Mondragon and the Sovereignty of Labor

In the Fall of 2019, I visited the Mondragon Cooperatives through the Saint Mary’s Masters of Cooperative Management Field Research course taught by Marcelo Vieta. Before I left for the field research trip, I was attracted to the Mondragon Principle “Sovereignty of Labor.” There is so much to say about this worker cooperative operating at such a large scale. I decided to dive more deeply into how the Sovereignty of Labor shows up in multiple aspects of life, work, and systems. I’m really inspired by it!

Following, you’ll find an adapted version of my final academic paper from my experience. In it, you’ll find information including 7 lessons I learned that contribute to the “Sovereignty of Labor” from Mondragon, connections to the United States and my cooperative, and dreams of a cooperative future.

(Also: enjoy video capturing our trip by my talented co-learner and friend in the Saint Mary’s program, Anne Caraan.)

The cooperative movement needs to have deep roots of solidarity, justice and freedom, in the interest of those who are committed to our base units, such as our work commitments. — Fr. Josemaria Arizmendiarrietta, founder of Mondragon

Introduction

Cooperatives build new economies based on human needs rather than profits. The cooperative model is a shift from the extractive nature of corporate globalization. The cooperative difference is simple. A cooperative serves the needs of its members guided by the cooperative principles. In a capitalist economy, it is not easy to center the needs of cooperative members. In the Arrasate region (also known as Mondragon), I witnessed a special connection to work and humanizing workers. In this piece, I reflect on the ways that the Mondragon Cooperative Corporation (MCC) has created a humanizing support system and prioritizes its workers and cooperatives.

Lesson 1Workers are the historic heroes, embedded in history and legends.

On an old building in Mondragon, a message enscripted in Latin conveys work as an honor. Mondragon spokesperson Ander Etxeberria (our generous host and guide for the week) shares that viewing work as honor is culturally important to the community at Mondragon. There are today some 2,000 cooperatives in the Mondragon region, with 97 of those connected under the Mondragon Cooperative Corporation. This cultural relationship and understanding of work highlights the MCC principle of the sovereignty of labor. This principle, sovereignty of labor, is clearly a Mondragon principle which “considers labour the principle factor for transforming nature, society and human beings themselves.”

The cultural meanings, narratives, practices, and building inscriptions in Mondragon demonstrate the power and infiltration of this principle, the sovereignty of labor. In many cultures, there is the legend of the dragon terrorizing the village; and there is always someone who saves the town from the dragon. Sometimes, the king, the knight, or the under-dog turned hero saves the village. What story is familiar to you?

In Mondragon, the story ends in a different way: the foundry workers overcame the dragon. This story is a cultural example of the honor of workers and work. Whereas in other cultures, workers are replaceable, they are sometimes pesky (when they revolt), they are advocated for, but they are not the heroes of the town. The king or knight is often the hero. In Mondragon, workers are the heroes. This contributes to the narrative around the sovereignty of labor, the sovereignty of the workers.

Lesson 2The purpose of work is to improve society.

On day one of the training, Etxeberria shared that work in the Arrasate region is seen as a positive thing. The purpose of work is to improve society. This ties into those cultural aspects: the workers saving the town from Mondragon and the Latin inscription on the old building as well as the success of cooperatives in the region. This also fits in well with the cooperative economy that the Mondragon people (workers) have built.

Arizmendiarrieta taught the idea that the purpose of work is to improve society through his education efforts in Mondragon. In his Reflections, Arizmendi suggests, “Human beings transform and make nature productive through their work, and work is the best heritage a community has.”

Through work, the community’s members can contribute their personal legacy. In the non-cooperative business and perhaps even in some cooperatives, personal legacy is certainly not the approach to work. At the risk of romanticizing Mondragon, this approach is beautiful and humanizing. The worker is not merely a cog in the machine. Work is important; and in return, the worker is also protected in the Mondragon Cooperative Corporation. I’ll share more about that protection later here. The purpose of work is to improve society.

Lesson 3Cooperation and the cooperative principles are steeped in the culture. It’s the way of life.

This is not just a narrative; this shows up in research on Mondragon as well. For example, LKS Consulting, a Mondragon cooperative, developed a report with the Young Foundation, which revealed data on key social values and narratives in Mondragon cooperatives.

First, in the Basque language there is a term, auzolan, which refers to the common good: one must do community work and take care of one’s neighbors.

