The difference between Mondragon, the kibbutzim, and other successful examples of collective labor, and the Soviet system, is precisely that the former are not governments, and operate in a capitalist system of property rights and free markets (in a practical rather than spherical cow sense of that term).
I'm all for more cooperatives, it's a good model. Operating in a system which doesn't compel that form of organization is what keeps them honest. Mondragon is a profitable company, emphasis on profitable.
The article talks a bit about how, while Mondragon is a pretty good deal for basic labor, they have trouble attracting high-demand talent like engineers, which they also need. In a free-market system, a worker's collective can solve a problem like that, by offering more perks, raising the 'level' for new engineering hires, waiving some amount of the up-front investment, or just getting by through, in effect, paying some of the salary in a nonmaterial reward of belonging to something which better meets some people's sense of ethics and fairness.
That's not how it works when the company you work for is also the police and the military. It's also not how it works when every company is compelled to organize itself this way. That compulsion leads to dysfunction, corruption, cheating, and at the extreme end, gulags.
So let's pass on all that. If you believe that worker cooperatives are a social good, as I do, buy stuff from them. Work for one, found one. It's working so far.
> The article talks a bit about how, while Mondragon is a pretty good deal for basic labor, they have trouble attracting high-demand talent like engineers, which they also need
Perhaps that's not inherent to high-demand talent, but Mondragons current composition and markets. I know a handful of engineering consultancies that are cooperatives in everything but name - and I know ofa couple that are legally coops.
The "soviet system" as you call, started (yes the revolution) with a slogan "power to the soviets". In the slogan the word "soviet" meant "worker coop".
This slogan was abolished when more central planning took over, and the word soviet become more associated with the central govt/ the state.
> The difference between Mondragon, the kibbutzim, and other successful examples of collective labor, and the Soviet system, is precisely that the former are not governments...
I've heard it put as "Socialism works great, as long as the socialist community gets to decide who is included."
I do feel like you've framed this as dichotomy: you either have a capitalist system or you have an autocratic centralized government.
Many socialist democrats (or democratic socialist, whatever your flavour) believe that collectivism need not be autocratic and all encompassing. The negative aspects you're describing, in my opinion, are the results of the fascistic elements of an autocratic communist regime. "The Fascist conception of the State is all-embracing..." and so on.
The liberty that open democracy promises is resistant (but not immune) to the kind of coercion you've correctly identified as being characteristic of the Soviet system.
It's not clear to me how this model can be meaningfully replicated. For instance corporations naturally minimize their labor costs according to the relative economic leverage of the participants often to the point of poverty vs those with little leverage whereas a cooperative would seem to be inclined towards decency at the cost of maximal profit.
This difference in profit is invested back into the company in terms of capital investment and lower prices allowing more capitalist exploitive corporations to out compete and ultimately buy or destroy coops.
Coops that exist in very small not very profitable niches may survive in the form of small businesses that make enough to survive but not to thrive its hard to see how this has any effect on the other 99.99% of the economy where most people are obligated to live.
I've studied and visited Mondragon before, and hosted their students at my company. It's very cool, but I'm unsure how replicable the model really is.
My conclusion is that it emerged out of the unique environment of already high Basque solidarity, but even more so under Franco's oppression. After a few generations, they admit that the hardcore spirit is gone and made initiatives to try to restore it, but still some of the biggest co-ops have died or been sold off (ie Fagor).
My friends from there told me: "It's where your dumb cousin works", as it's very political with a lot of patronage kinds of networks that democratic elections at that scale tend to produce. They made a startup community there, but it seemed like most of the kids were trying to get out, not stay to reform the coop.
I think the Italian Emilia Romagna region cooperatives [1] may be a less centralized model that could be better, as it does away with the big organization that eventually rots, like any big old org.
Based on what I've heard I'd love to visit there and even have a chance to intern there. I'd like to see for myself firsthand what life would be like. Would it be boring? Would it be bureaucratic or unmeritocratic? Would that bother me personally? I don't speak Spanish, unfortunately.
Obviously this article gives a rosy picture. However, the renewed interest in alternatives is precisely due to the new forms of arbitrary oppression that 21st century capitalism inflicts on many people, so maybe that would be one pathway for Mondragon and other meta-coops to flourish. Who knows.
Moreover, it's not like actually-existing capitalism doesn't tend to produce its own forms of inequality. Maybe a sociologist or economist could show that the "patronage networks" in something like Mondragon are an effect of their structure but the overall negative outcomes are lessened/mitigated compared to the negative social outcomes of Western capitalism. A proper comparison would be an open research question.
That's too bad about Fagor, 10 years ago I ordered a pressure cooker from them but had it returned immediately due to an improper lid fit. That would've been around the time of its decline and eventual closing off. I ended up buying a 2x more expensive pot from a Swiss company, it's lasted me 10 years so far.
They also don't speak much Spanish there, as the Basques have their own ancient unique language (a non-Indo-European isolate actually) and culture due to their mountain isolation and resistance to everyone, even the Romans. The people I worked with there all spoke English.
You might try reaching out to these guys if you want to visit. They actually get a lot of visitors, and there's a whole tour program I did when I was there.
As far as the effectiveness of Mondragon, I agree that we shouldn't judge it by capitalist standards, but more ask: Can it survive within capitalism while still doing well by its people?
I worry that Fagor, etc. may point to that not being long-term true, but it has been around for a long time, so maybe not. I more think that their model is hard to replicate outside of their high solidary cultural environment, rather than predicting their demise.
Its interesting that Rojava wasn't mentioned here. After driving out Islamic State, they founded their own country in north east Syria, not widely internationally recognised yet but functioning much better than the rest of Syria.
They are still a developing country and by no means wealthy, but the average income in this area is double what it is in the rest of the country.
Might be because since 2019 and the withdrawal of the US military presence in NE Syria, the relative prosperity of Rojava has plummeted. This draws into question exactly how 'autonomous' said autonomous zone was.
> This draws into question exactly how 'autonomous' said autonomous zone was.
It seems like you're conflating sovereignty with economic dependence, which are two distinct concepts—being entirely economic independent seems highly geographically dependent. Few regions in the world are lucky enough to even have this option. For instance, you can be economically dependent on neighbors but still locally determine who runs the local courts. So it's not great evidence of how their society is run, particularly when other states—say, Afghanistan, where the current government has clearly exercised local sovereignty—have similarly been affected by the withdrawal of US troops and the seizing of assets.
Yeah that's on of the things that get hand-wavity when you bring up these city-state type plans as well as anarcho-whatevers. They generally wouldn't be big enough to defend themselves from religious extremists or nation states acting against them--many of them not even figuring in defense against other entities and saying "we're pacifists". That kind of stuff only works when external factors like aggressive neighbors don't figure in.
Iraq and Turkey, as of a few days ago, are making a new agreement for a transport corridor and peaceful coexistence, which includes Iraq getting more reliable access to river water, and Turkey getting more reliable targetting access to Kurds with aspirations of self-rule.
Every regional power seems to periodically crush the population of their sector of Greater Kurdistan, and encourage their neighbors' sectors to start an insurrection.
The US has sacrificed these people over and over again in pursuit of foreign policy objectives.
you might want to look at the social.coop Mastodon instance (or cosocial.ca if you're Canadian).
Not only has the community on both those sites been a breath of total fresh air for me, I am not worried about the server I'm on having decide between disappearing and selling ads, and I feel like I'm partaking in a social enterprise.
Just recently social.coop had an open vote on how to donate some of our surplus to the open software we use and organizations that promote cooperation. It's been so nice to see and be apart of.
cosocial.ca charges CA$50 for its annual membership. Omg.lol charges $20/year for Mastodon and a bunch of services and for $29/year, I can offer Mastodon, Lemmy, Matrix and Funkwhale, with 250GB of storage.
It's not "social washing" if it's actually a working co-operative.
We all collectively own the funds, and if we ever want to lower yearly rates or pay our members dividends from surpluses, members are free to put it to a vote.
Part of the reason we run a surplus is to deal with any unexpected costs (they don't just scale with users, but also the popularity of users on our server), but FWIW I think we should open up a pay-what-you-can tier much like social.coop has. Thanks for reminding me, I'll send it to the coop for consideration.
By the members; we all pay a tiny bit into the co-op each month. Most people pay 1 USD or GBP per month, if you use some of the other services we offer through organizational memberships in other co-ops (ie. we're a member of meet.coop for video calls, May First Co-op for Nextcloud and email and what not, etc.) then some people pay a bit more (normally no more than 3 to 5 USD or GBP).
It's interesting to read about Mondragon in more detail. I just came across the term in Kim Stanley Robinson's solar-system sci-fi epic "2312." The book (highly recommended) heavily references Mondragon; that's the name for the alliance / co-op of all of the planets and settlements that aren't Earth or Mars.
Just wanted to flag that there are areas in the US that co-operative enterprises do flourish and have knock-on effects. This is biased by my food co-operative experience but just to show that there is an alternative to unfettered capitalism where businesses help each other thrive.
- The Minneapolis/St. Paul region has so many food co-ops that there's a co-operative warehouse dedicated to serving them (and other businesses too) https://www.cpw.coop/
- New England has a multitude of 30-40 year old food co-ops (along with startups like mine) and has its own association of food co-ops to help advocate for better state policy/governance http://nfca.coop/
- National Co-op Grocers is a US-wide group that helps co-ops buy food at cheaper rates and provides a ton of great branding food co-ops who are members get to use https://www.grocery.coop/
I'd love to see more tech co-operatives sprout up someday... there is an alternative to VC that keeps ownership equal, and it's been all around us this whole time!
