Louis Proyect: The Unrepentant Marxist

October 11, 2010

Mondragon: A path to 21st century socialism?

Filed under: economics,Fascism,socialism — louisproyect @ 1:12 pm



Mondragon: A path to 21st century socialism?

By Louis Proyect

October 11, 2010 — On day five of Carl Davidson’s visit to Mondragon, he alludes to a transition to a “Third Wave” future by the Basque cooperative. The Fagor pressure cookers might be phased out in favour of “the high-design and high-touch products of a third wave future in a knowledge economy”. In order to succeed in this new business, Mondragon would have to develop “new entrepreneurs”, according to Isabel Uriberen Tesia, a Mexican on the Mondragon staff.

Davidson has been committed to the Third Wave since 1997 when he launched an online magazine (now defunct) called cy.Rev. Back then I took exception (http://www.columbia.edu/~lnp3/mydocs/computers/cyrev.htm) to some of its major themes, especially the idea of a “third wave” popularised by futurists Alvin and Heidi Toffler, as well as Republican Party leader Newt Gingrich. I summarised the Third Wave as follows:

Put simply, the theory states that there are three important “waves” in social history: (1) rural societies based on agriculture, (2) urban societies that emerged with the industrial revolution, and (3) the information-based world in which we currently reside. The United States is in the throes of this third microchip-inspired wave. Most of its difficulties are the fault of its inability to migrate smoothly out of the “Second Wave” of dying smokestack industries into the promised land of computer networks and knowledge-based industries.

Davidson was also impressed with the ideas of Clinton administration economist Robert Reich, who insisted that an “information revolution” would be the source of new jobs. He wrote:

Reich makes a convincing case that it is both impossible and reactionary to try to prevent the globalization of the market. Instead, he poses a strategic question: Rather than trying to prevent low-wage, low-skill jobs from leaving the United States, why don’t we try a policy that would encourage high-wage, high-skill jobs to come into the U.S., regardless of the nationalities of the investors.

Doug Henwood was sceptical of such claims at the time. In a review of James Brook and Iain Boal’s Resisting the Virtual Life, Henwood questioned Reich’s assumptions:

Is there any truth to Reich’s … blather? How big is the high-tech, infobahn workforce now, and how big is it likely to get? The share of the workforce employed directly in information superhighway kinds of tasks is well under 2% — and that includes people who design, make, and program computers, chips, and telecommunications equipment. Business purchases of computer and telecommunications equipment totals just over 2% of GDP.

If anything, the era of the Great Recession has made claims about the benefits of the Third Wave ring even more hollow. On September 6, the New York Times reported:

Government labor reports released this year, including the most recent one, present a tableau of shrinking opportunities in high-skill fields.

Job growth in fields like computer systems design and Internet publishing has been slow in the last year. Employment in areas like data processing and software publishing has actually fallen. Additionally, computer scientists, systems analysts and computer programmers all had unemployment rates of around 6 percent in the second quarter of this year.

More troubling, however, was the spirit of entrepreneurialism that Davidson’s magazine embraced with even more passion than Ms. Tesia:

In our view of socialism, we affirm the entrepreneurial spirit, the motivating energy of the market and the right of individuals to become wealthy through the private ownership of the capital they have helped to create.

In the light of today’s intractable economic crisis that has made terms like “the entrepreneurial spirit” sound positively obscene, it must be understood that the mid-1990s were a period of a deep reaction against the Soviet model that had just imploded. There was a widespread reaction against the planned economy that helped make the ideas of “market socialism” attractive to many. And just as the Soviet Union in the 1920s served as a beacon for revolutionary socialists, so did Mondragon represent a vindication of the beliefs of market socialists. It was proof that the workers could run things on their own—more humanely than the capitalists even in the pursuit of profits.

