topic eight (2) alternative globalization (2) : alternative model? is global sustainable cooperative...

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Topic Eight (2) Alternative Globalization (2) : Alternative Model? Is Global Sustainable Cooperative possible?

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Topic Eight (2)

Alternative Globalization (2) : Alternative Model?Is Global Sustainable Cooperative possible?

Any alternative?

The Western globalization model is that corporations from outside of the nation should come in, bringing expertise and capital, employ local people at low wages, and export stuff back to the homeland, a process very similar to the modernization of previous generations.

Any alternative?

But this is not the only economic alternative developing countries have before them. The Mondragon cooperatives of the Basque, region of Spain, for example, have tens of thousands of worker owners, each of whom has an equal vote in electing the management of their enterprise. They succeeded without importing any outside capital or expertise or employing people at low wages.

The Mondragon Co-operative Experience

Started from the arrival of Father José María Arizmendi, the fundamental driving force behind and the founder of the Mondragon Organization, in Mondragon on February 5, 1941. Working as a preacher, he then became a teacher, discussion leader as well as a socialist afterwards. Two years after his arrival in Mondragón, Father José María founded the Professional School, the seed which would later become “Mondragon Unibertsitatea” - the University of Mondragón.

The Mondragon Co-operative Experience

This institution has played a vital role over the decades, training many of those who later became key figures in the development of the co-operative project. Five of his “first-round” disciples started a new company organized along the social and economic lines they had been discussed with him. The Mondragon system, starting with this five person coop in 1955, now employs 21,000 persons in secure and well paid jobs in 170 plus coops, each with superior working conditions and a lower ratio of highest to lowest salaries than in capitalist firms.

What make it different?

The success of the Mondragon has given a worldwide message that a worker cooperative is no longer a utopian ideal of an industrial economy, but what make it different between itself and an ordinary private firm?

Following aspects will be discussed1. Organizational culture, 2. Right of women worker3. Financial Policies4. Balance of workers’ interest

Organizational culture

The organization structure was so different from other common firms. There are the governing council, which are the top policy making body of the cooperative and it is elected by members, who are all workers with equally weighting vote; and the social council, which is Arizmendis’ idea that if the governing council was the only organ for representation, the members’ participationin the firm would be very little, the Social Council is then needed to avoid the passivity and to facilitate direct experience with many problem.

Organizational culture The Social Council is also asked not to make demands

on management, but rather should help integrate the cooperative by furthering the communications process. To further reinforce the concept of the social council as an advisory body only, its chairperson was chosen by the governing council from its own members or from management. Although the independence of the Social Council may affected and limited because management appointed its chairperson, in case of serious disagreements with the governing council, it can refer the issue to the general assembly, in which the final decision can be made by the total membership of the cooperative.

Right of women worker

At the period around 1960, single women had been required to leave the firm when they married, as men were considered the primary wage earners and thus deserved preference of continued employment. By the mid-1960s, the Mondragon cooperatives abandoned it, due to the natural demand of women and the rapid growing of the company at that time.

Financial Policies

Crucial to the Mondragon complex is a people's bank which pays interest on workers' savings, loans money (at interest) to start up new coops, and uses its surplus for aiding troubled firms, providing social welfare, and expanding worker controlled employment. Moreover, it was a momentous decision to eliminate cash payment, if it is the decision that continue or increase the payment, it would have been impossible to build the strong and dynamic complex today. This is aimed at building up their capital was necessary to support their increasing investments and rapid expansion.

Balance of workers’ interest

Originally the founders had set a three to one ratio between the lowest and the highest paid member. As the cooperative has grown both in its’ size and complexity, in order to prevent the prevent the left of executives, the ratio have changed several time, comparing with some similar size Spanish private firms of similar size. Furthermore, the company have socialized the members into a cooperative way of life that youths could able to find sufficient social and psychological satisfaction within the complex to overcome the “lure” of higher pay anywhere.

Structure of Mondragon

General Assembly Hold once a year by the entire membership of

each individual co-op Votes on business plan, allocates earning,

decides on mergers and acquisitions Votes on new members and the punitive

expulsion of members Electing the Governing Council and monitor

its performance

Structure of Mondragon

The Governing Council Composed of the president, vice president,

and secretary of the General Assembly, and several other members of cooperatives

All are elected by the General Assembly, and only co-op members can be elected

Prepares annual plans, proposes the distribution of profits for the approval of the General Assembly

Structure of Mondragon

The Governing Council Appoints and oversees managers Determines job classifications Presents annual reports and accounts Members of the Governing Council hold office

for four years

Structure of Mondragon

The General Manager Appointed by the Governing Council Accountable to the Governing Council and the

General Assembly, which can vote to dismiss a manager who is not performing well

Manager preside over department heads who are also appointed by the Governing Council

Appointed for four years and can be renewed Department heads (engineering, marketing,

and personnel and so on) is appointed by the General Manager

Structure of Mondragon

Management Council

A consultatory body to the General Manager

Made up of department heads and other executives who are nominated jointly by the General Manager and the Governing Council

Structure of Mondragon

Social Council Workers are represented to management by

the Social Council Elected directly from the geographical

sections of the shop floor Exert pressure upwards from the shop floor to

management Communicate managerial decisions and

convey information downward

Structure of Mondragon

Audit Committee

Required by Spanish cooperative law

Inspecting all documents brought before the General Assembly

Criticisms

Centralization Juridical organization of the new sectoral groups,

consisting of six to twelve co-ops in similar lines of production such as furniture or kitchen appliances

Each group has a Governing Council, Social Council, and General Assembly, to which delegates are sent from each co-op

Increasing dissatisfaction with this arrangement; workers and plant-level managers feel that important decisions are made outside of their control as the groups become more powerful.

