Jose Mari Ormaetxea. One of the founders of the Mondragon Cooperative: Equity must be paramount in business; each must be given what is justly theirs, and providing, as a boost for the town, that social justice be promoted
2008-01-11
VELEZ DE MENDIZABAL AZKARRAGA, Josemari
BELAXE. ITZULPEN ZERBITZUA
The evidence that economy is cyclical is on our doorstep. As an example, and with no intention of comparisons, Unión Cerrajera in Mondragón (UCEM) and Fagor show us the beginnings as well as the final stages of business roles.
It is a fact that economy works in cycles. But this assertion, an unavoidable point to consider when analysing the vast dimensions in which the business-world performs, may not affect all businesses in the same way, or the manner in which they are affected may vary.
The above examples, Unión Cerrajera and Fagor Electrical Appliances, are obviously completely different cases, as different are all the reasons that influence on the success or failure of a company. Bideoa kanpoko programa batean ireki
Unión Cerrajera, created as such in 1906, went through a highly successful period in its half -century boom through pure coincidence, until Fagor Electrical Appliances was set up in 1956. Unión Cerrajera went through a period of splendour protected by an autarkic economy that was created when the Spanish authorities of the time decided to separate themselves from the rest of the world’s economies. The company’s powerful industrial position, with 2000 workers in its factories (mainly in the Mondragón and Bergara plants) gratefully acknowledged the favour they were receiving, as closing the borders to foreign products prevented them from being evidenced as old fashioned in their manufacturing processes and lacking in competitiveness. This would have forced them to innovate.
The skill and honour of their Board of Directors cannot be questioned. But a reality that is fast becoming a motto for many businesses is that “no matter how splendid they are, they carry the stigma of their failure if they ignore the future that comes”.
These are the circumstances that brought on the collapse of Unión Cerrajera, beginning in 1956 and reaching its lowest point in 1976. At least this is so as far as I can distinguish. In this case, the economic cycles were of no influence. The harm came when the people responsible realised what the autarkic system was and the damage it was causing when it was too late. This method of total independence, together with the action of blocking the entrance to more effective and efficient European companies, was the downfall of the fine economic situation that Unión Cerrajera (and afterwards Elma, another paradigmatic company from Mondragón, set up in the 20’s) had achieved.
What produces a loss in industrial force is the idleness of those who manage businesses, and their belief that the future and present will vary very little is their greatest error.
In what concerns Fagor Electrical Appliances, which is over fifty years into its institutional life, it can only be compared in that it has lost its job-creating power in the Basque Country, its capacity for generating profit has reduced and, on a different social and economic scale, it has lost the enthusiasm of its pioneers: the 1000 odd cooperativists from the various cooperative groups formed around 1964.
In this case as well, which is not the same case as Union Cerrajera except for in the updating phase, the economic cycles have had no influence on the decision to revise the internal social-economic system. As a starting point, we can take the fact that Fagor Electrical Appliances, which currently counts on 10.000 workers in diverse European countries thanks to its strong business consolidation, only has a third of these workers among their shareholders. These figures go against a condition that was unmistakeably forged as a distinction in its origins: “All the workers in this company must be shareholders, contributing with their effort to the common economy; no worker may cease to be a member, or no longer assume their rights and obligations as common administrator of the company where he provides his services”.
The cause does not stem from the economic cycles. These last short spaces of time, maybe 5 years. It stems from a change in the scenario. In Unión Cerrajera, as well as in other companies of similar standing, an important aspect was the loss of the figure-head influence of their founders, as they had mostly passed away. To illustrate the fact, the only company with over 1000 workers in the province of Gipuzkoa that existed through the dictatorship and industrial autarky and still exists today is CAF -it was resuscitated barely fifteen years ago. The others have disappeared or dwindled into small businesses that resemble in nothing what they once were. The business people that took over from their founders thought that the future would follow pendulum inertia, no different from the past. It seemed just a question of letting things flow. And meanwhile, the whole environment surrounding the business world (technology, new markets, social demands, non-paternalist opportunities and advantages for the working force and for the products themselves) saw absolutely no modernisation.
