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Mondragon as a Bridge to a New Socialism (Five Books
Reviewed) - (long)

The Mondragon Cooperatives and 21st Century Socialism:
A Review of Five Books with Radical Critiques and New Ideas

Reviewed by Carl Davidson

Solidarity Economy Network

March 16, 2011

http://www.solidarityeconomy.net/2011/03/16/mondragon-as-a-bridge-to-a-new-socialism/

From Mondragon to America:
Experiments in Community Economic Development
By Greg MacLeod
UCCB Press, 1997

The Myth of Mondragon:
Cooperatives, Politics and Working-Class Life in a Basque
Town
By Sharryn Kasmir
State University of New York Press, 1996

Values at Work:
Employee Participation Meets Market Pressure at Mondragon
By George Cheney
Cornell University Press, 1999

Cooperation Works!
How People Are Using Cooperative Action
to Rebuild Communities and Revitalize the Economy
By E.G. Nadeau & David J. Thompson
Lone Oak Press, 1996

After Capitalism
By David Schweickart
Rowman & Littlefield, 2002


Something important for both socialist theory and working-
class alternatives has been steadily growing in Spain's
Basque country over the past 50 years, and is now spreading
slowly across Spain, Europe and the rest of the globe.

It's an experiment, at once radical and practical, in how
the working-class can become the masters of their workplaces
and surrounding communities, growing steadily and
successfully competing with the capitalism of the old order
and laying the foundations of something new - it's known as
the Mondragon Cooperative Corporation (MCC).

Just what that `something new' adds up to is often
contested. Some see the experiment as a major new advance in
a centuries-old cooperative tradition, while a few go
further and see it as a contribution to a new socialism for
our time. A few others see it both as clever refinement of
capitalism and as a reformist diversion likely to fail.
Still others see it as a `third way' full of utopian promise
simply to be replicated anywhere in whatever way makes sense
to those concerned.

The reality of an experiment on the scale on Mondragon,
involving more than 100,000 workers in 120 core industrial,
service and educational coops, is necessarily complex. It
can contain all these features contending within itself at
once.

That's what makes MCC a fascinating story where the final
chapters are still being written. But one thing is clear: it
continues to grow and provide a quality of life for a
participant that is unique in its moral benefits and above
average in its material standards. Hardly any concerned
would give up their position in the project today for the
options of the society around them, even if they are
skeptical or dubious about various aspects of MCC's current
practices or future prospects.

One MCC worker, for example recently expressed some cynicism
about the coops. "People once took them seriously, but not
anymore," she remarked. "You mean it doesn't matter to you
whether you work here or at a private company?" she was
asked. "Of course it matters," she replied. "Here I have job
security, and here I can vote."

If I had to single out one of the five books listed above to
tell MCC's story, it would be the first one, From Mondragon
to America by Greg MacLeod, even if its title is a little
misleading and its facts 15 years out of date. The reason?
It goes deeply into the structures and values at the core of
MCC, as well as discussing the philosophical thinking of its
founder, Father Jose Maria Arizmendiarrieta, or known more
simply as Father Arizmendi.

A Priest with a Philosophy

The story of Mondragon begins with Father Arizmendi's
arrival in the Basque country of Spain in 1941 following the
defeat of the Republicans in the Spanish Civil War. The
Basques has been a center of resistance to Franco and the
area was devastated by the conflict. Most widely known was
the bombing of the Basque city of Guernica, immortalized in
the mural masterpiece painted by Pablo Picasso. Father
Arizmendi himself had fought with the Republicans, was
imprisoned and barely escaped execution.

As a young priest, he was assigned to the Arrasate-Mondragon
region, which was suffering from high unemployment and other
destruction in the war's aftermath. Arrasate is the Basque
name for the area, while Mondragon is the Spanish name - in
any case, the industrial mountain valley received little or
no help from the Franco regime and was the target of ongoing
repression against the Basques, with the fascists trying to
stamp out their language and culture as well as their
political organizations.

In reorganizing his new parish, Arizmendi thus had to find a
way for the Basques to help themselves. He started by
forming a small technical school, and helped finance his
efforts by convincing the local Basques with meager funds to
form a small credit union. He also formed sports and other
family-related organizations that could still allow people
to gather under the legal restrictions of the fascists. In
addition to being an organizer, Arizmendi was also a deep-
thinking intellectual - all the while he was doing a
thorough study of Catholic social theory, Marx's political
economy and the cooperatives theories of Robert Owen, the
British utopian socialist.

