Co-ops can lay a path to just economies amid the COVID crisis

Cooperatives are showing greater resilience than traditional enterprises in Argentina amid the COVID-19 crisis, in the same way as employee-owned companies did in the US during the Great Recession, producing COVID tests, masks and disinfectant, and directly meeting the needs of their workers and communities.

Kristina Hille

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THE cooperatives of Argentina, many of which underwent a rapid conversion from capitalist firms to cooperatives in the class struggle of the early 2000s, provide an inspiring example of how we can face the COVID challenge with solidarity.

In 2020, co-ops have produced almost 10% of the Argentine GDP. Among them are approximately 400 empresas recuperadas (recovered companies), supporting 18,000 jobs across all sectors. These factories were rescued from bankrupt owners by worker takeover. In many cases, workers had stayed without salaries for months and were fired without severance pay. Many owners planned fraudulent bankruptcies, looting their businesses for years.

‘We’re fighting our former employers, who kicked us out, and the only thing we want is to work and to be responsible,’ Emanuel Stolerman, treasurer of the Cooperative Farmacoop Ltda, told the Truthout website, speaking in Spanish. ‘For this reason co-ops are an alternative to traditional economics in the whole world.’

In order to be responsible, the abandoned employees reactivated their former workplaces in three steps: 1. Occupy, 2. Resist (negotiate legal status), 3. Produce. During the country’s 2001 economic crisis, Argentine politics had already responded to the challenges of the times and opened up legal possibilities for workers who had lost their jobs. United in a cooperative, they can apply to use the company for a limited time, until the foreclosure (uso temporario) or until, especially in key industries, the local parliaments enact expropriation laws.

The neoliberal administration of Mauricio Macri (2015-19) was hostile to the cooperatives, and their boom was just returning when COVID struck and the country faced another fiscal-financial crisis. In March 2020, the International Monetary Fund (IMF) declared Argentina’s debt unsustainable and advised that the country not be forced to repay its foreign-currency debt until 2024. With the knowledge that forcing governments to choose unsustainable debt payments over health care would cost lives, bondholders nonetheless refused debt-restructuring proposals. Argentina skipped payment on 22 May and entered default. Nevertheless, in August 2020, Argentina reached an accord on debt restructuring with its biggest bondholders on $65 billion. Argentina became an IMF-precedent case in terms of supporting a debt negotiation for the first time, with the organisation’s objective to stimulate creditors in other pre-default countries towards debt restructuring and prevent a global crash.

In December 2019, with the start of the Alberto Fernández administration, the Peronist government proceeded to support cooperatives, and the Ministry of Social Development created a National Directorate of Empresas Recuperadas to support cooperatives with subsidies, preferential credit, tax relief and integration with state institutions, as well as to maintain a National Register of Empresas Recuperadas.

Responding to COVID in April, the National Directorate of Empresas Recuperadas presented a workplace recovery law that aims to facilitate the reactivation process and to prevent fraudulent bankruptcies and the looting of firms. BNA (Banco Nación), the national bank of the country, created a lending facility for empresas recuperadas to ensure access to cheap credit.

Empresas recuperadas and the battle against COVID

The Farmacoop cooperative, the first laboratory among the empresas recuperadas, produces affordable medications to support local health care. It produces 8,000-10,000 bottles of disinfectant per day and undertakes quality control and distribution for 20,000 masks per day. With the support of the State University of La Plata, the National Directorate of Empresas Recuperadas and a private investor, Farmacoop is starting production of cheap, fast COVID antibody tests. Like similar tests in the US, it immediately detects the virus antibodies but not the virus itself. The line will produce 25,000 test kits per week, and once the pandemic is over, the technology can be applied to other health concerns, including dengue, pregnancy and allergies.

The Textiles Pigüé cooperative, a maker of sports equipment, switched to producing face masks, uniforms and surgical masks. Textiles Pigüé is also participating in a project of the National Scientific and Technical Research Council and the National Institute of Industrial Technology (INTI) in Argentina to develop and integrate an antiviral and disinfectant material into fabrics, such as for sheets, masks, gloves, etc. The gel-like natural polymer – which contains copper and silver nanoparticles that reportedly destroy the membrane of the virus and deactivate it – is produced at low cost and with local materials. The material can be integrated into high-contact surfaces in hospitals, public transit, schools and dwellings.

Close integration of universities, state institutions and cooperatives has bolstered the Argentine health care system. In the city of Comodoro Rivadavia, Jointex produces boots and protection caps in cooperation with INTI. In Trelew, Propulsora Patagónica donated 60 metres of fabrics for sheet production for local hospitals. In Santa Rosa, six laid-off women formed a cooperative and now produce 500 masks a day. Atex Cooperative Textil produces 115 pairs of shoe protectors, 200 protective caps, 1,000 surgical masks and 1,000 sheets per day for the Tornquist municipal hospital. Cooperative Textil Traful Newen produces 200,000 masks for provincial hospitals under an agreement with the local Ministry of Health. Graphic design cooperative MadyGraf is publishing pandemic-safety instructions and has also begun producing disinfectant and masks.

