The Workers' Paradise A Discussion of Workers Cooperatives and Building the New Economy

January 2, 2017

A New Year with Feathers

Filed under: Year of the Co-op — Tags: , , , , , , — John McNamara @ 3:04 pm

The coming year brings, as always, hope. Given the rhetoric of the last year, that might seem a rather odd statement, but even if you feel that the abundance of hope has diminished, it still exists.

Indeed, in some of the darkest hours, hope has moved people through cooperation to create great things. On the craggy shores of Newfoundland in a place where in the 1920’s “the Great Depression” simply meant a normal life. Father Jimmy Tompkins and Moses Coady worked with the people to create economic opportunity and power. In a small industrial basque town under the iron heel of the fascist Falange Party and its Caudillo, Franco, a Jesuit priest, José María Arizmendiarietta, spared execution founded a small school for the children of workers which would eventually give rise to the much-lauded Mondragon Cooperative Corporation. In 1843, when Capitalism was truly unfettered with children laboring 12 hour days and any resistance met with imprisonment or forced relocation to Australia, workers and socialist came together in a small textile mill town to form the first modern-era cooperative store, Rochdale Society of Pioneers, known today simply as The Co-operative.

Hope is the Thing with Feathers

by Emily Dickinson

Hope is the thing with feathers
That perches in the soul,
And sings the tune without the words,
And never stops at all,

And sweetest in the gale is heard;
And sore must be the storm
That could abash the little bird
That kept so many warm.

I’ve heard it in the chillest land
And on the strangest sea;
Yet, never, in extremity,
It asked a crumb of me.

Hope, of course, does little without action. As we venture into the future, we must have hope, but also resilience and the willingness to act.

Rochdale, Antigonish, and Mondragon came into being through the hard work of their creators and members. They did it often in spite of the lack of political power held the participants.

So, too, we can take our worker co-op movement in the US and Canada and everywhere to new levels. Keeping our hopes alive through our individual efforts to support and build co-operatives along with raising the awareness of co-operatives must be our mission for the coming years. We need to truly make this the Cooperative Decade.

I am planning on returning to a weekly post on this site (along with urging you as a co-operative activist to join in posting your thoughts–just sign up and send me an email that you want to be a contributor). I also plan on writing each of my elected officials from my council person in Olympia to the President pertaining to the role of co-ops in his/her district, why these models are important, and how they can further support their constituents to engage in mutual self-help. I will post the letters here (and I will post yours if you send them to me with permission to post).

It is a bit fitting that the Chinese New Year (beginning with the New Moon on January 28th) is the Year of the Rooster. While there are many interpretations, let’s simply use the phrase, “the early bird gets the worm”–hard work and attention to principles will bring reward. This bird, a thing with feathers, is the symbol of the French Revolution whose motto remains “liberty, equality, fraternity” (the latter of which I interpret as the gender neutral “solidarity”. The values of the cooperative economic movement match the political values of people who seek freedom. They match the values of the Declaration of Independence.

Our movement has never depended on elected or appointed politicians–our hope lies within us. Let’s make 2017 the new Year of the Co-operative.

October 5, 2015

The People’s Ride: A Co-op Response to Uber

Filed under: Management,Movement,Worker Rights — Tags: , , , , — John McNamara @ 11:23 am

I haven’t been a fan of the “sharing economy” primairlity because it really isn’t about sharing, it is about extraction. Uber, Lyft, AirBnB, TaskRabbit aren’t sharing anything, they are providing a technological interface for people to do menial jobs and extracting a huge percentage for the service.

In the case of cab drivers, Uber and Lyft disrupt a market that is closed and generally united against drivers and the passengers. The modern day taxi market is designed to maximize wealth for the owner of the company without regard for the people who generate the wealth or the public who need transportation. Uber and Lyft disrupt this by allowing basically anyone to be a cab driver and open up the market to make getting a ride as easy as it seems on tv (reality check: on TV the cab shows up instantly, but in reality it takes 15-30 minutes to hail a cab in New York City and up to 45 minutes during rush hour).

The thing is, Uber and Lyft aren’t changing the model. They have just found a way to beat the monopoly owners in most communities. They offer a high tech solution to ordering cabs, but this has already been offered in a number of cities (San Francisco and Madison are two that come to the top of my head). Drivers and consumers are still preyed upon and have their wealth extracted. One of the reasons that attempts by exisitng taxicab owners to defeat Uber’s growth have failed is that  most taxicab companies have already sacrficied any consumer or driver loyalty to their personal profit. The unknown devil of Uber is, at worst, going to be the same as the known devil of ABC Cab, but people might be able to get a cab quicker.