I will never let myself forget that, 30 or 40 years ago, General Motors, directed by its president, Mr Sloan, was a powerful reference for the US, permitting important public figures like John Kennet Galbraith to say: “Anything good for General Motors is good for the United States, anything good for the United States is good for General Motors”.
Right now, in the middle of November, 2007, I read in the paper: “General Motors have lost 39,000 million dollars this year, while Toyota (a Japanese company) has made a net profit of 9,675.1 million dollars”.
And finally, to end this first incursion into the subject that has gathered us all here, I would just like to add that the business world depends on people to run it, its strength and dimension depends on the workers, and in particular, on those who manage the companies. This strength and its possible social and economical potential are only comparable to the human dimension that makes each company breathe from the inside. The natural economical cycles of market economy are losing protagonism due to being more under the control of the Governments or other monetary institutions (whether the United States Federal Reserve, the European Central Bank, the World Bank Group or the International Monetary Fund) and above all, thanks to the audacity of the company directors and their perceptiveness in foreseeing the future and finding remedies in the present.
One of the fundamental characteristics of modern society is a progressive individualisation. People tend to no longer be classified according to social class categories, social position or gender. Each has to prepare his or her own curriculum and social status. This is obviously something which limits the capacity to act as a group. Does the loss of traditional values in the heart of our society make us less solidary? And, if this is so, is it possible to move forward without solidarity?
The concern you show by asking this question is somewhat complex. However, it is a real concern, which causes an impression among the older part of society, because I feel I have made a long journey throughout which I see disturbing images which fill me with a sense of contradiction to my basic morals. The foundations of these basic morals were set in my youth and now they acquire another qualitative and quantitative dimension; but above all, they fill me with a sense of contradiction to what could be defined with, and maybe even contemplated as, the term “sociomoral” concern.
In my opinion, individualisation originally started to develop in the industrial age, in France. Diderot, D’Alembert and Voltaire created the foundations for God revealed to become the God of Reason. And Benjamin Franklin carried it out in the United States.
From then on (over 200 years have elapsed) there is a spreading of culture and even our founder, Father José María Arizmendiarrieta, proclaimed that the most profitable investment that society benefits from is that which is destined to education. People begin to control their own thoughts, to reason for themselves. In this way, various claims can be laid out. They don’t seem to feel faith in the Lord God Almighty. Their way of reasoning is that life cannot be subjected to a set of commandments which in essence are saying: “Love God above all things and love your neighbour as yourself”. Complying or abiding with this commandment does not force me to go any further than where I consider my own interests, which are what I most value, will not be damaged by it. I only respect what is dictated by the positive laws. In the same measure that “the others” move away from my family and chosen group of friends, I feel no obligations towards the rest of society. That is to say, the rest do not exist for me because I cannot receive anything in exchange: this is the powerful law of market economy infiltrated into everyday life. It is the essence of individualism that, for the faithful and compliant believer, had its correction in submitting to the moral norm and not the egocentric norm.
Furthermore, education tends towards equality in knowledge, and equality in knowledge attracts greater economic ease. Both of these, intellectual knowledge and material riches, create people who are un-cooperative towards social and moral compromises. This in turn produces class equality, at least in the minimum levels of being able to attain -in our country, obviously- a dignified dwelling and holidays to compensate their methodical and rigid everyday work.
However, I think that this question, specifically posed to me, has another implicit issue: nowadays, in this era of non-believers, a well-being exists which includes us among the 10% of the worlds inhabitants that are best situated on the human development index, as well as the fact that we live in a country and an area where riches are justly distributed, would it be possible to introduce an “angelista” cooperative system like in 1955?
Evidently not. It would be impossible.
Culture, together with what you call, as a whole, the loss of traditional values that is now introduced in society, has created a “habitat” for a new type of citizen; more rational and better educated, with more material and intellectual possessions. On the other hand, the end of the dictatorship and access to democracy has permitted trade unions to become the great defenders of the workers interests. Workers who, on the contrary, were completely defenceless in spite of the existence of the “Vertical Trade Union”. These entities acted paternalistically and, with no collaboration or enthusiasm from the workers, stood as their inoffensive protectors.
