"Occupying, Resisting, Producing"

Argentine Workers Take Over Abandoned Factories

by Andres Gaudin

Dollars and Sense magazine, March/April 2004

[Translated from Spanish by Alejandro Reuss]

It started timidly at first, in the mid-1990s, with workers occupying factories abandoned by their owners and getting them up and running again. But the phenomenon took off in December 2001, when the Argentinean economic crisis hit and massive street protests forced the country's president, Fernando de la Rua, from office. A decade of neoliberal policies had culminated in four years of recession, leaving thousands of domestically owned small and medium-sized businesses struggling or abandoned. Since 2001, in the face of growing unemployment and the state's failure to foresee or address the crisis, thousands of workers have restarted abandoned factories themselves. By taking over plant and equipment, these workers have put the right to work above employers' property rights, and have made some think that Argentina is at the beginning of a revolutionary process. While that is probably not the case, the takeovers do represent a remarkable form of action by Argentinean workers under conditions of harsh economic crisis.

"We are a new social actor; we're creating a new consensus," reads the constitution of the National Movement of Recovered Enterprises (known by its Spanish initials, MNER).

In the face of the failure of company management, we felt we had to replace individual effort with collective effort, as the crisis demanded. By raising the flag of self-management, we were able to go from a situation of social conflict to a productive consensus. In l955, we [workers] had a 51 % share of the national income; now we get just 17%. We're using forms of democratic organization like workers' cooperatives to fight for a more just distribution.

With this declaration, the workers have given preliminary answers to the major questions about the country's economic future: How should income and wealth be distributed? How should workers organize themselves at the worksite and in the larger society? And how should industry itself be organized?

THE SHAPE OF THE CRISIS

As of October 2003, about 140 factories had been or were in the process of being "recovered," and about 12,000 workers had used this strategy to keep their jobs, according to a study by the University of Buenos Aires. Argentina's factory recoveries are taking place amid a catastrophe of unemployment, off-the-books work, wage cuts, and poverty. Workers at companies abandoned by their owners see factory occupations and self-management as the only way to avoid unemployment, exclusion, and marginalization.

. In October 2002, official figures showed 17.8% unemployed in an "economically active" population of 13.8 million people. In truth, about 21.4% are unemployed, since in the official figures, people receiving $50 a month from the government (about $1.70 a day to cover basic necessities for a four-person family) count as employed.

* Almost 4 million people (equivalent to 45.1 % of the employed population) work off the books; they are workers without being officially declared as such. This means they don't have any rights as workers or any social insurance. They do not get paid vacations, retirement pensions, or disability benefits. They have no unemployment insurance, worker's compensation, or health coverage. Off-the-books work has been on the rise in Argentina since the so-called "tequila crisis," Mexico's devaluation of its currency in 1995, which depressed economies throughout Latin America. In May 2003, off-the-books workers represented 45% of the Argentinean labor force. As shocking as this national average is, in nine of the country's 23 provinces, off-the-books work exceeds 50% of total employment, topping out at 58.5% in the northeastern province of Corrientes.

* According to the International Labor Organization, the Argentinean working day is one of the longest in the Western world, and wages are much lower than those in other Western countries. While workers in the global North work between 1,300 hours per year (in Norway) and 1,800 hours per year (in the United States), Argentinean workers average about 2,000 hours per year. The average wage of an Argentinean worker, however, is just 10% to 20% that of a European or North American worker, and has about 30% the purchasing power.

* Measured in terms of income, 54.7% of Argentina's population falls below the official poverty line, and over a quarter of those below the poverty line are considered extremely poor or "indigent." With a population of 36.2 million people, this means 17.8 million people are poor, and 4.7 million are indigent. The number of indigent people reaches 5.5 million-14.3% of the country's households- when measured in terms of housing quality, access to utilities, sanitation, and school attendance. Among Argentinean households, 50% do not have running water, 60% have no access to medicine, and 71 % lack phone service.