In general, Uber succeeds because it offers immediacy and convenience in an industry that has refused to modernize or focus on customer service and loyalty (in fact, most cab companies have moved away from hiring drivers as employees and made the driver the customer through charging them for the priviledge of driving which has removed the owner of the company from the people who use the company’s services–it was good for consistent profits, but horrible for customer service and loyalty from drivers and consumers).

In Grand Rapids, Michigan, a new model is underway. Since Uber has spent millions of dollars to re-write laws to exempt their model from existing taxi ordinances, they created a new market for drivers through a “Transportation Network Company”. This new model is basically the old cab owner model created by cab owners to distance themsleves from any responsiblity to their drivers or customers; however, now that it also distances the owners of the TNC form local laws, it offers the ability for drivers to form new driver-owned and customer-focused cooperatives.

Matthew Bair is leading the effort. They are working for a better work environment for the drivers. In there GoFund Me Campaign he writes:

“I am a substitute teacher in Grand Rapids, Michigan.  I believe in creating a new world for tomorrow’s youth.  Change needs to happen everywhere.  My whole higher education involved figuring out what that would look like.  People’s Ride is about creating a new economy and a better future.  It is about creating a different kind of job.  One where people are able to use both their brain and muscle together and be wholly human.  
People’s Ride is a worker co-op where those who drive also own and control the business.  If a work week is 5 days, a driver picks up people and collects fares 4 days while on the 5th sit in meetings to make decisions about the company.      
The co-op community here in Grand Rapids is growing.  Housing, live/ work co-ops, land, food, beer, bicycling, honey bee, ride sharing co-ops are working together in solidarity to bring about an alternative.     
People’s Ride has been up and running.  We have been following the Cooperative Development Institute’s guide to starting cooperatives.  As in the spirit of the cooperative movement, we collaborate and learn from other ride sharing cooperatives from around the nation.  We have the potential to grow very fast.  Right now we are focusing on putting in place a solid infrastructure.
We are raising money to pay for a car and to have a grand opening.  Any amount makes a difference!  Big or small, $10, $50, $100, $500, you name it.  A contribution of $50 makes you a consumer member and gives you 10% off, $100 gives you 10 rides for half off, $200 gives you 20 rides, $500 gives you 50 rides.   Help build the co-op community in Grand Rapids.  
People who do crowdfunding say that their success is owed to how many people are reached.  So please, after you make a contribution, send this to all the friends you can think of.  “

TNC’s may allow cab co-ops to thrive where previously they were shut out by shenanigans of the owners limiting the number of cabs in a community through medallions or out-right leglislation. TNC’s break open the oligopolies that exist in most cities. While I still dislike Uber and Lyft (and think that they need more regulation to protect workers and consumers), I can see the value of the TNC model in a modern technological age. I am hoping that the Grand Rapids project works and spreads to other cities. Ideally, with a collaboration between drivers in cooprativ TNC and cooperativ tech companies, a national or even international model of a collectivized TNC could take hold and propser benefitting drivers and customers alike.



January 28, 2013

The Farmer’s Union, Cooperation, and the Environment

Filed under: Imagine2012,Movement — Tags: , , — John McNamara @ 7:00 am

Over the weekend, I had a really wonderful opportunity. I was asked to moderate a panel for the Wisconsin Farmer’s Union 82nd Annual Conference entitled, “Cooperatives – Empowering the Rural Economy… Again.” I also spoke to the Youth Conference presenting the Mondragon Cooperative model. It gave me that chance to also listen to William Nelson of CHS Foundation speak.

This weekend just happened to fall right after I represented my cooperative hosting the Sustainable Business Network quarterly breakfast in Madison with guest speaker from Gundersen Lutheran Health Systems.

The Wisconsin Farmer’s Union, part of the National Farmer’s Union, promotes the slogan “legislation, education, cooperation” and they really do mean all three things. In addition to helping family farmers work for legislation to protect their family farm and promote sustainable farming practices, the Union also operates a Youth movement with and Kamp Kenwood, a cooperative owned and operated summer camp that teaches the principles of co-operatives while also providing a fun summer camp for members.

