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September 2006   
F E A T U R E S

Interview: Australia’s Most Wanted
The ACCC is the latest state agency to turn its guns on the construction union. National official, Dave Noonan, discusses the implications.

Industrial: The Fox and the Contractor
With new laws looming for “independent contractors”, Foxtel subbies have had the carpet pulled from under their feet, writes Nathan Brown.

Unions: Industrial Wasteland
A group of inner-Sydney veterans appear to be working to strip their families of retirement incomes. Jim Marr records their desperation.

International: Two Bob's Worth
German and British workers are participating in business decisions while WorkChoices locks Australians out of the conversation, writes Anthony Forsyth.

Economics: National Interest
John Howard claimed that interest rates would always be lower under a Coalition government than under Labor, Neale Towart crunchess the numbers.

Environment: The Real Dinosaur
Economic ignorance remains at the top and the critics are oblivious says Sol Power

History: Only In Spain?
The experiences of self management during the Civil War have been the one positive factor to come from that tragic event, and the Mondragon Cooperative Corporation thrives today.

Review: Clerk Off
Nathan Brown draws solace from some fellow social misfits.

C O L U M N S

Legends
Westie Wing
MLC Ian West ventures beyond Macquarie St and into the desert of the eco rats.

The Soapbox
Testing Times
Former RLPA secretary and Newcastle Knights prop, Tony Butterfield, fires up over dawn raids.

Obituary
Dare to Win
The union movement has lost an inspirational leader of working men and women, writes Jeana Vithoulkas

Fiction
Tommy's Apprentice
Chapter Two - Tommy’s Tale.

E D I T O R I A L

Justice, Applied Liberally
To think, Phillip Ruddock used to be a liberal.

N E W S

 Boss Gives Dad the Finger

 Amber's Law Pulps WorkChoices

 Westfield Flogs Good Deal

 Building Workers Spooked

 Bankers to Train Assassins

 Astroboy Blasts Off

 First Global Deal Docks in Germany

 Bans Stop the Press

 Deportation for Pay-To-Work Tradesman

 Telstra in Bush Bloodbath

 Boss Punts Assaulted Teen

 Ballots Stuffed By WorkChoices

 Howard in a Spin

 Extras – The Waterfront.

 Activist's What's On!

L E T T E R S
 Please Don’t Go
WHAT YOU CAN DO
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History

Only In Spain?

By Neale Towart

The experiences of self management during the Civil War have been the one positive factor to come from that tragic event, and the Mondragon Cooperative Corporation thrives today.

Franco had the support of the Catholic Church. But not all apparatchiks of that organisation betrayed the Spanish people. One priest who fought for the Republic and who was then spared by Franco has been a key member of the community that has ensured that self management in Spain continues in a socially profitable way

Don Jose Maria Arizmendiarrieta, the Catholic Priest who stimulated the cooperative into existence had a strong base in catholic social doctrine (Rerum Novarum) and that he had Marx, Mao and Galbraith in his small personal library.

Race Mathews has for many years been trying to instill the lessons into the Australian labour movement, without any success as far as I can tell. He did have some support from the Cain Government at one stage.

Mathews draws links between the distribution and Fabianism of the Webbs, Chesterton and Shaw. (Those Fabians always seem to me to be very ready to tell the workers what to do, rather than listen and learn from what the workers have to say).

Mathews has performed an invaluable service by setting out the histories of Mondragon and other mutuals and cooperatives, and located them in historical context (included the Rochdale movement). In particular his book Jobs of Our Own Society (1999) (that language is a bit disturbing) and his earlier pamphlet produced for the Fabian Society in the midst of the hopes of the Accord: Employee Ownership: Mondragon's Lessons for Australia (1987).

The ACTU and the ALP went on a tour in 1986-87 and produced Australia Reconstructed still the most comprehensive view of where Australian work and workers could be heading. That tour went to several European nations but not Spain, and certainly not to the Basque country, the particular social and geographical area that allowed the worker cooperative to develop in a way never seen elsewhere.

George Benello writes that "while its explicit connections to the anarchist tradition are unclear, the Mondragon system is an example of liberatory organisation which, like its predecessors in the Spanish Civil War, has achieved success on a scale unequaled in any other part of the world.

Long notes that "There are similarities ...between the internal structure and day-to-day functioning of the CNT/UGT collectives in 1936 and 1937 and the MCF co-operatives since 1956."

Arizmendi had narrowly missed being put to death by Franco as a result of his participation in the Spanish Civil War on the Republican side. With the help of collections from citizens of Mondragon, he founded an elementary technical school in 1943. The first graduates numbered among them five men who, in 1956, founded a small worker-owned and managed factory named ULGOR, numbering initially 24 members, and given to the manufacture of a copied kerosene stove."

