While our prolonged economic downturn is concentrating power and wealth in fewer and fewer hands, it is also stimulating efforts to create more democratic business models. Today’s Financial Times highlights an increased interest in worker cooperatives, with the Basque’s Mondragon as the model. From a June article in the Guardian:
MC [Mondragon Corporatio] is composed of many co-operative enterprises grouped into four areas: industry, finance, retail and knowledge. In each enterprise, the co-op members (averaging 80-85% of all workers per enterprise) collectively own and direct the enterprise. Through an annual general assembly the workers choose and employ a managing director and retain the power to make all the basic decisions of the enterprise (what, how and where to produce and what to do with the profits)… In short, MC worker-members collectively choose, hire and fire the directors, whereas in capitalist enterprises the reverse occurs. One of the co-operatively and democratically adopted rules governing the MC limits top-paid worker/members to earning 6.5 times the lowest-paid workers. Nothing more dramatically demonstrates the differences distinguishing this from the capitalist alternative organization of enterprises. (In US corporations, CEOs can expect to be paid 400 times an average worker’s salary – a rate that has increased 20-fold since 1965.)…
MC displays a commitment to job security I have rarely encountered in capitalist enterprises: it operates across, as well as within, particular cooperative enterprises. MC members created a system to move workers from enterprises needing fewer to those needing more workers – in a remarkably open, transparent, rule-governed way and with associated travel and other subsidies to minimize hardship….
The MC rule that all enterprises are to source their inputs from the best and least-costly producers – whether or not those are also MC enterprises – has kept MC at the cutting edge of new technologies. Likewise, the decision to use of a portion of each member enterprise’s net revenue as a fund for research and development has funded impressive new product development. R&D within MC now employs 800 people with a budget over $75m. In 2010, 21.4% of sales of MC industries were new products and services that did not exist five years earlier…
During my visit, in random encounters with workers who answered my questions about their jobs, powers, and benefits as cooperative members, I found a familiarity with and sense of responsibility for the enterprise as a whole that I associate only with top managers and directors in capitalist enterprises.
I was in the Basque region earlier this year, and my impression is that the Basques have long been enterprising and egalitarian. For instance, they did not have feudal social structures in the medieval era (land was owned by farmers; home-owners elected representatives; women could inherit property and serve in important positions, such as judges). So Mondragon may in part be a reflection of Basque culture.
So it should not be surprising to see that a business model that differs radically from modern capitalism would be seen as relevant only to those that capitalism has largely ignored. From the Financial Times:
Richmond Spokes, the bike shop where he works, has no boss and no owner. It is just months away from becoming a fully-fledged worker-owned co-operative, where all six employees have an equal share in the company and an equal say in how it is run. That sense of power and purpose is something Mr Johnson never had at his previous job doing computer repairs. “The computer store was just another job,” he says. “Every day when I was going to work for the man, I had to keep repairing my bike just to get to the job. I thought, why not just focus on fixing the bikes.”
The shop is one of several co-operatives in the early stages of forming in Richmond, California, a city suffering from high crime and poverty rates. Unemployment among the population of just over 100,000 people has hovered around 18 per cent this year, well above the current national average of 8.3 per cent. City officials have recently pinned their hopes on co-ops as a key strategy for shifting the local economy and stemming social problems. They believe co-ops can create more, better jobs and stimulate spending at other local businesses…
According to the US Federation of Worker Co-operatives, these businesses are mostly in urban areas, at businesses such as restaurants and cab companies. In other industries, such as home healthcare, co-ops have helped to prevent employee attrition and provide more reliable care for the elderly. “The worker co-op takes a profession that is low pay, low morale, and high turnover and makes people worker-owners so they’ve got a vested interest in that business,” says Liz Bailey, interim chief executive of the National Cooperative Business Association.
The city has engaged a consultant to help train and advise new co-ops. In addition to the bike shop, Richmond has a catering coop, and a solar installation company and a bakery coop are in the formation process. Many of the prospective solar company owner/workers have had trouble finding employment due to criminal records or interrupted employment histories.