This is the context in which Argentinean workers have occupied factories. The workers involved, it should be clear, have not done so from ideological motives, but as a way out of even more severe poverty. But their strategy differs from traditional union struggles, and has put workers in new and unfamiliar situations for which few have sufficient training: they are self-managing bankrupt enterprises, trying to overcome shortages of working capital and other necessities, and confronting a poor economic climate and unfavorable legal norms. Workers who have taken over factories have done so knowing that they would face tremendous obstacles.

COOPERATIVE ECONOMICS

Factory recoveries have usually begun when enterprises have been sued by their creditors, the Department of Justice has declared them bankrupt, or their owners have simply abandoned the plants because they can not pay their debts. When the workers have taken over the plants, the Department of Justice has recognized their right to operate them. While the old owners have at that point lost power over the plants' operation, they have retained ownership. The workers in recovered factories do not own the premises and machinery, but simply have legal authorization to use them. In the few recovered firms where this legal process has not taken place, the workers have rented plant and equipment from the old owners for a fixed monthly sum. In a few other cases in and around Buenos Aires, the government has expropriated factories and turned them over to the workers, who have two years to pay for the machinery.

That there is a legal process for factory recoveries is significant. Attorney Luis Caro, who advises recovered firms, notes, "We have been able to get many judges to agree that when the destiny of the society is in the balance, private property should come after the right to work."

All recovered firms are managed by the workers themselves, and within the factories, all workers have the same rights and responsibilities, though some may do administrative work, others work on the production line, and still others may do less-skilled work. Everyone receives the same monthly salary, which a general assembly of workers sets based on the firm's net revenues. (This means that salaries vary from month to month, depending on the firm's performance. At most companies, salaries fall between $130 and $170 per month.) So far, the recovered firms have been able to pay wages, but have not shown profits. This means they have not been able to buy new equipment or modernize the plants.

In most cases, the workers are given two years to pay back creditors. "For us, those two years are fundamental, because they allow us to keep working-to avoid unemployment-and study the viability and profitability of the enterprise," explains Caro. "It's a reasonable time frame for figuring out at what point and in what form it may be possible to make an offer of repayment to creditors."

During the first two years, recovered factories face a series of difficulties. First, workers need to rebuild the confidence of suppliers and customers swindled by the old owners. They also need to acquire management and marketing expertise, since in many cases, managers leave along with the owners. Gabriela Dorrego, a management consultant, observes that recovered enterprises often have to contract with outside agents to put their products on the market. To help workers gain accounting, legal, and marketing skills, the MNER has signed an agreement for free advice with the Assembly of Small and Medium Businesses (APYME). The public National Institute of Social Economics (INES) also offers training. Besides needing management expertise, many factories lack working capital. Thirty-two percent are located in factory complexes over 30 years old, using obsolete technology and equipment. Many must make arrangements for other firms to supply their raw materials and market their finished product. Finally, according to Dorrego, recovered enterprises have trouble investing enough to develop and compete. Together, these challenges prevent the factories from being as productive as they could be. Osvaldo Porro, manager of the recovered meatpacking plant Yaguane, says that it took two years for his factory to break even on a contract.

The recovered sector, although socially significant, represents a tiny portion of the Argentinean economy. More than 12,000 workers are employed in the recovered sector, but measured in relation to an economically active population of 13.7 million, recovered enterprises employ scarcely 0.08% of the labor force.

The factories vary widely in size: 13 % of recovered enterprises surveyed in the UBA study employ 10 or fewer workers; 23 % employ between 11 and 20; 40%, between 21 and 50; and 24%, more than 50 workers. Of the roughly 140 enterprises under workers' self-management, about half are in the metalworking sector, followed by the printing and food industries. During 2003, some service enterprises-cleaning services, hotels, and schools-also joined the ranks.

