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.

November 4, 2013

Managing Old Industries: A lesson for aging coops

Filed under: Management — Tags: , , , — John McNamara @ 12:56 pm

Last week, Mondragon’s General Consul announced that it had decided to cease its efforts to stabilize the FAGOR Cooperative Group. FAGOR electronics makes kitchen appliances: stoves, ovens, refrigerators, and even pressure cookers. It is the original Mondragon cooperative that began life as ULGOR (an acronym consisting of the first letter from the last name of each of the five founders).

Mondragon, for those new to this blog, is a system of hundreds of individual worker cooperatives that link together vertically and horizontally to creation one of the largest corporations in the world. The Mondragon Experience, as they call themselves, includes manufacturing, transportation, retail, k-University education, finance, and even their own social security system that rivals that of Spain and other European nations. FAGOR, itself, is not a single cooperative, but made up of hundreds and it is one of the larger sectors within Mondragon.

When I visited Mondragon in 2007, the warning signs were already present. Mondragon had just negotiated the purchase of Brand Corp, a French “white-appliance” manufacturer. This purchase would make Mondragon the third largest manufacturer of kitchen appliances in the world. Even then, however, they realized that the nature of the industry would only leave room for two, not three.

Part of the problem arises from the aging of the industry of kitchen appliances. The oven, range, and refrigerator have not changed since their inception with the exception of various bells and whistles (self-cleaning, timers, and electronics that can tell you your milk is about to curdle). One could even argue, that the biggest advent in refrigerators occurred when we no longer had to put blocks of ice in the back for cooling. Likewise, the stove and oven’s biggest advance was being able to use electricity or natural gas instead of wood or charcoal. These advances happened during a different century. Old industries are hard to compete within. The main way of competition is reducing costs and the biggest costs are that of labor and transportation. Without a US manufacturing base, FAGOR has little options and spreading its workforce outside of the Basque Country runs against its mission and creates its own problems (as the strike in Poland during 2012 pointed out).

The second problem arises from sentimentality. FAGOR isn’t just any group of cooperatives in the Mondragon experience. It is, literally, the stuff of legends. It is the physical embodiment of the vision of spiritual leader Don Josê Marîa Arizmenidaretta and his five students. It created the foothold that led to the creation of the Caja Labora Popular. Without FAGOR, there would be no Mondragon.  In 2007, we met with members of FAGOR and they seemed resigned to their fate. They knew that the Brand purchase was treading water. I asked about the idea of re-tooling the plants for other products, but that is apparently not an option for reasons that I don’t understand, not knowing the manufacturing industry.

Under Mondragon’s system, each cooperative kicks in about 10% of its surplus to a solidarity fund that then assists struggling cooperatives. Over the last several years, FAGOR has accepted close to 300 million Euros (close to half a billion, US). It seems, from reading the press release, that Mondragon has finally decided to cease life-support for lack of a better word. This will likely bring a process of bankruptcy.

I am uncertain as to how this will effect the workers and their substantial equity in the organization. Each member invests 14,500 Euros. Membership also provides benefits through the system. Hopefully, there will be some ability for workers to move to other areas of Mondragon with their equity. In any event, this will be a painful time for the cooperative.

I also think that it will be an important time for Mondragon planners to learn. This will be the first, but not the last, time that they will need to effectively shut down a industry that has become too old to produce decent jobs. It might provide some lessons about how to transition factories from one industry to another, how to build economic diversity within cooperatives so that as an industry becomes too unproductive, it won’t have such a heavy effect on the group. Most importantly, it might be a good thing to let the founders finally become the past. Mondragon will soon celebrate it 60th anniversary. The retelling of the creation myth will be central to that celebration, but so should the future. Mondragon doesn’t need to rely on”borrowing” designs from other companies, they now have the ability to enter new industries and be a commanding force. Part of learning to let go, involves embracing the new. This might involve reconsidering how the Solidarity Fund is used. Instead of propping up an aging industry, it could be used to retool for the future.

Of course, these are my musings from America. Mondragon is famous for “building the road as they travel” and have a great track record of learning as they go. It will be interesting to see how this story develops.

September 16, 2013


Filed under: Worker Rights — Tags: , , , , — John McNamara @ 7:00 am

At the recent convention of the American Federation of Labor-Congress of Industrial Organization’s, the members spent a great deal of time surveying the reality of the labor movement in the United States and the significant changes since the last meeting of this group in 2009.

Not only has the number of households with a wage earner working under a collective bargaining agreement dropped, the full onslaught of the Koch Brothers funded war on labor has taken a dramatic toll on unions in the public service sector and new laws further restrict the ability of labor unions to function on anything resembling an even playing field. Unions may have been in an orderly retreat in 2009, today it might be better to call them scattered remnants.

