* Latin America: A failed industrial revolution
THE LATE COLONIAL PERIOD
Regional fragmentation
Imperial dominion
INDEPENDENCE AND AFTER
ECONOMIC STRUCTURE
THE ECONOMIC VIABILITY OF AN INDUSTRIAL REVOLUTION IN LATIN AMERICA
Table 2.- PERCENTAGE OF BRITISH GOODS EXPORTED TO NORTH AMERICA
AND THE REST OF AMERICA
Table 3.- LOCATION OF FOREIGN INVESTMENT FOR CERTAIN COUNTRIES
SOCIAL STRUCTURE
Table 4:- COMPOSITION OF LABOUR FORCE (by 1800)
Table 5:- COMPOSITION OF NON RURAL LABOUR FORCE (1800)
Table 6:-COMPOSITION OF TOTAL WORKING POPULATION (1800)
Table 7:- DISTRIBUTION OF INCOME
Table 8:- AVAILABILITY OF MONEY CAPITAL
BACKWARDNESS AS A SYSTEM
CONSOLIDATION OF THE HACENDADOS
a) IMPORT OF BRITISH MANUFACTURES
Table 9:- BRITISH EXPORTS TO LATIN AMERICA
b) IMPORT OF BRITISH CAPITAL
Footnotes
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[pp. 161-189] SECOND SECTION
CHAPTER ONE
THE LATE COLONIAL PERIOD
By late XVIII century the Latin American mode of production was in
its final stage of consolidation. In Western Europe the industrial
revolution was in its mid-way to completion. In Latin America there
existed a self-sufficient economic structure shifting vigorously
from mining to agricultural economy (1).
This development changed colonial Latin America from being outpost
for Spanish and Portuguese plunder to a social formation being
plundered by the force of two alien colonial powers. Thus, a
society was being plundered by another society, and part of the
colonial ruling class wealth was being removed by the Iberian
ruling classes. Therefore, unlike earlier times, even the ruling
class in Latin America (the white creoles) was being submitted to
an external power, and the struggle to get rid of that submission
became more and more apparent (2).
Applied mainly in the last half of the XVIII century, the colonial
policy of the Bourbons helped not only to develop agricultural
economy in Latin America, but to exacerbate the contradictions
between the Spanish colonial rulers and merchants and the creole
landowner ruling class.
On the one hand, Spanish and Portuguese statesmen came to believe
that a more efficient exploitation of colonial resources was the
most efficient lever to national regeneration at home. Therefore,
they applied rationalization, centralization and administrative
reforms in the colonies, tightening the grip on tariffs on foreign
and inter-colonial trade. This was directly against the interests
of the creole ruling class, both in its domestic economy and
foreign trade. At the same time, in order to strengthen its
dominion through economic measures, the imperial state attempted to
dismantle colonial industry (3). Hence, the imperial state became
distrustful of local or independent initiative, and, most
important, became a critical and permanent element (negative) in
the calculations of creole miners, landowners and traders.
On the other hand, precisely in order to obtain more profits from
colonial exploitation, Spanish statesmen supplemented the
traditional emphasis on gold and silver with a fresh and impetuous
interest in agriculture as a source of wealth (4) and of Iberian
development of manufacture. To do so, they widened the scope of
commercial activity. Every port of Spain was now permitted to trade
with most parts of Latin America.
New areas of glittering prosperity were added to traditional
centres such as Mexico and peru. Cuba soon became the biggest
sugar-producing colony in the Spanish Empire. The region around
Buenos Aires known as River Plate witnessed a boom in ranching: by
the mid-eighteenth century its exports of bull and cow hides were
around 100,000 to 150,000 hides a year; by 1800, the amount was
around one million hides. In the Venezuelan region the production
of cacao was increased, and new export lines such as tobacco,
coffee and indigo were introduced.
All these new developments pointed to a growing interest in
agricultural activities, strengthening the hacienda-peon
relationship on the one hand, and rocketing economic growth, on the
other hand. The industry of coffee in Venezuela, for instance, is
a case in point. Starting in the late 1790s, it grew significantly
until the second half of the XIX century with the following
organisation of labour:
"cultivation was carried out nearly always by free men rather than
slaves on land other than their own. The landowner supplied land to
the cultivator, who paid him for the same work and in produce, the
owner thus dispensing with payment of money wages or the more
onerous burden of purchasing and replacing slaves with which the
cocoa producers were faced" (5)
Once again, we find here a hacienda-peon type of relation of
production: the direct-producer bartering his surplus labour time
for the right to use a plot on the hacienda's land. Therefore the
prosperity, the greater achievement in economic development that
occurred in the colonies at the end of colonial rule, was built
upon the consolidation of the hacendado-peon relations of
production; consequently, there was a consolidation of a class
structure in which a tiny minority of non-producers lived in a
market economy and a huge majority of direct-producers lived in a
subsistence economy.
I am not arguing that the late colonial economy was one of
subsistence. The late colonial economy produced a huge surplus that
was marketed both in the colonies and Western Europe. What I am
arguing is that the surplus extraction relationships in that
economy were such, that the direct-producers obtained their means
of subsistence outside the market, by immediate production, both
agricultural and handicraft (6).
Around 1810, in accordance with Humboldt's figures, agricultural
exports from Latin America formed about 44% of total exports.
Alongside the strengthening of the economic base of the hacendado
ruling class in the late eighteenth century there appeared two
important phenomena which marked a tendency to fragmentation into
regional zones of economic development, and a tendency to part from
imperial dominion.
Regional fragmentation:- The new outlets opened to external trade,
combined with the rapid growth of agricultural and mining exports
gave birth to new mercantile groups in several of the colonies,
whose interests were linked to local progress, as opposed to those
interests of mercantile and landowning groups in other colonies. A
case in point is the long standing commercial squabble between Lima
and Santiago, related to the trade of Chilean wheat and Peruvian
sugar, and the commercial power that the Peruvian merchants had in
the port of Valparaiso in Chile, where the Chilean grain was in
storage on its way to Peru (7). So, the XVIII century growth of
intercolonial trade also produced a tendency to antagonise the
various colonies, No doubt, this situation was a prologue to the
formation of nation-states after the end of colonial rule. These
nation-states were formed in accordance with the interests of each
local group of hacendados and big merchants, which eventually led
to the atomization of the continent in a score of nation-states.
Imperial dominion:- Because the Spanish economy was in a state of
backwardness, it was not prepared to meet the demands for imports
by the colonial ruling class with Spanish products. hence, the
colonial ruling class had to buy through the imperial state
merchants based in Spain, England, France and other European
countries, commodities, at prices that more often than not were
many times higher than if those products had been bought directly
from the English or French merchants. Thus, for the colonial ruling
class, imperial dominion meant a substantial burden on their
imports. A burden measured by the fact that in the late XVIII
century more than 40%, and at times more than 50% of the
commodities imported by Latin American colonies through Spain were
English or French (8).
To summarize, it can be said that in the XVIII century the colonies
in Latin America became social formations with self-sufficient
economies. Agricultural economies based on pre-capitalist relations
of production. The basic relationship of surplus extraction being
one of bartered surplus labour time. it imposed serious
restrictions on the development of any domestic market, but not on
the accumulation of wealth by the ruling class. This economic
growth created contradictions with the imperial state that gave
birth to political opposition to the Spanish rulers, and, at the
same time, brought forward intercolonial contradictions which
created a tendency to fragmentation as an antecedent of the nation-
states that were going to be born in the early XIX century.
INDEPENDENCE AND AFTER
As John Lynch describes it, by the 1800s...
"the colonies...appropriated more of their own production, and
employed their capital in their own administration, defence and
economy"..."developed its own shipbuilding industry"..."and
acquired an overall self-sufficiency in defence...this activated
not only shipyards, copper foundries and arms workshops, but also
secondary supply bases servicing these industries."
During the Bourbon's reforms, mostly in the late XVIII century,
whose "chief object was not to remove the foreigner but to control
the creole", and, moreover, was an attempt at "the second conquest
of America", "a bureaucratic conquest", there was a long process of
alienation in which Spanish Americans became aware of their own
identity, conscious of their own culture, jealous of their own
resources, and this process accumulated with "independence
precipitated though it was by external shock" (9).
