| Economy

Opinion - Mondragón, the Next Face of the Left

With a proven record of better outcomes for workers, Mondragón could prove to be a model for the organization of a transition to socialism.

By Hector Miranda Plaza, April 6, 2021

After the Fall of the Soviet Union, socialism seemed to be completely discredited. For once and for all, the half century-long debate concerning the viability of socialism seemed to be conclusively settled. Capitalism had won, and in the following decades the left would dissipate from popular political thought.

In truth, they were not gone; rather, the fall of the USSR led to a fundamental rethinking of the doctrines and ideas that had shaped the pragmatic implementation of socialism in most places since the days of the Bolshevik revolution. Socialist governance could no longer involve direct government control or actions.

Because the core teaching of socialist and Marxist doctrines are of control of the means of productions by the workers directly, the new leftist currents of thought that emerged, led by prominent thinkers such as Noam Chomsky and Richard Wolff, became increasingly focused on the empowerment of the individual in all areas instead of empowerment of a central authority or government.

Models for a practical implementation of this brand of socialism are usually obscure or short-lived, but a great exception to this norm can still be observed to this day.

In the small Basque town of Arrasate, in 1956, José María Arizmendiarrieta, a Catholic priest who worked at a polytechnic university, gathered five of his students to found a cooperative appliance company.

At the time, Spain was in the process of rebuilding from a years long-civil war, and unemployment and poverty were rampant in the Basque Country. To help this, he sought to empower employees through workplace democracy, and saw this business as a means to that end.

Called Talleres ULGOR, later known as Fagor, this coop would grow to become one of the largest worker cooperative organizations in all of Spain, as well as the world: Corporación Mondragón. 

In 1959, the Caja Laboral, a worker owned credit union, was founded by Mondragón to better finance their projects, as well as those of other cooperatives. As Spain and the Basque Country fully recovered from the war, new worker coops grew alongside Mondragón, which expanded and diversified into other fields and adopted their current name, with help of their funding.

In 1986, when Spain joined what would become the European Union, Mondragón expanded into the other member states, opening factories and selling its goods abroad. In the 90s, this expansion would be brought outside of Europe with the opening of many more cooperatively run factories. By the year 2000, they had 54,000 employees, and accounted for nearly 5% of the Basque Country’s GDP. 

Today, they have more d their number of employees, currently standing at 80,000 employees, have an annual revenue of over 12 billion Euros, total assets valued at nearly 25 billion Euros, and are the seventh largest company in all of Spain to boot. All of their employees collectively own the business, with the head of the corporation,

Iñigo Ucin, serving at the behest of the collective. Each year, employees vote on the wage ratio of factory/field work and executive work, which determines the amount of money an executive can earn proportional to how much a conventional worker can earn; currently, this figure varies from 1:6 to 1:9 by sector. This lies in stark contrast to the wage ratio of the average wage ratio of American corporations, which lies at 1:350. 

The success of the coop model is not just limited to Mondragón, though. The percentage of workers employed by coops has risen to nearly ten percent globally, and coops now generate over two trillion USD in turnover.

Additionally, coops are more effective in poverty reduction, as more money is typically paid to workers, who then go on to spend that money in their own communities, which stimulates the local economy and improves conditions. On a practical level, coops have demonstrated themselves to be more efficient, productive, and more sustainable alternative to private firms.

This is not to say that it is a solution without flaws, and structuring production socially as has been done in Mondragón will not automatically correct the past wrongs of capitalism. After all, such corporations are still capable of exploitation of others abroad.

However, what such a structure provides in the short term is the ability to, for the first time, fight this exploitation at its roots directly by removing the need to collectively bargain with a boss, and provide an outlet for future abolition of exploitation abroad in a democratic manner.

The success of Mondragón demonstrates a reality which now, more than ever, is needed: capitalism is not the only viable system. If a system in which the workers are directly empowered with the means of production can ensure more favorable outcomes for all involved than capitalism, it can open the doors for more methods of public organization. For example, firms could be controlled and funded by publicly held banks, or through an equity market which guarantees everyone a stake.

The hope for a new socialist future can start small here, but it will allow the left, for the first time in decades, to dream of new and practical ways to organize a better world.

Hector Miranda Plaza is an author for and co-founder of Young Patriots Magazine.