The Meaning of Mondragon
Bernard Marszalek

A picturesque town in the Basque region of Spain has become a Mecca for progressive pilgrims, videographers and journalists. And every few months a glowing report announces that this town, nestled in a lush valley encircled by wooded mountains, holds the future. A future of responsible capitalism, or future socialism, or future, whatever. The tag line depends on the visitor’s agenda.

What’s so special about this town? Something extraordinary for a town with fewer than 25,000 inhabitants, it happens to be headquarters for a complex of modern manufacturing enterprises, a bank – one of the largest in Spain, a university, and more. All these enterprises are tied together to form the Mondragon Corporation, which ranks in the top ten of industrial conglomerates in all of Spain, and it’s a cooperative enterprise.

Americans, fed up with out-of-control corporations, and similarly disposed Europeans make the pilgrimage to Mondragon in search of an alternative to cut-throat global capitalism. The attraction on offer is unique in the world economy. Mondragon Corporation (MC) functions as the world’s largest cooperative enterprise. Across the globe, cooperatives come in various sizes and flavors. In America, they range from huge, multibillion dollar farmer-run processing plants and electrical utilities, to equally large retail outfits, down to the local credit unions and food stores. In light of this organizational confusion, MC is significant in that it adheres to the basic cooperative principle of worker-member control of the firms in the complex. Worker cooperatives, of all the various cooperative entities, advance the most democratic practices and most closely adhere to the original cooperative principles, formulated and practiced by workers in the 19th Century.

The statistics of Mondragon’s success ($17bn. sales in 2011), number of employees (83,569) and international expansion (94 subsidiaries in 17 countries), means that Mondragon must navigate global trade, which generates 70 percent of its income, with a keen awareness of the opportunities to make profitable investments, not unlike a traditional corporation. The savvy managers of this vast economic conglomerate put to shame the corrupt corporate CEOs, worldwide, who create wealth by controlling politicians and manipulating financial markets.

We have come to expect corporate malfeasance, however, when we come across a corporation abiding by a higher standard, we need to temper our enthusiasm and sharpen our critical faculties. MC abides by outstanding principles regarding the dignity of work and the betterment of their community, but when the corporation enters the arena of international trade, these ethical premises are challenged by the bottom-line mentality. This conundrum cannot be ignored. Every worker cooperative must deal with the marketplace and its diktats and limit, to the best of its ability, their corrosive effects on daily operations. Mondragon, since it contends with these issues on such an immense scale, attempts to balance the real world’s ethical comprises with their internal values with increasing difficulty. Its overseas investments, for instance, are motivated solely by financial concerns; they do not invest to create cooperatives with the 15,000 workers they employee in other countries.

The details of their managerial operations, properly appreciated, should inform a thorough assessment of the position of Mondragon within the global economy and, more importantly, its influence in the international cooperative sector, specifically in the US. Unfortunately, the surprisingly favorable reports we read in the business press, (Financial Times and The Economist, for example) as well as the tour reports from visitors, lack the in-depth approach that a sophisticated analysis requires. They mainly concentrate on its economic prowess.

This emphasis on MC’s profitable global reach and its world-class, competitive manufacturing sector, amounts to celebrating, contrary to Schumacher, “Big is Beautiful.” One wonders if the subtext here is the American (and British) industrial idyll of the 50s – a by-gone era when industrialism was embedded in communities and generated good paying jobs. If this is the reality to be retrieved from Mondragon, then the tealeaves in the cup are being read all wrong. The manufacturing prowess America enjoyed many decades ago, when it was the world’s factory, will never return. And though the beginnings of a modest manufacturing renaissance are evident, today’s industrial technology assumes a tiny, tech-savvy work force to monitor automated machinery, as is increasingly the case in Mondragon and its global extensions; the industrial armies of an earlier stage of capitalism are thankfully disappearing (even the Chinese recognize this fact). The “dark factory” where no human works already is fact with the gigantic server farms maintained by Google, Apple and similar companies. And what can “economies of scale” mean when factories (in the form of 3-D printers) are in our closets?

Schumacher’s “small” referred to a bottom up approach to economic development, not merely its scale. This is the legacy of the historical cooperative movement, and in fact, of Mondragon, which began with a cohort of five engineering students that Fr. Arizmendi, Mondragon’s intellectual founder, coached into creating the first cooperative. Cooperatives pose, if we read their history closely, a fundamental question regarding the purported social good derived from capitalism. I mean that, while Western society benefits materially from the expansion of the economy (a sizable minority excepted in the US), it does so at the cost of abandoning the communal values that the early cooperators held dear.

The little book of Fr. Arizmendi’s aphorisms, that all visitors to Mondragon become acquainted with, captures the essence of a cooperative society. These are marvelous and perceptive truisms drawn on his study of Marx, 19th Century anarchists and utopians, and a dash of Catholic social gospel (he was even reputed to have Mao’s little red book in his library). He synthesized these various sources to produce his original catechism of cooperation that served as a guide for the founders of Mondragon. Yet, his thoughts arose from a village experience and are not easily translated into the world of global competition and neo-liberal assumptions. The managers of Mondragon impress upon their visitors, that in a world were ethical behavior is a loser’s game, they need to be practical – they are not monks in suits. They are not building a utopia.

There are always exceptions to the drift of history, and Mondragon may be one, but few will dispute that, since the enclosures spread throughout the English countryside in the 18th Century, the control of our economic destiny has increasingly eluded us. From sequestering land, to manipulating our imagination, capitalism has successfully confined economic growth within a narrow, entrepreneurial perspective, which explains why Mondragon lacks leverage with government and foundation-supported professionals in the field of development. It’s too communal for their tastes.

Thirty years ago, the BBC-TV produced an excellent documentary, over two decades ago, the Whytes, an American husband and wife team of sociologists, published Making Mondragon, an exhaustive organizational analysis, and hundreds of Americans have traveled to the Basque country, and yet, as inspiring as their model may be, it has not been adapted anywhere. The growth of a cooperative economy requires more than distant models to emulate and more than sympathetic cooperative developers; it needs, understandably enough, a nurturing environment of social, financial and political forces. More importantly, it requires a small army of highly skilled developers to train prospective cooperators. Some of the former elements are slowly assembling themselves in the form of cooperative-friendly legislative and financial assistance, and this progress must be encouraged. To train developers, though, means confronting individualism and consumerism with a program of de-conditioning this culture we all absorb like toxins and this can’t be done with a training manual and two week workshops. And on this front, there has been some progress, with experienced worker cooperators emerging, organically, into the area of development.

Currently, and against great odds, there is a revival of interest in worker cooperatives across a spectrum of new business ventures, from small-scale retail (cafes, bakeries and bookstores) to high-tech start-ups, as people come to desire more control over their lives and work worth doing. And no one can discount the appeal of egalitarianism in self-managed workplaces. It is heartening to see that the range of these developments extends beyond the niche where neo-liberalism would like to banish cooperatives – to impoverished communities, freeing the state of a social irritant. Or, as we see in the UK, to state appendages, like the health-care system and schools, where government sponsored staff-owned businesses are supported, some critics believe, as a prelude to their privatization.

Two American economic trends, in my opinion, are most receptive to Mondragon’s core belief in democratic participation and US worker cooperatives’ practical implementation and extension of this ideal : the Employee Stock Option Plans (ESOPs) and the grassroots economy. I believe that with these two, very different economic currents, we can apply lessons learned from the extensive experience of worker self-management to encourage their unrealized radicality.

ESOPs consist of employees who buy shares of their companies to be redeemed upon employee departure, or retirement. ESOPs are firmly embedded in the capitalist economy, some call it a “peoples’ capitalism,” yet this form of ownership offers the participants a potentially subversive understanding that their work serves their needs, not those of some CEO. There is a minority of the 11,000 ESOP companies (but still a vastly larger sector than the co-ops) where, in their specially configured by-laws, ultimate control rests with the employees and where participation in their workplaces is high. These employees might be receptive to a critique of capitalism based on their unique (and privileged) experience with the self-management of their working lives. Is it fantasy to imagine that these employees could see their model extended to other workplaces? For example, the argument could be made that bank staff should be able to exercise control of their workplace, doctors and nurses, the hospitals and teachers, schools. Since these institutions, unlike private businesses, are mandated to provide a social good (I assume banks as social utilities), it could be further argued that the larger community, along with the staff, should govern. And who knows what that might lead to? If only somebody was organizing the ESOPs along these ends! The opposite, pro-capitalist, libertarian argument is more likely – everything should be privatized. One wonders though, as capitalism descends into a greater criminality in search of profits, whether the employees with ESOP shares may evolve a more critical view of capitalism; their significant assets, diversity and number, could pose a real problem for our wardens of wealth. But, while I love to speculate about the demise of capitalism, I hesitate to take too seriously predictions, even mine (!), on the repercussion of capitalism’s slow collapse amongst those privileged few who own a share in a dwindling asset.

