8 ms·

How Mondragon Became the World's Largest Co-Op

137 points by mitchbob 4y ago

mitchbob 4y ago
Archived: https://archive.ph/MPE7E https://archive.ph/MPE7E
anthk 4y ago
Well, in order to join a cooperative to work, you must pay a big chunk, but you may (should?) have a guaranteed job forever. At least with Eroski, or maybe Orbea.
- chii 4y ago
  > you must pay a big chunk not really, you could be given shares as part of the compensation package. Of course, paying to purchase some shares is and should be possible too. > you may (should?) have a guaranteed job forever. if by this you mean that if you don't work, you would still get paid your wages, then it'd be impossible. But your shares that you obtain as part of your compensation package would entitle you to some of the profits (proportional to your ownership amount), so it should be possible to receive money even if stopped working (you just don't receive a wage). if by this you mean you can never be fired from the job, despite your poor performance, then i dont believe that it ever to be possible - perhaps you cannot have unfair dismissals (i imagine dismissals are via committee, which means other share holders, which are also your coworkers, have a say, and if they all agree to dismiss, it must mean your contributions are negative).
jacquesm 4y ago
I've spent a whole day reading up on this company a while ago, it is super interesting as a possible alternative way of working. The fact that they have managed to scale it up as far as they did is what really impresses me. I wonder how well it would work if you started something like this from scratch today in for instance SV.
- woleium 4y ago
  Sadly, I think folks in SV have other priorities (at least ostensibly). You have to give up seeking gold to find life's other treasures, or something :)
- Gaessaki 4y ago
  I think this sort of thing is nigh impossible to do these days in most parts of the world. If you look at most major cooperatives around the world, almost all of them were founded at least 60-70 years ago if not further out. The primary challenge imo is the mass financialization of the global economy, which makes it a lot more enticing to start a traditional corporation over a cooperative. Cooperative regulations in most jurisdictions make it very difficult to raise equity and even restrict many types of debt. There’s more coordination overhead, at least initially, and once mature, most cooperatives tend to look like public companies governance-wise anyway. It just doesn’t make sense for the average person to start their own cooperative, especially in any competitive domain. The risk-to-reward ratio is totally skewed towards the wrong direction. It’s like starting a union for a non-existing company. I say all this as an avid cooperatist who has been working in the space for the last six years and who runs a cooperative startup in Quebec, arguably one of the strongest coop ecosystems in the world. If the stars didn’t align for us (e.g. strong technical team, ample personal funds, prior cooperative experience, market timing, etc.), there’s no way we’d be surviving two years in.
  - closedloop129 4y ago
    >It just doesn’t make sense for the average person to start their own cooperative, especially in any competitive domain. What do you mean by 'competitive domain'? State of the art like Amazon or many competitors like Ben and Jerry's [1]? If it's competitive like Ben and Jerry's, wouldn't that be the best environment for a cooperative? You can use your network to assemble an initial team and then build something that the market wants because everybody already knows the market. You create one more offer that will find its niche on the market. Where else does an average person have enough domain knowledge to make a better investment? [1] https://www.joelonsoftware.com/2000/05/12/strategy-letter-i-ben-and-jerrys-vs-amazon/ https://www.joelonsoftware.com/2000/05/12/strategy-letter-i-...
samcheng 4y ago
There was a nice discussion on Mondragon, and co-ops in general, in Kim Stanley Robinson's recent book Ministry for the Future. That book is chock full of ideas - a fun read!
- robbiep 4y ago
  They also feature heavily in his mars trilogy
- gopher_space 4y ago
  A co-op like Mondragon but global in scope is at the center of 'Islands in the Net' by Bruce Sterling. There's a much smaller co-op at the heart of 'Shockwave Rider' by John Brunner, but discussion of the mechanics is central to the story. This is an incredible book.
  - specialist 4y ago
    That and Sheep Look Up were my genesis. Kinda opposite to the Atlas Shrugged and Heinlein stuff that seemed to captivate most of my peers.
    - Apocryphon 4y ago
