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Mondragon: A path to 21st century socialism?

By Louis Proyect

October 11, 2010 -- On day five of Carl Davidson's visit to Mondragon, he alludes to a transition to a "Third Wave" future by the Basque cooperative. The Fagor pressure cookers might be phased out in favour of "the high-design and high-touch products of a third wave future in a knowledge economy". In order to succeed in this new business, Mondragon would have to develop "new entrepreneurs", according to Isabel Uriberen Tesia, a Mexican on the Mondragon staff.

Davidson has been committed to the Third Wave since 1997 when he launched an online magazine (now defunct) called cy.Rev. Back then I took exception ( to some of its major themes, especially the idea of a "third wave" popularised by futurists Alvin and Heidi Toffler, as well as Republican Party leader Newt Gingrich. I summarised the Third Wave as follows:

Put simply, the theory states that there are three important "waves" in social history: (1) rural societies based on agriculture, (2) urban societies that emerged with the industrial revolution, and (3) the information-based world in which we currently reside. The United States is in the throes of this third microchip-inspired wave. Most of its difficulties are the fault of its inability to migrate smoothly out of the "Second Wave" of dying smokestack industries into the promised land of computer networks and knowledge-based industries.

Davidson was also impressed with the ideas of Clinton administration economist Robert Reich, who insisted that an "information revolution" would be the source of new jobs. He wrote:

Reich makes a convincing case that it is both impossible and reactionary to try to prevent the globalization of the market. Instead, he poses a strategic question: Rather than trying to prevent low-wage, low-skill jobs from leaving the United States, why don't we try a policy that would encourage high-wage, high-skill jobs to come into the U.S., regardless of the nationalities of the investors.

Doug Henwood was sceptical of such claims at the time. In a review of James Brook and Iain Boal's Resisting the Virtual Life, Henwood questioned Reich's assumptions:

Is there any truth to Reich's ... blather? How big is the high-tech, infobahn workforce now, and how big is it likely to get? The share of the workforce employed directly in information superhighway kinds of tasks is well under 2% -- and that includes people who design, make, and program computers, chips, and telecommunications equipment. Business purchases of computer and telecommunications equipment totals just over 2% of GDP.

If anything, the era of the Great Recession has made claims about the benefits of the Third Wave ring even more hollow. On September 6, the New York Times reported:

Government labor reports released this year, including the most recent one, present a tableau of shrinking opportunities in high-skill fields.

Job growth in fields like computer systems design and Internet publishing has been slow in the last year. Employment in areas like data processing and software publishing has actually fallen. Additionally, computer scientists, systems analysts and computer programmers all had unemployment rates of around 6 percent in the second quarter of this year.

More troubling, however, was the spirit of entrepreneurialism that Davidson's magazine embraced with even more passion than Ms. Tesia:

In our view of socialism, we affirm the entrepreneurial spirit, the motivating energy of the market and the right of individuals to become wealthy through the private ownership of the capital they have helped to create.

In the light of today's intractable economic crisis that has made terms like "the entrepreneurial spirit" sound positively obscene, it must be understood that the mid-1990s were a period of a deep reaction against the Soviet model that had just imploded. There was a widespread reaction against the planned economy that helped make the ideas of "market socialism" attractive to many. And just as the Soviet Union in the 1920s served as a beacon for revolutionary socialists, so did Mondragon represent a vindication of the beliefs of market socialists. It was proof that the workers could run things on their own—more humanely than the capitalists even in the pursuit of profits.

It was never very clear in market socialist literature what exact purpose cooperatives would serve. There could be no objection to the idea that they serve as proof that the workers can run things themselves. In the 1864 Inaugural Address of the International Working Men’s Association, Karl Marx referred to them as follows:

We speak of the co-operative movement, especially the co-operative factories raised by the unassisted efforts of a few bold “hands”. The value of these great social experiments cannot be overrated. By deed instead of by argument, they have shown that production on a large scale, and in accord with the behests of modern science, may be carried on without the existence of a class of masters employing a class of hands; that to bear fruit, the means of labor need not be monopolized as a means of dominion over, and of extortion against, the laboring man himself; and that, like slave labor, like serf labor, hired labor is but a transitory and inferior form, destined to disappear before associated labor plying its toil with a willing hand, a ready mind, and a joyous heart. In England, the seeds of the co-operative system were sown by Robert Owen; the workingmen’s experiments tried on the Continent were, in fact, the practical upshot of the theories, not invented, but loudly proclaimed, in 1848. --

