New way to run the world: solidarity economics instead of good old greedy capitalism (actually, this is the most exciting prospect I've read in ages)

1. Other Economies are Possible!
Organizing toward an economy of cooperation and solidarity
By Ethan Miller (from Dollars & Sense magazine)

Can thousands of diverse, locally-rooted, grassroots economic projects form the basis for a viable democratic alternative to capitalism? It might seem unlikely that a motley array of initiatives such as worker, consumer, and housing cooperatives, community currencies, urban gardens, fair trade organizations, intentional communities, and neighborhood self-help associations could hold a candle to the pervasive and seemingly all-powerful capitalist economy. These "islands of alternatives in a capitalist sea" are often small in scale, low in resources, and sparsely networked. They are rarely able to connect with each other, much less to link their work with larger, coherent structural visions of an alternative economy.

Indeed, in the search for alternatives to capitalism, existing democratic economic projects are frequently painted as noble but marginal practices, doomed to be crushed or co-opted by the forces of the market. But is this inevitable? Is it possible that courageous and dedicated grassroots economic activists worldwide, forging paths that meet the basic needs of their communities while cultivating democracy and justice, are planting the seeds of another economy in our midst? Could a process of horizontal networking, linking diverse democratic alternatives and social change organizations together in webs of mutual recognition and support, generate a social movement and economic vision capable of challenging the global capitalist order?

To these audacious suggestions, economic activists around the world organizing under the banner of economía solidaria, or "solidarity economy," would answer a resounding "yes!" It is precisely these innovative, bottom-up experiences of production, exchange, and consumption that are building the foundation for what many people are calling "new cultures and economies of solidarity."

Origins of the Solidarity Economy Approach

The idea and practice of "solidarity economics" emerged in Latin America in the mid-1980s and blossomed in the mid to late 90s, as a convergence of at least three social trends. First, the economic exclusion experienced by growing segments of society, generated by deepening debt and the ensuing structural adjustment programs imposed by the International Monetary Fund, forced many communities to develop and strengthen creative, autonomous and locally-rooted ways of meeting basic needs. These included initiatives such as worker and producer cooperatives, neighborhood and community associations, savings and credit associations, collective kitchens, and unemployed or landless worker mutual-aid organizations.

Second, growing dissatisfaction with the culture of the dominant market economy led groups of more economically privileged people to seek new ways of generating livelihoods and providing services. From largely a middle-class "counter-culture"—similar to that in the Unites States since the 1960's—emerged projects such as consumer cooperatives, cooperative childcare and health care initiatives, housing cooperatives, intentional communities, and ecovillages.

There were often significant class and cultural differences between these two groups. Nevertheless, the initiatives they generated all shared a common set of operative values: cooperation, autonomy from centralized authorities, and participatory self-management by their members.

A third trend worked to link the two grassroots upsurges of economic solidarity to each other and to the larger socioeconomic con-text: emerging local and regional movements were beginning to forge global connections in opposition to the forces of neoliberal and neocolonial globalization. Seeking a democratic alternative to both capitalist globalization and state socialism, these movements identified community-based economic projects as key elements of alternative social organization.

At the First Latin Encuentro of Solidarity Culture and Socioeconomy, held in 1998 in Porto Alegre, Brazil, participants from Brazil, Mexico, Argentina, Peru, Nicaragua, Bolivia, Colombia, and Spain created the Red latinoamericana de la economía solidaria (Latin American Solidarity Economy Network). In a statement, the Network declared, "We have observed that our experiences have much in common: a thirst for justice, a logic of participation, creativity, and processes of self-management and autonomy." By linking these shared experiences together in mutual support, they proclaimed, it would be possible to work toward "a socioeconomy of solidarity as a way of life that encompasses the totality of the human being."

Since 1998, this solidarity economy approach has developed into a global movement. The first World Social Forum in 2001 marked the creation of the Global Network of the Solidarity Socioeconomy, fostered in large part by an international working group of the Alliance for a Responsible, Plural, and United World. By the time of the 2004 World Social Forum in Mumbai, India, the Global Network had grown to include 47 national and regional solidarity economy networks from nearly every continent, representing tens of thousands of democratic grassroots economic initiatives worldwide. At the most recent World Social Forum in Venezuela, solidarity economy topics comprised an estimated one-third of the entire event's program.

Defining Solidarity Economics

But what exactly is this "solidarity economy approach"? For some theorists of the movement, it begins with a redefinition of economic space itself. The dominant neoclassical story paints the economy as a singular space in which market actors (firms or individuals) seek to maximize their gain in a context of scarce resources. These actors play out their profit-seeking dramas on a stage wholly defined by the dynamics of the market and the state. Countering this narrow approach, solidarity economics embraces a plural and cultural view of the economy as a complex space of social relationship in which individuals, communities, and organizations generate livelihoods through many different means and with many different motivations and aspirations—not just the maximization of individual gain. The economic activity validated by neoclassical economists represents, in this view, only a tiny fraction of human efforts to meet needs and fulfill desires.

What really sustains us when the factories shut down, when the floodwaters rise, or when the paycheck is not enough? In the face of failures of market and state, we often survive by self-organized relationships of care, cooperation, and community. Despite the ways in which capitalist culture generates and mobilizes a drive toward competition and selfishness, basic practices of human solidarity remain the foundation upon which society and community are built. Capitalism's dominance may, in fact, derive in no small part from its ability to co-opt and colonize these relationships of cooperation and mutual aid.

In expanding what counts as part of "the economy," solidarity economics resonates with other streams of contemporary radical economic thought. Marxist economists such as Stephen Resnick and Richard Wolff, for example, have suggested that multiple "modes of production" co-exist alongside the capitalist wage-labor mode. Feminist economists have demonstrated how neoclassical conceptions have hidden and devalued basic forms of subsistence and caregiving work that are often done by women. Feminist economic geographer J.K. Gibson-Graham, in her books The End of Capitalism (As We Knew It) (1998) and A Postcapitalist Politics (2006), synthesizes these and other streams of thought in what she calls the "diverse economies perspective." Addressing concerns that are central to the solidarity economy approach, she asks, "If we viewed the economic landscape as imperfectly colonized, homogenized, systematized, might we not find openings for projects of noncapitalist invention? Might we not find ways to construct different communities and societies, building upon what already exists?"

