Abstract
Cooperatives are known to have a democratic organizational structure often characterized by a one-person-one vote system in the general assembly.However, cooperatives face many obstacles in their development and efforts to raise efficiency in the environment of capitalistic economies.These obstacles include problems of risk taking of capital and labor, capital financing, present members'attitudes toward new members and so on. On the whole, these elements constitute the basic character of the trade offs that arise when efficiency is sought in democratic systems. The Mondragon Cooperatives in Spain succeeded in shifting the relationship between democratic and efficiency trade offs into a new area of long term development.Consisting of approximately 150 cooperatives and 20000 members, the Mondragon cooperatives invented an ideal organizational system which contains several interesting institutions such as 'capital accounts' for members. The Mondragon cooperatives organizational system satisfies the necessary efficiency and democratic conditions of an optimal cooperative.