Not surprisingly, these enterprises can have trouble finding financing:
Solar Richmond is funding its co-op, Pamoja Energy Solutions, through a charitable grant from a foundation. But other co-ops, such as the Richmond Spokes bike shop, that do not have the support of an official non-profit, are struggling to find investors. Banks are suspicious of co-operatives, says Wayne Landers, one of five founding directors of the new Richmond Worker Cooperative Revolving Loan Fund, which will begin making loans to co-ops next month. “Banks do not understand or trust the distributed leadership structure,” he says. “They would like to go to one CEO or one chief financial officer. They want it to be very cut and dried. In the co-op community, we need our own financing infrastructure.”
While this approach is likely to develop more in the way of resources and funding, it’s hard to imagine it will ever be as important to the US economy as Mondragon is to the Basque region, where it is the leading employer. It’s too bad, because, as we have written elsewhere, unequal societies are unhappy and unhealthy societies. But as long as Americans embrace individualism and the myth that one’s fate is the result of effort, as opposed to circumstance, we are going to remain divided and easily exploited.
Worker owned businesses are great but UNLESS the government backed counterfeiting cartel, the banking system, is abolished they will simply join the exploitation class themselves. How else did capital become distinct from labor in the first place?
Actually, the way labor and capital evolved, they were always separate, at least in western cultures. Ever heard of the aristocracy, landed gentry, peasants and nobles? Worker-owned coops are a beautiful answer to a massive problem in our society. Your point about the currency is important, because funding is clearly an issue for these types of companies. I wouldn’t be surprised if many banks frown on these arrangements not because there isn’t one CEO, but because it runs counter to the methods of social control and domination that private banks foster.
Well maybe the credit unions will step up, and instead of sending their member deposits to the Wall St casinos, will get back to their local investment business model!
what about using the JOBS act and setting up kickstarter-esqe funding. worker owned is also worker financed. you can beat them at their own game by using a law that was set up for fraud and extraction and turn it into something entirely different. who needs a bank.
Capital, if I am not mistaken, is a word derived from “caput” in Latin, which means “head”. In Italian, it’s “capo”.
As you should know, FB, in Biblical times individuals did not own land in the way we do today. Herder societies were nomadic and while they may have had traditional grazing grounds, personal wealth was not reckoned by property deeds, but by “capi”, the number of head of cattle, sheep, goats or what have you. [Of course, that wealth reckoning is essentially a derivative of the land, excepting a certain lesser factor for good/poor husbandry.]
In theory, such capital can cause itself to grow, but not beyond the bounds of natural physical limits. Our abstract debt-money definition of capital has long parted ways with reality, exacerbating our current financial woes.
I really question the value of modern labor, seeing as it is largely applied towards excessively consumptive and destructive activities. Labor, especially industrial labor, seems to have been a mere by-product: a regrettably necessary means of through-put which turned raw materials and natural resources into mansions, jets, and yachts for corporate oligarchs. Now we’re seeing that, as more direct and efficient ways of capturing and extracting wealth are engineered (0% lending to banks by the Fed, for example), “workers” are becoming outmoded.
Shopping around my mom’s suburban zone, one gets the feeling that that bomb went off, what was it’s name? The one that killed people, but left buildings standing? The NEUTRON bomb! At the gas station, no attendant. ATMs. At the Home Depot, no cashiers. At the supermarket, self-checkout as well. Pretty soon there’ll just be a slot on the side of the building where we insert money and it goes directly to the Cayman Islands.
But that’s just it. The real problem isn’t capital, as defined in classical (but not neoclassical) economics, but rather land.
Re: the de-peopling of retail—
And the products sold increasingly require self-assembly. LOL.
I guess we’re paying the “job creators” for their “intellectual property” and use of warehouse space.
As you should know, FB, in Biblical times individuals did not own land in the way we do today. Lidia
Actually, once the farming land had been distributed by lot it was PERMANENTLY owned by the family it was given to though it could be leased out for up to 50 years. I’m not sure about grazing land though.
