Mutual Aid Society, Mondragon and MoreThis is a featured page

-- Mondragon, the Parent; MASA, the child

Learn from your elders.
That is what we’re here for. E n[i]
The parent/child simile is apt. Mondragon is proof positive that cooperation works better than competition. Mutual Aid Society of America (MASA) is a child, eager to learn from the parent (Mondragon), but not wishing to make the parent’s “mistakes”.


First some background on The Basque country and cooperatives. Industrialists would not pick Mondragon as a place to start a local, then regional, then national and then global industrial complex. With the death of Franco and with a history of democracy, three provinces of Spain: Alava, Guipuzoca and Vizcaya formed a semi-autonomous regional government. Basque country spans land along the Atlantic Ocean and straddles the Pyrenees mountains, going into France. Basque are also predominant in Navarra which remained outside the regional government.

By 1990, the population of the four provinces was 2.7 million. Fifty-six percent of the population speak Euskera, unrelated to any other language. The Basque region is generally mountainous and moist. Historically, the population supported themselves by sheep herding and farming, but later developed seafaring, shipbuilding, iron mining and steel fabrication. Along with the shipyards and steel foundries, were schools of apprenticeship. Steel for the famous Toledo swords came from a mine and workshop near Mondragon. Mondragon became known for its swords as well as arms of all types. In the 13th and 14th centuries, the Basque were in struggle against various kings. In the long run, they turned this struggle to their advantage by urbanizing some of the population. Fn[1]

Democratic local government was founded on the practice developed during the 16th and 17th century which gave the male head of each household the right to vote for members of the municipal government. The votes were for members of the local general assembly. In two provinces the common law, called fueros, was codified.

The Spanish Crown, however, limited the right to vote to the wealthy, thus halving the number of voters. Basque members of skilled crafts and professions struggled to maintain their values of equality and democracy within their occupational associations. The rising power of the merchant class and their need for cheap labor and free trade, undermined these associations. In response, many of these associations expressed their sense of equality and joint struggle by forming health and welfare organizations. They opened hospitals and sanitariums. They formed network of skilled workers which bid for jobs and distributed work among them. In rural areas, families joined to exchange labor and provide mutual aid. Guilds had strong internal ties, expressed by being closed to outsiders.

Some of the largest guilds, such as firearms, formed producer cooperatives in the 20th century. By 1972, there were 193 registered producers cooperatives in Basque country, of which 144 were independent of the Mondragon cooperatives. During the Ancien Regime in Castile, the sons of the aristocracy went in to politics, military or the priesthood. In Basque country, the noblemen with titles worked with their hands in the foundries and shipyards and bought and sold merchandise. This social class (“gentry” in England) grew, generation after generation, lived comfortably and took advantage of opportunities of the moment. Working with one’s hands was not looked down upon. Groups formed in schools, although of different social status, continued into occupations and business. En[ii].

The law and politics of the Franco regime favored the employers by banning unions, collective bargaining and strikes. In place of the unions, consultive group of workers were formed, but were largely employer dominated. Job security replaced unions and strikes. However, with increased foreign competition, employers saw these policies as restraints and began collective bargaining to exchange job security for rights to relocate plants and introduce productivity provisions.

As part of the school, later expanded to include higher grades, Don Jose Maria set up study groups to discuss social problems. It was observed by Juan Leibar, President of Polytechnical University of Mondragon that the Basque had used up all of its mineral resources and had to travel over 1000 miles for their fish. “Our only resource now are human ones, so education and technology are essential for our survival as a people.” [MacLeod, 1997,. P. 54]

Franco had denied financial aid to the Basque. Don Jose Maria realized that to promote the establishment of a new social order, the Basque would have to raise their own capital, which they did by public and private subscriptions to a bank. The motto, “Savings or Suitcases” meant that if the Basque people want to work at home, they needed to pool savings. [MacLeod, 1997, p. 54.] Franco had put Basque country and culture into a state of deep despair. He had prohibited the use of the Basque language, required the use of Spanish names, withdrawn public support, killed the Basque leaders and put severe cultural and economic sanctions against the Basque region.

It was this despair which eventually became their strength. “While Franco had economic, military and political power, the only thing left for the Basque was the wealth of human resources. Instead of setting up businesses simply for individual good of a small group of people, they set out to work for the common good. There was no simple formula, and there were no quick answers. There was mainly a reliance on the good to be found in all people.” [MacLeod, 1997, p. 39]

Upon learning that Franco was expected to die soon, the Basque independence movement increased the heat on the pressure cooker. Post-Franco, free elections catapulted the Basque Nationalist party into office, along with some Socialists and the Herri Batsuna party. The idea of cooperatives is an old one in Basque country. The Catholic Church had housing and food cooperatives earlier than 1929. Unions had credit unions priof to 1914. The growth of farmer cooperatives had been stimulated by laws passed in 1906. In 1920, bakers, fire arms manufactures and furniture makers established their cooperatives. Existing unions often provided the start-up capital. ALFA, a fire arms manufacturer shifted in 1925 from arms to sewing machines. Churches, political parties and union were all involved in some way in creating and sustaining cooperatives. “Clearly, the Mondragon movement developed out of a rich and diverse culture, representing broad interest and many organizations within the Basque country.

The Alfa case was well known to the founder of the Mondragon movement, Father Jose Marie Arizmendiarrieta. His nephew was a friend of Toribio Echevarria, the organizer and leading spirit of Alfa…” Whyte, p. 20. Mondragon and its cooperatives have become very profitable and are major sources of jobs and income, especially in the Basque region. As privately held companies, net profit information is generally not public knowledge, although gross statistics are available. En[iii] I recommend reading three outstanding books and thank the authors for the insight upon which this article is largely based. En[iv] Each reading contributed to attributes of MASA.

In the Bibliography section, I list some “also ran” books and other resources. Doctrines, traits, factoids, policies relative to Mondragon, gleaned from the books, are listed in the left column and the equivalent expressions relative to MASA are in the right column. For an adventure in the realm of worker owned enterprises, buy your ticket and take your seat.


