Home / Economics / Cooperatives / Mondragon Revisited

 

In the face of the global financial crisis that has Spain’s unemployment level standing currently at some 22 per cent, the Mondragon co-operatives offer an astonishingly successful alternative to the way we organise business and economies.

Revisiting recently for the fifth time, since the early nineteen-eighties, the great complex of worker-owned manufacturing, retail, agricultural, civil engineering and service cooperatives centred on Mondragon in the Basque region of Spain, it was impossible not to be impressed by the resilience that has enabled them to take their share of economic hits and emerge largely unscathed.

As Mondragon’s Human Resources Director, Mikel Zabala, points out, “We are private companies that work in the same market as everybody else. We are exposed to the same conditions as our competitors.”

For example, Mondragon’s Eroski worker/consumer retail co-operative—hitherto Spain’s largest and fastest growing chain of supermarkets, hypermarkets and shopping malls—has over the past two years experienced for the first time since its  inception in 1959 losses consequent on massively reduced consumer demand, and only now in the current financial year anticipates a return to modest profitability.

Fagor, Spain’s largest manufacturer of white goods including refrigerators, washing machines and dish washers, has successfully managed down production by 30 to 40 per cent in the face of a precipitous contraction of the effectively discretionary consumer durables market

The co-operative group’s Caja Laboral credit union—effectively Spain’s ninth largest bank—is recovering from a seventy-five per cent reduction in its profitability, from 200 million to 50 million euros.

And following a sharp reduction in the use by the co-operatives of temporary workers, overall employment has stabilised at around 83,800.

That so testing and ultimately triumphant an outcome has been achieved is attributable overwhelmingly to key attributes that set the co-operatives aside from comparable conventional enterprises.

Not to be overlooked, in the first instance, are the conceptual framework and enduring solidarity and subsidiarity values that are the legacy to the co-operatives of their founder, the Basque priest Don Jose Maria Arizmendiarrieta.

Internalised and in part secularised as the values and framework have so largely become, they stem directly from the unswerving adherence by Arizmendiarrieta, between his arrival in Mondragon in 1941 and the launch of the first of the co-operatives in 1956, to formation in the ‘see, judge, act’ or ‘inquiry’ study circle mould as developed by the Young Christian Workers (YCW) under the leadership of its long-time director, the Flemish priest, and later Cardinal, Joseph Cardijn.

“The study circle”, wrote Cardijn, “does not exist for its own sake: its only meaning is in terms of action and organization”:

The apostle said: “Faith without works is dead”. We must also declare that “The study circle without works is a dead study circle”. The study circle is not just a teaching business. It communicates a faith, a faith enthusiastic for social, moral and religious action and organization. Such faith is itself impossible, inoperative, without such action and organisation.

Here finally was the crucible from which Catholic Action as properly understood at last emerged.  Not without good reason did Pope Pius XI respond on being briefed by Cardijn in the Vatican in 1924 on his plans and aspirations for the YCW ‘At last! Here is someone who talks to me about the masses, of saving the masses.’

As recalled by one of the five lay co-founders of the co-operative group, Jose Maria Ormaechea:

The Study Circles in Accion Catolica and in JOC ( Young Catholic Workers Movement) continued at progressively higher levels… under the aegis of the Diocesan Secretariat in Vitoria, Father Arizmendi organized specialist courses on sociology to which he invited economics professors… His ecclesiastical training led him towards being a practical apostle. He not only tried to give guidelines on what should be the model for the ideal enterprise, but he put that social enterprise to which he aspired into practice.

As well, practical advantage gives rise to enduring ties of loyalty to the co-operatives on the part of their worker members. As equal co-owners of their workplaces, members enjoy job security together with individual capital holdings, equal sharing of profits on a proportionate basis and an equal ‘one-member one vote’ say in governance.

And members share at one remove in ownership of a unique system of secondary support co-operatives, from which the primary co-operatives draw resources including financial services, social insurance, education and training and research and development.

Reflective of the high priority attached by the primary co-operatives to the competitive advantage of cutting edge research and development is the augmenting of the original Ikerlan research and development support co-operative with thirteen sister bodies, specializing in the needs of particular aspects of manufacturing activity and product development.

And faced as recently by adverse trading circumstances, the co-operatives are able to avail themselves of significant flexibilities. For example, non-members employed on a temporary basis can be put off until conditions improve.

Members can agree to forfeit or postpone entitlements such as one or more of their fourteen per annum pay packets or the payment of interest on their individual capital accounts, or in extreme circumstances authorize individual capital account draw-downs.