I also have a background in food co-ops (member owned), I was in the bakery of one for 7 years, then served on its board. Food co-ops are really interesting orgs because food is one of the things people can control in their lives so their feelings, neuroses, fears etc. come out.
When we expanded about 17 years ago we managed to drive a new Whole Foods that had sprouted across town out of business within a year. Haven't heard of that happening elsewhere. They had a terrible location which didn't help but I think it was more due to the loyalty of our customers who had buy-in (literally).
The anarchist culture of the 1800s and 1900s in Spain, especially the emergence of anarcho-syndicalist structures [0], is certainly one of the reasons for Mondagon's existence.
When you start a co-op, just like any other bootstrapped business, you're staking your livelihood, but you're forgoing most of the upside. You also need several other people to agree with you. This screens out most of the risk, which is why they're perceived as working well. This works out great if you're lucky enough to be employed by one, but not great for people who need a job immediately.
That's a good question and it seems like it's difficult to separate from people's ideological ideas about whether they are good or bad.
My hometown in Oregon had a cooperative, Burley, that made bike stuff like trailers and tandems and some clothing. Word was that it was kind of dysfunctional because of how democratic it was even if all the people cared deeply. I think they finally ended up selling out to some outfit who scrapped everything but the trailers.
The paradox of worker-coops is that workers capable of successfully running businesses together are also capable of running businesses independently, so there's no need to form a co-op. It's those incapable of running a business individually or collectively that then form co-ops. Mondragon is the exception, not the rule.
There are a few. There's a tech coop federation in the UK for instance. A big hurdle for efforts like this is access to finance meaning they often have to be bootstrapped.
By historical reasons the Basque country has an special tax regime and economical benefits from the Spanish government. This may have an influence on the outcome. Is easier to win when the other run handicapped, and not so easy to replicate it if we remove that context.
Most people also ignores that this system exists. Out of Euskadi, the name is more associated to the (in)famous band orchestre Mondragon, that was an appropriately anarchical mess, part circus, part rock band.
It might be a lack of education (not a value statement). Socialism in Spain was not established at once. It was an effort spanning many decades.
If we would suddenly find ourselves in a medieval kingdom we would certainly need time (and help) to adapt to that system. Likewise, people from that period would need time (and help) to adapt to ours. Regardless of whether it is better.
Realistically Mondragon is rooted in Catholic social teaching (founded by a priest). Thus it requires someone to be motivated by something other than money. Religion is one of the few things that will be able to inspire such amounts of work while forgoing most economic upside.
Maybe nationalism can do that, but keep in mind that when this was combined with nationalism we got Nazism (Nazism took lots of inspiration from Austrian corporatism which was similarly influenced by Catholic social teaching here). I'm not sure it's either safe or advisable to do this aside from religion
They don’t allow genuine innovation in any shape or form, and that in particular leads to highjacking by bureaucrats and degradation. So they may work in short term (work for some at the price of oppressing the ones who don’t fit well into the collective) - I’m from USSR for example - yet the result is predetermined.
But not BY Franco. Note in the article how the government removes social security support from the coops and they have to set up healthcare themselves.
Arizmendiarrieta wasn't a Franco follower at all. He fought with the Republicans and went to jail during the war. After that stopped writing in Basque, as that wasn't seen with good eyes in Franco times.
I love how this article about a co-op that values workers opens with a clearly AI-generated image that is indirectly derived from the effort of many unpaid artists.
Just like those artists have benefited from the unpaid effort of their ancestors who invented fire. Please let's stop acting as if contributing to civilization is some kind of horrible injustice.
If you make a picture and someone steals it, okay that's not fair. If you make a picture and someone makes a copy, also not fair. But if you and million others make pictures, and someone else looks at them and learns how to make their own pictures... that's basically how people were doing it since ever. Except now this process can also be automated.
Every artist who never studied the art of others, and invented their own style from scratch, has a right to complain, of course.
A thing that is kind of glossed over is: what is "ownership" when we talk about worker-owners at cooperatives?
> The profits generated by each cooperative are put to work for the benefit of the greater whole. Each cooperative gives 14-40% of their gross profits to their division (depending on the division), and another 14% to their parent company. The rest are invested back in the cooperative (60% of net profits), distributed among their employees (30% of net profits), and donated to social organizations in their communities (10% of net profits).
> Workers buy into their cooperative when they become employees, investing up to €16,000 into a personal equity account. They pay 30% of that investment upfront, with the remainder taken out of their paychecks over following 2 to 7 years. After two years with the organization, workers become “members” and start earning interest on their investment at a rate of at least 7.5% annually. If the cooperative does well, they might earn much more than that. Workers can pull this money out of their accounts when they leave the cooperative or retire.
... so it's not ownership, right? It's profit-sharing while you're an employee (the "interest" the worker gets is out of that 30% of net profits discussed previously), but you don't own shares in the company that you can then sell, like an employee who receives an RSU or receives and exercises an option.
In some sense, corporate employees that get some form of equity as part of their compensation are more literally worker-owners. I think the problem with American companies that have an employee stock plan is that the employee stock pool is a small slice of the total ownership, and employees don't participate in any real democratic governance. Despite being shareholders, they get far less information about the financial health or strategic position of the company than investors with board seats. Real partial ownership doesn't lead to real power or access to information. And the aim of the company is still to serve the larger investors, not the workers.
> In some sense, corporate employees that get some form of equity as part of their compensation are more literally worker-owners.
As soon as a worker leaves or sells their shares, these shares aren't worker-owned anymore and the interests of their owner can quickly diverge from the ones of a worker. That's roughly what a coop fixes I think.
I can kinda see how one can argue that this is a feature rather than a bug, but I still think this points to the more distinctive feature in these coops being democratic governance of workers rather than ownership.
I own shares of past companies I've worked at, but I don't have any representation in how the company is run. It doesn't matter if my interests have diverged from current workers, because I have no influence.
If a company compensates its employees partially with RSUs, and those employees own and can eventually transfer those shares freely, and the company was also democratically governed by its workers ... could you not have "real" ownership (by current and past workers) and still protect current workers' democratic governance?
Not all that different from shares in a private company, or an interest in a partnership or multi-member LLC. Many corporate shareholders cannot freely sell; the idea of being able to sell stock for cash whenever you want to is unique to public companies.
And yes, the real problem is information asymmetry. This is always the real problem. Arguably the secretary who knows everything that's going on with the company via watercooler talk has more power than the CEO whose underlings tell him only what he wants to hear. A lot of corporate owners, even powerful shareholders like the Crown Prince of Saudi Arabia, have been bilked by unscrupulous but savvy management who knows how to control information flow.
A workers cooperative is owned by its current workers. Are you going to argue that consultancies and law firms are not really owned by their current partners, either?
Profits belong to the people who create them, not to people who used to work at the same company in the past. Expecting future employees of a company to work for ex-employees in the future is unfair. Having worked for a company, doesn’t entitle anyone to remain on the paycheck until death, despite not working there anymore.
I think that more important than ownership is the purpose of the company. Most companies have the purpose of making money. Few have a purpose which includes contributing to quality of life, unless that’s something which can be sold for a profit.
Not just making money, but making more money than they did last year, forever.
Like a company can't just be cool with the fact that they serve a profitable market niche and gainfully employ people. Investors need capital gains and won't just be satisfied with getting reliable dividends!
Seems to be not only a Spanish but a predominantly Basque enterprise. Cooperatives are relatively huge in Italy, too https://coops4dev.coop/en/4deveurope/italy Although the structure is a bit less monolithic than Mondragon.
> Mondragon provides us with a successful, working model. It’s not throwing out capitalism, it’s creating a better form of it.
Can any people from this region tell us what the downsides of working for Mondragon are? The article only touched on lower pay.
Also how much does the President of the parent Mondragon Corp get paid? The often cited 6:1 or 9:1 lowest paid worker to CEO seems to be applied to CEOs of the various corporations not the president of the parent company.
“Lorenzo estimates that the president of Mondragon is the highest-paid position (level 6) with a salary of around €200,000. Managers and directors earn between €80,000 and €120,000.”
>If the model is a good one, detractors say it can’t be replicated outside of the Basque Country, and there’s some truth to that.
The author doesn't speculate why, but I'd guess it's partly due to Basque ethnic solidarity. Mondragon sounds a lot like the kind of late 1800s / early 1900s syndicalism that later evolved into Italian fascism and German National Socialism.
Of course, another big "collectivist capitalism" success story is China, which is also fiercely nationalist.
I don't see either of those models working in the West on a large scale any time soon.
I've heard this story ever since I was a shit-eating Ron Paul voting right-libertarian. The whole "collectivist success requires ethnic purity" argument. I don't buy it. It is, inevitably, either an excuse to destroy functional collective institutions, an excuse to advocate for ethnic cleansing, or both.
To elaborate on my previous comment: if you want people to be less individualistic and more community-minded, and especially if you want economic organization to be more cooperative, decentralized and bottom-up, then people are going to need to feel a deep sense of buy-in and belonging, and you don't really see that in an undifferentiated mass of atomized "consuming and producing units".