Mondragon’s leaders created social inventions, created hybrid cooperatives, multi-level cooperatives and linked the growing number of cooperatives both directly with each other and through the general management structure of Mondragon Cooperative Corporation. “Their vision was not limited to the building of individual cooperatives. Rather, they were dedicated to developing a cooperative way of living and working. It was this vision that guided them to discover novel ways of solving the practical problems of organizational development.” Whyte, p. 57. MASA is a model of a self-sufficient, sustainable community which can be a role model for duplication in pockets of poverty in rural Americas and perhaps globally. MASA is two level, with included companies which are vertically and horizontally constructed and are in a tight network with each other. We insource as much economic activity as possible and network in a highly cooperative manner with the members and the included cooperatives. We outsource as little as possible. We will intentionally boycott products and services which controlled by entities which do not adhere to our Code of Honor or a similar ethical basis for economic and human concerns. We are faith neutral. Our PAC will gain political strength not as a “third party” but as a swing voting block on an issue-by-issue basis. The PAC will be voluntary.
FOUNDER - Don Jose Maria Arizmendi FOUNDER – James E. Miller
Don Jose Maria Arizmendiarrieta (shortened to Arizmendi); Catholic priest, educator; military journalist; and social activist. As a boy, lost his eyesight in one eye, gave up his inheritance, joined the priesthood, did poorly as a preacher in his moribund church in Mondragon, Basque region, Spain; developed for his parishioners, a blue-collar sports league, a family fellowship, a clinic, an athletic field and a sports league. While studying for the priesthood and during the lead-up to the Civil War which broke out in 1936, he became aware of Hitler’s command of the best technology which allowed him dominate Europe. He barely escaped execution in one of Franco’s prisoner of war camps, completed his studies and was assigned as an assistant pastor at the church in Mondragon. Having decided that who ever controlled the best technology, controlled the world, he organized a technical school for boys in 1940. En[vi] A local union, Union Cerrajera, invited him to give religious instruction to the apprenticeship classes. When the Union proposed the sale of stock to fund the union, Don Jose Maria request that it be expanded to include children of non-members. The Union rejected his request. Founded an independent school to teach crafts and industrial skills to boys 14 – 16. Formed a parent’s association to support the boys and raised money through cultural and social events. Of the residents of Mondragon, 600 or 15% pledges support, and formed the League for Education and Culture in 1948. Governed by a General Assembly composed of supporting local industries, parents and the Mayor of Mondragon. Later chartered the school as Escuela Politecnica Profesional. In 1971, the union closed its apprenticeship school and supported the Escuela. Don Jose Maria served as a teacher, preacher and institution builder. Arizmendi never took a formal position in any of the cooperatives, but was always a “presence”. Founder: James E. Miller, J.D. Leadership evidenced by membership in high school clubs (some offices) and Senior Class President. Stanford A.B. in history, economics and political science, 1957. Stanford Law School, J.D., 1959. President and leader of San Diego County Trails Council for 17 years. Built miles of recreational trails; obtained two grants. Community activist (civic association, horse club, county-wide trails plan, park committees). Deputy County Counsel, San Diego, 5 years; County Counsel, Imperial County, 4 years; Rohr Corporation, 2 years; private law practices 30 years with primary emphasis on real estate, business, intellectual property and commercial law. Bought, sold and developed real estate. Owned and operated residential, commercial, and office buildings. Operated recreational riding horse ranch. Managed several projects, including a $600,000 recreation project and a 63 acre family ranch (brushing, fence, water resources, planted 300 trees). Reared two daughters, one son. Enrolled in Agricultural Operations Technology, Montana State University, January, 2004. Completed undergraduate research projects in soil foodweb, selection of hazelnut cultivars and biodiesel production. Currently working on undergraduate research for a Croatian bee-keeper cooperative and specific issues relative to the MASA model, namely “social glue” and governance of a multi-layer cooperative. Started researching cooperatives in 2002.
Escuela Politecnica Professional continued to expand. Graduates offered enrollment in University of Zaragoza whereby graduates of Escuela could obtain an engineering degree in absentia. (First distance learning in Spain). Started Montana Virtual Education Consultancy with a partner for the Montana Laptop Project. Objective is to place a wireless laptop in the hands of each K-12 student in Montana and to develop and distribute online courses.
Used “study groups” extensively (over 2,000) for religious and humanistic purposes. Extensive meetings, discussions and social interchange, were to become the foundation for successful cooperatives. Jim failed an attempt develop study groups for Chem 121. He also failed to engage student’s attention in the use of the SOC 365 online forum. MSU students apparently do not transfer developing social interaction skills and needs to academic interaction skills and needs.
First cooperative: ULGOR. Five men with engineering backgrounds met and formed the cooperative, after the local union refused to include workers in an upcoming stock offering by the firm to raise its capital base. Mapped-out MASA as a mutli-level cooperative. In terms of legal organizations, the “parent” organization, or top level is MASA. Each included company, “child” will be a cooperative and is the second level. The third level will be joint ventures with individuals and non-cooperatives.
First project was to design and manufacture a paraffin stove. Designed and built subdivisions, homes, owned and operated apartment house for 34 years. Designed and built small bulldozer and other machinery. Have taken ROP classes in diesel engine repair, small engine repair, machine shop, welding. Self-taught in hydraulics, web design, operating systems, and desktop publishing.
Recruiting: Using the well-established social custom of chiquiteo, small groups would move from bar to bar, (mostly working class) sipping wine and engaging in conversation with customers and bartenders, spreading the word of the formation of the cooperative. Result: hundreds of people signed pledges, 1955, totaling $361,604. Running ads on the Web, seeking committed persons to join MASA as an “intentional community”. Few lookers and no takers. Yet, the best, and in this instance, probably the only way to recruit is by example. When the first cooperative is up and running, that of Home Grown Organics, it will serve as the point of entry for new members.
Brief Overview Brief Overview
Spanish law did not permit cooperatives as such. Ormaechea, one of the original five men, became the owner of a bankrupt firm which the Spanish government had allowed to manufacture a line of electrical and mechanical products. The founders bought these rights, November 12, 1956. Model bylaws were written. Each member has one vote. The governing council (junta rectora) is split, one-third to each: workers, staff, and the local companies which had purchases shares and generally were customers. Each director served four years, with elections every two years. Parts of MASA have been in the making over Jim past 41 years of law practice and real estate and business development and operation. This study is the first which brings together many of these parts, some of which have reached the finished business plan stage. MASA, Econo Energy and Alpine Hydronics, and more recently, Home Grown Organics will form the core cooperatives. Home Grown Organics has rented crop land and started with the hazelnut and truffle project. Econo Energy is the global distributor for Econo Heat’s waste oil heaters and boilers. Alpine Hydronics has conducted extensive research into the technology of condition the internal atmosphere of buildings, heating of green houses and dehydration facilities for food and fiber.
Mission Statement
“The Mondragon Cooperative Corporation is the embodiment of a social-economic experiment in the business world, the mission of which is the production and sale of goods, services and distribution. Democratic methods are used to elect the governing and management bodies on which the ‘corporations’ organizational structure is based; and the material and social assets generated are distributed for the benefit of its members and the community, as a measure of solidarity. “To achieve the aims expressed in its mission, the MCC shall operate competitively, generating the resources necessary for harmonious development.” [MacLeod, 1997, p. 38] The mission of Mutual Aid Society of America, LLC (MASA) is to create a national partnership which provides its members with a high standard of living in rural America. Consistent with this goal, is to create economically robust rural communities on a self-sufficient, sustainable basis. MASA will achieve this goal by the vertical and horizontal integration of the entire chain for food production, distribution and retail sales; light manufacturing products; and intellectual services. “Reap what you sow” could well be MASA’s motto. What MASA will reap is a net high standard of living for its members and dependents, greater health, longer life, sustainable income, less dependence on the Private and Public Sectors and the engagement and development of the Ethical Sector. The “inputs” will be the MASA structure, “social glue” and our own mental, emotional, intellectual and physical resources. We will embrace biodynamic farming methods, sustainable and earth-friendly technology and the eco-village concept. The “outputs” will be sustainable high profits from niche markets for both agricultural products and light industrial products. The most important “output” will be vastly improved interpersonal relationships -- “permaculture” of both mind and body.
Operating Guidelines
Mondragon has adopted operating guidelines: [MacLeod, 1997, pp. 38-39] In general, MASA will have the same guidelines as part of the Code of Honor.