Roughly, as I will prove later on with figures, the economic
position of Latin America in this period was similar to the British
colonies in North America in the same period. Both groups of
colonies reached independence from imperial dominion in a similar
economic situation. Nevertheless, two hundred years after the
former British colonies had become the most industrialized nation
on earth, the Latin American countries were still in a situation of
generalised backwardness and extreme social inequality.
In order to explain such a dissimilar progress we must take a
closer look at the late colonial society which "had never been
gayer" (10).
The most common explanations of this socio-economic
underdevelopment in the region may be grouped into three schools of
thought:
Firstly:- That during colonial times there was imposed upon its
economy a sort of subordinated capitalist structure, and that this
subordinated economy became a pattern of underdevelopment
influenced by the development of capitalist countries in Western
Europe, North America, and japan in the XX century. It seems to me
that evidence shows (as I outlined in my First Section) that there
was no capitalist relations of production in colonial America as
determinant factors of its economy, to say nothing of its class
structure.
Secondly:- That Latin American colonies had a feudal mode of
production determining their class structures at the moment of
their independence. Therefore, what they suffer now is just a "late
state of development". It is important to note that in the XVIII
century some of the Western European countries also had the same
determining mode of production and yet they became capitalist
countries, e.g. France and Prussia. It seems to me that the basic
feudal relation of production, landlord-tenant, that made possible
the appearance of the relation of production landlord-capitalist
tenant-wage labour, on which was based the Western European
agricultural revolution as a first step in the industrial
revolution in the late XVIII century, was completely absent in
colonial Latin America. Moreover, the Latin American colonial
relation of production landowner-direct labourer, which is
denominated hacendado-peon relation of production, is not feudal at
all, as I discussed before in the First Section.
Thirdly:- The "scarcity of factors" school of thought. It states
that the cause of the failure of the Latin American countries
economies to take off lies in that in the aftermath of independence
there was scarcity of capital, free labour, an "entrepreneurial
spirit" within the ruling class, and foreign investment. It is well
known that in the United States there was also scarcity of capital
and labourers in the first century of independence, and both were
provided by foreign investment and immigration; nevertheless, there
is no parallel at all between subsequent Latin America and United
States development (11).
In order to clarify the validity of this scarcity argument I will
examine some features of Latin American economies in the early XIX
century.
ECONOMIC STRUCTURE
Evidence shows that by 1760 the value of agricultural production
was already larger than the value of mining production. By 1800,
agriculture comprised little more than 40% of the colony's gross
product, mining almost 40%, government around 6%, taxes to the
Spanish imperial state about 4%, the remaining was allocated among
commerce, manufacture (including handicrafts) and services.
Approximately 19% of gross product was exported, of which around
44% was agricultural merchandise. Thus approximately 20% of
agricultural products and 18% of non agricultural products were
exported. On the other hand, exports were always more than imports
(in value), varying from 34.5% of exports in 1784, to 59% in 1792.
In Mexico, for example, government income in 1780 was 10 million
pesos, and in 1800, more than 20 million, an annual increase of
about 3.5%. This figure gives a fair measure of the rate of growth
in the national product of mexico, if we discount variations in
taxation or improvement in its collection. doing so, we can take
2.5-2.8% as an accurate rate of growth of the national product of
mexico in that period (12). Furthermore, the Mexican economy was
not the fastest developing economy at that time in the latin
American colonies. Such places as venezuela, Argentina and Brazil
were having a higher rate of growth (13).
Thus, neither composition of gross product nor the trade balance
nor the rate of growth were different enough in Latin America as
compared with Western europe and North American countries in the
late XVIII century-early XIX century, to be considered an obstacle
for development of former Iberian colonies after independence. This
statement remains valid even considering the damages caused by the
wars of independence and the flight of money capital from the
region, because there is no evidence that its volume was of any
significance as a whole, and moreover, did not affect all the
region but only certain localized sectors such as Mexico and Peru.
THE ECONOMIC VIABILITY OF AN INDUSTRIAL REVOLUTION IN LATIN AMERICA
Former colonies such as the United States of America, Canada,
Australia and New Zealand had their own industrial revolutions in
the XIX century and early XX century, in spite of the fact that
British investment was massive there, and that they started with
relatively scarce populations. The reverse happened in Latin
America. Some scholars give as a major cause of this contrasting
form of development the scarcity of various major economic factors
in the area, such as: availability of money capital and free labour
force (in the sense of "free" of land), small size of the
population and lack of labour force through immigration, and basic
technology.
I will try to show that this scarcity of economic factors is a
myth, even if we take into consideration the material damages
caused by the independence wars.
Describing the background of the industrial revolution, H. L.
Beales states that:
"in the hundred years between 1750 and 1850, the pressure of wars
was extremely heavy. before recovery from the Seven Year's War
(1756-63) and the War of American Independence (1774-1784) was yet
complete, the conflagrations (1793-1815) which sprang from the
French Revolution flamed out. From these agonies an exhausted
Europe required some thirty years of convalescence. The great
economic and social transformation was effected, that is, in a
century of stress" (14).
In the same period in Latin America, there was a century of rapid
growth of the domestic production, only ten or fifteen years of
wars of independence, and again relative stability. This is hardly
a century of stress.
The main economic features of capital formation in the industrial
revolution were as follows:
- capital requirements were "astonishingly small", so small that at
the end of the eighteenth century the annual flow of new capital in
the leading commercial and industrial sectors was a round 1 per
cent of national income. Some estimates are that circa 1770
industrial investment in England and Wales stood at 1 million
(with a gross national income of 140 million), and that in circa
1811 it was well over 3 million (with a gross national income of
310 million).
- little of the wealth held by the landlords was converted into
industrial capital (15). The richest classes (landlords, merchants,
financiers) invested their money outside direct industrial
development, or else wasted it (16).
- in the same way the fortunes coming from the planters and
merchants of West India "were used to buy landed estates in Britain
or government stocks, and to make mortgage loans to planters, but
not for investment in industry" (17)
- and finally, "industry itself supplied most of the capital for
its own transformation", commerce provided an important
supplementary reservoir, but the part played by landed capital,
bank capital and "miscellaneous" sources seems very small" (18)
Let us now compare the national incomes of Britain, USA and Latin
America by the year 1800, elaborating on the figures given by John
J. Coatsworth (19).
The national income of Latin America (in US dollars of 1950) was
around 675 million: the United States, around 858 million, and
Great Britain, around 2094 million.
In accordance with these figures, industrial investment in Great
Britain was around 21 million annually (one per cent of the
national income).
In addition, as in Latin America less than 2% of the population
appropriated around 72% of the national income, and in the USA and
Britain around 5% appropriated about 48%, we have the following:
The availability of money capital to the Latin American ruling
class: 486 million.
To the ruling class in the United States: 412 million. And in Great
Britain: 1000 million.
Thus, Latin America as a whole was in a better position than the
United States in reference to this economic factor.
Another economic factor was the availability of "free" labour, that
is landless and mobile labourers.
Again referring to the year 1800, in the United States there were
about 4.3 million inhabitants, of which one million were black
slaves, assuming a labour force of 34% of the population, and
utilizing data similar to Great Britain, the number of "free"
labourers in the USA in 1800 was about 0.79 million.
In Mexico alone, the population was 5.8 million, of which 2.5
million were indian, 1.23 million whites, and 2.1 million mestizos
and blacks (only ten thousand blacks). So, the labour force was
about 2.0 million, of which 0.255 were vagrant indians, 0.350
artisans (the majority mestizos), and 0.250 mestizos working in
ranches and haciendas as wage earners, all in all 0.855 million.
More than in the United States of America.
In Latin America as a whole, there were approximately 2.3 million
"free" labourers, far more than in the USA at the time.
As far as the size of the population is concerned, in Mexico alone,
there were more inhabitants than in the United States, and it
should be remembered that in Western Europe, at this time, there
were countries such as Denmark, Sweden, Norway, and the Netherlands
with populations of 1.0, 2.5, 0.9 and 2.0 million respectively.
