Inside a co-operative university

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Inside a cooperative university

Times Educational Supplement, 29 August 2013 | by David Matthews


We report from Spain on the University of Mondragon, which is fighting to preserve its teaching mission, industry-focused research and mutual governance model. Mondragon is jointly owned by its academic and administrative staff. No one may earn more than three times the salary of the lowest-paid worker

It is hard to think of a time when academics in the UK have been more dissatisfied with where the academy is going. Their list of gripes is long: from the rise of the student “consumer” to overpaid vice-chancellors, a distant management class, increasing marketisation, a seemingly ever-growing brood of administrators and, perhaps least tangibly, a sense that academia is turning into a competitive rather than comradely affair.

Last year, senior scholars founded the Council for the Defence of British Universities, which set out to fight many of these developments, along with what they believe to be increasing control of universities by government and business. But so far no practical alternatives have emerged. Meanwhile, experiments such as Lincoln’s Social Science Centre, a cooperative organisation offering higher education for free, have taken place only on a very small, relatively informal scale.

At a time when many academics feel remote from their university’s managers and strategic plans, the cooperative model, in which all staff have a stake, has obvious appeal. So, can the University of Mondragon, an established higher education cooperative in the lush green mountains of the Basque Country in northern Spain, offer any answers for academies elsewhere? Founded in 1997 from a collection of co-ops dating back to 1943, the institution now has 9,000 students. The staff have joint ownership and the institution’s culture and its model of governance are radically different from those of modern UK universities.

Times Higher Education went to see how and why they do things differently at Mondragon, and to consider whether some of its practices might appeal to UK scholars looking for a new model for the academy.

Equality, autonomy, openness, transparency

Even before arriving in Spain, there is one obvious difference about Mondragon – it does not have a press office to restrict access to the top brass or vet comments by its employees. Instead, THE’s trip was arranged directly through teaching and administrative staff. And on arrival, transport was provided by the vice-chancellor, Jon Altuna, who drove from campus to campus – with the occasional stop-off for tapas and wine.

Mondragon is jointly owned by its academic and administrative staff. To become a fully fledged member, employees have to work there for at least two years, and then pay €12,000 (£10,300), which buys a slice of the university’s capital that can be withdrawn upon retirement.

However, it is unlikely that anyone employed by the university expects to earn enough to build a personal art collection or buy membership to an exclusive private members’ club: no one at Mondragon may earn more than three times the salary of the lowest-paid worker.

This is a far cry from the UK, where in 2008 the ratio between the highest- and the lowest-paid workers in higher education was, on average, 15.35:1, according to the 2011 review of fair pay in the public sector led by Will Hutton – a bigger gap than found in any other part of the public sector.

There is one exception at Mondragon, though: the rector, the closest thing the university has to a chief executive, is permitted to take home five times the lowest wage – although even this relative largesse was agreed only after “huge argument”, Altuna notes.

Excluding cleaners and catering staff, who are subcontracted, the lowest-paid staff, such as administrative and maintenance workers, earn €27,421 a year. The highest-paid managers earn just over three times this amount, while the current rector earns about €157,000. “We are not in this project for [personal] profit-making,” Altuna says with a smile.

Although the university’s student population is relatively small, at about 4,000 (it offers 21 undergraduate, 12 master’s and three PhD programmes), another 5,000 people a year undertake professional training at Mondragon. “We want to be one of the main agents in making companies competitive,” Altuna says.

He is referring to the fact that the university is in effect the training and research-and-development arm of a wider network of interlocking cooperatives, known collectively as the Mondragon Corporation.

Discard any quaint images you might have of basket-weaving communes eking out a trade in the Basque hills. The corporation employs more than 80,000 people and had a revenue of €14 billion in 2012. It is the largest cooperative in the world and has 94 production plants outside Spain. Its factories manufacture white goods, industrial components and road bikes, while its construction wing built Bilbao’s swooping silver Guggenheim Museum.

The university has a highly democratic governance structure. Its supreme body is the general assembly, a 30-strong committee of representatives composed of one-third staff, one-third students and one-third outside interested parties, often other co-ops in Mondragon Corporation. It meets annually to decide on the priorities for the coming year and has significant powers: it can, for example, sack members of the senior management team. (It last used this power in 2007 when one manager was dismissed, according to Altuna.)

