Documentos de Académico
Documentos de Profesional
Documentos de Cultura
Studies in
Critical Social Sciences
Series Editor
David Fasenfest
Wayne State University
VOLUME 59
Industrial Colonialism in
Latin America
The Third Stage
By
LEIDEN BOSTON
2013
Cover illustration: Migrant workers on their way to the U.S.A. Photographed by Jos Alberto Donis
Rodrguez and used with his kind permission.
Library of Congress Cataloging-in-Publication Data
Figueroa, Vctor M.
Industrial colonialism in Latin America : the third stage / by Vctor M. Figueroa Seplveda.
pages cm. -- (Studies in critical social sciences, ISSN 1573-4234 ; volume 59)
Includes bibliographical references and index.
ISBN 978-90-04-25900-3 (hardback : alk. paper) -- ISBN 978-90-04-25906-5 (e-book) 1. Economic
development--Latin America. 2. Capitalism--Latin America. 3. Neoliberalism--Latin America.
I. Title.
HC125.F486 2013
338.8888--dc23
2013029650
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ISSN 1573-4234
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CONTENTS
Acknowledgements ix
List of Tables xi
Prologue by R.A. Dello Buonoxiii
Introduction 1
1.Imperialism and Industrial Colonialism 7
Monopoly, the Role of Science and the Function of the State 7
Social Relations of Production and Foreign Trade16
The Workings of Industrial Colonialism22
Imperialism and Nature27
Conclusion31
2.Imperialism at the Third Stage35
Key Aspects of Crisis35
The Globalization Strategy37
From 1995 Forward49
Capital and Nature53
Conclusion55
3.The Pattern of Industrial Colonialism57
Barriers to Regional Appropriation of Scientific Knowledge
for Production58
National Innovation Systems in Latin America62
The Universities in the Region70
External Limits to Export-led Economic Growth79
The Different Functional Roles Within the Region86
Internal Contradictions89
Political Regimes at the Third Stage92
Climate Change in Latin America99
Conclusion 100
4.Industrial Colonialism and Surpluses of Population 103
The Over-Supply of Labor-Power and Surplus-Population
Theory 103
Deficits and Surpluses of Population 112
viii
contents
ACKNOWLEDGEMENTS
The process of building the arguments of this book was largely encouraged by discussions with successive generations of students of the
Graduate Program in Political Science at the Universidad Autnoma de
Zacatecas, Mexico. Their shrewd criticisms and comments were always
helpful in the development of the ideas expounded here. No less important has been (and continues to be) my everyday contact with colleagues
sharing similar concerns. Distinct traces of encounters with peers at various academic events will be found throughout these pages.
Many diverse schools of thought have engaged in the study of Latin
Americas reality and every one of them has surely made some sort of contribution. The UN Economic Commission for Latin America and the
Caribbean (ECLAC) deserves special mention, regardless of its distance
from the thread of the story told in this work. The service that ECLAC
provides in terms of information and reflection on such an enormous
variety of social issues is simply priceless. Without it, the ongoing intellectual work about Latin America and the Caribbean would be much
more limited and far more convoluted than it is.
R.A. Dello Buono has consistently and enthusiastically promoted the
diffusion of studies on Latin America. As is well-known, he himself is a
learned researcher on the regions issues and I am infinitely grateful for
his interest in my work being published. I am likewise appreciative for the
assistance that David Fasenfest has provided in helping to overcome the
technical difficulties involved with producing this volume.
A large part of the tortuous effort to shape a legible English version
from my first draft was carried out by Anna Maria DAmore. Carmen
J. Dello Buono also participated in this difficult task.
The photograph that illustrates the front cover of this book was taken
by Jos Alberto Donis Rodrguez in the course of carrying out his work in
defense of the human rights of migrants.
Some of the propositions found in this book are the result of an ongoing research project on Science for Development and Democracy funded
by Mexicos Fondo Sectorial de Investigacin para la Educacin.
Special thanks to all who have enriched my work. Certainly, I alone am
responsible for the views and any errors contained in this book.
Vctor Manuel Figueroa Seplveda
Zacatecas, Mexico
LIST OF TABLES
2.1.Objectives of R&D Funding (Percents)41
2.2.Research and Development Funding in Selected European
Countries and Japan (Percents)43
2.3.Exports and Imports of G-7, 1977 and 1987 (Percents)44
3.1.Latin American and Caribbean Commerce. Export Goods
(in millions of US dollars)82
3.2.Latin American and Caribbean Commerce. Import Goods
(in millions of US dollars)82
3.3.Latin American and Caribbean Balance of Industrial Goods
(Millions of dollars)83
5.1.Schematic Representation of Peasant Production at Point 1 147
5.2.Schematic Representation of Peasant Production at Point 2 148
5.3.International Prices Index (Base 1990 = 100) 152
5.4.Productivity Differentials (1980 dollars) 156
PROLOGUE
Well into the second decade of the 21st Century, the search for an inclusive and progressive development scenario for Latin America has resulted
in persistent frustration. In one sense, deepening economic crises and
recurring cycles of violence confirmed the collapsing viability of neo
liberalism as a development strategy under post-keynesian representative democracies. Indeed, the upsurge of social exclusion that yielded
declining standards of living and physical displacement for large swaths
of the most vulnerable sectors placed Latin America at a crossroads: either
find another path or descend into a quagmire of ungovernable polarization and violence.
Why did neoliberal capitalist expansion prove so unable to turn explosive peaks of economic growth into greater prosperity for the majority of
Latin Americans? Why did accelerating technology driven by global
capital actually lead to greater underdevelopment? And why were uncontrollable migratory flows the necessary outcome of the competitive chase
for attracting inflows of foreign investment? Comprehensive answers to
these and other key questions of development are provided in the present
work by Vctor Figueroa. Figueroas pioneering work Reinterpretando el
subdesarrollo: Trabajo general, clase y fuerza productiva en Amrica Latina
(1986, Siglo XXI) first grappled with many of these questions in an era
when neoliberal regimes seemed dynamic and transformational. As a
powerful sequel to his earlier work, this new treatise presents a fresh
and insightful glimpse into the contradictory dynamics of accumulated
underdevelopment in 21st Century Latin America.
The essential mechanisms for harnessing technology within the context of development remains as much an enigma today as it did in earlier
phases of capitalism. Mindful of this fact, Figueroa develops a novel and
insightful approach to the structures of really existing dependent industrialization, identifying their consolidation as the third stage of industrial
colonialism. His analysis masterfully returns our attention to the role of
imperialism, not as some rhetorical accusation, but as a structural element of a hegemonic integration. What unfolds is a rigorous explication
of the internal restructuring of production implied by underdevelopment
as interconnected with the real structures of unequal partners in qualitatively asymmetrical social relations.
xiv
prologue
prologuexv
Readers who trace Figueroas analysis into the first quarter of the 21st
Century will come to appreciate the new urgency for reinterpreting
underdevelopment. In this sense, Figueroas critical analysis has returned
with renewed vigor to address the challenge he first outlined over a quarter century earlier.
R.A. Dello Buono, Ph.D.
Professor of Sociology
Manhattan College
New York City, USA
INTRODUCTION
The present work deals with some of the critical problems experienced by
Latin America beginning from the end of the 1960s and continuing right
up through the present. Special attention is paid to the living conditions
of the popular sectors during this period which I designate as the third
stage of industrial colonialism. My analysis is guided by an analytical
framework rooted in an interpretation of imperialism that has been constructed over a long period of time. I believe that the overall understanding of imperialism will be enriched with the theoretical propositions that
are developed through this study.
Attempts at dealing with the international relations of domination
that extend through Latin America, a region that forms part of the global
South, are certainly not new. Theories of dependency dominated the
progressive and revolutionary academic and political concerns of the
1960s and 1970s. Critical reflection on the big issues of the region gradually
faded away from the literature in favor of more specific themes and case
studies. Many reasons can be offered to account for this trend, including
the harsh repression of popular movements and the ensuing isolation and
retreat of Marxist thought. In recent years, however, the ongoing upsurge
of popular struggles and a general world crisis have contributed to
renewed discussion about the options for development and the optimal
paths to be followed. This work seeks to contribute to the revitalization of
critical thought.
Under neoliberalism, it was originally expected that increasing globalization supported by free-trade policies would bring along with it certain
leveling effects both inside national economies and between countries.
That was the alleged natural task of a market that supposedly acts on the
basis of objective data rather than the dictates of economic and political
domination. Echoes of these initial arguments in support of the imperialist strategy designed to tackle the global crisis unleashed at the end of the
1960s and the beginning of 1970s can still be heard today, lending support
to governments that adhere to such a depleted ideology. Reality, in turn,
tells a different story, in which things proceed in the inverse direction.
Inequalities both between classes and between countries have deepened
in Latin America.
introduction
The parallel development of the concentration of wealth and the extension of misery (or poverty as termed in the development literature) are
trends embedded in capitalist development logic. This was first brilliantly
revealed in the work of Karl Marx and thus provides the starting point for
any serious theoretical work around these issues. However, our concern
embraces the issue of inequality between North and South and inside
Latin American countries. The aim is to unveil the mechanism by which
globally created misery becomes concentrated in underdeveloped countries in a context in which global riches flow into the hands of large corporations originating in the more developed countries. We are particularly
interested in analyzing the social form of misery in a region where national
ruling classes never called into question their subordinate position within
the international economic organization.
The question of how domination by some countries over others is
reproduced will be tackled from both a general perspective as well as from
the specificity of the third stage of industrial colonialism. Both concerns
must go together in order to produce a convincing explanation. On the
one hand, this is a problem related to reproduction of the social relations
upon which domination rests. Or, to put it another way, following propositions which I have already advanced in previous work, it is a problem of
how underdeveloped countries are prevented from advancing towards
the normal labor division of capitalism and the organization of their own
scientific labor. On the other hand, it can be seen that the general causes
of imperialist reproduction take on particular forms at different stages of
capitalism. We will review the political aspects of this issue, but, in particular, I seek to develop the discussion of the neoliberal mode of knowledge creation for material production. This will allow us to unveil the
actual mechanisms for the reproduction of the economic and political
relations of industrial colonialism.
Since some elements of the process of industrial colonialism work
spontaneously, they appear to be normal factors of societys economic
functioning. This actively conceals critical subjective factors such as the
decisive role that local oligarchies played in the maintenance of domination between countries. From the beginning of the 19th Century, local
oligarchies have prided themselves on the supposed sovereignty they
had secured for their countries. What they actually did some two hun
dredyears ago was to avail themselves for a new form of colonialism.
Classic colonialism, which included economic, social, political and cultural direct domination, made it possible for commercial colonialism to
develop through the 19th Century. This latter form demanded the existence
introduction 3
of formally independent states that would be able to diversify their external economic relations following the changes inside the global economic
center of world hegemony, i.e., Europe. It was thus through commerce,
especially during the last decades of that century, that industrial colonialism would be introduced. This would provide for the functioning of an
underdeveloped capitalism in the region and establish the corresponding
relations of domination.
The local oligarchies identified the abolition of classic colonialism with
the elimination of all colonialism and that is how it became written in our
textbooks. Rather than question the subordinated position of their countries in the world market, they instead conquered strategic spaces for the
management of their own interests. The asymmetrical and subordinated
integration of their countries within the imperialist system did not pose
any problem for them. Indeed, it was in the midst of this system that they
built their economic and political power. There was no reason to embark
on independent ventures.
The possibility existed that these oligarchies might have improved
their lot even more had they proposed to challenge the imperialist system
with a view to creating a more equitable relation with developed countries. Yet, the fact is that they never became committed to the building of
a true nation. Their only open and determined commitment was the
maintenance of the present world order. With all of the disadvantages of
underdevelopment loaded on the backs of the working people, there was
no real reason for their behavior to be any different.
The guiding thread of the arguments that I will put forward in this work
is based on the proposition that imperial domination over underdeveloped countries above all rests upon industrial colonialism. This conclusion was reached after prolonged research that resulted in a book published
in 1986 entitled Reinterpretando el subdesarrollo. Trabajo general, clase y
fuerza productiva en Amrica Latina [Re-interpreting Underdevelopment:
General Labor, Class and Productive Forces in Latin America] (1986). The
present work seeks to further develop the implications of this general line
of reasoning.
Capitalist social relations of production and the division of labor
are key variables to the constructs presented in the present work. Thus,
capitalist development and underdevelopment take on a meaning
directly linked to the division between general (or scientific) labor and
immediate labor. From this perspective, Lenins work is re-examined
and the concept of monopolies is complemented. By so doing, the impact
of capital export on host countries is better revealed with a new
introduction
introduction 5
made to tackle the burning theoretical and practical questions that these
problems pose. I attempt to show that industrial colonialism provides
the most appropriate focus for explaining the causes and manifest forms
of surplus population. With this aim in mind, a brief review of the main
currents of thought on these issues is presented in order to expose their
inconsistencies. This allows us to present our own solutions and analyze
the different forms that the affected sectors of population assume vis vis
capital accumulation. The discussion of the problem begins with general
propositions regarding the situation in urban centers (Chapter 4) and
then moves to the surplus population in the countryside where the
unfolding of the peasant economy is taken as the benchmark (Chapter 5).
Earlier versions of my main arguments have been previously published
in the form of articles in publications such as Problemas del Desarrollo,
Revista Latinoamericana de Economa, Critical Sociology, Aportes and others. This material has been re-arranged, updated and corrected where
deemed necessary.
CHAPTER ONE
chapter one
10
chapter one
12
chapter one
It should be expected that the larger the quantity and the better the
quality of scientific labor, the greater its impact on a countrys interna
tional economic position. An imperialist country contending for world
hegemony will probably be successful if it carries out the best possible
development of its state function. A good articulation of the state with
capitalist activities and the accumulated experience that results from it
are important conditions in that connection. With a view to promoting the
national interest, the state can also allow for foreign capitalists to partici
pate in the development of scientific labor. When that occurs, it becomes
clear that the states view of national interest is not confined to the inter
ests of their own capitalists whose national concerns may be limited.
If control over science-based processes and products is crucial for a
countrys international position, the same is true for enterprises vis--vis
domestic and foreign competitors. Most monopolies have reached their
position thanks to the scientific labor they control. While bearing in mind
that neither the technical mode of production nor its products are consid
ered permanent, we can assert that holding a monopoly position rests
upon the enterprises quality, the mass of scientific labor it exploits, and
the consistency it shows in exploiting it.
Extraordinary profit promotes technological progress. Control of prog
ress allows for enterprises to prolong the period in which they obtain
extraordinary profit. Hence, the efforts made by enterprises to protect the
knowledge and abilities they control is well founded. Monopolies are big
supporters of authentic copyright and industrial secrets. To that extent,
they are also conservative. Normally, the success of other enterprises in
their search for profits poses a threat to the conservative monopoly which
becomes forced to introduce innovations.
To sum up, it can be said that monopolies do not control products and
markets only as a result of the mass of capital under their control. Rather,
it is mainly due to the knowledge and its productive applications which
they control. Apart from monopolies resting on control over exceptional
natural resources, it seems clear that enterprises cannot generally hold on
to a monopoly position indefinitely if they do not have control over cru
cial elements of the knowledge that their product objectifies and/or over
the processes to get that product.
During the first stage of imperialism (18701930), enterprises focused
on the productive applications of knowledge rather than on the direct con
trol over knowledge. Monopoly was in fact large-scale capital more than
anything else. This was the kind of capital required to pursue capitalist
progress at that time (steel industry, international railways networks
and navigation, international telegraph, large ports, and the like). At the
second stage (19301970s), monopolies displaced independent inventors
and became the principal agent of patent registration. From the 1970s
on (the third stage), large companies started internationalization of the
research and development activity itself, especially towards the so-called
emerging countries but also, to a much lesser extent, towards underde
veloped countries.
With the emergence and consolidation of neoliberalism, the role being
played by the various agents of scientific knowledge production and its
applications in production experiences significant change. In particular,
the state function as a coordinator of activities aimed towards innovation
gains relevance compared to its function as a key provider of basic knowl
edge. Science workers dedicated to basic science as well as public univer
sities are divested of part of their ability to determine their own research
agenda. While their traditional links with the states ends are broken, they
are now compelled to evolve in closer relationships with the demands of
private enterprise. Enterprises become vastly empowered in terms of
their ability to determine the content and rhythms of knowledge produc
tion. The new reality of scientific labor related to production is mainly
defined by these fundamental features. The implications of this fact
require careful elaboration.
The idea remains widespread that material development obtained
from the market requires stimuli. Or better still, that these stimuli are the
most adequate way to encourage development. These stimuli are sup
posed to have brought about adjustments within the relationships among
the participants in technological change, concerning both the links exist
ing between them and their relation to knowledge production. Private
enterprise, which has always played a crucial role in technological change,
now becomes an even more influential agent in this process.
Private enterprise has not often been recognized as the key and leading
partner that it has become for the production of knowledge and its appli
cations in material production. It therefore is often found alongside gov
ernment and the sector of the academic-scientific community not directly
concerned with profit-making activities, as is the case, for instance, in
triple-helix type analyses. The point is that the aims of the new institu
tional arrangement are the development of material production and the
acquisition of profit in a context where state action is limited and private
interests have been blown out of proportion.
Given this arrangement, private enterprise would on the one hand
increase its participation in research funding. It in fact grew consistently
14
chapter one
over recent decades although this tendency was halted during first the
decade of 21st century. In the USA, the private enterprise share in R&D
funding was 46.8% in 1977 and it went up to 66.6% in 2007. Inversely, the
states contribution fell from 50.6% to 27.6% during the same period
(Figueroa, 1992; RICYT, 2010).
On the other hand, the fact that governmental and academic commu
nities would now follow guidelines set by private interests was bound to
leave its mark on the larger ends of science. In essence, the aims of science
are always socially conditioned. The deepest level of determination comes
from the core of the social relations of basic production. Within that
framework, the advent of new relations between key social agents also
contributes to re-defining the ends of science.
In our case, neoliberalism brought with it the following implications
for knowledge production:
Research intensified its concentration on the solution of concrete prob
lems within the enterprise, whereby its concern for general, abstract
problems did not become necessarily weaker, but more focused towards
those areas where the probability of successful business activity was
higher.
The notion of interest of capital was diminished. Private profit largely
gets rid of considerations about the common interests of capitalists
or the interests of capitalism per se. In the case of the United States,
the effects of this new ideological arrangement can be appreciated in
the rather sparse attention that government and enterprises have paid
to researching such critical problems as the environment and energy.
This has been true practically throughout the entire neoliberal period.
Such a huge negligence is largely to blame for the extent of the present
conflict between capital and nature as well as for the inability of
the system to even attempt to provide, let alone actually provide, a
response to this contradiction. The same could be said of peak-oil
(Figueroa, 2010).
The state, in turn, does continue to carry out and promote scientific
research. However, its activity in this regard has been reduced relative to
the past and at the same time re-oriented by the conviction that competi
tiveness of both the national economy and of individual entrepreneurs
demands greater attention to those scientific areas that can more imme
diately impact upon productivity. Computers and electronics along with
bio-chemicals and pharmaceuticals became priority areas and in the case
16
chapter one
Generally speaking, the role of the state during the present phase of
capitalism with regard to its development function emphasizes the build
ing of creative links between the scientific community and enterprises,
and to the strengthening of the so-called National Innovation Systems
(NIS). In fact, innovation has become the main concern in studies
of technological change, thus stressing the extremely important aim of
knowledge creation for current capitalism. According to the Organization
for Economic Co-operation and Development (OECD): An innovation is
the implementation of a new or significantly improved product (good or
service), or process, a new marketing method, or practices, workplace
organization or external relations (OECD, 2007: 394). Thus, every phase
of a products life from its conception to its arrival in the consumers
hands can be a particular object of innovation, even if it does not require
the intervention of scientific research or the creation of new products or
processes. An underdeveloped country innovates through the importa
tion of progress, and in so doing it appears to be on the rails of develop
ment. It follows that the relations which the state promotes between
academic communities and entrepreneurs with a view to innovation will
have a different meaning in developed and in underdeveloped countries.
Every NIS includes the inventory of the human and material resources
that participate in innovation processes. The state must not only mobilize
them in pursuit of technological change, but also must continue to pro
vide the general conditions for development in terms of advances of social
constant and variable capitals and the other activities we have men
tioned. The power that private enterprise has won is exercised mainly by
large monopolies, for it is these that concentrate the R&D activities and
spending, and which in turn are geographically concentrated in a limited
number of countries (United States, Japan, England, Germany and
France). The larger power they enjoy has not only an effect inside their
respective economies, but also is bound to result in greater control by
monopolies over underdeveloped economies.
Social Relations of Production and Foreign Trade
In Lenins work, the export of capital is another outstanding feature of
imperialism. This refers to the placement abroad of monetary resources
and the means of production, which is now added to the export of ordi
nary commodities. This is also one of the most important means for the
plunder of backward areas by advanced countries. Lenin thought that the
cause of the export of capital was the search for profit by monopolies. He
put it this way:
As long as capitalism remains what it is, surplus capital will be utilized, not
for the purpose of raising the standard of living of the masses in a given
country, for this would mean a decline in profits for the capitalists, but for
the purpose of increasing profits by exporting capital abroad to the back
ward countries. In these backward countries profits are usually high, for
capital is scarce, the price of land is relatively low, wages are low, and raw
materials are cheap. (1966: 739)
Certainly, Lenin was aware that the destination of capital exports was not
only backward countries but also advanced countries. But this is not
encompassed by the formula he chose. Backward countries may not offer
the adequate conditions for a given production in terms of skilled labor
power or, more generally, the appropriate technological environment
and the adequate market conditions for the realization of the desired
products.
Our concern here is to describe how capital export had a decisive
impact on backward countries, beyond increasing monopoly profit and
providing a stimulus for capitalist world expansion. With regard to the
question of the main actor of imperialism, Lenin adopted Hilferdings
notion of financial capital, i.e., the merging of banks with industry, and
worked out the concept of the financial oligarchy that developed along
with it. Whether or not other forms of big capital and their representa
tions should be included in these concepts is a secondary matter. Lenin
would probably not have objected. The financial oligarchy that emerged
with concentration and monopolies is the principal promoter and benefi
ciary of capital export.
