Financial governmentality implications of financial decisions of tobacco cooperative in Argentina.
Aguero, Juan Omar
INTRODUCTION
This paper summarizes the arguments of the following thesis: 1) The
financial governmentality is the technology of the power of capitalism,
in its current mode of financial development. Operates as an autopoetic
system whose component elements are globalization, financial markets and
corporate governance. 2) The existence of a cooperative form of
government, based on partnership, is not independent of financial
governmentality, which operates as a premise for the financial decisions
of cooperatives. 3) The financial governmentality conditions the
application of an associated first vote, in the cooperative financial
decisions, constituting interference factors greater bargaining power,
the power and influence of the stakeholders. 4) The financial
governmentality limits the application in the financial decisions of the
cooperative, of principles cooperative value creation, streaming
services to partners and use value of money. 5) The financial
governmentality degenerates surplus rate cooperatives and hinders the
consideration of factors such as the need for growth, capitalization,
provisioning and service partners. 6) The financial governmentality
increases the risk of cooperatives and neutralizes the influence of
factors such as cooperative integration, mutual trust among members and
solidarity derived from the collective project of building cooperative
subjects.
DEVELOPMENT
Governmentality, government, governance, governability
What I call financial governmentality (Aguero, J.O., 2010) begins
with the Bretton Woods agreement, the gold standard and the creation of
international financial agencies; is developed with the Marshall Plan,
transnational corporations, international banking, technology and -in
the 1970s- the dollar standard, financial deregulation, the oil crisis
and international financial markets; and finally expanded on a global
scale -from the 1990s- with the global hegemony of capitalism,
electronic money, the government of the G-8 and the new world order. As
Foucault argues (2007), governmentality and government are two concepts
that imply each other, although the former is broader and defines how
the conditions and the type of government that occurs in a given
historical moment. While for Binkley (2009) neoliberal governmentality
involves temporality and specific forms of subjectivity, to Frazer
(2003) involves more discipline, since for this author Foucault is the
great theorist of the Fordist mode of social regulation. Similarly, for
Gibson-Graham (1996) is the deepening and not the end of capitalism.
Meanwhile, Derek (1999) warns about the duality of power involved
governmentality and limits in relation to criticism and social
emancipation. In the same way is located the work Lemke (2000). In a
different position is located Zwick and others (2008), who used the
ideas of Foucault to criticize the business paradigm of co-creation of
value as a means of disciplining consumers and as contrary to the
freedom of choice of these.
Another argument is generated with the concepts of governance and
governability. The word governance comes from the French word
gouvernance, first used by Charles D'Orleans in the fifteenth
century to refer to the art of government, ie the form of governance and
government activities. Its equivalent Anglo-Saxon governance is from the
late seventeenth century. However, the notion of governance emerges
strongly in the field of business in 1937, in the United States, with
studies on corporate governance and then at the government sector, in
the 1970s, with the strategic program on governance of the world
formulated by the Trilateral Comission in the context of the
globalization of capitalism. However, in the political and social use
tends to equate each other the meanings of government, governance and
governability. As contended by Roitman (2002), the Washington Consensus,
confirms the program of the Trilateral Comission, recommending the
implementation of neoliberal policies to strengthen governance.
Similarly, as argued Kaufmann and Kraay (2001), the World Bank and the
United Nations Program for Development recommend that countries
implement programs for good governance, reducing it to the control of
corruption, protection of the rights of ownership, accountability,
government effectiveness, regulatory quality and political stability.
For political science, governance as a category of analysis originally
referred to political stability and relations between actors and
political institutions. However, after extending its meaning, referring
generally to the dynamic balance between social demands and government
responses. That is, it incorporates on one hand the relationship between
government and society and, on the other hand, social conflicts. To
Camou (2001) governance refers to the action and effect to govern and to
govern or gobernability to how to govern. For this author,
governanbility refers to the ability of the government to maintain law
and order, effectively manage the economy, promote the general welfare
and control the political and institutional stability. In a more
descriptive definition, Prats (2001) considers governance as an
attribute of societies sociopolitically are structured so that all
strategic actors interact to make decisions and resolve conflicts
authority under a system of rules and formal and informal procedures. In
the same way, Michel Coppedge, quoted by Camou (2001) defines
governability as the degree to which the political system is
institutionalized, meaning turn institutionalization as the process by
which organizations and procedures acquire value and stability. For its
part, Kooiman (2006) understands governability as a sociopolitical
system capacity to govern itself in the context of other broader systems
of which they are part. This concept differs from governance, as it
refers not to a capacity but also the processes that organize the
interaction between actors and the system of rules by which a society
takes collective decisions, as argued Calame (2003). However, while the
concept of governability has been the subject of many studies and has
been relatively theoretical development, not so with the concept of
governance, whose content varies according to the study in which it is
used. In short, governmentality is a broader concept that government,
governance or governability. It refers to the practices constituting a
particular system of government in a historic moment and includes micro
power relations that exist between actors, subjects, social groups and
institutions, and macro power relations that occur at the level of
government policy between countries or within a country or region.
