Academic journal article World Review of Political Economy

The Experience of Mondragon Corporacion Cooperativa's Economic Model and Lessons for China

Academic journal article World Review of Political Economy

The Experience of Mondragon Corporacion Cooperativa's Economic Model and Lessons for China

Article excerpt

Abstract: Mondragon Corporacion Cooperativa (MCC) is the world's largest cooperative enterprise group and has the highest level of overall corporate performance. The multinational cooperative corporation is considered "a successful example of the world of contemporary cooperatives" by many international scholars. The key to success is mainly some joint-stock methods and implementing the organic unity of cooperative principles in the market economy. The economic model solves the global problem of the development of public ownership and cooperative systems and overcomes the drawbacks of the private ownership market economy which has led to polarization and economic crisis. All nations should learn from these successful experiences.

Key words: Mondragon Corporacion Cooperativa; cooperative ownership; cooperative economic mode of public ownership

As a result of the Western financial and economic crisis since the end of 2007 the world economy has entered into the most difficult situation since the Great Depression of the last century. Spanish "domestic demand suffered a hard landing and negative growth in 2009."1 However, the Mondragon Corporacion Cooperativa (MCC) only decreased its activities slightly and maintained its good situation. In order to accurately understand the contemporary international cooperation system, the author visited Mondragon as an academic visitor in Spain in March 2011. Now utilizing the international research literature we will evaluate and analyze the cooperative enterprise group and its system.

A Brief Introduction to MCC

Mondragon is a small town located in the Basque Country of Spain. Mondragon is also the name of a cooperative system in the Basque Country because the first cooperative originated there. As non-governmental organizations where workers united voluntarily, the cooperative economy in Spain has a long history and so has accumulated a wealth of experience wherein MCC is the most effective in the world.

Don Jose Maria Arizmendi, the founder of MCC, was a Catholic priest. He was a highly pragmatic and hard-working man. His thinking was the fountainhead of MCC's corporate culture. He was a model for the MCC members. His life motto was "Nothing differentiates people as much as their respective attitudes to the circumstances in which they live. Those who opt to make history and change the course of events themselves have an advantage over those who decide to wait passively for the results of the change."2 His outlook on life was to make history and change the history of the philosophy of life.

In 1941, Don Jose Maria started to disseminate economic thought in Mondragon town. In order to train qualified personnel for the cooperative economy, he set up a technical college in the town in 1943, which is the predecessor of Eskola Politeknikoa, the well-known education and training institution of MCC, now open to all young people in the region. The school played a decisive role in the start-up and subsequent development of the cooperative. On April 14, 1956, ULGOR, the first cooperatives of MCC were established. The five promoters were the first graduates of the technical college. There were only 24 employees in ULGOR. Only a simple kerosene stove was produced. At the suggestion of the cooperative movement started by Don Jose Maria, Katja Working People's Cooperative Bank was established in 1959, which played a key role in the later development of MCC. In the 1970s, new cooperatives were established continuously and formed alliances with the existing cooperatives. With the establishment of the Ikerlan Technology Research Center, MCC made significant progress in the field of research and development. In the 1980s, MCC had to respond to the establishment of the European Economic Community and challenges brought by economic globalization. MCC changed the method of organizing institutions in accordance with the zoning and location, while it reorganized its divisions in accordance with the plants' products, restructuring departments. …

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