It was never very clear in market socialist literature what exact purpose cooperatives would serve. There could be no objection to the idea that they serve as proof that the workers can run things themselves. In the 1864 Inaugural Address of the International Working Men’s Association, Karl Marx referred to them as follows:

We speak of the co-operative movement, especially the co-operative factories raised by the unassisted efforts of a few bold “hands”. The value of these great social experiments cannot be overrated. By deed instead of by argument, they have shown that production on a large scale, and in accord with the behests of modern science, may be carried on without the existence of a class of masters employing a class of hands; that to bear fruit, the means of labor need not be monopolized as a means of dominion over, and of extortion against, the laboring man himself; and that, like slave labor, like serf labor, hired labor is but a transitory and inferior form, destined to disappear before associated labor plying its toil with a willing hand, a ready mind, and a joyous heart. In England, the seeds of the co-operative system were sown by Robert Owen; the workingmen’s experiments tried on the Continent were, in fact, the practical upshot of the theories, not invented, but loudly proclaimed, in 1848. — http://www.marxists.org/archive/marx/works/1864/10/27.htm

But there’s also a tendency for market socialists to view cooperatives functioning in the same manner as handicraft manufacturing in the later stages of feudalism, as a kind of inkblot that would spread until it engulfed and overcame the dying system. In an article titled “21st Century Socialism”, Davidson’s notion of a transition to socialism seems based on this model:

Socialism will be anchored in public and worker ownership of the main productive forces and natural resources. This can be achieved by various means: a) buying out major failing corporations at penny stock status, then leasing them back to the unions and having the workers in each firm—one worker, one vote—run them, b) workers directly taking ownership and control over failed and abandoned factories, c) eminent domain seizures of resources and factories, with compensation, otherwise required for the public good, and d) public funding for startups of worker-owned cooperative businesses. — http://www.zcommunications.org/eleven-talking-points-on-21st-century-socialism-by-carl-davidson

This is why he has greeted United Steel Workers union president Leo Girard’s partnership with Mondragon with such enthusiasm. It would appear to fulfill at least one part of this schema, namely buying out major failing corporations and turning them into cooperatives. One might of course question whether Girard would be better off fighting on behalf of workers politically rather than getting sidetracked in such reclamation projects. A principal obstacle to socialism in the United States today is the same as it has always been, a willingness of the trade union bureaucracy to support the capitalist onslaught on jobs and working conditions in exchange for privileges enjoyed by the trade union aristocracy.

Finally, turning to the question of Mondragon itself. While nobody can gainsay the importance of a major business being owned and operated collectively by the workers, there are real questions about how this relates to socialism. There has only been one book critical of Mondragon from the left — Sharryn Kasmir’s The Myth of Mondragon — and it is essential reading for those trying to understand both sides of the debate.

To begin with, cooperatives have existed under governments completely hostile to socialism. In fact, in 1965 the fascist regime in Spain awarded Father Arizmendiaretta , the founder of Mondragon, with the Gold Medal for Merit in Work.

It turns out that worker-owned businesses have not exactly been anathema to fascist regimes. Indeed, Kasmir makes the case that if political parties and trade unions had been legal under Franco, “political energies never would have been channeled into so unlikely a project as cooperativism”.

And it was not just Spain. While the Italian fascists were initially hostile to co-ops, they got the green light from Mussolini after agreeing to purge Socialists and Communists. In 1927 there were 7131 co-ops and by 1942 the number had swelled to 14,576. Somehow the fascist state did not fear that these “alternative” modes of production threatened the economic system.

Indeed, Mussolini pointed to the co-ops as examples of his corporatist ideals. Kasmir explains this anomaly in terms of how they “embodied worker participation, nonconflictual relations between labor and management, and the withering away of class identifications.” In the fascist system, as well as in Father Arizmendiaretta’s Christian-based beliefs, the class struggle is anathema. Joxe Aruzmendi, Arizmendiaretta’s biographer, characterised the priest’s views as follows:

At the root of the class struggle can be found the myth of revolution, faith in violence, etc., that in the opinion of Arizmendiaretta characterize the twentieth century, and that he summarily rejects. The question of the class struggle is phrased, for Arizmendiaretta, as the question of how to overcome it, urgently.

A visit to the Mondragon website will reveal nothing about the class struggle, especially the pitched battles taking place in Spain between the trade unions and the social-democratic government. You will also find nothing about the movement to defend immigrant rights. Or anything about ecology, peace and the rights of national minorities, including the Basque people. For Mondragon, social justice is co-equivalent with the cooperative’s ambitions and nothing else matters for much. Even Davidson reports: “Frankly, Basque youth aren’t all that active inside the coops. They’re into third world global justice issues, environmentalism in general, and Basque nationalism.”