Indeed, the first task of solidarity economics is to identify existing economic practices—often invisible or marginal to the dominant lens—that foster cooperation, dignity, equity, self-determination, and democracy. As Carola Reintjes of the Spanish fair trade association Iniciativas de economía alternativa y solidaria (IDEAS) points out, "Solidarity economy is not a sector of the economy, but a transversal approach that includes initiatives in all sectors." This project cuts across traditional lines of formal/informal, market/non-market, and social/economic in search of solidarity-based practices of production, exchange and consumption—ranging from legally-structured worker cooperatives, which engage the capitalist market with cooperative values, to informal affinity-based neighborhood gift networks. (See "A Map of the Solidarity Economy," pp. 20-21.) At a 2000 conference in Dublin on the "Third Sector" (the "voluntary" sector, as opposed to the for-profit sector and the state), Brazilian activist Ana Mercedes Sarria Icaza put it this way: "To speak of a solidarity economy is not to speak of a homogeneous universe with similar characteristics. Indeed, the universe of the solidarity economy reflects a multiplicity of spaces and forms, as much in what we would call the 'formal aspects' (size, structure, governance) as in qualitative aspects (levels of solidarity, democracy, dynamism, and self-management)."

At its core, solidarity economics rejects one-size-fits-all solutions and singular economic blueprints, embracing instead a view that economic and social development should occur from the bottom up, diversely and creatively crafted by those who are most affected. As Marcos Arruda of the Brazilian Solidarity Economy Network stated at the World Social Forum in 2004, "a solidarity economy does not arise from thinkers or ideas; it is the outcome of the concrete historical struggle of the human being to live and to develop him/herself as an individual and a collective." Similarly, contrasting the solidarity economy approach to historical visions of the "cooperative commonwealth," Henri de Roche noted that "the old cooperativism was a utopia in search of its practice and the new cooperativism is a practice in search of its utopia." Unlike many alternative economic projects that have come before, solidarity economics does not seek to build a singular model of how the economy should be structured, but rather pursues a dynamic process of economic organizing in which organizations, communities, and social movements work to identify, strengthen, connect, and create democratic and liberatory means of meeting their needs.

Success will only emerge as a product of organization and struggle. "Innovative practices at the micro level can only be viable and structurally effective for social change," said Arruda, "if they interweave with one another to form always-broader collaborative networks and solidarity chains of production-finance-distribution-consumption-education-communication." This is, perhaps, the heart of solidarity economics—the process of networking diverse structures that share common values in ways that strengthen each. Mapping out the economic terrain in terms of "chains of solidarity production," organizers can build relationships of mutual aid and exchange between initiatives that increase their collective viability. At the same time, building relationships between solidarity-based enterprises and larger social movements builds increased support for the solidarity economy while allowing the movements to meet some of the basic needs of their participants, demonstrate viable alternatives, and thus increase the power and scope of their transformative work.

In Brazil, this dynamic is demonstrated by the Landless Workers Movement (MST). As a broad, popular movement for economic justice and agrarian reform, the MST has built a powerful program combining social and political action with cooperative, solidarity-based economics. From the establishment of democratic, cooperative settlements on land re-appropriated from wealthy absentee landlords to the development of nationwide, inter-settlement exchanges of products and services, networks of economic solidarity are contributing significantly to the sustenance of more than 300,000 families—over a million people. The Brazilian Solidarity Economy Forum, of which the MST is a part, works on an even broader scale, incorporating twelve national networks and membership organizations with twenty-one regional Solidarity Forums and thousands of cooperative enterprises to build mutual support systems, facilitate exchanges, create cooperative incubator programs, and shape public policy.

Building a Movement

The potential for building concrete local, national, and even global networks of solidarity-based support and exchange is tremendous and yet barely realized. While some countries, notably Brazil, Argentina, Colombia, Spain, and Venezuela, have created strong solidarity-economy networks linked with growing social movements, others have barely begun. The United States is an example. With the exception of the Rural Coalition/ Coalición Rural, a U.S.-Mexico cross-border agricultural solidarity organization, the United States has been nearly absent from global conversations about solidarity economics. Maybe it's harder for those in the "belly of the beast" to imagine that alternatives to capitalism are possible. Are alternative economic practices somehow rendered more invisible, or more isolated, in the United States than in other parts of the world? Are there simply fewer solidarity-based initiatives with which to network?

Perhaps. But things are changing. An increasing number of U.S. organizations, researchers, writers, students, and concerned citizens are questioning capitalist economic dogma and exploring alternatives. A new wave of grassroots economic organizing is cultivating the next generation of worker cooperatives, community currency initiatives, housing cooperatives and collectives, community garden projects, fair trade campaigns, community land trusts, anarchist bookstores ("infoshops"), and community centers. Groups working on similar projects are making connections with each other. Hundreds of worker-owners from diverse cooperative businesses across the nation, for example, will gather in New York City this October at the second meeting of the United States Federation of Worker Cooperatives (see p. 9). In the realm of cross-sector organizing, a broad coalition of organizations is working to create a comprehensive public directory of the cooperative and solidarity economy in the United States and Canada as a tool for networking and organizing.

It takes no great stretch of the imagination to picture, within the next five to ten years, a "U.S. Solidarity Economy Summit" convening many of the thousands of democratic, grassroots economic projects in the United States to generate a stronger shared identity, build relationships, and lay the groundwork for a U.S. Solidarity Economy Alliance. Move over, CEOs of the Business Roundtable!

Wishful thinking? Maybe not. In the words of Argentinian economist and organizer Jose Luis Corragio, "the viability of social transformation is rarely a fact; it is, rather, something that must be constructed." This is a call to action.

(Ethan Miller is a writer, musician, subsistence farmer, and organizer. A member of the GEO Collective and of the musical collective Riotfolk (www.riotfolk.org), he lives and works at JED, a land-based mutual-aid cooperative in Greene, Maine.)

