Another Town Is Possible: Community Wealth Building in the Basque Country

Yves here. Readers sometimes ask for success stories to show that there are possible paths out our present economic and social morass. The Basque has long operated a collective ownership model centered around Mondragon. And it has been successful in protecting the community from economic crises. I was in Portugal and Spain, by happenstance doing an austerity tour when post financial crisis unemployment in Spain was 27%. The locals in every town I visited could not keep themselves from making at least a passing mention of how bad things were…except in the Basque, where unemployment was only 12%.

The article also highlights local citizen’s concerns that the Basque economic model might be nearing its sell-by date. Unlike the Anglosphere, those issues seem to be getting real consideration.

By Ben Wray, a freelance journalist and writer. He is ex-editor of The Common Space. Originally published at openDemocracy

For decades towns have been buffeted by economic headwinds that feel out of the control of local communities. De-industrialisation, austerity and the rise of e-commerce have hollowed out many towns, leaving high streets barren.

The pandemic has, if anything, deflated hopes of a better future for town economies further, crushing local businesses and entrenching digitalisation, while once again raising the spectre of a generation scarred by unemployment.

For those who have experienced these economic cycles before, the temptation is to look for the next big investment to come, whether from the central state or a corporate giant riding into town – or both. The notion that recovery could start with community control, and that this could then be used to adapt to crises in the future so that ruptures are not accompanied by the destructive processes of unemployment and industrial dislocation, would appear like wishful thinking to many.

Oñati, a town in the centre of the Basque Country’s Gipuzkoa region, is an example of a community wealth building approach which has emerged stronger out of crises before, and is well placed to adapt to the shock of the pandemic.

In 2011, El Pais ran a piece titled ‘Oñati, capital del empleo’. At that time, the town had an unemployment rate of 5.4%, the lowest of any town with a population over 10,000 people in the whole of Spain. This is a function of its economic DNA: a strong manufacturing sector which is predominantly co-operative run, producing well-paid, secure jobs in firms which are – crucially – adaptable.

Adapting to the Crisis

Xabier Igartua is President of Oñati town council’s Finance & Socioeconomic Committee. He works part-time for the municipality, and part-time in a local co-operative factory. Adaptation has defined both parts of his work since the pandemic hit in early March.

“We had to respond at our factory by reducing our hours and salary adaptions, because our sales suddenly collapsed overnight,” he explains. “We don’t have time to fight among one another; it is our business so we need to make the changes now. But because we are a co-operative we can make these fast adaptations while looking after each other. We work less but we maintain a base level income for everyone and maintain jobs.”

In the council, his task was perhaps even greater – what to do about the local retailers, bars and restaurants in the town which had suddenly been closed by the lockdown? A local digital technology firm, Magnet Coop, developed a digital platform for local businesses shutdown during the crisis. Shoppers could buy a coupon which offered a 20% discount on purchases at local businesses. The value of the discount would then be covered by the town council.

Over €200,000 was spent in Oñati’s shops through the digital platform, with the Town Council paying €40,000 to the local businesses to cover the discount value.

“The reason why Magnet supports the local businesses is because they live in Oñati, they know each other, and they think ‘what could we do to support’; they have a feeling of responsibility to the community,” Igartua says. “They came to us [at the Council] and we said ‘this is a great idea, but what about if we give them an incentive through a discount, and we will cover the difference’.

“One thousand people used the site and there is only around 11,000 in Oñati, so you can imagine; this was surprising to everyone, and a big success.

“Now we try to turn this into a permanent digital platform on the town council website, and we are working with Magnet to build this.”

At the municipal level in the Basque Country, local government has important economic powers, including over taxes and a sizeable investment budget. Last year, Oñati town council, led by left pro-independence party EH Bildu, utilised citizen budgeting methods to ask residents to vote on priority options for €500,000 of public investment. The process was split into phases with citizens involved at each stage, first to define the options for investment through face-to-face sessions which were open to attend, and then, in the final stage, residents voted for their ten priorities: whether to invest in improved street lighting, cleaning the rivers, improving wheelchair access, etc.

“Always the community goes one step further than the administration,” Igartua says, explaining what he calls the council’s ‘community model’. “It is our job to bring the toolbox, but it is the local people who use the tools.

“I think this is a different way of thinking about local politics – that you support the community to change things themselves.”

It’s not all been plain sailing. While the co-operatives protect the jobs of their members, they also employ non-members, many of whom were let go when the crisis hit. Unemployment rose from 6% to 8% in the town in the four months from February to June, still significantly below the rate in Gipuzkoa (11%), the Basque Autonomous Community (13%) and Spain (15%) but nonetheless a rapid increase in a town used to economic stability.