Armed with these ideas, in a few years he 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 stove for cooking and
heating. The single-burner stove was much in demand and the
coop thus thrived and grew. Today it's called FAGOR, and its
8000 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. Managers can be removed
from their posts but worker-owners cannot be fired. New
hires however, can be fired or laid off during their trial
period - about six months. But when their trial period ends,
they can buy into the coop. If they don't have the funds for
the value of their share - today about 3000 Euros - it's
lent to them by the coop bank, and they repay in small
amounts over a few years. MCC coops typically have
relatively flat hierarchies, and a much smaller number of
supervisors compared to similar non-coop firms.

The Ten Principles

Father Arizmendi's most important intellectual contribution
to MCC, however, was the wider formulation of this structure
into ten governing principles, which are firmly held and
practiced throughout MCC. There is some flexibility around
the edges, but not much. Here's a brief description:

    * Open Admission: This means non-discrimination, that
    all are invited to join the coops - men or women, Basque
    or non-Basque, religious or non-religious, or from any
    political party or nonpartisan.

    * Democratic Organization. The principle of `one worker,
    one vote' is the core here, but it also entails a wider
    participatory democracy in the workplace and engagement
    with the management team.

    * Sovereignty of Labor. This is the underlying core
    belief describing the overall relation between capital
    and labor, primarily that labor is the dominant power
    over capital, at least within the coops, if not fully in
    the wider local community.

    * Capital as Instrument. This is a corollary of the
    point above. It defines capital as an instrument or tool
    to be used, deployed and governed by labor, rather than
    the other way around.

    * Self-Management. This stresses the importance of
    training worker-owners not only to better manage their
    work on the assembly line, but also to train those
    elected to the governing councils or selected for
    management teams to have the wider educational
    background to steer the cooperatives strategically in
    the wider society and its markets.

    * Pay Solidarity. Here is where the worker-owners
    themselves determine the spread between the lowest-paid
    new hires and the top managers, with various skill and
    seniority levels in between. Originally it was set at 3
    to 1, but that was adjusted because it was too difficult
    to retain good managers. Today the average is 4.5 to
    one, compared to 350 to one as the average for U.S.
    firms. The highest single coop's range is 9 to one, and
    only exists at Caja Laboral, MCC's worker-owned bank.

    * Inter-Cooperation. This encourages the various coops
    to cooperate with each other, forming common sectoral
    strategies, or for transferring members among coops when
    some firms' orders are temporarily too low to provide
    enough work.

    * Social Transformation. The coops are not to look
    inward and operate in isolation from the community
    around them. They are to make use of cooperative values
    to help transform the wider society. In the Basque
    Country, for many this means seeing MCC's growth as
    developing a progressive economy for Basque national
    autonomy and independence.

    * Universal Solidarity. The coops are not only to
    practice solidarity within themselves, but also with the
    entire labor movement - and not only in Spain, but
    across the globe as well. MCC has several projects
    abroad providing assistance in remote areas of third
    world nations.

    * Education. Just as the first coop was preceded by
    starting with a school and forming a cadre with a
    cooperative consciousness, MCC continues to hold
    education as its core value, seeing knowledge as power -
    and the socialization of knowledge as the key to the
    democratization of power in both the economy and the
    society.

In shaping these principles, Father Arizmendi also
discovered what he believed was a fatal flaw in the
cooperative theory of Robert Owen, which was the ability of
an Owenite worker-owner to sell his or her share to anyone.
This permitted external financiers to buy up the shares of
the better firms while starving others. Thus in MCC, this is
forbidden; a retiring worker may `cash out' on leaving the
coop, but he or she is not allowed to sell the share to
anyone but a new incoming worker, or to the coop itself to
hold until it does. This kept MCC's capital subordinate to
its workers, and is a second secret to its success.

Most of all, these principles have meant that the MCC
workers retained control over their own surplus value, using
it to provide themselves a modest but above-average standard
of living while using their resources for measured and
planned growth.