      So much of Stand on Zanzibar captures the tone of the modern age well, and some of the details too.
vimwizard 4y ago
The dynamics of Mondragon participating in free trade are no different than any other corporate entity. The internal dynamic works because most people that are participating share the same core values of shared ownership, and there is no corporate ladder to climb. IMO, leadership making these values core to the business is going against the grain, putting your probability of survival below or equal to that of others, which is why they are a rare occurrence It's objectively a better model for ensuring the sustainability of a corporation, with respect to operating in a free market. I would say that being an employee at a high productivity co op is the same as being a highly skilled software developer working for a contracting firm or maybe a sizeable startup. You have a valuable impact and have skin in the game. I think there is a tipping point where greed can end a corporation, but e.g. for western corporations, the beast is fed by central banking. The problem with that, is that there are clear winners that are chosen, which go on to buy out their competition. At that point, you have management making working conditions less and less favorable, for the sake of share holder bottom line, to the point of societal unrest. Take a look at Amazon.
- ceeplusplus 4y ago
  But do high productivity / high demand employees earn outsized compensation? Software engineers at Uber, for example, earn probably 10x what drivers make. If you look at some of the recent ridesharing coop attempts in the US, they advertise wages of 70-80k for devs, which is just not going to work in a competitive market.
  - sudosysgen 4y ago
    That's 80k + a share, which may have a lot of value.
    - jonas21 4y ago
      Though you have to buy that share.
      - msk-lywenn 4y ago
anon291 4y ago
The issue is that successful co-ops take work to build. Most early promoters of a business are seeking financial compensation. In Mondragon's case they had religious fervor. There's actually quite a few Catholic 'co-ops' that are founded because it is part of Catholic belief. While we don't often think of it that way, the Knights of Columbus in the United States has as its main purpose, the pooling of resources to provide for working class male members (which number in the millions). It still runs one of the largest not-for-profit life insurance schemes in the country [1]. While not a 'co-op' in the sense of Mondragon, it does provide the social security net that he Mondragon founders set up. So honestly, I think for established co-ops you need some kind of religious fervor. That is true of these co-ops, or also the communist hippy ones, except there's a different religion. Other successful examples of co-ops, like Winco, are where employees later purchase a private business from owners, rather than being established as a co-op. [1] And provides a whole host of other benefits for its members.
user_named 4y ago
I remember reading a lot about Mondragon a few years ago. I don't remember the specifics but my takeaway was that it is not so different than a regular corporation. The idealized co-op only really exists in organizations where everyone does close to the same job, if fruit picking. There are some examples of such co-ops in the US.
- ollybee 4y ago
  Take a look at Suma in the UK - a large coop with £50 million turn over. Not everyone does the same job, but everyone gets the same pay, much more like an idealized co-op.
walrus01 4y ago
Mondragons as an economic model are also referenced in Kim Stanley Robinson's Red/Green/Blue Mars novel series
pg_bot 4y ago
I've looked into the history of Mondragon and what is often overlooked is the fact that their credit union could legally offer higher interest rates to depositors than competing banks. So they were able to accumulate the capital needed to finance their operations and expansion somewhat unfairly. If you wonder why there aren't more Mondragons in the world do more research on the history of Caja Laboral Popular.
- woodruffw 4y ago
  Could you elaborate on why that higher interest rate is unfair?
  - hackerlight 4y ago
    They didn't claim that the higher interest rate is unfair per se. They're claiming that the regulators allowing Mondragon to have exclusive monopoly access to the high interest rate market is what's unfair.
- mandelken 4y ago
  This is a very strange argument, because banks do not lend out deposits. Deposits are created jointly with each new loan on its balance (and destroyed when the loan pays back). Offering higher deposits is actually a higher cost for a bank and lowers its profitability.
  - kortilla 4y ago
