Diagnosis and Perspectives of the Social and Solidarity Economy of Venezuela

A discussion by Venezuela's Elvy Monzant, Dean of the School of Communication at the University Cecilio Acosta de Maracaibo and active member of the Gestión Participativa Cooperative. Monzant spoke during the First Global Prout Conference in Venezuela, "Building a Solidarity Economy based on Ethics and Ecology" (July 2011). 

A translation of Elvy Monzant’s presentation at the First Global Prout Conference in Venezuela, “Building a Solidarity Economy based on Ethics and Ecology”, July 7-9, 2011, Caracas.

Good morning everyone. We are pleased that Cooperativa Gestión Participativais part of this large group of men and women who believe that, through this space of discussion and reflection, another world is possible, and we are working to make life happen in abundance for everyone.

The name of our cooperative means Participative Management. Dr. Luis Delgado Bello was scheduled to speak today on behalf of our organization, but due to health problems he could not be with us today. So I extend his greetings to all of you and especially to the organizers.

We want to present the results of our study on the solidarity economy sector in Venezuela. The International Cooperative Alliance (ICA) is an organization made of millions of cooperativists throughout the world that has been carrying out both qualitative and quantitative research in various countries to determine the reality of the cooperative movement in the world. In the case of Venezuela, we have formed an alliance with ICA to carry out this research on the social economy of the country. Because all over the world people are wondering what is happening with Venezuela and the cooperatives boom in Venezuela. We wanted to use a cooperative approach, not from outside the country, but from within, and our research project used a scientific approach to understand the objective reality. In the short time we have, I will present some of the most important results from the participative research process carried out throughout the country.

The first chart shows the total number of cooperatives that were legally registered in Venezuela from 2001 to 2008. In the year 2001 there were 1,045 cooperatives according to the National Cooperatives Office (SUNACOOP). By the year 2008 there were 264,845 registered cooperatives! We went from 1,045 to 264,845! I would like to point out that this growth placed us as the country with the greatest number of cooperatives on the continent, exceeding even those nations with a strong cooperative tradition, such as Brazil.

Up to the year 2008, 268,000 cooperatives were created. What a difference! The question was: Were all of those 268,000 cooperatives really functioning? This second chart shows us how many of the legally registered cooperatives in 2008 were inactive (77%), and how many were active (23%). We can see that most of the 268,000 cooperatives stopped functioning. Later I will answer the important question why so many failed. These numbers caused some people to first praise Venezuela calling it “the cooperative boom” and “the Venezuelan cooperative miracle”, and later to refer to Venezuela as “the cooperative graveyard”!

Let’s compare the number of active cooperatives in Venezuela with Brazil, which has more than 20,000. Argentina has more than 10,000, Colombia a little less. In Venezuela, out of 268,000 that were created by 2008 when we did this research, we found that there were about 60,000 active cooperatives. This still makes Venezuela the leader of Latin America with the largest number of functioning cooperatives. This is a very significant number, and shows the Venezuelan calling for a different way to do economics. The vocation for cooperatives survived, despite the large number of cooperatives that stopped functioning.

In this chart we can see more clearly that from 1,967 active cooperatives in the year 2001 (this number includes some that were not legally registered but were effectively functioning), we moved to 62,879 active cooperatives in the year 2008.

It is important to also mention another figure. In 2009, after our research was completed, approximately another 10,000 cooperatives were legally registered, without any direct support from the government. This is another proof that Venezuelans are still searching for the path of solidarity. They continue looking for common experiences in a different economic model to make a better life for those who do it.

Another contribution of this research that we can mention is the classification of the various types of cooperatives that currently exist in Venezuela. Because, fortunately, not all cooperatives are alike. We created these categories call the Faces of Cooperatives in Venezuela. The first of these faces is Classical Cooperatives, which refers to the traditional cooperatives that existed in Venezuela for many years, some of them since the 1960s. These cooperatives affiliated with integrative organizations called federations or centrals, based on models of representative democracy and hierarchical structures for their management. These are very traditional cooperatives, with many years of experience and a large number of members, that existed long before the Bolivarian process began [before President Hugo Chávez was elected]. These cooperatives we call classical.

The second type are the Innovative Cooperatives that consider themselves as an alternative, that build in their reality a participative and solidarity way of life that shows a just society, a solidarity society, an ecological society that we want to build. The third type are the Co-managed and Alliance Cooperatives that develop themselves as part of the public or private entrepreneurial processes with responsibility to encourage worker management in these areas of business.

There are also Cooperatives Directly Promoted by the State. The Venezuelan government at a certain time established a public policy to directly promote cooperatives through its Missions, the Vuelvan Caras job training program and the courses of INCES (small enterprise administration). The government sometimes arrived in a community and announced that they were creating a cooperative and you will be the members. Here is the money to start, here is the structure, and here are the articles of incorporation. The State directly created and promoted these cooperatives.

There are also Spontaneous Cooperatives, which were initiatives of men and women from various communities and neighborhoods. Knowing of the cooperative boom, they decided to create their own organizations without direct support from the government, and without any outside financing of any kind.

