= large cooperative network in the Basque country in Spain
- 1 History
- 2 Governance
- 3 Discussion
- 4 Status
- 5 Key Books to Read
- 6 More Information
"The network started in 1956 with a small stove factory built by five former students of a vocational teacher, a priest named José María Arizmendiarrieta. Unions were banned but agricultural co-op laws allowed workers to own their workplaces. Basque solidarity facilitated fund-raising. The movement faced a crisis in 1958 when Madrid declared members to be self-employed, hence ineligible for state health and unemployment benefits. Turning adversity around they created their own cheaper system. (Huet) In 1959, with this system's reserves, founders started the Caja Laboral Popular to give banking, entrepreneurial and health services to the four then-existing co-ops. (Since post-Franco Spain offered state health coverage, the network no longer provides its own health services.) Focusing on domestic appliances and machine tools for the protected Spanish market, the network steadily expanded. The network has repeatedly proved its value. In the 1980-83 recession, the Basque country lost 20% of its jobs. Nearby firms laid off massively or closed. Many co-ops took pay cuts up to 11%, and five co-ops closed. Yet, thanks to job transfers in the network, virtually no layoffs were made in the co-ops, stabilizing the region's economy. (Clamp) The costly network-underwritten re-tooling was quite beyond the individual co-ops.
Then a one-two punch hit with opening of Spain's market to Europe in 1986 and to the world in 1989. We visited in 1989. It was a decisive moment. Network appliances were suddenly up against major German and French brands. This presented a fateful choice: directly compete with multinationals or follow the Italian co-ops into niche markets? Re-tooling this time was judged too costly so in 1991 over 100 co-ops, organized up to then by regions and linked through the Caja, re-organized in three sectors as Mondragón Co-operative Corporation. This allowed speedy, centralized decisions typical of the multinational competition.
As of 2003, MCC had over 66,000 employees operating over 160 co-ops in three sectors: 135 industrial, 6 financial, and 14 distribution. In both sales and workforce, MCC is the Basque country's largest business corporation and Spain's seventh largest. The three sectors are backed by the Caja, housing, service, research, education and training co-ops. Mondragón University, founded in 1997, integrates technology with cooperativism in a multi-lingual environment for over 4,000 students. As a "second degree" co-op like the Caja its board is partly nominated by its own members (students and faculty), partly by the co-ops is serves. Other second degree co-ops include technology and management schools, and research institutes. Core industrial co-ops make an array of high-tech and durable goods for world markets including robots, machine-tools, appliances, auto parts, buses, and elevators. The network's supermarket, Eroski, partnering with a French chain, has become Spain's third largest grocery retailer and largest domestically owned one. Eroski's hybrid equity structure joins employees with customers as co-investors. (MCC 2002) Typical of worker co-ops, and unlike most capitalist firms, all Mondragón co-ops devote 10% of all profits to community needs. With a few exceptions -- the Fagor group with some 5,000 members -- most successful co-ops "hive off" related progeny after reaching 500 or so members. Beyond that number economies of scale do not make up for weakening of face-to-face production. Progeny take their own collective risk but infra-network competition is foreclosed by contracts with MCC committing all new co-ops to uniform principles of job creation, shared capital, and democratic structure." (http://www.globaljusticecenter.org/papers/bowstone.htm)
"At the same time, in the Basque region of northern Spain in the village of Mondragon, a priest, Father Jose Maria Arizmendi, took a different tack. He was part of the Basque resistance to Franco, the Spanish fascist who had taken power in Spain in the late 1930s. During this time, he was arrested and narrowly escaped execution. He was assigned to the parish in the small town of Mondragon. He assumed in his approach that controlling and developing the means of production in light of the values and priorities of the local community should be the principal focus of organizing and organizational development. rather than just focusing on the broader distribution of wealth. It was at the point of production, where work was done that democracy should be extended, and where worker/residents had the greatest leverage and power. Particular features of Spanish law made the creation of cooperatives attractive which became a distinguishing characteristic of the Mondragon "model." This was more complicated work but in the long run more powerful.
