| Reviews / Comptes Rendus | Labour/Le Travail, 53

Reviews / Comptes Rendus

George Cheney, Values at Work: Employee Participation Meets Market Pressure at Mondragon (Ithaca: ILR/Cornell University Press 2002).

THIS BOOK is an "updated" version of a work first published in 1999 and is based on research conducted in the 1990s. It identifies trends that encourage successful worker co-ops like those at Mondragon in the Basque region of Spain to imitate the behaviour of transnational corporations, thereby undermining their democratic roots. The original volume won the International Communication Association's Best Book Award for 1999–2001. The author is Professor in the Department of Communication at the University of Utah. The publisher is well-known for its series in labour studies, in particular, research into employee participation.

A worker co-op is a business enterprise owned by its employees on an equal basis. It differs from other employee ownership models because of its one person/one vote principle. As a non-capitalist enterprise, worker co-ops offer an alternative business model. This book tries to answer the question of how alternative social values, such as the participatory democracy inherent in worker co-ops, can be sustained in a complex business organization, which seeks to compete globally. The question implies that there is an inherent tension between market growth and employee democracy in which market demands result in a diminution of employee control. The author believes that the demands of productivity and the requirements of democracy result in a struggle over corporate identity.

The Mondragon co-operative system that the author studied in the 1990s was started in the 1950s (with roots in the 1940s) as a small manufacturing business that has grown into a variety of worker co-ops, educational institutions, a large bank and assorted consumer co-ops, including a large grocery chain. The 150 co-ops in the system have 42,000 employees, sales of $7 billion US, and constitute the tenth largest non-state enterprise in Spain. This spectacular growth has been both a source of pride for the worker co-operative movement and a challenge to democratic principles. It has also resulted in the Mondragon co-ops being the most studied (next to the kibbutzim) model of co-operative enterprise in the world.

The author's argument begins with an outline of the ethos of multinational corporate capitalism in the 1990s, which he sees as being centered on the mantra of market demands. He contends that this ethos is a challenge to the principles of democracy, equality, and solidarity that Mondragon represents. The author's American universe is the world's most hyped-up management culture with endless concern with new approaches to increasing profit. This "how-to" culture jumps from one management technique or buzzword to another.

While living in the ethos created by this hyper-capitalism, the author also brings with him the values of a smaller, alternative American movement that promotes democracy in business — everything from employee profit-sharing to communal enterprise. The roots of this approach are populist, an emphasis on the voice of the people being heard in the workplace. This movement fits with the wider American view that the US represents a radical sense of democracy that does not exist in Europe and that it is a place where change, innovation, and experimentation is a priority.

The author finds the new Mondragon deviating from its founding values as it pursues a policy of aggressive growth. He claims, as other researchers have, that Mondragon's ideology has compromised its co-operative values. The structure of the enterprises remains co-operative but the reality of operations limit employee participation. Earlier research into worker-owned firms by Jaroslav Vanek pointed out that small worker-owned businesses tended to develop an anti-growth ethic once the needs of the members for income and security were satisfied. As workers, they lacked an entrepreneurial capitalist ethic of expansionism and personal wealth accumulation. Cheney suggests that a corporate growth model as embraced by the Mondragon co-ops is closer to capitalist values than co-op ones.

The anti-growth ethos associated with the worker co-operative model can be overcome by an elite with a wider interest than just satisfying the members' basic needs. At Mondragon these goals came originally from the social ideology of progressive Catholicism, Basque nationalism, and resistance to Franco's centralizing fascism. These wider factors play only a peripheral role in Cheney's discussion. Because of his preoccupation with workplace democracy, his focus is the fate of employee participation.

One very important aspect signaling a pro-market ethic at Mondragon was an increase in the pay scales from the original 1 to 3 ratio (lowest to highest paid) to the current 70 per cent of market pay for its upper management. The author considers this an important departure from Mondragon's original principles. This may be a departure from original principles at Mondragon but the payment of market-competitive salaries to managers in co-operative enterprises of various kinds anywhere in the world is commonplace. Liberal democratic co-ops based on the Rochdale model, the most common co-op structure in the world, need to be competitive with the capitalist environment in which they operate. Paying market salaries does not undermine Rochdale principles. The radically democratic wage ratios in the early years of Mondragon reflected the communitarian values and Christian egalitarianism of reform Catholicism and not co-op principles.

Another departure that Cheney analyzes is the establishment of new plants in joint ventures outside of Spain and Mondragon ownership of enterprises that are not co-operatives. Promotion of co-operatives is a co-operative principle so one may conclude from this that the sanctity of the co-op model is not the essence of Mondragon. In fact, Mondragon has never exported its co-operative ideology outside of Spain. What the Mondragon system has learned is that their co-operative form, like the kibbutzim in Israel, is sui generis. These models have grown out of a particular historical situation and are grounded in a geographic locale that does not make them exportable in a universal way. They belong to the culture and society in which they were born and to which they are committed.

