Effects of Internationalization and Globalization on Mondragón

Gunn (2000) and others (Errasti, et al. 2003) argue that the increased international integration of the world economy (a.k.a. “globalization”) have adversely affected Mondragón, primarily in its ability to retain its unique and democratic features. “[T]he trend toward greater reliance on markets of the past two decades has made it more difficult for initiatives in workplace democracy to survive” (p. 448). He also notes that “the day-to-day objective of democratically-managed firms is the maximization of some combination of income per member and employment stability” (p. 451), factors which are beginning to disappear. For instance, some Mondragón firms have begun hiring non-member workers (cooperative equivalent of other companies hiring “temp workers”). Cultural pressure has arisen for greater individualism and hierarchy in place of the ideal of “socially-coordinated governance structures”. There has also been continual pressure within management for increased pay differentials.[1] All of these factors have contributed to a greater gap in power amongst workers and managers in Mondragón.

Some potential “pros” of globalization – or “the marketization of employee participation” – are detailed by Cheney (2001/2002): a sense of realism about market pressures, a sense of greater customer and consumer responsiveness, increased competitiveness in industry, a unity of objective and language for all employees, and an aesthetic of entrepreneurship at the individual and work team level. Cheney, however, does not describe all these changes positively, and further notes the following globalization “cons”: the [further] subordination of the member’s role as employee with an overriding emphasis on external and internal markets, undermining opportunities for greater cooperation in and outside of the organization, displacement of key social values of Mondragón (for the sake of “efficiency”), increased responsibility and stress without substantial self-determination for employees, and a neglect for the potential role that such larger firms can play in promoting social values and shaping the market itself. In short, Mondragón is facing similar, if not more extreme due to its originally progressive nature, threats to its traditional organization that standard capitalist firms are due to international integration and “globalization”.

Miller (2001/2002) comments that during a visit to Mondragón, he heard a lot of internal discussion about “responding to the market”, but little about “shaping the market”. Both approaches assume a standard capitalist interaction, while a change in workplace roles and organization is neither implicit nor necessary for either. As Johnson and Whyte (1977) remarked about labor unrest in the 1970s and Mondragón’s less than sympathetic response to it, Miller criticizes Mondragón for not fully supporting and working with labor unions for creating “alternatives to the unfettered free market” – although still honoring a General Strike in Spain during 1994. Moye (1993) cites an internal study of Mondragón that found nearly one-fourth of members interested in leaving the cooperatives if private firm positions of a comparable nature were available, and only two-thirds were confident they would stay. Although job satisfaction is still favorable compared to most capitalist firms, this is an especially high-level of dis-ease for Mondragón.

Notes

[1] The original maximum pay differential was 1:3 (worker to management), but has since increased in some firms to as much as 1:10.

References

Cheney, George. 2001/2002. “Mondragon Cooperatives”. Social Policy, Winter: 4-9.

Errasti, Anjel Mari, Inaki Heras, Baleren Bakaikoa, and Pilar Elgoibar. 2003. “The Internationalisation of Cooperatives: The Case of the Mondragon Corporation”. Annals of Public and Cooperative Economics, 74 (2): 553-584.

Gunn, Chrostopher. 2000. “Markets Against Economic Democracy”. Review of Radical Political Economy, 32 (3): 448-460.

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.

Miller, Mike. 2001/2002. “Mondragon: Lessons For Our Times”. Social Policy, Winter: 17-20.

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