In 1955, the only possible way of leaving behind the widespread situation of carelessness and social inequalities was to somehow manage to set up a business. Business people were the ones who had the real power, more spending power; they could afford to send their offspring to university, which was only within the reach of 1% of the population. Nowadays, those who wish to go to university achieve it, and this includes over 50% of the autochthonous population.
Therefore, to currently consider a personalistic type of company (where each person, worker or shareholder, counts as one vote, rather than one share counting as one vote), no longer has the sentimental value or the sense of innovation and change that it had half a century ago. This does not mean it is impossible to advance. However, this advance will be particularly necessary in the area of spiritual values. I feel that material and intellectual values are on the border of saturation, whereas the spirit is emptier. In order to do this, we must recover our faith in something, especially in reference to “the others”. Towards those who, for many diverse reasons in life, such as health, marginality or loneliness, suffer.
Economic businesses will also need leaders that are above all capable of a cosmic vision of a world that is no longer autarkic (like it was half a century ago), but globalised. Generously assuming the rights that are inherent to being a business person should be valued with the reward that the virtue of assuming them deserves.
The future cannot be extrapolated to out of date systems. We must proceed to re-invent, something which should be inherent to each person. Furthermore, we have been brought up with the general idea that if you don’t advance, you move backwards. However, what does it really mean when we refer to advancing at this point of the 21st century? What do we understand by not moving backwards?
For a person like myself, who has lived in the core of the business world for 66 years, this consideration you place before me acquires almost metaphysic values: beyond the material conception of the things which business people least notice, as they tend to be closer to the economic figures, material, the market and their correlation of forces alongside their competitors and looking towards the future.
Following with what has been said, the problems I see in today’s society are not susceptible to be solved in the business world, at least not completely. It is society and the education we receive, in our family, our schools and our everyday life which has to adapt to the generational change.
When an environment has been created that gives priority to individual privileges, rather than to moral or ethical compromises, these become more subtle and we search for ways of eluding our responsibilities. We, the cooperativists, fostered, in a certain way, an NGO called Mundukide. Mundukide works with intensity, greatly boosted by a workforce of retired people who receive no economic compensation for their work. However, its funding, which can reach around 1.5 million euros a year, comes from the institutions: from the social-work funds of cooperatives, clearly a necessary contribution, and the support from the Basque Government, nourished by taxes which are also a clear necessary contribution for all the citizens. Finally, individual contributions from cooperative shareholders barely reach 5% of Mundukide’s total income.
We all proclaim a search for equity on a global scale, internationally, to put an end to the differences that exist in the human development index. Countries like Sierra Leone and other bordering countries have a per capita income of barely 300 dollars and a life expectancy of 35 years, but no one seems interested in solving this situation of inequality. Meanwhile, the Basque Country has reached a per capita income of 30.000 dollars, and the life expectancy is 80.
To conclude answering the last part of your question, I think that, in this sense, we have moved backwards. In 1961, five years after the creation of the first cooperative company, it was decided to create a new Institute for Professional Education (Nueva Escuela Profesional), later to become the Polytechnic College (Escuela Politécnica) and presently the University of Mondragon (Mondragón Unibertsitatea). The total cost was to be around 50 million pesetas in those days, which would probable be more of less equivalent to 2.800 million in 2007. The members of Ulgor -to a man- decided to destine 20% of our personal profits which had been accumulating since the company’s origins, to the creation of this new educational institute. Around 4 million pesetas (currently about 220 million) were transferred. With today’s individualistic notions, the Polytechnic College probably would not have been created; therefore, the University of Mondragón would not have existed.
I believe that, in order to avoid moving backwards, social responsibilities should be discussed more often and individual personal rights should be proclaimed with less assiduity. More power must be given to educators, to be able to show more dedication in our social behaviour towards others; our politicians, apart from being correctly elected, should also fulfil the norms that are dictated by equity and good sense, without arrogance and without letting oneself get carried away by the assumed halo granted by the position they hold. Parents should refrain from burdening their offspring with an absence of sensitivity towards their other companions, who may be in a more limited economic situation than they are, even though these parents are economically capable of doing so.
