Mondragon is a highly successful cooperative model with over 60 years of proven success, demonstrating what is possible in a collaborative economy. Once known as one of the poorest regions in Spain, the Basque region is now the richest. The worker-owned cooperatives were founded in the 1950’s in Mondragon in the Basque region of Spain by a Catholic priest whose goal was to reduce the poverty rate caused by the repressive policies of Franco’s regime at that time. The priest wanted to counteract this by creating humanistic cooperative businesses which looked out for workers’ needs.
Today, with 103 businesses, nearly 80,000 worker-owners, and global sales of $15 billion, the Mondragón Cooperatives comprise the largest consortium of worker-owners in the world, and the people of Basque no longer experience the poverty they once did.
They have a banking system and supermarkets across Spain. They have established youth cooperatives, a culinary arts university, and small to large businesses. They manufacture a variety of goods, including elevators, bicycles, and auto parts. Mondragon also has a university and is the largest research and development complex in Europe.
Workers in Mondragon have full control over their firm. Moreover, the cooperatives are not accountable to shareholder’s needs; outsiders cannot buy any control, which allows management to invest solely on their cooperative with the long-term interest of the community in mind. Instead, the workers of Mondragon receive a share of the annual profits or losses based on a formula that tries to reflect the relative productive contribution of each worker. Using this formula, most of the profits are reinvested, in turn creating new cooperatives and jobs as well as spurring the long-continued growth of Mondragon. Funds are also put aside for social welfare, providing care for the retirement, widowhood and disability.
The Mondragon cooperatives are based on 10 principles: democratic organization, open admission, the subordinate and instrumental nature of capital, value and importance of labor, participation in management decisions, fair payment, social transformation, cooperation, education and the university.
Mikel Lezamiz, the Educational Director of the Mondragon Cooperatives, says “The Mondragon Corporation is based on a commitment to solidarity and on democratic methods for its organisation and management. Our mission is not to earn money; it is to create wealth within society through entrepreneurial development and job creation.”
Some people have been interested in whether and how the Mondragon model could work in the U.S. Georgia Kelly, the founder and executive director of Praxis Peace Institute, http://www.praxispeace.org/index.php, has been leading tours to the Mondragon Cooperatives, http://www.praxispeace.org/mondragon.php, for 10 years. She says, “Peace is a result of right livelihood, and the economics of how we live is critical for creating peace.” Praxis Peace Institute is a non-profit 501 (c) (3) organization that is dedicated to systemic peace, social and economic justice, environmental sustainability, and informed civic participation.