Those sorts of issues, of course, have much more to do with our socialist future than the spectacular rise of Mondragon as one of Spain’s commercial powerhouses. Those are the sorts of people that will reinvigorate our movement, not those with a flair for finding new markets for high technology products especially in a period when such markets are collapsing all around us.

[Louis Proyect is moderator of the Marxmail discussion list and runs The Unrepentant Marxist blog.]


  1. Comrade Nancy Reagan was perhaps best known for her famous saying, “Just say no”. But is there a rule which says that a country which has had a socialist revolution, and which is in need of reinvigorating its productive system, can’t try one or another experiments to see what’s best?

    Let’s keep in mind Fidel’s humble and honest assertion that the greatest error they ever made in Cuba, from the beginning, was to think that anyone actually knew how to build socialism. In other words, Fidel rejected the idea that some magic formula could be developed, outside of the reality of day-to-day life, by which all problems could be solved.

    June 18, 2010 8:48 PM
    Catholic Church Sponsors Policy Debate in Cuba
    Posted by Portia Siegelbaum


    Everleny further revealed that representatives of the Spanish corporation Mondragon are in Cuba this week holding meetings with City of Havana officials as Cuba studies the possibility of cooperative ownership, part of its reexamination of property rights.

    The Mondragon Corporation is a federation of worker cooperatives and is the seventh largest Spanish company in terms of turnover and leading business group in the Basque Country, employing 92,773 in 256 companies by the end of 2008.

    The Government is already dabbling with cooperatives in small scale services.


    Comment by Walter Lippmann — October 11, 2010 @ 1:48 pm

  2. Actually Lenin proposed the widespread adoption of co-ops in an article titled appropriately enough “On Cooperation” written very close to the end of his life. In a country that has abolished capitalism on the level of the “commanding heights of industry and banking”, co-op’s can be one of a number of initiatives that help resolve bottlenecks in the early stages of socialism. But in a country like Spain or the USA, they really have nothing to do with the struggle for socialism except as an example that bosses are not needed. (This leaves aside the question of whether Mondragon does not replicate the division between manual and intellectual labor found in the capitalist economy generally.)

    Comment by louisproyect — October 11, 2010 @ 2:04 pm

  3. Entrepreneurial spirit? Why would someone who claims to be a socialist so willingly buy into one of the oldest capitalist myths? The allure of profit and wealth may indeed encourage some to make technological and industrial breakthroughs, but I’ve always found that “necessity is the mother of invention” to be a much more realistic maxim. Besides, as socialists and communists, don’t we believe that progress will be made, not because individuals wish to benefit from personal gain, but that they would view their contributions to society as a good and right goal in and of itself. Furthermore, a socialism in which a few were still allowed to accrue significantly more wealth than the average worker completely defeats the purpose of power in the hands of the people. Money is power, and and when wealth is distributed in a grossly unequal fashion, the end result can only be corruption of the minds of the “entrepreneurs” and the institutions that they will inevitably end up supporting.

    Comment by Rob — October 11, 2010 @ 5:44 pm

  4. Besides, as socialists and communists, don’t we believe that progress will be made, not because individuals wish to benefit from personal gain, but that they would view their contributions to society as a good and right goal in and of itself.

    I think that’s a very moralistic view – and I do not believe Marx would have seen “society” as a good in itself

    Comment by PfromGermany — October 11, 2010 @ 6:20 pm

  5. He would have seen a class free society as a good thing.

    Comment by SGuy — October 11, 2010 @ 7:42 pm

  6. yeah, i remember seeing michael moore on leno promoting his capitalism doc and him telling leno that worker coops are not a radical socialist project since the guys who ran one of the coops he filmed were “hard core republicans.”

    nevertheless, i think a coop is better than a unionized work place, and in that respect i agree with most of davidson’s outlined goals – even if i don’t think that is going to get us to socialism per se.

    Comment by dermokrat — October 12, 2010 @ 4:36 am

  7. The first chapter of Kasmir’s MYTH OF MONDRAGON provided for fascinating reading. Though Louis didn’t see any reference to radical social and political activity on the company’s website, there’s quite a bit of it referenced in the first chapter of the book. Check it out:

    It presented an image of industrial life and culture rather different from that of MODERN TIMES or A NOUS LA LIBERTE which is what most of us who don’t work in factories imagine factory life might have been like back in the day. Those movies were made in the early 1930s. Take the time to read it through and thanks to Louis for drawing our attention to this.