In Latin America, besides Mexico, Central America had 1.0,
venezuela 1.0, Brazil 2.5, Peru 2.0, Bolivia 0.9, Ecuador 0.5,
Paraguay 0.3, Argentina 0.3, Chile 0.9 and Uruguay 0.03.
By 1850, due to western European immigration, Brazil's population
was already at 7.5 million, Argentina 1.0 million, and Chile 1.5
million (20).
Therefore, as far as economic factors are concerned (as isolated
from its social structure) - such as national income composition,
availability of money capital, balance of trade, availability of
free labourers, size of population and immigration of Western
European labour force -, in the early years of independence, Latin
America was in a very similar condition to that of the United
States of America.
On the other hand, British exports of manufactures and investment
in Latin America during the XIX century have been singled out by
scholars such as Gunder Frank as one of the main negative factors
helping to underdevelop Latin America since independence times.
Again, a comparison with British exports (goods and capital) to the
United States seems to signal that foreign investment and imports
as such are not a sufficient cause to bring about underdevelopment:
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Table 2.- PERCENTAGE OF BRITISH GOODS EXPORTED TO NORTH AMERICA
AND THE REST OF AMERICA (21)
Years North America Rest Of America
1710-1730 7 8
1740-1760 10 8
1770-1790 25 13
1800-1820 30 20
1830-1850 20 18
1860-1870 17 11
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and,
----------------------------------------------------------------
Table 3.- LOCATION OF FOREIGN INVESTMENT FOR CERTAIN COUNTRIES
(22)
GREAT BRITAIN
1800-1820s Europe 30%
1830-1850s Europe 25%, USA 30%
1860-1870s Europe 20%, Empire 40%
1900-1910s Empire 50% (Dominion 30%) Latin America 25%
UNITED STATES OF AMERICA
to 1870s capital imported
1870-1880 capital imported
1900-1910 capital imported
GERMANY
1890s capital imported
1910s Africa?
1920s capital imported
JAPAN
1910s capital imported
------------------------------------------------------------------
Consequently, it is not foreign investment and/or import of goods
as such which leads to underdevelopment, but the way in which this
foreign investment, mainly is utilized. Thus, allocation of foreign
investment, alongside domestic investment, will depend upon the
particular organisation of the process of production of the
particular society in point. Hence, this allocation will depend,
eventually, upon the social structure. In other words, it is the
class structure which is at the basis of the rationality (any given
rationality) of economic measures.
Therefore, to understand the outcome of XIX century development in
Latin America we must study the social structure that existed on
the eve of independence. As Dos Santos accurately states:
"the rational use of resources must be understood in the context of
particular historical situations. rationality is defined by men,
and men exist in history, in concrete societies and social groups.
In other words the rationality of an economic or political measure
can only be defined on the basis of an understanding of the social
system in which it is taken" (23)
SOCIAL STRUCTURE
The most detailed data available on population and social
distribution in late colonial Latin America, though incomplete, can
be found in J. Vicens Vives "Historia de Espana y America, Social
y Economica", published in Barcelona in 1977. I will use his data
together with works by T.E. Anna, H.S. Klein, J. Piel and O.
Cornblitt, R. Wasserstroom, B.R. Hamnett, R. Barbosa Ramirez and
Clayton.
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Table 4:- COMPOSITION OF LABOUR FORCE (by 1800)
Persons %
Military Personnel 160,000 3.0
Priests 30,000 0.6
Rural Workers 4,000,000 74.6
Artisans 700,000 13.0
Merchants 30,000 0.6
Miners 180,000 3.4
Manufactures
(obrajes-sugar and textiles) 19,500 0.4
Civil Servants 20,000 0.4
Domestic Servants 220,000 4.0
TOTAL 5,359,500 100.0
(about 35% of the total population) (24)
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As for the rural labour force, roughly its composition was as
follows: 2,400,000 Indians: one third of them working as peones in
haciendas, two fifths living in Indian communities, and sometimes,
as in mexico and Peru, doing work as peones in exchange for water
for irrigation, and use of roads in the haciendas, and the
remainder being vagrants, without any fixed work, and living from
bartering, robbing, and at times settled in religious communities,
actually working as peones. 650,000 mestizos, being pauperized
smallholders working part-time in the haciendas, either in exchange
for wages in kind, or as shareholders; some of them as full-time
peones. Thus, this huge 76.3% of the rural labour force was under
direct hacendados economic and social control.
Added to that there were 300,000 black slaves working in
plantations; 500,000 mestizos (and some whites) in ranches, and
working as foremen in haciendas and plantations, as wage-earning
labourers; some worked in the same capacity in tenancies; 130,000
whites (including some mestizos) were small and medium landowners,
some of them being tenants at the same time. Finally 20,000 whites
(including some mestizos) were big landowners - hacendados,
ranchers and planters.
Comparing with the rural social structure of England and Wales in
1688: (25)
Rural labourers not receiving any money for their work in Ibero
America: 3,350,000, or 83.75% of the rural workers. Cottagers,
paupers, workers in domestic industries and vagrants in England and
Wales: 1,600,000, or 37.6% of the rural workers.
Rural wage-earners in Ibero-America: 500,000, or 12.5% of the rural
workers. Rural wage-earners in England and Wales: 1,100,000 or
25.8% of the rural labour force.
Small and medium landowners in Ibero America: 130,000 or 3.25% of
the rural labour force. Freeholders and farmers in England and
Wales: 1,690,000, or 39.7% of the rural labour force.
This latter comparison is important because it was from this rural
stratum that in England and Wales capitalist relations of
production spread throughout the society. Conversely, in Ibero
America, the only stratum other than the big landowners in a
capacity to hire rural labourers were these small and medium
landowners, but, still, through the hacendado-peon relation of
production, the big landowners monopolized not only the land but
the availability of workers. Thus, what for the big landowners was
unlimited availability of labour power, for the small and medium
landowners was scarcity of labour power. Consequently, this
relation of production not only blocked the appearance of
capitalist relations of production within the boundaries of the
haciendas, but posed narrow limits to the development of such
relations on the small and medium farmer.
In England's countryside (one century before) the farmers were the
main lever in the relation landlord-tenant-wage labourer that
brought with it the so called first agricultural revolution
mediated by capitalist relations of production, basis for the
subsequent industrial revolution. As Maurice Dobb accurately
quotes, "farmers, like manufacturers...require constant labourers -
men who have not other means of support than their daily labour,
men whom they can depend upon" (26).
There was not such a possibility in the Iberian colonies in 1800.
The hacendados, directly and indirectly, used the bulk of the rural
labour force. That is, the whole of agriculture was influenced, in
various degrees, by the surplus extracting relation hacendado-peon:
firstly, this meant that the non-producers class could make certain
that the reproduction of the direct producers class was possible
without mediation of money: secondly, given the non-producers
monopoly of the land (more than 75% of arable belonged to 0.5% of
the rural labour force), any need to increase production could only
be met by extending absolute labour - more land under cultivation
and more peones. Extending, by the same token, the subsistence
farming in small plots.
On the other hand, the rural direct producers being responsible for
the production of their own means of subsistence, the needs for
production of means of subsistence for the non-rural populations
(31% of the total population, including black slaves in
plantations) were relatively small. Thus, there was plenty of room
to cultivate foodstuff or agricultural raw materials both for
domestic and foreign markets. As the domestic market was small -
precisely because of the features of the hacendado-peon relation of
production -, the bulk of the hacienda's production could go to
foreign markets as the most economical choice for the hacienda
class.
Finally, as compared with miners and merchants, the other two
components of the colonial ruling class, the situation of the
hacendados was far stronger. Even when all of them were tightly
linked to the fluctuations of the world market, and any serious
variation in international market prices or supplies could cause
bankruptcy to merchants or miners, this was not the case with the
big landowners, because they still had their means of subsistence
and of political invested in the haciendas. This particular
capacity to cope with internationally originated economic crises
made them the most powerful sector of the ruling class, hence their
capacity to shape the colonial and post colonial social structure
in accordance with their interests. And from there too, the
apparent tendency of merchants and miners to become landowners,
adding to the high level of homogeneity of the Ibero American
ruling class.
