Colonialism and Dependence In ‘Imperialism, the Highest State of Capitalism’, Lenin warned, in refuting Kautsky, that the domination of finance capital not only does not lessen the inequalities and contradictions present in the world economy, but on the contrary accentuates them. Time has passed and proven him right. The inequalities have become sharper. Historical research has shown that the distance that separated the standard of living in the wealthy countries from that of the poor countries toward the middle of the nineteenth century was much smaller than the distance that separates them today. The gap has widened. In 1850 the per capita income in the industrialized countries was 50 per cent higher than in the underdeveloped countries.
To have an idea of the progress that has been achieved in the DEVELOPMENT OF INEQUALITY, we have only to listen to President Richard Nixon:’ … and I think about what this hemisphere, the new world, will be like at the end of this century. And I consider that if the present growth rates of the United States and the rest of the hemisphere have not changed, at the end of this century the per capita income in the United States will be 15 times higher than the income per person of our friends, our neighbors, the members of our family in the rest of the Hemisphere.’ (1) The oppressed nations will have to grow much more rapidly just to MAINTAIN their relative backwardness. Their present low rates of development feed the dynamic of inequality: the oppressor nations are becoming increasingly rich in absolute terms, but they are richer still in relative terms. The overall strength of the imperialist system rests on the necessary inequality of its component parts, and that inequality is achieving ever greater proportions.
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Capitalism is still capitalism, and unequal development and widespread poverty are still its visible fruits.’ Centralized’ capitalism can afford the luxury of creating and believing its own myths of opulence, but myths cannot be eaten, and the poor nations that constitute the vast capitalist ‘periphery’ are well aware of this fact. Imperialism has ‘modernized’ itself in its methods and characteristics, but it has not magically turned into a universal philanthropic organisation. The system’s greed grows with the system itself. Nowadays imperialism does not require the old-style colonial administrations.
The archaic Portuguese model of control over Angola and Mozambique is no longer the most ‘convenient’. Lenin described the reality of his time, saying that ‘naturally… finance capital finds it most ‘convenient’, and is able to extract the greatest profit from a subordination which involves the loss of the political independence of the subjected countries and peoples’. In his report to the Twenty-second Congress of the CPUS SR in 1961, Nikita Khruschev reached the conclusion that ‘imperialism has irrevocably lost its control over most of the peoples of the world.’ According to his report, 40. 7 percent of the population of the world, without counting the socialist countries, had won their independence after 1919, and the total number of people living in colonies, semi-colonies, and dominions included, at the beginning of the 1960 s, less than 3 percent of the world’s population. ‘The revolutions of national liberation have dealt a demolishing blow to the colonial Bastille’, Khruschev said.
‘Forty-two sovereign states have emerged on the ruins of the colonial empires.’ In this connection, it can well be said that Latin America is a prophetic zone within the Third World. The political independence of almost all the Latin American countries dates back to the beginning of the nineteenth century. IT WAS AS A RESULT OF THAT INDEPENDENCE, HOWEVER, THAT LATIN AMERICA CONSOLIDATED ITS DEPENDENCE. Power passed from the ‘foreign’ viceroys to ‘national’ merchants advocating free trade, but it was precisely then that all obstacles were removed for the total incorporation of the entire region into the international division of labour that was centered in England. The words ‘sovereignty’ and ‘independence’ were not then, and still are not in most cases, more than the lip service that vice pays to virtue. In reality, most Latin American countries have never controlled their own internal markets nor the destination of the economic surplus generated by their productive forces.
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The control of their basic resources has always been in foreign hands, either through direct appropriation of the sources of the production of raw materials and food, or through the monopoly of demand in the foreign markets. The humiliating conditions under which they have received ‘foreign aid ” have always facilitated the penetration of foreign products and capital. Exactly one century after Argentina achieved its ‘independence’, Lenin was able to describe that country as a British semi-colony, and he warned that ‘finance capital is such a great, it may be said, such a decisive force in all economic and international relations, that it is capable of subordinating to itself, and actually does subordinate to itself, even states enjoying complete political independence’. Subsequently this Latin American nation, perhaps the most fortunate init’s relations with imperialism, passed through a rather intense process of industrialisation and accelerated urbanization: Buenos Aires is one of the largest and most attractive capitals in the world. But this does not keep Argentina from being today a U.
