Social movements beyond the iron cage: weak links in territorial development

Social movements beyond the iron cage: weak links in territorial development Part of the Special Issue on “Social Movements and the Dynamics of Rural Development in Latin America” – Accepted to be published in

World Development Ricardo Abramovay Professor in the Department of Economics, Faculty of Economics and Administration at the University of São Paulo, holder of the Sérgio Buarque de Holanda Chair at the École des Hautes Études en Sciences Sociales (Paris) and researcher for the National Council for Scientific and Technological Research (CNPq), Brazil. www.econ.fea.usp.br/abramovay/ Reginaldo Magalhães PhD student of the Environmental Program of the University of São Paulo. reginaldo-sm@uol.com.br Mônica Schröder Doctor in Social Sciences (State University of Campinas). m.schroder@uol.com.br

Summary. - The incentives and governance system of organizations are important in explaining how they behave in localized development processes.

This article builds on the observation that the literature on territorial development does not generally address the action of social movements. At the same time, research on social movements rarely studies their effects on the territories in which they act. This text is a contribution to fill this gap. It compares two social movement organizations, a trade union federation and a credit cooperative system operating throughout southern Brazil. Both organizations share common origins and social bases, yet their impacts on territories have been quite different. The analysis focuses on the social ties that link trade unions and cooperatives to their territories to show that governance systems may explain the performance of each organization, especially with regard to their capacity for innovation.

Key words: Organizations; family farmers; credit cooperatives; trade unions.

1. Introduction Localized development processes do not spring from the spontaneous and mechanical evolution of "market forces." Rather, they are shaped by actors, by way of 1

their culture (Rao & Walton, 2004), political action (Appadurai, 2004), and organizations (Cornwall & Coelho, 2007). Indeed, the literature on territorial development has underscored the importance of localized social ties and sharing of tacit knowledge among a range of actors in the emergence of innovative processes linked to economic clusters, local productive arrangements, learning cities and learning regions (OECD, 2001a and 2001b; Trigilia, 2005). Yet in this literature, social movement organizations are altogether absent even though they can be one of the most important forces in the shaping of these ties and bodies of knowledge, It is possible to offer two competing readings of this absence. It could be argued that social movements have little to do with the ways in which economic actors deploy the resources upon which the dynamics of a given region depend. Lines of thought that construe social movements as “collective action [that] becomes contentious when it is used by people who lack regular access to institutions [...]” (Tarrow, 2005:3) might be deemed as corroborating this point of view. The absence of any mention of social movements in the seventeen chapters that make up Boschma and Kloosterman’s (2005) important collection on clusters, productive arrangements and local development might also reflect the view that there is no relationship between social movements and territorial development.

Conversely, some would argue that, especially in rural regions, the influence of local organizations on the business environment, on the mobilization and use of resources, and on the very manner in which public goods are defined and produced, is decisive (Schejtman & Berdegué, 2007). This is particularly true of Latin America, especially in countries (e.g. Brazil and Chile) where the redemocratization process gave rise to an extraordinary growth of public policy steering groups on themes ranging from the social control of education, through to security and the creation of deliberative councils on public investments in rural regions (Abramovay, 2003). The sweeping decentralization process experienced by the whole of Latin America (Draibe, 1993) and the relative weakening of the pyramidal structure of State policies have only reinforced the role of local actors in development-related decision-making.

The paper takes this latter position as its starting point, while arguing that whether and how social movement organizations are relevant for territorial development depends very much on the incentives and governance mechanisms that shape them. While we

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will argue that the new institutionalism in organizational analysis is a powerful tool for understanding these incentives because of the emphasis it places on cultural factors (Meyer and Rowan, 1977) - myths, routines, and mimetic behaviors (DiMaggio & Powell, 2004) – in explaining why organizations find it so difficult to innovate, we will also argue that this new institutionalism does not give sufficient attention to the roles of governance structure in organizational behavior (Nee, 2005). Rather its main concern is to identify those factors that lead organizations to follow certain routine behaviors in order to secure their legitimacy. Conversely the new economic sociology focuses on understanding the ways in which organizational culture and incentives (as structured by social networks, Swedberg, 2003) can lead organizations to behave in ways that differ from their otherwise anticipated roles and routines. This approach can be helpful in responding to questions such as why it is that certain social movement organizations become routinized and bureaucratic while others manage to learn and continually innovate (Sabel et al., 2000; Sabel, 2004) or why it is that certain movement organizations can adopt certain managerial practices and yet still sustain the commitment to transformation that characterized their early years? In short, it can help explain why it is that the iron cage of organizational bureaucracy is not the inevitable destiny of all social movements.

In the paper we present an analytical comparison of two social movement organizations operating in the three southern states of Brazil – Paraná, Santa Catarina, and Rio Grande do Sul.

Specifically we compare the performance and regional

repercussions of a labor organization (FETRAF, the Family Farming Workers Federation), and a credit cooperatives system (CRESOL, the Solidarity Credit System).

These two organizations have much in common. Each emerged from the struggle to strengthen family farming in the South of Brazil. Their members were politically and culturally educated in the environment of the Christian Base Communities (Mainwaring, 1986) in the 1970s, and share similar convictions regarding both the strategic and utopian importance of their struggles. The leaders of the two organizations exhibit similar political and electoral behaviors and emphatically value direct social participation in public affairs. The social action of the cooperatives’ leaders originates in the labor movement, and trade unions contribute directly to the establishment of the cooperatives in many municipalities. For each, the defense of family farming is above all the defense of an ethical value, whose importance cannot be underestimated in a

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country with Brazil's degree of landowning concentration.

