Enabling Ethical Economies: Cooperativism andClass

J.K. GIBSON-GRAHAM *

ABSTRACT This papersituates contemporary evaluations of the ‘suc- cess’of Spain’ s Mondragoncooperative complex within atra- ditionof debate about the politicsof economic transformation. It traces the long-standingsuspicion of worker cooperatives amongpolitical and social analysts onthe left,revisiting both the revolutionaryand gradualist socialist critiquesof coopera- tivism. Taking the set ofproblems identiŽ ed by Beatrice and SidneyWebb as leadingto the inevitablefailure of producer cooperatives,the paperexamines Mondragonfor evidence of ‘degeneration.’The ethical decisions madeby Mondragon co- operatorswith respect toproduct, pay, proŽ t, innovation, man- agement,disputes and membership are discussed with apartic- ularfocus on the management ofsurplusproduction, appropri- ationand distribution. The papercalls formore sophisticated analyses ofthe economics ofsurplus distribution and the cen- trality ofethical debateto the construction ofdiverse economies andnon-capitalist economic subjects.

Keywords:producer cooperatives, communalism, ethics, eco- nomic politics,Mondragon, class processes.

Introduction The economicimaginary has traditionallyplayed a powerfulrole in left politics,certainly among those interested in constructing alternative futures.Fuelled bythe emancipatorycommitments of enlightenment

* In memory ofDon Shakow.

Critical Sociology, Volume 29,issue 2 also availableonline Ó 2003Koninklijke Brill NV, Leiden www.brill.nl 124 Gibson-Graham ² thinking,various ideals of another state of economic being have motivated politicalmovements andpolicy interventions throughout the twentieth century.It is in the economicimaginary that economies devoid of exploitation,economies of self-sufŽ ciency andsustainability, economies ofsmallholders and owner-operators, economies of cyborgs and so on have been constructedin opposition to the apparenteconomic realities ofcapitalist industrialization. Within this imagined terrain certain already existing alternative economieshave Žguredas guides to the possibilities andconstraints of ‘ real world’experimentation. Once itwas the visionof socialismor communismand the experiments ofthe sovietsin the Eastern Blocand the communesin East Asia that conŽ gured the foregroundof the left’s economicimaginary. Today, at least forsome, it is the original ‘thirdway’ – communitarianismor a revitalizedsocial democracy – that occupiesthis otherwise vacated space. Formany, the storyof the Mondragoncooperatives in the Basque regionof Spain has occupieda specialniche inthis space of speculation, envisioningand possibility. From a socialbase in the late 1940sthat was dividedby ideological differences, with physical infrastructure destroyed ordepleted by civil war, the Mondragoncommunity under the guiding philosophyof Catholic priest Father Arizmendiarrieta built perhaps the mostsuccessful complex of employee-owned industrial, retail, service andsupport cooperatives in the world.The Mondragon Cooperative Corporation(MCC) isfamed for its more than 30,000worker owners, its exibility andlongevity, cutting-edgetechnology and innovations in worker participation.The publicationof a chapterby Robert Oakeshott in 1975 andthe documentaryŽ lm madeby the BBC aboutMondragon in the late 1970senabled the message ofthis cooperativist movement tospread throughoutthe English-speakingworld at a timewhen the increasing internationalizationof capitalist production appeared to be heralding the latest ‘stage’of capitalist economic dominance. 1 One ofthe difŽculties of discussing any alternative economicproject, aswith any newor emancipated identity, is how to name anddescribe

1 Early studiesin Englishprovided histories of the establishmentof the cooperativesand descriptionsof the changingorganizational structure andactivities of the group(Oakeshott 1978;Gutié rrez-Johnson andWhyte 1977).More recent research hasexplicitly compared the performance andpractices of the Mondragoncooperatives with similarsized enterprises in the capitalistsector (Thomas and Logan 1982; Bradley andGelb 1983;Hacker 1989; Kasmir 1996).Others havefocused upon the wayin which the cooperativesnegotiated the difŽcult periodof recession and rationalization during the late1970s and 1980s when the Spanisheconomy was becoming more opento international market forces,via admission to the EuropeanEconomic Community, andthe effectsof globalizationin the 1990s(Weiner andOakeshott 1987; Whyte andWhyte 1988;Morrison 1991; Cheney 1999;Clamp 2000). EnablingEthical Economies 125 ² itwithout recourse to what is already known. Though one might want to posita radicaldiscontinuity between the emancipatoryalternative andthe oppressiveand exploitative norm, since the alternative isdeŽ ned in terms ofthe norm(albeit as its opposite or reversal), the existing malignsystem is fully implicatedin the alternative liberatoryone (Laclau 1996). This is clear inmuch of the discussionand evaluation of Mondragon. Representations ofMondragon are driven by the desireto highlight the uniquenessand utopianotherness of the alternative,but they arealso haunted by the fearof uncovering failures that undermine these differences,rendering the alternative nomore than the ‘same.’Much of the Mondragonstory has thusbeen toldwithin a capitalocentric framing(Gibson-Graham 1996:40-41); the Žguresof the capitalistenterprise and the capitalisteconomy shadow the representationsof its cooperative businesses and work practices and they arepositioned with respect to capitalism as either different from, the same as,beholden to or dominated by itsforces and relations. Notall commentatorshave succumbedto the comparisonsimplicitly enforcedby a capitalocentricdiscourse. Recently anumberof authors have taken updiscussion of Mondragon as an inspirationfor community andregional economic development in theirrespective contexts (Morrison 1991;MacLeod 1997; Mathews 1999).They suggesta wayof reading Mondragonas a guideto local practices of economicexperimentation, not asan‘alternative’to capitalismwhich cannot help butdisappoint. Building uponthe workof Morrison, MacLeod and Mathews, my interestis in contributingto a practicalpolitics of strengthening the sustainabilityof communityeconomies. 2 AcrucialŽ rststep is to revitalize the economic imaginaryby freeingit from the leaden gripof capitalocentrism.

RethinkingEconomy and Economic Politics Aspart of an ongoingproject committed to exploring the potentialities andpossibilities of buildingsustainable community economies I have been concernedto challenge the way‘ economy’is thoughtand to identify what weareup against when attemptingto think differently(especially ethically) aboutthe economicrealm. One problemis that, in contrast to previous periods,the economyis no longer seen asa sphereof decision (Lemke

2 Sustainabilityis referred tohere in terms ofthe inter-generational durabilityof local cultures,practices of sociality and emplaced livelihood strategies that supportcommunity economies.I havecoined the term community economiesto refer tothose economic practicesthat arein ected with ethical principlesto do with family,community, culture and environment (oftenloosely deŽ ned but strongly adheredto) that acknowledgethe relational interdependenceof all activities that constitutea society(Gibson 2002; Community EconomiesCollective 2001). 126 Gibson-Graham ²

2001;Gibson-Graham 2003). With the resurgenceof neo-liberalism in the secondhalf ofthe 20 th centurywe have seen renewedfaith in the hidden(almost mystical) handof the freemarket, and the active aspectof management associatedwith the term‘ economy’has been subordinated toa notionof systemic self-regulation.Naturalization of the view thatwe have no(longer a) rolein making and managing the economyby which welive has hadlimiting effects on economic imaginaries. A reluctanceto engage ineconomic experimentation because of its perceived futility, or forfear of repression by the all powerfuleconomy, has becomea formof unfreedom,a discursiveenslavement, arefusalto explore economic power asunstable and  uid,as potentially reversible “ strategicgames between liberties”that are always available (Foucault1988:19; Hindess 1997:97-8). Itis this depoliticization of the economicterrain that must be challenged ifany spacefor enabling ethical economic practices is tobe opened up. Anotherproblem is the representationof the economyas ‘ capitalist.’ Deconstructingthe hegemony ofcapitalocentrism involves representing the diversityof the ‘complexunity’ we know as ‘ economy,’that is, highlightingthe multipleregisters of value andmodes of transaction that make upour heterogeneous economic world, sustaining livelihoods in communitiesaround the world. 3 The diversemodes of remuneratinglabor, appropriatingand distributing surplus and establishing commensurability inexchange, forexample, all allowfor speciŽ c enactments ofeconomic freedom,some more circumscribed than others(Community Economies Collective2001). As is increasingly apparent competitive individualism is notthe only ethicalprinciple involved. In agrowingnumber of intentional andunintentional economies variously enacted ethics of social, cultural andenvironmental sustainabilityare actively shapingtransactions and performances.I have been particularlyinterested in communityeconomies inwhich the materialwell-being of people and the sustainabilityof the communityare priority objectives. Indeed it is through articulating these ethicaland political stances that ‘ community’is called into being. Iwouldlike toargue that this project of deconstructing the hegemony ofcapitalism and elaborating multiple axes ofeconomic diversity is an emancipatory project of repoliticizing the economy.It refuses to pose economicpower as already distributed to capitalist interests and opens up the possibilityfor non-capitalist practices to bethe focusfor an invigorated economicpolitics. It reinstates the importanceof making and managing

3 It alsoinvolves exposing the limitedview of what constitutes‘ the economy’that currently prevailsin popularand academic discourse, that is,the narrow focusupon commoditymarkets, wage labor, capitalist enterprise andthe singularethic ofcompetitive individualism. EnablingEthical Economies 127 ² economy– aspectsof the meaningof the wordthat have been increasingly washedaway – byplacing the politico-ethicaldecisions that make our economiesat the centerof analysis. ErnestoLaclau notes that

The roleof deconstruction is : : : toreactivate the moment ofdecision that underliesany sedimentedset ofsocial relations.The politicaland ethical signiŽcance ofthis Žrst moment is that byenlarging the areaof structural indeterminacy [egof the economy] itenlarges alsothe areaof responsibility – that is,of the decision.(Laclau 1995:93,bracketed comment added)

Avisionof the economyas diverse, multiply identiŽ ed and complexly overdeterminedand economic power as diffuse,segmented, and in motion opensup the possibilityfor local non-capitalist practices to be the focusfor an invigoratedeconomic politics. The projectof mapping diverse economies as a wayof imagining and enactingnon-capitalist futures has taken encouragementfrom Father Jose MariaArizmendiarrieta’ s visionof a pluralisticsociety and economy: 4

In the mindof the co-operatorsis the ideathat futuresociety probablymust bepluralistic in all its organisationsincluding the economic.There will be actionand interaction of publicly owned Ž rms andprivate Ž rms, the market andplanning, entities ofpaternalistic style, capitalistor social. Every juncture, the natureof every activity, the level ofevolution and the developmentof every community,will requirea special treatment butnot limited to one formof organisation, if we believein andlove man, his liberty,and justice, anddemocracy. (Arizmendiarrieta,cited in Mathews, 1999:186quoting from Whyte andWhyte 1991:255)

Thisvision of plurality can be likened toLaclau’ s visionof structural indeterminacy,which has the effectof opening up the Želd ofresponsibility anddecision. It is the issueof decision thatprovides a focusfor the discussion ofthis paper. Writing and living ashe didwith daily involvement inthe Mondragoncooperatives, economic diversity was, for Arizmendi, a visible