While it was fun to present Mondragon to a group of people who hadn’t yet heard of the Basque cooperative society, it is more important to share the take-away mirrored Bill Nelson’s message. The next 40 years will likely see a dramatic change in the way that the world produces farmers as the Ogallala Aquifer dries up.With a projected world population of nine billion or greater and significantly less water and land to produce food, the challenge to today’s young farmers will be incredible. It was my point that the challenge to the founders of Mondragon was also great, but the the role of the cooperative allowed them to focus on their values, work together, and find solutions instead of amassing profit. It will be the co-operatives that figure out the solution to climate change, because our focus is on sustainability  not simply amassing profit. Money doesn’t do any good sitting in a bank vault. Like manure, it only works if we spread it around and prevent run-off.

The panel brought three great stories of how cooperatives create sustainability. Fifth Season was the newest of the three coops presented. This is a relatively new model of food coop in the US. Rather than GM dominated consumer coops that cater to the wealthy, it is a multi-stakeholder co-operative that offers membership to each of the six different segments of the food chain: producer, producer groups, processors, distributers, buyers, and workers. Everybody is at the table. They aren’t operating retail outlets, however, most of their buyers have institutional needs, so it is a bit different than the foodie focused consumer coops, but it also caters to working people who can’t really afford shopping at boutique food stores and still want good food. It is a really neat experiment in sustainability and local development in the rural area of Wisconsin. Organic Valley also presented with a focus on how they are working to become even more sustainable  The organic producer coop  has been a leader in sunflower oil technology and has found the means to develop it for either food-grade or bio-fuel. In addition  they have been working the Gundersen Lutheran (which is also a member of Fifth Season) to install two ginormous wind turbines. The energy production gets shared between the two organizations, but Organic Valley’s representatives said it covers almost 90% of their electrical needs! Finally, Cooperative Care’s  Tracy Dudzinski spoke on the important work of providing home care and health care in the rural areas and the powerful nature of cooperatives to transform workers from people who work to live into fully actualized human beings as well as the growing need for home care as the baby boomers age into a large community of single people with limited personal support networks.

The last bit brings me back to my Mondragon talk and one of the things that I wish that I had mentioned at the panel. During the discussion of  the three panelists, I was reminded of a series of short stories by Hamlin Garland entitled Main Travelled Roads . He wrote about the farmers of the Coulee Country of Southeast Wisconsin. How they were preyed upon by eastern bankers, crooked salesmen, and a host of other issues that helped found the Grange and ultimately the Progressive Movement and the Wisconsin Farmer’s Union. I wondered how he would see the farmers of Wisconsin today (I wasn’t sure how many people in the audience got my reference, but I was presuming that everyone who grew up in Wisconsin and is a farmer has read this book–it is a great collection of short stories). More importantly, I wish that I would have amplified Tracy’s comments recognizing how cooperatives, especially worker cooperatives, function to change people. Arizmendiaretta, the spiritual founder of Mondragon, always believed that worker ownership would transform workers into strong and moral community leaders. It has been my experience to see that effect over and over again. It is one of the reasons that I believe that it will be the cooperative movement that manages to deal with climate change. It will take real leadership to build a new sustainable economy. Not leadership in the form of politicians, but leadership in the form of making tough decisions that provide the most benefit to the most people even if that means some short term sacrifice. Politicians are a dime-a-dozen these days, but few are leaders.

It was my pleasure to meet some of the future leaders of Wisconsin in Eau Claire this weekend. Leaders who understand the important role of education and cooperation and will help lead to better legislation. Leaders who are committed to dealing with three of the most important issues of our day: food security, energy and climate change, and an aging population and health care. At the very least, rural Wisconsin seems to be in good hands.

