Describing Progress in Paradise

Venezuela’s Co-op Boom
by Michael Fox
June 01, 2007

To end poverty, put poor people in charge of their livelihood. A co-op boom turns the jobless into worker/owners.

When Estrella Ramirez’s 14-year-old son signed her up to participate in the government’s free literacy program, Mission Robinson, she reluctantly agreed. Ramirez, who lives in the poor western Caracas neighborhood of Catia, lost her right arm in 1991 from an arterial thrombosis. Six years later, her husband left her, leaving her to raise her young children alone. She looked for work but couldn’t find a job. “I lived locked in my house with my children, and I maintained my children sometimes selling coffee at the hospital, making lunches,” she says.

Three months after ramirez started the literacy program, her teacher enrolled her in the government’s new cooperative job-training program, Vuelvan Caras (About Face).

“I thought they wouldn’t accept me or put up with me,” Ramirez says. “There’s discrimination. You’re treated as if you are useless, a cripple.”

Ramirez began the year-long Vuelvan Caras industrial sewing course in spring 2004 with a group of other unemployed women from her community. Some, like Ramirez, were also offered scholarships so they could study and still care for their children.

Three years later, Ramirez is a co-founder and associate of the textile cooperative, Manos Amigas (Friendly Hands). She is also, according to former cooperative president, Maria Ortiz, “one of the hardest workers” of the 15-person outfit.

Ramirez formed Manos Amigas with her fellow Vuelvan Caras graduates shortly after finishing the program. They received an $80,000 zero-interest loan from the Venezuelan National Institute for Small and Medium Industry to buy 20 sewing machines and purchase their first materials. The government provided a prime location—free of charge—from which to run their cooperative, in a rundown building in downtown Caracas. They invested part of their loan in fixing up their space on the fourth floor.

At Manos Amigas, members voted to work eight hours a day, five days a week, and to pay themselves minimum wage, or around $200 a month. They also receive a bonus at the end of the year, depending on the cooperative’s yearly profits. As is the norm under the 2001 Venezuelan Cooperative Law, a president, secretary, and treasurer are elected yearly. The co-op holds a general assembly once a month, and decisions are made by consensus or by majority. “No one is boss, everyone is part of the team,” said one member.

Manos Amigas is just one of the 8,000 cooperatives, or worker-collectives, formed by the nearly 300,000 graduates of the Vuelvan Caras cooperative job-training program since it began in 2004. It is also just one of the 181,000 cooperatives officially registered in Venezuela as of the end of last year—an astonishing figure that puts the South American nation at the top of the list of countries in the world with the most cooperatives.

Over 99 percent of Venezuela’s cooperatives have registered since President Hugo Chávez Frias took office in 1999. The cooperative boom is key to the shift by the Venezuelan government towards an economy based on the inclusion of traditionally excluded sectors of society and the promotion of alternative business models as part of its drive towards what Chávez calls “socialism of the 21st century.”

Seeds of Venezuela’s Co-op Boom

At the time that President Chávez was elected in 1998, poverty had been on a slow but constant rise since the middle half of the century. The consolidation of lands into a few hands had displaced farmers who migrated in large numbers to the cities in search of work. As a result, Venezuela became the most urbanized country in Latin America; its capital, Caracas, is surrounded by poor barrios that house almost half of its population of nearly 5 million in substandard conditions. The implantation of neoliberal policies during the 1990s only aggravated the situation by privatizing state-owned businesses, and cutting subsidies and social spending. Inflation skyrocketed and zeros piled on to the end of the national currency, the Bolivar.

Venezuela’s poor were left with few options in a society that former vice-minister of popular economy (MINEP) Juan Carlos Loyo, described last year as “profoundly individualistic … profoundly unequal, and discriminatory.”

In 1998, however, things began to change. Chávez was elected president with the promise to rewrite the Constitution. As he built on the vision of South America’s liberator, Simón Bolívar, his popularity grew among the poor. His “Bolivarian Revolution,” Loyo says, includes building an economic system “based on solidarity and not exploitation.”

Chávez decreed the Special Law of Cooperative Associations in 2001, which made it easier to form cooperatives, and, in the words of former Cooperative Superintendent (SUNACOOP) Carlos Molina, “transformed cooperatives into a fundamental tool of social inclusion.”

Why cooperativism? “Because cooperativism goes further than purely economic activity, and is based on productive relations which are collective, in solidarity, and above all else inclusive,” says Molina.

The Venezuelan government began promoting the creation of co-ops by prioritizing them for government contracts, offering grants and loans with little or no interest, and eliminating income tax requirements for co-ops. Cooperative numbers immediately began to grow.

Venezuela kicked off Vuelvan Caras in spring 2004 as it began to reinvest its oil wealth in educational, social, and health “missions” in an attempt to incorporate Venezuela’s marginalized poor back into society.

The same year, the Venezuelan government began to promote what it called “Endogenous Development” (economic development from within), directly in contrast to the neoliberal model imposed during the 1990s, which promoted privatization and corporate ownership.

Endogenous Development puts the development of the community in the hands of the residents and builds on the local resources and capacities for the benefit of the region and its inhabitants. The model is based in 130 Nuclei of Endogenous Development (NUDEs) located across the country as centers of local development.

At the pilot Venezuelan NUDE in western Caracas, Fabricio Ojeda, more than 40 worker-collectives intermingle with the government health mission, Barrio Adentro, and the low-priced government-sponsored food store, Mercal.

Unfortunately, the reality of the cooperative boom is not without its problems. According to last fall’s first Venezuelan Cooperative Census, less than 40 percent of the cooperatives registered at the time were actually functioning.

Many of the discrepancies come from businesses that registered and either never got off the ground or failed to comply with the cooperative law. In rare cases, so-called “ghost cooperatives” registered and received loans from the government before disappearing with the cash.

Venezuelan cooperative totals are growing at hundreds per week, and former SUNACOOP director Molina verified last year that they have no hope of being able to audit them all.

Manos Amigas has not been spared its share of difficulties. Only half of the nearly 30 founders remain. The greatest challenge is individualism, say numerous cooperative members. It’s difficult to change overnight. But improvements are being made, and Venezuela’s cooperatives have a long history to learn from, even if the new co-ops don’t necessarily recognize it.

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