Taking an early opportunity to see for myself, it was impossible not to be impressed by what was already the world’s largest grouping of worker co-operatives, and my admiration has grown over subsequent visits, most recently late last year. In order for cooperatives, such as Mondragon, to be economically successful, they must be able to offer goods and services that are within households’ marginal propensity to consume and embody enough utility for them to even consider purchasing. It is no mean task to convert the cooperative model into something universal. 8 The Basque name for Mondragon is Arrasate, but Mondragon is the more common usage. OUR ROADMAP MORE COMPETITIVE, COOPERATIVE AND FLEXIBLE. In analysis of present-day economic trends, if current wealth gaps continue to widen between capitalists and households, the phenomenon would increasingly jeopardize the ability of middle class citizens to live comfortable, competent lifestyles (i.e. The Mondragón co-operative movement, born in the 1950s around the local ... Flecha, R., and Ngai, P. (2014), ‘The Challenge for Mondragon: Searching for the Cooperative Values in Times of Internationalization’, Organization, 21(5), 666– 82. Essentially, these populations of low skilled labor lack the bargaining power to achieve higher wages (Wolff, 2012). One common issue within US firms has been poor relationships between workers and management. The Mondragon experiment seems to prove that a corporation can be globally competitive without abandoning cooperative ideals and principles of worker participation. Race Mathews returned recently from the fifth of a series of visits to Mondragon, dating back to the middle 1980s. Jose Luis Lafuente, Mondragon's Corporate Management Model specialist. The Mondragón Cooperative Corporation (MCC), the largest consortium of worker-owned companies, has developed a different way of doing business —a way that puts workers, not shareholders, first. Therefore, rather than completing tasks under the alienating eye of a supervisor, employees of Mondragon work out of passion for their occupation and their drive to excel (Wolff, 2012). They have established research centers, bank and credit unions, a university with several campuses, youth cooperatives, a culinary arts university, and small to large businesses. Also, although Mondragon is efficient at maintaining low internal layoff rates, due to the fact that income is evenly distributed, it is easier for Mondragon employees to achieve subsistence, but very hard for them to thrive. As a participatory organization, Mondragon employees don’t necessarily have managers or supervisors (Wolff, 2012). 19-36. Gorka Lejarcegi. (May 2007). Participation: Grassroots management. Cooperative business is directly related to the improve the business and welfare of members, so that with good supervision will have a high beneficial impact for members. At the same time, much of the recent literature on Mondragon has questioned whether Mondragon’s democracy has degenerated, without drawing definitive conclusions. Although Mondragon does embody a profit motive and operates to create revenue and jobs, profits remain second in importance to employee care and social values. In the last half of the twentieth century, Mondragon has grown and developed a unique worker democracy in Specifically, unlike most traditional US firms, Mondragon does not seek profit maximization at the expense of employee welfare (Tremlett, 2013). The Mondragon Cooperative Group Today The Mondragon Cooperative Corporation (MCC) is a highly complex federation of cooperatives bound together by much more than a formal contract of association. Participation. Remuneration within the cooperatives is egalitarian, with the highest rates payable other than in exceptional circumstances being no greater than six and a half times the lowest. It’s the way of life. Of these 91 are worker cooperatives and 44 are holding companies that are partly or n.d. Understanding Capitalism. Essentially, the workers of Mondragon own their labor as well as the products of their labor. These measures often include the lengthening of the working day as well as pressure by managers to meet lofty goals. MONDRAGON’s Corporate Management Model Our Corporate Management Model (CMM) provides the Corporation’s Cooperatives with guidelines for their everyday business management in a manner so that they are both efficient and consistent with our corporate culture and ownership values. MONDRAGON is Cooperation A cooperative socioeconomic project, with dedicated people working in global companies that are profitable, competitive and enterprising, acknowledged for their human values, social impact and competitiveness. Jon Wang is a sophomore this year at Bucknell University majoring in international relations and minoring in economics with a concentration in sustainability and economic development in Asia. Social Responsibility. He will be studying abroad next fall, participating in IFSA Butler's International Business program in Shanghai, China. https://www.theguardian.com/commentisfree/2012/jun/24/alternative-capitalism-mondragon. Mondragon Cooperative Complex, of which ULGOR was the first of many connected cooperatives, had 21,241 member employees. But the people of Cleveland did not simply accept this situation. In analysis of the current state of the US’ economy, some of the most significant issues facing households are wage solidarity, structure of management, education, and perspectives on capital utilization. https://www.theguardian.com/world/2013/mar/07/mondragon-spains-giant-cooperative. Although this has been believed to help boost output and enhance the overall economic welfare of companies, such practices