January 7, 2013

Imagine 2012 and Beyond

Filed under: Imagine2012 — Tags: , , , , — John McNamara @ 12:56 pm
In October, economists and cooperative thinkers from around the world met in Quebec to bridge the gap between the disciplines. The conference, Imagine2012, International Conference on Cooperative Economics featured a number of presenters such as Neva Goodwin, Thomas Homer-Dixon, Stefano Zamagni and Vera Zamagni. Maxnfred Max-Neef was unable to attend and Elinor Ostrum was scheduled but passed away prior to the conference. The next several posts will be from my notes on the event. Starting with the opening press conference.
This event is particularly important in the last quarter of the International Year of the Cooperatives. It allows us to spotlight our enterprises. My notes, even with quotes, should be seen as paraphrasing.
Colin Dodd, President Saint Mary’s University
Colin Dodd spoke of some of the origins for the idea of the conference which began through Saint Mary’s unique master’s program in cooperative management. He noted that Tom Webb had proposed a program based on a course at Saint Francis Xavier (home to Moses Coady and the Antigonish Movement). Further, Dodd’s own background was growing up in the mining community of Northern England near Manchester home to the birthplace of cooperative and trade unions, which had, by Pres. Dodd’s day created a “cradle-to-grave” cooperative movement.
The master’s program was build from the ground up, not simply a copy of an MBA. It reflects the essentials of the cooperative movement and complements the goals of the Sobey School of Business and SMU to be a global university. It creates a sustainable global economic model based on democracy.
Monique Leroux, CEO and President, Desjardins
Cooperatives are diffierent, our goals are difference, our long term vision is different. So few universities and business schools recognize coops. I hope that more universities will follow St. Mary’s lead. We need more innovation, sustainable growth, and more businesses to invest and think long-term. Cooperatives are not an alternative to businesses, what make them distinctive is that they base themseves on the needs of people, not profit.
Why are coops more likely to be studied in sociology courses instead of business courses?
Dame Pauline Green, President, International Cooperative Alliance
We are delighted to be part of this event. We need fresh thinking about how to go forward in building the cooperative movement. This event is a kickstart to where we want to go in the future. The IYC has been an opportunity to reach out to the cooperative movement.  For the first time in 170 years, our movement has worked together in a cohesive manner.
We need to keep on working to make sure that our model is a key part of the global economy. A billion people in the world are not “idealistic”.
Tom Webb, organizer of Imagine 2012
Tom commented on the differences in approaching cooperative management and understanding cooperative economics:
Want we need to do is to account how we use our resources to meet our goals and meet human needs. How do we market to human needs. We don’t teach human resources, we teach personnel management. We realized that we could not teach neoclassical economics to coop managers.
In neoclassical economics, needs get trumped by wants. income inequality is of no concern (as opposed to economies of scale and minimal markets).
What have we gotten, more wealth than ever even why we cannot afford education and healthcare. 100 million people work in coops.
Has the economy become an angry god to whom we must sacrifice: children, the elderly, the environment, the poor, healthcare, education
“The economy is a complex set of relationships that people use to provide thmsevles with the goods and services needed to provide themselves with a meaningful life.”
Economics is the sutdy of how effective the economy is at meting human need in a manner that allowes people to have a meaningful life.
Stefano Zamagni, Vice-director, Bologna Center
Prof. Zamagni is a leader in cooperative economics and, with his wife Vera, has produced some excellent works on the topic such as “Cooperative Enterprise: facing the challenge of globalization.”
“Why did cooperatives disapear from economic thought? Since the start of the market economy, their are two types of competition. Since globalization era began, the cooperative model has grown even if the economist will not admit it. Connective capital has also grown but that is simply another way of saying cooperative competition.  Why does mainstream economic theory continure to ignore coops?
It is common theory that assumes that everyone is Homo Economica statest thats self-interest is the only reason for people to act. Zamagni suggests that a different model is needed a Homo Cooperative? We need to see that common-interest, not self-interest, is what has allowed humans to flourish and will save the planet. Thinking thought vs. calculating thought is what is needed with our cooperatives,
Karen Miner, Manager, MMCCU program at Saint Mary’s University
Emphasis of new economic theory for the future development of cooperatives. Notice how capitalist model borrows from co-operatives. However, co-ops must be careful when borrowing from capitalists that they don’t lose themselves in the process. A cooperative movement must articulate a “future” state. Cooperative managers need specialized knowledge. “
These are only some brief comments from the opening press conference. Over the next few posts, I will be poring through my notes of the speakers.  It was a dynamic conference that explained the perilous state of the environment and the role that economics plays in creating our natural, political and economic environment. The discussion also focused on how we, as cooperators, can turn this around. Not, necessarily  through government intervention, but through a better understanding of economics.

February 9, 2011

Madison Mayoral Candidates Discussing Worker Cooperatives: Let’s Turn Talk Into Action

Filed under: Movement — Tags: , , — Fred Schepartz @ 5:47 pm

It appears that worker cooperatives may become an issue in this spring’s mayoral election in Madison, Wisconsin. Incumbent David Cieslewicz is blogging about a community-wide effort to facilitate the forming of worker cooperatives. Challenger and two-time former mayor Paul Soglin (the so-called Red Mayor) is blogging about it as well.