Scattered remnants, however, can still be powerful and can be reunited into a stronger labor movement. On the plus side of life since 2009, the US Steelworkers have discovered worker ownership and partnered with Mondragon to establish industrial unionized worker cooperatives in the United States. The Cincinnati Union Coop Initiative has been working to get a number of projects up and running.

While I am really excited about the activity around worker cooperatives in the labor union world, I also realize that it isn’t enough. According to Gary Chaison, in his book Unions in America, labor unions need to recruit almost 1,000,000 new members every year just to account for retirements, business closings, and decertification campaigns. It is estimated that Unions add only about 20-60,000 new members each year right now.

AFL-CIO President Richard Trumka proposed a new strategy for this year’s conference: allow people to join the AFL-CIO who aren’t members of labor unions. This would allow organizations such as the Sierra Club and the NAACP to join the AFL-CIO as well as individual members. One the arguments for this radical proposal, reported in the New York Times argued that when a union loses a collective bargaining vote by 49-51%, why should the 49% of workers who wanted a union be ignored by the union? Shouldn’t the AFL-CIO find a way to keep in contact with those pro-union workers and help them build a majority?

A similar idea was put forward in 1985, but it didn’t go anywhere. The buy-in by locals wasn’t there and the reality is the the full effect of Reagan’s PATCO action and the looming effect of globalization hadn’t become evident. The unions were able to believe that the world wasn’t changing around them. Thirty years later and the number of labor leaders in denial about the state of the movement has dropped as fast as membership.

As the convention concluded, the proposal was limited to only allow organizations in solidarity, not individuals, the ability to join, but the delegates also passed a resolution stating: “The labor movement consists of all workers who want to take collective action to improve wages, hours and working conditions. Our unions must be open to all workers who want to join with us.”

I understand the concern of just letting individuals join without some structure or understanding what they are joining; however, I also think that the idea of a “solidarity membership” would be invaluable to the labor movement. I imagine that depending on the range of dues, millions might join and be a great resource to assist locals in their area by pressuring businesses to bargain in good faith and helping business owners and marketers recognize that treating workers well is good business, not just an expense line.

In the end, the challenges facing the labor movement won’t be wished away with new membership categories. The iron cage of the Wagner Act, written for a very different labor environment, and the over-regulation of the various amendments (Taft-Hartely, etc) have created a legal framework that hampers the ability of workers to organize. Of course, labor’s historic unwillingness to change tactics, embrace emerging industries, and spend resources on organizing have as much to do with a pathetic 6.6% union households (maybe just over 10% with public sector unions) as the actions of management and globalization. Nevertheless, creating alliances with social movements can only help labor unions if for no other reason than the AFL-CIO can gain allies in modernizing the National Labor Relations Act by connecting mass movements that often represent the same individuals.

In my mind, Unions in the US have spent the last 30 years in retreat and doing the one deadly thing in politics: allowing their enemy to define them. Hopefully that is starting to change. Although they didnt take the plunge to accept individual solidarity memberships, they have started to engage non-union movements. The movement that brought us the “weekend” and created the “middle-class” needs a re-boot and it looks as if the current leadership has learned a lot watching the people act over the last couple of years. It will be interesting to see where the AFL-CIO convention  finds itself four years from now.



March 26, 2012

A Big Day in Pittsburgh

Filed under: Movement — Tags: , , , — John McNamara @ 9:12 am

For those of you who may not get the emails, the long awaited announcement by the USW and Mondragon will be made at 11:00 am EDT in Pittsburgh, PA. I haven’t really heard much about this project other than it will involve a modern industrial operation that will blend the concepts of worker ownership and collective bargaining.

I know a few of the people that have been part of an advisory group that will only say that this is a very incredible project. Unfortunately, the press conference is not be web cast (they cited the cost, but it seems that some form of a web cast could have happened with GoTo Meeting or other software). In any event, the press conference will be recorded and loaded up to Youtube–so you my want to keep an eye out for it this week.

I can’t wait to learn the details. For no other reason than this will shape my dissertation; however, I see this as ushering in a new form of worker cooperation. In the US, we already have the traditional model of the US Federation member coops (collectives and hierarchies), we have the WAGES model that focuses on specific socio-economic groups, and  then there is the Cleveland Model. The Mondragon-USW will be yet another way of figuring out worker cooperation. The difference is that it will be teaming with the traditional industrial union movement from the design stage and not as an after thought (see Cooperative Home Care NY). It will be interesting to see how the labour union interacts with the principles of cooperation. Will “managers” be excluded from collective bargaining? Will managers be excluded from co-operative membership? If the answers are “yes”, what will this mean in terms of Agency? If the answer is “no”, then how will the collective bargaining work?

Today is an exciting day in the history of worker ownership–stay tuned!


October 17, 2011

We Need New Laws

Filed under: Movement — Tags: , , , , — John McNamara @ 12:37 pm

Over the weekend, I wrote my Assembly Representative, Mark Pocan. The last time that the Democrats held the majority, Rep. Pocan co-chaired the powerful Joint Committee on Finance. Of course, today, his party is in the minority of a very partisan Assembly whose Speaker is planning a run for the US Senate.

