Across the Pond Cooperativism: Milwaukee and Mondragon.

January 9, 2014 § 1 Comment

In September of 2013 I had the privilege of taking a trip with the Praxis Peace Institute to Mondragon, Spain. It had been a dream of mine to go there for a few years, so I jumped on the opportunity. Mondragon Cooperative Corporation (MCC) is the world’s largest cooperative complex. They provide 83,000 full time jobs (100,000 people including part-timers) all over the world, and in the Basque region of Spain they have about 33,000 workers. They made €7.9billion in 2012. There are other places that you can read all about Mondragon. Philadelphia cooperator Caitlin Quigley wrote a rather insightful piece about this same trip here.

My biggest impression was “wow, they’re really doing it.” The cooperative movement that is just starting to pick up steam here in the US pales in comparison to the size and scope of Mondragon. I was overwhelmed with hope that the movements happening here can be successful and long-lasting. And there are of course plenty of lessons to be learned from Mondragon that can help our movements get there.

The cooperative complex is essentially a vast cultural and economic institution. There are cooperative schools for young children up through college. There is a co-op research and development firm and a separate firm to foster entrepreneurship and new ventures. There are co-op factories suffering a fate similar to American factories. The big-box stores Eroski (think Target, but a little smaller and more grocery-oriented) are cooperatized in Basque country (though the stores are not co-ops in the rest of Spain). The people there build cooperative apartment complexes together. Cooperativism has made its way through nearly every aspect of life. Employment is around 95% in Basque country, and crime is extremely low. It’s hard to say whether all this suggests Americans could do that or if we shouldn’t even try.

Worker-ownership is key there. On the first day, our guide told us a story about a major electronics corporation VP and Directors coming to Mondragon to find out how MCC manages intercooperation and worker engagement. They basically wanted to figure out how to make workers happier. Our guide said he responded by showing them this: MondragonStructureofPowerThat is to say, in a standard corporation, capital has all the power, and labor is a tool to be wielded to maximize capital, whereas in a cooperative, capital is the tool to be used in the service of labor (the workers). This, he explained, was why they have happy workers. I imagine a lot of cringing ensued.

The worker-centric approach of Mondragon has major implications for how we approach cooperativism here. A quick anecdote: when the co-op bar I work at was forming back in 2010, it was conceived of as a consumer co-op. There were two big reasons for this. One was that the food co-op that kind of birthed it was a consumer co-op so we had experience with that form, and the other more important reason was that selling memberships in advance of opening the business would be the principle form of capitalization for the business. In other words, we wouldn’t have opened our doors had it not been for early memberships, and lots of them. But now, this particular co-op has a bunch of workers who, despite adding value to the job, don’t own the place any more than many of their customers. And as a result, there is arguably no incentive to make it the highest performing business of its kind. (Of course there are other contextual factors, like the character of the neighborhood and the bar itself; and the workers DO get to run the place under the auspices of a pretty worker-friendly board.) Seeing the level of performance and pride, as well as the social and fringe benefits a network of specifically worker-owned cooperatives brings to the table made me think we’ve been approaching co-op development in the wrong way in certain contexts. I think this has to do with the need the co-op seeks to meet.

The basic reason co-ops form is to meet a need. Historically, farmers pooled their resources so they could purchase equipment and supplies and market their products together (their need was access to markets and an economy of scale). Food (grocery) co-ops today exist in most cases to deliver “natural foods” to areas that don’t have natural foods (This is a big part of the reason co-ops are seen as a hippie thing). It makes sense that food co-ops are mostly organized as consumer co-ops. The need being met is the consumer’s need for food. Many thriving food co-ops also have volunteer labor. This helps lower prices (among a host of other impacts) to meet the basic human need the consumers have to eat. But at a co-op bar, what is the need? There are dozens of bars in Milwaukee. So the need wasn’t for another one. In our context, the need is really for employment. We rounded out our mission to reflect a couple of additional needs (co-op development and a social activist-oriented gathering place), but in practice we have about ten people doing value-added customer-service work for a member base that does not get to volunteer, and who does not have a serious “need” for the product we are offering. This type of work requires employee ownership in order to have engaged, motivated workers who want to innovate.

