Economic Order and Democracy - Essay Example

For this reason especially, experiments with various kinds f worker ownership have increased sharply in the United States in the past two decades as a response to the problems f capital flight, runaway shops, bureaucratic waste in the managerial sector, and industrial decline. In the Progressive era, when theologians such as Rauschenbusch and Temple made the case for economic democracy, there were few examples f cooperative ownership or decentralized social ownership to which they could point.

But today there are thousands f worker-owned firms in the United States and, though they have been characteristically slow in rising to the challenge, many American unions have begun to bargain for worker ownership, worker control over pension funds, and worker management rights. These developments are not yet, but have the potential to become, the building blocks f a genuine movement for economic democracy. (Krimerman 1-4) The Mondragon cooperatives in the Basque region f Spain offer one instructive example f economic democracy at work.

In the 1950s a Catholic priest, Jose Maria Arizmendi, inspired a group f students to launch a cooperative stove factory (Ulgor) that quickly grew into a network f foundries incorporated as agricultural cooperatives. Mondragon has since grown into a highly successful and diversified network f worker-owned enterprises that are democratically managed on the basis f cooperative membership. Between 1966 and 1975, sales rose from $47 million to $336 million, and in the 1980s Mondragon became Spain's largest exporter f durable goods.

In over forty years, it has witnessed only two closings. The Mondragon cooperatives employ over 100,000 workers in an integrated network f more than 125 financial, industrial, and service companies in virtually every economic sector, including robots and mass transit. Mondragon contains over 75 industrial firms, an agricultural cooperative, five schools, a technical college, and a central bank -- the Caja Laboral Popular -- which is half-owned by its own employees and half-owned by other cooperatives.

Founded in a church basement in 1958, the Caja Laboral Popular has become a bank with $2 billion in assets that specializes in making loans to cooperative firms and providing industry-specific consulting assistance. Each Mondragon worker/owner holds one share f voting stock, and profits are distributed in the form f additions to a capital account on which 6 percent interest is paid annually. Seventy percent f annual profits are distributed to worker/owners on the basis f salary scale and seniority, 10 percent are donated to charity, and the remaining 20 percent are reinvested.

Because the network's worker/owners cannot withdraw money from their capital accounts until they retire, Mondragon is able to make long-term investments in expansion, diversification, research and development, and reinvestment from its accumulated capital stock. [TM] The Mondragon network consistently outperforms comparable capitalist enterprises throughout Europe, and thus demonstrates that worker empowerment and cooperation can be turned into economic advantages. Without question, the cultural variables are daunting; it is difficult to imagine how a similarly integrated network f pure-form cooperatives could be established in individualistic