Mondragon has come a long way from ULGOR, the small workshop
making the little single-burner kerosene stove. Today MCC
unites 122 industrial companies, 6 financial organizations,
14 retailers (including the Eroski chain with over 200
hypermarkets, supermarkets and convenience stores), plus
seven research centers, one university and 14 insurance
companies and international trade services. Its total sales
in 2009 were 13.9 billion Euros and a workforce of nearly
100,000 people.

Less than six of the 120 coops have failed over 50 years. In
the most recent economic crisis, MCC weathered the storm
fairly well. No coop failed, salary reductions were modest
and the only workers laid of were the trial-period new
hires. Now things are picking up again. MCC remains a
dominant force in the Basque economy, the leading force in
Spain overall and is now making waves in high-tech
manufacturing worldwide.

Cooperativism and Trade Unionism

What about Mondragon's wider connections with the Basque and
Spanish trade union movement outside the coops? Where do the
various parties of the Spanish and Basque left come in?

For some answers to those questions, at least as things were
in the mid-1990s, the best treatment is in Sharryn Kasmir's
The Myth of Mondragon. As a sociologist who spent some time
in the Basque country, she took great pains to try to
discern how workers themselves, inside and outside the
coops, viewed MCC. At bottom, she would agree that the MCC
workers, whatever criticisms they may have, would not
readily trade places with their counterparts outside. She
would also agree that the coops have become a powerful and
progressive economic force in the Basque country. But in the
end, these `pragmatic' concerns are not hers; she wants to
view MCC through the more traditional `ideological' lens of
the left.

Kasmir place high priority, for example, on trade union
militancy and solidarity and examines and celebrates its
history in the area in some detail. The Basque are best
known for their high-mountain shepherds but they have a long
industrial tradition in the valleys and coastal towns,
especially in iron and metalworking. The workers in these
areas like the Arrasate-Mondragon valley formed trade unions
early on and have a tradition of solidarity across
industries and trades, often shaped in a lively night life
in bars involving entire families.

Kasmir does an excellent job digging out this history and
showing how it continues. She also reveals, however, that
some of the level of its traditional expression has dropped
off in the areas where the Mondragon Coops are prevalent.
The MCC worker-owners, she notes, are viewed by other
workers as `working too hard' and spending less time in the
bars in political discussion. Moreover, when strikes are
called and other workers are asked to strike in solidarity,
the MCC workers only offer a token presence, or don't show
up at all.

"Ekintza, the Basque concept of `taking action,' is a core
cultural value," Kasmir argues. "Basque towns are centers of
political activity. In Mondragon, political discussion takes
place in bars, demonstrations are frequent, and town walls
are covered with posters, murals and graffiti, making them
dynamic arenas for political debate. Far from generating
ekintza among workers, however, cooperativism appears to
engender apathy." (p. 195)

Finally, Kasmir gives an example of a small group of young
Maoist workers in the ULGOR plant that tried to strike the
coop in the 1970s, but failed to win much support. They were
expelled from the coop by the other worker-owners, although,
after a few years, a good number were brought back in. It
was the only strike in all of MCC's 50 year history although
there have been other conflicts over regionalism and inter-
cooperation where a few coops split off.

Kasmir seems to hold to a traditional left view that the
task of the left is to organize increasing on-the-job
militancy while building one's strength in the political
area with socialist political parties, and to work both the
arenas of elections and other mass action campaigns. And as
she correctly observes, MCC doesn't fit this mold.

Class: Looking Forward, Looking Back

What Kasmir glosses over or misunderstands, however, is that
there is indeed a critical difference between the workers in
MCC coops and workers in other firms. The most important,
already mentioned, is that MCC worker-owners are not wage-
labor, but associated small producers. Most MCC firms are
under 500 workers and many quite smaller. Second, the MCC
firms are not owned by an external force alien to their
production process. The managerial strata and the workers
representatives in the governing councils have the same
single ownership share and vote as everyone else.

In other words, when workers in a regular firm go on a
sympathy strike, they hurt or pressure the interest of
external bosses; but when MCC workers go out, they only
subtract from their own material interest. They may do so
anyway as a matter of solidarity, much as a small store
owner may close for the day of a political strike, but the
structure of interest is clearly different than the wage-
laborer. Likewise when MCC worker-owners spend more time at
work, or attending school or training sessions after work,
subtracting from time spent in the bars - they are
contributing directly to their coop's growth and their own
benefit as well, where on the other hand, forced overtime in
a regular firm primarily benefits an external owner.