My opinion is that we need to stop and think, not necessarily in the nave of a church, but to reflect in order to be able to transmit to the new generations –it is too late for us, the older generation- that they can be happy too, or at least achieve a higher level of satisfaction, if they collaborate with others and support them so that they can find life more enchanting. This is possible to achieve.
Is our incapacity to advance socially a question of education? Have we become mundane?
Mundanity and impersonality, in spite of a persistent individualism, is an uncontrollable consequence that results from the loss of spiritual values. Back in the 4th century, the Church was adopted by Emperor Constantine as the official church of the Roman Empire. The dawning of education and reasoning was quickened through enlightenment in the contemporary age, placing doubt on this establishment by decree. Furthermore, the freedom of thinking that stemmed from encyclopaedism has been edging minds towards a mundanity that culminates in the exercise of commodity and hedonism.
We have no religious references, we dedicate no thought to a Divine Being on which to depend, but we have found nothing to take its place, even though it is something necessary for mankind.
The horizon, one’s own horizon, is established by each individual. It is established in an adaptable way. Nowadays, we are all equal: a greater social and economic benefit in search of individual satisfaction is the vector that guides us all.
They apply the minimum effort possible in order to be able to subsist and coexist and efforts in search of more compromised identities tend to prove fruitless. Anything that is done by the great majority should be remunerated; otherwise, things are left undone or deteriorate.
In exercising our obligations to become cooperativists in our personalistic companies, one of the conditions to be admitted as a working shareholder was to deposit an amount of almost 12.000 euros. (In 1956, fifty years ago, the demand was of 50.000 pesetas.) Wages those days were of around 1.500 or 2.000 pesetas per month; nowadays, that amount has multiplied by 120. Nevertheless, these contributions are considered a burden, reasoning that work is a basic right for mankind, and no “toll” should need to be paid. Nonetheless, this shows ignorance towards the fact that, on placing our contribution “at risk”, we are not only involved with the company as a worker, but also as one of the owners of the production tools and property that we use. We also acquire rights to vote and be voted, as well as to receive economic compensation in accordance to the benefits generated by our activities, in solidarity with our fellow worker and shareholders.
However, there are gastronomic societies that demand similar amounts in contributions from their members in order to set up the society in its beginnings. This is because that would be the cost of setting up and equipping one of these premises nowadays and it is something that all the members of these societies, or “txokos”, agree on as necessary. If we compare the issues of looking for a job that satisfies our professional, social and economic necessities and the right to go to a gastronomic society once or twice a week, we can see that the clearest alternative is employment. However, our logic, steeped in mundanity and lack of meditation, is searching for the easy path, the path that provides a certain conceit and satisfies our natural tendency towards a recreational life that we regard as something that we will always have the right to enjoy. This can be either because we adapt to comfort or because it establishes an unalienable privilege.
What should we do? How can we correct our society? Or rather, how can we correct ourselves-to be able to adopt a different idea of what progress is.
From our companies, you have passed on to our society; from the organisational techniques in microeconomy-in other words, the companies- you have switched to searching for a formula to restrain the paradox of economic progress while taking a step backwards in spiritual values. Not only the religious values, which you do not mention, but also those which arouse solidarity; the once renowned “communal property”, committed friendship, a sense of duty inspired by principles that take root in one’s spirit, break loose from material things and distance from selfishness, in order to reach “things”.
I do not feel qualified to approach these topics with the required profoundness. In the first place, because my training has been mainly technical; I come from the business world, even though the people involved have been the real axis in its organisation.
And the question you “announce” to me, “how can we correct ourselves to be able to adopt a different idea of what progress is?”.
I have no experience in such an issue, so impossible to contemplate. However, from my modest point of view, and bearing in mind some of my past readings, I will proceed to tell you what, through a decantation of idea, bustles in my mind.