S. semi-colony, at least in regard to its oppressive financial dependency on Washington and the omnipotence that direct investments by U. S. corporations enjoy in its internal market. The threads that make up the dense web of imperialist power have multiplied and become more subtle. It is not by chance that the world-wide process of capitalist integration under the hegemony of the United States, a process filled with tension and conflict, has coincided with the irreversible decline of the old colonial powers and their methods of control.
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The eminent Brazilian anthropologist Darcy Ribeiro described the new situation in America as follows:’ Hegel, in his classic study on the philosophy of history, foresaw the war between the Latin and Anglo-Saxon peoples of the Americas. This war is already taking place. However, instead of troops movements and pitched battles, it is being waged by conspiracies, bribery, contracts, intimidation, coups, programs of sociological studies, economic plans, and publicity campaigns. Through these means of pressure and compulsion, the United States is implementing, extending, and strengthening its own plan for exploiting our resources, organizing our societies, regulating our political life, determining the size of our population, and determining our destiny.’ (2) The Investments Change Their Direction The First World war was followed by the well-known withdrawal of European interests from certain underdeveloped areas of the world. In Latin America, due to obvious geopolitical reasons, the devastating advance of U.
S. imperialism took place before and with greater speed than it did in other regions; already by the end of the nineteenth century the Caribbean was the MARE NOSTRUM of the United States. When Lenin wrote his book on imperialism, however, U. S. capital still represented less than a fifth of all private, direct, foreign investment in Latin America; today it represents close to three fourths. What concerns us most here is to point out that after the Second World War there was an important change in the direction of these investments.
The tendency is clear. Capital invested in public services and mining has been losing its relative importance, while the proportion invested in petroleum and, above all, in manufacturing industries is increasing. Forty years ago U. S. investments in manufacturing represented only 6 percent of the total value of U.
S. capital in Latin America; in 1960 the proportion had come close to 20 percent; and at present almost a third of total U. S. investments is in manufacturing. The three largest countries in Latin America -Argentina, Brazil, and Mexico- are the ones that offer the most attractive markets for foreign industrial capital. The Organization of American States (OAS), the United States’ traditional ‘Ministry of Colonies’, describes the process as follows:’ Latin American enterprises are beginning to achieve superiority over already established industries and technologies of lesser sophistication, and private North American investments and probably also investments from other industrialized countries are rapidly increasing their participation in certain dynamic industries that require a relatively high degree of technology and are more important in determining the course of economic development.’ (3) The penetration has been successful; the potential of U.
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S. factories located south of the Rio Grande is much greater than that of Latin American-owned industry in general. It can be seen from data released by the U. S.
Department of Commerce and the Inter-American Committee of the Alliance for Progress that, based on an index of 1961 = 100, industrial production in Argentina rose to 112. 5 in 1965, while during the same period sales by U. S. subsidiaries in Argentina rose to 166.
3. The respective figures for Brazil are 109. 2 and 120; and for Mexico, 142. 2 and 186. 8. Of the fifty largest Argentinian businesses (those with a sales volume in excess of 7 billion pesos annually), half of the sales volume originates in foreign businesses, a third in state enterprises, and only a sixth in private Argentinian businesses.
(4) In 1962, two enterprises operating with private Argentinian capital ranked among the five largest industrial enterprises in Latin America; by 1967 both of them had been taken over by foreign capital. (5) A study carried out by the Institute of Social Sciences of the Federal University of Rio de Janeiro and published in 1965 revealed that of the fifty-five multi-billionaire private groups in the Brazilian economy, twenty-nine were foreign, twenty-four Brazilian, and two of mixed foreign and Brazilian capital; of the Brazilian groups, only nine had no links through stockholders with foreign groups or enterprises. A subsequent study by the Brazilian Congress provided new data which spoke eloquently of the denationalization process that is proceeding at breakneck speed in that country’s industry. (6) A minister of the Brazilian government said publicly in 1969 that ‘with a few honourable exceptions, the only strong sector in Brazil, besides the government itself, is foreign capital’. (7) His statement is valid not only for Brazil. According to figures published in 1962, fifty-six of the hundred most important enterprises in Mexico are totally or partially controlled by foreign capital, twenty-four belong to the state, and twenty to Mexican private capital.