1. Client Satisfaction. In the certitude that the user of our products and services is the ultimate rationale of our very existence as a business, le us respond to the needs of the client, foresee needs and, with personalized attention, increase the level of client satisfaction.
2. Person Centered. So that the well known expression that people are the first and principal asset of the corporation may not be simply an empty, rhetorical phrase, but a lived reality. So that we encourage creativity, initiative and communication above property, obedience and pedigree, and where systematic programs of formation guarantee the permanent development of all the workers.
3. Products and Services. We are conscious that the most objective form of appreciation and validation of our enterprise is through our products. Products, and the commercialization and servicing of them, makes possible the generation of resources sufficient for the consolidation and development of our corporation. The search for a full guarantee and the optimization of our services are factors that can help us to consolidate our position in the market place.
4. Cooperation. In our cooperative model of shared management, the word, “cooperation” takes on a broader meaning. It includes collaboration, collaboration teams, and above all, participation in the corporation as a whole, dedicated to society but also efficient and competent. We share responsibilities, delegate functions and assume risks. We are involved in the process of organization and as well, we share the satisfaction of fulfilling the objectives. These are the keys of cooperation together with respect for the pre-established rules of the game.
5. Continual Improvement. With the continual search for optimization of systems and processes in our changing environment, the adaptation to new markets and fulfillment of our commitment to supply must be constant. The open character of our management, receptive to the necessities of new technologies, should serve as a catalyst to motivate the workers in each of our cooperatives to the task of continual improvement.
6. Community Commitment. So that we not become limited to the narrow confines of our individual cooperatives, but rather that we transcend our own group. To create jobs and create community wealth are the irrevocable requirements of our community vocation. And within this community commitment, we must not forget to proclaim our respect for the ecosystem and the search for solutions which, while not hindering efficiency, permit a balanced development of our businesses, and equally permit full employment with the creation of new jobs. The Mondragon Cooperative Corporation assumes an historical responsibility which is concretized in its member cooperatives.
Mondragon Ten Operating Principles MASA will adopt.
1. Open Admission. The system is open to all who agree with the basic cooperative principles without regard to ethnic background, religion, political beliefs or gender.
2. Democratic Organization. The cooperative system is based upon the equality of owner-workers. Aside from limited and special circumstances, all workers must be members. The cooperative is democratically controlled on the basis of one member, one vote; its governing structures are democratically controlled and are also responsible to the general assembly or other elected bodies.
3. Sovereignty of Labor. Labour is the essential transformation factor of society. The cooperatives renounce wage labour, give full power to the owner-worker to control the co-ops, give full power to the owner-worker to control the co-ops, give primacy to workers in the distribution of surpluses, and work to extend the cooperative choice to all members of society.
4. Instrumental Character of Capital. Capital is basically accumulated labor and a necessary factor in business development and savings. The co-ops pay a just but limited return on capital saved or invested, a return that is not directly tied to losses or surpluses of the co-ops. Their need for capital shall not impede the principle of open admission, but (after and initial trial period ) co-op members must make a substantial, affordable and equal financial investment in the cooperative.
5. Self-Management. Cooperation involves both collective effort and individual responsibility. Cooperation is the development of the individual not against others but with others. Democratic control means participation in management and the ongoing development of the skills needed for self-management (autogestation). There must be clear information available on the co-op’s operations, systematic training of owner-workers, internally promotion for management positions, and consultations and negotiations with all cooperators in organizational decisions that affect them.
6. Pay Solidarity. The co-ops will practice both internal and external pay solidarity. Internally, the total pay differential between the lowest and the highest paid member shall not exceed a factor of one to six. Wages should be comparable to those privileging in the neighboring conventional firms.
7. Group Cooperation. Co-ops are not isolated entities. Cooperation exists on three levels: among individual co-ops organized into groups; among co-op groups; between the Mondragon system and other movements.
8. Social Transformation. Cooperation in the Mondragon system in an instrument for social transformation. As Don Jose Maria Arrizmendiarrieta, found of the movement, wrote, “Cooperation is the authentic integration of people in the economic and social process that shapes the new social order; the cooperators must make this objective extended to all those that hunger and thirst for justice in the working world.” The Mondragon co-ops reinvest the major portion of their surpluses in the Basque community. A significant portion goes toward new job development, to community development (through the use of social funds), to a social security system based on mutual solidarity and responsibility; to cooperation with other institutions (such as unions) advancing the cause of Basque workers, and to collaborative efforts to develop Basque language and culture.
9. Universal Nature. The co-ops proclaim that their solidarity with all who labor for economic democracy, peace, justice, human dignity, and development in Europe and elsewhere, particularly with the people of the world.
10. Education. Education is essential for fulfilling the basic cooperative principles. It is fundamentally important to devote sufficient human and economic resources to cooperative education, professional raining and general education of young people for the future. [MacLeod, 1977, pp. 41-42.]
Enterprise Creation
Standard cooperatives fail when they change goals and begin to pass most or all of the profits to the individual members. When the do this, they are the same as the elitist system. Fn[2] Agreed
The Mondragon cooperatives have avoided failure and bankruptcy by reason of several mechanisms: Funding by the Caja Analysis and reorganization by the Caja The Internal Economy Internal accumulation of capital within each cooperative. Promotion of new business ideas in a highly disciplined manner. [MacLeod, 1997, p. 44] Agreed. Most books on Mondragon report the critical need for internal funding. Caja was instrumental in forming new cooperatives, growing others and rescuing cooperatives in trouble. “In fact, Gorronogoitia refers to the governing and management structures of the Caja as ‘embodying an Arabesque of equilibria of power’.” P. 68 Until MASA has sufficient resources to start a credit unit, it will use the services of a local credit union. En[vii]
Caja: Specialization. Soon after Caja was up and running, it created a consulting division to aid business start-ups and assist failing co-ops to become profitable. Caja closed down only one co-op. Soon, the consulting division split into several departments:
The Entrepreneurial Division. [MacLeod, 1997, pp. 44 –46] The mission of the Entrepreneurial Division is three-fold: a. Develop new cooperative enterprises. b. Provide for technical consulting to all cooperative members. c. Audit and monitor the financial operations of all of the cooperatives. Agreed. MASA will make use of these developments in connection with its stages and gates analysis.
These functions were soon assigned to departments within the Entrepreneurial Division:
1. 1. “The Economic Analysis Department which studied international trends, help enter the Common Market and other macro-economics. It issued reports on the world economy and pin-pointed the dynamic areas which offered higher profits for new or expanded Mondragon cooperatives.
2. “Agroforestry and Food Promotion Department provides the necessary technical and entrepreneurial assistance for the agroforestry area. “The Mondragon leaders chose the rural over the urban as being supportive of a more communal mode of life. Thus they bought technology to agroforesty as well as to heavy; industries of urban centers.”
3. “The Urban Planning Department plans such infrastructure as sewer, water, and electrical systems as well as plans for buildings and structures such as industrial parks and shopping centers.
4. “The Intervention Department which provides planning and management services, also specializes in helping out enterprises in difficulty. If the Auditing Department discovers a developing problems with the finances of one of the associated enterprises, an Intervention Team will be organized to assist the local management. These are the trouble-shooters who try to prevent problems from getting worse.
5. “The Industrial Promotion Department is responsible for the initiation of new industrial cooperatives. **** These agents gather once a year to discuss ideas for new product development. This department provides specialized services in fields such as production engineering, marketing, legal services and finance.” [MacLeod, 1997, pp. 44 – 46].
The cost of these services were charged to the cooperative which was served, range from 36% to 64%. Annual budgets of each cooperative included amounts to fund this research and consulting. A full scale feasibility report is required. If found feasible, one advisor, the “godparent” provides oversight. A second advisor helps with the technology. Reviews are conducted by the Board of the participating cooperative and the Board of Caja. Initially, each included company will pay 2% of gross into an research and development account administered by MASA on behalf of projects suggested and sponsored by the included companies. Matching grants will be sought. Supplemental investments will be sought with outside agencies and cooperatives on a joint venture basis.
