Mondragon limits maximum salaries to 6x

Writing in The New Yorker magazine, Nick Romeo investigates the secrets of success of the Mondragon worker coops – now the world’s largest worker coop group.

Romeo writes:

The Mondragon Corporation, as it’s known, is a voluntary association of ninety-five autonomous coöperatives that differs radically from a conventional company. Each co-op’s highest-paid executive makes at most six times the salary of its lowest-paid employee. There are no outside shareholders; instead, after a temporary contract, new workers who have proved themselves may become member-owners of their co-ops. A managing director acts as a kind of C.E.O. within each co-op, but the members themselves vote on many vital decisions about strategy, salaries, and policy, and the votes of all members, whether they are senior management or blue-collar, count equally.


When individual coöperatives do well, their members share in the profits. When times are hard, the coöperatives collectively support one another, sharing funds and reallocating workers among themselves to preserve jobs. During the pandemic, workers at many Mondragon co-ops voted to temporarily reduce their own salaries or hours until markets recovered; people who felt sick were trusted and encouraged to stay home.

Six-to-one maximum pay ratio

If JPMorgan adopted Mondragon’s six-to-one pay ratio, ​​Dimon’s compensation would be capped at six times that of his lowest-paid employee; while it’s hard to estimate his hypothetical salary too narrowly, he would almost certainly make less than a million dollars instead of the more than eighty-four million dollars he earned in 2021, and his decisions would be subject to approval by workers. Furthermore, if JPMorgan were a Mondragon co-op, its profits and staff would sometimes be shared with Basque co-op versions of Bank of America and Wells Fargo.


It’s easy to assume that such arrangements must impair productivity. But multiple academic studies have found that coöperatives with worker governance and ownership are as profitable as or more profitable than ordinary firms. Researchers note that, in co-ops, incentives are better aligned: people benefit directly when their co-op succeeds, and so they are more committed. (The same principle motivates work at many startups.) They also find that democratic governance empowers workers to suggest improvements and increases their satisfaction.

Will it be repeated?

Mondragon’s network of co-ops, many clustered along Spain’s Deba River, has managed to survive nearly seventy years of capitalism’s creative destruction. Its persistence suggests that there are fairer and more sustainable ways of doing business. But whether a version of its model could be replicated outside of one beautiful region of northern Spain is an open question, debated within Mondragon and beyond. The collective has a unique history, and its density powers a rare feedback loop in which coöperative values shape institutions, which then reinforce the same values, spiralling outward to define an entire way of life. Mondragon is an inspiring and successful experiment. Will it ever be repeated?


How Mondragon became the world’s largest coop (The New Yorker)

Worker co-ops in the US

On 1 May 2019, the Feast of St Joseph the Worker, Pope Francis issued an invitation to young people – particularly to “young economists and entrepreneurs” – to join him in Assisi in March the following year to brainstorm a new economy, writes Renée Darline Roden in The Tablet.

The “Economy of Francesco” meeting was, of course, cancelled due to the pandemic, but a few months later Francis issued another call to action, a book entitled Let Us Dream. Again, he issued an urgent invitation to all Catholics to consider their part in reshaping a world economy that is exacerbating ­suffering rather than encouraging human flourishing.

The Economy of Francesco organisers in the United States are trying to find ways to add a distinctly American flavour to the global solidarity economy. Witchger and fellow ­organiser Elias Crim started a newsletter, “Ownership Matters”, to highlight various incarnations of the solidarity economy. The American models draw on a variety of global initiatives: the Quebecois cooperative credit unions; the Economy of Communion, personified in the town of Loppiano, Italy, run by the Focolare lay ecclesial movement; and the corporation founded by late Fr José María Arizmendiarrieta Madariaga, Mondragón.

Mondragón Corporación Cooperativa is a nexus of 170 factories, universities and media in the Basque region of Spain, cooperatively owned by approximately 81,000 workers who make a salary within a pay scale where the highest-paid member makes at most six times the amount of the lowest-paid member, where directors of companies are democratically elected by the workers and where each worker is also an owner of the company.

