Bees can fly, and worker co-ops can succeed

I offer a single
counter-example -- the Mondragón Corporation, in Spain's Basque
country, an association of 150 co-operatives in every sector --
industry, agriculture, banking, marketing, education, health insurance
and pension management. Around 21,000 workers are partners in their own
co-ops and in the corporation, and all enterprises are run
democratically. By regulation, the highest-paid director makes no more
than 4.5 times the wage of the lowest-paid production worker.

Mondragón
is run democratically by a 650-member Co-operative Congress, its
delegates elected from Mondragón's constituent co-operatives. The
annual assembly elects a governing council, which runs the corporation
and appoints senior staff. Each individual co-op has a workplace
council, whose elected president works with the enterprise manager.

More
than half a century ago, five workers in the Basque country, graduates
of a democratically run polytechnic school, started a co-op that
manufactured cooking-stoves. More co-operatives followed and linked
together, and a credit union was established. Other co-ops were invited
to join the group, and also companies facing bankruptcy, on condition
that they became co-ops as well. The Mondragón Corporation in its
present form emerged from this association of co-operatives in 1991.

Finances
in Mondragón are managed co-operatively, through a worker-run bank
called Caja Laboral, employing 1,800 partner-owners. The bank was the
first one in Spain to provide customer service in late afternoons and
evenings. Health insurance and pensions are run by another
co-operative, Lagun-Aro; the marketing co-operative Eroski is the
third-largest retail group in Spain and the largest Spanish-owned
supermarket chain; and the local university, Mondragón Unibertsitatea,
is a co-operative as well, founded in 1997 from the fusion of three
co-operative colleges. Four-thousand students presently attend at the
university's three campuses.

Contrary to Heath's common-sense
notion of human nature as essentially self-centred, Mondragón workers
characteristically accept wage cuts in hard times rather than layoffs.
If layoffs in one enterprise do prove necessary, those laid off are
found positions in other co-ops. Even during economic crises, the
Mondragón area has maintained a high rate of employment.

Of
course, Mondragón is not utopia. There are the usual stresses and
strains found in any institution, and observers have noted that there
is some disaffection in the ranks with what is perceived as top-down
management (although everything is relative -- at Mondragón, managers
are appointed by a democratically elected Social Council). The
centralization of decision-making has come at some cost, perhaps, to
full democratic participation on the ground.

But what Mondragón
does prove is that Heath's confident assertions are no more than a kind
of learned speculation. Mondragón does not create unemployment; there
are no second-class members of it; and it and its partner-owners are
prosperous by any economic measure one cares to apply. There have been
no mass wage-cuts because of expansion, and Heath's "perverse supply
response problem," much like the engineering obstacles that forbid bees
to fly, remains an academic abstraction -- dazzling, perhaps, to the
readers of op-ed pieces and to assorted philosophers and economists,
but irrelevant in the face of proven success.

John Baglow is an Ottawa-based writer and researcher in public and social policy.