In 1943, shortly after arriving in Mondragon, he organized a polytechnical school for young Basque people that taught both the technical skills of manufacturing and production as well as values. In 1956, with five graduates of this school, Arizmendi purchased a gas stove company and organized it on a cooperative basis-one worker/one vote and a compensation ratio of one to three. The initial company employed 30 worker owners. It was successful. Another company was launched with another team, and then another, and then another. By the mid-1970s, they had some 45 companies employing 17,000 workers in manufacturing and retail as well as a shared cooperative bank, vocational schools, and housing cooperatives. In 2007, the Mondragon network-now the Mondragon Cooperative Corporation-has 85 companies employing 130,000 people globally. There are major cooperatives in retail as well as manufacturing. Eroski is a big box retail store that is owned by its employees and customers and has kept Wal-Mart out of Spain simply by being a more competitive alternative for consumers. Mondragon is the cutting edge of the Spanish industrial economy, and the region is recognized as one of the leading manufacturing regions in the global economy. Unemployment is very low and per capita income is high. Democracy is a reality in politics as well as in the economy.
Arizmendi recognized the central role of wealth creation in society and the fact that market sophistication and competition could be combined with social values. Through organizing, leadership development, and organizational sophistication, Arizmendi led a movement that has contended successfully in the market and state, and profoundly influenced civil society." (http://www.solidarityeconomy.net/2009/05/19/community-organizing-and-the-solidarity-economy/)
The Principles of Mondragon Cooperative Corporation
"The Principles of Mondragon Cooperative Corporation state:
“The Mondragon Cooperative Experience considers that Labour is the principal factor for transforming nature, society and human beings themselves, and therefore:
a) Renounces the systemic contracting of salaried workers
b) Gives labour total primacy in the organization of cooperatives
c) Considers Labour to be worthy, in essence, in the distribution of the wealth created.
d) Manifests its will to extend the options for work to all members of the society.” (http://www.solidarityeconomy.net/2010/01/04/overcoming-the-rift-between-worker-coops-and-the-labor-left/)
More information on The Mondragon principle “Sovereignty of Labor”
2. Nicholas Roberts:
Mondragon’s 10 principles are
1. Open Admission. 2. Democratic Organization. 3. Sovereignty of Labor. 4. Instrumental and Subordinate Nature of Capital. 5. Participatory Management. 6. Wage Solidarity. 7. INTERCO-OPERATION. 8. Social Transformation. 9. Universality. 10. Education
Mondragons Strategy is
- People are the mainstay of the enterprise (twenty-first century, century of knowledge)
- We are all owners and protagonists
- One person, one vote (democracy)
- The involvement of everyone in: Management, Ownership and Results
- Decentralised organisation
- Real inter-cooperation in funds and people
- Reinvestment of surplus
- Social responsibility
- Innovation: Technical/Technological, Organisational, Financial, Social
- Balance between job creation and financial profitability
3. Shann Turnball’s great little nef pocket book ‘A New Way to Govern‘ (pdf) outlines Mondragon’s guiding principles as follows:
- Balance. Between interests and needs; technological imperatives and social needs; financial needs of the firm and economic needs of members; members and management; co-operative and co-operative groups; cooperative groups and the host community.
- Future orientation. Planning must be orientated towards a future well beyond the time when the immediate problem has been solved.
- Organisational self-evaluation. Nothing is ever perfect. Frequent self-critical evaluations need to be built into the structure.
- Openness and non-discrimination. Membership is open to any person who can contribute as a stakeholder.
- Pluralism in politics. There is no identification with any political party or ideology. Individual members can freely express their views.
- Freedom of information for members on all matters relevant to decisions on their rights and responsibilities.
- Complementarity. Individual co-operatives should buy and sell to each other as long as this entails no serious sacrifice.
- Size limitation. This is based on the premiss that it is difficult for an organisation to remain flexible, democratic and efficient when it grows beyond a certain size.
- Formation into groups. Co-operatives associate in groups to achieve economy of scale and reinforce solidarity."