So far, imperialism is open to two sets of relations: a) those taking place
between advanced countries, where financial oligarchies compete
directly between themselves and b) those between these oligarchies and
the backward countries. The former relations stress the analysis of a strug
gle for world hegemony, while the latter leads directly to the problem of
empire or domination. Certainly, domination is also part of the scenario
of struggle for world hegemony.
Monopolies are a product of capitalist development, indeed, a manifes
tation of such development. This process can be thought of as inde
pendent of external relations, at least, as far as a logical explanation is
concerned. H. Magdoff, with every reason, made it clear that: The wish
and necessity to operate at world scale forms part of capitalist economy
and Seen in this way, export of capital, just like external trade, is a normal
18
chapter one
20
chapter one
In England, the repeal of the Corn Laws and the abolition of duties on
other raw materials are outstanding proofs of the hegemony of industrial
capital. In this context, it can be said that industrial capital already
predominated in international trade throughout a large part of the 19th
century and it is well known that exports of the region were mainly
oriented to serving the industrial development of advanced countries.
This hegemony, however, was not directly exercised by the latter over the
region but indirectly through commercial capital and banks. Local states
did not oppose this subordination. What has been called the interna
tional division of labor organized home production to the benefit of capi
talist development in advanced countries and annexed it to them through
commerce. England, a country still very actively involved in classical colo
nialism in other regions, introduced in this way a more advanced form of
domination in Latin America: commercial colonialism. This is the form
of domination that, in the case of this region, corresponds to the period of
free competition and was established precisely in the name of free trade.
During the emergence and consolidation of capitalism in Latin America
(roughly 18601930), large-scale industry was already consolidated in the
developed countries and gave rise to monopolies. Relative surplus value
and productivity and, hence, the constant introduction of innovations
were generalized industrial methods. Latin America witnessed the intro
duction of the second wave of technological changes that had begun in
Europe and the United States. Electrical equipment, telephones, internal
combustion engines, vehicles, and flotation processes were some of the
technological innovations that would arrive over time. At the same time,
Latin America saw how innovations would also end up obliterating the
economic value of some natural resources. For example, this happened
22
chapter one
The Workings of Industrial Colonialism
24
chapter one
circuits. They produce more than they need for accumulation and their
growth takes place partly at the expense of surplus value created beyond
their frontiers, independently of foreign investment. It follows that under
developed countries transfer a part of their own employment generating
ability to developed countries, a topic that will receive the attention it
deserves in a later chapter.
A tendency towards deficit in the trade balance of underdeveloped
countries is also rooted in their specific relations of production, some
thing which requires no explanation at this point. A balance of trade defi
cit, in turn, brings with it a predisposition to indebtedness and openness
towards foreign investment. Remittances of interests and profits are an
inevitable link in this logic. These processes are not the outcome of politi
cal attitudes, although they can be reinforced, as they are in practice, by
political inclinations. Yet we are dealing here with a dynamic that flour
ishes from the deepest structure of underdeveloped capitalism, namely,
from industrial colonialism.
We can therefore affirm that relations with developed countries are
constrained by a chain that begins with a value transference and ends up
with another: investment transference trade deficit indebtedness
openness to foreign investment remittances of interests and profits.
This is a dynamic that proceeds spontaneously, independently of any form
of political domination and which does not require any systematic military
intervention to take place. It is in fact a dynamic that makes possible the
domination of formally independent states even as they become reorga
nized as formal democracies.
Local capitalists see no reason for remorse. They buy progress as they
buy raw materials or anything else. These purchases are seen as a normal
and necessary part of their profit-making activities. Their social function
as business people is guaranteed as they create employment and encour
age other businesses. From the point of their emergence as capitalists,
they found the excuse for ignoring tasks related to the development of the
productive forces in the exports of capital. They were born structurally
tied to the financial oligarchy of developed countries, globalized as we
now say. In this way, their character was established as consumer bour
geoisie as they renounced the economic option of building a truly inte
grated nation. They became a mere appendix of the core countries ruling
classes and it is clear that their socio-economic position does not corre
spond to an international division of labor. Capitalists in a developed
country would not compromise their right to the exploitation of immedi
ate labor.
The state that they built therefore remained incomplete, for the devel
opment function was not organized and the provision of material prog
ress was left in the hands of the international market. As production can
only take place in the context of subordination to developed countries,
the state is inevitably accorded a subsidiary function in the absence of the
development function, namely, the guarantee that the link that makes
accumulation possible will not be broken since this is a condition of eco
nomic growth. Obtaining profits falls into direct conflict with any policy
that seriously threatens that relation.
This means that national expropriations of foreign capital which are
rejected by the financial oligarchy and states of developed countries will
normally mobilize the bourgeois opposition in underdeveloped coun
tries. Local capitalists do not need to be involved in joint ventures with
affected foreign investors to act politically against their own government
since expropriations jeopardize their structural ties.
It should be said that expropriations by themselves cannot fully serve
any national purpose. They signify the appropriation of material resources
by the nation but do not convey the appropriation of the knowledge that
is objectified in such resources and much less the accumulated scientific
ability to produce them. A dramatic example of this could be seen in Chile
during the Popular Unity government of Salvador Allende. Expropriations
formed a crucial element of his national program and were contested by
the United States government by means of an invisible blockade that
brought all of the necessary means and credits for production grinding to
a halt. Industry and indeed most economic activity was severely dam
aged, with the ensuing shortages of supply, inflation and so on. The politi
cal activity of entrepreneurs, strongly financed by Washington, stopped
the forward movement of change and their influence on the armed forces
would do the rest (Figueroa, 1999).
Industrial colonialism therefore contains the social and political fac
tors necessary for its own reproduction, not only outside but also inside
underdeveloped countries. It really surpasses the prior scheme of colonial
possessions since external open military control, already losing its impor
tance during commercial colonialism, is now practically unnecessary
under normal conditions. Political democracy becomes possible, and if it
turns out to become dangerous, imperialists can resort to supporting local
armed forces to whose responsibility they leave the dirty work. If this
scenario breaks down, they still have other methods at their disposal such
as the promotion of wars between countries. Direct imperialist military
intervention always remains an option and the region has come to know
26
chapter one
28
chapter one
productive aims. While science did not emerge with the capitalist mode
of production, it did for the first time place itself massively and systemati
cally at the service of production in a system based on profit. By then,
people could come to see nature as an object of private appropriation, a
property alien to working people who had been set free of all possessions,
except for their labor power. A condition for the exploitation of labor had
in this way been fulfilled. Labor at the disposal of capital includes manual
and mental faculties, immediate and scientific labor.
In this way, nature and the human ability to understand and transform
it are capitalized, for both are now subjugated to capitalist production and
profit-making. Reason, as a productive faculty and nature as a condition
of production are subsumed in capital. In this case, it is not the properly
rational regulation of man and that of nature which orientates human
activity, but rather the exploitation of labor in the search for surplus
value. This is why human abilities can come to pose a threat to nature and
as such, act against humanity itself.
Under different conditions of production oriented to meeting human
needs, science would seek the best possible interchange between human
ity and nature. This is clearly not the case of science when employed for
profit where damage to the environment is a collateral result, regardless
of how outrageous it may be. Imperialism managed to worsen things con
siderably since competition between nations constrained even further
the possibilities of science as a means for an ecologically sustainable
development.
Indeed, it is precisely when attacks are waged against nature that
new reasons arise for inter-imperialist conflicts and the plundering of
underdeveloped countries. This proposition can be readily exemplified
with the case of oil, one of the most universally utilized natural resources
in present-day productive structures. On the one hand, oil is a good that
can be found playing different roles in production: as an object of labor
provided by nature, as a raw material, as an auxiliary material, and as part
of the final product itself after being processed. On the other hand, it is
the base for a large number of industries in providing fuel for automo
biles, airplanes, diesel motors, furnaces and boilers; kerosene for lighting
and heating; the manufacture of pesticides, herbicides and fertilizers;
paraffin for the manufacture of light bulbs and tar paper, vaseline for oint
ments and cosmetics; asphalt for road and wall surfaces; conditioning
materials to wipe and varnish; artificial colorings and perfumes; aspirin,
caffeine; plastics for construction, waterproof materials and covers;
synthetic fibers; manufacture of gums, balls, preservatives, toothpaste,
30
chapter one
32
chapter one
CHAPTER TWO
36
chapter two
but rather those that involve the class relations of society and which mark
a relevant point in history. The explanation of those, as we see it, includes
the following theoretical moments:
a)the rate of profit falls because surplus value drops or because surplus
value cannot increase beyond the point at which the rate of profit
decreases;
b)in either case, the fall occurs because the economic position of labor
relative to capital has improved, weakening capitals ability to extract
surplus value;
c)to overcome the ensuing crisis, it is therefore necessary that the prevailing class correlation be modified.
The change in the capital-labor relation is worked out in three complementary spheres:
1)the spontaneous action of the crisis creates unemployment, intensifies competition among workers, and leads to decreased wages;
2)state action is oriented to augmenting the weakness of labor, at least
until profit has recovered; and
3)since labor becomes stronger in the context of a given technical relation of production, the consolidation of new levels of the exploitation
of labor, by means of higher labor intensity and productivity, demands
a new technical mode of producing, which in turn calls for updated
state development functions.
The crisis is consequently followed by a new wave of technological innovations along with the devaluation of inadequate industrial methods or
their displacement to underdeveloped countries.
The Great Depression of the 1930s included all of these processes:
a) unemployment skyrocketed, poverty and even famine ravaged the
country as misery became generalized; b) a massive destruction of accumulated capitals spread by World War II; c) a more efficient use of science
and its productive applications which gave rise to a technical redesign of
industry, extending the exploitation of existing resources such as oil, steel
and electricity while pushing international communications to a new
level; c) new forms of the organization of labor, notably Fordism, became
consolidated; d) the transfer of some obsolescent industries to underdeveloped countries; e) repression of the labor movement, which continued
after the war along with concessions that would pave the way to a new
social deal on the basis of which the labor movement would initiate its
recovery.
The rate of profit of non-financial corporations in the US fell steadily during the 1960s. It averaged 8.3% during the 19611965 period, declined to
7.7% for 196670, and fell to 5.3% by 1970 (Mandel, 1980: 29). Economic
recession broke out in 196768 and again in 197475, and in these cases
there was no easy recovery for profit. An end to prosperity was by then
affecting all developed countries. For West Germany, the annual growth
rates for the years 195073 was 5.9% and this fell to 1.7% for the 197384
period. In Japan, the corresponding figures were 9.4% down to 3.8%,
while for the US the decline was from 3.7% to 2.3% (Maddison, 1988).
Labor productivity in the US non-farming business sector was also declining from 2.8% in 19471973 to 1.1% in 19731979 (BEA, 2009b).
The policies applied in order to confront this crisis would depart from
the earlier trajectory and this partially helps explain the specific course of
events that took place during the third stage of imperialism. The strategy
that was adopted and eventually dubbed globalization (though to be
more precise we should say neoliberal globalization) was designed to
cover three basic lines of action: a) labor flexibilization; b) liberalization;
and c) financialization. These three component parts demanded greater
deregulation and an active retreat of the states direct intervention within
key areas of the economy. By active retreat, we mean to emphasize the
states own reorganization as an economic and political agent. We will
review the course of this strategy across two historical moments, namely,
from the 1970s to the middle of the 1990s, and from the mid-1990s to the
present.
Labor flexibility became the key element of the shifting strategy. It
included wage flexibility (greater empowerment of management to fix
wage rates for different categories of employees), occupational flexibility
(number of workers, freedom to introduce or define shifts), functional
flexibility (mobility in the labor process), and organizational flexibility
(outsourcing). Together, these measures of labor flexibility were designed
to put an end to the old and now problematic social contract that prevailed during Keynesianism. Strong trade unions made it difficult for
wages to be decreased and their demands for full employment hindered
the introduction of innovations and the growth of productivity. The deep
recession of 19741975 would hardly weaken the labor movement.
Unemployment rose from 4.9% in 1973 to 8.5% in 1975 (BLS, 2009) and
average weekly earnings fell from $331.59 in 1973 to $305.16 in 1975 (figures
in 1982 constant dollars).
38
chapter two
While the crisis was beginning to shift the advantage towards capital,
this alone would not suffice. In describing the general situation of the
labor movement, David Moberg pointed out:
The working class has been on the defensive for most of the 1970s. At the
beginning of the 1980s, it is hardly able even to perform an acceptable
defense. Entrepreneurs almost everywhere are demanding that unions
accept lower earnings, lesser protection of living standards, benefits reductions and a drastic revision of the limited control on labor conditions
(Moberg, 1984: 63).
Relations between the Democratic Party and the labor movement had
deteriorated but it would be Ronald Reagan who manages to fully satisfy
the entrepreneurial demands for comprehensive labor flexibilization.
The repression of PATCO (the air traffic controllers union) in August 1981
during the first year of this government was a clear signal of the Reagan
Administrations attitude toward the labor movement. From then on,
organized labors debilitation would only accelerate. In 1970, 26% of US
workers were affiliated with a union while by 1990, unionized workers
accounted for only 16% of the total. While these figures are disputed by
some, it was abundantly clear that power had shifted to the side of management during this period.
Unemployment would remain at high levels during the 1980s, peaking
in 1982 (9.7%) and 1983 (9.6%), creating the structural conditions for new
aggressions against labor. Campaigns against unions multiplied, employers were now firing workers illegally and reinstating some of them only
with lower pay. Managers could now replace workers on strike, collective
bargaining was restructured and practically abandoned, lifetime job security tended towards virtual extinction, and temporary work was extended.
Subcontracting and the hiring of casuals became common practice as the
state cut back job training programs for the unemployed and moved more
generally to dismantle the social safety net. The deregulation of labor relations took place in spite of existing legal arrangements under the auspices
of labor authorities imposed by Reagan. The situation was the pure and
simple product of the exercise of political power which systematically
deactivated the legally recognized concessions that had been previously
obtained by the labor movement. In summary, a new correlation of forces
between capital and labor had been struck.
As one would expect, average real weekly wages fell throughout the
1980s from $298.87 dollars in 1979 to $267.27 in 1989 and would continue
to fall until 1995 where it reached $258.43 (in 1982 constant dollars). This
implied value transfers from labor to capital and a deepening of the
unequal income distribution. The reduction of wages relative to surplus
value (relative wages) was one of the most important methods of extracting new profits. It was likewise clear that an increasingly weakened labor
movement was in no position to oppose the intensification of labor or the
extension of the working-day.
As far as most workers are concerned, the so-called welfare state came
to an end during this period. This type of state had represented the most
amicable manner of treatment that capitalism had ever been able to offer
the US labor movement. Out of the two main methods used to deal with
workers, concession had prevailed over repression. Formerly, workers
enjoyed relative job security, steadily improving earnings, and access to
education, health care and housing, all of which created generally positive expectations about their quality of life. The Keynesian emphasis on
consumption ultimately had facilitated this development and just as the
Great Depression came to discredit liberal policies, the crisis that began at
the end of the 1960s would come to disqualify Keynesianism.
By 1970, systemic liberalization was under way. Ever since the Bretton
Woods Agreement of 1944, the dollar had been the only currency directly
convertible into gold. The fixed parity ($35 an ounce) had been sustained
for a long period independently of developments in the real economy.
Since the US dollar was vastly overrated, Washington took advantage in
terms of its purchases abroad (including gold purchases) and this facilitated the international expansion of US-based corporations. This same
industrial expansion abroad brought along with it additional problems
with respect to the balance of payments. Early in the 1960s, the government introduced new measures oriented towards discouraging investments and loans abroad. This meant that the international monetary
system created in the 1940s was now effectively putting a damper on the
growth of transnational corporations. Non-financial corporations worked
out their own path by relying on affiliates of US banks operating in foreign
countries. According to Lichtensztejn and Bauer:
These affiliates were in a position to make international loans to US corporations overcoming in this way internal credit restrictions imposed by their
government to mitigate the effect of external loans on the balance of payments, already deficit running as a result of the Viet Nam War. Although in
1969, the USA imposed a minimum reserve for credits taken in international
markets, it did not prevent these credits from continually expanding and
gradually provoking a substantial alteration of interest rates and of reserve
distribution between countries (1987: 4142).
40
chapter two
Thus, during the 1970s, the barriers to large international capital growth
fell one after another.
As for the international trade of goods and services, the US adopted
free trade as a motto for directing its external relations. The assumption
was that corporations involved in international trade are more productive, create more jobs and pay better wages and for these reasons this
would allow for a better provision of goods and services to domestic
industry. This policy would damage those industries lacking competitivestrength, but this was seen as a temporary situation since competition would push industries in this situation to innovate and improve
their market positions. Additionally, keeping the dollar exchange rate
high would reinforce competition as stimulus for domestic industries to
innovate.
In 1979, the Buy American Act of 1933 that had been designed to
enhance consumption of internally produced goods was repealed. It was
replaced by the Trade Agreement Act that decisively expanded the range
of products that could be purchased abroad. In addition, the US government was now strongly pressuring for the elimination of barriers to investment in other countries. This would allow US-based corporations to
expand internationally and avail themselves of cost advantages that
abounded in lower wage countries. To that extent, Washingtons strategy
also sought to create conditions for US corporations to enable higher
profits on the basis of higher surplus value rates. The foreign production
by affiliates that was expected to be consumed in the US domestic market
would improve the competitive position of corporations, reduce costs
and put a check on inflation.
Up to this point, the overall strategy seemed to rest heavily on two conditions: increased levels of labor exploitation and the liberalization of
market forces. Yet, both conditions together were insufficient to confront
the crisis. In reality, an active state development function was also necessary. This needed to be aimed at pursuing technological development and
spreading it through the economy in order to further enhance existing
productive forces, which in turn could guarantee productivity growth and
stabilize higher levels of labor exploitation. This is exactly what the state
set out to do.
The most significant indicator of state involvement in development
can be found in its investment in science and technology. Total Research
and Development (R&D) expenditures remained relatively stable as a
percentage of GDP between 1970 (2.7%) and 1988 (2.6%). In 1977, 50.6% of
these investment totals came from public funding while 46.8% originated
in the private sector, with the remaining 3.6% coming from other sources.
In 1988, this distribution changed. Public expenditure was now at 48%
and private investment reached 47.9%, leaving other sources at 4.1%. In
short, the state was beginning to cut back on its contribution to R&D in
relative terms while the private sector was increasing its share. Yet, the
origin of funding is not as significant as the shifting distribution of expenditures according to where it was aimed. It is there that the data proves to
be more impressive:
1976
1982
14.8
1.9
1.5
9.6
2.9
0.5
1.1
1.3
3.8
0.6
49.6
6.7
2.6
0.4
6.7
2.3
0.3
0.9
0.5
3.9
64.3
42
chapter two
Several relevant issues are highlighted by this data. First, the expenditure in agricultural research increased, linking it to the productivity
growth in this activity that remained one of the best within the economy
as a whole. Second, the R&D resources aimed at industrial development
fell in 1982 to a little more than one-fourth of that which was being allocated in 1976. The decline was not only in percentage terms but also in
absolute terms. In 1982, less than a half of the funds allocated in 1976
was allocated for this purpose. Indeed, research funding for industry
would not recover its relative levels of 1976 during the three succeeding
presidential administrations that followed Reagan. Productivity in the
manufacturing sector grew by just 1.8% during the 19871990 period and
climbed to 3.5% in 19901995, reflecting increases that would concentrate
on information technologies (IT) and some services. Third, research on
essential services was cut back, reflecting the overall state retreat from
important areas of social life. The same was true for the environment.
Fourth, most of what was cut back from research for economic development was oriented to defense activities.
Clearly, concern for defense does not interfere with the liberal doctrine
of imperialist countries, but the issue contains a highly relevant implication. Neoliberals had consciously calculated that the struggle for world
hegemony would be more a matter of political and military force than one
of economic competition. Their emphasis on the arms race in the context
of Cold War and later the Gulf War and various other military campaigns
since further supports arguments in this direction.
The mere reproduction of the material forces of production in the
United States had been neglected well before the Reagan Administration.
Social advancement of constant capital had been steadily reduced in earlier decades, decisively damaging the overall conditions of production. As
P.G. Peterson (1988) points out in an excellent work, real dedicated investment in roads, bridges, and public transportation had by 1988 sunk by
75% over the preceding decades and that a large part of infrastructure
was deteriorating much more quickly than it was being replaced. Peterson
shows that the US did not have a new generation of technologies available
for infrastructure, such as high-speed trains and underwater tunnels, precisely because it had decided not to pay for it.
This same logic held true in terms of social advancements for variable
capital. The situation in education had already become the butt of
commentary worldwide. In Mexico, one 1991 commentator in the journal
El Financiero put it this way:
In turn, other developed countries in Europe and Asia did not relax their
efforts to pursue economic development during the 1980s. This is shown
by their investments in R&D, see table 2.2 below.
Between 19731984, the increases in productivity of these countries
were as follows: West Germany 3.0%; France 3.4%; Japan 3.2%; Great
Britain 2.4%, all of which were far below the gains during the period
195073. In the US, the rate of productivity growth was the lowest: only 1%
for the same 19731984 period. The simple fact that the other countries
allocated a larger proportion of investment to R&D contributed to their
economic development and coincided with their higher productivity
performance.
It can be seen that the free-trade policies being adopted by Washington
were not being backed by a state development function that such policies
Table 2.2.R&D Funding in Selected European Countries and Japan
(% GDP).
Objectives*
W. Germany
(1987)
France
(1980)
G. Britain
(1986)
Japan
(1986)
I.
II.
III.
IV.
V.
VI.
VII.
VIII.
IX.
X.
XI.
XII.
7.1
2.2
12.8
7.2
0.6
2.8
2.4
3.1
46.9
1.7
13.2
9.2
3.9
9.3
7.5
2.7
4.2
1.3
1.1
22.2
1.8
36.5
4.4
4.3
9.7
4.1
4.1
2.8
1.1
20.0
0.3
49.2
12.8
20.1
10.8
32.1
2.5
4.6
1.3
2.5
3.3
8.0
8.0
44
chapter two
1987
Country
Exports
Imports
Exports
Imports
USA
Canada
Japan
France
(West)
Germany
Italy
G. Britain
13.9
3.6
6.0
6.4
8.7
11.9
4.2
7.4
5.9
10.7
10.8
4.2
9.8
6.3
12.5
17.5
3.8
6.2
6.5
9.4
4.4
5.6
4.3
5.4
5.0
5.6
5.2
6.4
46
chapter two
over to money capital. This implies that acquiring interest becomes more
relevant than achieving productive profits and accrued income is mostly
captured by the financial sector rather than by the real economy.