As a longtime worker/owner at Union Cab Cooperative here in Madison, I applaud both candidates for bringing up this issue. I’ve written about this before, that worker cooperatives could be a way to save our economy both by putting people back to work and getting back in the business of manufacturing things that people would want to buy. And of course, these would be safe, humane and sustainable workplaces more interested in serving the community than maximizing profit.

But let’s not be naive. This discussion comes in the context of a political campaign. It could be a lot of bloviating, just a lot of hot air that has no meaning once the last ballot is counted. Still, it could make for great discourse that could have real, concrete results but it is up to us. We need to get involved in this discussion to ensure that it has real focus to it. And once the election is over, we need to maintain pressure on whoever is elected to turn words to action.

On the treadmill at the East YMCA, it suddenly occurred to me that the best way to achieve this goal would be to propose something concrete, so we can have a real topic to discuss.

Here it is: I propose that the City of Madison establish the Madtown Worker Cooperative Incubation Center. And I know the perfect place: Union Corners on the east side of Madison. For those not familiar with Madison, Union Corners was where Rayovac had a manufacturing plant before corporate flew down south. A local developer had big plans for the site, but the financing fell through. Now it’s the most infamous blight in town. There have been various alternatives plans for the site, but none have come to fruition. Most recently, the city has proposed buying the land in order to be able to make sure that there’s at least a little rhyme and reason when it is eventually parceled off.

Union Corners is a good sized piece of property, and it’s certainly big enough for several small business. I propose that those businesses all be worker cooperatives, and that the city use its resources to help facilitate the formation of these new worker cooperatives.

First, the city should purchase and then develop the property in a simple but functional manner by erecting versatile structures and providing surface parking (along with ample green space as well).

Second, the city can establish a fund to provide seed money for these new business. The city would contribute to the fund, but would also solicit grants from the state and the feds, as well as the private sector.

Third, the city should participate in a community-wide effort to create a super-structure for MWCIC. This entity would oversee the creation of new worker cooperatives by approving viable proposals, facilitating funding and providing assistance in the formation of these new businesses. More importantly, however, this entity would do outreach in the community to let people know about the opportunities presented by MWCIC. Eventually, this entity would become an overall governing body for all MWCIC members. Down the road, MWCIC would buy the Union Corners property, but only if the city declares it as a Tax Incremental Finance district thus making it exempt from property taxes until its strong enough to contribute to the city’s tax base.

But MWCIC cannot merely be a collection of businesses that are housed on the same tract of land. There would need to be space for people to meet, confer and socialize. Also, within MWCIC there needs to be something I would call the Worker Cooperative Training Institute, which would do exactly what its name indicates. Obviously, MWCIC would attract people with previous cooperative experience. That’s all fine and good, but it’s probably even more important that member cooperatives include people with little or no previous experience with cooperatives so they would have an opportunity to learn how cooperatives can enhance and improve their lives.

The training institute would serve an important function and would give worker/owners the tools to be able to run their own cooperatives. In addition, the WCTI could eventually branch out and train worker cooperative members from all over the country and perhaps all over the world.

Another important institution for MWCIC would be the Workers Cooperative Credit Union. This credit union could be formed as a collaborative effort among the various local credit unions. The WCCU itself would be a worker cooperative. It could handle the financing of the various worker cooperatives at MWCIC, as well as the banking needs of member cooperatives and their worker-owners.

But what kind of worker cooperatives should there be at MWCIC? The answer is obvious: whatever kinds of worker cooperatives people can imagine, producing any and every kind of good and service. Get interested people together and talking, and they can come up with some of the most amazing and creative ideas. The only restriction is our collective imagination.

What are some of the great American products that are no longer made in America? We could make those at MWCIC. We could certainly create the Madtown Worker Cooperative brand, which could be recognizable from coast to coast.

Or another idea: one great resource in the Madison area is organic produce. A worker cooperative could perhaps make use of this produce to create various food products. MWC pickled vegetables. MWC liver pate. Again, the only limit is our imagination.

MWCIC is a win-win for everyone. It would create jobs where people would feel empowered. It would improve the city’s tax base and make use of Madison’s worst blighted area. In addition, it would represent a major step forward in the American worker cooperative movement. With Madison’s great progressive tradition, it seems logical for Madison to lead the way.

July 8, 2009

The Fair Trade Dilemma

Filed under: Movement — Tags: , — John McNamara @ 9:05 pm

When the US Federation members went on a tour of Madison worker co-operatives everyone expected to learn a lot about how we practice cooperation in Madison. We didn’t expect to get the incredible education about Fair Trade’s failures and a new understanding of how successful forces have been in co-opting this once great movement.