From the start, managers of recovered enterprises understood the need for their factories to complement each other-whether by jointly purchasing raw materials and other inputs to secure better prices, or by producing inputs for one another to increase production and ensure lower prices. Nonetheless, today, recovered enterprises have not developed economic relations with one another for reasons that the workers themselves are unable to explain. But 55% of recovered enterprises' output is used as inputs by other businesses (41 % is destined for consumers), which has led to some research on the ways that recovered enterprises might complement each other and increase the overall size of the sector.

Despite the obstacles they face, the recovered factories are able to pay wages and meet their variable costs-raw materials, energy, and so on. None of them, however, is working at full capacity, and their development is limited by a lack of capital, by an inability to make technological changes, and by legal difficulties in accessing export markets. For the time being, they are just trying to maintain the job base. Nonetheless, the recovered enterprises are not in danger of failing; and if any of them do fail, it will not be for the workers' lack of ability, but because of potential legal decisions that could hand the factories and machinery back to the failed owners.

Dorrego maintains that the recovered factories have done more than preserve jobs-itself an accomplishment. They create the possibility for workers to learn about the production process in sectors currently growing due to import substitution or competitiveness on the world market. They also

break down hierarchical labor relations and establish "horizontal" decision-making structures: recovered factories hold assemblies where all workers can contribute to decisions. Most importantly, argues Dorrego, they have gradually involved state, provincial, and national governments in the recovery project, and have promoted collaboration among different people and organizations-both within the enterprises themselves, and with professional employees, universities, civil society organizations, and state institutions.

COOPERATION, WORKERS' CONTROL, AND CLASS STRUGGLE

Knowing that workers do not mean to bring about revolutionary change, but simply aim to ensure steady employment for themselves, the state (ambiguously) and employers' organizations (with perfect clarity) have made their own proposals for the recovered factories. Their idea is to limit the workers' claim to one of establishing cooperatives to maintain employment. A claim of this scope does not challenge the private property system or employers' power in the economy; it assimilates factory recoveries into capitalism. As part of their effort to defuse the threat of recovery initiatives, employers and the state want to see that the factories-if they must stay in the hands of workers-exist in forms similar to regular commercial enterprises, whether as nationalized firms controlled by bureaucrats, or as cooperatives that may redistribute income but do not redistribute knowledge and power within the workplace. The state has also tried to present recovered enterprises as part of its own labor policy, and to show off the peacefulness and legality of the recoveries.

These strategies aim to prevent the factory recoveries from rekindling a debate that surged in Argentina during the 1970s about the best strategy for working-class organization and resistance under capitalism. On one side were the promoters of a politics of workers' control, and on the other side were the defenders of cooperativism. Each proposed a different way of dealing with the fact that under capitalism, workers are formally deprived of understanding and control of the production process, the product of labor, and the proceeds from the sale of this product.

For Marxist economist Eduardo Lucita, "Underlying the debate between cooperativism and workers' control is the opposition between a rupture with the logic of capital and a reintegration with it." Under the cooperative form of organization, which supposes voluntary association and self-management, the workers gain a source of work, a more egalitarian distribution of income, and productive gains that come from the logic of self-management.

Supporters of cooperativism typically point to two models to emulate: the Argentinean factory Zanello and the Mondragon cooperatives in the Basque region of Spain. Zanello, which manufactures tractors, is a single factory. When its Italian owners-attracted to the country in the 1990s by the neoliberal promise of low wages and labor "flexibility"- decided to abandon it, the workers were able to come to an agreement with several interested parties. They formed a corporation in which 33% of the factory remained in the hands of the workers, 33% of the power went to the firms that market the tractors and provide the capital, 33% went to the top technical personnel of the factory, and the remaining 1% went to the City of Villa Maria, where Zanello is headquartered. The organizational model chosen, the corporation, is one of the principal forms of the capitalist firm. Mondragon is a utopian example taken as a model by the MNER, and workers at recovered factories often refer hopefully to it. Almost 50 years old, Mondragon is now the largest business group in the Basque region and the seventh largest in all of Spain. It includes more than 150 cooperative enterprises and 60,000 workers, and has over 8 billion euros in working capital. Mondragon may be the most successful example of cooperative enterprise within a capitalist economy.