In any even, this was my letter:

Rep Pocan,

I would like to meet with you to discuss the possibility of drafting bi-partisan bill to assist workers in Wisconsin to create their own jobs. Specifically, I would like to see Wisconsin follow a successful model in Spain.

My basic proposal would be to allow workers who become unemployed to elect to receive their entire unemployment insurance benefit in one lump sum provided that at least 80% of it is invested into a worker owned enterprise under Chapter 185 of the Wisconsin State Statutes (Cooperatives).

This could have a dramatic effect on the state’s unemployed and even provide an added incentive for owners to sell to their workers (as the IRS Section 1042 provides a means for owners to avoid capital gains tax if they sell to their workers). It is clearly a bipartisan proposal as it would create jobs with an entrepreneurial spirit. Rather than forcing workers already stressed about their ability to make ends meet to jump through a lot of hoops, this law would allow them to either join an existing worker coop or join with other unemployed workers and create their own cooperative.

2012 is the International Year of the Cooperative and this could become model legislation in the United States. The cooperative movement offers real change and hope to the nation’s working men and women. As a 23 year member of Union Cab of Madison, I have seen first hand how our cooperative has humanized our industry in Madison and literally allow people to drive themselves out of poverty.


I might add that this also has a benefit in that worker cooperatives don’t leave. They won’t move to another state. That means, of course, the the State gets to keep all of that start-up capital circulating in Wisconsin. These are real jobs that will be here for a very long time (I read somewhere that the average lifespan of a cooperative is about 60 years compared to under 10 for most businesses). In the Basque region of Spain, roughly 30-40 non-Mondragon worker cooperatives start each year. Mondragon connected coops are sprout at the rate of about 20-30 a year. Imagine what would happen to Wisconsin’s economy if we started creating even 40 worker cooperatives a year? Solving local problems and providing local employment?

We wouldn’t need the “Cleveland Model” or well meaning hand-outs. We can create a Wisconsin model of bootstrapping using the existing unemployment insurance program. As this idea develops, I will continue to write about it. If you live in Wisconsin and think that this is a good idea, write your Assembly Representative or State Senator.

January 31, 2011

Contradictions in Paradise: When the Workers Become Bosses

Filed under: Human Relations,Worker Rights — Tags: , , — John McNamara @ 7:00 am

I have written extensively about Mondragon on these pages with almost all of it in a favorable light. There is, however, another side of Mondragon. As a matter of survival, Mondragon’s co-operatives have ventured abroad to place factories outside of Basque Country. These plants are wholly owned by the co-ops, most notably, Fagor. The workers of these plants are not eligible for membership in Mondragon and do not receive any of the benefits of the Mondragon system.  There seems little difference between the American management of local workers in US based internationals and Mondragon. They both are, in a sense, economic imperialism. In Mondragon’s case, it was a reaction to the pressures of globalization and designed to defend their jobs at home.

Mondragon’s leaders have always insisted that the workers in these plants receive better pay and benefits than other factory workers in the region. They also discuss long-term plans to eventually incorporate these plants into the Mondragon system as stand-alone co-operatives once they find a suitable means of educating the workers and developing a protocol for doing so without weakening the existing social cohesion of the Mondragon Co-operative.

One of The Workers’ Paradise commentators noticed some uproar in Poland last week and sent me word about labor actions taking place against Fagor. When I first did a search, all that I could find were some anarchist postings that decried Fagor Mastercook’s plant as a “workcamp”.  That seemed a bit inflammatory given Poland’s history of work camps under Soviet and Nazi rule. Fortunately, I have other sources who pointed me to some mainstream media outlets.

It appears that since Fagor acquired the French company Brandt, they have been slowly moving production away from France to factories in Poland in order to take advantage of cheaper labor in the eastern European country. This caused some labor unrest by the French workers. However, it also caused an increase in production in Poland. Now the Polish workers, led by Solidarnosc among other labor unions, demand compensation including seniority increases for their increased labor.

Here are some links to mainstream media about the strike:,wroclaw-strajk-wloski-w-fagor-mastercook,id,t.html,fagormastercook-w-zakladach-rozpoczal-sie-strajk,wia5-3266-5618.html
Gazeta is one of largest papers in Poland:,35751,8998212,W_FagorMastercook_strajk_wloski_do_konca_tygodnia.html,35751,8980978,Zaloga_FagorMastercook_szykuje_sie_do_strajku.html

If you use Google’s Translater, you can get the gist of the articles. Essentially, Fagor has fairly low pay, tries to use temp workers instead of permanent workers (and many of these temps were dismissed when the labor actions started) and has fought increased wages for quite a while despite a 10% increase in productivity by the workers.