It is impossible to recreate our model outside Mondragon, but it is possible to spread some of the culture and ideas of our version of higher education

Meanwhile, administrators make up just one in four workers, compared with 52 per cent in the UK higher education sector, according to 2011-12 figures from the Higher Education Statistics Agency.

Mondragon is also highly decentralised. “We say that the chancellor [also known as the rector] has less power than the deans,” says the current holder of the top post, Iosu Zabala Iturralde. (Zabala appears to be the only member of staff who wears a tie – but he does not go as far as wearing a suit jacket.)

The university has four faculties: business studies; engineering; humanities and education; and, since 2011, “gastronomic” science, the theory and practice of cookery. The first three began life as separate colleges, and merged into a university in 1997. Each faculty is its own cooperative, which makes Mondragon a kind of “cooperative of co-ops”, and each department has substantial autonomy. They do not even share the same academic calendars.

Each faculty also has “total freedom to leave the project”, Altuna says. There was a lot of debate in the early days of the university about the wisdom of the faculties joining forces, he explains, but only by combining several subjects could Mondragon become a university and award its own degrees. Now they have lost their distinct identities, making it very difficult for them to break away, he thinks.

What also makes the university unusual is that its three founding faculties are spread across five towns in the Alto Deba region, the heart of the Basque Country. Most are “remote” locations, Altuna admits, estimating that none has a population of more than 10,000. Only in recent years has Mondragon set up bases in the cities of San Sebastian and Bilbao.

Mondragon places a strong emphasis on transparent governance. For example, any worker in the Faculty of Engineering can check on the expenses of any of their colleagues – with enough detail provided to make it possible to work out which restaurants they have been to and when, Altuna explains.

Its students and staff say the institution has a very different ethos from those of traditional universities. As Raquel Pangua, a fourth-year undergraduate training to be a teacher, puts it: “We are like a family. We all work together – the university gives a lot of importance to group work. In public universities, they mostly work in an individual way, and maybe tutors don’t have that close a relationship with their students. We have a really close relationship with teachers.”

Vocational focus

So Mondragon has equality, autonomy, openness, transparency and no ties. Are there any catches? Plenty, as it turns out.

Mondragon is a private university, and thus it receives minimal public funds. Just over a 10th of its income comes from the Basque government’s structural funding, although the institution’s suite of new buildings – including the architecturally bold €17 million Basque Culinary Center in San Sebastian, designed to look like a stack of crooked plates from the outside – are largely funded by the Basque and Spanish administrations.

There is little room for the humanities: degrees are almost exclusively vocational. Mondragon offers bachelor’s degrees in mechanical, computer, biomedical and energy engineering, business administration and management, primary education and gastronomy and culinary arts. The master’s courses are largely in similar areas, although there is an MA in social economy and cooperativism.

Almost a third of Mondragon’s income comes from technology and knowledge transfer fees. It develops new products for the corporation’s engineering firms, consults for local businesses and advises schools in the region.

As a point of comparison, UK universities earned just 7.3 per cent of their income from research contracts with UK-based industry, charities and public bodies in 2011-12, according to Hesa.

Mondragon’s heavy dependence on technology transfer income means that “there is no ground for research that has no return”, Altuna says.

Still, there is no sense that academics at Mondragon begrudge the lack of opportunities to conduct blue-sky research; if anything, they seem proud that their work is being put to good use. But Altuna freely admits that some researchers “cannot understand it”. “They have quit and gone to a public university,” he says.

Because employees’ salaries are dependent on their faculties not running at a loss, academics have to bear money in mind far more than they might like.

“At public universities, the lecturers – and sometimes the directors of the departments – don’t talk a lot about money,” says Vicente Atxa Uribe, director of the Faculty of Engineering. “They talk more about academic things.”

They think “the world will provide” their salaries, claims Zabala, but that is not the way at Mondragon. Lecturers must constantly drive student recruitment, and rack their brains for new, income-generating technology transfer projects, he says.

