The Myth of Mondragon

On October 27^th, the United Steelworkers and Mondragon Internacional, the worldwide network of cooperatives based in Basque territory, announced a new alliance:

PITTSBURGH – The United Steelworkers (USW) and MONDRAGON Internacional, S.A. today announced a framework agreement for collaboration in establishing MONDRAGON cooperatives in the manufacturing sector within the United States and Canada.  The USW and MONDRAGON will work to establish manufacturing cooperatives that adapt collective bargaining principles to the MONDRAGON worker ownership model of “one worker, one vote.”

“We see today’s agreement as a historic first step towards making union co-ops a viable business model that can create good jobs, empower workers, and support communities in the United States and Canada,” said USW International President Leo W. Gerard.  “Too often we have seen Wall Street hollow out companies by draining their cash and assets and hollowing out communities by shedding jobs and shuttering plants.  We need a new business model that invests in workers and invests in communities.”

Josu Ugarte, President of MONDGRAGON Internacional added: “What we are announcing today represents a historic first – combining the world’s largest industrial worker cooperative with one of the world’s most progressive and forward-thinking manufacturing unions to work together so that our combined know-how and complimentary visions can transform manufacturing practices in North America.”

This has led some sectors of the left in the U.S. to view this as a major step forward. Carl Davidson, an SDS leader in the 60s who has moved in a social democratic direction in recent years, wrote:

…the USW initiative, and the potential clout behind it, puts the Mondragon vision on wider terrain. An integrated chain of worker-owned enterprises that might promote a green restructuring of the U.S. economy, for instance, would not only be a powerful force in its own right. It would also have a ripple effect, likely to spur other government and private efforts to both supplement and compete with it.

In These Times, a leading social democratic periodical, was also hopeful:

The USW/Mondragon alliance might represent a third alternative. While Mondragon coops are for-profit enterprises, they are committed to principles beyond the bottom line.

They are accountable to their workers and the communities in which they operate, not just to the dictates of the market. Mondragon has a financing wing and, like many major U.S. unions, the USW has considerable capital reserves. To the extent that they can bankroll their own projects, they can free themselves from Wall Street and its total focus on profit.

The idea of worker-owned companies has come to the fore recently in other contexts. Michael Moore’s “Capitalism: a Love Story” featured two cooperatives in the U.S., a California bakery and a Wisconsin robotics manufacturer. And about a decade ago, there was attention paid to the “recovered” factories in Argentina that had become the focus of Naomi Klein’s documentary “The Take“. Since neither Moore nor Klein are Marxists, it does not come as a surprise that cooperatives are viewed as an alternative to the “failed” state socialisms of the past.

My first encounter with Mondragon occurred in the early 90s on the Progressive Economists Network mailing list (PEN-L) when a professor at a Catholic university harped on its role in the transition to socialism in countries like the U.S. Consistent with market socialism schemas that were popular at the time, Mondragon-style cooperatives were seen as liberated territory that would diffuse out into the rest of the economy until it had become totally transformed. Somehow I failed to see how the capitalist ruling class would allow such a process to unfold peacefully.

But a reading of Sharryn Kasmir’s “The Myth of Mondragon” persuaded me that this development would have never been seen as a threat to begin with. The Mondragon collectives are the 7^th largest company in Spain and have never been the target of subversion. In fact, in 1965 the fascist regime in Spain awarded Father Arizmendi, the founder of Mondragon, with the Gold Medal for Merit in Work.

It turns out that worker-owned businesses have not exactly been anathema to fascist regimes. Indeed, Kasmir makes the case that if political parties and trade unions had been legal under Franco, “political energies never would have been channeled into so unlikely a project as cooperativism”.

And it was not just Spain. While the Italian fascists were initially hostile to co-ops, they got the green light from Mussolini after agreeing to purge Socialists and Communists. In 1927 there were 7,131 co-ops and by 1942 the number had swelled to 14,576. Somehow the fascist state did not fear that these “alternative” modes of production threatened the economic system.

Indeed, Mussolini pointed to the co-ops as examples of his corporatist ideals. Kasmir explains this anomaly in terms of how they “embodied worker participation, nonconflictual relations between labor and management, and the withering away of class identifications.”

For Carl Davidson, Father Arizmendi’s ideas on cooperatives flowed from a “deep study of Catholic social theory as well as the works of Karl Marx and the English cooperativist Robert Owen.” Now it should be acknowledged at the outset that Karl Marx did view the experiments of Robert Owens as praiseworthy. In the 1864 Inaugural Address of the International Working Men’s Association, he referred to them as follows:

We speak of the co-operative movement, especially the co-operative factories raised by the unassisted efforts of a few bold “hands”. The value of these great social experiments cannot be overrated. By deed instead of by argument, they have shown that production on a large scale, and in accord with the behests of modern science, may be carried on without the existence of a class of masters employing a class of hands; that to bear fruit, the means of labor need not be monopolized as a means of dominion over, and of extortion against, the laboring man himself; and that, like slave labor, like serf labor, hired labor is but a transitory and inferior form, destined to disappear before associated labor plying its toil with a willing hand, a ready mind, and a joyous heart. In England, the seeds of the co-operative system were sown by Robert Owen; the workingmen’s experiments tried on the Continent were, in fact, the practical upshot of the theories, not invented, but loudly proclaimed, in 1848.

Accepting momentarily that Arizmendi was partially inspired by such an example, it is still necessary to assess the role of “Catholic social theory” alluded to by Davidson. It turns out that this was largely a product of the priest’s membership in Catholic Action. While Arizmedi was a staunch opponent of Franco during the Spanish Civil War, he was just as much of an opponent of class struggle. He saw the war as a tragedy and hoped to find a way to achieve class peace in his homeland, especially in the Basque country, a traditional bastion of worker and nationalist militancy.