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(8) These twenty private Mexican concerns account for barely 13. 5 percent of the total sales volume of the one hundred enterprises under consideration. Except in the case of petroleum and some public services -activities in which the state clearly predominates in Argentina, Brazil, and Mexico-almost all of the other enterprises included in the above-mentioned studies are manufacturing industries, and it is precisely in this sector that foreign capital is most prominent. If this is the situation in the strongest countries in Latin America, it would be redundant to offer examples of foreign penetration of the few industries in the weaker countries. By far the largest part of these investments in manufacturing belongs to U. S.
corporations, although there are European enterprises with quite considerable interests in Latin America. For example, Volkswagen do Brasil, the largest manufacturer of automobiles in Latin America, is a German concern. The interest of imperialist corporations in appropriating the fruits of Latin American industrial growth for themselves and capitalizing it for their benefit does not imply, certainly, a lack of interest on their part in all the other traditional forms of exploitation. It is true that the railway which used to belong to United Fruit in Guatemala was no longer profitable and that Electric Bond and Share and the International Telephone and Telegraph Corporation made a splendid profit when their properties were nationalized in Brazil and they were paid indemnities in gold for outmoded installations. But this abandonment of public services in search of more lucrative activities does not occur in the case of many raw materials and foodstuffs.
While a relative decline has been registered in the total volume of new investments in minerals, the U. S. economy cannot do without the supply of vital materials coming from the southern part of the hemisphere. In THE AGE OF IMPERIALISM, Harry Mag doff has shown that the United States’ need for iron, copper, and long list of strategic materials is steadily increasing; the proportion of imports is growing as the internal production of the United States declines. This is also the case with petroleum. After all, the splendid iron deposits in the Brazilian valley of Paraopeba caused the fall of two Presidents before the deposits were graciously ceded to the Hanna Mining Company; copper certainly has something to do with the disproportionate amount of military aid that Chile receives from the Pentagon; bauxite was certainly a factor in the conspiracy to overthrow Che ddi Jagan in Guyana; Cuban nickel explains the blind fury of the Empire even better than sugar; while the largest U.
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S. military mission in Latin America is located in Venezuela, the great oil preserve of Standard Oil and Gulf. But all of this should not keep us from emphasizing the importance of this new phenomenon, which has occurred long after Lenin’s period: the capture of markets FROM WITHIN. The affiliates of U.
S. and European corporations jump at a single leap over Latin American tariff barriers, paradoxically erected against foreign competition, and seize control of the internal processes of industrialization. They export factories or, frequently, take control of and devour the already existing national factories. For this they can count on the enthusiastic aid of the majority of the governments of Latin America.
Under the Sign of Progress?’ The export of capital,’ wrote Lenin, ‘greatly affects and accelerates the development of capitalism in those countries to which is exported’. Historical experience has demonstrated that this is not so. The imperialism that Lenin knew -the greed of industrial centers in the search for world markets for their excess production and the capture of all the possible sources of raw materials; the extraction of iron, coal, and oil; the railways cementing their control of the areas under exploitation; the usurious loans made by the financial monopolies; the military expeditions and the wars of conquest -certainly did not accelerate anything except ‘the development of underdevelopment’, as Andrew Under Frank expresses it so well. Contrary to Midas, imperialism has turned everything it touched into scrap. But now some are tempted to deny this, basing themselves on the supposedly different situation that exists today. It is possible that Lenin was mistaken when he attributed an accelerated effect on development to the ‘old model’ of imperialist exploitation, they argue, but this is not the case with the ‘new model’.
There is no lack of technocrats today prepared to demonstrate that foreign capital, in its new positive guise, benefits the areas it penetrates. To the degree that the model of exploitation has changed, they tell us, its consequences have also changed. Previously, imperialism razed the places where a colony or semi-colony might have dared to erect its own factories, but now the rich countries stimulate the industrialisation of the poor nations. This ‘industrializing imperialism’ of our day, they maintain, contrary to the imperialism of past times, has an inevitable civilizing effect on a universal scale. Now guilty consciences no longer need alibis, since they are no longer guilty; modern imperialism radiates technology and progress, and it is even in bad taste to use that hateful word to describe it.
