WORKERS' CONTROL AND SOCIAL ECONOMY IN

ARGENTINA'S RECUPERATED ENTERPRISE MOVEMENT

BY

BRIAN MICHAEL ZBRIGER

B.A. UNIVERSITY OF MASSACHUSETTS AMHERST (2005)

SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS

FOR THE DEGREE OF MASTER OF ARTS
IN REGIONAL ECONOMIC AND SOCIAL DEVELOPMENT
UNIVERSITY OF MASSACHUSETTS LOWELL

Signature of
Author:____________________________________Date________________________

Signature of Thesis
Supervisor:
_________________________________________________

Signature of Other Thesis

Committee Members:
_________________________________________________

_________________________________________________
 WORKERS' CONTROL AND SOCIAL ECONOMY IN
ARGENTINA'S RECUPERATED ENTERPRISE MOVEMENT

BY

BRIAN MICHAEL ZBRIGER

ABSTRACT OF A THESIS SUBMITTED TO THE FACULTY OF THE

DEPARTMENT OF REGIONAL ECONOMIC AND SOCIAL DEVELOPMENT
IN PARTIAL FULFILLMENT OF THE REQUIREMENTS
FOR THE DEGREE OF MASTER OF ARTS
UNIVERSITY OF MASSACHUSETTS LOWELL
2007

ii
 Abstract

In Argentina, over 170 bankrupt or troubled businesses have become worker-

controlled cooperatives, mostly since the economic crisis of 2001-2002. This thesis

assesses the possibilities presented by this “recuperated enterprise movement” as a model

for expanding workers' control. Spanning economic and political concerns, the primary

focus is on the level of the shop floor and its relation to the surrounding community. A

review of the history of class struggle in Argentina reaching back to the early 20th century

helps put the movement in context and explains how it emerged. Site visits and oral

history interviews conducted at eleven recuperated enterprises illuminate the extent and

nature of workers' control gained by the movement, while practices of social and

solidarity economy are examined as a strategy to partially overcome the obstacles that

face worker cooperatives and to build power at the national and global levels.

iii
 Acknowledgments

First of all, I would like to express my gratitude to each of the countless

recuperated enterprise workers who welcomed me into their workplaces and took the

time to share their experiences with me. I will always remember and appreciate these

inspiring visits, and hope that this thesis might in some tiny way support their truly

remarkable struggles for workers' control. I would also like to thank a number of

individuals who helped greatly in arranging these visits: Graciela Monteagudo and

Marcelo Dimentstein of the Argentina Autonomista Project, Esteban Magnani of La

Base, and my fellow students Phil Belltower, Ben Hueftle, Carly Knight, John Baldridge,

and Leander Rist. Along with Esteban, I am indebted to Pablo Pozzi and Ezequiel

Adamovsky for the very helpful seminars they gave at the University of Buenos Aires,

also made possible through the organization of the Argentina Autonomista Project and

Phil Belltower.

I could have never written this thesis without my incredibly supportive

committee. Paula Rayman’s enthusiasm for my early term paper on Mondragón greatly

inspired me to continue studying workers’ self-management. Chris Tilly’s knowledge and

encouragement enabled me to pursue a project I initially considered impossible, while his

insightful criticisms challenged me to push my thinking further. Bob Forrant has truly

been the ideal committee chair. Though he was working with many other students this

iv
year, he found the time to give each of us the support we needed. His advice was

absolutely invaluable to me throughout the process of planning, researching and writing

this thesis. Finally, I would like to thank my family and all my friends for their patience

and support as this project has consumed much of my life over many months.

v
 Table of Contents

Page

List of Tables....................................................................................................................vii
List of Illustrations.........................................................................................................viii
List of Abbreviations........................................................................................................ix

Chapter 1: Introduction....................................................................................................1
1.1 Introduction.............................................................................................................1
1.2 Conceptual framework............................................................................................4
1.3 Methodology...........................................................................................................7
1.4 Outline of following chapters................................................................................10
Chapter 2: Historical Conditions...................................................................................13
2.1 Introduction...........................................................................................................13
2.2 Class formation in Argentina................................................................................14
2.3 Perón and Peronism...............................................................................................18
2.4 The crisis of neoliberalism....................................................................................25
2.5 “Make them all go!”..............................................................................................28
2.6 Conclusions...........................................................................................................34
Chapter 3: Change and Continuity Under Self-Management.....................................36
3.1 Introduction...........................................................................................................36
3.1 An overview of Argentina's recuperated enterprises............................................39
3.2 First impressions...................................................................................................42
3.3 Income and production..........................................................................................45
3.4 De-skilling, re-skilling..........................................................................................50
3.5 Cooperation and conflict.......................................................................................52
3.6 Political perspectives.............................................................................................55
3.7 Conclusion.............................................................................................................57
Chapter 4: Markets, the State, and the Solidarity Economy.......................................59
4.1 Recuperated enterprises in the conventional market.............................................59
4.2 Recuperated enterprises and the state...................................................................61
4.3 Defining “social and solidarity economy”............................................................65
4.3 ERWs and their neighbors....................................................................................69
4.4 Solidarity markets.................................................................................................73
4.5 Conclusion.............................................................................................................77
Chapter 5: Conclusion.....................................................................................................79
Literature Cited...............................................................................................................95

vi
vii
 List of Tables

Table 1.1: Visited firms.......................................................................................................9

Table 3.1: Percentage of ERWs in Argentina by industry (Ruggeri et al., 2005).............40

viii
 List of Illustrations

Figure 1.1: Dimensions of workers’ control........................................................................5

Figure 3.1: Mural inside Artes Gráficas El Sol.................................................................43
Figure 4.1: Magazine produced by students at Gráfica Patricios......................................71
Figure 4.2: ERW sales by type of client (Ruggeri et al., 2004).........................................73
Figure 4.3: Marketing poster for CUC athletic shoes........................................................76
Figure 5.1: Recuperated enterprises and workers’ control................................................93

ix
 List of Abbreviations

AAP Argentina Autonomista Project

ERW Enterprise Recuperated by its Workers

INAES Instituto Nacional de Asociativismo y Economía Social

(National Institute of Associationalism and Social Economy)

INTI Insitito Nacional de Tecnología Industrial

(National Institute of Industrial Technology)

MNER Movimiento Nacional de Empresas Recuperadas

(National Movement of Recuperated Factories)

MNFRT Movimiento Nacional de Fabricas Recuperadas por sus

Trabajadores
(National Movement of Factories Recuperated by their Workers)

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 1

Chapter 1: Introduction

That noise that you hear from the machines—to us it is music (worker at
Artes Gráficas El Sol, personal communication, July 17, 2006).

1.1 Introduction

At the end of a workday in 2001, a few of the women at the Brukman suit factory

in Buenos Aires realized they had no choice but to stay there overnight. They did not

have enough money to pay the fare for a bus ride home. The business had been

struggling, and part of the owners' response was to withhold their wages. Meanwhile the

bottom was falling out of the Argentine economy, the nation itself also on the verge of

bankruptcy. Workers demanded the money they were owed, and the Brukman brothers

simply abandoned the factory. The workers later realized that the owners would not be

returning to pay them their wages, so a few weeks later they sold the inventory that was

left behind, and used this money for the inputs needed to restart production. For the next

few months, the workers managed the factory as a cooperative, making and selling suits

without their bosses.

When Argentina’s economy slowly began to recover in April of 2002, the owners

wanted their business back. With only four workers present to keep watch one evening, a

battalion of 600 police showed up and evicted them. Thousands of supporters arrived
 2

quickly from all over the country and faced brutal repression. Despite about 30 injuries

and 100 arrests, the workers finally regained control a few days later (Buenos Aires

Herald, 2003; Lavaca, 2004, pp. 42-55; Lewis, 2004; Sitrin, 2005; Trigona, 2003). More

than five years after the collapse, the former Brukman factory continues providing a

reasonably dependable income to its roughly 50 workers.

Brukman is an enterprise “recuperated” by its workers (or ERW1). Across

Argentina, in perhaps 200 cases, workers faced with non-payment of wages and the threat

of unemployment have occupied their workplaces and continued production as

democratically controlled cooperatives. Disinvestment, capital flight and plant closings

are familiar problems in much of the world, but rarely do workers turn this devastating

and disempowering fact into an opportunity for workers’ control. Through the

documentary film The Take (Lewis, 2004) as well as various journalistic, activist, and

scholarly accounts, Argentina’s recuperated enterprise movement has captured the

imaginations of many, a potential model for replacing global capitalism with a more

humane economy.

As remarkable as this phenomenon is, it is not wholly without precedent. Some

similar instances include the factories occupied in Algeria immediately following

independence (Clegg, 1972), or in Chile before Pinochet (Petras and Veltmeyer, 2002),

but these were much more fragile phenomena than Argentina’s seems to be. There is an

important and long-enduring movement of confrontational worker self-management in

Bolivia, but it is almost exclusively confined to a single industry, mining (Ibid.). In many

1
I have created this acronym based on one used commonly in Spanish, ERT (Empresa
Recuperada por los Trabajadores).
 3

Northern contexts, including the United States, factories and other businesses have also

become ERWs. However, these were all somewhat isolated cases, and rarely political

expropriations, but buyouts dependent on financial backing by large unions or outside

investors (Bradley and Gelb, 1983; Edelstein, 1982; Logue, 1998). Self-management

became the guiding principle of the economy for decades in Yugoslavia, but the rule of

the Communist Party made this an extremely different situation, much more favorable to

workers' self-management and control.

In any case of transition to self-management, decisions formerly under

employers’ control are taken on by workers. These workers suddenly find that they have

new choices to make, about how much they will produce, how much money they will

earn, and under what conditions they will work. Their job becomes their own

responsibility in a much deeper sense than it ever was before. Of course, the decisions

they make are shaped by circumstances that remain beyond their power. Recuperating an

enterprise is a limited and localized solution to a set of profound and global problems of

exploitation, alienation and job insecurity.

Focusing on experiences at the level of individual recuperated enterprises, this

thesis looks toward workers’ ability to overcome or transform the external circumstances

that confine them. To what extent are workers actually able to improve their conditions

by taking production over as a cooperative? How do the experiences of recuperated

enterprise workers fit into to workers’ struggles for power overall? What follows in this

introduction is a discussion of key concepts of use in analyzing Argentina’s ERWs, a

brief description of my fieldwork observing some of these enterprises, and an outline of

 4

the rest of the thesis.

1.2 Conceptual framework

This thesis identifies key dynamics that define workers' control within

recuperated enterprises. The concept of workers' control is treated here in a very broad

and radical sense, distinct from a narrow conception of worker self-management. Self-

management is an independence from direct capitalist exploitation within a firm, where

workers can come to a consensus or vote on key decisions of how to produce and how to

allocate any surplus. Recuperated enterprises have this in common with other kinds of

worker cooperatives.

Workers’ control, however, is a goal that addresses conditions not only within

individual workplaces, be they within self-managed cooperatives or under more

commonplace forms of production, but also beyond them. André Gorz notes that:

The technical and social division of labour, the mode and relations of
production, the size and inertia of the industrial machine […] rigidly
predetermine both the results and the phases of the work process, [and so
they] leave no more than marginal space for workers’ control in and over
production (1982, p. 51-52).

This perspective on workers' control helps us make sense of ERWs by situating the

power workers have won into the broader social, political and economic contexts that

confine and constitute the labor process. This study considers workers’ control as a

process of democratization balanced across four directions: micro versus macro, and

economic, or material, versus political, or relational. Figure 1.1 shows examples of

demands and expressions of workers’ control in a context of capitalism, placed in relation

 5

to these four directions.

Often these dimensions reinforce each other in important ways. For example,

many cooperatives provide their workers both with better incomes and with greater

participation than they would enjoy in a conventional firm. On the other hand there are

irresolvable contradictions between these dimensions as well. Higher wages drive

inflation, while democratic processes of deliberation take time away from material

production, and so on.

Figure 1.1: Dimensions of workers’ control

Economic / Political /
Material Relational
Macro-level
Global Political Economy /
World System No excessive foreign debt No war or empire

Human and civil rights

Nation / State
Workers’ parties
Low inflation
Democratic labor unions

Communities and Neighborhood assemblies

Neighborhoods Mutual aid
Informal networks of solidarity

Firm / Shop floor Workplace assemblies

Income and benefits Control over pace and

Household process of production

Micro-level

Largely because of contradictions like these, Gorz asserts that workers’ control
 6

“will never be won as long as capitalism exists, and […] must be championed for

precisely that reason (1973, p. 326).” In his view, the only way to overcome the

limitations of workers’ control under capitalism is to end “work” itself, replacing it with

“autonomous production”, that is:

The right of each grass-roots community to produce at least part of the

goods and services it consumes without having to sell its labour to the
owners of means of production or to buy goods and services from third
parties. [Autonomous production also] presupposes the right of access to
tools and [… is] based on voluntary cooperation, the exchange of services
or personal activity (1982, pp. 4-5).

Workers’ control is the means toward revolution, while a society based on autonomous

production as the goal it points toward.

One strategy to advance workers’ control is to create spaces for autonomous

production directly through what is called the “social and solidarity economy”: mutually

sustaining networks of self-managed firms and other small-scale alternatives to

capitalism. This idea has been gaining particular attention across Latin America in recent

years. It is embodied by recuperated enterprises as they cooperate with one another and

build support in the larger community, in order to try and overcome or transform some of

the external conditions that limit them. Much of the debate around social and solidarity

economy today centers on whether or not this approach can ultimately challenge

capitalism, or if it only promises certain victories, largely local and material rather than

global and political, that serve to accommodate and prolong the dominant political

economy.

The following study puts recuperated enterprises into the context of this question.
 7

Historically, exactly how do recuperated enterprises fit with the more than a century of

class struggle that preceded them in Argentina? To what extent, and in what ways, do

ERW workers actually experience greater control on the shop floor? How do external

conditions limit that control, and how do these workers reach out beyond the firm to

overcome or transform those limits? What is the significance of Argentina’s recuperated

enterprises for the struggle against global capitalism more generally?

1.3 Methodology

This thesis draws from oral histories and direct observations made in Argentina.

Most of my initial contacts there were made through an organization called the Argentina

Autonomista Project (AAP). This organization connects foreign delegations of students

and activists with Argentine social movements. The recuperated enterprises that the AAP

works with generally have ties to the Movimiento Nacional de Empresas Recuperadas

(MNER, or National Movement of Recuperated Enterprises). I paid a fee to AAP and was

assigned to a residency at Artes Gráficas Chilavert, a small but well-known recuperated

print shop. The fee was primarily divided between the AAP (US$300), Chilavert itself

(US$200), and the MNER (US$120).

My residency at Chilavert was very informal. Shortly after arriving in Argentina,

another graduate student from the United States and I were taken by an employee of AAP

to be introduced to all the workers. From then on, I usually spent 2-3 hours there about

twice each week at their shop. I would occasionally help with their work while I was

there, but I generally used this time to explore the factory and talk to people while they

worked. Towards the end of my stay in Argentina I formally interviewed three workers at
 8

this firm.

Before I began this residency at Chilavert, the AAP set up interviews for me and

other students at three other recuperated enterprises. The AAP has formal agreements

with these enterprises through which they pay the cooperatives in exchange for accepting

student visitors. After this initial round of interviews, I set up other interviews on my own

or in collaboration with other students I met. A list of the recuperated enterprises I visited

(Table 1.1) follows. In addition to any formal oral histories collected, all visits included a

tour of the facilities and informal conversations with many workers.

While this sample is small and not completely representative of the recuperated

enterprise movement in Argentina as a whole, it is useful as a broad cross-section. All

firms were in Buenos Aires proper or one of its several industrial suburbs. The firms I

succeeded in making contact with tended to be those that were more open and engaged

with the community, politically progressive, and predominantly members of the MNER.