The tobacco industry in the world
The snuff is grown in over 80 countries worldwide. However, the
production of this crop has been increasingly concentrated. Currently,
60% is produced in Asia, 11% in North and Central America and 11% in
South America. Currently, five countries -China, India, Brazil, United
States and Zimbabwe- produce 70% of global snuff and two of these
countries -China and India- concentrate 50% of world production. World
production of snuff is stabilized in the 2000s at an average of 6
million tons per year. Brazil is the leading exporter, with 20% of the
total. Other exporting countries are, in order of importance, the United
States, India, Zimbabwe and Italy. China is the largest importer,
followed by Russia and the United States (Source: FAO).
Path of the tobacco industry in Argentina
The tobacco industry in Argentina has gone through four distinct
historical moments: a) craft production between 1580 and 1895, b) the
importing industry craft production between 1895 and 1930, c) national
tobacco agrobusiness between 1930 and 1965 and d) agroindustrial complex
transnational tobacco from 1965 onwards.
a) The snuff was introduced by the Spanish in Salta from Alto Peru
in 1580 and are cultivated in Misiones before the arrival of the Jesuits
in 1609. For three centuries it was traditional practice traditionally
played. The market was mainly for family and social consumption.
Indigenous people used it for religious and special occasions as part of
rituals and celebrations.
b) In 1612 began the cultivation of snuff in the U.S., exclusively
commercial. The business then moved to England and growing rapidly. In
the late nineteenth century, with the arrival of British capital and
European immigrants, begins in the country's industrial and
commercial exploitation of snuff. In 1913 it installed the first British
capital tobacco industry. Snuff were imported mainly industrialized and
only a fraction of national snuff, whose production is still handmade.
c) From the 1930s, tobacco agribusiness expands nationwide, with
more than 20 national tobacco companies, which is then concentrated and
reduced to four, plus an English capital that was installed in 1913. The
cultivated area and the number of producers increase. In Corrientes and
Misiones expanding black tobacco cultivation and in Salta and Jujuy
blond tobacco. In the 1950s, the domestic market is saturated, and then
started the search for external markets. Snuff exports grow rapidly
since the 1960s.
d) With the military dictatorship installed in 1966 began the
process of transnationalization of the country's tobacco industry.
The four national tobacco companies are acquired by foreign companies,
leaving the Argentine tobacco agroindustrial complex by five foreign
companies. From the state, subsidizing corporations buying snuff, by the
Special Snuff Fund established by law in 1967. Then with the next
military dictatorship installed in 1976, tobacco agribusiness focuses on
two large transnational corporations, one English and one American
origin.
The tobacco economy in Argentina
The national tobacco economy has very particular characteristics,
for the historical trajectory that had the industry, by the actors
involved, the degree of integration and economic concentration achieved,
their dual nature of regional economic output and in turn transnational
and the number of families of small producers that involves activity.
For the cultivation and harvesting of snuff it required intensive labor,
family and non-family. To produce 1 acre of snuff is required on average
130 working wages, while cotton requires only 28 wages, sugar cane 65
and vine 85. Each campaign mobilized no less than 27,000 tobacco
growers, of which more than 90% work on very small surfaces, which do
not exceed two or three hectares per household. Snuff production is done
in 7 provinces of northern Argentina: Jujuy, Salta, Tucuman, Catamarca,
Misiones, Corrientes and Chaco, although more than 80% were concentrated
in order of importance-in Misiones, Salta and Jujuy. The production
volume did not exceed 7,000 tons until 1930. In the 1960s, increase more
than 60,000 tons and in 1990 100,000 tons, reaching a historic record of
161,064 tonnes in the 2004/2005, the favorable exchange rate for export.