Co-operatives experiencing reduced demand are able to transfer members to ones where it is increasing, without detriment to their rights or entitlements. And supplementary capital can be accessed from centrally held inter-co-operative solidarity funds.

Meanwhile, on hold until the economy recovers  are further major changes expressive of the on-going commitment of the cooperatives to their origins and principles.

These include agreed measures to enfranchise the 35,OOO of Eroski’s 50,000 retail workers who are not already members.

Some 114 local and overseas subsidiaries owned or joint ventured by the co-operatives are scheduled for conversion to worker ownership on a case by case basis, consistent with their differing cultural, legal, business and financial circumstances.

And in 2009, the United States Steelworkers union entered into an agreement with Mondragon to jointly develop manufacturing co-operatives in the U.S. and Canada, that has yet to be given effect.

A record of so remarkable a character gives rise inevitably to pertinent questions.

What contribution to productivity and workplace well-being might not countries other than Spain have to gain from attitudinal change such as Mondragon has so successfully engendered?

What also might be the gains if in more instances labour were to hire capital as in Mondragon, rather than as all but universally capital labour?

And why is the Church in the English speaking world so largely silent about the bringing to triumphant fruition at Mondragon of the long struggle in the cause of its social teachings, by successive generations of its finest clerical and lay sons?

 

About the author: Dr. Race Mathews

 

The Hon. Race Mathews is a former Australian academic, federal MP, state MP and minister, municipal councillor and chief of staff to Labor Party leaders in the federal and state parliaments. He has written and spoken widely on politics, political history and public policy. Dr. Mathews is the author of Jobs of Our Own: Building a Stakeholder Society: Alternatives to the Market and the State.

 

Recent posts in Cooperatives

 

46 Comments

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  3. “What also might be the gains if in more instances labour were to hire capital as in Mondragon, rather than as all but universally capital labour?”:

    Why is it that labour never, or virtually never since there is always exceptions, does hire capital?

    I don’t know of even one single company which started out as labour hiring capital. And it’s not as if labour could not do so since virtually all businesses start off small, but it never happens.

  4. Could be that it’s precisely because labour hiring capital almost never happens that it also never occurs to us. That is, not until we learn about Mondragon. And thereby have our minds opened and our sense of the possible enlarged.

  5. Race Mathews writes : “That is, not until we learn about Mondragon.”

    That could be the reason,

    But even Mondragon was started by one person as catalyst. Not labour hiring capital.

    And companies owned by employees, just as Mondragon is, are common enough. So it’s not as if the concept of worker ownership is a foreign concept. Here locally my bank, 1st Bank, is worker owned as is New Belgium Brewery which is rather well known, as is United Airlines which has a hub here.

    I suspect the reason has far more to do with the culture, americans are not social in a manner which would lend itself to starting a co-operative business. In fact we are so socially disinclined that it simply does not happen. Not because it’s not known, but because its not in us.

    The agrarian dream isn’t to live in community, but on an isolated farm far enough away from neighbors to not see the smoke from their chimney. It may not be natural, but it’s very american.

  6. Having spent most of my adult life in rural America, I have to observe that there is much more of a sense of community here among us living where we can’t see our neighbor’s chimney smoke than you will ever find in a large city or suburb. By far. There are misanthropes out in the woods, but I have met a thousand times more in the city.

    Don’t mistake a culture that values self sufficiency and family autonomy for an anti social one.

    The original cooperative enterprise is the family farm. Whether they can see their neighbor’s chimney smoke or not.

  7. LTG, disregarding the urban-rural debate here, I think there are good reasons why capital hires labor and not the other way around. For one thing, capital is highly diversifiable, while labor can only take on a few jobs in a period of time. For another, capital can pay labor out of its reserves, that is, before making any money, while labor, in and of itself, can only make a promise to capital. Let’s take an example, and then a counter-example, of these notions.