have harmed overall household wellness, as longer working days essentially indicate less leisure time enjoyed (Wolff, 2012). The Guardian. Worker Cooperative Statute in Massachusetts," 11 NYU Review of Law & Social Change 441 (1982-1983) 7. The current chairman, Jose Maria Aldecoa says, “the co-operative model is absolutely flawed, but it has shown itself the least flawed in a crisis of values and models”. For instance, the largest Mondragon cooperative, FAGOR, is reputed to operate the most automated refrigeration assembly line in Spain. I recently had the opportunity to visit Mondragon, Spain to immerse myself into the world of worker-cooperatives. That way, according to the study, between 40% and 50% of MCC employees are not officially its members. What arose in 1956 as a handful of workers in a disused factory, using hand tools and sheet metal to make oil-fired heating and cooking stoves is today a massive conglomerate of some 260 manufacturing, retail, financial, agricultural, civil engineering and support co-operatives and associated entities, with jobs for 83,800 workers, and annual sales in excess of $US20 billion. Although beneficial for domestic workers, efforts to cultivate better work environments and conditions have lead to increases in capital costs and, ultimately, prices of final goods that are produced by the cooperative. MARKETS WITH ITS OWN MODEL BASED ON PEOPLE AND INTERCOOPERATION. Reflective of the high priority attached by the primary co-operatives to the competitive advantage of intensive research and development is the augmenting of the original Ikerlan research and development support co-operative with thirteen sister bodies, specialising in the needs of particular aspects of manufacturing activity and product development. 4th ed. Innovation. Historically, profit-driven motives have been complementary to longer workdays and, more specifically, lofty output and revenue goals. Write an article and join a growing community of more than 118,600 academics and researchers from 3,811 institutions. ... Mariposa Food Co-op, that looks at the role of cooperatives in building social justice. Mondragon’s core values also entail the promotion of healthier relationships between workers and management. The essentials of the Mondragon story are simple. WE ARE MONDRAGON A PROJECT SPANNING MORE THAN 60 YEARS, COMPETING IN GLOBAL. Therefore, by lowering labor costs, capitalists are able to receive higher profit margins. Mondragon today consists of 102 individual cooperatives united in a federation called the Mondragon Cooperative Corporation, which is also organized as a cooperative. As wages are more equally distributed among the cooperative’s employees, you will seldom see Mondragon employees driving Rolls-Royces. Therefore, by structuring the cooperative in this way, higher productivity and healthier work environments can be achieved. My 1999 PhD thesis and Mondragon book,Jobs of Our Own: Building a Stakeholder Society, set out in detail the origins of the co-operatives, how they work and the outcomes that have been achieved. Fagor, Spain’s largest manufacturer of domestic appliances (and also part of the Mondragon cooperative), has successfully managed down production by 30 to 40% in the face of a precipitous contraction of the consumer durables market. In 2011, the Basque Culinary Center was created and became part of Mondragon University. Number 19. Jon recently completed an externship at Joseph Gunnar LLC., has recently competed in a StartUp Bucknell program sponsored by Deloitte, and is a member of the Bison Investment Club at Bucknell. The Fagor plant has shifted production from white goods and household appliances to machinery. In 2012 Richard D. Wolff, an American professor of economics, hailed the Mondragon set of enterprises, including the good wages it provides for employees, the empowerment of ordinary workers in decision making, and the measure of equality for female workers, as a major success and cited it as a working model of an alternative to the capitalist mode of production. Members can agree to forfeit or postpone entitlements such as one or more of their fourteen per annum pay packets or the payment of interest on their individual capital accounts, or in extreme circumstances authorise individual capital account draw-downs. Even so, the ongoing economic crisis has not left the co-operatives unscathed, and their return to growth has only recently gained momentum. Back in the early 1980s, the former Secretary of State for Education in Harold Wilson’s Labour government, Shirley Williams, alerted me to a remarkable instance of regional economic development through employee empowerment, centred on Mondragon in the Basque region of Spain. For example, non-members employed on a temporary basis can be put off until conditions improve. And supplementary capital can be accessed from centrally held inter-co-operative solidarity funds. In addition, due to the highly technical and specific nature of the cooperatives, the cooperatives are, more or less, shielded from foreign competition, thereby allowing for financial stability. In analyzing workplaces and companies in the US, it is important for scholars to reconsider how jobs can better serve the interests and well-being of employees. With such an imperative enforced on extracting surplus value and profit squeezing, the goal of maximizing revenue has occurred at the expense of household and, more specifically, employee welfare. Mondragon co-operatives now own or joint venture some 114 local and overseas subsidiaries, and are committed to their conversion to employee ownership on a case-by-case basis, consistent with local laws, customs and other cultural and economic