CO-OPS ON THE RISE
I’m still excited about the budding alliance between the United Steelworkers (USW) and the Mondragon Cooperatives – and the general awakening consciousness about worker co-operatives and co-operative business in general that I wrote about last month.
And there’s more.
Rodney North of Equal Exchange (the Massachusetts-based worker owned co op fair trade coffee company) 
made me aware of an article on the New York Times Economix blog by Nancy Folbre, an economics professor at University of Massachusetts. In “The Case for Worker Co-ops” she says, “Since many of our most prestigious economic institutions have embarrassed themselves at our expense over the last year, maybe it’s time to look around. Worker-owned and -managed businesses combine the romance of entrepreneurship with solid family values and commitment to community. What’s not to like?”
In addition to the Mondragon/US Steelworkers agreement and the worker co-ops featured in Michael Moore’s new movie, she says, “Rousing examples abound. CNN Money recently profiled six worker-run businesses including Pelham Auto, whose mechanics have cheerfully fixed every car I’ve owned for the past 20 years.” One of the companies CNN profiled, by the way, is South Mountain.
But all this attention being paid to worker co-ops makes Folbre, the economist, wonder what the economic research says. Not much, according to her. Worker owned and managed companies are “largely ignored in economics textbooks.”
I have found that even the socially responsible business movement, to my ongoing surprise, pays little attention to true workplace democracy.
But she does, at least, find a little research – or maybe it’s just opinion. Mostly it’s about the troubles – or potential troubles – with employee ownership. One of these is that worker-owned and managed companies, with more complex goals than maximizing profit, tend to be less growth-oriented than other companies.
“Don’t tell Wall Street,” says Folbre, “but that could be a good thing.”
I want to say more about the USW/ Mondragon agreement.
The Mondragon initiative is not the first innovative Steelworkers alliance. In the 1990s, the USW helped found the Blue-Green Alliance together with the Sierra Club and other environmentalists and they have been involved with Van Jones’ Green For All.
And now, if this new alliance works, it might make a system of worker-owned enterprises assembled with the purpose of a green restructuring of the U.S. economy. That could be a powerful force.
The USW-Mondragon collaboration grew out of a ‘green industrial revolution’ project that created a partnership with Gamesa, 
a Spanish wind turbine firm, to retrofit abandoned steel plants in the U.S. (40,000 U.S. manufacturing facilities have closed since the beginning of the current economic crisis) and produce wind turbines (there are 200 tons of steel and 8000 moving parts in every large wind turbine). Gamesa’s connection to nearby Mondragon brought the USW and the co-operative giant together.
While this historic business alliance gives hope to the possibility of reviving manufacturing (and the communities that have been devastated by the losses), there is also congressional activity coming along to support employee ownership. According to the Vermont Employee Ownership Center, Senator Bernie Sanders of Vermont
will introduce two new bills that would seek to expand employee ownership in the United States.
The first, the Worker Ownership, Readiness and Knowledge (WORK) Act would create an Office of Employee Ownership and Participation within the Department of Labor to promote employee ownership and employee participation in company decision making. The second bill, the U.S. Employee Ownership Bank Act, would provide loans and loan guarantees to employees to purchase a business through an ESOP or a worker-owned cooperative.
On the eve of the Copenhagen meetings, this collection of related activity is heartening. Perhaps the most important thing about the expanding co-operative business movement, in the long run, may be as an avenue to the large-scale collaborative alterations to the architecture of the economy that will be necessary if we are to successfully tackle the challenges of climate change and the post peak oil transition to come.
AN HISTORIC ALLIANCE
My friend David Smathers of the TeamWorks Cooperative Network in California writes:
“The Mondragon cooperatives and the United Steelworkers have announced an historic partnership through which they will buy or start manufacturing businesses in the U.S. and Canada that will combine Mondragon’s democratic structure of ownership and governance with collective bargaining.
It will take many years to implement. But particularly in the face of the economic crisis that has exposed Wall Street’s failure to provide responsible stewardship of the economy, this is a very heartening development. Together, these two institutions have the resources, technical expertise, and vision to demonstrate to the public that it is possible to structure and run large corporations in entirely different ways than what we have become accustomed to.”
The Mondragon Cooperative Corporation (MCC) is the world’s longest-running, highest-grossing, most successful experiment in workplace democracy. Now 53 years old, the Basque association of worker cooperatives consists of roughly 260 cooperative enterprises with more than 100,000 employee owners.It is the seventh largest corporation in Spain and the world’s largest industrial workers’ cooperative. Its enterprises include its own university, research center, and bank.
In January 2001 I visited Mondragon with a small group of Americans for a four-day examination of the culture of both the town and the MCC. Having used a version of the Mondragon principles as the basis for the restructuring of South Mountain Company fourteen years before that, it was thrilling to get a firsthand look at this system of worker-owned cooperatives that appears to be unparalleled in its dynamism and its impact on a region.
