Kirstie & Nicholas had an informal discussion with Professor Fred Freundlich of Mondragon University about the history and state of the worker-cooperative movement, and Mondragon in particular, in reference to our establishing a global permaculture worker cooperative.
We came away from the meeting optimistic that our dreams of developing sustainability projects in a worker-cooperative framework can be realized. The two systems have the potential to be mutually beneficial: permaculture can contribute to the environmental sustainability aspects of Mondragon, and the economic and social sustainability aspects of the Mondragon cooperative can stabilize permaculture in the world (Gaia Permaculture). A permaculture worker-cooperative could research, develop and replicate the permaculture worker cooperative complex and create a truly sustainable future. A Gaia Permaculture Mondragon Cooperative Complex.
THE GIST OF IT
Our hopes for a global permaculture cooperative have been tempered by (1) our concerns that a global worker-cooperative cannot function profitably while embedded in the current global out-sourcing entrepreneurial culture, and by (2) our observations of the dysfunctional hierarchical relationships which predominate at established Permaculture farms in Australia.
Addressing The First Concern
Regarding the first concern, Fred alleviated some of our concerns by explaining the motivation and intentions behind two seemingly soulless acts: rapid non-cooperative expansion of the retailer Eroski and outsourcing of Mondragon’s manufacturing.
The massive consumer retail cooperative Eroski, which has expanded massively as a hypermarket chain by aggressive acquisition, now has thousands of outlets and over 50 000 workers, yet a minority of current Eroski workers are cooperators. This situation arose around the turn of the century when Eroski, faced with competition from the French hypermarket chains, had to choose between getting out of the business, morphing into a niche market, or undergoing radical expansion. Eroski democratically chose radical expansion, with the intention to cooperatise the franchises gradually.
Fred told us of a trio of gung-ho English cooperators who had gone down to an Eroski outlet in the south of Spain, and who were mortified to discover that not only were the workers there not cooperators, they weren’t even aware that Eroski was a cooperative. This was how fast the expansion happened — the signs had been changed on the store, but the newly-acquired workers had yet to be informed as to who had bought their workplace. Finally, after years of attempts to transition, Eroski has determined that it is simply too cumbersome to cooperatise gradually, and in January 2009, the vote was made to cooperatise the entire Eroski network.
In the case of Eroski, the aggressive non-cooperative expansion that seemed in defiance of the human rights ethics fundamental to the Mondragon cooperative philosophy, were a temporary compromise to save the entity and its ethics, a compromise made with the intention of not violating its ethics on the long-term.
Similarly, several of the industrial Mondragon cooperatives have in recent years faced increased pressure from, for example, auto-part buyers (i.e. car manufacturers) to open manufacturing plants in Third World countries, or to lose important contracts. We talked at length with Fred about Mondragon’s globalisation strategy - it now has 70 odd manufacturing plants overseas - none of which are as yet cooperatives. This “multi-localisation” process is covered in JM Luzarraga’s PhD defense presentation. Briefly, the cooperatives are embedded in the global capitalist system, with the result that appliance-making companies like Fagor have found it impossible to compete with companies who are outsourcing. This is not to say that they haven’t tried to come up with ways to cooperatise their outsourced plants, but there are many obstacles, not the least of which is that, in some countries, it’s not merely infeasible to create a cooperative, it’s illegal.
It is heartening to think that the same dynamic as happened with Eroski might happen with the outsourced manufacturing plants, but this is an extensive, expensive, and risky experiment that the Mondragon industrial cooperators are undertaking across the oceans, and they are putting up their own hard-earned money to do it.
Addressing the Second Concern
Regarding the second point, our observations of the dysfunctional hierarchical relationships which predominate at established Permaculture farms in Australia have led us to question how, if the “fair share” ethic can’t be expressed on the small scale, can it be expected to work on a global scale?
Our discussions with Professor Freundlich allowed our optimism to emerge on the “fair share” concern as well, not only because people who were formerly apathetic often become engaged in the cooperative culture, but also because a cooperative framework can become the status quo in a generation or so.