Many other ERWs, generally members of a separate network called the Movimiento

Nacional de Fabricas Recuperadas por los Trabajadores (MNFTR), are less socially

engaged and more private. Such firms are not well represented in my data. Only a few

individuals were interviewed at any particular firm, and they tended to be those most

willing to talk to outsiders. They were generally older than most other workers, and were

often in management or leadership positions. However, I did have some success in

encouraging some workers who were initially less open to talking with me.

Table 1.1: Visited firms

 9

Current / Former Location Product or Oral Notes

Name Service Histories
Artes Gráficas Buenos Aires Printing 3
Chilavert /
Gaglione
Artes Gráficas El Buenos Aires Printing 1 Spoke with Jorge Núñez, a
Sol / Gráfica government worker
Valerosa providing technical
assistance
CEFOMAR / Buenos Aires Editing 3
Marimar Editorial
Nueva Esperanza / Buenos Aires Party Balloons 1 Attended a region-wide
Global meeting of recuperated
enterprises at this location
Hotel Bauen Buenos Aires Hospitality 2 Attended another region-
wide meeting of
recuperated enterprises at
this location
Cristal Avellaneda Avellaneda Glassware 0
/ Cristalux
Gráfica Patricios / Buenos Aires Printing 1
Gráfica Conforti
Cooperativa San Martín Athletic Shoes 3
Unidos por el
Calzado / Gatic
Cooperpel / Buenos Aires Printing and 2
Induspel Packaging
Materials
18 de Diciembre / Buenos Aires Men's Suits 2
Brukman
19 de Diciembre San Martín Automotive Parts 1
and Machine
Tools

In addition to these visits I studied the movement through informal coursework in

Argentina, again paid for and set up through the AAP. These were very helpful in the

research for this thesis. First was a course on working-class history in Argentina, taught

by Pablo Pozzi from the Department of History and the University of Buenos Aires. The

second was a survey of recent Argentine social movements, focused on neighborhood

 10

assemblies, taught by Ezekiel Adamovsky, also at the university's history department.

The final course was focused on the recuperated enterprises themselves, including guided

visits to two firms, Cristal Avellaneda and Gráfica Patricios. Esteban Magnani, journalist

and activist who has written extensively on the movement, led this course. He works

closely with these enterprises through an NGO called La Base, which will be discussed in

Chapter Four.

Based primarily on the oral histories and observations, I will compare the firms I

visited to one another. Are there differences in the extent and character of workers'

control achieved at each firm? Are there characteristics that might explain or predict

these differences? Unfortunately, there was simply too much material collected to

transcribe and fully analyze given the time constraints of this thesis. However, to the

greatest extent possible, the realities of ERWs are described herein through the words of

the workers themselves.

1.4 Outline of following chapters

Struggles to achieve workers' control are not merely a recent phenomenon in

Argentina. Chapter Two reviews over one hundred years of class struggle in Argentina,

to show the basic historical dynamics of workers’ control that have emerged there. These

dynamics help greatly in explaining the spontaneous emergence of the nation’s

recuperated enterprise movement. Though all of the 20th century is covered, of particular

interest is the 1990s, Argentina’s most intensely neoliberal period. The policies of that

time ultimately led to the collapse of December 2001, and the response was a new

repertoire of resistance of which the recuperated enterprise movement is only one key
 11

aspect.

Chapter Three describes the extent and the nature of the transformation that is

taking place within recuperated enterprises. What exactly is the process through which

workers are taking over? For better and for worse, how has production changed under

this form of self-management? Income, working conditions, the pace of production, and

issues of hierarchy and participation are all included, thus spanning the material and

relational dimensions of workers’ control. What experiences are shared across most these

firms, and what are some of the particularities and exceptions that can be found?

Chapter Four looks beyond experiences within the firm itself, beginning with

some of the forces of market and state that confine recuperated enterprise workers’

control. However the main topic of the chapter is the social and solidarity economy. After

a more thorough definition of this concept, the chapter provides a detailed picture of the

community-oriented projects ERWs have created, and the practices of economic

solidarity they participate in.

In Chapter Five, these findings are pulled together to evaluate the overall meaning

of recuperated enterprises for the achievement of more complete workers’ control. ERWs

have proven themselves part of an appropriate but limited adaptation of Argentina’s

earlier expressions of workers’ control to the conditions of neoliberal collapse. However,

particularly when compared to other historical examples of recuperated enterprises, it is

clear that to continue advancing workers’ control any further, the movement will need a

coherent strategy to build political power and a more robust social economy. There is

little sign that Argentine ERWs will be able to pursue such strategies successfully in the
 12

present context, but the lessons they demonstrate may become crucial in the future. Thus,

toward the possibility of a global economy that works for all workers, the case of ERWs

presents us both with severe disappointments and with possibilities that are as concrete as

they are promising.

 13

Chapter 2: Historical Conditions

2.1 Introduction

Particularly in the United States, when we first learn of Argentina's

recuperated enterprise movement, we may be stunned by the possibility of such a

phenomenon. Even the concept of a democratically-run workplace is in itself

unfamiliar to many of us here. Of course, the idea of losing one's job because of a

business shutting its doors for good, often due to global economic forces—this is all

too familiar. As stated in the previous chapter, significant worker buyouts and other

forms of “enterprise recuperation” have in fact taken place in the United States

(Bradley and Gelb, 1983; Logue, 1998), but in many qualitative and quantitative

senses, these do not fully measure up to what has taken place in Argentina.

Toward explaining this contrast, the following chapter will analyze the

particular context in which Argentina's recuperated enterprises emerged. It will

highlight the culture of class solidarity and militancy that has long been a feature of

Argentine politics, a potent force for economic and political democracy despite many

formidable challenges and significant reversals. Of particular interest is the neoliberal

transformation implemented largely under the Menem presidency of the 1990s.

Finally, the chapter will describe the nature of Argentinazo, that is, the social
 14

mobilization that emerged amidst the 2001 collapse.

2.2 Class formation in Argentina

It is difficult to imagine recuperated enterprises emerging in the absence of

previous working class militancy. In fact, Argentina has a very long and dynamic

history of such activism. By the beginning of the 20th century, the country had what

was clearly the largest and most powerful labor movement of any South American

country (Munck, Falcon, & Galitelli, 1987, p. 248-249). Even as other Latin

American countries like Chile and Brazil have caught up with Argentina's early lead

on industrialization, the labor movement there still stands out as one of the strongest

in the world among dependent economies. While the trajectory of this history does

not in itself fully explain the large scale emergence of ERWs in Argentina, it

established numerous preconditions that made this form of resistance possible.

James Petras (1981, p. 260-262) enumerates five long-standing qualities of the

Argentine working class that have allowed it to repeatedly reemerge as a political

force:

The most striking feature [...] is the extraordinary degree of class

solidarity and organization [...] manifested in its unique capacity to
execute successfully massive general strikes on a nationwide basis
with maximum success. The second [...] was a general rejection of the
state and ruling-class domination and values. [...] Thus in extracting
benefits form the state, workers did not respond with “gratitude”, but
as something to which they were entitled and indeed must receive.
[Thirdly is] the intransigent insistence of the working class not to
sacrifice its standard of living for an illusory “national
development”—capitalist accumulation. Even Perón was incapable of
imposing any sacrifice of working-class interests in the name of
national capitalist growth. [...] The fourth feature of the Argentine
working class was powerful informal bonds, expressed through family,
 15

neighborhood, and work place, which reinforced class bonds and links
among the working class and against the ruling class. [...] The fifth
feature of the Argentine working class was the high levels of trust,
confidence, and mutual support within local working-class
communities.

Though Petras was writing to explain the labor movement's recovery from the brutal

repression of Argentina's last military dictatorship, these features are equally relevant

to the emergence of ERWs and their development of social economy ties in the

aftermath of neoliberalism. This section will outline key moments in the history of

Argentina's labor movement to show how this deep sense of class consciousness has

developed and expressed itself over time.

By the end of the 19th century, “class struggle had become a permanent fact of

life” in Argentina (Munck, Falcon, & Galitelli, 1987, p. 247). With the gradual

transition from artisan workshops to industrial production, ethnic and trade-based

mutual aid networks and “resistance societies” developed into formal labor unions. In

addition to political agitation and action, the unions continued the earlier groups'

traditions of organizing cultural activities and social welfare services. With trade

unions forming such an integral part of working class social life, they came to

function as “a state within a state” (Munck, 1998, p. 586).

Among the most active of the early unions were the typesetters of greater

Buenos Aires, who produced a vibrant range of newspapers. Coming out of mutual-

aid societies formed by immigrant craftsmen, these publications were initially

reformist in their orientation, aspiring toward social justice and the maintenance of
 16

their traditional control over the work process, but not necessarily social revolution

and the destruction of capitalism. Nonetheless, it was largely through similar

publication that by the early 20th-century, radical ideologies of anarchism and

communism flourished in Argentina, closely connected to similar movements in

Europe2.

This early class consciousness was not simply confined to print shops and

other work places. Immigrants’ residential neighborhoods were home to a range of

social and political clubs, even libraries and anarchist schools. At the beginning of the

20th century, between one half and two-thirds of the population of Buenos Aires was

foreign-born (Romero, 2006, p. 11), but this nationally and linguistically

heterogeneous population was unified by the harsh conditions of proletarian

experience. Interrelated cultural forms, like the tango and the slang patois known as

lunfardo, brought together elements from the original cultures of the main immigrant

groups, while expressing their shared experiences of class struggle in Argentina.

Thus, from an early point in the nation's development, workers’ cultural and political

unity were organically linked (Munck, Falcon, & Galitelli, 1987, Chapter 16;

Romero, 2006, pp. 20-21).

One result of these early conditions in Argentina was a strong culture of

cooperatives and social economy. As one recuperated enterprise worker observes

2
Thompson (1984) shows that historians tend to exaggerate the influence of
revolutionary ideologies like anarchism during this period among Argentina’s
rank-and-file workers. Most workers held on to hopes of social mobility within
capitalism, even if they were more widely exposed to the rhetoric of radical class
conflict than workers in many Latin American countries at the time.
 17

today, “cooperatives come from another generation, a lineage of people from Europe,

Italy, France.” These immigrants’ adaptation to Argentina was shaped by the fact that

they already had, “the formation to cooperate (J.O. Torres, personal communication,

August 1, 2006).” By 1900, Argentina had at least 50 cooperatives. In 1926 there

were 79 of them in urban zones, mostly in Buenos Aires, with another 143 in rural

areas (Montes and Ressel, 2003, p. 11). From the beginning, these included diverse

workers’ and producers’ cooperatives, but also consumers’ cooperatives and so on.

Particularly in the form of credit unions and utility services, cooperatives have long

been and continue to be a prominent feature of Argentina’s economy as a whole.

The conditions of early industrialization also made possible strong forms of

popular resistance. Argentina's first general strike was in 1902, and there would be

countless more to follow. In 1907, 170,000 strikers would participate in over 230

strikes (Munck, Falcon, & Galitelli, 1987, p. 50-52). There was also a major rent

strike in 1907, again showing that this solidarity was not confined to workshops and

factories, but rooted in the working class community as a whole (Ibid., p. 231).

Violent repression demobilized workers for a few years, but only temporarily, as in

1919 when over 300,000 workers participated in nearly 400 strikes. It is particularly

remarkable that so many workers were willing to strike that year, as it began with

what is known as the Semana Trágica or “Tragic Week”. A series of conflicts began

with a national strike of railroad workers and ended with 700 dead and 4,000 injured

(Ibid., Chapter 7).

 18

2.3 Perón and Peronism

Over the next few decades, despite occasional flare-ups, Argentina's labor

movement was in a weakened state overall. Communist leadership began to have

some limited success during this period, but the emergence of Juan Perón in the

1940s marked a radically different era for Argentine unions. Perón served as

Secretary of Labor under a military dictatorship and was consequently elected

president three times. An intimate relationship with the labor movement was a key

source of power for Perón throughout his political career. He still enjoys great

popularity long after his death, and many labor unions and political parties continue

to identify with Perón's nationalist and populist ideology. Peronism has a lasting

influence over Argentine class politics that is difficult to exaggerate.

From the perspective of businesses elites, Perón was a “pyromaniac fireman”,

insisting that he could extinguish the fire of labor unrest by putting more fuel on it

(Romero, 2006, p. 95). The effect of this political strategy on the labor movement was

complex. On the one hand, Perón sought to re-direct or restrain workers' militancy, to

make it compatible with a primarily capitalist economic system. Official unions were

created to maintain a certain level of discipline and cooperation with the Peronist

establishment. Under Perón, Communists and adherents of other radical tendencies

were repressed and purged from the union movement.

On the other hand, Perón's approach greatly empowered and emboldened

workers in their demands. During his first three years as president, union membership

grew 190%, (Munck, Falcon, & Galitelli, 1987, p. 133). Especially during the
 19

wartime boom, Perón delivered on promises of social welfare programs, job security,

and higher wages. The state also took on a fairly active role in encouraged economic

growth. Large, foreign-owned companies invested heavily in industries that were

relatively novel to Argentina, like automotive manufacturing and chemical

processing, creating a “new” class of workers who were more highly skilled and

better paid than those who were active previously. The mass class consciousness that

Perón helped encourage did not always remain under his direct control and would

repeatedly lead to spontaneous, anti-systemic action.

When Perón was not in power, his lasting legacy put the Argentine labor

movement in a position that was much more confrontational toward government than

movements in comparable Latin American countries like Brazil and Mexico. As

James Brennan (1994, p. 345) explains, “the visceral anti-Peronism of the upper

classes and large sectors of the middle class, and especially the animus of the military

toward Perón and Peronism, naturally obstructed the integration of the Peronist labor

movement into the state.” Thus, through social polarization and high expectations, the

Argentine labor movement retained a certain edge of political independence and

confrontation.

Perhaps the most relevant aspect of Peronism in understanding the ERW

movement is that beyond driving further industrialization, raising material living

standards, and mobilizing a mass movement, it gave workers a taste of increased

power at the shop-floor level. Perón strove to have personal control over the unions

that supported him, but nonetheless, democratization and participation was an

 20

essential part of how he achieved such support. While even the earliest Peronist

unions were bureaucratic, they did include comisiones internas, roughly comparable

to works councils found in Europe. These councils allowed workers to participate in

important work process decision-making, creating “an uneasy coexistence between

factory democracy and union oligarchy” (Munck, Falcon, & Galitelli, 1987, p. 135).

Though Peronist unions became increasingly bureaucratic over time and the

comisiones and other structures of grassroots participation in the unions were greatly

restrained, the basic contradiction of simultaneous empowerment and confinement of

workers’ control remained a basic dynamic of Peronism.

In 1945, the military regime came to see too much of a threat in the

independent political base Perón had built among the trade unions, and removed him

from the Secretariat of Labor and Social Security. Unions quickly responded with a

general strike, and Perón was reinstated. Riding this wave of support, Perón was

elected president the next year. Wages rose significantly in most sectors but

eventually began to fall, leading to strikes that the Perónist state tried desperately and

violently to break (Munck, Falcon, & Galitell, 1987, Chapter 11; Romero, 2006, p.

122). Perón was finally overthrown and forced into exile by a military coup in 1955,

despite a militant response from workers in his defense.

