This is a translation of an article published on Lekolin in Turkish on 26th December, 2013

The global crisis that has been a major topic for some time, and more importantly the increase in prices of agricultural products parallel to the rise in the price of oil, has triggered a search for alternative solutions in various countries against the impending depression. While scenarios of a return to Keynesian diagnoses are being discussed in core capitalist countries, the developing economies are contemplating ways to deal with the effect of increased prices on the budget.

Throughout this period, Kurdistan has become the focal point of attention of Turkish and global capital, with its high potential for agriculture and its workforce. While developmental programs are designed for Kurdistan from ideological perspectives of all sides, the Kurds have accelerated their search for a solidarity-based economic development through cooperatives. In this article, as a contribution to this search, the role and function of the municipality in cooperative production will be discussed.

We present the table below to the reader, visualizing the socio-economic situations of Kurdish cities, to set a material foundation for the discussion.

Statistical Performances of 16 Kurdish Cities

Kurdistan, Rojava, Syria, Cizire, co-operatives, cooperatives, co-operative, cooperative, co-op, co-ops, solidarity, solidarity economy, workers co-op, workers co-operative, workers cooperative, cooperative economy, solidarity economy

Source: Devlet Planlama Teşkilatı, İllerin Sosyoekonomik Performansları Araştırması, 2003

As an integrated regional infrastructure, Kurdistan’s economic needs can be roughly listed as follows: investment in agriculture-based industry; investment in manufacture; rejuvenation in agricultural production rooted in increased efficiency; public investment in social services and finally, infrastructural investments in public sectors such as energy, irrigation, communication, etc. To this should be added investments and credit opportunities in the domains of education and health. However, the central question is who will make the investment, the private sector, or the state? Our answer is clear: the people themselves through the municipalities and the cooperatives.

Between Development as Exposure to Plunder and Development Under Popular Sovereignty…

On the scale of Kurdistan, the configuration of capitalist relations of production would undoubtedly take a chaotic and unbounded form; this is the prediction of the capitalist sector. A possible answer to such a wave of assault is a shift towards cooperatives at the municipal scale, through ecologically sensitive industrialization municipal coordination in agriculture. From this standpoint, the municipalities should enter the markets as corporate actors. This is because there does not appear to be another solution on the horizon if the question of fair, egalitarian and community-based development hangs in the balance. To wit, regional municipalities should take on the role of corporate investors and coordinate the businesses owned by and administered for the people. And they should realize this by exercising the constitutional rights of the municipalities to become members of unions and cooperatives, participate in joint-stock businesses and found companies. Due to the extremely centralized administrative mechanism of the Republic of Turkey, the cabinet of ministers and the Ministry of the Interior can put strong pressure on the municipalities. While this appears to be an obstacle against transformation, the regional reforms that Turkey is responsible for implementing as part of EU accession negotiations creates an opportunity to take initiative. On the other hand, as this issue is within the purview of the project of democratic autonomy of the freedom movement, this side of the problem should be seen, a priori, as soluble. This is the theoretical side of the story. Moving on to the practical side…

Agriculture is the traditionally predominant sector in the economy of Kurdistan. The total population of the 16 towns on the table above is currently around 8.5 million. 65% of the population of every town is involved in agricultural labour, thus it can be presumed that about 5.5 million people in the region live in agricultural areas. Stockbreeding is most widely carried out in the North, along the region that stretches from Kars to Van, while crops are cultivated in the southern plains. However, in both sub-sectors, productivity is low and subsequently, the volume of production is limited. Furthermore, property ownership in agricultural activities is concentrated in private hands; feudal patronage is integrated with capitalism and the regressive social formation is preserved. The impoverishment of the peasantry persists. At any rate, since a large number of villages have been evacuated, land is not under cultivation. The lack of subsidies, coupled with the vulnerability of agricultural prices against fluctuations in the global market since the early 2,000’s, has gradually rendered small family cultivation unfeasible. Additionally, the investments in irrigation envisioned in GAP [Southeastern Anatolia Project] has not been completed, and the completed segments are owned by the large landowners, therefore the project does not make a substantial contribution to the local economy.