And finally, both

organizations have strong identity based ties (Tilly, 1988) reflected in the Italian, German, or Polish surnames of their leaders and through a regional culture marked by social struggle, the conquest of land, and the ability to continue raising crops and cattle.

Despite these similarities, the two organizations also differ in important ways in their behavior vis-Ă -vis important elements of local development processes. The labor movement, regardless of its rhetoric about formulating an "alternative model for rural development", focuses its claims on issues of a strictly sectoral nature, directed exclusively to family farmers. Moreover, its capacity to mobilize its membership is sporadic, only occurring at the same time as mass national actions designed, basically, to obtain credit-related resources for farmers. These actions induced an important social innovation when they gave rise, in 1996, to the National Programme for the Strengthening of Family Farming (PRONAF). Since then, however, labor action has become ever more routinized, and its capacity to influence local decisions regarding the use of public and private resources has dwindled. Conversely, credit cooperativism has been capable of carrying out actions with important territorial repercussions.

Its

existence depends on permanent social mobilization that strengthens bonds of trust between farmers as a basis for the payment of loans. The movement's contacts go well beyond farmers and government officials, and include local entrepreneurial organizations. Meanwhile, cooperatives are subject to permanent and continuous evaluation both by their account holders and the Central Bank in its supervisory role.

They are obliged to adopt innovative practices because if they did not they would unravel in the face of competition from other economic organizations (e.g. banks). Yet innovation has not distanced these organizations from the social bases that constitute the reason for their existence.

The behavioral differences between the two organizations derive from much more than the incentives that underlie their actions. They also derive from the network of social ties on the basis of which each organization sustains its actions, and from the way in which they affirm themselves in the social field in which they act. These two dimensions (networks and fields) are discussed in the following section as the primary conceptual basis of our argument. Part 3 then presents evidence on these organizations’ actions and the contexts in which they operate. Part 4 then discusses these empirical findings in light of the theoretical foundations outlined in the second section and draws 4

out several implications that the behavioral differences of the two organizations hold for the more general relationship between territories and social movements.

2. PARTICIPATORY ARENAS OF TERRITORIAL DEVELOPMENT Distinct intellectual traditions argue that the way in which a region uses its resources is determined not only by the independent decisions of its business leaders, but also by the expectations and demands of government and organized society (Tordoir, 2005).

Neo-corporatism emphasizes the importance of links between businesses, workers organizations and governments in the constitution of contemporary economic policies (Thomas, 1993). Studies of social capital (Putnam, 1993; Woolcock, 1998) also aim to explain the conditions under which cooperation between organized groups contributes to the creation of an environment of trust favorable to investment that will benefit the development process. Lin (2001:19) defines social capital as “the investment in social relations with the expectation of a market return”. The influence of organized social forces in businesses' core arrangements is highlighted by the neo-Marshallian literature on industrial districts (Bagnasco & Trigilia, 1993; Pyke et al., 1990) as well as by the literature dealing with the history of corporate environmentalism in the United States (Hoffman, 2001) and Europe (Hommel, 2004).

There is, however, a notable distance between those studies that envision localized social cooperation as one of the bases of contemporary processes of development, and that body of research on social movements that is much more concerned with conflicts and identities. It is as if social movements were decisive in situations of conflict, revolt, or insurgency, but lose all relevance when social groups previously in conflict not only coexist, but also develop projects in common that end up changing each group’s way of acting. Indeed, Tarrow defines social movements principally in terms of conflict 1 , while Tilly (1988) emphasizes the identities created through these conflicts as an analytical frame for studying social movements. Even for those who study processes of institutionalization, movements are seen as being organized against different forms of domination and oppression (Neveu, 1996/2005). This dichotomy between the emphasis placed on conflict in the literature on social movements, and on cooperation in the writings on territorial development (Schejtman & Berdegué, 2007), highlights a serious

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problem. The sociological base for territorial development is not just in revolt and contentious politics, but also in the shaping of distributive coalitions (Acemoglu & Robinson, 2005; Knight, 1992) whereby social actors, even in opposition, adopt common strategic goals in shared projects. The focus in social movement writing on open and permanent conflict obstructs any fruitful engagement with that on territorial development. As a result, the sense conveyed is either that the process of territorial development occurs despite the actions of social movements, or social movements, once they become protagonists in the decision making process regarding resource use, are in reality betraying their cause, losing their capacity for protest, and their potential to elicit social change.

In the following paragraphs, we suggest that – and show how - contemporary economic sociology offers important contributions to help find a way through this analytical and political bottleneck. a) The strength of weak ties in social innovation Resource mobilization approaches to social movements emphasize their modes of organization, their material bases and the entrepreneurs upon which they depend (McCarthy & Zald, 1977). This line of research was further deepened by Oberschall (1993), who through a critique of Mancur Olson's (1965) theories of collective action, drew on the study of sociability to examine how social movements are built. He elaborates a typology based both on the social situation of the groups studied and on the type of connection their leaders establish with authorities and dominant groups. It is from this perspective that he examines mobilization and revolt. In a similar fashion, Tilly (1988) examines social movements in terms of the nature of their networks and of the building of identities that help stabilize them.

