State-Financed Experiments in Venezuela’s Solidarity Economy

State-financed cooperatives are mushrooming in Venezuela, hand-in-hand with the boom in oil prices, and are supposed to be laying the foundations of a new socioeconomic model. However, some weaknesses are showing through.

CARACAS, Nov 17 (IPS) – “I used to be a buhonera (street vendor), but I got tired of working in all weather conditions, rain or shine, so I joined the Venezuela Avanza (Venezuela Advances) cooperative. Here I earn less money and the heat in the warehouse is stifling, but we hope our working conditions will improve with time,” Ana Ortiz, a mother of seven, told IPS as she sat at her sewing machine.

State-financed cooperatives are mushrooming in Venezuela, hand-in-hand with the boom in oil prices, and are supposed to be laying the foundations of a new socioeconomic model. However, some weaknesses are showing through, such as the creation of “phantom cooperatives” and a lack of self-financing.

Ortiz was one of 220 women working on a suffocatingly hot afternoon at the clothing cooperative set up a year ago in the Fabricio Ojeda Endogenous Development Nucleus, located in densely populated west Caracas. She works seven hours a day, five days a week, and is paid 117 dollars a month.

This is much less than the minimum salary, officially set at 188 dollars a month. “The thing is that we operate under the law for cooperatives and not the labour laws. What we pay is not a salary, but an advance on profits, which will be distributed in December,” Ana Guédez, who is on the cooperative’s administrative council, said in response to questions from IPS.

The Nucleus is located in a fuel distribution and storage station that had been closed for more than 12 years. It was reconditioned to make room for the textile cooperative along with a shoemaking cooperative, a government health clinic, a small plaza, and a vegetable garden to be tended by the elderly.

Next door is one of the markets forming part of the government subsidised food programme, and in the neighbourhood there will also be a library, a school for community activism, a soup kitchen, a preschool centre, a community radio station, a computer centre, and other projects to be chosen by the residents, said Guédez.

Decision-making assemblies are held to address production matters, according to Maria Maza, 20, one of the 143 people – nearly all women – who belong to the shoemaking cooperative. “We make mainly school shoes, a single model at a lower price, approved by an assembly of cooperative members together with people from the community,” she explained.

The combination of enthusiasm, difficulties and hope seen in the textile cooperative is repeated elsewhere. “It’s a job, an opportunity. We work with glue, and we have problems with the air extractor fans, but that will get better in a few months. We can’t spend money on everything at once,” said Marta Arrieta, a leather cutter.

The shoemakers voted to pay themselves 186 dollars, just under the minimum salary, for their monthly remuneration or advance on profits. This time-honoured method is used by cooperatives the world over, ever since the first cooperative was founded in Rochdale, U.K. in 1844. This practice means they can avoid some of the payments required by labour laws that are due to salaried workers (which they do not employ).

The Fabricio Ojeda Nucleus is the showcase for these centres of economic, social and political activity. It serves as a debate forum when neighbourhood activists gather for health committees or urban land use meetings, and it is often shown off to foreign visitors by the government of leftist President Hugo Chávez.

Fabricio Ojeda was a journalist who headed the Patriotic Junta, a civilian organisation that helped to overthrow the dictatorship of general Marco Pérez Jiménez (1948-1958). He was elected to parliament for the 1959-1964 period, but abandoned his seat to join the communist guerrillas. He died in 1966 in a military prison.

Where are the funds coming from for the new cooperatives? State oil giant Petróleos de Venezuela (PDVSA) contributed 7.4 million dollars for remodelling warehouses and common areas, building the clinic, and for use as seed money for the projects, including the working capital for the cooperatives, said the coordinator of the nucleus, Winckelman Ángel.

Local bricklayers’ cooperatives were put in charge of the civil engineering works, under the direction of naval engineers, Ángel added.

Meanwhile, new developments have been occurring with an architectural cooperative, and another cooperative of university graduates, Ápices, which is in charge of looking after social and economic aspects in the nucleus.