4 Usuallyreferred toas Father Arizmendi (or DonJose Maria), this Basque priest was postedto Mondragon in 1941straight after hisordination, having had his request to study sociologyin Belgiumturned downby hisMonsignor (Whyte andWhyte 1988:28).He was interestedin seeking“ democraticeconomic and social arrangements that might beneŽt all in the community andgive a strongfooting for postwar society” (Cheney 1999:39)and waswell readin the socialand political economic theorists of the 19 th and early 20th centuries.He admiredthe experiments ofRobert Owen and the RochdalePioneers, and wasfamiliar with the agriculturalco-ops and anarchist producerco-ops that ourished in Spainprior to and during the Civil War.His readings and observations led him to value“ institutionalautonomy and identity as two of the mostimportant characteristics of alternative organizations”(39). 128 Gibson-Graham ² presence,not a utopiandream or smashed hope, but also something that hadto be builtand given ‘specialtreatment.’ The titleof Roy Morrison’s book We Build the Roadas We Travel (1991) remindsus that when buildingsustainable, socially equitable and culturally distinctivecommunity economies there areno pre-given pathways to follow,no economic models that can be pulled down from the shelf and set inplace to ensuresuccess. 5 The processof enablingsuch economies to developinvolves continualdebate over economic and ethical considerations atevery stepof the way,and the makingof difŽ cult decisions that will directfuture pathways and crystallize community values. Itis throughthis processthat economic imaginaries are made into concrete, actually existing practicesand institutions. 6 The historyof leftist politics can be seen asa seriesof debates about strategicinterventions by which a ‘better’society is to come into being. Politico-ethicaldiscussion has focusedon questions of economic control, ownershipand organization of industryand the beneŽts of cooperativismor statesocialism as well asonmechanismsof income and wealth distribution. In the Žrsthalf ofthe paperI revisitthe historicaldebate about the limitsof the cooperativist‘ way’in an attemptto understand the basis ofthe longstandingantagonism between working class politics and worker cooperativism.In the secondhalf ofthe paperI focuson the politico- ethical decisions aroundmarkets, wages, technology, surplus appropriation, anddistribution that have been inscribedin the Mondragoneconomic experiment. 7 Thisdiscussion is structured around the criticismsthat have largely been acceptedas undermining the potentialfor longevity and successof worker cooperativism. My aimhere istopromotedebate about economicethics and the realmsof freedom that are open to us in theory andin practice.

5 In hisinsightful book Cheney reportsone of the foundersof the originalMondragon cooperativedemonstrating the experimental nature ofthe roadtraveled and saying to him “Althoughthere wasmuch talk aboutthe ‘third way,’we weren’ t entirely sureof what exactly wewere embarkingon. From the perspectiveof the 1990s,of course, everything that cameto pass in the pastforty-some years all looks much clearer”(1999:40). 6 Asimilarpoint is made by Mutersbaugh(2002) in hisŽ ne-grainedanalysis of production cooperativesin highlandMexico. 7 Thispaper draws upon the rich literature onMondragon and our own interactions with Mondragonpersonnel during a briefŽ eldtrip in April 1997.This visit was made possiblethanks tothe invaluableassistance of Fred Freundlich andRace Mathews, with Žnancial supportsupplied by AustralianResearch Council LargeGrant A79703183. EnablingEthical Economies 129 ²

Left Labor Politics versus Cooperativism In lightof the vacuitiesand possibilities opened up by ‘ post-socialism,’ ‘post-marxism’and ‘ post-socialdemocracy’ current interest in an economic politicsof the ‘thirdway,’ albeit it a neuteredversion of its late 19 th early 20th centuryoriginal, invites criticalre ection on the demiseof this originalin the left economicimaginary and the legacy ofthis demise. 8 I wouldlike toargue that the early denunciationof worker cooperativism byboth the tradeunion and the revolutionarysocialist movements has hada dampeningeffect on ethical debates concerning the economicsof experimentationwithin leftist communities most engaged in a critique ofcapitalism. For this reason it is salutary to take alookback at the someof the historicaldebates that have ragedamong those interested in cooperativeeconomic experiments, either as an antidoteor replacementto capitalism. Againstthe clearly deŽned politics of the ‘Žrstway,’ that is, capitalist consolidationand development during the 19 th century,there arosemulti- ple resistancesand critical currents. The prominent economic theorists and activists,Karl Marx andRobert Owen, stand out among others as inspi- rationsfor two divergent streams of thought and practice – revolutionary socialismas arouteto communism (the ‘secondway’ ), andworker cooper- ativismand community distributism (the original‘ thirdway’ ). 9 Both Marx andOwen believed thatthe rightsof the productiveand useful persons in asocietyshould be recognized over the inheritedand assumed rights of

8 Giddensclaims that the phrase‘ third way’“ seemsto have originated as early asthe turn ofthe century, andwas popular among right-wing groupsby the 1920s.Mostly, however, ithas been used by social democrats and socialists” (1998:25). As a majorinspiration forTony Blair’s embraceof a contemporary ‘third way’politics that navigatesa middle pathbetween a rapidlydismantling ‘ welfarestate economy’ and a rapidlyconsolidating ‘free market economy,’Giddens offers a sleekrendition of “ third wayvalues.” The third wayfor him looks“ fora new relationshipbetween the individualand the community, a redeŽnition of rights andresponsibilities” that haswell and truly “abandonedcollectivism” (65).In the war ofwords that makesup political debate, reference towhat wemight considerthe original‘ third way’has been lost or blurred.Deploying terms like‘ trust,’ ‘mutualobligation’ and ‘ reciprocity’that hailfrom the cooperativesupport systems of the early 19th century, contemporary third waypolitics offers a languagethat softensthe impact ofa neo-liberaleconomic agenda obscuring, even rendering desirable,the withdrawalof statebeneŽ ts. 9 The basisof distributism was “ the beliefthat ajustsocial order can only beachieved through amuch more widespreaddistribution of property. Distributism favors a ‘society ofowners’ where propertybelongs to the many rather than the few,and correspondingly opposesthe concentration ofproperty in the handsof either the rich, asunder capitalism, or ofthe state,as advocated by some socialists. In particular,ownership of the meansof production,distribution and exchange mustbe widespread” (Mathews 1999:2). 130 Gibson-Graham ² the unproductiveand useless aristocracy.And both were exercised bythe injusticesof ‘ socialtheft’ whereby the surpluslabor generated by the ‘in- dustrious’or working class was appropriated by the non-workingor ‘ idle’ class(De Martino2001:7; Geras 1985). 10 In the emergingworking class movement the twopolitical aims of challenging the distributionof ‘ rights’and redressing ‘ socialtheft’ were interwovenin the strugglesof working people. As Sidney and Beatrice Webb,the inuential Fabian socialists and historians of trade unionism in the UK,point out, the originsof the Britishtrade union movement inthe early 19th centurywere closely tiedup with demands not only forpolitical democracyand the rightsof working men tovote, but also industrial democracyand the rightsof working people to cooperative ownership and controlof industryand its product.

The chief politicalorganisation of the workingclasses duringthe Reform Billagitation began as atradeclub. In 1831a few carpenters met attheir houseof call in Argyle Street,Oxford Street, to form a “MetropolitanTrades Union,”which was toinclude all tradesand to undertake, besides its Trade Union functions,a vaguescheme ofco-operative production and a political agitationfor the franchise. Butunder the inuence ofWilliam Lovett the last objectsoon thrust asideall the rest. The purelyTrade Union aims were dropped;the Owenite aspirationssank intothe background;and under the title ofthe “NationalUnion ofWorking Classes” the humblecarpenters’ society expandedinto a nationalorganization for obtaining Manhood Suffrage. (Webb andWebb 1907:140)

The ReformBill wasdefeated and the failureto deliver manhoodsuffrage fuelledsupport for trade union formation in the mid19 th century.The organizationof the ŽrstGrand National Consolidated Trades Union between1833-34 was inspired by Robert Owen’ s visionof national manufacturingcompanies owned by their workers, all ofwhom would voluntarilybelong to a nationallyassociated federation of lodges. Each lodge was to

10 The terminologyof ‘ class’took on multiple meanings in thiscontext. ‘Class’denoted aplacein asocialranking or hierarchy ofupper, middle and lower classes – andas a set ofcultural markers that designatedmembership of one ‘ group’and distinguished it from others.But italso came to refer toan economicrelation of exploitation between producers andnon-producers, the industriousand idle, or workingand non-working classes(Gibson- Graham, Resnickand Wolff 2000:3; Williams 1983:65). This latter meaningemerged from the politicalmovements ofthe 18 th and 19th centuriesthat defendedthe rights ofworking peopleand was picked up and developed into a forcefulrhetoric byMarx andEngels in the Communist Manifesto. EnablingEthical Economies 131 ²

: : :providesick, funeraland super-annuation beneŽ ts forits own workers; and proposalswere adoptedto lease landon which toemploy “ turnouts,”and to set upcooperative workshops. (Webb and Webb 1907:119) Asthe labormovement grew,antagonism increased between pragmatic “TradeUnion aims” (defense ofworkers’ standards of living bywage settingand factory legislation to limit working hours) and utopian socialist “Oweniteaspirations” (cooperative ownership of industry) (1907:140). While admiringof the abilityof Robert Owen to inspire a surgeof solidarityfor the GrandNational Consolidated Trades Union (even among “regimentsof agricultural laborers and women” ) the Webbswere extremely scornfulof the “Utopianside” of his labor policy. Marx expressed similar scornfor the ‘utopia’of the cooperativistsocial democratic aspirations inuencing the Europeanworking class movement (1972). Theircriticisms were of four kinds. First there wasthe lack ofa plan for how to replace the system ofcompetitive capitalist industry with a system ofsocialized ownership, cooperation and voluntary associations of producers.The Webbsasked: Howwas the transfer ofthe industriesfrom the capitalists tothe Unions to beeffected in the teeth ofa hostile andwell-armed Government? : : : It is certain that duringthe Owenite intoxicationthe impracticableexpectations of nationaldomination on the partof the wage-earners were met with an equally unreasonabledetermination by the governingclasses tokeep the workingmen inastate notmerely ofsubjection,but of abjectsubmission. (Webb and Webb 1907:147-8) Even the philanthropicmill owners,they note,were utterly resistant to givingup their despotic control over workers and factories (1907:147). TheWebbs’ critique of Robert Owen’ s economicpolitics ultimately restedupon their acceptance that the economywas already (and perhaps alwaysto be) capitalist: In short,the Socialismof Owen ledhim topropose a practical scheme which was noteven socialistic, andwhich, ifit could have beencarried out, would have simply arbitrarilyredistributed the capitalof the country withoutaltering orsuperseding thecapitalist system inthe least.