These things are all over the Bay Area. I try to shop at them as often as possible. Website for Network of Bay Area Worker Cooperatives:
never let capital use your money.
capital and those middle class serving it do not pay taxes. they return part of your taxes to the pool for later retrieval, calling it a tax payment.
there are as many ways to legally avoid taxes as there are people. never pay a tax imposed upon you.
if you agree to pay a tax, pay it, especially if you made a stupid decision entering the contract.
that last robot assembly line paragraph should make you sick to your stomach.
if you are going to assume that you cannot make an impact as an individual, that the borg is all powerful, you may as well put a bullet in your head and avoid all the misery seeking corporation.
and the myth that one’s fate is the result of ones effort alone, as opposed to circumstance, we are going to remain divided and easily exploited.
Or only ones own effort, as you choose.
It is ignorance of basic dynamic systems interdependence, admittedly a topic requiring symbolic logic.
This reminds me of an old Chinese story Ram Dass tells in his Still Here book:
A son who is looking after his aging father builds a wooden box, that he will use to put his father and and dump over a cliff when the father is requiring all effort and yielding no profit.
So eventually he gets his father in the box, and wheels him up to the cliffs edge, and before he gets to the edge, the son here’s a knock from inside, so he stops.
Then the father says, “Son, just throw me over, don’t waste the box, your son is going to need it one day!
From what I’ve understood from remarks by David Harvey, a lot of the factories that were abandoned by western owners in the past two decades were taken over by worker cooperatives. Google points out to me that there’s an attempt made to describe their functioning here; Harvey has suggested that the ones that work best are the ones that also include a bank.
as in finance being in-house?
not necessarily; the point is mostly that the cooperative has to be able to fund itself at least to some degree to remain liquid etc., and that traditional bankers are likely somewhat unwilling to buy into Really Existing Socialism.
A good article on a similar topic, of a specific worker-run (but not owned) business, by Yanis Varoufakis:
Reading the supporting links at the top of that article, leads to some pretty interesting material too.
“But as long as Americans embrace individualism and the myth that one’s fate is the result of effort, as opposed to circumstance, we are going to remain divided and easily exploited. ” OUCH!
It doesn’t have to be either/or.
Nothing wrong with individualism. I make my living in a co-operative manner, blending on-farm with direct market; both individualism and cooperation are necessary to do well.
A farmer’s market is a good way to polish both individual energy and ideas, and cooperation. Same as with effort PLUS circumstance. I’m not Billy Gates and I know I had family help and a public school education, but I’ve also put thousands of hours of work, research and effort into my businesses. That individual creativity allows my work to stand out and flourish, and me to make good contributions to the market’s running.
Where Americans go wrong is allowing ourselves to fall for the idea that working for ‘the man’ and having A Job and letting others make all the decisions is all there is. (I once gave an interviewer the heebie jeebies when I told him no, I was not interested in working 6 days a week to manage his nursery, as I had elderly parents to care for; he was shocked someone was willing to choose life over servitude.)
There is dark hilarity in people (like Bill G) who can’t recall the aid they got all along the way and rewrite their history. That and the attending hero worship (bank account worship) is the myth-making that robs us of faith in ourselves and our ability to work together and make something worthwhile.
You write, too: ‘Where Americans go wrong is allowing ourselves to fall for the idea that working for ‘the man’ and having A Job and letting others make all the decisions is all there is.’
It’s actually the _lack_ of individuality and of the ability to march to one’s own drummer, in other words.
Ok but _lack_ of individuality is resolved in cooperatives, as well, if in a gentler way.
Most people aren’t gifted in business. It’s a talent, like any other. Would a society want only one set of gifts in its citizenry?
Our society does, it seems, and moreover, tends to assume that successful business-making is the same as the ethics of hard work and character.
Not saying you believe that, Mark P. Just observing.
Our society does, it seems, and moreover, tends to assume that successful business-making is the same as the ethics of hard work and character. Patricia
Moreover, since businessmen often use the stolen purchasing power of their workers (via loans from the counterfeiting cartel, the banks) then the point can easily be made that businessmen are often LESS honest than their workers.