What actually are the effects of the increasing shift of foreign investment toward manufacturing industries in Latin America? In the first place, it is necessary to note that this process of industrial de nationalisation has not required a large influx of capital. After all, direct investments of U. S. origin in 1966 in Argentinian, Brazilian, and Mexican industry, so important for the virtual monopolization of ‘key’ manufacturing industries, was barely 3, 3. 8, and 3.
6 percent respectively, of the total amount of U. S. capital invested on a world-wide basis. And it must be noted that even those investment figures are inflated.
In effect, since the rapidity with which technology is advancing is shortening at an ever increasing rate the length of time needed for amortization of fixed capital in the advanced economies, the vast majority of the manufacturing installations and equipment exported to Latin America has already passed through a complete productive life cycle in its country of origin and has been completely or partially amortized before it is exported. This ‘detail’ is not considered for the purposes of calculating the amount of foreign investment -the value placed on the machinery is fixed at an arbitrarily high level and would not be even remotely so expensive if the frequent cases of prior depreciation were taken into account. But why should the parent company incur expenses to produce in Latin America goods which were previously sold there after being manufactured in the home country? The Latin American governments themselves make sure that the foreign companies do not incur these expenses, by extending aid to the affiliates that are being installed, they say, to redeem the Latin American countries from their condition of underdevelopment. The affiliates have access to local credit from the moment they first post a sign on the land where the factory is to be built; they can count on foreign exchange privileges for their imports -imports which the companies usually purchase from themselves- and in some cases (such as Brazil) they can even count on special exchange rates for the payment of their foreign debts, which frequently are debts that they owe to the financial branch of the same corporation.
The affiliates are also exempted from numerous taxes over long periods of time, and it is even common for them to receive guarantees against the risk of expropriation and monetary devaluation. They finance their subsequent expansion by reinvestment of part of their juicy profits, and, above all, by means of the credit they receive in the country where they are operating. According to the OAS, an unimpeachable source in this respect, barely twenty cents of every dollar that U. S. industrial affiliates use for their operations and expansion come from the United States.
The remaining eighty cents come from Latin American sources, through credits, loans, and the retention of profits. U. S. affiliates employ Latin American capital almost exclusively to finance their various operating needs. (9) This channeling of national resources into foreign enterprises is due in large part to the proliferation of U. S.
bank branches spread throughout Latin America in order to pour national savings into foreign hands. There were 78 branches of U. S. banks in the area in 1964; in 1967, the number had risen to 133.
(10) The Bank of New York acknowledges publicly that the most important among its new goals in Latin America is the capture of domestic savings for the benefit of the multinational corporations, so as to meet their productions and sales needs. (11) It is worthy to note that the number of national banks which, without a change of name, are coming under foreign banking control is growing. Even those Latin American banks which have not been infiltrated or captured find it highly convenient to satisfy the credit requests of foreign affiliates, which are solidly backed and have a very considerable sales volume. The mobilization of local resources does not have, of course, the slightest effect on the capital structure of these enterprises. In general, 99 percent of the affiliates’s tock is controlled by the parent corporation.
(12) A form of foreign penetration which does not require any investment a tall is becoming increasingly common in Latin America. Even the OAS itself recognizes in the above-cited document that the development of. S. companies in Latin America is due to a great degree to ‘the acquisition of Latin American industrial enterprises by U. S. interests, a phenomenon that has been observed over the last few years’.
Every method of financial coercion is employed for this purpose, including dumping, financial blackmail, and the infinite possibility for exerting financial pressure provided by an overwhelming technological superiority. The old mechanism by means of which the creditor acquires the debtor’s property, for example, is employed on a large scale. Debts acquired through the purchase of supplies, the use of patents and t, etc. , complicated by monetary devaluations that force the national enterprise to pay more pesos for the same amount of dollars, frequently lead to bankruptcy. Since the end of the 1950 s, economic recessions, monetary instability, tighter credit, and the drop in the buying power of the internal market have all facilitated the task of bringing national enterprises to their knees before the large foreign corporations.