Compañeros Unidos Para Siempre produces 2,000 surgical masks per day for the local health system, and Aldea Eigenfeld, Diamante and Rosario del Tala produce 500 pairs of sheets and towels per day for the local Hospital de la Baxada in Paraná. With support from the Provincial Institute of Cooperative and Mutual Action, Teque of Tucuman produces around 10,000 masks per day for hospitals and vulnerable sectors.

Like traditional companies, co-ops are also dealing with the daily health risks of COVID. But their advantage is that they can accommodate to the circumstances, in order to protect each other and especially high-risk groups.

‘Eighty percent of our co-op members are over 55 years old, and this makes us organise our daily work in a way that protects these members: we offer at-risk groups to stay at home, while the rest of the co-op members work for them and we share the income,’ Farmacoop treasurer Stolerman told Truthout. ‘And of course, we take explicit care to use masks inside the company.’

Cooperatives have been central to confronting the twin economic and health crises. They have adapted to circumstances and demonstrated social responsibility and solidarity, providing their communities with crisis-relevant products as well as good livelihoods.

The principles of cooperatives are mutual assistance, mutual respect, solidarity, recognition and trust. Cooperative work relies on the principle of equal pay and one-person, one-vote, instead of one-share, one-vote. Leading positions rotate on a regular basis, and all-important decisions on the firm are taken in the plenary.

Co-ops advocate self-help and not charity. Cooperative members are their own employers, they invest their time and money in the company. They stay in the working process, keep their own jobs and in many cases create new ones. Co-ops are economic democracy, the counterpart of political democracy.

From cooperatives to a social economy

A July study from the United Nations forecasts that the number of people living in extreme poverty in Latin America is expected to increase from 67.7 million in 2019 to 96.2 million in 2020. This is equivalent to 15.5% of the region’s total population. In South America, a regional average decline of 9.1% in GDP is estimated in 2020. The COVID crisis led to an economic disaster; capital flight and falling exports from the Global South boost the downward spiral, to a supply-and-demand shock, extreme GDP fall, and towards an unknown catastrophe.

Despite ample warning from institutes that have forecast this exact pandemic scenario for years, many governments worldwide failed both to prepare or to react decisively – from Brazilian President Jair Bolsonaro, who defined COVID as ‘just a flu’, to the German Minister of Health Jens Spahn, who delayed importing masks and disinfectant, claiming that masks were of limited protective value for people not directly facing infection in health care settings. Moreover, a general social resistance to COVID-prevention measures has developed in many countries – fed by the organised right wing – with protests against the ‘corona lie’ and refusals to wear masks or follow social distancing orders.

COVID has revealed multiple faultlines in neoliberal global networks: companies that distributed to supply chains around the world to lower costs are frozen; unlimited mobility for global investment has made finance fragile; and welfare states beleaguered by capital flight leave citizens to weather the crisis alone. Like the Great Recession, the latest shock offers a choice: naively ask ‘Who could have known?’ and continue careening from crisis to crisis; or change the story for good.

The needed changes at the macro level are clear: build a global health system, broadly construed to include access to health care and social insurance for all at the national level; dignified livelihoods for care workers; and reform of the global pharmaceutical order. We must enable international public health cooperation on disease prevention and response, especially the growing threats of agriculture-enhanced pathogens, antibiotic-resistant microbes and climate-related shocks. These times also call for us to forgive debt for poorer countries and launch a Green New Deal with wage-led Keynesian reflation.

We also need a microeconomic vision to advance a more multipolar world organised around local, social economies with resilient production systems, fair pay for workers and the end of shareholder primacy.

In the COVID era, we must push for a social economy to collectivise key assets for the common good and to strengthen cooperative enterprises with government and third-sector collaboration. The COVID response that we choose can point towards a more egalitarian, sustainable world.      

Kristina Hille is a political scientist, journalist and filmmaker. She holds an MA in political science, criminology, penal and international public law from the University of Freiburg, and a PhD in political economy from the German Institute of Global and Area Studies. She is an expert on social economy, with publications at idelcoop, Challenge Magazine of Economic Affairs, International Labour Organization and teaching at the Berlin School of Economics.

     The above article is reproduced from Truthout (https://truthout.org/articles/co-ops-can-lay-a-path-to-just-economies-amid-the-covid-crisis/).

     Copyright, Truthout.org. Reprinted with permission.

*Third World Resurgence No. 345/346, 2020, pp 112-114