Funding for large capital projects is obtained from sources: (1) Internal profits, (2) loans from Caja, (3) government loans or loan guarantees, (4) joint venture partners, and (5) sale of bonds or preferred stock to members. Agreed.
Incubators are subject to a lengthy and intense review. A concept is promoted by an existing cooperative or a newly formed group of promoters. They are advised by the newest consortium, Saiolan. Phase One is three months of formation where the promoters are taught basic concepts of business. Phase Two, they are placed in to teams and assigned a tutor/advisor. Phase Three, the feasibility planning and proof is developed. Phase Four the full business plan and application is presented to the Board of Caja for funding. Phase Five. If approved, the incubator goes through a two year period of start-up. In general the goal of MASA is the same. MASA will need to go through several stages and gates to get to the point where it has its own “Saiolan”. The Mondragon model follows standard stages and gates practices and will be adopted by MASA.
Conversions of private companies proved harder than expected in most cases. Lack of prior experience in cooperative management and a different culture made for difficult conversions. P. 83 Probably the only way MASA will buy an existing business is to purchase only the assets, then populate the business with cooperative workers at all levels, while inviting the former employees to begin the process of education, the same as any member of the general public.
Mondragon found it was easier to recruit new worker-members from graduates of its schools, because of the cultural homogeneity, rather than recruit from among persons with no prior experience with cooperatives. Good plan for MASA.
Dual roles as workers and owners
There is built into cooperatives an ambivalence of goals, which is generally not good. “As workers, they would like to increase their immediate financial benefit and improve the quality of working life, but as owners, they must also be concerned about the long-run financial and organizational strength of their cooperative.” P. 291. MASA will also have the same problem. The process of resolution is by discussion and vote at the membership level, based on recommendations of the governing boards and social councils. It is the work of the latter to act as the melting pot for all member’s ideas through free association of ideas and workers as owners. In the end, some members will leave because of their perceived need for immediate rewards, while MASA will attract other because of the employment stability which wise investment creates.
Mondragon is organized in to related groups of cooperatives, but continue to be served by Caja and other service organizations. They are: Agreed
Financial Group (6 enterprises). The members are: Caja Laboral Popular, with 125 branches, is operated as a credit union for all members and all cooperatives. Lagun Aro which is the social security (retirement, health, benefits) system for all of the member cooperatives. It provides unemployment benefits and health services. Big Sky Federal Credit Union Big Sky Human Resources
Industrial Group (67 enterprises). This group is the main manufacturing core of Mondragon. Econo Energy Home Grown Organics Green Oxy Diesel Wind Sail Power Beaver Creek Dairy and Cheese
Distribution (8 enterprises) include: Eroski, the retail chain of 264 stores. Lankide Export, was setup to export goods. Round Robin Transport Farmstead Foods World Link
Corporate Activities (15 enterprises) include: Research Institute Education and Culture Higher Education Elementary School. Fn[3] MASA Insurance and Risk Management Legal Accounting IT Enterprise Knowledge Based Information Management System United States Virtual University Montana Laptop Project
Wages [MacLeod, 1997, p. 30-31]
The early founders recognized that different skill sets and abilities should be recognized monetarily by differences in wages. At first, the difference in wages was capped by a 1:3 ratio, later raised to 1:6, so that no worker was paid more than six times the lowest paid full-time worker. MASA’s wage cap, voted upon by all members and requiring a 66% vote to change, will be a ratio of 1:4 for full-time workers. Exceptions will be reviewed by the General Council and recommendations made to the general membership. All cooperatives will be partnerships and thus not pay “wages” as such, but will pay partnership draws to meet basic living expenses.
Within the cap, the individual ratio for a worker is set by the Social Council of each cooperative, based on a universal formula. Tenths of points are added for education, seniority, supervisory, fiscal responsibility and individual performance. For example, a beginning worker might be at point “1”, but when put in charge of a work group, would gain a tenth of a point. Please read the article on dispute resolution on the 1974 strike and its resolution. ULARCO’s Central Service developed new job descriptions and pay grades which led to the 1974 strike. Despite an elaborate appeals process and two years of study, the result provoked considerable worker unrest. Pp. 93 – 100. The governing council of each included cooperative will, annually, review and approve recommendations of its social council for wage adjustments within the cap. There are strong arguments for paying everyone the same rate for basic living expenses. Housing, transportation and utilities will be provided free of charge within each “campus”. A commissary will provide for joint purchasing, thus offering other commody goods at actual cost. Compensation differentials should be recognized within the area of profit sharing, not basic cost of living. Cost of living should be set according to the legal obligations of a member to support his or her lawful dependents. The U. S. military provides for a housing and food allowance to its members. Such allowances are well known and accepted in many industries so finding a good model should not be difficult or troublesome. The “solution”, if there is one, is not to make a company-wide or group change at one time, but to change one job at a time over an extended period, by negotiating with individuals or very small work units.
Internal Economics [MacLeod, 1997, p. 30-31]
Temporary and part-time worker are not admitted to membership and are paid wages consistent with those paid locally. To become a member, a person must: Serve a probationary period to test their personal abilities. During this period they are paid as temporary workers. Pay a capital contribution equal to one year’s pay for an unskilled worker ($10 – 15,000 in 1997). The new member can borrow the money from Caja and re-pay Caja through a check-off system. The capitalization of MASA and its included companies will proceed along a different line. As each applicant for membership is considered, the expectation for capital contribution is evaluated. Basically, a new member must “bring to the table” most of his capital in the form of education already taken, tools and equipment, real property or cash, or some combination. Capital units will be issued by MASA for the fair market value of the capital contribution, on which a small sum will be paid annually, regardless of profit or loss. Initially, contributions of tangible property will carry with it a lien in favor of the contributor until the total of the small sums paid annually, equal the fair market value of the item contributed at the time of contribution. Contributor’s of cash will have a general lien on all of the intangible assets of MASA and/or the included company’s intangible assets, until annual payments equal the original amount contributed. Where feasible, loans will be arranged for an incoming member’s capital contribution as a loan with check-off from Big Sky Federal Credit Union.
Profit Sharing [MacLeod, 1997, p. 30-31] Payment of Net and Gross Earnings
Profits per cooperative are pooled within the cooperative, but subject to the general rules of Mondragon: 10% is allocated to the cooperative’s social security fund. 20% is allocated to the company reserve fund which is never paid to the members. 70% is allocated to the worker-member. This personal capital of each individual is paid to the cooperative and held in trust. Losses can be applied to all such capital accounts. Upon retirement or leaving the company, the retiring or departing member may draw out these funds. Members who retire after 25 years of work are paid a lump sum of $100,000 plus a pension equivalent to 70% of the average earnings of the last five years. Pensions do not depend on profit and losses. Earnings of all cooperatives will be divided and paid quarterly as follows: 2% of gross is paid into a fund for research and development administered by MASA. 2% of gross is paid into a fund for education administered by MASA. 5% of gross is paid into a social security fund for health, welfare, unemployment and other social benefits, administered by MASA. Each cooperative, through MASA will pay and deduct from the drawing accounts of each partner/member, the quarterly estimated federal and state taxes which self-employed individuals are required to pay for an on behalf of each partner. The remaining net profit per included company, after all internal and external payments have been reconciled, will be paid quarterly as follows: Each partner will receive from net profit from the included company (or MASA, as the case may be), an additional draw generally equal to 50% of his or her basic cost of living draw. Bonus distributions of the difference between the cumulative 50%’s cost of living draws and 50% of the net profit of the cooperative, would then be allocated on a point system. Points would be awarded based on generally the same criteria as used by Mondragon. 25% of the included company’s net profits shall be belong to the included company as a reserve. The remaining 25% will be held in trust for the individual members in their respective retirement accounts. This latter 25% must be invested by the included company in very safe, interest bearing investments (banking and trust company standards).
General Assembly
Mondragon and each subsidiary cooperative has a general assembly. The Mondragon General Assembly or “Congress” is composed of representatives chosen by each cooperative enterprise. In addition there are zone (group) general assemblies. Its function is to approve general operating guidelines for the zone group. A general assembly for each cooperative is formed. The one member, one vote rules applies only to the individual cooperatives. Each worker who joins becomes a member of MASA and of one or more included companies. MASA holds an annual (and special) meetings of all members at the annual Convocation of Members. One member, one vote. Each included company has an annual meeting of all members. Voting for people positions is one member, one vote. Voting affecting fiscal and property matters is one member vote and one vote per $10,000 of capital represented by units (shares).
