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Business as if human beings mattered more than profit

Posted by on in Culture Blogs

Capitalism seems invulnerable today not because anyone likes it, informed decent people do not, but because it is hard to imagine a realistic alternative. State socialism failed, and failed in a horrible way.  Going back to the land is impossible for more than a relative few of us.  Markets work better than explicit controls and markets seem inevitably to generate capitalism.  We seem trapped. 

But markets are not as predictable as economists claim and most economists confuse their theoretical categories with the real world of men and women. Consider the Mondragon cooperatives   in the Basque country of northern Spain. In September, 2012, I had the opportunity to visit these cooperatives in September of 2012 as part of an annual study group organized by the Praxis Peace Institute.  Given all that I had heard, I felt that while I could not easily afford to go financially, I could not afford not to go intellectually. 

Here is why.

About 50 years ago Basque country was Spain’s poorest region, one of beautiful but steep mountains, narrow valleys, and a population where many had to seek work abroad.  Basque sheep herders were long a well known presence in the American West.

Today the Basque region is Spain’s most prosperous, and compares well with the most prosperous regions of Europe.  Workers’ cooperatives were the economic engine for this transformation, not capitalists.  The largest and oldest of these is the Modragon cooperative. Today the region’s economy of worker cooperatives encompasses hi tech industries, agriculture, higher education, large retail outlets, traditional manufacturing, housing, and much more.  It even includes Spain’s most solvent big bank. Total members of the Mondragon co-operatives now number over 80,000.

Within each cooperative management is chosen by and from among the workers. Even top managers can never be paid more than six times the lowest ‘wage’ in that particular firm. In Spain as a whole that figure is about 18 times, and in the US now an obscene many hundreds of times. 

As a developmental model the Mondragon cooperatives are exceptionally successful.  During their first 25 years 86 cooperatives organized along these lines were started. Only one failed. Today there are 289 Mondragon businesses and co-operatives and the huge economic crisis in Spain has claimed only one more.  Two failures in 289 enterprises over 50 years time. Spain’s current unemployment is well above 20%, as high as 25%.  The Mondragon cooperatives had zero % unemployment until one of their largest firms went under a few months ago due to the crisis.  Since then half of those workers have been re-employed by the cooperatives while the others are given retraining and most of their old income.  They are doing far better than Spain as a whole.  Truly they are a viable alternative to capitalism. 

There have been no Wall Street Journal articles on Mondragon, no TV specials on how these organizations have proven so resistant to the economic catastrophes hurting so many millions.  Instead in America we hear how the 1% “create jobs” that in practice do not exist and how they are the “makers” as compared to the “moochers” though they invent nothing, create nothing, and in many cases simply gamble with others’ money. Politicians extol the sociopathic doctrines of Ayn Rand’s Atlas Shrugged rather than the capacities and intelligence of most citizens. Workers supposedly lack the skills and foresight to manage their own lives, let along something a big as a factory.

The “spark plug” for this development was a Catholic parish priest, Fr. Jose Maria Arizmendi.   Under his leadership a small college was created, teaching engineering and the Catholic doctrine of labor’s superiority over capital.  This doctrine, which I will describe in my third column in this series, was essential to Arizmendi’s efforts and is not so much narrowly Catholic as broadly humane.  Later some of the college’s graduates founded a small factory, producing paraffin stoves. 

The factory prospered, and by 1958 had grown to 143 worker-members.  They were also actively assisting in creating other worker cooperatives. In 1959 Arizmendi urged creating a savings bank, Caja Laboral Popular,  the “Bank of the People’s Labor” to be independent of capitalist financial institutions. This bank was also to be a cooperative owned by its founding co-operatives and its own employees. One worker who would later become a leading Spanish banker told Arizmendi

“yesterday we were craftsmen, foremen, and engineers. Today we are trying to learn how to be managers and executives. Tomorrow you want us to become bankers. That is impossible.”

The bank is now Spain’s 7th largest. 

When I was there the president of the bank spoke to us, and his initial remark was “As we all know, capitalism does not work.” He was speaking in terms of working at improving human well-being. The word is slowly getting out.

Today the Mondragon cooperatives’ example is inspiring a new round of cooperative enterprises in different countries, including here In Northern California. As they do, they demonstrate people do not have to be Basque to exercise intelligent control over their place of work.

Let me illustrate by describing one very successful example is near where I live.

The Alvarado Street Bakery

Located in a modern office park in Southeast Petaluma, the Alvarado Street Bakery  seems far removed from its origins 30 years ago as a small quasi-hippie bakery. But unlike the more traditional businesses around it, the bakery is a worker cooperative, currently with 111 members.  To the uninitiated its hippie roots are visible only in its name and its trademark cat, Greta, curled atop a loaf of bread as the company’s logo. (Greta was their first organic pest control technology.)

To the initiated the bakery is an example of a road Americans can still take to reclaim the American Dream from its current corporate nightmare, a nightmare promising far worse to come

Organized like Mondragon, the bakery’s members are not so much its owners as its citizens.  Unlike shares in corporations and orthodox co-operatives, voting rights arise from working in the bakery, not from buying a share.  Members have to buy shares, but share prices are purposely kept low.  In this vital respect the bakery is more like a self-governing community than a typical business enterprise.  But it is a community that survives by producing products consumers want, such as good bread.

