Creation and Use of Social Capital

Caja Labour Popular

"The Caja Laboral Popular is at the heart of the economic life of the Mondragon cooperatives, but it is an expression of the Mondragon system, not its master" (Morrison, 86). As mentioned earlier, the CLP allowed the MCC to survive in a capitalistic market by making it possible to consolidate and use the social capital produced by the cooperators' labor and incorporating labor into the system. The CLP was founded by the owner-workers and by 1988 it had $2.9 billion dollars in assets. Currently its assets are worth over $18.75 billion dollars. The CLP is broken up into two divisions, the first being the Banking Division, and the second being the Empresarial Division. The Banking Division takes care of of basic financial and banking operations while the latter is in charge of promotion and support of the cooperatives in the Mondragon system. At this point, the bank has even entered the domain of commercial and investment banking, allowing them to further profit the cooperative. (86)

The Caja Laboral Popular has placed the power of finance and in the service of cooperative values and of freedom and community. (86) Here is a list of the accomplishments by the CLP.

Accomplishments of the CLP

1. Meet the financial needs of its member cooperatives.
2. Attract a consistently growing number of depositors and financial assets.
3. Possess financial resources and knowledge to provide the Mondragon cooperatives with special financial assistance and expert advice on almost all aspects of co-op operations, from birth to mature restructuring.
4. Provide financial and social services to the cooperators and their families.
5. Maintain its nature as a cooperative with fundamental commitment to the ongoing development and health of the Mondragon system as a social and as a business entity.

Banking Division

1. Risk Department: administers, studies, and backs banking operations and policies; actively involved with financing of and investment in the associated cooperatives
2. Planning Department: assists all departments in planning and policy development
3. Marketing Department: helps implement savings and investment decisions and does PR work
4. Foreign Department: Is concerned with import-export transactions, which are a major part of the business of the associated cooperatives
5. Internal Auditing: the watchdog council, consists of the special auditors who monitor all operations

Empresarial Division

1. Advice and Consultation-
   1. Export Department: develops and coordinates export policy and direct sales of some products
   2. Marketing Department
   3. Production-Engineerings Department: development and modernization of production services
   4. Personnel Department: recruitment, training and organization
   5. Administrative Financial Department: includes accounting financial-control systems as well as management of economic and financial resources
   6. Legal Department: assists in all legal matters including internal organization and business transactions
2. Studies: undertakes in-depth economic studies and forecast for co-ops
3. Agriculture and Food Promotion: assists existing agricultural cooperatives and aids in further cooperative development
4. Industrial Promotion: finds and researches new products for industrial co-ops as well as performing feasibility studies and marketing
5. Intervention: intervenes in problem co-ops to provide instruction or assistance
6. Auditing and Information-
   1. Auditing Department: establishes accounting procedures and monitors implementation
   2. Information Department: studies long-, medium-, and short-term prospects for co-ops
7. Urban Planning and Building: provides planning and buildings for co-ops as well as public-works

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Labor Force

The Neoclassical Model

On the horizontal axis we measure the ratio of invested capital per worker. The invested capital could consist of equipment, machinery, training and technological knowledge, so the more investment per worker, the more output per worker. On the vertical axis we have the interest rate, a measure of the productivity of one more dollar of investment, that is, the "marginal productivity of capital." Because of diminishing returns, the marginal productivity of capital decreases as capital per worker increases. In effect, the neoclassical approach reverses Malthus' approach, treating labor as the fixed input and capital (per worker) as the variable input. Here is the point: if capital grows faster than labor (the "warranted rate" is greater than the "natural rate") then the ratio of capital to labor increases, so the profitability of investment decreases, and investment slows down. This continues until an equilibrium is reached.

In a cooperative it is the workers who are the owners and the labor force therefore, they are the ones who will not see a profit if their productivity falls.

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