Can a Fifty Year-Old Company Serve as a Model for Our Future?
When I first discovered prefigurative politics, or as many of us Wobblies and anarchists say, “Building a new world in the shell of the old,” something clicked inside my head. It instantly made sense and resolved many of my misconceptions and contradictions I saw in anarchist theory. Until then, I’d been only half-hearted about my life as an anarchist, but now it seemed clear that a better world really is possible. So yeah, it would be great to live in a world without rulers and without bosses, and it would be great to start building that world now, but where exactly do we begin?
This whole idea of prefigurative politics and dual power sounds great in theory, but as I’ve involved myself in organized anarchism and radical politics, two issues stand out. First, trying to actually put this idea into practice typically causes all manner of ideological debates, arguments, personal conflicts and insults, and if you’re unlucky enough to be discussing it online, mindless trolling and endless flame wars.
For purists, working within the existing system at all is tantamount to selling out our values as anarchists and freedom fighters. Even for the not-so-purists, it’s hard to decide when we’ve crossed the the line from pushing forward into that new world to simply helping the old system chug along, embedding ourselves deeper and deeper into the status quo of capitalist and statist exploitation. Second, if anyone actually moves beyond this initial dilemma, making any sort of meaningful progress seems like an agonizingly slow and fruitless process. While it’s easy to be excited and dedicated to building this new world now, sooner or later we discover it’s not going to be here tomorrow. With that, and the usual series of roadblocks, internal division, and constant disappointments, most efforts to move forward to this new world stall out or fail altogether before they make much real progress. Such is the life of an American anarchist. I resigned myself to being perpetually frustrated, but resolved to push forward when and where I find an opening. Maybe if I stick with it, I imagined, one day we’d stumble upon the ‘silver bullet’ that finally puts an end to capitalism and the state.
Then I heard about Mondragon Cooperative Corporation (MCC). At first, I didn’t believe what I was reading. Mondragon is the seventh largest company in Spain (the largest in the
The Mondragon-Arrasate village in the Basque country
Basque region) with €14.8 million in revenue in 2011. It provides employment for close to 100,000 people, many of them worker-owners, across 120 coops in the fields of Finance, Industry, Research & Knowledge. Heck, their web site even looks like something a Fortune 500 firm would produce. The more I read, the harder it was to believe that something like this could actually exist., I thought to myself there’s simply no way a company that large can actually be run by workers and exist, let alone compete, in a capitalist system.
Carl Davidson, a scholar and activist (though not an anarchist) who recently had the opportunity to travel to the Basque region and take part in an fairly extensive tour of the Mondragon coops (the workshop he conducted at the 2012 SOA Watch weekend actually serves as the mental spark for this thing you’re reading right now). He compares the company to the discovery of the platypus. When the platypus was first discovered, most folks thought it was just a hoax. Something like that isn’t supposed to exist – it defies the laws of nature! Such is the creature that is Mondragon. It’s a strange new species, a patchwork of well-run coops, that seems to be not only surviving, but thriving, in a world that’s not supposed to be able to support that sort of life.
So, after doing some research and digging into its history, not only have I come to believe that such a creature can actually exist in a world dominated by capitalism, I think that just maybe the Mondragon model can serve as a bridge to this new world we’re hoping to build.
Of course, I’ve not gone completely silly. From an anarchist or even just a general socialist perspective, Modragon in its present form has its share of problems. Neither is it the ‘silver bullet’ that’s going to dump capitalism into an early grave. I do believe though, that if we can find the means to establish more coops in the mold of Mondragon here in North America, rather than continue serving as cogs in an unforgiving capitalist machine, we can make some meaningful advances in the right direction. Rather than continue fighting for concessions in the workplace (or the political arena), sometimes winning, but usually failing and falling farther behind, we will find ourselves in a much better position. We may even find ourselves with a roadmap toward managing our own workplaces and slowly transitioning away from the oppressive system we’ve always known into a place where capitalism and the state exert less and less influence in all of our lives.
Background of the Mondragon Model
Mondragon was started over 50 years ago by a Spanish priest, Father Jose Maria Arizmendiarrieta (Father Arizmendi for short). It was by no means an overnight process. Father Arizmendi arrived in Arrasate-Mondragon region of the Basque country in 1941. There he spent years educating young people about Catholic social teaching, the importance of solidarity, mutual aid, and participation in the local community. While doing this, he founded a technical school and a small credit union to fund his venture. A few years later, he selected the five top students and, with donations and funds borrowed from the credit union,
Father Jose Maria Arizmendi
created a cooperative workshop that developed a small personal stove that sold extremely well. That cooperative workshop went on to become FAGOR, a company which still exists today as one of about 120 Mondragon coops.
One of the most important ideas to come from Father Arizmendi’s project was the combination of the technical school, credit union, and a company with a solid product. These three factors have been crucial to Mondragon’s continue success. Considering that a majority of small business in the United States fail every year due to lack of capital, this is no surprise. In fact, Mondragon is so committed to the credit union-student-solid product paradigm, the company has its own coops dedicated to each of those areas. It has its own credit union, its own technical college (Mondragon University), and its own research and development coop.
