THE BLOG
10/12/2010 12:21 pm ET | Updated May 25, 2011

An Alternative to Cutthroat Capitalism

Praxis Peace Institute (my Sonoma, CA non-profit organization) brought a group of 25 people for a 5-day seminar and tour of the Mondragón Cooperatives in the Basque region of Spain, September 13-18, 2010.

There was a popular phrase among some politicians a few years back that proclaimed, "there is no alternative" (TINA) to the status quo of neoliberal capitalism. After spending one week at the educational center of the Mondragón Cooperatives in the Basque Country of Spain, it is crystal clear: There is an alternative! And, the Basques have proven it with their model of worker-owned businesses that has flourished over the past 55 years.

So, what are the Mondragón Cooperatives? And, what is so unique about them?

Founded by a Basque Catholic priest in the 1950s, they began with one small worker-owned cooperative that made parts for washing machines. Today, with 120 businesses and nearly 100,000 workers, the Mondragón Cooperatives comprise the largest consortium of worker-owned businesses in the world. In 2007, the Mondragón Cooperatives had sales of 24 billion Euros. In 2009, when twenty-five percent of all businesses in Spain failed, less than one percent of businesses failed in the Mondragón Cooperatives. What's their secret?

Based on a philosophy of human values, respect, and equality, the cooperatives are an inspiration in demonstrating what an evolved business environment looks like. The mission of the Mondragón Cooperatives Corporation (MCC) is to create wealth within society, to foster a people society instead of a capital society, to honor work with dignity, and to limit the number of work hours. Mikel Lezamiz, educational director at MCC, says, "People are the core, not capital. This is the main point. If capital has the power, then labor is simply its tool."

Producing everything from computer chips and bicycles to washing machines and auto parts, the Mondragón Cooperative businesses produce a wide range of products and services. In fact, we learned that 25% of the products that will be produced in 2014, are not yet in production. The continual search for new products reflects their flexibility in dealing with changing times and their commitment to innovation and job creation, which are stated goals.

For entrepreneurs, the Mondragón Cooperatives include an incubation center for new products and services where they help develop and fund new projects. The MCC includes thirteen Research and Development centers (the largest R&D center in all of Europe) and its own cooperatively owned bank, Caja Laboral, with 394 branches throughout Spain. The MCC has its own social services program, which provides pensions, unemployment insurance, and medical coverage. This is in addition to those services already offered by the Spanish government!

Instruction in conflict resolution is also an integral part of MCC. When someone in our seminar asked what they would do with a worker who was inattentive or goofing off on the job, our instructor didn't hesitate a moment. "We don't believe in confrontation," he said. "We would initiate a dialogue in order to find out what is causing the problem." The focus at MCC is not punishment for bad work but interest in the individual having the problem.

Their approach of caring for the individual first is what makes Mondragón exemplary in people relations.

The Mondragón hybrid moves beyond labels like capitalist and socialist and avoids both terms in describing their cooperative model. Instead, they appear to take some of the best ideas in both systems, adding their own philosophy and values into the mix. The result is innovation and social responsibility, a constant striving for improvement and always protecting the worker-owner.

The average CEO of an MCC corporation receives six times the salary of the lowest paid worker, a far cry from U.S. corporate CEO salaries, which might exceed 300 times the lowest paid worker. To become a worker member, one must apply for an open job and invest 14,000 euros in their company. This sum can be borrowed from Caja Laboral at 1% interest over 10 years. The democratic process means one worker-owner equals one vote. There are no stocks.

With a population of about 23,000 inhabitants, the town of Mondragón is solidly middle class. There are neither mansions on the hill nor poverty in the streets. The one mansion that exists in the area is a 14th century estate that was renovated to become MCC's educational center. The many acres that surround this estate are now small farms amidst green rolling hills. The families or coops that work the land have them rent free. "They are maintaining the land," Mikel said. "For that, they pay no rent." It is viewed as an even exchange.

The American myth says we can have it all, but in Mondragón that seemed provincially (or arrogantly) naïve. Why should we even want it all? The countries and communities that value social connection, social services, and an eradication of poverty consistently appear at the top of the happiness index. The Basque region has the highest standard of living and the lowest unemployment rate in Spain and it also has the largest number of people involved in worker-owned businesses. Many participants at the Praxis seminar in Mondragón had their worldviews turned upside down in a most inspiring and hopeful manner. There is an alternative!