Arizmendiarrieta, whose name is often shortened to Arizmendi, was born in Barinaga, Markina, Biscay, the eldest son of a family of modest means. At the age of twelve, he entered a theological preparatory school. When the Spanish Civil War began, he supported the Republican cause against Francisco Franco like many Basques; other Basques (tradicionalistas) fought against the Republican Government. He had lost an eye in a childhood accident so could not be a soldier. Instead he was a journalist for Basque language newspapers. His actions caused him to be arrested after the war and he was sentenced to death for his activities; legend has it that he escaped the firing squad only through an administrative oversight. Released, he returned to his studies in Vitoria and went on to take holy orders.
Arizmendi wanted to continue his studies in Belgium but was assigned to a parish 30 miles from his own home town. He arrived in Arrasate (in Spanish, Mondragón) in February 1941, as a 26-year-old newly-ordained priest to be assistant curate, to find a town still suffering from the aftermath of the Civil War and severe unemployment. The local priest had been shot by Franco's forces.
Arizmendi did not impress his new flock. Their one-eyed priest read badly; one parishioner described him thus: "He spoke in a monotone with intricate and repetitive phraseology difficult to understand. He hardly ever [read] with grace." They initially asked the Bishop to replace him. Nevertheless, he was determined to find a way to assist his congregation and realised that economic development - jobs - was the key to solutions to the town's other problems. Co-operatives appeared the best way to achieve this. Co-operatives, both consumer and worker, and self-help organisations had a long tradition in the Basque Country but had died away after the War.
"Those who opt to make history and change the course of events themselves have the advantage over those who decide to wait passively for the results of the change," Arizmendi once said.
In 1943, Arizmendi set up a Polytechnic School, now the Mondragón University, a democratically-administered educational centre open to all young people in the region. He set up the school, which quickly expanded, with money from local people collected on street corners. He taught many students himself. The school played a key role in the emergence and development of the co-operative movement, educating and empowering the townsfolk. In the 1950s, Arizmendi and a few graduates of the school set up the first co-operative enterprise Ulgor, which soon expanded and diversified, in time becoming Fagor and the Mondragón Cooperative Corporation (MCC). They then set up the Caja Laboral Popular ("People's Worker Savings Bank"), a credit union that both allowed the co-operative members access to financial services and also provided start-up funds for new co-operative ventures.
The MCC is now Spain's seventh largest corporation. Arizmendi, who died in 1976 in Arrasate, is revered in his adopted town and around the world by co-operative activists for seeing that co-ops can be effective businesses and transform local communities.
"To build cooperativism is not to do the opposite of capitalism", Arizmendi wrote, "as if this system did not have any useful features... Cooperativism must surpass it, and for this purpose must assimilate its methods and dynamism."