Joxe Aruzmendi, Arizmendi’s biographer, characterized the priest’s views as follows:

At the root of the class struggle can be found the myth of revolution, faith in violence, etc., that in the opinion of Arizmendiaretta characterize the twentieth century, and that he summarily rejects. The question of the class struggle is phrased, for Arizmendiaretta, as the question of how to overcome it, urgently.

While the Mondragon cooperatives were taking shape, leftwing politics in Basque country proceeded on a separate track. The ETA (this was before the group evolved in a Narodnik direction) sought to combine socialist and national liberation struggles and the trade union movement conducted illegal strikes that challenged the corporatist status quo. All the while, the Mondragonites were focusing on the immediate objectives of selling their products, delivering social services to their members and generally avoiding the class struggle.

While the Mondragon cooperatives have been successful in terms of business objectives, they are not exactly harbingers of a classless society. Despite the fact that everybody is an “owner”, the blue-collar workers on the assembly line do not feel that they have that much of a stake in the company. Kasmir conducted  poll of workers at Mayc, a private company in Mondragon, and at Fagor Clima, a co-op of comparable size that turned out similar products.

In answer to the question “In your job, do you feel that you are working as if the firm is yours?”, manual workers at Mayc replied 75 percent in the negative as opposed to 78 percent at Fagor. When asked whether they felt “part of the firm”, 33 percent of the Mayc manual workers said no but Fagor workers were even more alienated. Fully half said they did not. Meanwhile, those in more skilled or management positions tended to be happier in both places.

The Basque Workers Council, a syndicate combining class and national demands, has been critical of Mondragon since it was formed. In their magazine, they charged the cooperatives with:

Becoming like any private firm, from the point of view of daily work, the cooperative member is exploited in his/her job in a capitalist firm by increased production, mobility, schedule changes, etc.

We don’t understand why the managers don’t present a proposal to lower the age of retirement in the cooperatives…Instead, they opted, just like owners of private firms, to achieve profitability by the same methods as capitalist firms: lay-offs, increasing productivity, temporary contracts, etc.

Not surprisingly, Mondragon has adapted to a “leaner and meaner” corporate culture that became the norm internationally under what has become known as neo-liberalism. In 1993, the Guardian reported that Mondragon, the “darling of Western universities’ sociology departments in the 1970s, has been radically restructured in preparation for the European Single Market.”

It stated that “increased salary differentials, advertising campaigns in Fortune and co-operate alliances with companies like Hotpoint have had many co-op workers wondering whether in the new Mondragon Cooperative Corporation some members are more equal than others.”

By 2001, many workers at Mondragon were not even on a par with the 50 percent of manual workers who told Sharryn Kasmir that they did not feel “part of the firm”. I am referring to the largely foreign contract workers who are not even part of the collective ownership.

The October 23, 2001 Guardian reported:

Under Mr Cancelo’s guidance the MCC [Mondragon Cooperative Corporation] members have learned to think like the shareholders of any other global business. In order to protect their own jobs from fluctuations in demand, 20% of the workforce are on part-time or short-term contracts and can easily be shed. Like all the co-op’s foreign employees and most Spanish workers outside the Basque country, the 148 staff at Maier UK – a Lichfield car parts company that MCC bought earlier this year – are not co-op members.

In conclusion, I must also take exception to Carl Davidson’s selective take on the United Steelworkers leadership:

The Mondragon initiative is not the first innovative project of the Steelworkers seeking wider allies. With the encouragement of International President Leo Gerard, following on the anti-WTO street battles in Seattle in the 1990s, the USW helped found the Blue-Green Alliance together with the Sierra Club and other environmentalists.  It has worked closely with Van Jones and ‘Green for All’s jobs initiatives and the union plays a major role in the ongoing annual ‘Good Jobs, Green Jobs’ conferences. Most recently, the USW was a major participant in the week-long series of events making the oppositional case at the G20 events in Pittsburgh.

While nobody would deny that Green initiatives are laudable, and even that something good might come out of an alliance with Mondragon in terms of job creation, it must be stated that the collapse of the American trade union movement is largely a function of the class collaborationist policies of people like the USW President Leo W. Gerard, even if he has learned the importance of attending G20 events or making appearances on MSNBC.

The central crisis facing American workers today is their reliance on the Democratic Party to defend their interests. The USW is just like every other powerful union. It raises money for and urges its members to vote for the lesser evil. The USW backed John Edwards in the 2008 primaries and then switched gears to back Obama. This of course was to be expected.

On September 16^th Gerard informed Huffington Post readers:

The Obama administration fails to fawn over the affluent.

Instead, Obama talked of downtrodden workers in the former Jones & Laughlin Steel mill in Aliquippa. Bosses there fired a dozen workers shortly after the National Labor Relations Act passed in 1935. The workers, mostly union organizers, challenged the dismissals all the way the U.S. Supreme Court, securing a landmark win that not only got them their jobs back, but also affirmed the constitutionality of the labor law that led to the burgeoning of union organizing, and the growth of America’s large, stable middle class.

I don’t know about fawning over the affluent, whatever that is supposed to mean, but the general consensus is that Obama’s economic policies are a continuation pretty much of the administration that preceded his. Bailouts for Wall Street and foreclosures for everybody else.

Just about everybody has begun to wake up to this, from liberal bloggers like Jane Hamsher to the Congressional Black Congress. The fact that a “progressive” trade union president and his ex-radical admirer can state otherwise is a sign of the problems in the trade union movement and on the left that must be sorted out once and for all.