The marvels of Mondragon

...The best book on the subject remains that by an Englishman, Robert Oakeshott, despite the emergence of some anti-union bias in the last chapter...

...One of the lay founders of the movement has recorded their resistance to thecreation of the Caja: "We told him, yesterday we were craftsmen, foremen, and engineers...

...Father Arizmendi, who died in 1976, must have been an extraordinary man...

...Among the best sources are the Industrial Cooperative Association, 249 Elm St., Somerville, MA 02144 (617-628-7330) and the Association for Workplace Democracy, 1747 Connecticut Ave...

...True, there are some advantages peculiar to that particular place and time, but the absence of these advantages need not discourage anyone...

...In the stricter sense of cooperatives of workers directly producing goods or services, success has marked the efforts of plywood co-ops in the Pacific Northwest and refuse-collecting enterprises in the San Francisco area...

...In the early nineteenth century Christian socialists in France, led by Philippe Buchez, produced some modest results with cooperatives of Parisian craftsmen...

...in fact, especially in the early years of the movement, he often had trouble finding the words to express his ideas...

...There are alarming and repellent features to that future that make it necessary to face it...

...These are not artsy-craftsy enterprises that feature high labor intensity...

...If we look no farther than our own country, the fabulously wealthy America, we are staring into the faces of 9,500,000 unemployed human beings, according to the official figures...

...to increase the productiveness of labor, consists in the vast stimulus given to productive energies by placing the laborers, as a mass, in a relation to their work that would make it their principle and their interest (at present it is neither) to do the utmost, instead of the least possible, in exchange for their remuneration...

...In mid-century Christian socialists like the English clergymen, Frederick Maurice and Charles Kingsley, experimented with cooperative associations of workingmen in London, but their efforts were even more "dwarfish" (Marx's word) and short-lived than those of Buchez in France...

...The term suggests one who speaks eloquently, stirs deep emotions, and builds a personal following...

...It is scarcely possible to rate too highly this material benefit, which yet is as nothing compared with the moral revolution in society that would accompany it: the healing of the standing feud between capital and labor...

...Another thing that struck me was the sequence showing a meeting of the board of directors of the Caja Laboral Popular (Bank of the People's Labor), the financial, research, and organizational hub around which the Mondragon Group revolves...

...Tomorrow you want us to become bankers...

...In 1943 he persuaded one-quarter of the town's residents to contribute to the foundation of a technical college...

...Today we are trying to learn how to be managers and executives...

...As much as anything else this homely fact impressed me with the democratic, worker-oriented nature of the Mondragon phenomenon...

...These were: a) limitation of membership to actual workers, b) inclusion of all workers as members, from the least to the most skilled, c) the requirement that new members contribute a substantial membership fee (now about $2,000 payable in easy installments), and d) an arrangement whereby profits are not paid out immediately or wholly to the members, but are divided three ways: seventy percent placed in each worker's account, payable with interest on retirement but meanwhile treated as a loan to the co-op, and the remainder split between reserve funds and contributions by the co-op to "social purposes to benefit the community...

...An apt description of the essence of his leadership comes from the present director of the Escuela Politecnica, Javier Retegui: '[Arizmendi] sees the future - and makes us face it.' " Today IN EUROPE and the Third World intelligent Christians are coming to recognize that neither capitalism nor Communism can provide both freedom and justice, can produce a society that will insure the ordinary citizen a decent job and the chance to fulfill his or her potential as a worker, as a creator, as a parent, as a member of the body politic, as a child of God...

...a new sense of security and independence in the laboring class...

...doing business to a total of $ 15 billion...

...More and more it is becoming apparent that the best way to do that is by way of a workers' co-op...

...Assigned by his bishop to work with the young people of Mondragon, many of whom were unemployed, Arizmendi concluded that what they needed was technical training...

...Robert Owen, a more secular idealist but a much better manager, dazzled the world with his big textile mill at New Lanark, Scotland, but when he tried his New Harmonies in Indiana during the 1820s, the music turned discordant...

