Latin America (1971)

From the May/June 1971 issue of the Socialist Standard

Part 1 

Economy and Investment (1971)

Latin America is the Cinderella of world politics. In comparison with Africa and Asia it has been neglected, as a glance at the shelves in the libraries and bookshops will show. Penguin paperbacks, for example, have published a whole African Library but nothing comparable on Latin America, and even the left wing have been relatively silent on the subject. Why is this? The main reason is that while Afro-Asia’s struggles of “national independence” are either current or very recent, Latin America’s similar struggles occurred over a century ago. And while the left has seen “socialism” in just about every Afro-Asian state, Latin America has been a United States colony, ridden with rightist governments and dictators. The Cuban revolt caused a momentary flutter but interest soon waned when the whole continent didn’t follow Cuba’s example and when the inevitable “degeneration” set in.

The rise of the Tupamaros plus Allende’s electoral victory have produced a reawakening of interest, so it would be a good opportunity for us to assess the situation in Latin America and the prospects for the growth there of socialist ideas. And what a task this is! We are dealing with 14 per cent of the world’s land mass containing 7 per cent of its population and with greatly varied technology and culture. A continent dominated by a mountain range which severely restricts communications, a continent with the world's greatest jungles and even a desert, and yet with an extremely high level of urbanisation and great cities on the scale of London, Paris and Milan. Alongside this are remnants of feudalism in the rural areas with master and serf relationships, not to mention those pockets where people are still living in primitive tribal societies.

The modern history of Latin America starts with independence from Spain and Portugal at the beginning of the 19th century. The continent was, and to a lesser degree still is, ruled by landowning oligarchies. America, Britain and France soon made it an area of investment and a market for their manufactures. Today, America has largely ousted the others and made the continent its own preserve. Of course American domination has tended to keep Latin America industrially backward in order to maintain it as an outlet for exports. Even now, when American big business sets up large scale industry, such as car factories, it does so only to protect existing markets from foreign rivals and local entrepreneurs. It is this situation which has thrown up the growing bourgeois and military nationalists plus the would-be imitators of Castro and Guevara, all determined to end “Yankee Imperialism”.

The major problem for Latin America is, how can it become industrialised to the extent that is required? The need is for the accumulation of capital to finance expansion carried out by one means or another — through military juntas as in parts of Afro-Asia; through “revolutionaries” using highly centralised government action as in the “communist” world; or through a home-grown recognisably capitalist class perhaps utilising some of the methods of the other two groups. The first two groups have already made their presence felt in Peru and Cuba respectively, and the signs are that the last group is at long last coming through. Whichever aspirants come to power in whatever country their most important task must be to tackle the antiquated and inefficient methods of agriculture caused by the system of landowning.

Until now this system has severely hampered industrialisation. The big landowners often trace their ancestry back to the conquistadors and regard wealth through feudal eyes — as ownership of land providing, above all, social status. As a result the land is often badly and underused so agriculture remains static with too many people producing only enough — and usually not even that — for themselves. Consequently, there can be no surplus for investment in industry nor a rural population with any money to become emergent industry’s consumers.

Undoubtedly Latin America’s system of landowning is archaic. Land is owned mainly in large estates (latifundios) and the rest in dwarf holdings (minifundios). On the large estates can work wage slaves plus a variety of peasantry categorised as follows

(1)          Tenant Farmers: works part of landlord’s land for himself giving a money rent in return.

(2)          Sharecropper: gives part of produce in return.