‘Nature Has Warned Us’

The biggest employer in the town is Ulma and Fagor, two parts of the Mondragon Corporation Group, the world’s largest and most renowned co-operative which – as the name suggests – is based in nearby Mondragon, one town over from Oñati. Mondragon too has adapted rapidly to the crisis, becoming a major mask supplier to the Spanish Government almost overnight, with a contract for 340 million masks per year. They have also started manufacturing automatic respirators for ICU units, protective visors for health service staff and solutions for pathogen-free sanitation of spaces and surfaces.

“We need to generate a national industry of sanitary protection equipment,” Iker Alberdi, general manager of Onnera, a Mondragon co-operative based in Corboba in the south of Spain which is leading its mask production, said in El Pais. Manufacturing for the health service within Spain would ensure that PPE was “adjusted to the conditions and regulation of the national market”.

At the same time, Mondragon Corporation is itself reliant on the international market. The production lines used for mask production at Onnera were built at its Chinese subsidiary in record-quick time, arriving in Spain in late April. Mondragon workers outside of Spain are not co-operative members. This is a pragmatic co-operativism.

All parties promise support for jobs at the 12 July election, with the Basque government projecting 68,000 jobs will be lost by the end of the year, raising unemployment to 13.7%. The election has inevitably had a narrow focus on the jobs metric, with the headline commitment of the Basque Nationalist Party (PNV), the largest in the BAC, to reduce unemployment below 10% in the next parliamentary term. But with 90% of all job creation in the BAC since 2013 being temporary jobs, and little by way of a plan to improve the quality of work, this is not exactly an appetising future.

The Basque Country also has to contend with only 14.5% of its energy consumption currently coming from renewable sources; more than half of its population set to be aged 50 or above by 2031; and 50% of all jobs requiring replacement by the end of the decade due to technological transformation, according to Orkestra, the Basque Institute for Competitiveness.

“This crisis reinforces these challenges,” Miren Estensoro, an economist at Orkestra, says. “The response to this recovery needs to be thought of in combination with the big socio-economic challenges we have in this country.”

Indeed, the Basque Country had its own ecological crisis in February before the pandemic, with the collapse of a landfill site in Zaldibar, a town in the Bizkaia region, killing two people. The bodies have still not been found, the collapse caused a toxic air pollution which forced residents to stay indoors one month before the COVID lockdown was announced.

The PNV-led government was criticised for its slow response to the crisis, and a manifesto signed by 84 Basque academics and cultural figures said the Basque economic model was “exhausted”, and called for “an energy, ecological and social transition”.

“Nature has warned us to guarantee a liveable Basque territory for future generations,” the manifesto concludes.

Igartua and his colleagues have not lost focus on this challenge. They are soon to unveil plans to reduce industrial waste in the town through a “circular economy” model built in partnership with citizens and local firms.

“We know that we cannot go on the same way with exhausting natural resources, so the best way is to as much as possible be self-sufficient in the community,” he says.

Oñati provides some optimism that another town is possible, one where the community navigates its way through a future which will surely be defined by waves of economic rupture.

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64 comments

  1. Diego M

    These are 3 real factors behind the Basque prosperity:

    1) Its population hasn’t grown in the last 4 decades. There was an exodus of Spanish-speaking people who didn’t agree with Basque nationalism during the several decades where Basque terrorists were killing them. This exodus has been barely compensated by recent immigration from Third-World countries. Moreover, they aren’t having many children, either. As a result, there are not that many young people… which is great for unemployment figures.

    2) Unlike states in the US or Germany, the Basque Country doesn’t send any money to the poorer regions of Spain. On the contrary, the rest of Spain sends money to the Basque Country (around 1-2% regional GDP), as is crystal-clear from published fiscal balances. This is due to the need to secure Basque nationalists’ votes to form a government.

    3) All the heavy industry has been there for 2 centuries, as a result of political agreements after civil wars (e.g. the dismantling of Andalusian iron industry in the 19th century). It is not as if the “cooperative community” has built any wealth; it was already there before any cooperative community formed.

    And yes, there are also many things we can learn from the Basque experience (as from other places in Spain and Europe).

    Reply
  2. Diego M

    These are 3 real factors behind the Basque prosperity:

    1) Its population hasn’t grown in the last 4 decades. There was an exodus of Spanish-speaking people who didn’t agree with Basque nationalism during the several decades where Basque terrorists were killing them. This exodus has been barely compensated by recent immigration from Third-World countries. Moreover, they aren’t having many children, either. As a result, there are not that many young people… which is great for unemployment figures.

    2) Unlike states in the US or Germany, the Basque Country doesn’t send any money to the poorer regions of Spain. On the contrary, the rest of Spain sends money to the Basque Country (around 1-2% regional GDP), as is crystal-clear from published fiscal balances. This is due to the need to secure Basque nationalists’ votes to form a government.

