Mondragon in five points: advantages and challenges of worker co-operatives: Anyone serious about fostering freedom, equality and social justice should support co-operatives.
| Author | Ferretti, Thomas |
| Position | OWNERSHIP AND CONTROL |
Thinkers and politicians from across the political spectrum have proposed to realise a 'Property-Owning Democracy'. Right-wing politicians like Margaret Thatcher (or more recently David Cameron) have a narrow conception of Property-Owning Democracy, simply involving less regulation of property and some access to minimal property (like a little house) for everyone. More left-wing thinkers, like the Nobel Prize winning economist James Meade (1964; see also O'Neill (2015)) or the philosopher John Rawls (2001), two of the most important supporters of such a system, have a more radical understanding of it. They argue for a society in which income, but also financial and human capital, would be more fairly distributed and inequalities greatly reduced. This would help to secure political equality, equality of opportunity, and provide everyone with the real means to pursue their goals. Realising such a society might require what Ed Miliband proposed in the UK 2015 general election under the catchword 'predistribution': actually helping people to buy houses, helping workers get stronger negotiating power, investing in early childhood education, and so on. But as Meade and more recently Martin O'Neill and Thad Williamson (2012b) or Thomas Piketty (2014) have underlined, this may also require exploring alternative property structures for firms, giving workers the opportunity to have a share in productive property.
The 'Mondragon Corporacion Cooperativa' is a powerful example. It is a group of co-operatives in the Basque country in Spain which organises work in a more egalitarian and democratic way. It has been studied by many researchers, such as William and Kathleen Whyte (1991). More recently, Tom Malleson (2013, 2014) provided an up-to-date account of research on Mondragon and co-operatives more generally.
If co-operative groups like Mondragon were more widespread in the market, income and capital would be more fairly distributed. More people would have access to more stable jobs. Workers would develop management abilities as they would take collectively all the important decisions affecting their life. Maybe more importantly, they would have the satisfaction and the recognition of being in charge of their own business.
This sounds a utopian ideal, because not even Mondragon succeeds in realising it. Yet Mondragon is on the right track. Sceptics will tell you that a society organising work in a co-operative way would necessarily collapse or be dramatically inefficient, that capitalist investor-owned firms are the only viable organisations, that 'there is no alternative'. This is false. Although it is unknown to the general public, co-operatives are not only more egalitarian, they are also an efficient way to organise work if they are properly designed.
Studying Mondragon's successes and challenges can help us to understand how to progress towards a more egalitarian society. I don't pretend to provide a full normative justification for promoting co-ops and I don't really offer new data. But having spent a month at Mondragon in 2014, I thought it would be useful to spread knowledge about co-operatives. I offer a brief summary about co-operatives as egalitarian forms of organisations, showing how they can overcome the challenges they face and how states can support the co-operative model. Beyond superficial praise and criticism, what can Mondragon teach us about alternative ways to organise collective work?
Mondragon today
Mondragon is a group of co-operatives. The first co-operative of the group was founded in 1956. Today, it has become one of the largest co-operative groups in the world. It provides fairly paid, life-long jobs to more than 35 000 members. Members own their co-operative and take decisions democratically. It is the most important industrial group in the Basque country and the seventh most important in Spain. It has not been much affected by the financial crisis of 2008 (Mondragon, 2014).
Egalitarian and democratic constitution
The constitution and general rules put in place by the first co-operative, ULGOR, became the model for all new co-operatives of the Mondragon group. Even if the roles of various instances have changed over time, the structure stayed basically the same until today. Not only do all worker-members get a fair wage, they also share the ownership of their co-operative. Therefore, because ownership provides them the right to residual profit and the right to control the co-operative, decision-making power is organised democratically among workers (most information for this sub-section is taken from Whyte and Whyte, 1991).
Decision-making power ultimately lies in the hands of the General Assembly, meeting once a year. All worker-members (and only worker-members) have a right to vote and an obligation to attend. The assembly still respects the principle of 'one member, one vote'.
The Government Council is the highest political decision-making body in each co-operative. The General Assembly elects the Government Council, which can only be composed of worker-members (no external nominations). They are not paid for this job, but they continue to draw their regular salary. The Government Council decides the co-op's general orientations and policies (wages, working conditions and so on). It also appoints day-to-day managers and heads of departments.
Managers are often influential. However, although they can speak at the Government Council, they cannot vote. Managers have to implement the decisions of the Council and they have to collaborate with the heads of the various departments of their co-operative. Management Councils gather all managers and heads of departments to foster proximity between managers and workers.
The Social Council functions like an internal union. Because the General Assembly only meets once a year, this council meets once a month and allows workers to meet more regularly, voice their claims, and criticise management. Because managers are excluded and because it is composed of workers elected in each department (for two years), the proportion of low-paid workers is higher, giving them the occasion to acquire experience in business and bargaining. As members are at the same time owners and workers, one might say that the Government Council is more concerned with their interests as owners while the Social Council is more concerned about their interests as workers (Whyte and Whyte, 1991, 38, 291).
Activities in 2014
The 'Mondragon Corporacion Cooperativa' is made of 103 cooperatives mostly in the Basque country. In 2014, its turnover was about [euro]12 billion (including more than [euro]4 billion of international sales). In the 1990s, mainly in response to increasing international competition, the group also created more than 125 investor-owned subsidiaries in countries like Spain, Brazil, Mexico, Germany and China (Mondragon, 2014).
Co-operatives are organised in four sectors. The 'industrial sector' is the most important, producing various products such as trains and car parts, house and office furniture, and until recently appliances such as washing machines (produced by the first co-op ULGOR which gave birth to the first group of co-ops, FAGOR). Mondragon co-operatives have also participated in building the majestic Guggenheim museum in Bilbao. The 'financial sector' is composed of the Caja Laboral Popular (a savings and credit co-operative bank) and insurance services. The distribution sector is manly composed of the EROSKY chain of hypermarkets, selling food and other products all around Spain. In the Basque country (but not in the rest of Spain), this distribution chain is composed of co-operatives with a mixed constituency of workers and consumers. Finally, the 'knowledge sector' is composed of the Mondragon University and 15 industrial research-and-development centres in charge of innovation. The university and research centres are second-degree co-operatives: they are owned by other co-operatives of the group (Mondragon, 2014).
Jobs, members and non-members
In the last few years, Mondragon employed around 35 000 worker-members with full rights, powers and responsibilities. Mainly in the last decade, Mondragon has also created and acquired conventional investor-owned firms that are not (or not yet) co-operatives. Therefore, the group now includes around 45 000 non-member workers. Most are temporary workers with lower salaries than members. Non-members also lack the right to participate in decision-making (Malleson, 2013, 153) (and personal interviews conducted in 2014).
The rise in the proportion of non-members in recent years is mainly due to Spain's entry into the European common market and increased international competition. This is often cited as a 'paradox' or a failure of co-operatives, degenerating into a club of capitalists (The Economist, 2012). This is a caricature. Not only is the proportion of workers with more rights higher than in any regular firm, but most people I spoke with in Mondragon are well aware that this situation is in conflict with their founding value of equality between workers. However, they are pragmatic. They need to secure the jobs and capital of their 35 000 members. They need to adapt to an increasingly competitive environment. However, Mondragon does have a plan to get...
To continue reading
Request your trialCOPYRIGHT GALE, Cengage Learning. All rights reserved.