considerations. Created by Father Jose Maria in 1956, Mondragon consists of 102 internationally competitive cooperatives that offer employment to over 73,000 employees. In the past, Cleveland was a flourishing industrial city. For the first time since its inception in 1959, Mondragon’s Eroski worker/consumer cooperative — until now Spain’s largest and fastest growing chain of supermarkets, hypermarkets and shopping malls — experienced losses consequent on reduced consumer demand, and only in the current financial year anticipates a return to profitability. In fact, the machines are so sophisticated that they can manufacture four models of refrigerators simultaneously. Some things speak for themselves: "Mondragon Corporacion Cooperativa or the Mondragon Co-operative Corporation (MCC) is a business-based socioeconomic initiative with deep roots in the Basque Country, created for and by people and inspired by the Basic Principles of our Co-operative Experience. And members share at one remove in ownership of a unique system of secondary support co-operatives, from which the primary or frontline co-operatives draw resources including financial services, social insurance, education and training and research and development. OUR AIM IS TO CONSTITUTE A BUSINESS. Oxford University Press. And, the Mondragón Cooperatives have proven it with their highly successful model of worker-owned and democratically run businesses. Today, it consists of 98 cooperatives with more than 80,000 employees in areas of finance, industry, retail, and knowledge … One example is Cleveland, USA. Details and registration for Monday’s free public lecture and Q&A dinner with Mondragon spokesman, Mikel Lezamiz, are at http://www.eventbrite.com.au/event/4470958758/. At the moment, Mondragón has decided to establish a dual corporative system that involves the coexistence of cooperative societies and corporations. Trust among coworkers and supervisors within the Mondragon Cooperative reduces the need for managers to closely monitor employees. Mondragon, by granting workers with the democratic ability and autonomy to choose who supervises their cooperative, is allowing employees the ability to select supervising officials they believe are best suited for their cooperative which, in turn, enhances worker-supervisor relations (Tremlett, 2013). Since its founding in 1956 by Father Jose Maria Arizmendiarrieta, Mondragon has become the world’s largest and most advanced cooperative economy. However, cooperatives, such as Mondragon, consist of significantly compressed wage scales compared to capitalist firms, as members of the cooperative have the ability to vote on the distribution of wages and employee benefits (Wolff, 2012). 2012. Corporación MONDRAGON - Grupo Empresarial Internacional. When looking at the Mondragon model as a whole, one of the major inefficiencies of the model is significant production costs. He is a former federal MP and state MP and Minister. Cooperation: Owners and protagonists. The cooperative from the Basque Region is now a model for companies and governments around the globe. As equal co-owners of their workplaces, members enjoy job security together with individual capital holdings, equal sharing of profits on a proportionate basis and an equal ‘one-member one vote’ say in their governance. MONDRAGON Corporation is the embodiment of the co-operative movement that began in 1956, the year that witnessed the creation of the first industrial cooperative in Mondragón in the province of Gipuzkoa; its business philosophy is contained in its Corporate Values: Cooperation. However, this might just be the answer to some of the problems currently surrounding wage labor in the United States. In order to ensure that this disparity does not exceed tolerable levels, policymakers need to ensure that households can achieve what is necessary for subsistence. The largest worker cooperative in the world, Mondragon Corporation based in the Basque region of Spain, best exemplifies this claim. Through this analysis we can see that the efficiency of capitalism is derived from the exploitation of labor and fierce competition with other firms. The success of Mondragon and other worker cooperatives such as The Co-operative group, Amul Dairy and Suma makes a strong case for worker cooperatives as successful capitalism in a liberal democratic age. 6 known for his love of the Basque language and culture. References “Co-operative Experience.” Mondragon Corporation. The Mondragon Cooperative Group has engaged in a domestic expansion process since the early 1960s and internationally since the 1990s. The Mondragon Cooperative Group, which is the 10th-largest entrepreneurial group in Spain, is one of the most outstanding examples of worker cooperatives in history (Mondragon Corporation, 2013). Bowles, Samuel, Richard Edwards, and Frank Roosevelt. Co-operatives experiencing reduced demand are able to transfer members to ones where it is increasing, without detriment to their rights or entitlements. Specifically, one notable privilege that is bestowed upon Mondragon employees is their ability to choose management. To provide further incentive, employees are also granted a share of corporate earnings (Tremlett, 2013). It consisted of a complex of more than one hundred enterprises and was worth more than $2.6 billion. Winter, 1996. pp. David Ellerman, "The Mondragon Cooperative Movement," Harvard Business School Case Study (1982) 8. The Mondragon System: Cooperation at Work David Morris May 1992 ... model 2will be tested." As a result, all manufacturing processes within the cooperatives require continued human intervention, thereby providing continued, secure employment opportunities for workers. The