According to Lucita, it is clear that these conditions are infinitely better than the current ones. Nonetheless, cooperatives cannot escape the logic of market competition, which puts wage levels, conditions of work, and productivity in play. Pay, work time, and the pace of work all affect the final cost of the product, and this is fundamental to capitalist competition.

On the other hand, workers' control, which also assumes voluntary association and autonomy, allows the enterprise to remain under capitalist ownership (private or state), while the workers, through organized struggle against the capitalists, assume control of the enterprise's production process and financial accounting.

Lucita notes that the Argentinean situation has some unusual features: given the employers' abandonment of factories and the state's failure to assume responsibility for them, there are enterprises now functioning under a system of workers' control where there is no capitalist for workers to assert control over.

Today, Argentinean workers' autonomous action of resisting, occupying, producing, and marketing has challenged capital's monopoly over knowledge and authority, and the debate over cooperativism versus workers' control has reemerged, though more among advanced sectors of the workers' movement than among workers in recovered factories.

CRISIS AND CONSCIOUSNESS

From its beginnings, the MNER borrowed the slogan "To occupy, to resist, to produce" from Brazil's Landless Workers' Movement. This slogan, the MNER says, summarizes the stages that the workers pass through: not only maintaining their source of employment, but also creating an enriching experience of self-management and cooperation, and ultimately assuming an active role in the reconstruction of a country and a society razed by neoliberalism.

Workers in recovered factories speak proudly, but not ideologically, of having been able to restart their factories and keep their jobs after the flight of the owners. According to Alicia Esquivel, an administrative worker at CIS, a bus body shop, "When we occupied the plant, there wasn't much to think about: either we acted to run things for ourselves, without an employer to solve all the problems, or we became unemployed for good, in a country where once you have lost your job you don't get it back. Thank God we didn't make a mistake." Her description, full of emotion and lacking in ideological definition, is common among workers in recovered factories.

The UBA study confirms that the take-overs have not produced political or ideological changes among participants. The psychologists and sociologists who took part observed a notable increase in workers' self-esteem and a broad development of solidarity, but have found that these changes did not move workers toward a larger anticapitalist vision. "In general, these workers do not seem to be conscious that they have broken with one of the basic premises of capitalism," say the UBA academics, "so they do not move beyond the restarting of the factory, do not stop to consider what would be the best organizational form to guarantee the survival of the enterprise or for this experience to embrace new groups of workers."

The directors of some of the recovered enterprises have tried to tie their destiny to that of the workers' movement as a whole, but so far this has not borne fruit. In September 2002, when the Central Union of Argentinean Workers held its congress, a group from the MNER presented a document linking the recovered enterprises and the workers' movement, but the idea was not supported by the mass of workers in recovered enterprises. Likewise, the MNER has kept itself at the margins of the movement against the Free Trade Area of the Americas (FTAA), so it has not developed a relationship with what might be called the anticapitalist movement in Argentina.

For now, workers are winning the first battles in the war for their jobs. But in making the workers take the capitalist models of Zanello and Mondragon as their paradigms, the employers are winning the ideological battle. What predominates today in the recovered sector is workers' direct management. This development reflects the nature of the crisis in Argentina: it is not a revolutionary crisis, but it is one where the high level of concentration of capital does not leave room for a reformist way out of the impasse.

But even if the workers do not consciously embrace the larger implications of their struggle, their autonomous action-"occupying, resisting, producing"-calls into question the capitalist monopoly of authority and knowledge. In embryonic form, a new power is beginning to confront the powers that be.

Andres Caudin is an Uruguayan journalist based in Argentina, a correspondent of LatinAmerica Press and other publications, and an advisor on international issues to the Socialist Party legislative caucus.

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