In the season 2008/2009 was 135,531 tons, with a 50% of tobacco
cooperatives and 37% of corporations Alliance One and Massalin Private.
Snuff exports become important from the 1960s. By the late 1990s reach
50% of total production and now exceed 80%. Almost 90% of exports
consist of Virginia and Burley destemmed tobaccos, with an economic
value in 2010 of $5,830 Tn. The main buyers are the Russian Federation,
the European Union and the United States. Snuff imports do not exceed
10% of national production and only 10% are destemmed tobacco. In the
past three years, the tobacco industry gave the market a total of
6,375,580,991 packages of 20 cigarettes, whose average retail is $ 1.30
per package. This implies a direct contribution of the tobacco industry
to GDP by 2.763 million dollars per year, which corresponds add snuff
exports and 20% indirect contribution by activities generated or derived
from snuff. With these additions, the total contribution of the tobacco
sector to GDP is about 3,500 million per year (Source: SAGPyA).
For internal taxes, value added tax, customs tariffs and
deductions, special fund and other contributions snuff tax domestic
tobacco economy generates per year not less than 1,800 million dollars
in revenue to the state. Only by the Special Fund Snuff generated no
less than 190 million dollars in revenue per year, of which 80% goes to
the producers and the remaining 20% to provincial plans reconversion
tobacco provinces. The snuff value chain activities include cultivation,
harvesting, storage, processing leaf snuff, tobacco product
manufacturing, distribution, wholesaling and retailing. With an average
of 80,000 hectares per year, needing 130 labor days per hectare, length
of production cycle of 180 days per year and an average of four members
per household, the primary production of snuff demand 230,000 direct
jobs. For its part, the industry provides employment to about 7,000
workers, the distribution to other 2,500 workers and marketing chain and
retail to another 180,000 workers. This implies a total of 419,500
direct jobs, to which must be added the indirect jobs generated by
activities related to snuff. Consequently, the occupation linked to the
tobacco economy of the country is estimated at 500,000 jobs, direct and
indirect (Source: SAGPyA).
Tobacco Cooperatives in Argentina
Cooperatives emerged in Europe in the mid nineteenth century, as
social economy organizations and within the framework of social issues
arising from economic exploitation and impoverishment caused by
industrial capitalism. The first cooperative was founded in Rochdale,
England, in 1844. Between 1870 and 1970, state intervention in the
social question turns into a loss of sense of social economy.
Cooperatives are then reduced to adapt microeconomic and capitalism as
cooperative sector. After the crisis of the welfare state, cooperatives
resurface strongly in the 1970s, as collective action strategies and
instruments of solidarity, partnership and self-management.
Latin American Cooperative Experience comes with European
immigration in the late nineteenth century. Takes many forms in
different countries and is generally more heterogeneous than the
European cooperatives. It consolidates as a socioeconomic system in
rural and urban areas, responding to needs of production, savings,
credit, consumption and public services. These specific demands aside
theoretical and ideological issues underlying the European cooperative.
The constant interruptions of democracy and the installation of military
dictatorships permanently strained relations between cooperatives and
American governments, although cooperatives survived by their
versatility and autonomy.
The agricultural cooperatives born in our country in the second
half of the nineteenth century, without interference from the State and
from the hand of European immigration and the need for partnership and
defense against the threat posed by the political and economic power of
merchants and landowners. Until the passage in 1926 of the first law of
cooperatives, agricultural cooperatives growth is very slow. Then it s
accelerated by the regime of import substitution industrialization and
the inclusion of cooperatives in public policy. The tobacco cooperatives
emerged in our country in the late 1960s by a combination of at least
five factors: the mode of production of the tobacco industry, the
process of social differentiation and social actor's constitution
as tobacco producers, the agroindustrial complex evolution of tobacco,
tobacco policy of the State and the need for partnership and economic
organization of producers. Given the frequent abuses of power in
business relationships, abuse and manipulation of prices, quantities and
types of snuff which the producers gave, they grew in awareness and the
need to implement any collective action in order to defend transnational
corporations. In this way, associate and create cooperatives,
accompanied and supported by the State through the Technology Fund
Snuff, created in 1967 by Decree national No. 17,461 and ratified as
Special Fund Snuff in 1972 by the national law of snuff No. 19,800.