Speculation has been an omnipresent phenomenon throughout the
third stage of imperialism. As such, it is a practice arising from the autonomy that money capital can enjoy. The money capitalist sector certainly
did support some of the key changes that inaugurated the new period,
such as the new exchange system created by the Nixon Administration.
But since most of the effects of speculation on production are destructive,
speculative practices are neither a condition nor a sought-after result of
globalization.
As we have already suggested, the facilities offered to money capital
were key to the transnational corporate expansion of the 1960s as well as
to the conception of the new world order that followed in the wake of the
crisis of Keynesianism as favored by the monopolies. Working through
their affiliates, banks broke through the prevailing regulations and made
it possible for enterprises to expand abroad. The cross-border expansion
of non-financial corporations in turn created new demand for financial
services abroad. As improved information and telecommunications technologies helped the financial corporations extend their presence across
the globe, these corporations were instrumental in defining the path of
technological change that would in turn become concentrated in information technologies and services.
Global financial services skyrocketed in volume as their weight in
international transactions grew relative to goods trade. Interest clearly
became a more important source of income than productive profits. Yet,
there was still another aspect to financialization as far as the economic
operation of the economy was concerned. Since the globalization strategy
implied a systematic current account deficit, it led to an endemic dependency on foreign surpluses in order to finance the domestic shortfall in
payments. For a country whose currency is the standard for all foreign
currencies, this should not have posed such a big problem. This was especially true if current deficits are considered a temporary evil that must
stop after the adjustment of domestic industry has taken place. The dollars advantageous position allowed the US to contract debt in its own
currency, which is precisely what it did by a variety of means.
Foreign governments and the private sector retained access to many
kinds of liabilities and assets, both public and private, and all of them
remained dollar denominated. This inevitably implied a degree of
de-nationalization in order to perfect the evolving order in view of the
48
chapter two
The consolidation of the USSR and, therefore, the existence of an alternative to private capital were contributory factors to the generalization of
concessions to workers and led to the social arrangement that would
characterize post-World War II capitalism. The theoretical approach put
forward by Keynes with its emphasis on demand and consumption would
provide a suitable ideology for the new pattern of capital accumulation.
The crisis that unfolded towards the end of the 1960s heralded the
Keynesian period depletion. It was the Keynesian paradigm that collapsed
at the time as large private capital prepared to withdraw its concessions
and dismantle the complicated regulating system that prevailed.
From 1995 Forward
The economic policy regarding the creation of technological progress
remained almost unchanged in subsequent years. Research within industrial technology was assigned only 0.2% of total R&D expenditure in 1990,
0.3% in 19911994, and about 0.6% in 19952000 when it reached just over
one-third of its 1976 share. Energy continued to fall, from 4.5% in 1991 to
1.5% of the total in 2000. Although investment for research in defense
steadily reduced its share to 53.2% in 2000, it remained over the 1976 level
in relative terms. Research on health largely benefited from this new distribution of the R&D investment, reaching 20.9% of the total in 2000
(RICYT, 2009).
For its part, labor productivity evolved in a rather anemic fashion. In
1995, it was at 0%; increasing to 2.5% in 1996, 1.5% in 1997, 2.0% in 1998,
2.5% in 1999, and 2.3% in the year 2000. Information technology was the
leading sector that made the largest positive contribution to productivity
changes because of both its impact on computer related business and on
the rest of the economy. This can be better appreciated by referring to the
following comparison: whereas one hour labor product in the whole manufacturing sector grew by 45% between 1990 and 2000, it increased by
426% in computer and electronic products (Houseman, 2006).
Investment information technology (IT) grew very quickly and was
supported by speculation. The way in which these technologies affected
productivity was diverse and included a broad array of activities ranging
from product design to marketing (Stiroh, 2002) and they could even have
an impact on labor organization (Lynch, 2007). For most sectors, however, these technologies did not modify the direct relation between labor
and the means of production, except in those cases where they assisted in
50
chapter two
latter now netted 48.5%. The richest 5% of the population raised its share
from 14.6% to 21.8% during the same period. It can be observed that this
trend was constrained in certain periods such as between 1994 and 2000
when the lowest quintile share improved slightly from 4.1% to 4.3% (US
Census Bureau, 2009).
A similar trend was registered for the overall share of wages. According
to estimates by Buchele and Cristiansen, the labor share in total income
that was tantamount to 71% at the beginning of the 1970s had fallen by 10
percentage points by 2005. But this was not a linear downward trend. It
deviated, for example, in 1995 when the average weekly earnings at US$182
went up in constant dollars to US$259.38 in 1996; up again to US$265.22 in
1997; to US$271.87 in 1998; to US$274.64 in 1999 and slightly higher to
US$275.62 in 2000 (LRA, 2009). In 1997, the labor cost unit in the nonfinancial sectors gross real value added started to rise steadily until 2001,
while the profit unit fell similarly. Productivity stopped growing faster
than wages as the inverse relation was built up. The Commission for Labor
Cooperation (CCL), created by the three members of the North American
Free Trade Agreement (United States, Canada and Mexico) stated: In
turn, real wages recovered: they increased slightly more rapidly than productivity(CCL, 2003: 156), this in spite of the fact that productivity continued to rise after 1996.
Due to the fact that the largest productivity gains only favored the most
technologically advanced sectors, the rate of unemployment started to
retreat. In January 1994, it was at 6.6% and by the same month of 2000, it
had fallen to 4% and in the last trimester of the same year, it was at 3.9%
(BLS, 2009). In other words, regardless of labors weakness in terms of
organization, its objective position in terms of employment levels
improved. This was the main reason why the mechanism that allowed the
nonfinancial sector to obtain profits from the distribution of income
would stop working. One of the pillars of the neoliberal strategy was effectively collapsing.
The context for the rate of profit to begin to fall had now been built.
Dumenil and Levy (2004) using a methodology of their own determined
that this fall took place from 19971998 for nonfinancial corporations. The
Bureau of Economic Analysis, in turn, registered a fall of the total mass of
profit of those corporations from US$544.1 billion to US$487.5 billion
between 1998 and 2000. This is a much more sensitive indicator for capitalist corporations. In general, if the mass of profit falls, the rate will fall,
unless the position of labor is seriously degraded, something that did not
in fact happen during the second half of the 1990s.
52
chapter two
Thus, we can see that all of the basic conditions for economic crisis
were operating and that crisis soon would break out. Private gross domestic investment reduced its rate of growth from 12.4% in 1997 to 5.7%.
In2000, it slumped to -2.6%. Foreign direct investment also collapsed in
2002. The GDP grew by just 0.8% in 2001 and 1.6% in 2002. Unemployment
increased, soon reaching 5.7% in 2007. The crisis was now beginning
tounfold.
A durable solution to this economic convulsion would have demanded
a profound transformation of the technical mode of producing with an
eye to obtaining internally-generated increases in productivity, consolidating high levels of unemployment and improving the economys
competitive position within the international market. However, the government opted for an intensification of its globalization strategy, stressing
family and enterprise indebtedness whereby it expected to enhance the
domestic market. In other words, it settled on future value creation to
pursue economic growth. Interest rates would be down to near-zero. This
in turn was the perfect context for a new step forward in financialization
and the growth of financial capital which was ready to extend its reach on
the basis of new financial instruments.
New advances in deregulation would help financial capital to further
expand and strengthen its autonomy. Speculation was given a new freedom to proliferate and in the short term, there were not many readily
available alternatives. The government had relaxed the state development function and it did not have the means to boost a new wave of technological change. Moreover, it lacked the necessary ideological basis to do
anything else.
The results are now well known. The rate of labor productivity went
from 2.8% in 20022004 to 1.4% in 2005, to 0.9% in 2006, slightly recovering in 2007 (1.3%) (OECD, 2009). Unemployment fell to 4.5% in 2006 and
the workers improved their share in income. Their participation in
national income went from 63.9% to 64.4% from 2006 to 2007 and even
though it did not reach its 2001 level, it tended to improve. The balance
oftrade duplicated its deficit between 2000 and 2006. Oil prices skyrocketed, stimulated in part by speculation, while Chinas export prices
increased between 2006 and 2007 as a result of changes in domestic
wages and a certain valuation of the Yuan. The US domestic fixed private
investment, which was only able to grow 1.9% in 2006, collapsed in 2007
(-3.1%). A new and tougher series of economic convulsions now served as
a cruel reminder that the deepest economic difficulties had still not been
dealt with.
54
chapter two
The reduction of emissions demands an improvement in energy efficiency and clean technologies in the energy, heating and transport sectors. Nonetheless, it is possible that fossil fuels will continue to represent
more than 50% of the world energy supply by 2050. Carbon will be still an
important component of the energy mix, as it is necessary to encourage
the capture and storage of carbon. Equally necessary is the reduction of
emissions from deforestation and agricultural and industrial processes.
State action is unavoidable in a large variety of tasks to confront climate
change, with the regulation of carbon prices, the promotion of energy
efficiency and international agreements being prominent among them
(Stern, 2006).
The Stern Report defines climate change as the greatest market failure
the world has ever seen, which could be read as a desperate call to reason
amidst world economic affairs. In reality, the report fails to critique the
capitalist logic that unceasingly pushes towards an irrational relation of
man to nature. It does however manage to at least condemn the ultraneoliberal approach that has dominated world relations over the last few
decades.
It is not easy to imagine that something could be produced without
increasing production costs with higher water or electricity prices, even if
we do not consider agriculture, estates, insurance and many other prices.
Both constant and variable portions of capital are certain to increase their
prices.
Concern regarding the effects of global warming has been spurred by
the current strategic circumstances of oil, a resource that has been the
foundation for a long period of capitalist development, regardless of its
necessarily cyclical course. The general conviction is that the greater part
of easy-to-exploit oilfields has reached its peak and that production is
becoming displaced from conventional sites to harder-to-exploit deposits. Non-conventional oil, apart from being more contaminating, demands
more water and energy to be processed and it is more costly. Certainly, oil
prices are also determined by shifting demand that further explains price
oscillations, but any rate of economic growth under the present conditions would ultimately raise prices.
The capitalist search for alternative energy sources has itself created
new contradictions as in the case of agriculture. Bio-energetic products
have expanded at the expense of a food production that is already affected
by climate change. The so-called food crisis is in part the result of this
changing emphasis in agricultural production. In addition, bio-energy
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CHAPTER THREE
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noted that this law only applies to already functioning capital within relatively stable market conditions. The law explains the behavior of those
enterprises that faced the process of economic liberalization by improving labor performance through means other than the incorporation of
new technology. This was the case, according to ECLAC, of much of big
capital:
However, most sectors of industry achieved their labor productivity
advances without significant new investments and with a fall in employment. On the whole it seems that changes related to job organization and to
un-embodied technology are taking place, that is, changes not directly
linked to the incorporation of new capital goods, although they lead to complementary investments. (ECLAC, 1996: 101)
The same situation was observed by ECLAC concerning enterprises controlled by foreign capital:
Effectively, in spite of the fact that transnational companies enjoy important advantages in order to achieve their restructuring as compared with
national enterprises such as access to international markets, greater financing and modern technologies, their efforts aimed at gaining competitiveness are limited both by the restriction of their present plant and their
corporate globalization strategy. The majority of foreign enterprise attention has been dedicated to reducing their variable costs, rationalizing their
production and introducing soft technologies without engaging in investments oriented at renewing and modernizing their production equipment.
(ECLAC, 1994: 36)
The globalization strategy of corporations is not very useful as an explanation of this phenomenon, given that the same practice is carried out by
local enterprises which lack any globalization projects. In both cases,
profit is the determining factor underlying company strategies to adapt to
export-oriented growth. The low value of labor power prevents firms from
introducing costly new technologies. As a secondary effect, this reinforces
the tendency for Latin American labor power to remain poorly skilled.
So far we have drawn attention to economic barriers that prevent
underdeveloped countries from appropriating current technological
innovations. These barriers, in turn, should effectively encourage the
organization of general labor in the region with a view to developing local
abilities in order to create progress. However, two ideological obstacles
oppose such a course of events.
The first is a permanent one that has to do with a number of notions
that underdeveloped capitalists employ when it comes to business matters. They believe that foreign technology is better by definition, since
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The number of authorized patents per resident of the region is very low
compared to the number granted to non-residents: 16.33% against
83.66% in 2007. During that same year, residents applied for 2.39 patents for every 100,000 inhabitants while in the United States, the same
indicator for applications was 80.02.
Most of basic research takes place in isolation from its potential productive applications. There are fully documented cases of scientific findings
by local scientists that are productively exploited by transnational corporations subsequent to their publication (Figueroa Delgado, 2006).
It was only by the middle of the last century that some efforts toward the
construction of local abilities for the operation of some industries began
to take place in the region. By then, institutions created for the promotion
of science and technology came to join the sparsely supported academic
science that was concentrated in universities. Some large public enterprises, particularly those belonging to sectors that governments defined
as strategic, in addition to national defense, together with some private
enterprises, organized small research and engineering departments. In
addition, affiliates of transnational corporations were by then establishing their own research facilities.
About 80% of total spending in R&D was paid for by the state. At that
time, a certain nationalistic spirit and a desire to reach a certain degree of
technological independence was palpable in the region. Some local industries were given special attention, such as oil in Mexico and aeronautics in
Brazil. Yet, the adaptive purposes generally prevailed.
The Inter-American Development Bank (IDB) has intermittently carried out activity to strengthen scientific labor in the region. From the
beginnings of the 1960s it promoted the growth of physical infrastructure,
increasing the skills of scientific labor power and the expansion of funding sources for the development of science. Its so-called assistance to the
region has been changing over the years according to the evolution of the
prevailing economic models in developed countries, especially the United
States. However, it was not until 2000 that it elaborated a coherent set of
propositions that acquiesced to neoliberal policies.
The IDB premise for its science and technology support policy in
the region is put bluntly: Economic globalization and the world technology revolution, especially in telecommunications and information
technologies, define the context in which all countries will have to perform, and make technology even more important than in the past
(IDB 2001: 1).
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Certainly, the IDB policies do not aim to improve the regions position in
the world market. On the contrary, no matter what the Bank intends, its
policies inevitably lead to strengthening the regions subordinated place
in the global economy. Latin America evolves by importing technological
progress and practically produces no real innovations other than those
required for the adaptation of imported goods and processes to local conditions. This is the normal practice of industrially colonized countries and
the perpetuation of this practice is fundamental to the perpetuation of
their condition. At the other pole, developed countries and transnational
corporations benefit from the extension and strengthening of their control over scientific labor and its products that are implied by the IDB policies toward the region. Dependence on external progress can only get
worse by extending the regions commercial opening and expanding the
facilities for the importation of technologies from developed countries.
The concept of innovation as defined by the Organization for Economic
Co-operation and Development (OECD) is rather lax. It refers to the
implementation of new or improved processes, goods, services, or
marketing methods, which can include or exclude any of the above, such
as the invention of goods and processes. Therefore, it is only logical
that the region be able to produce innovations based on imports. The
resulting concept of the national innovation system will be equally lax
and it can be found operating throughout the region with little regard to
the enormous differences existing between the different categories of
countries.
We have already noted some of the characteristics of the regions NIS
and have shown how it does not even promote a more active globalization of the R&D activities of transnational corporations in the region,
something which could result in an expansion of inventions in Latin
America. The UN Conference on Trade and Development (UNCTAD) has
discovered why:
Innovative R&D here refers to activities related to inventions. The indicated conditions are to be found in developed countries and the so-called
emerging countries. The situation prevailing in Latin America corresponds to underdevelopment and to adaptive innovation, related to the
mass production of a good or service, or to the setting up of an already
invented process. And it focuses on the habilitation of imported technologies according to local conditions.
Perhaps it might be thought that international organisms are interested in Latin American governments being involved in policies that
might facilitate a transition from adaptive to innovative activities. This
would be tantamount to saying that these organisms would like to see the
region committed to tasks that would allow it to overcome underdevelopment. Clearly, this has not been the case. It should suffice to recall the IDB
policies that reject this sort of idea. But the problem goes much further. In
the context already described for R&D policies towards the region, the
most emphasized measures refer to:
(1) Support for research and development according to market signals,
that is, according to the specific demands from enterprise. Generally,
these demands fall within the routes of technological innovation defined
by transnational corporations and the governments of developed countries. It is not by coincidence that the US government and the IDB have
coincided on the importance of the new economy technologies. Local
state support for the expansion of these industries in the region is at the
same time a subsidy for them and for those local industries which import
progress. In addition, we can see that when R&D is involved, there is not
much difference if the point is the creation of new technology or its adaptation, for in both instances the scientific labor of transnationals is better
qualified and equipped to carry out the tasks involved. It is not that local
scientists lack any ability to participate in research activities, or even that
they could not come to accomplish leading roles. The point is that generally they play a secondary and subordinated role. Henning Jensen
Pennington, a well-known scholar of the regions scientific processes,
points out that scientific collaboration with developed countries takes
place on the foundations of a very unequal division of tasks:
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Generally, scientists from developing countries participate during the operational phases of joint projects, but they are not equally involved in other
phases such as the definition of theoretical and methodological tools, the
discussion and analysis of results and the drafting and publication of results.
These scientific workers tend to become more involved in data collection
activities which is a very limited participation, one which will not necessarily foster local capacities (Jensen, 2007).
This is the situation that predominates and Jensen warns of the danger of
scientific colonialism that academic collaboration under such conditions conveys. Indeed, he fully describes the operation of an active scientific colonialism. Speaking from his vantage point at the University of
Costa Rica, he seemingly articulates the view of an anti-colonialist struggle that includes the basis of a political platform which demands:
An equitable participation in project design.
A shared use of information.
A joint application of results.
An equitable distribution of benefits.
Participation of local scientists in border projects.
This is certainly a rather academic platform, with no considerations
toward the larger economic and social implications. Scientific colonialism is merely an expression of industrial colonialism and imperialism
that does not rest principally on the academic communities of either
developed or underdeveloped countries but rather on Latin American oligarchies and their states. What we face is not merely a problem based
upon the relations among academic communities, no matter how desirable an egalitarian practice would be, but rather a problem of the domination of one category of countries by the other.
(2) Protection of copyrights. The greater the awareness of the importance
scientific labor has for material production, the stronger the defense
of copyrights. Given that the production of new processes, goods and
services and innovations in general is concentrated in developed countries and transnational corporations, copyright protection is a typical
imperialist demand. In the context of large companies and their
R&D departments, the recognition of property rights for the company
moreover constitutes a direct expropriation from the workers who created the given innovation, an appropriation by the company of the workers mental capacities at a given point in time. The same happens
when corporations take advantage of their control over production
and market facilities and productively exploit the scientific findings of
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network agents who look after a variety of interests concerning feasible
knowledge, among which entrepreneurs, engineers, and financiers play the
most relevant role () These network dynamics reinforce the core countries leadership not only due to the academic excellence of their scientists
but also because of the close links between enterprises and labs. Therefore,
Latin American academic research is pushed to a two-fold peripheral status:
one related to its relatively marginal position within the international scientific community, and the other concerning its capacity to integrate into the
application context that international capital has defined for innovation
and production (Vaccarezza, 1998).
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(3) To train the cadres required for the economic, social, political and cultural leadership of a country. On this point the World Bank is much more
accurate where it states: Institutions of higher education have the main
responsibility for equipping individuals with the advanced knowledge
and skills required for positions of responsibility in government, business,
and the professions (1995: 23). Most of these cadres do not rise to the
position of society leaders as a direct product of higher education. Rather,
they generally require further developing and proving of their respective
competencies. In a context of relative ideological openness, the university
gives them not only professional qualifications, but also a perspective on
universality and change which is necessary to create forward looking
approaches and strategies. The university itself is a space for permanent
discussion of possible alternative courses for the future of society as well
as the causes of its periodic convulsions and constant uncertainty.
(4) The production of ideology to support the legitimacy of ruling institutions and practices. Included here is all critical thinking oriented to the
improvement of domination. For its part, radical, anti-capitalist criticism
is not recognized by capital as a university function, but the state tolerates
it out of respect for a sense of plurality and universality that institutions of
higher learning cultivate. Moreover, the radical thought is tolerated since
the liberal state is the strongest and most appropriate model for a society
immersed in class contradictions. The university as a producer of ideas is
a fundamental institution for the smooth advance of capitalism and its
democracy. Totalitarian regimes remind us that from time to time, capitalism feels the necessity to rid itself of criticism (even if it is not radical)
to ensure a smooth and felicitous working of society. In these cases, social
stability rests directly upon the use of force and not on reason. This is
when the totalitarian regime becomes an outstanding expression of social
problems and amounts to an open confession that it cannot do without
violence. For this reason totalitarian regimes tend to be temporary and, in
general, undesirable solutions to capitalist conflicts.
The Latin American university does not accomplish the first of the four
functions indicated above. This is due to the fact that local oligarchies
never perceived the necessity of an institution dedicated to the promotion of technological development. Local capitalists were educated in the
midst of the world market and derived their specific mode of producing
from this practice, i.e., by depending upon externally created progress.
The university was organized in isolation from the technological needs of
local capitalists. This fact is crucial to the understanding of the evolution
of the regions systems of higher education. The university essentially
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nevertheless insisted on a number of actions designed to integrate universities into the systems of innovation and this has resulted in some transformations that have changed their relation to society. It is this point that
deserves some attention.
It has been perceived by policy-making institutions that one of the
most complex and difficult tasks for the regions universities is to learn
how to collaborate with the private sector (IDB, 2000: 26). With a view to
tackling this task, many governments have been building new relations
with universities with the expectation of bringing about a significant
restructuring. Certainly, the increase in public financing would not be a
device envisaged to support a relevant transformation of these institutions. In reality, a decrease in financing would.