We are reaching a point where having more belongings does not bring more happiness, nor even more satisfaction. In the meantime, one thinks of the more than 1.500 million people there are in the world that suffer hunger. Furthermore, the North American economist, Jeffrey Sachs, points out that in 2004, for example, the United States spent 450.000 million dollars on arms, whereas only 15.000 million dollars of external aid funds were destined to poor countries. In the mean time, Sachs calculates that it would only be necessary for the rich world to destine 250.000 million dollars a year, assigning quantities directly to each poor country, depending on their situation as to basic necessities. This would be the way to face the enormous differences that exist and which separate us, making us more moderate and eliminating the deaths caused by starvation to a third of the planet’s population.
On the other hand, I have heard well-known speakers such as Ramonet, director of “Le Monde Diplomatique”, say that all that is needed to destroy the forests of the entire earth would be for the Chinese population to decide to use toilet paper, just in order to obtain the necessary cellulose for its manufacture.
So, in order to position myself correctly, which is where I think you should lead me, I see no other formula to socially advance than to share the world’s riches more equally, which would oblige upper and middle developed countries to, in a way, live less comfortably. This would be so if living less comfortably, as I have said before, were represented in this life by the ownership of a smaller amount of totally superfluous possessions.
Nevertheless, I get the impression that that is not where everyone is heading. Roles of life, the law of the strongest, stimulating publicity, we subliminally soak all this in and are falsely made to believe that happiness is not transitory, as it proves to be, but within one’s grasp, sustainable. This would be why our stimulus towards others represents a low profile human vector and of less acquiescence.
Progress is not a synonym of growth... at least not if we revise its traditional definitions during the 20th century. How could a new definition be established which would catch on in society?
Once again, you force me to return to an area of thinking which is distant from the business world, which is the little I can presume of knowing about.
We receive a Christian education in Christian families, solemnly poor. The fact is, since we can remember, we have lived the Church, in that community of believers that form it.
This is also true when we reach the age of thirty. In the exact moment that we begin to create companies, in a Christian spirit, companies that will respect the inviolability of man according to our religious education and, in particular, to the encyclicals of Pope Leon XIII and Pope Pius XI, “Rerum Novarum” and “Quadragessimo Anno” respectively. These encyclicals were acquired and profoundly studied by priests from Gipuzkoa or other Basque areas, for example, Ricardo Alberdi from Irún, José María Setién from Hernani, or Carlos Abaitua from Berriz. The three of them together wrote the book “Christian Demands in Social and Economic development” (Exigencias cristianas en el desarrollo económico y social), which was published around 1960 to gather together the “Mater et Magistra” encyclicals of Pope John XXIII.
In the mean time, José María Arizmendiarrieta, led by his sense of duty, tried to represent the ideas emitted by Rome, firstly, to influence over a group of young men, and then to create, together with these men, some companies. These companies are those that make up the Mondragón cooperatives. In 50 years, they have reached the impressive figure of almost 100.000 workers at the end of 2007. Of these, only a surprising 27.000 are cooperativists.
We sincerely believed back then that progress, the way our progress was planned, would generate solidarity and generosity as it was creating a type of “new man”, disconnected from the individual attraction of riches.
This way, like the rolling of a drop of water and stimulated by the Polytechnic College, a Faculty of Humanities, Huezi, and a Faculty of Business Studies, Eteo, we would achieve to promote a fairly generous mental conformity that would influence, both individually and on a collective basis, on the society which we were destined to live.
However, as far as I can recall, and I think I am not far from the truth, during that half a century the Church’s potential has alarmingly diminished. Without going into euphemisms, which in this openly generous interview are not adequate, it can be asserted that if in 1950, 95% of the younger generation carried out their Eucharistic and Sacramental duties, as evidence to their adhesion to the evangelism, today it is barely 2 or 3% that do so. The most worrying aspect, though, is that the so-called “revision of traditional definitions” that you refer to has not been substituted by any other regularly practiced form of conduct nor by any other attraction that could make up for the lack of references -not even non-Christian-.
Consumerism and easy living are not an adequate moral setting, nor is irritating individualism or making the minimum effort to achieve a profit. Neither is something which is even more in the centre of the Christian Decalogue, concern for those around us that may need us.
I am not able to confirm, however, that today’s social basis is more prone to consumerism and non-belief, in objective terms and in particular among the age group of between 30 y 60. I believe it is, but I think it is so because our income has multiplied by ten in half a century and the appealing, though naïve, message of spending for the sake of spending has not yet extinguished and no ethical hierarchy has been established to influence on these conducts.