SOURCES: Marcos Arruda, "Solidarity Economy and the Rebirth of a Matristic Human Society," World Social Forum, Mumbai, India, January 2004, www.socioeco.org; José Luis Corragio, "Alternativas para o desenvolvimento humano em um mundo globalizado," Proposta No. 72, 1997; J-K Gibson-Graham, The End of Capitalism (As We Knew It) , Minneapolis: University of Minnesota Press, 2006; J-K Gibson-Graham, A Postcapitalist Politics , Minneapolis: University of Minnesota Press, 2006; Ana Mercedes Sarria Icaza, "Tercer Sector y Economía Solidaria en el Sur de Brasil: características y perspectives," www.trueque-marysierras.org.ar/BLES36.zip; Latin Meeting on a Culture and a Socioeconomy of Solidarity, "Letter from Porto Alegre," Porto Alegre, Brazil, August 1998, www.socioeco.org; Euclides Mance, "Construindo a socio-economia solidária no Brasil," Report from the First Brazlilian Meeting on a Culture and Socioeconomy of Solidarity, Rio de Janeiro, June 11-18, 2000; Ethan Miller, "Solidarity Economics: Strategies for Building New Economies from the Bottom-Up and the Inside-Out," Greene, Maine. May, 2002, www.geo.coop; Carola Reintjas, "What is a Solidarity Economy?" Life After Capitalism Talks, World Social Forum III, Porto Alegre, Brazil, 2003, www.zmag.org/carolase.htm; Harriet Fraad, Stephen Resnick and Richard Wolff, Bringing It All Back Home: Class, Gender and Power in the Modern Household , London: Pluto Press, 1994; Workgroup on a Solidarity Socioeconomy, "Exchanging Visions of a Solidarity Economy: Glossary of Important Terms and Expressions," November, 2005, www.socioeco.org.
Dollars & Sense
29 Winter Street, Boston, MA 02108 USA
T:(617)447-2177
F:(617)447-2179

The Data Commons Project
The Data Commons Project is a collaborative effort between a diverse array of organizations in the U.S. and Canada who share a mission of building and supporting the development of a democratic and cooperative economy. The goal is to collectively develop an accurate, comprehensive, public database of cooperative & solidarity-based economic initiatives in North America as a tool for democratic economic organizing. The project is working to achieve this goal through two interrelated tasks:
Creating a shared "data commons" between multiple organizations, built from existing models of open information-sharing, and involving a merger of separate organizational databases into a commonly-shared data pool.
Launching a free, public web-interface to this data commons, as a tool that can be used by many organizations and individuals working for a cooperative economy. With such an interface, users will be able to run searches by initiative name, geographical location, type of initiative or business, and product/service, as well as to add and update directory listings themselves (thus being a "self-editing directory").

Current collaborators in this project include Grassroots Economic Organizing (GEO), the U.S. Federation of Worker Cooperatives (USFWC), North American Students of Cooperation (NASCO), Cooperative Development Institute (CDI), the Regional Index of Cooperation (REGINA), Southern Appalachian Center for Cooperative Ownership (SACCO), and worker-owners from Sligo Computer Services and the Brattleboro Tech Collective.

To learn more about the Data Commons Project, or to find out how you can get involved, please contact Ethan Miller, project coordinator, by phone: (207) 946-4478 or by email: directory-@-geo.coop.

Web Resources
•www.socioeco.org/en : Alliance for a Responsible, Plural and United World, a workgroup on the Socioeconomy of Solidarity. Currently the most comprehensive source for material in English on solidarity economy theory and practice.
•www.communityeconomies.org : Community Economies Project, an ongoing collaboration between academic and community researchers and activists in Australia, North America, and Southeast Asia, developing theories and practices around the concept of "diverse economies."
•www.trueque-marysierras.org.ar/biblioteca2.htm : A website of one of Argentina's many barter clubs; a large, excellent library of Solidarity Economy articles in Spanish.
•www.ecosol.org.br : A cooperative website maintained by a number of supporters of solidarity economy; perhaps the best library of Brazilian Solidarity Economy material available online.


2. Venezuela's Cooperative Revolution
An economic experiment is the hidden story behind Chávez's 'Bolivarian Revolution.'
By BETSY BOWMAN AND BOB STONE (from Dollars & Sense magazine)

Zaida Rosas, a woman in her fifties with 15 grandchildren, works in the newly constructed textile co-op Venezuela Avanza in Caracas. The co-op's 209 workers are mostly formerly jobless neighborhood women. Their homes on the surrounding steep hillsides in west Caracas were almost all self-built.

Zaida works seven hours a day, five days a week, and is paid $117 a month, the uniform income all employees voted for themselves. This is much less than the minimum salary, officially set at $188 a month. This was "so we can pay back our [government start-up] loan," she explained. Venezuela Avanza cooperativistas have a monthly general assembly to decide policy. As in most producer co-ops, they are not paid a salary, but an advance on profits. Workers paying themselves less than the minimum wage in order to make payments to the state was, Zaida acknowledged, a bad situation. "We hope our working conditions will improve with time," she said.

To prepare the co-op's workers to collectively run a business, the new Ministry of Popular Economy (MINEP) had given them small scholarships to train in cooperativism, production, and accounting. "My family is a lot happier—I've learned to write and have my 3rd grade certificate," she said.

Zaida is now also part of a larger local web of cooperatives: her factory is one of two producer co-ops, both built by a local bricklayers' cooperative, that, along with a clinic, a supermarket co-op, a school, and a community center, make up a so-called "nucleus of endogenous development." These nucleos are at the core of the country's plan for fostering egalitarian economic development.