I won’t go into an exhaustive list of the Mondragon coops, what they all do, or how they are organized (this information is available at Mondragon’s web site or in Carl Davidson’s book New Paths to Socialism) here. It can’t be stressed enough, though, that the combination mentioned above, along with secondary coops that provide human resource management, health care and insurance, pension and retirement funds, benefits management, and credit and finance services for the coops and worker-owners, provide Mondragon the leverage to be extremely competitive in the capitalist marketplace. These ingredients have been missing in most cooperatives in North America, which may explain why we have had such limited success with them here.
Father Arizmendi’s Ten Principles of Cooperatives
In addition to all this, Father Arizmendi laid out Ten Principles that served as a guideline for his initial parrafin-burning stove project and which still serve as the model for all the Mondragon cooperatives today.
1. Open Admission – Anyone can join the coops, provided they are willing (and able) to work, regardless of gender, sexual preference, religious belief, nationality, age, political affiliation, or, most importantly, class and social status. This guarantees the opportunity afforded by these coops is accessible to anyone, rich, poor, middle class, provides for greater social mobility, and raises the possibility of actually reducing wealth disparity, rather than the enormous chasms between rich and poor to which we’ve grown accustomed under capitalism. New workers are generally brought on as waged employees with an option to later buy into the coop. New workers can even borrow this ‘buy-in’ money from Mondragon’s own credit union at low interest and have payments gradually deducted from their pay.
2. Democratic Operation – Workers in North America rarely, if ever, have a say in the operation of their workplaces. Decisions are generally made by professional managers who often openly disregard, and only occasionally feign appreciation for, the opinions of those actually doing the work or dealing with customers. While a management hierarchy does exist at Mondragon, the coops are run democratically using a ‘one worker, one vote’ model. This doesn’t mean workers have a say in every aspect of day-to-day operations. They are able to participate in and vote at annual or semi-annual general assemblies of workers at which, not only are major business decisions made, but workers actually select which members will lead the company. Not only that, but on the shop floor, there is a noticeable absence of managers or foremen, not because they don’t exist, but because there are far fewer than in similar shops. Workers, for the most part, manage daily operations themselves with little interruption from management, which seems to work quite well and reduces overhead costs.
3. Sovereignty of Labor – This is perhaps one of the most important principles, especially from the perspective of those of us coming from a union or syndicalist background. Rather than viewing labor as an ‘expense’ or a ‘cost of doing business’ as most capitalist firms do, this model views labor as the dominant force. The workers and the work they perform is central to everything that goes on in the coops. Labor has the final say in all matters, which drastically alters the power relationship and workplace dynamics and gives workers not only a sense of control, responsibility, and creates a true feeling of investment, importance, and belonging.
4. Capital as an Instrument – This ties in closely with sovereignty of labor. It’s important to remember that, while Mondragon incorporates many aspects of socialism and worker-control into its model, the company still competes in capitalist markets, and so capital does come into play. However, capital is viewed as a tool to be used, not the dominant force around which all else is arranged. Capital is an instrument to be used and managed by the labor force. The dynamic between labor and capital is one of the most interesting difference and a critical factor that sets the Mondragon model apart from capitalism.
It may seem simplistic, but to help visualize the relationship between Labor and Capital in the two models, here’s a chart comparing them:
5. Worker Self-Management/Participatory Management – Again, while the Mondragon coops do have a hierarchy, their organization is not only more horizontal than the average Fortune 500 company (where there may be 8 or more levels of management between the CEO and the lowest worker on the ladder), it is also democratic on a scope unseen in capitalist organizations. Workers not only manage their own workspaces and shop floors, the company actually encourages worker-owners to be be trained in how to manage the company so that, should they be elected to positions of management, they have the necessary educational background to effectively guide the company. This fosters an environment where, much as anarchists and syndicalists in North America would say, everyone is a leader.
6. Pay Solidarity (Salary Spread) – Recent studies by groups like the Institute for Policy Studies put the pay ratio of CEO’s to low-level waged workers of American companies at between 250:1 to 400:1. That means if I make minimum wage ($7.25/hour in Georgia), the CEO of my company may well be pulling in $2000 to $3000 every hour! At Mondragon, the ratio between the highest- and lowest-paid worker averages around 4.5:1. That’s still a meaningful disparity, and many of us would rightly view this as unfair, especially given that the highest-paid worker is likely not doing 4 times as much work as anyone else. Still, that they are able to retain qualified managers in a competitive labor market at such a low pay ratio is no minor accomplishment. In addition, it’s possible that if we saw a large growth of coops using this model, we could see these ratios creep closer and closer to 1:1.
7. Inter-Cooperation Between Cooperatives– Given the poor state of the Spanish economy recently, cooperation between coops has been critical to Mondragon’s continued success. If one coop is performing well and needs labor, members can be transferred from another coop that is not performing as well or whose goods and services are in lower demand. This diversification has allowed the coops as a whole to remain competitive without the need to reduce the workforce at all. While waged employees who have not bought in can be let go,
Mondragon’s 10 Principles of Cooperatives
Mondragon worker-owners can not be fired or laid off.