More than 100 kilometres to the southeast, in a rural location bordering a national park, the big house of the former La Elvira cocoa plantation is the site of another endogenous development nucleus, with smaller cooperatives aiming to exploit the area’s potential to attract tourists who want to relax in the open air in contact with nature.

“A group of 19 of us have formed a cooperative to manage part of the big house as an inn, and to work as tourist guides. We were granted a 97,000 dollar government loan,” Paula Calderaro, director of the project, which emerged as an initiative of the Ministry of the Popular Economy, told IPS.

Other cooperatives for the nucleus are being formed, involving transport, crafts, jams and preserves, the maintenance of fields for an agrotourism “cocoa route”, and running the restaurant at the big house. Half an hour away, a group of peasant farmers led by Javier Hidalgo wants to create a beach resort by a river.

In the nearby dusty town of Macaira, population 3,000, the army has been busy repairing roads, the church and the primary school, and is also cooperating with health programmes. “We need a secondary school, a health clinic, and most of all we need jobs,” María Fuentes, a retired teacher, told IPS.

Several cooperatives have been formed to carry out construction work, transport, crafts, and even a bakery.

“Our idea is to link these cooperatives with those at the nucleus, to create a sort of tourist route between Macaira and La Elvira, and to connect that nucleus with others to establish an endogenous development zone,” the deputy minister of the Popular Economy, Juan Carlos Loyo, commented to IPS.

“This plan is a year old. People go on courses for technical and production training, and to learn how to organise a cooperative. The course takes several months, and they may receive a scholarship (80 dollars a month) while they are in training. Then they organise themselves and come up with a project, financing is sought, and they start to produce,” Loyo explained.

After 12 months, “260,000 people have graduated and have set up 6,800 cooperatives, 60 percent of which already have financing. The cooperatives are grouped in 125 endogenous development nuclei. This means that about 200,000 people will be working collectively, in a country with 26 million inhabitants and a work force of 12 million,” Loyo indicated.

With government funding and a major reduction in the requirements for their creation, cooperatives are booming in Venezuela. The total number rose from 800 in 1998 to 10,000 in 2003, 50,000 in 2004, and 74,200 by the end of June.

In two years, PDVSA alone has poured 585 million dollars into “endogenous development” programmes, one of the company’s vice presidents, Franklin Méndez, told a recent regional forum of environment ministers.

Oscar Bastidas, with the Centre for Cooperative Studies at the Central University (Cepac-UCV), warns that this may be “money thrown into a bottomless pit, if the cooperative disbands as soon as the first instalment of money is paid. This happens because of the improvised way in which many cooperatives have been organised.”

The expert pointed to the absence of one of the general principles of the cooperative movement, namely self-financing. Instead, he said, the programme “has become an instrument for the government to redistribute oil income.”

Even the minister for the Popular Economy Elías Jaua admitted that “there are many cooperatives that are registered as such on paper, but which actually have a boss who is paid more, salaried workers, and unequal distribution of work and income.”

For this reason, the government Superintendence of Cooperatives has commenced a programme of inspection, “to make sure they aren’t being used as a smokescreen for some groups to cling to privileges,” the minister said.

“We know that we are coming from a capitalist lifestyle that is profoundly individualistic and self-centred,” commented Loyo.

“Our idea is to lay the foundations for a new socioeconomic model, which our president (Chávez) calls ’21st century socialism.’ That’s why we’re prioritising communities that belong together in a shared social fabric and organise themselves for productive activity,” he added.

In the Fabricio Ojeda nucleus, Ángel, the coordinator, put it like this: “We, the organisers, are not going to be here forever. The nucleus must be strengthened and the community and its cooperatives must be able to sustain it. We transfer power to the community, but the community must be prepared to take over. It’s all part of the ongoing struggle to create 21st century socialism.”

Source: IPS