All this will beso obvious to those whocomprehend our capitalist system that they will have some difŽculty in believingthat itcould have escaped soclever aman andso experienced andsuccessful acapitalistas Owen. (Webband Webb1907:146, emphasis added)

In asomewhatsimilar vein Marx takes the German socialdemocratic movement totask in1875 for their terminology, writing that what they call “present-daysociety” 132 Gibson-Graham ²

is capitalist society, which exists in all civilized countries,more or less free frommedieval admixture, more or less modiŽed by the special historical developmentof each country,more or less developed.(Marx 1972:394, emphasis added)

Marx’s ‘scientiŽc’ analysis ofcapitalism’ s tendencies towardexpansion led himto see whatwas coming as what was already ‘ there’– the identityof the economywas unquestionably capitalist. But he wasalso acutely awarethat capitalism was not yet securely consolidatedin a social anddemographic sense. 11 In responseto the Lassallian-inspiredsocial democraticcall for“ establishmentof producer cooperative societies with state aid under the democratic controlof the toiling people ”(emphasisin original, 1972:394),Marx ratherscornfully notes: “ In the Žrstplace, the majorityof “toilingpeople” in Germany consistsof peasants, and not of proletarians” (393).Rejecting the proposalthat all classes otherthan the workingclass are “onlyone reactionary mass ”(emphasisin original, 1972:389), he pointsto the potentialfor support from the “artisans,small manufacturers,etc., and peasants”(1972:389). There is an interestingdisjuncture between Marx’ s empiricalunderstanding of the diversityand magnitude of non-capitalist economicrelations coexisting alongside capitalist relations and his belief in systemic capitalistdominance.

Restricted : : : todwarŽ sh formsinto which individualwage slaves can elaborateit bytheir privateefforts, the co-operativesystem will never transform capitalistsocieties. (Marx 1985:2quoted in Mellor,Hannah andStirling 1988:22)

Forboth Fabian socialists and revolutionary socialists alike the system wasunambiguously capitalist (even ifyet tofully comeinto being) andthe powerof industrial capitalists was already entrenched. To be toppledit would require the superhumanefforts of a centralizedstate ora revolutionarymovement. 12 Only then mightthere bea conducive

11 It isinteresting tonote that Marx saw“ cooperativefactories run byworkers themselves” bothas evidence of the emergence ofa new modeof production “ within the oldform” that wasmade possible by the historicinnovations (the factory systemand credit system) associatedwith capitalistproduction, and asboundup in the reproductionof “allthe defects ofthe existingsystem,” i.e., capitalism (Marx 1981:571).His theoretical andpolitical project ledhim toforeground capitalist dominance in almostevery instance. 12 Or,given the inherent progressivismof much socialistthinking, the full-blown developmentof capitalism to the pointwhere transitionwould be inevitable. Potter writes in 1891: RobertOwen’ s Co-operativeideal : : : wasan idealwhich requiredfor its realization a sciencewhich hadnot arisen ,acharacter which hadnot beenformed ,economicand legal conditions existing nowhere inthe purelyaristocratic societies of Europe. Above all, unless EnablingEthical Economies 133 ² environmentfor new economic relations. Certainly, in the faceof the ‘realities’of capitalist power Owen’ s beliefin the transformativeeffects of pedagogyseemed weak andmyopic. 13 Second there wasfaulty economicanalysis inthe viewthat workers could“ raisewages and shorten the hoursof labour” to the pointwhere they wouldget backthe “wholeproceeds of their labour” (Webb and Webb 1907:144).This stemmed, according to the Webbs,from the “erroneous theorythat labour is by itself the creatorof value,” that prices could be Žxed bylabor input alone, and the mistake ofoverlooking “ the more difŽcult law of economic rent which is the corner-stoneof collectivist economy”(147). Here they arereferring to the necessary payments to land,transportation, non-labor inputs, managerial labor and so on that inuence the price/value ofthe industrialproduct. Despite their dismissal ofKarl Marx andhis labor theory of value atthis point in the text (147),they inadvertently repeatthe exact criticismthat Marx madeof the German socialdemocrats when he questionstheir assertion that workers have rightsto the “undiminishedproceeds of labour” (1972:384). Marx is keen tooutline the necessary deductionsfrom total social product that will alwaysdiminish the portionof surplus product that could be returned to labor– the proportionset asidefor expansion of production, the reserve fundfor insurance against accidents, the general costsof administration ofproduction, the socialfund to support schools and health services,the fundsto support those unable to work.In the viewof both the Fabianand revolutionarysocialists, cooperative ownership of the means andoutput ofproduction did not resolve many ofthe thornyissues associated with the operationsof the economy,speciŽ cally distributionof the proceedsof labor.

itwere tobe subjected to an iron-boundtyranny, sucha community wouldnecessitate the developmentof anadministrativesystem, of the nature ofwhich even Owenhimself hadformed no conception, and which couldonly originatein apureand enlightened [capitalist?]democracy. (1891:29, emphasis and insertion added) Thanks toDipesh Chakrabarty (2001)for helping me seethe historicist‘ not yet’argument inthisformulation of defeat. 13 Engels’wonderful description of Owen as “ : : :aman ofalmost sublime, childlike simplicityof character, andat the sametime oneof the fewborn leadersof men” (1972: 613)was matched with genuineadmiration for his achievements, but did not diminish aharsh dismissalof the “mish-mash”of his and other Utopians’mode of thought (616). Write the Webbs,“ He [Owen] hada boundlessbelief in the powerof education to form character; andif any scheme promisedjust sufŽ cient respitefrom povertyand degradation toenable him andhis disciples to educate one generation of the country’s children, he was readyto leave all economic consequences to be dealt with bythe “New MoralWorld” which that generation’s Oweniteschooling would have created” (1907:146). 134 Gibson-Graham ²

Third ownershipof the instrumentsof production by the workers whouse them (democraciesof producers) brought with it the dangers andtemptations of group individualism .TheWebbs saw a conict of interestbetween the workersin a producercooperative who could act asa “peculiarly‘ interested’oligarchy” at odds with the communityat largewhom they serve (Webband Webb 1921:462-8). If the agricultural uniontook possession of the landand the minersunion the mines there wasdanger of sectarian interests becoming transcendent. Without adequategovernance of the interdependenciesof the economy,each trade,which was “ buta fragmentof the community”(1907:465), would deteriorateinto a JointStock Union, no different from a JointStock Company,in competition with each otherto raise prices and increase proŽts. They mistrustedproducers as such and advocated handing the directionof the economyover to the state(as representingthe community) andto democracies of consumers and citizens (organized into consumer cooperatives)who would keep pricesdown, advocate ever moreefŽ cient productiontechnologies and be much more successful in ensuring the “distributionof the inevitable surplusesthat we knowof as rentand proŽ t equitablyamong all consumers”(1907:462). 14 Thisset ofcriticisms has been less developedwithin the revolutionary socialistmovement inwhich a privilegedproductionism allows the working classto take precedenceover community in directing the economy.As Mellor,Hannah andStirling note, Marx “clearly sawcooperatives as shiningexamples ofthe organizationof life undersocialism” and had a “preferencefor producer rather than consumercooperatives” (1988:22). He waskeen toassert the value ofthe “cooperativefactories raised by the unassistedefforts of a fewbold ‘ hands”’ as“ greatsocial experiments” thatconcretely demonstrated that slave, serf and hired laborwere but “transitoryand inferior form[s], destined to disappear before associated labor,plying its toil with a willinghand, a readymind and a joyous heart”(Marx 1985,quoted in Mellor et al.1988:23 emphasis added). Issuesof individualism and collectivism were traditionally seen throughthe

14 In favoringthe “community ofconsumers and citizens” as ‘ directors’of the economy (Webband Webb 1921:482) rather than the workingclass, the roleof consumption was differently conŽgured and valued by the Webbsin awaythat distinguishesthem from the mainstream socialisttradition. In their view:“ Weare, in fact,habitually misled by ourtoo narrow viewof the socialfunction ofconsumption. It isnecessarily the consumer who,according to his tastes and desires, determines the demandand ‘ setsthe fashion,’ andthereby decidesthe kindsand qualities of the commoditiesand services, high or low, materialor spiritual,that shallbe produced. ‘ Consuminggoods : : : isthe creationof a type oflife.’ In the socialorganization of the world,the act ofconsumption ‘ isdirective: it is constructive”’ (1921:482-3). EnablingEthical Economies 135 ² lens ofclass struggle and the collectivismof the workers,while privileged overthe individualismof the capitalists,is only ever ambiguouslyrelated tothat of ‘ the community.’ 15 The reluctanceto deal with the complex politicsof class versus community has led tomany problemsfor the labormovement inits relations with other issues-based and community- basedsocial movements. Itis in this realm of economic politics that the Mondragoncase isparticularly instructive as isdemonstrated in the second partof this paper. Fourth there werethe empirical facts aboutworker cooperatives – mostnotably that, in comparison to consumer cooperatives, they seemed notto last. Between the heady daysof the 1830swhen tradeunionists “aimedat nothing less thanthe supersessionof the capitalistemployer” (Webband Webb 1907:322) and the institutionalizationof trade unions inthe latterhalf ofthe 19 th century,a numberof cooperative workshops wereset upby trade unions “ asa means ofaffording, to acertainnumber ofits members, a chanceof escape from the conditionsof wage-labour” (320).These ventures largely endedin failure and the Webbs’analysis oftheir lack ofsuccess contributed to what became generally known asthe ‘degenerationthesis’ – the claimthat “ overtime a democratic, worker-ownedŽ rmwill tend to fall intodecay, chie y becauseof declining economicefŽ ciency butalso because of a lossof social dynamism” (Cheney 1999:17).The diagnosisimplied an inherent systemic weakness ofthe cooperativeand human weakness ofthe cooperatorin the faceof the “logicof the marketand the motivationsof capital”(Mellor et al.1988:67). Marx’s commentsto the effectthat cooperative factories reproduced the defectsof the capitalistsystem (1981:571)imply that he similarlyshared the viewthat, while indicative of a newmode of production, they couldnot standalone andindependently ‘reproduce’themselves (see footnote11). The taintof utopianism damned worker cooperativism on all sides– bothfrom the Fabiansocialist gradualists who were happy to advocate