It is puzzling, however, that one of most important categories of the new economic sociology, “the strength of weak ties” (Granovetter, 1973 and 1983), has not been systematically employed in the study of social movements. Granovetter suggested, in his 1973 pioneering text, that such weak ties helped explain how far marginal groups were able to benefit from urban renewal processes in U.S. cities. More recently, building on her work on Silicon Valley, Anna Lee Saxenian (1994) showed the importance of these weak ties in the Silicon Valley’s relative success in comparison

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with the decline experienced by Boston’s Route 128. The study of social networkingbased innovation emphasizes social embeddedness in economic action (Granovetter, 2005) and insists above all on the immense potential that inheres in links between disparate cognitive worlds – a potential that can enhance both performance in the labor market and technological innovation (Castilla et al., 2000).

While Oberschall (1993) does recognize that the nature of movements' ties with opposing groups may have a determining effect on their success or failure in satisfying their demands, and on the extent to which their demands are expressed peacefully or through violent revolt, the significance of "the strength of weak ties" goes beyond their contribution to success in attaining certain demands. Strong cultural ties of identity and the sharing of a common cognitive world are also important for the cohesion of certain groups. Yet they are largely insufficient to foster the broadened information repertoire to which individuals and groups require access if they are to devise and pursue innovative strategies.

That is, Granovetter's contribution not only illuminates the

capacity of a social group to mobilize resources through weak ties, but also the innovative potential of such ties. It is not just that weak ties can allow identity based groups to network with authorities and parts of the elite – their "strength" also lies in the sense that the ability to build ties with other actors supposes a certain cognitive flexibility (Granovetter, 1983), an openness of these groups' mental models toward the information, knowledge, and values coming from other social sectors.

It is important to integrate the "strength of weak ties" argument with organizational analysis's theoretical contribution to the study of institutions. Indeed, if we were to rely on, say, the work of Herbert Simon (1976), regarding the procedural nature of rationality – i.e., its cultural and psychological determinations–and the now classic text by DiMaggio and Powell (2004) on the Iron Cage, we would conclude that organizations have very little scope for innovative action. “Societies (or elites), so it seems, are smart, while organizations are dumb”, summarize DiMaggio and Powell (2004:126). Yet if we were also to study organizations on the basis of the social (weak and strong) networks of which they are part, then we might be less skeptical of their potential for innovation.

Indeed, such an approach might help us find innovative

processes at the very heart of public non-state institutions, such as credit cooperatives and trade unions.

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Of course, weak ties may not merely constitute opportunities: to the extent that they come to question the very identity and ideological and cultural integrity base upon which a given group is organized, they might also represent threats. To social movements organized around a discourse of anti-capitalist struggle against neoliberalism, for instance, links with business segments may undermine some of the cultural foundations upon which their own social cohesion rests. Yet these links and the new themes they subsume may also reinforce the group and open up unprecedented opportunities for affirming its own identity.

To understand the tensions between

opportunity and constraint that inhere in weak ties, it is helpful to view these networks as social fields, arenas of dispute among different visions regarding how public and private resources should be used. b) Fields and social skills In his definition of the concept of "social field", Pierre Bourdieu (Bourdieu and Wacquant, 1992) took inspiration from the Weberian idea of relatively autonomous institutional spheres. Fields are formed by actors in a given area of social life, drawing on the resources available to them, the diverse positions they occupy, and the various capitals –symbolic, cultural, social, technological, and financial– they hold. Each field – the artistic, the cultural, the economic, the religious, the unionist, that of microfinance or cooperativism– has rules of its own, a “logic of the game” (Bourdieu, 2003:25), that agents follow strictly, even if these rules are not always made explicit. Such rules, however, are also constantly being reworked as a result of other transformations in the field, disputes among actors operating in the field, and the capacity for capital accumulation stemming from these disputes.

It is based on such premises that Neil Fligstein proposes that the theme of direct social cooperation between actors –so important for the shaping of territories– be approached from the perspective of social skills: “the idea of social skill is that actors have to motivate others to cooperate. The ability to engage others in collective action is a social skill that proves pivotal to the construction and reproduction of local social orders” (Fligstein, 2001a:3). Unlike networks, social fields necessarily involve hierarchies and specific modalities of domination 2 . Human cooperation, in Fligstein’s approach, is not a normative or metaphysical formulation, as it appears in, for example, John Locke’s philosophy of natural rights: it is an action model. Cooperation with other

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actors supposes, above all, the capacity to persuade, to interfere in the very shaping of the meanings around which social life organizes itself. It is a notion that is interestingly reminiscent of the Gramscian idea of hegemony and the Weberian notion of domination.

In this sense, social fields are unstable, for within them there will always be disputes over conceptions, power, and modalities of domination, even though the basic rules and fundamental objects of dispute of the field remain stable. Hence the importance of institutional entrepreneurs: “under conditions of crisis or formation, it is possible for institutional entrepreneurs to create entirely new systems of meaning. These entrepreneurs are skilled strategic actors who find ways to get disparate groups to cooperate precisely by putting themselves into the positions of others and creating meaning that appeals to a large number of actors” (Fligstein, 2001a:5).

Social skills entail capacities to formulate and reformulate the history of the field in question, to establish an agenda for its basic issues, and to negotiate its bridges with other fields and social universes. Indeed, the decisive social skill of those institutional entrepreneurs who exercise de facto leadership is that they are able to make the aspirations of their groups appear as if they were universal claims rather than exclusively self-interested ones. Thus, while strong ties are pivotal in maintaining a group’s cohesion (Granovetter, 1983), the real power of groups derives from their ability to impose changes in the language, agenda and key issues around which the field in which they operate is organized. We now use these theoretical observations to describe the actions of the organizations studied, and their effects on the territories in which they are acting.

