Building New Detroit

I’ve finally reached the last stop on my monthlong journey. This afternoon I head to the airport for one last trip back home to Sacramento. On the one hand, I can’t wait to be home. On the other, Something very interesting has begun in Detroit, and I would love to stay and learn more about it. Visiting Detroit is essential to anyone who wants to really understand what is happening to industry and cities in the U.S. It is an extreme case, which casts light on what other cities face if they don’t address the continued concentration of wealth in the hands of investors.

I first visited Detroit in 1994, and was blown away by what seemed like a post-apocalyptic scene; the usual signs of urban decay were everywhere, but on a scale and intensity I’d never seen. In addition to the usual boarded-up buildings and vacant lots, there were deeper signs of collapse. Broad boulevards had very little traffic. Many buildings were standing burned but still open months later; some were partially or completely collapsed. On many blocks there were more vacant lots than houses. In one such area an artist had created the Heidelberg Project, a surreal art installation using scavenged objects – and an attraction to tourists from around the world. Most shocking to me, there were some huge abandoned buildings like the Michigan Central terminal, a 16-story high rise that sits on what was once one of the nation’s major transportation hubs.

Detroit is different now. It feels like the rate of collapse has slowed. There is more vacant land (whole blocks now returning to a forested state), and not as many half-collapsed buildings. Michigan Central is still there, despite the city council’s decision last spring to demolish it and bill the owner. So is Heidelberg, despite two city attempts to bulldoze it. The 38-story Book Tower, one of Detroit’s ten tallest buildings, was abandoned this year. There are a few pockets of near-normalcy, like that around Wayne State University. But even there, the streets and sidewalks are a wreck and the library stairs have mostly been blocked off to lessen the expense of snow removal. You have to spend a while here to see the scope of the depopulation and devastation, but a cheap substitute can be found in online maps, with which you can spend a while roaming around, getting a sense for how much vacant land exists, perhaps using this as a starting point.

More and more, Detroit is summed up by a phrase I’ve heard several times here: “blank canvas.”

In most places, we can still believe that the capitalist economy works, that the recession is over and good times will soon return. But in Detroit, it has quite obviously failed. That failure has prompted more and more people to consider new ideas and launch innovative projects. I was honored to speak last night at the Boggs Center, where I met with a group of people who are interested in figuring out what to do with Detroit now that the global economy no longer wants it.

Here’s a a sampling of projects underway in Detroit, some of which had people in attendance.

Hope District is a grassroots attempt to bring back one of Detroit’s struggling neighborhoods (and I use struggling as a compliment here, as it is a sign of life). They seek to “create jobs and housing for everyone.” They are working on revitalizing and cleaning the urban landscape, making pocket parks with scavenged materials and painting murals everywhere. They have also created Club Technology; this facility includes commercial kitchen, meeting space, a computer lab and other amenities.

Urban farming is huge here, with hundreds of community gardens springing up. Most of these are not part of the cash economy, but grow food to give away in neighborhoods where formal economic activity has essentially ceased. Urban Farming has about 60 gardens going in the city, and dozens more from Los Angeles to New York. The Capuchin’s Earthworks Farm has 21 separate plots in a few square blocks, growing food for their soup kitchen. The Detroit Black Community Food Security Network has created a 2-acre farm called D-Town on what was once a city nursery in a public park.

Another project has potentially huge impact seeks to bring groceries back to the city. From what I hear, there are no longer ANY major grocery chains in the city of Detroit, and most neighborhoods have only limited access to food. Dollar stores and convenience stores are primary suppliers to many Detroiters. So along comes a model that I’ve been hoping would develop for a while now – I’m not surprised it started here. The Detroit Community Grocery Store Coalition involves 80 churches, working with the United Food and Commercial Workers, seeking to create community based grocery stores. I’ll write more when I know more, but it seems that they are considering three kinds of membership, for consumers, workers and supporting organizations.

So lets give it up for Detroit. They’ve got big problems, but they’ve got a lot of spirit and energy to tackle those problems. With any luck Detroit will continue to crank out models for how we all can address the serious and growing failures of the global economy. And if we pay attention to what is happening here, we won’t have to wait for economic collapse to start building our own new cities.

Cooperative Islam

I was going to write about the amazing stuff I’ve seen happening in northeastern Ohio over the last few days. However, the unfortunate events at Ft. Hood have me distracted. The perpetrator was apparently an Arab-American who was at least sympathetic to extremist Islam. So whether or not this came out of religious motivation, I’m afraid we’re in for another round of Muslim-bashing.

Whatever Hasan’s motivations, it is important for us to remember that he is one person, and that violently radical Islam is only a very small piece of the picture. In general, Muslims are a pretty peaceful bunch until provoked. And isn’t that true of all of us? Remember, remember, the fifth of November is also Guy Fawkes Day, commemorating a notorious Catholic terrorist.

In any case, Muslims deserve credit for launching an extremely brave and useful dialogue with Christians two years ago, called “A Common Word Between Us and You.” This writing is at a web site which should be familiar to all people who wish to see an end to our current religiously-tinted struggle. Please, please, please take some time to check it out, including the following Christian response and this Jewish response. We can’t afford another round of post-9/11 style fear and hatred, and it is up to peace-loving people to make sure that we don’t get drowned out this time.

I’ll be presenting on interfaith cooperative economics twice this weekend, so it seems like a good time to dust off a paper I wrote last year, which looked at more cooperative expressions of Islam (as well as Christianity and Judaism). Here are some excerpts from a that paper, outlining some of the admirable steps that Muslims have taken toward building a more just and equitable economic order. The links are in the footnotes, but I hope that isn’t too much of a deterrent to further research.

Keep in mind that this research is a year old, and some projects described as launching may well be launched. It might be time for me to give it a little update…

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The Muslim analog to insurance is called takaful, which translates as “guaranteeing each other.” The main difference is that risk is shared in order to avoid the Islamic prohibition on gambling. Many takaful organizations are members of the International Cooperative and Mutual Insurance Federation (ICMIF), whose website has a separate section addressing the special subject of takaful. More than two-dozen ICMIF Takaful members can be found in Africa, the Middle East, South Asia, North America and the Caribbean. In some cases, general insurance cooperatives have begun offering takaful, as is the case with The Co-operators, located in Canada.[1]

In the interest of building further bridges to Muslims, ICMIF lists more than 100 non-member providers on its takaful directory.[2] Some of these provide a glimpse into the theological reasoning behind the model.

