The Mondragon Corporation
A historical blueprint for cooperative capitalism
This is part three in a series about societies—rather than businesses or governments—that have made a meaningful impact on the world. Read part one here, part two here, and the series intro here.
Imagine a school that spawns worker-owned companies, caps CEO pay at 6x the factory floor wage, and funnels profits into community hospitals and universities—all while generating $13B+ in revenue. Meet Spain’s Mondragon Corporation, a decentralized network of 258 cooperatives that’s quietly redefined capitalism since 1956. Let’s dissect why startup society founders, DAO enthusiasts, and anyone tired of shareholder supremacy should care.
Why Mondragon Matters
Basque Country 2.0: From Post-War Rubble to Cooperative Powerhouse
Mondragon didn’t just build companies—it rebuilt a region. The Basque Country, once scarred by civil war and poverty, now boasts Spain’s lowest inequality rates and highest GDP per capita outside Madrid, thanks largely to Mondragon’s ecosystem. Profits from its coops fund 15 vocational schools, a university, and 43 R&D centers (including AI labs), creating a self-sustaining talent flywheel.
Local healthcare? Covered by Lagun Aro, their worker-run social security system.
Retail? Eroski—a consumer-worker hybrid—dominates Spanish grocery markets.
Even skeptics can’t ignore the math: Mondragon’s 1:6 CEO-to-worker pay ratio (vs. the S&P 500’s 1:324) circulates wealth locally, while its €120M annual training budget upskills workers for high-value roles in robotics and green energy. Crypto communities talk about “exit to community”—Mondragon’s Basque Country is that vision made manifest: a closed-loop economy where profits reinvest in people, not shareholders. It’s a legitimately powerful glimpse that the future of work might not be web3-powered UBI, but old-school ownership, upgraded for the 21st century.
Global Ripple Effects: A Cooperative Beacon in a Shareholder World
Mondragon’s greatest export isn’t refrigerators or banking services—it’s proof. For decades, this 82,000-person experiment has quietly dismantled the myth that worker ownership can’t scale, inspiring movements from Cleveland’s Evergreen Cooperatives to Italy’s Legacoop.
Its model—a blend of radical democracy, profit-sharing, and networked resilience—offers a tangible alternative to shareholder capitalism’s extractive playbook. While Silicon Valley preaches “disruption,” Mondragon delivers stability: during the 2008 crisis, it relocated 85% of displaced workers within its ecosystem, avoiding mass layoffs. This isn’t just ethical—it’s strategic. By treating labor as partners rather than costs, Mondragon’s coops report 70% lower turnover than traditional firms, with productivity rates rivaling Fortune 500 peers.
Academics and policymakers now study it as a living blueprint for a different type of capitalism, proving that profit and honoring labor’s contributions can coexist without sacrificing competitiveness. Even crypto’s DAO pioneers nod to Mondragon’s 1950s-era ecosystem dynamics—how shared infrastructure (like their cooperative bank) lets small entities punch above their weight.
Origins: Education → Cooperatives → Ecosystem
Mondragon began not with a business plan, but with a priest and a vocational school. In 1943, Father José María Arizmendiarrieta launched a technical academy in post-civil war Spain—a region crushed by poverty and Franco’s dictatorship. This school became the breeding ground for a radical idea: worker-owned cooperatives that prioritize labor over capital in tangible ways (at a time when such a distinction was especially salient and contested).
Key milestones:
1956: First coop (Fagor Appliances) emerges from the school’s alumni.
1959: Launch of Caja Laboral—a cooperative bank blending worker/user ownership (DAO vibes, anyone?).
1967: Lagun Aro health/pension system—built because Spain’s govt excluded co-op "self-employed" workers.
1969: Eroski retail coop hybridizes worker/consumer ownership (imagine a DeFi protocol governed by both devs and users).
2004: Crowdsourced values reboot—2,000+ workers spent 2 years redefining their cooperative principles.
By 2024, Mondragon’s 82,000 worker-owners run a sprawling ecosystem spanning appliances, finance, AI R&D (Ikerlan), and even a university.
Operating System: 5 Radical Principles
Labor > Capital: Workers own the coop, elect leadership democratically (1 member = 1 vote), and cap executive pay at 6x the lowest salary. Surplus profit isn’t hoarded—it funds schools, healthcare, and new coops.
Anti-Fragile Design: Each coop operates independently but shares resources (R&D, training, crisis funds) via the federation—like an L2 blockchain with shared security.
Participatory Management: Flat hierarchies, self-managed teams, and monthly financial transparency sessions (imagine on-chain governance IRL).
Wage Solidarity: Strict 1:6 pay ratio enforced across 100+ coops. Compare this to the S&P 500’s 1:324 CEO-to-worker ratio.
Continuous Education: 10% of profits fund worker training—a proto-version of retroactive public goods funding.
Crypto Parallels: DAOs 0.1?
Mondragon’s model eerily mirrors web3’s ambitions:
Tokenized Ownership: Worker-owners get profit shares + voting rights—like a governance token with dividends.
Subsidiarity: Coops retain autonomy but share infrastructure (Caja Laboral = a credit union DAO).
Crisis Resilience: During 2008’s recession, Mondragon relocated 85% of laid-off workers within the network—an ecosystem solve for individual problems.
How else could you extend their archetypical example? Blockchains could turbocharge this model:
Transparent, real-time profit-sharing via smart contracts.
On-chain voting for coop decisions (upgrade from 1970s-era assemblies). See Balaji’s talk on Technodemocracy at TOKEN2049 for possibilities here.
A tokenized ecosystem where retail coop consumers earn equity via loyalty programs (think "shop-to-earn").
Lessons for Builders
Embed Values in Code (and Culture): Mondragon’s 1:6 pay ratio isn’t a suggestion—it’s hardcoded. DAOs need similar constitutional guardrails.
Balance Autonomy & Interdependence: Let coops/DAOs experiment, but share critical infrastructure (R&D, treasury management).
Education > Speculation: Mondragon’s 80-year head start began with a school. Crypto ecosystems investing in dev academies get this, and it’s worth easing friction for what the training-to-founder pipeline looks like for new constituent elements of the ecosystem.
IRL = Good: The Mondragon entities run real businesses in the real economy. Digital businesses are great—see Tether’s revenue-per-employee at $83.03m vs. Coca-Cola’s $67,230 per employee—but the IRL economy still matters tremendously, and the intersection of crypto infra/rails with IRL economic value creation is underdeveloped (though super promising).
Final Thought
I hesitated to include Mondragon in this series because, well, are they a society, technically? They’re sort of businesses, sort of governments (given their active local role), sort of a society (given the religious intermingling at the start plus all the social services emerging from the network)—so ultimately they’re a hybrid thing, a unique bird. But despite my classification anxiety, I obviously opted to move forward—because their example is just too remarkable to omit.
Mondragon proves worker-owned models can scale—without VC funding or shareholder primacy. As crypto grapples with decentralization theater, this 82,000-person cooperative is a living case study in how to build durable, human-centric networks. It’s possible—and emerging technology could accelerate the formation, scale, and imagination of what a new Internet-native Mondragon could become.
(And for wonks: Dive deeper into Mondragon’s management model.)