GEOG 352: Day 18Democratizing the Economy

Housekeeping Items0I can finally return the mid-terms.0To reiterate, the final exam is scheduled for

Thursday, December 17th, from 9 to noon in this building in Room 217. I have one volunteer willing to present on November 17th.

0Does anyone else want to step up to the plate?0I’ve put a couple of new items in the folder.

Democratizing the Economy0 Megan covered much of the material from Chapter 9,

but I will touch on a few points.0The examples in this and other chapters show that a

different economy is possible, one that is environmentally and socially responsible, or at least considerably more so than is the case today. And often things develop quite quickly. The authors cite the example of the Knights of Labor, founded in the U.S. in 1869. Within 20 years it had grown to a membership of 800,000 throughout North America.

0As the chapter notes, it recruited women and minorities (its record on these issues was mixed though) and fought for tax, land, monetary, and banking reforms, as well as women’s suffrage.

Democratizing the Economy0Even when they fell on hard times, they continued

to organize unions for farmers.0As mentioned by Megan, “guild socialism” was a

popular concept in the early part of the twentieth century and was supported by Bertrand Russell, G.D.H. Cole and others, but began to wane with the rise of fascism and other factors.

0Many progressives – anarchists, socialists, and communists fought in that war (the term doesn’t apply so much to the last group; they played a treacherous role in the conflict, and were under the thumb of Stalin).

The Spanish Civil War

Democratizing the Economy0Generalissimo Franco, the ally of Hitler, won the

conflict, and thus an era of repression under his dictatorship began. In addition to being politically and socially regressive, he was oppressive to Spain’s minorities, such as the Basques, Catalans, and Galicians.

Democratizing the Economy0The poor citizens of the Basque region were ignored

and they stagnated economically or worse. In 1943, a young Catholic priest, who believed in Catholic social doctrine, founded a technical college in the town of Mondragon in the Basque country.

José María Arizmendiarrieta, who founded Mondragon

Mondragon system of co-ops0 It, in turn, spawned a co-op to produce paraffin

heaters, which in turn led to other co-ops. Because these were not explicitly political, they flew under the radar of the Franco and gradually expanded.

0Franco died in 1975 and his regime was replaced with a nominally democratic government. In the meantime, Mondragon Corporation had expanded enormously. “At the end of 2014, it employed 74,117 people in 257 companies and organizations in four areas of activity: finance, industry, retail and knowledge [i.e. education]” (Wikipedia). Annual revenue is over $11 billion per year and it is the largest economic entity in the Basque Country.

Mondragon system of co-ops0The Caja Laboral (or Workers’ Credit Union) was

established in 1959. It is “the major financial provider behind the Basque cooperative movement… and provides banking and financial services to its customers through a network of over 370 branch offices in the Basque Country and beyond. With over 1800 employees - who are actually the partners-owners of the bank following the cooperative philosophy of shared ownership and stewardship - Caja Laboral generates annual revenue in excess of €330 million” (Wikipedia).

0Mondragon has opened plants in Mexico and elsewhere to remain competitive (a good idea?) and negotiated an agreement with the United Steelworkers to create workers’ co-ops in the U.S.

Mondragon system of co-ops0 Its operating principles are:Open AdmissionDemocratic OrganizationThe Sovereignty of LabourInstrumental and Subordinate Nature of CapitalParticipatory ManagementPayment SolidarityInter-cooperationSocial TransformationUniversality, andEducationo Mondragon’s wage ratios range from 3:1 to 9:1 in

different cooperatives and average 5:1.

Mondragon system of co-ops0Contrast that with a recent report on ABC that shows

that the CEO of Walmart earns more in an hour than his employees will earn in a year!

0While Mondragon is a great advance, it is far from perfect. As Noam Chomsky notes,

Take the most advanced case: Mondragon. It’s worker owned, it’s not worker managed, although the management does come from the workforce often, but it’s in a market system and they still exploit workers in South America, and they do things that are harmful to the society as a whole and they have no choice. If you’re in a system where you must make profit in order to survive, you're compelled to ignore negative externalities, effects on others.

We’ll watch a video on Mondragon: “The Mondragon Experiment”

Leaders in Economic Democracy

0Megan mentioned La Via Campesina and we watched a couple of videos on them.

0 In addition, in addition, in Southwest Montreal, the community has been transformed by Le Regroupment Économique et Social du Sud-Ouest (RESO).

0 In addition, a network of networks was formed in Quebec called Chantier de l’economie social in the mid-90s, and it has been very effective in advocating for various policies and agitating against government cutbacks.

0They have helped foster the notion of a “social solidarity economy.” By 2005, this economy employed 124,000 people in 7150 enterprises, and generated a total profit of $17.2 billion.