    > This is a very strange argument, because banks do not lend out deposits. Deposits absolutely drive how much a bank can loan though. Otherwise banks wouldn’t bother taking deposits at all. Look at the history of what the Narrow Bank attempted to do. It tried to drop the whole loan side of the business and effectively offer the fed funds rate directly to depositors. They were rejected because it was detrimental to the whole ecosystem of loans.
- monodeldiablo 4y ago
  I wouldn't quite call it "unfair". Credit unions worldwide tend to offer higher savings rates because they distribute their profits to depositors as interest yield instead of to shareholders as dividends.
christkv 4y ago
My kids go to a school which organized around as a cooperative owned by the parents. I find the biggest problem is lack of general financial understanding by people about what a cooperative is. It’s still a business and every member is on the hook for their share of the losses the business incur. The problem as I’m all cooperatives organized around delivering a service to its owners a handful of people carry the whole load of work.
ksec 4y ago
The world's largest Co-Op? What does "Co-Op" means in this context? Because if it was under ordinary Co-Op, I am pretty sure there are a few Co-Op larger than Mondragon. > "In 2021, the network brought in more than eleven billion euros in revenue" €11B, or roughly $11B USD in revenue. There are quite a few large Co-Op in Japan unknown to the West, which is similar or an order of magnitude larger. But outside of that, even the well known ones from New Zealand such as Fonterra, I guess everyone should at least have heard of the butter brand Anchor, comes in at 20.57 billion NZD revenue, or ~$12.5B USD. So what makes Mondragon the largest Co-Op in the world? By Profits? By Headcounts? or By Asset?
- Hasnep 4y ago
  Mondragon is a worker co-op, Fonterra is a dairy co-op, which is a type of producer co-op. So I think they mean that Mondragon is the largest worker co-op in the world.
ZeroGravitas 4y ago
People think co-ops are a hippy thing but MasterCard was a co-op of financial institutions: https://en.m.wikipedia.org/wiki/Mastercard https://en.m.wikipedia.org/wiki/Mastercard I'd suggest many corporate open source efforts, like AV1 or Android and Linux are similar structures and follow a similar pattern of one corporation having an early dominance, and the other corporations facing the choice of standing together or losing individually.
- monodeldiablo 4y ago
  Many of the most successful agricultural, banking, and insurance firms are cooperatives. They have a number of advantages over other corporate forms, but suffer from a legislative and regulatory environment that has become increasingly discriminatory against them.
yunohn 4y ago
> To some critics, Mondragon’s overseas workers, who are not owners—it outsources to low-cost locations, operating a hundred and thirty-two production plants in thirty-two countries—are a sacrifice to the dragon of capitalism. Ah of course, I knew there was a catch. Capitalism consumes all morals!
- hackerlight 4y ago
  Hiring low wage workers in foreign countries is not automatically immoral under utilitarianism if the only alternative is to not hire them, in which case they will be forced to find an even worse job that objectively reduces their utility. The hypothetical alternative of Mondragon hiring foreign workers at higher wages may actually be practically impossible under our current capitalist system, given the kind of dilemma like incentives at play when separate businesses are competing to provide fungible goods to consumers who are making purchasing decisions based on which offering has the lowest price. What is immoral is the system that makes this the case: closed borders, lack of regulations protecting foreign workers in endogenous bargaining disputes, and so on. I also dislike how this topic is weaponized by nativists, and sometimes by self-proclaimed leftists, in order to push for policies -- banning foreign labor (leftists) or closing borders and isolationism (nativists), typically -- that clearly make the lives of people in poor countries worse and not better.
  - yunohn 4y ago
    Of course, I agree with your description. It’s not logical to stop hiring foreigners, or expecting Western wages - I just feel like a cooperative could come up with a better compromise.
vinibrito 4y ago
I have visited and interviewed several agricultural coops (dairy and grains), some are very similar to a normal business, but the ones that are not, usually are built to solve a group's common problem, not to be financially successful by itself. Some are tied to local politics and are meant to augment public policies, some are just a channel to process and commercialize their production.