In spite of the fact that universities notably increased the number of
students matriculated, budgets for higher education remained largely
unchanged (under 0.9% of GDP) throughout recent decades. The majority of governments displayed no intentions of substantially increasing
their support for education. In this context, if the aim was to introduce
changes in university practice, the budgets should have been reorganized
in order to mobilize the most determinant agent of academic practice in
the desired direction, that is, to orient the practices of academic staff.
Monetary incentives are probably the most efficient method easily available to reorient academic activities. This is precisely why the income of
academic staff was restructured and a part of it was linked to productivity
goals in terms of publications, inventions, innovations in general, number
of graduates and other criteria, at least in those countries that enroll the
largest number of students in the region (Brazil, Mexico, Argentina,
Venezuela, Chile and Uruguay). At the same time, wage increases through
collective bargaining were frozen.
Productivity assessment to decide the level of economic compensation
has taken place mainly on the basis of quantitative criteria with scarce
application of qualitative judgments. Such a scheme promoted an expansion of theoretically and practically non- relevant work as opposed to the
construction of paradigms and efforts oriented to arrive at knowledge
that could be translated into the production of goods and services. Social
research, which in the region used to focus on general and politically relevant issues, is now compelled to concentrate on case studies supported
by officially accepted or tolerated theoretical frameworks and which
rarely goes beyond the level of social mapping and description.
Likewise, the so-called competitive funding program was established
with a view to promoting improvement of academic quality on the basis
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cases, a management function has been recognized as a regular task burden within the overall stimulus program. It follows that the work allocated to the other functions should be reduced, but all these changes take
place in a context where productivity demands in research and teaching
have become much more intense.
The budgetary squeeze was also aimed to mobilize institutions of
higher learning to search for their own financing resources. On the one
hand, seeking funds should have led universities to the exploration of
new links with society, especially with the larger income sector of society
within which entrepreneurs are prominent. The relation between universities and enterprises would thus come to satisfy mutual needs. Yet, on
the other hand, since these relations have not produced the sought after
results, universities are still being forced to try alternatives other than the
commodification of academic work for the benefit of enterprises. For
many institutions, the introduction of tuition fees would come to alleviate their budgetary crunch. In this manner, the growth of private universities would come to put an end to free higher education throughout much
of Latin America. Indeed, the privatization of universities has taken place
under state control and guidance. So much so that it could be readily said
that the decomposition of public higher education was a definite aim of
the state.
None of these fundamental transformations have helped the university
to improve the accomplishment of the second function indicated above,
that is, the provision of a labor force that is professionally trained to meet
the current demands of industry. The economic restructuring that took
place across the region, especially during the 1990s, gave way to a generalized process of technological change that unfolded with unprecedented
intensity. With a view to ensuring the proper working of the new means
of production, it was necessary to redefine the training of the labor force
so that it could be constantly improved and allow for the re-training of
those competencies that the new technologies were making redundantand useless. In addition, this redefinition had to take place over a
short term.
The university, with its degree programs, its vocation of comprehensive knowledge, its demands for autonomy, and its traditional separation
from the needs of businesses, was far from being in the best position to
meet the requirements of the new environment. At the same time, the
aim to minimize state economic intervention with its effects on public
spending cuts worked in opposition to any new investment in public university education. The preferred way out of the dilemma would have been
to contemplate two parallel lines of action: the extension of higher education beyond university boundaries on the one hand and its further privatization on the other.
This transformation has gradually taken place and at different times in
different countries. It started first, as did many other aspects of globalization, in the Southern Cone countries while submerged under totalitarian
regimes. This was especially the case in Chile, Uruguay and Argentina,
although the changes would differ in depth and breadth in each of these
countries. By the mid 1990s, the World Bank would refer to the case of Chile
as an exemplary one to be followed concerning its successful reforms
with little or no regard to the fact that the changes were violently imposed
by one of historys most brutal dictatorships during the 1970s and 80s. On
the other hand, these neoliberal transformations in the region began to
clash with new obstacles during the second half of the 1990s following the
emergence of progressive governments that decided to confront globalization policies. Higher education in those countries is now taking a different
course. Even so, we must affirm that neoliberal changes left a visible and
significant mark on Latin American institutions of higher education.
Registration in higher education grew impressively fast. The average
rate of registration exceeded 30% of the population between the ages of
2024 and while still far behind the levels that developed countries have
reached, it practically doubled the rate that existed in 1994. It should be
noted that this expansion has taken place in a context in which the growth
of this age group has notably slowed down, probably due in large part to
the rate of emigration to developed countries. By all accounts, the growth
of matriculation was still real and impressive.
This advance was achieved mainly due to the expansion of private
higher education that now accounts for more than a half of total enrollment. Public higher education has grown as well but much more slowly
than in private institutions. The growth of higher education has been
mainly as a response to market signals and it was supposed that this was
the correct method of adjusting education to the needs of society. The
expansion of the private sector which has reached a commanding presence in higher education (Garca, 2007) took place within an environment where regulations and controls were practically nonexistent. This in
turn was bound to translate into negligence in the area of curricular
design and did in fact lend itself to a dubious quality of academic activity
in many if not most of these institutions.
The strongest stimulus to this expansion focused on the creation of
non-university higher education institutions, most of them private. These
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The export rate of growth had been 4.2% in 19601970 while in 19801990
it jumped to 7.8%, very similar to the percentage growth of the following
decade, where it reached 8.6% during 20002007.
By 19971999, exports already represented 18.9% of GDP and imports
20.9%. The balance of trade deficit became by itself a reason for contraction. What is to be noted here is not the new level reached by exports and
imports, since this corresponds to the economic opening of these countries,
but the fact that imports were growing faster than exports. This provokes a
highly volatile economic scenario. During the 1990s, the business cycle in
Latin America experienced a couple of years of growth with a shrinking
trade surplus which then transformed itself into a growing trade deficit.
After two or three years, the latter became unbearable and it had to be corrected by resorting either to recession or simply slowing down growth.
The trade balance under the present pattern of industrial colonialism is
more vulnerable to deficit, although underdeveloped countries can contain this tendency for periods, especially during those of prosperity generated by high prices and volume of exported natural resources. This has
occurred during the last few years with the regions exports of mining, oil
and agricultural products. The evolution of the last two decades that
shows manufacturing exports with technological content to have grown
steadily might therefore cause confusion or create unfounded expectations. Mexico, the main exporter of the area at the beginning of the millennium, is also the representative case of this evolution. Products of medium
and high technological content are concentrated in the maquila industry
(i.e., enterprises located in the national territory that carry out an industrial process or service by which a good sent by a parent company from
abroad is transformed, repaired or used, to make products for export). In
2001, this sector represented around 22% of the regions exports. However,
this industrialization that resulted with greater exports has taken place by
following the established patterns of underdevelopment.
The maquila industry relies on the imports of the means of production,
imports that normally account for more than 70% of the value of the
product. By 2001, the local input contribution reached its highest point
since 1980, 2.7% of the value of the product. In other words, the maquila
industry has not had any significant impact on the promotion of industries for import substitution (ECLAC, 2003). The value of exported manufacture is higher, much higher in this case, than the internally produced
value. This means that the so-called exports of medium and high technological content are predominantly sales of products obtained with poorly
skilled labor-power from the exporter country.
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It can be seen that the labor, not only of conception and design of processes and products but also a large part of the immediate labor related to
the former, remains concentrated in developed countries. It is also evident, although in a rather extreme way, that not only the creation of new
industries but also their operations depend upon the imports of means of
production, prolonging the internal deficit of the ability for creation. The
development of industry intensifies both the lack of control over production and the incapacity of underdeveloped countries to make their own
economic decisions. As it is stated by UNCTAD: The growing importance
of international production networks elevated the degree of productive
complementariness between developed and developing countries. This
means that a major share of production and exports in developing countries becomes dependent on the decisions and performance of foreign
firms and countries (Mayer, Butkevicius & Kadri, 2002).
The Latin American and the Caribbean balances of goods, broken
down into their different categories, illustrate the above-mentioned trend
concerning industrial deficit in the region.
Table 3.1.Latin American and Caribbean Commerce. Export Goods
(in millions of US dollars).
Products
1987
1992
1997
2002
2004
Primary
Industry based on
natural resources
Industry with
technological intensity
1987
Primary
Industry based on
natural resources
Industry with
technological
intensity
14.30
13.740
1992
1997
19.999
25.772
31.115
49.386
40.180 100.237
217.245
2002
32.469
50.685
2004
43.981
62.415
234.499 279.506
The Latin American trade balance rests heavily upon the exports of primary and industrial goods based on natural resources. As a whole, it
shows a favorable balance between 1987 and 1991, based on the control of
imports and a decline in economic growth. For the following ten years
(through 2001), the balance showed a deficit. From 2003 until 2007, this
situation was inverted thanks to an increase of prices and, on a smaller
scale, by the volume of primary exports, especially oil, gas, copper and
some farming products (sugar, banana and coffee). During each year of
the period between 1987 and 2004, the balance of industrial goods was
adverse. This was especially due to the deficit of medium and high technology goods. The evolution of the balance is as follows:
Table 3.3.Latin American and Caribbean Balance of Industrial Goods
(Millions of dollars).
1987
1992
1997
2002
2004
Total of
9.5888 33.801 82.051 50.168 50.554
industrialized
goods
Based on natural
6.911
6.297
3.139
2.137 10.498
resources
Of low technology
2.587
2.632 10.154 6.424 5.896
Of medium
11.671 25.098 50.483 30.877 31.692
technology
Of high
7.415 12.368 24.553 15.005 23.466
technology
Source: Source CEPAL (2006a) (Statistical Annex).
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countries to expand their own production and employment, or to estimate the extent to which the ability to accumulate is transferred to developed countries. In general, less production and more unemployment are
inherent features of underdevelopment.
At this point, the following digression may be appropriate. International
organizations include amongst the developing countries East and
Southeast Asian economies. The participation of this area in world exports
of manufacture is already quite high. Between 1996 and 2001, these countries participated with 30% of world exports in the area of information
and communication technologies, one of the most dynamic sectors of
international trade. This area sells a little less than the European Union
(34%), but more than the United States (17%) and Japan (15%) while the
contribution from Latin American countries scarcely reached 4%. It
seems that the distinction between developed countries and developing countries does not have any clear meaning at the trade level. Thus, to
situate the Republic of Korea, Taiwan, the Philippines, Singapore and
Thailand together with Latin America in the same category of developing countries only makes more difficult our understanding of the processes which the different countries are involved in.
It is not that international organizations ignore the relevant differences
between the aforementioned Asian countries and Latin America. For
example, CEPAL points out in contrast with the experiences of certain
countries of Asia, the Mexican export sector, despite its supposed success,
has not been able to create the internal economic links within the national
economy. It is further explained that:
To climb the technological ladder is difficult, especially when the chain of
local inputs suppliers is not developed and, in consequence, enterprises
located outside the territory provide parts and components, as well as more
sophisticated services. In these cases, the services of design and engineering, research and development, and logistic and commercialization tend to
be offered by parent companies, with no possibility of technological transfer (CEPAL, 2003a: 109).
What is not noticed is that the countries climbing the technological ladder are indeed advancing in the development of their capitalist division
of labor. They are elevating the organization of their general labor and
building the conditions that make it possible for them to appropriate
and produce the knowledge and skills that are necessary for the process
of accumulation. They did not expect the export sector to be able to create the necessary economic links. On the contrary, they undertook the
task of producing technological progress as a national project, one that
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The Different Functional Roles Within the Region
From the point of view of the regions integration into the world market,
we can group together Mexico and the Caribbean Basin on one side and
the South American countries on the other. It is Mexico that shows a more
dynamic evolution when compared to the other countries. South America
has, on the whole, followed the old exporting tradition by which it provided raw materials and foods to developed countries, thus making some
savings in constant and variable capital possible for the latter. A demanding export orientation of production in terms of price and quality would
lead this part of the region to a better performance of the same function.
Mexico, on the other hand, appears linked to the international trades
most dynamic sectors. Some data can suffice to illustrate this situation.
Mexico increased its participation in OECD purchases from 1.26% in
1980 to 2.27% in 1996. In South America, only Chile saw its share of that
market increase during that period, going from 0.23% to 0.28%. Unlike
Chile, Mexico has been incorporated into the more dynamic trends of
commodity circulation in the world market, notably through three industrial branches: automobiles, electronics and clothing.
At the beginning of the 21st centurys first decade, manufactures contributed 90% of the countrys total exports. In South America, on the contrary, the relative weight of primary goods in total exports continued to be
important. With the exception of Brazil, South American countries have
not taken meaningful steps in order to overcome their dependency on
products based on natural resources.
As for the destinations of exports, Mexico increased its participation in
US imports from 6.61% in 1992 to 11.25% in 2000. On the other hand, South
Americas participation fell from 4.47% to 4.07%. US imports from Mexico
grew 17.2% annually between 1992 and 1999, whilst US purchases from
South America only increased by 7.1% as an annual average. Meanwhile,
88% of Mexicos total exports went to the United States in 1999 and 74%
of Mexicos total imports came from the United States. Mexico thus had
intensified its dependency on the US economic cycle. South America, in
turn, diversified its trade towards the rest of the world, in particular,
towards Asia.
Mexico has been one of the favorite destinations for direct foreign
investment in Latin America, surpassed only by Brazil. Large transnational corporations have carried out ambitious programs oriented
towards the restructuring of their subsidiaries and towards the creation of
new assets in Mexico. A massive transfer of advanced technology along
with location advantages and cheap labor power has allowed enterprises
to gain an edge over many competitors. It should be noted that this course
of events does not follow the logic of functioning capital, where investment faces obstacles to the introduction of technological progress mainly
on account of the low value of labor power in the region. Indeed, this
rationality operates when decisions are based on the economic environment of a given underdeveloped country, especially in terms of technological resources, productivity, scale of production and prices. When
investment decisions are made in accordance with the conditions prevailing in developed countries, things change. A corporation produces in
an underdeveloped country with a view to competing with developed
ones. Cheap labor diminishes production costs, thus augmenting the
profit. But at the same time, corporations must be able to master and
solve the host countrys technological gaps. The maquila method provides
an adequate answer to this problem.
The US Governments strategy enhanced the investments of transnational corporations in Mexico with a view to recapturing the positions
they were losing within their own domestic market, especially since
Ronald Reagans rather deficient movements to boosting development in
the United States. As we have already seen in Chapter 2, George Bush
Sr. attempted to mitigate the effects of neo-liberal policies as applied by
his predecessor without actually abandoning them but instead by means
of a new deal with an eye for creating conditions for a deeper penetration
of US capital in the region.
Free trade agreements would go very far in this context. The United
States was in no position at that time to continue supporting the General
Agreement on Tariffs and Trade (GATT) multilateral approach to economic liberalization, especially since this organization insisted on reducing tariffs, which would only worsen the position of North American
agribusiness and industry. Immediately after signing the Free Trade
Agreement with Canada, the United States signed another treaty with
Mexico. Both would enhance liberalism between these countries, so that
the United States would have access to a proper means of recapturing
positions in her own domestic market. This means that the mode of operation of the present pattern of industrial colonialism in Mexico directly
responded to the interests of large US transnational capital.
It is not very often that an economy is put at the service of another ruling one, to the benefit of competition and liberal principles. But under the
present pattern of industrial colonialism, this has been a generalized aim
of Washington in the region (Dello Buono and Gandsegui, Jr., 2007). In
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period from 1950 to 1980, the annual rate of growth was 5.3% while
between 1991 and 2003, it reached just 2.7%. A more accentuated tendency towards trade deficit has led governments to a tighter control on
imports and on economic growth. At the same time, a deeper external
dependency in every sphere of economic life has transformed the region
into a more vulnerable victim of financial turbulences abroad.
During the present stage, the region reduced its participation in world
production, from 8.7% in 1973 to 7.7% in 2006. Differences in per capita
income with developed countries also heightened. From 2.5 times in relation to Europe in 1973, it jumped to 3.2 times in 2006. Differences with
Europe had grown between 1950 and 1973, a period when that region was
very actively engaged in economic reconstruction and expansion. It is
interesting to see that the same differentiation did not take place with
other advanced regions during the previous stage. According to an ECLAC
report, per capita income from a group of countries including Australia,
Canada, the United States and New Zealand was 3.7 times that of the
region in 1950 and the difference did not grow until 1973; on the contrary,
it declined slightly to 3.58 times. Yet, from 1973 to 2006, the difference in
income went up to 4.64 times (CEPAL, 2008). The annual GDP growth
rate per employed person between 1992 and 2003 was very low at 0.1%. It
later rose to 1.9% during 2003 and 2006, for an average annual rate of 0.6%
for the years 19922006.
Such meager economic results would not bode well for employment.
Before revising the data, it is important to note that there are factors
inherent to this form of economic growth in addition to the slow growth
that affects employment levels. On one side, export enterprises work with
a higher organic composition of capital with the aim of reaching acceptable performance in terms of productivity levels as demanded by global
competition. A lesser amount of labor force is required for mobilizing a
unit of capital. On the other hand, protection of the industry producing
for the domestic market was almost completely dismantled and it was
forced to either restructure or go into bankruptcy. The ability of this
industry to attract a labor force was seriously damaged. For example, the
weight of personal consumer goods in total imports had fallen from 23%
in 1948 to 15% in 1970, this during inward-oriented growth. The new pattern of industrial colonialism severely hampered the continuous growth
of this sector and imports of consumer goods rose from 14% to 17%
between 1990 and 1998.
The rate of unemployment in Latin American and the Caribbean has
been correspondingly high. In 1994, it was at 8.2%, increasing to 10.4% by
2000 and hovering at 7.5% in 2008. Indeed, these figures are not far off
those of many developed countries. What is more astonishing is the level
of so-called informal employment that according to official estimates
(CEPAL, 2009) constituted around 50% of total employment from 1994 to
2008. This sector includes independent workers, family and apprentices,
micro-business workers and domestic service workers. We will attempt to
produce a more proper account of this in the following chapter. Suffice to
say for now that it is mostly made up of workers who are not directly
involved in the wage-labor capitalist relation and who are therefore
pushed to seek independent occupational alternatives.
The very precarious labor conditions of the informally employed sector
barely allow them to make a living. Just while it was assiduously expanding, Latin America had become the worlds most unequal region. Poverty
intensified and eventually reached an unprecedented magnitude. Official
figures registered 40.5% of the population living in the condition of poverty by 1980, growing to 48.3% in 1990, and then declining to 44% in 2002.
Since then, after a six year period of continuous economic growth, poverty was reduced to 33% in 2008. Yet, as a result of the world crisis, millions are once again joining the ranks of poverty and indigence. In absolute
terms, the population living in poverty rose from 135 million in 1980 to
180.4 million in 2008.
As a harsher social exclusion lashed the region, political governance
became much more complicated. The political sphere and social sentiments drifted ever further apart. Between 1990 and 2002, only 62% of
those citizens entitled to vote actually cast their ballots and no more than
56.1% of votes were validated. In countries where voting is not compulsory, popular participation was even lower, such as in Colombia (33%) or
Guatemala (36.2%). Electoral abstention tended to increase and this was
the case of Mexico where it accounted for 42.3% of citizens in 1997 and
58.3% in 2003. At the beginning of the present century, only 43% of citizens professed to support democracy and no more that 20% backed existing political parties. Less than 40% had trust in the judiciary, police, heads
of states and armed forces and even television had less than 50% of popular credibility (UNPD, 2002).
The political and ideological institutions of Latin American capitalism
were far from behaving as required for a smooth development of society.
They lost much of their energy as sources of legitimization for domination. Social unrest would increasingly find new channels to express itself.
Successful paths were blazed in Venezuela, Ecuador and Bolivia on the
basis of leaderships which exhibited a tough stance against neoliberalism,
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Overall, this was a period when society witnessed a continual flow of class
concessions, thanks to which large swaths of the popular sectors saw
themselves enjoying the fruits of economic growth. These sectors managed to develop reasonable prospects of having a job, a place to live, and
access to health and education services. The so-called Welfare State provided a material basis to these prospects. Political parties acted as dynamic
agents promoting this steady flow of concessions.
Neoliberalism put an end to these class concessions and the overall
social contract that had crystallized, in favor of a new regime of policies
towards the popular sectors and their social class organizations. This
political shift was a key element in confronting the economic crisis that
had become incubated during the 1960s and had begun to reveal its major
fault lines in 19671968 and then again in 19741975. The first aim of neoliberalism was the recovery of the rate of profit and this implied that the
social correlation of forces was destined to become modified. Attacks on
trade unions in the US were mounted during the second part of the 1970s
at a time when they had already become generalized throughout southern Latin America. The highest expression of this process would become
felt during the Reagan administration when economic decline and cutbacks in state expenditures, including for technological innovations,
translated into unemployment. The expansion of unemployment helped
to weaken the labor movement everywhere, allowing the state to back
away from the prevailing regulation of labor relations. In its place, labor
flexibility was introduced by means of which almost unconditional
power over labor was transferred to the bosses.
Exclusive Democracy in Latin America
In Latin America, governments seem highly vulnerable to the pressures
from organizations, enterprises and governments of the advanced world.
But in this region social reorganization against the labor movement
adopted particularly severe characteristics. Income redistribution led to
the concentration of wealth during the 1980s, a process that became consolidated during the 1990s. In Argentina, Bolivia, Brazil, Costa Rica,
Ecuador, El Salvador and Nicaragua, the position of the impoverished
worsened even further while the richest 10% of the population increased
its share of national income. Towards 20002002, this latter stratum
received an income equal to 19.1 times that obtained by the poorest 40%
of the population. Between 1980 and 2002, the population living in poverty grew from 40.5% to 44.0% of the total. Their total number increased
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from 135.9 million in 1980 to 221.4 million in 2002. By the end of the 1990s,
the number of malnourished people in the region reached 54.0 million
(CEPAL, 2003b). In other words, it did not take long for neoliberal policies
to substantially modify social class relations.
This oligarchic income distribution was accompanied by the consolidation of a wide and growing sector of excluded people. The appeal for
them to participate in electoral democracy was not supported by their
economic integration. This is the main obstacle for electoral democracy:
political inclusion cannot be successful if it goes hand in hand with
economic exclusion. All of this was bound to have an impact upon the
political workings of society and it did. The political game was abandoned
by a large portion of society and its legitimating power became seriously
eroded.