They must be responsible for their own community. This Basque word and concept was an important theme in the LKS interviews.

Second, the report revealed a sense of “sacrifice and generosity” where giving to others is very important. Cooperation requires sacrifice at times.

Third, self-responsibility (a cooperative value) showed up in the report. The cooperative model simply will not work without a culture of self-responsibility because one must make difficult decisions in a cooperative. Fourth, democracy and participation unsurprisingly showed up in the interviews and surveys. Worker participation is quite embedded in the Basque region even in non-cooperatives. These values and cultural understandings show up in the work and contribute to the importance and power of the worker in Mondragon and in the Basque Region.

For generations and generations, work has been culturally significant. Mondragon people today stand on the shoulders of their ancestors, who, as Etxeberria suggested, are “many, many normal people.” The care for and honor of workers goes beyond a cultural gesture. Work as honor proves to not merely be a narrative in Arrasate. In all of Basque country, Arrasate has the highest per capita income and lowest inequality. Poverty is very low here.

This is significant in the larger picture of work in this area being viewed as honor. Work as honor has also been institutionalized in the Mondragon Cooperative Corporation.

Lesson 4Financial intercooperation protects the cooperatives.

One of the most impressive pieces of the Mondragon Cooperative Corporation is the worker protection and intercooperation set in place. According to Mondragon scholar Fred Freundlich, many of the cooperatives in MCC would be much smaller or non-existent if the intercooperation systems were not in place (especially profit pooling). All of the cooperatives have lost money at some point in time.

To survive, the cooperatives practice profit pooling. The cooperatives contribute some of their profits together; and then the cooperatives who are doing well can offer financial support to the cooperatives who suffered from losses that year. This is not a charity measure or a hand out. This is an act of solidarity.

The group places pressure on the cooperatives who need support to do better so that they can get off the “help” list. Mondragon Cooperative Corporation practices this with their cooperatives as a way of financial intercooperation. As the economy becomes more and more globalized it also becomes more unpredictable. This profit pooling practice is essential to protecting the cooperatives and, essentially, their workers in times of need.

Lesson 5Mondragon cares for its workers through health and work protection.

The Mondragon Cooperative Corporation designed an incredible and supportive safety net for its workers through its own social welfare cooperative: Lagun Aro. At Mondragon, they believe in the right to work; and this is systematized through Lagun Aro.

This right to work is not the same as our familiar anti-union laws. Instead, it is right to work as a person contributing to one’s self and their community. If one of the Mondragon Cooperatives closes or needs to downsize, the cooperative members are not left jobless.

Instead, Lagun Aro works with each member to place them into another cooperative in MCC. If there is no opportunity with their skills, Lagun Aro arranges training and education to make sure they can be placed in a job. Lagun Aro will even provide them partial employment and partial training so that the worker does not have to do school work on top of a forty hour work week. If the cooperative member cannot be placed right away, they can receive two years of unemployment at eighty percent of their income. As of now (2019), no one has used up their two year limit of unemployment. This is because work is an honor and Lagun Aro works hard to get the member placed. Lagun Aro is institutionalized protection of the worker.

For Armendariz, Lagun Aro supported her as a cooperative member in her time of need with the closure of Fagor Domesticos. Armendariz stayed at home for only one month, more or less, after the closure of her cooperative, and then she was placed at another cooperative. She shared that she felt very supported by Lagun Aro and other cooperatives. She can remember the day she learned Fagor was shutting down. She went home and left everything in the office. She went to meetings and went to Lagun Aro who worked on finding her and her colleagues work. Other cooperatives were looking for new workers and she is very skilled as an engineer. It was easy for her to find a new job. It was not easy for everyone though. After Fagor’s closure, Lagun Aro had to manage 1,800 newly unemployed members to provide them benefits and to relocate them into other cooperatives for new jobs. And, they had to do it quickly. This was particularly difficult because of the downturn in the market. In addition, eighty percent of the workers at Fagor did not have a formal education making it harder to find new job placements for the members. Lagun Aro worked with these workers to support their education for new employment where necessary. This speaks to the dedication that Lagun Aro has to each of the Mondragon Cooperative workers (not just the educated ones or just the managers).