How do you say “eureka!” in Euskara?

But at Mondragon, there is a somewhat more clearly delineated line between the low skilled, low education, repetitive, semi-automaton labor that is required of much of their industrial jobs and the flexible, challenging, variable, highly skilled type labor that happens in other jobs. In either case, Mondragon has found consistent empirical support for the “mutual gains” model, where people are a key asset to be invested in for company improvement, rather than the alternative “conflicting outcomes” model where human resources are a cost to be minimized in order to improve organizational performance. They studied industrial jobs regardless of sector, cooperative or not, and regardless of past performance to come up with these findings, by the way. But industrial jobs nonetheless.

In the big retail outlets called Eroski, they found a different result: organizational performance increases with job strain. Highest productivity corresponds to low job satisfaction. The data suggests Eroski should pursue a model with low satisfying/paying/skilled jobs and high expected turnover to maximize profit. This is an industry that is extremely cost-sensitive (low price strategy), which drives down investment in employees. How can Eroski be sustainable AND value workers in the context of these results?

In our case, the bartender’s mixology skills and face to face customer service skills are a little harder to quantify. They’re clearly adding value. Same with the cooks at the consumer-owned food co-op’s cafe. Should all value-added jobs be in the realm of worker-co-ops? In the service industry, what’s the difference between value-added and non-value added? What’s the best way to develop employees in a worker-owned/managed setting? How do we even know the right way to structure our co-ops?

The answer to those questions should be the subject of further study, but I have a hunch going back to the initial co-op-theoretical question of “What is the need this co-op exists to meet?” and the context-sensitive question of “Are these value-added jobs?” can help determine the form: worker, consumer, or hybrid.

Mondragon’s success poses another totally different problem however, and it also has to do with worker ownership. The worker-owned industries at Mondragon have pursued growth just like any firm under the capitalist regime. Sure they value the workers, but they also value profit maximization. Worker-ownership in capitalism requires the same growth paradigm as traditional corporate ownership. But it doesn’t have to. One of the things that I find really exciting about the smaller-scale cooperative developments happening in the US is their willingness not to pursue growth for growth’s sake. Growth requires resources, and overuse of resources kills the planet. Our friends at Just Coffee have made a decision to stay at about their current size despite opportunities to get way bigger. Our food co-op has decided to stay in the building where it was founded, directly contrary to some other food co-ops that pursue rapid growth.

Another advantage of staying small is that it preserves democracy. Smaller democracies allow for a greater proportionate voice for each participant. But as Caitlin Quigley so aptly noted:

The cooperative model is built for democracy, but one member, one vote is only an invitation. Co-op members still need to show up to meetings and they need to be informed about what they’re voting on. More participation means stronger co-ops that actually reflect the needs and goals of their members. The cooperative model is a structure, and we have to create culture within that skeleton.

Mondragon has seen such success in part because it treats democracy as a precious resource. It’s the wellspring of their strength and their innovation. No matter how we structure our cooperatives, or how big they get, practicing and honing democracy is integral to the sustainability (both economic and environmental) of the businesses.

As for a linkage between Milwaukee and Mondragon, it’s still hard to say if Mondragon’s success is a sign we could do it here or whether the specificity of its historic, cultural, environmental and economic context should be taken as a warning not to even try. There are obviously a lot of things we can learn from them, but Mondragon’s size forces them to engage in the rapacious capitalist behaviors of other multinationals. They’re really great for the Basques, but how are the workers in their Chinese and Mexican factories treated, since they’re not worker-owners? The co-op-cultural best practices they have honed to make democracy flourish throughout the business and social life of the area are in my opinion the best takeaways from Mondragon. I’d prefer small neighborhood businesses running cooperatively and focusing on localism over huge firms that participate in the global market.

When I was there, I heard capitalists referred to on more than one occasion as “the enemy.” In spite of their global footprint and arguably relativistic philosophy of worker ownership, they still proclaim never to give up, never to “let them win.”2013-09-08 15.53.57 2013-09-08 21.54.22 2013-09-08 13.21.54 2013-09-08 14.34.11

Peter Murphy, Milwaukee cooperativist

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