    Say that one thousand investors, with an average of $500 thousand apiece in financial wealth, supply a mean of $20 thousand to a project, and hire 100 workers at an average of $40 thousand a year. So, there is an investment of $20 million, and a work force that will get $4 million per annum. (For simplicity’s sake, I’m assuming that management will get a share of the profits for their compensation.) If we assume that half of the $20 million goes towards buildings, land, and machinery, there is still $10 million left to pay for utilities, taxes, raw materials, AND the work force’s wages for some time before the company earns enough to pay for all these plus a profit. And this for just four per cent of the average investor’s capital.
    And the other way around, where the same one hundred workers hire the same one thousand investors for the same company? Well, labor can promise to pay capital at a fixed rate of interest, but if the company doesn’t make enough money, the work force will get a very poor rate of return for their efforts. (So will the investors too, in the former example, but they have other investments to tide them over, unlike the workers.) Or, conversely, they could give themselves a decent income, and give the investors, in effect, a promissory note for increased payments later. This is what the investors fear, and it is why they’d be highly reluctant to lend the laborers the money. Too, although I hope this wouldn’t be too common, there might be a tendency on the part of some workers to malinger, hoping the investors will bail them out with more money if the company doesn’t make it. With money invested, there’s just no such disincentive to hope for the company’s success.

    Viking

  8. Bill Granger writes : “there is much more of a sense of community here among us living where we can’t see our neighbor’s chimney smoke than you will ever find in a large city or suburb.”

    I agree, which only further proves the point I was making. Because even in the city men are fully isolated.

    As for autonomy being being compatible with community, I’m afraid you’ve bought into a rather unnatural understanding of man. An understanding which is spreading with homeschooling and other forms of isolation being promoted as a per se goods, and not what they really are, a unfortunate choice which must be made because other better community oriented alternatives are not available.

    Isolated farms are not natural, what is natural are communities as hubs with farmers living in those communities with their neighbors, with farmland spreading out beyond that community, which is in turn not unlike worker owned manufacturing.

    Physical distance does matter, and community cannot exist naturally without close proximity.

  9. Love the girls,
    I echo Bill Grangers comments. Density of development has less to do with sense of community than shared culture and economy.

    There is nothing unnatural about isolated farmsteads, or any reason to favor them over concentrated farming villages. Study the geography of Europe and both existed from time immemorial. Generally, isolated farmsteads are found in environments where stock grazing and pasturage are dominate and intense grain production is minimal (Alpine, Nordic and certain maritime environments). Farmers resident in villages were primarily in areas where grain or vines were the norm (or social reasons such as defense or land tenure)

  10. Vi King,

    While I appreciate your explanation, it doesn’t account for the formation of virtually all businesses which began as small with very little capital. Of course, once money has been made that same business owner can start other businesses, but the initial business is almost inevitably small and under capitalized.

    A circumstance which would seem to actually make pooled resources more likely to succeed and thus desirable.

    I look at my own grandfather who was a dirt farmer in eastern colorado who started a manufacturing company making baby shoes which are now currently sold worldwide in every major chain. The company has long since been sold, but the initial design of the shoes made out of cloth was because my oldest sister when a baby didn’t have shoes and they could not afford to buy her shoes so they made some out of cloth. And they took some of that same fabric and made two more pairs and sold them to the store down the street. That is how businesses really begin. Not with big bank loans.

  11. Mr. Grossman,

    It’s not natural for formation of community. Shepherds on their hills may be natural, but not for formation of community. Human scale does matter.

  12. Vi King

    The obstacles to labour hiring capital rather than capital labour may be less daunting than you suppose. My book ‘Jobs of Our Own’ describes in detail how the Mondragon co-operatives were capitalised. In short, the startup requirements were modest, as the initial group simply rented a disused factory and used hand tools and sheet metal to manufacture small oil-fired heaters and stoves. When in the course of rapid expansion of the workforce and creation of new businesses over the next three years the capacity for internal capitalisation became stretched and banks and other conventional financial intermediaries were unhelpful, a credit union, the Caja Laboral Popular, was formed, with the express purpose of encouraging investment by the local community, through the slogan ‘Savings or Suitcases’. So successful was the venture that the Caja became both the major capital source for further growth over several subsequent decades, and was able to assume wider functions of facilitating solidarity and mutual support between existing businesses and incubating new ones. In addition, members contribute individually to the capitalising of their jobs through an upfront contribution at the point of entry that currently stands at around $US12,500, and in turn becomes the basis of an individual capital account that attracts interest together with an agreed share of profits. Members currently retiring from the co-operatives are cashing out on average from their capital accounts lump sums of around $US120,000, in addition to generous superannuation entitlements that are funded through a separate secondary support co-operative, Lagun-Aro. And the credit union, the Caja, is effectively Spain’s ninth largest bank.

  13. Stephen Peterson

    @LTG et al
    Interestingly, when I was traveling through the countryside of France and Spain a couple of months ago it was noteworthy that I didn’t see and residences in the farm properties. People live in villages and travel out to their farms to work. I suspect that has been the way for centuaries in many places. In many places, also, the village church is still the dominant structure of the village, to my great surprise and delight.