So the interesting question Kasmir leaves unanswered is
whether the class position of the MCC worker-owner is a step
backward to a petit-bourgeois past or a step forward to a
worker-controlled mode of production of a socialist future.
Given the overall picture of MCC's successful growth since
the time of her writing, the latter seems the better answer.

Democracy: Representative and Participatory

But do the MCC firms' internal practices still stand as
well-functioning examples of direct and participatory
democracy in the workplace? Kasmir suggests they are not;
that they are simply run by the managers and the rest is pro
forma. But her ideological presumptions miss a great deal
here that is much better treated in George Cheney's book,
Values at Work: Employee Participation Meets Market Pressure
at Mondragon.

Cheney is both more in solidarity with the Mondragon project
and in some ways, more critical of it at the same time. His
criticisms, however, come largely from within. He holds up
MCC's own values as a mirror to its practice, and then
examines the realities.

During a recent study tour of MCC, for example, my group had
a session with Fred Freundlich, an American who hade been
living in the Basque Country for more than a decade and
teaching economic theory at MCC's Mondragon University. We
asked for his opinion on how involved the younger MCC
workers were with their own governance in the coops.

"Frankly, Basque youth aren't all that active inside the
coops. They're into third world global justice issues,
environmentalism in general and Basque nationalism. About
the coop managers, I'd say a strong minority, maybe 30
percent, have solid cooperative values at heart, another
small minority pays lip service to them, and the rest are
somewhere in between. We clearly need a new surge of
activism to spread cooperativism beyond the factories."

The highest governing body of each coop, and MCC overall, is
its General Assembly or Congress. The average participation
is around 70 percent, and attendance is required. (One
absence results in a warning; a second results in a fine to
be paid.) Issues decided are important, such as overall
salary spreads, strategic direction of products and the
election of leadership.

"The General Assembly of worker-members is the highest
authority in each company," explains Freundlich in his 1998
paper, MCC: An Introduction.  "It must meet at least once a
year to address company-wide concerns (though it often meets
twice).  The General Assembly also elects the company's
Board of Directors and a President of the Board for four-
year terms, based on the principle of one-member one-vote.
The Board appoints the chief executive and must approve his
or her choices for division directors.

"A Social Council," Freundlich continues, "is elected by
departments to represent front line workers' interests and
to help promote two-way communication between management and
workers.  Pay solidarity and the distribution of profits to
all worker-members, as described previously, are other
important cooperative policies.

"While the MCC has its share of workforce controversy and
apathy," he concludes, "and perhaps more today than 30 years
ago-these structures and policies have contributed to fairly
high levels of commitment to the business and to the
cooperative idea, which in turn, many believe, have provided
Mondragon firms with a difficult to measure, but nonetheless
real, competitive advantage over its conventional
competitors."

Other studies of various MCC components, such as Eroski,
have placed the average quantifiable advantage self-
management has given MCC coops over non-MCC firms in the
marketplace at 15%.

"If one enters a Mondragon factory," writes George Benello
in the magazine Reinventing Anarchy Again, "one of the more
obvious features is a European-style coffee bar, occupied by
members taking a break. It is emblematic of the work style,
which is serious but relaxed. Mondragon productivity is very
high - higher than in its capitalist counterparts.
Efficiency, measured as the ratio of utilized resources
(capital and labor) to output, is far higher than in
comparable capitalist factories."

Changes, Large and Small

As for shifting attitudes, Basque society itself has seen
major changes over the past 30 years. "Such changes are
revealed, for example," says Cheney, "in the dramatic drop
in attendance at Mass in the Basque country, from about 75
percent in 1975 to less than 25 percent today." (p. 56).
What this shows is the Basques were not immune to a
weakening of traditional ties and the growing secularism and
consumerism prevalent in Europe.

