The Basque Country had fought General Franco’s takeover with everything it had, making it one of the last regions to fall to regime forces. As retribution when he won, Fanco turned the region into a police state, leaving the people “deeply impoverished, with virtually no middle class… and fractured by war.”
Speaking Euskara (the Basque language) instead of Spanish was banned, jobs were moved elsewhere in Spain, and food became scarce.
It was in this context that a young Catholic Priest arrived, Father José María Arizmendiarrieta.
In listening to his new parishioners, he heard two things: people felt powerless to change the situation, and lacked an imagination for what any alternative could look like under Franco.
So the priest focused his ministry on two priorities: action and education.
Encouraging and cajoling, he organized community members to launch civic and cultural initiatives, including a soccer field, a medical clinic, and a housing complex for workers.
Their biggest achievement was the creation of a technical training school that aimed to move talented young people out of factory work and into better jobs.
When the first five students graduated from this school, however, there were no better jobs for them to move to. Rather than give up, Fr. Arizmendiarrieta challenged them to create some.
Together, the five graduates raised money from the local community and gave rise to the first cooperative in the valley: a small company producing kerosine heaters. Since the main motivation was less about the kerosine heaters than it was about giving people good work, they decided that everyone who worked there should have a say in deciding what good work looked like.
When these worker-owners later filed for social-security insurance with the government, they were denied. Franco’s regime argued that the new employees were not eligible for workers’ benefits because they were also part-owners.
So the community organized again and Mondragon’s second cooperative was born: a cooperatively owned insurance agency that everyone paid into and anyone could withdraw from incase of an emergency. This organization proved so effective that 70 years later it still supplies worker-owners at Mondragon with sick leave, parental leave, a generous pension, unemployment benefits, and medical insurance - even though Spain long ago changed their policy on covering cooperatives.
Little by little, these cooperatives kept growing and a pattern emerged: when an obstacle confronted the community, people came together to identify individuals with the skills and capacity to take it on, and together they would create a new co-op to overcome it.
When, for example, existing cooperatives wanted to expand the businesses but state-run banks wouldn’t lend to them, the community and Fr. Arizmendiarrieta founded La Caja Laboral Popular (literally, The Popular Labor Fund). This cooperative bank is also still alive and well, providing affordable financing to new cooperatives and community members alike; supporting businesses while also investing in the community.
Today, the Mondragon Corporation is a federation of 95 distinct cooperatives. When some businesses do well, their members share in the profits. When times are hard, they collectively support one another, sharing funds and reallocating workers to preserve jobs.
Mondragon is not a story about a white knight. There is no “savior.” Nor is it a story about individual accomplishment where hard work allowed a talented underdog to overcome social obstacles. This story is about A People. A people who move from feeling impotent and on the brink of despair, to building a world where they have power.
The shift in the story occurs when the individuals figure out how to do together what could never have been done on their own.
In this case, the vehicle of that collective action is cooperatives. But Dean Beloki and I agreed that it doesn’t have to be.
Cooperatives are not a magic bullet, they are a business like any other. As the Dean put it at the end of our conversation: it is all about “why” you have a co-op in the first place: Is it to make your community’s life better, or is it to make money (knowing that a successful co-op has to do both)? Knowing which comes first will determine if you are more concerned about making profit for the community, or using the community to make a profit.