Strength and Confidence

Having finally joined the People's Press Printing Society (as should you, for as little as one pound), I am delighted to see Nick Matthews's article in the People's Press that it Prints:

British co-ops have always tried to be neutral when it comes to religion. That does not mean that different communities with religion as part of their make-up have not gone on to create separate co-operatives, but back in the 19th century religious neutrality was a key founding principle [I am not convinced of that. Nonconformity was not neutrality]. This was probably a pragmatic position of not wanting to bring religious divisions into co-operative societies.

In other countries religion has played a positive role in the creation of co-operatives. The classic case raised by a recent correspondent to the Morning Star is the great Basque co-operative of Mondragon. This huge industrial business today has assets of €83.5 billion and employs 84,000 people, in Spain and 18 other countries - including several specialist engineering firms in Britain. While not immune to the Spanish economic crisis, it is still the largest business in the Basque country and the seventh-largest in Spain.

Its creation was down to the arrival of a young curate, Jose Maria Arizmendiarrieta, in Mondragon, a small town, then just 7,000-strong, that had not recovered from the horrors of the Spanish civil war. He arrived in 1941 and by 1943 he had established a polytechnic that became a training ground for generations of skilled workers. In 1956 five of its graduates formed a co-operative with the support of "Arizimendi" to make paraffin heaters. This was the start of Mondragon.

I am not sure he was that popular with the church hierarchy, but he cited key Catholic teachings like the Encyclical Rerum Novarum of 1891 by Pope Leo XIII and the Encyclical Quadragesimo Anno (1931) in which Pope Pius XI suggested the creation of workers' associations. In his radio message of September 1944, Pius XII proposed the creation of co-operative unions for small and medium enterprises. It is likely that Arizimendi and the Catholic connection helped to protect Mondragaon during the years of Franco's dictatorship.

Catholic commitment to co-operatives comes up to date in the 2004 Compendium Of The Social Doctrine Of The Church, prepared by the Pontifical Council for Justice and Peace. In this document there is a chapter "Business and its goals," which argues: "All those involved in a business venture must be mindful that the community in which they work represents a good for everyone and not a structure that merely permits the satisfaction of someone's personal interest.

"This awareness alone makes it possible to build an economy that is truly at the service of mankind and to create programmes of real co-operation among the different partners in labour. A very important and significant example in this regard is found in the activity of so-called co-operative enterprises." It might be difficult for some to accept that Catholicism has had a role as a co-op champion, and not only in Spain. Examples can also be drawn from Italy, Latin America and Quebec. However, what this does show at least is that, at its best, Christianity can offer a radical critique of capitalism.

You will not see much evidence today of Mondragon's Catholic origins [again, that is debateable], although Arizmendi is still held in high esteem. It sticks to International Co-operative Principles within its four divisions - finance (banking, social welfare and insurance), industry (production of goods and services), distribution (commercial distribution and an agro-food business) and knowledge (research centres, a university with 4,000 students and several vocational training centres). Each individual co-operative is one of the building blocks in its organisational structure, with the supreme body the congress having 650 delegates for "joint expression and sovereignty," whose duties include the election of the CEO.

Mondragon is still a co-operative exemplar, but there are some new challenges. For example only half of its 256 companies are co-operatives and a similar proportion of its employees are co-operative members. Being a dynamic business, Mondragon is sometimes compelled to start moving first, then co-operating later. It helped create the giant Spanish co-op retailer Eroski from the merger of a group of smaller co-ops, and took the decision to expand the business very quickly, as it needed scale to compete with the French giant Carrefour, only making the workers co-op members later.

There is also an issue with plants Mondragon has acquired outside Spain and whether their workers could or should become Mondragon members. In 2009 it signed a framework agreement with the US Steelworkers Union for its US and Canadian plants. Only in 2012 has this become a programme for turning them into worker/owners. The truth is that historically co-operatives have grown out of a particular community. Despite its size, in Mondragon's case this is a single valley in the Basque country. It is hard to build a new community beyond that original base and it is particularly difficult across national boundaries.

Whatever the source of Mondragon's origins, it is taking on these issues from a position of strength and confidence. Growing larger co-operatives by mergers and acquisitions, even across national boundaries, in a largely non-co-operative world is a process that we all need to understand.