“The Mondragón Experiment” could be a Robert Ludlum thriller, but it’s actually more interesting than that—at least if you think the current economic crisis creates a teachable moment about what’s wrong with our system and what might work better.
Mondragón is a town in the Basque region of Spain, and also the home of the Mondragón Corporación Cooperativa (MCC), a corporation with a twist. MCC began in 1943 as a 25-worker factory making cookers and stoves. Today it is a highly diversified corporation (Spain’s seventh largest) with over 100,000 workers, annual sales of US$20 billion, and 65 plants overseas.
Sounds like any other successful multinational. So what’s the twist? It’s not capitalist.
MCC began as a worker-owned firm, grew as a worker-owned firm, and remains a worker-owned firm. Democratic worker participation is at the root of MCC’s management style. It is a “democratic federation of democratic cooperatives,” in the words of Loyola University Chicago scholar David Schweickart, who writes about “the Mondragón experiment” and what he terms “economic democracy” in the September/October issue of World Watch (see “A New Capitalism—or a New World?”).
The 2008–09 economic crisis has triggered a lot of talk about the potential for a Green New Deal, and we’ve done our share here at Worldwatch. But one of the striking things about the meltdown—especially in view of the spectacular collapse of markets, the trillions spent on recovery, and the staggering and still mounting human costs—is the lack of discussion of genuine alternatives to capitalism. Maybe most of us believe there really aren’t any, except socialism and Communism—notions that are increasingly anathema, especially in the United States. But economic democracy is neither socialist nor Communist. The government doesn’t own firms, and decisions are made by the people who do: the workers.
I know, it’s hard to even hear the word “workers” without thinking of the late U.S.S.R., Communism, apparatchiks, and a gloomy cloud of discredited jargon. But economic democracy, in Schweickart’s vision, is radically different. And it’s different in ways that make it both fairer and greener than any other economic system.
Under economic democracy, workers don’t get paid wages, they receive shares of their firm’s profits—a strong motivator for good performance. But such firms generally don’t focus on sheer growth so much, so competition is less intense, thus avoiding the “grow or die” tendency of capitalism. That alone would be kinder to the environment, but there’s another benefit: In economic democracy, investment is also democratized. Investment funds come from redistribution of a tax on each firm’s capital assets, rather than from private investors (“capitalists”). There are no external owners, i.e., shareholders. And because nobody is demanding ever-increasing returns on their investments—and threatening to sell their shares if they don’t get them—the perpetual-expansion impulse of capitalist firms is subverted.
This could all be theoretical pie in the sky—except for Mondragón. Schweickart offers much more detail in his World Watch article and in his books on the topic (e.g., After Capitalism). Maybe it’s time to begin thinking beyond band-aids for the capitalist economy, and consider a system better suited to our times. It’s kind of exciting—even a bit thrilling.
After ww2 a few worker owned plywood companies were started on the northwest coast. Some failed and went bankrupt. the individual shares of Those that succeeded were selling at such a high priced that eventually they were acquired and disappeared as worker owned companies. ONe of these was acquired by Mutual plywood.
Hooray for Tom Prugh! The story about Mondragon in really inspiring. It is about time that the public realize what capitalism actually is – unsustainable.
Let’s start making the transition to an egalitarian economy now and avoid the necessary pain that a long, slow and agonizing death that capitalism will bring.
Have you greenies never heard of the stock market? Many American companies, yes even corporations; give their emplyees stock options. When an employee owns stock in a company, he actually has partial ownership, and even some voting power in the management of that company. Every company that is on the public stock market, makes partial ownership available to everyone. Imagine that! Our American CAPITALIST system, on its own, has more options, more freedom than you could ever force on it.
I think you’re ignoring a fundamental difference between a corporation with an employee stock ownership plan (ESOP) and one structured along the economic democracy lines suggested by David Schweickart. In economic democracy, workers generally own the whole shebang. ESOPs, in contrast, give workers a tiny fraction of the total shares of stock issued by a publicly traded corporation and function primarily as a supplemental form of compensation. They’re not remotely serious, or intended, as a way of giving workers (or anybody else, for that matter) much control over the firm. That remains firmly in the hands of senior management and ultimately boards of directors, whose behavior seems mostly governed by share prices—to the exclusion of every other measure of value.
All those in the US (and the rest of ‘free world’) raised on the cold war “4 legs/2 legs” propaganda, learned the Bad Scary Words (“USSR, communism, apparatchiks”. Little they know or understand of what it was about.