structure of Mondragon University provides … The Guardian. As populations of skilled labor continues to increase, capitalists increasingly have the power to exploit wages and extract greater margins of surplus value from the fruits of their workers’ labor. As motivational incentives, workers are granted portions of corporate earnings and also have the ability to decide how company surpluses are spent. "The Mondragon Co-operative Federation: A Model for Our Times?". Essentially, by replacing worker satisfaction with profit maximization in the company’s mission statement, Mondragon presents the quintessential example of a company that values the opinions of its workers while also deterring internal wage disparities. For example, capital for expanding existing businesses and establishing new ones is drawn in part from the group’s bank and social insurance funds and workers are skilled to high levels at a university of technology, which is itself structured as a co-operative and attracts students in disciplines such as engineering and metallurgy throughout Spain. Copyright © 2010–2020, The Conversation US, Inc. Jobs of Our Own: Building a Stakeholder Society, unemployment nationally is in excess of 25%, http://www.eventbrite.com.au/event/4470958758/. Values. At Mondragon, cooperative education is framed as teaching people group process, for example, teaching members how to make decisions together. Most of the cooperatives are deemed as economically sustainable, constituting a small, less competitive niche market (Wolff, 2012). Mondragon University is a cooperative university, founded in 1997 and officially recognised under Act 4/1997 of 30 May, albeit comprised of three educational cooperatives (Mondragon Higher Polytechnic School S.Coop, Enpresagintza S.Coop and Teacher Training School S.Coop). Following the global financial crisis in 2008, the Mondragon Cooperative Corporation was used as an example of an alternative to capitalist development. 2013. Mondragon on the other hand has realized the importance of technology in the modern economy. Our CMM has several interlocking elements, summarized below: Noteworthy in particular is their commitment to manufacturing excellence and export growth, through cutting edge technological innovation. Senior Research Fellow (retired 1998), doctoral candidate, University of Divinity. Amidst the fierce increasing competition among workers for employment in the United States’ economy, finding a means of subsistence has become increasingly harder for the population of skilled American households. "Mondragon: Spain's Giant Co-Operative Where Times Are Hard But Few Go Bust". The cooperative group’s Caja Laboral credit union — effectively Spain’s ninth largest bank — is recovering from a 75% reduction in its profitability. Currently, the MCC is comprised of 135 firms. Faced in the aftermath of the global financial crisis with circumstances — where unemployment nationally is in excess of 25% and 53% among young people — Mondragon has demonstrated impressive resilience in helping keep jobless levels in the Basque region to under half the national average. The Mondragon model: how a Basque cooperative defied Spain’s economic crisis ... of intensive research and development is the augmenting of … To ensure that this demise is avoided, the US firms should strive to follow Mondragon and its associated ideology. Mondragon is a highly successful cooperative model with over 60 years of proven success. Another significant aspect of Mondragon is the cooperatives’ mission in helping individuals accomplish personal development as well as foster collective achievement. Wolff, Richard. health care, housing, education). Tremlett, Giles. A model for our times? One may argue that the Mondragon model is promoting socialist economic concepts. The collapse in 2013 of Fagor, Spain’s leading electrical appliances manufacturer, was a powerful symbol of the country’s economic woes, and saw 1,895 members of the Basque Country cooperative lose their jobs.For six decades, Fagor, based in the town of Mondragón, … Cooperation and the cooperative principles are steeped in the culture. Richard Feldman, "An Illustrated Guide to the Internal Capital Account System for Worker-Owned Cooperatives," The ICA Group (1988) 9. Overall, Mondragon presents a unique model of collective ownership and democratic capitalism in an age awash with the opposite. The Mondragon Cooperative Corporation is a business-based, socioeconomic program that is committed to serving the interests of the environment, individual competitive improvement, and customer satisfaction (Tremlett, 2013). His Founded by a Basque Catholic priest, Father Don José María Arizmendiarrieta, in the 1950s, the cooperatives began with one small worker-owned business that made kerosene stoves. The Mondragón Cooperative Corporation is a 35 year old experiment in building a comprehensive cooperative society in which labor plays the primary and dominant role. They took the success of the Mondragón cooperatives as a model and created an urban economic plan with cooperatives and local production a… The Cooperative Group has amassed technical, managerial This has, in turn, affected household ability to afford even necessities, such as adequate health care and nutrition – all of which entrap families in generations of financial hardship. This is not … Faced repeatedly over their 50-year lifespan with cyclical economic downturns, the co-operatives have been able to avail themselves of significant flexibilities. The worker/owners and the managers met to review their options. Here’s how it played out when one of the Mondragón cooperatives fell on hard times.

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