Light in Darkness: Mondragon and the Global Economic Meltdown

By Dr. Race Matthews


The current economic crisis will not have been in vain if the world is reminded that grass roots initiative can triumph even over seemingly overwhelming adversity. In the aftermath of the devastation of the Basque region of Spain in the Spanish Civil War, a young priest, Don Jose Maria Arizmendiarrieta, himself only recently released from concentration camp confinement and narrowly spared imminent execution, was sent by his bishop in 1941 to the small steel industry town of Mondragon. It was here over the subsequent decade and a half that he through painstaking pastoral care, grassroots organization, community development, consciousness-raising and technical education laid secure foundations for the great complex of some 260 worker-owned industrial, retail, agricultural, construction, service and support co-operatives and associated entities that the world now knows as the Mondragon Co-operative Corporation.

From a standing start in 1956, the MCC has grown to the point where by mid-2008 it was the seventh largest business group in Spain. Annual sales increased between 2006 and 2007 by 12.4 per cent to some $US20 billion, and overall employment by 24 per cent, from 83,601 to 103,731. Exports accounted for 56.9 per cent of industrial co-operative sales, and were up in value by 8.6 per cent. Mondragon co-operatives now own or joint venture some 114 local and overseas subsidiaries.

Hard-hit by the economic meltdown as like other business the co-operatives now find themselves, their members are tightening their belts in a further exercise of the solidarity that has enabled them to weather previous major downturns, and achieve new heights. For example, in 2008 worker owners at the Fagor appliance co-operative elected to forego the additional four-week’s pay normally due to them over the Christmas period, and have subsequently cut their pay by eight per cent. As the MCC’s Human Resources Director, Mikel Zabala, points out, “We are private companies that work in the same market as everybody else. We are exposed to the same conditions as our competitors”. What then are the attributes to which Mondragon owes its remarkable success?

Industrial Co-operatives

The basic building blocks of the MCC have been its industrial co-operatives. The industrial co-operatives are owned and operated by their workers. The workers share equally in the profits - and, on occasion, losses - of the co-operatives, and have an equal say in their governance. That they are able to do so is due to the unique structures and systems of governance and financial management which the Mondragon co-operatives have developed. In the case of governance, the workers in a co-operative have their say in the first instance through its General Assembly, where the performance of the co-operative is discussed and its policies determined. The workers also elect a Governing Council, which conducts the affairs of the co-operative between Assembly meetings, and an Audit Committee - referred to by some as the "Watchdog Committee" - which monitors the co-operative's financial operations and its compliance with its formally established policies and procedures. Only members of the co-operative - all of them workers - are eligible to stand, and voting is on a one member/ one vote basis.

Successful candidates hold office for a four-year term, but continue to be paid their normal salaries and receive no compensation for their Council responsibilities. Council meetings are normally held before the working-day begins, and members then resume their normal workplace duties. The Council appoints a Manager for the co-operative on a four-year contract, which may be renewed subject to a mandatory review of his performance by the Council. The Manager may attend Council meetings in an advisory capacity, but is not a member and has no vote. There is a separate Management Council where the top executives and officers of the co-operative liase with one another on a monthly basis. The separation of the Management Council from the Governing Council reflects the clear distinction which the co-operatives draw between the governance function which is properly the prerogative of their members and the carrying on of operations for which management is responsible.

A final body - the Social Council - is elected annually, by and from shop-floor groups of from twenty to thirty workers. Members of the Social Council hold office for a two-year terms, and may offer themselves for re-election. The Council is a unique structure, with a highly distinctive contribution to the well-being of the co-operative. Whereas the Governing Council represents the members of a co-operative primarily in their capacity as its co-owners, the Social Council represents them primarily as workers. The Council's character in this respect reflects in part the fact that the co-operatives were established during a period when trade unions had been outlawed by the Franco government. Franco's negation of workers' rights was unacceptable to Arizmendiarrieta and his associates. In effect, the Social Council has had built into it the union function of enabling members to monitor, question and - if necessary - oppose the policies of the Governing Council and management. The Social Council is required to give advice to the Governing Council on industrial and personnel issues - for example, working hours, the evaluation and classification of jobs, and occupational health and safety - which the Governing Council must consider before its decisions on them are finalised. In recent years, some co-operatives have mandated their Social Councils to bargain formally for members with their Governing Councils.