Takaful International of Bahrain provides a particularly useful overview of the cooperative nature of takaful. It points out that in order to be halal (lawful) an insurance arrangement must avoid charging or paying interest, gambling or speculation, and unclear conditions for the insured. The ultimate goal is to organize in a “context of co-operation and solidarity for the good of society.”[3]

Takaful is also applied to foster economic development. Bandeh Aceh, Indonesia, is home to the Mahardika cooperative, which offers “microtakaful” policies for the very poor residents of that province, who are still recovering from the 2004 tsunami. Mahardika has now started offering savings and loan services, and in doing so has grown tenfold by providing financing with an average amount of $500.[4]

The Islamic rule against riba (usury, or interest) supports cooperative financial arrangements. Recent years have seen an explosion of “shariah-compliant” finance, which has been the cause of significant controversy and those who declare these practices halal are sometimes derided as “rent-a-sheikhs.” A 2007 Wall Street Journal article on Islamic finance described the many ways that hedge funds and other investment vehicles are being repackaged as halal, even though “Islam prohibits all kinds of speculative behavior that is embedded in Wall Street’s DNA.”[5]

An analysis of whether the various “shariah-compliant” banking products are halal or haram (unlawful) is beyond the scope of this paper, but suffice to say that there are many organizations which seek to follow shariah by means of cooperative organization. Islamic finance cooperatives may perhaps limit these ethical grey areas by merging borrowers and lenders into the single class of members.

Credit unions are making some inroads into even the most conservative Muslim society. The World Council of Credit Unions has explored the role that credit unions might play in building a financial industry in Afghanistan, where it has already assisted in the creation of two such cooperatives. Their research paper on the subject concluded that credit unions are appropriate to the nation’s culture, but inasmuch as they (and formal banking, in general) are somewhat exotic and brought by outsiders, it will be important and challenging to build a local sense of ownership.[6]

Islamic cooperation also occurs in pluralistic nations in which Muslims are a minority. For example the Muslim Community Cooperative (Australia), which has grown to nearly 7000 members and A$120 million (€70 million) in mortgages. It describes its core purpose is “To provide goods and services to members in accordance to the Islamic law of life and the principles of co-operation.”[7]

The Takaaful T&T Friendly Society is located in Trinidad and Tobago, and provides several services to strengthen that small nation’s small Muslim community. These include a funeral benefits program and a hajj (pilgrimage) fund and a cooperative for waqf (a charitable trust of property).[8]

Several Islamic cooperatives exist or are forming in the United States. Pioneer Muslim Credit Union was founded in 1981 and serves nearly 5000 members in the Houston area.[9] Another credit union is being developed in Minneapolis by the African Chamber of Commerce, and already has 1500 prospective members.[10]

Islam does not seem to have the same affinity for communalism that is sometimes found in the Jewish kibbutz or monastic-inspired Christian communities. Indeed, the Qur’an teaches against withdrawing into monastic life. (57:16)

Even so, there are cooperative living arrangements in some Muslim communities. These may be limited to North America, and might be inspired more by cultural preferences than Islamic values. Nevertheless, they provide a glimpse at what a Muslim approach to cooperative housing might entail…

Canada has several housing cooperatives, although these do not take the form of resident communities, which tend to bring members together in a single property or cluster of properties. Instead, it is a mutual financing arrangement in which members select a property that suits them, which is then purchased by the cooperative once the member has made a sufficient initial investment. The member continues to buy shares over a number of years until he or she has acquired enough shares to match the value of the home. At that time, the member and the cooperative make an exchange.

Two of these are sister cooperatives. Islamic Cooperative Housing Corportation (ICHC) has purchased more than 500 houses for members, and transferred ownership of nearly 200 of these to its members. This cooperative was legally limited in its size, so a second co-op was formed along similar lines, called Ansar Co-operative Housing Corporation (ACHC). This co-op has already purchased more than 100 homes and transferred at least 14 of these to members.[12]

Qurtuba Cooperative is located in Quebec, and was started as part of a financial initiative launched in 1991. Its general processes are rather similar to those of ICHC and ACHC. Qurtuba, like the others, has investor memberships, which provide a dividend for those who do not gain the benefit of housing from the cooperative.[13]

Given the strong Islamic values that support cooperative economics, it may certainly be the case that the examples discussed here are only the tip of the iceberg. The limited statistics available support this supposition.

In any event, Takaful is spreading rapidly worldwide, and is projected to surpass $7 billion in premiums by 2015.[14] Islamic banking is reportedly managing approximately $200 billion worldwide[15] but it is not clear to what extent this is being done along mutual lines. In any case, Islamic principles have inspired a widespread degree of cooperative organizing, and this is certainly an area for further research and discussion.

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[1] Retrieved August 26, 2008 from http://www.icmif.org/services/takaful/member-list.asp

 

[2] Retrieved August 26, 2008 from http://www.icmif.org/services/takaful/directory-takaful.asp?type=Full

[3] Retrieved August 26, 2008 from http://www.takafulweb.com/protislam.html

[4] Retrieved August 26, 2008 from www.microfinancegateway.org/files/42106_file_ICMIF_Prosper1.pdf.

[5] Retrieved August 26, 2008 from http://online.wsj.com/article/SB118661926443492441.html?mod=googlenews_wsj

[6] Retrieved August 28, 2008 from http://www.woccu.org/functions/view_document.php?id=AfghanistanResearchMonograph_jan08, (p. 19).

[7] Retrieved August 28, 2008 from http://www.mcca.com.au/Corp_Profile/CorporateProfile2006.pdf, (p. 2 and second cover page).

[8] Retrieved September 1, 2008 from http://www.wevolutions.com/takaaful/presentation.htm.