Now the workers have begun an “Italian Strike” which in the United States is known as “Work to Rule”. For those unfamiliar with the term, “Work to Rule” means that the laborers follow every corporate policy as well as all federal and state (in the US) safety laws. The idea is that most corporations’ profit depend on workers taking short cuts and ignoring policy. A “Work to Rule” action can significantly reduce productivity without shutting the plant down.

A colleague of mine suggests that the board of the Fagor mastercook plant in Poland seems uneducated in the co-operative or in management. Most of the directors are either financial bean counters or in marketing. This web site gives a short bio of two of the directors (again, you will need the Google translator if you do not read Polish).It appears that the board of Fagor Mastercook in Poland consists of Polish managers. I have to admit quite a bit of ignorance on the organization of Mondragon’s foreign operations. The CEO and President of Fagor Mastercook in Poland (and apparently, if I read the articles correctly, France) is Polish.

In reading some of the comments on the articles there seems to be a real fear among some workers that Fagor will simply move these jobs to another country if the union doesn’t give in (one posts begs fellow Poles to not let these jobs go to Argentina). I think that the most important point of the articles is that this labor action and the news about the labor conditions and pay defeat the argument made by Mondragon regarding how they treat non-member foreign workers. It seems that they don’t offer the prevailing wage and use lax laws regarding temporary workers to undercut the power of labor unions and collective bargaining by workers.

I realize that Fagor has been fighting for its life. So called “White Appliances” are an incredibly mature industry, with little or no room for growth. The recession has made this durable goods even less of a likely purchase for most working class families. When I was in Mondragon, one of the managers with whom we spoke admitted that many saw Fagor’s time coming to an end. The purchase of Brandt was meant to forestall that time; however, the people at Headquarters recognized that they were only buying time. The trouble, of course, is that Fagor was the first co-op and its legacy has an incredible hold on the psyche of Mondragon.

The Polish struggle represents the dark underside of worker co-operation. Our movement can’t engage in the exploitation of workers even to protect other members of the co-operative or, worse, a nostalgic legacy. I don’t think that this means that Mondragon should simply accept worker demands; however, when the situation gets to the point of a work slow-down, work-to-rule, or all-out strike, it seems to me that a worker co-operative is no longer acting according to the principles of co-operatives or worker rights.

The Fagor Mastercook board needs to take a real assessment of who they are as an organization and find a way to settle this dispute that will create a true partnership with the Polish workers based on the best interests of both Mondragon and Poland’s community. Creating fear and loathing isn’t the method of building a better world. Fagor Mastercook’s board would do well to read the Mondragon publication Pensiamentos and learn the teachings of Don José Arizmenidaretta. How Fagor responds to this strike could have significant consequences especially in working with the US Steelworkers to open plants in the United States and Canada.

November 9, 2010

The Three Dimensional Business Integration

Filed under: Education,Human Relations — Tags: , , — John McNamara @ 7:26 pm

The people who work in our businesses are not two dimensional, why should the structure be?

If you have studied business, or even US history, you have likely heard the term “vertical integration”. This concept was developed by US Steel as a means of controlling the industry through control of the supply lines and distribution networks. It allows a company a lot of control and the ability to benefit from making expenses profit centers since the different parts of the supply and distribution chains can be used for non-competing products as well.

Another common concept is that of horizontal integration. This allows economies of scale as the company can create similar products within a market. General Motors was a great example of this format with the Pontiac, Oldsmobile, and Chevrolet nameplates have a number of common designs with slightly different features.

Well, those of the two external dimensions which notably ignore depth. Is there an example of a company engaged in depth integration? What would that look like? Further, what would a company look like if it engaged in all three forms of business integration to create a three-dimensional business model? There is a great example–Mondragon.

The depth integration develops from something that few US corporations would really care about (or it they did, it would likely end up as The Company Store). Depth, after all, creates an internal dynamic and this means attending to the needs of the workers and sustainability of the business. Of course, this is exactly what Mondragon has done.

First, however, they do have a fairly vertical integration in which they develop co-operatives to handle supply lines and distribution lines. Horizontally, ULGOR has been working hard to keep their place in the market by buying the smaller companies (most recently was the Brand corporation which was just behind ULGOR in market share). So far, Mondragon looks like a standard corporation operating on the global scale. This is where the third dimension arrives:

The Depth integration of Mondragon involves creating co-operatives to provide the social and human needs of the workers. This area of integration means a K-University school system, a Social Security system that provides a horn of plenty in terms of benefits and services, a banking system to meet the members needs and soon assisted living communities for the aging population. All of this works together to provide the basic needs of the workers and families.

Depth integration does more than simply keep the money in the Mondragon system. The presence of a university, management institute and trade school allows workers in unemployment to return to school and learn new skills. this not only benefits the worker, but helps Mondragon keep the correct number of workers to maintain decent wages and benefits. It provides other avenues for workers to use their knowledge and skills. A worker who can’t do the physical labor in the plant may transition to a teaching position. It allows workers to develop themselves as human being through their work. This was the ultimate idea of Mondragon’s spiritual founder, Don José María Arizmendiaretta.