As for the urban labour force, it was slightly more than 25% of the
total. Almost 60% of the domestic income was produced by this
sector. In order to examine a cross section of this non rural
sector I am going to use available data from J. Vicens Vivens, and
as a tool for analysis, the same division upper/lesser groups as in
Gregory King's "Estimate of the Class Structure For England in
1688" (27)
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Table 5:- COMPOSITION OF NON RURAL LABOUR FORCE (1800)
---------------------------------------------------------------------
Ruling class Persons %
Upper Merchants 8,000 0.6
Manufacturers 3,500 0.3
Mine Owners 12,000 0.9
Upper civil servants 11,000 0.8
Upper clergy 6,000 0.4
Spanish born officers 25,000 1.8
TOTAL NON RURAL
RULING CLASS 65,000 4.8
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Middle Classes
Lesser Merchants 22,000 1.6
Lesser civil servants 9,000 0.7
Lesser clergy 24,000 1.8
Creole officers &
professionals 25,000 1.8
Upper artisans 175,000 12.9
TOTAL NON RURAL
MIDDLE CLASSES 255,000 18.8
---------------------------------------------------------------------
Lower Classes
Lesser artisans 525,000 38.6
Soldiers 110,000 8.0
Workers in mines 168,000 12.4
Workers in manufac. 16,000 1.2
Domestic servants 220,000 16.2
TOTAL NON RURAL
LOWER CLASSES 1,039,000 76.4
---------------------------------------------------------------------
TOTAL 1,359,000 100.0
---------------------------------------------------------------------
If we add this non rural data to those of the rural social
structure described above, we have the following:
---------------------------------------------------------------------
Table 6:-COMPOSITION OF TOTAL WORKING POPULATION (1800)
Persons %
---------------------------------------------------------------------
RULING CLASS: 85,000 1.6
- rural: 20,000
- urban: 65,500
MIDDLE SECTORS: 385,000 7.2
- rural: 130,000
- urban: 255,000
WAGE-EARNERS: 1,319,000 24.6
- rural: 500,000
- urban: 819,000
NON WAGE-EARNERS: 3,570,000 66.6
- rural: 3,350,000
- urban: 220,000
TOTAL 5,359,500 100.0
---------------------------------------------------------------------
Thus, the most striking feature of this social structure is that
two thirds of the population were outside the domestic market, as
defined by the circulation of money for goods, and viceversa. but,
still, this does not enable one to conclude that in early XIX
century Latin America there was not a middle sector capable of
developing capitalist relations of production through availability
of money capital. In order to demonstrate this, we must analyze the
pattern of the distribution of income in the region, and compare it
with another society when the latter was in the early stages of
transition to a capitalist mode of production (28)
---------------------------------------------------------------------
Table 7:- DISTRIBUTION OF INCOME
LATIN AMERICA - year 1800 ENGLAND AND WALES - year 1688
Population (%) Income (%) Population (%) Income (%)
---------------------------------------------------------------------
1.6 71.9 1.2 14.1
7.2 13.0 31.7 59.0
24.6 13.3
66.6 1.8 67.1 26.9
---------------------------------------------------------------------
Table 7 shows that while in Latin America the riches sector earned
almost 1,500 times as much as the poorest two thirds of society (in
per capita basis), in England and Wales it was only slightly more
than 29 times. Moreover, the middle sectors in Latin America, 7.2%
of the population, were in a similar position of difference of
income with respect to the richest strata, than the poorer in
England and Wales. The latter had a ratio of 1 to 29 with the
richest, while in Latin America, the middle sector had a ratio of
1 to 25.
If we consider that the national income in Latin America was
roughly 675 million dollars in 1800, and assume that in 1688 the
national income of England and Wales was similar, then we have the
following:
----------------------------------------------------------------
Table 8:- AVAILABILITY OF MONEY CAPITAL
LATIN AMERICA ENGLAND AND WALES
1.6% richest 485.3 million 1.2% richest 95.18 million
7.2% middle sec. 87.75 " 31.7% middle sec. 398.25 "
----------------------------------------------------------------
This data points to the heart of the matter: while in Latin America
money capital was massively concentrated in the richest sector of
the social ladder - the ruling class of a pre-capitalist mode of
production -, in England and Wales money capital was concentrated
in the middle sectors, where the appearance and development of new
relations of production was possible. Moreover, as a result of this
massive concentration of capital in the hands of the ruling class,
the difference in income per capita between rulers and middle
sectors was almost 25 to 1 in Latin America, as compared to 6.3 to
1 in England and Wales. Thus, the economic power of the richest in
Latin America was far greater than in England and Wales, adding to
the capacity of the hacendado class to resist changes in the social
structure. Consequently, as compared with England and Wales in
1688, in Latin America on the eve of the collision with the
capitalist mode of production, the middle sectors hadn't an
availability of money capital and an open access to free labour.
In 1688, in England and Wales, the limits posed by the social
structure were broad enough to permit the productive encounter of
money capital and free labour. In Latin America, in 1800, a
different social structure posed narrow limits to any organisation
of the labour process other than that of the hacienda-peon (29).
From the above, we can derive some characteristics of the system of
production: whilst small industries were sufficient to cope with
subsistence consumption, the remainder could be obtained cheaper on
the world market. As Lynch writes:
"...in the final analysis the prospects of national economic
development were defeated by the social structure of the new
states. The polarization of Latin America society into two sectors,
a privileged minority monopolizing land and office, and a mass of
peasants and workers, survived independence and continued with
greater momentum...Many landowners regarded their property as a
social rather than economic investment, and their greatest economic
activity was conspicuous consumption...Without agrarian reform
there was no prospect of raising living standards of the mass of
the people, and without this there was no possibility of industrial
development...Peasants living at subsistence level could not be
consumers of manufactures; and urban workers had to spend too much
on food to have anything left for consumer goods. In these
circumstances there was no mass market for national industries"
(30).
It seems to me that Table 4 to 8 illustrates precisely this point.
Two types of economies articulated in one system of production:
money economy for the ruling class, subsistence economy for the
bulk of direct labourers, with an intermediate zone of a mixture of
both economies. All in all, on the eve of political independence,
the Latin American social structure was as follows:
a) Less than 2% of the population monopolizing land, other means of
production, labour force, commerce, trade, and political life.
b) Around 7% of the population, the middle sectors, owners of land
and means of production, self employed, civil servants, et al, with
living standards far below the upper class, but, at the same time,
far above the rest of the society.
Sectors a) and b) were the bulk of the domestic market. Thus, the
middle sectors were bound to have the same interests as the ruling
class, because only an enlarged capacity of imports could improve
their living standards.
c) More than 90% of the population, of which two-thirds were non
wage earners living in or around haciendas, ranches and
plantations, and as domestic servants, impoverished small owners of
land, self employed, wage earners, et al, lived at a subsistence
level, outside of the domestic market, or, at most, on its fringes.
BACKWARDNESS AS A SYSTEM
Bearing in mind this general picture of the colonial social
structure that survived almost unchanged until well into the XX
century, it is possible to understand why it didn't need a broad
manufacturing sector to reproduce its relations of production, and,
most important, how the best way to maintain that social structure
for the ruling class was to fight against any encroachment of money
economy on the rural economy. In a word, the backwardness (as
compared with industrialisation) of the whole system was a
guarantee for the ruling class.
Conversely, in the absence of a significant middle sector, the
possibility of changes generated within the internal dynamics of
the socio-economic fabric, such as in England in the XVII century,
was absent. At the same time, the class of direct producers had
failed consistently in its attempts to change the situation by
force, adding to the rigidity of such a system of production.
So, the main lever in the mode of accumulation of this particular
surplus extraction relationship was that of enlarged production for
other than the domestic market. Not only was this the case for
mining production, but for any surplus produced above subsistence
level.