(3)          Labour Tenant: gives personal service (labour) in return and is an out and out feudal throwback. [1]

It is these three groups that the rural guerillas set their sights on. The following figures show the extent of big landowner’s holdings: Between 3 and 8 per cent of landlords own between 60 and 80% of the continent’s cultivable land. In Paraguay eleven lots cover 35% per the eastern region. In Chile 63% of arable land is owned by big owners, the remainder being dwarf holdings. In the Peruvian Highlands 1.3 per cent of estates control more than 50 per cent of land. [2]

So agriculture must be modernised by getting it onto a capitalist basis in order to stimulate investment, free a major portion of the population to become workers in industry and commerce, and create the mass of consumers necessary for a home market. Right, but who is to carry out the role of accumulators? Obviously the Castro-type solution is out, as the guerilla movement — where it even exists — is being given short shrift by the U.S. trained Latin American military. Witness the experience of Guevara in Bolivia. Also, the peasantry is fatalistic in its outlook and will only join in a revolt after it is seen to be winning. Besides, any idea of splitting up the land amongst the peasantry is, in the long run, opposed to modernisation in that while it may produce happier peasants it does not lead to a surplus for investment.

Can military dictatorships of a nationalist complexion fill the bill as in, say, Egypt, Indonesia, or Nigeria? This is likely in some of Latin America’s less developed nations where the bourgeoisie are still too weak or disunited, but in the more advanced nations a native bourgeoisie is emerging strong and determined enough and has been flexing its muscles of late, particularly in Chile and Venezuela.

Of course their potential has always been there as was shown during the depression years when, paradoxically, a considerable degree of industrialisation was achieved. As the flow of foreign funds dried up then the state and local capital stepped in to fill the vacuum. And during world war two, when Latin America’s normal suppliers of manufactures were otherwise engaged in mutual mayhem, a profitable opportunity beckoned for home investors. Then there is the 5 billion dollars of Latin American capital which is invested overseas, [3] so it’s not as if there is simply nothing in the kitty. Given the right climate for home investment (political stability) the continent’s capitalists could be induced to plunge heavily. Until now the state has had to do the job of laying the foundations of industrialisation. In what is virtually America’s backyard 30 per cent of all investment is by the state!  [4] Nationalisation, so beloved by the left, is embraced by conservative regimes easily enough. Oil, railways, steel, electricity, mining, are either wholly or partly state owned in many Latin American countries. And why not? It is often the logical way for an as yet economically weak owning class to run things by combining into a community of capital.

So far we have been reviewing Latin America’s past and present. In the next article we shall be considering the prospects for the future.

Part 2  Tomorrow’s prospects 

The modernisation of Latin America will be a fantastic task for whoever takes it on. Despite the existence of several nations with a more or less European culture and level of technology, the continent is generally appallingly backward. In the mid 1960’s its industry accounted for only 24 per cent of the gross domestic product and employed only 14 per cent of the native population. Only half the population ever receives any primary education and in some parts the rate of illiteracy is 100 per cent. In 1965 the income of General Motors was 20.7 billion (thousand million) dollars which was more than the gross national product of any Latin American nation including Brazil. In case the message still isn’t clear, one man, Paul Getty, owned more personal wealth than the yearly income of Ecuador. Moreover, many millions live outside a money economy: In Brazil’s north east alone 10 millions are reckoned to come into this category.

The most awesome statistic about Latin America is that from a total of 226 million in 1965 the population is expected to be around 316 million by 1980, 40 per cent of whom will be under 15 years of age. This means that the vast majority will be non-producers. Here, rather than China or India, is where the so-called population explosion is at its worst and an annual increase of 3 per cent in the economy is required just to keep living standards as they are.

In the face of all this can there really be any hope for Latin America? The answer is “yes”. In fact it is precisely this state of affairs which must galvanise capital into action, whether using the methods of democratic government or military juntas, for failure to act will ensure that the situation becomes utterly chaotic, and that can’t be good for business. What use is a continent seething with discontent and crawling with guerrillas in the countryside and in the cities? We dealt last month with the poor prospects of the rural guerrillas. As for their imitators in the cities, they have no basis of support among the working class class and can really only have nuisance value. A resumption of constitutional rights in Uruguay will undoubtedly cut much of the ground from beneath the Tupamaros. Indeed, the only possible contribution the guerrillas might be able to make is by prodding tardy regimes into some concessions that little bit sooner.

