Is Mondragon An Alternative to Our Current Form Of Capitalism?

One almost never hears about Mondragon in the US press.  This is for good reasons.  It has been a very successful alternative to capitalism in Spain.  The US corporate system of capitalism is essentially anti-democratic.  The corporate hierarchy, along with compliant boards, make all of the strategic decisions.  Wall Street also plays a major role in their funding and in their operation.  Corporate management is held accountable for increasing shareholder value and CEO candidates that don't please Wall Street seldom get selected.  Corporations are also highly centralized plan and control systems.  In a sense, they mimic the centralized state systems that capitalists frequently criticize,  but the top management is paid much better. CEO compensation is 300-400 times the compensation of the average employee.  That ratio has grown by a factor 10-20 over the last 40 years.

Mondragon is owned by its employees and they participate in the management of the corporation.  The corporation consists of numerous independent enterprises that are owned by the employees and conform to the general rules of Mondragon enterprise.  One of the rules is that CEO compensation cannot exceed that of the average employee by more than a factor 6.  Job security is also highly valued.  Employees may be laid off by a business, but every effort is made to relocate the employee to a business within Mondragon that needs additional labor.  Mondragon invests heavily in R&D and it has a university that provides courses that conform to European standards.

Mondragon operates in a region of Spain that has a history of cooperative enterprise development.  It is the largest corporation in the region.  During the Spanish Civil War this region opposed the fascist army and it was also undermined by the Soviet Union which was also fighting against the fascist army.  The Soviet's had a different idea about the alternative to capitalism.  They were invested in a centralized economic system operated by the state.  They did not want to see a successful decentralized, employee owned economic system, arise as the alternative to capitalism.

There is no perfect form of organization.  Every organization has its problems and so does Mondragon.  We are well aware of the problems that have developed in our current system of capitalism.  Job security has become a huge problem since businesses have operated primarily to increase shareholder value and executive compensation.  Income inequality has also risen rapidly in most industrial economies.  Instability has also increased due to frequent and severe financial crises that have been difficult to resolve. We also face environmental issues are difficult to resolve under a capitalist system that is based upon a requirement for 3% annual growth. The global economy would double every 25 years under that requirement.  That is not sustainable. We should devote more time  to learning about the strengths and weaknesses of Mondragon.