But you do see it among the Amish, and the Basques, and the Boers, and in the kibbutzim, and in families generally, because kin relations are meaningful among humans and elsewhere in the animal world.
And I'm not arguing that "collectivist success requires ethnic purity", just noticing a correlation. Where you see apparent altruism in economics -- including nepotism in hiring -- you tend to find kin relations.
Probably the game theorists and evolutionary psychologists have it figured out.
The importance of "leftist" fascism is overplayed.
"Socialism" back then, much like "Human Rights" today, was generally associated with what is morally right. It was not an ideology of extremist groups. Fascism "evolved" from socialism same as everybody and their mother evolved from it.
And because of its dominance, everybody tried to exploit it, too. So you called your organisation "National Socialist Party" and your heads of propaganda copied the rhetoric.
Also, libertarian socialism was nowhere as developed as in Spanish society at that time. This is not the most surprising society to generate Mondragon.
>Mondragon sounds a lot like the kind of late 1800s / early 1900s syndicalism that later evolved into Italian fascism and German National Socialism.
Sure, if you dishonestly use their slogans rather than policy decisions as your barometer. What actually happened is that fascists co-opted the language of the left and deployed it in service of entirely different ends.
Another take on this kind of subsidiarity approach is Joel Salatin's "Memorandum of Understanding" which he talks about in detail in "Stacking Fiefdoms": https://www.youtube.com/watch?v=EbJc8i5B9RU
I read about Mondragon in Pickety's works. That's why I went to Mondragon. I was deeply disappointed, the city and the surroundings look very sad. It reminded me a lot of the former DDR (german "democratic" republic which was under russian control).
Basque people have a distinct culture. You can often figure out someone comes from there just based on their hairstyle, way of dressing or attitude. They will usually favor practicality and durability over style.
You may think it is sad, they may just think it is the way it should be done and that's it. I don't think you can judge the coop concept based on the impression you got from the city. Its inhabitants may on average feel happier than those where you live.
It's located in Spain, a country not known for its vast wealth. Plus, it's in a special administrative region in Spain, the Basque Country. They enjoy subsidies and favorable treatment from the regional government.
"Could we eventually create a capitalist paradise where democratically run companies use their profits for the good of their worker citizens? Could that even replace our existing governments?"
Dude reinvented the socialist mode of production but renamed it "capitalism" instead lmao
It's a shame there's not a YC like incubator for tech worker coops, cut out the VCs and have milestone based funding in exchange for a percentage of future profits that would be reinvested in future projects.
It's inherent to the way a coop works that it's not possible to follow the same path. There is no 7% equity to be given, only the repayment of a loan. The coop model does not promote taking risk and hence have many fail, yet a few grow very quick.
Another problem is law. At this point it favors the common ownership forms of business. Starting a coop is hence much harder than it should be. This is what i think where the "it's a shame" make most sense. We should make w-coops easier to start and give them tax benefits as they are on the long run much more beneficial/ less detrimental to society.
A possible model is to divide your shares into ownership/control class shares (reserved only for workers) and profit shares which can be bought/sold by third parties. This gives workers ultimate control over the venture while allowing third-party investment. I don't know if this has been implemented anywhere, but it's a possibility. It's not going to fuel explosive growth like VC funds do, but TBH I'm finding as I get more experienced that those types of ventures generally end up being trash dumpsters once the honeymoon phase is over.
I'm not a finance person, but my understanding is that co-ops more often raise capital with traditional loans.
While I believe you are correct that co-ops are not a great fit for the growth business strategy that VCs make their bread and butter on, I believe that on many metrics co-ops tend to be more sustainable than the corporate alternatives[0]. This means they are more likely to be around tomorrow to pay off a loan.
All this to say, it would be great to see more capital for co-ops in the form of traditional loans with favourable interest rates.
Are there countries with legal structures more friendly to worker coops?
For example I know Germany has structures like works councils that are foreign to us in N. America (though this is not a worker coop structure). However these structures historically arise from labor movements, not from top-down planning from authorities or electoral politics, which takes more than thinking up a design for a better society without considering who and why it would be implemented
Yeah I'd imagine it would have to be a single holding company that has members join, instead of investing for equity.
So as an example you could have hypothetical opensource.coop that funds open source projects like signoz or posthog, giving the team a year of runway in exchange for a cut of future profits, with follow on funding if certain milestones are reached.
Same could work for "indie hackers" or boostrappers, merge a few successful companies into a holding company that shares office space, accounting, legal and etc, and reinvests a fixed % of profits to seed new projects that apply to join.
In a Co-op you put up your own money to buy into a co-op. This is the opposite of VC where an external party joins your org with money.
So a co-op model would only help to serve the already wealthy.
However, maybe it would be interesting to have a co-op for developer resources for example. As in companies or startups can buy into the coop in return for cheaper rates and more vertically integrated team augmentation.
Imagine a indie hackers founders cooperative, you take a few successful bootstrapped founders and start a new holding company that shares an office space and has staff to handle legal, accounting and all the other stuff that most engineers hate to deal with.
You offer founders that apply a coworking space and a stipend that can get renewed each year if the members of the coop agree to keep funding it. In exchange the new member commits to giving up 10% of their future profits that get split into an investment budget and dividends.
If a company is failing the members can vote to stop funding them and set them free of the agreement.
If a company needs way more funds and VC route makes more sense you spin it out as a c corp, convert the 10% profit agreement into equity and let them raise funding like any other startup would.
Start.coop (https://www.start.coop/) comes to mind, but I know I've read about others as well. I don't recall what their exact model is, so it likely doesn't match perfectly with what you're describing.
This was recognized by everyone from Karl Marx to Abraham Lincoln to Adam Smith. Smith even conceded that profit was impossible if workers retain their surplus value, which is exactly the point.
I bring this up because that's what capitalism is: draining the surplus labor value from workers to the capital-owning class. In feudalism, the artistocracy and th emonarchy extracted that value. Jeff Bezos is the new king.
Why do I mention this? Because it wasn't that long ago that this view was universally accepted. The Red Scare post-WW2 spread a lot of damaging propaganda that has led ordinary people to fight for the ultra-rich to have even more money, to their own detriment.
Walmart killing all your local businesses then leaving, leaving you in a food desert with a Family Dollar store maybe. That's capitalism. Locally-owned businesses. That's socialism. Monsanto agribusiness? Capitalism. Family-owned farms? Socialism.
Something like Mondragon shows that large-scale cooperatives can work. And the reason why these sorts of things aren't more prevalent is that laws are passed to make them difficult to set up or outright illegal. Many US states outlaw municipal broadband, for example.
And any country in the last 70 years that even thinks about nationalizing resource extraction finds itself having a coup that nearly always has the CIA's fingerprints over it.
Or we simply starve them to death under the sanitized euphemism of "economic sanctions" (eg Cuba, Iraq, Venezuela). I really want people to understand that we're not doing this for any moral reason. We're doing it at the behest of Western companies who would prefer to steal the riches of these countries.
Co-operatives can go a lot further than manufacturing too. It can be a solution for housing. Housing cooperatives cut out landlords, who are rent-seeking both literally and figuratively.
While this is generally true, it's also not the entire equation. For example, there's no gain without risk.
- When I work for someone else, I am offloading some of the risk to that person/owner. When someone starts a company and hires other people... if the company goes belly up, the founder loses their investment; the workers find another job.
- When I rent from someone else, I am offloading the risk of owning a property to someone else. If I get a job across the country, I don't need to sell my house at a loss to move.
None of this justifies people making insane amounts of money while others are starving. But neither should the worker expect to reap all the benefit unless their also willing to take all the risk.
So does the bank, and the state that (more often than not) subsidised said investment through diverse vehicles. If the bank goes belly up, we've seen what happens, we collectively contribute to save them... because we're collectively sharing all the risk of investment in our financialized economies.
I agree that some people don't want risk and others do, but as soon as you start sharing ownership that dichotomy simply disappears.
> When I work for someone else, I am offloading some of the risk to that person/owner.
Workers generally risk their lives or simply injury. Owners "risk" capital. I put that in quotes because our government is typically set up to rescue failing businesses and by that I mean bailing out the owners. If the business fails, the owner simply has less money or they have to become a worker.
So who is really taking a risk here?
> When I rent from someone else, I am offloading the risk of owning a property to someone else.
We shouldn't treat housing as an investment vehicle. It is shelter and necessary to live. Every level of government is subordinate to the cause of increasing property prices as society increasingly views housing as a vehicle to build generational wealth.
The majority of housing in vienna is state-owned (so-called "social housing"). Any kind of state housing has been successfuly propagandized as a "slum" ("project") but there's no need for that to happen. The UK, prior to Thatcher coming along and dismantling the whole thing, almost completely got rid of landlords simply by being the buyer of last resort for owners that wante dto sell.
> None of this justifies people making insane amounts of money while others are starving
Our economic system is predicated on withholding basic needs for profit.
there is a risk for the worker and renter, too. and opportunity costs.
my shelter not being destroyed is extremely more important to me and my life than my landlord who has insurance for such things, especially in a place with a housing vacancy less than 1% (aka very very hard to find housing). if i leave, they will have no problem finding a tenant to take my place. any repairs and maintenance are essentially paid for by my rent. they raised property taxes? no problem, just raise rent...
from my POV, seems like a low risk investment to be a landlord.