It is difficult to imagine a community like our current community, which is used to an intense rhythm of consumerism, trying to hold back that tendency. On the other hand, something that we often tend to forget is that we have created the current situation ourselves; nobody has imposed it upon us. Nevertheless, on willingly accepting subliminal rules of the game, leading us to unsustainable settings, our weakness has been exposed.
In reply, I would like to recall the role that the Church, “Mater et Magistra”, can adopt nowadays according to our well-remembered Pope John XXIII.
I sincerely believe that there is little space left for it. The Seminaries are empty, many churches have been closed. Often, when the younger generations celebrate their First Holy Communion, this is the last time they enter a church, except in cases like weddings, funerals and other social events. Many times, this is through the voluntary choice of the parents.
The number of believers is decreasing, in the same way as is the number of priests. We are walking towards an inexistence of religious practice. Sometimes I ask myself when it will finish, through the inertia of these perceptible realities, when all possible influences from the Religious World will stop influencing on our social lives. There are three sources of moral influence on youth: education, the family and religion, nevertheless we can see that many of the schools that were founded by religious entities are closing down (in Mondragón, the two existing Catholic schools, one of them over a hundred years old, are doomed to disappear, if they haven’t done so already).
The lack of priests is substituted by seculars and soon, they are no longer profitable or religious. In certain churches there is an urgent lack of priests, for example in Vitoria, whose diocese has brought forth countless priests and missionaries. In spite of being a Capital that is a classic example of a Levitical city, the alters are occupied by priests of African origin, or American, where thousands of Basque priests travelled to preach, and to leave their evangelical seeds.
Our community’s tendency towards consumerism which you ask me about can only find one solution. I say “can only”, I don’t know if it is possible, but if it can, the only way is creating a global ethical conscience, a creed open to be adopted by all ethical sensibilities. Since even agnostics, non-believers, or atheists think, and if they think, they have to accept a set of moral rules that are universally invoked and practiced.
Hans Küng, Christian theologist (since some affirm he is not a Catholic theologist) moves in that direction: the search for a moral or ethical Decalogue which can transversally affect all the earth’s inhabitants. It would be a kind of religion without invoking a specific god. Nevertheless, and in any case, everyone would have their own free will to choose their specific divine, or non-divine, reference.
Ceremonies would be fewer, albeit each time with a more intellectual humanity, more reflective and conceptualised. Our inner life, focused from shared ethics, would be more plausible or accepted and would serve as an unavoidable pattern for human relations that are artificially divided by the geographical limits of each state. These should eventually become just an anachronism, in the same way as currency or languages (one language is found or chosen as the “lingua franca” and the native tongue will be stored away in each natural space that so desires).
What occurs is that this future I suspect (with no philosophical preparation to do so) cannot be effectively dated. I do not know if this will happen, even though my intuition tells me that it will, and even less do I know when the whole process may conclude. Dating prognosis should be avoided. Some forty years ago, the intellectuals Herman Kahn and Anthony J. Wiener with the help of the Hudson Institute, wrote about what the international system would be like in the long term, and investigated the subjects of politics and social changes. They dared to fix dates for their predictions, saying this would come to pass in the year 2000. I followed the text so that it could help me to establish the system in the cooperatives I was responsible for. A short while late, it was no longer my bed-side book, as Hahn and Wiener couldn’t manage to get it right. The most difficult part of such impressive issues is establishing a date for its implementation.
If what was proposed by Hans Küng came to pass, the “settings would be more sustainable”.
¿Do we have to become poorer to come out of this mire?
Before coming to this conclusion, which seems to me slightly defeatist and discouraging, we should ask ourselves what it means to “become poorer”. My generation, the generation that went through the Civil War (1936-1939) knew what it was to be poor and not be able to cover your most basic needs. Hunger, ravenous hunger among the lower echelons of society, which was over half of the population; lack of hygiene and the consequent apparition of contagious diseases, in the period before antibiotics were discovered; lack of resources to be able to dress oneself with the decorum that the young or old desire; the impossibility of opting for university education; with the greatest economic effort these families formed our standards for life, for myself and for anyone that was my ages. That is how our childhood passed, and our teenage years, more or less from the age of nine until we were 20 or 22.
