Mondragon

The Miracle & The Contradiction

​

The Basque Country

An autonomous region in northern Spain, home to 2.1 million people, as well as 3,000 worker cooperatives. Basque is the primary language, and has no known relations (it is an isolate). Independence and cooperation are part of the core values of their culture.

​

The Mondragon Cooperative Corporation

Headquartered in Mondragon, Spain, the Mondragon Cooperative Corporation (MCC) is the largest worker-owned company in the world, currently comprised of 98 worker cooperatives, and 143 non-cooperative subsidiaries. The name means “Mount of the Dragon” in Spanish.

MCC and the Basque Country

• MCC is the 10th largest company in Spain
• 74,000 employees in Europe; 14,000 outside
• 260 entities, 98 of which are co-ops
• Heavy industrial production, as well as knowledge and retail (services)
• Does roughly €12 Billion a year in business

​

• The Basque Country was once the poorest and most exploited region in Spain. Today, it is the most economically successful.

​

• Additionally, it enjoys the highest standard of living in the country, as well as the lowest unemployment, and has the lowest inequality.

​

MCC describes itself as an “entrepreneurial socio-economic project inspired by cooperative principles” such as:

• 1 Member, 1 Vote Democratic Structure
• Wage Solidarity (1 to 6 lowest to highest)
• Participatory Ownership & Management
• Solidarity in Equity and job relocation

Basic Principles of MCC

• Open admission and neutrality
• Democratic organization
• Sovereignty of labor
• Instrumental and subordinate nature of capital
• Participatory management

​

• Wage solidarity
• Intercooperation
• Social transformation
• Universality
• Education

​

​

Cooperatives Within Mondragon

Mondragon: A History

Padre Arizmendi

In 1941, Father José María Arizmendiarrieta was sent to the town of Mondragon. At this time, it was very poor. Father Arizmendi tried to convince Unión Cerrajera (the largest employer) to allow non-workers into its vocational school. He did not succeed.

​

In 1943, he founded the Escuela Profesional, which trained locals in engineering, among other subjects. In 1956, he convinced 5 students to start the first Mondragon cooperative - ULGOR.

​

In 1959, Arizmendi and the workers of ULGOR created Caja Laboral, a bank/entrepreneurial cooperative (now called Laboral Kutxa).

The same year, they created Lagun Aro, a welfare and health insurance cooperative for Mondragon members. Finally, in 1964 the co-ops launched the very first cooperative “group” Ularco-Fagor.

​

Nearly 100 additional cooperatives have sprung up since, including Eroski: a grocery and retail chain with 10,000 worker-owners.

Management Structure

The MCC Philosophy on Power

Co-op Member Governance Structure

MCC Governance Structure

Rules to Enter Mondragon as a Co-op

Restructuring results (from gross profits):

• Within the sectoral groups (>15%-<40%)
• Investment fund 10%
• Education/Research fund 2%
• Fund for compensation in case of losses 2%

Profit distribution:

• 10% to the Fund of Education
• 60% Fund of Reserve of Co-op
• 30% Returns to workers
• Solidarity in compensation (1:6)

​

Equity:

• Equity interest to owners < 7.5%, in cash
• Initial contribution (≈15.000 euros)

​

Business Structure & Employment:

• Relocation among cooperatives
• Reporting of data to MCC Headquarters
• No internal competition
• Open, voluntary membership

​

Member Benefits

• A say in your workplace (a proposal with a 10% signature is voted on)
• Management training (general council and social councils)
• Excellent salaries for most rank and file workers
• Pension (40% government, 60% MCC - 80% your former salaries)
• Insurance through Lagun Aro
• Easy access to Mortgage, collateral and loans via Laboral Kutxa
• Equity: 7.5% max per year, usually 100,000-200,000 Euro at retirement
• Job security: protection against bankruptcy and market instability
• Less inequality in the society where you reside.

​

A Cooperative Culture

Cooperatives are deeply rooted in Basque culture.

​

There is a folk tale regarding the dragon that gave the Mondragon its name; supposedly the villagers were terrorized, but banded together to remove it. There were no heroes or knights to save them: they succeeded through mutual aid.

Co-op associations of a Mondragon citizen:

• Employee (at a Mondragon co-op or other)
• Bank (Laboral Kuxta, a worker/consumer co-op)
• Grocery (Eroski, a worker/consumer co-op)
• School (Ikastola, a worker/parent co-op)
• Higher Ed (1 of 8 Mondragon Universities)
• A club (a “sociedad” or co-op bar)
• Housing (flat in a co-op building)

Contradictions

Fagor

In 2013, Fagor Electrodomésticos, the largest industrial cooperative, declared bankruptcy. All of its 1,900 workers faced job loss, as well as a total loss of their shared equity. In response, this is what MCC did:

• Move workers to co-ops with similar job types
• Retrain workers, and then move them into jobs at other co-ops
• Provide early retirement for workers
• Put workers on a cycle of paid work and paid leave

Now, only 250 workers remain on paid work/leave, the rest have jobs. The workers lost all of their equity, however. Some of these workers are suing MCC.

Subsidiaries

MCC has 143 subsidiaries all around the world. The vast majority of these are not cooperatives. How did this happen?

• Cooperative culture within these countries is very different, or non-existent
• In some countries (China) there was a negative association with co-ops
• Political and legal models for cooperation are largely missing
• Individual companies voted against becoming a cooperative
• Workers were not interested in the long-term, often leaving after a year
• The Basque cultural value of non-aggression is strong
• Economic realities (see: the Brazil case)

Personal Notes

The majority of my interviews were with citizens in Mondragon and Onati, a sister city (largely dominated by the Ulma co-op). There were differences amongst them, to be sure - but I think it is possible to make a few standout observations. Within the regions where cooperatives thrive, a few things were immediately obvious:

• The stark absence of poverty, blight and homelessness
• There were no displays of great wealth: mansions, fancy cars, etc
• The profound safety with which people roamed the streets
• Everyone seemed solidly middle-class (within a spectrum)

​

​

​

Can this happen here?

It is quite seductive to consider what lessons MCC can teach us, and how we can deploy that wisdom.

• What is the “special sauce” that created the conditions presented in the Basque Country?
• What were the keys to their survival?
• What unique circumstances exist(ed) there, that are difficult to export?

Key Factors Unique to the Basque Country

• An extant “cooperative culture”
• A homogeneous society (racial, religious)
• A culture of independence and autonomy
• Strong ethnic ties (language and culture)
• Cooperation amongst co-ops (Banking, Insurance)
• Tradition of Christian Humanism
• A selfless, humble leader (Arizmendiarrieta)
• Good financial management, holding the worker high

eskerrik asko!

​

​

​

​

(thank you)