...If we look beyond our borders, especially to the south, we can see even more depressing examples of the failure of capitalism to meet Christian standards, or even human standards, of social justice...

...The contribution of Father Arizmendi, who persuaded them that it was not only possible but necessary, has been nicely described by Ana Gutierrez Johnson and William Whyte in their 1977 article on Mondragon in Cornell's Industrial and Labor Relations Review: "Was Jose Maria Arizmendi a charismatic leader...

...In America that recognition is arriving more slowly...

...Clearly he did stir emotions, but they did not come to center upon himself...

...was the social teaching of the church, including that passage from Quadragesimo Anno that encourages partnership arrangements whereby "wage-earners are made sharers in some sort in the ownership, or the management, or the profits...

...What he himself taught the students, besides an emphasis on competence and an impatience with theory divorced from practice...

...There is almost no turnover...

...The room, in furniture and style, looked like any board room in a successful American corporation, but none of the men around the table was wearing a suit...

...The technical college, infused with Christian social teaching, was providing the latter...

...He stirred people to think and act...

...The AFL-CIO, like most union movements, has been uncomfortable with cooperatives because they seem to undermine the adversary role with which they feel most at home...

...one consumer and four agriculture cooperatives...

...Nevertheless, one day recently, as I sat in a lecture hall at Harvard's Institute of Politics, I was tempted to repeat Lincoln Steffens's glad cry, "I have been over into the future, and it works...

...In England, where the unions are even more class-conscious than here, this is changing as unemployment becomes more and more menacing...

...According to the founders of Ulgor [the first co-op], Don Jose Maria was neyer an eloquent speaker...

...Most are capital-intensive and operate with sophisticated technology...

...He then has the same freedom and responsibility to manage that would characterize a conventional firm, at least one with a union contract...

...In America producer co-ops have been successful mainly among farmers as marketing associations...

...Few people since then have expressed more eloquently the advantages of an "association of the laborers themselves on terms of equality, collectively owning the capital with which they carry on their operations...

...Last fall, for example, the Trades Union Congress of Wales announced, after an eight-month study and a visit to Mondragon, that it was seeking public funds to start a similar operation that would create 10,000 jobs for its unemployed members...

...What is perhaps most extraordinary about Mondragon is the fact that among all these diversified enterprises, winch are now scattered thoughout the Basque provinces, there has been only one failure: a small fishing co-op...

...The standard dress was slacks and a sweater...

...one bank and research center, with 93 branches and 206,841 depositors...

...Mondragon has now proven that the chances of success are excellent if the right formula is followed...

...This in reaction to the shots of handsome buildings and landscapes that mark the central operations in the town of Mondragon...

...In 1848, the same year that Marx and Engels were pushing socialism in the direction of nationalization of productive property in their Communist Manifesto, John Stuart Mill was making a counter-statement in behalf of another form of social ownership...

...That is impossible...

...Although Spain has only a weak cooperative tradition, this first co-op not only incorporated the basic Rochdale principle of one-person-one-vote, but added several other features that were important in helping it to become successful...

...Compare that with the average rate of failure among capitalist enterprises...

...Retirement is at full pay plus an accumulated share of the profits, which in 1978 could be as much as $40,000 for one member...

...Herewith some data to support that statement: Since its founding in 1956 by Father Jose Maria Arizmendi the Mondragon Group has produced 76 industrial cooperatives with 15,621 members, five service cooperatives with 1,500 members...

...In this country plant closings and runaway shops are relentlessly educating union officials to the realization that they have a responsibility to their members who want to keep those plants operating and themselves working...

...the transformation of human life, from a conflict of classes struggling for opposite interests, to a friendly rivalry in the pursuit of a good common to all...

...The AFL-CIO charges that "true" unemployment is closer to 13,500,000...

...In this day of declining productivity in relation to our industrial rivals in Europe and Japan, Mill's words should provoke some interest...

