Camila Piñeiro Harnecker
Paper for the 22nd IPLC
Venezuelan Cooperatives: Practice and Challenges
Introduction
The number of cooperativesin Venezuela increased sharply in recent years, especially between 2003 and 2007. From less than 1,000 cooperatives in 1998, there are now between30,000 and 74,000 estimatedin operation.[1]This sharp increase in the number of democratic workplaces, particularly cooperatives, in Venezuela has been—far more than a spontaneous process from below—largely the result of public policy.[2]Government officials engaged in the promotion of the cooperative organizational model had asserted that the democratic, egalitarian and solidaristic principles that define it would serve not only to replace the wage labor relation with that of associated workers within enterprises, but also to transcend the capitalist logic of the Venezuelan economy in favor of one in which individual and social needs are at the center.
However, since 2008, cooperatives have not being promoted as strongly as “socialist” and “communal” enterprises; both characterized by legal state property and more control by local community and state institutions. Instead of promoting the organization of participants in public professional training programs into cooperatives only, now they are encouraged to join the more than 200 “socialist enterprises” that are been created by the state and transferred to the communities so that they are democratically managed by them.[3] Communities organized in communal councils[4] have been called to create enterprises of communal property and democratically manage them (Chávez: Aló Presidente #280).Venezuela’s National Superintendence of Cooperatives (Superintendencia Nacional de Cooperativas— SUNACOOP) former director, Juan Carlos Baute, emphasized that in Venezuela “cooperatives are not going to disappear because cooperativism is a leading movement of the revolution, […] but they do need to be transformed from the capitalist cooperative model to a socialist one”. SUNACOOP is advancing the idea that cooperatives ought to be created by communal councils so they become “communal cooperatives” (Baute, 2009a).
Some years after this new wave of cooperatives started there are important questions about their sustainability as well as the role these self-managed enterprises should play in Venezuela’s socialism of the 21st century. The creation of thousands of new cooperatives has certainly contributed to the decrease in unemployment and increase in formal employment.[5] But production cooperatives, especially agricultural ones, have failed the expectation that they would contribute to alleviate the increasing shortages of basic consumption goods.
The fact that only 19 percent of the 274,000 registered cooperatives seem to be in operation raises the question of how many of them were created merely to receive public loans and then disappeared. It is also recognized that there are still many capitalist enterprises registered as cooperatives to avoid paying taxes and complying with labor rights (Baute, 2009a). Most importantly though, in my view, we must inquire into the factors that have caused the economic and social failure of an undetermined but significant number of well-intentioned cooperatives in that nation. In this paper, I analyze the main challenges that Venezuelan cooperatives are facing.
The empirical evidence I employ is the result of a study of 15 production cooperatives[6] located in three different Venezuelan regions (that nation’s capital, Caracas, and the states of Lara and Mérida) that I conducted between early June and late August 2006.Due to the short time available to conduct research, and to make my sample more easily comparable, I focused on nonagricultural production cooperatives with at least one year of operation.[7]The cooperatives I studied are in food production (four), construction (three), textile production (three), footwear (one), ironworks (one), and handcraft wool production (one). Since they have similar origins and circumstances to other cooperatives in the sample, I decided to include two cases of tourism services cooperatives.Since the main focus of my research was the relationship between cooperative members’ democratic practice and the development of their solidarity,[8] I was not interested in finding a representative sample of Venezuelan worker-managed enterprises, but one where the two variables could ranged as widely as possible. Despite the fact that my sample is not representative of the entire universe of Venezuelan cooperatives, I can generalize most of my findings here analyzed by drawing on secondary sources as well as several interviews with persons knowledgeable of their situation.[9]
cooperatives’ internal organization
My study of the internal organization of the cooperatives in my sample was limited to what I called their “workplace democracy”; which has the following dimensions: extension, mode, scope, equality in information, elimination of division of labor, collective monitoring, workers’ power, workers’ motivation, workers’ comprehension skills, workers’ communication skills.The first four are related to the “formal” dimensions of workplace democracy, and the rest to its “substantive” dimensions.
As to extent, Articles 21 and 26 of the Venezuelan Cooperative Law require all members are included in decision making. To ensure that the majority of the members participate, most cooperatives had stated in their rules that the minimum quorum for an assembly is at least 50 percent, and in some cases 75 percent for changing rules and elections. Cooperatives can hire temporary workers for a maximum of six months, after which they must be accepted as members (Article 36).
In regard to the mode of workplace democracy, participation in decision making in cooperatives was generally direct. In most cooperatives it was “one person, one vote.” A decision is generally reached when a simple majority is achieved. But for rule changes, dissolution, or merger, the law requires a three-quarter majority. However, since most traditional cooperatives are fundamentally family businesses, their decision making was generally too informal and irregular, having entrusted a few members with most decisions.