Most of the distorted “individualism” talk we hear comes either from paid propagandists or angry, resentful wage/debt slaves.
Richard Sennett’s 2012 book, Together, the Rituals, Pleasures and Politics of Cooperation, is an exploration of the relationship between competition and cooperation along lines similar to yours. Considering that Sennett is a traditional Lefty, his most controversial contention is that we should be practicing cooperation rather than solidarity. He backs this with an analysis of several word/concept pairs:
political Left (think Bolsheviks) vs. social left (think Catholic Worker);
dialectic vs. dialogic conversation;
sympathy vs. empathy;
information sharing vs. communication;
He argues that we should not be employing dialectic conversation, i.e. making arguments, using information sharing and sympathy (“I feel your pain.”) to accomplish solidarity. Instead, we should take people where they’re at, respect differences while recognizing common humanity, and improve our ability to cooperate together to make change.
He diagnoses a casualty of our time, the “uncooperative self,” who has succumbed to withdrawal and complacency to relieve the extraordinary anxiety wrought by our Late Stage Capitalist world.
A small, cooperative workshop would be his ideal workplace. Scale is important to maintain real communication, something accomplished as much by secular ritual and informal gesture as by talk. This allows for the building of earned and informal authority (as opposed to dictated and formal), trust and ultimately, true cooperation that can overcome obstacles and even emergencies.
A little background on Sennett, in case you’re unfamiliar with him.
1) After his father ran off, he was raised by his mother in Cabrini Green, the infamous Chicago housing project. His mother was a lifelong Lefty, active in various causes and organizations, including the CP for a while.
2) He became a cellist–a Catholic settlement house played a role in this–and eventually graduated from Julliard, but a hand injury ended his concert career. David Riesman brought him to Harvard to study under himself, Erik Erikson and Oscar Handlin. Sennett earned a Ph.D. and became an “urbanist.” He currently holds joing appointments at the London School of Economics and NYU.
3) Together is the second in a three book series that comprises Sennett’s Homo Faber project, an effort devoted to examining now human beings make not only things but also culture. The implication is that we can rebuild our current culture, sickened by Capitalism, into a new, more community-and humanity-oriented form.
Eliot, I enjoyed your thoughtful comment. This is the way that I have worked in the past (in a small co-operative studio of 3 professionals) and intend to in the future. It’s just so much easier to have neither bosses nor underlings to deal with, rather, collaborators.
It’s essential to get out of debt, too. Because then you really can make a free decision to walk away from excessively demanding people and projects. It’s a great feeling to be able to fire a client!
My mom had an old saying, along traditional American “rugged individualist” lines: you’re the master of your own shovel. The sad thing is that the vast majority of Americans *are not* the masters of their own shovels! But they would never admit it. They don’t see their chains, I don’t think, and I don’t think most of them are ready for real freedom. They’re like the zoo animal who, after pacing in a rectangular cage for years, repeats the pattern even when the cage is removed.
And this is not only Americans: I was talking with a smart Italian patent-lawyer friend. He’s freaking out because work is down, and he has to keep paying his staff. He doesn’t want to downsize them, even though I think he knows that the financial outlook is only going to worsen. At the same time, he owns a number of private residences approaching that of John McCain. I told him he should sell off some of these properties in order to give the employees a good severance, and then BE FREE. He owns farm property as a vacation home in the town where I live, and he’s always nostalgic about the days when life was simpler, as though he has No Control over how his life got complicated! I am down-sizing and HE is jealous of ME. Some people are just trapped in conventional modes of thought and always will be, I think…
The important thing is economic rents.
All this stuff about “you didn’t build it alone” is a distraction. Of course no one built anything alone. The real issue is “you built it with labor and non-rent-producing-capital; awesome. You built nothing but instead parasitically collected rent by owning land or indulging in government-privileged practices like banking: you’re a parasite.”