There is no doubt that a large part of the criticism of electoral democracy comes from economically excluded people. A survey by the Centro de
Estudios para un Proyecto Nacional (IFE, nd) on electoral abstentionism in
Mexico came up with the following results:
Electoral abstention and levels of income evolve in an inverted
relationship.
The least educated abstain the most.
Rural abstentionism is greater than urban abstentionism.
Abstention is greater in districts with a large self-employed population.
Given the extreme state of affairs, a substantial and growing layer of the
population indicated in region-wide polling that it would not mind having an authoritarian government if it was able to solve their economic
difficulties. In Mexico, the percentage of voters who thought this way
went up from 39% to 41% between November 2002 and April 2004.
However, this opinion survey should not have just a single interpretation.
Each society has the image of an authoritarian government that has been
built from its own experience. While in Chile and Argentina, for example,
authoritarianism is linked to murder, torture, jail, exile, hunger, unemployment, open repression, disappeared people, and so on, Mexicos
experience under presidentialism yielded authoritarian governments
that were much more moderate and which operated through a weak but
long lasting social arrangement with a reasonable amount of freedom at
the community, grass roots level. In the case of the South American countries, it is very doubtful that poor people or even the majority of them
would be willing to support an authoritarian government.
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Given that most emissions (around two-thirds) are produced by developed countries (included some of the so-called emergent countries such
as China and India), the general conviction is that no matter what
the region does to face climate change, these actions will have very little
or no impact at all. For that reason, governments tend to focus on demanding deeper commitment and meaningful actions from those countries
where the larger amount of emissions is produced. The largest polluters
should undertake major economic internal changes and deliver support
for adaptation and mitigation to those countries like those of the region
which actually are less responsible for global warming.
Conclusion
Large local capitalists, closely tied to transnational corporations, enjoy no
freedom to decide on the pattern of industrial expansion. They did not
decide their previous industrial trajectory and show no major interest in
or capacity to influence the coming industrial strategy. They will not be
able to provide an original answer to the current problems facing
development.
The very economic well-being of the nations appears to be a strong
argument for governments to authorize measures that promote climate
change instead of alleviating it. The insatiable need for external resources
calls for politics that stimulate foreign investment without paying
much attention to their impact on eco-systems. Lax legislation and environmental controls that are practically left unenforced represent typical
features of industrially colonized economies. When certain legal restrictions to industry are recognized, this is mostly due to the fact that the
importing economy demands certain quality standards for their own productive or personal consumption at home. It goes without saying that
production for the domestic market represents the best opportunity for
the location of foreign environmentally dirty industries in underdeveloped countries.
The list of reasons that prevent the region from even approaching a
proper answer to the challenges that climate change represents must be
expanded. We can assume that capitalism could reduce the present level
of hostility against nature. Yet, a weak and peripheral science, such as that
found in the region, cannot provide great initiatives related to the transition towards a greener, less contaminating capitalist economy. On the
contrary, it is widely accepted that this weakness of the region represents
This is a clear example of the pressures that put local science, or segments
of it, at the service of foreign capital expansion in the region. There is no
room to expect an autonomous answer to the challenges that climate
change poses from the local capitalists and pro-colonial governments,
even if a solution was dependent on the region. Yet, developed countries
are also far from leading a determined struggle against climate change.
The UN Environment Program (UNEP) assessment of the actions oriented
to adaptation and mitigation is, without a doubt, frustrating. It reports
that At the end of the first half of 2009, only around 3 per cent of committed green funds had been disbursed; that a big gap remains between governments public statements and facts, and that overall, the amount
allocated to renewable energy falls short of the investment needed to
reduce carbon emissions and to keep the rise in global average temperature under two degrees Celsius. Some incentives, such as subsidies to the
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CHAPTER FOUR
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Efforts conducted by Anibal Quijano (1977) and Jos Nun (2000) since the
end of the 1960s in this regard were especially outstanding. In reality, the
arguments of both are very similar. They consider that the emergence of
monopolies modifies the conditions of the production of a relative surplus population. The economys most advanced sectors do not require a
labor-power reserve for their expansion. As a result, the ability of production to absorb labor becomes weaker, which is why a portion of the unemployed becomes permanently redundant for capital and does not act as a
reserve army. This sector of the relative surplus population was named a
marginal pole by Quijano and a marginal mass by Nun.
A large part of Nuns theoretical efforts were oriented to demonstrate
that the marginal mass created by capitalism does not have any functional effect on capital, contrary to the industrial reserve army. For his
part, Quijano tries to expound on the links that result in the marginal pole
of the social sector becoming most severely damaged by capitals rule.
Both of them firmly reject the accusations of dualism that the idea of
marginalism seemed to legitimate. But their discussions of the issue
paid little or no attention to a more important question, namely, the
problem of the causes that produce an overflowing surplus population in
Latin America. This phenomenon should in turn have pointed an analysis
to the question of the specific socio-economic organization of capitalist
underdevelopment. In fact, for both authors, a surplus population existing side by side with the industrial reserve army is a generalized phenomenon in capitalism regardless of a countrys respective position in the
world market. Some of Nuns first propositions on extended surplus population are still relevant to this point, but a crucial turn of the author over
the last few years has weakened the original explanatory power of his
position. Nun abandoned his original adherence to forces that show the
excessive surplus population as a necessary phenomenon of capitalism.
(Nun, 2001: 3133)
Quijano, in turn, seems to swing between two possible causal routes of
marginalism. He appeals to a famous passage of Capital where Marx
affirms that the industrial reserve army tends to grow faster than the
employed active sector of the working class whereby capital advances
towards the creation of a consolidated surplus population (Marx, 1990:
798). The author explains that: In this well-known passage, Marx considers as consolidated the part of the relative surplus population destined,
on the course of development [] to be a victim of a continuous condition as leftovers in relation to the needs of capital accumulation (1977:
21). In fact, it would be a sector of the surplus population that does not act
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as industrial reserve army, that is to say, as labor-power that exists for the
satisfaction of accumulation needs.
According to Quijano: this is the part of the relative surplus population that has been called marginal in the Latin American sociological
debate (1977: 21). Marx had not worked on this sector because the conditions for its emergence in pre-monopoly capitalism did not exist, Quijano
argues. However, the author does not tackle the inevitable question of
how Marx arrived at the tendency towards the creation of a consolidated
surplus population by analyzing only the capitalism of his own time
with conditions of free competition.
On the other hand, Quijano attempted to uncover the historical forms
of the process that ultimately created a marginal pole. He affirms that the
process of disintegration of pre-capitalist relations has not been completed in Latin America, a situation that continuously throws new contingents into the labor market. At the same time, monopolization and
internationalization of capital have already matured, thanks to high technological levels, in enterprises where the demand for labor has been practically reduced to nil. Thus, the creation of the relative surplus population
exceeds the capacity of accumulation to absorb it, making it grow beyond
production needs.
In Latin American countries, the situation becomes worse because the
expansion of capitalism, led by imperialist capital, did not rest upon the
existence of already developed local circuits. In addition, monopoly capital not only works with a higher technical composition of capital, but it
also counts on production and realization facilities in the imperialist
countries which moreover obstructs the regions internal growth. That is
why the process that creates a surplus population in the whole capitalist
system, at all levels, has in these countries become especially prominent
and to such a point that it has created a particular sphere of social research
in Latin America (1977: 15), i.e., the sphere of marginalism.
It can be seen that historical and logical paths run independently from
each other. The category of the consolidated surplus population was elaborated by Marx to designate a logical result of the development of capitalism at the level of the essential relations of production. Capital represents
the historicity of a mode of production as a result of analysis. It is not
intended to reflect reality directly nor does this analysis have as its aim a
special stage within this mode of production, but rather the analysis of
capital in general (Rosdolsky, 1980). For this reason, it includes the study
of the forces that generate it, develop it and produce its decomposition
(Marx, 1990: 102). In addition, Marx expounded his theory of surplus
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seems more interested in the position of these sectors vis--vis accumulation and employment, especially concerning the two first types, the case
is that we are not dealing here with categories of the relative surplus population, but rather with living conditions in the midst of the latter. Pau
perism can exist within any category of the relative surplus-population,
and, as a matter of fact, beyond this category, as we shall see later on.
The case of the third group inside pauperism is somewhat distinct
because pauperism is linked here to the inability to work. They are, moreover, a product of accumulation. The problem is that they do not meet
any need of accumulation, neither present nor future. This sector cannot
thus be considered a condition of existence of the capitalist mode of production. Marx himself defines them as a burden for capital, one which
enters in the fraux frais of capitalist production (1991: 797), creating a
diversion of resources that could otherwise be useful to the valorization of
capital. In fact, they are elements of an absolute surplus-population, a sort
of advance of the consolidated surplus-population that capitalism is
bound to create in its higher stages of development.
Generally speaking, it is certainly true that no human being is absolutely redundant. This proposition only refers to the position of a sector of
proletarians in relation to the needs of capital valorization. In other words,
they stand in relation to their meaning for capital and this essentially
points to the scant attention that capital pays to human needs. The forms
of existence of an absolute surplus population must tend to multiply and
grow beyond the sphere of those who lack the means to survive such as
criminals, vagabonds and the like, to include parallel forms of labor
organizations, different ways to earn an income, stimulated by necessity
and social imagination. Their existence or non-existence at the present
time, as a result of the described logic, can be and must be an object of
discussion. However, there is no doubt that this situation has not been a
permanent characteristic of imperialism in developed countries. In underdeveloped countries, on the contrary, their presence is visible, but their
explanation will still have to overcome some theoretical difficulties.
We cannot continue without resolving the uneasiness that the concept
of relative surplus-population still provokes. If it refers to a labor reserve
army that is essential in order for accumulation to proceed, i.e., a condition of the capitalist mode of production, why should it be called surplus
population, even if it is relative? It does not seem coherent to do so
because these workers are not leftovers who are not wanted or needed
but on the contrary are a necessary population for capitalism and not precisely in a relative sense.
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forms of labor organization are of no interest for the sort of study that
Marx was carrying out. Those who are not actively participating in production dwell outside the relation of capital and in connection with the
latter they exist as surplus-population. Once Marx introduces his theory
of the industrial reserve army as presented in Capital, it can no longer be
said that the surplus population, or at least a part of it, is outside the
reproductive conditions of this specific basis in this case, the basis being
capitalism. On the contrary, it is clearly a condition for it. The approach
according to which all the unemployed are surplus population should
have been abandoned.
In the real process of the society of capital, the working population
does not only obtain their means of subsistence through wage-labor or by
charity. It also does so through non-capitalist forms of work organization
and these in turn can evolve either with or without contact with the processes of capital self-expansion.
In an attempt to resolve these difficulties, we will call necessary working population the sector integrated by those workers directly involved in
capitalist production and by the labor reserve army. We will limit the concept of the latter to its floating and latent forms. We will term those
remaining the surplus-population and will distinguish: a) a relative surplus
population, to refer to the workers that, from outside the capital relation,
are engaged in activities that keep some sort of relation with the accumulation process, and b) an absolute surplus population whose activities in
no way assist the process of capital accumulation.
Now we can return to the Marxist theory of marginalism. A relevant
fact of historical evolution that does not appear properly registered in
these analyses is that the process of accumulation in developed countries
has proceeded for a long period bolstered by immigration. In other words,
the developed countries have required not only their own labor force but
also that of contingents coming from other countries. To the migratory
movements that take place constantly within the different categories of
countries (developed and underdeveloped) and that correspond to the
changing needs of growth in different countries, the migration between
the South and North is added. And in the case of Latin America, it has
become consolidated since the 1950s as a practically unilateral movement, i.e., as migration from the South to the North.
The International Labor Organization estimates that in 1998, migrant
workers from developing countries reached 4.2% of the whole workforce of the OECD countries, reaching 57.8% of the total immigrant force.
Moreover, the shift of workers towards the industrialized countries
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has increased during the last decades, the United States being the main
receiver (81% of the new migrants), followed by Canada and Australia
(11%), while France, Germany, Italy and the United Kingdom are the destination of the rest (OIT, 2004). This point is not theoretically irrelevant
because it not only calls into question the existence of a marginal pole in
the developed countries, but it also indicates the existence of difficulties in
the operation of the law of the industrial reserve army in those countries.
This is indeed a challenge for the theory of accumulation and is one that
must be confronted from accumulations own assumptions.
Deficits and Surpluses of Population
According to the Marxist theory of capital accumulation, production in
countries with a lower composition of capital shows a relatively greater
capacity to attract labor-power. The rate of unemployment should be
lower than in developed countries. We have seen, however, that in practice the opposite is the case to the point where developed countries have
been unable to provide the required labor-power by themselves, while
underdeveloped countries produce an overflowing surplus-population.
The explanation, therefore, must reconcile logical and historical developments that at first sight appear to be in open contradiction.
The cause of Latin Americas ability to create a surplus population
alongside the industrial reserve army is to be found in the conjunction of
two factors related to the social organization of production: its capitalist
character, on one side, and the frustration of the development of the division that separates general labor (scientific labor) and immediate (operational) labor, on the other. As seen in Chapter 1, the absence of this social
division of labor in relation to the great mass of industrial processes is
what defines the underdeveloped character of the economies. The underdevelopment of the area is, above all, the underdevelopment of the capital relation.
Historically, the penetration of capitalism in Latin America combines
the processes of original accumulation (separation between the producer
and his means) with the production of relative surplus value, as required
by the type of industry that arrived in the region by the end of the 19th
century. This combination ended up weakening the energy of capitalism
to promote the separation of means and producer. In fact, it has been
necessary to reorganize in a non-capitalist way large sections of the surpluspopulation, as in the case of agrarian reforms or to send millions of
workers abroad as with the bracero program shared between Mexico and
the US (19421964).
As for the effects of the consolidation of capitalism over the working
population, there is no single pattern. In a country like Mexico, for example, the relatively low capacity of accumulation to absorb labor-power
together with the increasing disposal of the free labor force promotes a
very slow evolution of capitalism in agriculture. In contrast, the huge
availability of land in Argentina combined with a relatively low population favors labor immigration, extends wage-labor and promotes the
introduction of capitalist techniques. In other words, the starting point in
different areas can be translated into diverse circumstances of population
that will have a distinct impact upon its subsequent evolution. Once capitalism is consolidated, however, inside definite territorial limits and with
predominance in all the branches, production always tends to create a
reserve army, whatever the average composition of capital.
Alongside these general features of capitalism in Latin America we find
the transfer of investment and of jobs that accompanies accumulation.
Due to these reasons, underdeveloped capitalist production not only creates a reserve army but also a surplus population, that is, one that extends
itself beyond the average needs of the valorization process of capital, i.e., the
needs of capital, either working or latent.
The inverse situation is to be found in developed capitalism. While in
underdevelopment, accumulation consumes more than it produces, in
developed countries accumulation produces more than it consumes. The
shortage of production in one pole is satisfied with the excess of production in the other. We have already seen this inherent feature of industrial
colonialism at work in the first chapter. The proposition that follows
needs no greater elaboration. While in underdeveloped countries, accumulation generates an extended overpopulation, in developed countries
it displays an insufficiency in the creation of its labor reserve army. The
imperialist organization of production condemns certain countries to
concentrate on immediate labor and also distributes in an unequal way
the energy with which each pole of the system generates available
labor-power.
In summing up our argument, the underdevelopment of the relation of
capital, i.e., the absence of the division that organizes general labor (scientific labor), as different from immediate work, conveys a transfer of
the capacity of accumulation in underdeveloped countries to generate
employment to the developed countries. The emergence of industrial colonialism opened novel routes to the operation of Marxs law of population,
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ways, which also reveals the action of different agents, should in fact allow
us to see where the surplus-population stands in relation to capital
accumulation.
As for unemployment, the situation seems to be more complicated to
assess. Let us say that unemployment reaches 7% and we decide that the
level that meets the needs of capital self-expansion is at best 5%. In this
scenario, how can we define the excess 2% but as a useless population for
capitals valorization? Is the existence of an absolute surplus-population
not thereby revealed? It consists of workers who are just entering the
labor market in search for a job, or who have been expelled from the accumulation process, or for some reason, have abandoned their activities
outside the direct process of accumulation. We may assume here that the
unemployed worker faces a transitory situation and sooner or later will be
forced to undertake some activity in order to acquire the means to
survive.
Relative Surpluses of Population at the Level of Goods
Production and Repairs
The surplus-population can productively get organized by resorting to
labor relations other than capitals specific ones. In doing so, this population can also make some sort of contribution to capital accumulation.
Such cases could include: 1) supporting the global process of production.
A prominent example of this in Latin America is peasant production, at
least during the period in which this sort of production plays a functional
role delivering cheap primary and wage-goods. 2) Competing with the
capitalist organization of some particular activity whilst enhancing production in some other activity. This is the case of those who engage in
construction activities normally in workers housing. Their work opens
paths for the realization of capitalist-produced building materials.
3) Filling gaps left by capitalist production. Vehicle repair shops illustrate
this case. 4) Carrying out by their own means the production of parts or
the execution of some task necessary for completing the process of a particular good. The textile industry is one example, among many others. In
all these cases, the workers control their means of production and do not
work for profit but rather for consumption. They appear as subsidiary producers of goods and services. They do not enter the wage-labor relation yet
they assist it from their particular labor positions. This is why they are
considered to be relative surpluses of population.
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The capitalist arrives in the market with his money (M) where he buys
commodities (C) in the form of means of production (MP) and laborpower (LP). Then he abandons the sphere of circulation and starts a labor
process (P), coming out of it with a commodity (C) whose value is larger
than the value of the original (C). Back to the market, he changes his product (C) for an equivalent amount of money (M) with which he can start
the circuit over again in the form of an extended reproduction.
With the generalized intervention of science in production, this circuit
becomes more complex. The labor market has been divided into general
and immediate labor markets and the same happens with the means of
production, as scientific labor requires labs, instruments, and so on. The
enterprises may organize their own research and development departments, or they may resort to independent workshops of technological
progress, or, as generally is the case in Latin America, they might meet
their needs by buying abroad. Whatever the situation, spending on products of general labor cannot be avoided. This is why the first movement of
capital circuit, which was originally M-C (MP-LP) appears now as:
M-C(MPg + MPi + LPg + LPi)
In Latin America, investments in the means of scientific production
(MPg) and in scientific labor-power (LPg) mainly take on the form of the
license of industrial property (patents of invention, utility models, industrial design, registration of trademarks, names and commercial slogans,
and so on). To simplify, we shall call these types of investments costs of
transfer (Tr). The movement we are dealing with in the region, therefore,
will be described in this way:
M-C(MP + LP + Tr)
For pirate capital, however, the first phase of capital movement continues
to be M-C(MP + LP) where everything is reduced to immediate labor,
because pirate capital appropriates, without the mediation of any legal
transfer, the efforts of research, experimentation and promotion done by
others.
As pirate capital does not operate in a regulated market, its investments are duty-free and it can ignore regulations on labor conditions
such as minimum wages, working day, and so on. When buying means of
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production, it is not forced to follow specifications of quality, thus cheapening its production costs. All of this, which is reflected in low prices,
accounts for pirate capital success.
Pirate reproduction introduces a serious distortion in the normal circuit of the original capital. If the latter is well-established in the market,
the eruption of pirate capital will reduce its room for realization. A part of
his product (M) will not be transformed into money and the return will
not equal the expected difference between D and D, if there is any difference at all. As the production costs of the individual commodity rise, the
entrepreneur is pushed to the restructuring of his business, all the more
when he realizes that his unamortized spending in research and promotion vanishes as if by magic. It is comprehensible that the situation is still
worse for a capital that suffers the eruption of piracy just when it is trying
to conquer a market.
Pirate capital is parasitical capital in that it feeds on the creativity and
the surplus-population that accompany accumulation. Capitalist society
could do perfectly well without it, no matter how much it contributes to
reducing the costs of other capitals, as occurs, for example, when it provides (normally inferior quality) spares at low cost. Piracy meets no
immanent need of capital accumulation. On the contrary, it disturbs the
working of capital which is why it is forced to operate from the shadows.
Individual capitals are exposed to the dismantling of their own circuits
and to the creation of uncontrolled parallel channels for the production
of something similar to the commodity they created. Pirate capital shatters every provision of economic security made by society with a view to
creating an adequate environment for formal investors.
Concerning the inner working of capital, pirate capital is superimposed
capital, superfluous capital. That is why its workers continue to appear as
surplus-population, even though they are employed under capitalist conditions. The repression of piracy is not directed so much towards the
workers as it is against the enterprises.
The operation of this kind of capital in Latin America is considerable.
In Ecuador, it has earned the reputation as a great exporter of unauthorized DVDs and CDs, and its economic weight is such that it contributed
to throwing the transnational giant BLOCKBUSTER out of the market
(Ayala, 2004) in a context of complaints about the quality of the latters
services. Peru stands out in Latin America as a producer of pirate books,
with three million volumes and three thousand titles (Cmara Peruana
del Libro, 2003). According to the Federacin Internacional de Indus
trias Discogrficas (The International Federation of Record Industries),
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The established retail dealer, i.e., those who rely upon their own means
of production (small installations, often located where the owner/proprietor lives, sometimes incorporating some means of transportation,
smaller measuring and calculation instruments, etc.) and who actively
contribute to the realization of products of normal accumulation, function for that reason as a subsidiary producer of services.
The overall complexity of retail trade is, however, much greater. During
the last few decades, the hawker, a figure with a long tradition in Latin
America, became multiplied thousands of times over. The surpluspopulation, as it grew, rushed onto the streets and the avenues, especially
in the larger cities, and crowded together into small dealer conglomerates. These conglomerates grew to become an outstanding feature of the
regions urban landscape. In general, they represent a new burden for the
settled retail dealer and, at times they compete advantageously with capitalist commerce.
At the same time, the multitudes that sell on the streets represent anything but a homogeneous mass. According to their relationship with capital accumulation, this surplus-population can in principle be split into
two segments: 1) those that sell goods obtained directly from the capitalist
producer or from the capitalist merchant, and 2) those that sell goods produced by pirate capital. The complete typology of the hawker is certainly
much wider and we will return to this point later.