In its historical development, tobacco cooperatives experiencing
three stages: a) foundation, that between 1967 and 1975, in Jujuy and
Salta, with the establishment of the first two cooperatives, b) regional
expansion, which is between 1976 and 1983, with the creation of
cooperatives in Tucuman, Catamarca and Corrientes c) of specialization,
which occurs in Misiones, Chaco and Tucuman, after the restoration of
democracy in 1983. Cooperatives earn foreign markets and their
participation in the production of snuff in the country exceeds 50% in
the 2000s. Tobacco cooperatives grew rapidly between 1969 and 2009. The
collection volume grew at an average annual rate of 5.5%, while sales
grew at an average rate of around 10% per year and the assets at an
average rate of over 12% annually, as equity. The number of members was
increased in the case of cooperatives of Salta and Jujuy and decreasing
in the case of cooperative in Misiones. By the late 2000s, together
cooperatives had annual sales of $200 million, total assets of $217
million and net worth of $55 million dollars.
The investment structure of cooperatives, in the period 1969-2009,
had an average share of 70% of working capital and 30% of fixed capital.
The most important assets were inventories, the current receivables and
assets, with an average participation of 40%, 25% and 24% respectively.
This structure differs slightly in the case of cooperative in Misiones
where inventories and fixed assets have a 26% and 37% respectively. In
the same period, cooperatives were funded on average 1/3 with capital
and 2/3 with third party capital. The short-term debt had an average
share of 52%, although this share was 63% in the case of the cooperative
of Salta and 39% in the case of cooperative in Misiones. The main
sources of funding, in order of importance, were the clients with 23%,
the special fund of snuff with 16%, depreciation at 12%, reserves with
11.5%, the share capital in 9.7%, providers with 8% and lower
percentages private banks, public banks and various creditors. In the
period 1969-2009, the cooperatives had contributions (difference between
sales and cost of goods sold), equivalent to 22% of sales and operating
surpluses by only 2%, and operating expenses incurred amounting to 20%
of sales. Besides, other income and expenses were equivalent to 13% and
4% of sales and expenses equivalent to 11%, which had no net surplus on
average. In the case of cooperatives of Salta and Misiones, had no
surplus but operating losses and operating expenses were greater than
the contributions. However, while both of them had other income
equivalent to 14% of sales, financial expenses tripled Skip cooperative
to the cooperative in Misiones with which it operated with a net loss
equivalent to 4% of sales, while it earned net surplus equivalent to 7%
of sales. Cooperatives operated at an average rate of economic surplus
of 15%, an average rate of cost of borrowing of 21% and 250% average
indebtedness. This implied that cooperatives were not only leverage but
operated with a strong financial mismatch. The average operating cycle
was 303 days and the average payment term of 164 days, which
cooperatives should have operated with a minimum current ratio of 1.8 or
with working capital at least equal to 80% of debt short term. On
average, cooperatives operated with a sales level of 77% below the
equilibrium point and therefore did not have coverage for risk margin,
but had a 1.7 average solvency. Also financed 50% of current
receivables, inventories and fixed capital with short-term funds, with
the risks involved and should be financed with long-term funds.
The financial governmentality as an autopoietic system
The financial governmentality is the technology of power of
capitalism in its current mode of financial development and operates as
an autopoietic system whose components are elements of globalization,
international financial markets and corporate governance. The notion of
autopoietic, taken from biology to social sciences by Niklas Luhmann
(1998), refers to those social systems consisting of elements produced
by the systems themselves which these elements are components. In this
way, these systems work and reproduce through processes closed,
closured, circular and self-referential. These same attributes are given
in the case of financial governmentality. Itrself was producing elements
in turn were forming: globalization since the 1940s, the international
financial markets since the 1970s and the corporate governance since the
1980s. His only reference is itself and also its only justification.
Everything else is excluded, closed, for the thesis of the end of
history. Before the end of the Second World War, the contest winners
countries, mainly the United States and England, the world choose to
install a new form of capitalism, much more sophisticated than previous
and financial nature. This new form of capitalism is inaugurated at
Bretton Woods in 1944 and developed through a financial governmentality
a regime that is embodied in the world through three instruments very
effectively and efficiently: globalization, international financial
markets and governments corporate. These three elements are produced by
the system of financial governmentality, which these same elements are
part and constituent components, thus generating a circular process,
internal, closed and autonomous, which allows and enables the continuity
of the system through self-referential autopoietic reproduction thereof.