Bovine stockbreeding is the primary form of stockbreeding in the North. Families find themselves in a challenging situation as the local species of cattle is not productive in terms of milk and meat. Particularly since the 1990’s, imports in meat have been liberalised and the local population was out-competed due to the fall in price. The faulty eugenic projects of successive governments with the livestock have further aggravated the situation (Ovine husbandry in the south has been negatively affected by war conditions and regressed in productivity). Another reason for the disintegration of stockbreeding in the North is the phenomenon of monopolization, particularly in terms of milk production and at the district level. As noted, the predominant form in the region is small family production. Consequently, the milk produced by the households in the villages is collected in private dairy farms and transferred to centers of production in the region or the West. In the period before monopolization took hold, villagers were able to compete, albeit in a limited way, and sell their milk at prices that let them afford their livelihood. However, there is an expansive network of cartelization and monopolization that can be observed in every district in the region.

A few dairy farms purchase the milk from the surrounding villages of their district, and instead of competing amongst each other, they broker a single price that is usually very low, and impose this on the villagers. Since the villager is obliged to take a down payment for their milk six months in advance, they accept this price out of desperation, and end up penniless at the end of the process. In short, the Kurdish peasant in the stockbreeding sector, particularly the one making a living by producing milk, becomes impoverished over the years and is eventually forced to migrate from their village when they cannot repeat the same cycle any more. If they are lucky, the peasant that moves to the city and does not have their own capital finds temporary work in construction, but usually lives in unemployment. The Kurdish community in the metropolitan areas is ghettoised in this way. The new generations that meet in the city in a ghettoised neighbourhood, if they are not political and are isolated from political mechanisms, are high likely to get embroiled in organized crime.

The problem of cartelization in stockbreeding also applies to the segment of the peasantry practising cultivation. Particularly in regions where monocultural agricultural is implemented, it is easier for middlemen to establish an oligopoly. For instance, this has visibly taken place in Malatya in the last few years, where apricot is the most common product. While the average price of apricots per kilogram was 1.5 million Turkish Lira until 2005, the price dropped to 550-600 thousand lira in the same year. This sharp drop has predictably devastated the producers and driven many families to bankruptcy. However, the reason behind the drop was understood later on. The middlemen had first purchased the apricot and sold it to Greece for production, then colluded to decrease the price in 2005, profiting immensely (It is possible to cite more examples: pistachio producers in Urfa and recently hazelnut producers in the Black Sea region have had similar problems).

What, then, needs to be done by the municipalities in this situation? Firstly, it appears that while the predominant structure of small property ownership in the North creates an advantage, large property ownership in the South, particularly in the wide plains, is a disadvantage. The differentiation of the internal dynamics of the region and the small family production in ovine husbandry in the South make it possible to realize a certain model.

This model is envisioned as follows: the backbone of the model is the organization of agricultural producers in legal cooperatives and the prevention of decreases in prices of raw material caused by middlemen-merchants and cartels. However, the primary goal is to change the traditional role of producers’ unions as raw material providers, and put them in a position where they can sell their own merchandise. For example, a peasant that produces milk is primarily a provider of raw material in the market as a member of their regional or district cooperative. As a result, their primary income depends on the profit they can make from the average price of milk in the market. To simplify: if the buyers propose paying 50 kuruş on average for a litre of milk, the peasant will make at least 50% profit from the milk they give to the cooperative, meaning their price will be at least 75 kuruş (here we assume that the profit obtained by the cartel is at least 50%). This model, however, does not leave the peasant at this point, but foresees the integration of the provider in production.