The coup was of limited use in the military's attempt to restrain Argentina's

working class. The subsequent dictatorship faced an important wave of factory

occupations, mostly led by Peronist workers and unions. Though fundamentally

different in several respects, this experience might be seen as a kind of prelude to the
 21

recuperated enterprise movement. Economic crisis and attempts to privatize or

otherwise undermine workers’ control radicalized workers in many different

industries. For example, in 1959, the Lisandro de la Torre meatpacking plant near

Buenos Aires was occupied by 9,000 workers who opposed the imminent

privatization of the facility. Tens of thousands of local residents rallied in support.

Tanks crashed through the walls of the plant, and police succeed in evicting the

meatpackers, most of whom would never return to their jobs. The repression led to

several days of general strike, which continued to have popular support even after

union leadership called it off (Munck, Falcon, & Galitell, 1987, p.152; Salas, 1999).

More strikes and factory occupations in 1961 and 1962, driven by pressure

from below within the unions, put the military government on the defensive. In the

province of Tucumán alone, 27 sugar mills were occupied. As this wave of militancy

built momentum, workers articulated demands that went well beyond the workplace,

including the nationalization of many key industries including banks, and the refusal

to pay Argentina's external debt. Those in power within the union bureaucracy, while

encouraging the general state of high mobilization, did not actively support these

revolutionary claims, preferring a strategy they called “hit and negotiate”, which

encouraged radical tactics but aimed for more narrowly economic goals.

Then in 1964, the leadership of the main federation of unions coordinated a

massive series of actions in which four million workers occupied 11,000 factories3.
3
In terms of the overall size of the mobilization, the piecemeal occupation of
well under 200 firms by a few thousand workers over the years since 2001 is
significantly less impressive then this massive 1964 campaign. The unique nature
and spontaneity of the ERW movement should not be overlooked, but such a
comparison certainly helps to explain how some Argentine workers might
 22

These occupations took place in several provincial capitals across the country.

Though the more recently organized metallurgical sector functioned as a vanguard,

the textile, food processing, construction and meatpacking industries were all very

active in these occupations. Initially designed by bureaucrats to be the kind of

pacifying action that Perón often called “revolutionary gymnastics”, rank-and-file

activists pushed this episode in a more militant direction, and it became a critical

radicalizing experience for Argentina's working class (Munck, Falcon, & Galitell,

1987, p.155-159).

There were more factory occupations in the 1960s, but for much of that

decade, the restraint imposed by union leadership and the repression of the

dictatorship kept the labor movement relatively quiet. This lull came to a dramatic

and abrupt end with the Cordobazo of May, 1969—a massive uprising against the

military dictatorship, led by workers and university students. It was initially centered

in the industrial cities of Cordoba and Rosario, but spread to other parts of the country

from there. The protests in Cordoba were powerfully organized, but also highly

spontaneous and confrontational:

Students and workers—with a massive participation of auto workers

among the latter—took control of the city center, where common
citizens soon joined them. The strong police repression sparked a
violent confrontation. Barricades were erected, bonfires were started to
combat the effects of tear gas, and businesses were attacked, though
little looting occurred. The multitude that controlled the downtown
neighborhoods for various hours had neither slogans nor organizers—
unions, parties, and student organizations were all overwhelmed by the
magnitude of the protest—yet acted with unusual effectiveness,
repeatedly being dispersed only to regroup again (Romero, 2006, p.
181).
understand factory occupations to be within the realm of the possible.
 23

The Cordobazo showed beyond any doubt, contrary to the thinking of many

observers at the time, that Argentina's “new” working class had not become a “labor

aristocracy”, pacified by relatively high wages and good working conditions. Instead,

these workers were making broad demands, reaching well beyond wages and union

recognition. They acted independent from bureaucratic union control, articulating

goals that were as much political as economic, and drawing on the support of radical

student groups and unemployed youth (Brennan, 1994; Brennan & Gordillo, 1994;

Munck, Falcon, & Galitelli, 1987, pp. 166-186).

This watershed marked the beginning of several years of intense militancy,

spanning the factories and neighborhoods, cities and remote rural areas. It is feasible

that this period would have brought a radical revolution, but the struggle became less

intense when the dictatorship allowed some political opening in 1971, intending to

allow Perón’s return from exile. In 1973, Perón became president once again, and this

was widely celebrated by workers as a great victory. However, Perón could not

deliver on the expectations raised by his earlier periods of rule, and the working class

became divided. Perón died in 1974 and his second wife, Isabella, took over.

Disappointment grew further under her administration, and for the first time there was

a general strike declared against a Peronist government (Munck, Falcon, & Galitelli,

1987, pp. 187-203).

Isabelle Perón was overthrown by a military coup in 1976. The wing of the

military that then took over was especially focused on destroying the power of
 24

Argentine labor, at all costs. Peronist and Marxist guerrilla groups were all but

destroyed early on in Argentina's “dirty war”, a campaign of state terror against all

perceived forms of subversion. With the transition to civilian government,

neoliberalism changed the landscape of challenges for labor. Writing in 1987, Munck

et al. suggest that, “one can safely predict another political remaking of the working

class in Argentina in the period now opening up (p. 226).” The events of 2001 can be

understood as a milestone in this latest transformation—a decisive grassroots

response to neoliberalism.

Thus, the national uprising of the Argentinazo from which the recuperated

enterprise movement emerged is only the most recent of several episodes of mass

insurrection in Argentina's history. Over several generations, workers had formative

experiences of mobilization in pursuit of goals ranging from the most concretely

economic to the most broadly political, from the home and the shop floor to the

international stage. Workers in different parts of the country and different industry

sectors exhibited an inclusive, albeit nationalist, sense of solidarity. Though much of

this history was dominated by Peronism, left-wing revolutionary ideologies and an

independent sense of class consciousness also had an important influence. The

recuperated enterprise movement would have been far less likely without these

historic foundations, built over the course of 100 years of continuous struggle.

2.4 The crisis of neoliberalism

The most immediate impetus for the recuperated enterprise movement in

Argentina was the Argentinazo of 2001. The economic and political crisis had been
 25

building for many years, but then a sudden financial collapse brought Argentina's

economy to new depths, even pulling down the previously sheltered middle class. As

a result, the neoliberal system temporarily lost all political legitimacy among the

Argentine public. After the collapse and on into much of 2002, a variety of social

movements were highly mobilized and relatively united across the unemployed,

workers and middle classes. Nearly all recuperated enterprises workers, when asked

why they decided to seize control of their workplaces, begin their story with a

description of this period, so it is important to evaluate the basic features of the

Argentinazo and its origins.

Since at least the 1970s, Argentina has experienced periods of remarkable

economic growth, but also many bouts of recession, hyperinflation,

deindustrialization and unemployment. Underlying all of these was Argentina's

dependence on foreign capital and unsustainable debt. These problems were driven

largely by neoliberal economic policies, first implemented under the military

dictatorship that began in 1976, but taken to new extremes by Carlos Menem,

president of Argentina during all of the 1990s. The impacts of neoliberalism were the

driving force behind the crisis of the Argentinazo.

For much of Menem's administration, Argentina was lauded as a “poster

child” of Washington Consensus policy. In accordance with IMF recommendations,

the state lowered deficits and loosened a range of regulations. This strategy succeed

in attracting foreign investment, which nearly quadrupled in 1992, making Argentina

the fourth largest recipient of foreign money in the world (Rock, 2002, p. 65). Worker
 26

productivity climbed 45% from 1992 to 2000 (Halevi, 2002, p. 21). For most of this

period, external debt remained in a range that was not alarming to most observers,

well below 60% of GDP. Economic growth during much of the 1990s was around or

above 6% per year, which was ahead of most other countries in Latin America at the

time, and far greater than what Argentina had been experiencing a short while before

(Krueger, 2002).

Positive assessments of this situation ignored a number of problems. While

investors and creditors were still celebrating the apparent 'success' of Argentina's free-

market policies, more and more working-class citizens were already experiencing the

brunt of the coming crisis. Despite the overall economic growth, unemployment and

underemployment rose during most of the Menem years. The gain in worker

productivity was based on falling wages and the suppression of industrial unions.

Rural areas were hit the hardest, where per capita incomes plummeted and poverty

rates rose to levels that evoke comparison to Bangladesh or Nepal (Rock, 2002, p.

71).

The capital that was coming into the country was for the purchase of

privatized infrastructure and speculative investments, not increased production or the

creation of jobs. To the extent that any real production did increase, it was

concentrated heavily on agricultural and mineral exports which provide relatively few

and low-paying jobs. Given the absence of productive investment, once there was

nothing left to privatize the government had to rely once again on heavy borrowing.

Argentina's peso, previously pegged to the US dollar, collapsed as the debt became
 27

unsustainable, leading to the largest loan default in world history.

Privatizations helped balance the national budget during most of this period,

and there were certainly severe inefficiencies with publicly-owned systems, but the

restructuring had severe immediate and long-term negative impacts on nearly all of

the basic sectors of the economy, including health, transportation,

telecommunications, water and energy. Massive layoffs were implemented in these

traditionally well-paid, unionized sectors. In the case of the railroads during the

Menem years, 90% of Argentina's 100,000 railroad workers lost their jobs (Rock,

2002, pp. 68-70), despite a furious wildcat strike that lasted 75 days (Ash, 1993;

Kopicki and Thompson, 1995, p. 151). The removal of state subsidies and

downsizing of formerly-public services led directly to a decline in supply. In

electricity and natural gas, the effects of privatization have included price gouging

and abuse, and the condition of these privatized sectors continues to be a major threat

to Argentina's economic development and political stability (Petras and Veltmeyer,

2005, p. 38). As in many other dependent economies, Argentina's privatization

policies were catastrophic, especially so from the perspective of the working class.

In contrast to the privatization, a more unorthodox aspect of Menem's strategy

was an increase in spending on jobs within the government bureaucracy. Though

contrary to the Washington Consensus, this spending was central to Menem's political

support base. New public jobs were used as patronage, one key part of a new form of

party machine that is much less based in industrial unions than that of earlier Peronist

politics (Rock, 2002, pp. 76-77). The wage advantage over the private sector for the
 28

average federal employee grew from 25% in 1994 to 45% in 1998. Meanwhile, the

portion of the total workforce in these more generously-paid public jobs climbed to a

very high level (12.5%) essentially unheard of outside Western Europe (Krueger,

2002). Even if cutting these jobs and salaries could have helped delay the debt crisis

by reducing a major government expense, it could have only quickened the political

crisis.

Despite a few such exceptions, Menem's program was basically one of

orthodox neoliberalism and lead to “a fairly classic crisis of a breakdown of the

economy due to excessive extraction of surplus value (Bedggood, 2002).” Working-

class households, especially in the country's interior, experienced the resulting crisis

long before 2001. The pegging of the peso to the dollar and other aspects of the

Menemist strategy had successfully quelled the middle class up until the collapse, but

finally even they too were experiencing economic desperation. Together these

currents created a conjuncture in which several movements, including the recuperated

enterprises, would thrive.

2.5 “Make them all go!”

The popular response to the crisis took diverse forms. Over the course of the

1990s, a number of trends emerged in the repertoire of protest seen in Argentina:

1) a shift in the locus of labor conflict from the industrial to the public
sector, 2) a decrease in the demands for wage increases and an increase in
the demands for arrears, job security, and basic needs like food, 3) a
diminution in the number of strikes and an increase in the number of
roadblocks ([...] roadblocks swelled from 51 in 1998, to 252 in 1999, to
514 in 2000, and to 1383 in 2001), 4) the intensification of protest in the
provinces (i.e. outside the metropolitan region of Buenos Aires [...]), and
 29

5) the increased centrality of provincial and municipal unions and

organizations of the unemployed (known as piqueteros) as the main
contentious actors (Auyero and Moran, 2005, p. 56).

Much of this can be seen as a direct response to Menem's policies. Privatization drove

the shift of labor militancy to the public sector. The roadblocks were generally led by

unemployed piqueteros, and their main demand was to receive welfare benefits from

the state. As industrial unions have declined in power, these networks of piqueteros

became a key replacement for the previous Peronist patronage networks.

On one level then, the events of December 2001 were an intensification of

these same trends. There was a spike in road blocks and food riots throughout the

interior of the country. Such local insurrections were led somewhat spontaneously by

unemployed workers, but were also actively encouraged by some Peronist

organizations. At the height of these conflicts, thirty looters were killed by shop

owners and police in two days (Auyero and Moran, 2005).

At the very peak of the crisis however, the unrest took on a fundamentally

new tenor. The center of the activity had finally reached Buenos Aires itself, and the

population as a whole, across nearly all sectors of society and regions of the country,

was united in an overall rejection of political authority. Groups that had been

declining in their activism were mobilized as well. A series of general strikes was

supported by all three of the main national labor federations, which included both

public-sector and industrial workers. When President De La Rúa declared a state of

emergency, this only fueled the disorder. The middle classes began banging pots and
 30

pans in the street, a common form of protest across South America known as a

cacerolazo. Much of the outrage, particularly for the middle classes, centered on the

coralito, a restriction on bank withdrawals implemented in the first few days of

December; as a result, countless banks were burned. Presidents resigned one after

another during these few days. The characteristic slogan of the Argentinazo is ¡Que

se vayan todos!, or “Make them all go!” (Aufheben, 2003; Iñigo Carerra and

Cotarelo, 2003, p. 202-203).

Though things were already desperate years earlier in many parts of the

country, economic conditions would only get worse in the months immediately

following the collapse4. As the value of the peso plummeted essentially overnight, the

cost of basic goods jumped 43%. Compared to earlier periods of neoliberal

restructuring in Argentina, this seemingly severe inflation was actually quite modest.

Its impact was greatly magnified by the drop in demand for labor. From October 2001

to May 2006, about 400,000 Argentines lost their jobs. By the end of that period, less

than a third of Argentines were employed. Many of those who did have jobs saw their

hours cut back and their wages reduced or withheld. The overall poverty rate

increased by 40% in six months, and 25% of the population fell into the most extreme

level of indigence (Kritz, 2003, p. 4-7). To avoid literal starvation, many workers

became cartoneros, scavenging the streets for cardboard and other recyclables

(Branford, 2002).

4
Five years later, growth in GDP has returned to a stunning 8% per year, but
relatively few of the benefits are being seen by most of the population, as
inequality continues to grow dramatically (Rohter, 2006).
 31

Further unemployment increased the importance of political patronage

networks based on small government subsidies to families and individuals. However,

other social responses occurred, like the recuperated enterprises, which were managed

by direct democratic participation. Perhaps most emblematic of this trend of popular

deliberation and action were the neighborhood assemblies (Dinerstien, 2003). In

many neighborhoods across the country, but especially around greater Buenos Aires,

spontaneous groups formed to address the needs created by the crisis. Local residents

met in public spaces on a weekly basis to hold long discussions and vote on a range

of locally important decisions. Like many other spontaneous mobilizations in

Argentina over the decades, they articulated broad political demands, like the

complete repudiation of the external debt and the re-nationalization of banks and

other key sectors. They also organized social economy projects like barter markets,

alternative currencies, and new worker cooperatives.

The assemblies made extensive use of the Internet as a communication tool

(Finquelievich, 2002). There was an attempt to coordinate the assemblies through

representative “inter-neighborhood” gatherings, but these were far less successful

than those of individual neighborhoods. Because these groups were so improvised

and local in nature, they were quite diverse, varying according to decisions they made

and the class character of the neighborhood. In many cases, Troskyists and other

political parties tried to co-opt the assemblies, which served to weaken the movement

on the whole. In terms of overall mass participation, the assemblies declined greatly

in the months after the general rebellion, but to this day they remain a highly
 32

significant new feature of Argentine civil society.