The globalization process began in the 1940s with the
implementation of the Marshall Plan for European reconstruction. This
allows expansion in Europe of large U.S. corporations, which are then
transformed into large corporations. U.S. banks accompany this
expansion, becoming international banks and then make up the global
banking. A third key element in this process is the rapid development of
information technology and telecommunications, based on scientific
knowledge generated during the war. In the 1970s financial markets were
developed, with the oil crisis and the masses of dollars mobilized oil
price hikes and euromarkets deposits formed with petrodollars. This
process was helped by the economic and financial deregulation promoted
by the United States in the early 1970s and acquired autonomy to
separate financial flows of trade flows. Two further consolidate events
ending this process are the fall of the Berlin Wall in 1989 and the
development of electronic money as a new form of money. This expansion
of capitalism as a global hegemon, as also of the large transnational
corporations, global banking, global markets and the broad masses
circulating cash flow in the form of electronic money information
problems escalated, control and separation of ownership and management
of corporations, ie corporate governance issues. There is a loss of
confidence in the international financial system and this feeds the
increasingly frequent crises and acute.
The financial governmentality and government cooperatives
The existence of a cooperative form of government, based on
partnership, is not independent of financial governmentality, which
operates as a premise for the financial decisions of cooperatives.
Cooperation is a spontaneous act born of freedom and the human
capability will to choose to join others to cooperate, but this
spontaneity is not enough to sustain a cooperative organization in time,
planned action is needed and shared intentionality that makes collective
action possible, and that cooperation has a sense of action and
collective motion. The cooperation is based on the association, which is
broader and cooperation that comes from the social nature of man. As a
phenomenon, cooperation is explained only in the context of the
associative nature of human beings, is a way of association and, as
such, requires an organization to be continuous and lasts over time.
These organizations are cooperatives, which can be defined as
organizational forms of partnership based on cooperation. While
cooperation can take many different forms, cooperatives have only
historical existence as organizations; this is like human groupings
continuity over time beyond its members. It expressly rejects the
dualistic conception that cooperative organizations are combinations of
human groupings, on the one hand and on the other, companies that
produce goods and services. It rejects the idea that they are companies
conducted by or associations or that they are organizations that work
with two structures: one business and other associations. It is
difficult to differentiate a unit called business, from other called
human group, in an organization called cooperative, considering that
every company is an organization and every organization is a human
group. Cooperative organizations born of collective decisions made by
certain human groups and also sustain and grow collective decisions of
its members. However, these decisions are not independent of other
decisions that operate as premises. In this sense, financial
governmentality operates as a premise for government decisions
cooperatives. Its components, ie globalization, international financial
markets and corporate governance, operate as decisional networks in
which fall in one way or another government decisions cooperative, which
can not be abstracted from them. The same decision to create the first
cooperative in 1967 tobacco country is not independent of the network
decisions that led, developed and were setting the tobacco
agro-industrial complex. The same applies to the expansion and
development of tobacco cooperatives, which did not occur independently
of concentration and transnationalization of tobacco agro-industrial
complex. While cooperatives are governed by the principle of
association, its decisions are not independent of a network of decisions
made by others and represent the environment, the border and the
boundaries of those decisions. The rules of the tobacco industry in
Argentina do not arise from decisions of tobacco cooperatives, or
provincial or municipal governments, or the producers. Are decisions
made by national governments and transnational tobacco corporations,
which are not independent of the conditions created by the financial
governmentality.
Financial Governmentality and decisions of the cooperative
Financial Governmentality determines an associated the principle
cooperatives voting, constituting interference factors greater
bargaining power, the power and influence of the stakeholders. The
cooperative is owned jointly, collectively and undivided. It is an equal
and equitable right that had each partner and does not depend on the
capital provided as in the case of non-cooperative firms. However, this
democratic right is indeed strongly affected by internal and external
groups interested in cooperatives. The bargaining power and influence of
these groups determine the decisions of cooperatives, which in practice
end up replacing the formal right partners. These groups are formed by
the partners themselves, directors, managers, plant employees,
contractors, consultants, customers, suppliers, banks, creditors, local
governments and social organizations. Not all of these groups exert the
same power, and that this is not a thing but a social relation between
subjects in which one influences and modifies the behavior of another.