As of now, 600 workers still do not have full membership at a new cooperative in the network. They have work, but they are not yet settled as a member owner of the new cooperative for a variety of reasons. Due to this system, unemployment is virtually zero percent, since each worker will be relocated or trained for relocation upon closure of a cooperative. There are no layoffs at Mondragon Cooperative Corporation.

This institutionalized worker and job protection (as well as other benefits) is made possible by the investment from the workers. Cooperative members make contributions to both the government and Lagun Aro. Thirty percent of each members’ salary goes to Lagun Aro. Everyone makes contributions and members receive benefits according to their needs.

Members receive two groups of benefits: distributions and capitalization. The distribution benefits include employment aid, temporary sick leave, care for children with cancer, maternity leave, healthcare, and more. The capitalization benefits include permanent disability, retirement and pensions, and survivor allowance. Lagun Aro has 28,401 subscribing members and 72,793 healthcare beneficiaries that include cooperative members and their families, and private members who opt in to their insurance. Lagun Aro provides an intricate and human-centered support system to take care of its members when they need it most.

Lesson 6Automation can make things more efficient without lost jobs.

As technology becomes more sophisticated, automation and efficiency is a given. Some theorists suggest that this will cause lots of unemployment, especially for the workers on the bottom. This has not been the case at Mondragon. According to José Antonio Yela from Eroski, automation will happen and is happening. But, MCC will not simply kick people out or turn them “into sausages,” as one spokesperson put it. Instead, they find ways to include the workers with value. Nobody has lost their jobs due to automation. This is in line with Eroski’s commitment to take care of workers. Eroski’s board designed ten commitments, which were voted on in the general assembly. The ninth commitment is to “take care of their employees.” Thus, instead of losing jobs, the workers find new value.

Yela provided an example about bringing automation to the warehouse. Instead of reducing the number of shifts and workers, the automation allowed the warehouse workers to work around the clock making use of their skills and the more efficient machines. Yela was insistent that automation only means shifted value for workers at this cooperative particularly because they are a cooperative.

Being a cooperative means that there are more important aspects to the business than laying off workers in order to maximize profits.

Lesson 7Cooperation is hard work, not utopia.

Eroski, a multistakeholder grocery store cooperative owned by workers and consumers, has an interesting data point on job satisfaction. Eroski has learned that sometimes the cooperative owners are less satisfied because they have higher expectations. However, it takes a lot of work to be in a cooperative. Simply put, democracy takes work; you have more rights, but you have more responsibilities.

Similarly, Armendariz is not interested in taking on the very big responsibility of participating on the social council of her cooperative. She suggested that when the company is in a good situation, everything flows well, but when it’s in a bad situation, it is not so easy. There is something about this disconnect between the impressive sovereignty of labor systems and the worker’s ability or willingness to step up. What we see, at RoundSky Solutions, for example, is that clear ways to step up (and the training support) can be helpful to encourage people to engage in those leadership roles.

At one point, Ander suggested that sometimes people feel less satisfied in the cooperative because they have high expectations and they feel that the cooperative owes them something. There is a lot of responsibility to being a cooperative member.

Conclusion

And yet, the cooperative is a way of life, as Armendariz shared. It is not just a job. Workers should be in charge. People who have their livelihoods on the line should make the decisions, as they are more likely to make decisions that would benefit the company as well as themselves.

How do we replicate this intricate system of support? One Mondragon person suggested that we must make sure solidarity is a practiced value. It is important that we look at the system and get inspiration, but in reality it cannot be replicated.

In considering how to replicate pieces of the Mondragon Cooperative Corporation in other places, I think cultural and educational shifts will be key.

During the Mondragon training, I remember some strong reactions to the Lagun Aro presentation. The point made by the presenter was that it is difficult to be in school and to also work forty hours a week, so Lagun Aro makes sure to accommodate school so workers are not overloaded. The response from many in our (North American) group was: “Oh wouldn’t that be nice” and a general sentiment that it was too frivolous in some ways. As working and studying graduate students, we understand the challenge and exhaustion to both work full time while in school. However, some of my colleagues’ responses were less of a longing for that supportive system. I understand that response with the realities that we come from. Perhaps the response was in disbelief of that possibility. I long for a support system like Lagun Aro and truly, I think we all deserve that kind of security to work, in order to improve society. Thus, to bring this home we need to believe that the sovereignty of labor and the protection of the worker is essential. In addition to the systemic work we need to do, we ourselves need to believe that we deserve it.