Separating Ownership from Voting Rights
Presented as a solution to the degeneration problem (i.e. coops turning into for-profit enterprises):
"The Mondragón co-ops avoid this degeneration by separating ownership, which varies in value, from voting, which is strictly equal. Instead of buying stock, new applicants advance labor to pay the membership fee. Roughly a year's salary, this loan by members starts an "individual capital account" (ICA) to which monthly and year-end profits and losses are credited or debited. (Thomas & Logan 1982, p. 136) Unlike stock shares, ICAs are neither accumulable nor sellable and carry only one vote. Being both individually recoupable upon leaving yet available meanwhile for collective investment, they constitute a sort of bank inside each co-op. Rights attach solely to membership and terminate when members retire or leave. There being no non-worker owners, co-ops remain whole solely in the hands of their active workforces, avoiding the Rochdale error. A co-op could be sold, but only by a hard-to-muster two-thirds of a general assembly vote, and this has never happened.
The "salary" spread from lowest to highest, currently 1 to 6, is based on an agreed job rating index. "Salary" is in scare quotes since members, not being employees, receive no wages or salaries. Rather, they have the following rights of owners and managers: 1) monthly and annual profit distributions; 2) 6% annual interest on their loans to the co-op; 3) a vote on undistributed funds; 4) access to all records; and 5) a vote on policy and managers.
Mondragón has outlasted Olympia as a co-op by 20 years, due partly to separating voting rights from ownership rights." (http://www.globaljusticecenter.org/papers/bowstone.htm)
From the article: Cooperativization on the Mondragón Model As Alternative to Globalizing Capitalism. Betsy Bowman and Bob Stone
How the private nature of cooperative property drives capitalist behaviour patterns
"Reserves build up as soon as the company turns a profit. In the competitive environment of today’s economies, these reserves, like the price of members’ shares, are a force driving the development of the company. Just like any capitalist shareholder, cooperative members do not want to see their shares depreciate. Nor do they want to divest themselves of reserves, once built up, as they represent both a security net for their shares and a way of developing the cooperative further. When a cooperative grows economically, it can often be observed that the cooperative spirit that powered the organisation at the beginning gives way to typically capitalist behaviour. One of the most obvious examples of this is the cooperative group Mondragón.
At the peak of its growth, the group was made up of 125 cooperatives linked through second level cooperatives and the governing body elected by a group assembly made up of representatives of the various cooperatives. Mainly comprising industrial cooperatives, the group had to face the issue of globalisation after Spain joined the European Union in 1996. To do so it introduced a policy of acquiring foreign companies which remained subsidiaries of Mondragón cooperatives and were not turned into new cooperatives. The workers of these subsidiaries kept the status of employees, reporting to the company management and did not become members like their counterparts in Spain. So the question is, why didn’t these employees become members? A number of different explanations have been mooted (legal difficulties, membership reserved to the Basque Country, etc.) which remain unconvincing. There is, however, another reason which is far more prosaic.
At the end of 2012, the group’s equity amounted to €3.95 billion, composed of 2.05 billion of shares and 1.9 of billion indivisible reserves. Unlike French workers’ cooperatives (SCOPs), the shares in Mondragón cooperatives are revalued. One might think that this fact would facilitate the entry of new members as they join the cooperatives on the basis of a share that is revalued every year. But it is not a full revaluation, as we can see from the existence of indivisible reserves which almost equal the number of shares. Even if these indivisible reserves do not belong to Mondragón members individually, they do represent a safety net for them and the potential for investment and development. So it is easy to understand that they are attached to them and want to keep them. From a strictly financial point of view, a new member of a Mondragón cooperative benefits from a discount of approximately 50% to access the group’s equity simply due to the build-up of these reserves. There is no doubt that current members are happy to introduce new people in the general and every day running of the cooperative, but doing so on a large scale and integrating employees of the subsidiaries bought is another problem entirely.
In other words, although the indivisible reserves are indisputably collective property, it is still private from the point of view of people outside of the cooperative. The reserves are indivisible due to the third pillar of cooperatives: limited remuneration of the capital. This does not resolve the issue of ownership linked to the existence of equity. A new approach could be tested, that of an equity-free company that is financed by debt alone. This would be an unprecedented political revolution that would pursue the idea of creating common property: power would no longer be defined in terms of holding company shares, but one’s place in relation to the production unit. Co-activity would grant the power to decide. Workers would manage production and users would be able to have their say on the direction and quality of production. But is this credible? Is equity really avoidable?" (http://www.workerscontrol.net/authors/cooperative-and-common-ownership)
Mondragon and the Market
"Mondragon obviously is embedded in the global capitalist order. It functions with that reality everyday. Its decisions are based on the proverbial bottom-line. Furthermore, it operates in countries seemingly without concern for the factors many liberals in this country believe should influence investment decisions. Mondragon invests in developing countries to compete on the level of the capitalists. For instance, Mondragon has manufacturing facilities in Mexico so that they can take advantage of NAFTA to import their home appliances into the States.
