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.
Are We Different Enough??
At the recent conference of the Vermont Employee Ownership Center (VEOC) in Burlington, VEOC board president Paul Millman asked an important question to the attendees, who represented some of the many remarkably progressive companies in the Green Mountain State. “Are we different enough?” he wondered.
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.
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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
read more -