Then there are Communal Banks. A few years ago all the communal councils in the country were asked to create a cooperative finance organization. At that moment, every communal council suddenly had a community bank, so we studied this, too. Finally came the Credit Unions (savings and loan associations). Our research studied all these different experiences of the solidarity economy.

So the different faces of the cooperative experience in Venezuela are: classical, innovative, co-managed and alliances, directly promoted by the State, spontaneous, communal banks, and credit unions. Let’s see some figures of these cooperatives.

The total number of classical cooperatives, which have not changed substantially since our research, were 882 in the whole country. The number of innovative cooperatives, which did not follow vertical patterns but were revolutionaries in the way they managed themselves and administered their resources, were 402. The co-managed and alliance cooperatives were 3,023. Those directly promoted by the State were 8,832. The spontaneous cooperatives were 27,798. The communal banks were 21,058. And the credit unions were 944. We can see that the largest number of active cooperatives were not directly promoted by the State, but rather were the spontaneous ones, created by men and women who decided to search for their own success and contribute to the transformation of the country through solidarity and participatory economics.

What were the percentages of active cooperatives in 2008?

34% communal banks,
1% credit unions,
1% classical,
5% co-managed,
14% directly promoted by the State, and
44%, the largest group, were the spontaneous cooperatives.

Now if we look at the number of members each cooperative has, we see that the large classical cooperatives with a long history are in first place:

680,000 people in classical cooperatives,
31,000 people in innovative cooperativs,
48,000 people in co-managed and alliance cooperatives,
52,000 people in cooperatives directly promoted by the State, and
62,000 people in spontaneous cooperatives.

I think this is more interesting than looking only at the abstract figures. Why did cooperativism grow in Venezuela? Why did we move from a thousand to 68,000 active cooperatives in seven years? First of all, the social and economic situation in the late nineties and the beginning of this century excluded the large majority of the people, and therefore alternative ways had to be found. Second, it was due in part to the promotion done by the cooperative movement that existed before 2001. For example, the cooperative movement helped pass a new cooperative law that was much better than before. And third, it was also due to public government policies from 2006 to 2008 that promoted cooperatives.

What were these government policies and strategic guidelines, implemented and evolved in stages, that helped to create the cooperatives boom? They are detailed in our presentation if anyone would like to know them.

Briefly, the public policies and strategic guidelines we identified were:

the change in the legal framework;
the President´s call to create cooperatives;
cooperatives included as part of the policy vision of the government;
abundant financing;
the policy to give priority to cooperatives in government contracts to buy goods and services;
special promotion programs;
social responsibility through social production businesses;
priority financing for private companies that were self-managed as cooperatives; and
delivering public resources to the communal councils that directly administered this money through communal banks.

These were the main policies that encouraged the cooperative boom in Venezuela.

Then we examined each one of the types of cooperatives and asked: How do they represent cooperative values? What is their social vision or group vision? Are they autonomous or dependent? The previous speaker, Camila Piñeiro Harnecker, expressed our viewpoint, stressing that cooperatives must be autonomous. Are they integrated with other entities in the Solidarity Economy or not? Are they committed to the local community or focused only on the cooperative itself? Are they focused on all the needs of their members, or only on their economic activity? Do they have participatory management or delegated management? Do they use a horizontal work system or a vertically supervised work system? Are they productive or not productive? Do they have roots in the culture or are they transcultural? Is their education constructivist [sharing experiences and knowledge] or based on the banking model [students are like empty accounts to be filled by teachers]. We evaluated all these and came to the conclusion that the spontaneous cooperatives are the closest to the cooperative ideal.

I would like to discuss the question: Why did so many cooperatives fail?

First, because government financing was given to organizations with vertical structures that benefited small groups without the actual participation of all the members. Second, because the cooperatives that failed were not formed by cooperativists with processes of educational and cultural transformation. Instead they were just another type of capitalist business. They registered as cooperatives to qualify for bank loans or government contracts, but the values and principles of an authentic cooperative were missing. When all money came from the government, and when there were not cultural and educational processes, then regardless of the fact that they spoke of participation, they repeated the same old pyramidical structures with president and vice president, and a small group subcontracted workers or hired employees instead of incorporating new members with full benefits and responsabilities. Those were pseudo-cooperatives, and as such, most of those 268,000 failed.

Which survived?

Those that were authentic cooperatives of men and women willing to demonstrate that through an economic revolution, it is possible to make a holistic revolution in the world. Where economy has a human face, based on justice and peace, and where everybody, both men and women, participates. And where a higher standard of living and happiness is possible through participative management by those who work.

What are our challenges?

To have a coherent model of cooperativism and cooperatives, promoting the integration of cooperatives in the solidarity economy, with alliances to the public and private sectors.
To introduce cooperativism in Venezuela’s petroleum industry.
To deepen cooperative educational processes.
To promote a good law for the solidarity, social and participative economy.
To improve self-regulation and the mechanisms of self-management of professions and supervision.
To develop an information and communication system for the solidarity economy.

Translated by Eugenio Mendoza and Dada Maheshvarananda

Listen to the English audio file or audio file in Spanish.

Read the original Spanish presentation with the charts.