In 2013, Fagor Electrodomésticos, the home appliance division of the world-renowned Mondragón cooperative group, declared bankruptcy. The announcement disheartened coop advocates who consider Mondragón the most successful worker-owned enterprise in the world.

Headquartered in the Spanish Basque city for which it is named, the Mondragón Corporation (MC) began in the 1950s as a Catholic Action project. The first factory produced gas stoves and was the precursor to Fagor. MC is comprised today of 257 financial, industrial, retail, and research and development concerns, employing some 74,000 people. Producer coops make everything from machine tools and automotive parts to commercial kitchen equipment. The retail mega-chain Eroski has more than two thousand outlets. The Caja Laboral bank and Lagun Aro social security coop provide insurance and financial services to members and affiliated businesses. Mondragón University offers undergraduate and postgraduate degrees in engineering, business, and education.

In the aftermath of the 2007–08 financial crisis, and the 2011 anti-austerity and Occupy movements that followed, there has been a growing interest in worker-owned cooperatives. Mondragón is regularly called upon as an example when coops are on the agenda. Advocates (both academic and activist) believe Mondragón-style coops secure jobs, give workers control, and nurture solidarity and community-based economies—that they proffer a more democratic and just form of capitalism, or that they even manifest non-capitalist social relations and sow seeds of socialism within contemporary society. This is a welcome dispatch after four decades of triumphalist capitalism and extreme income and wealth inequality. Therefore, advocates discourage dwelling on Fagor’s bankruptcy, the first in the cooperative’s sixty-year history.

For more than its size and success, Mondragón is a beacon for academics and activists who want to find real-world alternatives to capitalism. The coops do not have unions or outside stockholders. Rather, each member, whether worker or manager, invests as a shareholder in a firm and has one vote in its general assembly. Each coop is represented at the Co-operative Congress, where system-wide plans and business decisions are made. Coop members in the Basque Country have preserved their jobs during tough economic times by accepting salary cuts, investing additional money into their capital accounts, and transferring between coops to reallocate labor power. MC also limits managerial salaries to about nine times that of the lowest paid member; this is an exceptionally equitable pay scale compared to the average CEO-to-worker pay ratio of 127:1 in Spain or 331:1 in the United States (according to the AFL–CIO for 2014.) A core principle of Mondragón is the sovereignty of labor over capital, demonstrated in the distribution of surplus to members’ personal capital accounts in the Caja Laboral, held as private savings but made available for reinvestment in the coop group.

Promoters of Mondragón regularly enumerate these accomplishments, which are configured to count MC as a model for an alternative economic future (e.g., Davidson 2010; Gibson-Graham 2003). Fagor’s failure, nonetheless, poses inescapable problems of scale, politics, and labor. Given that Mondragón is so often evoked to exhibit alternative economies, indeed “solidarity economies,” these concerns have implications for formulations of “non-capitalism,” “everyday communism,” and “cultural alterity” that resonate with the post-2011 horizontalist zeitgeist uprisings and that have particular salience for the current moment in anthropology. Waging a debate on Mondragón can, therefore, shed light on conversations developing within contemporary anthropology.

Global cooperatives and divided workers
Fagor struggled since 2008, when the international financial crisis shocked the Spanish housing market and the home appliance sector with it. Other MC coops subsidized the unit for years, but with €1.1 billion in debt, continued losses, and burdensome international investments (eighteen factories in nine countries, employing 11,000 worldwide at a pre-crisis peak), the affiliated coops were no longer willing to save Fagor.

The bankruptcy affected 5,600 workers. Seguros Lagun Aro insurance subsidized Fagor members in Mondragón and nearby towns until they could take early retirement or transfer to other coops. The remaining temporary workers on short-term contracts and 3,500 employees of Fagor international subsidiaries, however, were not similarly protected. Some Fagor plants have recently been purchased by corporate competitors (Bosch–­­Siemens and the Catalan CAN-Cata group) and will reopen with significantly reduced workforces. The bankruptcy and its unequal consequences for the different categories of employees forces questions about labor at the local and global scale that are too often sidelined by Mondragón supporters and “solidarity economies” advocates.