Board of Directors [MacLeod, 1997, p. 31-32]
The Congress members do not elect the Congress Board of Directors. This board consists of all of the general managers of the cooperatives. There is no board of directors for zones. The General Assembly for each cooperative elects the cooperative’s board of directors. The Convocation of Members elects the Board of Directors from members. Alternate members are also elected, one for each elected member. Alternate members may participate in the meetings. They may vote only if the hold a proxy from the Board member or the board member is not present at the meeting. The minimum necessary for a Board of Directors is three. The actual number can be increased above three and reduced to three by action of the Convocation of Members. The intent is to have one director slot and alternate slot for each included cooperative.
Each director serves four years. Half are elected every two years Same for both Board member and the alternate elected member. Generally, it is expected that the alternate member will succeed the Board member.
Meetings of the Board will be held at least quarterly and probably monthly.
The General Congress was changed in 1986 in response to the Common Market and global competition. The new structure focused on strategic planning, the inter-linking of the cooperatives and creating a system which would permit quick decision-making. Much of Caja’s authority to guide business was shifted to the General Congress. Cooperatives must abide by the decisions of the Congress or leave the system. As an example, one year the Congress voted to allocate $600 per member to formation of new cooperatives. That amounted to $15 million per year for formation. The idea that the general managers can make quick decisions is approved. However, the power of decision must remain with the Board of Directors. MASA’s Board will have the advantage of the advice and discussion of the general managers. All of the general managers will constitute a Manager’s Council which meets in advance of each Board meeting. The Council advises the board. Further, any GM can attend a Board meeting and discuss any topic, but not vote.
Officers and advisors
Each cooperative General Assembly (or Congress) elects a General Manager and appoints members to the audit committee and the social council. The GM then appoints subsidiary officials. MASA’s Board appoints a GM for MASA. Individual cooperative boards likewise appoint their respective GM’s. In addition each board will appoint for its organization, the following, some with independent powers: Social Council which will provide for discussion about benefits and perform an oversight role on handling of trust funds and distribution of benefits. It will recommend on standard of living issues for the members. A Counselor who will provide conciliation services to members and psychological counseling. A Rector who provides guidance and oversight on matters of business and personal ethics. A Doctor who provides health and wellness information and guidance. An Actor who provides for entertainment. An Instructor who provides for educational programs for the cooperative. An Ombudsman who provides general oversight for the cooperative and has powers of investigation and can require production of documents.
See article on Dispute Resolution Rights, such as the right to strike and the right of lock-out can be contractually modified and even eliminated. The MASA model is a combination of the exhaustion of administrative remedies and binding arbitration. Individual workers have an administrative path through the local cooperative’s social council to the Board of Directors of the cooperative, then to the MASA Social Council, then to the MASA Board of Directors, then to the Convocation of Members. If, after exhausting this administrative remedy, the dispute remains, then binding arbitration will resolve the dispute.
A cooperative may dispute any decision of the Board of Directors of MASA by appealing to the Convocation of Members. If the dispute is not resolved at that stage, then binding arbitration will decide the dispute. In each case, either side has access to the local courts to force binding arbitration and to enforce any arbitration award.
INTERNAL ORGANIZATION of each cooperative
Audit committee: Three people, elected by the members of each cooperative, serve as an audit committee, independent of the Board of Directors and officers. Their sole job is to perform an internal audit of the financial operations. MASA will adopt this model.
Management Committee: Composed of all managers in a cooperative. MASA will adopt this model.
Social Council. The Social Council was formed and was in operation a year after Ulgor was formed. The intellectual origins of this council was the study groups referred to above. Its main purposes were to further the communication process within the cooperative and to “advise” the Board of Directors. Members were elected at large, thus acting as a counter-balance to the representational form of governance employed by creating the Board of Directors which was in turn populated by directors from the three groups mentioned above. This approach was designed to engage the maximum number of workers. The membership was limited to 50 members. MASA will generally adopt this model.
Ikerlan was formed as the research and development agency for all of the cooperatives. It emerged from the research department of Escuela Politecnica Profesional. Manuel Quevedo, an instructor in charge of the shop operations, became the leader. Six faculty members took a leave of absence and studied industrial research at French and other universities. Quevedo then established a robotics laboratory within Escuela. In 1974, Don Jose Maria proposed establishing what would become Ikerlan with a capitalization of two million dollars and to contract with the industrial cooperatives to provide them with advanced technologies. Leaders of the Caja and of the other cooperatives were asked to and agreed to provide support for Ikerlan. MASA will create first level cooperatives, including farming operations, post-production processing, transportation and warehousing, retail, light manufacturing operations and construction. Second-level cooperatives include a credit union; a research and development institute, including a consulting firm; a virtual university and a traditional campus; an insurance company, including a risk management consultancy; computer infrastructure, including IT and enterprise management systems; marking and sales; and a political action group. MASA will provide overall governance, but in practice will operate more as a service organization.
Don Jose Maria’s leadership included his independent research into new technologies and manufacturing techniques.[4] Jim Miller’s research spans projects for the production of biodiesel from waste vegetable and animal oils, refining glycerine, hazelnut husker, hazelnut huller, intelligent greenhouse, wind/sail power generator, low head hydroelectric generation, design of a mini-bulldozer, design of a forest thinning machine, all-terrain hauler and tool carrier, waste oil-to-energy heaters, chillers and boilers and others.[5]
The initial funding of Ikerlan, as noted above, came from the community, the cooperatives and from the enterprises which sought technology research. The funding received a boost in 1982 when the Basque regional government contributed one-half of Ikerlan’s annual budget. 38% came from contracts for projects, most of which were from the cooperatives, but many were from private firms. 12% came from fees ($17.50 per annum) levied per member of any supporting organization. Like Ikerlan, MASA’s research and development will start as individual projects by one or more members of MASA. As the project proves feasible, grants from government and private foundations will be sought. Initiation of a given project can be a simple as taking a senior or graduate level course at MSU or other university. Fellowships, internships, scholarships will fuel this level of research. When the “cookbook” and the “road map” (feasibility) has been established, the project will move into the working drawing stage, then the test bed stage, then the limited production stage, then the full production stage. Along the way, proposals to form cooperatives to exploit the specific technology will be proposed, studied and funding sources sought.
Cooperatives and private firms contracting for research and development which were not members of the Ikerlan cooperative, were required to pay 50% more than member organizations which gave the private firm limited rights to use the research results. For 100%, the non-member obtained exclusive rights. Because funding from government and funders is fickle, two percent of the gross income from MASA and all included companies will be devoted to research and development. Since all profits and losses will be pooled, then also will the R & D funding. Projects will be accepted which benefit the cooperatives as a first order of business. All included companies can proposed projects and expect that a fair and reasonable percentage of the R & D funds will be spent proportionally based on the contributions, but not necessarily at any given time.
If Ikerlan is unable to solve a problem, it will share the costs of research with client firm on a 50/50 basis. This arrangement encourages client firms to support high-risk research. R & D research will be conducted for non-member private companies. High-risk research should be funded by third party grants or the client.
Ikerlan offers memberships to private companies the same as to the Mondragon cooperatives. MASA will adopt this model.
On projects for cooperatives or private firms, Ikerlan creates a joint team which is designed to provide a smooth flow of information among the team members. MASA will adopt this model
Projects are divided evenly between client/cooperative based research and staff developed research. Each researcher has one of both types of research. MASA will adopt this model