“Where Americans go wrong is allowing ourselves to fall for the idea that working for ‘the man’ and having A Job and letting others make all the decisions is all there is.”
I think you’re right. But the point about sources of funding is also very important. Apart from traditional business loans from banks looking to deal with “one business owner,” who assumes the risk and reasonably wants to be compensated for this, most current avenues of funding are from those who are looking to extract value out of the organization that in the cooperative model is paid out to employee-owners.
So, the question becomes how do you get resources into the hands of people who intend to return profits to the organization and its employees, and not to rent seekers?
You have to hold this as a value, and people involved in finance typically do not.
From today’s links:
“Microlenders a lifeline to online business, Seattle Times. “On Deck’s rates run 18 to 36 percent,” according to the article. Microlenders or loan sharks?”
I wonder what a venture capitalist would take?
The Mondragon collective is anything but hippie. It was actually cofounded by a catholic priest (probably one of those alternative-socialist types…)
In the eyes of the “real” right-wing capitalists is that these systems, based on equality and solidarity, destabilize the divide-et-impera model at the bottom of the ladder. That’s why the banking system is loath to extend any credit ;-)
Exactly — banks don’t want to see this form of egalitarian ownership — it questions the very foundation of THEIR OWN existence.
Oh, and who do you think the original hippies were, btw? A bunch of danged Jesuits!
Yes, the Jesuits were running off to Asia for thousands of years. (And not a few civil servants of the British Empire)
In more recent decades, liberation theology was adopted by Catholics and others as a philosophical rationale along the lines of Maslow’s pyramid; i.e., that meeting certain basic needs are the foundation for providing a modicum of liberation in the here and now. (Some of us have given up waiting for their feminist awakening, however, although there are plenty of sympathizers among the ranks.)
In Buddhism this idea is often called Humanistic Buddhism, i.e., making the pure land here on earth.
Until Bloomberg bought it last year, BNA was employee owned for something over 100 years. Employee owned, and competed toe-to-toe with traditionally structured rivals.
If you look, there are examples in the U.S.
the ultimate successful model is UK retailer John Lewis…..100% worker-owned and governed. Check it out if you’re in the UK.
capital, middle class, and labor all exist for good reason, but if the system is relatively inert like the one before you, the best possible putcome is swapping chairs on a sinking ship. while the explicit democracy grows into inertia, the implicit democracy is building life boats…which get replicated, modified, blah, blah, blah.
A little OT maybe, but our state banking agency (Vermont) is trying to ban our credit union from describing its services as “banking.” Now who do you suppose is behind that?
Here is an excellent resource about American community based cooperative ventures:
Another resource is Gar Alperovitz’s book: America Beyond Capitalism
what happened in august you say?
a ca jury of peers cut its own throat;
the fed, having already given up on vacant homes gave up on vacant rentals, to maintain credit for Apple;
china is broke;
blah, blah, blah
Mondragon was created on the monastery model? We certainly don’t hear economists talking about that one. All that self sufficiency and success just isn’t good for the economy. And since it is a catholic model which held up for centuries, no pol can say it’s communist. But it is cooperative. And large enough to have its own finance and research departments. Why isn’t this “model” talked about?
And that’s another argument for state-owned banks (see North Dakota) which would lend to workers’ co-ops, under a directive to promote the local productive economy.
Yves—what you and Dabama going full on unabashed socialist marxist? the myth that one’s fate is the result of effort. Hell yeah, you didn’t build that, someone else did.
But as long as Americans embrace individualism and the myth that one’s fate is the result of effort, as opposed to circumstance, we are going to remain divided and easily exploited.
I don’t frequently indulge myself in this sort of thing to this extent, but you’re about as dumb as they come.
A little history from the horse’s mouth:
link for my post above about threat to credit union in Vermont:
Worker ownership is a step in the right direction.
Everyone benefits when workers and customers are owners as well, like in a credit union or a cooperative.
Customers should not be excluded, treated as if they are someone to be excluded from a good thing.