[9] Retrieved August 28, 2008 from http://www.pmcuonline.org/about.aspx

[10] Retrieved August 28, 2008 from http://findarticles.com/p/articles/mi_qa3799/is_20080515/ai_n25480837

[12] Retrieved August 28, 2008 from http://www.isnacanada.com/ichc.htm

[13] Retrieved August 28, 2008 from http://www.qurtuba.ca/en/membership.html

[14] Retrieved August 28, 2008 from http://www.salaam.co.uk/themeofthemonth/november02_index.php?l=8

[15] Retrieved August 28, 2008 from http://www.islamic-banking.com/ibanking/statusib.php

The latest from United Steelworkers

On Friday, my friend/colleague Lisa Stolarski and I sat down with Rob Witherell, who is coordinating the United Steelworkers’ freshly-announced plan to create worker cooperatives in North America. This will be modeled after, and in partnership with, the Mondragon cooperatives of the Basque Country (in Spain).

Here are some excerpts from our chat:

Q: How did this agreement unfold?  Who initiated it?  How did it develop?

Well, we had a lot of interest in worker ownership in the past.  We’ve done a lot of work with ESOPs.   We thought of doing some type of coops, both here and in Canada.  Our ESOP experience soured us a little bit because essentially it was short-lived.  By the time we were offered the opportunity to buy the shares the company was so financially strapped that it had a very small chance of success, and those that did succeed were usually bought out by some other investor, and even earning those shares didn’t actually translate to any accountability to the workers or worker input.  It really didn’t change the nature of work in a lot of cases…

We saved Algoma Steel up in Ontario through an ESOP which was good initially but didn’t work out as we’d hoped although we did save the plant by doing so.  In the end by doing, so yeah there has been a lot of interest going over the last couple of decades and Lynn Williams, one of our international vice presidents, has been very interested and active working on this in Canada.  I think they had a little more interested with the coop-stuff in Canada, and being a truly international union, we have lots of members in Canada so it opens us up to another experience.

So Mondragon specifically was somewhat happenstance as these things work out because of where they are located in the Basque region they are near where another company called Gamesa are located in that area as well, in those provinces, in the same area.  One of the people we had connected with through Gamesa also happens to be the Mondragon North American delegate… So that’s how the connection was initially made, just having conversations over the past year about the things that we are interested in doing, and what was important to us – what was important to them.  So we thought that here’s somebody we should try to figure out ……. And they have interest in a North American presence and we have interest in developing a union worker-owner coop model that works, because we are in situations where that’s going to be more beneficial in the long run for our existing members, or a way to build our membership – either way.

Q: When did it really get rolling?  When did the serious negotiations for the statement that came out start?

It’s hard to say.  It has been a series of conversations and e-mails and some drafts of what we wanted to do.  Ultimately our agreement was pretty basic and broad.  But we figured it was better to start with something that was broad and fairly simple and figure out where to go from there, rather than try to figure out all the details at first and figure out how to make that work.  I think one of the key pieces in making this happen is to build the alliances and networks and making these connections.  So I think Mondragon and the Steelworkers Union both acknowledge that if we are going to make this work, we probably need help doing that…

It’s one thing for us to have some common goals and say hey, let’s work together, and then it’s another thing to actually get it done.  That’s really the hard stuff for us, so we’ve got to figure our situation and target and figure out how to make it work…

Now, some of that, I think the figures I saw said there are about 14,000 people outside of Spain that work for Mondragon, but only about 10% are also owners.  That concerns them because they want to grow more of the ownership piece. They have gone in and taken over a place and set up without finding out what the culture and ideas are from the beginning, they have a hard time getting people to buy into being an owner.  Because “I’m a worker, I show up, I get paid, and that’s all I have to do.”  So, that’s really important to them, to make that work.  They understand that’s not something you can carbon copy  – it’s going to have to be something a little bit different – you have to make some adjustments, but you want to keep the spirit of the workers having a vested interest, so that’s why, for them, it made sense to work with us because we have a lot of those relationships and can help steer them in the direction that we can really help implement that model.  Our members are not making minimum wage and going from one job to another every six months.  These are folks that are making, hopefully, a living wage at least and are more vested in what they are doing than the population in general.  And so, that’s important to them.  They are looking for somebody that is really going to be committed to the work that they are doing and that plans on staying for the rest of their working lives, essentially.  They create their own insurance for lifetime jobs…

Q: Do you have any projects lined up?

Not at the moment.  There are a lot of ideas…

It’s very preliminary and going to take a lot of work to figure out which ideas are going to be the most suited and also because their estimate is that it takes about 8 months, in their experience, from when they start talking to people to changing over to a coop, to when it actually happens…

Q: Do you have any sort of plan for accepting Request for Proposals?

I think that we are partly saying this is what we are looking to do, so it  can serve that purpose, and so we have gotten a lot of interest from people  and are still trying to make as many of those connections as we can to see what possibilities are.

Q: Do you have any financing strategy that you’ve been talking about for these kinds of conversions?

Well, this is going to be the tricky part.  Going back to the family business conversion exmple that they have given us.  People become members when they put in something like 14,000 euros, so normally that’s just a piece of the overall pie, but a substantial piece from the perspective of the workers, but you still have to figure out the rest of it.  Normally, they may have an interested coop interested in investing.  They may have farming an investment fund outside the bank.  That’s kind of how they piece it together.  For us, we have friends in finance, so maybe there is a way to structure some of that, while still having the worker-owner goal.  There is the National Cooperative Bank in D.C. that is interested in getting behind some of this…

Q: Is the Mondragon Caja Laboral  bank is going to invest in this?

Rob:  You know, I don’t know whether it would be the bank or one of the coops – I think there’s a willingness to maybe participate a little bit, but they have been pretty firm that they don’t want to be a venture partner…  It goes back to (a) It’s a matter of having the money to do that and (b) they don’t want to essentially just be a business owner and employ workers any more than they already are.  There may be some role for them to play, but I think it would be fairly small.

Q:  Just to clarify, they are not planning to work with Steelworkers to create coops to be subsidiaries of their coops.  They want to create a whole Mondragon-type system in America?

Right – they are looking for, willing to help us implement their model, a worker ownership model that is affiliated with them…

The key part for us is whatever we do first, we want it to be successful even if it’s 5 people.  You want to be sure that it works right and is successful.  Then you figure out how to do the next one…

Q: Are you aware of other unions that are interested in this?  Have any contacted you since the announcement and said that they want to get involved?

