What happens when the people who do the work own the business?

The idea

In most businesses, the people who own it and the people who do the work are different groups. The owners take the profit and the vote. The workers take a wage.

A co-operative joins the two. The people who do the work, or use the service, own the business together. Each member gets one vote, whatever their stake. The profit goes back to the people who made it. Cooperation is rewarded directly: the better everyone works together, the better everyone does.

A priest, a school and five young people

In February 1941 a 26-year-old priest, José María Arizmendiarrieta, arrived in Mondragón, a Basque town of about 7,000 people still recovering from the Spanish Civil War (Wikipedia, 2026a, 2026b). Four years earlier Arizmendiarrieta spent a month in a Francoist jail for writing for the newspapers Eguna and Gudari, and faced a court-martial where only 4 of 17 detainees escaped execution (Wikipedia, 2026b).

In 1943 Arizmendiarrieta opened a technical school with 21 students (Mondragon, 2026b). In 1956 five young people from the town, Luis Usatorre, Jesús Larrañaga, Alfonso Gorroñogoitia, José María Ormaetxea and Javier Ortubay, founded Ulgor, a workshop owned by the people who worked in it (Wikipedia, 2026b). It later became the appliance maker Fagor.

Then came the pieces that let it grow:

• 1958: Lagun Aro, its own welfare fund, which later added unemployment cover (Mondragon, 2026b).
• 1959: Caja Laboral, a co-op bank that funds new co-ops (Mondragon, 2026b; Wikipedia, 2026a).
• A university, itself a co-operative, that trains the next members (Wikipedia, 2026a).

How big it got

Today Mondragon is 81 self-governing co-operatives and about 70,000 people, with 104 plants in 37 countries (Mondragon, 2026a). Its 2024 revenue was €11.2 billion (Wikipedia, 2026a).

Pay stays close together. The gap between the highest and lowest paid runs from 3 to 1 up to 9 to 1, and averages about 5 to 1. The lowest-paid jobs pay about 13% more than similar jobs nearby (Wikipedia, 2026a).

What it does in a crisis

The hardest test came when Spain's property bubble burst. In October 2013 Fagor Electrodomésticos, the co-op that grew from Ulgor, filed for bankruptcy with €1.1 billion in debt, and 5,600 jobs were at risk (Wikipedia, 2026a).

An ordinary company would have laid them off. Mondragon's other co-ops worked through 2014 "to try to relocate the members affected by the Fagor Electrodomésticos Crisis" (Mondragon, 2026a). It wasn't perfect: worker-owners were placed first, ahead of staff on wages (Wikipedia, 2026a). The instinct was still to find people work, not to let them go.

The same thinking shows up across worker co-ops in hard times. In an ordinary firm, workers rarely accept a pay cut, because nothing guarantees the pay comes back, so the firm cuts jobs instead. In a co-op the workers own the recovery, so they can take a cut together and restore it later (Wikipedia, 2026c). A co-op paying less in a bad year isn't a worse employer. It's a group choosing to share the loss instead of handing it all to the people let go.

Why the Basques?

Mondragon didn't grow from nothing. Basque villages have an old custom called auzolan, "neighbourhood work": unpaid work done by everyone for the whole community. Villagers built and repaired roads, fountains and churches this way, and rebuilt a neighbour's house after a fire. The church at Aia went up through auzolan between 1911 and 1913, and homes in the Chantrea neighbourhood of Pamplona in the 1950s (Wikipedia, 2026d).

A people who already built their churches together found it natural to own their factories together.

What the research says

The usual objection: co-ops are nice, but they can't compete. The best evidence says otherwise.

Question	What the study found
Are they as productive?	Using two large French data sets across many industries, including services, worker co-ops were as productive as conventional firms or more, and used their inputs efficiently. They were about the same size and grew as fast (Fakhfakh, Pérotin & Gago, 2012).
Do they close sooner?	In a long panel of Uruguayan firms, worker-managed firms were 29% less likely to close than conventional ones, and the extra survival came with steadier employment (Burdín, 2014).
Why so few, then?	Not because they fail more. Burdín (2014) concludes that low survival can't explain why worker-managed firms are rare.

The French study goes further: conventional firms could produce more by organising work the way the co-ops do (Fakhfakh, Pérotin & Gago, 2012).

Australia already does this

Australia has more than 1,800 co-operatives and mutuals. The largest 100 took in a record $50.9 billion in the year to June 2025 (Business Council of Co-operatives and Mutuals, 2026).

• CBH Group, Western Australia's grain co-op, has been owned by the state's grain growers since 1933. It was set up on one person, one vote, no matter how much grain a farmer delivers (Wikipedia, 2026e). Growers deliver their harvest to more than 100 of its sites (CBH Group, 2026).
• Norco is a dairy co-op established in 1895 and owned by more than 200 dairy farms (Wikipedia, 2026f).

Most Australians have never heard that these businesses belong to the people who work them.

What we can do

• Bank, insure and shop with a member-owned business. Customer-owned banks, mutual insurers and co-op stores exist in most towns. Your custom becomes your share.
• Reward cooperation where you work. Profit sharing, a vote for the people who do the job, and pay kept close together all move a business towards the co-op model. How people respond to shared goals is in Does competition make people perform better?
• When a business owner retires, ask about the workers. The people who already run it are often the best buyers.

A priest and five young people started with a workshop in a town still healing from a war. Seventy years later their idea employs 70,000. The model works. The question is why so few of us are offered it.