A CHANGE OF FOCUS?

Mondragon Co-operative Principles (copyright@Mondragon)

We need a change of economic focus and a new government from next May (2016).  Our country is littered with the remnants of failed models of economic development, most of them having failed to deliver long-term economic benefits and more than a few long-term jobs to our people and our communities. What is needed is to step away from the centralised state dependent model of economic development as applied by successive Westminster and Welsh governments who have failed to deliver for Wales.

We badly need some fresh economic thinking and to find other economic models that can deliver long-term jobs and lasting material benefits to our communities and to our country. Our over-dependence on Westminster or Cardiff Bay to solve our economic problems is understandable considering the nature of our economic and political history, but it is simply compounding the error and won’t solve our economic problems or create sustainable jobs.

The days of bringing in significant amounts of ‘inward investment’ are probably over, Westminster has better things to spend its money on. As far as it is concerned the current Welsh Labour government is fresh out of ideas. We need indigenous home grown businesses which will put down roots and stick around when economic times are tough rather than pulling up sticks and bugging out when the grant money runs out. We need to develop small to medium sized enterprises or local co-operative industries that could provide medium to long-term sustainable job opportunities. 

The co-operative model works well in both Ireland and in the Basque country, there is no reason why it should not work well here. The Basque cooperative model, as personified by Mondragon co-operative suggests what can be accomplished. Additionally to grow local businesses and local jobs we are going to have create a real Bank of Wales, perhaps using the German Sparkasse and Landesbanken model.

For too long far too many small and medium sized businesses in our country have been denied credit by banks and this has prevented the growth of our private sector. The German Sparkasse and Landesbanken operate on a geographical basis, and have developed special expertise in the local industries so that they are better equipped to make investment decisions. The over centralised dividend driven rootless banking model that has been followed in the UK is incapable or unwilling to deliver or support economic development in our country.

Adam Price noted, “there are some great contemporary examples of Welsh co-operation at work.  Time-banking was a great idea developed by American Edgar Cahn, but it’s in the south Wales Valleys that it’s taken deepest root.  Antur Aelhaiarn, the UK’s first community co-operative, is still going strong after thirty years.  Glas Cymru is such a unique example of utility-based mutualism that Harvard has made it a case study.   But these wonderful examples are so often beacons without bridges, lone successes that have never scaled into a full-flung Mondragon-like movement”. 

Mondragon which is a collective of around 257 companies and organisations based in the Basque Country has proved to be one of the more resilient economic success stories in recession-hit Spain. The Basque co-operative may well be the world's largest worker co-operative, it is certainly helping the Basque economy to try and resist the worst ravages of the recession in Spain. The company was established in 1956, in the province of Gipuzkoa; employs around 74,114 people (2014 figure) with a business philosophy built around co-operation, participation, social responsibility and innovation.

It began small, with a group of workers in a disused factory, literally using hand tools and sheet metal to make oil-fired heating and cooking stoves. It is now a large conglomerate with over 257 manufacturing, retail, financial, agricultural, civil engineering and support co-operatives and associated businesses; and 15 Technology Centres. Mondragon has annual sales in excess of  €11,875 million (2014 figures). The Cooperative competes on international markets using democratic methods within its business organisation, helps to create jobs, and is committed to the human and professional development of its workers and pledges to development with its social environment. 

Some parts of the co-operative are wholly owned, others are run as joint venture operations, with some 125 local and overseas subsidiaries, which are committed to converting to employee ownership on a case-by-case basis, being consistent with local laws, customs and other cultural and economic considerations. The Mondragon group’s credit union (Caja Laboral) practically became one of Spain’s largest banks and recovered from an initial 75% reduction in its profitability, unlike the other Spanish banks which are still struggling.

Co-operative members as equal co-owners of their own workplaces enjoy job security and individual capital holdings, with an equal sharing of profits on a proportionate basis and an equal ‘one-member one vote’ say in the way their enterprises are run. Pay within the cooperatives is strictly egalitarian, with the highest rates payable other than in exceptional circumstances being no more than six and a half times the lowest.

We in Wales can learn a great deal from the example Mondragon and its methods when it comes generating and retaining sustainable jobs. There is no reason why the co-operative approach cannot be used to bring in a community upward slow burn approach to economic development, something that will not just provide local jobs but real community beneficial sustainable developments which can transform our communities and our country’s economic potential.