Generally the answer is no.  I think our union is a little bit different – we are more willing to try stuff that is a little outside our experience.  I don’t know that anything else is really invested in this yet…

Q: Do you have plans for educating your members and the public?

Generally the piece is to pull all of our allies and friends together and figure out where the common ground is, where the common ideas are that we can work together and build from that.  So that’s really the extent of the education piece because, again, depending on the situation, it could be way different from one piece to another.  A bigger piece is going to be a lot more complicated to create – a couple thousand member owners all at once, right? So it really depends on what are the opportunities that come up and how we deal with those.  The analogy that we were drawing on this week is the start-up of the blue-green alliance.  Very few people in the mainstream media– nobody really got it at first, right?  And so, as it took formation and there was a lot of interest scattered about, it was a way to kind of channel those folks together, and it developed some momentum.  Now there are about 7 or 8 million people who are affiliated with it…

Thanks to Susan McLeod for speedy help with transcription of this conversation. (Hi mom!)

Pittsburgh pinball

Silly me. I open my big mouth about my unscheduled relaxing week in Pittsburgh, and sure enough…never a dull moment.

It turns out that the housing situation for the second half of my stay in Cincinnati was only the start of something bigger. My matchmaker introduced me to someone, who introduced me to someone else, who linked me to a whole cascade of people, and my schedule has been relentlessly filling up.

I’ve been repeatedly amazed by the network that exists in this region. As I mentioned a couple of posts back, there is a lot of faith-based work happening to build everything from local food production to communal living. Rather than focus on the exact links that connected me to all these projects, I’ll just list the connections I’ve made in the last few days (not counting a mess of referrals to cities I have yet to visit).

First, the Union Project is an old church that is finding new life as a community center. The old daycare area is now offices for nonprofits, and the basement is filled with a pottery studio (being rearranged to make yet another classroom) and a stained-glass restoration workshop. There was a cafe in the old foyer, but it was apparently not immune to the economic downturn.

The Open Door church is exploring issues of sharing, and have launched an urban farming project called the Garfield Community Farm. I haven’t seen this urban farm yet, but I plan to attend their harvest party Saturday if it isn’t raining too hard. Incidentally, Open Door worships at the Union Project’s great hall (which I’m told is not called a sanctuary).

There are at least two loose intentional communities in Pittsburgh. One of these is a cluster of three big houses in a row, right next door to one of the many urban farming projects launched by Grow Pittsburgh. These houses are affiliated with a project called Formation House, which is fixing up a big old mansion into a training center so people can actually learn about what works in intentional communities before they just move in and start randomly trying stuff. What a concept.

Another intriguing project is the Sprout Fund. Pittsburgh is doing relatively well, and this is often credited to its decision to shift from a manufacturing economy to “meds & eds.” That is, pharmaceuticals and education. One problem, however, is that college graduates often leave town due to a lack of job opportunities. The Sprout Fund seeks to retain this talent by helping to fund start-ups.

And of course, I’m just scratching the surface. There are many other great things going on just outside of the faith-based networks in which I’ve been swirling (and other faith-based projects that I haven’t mentioned. There is simply a lot going on in this city. For examples, consider Bike Pittsburgh (especially impressive since this city has lots of hills and often-interesting weather), Friends of the Pittsburgh Urban Forest, and Grow Pittsburgh. The latter two have adjacent offices next to the Sprout Fund, and right across from the Quiet Storm, which is one of the coolest vegetarian restaurants ever. Quite a groovy little cluster there.

But it hasn’t been all Pittsburgh all the time. In the course of my wild chain of referrals, I was strongly encouraged to pay a visit to a Bruderhof community about an hour south of town (in theory – we became profoundly lost trying to escape the southern suburbs, where I must admit they could use an expressway).

Bruderhofs – now calling themselves Church Communities International - are a pacifist anabaptist movement (somewhat related to Amish and Mennonites, who do not practice infant baptism). They practice radical sharing of property. That is, they are about as communal a group as you are likely to find anywhere. They live in large buildings with apartments for several families. They have their own farm, school and medical clinic. They dress modestly (I felt utterly out of place in my bright green jacket).

They also limit their community sizes. Just across the road was a younger sister community, also with about 250 members. Each operates by consensus, with elected leaders making some decisions. We didn’t have time to delve too deeply into the exact governance, and I didn’t feel like I should pry too much. When I initially called, I mentioned that I am “studying” such things, and was politely told that they’re not big on being studied but I would be welcome to come experience things a bit. I appreciated that distinction.

And they do know what to do with gawkers. They have a large and modern workshop (perhaps 50,000 sf) where we were both briefly put to work making Community Playthings. I was assigned to final assembly (attaching a really clever system of retractable wheels) and boxing of shelf units, and my friend helped with inspecting and packaging chairs.

Somewhere out there are a handful of kids’ shelves with my fingerprints on them. I love that.

Mondragon and the Steelworkers

Today was my first full day in Pittsburgh. By coincidence, it was also the day that Mondragon Internacional and the United Steelworkers announced their intention to work together to build worker ownership in North America. This is extremely interesting news, and probably also extremely big news. I haven’t had time to digest it yet, but I’m planning to take advantage of my location and go downtown for a little visit to the USW HQ. Meanwhile, here is the press release, which says it about as well as I could say it myself…

Steelworkers Form Collaboration with MONDRAGON, the World’s Largest Worker-Owned Cooperative

Pittsburgh (Oct. 27, 2009) – The United Steelworkers (USW) and MONDRAGON Internacional, S.A. today announced a framework agreement for collaboration in establishing MONDRAGON cooperatives in the manufacturing sector within the United States and Canada.  The USW and MONDRAGON will work to establish manufacturing cooperatives that adapt collective bargaining principles to the MONDRAGON worker ownership model of “one worker, one vote.”

“We see today’s agreement as a historic first step towards making union co-ops a viable business model that can create good jobs, empower workers, and support communities in the United States and Canada,” said USW International President Leo W. Gerard.  “Too often we have seen Wall Street hollow out companies by draining their cash and assets and hollowing out communities by shedding jobs and shuttering plants.  We need a new business model that invests in workers and invests in communities.”