The critique of globalism can’t escape being applied to Mondragon. Nor can that critique be ignored by those who laud the spectacular growth of the MCC as proof that worker-ownership works!
To close the book on Mondragon based on their ability to play the game of neo-liberalism would be a mistake. US visitors who over the years have not tempered their criticisms of the MCC, especially their overseas operations, have returned home with insights garnered from the daily practices of the cooperatives.
Before venturing into the more positive aspects of the Mondragon experiment, it is only fair to record how Mondragon responds to their critics’ concerns that cooperative principles are flaunted.
In the early 90’s Mondragon learned that a large French retailer planned to open in Spain Wal-Mart-size “big box” stores. Since Mondragon has a large domestic appliance presence in Spain, to loose retail outlets to a foreign operator threatened their national distribution. To prevent these foreign acquisitions, Mondragon began buying up various retails chains throughout Spain. For Mondragon to expand beyond its manufacturing base, was a major corporate decision. And it was also significant for the MCC to absorb thousands of employees throughout Spain in traditional capitalist enterprises.
About ten years ago co-op membership was opened up to these new retail workers on a limited basis to ease the transition into the corporation, but the job growth of these retail outlets was outstripping the rate at which membership was attained.So early this year Mondragon decided to open up membership to all of the 40,000 retail employees. This appears to be a successful policy.
Outside of Spain the acquisitions are usually established firms purchased for strategic reasons. For example Mondragon manufactures the machinery that makes solar panels, but does not fabricate the panels themselves. So for instance in China, the largest factory for solar panels uses their machinery and so it makes sense for the MCC to purchase a Chinese manufacturer to serve as a supplier for these machines using Mondragon’s designs. Similar practices occur all over the globe. The MCC doesn’t buy these firms to spread cooperative principles, but to invest in them for their larger economic viability. In some cases these firms may not be profitable, but with new, proprietary inputs Mondragon expects that over a period of time they will be. Mondragon argues therefore that if the firm is not profitable when purchased why would the workers want to buy in?
In other cases Mondragon might find itself in a country with no legal avenue for creating a worker-cooperative, or where the government actively opposes such a development. That said, where Mondragon has succeeded in establishing a profitable firm and where the workers, the legal system and the government are all favorable to the development of cooperatives, there can be no reason for resistance to cooperative transformation.
It certainly cannot be said that Mondragon would be unable to handle such a transition. Along with the huge manufacturing sector, Mondragon facilitates financial services all over Spain and beyond. It also supports a development agency and a university. The MCC’s bank aids the development agency to guide both new and established firms to succeed. These efforts in turn are supported by the research conducted through the university. And behind the entire complex are the principles of Father Arizmendi. Together these resources provide all the knowledge that is needed to develop cooperatives from traditional capitalist firms.
The reason so many visitors pilgrimage to the Basque country every year lies precisely here. Sophisticated research and decades of proven practices support the assertion that the worker-centered basis of the cooperatives knows no language or cultural barriers. This explains why, in the last years of his life, Cesar Chavez began speculating on the creation of cooperatives based on the Mondragon model. And it is the reason, that recently, economic developers from the America Midwest have been eager to adopt some of the lessons of Mondragon’s history." (http://jasecon.wik.is/Analysis/Mondragon%3a_What_relevance_for_US_cooperative_development%3f)
Betsy Bowman and Bob Stone:
" Usually "profit" is income after all costs, including labor costs. But in a worker co-op, profit is income after all non-labor costs. For labor is not a "cost" but a mutual sharing of each member's capital. Since labor time is neither bought nor sold, a co-op's workers together share all profit and losses. Not more than 30% of losses may be debited to a co-op's undivided account. Democracy is central and turns on membership. Ultimate control of production, income spread, and board seats lies in the yearly general assembly. It elects the board of directors (consejo rectoral) which appoints management. The assembly elects a watchdog council (consejo de vigilencia) to monitor management and a social council (consejo social). Subject to board and management approval, the social council indexes jobs within the 1 to 6 spread based on demands for experience, training, responsibility, and hardship. In individual grievances over pay scale and social welfare its decisions are binding.