In the view of many scholars and activists, these assemblies, the recuperated

enterprises, and other forms of resistance and social economy that have made up the

Argentinazo as a whole, all represent a milestone in an emerging global justice

movement—that is, an approach to building political power through decentralized

networks, also evident in the global anti-neoliberal convergences in Seattle, Genoa,

and Cancun or the World Social Forums. These movements are characterized by

broad participation and a rejection of any centralized vanguard or highly specific

theories of how a transformed social order should be formulated. At times,

participants in recuperated factories themselves articulate this interpretation. For

example, a long-time worker at ex-Gatic/CUC believes that recuperated enterprises

embody the approach advocated by Subcomandante Marcos and the Zapatistas, “to

construct power [...] from below (Luis Medino, personal communication, August 1,

2006).” Especially in the context of Argentina, this approach is often referred to as

“horizontality”. This word is the title of Marina Sitrin's book of interviews from

contemporary Argentine social movements. In the introduction she writes:

During the last decade, there has surged in the world a wave of
prefigurative revolutionary movements, that is, movements that create the
future in the present. These new movements are not creating parties or
political programs. They do not follow a leader, but rather create a space
in which everyone can be leaders. They consider it more important to ask
the appropriate questions than to offer correct answers. They absolutely
renounce dogmatic positions and hierarchy, opting in stead for direct
democracy and consensus (2005, p. i).

Along similar lines, the Argentinazo has been interpreted through the post-modern
 33

lens of Hardt and Negri's conception of the diversity of exploited subjectivities, or the

“Multitude”, united against the denationalized hegemony of capital, or “Empire”

(Bedggood, 2002; Merril, 2004).

While it is hard to disagree that important currents of social movements during

and after the Argentinazo reflect a kind of participatory politics which resonates with

other contemporary global developments, many suggest that there is a downside to

this model as it is being practiced. Petras and Veltmeyer (2005) point out that despite

the impressive power of the largely spontaneous rebellion, the class structure and

basic character of the state in Argentina is mostly intact. Because class-based social

movements have only very limited control over the state, Argentina is returning to the

unstable and exploitative conditions of what President Kirchner has called “normal

capitalism”. In this view, as impressive and unprecedented as the Argentinazo may

have been, it represents only a very limited advance in the power of social

movements to make the revolutionary changes they will need to achieve their goals in

the long-term.

The tension between these two interpretations of the Argentinazo is central to

the realities of the recuperated enterprise movement. On the one hand, workers have

clearly seized a new form of control, a weapon against unemployment and

disinvestment as well as alienation and hierarchy in the workplace. At the same time,

recuperated enterprises are severely confined by their inability to reshape the culture

and economy around them—not even at the national level, and certainly not at the

global level. ERWs suffer in an important sense from dependence on what remains an
 34

essentially neoliberal state.

2.6 Conclusions

There are countless situations in which workers have struggled against capital

flight, disinvestment, and deindustrialization. In many of these cases, there have been

factory occupations, worker buyouts, and even small pockets of enterprises

recuperated under worker self-management. However, none of these has ever quite

reached the achievements of Argentina's ERWs. It is primarily the historical

background of the country that explains the difference.

One ingredient is the level and nature of militancy among Argentine workers.

A strong and deeply-rooted sense of solidarity has fueled general strikes, factory

occupations, and other confrontational tactics over and over again for many decades.

In place of the myth of social mobility that all but erases class consciousness in the

United States, most Argentine workers across the political spectrum have cast their

lot with Peronism, an ideology that has historically preserved class identity by

attempting to incorporate it into the national development project. This combative

class identity is not rooted in specific workplaces, but the wider social networks of

families and neighborhoods. Argentine workers have historically benefited from

welfare programs funded almost entirely by the labor movement, not the state. The

masses of Argentine workers have also long been familiar with factory councils and

worker cooperatives in concept and in practice, and have often defied or struggled

against union bureaucratization. Overall, these experiences raised expectations across

all four of the directions of workers’ control highlighted in the pervious chapter.
 35

This advanced state of class formation has collided with the neoliberal world

order. Privatizations and the almost complete disappearance of industrial investment

hit close to the root of workers' power. Living standards and union organization have

been severely reversed, and the full range of industries in which workers have

historically exercised their power most—transportation, printing, metallurgy,

automotive manufacturing and so on—have all been severely downsized. Significant

severance pay or unemployment insurance has been rare; in fact, when most of these

workers lose their jobs they are owed significant back wages. Particularly during the

worst months of 2002, many former industrial workers suddenly faced the possibility

of literal starvation, with very little reason for hope in sight. It was the combination of

militant solidarity and economic desperation that made the explosion of recuperated

enterprises possible.

James Petras (1981) compares the Argentine working class to a mythical

hydra. From time to time, economic recessions, even quasi-genocidal repression, can

cut off one of its many heads and weaken it temporarily. Meanwhile, another head

grows back. Neoliberal restructuring may present the most serious threat Argentina's

labor movement has yet faced. For now though, the hydra seems to be growing more

heads, and one of these is the recuperated enterprise movement.

 36

Chapter 3: Change and Continuity Under Self-Management

Some still think they work for a boss. [...] That's the hard thing, the
culture, understanding that we depend on one another (J. Torres,
personal communication, August 1, 2006).

3.1 Introduction

There is a certain ambiguity to the term “recuperated enterprise”. In this study

and many others, a firm is considered to be such if it began under a traditional

ownership structure, became financially insolvent, and then made a transition to self-

management. Even a much more restricted and specific understanding of the term,

focusing on those firms that were occupied by workers in the midst of Argentina's

2001-2002 crisis, would lump together some rather diverse experiences. Another

ambiguity, as suggested by Ruggeri et al. (2005, p. 21), is that there is no certain

moment at which a bankrupt enterprise is definitively “recuperated”. Rather, there is a

process with no clear or universal endpoint, whereby workers constantly struggle to

make their control less precarious.

In the abstract this process is often described as following three distinct

stages, represented in a slogan popularized by the MNER: “Occupar, Resistir,

Producir” or “Occupy, Resist, Produce”. However, only about half of the firms in

Argentina that identify themselves as “recuperated” ever had a definitive experience

of “occupation” (Ibid., p. 54). Artes Gráficas El Sol is a typical example of the other
 37

half, which did not experience an occupation per se. Owners willingly agreed to a

bankruptcy arrangement in which workers would retain their jobs under self-

management. Workers had support from their union, and the process of gaining full

recognition as a cooperative was relatively short, about 6 months. There was never an

eviction or even an interruption in production (Gobierno de la Ciudad de Buenos

Aires, 2007a; Lavaca, 2004, p. 144; J.P. Núñez, personal communication, July 18,

2006).

In some other cases, workers occupy a factory by breaking into it after it has

sat abandoned for weeks or months. Generally when this happens, the factory has

been stripped of all saleable materials by any combination of creditors, looters or the

owners themselves. Many owners follow an illegal practice known as “vacuuming”,

in which corrupt officials allow the owner to move equipment and other assets to a

new location and open for business under a different name, free of debt. In the

remarkable case of Global, now Nueva Esperanza, workers recruited trucks and

volunteers from other ERWs to sneak out the vacuumed equipment from the new

factory and bring it back to the original location. They could then resume production

and, eventually, gain legal recognition (E. Valiente, personal communication, July 17,

2006).

Occupations in the truest sense are those that begin before the owners

officially abandon the factory. These cases are generally ones where resistance—that

is, the period of tenuous occupation in which the workers are desperately trying to

hang on to the factory despite repression, so they might resume production and
 38

eventually achieve a legal expropriation—is most intense. Often this experience is

long, bitter and confrontational. The more pressure experienced during this stage, the

more crucial it is for the workers to find support in the wider community, generally

from social movements and almost always from personal friends and family in the

neighborhood.

One case where the resistance was a particularly trying experience was at the

print shop now known as Chilavert. In April 2002, the owner came to remove some

machinery. The operator of one machine, Cándido González, told him he would not

cooperate unless he and the other workers received the back wages they were owed,

and the machine was not removed at that time. It was clear that the owner intended to

sell off the machines and close the businesses as soon as possible, probably without

even settling the back wages, so the occupation began that night.

Cándido, his brother Fermin, and six other workers barricaded themselves

inside the shop. Police and private guards kept watch for two months, but with the

cooperation of a neighbor, they smuggled materials in and out through a hidden hole

in the wall. The workers relied on food collected by the local neighborhood assembly.

The workers' union actively discouraged the occupation5, but they found help

elsewhere. When there was an attempt to evict the workers, about 300 of their

supporters showed up, including their families, member of 5 different neighborhood

assemblies, workers from IMPA (a recuperated metal shop), neighbors, and the senior

5
The same union later supported the recuperations at Artes Gráficas El Sol and
Gráfica Patricios (J. Durán, personal communication, July 18, 2006; G. Rojas,
personal communication, July 31, 2006).
 39

citizens from a local retirement center. Using glue and paper, the workers built

flammable barricades and threatened to burn down the building and destroy the

machines if the police attempted to enter (Lavaca, 2004, pp. 61-65).

Though this kind of resistance can be a brutal experience, it is widely agreed

that the last stage, production, is the most difficult and complex. As has happened to

many other workers in ERWs, CUC president Jorge Torres lost his marriage because

of the strains that the period of resistance put on his family, and yet he insists that

managing production is a far greater challenge.

The hardest process is this—to compete, to survive, all that. With

resistance [...] all you need to put in is your body, your time. But here
you need time, capacity [...] intelligence, and consciousness. To resist,
it was a hard process for us, but it was not impossible. For me, it's
easier to take twenty factories than it is to maintain one (personal
communication, August 1, 2006).

Exactly what kinds of “capacity” and “consciousness” is Torres saying his

cooperative lacks? What are the possibilities and the challenges that are revealed once

production has resumed under worker control?

3.2 An overview of Argentina's recuperated enterprises

This section will summarize the basic characteristics of Argentina's

recuperated enterprises as a group. Unless otherwise cited, statistics in this section

were collected in a 2004 survey by the Programa Facultad Abierta at the University of

Buenos Aires, a research group and extension program focused entirely on ERWs. A

representative sample of 72 enterprises from across the country answered the survey

(Ruggeri et al., 2005).

 40

Argentina's recuperated enterprises generally emerge from firms which are

quite old. Sixty-five percent started prior to 1970, and 20% are from 1950 or earlier.

Only 15% of ERWs are inside the capital itself, but sixty percent are in the greater

metropolitan area. The portion of recuperated enterprises in the provinces increased

rapidly after the worst of the crisis had passed, from 16% in 2002 to 39% in 2004.

The overall number of recuperations was roughly level through this crisis period, but

dropped from 17 in 2004 to 9 in 2005 (Fernández, 2006, p. 2).

Table 3.1: Percentage of ERWs in Argentina by industry (Ruggeri et al., 2005)

Industry Type % of ERWs

Metallurgy 29
Other Manufacturing 20
Foodstuffs 18
Other Services 10
Textiles 7
Printing 6
Health 5
Ceramics 4
Construction 1
Total 100

Any industry with a history of labor activism in Argentina is represented

among ERWs (Table 3.1). This includes sectors where militancy peaked early in

Argentina's history—18% are in food processing, making it the second largest group

—or those that were only widely unionized since the rise of Perón—29% percent are

metallurgical, the largest group. Only 6% are in printing nationally, but this sector is
 41

highly concentrated within the city of Buenos Aires, where they make up 25% of all

ERWs. The vast majority of recuperated enterprises are in manufacturing of some

kind. Only about 15% of ERWs are in services, the largest sub-sector being in the

health field, about 5% of all recuperated firms. There are also a few recuperated

enterprises in fields like transportation and construction.

Fourteen of the enterprises in the survey became self-managed prior to 2001.

One of the oldest, Gráfica Campichuelo, formerly owned by the national government,

became a privatized cooperative in 1992 (Gobierno de la Ciudad de Buenos Aires,

2007b). While even a few firms that were recuperated as early as 2001 were still not

producing at all in 2004, all of the ERWs formed before 2001 resumed production by

2004; more than a third of them were at 60% of capacity or better. Only during 2001

and 2002 were the majority of ERWs formed through occupations. Overall those

recuperated enterprises which never experienced occupations are at higher levels of

production today and pay more to their workers, but they are less likely to have

achieved definitive expropriations.

Most ERWs have well under 100 workers, with an average of about 366.

About two-thirds of ERWs have incorporated new workers since their formation, but

a slightly greater portion also reports having had members leave. All of these firms

generally lost a very large number of employees in the period before the recuperation,

regained slightly once production was resumed under self-management, but generally

6
This average ignores a major outlier not included in the sample, a sugar mill called
Ingenio La Esperanza which employs 2,200 people, or almost 30% of Argentina's
ERW workers as of 2004.
 42

remain much smaller than they had once been. The Hotel Bauen is a somewhat

exceptional case; at one time 200 workers, a core of 12 “founders” initiated the

recuperation, quickly growing to 36, and in 2006 they were back up to roughly 160

workers, despite having no formal expropriation and several floors still under

renovation (O. Clavarino, personal communication, July 21, 2006).

On the whole, these figures begin to suggest the diversity of the firms and

experiences in the recuperated enterprise movement. Firms are very heavily

concentrated in the industrial zones surrounding the capital, but can be found in 14

out of the country's 23 provinces. There was a clear spike of recuperations in 2001

and 2002, and these tended to involve more confrontational occupations than the ones

before or after. ERWs range widely in terms of their industry, size, and the degree to

which they have approached their previous level of production.

3.2 First impressions

In many respects, the recuperated businesses that I visited do not look

immediately different than how I expect a more traditional business of the same kind

to look. I imagine a client or customer who is not paying close attention might easily

walk in to one of these firms and conduct their businesses, never realizing that the

enterprise is worker-controlled. However, there are many observable features that

distinguished these workplaces from most—signs of social commitment and workers'

control, and of the unique challenges these cooperatives face.

Nearly all the recuperated enterprises I visited display a large, colorful mural

that usually included the name of the MNER and the “Occupar, Resistir, Producir”
 43

slogan (Figure 3.1). Sometimes these murals are on an outside wall, other times they

are in a slightly more hidden, interior space. The art is usually designed in a similar

style, if not by the same team of artists.

Figure 3.1: Mural inside Artes Gráficas El Sol

Particularly in larger factories, a close look makes it apparent that the

recovery of the business is only partial or ongoing; facilities are not yet producing at

their full capacity. A particularly striking example of this is the vast factory complex

of Cristalux. Just a small portion of the sprawling warehouse space contains hundreds

of pallets of finished products waiting to be sold. As in many recuperated factories,

piles of broken equipment are slowly being fixed or used for parts. Workers have

invested incredible effort just to replace electrical work that was stolen, and to get
 44

two of their six massive furnaces into production. Other furnaces sit cold and unused.

One worker spoke of a slow process of “re-colonizing” their vast space and returning

it to production, one small piece at a time. Similarly, at the Hotel Bauen, it seems that

many of their building's many stories are unused, awaiting or actively under

renovation. Even in the smallest shops, spaces that were once needed for production

housed community projects or, for the time being at least, are left empty.

Unlike most workplaces, these recuperated enterprises almost all have areas

designated for community projects. These are generally somewhat hidden, but always

very near to the zone of production. It is rarely obvious from the outside that these

buildings contain radio stations, community center, schools and the like. Public

spaces including a cultural center at Chilavert and classrooms at Patricios overlook

the shop floor from above. Though normally housed in their own rooms or even their

own buildings, community areas are often in a location that requires visitors to pass

through other spaces. These arrangements always give a sense that community

projects are secondary to production, but still valued and integral to the mission of the

enterprise.

The pace and conditions of work varied greatly. Within the balloon factory

Nueva Esperanza, workers toil at a furious rate, without even so much as bandannas

on their faces to protect them from the dust-filled air and the stinging odor of

ammonia. In contrast, when I arrived at Chilavert to set up my residency, workers

were gathering in the middle of the shop floor, chatting and sharing an afternoon

snack. To my surprise, when I asked about setting up a schedule a worker simply told
 45

me, “there's no boss, show up whenever you want.”