The claim often made my managers and CEOs guarding their position that you need experts, or the alternative claim by those who, like the current government, claim that small business represents the individual entrepreneurial spirit, that workers need to just work and the managers manage is shown to be a lie in Mondragon.

A look at work in the MCC by Benello gives the feel of cooperation:

"If one enters a Mondragon factory, one of the more obvious features is a European style coffee bar, occupied by members taking a break. It is emblematic of the work style, which is serious but relaxed. Mondragon productivity is very high -- higher than in its capitalist counterparts. Efficiency, measured as the ratio of utilized resources (capital and labor) to output, is far higher than in comparable capitalist factories.

One of the most striking indications of the effectiveness of the Mondragon system is that the Empressarial Division of Mondragon has continued to develop an average of four cooperatives a year, each with about 400 members.

Only two of these have ever failed. This amazing record can be compared with business start-ups in this country, over 90 percent of which fail within the first five years. I have seen a feasibility study for a new enterprise. It is an impressive book-length document, containing demographics, sociological analysis of the target population, market analysis, product information -- just about everything relevant. When a new prospective cooperative comes to Mondragon seeking help, it is told to elect a leadership. This leadership studies at the Empressarial Division for two years before they are allowed to start the cooperative; they thus learn every aspect of their business and of the operation of a cooperative"

The criticism that some anarchist groups level at Mondragon in that although they do not have traditional management structures, they have not replicated the cooperative model that developed more or less spontaneously during the Civil War. Rather the members of cooperatives elect a separate management team from their own membership. Long comments that there are "undeniable compromises which today's worker-owners have made (or as most of them see it, have been forced to make) in order to stay afloat in the hostile capitalist sea in which they operate, and despite the fact that the debt appears to go unrecognised by many of the co-operators themselves, few of whom consider themselves anarchists."

The financial structures in place do a great deal to ensure this success. Personal profiteering is not a part of the system. Profit, or surplus, is social surplus and remains in the system.

"It does not produce weapons, useless luxury goods, or things that pollute the environment".

Mike Long notes that "by 1994, the MCF had become the fifteenth biggest business group in Spain, comprising some 170 co-ops and over 25,000 worker members and their families, with vast assets, large financial reserves, and annual sales of around three billion US dollars." http://www.cooperativeindividualism.org/long_mondragon.html

Mathews writes that unemployment in the region was at 20% and the region had lost 150,000 jobs since 1975. The MCC, on the other hand, had seen employment increase each year.

It is important that the cooperatives do not just manufacture, but they also run childcare, credit unions, supermarkets etc on a cooperative basis and the members use them.

Mathews notes the that

"The Basic Points of the Mondragon Cooperative Experience are:

∑ Open admission

∑ democratic organisation

∑ sovereignty of labour [note: all economic textbooks in Australian universities take as their basic premise sovereignty of the consumer]

∑ the instrumental and subordinate character of capital

∑ participatory management

∑ payment solidarity

∑ interco-operation

∑ social transformation

∑ universality

∑ education

The cooperative seeks to provide work for all those who need it. The MCC explicitly recognizes the primacy of labour in its organisation and distribution of the wealth created."

Additional principles crucial to survival of cooperative ventures and the overall structure included

∑ a system of individual internal accounts into which 70 percent of the profits (a more accurate term is surplus) of the cooperative were placed. Each member had such an internal account. 30 percent were put into a collective account for operating capital and expansion, with a portion of that being earmarked for the community. The individual internal accounts noted receipt of the potion of the surplus earmarked for it, but this was then automatically loaned back to the cooperative, with interest paid. Upon leaving, members receive 75 percent of the accumulated funds credited to their internal account, while 25 percent is retained as the capitalization which made the job possible. This system essentially allows the cooperative to capitalize close to 100 percent of its yearly profit and gives it a capacity for internal capital accumulation unequaled by any capitalist enterprise. It also establishes an ongoing flow-through relation between the individual and collective portions of the surplus.

∑ A membership fee was determined, now about $3,000, which represents a substantial investment in the cooperative, and which could be deducted from initial earnings. This too is credited to the internal account. Both the membership fee and the share of the surplus represent methods of ensuring commitment through financial incentives. Unlike older cooperatives, which often determined the membership fee on the basis of dividing the net worth into the number of shares, hence making the membership fee prohibitive, the fee is arbitrary and fixed at an affordable amount.