...and the conversion of each human being's daily occupation into a school of the social sympathies and the practical intelligence" (Principles of Political Economy, Book IV, Chapter VII, Section 6...

...Otherwise it has been a case of "dwarfish" results or failure resulting from inadequate capital, incompetent management, faulty structure, weak commitment by worker-members, or all of the above...

...To provide the former he persuaded the group in 1959 to start the Caja Laboral Popular, which became a kind of super credit union providing loans, accounting services, and eventually research and technical assistance to the co-ops...

...It is The Case for Workers' Co-ops (Routledge & Kegan Paul, Boston, 1978, $21.50), and the heart of it is the chapter on Mondragon...

...It was not always easy to understand what he was getting at, yet the members listened patiently and reflectively for they sensed that he was following a vision of a better world that they could help create...

...The first venture was an immediate success and led to the formation of additional co-ops in Mondragon and neighboring towns for the manufacture of foundry products, machine tools and food-handling equipment, plus a more conventional consumers co-op store...

...As I watched the film at Harvard I was also tempted to exclaim, "I have seen the future, and it is beautiful...

...the elevation of the dignity of labor...

...On the basis of one-worker-one-vote the members of a Mondragon co-op elect the board of directors, and the board selects a general manager for a term of four years...

...14 housing co-ops...

...I was watching a BBC documentary about Mondragon, a town in the Basque country of Spain that has become the center of the most impressive success story in the history of workers' cooperatives, a history that has been marked by lofty rhetoric but few solid successes...

...George Wright, general secretary of the Welsh TUC, said that his organization was tired of being "a field ambulance for capitalism" and wanted to start its own cooperatives that could directly serve its members...

...The right blend of idealism and pragmatism had clearly not been discovered...

...To Father Arizmendi, however, the major problem was still the guarantee of adequate working capital, which, as stated, has been one of the major causes of co-op failure, along with the scarcity of competent managers willing to work for modest salaries...

...Salaries (called "advances") start at the prevailing wage for the area and go to a top, for the highest executives, of no more than three times the lowest salary...

...But if we take Father Arizmendi's advice on how to face it, I believe that we can build a future that works, and is beautiful...

...In 1970 there were 5,015 with 3,133,000 members, more than half of all farmers...

...We are finally developing a body of scholars and practical experts who can help people with technical advice and assistance on structure, funding, and management...

...NW, Washington, DC 20009 (202-265-7727...

...Over the years since then apostles of producer cooperation have been able to point to a few effective demonstrations of Mill's principles in England, a few more in France, still more in Italy and Israel, and even more in Poland, where 800,000 workers were involved by last report...

...Among black youth, it is up around forty percent and we may be seeing the creation of a permanent underclass whose only hope of income is in the pursuit of crime and violence...

...People like Michael Novak and William Buckley at the upper level of the intellectual scale and Jerry Falwell at the lower are still trying to convince us that capitalism and Christianity make compatible bedfellows...

...36 school co-ops and one technical college...

...These feature's not only guaranteed strong public support but a larger pool of working capital than is usually available to producer co-ops...

...One of them has nearly 3,500 employees (too big, they have concluded now) and is the largest producer of electric stoves and refrigerators in all Spain...

...The total number of full-time working members is in excess of 28,000...

...He wrote, "The mode in which cooperation tends...

...Arizmendi] sees the future - and makes us face it...

...It was therefore natural that when five of his students earned their engineering degrees and had picked up some experience in a conventional firm, they should decide to start their own business (1956) making stoves for cooking, first on an informally democratic basis and then a few years later (1959) with a formal cooperative constitution largely written by Father Arizmendi...

...At Mondragon, however, the formula for success seems to have been discovered and practiced to a degree unknown anywhere else in the world...

...Before becoming a priest he had fought on the Loyalist side in the Spanish civil war been captured by Franco's troops and at one point was under sentence of death...