I was generally made to feel like an honored guest. The presidents of most

cooperatives clearly have very busy schedules but were more than willing to make

time to speak with me and give me a thorough tour. Workers were very forthcoming

in telling me about their experiences and work, and curious to ask me about my own.

They often commented that they receive many visitors form all over the world.

During my site visits, I met many of these other visitors, including foreign students,

local students, representatives of the government, and workers from other recuperated

enterprises.

3.3 Income and production

What does self-management mean for the time and effort invested in

production? As illustrated with the contrasting conditions at Nueva Esperanza and

Chilavert, the pace and condition of work are not the same across all ERWs. It is

worth elaborating on a number of dynamics that either affect how workers choose to

pace themselves or limit their ability this ability to set their own pace.

A key aspect of self-management is that it strengthens the link between the

productivity of the firm and the pay that an average worker receives. When I asked

what “wages” were like at these cooperatives, I was usually corrected, because at

most ERWs there are no “wages” or “salaries”, but rather “withdrawals” (retiros). On

a routine basis, workers reassess how much money they should take home, based on

how production has been going and what investments need to be made in the firm. If

business is going well, workers have the option to either take home more cash or put
 46

this surplus into further expanding the businesses. In either case, the long-run result is

that higher productivity translates very directly into higher income for workers.

An important exception to the usual “withdrawal” system is at CUC. Here,

each worker’s income is equal, but it also comes in the form of a guaranteed wage. If

production is very low, they still take this money out of the business. A minority of

skilled workers sees this system as a great detriment to the firm, part of an overall

lack of commitment to productivity, but the majority is unwilling to give up their

regular income (J.O. Torres, personal communication, August 1, 2006).

Across all firms, many workers would ideally like everyone’s pay to be equal.

At a majority of firms—56% percent of those surveyed by Ruggeri et al. (2004, p. 80)

—every worker does in fact receive the same amount from each withdrawal,

regardless of their role in the firm. It is frequently recognized however that financial

incentives are necessary to help attract and retain skilled workers. For example, as of

the time of my visit to El Sol, the most highly-skilled workers receive three times

what the lowest paid workers receive from each withdrawal, but even this ratio

appears insufficient and may be augmented (J.P. Núñez, personal communication,

July 18, 2006). At Gráfica Patricios, a salesman who has greatly increased the volume

of work for the firm receives significantly more income than other workers, in the

form of commission (G.M. Rojas, personal communication, July 31, 2006).

Where equality of pay is not absolute, personal incomes are still relatively

very equitable compared to traditional firms. Because of this equalization, a relatively

small group of administrators or other skilled workers may take an especially large
 47

pay cut, but most workers benefit. At the most productive ERWs—which tend to be

ones that are smaller, that have been recuperated longer, and that did not experience

occupations (Ruggeri et al., 2004, pp. 82-83)—the majority of workers may take

home significantly more than equivalent workers at a traditional firm. The increase in

many workers income is especially significant considering that under previous

ownership workers, at many of these firms were not even receiving all of the wages

they were entitled to.

In addition to financial income, workers find a range of other new material

benefits under workers’ control. At the Hotel Bauen, workers now have free health

services provided by volunteer doctors. At CUC, I saw workers saving money on

repair by using the company’s materials and machines to fix their own shoes. It is

possible that in some cases, small benefits like these might add up to a significant

economic advantage for these workers.

Even though personal income is usually tied directly to collective production,

recuperated enterprises may vary in how they prioritize raising income and

productivity over other concerns. Particularly in the case of Chilavert, it is clear that

workers have chosen to slow down the pace of work, even though this translates

rather directly to lower pay than they could otherwise earn. The freedom to chat or to

drink mate at one's machine is considered a great victory here and at many other

recuperated enterprises. Workers often see these kinds of working conditions as their

right. Especially at a small cooperative like Chilavert, where workers are all aware of

the condition of their businesses as a whole, it is clear that workers are making a
 48

conscious choice to enjoy these conditions rather than implement more shop floor

discipline and increase their income.

Not all workers are in full agreement with this choice. Older workers at

Chilavert were quite unhappy with the fact that there was less regimentation on the

shop floor. According to them, it reduces productivity not only because there is less

effort per hour, but also because of tremendous inefficiencies in the amount of raw

material used. I saw Fermin González spending much of his time checking the quality

of finished products, throwing out stacks of paper that had been printed wrong, and

telling other workers to do them again. Another experienced worker explained that

this kind of quality control became necessary only since the recuperation. Early in the

process of trying to establish their new customer base, clients were unhappy with the

work being done. Under the previous ownership there was no need to carefully

inspect all the products; the work process was so highly regulated that products

almost always came out correctly the first time (H. Gamboa, personal

communication, August 7, 2006)

Partly as a result of this choice to have a more relaxed work process, the

amount of hours worked can be uneven. At the shop that is now Chilavert, overtime

had been relatively uncommon under a boss. Today, the shop is frequently producing

into the evening and through the weekends, while at other times there may not be

enough to do to stay busy during the standard schedule.

Another reason that the pace of work is not always the same at Chilavert is

because of their marketing strategy. While the other print shops I visited have a
 49

dedicated salesperson helping to ensure a steady stream of jobs, Chilavert relied on

their political reputation, essentially waiting for socially motivated customers to come

to them. This makes an even pace of work harder to maintain than at other print shops

(E. Magnani, personal communication, July 31, 2006).

At many firms, access to capital for raw materials is a major problem, also

leading to unpredictable schedules. In the case of CUC however, they choose to

maintain a rigid schedule anyway, and this leads to a significant decrease in

productivity:

If there is no material you could go home, and then when the material
comes, stay more hours. But there are some workers who say, 'No, I
fulfilled my schedule, if there is no material, it's not my problem.' (L.
Medino, personal communication, August 1, 2006)

Precisely why is it so difficult for ERWs to access the capital they need? Jorge Durán

of El Sol (personal communication, July 18, 2006) points out that their complex and

often tenuous legal status makes borrowing difficult. Their future existence as a firm

is somewhat uncertain and they also lack the right to use their machines as collateral.

Some financing is available to recuperated enterprises from government programs

and NGOs, but compared to traditional firms, recuperated enterprises are largely

restricted to drawing on the capital they are able to put aside from their own

production.

Nonetheless, recuperated enterprise workers put significant sums into

restoring their productive capacity. They often have to replace basic infrastructure

like electrical wiring and gas lines. The Bauen renovated much of their building and
 50

continues to do more. Chilavert purchased at least one new machine under self-

management. Previous owners may have had an easier time accessing capital, but

workers are much more determined to make productive investments in these firms.

3.4 De-skilling, re-skilling

In addition to the need for investment, a lack of production and management

know-how are an important obstacle to resuming production. Jorge Torres of CUC,

known by the nickname “Coco”, explains:

Why? Because in all this hard process of taking the factory, two years
almost homeless—the people in skilled trades all left. They left
because [...] of necessity, family and all. If you have a trade, and you
have a woman and kids who are crying 'WAAAH!', well it's a different
thing. Even if you're convinced this would be a good change, out of
necessity, you leave. Guys who know how to work, they left. They
said, 'Coco, it is very nice, but I can make money.' If you want people
who are intelligent, you have to pay them or invest in training
(personal communication, August 1, 2006).

This was true whether a worker's skills were technical, mechanical, administrative,

clerical or managerial—all of these workers tended to leave.

The youngest skilled workers had the best chance of finding new jobs

elsewhere. Therefore, at most of the firms I visited I encountered older workers who

had returned from retirement or unemployment once production resumed under

worker control. Often these older workers remain or return because of economic

necessity (F. González, personal communication, August 6, 2006) but others say their

main motivation is a desire to support their co-workers and continue spending time

with them (H. Gamboa, personal communication, August 7, 2006).

 51

In many firms, older workers are the primary ones doing the more skilled

tasks, though they may try quite actively to pass their skills on to the younger

workers. Across all the ERWs I visited, there were signs of workers learning a wider

range of skills than before, and of the division of labor becoming more flexible. The

youngest workers7 are frequently apprenticed by older workers. This tends to take

place in a very informal way. In some cases, like El Sol, the sharing of skills is

becoming a more formalized process. A government body called the National

Institute of Industrial Technology (Instituto Nacional de Tecnología Industrial, or

INTI) is helping the cooperative to produce a detailed manual outlining every step of

their production processes, so that all workers can eventually be trained in all tasks

(J.P. Núñez, personal communication, July 18, 2006).

Self-management and equality of pay help to encourage a spirit of cooperation

between many workers. This makes the informal sharing of skills possible. The

downside of this, however, is that there is less incentive for workers to invest their

time and effort as individuals in formal study and skill development. El Sol puts aside

5% of its earnings to pay for training, but the disincentive to acquire skills is so strong

that they will probably increase the pay differential for skilled workers (J. Durán,

personal communication, July 18, 2006).

Another obstacle to the development of certain skills is an attitude that Luis

Medino explains:
7
These were often the children of other workers, but also recruited through
internship programs or newspaper ads and the like. Other recuperated enterprises
not visited for this study, such as FaSinPat, have hired young members of their
local organization of unemployed workers (Lewis, 2004)
 52

Most of my life I've been an administrator. Not here, here I was in

production [... so] I have been assimilated [by the other production
workers]. They accept me because I was working in production with
them [...] They don't value intellectual work, work is what you do
when you're at a machine. At a computer? They don't see that as useful
or necessary (personal communication, August 1, 2006).

In a traditional situation of employment, placing a higher cultural value on manual

work in this way can be seen as a form of class pride or resistance, but in the unique

situation of an ERW, it becomes a serious limitation. It discourages many workers

from developing skills they would benefit from, and feeds into a division between

groups of workers at many firms.

3.5 Cooperation and conflict

In most cases, the cooperative members with administrative skills are not

accepted by the others the way Luis is. Social divides are evident within ERWs,

especially between administrators and other workers. Even though there is no direct

class exploitation of the typical capitalist form, the social dynamics of class conflict

persist. Pay is often completely equal in these firms, to great financial disadvantage

for skilled workers, but this does not suddenly erase resentment of hierarchy or the

desire to minimize work.

While there may not be unions and strikes, the more “everyday” habits of

class resistance persist. Decisions that are made in an assembly are later questioned in

practice, materials are stolen, and so on (J. Durán, personal communication, July 18,

2006; J. O. Torres, personal communication, August 1, 2006). Luis at CUC described

to me the various strategies workers follow to avoid work, such as spending extra
 53

time in the bathroom, and concluded:

Time is taken away from production. It’s an old custom that, well—
before you could steal from the boss. Now? No. You're taking from
your own self. [...] Before, it was more controlled. If you went to the
bathroom for more than two minutes you would hear a knock at the
door. Now, this control doesn't exist. There aren't workers who will
say, “Hey! I'm the one you're screwing over!”

As Luis points out, workers who see each other as equals rarely hold one another

accountable to collective interests. Instead what happens is that a few workers—

overwhelmingly those with more administrative skills or formal education—are the

primary ones who advocate for things that will make the firm more productive,

especially in the long-term. Perceived as a boss rather than an equal, but with out any

authority to discipline, these individuals are often resisted and ignored.

This was perhaps most obvious to me at Cooperpel. Unlike any other

cooperatives I visited, the president wore a suit. He ordered workers to stop whatever

they were working on and to come speak with me. When he told one worker not to

smoke near flammable glue, the worker openly ignored him8. At most ERWs, the

social division between workers was more subtle, but it was explicitly mentioned to

me by workers at both CUC (J. Torres, personal communication, August 1, 2006) and

Artes Gráficas El Sol (J. Durán, July 18, 2006).

In some cases, mostly much smaller firms, this kind of tension and short-

sightedness seemed minimal or nonexistent. CEFOMAR is a small editorial and

8
The particular practice of smoking was a problem at all seven of the firms using
flammable materials that I visited. Workers consistently said that this hazardous
behavior was not tolerated under the former ownership.
 54

educational cooperative, so their workforce as a whole has far more formal education

and administrative skills than at most ERWs. Elections for positions like president

and treasurer are described as a formality required by law9; members simply agree to

rotate through the offices and give everyone a turn, rather than let the offices become

entrenched positions of power. At CUC, a handful of women follow similar practices

of equality and participation within the company's daycare, which is run as a small,

separate unit within the larger cooperative (D.N. Paloma, August 1, 2006).

Even where certain divisions do exist, self-management may eliminate other

divisions that used to exist, particularly between workers with similar skills,

education, or class background. Gabriel Rojas of Gráfica Patricios explained to me

that because of equality within the firm and improved job security, “competition is

not necessary.”

In this system of recuperated enterprises, we help each other, we cover

for each other. [...] If my coworker has any doubt about something, he
comes and asks me and we clear it up. If I'm making mistakes and I
don't see it [...] he realizes, he lets me know (personal communication,
July 31, 2006).

Workers’ control increases cooperation beyond the production process itself. In a

sector of the CUC factory that makes soles, I saw a worker cooking lunch in a corner.

Using a gas connection that is needed for melting rubber, workers have organized a

communal kitchen in their work area, taking turns buying groceries, preparing food,

9
Under Argentina's National Law 20.337, all cooperatives must have various
elected officers, including a president. The day-to-day significance these offices
have in practice can vary greatly between firms. This law also specifies that a
number of key decisions have to be made by majority vote in a general assembly
of all member-workers.
 55

and cleaning up. This level of cooperation in the workplace did not take place under

previous ownership.

However, workers’ control does not eliminate all tension, even between

workers with similar backgrounds doing similar tasks. At CUC, workers have lost an

eye and a finger in fights on the shop floor (L. Medino, personal communication,

August 1, 2006). This kind of intense animosity is rooted in larger social conditions

outside the cooperative, and was not described at other firms visited in this study.

Though Jorge Dúran of El Sol also mentioned social divisions within his cooperative,

he believes that under self-management overall productivity has greatly increased in

his firm, because, on the whole, workers are committed to the cooperative and more

willing to work together than before (personal communication, July 18, 2006).

3.6 Political perspectives

Workers express a range of views in terms of the political significance they

see in their experiences. Jacques (who chose not to give his last name) and Graciela

Quintero at the former Brukman factory are examples of two polar extremes. Jacques

has worked at Brukman for many years, and says he preferred the way things were

before the business collapsed. He is not interested in participating in the decisions of

the cooperative, but would rather “come in, stitch on the machine, and go home”.

Graciela, however described herself as a long-time communist militant. She began to

work here only after she got involved in the struggle against the eviction, and says

that she is honored that they chose to accept her into the cooperative later on. She

sees herself as working to raise the level of class consciousness among her coworkers
 56

(personal communication, August 10, 2006).

A few other people I spoke with, generally among those with the broadest

range of skills, expressed previous political commitments—one had traveled to

participate in leftist guerrilla insurgencies in Mexico and El Salvador and several had

decades of experience in the labor movement. These individuals generally spoke of

their enterprise in the context of a larger struggle against capitalism. However, most

other workers said they were motivated primarily by economic necessity and did not

have prior experience with political confrontation.