Carrying the example further, let us assume that a given milk factory in the market offers 75 kuruş per litre of milk when it is purchasing. This is because in the end, if they can not produce their own milk, the middleman will sell the milk they have bought to these large producers. At this point, the peasant will make enough not to starve in market conditions, but will not be able to exit the cycle of poverty. This model proposes to the peasant that their cooperative also become a founder or shareholder at a factory that produces dairy products. This factory can then be jointly owned by a municipality. In this shareholding, the largest shareholder is the municipality with 51%. The marketing of the company’s products may be taken up by a corporate department linked to the management. Accordingly, this company produces and markets its products like any ordinary company. As it engages in these activities within a framework of capitalist relations of production, it makes profits. This profit, with the deduction of costs outside the wages, goes to the workers, who are also shareholders in the factory, and indirectly to the raw material providing cooperatives and thereby to the peasants. Every link in this chain of value involves labour, and the accumulated capital, except for the depreciation costs, is organically open for outside participation.

As can be seen in the example, the peasant remains a shareholder in the factory as long as he produces. Hence, the profit that is gained from the sales of the merchandise on the shelves returns equally to the factory worker that produced it, the sales worker that marketed it, as well as the peasant who contributed the raw material. The aim here is to socialize, or communalise, the surplus value that results from the cost-price mechanism (As the economic explanation is too detailed to provide here, we confine ourselves to the functioning of the model). The share of the factory is closed to funds outside its production, therefore it is not a commodity to be bought or sold. For this reason, it only belongs to the producers.

The same model can be applied across different sectors. For instance, the apricot producers can organize in such cooperatives, and instead of selling their products as raw material to be processed in Greece (or any other factory), they could send them to the factory under municipal tutelage to be processed. This way, they would be able to avoid leaving the surplus value to private capital, which would have been unfeasible on their own or as only a cooperative.

Apart from the legal requisites for the municipal supervision of investment in agriculture-based industry, an important factor in the functioning of this structure is the acquisition of initial capital, which requires, as it would in capitalist enterprises, the cultivation of serious human capital. Regarding finances, opportunities such as the incentives, grants, and credit offered by the central government may be considered. Additionally, a detailed study can be made on the subjects of local access to credit and public participation. However, the relationship between the peasants and the workers that set up the factory, and the education of people who would work in product development, requires a separate investigation. After all, this is about education, and the importance this has for the freedom movement is the ideological education of the workers.

In non-agricultural sectors, the units of production that can be devised are sectorally variegated. However, the focus in manufacturing should on basic consumer goods and human needs. For instance, the production of textiles is the first sector that comes to mind regarding potential investments in the region. We can illustrate how this might work: the municipality of a town with high unemployment and skilled workforce shall invest in a textile factory. The product shall be of a quality that corresponds to the local demand. This factory, that can satiate a degree of local demand once it has also set up a sustainable system, shall begin production for external markets. Notwithstanding this aspect, the principle here remains similar to that followed in agricultural industry. The point is to be a producer of products that are ready to be consumed, and not merely a supplier of raw material or intermediate products. As textiles are the products in question, even in conditions where it is not possible to unify all rings of the production chain within one unit of production, those rings that are missing locally shall be preferentially acquired from the productive assets of another municipality. To put it simply: a factory that produces shirts should set up its own design studio, turn these designs into products, and introduce them to the market as their own brand. In optimal conditions, it may at first acquire the fabric for shirts from the market, but it should be able to move on to produce its own fabric in line with the plan and to be introduced to the market.

The primary shareholder in such a textile factory would be the municipality. The portion of its shares may be between 51 and 100%, but this model proposes the following: the businesses that have low profit margins after their initial foundation, due to their initial financial balance, should remain under the ownership of the municipality until this margin becomes wider. Once it does so, it should distribute the shares among its workers in proportion to the increased profits. The portion of the profit that remains after the costs are compensated should contribute to a common fund between municipalities. As this model envisions it, this fund would be regulated by people’s councils and make up the financial base for decisions made on new investments.