The Cooperative Law mandates that the assembly of all members has the final decision making power over all topics (Articles 21, 26). Thus, the scope of workplace democracy must include all subjects; some being directly discussed by the assembly, others by the coordinators whose proposal must then be submitted to the assembly. However, I found that in some cooperatives the most important decisions—for example involving distribution of surpluses or compensation—were taken by the coordinators or even just the president or general coordinator. This practice was more common in new cooperatives, wherethe first coordinators felt like owners.
The weakest component of formal workplace democracy in the cooperatives I studied was access to information. There was insufficient bookkeeping and few established mechanisms to present information effectively.This despite the fact that cooperatives SUNACOOPrequires quarterly reports,that their financial situation and distribution of net revenues be discussed at least once a year, as well as to keep record of all meetings in which important decisions have been taken.
In spite of very high levels of formal workplace democracy, some cooperatives had low levels of substantive participation. This can be explained by the members’ low level of comprehension and communication skills. More than 85 percent of all cooperative members in my sample are women, and this coincides with the fact that more than 72 percent had no prior organized work experience, not even as informal workers.
In regard to social division of labor (i.e., the separation of work tasks, especially between intellectual and manual ones, that produce inequalities in social status and power), I found that in small cooperatives most members had some responsibility. In larger cooperatives, the number of management-level positions was increased, and responsibilities were shared between multiple individuals, thus augmenting the percentage of members with leadership roles. These positions by statute have a maximum tenure of three years and only one reelection permitted, but they tended to be rotated. Also, in both traditional and new, job tasks were generally enlarged to include the less desirable activities, such as cleaning and security, by rotating them among the membership.Despite these non-hierarchical structures,traces of the social division of labor persist in the cooperatives in this study. They mainly come from the fact that, due to most members’ scant enterprise-management knowledge, accounting and administrative tasks generally remain among those few workers with some experience or higher educational levels. Success in eliminating these sources of inequality within cooperatives seemed to be tied to the willingness and effectiveness with which those knowledgeable shared their skills with the rest of the membership.
Members’ sense of their power to control the decision making processwas inversely related to the concentration of leadership. Some cooperatives had more diffuse leadership, contributing to the sense of equality necessary for effective participation. But many cooperatives suffered from having members who are exceptional leaders in their communities, making other members feel less capable or prepared to participate. Some leaders attempt to encourage others to play a more active role, but I would argue that their degree of success is linked to whether they are patient enough to allow others to assume leadership.
The sense of equality necessary for a genuine participatory practice is also affected by inequalities in members’ disposition to exercise their rights and obligations. Establishing mechanisms of collective monitoring is crucial to prevent some members from shirking their duty to participate actively in both decision-making and production activities. Only one of the new cooperatives had formalized collective monitoring mechanisms in August 2006. Mechanisms for collective monitoring were much more common in traditional cooperatives.
Nevertheless, cooperative members’ motivation to participate in decision making was relatively high. Even in those cooperatives where workplace democracy was least developed, workers recognized the opportunities and advantages of participation for them.
I found that most new cooperatives have not entirely consolidated their workplace democracy because they need more time to learn from mistakes, as evidenced by the lack of mechanisms for information sharing and, especially, collective monitoring. The elimination of the social division of labor necessary to create a climate of genuine equality has also proven difficult to accomplish. Members’ slight professional and administrative experience, as well as relatively low educational levels, sometimes combined with flawed leadership, encourages the concentration of administrative tasks.
access to ADMINISTRATIVE and technicalSKILLS
One of the biggest challenges that Venezuelan cooperatives are facing is due to the fact that vast majority of cooperatives, especially those created after 1999, are formed by members of the most marginalized sectors of that country. More than 85 percent of all 229 cooperative members in my sample are women, and more than 72 percent had no prior nondomestic work experience, not even as informal workers. Members’ scant experience with administrative and technical tasks, combined with a relatively low education level, makes it very difficult for them to learn even simple management skills such as basic accounting. In fact, SUNACOOP superintendent Juan Carlos Alemán has recognized that the most common problems among Venezuelan cooperatives are of administrative type due to lack of bookkeeping skills (Tovar, 2007).
Most Venezuelan cooperatives depend on external support to address their members’ deficient levels of administrative and technical skills. In fact, many of the cooperatives I studied counted with an external institution that provided them with administrative services, as well as technical support in some cases.
“Traditional” (how those created before 1999 are known) cooperatives in my sample are part of Lara’s Social Services Cooperative Central (CECOSESOLA).[10] This integration body counts with a “school” that helps them with their accounting, management and investment decisions through workshops and counseling, as well as with—although to a smaller degree—technical questions.
Except for those being funded by a state institution or those created by the Vuelvan Caras (now Ché Guevara) program,[11] “new” (i.e., created after 1999) cooperatives cannot count on any public institutions through which they can obtain technical support, especially in management. But even this support had not been effective in helping new cooperatives overcome their lack of administrative skills because there are too many cooperatives and too few prepared personnel. In fact, except those new cooperatives where there are members with previous accounting experience, they have been forced to hire public accountants.