But there is very little value without tools. In fact, one could argue that all material progress has been in the form of better and better tools. One person with a combine beats 100 people with sickles.
Those tools are necessary for almost all of the value that labor produces.
So if we want those tools, in the real world we need to pay the producer of those tools. (Or make them ourselves, which is possible, but runs into division-of-labor issues.) The people who manufacture combines aren't a charity; they want to receive the value of their work too.
And unless the farmer (or custom cutter) has the money to buy the combine, then there's a third party in the situation - the capitalist, the person who provides the money to buy the tools that will give the increased productivity. That person usually isn't a charity, either. They need to get some return on their money.
But the place where I at least partly agree is this: The worker who knows how to use the tools is deserves at least part of the value provided by using the tool. The tool-maker deserves part of the value; the capitalist deserves part of the value; and the worker also deserves part of the value. (If you don't like the word "deserves", well, without all three parties, the value isn't produced, and none of the three are charities, so if we want the value, we need to give them part of the returns.)
And currently, you can make a very solid case that the worker is getting the short end of the stick. I can't buy "the worker deserves it all". No, the worker does not. But I can agree that workers deserve more than they're getting.
(In the cases where the workers either make their own tools or have the money to buy them, this argument breaks down. But in an industrialized society, that seems to be the exception, not the rule.)
Did those tools magically come into existence? Or were they made? Who made them? More workers. Where did the materials come from? More workers.
The point here is that everything we as a society do is so fundamentally interconnected that thousands of people contributed to pulling gold out of a mine, for example, both directly and through the tools that were created to make it possible then why are we concentrating the proceeds of this enterprise onto the capital owner who got a lease from the government (with the threat of violence backing it) just because they wrote a check to fund the operation?
> ... there's a third party in the situation
Yes, more products of labor.
> I can't buy "the worker deserves it all"
I don't believe you intended it this way but it reads as a false dichotomy.
I don't expect radical change in our economic system. I would be happy to see more cooperatives for housing and manufacturing (like Mondragon). This requires some class consciousness and collective action.
So much of our modern society deifies hyper-individualism. You ever wonder why that is? It's sold as "freedom" but it's really to manipulate you because there's a massive power imbalance between your employer and you. If you withhold work, most likely that employer will be fine. If that employer withholds work, you might end up homeless. The only way to counter that power imbalance is with collective action.
Modern political discourse is dominated by manufactured culture war issues. This isn't new. Post-Civil War there was fear in the South of emancipated slaves and poor white people uniting [1].
To be absolutely clear, I'm not accusing you of racism or similar. My point is to show how this is manufactured to divide workers. Even the idea of the "middle class" is intentionally divisive. Why do the interests of a white-collar (middle class) worker differ from a blue-collar (lower class) worker? Why are we making that distinction?
I'm pretty sure your economic terms are not what the consensus of professionally trained economists would say.
>>>Locally-owned businesses. That's socialism.
There is definitely nothing in the definition of socialism that says everything is locally-owned. Moreover, that can be a way to end up with things like Redlining and other institutional racial issues.
>>>There is no value without labor.
The great thing Marx did was show that everything could be converted to a value measured by labor. But, economists afterwards showed that once you have that conversion, you can do it literally with anything. We could have a system based on the number of bumblebees required to build a house. That is a normative judgement that labor is somehow special.
Now, our current implementation of Capitalism is clearly wreaking havoc on our environment. But it has brought the standard of living up across the entire world past a Malthusian cycle of more food means more people, means they eat the food, and we have starvation.
The same can be said for current implementations of Communism all across the globe.
Lastly, cooperatives may be a great solution for a lot of manufacturing and housing challenges. And when you get to the scale of a country, a co-op is just a government, and a capitalistic democracy feels a lot more like a co-op than a dictatorship or authoritarianism even with all its pitfalls. A populous who then really starts to demand through votes that we change to improve the blight of our fellow humans seems an even better place to live, if we can just get there.
> I'm pretty sure your economic terms are not what the consensus of professionally trained economists would say.
It's an oversimplification to highlight the main point: workers' relationship to the means of production. In capitalism, capital owners own the means of production. In socialism, the workers own the means of production.
IME most Americans not only don't know what socialism is (despite being opposed to it), they don't know what capitalism is either (despite supporting it).
> Now, our current implementation of Capitalism is clearly wreaking havoc on our environment.
It's doing an awful lot more than that. It's pillaging the Global South. It's impoverishing us under the massive weight of housing, medical and student debt. And it's quite literally killing people. People decry the failures of the USSR, for example, but 9 million people die of starvation every year. Why isn't this attributed as a failure of capitalism in the same way?
>> There is definitely nothing in the definition of socialism that says everything is locally-owned. Moreover, that can be a way to end up with things like Redlining and other institutional racial issues.
I read the OPs post as an example of propoganda (mega corp - capitalism, small company - socialism) not reality.
As wikipedia says, "modern mainstream economics rejects the LTV" (for very good reasons). It leads to some pretty obvious absurdities if you take it seriously. For example, 10,000 people digging holes should be more "valuable" than one guy designing a microchip, because hey! The holes take more labor.
Marx wrote a gigantic book called Capital and it provides a thorough analysis of investment and risk. He wrote a great deal of words describing how investment relates to surplus value (hint: investment is simply a capitalist's way of generating surplus value - profit, which is then used to generate more surplus value, which is... you understand the systemic contradiction here, I hope). You should probably read it if you want to discuss it!
Surplus-value as a notion is frankly completely barking mad, and bred from a mix of multiple different fallacies mixed together including the labor theory of value.
In what universe does water by the river cost the same as water in the middle of the Saharra desert? A plant worth the same whether it is local or highly exotic? Where buying lumber at $300 a cord to burn fair, but buying it for the same $300 a cord but operating a warehouse selling it for as so much as $301 a cord retroactively somehow robbing the lumberjack? The madhouse world of surplus-labor-value! Boy, if Lewis Carroll had a field day with imaginary numbers then he missed truly golden opportunities of exploring an utterly mental system which demands fixed globally perfect valuations to avoid exploitation!
> In feudalism, the artistocracy and th emonarchy extracted that value.
Feudalism was in some ways a bit kinder, because part of the basic arrangement was the expectation that the nobles would protect the peasantry (for pragmatic that's-where-the-food-and-supplies-come-from reasons, not ethical ones). Capitalism has no such expectations or incentives.
The difference between Mondragon, the kibbutzim, and other successful examples of collective labor, and the Soviet system, is precisely that the former are not governments, and operate in a capitalist system of property rights and free markets (in a practical rather than spherical cow sense of that term).
I'm all for more cooperatives, it's a good model. Operating in a system which doesn't compel that form of organization is what keeps them honest. Mondragon is a profitable company, emphasis on profitable.
The article talks a bit about how, while Mondragon is a pretty good deal for basic labor, they have trouble attracting high-demand talent like engineers, which they also need. In a free-market system, a worker's collective can solve a problem like that, by offering more perks, raising the 'level' for new engineering hires, waiving some amount of the up-front investment, or just getting by through, in effect, paying some of the salary in a nonmaterial reward of belonging to something which better meets some people's sense of ethics and fairness.
That's not how it works when the company you work for is also the police and the military. It's also not how it works when every company is compelled to organize itself this way. That compulsion leads to dysfunction, corruption, cheating, and at the extreme end, gulags.
So let's pass on all that. If you believe that worker cooperatives are a social good, as I do, buy stuff from them. Work for one, found one. It's working so far.
> The article talks a bit about how, while Mondragon is a pretty good deal for basic labor, they have trouble attracting high-demand talent like engineers, which they also need
Perhaps that's not inherent to high-demand talent, but Mondragons current composition and markets. I know a handful of engineering consultancies that are cooperatives in everything but name - and I know ofa couple that are legally coops.
The "soviet system" as you call, started (yes the revolution) with a slogan "power to the soviets". In the slogan the word "soviet" meant "worker coop".
This slogan was abolished when more central planning took over, and the word soviet become more associated with the central govt/ the state.
I didn't say "soviet system", I said "Soviet system", as in the Union of Soviet Socialist Republics. I do know what the word means.
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> The difference between Mondragon, the kibbutzim, and other successful examples of collective labor, and the Soviet system, is precisely that the former are not governments...
I've heard it put as "Socialism works great, as long as the socialist community gets to decide who is included."
I do feel like you've framed this as dichotomy: you either have a capitalist system or you have an autocratic centralized government.
Many socialist democrats (or democratic socialist, whatever your flavour) believe that collectivism need not be autocratic and all encompassing. The negative aspects you're describing, in my opinion, are the results of the fascistic elements of an autocratic communist regime. "The Fascist conception of the State is all-embracing..." and so on.
The liberty that open democracy promises is resistant (but not immune) to the kind of coercion you've correctly identified as being characteristic of the Soviet system.
It's not clear to me how this model can be meaningfully replicated. For instance corporations naturally minimize their labor costs according to the relative economic leverage of the participants often to the point of poverty vs those with little leverage whereas a cooperative would seem to be inclined towards decency at the cost of maximal profit.
This difference in profit is invested back into the company in terms of capital investment and lower prices allowing more capitalist exploitive corporations to out compete and ultimately buy or destroy coops.