U.S. media coverage of Venezuela tends to center around the country's oil and the—not unrelated—war of words between President Hugo Chávez and the White House. Chávez, for example, likes to refer to George W. Bush as "Mr. Danger," a reference to a brutish foreigner in a classic Venezuelan novel. Somewhat more clumsily, Defense Secretary Donald Rumsfeld recently compared Chávez to Hitler. While this makes for entertaining copy, reporters have missed a major story in Venezuela—the unprecedented growth of cooperatives that has reshaped the economic lives of hundreds of thousands of Venezuelans like Zaida Rosas. On a recent visit to Caracas, we spoke with co-op members and others invested in this novel experiment to open Venezuela's economy from the bottom up.

Explosion of Cooperatives

Our first encounter with Venezuela's co-op movement was with Luis Guacarán, a taxi co-op member who drove us to the outskirts of Caracas. Settled into the rainy trip, we asked Luis what changes wrought by the Chávez government had meant for him personally. Luis replied that he now felt that as a citizen he had a right to share in the nation's oil wealth, which had always gone to an "oligarchy." The people needed health, education, and meaningful work; that was reason enough for Chávez to divert oil revenues in order to provide these things. Two of Luis's five sons are in the military, a daughter is studying petroleum engineering, another has a beauty shop. All were in vocational or professional studies.

Almost everyone we met during our visit was involved in a cooperative. The 1999 constitution requires the state to "promote and protect" co-ops. However, it was only after the passage of the Special Law on Cooperative Associations in 2001 that the totals began to skyrocket. When Chávez took office in 1998 there were 762 legally registered cooperatives with about 20,000 members. In 2001 there were almost 1,000 cooperatives. The number grew to 2,000 in 2002 and to 8,000 by 2003. In mid-2006, the National Superintendence of Cooperatives (SUNACOOP) reported that it had registered over 108,000 co-ops representing over 1.5 million members. Since mid-2003, MINEP has provided free business and self-management training, helped workers turn troubled conventional enterprises into cooperatives, and extended credit for start-ups and buy-outs. The resulting movement has increasingly come to define the "Bolivarian Revolution," the name Chávez has given to his efforts to reshape Venezuela's economic and political structures.

Now MINEP is trying to keep up with the explosion it set off. While pre-Chávez co-ops were mostly credit unions, the "Bolivarian" ones are much more diverse: half are in the service sector, a third in production, with the rest divided among savings, housing, consumer, and other areas. Cooperativists work in four major sectors: 31% in commerce, restaurants, and hotels; 29% in transport, storage and communications; 18% in agriculture, hunting, and fishing; and 8.3% in industrial manufacture. Cooperativism is on the march in Venezuela on a scale and at a speed never before seen anywhere.

Most cooperatives are small. Since January 2005, however, when the government announced a policy of expropriation of closed industrial plants, MINEP has stood ready to help workers take control of some large factories facing bankruptcy. If the unused plant is deemed of "public utility," the initiation of expropriation proceedings often leads to negotiation with the owners over compensation. In one instance, owners of a shuttered Heinz tomato processing plant in Monagas state offered to sell it to the government for $600,000. After factoring in back wages, taxes, and an outstanding mortgage, the two sides reached an amicable agreement to sell the plant to the workers for $260,000, with preferential loans provided by the government. In a more typically confrontational example, displaced workers first occupied a sugar refinery in Cumanacoa and restarted it on their own. The federal government then expropriated the property and turned it over to cooperatives of the plant's workers. The owners' property rights were respected inasmuch as the government loaned the workers the money for the purchase, though the price was well below what the owners had claimed. Such expropriated factories are then often run by elected representatives of workers alongside of government appointees.

There are strings attached. "We haven't expropriated Cumanacoa and Sideroca for the workers just to help them become rich people the day after tomorrow," said Chávez. "This has not been done just for them—it is to help make everyone wealthy." Take the case of Cacao Sucre, another sugar mill closed for eight years by its private owners, leaving 120 workers unemployed in a neighborhood of grinding poverty. The state's governor put out a call for the workers to form a co-op. After receiving training in self-management, the mill co-op integrated with the 3,665-strong cane growers' co-op. In July 2005, this large cooperative became the first "Social Production Enterprise." The new designation means that the co-op is required to set aside a portion of its profits to fund health, education, and housing for the local population, and to open its food hall to the community as well.

With only 700 plants on the government's list of closed or bankrupt candidates for expropriation, cooperativization of existing large-scale facilities is limited, and so far a bit slow. Unions are identifying more underproducing enterprises. But there is a long way to go.

Cooperatives are at the center of Venezuela's new economic model. They have the potential to fulfill a number of the aims of the Bolivarian revolution, including combating unemployment, promoting durable economic development, competing peacefully with conventional capitalist firms, and advancing Chávez's still-being-defined socialism.

Not Your Grandfather's WPA

Capitalism generates unemployment. Neoliberalism aggravated this tendency in Venezuela, producing a large, stable group of over-looked people who were excluded from meaningful work and consumption. If not forgotten altogether, they were blamed for their plight and made to feel superfluous. But the Bolivarian revolution is about demanding recognition. In March of 2004 Chávez called Venezuelans to a new "mission," when MINEP inaugurated the " Misión Vuelvan Caras " program—Mission About-Face. Acting "from within themselves and by their own powers" to form cooperatives, the people were to "combat unemployment and exclusion" by actually "chang[ing] the relations of production."

In Venezuela, " vuelvan caras " evokes an insurgent general's command to his troops upon being surrounded by Spaniards in the war of independence. In effect: stop playing the role of the pursued; turn and attack the enemy frontally. The new enemy is unemployment, and the goal of full employment is to be achieved by groups—especially of the unemployed—throwing in their lot with each other and setting to work together. Vuelvan caras teaches management, accounting, and co-op values to hundreds of thousands of scholarship students. Graduates are free to seek regular jobs or form micro-enterprises, for which credit is offered; however, co-ops get priority for technical assistance, credits, and contracts. But the original spark—the collective entrepreneurship needed for cooperativization—is to come from the people. Over 70% of the graduates of the class of 2005 formed 7,592 new co-ops.

Vuelvan Caras seems to be paying off. Unemployment reached a high of 18% in 2003 but fell to 14.5% in 2004, and 11.5% in 2005. MINEP is planning a "Vuelvan Caras II," aiming to draw in 700,000 more of the jobless. But with a population of 26 million, Venezuela's battle against structural causes of unemployment has only begun.