The earnings of a Mondragon co-operative are the property of its members. In place of wages, members are paid monthly advances - referred to as anticipos - against the income their co-operative expects to receive. Two further advances required by Spanish custom are made available at Christmas and for the summer holiday period. The co-operatives observe a "principle of external solidarity", under which no advance should exceed by more than a narrow margin the wages paid for comparable work by nearby private sector businesses. The level of each member's advance is determined in the first instance by a labour value rating which the Social Council of the co-operative assigns to the job. Overall, incomes are kept as equal as possible. The highest advances a co-operative pays its members cannot exceed the lowest by more than eight to one. By 1990, members had had an estimated increase in their purchasing power since 1956 of around 250%.

A further share of the co-operative's earnings is credited to the members as capital. The capital structure has been designed to produce the greatest possible consciousness on the part of the each member that he is a stake-holder in the co-operative. The identification is achieved initially by requiring as a condition of entry to the co-operative that each member should make a direct personal contribution to its capital. There is an entry fee which currently stands at about $US12,500. Payment can be made on the basis of a 25% initial contribution, followed by monthly instalments. The co-operative then establishes an individual capital account for the member, to which 70% of his initial contribution is credited. The capital accounts earn interest at an agreed rate, and are credited each year with - say - 40% of the co-operative's surplus, apportioned among members on the basis of their salary grades and the hours worked. Members may draw on the interest accumulated in their accounts, or use the accounts as collateral for personal loans, but the principal cannot normally be touched until they resign or retire. Payouts from the capital accounts of members currently retiring in Mondragon - over and above their superannuation entitlements - are in some instances in excess of $US100,000. A further fifty percent of the co-operative's surplus goes to its permanent reserves, while Spanish law requires 10% to be set aside for social and educational purposes. A co-operative which incurs a loss may require its members to re-invest the extra Christmas or summer holiday advances which they would otherwise have taken in cash. Alternatively, they can forego the interest which would otherwise have been paid on their capital accounts. In extreme cases, the value of capital accounts can be written down or even written off.

Worker/Consumer Co-operatives

Mondragon's initial focus on industrial co-operatives was expanded by the creation in 1968 of its Eroski worker/consumer co-operative. Reflecting the overall Mondragon approach, Eroski - unlike traditional consumer co-operatives - is not limited to consumer members. Instead, its membership falls into two categories, namely, the workers who operate its outlets and the consumers who shop at them. The Governing Council has equal numbers of worker and consumer members, with the position of chairman always being held by a consumer. A further difference is that Eroski does not pay the traditional consumer co-operative dividend, but instead concentrates on low prices, healthy and environmentally-friendly products and consumer education and advocacy.

Eroski is today the most rapidly expanding component of the MCC, with some 2,441 retail outlets, ranging in size from petrol stations and small franchise stores to hyper-markets and shopping malls, in locations that now extend beyond Spain to France and Andorra. It is a key participant in the Spanish Confederation of Consumer Co-operatives, speaks for the Confederation in its dealings with government and the media and is also active in the affairs of the Consumer Advisory Council in Brussels.

Mondragon Mark I

The industrial, worker/consumer and service co-operatives at Mondragon have benefited from a unique system of second-order or support co-operatives and groups. Just as the primary co-operatives were formed in response to a pressing need on the part of workers for jobs - and of the Basque region more generally for economic development - so the secondary co-operatives have been a response to the need of the primary co-operatives to co-ordinate their activities and access capital and support services such as social insurance, education and training and research and development. The co-ordination and support structures and procedures - as distinct from the primary or frontline co-operatives - have undergone major changes. A broad familiarity with the arrangements in their original form - with what was in effect Mondragon Mark I - is needed in order to properly understand the nature and purpose of the Mondragon Mark II which in key respects has replaced them.

