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Throughout the semester we have studied some common themes that seem to unite all workers under different systems of economic organization; the main theme being the quality of life and the workplace for the members of society. Some of the more specific problems we have covered from the political economy side deal with the extraction of surplus value, environmental issues, the trend of excessive consumption and, perhaps most importantly, the undemocratic workplace created by capitalism. In Europe and various other cultures, there is much being to better the economic standards of living. We have examined democratic socialism, centrally planned economies, and most recently, and most effectively, the cooperative corporation.
Mondragon Cooperative Corporation, MCC, has created a new way to run both a co-op and a corporation. Its aim is to protect the interests of its workers and its community. In particular, Mondragon has been organized in a way that presents new solutions to these common political economy dilemmas. Through its unique set-up, Mondragon has developed some innovative and efficient ways to deal with these specific problems.
The Mondragon Corporation deals most primarily with the problems workers face from undemocratically run businesses. The key is that the corporation is runs on a foundation of values that are designed to keep the interests of the community at the forefront of all production. This is an immediate departure from profit driven, capitalist firms. Self-interest behavior of capitalists is the first step away from any sort of democratic production. What is truly democratic about a corporation like Mondragon is that there is an emphasis on equal ownership despite wage discrepancies that may exist within the firm. Therefore, the democratic workplace exists because of the notion of ordinary citizens controlling the business upon which they depend, thus making a better life for all (MacLeod, 20).
The invested interest of everyone is embedded in the firm because it is run by the workers as a whole. This is the principle of a democratically run work environment. Furthermore, the MCC works so well as a democratic corporation because it is primarily run by an internal labor union that is comprised of the Social Council. This promotes better communication between management and lower level employees, where the traditional capitalist corporation falls short. This works because in many corporations, managers are in place solely to monitor the work of the employees. In Mondragon, we see managers in place specifically to convey worker input into the decision making processes at the upper levels.
This is a very proficient way of voicing the normally unheard, uncared for workers input. Run on democratic principles like this, Mondragon also creates much better incentives for productive labor. In capitalist firms, one is paid for the time they work. The surplus value is the difference in the workers cost and their total production. This becomes profit for the capitalist. The worker has no motivation to increase their productivity because they receive none of the returns.
This extraction of the surplus value is the reason that there is so much income inequality in a system like our own. The incentives to work are altered in Mondragon. Instead, the corporations profits benefit everyone, so productivity is now to the benefit of the entire community which Mondragon serves, rather than a waste of effort to the individual worker. The underlying point, and principal reason for Mondragon's success, is that Mondragon accomplishes far more as a group than any of its individuals.
Communal interests assure that labor is not being extracted or exploited. The extraction of surplus value is in the interest of select individuals. The Mondragon co-op is run with no more than a six to one salary difference, and roughly 70 % of profits from production increases are shared across the entire corporation. These practices are clearly in place for the benefit of the whole. This is also the way by which a corporation run in Mondragon's fashion may be able to reduce the problem of over-consumption we see in our society. We have become the most notorious culture of work and spend in the industrial world.
Promoting fairer wages and business practices would discourage the individuals desire to get ahead. Over-consumption is created this way because there is the desire to appear better off than our peers. Mondragon's sense of equality does not provoke this form of conspicuous consumption because the individual is representative of the community. Furthermore, Mondragon produces many products in different industries, with the main intention of marketing, not the cheapest goods, but those produced by the co-op. It is, therefore, in the majority's interest to consume these goods because they have produced them, and the revenues will circle back to their own wages.
Over-consumption is hereby foregone because it is the consumers who are, in essence, paying themselves for their own products and services. There becomes no need for wasteful spending because it becomes overly expensive, offers no benefit to the community and most likely would leave the local economy. It is because of this communal mentality that there is a conscious awareness of maintaining a healthy environment in Mondragon. The value in community then shifts the modes of economic production.
In capitalism, production is aimed at cutting costs while in Mondragon, economic development is driven by society's best interests. Most production techniques in big corporations produce large amounts of pollution, where financially, the environment is not a factor to turning a profit. Mondragon strives to maintain efficiency without sacrificing the community that it serves and employs. Because Mondragon has its own internal bank, it is able to finance its own businesses. This becomes an aid to the environment because the co-op can invest in cleaner modes of production without worrying about the funding that most commercial banks would not be willing to support. Mondragon's bank also funds entrepreneurial research that aids the production process.
This allows them to find the most effective ways to produce without taking on excessive risks. It is in this respect that a cooperative corporation such as Mondragon creates efficient ways to avoid environmental crises. There are, however, problems that come from any centrally planned economic organization. Hayek, a critic of centrally planned economies, has a few key arguments on the efficiency and success of these institutions.
First off, in a corporation such as Mondragon, where production in based upon the best interest to society, the freedom of the individual is sacrificed. To Hayek, freedom to choose what to produce and how to do so, is lost because production becomes the means to an end; society. To those in Mondragon, this has not been a problem, rather a success. However, centralization does take some of the democratic freedom out of the production process.
Even in Mondragon, where there are many production industries, job relocation and training and entrepreneurial research of new sectors, there becomes an obligation to the corporations needs. One becomes a unit or tool to the interests of the Social Council in Mondragon. It is accepted in the corporation, and in the community, that this interest, however, is the individuals as well as societies. In Hayek's argument though, this puts direct constraints on what we are able to do. Hayek saw this as the way by which we become controlled in the same fashion as a fascist or communist dictatorship. In Mondragon's case, this takes the form of the elected council.
This implies that it is the community's interest, and the councils obligation, to please the majority. This must happen in central planning because those in control must set standards to be agreed upon. This is achieved by reducing the values and standards of society to the lowest common denominator. Hayek argued that in this way, the worst of society was brought to the top.
The values become unsophisticated; the masses become gullible and moldable; and group-think mentality promotes means to an end production that in the end, forces society to adopt low moral standards. What Hayek fails to mention, however, is that the goals and intentions of the majority may already be shared communally. In the case of Mondragon, the values have been established as beneficial and fair to all. In Hayek's argument, the values become altered, but in Mondragon, they are preserved and invested in.
They are universal throughout the community, and serve the people who choose to work under them. And, because they are widely agreed upon to better the quality of life, the values offer an interesting, and politically economical approach to the modern corporation.
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