Would it be possible to expand the model of Mondragon- that system of co-operatives discussed in Part I? MCC itself officially claims that it would be “pretentious” to advise the rest of the world on how to organize themselves. Since we are faced with the problem of surviving in a world without fossil fuels, we need to be pretentious.

After capitalism

Let us first assume that the main economic unit would be an urban region, that is, each region that had a central city or cities surrounded by suburbs, towns, and rural areas; the New York City urban region would be an example.[1] Each urban region’s economy could be composed of a set of worker coop banks, and each bank could have its own constellation of firms as members, thereby preserving a competitive structure to the local economy. In a transition period, all firms could choose which bank/worker coop complex to join. A central urban bank, which would have the role of regulating the worker coop complexes, would help the firms to make the transformation to a coop structure and train their employees in how to participate in such a culture (perhaps this central bank could be elected or appointed by elected officials of the urban region). The coop banks could accept deposits from their members, and should not invest money outside of the urban region, thereby preventing the emergence of a financial system that exports finance capital, as we have today.[2]

The “scaling-up” problems of Mondragon point to other possible considerations when designing an efficient economy. First, it has been found that a cooperative of more than about 500 people leads to a certain breakdown in community; this is about the size of factory or office building. If major corporations, or even multinational corporations were restructured on the Mondragon model (and in fact, Mondragon is now multinational), then each factory or office would essentially have to become its own co-op, with the Governing Council coordinating the various co-ops.

On the other hand, should Mondragon or other worker co-op networks really be multinational, or even stretch across urban regions? Mondragon has been heavily criticized for expanding internationally in what is basically a typical corporate way.

Second, how hard would it be to train non-Basque peoples to thrive in a democratic economy? Does it really take that large of a cultural shift? The Basque people may have been living together for tens of thousands of years; they may be able to reasonably claim to have the greatest communal solidarity of any people. Perhaps extensive training in participative organizations is a critical necessity.

Democracy means government doesn’t need to be on our backs

Third, it is quite possible that an economy composed of myriad Mondragon-type complexes would actually require less government regulation of the economy[3] than is currently needed, leading to lower cost for government. Hierarchical, top-down, absentee shareholder-owned firms have a stock explanation for their behavior, no matter how anti-social: “We have to maximize the profits of the stockholders”. In practice, these firms actually behave according to the dictate: “We must maximize the power of our CEO”.

It is one of the great mysteries of current liberal thinking in the United States that the selfish nature of corporate behavior should not elicit the following response:

“Fine. Your job is to maximize profits/power for your corporation. Therefore, the government must keep the needs of the society as a whole in mind, and must regulate your behavior accordingly”.

At this point, the good conservative economist will pop up and proclaim that the interaction of competitive firms in a free market leads to the best of all possible worlds, but the market’s headlong rush into deindustrialization, economic collapse, global warming, oil depletion, and so on should make it clear that the market is anything but perfect.

A Mondragon-type complex, being controlled by its employees, will have a tendency to minimize unsafe working conditions, output of pollution, and outsourcing. Being composed of members of the community, a democratic firm will have more than maximization of profits/power as goals of their activity. This would be another reason to keep each complex local, contrary to what the Mondragon system is actually currently doing.

The Bank of Ecoland

Fourth, an entire economy made up of worker co-op complexes would mean that there would be no need for a stock exchange, since shares in the co-ops cannot be traded. Much of the finance sector would not be needed; there would be no more huge mergers and acquisitions fees, nor fees for initial public offerings, saving billions for the economy for productive work.

Finally, a democratic economy would help to solve the massive problems confronting the U.S. and the world. For instance, in order to make mass transit based on rail practical, much of the physical layout of the major metropolitan areas will need to be reconfigured, and in particular, housing will need to become more dense than your typical suburban sprawl, and built closer to transportation stops. In the Mondragon system, the Bank provides financing for housing construction, and this function could be well-served by a continent-wide network of co-op complexes. In addition, the co-op banks could provide financing to move food production close to the city, and even within the city. 

In the normal functioning of an industrial economy, the surplus generated from the manufacturing sector – essentially, the profits – are either used by the firms to expand, or are deposited in large banks, who then do whatever it takes to maximize their own profits, whatever the effect on the national economy. If the economy is organized as sets of co-op complexes, then the banks in the middle of these complexes would receive these surpluses, as well as the deposits of their consumers, and the finance capital would be available to improve the asset base of the urban region – asset base being used in a broad sense to include infrastructure, housing, and even in the case of Mondragon, education.

The first two ways to eliminate the waste of human resources is to cutback unnecessary sectors such as the military and to make firms democratic. The third move toward an efficient economy would be to construct a democratic financial system, anchoring the democratic economy.

As Seymour Melman observed, in the last words of his last book at the end of his long and distinguished career: “The very readiness to consider alternatives to alienating hierarchical rule in every industry and calling may well be triggered by a question about the top managers and their staffs, openly stated:

What do we need them for?”[4]

You can contact Jon Rynn directly on his jonrynn.blogspot.com . You can also find old blog entries and longer articles at economicreconstruction.com. Please feel free to reach him at This email address is being protected from spam bots, you need Javascript enabled to view it .

[1]  These would be embedded in a continental economy, see Extreme Makeover, Global Edition, Episode One.

[2]  As far as I can tell, the Mondragon Bank does not lend money or invest money outside the MCC. In his article “Extending disarmament through economic democracy”, published in the journal Peace Review  in 2000, Jonathan M. Feldman considers how workplace democracy could help cut down the size of that other major source of waste, the military.

[3]  I would like to thank Brian D’Agostino for pointing this out to me

[4] "After Capitalism", p.447.

Jon Rynn uses his blog at http://www.globalmakeover.com/ to comment on articles concerning global ecological and economic problems and solutions.  Please feel free to email him with your comments at This email address is being protected from spam bots, you need Javascript enabled to view it ",