15 Thisambiguity can beseen in Marx’s exchangeswith anarchists suchas Bakunin andProudhon who were concerned that in apost-revolutionarystate ‘ government by the workingpeople’ would reproduce structures ofdomination, with “human nature” leadingthe representativesof the workersto look down on “ ordinary workersfrom the heightsof the state”(1978:546). Marx’ s somewhatweak response (which contradictsother pronouncements) isthat oncethe economicfoundations of the existenceof classes have beendestroyed, wage workers will have abolished the speciŽcity oftheir classcharacter andthe functionsof administration would be different. With areference toactually existing cooperatives,Marx asksfor it tobe taken ontrust that the threat ofindividualismoverriding collectivismwill be avoided, asserting that “IfHerr Bakunin knew onething aboutthe situationof the managerof a workers’cooperative factory, all his hallucinations about dominationwould go to the devil”(1978:546). 136 Gibson-Graham ² consumercooperatives (but not producer cooperatives) and heavy state involvement inthe distributionof social goods and also from the communistrevolutionaries who advocated state socialism and the transition tocommunism ‘ afterthe revolution.’The historicalantagonism between left laborpolitics and worker cooperatives continues to have resonancein the presentas do the still prominentviews thatthe cooperativesector is insigniŽcant and unthreatening to the dominanteconomic order, 16 that cooperativesare unable to build sustainable interdependencies, that they areeconomically  awedand not really distinguishablefrom capitalism, that cooperatorsare prone to the individualisticself-interest ofthe cooperative, thatcooperatives are short-lived as well aspolitically conservative and disinterestedin solidarity with the morepolitical struggles of the left. 17 Thisantagonistic stance has contributedto a hyper-critical,because over- invested, attitudeto the evaluationof existing economicexperiments with cooperatives. 18 Given myinterestin recouping an economicpolitics of cooperativismin apost-socialistand post-social democratic era, it is worthreexamining these objectionsin more analytical detail.In The ConsumerCo-operative Movement Beatriceand Sidney Webb set outspeciŽ c reasonsfor “ why democraciesof

16 Cooperatives,for example, have been represented as limited “ tothe roleof isolated, undercapitalized,and marginal ‘dwarfŽ sh’in the capitalistsea of major corporations” (Ellerman 1984:5quoted in Morrison1991:48), that is,as havingno power with respectto the dominantstructure ofcapitalism. 17 Ofcourse there isa counter-story tobe told of the waxingand waning of support the labormovement hasgiven to cooperative development. This has changed over time from the buildingof trade union consumer cooperativesin the early part ofthe 20 th century, toexperiments with worker-owned productionin the 1970s,to worker buyouts andESOPS in the 1980s.This point only highlightsthe rhetorical violenceof referring to somethingcalled the ‘labormovement’ when itsinternal differenceshave historically and geographicallybeen so great. 18 Forexample, despite the desireof many torepresent Mondragonas aliving,breathing alternative tocapitalism, Mondragon discourse is haunted by the fearof (and in somecases almostperverse pleasure in) defeat.From an avowedlyleft perspectiveKasmir (1996;1999), forexample, uncovers the ‘myth’of Mondragon,arguing that the Mondragonmodel is part ofa “globalcapitalist discourse” (1999:395) aimed at legitimatingpost-Fordist management practices.She insiststhat it“ reinscribescapitalism by eviscerating class as a socialand politicalcategory” and that itappears to be an alternative tocapitalism but really only contributesto the assertion“ that noother systemis possible”(396). Kasmir admitsthat she is“ puttingcontemporary capitalismat the center of[her] inquiry”(382); for her, the body ofcapitalism is more real than the ghostlypresence of cooperativism– capitalismis present in the market, in the processof producing commodities, in the technologyemployed, in the pressuresto develop one way and not another. EnablingEthical Economies 137 ²

Table 1 Extractsfrom Sidney and Beatrice Webb’ s “why Democraciesof Producers Fail inOrganising Production” (Webband Webb 1921:462-68, emphasis added)

the self-governingworkshop is inevitably “ ledto regard its own product oritsparticular ² function asof more than averageimportance to the community”(465) “the conict ofinterest betweeneach self-governingindustry or vocationand between ² the community asa wholemay appearin the exactionof pay abovethe average,or hoursand conditions of work lessonerous than thoseof others” (465) itis “ perpetuallytempted to exact, like the capitalistemployer, a proŽ t oncost; that is ² tosay, to secure for its own members whatever surplusvalue is embodiedin the pricefor which itcan disposeof its product or service;or toput it in another way,to retain for itsown members the equivalentof the advantageof all differential factors in production (such assuperiority of soil or site,of machinery or administrativeskill) that itcontrols” (465) “every democracyof producers : : : [is] : : : perpetuallytempted to seek to maintain ² existingprocesses unchanged, to discourage innovations that wouldintroduce new kindsof labour, and to develop vested interests against sections of workers”(466) the “invidious”problems with “discipline”and the hierarchy of managers and ² producers;“ Noself-governing workshop, no Trade Union, noProfessional Association, noCo-operative Society, and no Local Authority –andno ofŽ ce orindustrialenterprise belongingto any ofthese – hasyet madeits administration successful on the linesof letting the subordinateemployees elect or dismissthe executiveofŽ cers whosedirections theseparticular groupsof employees have, in their work,to obey” (467); “ itis a matter ofpsychology” (468) “disputes amongdifferent vocationsand sections of vocations (whether brainworkers ² or manualworkers) asto which ofthem were “entitled”to particular jobs,have been speciallycharacteristic ofevery form ofassociationof producers” (466) “the tendency toexclusiveness is inherent in any associationbased on vocation in ² production : : : [and] : : : justbecause they arenecessarily producing almost entirely not fortheir ownuse but for exchange, [they] can normally increasetheir ownincomes, apartfrom any increasein efŽciency in production,by restricting their membership andlimiting their outputin relationto demand in sucha wayas toenable them toraise the aggregateexchange-value of their product”(466) producersfail in organizingproduction” (1921:462-468). 19 Theircriticisms stem froma view thatthe cooperativeideal, as propounded by Owen, forexample, calledfor a “characterwhich had not been formed”(Potter

19 Thesecriticisms were Žrst propoundedby Beatrice Potter in her 1891book on The CooperativeMovement in GreatBritain andthen incorporatedinto her 1921book with Sidney Webb. 138 Gibson-Graham ²

1891:29).They hada Žrmbelief that “ noman can be trusted to be judge inhis own case” (Webb and Webb 1921:465) and thus predicted that an inevitable conict of interest would arise between the workersin a cooperativeand the communitythey serve. 20 Theirarguments, as laidout inTable 1, still standas classic oppositions to worker cooperatives. In the secondpart of this paper I take these weaknesses asa wayof organizing discussionof the distinctiveelements ofthe Mondragonethical economy.

EthicalStances and the Mondragon Way The MondragonCooperative Corporation (MCC) standsin direct con- tradictionto many ofthe claimsof limitation set outabove and as such highlightsthe possibilityof ‘making’viable andsustainable economies that arebuilt around cooperativism. I amparticularly interested in how a new economymight be built by marshalling the potentiatingforce of surplus labor.In the realmof economic practice important decisions must be made aboutquestions of individual and collective rightto the fruitsand rewards oflabor, power over the performanceof one’ s labor,exchange principles anddistributive policies (to name butsome). Eradication of distinctions aroundownership of property in a cooperativedoes not resolve the di- visionsbetween producers of surplus and non-producers of surplus. How these divisionsare negotiated, how surplus is distributedand allocated be- tween workersand the community,all occupythe spaceof aformof class politics. 21 Eachnew way of producing, appropriating and distributing or allocatingsocial surplus allows for new becomings, new ways of being.

20 Potter askedthe questionin her 1891book on the cooperativemovement: “For where, in the wideworld, could Robert Owen discover a bodyof associates : : : who hadinherited or acquiredcharacters Žtforthe difŽculties of associated life and self- government?”(1891:29). She displaysa certain elitismin the observationthat thosewho were attracted tocooperativism were the unemployed,“ workersalready degraded by starvationor idleness,or restlessor discontentedspirits” who were, in her estimation, “incapableof the mostelementary dutiesof citizenship” (29). With sucha lowopinion of the masses,it is not surprisingto see Potter/ Webband her husbandenshrine aform of mistrust ofthe worker’s capacityfor ideals other than greedat the center oftheir evaluation ofproducer cooperatives. 21 Resnickand Wolff’ s (1987)symptomatic reading of Marx’ s economicand class analysis reinstatessurplus labor distribution (the distributionof extracted surplusto various ends by the appropriator)as just as important amoment ofthe classprocess as those of surplus laborproduction and surplus labor appropriation. All three moments can beseen as fociiof classstruggle. What ismore they arguethat diverseclass processes can beseento be present in allsocieties in which surplusis usedto build and support a socialsystem, including those that claim tohave ‘ abolishedthe classsystem.’ See for example their analysisof the Soviet Union (Resnickand Wolff 2002). EnablingEthical Economies 139 ²

Crucialto the longevity andsuccess of the Mondragoncooperatives has been acommitmentto constant debate and reevaluation of how aparticularset ofethical principles will guide their economic choices andresultant paths of action. At base, the mostpowerful constituent ofthe Mondragonintentional economy has been itsBasque ethnic and communityidentity. During the 1950sFather Arizmendi set himself the goalof promoting unity in a societyfractured by civil war and political division.In hisview, the economicstrategy of settingup cooperativeswas a steptowards building a cohesive communityand enabling Basque cultural survivaland regeneration. 22 Underthe repressiveFranco regime, Basque languagehad been outlawedand ownership of productionfacilities denied Basquecommunities. Working within and against these constraintsthe Mondragoncooperatives began to grow and foster an economicbasis for renewedexpression of Basque cultural identity. Community coherence and preservationhas remainedan underlyingcommitment guiding many ofthe strategiceconomic decisions taken bycooperators. The ten cooperativeprinciples that have guidedthe Mondragon experiment areas follows: 23 1.Open admission: Membershipof the Mondragoncooperatives is opento all whoagree with the basiccooperative principles. 2.Democratic organization: Allowner-workers ( socio-trabajadores ) are equalmembers of the cooperative.Each has onevote inthe democratically controlledgeneral assembly ofthe enterpriseand in the electionof membersto other governing structures. 3.Sovereignty of labor: Controlof the cooperativesis in the hands ofthe owner-workers,and they have aprimaryrole in the distribution ofsurpluses. There is no distinction made between so-called ‘ productive’ workers(direct producers of surplus) and ‘ unproductive’workers (ofŽ ce and sales personnelwho do not produce surplus but enable itsrealization and arepaid out of distributed surplus). All are ensured the rightto determine

22 Interview with JoseRamon Elorza, Human ResourcesDirector, IKERLAN,April 22, 1997.The initialcooperative was established in 1956,but prior to this Father Arizmendi hadspent the yearssince his arrival in the community in 1941setting up youth groups, amedicalclinic, athleticsand soccer clubs, teaching in the apprenticeshipprogram of the largestcompany in town,Union Cerrajera, settingup an independenttechnical school, EscuelaPolitecnica Profesional, and conducting more than 2000study circles onsocial, humanist andreligious topics! (Whyte andWhyte 1988:29-32).The schoolwas to provide the technical andorganizational base from which the producercooperatives grew (30). 23 The principlesas they currently standwere basedon those set out originally by the Rochdalecooperators in 1844but have been in uenced by the contemporary International CooperativeAlliance and their ownexperiences (Morrison 1991:11-12; Ormaechea1993:139-86). 140 Gibson-Graham ² howsurplus will be distributed within and without the cooperative enterprise. 24 4.Instrumental and subordinate character of capital(people over capital): In all instancespeople are valued over capital, which is seen as“ basicallyaccumulated labor and a necessary factorin business developmentand savings” (Morrison 1991:11). For example, whilethe cooperativesrequire a substantialpersonal investment bynew members, thisneed forcapital does not stand in the wayof open admission. 25 This principleensures that capital does not have an independentexistence, imperativeor logic. For example, returnspaid out on capital saved or reinvested inthe cooperativesystem are“ justbut limited,” “not directly tiedto the losses orsurpluses of the co-ops”(11). 5.Self-management: Thecollective enterpriseis managed through democraticparticipation of all members,based on free owof information, accessto training, internal promotion for management, consultation and negotiationabout all decisionsthat affect owner-workers. 6.Pay solidarity: Wages areset accordingto principles of solidarity betweenworkers within each cooperative,between cooperatives and with workersin conventional capitalist enterprises in the region.Collective decisionsabout what proportion of the worker’s laboris to be considered ‘necessary labor’(to be used for meeting subsistencecosts and remunerated tothe cooperatoras a wage)are particularly informed by the ethicof equilibrio,thatis, a commitmentto seeking balancebetween con icting interestsand forces. 7.Group cooperation: Cooperationis fostered among individual cooperativeswithin the same group,among cooperative groups within the MCCandbetween the Mondragoncooperatives and other cooperative movements throughoutthe world. 8.Social transformation: The ever greatereconomic and social reconstructionof a Basquesociety “ whichis more free, just and solidary” (Ormaechea1993:175) through, for example, expansionof employment in the cooperativesystem.

