The Mondragón Cooperatives: An Inspiring Economic Hybrid

Members of the Mondragón Cooperatives

Members of the Mondragón Cooperatives vote on a proposed 2013-2016 socio-corporative policy. Credit: Mondragón Corporation.

Riding from the Bilbao Airport to the small town of Mondragón, one is struck by the sheer beauty of the forested hills and verdant valleys in Spain’s Basque Country. The roads are as smooth as if they were paved yesterday, and there is nothing in this bucolic landscape to suggest anything is amiss in Spain.

However, the economic woes in this country are well known. As of November 2012, unemployment has risen above 25 percent and calls for more austerity have been greeted with demonstrations and widespread popular opposition. But, in spite of the country’s financial crisis, there is a solution quietly thriving in northern Spain—a solution that has nothing to do with austerity.

Sixty years ago, the Basque region was the poorest area of Spain. Today, thanks to the cooperative culture, it is the wealthiest. The dramatic transformation leads directly back to the arrival of a visionary Catholic priest, Father Jose Maria Arizmendi, who was sent to oversee a parish church in the small town of Mondragón. Though he questioned the wisdom of this appointment, it didn’t take long for Arizmendi to discover his mission in the impoverished town.

Because of the high unemployment in Mondragón, Arizmendi decided to open a school that would provide skills to some of the unemployed men in the area. The polytechnic school trained workers to make machine parts and provided an ethical foundation for the formation of cooperatives. In 1956, a handful of worker-owners who were trained in this school opened the first cooperative, ULGOR.

From such a modest beginning grew the world’s largest consortium of worker-owned businesses—a consortium that now comprises 120 businesses and more than 83,000 worker-owners.

In 1959, the Mondragón Cooperatives formed their own bank, Caja Laboral. It is this financial institution that has been the engine behind the expansion and financial stability of the cooperatives. In 2009, when 25 percent of all businesses in Spain failed, less than 1 percent failed in the Mondragón Cooperatives.

Putting People above Profit

Based on a philosophy that values respect, equality, and human dignity, the cooperatives exemplify what an enlightened business environment can be. The mission of the Mondragón Cooperatives Corporation is to create wealth within society, to foster a people society instead of a capital society, and to honor work with dignity. “People are the core, not capital,” says Mikel Lezamiz, the corporation’s director of dissemination. “This is the main point. If capital has the power, then labor is simply its tool.”

The Mondragón Cooperatives have created businesses in four key areas: finance, industry, retail, and knowledge. They have four university campuses, a culinary arts school in San Sebastian, the largest research and development center in all of Europe (with fourteen separate entities), the Caja Laboral Bank with 380 branches in Spain, and an incubation center for creating new products and services. Mondragón also acquired the largest supermarket chain in Spain (Eroski) and has been converting it from a conventional business to worker-owned cooperatives. As of today, all of the markets in the Basque region are worker-owned and those located in other parts of Spain are in the process of conversion.
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One thought on “The Mondragón Cooperatives: An Inspiring Economic Hybrid

  1. Unfortunately things are not so easy as this article explains. The Basque Country, same as Catalunya, was developed industrially in the XIX Century and it was never the poorest region in Spain. The South of Spain, where land is still today organized feudally would have been the poorest region. On the other hand, if the Basque Region saw a big development happening after the end of the dictatorship, it wasn’t for the communal experience either, but for the fact that the area developed as the capital of heavy industry for the country.

    With this, I do not mean to deny the great value that the Mondragon experience has, I’m just trying to put forward that we need to be factual when reporting this kind of issues, if we want to be taken seriously and confront with facts those defending the same old capitalist tale that brought us to this disaster.

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