    3) All the heavy industry has been there for 2 centuries, as a result of political agreements after civil wars (e.g. the dismantling of Andalusian iron industry in the 19th century). It is not as if the “cooperative community” has built any wealth; it was already there before any cooperative community formed.

    And yes, there are also many things we can learn from the Basque experience (as from other places in Spain and Europe).

    Reply
    1. Fireship

      “There was an exodus of Spanish-speaking people who didn’t agree with Basque nationalism during the several decades where Basque terrorists were killing them.”

      This could also be written as “Some Spanish Conquistadores were driven out of the Basque country by freedom fighters.”

      Personally, I don’t agree with the violent methods of Either ETA or the Castillian state, but let’s try and keep things objective.

      The real reason Basque country is richer is because they had to industrialize and be inventive whereas Spain was content to plunder other countries. Read “the Blood of Latin America” for a horrific account of Spanish colonialism.

      Euskaldunak askatu!

      Reply
      1. Diego M

        So 300,000 people who had to flee the Basque country because their families received death threats, were forced to pay “revolutionary taxes” to a terrorist group, etc. were just “some Spanish Conquistadores”. All this in the context of the Spanish democracy, where the Basques could elect their own government and had their own fiscal system.

        We are talking about around 400 dead policemen (including French policemen and policemen from the Basque regional government) and 343 dead civilians, including children, people who didn’t accept extortion (“revolutionary taxes”), politicians from democratic, non-independentist parties, etc. These figures refer only to the 3 decades between 1975 (after Franco’s death) and 2011.

        I think your own comment explains a lot of what immigrants from the rest of Spain can expect and why people felt (and still feel) the need to flee.

        Reply
      2. Billy

        I think you mean “The Open Veins of Latin America” by Edward Galliano.
        Compared to Spaniards, Basques are tough people who have an alien language, different genes and physical strength that lent itself to early heavy industry. Picture a beach ball made of granite being picked up and heaved, that’s a sport there.
        Landlocked by the Pyranees, the Picos de Europa to the south and west and the Cantabric Sea, they have lived in isolation for centuries, until recently and had no Arab invasion like the rest of Central and Southern Spain which definitely created part of the culture and philosophy there.

        Reply
        1. Nomorebs

          I see you’ve been reading Arana’s books! Good! Do you want a recommendation for another book very much like Arana’s writings? Mein Kampf. Same story, replace “Basques” with “Aryans” and “Spanish” with “Jews”. Everything else, down to the radical Catholic ideology, is exactly the same. A great deal of historical revisionism as well!

          Why don’t you tell us what the guy who came up with the whole Basque superiority thing thought about women? Also very interesting!

          PS: All those nasty conquistadors? A significant portion of them were Basque.

          Reply
    2. auskalo

      Instead of lying with “exodus” and fake fiscal balances, you could learn a bit about the Economic Agreement between Spain and Basque Country here.

      Reply
      1. Diego M

        Did the population of the Basque country grow in the last 4 decades?

        Population grew around 25% in Catalonia, over 40% in the Madrid region, and around 0% in the Basque Country, despite its good economy and mass inmigration from Third World countries.

        What do the official fiscal balances state?

        They state that rich regions, including Catalonia and the Balearic islands, pay a lot to the poorer regions, such as Andalusia. With two exceptions! The Basque country and Navarre; they have a different fiscal system. The young from the rest of Spain pay for the retirement of the Basque old people; but those Basques who are rich don’t contribute to the economic development of the poorer regions (only to the Basque region). In a nutshell, 1-2% of Basque GDP are payments from the rest of Spain (instead of 6% of Catalonian GDP being payments *to* the rest of Spain). That’s a huge systemic difference, and NC readers deserve to know this.

        Reply
        1. m sam

          Well, I can’t comment on the situation in Spain, but as far as NC readers go, at least those of us in the US where such fiscal transfers between richer states and poorer ones are part of the bedrock of our federal system, they are for the most part uncontroversial.

          Reply
          1. Diego M

            Now imagine that NY and California decided they didn’t want to contribute to the Army/Navy and Federal Social Security as much as Texas. And the President agrees as a pre-requisite for being elected as such. And then NY and California have significantly higher growth rates, since they have more money to invest and attract talent and business.

            The rest of the States get jealous (unfair advantage) while NY and California state that the change in growth rates is all due to their unique culture.

            Welcome to Spanish politics!

            Reply
    3. Ignacio

      This isn’t as simple as you picture and your takes do not explain the features described in the article. One of the important takes in the article is the role of municipalities in the Basque Country (and in Navarre as well) which is stronger than in other regions and this is a long standing tradition. The distribution and usage of land, the existence of municipality-owned land that can be used for the good of all and their sometimes clever management is something that you can feel when you visit the Basque Country: they feel proud and with good reason when they manage to organise themselves to make improvements for the community.