In the construction process of power, subjects used a variety of
resources, strategies and devices. In the period 1969-2009, tobacco
cooperatives responded to certain collective mandates that gave rise to
them. These mandates were the premises that guided the path of
cooperatives and legitimized the decisions that were taken. The
decisions were considered valid and necessary to the extent that these
mandates were part of groups. The premise of ensuring the sale of the
production was the basic mandate that drove the development of tobacco
cooperatives. This mandate has as object to ensure the income of
producers. Thus, for the boards of administration, the important thing
was to fulfill this mandate, beyond that implied invest more or invest
less, borrow more and borrow less, be above or below the point of
economic equilibrium or have more or less financial implications. The
tobacco cooperatives adopted vertical integration strategies with
clients and producers to secure financing and the sale of production and
to ensure the delivery of snuff, respectively. Thus, the cooperatives
themselves become agroindustrial complexes, like transnational tobacco
corporations operating in the country and this is a direct consequence
of the form of governance produced by financial governmentality.
Vertical integration strategies allowed tobacco cooperatives not only
secure the sale of production, but also to have funds to finance its
operating cycle and move those to the producers, to change snuff
delivery commitment. Customer advances were the main source of funding
for tobacco cooperatives. On average, represent a high percentage of
total funds used by cooperatives for financing. In the case of
cooperatives of Jujuy and Salta, this percentage was higher, even at 80%
and 100% at times and guaranteed loans with bank guarantees, mortgages
and pledges. In conclusion, an associate one vote principle, whereby
cooperatives as social organizations opposed to the logic of capitalist
accumulation, historically attempted to democratize economic power
companies in the world, is now, due to financial governmentality,
strongly blurred and conditioned by the bargaining power, the power and
influence of the stakeholders, particularly customers. International
Buyers used vertical integration strategies to have financial control,
business and technology of cooperatives and snuff production and
processing, in order to guarantee the process of accumulation and
appropriation of economic tobacco surplus.
Financial Governmentality and cooperative principles
Financial Governmentality limits the application of the principles
of cooperative value creation, flow of services to partners and use
value of money. According to the tenets of economic theory, companies
seek to maximize the economic benefit to a particular investment
structure. For financial theory, they seek to maximize the return
obtained with the immobilization of capital, ie, seek to create value
for the owners of the company, thus resulting key concepts of capital
stock, cash flow, time value of money, rate return and risk associated.
In the Latin origin of the word, lucro means profit or gain profit to be
drawn from one thing. In economic theory identifies with the benefit you
get from an investment. Cooperative organizations are not for profit nor
constitute investment opportunities for reproduction and capital
accumulation. Therefore, do not seek to maximize the rate of return on a
fixed capital stock. Its purpose is to provide services to its members
and collectively build cooperative subject with equal participation,
democratic control and joint liability. When it comes to creating value
in a cooperative, we are not talking about cash flow or capital stock,
but that partners can have more and better services, and the more and
better services to offer a cooperative to their members, the greater its
value as an organization. Value creation in cooperatives is, therefore,
to increase the value of the organization to its members. This increase
in value is given not only for the services they can offer, but by
increasing business opportunities and social advancement of its members.
Financial Governmentality strongly conditions this action. There are no
creation of cooperative subjects, and no possibility of going beyond the
imperative to be in the agroindustrial tobacco complex at least without
losing competitive position. The strong competitiveness and equitable
distribution of the agroindustrial tobacco complex leaves little room to
create cooperative value.