  14. I feel bad about hijacking this thread, but the history of settlement patterns is one of my avocations.
    Stephen,
    Spain and France are areas where farm villages are traditionally dominant. Travel in northern Finland or western Ireland you will see a few small hamlets and many isolated farmsteads (like the US). Though there are historical and cultural/land tenure reasons for this, a lot of it has to do with the form of agriculture that land will support. The imitations of the land necessitate dispersion over concentration.

    Love The Girls,
    Density is only one factor in shaping sense of community. I live on a farm in the township I grew up in. The nearest hamlet is one mile away and once had a store and still has a small church. The average density is maybe one home per each 30-100 acres. Because everyone shared economic interests, and mostly were the same ethnic and religious mix, we had a very rich social life and sense of community. The mile walk to the store, a neighbor’s home, or church did not matter.

    I enjoyed looking at your blog and your concerns about human scale. I agree, but the pattern of small dispersed family farms is part of that human scale.
    My Amish friends in the next township shun village living, but maintain a very strong community AND human scale farming and industry.

  15. A key to this model is the social solidarity that comes from the Basque people. They are a people – with an indigenous language, culture, and boarder which they have been fighting for for decades.

    Absent this level of cohesion that is already in place, how can a cooperative model work of this scale in a place like America where there just isn’t that level of cohesion?

  16. Richard Grossman, don’t feel bad about hijacking the thread, you’re not. And the debate between you and TLG is an important one. Whether or not close geographical proximity is necessary for a true sense of neighborliness and community needs to be established, especially for a belief system like distributism.
    Viking

  17. Columcille, you make an excellent point. The US, and Australia, Canada, and New Zealand, all have people from many parts of the world. They mainly speak English, tho a significant part of Canada speaks French and a smaller percentage of the US speaks Spanish, but they are nonetheless not as cohesive as the Euskara (Basque). The Euskara are somewhat beleaguered, having no country of their own, and surrounded by two of the most-spoken languages on Earth in Spanish and French. People and cultures in that context are likely to develop a strong sense of solidarity and cohesion, which no doubt contributes to Mondragon’s success.
    Viking
    PS I suppose, to be fair, since I used the word for “Basque” in their own language, I should say “Francais” and “Espanol” for French and Spanish. But I don’t know how to insert the subscript for the first, nor the superscript for the second.

  18. LTG, my example was meant to convey a situation where the distinction between capital and labor was quite clear, and with no necessary overlapping. Most businesses no doubt start out as you say, but the family, individual, or group then would be entrepreneurial, which combines the roles of investor and worker. Therefore, the question of L hiring C vs. C employing L is immaterial.
    Dr. Race, if I understand Mondragon’s requirements on entrance correctly as you described them, $12,500 seems rather much for many people. There are no doubt a lot of folks who’ve entered the stock market with less than that. While I’m happy for those who are doing well with Mondragon, it doesn’t seem to me to be necessarily suitable for everyone. In my example, I only supposed 60% more than that, and that was an average, not a minimum.
    Viking

  19. Columcille and Vi King

    The point about Basque social cohesion is well taken, as also could be that of the Basques having had a measure of experience of worker ownership through co-operatives prior to the Civil War. However seems to me that the more important driving force was post Civil War unemployment and overall economic immiseration on a scale which Americans and Australians are now barely if at all able to comprehend, and the consequent hunger for job security. And the thereby compelling attraction of Arizmendiarrieta’s Distributist solution of enabling them to have jobs of their own. And that, given the current scale and likely persistence of unemployment in countries such as the US that have been hard hit by the global financial crisis, evolved Distributism along Mondragon lines may be becoming such as Victor Hugo had in mind when he wrote ‘Nothing is so powerful as an idea whose time has come’.

  20. Hope you’re right about that, Dr. Race!
    Viking

  21. LTG

    The $12,500 up front payment is usually in the form of a loan, which the newly admitted member pays off over an extended period. And can’t be too formidable a barrier, as there are always more applicants for membership than vacancies.

  22. I see. Thank you for that, Dr. Race. Btw, I was the one who brought that up, not LTG.
    Viking

  23. Vi King writes : “LTG, my example was meant to convey a situation where the distinction between capital and labor was quite clear . . . Therefore, the question of L hiring C vs. C employing L is immaterial.”

