Mondragon – A Local Living Economy Model For Oz?
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January 7, 2008Local living economies are fascinating and now Alan Greig writes to us about a Spanish example that has operated in and around the town of Mondragon in northern Spain since the 1960s – one of the largest enterprise conglomerates in the European Union, owned entirely by its 75,000 employees in the 200+ enterprises involved, and all controlled on a one member one vote basis.
The local bank and the supermarkets are owned by the community, the TAFE system by the teachers and students, and much of the housing is owned by housing cooperatives. Mondragon is also now one of the wealthiest regions in Spain, with the wealth almost entirely evenly distributed.
One of the MCC (Mondragon Cooperative Consortium) ‘rules’ is that no employee can get paid more than six times the lowest paid employee – and it works ! Check this against the outrageous sums that CEOs get paid in even the non performing public companies in Australia – dozens of times more than their lowest paid employees.
Various Views
Alan says there was always a feeling that it wouldn’t last. However, not only has it lasted, it has got bigger and better and – this is the key point for ‘local economy’ change management – it has actually managed to ‘transition the generations’, with the new generation of owners now coming through being just as committed as the founders.
Many will say that Australia is ‘too culturally different’ for the business model to succeed here but Alan says this is nonsense as the business model is replicable here under existing laws, and several companies have adopted ‘common ownership’ constitutions along Mondragon lines in the past.
The Key To Long Term Survival
The regionally based support system that Mondragon has adopted for its local economy, including locally owned and directed finance systems and system wide business consultancy, R&D, skills training and employment rules seems to be the key.
Australia’s foremost researcher on the Mondragon phenomenon is former Victorian Parliamentarian (ALP), Race Mathews. He says:
“The Reasons For Success Are:
- Every permanent worker is an equal co-owner of the co-operative where he is employed, with an equal say on a one-member-one-vote basis in the governance of the co-operative and an equal proportionate share in its profits or, on occasion, losses.
- The key distributist objective of a well-judged distribution of property has been achieved in Mondragon. Members of the co-operatives have property of four kinds:
(i) ownership of their jobs
(ii) direct personal ownership of the balances held for them in individual capital accounts, which earn additional income for them through interest to which they have regular access
(iii) a shared ownership of the assets of their co–operatives, such as buildings, equipment and reserves, for whose governance and management they are directly responsible
(iv) a further shared ownership — albeit less direct — of the secondary support co–operatives in which the primary co–operatives are major stakeholders.”
Nowhere else in the world has ownership of property been established on so well–distributed, diverse and entrenched a basis. In the words of a recent CEO of the MCC, Javier Mongelos,
“The workers who own these co-operatives know their future depends on making profits”.”
History
Mondragon started in 1956 with its first small worker cooperative making cookers and heaters providing work for the local unemployed. The big growth period was in the 60s, after the setting up of the Mondragon Community Bank (The Caja Laboral) in 1959.
Wikipedia says in the 1980s the various companies responded to pressures of globalisation by joining together as the MCC which is now the Basque Country’s largest corporation, the seventh largest in Spain. It is considered the world’s largest worker co-operative. In 2006 the MCC contributed 3.8% towards the total GDP of the Basque Country.
MCC now has important manufacturing and engineering interests, as well as retail, financial and educational arms. Its supermarket arm, Eroski, is the largest Spanish-owned retail food chain and the third largest retail group in Spain.
The Basque government and the tax authorities of the Basque provinces have special measures to help co-operatives. The Deba county around Mondragón has kept a very high employment rate even during Basque industrial crisis.
Organization
The sovereign body is the 650-member Co-operative Congress, its delegates elected from across the individual co-operatives. The annual general assembly elects a governing council which has day-to-day management responsibility and appoints senior staff. For each individual business, there is also a workplace council, the elected President of which assists the manager with the running of the business on behalf of the workers.
2 Comments
Dr Mathews discusses the benefits of worker co-operatives in more detail in his book, ‘Jobs Of Our Own’. It’s a good read for anyone interested in socially sustainable workplaces.
Perhaps the most important advantage of worker co-ops is that the profit generated by an enterprise goes back to the people who helped create the value.
The award winning author, Kim Stanley Robinson commented on this in an interview in 2005. Speaking about alternatives to traditional capitalism, he said;
“You can’t even dispense with the markets because there’s so many things we need to trade and balance but if every company was a co-operative owned by the employees, if employees hired management the way management hires labour right now and if the profit of the work of a company was distributed amongst its employees and if this was universally true …. why not? I read some statistics recently that boggled my mind: the average American worker creates a surplus value of about $66,000 a year, the average American’s salary is about $25,000 a year and the amount the average American worker pays in taxes is about $10,000 a year so you have literally millions of Americans complaining about their government and the taxes they pay, living on the very edge, especially with terrible health care possibilities and always on the edge of disaster financially, and their children, you know, uncertain and sometimes even hungry, and $66,000 a year, which is a hefty amount of money, being siphoned off by the shareholders which they never know about. And it’s a giant siphon going up to people who don’t really need more than what they’ve got.”
http://www.albedo1.com/html/kim_s_robinson.html
Cheers
.
Hi all, a co-operative way of living is Ok provided you are 100% dedicated to commitment.
The majority of OZ inhabitants have the option of working for a corporation or small business owner or going it alone and becoming a limited company which is fine if the going continues to be good and you have resources that are favourable to your line of work.
The problem arises when the ebb and flow of the national economy seeps down to the small business owner and costs are not able to be nullified.
This becomes apparent with the economic downturn when the labour force employed is not fully productive and costs more to keep than it produces.
The shedding of labour cures this problem and passes the problem onto the Government body that caters for unemployment when work becomes scarce.
In a Democratic run society the government is appointed on a four yearly basis to cater for the management of the economy, and it is the gamble of the work force to see which sector will produce the most returns for their chosen work choice.
It is very true that the majority of a worker’s earning capacity is available to the person for whom they are employed, by very nature of the terms of employment etc.
It is also very true that if the surplus wage earning capacity were to be paid directly to the wage earner, then as soon as the employer had a down turn in earning capacity resulting in lower payout to the worker, the worker would depart to pastures new without thinking for the longer term.
It is also a fact that the initial setting up of a work facility is borne by the shareholders, who stand to lose if the work place fails to produce a profit, and so are justified in reaping the rewards of their gamble, whereas the worker is a here today and gone tomorrow commodity.
A co-operative is only really viable if you are totally independent of national and international occurences, a state within a state so to say, and it is ludicrous to say that a state can tolerate the independence that a state within a state would like to enjoy.
This is tantamount to enjoying the security of numbers with the advanages of a closed and very secular club facility.
A co-operative will only be viable when the conditions for monetary gain by way of employment are practically non existent, such as might occur when the oil becomes too costly to refine and alternative energy sources do not meet the manufacturing requirements to ensure profit from investment.
The big problem of today is the huge population burden that will have to be supported on an increasing energy cost structure.
Ian.