It follows that allocation of investment had to be made in
accordance with the need to maintain most of the direct producers
through subsistence goods obtained outside the market. Therefore,
the domestic market had very narrow limits - given by the aggregate
demand of the ruling class and some sectors which helped to
maintain the class structure. Thus, a reduced development of
production of industrial goods to be consumed domestically had an
economic rationality, on the one hand, and a social one, on the
other, because such a system of production of industrial goods
leads to a monopoly of the domestic market, tightening even more
the domination of the ruling class based in the first place in the
monopoly of the land. Such a pattern renders an industrial sector
producing capital goods unprofitable. As Barn summarizes:
"...their will to reinvest their funds in productive enterprises is
effectively curbed by a strong reluctance to damage their carefully
erected monopolistic market positions through creation of
additional productive capacity, and by absence of suitable
investment opportunities - paradoxical as this may sound with
reference to underdeveloped countries. The deficiency of investment
opportunities stems to a large extent from the structure and the
limitations of the existing effective demand. With very low living
standards the bulk of the aggregate money income of the population
is spent on food and relatively primitive items of clothing and
household necessities...Finally, the limited demand for investment
goods precludes the building up of a machinery equipment industry".
(31)
As this system of production was linked to the world market
dominated by British imperialism whose centre was a capitalist mode
of production, the sort of products to be produced in Latin America
and sold in the foreign market had to be those needed by the
emergent capitalist system: raw materials, both from agriculture
and mining, and foodstuffs for the ruling classes in the capitalist
nations.
Still, this merging of interests between Latin American ruling
class and the British ruling class brought with it the tag of
dependence, because the former didn't bother to invest in the
modernization of the exporting sector or the building of railways,
power stations, etc, to link that sector with the foreign outlets
of their products, leaving such a task to foreign capital.
In the early XX century, a Peruvian scholar wrote:
"to sum up, the new continent, politically free, is economically a
vassal. This dependence is inevitable; without European capital
there would have been no railways, no ports, and no stable
governments in America. But, the disorder which prevails in the
finances of the country changes into a real servitude what might
otherwise have been a beneficial relation" (32).
And the Chilean Edwards Bello, member of the ruling class, stated:
"The Trans-Andine railway, the most expensive in the world, is
English. By boarding a tramcar, talking on the telephone, eating
breakfast, buying in a shop, turning on the light, the Chilean is
contributing to the admirable life of an English capitalist who
takes his tea or plays his polo in the English Isles...Harrods, the
best shop in Santiago, is English. The sheep ranches of Magallanes
are in the hands of Englishmen, which means they pay miserable
export duties, because they naturally pay lawyers who are
influential in government" (33)
I am not arguing that underdevelopment in Latin America in the XX
century was caused by the internal social structure alone, and
that, consequently, British imperialism, and then American
imperialism, had nothing to do with it. My argument is that the
ruling class in Latin America, at the moment of trading
imperialism's encroachment in the region, had interests which
fitted with those of imperialism, in the sense that an export
orientated economy and a small development of manufacturing were
economic conditions suitable to maintaining their class dominance
in the continent.
That the Latin American ruling class was aware of the need to
maintain its domestic economic structure in the most profitable and
balanced way, can be seen in its constant industrial policy from
the independence wars until the early XX century: the various
governments of the new republics established a set of tariffs and
state policies to build industries whose products were cheaper than
those imported. In the first two-thirds of the XX century a massive
amount of domestic capital was invested in transport, storage, and
opening of new mining centres, and in improving agricultural
production, but just enough to foster exports of industrial raw
materials and foodstuffs, and not to transform the domestic market,
via, for instance, spreading capitalist relations of production to
the countryside and, at the same time, promoting industrialization.
(34).
My argument is that this development was limited by the existing
social structure, and that it was in the best interests of the
ruling class in this social structure to make partnership with
British imperialism (and then American imperialism), and that
partnership became a relation of master-vassal from the economic
point of view, but still a relationship that helped the ruling
class in Latin America maintain its dominion over the other
classes, to such an extent that in the XX century, for example, any
military aggression undertaken by the United States in the
Caribbean area had been carried out with the approval of the ruling
class of the country involved; and the same is valid for the more
subtle military and/or economic American aggression in the rest of
the continent.
CONSOLIDATION OF THE HACENDADOS
In the first fifty years or so after the independence wars, that
is, around 1860-70 three main factors had a role to play in the
shaping of "free" Latin America:
1) the geographical distribution of economic centres shifted from
Mexico and Peru to the east-south area of the continent: mainly
Argentina, Chile and Brazil.
2) the region became the object of new external influences,
embodied in the presence of British commercial and political
influence.
3) the basic features of the class structure were reinforced. The
new external influences until the 1860s can be grouped in two:
a) IMPORT OF BRITISH MANUFACTURES - It is a common myth that
imports of British manufactures "destroyed" Latin America's young
manufacturing industry. Evidence seems to point to something rather
different.
-----------------------------------------------------------------
Table 9:- BRITISH EXPORTS TO LATIN AMERICA
(declared values) (millions of pounds) (35)
BEFORE INDEPENDENCE AFTER INDEPENDENCE
Year Amount Year Amount
---------------------------------------------------------------------
1805 7.7 1831 3.6
1806 10.8 1833 4.8
1807 10.4 1836 5.6
1808 16.5 1838 4.7
1809 18.0 1840 6.2
1810 15.6 1842 4.9
1843 5.9
DURING WARS OF INDEPENDENCE 1845 6.0
1848 5.7
1811 11.9 1849 7.1
1816 2.1 1850 6.6
1825 6.4
-----------------------------------------------------------------
Table 9 undermines the conclusion that British traders "flooded"
the continent with manufactures after independence. It seems to be
the other way round: it was before independence, the period in
which colonial economy was at its peak with a thriving domestic
economy, that imports of British manufactures were at their
greatest.
Only in 1864 did these imports regain the level of 1809, at 20.1
million. On the other hand, while in the period 1800-1820s, British
exports to Latin America were 20% of the total, in the 1830s-1850s
they were only 18% and in the 1860s-1870s, just 11%. Then, again,
Latin America was not the main outlet for British trade imperialism
at the time.
Moreover, between 1845 and 1850 Peruvian exports of guano rocketed
from 14.1 tons to 95.1 tons, Cuban exports of sugar between 1811
and 1850 increased from 14.5 to 93.45 arrobas, Chilean silver
production between 1811 and 1855 rose from 10.1 tons to 212.9 tons,
copper production from 2.0 tons in 1821 to 42.6 tons in 1864, and
in Argentina, total exports were 5.2 million gold pesos in 1829 and
9.9 million in 1850.
Except for Mexico, whose exports of precious metals shrank from 21
million pesos during 1795-1810 to 9.0 million pesos between 1825-
1851, the other data seems to point to a fair recovery of Latin
America after independence, which was not followed by any growth in
imports of British goods but quite the opposite during the period
in question (36). Even more, during the first fifty years of the
XIX century most of the growth of the export sector was backed by
domestic investment and domestic industry.
Similarly, during the 1820s, the governments in Mexico, Peru,
Chile, and Argentina, all of them substantial markets for British
goods, were protecting local manufactures with custom duties of up
to 100% and more for foreign goods. In a word, the bulk of the
demand for British goods came from the ruling class, while the rest
of the society was supplied by the manufacturing sector
appropriated for the system of production as we saw before.
b) IMPORT OF BRITISH CAPITAL - Evidence shows that in 1825 the
import of British capital was 24.6 million pounds, of which 20.7
million were government loans; in 1840, the figure is 30.8, with
23.6 as government loans, and finally in 1865, it was 80.9 million
pounds, with 61.8 as government loans.
In reality, it is only after 1875 that British investments started
to be massive in railways, public utilities, financial sector, raw
materials, industry and shipping (37). But this period, until 1913,
was the period of consolidation of the Latin American economy as
dependent on the world capitalist system. I will elaborate on this
point later on in my analysis.
Certainly, the British presence in Latin America mushroomed some
time after independence, but the main economic effort was being
made by local capital and local owners of money capital, and the
manufacturing development was being promoted in accordance with the
economic needs of the upper strata of the ruling class: landowners,
miners and merchants, in order to obtain cheap industrial products
either from domestic or foreign manufacturing, and to improve their
business through fostering exports of foodstuffs and raw materials
needed in Western Europe and the United States.