    But it’s not immaterial on a practical level. Where as what is impractical is using examples such as mondragon because that is not how business actually operates in america. Which was my only point.

    Businesses for profit that actually pay their workers a living wage from the proceeds of sales never begin as joint enterprises of workers where 5, 10, 20, 30 or so equal in stature workers come together to form a business. It simply does not happen.

    Further, I find it interesting that mondragon is pushed as some wonderful company when it’s nothing more than a conglomerate wrecking the social fabric landscape with its shopping malls. Or does human scale go out the window just because workers are doing it.

  24. LTG

    Maybe taking American exceptionalism a bit too far to suggest that because labour hiring capital rather than capital labour hasn’t happened there it never can and – I hope I’m not misrepresenting you? – never should?

    As to Mondragon generally and why to push it, a possible answer in theological terms might be that, consistent with the Church’s social teachings and the social encyclicals, the model enables ownership of productive property to not only be spread but remain spread more widely and reliably than by any other means so far on offer.

    And in more empiric terms, the high levels of members satisfaction to which surveys consistently attest, and the number of non-members clamouring for admission.

    And, as regards in particular to the Eroski retail co-operatives, the balancing of socially significant interests that’s achieved consequents on their unique structure as worker/consumer enterprises.

    Meanwhile, as regards conglomerates, the term isn’t strictly accurate for Mondragon, as the co-operatives are linked voluntarily with one another for mutual support, on a basis that enables them to fully retain their autonomy and, if at any time they so choose, sever the connection.

    And, needless to say, these comments are necessarily shorthand for the broader narrative that underlies and underpins Mondragon, and that you’ll find set out not only in my ‘Jobs of Our Own: Building a Stakeholder Society’ but in other authoritative accounts including, for example, Fr Greg MacLeod’s ‘From Mondragon to America: Experiments in Community Economic Development’ and ‘Making Mondragon: the Growth and Dynamics of the Worker Cooperative Complex’ by William Foote Whyte and Kathleen King Whyte.

  25. Race Mathews writes : “Maybe taking American exceptionalism a bit too far to suggest that because labour hiring capital rather than capital labour hasn’t happened there it never can and – I hope I’m not misrepresenting you? – never should?”

    What is needed is actual practical, here and now advise. And because businesses don’t form that way here and now, that alone makes it not practical here and now. What is needed is practical advise on how to form those small scale businesses.

    And I stress small. And practical. What can actually be done where there actually is worker ownership.

    Because worker ownership of large scale businesses is no different than ownership of the public lands where I can’t even pick a singe wild flower or a rose. It’s an illusion because ownership means control.

    Anyone who has ever lived in a large scale condominium association knows full well that the only thing they really own is the airspace inside their own condo. And that ownership of all the public spaces and buildings doesn’t mean a thing beyond having to pay for the upkeep.

  26. let me add.
    I don’t really care for worker ownership because I don’t think the workers can run a business as well as a single owner can. But what matters most is that each business treat its workers as well as it can. And in our current selfish environment that probably means worker ownership is necessary. Not because it’s a good per se, but because it’s a necessary solution to offset an evil.

  27. LGT

    Seems to me that the comparison of the Mondragon co-operatives with condominium associations fails to take into account a number of features that are unique to Mondragon.

    In the first instance, directors on the governing boards of the co-operatives are elected exclusively from and by their worker members, pull the same shifts for the same hours as other members and meet in their board capacity outside working hours, thereby ensuring that the gap between the board room and the shopfloor is minimised or eliminated, and that the sense on the part of the workers of the lived reality of their ownership of their workplaces is constantly reinforced.

    Secondly, the character of the co-operatives in these important respects is further reinforced by an independently elected system of Social Councils at the shop floor level whose responsibilities both complement and supplement those of the governing boards, and may in some circumstances act as a corrective to them.

    Thirdly, every member is aware in the most direct and practical way of his/her capital stake in the co-operative, through the system of individual capital accounts that I have described in an earlier posting.

    Fourthly, in the face of recurrent mass unemployment such as that of Spain in the aftermath of the Civil War and also currently, ownership of capital is secondary in importance to that of a job.

    And the effectiveness of the sense of ownership thereby given rise by these and also lesser attributes of the co-operatives too numerous to mention surely is attested to by the resilience that has enabled them to survive the global economic crisis where conventional businesses in so tragically numerous instances are succumbing to it.

  28. Not sure that that my previous posts have sufficiently emphasised the central, simple, fundamental and inescapable truth to which Fr Arizmendiarrieta’s theology and take on the social encyclicals gives expression.

