Entrepreneurship and Democracy in Peru: An Alternative Vision

By Diego de Soto

Talking to the vast majority of Peruvians about work, one finds that there’s a pervasive attitude: if you have a job, then you’re lucky. It doesn’t matter what kind of job, or how much you’re paid; you’re lucky to just be working, and you should be very happy about it.

Perhaps there’s a cultural, historically rooted reason for this commonly held perception. Peru’s history obviously hasn’t been easy, and it seems that this notion of work being difficult to come by is a proverbial hangover from more difficult times, when you took whatever work came your way, and didn’t ask too many questions about pay, working conditions, or opportunities for advancement.

According to the latest statistics, Peru has a 6.3% unemployment rate.  All told, that isn’t that bad when compared to many other, much richer countries. That said, there are obviously many “bad” jobs in any economy in Peru today; that is, jobs with poor pay, subpar working conditions, and poor future prospects.

There’s also another element, less noticeable, but still important, that makes jobs undesirable. And that’s a lack of opportunities to be creative on the job. Huge swathes of jobs in all sectors involve repetitive, almost mechanical work, with little to no ability to innovate. This inability may be linked to the nature of the responsibilities involved, to close-minded or envious superiors, or to the compartmentalized nature of the job not allowing a worker to get the bigger picture, to see the way his or her job contributes to the overall delivery of the product or service, thus blocking any ability to see how products or services could be improved.

In 1943 Abraham Maslow, an American psychologist, published his theory of what he called the human hierarchy of needs. This is a set of factors which, in Maslow’s view, were necessary for healthy human development. He started with physiological needs, like food and water, and moved up through various levels, and ended with what he termed “self-transcendence”, which can be viewed as the need to have goals which are directed toward the benefit of others whom one doesn’t know personally, i.e. altruism.  Along the way, Maslow cites, in ascending order, the needs of safety, love/belonging, esteem, and self-actualization.

Our professional lives can influence all of these factors. A job can provide for our physiological needs, our safety in the form of property, belonging in the sense of being part of a community of workers, our esteem for our own professional capabilities and the capabilities of others, self-actualization in the form of creativity and problem-solving, and self-transcendence in the form of making a positive contribution to society.

I focused on creativity earlier because I believe it’s often overlooked when one evaluates one’s job. We tend to forget that the ability to do original work, as opposed to doing the same thing over and over, is very important, and is ultimately as important as making a healthy salary if we want to be truly satisfied with what we do. We often assume that drudgery has to be a major component of our jobs, that that’s just the way it is. And this is probably particularly vexing for Peruvians, who are by nature very creative people.

So what to do? There are indications from all over the world that there is a better way to organize productive activities, one that addresses all the needs in Maslow’s hierarchy, which will make us into more evolved and fulfilled human beings. The concept is simple: workplace democracy. And from a simple idea can grow incredible things.

Imagine a workplace where all significant decisions were made in a democratic way. Where everyone involved had an equal say in how the creation and delivery of products and services were carried out. Where managers were managers not because they were appointed by people higher in the hierarchy, but instead because they were voted in by all the workers in company. Where profits were shared according to collective will. In short, where workers were in control of the company, instead of a small coterie of senior managers.

Perhaps this sounds overly idealistic, but the concept is being practiced with startling success all over the globe. While there are myriad examples of local-level cooperative enterprises, there are also examples of very large enterprises that practice workplace democracy with remarkable success.

The Mondragon Corporation in Spain is one of these examples. Founded in 1956 as a group of cooperatives by a young Catholic priest, Mondragon is now the biggest business group in the Basque country and the tenth-largest in Spain. It is divided into four broad areas: Finance, Industry, Retail, and Knowledge, and it produces many high-tech goods. It has integrated democratic structures into every level of its operations, meaning the company is managed by all of its members, as opposed to a top-down, hierarchical model of decision-making. It has offices in 41 countries and sells products and services in 150, employing 74,000 workers, and had revenues of nearly 12 billion euros in 2014.

But perhaps the most striking feature of Mondragon is its remarkably resilient economic profile, even in the face of global recessions like that of 2007, which has obviously been extremely difficult for Spain. In the wake of the recession, Mondragon employees got together and, instead of deciding to cut jobs, opted for wage reductions of 5% across the board and reallocated workers with unproductive jobs to other cooperatives within the corporation. Another democratically determined decision that is emblematic of Mondragon’s culture is that, as of 2012, it limited top-paid worker/members to earning 6.5 times the lowest-paid workers. One only has to compare this to US corporations, where CEOs, on average, are paid 400 times an average worker’s salary.

So alternatives clearly exist. Maybe if more Peruvians are aware of workplace democracy and its potential to unleash the full human potential of workers, the implementation of this model will lead to a more economically resilient and happier country.

Diego de Soto is a freelance journalist and social entrepreneur. He is a graduate of the School of Foreign Service at Georgetown University, with a B.Sc. in international economics, and has worked at the World Bank and the H. F. Guggenheim Foundation. He has just published his first novel, Wounds from Saturn, available on Amazon.com.   He is currently setting up an NGO based on his article “Cutting the Knot”, which was published in two major media outlets. He is on Twitter @OtioseDodge.

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One Comment

  1. Meike Zimmermann says:

    Very Interesting article – I have been living in Peru for almost a year now and I often find myself thinking about work-ethic here (sometimes – without prejudice – comparing it to my home country Germany). I find the point about altruism a very intersting observation. I definetly do agree: it would change a lot in Peru if the single person were given the feeling to be able to make more decisions (starting at work), as along with this comes taking up responsability. Not only for myself but for the society I live in, too.

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