Mondragón went global in 1990 as a response to increased international competition that followed Spain’s entry into the European Union. In an effort to protect jobs in the Basque Country, multinational coops now control some 100 foreign subsidiaries and joint ventures, mostly in developing and postsocialist countries, where wages are low or markets growing. These firms are not worker owned, and employees do not have the rights or privileges of coop members. Instead, they are wage laborers. Even in the Basque Country and Spain, industrial and retail coops depend on significant numbers of temporary workers on short-term contracts. Only about half of MC’s businesses are cooperatives and one-third of its employees are members. The Mondragón group has a three-tier workforce—members in the Basque Country, temporary workers in the Basque Country and Spain, and wage laborers in coop subsidiaries.

A study of eleven Mondragón subsidiaries in the Kunshan German Industrial Park in China (there are nineteen total in China) compared coop-owned factories with foreign-owned capitalist firms. The data showed that the pay was equally low (€1.5 per hour compared to €21 in the Basque Country), hours long (to earn overtime workers put in eleven hours, six days a week), and conditions harsh. Like their competitors, MC coops invested in China to manufacture labor-intensive goods cheaply and to be in close proximity to their clients in emerging markets (Errasti 2013). A 2008 strike over low pay and anti-union repression at Fagor in Wroclaw, Poland, suggests that these conditions are not unique to China.

To be clear, coop members in the Basque region voted to pursue an international strategy, to open these firms, and, therefore, to employ low-wage laborers. Do job security, decent pay, and workplace participation in the Basque Country rest upon exploitation elsewhere? How should we assess the spatial/national inequality within the global working class as it is made, in this instance, by worker-owned cooperatives?

The 2003 Co-operative Congress passed a policy of “social expansion” to extend participation and democracy. Workers from one coop venture in Mexico traveled to Mondragón to learn cooperative principles, and MC signed an agreement with United Steelworkers in 2009 to encourage unionized coops in the United States. There is also talk of converting subsidiaries to coops, although distinct national legal frameworks make this difficult, and there has been one coop conversion outside of the Basque country (Flecha and Nagai 2014). Still, MC’s subsidiaries operate like standard firms, despite the fact that their aim is not to maximize profit for stockholders but rather to maintain coops jobs in the Basque Country. Many analysts trust that the Mondragón group intends to do right by its nonmember employees. Others, to the contrary, see in Fagor’s bankruptcy and MC’s international business strategy confirmation that cooperatives cannot survive in a capitalist sea: cooperatives either give in to competition and degenerate into capitalist firms, or they founder.

Contradictions of work and class in the coops, however, have a longer history. My study of a Fagor coop in the late 1980s to the early 1990s, before the global strategy took off, showed that shop-floor conditions, rank-and-file participation in decision making, and workers’ feelings of motivation were not better than they were in a neighboring capitalist factory with a unionized workforce. Furthermore, coop members were less involved in and showed less solidarity with the Basque labor movement, which at the time was part of an activist, left coalition for socialism in the Basque Country. MC steered clear of these politics, just as coop members stayed on the job while metal-sector workers struck for their national contract. The Mondragón coops engendered difference and division within the local working class decades before reproducing them on a global scale (Kasmir 1996).

This legacy came home to roost when Fagor members took to the street for their jobs and their capital accounts, which were sacrificed in the bankruptcy agreement. A union leader in Mondragón told me that he joined the demonstrations for jobs but did not support cooperators’ fight for their capital accounts. The accounts symbolized the ways cooperators divorced themselves from regional labor struggles, and they represented coop members’ narrow self-interests over wider working-class identity and affiliation.

For some, the solution to these divisions in the local working class and to global inequalities in the cooperative workforce is to grow the system and spread many Mondragóns all over the world. Yet if we concede that job security, community-based economy, and formal workplace democracy in the Basque Country rest on exploitation and insecurity elsewhere (including temporary workers close to home), then scaling up begs the question, albeit at a greater scale. At some point, we come up against the worldwide accumulation of labor and capital, and we meet capitalist class and state power.

Global labor versus the new culturalism
This unwaged debate about labor and politics in Mondragón has unexpected relevance for anthropology; indeed, it goes to the heart of an emerging theoretical divide within the discipline. Don Kalb (forthcoming; 2014) has recently suggested that anthropology is facing two distinct turns: a new culturalism on the one hand, world-historical anthropology on the other. Each takes capitalism as its object but from decidedly different positions.