      And this sense of being proud does not translate into a complex of superiority. A hat tip for the Basques because in some senses they are doing things rather well.

      Reply
      1. Diego M

        The figures of population non-growth and fiscal balances provide an objective explanation for the Basque unemployment gap.

        I see no reason to look for a different explanation and leave those figures out, unless the goal itself is to feel proud.

        Reply
        1. Ignacio

          But you still have a long road to explain the differences. It is generally true that populations have not grown, even shrunk in rural areas anywhere, so?

          Reply
          1. Diego M

            The Basque country is essentially Bilbao’s metropolitan area, there is no point in calling it “rural” anymore than Southern Madrid is “rural” (it was rural 40 years ago, that’s what economic growth is about). The comparison with places like Soria fails by two orders of magnitude. Economically, the Basque country is one big wealthy city. The scenery may be more foresty and more beautiful, but that’s the weather, not the economic geography.

            In this big Basque city, 300,000 Spanish-speaking people felt the need to flee. 300,000 Africans and Southern Americans filled in the void. Demographically, the place has gotten older and older, which means that the younger generation has lots of opportunities.

            This blog post suggests that they are doing something politically different from the rest of Spain and that’s why they have lower unemployment. The reasons for lower unemployment are: 1) no population growth (= fewer young people for the same jobs every year); 2) An 8% GDP advantage in fiscal matters vs. regions like Catalonia.

            Localities like Oñati, for example, have a big investment budget according to the post. Great. Where does the money come from? A history of nationally promoted industry there (for 2 centuries now) and that 8% GDP fiscal advantage.

            Are they more democratic or community-focused? No. They asked “residents to vote on priority options for €500,000 of public investment”, which is great, but it’s also what we have been doing in central Spain for several years now, and nobody is interviewing us or praising us. The results of this method aren’t especially good, either.

            Reply
            1. The Rev Kev

              I can tell that the Basque nation is not on your Christmas card list. Perhaps they are more sinned against than sinning, especially with people that have memories of Franco. How about we just take off and nuke the place from orbit. It’s the only way to be sure. :)

              Reply
            2. Ignacio

              I have had personal experience with Basque institutions proactively searching for entrepreneurship, and though I didn’t reach any agreement with them when I was involved in biotech entrepreneurship I have to say that amongst the different institutions from Madrid, Catalonia, and Andalusia that i have contacted they were IMO the best in focus and scope. A friend of mine is the CEO of two biotech companies in the Basque Country and for his accounts I can attest that they give the best help one can find in any Spanish Comunidad Autónoma.

              Your reasons, as I told before, say nothing but tenuous links between population dynamics and unemployment that really don’t add to the article above anything but confusion. Your fiscal analysis is nuts and you should provide stronger evidence for your claims. I live in central Spain (Madrid, more central is impossible( and cannot find an equivalent to the capacity that the Basques have shown.

              Reply
              1. Diego M

                So you think Catalonia and the Basque country are fiscally the same? That *is* nuts.

                It’s straightforward that the more the population grows, the more difficult it is to create employment for all of them (ceteris paribus). For example, a number of my German clients have lots of problem to find suitable young candidates! It is all due to what they call the “demographischer Wandel”. The Basque country is in exactly the same position as Germany in this respect.

                I’ve never been the CEO of a biotech company, but I *am* the CEO of a Madrid-based technology start-up for many years now and have friends in the scene and I can tell you three things:

                1. Never try to find support for your company from a public administration, in any country. It’s a time waste. You’ll find the support, but it isn’t worth it.

                2. There are many initiatives for tech companies in the Madrid area, mostly based around universities and “parques tecnológicos” (I have made use of them and, while I now regret it for reason 1, I can’t say companies lack any support). The pool of specialists is wider and deeper than elsewhere even for very specific niches, thanks to institutes like IMDEA. (It’s tech what I am talking about, not necessarily biotech).

                3. As Silicon Valley exists despite SF, and no self-respecting start-up would care to beg for support to the city council, what you want for your start-up is an environment (an ecosystem) where it can thrive. It’s people, not the administration, who create that environment.

                On the political side, there have been “presupuestos participativos” (like those of Oñati) for several years now in many cities of the Madrid area, including Madrid itself. Aren’t you familiar with them?

                Reply
                1. Alex Cox

                  Diego, Ignacio, Rev
                  The article was interesting, and the ensuing discussion fascinating.
                  Thank you very much for this exchange!

                  Reply
        2. Yves Smith Post author

          Any economist will contend that lack of population increase is a negative for growth. It produces an average high age, and so a high dependency ratio, and limited new household formation, when that is a huge growth driver (building and kitting out new houses). The article even pointed that out in noting that the Basque area is old.