When I shop at a vegetable stand or a book store, I want to feel that my shopping there is making a contribution to the success of the enterprise and will be proud that I am a part owner as well.
At the end of each quarter, if what I paid exceeded what it cost to produce, including all the labor and capital expenses, i.e. if there is a profit, I will be able to partake in the celebration, along with the workers and managers, instead of being forgotten as a nameless outsider, while the ‘insiders’ divide the spoils.
ownership merely fosters a false sense of security, which must be subsidized by ever greater exploitation, in a positive feedback loop.
Worker owned businesses are a great idea and a lot could be accomplished if the tax code were revised to be more supportive of ESOP’s. I would like to see healthier tax credits based on payroll $’s and payroll growth, and larger tax credits for capital investment in such local businesses. Also, to encourage capital formation, tax credits and guarantees of some sort offered to local banks (local a must, no multinationals) to encourage lending to small local employee-owned businesses (get that money to Main Street), and I would like to see real distribution channels and retail establishments that carried worker-owned company goods only. A national advertising campaign aimed at educating the general public of the advantages of shifting their life styles to support such enterprises. Sort of like a bail-out of Main Street instead of Wall Street. It seems, based on need, it is Main Street America that needs to be bailed. Just a matter ow will.
>>Not only would such humbling work be good for company wide morale, but it would serve to instill a sense of reality and balance to those with executive positions.<<
Why stop there? We could send them to Nebraska to help bring in the harvest. Call it a working vacation. Good for the soul, yo.
I take it that is sarcasm, and the notion of breaking down class barriers creates a little bit of fear for you. Maybe you see yourself as a member of America’s upper Noble class, and the notion of manual labor is beneath you? Something those little peasant people should be happy doing for you, his royal highness?
But to answer your question first tell me who’s “we”? The policies the company adopts should be vented and approved by the employees themselves. If they want to delegate authority to certain positions, that’s fine, but there is no “We” as in big brother telling people what they should do.
Furthermore, working outside in the fields probably would be good for the soul. I would imagine the views and smells of the country-side would be saner and preferable to a cubicle or office in a crowded office tower on Wall Street filled with the stink of greedy, cheating, lying executives.
But I guess I’m sort of getting off topic here. I think we are suppose to be commenting about creating a more democratic workplace.
But I guess I’m sort of getting off topic here. I think we are suppose to be commenting about creating a more democratic workplace.
Really? Your reply (which smacks of class warfare) suggests otherwise.
As for my position in the hierarchy, I’m self employed. We all are actually, it’s just that most of us don’t realize it.
A further observation on worker-owned companies. Job specialization if fine up to a point, but I think maybe it has been carried to far. I think employee-owned businesses should take care that they foster some sort of common ground between all workers. For example, maybe Friday’s could be designated as “clean up” day, with all workers, including and up to the President, pitching in and working together to clean the men and ladies rooms, sweep the floors, dust the furniture, etc. Not only would such humbling work be good for company wide morale, but it would serve to instill a sense of reality and balance to those with executive positions. Heck, the same principles could be extended to Congress. Instead of flying out of Washington D.C. on Thursday night to their palaces and retreats, our elected leaders could be literally cleaning up the halls of Congress, the White House, and the various federal agencies. I’m serious, specialization has went too far, created class divisions between fellow human beings, and is a cultural feature that people take for granted, but should really be abandoned.
My company, once an ESOP, has been operating as a coop for 4 years, from the time when the president and the accountant both quit together rather than face a challenging economy. Those persons not quitting did have to make sacrifices and conditions remain very challenging for us.
Our biggest problems today are: (1) cash flow/float, and (2) a faction that wants to rejoin “the man”. To do so they propose a sale of company assets in exchange for a 1 year work contract. I think this would be a disaster, a give-away.
One can be disappointed in fellow human beings whatever the org structure. While I like the comment from one of the bloggers above about being the master of your own shovel, many tasks do require a diversified team. Woe betide when one team member sits back and figures on trading efforts of the others behind their back.
Where are they now?