Because of this, there was in the period in question a low rate of
growth for the manufacturing sector, and a fast expansion of
farming and ranching, alongside a stagnation of mining, with the
exception of Chile (copper and silver).
The European demand for dyewoods, skins, drugs, coffee and wheat
for the new markets in California at the end of the 1840s and
Australia in the 1850s, drove a boom all over the former colonies
in farming and ranching. This economic factor, which brought more
wealth to the landowners, was accompanied by the following
development: All the land that belonged to Spanish-born hacendados,
ranchers and planters who escaped or returned to Spain was
confiscated or merely sold as vacated. Of course, that land was
bought by the creole landowners, who saw the already huge size of
their latifundia enlarged. The land belonging to the Church also
was a target for further confiscations and redistribution among the
ruling class. And, most important, in the name of "modernization",
the creole hacendados managed to achieve something that the Spanish
Crown had never permitted: the ending of legislation protecting the
Indian communities. So, the creole landowners were now in a
position to seize the lands of the communities.
Therefore, more and more rural workers (mainly indians) were
incorporated directly into the role of peones; merchants and miners
incorporated themselves into the status of hacendados, the ruling
class became more homogeneous, with strong links between
hacendados, merchants, and miners, and because of this,
manufacturers also. The price of land rose, pushed by increased
demand, and an important part of domestic capital was spent in
these transactions, with a resulting scarcity of capital for other
purposes.
But, the most important post independence development was the
consolidation of the hacienda system, or, the strengthening of the
class structure.
The consolidation of the hacienda system had effects on the social
order, such as a deep immobility, economic conservatism, and rigid
class differences.
The strength of this social structure was so considerable that even
in the 1960s it remained the case that:
"Latin American agriculture is still largely organised in large
estates worked by several families under the direction of a single
owner, and in communities of smallholdings where each family
performs both entrepreneurial and labour functions. The area in
commercially operated estates has on balance increased at the
expense of the smallholders and traditional haciendas, and the
number of family-sized commercial farms and small commercial
estates has also grown, but far less rapidly than colonial
visionaries and liberal optimists had foreseen when they encouraged
the handing out of PEONIAS to disband soldiers and later when after
independence from Spain and Portugal they abolished primogeniture
and slavery. In the seven countries studied by the CIDA the owners
of estates hold an average of over three-quarters of the
agricultural land" (38)
Moreover, the estate-owner continued to hold considerable power
throughout society. This was so because "the nineteenth century
caudillos and aristocrats had shaken off colonial domination in the
name of political freedom, but had retained the colonial economic
and social structure" (39), and "control of land use in many parts
of Latin America was a social technique used by a minority to
impose a rigid discipline of work on populations living in extreme
misery"..."thus"..."agrarian structures are not only an element of
the production system but also the basic feature of the entire
social organisation." (40)
Accordingly, the imperial state destroyed by independence was
replaced by a multiplicity of nation-states, which took shape
around centres of trade ruled by hacendados, miners and merchants
with similar regional interests. The state became an instrument of
domination controlled by the creole ruling class, and therefore its
fabric had the pattern of the hacienda system. Thus, "the pursuit
of power became a principal means of pursuing prosperity"..."public
posts rapidly became part of a locally based 'spoils system'
operated by successful creole politicians" (41). Thus, the Latin
American state became a superstructure as all-powerful and all-
penetrating in society as its ruling class - a feature that still
persists in the region.
This relative success of the creole ruling class in getting rid of
Spanish domination without changing the class structure (42)
conditioned the solution to some new problems. The set of new
problems was as follows:
- a need for railways and better port facilities to transport and
deliver raw materials and foodstuffs.
-a need for stronger armies to deal with potentially serious
dissension in such a rigid social structure, and with external
threats from other nation-states.
- a need for ever growing services to manage foreign trade.
- a need to exploit new sources of raw materials to cope with world
market demand.
- a need to produce cheap means of subsistence for the ever growing
urban population, as a result of the over availability of labour
power in the countryside and the seizing by the landowners of the
land belonging to the Indian communities.
The latin American ruling class attempted to fulfil those needs
through two means:
1) obtaining loans from the world capital market to finance
expenses in armies and administration; foreign investment to
finance the building of railways and transport facilities; and the
establishment of some capital intensive mining industries;
2) promoting the development of a domestic consumer goods
industrial sector in the cheapest way possible way: importing
capital goods for these industries.
This process lasted roughly from the 1860s to the beginning of the
First World War. It marked the apex in the process through which
the Latin American economy ended irremediably tied to the world
capitalist system as a supplier of raw materials and foodstuffs.
The advantages of the arrangement, as we saw earlier, were apparent
for the ruling class in the region. So, what trade imperialism did,
in the last analysis, was to strengthen the class structure with
which Latin America emerged into independence. From this point of
view it can be said that the plundering of wealth from the
continent via trade imperialism was only a secondary factor in the
subsequent underdevelopment of the regional economy; the primary
factor was that trade imperialism became a partner with a ruling
class in a social structure which blocked the sort of industrial
development characteristic of the capitalist countries.
British investment doubled in 1875 with respect to 1865, more than
tripled in 1885, was about seven fold in 1895, eight times in 1905,
and almost fifteen times in 1913 (43).
The so-called "modernization" of the area, actually was "British
made". Thus, many important political and economic decisions taken
by the ruling class at that time were dependent on London approval.
Nevertheless, this pressure coming from the first capitalist
imperialism was not at all contrary to the best interests of the
Latin American ruling class. A case in point is that of Chilean
nitrates in the 1880s. It took a war against two neighbouring
countries for the Chilean ruling class to solve its financial
predicament through handing over the nitrate mines to British
investors (44).
This considerable inflow of foreign capital, unlike in the United
States where the relations of production were capitalist, and
consequently it helped to develop an internal capitalist economy,
was an important factor in helping to consolidate the dominion of
the landowning class in the region, and in the appearance of a
middle sector led by a specific type of "bourgeoisie", as we shall
see.
The period in question thus brought about social and economic
changes on a scale unknown in Latin America since the XVI century.
"Modernization" came to the continent in the realms of transport,
gas, electricity, telephones, technological improvements in mining
and agriculture, and foreign entrepreneurs, facing the native
system of production with the task of absorbing the capitalist
relations of production brought about by this modernization. On the
other hand, the landowners benefitted markedly. Haciendas, ranches,
and plantations were the source of primary commodities extracted,
grown, or raised on an unprecedent scale to export. Pastoral
products and temperate crops in Argentina and Uruguay; tropical
agricultural products such as coffee, sugar, and tobacco in Brazil,
Ecuador, Colombia, central America, and the Caribbean; mining and
various crops in Chile, Bolivia, Mexico, and, then, Venezuela.
In this process two new social sectors emerged with great force:
the middle classes and the working class, both belonging to an
alien mode of production. Capitalist relations of production were
introduced from abroad, its main inroads were in manufacturing and
mining, and in ranching to a lesser extent. These new relations of
production were incorporated by the ruling class in so far as they
did not endanger its position of dominance over the whole society.
Regarding this particular point it is illustrative to note that in
the rural areas, the landowners did their best to block and retard
the introduction of capitalist relations of production, managing to
impede the introduction of agrarian reforms until the second half
of the XX century.
At the same time, though foreign interests (the main introductory
agents of capitalist relations of production in the region) were
fighting hard to make the most of their investment, the motive
force behind the necessity to enlarge domestic production was
internal: a growing urban population unable to produce its own
means of subsistence and engaged in secondary activities related to
trade and commerce; financing the expenses of the state through
taxes other than on foreign trade, and, coping with the shifting
labour power from the countryside to towns or mining sites without
endangering the social equilibrium inherited from colonial times,
that is, supplying these masses with subsistence goods.
Therefore, the growth of consumer goods production was a most
important necessity. Since the end of the independence wars, the
Latin American ruling class attempted to protect the domestic
system of production of consumer goods (at that time composed
totally of handicraft products), in order to save money in imports
and re-allocate it to finance the armies, the administration, etc.
