Mondragón Corporación Cooperativa

– a cooperative model for the success of a socially acceptable economic activity in Basque country – Published on Current Concerns no. 23/24, by Erika Voegeli, 31 october 2011.

The example of the Mondragón Cooperative clearly demonstrates what human activity can accomplish if it is oriented towards social responsibility for the surroundings without losing track of the economic aspects of good corporate governance. Its founder’s initiative also offers suggestions which could be reflected about in many crisis-ridden regions – for instance with regard to instruction and activation of unemployed young people … // 

… Economy is to be subordinate to man and the common good, because it is definitely the human person who is the author, center, and end of all economic and social life.

The working bank – a private bank provides for economic independence:

  • Another fundamental impulse was set by Don José: his study of the co-operatives made him reflect upon the British Rochdale Society, which had become an ordinary joint stock society by raising capital from outside investors.
  • Thus he initiated the establishment of an own bank which was realized in 1959 with the foundation of the Caja Laboral popular credit co-operative, a true co-operative bank. It provided for the necessary financial independence, could support newly established co-operatives and helped in times of crisis.

Democratic structure:

  • The co-operative is based on the fundamental equality of the working members, which implies acceptance of a democratically organized company. This includes the sovereignty of the general assembly, consisting of all the members, which operates on the basis of ‘one member, one vote’. Its tasks include the democratic election and dismissal of governing bodies in secret ballots, especially the governing council and auditors, who are accountable to the general assembly for its management; the control of the association’s executive board; the approval of annual accounts and the distribution of profits or losses; the authorization of the general guidelines and strategies of the cooperative; the approval of the extension of capital, of interest rates on capital contributions and the admission fees for new members; the change of the association’s statutes as well as the approval of amendments involving a fundamental change in the economic, organizational and functional structure of the co-operative itself. In addition, there is the co-operative congress whose aim it is to establish the strategic criteria by which the corporation is to be administered, through the planning and co-ordination of its business units. It comprises 650 members delegated by the various co-operatives. Basically, each member must complete a probation in his or her job, generally lasting between six months and one year, if he or she is willing to support and share the co-operative’s values.
  • Participation also refers to sharing the profits, with the primary aim of reasonable and moderate action – in particular the preservation of workplaces and the creation of new ones. Thus the individual companies that are organized within the MCC in industry associations provide synergies in the field of knowledge and the social system, 20% of net profits are given back to the group to which they belong. 14% are given to the federation, 10% to an investment fund, 2% to an educational institution and another 2% to a solidarity fund. Of the remaining 52% of net profits 10% (i.e. 5.2% of total profits) are granted to a social fund, with 45% (i.e. 23.4%) accumulated reserves and the same sum will be channeled onto the accounts of the co-operative’s members.
  • Moreover, wages are to be socially acceptable, correspond to other workers’ ordinary wages in the surrounding, and the highest salaries are limited to the eightfold of the lowest salary.

Education and training – another key factor:

  • The importance that was attached to training from the very beginning gives evidence of prudence and foresight. The “Polytechnic University of Mondragón” developed from the vocational school as a  state educational institution for medium-level technical training, in other words, as a teaching facility for technical training in engineering. Other educational institutions, such as a technology center, were added, which could provide the company with trained personnel and know-how. In 1997, the two polytechnic universities and two academies for administration and management were merged into the University of Mondragón. All these efforts remained a key factor for further development of cooperatives and companies in an era of a continuously developing information and knowledge-based society.

Another economy is possible: … (full text).

Some Links:

Mondragón on it’s own website (in spanish and 13 other languages); and on fr. wikipedia; on en. wikipedia; on Horizons et débats;

… and on YouTube:

  • Mondragon Cooperative Part One, 6.00 min;
  • Mondragon Cooperative Part Two, 8.03 min;

Mondragon Cooperative Rules, 9.24 min;

Use of Mondragon Co-operative Model to Create Economic and Social Good, 2.25 min;

and find it also on Facebook.

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