Coops that exist in very small not very profitable niches may survive in the form of small businesses that make enough to survive but not to thrive its hard to see how this has any effect on the other 99.99% of the economy where most people are obligated to live.
The kibbutzim are failures propped up by generous government subsidies, using money taxed from capitalist businesses.
I've studied and visited Mondragon before, and hosted their students at my company. It's very cool, but I'm unsure how replicable the model really is.
My conclusion is that it emerged out of the unique environment of already high Basque solidarity, but even more so under Franco's oppression. After a few generations, they admit that the hardcore spirit is gone and made initiatives to try to restore it, but still some of the biggest co-ops have died or been sold off (ie Fagor).
My friends from there told me: "It's where your dumb cousin works", as it's very political with a lot of patronage kinds of networks that democratic elections at that scale tend to produce. They made a startup community there, but it seemed like most of the kids were trying to get out, not stay to reform the coop.
I think the Italian Emilia Romagna region cooperatives [1] may be a less centralized model that could be better, as it does away with the big organization that eventually rots, like any big old org.
[1] https://www.yesmagazine.org/economy/2016/07/05/the-italian-p...
Based on what I've heard I'd love to visit there and even have a chance to intern there. I'd like to see for myself firsthand what life would be like. Would it be boring? Would it be bureaucratic or unmeritocratic? Would that bother me personally? I don't speak Spanish, unfortunately.
Obviously this article gives a rosy picture. However, the renewed interest in alternatives is precisely due to the new forms of arbitrary oppression that 21st century capitalism inflicts on many people, so maybe that would be one pathway for Mondragon and other meta-coops to flourish. Who knows.
Moreover, it's not like actually-existing capitalism doesn't tend to produce its own forms of inequality. Maybe a sociologist or economist could show that the "patronage networks" in something like Mondragon are an effect of their structure but the overall negative outcomes are lessened/mitigated compared to the negative social outcomes of Western capitalism. A proper comparison would be an open research question.
That's too bad about Fagor, 10 years ago I ordered a pressure cooker from them but had it returned immediately due to an improper lid fit. That would've been around the time of its decline and eventual closing off. I ended up buying a 2x more expensive pot from a Swiss company, it's lasted me 10 years so far.
They also don't speak much Spanish there, as the Basques have their own ancient unique language (a non-Indo-European isolate actually) and culture due to their mountain isolation and resistance to everyone, even the Romans. The people I worked with there all spoke English.
You might try reaching out to these guys if you want to visit. They actually get a lot of visitors, and there's a whole tour program I did when I was there.
https://mondragonteamacademy.com/
As far as the effectiveness of Mondragon, I agree that we shouldn't judge it by capitalist standards, but more ask: Can it survive within capitalism while still doing well by its people?
I worry that Fagor, etc. may point to that not being long-term true, but it has been around for a long time, so maybe not. I more think that their model is hard to replicate outside of their high solidary cultural environment, rather than predicting their demise.
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thank you for these comments, makes sense to me.
Its interesting that Rojava wasn't mentioned here. After driving out Islamic State, they founded their own country in north east Syria, not widely internationally recognised yet but functioning much better than the rest of Syria.
They are still a developing country and by no means wealthy, but the average income in this area is double what it is in the rest of the country.
Their economy is built almost entirely on cooperatives. The government provides land and seed funding to get the cooperatives going https://www.hamptonthink.org/read/the-social-economy-of-roja...
Might be because since 2019 and the withdrawal of the US military presence in NE Syria, the relative prosperity of Rojava has plummeted. This draws into question exactly how 'autonomous' said autonomous zone was.
> This draws into question exactly how 'autonomous' said autonomous zone was.
It seems like you're conflating sovereignty with economic dependence, which are two distinct concepts—being entirely economic independent seems highly geographically dependent. Few regions in the world are lucky enough to even have this option. For instance, you can be economically dependent on neighbors but still locally determine who runs the local courts. So it's not great evidence of how their society is run, particularly when other states—say, Afghanistan, where the current government has clearly exercised local sovereignty—have similarly been affected by the withdrawal of US troops and the seizing of assets.
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Yeah that's on of the things that get hand-wavity when you bring up these city-state type plans as well as anarcho-whatevers. They generally wouldn't be big enough to defend themselves from religious extremists or nation states acting against them--many of them not even figuring in defense against other entities and saying "we're pacifists". That kind of stuff only works when external factors like aggressive neighbors don't figure in.
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Iraq and Turkey, as of a few days ago, are making a new agreement for a transport corridor and peaceful coexistence, which includes Iraq getting more reliable access to river water, and Turkey getting more reliable targetting access to Kurds with aspirations of self-rule.
Every regional power seems to periodically crush the population of their sector of Greater Kurdistan, and encourage their neighbors' sectors to start an insurrection.
The US has sacrificed these people over and over again in pursuit of foreign policy objectives.
https://www.theguardian.com/world/2019/oct/13/the-kurds-a-bi...
https://theintercept.com/2019/10/07/kurds-syria-turkey-trump...
If:
1 - Cooperatives excite you and
2 - You use social media
you might want to look at the social.coop Mastodon instance (or cosocial.ca if you're Canadian).
Not only has the community on both those sites been a breath of total fresh air for me, I am not worried about the server I'm on having decide between disappearing and selling ads, and I feel like I'm partaking in a social enterprise.
Just recently social.coop had an open vote on how to donate some of our surplus to the open software we use and organizations that promote cooperation. It's been so nice to see and be apart of.
Beware of social washing to justify higher costs.
cosocial.ca charges CA$50 for its annual membership. Omg.lol charges $20/year for Mastodon and a bunch of services and for $29/year, I can offer Mastodon, Lemmy, Matrix and Funkwhale, with 250GB of storage.
It's not "social washing" if it's actually a working co-operative.
We all collectively own the funds, and if we ever want to lower yearly rates or pay our members dividends from surpluses, members are free to put it to a vote.
Part of the reason we run a surplus is to deal with any unexpected costs (they don't just scale with users, but also the popularity of users on our server), but FWIW I think we should open up a pay-what-you-can tier much like social.coop has. Thanks for reminding me, I'll send it to the coop for consideration.
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That's neat! How is it funded?
By the members; we all pay a tiny bit into the co-op each month. Most people pay 1 USD or GBP per month, if you use some of the other services we offer through organizational memberships in other co-ops (ie. we're a member of meet.coop for video calls, May First Co-op for Nextcloud and email and what not, etc.) then some people pay a bit more (normally no more than 3 to 5 USD or GBP).
It's interesting to read about Mondragon in more detail. I just came across the term in Kim Stanley Robinson's solar-system sci-fi epic "2312." The book (highly recommended) heavily references Mondragon; that's the name for the alliance / co-op of all of the planets and settlements that aren't Earth or Mars.
Thanks for the book idea '2312', will check it out.
Just wanted to flag that there are areas in the US that co-operative enterprises do flourish and have knock-on effects. This is biased by my food co-operative experience but just to show that there is an alternative to unfettered capitalism where businesses help each other thrive.
- The Minneapolis/St. Paul region has so many food co-ops that there's a co-operative warehouse dedicated to serving them (and other businesses too) https://www.cpw.coop/
- New England has a multitude of 30-40 year old food co-ops (along with startups like mine) and has its own association of food co-ops to help advocate for better state policy/governance http://nfca.coop/
- National Co-op Grocers is a US-wide group that helps co-ops buy food at cheaper rates and provides a ton of great branding food co-ops who are members get to use https://www.grocery.coop/
I'd love to see more tech co-operatives sprout up someday... there is an alternative to VC that keeps ownership equal, and it's been all around us this whole time!
I also have a background in food co-ops (member owned), I was in the bakery of one for 7 years, then served on its board. Food co-ops are really interesting orgs because food is one of the things people can control in their lives so their feelings, neuroses, fears etc. come out.
When we expanded about 17 years ago we managed to drive a new Whole Foods that had sprouted across town out of business within a year. Haven't heard of that happening elsewhere. They had a terrible location which didn't help but I think it was more due to the loyalty of our customers who had buy-in (literally).
Are there any resources for learning about tech co-operatives in the USA?
Do you happen to know any (specifically in tech), that you would recommend?
Thanks!
I still need to finish reading it, but this was published last year on the topic: https://www.versobooks.com/products/2839-own-this
The anarchist culture of the 1800s and 1900s in Spain, especially the emergence of anarcho-syndicalist structures [0], is certainly one of the reasons for Mondagon's existence.
[0] https://en.wikipedia.org/wiki/Anarcho-syndicalism
>anarcho-syndicalist
I'm sure 99% of people first heard this term in the famous Holy Grail bit. I have never seen it used in the wild. Thanks!
you are overestimating the degree to which your personal social group is typical in the world by probably about a factor of 100
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Why aren’t there more of these if they work well?
When you start a co-op, just like any other bootstrapped business, you're staking your livelihood, but you're forgoing most of the upside. You also need several other people to agree with you. This screens out most of the risk, which is why they're perceived as working well. This works out great if you're lucky enough to be employed by one, but not great for people who need a job immediately.
That's a good question and it seems like it's difficult to separate from people's ideological ideas about whether they are good or bad.
My hometown in Oregon had a cooperative, Burley, that made bike stuff like trailers and tandems and some clothing. Word was that it was kind of dysfunctional because of how democratic it was even if all the people cared deeply. I think they finally ended up selling out to some outfit who scrapped everything but the trailers.