Just Coffee no longer uses the TransFair certification and you won’t find their label on their coffee. That sounded rather amazing to me, but then a look at their site and one sees Starbucks and other major corporations. I try not to be a cynic, but the folks at Just Coffee explained that the trend in Fair Trade has been to draw in the “big fish” like Maxwell House, Nestlé, and Starbucks. To get them in the fair trade movement, the “fair trade” floor price hasn’t moved in two years despite the incredible inflation in fuel prices last year and the world’s worst economic crisis since 1929.

I haven’t been able to verify that the prices have stayed flat partially because I can’t find prices on TransFair’s site. that is the real problem. The lack of transparency will ultimately undermine the Fair Trade movement. Just Coffee’s response has been to withdraw the certification (and save the money spent on it) and try a new tactic: Transparent Trade.

What is Transparent Trade? Well it is the concept that the person who consumes the coffee should be able to easily track the bean back to the seed purchase and see the price paid at every step. It means that financial statements and contracts should be published on -line and accessible to consumers so that they can research how their money circulates.

One of our hosts said that the most common question from peers is if they suffer from the competitive disadvantage of full disclosure. He retorts that Just Coffee sees it as a comparative advantage.

This leads to the essential difference between community development and social transformation. The community development model uses co-operatives to teach people to fish, but doesn’t discuss the overall failure of the society. It helps people play by the rules instead of changing rules that work against them.

Worker cooperatives should be about social transformation. They should strive to change the dominant paradigm of profit-motive that Corporate Social Responsibility as a means to mitigate the worst aspects of capitalism.

Flattening “fair” prices doesn’t grow the movement, it dilutes it.

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.

September 15, 2007

Getting Ready for Mondragon

Filed under: Movement — Tags: , — John McNamara @ 2:44 pm

As part of my class at St. Mary’s, I will participating in a 10-day seminar at Mondragon Cooperation Corporation. It is sure to be an exciting time and to get ready for the trip, we are starting to read up on this incredible cooperative experience. The following are my notes from one of the works being used in the class. It is We Build the Road As We Travel by Roy Morrison (now out of print).

Mondragon has many “types” of cooperatives:

Industrial (86)
(casting and forging, capital equipment, parts and components, consumer goods and construction)

Agricultural (8)
(Dairy, agriculture, hogs, sheep, feed production and marketing)

Service Sector (4)
(Industrial food and cleaning systems, data processing)

Educational (46)
They have a primary school system (Ikastolas) with 35,000 students
6 special training institutes:
•Institute of Industrial Design, p
•Postgraduate engineering and technical studies (abroad)
•Iranukor—continual education both general courses and courses designed at the request of specific coops.
Iraskale Eskola—teacher training
Saiolan—worker training in new technologies.

Alecoop is a cooperative where students work and put their education into practice.

Retail (1)
Eroski has 270 outlets. It has 1,600 members with a mixture of workers and consumers.
Housing (15)
Second-degree support (6)

The coops vary in size from 6 to 2,000

Cooperative Structure

One really needs to see the structure chart, because it is almost too complicated to place in simple words. However, the system known as Mondragon consists of individual cooperatives, secondary cooperatives and a tertiary cooperative congress.

Individual cooperatives consist of six basic features:
1. General Assembly consists of all members and has ultimate authority
2. Governing Council, elected by GA, in charge of day-to-day implementation of Coop Policy and Plan
3. Social Council, elected by GA, makes decisions about Personnel issues
4. Account Control Board, elected by GA, audits books and monitors operations
5. Coop Manager, hired by Governing Council, runs the business according to the plan
6. Management Council consists of managers and coop officers, meets monthly to review the coop’s progress.

Secondary cooperatives

1. Cava Lab oral Poplar (CLP) controlled by worker-owners and primary cooperatives (who are the membership). It is divided into financial and business divisions. Cooperatives sign an agreement of Association.
2. Lagun-Aro is the social security insurance system. It provides a full range of retirement, disability and health insurance.
3. FISO provides resources beyond what the CLP can do to help aid economically distressed cooperatives.

Cooperative Congress

This is a tertiary organization that meets bi-annually to consider broad system wide issues. While each cooperative is guaranteed one seat, the 350 members are allotted on a prorated basis based on the size of the cooperative. The congress has a president and vice-president, a commission to follow up on its decisions and its own General Council that includes members from the secondary cooperatives.