Besides, since the affiliates of these corporations are no more than cogs in a world-wide system, they can afford the luxury of losing money for a year or two or indeed for whatever time is necessary. Consequently, the lower their prices and wait for their victim’s demise. The siege begins. The banks collaborate, and the national enterprise is found not to be solvent as it seemed -it is therefore denied assistance. The national enterprise, completely surrounded, soon raises the white flag. Both sides then merrily celebrate the surrender.
The Latin American ‘national bourgeoisie’, which was produced by the old agricultural exporting system, rediscovers its destiny -the local capitalist becomes either a junior partner or a functionary of his conquerors. Or he gains the most coveted prize of all: he receives the ransom of his goods in stocks in the foreign parent corporation and ends his days living the soft life of a shareholder. The great corporations, then, do not need to bring many dollars along with them. Quite to the contrary, they take them out of the country.’ Under modern capitalism, when monopolies prevail, the export of CAPITAL has become the typical feature’, wrote Lenin. In our days, as Baran andSweezy have pointed out, imperialism imports capital from the countries where it operates. In the 1950-1967 period, new U.
S. investments in Latin America totaled, without including profits which were reinvested, $3, 921 million. In the same period, $12, 819 million were repatriated by those enterprises in profits and dividends. The earnings which have been drained off are more than three times as much as the total amount of new capital invested in Latin America. But this is a conservative estimate. A good part of the money which was sent back to the U.
S. as amortization was really profits, and the figures also do not include payments abroad for patents, royalties, and technical assistance; nor do they reveal other invisible transfers that usually appear under the heading ‘errors and omissions’; nor do they take into account the profits that the corporations receive when they inflate the prices of supplies sold to their affiliates and when they inflate, with equal enthusiasm, their operating costs. The negative flow of capital reflects increasingly greater profits, above all in the most underdeveloped areas: Latin America, Africa, and, to an even greater degree, Asia. The profound structural deformations in the Latin American economy, which can be seen everywhere and at all times, like a bone laid bare by wound, are also reflected in the simple and terrible fact that half of all investments in Latin America are of a unproductive nature.
(13) The ‘internationalization’ of the industrial process has only increased this waste, allowing the economic surplus produced in the region to be drained off by foreign interests. It is becoming more and more evident that the bread of the oppressive minorities in Latin America is the poison of the oppressed majorities; south of the Rio Grande private interests coincide less and less with public interests. Foreign investment in industry does not alter this picture of things; it only confirms it in a dramatic fashion. When they remove more dollars than they bring, the foreign enterprises help increase the growing deficit in the balance of payments; THE REGION THAT IS ‘BENEFITED’ IS DE CAPITALIZED INSTEAD OF CAPITALIZED. THE LOAN MECHANISM THEN BEGINS TO FUNCTION.
And it is important to observe that the international credit organizations play a very important role in dismantling the defensive citadels of Latin American industry. Lenin rightly emphasized the fact that the export of finance capital is, for the imperialist countries, a means of stimulating the export of goods. In this sense, the conditions attached to loans made by the Alliance for Progress, ‘tied’ to the purchase of goods and services in the United States, are instructive. This holds true to such an extent that the portion of REAL aid in official U. S. financial assistance to Latin America is less than half the amount of NOMINAL aid, again according to unimpeachable sources, (14) as a result of the conditions under which is given.
The changes announced by President Nixon do not significantly alter the situation. But it is still more important to note the importance of international credit in ‘clearing the way’ for direct investments by the large corporations. ‘The characteristic feature of imperialism’, wrote Lenin, ‘is NOT industrial capital, BUT finance capital.’ The evolution of capitalism since then implies and evolution of imperialism. In the last half century changes has taken place within the capitalist system; in the United States banks no longer control industrial corporations, but are instead integral parts of the same system.