The paradox of worker-coops is that workers capable of successfully running businesses together are also capable of running businesses independently, so there's no need to form a co-op. It's those incapable of running a business individually or collectively that then form co-ops. Mondragon is the exception, not the rule.
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Considering that I just started one, the reason is, nobody will fund it
Why? Everybody with the money to start it, wants more money or special tax treatment via charity.
I’m actively funding ours myself for 0% return in order to bootstrap the infrastructure we need
Why don't workers unite to democratically manage production? The police, propaganda, wage slavery.
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A comment below suggests that they have a hard time recruiting engineers, but I believe also experts and talent in general..
There’s then also something deeper about making the trade-off between growth(rate) and stability..
OTOH photographer coops are quite common, here is a famous one https://en.wikipedia.com/wiki/Magnum_Photos
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There are a few. There's a tech coop federation in the UK for instance. A big hurdle for efforts like this is access to finance meaning they often have to be bootstrapped.
> Why aren’t there more of these
By historical reasons the Basque country has an special tax regime and economical benefits from the Spanish government. This may have an influence on the outcome. Is easier to win when the other run handicapped, and not so easy to replicate it if we remove that context.
Most people also ignores that this system exists. Out of Euskadi, the name is more associated to the (in)famous band orchestre Mondragon, that was an appropriately anarchical mess, part circus, part rock band.
Be afraid, very afraid: https://www.youtube.com/watch?v=XWKHnjWMTNI
There are more of them, but good design "just works" and so goes mostly unnoticed.
Actually, I wonder if there's a word for this effect?
I do not believe it is necessarily about that.
It might be a lack of education (not a value statement). Socialism in Spain was not established at once. It was an effort spanning many decades.
If we would suddenly find ourselves in a medieval kingdom we would certainly need time (and help) to adapt to that system. Likewise, people from that period would need time (and help) to adapt to ours. Regardless of whether it is better.
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Realistically Mondragon is rooted in Catholic social teaching (founded by a priest). Thus it requires someone to be motivated by something other than money. Religion is one of the few things that will be able to inspire such amounts of work while forgoing most economic upside.
Maybe nationalism can do that, but keep in mind that when this was combined with nationalism we got Nazism (Nazism took lots of inspiration from Austrian corporatism which was similarly influenced by Catholic social teaching here). I'm not sure it's either safe or advisable to do this aside from religion
They don’t allow genuine innovation in any shape or form, and that in particular leads to highjacking by bureaucrats and degradation. So they may work in short term (work for some at the price of oppressing the ones who don’t fit well into the collective) - I’m from USSR for example - yet the result is predetermined.
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Probably more influenced by the Falange driving against classic capital and communist analogs. This was setup under Franco's Spain.
But not BY Franco. Note in the article how the government removes social security support from the coops and they have to set up healthcare themselves.
Arizmendiarrieta wasn't a Franco follower at all. He fought with the Republicans and went to jail during the war. After that stopped writing in Basque, as that wasn't seen with good eyes in Franco times.
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The vast majority of Mondragon's revenue comes from foreign subsidiaries which, notably, are not worker-owned nor run democratically.
I love how this article about a co-op that values workers opens with a clearly AI-generated image that is indirectly derived from the effort of many unpaid artists.
Just like those artists have benefited from the unpaid effort of their ancestors who invented fire. Please let's stop acting as if contributing to civilization is some kind of horrible injustice.
If you make a picture and someone steals it, okay that's not fair. If you make a picture and someone makes a copy, also not fair. But if you and million others make pictures, and someone else looks at them and learns how to make their own pictures... that's basically how people were doing it since ever. Except now this process can also be automated.
Every artist who never studied the art of others, and invented their own style from scratch, has a right to complain, of course.
A thing that is kind of glossed over is: what is "ownership" when we talk about worker-owners at cooperatives?
> The profits generated by each cooperative are put to work for the benefit of the greater whole. Each cooperative gives 14-40% of their gross profits to their division (depending on the division), and another 14% to their parent company. The rest are invested back in the cooperative (60% of net profits), distributed among their employees (30% of net profits), and donated to social organizations in their communities (10% of net profits).
> Workers buy into their cooperative when they become employees, investing up to €16,000 into a personal equity account. They pay 30% of that investment upfront, with the remainder taken out of their paychecks over following 2 to 7 years. After two years with the organization, workers become “members” and start earning interest on their investment at a rate of at least 7.5% annually. If the cooperative does well, they might earn much more than that. Workers can pull this money out of their accounts when they leave the cooperative or retire.
... so it's not ownership, right? It's profit-sharing while you're an employee (the "interest" the worker gets is out of that 30% of net profits discussed previously), but you don't own shares in the company that you can then sell, like an employee who receives an RSU or receives and exercises an option.
In some sense, corporate employees that get some form of equity as part of their compensation are more literally worker-owners. I think the problem with American companies that have an employee stock plan is that the employee stock pool is a small slice of the total ownership, and employees don't participate in any real democratic governance. Despite being shareholders, they get far less information about the financial health or strategic position of the company than investors with board seats. Real partial ownership doesn't lead to real power or access to information. And the aim of the company is still to serve the larger investors, not the workers.
> In some sense, corporate employees that get some form of equity as part of their compensation are more literally worker-owners.
As soon as a worker leaves or sells their shares, these shares aren't worker-owned anymore and the interests of their owner can quickly diverge from the ones of a worker. That's roughly what a coop fixes I think.
I can kinda see how one can argue that this is a feature rather than a bug, but I still think this points to the more distinctive feature in these coops being democratic governance of workers rather than ownership.
I own shares of past companies I've worked at, but I don't have any representation in how the company is run. It doesn't matter if my interests have diverged from current workers, because I have no influence.
If a company compensates its employees partially with RSUs, and those employees own and can eventually transfer those shares freely, and the company was also democratically governed by its workers ... could you not have "real" ownership (by current and past workers) and still protect current workers' democratic governance?
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Not all that different from shares in a private company, or an interest in a partnership or multi-member LLC. Many corporate shareholders cannot freely sell; the idea of being able to sell stock for cash whenever you want to is unique to public companies.
And yes, the real problem is information asymmetry. This is always the real problem. Arguably the secretary who knows everything that's going on with the company via watercooler talk has more power than the CEO whose underlings tell him only what he wants to hear. A lot of corporate owners, even powerful shareholders like the Crown Prince of Saudi Arabia, have been bilked by unscrupulous but savvy management who knows how to control information flow.
A workers cooperative is owned by its current workers. Are you going to argue that consultancies and law firms are not really owned by their current partners, either?
Profits belong to the people who create them, not to people who used to work at the same company in the past. Expecting future employees of a company to work for ex-employees in the future is unfair. Having worked for a company, doesn’t entitle anyone to remain on the paycheck until death, despite not working there anymore.
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I think that more important than ownership is the purpose of the company. Most companies have the purpose of making money. Few have a purpose which includes contributing to quality of life, unless that’s something which can be sold for a profit.
Not just making money, but making more money than they did last year, forever.
Like a company can't just be cool with the fact that they serve a profitable market niche and gainfully employ people. Investors need capital gains and won't just be satisfied with getting reliable dividends!
Stock buy backs ruined corporate governance...
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> ... so it's not ownership, right?
"Ownership" as in: You control it, and you ought to control it, too.
Control is exercised by means of the democratic process (the worst type of process except for all others).
When they leave or retire how are the earnings taxed?
Seems to be not only a Spanish but a predominantly Basque enterprise. Cooperatives are relatively huge in Italy, too https://coops4dev.coop/en/4deveurope/italy Although the structure is a bit less monolithic than Mondragon.
For those astute, workers owning the means of production should sound familiar. Mondragon demonstrates that it can scale.
> Mondragon provides us with a successful, working model. It’s not throwing out capitalism, it’s creating a better form of it.
Can any people from this region tell us what the downsides of working for Mondragon are? The article only touched on lower pay.
Also how much does the President of the parent Mondragon Corp get paid? The often cited 6:1 or 9:1 lowest paid worker to CEO seems to be applied to CEOs of the various corporations not the president of the parent company.
In the OP:
“Lorenzo estimates that the president of Mondragon is the highest-paid position (level 6) with a salary of around €200,000. Managers and directors earn between €80,000 and €120,000.”
So the president makes less than a middle manager in a Fortune 500 company. I hope there are some other benefits…
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>If the model is a good one, detractors say it can’t be replicated outside of the Basque Country, and there’s some truth to that.
The author doesn't speculate why, but I'd guess it's partly due to Basque ethnic solidarity. Mondragon sounds a lot like the kind of late 1800s / early 1900s syndicalism that later evolved into Italian fascism and German National Socialism.
Of course, another big "collectivist capitalism" success story is China, which is also fiercely nationalist.
I don't see either of those models working in the West on a large scale any time soon.
>Of course, another big "collectivist capitalism" success story is China, which is also fiercely nationalist.
Yugoslavia had a dynamic market socialist economy and was powerful enough to align against the USSR for decades, yet was multi ethnic.
It suffered from the typical authoritarian weak succession and was ultimately destroyed by its resurgent ethnic nationalism.
I've heard this story ever since I was a shit-eating Ron Paul voting right-libertarian. The whole "collectivist success requires ethnic purity" argument. I don't buy it. It is, inevitably, either an excuse to destroy functional collective institutions, an excuse to advocate for ethnic cleansing, or both.