As this situation came into being when the industrial revolution in
western Europe was complete, it seemed only natural, for the non-
producer classes in Latin America, to import machinery instead of
trying to produce those industrial means of production in the
region, because for the production of capital goods to be
profitable, it needs a market far larger than the Latin American
domestic market. It follows that Latin American industrial sector
growth centred on the production of consumer goods through the
import of capital goods, and, in many cases, even raw materials and
intermediate goods.
For the purposes of my analysis the most important consequence of
this was that the new entrepreneurial class (even though it was
composed of different persons than the landowners, merchants, and
mining ruling class) developed a specific mode of accumulation:
through imports, and not through the production of capital goods.
It follows then that this "Latin American bourgeoisie" could
accumulate only if Latin America's capacity for imports was
healthy. Enlarged accumulations, for this bourgeoisie, meant the
enlarged capacity to import means of industrial production, that
is, its business was directly linked to the growing capacity of the
whole export system - export of raw materials and foodstuffs to the
industrialised countries. Of course, this enlarged accumulation had
its limits; the limits posed by the size of the domestic market.
Therefore, unlike the bourgeoisie which developed from the
decomposition of the feudal mode of production in Western Europe,
the Latin American "bourgeoisie" had economic interests similar to
those of the landowners, merchants and mining ruling class of the
pre-capitalist mode of production within which it developed. This
new class came into being integrated into the hegemonic system of
the oligarchy. As Veliz accurately put it:
"industrialization in Latin America is neither the product of the
activities of a rising bourgeoisie nor has it produced one. This
situation is fundamentally different from that of the rise of the
European industrial bourgeoisie". (45)
Contradictory as it is, the mode of accumulation of the industrial
entrepreneurs in the region was one totally depending on the
capacity of the economy to export and not on the capacity for
expansion of the domestic market. The rate of profit was related to
monopolizing the domestic market and not to increasing
productivity, and, last but not least, to the extremely low level
of wages: the latter, in turn, was related to the low social value
of necessary labour determined by the original relation of
production of the system, that of the hacendado-peon.
In general, then, a regressive distribution of income, and
dependence upon the world capitalist market were not contradictory
with the interests of this new entrepreneurial sector. In the same
way, it is not surprising that a process such as import-
substituting industrialisation in the region was implemented
without antagonistic contradictions with the class structure
inherited from the old Latin American mode of production. It is no
surprise, either, that the new industrialists became landowners and
landowners became industrialists, civil servants members of the
ruling class, bankers became landowners, and viceversa, producing
an homogeneous ruling class with middle sectors integrated within
that ruling class, and therefore opposed to any major change in the
social structure of their society.
To summarize, this is a case of a social structure belonging to a
pre-capitalist mode of production determining the structure of a
new system of production which absorbs capitalist relations of
production. Or, a pre-capitalist class structure surviving the
introduction of capitalist relations of production, and that social
structure articulating a new system of production.
This process has been ignored by many Latin American scholars.
Attempting to launch Latin America onto the road of "development",
they have utilised two schools of thought:
The first, represented by ECLA and the Christian-democratic
parties, tried to bring the region into the capitalist mode of
production as is known in Western Europe, North America, Japan,
Australia, and New Zealand. This occurred from the 1950s to the
1960s.
The second, represented by the communist parties and their allies
(both adhering either to the leadership from Moscow, or from Peking
until 1976), who tried to make social revolutions against
imperialist and oligarchic ruling through what they call "national
revolutions".
Both attempts failed because the class structure in Latin America
does not permit the development of a capitalist mode of production
as we know it in the industrialized world, in the first case, and,
in the second, because the Latin American bourgeoisie is not of the
same type as the Western European in the XVIII-XIX centuries;
therefore there are no "national" or "patriotic" sectors of any
significance in this bourgeoisie with which the working class and
the landless peasants could form an alliance against the oligarchy.
From this follows the consistent failures of the popular fronts in
the region.
-----------------------------------------------------------------
Footnotes
CHAPTER ONE
1) See Roberto Cortes Conde, THE FIRST STAGES OF MODERNIZATION IN
SPANISH AMERICA, Harper and Row, New York, 1977, pp.1-2; and J.
Fred Rippy, LATIN AMERICA: A MODERN HISTORY, The Univ. of Michigan
Press, N.Y., 1958, pp. 80-99; and HISTORIA DE ESPANA Y AMERICA,
SOCIAL Y ECONOMICA, edited by J. Vicens Vices, editorial VICENS-
VIVES, Barcelona, 1977, Vol. IV, pp. 283-389.
2) John Lynch, BRITISH POLICY AND SPANISH AMERICA, 1783-1808,
Journal of Latin American Studies, London, Vol. I, 1969, pp.4-6;
and Gonzalo Anes, HISTORIA DE ESPANA ALFAGUARA, Vol. IV " El
antiguo regimen de los Borbones", Alianza Ed., Madrid, 1975,
pp.435-444. Also, Maria Carmen Garcia-Nieto, Javier M. Donezar,
Luis Lopez Pueta, REVOLUCION Y REACCION, 1808-1833, Bases
Documentales de la Espana Contemporanea, Madrid, 1975, pp.216-226.
3) Jacques A. Barbier, PENINSULAR FINANCE AND COLONIAL TRADE: THE
DILEMMA OF CHARLES IV'S SPAIN, Journal of Latin American Studies,
Vol. 12, No. 1, 1980, p. 31.
4) Vicens Vives, op. cit. pp. 387-389.
5) Tulio Halperin-Donghi, THE AFTERMATH OF REVOLUTION IN LATIN
AMERICA, Harper and row, N.Y., 1973, p. 65.
6) Available data shows that agricultural and pastoral activities
- hence, the hacendado-peon relations of production - grew
considerably during the latter half of the XVIII century, alongside
the boom of mining in such places as Mexico. The most reliable
figures are those related to exports, since they were written down
in the archives of the bureaucratic system of the Bourbons. If we
combine figures given by Rippy, op. cit., and Jori Nadal and
Gabriel Tortella's AGRICULTURA, COMERCIO, COLONIAL Y CRECIMIENTO
ECONOMICO EN LA ESPANA CONTEMPORANEA, Editorial Ariel, Barcelona,
1974, we have the following table:
-----------------------------------------------------------------
EXPORTS FROM LATIN AMERICA TO SPAIN (in value. 1747=100)
Year Gold, Silver Agriculture pr. Total
jewelry
1747 100 100 100 (y.1753)
1784 204 733 250
-----------------------------------------------------------------
Mining exports grew 131%, against 1700 for agricultural products.
That is, a rapid development of farming and ranching during the
last stage of colonial rule.
7) Carlos Ugarte, EL CABILDO DE SANTIAGO Y EL COMERCIO EXTERIOR
DEL REINO DE CHILE DURANTE EL SIGLO XVIII, in Estudios de Historia
de las Instituciones Politicas Y Sociales, editorial Juridica de
Chile, 1966, numero 1.
8) FOREIGN COMMODITIES EXPORTED BY SPAIN TO LATIN AMERICA AS %
OF TOTAL EXPORT TO LATIN AMERICA
1784 54.84 1791 50.54
1785 55.93 1792 48.02
1786 48.12 1793 45.39
1787 55.63 1794 39.04
1788 47.33 1795 44.18
1789 43.25 1796 42.76
1790 48.14
Source: Nadal and Tortella, op. cit.
-----------------------------------------------------------------
9) John lynch, op. cit., pp. 3-7
10) Simon Collier, op. cit., p. 203
11) This disparity in models of development is a further proof that
similar economic factors do not produce similar effects on
different societies.
12) See Vicens Vives, op. cit., pp. 387-390.