(15) And just as the multinational corporations are multinational because they operate in the four corners of the capitalist globe, while their property is in no way international, so the international monetary organizations are in no way at the service of the numerous countries that provide the capital with which they operate, but instead fulfill the designs of the great integrating power of world capitalism – the United States. The death of the system based on the gold standard, which signaled the definitive decline of the British Empire, enormously increased the international supply of finance capital and made possible the appearance of organizations such as the World Bank, the International Monetary Fund, and, on the regional level, the Inter-American Development Bank, which reserve for themselves the right of governing the Third World and of determining the course to be followed by the countries that benefit from the credit they extend. The presence of the marines is becoming less and less necessary; the international technocrats disembark instead (tears flow, not blood) and mount assaults on the central banks and the key ministries of the poor nations. With its direct investments, imperialism bleeds dependent economies. With its loans, it administers the drug to keep them on their feet and takes control, in an increasingly arrogant way, of the internal power structure. Imperialism first makes its subject ill, and then it constructs the hospital in which the patient lies imprisoned and without any possibility of being cured.
Latin America is now living through what economists call the ‘debt explosion’. It is a vicious circle of strangulation: loans and investments increase, and as a result the payments of amortizations, interests, dividends, and other services also increase. In order to make these payments, new injections of foreign capital that generate greater obligations are needed, and so on successively. According to the World Bank, payments for services in 1980 will completely cancel out the influx of foreign capital to the underdeveloped world. In the decade 1956-1965, Latin America’s public foreign debt climbed from $4 billion to close to $11 billion. In 1965, the influx of credit was already less than the capital leaving the region to meet commitments previously contracted.
The World Bank, the Alliance for Progress, and U. S. private banks make their loans contingent on approval by the International Monetary Fund (IMF).
The IMF uses the magic phrase ‘monetary stabilization’ to impose on Latin America the policies of liberalization of trade, tightening internal credit, freezing wages, discouraging state activities, and monetary devaluations that are theoretically intended to stimulate exports but that in fact only stimulate the internal concentration of capital in the hands of the large landowners, the bankers, and the big speculators. This is a policy intended to destroy national defenses against the omnipotent penetration of foreign private capital. THE TERRAIN IS PREPARED IN ADVANCE FOR THE CONQUERORS.
All these imperialist organizations for international philanthropy insist on the struggle against internal and external imbalances in the Latin American economy. Their prescriptions correspond to the diagnosis. We cannot, given the brevity of this study, demonstrate the many ways by which the policy imposed by them aggravates those imbalances instead of lessening them. What interests us here is simply to observe the effect that imperialist investments in the field of industry have on one of the most important factors in Latin American economic imbalance -foreign trade.
The ‘trade gap’ is becoming wider and wider because the need to import products is growing steadily in relation to the financial resources generated by exports. Only a tenth of Latin American exports are provided by manufactured products. The region depends on sales of unprocessed or hardly processed primary products that have very unstable prices on international markets controlled by the rich countries and their powerful corporations. Latin American exports grow in volume but their prices tend to fall -or, in the best of cases, they remain stagnant- while the prices of industrialized products imported by the region rise. Buying power is diminishing.
Taking 1950 prices as a base and adding data from various documents published by the United Nations Economic Commission for Latin America and the UN itself, it can be seen that Latin America lost, due to the deterioration of its terms of trade, more than $18. 5 billion in the ten years from 1955 to 1964. Now then, IMPERIALIST INVESTMENTS INTHE INDUSTRIAL SECTOR HAVE HAD ABSOLUTELY NO EFFECT ON THESE TERMS OF INTERNATIONAL TRADE. LATIN AMERICA CONTINUES TO EXCHANGE ITS PRIMARY PRODUCTS FOR SPECIALIZED ARTICLES PRODUCED IN THE METROPOLITAN ECONOMIES. The importance of ‘traditional’ exports is actually growing within the total picture rather than diminishing, and the proportion of foreign sales by foreign affiliates is steadily decreasing within the total volume of sales.
The head of a U. S. technical mission to Brazil, John Abb ink, announced prophetically in 1950:’ The United States must be prepared to ‘guide’ the inevitable industrialization of underdeveloped countries if it wants to avoid the blow of very intense economic development outside of U. S. influence…
Industrialization, if it is not controlled in some way, will lead to substantial reduction in U. S. export markets.’ (16) There was absolutely no reduction in the Latin American market for U. S. goods. One of the paradoxes of industrialization to REDUCE imports is that it forces an INCREASE in imports.