Even so, there is still a considerable degree of
participation and debate at the base of the MCC coops, even
if it doesn't take the forms or rise to the level those on
the governing councils or management teams would like to
see. One ongoing debate is over the salary spread between
managers and production workers. According to Wikipedia:

"At Mondragon, there are agreed-upon wage ratios between the
worker-owners who do executive work and those who work in
the field or factory and earn a minimum wage. These ratios
range from 3:1 to 9:1 in different cooperatives and average
5:1. That is, the general manager of an average Mondragon
cooperative earns 5 times as much as the theoretical minimum
wage paid in his/her cooperative. This ratio is in reality
smaller because there are few Mondragon worker-owners that
earn minimum wages, their jobs being somewhat specialized
and classified at higher wage levels.[10]

"Although the ratio for each cooperative varies, it is
worker-owners within that cooperative who decide through a
democratic vote what these ratios should be. Thus, if a
general manager of a cooperative has a ratio of 9:1, it is
because its worker-owners decided it was a fair ratio to
maintain.[10]

"In general, wages at Mondragon, as compared to similar jobs
in local industries, are 30% or less at the management
levels and equivalent at the middle management, technical
and professional levels. As a result, Mondragon worker-
owners at the lower wage levels earn an average of 13%
higher wages than workers in similar businesses. In
addition, the ratios are further diminished because Spain
uses a progressive tax rate, so those with higher wages pay
higher taxes."[10]

Another key tension and debate arose in the 1990s, when
Mondragon transformed itself from a federation of coops
loosely connected through their `second degree' coops - the
bank, the social insurance agencies, the university and
research institutes - into MCC with its `sectoral'
structures - industrial, financial, retail distribution and
knowledge. The more centralized and unified structure
enabled Mondragon's management teams to develop and pursue
common strategies to better compete collectively with their
rivals in the marketplace.

While this relatively greater degree of centralization
proved very successful, it also increased market pressures
on the individual coops in the form of intensity of work and
speed of innovation. `Finding the balance', explains Cheney,
is the key term used to resolve differences.

Prospects for Coops in the U.S.

Can an experiment like Mondragon find fertile ground in the
U.S.? This is a topic addressed in Cooperation Works! How
People Are Using Cooperatives to Rebuild Communities and
Revitalize the Economy by E.G. Nadeau and David J. Thompson.
This work offers a survey of some 50 cooperative ventures in
twelve different areas of the U.S. society, both historical
and current - including agriculture, housing, business
purchasing coops, credit unions, social services and power
utilities - as well as worker-owned industrial coops.

The authors reveal two key points. The first is that
cooperatives have a long, rich and varied history across the
U.S, ranging from wheat farmers banding together to
manufacture and market their own pasta products, to home
health care providers building their own company to provide
decent wages and benefits in an occupation that often
suffers from poor conditions. The second is that none of
these 50 case studies, successful or unsuccessful, has
followed the Mondragon model of a three-in-one combination
of school, credit union and factory - even though in a
number of areas these three components exist nearby each
other. (The book's appendix lists the top 100 coops in the
U.S. which is quite useful.)

That doesn't mean some of these coop ventures aren't doing
well or breaking new ground. The Cooperative Home Care
Associates, based in the Bronx, NY, has grown to include
more than 1600 worker-owners, and vastly improved the lives
of the mainly Black and Latino women workers involved.

"By transforming part-time home care jobs into full-time
positions," states board member Kim Alleyne, "CHCA
differentiates itself from other firms in New York City's
home care industry. Specifically, we invest significant
capacity in scheduling our home care workers for at least 30
hours each week .... We also allocate 80 percent of our
total revenue to the wage and fringe benefits costs of our
home care workers - including a comprehensive health and
dental insurance benefit that does not require a financial
contribution from employees.

"We also offer our home care continuing education with many
opportunities to accumulate assets, including worker-
ownership, through which employees can accumulate a $1,000
equity stake in CHCA and receive dividends based on our
annual profits, an employer-contribution to their 401(k)
account in profitable years; and as an alternative to
predatory payday loans, CHCA offers no-interest loans that
average $250. We also encourage workers to create savings
and checking accounts, instead of relying on expensive check
cashing services."

For another interesting example, one can look to
California's Bay Area. Here Cheeseboard Pizza and five other
bakeries have formed a networked cooperative of Arizmendi
Bakeries. With some 200 worker-owners, they produce baked
goods combined with retail eateries that keep winning prizes
for the best foods and best places to eat in the area. Even
though the scale is small compared to MCC in Spain, they
also include in their network one `second degree' coop that
helps them all with financial services.