24 In the terms proposedby DeMartino this constitutes an exampleof “ weakappropriative justice”in that thosewho “ directly producethe surplus(Marx’ s productiveworkers) are not excluded from fairand meaningful participation in itsappropriation” but are joined by other members ofthe cooperativeand in alessdirect wayby other members ofthe wider community (2003:18). 25 Mathewsnotes that the entry fee“ currently standsat about$12,500” which represents “roughly10% of the estimatedaverage capital requirement forthe creationof a new job” andthat “(p)ayment can bemade on the basisof a 25%initial contribution, followed by monthly installments”(1997:11). EnablingEthical Economies 141 ²

9.Universality: Promotingsolidarity with “ all thoseworking for economicdemocracy in the sphereof the ‘SocialEconomy,’ championing the objectivesof Peace, Justice and Development, which are the essential featuresof International Cooperativism” (Ormaechea 1993:180). 10.Education: Commitmentto education about cooperative principles andtheir dissemination to members, especially amongthose elected to ofŽce inthe socialand management bodiesof the organization,and cruciallyto young people, the cooperatorsof the future(Ormaechea 1993:183). Theprocess by which these principleshave been deliberatelydebated andfrequently reinterpreted over the past40 years providesa modelof auidand iterative process of deŽ ning and redeŽ ning ethical positions withspeciŽ c politicaland economic outcomes. In all instancesa com- mitmentto seeking balancebetween con icting interests and forces, to the principleof equilibrio,has comeinto play inadjudicating differences anddetermining how to proceed. In the discussionto follow we see how these principledethical stances have been actedout in the speciŽc cir- cumstancesidentiŽ ed by the Webbsas moments of producer cooperative weakness/limitation/temptation.

Product

Theself-governing workshop is inevitably “ledto regard its own product or its particular function as ofmore than average importance to thecommunity” (Webband Webb 1921:465)

When the Žrstenterprises were established, the cooperatorssought to set upthe productionof commodities not being manufactured in the region(or in Spain). Commitment to an ethicof regional business solidarityin uenced the decisionnot to replicate (and therefore create heightened competitionfor) businesses already established in the region. They beganwith one cooperative business manufacturing parafŽ n stoves andprogressively established new enterprises producing space heaters and electricalappliances, targeting local and national markets. This strategy workedvery well inthe consumer-depriveddays following the warwhen the Spanisheconomy was both depressed and politically isolated. Prices wereprotected by the hightariffs on industrial imports that stayed inplace untilSpain’ s entry intothe EuropeanEconomic Community beginning in 1986(Whyte andWhyte 1988:132). The commitmentto social transformation of Basque society through increasedemployment has led tothe proliferationof cooperatives. During the establishmentphase the Mondragoncooperatives developed their owninternal markets building backward and forward linkages between 142 Gibson-Graham ² theirown cooperatives. As some enterprises became larger, sections ofproduction were spun off as independent entities. The components producedby a newcooperative had an assuredmarket with the oldparent Žrmand the cooperativehad the opportunityfor expansion by developing newmarkets, selling tobuyers outside the cooperativesystem. Strengthin the manufactureof domestic white goods thus translated intostrength in other product markets such as machine tools. Most recently movement intoretailing and services isfulŽ lling the goalof increasingemployment. Committed to the principlesof open membership, universalityand education, the hyperand supermarkets, Eroski and Consum,are run as both worker and consumer cooperatives. Consumer membersare represented on the governingcouncils of the cooperative butare not paid a consumercooperative dividend. Eroski concentrates insteadon “lowprices, healthy andenvironmentally-friendly productsand consumereducation and advocacy” (Mathews 1997:12).These enterprises have managedto carve out a signiŽcant market niche byoffering cooperativemembership to all consumerswho shop with them, utilizing theirinternal market links toagriculturaland commodity producers. Eroski nowemploys over 12,000 workers and the chainextends beyondSpain. The Mondragoncooperators have notsought to establish any one productor function as more than of average importance tothe community . The extent ofproduct diversiŽ cation is remarkable from agricultural products, tocapital goods, domestic appliances and retail services andhas led tothe strengtheningof the regionaleconomy as a complexly differentiatedand networkedwhole.

Pay

“(T)hecon ict ofinterest betweeneach self-governing industry or vocation and thecommunity as awhole mayappear in theexaction of pay abovethe average, or hours and conditions ofwork less onerous than thoseof others” (Webband Webb 1921:465)

Thesetting of wages (called anticipos oran advance) isone of the spaces offreedom open to Mondragon that has been seriouslydebated and modiŽed in line withchanges inthe economicenvironment. 26 While all membersof any onecooperative are democratically involved inthe decisionsregarding the operationsof the cooperativeenterprise, decisions aboutwages are made by the cooperativecommunity as a wholeat the CooperativeCongress, the democraticallyelected governingbody of all the cooperatives.This signiŽ es the importplaced by the cooperativesystem

26 The issueof hours and working conditions will be taken upunder ‘management.’ EnablingEthical Economies 143 ² uponthe settingof the necessary laborpayments thatin uence ratesof appropriation 27 andthus production of cooperative surplus. Anumberof principles come to bear here. The identiŽcation Ž rstand foremostof the cooperativesas a Basque survivalstrategy meant thatthey werevery consciousof not recreating or instigating divisions within the Basqueregion. 28 Thisimperative became institutionalized in the ethicof regionalpay solidarity. Wages arepegged to abasewage which is “ roughly comparableto that of suitable workers in neighboring Basque industry” (Morrison1991:50). This decision re ects acommunitycommitment to equilibrio and solidarity ensuringthat the Mondragoncooperators do not becomea newwealthy ‘socialclass’ within the region.A similarlyinformed decisionto minimizewage differentials within any cooperativeto a ratioof 1:3between the bottomworker and the topmanager was instituted by all the cooperatives(Whyte andWhyte 1988:44).This ratio has been modiŽed anumberof times throughout the historyof Mondragon and is currently 1:6. 29 The decisionto debate wage levels atthe level ofthe communityand notthe individualcooperative ensures equilibrio byestablishing safeguards againstany onegroup increasing the productionof surplus labor in their cooperativeby driving the wagelevel downbelow the communitywide level, orjeopardizing the productionof surplus by raising wages above thislevel. The decisionto limit the necessary laborpayment (thereby maximizingthe surpluslabor produced) enhances the economicability toproliferate cooperatives. It also indicates a commitmentto valuing communitysustainability over and above immediate personal consumption, acommitmentevident inmany ofthe aspectsof the Mondragoneconomic experiment.

27 In that thisact ofappropriation is sanctionedby the workersthemselves, it seems more realisticto use this terminology, rather than the more wellknown “rate ofexploitation.” 28 Duringthe Civil War the Basquecommunity hadbeen split by Republican, socialist andanarchist loyaltiesas well as having been decimated by outmigration and the targeted bombingof Guernica, the spiritualand governmental center ofBasquedom. 29 It mustbe noted that in many ofthe technologicallyadvanced enterprises there are noworkers receiving the basegrade pay. The moveto the greater ratiowas instigated by the needto permit salariesof the topmanagers to rise to 70% of established market equivalents(Cheney 1999:49).The wagesissue has been complicated in recent times with the employment ofnon worker-owner labor( eventuales)whowill be included as full cooperativemembers when new fulltime jobsare generated, and non worker-owners ( socios temporales)with Žxed-term contracts. Cheney notesthat thesenon- socios makearound 80% ofthe wagesof the socios andreceive no dividends in the enterprise (86).At present some 10,000of the totalMCC workforceof around 40,000 are non worker-owners. 144 Gibson-Graham ²

ProŽ t

(I)tis “perpetually temptedto exact, like thecapitalist employer,a proŽ t on cost; that is to say, to securefor its own memberswhatever surplus value is embodiedin theprice for which it can disposeof its product or service; or to put it in another way, to retain forits own membersthe equivalent ofthe advantage ofall differentialfactors in production (such as superiority ofsoil or site, ofmachinery or administrative skill) that it controls” (Webb andWebb 1921:465)

Trueto the sovereignty oflabor principle, the cooperativemembers are ownersand Ž rstdistributors of their proŽ ts, or disposable surplus, that is,what is left oftheir appropriated surplus labor after meeting all the enterpriseexpenses (costof inputs including raw materials, machinery and the wages, anticipos,aswell asdeductionsfrom surplus for insurance, taxes etc).The members of the general assembly ofthe individualcooperative arenot, however, at liberty to retain the remainderfor themselves, but arein charge of major decisions about how to distribute their proŽ ts. Certaindistributions are determined by the cooperativesystem asawhole, andone distribution is enforced by Spanish law – the allocationof 10per cent ofannual proŽ ts to social or charitable institutions. These fundsare spent on educational programs conducted in Basque language, communityand public health projects,providing important support for culturalmaintenance (Cheney 1999:87). In principlethe cooperativistshave the strategicpower to determine how90 per cent ofthe proŽt isallocated and it is in this arena of decisionmaking that the strongcommitment to people over capital and communityover individual has increasinglycome to the fore.Early on the cooperativesdistributed 20 per cent oftheir disposable surplus to a permanentreserve fundof retained earnings to be used for machinery replacementand upgrade. The remaining70 per cent ofthe proŽt was distributedon a yearly basisdirectly as dividendsto the cooperators“ who couldspend or save itas they chose”(Morrison 1991:159). It soon became evident thatthis arrangement would not allow for long-term expansion ofthe individualenterprise or the widercooperative system. The decision wasthus made to establish internal capital accounts whereby 70 per cent (orless) “isdistributed to the owner-workers’personal internal capital accounts,apportioned according to number of hours worked and salary grade”(Morrison 1991:50). 30 The individualworker’ s capitalaccount