3. Routinized demands and organizational innovations Brazilian trade union legislation – inspired in the Carta del Lavoro of Italy’s Fascist period – reinforces the corporatist character of trade union representation by permitting only one union per municipality, one federation per state, and one national confederation for each professional category of workers. Even though cooperativism is subject to significantly fewer restrictions than those imposed on trade unions, the text of the law also makes clear that they too are subject to State control. It is in the context of such legislation – and the open hostility to trade unionism and cooperativist

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organizations that it reflects – that both FETRAF and the CRESOL Solidarity Credit System emerged as part of a broader movement of contestation. Both organizations have advocated actions that promote the direct participation of their bases, and adopted new forms of organization that escape the narrow limits imposed by the State (Medeiros, 1989). In these senses, each organization has helped change the physiognomy of the fields in which they act. a) The trade union field The rural workers' trade union field in Brazil was formally established in 1963 in the context of an important conflict involving conservative sectors of the Catholic Church and the left (with strong participation of the Communist Party). With the 1964 coup d’etat, a large part of the left active in the trade union movement was arrested.

Nonetheless, unionism adopted an oppositional posture, albeit one that was moderate and operated within legal boundaries, assuming the defense of agrarian reform as one of its central themes. That said, the oppositional position assumed at a national level was rarely replicated at a municipal level. Indeed, during the dictatorial period, many unions ended up becoming places where workers went to solve health problems or file for retirement, and where local leaders perpetuated their presidencies, as if it were truly a job for-life. While this was less the case in the Northeast, where membership organizations (especially of salaried workers) were always stronger and more active, in the South of Brazil, trade unions rarely stood up to contest and fight for rural workers.

This context began to change in the late 1970s, when the work of Christian Base Communities became geared toward fostering oppositional practices, some of which led to victories for unions. This then gave rise to more unprecedented struggles: resistance against the expropriation of small holder properties for the construction of large dams, debates over agricultural policies, organization against practices adopted by companies in the pork and broiler industry, and the beginning of discussions regarding environmental and social problems caused by agricultural modernization.

The grassroots activity of the Catholic left was decisive in establishing, in 1983, the Single Central of Workers (Central Ăšnica dos Trabalhadores, CUT), a national worker organization which contested the corporatist model of representation by professional category and the bureaucratic practices that had characterized the labor

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movement up to that point. Luiz Inácio Lula da Silva was forged in this environment of contestation whose cultural bases inhered in the intellectual work of liberation theology.

Young seminarians and former seminarians, priests and members of the Christian Base Communities became increasingly more involved in the shaping of trade union opposition in the rural areas of Southern Brazil, giving rise to a segment of the CUT that had its own independent life, the so-called “rural CUTs”. They failed, however, to win approval for their proposals at the congresses of the National Confederation of Workers in Agriculture (CONTAG), a large rural labor organization created in 1963 to bring together salaried workers and family farmers.

As a consequence, these unionists

decided in 2001 to withdraw from CONTAG and create FETRAF. Today, FETRAF is one of the main social organizations in Southern Brazil, a region in which family farming is prevalent. It is organized in 22 micro regions, and comprises 93 rural workers' unions, family farming workers' unions, and some associations of family farmers in 288 municipalities in the states of Paraná, Santa Catarina, and Rio Grande do Sul. The federation is affiliated with the CUT, as is CONTAG also (which FETRAF opposes in the three states of the south of Brazil).

When President Lula convenes a meeting with representatives of the rural workers, the president of CONTAG and the president of FETRAF, both CUT-affiliated organizations, each attend.

FETRAF drew its strength mainly from a struggle for a specific agenda: access to subsidized farming credit extended by the National Programme for the Strengthening of Family Farming (PRONAF). Of the 4.2 million family farmers existing in Brazil, more than 2 million have access to credit. In the south of Brazil, the overwhelming majority of farmers can get this financing, and the unions’ engagement was crucial in organizing the demand for credit and pressuring banks to grant it. Labor action was also important in prompting the State to shoulder both the costs of subsidized credit and the risks in loan operations involving low-income farmers. Its grassroots strength rests above all on its unions’ capacity to guarantee that farmers have access to banks and to pressure government for more resources and greater subsidies.

In the 1990s, both the CONTAG and the CUT conducted seminars, surveys, and capacity-building programs to formulate what both termed an “alternative rural development program”. These seminars incorporated new demands formulated by social

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movements, as well as much contemporary academic research. The theme of territorial development was especially debated by the national and state boards of both movements. Indeed, union leaders are, today, aware of scientific research showing the growing importance of non-agricultural activities in rural territories, as well as the nonagricultural destinations of the majority of the youth from farming families. These ideas were important in that they equipped the labor movement with the tools to mount an opposition, as much cultural as political, to agribusiness, which tends to see rural space as exclusively agricultural and, therefore, to advocate the adoption of economically more efficient and low cost agricultural production. Unionists, on the other hand, wanted a more densely populated countryside, peopled by family farmers rather than by productive but socially deserted fields.

However, the gap between the content of the “alternative rural development project” and the actual practices of labor unions could not have been wider. Indeed, rural workers’ unionism wound up almost exclusively pressuring the Federal Government to increase the line of subsidized credits provided by the National Programme for the Strengthening of Family Farming. This is not to say that there is no logic to such a strategy. Agribusiness also receives credit incentives which far exceed the credits obtained by family farming, and therefore to demand credit is simply to demand the same benefits as agribusiness, and secure an input upon which their members depend. Furthermore, lobbying on credit issues is a continuous need, because credit allocations for family farming are often not disbursed, and so the unions have to negotiate with Congress and the Executive to ensure disbursement. Whatever the case, the labor movement’s agenda focuses mainly on obtaining these resources and on the negotiation of the successive amnesties for farmers who default on their loans.

