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Topic Eight (2). Alternative Globalization (2) : Alternative Model? Is Global Sustainable Cooperative possible?. Any alternative?.
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Topic Eight (2) Alternative Globalization (2) : Alternative Model? Is Global Sustainable Cooperative possible?
Any alternative? • The Western globalization model is that corporations from outside of the nation should come in, bringing expertise and capital, employ local people at low wages, and export stuff back to the homeland, a process very similar to the modernization of previous generations.
Any alternative? • But this is not the only economic alternative developing countries have before them. The Mondragon cooperatives of the Basque, region of Spain, for example, have tens of thousands of worker owners, each of whom has an equal vote in electing the management of their enterprise. They succeeded without importing any outside capital or expertise or employing people at low wages.
The Mondragon Co-operative Experience • Started from the arrival of Father José María Arizmendi, the fundamental driving force behind and the founder of the Mondragon Organization, in Mondragon on February 5, 1941. Working as a preacher, he then became a teacher, discussion leader as well as a socialist afterwards. Two years after his arrival in Mondragón, Father José María founded the Professional School, the seed which would later become “Mondragon Unibertsitatea” - the University of Mondragón.
The Mondragon Co-operative Experience • This institution has played a vital role over the decades, training many of those who later became key figures in the development of the co-operative project. Five of his “first-round” disciples started a new company organized along the social and economic lines they had been discussed with him. The Mondragon system, starting with this five person coop in 1955, now employs 21,000 persons in secure and well paid jobs in 170 plus coops, each with superior working conditions and a lower ratio of highest to lowest salaries than in capitalist firms.
What make it different? • The success of the Mondragon has given a worldwide message that a worker cooperative is no longer a utopian ideal of an industrial economy, but what make it different between itself and an ordinary private firm? Following aspects will be discussed • Organizational culture, • Right of women worker • Financial Policies • Balance of workers’ interest
Organizational culture • The organization structure was so different from other common firms. There are the governing council, which are the top policy making body of the cooperative and it is elected by members, who are all workers with equally weighting vote; and the social council, which is Arizmendis’ idea that if the governing council was the only organ for representation, the members’ participationin the firm would be very little, the Social Council is then needed to avoid the passivity and to facilitate direct experience with many problem.
Organizational culture • The Social Council is also asked not to make demands on management, but rather should help integrate the cooperative by furthering the communications process. To further reinforce the concept of the social council as an advisory body only, its chairperson was chosen by the governing council from its own members or from management. Although the independence of the Social Councilmay affected and limited because management appointed its chairperson, in case of serious disagreements with the governing council, it can refer the issue to the general assembly, in which the final decision can be made by the total membership of the cooperative.
Right of women worker • At the period around 1960, single women had been required to leave the firm when they married, as men were considered the primary wage earners and thus deserved preference of continued employment. By the mid-1960s, the Mondragon cooperatives abandoned it, due to the natural demand of women and the rapid growing of the company at that time.
Financial Policies • Crucial to the Mondragon complex is a people's bank which pays interest on workers' savings, loans money (at interest) to start up new coops, and uses its surplus for aiding troubled firms, providing social welfare, and expanding worker controlled employment. Moreover, it was a momentous decision to eliminate cash payment, if it is the decision that continue or increase the payment, it would have been impossible to build the strong and dynamic complex today. This is aimed at building up their capital was necessary to support their increasing investments and rapid expansion.
Balance of workers’ interest • Originally the founders had set a three to one ratio between the lowest and the highest paid member. As the cooperative has grown both in its’ size and complexity, in order to prevent the prevent the left of executives, the ratio have changed several time, comparing with some similar size Spanish private firms of similar size. Furthermore, the company have socialized the members into a cooperative way of life that youths could able to find sufficient social and psychological satisfaction within the complex to overcome the “lure” of higher pay anywhere.
Structure of Mondragon • General Assembly • Hold once a year by the entire membership of each individual co-op • Votes on business plan, allocates earning, decides on mergers and acquisitions • Votes on new members and the punitive expulsion of members • Electing the Governing Council and monitor its performance
Structure of Mondragon • The Governing Council • Composed of the president, vice president, and secretary of the General Assembly, and several other members of cooperatives • All are elected by the General Assembly, and only co-op members can be elected • Prepares annual plans, proposes the distribution of profits for the approval of the General Assembly
Structure of Mondragon • The Governing Council • Appoints and oversees managers • Determines job classifications • Presents annual reports and accounts • Members of the Governing Council hold office for four years
Structure of Mondragon • The General Manager • Appointed by the Governing Council • Accountable to the Governing Council and the General Assembly, which can vote to dismiss a manager who is not performing well • Manager preside over department heads who are also appointed by the Governing Council • Appointed for four years and can be renewed • Department heads (engineering, marketing, and personnel and so on) is appointed by the General Manager
Structure of Mondragon • Management Council • A consultatory body to the General Manager • Made up of department heads and other executives who are nominated jointly by the General Manager and the Governing Council
Structure of Mondragon • Social Council • Workers are represented to management by the Social Council • Elected directly from the geographical sections of the shop floor • Exert pressure upwards from the shop floor to management • Communicate managerial decisions and convey information downward
Structure of Mondragon • Audit Committee • Required by Spanish cooperative law • Inspecting all documents brought before the General Assembly
Criticisms • Centralization • Juridical organization of the new sectoral groups, consisting of six to twelve co-ops in similar lines of production such as furniture or kitchen appliances • Each group has a Governing Council, Social Council, and General Assembly, to which delegates are sent from each co-op • Increasing dissatisfaction with this arrangement; workers and plant-level managers feel that important decisions are made outside of their control as the groups become more powerful.
Criticisms • Cooperative Congress • Created in 1987 to bring together representatives of all the co-ops into one body • More than 300 delegates • Delegates tend not to come from the ranks of manual workers • Has a president and a permanent commission, made up of representatives of the co-op groups
Criticisms • Cooperative Congress • Formalize and legalized the change of Mondragon system • Consolidate the new organization of the co-ops into 25 sectoral groups • Set up Mondragon Cooperative Corporation
Criticisms • Cooperative Congress • The Corporation has its own Governing Council, comprised of a president, vice-president and representatives from the member co-ops. • Represent a dissolution of democracy • But the proposal to increase the salary ratio to 1:9 or 1:10 was defeated
Criticisms • Political Apathy • Distancing from Labor Movement • Middle-class Project?
Comparison with Standard Private Firm • No interested in the governance of cooperative • Mondragon system affects other non cooperative operations
Comparison with Standard Private Firm • Fagor Clima • Set up in 1984 producing gas water heaters • In 1989, there were 250 worker-owners • Fifty temporary workers on contracts • 80 women, average age was
Comparison with Standard Private Firm • Fagor Clima • annual payment and bonus was US$17,568, equivalent to local workers in private firm and a comfortable lifestyle. • Head of department with a rating of 2.8 earned UD$37,745, a modest difference • 1/3 workforce was nonmanual, more low- and mid-level managers than in private firm • a handful female engineers and managers
Comparison with Standard Private Firm • Mayc • Founded in 1941 by three families from Bergara • Workers refused to join Fagor Goup • Manufactured washing-machine and water heaters • 1992 the owners sold 64% of the shares to the Italian multinational Candy • Mayc employed 612 people, 129 job had been eliminated • 498 manual workers; 114 clerical staff, engineers, and managers
Comparison with Standard Private Firm • Mayc • average age was 42 • 128 women, equivalent to 21% of workforce • only one female manager • annual payment plus bonus was US$17843, slightly higher than Clima • 65-80 workers were on short-term contract, about 13% of total workforce