137 points by mitchbob 4y ago

Archived: https://archive.ph/MPE7E https://archive.ph/MPE7E

Well, in order to join a cooperative to work, you must pay a big chunk, but you may (should?) have a guaranteed job forever. At least with Eroski, or maybe Orbea.

chii 4y ago
> you must pay a big chunk not really, you could be given shares as part of the compensation package. Of course, paying to purchase some shares is and should be possible too. > you may (should?) have a guaranteed job forever. if by this you mean that if you don't work, you would still get paid your wages, then it'd be impossible. But your shares that you obtain as part of your compensation package would entitle you to some of the profits (proportional to your ownership amount), so it should be possible to receive money even if stopped working (you just don't receive a wage). if by this you mean you can never be fired from the job, despite your poor performance, then i dont believe that it ever to be possible - perhaps you cannot have unfair dismissals (i imagine dismissals are via committee, which means other share holders, which are also your coworkers, have a say, and if they all agree to dismiss, it must mean your contributions are negative).

jacquesm 4y ago

I've spent a whole day reading up on this company a while ago, it is super interesting as a possible alternative way of working. The fact that they have managed to scale it up as far as they did is what really impresses me. I wonder how well it would work if you started something like this from scratch today in for instance SV.

woleium 4y ago
Sadly, I think folks in SV have other priorities (at least ostensibly). You have to give up seeking gold to find life's other treasures, or something :)
Gaessaki 4y ago
I think this sort of thing is nigh impossible to do these days in most parts of the world. If you look at most major cooperatives around the world, almost all of them were founded at least 60-70 years ago if not further out. The primary challenge imo is the mass financialization of the global economy, which makes it a lot more enticing to start a traditional corporation over a cooperative. Cooperative regulations in most jurisdictions make it very difficult to raise equity and even restrict many types of debt. There’s more coordination overhead, at least initially, and once mature, most cooperatives tend to look like public companies governance-wise anyway. It just doesn’t make sense for the average person to start their own cooperative, especially in any competitive domain. The risk-to-reward ratio is totally skewed towards the wrong direction. It’s like starting a union for a non-existing company. I say all this as an avid cooperatist who has been working in the space for the last six years and who runs a cooperative startup in Quebec, arguably one of the strongest coop ecosystems in the world. If the stars didn’t align for us (e.g. strong technical team, ample personal funds, prior cooperative experience, market timing, etc.), there’s no way we’d be surviving two years in.
- closedloop129 4y ago
  >It just doesn’t make sense for the average person to start their own cooperative, especially in any competitive domain. What do you mean by 'competitive domain'? State of the art like Amazon or many competitors like Ben and Jerry's [1]? If it's competitive like Ben and Jerry's, wouldn't that be the best environment for a cooperative? You can use your network to assemble an initial team and then build something that the market wants because everybody already knows the market. You create one more offer that will find its niche on the market. Where else does an average person have enough domain knowledge to make a better investment? [1] https://www.joelonsoftware.com/2000/05/12/strategy-letter-i-ben-and-jerrys-vs-amazon/ https://www.joelonsoftware.com/2000/05/12/strategy-letter-i-...

samcheng 4y ago

There was a nice discussion on Mondragon, and co-ops in general, in Kim Stanley Robinson's recent book Ministry for the Future. That book is chock full of ideas - a fun read!

robbiep 4y ago
They also feature heavily in his mars trilogy
gopher_space 4y ago
A co-op like Mondragon but global in scope is at the center of 'Islands in the Net' by Bruce Sterling. There's a much smaller co-op at the heart of 'Shockwave Rider' by John Brunner, but discussion of the mechanics is central to the story. This is an incredible book.
- specialist 4y ago
  That and Sheep Look Up were my genesis. Kinda opposite to the Atlas Shrugged and Heinlein stuff that seemed to captivate most of my peers.
  - Apocryphon 4y ago
    So much of Stand on Zanzibar captures the tone of the modern age well, and some of the details too.

