Reflections on the 6th International Gathering of the Workers’ Economy (Argentina, 23.08.2017-03.09.2017), Part II

As some businesses slip into the cracks created by financial crises, new grassroots, bottom-up organisations begin to coalesce, attempting to fill the socio-economic vacuum left in their wake.

One such organisation is the occupied factory. From the early years of industrialisation in Europe, there have been instances of worker takeover and self-management of factories. Fuelled by militant unionism or ideological fervour, workers occupied their workplaces when confronted with factory closures and unpaid wages. This can be seen from the takeover of tobacco factories by workers in 1819 (Miranda Lorenzo 2011: 77) to the evolution of the modern worker cooperative movement through the efforts of Robert Owen, Philippe Buchez (among others) to the Biennio Rosso mass occupations of factories in Italy by half a million workers between 1919-1920.

More recently, this tradition has continued in countries like Argentina, as well as Greece and Spain where the unemployment rate peaked at over 25% in the years following the 2008 global financial crisis. In 2001, at the height of the Argentine financial crisis, 2,600 businesses were going bankrupt every month (Magnani 2003: 37)! Market failure and a dearth of employment opportunities fomented the occupation and restart of several closed businesses by its workers, usually in the form of worker cooperatives operating under a type of self-management known as autogéstion. As of March 2016, there are 367 such recuperated enterprises in Argentina run by 15, 948 workers (Ruggeri 2016: 8). They operate in a broad variety of industries, from printing presses and parillas (steakhouses) to metallurgical factories and media outlets. What makes the Argentinian experience truly unique though is the longevity and resilience of these enterprises as well as their provenance in non-union movements. Of a total of 411 recuperated enterprises between 2002 and early 2016, only 43 have gone out of business, roughly 10% (Ruggeri 2016: 13).

unemployment rates in greece and spain
Unemployment Rates in Greece and Spain between 2000 and 2017, as compared to the EU and the Netherlands

Thus, as Marcelo Vieta argues, these recuperated enterprises have evinced similar, if not more pronounced, counter-cyclical and resilient qualities as worker cooperatives and other labour-managed firms (Vieta 2013: 9, Birchall 2012). In an economy that has moved from crisis to crisis, with relatively brief periods of recovery, this is an impressive achievement.

The resilience of such labour-managed firms may be attributed to several intrinsic and extrinsic factors. Empirical studies have shown that such firms are less likely to fail during periods of economic depression as they prioritise the retention of employees rather than profits for investors. To achieve this, they are willing to (democratically) introduce flexibility to wages and working hours, laying off workers only as an undesirable last resort (Pérotin 2013, Harrison 2013, Birchall & Hammond 2009). Worker cooperatives generally require a contribution of both labour and capital to the business, thereby aligning worker interests closely to that of the business. An additional feature of recuperated businesses in particular is their close ties with the communities in which they are located. The process of recuperation is rarely smooth and it is the solidarity exhibited by community members, standing shoulder to shoulder during factory occupations or by purchasing products, that acts as a critical lifeline in the early years of the business. In the post-default period, the survival and economic growth of said enterprises had a knock-on effect on government policies and regulations, shaping the laws of expropriation, bankruptcy and cooperatives as well as creating new avenues for financing worker cooperatives and recuperated enterprises.

However, as I was to discover during my visits of worker-recuperated cooperatives in the province of Buenos Aires and the eponymous capital, much has changed since the inauguration of the government of Mauricio Macri in December 2015.

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Reflections on the 6th International Gathering of the Workers’ Economy (Argentina, 23.08.2017-03.09.2017), Part I

Argentina was once one of the ten most developed countries in the world – and it shows.

Its baroque churches and neoclassical banks leave as much of an impression as the people sleeping on mattresses at their doorsteps. The parks and avenues are lined with blooming Jacarandas yet pedestrians clutch their bags tightly as they rush under the tree boughs as night descends. Buenos Aires has more bookstores per capita than any other city in the world, in spite of two severe financial crises in the past fifteen years.

Argentina became a major fault line in the global economy in 2001. The overvaluation of the Argentinian peso (after being pegged to the US dollar in the late 1990s) and higher utility prices following a wave of privatization raised the cost of doing business in Argentina compared to regional competitors, leading to a depression in foreign investor confidence, the shuttering of domestic companies and mass redundancies. Excessive borrowing by the government from foreign markets through the issuance of sovereign bonds precipitated the rise of domestic interest rates, making credit more expensive for domestic enterprises and further precipitating business closure and unemployment. Public discontent soon reached a boiling point, with runs on banks out of a fear of devaluation and frequent looting of supermarkets (Time). This also contributed to a shortfall in tax revenue, as a consequence of which the IMF refused to extend a previously agreed US$1.3 billion loan, citing Argentina’s failure to meet budget deficit reduction targets (NY Times). These developments eventually came to a head on 23 December 2001, when the President of Argentina declared that the state was defaulting on US$ 93 billion of its sovereign debt (Rabobank), most of which was in the form of bonds held by foreign creditors.

Buenos Aires erupted in a cacophony of clanging pots and pans (cacerolazos) as citizens took to the streets to air their grievances.