The Mondragon Cooperatives, Workplace Democracy and Globalization

150 Pages·2014·25.058 MB·English

by  Amanda Latinne

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Publications on Labour Law
The Mondragon Cooperatives. Workplace Democracy and Globalization
Amanda Latinne
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ACKNOWLEDGEMENTS
Arizmendiarietta, the founder of the Mondragon cooperatives used to say that we
build the road as we travel.
To all those who accompanied me during my travels, my parents, my
husband, my children and my friends: a sincere thank you for the love, friendship,
inspiration and patience 1 was granted.
A special thanks to my professors for their guidance, and last but not least,
to Erika Peeters for the Dutch-English translation and the Spanish corrections.
vii
Interaenti*

CONTENTS
Acknowledgements...................................... ..................................vü
Introduction........................................................................ 1
Chapter I. Genesis and ideology.................. 3
1. Introduction.................. .....3
2. Historical outline .....................................................................................3
3. The ideological framework...,................ .................................................. 7
4. Portrait of the “founder" Arizmendiarrieta........................... 10
5. How it all began: outline of the rise of MONDR AGON................ 16
6. The basic ideology............... 21
6.1. The democratic bodies ......................................... 21
6.2. Day-to-day proceedings..............,, 22
6.3. “R**emuneration ............................................... 23
6.4. Employment .................................................. 26
7. Conclusion ........................................................ 26
Chapter II. The growth of MONDRAGON ............................. 29
1. Introduction........................................................................................... 29
2. Economic evolution........................................................................ 29
3. Evolution of the ideology........ ...................................... 32
3.1. The democratic bodies..................................................................... 34
3.2. The work..,.................................................,. 36
3.3. Wages ........................................................ 42
3.4. Employment................................................. 46
4. Conclusion ............... ......... 51
Chapter III. The relation between the MONDRAGON Group
and the trade unions...........................53
1. Introduction....................................................... 53
2. The relation between cooperatives and trade unions in historical
perspective. .........*«• • 54
2.1. A n estranged couple .................................... 54
I*nirrwnti
M
Contents
2.2. Historical evolution of trade unions (and cooperatives) in Spain... 55
2.3. Trade unions and cooperatives in the Basque Country and in
Mondragon in particular: an on-and-off relationship......................... q
3. The birth of MONDRAGON and its development during the Franco
period ........................ ............................................................................ 69
4. MONDRAGON and the trade unions in the new democracy .......... 80
4.1. The aftermath of the Ulgor strike...................................................................80
4.2. Conflict of values .............................................. 83
4.3. Take-overs and expansion: MONDRAGON and trade unions
keep crossing swords........................................... 86
4.4. MONDRAGON goes to America ............................... 98
5. The legal construction .............................................. 99
5.1. The graceful waltz of governments and the social economy ....... 99
5.2. The real status of the MONDRAGON worker-owners and their
non-owner colleagues......................................... 104
6. And what about the consejo social?.................................. 116
7. Conclusion ....................................................... 119
Final conclusion .................................................................. ..................................................
Annex 1......................................................................................................................................... 127
.............................................................. I
Annex 2
Annex 3................................................... .......................
131
Bibliography
INTRODUCTION
MONDRAGON S. COOP is a big enterprise with a workforce of 83 321 people
and a sales total of 14 080 million euros.2 Set up as an industrial cooperative in
the Basque Country in the 1950s it is now a transnational enterprise in which
cooperative employment is no longer the rule. MONDRAGON has turned out
to be a pragmatic answer to a social and economic reality. It is no paradise, its
thinker-doers are no angels? It is, however, a crossroads of ideas on economics,
history, sociology and anthropology.
Even though the town of Mondragon itself still breathes a seventies atmosphere,
an astonishing amount of multinational activity is going on behind the scenes:
ranging from a large financial institution like the Caja Laboral, over a network of
domestic and foreign companies in the industrial sector, services sector and retail
sector, to the social security institute lagan Aro and MONDRAGON'S very own
university and research institutes.
Although the company is not exactly famous, it is fascinating to see how much it
has been written about from all kinds of angles. Apparently, once people get to
know MONDRAGON and its history, they cannot stay unmoved. And then of
course, there is also the current (renewed) interest in alternative types of business
enterprises because of the threatening bankruptcy of Western capitalism?