30 Cheney notesthat in recent timesit has been reported that some socios havevoted to reducethe reinvestment oftheir dividendsinto the collectivecapital fund to 30%, that is, towhat isrequired by statute. His informant attributesthis shift to a demiseof the ‘culture ofsacriŽce’ (or giving)that characterized the Žrst 40years of cooperativedevelopment and EnablingEthical Economies 145 ² earnsinterest at an agreedupon rate and “ (m)embersmay drawon the interestaccumulated in theiraccounts, or use the accountsas collateral for personalloans, but the principalcannot normally be touched until they resignor retire” (Mathews 1997:11).This means thateffectively 90per cent ofthe proŽt ordisposable surplus generated is saved tobe reinvested inenterprise development. In effect,this allocation of funds to ‘ forcedsavings’ has been acrucial enactment ofstrategic power on the partof the cooperatorsthat has subordinatedpersonal economic gain to the goalof strengthening and diversifyingthe cooperativesystem. The individualproducers cede their rightto directly determine many ofthe distributionsout of appropriated surplusby depositing their individual capital accounts with the Caja Laboral Popular (the WorkingPeople’ s Bank). Thisinstitution is a seconddegree cooperative(a cooperativeof cooperatives) that is controlled by its owner- workersand its members (other cooperative enterprises). The foundation of the Caja Laboral 31 wasa key interventionthat enabled the economic powerof cooperatively produced surplus to be marshalled within the cooperativesystem asa wholeand dispersed in a mannerthat proliferated the intentionaleconomy of Mondragon:

The sloganused by the Caja inthe early stages ofits developmentwas “savings orsuitcases,” indicating that local savings were necessary inorderfor there to belocal jobs.The Caja alsoprovided a means forthe cooperativesto manage the capitalheld in their permanent reserves andindividual capital accounts, soenabling them toretain within the groupall oftheir surpluses otherthan the 10%allocated by law tocommunity projects.(Mathews 1997:13)

The Caja operatesas both a bankand a businessdevelopment agency. Its Empresarial Division engages inasecondorder redistribution of the worker- owners’surplus deciding where and how to allocate its investments soas toprotect and advance the cooperativistvision. It still offerslow interest loansto cooperatives and provides business and Ž nancialsupport to new startupcooperatives (Cheney 1999:56).The surplusesdeposited with the Caja Laboral have alsobeen usedto establish a networkof other second degreecooperatives and groups that have providedongoing support to the ‘primary’producer cooperatives; Lagun-Aro, the socialinsurance cooperative the riseof consumerism in Basquesociety (1999:80). It isalsopossible that with the growth andconsolidation of the MCCthere islesspressure within the organizationto rely onthis fundfor business expansion. 31 In settingup this bank the cooperativestook advantage of a clausein Spanishlaw that alloweda cooperativecredit unionto offer 1% higher interest than other Žnancial institutions(Mathews 1999:206). It wasable to quickly attract the savingsof local people andchannel them intoŽ nancing further developmentof the cooperativesystem. 146 Gibson-Graham ² thatprovides health care,life insuranceand social security to cooperative membersand their families; 32 Hezibide Elkartea ,the educationand training cooperativeproviding education from day-care to university level; and Ikerlan and Ideko,the researchand development cooperativesthat undertake scientiŽc andtechnical research both for the cooperativebusinesses and on contractfor the privatesector. 33 The generationof cooperativeproŽ t andits deployment into job growth inadditionalŽ rstdegree and second degree cooperatives and the provision ofsocial services has,in Mondragon, become a wayof sharing the dividends,connecting cooperative members to the widercommunity, and expandingand strengthening the cooperativecommunity economy.

Innovations

“(E)verydemocracy of producers : : : [is]: : : perpetually temptedto seekto maintain existing processesunchanged, to discourage innovations that would introduce new kinds oflabour, and to developvested interests against sections ofworkers” (Webband Webb 1921:466)

The Mondragoncooperatives began with modest production processes thatwere appropriate to the localdemand for domestic appliances. But technicaleducation and innovation has alwaysbeen akeystone ofthe Mondragoncooperatives since the early dayswhen the Žrstgraduates of the EscuelaPolitecnica Profesional formed the Žrstcooperative enterprise. MacLeodnotes that “ the theoryas well asthe practice[of the Mondragon model]is infused with an almostŽ erceattachment to the necessity of beingon the cuttingedge ofthe mostadvanced technology available” (1997:92insertion added). He speculatesthat this commitment to the latest technologymight have been inuenced by Don Jose Maria’ s impressionsof the SpanishCivil War in which the idealismof those who came together

32 Under Spanishlaw the cooperativeswere excludedfrom normal socialsecurity taxes andbeneŽ ts and so the cooperatorsformed their ownsystem to provide social beneŽ ts to themselvesand their families(Whyte andWhyte 1988:19). 33 Mathewssummarizes the implicationsof this economy of surplus distribution for the diverseforms of propertyownership that coexist: : : :members ofthe co-operativehave property of four kinds: Ž rstly, ownershipof their jobs;secondly, direct personalownership of the balancesheld forthem in their capital accounts,which earn additionalincome for them through interest towhich they have regularaccess; thirdly, asharedownership of the assetsof their co-operatives,such as buildings,equipment and reserves, the governanceand management ofwhich they are directly responsiblefor; and, Ž nally, afurther sharedownership – albeitless direct – ofthe secondarysupport co-operatives in which the primary co-operativesare major stakeholders.(1999:232) EnablingEthical Economies 147 ² tosupport the Republicancause “ wasno match for the precisionand efŽciency ofHitler’ s technology”when the German AirForce came in tohelp Francoby bombing the Basques’most ancient and sacred city of Guernica(1997:94). SigniŽcant investment has been allocatedto keeping atthe developing edge ofproduction technology and methods and this has allowedthe MondragonCooperative Corporation to become Spain’s largest exporterof machine toolsand the largest manufacturerof white goodssuch as refrigerators,stoves, washing-machines anddishwashers. It is alsothe thirdlargest supplierof automotive components in Europe– designatedby General Motorsin 1992as “EuropeanCorporation of the Year”– anda Europeanleader in the supplyof components forhousehold appliances.(Mathews 1997:2) Mainstreamtechnology and production processes have formany years served the primaryagenda of building community sustainability, but there isnow a commitmentto developing environmentally responsible productiontechniques. Adherenceto the principleof the instrumentaland subordinate characterof capital has meant thattechnical change isnotposed as athreat tothe individualowner-workers’ job or existing skill base.While there is noquestion that innovation must take placeto remain competitive, the cooperativeswere designed primarily to gainfully employ people and not only tomake proŽtable returns. With the introductionof new ‘ laborsaving’ machinery,workers are deployed to other existing cooperativesor retrained towork in new production processes and paid a maintenance wage.The costof upholding this principle is met byreallocations of distributed surplus atthe level ofthe individualcooperative and supported by allocations of secondorder surplus distributions by the Caja Laboral .Duringthe recession ofthe 1980s,for example, certaincooperatives increased to 45 per cent the distributionto retained earnings to allow for the costof retooling andupgrading machinery and paying unemployment beneŽ ts to laid-off workers,thereby reducingthe allocationto individualcooperator accounts. Thecommitment to keeping enterprisesgoing or changing their purpose sothat they cancontinue to generate adisposablesurplus that can build andextend communityhas led toan emphasisupon efŽ ciency, high productivity,market expansion and new business growth and product development.

Management

(T)he“ invidious”problems with “discipline”and thehierarchy of managers and producers; “Noself-governing workshop, no TradeUnion, no Professional Association, 148 Gibson-Graham ²

no Co-operative Society,and no LocalAuthority –and no ofŽce or industrial enterprise belonging to any ofthese – has yetmade its administration successful on thelines ofletting thesubordinate employeeselect or dismiss theexecutive ofŽcers whose directions theseparticular groups ofemployees have, in theirwork, to obey” (Webband Webb 1921:467)

Given thatthe Mondragonoperations adhere to the principleof self- management,many issuesto do with the directionof work and com- pliancewith shop  oordiscipline are side-stepped. Indeed this is one of theircompetitive advantages over conventional capitalist corporations. As Morrisonnotes, the cooperativesare “ notburdened by layers ofsuper- visorsand managers who act as enforcers [and who must be paid out ofappropriated surplus]; instead, [they have] atalented,committed force ofowner-workers who can successfully use the new exible technologies” (bracketedcomments added 1991:214). Workplace behavior must abide byan agreedupon disciplinary code that addresses issues of punctuality, absencesand violation of co-op rules, specifying ‘ light,serious and grave’ offencesand appropriate punishments (from Ž nes tosuspension or expul- sion).In alargely self-managedwork environment enforcement of these codesis mainly upto the individualand the immediatework group. 34 Thereis still the questionof how owner-workers relate toa general managerof the wholeenterprise. In Mondragoneach cooperativeis set upwith a numberof elected councilsthat see today to day governance andcarry out the decisionsmade by the annualGeneral Assemblyof all worker-owners. 35 The governingor directing council is made up of general memberselected toa fouryear termand is considered to be the mostpowerful body in the cooperative.It appoints, supervises and removes the co-opmanager, oversees membership,job classiŽ cation, accounts, distributionof proŽ ts or losses, Ž nancialcommitments and business plans (Whyte andWhyte 1988:76).The cooperativemanager is appointed for afouryear periodand may attendgoverning council meetings asan

34 Onecooperator explained to me howher jobwas to plan out the owof work inthe factory forthe week.As long as this plan was ready to be operationalized on the shop oor onMonday morning, itdid not matter when shedid her work.Sometimes she came in onthe weekendto complete it if she had spent her time onother things(she was a local councilor)during the precedingweek. She wasappreciative of the considerablefreedom toorganize her work time;at the sametime sheexpressed a strongsense of responsibility tothe cooperativeenterprise andhad a well developedwork/ serviceethic. Thisaccount pointsto the reducedneed for managers to police behavior or giveout orders. As an employeeof the owner-workers the manageris free in turn tolook to the smoothrunning ofthe productionand commercial sideof the business. 35 At the General Assemblyposition papers and business plans are presented, debated andapproved. The meetingis preceded by smaller “preparatorychats” for groups of 30- 40 socios toreview and modify the plansand strategies to be presented (Cheney 1999:58). EnablingEthical Economies 149 ² advisorbut has novote. The governingcouncil normally meets every daybefore the workingday begins and at the conclusionof the meeting the councilorsresume their speciŽ c jobswithin the enterprise(Mathews 1999:199).In the largercooperatives a separatemanagement councilmade upby the hiredtop executives anddirectors of the cooperativemeets to formulatepolicies and plans to be approved by the governingcouncil (Cheney 1999:59).In these largerenterprises an auditcommittee keeps watchover the cooperative’s Žnancialoperations. Managersearn much less thanthey wouldoutside the cooperative system, sothey areoften drawn from within the cooperativesor are younggraduates brought in from outside who are keen toparticipate in the cooperativevision. Some are even hiredfrom traditional capitalist Žrms.They are“ awarethat they mustsucceed in order to maintain their jobs”(Morrison 1991:74) and that they have tojustify their decisions to worker-shareholderswho are much more involved inthe businessthan the conventionalshareholder (Bradley andGelb 1983:62).“ Co-opmanagers, however,do not live interror of losing their jobs. It is not a tragedyfor amanagerto fail; those who are replaced are reintegrated into the co-ops withanother assignment” (Morrison 1991:74). In additionto the hiredgeneral manager,each cooperativehas an elected presidentwho is an ex-ofŽcio member of the governingcouncil and socialcouncil (see sectionon disputes)and is invitedto attend the meetings ofthe management councilwhen there isone. Cheney notesthat this dualgovernance-management structure imbues vitality inthe organization anda strongdemocratic awareness. In hisresearch he foundthat the two leadersoften act as partners in management withthe elected president “typically moreconscious of his or her constituencies than is the selected general manager”(1999:61). Theclear speciŽ cation of the termsand conditions of management and the individualrights and collective responsibilitiesof the owner-workershas contributedto one of the mostsuccessful systems ofworker management inthe world.The MCC is host to many studygroups from all overthe worldinterested in efŽ cient business and industrial management witha strongemphasis on workerparticipation.