The Caja Laboral Credit Union

The core and nerve centre of what is now the MCC was originally the Caja. Arizmendiarrieta realised at a very early stage in the life of the group that expanding the existing co-operatives and creating new ones would require reliable access to capital on affordable terms. "A co-operative", he wrote, "must not condemn itself to the sole alternative of self-financing". As has been seen, his insight resulted in 1959 in the establishment of the Caja in order to mobilise capital for the co-operatives from the local and regional communities. The slogan used by the Caja in the early stages of its development was "savings or suitcases", indicating that local savings were necessary in order for there to be local jobs. The Caja also provided a means for the co-operatives to manage the capital held in their permanent reserves and individual capital accounts, so enabling them to retain within the group all of their surpluses other than the 10% allocated by law to community projects. The effect overall was to free the co-operatives from the capital constraints which otherwise would so drastically have curtailed their development. The Caja enabled the co-operatives to borrow at interest rates which were 3% to 4% below those of conventional financial intermediaries.

From functioning purely as a source of capital for the co-operatives, the Caja then moved on to become the mechanism through which their association with one another was formalised and their activities integrated. The individual co-operatives were linked to the Caja through a Contract of Association which set out in detail their respective obligations and entitlements. For example, it was a requirement of the Contract of Association that an affiliated co-operative should adhere to an agreed system of wage levels and ratios. Returns to members on their capital contributions should be at a fixed rate on interest. The co-operative should invest in the Caja and the surplus cash and liquid assets of the co-operative should be held for it on deposit by the Caja. The co-operative's deposits with the Caja should also include all holdings on behalf of its members, such as pension funds, social security funds, and workers' share capital. The co-operative should adopt a five year budget and report on it to the Caja at monthly intervals. The financial affairs of the co-operative should be subject to audit by the Caja at intervals of no more than four years.

The Caja lastly had a key role in developing new co-operatives, advising and otherwise helping out co-operatives which were experiencing difficulties and, more generally, providing an integrated mix of services for co-operatives in all stages of their development. These functions of the Caja were performed by its Empresarial Division. The Division consisted of seven departments - Advice and Consultation; Studies; Agricultural and Food Promotion; Industrial Promotion; Intervention; Auditing and Information; and Urban Planning and Building - with around 120 worker-members.

Where new co-operatives were concerned, a group of workers who were interested in establishing a new venture had first to find a product or service for which they believed there was a market, along with a manager. They were then in a position where an approach could be made to the Empresarial Division. If the Division believed that the proposal was sound, it assigned an adviser - sometimes known as the "godfather" - to the group. The group in turn registered as a co-operative and accepted a loan to cover a salary for the manager while pre-feasibility and feasibility studies were conducted. The studies usually lasted between eighteen months and two years. In the course of that period, the group's preferred product might be discarded in favour of an alternative drawn from the ideas bank which the Division maintained from its own market research. Attention then focused on factors such as factory design, production processes, marketing strategies and export opportunities. The completed study was presented to the Operations Committee of the Banking Division of the Caja, which determined whether the venture should be approved. Where a co-operative proceeded, the Empresarial Division godfather usually went on working with its manager until the break-even point was reached. The co-operative and the Division then remained in touch through the monthly return of operating and financial information the co-operative agreed to provide as a condition of its Contract of Association. The information was stored in a computerised data bank, so enabling the Division to at any time call up a comprehensive account of the status of the co-operative and the trends currently being experienced.

Where an established co-operative experienced difficulties, the Empresarial Division had the capacity to help out through the professional services of its Intervention Department. The data base compiled from the monthly returns of the affiliated co-operatives enabled the Department to have emerging problems brought to its attention, in some cases earlier even than the managers of the co-operative directly involved. An intervenor was then appointed, who assessed the situation of the co-operative in terms of three categories of risk. A summary of the categories by two American scholars reads in part:

1. High Risk. The life of the co-operative is threatened. The intervenor reviews every aspect of operations and in effect takes over management on a full-time basis until a reorganisation plan is approved or the co-operative must be closed. Interest payments on outstanding loans are suspended until the plan is in place.

2. Medium Risk. Bankrupcy is not imminent but could occur in the near future. In such cases the intervenor spends at least one day each week at the co-operative during the reorganisation but does not take over the management of the firm. Interest on loans is reduced temporarily by - say - half, but returns to the full rate as the reorganisation progresses.

