Co-operation keeps out the economic cold

Press, 30 November 1982, Page 20

Co-operation keeps out the economic cold

From

CHRISTOPHER LOGANS,

in London

The Basque co-operatives of Mondragon, 25 years old this year, are confidently facing their second quarter of a century despite Spain’s economic depression and political upheavals. •••■.

It was in 1957 that the Mondragon experiment began, when, dissatisfied with limitations. placed upon labour by local paternalistic capitalists, five young graduates acquired a small engineering firm and began a movement that has transformed the regional economy and attracted international attention.

All 77 employees of that firm were invited to take part in the experiment of converting it into a co-operative based on the traditional Rochdale principles of equality in both ownership and control. The group now comprises 85 industrial enterprises, a savings bank with 120 branches and other service cooperatives. Among these are a research and. development laboratory with teams looking at microchips and robotics; a polytechnic which trains students and workers from the. co-operatives; a retail network; and housing associations. . Academics, politicians,-; in-.• dustralists and trade unionists

make pilgrimages to the Pyrenees to find out what makes Mondragon work. While the Mondragon model may not be designed for export, there are some key lessons it offers everyone. First, although it is true that the industrial co-operatives thrived in the boom conditions of 1960-74 there have been neither massive lay-offs nor one bankruptcy. The rest of the Basque economy has reeled before recession, big names have gone bust, and others are clinging to bank and government lifebelts. The area’s real level of unemployment has stood at around 20 per cent for the last two years, yet there have been no redundancies in the cooperatives, and short-time

working has been minimal. Building on the r efficiency gains of/the good times, the . challenge of these hard times ; has been met by increased exports - up from 10 per cent of aggregate sales in 1970 to nearly 29 per .cent last year - and further integration and ■ investment. Federations of co-operatives have been, formed to make the ' most of resources; both human and physical; The savings bank .is still planning to create five

new co-operatives a year. Because profits have not been removed for consumption by-the membership but retained within the system; the banking operation has not been put under a strain in meeting the need for more investment to offset falling profitability. Most of the Mondragon cooperatives are in the mechanical, electrical, and electronic engineering branches of industry, with , some in light manufacturing, such as furniture. This highly capitalised development is a result ;of a combination of factors but a primary influence must' have been the farsighted decision, taken only two years after setting up the first co-opera-tive, to establish a bank. All political parties in the Basque provinces are in favour of extension of co-operative principles in the restructing of the economy. At 25, Mondragon is still young, but its message to visitors is that co-operatives can be successful in building a sound local and regional economy, where power is held at the lowest possible level and yet efficiency is not sacrified in the pursuit of equality. Copyright, London Observer Service.