Basic Principles of the Mondragón Cooperative Corporation

This summary consists of both direct quotes and our summary of the Mondragón text.

I. Open Admission.

The cooperatives do not discriminate on the basis of religion, politics, ethnicity, or sex when it comes to becoming a member of the cooperative.

II. Democratic Organization

All authority is vested in the General Assembly, which consists of all the worker owners of the enterprise, one person one vote. The General Assembly elects the Governing Council, which would be like the Board of Directors, appoints (and removes) the organization’s management.

III. Sovereignty of Labor

“In the MCC Cooperatives it is understood that Labor is the main factor for transforming nature, society, and human beings themselves. As a result, Labor is granted full sovereignty in the organization of the cooperative enterprise, the wealth created is distributed in terms of the labor provided and there is a firm commitment to the creation of new jobs. As far as the wealth generated by the cooperative is concerned, this is distributed among the members in proportion to their labor and not on the basis of their holding in Share Capital. The pay policy of MCC’s cooperatives takes its inspiration from principles of Solidarity, which are materialized in sufficient remuneration for labor on the basis of solidarity.”

Worker owners receive competitive and just salaries and dividends based on the profitability of the coop.

IV. Instrumental and Subordinate Nature of Capital

Generally, a corporation sells shares of ownership and management to raise capital, and then hires labor. The Mondragón Cooperatives do not sell shares in order to raise capital. Here, the workers own the enterprise and the management and rent the capital.

V. Participatory Management

“This principle implies the progressive development of self-management and, consequently, of the participation of the members in business management. This requires:

  1. The development of adequate mechanisms and channels for participation.
  2. Transparent information with respect to the performance of the basic management variables of the cooperative.
  3. The use of methods of consultation and negotiation with the worker-members and their social representatives in those economic, organizational and labor decisions which affect them.
  4. The systematic application of social and professional training plans.
  5. The establishment of internal promotion as a basic means of covering positions with greater professional responsibility.”

VI. Payment Solidarity

“The Mondragón Cooperative Experience declares sufficient payment based on solidarity to be a basic principle of its management. Solidarity is manifest both internally and externally, as well as at the corporate level.”

VII. Intercooperation

The Cooperatives cooperate with each other, with other cooperatives in the area, and with national and international cooperative organizations.

VIII. Social Transformation

The Cooperatives acknowledge a duty to contribute to the common good:

  1. By reinvesting a high proportion of heir profits, including regular investments in community funds for job creation;
  2. 10% of the net profit of the Cooperatives is donated to charitable organizations;
  3. Taking care of their social security, unemployment, and health insurance requirement (through a cooperative owned by the other cooperatives), and
  4. Being active in their community.

IX. Universality

“The Mondragón Cooperative Experience, as an expression of its universal vocation, proclaims its solidarity with all those who work for economic democracy in the sphere of the Social Economy and supports the objectives of Peace, Justice, and Development, characteristic of the International Cooperative Movement. Likewise, through OTALORA, which is our Business and Cooperative Training Centre, we try and disseminate cooperative culture on the basis of our own social-economic experience, developed over the last 40 years.”

X. Education

“Education and Training have played a decisive role in the creation and development of the Mondragón Cooperative Movement. Its founder and main driving force, the priest José María Arizmendiarrieta, was always quite clear that ‘education, understanding as such the complex of ideas and concepts adopted by a man, is the key to the development and progress of a people.’ Insisting on this idea, Father Arizmendiarrieta like to repeat ‘that education is the natural and indispensable cornerstone for the promotion of a new humane and just social order’ and that ‘knowledge has to be socialized to democratize power.’

“Therefore, on the basis of this approach, the first thing he did when he came to Mondragón was to create the Polytechnic School in 1943 (today Mondragón Eskola Politeknikoa) which during all these years has been the main source of managers and skilled workers for our cooperatives.”

 

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