The working class of Latin America has already been written off as the “revolutionary” force by the would-be emancipators at the meeting of the Latin American Solidarity Organisation (OLAS) in Havana in 1967. It is true that the continental working class is still very weak and is actually declining as a percentage of the population. There are only about 7 million members of the trade unions and these mostly in the more developed nations. But in Latin America, as elsewhere, the Socialist movement must be essentially working class.

A popular explanation for the political backwardness of the Latin American working class is that it brings with in into the cities reactionary rural attitudes among which is the desire for a strong-man such as Peron was. In short, they look to a “Patron” to solve problems rather than their own political or industrial action (see S. Mander Static Society: The Paradox of Latin America). There is some truth in this explanation but it has to be seen against the fact that millions of city dwellers in Latin America aren’t, strictly speaking, workers at all. Each year destitute rural inhabitants drift citywards to end up in the shanty-towns such as the “Favelas” of Rio. Some drift back to the countryside for a variety of reasons but many of those who remain never really get involved in the relationships and disciplines of wage-labour, so the size and attitudes of Latin America’s working class cannot be accurately judged merely by looking at the urban populations.

Nor will the idea of the “Patron” endure outside of the semi-feudal hangover which throws it up. As capitalist expansion really gets underway the workers will be forced by an intensification of the class struggle to look to unions for help and to the various political parties. This has been the pattern in Italy, Japan, and other countries which have recently undergone large scale industrialisation and it is no accident that Latin America’s trade unions are strongest in those countries where capitalism has already made considerable progress, such as Argentina, Brazil, Mexico, Chile and Venezuela.

The evidence is that Latin America’s capitalist class is awakening to the possibilities. Their theorists have long extolled the need to control foreign investment and interference, particularly American, and the current denunciations of the “imperialists” are belated recognition of this. Covering the election by the Chilean Congress of Dr. Allende as President, Lewis Duguid reported that “. . . the bourgeois congressmen, some of them bitterly anti-American and convinced that Chile’s problems are imported, have voted in a man who repudiates many institutions of Chile while glorifying its distinctiveness”. Of Allende’s alleged Marxism, Duguid quotes Allende explaining this as meaning "he accepts the Marxist interpretation of history”. (Guardian 25 October, 1970) So what? This is purely academic and the fact remains that Allende’s government is committed to and was elected on a mere ragbag of reforms, and far from opposing US investment is soliciting it, only this time for "fair returns”.

Meanwhile the government is forcing foreign companies which are wholly controlled from abroad to sell the majority of their shares to local investors. In Venezuela the bourgeois government is progressively increasing its share of the profits of the largely US owned oil companies and is extending its overall stake in the oil industry. This bourgeois confidence stems from the sure knowledge of their newfound unity.

As we have already said, our interest in Latin America lies in the prospects for the growth of socialist ideas there. These ideas will go hand in hand with the strengthening of the conditions which have produced them elsewhere — mainly the development of capitalism and all that stems from that, including its ever increasing problems and contradictions. Of course as socialist ideas grow in the rest of the world then, with the existence of today’s sophisticated means of communication, Latin America cannot fail to be affected by this. Indeed, even if the continent continued indefinitely in its backward state it could not escape Socialism when the developed world put it into operation. It would fall in line with the superior social system, so we don’t have to wait for every backward part of the world to be modernised before production for use becomes possible. The fact is that capitalism has come to Latin America and is rapidly expanding its techniques and relationships.

We confidently look forward to the day when growing interest in our ideas will be reflected in the number of enquiries from Latin America. What should socialists there do in the meantime? Certainly not to engage in movements of "anti-imperialism”, demands for agrarian reform and the like, but instead to propagate whenever possible the case for Socialism — worldwide common ownership and democratic control of society’s resources.

Vic Vanni