Osvaldo Claverino at the Hotel Bauen (personal communication, July 21,

2006) explained that he had no previous interest in politics or activism whatsoever,

but now he is extremely active in marches, lobbying and various other activities

aimed at winning expropriation of the hotel. He works closely in these activities with

workers from other ERWs across the country, but he does not relate this activism to

any other cause beyond the defense of recuperated enterprises. Some individuals who

are active in community projects insisted that their commitment was “social” but not

“political” (E. Carrizo, personal communication, July 17, 2006; S. Diaz, personal

communication, August 3, 2006). A question worthy of further study, it seems that

nearly all ERW workers are transformed by the experience in some way or another,

but much of their present attitudes are determined by previous ones. Transformations

in workers’ political consciousness from these experiences are varied and, overall,

limited.
 57

3.7 Conclusion

This chapter has described some of the diversity of the firms recuperated

under worker control in Argentina. In many ways, they are a cross-section of

Argentina's whole national economy. They have all suffered from some level of

disinvestment, but this is far from unique. What distinguishes this group of less than

200 firms is that workers refused to have their source of income neglected any longer.

In the face of profound economic hardship and even violent repression, they turned

these companies around, well enough to retain and even increase employment.

It is a great challenge merely to get the most provisional and temporary legal

recognition for the right to produce, but the greatest challenge comes in organizing

production. The workers who remain are overwhelmingly those with the least skills

and know-how, because the better skilled can find work elsewhere, generally with

better pay. Firms are uniformly in great need of re-investment, but there is a lack of

financial capital. This difficult process can strengthen commitment and cooperation

between workers, but success as a cooperative requires radical changes in behavior.

Where before it was in workers' interest to stand up for their rights and resist speed-

up and wage cuts, now they stand to benefit quite directly from higher productivity

and better quality output.

Given this entire range of challenges, networks of support are critical for these

firms. They must use their particular status as worker-run firms to access capital,

inputs, and markets for their finished products. The next chapter describes these

networks and strategies, primarily through the conceptual lens of social and solidarity
 58

economy.
 59

Chapter 4: Markets, the State, and the Solidarity Economy

Recuperated enterprises emerge from economic failures—firms that are

unable to keep up with the payments they owe to their workers and creditors. How

can workers expect to remake such firms in a more viable form? In addition to the

challenges inherited from their previous owners, there are the new challenges brought

on by the flight of skilled workers and the transition to self-management. The

previous chapter described some of these challenges, and some of the ways that

commitment and cooperation allow workers to address these challenges.

The focus of discussion so far has been internal to individual firms. However,

an important part of how ERWs are able to protect employment and workers' control

lies in how they relate to external forces and to one another. This chapter begins with

a few brief remarks on the market conditions and state policies defining the context in

which ERWs must survive. A key strategy for ERWs responding to these conditions

is to build networks of support, networks taking a form that can be described as “the

social and solidarity economy”. This term warrants some elaboration. From there, we

can look at the specific details of how different ERWs build and participate in such

networks.

4.1 Recuperated enterprises in the conventional market

As described in previous chapters, ERWs vary widely by firm size and

 60

industry sector. At times this means that they do not all face the same obstacles and

opportunities. Some recuperated factories face unique challenges because they are

links in the middle of a global supply chain. For example CUC—like two other

recuperated factories in distant provinces—was once part of Gatic, a major

subcontractor to the German athletic shoe company Adidas. As part of Gatic, all

inputs were provided, but now the cooperative has to pay about 80% of the value of

the finished product in advance, to purchase materials like leather, glue and rubber (L.

Medino and J. Torres, personal communication, August 1, 2006). Though CUC no

longer makes Adidas, they do much of their work for Converse and other

international brands. Similarly, 19 de Diciembre makes parts for cars produced

elsewhere in Argentina, South Africa or other parts of the world, for brands like Ford

and Renault (E. Iriarte, personal communication, August 11, 2006). ERWs in these

globalized manufacturing sectors are competing against conventional firms, which

may be better capitalized and operating in even lower-wage countries.

Even when a recuperated enterprise is locally or regionally oriented, it can

face a disadvantage if its primary customers are other producers. Political support and

socially-motivated markets are most available to cooperatives with a product or

service consumed directly by individuals or the local community (Lindenfeld, 1982,

p. 346). Conventional firms are unlikely to prefer supporting a worker-run firm over

another potential supplier. In fact, such customers may view a self-managed firm with

great suspicion. They might assume that a transition to self-management implies

lower quality or less reliability, and in cases like Gatic, they may fear the example
 61

that collaborating with an ERW could set for their own workers (J. Dúran, personal

communication, July 18, 2006; L. Medino, personal communication, August 1, 2006).

Often for smaller or more locally-oriented firms, finding customers and

suppliers is no less challenging. For example, many ERWs in Buenos Aires are in the

field of commercial printing, an industry where competition for customers is

famously cutthroat. At CEFOMAR, whose primary activity is editing educational

books, workers are beginning to conclude that because of competition from firms

with more working capital, they cannot possibly remain in business if they do not

branch out into new products or services (G. Maldonado, personal communication,

July 17, 2006). Regardless of their industry, all ERWs face at least some significant

competition with conventional firms that have greater knowledge and access to

capital. To survive they must find a special niche in some sense, whether it be

through the solidarity economy or through more market-oriented forms of

specialization. In some cases, the state can be a helpful partner in making this

transition.

4.2 Recuperated enterprises and the state

The state plays a significant and often contradictory role in the experience of

any recuperated enterprise. The same firm might experience repression and police

violence on the one hand, but also receive subsidies, preferential contracts, or

technical assistance on the other. This contrast reflects the fact that recuperated

enterprises came to prominence as Argentina was experiencing an important political

 62

shift. After more than a decade of radically neoliberal administrations, the crisis

finally brought Kirchner to power. This “center-left” Peronist took office with less

than 25% of the divided electorate behind him, but has enjoyed approval ratings as

high as 90%. He has done this by succeeding in a difficult balancing act: addressing

the most unpopular impacts of neoliberalism, just enough to contain social unrest

without alienating investors (Gaudin, 2005; Petras and Veltmeyer, 2005). The

experiences of recuperated enterprises are emblematic of this political context.

Of the firms I visited, the Hotel Bauen probably faces the most difficulty in

gaining legal recognition, mostly due to its symbolic power. In the heart of Buenos

Aires' downtown theater district, it has traditionally been a territory for business and

political elites. The occupation there began in March of 2003 and to date the workers

are still struggling for a definitive expropriation, holding rallies and marches on a

regular basis. Workers from ERWs in far-off provinces come to Buenos Aires to help

them in this struggle (O. Claverino, personal communication, July 21, 2006). For

ERWs in general, as the worst of the crisis has passed, occupations and evictions have

become much less common, but the state still has not provided an easy—or even

predictable—process to legally transition a failed or failing firm to worker self-

management.

At the same time, the state actively supports many recuperated enterprises as

an effective and visible strategy for addressing unemployment, if only on a very

limited scale. As of 2004, nearly half of recuperated enterprises had received some

sort of government subsidy, and another 20% were in the process of trying to obtain
 63

one. During my brief visits at both El Sol and Cooperpel, I encountered Jorge Pedro

Nuñez, a representative of INTI working very closely with these and other ERWs on

issues of technical assistance. Even Chilavert, where workers once threatened to burn

the building if police entered, gets contracts to do printing for various government

agencies.

Though much is determined by politics at the national level, recuperated

enterprises deal far more directly with the government of their municipality or

province. These local entities define the terms of any expropriation and can differ

significantly in the posture they take. Thus, Cristal Avellaneda faced greater

difficulties in gaining legal recognition than the nearby Gráfica Patricios, largely

because it lies just outside the city limits where the municipal government is even less

accommodative of ERWs (E. Magnani, personal communication, July 26, 2006).

Frequently, workers in recuperated enterprises say that they wish the state

played a more pro-active role in supporting them. Graciela Quintero at the former

Brukman factory would like all ERWs to be nationalized, and says that many workers

at the well-known recuperated enterprise FaSinPat (formerly Zanón) share this goal

(personal communication, August 10, 2006). Other workers I met frequently referred

to Hugo Chávez as an example of the leadership they would like to see in Argentina.

Most of these workers saw Chávez speak at a conference for recuperated enterprises

organized by the Venezuelan government, the Encuentro Latinoamericano de

Empresas Recuperadas por los Trabajadores. In that country there are about 20
 64

recuperated enterprises, all nationalized10. Several articles of the Venezuelan

constitution implemented under Chávez in 1999 pledge protection and support for

cooperatives, and a law passed in 2001 has led to explosive growth in worker-owned,

self-managed firms (Piñeiro Harnecker, 2005). Though Argentina has an agency

focused solely on supporting cooperatives and social economy (Instituto Nacional de

Asociativismo y Economía Social or INAES), it seems that Venezuela’s government

has made a much larger commitment to cooperatives.

Overall, the position of ERWs relative to the state in Argentina is ambiguous

and inconsistent. Despite a variety of supportive programs, in the words of Ruggeri et

al., “there is no true public policy toward recuperated enterprises (2004, p. 86).” In

part, this can be explained by the fact that the ERWs themselves lack a coherent

political voice. About one third of them belong to the MNER, another third to the

MNFRT, and most of the other third are unaffiliated (Ibid, p. 94). At most of the

organizations I visited, the support provided by the MNER was described as very

helpful for the early part of the process of becoming a recuperated enterprise, but the

organization's capacity to help address ongoing issues of production is much more

limited.

I attended two meetings that each included representatives of many MNER-

associated enterprises, where workers and their allies planned a broader forum for all

10
The question of whether the more sympathetic state in Venezuela means that the
situation for workers demanding self-management at failing firms there is actually
better then in Argentina is unclear. On the one hand Venezuelan workers resisting
unemployment have occupied well over 1,000 factories (Trigona, 2006), but it
seems that very few of these have succeeded in becoming recuperated enterprises.
 65

recuperated enterprises, including members of the MNFRT. I was also invited to

attend this forum, but when I arrived at Gráfica Patricios where it was already

underway, I was told that they had changed their mind about allowing visitors,

because they were in the process of working through some highly divisive issues.

Gabriel Rojas, a worker at Gráfica Patricios who I had interviewed during my earlier

visit, described the division as ideological, and falling between members of the two

main movement organizations. However, like many other ERW workers, he pointed

out that it is also sometimes difficult for many recuperated enterprises to work

together because of the diversity of their firms' industries and histories (personal

communication, August 5, 2006). In addition to relations toward the state, most of the

agenda of this meeting was related to building a more coherent social and solidarity

economy, the topic for the balance of this chapter.

4.3 Defining “social and solidarity economy”

The term “social economy” has been in use for about 150 years, and refers to

practices with precedent almost throughout human history. Literature on the topic

wrestles with the complexity of comprehensively defining the term (Moulaert and

Ailenei, 2005; Westlund, 2003). In current usage, “social economy” is an inclusive

and general term for a range of practices that replace profit-maximizing firms and

markets with other systems of production and exchange, emphasizing social or

political outcomes but eschewing centralized state control. Collin Harguindeguy

(2006) lists 15 different terms for social economy in this sense, most of them used in

multiple sources. They often refer to similar concepts and may reflect common goals,
 66

but each term also implies its own unique perspective and is often rooted in a specific

context of praxis.

There are a few themes that cross most discussions of social economy. One

key issue is how social economy is understood relative to the “market versus state”

dichotomy. In some sense, social or solidarity economy is almost always posed as an

“alternative” to these two forces. Most conceptions traditionally imply that this

alternative sphere can co-exist within existing political economies. In other words,

this view emphasizes the role of social economy as a “third sector”, potentially

overlapping with or working in close partnership with profit-seeking firms or the state

in order to fill needs those other sectors leave unaddressed.

On the other hand, there are conceptions of social and solidarity economy that

treat it is as a prefiguration of more radical social transformations. An upcoming

international conference in Argentina on self-management calls for something closer

to the latter understanding of social economy, which the conveners discern by calling

it “workers' economy”:

What we are proposing for this First International Gathering, however,

is not what might be interpreted, at first glance, as a debate on the
"social economy" (as fomented, for example, by the World Bank and
NGOs focused on "social containment"). Rather, we are proposing the
reverse: We would like to engage in discussions centred on the
socialization of the economy. Instead of waiting for the fulfillment of
the promises set in a far-off utopia grounded in a revolutionary
conquest of political power, workers from around the world are
presently advancing projects that are giving them back their lives and
labour. However fragmentary and limited these projects might
currently be, they tend to be rooted in actual practices and concrete
experiences rather than in the promissory and the abstract (“Workers'
Economy”, 2007).
 67

The call to see the construction of a solidarity economy as a conscious, intermediate

strategy toward the eventual “socialization of the economy” has become increasingly

common, particularly in Latin America. However, both of these understandings of

social economy, the more reform-oriented and the more socially transformative, can

be found in practices within the recuperated enterprise movement.

Another question dealt with by many definitions of social economy is its

“juridical form” (Westlund, 2003), that is, the particular legal structures which define

the key actors of the social economy. By many definitions, ERWs would inherently

be seen as examples of social economy simply because they are organized as worker

cooperatives. Other juridical forms, such as non-profits and NGOs, participate in

social economy networks together with recuperated enterprises. Some understandings

of social economy place less importance on particular juridical forms, including more

informal social arrangements. Again, both aspects of social economy, those with and

without specific juridical forms, are clearly important to the experience of most

recuperated enterprises.

The distinct but related concept of “social capital” captures much of how the

most informal aspects of social economy operate. A full discussion of social capital

would be beyond the scope of this paper11, but in brief, the term describes how social

relationships and networks may facilitate economic transactions. Social capital can be

important to commercial economies as well as to social ones, so the mere fact that

11
See (Portes, 1998) for a relevant treatment.
 68

ERWs draw on social capital is not inherently an example of social economy.

However, social capital is more central to the logic of the social economy and its

successful development, and the social economy tends to encourage a much more

horizontal distribution of social capital than the market economy does (Westlund,

2003, pp. 1198-1199).

Social capital can be useful even to traditional firms because it forms the basis

for trust and mutuality. With a strong network of social relationships, transactions can

be conducted in a way that approaches a “gift economy”. Goods or services can be

obtained without an immediate quid pro quo, but rather an understanding on the part

of the provider that they will be able to receive a similar favor in the future, even if it

is not directly from the recipient. In a traditional commercial economy, this kind of

flexibility can provide a competitive advantage. In a social economy, the creation of

gift economies and networks of mutual aid may be a goal in and of itself.

This brings us to a third aspect of social economy: alternative modes and

mediums of exchange. The intentional fostering and promotion of gift economies is

one example of this. A complimentary example is solidarity purchasing, whereby

certain market decisions are shaped by the desire for social outcomes, like local job

creation or the advancement of workers' control. Recuperated enterprises often

choose to purchase inputs from a particular supplier in part because they are also a

cooperative or ERW. Similarly, they might develop special opportunities to market

their finished products to consumers who want to support self-managed firms. One

other example of social economy exchange, of less direct relevance to ERWs at

 69

present but worth mentioning, is alternative currencies and barter. At the height of the

economic crisis, these modes of exchange were absolutely critical throughout

Argentina (McClanahan, 2003; Pearson, 2003).

Taken together this constellation of concepts gives us a sense of what it means

to examine the social and solidarity economy practices of recuperated enterprises.

What relationships do ERWs have with one another, and with other collective actors

that do not fall neatly within “the market” and “the state”? How central is the

expansion of social capital to their business model? How do they break out of the

traditional modes of market exchange? How do all of these strategies impact workers’

control?

4.3 ERWs and their neighbors

Particularly when it involves a confrontational occupation, the recuperation of

an enterprise is only possible with a broad base of community support. ERWs nurture

this network by giving back to the community. Gabriel Rojas of Patricios explained to

me how this approach arose organically from the experience of workers:

In the Menem years—we all know that during the decade of the 1990s,
a goal of those in power was to destroy [...] a social network. Well,
what we are trying to see is how we can reconstruct it. [...] We're not
only recovering the network [...] we're adding something more to the
network than what had existed before the 90s. This is something that is
new for the community and is new for us too, but everyone understood
it had to be done (personal communication, July 31, 2006).