Josu Ugarte, President of MONDGRAGON Internacional added: “What we are announcing today represents a historic first – combining the world’s largest industrial worker cooperative with one of the world’s most progressive and forward-thinking manufacturing unions to work together so that our combined know-how and complimentary visions can transform manufacturing practices in North America.”

Highlighting the differences between Employee Stock Ownership Plans (ESOPs) and union co-ops, Gerard said, “We have lots of experience with ESOPs, but have found that it doesn’t take long for the Wall Street types to push workers aside and take back control.  We see Mondragon’s cooperative model with ‘one worker, one vote’ ownership as a means to re-empower workers and make business accountable to Main Street instead of Wall Street.”

Both the USW and MONDRAGON emphasized the shared values that will drive this collaboration.  Mr. Ugarte commented, “We feel inspired to take this step based on our common set of values with the Steelworkers who have proved time and again that the future belongs to those who connect vision and values to people and put all three first. We are excited about working with Mondragon because of our shared values, that work should empower workers and sustain families and communities,” Gerard added.

In the coming months, the USW and MONDRAGON will seek opportunities to implement this union co-op hybrid approach by sharing the common values put forward by the USW and MONDGRAGON and by operating in similar manufacturing segments in which both the USW and MONDRAGON already participate.

The full text of the Agreement is available at http://assets.usw.org/Releases/agree_usw_mondragon.pdf

There was apparently a conference call which provided more information, and I’m still trying to track down a transcript or recording for more information. Meanwhile, here is some intrepid liveblogging from my friend and fellow St. Mary’s MMCCU student (go Huskies!) John McNamara.

This is such a huge story that I’m not going to even try to digest it today. But it certainly casts some new light on my efforts to see what Mondragon and the Rust Belt has to teach Sacramento. Stay tuned…

Back from the dead

Remember me? The guy who set off on this amazing trip to visit the legendary co-ops of the Basque Country and then disappeared off the face of the earth? Yeah. That’s the one.

I promise that I will get back to the lessons I learned from the trip, but first I feel compelled to give an update about why I dropped out of contact, and about the conference I’ve just attended.

I must confess that I occasionally fantasized about “losing” my passport and applying for a job stocking shelves at Eroski, but I am actually back in the United States. Cincinnati, to be exact. Norwood, to be really exact (more on that later). It has been a really mind-blowing week. I’ve gone from misery to bliss, with lots of stops along the way.

By the end of the Mondragon trip, we were all exhausted. When our final presenter sensed how whupped we were, he came out and asked what we wanted to do. I asked him to maybe just show us pictures of kittens for a while. No such luck; we got another PowerPoint.

After Mondragon, I still had three weeks of travel, starting with the Christian Community Development Association conference. It was utterly unrestful, and in retrospect I should have given myself more opportunity for rest and reflection.

In any case, it was a heckuva conference. I attended workshops with and about a whole host of inspiring projects.

Northern California Urban Development opened the Community Trust Credit Union in East Palo Alto, Calif. (an island of poverty in one of the nation’s most wealthy areas).

Felder School Farm is an urban farming project in Little Rock, Ark. The presentation ranged from community gardens to local marketing of produce through LocallyGrown.net and the Oklahoma Food Co-op.

The Georgia Avenue Food Co-op of Atlanta is providing a mutual-aid-based alternative to the impersonal lines at food pantries, providing transformative opportunities for personal growth through shared work. They now have 5 separate cooperatives of up to 50 families each.

Rebuilding the Wall, based in the radical hotbed of Indianapolis, gave a presentation on non-hierarchical organizing, and their work creating homeownership opportunities through work exchange.

At each of these workshops, there were many other interested people with related projects. In most cases, I was only able to connect with a fraction of the people who caught my attention. I also missed several workshops that specifically connected to cooperatives, due to scheduling conflicts. All in all, it confirmed my suspicion that cooperative energy is building in the evangelical movement. There is too much going on for me to catalog, let alone fully understand.

Everything was huge, as there were well over 2000 attendees. The conference was very productive and also very very hard. I spent most of the time spiraling into a combination spiritual/professional crisis that utterly kicked my butt.

I met great people and made some very important connections. Unfortunately, the size meant that there was a pretty good chance that I would never see them again over the course of the conference. That was a bit frustrating.

The worst thing was the building; don’t ever have an event at the Duke Energy Center. It is built like an airport without the planes (or hope of ever leaving), or like a mall without anyplace to shop (although there was a food court with some pretty good soul food). It is built on a completely inhuman scale. Even the basic meeting rooms have 20-foot ceilings. On the link above they have a little slide show meant to be flattering; but notice the size of the exit doors at the bottom of the exterior shot and the teeny little specks at the far end of the 40,000 s.f. “ballroom.” It is the most soul-crushing space in which I have ever spent time – let alone four days. I know that there aren’t many other places to gather 2000+ people, but I think that is just evidence that such huge gatherings are problematic.

After a few days of growing discomfort with my surroundings, my situation was aggravated by a health problem at the home of my planned host for the second part of the visit. So I had to start looking for a hotel room, which was not going to help my need for positive space in which to recuperate. I think that was what finally spun me into my little internal crisis. It got pretty dark for a while there.

Then, in the middle of a technical-difficulty-plagued book signing event, I was rescued.

A friend of a friend of my first host showed up and said I could stay at 1801 Mills (I’m now on the top floor, in the room with the portholes). 1801 is part of a loose intentional community surrounding the old St. Elizabeth’s Church. The church building was purchased by a network of house churches called Vineyard Central, which has a fascinating organizational structure that I want to understand better. 1801 is also home to thousands of books, some great art, and a veritable espresso museum. The community also has plans to reopen a cafe as a sort of work-training cooperative.

It is a blissfully comfortable space, and built totally on a human scale. While I was getting my initial tour I just about cried with relief. It’s been a powerful lesson in how important physical space and structure can be.

So now I’m all recuperated from my overwhelming conference adventure and dark night of the soul (I once again know what I want to be when I grow up!), and I’m ready for tonight’s panel with Interfaith Business Builders, Cooperative Janitorial Services, and Equal Exchange.

Then it’s off to Pittsburgh for me, and a week of nothing scheduled. That will give me plenty of time to write more about my travels in the Basque Country and the Rust Belt.