In Mondragon, Fred explained, there are plenty of people who embark on a career in a cooperative not because of the democratic processes of the workplace, but largely because of the excellent job security, pay and general conditions. Then some important event or crisis will arise at the co-op, and the member will become involved in the discussions, will vote at the general assembly, and then be much more engaged in the cooperative processes from that point forward.
Fred told an anecdote about a Canadian cooperator who came to the mythical Mondragon and stopped a young person on the street to ask him: “Do you work in a worker-cooperative?”; “Do you share in profits at the end of the year?”; “Do you get to vote at a general assembly for the board who then select management?”. The answer to all of these, was of course, “Yes.” The Canadian was ecstatic! “Isn’t this fantastic? What a wonderful world of cooperation!” The young Arrasate resident shook his head and said, “No. All the companies around here are like that.” Hence the cooperative framework has become the routine company structure, the cultural status quo.
As we informed Fred that we were researching a global permaculture worker-cooperative, Nick described permaculture as a sustainability framework, developed in Australia, which has been propagated by the use of 72-hour intensive training courses, and asked whether any similar intensive cooperator training course exists at Mondragon. Fred explained that the focus here in Arrasate has traditionally been on vocational training for youth, and on management training for current cooperators, the intimation being that both are long-term educational commitments which emphasize practical training for local residents. If the Mondragon business school does decide to initiate intensive cooperative training courses, we are happy to be the first focus group!
Finally, after we’d chatted for a couple hours, Fred gave us numerous references to people with expertise in our interest areas of media and worker cooperatives, suggested Kirstie might consider taking up her sustainability research here at Mondragon University, and encouraged us to continue our pursuit to develop a network of permaculture worker-cooperatives.
OTHER DISCUSSION POINTS
Mondragon is humane
Fred told us an anecdote, and said that people don’t sit at the dinner table each night and joyfully explain the ever-escalating cooperation, but instead gripe about their work-mates or their crappy supervisors. This is human. But at Mondragon, they have work-place democracy, internal organisatons that can resolve issues in a healthy way; Social Council, General Assembly, a Management Council and so on. At Mondragon they have a cooperative system that more humanely and creatively addresses the problems of work.
Cooperative renewal and extension
Within Mondragon the Cooperative identity is to be revitalised; educating new cooperators that joined for professional reasons and work conditions, and may not be so much cooperative activists. Many of the older cooperative activists are working to extract cooperative patterns from the cooperatives and promote those into other spheres; politics, sport, government etc
WorkerCooperatives.com and New Economy worker-cooperatives
Nicholas asked was there a media and education source for the internet generation regarding about the worker-cooperative movement. He has in mind a mass-multi-media project called WorkerCooperatives.com. Similar to Permaculture.TV, but focussing on the culture and stories of the broader worker-cooperative movement, which is largely industrial and often in an un-sustainable environmental mode.
Nicholas also asked Fred about Mondragon education and industry and open source business models and social media, and asked if there where any run by worker-cooperatives. Fred suggested there might be New Economy worker-cooperatives, but couldn’t think of any of hand. Nicholas explained, that although he knew of an excellent report on Tech Worker Coops funded by the US Freelancers Union, that profiled a number of development and service worker-cooperatives, he knew of not a single worker-cooperative run Facebook, Wikipedia or Firefox type project.
Nicholas also mentioned a recent Wired magazine article on the New New Economy, which has Wired’s New Socialism placing Facebook and Wikipedia on the same spectrum as the 21st Century Socialism of Venezualia, he said that hopefully the ground noise and static has reduced, and that he might be able to collate and make sense of the article and the reponses i.e. some perhaps muddled posts from Lawrence Lessig etc
Sustainability.Mondragon.EDU
Nicholas suggested that a website or initiative be created at Mondragon similar to Sustainability.MIT.edu and was interested in meeting and talking to students that would be interested.
21st Century Socialism
Nicholas asked whether there was a huge interest in Mondragon from the countries of Latin America such as Venezualia and Bolivia that are basing their Socialism of the 21st Century or social revolutions on worker and other cooperatives, on a social economy. Fred explained that there had been not as much interest from these nations as might be expected. There where students and visitors, but not huge numbers or big engagements.