The quality of its breadis reflected in its profits.  The average worker’s income at Alvarado Street in 2012 was $68,000  plus a percentage of profits, based on the number of hours worked. There are time cards at the bakery, but rather than enforcing managerial demands they measure every worker’s right to a share of the profit.  Some workers receive more in disbursement than its CEO, Joseph Tuck, because, as he emphasized to me, they worked longer hours.  Last year these profits added an average of $18,000 to everyone’s pay.  In addition to this $86,000 workers receive generous vacation time, maxing out at 6 weeks annually after 7 years with the company. This includes the right to roll one week over into the next year.  In addition the company provides generous medical, dental, and retirement benefits. 

The flip side is that when times are bad workers feel it.  Twice since its founding workers had to vote in reduced wages for themselves, taking a pay cut.  But no one was laid off.  Since 1993 this has not been necessary.  Today the company is self-financing for all its needs. 

The ethical economy

From the standpoint of a column on a Pagan site, economic prosperity is not the major issue, important as it is. As I explained in my previous post, capitalism is radically inhuman and incapable of reflecting human ethical values.  Not so at the Alvarado Street Bakery, or other organizations based on the Mondragon model.  Money is important and profits are necessary, but other values can sometimes trump them.  In times of crisis everyone worked for less to protect all members, the opposite of corporations who see working people as sadly necessary expenses to be cut and minimized as much as possible.  In this and many other ways, a workers cooperative organized along Mondragon style lines is a community able to act responsibly within a moral universe. A capitalist enterprise is not.

Transparency and trust emerge from this kind of enterprise. The fact that everyone benefits when the company does well, and that necessary hierarchy is understood as good for everyone, breaks down traditional internal barriers. As CEO, Joseph Tuck makes three times what the least paid worker makes, and his salary rate is determined by the workers themselves.

Workers also vote in the Board of Directors which itself is made up of workers.  The Board sets hiring and firing policies, and decides whether or not to accept new members.  If someone is terminated by a manager they can appeal to the CEO. If they disagree with his decision they can appeal to a committee of peers that make a recommendation to the Board of Directors. The Board makes the final decision.

Turnover is very low at Alvarado Street with only three workers having left this last year. Over 65% have been there 10 years or more.

The Alvarado Street Bakery demonstrates workers’ co-operatives can prosper in our strongly individualistic culture.  When I asked Tuck about any tensions between American individualism and the cooperative model he replied “As Americans we change culture like no one else on the planet.”  More fundamentally, he observed “When you come here our basic culture is in harmony with the human condition. People are attracted to the idea of having a decent life and wage, and if the cooperative does well, they do as well.”

In many ways the logic behind the Alvarado Street Bakery, and the Mondragon model in general, is an economic version of one of America’s most venerated old institutions: the New England town democracies that so impressed many European visitors to the new United States.  If such a town decided to create an enterprise to support them all, and in which they all worked, we would be looking at an example of this model.

Ironically the Mondragon model is in far greater harmony with the logic of a market economy, voluntary contract, and individual freedom than are capitalist corporations. They take the greatest positive strengths of modern economic organizations and transform them into service to human well-being rather than rule by an oligarchy.

Now that I have provided a solid set of examples that alternatives to capitalism exist, I will return to more Pagan specific issues in the next follow up post.

 

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Gus diZerega is a Third Degree Elder in Gardnerian Wicca. He studied closely with Timothy White who later founded Shaman’s Drum magazine, and also studied Brazilian Umbanda  for six years under Antonio Costa e Silva.Dr. diZerega has published widely on the social sciences in the academic press as well as on spirituality.  His second book Pagans and Christians: The Personal Spiritual Experience won the Best Nonfiction of 2001 award from  The Coalition of Visionary Resources.  His third, coauthored with Philip Johnson, is Beyond the Burning Times: A Pagan and a Christian in Dialogue. His art frequently appeared in Shaman’s Drum, and the ecological journals Wild Earth, and The Trumpeter.DiZerega combines a formal academic training in Political Science with decades of work in Wicca and shamanic healing.His newest book, Faultlines: The Culture War and the Return of the Divine Feminine, received a 'silver' award by the Association of Independent Publishers for 2014. 

Comments

  • Stifyn Emrys
    Stifyn Emrys Sunday, 23 February 2014

    Intriguing analysis. It seems to me you've put your finger on a weakness of corporate capitalism as practiced in the United States today: Workers often don't feel invested in the success or failure of their companies, because they have been made to feel expendable and disposable. There's little incentive to excel, because they might be let go anyway and their work succeeds largely in generating profits for shareholders rather than for the workers themselves. There's no incentive.

    This harms productivity and will, in the long term, hurt the corporations that are exploiting the workers. Unions that provided some measure of cooperative support are now toothless and of little help because everyone's "just glad to have a job." A sense of shared experience and cooperation is sorely needed. I hope this can be restored.

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