Union membership thus becomes a means of ensuring movement strength at the moment of negotiating access to credit on favorable terms. As a result members really only participate whenever it is necessary to demonstrate movement strength. During PRONAF's early years, this led to forms of mobilization that did indeed represent something quite novel at both national and municipal levels. This was the first time that Brazilian farming policy had been shaped in such a way that support to workers and family economies was a national priority. However, ten years later, the one-time innovative union practices and strategies that initially won and sustained PRONAF have

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now become routinized, and the mobilizations in which these policies found their support have altogether faded.

Meanwhile, the rhetoric regarding an alternative model for rural development seems completely sterile when seen in the context of actual union practices and the incentives around which labor organizes itself – namely the perpetual renovation of credit lines. It was in this context that at the Congress held by FETRAF in 2005 we interviewed 120 union leaders about these issues. 3 The interviews sought information that would help us understand FETRAF practices and strategies in terms of the concepts outlined earlier. In Table 1 we highlight a few of the survey’s questions designed to identify the nature of the social networks in which FETRAF leaders are embedded: Table 1: FETRAF leaders' views on their organization

Question

Most frequent answers

Accumulated frequency

Which is the single most important Credit,

prices,

agrarian

national policy that ought to be defended reform

and

technical

by FETRAF?

assistance.

Your friends are mostly?

Family farmers.

Who is FETRAF’s most important ally in President Lula, the PT, the their national struggles?

78%

96% 66%

government

Has your union discussed problems with No

87%

the business association, CDL, Sebrae?

Source: Field survey at the FETRAF Congress, in 2005.

For seventy-eight percent of the southern region delegates to the FETRAF Congress, agrarian policies constitute the most important national policies. Only 6.6% identified, for example, education or health as the most important policy. Evidently, 13

then, union leaders express little real interest in policy domains beyond those linked directly to agriculture even though some of these – such as the quality of education for low-income populations – are of great strategic importance. Certainly improving the quality of education will be vital for the future development of the regions in which these unions live and operate.

This "agro-centrism" is also reflected by and in the social networks in which these leaders live. Fully ninety-six percent of union leaders say that their friends are other family farmers, other labor leaders, or community leaders. Only four percent of the leaders have friends who belong to other social groups. It is worth noting that for 66% of the delegates, President Lula, the PT, and the government are FETRAF’s main allies. Not a single union leader identified an ally outside the worlds of labor unionism, rural workers’ social movements, the government, or the PT. At the municipal level, allies are merely those organizations that represent the family farmers themselves.

These views and networks affect the conversations that leaders have, and thus their access to information. Only 13% of the delegates discuss the problems of family farmers with organizations not directly linked to crop and cattle production – organizations such as business or industrial associations - and fewer than a quarter of the leaders get to meet with entrepreneurial leaders. This is all the more striking given that the survey was with leaders who live in a part of Brazil in which the rural economy is quite diversified and where industrial activity is rising.

One of FETRAF’s goals is access to new markets, such as solidarity and ethical markets, and new production technologies, such as agroecological practices. Yet, reflecting an ambiguity in its position on market relationships, FETRAF fails to enter in markets that are outside the local or alternative environment. Seeking out ways of renegotiating existing markets simply does not feature on FETRAF’s cognitive horizon.

Despite radical criticism of agribusiness, FETRAF does not seek to negotiate for new forms of integration with the pork and broiler industries –whose territorial and economic importance is decisive in the south of Brazil– nor for ways of ameliorating the social and environmental consequences of their actions.

FETRAF withdrew from the Round Table on Responsible Soy in which it participated in 2004 and 2005. Also at this Round Table were NGOs, major companies

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represented by the Vegetable Oil Industry Brazilian Association (Abiove), and large scale purchasers, such as Unilever. The fruit of a major campaign coordinated by environmentalist NGOs (Greenpeace principally), soy industries and traders adopted a voluntary moratorium banning the purchase of soy from areas of the Amazon region that were deforested. Yet FETRAF has ignored this and instead participates in another forum (Articulação Soja), created in 2003 and bringing together social movements and NGOs and funded mostly by European NGOs. This forum’s objective is to foster debates among Brazilian NGOs to define minimum requirements for the production of soy. At the same time as shunning opportunities to negotiate with agro-industry, FETRAF focuses its attention to the market on participating in organic and solidarity market networks in which strong ties prevail. While these initiatives involve actors that share ideological positions, they have little headway in significantly changing the main markets affecting small farmers and rural territorial development.

FETRAF was born in an environment of confrontation against the conventional vision of union action. Its grassroots actions, even before its formal consolidation, were important in obtaining a public policy change – PRONAF - that marked a historical turnaround in the relation between farmers and State in Brazil. Nonetheless, very quickly FETRAF routinized its practices and, today, its local action focuses on obtaining public resources in a way which pre–supposes neither membership mobilization nor the construction of an alternative vision of rural development. The incentives to which leaders and members respond mean they are not even necessarily aware of the limitations of such a strategy – rather they reproduce this orientation towards securing credit.