8. Social Transformation – Being founded by a Catholic priest, Mondragon has a solid background in social justice and Catholic social teaching, which stresses the importance of concern not just with our own good, but with the good and well-being of our communities and society as a whole. Mondragon has set a new standard of care not just for its members, but also of giving back to the community, social responsibility, and being good stewards of the environment.
9. Universal Solidarity – This feature should be familiar and should certainly appeal to anarchists and syndicalists. It’s essentially an expression of the Wobbly maxim, “An Injury to One is an Injury to All.” Not only are worker-owners expected to express solidarity with their fellow workers, but they should show and practice solidarity with workers in the rest of Spain, Europe, and the entire world. How well this is actually executed is open to question. There is some criticism of a half-hearted support of and detachment from the traditional labor movement among Mondragon members. Going forward, whether we are in a union or members of members of a cooperative, solidarity with and an undying commitment to the welfare of all workers is critical to our success and should be central to everything we do.
10. Education – One of the most distinctive features of the Mondragon coops is their adamant focus on education. This goes back to Father Arizmendi’s original vision. Mondragon would likely not have been possible, and certainly not in its current form, had Father Arizmendi not spent so much effort educating young people in his community about Catholic social teaching and, of course, had he not founded the technical school. Mondragon University functions as a worker-run educational facility with approx. 3600 students. Tuition is comparable to similar in Europe and the university provides the Mondragon coops with a steady stream of well-educated and well-rounded future worker-owners. Not only that, it provides existing members the chance to continue their education to promote personal growth and create a stronger, better-run cooperative,. In the end, this benefits not only the nearly 100,000 Mondragon workers, but the Arrassasate-Mondragon region and everywhere Mondragon operates.
A Better World IS Possible…How Will We Build It?
As Mondragon expands into new territories and increases its market share, the company faces new and unique challenges. Some have criticized Mondragon and similar cooperatives as capitalistic. And they are. But the reality is, while these businesses are competing in a capitalist marketplace, they are not necessarily capitalist. In their present form, these cooperatives are not “the answer” to capitalism and exploitation, but they are a critical step on the path to a society in which we all have a say in our own destiny. And while many anti-business critics speak from theory and have no practical examples to point to for their perspective, Mondragon and upstart coops in the US are actually putting these practices into action – and succeeding.
Some leftists have criticized Mondragon and similar cooperatives for being capitalistic. And they are. It’s important to remember that Mondragon operates in a capitalist market. This is not a socialist utopia by any stretch. But while anti-business and anti-market critics speak from theory, with little or no practical examples of success to fall back on, Mondragon is competing against traditional capitalism – and succeding.
Still, the various coops, Mondragon’s bottom line, and its business decisions are subject to market forces, just like any traditional capitalist company. But, going back to the platypus metaphor, Mondragon is a strange new hybrid or capitalism, worker self-management, and bits of socialism thrown about here and there. And while it competes in a capitalist market, the company has demonstrated that the market need not dominate its values and its basic strategy.
Capitalists, while boasting about the wonders of free markets on one hand, seem perpetually fond of blaming all their shortcomings on ‘the market.’ They can’t pay a living wage because the market won’t allow it. They can’t let workers unionize because the market favors non-union labor. They have to ship jobs to China or Bangladesh and use what amounts to slave labor because that’s what the market demands. If we don’t listen to the market we’ll be left behind, and not only will shareholders be affected, but think about all the good ‘middle-class’ jobs we’ll lose! As if the market absolves capitalist firms of any social responsibility.
Mondragon has proven that this is not necessarily the case. While their track record is not spotless, their social, economic, and environmental record far outshine those of their capitalist competitors, all while competing effectively in the same markets. If a company is well-organized and dedicated to a core culture that values producing top quality products and services in a responsible manner, all while giving back to their community, it can succeed in any market. In fact, in Spain at least, it appears that such a company can even dominate its capitalist competition and succeed even in an economic downturn. All this while not letting go of a single one of its worker-owners. This is perhaps one of the most exciting prospects offered by the Mondragon model.
As anarchists, but not only that, as people with a genuine concern for our neighbors, our brothers and sisters from all lands, and for the generations that will inherit the world we’ve created, it’s up to us to begin building the new world we hope for, the world the lives in our heart. Mondragon serves as one example of how we might begin doing that, but it’s certainly not the only one. In the second part of this article we’ll explore the effect Mondragon’s model is having on coops and other businesses in North America and how we might take these best practices and set about building this new world.
Capitalism, at least capitalism as we know it, is in crisis. This is something we can use to our advantage to increase libertarian-socialist awareness. We need to stop fighting with each other and join together, to make a change and, in the words of Ghandi, “be the change we want to see in the world.” If we don’t, then the capitalists and the statists will build the world they want to see, and that’s not a pretty sight at all.
Many thanks to Carl Davidson, his workshop at the SOA Watch weekend, and his book “New Paths to Socialism” for much of the background on Mondragon. Several of his presentations on Mondragon are available at The Online University of the Left (http://ouleft.org).