          You are turning conventional view on their heads by saying no population growth is good. Fer Chrissakes, Germany has destabilized its society by bringing in Turkish guest workers (who stayed) and Syrians to counter no population growth.

          Reply
          1. Michael Hudson

            Yves is right.
            Ten years ago I was invited to the Basque country to support its labor unions and overall social organization. I was struck by their community-mindedness. To make a long story short, they are wonderful.
            As an Ice Age anthropologist, I have dealt with Basque specialists and linguists in the United States. They seem to be the only surviving indigenous non-indo-European-speaking population. They have retained mutual aid as their basic ethic apparently for over 20,000 years.
            I have some disagreements with them. Their favorite drink is hard apple cider — not my favorite. But it is the occasion for gemütlichkeit and I found that it was genuinely egalitarian.
            And Mondragon does not favor labor unions. But their success should shine as a model

            Reply
            1. Diego M

              The Basque language is as much of a surviving non-indo-European language as Silicon Valley lingo is a surviving Faliscan language.

              I am glad that you enjoyed your stay in Spain.

              Reply
              1. The Rev Kev

                Dude! Seriously? The Basque language, as I have absolutely no doubt that you are aware of, is unrelated to any other language on the planet. It must therefore predate any language currently used on the continent or the British Isles. So that is several thousand years right there and then. You are entitled to your own opinions as am I. You are not entitled to your own facts-

                https://en.wikipedia.org/wiki/Basque_language

                Reply
                1. Diego M

                  The Basque language is as unrelated to any other language on the planet as Silicon Valley lingo is unrelated to any other non-Faliscan language on the planet.

                  *That* is my point.

                  As you can read in your own link: “Basque has adopted about 40 percent of its vocabulary from the Romance languages.”

                  Reply
                  1. The Rev Kev

                    Sure the Basque language has adopted about 40 percent of its vocabulary from surrounding languages. And it only took several thousand years to do so. English itself is about 80% composed of words taken from other languages with this happening only over the course of a few centuries. But we are not talking about the Ship of Theseus here. The core of the language still remains. You do wonder how widespread this language was and if it was limited only to the Iberian Peninsular-

                    https://en.wikipedia.org/wiki/Ship_of_Theseus

                    Reply
                    1. Diego M

                      The thing is: nobody would be so stupid as saying that English has been spoken for 3 millenia, or denying its ties to Romance languages.

                      80% of English vocabulary is loaned from other languages. This process took 1,400 years.

                      70% of Basque vocabulary is loaned from other languages. This process seems to have taken about the same time.

                      See the difference?

                2. Diego M

                  What I mean is that you cannot say “Basque” has been spoken for millenia there and it had nothing to do with surrounding languages. That’s basically propaganda.

                  Today’s “Basque” is essentially a recently born language that has nothing to do with what was spoken over two thousand years ago. Moreover, what was spoken two thousand years ago seems to be very close to what was being spoken at the time in the surrounding areas, e.g., Indo-European languages.

                  If you deny this, then you must also agree that Silicon Valley lingo is Faliscan and has been spoken for nearly 3 millenia.

                  If any of you are really interested in this topic, you can survey the arguments why Pre-Basque was Indo-European: http://www.academia.edu/attachments/52203559/download_file?s=portfolio

                  The origins of Basque are in no way established as a scientific certain fact, despite political propaganda.

                  Reply
          2. David in Santa Cruz

            No population growth in a well-integrated community would be the world-wide solution to just about everything! What could be better than highly-productive young people supporting their elders? This is the model which you describe. Human over-population determines every aspect of our material existence, from climate change to unemployment.

            A colleague who is Mexican-American and fluent in Castilian Spanish spent six weeks with his family in the Basque Country a few years ago. They were initially shocked that their fluency in Castilian Spanish was completely useless, but they came back to the U.S. thoroughly impressed with the vision of the Basque Country as a cooperative and deeply supportive urban agglomeration.

            Reply
          3. Diego M

            Yves, you are conflating growth with unemployment. Japan had lack of population increase, but low unemployment. Similarly, the Basque country didn’t grow as much as Madrid or Barcelona, but their lack of population increase allows for low unemployment.

            The Basque country is an excellent place to live unless you speak about politics and don’t agree to the Basque nationalistic credo. That may get you a beating, even today. Not the kind of community focus I’d like.

