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13 January 2007

VISIT TO MONDRAGÓN

On the morning of January 3, 2007, when many people were still on holidays, Mikel Lezamiz, Director of Cooperative Dissemination, was waiting for us. Four of us had driven together eight hours through the fog to the city of Mondragón in the Basque Region of northern Spain. Mikel is like a living cooperative encyclopedia – ask him anything, and he remembers the facts.

This is the largest and most successful cooperative network in the world. Begun in the 1950s, today more than 50,000 workers are employed in 120 cooperatives, all of them part of the Mondragón Cooperative Corporation (MCC).

The Mondragón Cooperative Experience has ten basic principles, three more than the International Cooperative Alliance (ICA):

1. Open admission
2. Democratic organization
3. Sovereignity of labor
4. Instrumental and subordinate character of capital
5. Participatory management
6. Payment solidarity
7. Intercooperation
8. Social transformation
9. Universality
10. Education

Payment solidarity is not one of ICA’s stated goals. Mikel explained that the annual starting salary today in every co-op is €13,000-14,000 (approximately US$17,000). A one-to-three wage differential in worker salaries lasted more than 20 years. However in order to avoid losing their top management to private companies, they have raised the highest salaries to 4.5 times more than the minimum in most of the cooperatives, in the Caja Laboral Bank to 8 times more, and the Chief Executive Officer of the Mondragón Cooperative Corporation gets 9 times more, or €126,000 (US$164,000) per year.

All new workers in the Basque Country start with a six to twelve month trial period. If they demonstrate that they are good workers and accept the cooperative system, they can become a member by investing about one year's salary – they can get a bank loan to pay this over 36 months at 3.7% interest. But the benefits of being a cooperative member are impressive. For €30 per month, all members and their families get full health coverage. For €15 per month, members can send their children to the best private school, which is also run as a cooperative. There is subsidized housing, and, most important, they have job security for life! If for any reason their cooperative needs to layoff workers, they will be transferred to another cooperative. Of the 120 cooperatives, only 12 of them lost money last year, and a total of 110 workers had to be relocated to other co-ops.

Education, research and innovation have always been essential to MCC’s growth, and much profits are invested every year into the MCC University (with 4000 students), seven other cooperative schools, and 11 research and development cooperatives. The sophistication and high technology of the hundreds of products produced in cooperative factories make them very competitive throughout Spain and the world, earning the corporation €11 billion in total sales.

Each cooperative is responsible for its own marketing. Most of the cooperatives are industrial or in services – there are only four agricultural cooperatives, and some of some of those are very small. In the same way that the Mondragon Cooperative Corporation is not actively promoting cooperativism to local farmers, they also do not promote it in MCC factories and companies in the other regions of Spain or in 15 other countries; however the MCC board has finally passed a resolution to begin cooperative dissemination throughout their global network of companies. Women comprise 42% of the total cooperative members of Mondragón, but sadly they are elected to only 15% of management positions.

Every cooperative has a general assembly of all members which decides the general policies and strategies of the cooperative and appoints and removes by secret vote the members of its Governing Council and the Account Auditors. The Governing Council in turn appoints the managing director and other directors.

I asked whether they have had problems with dishonesty or corruption. Mikel said, “Each cooperative has both internal and external audits. In addition there is strong social control, meaning our Basque culture and the cooperative spirit that has developed for 50 years encourages group trust and solidarity. So far,” he said, knocking on wood, “there have only been three cases to my knowledge of members stealing from a cooperative. None of them were top managers, all of them were discovered relatively quickly, and all three were dismissed by the general assembly of their respective cooperatives.”

Last year 18 activists from the Brazilian Landless Peoples Movement trained for two months in Mondragon to learn how to start and manage co-ops effectively. This year a similar one-month course will begin in March; the Prout Research Institute is trying to convince SUNACOOP and other Venezuelan organizations to send participants.

We are committed to continuing our study of the very successful Mondragon Cooperative Experience, and we carried many books and materials when we left. Afterwards Mikel sent an email in which he wrote:

“I have been reading on the Internet about Prout, and I have been surprised by its clear and pragmatic ideas of the socio-economic development of communities. I believe that a lot of similarities exist between the philosophy of our Mondragón Cooperative Experience and that of Prout: for example, the importance of economic decentralization (in MCC each cooperative is independent and it maintains its own autonomy), participatory democracy, the balance between the social and the economic, etc. In general, I agree with all that appears in the Prout Study Guide.

“Allow me to make the following reflection. Perhaps the biggest difference that exists between you and us is that we have always avoided being too belligerent with the nearby economic systems (capitalist and communist) to avoid arousing suspicions and to make our own road, being pragmatic in the search for balance between the economic efficiency of our companies and the social development of the region. Our main mission is undoubtedly to generate wealth in the society. Another significant difference (allow me to say it) could be that our cooperativism is more directed at the level of labor. Outside of the company we are not too sensitive with spiritual life (although we do strive for social transformation toward a more fair, equal and united society). I believe that you are more spiritual than us and your philosophy of life and your practice of it is very consistent with the values that you propagate. I would say that you demonstrate cooperativism 24 hours a day, while we do so only during the eight working hours! Of course in our personal and family lives we also try to continue with solidarity and cooperative values, but without being very perfectionist.

