March 23, 2011
The Mondragon Way

If you’re as ill-informed as I was until just now, you’ve never heard of the Mondragon Cooperatives in the Basque country of Spain. The Rag Blog can fill the gap. Fascinating stuff. Here’s a sample:

In a few years, armed with these ideas, [Father Arizmendi] selected five graduating students from his technical school and with donations and borrowed funds from the credit union, his team of young workers formed a small cooperative workshop, ULGOR, named from one initial of each of the five students’ names.

It brought in about 20 more workers and started to produce a small but very practical kerosene stoves for cooking and heating. The single-burner stoves were much in demand and the coop thus thrived and grew. Today it’s called FAGOR, and its 8,000 current employee-owners in several divisions produce a wide range of high-quality household appliances sold across the world.

But this small startup in 1956 contained the first secret of MCC’s success — the three-in-one combination of school, credit union, and factory, all owned and controlled by the workers and the community. Starting a coop factory or workshop alone wouldn’t work; a startup also required a reliable source of credit and a source of skills and innovation.

Typically, an MCC coop is entirely owned by its workers — one worker, one share, one vote. Worker-owners get a salary that is a draw against their share of the firm’s annual profit, and is adjusted upward or downward at the end of the year. By Spanish cooperative law, a portion of the profits has to be turned over to the local community for schools, parks, and other common projects, The remainder is set aside for the repair and depreciation of plant and equipment, health care and pensions, and emergency reserves, as well as the workers’ salaries.

Technically, MCC worker-owners are thus not wage labor, but associated producers. There is an income spread, according to skill and seniority, but this is set and modified by the workers themselves meeting in an annual assembly. The assembly also elects a governing council, which in turn hires a CEO and management team.



Posted by Jerome Doolittle at March 23, 2011 01:20 PM
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FAGOR pressure cookers rock!

Thanks for this. We have one of their pressure cookers and I have been curious and meaning to look up more about the company, so I am going to click on the link and read the full article when I have time.

Posted by: Tim on March 23, 2011 1:28 PM
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