History of Mondragon
History of MCC
Mission Statement
- MCC’s mission combines the basic objectives of a business organisation competing in international markets with the use of democratic methods in its organisation and with special emphasis on job creation, the promotion of its workers in human and professional terms and a commitment to the development of its social environment.
Roots of the Mondragon Cooperative Experiment
MCC began in a 1940's Basque town that had lost most of its community leaders during Franco's Spanish Civil War. The lack of responsible leaders combined with the industrial knowledge of the people was a perfect enviroment for change that led to the creation of MCC by a priest José Marìa Arizmendiarrieta. José Marìa Arizmendiarrieta was born on Aprill 22, 1915 to a farming family about thirty miles away from Mondragon. He joined the Catholic seminary at the age of thirteen and was ordained as a preist by the age of twenty-six. At this point in this life he was assigned to the "war-ravaged" town of Mondragon (Morrison, 46).
After a few years in Mondragon, Don José Marìa Arizmendiarrieta became a religious instructor at a small training school operated by a local steel company. This motivated him to start a independent community-run training school in October of 1943. This school was self-governed and self-financed, laying the ground work for what would become the Mondragon Cooperative Corporation's schools that would educate 45,000 students.
In 1954, five successful students from José Marìa Arizmendiarrieta's school bought a small bankrupt factory that manufactured paraffin cooking stoves. To get the money needed to buy the company, the five men asked one hundred members of the Mondragon community for a $100,000 loan (Morrison, 47). The men used their initials to name the first cooperation Ulgor, and by 1958 it was employing 148 members of the Mondragon community. More cooperatives were started throughout the 50's and 60's but the entity as a whole lacked a structure.
Economists believed there are two ways that a co-op can survive in a capitalist market. First, "by a commitment to growth, which would ultimately lead to adopting the traditional capitalistic mode of development and operation, becoming co-ops largely in name only; or by remaining small, isolated, and marginal, cutt off from the opportunity for effective change." (Morrison, 49)
MCC solved this problem in two ways. First they created a set of organizational and operational principles for each individual co-op. Secondly, they started a cooperative bank called Caja Laboral Popular which "made it possible to consolidate and use productively the social capital produced by the cooperators' labor, thus incorporating capital into the system" (Morrison, 49)
Wages are called anticipios and are actually advances to the workers against the cooperatives income. This amount is approximately the same as comparable workers would make at a different company in the Basque. At least ten percent of the cooperatives profits are donated to social and charitable institutions. Another twenty percent is held in a reserve fund to finance other ventures. The rest is distributed to the owner-workers' personal internal capital accounts (Morrison, 50). The allocation is decided by the amount of hours that were worked and the salary grade. The owner-workers can remove the interest that is paid on the accounts at anytime, but they cannot remove the principal untill the leave the company, be it for retirement or another job.
By 1964, Mondragon had twenty-seven cooperatives and about 2,600 owner-workers. To them, it was impressibe that they had managed to be successful in the capitalist marketplace. "In addition, the cooperatives clearly benefited from the economic boom of the 1960s, which included tremendous demand for industrial goods and consumer durables of the sort produced by the mushrooming co-op" (Morrison, 51) Mondragon was also able to survive through the world-wide recession in the late 1970s and the slow-growth of the 1980s. This proved that this co-op truly had flexibility. Now, the co-op has over 250 companies, over 80,000 employees, and is the largest company in the Basque region.
Employment
What is a Cooperative Corporation | Internal Structure | History of Mondragon | Creation and Use of Social Capital | The Future of Cooperative Corporations | Mondragon Works Cited | Cooperative Corporations