Disputes

“(D)isputes among differentvocations and sections ofvocations (whetherbrain workers or manual workers) as to which ofthem were “ entitled”to particular jobs,have been specially characteristicof every form of association ofproducers” (Webband Webb 1921:466)

Theprocess of determining working conditions, wage levels andjob classiŽcations in the Mondragoncooperatives has alwaysbeen pursued 150 Gibson-Graham ² outsideof the ‘normal’operations of the labormarket or conventional collective bargaining.This is partly because when the cooperatives wereŽ rstbegun the Francodictatorship banned membership of trade unionsand political parties, though clandestine organizations existed. The commitmentto equilibrio and solidarity couldalso be seen ascontributing to aninterestin ways of resolvingcon icts that do notdraw upon the us/them ideologyof mistrust and suspicion that has traditionallycharacterized tradeunion struggles over industrial relations. Efforts to build a sense of economiccommunity are aimed at transforming the usualclass divisions andantagonistic affective politics that often pertain between management andworkers. Withinthe cooperativessocial councils were organized to allow the voiceof owner-workers as workers tobe heard. The socialcouncil stands alongsidethe governingcouncil and focuses on monitoring personnel matters,salary grades and advances, health andsafety issues,and administeringthe coopsocial funds. It aims to evaluate andpossibly counterdecisions made by the governingcouncil that might be more inuenced by businessconsiderations and as such operates like aunion. Disputesover job classiŽ cation and reevaluation have indeedoccurred inthe Mondragoncooperative, the mostfamous being the disputethat eruptedas the 1974Ulgor strike. At this time the Mondragoncomplex ofcooperatives was under attack from elements withinETA, the Basque politicalorganization, who saw this “ entrepreneurialadventure” as “ a disguisedform of capitalism, and therefore an obstaclein the wayof the proletarianrevolution” (Whyte andWhyte 1988:92-3).Criticism was particularlystrong of the socialcouncils which were seen bythe militant left asnone otherthan a“bourgeoisparliament,” a “faithfulservant and legitimatechild of the system whichgives riseto it” (Whyte andWhyte 1988:93quoting Azurmendi). ETA agitationwithin the cooperativessaw attemptsto mount strikes in the early 1970sand the responseby the governingcouncil at the Ulgorplant was to distinguish between “ sympathy strikes”in supportof laborcauses in the widerBasque region and “ internal strikes”focused on issues that could be raised and resolved with the social council.The latterwere deŽ ned as attackson the cooperativeand subject topenalties anddischarge (92). 36 TheUlgor cooperative had grown into alargeand bureaucratic organization with 3,500 employees and,in the heightened climateof attack,the attemptby management toimplement job reclassiŽcations and individual merit ratings for blue-collar workers was met withmisunderstanding, resistance and ultimately a strike.This experience causedmajor rethinking within the cooperativecomplex and prompted

36 Amovewhich Father Arizmendi wassaid not tohave supported (Morrison 1991:154). EnablingEthical Economies 151 ² many changes.One wasthe decisionto limit the sizeof future enterprises wherepossible to around 500 so that high levels ofcommunication could bemaintained among the workforce. JobclassiŽ cation and individual performance goals are important as not only dothey translateinto a particularwage level butthis in turn affects the shareof cooperative dividends paid to the owner-worker.It is not surprising,therefore, that exercising the ethicsof solidarity and equilibrio is notalways easy. 37 The strengthof Mondragon has been itswillingness to openly anddemocratically discuss these issues,to re ect on past mistakes andto constantly change inorderto sustain the originalvision. Openness tochange isafreedomto be exercised initself.

Membership

“(T)hetendency to exclusiveness is inherent in any association basedon vocation in production : : : [and] : : : just becausethey are necessarily producing almost entirely not fortheir own use but forexchange, [they] can normally increasetheir own incomes, apartfrom any increase in efŽciency in production, byrestricting their membership and limiting theiroutput in relation to demandin such away as to enablethem to raisethe aggregate exchange-value of theirproduct” (Webband Webb 1921:466)

Asthe historyof Mondragon shows the cooperativeshave notdisplayed exclusiveness onthe basisof productionor vocation.On the contrarythey have expandedinto multiple production lines andindustries, building con- nectionsbetween workers of all tradesand skills acrossa diversiŽed econ- omywithin the Basqueregion of Spain.Output has been expandedrather than limitedin relation to demand and prices of Mondragon produced commoditieshave been kept competitivewith those of commodities pro- ducedwithin capitalist Ž rms.Until recently, membershiphas been available toall whoworked in a cooperativeenterprise and wage levels have been regulatedin line withthe principlesof open membership, solidarity and equilibrio.Many ofthe dangersof exclusivism orgroupindividualism have been mediatedby the principlesand ethical practices elaborated above. Today,one of the pressingchallenges facingthe MCCisrelated to thisquestion of membership and market competitiveness. The increasing opennessof global markets could be seen asrestricting the spaces offreedom within which the cooperativescan forge their own path. Mondragonwatchers have drawnattention to the phenomenal growthof the cooperativecorporation in the late 1980s,when itwasinitially adapting

37 With reorganizationof work intoteams there arecurrent movesto reward group outputwith team-basedpay which isproducingmore controversy within the group(Cheney 1999:130). 152 Gibson-Graham ² tothe internationalmarket, and during the 1990s,when itreorganizedthe corporationalong sectoral lines andcommenced aggressive strategiesto defendand increase its market position by establishing production sites outsidethe Basqueregion and in international locations (Cheney 1999; Clamp2000). 38 The expansioniststrategy within Spainhas been accompaniedby acon- sciousprogram of education and conversion to cooperative membership. Butin the growingnumber of joint ventures, acquired Ž rmsand start- upsoutside of Spain the workforcesare wholly or partly comprised by contract-basedor non-owning employees. Foreignplants have been ac- quiredor established both to access and cater to overseas markets(e.g. in Moroccoand Argentina to produce and supply domestic appliances) and to accesscheaper labor and keep competitivein international markets (e.g. in the componentssector by locating a plantin Thailand) (Clamp 2000:566, 568).The expansionstrategy is pursued primarily to protect cooperative employment andoperations in the Basquecountry by maintainingmarkets andcompetitiveness. Indeed, where possible the researchand development armof the corporationaims to “ developsubstitute technologies that enable the MCCto return manufacturing operations from overseas to the Basque region”thereby sustainingemployment locally (Clamp2000:562). 39 What wesee inrecent times is an attemptto stay trueto the guiding visionof people over capital in the Basqueregion (i.e., maintaining sustainableemployment) whileengaging in operations elsewhere along mainstreambusiness lines (where capitalrules over people). As one MCC householdgoods division vice-president is quoted as saying “We don’t go asmissionaries,we goasa businessthat has tomake money,be proŽtable andsupport our principal business” (Clamp 2000:566). Or as another co- opmanager puts it “ We donot see ourmission to create new jobs in Argentina.We wantour project to increase more and more and more : : : The‘ head’is here [inMondragon] and the ‘feet’are utilized to sustain the ‘body”’ (quotedin Clamp2000:562, insertion added).

38 Cheney arguesthat the interest in international expansionis somewhat unexamined (1999:78)and cautions that “In an effortto engage the market completelyon its own terms, they may beunduly sacriŽ cing the long-valued‘ bufferzone’ between them and the turbulence ofthe international market”(79). Clamp recordsthat “foreignsubsidiaries generated9 percent ofthe international salesin 1997”(2000:564). Currently production subsidiariesare located in Argentina,China, Czech Republic,France, Germany, Holland, Mexico,Morocco, Thailand as well as other regionsof Spain (Clamp 2000). 39 The componentsplant acquiredin Thailandemployed 100 Thai workers. Clamp notes that by1998 “ MCC’s engineerswere ableto redesign the component.They can now manufacture the samecomponent with 15workers once again in Mondragon.The plant in Thailandwill be maintained since they anticipatethat there willbe other components, which willencounter similarlabour cost challenges” (568). EnablingEthical Economies 153 ²

TheMCC has alwaysoperated within an international community of cooperativistsolidarity and avery locally emplacedcommunity of cultural speciŽcity. It maintains a strongrole in international education about cooperativesand solidarity with international cooperatives as evident in substantialŽ nancialcontributions to the InternationalCooperative Alliance andits outreach programs. But the MCCis not yet involved ineducation andconversion in its foreign plants. The task ofextending cooperative educationand membership to workers in the myriadinternational sites thatthe MCCnowoperates would be a dauntingone indeed, and would potentiallycarry with it all the worstaspects of missionizing that go counter tothe grassroots participatory involvement thatis so much a partof the cooperativevision. 40 Itscommitment to sustainability has ultimatelybeen localand has led toa privilegingof the Basquecommunity economy and itsinterests. Having a clearsense ofwhich community is being sustained bywhateconomic practices inevitably involves facingup toexclusions and violences anddebating their acceptability at any onemoment. Clearly Mondragonhas reacheda juncturewhere, as Cheney observes, “the cooperativeshave nowfar exceeded theirfounders’ expectations of Žnancialsuccess, resources, geographic reach, and power” (1999:72). It is importantto highlight that the successof Mondragon has notbeen bought bytheir ‘ democracyof producers’ at the expense ofthe communityfrom whichthey aredrawn, nor from the citizensand consumers, both local andinternational, that they serve. Butit cannot be denied that today the cooperatorsare facing new ethical dilemmas to do withthe scale andreach ofthe economicjustice they arekeen topromulgate. 41 While cooperative membershipis restricted at present by the capacityof the production system togenerate continuingpositions (not for the purposeof limiting outputand sending prices up, as the Webbspredicted) employment as wageworkers in the MCCisrising.The questions currently being debated withinthe MCCwithrespect to internationalization, growth, membership andits cooperativist identity are of utmost importance. The speciŽc dangersof cooperativism, as outlined by the Webbsin the early partof the twentiethcentury, continue to resonate on the left when discussionsof economic experimentation and support for cooper- atives arise.From the perspectiveof these historiccriticisms of worker ownedcooperatives the Mondragonexperiment representsan impressive