Mondragon has created a total system wherein people can learn, work, shop, and live within a cooperative environment. The town, in its isolated valley, has a vital, prosperous feel—a small bustling city with a comfortable mix of young people from the university, new middle-class families, and those who have been in the valley for generations. The surrounding hills are verdant and productive, dotted with villages and farms. The MCC’s influence reaches into every aspect of community life.
I’ve always wondered why the amazing story of Mondragon is such a secret in the United States. It has attracted significant attention worldwide, but far less here. Even the U.S. based socially responsible business movement pays it little mind (as it does the issue of ownership in general). Is the idea that capital is a tool, rather than the residence of power, too radical to embrace? Instead of awarding profit and control to capital, Mondragon has succeeded by awarding profit and control to labor in a system of democratic capitalism. It has developed an enduring way to use capital productively and distribute income equitably at the same time.
For too long the idea of worker-cooperatives as a potent business model has flown under the radar, but in Michael Moore’s new film: Capitalism: A Love Story (marquee photo) people all over the country have been seeing worker cooperatives and workplace democracy in action. 
He presents them as a possible solution to the undemocratic, inequitable and greed-driven economy that he spends most of the film building a case against.
Featured on film are Alvarado Street Bakery in Rohnert Park, California, and Isthmus Engineering in Madison, Wisconsin. Scenes of workers making decisions, working on production lines, and eating and laughing together paint a picture of worker cooperatives that stands in marked contrast to the exploitation and abandonment shown in other parts of the film.
The new Mondragon/Steelworkers association will further raise the profile of cooperative business in the U.S. More importantly, it may jump start the crucial re-industrialization of the nation that is so essential to our future.
In the Steelworkers announcement of the agreement USW president Leo Gerard says, “We see Mondragon’s cooperative model with ‘one worker, one vote’ ownership as a means to re-empower workers and make business accountable to Main Street instead of Wall Street.”
I’m excited by the prospect of seeing where this will lead.
Out of the Minefield
After reading my last post, Values and Principles, Ross Chapin (www.rosschapin.com.) wrote to me. Ross is an architect in the Northwest who has pioneered in the design and development of small “Pocket Neighborhoods” and is currently writing a book on the subject. 
Ross wrote, “On my end, we’ve somehow managed to get to this day without laying off or furloughing anyone (gratefulness is a daily practice), though the inquiries for custom homes are pretty shy these days. However, we are, and have been, getting calls from developers all over the country — as many as 4 a week … Mostly mainstream developers, who often say, “Thank goodness for this recession — it brought us to our senses! We were focused on profit, but it was in no way sustainable or good for the community. Can you help us look at a better plan?” … So we’re planning neighborhoods all over – from clusters of 8 cottages, to mixed-use communities of 150 dwellings. Some infill, some brown and greenfield. You may have heard of our work with Dan Gainsboro in Concord? He’s working with us and your friend and colleague Marc Rosenbaum. We’re in the process of submitting a 12-house plan for a site in West Concord. And work in and with our island community unfolds, perhaps similar to MV. These hard times are good for thinking deeply about what’s most important.”
Isn’t that the truth? And isn’t it heartening that mainstream developers are doing just that?
But what about our political leaders? Shouldn’t these hard times be good for thinking deeply about what’s important for them too? The health care battles rage on, economic reform is a distant dream, and climate change – the one that matters most – languishes.
A friend of mine who is going through a major life transition recently said “I feel like a man who has woken up in the middle of a minefield and refuses to move until he knows where it’s safe to step.” The U.S. congress seems to be perpetually standing in the middle of a minefield, paralyzed with fear.
According to the New York Times, (July 29, 2009), a study by the McKinsey consulting group says that a $520 billion investment in energy efficiency improvements to U.S. buildings over the next 10 years could save $1.2 trillion and cut total U.S. energy use by 23%, a reduction greater than the entire energy consumption of Canada.
That’s all well and good, but where does the money come from?
Denmark has a $5/gallon tax on gas and diesel and nobody’s suffering. If we had just a $1 tax it would yield $140 billion/year.
But why stop there? The more you tax the more you have – to reduce the deficit, pay for health care reform, and help low and middle income people pay for more expensive fuel (by cranking up energy efficiency and renewable energy incentives, expanding cash for clunkers, and doing a host of sensible things like that to reduce our oil addiction and create an economy that works). Nobody has to suffer.
If the recession can bring mainstream developers to their senses, maybe it can bring senators and representatives to their senses too. If they were to start to think deeply about what’s most important they might find that it’s not a minefield; it’s a vast virgin forest of new possibilities.