Basque exceptionalism
We also talked about Basque nationalism and asked was cooperation unique and limited to them. Fred mentioned that if that was true, there would be more cooperatives, in total only 7% of the Basque economy is cooperative. Basque nationalism is clearly a major element of the culture here, the original cooperative activists wanted to create a system that was autonomous from Franco, that was better than a Francoist system. This created a technocratic culture, if they where to be autonomous AND succeed that meant more research and study, more competence and skill, more hard work and discipline. A more highly technical, organised and democratic system.
Democracy at work and in community
The lesson from Mondragon, so far, is that democratic debate is central to the cooperative process, and that although Mondragon operates as a single successful system it is internally very lively and animated with all sorts of discussion… they confront problems front-on, democratically with one person, one vote. All workers own financial and decision making at Mondragon.
I’m a big fan of Mondragon, but I’m also a big fan of the International Cooperative Alliance and all its members around the world. “Basque exceptionalism” seems like an ill-informed question to me. The English “invented” the modern cooperative when Charles Hogarth and more than 20 other striking workers innovated the simple but significant principles of democratic ownership and investment.
Just as important are the principles of modern psychology and anthropology, and related practices like education. Witness Jaime Escalante’s feats memorialized in the movie “Stand and Deliver.” He was able to teach people from underprivileged backgrounds to do advanced math, with almost 100% success. I think cooperative culture needs to deepen its reference points to avoid hollowing its own nature and defeating its own purpose.
Comment by Robinhood Diego Rivera on November 5, 2009 at 4:30 am
hi Robinhood, thanks for taking the time to comment.. I apologise, my writing wasnt clear.
We where NOT advancing a Basque Exceptionalism argument, nor was Professor Freundlich. As I tried to explain in the blog post, that his point was that if the Basque where somehow more advanced and cooperative there would be many more cooperatives all over Basque Country. According to Fred, there is only 7% of the economy working as worker cooperatives in Basque Country.
Fred went on to explain that the success of Mondragon was more to do with the fact that the Arrasate cooperative activists where extremely technocratic, disciplined and hard-working. They got no help from the Franco regime or the state, and needed to do more research, more development.
Also, Arizmendi and other contemporary Mondragon cooperative activists DO acknowledge the Rochdale pioneers and the UK cooperative scene as strong, vibrant and creative.
I apologise that the post was not clear.
We have very much been “making the road as we travel”; have self-funded and self-guided ourselves.
We are hoping to do deeper, global research in 2010, and engaging the existing and emerging global cooperative movement.
I did manage to have excellent conversations with the Permaculture Association of Britain, the Transition Network, and a secondary cooperative called Radical Routes in the UK.
http://gaiapermaculture.com/projects/permaculturecooperative/blog/2009/08/26/permaculture-worker-cooperative-britain-ideas/
It seems to me that the greatest cooperative growth is occurring in the Global South, with popular economies underwriting popular governments. I believe Chomsky’s new book “Hopes and Prospects” documents this. http://www.roamagency.com/pages/9781931859967.shtml
I will be reading-up on the helpful suggestions and information in your comment.
Kind Regards
-Nicholas
PS
Have blogged about some of that here and also posted some related stories on Permaculture TV.
http://Permaculture.TV
http://permaculture.tv/?tag=worker-cooperatives
skype permaculturecoop
email permaculturecoop@gmail.com
phone +1 415 670 9710
–
plans http://gaiapermaculture.com
video http://Permaculture.TV
–
http://twitter.com/permaculturetv
http://www.youtube.com/user/permaculturecoop
Comment by Nicholas Roberts on November 5, 2009 at 7:18 pm
PATH TO SUCCESS
- FUNDING OF WORKER COOPERATIVES
- By Jim Miller
1 OVERVIEW
The key is to have workers deposit small amounts per paycheck into a savings account with a Workers Cooperative Credit Union (WCCU). This money can be used by the WCCU to make loans to start-up Worker Cooperatives (social benefit entrepreneurial enterprise [SBEE])by having the savings accounts pledged as collateral. This loan qualifies. Each worker signs a continuing guarantee pledging $XX of the savings account. The savings account continues to earn interest.