I myself became interested after I had chanced upon (was it chance?) an article
about MONDRAGON. As an historian and sociologist, I wanted to know
how it had all begun. What were the motives, who was the driving force? As
an entrepreneur and lawyer 1 wanted to examine how such a project could be
compatible with today’s legal-economic context. But being a pragmatist and
mother I most of all wanted to find out how MONDRAGON dealt with the
challenges and problems all of us are facing today. I wanted to know whether
MONDRAGON was an answer, a solution.
Figures of 2012 on www.mondragon-corporation.com/.
“77iis is hoi paradise and we are no angels”, statement by Mikel Lezamiz, the person in charge
of the dissemination of the cooperative ideas, during my visit on 12 April 2011.
Culminating in 2012 in the International Year of the Cooperatives (UN Resolution 64/136).
1
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CHAPTER I
GENESIS AND IDEOLOGY
1. INTRODUCTION
MONDRAGON is an industrial cooperative enterprise which was set up in the
Basque Country in the fifties. At first sight, it looks like an almost revolutionary
solution to an old problem. After all, the discrepancy between labour and capital
seems to be irreconcilable. And then there is this priest-entrepreneur in a small
village in a valley who manages to reconcile this discrepancy? Naturally, one
would become intrigued. Bearing in mind the theory that we can only know
what we are by exploring where we came from, we are going to take a plunge into
history.
2. HISTORICAL OUTLINE
The town of Mondragón/Arrasate is situated in the Province of Gipuzkoa, one of
four provinces of the Spanish Basque Country.5 At the beginning of the twelfth
century, these Basque provinces were granted a fair amount of autonomy in
exchange for their support of the Iberian monarchs. This autonomy was laid
down in fueros, charters, but with the rise of the liberal states these old laws came
under pressure and were abolished in 1874/
Since the end of the nineteenth century, the industrialization in Gipuzkoa had
been evolving differently from the one in the nearby city of Bilbao. The region had
been living off metallurgy and metal processing (including locks and coachwork
but also arms), textile industry and small farming. In 1906 several of these metal
works merged into the Unión Cerrajera. Apart from producing steel plates the
company also specialized in further treatment and processing of screws, bolts,
locks, metal furniture and the like. By 1940 Unión Cerrajera had become an
important economic community with an entire network of bars, cooperative
shops, insurance companies, schools and other in-work benefits. Small suppliers
The other three provinces of the Spanish Basque Country are Biscay (Spanish: Vizcaya,
Basque: Bizkata). Álava and Navarre (Navarra).
T. Davis, “Revisiting Group Attachment: Ethnic and National Identity”, Political Psychology,
1999, (25) 25-28.
3
Intertentia
Chapter I
in the area supplied parts, as a result of which 60% of the inhabitants of Mondragon
were directly or indirectly employed by Unión Cerrajera.7
Simultaneously with this industrial development and the concomitant flow
of Spanish immigrants from other regions, Basque nationalism developed.
After having mastered the Basque language, Sabino Arana y Goiri was one of
the first people to popularize the Basque myths. Consequently, he is regarded
as the founding father of Basque nationalism. He founded the Partido Nacional
Vasco, PNV in 1895, emphasizing the uniqueness of the Basque language, one
of the oldest living languages in Europe that cannot be traced back to the Indo-
European substratum.8 It is worth mentioning that this PNV was the first political
party in Spain that was not led by dignitaries but instead used a system in which
local, regional and national leaders were chosen by all party members according
to a strictly democratic grassroots system.9
During the Spanish Civil War (1936-1939) the region was heavily
bombarded.10 The reason was that during this war a lot of Basques from Biscay
and Gipuzkoa sided with the Republicans because these were sympathetic to
their pursuit of a*utonomy. 1 The Basque clergy too sided with the Republicans.
For that reason, the military executed a dozen Basque priests as early as October
1936. One of them was Padre José Joaquín Arín Oyarzábal, a parish priest in
Mondragon at the time.12
After the victory of Francos troops in Bilbao in June 1937 the Civil War
became some kind of “holy” war in which Franco assumed the role of saviour
of the Roman Catholic religion against the atheist left side. When Pope Pius XII
formally acknowledged Franco as the leader of Spain, the repression against the
“left-wing” Basque priests peaked: 278 priests and 125 monks were imprisoned
F. Molina and A. Miguez, “The origins of Mondragon: Catholic co-operativism and social
movement in a Basque village (1941-59)”, Social History, 2008, (284) 289.
