Carl Davidson : Mondragon Diaries V: Innovation and Transformation

Image from Mondragon website.
Mondragon Diaries, Day Five
Innovation and transformation
towards a third wave future

By Carl Davidson / The Rag Blog / October 6, 2010

“The world has not been given to us simply to contemplate it, but to transform it. And this transformation is accomplished not only with our manual work, but first with ideas and action plans.” -- Father Jose Maria Arizmendiarrieta, founder of the Mondragon Coops

[This is the fourth of a five-part series by Carl Davidson about the Mondragon Cooperative Corporation, a 50-year-old network of nearly 120 factories and agencies, involving nearly 100,000 workers -- centered in the the Basque Country but now spanning the globe. Go here for the series so far.]

BASQUE COUNTRY, Spain -- Today the Mondragon valley is misty and grey, with small clouds drifting close to the valley floor between the mountain peaks. It's somewhat otherworldly, I think to myself on the bus ride up the slopes, almost like a scene from “The Lord of the Rings.”

Today is also our last day, and we're full of mixed feelings. Melancholy that our week-long seminar is coming to a close and that the new friends we've made will scatter. But there's also excitement that we'll soon be back home and able to share it all with our communities.

Our first stop is another component allied with Mongragon University called SAIOLAN. It's an incubator project for helping to launch new coops and high-tech businesses.

We're greeted in a classroom by a young woman from Mexico, Isabel Uriberen Tesia, who is also our presenter. She wastes no time bringing up her powerpoint on the screen and getting into the topic.

“Our aim is generating employment, creating new jobs,” she says. “our purpose is to do this by developing new business projects and training new entrepreneurs.”

A few years back, as the economic crisis was developing, nearly 60 percent of the students graduating in the Basque Country were having a hard time finding employment. The government, the MCC coops, and other businesses, as well as the students themselves, all turned to SAIOLAN to help launch new enterprises that could put young people to work.

“There are five levels in the training of entrepreneurs,” Isabel explained. “First is motivation. Second is finding opportunities. Third is defining a suitable project for the student, in tune with his or her interests and ideas. Once you get past these three, the next two, planning the startup and launching what you have developed, also involves finding resources, such as grants and loans, that can get the new businesses operating.”

What kind of businesses were being started? One involved processing plants for cleaning waste water in a new and better way, another was called "micro-manufacturing," producing very small components accurately, quite a few were new software products. One from FAGOR, the large home appliance worker-cooperative, involved finding new uses for stainless steel, including exterior products, like one-piece transit stop structures.

Some in our group were concerned that many of the new startups were simply new businesses rather than also coops. This was 80 percent, or 138 out of 172 new small enterprises over the last few years, with 2,281 new employees. SAIOLAN didn't seem worried. “It's their choice,” was the explanation. “Some of them will later transform into coops, and in any case, it's good to create new employment for our entire Basque community, not just the minority in cooperatives.”

We got deeper into the subject in our next session. It was further up the mountainside at Otlalora, and we had as our resource person Jesus Herrasti, one of the senior MCC leaders, the head of the “Innovation Group," who had been with Mondragon for 48 years.


After laying out some of the basic features of innovation -- infrastructure, science, technology, strategic planning -- Herrasti made it much more real by talking about a fundamental conflict facing all manufacturing businesses, not just MCC.

Take FAGOR, our home appliance manufacturing coop. It's a mature business. We can continue to compete by making some additional improvements in quality, or cutting our profit margins. But in the end, it's going to be very hard to compete with similar products produced in Asia. We should keep at it as long as we can operate in the black and our worker-owners can maintain their standards, but where, really, is our new growth potential?

He named three broad areas -- renewable energy, health and eldercare, and information technology. It got even more interesting to me as he became more specific about new product lines -- fuel cells, wind turbines, photovoltaics, embedded software, wireless, ambient intelligence, and bioprocessing in supercomputers. He was presenting the shift from second wave manufacturing to the high-design and high-touch products of a third wave future in a knowledge economy, and he had 200 people working full time on coming up with new ideas and plans.

I asked a question.

Have you had any inquiries from those countries trying to define a new 21st century socialism, in whatever way, such as Venezuela, Cuba, China, Vietnam, or even South Africa, on how they might use Mondragon's ideas and services? Do you think you have something to offer here?

“Yes and no,” was the cautious answer.