3. Warning or alert level. Here the threat of failure is not imminent but current trends are negative, suggesting a need for remedial action that may be beyond the capacity of the co-operative. No interest rate concessions are offered, as it is anticipated that the intervention will make the interest burden manageable.

Once the seriousness of the situation has been determined, the intervenor has the task of working out with the co-operative a new business and re-organisation plan.

The plan might require changes in the marketing strategies, manufacturing methods or product mix of the co-operative. Other changes might involve the organisational structure of the co-operative or the appointees currently occupying its key management positions. Members might be required to accept reductions in their anticipos or contribute additional capital. Where in extreme cases a reduction in the workforce was necessary, it fell to the Social Council to identify in conjunction with management those members who were to be retained in their current positions, those who were to move to new positions and those who were required to leave, normally by transferring to another co-operative whose business was expanding. Once agreement on the plan had been reached, the co-operative was responsible for securing approval of it from the Financial Division of the Caja. The Financial Division was required to determine whether interest on the co-operative's loans should be suspended or reduced or in what other ways - if any - the co-operative should be assisted.

The mutuality of interest between the Caja and the primary co-operatives which are linked with it through their Contracts of Association - together with the credit union's functions in regard to the co-operatives of capital mobilisation and management, integration and support - were entrenched in its structure and governance. Forty-two percent of the delegates to the General Assembly of the Caja are from its workers and 58% from the affilated co-operatives. Seven seats on the Board are for the affiliated co-operatives, four for workers in the Caja and one for a representative of wider sectorial groupings of co-operatives. Rather than the Caja's workers having allocated to them a 40% share of its annual surplus as is the case in the affiliated co-operatives, their capital accounts are credited with the average of the amounts credited to members of the affiliated co-operative. The Caja has succeeded so spectacularly as to have now become effectively the tenth largest bank in Spain. Its assets are now so large that loans to the co-operatives now account for no more than 25% of its overall lending - or 10% of its capital - with the balance available for regional economic development and other investment projects, often in partnership with the Basque government. Its example triumphantly vindicates Arizmendiarrieta's faith in the capacity of working people to provide for themselves through co-operation and economic solidarity the jobs for which they can no longer rely on others.


Lagun-Aro Social Insurance Co-operative

A second support co-operative - the Lagun-Aro social insurance co-operative - began as a division of the Caja. Being co-owners of the businesses where they work instead of employees meant at the time that members of the Mondragon co-operatives were ineligible for health and retirement benefits under the Spanish social security system. What was originally the social insurance division of the Caja was established to remedy the deficiency, by providing a fund to which the co-operatives could subscribe through pay-roll deductions and from which benefits for their members could be drawn. In 1967, the division became independent of the Caja as Lagun-Aro, with a Governing Council which included representatives of the co-operatives affiliated with it. The functions and service-mix of the co-operative have varied over time, reflecting changing needs and government policies. The health care clinic Lagun-Aro conducted at Mondragon for many years was taken over by the Basque government in 1987, as a model for other towns in the province. Rather than administering pensions as previously on an in-house basis, Lagun-aro now contracts out the function to a fund - Mutualidad de Autonomos. - conducted by the state. At the same time, a general insurance subsidiary - Seguros Lagun Aro - and a life insurance subsidiary - Seguros Lagun Aro Vida - have been established, as have subsidiaries for leasing and consumer finance - Aroleasing and Arofinance - and Lagun-Aro Intercoop (Max Centre), a subsidiary for the development of shopping malls in conjunction with the Eroski worker/consumer co-operatives.

Hezibide Elkartea Education and Training Co-operative

A third support group - the Hezibide Elkartea - stemmed from the establishment by Arizmendiarrieta of the training school for apprentices in Mondragon in 1943 and of the League of Education and Culture - a body to promote and co-ordinate education on all levels for all children and adults - in 1948. The apprentice school and the League played a key part in the consciousness-raising through which the establishment of the first of the industrial co-operatives - Ulgor - was instigated. The Hezibide Elkartea has come to cater for programs ranging from day-care to advanced technical and management skilling to adult education. The apprentice school is now a university-level polytechnical college - the Eskola Politeknikoa Jose Maria Arizmendiarrietra. Over and above its mainstream teaching programs, the Hezibide Elkartea brings together specialist bodies such as the Saiolan centre for new business activities education, training and development; the Goeir centre for the co-ordination and promotion of overseas postgraduate engineering and technical studies; the Eteo school of business management; the Iraunkor centre for continuing education and in-company training; the Ahizke-CIM centre for language studies; and the Otalora Centre for co-operative research, education and management training.

