The Mondragon Cooperatives

by | Sep 21, 2022 | What I'm Seeing and Hearing | 7 comments

I had the chance to visit Mondragon, Spain, earlier this month. Known as Arrasate in the Basque language (Euskara) that is most widely used in the region, Mondragon gives its name to the collection of 95 worker cooperatives that employ some 80,000 people in northern Spain.

My image of a coop is based primarily on the various food coops I’ve been part of in the course of my life. Philadelphia, Amherst, and Cambridge have all offered satisfying experiences in cutting cheese and buying in bulk as a way to obtain high-quality food and other products at good prices, as well as a way to interact in a positive way with my neighbors. For my couple of hours a week weighing and packaging grains or stocking shelves, I think I got something like a 10 percent discount on broccoli and tofu and the sense that I was doing the right thing in the world—even if the coops didn’t always have what I wanted, never seemed to do that well financially, and suffered from high turnover of their overworked and underpaid staff. (I think the coops that survived the final decades of the 20th century may be doing better now, but I am not sure.)

That’s not what Mondragon is about, as you might guess from the number of employees. In case you missed it: 80,000 employees—80,000 people with health care, retirement plans, and secure jobs in an area that was nearly bankrupt 75 years ago. But that’s not even the whole story. You can get more details on structure and business impacts in this recent article that appeared in the New Yorker about 10 days before I left on my trip.

There are no volunteers working for a discount on brown rice at Mondragon. My five-day seminar included a tour of one of the cooperative Fagor’s industrial plants, where workers were constructing the steel shells of washing machines and refrigerators designed not for the home market, but for hospitals, hotels, and other institutions requiring appliances that can handle heavy usage. Nor would you find volunteers on the thousand-cow dairy farm we visited, nor at the bank that manages the shares purchased by each worker-owner. And if the people who work at one of the Mondragon coops feel good about what they are doing, it’s not because of some abstract ideal regarding the “right thing.” They feel good because they have health insurance, retirement plans, and the knowledge that if the cooperative for which they are working experiences a downturn and has to institute layoffs, they will be offered up to three comparable positions in other enterprises that are part of the cooperative, and if that is not possible, unemployment insurance at 80 percent of their lost salaries. They can feel good because they have a say in how the business is run, through a complex structure of both direct and representative democracy.

The slogan of Mondragon is “Humanity at Work,” and its mission is to create good jobs for as many people as possible. While not everyone in the Basque region works in a coop, enough of them do that the region has the lowest level of economic inequality in Spain. (One of Mondragon’s principles is that the highest-paid worker-owner in a company cannot be paid more than six times the salary of the lowest-paid worker.  According to the AFL-CIO, the average S&P 500 company’s CEO-to-worker pay ratio was 324-to-1 in 2021.)

The event that seems to have kicked off this cooperativeness was the arrival of a Catholic priest, José María Arizmendiarrieta, in Mondragon in 1941. The area was impoverished by the Spanish Civil War (most Basques had been on the losing side) and working conditions were brutal, extending to children. Arizmendiarrieta started a school for boys, and worked with a few of them as they pursued engineering degrees through a correspondence school. In 1956, once they had their degrees, he suggested that five of those young men form a cooperative to produce kerosene heaters. Other coops followed, many of them industrial, inspired by Arizmendiarrieta’s commitment to principles of equality for all, regardless of race, religion, social class, or gender. An effort to canonize Arismendiarrieta, who died in 1975, is currently underway, and even those who have little allegiance to the Catholic church regard him as a saint. He resorted at times to subterfuge and forgery to realize his plans for elements such as a credit union to serve the needs of the coops. I was sorry to learn that I would miss the performance of a musical portraying Arizmendiarrieta’s life the day I was leaving Mondragon, but realized that it would probably be staged in Euskara, and thus unintelligible to me. 

Today the Mondragon Cooperatives include a university, charitable foundations, a highly regarded culinary institute, and a large retail chain (comparable to a Target or a Walmart in the variety of goods offered) as well as firms that manufacture machines that make packaging, a company that produces cheese and yogurt (which I had for breakfast every morning that I was in Mondragon), elevators, escalators, and other products. While in the region, I visited the Bilbao Guggenheim (Bilbao has the nearest airport to Mondragon) and admired the work of a Mondragon construction cooperative that manufactured the asymmetrical components Frank Gehry’s unconventional design required.

A lot of people want to know why cooperatives have been so successful in this little pocket of the world. Some offer romantic explanations regarding Basque culture, which includes an agricultural tradition of neighbors helping neighbors and a more urban tradition of men’s gastronomic clubs, but I’m not buying that. The United States has a tradition of barn raisings and Alexis de Tocqueville noted the centrality of associations in the early United States, but cooperatives have had a minimal impact on our economy. The tour I was part of was fortunate to include a recipient of a Durfee Foundation Sabbatical who had visited South Korea and Rwanda, also presently sites of unusally high cooperative activity.  He suggested that regions that had suffered periods of significant stress and disruption might be more fertile ground for coops. (During and after the fascist regime of Francisco Franco, which lasted from 1939-1975, Basque separatists, mainly those of the ETA, claimed responsibility or have been charged with killing somewhere between 820 and 950 people and of injuring over two thousand others in more than three thousand terrorist bombings, assassinations, and other attacks over a sixty-year period before renouncing armed activity  in 2011. The peacemaking efforts of the Basque government are as worthy of attention as the cooperatives as the community comes to terms with a legacy of death and torture.) 

Mondragon, and cooperatives in general, have their critics. Some on the left see Mondragon’s employing thousands of workers who are not member-owners in countries such as Mexico, Morocco, Egypt, Argentina, Thailand and China as a shortcoming. But Mondragon has overcome numerous shortcomings in its history. Today, every worker-owner gets one vote, but in the past, one’s voting power was based on one’s salary. A person who made 10,000 Euros a year had only half the voting power of someone who made 20,000 Euros a year—and women were paid at only 90 percent of what men in the same position were paid. Both of those situations have changed for the better (women are paid the same as men), but as one of the presenters at our seminar said, “the sign of vitality is not to endure but to reform and to be able to adapt.” There is a constant tension in Mondragon between solidarity—the commitment of worker-owners to providing a high quality of life to one another—and efficiency—the commitment to a successful business that can create and preserve good jobs. 

Unlike my old food coops, in which coop members generally distinguished ourselves from the surrounding population with buttons or T-shirts expressing political positions, the people of Mondragon seem determined to fit in to the surrounding landscape. It was, in fact, puzzling to several of us on the tour that these large and successful businesses refused to employ any collective logo that would communicate their participation in the larger cooperative project. When we asked our Mondragon guide about this, he insisted that Mondragon wants people to buy their products because they offer high quality at a competitive price, not because they are made by “nice people.”

As another friend later remarked, however, when I told him about this perspective, once people became aware of the high quality and competitive prices of the products offered by one cooperative in the Mondragon Corporation, wouldn’t they then be prone to try to products of another Mondragon cooperative? Corporations such as General Electric drew on that marketing strategy to achieve success in the mid-20th century.

I hope the Mondragon cooperatives will come to see that while many consumers want high quality products at a good price, the ultimate product, for many, is an economy based on democracy, sustainability, and human rights. And that just may be the ultimate product that Mondragon can offer. 

[photo of the converted 17th century palace that serves as one of the training and meeting centers for the Mondragon Cooperatives @Lynne Weiss 2022]