Together with Finnish and Hungarian, whose origin is not Indo-European either, J. Linstroth,
“The Basque Conflict Globally Speaking: material culture, media and Basque identity in the
wider world”, Oxford Development Studies, 2002, (205) 222, note 39.
L. Mees, “Politics, economy or culture? The rise and development of Basque nationalism in the
light of social movement theory”, Theory and Society, 2004, (311) 318-321.
The village of Gernika/Guernica, for instance, lies at approximately 50 km from Mondragon,
A. Azevedo and L. Gitaby, “The Cooperative movement, self-management, and competitive­
ness: the case of Mondragón Corporación Cooperativa”, WorkingUSA: The Journal of Tabor
and Society, 2010, (5) 8; J.M. Ormaetxea, Orígenes y Claves del Cooperativismo de Mondragon,
Mondragon, Caja Laboral, 1998,39,
Three battalions from Mondragon : a socialist, a Basque nationalist and a neutral battalion,
allegedly fought on the side of the Spanish Republicans: R. Morrison, We build the road as we
travel, Philadelphia, New Society Publishers, 1991,39.
When the Civil War started, the Spanish clergy turned against the Republicans. The Basque
clergy, on the other hand, sided with the Republicans: R Momison, We build the road as we
travel, Philadelphia, New Society Publishers, 1991,42-43.
4 Interseuli*
Genesis and ideology
or deported.13 * Parish priests were replaced by “imported” Spanish priests and
there was a total ban on speaking EuskeraZBasque in public. This even went so
far as the removal of Basque inscriptions on public buildings and tombstones in
Gernika/Guernica.” Being regarded as opponents, the Basques were mistrusted
and deprived of their fiscal and administrative autonomy.15 * * * * Nevertheless, Basque
nationalism continued to prosper in secret in the form of circles of friends who
gathered on a daily basis, often under the patronage of the Catholic Church.1”
The Franco regime wanted economic autarky and granted Spanish companies all
kindsof advantages so that theaspired import substitution could be accomplished?7
Although the “rebellious” provinces of Biscay and Gipuzkoa lost their economic
privileges and freedoms, the Basque metal industry remained untouched because
it played a big part in the overall Spanish development. Exporting companies
suffered ill effects from the political decisions, but because private persons and
companies were more or less forced to purchase domestic products”, it was not
only possible for inefficient methods of production to survive but also to avoid an
increasing price pressure.”
Since the end of the Second World War, Francos economic policy also focused
on promoting immigration from the rest of Spain as a kind of‘’natural” solution
for the Basque problem. Due to a lack of resources to deal with this flood, the
immigration led to problems of education and housing. It also put pressure on the
workers’ wages because the poor Spaniards from the South were willing to work
for lower wages.20
R.P. Clark, The Basques. The Franco Years And Beyond, Reno, University of Nevada Press,
1979.80- 82; One of Arizmendiarrieta’s contemporaries declared In an interview with Kasmir
that Basque priests had always shown a strong social commitment and had always been
disposed towards socialism/trade unionism or Basque nationalism: S. Kasmir, The Myth of
Mondragon, Cooperatives, Politics, Working-Class life in a Basque Town, Albany, State of New
York Press, 1996,71.
M R.P. Clark, The Basques. The Franco Years And Beyond, Reno, University of Nevada Press,
1979.80- 82,
F. Molina, ‘The historical dynamics of ethnic conflicts: confrontational nationalism,
democracy and the Basques in contemporary Spain", Nations and Nationalism, 2010, (240)
250.
Private schools run by the Church also taught in Basque: L. Mees, “Politics, economy or
culture? The rise and development of Basque nationalism in the light of social movement
theory", Theory and Society. 2004, (311) 321.
Ley de 24 de octubre 1939 de Protección y Fomento de la Industria Nacional, B.O.E. 25 October
1939.
Ley de 24 de noviembre 1939 de Ordenación y Defensa de la Industria Nacional, B.O.E.
15 December 1939.
R.P. Clark. The Basques. The Franco Years And Beyond, Reno, University of Nevada Press,
1979, 222-223; S. Lieberman, Growth and crisis in the Spanish economy 1940-93, London,
Routledge. 1995,29-30.
88 H P. Clark, The Basques. The Franco Years And Beyond, Reno, University of Nevada Press,
1979; 227-263.
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