Students at the Eskola Politeknikoa have a co-operative of their own - Actividad Laboral Erscolar Cooperativa or, for short, Alecoop - that enables them to support themselves financially during their courses, while at the same time obtaining a hands-on experience of how co-operatives work. A further network of educational co-operatives offers a bi-lingual education in the Basque and Spanish languages at the pre-school, primary and lower secondary levels. Funds for the schools are drawn in part for the social allocations of the Caja and its affiliated industrial co-operatives. Their General Assemblies include staff, parent, student and affiliate members. Faced in 1993 with demands by the Basque government that schools receiving government funds should join the government system, 80% of the schooling co-operatives voted for rejecting the government's money and retaining their independence.

Ikerlan Research and Development Co-operative

A fourth support co-operative - the Ikerlan research and development co-operative - reflects the high priority which the Mondragon co-operatives have attached to keeping abreast of modern technology. This pattern, like so much else about Mondragon, was shaped by Arizmendiarrieta, through his initial choice of technical education as the means of bringing the community together and instigating change, and his insistence throughout that by mastering technology it would be possible to bring about higher forms of human and social development. "Our people", he argued, "require of our men the development of the means to scale the heights of scientific knowledge, which are the bases of progress". Arizmendiarrieta's advice caused research and development to be pursued vigorously from the start by individual co-operatives and the Mondragon polytechnical college, but this allowed insufficient scope for inter-disciplinary problem-solving and cross-fertilisation within the overall scientific and technical workforce. Ikerlan was hived-off from the college in 1977 as a separate support co-operative, in order to overcome these shortcomings, and further strengthen the competitiveness of the industrial co-operatives in the export markets where their future was seen to lie. As in other support co-operatives, the General Assembly consists of the worker/members of the co-operative and representatives of the affiliated primary co-operatives.

An extensive staff of highly qualified engineers and technicians enables Ikerlan to provide contract research and development services for co-operatives affiliated with the MCC, private sector businesses other than those in direct competition with the co-operatives and agencies of the Basque government. Ikerlan is also an active member of the European Association of Contracted Research Organisations, and offers competitive research fellowships for visiting scientists and engineers under industry re-vitalisation programs funded by the Basque government. A further support co-operative - Ideko - specialises in machine tools research and development.

Co-operative Groups

Over and above its unique support co-operatives, Mondragon was reinforced by a structure of groups or divisions which linked individual co-operatives together, both geographically on the basis of their proximity to one another, and by similarity of the sectoral activities in which they engage. Geographically, there were twelve regional groups of co-operatives. The structure stemmed from the rapid growth of the original household appliances co-operative, Ulgor, in the early nineteen-sixties. Faced with a co-operative which was outstripping by far the limits within which the advantages of growth could be achieved without succumbing to the bureaucratic rigidities, Arizmendiarrieta and his associates developed a policy of spinning-off those sections where a level of efficiency was achieved such as would enable them to function successfully as independent entities.

In this model, the components manufactured by the new co-operatives had an assured market in Ulgor, but could also be sold to other buyers. In order to balance the interests of the new co-operative with those remaining behind in the parent body - and to avoid loading the new co-operative with costs such as the establishment of marketing and other specialist divisions of its own - a co-operative group, ULARCO, was formed from Ulgor itself, the Arrasate co-operative which supplied machine tools for Ulgor and the Copreci co-operative which supplied Ulgor with parts for its gas stoves and heaters. A fourth member - Ederlan - resulted from a private sector foundry being taken over and combined with the foundry at Ulgor. Fagor Electrotechnica became the fifth member when it was spun-off by the three foundation co-operatives, as an independent co-operative manufacturing electronic components and equipment.