Mondragon’s heavy reliance on contract research also leaves it exposed to the chill winds of Spain’s bleak economy, and ironically, the business faculty has been squeezed more than most.

Juanjo Martin, who is responsible for Mondragon’s international relations, admits that the business faculty is “not doing really well” financially. Businesses have cut back on commissioning his faculty’s consultancy work while continuing to buy research from the engineering department because their projects are “more tangible than ours”, Martin suggests.

The faculty will make a loss this year, and workers have had their salaries cut – to 80 per cent of their normal pay – partly because, says Martin, “it’s impossible to fire people” from the co-op. “This year we are really suffering from the [economic] crisis in the Basque Country.”

Under the university’s regulations, a faculty can have up to 30 per cent of its losses offset if other faculties are making a profit. Although wages are now as low as they are allowed to go in the business faculty, Martin is still positive.

“Of course we are unhappy [with the pay cut] but it’s not as if we were in a public company. The project is ours. You are relaxed because you won’t lose your job,” he explains.

Solidarity among co-ops

Although parts of the university may be struggling financially, other Mondragon Corporation cooperatives are in worse positions. The trouble is, when your comrades get into difficulties, it is only brotherly to bail them out. All co-ops recently elected to give 1 per cent of their income to support the beleaguered Fagor Electrodomésticos, a white goods manufacturer affected by the slump in Spanish demand. About 1,000 of its workers will be shifted to other, more successful co-ops, Altuna says.

Still, Altuna is keen to stress that the university is not totally economically bound to the wider corporation: 40 per cent of its technology transfer income is generated from deals with companies that are not cooperatives.

“Some people imagine we’re like the Mormons but in fact we’re open to the whole society,” Martin adds. He points out that two-thirds of students in the business school go on to work outside the cooperative movement.

Another disadvantage of being a private institution is that Mondragon’s students must pay fees up front, and staff admit that most have to scrape the money together with the help of their families.

At just under €5,500 a year for a bachelor’s course, fees are relatively low for a private university in Spain, and make up just over a third of Mondragon’s income. But Spanish public university fees, although they are increasing, are presently much lower, at about €1,000 a year. Mondragon does, however, offer grants to students from poorer families, and students can work part-time during their studies at Alecop – a co-op that manufactures educational training and simulation equipment – to help fund their studies.

Mondragon does feel subtly different from many UK institutions – staff are open about its problems, there is no relentlessly upbeat corporate message, and relations between workers feel less hierarchical and more relaxed than on many UK campuses. But some veteran staff express concern that the university’s cooperative spirit is waning.

“I think some of the values have been lost along the way,” Martin observes. “Going to any meeting here, and any meeting in a public limited company, there is no difference. This is happening in all the co-ops in Mondragon.”

The cooperative spirit has become perfunctory, he believes. “It’s like going to church, where you can go just on Sundays and listen to the priest and you are a Christian,” he says.

Fred Freundlich, a US academic who has been working at Mondragon since the 1980s and lectures in business studies, says he has observed a decline in camaraderie. Fewer workers now eat their lunch together or go out for a glass of wine after work, he says.

One of the benefits of Mondragon’s ethos, he observes, is its highly collaborative research style. He contrasts this with the US where, he says, “the culture is that faculty members may end up collaborating but each one is there to do their individual research”. But these days, even at Mondragon, researchers can be more reluctant to invite others to join their projects, focusing instead on trying to clock up as many of the hours they are required to work as possible, he says.

Freundlich thinks this is symptomatic of wider social change. In a bid to revive some of the older values, he is bringing in co-op “veterans” to explain to younger staff how they used to work together.

Other social pressures are chipping away at the sustainability of the project. The Basque Country, like much of southern Europe, has a rapidly ageing population. “Not only in the Basque Country, but Spain generally, there are too many universities, and there’s not enough domestic demand to keep them running,” Freundlich observes.

A transferable model?

Mondragon is looking to expand its activities overseas, principally into South and Central America, both to spread its ideas and to create new markets for the companies in the corporation. “The only way that our project can survive is to create activities in countries that are developing,” Altuna says.

The university is helping a network of about 40,000 non-profit businesses in Colombia turn a private university into a higher education institution that will serve them with training and research. Mondragon is providing governance experts, lecturers and researchers. It has also acquired 80 per cent of a private university in Mexico.