The continuing guarantee is a percentage of the loan and declinates as the principal of the loan is paid back. This approach provides for some liquidity to the worker and eventually when the loan is paid, the continuing guarantee is canceled which cancels the pledge of the savings account.
The worker who signs the continuing guarantee will have specified that it is only for the specific loan, not roll-over loans or refinancing of the loan, and is for the benefit of a named worker co-op.
When the total of the continuing guarantees reaches the tipping point, the CU makes the loan to the SBEE.
2 SECURITIES ISSUES
The securities laws generally provide for rescission as one of the rights of the investor when the issue they purchased was not qualified under an effective registration, notification or coordination with the states and the SEC. Imposition of this remedy results in a massive disruption of the enterprise and its members. Also there are also criminal and civil sanctions which can be imposed. The use of the WCCU in the first instance is intended to provide initial seed and start-up funding without involving a “security”.
3 USE OF SEED FUNDING
Seed capital typically is applied to costs for peer review of the business play by attorneys, accountants, engineers and other professional who are independent of the business. In addition, this review allows for the attorney and accountant to prepare or oversee the preparation of a memorandum which is required by securities laws and for the due diligence investigation of the company and its initial founders. This funding also pays for the preparation of all necessary filings with securities regulators by the securities attorney. I was recently quoted $5,000 for the retainer by a securities attorney. I figure he was thinking of a total fee of about $10,000.
The seed funding can be used, very carefully, for the infrastructure needed for development of the enterprise, such as computers and software. In the case of SBIE, we would need to purchase the $150.00 basic software for Personal Brain and $150.00 for MindTouch. AskSAM Is a about the same. We would likely also need some paid consulting, so figure about $5,000 each for Personal Brain and MindTouch with about $1000 for AskSAM.
Market studies also need to be accomplished. Figure another $5,000. Money finders usually want some fee up-front, which should be avoided if possible. The use of investment clubs as chapters may avoid the need for money finders.
4 EARLY MARKET
Early investors will be those who are imaginative and/or have a social purpose enterprise they would like to see develop. Their interests should align with the purpose of the proposed SBEE. For instance the promoters of a farmer’s market could approach a garden club for early investors. Early funding received by SBEEies from the WCCU should also be used to fund the early expenses of SBIE since it will be the means by which the second and future rounds of funding will be facilitated.
5 ALIGNMENT MARKETING
Let’s take a deeper look at alignment marketing, such as the garden club and the farmer’s market. Let’s also include a CSA. The garden club members often grow or can grow more fruit and vegetables than they can personally use to give away to friends. They can sell through a farmer’s market. Most don’t have enough to sell to make going to a farmer’s market, set-up tables and a cover and spending a day or a half-day there. They could group their production and have one member sell the surplus. But most farmer’s markets require that only the producer can sell. We would need a farmer’s market with more flexibility, yet not get into the peddler who only buys at the wholesale market and does not grow any of his/her own produce or fruit. Generally, the peddler over-prices his/her goods which defeats the purpose of the farmer’s market – which is fresh, locally grown foot, sold under supermarket prices.
I discussed the CSA aspect with an existing seller at the Elisabethtown, KY, farmer’s market. She had developed her own, captive, CSA and got $15,000 up front. Each CSA member got a defined amount of produce each week. I asked about substitutes. She said yes, but generally indicated some items would reduce the package, but not contain items she did not grow. She emphatically rejected the idea of a group of farmers starting a CSA.
The ETown farmer’s market was behind a funeral home on a side street off Highway 62 (Mulberry St) and under a new, large steel shade structure on a concrete slab. Each vendor backed up his/her van/truck to the sides and unloaded tables and set-up the display – about 10′ x 10′. No admittance was charged. A table with a debit/credit card reader was present for those customers who wished to use a card as a means of payment. A fee was charged for this service. No cash registers were in sight. Baked goods and flowers were being sold. There were empty spaces not filled with vendors. The BBQ wagon is only there on Thursdays, not on Saturday when the largest crowd is there.