ULARCO adopted a structure similar to that of the individual co-operatives. Its General Assembly comprised the members of the governing councils, management councils and audit committees of the affiliated co-operatives, and was responsible for determining the policies of the group, making decisions about admissions to - and exclusions from - the group, and approving all accounts and budgets. There was also a Governing Council, made up of one member from each of the affiliated co-operatives, a General Management Committee chosen by the Governing Council and a Central Social Council comprising one representative from each of the Social Councils of the affiliates. Similar structures were adopted by the other regional groups.

The groups enabled key planning and co-ordinating functions to be undertaken in the interests of their affiliates. From 30% to 100% of the surpluses earned - or losses incurred - by individual co-operatives were pooled through their regional groups, so providing further protection for the co-operatives against the problems to which short-term market fluctuations might otherwise expose them. The groups facilitated the exchange of members between co-operatives whose markets were expanding and those experiencing contractions. Dialogue between the Governing Councils and Central Social Councils of the groups - reflecting in part discussion within and between the affiliated co-operatives - in some instances played a major part in enabling the co-operatives to implement the re-positioning and re-structuring forced on them by Spain's entry into the European Community and the economic stringencies of the nineteen-eighties and nineteen-nineties.

Mondragon Mark II

What has been effectively the replacement of Mondragon Mark I by Mondragon Mark II between 1987 and 1991 reflects the capacity of the co-operatives to re-invent themselves in the light of new challenges and changing circumstances. A series of congresses of the co-operatives since 1987 - drawing in part on recommendations from the Caja adopted by a pre-constituente congress in 1984 - has radically altered the original structure, so that the co-operatives now relate to one another in new ways. The governing philosophy of the co-operatives was codified by the 1987 Congress in an explicit ten-point declaration known as "The Basic Principles of the Mondragon Experience". The ten points are respectively open admission, democratic organisation, sovereignty of labour, the instrumental and subordinate character of capital, participatory management, payment solidarity, interco-operation, social transformation, universality and education. The declaration reads in part that admission to a Mondragon co-operative is available without discrimination on religious, political or ethical grounds or due to gender, subject only to applicants agreeing to be be bound by the principles and proving that they are professionally capable of carrying out such jobs as may be available. Members participate in the governance of the co-operative on a "one member, one vote" basis, irrespective of their positions, seniority, hours worked or capital contributions. The co-operative recognises the primacy of labour in its organisation and the distribution of the wealth created; rejects the contracting of workers who are not admitted to membership; and seeks to provide work for all who are in need of it.

Capital is seen as being an instrument, subordinate to labour and subject to a maximum rate of return. The democratic character of the co-operative implies a progressive extension of opportunities for involvement by its members in business management, through mechanisms and channels for participation, freedom of information, consultation, implementation of social and professional training plans for members and the establishment of internal promotion as the basic means of filling positions of higher professional responsibility. Solidarity should be observed externally, so that rates for equal work are roughly the same within the co-operative as in the wider community. There should be co-operation by co-operatives, both within and between sectoral groups, and by the MCC with the Basque and international co-operative movements. The MCC should contribute to economic and social reconstruction and to the creation of a Basque society which is more free, just and expressive of solidarity; act in solidarity with all those working for economic democracy in the sphere of the social economy and championing the objectives of peace, justice and development which are essential features of international co-operativism; and provide education and training in co-operation for its members, management bodies and in particular the younger generation of members on whom its future depends. The Basic Principles broadly reflect - and in key aspects improve upon - those of the International Co-operative Alliance.

The 1987 Congress also established a special fund - the Interco-operative Solidarity Fund (Fiso) - to help out co-operatives in economic difficulties with resources over and above those available from the Caja, and so avoid job losses. A further fund - the Fund for Education and Inter-co-operative Development (FEPI) - was established by the 1989 Congress, to assist participation by smaller co-operatives in larger and longer-range projects, with funds drawn from the social contributions of those which are larger or better-off. The 1991 Congress endorsed recommendations from the Governing Council in 1989 for the move to the sectoral groups and the establishment of the MCC. The Caja has surrendered its central co-ordinating functions, and is now a conventional co-operative financial intermediary, lending largely to private sector businesses. Co-ordination and strategic planning are now the responsibility of the MCC. The MCC is a tripartite structure, made up at its base of three sectoral groups - the Financial Group, the Industrial Group and the Distribution Goods Group. The Industrial Group in turn has a further eight sub-groups, namely Capital Goods I, Capital Goods II, Automotive Components, Domestic Appliance Components, Industrial Components and Services, Construction, and Household Goods.