Seventy years later, the living conditions have changed and none of those social burdens exist in the Basque Country, except in very specific cases, and in no case do all these afflictions occur together. Society is embedded in a political-democratic marquee which involves a large amount in joint cost expenses. This situates us in a privileged position, as I have said before, and equity in the distribution of the income produced would do the rest: these class divisions, which were sealed before by social status, have been overcome.
This is why when you ask me whether we should lessen the access to this way of life and all its material possessions that have “taken us to unsustainable settings”, now proposing as a remedy to “become poorer”, it is necessary to previously consider some points.
The saturation of material measures for living is not the solution to be able to reach happiness, nor will it bring well-being, not even satisfaction, which is the most one can achieve.
The intellectual practices that enrich other potentials are finally reaching us. Today, our youth disdain the ritual of exquisite eating and dressing with the care of a dandy. In our town, Arrasate, there is a celebration called “Maritxu Kajoi’s day”. It is held every year on the first Friday of October. On this day we remember, in a relaxed, slightly mocking attitude, the absurdity of the rigid and restrictive measures due to the persecuted ostentation that there was in the past concerning clothing, measures that are nowadays a thing of the past.
Our younger generation is looking for a formula that will nourish the spirit of that which is called something like “the rational soul”. Our children and grandchildren no longer ask for shows of ostentation that consume “per capita income”. On the contrary, they wish to satisfy their spirit. Education has put a deadlock on conventionalisms. The new generation demands freedom, while requiring answers to their latent spiritual worries.
They are not so interested in economic wealth. This model is extinguishing its capacity to bring us well-being. However, they wish to be heard, each one has formed their own personality, their own criteria, and they demand spaces to put forward their personal options and preferences.
They tend to be individualists, but they aren’t precisely covetous for money.
Therefore, I think that the people I know, the people that surround me, will not mind decreasing their spending capacity in the future if society gives them the chance to enrich themselves with the profit that can come from cultivating their spirit, which is becoming more and more the wealth of rational beings.
This would not be contrary to both young and old, in benefit of their beauty and health, cultivating their body in a more effective way, in the same way that they feel inclined to use self-help lecture. This progress, though, towards a better life, is obtained regardless of having to renounce to part of what is simply gaining money.
Looking back, would a business model like the one created in 1956 be possible today?
No. It would be impossible. And probably unnecessary. The grounds for debating business are infinitely wider than fifty years ago, because economy has become worldwide under the generic term of globalisation.
This confrontation among our companies and their market competitors counts with only one mechanism for interrelations: the exchange of money. It is money which has no boundaries, the means of payment by excellence, it is what rates whether technology, organisation and the production that is obtained increases or decreases its efficiency.
This is because money has the quality of being fungible, flexible, and exchangeable and you can pay it off. People do not have the quality of being exchangeable, nor are they displaceable, nor can you pay them off. Therefore, in the current stage of the economy, towards the end of the first decade of the 21st century, the cooperative movement itself, the paradigmatic social model, has run out of time. Furthermore, it is progressively accepting great part of the capitalist model. Public Limited Companies are created, both in Spain and abroad, that can sometimes be 100% owned and other times they are majority owned. As a result, less than 30% of the workers are presently cooperative shareholders. If things continue as they are, the long-term tendency seems to be that, another fifty years from now, a social community made up of people will be something looked back on with nostalgia. The merit of being born into an economic and social life that is an example of what is represented by man, man organised in working communities and working in freedom to decide and with total economic and political rights, will never be questioned. Nevertheless, other forms of equity must be found that are compatible with market and financial globalisation.
It is notorious and exceptional, something accepted all over the world and which will have disappeared as a model to develop. This will not prevent having to accept that its roots and the potential of its magnificent capacity to create well-being for all, was to have understood that the human being is also the essential factor in financial companies, and capital its indispensable tool. A tool that I dare to say should never be the guiding light of any person. It should be what it is, a tool at one’s service.
