Mondragon: Proof that Catholic social teaching works

04 Mar 2009

By The Record

As the world writhes in the throes of the biggest financial crisis since the Great Depression, one system based on Catholic social teaching is proving what can be done – and that Catholic teaching, as always, has practical applications to save the world.

Fr Jose Maria Arizmendiarrieta

By Race Mathews
The current global economic meltdown will not have been in vain if the world is reminded by it that grass roots initiatives can triumph over seemingly overwhelming adversity. Following the Spanish Civil War, the economy of Spain’s Basque region was in ruins. Franco destroyed its industrial base on a scale reminiscent of the destruction of Ireland’s agricultural economy (the ‘sowing of Ireland’s fields with salt’ – at the hands of Cromwell) shot some 17 of the local priests, butchered or confined in concentration camps many more of the best and brightest in the community and systematically set about the creation of unemployment, under employment, impoverishment and misery on a scale now unimaginable in the developed world other than among the thinning ranks of those who still remember the direst depths of the Great Depression. 
Against that sombre background, the young priest Don Jose Maria Arizmendiarrieta, himself only recently released from concentration camp confinement and narrowly spared imminent execution, was sent by his bishop to the small steel industry town of Mondragon, where through patient pastoral care, grassroots organisation, community development, consciousness-raising and technical education he brought to fruition the triumphant exemplification of ‘evolved distributism’ that the world now knows as the Mondragon Co-operative Corporation. What finally took off in 1956 with a handful of workers in a disused factory using hand tools and sheet metal to manufacture paraffin-fired heating and cooking stoves on a design pirated from the British Aladdin Stove Company has now become one of Europe’s – and the world’s – great business success stories.  
Mondragon bears witness to the indispensability of subsidiarity and the wisdom of the early twentieth century UK Catholic writer and founder distributist Hilaire Belloc when he wrote in his 1936 An Essay on the Reconstruction of Property that ‘The evil has now gone so far that, though the preaching of a new doctrine is invaluable, the creation of a new and immediate machinery is impossible.
“The restoration of property must essentially be the product of a new mood, not a new scheme. It is too late to re-infuse it by design, and our efforts must everywhere be particular, local, and in its origins at least, small.” The need, as the French personalist philosopher Emmanuel Mounier likewise so eloquently reminded us in his 1938 A Personalist Manifesto… is not, then, to unite incoherent forces for an attack upon the coherent and powerful front of bourgeois and capitalist society.
It is rather to implant in the vital organs, at present diseased, of our decadent civilisation the seeds and ferment of a new civilisation’. I set out in my 1999 book Jobs of our Own: Building a Stakeholder Society – currently sold out in both its European and Australian editions, but shortly to re-appear in a US edition – to set distributism in the historical context of its evolution from the teachings of Pope Leo XIII’s 1891 encyclical Rerum Novarum through the British Distributism of Belloc and the brothers Gilbert and Cecil Chesterton and the Antigonish Movement of Fr Jimmy Tompkins and Monsignor Moses Coady in Atlantic Canada to Arizmendiarrieta and Mondragon, and explain exactly how Mondragon works and to what its success is attributable. In the decade since that account of distributism appeared, the ‘evolved distributism’ philosophy of the Mondragon co-operatives has continued to deliver exceptional levels of job security, social well-being and responsibility and economic growth.
As of 2008, Mondragon has moved up from the ninth to the seventh largest business group in Spain, comprising some 260 industrial, retail, agricultural, construction, service and support co-operatives and associated entities.
Annual sales increased between 2006 and 2007 by 12.4 percent, to some $US20 billion, and overall employment by 24 percent, from 83,601 to 103,731. Exports accounted for 56.9 per cent of industrial co-operatives sales, and were up by 8.6 percent. Mondragon’s Eroski worker/consumer co-operative now operates some 2441 retail outlets, ranging in size from petrol stations to small franchise stores to hyper-markets and shopping malls, in locations that now extend beyond Spain, to France and Andorra. Mondragon co-operatives now own or joint venture some 114 local and overseas subsidiaries.
No less has Mondragon adhered closely to the ‘evolved distributism’ teachings that have been Arizmendiarrieta’s legacy to it, and the source of its outstanding success. 
Consistent with ‘evolved distributism’, Eroski is adopting new measures to enfranchise the 35,000 of its 50,000 workers who are not currently worker members. The co-operatives have entered into a solemn commitment to extend worker ownership measures to their local and overseas subsidiaries on a case by case basis, consistent with their differing cultural, legal, business and financial circumstances.
Just as the Basques were empowered by Arizmendiarrieta’s ‘evolved distributism’ to lift themselves by their bootstraps from their poverty and privation in the aftermath of the Civil War, so too may others now be encouraged by Mondragon’s example to transcend along similar lines the grief and fear to which the greed and folly of rampant capitalism and insufficiently regulated market forces have so wantonly given rise. As Victor Hugo reminds us, ‘Nothing is so powerful as an idea whose time has come’.
Take from Mondragon the distributist lessons it has for us irrespective of our current disappointments or the differing circumstances in which we may find ourselves, and we may at last move forward along the path to which Belloc, Mounier, Arizmendiarrieta and so many more have directed us.