Public institutions committed to cooperatives’ future or, even better, cooperative integration bodies could make it significantly easier for cooperatives to deal with the short-term challenge of having access to specialized consultants as well as the longterm challenge of developing their own administrative and technical capacities, at least to a certain degree.However, most cooperative training in Venezuelafocused on basic bookkeeping and cooperative legislation, while other management tasks are critically neededare undersupplied such as cost analysis, pricing, marketing, investment, as well as production techniques and technologies that increase the efficiency of their production processes. To ensure their access to specialists without having to depend on state institutions or to abandon their egalitarian principles, new cooperatives—like most traditional cooperatives have done—must join together and create their own consulting groups to be shared among them.
WORKERS’ motivation
Another difficulty that the new cooperatives I studied have is that some of their members are little motivated to comply with their workday. This is evidenced in absenteeism and low productivity. Traditional cooperatives whose funding members were retiring and were thus renewing their membership, also had this problem with some of their new members.
In most of the new cooperatives I studied, members receive monthly or bimonthly payments called “advances” (anticipos) of equal amounts—democratically decided according to the economic situation of the enterprise—only discounting unjustified absences. Similarly, traditional cooperatives in my sample, like all in CECOSESOLA, distribute members’ income according to the number of hours they work. Also, in both cases, members democratically decide what to do with the cooperatives’ net revenue at the end of the fiscal year, and a part of it is generally divided among them, equally in some cases and in others according to the number of days worked.
Certainly, cases of free-riding were not uncommon in those new cooperatives in my study that had not established collective monitoring. Unfortunately, only one small new cooperative had just decided to meet weekly to delegate tasks, check their completion, and establish penalties or bonuses based on members’ effort in complying with their responsibilities. Maybe due to the little exchange among new and traditional cooperatives, the first have not taken advantage of the lessons that have been learned be the second; the advantages of collective monitoring among them.
Reacting to these problems of motivation, some new cooperatives were moving towards a distribution of income according to productivity. But discussions about how to measure the contribution of each member to the total production of the enterprises—something that in some production processes can be very subjective and difficult or even impossible to determine—were generating conflicts among members, or deepening existing ones.
While egalitarian and need-based distribution schemes might be more ethically advanced as well as easier to implement because they do not require calculating work contribution or effort, they might not be the most consistent with workers’ conceptualization of justice. Indeed, of all cooperative members surveyed, 27.8 percent stated that income distribution should be egalitarian, 26 percent according to work effort, 24.3 percent according to workcontribution, 15.7 percent egalitarian but taking into consideration some members’ special needs, and 5.7 percent according to need.
Beyond income distribution questions, self-managed enterprises can offer workers very important incentives: a sense of substantive control and self-realization.Indeed, more than 60 percent affirmed that their opinions are generally taken into consideration, and an equal number stated that there were no members with much more power than them to influence in the decisions. A perception of greater self-realization and pride of their work was clearly manifested in that more than 86 percent of all the members I surveyed expressed feeling more prepared, and more than 82 percent valued manual tasks as equally or almost as important as intellectual ones. These results are not stronger because some new cooperatives have yet to consolidate their democratic decision-making processes, and suffer from internal conflicts and difficulties with communication (Piñeiro, 2007: 105-106). The intervention of consultants contracted by MINEC in the management of the Vuelvan Caras cooperatives, by limiting members’ democratic practice, has resulted in that some do not feel real owners, that is, responsible and committed to the performance of their organizations. this perception of greater self-realization and pride of their work was clearly manifested in that more than 86 percent of all the members I surveyed expressed feeling more prepared, and more than 82 percent valued manual tasks as equally or almost as important as intellectual ones. In regard
In short, workers’ motivation in selfmanaged enterprises could be higher than in nondemocratic ones thanks to the combination of the incentives of participation in decisionmaking and of the distribution of surpluses according to the equity criterion considered fairest together with collective monitoring. Venezuelan cooperatives should, first of all, consolidate the democratic character of their decisionmaking process. They should also decide—depending on their conditions, and, most significantly, on their dominant conceptualization of justice—which income distribution scheme (egalitarian, work-based, need-based, effort-based, or a combination of them) fits best their realities. Whatever scheme they may choose, it ought to be established in conjunction with an effective mechanism for collective monitoring.
state Financing
The Chávez government has made Venezuelan cooperatives’ access to financing significantly easier with the creation of several public financial institutions that lend to them at preferential terms with low interest rates and more flexible collateral requirements.[12]According to former SUNACOOP director, Baute (2009b), the Ministry related to Communal Economy (former MINEC, now the Ministry of Communes) alone had invested more than $1,000 million since 2003.