Published by The Guardian/UK
Yes, There Is an Alternative to Capitalism: Mondragon Shows the Way
Why are we told a broken system that creates vast inequality is the
only choice? Spain's amazing co-op is living proof otherwise
by Richard Wolff
THERE IS NO alternative ("Tina") to capitalism?
Really? We are to believe, with Margaret Thatcher, that an economic
system with endlessly repeated cycles, costly bailouts for financiers
and now austerity for most people is the best human beings can do?
Capitalism's recurring tendencies toward extreme and deepening
inequalities of income, wealth, and political and cultural power
require resignation and acceptance – because there is no alternative?
I understand why such a system's leaders would like us to believe in
Tina. But why would others?
Of course, alternatives exist; they always do. Every society chooses –
consciously or not, democratically or not – among alternative ways to
organize the production and distribution of the goods and services
that make individual and social life possible.
Modern societies have mostly chosen a capitalist organization of
production. In capitalism, private owners establish enterprises and
select their directors who decide what, how and where to produce and
what to do with the net revenues from selling the output. This small
handful of people makes all those economic decisions for the majority
of people – who do most of the actual productive work. The majority
must accept and live with the results of all the directorial decisions
made by the major shareholders and the boards of directors they
select. This latter also select their own replacements.
Capitalism thus entails and reproduces a highly undemocratic
organization of production inside enterprises. Tina believers insist
that no alternatives to such capitalist organizations of production
exist or could work nearly so well, in terms of outputs, efficiency,
and labor processes. The falsity of that claim is easily shown.
Indeed, I was shown it a few weeks ago and would like to sketch it for
In May 2012, I had occasion to visit the city of Arrasate-Mondragon,
in the Basque region of Spain. It is the headquarters of the Mondragon
Corporation (MC), a stunningly successful alternative to the
capitalist organization of production.
MC is composed of many co-operative enterprises grouped into four
areas: industry, finance, retail and knowledge. In each enterprise,
the co-op members (averaging 80-85% of all workers per enterprise)
collectively own and direct the enterprise. Through an annual general
assembly the workers choose and employ a managing director and retain
the power to make all the basic decisions of the enterprise (what, how
and where to produce and what to do with the profits).
As each enterprise is a constituent of the MC as a whole, its members
must confer and decide with all other enterprise members what general
rules will govern MC and all its constituent enterprises. In short, MC
worker-members collectively choose, hire and fire the directors,
whereas in capitalist enterprises the reverse occurs. One of the
co-operatively and democratically adopted rules governing the MC
limits top-paid worker/members to earning 6.5 times the lowest-paid
workers. Nothing more dramatically demonstrates the differences
distinguishing this from the capitalist alternative organization of
enterprises. (In US corporations, CEOs can expect to be paid 400 times
an average worker's salary – a rate that has increased 20-fold since
Given that MC has 85,000 members (from its 2010 annual report), its
pay equity rules can and do contribute to a larger society with far
greater income and wealth equality than is typical in societies that
have chosen capitalist organizations of enterprises. Over 43% of MC
members are women, whose equal powers with male members likewise
influence gender relations in society different from capitalist
MC displays a commitment to job security I have rarely encountered in
capitalist enterprises: it operates across, as well as within,
particular cooperative enterprises. MC members created a system to
move workers from enterprises needing fewer to those needing more
workers – in a remarkably open, transparent, rule-governed way and
with associated travel and other subsidies to minimize hardship. This
security-focused system has transformed the lives of workers, their
families, and communities, also in unique ways.
The MC rule that all enterprises are to source their inputs from the
best and least-costly producers – whether or not those are also MC
enterprises – has kept MC at the cutting edge of new technologies.
Likewise, the decision to use of a portion of each member enterprise's
net revenue as a fund for research and development has funded
impressive new product development. R&D within MC now employs 800
people with a budget over $75m. In 2010, 21.4% of sales of MC
industries were new products and services that did not exist five
years earlier. In addition, MC established and has expanded Mondragon
University; it enrolled over 3,400 students in its 2009-2010 academic
year, and its degree programs conform to the requirements of the
European framework of higher education. Total student enrollment in
all its educational centers in 2010 was 9,282.
The largest corporation in the Basque region, MC is also one of
Spain's top ten biggest corporations (in terms of sales or
employment). Far better than merely surviving since its founding in
1956, MC has grown dramatically. Along the way, it added a
co-operative bank, Caja Laboral (holding almost $25bn in deposits in
2010). And MC has expanded internationally, now operating over 77
businesses outside Spain. MC has proven itself able to grow and
prosper as an alternative to – and competitor of – capitalist
organizations of enterprise.
During my visit, in random encounters with workers who answered my
questions about their jobs, powers, and benefits as cooperative
members, I found a familiarity with and sense of responsibility for
the enterprise as a whole that I associate only with top managers and
directors in capitalist enterprises. The easy conversation (including
disagreement), for instance, between assembly-line workers and top
managers inside the Fagor washing-machine factory we inspected was
Our MC host on the visit reminded us twice that theirs is a
co-operative business with all sorts of problems:
"We are not some paradise, but rather a family of co-operative
enterprises struggling to build a different kind of life around a
different way of working."
Nonetheless, given the performance of Spanish capitalism these days –
25% unemployment, a broken banking system, and government-imposed
austerity (as if there were no alternative to that either) – MC seems
a welcome oasis in a capitalist desert.
Richard D Wolff is professor of economics emeritus at the University
of Massachusetts, Amherst, where he taught economics from 1973 to
2008. He is currently a visiting professor in the graduate program in
international affairs of the New School University, New York City.
Richard also teaches classes regularly at the Brecht Forum in
Manhattan. His most recent book is Capitalism Hits the Fan: The Global
Economic Meltdown and What to Do About It (2009). A full archive of
Richard's work, including videos and podcasts, can be found on his