Mondragon 4: Outside the bubble

In the valleys surrounding Mondragon/Arrasate, roughly 60% of jobs are in the cooperative sector. These co-ops have a rule that top management can be paid no more than six times the starting wage. There are two exceptions: the CEO of the Caja Laboral (co-op bank) can make eight times base, and the overall CEO can make nine times base, for the privilege of leading something that is at least as complicated as General Motors. It sounds impossible to those of us used to multimillion dollar “bonuses” but it works.

This has resulted in a society that is visibly different from anything I’ve experienced before. There are no large cars, very few large houses on hillsides, no beggars, few visibly disheveled people or run-down housing, and very little in the way of conspicuous displays of wealth. On the other hand, there is graffiti everywhere – but mostly of a political nature.

I’m still waiting for data on exactly how the co-ops effect distribution of wealth, but my impression is that something significant is going on. When I do get solid information, you can be sure I’ll post it here.

Meanwhile, this weekend, we took a couple of trips to the coast. These were regions where the cooperatives are much less prevalent. Sure enough, things were visibly different. I’m going to note these as part of my touristy account of a very nice and relatively relaxed and un-educational weekend.

Saturday, we went to Gernika and Bermeo. Gernika was the location in which Hitler tested out carpet-bombing to help his buddy Franco during the Spanish Civil War. It is also the ancient seat of Basque government and the current site of the assembly of Bizkaia (one of three provinces that make up the Basque Autonomous Region).

We visited the assembly building to see the Tree of Gernika (an important national symbol around which important ceremonies still take place)

where it all happens

Then we saw a tile reproduction of Picasso’s famous painting before heading to the Peace Museum. It was a short visit, but it became clear that there was more of a wealth disparity here. On the one hand were some large walled estates in the center of town; on the other were some run down apartments on the edges and several half-built developments. Like California, Spain had a real estate boom that is now going horribly wrong. The Basque Country is not immune from this mess -not even in Mondragon – and it seems that the damage is worst in areas with high tourist value. No surprise there.

Bermeo is a fabulously scenic port town.

ridiculous, isn't it?

Not surprisingly, lots of large construction projects are underway there and on the rugged coastline of the area. I couldn’t tell if they were stalled, but they seemed alarmingly common and I would be surprised if they are all going well. One huge project had a lone holdout against urban renewal.

there goes the neighborhood, literally

The town also had a very curious little slum area. it had an amazing view but still felt very sketchy, with lots of trash on the ground. I took one picture and left.

at least the view is good

There was a huge festival underway, with many hundreds of people partying in medieval garb. That made it hard to judge what is usually going on, but I saw quite a few African immigrants selling pirated DVDs or a mix of purses and umbrellas.

Sunday, we visited Donostia/San Sebastien. This is a much larger city, close to the French border. It is a major tourist attraction, and for good reason. It is a stunning port, and very cosmopolitan. For the first time since Barcelona, I had a strong sense of being in integrated Europe, rather than in a specific and relatively homogenous nation.

We also saw significant signs of wealth disparity. The buildings along the harbor were much fancier than those inland. This is hot real estate, and has been for centuries.

new and old wealth

There were people with fancy clothes and jewelry. There was a beggar making the rounds (although nothing like Barcleona, where I encountered a gauntlet leaving church). There were numerous tourist stores. There were boutique stores from the US, as well as a McDonald’s.

At the same time, I don’t want to sound overly critical. Donostia is a beautiful city, and had a really incredible number of people out strolling and visiting. I spent a couple of hours sitting in a plaza cafe, watching dozens of kids play, a huge herd of teenagers gathering and then leave as a group, and everyone interacting.

Sunday afternoon in the new plaza

I should also note that during the entire weekend, including drives through a half-dozen lovely ports, I did not see a single mega-yacht. I didn’t even see anything over 30 feet, except for fishing boats that were maybe twice that. The coast has some wealth, but nothing extreme.

It was good to get out of the valley, and get a broader perspective on what is really going on in the Basque Country. Of course this is not a scientific survey of any sort, and I look forward to supplementing this with some data. But impressions do count for something.

Mondragon 3: Uncle!

That fabulous remote hotel wrecked my email access, so I have been behind on everything. I had hoped to provide an account of each day’s adventures in Co-op Land, but for now, it appears that I’ll just have to offer a brief feeble summary and some photos to make up for the lack of detail. I’ll be coming back to the detail in future posts, especially as I start visiting the U.S. Rust Belt next week.

We’ve now had four days of nonstop workshops and tours (punctuated by long lunches – with wine). I’ve got about 14 double-sided pages of notes, two annual reports and a wad of other miscellaneous handouts. We’ve received an absolutely stunning amount of information, and my list of questions keeps growing. It seems like everyone in the group is exhausted, and I’m not sure how or why I’m still up at 1am.

The Mondragon cooperatives are an amazingly complex system, and it is extraordinarily difficult to get even a general grasp of what is going on here. Each presenter has had a different perspective, and some of them seem to conflict at times. But they somehow add up to a cohesive whole. This system of democratic enterprises is a microcosm of Basque society, which is in turn a microcosm of Spain and the world. In any group of high complexity, different people have different perspectives.

I’ve been impressed by these perspectives. We’ve heard from directors and managers of their top institutions, of course. But we’ve heard from more than just them.

On Wednesday, we got a couple of hours with a blue collar worker in his mid-30s, who grew up with parents who worked for the co-ops. Cooperatives to him are like water to a fish. He was only somewhat aware of the principles, and although he didn’t see himself moving into leadership or elected positions, he also didn’t see any obstacles to that. At the same time, someone asked if he would work for a capitalist firm for 5000 Euros more, and he was visibly tempted, even with MCC’s head of education sitting right there.

Yesterday, we visited Alecop, a student-run cooperative that provides valuable work experience to students.