Factors that are debated as to the success of the MCC include Basque nationalism; co-operative values; a strong sense of (Basque or any other) ethnic, linguistic and cultural identity among the participants; the foresight and leadership of Father Arizmendiarrieta; the compatibility of MCF values with Basque traditions, such as co-operative farming practices and the relatively equitable land distribution among Basque families compared, for instance, with the hacienda system of southern Spain.

The weight given to any of these is hard to distribute. However the historical role of the trauma of the Spanish Civil War and the establishment of the syndicalist cooperatives during that war in Barcelona, Aragon and the Basque Country, and the unrelenting hostility of Franco to the Basques, the bombing of Guernica (perhaps the seminal moment in 20th century warfare) helped maintain a tradition of self-reliance that had grown in the geography of the rugged region and the sorts of livelihoods (fishing, small scale farming) that sustained the region.

Small groups together for the common good were always the basis of their existence. The move to a formal cooperative and industrial training and education shifted this focus to a 20th century outlook that has been able to be sustained through war, economic downturn, the end of fascism in Spain and the rise of the global economy. The cooperatives have a financial structure and a people structure that has ensured their survival without having to betray the above basic principles.

Flassati sums up the reasons for success:

• The comparative isolation of Spain under Franco in the 1950s, together with post-war economic growth, offered a protected and expanding market for the sale of their consumer products.

• The Mondragon system has triumphed over the shortage of investment money which nearly always hampers such co-operatives (see The Crippled Giants page 18). It is not dependent on private banks or government subsidies: 70 per cent of all surpluses are distributed to worker members by being credited to their co-operative bank account at the Caja Laboral Popular. This blocked account money is for reinvestment in new machinery and loans for the founding of further co-operative factories.

• Basque attitudes towards manual labour are healthy, nothing like the hidalgo spirit elsewhere in Spain which is contemptuous of physical labour. A further Basque characteristic which has helped is the respect for social equality and the 'associative spirit' found in thousands of small dining-out groups.

• The co-operative bank has a planning organisation for the deployment of its funds, not lending where profits can be maximised although the lenders projects have to be viable, but where there is a strong determination of a group of people willing to sink some of their own savings into a projected enter prise.

• The spirit, advice and influence of the founding father, padre Jose Maria Arizmendi was central to the enterprise. His philosophy of priding himself on never making decisions for others and refusing to centre institutions on himself, encouraged others to think and act for themselves. So the co-ops have never been dependent on one personality for their survival, development and expansion.

• The 'cloning' process, or establishment of spin-off firms has stopped successful groups from becoming too big. Instead of expansion of the prosperous factories, most have been split up to retain friendly worker-management relations.

• The founding of mutually supporting organisations has avoided failures through isolation. Education at the technical college, sympathetic banking advice and loans, advanced research groups and factories, the skills, experience and knowledge of each group are fed into others.

NOTE: a expression of the survival of us all is to be found at Mondragon. They have active research divisions and have a photovoltaic research project and manufacturing section

See:

Mike Long (1996) The Mondragon Co-operative Federation: A Model for our Time? at

http://www.cooperativeindividualism.org/long_mondragon.html

Kevin J Jones. Mondragon: Keeping in order to Give More http://www.thirdway.org/files/world/mondragon.html

George Benello The Challenge of Mondragon

http://dwardmac.pitzer.edu/dward/classes/powpart/benellomondragon.html

The Mondragon Cooperative Corporation (2001) Mondragon Corporacion Cooperativa

"The History of an Experience" http://mondragon.mcc.es/ing/cooperativismo/experiencia.html is a good brief istory provided by the MCC on their website in English

Dominic Flassati (1981). Viva La Co-operativa. By the Sweat of their Brows (new Internationalist no 106

http://www.newint.org/issue106/viva.htm

Race Mathews (1987) Employee Ownership: Mondragon's Lessons for Australia (Australian Fabian Society Pamphlet no 47)

Race Mathews (1999) Jobs of Our Own: Building a Stake-Holder Society: Alternatives to the Market and the State (Annandale and West Wickham, Kent: Pluto Press and Comerford and Miller) (note that there is quite a degree of hope in this about the then recently elected Blair government. I am not sure that such hope remains!)

Bob James, anarchist historian and reviver of the flame as far af fraternalism and mutualism are concerned is not so complimentary of Mathews approach but does give him a small amount of begrudging respect. James develpes the view that there is much to be learned from the fraternal societies whilst Mathews, according to James, looks at examples and decides we need to move past them.

See James' Centre for Fraternal Studies webpages http://www.fraternalsecrets.org/links.php


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