“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.

Despite the Obama administration’s recent shift in emphasis from homeownership to rental housing (which I will discuss in detail in a future post), homeownership is at the very heart of the American dream. Owning our work, and finding meaning there, seems as essential to a good life as owning our homes. But although many of us own homes, far fewer own our work.

But the idea that the people who use our productive assets should own them is as old as America.  As John Logue of the Ohio Employee Ownership Center says in The Real World of Employee Ownership, “Thomas Jefferson argued passionately that what set this country apart from the Old World and made it so suitable for democracy was the fact that the ownership of productive property was widely dispersed:  farmers owned their land in the countryside; artisans owned their tools and shopkeepers their shops in the towns.”

Employee ownership is emerging from beneath the radar. There is an awakening interest in the potential of broadly shared ownership of enterprise. The idea is beginning to surface all over the world in companies small and large.  Today over 11,000 companies nationally, with over 13  million employees, have some form of employee ownership.  In fact, today more Americans work in firms partly or wholly owned by employees than are members of unions in the private sector. Most of these do not share the SMC co-op model, and many can hardly be characterized as democratic, but all indicate that we may be learning something as we try to assemble the components of a restorative future.

The context is important. My fellow baby boomers own several million businesses, and during the next two decades, most of these founders will exit. The businesses will either be shut down, or sold to outsiders, or passed on. Selling to employees is an option that deserves to be more widely understood, for it offers powerful benefits to all parties. There is a need for more information as employee ownership becomes an important entity of choice, not only for aging boomers but for the millions of young people intent on finding real meaning in their work.  Employee ownership is one way to open that door. There is new knowledge and there are new practices that make employee ownership more widely applicable, and growing interest among these business owners.

Tom Greer is one of them.

Many people pass through Martha’s Vineyard  (how’s that for understatement?).  Some of them want to visit our facility, or see some of our work, or talk business.   Each of these visits takes time, so we have to be careful.  It’s a delicate balance because, mostly, these are well-meaning people with good stories and legitimate interest.  How can you possibly turn them away, how can you possibly not generously accept?  Maybe someday we’ll have designated visiting days, but for now we field the e-mails and calls and decide whether time will allow and the inquiry is serious enough to warrant the time.

Tom Greer, a builder from Charlottesville, Virginia, was on the island.  He asked to visit, and and wanted to ask a few questions.  Turns out his successful, stable business 31 years old, has 25 employees and annual revenues of $8 million (about our size).  A decade ago he took two longtime colleagues in a partners; each owns 20% and Tom owns 60%.

He is interested in examining the possibility of becoming a co-op.  I asked him why, given the success story, he is interested in rocking this stable boat by considering a shift to co-operative ownership.  He responded, “As I have grown up with my people, I have wondered what it is like for them to give their working life to a company, and then upon retirement walk away from their life’s work with only Social Security. I have benefited greatly from their sweat, loved every minute of my ownership, and think that with the co-op concept I can help paint a better picture.”  As he digs deeper he’s beginning to understand the challenges.  Whether they ultimately make the shift or not, Tom Greer is the kind of person who will change the way we do business.

He knows that it’s about sharing ownership of the future.

Good question.  I wonder about that often when I think about South Mountain.  Are we promoting a system that would, if widespread, create fundamental change in our broken economic system?  Or are we just avoiding one avalanche chute by traversing to another with a slightly more gradual incline?

Hard to say.

In 1987 I re-structured my company from a sole proprietorship under my ownership to an employee owned co-operative corporation.  It was a dramatic hinge point in the history of the company.  Ownership became available to all employees, enabling people to own and guide their workplace.  The responsibility, the power, and the profits all belong to the group of owners.  There are no outside investors and no non-employee owners.

That’s different.

Profits are essential , but our cooperative ownership structure assigns the wealth we make to those who make it. Our democratic system of decision making offers everyone a voice.  Our employees, who live in the community, and are raising their children here, and are part of the civic landscape, are making the decisions; therefore, community accountability is woven into the fabric of our system.

That’s different too.

Low environmental impact and principled corporate behavior share the same status as profits.

That’s different too.

But principles aren’t really principles until they cost something.  And this year some of our principles began to cost something.  Last fall, as we considered the re-building of our decimated work backlog, we re-considered some of those principles. Many of them.  Here’s just one.

We have had a long-standing policy of only doing work on the Vineyard, the place that we know. That one flew the coop when we had the opportunity to do an extraordinary project across the water, for the Woods Hole Research Center, at a time when our future workload was less secure than usual.  It wasn’t the first time we had such an opportunity, but this was the first time we forced ourselves – due to circumstances – to confront the logistical hurdles and  internal complications we are faced with.  I’ll talk more about this project – and its implications – in future posts.

As a company, we express many ideals.  One that we express less often might be the most important of all – to assure that at all times the 30 families (and other associated individuals and companies) that rely on us for their incomes are secure in the knowledge that the work – and the income – will be there.  Not so lofty.  But this is the real deal, the rubber on the road, and other principles must work in service to that one.

That may be less different, but our democratic structure ensures that we will struggle, at least, to uphold our principles while we keep our business healthy.  And struggle to be different  enough, even when there is genuine conflict between our principles and the practical matters of doing business successfully.

The beginning of the Obama era is frustratingly slow; it’s not different enough. Each of us can have only a minor impact on the political process. Meanwhile, however, our democracy offers other choices. We have the liberty to invent the corporation of the future right now. We can make whatever kinds of companies we want.

Nothing stands in our way, except us.  But we are a significant obstacle.  It’s easy to say that we knew all the things the economic crisis, climate change, and the approach of peak oil are teaching us.  We did, in a way, but it’s not different enough just to know these things.  We have to act, to make fundamental change in the way we work, to learn these things in our hearts and in our guts.

The patterns that we had established over three decades no longer work, and the challenge is to do the work that we must – better service, tighter finances, deeper energy makeovers, higher performance buildings, new forms of old crafts – in this new economic climate.   Maybe, eventually, we can be different enough to actually make a difference. Different enough to uphold our principles, even when it costs something.

It shouldn’t be so hard, I sometimes say.  But it is.  And we have only begun to scratch the surface of change.  That’s scary.

But there’s an old Chinese saying that “Man stands for long time with mouth open before roast duck flies in.”   We have to roast the duck.