The stock of capital invested in cooperative organizations
constitutes an installed capacity of services to its members. It is a
productive capacity and not a capital tied for profit. The concept of
cash flows generated by an investment in a capitalist enterprise is
replaced by the concept of flow of services in a cooperative. However,
the condition imposed by financial governmentality and the rules of game
for tobacco agroindustrial complex in Argentina does not leave room for
the associated service. The cooperative relationship between tobacco and
its partners is not associative or solidarity, but trade agreements
fulfillment, production schedules, promises to pay, delivery of inputs,
pre-financing, among others. The time value of money in a cooperative is
replaced by the concept of use value of the money, more linked to the
need of funds to the rate of return required by an investor capitalist
in the sense of opportunity cost of capital. Money is the rarest asset
of tobacco cooperatives in Argentina. The value of money in these
cooperatives is given by the need for immediate use of it, to make
payments that can not wait or to meet urgent business commitments. It is
a good absolutely necessary as a means of payment, not for speculative
or rate of return expectation. However, the effects of financial
governmentality, for those who finance tobacco cooperatives or held
contracts us buyers forwarding funds, these operations are investments
that generate cash flows and time value of money. The opportunity cost
of these funds, the cost of capital and the risk associated with these
operations are transferred to cooperatives and are reflected in high
levels of financial expenses. International buyers financed cooperatives
and these in turn to their partners, but the cost of financing and the
associated risks are borne mainly by cooperatives. In conclusion,
financial governmentality transforms money into a commodity with a share
huge bargaining power to its possessor. In the case of tobacco
cooperatives in Argentina, this power has international buyers, which
set the conditions for use of the money. These conditions are very
favorable to buyers and very unfavorable to cooperatives, but these
allowed them to stay in business, make investments, show results to
society and make a will of its members, among other consequences.
The financial governmentality and the rate of surplus of
cooperatives
Financial governmentality degenerates surplus rate cooperatives and
hinders the consideration of factors such as the need for growth,
capitalization, provisioning and service partners. The exceeding earning
in the cooperative is defined as the income remaining after covering it
all costs and expenses necessary to obtain them. Is justified in four
needs: growth, capital growth, reserve constitution and services to
partners. As a result of financial governmentality, in the case of
tobacco cooperatives in Argentina, the relationship between surplus and
no growth occurred in the period 1969-2009, at least not directly, since
growth was rather an imperative of competitiveness in a market dominated
by large corporations and unregulated by the state. The only way to
survive was the growth, without caring how it was financed. For this
reason, tobacco cooperatives were not financed with surpluses, but with
debts. There was never any need to discuss how much surplus was
necessary to generate, as this discussion was becoming irrelevant in the
context of ongoing concern to sell and generate income for producers.
The way to generate income for producers was always guarantee the
purchase of snuff paying good money, for which the market had to ensure
buyer and obtain financing. The important thing was always going to
increase the collection, production, price and market share. Vertical
integration strategy adopted by cooperatives led to an increasing need
for investment. The investment by cooperatives grew at a faster rate
than the collection of snuff volume and sales volume. In evaluating
investment decisions not influence the volume and cost of capital
assets, net present value added, the risk involved, the expectations
generated by the context or indirect benefits and costs, but mainly the
imperative to grow.
Most of the business of tobacco cooperatives in Argentina depends
on the use of working and fixed capital. In turn, most of the working
capital is permanent and nonfluctuating, for the duration of the
operating cycle and operational characteristics of the sector. This
requires a funding model based primarily on sources of financing medium
and long term, own and/or third parties, public and/or private. In the
absence of equity cooperatives and not having sufficient institutional
mechanisms for financing medium and long term, turning in a high
proportion of short-term financing, primarily from vertical integration
strategy with clients. In the case of transnational corporations
operating in the tobacco agro-industrial complex in Argentina, have
global financial capital, to whom turn to finance the tobacco business,
which require the characteristics identified sources of medium and long
term. Tobacco cooperatives, however, do not have this type of capital or
institutional funds to finance their operating cycles at medium and long
term and can not generate surpluses to finance with own equity. Fixed
investment cooperatives needs are financed largely with public sector
financial and nonfinancial resources, while working capital needs are
financed largely with funds generated with vertical integration strategy
adopted by cooperatives. In conclusion, financial governmentality
blocked in Argentine tobacco cooperatives the discussion and decision
making regarding the surplus rate and also the role of surplus as
genuine source of financing growth, capitalization, provisioning and
increased quality and quantity of services to members. Growth was only
raised as an imperative of competitiveness and participation in the
country's tobacco business to increase sales and revenue. The
conditions of this growth were not decided by the cooperatives, but
resulted from the rules of tobacco agro-industrial complex, which also
were not decided by cooperatives or producers, but national governments
and transnational tobacco corporations operating in the country.