            Reply
      2. Amfortas the hippie

        while i find the …other discussion… pretty interesting,lol…what you say about the municipalities having some power interests me. In Texas, the gop mantra…and dominant conservadems before them…was “local control”. But it was never really like that, especially if the town/county/city tried to do something that Austin(and the megacorps behind the throne) didn’t like. This phenomenon didn’t begin with the recent state arrogation of local control over minwage, fracking, etc.
        cities and counties are limited by state law…which in Texas, is often based in our exceedingly bloated and cumbersome state constitution(so, hard to remedy). in talking with city and county leaders over the years(feed store symposia, again), I’ve learned that a lot of my outside the box thinking would be all but forbidden by the state…simple things like putting in a gas digester plant instead of a sewerage pond would be problematic, due to state gov’s pathological aversion to anything environmental.
        this is not to say that any of that would actually be enforced,lol…but it’s a convenient excuse to just continue to do things the old fashioned way(debt/bonds/plugged in with giant tech, etc).
        anyhoo…the power of smaller polities is one of my policy hobby horses(Subsidiarity)…and, in spite of the complications of Spanish/Basque history, I find this sort of thing(Mondragon, etc) fascinating.

        (and, as an aside: I’ve known a few folks from Espania, but when i was little, my grandad had a war buddy who was married to a tall, striking Basque woman…I remember being smitten by her as a little boy..accent, mannerisms, beauty…because they were often at the big family gatherings. Lords Prayer in Basque still sticks in my head, although at the time i of course had no idea what “Basque” was. Found out decades later that she had been in exile…was affiliated somehow with ETA, and on the run from Franco. Can’t think of Basque Country without thinking of her)

        Reply
      3. Susan the other

        The thing that raised my eyebrows with this article was that the Basque/Mondragon model does also outsource some things to China. Why I was surprised is probably because I’m still stuck in the 60s. But the overall picture of Mondragon and the Basque region being autonomous enough to be flexible and respond to making sure everyone had enough in down times is the model for the world imo. Doing things locally to control social well being and still be able to deal with the outside world. But always with the obligation to maintain a base level of income. What’s not to copy?

        Reply
        1. Dirk77

          I think the difficulty with copying it is that the established free market model is violently – in the literal sense – opposed to any alternative existing. That article posted in NC last week about Clinton essentially destroying socialistic Yugoslavia is an example. It has been allowed to exist in Basque Country I think partly because they themselves are so violently nationalistic. Any CIA front NGO trying to worm its way in would be quickly burned to the ground. Which makes reform troublesome in the US and UK. I am wondering now if reform will come only if corruption has weakened the US so much that it is defeated militarily. Which given the escalating incompetence should be only twenty years away.

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        2. Dirk77

          That said, a place to start might be coops? REI exists and flourishes, as do employee owned companies such as Bob’s Red Mill.

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    4. Pelham

      Knowing very little about Basque history and reading the responses here, it seems the common thread and essential element in Basque success is the ethnic unity of the Basque people. We have absolutely nothing like that in the States — although perhaps we’re getting there with the rabid racial divisions that are currently separating us into tribes.

      Reply
    1. Amfortas the hippie

      doesn’t have to be “slumming”,lol.
      I lived with lots of different folks throughout the south during my wild years…learned a lot from all of them:Po White Trash, Creole POC, Real Cajun Swamp People, Rural Black Folks in Texas…this all is where i learned to cook like a boss,lol. It also taught me a lot about how various people get $hit done, manage to live together in a hostile world, etc.
      I think of it as whatever the domestic equivalent of “Foreign Exchange Students” is.

      …and the last 21 Not So Wild Years, married to mi esposa, have been a prolonged embeddedness in TexMex Culture, to my absolute betterment as a human and a cook(and i like to think it goes both ways)

      Reply
      1. Janie

        My father used to say that you can learn something from every person, no matter the level of formal education, if you will listen. He was able to talk on all levels without being condescending, a gift. I think it’s because he did truly respect everyone’s humanity.

        Reply
      2. JBird4049

        I was trying far to hard to be cute and dryly humorous. I don’t think she was doing one of those Poverty Tours, much like the old freak shows, done for the tourists. Rather, it was that most people spend money to go to foreign places for fun vacations and tours to be entertained, not take grim misery tours to be educated.

        Reply
        1. Bugs Bunny

          I have a friend in India who guides French tourists and the vast majority (especially women, oddly), want to see the most miserable poverty in each place they visit. They’ll even go out at night in places they were told not to, for the frisson and to tell people at home. My friend gets very upset and destabilized about it but it’s how she makes a living and is able to rescue pariah dogs.

          All that to say that poverty tours are still a freakshow for some people :(

          Reply
  3. Sound of the Suburbs

    Powerful vested interests have been tweaking things to their advantage over time and left us with little idea of how the system actually works.
    Everything had been going well for 5,000 years and then the classical economists turned up.
    Those at the top had been living in luxury and leisure, while other people did all the work. The last thing they needed was “The Enlightenment” as people would work out what was really going on.
    They did work out what was going on and this had to be hidden again.

