Co-ops Fill the Breach

When corporate capitalism fails to deliver, what can? Argentina offers a dramatic test case that bears comparison with the transitions that are happening in Canada and other parts of the world. 

During Argentina’s economic crisis in 2001, many industries closed their doors. Employees found themselves locked out, without social security or unemployment insurance, sometimes after years of being paid in IOUs. What to do but … go back to work anyway? Hundreds of people returned to abandoned plants, occupied them, refurbished and then re-opened them, often as worker-co-operatives. (In the photo above are two of the owners of Metal Varela, a foundry south of Buenos Aires.)

Most of these 200 or so “recovered” factories have survived the partial restoration of Argentina’s economic situation in the last six years. Their competitive advantage has been a dedication to neighbourhood, to a trade, to a way of life – and to exchanging goods and services amongst themselves. They act as a local economic unit, not as curiosities bolted here and there onto the “real” economy. The value they place on people, place, and relationship enables them to function, even flourish, where your garden-variety capitalist either fears to tread or couldn’t be bothered to.

But for examples of the “recovery movement” closer to home, look no further than that hotbed of corporate capitalism, the province of Alberta. Over the last five or ten years the corporate world has been backing out of the rural towns of Westlock, Alliance, and Sangudo. None of the premises – a grain terminal, a railway spur, and a meat-packing plant, respectively - were abandoned and dilapidated, as was often the case in Argentina. Instead, due to inadequate returns on capital or to an owner’s retirement, an economic mainstay of these towns and their surroundings was in danger of being sold to interests that would scrap them or transfer their assets to larger centres.

Co-ops recovered all three industrial units: Westlock Grain Terminals New Generation Co-op, Battle River Railway New Generation Co-op, and Sangudo Opportunity Development Co-op. In addition to workers, each co-op drew members from the community as a whole. In each case, residents answered a share offering that capitalized the co-op, so it could purchase the premises, re-fit them, hire management and staff, and make ‘em go.

The money involved here is not insignificant, especially for small communities: $1.2m for Westlock; $3.4m for the Battle River Railway; $220,000 for Sangudo. So far the risk has been well worth it. Driven by the need to serve the community as well as to return dividends and capital gains to individual investors, these co-ops are turning an adequate profit and much more. They are employing local people, building local assets, and revitalizing a parcel of rural Canada where corporations driven by profit alone demonstrably could not. Jobs, skills, equipment, and control that stood poised to drain away instead have stayed local.

How common can this get? In times like these, when the cumulative costs of corporate capitalism to consumers, communities, governments, and the environment are overtaking its benefits, that’s a question that needs answering.

Photo courtesy of Paula Surraco and The Working World.

Dig Deeper
  • Two things that capitalism can deliver are production on a vast scale, and innovation. Transition requires co-ops to be able to do the same, but without compromising their commitments to people, place, and relationship. To learn more about how co-ops can meet the challenges of scale and innovation, read The Co-operative Idea in the 21st Century (includes a French language summary). See also the book it reviews, Humanizing the Economy: Co-operatives in the Age of Capital.
  • Esteban Magnani explains the success of Argentina's worker co-ops in greater detail in his article The Measure of Success. They survive, and sometimes even thrive, because desperate people see options beyond the imagining of those who still have something to lose.
  • It is very difficult for a co-op simply to “step into the breach” left behind by a business corporation. A whole system of financial services, securities regulation, and business training has grown up in support of capitalist entrepreneurship. Transition requires that we create a similar support system on behalf of co-operative entrepreneurship. Read What’s So Special About Nova Scotia? to see how the co-op system in one province is doing it.
  • Here’s a different story. For over a century, the St-Albert Cheese Factory Co-op in eastern Ontario has kept business corporations from stepping into its shoes. Nowadays, that means maintaining its product quality and markets despite competition from multinational food giants. Find out how St-Albert manages it in Une vision à très long terme (includes an English language summary.)
  • The Albertan examples show how powerful community-based finance can be. To wield that instrument residents require a lot of financial and legal expertise, however. To see how Westlock Grain Terminals organized a share offering, read Westlock Grain Terminals: A Case Study, a research study sponsored by the BC-Alberta Social Research Alliance (BALTA).

i4 is an ejournal about Inspiring, Innovating, Inciting, and Inventing ways of life and work that permit humanity and the planet to thrive in this century of unprecedented challenges. i4 is a publication of the Canadian Centre for Community Renewal.