Industrial Modernism

Morrison argues that the Mondragon system, which he calls a “cooperative social system,” is a constructive response to the rise of Industrial Modernism. In this sense, Mondragon represents an ecological postmodernism and the Mondragon system faces six issues:
1. Pursuit of equilibrium
2. Ecological protocols and ethics
3. Engagement and change of social structures
4. Tension between centralization and autonomy
5. Freeing of social practice from ideology of industrialism
6. Diverse and convergent paths informing the reimagination of society.

Mondragon is concerned with the why and how the social means and social product is used, not who owns them. It sees class as a function of the industrial ideology and notes that the mere changing of ownership of the means of production has not transformed the nature of its use.

Industrial Modernism exists through the construct of a “steel triangle” in which the three sides are Technique, Hierarchy, and Progress.

Technique (science, technology, industry, bureaucracy) has built a culture that is capable of transforming the landscape, climate and biosphere. It is a means for dividing things and people.

Hierarchy (and power) create the class dynamic that allows small groups to control large groups

Progress is a “go code” combined with the false belief of “social Darwinism” it provides a seamless rationale for greed and cruelty and the idea that competition and self-aggrandizement were not social creations of capitalism but part of human nature.

Mondragon challenges this triangle through the concept of Equilibrio.

Equilibrio—life in a cooperative should not be carried out as if it were a “zero-sum” game. There must be a balancing of interests and needs.

Dynamics of Ecological Postmodernism

Mondragon Accomplishment is demonstrated through it cooperative economic sector and convivial social institutions.

The slogan  “Unity in Diversity” is the outcome of successful Equilibrio. It has three characteristics:

1. Values importance of individuals and groups
2. Recognized the integrity and validity of varying levels of responsibility
3. Recognizes differences among degrees of organization, time, scale, and intimacy.

“As individuals, we see that which appears to be “below us” (or smaller and simpler in structure) as a tumult of noise and motion; but this apparent chaos is, in fact, the murmurings, stirrings voices of life. What appears to be “above” us (or larger or more complex) looks implacable and unchanging, a source for reference or reverence. These grand structures are, in fact, a reflection of our aggregate being and behavior. They are also in motion, with dynamic and living rhythms.”

“The health of social and natural systems is reflected in the functioning, integrity, and interrelations of all of their components. Power in such systems reflects a facilitating freedom, an interactive potential whose apotheosis is love—a “power to” that is constrained and responsive, and can exist fully only within an ecological context.”

Chapter 2: Mondragon History and Development

•Basque region rich in environmental gifts
•Euskadi ancient civilization whose language is so ancient that it is separate from other indo-European languages
•Long history of metal working (made munitions in WWI)
•Tradition of community that was only displaced by capitalism (public ownership became private ownership)
•Tended to fight against Franco and paid dearly (Guernica)
*Franco’s victory meant political and economic repression for region (language banned, priests and community leaders executed)

By the 1950’s the Falangist Economy was failing and Franco’s grip on the economy slipped. Prodded by the Catholic sect, Opus Dei, Franco allowed reforms.

The Basque Church needs special mention because it was decidedly different from the mainstream Church. While the Hierarchy of the Church sided with Franco (the Arch Bishop called himself a soldier in Franco’s army), the Basque priests joined the resistance. They valued the village culture and nationalism of the Basque and fought to defend it. Many of these priests were executed until the Church hierarchy intervened sparing the life of many, including Don Jose Maria Arizmendiarrieta.

Don José María Arizmendiarrieta

Born 4/22/1915 in Vizcaya.
Entered the seminary in 1928, but joined the loyalists in the civil war. He was a journalist for a Basque resistance newspaper. After the war, he was imprisoned and scheduled for trial and inevitable execution, but was spared. He returned to the seminary and was assigned (as a punishment) to Mondragon. It was thought that keeping him (and other loyalist priests) in backwater towns would limit their influence.
JMA did not belief in the basic notions that work should be a form of suffering. Instead, he saw work as rewarding. His concepts and beliefs diverged from the Church of his day, but in 1981, many of his ideas would be found in John Paul II’s “On Human Work”.

On arriving in Mondragon, JMA became an instructor in the towns only school The school was owned by the steel plant and only allowed children of workers to enter (with the exception of 12 students from the community). JMA lobbied the owners to open the school to all and they refused. This led JMA to open his own school by soliciting donations from the community.