Economic Development from Within

Cooperatives also advance the Chávez administration's broader goal of "endogenous development." Foreign direct investment continues in Venezuela, but the government aims to avoid relying on inflows from abroad, which open a country to capitalism's usual blackmail. Endogenous development means "to be capable of producing the seed that we sow, the food that we eat, the clothes that we wear, the goods and services that we need, breaking the economic, cultural and technological dependence that has halted our development, starting with ourselves." To these ends, co-ops are ideal tools. Co-ops anchor development in Venezuela: under the control of local worker-owners, they don't pose a threat of capital flight as capitalist firms do.

The need for endogenous development came home to Venezuelans during the 2002 oil strike carried out by Chávez's political opponents. Major distributors of the country's mostly imported food also supported the strike, halting food deliveries and exposing a gaping vulnerability. In response, the government started its own parallel supermarket chain. In just three years, Mercal had 14,000 points of sale, almost all in poor neighborhoods, selling staples at discounts of 20% to 50%. It is now the nation's largest supermarket chain and its second largest enterprise overall. The Mercal stores attract shoppers of all political stripes thanks to their low prices and high-quality merchandise. To promote "food sovereignty," Mercal has increased its proportion of domestic suppliers to over 40%, giving priority to co-ops when possible. Venezuela still imports 64% of the food it consumes, but that's down from 72% in 1998. By cutting import dependence, transport costs, and middlemen while tapping local suppliers, Mercal aims to wean itself from its $24 million-a-month subsidy.

Displacing Capitalism and Building Socialism

Another reason the architects of the so-called "Bolivarian revolution" are vigorously pushing the co-op model is their belief that co-ops can meet needs better than conventional capitalist firms. Freed of the burdens of supporting costly managers and profit-hungry absentee investors, co-ops have a financial buoyancy that drives labor-saving technological innovation to save labor time. "Cooperatives are the businesses of the future," says former Planning and Development Minister Felipe Pérez-Martí. Not only are they non-exploitative, they outproduce capitalist firms, since, Pérez-Martí holds, worker-owners must seek their firm's efficiency and success. Such a claim raises eyebrows in the United States, but a growing body of research suggests that co-ops can indeed be more productive and profitable than conventional firms.

To test whether co-ops can beat capitalist firms on their own terms, a viable co-op or solidarity sector must be set up parallel to the securely dominant capitalist one. Today Venezuela is preparing this "experiment." More than 5% of the labor force now works in cooperatives, according to MINEP. While this is a much larger percentage of cooperativistas than in most countries, it is still small relative to the size of a co-op sector that would have a shot at out-competing Venezuela's capitalist sector. Chávez's supporters hope that once such a sector is launched, cooperativization will expand in a "virtuous circle" as conventional workforces, observing co-ops, demand similar control of their work. Elias Jaua, the initial Minister of Popular Economy, says, "The private sector can understand the process and incorporate itself into the new dynamic of society, or it will be simply displaced by the new productive forces which have a better quality production, a vision based much more on solidarity than consumption." One could claim that MINEP's credits, trainings, and contracts prejudice the outcome in favor of co-ops. But Vuelvan Caras graduates are free to take jobs in the capitalist sector. And MINEP's policy of favoring employee-owned firms is not that different from U.S. laws, subsidies, and tax benefits that favor investor-owned ones.

Finally, by placing the means of production in workers' hands, the co-op movement directly builds socialism. Cooperativization, especially of idle factories occupied by their workforces, promotes "what has always been our goal: that the workers run production and that the governments are also run by the workers," according to Labor Minister Maria Cristina Iglesias. Co-ops, then, are not just means to what Chávez calls "socialism for the 21st century": they actually constitute partial realizations of it.

Managing the Experiment's Risks

Cooperativization is key to achieving the aims of the Bolivarian revolution. But the revolution's leaders acknowledge that a long struggle lies ahead. Traditional capitalist enterprises still dominate Venezuela's economy. And even if all of the country's current cooperativization programs succeed, will that struggle—and it will be a struggle—result in socialism? Michael Albert of Z Magazine grants that co-ops may be more productive, and he strongly supports Venezuela's experiment. But in the absence of plans for de-marketization, he has doubts that it will reach socialism. For the effect on cooperatives themselves of "trying to out-compete old firms in market-defined contests may [be to] entrench in them a managerial bureaucracy and a competitive rather than a social orientation," leading to a market socialist system "that still has a ruling managerial or coordinator class." Albert's concern is well founded: the history of co-ops from the Amana colonies of Iowa to the Mondragón Cooperative Corporation in the Basque country shows that even when they start out with a community-service mandate, individual co-ops, or even networks of co-ops, tend to defensively re-internalize capitalist self-seeking and become indistinguishable from their competitors when made to compete alone against an array of capitalist firms in a capitalist economy.

Disarmingly, members of Chávez's administration acknowledge these risks. Juan Carlos Loyo, deputy minister of the popular economy, noting that community service has been part of the cooperative creed since its beginning, asks for patience: "We know that we are coming from a capitalist lifestyle that is profoundly individualistic and self-centered." Marcela Maspero, a national coordinator of the new, Chavista UNT labor federation, acknowledges "the risk of converting our comrades into neo-liberal capitalists." In Venezuela's unique case, however, construction of a viable co-op sector is the goal of a government with considerable financial resources, and its aim of thereby building socialism is also a popular national project. In Venezuela, success is therefore a plausible hope. A loose analogy would hold with May 1968 if both the de Gaulle government and the French Communist Party had been in favor of student-worker demands for " auto-gestion " or self-management.

There are problems, of course. Groups may register as "phantom co-ops" to get start-up grants, then simply walk away with the money. And since co-ops are favored in awarding government contracts, there is a significant amount of fraud. "There are cooperatives that are registered as such on paper," Jaua, the former head of MINEP, reports, "but which have a boss who is paid more, salaried workers, and unequal distribution of work and income." SUNACOOP admits that its enforcement is spotty. Many of the new cooperatives have also suffered as a result of inadequate self-management training. Government authorities are attempting to address these problems by increasing visits to local co-ops, augmenting training and support services, and decentralizing oversight to local councils.