To elaborate on my previous comment: if you want people to be less individualistic and more community-minded, and especially if you want economic organization to be more cooperative, decentralized and bottom-up, then people are going to need to feel a deep sense of buy-in and belonging, and you don't really see that in an undifferentiated mass of atomized "consuming and producing units".
But you do see it among the Amish, and the Basques, and the Boers, and in the kibbutzim, and in families generally, because kin relations are meaningful among humans and elsewhere in the animal world.
And I'm not arguing that "collectivist success requires ethnic purity", just noticing a correlation. Where you see apparent altruism in economics -- including nepotism in hiring -- you tend to find kin relations.
Probably the game theorists and evolutionary psychologists have it figured out.
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Now Basque country is not considered "the West"?
>"on a large scale"
The importance of "leftist" fascism is overplayed.
"Socialism" back then, much like "Human Rights" today, was generally associated with what is morally right. It was not an ideology of extremist groups. Fascism "evolved" from socialism same as everybody and their mother evolved from it.
And because of its dominance, everybody tried to exploit it, too. So you called your organisation "National Socialist Party" and your heads of propaganda copied the rhetoric.
Also, libertarian socialism was nowhere as developed as in Spanish society at that time. This is not the most surprising society to generate Mondragon.
>Mondragon sounds a lot like the kind of late 1800s / early 1900s syndicalism that later evolved into Italian fascism and German National Socialism.
Sure, if you dishonestly use their slogans rather than policy decisions as your barometer. What actually happened is that fascists co-opted the language of the left and deployed it in service of entirely different ends.
Another take on this kind of subsidiarity approach is Joel Salatin's "Memorandum of Understanding" which he talks about in detail in "Stacking Fiefdoms": https://www.youtube.com/watch?v=EbJc8i5B9RU
I read about Mondragon in Pickety's works. That's why I went to Mondragon. I was deeply disappointed, the city and the surroundings look very sad. It reminded me a lot of the former DDR (german "democratic" republic which was under russian control).
Basque people have a distinct culture. You can often figure out someone comes from there just based on their hairstyle, way of dressing or attitude. They will usually favor practicality and durability over style.
You may think it is sad, they may just think it is the way it should be done and that's it. I don't think you can judge the coop concept based on the impression you got from the city. Its inhabitants may on average feel happier than those where you live.
Mondragón is where it started, to raise the standard for disadvantaged workers.
But lots of employees live and work in much nicer spots like the San Sebastián area.
Many engineering and hardware companies all around the Basque Country are owned by Mondragón.
It's located in Spain, a country not known for its vast wealth. Plus, it's in a special administrative region in Spain, the Basque Country. They enjoy subsidies and favorable treatment from the regional government.
Basque country is one of the richest regions in Spain, which is already a highly developed country. Not sure what you are talking about.
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> a country not known for its vast wealth
Its looting of the gold and silver from S. America apparently didn't help.
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Are you saying that Mondragon is a failure because you found the local architecture disappointing?
"Could we eventually create a capitalist paradise where democratically run companies use their profits for the good of their worker citizens? Could that even replace our existing governments?"
Dude reinvented the socialist mode of production but renamed it "capitalism" instead lmao
It's a shame there's not a YC like incubator for tech worker coops, cut out the VCs and have milestone based funding in exchange for a percentage of future profits that would be reinvested in future projects.
It's inherent to the way a coop works that it's not possible to follow the same path. There is no 7% equity to be given, only the repayment of a loan. The coop model does not promote taking risk and hence have many fail, yet a few grow very quick.
Another problem is law. At this point it favors the common ownership forms of business. Starting a coop is hence much harder than it should be. This is what i think where the "it's a shame" make most sense. We should make w-coops easier to start and give them tax benefits as they are on the long run much more beneficial/ less detrimental to society.
A possible model is to divide your shares into ownership/control class shares (reserved only for workers) and profit shares which can be bought/sold by third parties. This gives workers ultimate control over the venture while allowing third-party investment. I don't know if this has been implemented anywhere, but it's a possibility. It's not going to fuel explosive growth like VC funds do, but TBH I'm finding as I get more experienced that those types of ventures generally end up being trash dumpsters once the honeymoon phase is over.
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I'm not a finance person, but my understanding is that co-ops more often raise capital with traditional loans.
While I believe you are correct that co-ops are not a great fit for the growth business strategy that VCs make their bread and butter on, I believe that on many metrics co-ops tend to be more sustainable than the corporate alternatives[0]. This means they are more likely to be around tomorrow to pay off a loan.
All this to say, it would be great to see more capital for co-ops in the form of traditional loans with favourable interest rates.
[0] https://www.theguardian.com/social-enterprise-network/2014/m...
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Are there countries with legal structures more friendly to worker coops?
For example I know Germany has structures like works councils that are foreign to us in N. America (though this is not a worker coop structure). However these structures historically arise from labor movements, not from top-down planning from authorities or electoral politics, which takes more than thinking up a design for a better society without considering who and why it would be implemented
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Yeah I'd imagine it would have to be a single holding company that has members join, instead of investing for equity.
So as an example you could have hypothetical opensource.coop that funds open source projects like signoz or posthog, giving the team a year of runway in exchange for a cut of future profits, with follow on funding if certain milestones are reached.
Same could work for "indie hackers" or boostrappers, merge a few successful companies into a holding company that shares office space, accounting, legal and etc, and reinvests a fixed % of profits to seed new projects that apply to join.
Isn't that almost the opposite?
In a Co-op you put up your own money to buy into a co-op. This is the opposite of VC where an external party joins your org with money.
So a co-op model would only help to serve the already wealthy.
However, maybe it would be interesting to have a co-op for developer resources for example. As in companies or startups can buy into the coop in return for cheaper rates and more vertically integrated team augmentation.
Imagine a indie hackers founders cooperative, you take a few successful bootstrapped founders and start a new holding company that shares an office space and has staff to handle legal, accounting and all the other stuff that most engineers hate to deal with.
You offer founders that apply a coworking space and a stipend that can get renewed each year if the members of the coop agree to keep funding it. In exchange the new member commits to giving up 10% of their future profits that get split into an investment budget and dividends.
If a company is failing the members can vote to stop funding them and set them free of the agreement.
If a company needs way more funds and VC route makes more sense you spin it out as a c corp, convert the 10% profit agreement into equity and let them raise funding like any other startup would.
Start.coop (https://www.start.coop/) comes to mind, but I know I've read about others as well. I don't recall what their exact model is, so it likely doesn't match perfectly with what you're describing.
There is no value without labor.
This was recognized by everyone from Karl Marx to Abraham Lincoln to Adam Smith. Smith even conceded that profit was impossible if workers retain their surplus value, which is exactly the point.
I bring this up because that's what capitalism is: draining the surplus labor value from workers to the capital-owning class. In feudalism, the artistocracy and th emonarchy extracted that value. Jeff Bezos is the new king.
Why do I mention this? Because it wasn't that long ago that this view was universally accepted. The Red Scare post-WW2 spread a lot of damaging propaganda that has led ordinary people to fight for the ultra-rich to have even more money, to their own detriment.
Walmart killing all your local businesses then leaving, leaving you in a food desert with a Family Dollar store maybe. That's capitalism. Locally-owned businesses. That's socialism. Monsanto agribusiness? Capitalism. Family-owned farms? Socialism.
Something like Mondragon shows that large-scale cooperatives can work. And the reason why these sorts of things aren't more prevalent is that laws are passed to make them difficult to set up or outright illegal. Many US states outlaw municipal broadband, for example.
And any country in the last 70 years that even thinks about nationalizing resource extraction finds itself having a coup that nearly always has the CIA's fingerprints over it.
Or we simply starve them to death under the sanitized euphemism of "economic sanctions" (eg Cuba, Iraq, Venezuela). I really want people to understand that we're not doing this for any moral reason. We're doing it at the behest of Western companies who would prefer to steal the riches of these countries.
Co-operatives can go a lot further than manufacturing too. It can be a solution for housing. Housing cooperatives cut out landlords, who are rent-seeking both literally and figuratively.
> There is no value without labor.
While this is generally true, it's also not the entire equation. For example, there's no gain without risk.
- When I work for someone else, I am offloading some of the risk to that person/owner. When someone starts a company and hires other people... if the company goes belly up, the founder loses their investment; the workers find another job.
- When I rent from someone else, I am offloading the risk of owning a property to someone else. If I get a job across the country, I don't need to sell my house at a loss to move.
None of this justifies people making insane amounts of money while others are starving. But neither should the worker expect to reap all the benefit unless their also willing to take all the risk.
> the founder loses their investment
So does the bank, and the state that (more often than not) subsidised said investment through diverse vehicles. If the bank goes belly up, we've seen what happens, we collectively contribute to save them... because we're collectively sharing all the risk of investment in our financialized economies.
I agree that some people don't want risk and others do, but as soon as you start sharing ownership that dichotomy simply disappears.
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> When I work for someone else, I am offloading some of the risk to that person/owner.
Workers generally risk their lives or simply injury. Owners "risk" capital. I put that in quotes because our government is typically set up to rescue failing businesses and by that I mean bailing out the owners. If the business fails, the owner simply has less money or they have to become a worker.