In North Carolina, however, a project called the Center for
Community Self-Help, started by Martin Eakes and Bonnie
Wright, highlighted a core problem. They retrained workers
displaced by plant shutdowns, and hoped to help them form
coops. Cooperation Works!... explains:

"Eakes and Wright discovered that the engine that gave
Mondragon its power was missing in North Carolina and was
stalling the development of worker coops. That element was
access to capital. For the Mondragon Cooperatives, the Caja
Laboral (or `Workers Bank') furnished the necessary capital
to launch successful ventures. Thus Eakes and Wright
concluded their next step was to create a Caja for North
Carolina."

So that's exactly what the couple did. Starting with a bake
sale, within three years they formed the Self-Help Credit
Union with several million dollars in deposits from area
churches and government grants. In another seven years, this
had launched new businesses with some 4000 jobs and 2000
child care spaces.

Cleveland, Ohio has a similar story. The Cleveland
Foundation and other nonprofits for years had been
repeatedly funding job training programs for the long-term
unemployed in low-income neighborhoods, only to find that
their newly certified workers still couldn't find
employment. Finally, a core group of funders and allies made
the trek to Mondragon, and was inspired on their return to
form the Evergreen Cooperatives, with local colleges serving
as schools and the foundations serving as sources of startup
capital.

Three businesses are now underway: Evergreen Cooperative
Laundry, an industrial-scale operation doing laundry for
major medical centers nearby; Ohio Cooperative Solar, which
leases urban business rooftops and installs solar arrays,
providing electric power to the region's grid; and Green
City Growers, and industrial-scale urban agriculture venture
producing fresh produce for local markets and restaurants. A
dozen more coop businesses are on the drawing boards.

Another project, in Chicago decided to follow Father
Arizmendi's model closely, and started with the design and
organization of a new public school in a low-income
neighborhood, Austin Polytechnical Academy. With ideas of
worker participation and worker ownership built into the
school's mission and curriculum, it will graduate its first
class of students with high-tech manufacturing skills in
2011. The school was developed with partners from area trade
unions and some 20 high-tech manufacturing firms. A number
of the students have gone to Mondragon on study tours.

Agreement with the Steelworkers

What gave a national focus to all these efforts was a recent
decision by the United Steel Workers, one of the largest
industrial unions in the U.S, to declare a formal
partnership with MCC to try to establish worker-owned
enterprises in depressed Rust Belt regions. This was soon
followed by a similar partnership declaration between MCC
and the City of Richmond in the Bay Area to launch a similar
effort.

The U.S., of course, continues to face dire economic
conditions. Bank credit is difficult to obtain and
unemployment is near 10 percent. Government at every level,
blocked by a neoliberal budget-cutting resurgence, is
slashing funds for community and small business development
in favor of tax breaks for the superrich.

This manufactured austerity is a two-edged sword as far as
coops are concerned. One edge is that there is little help
coming from government which makes new ventures very tough.
The other edge is that the solidarity economy, of which MCC
is a mother lode of ideas and experience, emerges precisely
when government fails and people have only each other to
turn to for mutual aid. The harsh conditions become a spur
to radical experiments and strategies for structural change.

This is where the last of these five books takes center
stage, David Schweickart's After Capitalism. In this short
but lucid book, Schweickart draws on his earlier studies of
workers control in Yugoslavia and his own experiences in
Mondragon and elsewhere, and raises all of these to a wider
working hypothesis for a new socialism for the 21st century.
He calls his effort `successor-system theory' and names its
project `Economic Democracy.' The core idea is that the
workers themselves democratically elect the managers of
their firms, which are either leased from the government
collectively or owned cooperatively outright. They also
share the wealth they create by sharing the profits among
themselves. They make their money the old-fashioned way: by
finding consumer needs, meeting those needs with decent
products, and selling them to satisfied customers at
reasonable prices.

We can see the Mondragon model here, but painted on a much
wider canvas of an entire nation's economy. Schweickart's
theory is one of the main variants of what is called `worker
controlled market socialism,' and his task in this work is
not so much to tell us how to get there, but how it can work
once we do get there.