Puting aside some exceses, the “Big Bad Thing” was in many ways more civilized, humane and rational, far more so than the throat-cutting US capitalism, with its insatiable greed, mindless consumption and destructive environmental footprint.
My testimony is based on personal experience, having lived there for 26 years, and having left it as a ‘dssident’.
Given the global economic collapse (and impending environmental collapse) brought by the US-style ‘free-market’ manipulators, one would expect more humility here, instead of a knee-jerk reaction to the “S-words”. Yet if anything, the “S” (socialist) way stands better chance to save us from the capitalist madness.
OOps, what a good news ! It appears there, in “your un-humble country… the one of the pioneers, the freedom of all jealousy and guns laws …” you perceive other countries as defective or un-progressist, seen under-developed… but to where ?
How can you still think about a “marvelous USA world” ? Of course compared to the China people, you may have dev. more, but what ? Many people from your land are living from dreams… and also buying with … nothing else credits, from …. bankers, poor bankers who make money over the transactions, form your incomes too, from the advantage over anyone say have to create the credit… the stock options ? a good choice ? but the system is so perverted that only the initiated (directors,CEO,and politicians…) have the info to sell or buy, and make the little stock opt. be bad or better; none of the “workers” (employees you say exactly: that’s the same: today there are less “real” workers, but some “white collars” for services, but more for administrations of the transactions: results: more costs, more stupid jobs, just to regulate the companies… but nothing really done for the humanity, for others… just to pay for living: you said i work=you pay=i’m better tha..=pay me more= i can pay some to work for me now=i live from your work=i do nothing else signing the plans=you work not enough productively=you’re fired !=i got a robot company=no one there, i’m alone, quiet, but feel anxious, no one to talk about important things, only beers, meat, fire and steel… “enjoy hell!” as you said…
oops, that’s a great day, Americans are to understand they are not a big nation, but an agglomerate from same old-religious cultural nations (dislocation of the US ? may be next when re-found freedom of real expressions)_ there, i must say Americans are to be sometimes very tolerant, yes very form the better signs to the worst …
oops, there is a day when people are to make their efforts, also for the better of others, supporting more by donation than for money, they live humanly, not in violent films, done for “believing of fearfull world”(?).
oops, no people around, outside USA are to welcome you too, for your fun, your naïve vision of globality, for your childish way of meeting, for your enthusiasm and happiness, for your believes and go(o)d futures: traditionalists, but progressists in rails, innovatives but alone, just for biz, not for the country, just for having more money, not for human environment.
oops, it appears one day we’ll meet. That’s soon now, coz many signals indicate the end of the Kapitalism civilization, not any wars but to say that people embrace the DiEm Ovo (means Democrate international Ethical move’ means that egg you may cover to the birth of a paradise bird…a ALLhuman world named Earthians) or said La MoDiE (La Mouvance Démocrate internationale Ethique (in french) …
that said, i’m a bit happier today; you’re evolving to some good thoughts !
cheers all your day !
ps: i know i’ve shocked some readers there, also, mind shocks are to enlightened the dark thoughts = i support USA as other countries; all have to temporize to change their point of view. So Apologizes if i’ve cut too far inside. Be blessed if you believe
[...] late August, my colleague Tom Prugh blogged about a non-capitalist, worker-owned corporation—the Mondragón Corporación Cooperativa (MCC) in Spain’s Basque region. For [...]
[...] colleagues Michael Renner and Tom Prugh have already written about the Mondragón worker cooperative model in Spain, one example of the economic democracy concept described recently in World Watch magazine. [...]
[...] colleagues Michael Renner and Tom Prugh have already written about the Mondragón worker cooperative model in Spain, one example of the economic democracy concept described recently in World Watch magazine. [...]
[...] early successes. But, as we have argued in previous Green Economy posts (here, here, here, and here), the naked economic fear that now drives destructive political processes and blocks [...]
[...] to reduce environmental impact. Worker co-ops, as envisioned by University of Chicago philosopher David Schweickart, are governed by workers and capitalized from a public fund rather than private shareholders. The [...]
Let’s start making the transition to an egalitarian economy now and avoid the necessary pain that a long, slow and agonizing death that capitalism will bring.
Puting aside some exceses, the “Big Bad Thing” was in many ways more civilized, humane and rational, far more so than the throat-cutting US capitalism, with its insatiable greed, mindless consumption and destructive environmental footprint.
My testimony is based on personal experience, having lived there for 26 years, and having left it as a ‘dssident’.