So who is really taking a risk here?
> When I rent from someone else, I am offloading the risk of owning a property to someone else.
We shouldn't treat housing as an investment vehicle. It is shelter and necessary to live. Every level of government is subordinate to the cause of increasing property prices as society increasingly views housing as a vehicle to build generational wealth.
The majority of housing in vienna is state-owned (so-called "social housing"). Any kind of state housing has been successfuly propagandized as a "slum" ("project") but there's no need for that to happen. The UK, prior to Thatcher coming along and dismantling the whole thing, almost completely got rid of landlords simply by being the buyer of last resort for owners that wante dto sell.
> None of this justifies people making insane amounts of money while others are starving
Our economic system is predicated on withholding basic needs for profit.
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The nuance in this argument is that everybody shares risk.
Workers take risk not only of the financial kind (choosing to take a job at company A instead of B is a bet), as well as physical risk most times.
If we believe shareholder of a oil company is taking more risk than the worker in a platform, we value capital more than labour.
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there is a risk for the worker and renter, too. and opportunity costs.
my shelter not being destroyed is extremely more important to me and my life than my landlord who has insurance for such things, especially in a place with a housing vacancy less than 1% (aka very very hard to find housing). if i leave, they will have no problem finding a tenant to take my place. any repairs and maintenance are essentially paid for by my rent. they raised property taxes? no problem, just raise rent...
from my POV, seems like a low risk investment to be a landlord.
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> There is no value without labor.
Yet wine is higher valued than grape juice.
Value can clearly exist without labor.
Winemaking requires far more resources, labor, skill and time than simple grape juice production.
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> There is no value without labor.
Plausible.
But there is very little value without tools. In fact, one could argue that all material progress has been in the form of better and better tools. One person with a combine beats 100 people with sickles.
Those tools are necessary for almost all of the value that labor produces.
So if we want those tools, in the real world we need to pay the producer of those tools. (Or make them ourselves, which is possible, but runs into division-of-labor issues.) The people who manufacture combines aren't a charity; they want to receive the value of their work too.
And unless the farmer (or custom cutter) has the money to buy the combine, then there's a third party in the situation - the capitalist, the person who provides the money to buy the tools that will give the increased productivity. That person usually isn't a charity, either. They need to get some return on their money.
But the place where I at least partly agree is this: The worker who knows how to use the tools is deserves at least part of the value provided by using the tool. The tool-maker deserves part of the value; the capitalist deserves part of the value; and the worker also deserves part of the value. (If you don't like the word "deserves", well, without all three parties, the value isn't produced, and none of the three are charities, so if we want the value, we need to give them part of the returns.)
And currently, you can make a very solid case that the worker is getting the short end of the stick. I can't buy "the worker deserves it all". No, the worker does not. But I can agree that workers deserve more than they're getting.
(In the cases where the workers either make their own tools or have the money to buy them, this argument breaks down. But in an industrialized society, that seems to be the exception, not the rule.)
> But there is very little value without tools.
Did those tools magically come into existence? Or were they made? Who made them? More workers. Where did the materials come from? More workers.
The point here is that everything we as a society do is so fundamentally interconnected that thousands of people contributed to pulling gold out of a mine, for example, both directly and through the tools that were created to make it possible then why are we concentrating the proceeds of this enterprise onto the capital owner who got a lease from the government (with the threat of violence backing it) just because they wrote a check to fund the operation?
> ... there's a third party in the situation
Yes, more products of labor.
> I can't buy "the worker deserves it all"
I don't believe you intended it this way but it reads as a false dichotomy.
I don't expect radical change in our economic system. I would be happy to see more cooperatives for housing and manufacturing (like Mondragon). This requires some class consciousness and collective action.
So much of our modern society deifies hyper-individualism. You ever wonder why that is? It's sold as "freedom" but it's really to manipulate you because there's a massive power imbalance between your employer and you. If you withhold work, most likely that employer will be fine. If that employer withholds work, you might end up homeless. The only way to counter that power imbalance is with collective action.
Modern political discourse is dominated by manufactured culture war issues. This isn't new. Post-Civil War there was fear in the South of emancipated slaves and poor white people uniting [1].
To be absolutely clear, I'm not accusing you of racism or similar. My point is to show how this is manufactured to divide workers. Even the idea of the "middle class" is intentionally divisive. Why do the interests of a white-collar (middle class) worker differ from a blue-collar (lower class) worker? Why are we making that distinction?
[1]: https://bittersoutherner.com/from-the-southern-perspective/m...
I'm pretty sure your economic terms are not what the consensus of professionally trained economists would say.
>>>Locally-owned businesses. That's socialism. There is definitely nothing in the definition of socialism that says everything is locally-owned. Moreover, that can be a way to end up with things like Redlining and other institutional racial issues.
>>>There is no value without labor. The great thing Marx did was show that everything could be converted to a value measured by labor. But, economists afterwards showed that once you have that conversion, you can do it literally with anything. We could have a system based on the number of bumblebees required to build a house. That is a normative judgement that labor is somehow special.
Now, our current implementation of Capitalism is clearly wreaking havoc on our environment. But it has brought the standard of living up across the entire world past a Malthusian cycle of more food means more people, means they eat the food, and we have starvation.
The same can be said for current implementations of Communism all across the globe.
Lastly, cooperatives may be a great solution for a lot of manufacturing and housing challenges. And when you get to the scale of a country, a co-op is just a government, and a capitalistic democracy feels a lot more like a co-op than a dictatorship or authoritarianism even with all its pitfalls. A populous who then really starts to demand through votes that we change to improve the blight of our fellow humans seems an even better place to live, if we can just get there.
> I'm pretty sure your economic terms are not what the consensus of professionally trained economists would say.
It's an oversimplification to highlight the main point: workers' relationship to the means of production. In capitalism, capital owners own the means of production. In socialism, the workers own the means of production.
IME most Americans not only don't know what socialism is (despite being opposed to it), they don't know what capitalism is either (despite supporting it).
> Now, our current implementation of Capitalism is clearly wreaking havoc on our environment.
It's doing an awful lot more than that. It's pillaging the Global South. It's impoverishing us under the massive weight of housing, medical and student debt. And it's quite literally killing people. People decry the failures of the USSR, for example, but 9 million people die of starvation every year. Why isn't this attributed as a failure of capitalism in the same way?
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> our current implementation of Capitalism is clearly wreaking havoc on our environment
Communist countries are the most polluted ones.
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>>> Locally-owned businesses. That's socialism.
>> There is definitely nothing in the definition of socialism that says everything is locally-owned. Moreover, that can be a way to end up with things like Redlining and other institutional racial issues.
I read the OPs post as an example of propoganda (mega corp - capitalism, small company - socialism) not reality.
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How much labor were they putting into those 1960s California starter homes!?
> Co-operatives can go a lot further than manufacturing too. It can be a solution for housing.
An interesting example of this in an article published yesterday (a housing/renovation co-op operating in Baltimore).
https://www.theguardian.com/business/article/2024/sep/03/wat...
> There is no value without labor.
is this a serious statement?
He's a Marxist and believes in Marx's labor theory of value.
https://en.wikipedia.org/wiki/Labor_theory_of_value
As wikipedia says, "modern mainstream economics rejects the LTV" (for very good reasons). It leads to some pretty obvious absurdities if you take it seriously. For example, 10,000 people digging holes should be more "valuable" than one guy designing a microchip, because hey! The holes take more labor.
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Not only is it serious, it’s the central argument of all political systems since there have been political systems.
Most likely a message that's lost on anyone offering oblations while facing Cupertino everyday.
More importantly, a message lost on an audience who largely is dreaming of being one of the exploiters.
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> There is no value without labor.
True, but there is also no value without investment and risk. Marx's failure was ignoring the other two ingredients.
Marxism is building a road with hundreds of laborers with shovels. Capitalism is one guy with a bulldozer.
P.S. Cuba has no riches to steal.
Cuba’s riches are Florida’s electoral votes, often hinging upon the sentiment of the exiles in Miami-Dade County. Plus, their whole cigar thing.
Marx wrote a gigantic book called Capital and it provides a thorough analysis of investment and risk. He wrote a great deal of words describing how investment relates to surplus value (hint: investment is simply a capitalist's way of generating surplus value - profit, which is then used to generate more surplus value, which is... you understand the systemic contradiction here, I hope). You should probably read it if you want to discuss it!
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Surplus-value as a notion is frankly completely barking mad, and bred from a mix of multiple different fallacies mixed together including the labor theory of value.
In what universe does water by the river cost the same as water in the middle of the Saharra desert? A plant worth the same whether it is local or highly exotic? Where buying lumber at $300 a cord to burn fair, but buying it for the same $300 a cord but operating a warehouse selling it for as so much as $301 a cord retroactively somehow robbing the lumberjack? The madhouse world of surplus-labor-value! Boy, if Lewis Carroll had a field day with imaginary numbers then he missed truly golden opportunities of exploring an utterly mental system which demands fixed globally perfect valuations to avoid exploitation!
> In feudalism, the artistocracy and th emonarchy extracted that value.
Feudalism was in some ways a bit kinder, because part of the basic arrangement was the expectation that the nobles would protect the peasantry (for pragmatic that's-where-the-food-and-supplies-come-from reasons, not ethical ones). Capitalism has no such expectations or incentives.
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