    IMDB on A Nous La Liberte:

    Cuba is also showing it’s open another
    innovative option from Spain as well:

    Cuba looks ready to allow small loans for reforms
    By Reuters – Monday, October 11th, 2010.

    Remember, there can be no absolute, one-size-fits-all formula for how to build socialism. That’s one of the central lessons Fidel draws from his half-century of hands-on experience in the process. I even recall his telling Georges Marchais, then the head of the French Communist Party, that should they take power, don’t even THINK about nationalizing agriculture. Leave the small producers alone or they could kiss good wine and cheese good-bye. (Fidel Castro, My Life, p. 518)

    After fifty years of experience, it’s obvious that the notion that it’s necessary to nationalize EVERY form of private business makes no sense in the real world, and makes even less sense in an economically underdeveloped third world country. The idea that society, or “the state” should be responsible for producing every cup of coffee, ever ice cream cone, or every sandwich or children’s toy is a formula for massive bureaucratism and lots of illegal activity (black market or informal sector). Certainly that’s been the Cuban experience.

    As long as the commanding heights of the economy: the banks, the dominant industries, and the foreign trade remain in the hands of the state, society can have ultimate responsibility and control of what happens INSIDE THE COUNTRY.

    World economic, still dominated by the anarchy of capitalism, continues to have its own powerful effects, which can only be modified, but not eliminated, on the territory of a single country. That’s the sense in which Trotsky’s idea that you cannot build socialism in a single country retains its continued validity.

    Comment by Walter Lippmann — October 12, 2010 @ 3:07 pm

  8. Though Louis didn’t see any reference to radical social and political activity on the company’s website, there’s quite a bit of it referenced in the first chapter of the book.

    There certainly is a lot of radical politics in the town of Mondragon but the co-op and the town are not co-equivalent.

    Comment by louisproyect — October 12, 2010 @ 3:13 pm

  9. Well french agriculture is heavily subsidised, government plays some role in the quality of cheese and wine.

    Comment by SGuy — October 12, 2010 @ 5:29 pm

  10. It might be interesting if someone did a sociological study of the people who create cooperatives, why they do so and what sort of economic activities they pursue, if it hasn’t been done already. My suspicion is that the results would tend to disarm those who believe that coops are a step down the road towards socialism.

    Comment by Richard Estes — October 13, 2010 @ 11:49 pm

    by V.I. Lenin

    Written: January 4 & 6, 1923
    First Published: Pravda (No. 115-116) May 26-27, 1923
    Source: Lenin’s Collected Works, 2nd English Edition, Progress Publishers, Moscow, 1965, Volume 33, (p. 467-75)
    Transcription/Mark-up: Brian Baggins
    Public Domain: Lenin Internet Archive (2000). You may freely copy, distribute, display and perform this work; as well as make derivative and commercial works. Please credit “Marxists Internet Archive” as your source.

    It seems to me that not enough attention is being paid to the cooperative movement in our country. Not everyone understands that now, since the time of the October revolution and quite apart from NEP (on the contrary, in this connection we must say—because of NEP), our cooperative movement has become one of great significance. There is a lot of fantasy in the dreams of the old cooperators. Often they are ridiculously fantastic. But why are they fantastic? Because people do not understand the fundamental, the rock-bottom significance of the working-class political struggle for the overthrow of the rule of the exploiters. We have overthrown the rule of the exploiters, and much that was fantastic, even romantic, even banal in the dreams of the old cooperators is now becoming unvarnished reality.