Government income in Mexico (New Spain) was as follows (in pesos)
-----------------------------------------------------------------
Years Government Income (annual average)
1763-1767 6,169,964
1776-1779 10,000,000
1780-1799 18,000,000
1800 20,000,000
-----------------------------------------------------------------
13) The annual rate of growth for Great Britain from 1801 to 1851
was 2.9%. Circa 1770 its national income was distributed as
follows: agriculture 45%. manufacture, mining and building, 24%.
commerce, 13%. professions and domestic services, 11%. government
and defence, 4%. rent of housing, 3%. (P. Deane and W. A. Cole,
"BRITISH ECONOMIC GROWTH, 1688-1959", Cambridge Univ. press, 1967,
Tables 35 and 38). I am not arguing that British and colonial Latin
American economies were at the same level in 1800, but that both
had a similar ratio between agricultural and non-agricultural
products. Per capita income in 1800 was about 70 U.S. dollars in
Latin America, against 190 in Great Britain, 160 in the United
States, probably 150 in france, and 115 in Germany. (J.H.
Coatsworth, "OBSTACLES TO ECONOMIC GROWTH IN NINETEENTH-CENTURY
MEXICO", in the American Historical review, Vol. 83, No.1, February
1978, Table 1, and C. Cipola, "THE FONTANA ECONOMIC HISTORY OF
EUROPE", Vol. 3, pp. 110-111). In 1800 the United states "was still
a predominantly agrarian country, decades away from its industrial
revolution"; around 80% of its labour force produced around 40% of
its gross product. The same situation existed in latin America at
that time (Coatsworth, op. cit., p. 83)."...far from shifting over
from an immature debtor to a mature debtor in 1873, the United
States was a mature debtor (in the sense that net debt service
leaving the country exceeded net investment entering the country)
as a general pattern from the time statistics on the matter start
to be available, which is about 1790. There were brief periods when
new investment exceeded debt service in the 1830s and about 1870.
But the existence of the prolonged period (1790 to 1873) which
international economic texts describe as being a time when the
United States enjoyed a consistent import trade balance financed by
foreign investment, seems to be pure myth". (Wendell C. Gordon,
"THE POLITICAL ECONOMY OF LATIN AMERICA", Columbia University
Press, London, 1965, p. 239). Conversely, Latin America's balance
of trade (on goods and services) with Great Britain was negative
for the latter between 1854 and 1880, positive between 1881 and
1897, and negative again between 1898 and 1913, with an aggregate
balance of about 136 million sterling pounds in favour of Latin
American countries (D.C.M. Platt, "LATIN AMERICA AND BRITISH TRADE,
1806-1954", A. and X. Black, London, 1972, pp. 316-319, Appendix
I).
14) H. L. Beales, THE INDUSTRIAL REVOLUTION 1750-1850, F. Cass,
London, 1958, p.65
15) Francois Crouzet, CAPITAL FORMATION IN THE INDUSTRIAL
REVOLUTION, Methuen and Co. Ltd, London, 1972, pp. VIII, 59.
16) E.J. Hobsbawn, INDUSTRY AND EMPIRE: AN ECONOMIC HISTORY OF
BRITAIN 1700-1914, Penguin, London, 1968 and F. Crouzet, op. cit.,
p.62.
17) Crouzet, op. cit. pp. 176-177
18) Ibid, pp. 182-183
19) See note 13
20) Colin Mcevedy and Richard Jones, ATLAS OF WORLD POPULATION
HISTORY, Penguin, London, 1980; and Coatsworth, op. cit., Vicens
Vives, op. cit., THE FONTANA ECONOMIC HISTORY OF EUROPE, Vol. 3.
21) Deane and Cole, op. cit., Table 22, and Platt, op. cit.
Appendix I.
22) Michael Barrat Brown, THE ECONOMICS OF IMPERIALISM, Penguin
Books, 1978, Table 10, pp.168-169
23) Theotonio Dos Santos, THE CRISIS OF DEVELOPMENT THEORY AND THE
PROBLEM OF DEPENDENCE IN LATIN AMERICA, included in
UNDERDEVELOPMENT AND DEVELOPMENT, THE THIRD WORLD TODAY, Ed. Henry
Bernstein, Penguin books, London, 1978, p. 61
24) Percentage given by Vicens vives, op. cit. Vol. IV
25) G.D.H. Cole and Raymond Portgate, THE COMMON PEOPLE, 1746-1946,
Methuen and Co. Ltd, London 1956
26) Maurice Dobb, STUDIES IN THE DEVELOPMENT OF CAPITALISM,
Routledge, London, 1975, p.222
27) See note 25
28) A SOCIAL HISTORY OF ENGLAND 1851-1975, London, Table 6
29) "The Indian and castes are employed in domestic service,
agriculture, the menial side of commerce, the crafts and trades. in
other words, they are servants, menials or labourers employed by
the upper class. Consequently between them and the Spanish class
there is the conflict of interests and the hostility which
invariably prevails between those who have nothing and those who
have everything, between vassals and lords. To some extent these
conditions are prevalent all over the world. But in America it is
worse, for there are no gradations between classes, no mean; they
are all either rich or poor, noble or vile" (Manuel Abad y Queipo,
ESTADO MORAL Y POLITICO EN QUE SE HALLABA LA POBLACION DEL
VIRREINATO DE NUEVA ESPANA EN 1799, in Jose Maria Luis Mora, OBRAS
SUELTAS, Mexico, 1963, pp. 204-5, and quoted by Lynch, op. cit.
0.23).
30) Lynch, op. cit. p.339
31) Paul A. Baran, on THE POLITICAL ECONOMY OF BACKWARDNESS,
included in IMPERIALISM AND UNDERDEVELOPMENT. A READER, Ed. by
Robert I. Rhodes, MR. London, 1970, p.291
32) F. Garcia Calderon, LATIN AMERICA, ITS RISE AND PROGRESS,
London, 1913, p. 382
33) Joaquin Edwards Bello, NACIONALISMO CONTINENTAL, Editorial
Nascimento, Santiago, 1968, p.51
34) "There is increasing evidence that lack of potential for
domestic saving has not been the factor holding back development in
the Latin American countries. There is considerable reason to
believe that significant amounts of actual or potential domestic
savings in the underdeveloped countries have gone (1) into land and
mortgages, (2) into the construction of imposing public buildings
and churches, (3) into foreign balances, and (4) into the expense
of rearing people who do not live very long. Also (5), there has
been a good deal of ostentatious spending and living which could
have provided savings". Gordon op. cit. p. 215; see also pp. 214
and 242.
35) Platt, op. cit., Appendix I, and Deane and Cole, op. cit.,
Table 22
36) Roberto Cortes Conde, op. cit., chapters, 2,3,4,5 and 6.
37) Irving Stone, BRITISH DIRECT AND PORTFOLIO INVESTMENT BEFORE
1914, The Journal of Economic History, Vol. XXXVII, Sept, 1977, No.
3., pp.690-722, Table 1.
38) Solon Barraclough, THE AGRARIAN PROBLEM, Included in Claudio
Veliz, AN HISTORICAL INTRODUCTION IN LATIN AMERICA AND THE
CARIBBEAN, pp.487-491. The seven countries were Argentina, Brazil,
chile, Colombia, Ecuador, Guatemala, and Peru. The study was
carried out in the early 1960s.
39) Jacques Lambert, op. cit., p.5
40) Celso Furtado, ECONOMIC DEVELOPMENT OF LATIN AMERICA,
HISTORICAL BACKGROUND AND CONTEMPORARY PROBLEMS, Cambridge
University Press, London, 1976, pp. 68 and 71.
41) Collier, op. cit., p.214
42) This happened mainly because wars of independence were fought
to destroy Spanish rule, but not to change the system of
production, and because the "libertadores" oppressed any attempt of
the direct-labourers to lead the independence wars beyond that
limited goal.
43) Stone, op. cit., Table 2
44) See Thomas F. O'Brien, Jr., CHILEAN ELITES AND FOREIGN
INVESTORS: CHILEAN NITRATE POLICY 1880-82, The Journal Of Latin
America Studies, Vol. II, No. 1., 1979, pp. 101-144
45) Claudio Veliz, OBSTACLES TO CHANGE IN LATIN AMERICA, Oxford
University Press, London 1968, p. 6.
=======================================================================
(Róbinson Rojas, "Latin America: Blockages to Development", PhD
dissertation, 1984, London) pp. 161-189
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