    It’s that, in the face of mass and endemic unemployment and under-employment such as the US and other advanced economies are only now re-discovering, the key and necessarily most sort after form of property is the security of livelihood that job ownership alone can confer.

    And that, for the millions for whom in the foreseeable future neither small proprietorship nor access to the conventional labour market are likely options, job ownership through mutualist self-help on the Mondragon model of labour hiring capital rather than capital labour may in some instances offer a viable alternative.

    And that, as in Spain, the model, once established, may spread by example.

    And that, while no panacea, this thread of the rich tapestry of Distributism is deserving of more extensive and eloquent advocacy than currently is being accorded it, including by the Church to whose social teachings its origins are so plainly owed.

  29. Race Mathews writes : “the key and necessarily most sought(sic) after form of property is the security of livelihood that job ownership alone can confer.

    I suppose I’m beating a dead horse here, but if you actually want the above, you have to go small. Because small is practical. It’s doable. Because down on the street doable matters.

    As my father, an attorney, once replied when asked if he ever lost in court: “I wasn’t paid to lose”. The same with any other business, what matters is success.

    If you can pull off your mondragon, all the more to you. But perhaps biting off smaller more doable projects would help you accomplish that end, and would in the mean time do some practical good.

  30. LTG,
    I’m not sure you think that employment security can be achieved only with small enterprises. It seems to me that either big or small businesses can supply reasonable guarantees if run properly. And there are some industries where Mom-and-Pop operations just won’t cut it.
    I also quarrel a bit with your assessment of worker-owned firms. There wouldn’t need to be complete direct democracy about every single picayune matter, their ownership simply guarantees that the workers would vote in the management. It’s quite similar to stockholders doing so, even if those owners who actually have genuine say are a minority.
    Didn’t understand why you put a “sic” after Dr. Race’s remarks. Was there a grammatical or other error that I, and perhaps others, didn’t catch?
    While I’m at it, from what origin does “Love The Girls” come? Are you the father of daughters, or is there another meaning? If you’re interested in mine, it’s from the fact that both my elementary school and my main college had “Vikings” as their mascots.
    Viking

  31. Oops, that first sentence should have started out “I’m not sure WHY…” Apologies for the error.
    Viking

  32. ViKing,

    mondragon is just a bit larger than mom and pop, even when separated out into various co-ops.

    Scale, of course, matters. But most industries don’t require a large scale to function well. And in today’s economic environment smaller scale can be much more competitive.

    Worker ownership as stockholders already does exist in the US and those companies offshore. Large unions sellout their workers. And every business functions best as a kingship.

    ‘sort’ was changed to ‘sought’

    love the girls is simply a fun nom de plume. The lib girls hate it as likewise do the jansenists which is enough of a reason to use it. And I don’t expect anyone else, will, would also be using it no matter where I might post. In the past I changed my nom be plume every couple of years, but I’m kind of stuck with this one because of my blog.

  33. LTG and Vi King

    Small is fine with me, and I’m all with Schumacher in the belief that it’s also beautiful.

    Mondragon started that way, and, wherever possible consistent with imperatives of scale, current co-operatives have as a matter of policy spun off aspects of their activities to daughter ones in preference to allowing themselves to expand indefinitely.

    For example, where once there was a single research and development secondary support co-operative – Ikerlan – there are now fourteen of them, mostly delivering services to the manufacturing co-operatives on a tightly defined and specialised basis.

    And small also is consistent with the prior requirement for patient formation, along the lines adapted by Arizmendiarrieta from Cardijn’s Young Christian Workers (YCW) model.

    As also was Arizmendiarrieta’s approach consistent in turn with that of Belloc: ‘The restoration of property must essentially be the product of a new mood, not a new scheme. It must grow from seed planted in the breast. It is too late to re-infuse it by design, and our effort must everywhere be particular, local, and in its origins at least, small’.

  34. Dear Dr. Mathews, appart from the property (cooperative or not), what differences you see beetween Eroski and Walmarts? Aren´t both of them unrestrained competence for the small and family-owned shop that distributists should support?. Thanks in advance.

  35. Alfonso, you don’t mean “competition” instead of “competence”, do you?
    Viking

  36. Yes, I do. Thanks Viking.

  37. Alfonso

    Your point about competition and the importance of small and family-owned shops is well taken, but a proper response would require a far more greater knowledge of matters such as the economics and organisation of supply chains and the sociology of consumer demand than I can offer.