    Indeed, since political power is in the hands of the working-class, since this political power owns all the means of production, the only task, indeed, that remains for us is to organize the population in cooperative societies. With most of the population organizing cooperatives, the socialism which in the past was legitimately treated with ridicule, scorn and contempt by those who were rightly convinced that it was necessary to wage the class struggle, the struggle for political power, etc., will achieve its aim automatically. But not all comrades realize how vastly, how infinitely important it is now to organize the population of Russia in cooperative societies. By adopting NEP we made a concession to the peasant as a trader, to the principal of private trade; it is precisely for this reason (contrary to what some people think) that the cooperative movement is of such immense importance. All we actually need under NEP is to organize the population of Russia in cooperative societies on a sufficiently large-scale, for we have now found the degree of combination of private interest, of private commercial interest, with state supervision and control of this interest, that degree of its subordination to the common interests which was formerly the stumbling block for very many socialists. Indeed, the power of the state over all large-scale means of production, political power in the hands of the proletariat, the alliance of this proletariat with the many millions of small and very small peasants, the assured proletarian leadership of the peasantry, etc. — is this not all that is necessary to build a complete socialist society out of cooperatives, out of cooperatives alone, which we formerly ridiculed as huckstering and which from a certain aspect we have the right to treat as such now, under NEP? Is this not all that is necessary to build a complete socialist society? It is still not the building of socialist society, but it is all that is necessary and sufficient for it.

    It is this very circumstance that is underestimated by many of our practical workers. They look down upon cooperative societies, failing to appreciate their exceptional importance, first, from the standpoint of principal (the means of production are owned by the state), and, second, from the standpoint of transition to the new system by means that are the simplest, easiest and most acceptable to the peasant.

    But this again is a fundamental importance. It is one thing to draw out fantastic plans for building socialism through all sorts of workers associations, and quite another to learn to build socialism in practice in such a way that every small peasant could take part in it. That is the very stage we have now reached. And there is no doubt that, having reached it, we are taking too little advantage of it.

    We went too far when we reintroduced NEP, but not because we attached too much importance to the principal of free enterprise and trade — we want too far because we lost sight of the cooperatives, because we now underrate cooperatives, because we are already beginning to forget the vast importance of the cooperatives from the above two points of view.

    I now propose to discuss with the reader what can and must at once be done practically on the basis of this “cooperative” principle. By what means can we, and must we, start at once to develop this “cooperative” principle so that its socialist meaning may be clear to all?


    Comment by Walter Lippmann — October 14, 2010 @ 4:16 am

  12. Of course, Lenin’s article is totally irrelevant to Spain today. Probably the only capitalist country that it is relevant to is Venezuela, in which Hugo Chavez conceives of them as an asset against the bourgeoisie. If someone like Hugo Chavez was elected president of Spain, my guess is that the kind of coop he’d encourage would look nothing like Mondragon, whose founder was given a prize by the fascist government in 1965 for good citizenship.

    Comment by louisproyect — October 14, 2010 @ 1:19 pm

  13. None of you know anybody working in supermarkets owned by Mondragon cooperative, right?

    this has nothing to do with socialism, aside of ideological qüestions (a sort of paternalism maybe due to its religious origins) not all the workers are associated, who are exploited by ‘the collective’, and as for teh associated, is like autonomous workers, they work for themselves, but they are in fact autoexploited because the ‘market’ forces them to do it.

    associated workers have adopted a lot of times politic lines against class interests of workers, like not taking part in important strikes, or work more days, or holidays, with the same wage, lowering standards of all the other workers of the sector. The fact that hey are in a capitalist economy makes them operate like all the other corporations seen from outside, they not contribute to the general interests of all the workers

    unionizing is banned in the cooperative, they have not public social security but private insurance, owned by the coroporation.

    Comment by Reader from Barcelona — October 18, 2010 @ 2:48 pm

  14. The notion that fine cheese & wine is dependent on petite bourgeois producers is pure bullshit. You can’t convince me that if imperialism can get to the moon & back on cathode ray tube technology (a feat that could never reproduced under today’s model of NASA farming out private contractor bids for parts) that a socialism couldn’t provide the incentives to produce the finest wines, cheeses, and cigars that the world has ever known.

    Comment by Karl Friedrich — October 20, 2010 @ 1:42 am

  15. “The full replacement of the hiring of labour for small-business profit by cooperative production, and also the enabling of society’s cooperative production of goods and services to be regulated by cooperatives under their common plans.”

    Should there be agreement upon and not mere acceptance of this directional measure, it can facilitate the nationalization debate but in a way such that private ownership of productive and other non-possessive property is altogether outside the boundaries of debate; there can be no advocacy on the class-strugglist left for a combination of small-scale cooperative production with “medium enterprises” still under private ownership.

    Comment by Jacob Richter — October 23, 2010 @ 5:07 am

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