The primary way that workers do this, reversing the social destruction of

neoliberalism, is by trying to replace social services from the ground up. The types of
 70

social projects that ERWs offer vary, but are generally educational or cultural in

nature, because these require the least financial resources (G. Maldonado, personal

communication, July 17, 2006). Many services are provided at no cost, but some

others generate a small amount of revenue to at least cover the program itself,

sometimes through fees but often through local government support. Examples

include:

 Preschool (CEFOMAR)

 High school (Gráfica Patricios)

 Trade school (CUC)

 Daycare (CUC)

 Tutoring, adult education (CEFOMAR, Nueva Esperanza)

 “Industrial park” i.e. small business incubator space (CUC)

 Radio stations (CUC, Patricios)

 Parties and cultural events (Chilavert, Patricios)

 Meeting spaces (nearly all)

Though workers are most directly motivated to open their doors and invest in

these projects out of gratitude and social commitment, there can clearly be political

and economic benefits for the firm as well. One striking effect from many of these

projects is that they transform workplaces that were once very private and closed into

semi-public spaces. This supports the feeling expressed by many recuperated

enterprises that they are genuinely, “of the people”. Interacting with neighbors and

filling diverse social needs encourages neighbors to remain loyal supporters and
 71

customers (L. Medino, personal communication, August 1, 2006).

There are other ways that some of these specific projects can help a

cooperative build its network of support or secure other resources. The community

radio station and a magazine produced by students at Patricios' high school (Figure

4.1) provide the cooperative and its allies with publicity they could not otherwise

access (G. Rojas, personal communication, July 31, 2006; González et al., 2006).

Students who have done well at CUC's trade school have gone on to join the

cooperative as semi-skilled workers (J. Torres, personal communication, August 1,

2006). Creating these kinds of connections are very helpful to cooperatives that

depend so heavily on community engagement.

Figure 4.1: Magazine produced by students at Gráfica Patricios

Recuperated enterprises also reach out to people beyond their own

neighborhood. I ran into all kinds of other visitors who were at these ERWs for
 72

diverse reasons, from near and far. Workers at recuperated enterprises often visit and

work with one another. They travel abroad sharing their stories and looking for

support. The Programa Facultad Abierta oversees partnerships between the University

of Buenos Aires and many recuperated enterprises. Firms receive a range of technical

assistance through this program. Also in conjunction with the university, Chilavert

hosts a “documentation center”, a library of materials about recuperated enterprises.

On some level, these activities are not fundamentally different from the kinds

of public relations and networking that would be advantageous to any small firm.

They provide an advantage in attracting sales and support from neighbors, even

international allies. However, a key point here is that none of these firms had similar

community projects when they were under traditional ownership. Recuperated

enterprises are uniquely committed to the well-being of their local communities, and

these community projects come out of a genuine social commitment on the part of

workers. Luis Medino explains that the purpose of the community radio station he

manages at CUC is:

To cover the necessary connection between society and the

cooperative, because, well—it's an integral project [...] There's a lot of
social participation in the process of a recuperation—the neighbors
fighting for a source of employment that belonged to the
neighborhood. As a cooperative and as a recuperated enterprise, we
have to return in some way what society has offered us.

This last sentiment especially, the idea of serving the community as a way to

give back for the support that made their firms’ recuperation in the first place,

is quite common across recuperated enterprises. ERWs continue to develop

and draw on their network during the stage of production, but it emerges out
 73

of the process of occupation and resistance.

4.4 Solidarity markets

Cooperatives in general, but recuperated enterprises especially, can benefit

from customers who are interested in supporting worker control. Figure 4.2 shows the

nature of ERWs' customers as a whole. It is hard to quantify the importance of

solidarity marketing based on this data alone, but a significant minority of the sales

by ERWs is made to customers that may at least potentially have an interest in

supporting them as worker-run firms. Perhaps most remarkably, NGOs account for

over 23% of the sales made by recuperated enterprises. Further research would be

needed to quantify the existing and potential solidarity market in more depth.

Figure 4.2: ERW sales by type of client (Ruggeri et al., 2004)

 74

9.8% 10.6%
2.3%
3.8%
1.5% Monopolist enterprise
Other large enterprise
Small or Medium Enterprise

25% Microenterprise
Social Enterprise
NGO
ERW
State
24% General Public
Other

18%
3.0%
2.3%

For now, we can consider some observations on how ERWs target socially or

politically conscious customers and what makes these kinds of transactions different

from more conventional ones. First of all, the importance of solidarity marketing

clearly varies greatly between recuperated enterprises. At some firms I visited

(Cooperpel, 19 de Diciembre) I saw no sign that they have any socially-motivated

customers, which is not surprising given that their customers are mainly large,

conventional firms. On the other hand, at Chilavert, it appeared that every one of their

customers may have had at least some interest in supporting them as a worker-run

firm. Across my many visits there, I saw work being done for credit unions,

government offices, political publishers, and so on, while at the other print shops,

everything I saw printed was for traditional private firms.

As Figure 4.2 demonstrates, there is only a small amount of business

 75

conducted ERW to ERW. Nonetheless, these deals can be very important for them.

When the workers of Forja San Martin were fighting for their expropriation, they

needed to prove that they had potential customers, but had little idea of how to find

clients. They visited a recuperated tractor factory to look for help. It happened that

this more established cooperative needed forged parts that the workers of San Martin

could make easily, and was also willing to provide the raw materials in advance. With

this arrangement between recuperated enterprises in place, Forja San Martin had its

first substantial customer and could better argue for expropriation from the

bankruptcy court (Lewis, 2004). Even when recuperated enterprises are not buying

directly from one another like this, they may help them find other customers in a

similar way. For example, Patricios' first customer was referred to them by workers at

Chilavert (E. Magnani, personal communication, July 26, 2006).

I saw numerous examples of ERWs making a conscious choice to support

other firms because they were also worker-controlled. Workers at Cristal Avellaneda

wear uniforms and utility boots made at other cooperatives. Often such deals were

made under terms favorable to both parties, and at many ERWs, workers told me that

their own products were both cheaper and higher quality now than they were under

the previous ownership. At the same time, there are cases where supporting workers’

control, evaluated narrowly as a market transaction, is a sacrifice for the customer.

Chilavert workers complained that the bread rolls they buy from a local cooperative

for their afternoon snack are higher priced and lower quality than they could get

elsewhere, but they felt it was necessary to support them anyway.

 76

CUC has been particularly successful in terms of adapting traditional mass

marketing strategies to target socially-motivated consumers and create a brand for

itself. A poster (Figure 4.3) presents a stylish image of “worker democracy”, and

indicates that CUC brand shoes can be bought at the factory's outlet store and at the

Hotel Bauen. The poster also says that it was printed at Chilavert and lists CUC's

website, hosted by the NGO La Base. The official launch of the brand was a press

conference held at the Hotel Bauen (CUC, n.d.). Débora Palomo has described the

brand as, “directed to a public that is committed to solidarity economy and has an

interest in the social (Cáffaro, 2006).”

CUC is able to export shoes to Italy through a fair trade textile supply chain

arrangement called La Cadena Productiva Textil Justa y Solidaria. This is an NGO

committed to social economy development, and is working to link together Argentine

cooperatives at various stages of the production process, from cotton farmers'

cooperatives up through foreign fair trade retailers. This is still a pilot program, but

the organization hopes it will be the beginning of an expanding network (Fundación

Pro Tejer, 2006).

 77

Figure 4.3: Marketing poster for CUC athletic shoes

Another NGO, La Base, provides recuperated enterprises and other worker-

controlled firms in Argentina with a vital input at a great discount: capital. The

NGO's founder, Brendan Martin, moved from New York to Buenos Aires to start the

organization shortly after seeing the film about recuperated enterprises, The Take. So

far, they have loaned over AR$600,000 (roughly US$200,000) to 17 cooperatives.

They have made loans ranging from AR$530 – AR$30,000 (roughly US$170-

US$9,700) mostly for raw materials, machinery, and marketing. La Base takes no

collateral or guarantees but maintains a high rate of repayment by publicizing the

payment history of each loan on its website and explaining to the firms that
 78

repayment allows this resource to continue serving the movement as a whole. Martin

personally pays the salaries of the organization’s small staff and develops a network

of foreign donors to support the loan fund, keeping overhead remarkably low (E.

Magnani, personal communication, July 26, 2006). Though this model makes the

organization highly dependent on one individual, it is an otherwise sustainable and

important source of interest-free financing available to ERWs.

4.5 Conclusion

To summarize, recuperated enterprises cannot survive by simply emulating

the same business model followed by their former bosses. They face all the same

competitive disadvantages as the earlier bankrupt firms, and many new challenges as

well. Now that the movement has established itself as a feature of Argentine society,

the state may give them certain subsidies and supports to protect them, but these are

limited and can only carry a firm so far. Many ERWs use their political significance

and social connections to build special advantages from the grassroots.

Service projects do not only help to draw this support, but they also expand

workers’ control in other ways. They replace and expand some of the social services

destroyed by neoliberal policies. More than primary production activities, these

projects also give workers experience with autonomous production, using their labor

to address needs in their own community. Community radio stations are one of the

examples Gorz himself gives of autonomous production in practice (1982, p. 87).

Overall, this approach is more of a nascent possibility than a fully developed

reality. When I asked one worker at CEFOMAR to explain his understanding of what
 79

“social economy” is, he answered: “What is it? No. What should it be? It's a very nice

idea but it doesn't exist yet (D. Rogovich, personal communication, July 17, 2006).”

CEFOMAR is an example of a firm that invests heavily in building social capital, by

providing many educational programs to their community and offering their

administrative expertise for free to other ERWs. Other firms, like CUC and Chilavert,

are better able to translate this kind of solidarity into sales and sustain themselves

financially. In contrast, firms like Cooperpel and El Sol are determined to compete on

the terms of the commercial market, maximizing productivity while also drawing

more effectively then many other firms on transitional support from the state. In the

process, they may sacrifice the relaxed pace and equal participation found in some

other cooperatives. Even some of the most market-oriented firms like these may have

some strong informal ties to other ERWs and their local neighborhoods, but

Argentina's recuperated enterprises on the whole seem to lack the organization it

would take to win a coherent public policy and to develop a more robust social

economy.
 80

Chapter 5: Conclusion

It's easier to take twenty factories than it is to maintain one (J. Torres,
personal communication, August 1, 2006).

The students come here to study and see the workers working
cooperatively. This is a powerful image of links between community
and work. Usually factories are closed places where nobody can get in,
and nobody sees (E. Magnani, personal communication, July 26,
2006).

From the early days of the country’s industrialization, the Argentine working

class has aspired toward profound levels of control. Their unions and political parties

have frequently suffered from cooptation and ideological division, but their organic

sense of class solidarity is formidable. They have frequently mobilized militant

resistance, including general strikes and occupations of factories, to demand control

over the work process, over union bureaucracy, and even over the state. At many key

moments throughout this history, such as the Semana Tragica in 1919 or the

Cordobazo in 1969, workers have adapted to changes and crisis to reassert their

power. The historical formation of the Argentine working class could hardly lend

itself better to the spontaneous development of a recuperated enterprise movement,

particularly at the level of culture, consciousness, and informal social networks.

The organization and capacity of Argentina's labor movement, as well as the

 81

strategies of elites to contain it, have oscillated and transformed in response to

economic changes and political crises. Over the course of the 1990s, neoliberalism

brought deindustrialization and unemployment, greatly reducing the power of trade

unions. Public sector workers rallied hard against privatization with little success,

while unemployed groups developed new strategies. When total collapse in

December of 2001 created a situation desperate enough that even much of the middle

class was temporarily radicalized, recuperation of failing enterprises became a viable,

albeit desperate, survival strategy for thousands of workers. Thus, as part of the

Argentinazo—the most recent and perhaps most profound crisis in the country's

history to date—recuperated enterprises quickly became a widespread phenomenon.

Though extremely diverse, some common experiences characterize the

experiences of recuperated enterprises. On the whole, workers have increased control

over the work process and enjoy a less regimented atmosphere, but may work harder

or longer hours than before, and experience lower safety standards. Overall

production is decreased, but there are fewer workers and salaries are more equal, so

those with jobs now enjoy higher incomes. Jobs continue to be created as workers

slowly restore the capacity of their facilities. They are unable to retain or attract all

the skilled workers they need, but make up for this to some extent by sharing skills

with one another more openly than before.

The differences between firms demonstrate a number of important

organizational trade-offs. Especially at larger firms, a minority of workers with

administrative skills can dominate the management process, pushing to increase

 82

productivity against the majority of workers who are not as engaged in the firm

beyond the repetitive tasks of production. At the smallest firms, management tends to

be more informal and participatory, reducing these work process conflicts. At

CEFOMAR, administrative skills are abundant, making management even more

horizontal. To avoid hierarchy and bureaucracy, equal control over physical capital

through a cooperative structure is not enough; the distribution of human capital must

also be relatively equal.

CEFOMAR is also the least productive of the firms I visited. In fact, it is the

only one where workers said that most of them depend on additional sources of

income other than the cooperative to survive. Among print shops, the smallest,

Chilavert, is probably the least productive in economic terms. However, it would be

too simplistic to conclude that there is a simple trade-off between higher participation

or higher productivity. Workers at CUC, the largest factory I visited, envy the high

productivity that many smaller cooperatives achieve (J. Torres, personal

communication, August 1, 2006). The absence of a capitalist employer does not in

itself guarantee greater control for all workers, regardless of the size or industry type

of a firm, when so much else of the previous condition remains the same. As Gorz

observed, “a communist life-style cannot be based upon the technology, institutions,

and division of labor which derive from capitalism (qtd. in Boggs, 1977) .”

State support can help recuperated enterprises greatly increase their

productivity, particularly by providing access to capital and technical assistance.

However, the Argentine state is most pro-actively helpful to the firms (e.g. El Sol,
 83

Cooperpel) that are the most hierarchical and that did not experience combative

occupations. This is not necessarily a conscious political choice on the part of the

government, as these might also be the firms that are best positioned to compete in

the traditional market. In any case, a more developed and positive state policy to

encourage ERWs could be very effective at saving and creating high-quality jobs, but

it is of only of very limited use toward furthering workers' control in a more general

sense.

Many recuperated enterprises contribute toward developing a social and

solidarity economy as an alternative to the confines of market competition and state

dependency. They develop networks of mutual support between one another. They

open their doors and share their resources with the community, and in turn depend on

the support of their neighbors, as citizens and as consumers. It is likely that many

firms could not survive if it were not for their innovative social economy practices.

However, the growth of the solidarity economy has been piecemeal. Unlike the

successful network of Mondragón cooperatives in Spain, the workers' economy in

Argentina has no central body to marshal resources and strategically coordinate

advancement.

What are some of the overall lessons from previous contexts of self-

management and social economy like Mondragón that can be compared to

Argentina’s recuperated enterprise movement? Bradley and Gelb (1983) observe

some patterns that emerged across various Northern examples:

Case studies, firstly, suggest that the impulses towards employee

 84

takeovers are primarily accommodative, and may be assessed from

within the framework of the existing socioeconomic system, rather
than being a radical change. This is not to say that in the long run
declining capitalism would be stable. [...] But in most instances the
employee takeover, the immediate circumstances and isolation of
those individuals for whom the 'cash nexus' has snapped makes it
unlikely that closures will lead directly to ideological reaction.
Case studies also indicate four dimensions of firms undergoing
transitions. Firstly, they range from those close to commercial viability
to virtually hopeless cases. The position on this spectrum of
commercial viability relates to that in the second dimension – the
degree of political protest, controversy and perhaps even violence. The
nearer is the closing company to full commercial viability, the less
controversial, and the smoother, is likely to be an employee takeover.
[...]
A third dimension is the capital intensity of an affected firm. The
greater average job cost/man, the more costly is the prevention of a
given number of redundancies likely to prove [...]
The fourth dimension is the extent to which closure is politically
unacceptable for genuine social reasons, as opposed to immediate
political pressures which cause government to adopt a 'survival'
welfare function. (pp.85-86)

In terms of the initial point from this quote, Argentina's ERWs arose in a moment of

political upheaval, but they have proven to be largely “accommodative”. Hierarchy

has been reduced, but has not disappeared from most shop floors, and workers'

political attitudes have not radically changed. Despite the efforts of a few firms and

individuals within it, the recuperated enterprise movement has not fought for broad

revolutionary change, but for the defense of jobs, making important but only limited

adjustments to their Fordist character.