In the US, we often marvel at Mondragon and people fall over themselves to either create Mondragon in the US or to expose every chink in the armor. Fortunately, there are plenty of grad students up to these tasks! However, something that we should consider is this revolutionary form of integration. We don’t need to re-create Mondragon in America, but we should consider how to develop a three-dimensional integration in our existing co-operatives. We need to see where we can partner with existing institutions and create the institutions that we don’t have.

September 22, 2010

Can Syndicalism Help Worker Co-ops?

Filed under: Worker Rights — Tags: , , , , — John McNamara @ 8:00 am

If you talk to a lot of co-operative developers and community organizers in the United States about Mondragon, you will likely hear them extol the virtues of the Caja Popular (former the Caja Laboral Popular). The bank owned and controlled by Mondragon played a major role in the development of the Basque co-operatives and many see it as the key to creating Mondragon in America.

Well, who wouldn’t want a bank that caters especially to worker co-operatives? But is this really the secret to Mondragon success? It certainly played a key role and provided a method of developing new cooperatives, creating strong business plans, and otherwise ensuring the financial viability of the co-operatives. However, keep in mind that the banking system of Spain in 1959 was hardly a modern system and it really wasn’t able to grow due to the isolation of the nation under the heel of the Phalange. The CJP gave Mondragon access to capital and that is something that any worker co-operative can use.  I would argue, based on experience, that successful worker co-operatives have no problem accessing capital from today’s financial institutions and we do have several development funds available in the United States including the Northcountry Co-operative Development Fund’s Worker Ownership Fund*. Granted, the availability of start-up capital has been much harder to come by and there are few, if any, Angel Investors in the worker co-operative world. A worker co-op bank can be started at any time. All that needs to happen is for the co-ops who want to create our version of the CJP to simply pool their assets and hire a bank manager (yeah, I know that it isn’t THAT simple, but bear with me).

I think that the stronger part of the Mondragon model is the Social Council. Unlike the social committees of most co-operatives, this group doesn’t plan the summer picnic and winter party. The Social Council represents workers as workers. It is essentially a watch dog on management and the governing councils. This body within Mondragon provides a model for our co-operatives as it infuses the distributist structure of the worker co-operative with a definite syndicalist voice.

Syndicalism was made popular in the United States by the Industrial Workers of the World. The Syndicalist rejected both the capitalist and socialist world views. They sought, instead, to create a world in which the basic political unit was not the dollar or the voter, but the worker. They saw a structure that is quite similar to Mondragon’s structure with individual worker collectives connected by industry and sector into a regional, national and international alignment. A colleague of mine discussed his view of neo-syndicalism on this site back in December of 2009. While Fred speaks about direct action along the lines of the Buenos Aires workers featured in the excellent documentary, The Take, the structural concept of syndicalism already exists. It involves pulling our workplaces together and creating a strategy. It also means making sure that our worker co-operatives really have a syndicalist basis and aren’t simply capitalist partnerships trying to sneak in to good party.

Arizmenidiaretta would have been quite familiar with the logic and ideas of the Anarcho-Syndicalists of Barcelona as they were heavily involved in the fight to save the Republic in 1936. Certainly, Mondragon arose like a Phoenix out of the ashes of the Republic. So, we should not be surprised to see that the Mondragon co-operatives developed  distributist and syndicalist institutions. Both offered third ways between the state socialism of the the Fabians and the “invisible hand” of the Free Marketeers.

It is in this juncture that the distributists and the syndicalists converge. To me, that is the lesson of Mondragon and what should be imported into the United States worker co-operative movement. This also appears to be the pathway for co-operative development as envisioned by Mondragon and the US Steelworkers. A renewed syndicalist movement in this country could well be the pathway to creating a distributist society and overcoming the culture of wage and chattel slavery. The IWW’s great slogan, after all, was “Instead of saying ‘A Fair Day’s Pay for a Fair Day’s Work’ we say ‘Abolish the Wage System!'” We need to start changing the world to one that values the worker. We need to bring back syndicalism as not just a counter-weight to ne0-liberalism, but with the goal of it displacing neo-liberalism as the preferred economic model for sustainable communities.

The creation of a new syndicalist movement should be quite natural to those of us who have chosen worker co-operation, but it is an easier thing to think and blog about that to actually create. For one, my guess in that only one in a hundred of the workers in our co-operatives could define syndicalism, let alone distributism or any of the other economic models. Given the amount of neo-liberal arguments that I hear in my own co-operative and other debates, I can tell you that many worker co-operative members do not see a significant difference between capitalism and co-operation.  Just recently I talked to a fellow member who supports keeping the Bush tax cuts because “I want to rich some day.” <Heavy Sigh> In this environment, spouting the slogans of the IWW from a hundred years ago will likely generate more eye-rolling than anything else.