    However – by way of a stab at it – seems to me that some relevant considerations might include the following.

    In the first instance, and from a Distributist perspective, Eroski differs from Walmart in that what Distributism is about fundamentally is ensuring, consistent with the teachings of the social encyclicals, that ownership of productive property is as widespread as possible.

    While Distributists have always had a preference for small proprietorship, it’s also always been tempered with an explicit acknowledgement that such a model won’t at all times and in all circumstances be tenable.

    And Chesterton, for example, was in no doubt that Distributism had room for diversity. He wrote “Even my Utopia, would contain different things of different types holding on different tenures … There would be some things nationalised, some machines owned corporately, some guilds sharing common profits, and so on, as well as many absolute individual owners, where such individual owners are most possible … Even while we remain industrial, we can work towards industrial distribution and away from industrial monopoly … we can try to own our own tools … In so far as the machine cannot be shared, I would have th ownership of it shared; that is, the direction of it shared, and the profits of it shared’.

    Second, Eroski differs from Walmart in that the ownership of the business by its workers in conjunction with its customers ensures a proper balance between their respective interests.

    As regards the worker members, the co-operatives provide a safe, healthy, respectful, tenured and justly remunerated workplace.

    As regards consumer members: ‘In place of the traditional Rochdale dividend, there is a 5 per cent discount on all purchases, and the co-operatives emphasise low prices, healthy and environmentally friendly products and consumer education and advocacy … Eroski has a key role in the Spanish Confederation of Consumer Co-operatives, and speaks for the confederation in its dealings with government and the media. It is also active in the affairs of the Consumer Advisory Council in Brussels’.

    Third, that Eroski is not unmindful of the importance of smaller retail outlets is evident from the making available of significant numbers of its properties to small traders on a franchise basis.

    And finally – albeit also tentatively – is it not possible that the relationship between Walmart’s expansion and the relative decline of small traders is less one simply of cause and effect than of the impact on both of seismic external factors, including changing consumer preferences and expectations, as for example of product affordability, diversity and convenience, together with intangibles such as location and ambience that comprise the so-called ‘shopping experience ?

    Just wondering.

  38. Race Mathews writes : “And finally – albeit also tentatively – is it not possible that the relationship between Walmart’s expansion and the relative decline of small traders is less one simply of cause and effect than of the impact on both of seismic external factors,”

    Leviathans, worker owned or not, kill little independently owned stores because the market naturally shifts to big store. It’s why Steamboat Springs refused to let Walmart move in.

    The problem also with leviathans, even franchised ones, is the uniformity also crushes local differences. The US has become an homogenized wasteland because of franchises and mass marketing.

    What is needed is a holistic approach where each society is left alone as much as possible. Which is something leviathans by their very nature cannot do.

  39. Stephen Peterson

    I think I see the point here, that perhaps Mondragon crossed a line when it expanded from the industrial to the retail sector. In the industrial sector there is a appropriate scale to the sector that is in accordance with subsidiarity – white goods are not in the traditional domain of small craftsmen and I don’t think anyone has even conceived a viable business model that could make it so. In the retail sector the size and uniformity flatten the market.

  40. SP

    I question whether the line you envisage has in fact been crossed. Seems to me that, consistent with the teachings of the social encyclicals, the acid test of Distributism is whether it enables ownership of productive property to become and remain more widespread.

    The primary question as regards Eroski therefore is one of whether, and if so to what extent, the arrangements currently in place, or approved in principle for implementation following a recovery from the global financial crisis, extend such ownership to a significant number of workers to whom it would not otherwise be available.

    Further – given known patterns of consumer behaviour and supply chain economics – were the space in the retail market currently occupied by Eroski to become vacant, is the greater likelihood that it would gravitate to small shops or simply to a conventional corporate retailer which lacks the redeeming Distributist attribute of worker ownership?

    And, if the answer in both instances is in all likelihood affirmative, does not Eroski emerge with no line crossed and its Distributist credentials confirmed?

  41. Thanks Mr. Mathews for your kind reply. The point would be, as SP wrote, the subsidiarity of cooperatives and their limits. If Im not wrong, Chesterton thougth in cooperatives to reach where indivuals could not reach because of technology and scale economies. Retailing is much more influenced by customers preferences than by technology. From the point of vew of subsidiarity, is a cooperative big shop needed when every member of the cooperative could have their own small specialized shop?. From the point of view of the customer,isnt more “distributist” to buy local products in local small shops?. Aren’t Big Cooperatives Big Business at all?.