Alecop's building

Alecoop also has provided financial assistance, but that function is less important now; there is relatively little poverty in this valley, where 60% of jobs are with the cooperatives, and many more are with other types of employee-owned firms. This is a genuine manufacturing firm, which provides key components to other cooperatives. They also design and build some of their own complex machines.

way beyond woodshop

Later that day, we got a visit to Mondragon Assembly, which is essentially a factory factory. A young sales manager gave us an account of the advanced production they are doing, then took us on a tour of their production floor. About a dozen workers were about six months from finishing a 2.5 million Euro assembly line that will crank out electronic interruptors (little plastic and metal gizmos about one inch cubed) by the million every 1.2 seconds. It was about 50 feet long and it took me a long time to even figure out what they were doing. It felt like the start of the movie 2001.

They are increasingly focused on solar cell production. That doesn’t mean they make solar cells themselves – rather, they make machines that make solar cells, and you can buy your own system for 1.5 to 10 million Euros. One of the best part of the whole place is that nobody has a private office. Even the CEO has a desk in one of two large rooms in which they must do some pretty amazing computer work. They were predictably wary about people taking photos (especially since someone might post them on a blog or something), so you’ll just have to imagine it. They have some pictures on their web site, though

This morning, we visited Mondragon University (also a cooperative) and then the Saiolan Incubation Centre that is closely tied to it. There, we got a presentation from a business coach who was filling at the last minute. Despite being a little new and insecure about her English (which was fine, and certainly better than our Basque), she stepped up and gave an excellent account of this fascinating place. They have an extremely elaborate system in which they work with one or more entrepreneurs to develop a business model and product prototype, then guide them through the startup process over two years. They do this for all sorts of businesses, and not just cooperatives.

That’s only about half of our presentations. I’ll try to cover the others over the rest of my visit, but we’ve got a pretty merciless schedule, so I’m not making any promises.

Now we’re in the city of Mondragon, now more commonly known by its Basque name, Arrasate. It is good to finally walk the streets here, and it is a strange place. There are many people crammed into this valley, and a lot of land taken up by large factories. So the density is fairly high. It has a strange quality to it, unlike anywhere else I’ve ever been. The architecture is unusual, sometimes reminding me a little of Eastern Europe (which I’ve never visited. There are slogans painted on many walls. Nothing is very fancy, but nothing is very decrepit, either. I look forward to exploring this place where the Mondragon Experience began.

view from MCC HQ

looking up at the mountain, Udalatx

Mondragon 2: Getting down to business

On the first day of our formal education, we went right to the middle of things…in more ways than one.

I’ve known that this trip is going to reveal a system that is more complex and less perfect than the myth of Mondragon. I know that they are doing things that I don’t agree with, and am sure that I’ll learn about more. But I’m impressed by how frank they’ve been so far. Our first day included two presentations that plunged deeply into these controversies, and raised difficult issues about how a cooperative economy can be developed. Therefore, this post might not be the best sales pitch for MCC other than praise for their admirable transparency and honesty.

We started at the headquarters of the Mondragon Cooperative Corporation (MCC). It is clearly a corporate campus, with nearly a dozen large buildings housing the major central institutions of the cooperative system: the bank (Caja Laboral), social services, research and development, the polytechnic school campus, and a student cooperative.  It overlooks part of the city of 22,000, which is located in the middle of a mountain range and frankly not a great place to put a bunch of factories.

After a round of introductions, our host Mikel Lezamiz brought us into a small theater where we watched a 15 minute movie. It was slick and a little bit too loud, with pulsating background music and a soothing accented narrator telling the history and successes of the system. It felt like a PR piece for GE Capital, but it was all about worker-owned and democratic cooperatives. It was an overwhelming blur.

MCC has built and designed bridges and high-rises all over the world, made most types of car parts and the machines for making the rest (although they’ve apparently been smart enough to avoid making cars themselves), washers and driers, bicycles, buses, technical assistance to other corporations. The video went on and on and on, outlining the products offered and tallying up the billions of Euros generated by each division. If nothing else, MCC is a tremendously successful business, creating 100,000 jobs in a formerly depressed region.

MCC is made up of roughly 150 separate cooperatives, divided into four main areas: industry, finance, retail, and knowledge. Industry is further divided into groups around consumer goods, capital goods, business services, construction and so on. They do just about everything, really.

It is a very complex system, and I want to acknowledge that I’ve been studying this for a while and I might skip important background information. I’ll try to explain things, but I encourage readers to post questions if something isn’t clear. And for a general background, please take a look at this publication.

Now, about those controversies…

To address competition in the globalizing economy, MCC has resorted to opening subsidiaries throughout the world, effectively becoming a multinational corporation with an ethnocentric cooperative core. After the movie, we were joined by the director of their international operations for the Americas, who was fairly candid about this controversial element. The international firms are not cooperatives, although MCC is very scrupulous with these firms and would cut off relations if they were found to be abusing their workers.

They have roughly 14,000 international employees; this is a sizable portion of the overall workforce, and a major source of cash flow that provides essential support to the system’s cooperative core. The main controversy is that MCC does not seem to have much interest in converting these firms into cooperatives.

On the other hand, I was surprised to learn that MCC has experimented with elements of cooperatives at a firm in Mexico and the early results have been encouraging. However, each subsidiary is linked to a single cooperative within MCC, so it is far from certain that successes in one subsidiary will be copied throughout the system.

Later that day, we visited the headquarters of Eroski – Basque for “group buying” – a retail behemoth with nationwide distribution (and beyond!) and a 13-14 percent national market share in grocery and household items.  This is MCC’s largest, most complex, and fastest-growing cooperative; last year it spent 1.3 billion Euros to buy a major competitor. This added 15,000 employees in one fell swoop, and many of them are becoming MCC owners as a result. It reminds me of a python that ate a zebra.

Eroski is internally complex even from a simple operations standpoint. It operates everything from tiny corner stores up to massive hypermarkets, as well as gas stations, travel agencies, and stores selling perfume or sporting goods. They now have roughly 2400 separate locations, employing 42,000 people. Of these workers, roughly 1/3 are owners, with a large minority of that group located outside the Basque Country. In many cases, Eroski builds a shopping center when it wants a new store (presumably employing other cooperatives for the construction) and then rents out the other spaces. It is simply enormous.

Eroski is also dabbling in consumer ownership, offering memberships for the strange price of 1.20 Euros. These consumer members can elect their peers to half of the seats on Eroski’s governing council (equivalent to a board of directors), and can give input through other channels. Even so, I found Eroski not to be a particularly strong or impressive form of consumer ownership.