How do we create what we need without sounding like we time traveled from 1967? or 1907? Another lesson from those Co-op Priests: Tompkins, Coady and Arizmendiaretta:  we need to create educational programs that are modern but still promote the differences between the “one-dollar, one-vote” of capitalism and “one-worker, one-vote” of co-operative syndicalism. We need an education programs and we also need to create incentives for people to participate in them. We need to act internally and externally.

Internally, we need education programs and a constant focus on how we are different. How does Rainbow differ from a traditional grocery store? How does Union Cab differ from a traditional cab company? How does Co-operative Home Care differ from a traditional home care service? You and I might easily answer that question, but can every member of your co-op answer how their co-op really differs from the capitalist competitors in your industry? I don’t mean simply describing the structure (which would be great) but the underlying concept of the organization. Does the analysis stop at “We own it!”, if it does, then the understanding may be a mile wide, but it is only an inch deep.

In addition to the educational process, we need to create the social committees. We can call them Steward Councils, or Member Advocates, or any language that our community knows and understands. However, we need to create real syndicalist functions within our co-operatives. These councils need to do more than simply help members file grievances and present ideas, they can’t simply mimic the antagonistic labor relations from the factory. They need to educate people on their history as a worker in addition to the former educational process of the co-operative. They need to create solidarity among the entire workforce (not against management or any other group, but among all those who work including the leadership) and they need to be the voice for the workers while the board speaks for the members and management speaks for the business.

Externally, we as a movement, need to create the basis for seeing a syndicalist worker movement as a viable means of managing the economy. We need to use our institutions and our co-operatives to present a true alternative to the dominant paradigm of capitalist and theft of labor. In this regard, we need to turn away from the rather insular Mondragon model and borrow a tactic from a very different guide and trailblazer: Milton Friedman.

More on that, tomorrow.

September 21, 2010

The Agency Dilemma in Worker Co-operatives

Filed under: Movement,Worker Rights — Tags: , , , , , , — John McNamara @ 8:00 am

Last week at my other blog, Breathing Lessons, I discussed the Rochdale cul-de-sac as it applies to consumer cooperatives. This week, as part of this discussion over the future of US worker cooperatives, if not the labor movement in the United States, I want to put the spotlight of the Agency Dilemma on our movement.

It would be a mistake to presume that worker cooperatives, by their nature, enjoy an immunity to the agency dilemma. Race Matthews notes that even Mondragon has its issues. In the US, we have a lot of issues that arise from our culture as well as from the Agency Dilemma.

A More Critical View of Mondragon

First, while I am impressed with Mondragon and loathe to point out the cobwebs up in the corners, it is worth mentioning that perfection is a goal that we strive for, but can never attain. Thus, the criticism of Mondragon (and our own co-operatives) should be accepted in the effort to make them better.

The single biggest criticism of Mondragon has been their outsourcing labor to the developing countries without developing worker co-operatives. This not only runs counter to their principles but invokes the legacy of Spanish imperialism especially when they are engaging the South American economy. However, even within their co-operatives, Mondragon can succumb to elitism and a class separation among their workforce. Matthews cites research conducted by groups within and without Mondragon. Specifically the work of Cornell University anthropologist Dayvydd Greenwood and the ethnography of Sharyn Kasmir . Matthews also taps the work of Mondragon insiders José Luis González (at the time, the Director of Human Resources at FAGOR), and  Mikel Limenez. The work that Matthews uses is from his 1990 position as the Director of Sociological Research for Ikasbide, the predecessor of Otalara Institute. Mikel generally leads the tour groups.

While the workers love their co-operatives and appreciate them, they also recognize that there are “those above” and “those below” (Matthews, 1999, 225) They also speak of issues that should resonate with those of us in the United States, “we are less equal among ourselves than the workers in a capitalist firm; being members, many of us often have to put up with things that workers in other firms would not tolerate.” (Matthews, 1999, 225) Certainly, the 1974 strike revealed a very real rift along gender lines in the co-operatives. While the official discussion of the strike resulted in limiting the size of co-operatives (the factory co-op that suffered the strike had over 2,500 members), it did not talk about how the strike leaders were treated. According to Kasmir in The Myth of Mondragon, twenty-four leaders from the strike were fired (2/3’s of them women). Twenty-two were re-hired except for two women. They were unable to find decent employment in the Basque country for almost five years (public pressure finally forced their re-hiring). (Kasmir, 1996, 110-120) Kasmir’s work provides a Gramsci-esque critique of Mondragon. I can tell you that it is not well received by academia and considered flawed. It is an ethnography so her work does have certain limitations, but I think that it does raise some issues that shouldn’t be ignored.