Despite the obstacles, the new co-ops, with government support, are building a decentralized national movement with its own momentum and institutions. This May, the National Executive Cooperative Council (CENCOOP) was launched. The council is made up of five co-op members from each of Venezuela's 25 states, elected by their State Cooperative Councils, which are in turn elected by Municipal Councils composed of local cooperativists. CENCOOP will represent Venezuela at the International Cooperative Alliance—the global body embracing 700 million individual members in hundreds of thousands of cooperatives in 95 countries.

The pre-Bolivarian co-op movement at first felt left out, and criticized hasty cooperativization. But its advice was sought at each stage of the planning for CENCOOP, and it finally joined the council, sharing its valuable experience with the new movement. The new state and municipal co-op councils are part of a plan to decentralize MINEP's functions. Having helped organize CENCOOP, MINEP Superintendent Carlos Molina says his office will adopt a hands-off approach to assure the cooperative movement's increasing autonomy. Today, however, many of the new co-ops remain dependent on MINEP's support.

A Movement's Opponents

Whatever success cooperativization achieves carries its own risks, both internal and external. So far, the Chávez government has compensated capitalists for expropriations and has targeted for co-op conversion only firms that are in some sense in trouble. But at a certain point, workers in healthy firms, seeing their cooperativist neighbors enjoying newfound power in the workplace and a more equal distribution of income, may want to cooperativize their firms too. And having for years had profit extracted as a major portion of the value their labor has created—in many cases enough to cover their firm's market value many times over—won't they have grounds to demand transfer without compensation? In short, to further expand and strengthen revolutionary solidarity before new counter-revolutionary efforts take root, won't the revolution have to start a real redistribution of productive wealth—to cooperativize firms directly at the expense of Venezuela's capitalists? Sooner or later, Venezuela's cooperative experiment will have to address this question.

After joining in the World Social Forum in Caracas in last January, we caught some glimpses of the "Bolivarian revolution" moving at full speed, and we've followed it since then. We are convinced that for those around the world who believe "another world is possible," the stakes of this experiment are enormous. Predictably, then, it faces genuine external threats. The short-lived coup in April of 2002 and the destructive strike by oil-industry managers that December were the works of a displaced and angry elite encouraged by the United States at every step. And the campaign continues: State Department-linked groups have been pumping $5 million a year into opposition groups that backed the coup. Yet the democratizing of workplaces proceeds relentlessly, bringing ever more Venezuelans into the revolutionary process. This inclusion is itself a defense since it expands, unites, and strengthens the resistance with which Venezuelans would greet any new effort to halt or divert their revolution.

(Betsy Bowman and Bob Stone are on the editorial collective of GEO. They are among the cofounders of the bilingual Center for Global Justice in San Miguel de Allende, Mexico, where they serve as research associates, and are co-authors of many articles on Jean-Paul Sartre. They thank Steve Ellner for comments and invite dialogue through www.globaljusticecenter.org.)

SOURCES Many valuable articles have been collected at www.Venezuelanalysis.com, including: C. Harnecker, "The New Cooperative Movement in Venezuela's Bolivarian Process" (from Monthly Review Zine ) 5/05; S. Wagner, " Vuelvan Caras : Venezuela's Mission for Building Socialism of the 21st Century," 7/05; "Poverty and Unemployment Down Significantly in 2005," 10/05; F. Perez-Marti, "The Venezuelan Model of Development: The Path of Solidarity," 6/04; "Venezuela: Expropriations, cooperatives and co-management," Green Left Weekly , 10/05; M. Albert, "Venezuela's Path," Z-Net, 11/05; O. Sunkel, Development from Within: Toward a Neostructuralist Approach for Latin America (L. Rienner Publ., 1993); H. Thomas, "Performance of the Mondragón Cooperatives in Spain," in Participatory and Self-Managed Firms , eds. D. C. Jones and J. Svejnar (Lexington Books, 1982); D. Levine and L. D'A. Tyson, "Participation, Productivity and the Firm's Environment," in Paying for Productivity: A Look at the Evidence , ed. A. Blinder (Brookings Inst., 1990); D. Schweickart, After Capitalism (Rowman & Littlefield, 2002); M. Lebowitz, "Constructing Co-management in Venezuela: Contradictions along the Path," Monthly Review Zine 10/05; Z. Centeno, "Cooperativas: una vision para impulsar el Desarrollo Endogeno," at www.mci.gob.ve.

Democracy: Economic and Political
Alongside the co-op movement, Venezuelans are engaged in building a new form of local political democracy through so-called Communal Councils. Modeled on Brazil's innovative participatory budgeting process, these councils grew out of the Land Committees Chávez created to grant land titles to the many squatters in Caracas's barrios. If a community of 100 to 200 families organizes itself and submits a local development plan, the government grants land titles. Result: individuals get homes, and the community gets a grassroots assembly.
The councils have budgets and make decisions on a range of local matters. They delegate spokespersons to the barrio and the municipality. Today, a few thousand Communal Councils exist, but within five years the government plans to bring all Venezuelans into local counsels. In conjunction with cooperativization in the economy, the Community Council movement may portend the creation of a new decentralized, democratic polity.


3. Popular revolution, culture of impunity
Venezuela’s promising future
Local councils – Units of Popular Power – are being set up in the hope that their members, and the small groups they represent, will take responsibility for changing their lives.
By Renaud Lambert (from Le Monde)

JUAN Guerra, a lorry driver from Zulia state, knew that he looked out of place in an office in his dirty jeans and three-day beard. But he had spent a week crossing Venezuela and he would not be intimidated by a civil servant from the national assembly. He slammed his fist on the table and said: “No, we are not asking, we are demanding that the comrade deputy transmit our complaint to the citizen president.”