Ikerlan has developed a reputation as one of the leading industrial research institutes in Spain. Rather than higher a highly credentialed CEO, Ikerlan chose Quevedo, mindful that the lacked the academic credentials usually associated with a CEO of a R & D institute. “They realized that he had risen to the challenge of each new task, building a team to work with him, and they expected him to continue to grow with increasing responsibilities.”[viii] MASA will adopt this model
By coalition with two other research institutes in the Basque region, Ikerlan secured financial support from the Basque regional government, Ikerlan not only served Mondragon but also the socioeconomic and industrial development of the Basque region. MASA will develop professional relationships with universities, colleges, private firms and think tanks and wherever the research leads us.
As Escuela expanded into higher grades, additional sources of funding was created for the largely poor families of the region. Previously the League of Education and Culture had helped students find part-time jobs in the form of “contracts for apprenticeships” with private firms. Recall that the Union had refused Don Jose Maria’s request that their program be expanded to children of non-union persons. In cooperation with the cooperatives and private firms, Alecop developed a work-study program. The governance of Alecop was by a tripartite council whereby one-third represented students, one-third represented staff and one-third represented the contracting cooperatives. MASA will adopt this model.
The 85 member General Assembly is based on one vote for every 300 people per second level cooperatives (such as Caja, Ikerlan, and Escuela Politecnica Professional) which accounts for 30%, staff members make up 40%, and 30% the first level cooperatives. The 12 members of the Governing Council are elected by the General Assembly and serve four years, with half being elected every two years. Membership in MASA is automatically gained by becoming a member of any included company. Membership meetings are held annually (being also one of the quarterly meetings of the General Council) over a three day period for education, reports, discussion groups, awards and distribution of one of the quarterly bonuses. Voting is on major issues such as changes to the basic governance of MASA, and corporate reorganization, acquisitions and mergers.
During the early years, Mondragon limited itself to industrial production. When Don Jose Maria gave up his inheritance, his younger brother took over the family farm in Markina. The brother asked Don Jose Maria to help him form a cooperative for marketing of milk and timber, to be controlled by the farmers. Such was not to Don Jose Maria’s liking since it violated the fundamental principles of the cooperatives. He persuaded the farmers to create a hybrid cooperative with farmers and workers. Thus Lana was created in Markina in 1961, one of the first. By 1982, the cooperative had 300 farmers and 120 workers. MASA will create Farmstead Foods which will include all members involved in the production and distribution food chains, including consumers. Jim Miller has completed the soil foodweb and the hazelnut cultivar projects and is proceeding with the next stages of research. He has rented farm land in Belgrade as an experimental research facility for the growth of hazelnuts innoculated with mycelium from Tuber melanosporum (French Perigord black truffle).[6]
Farmers are paid retail prices upon delivery of goods. Workers are paid the value added to each product in the chain. Individual cooperatives are paid “production” rates for their production and services added to the stream of commerce. Production rates include direct costs, job overhead, and general and administrative costs. All profits are determined at retail, when the production or services leaves the hands of Farmstead Foods. That profit is distributed according to the formula which provides for reserves, charity, benefits and for “bonuses”.
Spanish law prohibited a cooperative from selling to non-members. The food cooperative, known as Eroski, solved the problem by offering every consumer membership for a very small amount, collected at the cash register. MASA will adopt this model.
Eroski eliminated dividends on purchases and instead offered modest prices, published a monthly magazine, sponsored vacation trips, vacation housing rentals and conducted extensive consumer education. MASA will adopt this model.
Governance of Eroski
To balance the governance between the farmers, workers and consumers, governance was based on two classes of members, each of which held 50% of the voting rights. MASA will adopt this model.
WOMENS’ COOPERATIVE, Whyte, pp. 75-78.
Early cooperatives were, with rare exception predominately male populated. In 1965, when the women’s’ cooperative, Auzo-Lagun was founded, few single women worked in the cooperatives; these were terminated when they got married. The expansion of the cooperatives created demand for labor which was filled by women. By 1977, 48% of the Auzo-Lagun women had not finished elementary school, 35% had finished elementary school, 10% had finished high school, 6% had some college and only 1% had graduated from college. MASA has a level playing field. We will not adopt this model.
Formation of Auzo-Lagun
Auzo-Lagun was formed in 1965 to provide part time work to married women. It started as a food service coop, providing meals to the coop factories. They worked out of a parish church, drove their own trucks, and ran the business. The next expanded to include a restaurant, service to private firms and established a cleaning service. MASA’s free child care and flex-time scheduling will generally allow for a parent to fulfill both work and parenting responsibilities. One of the goals, and hence one of the “outcomes” are mentally and emotionally healthy families and reduced divorce rate among members.
Industrial part-time workers
Demand for part-time labor lead to the creation of a separate department for temporary labor, which led to the creation of a child care department. By 1988, the number of part time workers was 4,500. Because of the uncertainty of part time work, Auzo-Lagun expanded the food/restaurant model to include convention services and an industry which sub-contracted minor assemblies from the other coops. MASA and all included companies shall provide free child care to all coop members and charge modest fees to non-members. Many of the included companies will conduct light manufacturing operations to sustain workers during the winter months in Montana and slack periods during the remainder of the year.
The Auzo-Lagun cooperative provided for education, stabilization of household income, leadership training and experience for women and proof that women could manage important enterprises. MASA is gender neutral and supportive of women’s rights (men’s and children’s too).
Starting in 1960 with two people, the Caja has become the most important core cooperative in the Mondragon movement. “The relationship between the Caja and individual cooperatives is now so strong that the bank determines their norms and guides their development.” P. 68. MASA will form a subsidiary, Big Sky Federal Credit Union and operate along the same guidelines as did Caja in the early years as a bank. Consulting services will not be part of the banking operation. The credit union will develop an internal currency in the form of digital cash transactions using the “one card” and debit card examples.
The population of Mondragon tripled between 1940 and 1970. Leaders of the movement were concerned about housing. Mondragon formed housing cooperatives which by 1984, consisted of five companies employing 1,511 members and had seventeen high-rise apartments. MASA will establish a construction and property maintenance cooperative. Service Master is one of the models. The three purposes are: (1) to provide low cost, high quality housing and commercial construction which is energy efficient and very habitable, (2) to provide for the proper maintenance and provision for utilities. (3) MASA’s construction arm will also build spec housing and eventually own and manage rental properties as a source of outside income. MASA has a design for a three story, multi-use building for farmsteads. It has plans and will soon start on an economy mobile home for the first farmstead, Home Grown Organics in Belgrade.
Membership is open to all regardless of gender, race, etc. MASA membership is open to all, EOE, etc. Three classes of workers:
A probationary period is required. Temporary or part-time workers are not members and word for standard wages and benefits.
There is a capital requirement. Probationary members are limited partners for one year. They have limited liability, no vote, no obligatory capital contribution, and can be terminated by the General Manager or can withdraw at any time.
Full members have been approved by a majority vote of the general assembly of their cooperative after passing the probationary period and making the capital contribution.
Respectfully submitted, James E. Miller, J.D. November 15, 2004 Contact information: MUTUAL AID SOCIETY OF AMERICA, LLC P. O. Box 1172, Belgrade, MT 59715 T 406-570-3843 E ============================================ BIBIOLOGRAPHY Bastone, David; Saving the Corporate Soul; 2003; Jossy-Bass/Wiley, San Francisco, CA. Ehrenreich, Barbara, and Hochschild, Arlie Russell, Global Women, Henry Holt and Company, 2002. Gutierrez-Johnson, Ann; The Mondragon Model of Cooperative Enterprise: Changing Work; Journal of Political Renewal and Radical Change, Democracy; Vol. 1, No. 1; January, 1981; Sheldon S. Wolin, Ed; The Common Good Foundation, New York, NY. Kasmir, Sharryn, Cooperatives, Politics and Working-Class Life in a Basque Town, State University of New York Press, 1996. MacLeod, Greg, From Mondragon to America; University of Cape Breton Press, Sydney, Nova Scotia, 1997. ISBN: 0-920336-53-1 Rifkin, Jeremy; The End of Work; 1995; G. P. Putnam’s Sons, New York. Whyte, William Foote and Whyte, Kathleen King; Making Mondragon; ILR Press, Ithaca, NY; 1991, 2nd Ed. ISBN: 0-7914-3004-9 ===========================================ARTICLES AND OTHER PAPERS BY JIM MILLER ORGANIZATIONAL AGREEMENT, MUTUAL AID SOCIETY
the Ethical Sector E
-- “An incoming tide raises all boats” (except those tied
to the dock or on the bottom of the bay). G
JUST COMPENSATION – Equity, Not Avarice, Should
Rule our Dealings H
HEARTLAND RENAISSANCE -- A Survey of attempts to
Create cohesive, profitable, sustainable communities
and businesses. I
Ethical Sector reform the Private and Public Sectors? J
ETHICS AT UNIVERSITIES – You’ve gotta be kidding. K LESSONS FROM THE SERVANTS – How do we finish
the job? L
THE 111 STANDARDS M SOCIAL GLUE – Term paper, Sociology 365, Sociology
of Globalization