The point is that our co-operatives can easily succumb to the dominant paradigm of capitalism. Even Mondragon can create an environment where mental and physical labor has separate value within the organization. We are not immune from creating agency theory. If our Human Resource department only has the corporate world of human resources to use for educating itself, it shouldn’t be a surprise that our HR departments talk and act like other corporations. Unless we create a structure that either flattens hierarchy or contains and channels its power, we are susceptible to it overcoming our democracies. If Mondragon cannot eradicate it despite their principles and culture, then it will be doubly hard for our US Co-ops.

The US Agency Dilemma

Our coops have few, if any, resources as worker cooperatives. While the Worker Co-operative conferences offer some skill sets and workshops, it can be difficult to translate between industries. We often have to turn to our industry and their “best practices.” As I have mentioned before, we need to critique the “best practices” rather than simply accept them. In whose interest are these practices best? My guess is that they work best for the managers first and the stakeholders second. The workers are far down the pecking order.

Because US culture bases itself on control and power, it creates an environment where it can be quite easy for our worker co-ops to mimic them. We often haven’t the time or energy to explain and debate every detail of the operations to the membership. It is easier to let individuals specialize in their area and run it. However, that needn’t take away from the democracy of the organization. For the smaller co-ops, it is easier to maintain a collective attitude; however, as co-ops grow, they cannot always follow the Rainbow Grocery or the Arizmendi models due to the needs of their industry. These co-ops do need some level of structure and we shouldn’t see hierarchy as an automatic failure or example of Agency. We shouldn’t simply hire managers to run our co-ops and then complain about their decisions.

The Danger of Agency

One of my current fears regarding the Agency Theory and US Labor Movement comes from the two sources. First, the traditional labor movement has largely given itself over to Agency long ago. Corporate officers and union leaders make as much as the CEO and have little in common with the rank-and-file. SEIU’s growth strategy has resembled Wal-Mart more than a people’s movement. In our movement, we are seeing social workers and “community developers” find ways to co-opt the movement to include well-heeled consultants and advisers. Elsewhere, worker co-operatives are being created to outsource unionized government services with lower paid and benefit-poor positions.

The Cleveland Model offers hope, but also offers dangers. It is an agency development model that focuses on good jobs and keeping the neighborhood intact. However, it is based on the benevolence of a couple of large institutions and has a control structure that will fill the key decider roles from the established philanthropists (at least initially). Capital, in Cleveland, is creating worker co-ops to serve it, but doesn’t really adopt the concept of the sovereignty of labor or the subordinate nature of capital. This might end up being a revolutionary act and greatly aid the development of large scale co-operatives, or it might be a wonderful act of charity that really can’t be replicated (and subject to the goodwill of the benefactors). The real test of this project will come when the primary financiers step aside and allow the workers complete control over their destiny.

How Do We Move Forward?

We need to create a set of best practices for worker co-operatives regardless of their industry, size, and structure. Certainly, the CICOPA Declaration on Worker Co-operatives can provide a lot of guidance in this effort. Worker Co-op Best Practices need to be aimed at diffusing the control and power of elite groups within the organization as well as preventing cliques and informal processes from overcoming the democracy of the organization. This can and should be a role for the US Federation of Worker Cooperatives or its “project” the Democracy at Work Institute.

We need to recognize that few workers come to our co-operatives with the illumination of the co-operative movement. We need to create the means for them to understand and develop. We need to follow Arizmendiaretta’s belief that our movement is an educational movement with an economic basis. We can’t simply teach people how to read a balance sheet or write a cash-flow statement and think that we are done. We need to teach critical thinking an analysis. We need to develop a work force where every member has the knowledge and intellectual skill to engage as a fully vested member of the co-operative.

This means working to overcome our culture of treating people and labor as mere machinations of the marketplace. We need to find a way to develop a new path through our co-operatives that provides a real answer to neo-liberalism. If we only try to democratize capitalism, then we really fail. We can only be a parody of our capitalist competitors: children playing dress-up as opposed to engaging as a true adult and providing a counter-weight, a true Third Road to Socialism and Capitalism.

To overcome our Agency dilemma and develop a true Distributist society, we will need to challenge our institutions and our co-operatives to step forward, to be leaders of the labor movement. My next post will discuss the idea of how to do that and creating a neo-syndicalist movement to counter the neo-liberals.


Kasmir, Sharyn The Myth of Mondragon: Cooperatives, Politics, and Working-Class Life in a Basque Town, State of University of New York Press, Albany, 1996

Matthews, Race Jobs of Our Own: Building a Stakeholder Society (Alternatives to the Market and the State), Comerford and Miller and Pluto Press. Syndney and London. 1999

September 20, 2010

Roadblocks on the Path to Mondragon: The Theft of Labor

Filed under: Society,Worker Rights — Tags: , , , , — John McNamara @ 8:00 am

The three English countries (UK, Canada, and the United States) have, at their core, a culture that promotes and accommodates the theft of labor in a way that simply didn’t exist in Euskera (The Basque Country). Really, it is a problem for all of North and South America, but for this discussion, I will limit to North America; however, the effects of slavery culture and US imperialism have certainly caused its share of problems in worker development in the south as well.

