Can Co-Operatives Conquer Capitalism And Change The Way The World Works?

Filed under: Features,Labor,Management |

By WAYNE ELLWOOD, New Internationalist– In the eyes of the mainstream media and the high priests of the free market, Argentina just doesn’t get it.

This past May, the country was savaged by the international business press for nationalizing the Spanish-owned oil company, YPF.

Hotel Bauen in Buenos Aries was taken over by its workers in 2003 and has run as co-operative ever since.

Co-operatives in action: Hotel Bauen in Buenos Aries was taken over by its workers in 2003 and has run as co-operative ever since.

Scarcely mentioned was the fact that Argentina’s oil and gas industry was only ‘privatized’ in the late-1990s under pressure from the International Monetary Fund (IMF) and other hardline enforcers of then fashionable neoliberal economic policies. Like many countries around the world, Argentina’s oil industry used to be state-owned.

Back in 2001, the knives were out again.

After years of enforced austerity and ‘structural adjustment’ the resource-rich South American country was awash in debt, crippling inflation, staggering unemployment and negative economic growth. (Notice any parallels with present day Greece and Spain?)

The IMF’s prescription for setting the economy right ‘flexible’ labor conditions, deregulation, loosening of capital controls, privatization of state-owned assets, devaluation of the national currency only made things worse.

With inflation raging and tens of thousands of workers on the streets, the government finally called it quits, defaulting on its debt and devaluing its currency. Predictably, the kingpins of global finance went ballistic, warning that Argentina would sink into penury and chaos.

It didn’t happen.

During the next decade the country’s GDP grew by nearly 90%, the fastest in Latin America. Poverty fell and employment rose steadily while government spending on social services slowly increased.

Many factors contributed to this astounding turnaround, including the determination of Argentineans to strike an independent economic course not reliant on the whims of foreign capital.

But a significant part of its success is rooted in Argentina’s rich history of co-operatives.

Poster for a co-operative print shop in Argentina.

Poster for a co-operative print shop in Argentina.

Waves of Jewish and Italian immigrants brought the co-operative vision with them during the early 20th century. Co-ops were well established, especially in agriculture, prior to the financial and political meltdown in 2001.

According to the International Co-operative Alliance (ICA), nearly a quarter of the South American country’s 40 million people are linked directly or indirectly to co-operatives and mutual societies.

So when the national economy collapsed and the country’s business class started to bail out, abandoning factories and stripping assets, the workers had a better idea. They decided to form worker co-ops and run the factories themselves.

The movement became known as las empresas recuperadas (recovered companies). You can see the background to the Argentine crisis and the story of one such takeover in Avi Lewis’ and Naomi Klein’s inspiring documentary, The Take.

It was by no means an easy road. One estimate put the number of factories around Buenos Aires abandoned by their owners at close to 4,000.

Argentina was a country steeped in decades of corrupt, clientalist politics and ‘I’m-all-right-Jack’ trade unionism. Democratic ownership, the workers taking control, running their own factories as co-operatives, was a stretch.

How to re-engineer a top-down system of traditional management where employees defer to authority in an adversarial workplace?

The psychological shift alone was daunting. But desperate times can bolster resolve.

Against all odds, including belligerent bosses, intransigent owners and reluctant bureaucrats, the idea took hold.

Today, there are more than 200 ‘recovered’ co-operative factories in Argentina up from 161 companies in 2004 providing jobs for more than 9,000 people.

Most are smallish, which means the hands-on approach is a little easier to manage.

Three-quarters of the firms employ fewer than 50 workers, though 2% have more than 200 employees. They are scattered across a range of industries from shoes and textiles to meatpacking plants and transport firms.

What began as a brave experiment after the economic collapse of 2001 has become a vibrant and stable part of the economy.

According to University of Buenos Aires researcher Andr s Ruggeri: “The workers learned that running a company by themselves is a viable alternative. That was unthinkable before These are workers who have got back on their feet on their own.”

As in Argentina’s 2001 crisis, the co-operative spirit often emerges when times are toughest, in the midst of economic collapse and social disintegration, when people are searching for alternatives.

A little history is instructive.

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