A Mondragón-like co-op re-unites in one person the functions of worker, manager and owner. Capitalism consigns these functions to three separate persons. To personify these functions is to impose on the three groups thus constituted an imperative that pits them against the other two. Re-uniting these functions in each member abolishes the conflict among the three groups. In this re-combination, however, one typical "function" does not re-appear when a firm becomes a co-operative: that of capitalist itself. Their only function is to "furnish capital." But this is not a distinct contribution to production. Workers can exercise entrepreneurship and either hire capital or capitalize a Mondragón-like co-op with their own labor. Capitalists as such make no irreplaceable contribution, Schweickart notes (2002, p. 33), and since profits should go only to those who do, he concludes they deserve none. Thus while workers assume manager and owner functions, the capitalist side of the owner function -- vestigial under capitalism -- drops out altogether with cooperativization.
Finally Mondragón works better at the capitalists' own game than do capitalist firms! Concluding his two-factor comparative study, Henk Thomas writes: "Productivity and profitability are higher for co-operatives than for capitalist firms. It makes little difference whether the Mondragón group is compared with the largest 500 companies, or with small-and medium-scale industries; in both comparisons the Mondragón group is more productive and more profitable." (Thomas 1982, p. 149) Studies of job creation, worker compensation, and job security yield similar results. (Thomas & Logan; Bradley & Gelb)
Central to our argument for cooperativization, is the persistant indication in available research that the closer workplaces get to Mondragón-like co-operative labor, the more productive and profitable they are. Summarizing forty-three economic studies of self-management, Levine and Tyson conclude worker participation in management usually boosts productivity, but especially when combined with other elements of self-managed cooperative labor, such as: 1) profit-sharing; 2) guaranteed long-term job security; 3) small wage spread; and 4) guaranteed worker rights. (pp. 205-214) To these Mondragón adds the potent element of worker ownership. So, instead of tapping the power of liberated co-operative labor with one or two such elements, Mondragón unites all of them at once. Such co-ops outstrip all types of capitalist firms in productivity not in spite of being democratic but to the extent that they are." (http://www.globaljusticecenter.org/papers/bowstone.htm)
1. Betsy Bowman and Bob Stone:
"Mondragón has not been true to its impetus. Is it a model? Three sets of degenerative practices make it less worth emulating and endanger its economic superiority. The practices, and remedies, are:
(1) When demand increases, the co-ops often hire non-member wage labor. MCC recently persuaded local legislators to raise the ceiling on "contract" labor to 30%. (Köhler) And if a co-op applies, MCC may allow it up to 40% non-member workers. (Huet) Illegal "eventuales" or temporaries -- mostly female -- are not counted in the 30% quota for "contract" labor, and make up a substantial percent of workforces. In some co-ops over 40% of work may be done by non-members. The overall percentage is unknown since MCC no longer gives out membership figures. Collective exploitation of wage labor encourages more of it, membership limits, and sell-outs. Ruling out the false benefits of wage labor will in the long run be a benefit.
(2) MCC is using women as a reserve army of labor. True, on the gender division of labor women do slightly better at MCC than in capitalist firms (Hacker & Elcorobairutia) and have a major presence in management. But blue collar work remains largely male. This second-class labor pool is incompatible with cooperativism. Solutions include: observing the one-worker-one-vote rule, gender integration of all co-ops and jobs; and child-care in workplaces. (Ferguson, pp. 94-99) These practices would probably boost productivity by fully engaging women's talents.
(3) There are unnecessary sacrifices of cooperativism. In 1999 external non-voting capital stakes were 13% of MCC equity. (Köhler) This is due to joint ventures and acquisition (or start-up) of many capitalist enterprises abroad, mostly in Latin America. Vague assurances that cooperativization is "on the agenda" are extended to such workers. (Logue) This perilous mixing of co-op with external investor capital contravenes co-operative principles.
