Cooperatives in Action
Mondragon and Emilia-Romagna
As I noted last week, the cooperative model is an excellent way for people to meet common needs. Instead of maximizing investment returns, a co-op operates to maximize member benefit.
Cooperatives strengthen their communities because of their local ownership, control, and operations. Profits remain in the local economy. When members patronize their consumer cooperative, for example, they’re supporting employment and business activity in their home communities.
The structure of co-ops – one person, one vote, electing leaders to oversee management – is a model of economic democracy, and also of political democracy.
The cooperative universe includes user (or consumer) co-ops (members use the service the co-op produces, like retail, housing, utilities, or credit), producer co-ops (members produce goods and share the purchasing of inputs, marketing, etc.), service co-ops (offering elder and child care, medical services, etc.), and worker co-ops, in which workers are directly manufacturing a product and the workplace is cooperatively run.
In the US, about 130 million people belong to cooperatives. These are mostly consumer and producer co-ops. Around 7,000 people nationwide are part of worker co-ops. In places like Cleveland, Ohio, co-ops are thriving. Grocery stores, cooperative housing, producer and consumer cooperatives, farmers’ cooperatives, all contribute to the remarkable growth of this sector of the economy.
And in many other parts of the world, co-ops are intimately integrated into economic development as worker-owned businesses. The go-to model, of course, the one everyone talks about, is Mondragon.
Located in the Basque region of Catalan, Spain, Mondragon is the largest such system in the world, with over 200 distinct enterprises employing close to 100,000 people.
In an introduction to the book Reflections, Nathan Schneider writes, “The mighty Mondragon enterprises of manufacturing, retail, and finance carry out a model, an entrepreneurial scheme. The pay ratios, the mutual investment, the job protections, the mechanisms of self-governance - there is much for modelers to examine and export. Mondragon even has its own university.”
“The cooperative idea was neither crony capitalism nor state communism,” Schneider continues. “It blended personal responsibility and solidarity… Economic democracy is as much a matter of culture and spirit as any economics.”
American scholar David Herrara crafted a poem from the voices of workers he interviewed at the Mondragon cooperatives:
I’ll never be rich, I’ll never be poor. I’ll have all I need and most that I want. And I’ll have enough. At least I will know the work that I do will not just result in having a few who already are rich get even richer!
Executive pay is set at no more than nine times that of the lowest-paid employee, materializing the sense of fairness and equity in Mondragon’s ideals. Of course, Mondragon has its challenges and has been impacted by its effort to compete at a global level. Writer Roar Bjonnes notes that, at times, Mondragon resembles conventional capitalism in its tendency toward hierarchical leadership. Participants can feel like they are rubber-stamping management’s ideas rather than being engaged in true co-creation, he notes. The idea of ‘lean production’ rather than ‘radical participation’ has slowly filtered into some of the management philosophy.
I’m inspired by much of the work being done at Mondragon. But it’s also important to remember that a cooperative economy exists to serve its members and the local society, not the other way around.
To get a more rounded understanding of the range of cooperative styles, we might look to Emilia Romagna in northern Italy. In this region of 4.5 million people near the university city of Bologna, two out of every three residents are co-op members. Together, they produce around 30 percent of the region’s GDP.
The system thrives to such a degree that an Italian dairy cooperative recently raised more than $6 million in financing, journalist John Duda notes, by issuing “bonds backed by aging wheels of Parmesan cheese.”
There is a tradition of collective support and work here that goes back to the 1850s, rooted in a rich agricultural history. Historical factors of self-governance and a reliance on small-scale industries have also played into the nurturing of cooperative values.
Emilia-Romagna differs from Mondragon in important ways. In Italy, they are more about building intertwined cooperative systems rather than large, monolithic businesses. A more decentralized system keeps the values of collective welfare close to heart, tapping into energy at many different levels, a web of mutual support.
This is not to say that all cooperative enterprises in the region are small-scale. They can grow to be quite large, but remain nestled within a network of decentralized businesses. The largest retail supermarket chain in Italy, Coop, claims close to 20 percent of market share. It’s owned by 7.4 million consumer members across the country.
Cooperatives, of course, need support to develop, especially in their initial phases, and Italian government policy has been favorable in this regard. Co-ops are specifically mentioned in the Italian constitution, which helps them to raise capital. Regulations for co-ops are clearly defined, and co-ops are eligible for government subsidies. Thanks to Italian law, co-ops can easily procure loans from members, and some undistributed profits remain exempt from taxation.
A 1971 law exempted co-ops from some banking limitations. As a result, Coop was able to raise a good deal of financing from its many members, who each contributed a small amount.
John Duda also remarks upon the strong emphasis on service coops in Emilia Romagna, which work with the elderly, and offer childcare and other services. They are workplaces “built around compassion—not profit—and are designed with the interests of workers and those receiving care in mind. Here, cooperatives are community institutions that humanize social services in a way that neither state nor market mechanisms alone could.”
The cooperative systems of Mondragon and Emilia Romagna represent successful, if slightly different, constellations of cooperative structure. We see through their lenses both the achievements and the challenges co-ops represent in achieving economic democracy, and offering dignity to working people. They are also, to varying degrees, about relationships. How things are done is as important as what is done. Producing trust is as important as producing useful goods.
References:
Reflections: Insights from the Founder of the Mondragon Cooperatives (SolidarityHall, 2022).
https://prout.info/the-mondragon-cooperatives-how-democratic-and-how-local-are-they/
Andy, I really appreciated this piece. I found the comparison between Mondragon and Emilia-Romagna especially thoughtful because it showed that cooperative economies can take different forms while still centering dignity, participation, and community well-being.
I also appreciated that you did not romanticize the models or ignore the tensions they face within larger economic systems. That nuance made the reflection feel grounded and credible.
What I keep thinking about afterward is how some of these principles could be applied more broadly at the local level, not only through worker co-ops, but through food systems, housing, caregiving, land stewardship, and community resilience efforts. It feels like these models offer important lessons about rebuilding trust, participation, and shared responsibility in a time when many people feel increasingly disconnected from both the economy and one another.