There Can Be A Warmth To Collectivism

My compañeros (co-workers) at Cecosesola. | Photo credit: Frank Corva

There can be a warmth to collectivism — if joining the collective is voluntary.

If joining the collective is compulsory, though, the outcome has historically been devastating.

Let's dive in.

Cecosesola

An example of an incredible, purely voluntary collective: Cecosesola

Cecosesola is a massive cooperative based in the state of Lara in Venezuela.

In 2011, I worked for this cooperative, which provided healthy food to over 250,000 people per week.

Everyone at the cooperative made the exact same amount of money, including Gustavo Salas Römer, the Yale-educated economist who founded the cooperative in 1967.

Each member of the cooperative earned a modest wage, though, it was more than enough to live on.

To be a member of the cooperative, you not only had to work your shifts, but you had to attended meetings at which each member voted on how every dollar at the cooperative was spent.

It was a decentralized, leaderless organization for which each member took responsibility.

I remember attending said meetings, listening to members cry because they were so grateful to be a part of this organization that not only provided them with a living wage but a sense of ownership and purpose.

I was truly a beautiful thing to witness.

Cecosesola eventually expanded into funeral services and even a hospital, where the doctors earned the same as the administrative staff.

Again, though, it was important to note that this was all voluntary and that some people did leave the collective for greener pastures.

Chama

Another great example of the power of collectivism is chama, an informal system in East Africa in which community members pool money as a type of community savings and insurance.

Like Cecesesola, people voluntarily take part in chama — they aren't compelled by the gov't to do so.

Fun fact: Some Africans now use bitcoin for their chama savings.

Shout out to Bitcoin Chama!

Bad Collectivism

Now for when collectivism is anything but warm...

Soviet Russia/The Soviet Union, Venezuela, and the financial bailouts of 2008-09.

With each of these examples, people had no choice but to opt in, and everyone, aside from the elite, paid the price for collectivist policies.

Soviet Russia and The Soviet Union

In the early days of Soviet Russia and then The Soviet Union — the time of the dictatorship under Stalin in which he promised a collectivist utopia via central planning — almost 2 million Russians died in gulags, forced labor camps.

Great book on the topic: The Gulag Archipelago, by Aleksandr Solzhenitsyn

And from the 1920s through the collapse of the Soviet Union in 1991, the government imposed price controls, a hallmark of centrally-planned collectivism, and then argued that there was no inflation.

The price controls not only led to shortages that caused desperation, resulting in the death/suicide of many, but the debasement of the currency.

More on the topic: https://mises.org/mises-wire/how-soviets-fixed-inflation-ruined-economy

Venezuela

In Venezuela, first Hugo Chávez and then Nicolás Maduro promised a collectivist utopia in which the government would provide people with all the services they needed.

For some time, Chávez did make the lives of the poor better in Venezuela.

Through the Bolivarian missions, Chávez brought in many doctors from Cuba to help the poor and also made higher education affordable. Good stuff, no doubt.

The problem was that these missions worked until they didn't.

Eventually, the government ran out of money to fund them, especially when oil revenue dried up as a result of an incredibly mismanaged nationalized oil industry.

Chávez also imposed price controls for food staples starting in 2003, a policy that Maduro continued, which led to shortages/bare shelves at grocery stores.

In efforts to remedy the situation, the government began printing money en masse (this accelerated under Maduro), which led to hyperinflation, a complete loss of faith in the Venezuelan currency, the bolívar, which led to the largest migration crisis on planet Earth today, with almost one-third of the Venezuelan population fleeing the country to survive.

The Global Financial Crisis

During the Global Financial Crisis of 2008-09, governments around the world socialized the losses of major banks that would have failed if it weren't for government backstops.

Citizens were told there was no other choice, while unelected bureaucrats and members of central banks printed more money than the human mind could process.

What we've experienced as a result and even more so since is the continued debasement of almost all fiat currencies, which hurts the non-asset holding public (i.e., the poor) the most.

While countries like the U.S. still claim to be capitalistic, this is simply not true.

You can't have capitalism on the way up and then socialism on the way down.

This is a version of what Dr. Martin Luther King, Jr. referred to as "socialism for the rich and rugged free enterprise capitalism for the poor."

My Point

I share all of this to illustrate that there are surely benefits to working together and to voluntary collectivism.

Voluntary collectivism that requires that people take responsibility for their role in the collective can be very effective, especially for those of lower socioeconomic status.

Compelled collectivism — or "just trust me, bro" collectivism, as I like to call it — where a leader promises that they have the top-down solution to the problem has always failed historically and is fundamentally disempowering.

Ideally, the likes of NYC Mayor Zohran Mamdani and Cea Weaver, director of the Mayor's Office to Protect Tenants, learn and heed this lesson before leading New York City down a nasty path.

Finally, I'm keeping an eye out for other projects like Bitcoin Chama, where versions voluntary collectivism intersects with Bitcoin.

I sometimes think about what Cecesesola might look like if it ran, even in part, on bitcoin, as opposed to just Venezuelan bolívares or U.S. dollars.

It would likely be one of if not the the most impactful collectivist organizations on the planet today.

Thanks for reading, and much love to everyone!