Worker alienation is rampant. (Kasmir) Social councils are underutilized. (Clamp) Unionization is under discussion. (Huet) Work-floor democracy is a complex issue. In the mid-1960s the network studied Scandinavian work groups to replace Taylor's "scientific management" -- up to then dominant on the work-floor. Ironically Ulgor workers voted down the innovation in favor of the assembly line! (Thomas & Logan) In in89 Total Quality Management was introduced with other disempowering practices: just-in-time inventorying, work-movement monitors, and swing shifts. Studying effects, George Cheney concluded that the changes threaten Mondragón's "organizational integrity" as a "value-based" rather than "market-based" firm. This "neo-cooperativism" trend "privileges an externally driven form of participation, in marked contrast with [one]…in which workplace democracy is justified primarily or significantly in terms of the benefits for the employees and the organization as a whole."
Yet while members may not often exercise their powers over their work-lives and managers, they have them. In 2001 although the social council at Fagor -- the largest and oldest co-operative -- issued a blistering critique of MCC's evolution, it continued. Centralized decision-making has made meaningful consideration of alternatives harder. An observer sadly concluded that the Fagor dissidents were "not confident [they] can provide an alternative -- they worry MCC is correct that survival in the global market requires compromises of critical co-operative principles." (Huet) (http://www.globaljusticecenter.org/papers/bowstone.htm)
2. Management does not truly represent the workers
"Kasmir (1996) has provided one of the more critical studies of the Mondragon cooperatives, finding that many workers feel that they are excluded from meaningful decision-making. In one case, this even led to a strike, in the Ulgor factory in 1974 – worker-owners striking against themselves should be unthinkable if the cooperatives were working as intended! In a study of one Mondragon cooperative, Fagor Clima, Kasmir found that dissatisfaction resulted from the fact that the Management Councils, which run a company in its daily affairs, end up doing a poor job of promoting worker interests, despite the fact that they are appointed by the Governing Council that is elected by all the worker-owners. A Social Council, elected by the workers, is supposed to represent worker interests in daily operations, but is hampered in its activities because workers are not allowed sufficient time off for involvement in these councils, and because Social Councils are not allowed to hire external consultants in order to review business plans, financial reports and the like (unions under Spanish law are allowed to do these things). Hence, some workers feel that their interests would be better represented if they worked in a capitalist factory and had a union. Kasmir presented evidence that this sentiment is found not only among people working for Fagor, but also other Mondragon cooperatives.
Despite these critiques, Kasmir’s work also provides powerful evidence for the benefits of the Mondragon cooperatives. In her study, she wished to compare labor-management relations in a mid-sized cooperative firm to a similarly sized “standard” capitalist firm in the same sector and locality. While she was easily able to find a suitable cooperative firm in Mondragon, she was not able to find a good capitalist comparison because the capitalist companies had either recently downsized and relocated production elsewhere, or had adopted some of the principles of cooperatively run factories (e.g., sharing some of the profits, keeping workers informed through regular meetings, providing better job security) and could no longer be regarded as “standard capitalist firms” (Kasmir 1996: 123-6). In order to find a suitably capitalist company, she had to widen the geographical scope of her search and found a company in a nearby town. This shows strong evidence that the Mondragon cooperatives provided more stable employment, and changed the bargaining relationship between employers and workers in capitalist enterprises because workers had the option to work for a cooperative instead." (http://www.icape.org/b5-Hoeschele.pdf)
Mondragon as a Distributist project focusing productive community and stakeholder property
"As Race Matthews puts it,
The lesson from all the consumer co–operatives and co–operative movements that have failed, either wholly or in part, is that the experience of consumption either of goods or services is insufficiently central to the lives of ordinary people to provide the foundation on which a lasting co–operative consciousness — and thereby an enduring immunity to the basic agency dilemma — can be established. As the account of Mondragón in the following chapters makes clear, the only experiences equal to the task of developing a lasting co–operative consciousness or culture are those of work and property. It is only through stakeholding in property and the exposure on a daily basis to workplace democracy that members can acquire the habit of seeing themselves as the masters of their own destiny, and fully accepting the entitlements and obligations consequent on their status.