But there's also a tendency for market socialists to view cooperatives functioning in the same manner as handicraft manufacturing in the later stages of feudalism, as a kind of inkblot that would spread until it engulfed and overcame the dying system. In an article titled "21st Century Socialism", Davidson's notion of a transition to socialism seems based on this model:

Socialism will be anchored in public and worker ownership of the main productive forces and natural resources. This can be achieved by various means: a) buying out major failing corporations at penny stock status, then leasing them back to the unions and having the workers in each firm—one worker, one vote—run them, b) workers directly taking ownership and control over failed and abandoned factories, c) eminent domain seizures of resources and factories, with compensation, otherwise required for the public good, and d) public funding for startups of worker-owned cooperative businesses. --

This is why he has greeted United Steel Workers union president Leo Girard's partnership with Mondragon with such enthusiasm. It would appear to fulfill at least one part of this schema, namely buying out major failing corporations and turning them into cooperatives. One might of course question whether Girard would be better off fighting on behalf of workers politically rather than getting sidetracked in such reclamation projects. A principal obstacle to socialism in the United States today is the same as it has always been, a willingness of the trade union bureaucracy to support the capitalist onslaught on jobs and working conditions in exchange for privileges enjoyed by the trade union aristocracy.

Finally, turning to the question of Mondragon itself. While nobody can gainsay the importance of a major business being owned and operated collectively by the workers, there are real questions about how this relates to socialism. There has only been one book critical of Mondragon from the left — Sharryn Kasmir’s The Myth of Mondragon — and it is essential reading for those trying to understand both sides of the debate.

To begin with, cooperatives have existed under governments completely hostile to socialism. In fact, in 1965 the fascist regime in Spain awarded Father Arizmendiaretta , the founder of Mondragon, with the Gold Medal for Merit in Work.

It turns out that worker-owned businesses have not exactly been anathema to fascist regimes. Indeed, Kasmir makes the case that if political parties and trade unions had been legal under Franco, “political energies never would have been channeled into so unlikely a project as cooperativism”.

And it was not just Spain. While the Italian fascists were initially hostile to co-ops, they got the green light from Mussolini after agreeing to purge Socialists and Communists. In 1927 there were 7131 co-ops and by 1942 the number had swelled to 14,576. Somehow the fascist state did not fear that these “alternative” modes of production threatened the economic system.

Indeed, Mussolini pointed to the co-ops as examples of his corporatist ideals. Kasmir explains this anomaly in terms of how they “embodied worker participation, nonconflictual relations between labor and management, and the withering away of class identifications.” In the fascist system, as well as in Father Arizmendiaretta's Christian-based beliefs, the class struggle is anathema. Joxe Aruzmendi, Arizmendiaretta’s biographer, characterised the priest’s views as follows:

At the root of the class struggle can be found the myth of revolution, faith in violence, etc., that in the opinion of Arizmendiaretta characterize the twentieth century, and that he summarily rejects. The question of the class struggle is phrased, for Arizmendiaretta, as the question of how to overcome it, urgently.

A visit to the Mondragon website will reveal nothing about the class struggle, especially the pitched battles taking place in Spain between the trade unions and the social-democratic government. You will also find nothing about the movement to defend immigrant rights. Or anything about ecology, peace and the rights of national minorities, including the Basque people. For Mondragon, social justice is co-equivalent with the cooperative's ambitions and nothing else matters for much. Even Davidson reports: “Frankly, Basque youth aren't all that active inside the coops. They're into third world global justice issues, environmentalism in general, and Basque nationalism."

Those sorts of issues, of course, have much more to do with our socialist future than the spectacular rise of Mondragon as one of Spain's commercial powerhouses. Those are the sorts of people that will reinvigorate our movement, not those with a flair for finding new markets for high technology products especially in a period when such markets are collapsing all around us.

[Louis Proyect is moderator of the Marxmail discussion list and runs The Unrepentant Marxist blog.]

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