Continuing our reflection on our trip to Mondragón to see one of the largest worker co-operative systems in the world, Diarmuid discusses the four pillars driving the development of this great industrial democracy experiment.
Many co-operators will be aware of the Mondragón Co-operative Corporation (MCC) structure, as well as its principles derived from those developed by the Rochdale Pioneers. What might not be known are the pillars providing the foundation for MCC; these pillars reflect where MCC has come from, the challenges it currently faces, and the direction it wishes to drive the organisation in the future. The four pillars are education, social welfare, finance, and research & innovation.
The worker co-operative movement that originated in the Basque town of Mondragón was driven by a need to create sustainable employment in an area that suffered greatly during the Spanish civil war. Mondragón is much more than employment however; it is an educational movement, an experiment in social and industrial democracy. As Father Arizmendi once said,
It has been said that cooperativism is an economic movement that uses the methods of education… (it can) be modified to affirm that cooperativism is an educational movement that uses the methods of economics.
MCC holds the educational ideal of Father Arizmendi close to its heart and education is built into many of the functions of the group, be it the development of Mondragón University, member training and development or the many study visits it facilitates in order to educate the wider co-operative movement on its structure.
One of MCC’s core objectives is provide sustainable employment for its members. To this end, MCC places great importance on the social welfare needs of members and their families. Spanish law recognises members of worker co-operatives as self-employed, placing them in a vulnerable position. MCC created Lagun Aro, an insurance and pensions co-operative, to look after the social welfare needs of members. 26% of every member’s gross salary goes to Lagun Aro, of which 18% goes to their pension, 6% to the health fund, and 2% to the employment fund. This is supplementary to the 2% of gross profit that every Mondragón co-operative contributes to a solidarity fund to help pay the wages of members when they are ill or not working.
Finance is always a concern for co-operatives of all types: sourcing, managing and increasing capital requires innovative solutions. MCC recognises the importance of this and has a number of procedures in place to ensure their co-operatives are adequately financed. Firstly, the Caja Laboral (co-operative bank) plays a central role in supporting the establishment and maintenance of a co-operative. Secondly, MCC facilitates the transfer of loans between one co-operative and another. At firm level, MCC rules stipulate that 45% of a co-op’s net profit is to be allocated to reserves; even the 45% that is give to members is retained in the business in individual capital accounts.
Research and innovation
Mondragón’s great industrial experiment would not exist today if it weren’t for the emphasis placed on research and innovation, both in terms of product development and support institutions. MCC currently has 14 research centres supporting the 120 or so worker co-operatives in the group to develop new products/services. It is through this innovation that the future of the group is secured; new technologies give birth to new products and co-operatives, helping to replace declining industries with ones in their infancy.
These four pillars support MCC’s continued success, both from a business and co-operation perspective. They give rise to the practical implementation of MCC’s principles, support its structure and facilitate the achievement of future objectives.