Witchger told me that the United States’ closest answer to Arizmendiarrieta’s project is Molly Hemstreet’s Industrial Commons, in Morganton, North Carolina. Hem­street, sporting a gentle Carolina accent, is a native of Morganton, in the Blue Ridge Mountain section of the Appalachian Mountains. She co-founded its first cooperative factory, Opportunity Threads, in 2008. It expanded by working with its local county business development bureau to build a close-knit ­network of textile producers in the region.

The Arizmendi Bakeries in California take their name from Fr Arizmendiarrieta. The first Arizmendi bakery opened in Oakland in 1997 and expanded into a franchise of cooperative bakeries. Each new cooperative was funded by some of the profits set aside from an older cooperative.

There are 22 worker-owners at the San Francisco site where Jason Jordan works, and around 200 worker-owners among all six bakeries.


The people versus Mammon: worker-owners cooperatives in the US (The Tablet)


Bjorn / Flickr / CC BY SA 2.0

Arizmendi Gatherings for Australia and the Americas

“Wherever there are people who are conscious of their dignity, who love freedom, who are resolved to meet the demands of social justice, and who are able to accept a regime of solidarity that benefits everyone equally, there is a basis for cooperativism…”

Father José María Arizmendiarrieta

The Earthworker Cooperative in Australia and Solidarity Hall (for the Americas) are hosting two gatherings to mark the passing of Fr José María Arizmendiarrieta (Arizmendi) (22 April 1915 – 29 November 1976), founder of the Mondragón Corporation, the largest integrated network of worker co-operatives in the world, based in the Basque Autonomous Community.

Significantly, Fr Arizmendi, as he was also known, was a chaplain to local Catholic Action groups in the town of Mondragon, including the local JOC.

The Arizmendi gatherings will facilitate shared learning about his legacy and that of the Mondragon cooperatives as well as the conditions we face today so we can combine our different social and environmental justice efforts together to build a broad and committed movement for economic democracy, cooperation and equitable distribution of ownership.

Themes to be explored include:

Arizmendi the person – reflecting on his life

Arizmendi in action – the Mondragon experience

Arizmendi’s legacy – inspiring the social/solidarity economy today.

Speakers will include:

  • Prof. Katherine Massam (historian and ACI board member) – reflection on the life of Arizmendi
  • Elsa (Uka) Pinto and Leo Suares (Timor Leste co-operators) – on the shoots of cooperation in Timor Leste
  • Dan Musil (Earthworker Secretary) – on the Mondragon legacy and Earthworker
  • Colin Long (Victorian Trades Hall Council) – a reflection on the future of cooperation.

ACI is co-sponsoring the event along with several other union, church and community groups and institutions including Yarra Theological Union, Pilgrim Theological College, the University of Divinity, Jesuit Social Services, Borderlands Cooperative and Union Aid Abroad.


Arizmendi Gathering (Australia/Asia-Pacific): online via Zoom



Arizmendi Gathering Blog

Josemaria Arizmendiarriatta (Joseph Cardijn Digital Library)

Race Mathews: Of Labour and Liberty

Race Mathews’ new book, Of Labour and Liberty, Distributism in Victoria, 1891 – 1966, was launched in April this year.

It is an excellent historical account of the role of Catholic social teaching and social activists in general, and of the YCW, in particular, in the development of the cooperative movement in the Australian state of Victoria.

Moreover, it’s not just history. Race Mathews, who was once chief of staff to Australian prime minister, Gough Whitlam, as well as a parliamentarian and government minister in his own right, also sets out some important pointers for the future development of Mondragon style worker cooperatives.

The key, Mathews finds, is the need for formation – formation based on that given by the YCW itself but also carried further as it was by Fr Jose Maria Arizmendiarrietta, the founder of the Mondragon cooperatives.

Read more about the new book in the review that I wrote for the Catholic Weekly: