May/June 1984 RAIN Page 15 the effects of technological choices on democratic forms. Nonetheless, what they have built is impressive. Their democratic model guarantees that all people will have a voice. By clearly separating rights of ownership from rights of membership, they have ensured that unequal distribution of ownership among workers (every worker must be an owner to some degree) will never lead to unequal rights of participation in the governing of the firm. One person, one vote is the rule. Many observers have highlighted three aspects of the Mondragon co-ops that point out the main differences between Mondragon and less successful cooperative experiments. First, the Mondragon cooperatives have succeeded by some combination of sound intuition and simple luck in fashioning a structure in which every worker can be an equal member without necessarily being an equal owner. The form they developed is called "internal capital accounts." Rather than go into a lengthy explanation of these here, I refer readers to the excellent report by David Ellerman (see access). Eller- man explains how this seemingly innocent structural innovation was highly important for the expansion and dynamism of the cooperatives. Second, members of the Mondragon cooperatives unabashedly embrace technological and market sophistication. The Mondragon cooperatives have succeeded not by holding to the correct beliefs but because they produce excellent dishwashers, refrigerators, electronic machinery, machining tools, pipes and valves, even bathroom fixtures. It would be a mistake to see Mondragon members as social militants who got lucky in the marketplace. They are devoted engineers and business- people who also happen to believe strongly in the primacy of labor over other factors of production. That combination is a new one for American social activists. Third, the federation makes wise use of dynamic linkages. Mondragon includes more than factories. It also includes one of Spain's best-regarded technical universities. It includes a venture capital-cum-consult- ing firm with 116 employees, whose expertise includes marketing, engineering, finance, product development, and personnel policies, as well as real-estate and industrial-building development. It includes a social-security and medical cooperative to serve those needs of the federation's members. And over all is the bank, with which each cooperative must sign a contract of association that assures mutual support as well as uniform adherence to democratic principles throughout the federation. With all these institutions under one banner. Mondragon has vastly increased its ability to exploit whatever opportunities present themselves. And the ubiquitous democratic forms are the best guarantee that these large, interconnected institutions will remain flexible and dynamic. There may be other lessons to be found in the 30-year history of the Mondragon co-ops. More important than any list of lessons, though, is the challenge that Mondragon presents to progressives. That challenge is to recognize that whoever controls the production of goods and services controls social life on a large scale, because the satisfaction of needs is always the first order of life. The challenge also implies that if progressives want to have a say in how production for needs will be organized, then they have to be willing to get involved in production itself. The Mondragon cooperatives may not be a perfectly realized democracy, but it is clear they are committed to pursuing that goal—clear not just by their words but by their deeds. (A good example is the three- to-one ceiling on the ratio of highest to lowest wages.) If others know a better way for people to cooperate in producing their livelihood, then let them try. The Mondragon challenge demands simply that we do try. □ □ ACCESS: Cooperative Ownership The Socialization ofEntrepreneurship; The Empresarial Division of the Caja Laboral Popular, by David P. Ellerman, 1982, 51 pp., $6 from: Industrial Cooperative Association 249 Elm Street Somerville, MA 02144 The Industrial Cooperative Association (ICA) is one of the oldest, and best, of the groups promoting Mondragon-style cooperatives in the U.S. Since 1978, it has helped a handful of American firms structure themselves around the Mondragon model. Last year the ICA turned its attention to Mondragon itself and produced a fine study of the federation of cooperatives, with the emphasis on the activities of the Caja Laboral Popular, the federation's central bank. Two ICA members visited Mondragon in summer 1982 with several other representatives of the American cooperative movement. The report is based on their extensive interviews with the leaders of the Mondragon movement. David Ellerman, author of the study and a cofounder of the ICA, has also written several excellent essays on the theoretical and legal background for workers' cooperatives. He has a subtle understanding of economic democracy, and he writes clearly and with force. Most importantly, he is good at exploring the political aspect of cooperatives without distorting the facts. He is factual and opinionated at the same time. Socialization of Entrepreneurship has all these qualities, as well as a sizable chunk of useful insights into the history and current workings of the Mondragon network. The emphasis, as the title suggests, is on the system's highly successful program for starting new industrial cooperatives. Ellerman claims this entrepreneurial success is especially significant because the Mondragon federation is neither a conventional private corporation nor a government bureaucracy. Instead, it is a "labor-based democratic social institution." So different is this from traditional private or public bureaucracies, says Ellerman, that the example's success should allow progressives in the U.S. finally to "get beyond the poverty of the traditional public/ private debate." What then? No doubt, Ellerman would have us begin the hard work of building an American Mondragon-style cooperative movement. This book, and the other activities of the ICA, will certainly aid in that process. Write to ICA for the latest news of its million-dollar loan fund, and its consulting projects with worker cooperatives, and for a list of its excellent pamphlets and essays. —Scott Androes
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