The first fraction of street workers contains the following characteristics. Firstly, their activity is not necessary for capital self-expansion. The
small subsidiary producers of services were originally in charge of the filling of accumulation vacuums in commerce. Indeed, street dealers represent commercial over-labor. Secondly, and at the same time they open
new channels for commodity realization, parallel routes of selling that are
in no way despised by capital. The lower prices of retail street dealers
expand and accelerate the transit of a commodity from the producer to
the consumer. Capitalist production has not produced more value, but a
redistribution of commercial income has ultimately been made possible,
thanks to the street dealer.
The producer of commodities containing surplus-value needs to sell
them in order for production to retain its social meaning. The realization
of the product is the supreme event of his activity. He is not interested in
the social condition of the buyer and the purposes that commodity has for
the buyer. For the producer or for the large capitalist merchant, the
hawker and the small settled dealer carry out the same functional role:
both effectively place a commodity into the hands of the consumer.
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economic relations which are different from those of capital proper in its
pure and dominant form.
It can also be appreciated that the intervention of the surpluspopulation is far from giving way to an idyllic combination. The highest
degree of contradiction is introduced when the surplus-population is
incorporated into the valorization of pirate capital. At first glance, pirate
capital seems to be a simple phenomenon of capital competition, but it is
in fact something qualitatively distinct. It is the introduction of plunder
against a given capital as a condition for the functioning of another. Crime
in this context becomes permanent and has no positive impact on capital
development.
The surplus population whose activities somehow link with capital
accumulation is to be understood for that reason as relative surpluspopulation. Either these are subsidiary producers of goods and services,
irregular and surplus commercial proletarians, or direct proletarians of
pirate capital. In general, their activities are not a condition of existence
of the capitalist mode of production, even as they effectively become so
for some capitalists.
Surpluses of Population Beyond Capital Valorization
We have seen that the non-capitalist organization of labor can appear
related to the accumulation of capital in spite of its form. So, within those
limits, it is not correct to uphold that we are speaking of non-capitalist
activities. The evidence for this relation is so overwhelming that a turn
towards the other extreme, that is, towards the proposal that every noncapitalist organization of labor ultimately exists to serve the development
of the dominant economy, could somehow seem reasonable. Nevertheless,
activities that are excluded from the modern economy do exist and have
a significant presence, especially if understood as the absence of links that
are useful either for capitalist production or for the valorization of any
particular investment of capital.
In addition to the various types of street retail dealers already discussed, it is possible to distinguish others such as: a) those who sell stolen
goods; b) those who collect and sell used goods (clothes, spare items,
instruments, furniture); c) those who trade products that are more or less
available in nature, such as fruit, medicinal plants, animals (rabbits,
snakes, countryside rats); d) those who proceed to the market with products from their plot; e) those who offer non-essential or temporary services for homes; and f) those who live off the charity of others.
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labor is insignificant and their use only substitutes the use of the same
means by the families themselves. On the other hand, in category f) are
those activities that promote public support, as in the case of a windshield
cleaner at the crossroads, the juggler, the fire-eater, the clown, the musician, the caretaker of parked autos, the porter moving baggage at stations,
and the beggars lining the streets.
What About Home Labor?
So far we have shown that accumulation in underdeveloped countries
creates, in relation to itself, not only a relative surplus-population but also
an absolute surplus-population. However, we cannot finish our brief overview of the relation which surplus-population shares with capital accumulation without considering the problem of domestic labor. On the one
hand, it figures prominently in Latin Americas labor map. On the other,
the issue is normally solved incorrectly, assigning this kind of work to the
ranks of informal labor. This treatment simply says nothing about its
economic meaning and at the same time it contributes to strengthening
the prevailing, twisted images concerning the issue.
Home or domestic labor covers a wide range of physical, intellectual
and cultural activities. Services such as health and education are, to a
large extent, provided by the state, but they are very much complemented
in the household. This labor is necessary for the production and reproduction of labor-power. In most working families, this labor is carried out in
the context of an historic and cultural division of labor that assigns most
of domestic service to women, although men and children seem to have a
growing participation.
The household service work as a part of the necessary labor for the
reproduction of the body is included in the value of labor-power. The fact
that it is the worker who earns the necessary income for the reproduction
of the family in exchange for his labor and not in exchange for his laborpower, i.e., a capacity that must be produced daily, projects the notion that
domestic labor has no role in value production. Consequently, the relations of dependence of men to women are hidden while mercantile practices emphasize the role of the worker as the home provider. These
images are of course alien to the person who, in addition to laboring in
order to earn an income, must also pay for the work of cooking, house
cleaning, clothing cleaners, and so on. In this case, it becomes crystalclear that the domestic service carries with it the spending of an energy
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that must be restored, just as the energy of the worker who pays the
domestic laborer must be restored. If the worker carries out the necessary
domestic labor for the reproduction of his labor power himself, the resulting saving should be taken as a result of self-paid labor.
The falling value of labor-power promoted by neoliberal globalization
has pushed wage-earning families to introduce new practices in their
reproduction strategies. Not only women, but also children have joined
the labor market in the pursuit of incomes to complement home spending. The better remunerated families, especially those where a couple is
employed, are in a position to employ a third person for completing
domestic tasks, or at least an important part of them. In this case, the familys monetary income equals the amount that the couple receives less the
amount they pay to the domestic worker. For all practical purposes,
the remuneration of the family are not equivalent to what it is paid by the
employer(s) since a part of it must go to the domestic worker.
As a matter of fact, the relation between domestic workers and their
employers is exposed to tensions around remuneration. But there is no
relation of labor exploitation involved. The fact that the domestic worker
receives a wage does not mean that s/he is a producer of surplus-labor,
nor is the employer a capitalist just because s/he pays the wage. The
meaning of the quarrel here relates to the distribution of family income
and not the distribution of profits.
If the employers labor is useful to accumulation, the same applies to
domestic labor. The home worker participates in the production and
reproduction of the labor-power that serves accumulation, and which,
ultimately, is the source of wealth. This is why, also in capitalist society,
this home worker is a member of the necessary population. This is so even
if the worker does not carry out all of the domestic labor. There are many
reasons for this: cultural norms in cleanliness (using cleaning as an example), practical tasks (childrens education), and so on. What is important
is that the domestic worker makes it possible for others to engage in accumulation linked tasks.
If the situation is looked at from the point of view of the home worker,
it is possible to detect some other relevant issues. The reduction of the
value of labor power has sharply affected low income families, where the
head of the household is subjected to precarious labor conditions. It has
become necessary for other family members to make a contribution to
the family income. For a great quantity of women, domestic labor represents the best possibility of employment. Women from families in a state
of poverty have also joined the labor market. The difference is that these
women cannot at the same time free themselves up from any domestic
labor in their own homes. Technological development of the means of
domestic labor (washing machines, microwaves, cleaning and cooking
devices, and the like) has lightened a burden that would otherwise be
unbearable. In spite of that, their labor has been intensified.
We have presented active workers, splitting them up into those who
directly satisfy the processes of accumulation and those who do it indirectly. The former, together with the industrial reserve army, we argued,
are necessary population, while the latter are to be considered part of the
relative surplus population. The same division is valid for domestic labor
and for domestic employment because domestic labor produces and reproduces the labor-power in its position vis--vis the process of accumulation.
That is to say, if domestic labor contributes to the production of necessary
labor power, the domestic worker is also a part of the necessary population. S/he will be a part of the relative surplus-population when the
employer whom s/he works for also enters this category. By the same
token, the absolute redundancy of the worker determines the absolute
redundancy of the domestic labor devoted to her/his reproduction.
The Nature of the Latin American Migrant Worker
and the Historical Record
Migration is one of the options that workers can activate in their search
for a suitable means of living. We can say that their specific condition
reveals another feature of international labor mobility and the nature of
most migrant workers becomes clear. Generally, the worker who emigrates can be regarded as one for whom accumulation lacks a productive
function in his own country, for either actual or potential production.
Governments are not interested in retaining these workers at home but,
on the contrary, they are inclined to support their moving due to the
problems that this shift mitigates and the advantages that it creates. They
are members of the surplus population, yet their situation is redefined as
soon as they emigrate and are incorporated into a productive activity in
the developed country that receives them. It now becomes clear that their
true nature is to be a part of a labor reserve army created in one pole of the
international system to serve in the other one. The growth and skill-level
of this labor power costs nothing to developed countries whereas it is
a waste to underdeveloped countries. This has been a prominent feature
of industrial colonialism for decades as it has evolved to modify the
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reached an estimated US$53.5 billion. These amounts could well be distorted because of methodological issues (CEPAL, 2006b) but they are nevertheless impressive and indicative. While they represented around 2.6%
of the regions GDP in 2005, it appeared that the remittances growth curve
had already begun to wind down by that year (Cortina, de la Garza and
Ochoa-Reza, 2005).
There is no need to explain the interest that remittances have caused in
national and international public organizations and in large private economic interests, where the banks are included. With the excuse of promoting a better impact of remittances on development, they try every
possible way within the framework of their respective interests to obtain
the best possible benefit for themselves. Remittances are overwhelmingly
destined towards consumption (8085% of them) and this indicates the
point to which the reproduction of the regions labor-power is accomplished by means of value created abroad. In other words, a part of internal production, equivalent to the consumption that takes place thanks to
the remittances and that is not satisfied by imports, rests upon the value
created by migrant workers. It follows that the regional production of
wage-goods for internal consumption is greater than the income generated internally for those purposes. Remittances take the production of
wage-goods beyond the limits determined by domestic wages and to that
extent therefore have a positive impact on local production and
employment.
Remittances have other positive effects, such as strengthening the current national reserves or increasing government income by means of
taxes, or even the reduction of poverty at no cost to governments or
employers. They can also have undesired effects such as weakening the
competitiveness of export products and the promotion of imports caused
by a strengthened local currency. But the disadvantages are just collateral damage in the context of a process of the export of labor-power
which has been assumed as a big business by the regions governments.
The question of the wage differentials between the different categories
of countries which makes remittances possible demands our attention in
this context. The surplus-population certainly bears upon it and, according to the perspective we have been working on, one point must be clarified. According to Marx: Taking them as a whole, the general movements
of wages are exclusively regulated by the expansion and contraction of
the industrial reserve army and this again corresponds to the periodic
changes of the industrial cycle (1991: 790). So, it is not the labor reserve
army that regulates the general movements of wages, but accumulation.
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The latter produces a labor reserve of a magnitude that varies with the
succession of phases in the process of production. In periods of expansion
the surplus-population decreases, the trade union movement is strengthened, competition between workers weakens and wages tend to rise. The
inverse of this therefore takes place during the contraction phase. That is
to say, the functioning of capital produces different power correlations
between social classes, thus creating different contexts for the negotiation
of the level of wages.
Now, what exactly may the situation look like in underdeveloped countries? A permanent overflowing surplus-population can only act as a
constant downwards pressure on the level of wages. Indeed, the surpluspopulation is one of the main reasons behind the low value of laborpower, for it can do nothing but weaken the strength of the active army.
This is not to say that the labor-power is paid beneath its value since its
value itself is lower than in developed countries (Figueroa, 1986). This
thesis is by itself so clear that, in fact, what must be explained is why the
relative value of labor-power in Latin America is not lower than it is, or
why there are periods when wages register increases.
The influence of the surplus-population on the level of wages consists
of two elements: one objective and the other subjective. The former is
defined by the existence of the surplus-population as an element that
results from the organization of the relations of production. The surpluspopulation is a burden for active labor. Its effect is negative. The subjective element appears because the surplus-population is also a highly
explosive repository of discontent and unrest. It has normally been an
integral part of the great social and political movements of the regions.
Landless laborers, the socially marginalized, the rural unemployed, and
the urban informal workers among others, all organize themselves to
pursue their own specific demands. In certain eras, they coalesce around
wider movements such as during the populist period. They have been
recently at the heart of movements that culminated with progressive governments in Venezuela, Bolivia, Ecuador and Nicaragua, and constitute
an important force of every significant political resistance to neoliberalism. Probably no outstanding movement that has ended with concessions
to the working class registers the absence of the surplus-population.
The social movement, however, also proceeds through periods of
ascent and retreat. Repression which includes plenty of dramatic episodes in Latin America is as consistent as social discontent. It is the
method by which capital restricts concession. Not only does it obstruct,
but it eventually orients the improvement of the living conditions in
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split labor into general and immediate forms in connection to most of the
locally operating industry is the fundamental fact. This proposition was
bound to make the explanation of the oversupply of labor and the permanence of non-capitalist relations easier.
Nothing of this is intended to deny the existence of segments of the
Latin American population that evolve as attached to their own traditional forms of social organization. They are not a product of capital
accumulation but their persistence has a bearing on underdeveloped capitalism, just as the same causes that account for labor oversupply explain
the inability of capital to dissolve pre-capitalist forms. From this perspective, the persistence of pre-capitalist relations also appears as a failure of
the dualist transition.
We are dealing here with the legacies of a precapitalist past and it
would not be correct to simply incorporate them into the surplus population, a category of capitalism. This is why we did not discuss the indigenous population here, one which shares conditions like poverty, exclusion
and vulnerability with other sectors of society, but which deserves a
particular analysis. Besides, the indigenous population is not a reality
everywhere in the region and certainly is not a logical condition of underdevelopment in general.
It is estimated that between 3340 million indigenous people live in
Latin America. Most of them are located in Peru, Mexico, Guatemala,
Bolivia and Ecuador. Their relative weight inside those countries is
respectively greatest in Bolivia, Guatemala, Peru and Ecuador (Hopenhayn
and Bello, 2001). According to ECLA, there are 671 indigenous pueblos recognized by Latin American states (CEPAL, 2006b).
The indigenous pueblos are specific symbolic and economic spaces.
They try to live in harmony with nature and are subjected to their laws as
though these laws were dictated for them to abide by. They live in the
forests, by the sea, the rivers and on the land. Hunting, fishing, picking
fruit and organic cultivation are activities that the earth has spontaneously furnished for them to carry out reproduction while taking care of
nature. Nature lives in them and the ecological characteristics of their territories influence the creation and support of their cultures and identities
as pueblos. Cultural renewal has as its primary reference the care for
nature in the way that nature appears in each territory. The fruits of
nature can only be an object of collective appropriation and only cooperation can be the appropriate method for obtaining those fruits. That is
why egalitarian feelings flow with spontaneity among these peoples. The
leaders often lack motives to raise themselves above the community.
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investment applies. True, the rate of profit that a transnational corporation achieves in underdeveloped countries may be larger that the one it
obtains at home, but this in itself is no guarantee of economic expansion.
Domestic markets in underdeveloped countries are small, largely due to
low wages, and these countries do not offer the adequate technological
environment.
The third stage expanded the option of producing in low wage countries with a view to selling in high income countries. One determinant
that has constrained this possibility for Latin America is the absence of
adequate technological conditions. All of this helps to explain why investment concentrates on developed countries and those which in addition
to offering low wages pursue a dynamic state development function.
We have pointed out that the worker who leaves his underdeveloped
country for a country like the United States shows himself to be part of a
labor reserve army created with a view to serving in the recipient country.
In principle, he appeared as a member of his own countrys surplus population. Yet, this does not mean that he was necessarily unemployed. It
only means that he lacked a job under stable and bearable conditions. As
shown here, the surplus population is forced to do something in order to
acquire an adequate means of living. This seems to support the theory
according to which wage differentials and not precarious jobs and unemployment are the real cause of migration. In the same way that neoclassical theories pay no attention to structural causes, this explanation
overlooks the fact that migration has done nothing to equalize wages.
The international articulation of the labor market through migration is
now starting to deplete itself. The development of productive forces is
allowing advanced countries to create not only their own labor reserve
army but also their own surplus population. The attraction of migrant
labor-power is now limited to qualified segments of workers and temporary workers. This attraction should in fact continue to weaken.
Correspondingly, Latin Americas surplus population will grow as well.
This is its fate under capitalism. This trend might be moderated thanks to
a reorientation of productions to inward-oriented growth, a path that the
present world crisis is calling for, but in the final analysis, it cannot be
eliminated.
The propositions that we have expounded here are far from optimistic
regarding the future of the surplus population, as this will continue to
increase. This is the trend suggested by the dynamics of underdevelopment and capitalism in general at the present stage of development.
Yet we are by no means denying the possibilities of politics in terms of
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CHAPTER FIVE
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say, their existence is subject to dramatic shifts from one pole of the surplus population to another, a social transmutation that moves them from
being subsidiary producers to being independent producers whose maintenance must ultimately be supplemented by other family members.
Amidst an environment that harries them, they are forced to struggle in
order to get from politics that which the economy denies them.
In this chapter, we intend to develop further these propositions. First,
we will discuss the social character of peasant production from the point
of view of its internal organization. Our points of reference consist of the
producers relation to the means of production and the aim of production. Next, we will explore the relations of plot production to capital
accumulation, paving the way for an analysis of the dialectics of plot
production. Finally, we will turn to the social transmutation that such dialectics imply. To deal with all of these issues, we will build a logical construct that emphasizes the way that peasant production tends to evolve
independently from the form of economic growth and in isolation from
heterogeneous peasant spaces. To close this chapter, however, we will
attempt to assess the overall impact of neoliberalism on peasant production. Our approach remains squarely within the confines of political economy and no attempt will be made to encroach upon anthropological
terrain.
The Social Character of Peasant Production
Following Engels, we can say that in principle, By small peasant we mean
here the owners or tenantparticularly the formerof a patch of land
no bigger, as a rule, than he and his family can till, and no smaller than can
sustain the family (Marx & Engels, 1955 [1894]: 658).1 No attention will be
paid to Engels suggestion that there could be medium and large-scale
peasants, and it will be assumed that, alongside the peasant and other
forms of the surplus population, there are only small, medium and largescale capitalists who accumulate thanks to the exploitation of wage-labor.
Thus, the peasant is a small producer who: a) cultivates a plot that suffices
for his and his familys sustenance; and b) as a general rule, uses his own
labor power and that of his family, but who can resort to other labor power
when the family effort does not suffice.
1This citation from the Collective Works of Marx and Engels originates from: Engels,
Friedrich. The Peasant Question in France and Germany. Moscow, Foreign Languages Pub.
House, 1955.
Thus peasant labor configures a specific mode of production whose features so far amount to: a) production for consumption; b) mainly family
labor employed; and c) control (implicit both in ownership and possession) over the land which they work. Yet, few things are left uncontested
in social sciences and this approach is not one of them. Hence, it is important to elaborate a bit more on this definition.
The main aim of capitalism is profit through the extraction of surplus
value. The purchase of labor power obeys this fundamental objective.
As Marx put it:
Labor-power is not purchased under this system for the purpose of satisfying, the personal needs of the buyer, either by its service of through its product. The aim of the buyer is the valorization of his capital, production of
commodities which contain more labour than he paid for, and therefore
contains a portion of value which costs him nothing, and is nevertheless
realized through the sale of those commodities. The production of surplusvalue, or the making of profit, is the absolute law of this mode of production
(1990: 769).
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rate of surplus value), saves foreign currency and absorbs the growing
social unrest in the countryside (1974: 25).
For peasant production to be economically functional, it is necessary
that certain conditions be met, especially concerning technology and
extension of the plot. However, there is a structural condition that prolongs the possibility of peasant production to lend a service to capitalist
production. That is the fact that capitalist agriculture must pay a rent,
raise prices and reduce technological demands on small production.
Therefore, this is one more case of non-capitalist labor organization that
belongs to the relative surplus population under the guise of subsidiary
goods producers. Yet, this is not a permanent condition, for peasant production is far from being stable.
From Peasant Production to Infra-Subsistence Production
The assumption upon which the programs of agrarian reforms were generally formulated in Latin America, following Alexander Chayanovs thesis, is that due to the familys relatively intense labor, the peasant is able to
meet his own as well as his familys consumption needs. The required
extension of land was estimated on the basis of the given conditions of
soil quality and location.
Of course, if Chayanov inspired some agrarian reform efforts, it is not
his fault. In the end, he did not ignore the objections to his own concept
of the peasant mode of production which emerged from criticism and his
own observations of real processes. In effect, discussions in Russia and his
studies on US agriculture and its relation to technological progress, led
him to another topic, name, the projection of what he saw as advantagesof peasant production for the social organization of agriculture in
his own country. His proposals of cooperative organization in opposition
to land nationalization and socialization transformed his peasant economy into something different, especially by introducing profitability criteria. Towards 19281929, he abandoned his defense of the peasant economy
and in this way closed off the discussion that his own concepts had
created.
Chayanovs notion of the peasant economy should not be criticized for
failing to take into account a particular category of capitalist production.
He thought that these categories were fully articulated into a theoretical
framework and could contribute nothing to the understanding of the
peasant economy. Yet, his own understanding of capitalism is not free
from criticism. For example, he thought that the existence of a labor market (which he deemed absent from the peasant economy) made it possible to equate slavery and capitalism. But he did not stop at the peculiarities
of each mode of production. The selling of labor power by his proprietor,
the worker, cannot be compared to the definite selling of a whole body,
even by a third party. Still, it seems to us that the principal weakness of
Chayanovs work lies elsewhere. In short, he ignored the impact of capitalist production on the peasant economy.
In the work of Marx, the peasant economy is a process, or more accurately, a process of dissolution, due precisely to the dominant capitalist
environment in which it evolves:
the handicraftsman or peasant who produces with his own means of production will either gradually be transformed into a small capitalist who also
exploits the labour of others, or he will suffer the loss of his means of production () and be transformed into a wage labourer. This is the tendency
in the form of society in which the capitalist mode of production predominates (1969, Part I: 409).
So, the continued reproduction of peasants is not sustainable in this context. But at the same time, the transformation of a peasant into a small
capitalist or wage laborer is not a necessary outcome of industrially colonized societies, something that Marx could not have known. Other social
figures are an outcome of the dissolution of peasant economy, as we will
see later on.
Marx detected a variety of causes which erode the weak complexion of
the peasant structure, among which the following are worth pointing out:
a) the progressive fading away of the domiciliary industries that com
plement peasant production; b) the usurpation of communal property;
c) the development of large-scale farming, and d) improvements of
agriculture, which on the one hand bring about a fall in the prices of the
products of the soil, and on the other require greater investments and
more diversified material conditions of production, also contribute
towards this end, as they did in England during the first half of the
Eighteenth century (1991: 943944 ). Actually, the last two causes suffice
to envisage the tendencies within peasant production.