  42. Alfonso

    You are right about Chesterton and co-operatives, albeit at a time and in circumstances so different for our own as to be for practical purposes unrecognisable. Meanwhile, seems to me that the two questions posed in my previous post cut to the heart of the matter, and would be interested in any response to them that you or SP may wish to offer.

  43. Stephen Peterson

    Dr. Matthews,
    I don’t think I’d go so far as to say that multi-store cooperatives are contrary to CSD, but at the same time I don’t think I’d regard them as the preferred distributist solution.
    Yes, you are correct in stating that Eroski extends worker-ownership to a far greater extent than the prevailing climate would otherwise allow for. And, yes, you’re also probably correct in asserting that if Eroski vanished the vacuum would most likely be filled by a corporate chain than by small shops. However, this isn’t an argument that multi-store cooperatives are the distributist solution, it’s only an argument that multi-store cooperatives are more competitive in an environment that favours big business than are small grocers.
    As to the final question, however, as to whether two yes’s confirms the distributist credentials, I would be hesitant to agree, although I wouldn’t come out in condemnation either. While the multi-store cooperative is good at sharing ownership, it stumbles when it comes to subsidiarity. There is very little that a multi-store cooperative can achieve that a single-store cooperative can’t except, maybe, a reduction in distribution cost, but this can be overcome by franchising. I think I’d be a lot more comfortable with Eroski if franchising was the norm rather than just an option.
    However, having said all that, I’d definitely agree that it is a big improvement over the chains that dominate the retail landscape.

  44. SP

    Thanks for the thoughtful response, but I wonder – and in no sense purport to have the answer – whether your ‘environment that favours big business’ isn’t rather one that’s simply reflective of actual consumer preferences as regards not only price, variety and accessibility but the intangibles that the trade refers to under rubrics such as ‘the total shopping experience’?

    And, if so, what sort of intervention would be needed to change the relevant behaviours, and on what grounds it might be thought to be legitimate?

    Aren’t there elements here of attempting variously to close Pandora’s box, put genies back in their bottles, close the stable doors after the horses have got away or simply the old post World War I song ”Ya Gonna Keep ‘Em Down on the Farm? (After They’ve Seen Paree)’?

    And in this context does subsidiarity out-rank enabling ownership of productive property to become and remain more widespread?

    Or vice-versa?

    As I said before, just asking.

  45. Dr. Matthews,
    I would also reply “yes” to both questions, but I dont thing that creating be cooperatives for better competition in standarized capitalists markets is the distributist solution.
    In one chapter of “Small is still beautiful” Joseph Pearce wrote about the english beer market, that become standarized with very few big companies offering a low price-low quality product in the 70-80’s. The “Mondragonian” solution to that would have big to build a big cooperative factory that could offer a similar product at competitive prices. But the CAMRA (Campaing for real Ale, a consumers asociation) was to promote small local breweries to rrscue the taste and essence of local beer that were lost because of scale economics and standarizaton. My point is that i prefer the CAMRA solution because it affects not only to the problem of the property but also to the one of the restoration of traditional products and way of life that I believe is also into the spirit of Distributism.
    Another problem with cooperatives is that altought property is shared management should be in a few hands, and even when members can vote, if the cooperative is so big their individual decision power vanishes into the crowd.

  46. Stephen Peterson

    Dr. Matthews.
    No.
    I’d argue, firstly, that price isn’t the sole factor – people are willing to pay more for better service. And franchises that buy in bulk can provide competitive prices anyway.
    Variety is probably the hardest to argue away, except to say that people will tend to prefer a local product to a non-local product of comparable quality and price.
    As far as accessibility is concerned, a multiplicity of small shops in walking distance are more accessible than jumping in a car and finding parking at Coles or Woolies.
    “The total shopping experience” only sells because it caters to our time-poor western culture. I think that if most people had the time they’d prefer to wander from shop to shop and chat to the same shopkeepers they talk to every day, thus combining their leisure and social time with their shopping time. Instead they have to cram as much purchasing into as little time as possible, getting no enjoyment from the experience. Time poverty (and double income families) are part of the landscape that favours big business.
    The intervention that would be required would be complete social paradigm shift, which is difficult but I don’t think impossible. Paree was nice to look at but a different thing now that we’ve lived in it.
    Keep in mind that if enabling ownership was our only priority and subsidiarity didn’t count, Communism would be our best bet. Prioritising subsidiarity, however, inherently enables ownership.