Monday, June 19, 2017


From the perspective of the periphery, something that largely depends on where you stand and how you look at the map, a change of economic focus is long overdue, perhaps ironically Brexit may provide a new opportunity. Our country is littered with the tombstone like remnants of failed models of economic development, most of them having failed to deliver long-term economic benefits and more than a few long-term jobs to our people and our communities.

What is badly needed is the courage to step away from the centralised state dependent model of economic development as applied by successive Westminster and Welsh governments who have consistently failed to deliver beyond the short-term for Wales. With the crutch of EU regional funding about to be kicked away, despite some weak and wobbly promises from Westminster to the contrary, we desperately need some fresh economic thinking.

We need to find other economic models that can deliver long-term jobs and lasting material benefits to our communities and to our country. Our over-dependence on Westminster or Cardiff Bay waving their magic wand to solve our economic problems is understandable considering the nature of our economic and political history, but it is simply compounds the error and won’t solve our economic problems or create sustainable jobs.

The days of bringing in significant amounts of ‘inward investment’ are probably over, Westminster has better things to spend its money on. Westminster and ‘The Union’ has largely failed to deliver for Wales, certainly as far as it is concerned the current Welsh Labour government is fresh out of ideas. 

We need indigenous home grown businesses which will put down roots and stick around when economic times are tough rather than pulling up sticks and bugging out when the grant money runs out. We need to develop small to medium sized enterprises or local co-operative industries that could provide medium to long-term sustainable job opportunities.

The co-operative model which works well in both Ireland and in the Basque country, there is no reason why it should not work well here. The Basque cooperative model, as personified by Mondragon co-operative suggests what can be accomplished. If we are to grow local businesses and local jobs we are going to have to create a real Bank of Wales, perhaps using the German Sparkasse and Landesbanken model. For too long far too many small and medium sized businesses in our country have been denied credit by banks and this has prevented the growth of our private sector.

The over centralised dividend driven pretty much rootless London based banking model that has been followed in the UK is incapable, indifferent or simply unwilling to deliver or support economic development in our country. The German Sparkasse and Landesbanken operate on a geographical basis, and have developed special expertise in the local industries so that they are better equipped to make investment decisions and should offer a real alternative.

Adam Price (AM/AC) has previously noted, “there are some great contemporary examples of Welsh co-operation at work.  Time-banking was a great idea developed by American Edgar Cahn, but it’s in the south Wales Valleys that it’s taken deepest root. Antur Aelhaiarn, the UK’s first community co-operative, is still going strong after thirty years.  Glas Cymru is such a unique example of utility-based mutualism that Harvard has made it a case study.   But these wonderful examples are so often beacons without bridges, lone successes that have never scaled into a full-flung Mondragon-like movement”.

Mondragon is a collective of around 261 companies and organisations based in the Basque Country has proved to be one of the more resilient economic success stories in recession-hit Spain. The Basque co-operative may well be the world's largest worker co-operative, it has certainly assisted the Basque economy to try and resist the worst ravages of the recession in Spain. The company was established in 1956, in the province of Gipuzkoa; with a business philosophy built around co-operation, participation, social responsibility and innovation. It began small, with a group of workers in a disused factory, literally using hand tools and sheet metal to make oil-fired heating and cooking stoves.

The Cooperative competes on international markets using democratic methods within its business organisation, helps to create jobs, and is committed to the human and professional development of its workers and pledges to development with its social environment. Some parts of the co-operative are wholly owned, others are run as joint venture operations. 

Over 11,000 people work abroad in 9 delegations and 128 production subsidiaries. The group’s innovative drive is channelled into 15 technology centres and into the cooperatives themselves, participating in research and technology development projects at the national and international level. The Mondragon group’s credit union (Caja Laboral) practically became one of Spain’s largest banks and recovered from an initial 75% reduction in its profitability, unlike the other Spanish banks, which are still struggling.

Co-operative members as equal co-owners of their own workplaces enjoy job security and individual capital holdings, with an equal sharing of profits on a proportionate basis and an equal ‘one-member one vote’ say in the way their enterprises are run. Pay within the cooperatives is strictly egalitarian, withthe highest rates payable other than in exceptional circumstances being refreshingly no more than six and a half times the lowest rate. 

We in Wales can learn much from the example Mondragon and its methods when it comes generating and retaining sustainable jobs. There is no reason why the co-operative approach combined with a rich mix of small to medium sized enterprises cannot be used to bring in a community focused upward economic slow burn approach to economic development, something that will not just provide local jobs but real community beneficial sustainable developments which can transform our communities and fundamentally boost our country’s economic potential.

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