The Workers' Paradise

October 13, 2007

Mondragon and Globalization, Basque Country and Ghosts

Filed under: Management — Tags: , — John McNamara @ 2:38 pm

Today’s schedule: Group Discussion in the Morning. We then left Hotel Sandika and the mountains to have lunch and discussion with Anjel Herrassti in Donostia. We returned to Mondragon and checked in at the Mondragon Hotel.

The first part of the discussion was a review of why Mondragon has succeeded as a cooperative business: Sustainability, worker participation (sovereignty), education, integration, diversification, innovation and flexibility. How are these terms used in investor-controlled companies? How do we talk about cooperative businesses outside of the dominant paradigm?

As part of this we discussed the pillars or keys to success:

•Control and use of capital
•Redefinition of labor/management relations
•Management education
•cooperative development
•lack of “silo” mentality—horizontal and vertical integration
•Intercooperative fund mechanism.

All of these are the key to Mondragon’s success. It is hard to imagine that they would be the same cooperative without a commitment to these pillars.

Of course, Mondragon, like the rest of the cooperative world, is an island in a capitalist ocean. The problems of capitalism can’t help but creep into our cooperatives because we are part of society and societal norms get determined through a capitalist lens (for now). As a result, the issues of racism and paternalism play a role even in a cooperative structure. This is the primary focus of the Kismar ethnography and certainly Mondragon’s history has raised questions as to their ability to ascend the dominant paradigm of capitalism and create a new socio-economic order. Mondragon University teaches the neo-classical economics of the Chicago and Harvard business schools and, as was apparent by the discussion at Otalora, they have not developed a management training model based on cooperative economics.

We spent the remainder of this time preparing for the afternoon session with Anjel Herrasti as professor as the University of the Basque County.

Anjel wrote his dissertation on the internationalization of cooperatives and teaches business economics. He is working on developing a model for a multi-national cooperative that would be a democratic multi-national enterprise.

He gave a brief history of the globalized economy from the early 1990’s to the present. Mondragon was forced to follow suit as Multi-national moved jobs overseas and demanded that suppliers follow. Mondragon has responded defensively in an effort to keep jobs in Basque. As part of this, they have also kept their knowledge base in Mondragon, which the real power of any organization. Anjel presented some key criticisms of Mondragon:

  • Foreign workers see no difference between the cooperative and a corporation.
  • Mondragon has been promising change for 12 years with a “wait and see” approach.
  • They use a traditional top-down control model (basque managers).
  • Cooperative managers are resistant to creating expectations of ownership
  • Fagor bought Polish companies and cut jobs by 50% (to keep jobs in Basque); it is expected to do something similar with the purchase of the French Brandt Corp.
  • Fagor fired union organizers in Turkey and have created “yellow” or company unions elsewhere—a similar method of other MNEs.
  • On the postive side, at Irizer, workers are the richest workers in the world. The foreign workers get a 20% profit share and have a participatory model; however, the participation stops at governance. They are the birds in the gilded cage.

Finally, Anjel present his five-step or five level plan for converting foreign plants into worker cooperatives. It is a very solid, strong plan that allows for the necessary time to make the necessary changes to the system and the culture for conversion. It allows for the conversion in a way that as workers become educated about cooperatives, become champions of the cooperative model, and earn enough share of the profits to participate economically, that the plant can convert into a Mondragon cooperative with a minimum of stress to the organization.

I remember last semester when I proposed my idea for a multi-national to the class. I was essentially scoffed at by the group (in a polite way). I think that it is very hard for people to see cooperatives as being “big” and still being democratic. Part of that might be that we see the failure of “big government” and “big corporations” and translate that to the cooperative model which seems to thrive on the sense of community. However, the sense of community that we in the west think about it tends to be based on falsehood. As politicians and corporations peddle the myth of neighborhoods and family as the basic unit of society, Mondragon (and Arizmendiaretta) know that the real unit of society has actually become the corporation. Being “big” is only bad if it fails to live up to the principles and core values of the cooperative. I found a kindred spirit in Anjel and really appreciate his insight on how a global world of cooperation can work. He does see how democracy can be kept alive in a large, multi-national organization. It has been my argument that if we cooperators cannot figure this out (and insist on staying small regional or local entities) that the movement will wither and eventually succumb to the Wal-Marts, Tesco’s and Toyota’s of the world.

The rest of the evening was spent enjoying the old part of Donostia. Becky and I chose to return later (after the study trip) for a fuller afternoon of exploration. It is an amazing city, with wonderful food.

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