One of the most important components of this model is transparency in management and regulation. The model envisions a technique of council management in the administration of municipal businesses and cooperatives. Regardless of the scale, as all factors of production would be owned by the municipality, the presence of representatives from the municipal council may be thought of as a legal obligation. Be that as it may, workers from all levels of factory production would be involved in the factory councils, and thus a balance would be achieved between the factory and the municipality. The relationship of the municipal council with the people’s councils remains outside the purview of this model, but within that of the project of democratic autonomy. From this perspective, notwithstanding the abiding authority of the municipal council, popular participation in companies can be put into practice, albeit indirectly. In this sense, this model is in line with the oldest democratic currents of “factories under worker self-governance”. This corollary that has roots ranging from the Kibbutz in Israel to Argentina and Brazil, along with Yugoslavia, Venezuela and Chiapas, can blossom in this region with the realization of this model.

The contemporary advances in communications technologies suggest creative ways to address issues around the transparency of municipal companies. The balance-sheets and accounting records of these companies may continue to be regulated by the central organs of the Ministry of Industry, and they should be. This model does not envision a radical break with the central organs, but a redefinition of a constitutional and legal relationship on a democratic basis, ie. democratic autonomy. However, the responsibility of regulation should not lie with the cabinet, but with the Chamber of Accounts or an equivalent board. Hence, the financial regulation of the companies, technically referred to as the ‘post-audit’ by the Chamber of Accounts, would enhance the reliability of the companies. Most importantly, the companies should be regulated by their own workers and the community. This can be achieved by making accounts electronically accessible and responsiveness to scrutiny.
Apart from production, the municipalities can set up businesses that operate in the fields of consumption and marketing. Currently such businesses are operational in the forms of ‘consumers’ cooperatives’ and municipal markets in various provinces. Although many cooperatives of this sort are defunct because they engage in a significantly primitive mode of labour and do not have a firm price-product policy, methodically, the consumer’s cooperatives are exceptionally useful: they can directly provide the basic materials that the community needs at affordable prices, and they could be institutionalized primarily in the areas where poverty is widespread. A more modern and rational administration of these cooperatives would widen their activities and bring them closer to the community. These establishments, that would be organized in the form of modern markets, would provide affordable, basic foodstuffs on the one hand, and organize the transmission of the products produced by the people back to the people.

Another function of municipal companies is to expedite and enhance social cohesion. While they provide for the social needs of the workers such as rest, leisure and moral motivation, they also offer institutional solutions to the pre-school needs of workers’ children in terms of daycare and related facilities, along with education in the mother tongue.

Foundational Requirements for the Model

As mentioned earlier, the condition for the optimal application of this model is a radical administrative-political reform in Turkey, setting the legal parameters for regionalisation and the transfer of central powers to the regions and from there to the municipalities. The administrative powers of the governors, who act as representatives of the central authority, should be confiscated, and replaced with central officials who take on the role of coordinators between the centre and the province, and have a limited veto power over the decisions of the local units. This can become possible through a process of decentralization in Turkey. In the end, the legal infrastructure for democratic autonomy depends on administrative reform.

The model can optimally function under rule of law and democratic institutions, that is to say in an environment where the local community can exercise legislative authority over matters that concern them, and local administration is carried out under the aegis people’s councils organized in all spheres from the school to the neighbourhood. Yet, since these ideal conditions cannot be attained with a struggle, as we said in the previous section, the legal ways to put this project into effect could be pressured. A law should be drafted towards the realisation of these conditions, and masses should compel the government to institute it.

Another requisite for the application of this model, which can only be presented as a rough sketch in this article, is the urgent realisation of the public investments that are necessary to consolidate the practical infrastructure. Apart from urban infrastructural needs such as electricity, transportation, and communication, the central government should be pressured by the regional population to provide subsidies for irrigation that are needed for rural development. This is a matter of political struggle. The people are aware that all these vital needs are ultimately linked to the Kurdish question. Still, success can only be achieved through leadership responsibility, and emphasis on ideological education.

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Kurdistan Strategic Studies Center

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