Creation and Use of Social Capital
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The 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" (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 incoroprating 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 investiment 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)
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 the figure, the horizontal gray line shows the interest rate that agrees with the time preference of the investing public. If the interest rate falls below the time preference rate, then (on the average, anyway) investors would no longer be willing to invest. Once the marginal productivity of capital has dropped down to the rate of time preference, capital per worker will no longer increase. The equilibrium ratio of capital to labor is k.
In equilibrium, the warranted rate of growth and the natural rate of growth are the same -- that is, the capital stock and the labor force grow at the same rate, and labor productivity does not grow at all.
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