Criticisms

Cooperative Congress Created in 1987 to bring together

representatives of all the co-ops into one body

More than 300 delegates Delegates tend not to come from the ranks of

manual workers Has a president and a permanent

commission, made up of representatives of the co-op groups

Criticisms

Cooperative Congress Formalize and legalized the change of Mondr

agon system

Consolidate the new organization of the co-ops into 25 sectoral groups

Set up Mondragon Cooperative Corporation

Criticisms

Cooperative Congress The Corporation has its own Governing

Council, comprised of a president, vice-president and representatives from the member co-ops.

Represent a dissolution of democracy

But the proposal to increase the salary ratio to 1:9 or 1:10 was defeated

Criticisms

1. Political Apathy

2. Distancing from Labor Movement

3. Middle-class Project?

Comparison with Standard Private Firm

No interested in the governance of cooperative

Mondragon system affects other non cooperative operations

Comparison with Standard Private Firm

Fagor Clima

Set up in 1984 producing gas water heaters

In 1989, there were 250 worker-owners Fifty temporary workers on contracts 80 women, average age was

Comparison with Standard Private Firm

Fagor Clima annual payment and bonus was US$17,568,

equivalent to local workers in private firm and a comfortable lifestyle.

Head of department with a rating of 2.8 earned UD$37,745, a modest difference

1/3 workforce was nonmanual, more low- and mid-level managers than in private firm

a handful female engineers and managers

Comparison with Standard Private Firm

Mayc Founded in 1941 by three families from Berg

ara Workers refused to join Fagor Goup Manufactured washing-machine and water h

eaters 1992 the owners sold 64% of the shares to t

he Italian multinational Candy Mayc employed 612 people, 129 job had bee

n eliminated 498 manual workers; 114 clerical staff, engin

eers, and managers

Comparison with Standard Private Firm

Mayc average age was 42 128 women, equivalent to 21% of workforc

e only one female manager annual payment plus bonus was US$17843,

slightly higher than Clima 65-80 workers were on short-term contract,

about 13% of total workforce

Comparison with Standard Private Firm

Social Council Workers’ Council

One representative from eachsection of plant, includingengineering and managerialoffices

Same composition

Set up in 1957, modeled on factory Councils

Followed the Spanish legislation of 1988

Dual characters formanagement and workers:

Different nature and scope, abody challenging the Management

Comparison with Standard Private Firm

1. improve decision making by taking into consideration of different views regarding business objectives and plans;

1. receive information every three months on production figures, sales, production plan, and future employment projections;

2. examine business plans and contributing proposals;

2. be informed of the firm’s finances including accounts and shareholders

Comparison with Standard Private Firm

1. improve decision making by taking into consideration of different views regarding business objectives and plans;

1. receive information every three months on production figures, sales, production plan, and future employment projections;

2. examine business plans and contributing proposals;

2. be informed of the firm’s finances including accounts and shareholders

Comparison with Standard Private Firm

3. propose changes in cooperative rules and norms

3. be informed to any restructuring plans regarding issues of layoffs, training programs, changes in work organization, and so on.

4. prevent accidents and monitoring health and safety

4. transmit information on any change of in ownership of the firm that might affect employment

5. monitor social security 5. be familiar with labor contracts

Comparison with Standard Private Firm

6. participate in annual evaluations of pay rates

6. be informed of the penalties and sanctions applied to workers who break rules

7. inform workers regarding the activities of the Social Council

7. know the rate and causes of absenteeism, accidents, work-related illnesses and be familiar with work environments

Comparison with Standard Private Firm

8. maintain and evaluate the system of information from managers to workers and vice versa

8. actively ensure that the company abides by all regulations concerning social security, unemployment, and health and safety and take legal action when necessary

9. analyze objectives and methods for improving labor relations

9. participate in the management of social projects for the benefit of workers and their families

Comparison with Standard Private Firm

10. submit a vote to General Assembly for a solidarity strike or not

10. collaborate with management to maintain and increase productivity, in accord with the annual contract.

11. set up subcommittees and study committees

12. develop a list of candidates for the Management Council

Comparison with Standard Private Firm

RIGHT POWERLesser hours for meeting longer

No professional expertise to help Lawyers, economist and engineers to evaluate management plan

Individual apathy and structural apathy: cooperative is free from labor-management conflict

Actively involved in the design of an assembly line since they were not allowed in planning production and cannot make recommendation

Comparison with Standard Private Firm

No creativity Larger social project- factory museum

Lesser social distinctions, but inequalities were more meaningful to workers than managers

Political strife