The alternative that FETRAF purported to represent in the

trade union field was short-lived, and today FETRAF and CONTAG share extraordinarily similar identities in terms of practices and rhetoric. However, more important than this overall trend toward mimesis in organizational behaviors is the fact that any contribution of these organizations to RTD becomes determined by the role they play as mediators of the public resources that Federal Government allocates to their membership.

Yet this does not need to be the destiny of all representative

organizations, as shown by the example of the CRESOL Solidarity Credit System. b) The agricultural financing field

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The CRESOL Solidarity Credit System emerged in the early 1990s also as a consequence of initiatives by former militants of the Christian Base Communities, at the time working for local NGOs supported by international organizations. As in many other localities in Latin America, in the southwest of the state of Paraná organizations linked to the work of the Catholic Church had established a kind of ROSCA (Rotating Saving and Credit Association). Within months of its initiation, however, those responsible for the fund realized it lacked the minimum requirements to ensure its “rotating” character. The risk that a loan taker would not return the money was immense, and solidarity and proximity bonds among participants were not sufficiently strong to ensure repayment. In the meantime, the Federal Government announced the launch of a program (which later came to be PRONAF) that sought to broaden family farmers' access to credit. This was to be done through the Brazilian State’s retail banking network, beginning with the powerful Bank of Brazil. As a commercial organization, however, the Bank of Brazil required its clients to give forms of loan guarantee that were often impossible for family farmers.

The combination of frustration with the rotating funds and the prospect of a program designed to assign credit to family farmers prompted a sizable group of farmers formerly linked to the Christian Base Communities to take the initiative, in 1995, of establishing a credit cooperative. The step was daunting, for it meant imprinting a formal dimension to a set of informal ties grounded up to then in a common cultural, ideological and even political universe. This formalization introduced calculations of economic rationality (the obligation to repay loans, and the design of incentives and penalties to guard against opportunism) into a universe that had been based entirely on solidarity and social proximity. The initiative was supported by Brazilian and international NGOs, and also by the active participation of unionists.

In contrast to the informality of rotating funds, a cooperative is directly controlled by the Central Bank, since it captures resources from its associated members: it is subject to a regulatory framework akin to that of the banking sector. It cannot be funded by Government resources or international cooperation (although the latter was of great importance in its inception). Up to then, the credit market – the field of agricultural finances to employ Fligstein’s (2001b) and Bourdieu’s (2005) term – had been totally dominated by the banking sector. The cooperative that would ultimately become the CRESOL system thus surfaced as a minute challenger (Fligstein, 2001b) in 16

the face of a sector whose practices were completely consolidated. The novelty of this challenger was two-fold. On the one hand, it intended to lend to the poorest farming sectors and, indeed, succeeded in doing so. On the other hand, it altered the very nature of lending technologies by strengthening groups and group-based guarantee mechanisms based on the farmers’ mutual knowledge rather than on their assets.

Moreover, the embedding of cooperatives in the farmers’ universe not only meant that arrears and transaction costs were each reduced; it also helped build the organization's own capacities, when farmers’ children began to do technical work for the organization - further reducing costs in the process. As a consequence, the system grew and, throughout its ten years of existence, has become an important player in the field of finance services for family farming in the South of Brazil.

Today, the CRESOL system is organized in two main credit offices, with 112 individual cooperatives in 380 municipalities in Brazil’s southern region, and a total of 75.5 thousand members. In 2006, credit cooperatives reported an annual movement of some R$ 118 million (c.US$59 million) through the transfer of public resources in the form of credit to its members. Arrears are always close to zero. Members are stimulated to save, with the result that, in 2006, there was some R$ 117 million in cash and forward deposits.

The field research found that CRESOL system board members take part in business associations engaged in the development of several municipalities where CRESOL operates. Moreover, it was at the initiative of the CRESOL system that the Brazilian legislation, which up to then had only authorized credit cooperatives whose members belonged to the same trade, was overhauled. Today, rural credit cooperatives can accept applications from non-farmers. The leaders (or what we prefer to call "stewards") of the CRESOL system pushed for this change in legislation once they began to realize that their cooperatives could make important contributions to their regions’ economies, over and beyond the immediate interests of farmers alone. It is also interesting that this broadening of scope did not undermine the objectives of reaching out to family farmers, and particularly to the poorest among them. Most important, though, is that this change suggests a shift of orientation in CRESOL, in which it increasingly caters to the territories of which it is a part, and not only to the social bases from which it initially emerged.

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In this process it is also important to mention the importance of ties with Central Bank technical staff. In the beginning, these technicians lacked any confidence that a group of cooperatives could be established by people with no tradition in the financial area, and far less that they would be successful. Strict rules for the opening up of new cooperatives expressed the wide gap separating these two universes. The success of the CRESOL system in recovering loans, in setting up a portfolio with its own resources, and in stimulating local organization was, however, important in overcoming these doubts and strengthening ties with the Central Bank. This success – and the ties to which it gave rise - also helped persuade the Central Bank to accept a relaxation of the rigid regulations designed to maintain the financial health of cooperativism. The CRESOL system became one of the nation’s most respected examples of credit cooperativism.

4. Discussion A comparison between the governance systems adopted by FETRAF and the CRESOL System is summarized in table 2.

Table 2: FETRAF and CRESOL compared

Ties

Identity and cohesion

FETRAF

CRESOL

Prevalence of strong ties

Strong and weak ties with

between family farming and

other financial institutions,

Government. Quasi absence

local entrepreneurs, and

of weak ties.