Juan and his colleague Jhonny Plogar represent 700 lorry drivers. In 2000 they filed a complaint against their employers, the coal haulage companies Cootransmapa, Coozugavol and Coomaxdi. According to the plaintiffs, the companies “misused their cooperative status to benefit from tax exemptions and state contracts”. Over the past five years the two men have been shunted from office to office and Jhonny has a bulging file of copies of letters written to ministries, town halls, the state government and the president.

When Venezuela’s National Superintendence of Cooperatives (Sunacoop) finally withdrew the companies’ cooperative status, the national coal mining company continued to use their services. The Zulia state governor and presidential candidate, Manuel Rosales, who signed a decree dismantling all bodies set up during the 2002 coup, is in no hurry to put Sunacoop’s decision into effect. The bosses are using the time to get organised. Hired killers known as sicarios will soon be threatening people.

This is a common situation in Venezuela. When the two men reached the national assembly to present their case, they found a crowd of other plaintiffs with similar cases. All support Hugo Chávez, the citizen president, and all demand an end to bureaucracy and corruption. They are hostile towards a government that they consider inefficient at best, reactionary at worst. Chávez himself has said: “Our internal enemies, the most dangerous enemies of the revolution, are bureaucracy and corruption” ( 1).

This language has been used before to blame incompetent activists for not applying presidential policies correctly. But the “Bolivarian process” stresses popular participation as a means of transforming the state apparatus. In Venezuela it is called “the revolution in the revolution”.

Before Chávez was elected in 1998, two parties shared power for 40 years: the Venezuelan Christian Democratic party (Copei), and the social democratic party, Democratic Action (AD). They were adept at using petrodollars to deal with problems. They handed out government posts to calm social unrest but had to comply with the neoliberal ideology of the North and the need to limit public policies. The only way to offset the bloated state apparatus was to organise its inefficiency. With Venezuela’s social divisions, skilled civil servants often come from backgrounds resistant to social change, sometimes because of ignorance of the conditions in which most Venezuelans live. Gilberto Gimenez, director of the foreign minister’s private office, has said his solution was: “Diplomats will be promoted only if they spend two weeks in the barrios (working class districts).” He was smiling when he said it.

Few political leaders are able to take an active role in transforming the state from within. Before the foreign minister, Ali Rodriguez ( 2), got the job, six others had tried their hand since 1998.

Not a political party

The Fifth Republic Movement that brought Chávez to power is not a political party. After 1994 ( 3) it grew out of a coalition of leftwing parties and former guerrilla movements disgruntled with their leaders, who some thought settled too comfortably into the society they had struggled against. Young activists trained by AD and Copei quickly realised that the Chávez candidature would open up new ways to reach power and many joined his ranks.

In November 2001, when Chávez tried to pass 49 decrees to start social reform, Luis Miquilena, who had been responsible for bringing the Venezuelan left and Chávez together, decided the decrees were too radical. He resigned as interior minister ( 4) and his followers in the National Assembly followed. “We lost a legislature,” explained sociologist Edgar Figuera, “They were passing those laws on the cheap. Venezuela is still stuck in the legal framework of the Fourth Republic” ( 5). Until the country could train its activists, a revolutionary project was being built with tools inherited from a state devoted to perpetuating the neoliberal model.

At the December 2005 parliamentary elections pro-government parties won all 167 seats in the national assembly and no longer had any excuse to delay legislative reforms. The 75% abstention rate in the elections may have been the result of a boycott by the opposition, realising that it would be beaten and preferring to abstain. Even so, it revealed dissatisfaction with a common failing in the revolutionary process, one with which Venezuela must deal: the replacement of a bourgeois elite by a political elite that has the same shortcomings and distances itself from the daily realities of the people.

Without a real party, a solid state, enough revolutionary activists or, for the moment, a coherent social movement, the Bolivarian revolution in Venezuela is no different from any other experiment in Latin America. Chávez said in 2004: “The people must be organised and take part in a new participative, social state so that the old rigid, bureaucratic, inefficient state is overthrown.” He was referring to “missions”, programmes managed by the community, that bypassed the old state to deal with social emergencies. The creation of communal councils this April is an important step towards building the new state and the type of local government on which it will be based.

A small house shelters the Unit of Popular Power (UPP) at Vela de Coro from the sun that scorches the Paraguana peninsula. A small poster explains that communal councils “are a push for participative democracy, for assisting social movements in their quest for solutions to collective problems and paying back the nation’s social debt”. Here, the town hall took the initiative to help set up these organisations. Xiomara Pirela, UPP coordinator, said: “We just supply the tools or help in the event of conflict. Only a citizen’s assembly can make decisions.”

The councils at work

The councils’ task is to coordinate and integrate activities of local missions, urban land and cultural committees. Pedro Morales, director for the Caracas region of Fundacomun, the organisation that finances the councils, said they do not “represent, but speak for the citizens’ assembly, which is the ultimate decision-making body”.

Xiomara Pirela showed us a pile of maps, some drawn in felt-tipped pen. “People start by making a social sketch of their community: houses, inhabitants, their income, infrastructure, social problems.” This work contributes to the “participative diagnosis” and highlights priorities: water supplies, drainage, a health centre. On that basis the communal council suggests projects to citizens’ assemblies, passes them to relevant authorities and manages resources allocated through a communal, cooperative bank. Each project can get up to $15,300; applications for more expensive projects can be made to public planning councils or town halls for the following year.

In Barinas, Mérida, Táchira and Trujillo, the four most advanced states of the Occidente region, more than $44.6m has already been paid for some 3,000 projects. After 2007 half the money allocated to the Intergovernmental Decentralisation Fund and the Special Economic Assignments Law for mines and hydrocarbons, nearly $1.2bn, will be earmarked to finance the councils. Town halls and states that used to benefit from these funds will have to make do with what is left over.

Some mayors are tempted to push their sympathisers for election to the councils, although it is illegal. According to Pedro Morales: “The councils are not only a response to the problems of bureaucracy and corruption; they also increase the accountability of people who were used to letting the state decide for them and then complain about the result.” The population is more than ready to take on the responsibilities.