The heart of his argument rests on dividing markets into
three - capital markets, labor markets, and markets in goods
and services. Capital markets he would abolish or at least
severely restrict by government buyouts or takeovers of
major banks and corporations in a time of crisis and turning
them into public asset funds. Labor markets he would
drastically change or restrict by vastly reducing wage
labor, turning most workers into owners or leaseholders of
their factories. Workers each have one equal vote, and elect
their managers. Markets in goods and services, however,
would remain, although regulated for ecological
sustainability and other matters related to the common good.

Mondragon as a Bridge to Socialism

Even if the Mondragon cooperators themselves don't speak
directly of wider socialist theory, Schweickart does it for
them in this work. "The Mondragon complex did not develop as
a purely pragmatic response to local conditions," he
explains. "Arizmendiarrieta was deeply concerned about
social justice and explicitly critical of capitalism, basing
his critique on progressive Catholic social doctrine, the
socialist tradition, and the philosophy of `personalism'
developed by Monier, Maritain, and other French Catholic
philosophers. He was critical of Soviet state socialism and
certain elements of the cooperative movement itself. He was
particularly sensitive to the danger of a cooperative
becoming simply a `collective egoist,' concerned only with
the well-being of its membership."

Schweickart goes on to note the problems of conflict,
tension and abstention from participation within the MCC
coops mentioned by both Kasmir and Cheney. But he draws this
conclusion:

"The presence of worker alienation and of certain practices
that cut against the grain of Arizmendiarrieta's vision
should not blind us to two striking lessons that can be
drawn from the economic success of Mondragon. First,
enterprises, even when highly sophisticated, can be
structured democratically without any loss of efficiency.
Even a large enterprise, comparable in size to a
multinational corporation, can be given a democratic
structure.

"Second, an efficient and economically dynamic sector can
flourish without capitalists. Capitalists do not manage the
Mondragon cooperatives. Capitalists do not provide
entrepreneurial talent. Capitalists do not supply the
capital for the development of new enterprises or the
expansion of existing ones. But these three functions -
managing enterprises, engaging in entrepreneurial
activities, and supplying capital - are the only functions
the capitalist class has ever performed. The Mondragon
record strongly suggests that we don't need capitalists
anymore - which, of course, is the central thesis of this
book."

What Schweickart is doing, of course, is dispensing with all
the usual arguments capitalist apologists circulate among
average workers as to why socialism can't work. In addition
to the intellectual arguments, he simply points to
Mondragon, which continues to move forward as the living
example of another path. In this sense, what the MCC worker-
owners have established is a bridge to a small fortress that
serves as a foothold in the future, a powerful example of
one not-so-small victory in a Gramscian `war of position.'

To a certain extent, many of the MCC workers and managers
would agree. MCC itself is officially `nonpartisan,' meaning
that it's not tied to any particular Basque or Spanish
political party.

But this does not mean `anti-partisan.' MCC works with a
number of socialist and Basque nationalist parties and
officials to build up the economy and educational planning
infrastructure of Euskadi, the Basque name of their `Basque
Country,' for which they are working for a high degree of
regional autonomy, if not national independence. In the MCC
coops, the workers belong to a range of socialist, communist
and Basque nationalist groups ranging from left to center.
There have been sharp differences between socialists and
some of the more militant nationalist groups in the recent
past, but today, the trend is for a wider popular unity and
a cessation of any violence.

Not all cooperatives are on the left, of course, and not
only in Spain, but elsewhere, including in the U.S. Nor are
those that do have progressive politics at their core the
only examples of strongholds that can be won in the `war of
position.' There are many other `strong points' in need of
multiplying and growing - progressive trade unions and labor
councils, community-driven schools and civic organizations
and coalitions, and, naturally, progressive political
organizations and parties rooted in working-class
communities. These are all organizational instruments for a
range of tactics that will be required in different phases
and a variety of fronts in class struggle and popular
democratic campaigns. What Mondragon has done for us,
however, is to make a major breakthrough in both theory and
practice and bring it to scale as a powerful example of what
can begin to happen when `labor is sovereign' in a new
socialism for a new century.

[Carl Davidson is a national co-chair of the Committees of
Correspondence for Democracy and Socialism, a national board
member of the Solidarity Economy Network, and a member of
Steelworker Associates. He is also the co-author, with Jerry
Harris, of CyberRadicalism: A New Left for a Global Age, at
http://stores.lulu.com/changemaker. His email is
carld717@gmail, and he is available to speak on Mondragon.]

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