Culturalism is seen in the work of David Graeber, J.K. Gibson-Graham, and HAU: Journal of Ethnographic Theory, who believe that this moment of crisis urgently requires us to deploy our ethnographic strengths to document social relations, practices, and spaces of “non-capitalism” or “everyday communism” on the “moral outside” of capitalism. Conversely, the political–economic anthropology of Eric Wolf, David Harvey, and others situates these democratic expressions within world-historical capitalism, which, while never totalizing, shapes people’s lives even as they resist, escape, or are marginalized from surplus extraction and the wage relation. Recall that Marx characterized capitalism as generalized commodity production, but this did not mean that all social relations took this form; indeed, heterogeneity and difference have been the lifeblood of capitalism. The ethnographic search for instances of non-capitalism reinstates cultural essentialism, now via horizontalism on a political front and ontology on the intellectual one. It leads anthropology back to an unproductive preoccupation with cultural difference, and to the primitive isolates and small-scale units of study of Boas and Malinowski.

This anthropological split rehearses the nineteenth-century opposition of Marxism and anarchism, which was centered in good measure on a clash between Marx versus Proudhon and Bakunin over cooperatives. Twenty-first century horizontalist thinking, as it developed from the 2001 Argentine experience, prizes the cultural, the moral, and the immanent. Even more than its anarchist precursor, horizontalism proposes to sidestep the state and capitalism by avoidance or escape, through the creation of utopian communities, coops, and egalitarian exchange. This stance assumes individual freedom to be outside of capitalist relations and maintains that capital can be negated subjectively through ideas (Haysom 2014). This position is hard to sustain, however, when we widen the lens to look beyond the particular cultural moment of negation or refusal and take in history and global labor—including the power-laden processes of naming, categorizing, differentiating, or unifying the manifold ways of working within temporal and spatial processes of capital accumulation (Kasmir and Carbonella 2014).

With a tight focus on coop businesses and their members in the Basque Country, Mondragón may look to be on the moral outside of capitalism, but the picture changes when we consider the ways that the cooperatives fragmented Mondragón’s working class and recreated those divisions on a global scale. This line of analysis can get one charged with “capitalocentrism”—of succumbing to the discursive hegemony of capitalism by condensing economic difference (Gibson-Graham 2006). But with labor in the frame (an inclusion that is arguably counter-hegemonic, given the erasure from neoliberal ideology of labor as a collective force), it comes down to who is cut in and who cut out, whose privilege rests on whose dispossession, and what it would take to build alliances that cross those divides.

Committed people in Mondragón work incredibly hard to create a just and fair cooperative system, and well-meaning advocates the world over rightly herald their achievements. Even so, extending coop businesses and moralities is not sufficient. A postmortem on Fagor exposes the limits of Mondragón to overcome the contradictions of the capital–labor relationship, even if capital takes the form of a cooperative corporation and class exploitation is displaced to foreign subsidiaries. Mondragón has accomplished a great deal and teaches a lot that is valuable for informing social and political movements for a more just society, but it is not non-capitalism.

A critique of Mondragón also issues an advisory to anthropologists: to probe the ways that egalitarian, reciprocal, or caring social relations that we see in the field are, at another scale, imbricated with class processes. Far from a cynical assessment of possibility, this alert that there is no outside of capitalism is a rallying cry. It directs anthropologists not to essentialize cultural distinctiveness but rather, as Kalb urges, to make new inquiries into the nature and dynamics of large-scale processes—including capital and labor accumulation—and their on-the-ground engagements with local histories (see also Carrier and Kalb 2015). In this way, our office is not to discover free spaces where people with shared kinship, identity, ideas, or location enjoy or create an imagined non-capitalism. The more hopeful project, I believe, is to document and theorize the efforts of groups engaged in political struggles to make connections and alliances and to build networks, organizations, and solidarity across lines of difference.

Sharryn Kasmir is Professor of Anthropology at Hofstra University. She is the author of The Myth of Mondragón: Cooperatives, Politics, and Working-Class Life in a Basque Town (SUNY Press, 1996) and co-editor, with August Carbonella, of Blood and Fire: Toward a Global Anthropology of Labor (Berghahn Books, 2014).