The General Assembly of each co-operative affiliated with a group sends a delegate to a Group Assembly. The Group also has a General Council made up of the chairperson of each co-operative together a further member from each co-operative's Board, and a Management Committee consisting of the managers of the co-operatives. The General Council selects a member of the Management Council as the Group CEO. The aim is to have a common business strategy for each sector, including the adoption of common identifiers such as brand names, trademarks and logos. The groups have also had devolved to them the intervention function which was previously performed by the Empresarial Division of the Caja. Other function of the Empresarial Division have been assumed by the Lankide Suztaketa I and Lankide Sustaketa II management and engineering consultancy co-operatives, the Saiolan business activities development co-operative and an MCC Services Co-operative within the corporate headquarters of the MCC.

The groups are responsible for the management of workers whose co-operatives cease to have positions for them. Workers so affected are normally relocated - and where necessary re-trained - for positions in co-operatives whose businesses are expanding. While the objective of protecting employment has largely been achieved, the groups have not necessarily in all cases been thanked for their efforts. Transfers are seen to have generated frustration, rejection and ill-will among these affected by them. "The transferee", in the view of a major study, "feels himself/herself to have been 'managed' rather than consulted; feels less a co-operative member than the rest, as if he/she were a second-class citizen".

Members of the co-operatives affiliated with the MCC elect delegates to a Mondragon Co-operative Congress. The Congress meets at intervals of not more than two years, to consider the philosophy, policies and operation of the MCC. Two further bodies - the Standing Committee and General Council of the Congress - look after the affairs of the Congress between its meetings. The Standing Committee consists of the president, vice-president and secretary of the Congress, together with representatives from each of co-operative groups and secondary support co-operatives. The members of the Council are the heads of the co-operative groups and support co-operatives. Congress decisions "in general will have the character of recommendations to the co-operatives represented in the Congress". In order for a decision to be binding on the co-operatives, "it must be proposed by the Governing Council, be presented by the Standing Committee and be approved by the full Congress by an absolute majority".

Conclusion

In the face of the world’s economic vicissitudes, Mondragon has been steadfast in its adherence to the fundamental principles with which its founders endowed it, and continues to enlarge the scope of their application. Eroski currently is adopting new measures to enfranchise the 35,000 of its 50,000 workers who are not currently worker members. The co-operatives have entered into a solemn commitment to extend worker ownership measures to their local and overseas subsidiaries on a case by case basis, consistent with their differing cultural, legal and financial circumstances.

In a passage written a few days before his death in 1976. Arizmendiarrieta wrote in part:

Hand in hand, of one mind, renewed, united in work, through work, in our small land we shall create a more human environment for everyone and we shall improve this land. We shall include villages and towns in our new equality; the people and everything else: "Ever forward". Nobody shall be slave or master to anyone, everyone shall simply work for the benefit of everyone else, and we shall have to behave differently in the way we work. This shall be our human and progressive union - a union which can be created by the people.

It is not necessary for us to suppose that the Mondragon model can be transplanted in its entirety to other countries. What is required of us is rather that we should take from Arizmendiarrieta the message of hope his words hold out to us, study such aspects of the Mondragon experience as are relevant to our needs and circumstances and open our minds to what it can teach. Arizmendiarrieta summarised the Mondragon approach as "We build the road as we travel". The question in these straitened times is whether we will make for ourselves the future of our choice - whether we will take back control over our lives and destinies by the co-operative means whose availability Mondragon so plainly demonstrates - or by default allow others to choose the future for us.


The Hon Dr Race Mathews is a former academic, federal MP, state MP and minister, municipal councillor and chief of staff to Australian Labor Party Leaders in the federal and state parliaments. A new and updated US edition of his 1999 Mondragon book ‘Jobs of Our Own: Building a Stakeholder Society’ is available on order from The Distributist Review Press or Amazon.com.