The most obvious example of this theft was the slave trade and US slavery that was ended with the Civil War. The United States economy and society was built on slavery and the white form of it: indentured servitude. All of English society benefited from this theft of labor). In fact, this can be said for the entire Americas as all of its modern nations were based on the slave trade. In Paraguay, they even call their currency the Guarni (the name of the indigenous peoples who served as slaves).

Ta-Nehisi Coates, a senior editor for The Atlantic, has an excellent blog post on this subject called The Big Machine. Go read it and then come back. . I’ll wait. While Coates comments on race relatons, my focus is one economic class.

With the rise of capitalism and the industrial revolution, the theft of labor became a matter of principle. David Ricardo, an 18th century economist, even argued for The Iron Law of Wages which suggested that it was part of a natural economic order that workers only earn enough to sustain them to continue to labor. It was this point when the value of work was divorced from humanity and made to be simply another marketplace. Of course, as in most of the propaganda regarding “free markets”, it was a rigged system in favor of those who held capital. In the UK, workers who attempted to unionize or organize for better wages were deported or jailed. In the United States, they were murdered and blacklisted. Even Canada has its history of shooting and jailing workers.  Capital, in the English speaking north, has always trumped labor.

It would be nice to think that our culture of subsidizing our society through free labor was a quaint artifice of the past. However, it isn’t. Every summer, college students are expected to work for free (to better their future prospects). In the taxi industry workers are deemed “independent contractors” and expected to pay for the ability to work (NYC cab drivers often average only about $30 a day through this system). Of course, in college and professional sports, millions are made off of the labor of the athletes. Only a small percentage (the superstars) ever sees a share of that profit and in the college, the system takes extreme steps to ensure that the player doesn’t see a dime. A friend of mine who did legal work for migrant farm workers has dozens of tales of wage theft and outright chattel slavery in Ohio during the 80’s and 90’s.

This idea is so embedded in our culture that even the US Federation of Worker Cooperatives uses the apprentice/internship model for its Democracy at Work Network of peer advisors.

I don’t want to say that all volunteerism is wrong. Don José famously refused any compensation for his role as “advisor” to the Mondragon co-opeative. The workers even had to steal his bicycle so that they could justify buying him a new one that was motorized! Volunteerism has its place in truly fair and cooperative society, but in our society, we need to understand the fine line between volunteerism and exploitation. (Dr. Laurie Mook has a great book–What Counts? Social Accounting for Non-Profits and Cooperatives–on how to quantify volunteer hours with an expanded value statement that every coop should use).

The key point: The devaluation of labor in the US makes it a lot harder for the distributist model to take hold. Our culture establishes a base of distrust between the worker and the organization that uses their labor. It creates an environment where workers express solidarity with each other by enabling them to “get one over” on the machine. We can create worker cooperatives, but to change the culture of the workers from the asymmetrical survival strategies that they have spent a lifetime learning requires more than simply writing some by-laws.

We need accountability structures because we have a society based on theft. The original theft is from the worker who can then justify behavior as a means of fighting for their rights. We can’t really divorce ourselves from that culture without taking some extraordinary steps or developing our cooperatives from a different paradigm and working to only accept workers who have achieved that level of understanding (this might be why Cheeseboard and Rainbow Grocery can operate as they do). In the US, we had a strong labor movement until the neo-liberals under Reagan went on the attack. While they destroyed private sector unions, what replaced it was an Intifada of assymetrical class war that involves slacking, cigarette breaks, and Facebook. I’ve read some estimates where close to 25% to 30% of the work week (or white collar workers) is spent doing non-work things (chatting, smoking, web surfing, etc). On the other hand, blue collar workers at the lowest end are expected to wear diapers to work so as to keep the line moving. It is really a messed up work culture.

A Long Term View

As I will be writing over this week, we need to take a long-term view. We need to keep in mind that Mondragon was not created overnight. It started with the creation of a poorly funded school. Arizmendiaretta spent a dozen years educating students who then went to University. They then took jobs with the large employers and finally returned to Mondragon to establish their own company based on the values that they learned at their Priest’s school. Arizmendiaretta famously argued that theirs was an educational movement with an economic structure, not the other way around.

If we want to create something that looks like Mondragon and makes us feel good, we need to do more that simply try to model Mondragon. We need to first develop a legitamate belief in the value of humans and the value of work—not the false Work Ethic along the lines of Ragged Dick and the myth perpetrated by Horatio Alger that lures people into supporting capital with false promises of becoming rich themselves. We need a humanist ethic—one that has already been written down by the International Co-operative Alliance and Mondragon. We might even need to create a different pathway to a Distributist society. While the Spanish (and even the Maritimes) had their common religion and inspired priests to guide the people, we don’t. To create a culture that honors work, we need to create a means of honoring the human doing the work. Fortunately, there is already a model for that as well: syndicalism.

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