What the author has missed that is so crucial about Mondragon's success is the importance of non-co-operative values rooted in Basque identity. In fact, Doug Lionais of the University of Durham argued in a paper given at the 2002 Canadian Association for Studies in Co-operation that it is the non-cooperative features of community-based business that are the key to success and longevity. Mondragon is successful because it has made pragmatic adaptations in defense of its regional development and not because of its co-operative principles.

Cheney has an essentialist view of social values rather than viewing them as instrumental. He conceives of co-op principles as the central goal of Mondragon and in this he is wrong. Co-operative principles and values were basic tools for achieving valued employment, social cohesion, regional regeneration, and other wider community values that were to maintain the Basque way of life so important to its Catholic founder and visionary. Co-ops were approved by reformist Catholicism as a form of Catholic communitarianism expressing Christian principles against models of communist state ownership and capitalist exploitation. Worker ownership and participation may be defining aspects of Mondragon but not its raison d'étre. In Canada the New Dawn Community enterprises in Nova Scotia, also founded by a Catholic priest, use co-operative structures to achieve broader goals of community survival and integrity. There is a similar social vision at New Dawn and Mondragon that is deeper than the horizon of workplace democracy.

Cheney does a good job of documenting the threat to democracy at Mondragon forced by the ethic of growth. But growth is not just a corporate value. It exists for individuals, communities, and states. Mondragon has become the equivalent of a General Motors in the Basque region through intense work, technical leadership, loyalty to the people of the region, and the desire to be world-class in a globalized economy. To protect its co-operative base Mondragon has had to expand internationally to remain price-competitive in a region where costs keep increasing as the standard of living goes up. Criticism that this has led to potentially exploitative relations outside the co-op structure is no different from criticism that co-ops in the Western world do not treat their employees fairly. It may be a valid criticism but it is not necessarily anti-cooperative in that the interests of a co-op's members are paramount.

Mondragon's longtime dependence on a managerial class is a bedrock of the system. Managerial classes, technocracies, and bureaucracies are hindrances to democracy, but they do not destroy it. The strategic thinking required of the management cadre does not mesh easily with the tactical interests of workers. Entrepreneurial risk, capital investment, market forces etc. are the concerns of the former group while pay, pensions, and hours of work are the concerns of the latter. Only in small scale enterprises can the two be brought together in a formal way. Thus one can achieve a utopian ideal of the worker-owner-entrepreneur but at a cost. What is crucial is that the management elite and Mondragon's worker-owners have never sold their enterprises to capitalist competitors the way various successful American worker co-ops have. The system has maintained employment in the region, has created new co-operative jobs, and has secured the future of the co-op worker-ownership model like no other worker co-op in history. Enforcing stricter democratic practices at Mondragon to preserve founding values could very well undermine this achievement and even lead to its demise.

Workplace democracy is a narrow definition of a human being. In large systems like that of Mondragon, individual power is limited even on the job. Working in large corporate structures means that people often seek personal satisfaction and control in areas outside of work — in what entertains them, in the sports they play or watch, in the hobbies they have, the voluntary groups they belong to, where they worship, and in those they love. It would do well for investigators to think about this and not be so restrictive in their definition of life and work at Mondragon.

Cheney's research provides a valuable synopsis of the broad issues facing the Mondragon model, issues that Mondragonians have been debating for several decades. The quotes from interviews he conducted with key players are useful and insightful. His in-depth discussion of workplace democracy is recent and his knowledge of the extensive literature on Mondragon and general workplace democracy issues is excellent. In many ways he tries to be balanced in his assessment of the trends at Mondragon, pointing out both benefits and drawbacks. But his conclusion that management's emulation of trends in corporate capitalism is undermining Mondragon's democratic cooperative achievements is overstated. He has an American-rooted evangelical interest in workplace democracy that is not translatable to Mondragon. His criticism that Mondragon currently lacks someone to provide a counterbalance to the culture of globalizing capitalism is correct but, again, that earlier commitment came from a founding visionary, working in a different business environment. The managerial elite that drive Mondragon today cannot be expected to be anything more than disciples, keepers of the grail. That they have remained true to the original vision to the flawed degree they have is to their credit. I believe that Mondragon workers would rather have a flawed system of workplace democracy and remain economically viable, than have a radical democratic structure that leads to collapse.

What would be interesting and revolutionary is having Mondragon's elite develop a radical corporate model that the great majority of the world's co-ops could use for growth in a capitalist environment. If the impressive mixed-ownership model of second-tier co-ops at Mondragon (workers, consumers, and the community) were adopted by the thousands of co-ops in the world, Mondragon would have caused a revolution in co-operative principles. Likewise, the maintenance of first-tier worker co-ops as the focal point of the co-operative experiment remains radically innovative. The worker co-op element in the world co-operative movement is a small and unimportant element compared to consumer, agricultural, and credit union co-ops. There is nothing else like Mondragon in the world and it remains a radical model for co-operation, even after 50 years. In the last analysis Mondragon, even in its present form, is more democratic, more co-operative, and more egalitarian than anything else in the co-op universe. Cheney's concern that Mondragon may be turning into a capitalist wolf in co-operative clothing is unjustified. Only when Mondragon stops being a co-operative system, can we cry wolf. I doubt that will happen soon.


George Melnyk University of Calgary

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