We get queries from all of them. We've been to China and other places, and there is some genuine interest, to a point. But since spreading knowledge and worker's power at the workplace also often runs against the clinging to control by bureaucrats, socialist or otherwise, the interest often comes to a dead end. But it's not always the case, and we keep working on doing what we can.

He went on to discuss the problems of cultural differences.

We Basques are often risk-adverse when it comes to business, unlike Americans. We often avoid risks when we shouldn't. On another hand, when we talk with Mexican workers about taking over and owning the firms we start there for themselves, and where they elected the leadership, they simply don't believe us. They want to know where "the trick" is hidden, since businesses, in their culture, are always owned by bosses, never by workers. There is no trust, at least trust with us, that it can be otherwise.

So what are the basic things needed to start worker-cooperatives in our countries, asked one of our group?

First the workers themselves must FEEL THE NEED. Without that, it's hard to get anywhere. Second there must be a culture of TRUST, since you are sharing money, sharing risks, and supporting new leaders. Third, is to BE REALISTIC. You need successes, especially in the beginning. Too many early mistakes, and you are finished. Finally, you need friends and collaborators -- but pick them carefully!

This had us inspired and buzzing all through lunch, another amazing sampling of Basque cuisine. I had steamed artichokes with a delicious sauce and braised pork, finished off with dark strong coffee and ice cream with slivers of dark chocolate.

The afternoon session featured a presentation of one of the students in MUNDUKIDE, a small overseas assistance program with the people of Mozambique, Brazil, Cub, and a few other countries. One discussion was largely about microloans, which weren't working very well, and another about road-building, which was rather successful.

Our final session was with Fred Freundlich, the American professor, who was a veteran of the movements against plant closings in the U.S. a few decades back, who now was a faculty member at Mondragon University. Since he understood both our realities and those at MCC, he could handle any outstanding questions.

There were a lot of them. The first was how much was MCC's success a result of factors unique to the Basque Country. “It's somewhat important, but not decisive,” Fred answered.

One very important factor was it started at just the right time. If it had started 10 years earlier, conditions may have been too harsh. But the first coops were launched at a time when people really needed a lot of things, and finally had a little savings to spend. Many businesses grew in this period. If it started 10 years later, MCC may have had much stronger competition, and may not have gotten off the ground so well.

I asked what was the response of the socialist and communist groups in the Basque County and Spain to MCC? “Mixed and confused,” was the answer. Some thought it utopian. Others dismissed it as a diversion, as making workers into capitalists. "But they still keep sending delegations for visits, and going away impressed," Fred noted. The Basque left was also fragmented over violence, when ETA, the Basque armed resistance group, assassinated a former leader of one of the MCC coops who was also a socialist official.

After a thoughtful pause, Fred made a point that applied to the U.S. Left as well. “There's two trends in the left,” he explained. “Those who think long and hard about business and what to do with it. And those who mainly like to discuss left ideas.” The implication was that the two trends most often didn't overlap, even if it was wise to do so, both tactically and strategically.

Mikel brought the session to an end by asking us all for our new ideas on how we might implement what we had learned, and possible projects for doing so. There were all sorts of plans in the works on the part of our group, from networking food coops, to producing new green products, to making a new film about Mondragon for a U.S audience.

We clearly all had our imaginations fired up by the experience. Mikel gave us each a certificate for completing a 40-hour study seminar, which was a lovely touch. But the truth was that most of us would need no reminder hanging on our walls. What we had learned here had changed us, in some ways deeply, and we would be looking at people and projects in new ways for some time to come.

[Carl Davidson is a national co-chair of the Committees of Correspondence for Democracy and Socialism, a national board member of Solidarity Economy Network, and a local Beaver County, PA member of Steelworkers Associates. His website is Keep on Keepin' On, where this series also appears. Davidson is also available to speak on the topic. Contact him at carld717@gmail.com. For more info on these tours, go here.]

Also see:

• Carl Davidson : Mondragon Diaries I: Bridges to Socialism / The Rag Blog / September 20, 2010
• Carl Davidson : Mondragon Diaries II: It Starts With a School / The Rag Blog / September 23, 2010
• Carl Davidson : Mondragon Diaries III: Visions of the Future / The Rag Blog / September 27, 2010
• Carl Davidson : Mondragon Diaries IV: Banking on the Future / The Rag Blog / October 1, 2010

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