Economic Innovation: Despite Global Economic Insecurity, Worker-owned Cooperatives Flourish

Economic volatility is a distress signal that is constantly being emitted from the global financial sector. During times of economic uncertainty, attention tends to gravitate towards businesses that thrive even in an environment marked by widespread economic turmoil. Why is a certain business sector doing so well when others are struggling to survive? This question is even more pressing when the economic pain is being experienced across multiple sectors around the world over long periods of time.

Financing Economic Democracy Within the New Cooperative Business Model

Economic democracy is often ignored as a viable solution to the global economic crisis. If it is discussed at all, it tends to be treated as an obscure concept, an abstraction or an impractical ideology. It is rarely implemented or discussed within any existing institutions. Generally speaking, the mechanisms for economic democracy are poorly understood, especially within the United States. For this reason, it deserves careful attention.

The Mondragon Corporation Presents a Working Model for Emerging Economies

The largest global cooperative in the world is the Mondragon Corporation, and their mission statement encapsulates the company’s philosophy: “Mondragon is a cooperative business organization integrated by autonomous and independent cooperatives that competes on international markets using democratic methods.” The Mondragon business model originated in the Basque region of Spain, and it was founded in response to an economic crisis that was impacting the lower-income population of the area disproportionately.

Today, the corporation uses an established management model that integrates democratic participation in all levels of governance. It also offers a unique model for job security. The internal structure of Mondragon is publicly available for review, and they maintain an internal policy of equitable compensation and employment security for all workers. According to the Basque media outlets, this area within Europe has one of the most fair income distribution rates in the entire region.

If an existing business wants to join the cooperation, they must convert into a cooperative business in order to be accepted. If a particular sector is hit by an economic downturn, the workers will simply be relocated to a sister business, and this policy choice creates low unemployment. Financing new cooperatives can be done in a variety of ways, and new worker-owners can visit www.Personal Money Store today to learn how to leverage expected future sales to get working capital.

New Era Windows Receives Financial Support, Converts to Cooperative Model

The economic crisis of 2008 created huge changes within the United States as well. In 2012, a Chicago factory was scheduled to close after filing for bankruptcy, and the workers were facing termination, loss of severance pay and long-term unemployment. Inspired in part by the Mondragon cooperative business model, they contacted the United Electrical Workers Union, The Working World and the Center for Workplace Democracy. They raised the capital needed to convert the factory into a worker-owned and -operated manufacturing facility. The incipient business is called New Era Windows, and they now supply Chicago business and residents with high-quality windows that are soundproof, affordable and energy-efficient.

Income Inequality Fuels Business Innovations, Financial Statements Pending

To examine the inner workings of economic democracy allows the outsider to glimpse the full potential of a nascent economic paradigm that is still gaining traction and momentum across the entire world. Workers disproportionately pay the costs for externalized and structural economic flaws, yet they are rarely perceived as an active constituency with any leverage or even personal agency. Worker-owned and -operated businesses change that assumption. Innovations in the business world can have lasting consequences for generations, so it is fair to say that the smart jobs and careers of the future are still gestating today.

It is currently unclear if the new owners reclassified the traditional Owners’ Equity account as a Workers’ Equity account within the company’s Chart of Accounts. This move could permit distribution of quarterly or annual dividend payments to workers. However, it is certain that the workers’ wages are faithfully following their productivity. Other signs of future development and growth in the cooperative sector are still subtle, but they are becoming increasingly obvious over time. Mondragon and New Era are certainly flourishing in an environment that is proving to be toxic, or even fatal, to many established, reputable enterprises of the ancient régime.

Working people should make informed decisions about whether to join a conventional corporation or to start a worker-owned cooperative business. However, financing is always an issue. Traditional lending institutions and banks tend to avoid this sector just because it is new. Start-up and operational costs present a perennial obstacle, so fledgling cooperative worker-owners can rely on to secure immediate merchant cash advances against their future collective revenues.

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