Financial Governmentality and the risk of cooperatives
This paper also takes the view that financial governmentality
increases the risk of cooperatives and neutralizes the influence of
factors such as cooperative integration, mutual trust among members and
solidarity derived from the collective project and construction of
subjects cooperative. While risk is an inherent component in any
economic activity, whether or not for profit, cooperative organizations
do not have the sense of partnership at a given rate of return required
to compensate them, but the extent of variation contextual conditions
where cooperative action falls. Cooperatives should have less risk that
companies, by the combination of four factors that are usually present
in the institutional life of cooperatives: a) the integration processes
by which they form cooperative federations and confederations, b) social
capital resulting from the construction of mutual trust through social
cohesion linking actors, c) solidarity that involves the construction of
a composite whole strongly internally cohesive elements, and d) the
existence of the cooperative subject, collective and undivided, which
reflects and encapsulates the action of human group that integrates a
cooperative. However, the phenomenon of risk involves cooperatives,
beyond these factors, which are certainly important. Indeed, the risk
includes five distinct dimensions: a) the overall risk stemming from
financial governmentality, globalization, the functioning of
international financial markets and the government of transnational
corporations, b) the country risk that derives from the political,
economic and social within each country, c) sector risks derived from
the internal conditions of each sector of economic activity of a
country, d) organizational risk derived from the investment structure
and financing structure of each organization and e) the decisional risk
that comes from the specific conditions of each decision. These
dimensions of risk have a centripetal effect when it comes to local and
national organizations and a centrifugal effect when it comes to
transnational organizations. In the first case the risk has a surround
effect to global decision-making and is intensifying and increasingly
condensing. In the second case, has a deportation or transfer of risk,
from the decisional to global. Financial Governmentality facilitates
this process of expansion and movement of risk between countries,
globalization, international financial markets and large corporations.
Thus, the effects of financial crises occurring in certain countries and
markets quickly move to other countries and markets creating what are
commonly called domino effect. This transfer risk also occurred in the
case of tobacco cooperatives in Argentina. The risk is increased
considerably by the strategy of vertical integration between
international buyers, cooperatives and tobacco producers. Tobacco
cooperatives, especially those of Jujuy and Salta, were located in an
intermediate position between the play of interests of international
buyers and local tobacco producers. On one hand, international buyers
demanded regular delivery of products under certain agreed conditions,
including the pre financing, moving to cooperatives economic and
financial risks of the business. On the other hand, local
producer's cooperatives also required to receipt or collection of
snuff under certain conditions, regardless of changes in context. This
happened also in the case of cooperative in Misiones, although in this
case the subordination was from the producers, for the nature of the
production of snuff in Misiones, which are very different to Salta and
Jujuy. Investment structures and funding resulting from this strategy
had little flexibility and permeability changes in context. This led
cooperatives to accumulate stocks, extend operating cycle length,
oversize fixed investments, not sufficiently weigh the economic risks
and financial decisions, borrow above their actual or potential
financial convenience, absorb high financial costs and, generally,
assume difficult commitments to fulfill, precisely because of the
variability and speed of those changes.
In conclusion, for the effect of financial governmentality, tobacco
cooperatives in Argentina adopted the mode of operation of transnational
corporations and, behind the garb of social organizations, met the
founding mandate of sale of production, establishing mechanisms of
vertical integration with its international customers, through contracts
strictly stipulated by the terms of delivery of products in terms of
quantity, time, price, variety and quality. Transnational corporations
moved the economic and financial risk to cooperatives and producers,
mainly the risk, but also the risk of inflation and the risk of changes
in interest rates. The producers also took other risks: climate, not
delivery or disqualification of snuff, price change, production costs,
payment of supplies and lack of excess, among others.
CONCLUSION
Financial Governmentality is a useful category for understanding
the workings of capitalism in its current financial. It is a logic
strategic of power designed before the end of the Second World War, in
order to ensure continuity of a global political order built to benefit
winners countries in the race war, primarily the United States and its
allies. In this paper we presented the arguments supporting the thesis
that financial governmentality works as an autopoietic system luhmaniano
composed of three basic components: the globalization, financial markets
and corporate governance. As empirical reference we expose the case of
tobacco cooperatives in Argentina, in order to show the implications of
financial governmentality in financial decisions that were taking
cooperatives between 1969 and 2009.
Reception date: 11/05/12--Approval date: 02/06/12
BIBLIOGRAPHY
Please refer to articles Spanish Bibliography.
Aguero, Juan Omar
Facultad de Ciencias Economicas, Universidad Nacional de Misiones
Miguel Lanus, Misiones, Argentina
juanaguero@arnet.com.ar
