FacebookTwitterRedditEmail

The Case of Mondragon

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. 

More articles by:

Vincent Navarro is Professor of Public Policy, Johns Hopkins University, U.S., and Professor of Political Science, Pompeu Fabra University, Spain.

bernie-the-sandernistas-cover-344x550
Weekend Edition
March 27, 2020
Friday - Sunday
Rob Urie
Bailouts for the Rich, the Virus for the Rest of Us
Louis Proyect
Life and Death in the Epicenter
Paul Street
“I Will Not Kill My Mother for Your Stock Portfolio”
Jeffrey St. Clair
Roaming Charges: The Scum Also Rises
Pam Martens - Russ Martens
Stimulus Bill Allows Federal Reserve to Conduct Meetings in Secret; Gives Fed $454 Billion Slush Fund for Wall Street Bailouts
Jefferson Morley
Could the Death of the National Security State be a Silver Lining of COVID-19?
Ruth Hopkins
A Message For America from Brazil’s First Indigenous Congresswoman
Kathleen Wallace
The End of the Parasite Paradigm
Anthony DiMaggio
Misinformation and the Coronavirus: On the Dangers of Depoliticization and Social Media
Andrew Levine
Neither Biden Nor Trump: Imagine Cuomo
David Rosen
God’s Vengeance: the Christian Right and the Coronavirus
David Schultz
The Covid-19 Bailout: Another Failed Opportunity at Structural Change
Evaggelos Vallianatos
In the Grip of Disease
Edward Leer
Somebody Else’s World: An Interview with Kelly Reichardt
Robert Fisk
What Trump is Doing in the Middle East While You are Distracted by COVID-19
Daniel Warner
COVID-19: Health or Wealth?
Thomas Klikauer – Norman Simms
Corona in Germany: Hording and Authoritarianism
Ramzy Baroud
BJP and Israel: Hindu Nationalism is Ravaging India’s Democracy
Richard Moser
Russia-gate: the Dead But Undead
Ron Jacobs
Politics, Pandemics and Trumpism
Chris Gilbert
Letter From Catalonia: Alarming Measures
Richard Eskow
Seven Rules for the Boeing Bailout
Jonathan Carp
Coronavirus and the Collapse of Our Imaginations
Andrew Bacevich
The Coronavirus and the Real Threats to American Safety and Freedom
Peter Cohen
COVID-19, the Exponential Function and Human the Survival
César Chelala - Alberto Luis Zuppi
The Pope is Wrong on Argentina
James Preston Allen
Alexander Cockburn Meets Charles Bukowski at a Sushi Bar in San Pedro
Jérôme Duval
The Only Oxygen Cylinder Factory in Europe is Shut down and Macron Refuses to Nationalize It
Neve Gordon
Gaza Has Been Under Siege for Years. Covid-19 Could Be Catastrophic
Alvaro Huerta
To Survive the Coronavirus, Americans Should Learn From Mexicans
Prabir Purkayastha
Why the Coronavirus Pandemic Poses Fundamental Challenges to All Societies
Raouf Halaby
Fireside Chatterer Andrew Cuomo for President
Thomas Drake
The Sobering Realities of the American Dystopia
Negin Owliaei
Wash Your Hands…If You Have Water
Felice Pace
A New Threat to California’s Rivers:  Will the Rush to Develop Our Newest Water Source Destroy More Streams?
Ray Brescia
What 9/11 Can Teach Us About Responding to COVID-19
ADRIAN KUZMINSKI
The Covid-19 Opportunity
John Kendall Hawkins
An Age of Intoxication: Pick Your Poison
Kollibri terre Sonnenblume
The Propaganda Virus: Is Anyone Immune?
Nicky Reid
Fear and Loathing in Coronaville Volume 1: Dispatches From a Terrified Heartland
Nolan Higdon – Mickey Huff
Don’t Just Blame Trump for the COVID-19 Crisis: the U.S. Has Been Becoming a Failed State for Some Time
Susan Block
Coronavirus Spring
David Yearsley
Lutz Alone
CounterPunch News Service
Letter from Truthdig’s Editor-in-Chief Robert Scheer to the Publisher Zuade Kaufman
CounterPunch News Service
Statement From Striking Truthdig Workers
FacebookTwitterRedditEmail