Central Bank

Radical rhetoric to

Strengthening of relations of

strengthen social

trust based on informal bonds

mobilization

and formal rules. Rhetoric focused on development and

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valuing of territories.

Membership demands

Political pressure on the

Mobilization of resources

federal government for the

from local savings in

transfer of public resources

exchange for access to public resources

Incentives to innovation Unionists tend to maintain a

Cooperative stewards create

routine of mobilization and

new services to adjust to the

negotiation with

competition from other actors

government

in the field

Transparency and

Assessment criteria are

Defined by external and

results’ assessment

political; no mechanisms in

internal rules according to

place for accessing

objective social and economic

information and no external

benchmarks. Monitoring by

evaluation. Bureaucratized

Central Bank and assessment

membership participation

by expert companies.

Participatory membership assemblies.

Source Source: Field survey at the FETRAF Congress, in 2005..

FETRAF’s governance system and incentive mechanisms are based on its capacity to mobilize membership and secure resources from the federal government. Its mobilization capacity, in turn, relies upon continued radical rhetoric that distinguishes the organization from all other labor organizations that are more moderate with regard to the critique of agribusiness and agro-industries. The effects of mobilization at the local level are less important than are their national repercussions.

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Throughout the process of reconstruction of the trade union field, FETRAF, and the group that created it, sought to characterize itself as a challenger and alternative to CONTAG, which presented itself as an incumbent, to use Fligstein's (2001b) terminology. Yet, when this new organization was created, its creation involved no innovation in its system of governance. As a consequence, FETRAF – like CONTAG – continues to have a strictly sectoral perspective on politics and development that, though it may reflect the immediate demands of its members, leads it to have no strategy for fostering more territorially based processes of rural development. Its focus is purely agrarian, and in those territories in which it exists, its strength and recognition are a direct function of its capacity to mediate access to governmental resources for its membership.

The credit cooperatives of CRESOL exhibit four important differences when compared with the unions of FETRAF: a) They do not depend fundamentally on public resources. The money upon which they depend is not obtained as a result of exercising political pressure on Government but, rather, on their capacity to organize financial management systems and gain the trust of their associates. Their success in this regard is reflected in the sizable volume of deposits and the very low default rates in credit operations. b) They are organizations whose administrative records are widely accessible. Any citizen has access to information such as number of members, volume of deposits, credit portfolio and assets. These data are available both on the CRESOL system’s web site and at the Central Bank. This information is controlled internally, by means of accountability meetings and assemblies, and is also submitted to constant outside assessment, by the Central Bank’s online monitoring. c) Credit cooperatives are characterized by objective mechanisms and benchmarks with regard to planning, incentives, and the assessment of results for the system as a whole, for each of its units and for the individuals (stewards, staff, and members) who are part of the organization. Results are measured, for example, with regard to the number of members, volume of deposits, loans, and arrears. Moreover, results are collectively evaluated in informal meetings and assemblies that approve or not the accounts and define how each organization’s profits will be invested. The way in which cooperatives are organized is consistent with such objectives. Cooperatives are small (not more than

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600 members per municipality) in order to ensure proximity with the membership.

Local organizations organize in networks and rely on qualified technical teams to support their services. Planning and monitoring are systemic (goals are defined and results assessed for each of the System’s unit) and are consolidated for the whole of the system, making senior stewards accountable for every level of the organization. d) Credit cooperatives combine both strong and weak ties within a diversified network of organizations. Local groups and associations ensure proximity to the membership of the cooperatives.

They also maintain steady contact with the banking sector,

interchanging knowledge on both loan and guarantee techniques, as well as important links to international bodies specialized in evaluating microfinance organizations. But beyond these relationships that come with the very nature of microfinance work, yet more important is the network of informal links that the cooperatives maintain with other economic actors operating within the same territories. Both leaders and technical staff participate in networks that link them to local business and political leaders and that give them access to information as well as to new local development opportunities.

By giving the cooperatives additional knowledge of territorial economic dynamics, these weak ties and informal relationships help the cooperatives reduce risks and identify new business options.

This organizational model is entirely focused on achieving results locally. More than that, the success of the organization depends on expanding economic opportunities and access to markets for its members, which prompts the organization to constantly seek to expand its relationship networks and innovate in its business practices. CRESOL's action is thus oriented towards strengthening the economic base of the territories in which it operates on the grounds that it is the territory that will boost its membership’s prospects of economic success and, therefore, the repayment of the loans it extends. To identify these opportunities and to offer services that will foster dynamism in the financial and productive life of its associates, cooperatives must be constantly present in everyday life and in the formal spaces where problems are analyzed and opportunities for territorial development identified. They must therefore ensure that they have constant access to a broad base of local knowledge. In this they differ in a fundamental way from union based organizations that, because they are oriented instead toward identifying opportunities offered by the government, must maintain constant presence not in everyday rural life but rather in the offices of the federal capital.

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Credit cooperatives set up by social movements that target the strengthening of family farming seek to respond to a sort of squaring of the circle: on the one hand, they emerge around certain political objectives belonging to the realm of what Max Weber called material or substantive rationality. 4

They openly position themselves as

instruments for the democratization of credit, the expansion of opportunities for the poorest and the struggle against poverty: these are purposes coherent with the organizational environment from which they are emerged, one that is strongly marked by the work of Christian Base Communities and social struggles for expanded access to credit. Thus, one of their motivations is to strengthen the "strong ties" that sustain this socially-oriented identity. These strong ties inhere in the small, trust-based local groups that collectively monitor the giving of solidarity credit and which are based on relations that allow the constant sharing of knowledge among members.

