FacebookTwitterGoogle+RedditEmail

The Case of Mondragon

by

Mondragon is a cooperative that has 147 companies employing 80,000 workers. It was established by a Catholic priest, Jose Maria Arizmendiarrieta (JMA), in the Basque country in Spain. As did many priests in that country, JMA sided with the popular classes against the fascists, who—supported by Hitler and Mussolini—came to power in Spain, overthrowing an elected government in 1936. The leadership of the Spanish church hierarchy supported the fascist coup, and JMA was jailed because of his support for the republican democratic forces, as well as his opposition to the coup and to the dictatorship that it established. For many years JMA was ostracized from the church, although more recently he has been “discovered” by the Vatican and is even being considered for canonization, meaning that he could become a “saint.”

In 1956, JMA established the first cooperative, according to the principle that companies are best run when workers are their owners and participate in management decisions. Its success proves that JMA was right. Mondragon, based on this principle, has become one of the largest conglomerates of companies in the world. Of its employees, 46% work in the Basque country, 40% in other parts of Spain, and 17% in the rest of the world. The four major areas of involvement include industry (46%), commerce (40%), finance (3%), and services (1.3%). The system of governance is arranged so that the workers (members of the cooperative) own a share of their company, elect their managers (in each company and in the overall cooperative), and participate in all major decisions. The salary range limits the difference between executive positions and the lowest paid employees; the highest paid can never make 6.5 times more than the lowest paid. In other large companies, this differential is much, much greater, such that the best paid directors and top managers may make 200 times more (in some cases, 1,000 times more) than the average employee of the company. Mondragon companies are more efficient than these other companies.

Recently, one of Mondragon’s companies collapsed. Immediately, the conservative and neoliberal economists used that collapse as a means of discrediting the cooperativism movement. The company, Fagor Electrodomesticos, produced electrical material for use in home domestic tasks (e.g., washers). The collapse of the construction industry, a result of the explosion of the housing bubble, directly affected this company, as it sold its products primarily to the Spanish market.

The response of Mondragon, the overall parent company, to that crisis was quite different, however, compared to what other non-cooperative companies have done in similar situations. Mondragon lent 700 million euros to Fagor to help it recover. When recovery eventually looked impossible, only then did Mondragon stop lending money. But then, it relocated 600 of Fagor’s worker-owners to other companies belonging to Mondragon. Universal solidarity among worker-owners made the collapse of Fagor more bearable than it would have been otherwise.

There have been some problems, however, that need to be noted. One is that employees who are not owners have increased more rapidly than worker-owners, to a point that in some companies, the first are a much larger group than the second. In the supermarket chains owned by Mondragon, employing 38,420 workers, only a minority (12,260) are worker-owners, which establishes a difference in terms of whom to save in the case of collapse. In the collapse of Fagor, the transfer of employees favored those who were worker-owners, which is expected, but clearly creates a two-tier system that affects labor relations. Those who do not become owners either cannot afford to become owners or choose not to become an owner.

Actually, one of the successes of Mondragon was its ability to create a sense of identity among the workers within the company, encouraging an environment of solidarity and collegiality among them, a feeling that also extended (although to a much lesser degree) to non-worker-owners. The connection felt by the latter group has somewhat weakened, however, exposing a vulnerable point for the cooperative. Otherwise, from a business perspective, Mondragon is an excellent case of matching efficiency with solidarity and democracy.

Vincent Navarro is  Professor of Public Policy at the Johns Hopkins University and Pompeu Fabra University. 

Vincent Navarro, is professor of Public and Social Policy in The John Hopkins University USA and the Pompeu Fabra University Catalonia, Spain. He is also the Director of the JHU-UPF Public Policy Center in Barcelona, Spain. 

More articles by:

CounterPunch Magazine

minimag-edit

bernie-the-sandernistas-cover-344x550

zen economics

Weekend Edition
January 20, 2017
Friday - Sunday
Paul Street
Divide and Rule: Class, Hate, and the 2016 Election
Andrew Levine
When Was America Great?
Jeffrey St. Clair
Roaming Charges: This Ain’t a Dream No More, It’s the Real Thing
Yoav Litvin
Making Israel Greater Again: Justice for Palestinians in the Age of Trump
Linda Pentz Gunter
Nuclear Fiddling While the Planet Burns
Ruth Fowler
Standing With Standing Rock: Of Pipelines and Protests
David Green
Why Trump Won: the 50 Percenters Have Spoken
Dave Lindorff
Imagining a Sanders Presidency Beginning on Jan. 20
Pete Dolack
Eight People Own as Much as Half the World
Roger Harris
Too Many People in the World: Names Named
Steve Horn
Under Tillerson, Exxon Maintained Ties with Saudi Arabia, Despite Dismal Human Rights Record
John Berger
The Nature of Mass Demonstrations
Stephen Zielinski
It’s the End of the World as We Know It
David Swanson
Six Things We Should Do Better As Everything Gets Worse
Alci Rengifo
Trump Rex: Ancient Rome’s Shadow Over the Oval Office
Brian Cloughley
What Money Can Buy: the Quiet British-Israeli Scandal
Mel Gurtov
Donald Trump’s Lies And Team Trump’s Headaches
Kent Paterson
Mexico’s Great Winter of Discontent
Norman Solomon
Trump, the Democrats and the Logan Act
David Macaray
Attention, Feminists
Yves Engler
Demanding More From Our Media
James A Haught
Religious Madness in Ulster
Dean Baker
The Economics of the Affordable Care Act
Patrick Bond
Tripping Up Trumpism Through Global Boycott Divestment Sanctions
Robert Fisk
How a Trump Presidency Could Have Been Avoided
Robert Fantina
Trump: What Changes and What Remains the Same
David Rosen
Globalization vs. Empire: Can Trump Contain the Growing Split?
Elliot Sperber
Dystopia
Dan Bacher
New CA Carbon Trading Legislation Answers Big Oil’s Call to Continue Business As Usual
Wayne Clark
A Reset Button for Political America
Chris Welzenbach
“The Death Ship:” An Allegory for Today’s World
Uri Avnery
Being There
Peter Lee
The Deep State and the Sex Tape: Martin Luther King, J. Edgar Hoover, and Thurgood Marshall
Patrick Hiller
Guns Against Grizzlies at Schools or Peace Education as Resistance?
Randy Shields
The Devil’s Real Estate Dictionary
Ron Jacobs
Singing the Body Electric Across Time
Ann Garrison
Fifty-five Years After Lumumba’s Assassination, Congolese See No Relief
Christopher Brauchli
Swing Low Alabama
Dr. Juan Gómez-Quiñones
La Realidad: the Realities of Anti-Mexicanism
Jon Hochschartner
The Five Least Animal-Friendly Senate Democrats
Pauline Murphy
Fighting Fascism: the Irish at the Battle of Cordoba
Susan Block
#GoBonobos in 2017: Happy Year of the Cock!
Louis Proyect
Is Our Future That of “Sense8” or “Mr. Robot”?
Charles R. Larson
Review: Robert Coover’s “Huck out West”
David Yearsley
Manchester-by-the-Sea and the Present Catastrophe
FacebookTwitterGoogle+RedditEmail