The succes of Mondragon: Spain’s giant co-operative

Overview

In 1956 graduates of a local technical college founded Mondragon in the town of Mondragoe. The northern Spanish town now has become a corporation of 100 smaller cooperatives which operates in four areas: finance, industry, retail, and knowledge. In 2013, the corporation posted a total revenue of over €12 billion and about 74.000 employed, making it Spain’s fourth-largest industrial and tenth-largest financial group.

Creating an internal economy
It is a remarkably recession-proof company. The co-operative form makes Mondragon more flexible: they cut wage costs by own decision of the workers. And as Spain struggled through the recession of 2008, it did not collapsed and the workforce remained steady against around 26% unemployment rates in other parts of Spain. Another problem in Spain’s economy was a credit squeeze that resulted in the fact many companies were not able to pay the bills of suppliers. Mondragon invented it’s own internal credit system: when one co-operative has money left over, and another co-operative has run out, then they can lend them that money.

Two type of workers
It is now the world’s biggest workers co-operative with about 84,000 people worldwide in 2015 – about a sixth of them outside Spain. The latter is a a consequence of Mondragon being exposed fiercly to competition from lower labour costs countries. In response they decided to buy or set up factories worldwide. These foreign workers are not members of the cooperative but form already a large number of Mondragon’s workforce. This means these workers are not-protected by Mondragon anti-capitalist mechamisms as the co-operative members are.

Identity danger
Mondragon has an identity of solidarity, collegiality and democracy among the partcipants of the co-operatives which extends to the not-owners but not includes them. The connection to the latter group who are much more exposed to the risks of the capitalist market is therefore weakened which is a vulnerable point for the co-operative. The group non-owners grows rapidly to a point that in some companies they are with more than the co-operatives owners, like the supermarket chains owned by Mondragon, in which the non-owners are a much larger group than co-operative owners.

Sources:
https://en.wikipedia.org/wiki/Mondragon_Corporation
https://www.theguardian.com/world/2013/mar/07/mondragon-spains-giant-cooperative