Cooperatives

Acemoglu and Robinson discuss at length the issues with extractive institutions, arguing instead for more inclusive ones that maximize and broaden social participation and individual freedom. One way to do this in a broadly capitalist context is through cooperatives. Generally speaking, cooperatives tend to be small-scale organizations like local credit unions or co-op markets. One, however, is very different than the rest - the Mondragon Corporation. It was founded in the 1950's by a Basque priest, originally as a miniscule manufacturing company. Today, it is a large firm that operates in multiple sectors of the economy. Mondragon is a remarkably successful story of how cooperation between capital and labor - that is, a more inclusive business model within a generally inclusive economy - can work wonders.

 Mondragon's motto - "Humanity at Work" 

Taken from UnitedDiversity.coop

As economist John C. Medaille writes,

"Mondragón has a unique form of industrial organization. Each worker is a member of two organizations, the General Assembly and the Social Council. The first is the supreme governing body of the corporation, while the second functions in a manner analogous to a labor union. The General Assembly represents the workers as owners, while the Social Council represents the owners as workers. Voting in the General Assembly is on the basis of 'one worker, one vote,' and since the corporation operates entirely form internal funds, there are no outside shareholders to outvote the workers in their own cooperatives. Moreover, it is impossible for the managers to form a separate class which lords it over both shareholders and workers and appropriates to itself the rewards that belong to both; the salaries of the highest-paid employee is limited to 8 times that of the lowest paid. Mondragón has a 50 year history of growth that no capitalist organization can match," ("The Economics of Distributism V: The Practice of Distributism").

It's clear that Mondragon is a model of institutional inclusivity. By empowering rather than using its workers, the whole company thrives.