    Economists do identify where real wealth creation in the economy occurs, but this is a most inconvenient truth as it reveals many at the top don’t actually create any wealth.
    This is the problem.
    Much of their money comes from wealth extraction rather than wealth creation, and they need to get everyone thoroughly confused so we don’t realise what they are really up to.
    This is the purpose of neoclassical economics.
    Once trained in this you become economically disorientated.

    Paul Ryan had become economically disorientated and Alan Greenspan had to put him straight.
    Paul Ryan was worried about how the Government would pay for pensions.
    Alan Greenspan told Paul Ryan the Government can create all the money it wants, there is no need to save for pensions.
    https://www.youtube.com/watch?v=DNCZHAQnfGU
    What matters is whether the goods and services are there for them to buy with that money.
    That’s where the real wealth in the economy lies.

    The Classical Economists had a quick look around and noticed the aristocracy were maintained in luxury and leisure by the hard work of everyone else.
    They haven’t done anything economically productive for centuries, they couldn’t miss it.
    The Classical economist, Adam Smith:
    “The labour and time of the poor is in civilised countries sacrificed to the maintaining of the rich in ease and luxury. The Landlord is maintained in idleness and luxury by the labour of his tenants. The moneyed man is supported by his extractions from the industrious merchant and the needy who are obliged to support him in ease by a return for the use of his money.”
    There was no benefits system in those days, and if those at the bottom didn’t work they died. They had to earn money to live.

    Ricardo was an expert on the small state, unregulated capitalism he observed in the world around him. He was part of the new capitalist class, and the old landowning class were a huge problem with their rents that had to be paid both directly and through wages.
    “The interest of the landlords is always opposed to the interest of every other class in the community” Ricardo 1815 / Classical Economist.
    They soon identified the constructive “earned” income and the parasitic “unearned” income.
    This disappeared in neoclassical economics.

    Reply
    1. Sound of the Suburbs

      Oh yeah.
      I watched that “Versailles” series on the TV.
      The French aristocracy were very active in the bedroom department, but they didn’t do a lot else.

      The English aristocracy like to head into the countryside and kill anything that moves.
      They call it hunting.

      Reply
      1. Fritzi

        The aristocracy traditionally had dibbs on offices of state, the higher ones especially, made up the officer’s corps of the military and also served as diplomats.

        They themselves would have described it as a life of duty for King and country.

        When colonialism became a thing, administering the colonies became a rather popular part various aristocratic portfolios too, though to what degree was different in different countries.

        I heard it said though about british or english aristocrats though that they liked to act as if doing their country a huge favor that they were owed for by deigning to leave their estates and lower themselves to save the Empire.

        No doubt there are plenty who can judge if that is true.

        Going back further in time, Roman aristocrats kinda were expected to be renaissance men, long before the renaissance, being goverment officials of all kinds, responsible from commissioning public works of all kinds, usually paid out of their own pocket, from keeping aquaeducts and the cloaca maxima running, over road repair to providing bread circuses, administering the provinces, acting as judges, lawyers, bankers, military leaders, priests, often running all kinds of businesses besides, taking care of huge networks of clients with many needs, the system of patrons and clients replacing a kind goverment run social security net, and many, many, many other things.

        Much of that stuff was very lucrative, and almost all of it gave them endless opportunities to lord over, exploit and oppress people, even outside of their armies of slaves, but it did not necessarily leave them much time for leisure as such.

        If course, service to the state was the primary way to gain and preserve honor and glory for oneself and one’s family.

        I think roman aristocrats at least probably worked more and harder, with incomparably more risk to life and limb, than most of our modern, supposedly meritocratic capitalist “elites” (and politicians).

        But as cruel and rapacious as they no doubt were, and despite the fact that was of course no productivity and technological inventiveness comparable with modern capitalism, in a largely agrarian society, with little reason to replace abundant slave power with machines, but I’d hesitate to characterize them as pure parasites.

        After all, they DID work hard and used a big part of their personal wealth (“giving it back”, do to speak) to keep overall society running smoothly and organised and provided many, many services that the great majority of the free, but non wealthy citizens profited from directly and in visible ways.

        Reply
    2. Ragabhava

      Assuming that you aren’t a bot you may be suffering from some weird political tourette logorrhea.