40 Thiswas one of the pointsthat cameout in the discussionI hadwith amember ofthe OtaloraInstitute in 1997. 41 Supportivecritics likeGeorge Cheney (1999)are worried that their successwill undermine the valuesthat haveprovided organizational strength in the past.We see this asa realisticand sympathetic concern. 154 Gibson-Graham ² achievement. Itoffers an importantempirical counter to the degeneration thesis thathas plaguedcooperativist experimentation suggesting that there isno logical imperative toward cooperative degeneration and failure. It demonstratesvarious ways to avoidthe “perpetualtemptations” of individ- ualismthat the Webbspinned on the ‘self-governingworkshop’ suggesting thatany suchinevitability is likely tobe a functionof the absenceof de- bateabout what it means toactas communalor cooperativesubjects. The Mondragoncase showsthat the pitfallsof group individualism can be ad- dressedby an active discussionof ethics, values andconnection to others. Itseems thatlong-term success (even an excess ofsuccess) of a system of worker-ownedcooperatives is, indeed, possible if economic practices are constantlyscrutinized and modiŽ ed in the lightof evolving commitments tocommunity survival over and above individual interest. In Mondragondecisions to do with product, pay, proŽ t, innovation, management,disputes and membership have been guidedby a set of values establishedearly onin the studycircles that Father Arizmendi conductedprior to the commencementof the Žrstcooperative and that he continuedto run throughout his life. And the economicpractice of equilibrio and solidarity has fosterednew conceptions of the cooperativist orassociative self. The overarchingdesire to preserve Basqueculture has providedthe inspirationand motivation to develop a cooperativeor communalsubjectivity. This raises the questionof what we might take fromthis analysis ofthe Mondragoncooperatives, clearly auniqueand very particularcase of‘ success.’How might the Mondragonexperience informmodels of community economic sustainability?

Conclusion Thispaper has situatedcontemporary evaluations of Mondragon’ s ‘success’ withina traditionof debate about the politicsof economictransformation. Ithas exploredthe long-standingsuspicion of worker cooperatives among politicaland social analysts onthe left,taking issue with both the revolutionaryand gradualist socialist camps over the capitalocentric contoursof their arguments and the implicitpessimism, particularly of the latter,with respect to emergence ofa communalsubjectivity among worker-owners.I have arguedthat economic experimentation whether in the 19th or 21st centurieshas been stied by a povertyof theories of economicdifference that can be drawn upon when buildingalternative, non-capitalistcommunity economies. As an antidoteto disheartening assessments andtheoretical underdevelopment, I have offeredan extended discussionof the ethicaldecisions taken bythe Mondragoncooperators intheir efforts to consolidate what arguably stands as the mostsuccessful cooperativistregional economy in the world. EnablingEthical Economies 155 ²

The Mondragoncase has indeedprovided an inspirationalmodel of acommunitythat is not averse toethical discussion and to the difŽcult collective decisionsthat must be made if a newkind of societyincorporating differenteconomic principles is toemerge. Steppingback from the cultural andgeopolitical speciŽ cities of the Mondragoncase I wouldlike tofocus inconclusionon whatit mightteach us about perhaps the mostimportant issuesraised by gradualist and revolutionary socialists in opposition to the cooperativemovement –namely, the lack ofan appropriateeconomic analysis forbuilding new cooperative economies and the absenceof a strategyfor overthrowing and replacing the capitalistsystem. First,while claimsabout the faultyeconomic analysis ofthe advocatesof cooperatives areperhaps not unfounded, I wouldtend to see thisas a problemof omissionrather than commission. From my perspective,it seems that the underdevelopmentof an economicsof surplus labor distribution has hindered all formsof alternative economicexperimentation, whether ofa cooperativist,labor unionist or state socialist form. Left analysis (especially amongeconomists) has almostexclusively focusedon the ownershipand control of capital, or on the dynamicsof exploitation and surplusappropriation (as measuredby the sizeof compensation packages) whileignoring the dynamicsof surplus distribution (most importantly the distributionof proŽ ts). In many societiesthe dominantethos around wagesetting has been orientedtoward pushing wage levels ashigh as willbe permitted (a directionthat many tradeunions have fostered). 42 Socialdemocratic movements have, ofcourse, focused upon questions of distributivejustice, but the distributionat stake islargely thatof personal income,only someof which, at the topend of the salary spectrum,could beseen asdistributed surplus labor. Governments have attemptedto tax corporateproŽ ts, but in the classiccases ofsocial democracy signiŽ cant stateassistance to industry redistributes funds towards corporations.Focus onstate taxation of citizens and the generalizeddistribution of social consumptiongoods completely obscuresan economicsof surplus labor orapoliticsof rightsto thatsurplus. Thus the potentiatingforce of surplus

42 TeamX isa new worker-owned andunionized garment factory in LosAngeles that signalsa new directionfor union-based economic politics. Supported by the USUnion of Needletrades,Industrial and Textile Employees,TeamX produces“ SweatX clotheswith a conscience”(Lawrence 2002:1)and aims to tap into a “niche moral market”for clothing not madeby sweated labor. Inspired by the MondragonCooperative’ s ethic ofwages solidarity,the ratiobetween the highestand lowest paid employee is 8:1. As this is an intervention to“ setthe higheststandard for sweat-free manufacturing” the lowestwage is much higher than the industrystandard (3). 156 Gibson-Graham ² isallowed to drain away untheorized and untapped and citizens are left squabblingover who is supportingwhom in society. 43 The Mondragoncase illustrates the importanceof a well thoughtout economicsof surplus management anddistribution that is linked tothe settingof wage levels andattendant surplus generation. 44 The decisions topeg wages at a sociallyacceptable but modest level andto keep wage differentialsto a minimumrepresent exercises ofrestraint that constitute the freedomto construct a very differentkind of economy.The decision to allow,via the operationof the Caja Laboral ,the communityof cooperators tooversee the distributionof individual cooperatives’ surpluses represents an exercise ofcommunality that enables the sharingand proliferation of thisdifferent economy and society. All these decisionshave broughtinto beingdistinctive spaces of collectivityin which we cansee acommunalclass processbeing enacted. 45 They privilegerelations of social connection and interdependencebetween workers and workers and citizens, bringing the socialityof the economyto the fore.Supporting these particulardecisions arethose to dowith the socialrelations of cooperative work – the decision todevelop sophisticated methods of self-management andtechniques of non-conictual dispute resolution. Secondlyand Ž nally, withrespect to the lack ofa strategyfor replacementof capitalism by cooperativism, this is a criticismthat only

43 It iseasy to see how in thissituation social altruism may giveway to individual greed, andwhat were onceseen as legitimate rights becomeillegitimate forms of dependency. The pieis indeed limited. 44 In thinking aboutthe lessonsthat might belearnt fordevelopment of community economiestwo important politicsbuilt around ethical economicdecisions come to mind –that ofthe livingwage movement, an intervention topressure city governments viathe votingsystem to pay minimum wagesto their workersin areasof the labormarket that havetraditionally remained unorganized by trade unions (Pollin andLuce 1998) and the simplicitymovement, aself-consciousinterest bycommunities in voluntarily minimizing consumptionlevels, particularly in regionswhere an ethosof environmental stewardship hastaken root(Pierce 2000).One focuses on ethical principlesaffecting the lowerlevel, the other thoseaffecting the upperlevel of wage payments. Unlike in Mondragonthese movements areseparated from apoliticsthat might addressthe implicationsof decisions andchoices regarding wage levels for surplus generation and distribution. This disjuncture might wellhave the effectof undermining the strategicdevelopmental power of theseforms ofeconomic politics, while not in any waydiminishing their moral force. 45 In other economicsites the decisionstaken might beviewed as more conventional or undifferentiatedfrom thosetaken bycapitalist enterprises. For example, with respect tothe choiceof products produced, market developmentand the introductionof new technologies,the cooperativeshave opted for intense product diversiŽ cation, expanding nationaland international markets andcutting edgecomputerized technology. Their decisionsto participate in commoditymarkets atthe topend have ensured market success butmore importantly havesupported the continuedgrowth ofcooperatives. EnablingEthical Economies 157 ² seems validif one is blinded by a visionof the economyas singular andcapitalist. If we see the economyas always and already diverse, then the projectof replacement is transformed into a projectof strengthening alreadyexisting non-capitalisteconomic processes and building new non- capitalistenterprises. Central to these projectsis astrategythat Mondragon has developedso innovatively –the constructionof communal subjects via methodsthat operate on a rangeof material, social, cultural and spirituallevels. The very processof marshalling surplus and directing it towardsexpansion of a cooperativeeconomy is intricately connected with the becomingof ethical communal subjects. Thereading of Mondragon presented in this paper suggests two lines forresearch and theorizing that will further enhance developmentof alternative communitiesand economies. The Žrstis a moretechnically sophisticatedanalysis ofthe economicsof surplus distribution; the second ismore understanding of the processby which communal subjectivities are createdand fostered. Clearly examples ofinnovative economicexperiments aboundand while making them morevisible is an importanttask that cannotbe underestimated, that is not all there isto do. As theorists and practitionerswe can take aconstructiverole in community conversations aboutthe ethicaleconomic decisions and personal political becomings involved inbuildingour own roads as we travel.

Acknowledgements Thispaper has hada longgestation and many peoplehave contributed toits Ž nal appearance.It is dedicated to the memoryof our teacher andmentor Don Shakow who, having migratedfrom a worker-owned cooperativeinto academia, taught J.K. Gibson-Graham about Marxism andŽ rstinspired our fascination with Mondragon more than 25years ago.Thanks mustgo to a numberof audiences where versions of this paperwere presented: two different meetings ofthe Instituteof Australian Geographers’Economic Geography Study Group in Manly, 1997and the University ofSydney, 2001;the IAGConferencein Canberra, 2002 and the Departmentof HumanGeography Seminar, RSPAS, ANU, Canberra, 2002.Gratitude and thanks alsoto Race Mathews andFred Freundlich for helpingKatherine Gibson organize a visitto Mondragon in 1997, and the AustralianResearch Councilfor Ž nancialassistance for this trip. Sandra Davenportprovided invaluable research assistance in the Žnal stages of writing up. 158 Gibson-Graham ²

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