The plan is to eventually turn these two institutions into co-ops, but for the moment, the idea is too radical to implement in those countries, Altuna says. Indeed, many subsidiaries of cooperative businesses outside Spain are not co-ops, he says. The idea is an alien one in China, for example.

But in South Korea, people are going “crazy” for cooperatives, Martin says, and the university receives regular delegations from countries where there is curiosity about the project.

“It is impossible to recreate our model outside Mondragon,” Altuna says. “But it is possible to spread some of the culture and ideas of our version of higher education.”

Whether a cooperative university could flourish away from the special circumstances found in the close-knit Basque Country is unclear. But it may offer hope to those unhappy with the academy’s present direction in the UK and elsewhere.

In 2011, three academics – Rebecca Boden of the University of Roehampton, Davydd Greenwood of Cornell University and Susan Wright of Aarhus University – visited the university and wrote that Mondragon was a “highly successful” alternative to what they called “neoliberalised university formations”.

“It is possible to create and manage successful universities that do not involve the exploitation of faculty as passive employees and the treatment of students as mere clients in a fee-for-service educational scheme,” they conclude in “Report on a field visit to Mondragón University: a cooperative experience/experiment”, published in the journal Learning and Teaching.

Mondragon rejects the idea of private profit-making, and yet academics are perpetually concerned with bringing in income. Earnings are relatively equal, but fluctuate with financial performance. Governance is highly democratic, but allows for an unprecedented degree of influence from businesses and students. It may be an alternative to the state-funded public university – but is it worth it?

Could it happen here? Prospects for a cooperative university in the UK

A number of vice-chancellors have had private talks about adopting some elements of the cooperative model at their institutions, according to Mervyn Wilson, chief executive and principal of the Manchester-based Co-operative College, which specialises in studying and researching the movement.

The problem with universities in their current form is that they “treat professionals as employees”, he argues. This means that running difficulties and big decisions are seen as “management’s problem”, not “our problem”.

Give staff a slice of ownership and control and they are more likely to take responsibility, Wilson believes.

He says he has met a “handful” of university leaders who are concerned about ways they can “differentiate” their institutions in the UK and globally.

“The ones I’ve spoken to see a very distinctive community-focused role,” Wilson says. They are not willing to go down the “sharp-elbowed” corporate route favoured by others, he adds.

The introduction of higher undergraduate fees in England and more open competition for students means that the “ground is opening up…over the next three to five years lots of institutions will be looking at appropriate governance reforms in the marketised sector”, he believes.

There are already a number of cooperative higher education projects under way in the UK, in Brighton, Edinburgh, Glasgow and Cardiff. In Lincoln, the not-for-profit, cooperative, zero-fee Social Science Centre took its first cohort of nine students last October. But for now, these projects are extremely small and do not have degree-awarding powers.

Dan Cook, school manager and director of education in the Graduate School of Education at the University of Bristol, is currently in the early stages of a master’s thesis on cooperative universities. He thinks there is at least the possibility of something much bigger emerging.

If a larger cooperative institution were established, although it would face significant hurdles, “these are essentially the same ones any other private university…has successfully faced”, Cook says.

The government is encouraging new entrants to the sector and in the past year, it has approved the creation of three new private universities, Regent’s University and the for-profit University of Law and BPP University.

But “the more likely possibility is for an existing university to convert to mutual status”, Cook believes. There would be various ways in which a university could legally convert, he says, but of the challenges that such a change would present, “none is insurmountable”.

In 2011, the Cabinet Office announced £10 million in funding to help public sector organisations spin off into mutuals, which it defines as “organisations in which employee control plays a significant role in their operation”, and this could include cooperatives.

“The bigger question than the legal one is that of culture – are universities ready to mutualise?” asks Cook. “That’s a much bigger ‘if’, but it is a question I’m hoping to make some progress on”.

However, many of the principles on which cooperatives are based are not necessarily that radical in higher education. Cook points out that the University of Cambridge “is already configured as a sort of workers’ co-op” because every academic is part of the governing body, Regent House.

But, he adds: “I don’t think anyone has told them yet.”