“In conclusion I hope that we meet again and that in way or another it improves this world. With sincere cooperative greetings,
“Mikel Lezamiz, Director of Cooperative Diffusion MCC”

14 comments:

August Torngren Wartin said...

I have a question:

Do they have individual wages in Mondragon? I mean do people with the same working tasks or profession earn the same?

/August, Sweden

Dada Maheshvarananda said...

Answer: Yes, the workers in each cooperative receive individual wages. Yet with each year of experience, one's wage slowly increases.

August Torngren Wartin said...

Another question:

''However in order to avoid losing their top management to private companies, they have raised the highest salaries to 4.5 times more than the minimum in most of the cooperatives, in the Caja Laboral Bank to 8 times more, and the Chief Executive Officer of the Mondragón Cooperative Corporation gets 9 times more, or €126,000 (US$164,000) per year.''

Are the differences higher now than when you wrote this, or the same?

August Torngren Wartin said...

Thanks for your fast answer!

So, the individual wage only depends on how long time you've been a cooperative member and the kind of proffesion/working tasks you have? I doesn't depend on work effort, skills/''talent'' or your relationship with your manager etc, like in normal capitalist firms?

/August

August Torngren Wartin said...

Thanks for your fast answer!

So, the individual wage only depends on how long time you've been a cooperative member and the kind of proffesion/working tasks you have? It doesn't depend on work effort, skills/''talent'' or your relationship with the manager etc, like in normal capitalist firms?

/August

ATW said...

Btw: A very nice blog!

Joan said...

''All new workers in the Basque Country start with a six to twelve month trial period. If they demonstrate that they are good workers and accept the cooperative system, they can become a member by investing about one year's salary – they can get a bank loan to pay this over 36 months at 3.7% interest.''

Do they get the bank loan fron Caja Laboral or from the indiviual cooperative?

Dada Maheshvarananda said...

Joan, the loan comes from the Caja Laboral cooperative bank.

Mikel told us a funny true story about that. Shortly after the first co-op was started by the five engineers who had trained under Father José María Arizmendiarrieta, he started urging them to start a cooperative bank. But they said they weren't interested. Then the priest went to Madrid for a few days, and when he returned, he brought the incorporation papers for the Caja Laboral. The good priest had FORGED their signatures and gotten the application approved. And to this day, the grand success of the Mondragón Cooperative Movement is credited in large part to the financial resources that the bank provides.

Rosie said...

Maybe it's to late to comment on this blog post, but I have a question regarding the following:

''All new workers in the Basque Country start with a six to twelve month trial period. If they demonstrate that they are good workers and accept the cooperative system, they can become a member by investing about one year's salary – they can get a bank loan to pay this over 36 months at 3.7% interest.''

If a worker wants to leave a Mondragon cooperative, do the individual cooperative have to pay him/her back this money?

Dada Maheshvarananda said...

Rosie,

No, the investment is non-refundable. However, if any Mondragon cooperative goes bankrupt, the Mondragon Cooperative Corporation guarantees employment in another cooperative for every worker. So each member is guaranteed work for life.

rosie said...

Thanks a lot for your answer!

Am I allowed to ask two more questions? I would be very happy if you could answer!

Can a cooperative fire workers, and if so, how do they do it? Do you know who makes the decisions if someone has to get fired (if someone's breaking the rules of the cooperative for example)?

In for example Argentina, according to what I know (correct me if I'm wrong), the cooperative legislation says that everyone working in a cooperative have the right to become member after a six-month trial period. In the Basque Country, such a law doesn't exist (again according to what I've read so correct me if I'm wrong), and that's why the cooperatives of Mondragon can hire people without making them members (like Eroski did until last year when everyone became members). Does every worker have the right to become member in the individual cooperatives of Mondragon (is there some kind of rule in Mondragon giving the workers the right to become members) or is that a decision of every individual cooperative?

Thanks again lot for you answer!

/Rosie

georg said...

hey dada, do individual cooperatives of mondragon compete with eachother?

Dada Maheshvarananda said...

Dear Rosie and Georg,

There is a one-year trial period before a worker is approved to join a cooperative in Mondragón. Yes, it is possible to fire a cooperative member, but that is a complicated process involving the collective membership with appeals procedures.

No cooperative in Mondragón is allowed to compete with any other cooperative. The Mondragón Cooperative Corporation is very strict about that.

georg said...

Cheers.

One more thing: Why do you think Mondragon coops invest so much in the future? It seems to me that some workers cooperatives that I've visited in for example Argentina are unwilling to reinvest profits in the their company because the workers often prefer to take out all the profits as wages instead of for example investing some of the profits in more marketing etc. Is that something you have experienced in workers-managed firms? If so, how do you think we can solve this problem and how did they solve it in Mondragon?