At the same time, however, these economic organizations are controlled on an online, daily basis by the Central Bank of Brazil. They must therefore also fully obey the logic of what Max Weber called the formal rationality of economic management.

Their management responds to criteria of a “numerical and calculable” nature, which certainly do not stem from local knowledge of and localized ties between groups sharing experiences in common. Yet, far from leading them to renounce the political values that underlay their initial creation, the cooperatives' obedience to formal precepts of economic rationality is achieved through the strengthening of an ethics in which their key objective is to expand opportunities for the poorest – an objective that itself requires economic rigor and innovation.

None of this is to deny that cooperatives –like trade unions– cater fundamentally to the sectoral interests of their members. Nevertheless, their influence and legitimacy have become sufficiently great that they can come before and engage with other economic actors in their other role as direct protagonists in local development processes. They are present, for example, in many forums convened by organizations from economic sectors other than farming, and they attend local meetings with organizations such as business and industrial associations. They do so because, in organizing the economic life of their associated members, they are obliged to relate to other local social actors. In this they differ from the labor movement, which tends to organize its membership fundamentally on the basis of demands to be met, first and foremost, by the State itself.

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The impacts of the services delivered by cooperatives go well beyond the farming sector. The expansion of both credit supply and the volume of local savings also have an important influence on other sectors of the regional economy. Commerce benefits from expanded credit, local banks benefit from higher savings levels, and municipalities benefit from larger financial movements and the ensuing growth in tax revenue. For this reason, those at the head of the cooperatives are embedded in a much broader network of social relations, managing wide networks of weak ties that allow them a broader view both of local reality and of economic opportunities. Furthermore, their permanent contact with entrepreneurs, businesspeople, bank managers, and local administrators leads to forms of interaction that strengthen the capacity for learning and innovation within the credit cooperative system.

5. Conclusions The most important aspect of the comparison carried out here is not the fact that one of the organizations is of an outright economic nature while the other is laborrelated, although this trait does help to account for some of their respective dynamics.

The fundamental point is, instead, that CRESOL has managed to safeguard the social, cultural, and political cohesion to which we can trace its origin, at the same time as having been obliged to adopt internal mechanisms that lead it to broaden its horizon and engage social sectors that are not part of its immediate universe. Put in different terms, it has been able to build and find synergies between both strong and weak ties. Its participation in the social field constituted by the credit market led it to develop not only the social skills necessary for an effective management of economic organizations but also the skills necessary for it to be able to engage in discussions on the possible futures of the region of which it is a part, discussions that take it beyond the simple defense of the interests of its members.

Conversely the representative nature of the rural workers' labor movement, and its emphasis on making demands, drew it into to an ever greater dependence not only on the State’s financial resources but also on its capacity to act as the local mediator of the governmental resources allocated for its membership. It does not question the merit of continuing to depend on this type of state led and potentially corporatist financing, and nor does it have any incentive to engage with actors other than the state (e.g. business

23

actors). Thus, its territorial action is reduced to obtaining subsidized credit for family farmers.

What is at issue here is not the fact that the credit is subsidized or that it is state financed. The problem is that the process has produced an organization whose specialty is to tap into these resources – an orientation that serves simultaneously to reproduce the organization and strengthen the power of the State itself. The vast majority of the members of the cooperatives are supporters of the PT and President Lula also. The difference is that the cooperatives adopted internal governance systems that foster an attitude of openness to and cooperation with the most important actors in their territories. They have built governance systems that have combined the strong ties that ensure internal cohesion with weak ties that link them to other, quite different actors.

Put otherwise, the shared social and cultural origins and politics of the two organizations did not lead the two organizations to behave in similar ways (as new institutionalist approaches to organizations would have suggested). The explanation of their divergent evolution is to be found in the distinct character of the social networks of which they are a part, the incentives that derive from these networks and the types of social skill that each organization has developed as a result of participating in different types of social field.

By identifying, as we have attempted, the reasons why labor union practices have become so routinized, we do not mean to suggest that non-economic representative organizations become necessarily trapped by the "iron cage" of bureaucracy and clientelism. While within such organizations there are many factors that do indeed frustrate innovation, their power is not absolute. Indeed, contemporary research on learning and innovation systems shows that routinization can be avoided by the introduction of governance systems that emphasize evaluation and the constant search for quality. The CRESOL system shows that to introduce such systems in social movement organizations does not necessarily lead those organizations to veer away from their initial empancipatory objectives.

Perhaps the most important conclusion of this article is that social movement organizations urgently need to put in place mechanisms that ensure public disclosure of their sources of funding, and external assessment of their results and methods. In the absence of such mechanisms, organizations they might fall into the worst of all worlds, that which allies radicalism to irrelevance.

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ENDNOTES 1

“Contentious politics occurs when ordinary people, often in league with more influential citizens, join forces in confrontations with elites, authorities, and opponents. Such confrontations go back to the dawn of history. But mounting, coordinating, and sustaining them against powerful opponents are the unique contribution of the social movement…” (Tarrow, 1998/2005:2).

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In a revised version of his 1994 text, Swedberg (2005) addresses in a rather interesting way this difference in the visions of Bourdieu and Fligstein, on one hand, and Granovetter and Harrison White (2002), on the other, with regard to social cooperation, particularly that of the markets.

3

The interviews were conducted with the consent of the FETRAF board and the questionnaires applied

by University of Brasília sociology students.

4

For a more detailed explanation of these concepts, see Swedberg, 1998.

31