The firms that have been recuperated in Argentina vary in terms of their

initial prospects for economic viability. The present study did not collect enough data

on the conditions of the older firms or include a large enough sample to evaluate their
 85

initial viability and make meaningful comparisons in this regard. On the one hand, El

Sol and Cooperpel experienced a low level of conflict in their transition to self-

management, and also expressed relative confidence in their capacity to compete.

However, CEFOMAR experienced a very smooth transition as well, and yet they

were the most anxious about their long-term viability.

One important dynamic in this case is that the country's economic collapse

greatly reduced the viability of firms, but in a rather temporary sense. Owners

abandoned firms that became viable again after the crisis, to the advantage of worker

takeovers. Another dynamic common for many of these firms is that they were

gravely mismanaged and neglected by their former owners. Both of these conditions

seem critical to the emergence of Argentina's recuperated enterprises. Significant

growth in the number of ERWs in Argentina, or the emergence of similar movements

in other countries, is only likely in response to further crises, and in contexts where

corruption, protection, subsidies or other dynamics have allowed viable but critically

mismanaged firms to remain only precariously functional.

Yet again there is some variation, but in terms of capital intensity, Argentina's

ERWs are in an intermediate position overall. None of them are extremely capital

intensive, and as older firms, any major investments had been made decades prior to

the takeover. Nonetheless, the vast majority of ERWs have some very significant

sunk costs in terms of machinery or other facilities. CEFOMAR may not be typical of

the firms that are least capital intensive, and so further studies should look at other

service-oriented ERWs, like the few health clinics and schools that seem to be fairly
 86

successful, and compare these to the firms that rely more on machinery and other

physical capital.

The political pressures of the crisis were in fact immediate, but much of the

support for ERWs is for “genuine social reasons”. Where the state is supportive, its

policies seem to be aimed at assisting in a transition to self-sufficiency, not creating

long-term protection for uncompetitive firms. This will be a question for further

study, especially as the situation evolves in the future.

In another helpful comparison of early experiences, Lindenfeld (1982)

provides an excellent overview of what pieces he believes need to be in place for a

failing company to transition to recuperation under self-management. He bases these

conclusions on worker buyouts in the United States and England as well as the

network of Mondragón cooperatives thriving in the Basque region of Spain. One of

these key resources is the leadership to organize workers around the idea, point them

to the resources they need, and help guide the planning process in a participatory

manner. As an early step, a feasibility study can produce a viable business plan and

help garner support.

Lindenfeld also identifies firm characteristics that lend themselves well to

success. Labor-intensive industries in a sector where the government already has a

record of effective technical support, and products that will be consumed by

individuals in the community are helpful. Medium-sized firms of about 30-300

workers are ideal, so that they are big enough to have an impact on the community

but small enough to prevent bureaucratic hierarchy. Lindenfeld points to the state and
 87

unions as key sources of financing, as well as credit unions like the Caja Laboral

Popular that has driven the growth of worker cooperatives at Mondragón. The

presence of at least some government support is almost always critical. The key to

obtaining state support is, of course, a general political climate favorable to pro-

actively protecting employment in this form. The most successful recoveries are by

firms where worker control is increased, rather than mere buyouts that leave vertical

management structures intact.

Lindenfeld also elaborates on the roles that supporting organizations can play.

They can pro-actively identify firms that would lend themselves to being recuperated

by the workers and begin talking to them at an early stage, launching the critical task

of educating workers in the very different attitudes that self-management requires. To

facilitate a buyout, such organizations can act as a holding company and own the

facilities that workers manage. If this entity receives payments for use of the property

and holds pension funds for workers, it can invest this money in expanding and

supporting the network of worker cooperatives. It can lead research and technical

assistance focused on the collective needs of the recuperated enterprises. Finally,

Lindenfeld points out that such an organization can coordinate the growth of social

economy ties by matching firms to one another and promoting solidarity marketing.

He suggests that solidarity marketing focus on liberal middle-class consumers.

Lindenfeld's assessment of ideal situations for transitions to self-management

is largely consistent with the firms included in this study. In Argentina as elsewhere,

smaller numbers of workers, consumer-oriented products, and various forms of social

 88

and political support can be very helpful. Overall though, looking at the diversity of

ERWs from this perspective shows how impressive this particular movement is. The

success of so many recuperated enterprises is explained not by the existence of an

ideal situation to support the transition, but by the high level of class solidarity among

Argentine workers and their supporters, and the severity of the crisis that left them

with so few alternatives.

In Argentina, the MNER and the MNFRT provide much of the catalyzing

leadership that Lindenfeld calls for. Though many recuperated enterprises arose

spontaneously, many more would not have been possible without the advice,

organization and legal services provided by these groups. The educational process

they led was eased somewhat, in comparison to in the United States, by the fact that

worker cooperatives are a much more familiar idea in Argentina, and by the high

profile of the movement once it began to gather momentum. However, the MNER,

MNFRT and miscellaneous NGOs that support ERWs are not effective in giving all

the other forms of support and coordination that Lindenfeld recommends.

Given the nature of the crisis, workers at Argentina's ERWs never had

thorough feasibility studies. The legal process for winning expropriation does require

demonstrations of viability though, so some helpful planning may take place in this

process. It is unclear how many enterprises may have been occupied but then never

expropriated because they were truly not economically viable. What is clear however,

and extremely important to emphasize, is that workers so far have never abandoned or

been evicted from a firm because they could not make it function economically after
 89

winning an expropriation (E. Magnani, personal communication, July 26, 2006).

Given the chance, workers find a way to make their firms survive.

Overall, most ERWs do not perfectly fit the profile of companies that lend

themselves most easily to self-management. Lindenfeld's list of favorable

characteristics is effectively a list of some key obstacles that many ERWs have had to

overcome. Many are within the given range for size in terms of number of workers,

but many are also below it. As recuperated enterprises generally continue to create

more jobs, perhaps this gap will lessen. A significant portion of ERWs does not sell

directly to consumers. In the case of CUC, workers overcame this by creating their

own brand of shoes. Some of their solidarity market lies with middle-class—and

largely international—sympathizers, but in fact like many other ERWs, their most

loyal customers are their working class neighbors.

The severity of deindustrialization brought by Argentina's financial crisis

helped to create a favorable political climate for recuperated enterprises. The

population mobilized to the point that the government could not possibly hold on to

power if it did not find ways to address the economic situation. The various

movements of the Argentinazo activated a vast network of support for new forms of

social economy. The long history of Argentina's working class helped prepare it for

the recuperated enterprise movement. Perhaps the one disadvantage of the political

context for ERWs is that in the aftermath of the crisis, the middle and upper classes

were eager to see a return to “normal capitalism”, including traditional property

rights. Overall though, circumstances were so favorable in Argentina that the

 90

recuperated enterprise movement arose far more spontaneously than Lindenfeld could

have ever imagined possible in the United States. The downside of this spontaneity is

a lack of coordination, leaving ERWs little chance to reach the level of economic

success and integrated social economy seen in Mondragón. If ERWs can build more

unity between one another, far greater possibilities may be open to them.

Lindenfeld outlines a coherent strategy for encouraging failing businesses to

become economically viable worker cooperatives, but this is not sufficient. He draws

some key insights from the Mondragón model, which is a profound illustration of

how worker cooperatives can drive regional development and stable employment.

However, as Sharryn Kasmir (1996) explores in great depth, Mondragón's ideology of

cooperativism—much like “quality circles” and other “worker participation”

programs in more traditional firms—increases productivity by subsuming class

conflict. The most politically conscious recuperated enterprise workers I spoke with

see older cooperatives in Argentina12 as examples of a similar trap and emphasize that

recuperated enterprises should remain fundamentally different from these, by

continuing to pursue workers' control in a broader sense than mere worker ownership

and democracy. Lindenfeld's framework does not adequately address this question of

how self-management relates to building workers' control politically.

For this we turn to Petras and Veltmeyer (2002) who look at previous cases of

worker takeovers in Latin America and the former Yugoslavia for lessons of interest

to Argentina. They list the following observations:

12
An example frequently given is the cooperative called SanCor, one of the country's
largest dairy processors.
 91

1) The success of past worker-managed factories was based on

horizontal structures based on popular assemblies, [...] workers'
councils and factory assemblies.
2) The success in one sector, [...] depended on extending the WSM
[worker self-management] to other sectors and alliances with other
classes, a phenomena that the worker vanguards failed to consummate.
3) Local victories and dual power heightened class consciousness and
improved working conditions, but also provoked violent reaction from
the ruling classes. [...]
4) The context for the growth of WSM movements varies from
country to country and under specific conditions. In Yugoslavia, WSM
began with the workers' anti-fascist war, and culminated in the
massive occupation of factories under the Yugoslav Communist Party.
In Chile, WSM was a result of both government policy and direct
intervention of workers to prevent capitalist lockouts and sabotage. In
Bolivia, WSM grew out of a popular anti-oligarchical insurrection.
Only in Yugoslavia did WSM consolidate power over 3 decades, and
that is largely because the state power was in the hands of a non-
Stalinist Communist Party. WSM, in order to consolidate and operate
needs to move from the local to the national, from the factory to the
state, from the employed industrial workers to the unemployed, the
youth, women, ethnic minorities.

As in the cases from which these insights are drawn, Argentina's recuperated

enterprise movement is largely rooted in horizontal organizational structures, both

within the enterprises and in the social movements that support them. Vertically

organized political parties do have important influences over the MNER, MNFRT,

and many of the various social movements that recuperated movements are connected

with. ERWs have the advantage of existing across almost every sector of the

economy, and having support across different social groups. The “local victories and

dual power” of the movement has indeed provoked violent reactions, but not to the

point that the movement has been destroyed.

Only in the comparison of political contexts, we see a serious limitation for

 92

Argentina. Yugoslavia is where self-managed enterprises had the most political

success, but the Argentine situation has much more in common with those of Bolivia

and Chile. Political divisions and Kirchner's success in taming much of the social

unrest makes it very unlikely that state power will be subordinated to popular

movements any further. Short perhaps of another tragic and disastrous economic

collapse, it is hard to imagine the state coming to act as favorably towards workers'

control as was the case in Yugoslavia.

This study cannot produce meaningful suggestions about what immediate

measures recuperated enterprises might take to better advance toward this degree of

organization. While the organic class consciousness in Argentina at the level of the

community is remarkable, perhaps the most advanced in the world, it has historically

been quite difficult for this class formation to translate into sustained control at the

level of the nation-state. Only through further episodes on the scale of the Cordobazo

and the Argentinazo might the nature of the state eventually be changed enough to

create significantly more space for workers’ control at the macro level. Such mass

mobilizations span the material and the relational in their achievements, and bridge

control from the level of the community to the level of the nation-state.

Through social and solidarity economy, recuperated enterprises are increasing

the links between the shop-floor to the community in profound ways, but they have

established only extremely limited connections toward control at the national and

international levels. The movement as a whole has achieved very significant

economic and political benefits, but they are largely confined to the micro level.
 93

Moreover, within any given ERW there seems to be a trade-off between these two

goals; that is, some recuperated enterprises provide more material benefits, while

others provide more relational ones. This contradiction is not likely to be resolved in

the near-term, particularly not without successful struggles for workers’ control at the

macro level.

Figure 5.1 places recuperated enterprises into the overall field of workers’

control. Many more pieces could be included in this picture, but this diagram focuses

on the elements that this study has explored most directly. Dotted lines suggest

linkages, formations and practices that are especially lacking or underdeveloped. The

question mark denotes a hypothetical body that would vaguely resemble that

suggested by Lindenfeld: a consolidated force to organize and empower the solidarity

economy. If the missing pieces were in place, recuperated enterprises and the social

economy might become an essential link in an anti-capitalist network, encompassing

the local and global, the political and the economic. Another piece that might be

helpful for linking ERWs, mass mobilization and the social economy to more macro-

level control, in addition to or in place autonomous mass workers’ parties, is an

“assembly of social movements” as described by Adamovsky (2006).

To explore this hypothesis, many other questions remain. The historical roots

of social economy within Argentina could be illuminated in far more depth than has

been done here or other studies. Organizations like the MNER, MNFRT and the

various NGOs that work with recuperated enterprises should be examined in greater

depth, particularly in relation to the state and political parties. A full treatment of the
 94

social economy in Argentina would have to look at important aspects neglected in

this study, especially the thousands of cooperatives formed by piquetero groups,

neighborhood assemblies, and other movements of the Argentinazo. These

cooperatives seem to afford more possibilities for autonomous productions because

they are built from the ground up by workers and do not have the inertia of a

previously capitalist firm.

Figure 5.1: Recuperated enterprises and workers’ control

Economic / Political /
Material Relational

Macro-level

Mass
? Workers’
Parties

Mass Mobilization

Mutual Aid Neighborhood

Assemblies

Recuperated
Enterprises

Job Security

Increased Income / Control over pace and

Better Benefits conditions of work

Micro-level
 95

There are also many remaining questions specific to the ERWs themselves.

Given the large number and diversity of these firms, data should be collected in more

depth, but also across a wider sample. Further comparisons can be explored not only

between Argentine ERWs, but between this movement and other contexts as well.

About five years after the movement began, the scholarly literature on Argentine

ERWs in Spanish is still somewhat limited, and in English it is nearly non-existent,

but this is likely to change given the rich possibilities for further study.

Argentina's ERWs will continue to face challenges as individual firms and as

an overall movement. They are not, however, likely to disappear anytime soon. In

Argentina a failing business owner who chooses to withhold wages or shut down an

enterprise must now consider the possibility, once nearly inconceivable, that workers

will form a cooperative and successfully take over the company. This is a large step

forward for workers' control in Argentina. It appears very difficult to reverse, in the

near future at least, and may continue to inspire similar struggles throughout the

world.
 96

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Biographical Sketch of Author

Brian Zbriger grew up in Trumbull, Connecticut. He earned a Bachelor of

Arts degree from the University of Massachusetts at Amherst, with a major in Social

Thought and Political Economy, and a minor in Latin American Studies. He spent the

fall semester of 2001 studying in Central America with the program on Sustainable

Development and Social Change, of the Center for Global Education at Augsberg

College. He was also an undergraduate intern at the Center for Popular Economics in

Amherst, Massachusetts helping to coordinate an international summer conference.

Before beginning the MA program in Regional Economic and Social

Development at the University of Massachusetts at Lowell, he served for a year as an

Americorps VISTA volunteer at the Boston office of ACCION USA, a nonprofit

provider of microenterprise loans. As a graduate student with a HUD Community

Builder Fellowship, he has worked as a research assistant for three organizations in

Massachusetts: Lawrence CommunityWorks, the City of Lawrence Offices of

Planning and Community Development, and the City of Lowell Division of Planning

and Development. He plans to earn a PhD in Sociology from Binghamton University

and pursue further research on workers' control in the Americas.