      Reply
      1. Massinissa

        He does this alot, though to be fair hes done it less recently than he did a few weeks ago. At one point Yves told him he should just start a blog instead of making all of these long posts, and for for awhile he kept himself to shorter posts, but seems like hes doing the “Comment as long as a blog post” thing again now. Well, considering Suburbs used to string three comments of that size together, I guess this is still a mild improvement…

        Anyway I don’t think Suburb is a bot, but yeah, political tourettes sounds rather accurate…

        Reply
        1. Amfortas the hippie

          I’ve always thought Sound of the Suburbs was a she, and the message is a good and necessary one…gels completely with what i got out of reading primary econ texts.(but (s)he does tend to go on,lol.)
          In this formulation, the boss class(sans giant, supranational corps and things like hedge funds and whatnot) and the working class are almost on the same side of things, against the rentier class–
          But due to the purposeful confusion and chaos of tongues foisted upon us by that all but hidden rentier class, we are instead at odds with each other.
          it’s an interesting take.

          Reply
          1. JBird4049

            Societal multiple personality disorder as inflicted by the ruling rentier class makes as much sense as anything else I have read or seen.

            Reply
          2. Massinissa

            Very possible Suburb could be a she. I suppose I should have used ‘they’. I honestly have no idea, and meant no offense to Suburb. I just usually use ‘he’ when I don’t know the gender because as useful as it is, calling a single person ‘they’ still makes my mind want to revolt. I wish there was a widely used gender neutral term that wasn’t also a plural.

            Reply
            1. JBird4049

              IIRC, English had, but lost the singular gender neutral pronoun sometime around the 1300s. If anyone wants to correct this, please do as I am going by old memories.

              How the English language evolved is a fascinating history and sociology lesson. Each time the English speakers invaded or were invaded the language changed and was often simplified for easier learning by the husband/wife/lord/servant/whoever. That means that somethings were lost. However the vocabulary was increased greatly in the steady additions of words by each change in who the ruling class was.

              Maybe I should check my memory and, if possible, use the pronoun although after eight or nine centuries people might be very confused seeing it in use. Maybe it might be a bit pretentious as well.

              I have been thinking to more thoroughly study Middle English at least. Or my hazy high school Latin. I need to prevent boredom.

              Reply
          3. Sound of the Suburbs

            Why do I keep seeing that “E=mc2” all over the place.
            Why do they feel the need to keep endlessly repeating it?

            Think about it.

            Reply
        2. Yves Smith Post author

          His comments flagrantly violate house rules and I’ve been more tolerant of him than I should be. I have had both readers and guest post authors complain about him, in that plops these long comments in (which many say they skip over, which is indirectly confirmed by how seldom readers engage him) on his pet issues rather than what the post is about. That is tread-jacking and hogging bandwidth.

          Reply
          1. Sound of the Suburbs

            The FT and Telegraph have readers with a longer attention span.
            I am probably commenting in the wrong place.

            What’s wrong with Twitter anyway?

            Reply
      2. Kirk Seidenbecker

        The substance of what SOTS writes is on point tho. A narrative focus on earned vs unearned gains terrifies the vested interests.

        Reply
          1. Sound of the Suburbs

            There are underlying principles that are true for all economies.
            Knowing what they are is always useful.

            Reply
            1. Ragabhava

              There are underlying principles to all human forms of communication.
              Knowing what they are is always useful.

              Otherwise one might sound like a monomaniacal rambling guy who hijacks every conversation by gish gallopping light brigade way into his pet peeve.

              Reply
  4. rtah100

    The Basques and the Portuguese discovered the Grand Banks fisheries off North America long before the rest of Europe and this fuelled a maritime economy (both countries are in their way islands, between the sea and mountains). Phrases like “rich as a cod fisherman” and “cod’s eye” decorative detailing in houses still attest to this in Atlantic nations (our cousins have cod’s eye inlays on the stair bannisters in Jersey (the island not the state). The Basque industrialisation was jumpstarted by this capital.

    Reply
    1. Diego M

      This is true for many places in Northern Spain, e.g. Castro Urdiales in Cantabria. They even have a whale in their coat of arms.

      Reply
  5. Olivier

    I wonder what the demographics of the co-op members vs. that of the non-members look like. If the latter are primarily younger people hired more recently (which I strongly suspect) then we have seen that movie elsewhere and you could say that the co-op movement is slowly liquidating. Is that so or am I wrong?

    Now maybe there is a seniority system in place whereby you need to have worked at the co-op for a number of years before “making it” to member. If so then the young and recently hired will always be over-represented among non-members and the litmus test would be whether their proportion is stable or growing. Again I don’t have the information. Maybe some reader does?

    Reply
    1. Dirk77

      Well, Mondragon not having any employee in China a coop member is probably due to the Chinese government.

      Reply
  6. KFritz

    Cooperatives are significant in Italy, especially in Emilia Romagna where they account for 1/3 of GDP. A search “cooperative emilia romagna” turns up a good deal of material. I enjoyed the article “The Italian region where 30% of GDP comes from cooperatives,” at the website “apolitical.” It included the fact that cooperatives are protected by the Italian constitution. The West Coast worker owned Winco chain provides quality food at good prices for the masses

    Reply

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