Values and Principles
A group of friends was here for a post-Labor Day vacation, enjoying the last harmonies of Vineyard summer – warm water, cool breezes, and empty roads. Devon Hartman runs a design/build company in L.A. and Jamie Wolfe is a design/builder from Connecticut. Dennis Allen runs a building company in Santa Barbara, CA. Sal Alfano is the editor of both the Journal of Light Construction and Remodeling Magazine. Each is remarkable in his own way. Each has much to teach. All agreed to do a panel discussion for an SMC company meeting.
The following questions were put to the four of them: what happened to your business (and you) between last September and this September, what lasting effects has the economic crisis had, and what’s next for you and your enterprise?
They spoke about the troubles of these times, but they also spoke – compellingly – about the possibilities, and new doors that are opening.
Jamie, whose business had severely tanked, talked about the opening that has come with the lack of work – a rare opportunity to “re-boot” his business from Powered Down to Re-New. Dennis spoke of the perfect occasion for providing greater service and paying closer attention to clients, and told about the risks they have taken, like promoting two young employees to positions of General Manager and (I think) Production Coordinator, guys who, Dennis said “think a lot faster than I do.” Devon talked about the utter necessity of relentless, effective, and widespread communication within his market area, and the need to expand the breadth of both terrain and service. He pointed out that you never know how little people know about what you do and what your capabilities are. Just recently his own brother asked him to recommend someone who could help him figure out how to reduce energy use (a new specialty of his own company!). And when he ran into a client in the supermarket who he hadn’t seen in 25 years she said, ” So. . . how’s the painting business going?” They haven’t been a painting company for a quarter century. And Sal, with the great overview that his position in the industry affords him, said that nobody is immune to these times. Everyone is affected. He said we’re thinking less about what we’d like to do and more about what we have to do. It’s a mold-shattering time.
We have had many company meetings with a variety of stimulating people, topics and exchanges, but this one seemed to touch more people, in more ways, than usual. I think it’s because all four were speaking, from the heart, about making the most of hard times and holding true to our values at the same time. 
It was also a moment for all of us to toast and celebrate the recent marriage of one of my partners, COO Deirdre Bohan, with Deirdre and her new husband Dave.
While they were here I happened to be in the middle of an extraordinary book called Born to Run, by Christopher McDougall. It’s an epic adventure about the reclusive Tarahumara Indians who live deep in the Copper Canyons (a canyon system larger than, and in some places deeper than, the Grand Canyon) in the Sierra Madre Mountains of Mexico. The Tarahumaras may be the greatest runners on the planet, but they’re far more than that. And no, the book isn’t really about them either, it’s about human endeavor and community and evolution and it is full of more great stories than I’ve come across in any one place in a long time. I don’t even like to run and I couldn’t put it down.
It’s especially about values.
McDougall tells the story of a Czech runner named Emil Zatopek who set world’s records and won gold medals in two events in the 1952 Helsinki Olympics, and then decided to run in the Olympic Marathon. He’d never run a marathon, but he won that too, and set a new world record in that event as well!! He ran with “infectious joy”, and he was beloved – even his opponents loved to see him win. Says McDougall, “You can’t pay someone to run with such infectious joy.
You can’t bully them into it, either, which Zatopek would unfortunately have to prove. When the Red Army marched into Prague in 1968 to crush the pro-democracy movement, Zatopek was given a choice: he could get on board with the Soviets and become a sports ambassador, or he could spend the rest of his life cleaning toilets in a uranium mine.” He took the toilets. And disappeared.
At the same time Ron Clarke, an Australian, broke Zatopek’s records but never managed to win the big one. He had become known as “the bloke who choked”. In the summer of ’68 he blew his final chance in the Mexico City Olympics. On the way home he stopped in Prague to pay a courtesy call to the “bloke who never lost”. During the visit, he noticed Zatopek slipping something into his suitcase; assuming he was smuggling some message to the world, he didn’t dare open it until he was long gone. 
It was Zatopek’s 1952 Olympic 10,000 meter gold metal. He thought Clarke was the one who deserved it. For Zatopek to give the medal to the man who had replaced his name in the record books at precisely the moment when he was losing everything else was, as McDougall said, “an act of almost unimaginable compassion.”
I don’t mean to over-dramatize, or to diminish the passionate adherence to deep values and unthinkable sacrifice of Zatopek, but the generous sharing of stories and personal truth by Jamie, Dennis, Devon and Sal seemed somehow related. Times of adversity are when our values are tested. I once heard a visionary businessman named Paul Saginaw of Zingerman’s say, “Principles aren’t principles until they cost something.” Simple as that.
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JOHN ABRAMS is co-founder and CEO
of South Mountain Company and the author
of COMPANIES WE KEEP read more
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COMPANIES WE KEEP is published by Chelsea Green Publishing
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