Family sustenance does not only depend upon what the family is able
to produce. It is also linked to the realization of the peasants product or
part of it in a market ruled by capital where production prices are constantly falling. Therefore, in order for the peasants to maintain a given
consumption level, it is necessary to steadily increase their production.
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This is why a direct relation has been established between the use of
supplies and the means of production and the size of the land exploited
(CEPAL, 1986). Peasant production yields will therefore tend to increase
much more slowly than those of the capitalist sector. The point is not that
peasant production does not improve, but that it does so much more
slowly. As a result, peasant income tends to fall. The next exercise, inspired
by the labor theory of value, will allow us to illustrate such a conclusion.
Let us assume the following initial situation of wheat production:
Table 5.1.Schematic Representation of Peasant Production at Point 1.
Kind of
Production
Yield
per Hectare
(quintals)
Value
per Quintal
(dollars)
Value
of the Product
(dollars)
Capitalist
Peasant
21
14
10
10
210
140
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Yield
per Hectare
(quintals)
Value
per Quintal
(dollars)
Value
of the Product
(dollars)
Capitalist
Peasant
26
14
8.08
8.08
210
113
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done nothing but impoverish them and ultimately forces them to take
refuge in self-consumption, while maintaining rather tenuous bonds with
capital accumulation. From then on, they will become independent producers, a member of the absolute surplus population. This social transmutation will initially affect those relatively smaller plots with the worst
quality soils and gradually embrace all of the rest. In this way, these producers swell the ranks of those who never had the opportunity to become
subsidiary producers.
In order to illustrate this process, we turn to ECLACs typology of
small producers in Mexicos countryside. The lowest link consists of
infra-subsistence producers (infrasubsistencia), i.e., those who have
fallen outside of the confines of the peasantry. Immediately above
them are subsistence producers (subsistencia) who are still peasants
but those only able to satisfy their basic food needs and create no surplus for any means of production acquisition. The next higher up
there are the stationary producers (estacionarios) who generate an insufficient surplus for repositioning. At the top of the peasantry we find the
sustainable producers (excedentarios) made up of those who are able to
invest in order to maintain their position as peasants (CEPAL, 1986).
In none of these categories does the hiring of labor power exceed
25 working days.
In accordance with the interpretation we are constructing here, the
lower strata of the peasant sector will tend to expand, thus creating a
pyramidal social structure. Eventually an ever larger amount of producers
will be pulled out of the peasant scene. This downward displacement
does not necessarily follow one link after another since certain processessuch as profound crises could violently transform the scenario. For
example, a sustainable producer can become transformed into an infrasubsistence producer under certain conditions. Other factors such as land
subdivisions by inheritance could have similar impacts on individual
peasant families.
Once a producer enters the infra-subsistence level or is in transition
towards it, the time has come to begin searching for a new occupation,
either fulltime or as a supplement to the family income. Those who
succeed in their search for employment mainly enter into construction,
transport or domestic service, apart from capitalist agriculture. But generally, that is when they discover that becoming a wage worker is a difficult
enterprise due to already well-established barriers. In one study on
the Mexican labor market using data from 1988, the following was
concluded:
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number had reached 1.4 million (CEPAL, 1999). In Central America, subsubsistence producers increased from 1.04 million to 1.14 million between
1989 and 1993 and it was expected that they would reach 1.32 million by
2000 (CEPAL, 1995).
This evolution is not independent of political implications, as social
unrest tends to radicalize. The revolution in Nicaragua and guerrilla war
in El Salvador managed to recruit a large portion of their ranks from
the poorer population in the countryside. Under different conditions, the
Zapatista guerrilla movement benefited from the same disposition of
the poor to armed resistance. Certainly, these sectors have also been
behind the emergence of popular governments, especially in Bolivia,
Ecuador, Nicaragua, Venezuela and even Brazil, a country that could not
ignore popular demands for agrarian reform.
Before moving forward to our conclusions, it is necessary to underline
the impacts of the conflict of capital and nature on peasants, something
which we have so far ignored. The evolution of prices is one of the most
evident, secondary forms of manifestation of this conflict so we take it as
a point of departure.
The reduction of unit costs and prices as a result of productivity
improvements is an established trend of capitalist production. Unit prices
fall in the long run because the produce unit value falls. While this historical process can be seen above, the trend became abruptly halted during
Table 5.3.International Prices* Index (Base 1990 = 100).
Commodity
1980
2000
Rice
Corn**
Wheat
Sorghum
Cotton fiber
Sugar
Bananas
Coffee
Shrimp
Cattle Meat
Tobacco
127.4
114.9
118.9
124.0
113.2
229.2
69.1
184.0
93.9
109.1
79.9
94.3
70.1
84.0
84.7
60.8
64.5
77.2
101.3
139.8
76.0
76.1
the first decade of the 21st century. Prices of primary goods increased,
although in a general context of volatility. They increased during the
export boom of 20032008, while in 2009 during the worst moments of
the crisis, they declined. In 2010, especially during the second half of that
year, they shot up again.
Factors unleashed during the third stage, which we have already
referred to, are to blame for this state of things. What we encounter
include factors arising from capitalist production which at the same time
call into question the regular operation of capitalism. They are the result
and manifestation of the present crisis in the capitalist exploitation of
nature. Among them, the following should be pointed out:
a)The effects of climate change. It is true that we do not yet have studies
that inform accurately about the impact of global warming in the
region, apart from forecasts built on the basis of case scenarios.
Although information exists on damage produced by climate events in
some countries, it has not been proved beyond any doubt that these
events are part of what has euphemistically been called climate
change. Yet, academic uncertainty in this connection does not refute
correlations in real life. On the one hand, rural dwellers know from
experience that the principal risk for their activity is climate variability and academic observations have confirmed this. Extreme climate
events have historically been the most frequent source of price variability in agriculture. And it has also been found that: the frequency
of floods and droughts on the American continent has multiplied
twenty times from the first half of the last century to the present 2000
decade. These climate disasters have contributed to harvest losses at
the global level, thus giving place not only to swings in prices of agricultural goods but also to devastating famines in the most vulnerable
regions (CEPAL/FAO/IICA, 2011: 13).
b)The rise of oil prices that resulted from already discussed causes
directly affects the cost of agricultural inputs and transport. According
to estimates, the prices of fertilizers have increased between 90% and
150% during this centurys first ten years. Now that the epoch of cheap
oil is over, and leaving aside its price volatility as a result of various
historical events, it could reasonably be anticipated that prices will
tend to stabilize for a period at a level higher than the one prevailing at
the beginning of the 21st centurys first decade. In this way, the spike in
oil prices has contributed to the disruption of the otherwise expected
evolution of prices under capitalism.
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Year
Europe
USA
& Canada
Latin
America
Per worker
1970
1990
1970
1990
19701990
1.904
4.747
450
577
11.571
22.561
218
317
1.058
1.588
332
428
4.7
1.3
3.4
1.9
2.1
1.3
This situation would not improve over the following two decades. On the
contrary, the relative productivity of agriculture, hunting, fishing and forestry in relation to the productivity of the same sector in the United States
continued to systematically fall. It represented 14.2% in 1990, 13.3% in
1998, 10.7% in 2003 and 7.0% in 2008 (ECLAC, 2010). The gap, instead of
narrowing, actually expanded even though productivity growth in the US
was lower than that taking place throughout most of Asia.
At the same time, the regions agricultural exports expanded and contributed to moderating the tendency towards increasing trade deficits
during 20032008 (although the effect was not as great as that registered
by the regions mining exports). This suggests that the increase of agricultural exports rested mainly on price increases rather than on productivity
advances based upon the introduction of technological progress. This is
not meant to imply that technological advances were not introduced, as
improvement in productivity, even though limited, would prove to the
3Behind these figures there is a very unequal use of means of production and supplies
which does not diminish. For example, in these more developed countries (Canada,
United States, Belgium, Norway, France, United Kingdom and Italy) the average use of
tractors for every 100 workers was 6.28 in 1970; in 1990, it increased to 13.24. In ten Latin
American countries (Uruguay, Argentina, Venezuela, Chile, Brazil, Costa Rica, Mexico,
Paraguay, Colombia and Guatemala) the same average figures were 0.39 in 1970 and 0.69,
20 years later. The same is true for fertilizers. The first group of countries employed 120.6
kilograms per hectare in 1970 and 136.0 in 1990. The second group of countries consumed
6.97 and 16.85 in 1970 and 1990 respectively (CEPAL, 1995). As should have been expected,
agriculture competitiveness continues to fall. The regions participation in OECD countries agriculture and cattle farming imports went down from 14.50% in 1980 to 6% by the
end of the 1990s.
contrary. What underlies these developments is an ever more concentrated pattern of technological innovation. As ECLAC has stated in relation to agricultural development during the third stage:
The most modern and capitalized sectors were able to introduce technological innovations, raise mechanization and direct production towards
more rewarding investments. On the other hand, small landholders stagnated and in many cases their situation deteriorated, this due to obstacles in
obtaining credits or getting access to technology and markets and also due
to their commitment to traditional crops which compete with imports
(ECLAC, 2004: 76).
So if the new situation concerning prices during the first decade of the
present century represented an opportunity for agricultural development,
this opportunity was greatly seized upon by developed countries but only
in much smaller measure by some of the regions countries and within
them, by large capitalist producers. This fact is illustrated with regard to
the shift towards global grain production in 2007 (Graziano, 2009).
The region as a whole continues to move backwards with respect to
competitiveness within the world market. This is a necessary effect of
industrial colonialism. In a context of commercial liberalization, the
future for agriculture looks rather bleak, except for some products such as
those utilized for bioenergy. Yet, social repercussions are also significant.
In principle, the impoverishment of weaker capitalist producers is a predictable result, but for some of them this impoverishment could mean
and has meant a downwards social mobility, for they have come to swell the
ranks of peasant production.
A large portion of small and medium capitalists in agriculture were not
in a position to properly confront commercial liberalization. As a result of
competition and the evolution of prices, the minimum amount of land
necessary to turn a profit became modified. An ECLAC study in Mexico
described this situation in the following terms:
The fall of income in the traditional segment of corn producers was reflected
by a tendency towards production concentration () Only by exploiting
larger extensions could producers have been able to reach the income level
they had during the early 1980s. This tendency certainly pushes many producers out of the market. Some of the farmers interviewed declared that if
they had previously obtained adequate income by cultivating 100 hectares
of corn, now they need to cultivate 250 hectares to obtain their previous
income. Thus, corn production has become a volume activity. In addition,
now they require strategic abilities to discern the best possible combination
of supplies to be applied due to the constant changes in relative prices and
they must count on their own capital to finance their activity due to the
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constriction of credit. Again, only a reduced segment of producers have
these abilities and resources (CEPAL, 1999: 74).
Therefore, globalization gave a strong boost to land and capital concentration in the countryside. Concentration of wealth and expansion of
poverty are highly common processes in rural Latin America. The social
meaning of these changes needs to be stressed. A whole sector of small
and medium capitalists has been forced to enter the ranks of the peasantry. We have no sure way of proving that this has been a generalized
process throughout the rest of the region, but we do have some information and a case study which indicates that this proposition goes beyond
intuition.
In Mexico, a significant decline of labor force employers took place.
They amounted to 855,168 in 1988 (CEPAL, 1999) and according to the
April-June 2000 national employment survey they had shrunk to only
166,557. The number of agriculture and cattle raising workers registered
at the Mexico Social Security Institute (Insituto Mexicano de Seguridad
Social, IMSS) declined 21% between 1982 and 1998, while the number of
the self-employed increased from 1,924,854 to 2,669,355 between 1988
and 2000 (INEGI, 2000).
Research carried out by I. Castro (1996) in Zacatecas, Mexico, confirmed that many entrepreneurs reduced the hiring of labor to a bare
minimum and were forced to rely more upon family labor. Similarly, some
of them had to give up the use of tractors and resort to animal traction to
do the job. In addition, there was a certain abandonment of the use of
water due to high electricity prices. For some of these producers, profit
was no longer a production goal. It is certainly true that in Mexico, special
conditions accelerated this social shift, including the lack of financial support for producers in particular, but the general tendency was already in
place before financial difficulties flared up in 19941995.
Conclusion
We have shown that the peasant economy provided a means by which a
part of the surplus population, which industrial colonialism creates,
makes a living. For that reason, it is also a means to which governments
resort with an eye towards attaining a certain measure of governability. In
this way, peasants join in the relative surplus population for a transitional
period.
APPENDIX
162
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capital may tend to a certain extent to arrest development in the capital exporting countries, it can only do so by expanding and deepening the further development of capitalism throughout the world (1963: 240).
Capital export was also dictated by the production needs of more developed
countries. The enormous growth of production was unsustainable without an
increase in the supply of raw materials. If we add to this the cheap wage goods
obtained from the region, we can build a more or less complete picture of the
regions economic role concerning developed countries: a) it provides areas of
exploitation under conditions of higher rates of profit; b) it provides cheap elements of constant capital for the expansion of production in developed countries; c) it offers a captive market for capital export; and d) it helps to keep the
rates of profit and surplus value high in developed countries in so far as capital
exports cheapen constant and variable capital at the core.
Through direct investment, foreign capital promotes the development of capitalism as it increasingly resorts to wage labor. There is evidence that initially,
foreign investment attempted to avoid the use of wage labor. However, the general economic advance coupled with the struggles of working people progressively forced the diffusion of labor relations that belong to capital.
The type of productive forces that were imported into the region also played
an important role in the transition. The railways impacted on social relations not
only quantitatively but qualitatively. As a product of large industry, it eroded precapitalist relations on a variety of fronts. First, it did so directly by means of the
mass employment of the labor force required for construction and maintenance.
The use of some kind of forced labor represents the absence of a capitalist labor
market and it vanishes with the development of the latter. Workers occupied in
railway work eliminated hands for agriculture, which in turn came to promote
the introduction of new technologies throughout the countryside. Second, this
erosion was advanced by accelerating the decomposition of craft relations by
demanding carpenters, blacksmiths, lathe operators, masons, smelters and the
like. It was also encouraged by facilitating labor mobility. In this latter connection, J.F. Leal and J. Woldenberg point out: The railways labor demand as
compared to the wide mass of agricultural laborers was rather limited. Yet, even
though railways did not represent an opportunity for mass employment, it
did represent expectations for countryside workers. It was a means to migrate
(1981: 97).2
The importation of railway systems further advanced the spread of capitalist
social relations by providing incentives for the expropriation of lands under control of direct producers. As the railway networks extended, the value of enclosed
lands increased along with the eagerness to get control over them. The expansion
of railroads spelled a risk for agricultural communities as John Coatsworths
work clearly shows. In his analysis of fifty-five conflicts between indigenous
2The translation of citations from Spanish texts is ours.
settlements and the haciendas in Mexico between 1877 and 1884, the author
reported that:
Most incidents dealt with illegal appropriations by large-estate owners.
Almost in every case some form of active resistance by peasants was
involved: prolonged lawsuits; demands to government employees, violent
protests or armed rebellions. In a number of maps () the location of these
conflicts has been signaled in relation the actual or projected railways
system. The result is impressive. Out of the 55 registered incidents, only 5
(9.1%) took place further than 40 kilometers from a railroad franchised by
the federal government; around 60% of the cases (32 out of 55) had taken
place at less than 20 kilometers from an actual or projected railroad
(Coatsworth, 1984: 122).
The legally protected seizures and usurpations of lands which did not clash with
resistance from the communities and the privatizations of national estates
also figure as methods of original accumulation, boosted by the expansion of
railways. Coatsworth succinctly argued that from the point of view of its socioeconomic impact, the expansion of railways was a process of usurpation of communal indigenous lands and public territory by the countrys ruling class and
landowners (1884: 134).
The impact of the new productive forces on social relations can also be
observed in the mining industry. In Mexico, the partido relation, which allowed
the worker to keep a part of the product for himself as compensation, originated
early during Spanish rule and had shown a stiff resistance to dissolution despite
the efforts of owners to dissolve it. It lasted into the final quarter of the XIX century, at least in those tasks that demanded some skill and where the conditions of
the labor process exposed the worker to a short life span. Cuauhtmoc Velasco
depicted this social relation accurately: This worker is not a wage-worker
because the fundamental part of his income does not come from wages, but from
the partido. This participation in mineral production involves him in the sharing
of the enterprises product and so it follows that the struggle that took place over
the elimination of the part belonging to the workers must be interpreted as part
of the separation process of the workers from their means of production. If the
partido was going to be dissolved in a given workplace, the workers threatened to
abandon the mines; actually they frequently abandoned the mines on account of
the news of prosperity somewhere else, thus affecting production at the mines
they left. Towards the end of the XIX century, a number of technological innovations reduced the need of skilled workers and labor conditions were improved.
Leal and Woldenberg (1981: 22) cite Santiago Ramrez who makes this connection
to steam driven machinery applied to extraction, drainage and drilling; the use of
dynamite in place of common gunpowder to blast; expanding rail transport;
the ventilation by compressed air at the points where the mechanic boring
was established; the substitution of the hammer mill by the Chilean drag mills;
and so on. We do not have sufficient information to assess the impact of
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In this way, the incipient owners of Japanese capital appropriated the scientific
principles objectified in it and actively engaged in their development. The
Japanese state, directly involved in this project after the Meiji Restoration, organized the Ministry of Industry and Technology, created an industrial infrastructure and promoted the training of technicians. Beginning in 1870, it stimulated
internal production to reduce the influx of imported goods from abroad and
helped decrease the nations trade deficit. Thus, the determined effort of Japans
ruling class maintained its aim of bolstering national development and showed
that underdevelopment was not an inevitable outcome of capital exports. This
leads us to now advance to the crucial point.
The Lack of Commitment to National Development by the Regions Ruling Classes
The fact that the ruling classes did not confront the penetration of foreign capital
with a national project, i.e., make any political attempt to reach development or
economic growth based on internally generated productive forces, is one of the
few generally accepted facts about Latin Americas history. In the case of Peru,
Anibal Quijano posits his conviction in this way:
Imperialist capital and its agency the imperialist bourgeoisie were able to
easily impose conditions for their hegemony in the country, given the
weakness of the Peruvian bourgeoisie and its inability to raise itself to
the position of ruling class before the imperialist invasion () and henceforth the concrete interest and behavior of that Peruvian bourgeoisie
would strengthen those conditions and the imperialist bourgeoisie hegemony. It (Perus bourgeoisie) could never be, a national class, except for its
Peruvian origin, it could not be nationalist and much less anti-imperialist
(1977b: 124).
R. Puiggrs put it in this way with respect to Argentina:
Contrary to the economy of less nature gifted nations but with a diversified
and inwards oriented production, Argentinas economy was vulnerable to
external changes to such a point that governments believed that their withdrawal from the prevailing international division of labor which made of
the country the worlds bread basket, the country would go bankrupt. The
notion that this international division of labor would prolong ad vitam
aeternam took root among politicians and economists () The fast and sensational advances during the prosperity period were equivalent to a bourgeois revolution which, under the lead of British capital, concentrated on
the export economy. The landowning oligarchy, which got rich under the
shadow of these changes, had the features of a big rural bourgeoisie and
joined forces with the commercial bourgeoisie. Both were free-traders and
in consistency with their class nature they tenaciously opposed industry
protection, arguing that this was artificial and anti-economic. Forty years
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later they still insisted on hindering the integral self-development of the
country in the name of a static and anachronistic conception of the world
market and the Argentinas reality (1977: 311).
To sum up, local ruling classes did not have in mind any sense of building economic sovereignty. As producers, they never thought of their own existence and
enrichment independently of the more advanced countries, or better put, in isolation of the latters development upon which they believed their immediate
interests rested. It was the fate of developed countries which determined the evolution of their exports and hence of their own fate. This is why their ideological
horizon was trapped within the limits of the international division of labor and
comparative advantages which the rent they acquired rested on. They were
unable to transcend free trade notions in accordance with their position as producers of international commodities. This also is why they defined foreign capital
as a natural ally to which they openly subordinated themselves.
The economic evolution of advanced countries determined not only the
demand of goods from the region but also the supply of goods to the region. And
supply, following the development of general labor and department I of the economy was qualitatively modified, not because consumer goods are displaced but
because capital goods are added. With capital export from the center, capitalist
relations of production spread in their specific underdeveloped form throughout
the region. Latin American capitalism therefore emerged not from a societal
project but from the movement of economic forces at international level.
It is as though the world economy, through its own evolution, had laid the
foundations for its conversion into imperialism, including the creation of a subordinated ruling class. This indeed turned out to be the actual process. What did
this process which created a ruling class lacking any national vocation actually
consist of? How can a society that is dominated by a ruling class so strongly
predisposed to subordination best be defined? Any serious reflection on this
issue points us back to underdevelopments originating causes. The relevant
process goes all the way back to Spanish rule and conventional colonialism. For
obvious reasons, we will limit ourselves here to the presentation of some general theses.
Prelude to Underdevelopment
The discovery of America was mainly the work of Spanish and Genovese commercial capital as a result of the search for new routes to extent mercantile circulation. In this way, a crucial step forward was taken in the configuration of the
world market, a step which in Marxs words: inaugurates the modern biography
of capital and which coincides with first moments of the process of creation of a
free proletariat. The prelude to the revolution that laid down the foundation of
the capitalist mode of production was played out in the last third of the fifteen
century and the first decades of the sixteenth. A mass of free and unattached
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appendix
proletarians was hurled onto the labor-market by the dissolution of the bands
of feudal retainers (Marx, 1990: 878). The world market, in turn, would propel
this social transformation. The discovery of America and the circumnavigation
of Africa created a new field of activity for the ascending bourgeoisie. The market
of East Indies and China, the colonization of America, the trade with colonies,
the increase of means of exchange and commodities in general gave to trade,
navigation and industry an unprecedented boost and with it a fast development
to the revolutionary element within the disintegrating feudal society (Marx and
Engels, 1972: 4041).
The creation of the world market, therefore, was not the work of capitalism,
that is, the work of a production regime based on free labor, for this is just emerging, a process that the world market would help to develop. As capitalism grows
the world market would expand on new foundations. Commercial capital does
not require capitalism to exist and it grows up in the most varied economic formations of society (Marx, 1990: 914).