vimwizard 4y ago

The dynamics of Mondragon participating in free trade are no different than any other corporate entity. The internal dynamic works because most people that are participating share the same core values of shared ownership, and there is no corporate ladder to climb. IMO, leadership making these values core to the business is going against the grain, putting your probability of survival below or equal to that of others, which is why they are a rare occurrence It's objectively a better model for ensuring the sustainability of a corporation, with respect to operating in a free market. I would say that being an employee at a high productivity co op is the same as being a highly skilled software developer working for a contracting firm or maybe a sizeable startup. You have a valuable impact and have skin in the game. I think there is a tipping point where greed can end a corporation, but e.g. for western corporations, the beast is fed by central banking. The problem with that, is that there are clear winners that are chosen, which go on to buy out their competition. At that point, you have management making working conditions less and less favorable, for the sake of share holder bottom line, to the point of societal unrest. Take a look at Amazon.

ceeplusplus 4y ago
But do high productivity / high demand employees earn outsized compensation? Software engineers at Uber, for example, earn probably 10x what drivers make. If you look at some of the recent ridesharing coop attempts in the US, they advertise wages of 70-80k for devs, which is just not going to work in a competitive market.
- sudosysgen 4y ago
  That's 80k + a share, which may have a lot of value.
  - jonas21 4y ago
    Though you have to buy that share.
    - msk-lywenn 4y ago

anon291 4y ago

The issue is that successful co-ops take work to build. Most early promoters of a business are seeking financial compensation. In Mondragon's case they had religious fervor. There's actually quite a few Catholic 'co-ops' that are founded because it is part of Catholic belief. While we don't often think of it that way, the Knights of Columbus in the United States has as its main purpose, the pooling of resources to provide for working class male members (which number in the millions). It still runs one of the largest not-for-profit life insurance schemes in the country [1]. While not a 'co-op' in the sense of Mondragon, it does provide the social security net that he Mondragon founders set up. So honestly, I think for established co-ops you need some kind of religious fervor. That is true of these co-ops, or also the communist hippy ones, except there's a different religion. Other successful examples of co-ops, like Winco, are where employees later purchase a private business from owners, rather than being established as a co-op. [1] And provides a whole host of other benefits for its members.

user_named 4y ago

I remember reading a lot about Mondragon a few years ago. I don't remember the specifics but my takeaway was that it is not so different than a regular corporation. The idealized co-op only really exists in organizations where everyone does close to the same job, if fruit picking. There are some examples of such co-ops in the US.

ollybee 4y ago
Take a look at Suma in the UK - a large coop with £50 million turn over. Not everyone does the same job, but everyone gets the same pay, much more like an idealized co-op.

walrus01 4y ago

Mondragons as an economic model are also referenced in Kim Stanley Robinson's Red/Green/Blue Mars novel series

pg_bot 4y ago

I've looked into the history of Mondragon and what is often overlooked is the fact that their credit union could legally offer higher interest rates to depositors than competing banks. So they were able to accumulate the capital needed to finance their operations and expansion somewhat unfairly. If you wonder why there aren't more Mondragons in the world do more research on the history of Caja Laboral Popular.

woodruffw 4y ago
Could you elaborate on why that higher interest rate is unfair?
- hackerlight 4y ago
  They didn't claim that the higher interest rate is unfair per se. They're claiming that the regulators allowing Mondragon to have exclusive monopoly access to the high interest rate market is what's unfair.
mandelken 4y ago
This is a very strange argument, because banks do not lend out deposits. Deposits are created jointly with each new loan on its balance (and destroyed when the loan pays back). Offering higher deposits is actually a higher cost for a bank and lowers its profitability.
- kortilla 4y ago
  > This is a very strange argument, because banks do not lend out deposits. Deposits absolutely drive how much a bank can loan though. Otherwise banks wouldn’t bother taking deposits at all. Look at the history of what the Narrow Bank attempted to do. It tried to drop the whole loan side of the business and effectively offer the fed funds rate directly to depositors. They were rejected because it was detrimental to the whole ecosystem of loans.
monodeldiablo 4y ago
I wouldn't quite call it "unfair". Credit unions worldwide tend to offer higher savings rates because they distribute their profits to depositors as interest yield instead of to shareholders as dividends.

