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The reason why Mondragon was able to grow to its current size is their credit union Caja Laboral. Under the dictatorship of Francisco Franco "people's savings b
by pg_bot 7y ago
The reason why Mondragon was able to grow to its current size is their credit union Caja Laboral. Under the dictatorship of Francisco Franco "people's savings banks" were allowed to offer higher interest rates than competing banks. Therefore local citizens would deposit their funds in Caja Laboral, which would fund more cooperative businesses.
There's nothing special about the region or the culture, if you artificially favor a certain type of business structure then you will get more it. Mondragon is a classic case of incentives at work.
- kgwgk 7y agoAnd what about the rest of the country where credit unions also exist but we didn’t get more (at least not that much) of that type of artificially favoured business structure?
- pg_bot 7y agoI would argue that you did get more across the country, but the question is why is Mondragon more successful. The other benfit they had was the isolation of the Basque region in Spain during the 1950s. They weren't served by railroads and the region itself is quite mountainous, so for regular people they tended to be the only game in town. In fact, their slogan at the time was "savings or suitcases". In other places credit unions would compete with each other so you couldn't establish a dominant position in the way that Caja Laboral did. Liberalization of the banking industry in Spain during the 1970s tended to level the playing field further. So you have the right mixture for a single dominant cooperative in Mondragon.
- narag 7y agoThere are more around the country. It's very successful model in certain sectors like agriculture.