On 16 July Block 45, a huge apartment building in the 23 de Enero barrio of western Caracas, leapt a political hurdle. After half a dozen preparatory assemblies, they elected a council. A resident pointed to the garbage piled carelessly around the block. “This building is known as one of the filthiest in all of South America,” she said, then added proudly, “but now people will get a grip on the situation.”

‘No vote, no meals!’

Something similar happened further up the hill in the El Observatorio district. A plastic sheet pinned in a corner served as a voting booth, a poster reminded voters “balloting must be direct and secret” and a queue formed in front of the cardboard urns, shown to be empty before voting began. As is so often true, the local women had taken matters in hand. The stakes were considerable and the law clear. Notices said: “If less than 20% of the community takes part ( 6) the election will be invalid and no complaints will be accepted afterwards. The women were confident: “The men will come,” one said. “I’ve told my husband: no vote, then no meals, no laundry, nothing!”

In a few months thousands of councils have been or are being set up. Those that existed before the law was passed are gradually being legalised. There are already more than 500 in Caracas and 50,000 are expected overall. Upper-class districts are also taking part — “that is, when people agree to provide information on salaries”, said a resident of Prado del Este. Xiomara Paraguán, an El Observatorio council member, said: “At least they’re taking part. Who would have thought that possible a few years ago?”

Why did the government wait seven years to set up the councils? Engels Riveira of the Camunare Rojo council said: “If the mayors and governors had done their jobs properly, we wouldn’t have needed the councils. In a way it’s thanks to them.”

The rush to set up the councils shows that they cater to a need for democratic process. Participation had already been encouraged in the workplace, as co-management, self-management or cooperatives (the number of these shot up from under 1,000 in 1999 to more than 100,000). There were local cultural committees. But political arrangements were still needed.

Now the community is the basic structural unit of government of the new state, legally defined as 200-400 families in urban areas, around 20 in the countryside and from 10 up for the indigenous population. The Spanish political analyst Juan Carlos Monedero observed that the main reason 20th-century socialism failed was a lack of participation by the people. Communal councils may be instrumental in the construction of Venezuela’s 21st-century socialism. “If we get the money,” said Xiomara Paraguán. Another El Observatorio council member countered, “If the money doesn’t come, we’ll go and get it.”

Since the elections things are moving in El Observatorio. Paraguán attended a workshop on social projects and showed off her diploma. All council members will have similar training.

Faced with the inertia of some bureaucrats and politicians, people have to rely on the vigour of Contraloría (social control), a citizens’ watch that defends the process. Councils may be more finely tuned version of the principle and help Venezuelans get the means to exercise co-responsibility with the state.

Juan Guerra is a grassroots expression of Contraloría . After he finally got to meet a deputy, he said: “Revolution is like an iron fence protecting the bourgeoisie. If we, the people, allow the rust to accumulate, the fence will fall.”


4. COLORS Restaurant
A new democratic worker-cooperative challenges the industry
By John Lawrence (from Dollars & Sense magazine)

In the fall of 2005, COLORS restaurant opened in the heart of Greenwich Village, in New York City. In an elegant setting with Bauhaus and Art Deco touches, COLORS offers a creative seasonal menu based on favorite family recipes of its staff, who hail from 22 countries.

More than an excellent restaurant, however, COLORS is one part of a labor struggle to revolutionize the New York restaurant industry (see "Immigrant Restaurant Workers Hope to Rock New York," Dollars & Sense , Jan/Feb 2004). The restaurant is a democratic worker cooperative, founded by former workers of the Windows on the World restaurant (located on the top floor of the World Trade Center until 9-11), with help from the Restaurant Opportunities Center (ROC-NY), a workers' center established in 2002.

New York's famed restaurant industry is built on exploited immigrant labor, according to a study commissioned by ROC-NY. Only 20% of restaurant jobs pay a livable wage of $13.47 an hour or higher. Ninety percent of workers have no employer-sponsored health coverage. Immigrants of color are usually in low-paying back house jobs like dishwasher, food preparer, and line cook. Thirty-three percent of those surveyed "reported experiencing verbal abuse on the basis of race, immigration status, or language." Other illegal labor practices are common, such as work "off the clock," overtime, and minimum-wage violations, and health and safety code violations.

COLORS aims to be different. The minimum salary for back house worker-owners is $13.50 an hour. Front house worker-owners are paid minimum wage plus tips. Tips are split more equitably among the various occupations than the industry standard. In addition, every worker-owner has a benefits package that includes health insurance, paid vacation, and a pension.

Worker-owner Rosario Ceia, a 10-year veteran of the restaurant industry, says working at COLORS has been a radical change. Besides providing fair wages and benefits to worker-owners, COLORS is democratically organized into eight teams based on occupation—managers, line cooks, prep cooks, waiters, back waiters ("bus boys"), runners, dishwashers, and hosts. Each team has a representative on the board of directors. Rosario is not only a back waiter, but also treasurer of the board. Everyone participates in decision-making, Rosario emphasized, from adopting bylaws to choosing the restaurant's design.

Those in management, such as the executive chef, general manager, and wine director, play typical roles in providing needed expertise to the restaurant. In their day-to-day relationship with the other worker-owners, though, they are teammates, not bosses. As an additional safeguard against abusive hierarchy, all non-management worker-owners belong to the Hotel and Restaurant Employees Union (HERE).

Rosario believes COLORS will benefit all restaurant workers—not only by providing a successful model of "high road" business practices, but by actively advocating for workers in restaurant owners' association meetings. COLORS also extends its values down the supply chain by supporting fair trade, sustainable agriculture, and local producers.

The venture is also revitalizing an old labor organizing strategy of developing democratic worker cooperatives. The first union in the United States, Knights of Labor, wanted "to establish cooperative institutions such as will tend to supersede the wage-system, by the introduction of a cooperative industrial system." Perhaps, in addition to challenging an industry, COLORS is modeling a "new" organizing strategy for the 21st-century U.S. labor movement.

(John Lawrence is a psychology professor at The College of Staten Island, City University of New York, and a member of the GEO collective. Learn more at colors-nyc.com and rocny.org.)