The Mondragon cooperatives - in Spain

Whole Earth Review, Spring, 1989 by Jaques Kaswan, Ruth Kaswan

COOPERATIVES have been around for about about 150 years, ever since the industrial

revolution began to urbanize the western world. Craftspeople set up common warehouses to compete more effectively with manufactured goods, and workers subject to miserable working conditions and the whims of employers formed unions not only to fight for better conditions, but often also to set up their own stores and workshops, like the famous Pioneers of Rochdale. In fact, much of the labor union movement in the United States saw the establishment of a cooperative commonwealth as a major goal until the 1890s, when most unions decided to fight instead for the best deal they could get within the employer-employee system.

Still, cooperatives have continued and sometimes flourished in many parts of the world, operating according to social and economic principles that differ fundamentally from those of the mainstream. A key social principle of cooperatives is that those involved and affected by a business, usually workers and consumers, make the important decisions, so that democracy is brought to the workplace. By contrast, important decisions in private or state capitalist systems are made by those who control investment capital. A basic cooperative economic principle is that ownership and rights to profit are earned by work or other active partici- pation in an enterprise. In capitalistic systems, those who provide the capital own the business and get the profits. Capital is necessary for any enterprise, but while capitalists rent labor and earn profits, cooperatives rent capital and the members earn profits through their participation. The cooperative movement has grown a great deal during the last few decades in western Europe, where about 60 million people are participating in some form of voluntary cooperative - worker, housing, consumer or other types. Where cooperatives are most successful, they are part of associations that provide technical, financial, political and social support to their member organizations, as in France, Italy and Germany.

The most spectacularly successful cooperative system anywhere evolved over the last 30 years in Mondragon, a small provincial Basque town in northern Spain. Though their achievements are closely related to local conditions, the performance of these cooperatives is instructive for others because the challenges they face, like balancing democratic decision-making with productive efficiency, or more mundane problems like financing, planning, or relating principles to practice, are similar to the challenges faced by cooperatives everywhere.

What works for them may not work for us, but just as they borrow ideas from others, so we might try to learn from them.

Today, Mondragon is a town of about 25,000 people. Two narrow, winding mountain roads connect it to larger cities and to major highways and railroads. In the middle ages it was known for the fine steel of its swords, and it has remained a small industrial center all along. Economically devastated by the Spanish civil war in the late 1930s, and demoralized by dictatorship, Mondragon had about 8,000 inhabitants in the early 1940s, with only one small factory as the major employer - an unlikely candidate for extensive industrial development, let alone the creation of a system that embodied ideals subversive of the prevailing power.

What happened in Mondragon is revolutionary. We usually think of revolutions as violent upheavals that destroy the old order and, often, many people along with it. But the revolution that came to Mondragon was peaceful and constructive. It was inspired by a pragmatic, gentle, visionary priest. The young Padre Jose Maria Arizmendiarrieta (usually shortened to Arizmendi) was sent to

Mondragon in 1941 to educate young people. He passionately believed in social justice and was convinced that it could be achieved only if workers owned and operated their workplaces democratically, in solidarity with the larger community. Shortly after he arrived, he proposed that "the ideal of the youth of Mondragon should be to make this town the model of the industrial towns of Guipuzcoa [province]." But, he emphasized, "the economic revolution will be moral, or it will not be at all. The moral revolution will be economic, or it will not be at all. "

Arizmendi spent his first 15 years in Mondragon preaching his dream wherever he could, and also saw to it that his young students received the best possible technical education. In 1956, five of them, graduate engineers by then, bought a small stove factory with money borrowed from people in the community. Now, thirty years later, the "Mondragon Experiment," as it is often called, is a comprehensive socio-economic system, a major factor in the regional economy. Its 173 member cooperatives, spread over four Basque provinces, include almost 20,000 workers. They range in size from as few as eight to 2,000 workers in individual enterprises, with an average of 100 per cooperative. About half of the cooperatives are industrial enterprises, including Spain's largest manufacturer of stoves and refrigerators, one of Spain's major machine tool producers, and a wide variety of industrial, electronic and state-of-the-art technological enterprises. Other member enterprises cover virtually every field, with agricultural, construction, housing, educational, consumer and service cooperatives. The latter include Spain's fastest-growing bank, with about one billion dollars in assets, one of the largest chains of consumer stores in Spain, a social insurance and health service cooperative, and a technological research center. In 1985 these enterprises - not counting the bank - transacted over a billion dollars' worth of business. That may not be much by the standards of international conglomerates, but it is very big by local standards. And independent economic analyses show that Mondragon's cooperatives are among the most efficient, productive and profitable enterprises in Spain, if not in Europe. Spain's economic recession has slowed their growth in the 1980s, but even so, while there was over 20 per- cent unemployment in the region, they added 366 new jobs in 1985.