One popular hypothesis about the rarity of labor-managed firms is that workers tend to be poor, and LMFs cannot gain access to credit on the same terms as capitalist firms. This story is incomplete in a number of ways: for example, it does not explain why LMFs have more difficulty attracting capital than capitalist firms have in attracting labor. The chapter develops a repeated game model where agents are unable to make binding commitments about input supply or side payments. Due to the alienability of capital and the inalienability of labor, physical assets may be more vulnerable to rapid depreciation in LMFs than human assets are in capitalist firms. For a model with quadratic costs and patient agents, it is shown that this asymmetry can make capitalist firms viable while LMFs would not be, in the sense that LMFs are unable to finance the fixed assets they require. This result goes through regardless of whether LMFs rent physical assets or finance them through debt, and does not rely on informational asymmetry. More generally, the chapter argues that firms where controllers face smaller temptations to cheat non-controllers tend to have a competitive advantage.