Afterward, we made a quick stop to shop and see Eroski for ourselves. There were dozens of checkstands, and we weren’t even in one of their biggest stores (which have up to 60 lanes). As much as I hate to make this comparison, Eroski is a sort of cooperative Spanish Walmart. I’m not comparing their overall business models, and Eroski’s treatment of workers is the polar opposite of Walmart (whose employees’ pay is so low they sometimes qualify for welfare). But from the retail floor, it looked like a giant discount store.

When I visited consumer co-ops in Italy last year, I was amazed by how they could provide organic fair trade products for prices that competed with conventional products. At Eroski, they have toothpaste for 0.99 Euros and deodorant for 0.95; but these did not seem to be of high quality and weren’t produced ethically or sustainably. It seems that Eroski’s main focus for its house brand is price.

All the same, I think it is better to have Eroski than not. They are capturing a large market share and providing a valuable outlet for cooperatively made goods, and giving consumers some amazing prices. And if there is going to be a giant and growing retailer, it might as well be part of a larger cooperative system. The same goes for their international operations. It would be better if they converted those into co-ops, but at least for now those workers have a scrupulous parent corporation owned by members of a historically oppressed minority.

Of course I would prefer that they make all of their stores cooperatives, and extend the opportunity of membership to all employees. And certainly I would rather that they focus more on quality and sustainability.

I’m willing to cut them a break, but I’m not willing to leave it at that. MCC is a work in progress with serious shortcomings. It is a serious attempt to apply idealistic principles in the real world, and it is doing a pretty good job of that. But the next time something like Mondragon is created, its members should learn from MCC and create an even better expression of cooperative values and principles. That’s how we can build a new future.

Mondragon 1: Arrival in the Basque Country

NOTE: This was written two days ago. I’ve had internet access issues, so it’s taken a while to post. Hopefully I’ll get some additional writing from the past two days up very soon. Please stand by…

I’m already overwhelmed.

I didn’t sleep much on my flights, An enthusiastic young kid sitting next to me who kicked and elbowed me several hundred times, but made up for it by covering my lap with part of his blanket. I had an eight hour layover in Barcelona, so I took the train into town to check out this amazing city. I attended a Spanish mass, dipped my feet in the Mediterranean, boggled at Gaudi’s La Sagrada Familia and other architecture, and saw my first piece of co-op litter.

 

the first sign of Spain's cooperatives

 

 

I should explain that last bit: I am in Spain to visit Mondragon, and the huge system of worker-owned cooperatives based here. Among their many achievements is the creation of Spain’s second-largest chain of grocery stores, called Eroski (which means “group buying” in Basque). Barcelona has dozens of locations, yet I somehow managed to miss any sign of them beyond this juice box on the sidewalk. And yes, I picked it up after I snapped a photo.

In Bilbao, I met my cohort at a hotel that is part of Best Western, a U.S. based marketing co-op; it struck me as ironic that this would be our first co-op. After a brief orientation, we went out for an intense dinner that lasted from 8:30 to midnight, followed by several hours at a discotheque. I had none of my usual jet-lag insomnia.

Before we left Bilbao, I stopped by the Guggenheim Museum. It is an amazing structure by any standard, but I had a special appreciation for it because this morning I learned that it was built by the Mondragon cooperatives. Gehry’s concept was converted to a specific design by a co-op, the general contractor was a co-op, most of the subcontractors were co-ops, and the steel beams and titanium skin were even manufactured by a co-op. By working together as a consortium, they were able to take on a huge and complex project.

 

me and co-op steel

 

 

The Basque Country is the most affluent region in Spain, with an income level roughly 40% above the European average. This was clear pretty quickly. While I saw numerous people begging in Barcelona, I didn’t see any in Bilbao. But the area’s wealth became even more apparent after we left the city, where the co-ops are a relatively minor influence.

It is a rugged country, which reminds me a lot of the coast of northern California. It is not without old scars from the severe recession and deindustrialization that hit Spain in the 1980s – I saw several abandoned factories with grass growing on their roofs, and one large furniture store going out of business from the current crisis. But there appears to be generally good health, and the freeways are amazing; the main route to Mondragon is more tunnels than surface roads for about 20 km.

We left the highway and headed up a typical curvy scenic mountain road alongside a small lovely river, toward the town of Onati. But then something funny happened: We passed a large new factory. Then another. Then another. And so on. This beautiful, remote town had a healthy manufacturing sector, with close to a dozen new or recently expanded factories, most of which were facilities of two cooperatives, Fagor and Ulma.

To really understand how this all applies to my own region, I have been mentally comparing the Basque Country to the area roughly encompassing the Sacramento area to Lake Tahoe, between US50 and I-80. The Basque Autonomous Community is roughly the same size and a somewhat larger population (3 million). The closest parallel I can imagine to Onati would be if Placerville had a vibrant and growing manufacturing sector.

We continued past Onati to our hotel for the next four nights. It is not part of a co-op, but I’m going to let that slide because it is in one of the most powerful settings I have ever encountered. It is perched above a gorgeous mountain canyon, with a view of one of the Basque Country’s highest ridges, which features a line of giant wind turbines that somehow only added to the beauty. I highly recommend the Hotel Sandika, room 218, for anyone not afraid of heights – our balcony overlooks a gorge hundreds of feet deep, facing a stunning cliff that is literally closer to our room than the bottom. I hope they don’t have earthquakes here.

down

the cliff

 

 

We are in Arantzazu, which is a major Basque spiritual center. It is also home to the most amazing church I’ve ever seen. The structure is a collaboration of several giants of Basque contemporary art, and it is just stunning. The name means “in the thorns” and it is quite apt for this prickly masterpiece. I couldn’t bring myself to take any pictures of the inside; it was too powerful.

the church

It is also currently being renovated by the co-op Ulma and one other firm. 

These co-ops are everywhere, and tomorrow, finally, we are going to the place it all began. Just over 50 years ago, five graduates of Father Arizmendi’s community-based trade school bought the license to open a factory making paraffin stoves. Now they’ve got a model for the world. I’ve wanted to see this for years, and for the next week I’ll be immersed in it.