The description above would be the first stage of a farmer’s market – individual vendors selling their own produce and, possibly, having a captive CSA. The second stage would be a farmer’s market organized by a group of farmers who share a CSA. Out of each sale, a “commission” would be charged to support the creation and operation of a group CSA. The funding would pay for marketing and for the services of a WCCU which issued “company” debit cards to the CSA members, the use of which would be exclusive with the farming group. All sales would be made using the debit card. The CSA member by paying a larger amount would get a larger discount when buying. Each farmer would set his/her own prices. One vendor could sell the products of any other member of the farmer group. All products would have a scannable UPC as part of the label. Tracking would allow for the products of several vendors to be sold by one member. The “seller” vendor would rotate among the farmer group members so as to equalize the burden of marketing. Products which did not sell would be returned to the owner or donated to the local food bank.
The third stage would be a food co-op. Please read: XXXXXXXXXX. Dividends would be paid to customers based on their purchases and to vendors based on the sales of their products. Since all products are labeled and scannable, accounting should be easy. The Co-op store would get a commission on each sale, thus not having to use its cash to purchase the inventory (essentially a consignment). The garden clubs (part of the “public group”) would continue to be active “partners” in the Food Co-op by electing three of twelve members of the Board of Directors. Food banks and their supporters could also be likely members of the “public” group, representing the consumer element. Investors would elect three of the twelve Directors and the workers of the co-op would elect three of the twelve directors. The farmer producing group would elect three of the twelve directors.
6 INTEREST GROUPS
Candidate interest groups are those which already have some common interest and some leadership or immediate past leadership. Examples would include trade unions, industrial unions, associations of independent workers, and professional organizations. Trade unions might be a source, although many do not allow as members any worker above a foreman. Management skills are necessary in a worker co-op, so this rule prevents trade union members from gaining skills needed to run a business.
In many areas of the country, trade union chapters have dissolved or been reduced to the point they are ineffective. Other unions have grown, especially those consisting of government workers. Still, corporate employers still launch savage attacks against unions and their members. Defunct chapters may be a good source for starting worker’s cooperatives. There are enough examples in most areas of commerce to provide some models. A local chapter which has been dissolved or simply quit, lacks the union bosses who would likely resist the worker co-op.
For example, Carp Catchers Cooperative could approach a defunct chapter of the carpenters’ union in a locale and suggest that the former union members join with some administrative types to form the CCC and build a shipyard and then the three vessels. Rather than reverting to a local union chapter with union bosses at the top, they would elect three of the nine Directors to the Board, the investors would elect three and three would be elected as “public interest” members. We could eventually expand the Board to twelve directors and include three members elected by the vendors and the customers as part of the up and down channel members.
7 ..TO BE CONTINUED
jimmiller5417Ayahoo.com
Comment by Jim Miller on June 19, 2010 at 2:28 am
Folks,
I would very much like to be a part of the Mondragon permaculture complex. I have the credentials, and background to make major contributions. I have studied Mondragon in depth and developed a USA legal and practical model. Please visit: http://masallp.wetpaint.com. Please write me directly with your email address and I’ll respond.
Jim Miller
jimmiller5417@yahoo.com
Comment by Jim Miller on June 19, 2010 at 2:31 am
Folks,
I am in the process of creating a fishing fleet to catch and process Asian carp taken from the Mid-American Rivers. I plan to build the ships in the US, probably in Port Monroe, MI. I will need finish carpenters and other shipwrights to build wooden ships. Then, I will need asbout 50 for the crew/staff. The plan is to have two worker cooperatives, one for the shipbuilding and one for the fishing fleet. Please visit: http://carpcatchersco-op.wetpaint.com and give me an email if you are interested.
Jim Miller
jimmiller5417@yahoo.com
Comment by Jim Miller on June 19, 2010 at 2:45 am