It is the sense of ownership alone that can build an enduring distributist culture, and this sense that makes Mondragón the more interesting example. Founded in 1953 by students of a rather remarkable parish priest, Father José Maria Arizmendiarrieta, it has grown from a simple paraffin stove factory into a giant corporate conglomerate with several hundred worker-owned firms involved in the manufacturing of the most sophisticated products, banking, retailing, research, education, construction, business services, and insurance. Today, the Corporation has €33 billion in assets, does €16 in sales, employs 104,000 workers, 81% of whom are worker-owners to whom they distribute 52% of the profits. But Mondragón is more than a mere “corporate success story.” It is a business model that is completely counter to the modern corporation.
In the first place, Mondragón is ruled by the principle of subsidiarity; that is to say, the higher level exists to serve the lower levels. Indeed, the individual cooperatives have the right to leave the corporation; participation is voluntary. This makes it impossible for a centralized authority to “lord it over” the member cooperatives. The corporation itself is ruled not by outside investors (there are none) but by the workers themselves. You might call this an inverted model of corporate organization. The firm is built from the ground up rather than the top down.
But that is only part of the story, because Mondragón is more than just a business enterprise; it is a social one. It is of course a profit-making enterprise, but profit is not an end in itself. It is merely a means to a much broader set of ends. In addition to its normal business enterprises, Mondragón runs an education system, a university, social safety networks, retirement systems, research and training institutes—things normally provided by governments through taxes—and provides all on its own resources, without the help of government. The guiding principle is solidarity, people caring for each other with the help of formal structures and institutions.
Between these two principles, subsidiarity and solidarity, Mondragón takes the principles of Catholic social doctrine and turns them into a living reality. And a successful one at that. The fear of implementing a “morality-based” system is that it might compromise the necessary business goals. But the opposite seems to be the case; the cooperative model doesn’t merely work, it works to produce a strong and growing network of firms that are fully profitable and competitive in local and world markets. Moreover, it lessens the need for big government by providing social services from its own resources. But more than these successes, what Mondragón really builds up is community, that sense of mutual caring and obligation that must be the real point of any sane economic system.
And therein lies the significance of Race Mathews’ book." (http://distributistreview.com/mag/2011/05/who-owns-our-jobs/)
More in the book review on: Dr. Race Mathews: Jobs of Our Own: Building a Stakeholder Society, Alternatives to the Market and the State. The Distributist Review Press, 2009
- $17bn. sales in 2011, number of employees (83,569) 
- Apostolis Xekoukoulotakis: In 2006, only 4 out of 10 workers were members of the mondragon cooperative. (MB: this strongly suggests a two-tier structure with privileged cooperators)
Key Books to Read
- From Mondragon to America: Experiments in Community Economic Development.By Greg MacLeod. UCCB Press, 1997
- The Myth of Mondragon: Cooperatives, Politics and Working-Class Life in a Basque Town. By Sharryn Kasmir. State University of New York Press, 1996
- Values at Work: Employee Participation Meets Market Pressure at Mondragon. By George Cheney. Cornell University Press, 1999
More publications at http://library.uniteddiversity.coop/Cooperatives/Mondragon/
- Extended (five) book review at http://www.solidarityeconomy.net/2011/03/16/mondragon-as-a-bridge-to-a-new-socialism/
- profile of the Mondragon founder, http://level.interpreters.coop/the-cooperative-man/introduction/ ; "José María Arizmendiarrieta is considered the founder, or inspiration, of the cooperative movement of Mondragon."
Altuna, L. 2011. Responsabilidad social cooperativa y sostenibilidad a comienzos del siglo XX.Informe de investigación, Universidad Pública de Navarra.
Azkarraga, J. 2007. Mondragón ante la globalización: la cultura cooperativa vasca ante el cambio de época. Cuadernos Lanki, Eskoriatza.
Azurmendi, J. 1988. El hombre cooperativo. Otalora, Aretxabaleta. Joas, H. 2004. “Morality in an age of contingency”, Acta Sociológica, Vol. 47, No. 4.
Sarasua, J. 2009. Mondragón en un nuevo siglo. Síntesis reflexiva de la experiencia cooperativa. Cuadernos Lanki, Eskoriatza.