In 1943, the school opened with 20 students. Contributors elected a management committee and the pupils assisted with fund raising. This created a strong foundation of workers trained in skills and cooperative thought. In 1952, eleven of his initial students graduated from the University. Five of them formed the first Mondragon cooperative (ULGOR) in 1954 after working in capitalist firms and finding the owners unwilling to adopt worker input.

ULGOR followed JMA’s concepts and asked the community for help. They managed to raise $100,000 and moved the company to Mondragon in 1956. They also “borrowed” a design for an Aladdin Stove in France, managed to get the Spanish patent for it and began producing stoves. In 1958, they had grown to 149 employees

By 1959, they still had no legal status and several other cooperatives had started up. They all faced limited access to capital since the banks refused to loan them money. They found their own solution:
1. They developed and formalized a series of organizational and operational principles for each cooperative
2. They created their own bank, the CLP.

By 1964, the associated cooperatives have 27 coops and 2,620 cooperators.

Why didn’t Franco crush this movement?
1. Anarchists were hard at it in Barcelona
2. The Communist Party had reformed in 1958
3. Coops met the basic nationalist concepts of the Falange movement
4. Franco had yielded on economic control in order to maintain political control.

Mondragon was the natural outcome of industrial modernism. They followed the basic S curve of economic growth (start-up, rapid growth, slowing growth, renewal expansion).

I will try to add more as we get closer to the date. . . .

October 22, 2006

Should Co-ops Create Multi-nationals?

Filed under: Movement — Tags: , , , — John McNamara @ 6:57 pm

Recently, the membership of Burley Bicycles Cooperative sold their jobs to a private investor ending 28 years of worker democracy for a paltry sum of about $20,000 per member. Burley became immensely popular with Baby Boomers for the creation of their blue and yellow bike trailers perfect for carrying toddlers and/or groceries. In addition to the trailers, Burley also made recumbents, tandems, and high-end road bikes.  They produced everything in the United States which made them one of the last (if not the last) US manufacterer to keep production at home. As Trek and others sought low-wage factories over seas (most notably Asia), Burley stayed the course. During the last three years, they lost money including a whopping $1.5 million last year s reported by the Cooperative Business Journal.

Was it soley the lower production costs of the other companies that did Burley in? Obviously, they were spending money on production that could have been spent on marketing and advertising to increase their share and keep them competitive with other manufacterers. I imagine that the thought of establishing overseas production was anathema to the worker-owners of Burley. Is the lesson to be learned that worker coops can’t compete in a global workplace?

What if Burley had chosen an overseas option? Can worker cooperatives create Multi-National Enterprises without exploiting their fellow workers in the process?

What if the workers of Burley had developed, organized and trained a worker cooperative production facility in Malaysia? They would have been able to partner with them and reduced their production costs which could then be put into marketing and design. The Eugene facility would have been headquarters as well as the “burley design coop” and handled planning and marketing. The asian factory would have been the production co-op. Workers could have been paid a living wage for their area, but split the surplus in a more equitable manner.
It might have meant some big changes for the cooperative, but the net result would have been an expansion of the cooperative movement not a shrinkage. By setting up a cooperative which would still pay a living wage for the region, Burley would still be at a comparative disadvantage over Trek; howev er, they could off-set that by marketing a “fair trade” bicycle and using the cooperative advantage to move product.

Of course, I wasn’t there and hindsight is, well, you know. I am sure that many reasons existed for their demise other that the global bicycle market. When does a coop get lost?

After the conference in NY, I realized that a lot of cooperatives are struggling with growth issues right now. They need to start thinking strategically not operationally. Putting aside slogans and preconceived ideas about business is the first step. Co-opers need to review the history of their movement. The success of Rochdale and the Cooperative Wholesale Society came about in part because they saw the value of shipping in cheap goods from the US and Canada to compete with the retail societies. They grasped the idea of vertical integration and made it theirs.

We need to see the fair trade movement as our movement and its success can be modeled in other industries. I don’t know if my scenario would have kept Burley cooperative or if it would even have worked, but I do know that there are few market sectors where growth can be stifled or the status quo maintainted. The non-coop business world saw the importance of vertical organization created by Rochdale. They have started to see the value of values. We need to start looking at their practices and determining how we can make them work under the cooperative system within our ethics and principles.

We aren’t going to do this alone. We need to start talking to one another. We need to ignore the industry label on our company and focus on the cooperative label. We have a huge amount of unused talent.

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