At the same time, the conquest and colonization of Latin America is one of
the elements of original accumulation, a process which favors capitalist development in Europe but one whose scene is the entire world market.
As Marx put it:
The discovery of gold and silver in America, the extirpations, enslavement
and entombment in mines of the indigenous population of that continent,
the beginning of the conquest and plunder of India, and the conversion
of Africa into a preserve for the commercial hunting of blackskins, are all
things which characterize the dawn of the era of capitalist production.
These idyllic proceedings are the chief moments o primitive accumulation
(Marx, 1990: 915).
If original accumulation is the process which creates the capital relation and if,
on the one hand, it extends throughout the world market while, on the other, has
its venue in Europe where the birth of capital is actually taking place, then it
seems convenient to distinguish between a subject and an object of original accumulation. The conquest and colonization undertaken by Europe thanks to its
material development transformed Latin America into an object of original accumulation. In the main, the region provided the Europeans, on the one hand,
world money and, on the other, an area for commodity production, that is, it
contributed to the money concentration which must accompany the separation
processes and to the mass production of crucial commodities for capital steady
working.
In principle, three factors determine the form that production assumes: a) The
forms designed by the Crown according to its (feudal) image of society, b) The
pre-existing socio-economic forms and more generally, all the prevailing (material, institutional, environmental) conditions of the region; and c) the mercantile
purposes of the conqueror. This last one is the determinant factor, for whatever
the result of the clash between the first two, production would end up getting
organized to satisfy commercial capitals interests. In other words, the organization of production would reflect commercial capitals predominance, a concept
first suggested by Jos Carlos Chiaramonte (1984) in connection with Latin
America.
Before carrying on with this analysis we must expound our interpretation of
the predominance of commercial capital. This concept essentially includes the
following points:
a) Exchange between producers and merchants is submitted not to any economic law but to fraud and plunder as a generalized practice. As Marx explained:
When commercial capital exchanges the products of undeveloped communities, commercial profit not only appears as defrauding and cheating but to
a large extent does derive precisely from this () Commercial capital when
it holds a dominant position, is thus in all cases a system of plunder, just as
its development in the trading people of both ancient and modern times is
already bound up with violent plunder, piracy, the taking of slaves and subjugation of colonies; as in Carthage and Rome, and later with the Venetians,
Portuguese, Dutch, etc. (Marx, 1991: 448449).
Thus plunder and violence in Latin America are a manifestation of commercial
capitals predominance. The figure of the conqueror that arrives offering glass
beads in exchange for gold is far from giving an exact image of this predominance. All that which the conqueror does not obtain from the natives by means
of fraud, he gets by forcing the native to produce, making of him an object of
exploitation, with no consideration about local traditions and evolution. That is
why Marx states: The Spanish conquest put immediately an end to any further
independent development (Marx and Engels, 1972: 30).
b) Commercial capital predominance is linked to the backward state of material production: where commercial capital predominates, obsolete conditions
obtain (Marx, 1991: 444). This is not intended to signify that commercial capital
predominance takes place only under pre-capitalist conditions. On the contrary,
commercial capital prolongs (and deepens) its predominance under the period
of capitalist manufacture precisely because it accelerates the process of original
accumulation. In effect: Today, industrial supremacy brings with it commercial
supremacy. In the period of manufacture it is the reverse: commercial supremacy
produces industrial predominance, hence, the preponderant role played by the
colonial system at that time (Marx, 1990: 918).
c) The backward state on which commercial capitals predominance is established is a relative backwardness. A nations commercial predominance and
therefore commercial capitals predominance which becomes manifest in its
relations with the rest of the world, cannot be conceived of if the development of
that nation is not enough to support its power in terms of fleet, weapons, among
other things. Commercial predominance erected on a given state of development
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appendix
sooner or later reacts, provoking the stagnation of production. Actually, predominance of commercial capital is also predominance over industrial capital. Marx
states that The industrial capitalist is constantly faced with the world market; he
compares and must compare his own cost prices not only with domestic market
prices, but with those of the whole world. Previously this comparison was almost
exclusively the tasks of merchants and ensured commercial capital its mastery
over industrial (1991: 455). Given that under conditions of its predominance,
commercial capital is not submitted to average profit and on the contrary reduces
industrial profit in proportion to its thirst for profit and its possibilities to
obtain it, commercial capitals predominance plays a negative role on industrial
development.
d) A nations commercial predominance, therefore, restrains its own industrial development and results in the driving force of development becoming displaced to another nation. In that way, commercial predominance itself is displaced
until industrial development reaches a point where it is able to turn commercial
capital into its own agent. This point was reached after the industrial revolution.
This is why Marx writes: The history of Hollands decline as the dominant trading nation is the history of the subordination of commercial capital to industrial
capital (1991: 451). From this standpoint, it was precisely Hollands commercial
hegemony that prevented the industrial revolution from taking place in that
country.
e) The Spanish manufacturers decline can be explained in the same way.
Commercial capital condemned Spain to be supplied and to supply its colonies
in large measure with goods manufactured in the more developed countries, goods
which Spain paid for, not with internal production, but with income obtained
from the colonies. It follows that Latin America was not an object of original
accumulation to the benefit of industrial development in Spain, but rather to the
benefit of industrial development taking place in other places (mainly in Holland,
France and England).
f) The frustrating influence of commercial capitals predominance over development also impacts the transition to capitalism. The merchants control of production cannot bring about the overthrow of the old mode of production by
itself, but rather preserves and retains it as its own precondition (Marx, 1991:
452). In other words, commercial capitals control over production coincides
with the transition to capitalism only thanks to the intervention of other factors,
mainly the development of productive forces taking place in those locations that
step back from direct commercial hegemony.
g) The economically reactionary influence of commercial capitals predominance is accompanied by its politically reactionary influence. Marx asserts:
In modern English history, the actual merchant estate and the trading cities
also appear to be politically reactionary and in league with the landed
and financial aristocracies against industrial capital. Compare for example
the political role of Liverpool as against Manchester and Birmingham.
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commercial capitals interests. This is why the classic colonial system is also a
commercial system of exploitation, i.e., one where commercial domination is a
part of the whole system and which after independence becomes commercial
colonialism. In short, the classical colonial economy is organized around export
production. It therefore satisfies pre-existing needs and interests developing
abroad. Yet, insofar as such needs and interests condition the regions own labor
organization and evolution, they are no longer external factors, but internal factors. The regions economy is part of the world market just as much the world
market is a part of it and is subjected to commercial capitals predominance
around which society increasingly revolves.
At the beginning, export production is focused on precious metals. In this way,
the region helps supply money to the colonial power, facilitating money concentration and the expansion of money capital. Around mining centers, agriculture
and stockbreeding develops to support the mining complex. The possibilities of
export diversification remains closely linked to commercial capitals interests.
For the same reason, many of these possibilities are frustrated. In a study on
Mexico, for example, Andrs Lira and Luis Muro recount the case of linen and
hemp production. In principle, the Crown had authorized the production of
these fibers and to instruct the native in the arts of spinning and weaving linen.
However, it seems that soon the opposition from the mainland monopolist merchants grows as they saw that their interests would be endangered with the
growth of New Spains textile industry. As a result of these pressures, the Crown
revised its initial policy (Lira and Muro, 1981: 400). Sometimes, it is more directly
the arrival of commodities produced under better conditions abroad which ruins
local production. The same authors report the case of silkworm production
whose processing, after an initial growth, soon declines in the wake of competition from Chinese silk production. Certainly, the production of much demanded
and competitive export goods is boosted by trade with Europe as well as intercolonial trade. Such is the case of indigo, cochineal, leather, mercury, cattle, wine,
sugar, and some others. It was in this manner that a local producer class developed closely tied to trade with Europe and to inter-colonial trade and therefore
grew up subordinated to commercial capital for it is the latter that makes the
exchange possible and which exercises a decisive influence on what is to be produced (and what is not).
All through the 17th and part of the 18th Centuries, Latin America relaxed its
ties to the Spanish metropolis. According to Enrique Semo, Between 1650 and
1770, Spain enjoyed only 18 years of peace. In the beginning of this period, Spain
sent merchant fleets every year to Peru. Soon after, the fleets started to come out
every three or even every four years. From 1682, they did so every five or six years
(Semo, 1982: 110). Spains military campaigns and economic setbacks prevented it
from maintaining, let alone reinforcing, its economic links with Latin America.
Yet, this situation did not yield a proportional decrease of the regions external
trade, for contraband got stronger. Agustn Cu Cnovas affirms that smuggling
in the XVII century became a real colonial necessity (1982: 96). Sergio Bag in
turn stresses At the end of the day, everybody is an accomplice (to smugglers)
the consumers who preferred the cheaper and better quality smuggled commodities and the authorities who were almost always ready to let themselves be led
astray by phantoms that leave no trace (1977: 83). In this way commercial capital
actively restrained the exploitation of development local possibilities created by
the relaxation of relations with the Crown.
Even with all that, production diversified and local and inter-colonial trade
expanded. Entrepreneurs tended to build some economic strength and take root
in the region. Local administration, which at first appeared as a mere extension
of the Spanish state, gains some autonomy as the colony begins to learn how to
manage by itself. Yet, commercial capitals predominance was never disturbed.
In this regard, Enrique Florescano and Isabel Gil point out:
However, the distribution of privileges and powers was unequal. The group
located in the key sector of metropolis-colony relations (foreign trade) was
the best favored one. Merchants from the consulate of Mexico, by acting as
the metropolis agents, obtained the highest gains, because they were the
only suppliers of a captive and thirsty market. The large amount of profit
that they got thanks to their monopoly position constituted the capital that
allowed them to control exports by controlling credits to farmers who were
compelled to sell them back the totality of their harvest. Finally, the merchants accumulated capital allowed them to control internal trade and to
become the main moneylender, along with the Church, to miners, small
traders, artisans and farmers. This excessive accumulation of economic
resources granted them a principal place in colonial society, second only to
the place of the Church. Just like the latter, this group of merchants was a
privileged corporation that counted on courts, state agencies and special
rights; powers to carry out government tasks (to collect and manage taxes)
and economic power to appoint and remove government employees
(Florescano and Gil 1981: 483484).
Also the Church attained functions quite typical of commercial capital although
it did not show much interest in using its large amount of resources to control
production. Evidence of this was its reluctance to loan for productive ventures.
Loans were indeed rather scarce: While for mortgages, the predominant interest
rate was around 5%, it was impossible to get a loan for investment in production
with an interest rate lower than 20% (Florescano y Gil, 1981: 178). Merchants in
turn privileged export production. According to Semo, Mexico Citys merchants
or even the smaller merchants from provinces provided loans for the production
of cochineal, indigo, vanilla, and the like (Semo, 1982: 178). Thus production
heavily depends on merchants and their money as does the economic wellbeing
of producers who, for the same reason, position themselves at a lower level of the
ruling class structure, a position they can hold on condition of producing for a
market they do not know and is directly controlled by commercial capital.
174
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It was the development of large industry at the more advanced centers, especially England whose constant condition, among other things, was to increase
demand for raw materials that opened new opportunities for the regions export
production. Latin America had undergone a certain specialization which would
allow it to properly respond to such a demand. This specialization, which was
at first encouraged by Spain, would advance and strengthen to the benefit of
England. As Marx recognized, A new and international division of labor springs
up, one suited to the requirements of the main industrial countries, and it converts one part of the globe into a chiefly agricultural field of production for supplying the other part which remains a pre-eminently industrial field (Marx, 1990:
579580).
By industrial production, we do not just refer to finished consumer products;
it is now necessary to add the production of capital goods as one of its main components. The fact of the predominate exchange of finished consumer goods for
raw materials does not mean that advanced countries specialized in the production of the former like Latin America specializes in raw material production.
Neither should we understand by the growth of industrial production a purely
quantitative advance of accumulation. Large industry produces a constant renovation of the means of production, where every technological means is only a
transitional point to new and superior means. Accumulation essentially proceeds by revolutionizing its own methods so that industrial production also
includes the creation of technological progress.
Latin Americas link with England and other industrial countries could not be
reduced merely to the simple exchange of goods but rather to a structural linking
with an economic core that produces technological progress. On the other hand,
the importation of industrial goods weakens the necessity of producing them
internally throughout the region and spoils any effort aimed at creating domestic
industry. In other words, the so-called international division of labor relegates
the task of developing the productive forces in the hands of the core countries while
it places the peripheral countries in service of this task as if it were something that
does not directly correspond to its structural role. In so doing, it also locates the
development of scientific labor in the core countries.
This is why Celso Furtado identifies among the essential features of the 19th
Centurys world economy:
The existence of a nucleus with a considerable advance in capitalization,
that concentrates a large part of industrial activity and almost all production of machinery; a nucleus that also finances world exports of capital
goods, controls the transport infrastructure for world trade and is the main
global importer of primary commodities[Moreover, it includes]The creation of a network for the transference of technological progress as a subsidiary mechanism for the system of international division of labor facilitates
capital exports and, at the same time, connects capital exports to the international division of labor which the network helps to consolidate. Given
176
appendix
that the capital goods industry is located in the mentioned nucleus, the creation of new production techniques also remains geographically concentrated () This is why the techniques own evolution is conditioned by the
system of international division of labor that emerged after the industrial
revolution (Furtado, 1979: 4950).
It thus follows that after the unfolding of the independence movements, the
character of commercial capitals dominance changes. Foreign commercial capital controls a large part of the regions external trade whether directly or through
its connections with local merchants. As Ciro Cardoso affirms, Europeans
merchants located in Mexico, mainly in ports, exercised considerable control on
the (legal or illegal) commercial circuits of the country, directly and through their
closed connections with national merchants (1980: 57) Yet, even if national
commercial capital had worked with its own connections abroad, either merchants or industrialists, and if no foreign capital had operated in the region, the
final result would have been the same. Once the world market is controlled by
the industrial capital of core countries and commercial capital becomes nothing
more than its agent, local commercial capital has no option but to work for the
benefit of the now dominant reign of productive capital. Therefore, what appears as
commercial capitals predominance in the region is only now comprehensible as
the means by which core industrial capital exercises its domination over the region.
In this context, no sooner does industrial capitals interest in advanced capitalist countries become realized through the export of capital, does local commercial capital bury itself in capital goods trade, thus encouraging local
industrialization. If this industrialization focuses on export production, it is
something resulting from both the nature of Latin American society and productive capitals interest in advanced countries. The predominance of commercial
capital in the region is not only, nor mainly, based on its economic power. In
effect, it is the entire nature of the Latin American society that finally determines
this predominance. It cannot be otherwise because that society as it evolved historically exists for the world market and is defined in the first place, as a part of
the world market rather than for itself per se.
The real fatherland of the local ruling classes, the one in which they were born
into and evolved as ruling classes, is the world market. To the benefit of the latter
and in accordance with its degree of development at that point, they independently organized social life in spite of the conditions that had afforded different
possibilities. Given that the real export boom took place during the second half of
the 19th Century, it was the anemic economic period that preceded it which
pushed them to aim their sites on the recently conquered nation. Thus, their
consciousness as formed over a whole epoch afforded no real place for nationalistic feelings. This is a point that Charles Anderson nicely makes in depicting the
profile of the typical member of the ruling local classes:
The world he lives in and the relations he shares have little to do with the
nation. Rather, he has his eyes fixed on overseas, thinking about his commercial partner or about his large estates. He thinks of himself as a citizen of
the world, and surely he is, for the community he lives in goes beyond
national borders. Taking advantage of free convertible currency exchange
and transferability of funds, he invests or deposits his gains in the United
States or in Europe; he has in his possession at home as many manufactured
178
appendix
goods from North America or Europe as any other citizen of London or
Boston; his children have been educated abroad; he visits the cities of
advanced countries more frequently that he visits his own countrys urban
centers; he speaks some foreign language with proficiency. If he is from Cali,
news of New Orleans matters as much to him as news of Medellin; if he is
from Monterrey, he is more interested in the city of Los Angeles than Merida
(Anderson, 1974: 36).
This then is the portrait of a ruling class which was prepared to embark on a path
to the development of imperialism and underdevelopment in the region.
Finally, it only remains to say that with the installation of imperialism, the
domination of productive capital based in the advanced countries takes firm root
in the very capitalist relations of production. The local ruling class appear now,
strictly speaking, as capitalists as they confront the labor which they exploit, just
as they continue to appear as a subordinated class in service to their masters vis
vis the larger capitalist system.
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NAME INDEX
Anderson, Charles W.166, 167, 177, 178
Ayala, Maggy118
Bag, Sergio173
Bell Lara, Jos92
Bello, lvaro134
Braverman, Harry9
Buchele, Robert51
Burachik, Gustavo59
Butkevicius, Arunas82
Calva, Jos Luis148
Carton de Grammont, Hubert143
Cassiolato, Jos E.69
Castro, I.158
Chiaramonte, Jos C.169
Christiansen, Jens51
Coatsworth, John163
Cortina, Jernimo131
Cue Cnovas, Agustn172
Cueva, Agustn166
Daporta, Natalia119
De la Garza, Rodolfo131
De Soto, Hernando104
Dello Buono, R.A.87, 92
Daz Alejandro,C.F.104
Dumenil, Gerard51
Dzisah, James71
Engels, Frederick28, 119, 140, 168, 169, 171
Etzkowitz, Henry71
Faletto, Enzo62
Farr, Pedro116
Figueroa Delgado, Silvana63
Figueroa, Vctor14, 18, 19, 22, 25, 107,
132, 161
Florescano, Enrique173
Furtado, Celso175, 176
Gandsegui, Marco A, Jr.87
Garibaldi, Jos Alberto101
Gersovitz, Mark104
Gil Snchez Isabel173
Gligo V., Nicolo101
Gonzlez Amador, Roberto154
Hans-Peter, Martin40
Hopenhayn, Martin134
Houseman, Susan49
Jennsen Pennington, Henning65
Kadri, Ali82
Katz, Jorge60
Lastres, Helena69
Lara Flores, Sara Mara151
Leal, Juan F.162, 163
Lenin, Vladimir I.7, 8, 16, 17, 22, 161
Levine, Elaine128
Lvy, Dominique51
Lewis, A. W.104
Lira, Andrs172
Lynch, Lisa M.49
Macpherson, C. B.96
Maddison, Angus37, 128
Magdoff, Harry17
Mandel, Ernest37
Mansilla, H.C.F.104
Marx, Karl9, 28, 105107, 110,
140, 168171, 175, 176
Mayer, Jrg,82
Mistral, Carlos143
Moberg, David38
Muro, Luis172
Nun, Jos105
OConnor, James28
ODonnell, Guillermo96
Ochoa-Reza, Enrique131
Palley, Thomas I.50
Panebianco, Angelo96
Pellegrino, Adela128
Pennington, Henning Jensen65
Peters, Gehard42, 45
Peterson, PeterG. 42
Prebisch, Ral103, 104
Puiggrs, Rodolfo165
Quijano, Anbal105107, 165
188
Ramrez Necochea,
Hernn166
Ranis, G.104
Rey Santos, Orlando101
Rojas M., lvaro147
Rosdolsky, Roman106
Rosenzweig, M.F.104
Samaniego, Jos Luis99
Schejtman, Alexander146
Schumann, Harald40
Semo, Enrique172, 173
name index
Stern, Nicholas53, 54
Stiroh, Kevin49
Vacarezza, LeonardoS. 67
Vargas, Marco A.69
Woldenberg, Jos162, 163
Wooley, John T.45
Yoshitomi, Masaru59
Zsapiro, Marina69
SUBJECT INDEX
19731974 oil shock28
adaptive innovation65
Agrarian Reform World Forum139
Argentina74, 77, 93, 94, 98, 113, 156,
164166
Australia90, 112
banana83, 146, 152
bio-fuels154
bio-chemicals industry14
bio-energy alternatives54
Bolivia30, 91, 93, 98, 132, 134, 152
bracero113
Brazil62, 63, 74, 80, 86, 93, 152, 156
Bretton Woods Agreement of 194439
business cycle in Latin America81
Buy American Act of 193340
Canada40, 44, 51, 87, 88, 90, 112, 128, 156
capital25, 712, 1433, 35, 36, 3840, 42,
4555, 5862, 64, 67, 68, 70, 72, 73, 79,
80, 8492, 95, 100126, 128, 129, 132155,
157159, 161, 162, 164178
capital accumulation5, 49, 105, 111, 112,
114, 115, 120, 122125, 134, 136, 139, 140,
150, 166
capital and wage-labor relation18, 110,
111, 143, 164
capital distribution and competition8
change in the capital-labor relation36
concentration and centralization of
capital8, 107
concentration of capital7
internationalization of capital106
main aim of capitalism141
nominal capitalist142
organic composition of capital90
pirate capital103, 116118, 120122, 136
underdeveloped capitalism3, 24, 134,
136, 151, 164
capitalism in Latin America20, 58, 112,
113, 164
capitalist monopoly7
carbon27, 5355, 101
Caribbean Basin80, 86
Chvez, Hugo30
190
subject index
subject index191
192
subject index
self-paid126
shrinking trade surplus81
Singapore84
Sir Nicholas Stern53
small landholders154, 155, 157
small plot producer139
social classes132
socialism8
Socialist Bloc46
socialization of knowledge11
Southern Cone77, 79
speculation40, 47, 49, 52, 154
state development function4, 11, 32,
36, 41, 43, 52, 137
Stern Report54
structural adjustment79
structuralism104
subcontracting38
subsidiary producer of
services120
subsidiary producers of goods and
services115, 122
subsistence producers150, 152
sugar83, 152, 164, 172
surpluses of population115
surplus-population theory103
absolutely redundant107, 109
surplus value10, 20, 23, 24, 29,
36, 40, 110, 112, 120, 141, 142, 144,
149, 161, 162
production of surplus-value110
relative surplus value10, 20, 112, 149
Taiwan84
technology41, 49, 5965, 68, 70, 71, 83, 86,
88, 89, 144, 157, 164, 165
technological dependence21, 26
technological independence63, 69
technological progress12, 19, 49, 50, 60,
64, 68, 69, 84, 87, 117, 144, 147, 148, 155,
156, 175