christkv 4y ago

My kids go to a school which organized around as a cooperative owned by the parents. I find the biggest problem is lack of general financial understanding by people about what a cooperative is. It’s still a business and every member is on the hook for their share of the losses the business incur. The problem as I’m all cooperatives organized around delivering a service to its owners a handful of people carry the whole load of work.

ksec 4y ago

The world's largest Co-Op? What does "Co-Op" means in this context? Because if it was under ordinary Co-Op, I am pretty sure there are a few Co-Op larger than Mondragon. > "In 2021, the network brought in more than eleven billion euros in revenue" €11B, or roughly $11B USD in revenue. There are quite a few large Co-Op in Japan unknown to the West, which is similar or an order of magnitude larger. But outside of that, even the well known ones from New Zealand such as Fonterra, I guess everyone should at least have heard of the butter brand Anchor, comes in at 20.57 billion NZD revenue, or ~$12.5B USD. So what makes Mondragon the largest Co-Op in the world? By Profits? By Headcounts? or By Asset?

Hasnep 4y ago
Mondragon is a worker co-op, Fonterra is a dairy co-op, which is a type of producer co-op. So I think they mean that Mondragon is the largest worker co-op in the world.

ZeroGravitas 4y ago

People think co-ops are a hippy thing but MasterCard was a co-op of financial institutions: https://en.m.wikipedia.org/wiki/Mastercard https://en.m.wikipedia.org/wiki/Mastercard I'd suggest many corporate open source efforts, like AV1 or Android and Linux are similar structures and follow a similar pattern of one corporation having an early dominance, and the other corporations facing the choice of standing together or losing individually.

monodeldiablo 4y ago
Many of the most successful agricultural, banking, and insurance firms are cooperatives. They have a number of advantages over other corporate forms, but suffer from a legislative and regulatory environment that has become increasingly discriminatory against them.

yunohn 4y ago

> To some critics, Mondragon’s overseas workers, who are not owners—it outsources to low-cost locations, operating a hundred and thirty-two production plants in thirty-two countries—are a sacrifice to the dragon of capitalism. Ah of course, I knew there was a catch. Capitalism consumes all morals!

hackerlight 4y ago
Hiring low wage workers in foreign countries is not automatically immoral under utilitarianism if the only alternative is to not hire them, in which case they will be forced to find an even worse job that objectively reduces their utility. The hypothetical alternative of Mondragon hiring foreign workers at higher wages may actually be practically impossible under our current capitalist system, given the kind of dilemma like incentives at play when separate businesses are competing to provide fungible goods to consumers who are making purchasing decisions based on which offering has the lowest price. What is immoral is the system that makes this the case: closed borders, lack of regulations protecting foreign workers in endogenous bargaining disputes, and so on. I also dislike how this topic is weaponized by nativists, and sometimes by self-proclaimed leftists, in order to push for policies -- banning foreign labor (leftists) or closing borders and isolationism (nativists), typically -- that clearly make the lives of people in poor countries worse and not better.
- yunohn 4y ago
  Of course, I agree with your description. It’s not logical to stop hiring foreigners, or expecting Western wages - I just feel like a cooperative could come up with a better compromise.

vinibrito 4y ago

I have visited and interviewed several agricultural coops (dairy and grains), some are very similar to a normal business, but the ones that are not, usually are built to solve a group's common problem, not to be financially successful by itself. Some are tied to local politics and are meant to augment public policies, some are just a channel to process and commercialize their production.