Does the cooperative movement need re-reading?
It is good practice for all business people to follow the stretch of past life and project it, without inertias but with the idea of “being re-born and adapting to new circumstances”, at all time. As Arizmendiarrieta said, our obligation is to always be in the constituent period. The weight of the past must not be an obstacle in the path of finding new developments and innovations in the organisation of our companies, both internally and externally, or in redefining their social life. In this crystallized norm, innovation does not exist.
In the beginning, because cooperatives were considered a “favourite work of art” of the dictatorship and because the limits in positive rights were very narrow, we avidly handled what was devised by a great economist that in time became Director-General of the Banco de Bizkaia: José Luis Serrano Lizarralde.
He denominated his conceptual model for business “THE TOTAL SOCIETY”. In his introduction, he said: “Primun vivere et deinde philosophare”, meaning something like: first, we have to nourish ourselves and live our life, and afterwards, philosophise. In this pragmatism, expressed in the document which is still preserved in Mr José María Arizmendiarrieta’s Museum-lecture room, he divided the power and the rights of companies in three parts: The first, exercised by the worker, the person. The second part was held by those who supplied the means for production, the capital. The third was the executive body, the directors chosen to decide and direct the destiny of the company.
But this model did not fit in, not even adapting it, with the one that was in force then, in 1955- the “Ley de Sociedades Anónimas” (Law for Public Limited Liability Companies). This is the reason why it did not succeed. This re-reading that you suggest may be a base for a new business model pattern. All possible options have been extracted from the Cooperative Laws in the Basque Country: mixed cooperatives have been created, (in which the social rights of non-shareholders can reach 49%, and the 51% that is left corresponds to the shareholders); subordinate financial contributions; 20% of the workers are non-shareholders, fixed-term shareholders, etc. Nevertheless, these solutions allow very little movement because, after all, a cooperative will never be able to participate in capital markets, whatever form it is given; the bearer markets where those who dispose of some savings are shown where they should invest with a regulated transparency that is far from the original standards of flexibility of the cooperative movement.
I do not know what alternatives exist to such a rigid cooperative movement as ours was, even though, here, we still repeat that saying, very popular with Arizmendiarrieta that says: “Cooperativism is a dynamic process to develop new experiences”.
What I am sure of is that equity must be paramount in business; each must be given what is justly theirs, and providing, as a boost for the town, that social justice be promoted. But for this to be possible, companies of all types, cooperative or not, must be profitable: in plain language, they have to make money. To carry this out, the companies must be well-managed, competitive, create added value and, going beyond the ordinary management and planning, putting imaginative directors in charge of these companies, capable of handling the complex and subtle network that surrounds them, to be able to progress and become a shared social value. The social model must be investigated, but it is time for a generous creating effort. Jose Mari Ormaetxea
(Mondragon, 1926) Born in Mondragon (Gipuzkoa) on 23 December 1926, as from his youth he knew how to channel his extraordinary aptitudes for study and work in a corporate direction without ignoring Father Arizmendiareta’s social project. He concluded his studies as skilled mechanical and industrial worker in 1945 and then qualified as a chemist in the Zaragoza Industrial Surveyor School in 1952. He dedicated his life completely to the Mondragon cooperative movement, within which he held various posts of responsibility which testify to his extraordinary activity: Cofounder and Manager of ULGOR (the first of the cooperatives in the Mondragon Cooperative Group) (1956 - 1962); Chair of the Board of Directors of the ULARCO Cooperative Group (1962 - 1970); Director-General of the Caja Laboral Popular Savings Bank Cooperative (1960 - 1987) and Councillor therein up to 1990. He was also the Founder and Chairman of the Mondragon Cooperative Group (now known as the Mondragon Cooperative Corporation - MCC) (1985 - 1990), director of the OTALORA Cooperative and Management Training Centre (1990 - 1991), executive vice chair of the Society for Industrial Promotion and Reconversion (SPRI) under the Department of Industry of the Basque Government, and President of the Venture Capital Society, controlled by the SPRI (1991 - 1992). He is the author of several books and conferences on the “Mondragon cooperative experience”. Translation: Andrés Krakenberger
