Friday, March 18, 2011

An Introduction to Work Changes Within Mondragón

[The Mondragón cooperatives in Spain's Basque region have been very interesting to me in the past (and a good number of other people I know, too). As a friend of mine once said: we in the US focus on creating little coops, like grocery stores, while the Mondragón are making industrial-scale stuff like refrigerators! Even given their many flaws (including ever-increasing corporatization and layers of internal-hierarchy), they are still an example of collective enterprise that flies in the face of neo-liberal arguments that "workers need bosses". Written [somewhat painfully] for a sociology of work class in Spring 2004.]

The Mondragón is a complex of worker cooperatives – primarily industrial in nature – located in the Basque region of Spain. It continues to be the largest federation of such cooperative corporations outside of the former Yugoslavia and China, and has, in many respects, been able to successfully compete with capitalist firms in a number of ways.

Due to the cooperative nature of these firms, the work relations are different than nearly any other capitalist company. Workers exercise not only ownership over the firms, but also a substantial level of governance over the firm’s macro-level decision making as well. In later decades, workers have taken on a greater role in work democracy for their day-to-day tasks. As members of the cooperative, they have an ownership share in the firm, and contribute to the governance of the firm directly on the job and through elected representatives of various councils.

Unlike some cooperatives where there is no delineation between management and worker[1], Mondragón firms typically have layers of management. Since there is a management structure, the Mondragón has not been immune from labor discontent and struggles. In the 1970s, workers and progressive managers spurred a number of work place reforms. But, this was not able to stop a strike at the Ulgor firm, one of the largest producers of refrigerators in Spain (Johnson and Whyte 1977).

The problem I wish to address is how work has changed within the Mondragón complex, both in terms of the organization of the workplace for members and the structural relationship within firms, such as that amongst worker and manager. A large part of this is how have democratic channels and the nature of self-determined work changed in the complex. Have some firms had easier times with democratic reforms than others? Which firms have had greater successes with work democracy and has this translated into greater success for these firms? How has recession and globalization affected how Mondragón operates? Has there been increasing worker discontent during the existence of Mondragón, or has it decreased since the 1970s? And how democratic has Mondragón as whole been evaluated? In answer the above questions, along with a brief history of Mondragón’s evolution, I hope to understand in what ways work and democracy has changed.

In Moye (1993), four distinct periods in Mondragón history are noted: expansion (1956-59), programmed development (1970-84), adaptation to the market (1985-90), and sectoralization (1991-present). These strategic periods describe the various changes that Mondragón has gone through as a group of cooperative companies and also in terms of work.

The early period of Mondragón (expansion) involves the initial formation and design of the complex, an idea that is commonly attributed to a Catholic priest named Fr. José Maria Arizmendi. He laid out the first draft of the constitution and by-laws for the first cooperative. These documents have formed the basis for every cooperative since. It was at this time (and under the influence of Arizmendi) that low wage ratios and the direct deposit of member shares into accounts were established as norm to keep both a low management hierarchy and a large pool of capital for a cooperative. With the establishment of a credit union to help the funding of additional cooperatives, the Caja Laboral Popular, and a cooperative educational system to help in job training, Mondragón began creating institutions to fulfill important needs that neither the marketplace nor the state would provide to cooperative organizations.

The period of “programmed development” saw both a rapid increase in the number of Mondragón firms and also the onslaught of a Spanish recession. As noted above and will be noted below, this period also saw an increase in labor struggles within Mondragón, including a strike (including retributive firing afterward), in addition to external union organizing throughout Spain. These efforts increased employment in Spain and the Basque region, and also led to much higher wage levels. Experiments and strategic changes in on-the-job work organization will be dealt with in the section titled “Workplace reorganization”. Bradley and Gelb (1986) write and analyze four responses typical of cooperatives in regards to recession, including 1) efficient adjustments by the more flexible wage labor, 2) cautious investments, 3) attempts to diversify, and 4) moral authority of a tight community and better information flows between members.

Adaptation to the market and sectoralization have both occurred in tandem with increased global integration (which is discussed in the section “Internationalization and globalization”) and corporatization following a multinational model whose essence is captured by the formation of the Mondragón Cooperative Corporation (MCC). Taylor (1994) remarks that by the late 1980s, the economic challenges faced by Mondragón were answered by “a more narrowly economic conception of efficiency” (p. 483). The preoccupation with “standard” capitalist concerns like “efficiency” continued to grow through out the 1990s.

Before looking at how work was reorganized in the 1970s, I would like to preface the discussion by looking at how workers have not behaved as theories have commonly predicted those in cooperatives to behave. Moye (1993) details four theoretical problems that besiege most cooperatives on a firm and societal level. First, theory suggests that members will restrict employment to increase the per member income. Second, it is thought that cooperative firms with collective capital funds will not offer sufficient incentives for its members to reinvest in the firm itself – and thus be driven to invest outside their firms. Third, new cooperatives will not have proper “external market discipline”. And fourth, there is allegedly a danger of a sale by cooperative members, since this is said to be the best way members can gain the full value of their investments. Moye concludes that, on all these accounts, Mondragón has overcome such issues by dealing with the related problems both directly and indirectly.


[1] See Rothschild-Whitt (1979) for more on cooperative alternatives to the rational-bureaucratic model, that eschews a separate management structure and hierarchy.


Bradley, Keith and Alan Gelb. 1986. “Cooperative Labour Relations: Mondragon’s Response to Recession”. British Journal of Industrial Relations, 25 (1), March: 77-97.

Johnson, Ana Gutierrez and William Foote Whyte. 1977. “The Mondragon System of Worker Production Cooperatives”. Industrial and Labor Relations Review, 31 (1), October: 18-30.

Moye, A. Melissa. 1993. "Mondragon: Adapting Co-operative Structures to Meet the Demands of a Changing Environment". Economic and Industrial Democracy, 14: 251-276.

Rothschild-Whitt, Joyce. 1979. “The Collectivist Organization: An Alternative to Rational-Bureaucratic Models”. American Sociological Review, 44, August: 509-527.

Taylor, Peter Leigh. 1994. “The Rhetorical Construction of Efficiency: Restructuring and Industrial Democracy in Mondragón, Spain”. Sociological Forum, 9 (3): 459-489.

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