Your point? And what has become of the publicly owned railroads of, say, 40 years ago? “Erie Lackawanna”, “The Detroit, Toledo, and Ironton”, etc. Merged, gobbled up by big railroads, disassembled and vanquished.
I think we are talking about an entirely different business model or business infrastructure being built to support a wider ownership in the country’s productive assets and their management and use. Capitol Hill policy makers promulgating legislation to foster small business, Federal Reserve monetary policies directed towards supporting the health of small business instead of the Stock, bonds, and money market. Government agencies created to encourage and support co-op and small businesses. Let’s set some national goals, say a goal of producing 70 % of televisions and smart phones on-shore, and create the infrastructures to support it. Grants to Universities for designing world-class automated manufacturing facilities, state and local tax credits for renovation and restoration of abandoned manufacturing facilities to not only put people to work but to rebuild the construction industry. I’m not advocating government owned and operated businesses, but just saying that government policy should be directed towards helping Main Street, not Wall Street. Obviously, Wall Street does quite well when they have the full support of the U.S. government behind them. Maybe small business could fare better with the same level of support.
How ’bout let’s not produce any televisions, and put a heavy tax on importing them, like the taxes on cigarettes and booze…
Oh, I get it. I don’t watch television, therefore no one should watch television. Well, I like to watch baseball, football, and the old classic movies thank you very much. I know, the thought of people watching $3200 an hour professional athletes perform must give $1,000 dollar an hour professional corporatists nightmares. But if you got that kind of talent you deserve that kind of pay, at least in this bizzaro universe, doncha know?
I just liked the rusty sign. Very poignant, don't you think?
Anyway, my job is to ask questions, not answer them. Plenty of people here with answers but how many can put together a well made question?
Somehow we can figure out how to include independent contractors in the sharing as well; otherwise, independent contractors might just become the fastest growing employment-category.
Regards from Basque Country
About Basque Country
What’s the difference between being able to make the tools, and being able to use them? As tool makers, every Spaniard should be asking this question.
Y que es la differencia entre pensar una cosa, y hacer lo?
While it is true that the Basque region has a unique culture that may have been receptive to cooperative enterprise, it is important to remember that Mondragon did not spring up overnight. MCC is the mature result of a 60 year story that began with five students and an enterprising priest. So it is inapropos and a bit unfair to compare Mondragon to Richmond.
On the other hand, Mondragon found important solutions to some of the historic challenges of worker cooperatives that we are applying here without having to go through that 60-year history. In addition to the wage ratio cap mentioned in the article, Mondragon developed formulas for equity ownership that permit each worker to develop personal wealth in the value of the business without creating a barrier to ownership for newer workers entering the enterprise. These also counter the built-in incentive to demutualize, that is to sell out to any attractive purchase offer for the business.
The article accurately highlights startup finance as a significant issue for U.S. worker cooperatives. Banks and other lenders just don’t get cooperatives. Mondragon developed an internal source of capital in the 1960s, fairly early in its history. This was an absolute necessity for Mondragon because, as here and now, banks would not lend to the Basque cooperatives. Mondragon’s credit union started with nickel and dime donations and became the linchpin of its success. That new cooperatives here have used foundation grants for startup capital is no big deal. Cooperatives are real businesses with positive cash flow and are capable of paying the cost of capital when financing is available.
I don’t think it is fair to write off the worker cooperative movement as a fringe experiment in the U.S. There are a number of successful and long-lived worker cooperatives around the country from which we draw knowledge. The past few years have seen a mushrooming of interest in worker ownership and in the founding of new cooperatives. The obvious failings of financial capitalism are driving new growth in all cooperative sectors.
While it is true that Americans have cooperation drilled out of us in grade school, it doesn’t take much reorientation to for most cooperative worker-owners to recognize that self interest is aligned with the mutual interest in the success of the business. Human are fundamentally cooperative in nature.
We are working on developing a Mondragon-like cluster of worker cooperatives here in Western North Carolina. I know of a number of efforts around the country working with variations on the same theme.
As Buckminster Fuller famously said, “You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.” That’s what this is about.