“In their struggle against the King of Aragon and the feudal lords, the kings of Navarre, and later Castile, encouraged the growth of urban centers. To migrants to the towns and cities, the Castilian Crown offered freedom from the serfdom owed to feudal lords. The monarchs saw freeing the townspeople from the control of the feudal lords as a means of extending central control, whereas the Basques saw it as enhancing opportunities for local autonomy. This struggle for autonomy was supported by the development of a distinctive Basque myth. By the fifteenth century, the Basque had persuaded the Spanish King to declare all inhabitants of Guipuzcoa, hijosdalgos (people of known parentage, or literally, ‘sons of something’) and thus “noble” or “equal” in relation to each other. Ironically, the myth did not base egalitarian claims on the virtues of the common man but rather on the comforting fiction that, because they were all of noble blood, Basques were equal among themselves and superior to other people.” Whyte, p. 11.
[2] “Above all you must recognize the danger to turning in on ourselves, which happens to cooperatives, enjoying the profits which previously belonged to the capitalists. This is corporate egoism, which englobes all the individual egoisms. The cooperative movements will necessarily feel this temptation.” [MacLeod, 1997, p. 44]
[3] Mondragon invested 74 million pesetas between 1962 and 1964 to build the Escuela Politecnica and in the 1980’s spent another 200 million pesetas. Its three year enrollments grew to 720 engineering students by 1986-87. Five lower grades were enrolled in Escuela Tecnica Empresarial de Onate which had 868 students in 1985-86. p. 215
Fn[4] “The director of the school, Retegui, said that on several occasions Don Jose Maria had told him and his associates about some new technology or manufacturing process they had never heard of, whereupon Quevedo would loo0k for the sources of information on the topic and find that Don Jose Maria had pointed them in an important direction.” Whyte, p. 64.
Fn[5] The wind-sail generator has schematic designs, waste-to-energy is conceptual, the all-terrain hauler and tool carrier is partially built, the forest thinning machine is an attachment on the tool carrier and is conceptual, and the hydroelectric system is conceptual.
Fn[6] During the spring semester, 2004, Jim proposed to Vic Cundy, Department head of Engineering, three engineering projects, including the biodiesel cookbook and road map project and the design of a hazelnut husker. Neither project was accepted. Part of the biodiesel project was completed as an AOT undergraduate research project with Dr. Blair Stringam. The biodiesel design project still does not have a “home”, although MSU conducts biolubricant research in Kalispell.


