Abstract:
This thesis reviews cooperatives in the light of the financial crisis in 2008. This is done by performing a survey on the theoretical and empirical literature relevant for cooperatives in general, and by performing a case study of the cooperative group Mondragon Corporation. The purpose is to investigate what conclusions can be drawn about the viability of cooperatives, how they react to financial crises and how the economy would be affected by a larger fraction of firms being cooperatives.
Section 1 defines the core issues of the thesis. I then move on to define the worker cooperative in section 2. The ideal-type worker cooperative is a firm fully owned by its workers, and the ownership is equally distributed. The cooperative has a “one person one vote” internal democracy. In section 3 I review some of the philosophical and pragmatic reasons for studying cooperatives. The idea of egalitarianism is central to cooperative theory, which in itself might be sufficient motivation for studying the cooperative. But the very presence and endurance of cooperatives in most economies today entails a need to understand what cooperatives are and how they work. The theoretical and empirical research on cooperatives is presented in section 4. First, the long-standing debate of how to model a labor-managed firm is treated. I then move on to the empirical research on cooperatives, before I mention certain obstacles to cooperative formation and survival. Sections 2, 3 and 4 thereby constitute a survey on the cooperative literature.
In the last section I present the Mondragon Corporation as a case study. The cooperative has grown and prevailed for decades, and employs over 85,000 workers worldwide. Its headquarters are situated in the Basque Country in Spain. With regards to the economic problems Spain is experiencing in the aftermath of the financial crisis, a study of Mondragon can provide us with important insights about how worker cooperatives react to crises. The conclusion is that Mondragon provides insecurity in income but security in employment for its members. This is the opposite of how a capitalist firm reacts to crises. Capitalist firms will usually react to a fall in demand by firing employees, not by adjusting wages downwards. On the other hand however, Mondragon also has a large portion of its workers hired on normal wage contracts. Mondragon has acted in a similar manner as a capitalist firm towards this group of workers.