Mondragón Cooperatives

The Mondragón Cooperatives were long a source of inspiration for theorists and activists searching for a more just economy based on a democratic alternative to the traditional, exploitative capitalist enterprise. In spite of their huge success, even the Mondragón cooperatives' staunchest defenders have been compelled to admit that their status as a model has significantly diminished in the past 2 decades as a result of the expansion in the network of elements incompatible with the cooperative ethos.

The Mondragón Cooperatives, today known as the Mondragón Cooperative Corporation or MCC, started in 1956 in the Basque Country of northwest Spain. There, the founder, Father José María Arrizmendiarietta, having started a technical school, preached the dignity and value of labor. The Basques had fought on the losing side in the recent civil war, and Spain was under the dictatorship of General Francisco Franco. Unions were forbidden, but the law allowed agricultural cooperatives, and so Father Arrizmendiarietta and five of his students formed a cooperative making paraffin stoves and heaters. It was called Talleres Ulgor.

For nearly 30 years the founding principles—that all wealth comes from labor and that capital is [Page 968]subordinate to it—guided the Mondragón network's growth and success, but they have not survived in MCC, probably because of European competition and more recently because of global competition brought on by neoliberal opening of markets.

In 1959, a crucial support institution was added, the Caja Laboral, which, holding the network's savings, provided it with capital, market research, and health services. The network grew from five worker/owners and one workshop to 8,743 jobs and 40 cooperatives by 1970. Its Fagor brand markets a full line of kitchen appliances. Today, in addition to white goods, the cooperatives produce everything from buses to robotics, precision parts to cleaning services, and its banks and supermarkets are all over Spain.

The worldwide recession of the early 1980s demanded retooling and transfers of members among co-ops, but the network survived with no layoffs—an impressive accomplishment. But this recession, the subsequent opening of the Spanish market, and more competition all took their toll. Hiring of wage labor often took precedence over adding new cooperator/owner/workers, in the belief that doing so would safeguard the network's profitability.

By the late 1980s and early 1990s, Mondragón was locked in competition first with European and then with global firms. To compete, the network decided in 1991 to reorganize as the MCC by sector rather than geographically. It also streamlined decision making to resemble its transnational competitors. The cooperative's goal shifted from meeting its members' needs to profit making and capital accumulation. Solely to profit the MCC, a series of wholly owned foreign subsidiaries was started with no promise of cooperativization. The MCC has since grown to embrace some 200 enterprises grouped in financial, industrial, distribution, research, and support sectors, with 68,260 members as of 2003. The percentage of non-member wage laborers is a closely guarded secret but credible observers put it at around 25%, on average, rising to 40% in some co-ops.

Over time MCC has become a mostly capitalist conglomerate with absentee investor ownership and wage labor. Yet while the co-ops have degenerated as co-ops, they were for years the worker cooperative movement's most successful and durable example. Studies have identified as possible causes of its success its innovative structure, which does not use the stock share as an instrument of ownership and separates ownership from voting rights (one worker, one vote); its bank, the Caja Laboral; its university; mutual aid among network co-ops; and its democratic ethos.

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