02/18/2010 § 2 Comments

BBC documentary on mondragon from the 1970’s (part 1)

mondragon is spain’s 7th largest corporation, founded in 1955 in the historically oppressed basque region.  today, it encompasses over 260 businesses and employs more than 100,000 people.

mondragon is exciting because its a huge federation of mutually supported worker-owned cooperatives.  they have their own bank, technical university, industrial manufacturing, grocery store chains, advanced research etc.

i think mondragon is the best example of modern democratist development, at least as far as the internal organization of the firm.  each worker owns an equity share in the company, and the board is elected from amongst the workers. compare this to a traditional corporation where outside shareholders are making profit driven decisions that determine the fate of their employees.

through democratically decided policy, the highest paid worker in a mondragon co-op generally cannot earn more than 6-8 times the lowest paid worker. traditional large corporations have wage hierarchies that are over 350 to 1.  this allows for mondragon employees at the bottom of the payscale to make notably more than workers in equivalent positions in other firms.

mondragon also has a social mission, where 10% of their profits are reinvested in the community, 40% are put into research/new equipment etc and the rest is added to the workers’ equity stake in the company.  (new workers-owners initially “buy in” to the co-op for a few thousand dollars that is amortized off their wages).  through the mondragon bank, workers can draw on a low-interest line of credit off their co-op equity to finance key moments like home buying.  when they leave the company, worker-owners cash out their total equity investment (in effect a secondary retirement fund) while ensuring that the coops are only owned only by its current workers.

i’ve been following mondragon over the last 4-5 years and was excited when they announced a new alliance with the united steelworkers to build industrial worker co-ops in the US as a response to mass unemployment.

the cooperative movement in the US is actually much larger than people know about, but mondragon is definitely the international model for a successful, democratically owned and operated company.  of the 260+ mondragon cooperatives, less than a dozen (i think 4?) have failed.  and workers report higher quality of life and enjoy better wages and benefits.  of course, as a firm operating on the free market, mondragon has its limitations and external pressures to cut costs, turn profits etc.  but these decisions are being made by the workers, rather than against them.  for theory types, worker-owned cooperative resolve the marxist critique of exploitation, specifically in that “surplus labour value” is owned by the workers themselves.

most importantly, mondragon shows that worker-ownership and democratic workplaces are not only possible, but highly efficient and sustainable in 2010.

(part 2)


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