Aside from the ESOPs, the expansive grassroots economy exhibits potential for economic, and social, transformation. The grassroots economy, a nation-wide phenomenon, consisting of community-controlled projects, like urban gardens and community assisted agriculture, and alternative transport and energy, neighborhood self-help groups, and so much more, offers us a model of an economy totally at the other end of the spectrum from Mondragon – highly decentralized, pastoral as opposed to industrial, radically democratic and leisurely, though not economically insignificant. Add to this popular economy the thousands of non-profits committed to ameliorating the social devastation left in the wake of so-called progress, spice this economic stew with idealistic young social entrepreneurs, and we have a major economic force of a kind unrivaled anywhere in the world.

I know from personal experience organizing in this milieu that the grassroots is populated with diverse, chaotic and committed (in the good sense of motivated!) participants, who would rather “get on with the work” than sit around speculating how to overthrow capitalism. In their day-to-day activity, a culture of respect, engagement and pragmatism gets built. Possibly, we have here a lesson, a seed, from Mondragon to plant in American dirt, and, importantly, a role for worker cooperatives. The members of worker cooperatives in some cases are the very same people involved in the informal, somewhat contingent, bottom-up economy. And if not themselves, then their housemates, friends and lovers are involved. In any case, the worker cooperatives are not divorced from the ferment brewing below the surface of our corroding economy.

And it is here, I believe, where Mondragon’s ideals, as infused in the day-to-day practices of the worker cooperatives, may be significant and exemplary: both internal practices, as democratic management, and external, as co-ops network to strengthen their sector, following Mondragon’s example (and that of the cooperatives of the Emilia-Romagna region of Italy). As co-ops demonstrate, beyond their everyday work, their organizational abilities to create financial institutions, develop co-op educational projects, secure land and buildings through land trusts and develop housing, healthcare and recreational facilities, they enhance their economic resilience, and in doing so, demonstrate to other groups ways of forging durability through bottom-up alliances. The cooperatives, in other words, might act as catalyzing agents for the grassroots economy, not to lead it, but to contribute their organizational expertise to the larger alternative economy. And, at the same time, the co-ops could benefit from the positive aspects of the grassroots – its spontaneity, its commitment to social relevance and its non-monetary and joyful approach to activities. Worker cooperatives, we must remember are not ends in themselves, but means to an end – a process to transform the economy, if not abolish it altogether. After all, it is the people working on these small community projects who abandon compulsive consumerism for a better life and who, while doing worthwhile work, consequently value their time saved from soul-destroying jobs to construct, naturally haphazardly, a true cultural revival.

The new economy can’t duplicate the old, hierarchical economy of a previous era, but better resemble a rhizomatous structure with nodes of economic and cultural specialization, like open source manufacturing, or high-tech coordination, or even, to fantasize outrageously, popular and free universities – and the list goes on. The grassroots economy in serving unmet needs, lays a foundation, in a methodical way, for the long term. There is no wiki with blueprints to follow to avoid the immense obstacles – like deathly jobs that leash our collective creativity to earning an income. It falls on us, as our major task, to put it bluntly and in as few words as possible, to recreate the commons as the source of our livelihoods. Down with jobs! Nothing is assured in this crazy and dangerous world, however, the bonding of democratic organizational smarts – the cooperative contribution – along with the joyful spontaneity of the grassroots, recalls Ivan Illich’s concept of a convivial society. And given the acceleration of multiple global crises, resource depletion and climate change being the two major ones, a convivial society has the best chance of replacing the unsustainable grow-or-die economy that literally murders the helpless amongst us, as it perverts the creativity of the more fortunate.

The worker cooperatives then, in collaboration with the new society on the horizon, could join in realizing Arizmendi’s vision of an empathetic culture. His philosophical aphorisms, difficult to interpret in the context of neo-liberalism, have a fresh relevancy when they are applied to the new society. As the worker cooperative slogan says: Democracy in the Workplace, Responsibility in the Community.