Miller, Jim. 2004.
[ii] Whyte, op. cite supra at 9 –11.
[iii] MCC overview:
Year 1994 (Billion) 1995 (Billion) 1996 (Billion)
Total Assets 10.8 12.3 13.8
Total Sales 4.9 5.5 6.0
Exports 0.8 1.0 1.1
Personnel (Actual number) 25,990 27,950 29,407


Kasmir, Sharryn, Cooperatives, Politics and Working-Class Life in a Basque Town, State University of New York Press, 1996. MacLeod, Greg, From Mondragon to America; University of Cape Breton Press, Sydney, Nova Scotia, 1997 Whyte, William Foote and Whyte, Kathleen King; Making Mondragon; 1991, 2nd Ed.; ILR Press, Ithaca, NY. All references are to this book unless otherwise indicated.


Whyte, op. cite supra.
[vi] MacLeod, Greg, From Mondragon to America; University of Cape Breton Press, Sydney, Nova Scotia, 1997. P. 54
[vii]SHARE is a local credit union and is commented on by the Flagstaff Tea Party, “Another alternative to big chain banks may be to create a structure by which community members pool their savings to support locally-owned, environmentally and community friendly businesses. Folks could create a non-profit, cooperative organization. The non-profit could then collaborate with an existing local bank to set up savings accounts that will act as collateral for loans to projects generally considered too risky for the bank, such as the creation of a locally-rooted, cooperatively-owned grocery store. **** Essentially, this could allow members to take the financial “risk” and to gear loans towards locally based, environmentally sensitive and community friendly businesses. On the other hand, the bank could handle all the legal and financial paperwork as well as federal and state regulations issues and at the same time build its Community Reinvestment Act rating and attract new customers. The framework of this program was created by the E. F. Schumacher Society, and is called SHARE Program (Self-Help Association for Regional Economy). It is a micro loan program which was formed in 1983 in Great Barrington, MA. According to one representative, given the successes of the SHARE program in Massachusetts, members have recently allowed their local bank to handle the loan process entirely, including screening and collateralizing of loans. Unfortunately, the SHARE program in Massachusetts also charges around ten percent interest; thus concerns over what Greco refers to as debt slavery are still an issue with this option. Urban, Jesse with McDougal, Chuck and Daggett, Becky; Cooperative Banking And Credit Alternatives; Flagstaff Tea Party, Vol. 2, Issue 8, August, 2001;­_Aug2001/Cooperative….

[viii]Whyte, p. 67.

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