Certain goods that previously were imported are produced internally, but such internal production generates a ‘derivative’ demand for intermediate products and capital goods, the magnitude of which goes far beyond the original saving in foreign currency. The United States now sells Latin America a greater proportion of more sophisticated products requiring a higher level of technology.’ In the long run’, says the U. S. Department of Commerce, ‘as Mexican industrial production increases, there are greater opportunities for additional exports from the United States… .’ (17) The affiliates of great corporations have leaped the tariff barriers to supply Latin American markets from within, and they obtain additional benefits to the degree that they make purchases abroad, buying materials from their parent corporations or from other affiliates at prices set deliberately high. This imperialism that even exports entire factories corresponds to the highest state in the development of monopoly capitalism.
In Lenin’s time, free competition was already a museum piece. Today the corporations comfortably enjoy the control of prices in the countries where they operate. In Latin America they protect themselves behind a Chinese Wall of protective tariffs to produce, at prices two or three times higher, products that they used to export to our countries from abroad. Investments are low, manpower is as abundant as it is cheap, and the state subsidizes the financing of installment buying. Nevertheless, everything is more expensive. Control over the market is facilitated by the complete freedom which these enterprises enjoy, by the magic prestige of U.
S. trademarks and advertising slogans in English, benefiting from an unparalleled and effective international publicity campaign, and from the fact that foreign industrial investments control the ‘modern sector ” of the dependent economies which, by its own dynamics, subordinates all the other sectors to it. The internal markets, then, provide juicy profits, even though the significant consumers in Latin America represent only a very small part of the total population. Barely one out of every four Brazilians can be considered a real consumer.
The population is growing at a dizzy rate, and yet the development of dependent capitalism -a voyage with more disasters than survivors- leaves more people on the margin of the economy than it integrates into it. In the majority of Latin American markets there is only an elite with buying power. Foreign industry is aimed, above all, at that elite, and it does not show the slightest interest in expanding the consumption of the masses beyond a certain limit. The market could only be expanded both horizontally and vertically if profound changes were made in the entire socio-economic structure.
Fernando Henrique Cardoso has noted (18) that national capital in Argentina and Brazil is strongest in the ‘traditional’ industrial sectors, those with a low technological level which depend to the greatest degree on a mass market, while the foreign affiliates or the national capitalists subjected to ‘structural dependency’ only ‘require the strengthening of economic links between the islands of development in the dependent countries and the international economic system, and subordinate internal changes to this primary objective.’ The studies that have been carried out concerning the need for agrarian reform are very instructive in this regard, above all if one takes into account the fact that the agrarian question is the main bottleneck in Latin American development. In Argentina as well as in Brazil, ‘the managerial sector shows a marked tendency to oppose agrarian reform’ (19), and the studies that have been made show clearly that the more dependent the managerial sector is on the ‘international mode of production’, the sharper is its opposition to changes in the agrarian structure. The industrially less complex sectors are the ones that favor drastic broadening of the market. The most complex sectors, when they represent national capital, are usually bound to foreign interests by their technological or financial dependency, and the payment on account of patents, profits, interest, royalties, stock divides, or ‘know-how’ is accompanied by an attitude of resistance to possible structural changes.
There is a direct relationship between the manager’s degree of dependency and his political panic when there is the slightest possibility of change in the power structure from which he benefits. The LATIFUNDIUM continues untouched -it is his ally. The continued existence of the rural LATIFUNDIUM generates a constant and growing flow of workers moving from the countryside to the cities, but the factories do not provide employment for the surplus workers. On the contrary, industrial productivity is increasing in the face of ever-diminishing job opportunities -and Latin America has the highest demographic growth rate in the world.
The ‘internationalized ” industrialization has an exclusive character; the enterprises bring a technology along with them to save on manpower in countries where manpower has no employment. THE PROPORTION OF WORKERS IN MANUFACTURING INDUSTRY IS DIMINISHING IN RELATION TO THE TOTAL ACTIVE POPULATION IN LATIN AMERICA. Factory workers represented 14. 5 percent in the decade of the fifties, but only 11. 6 percent in the decade of the sixties.
(20) A fourth of the active population is currently unemployed or underemployed; in the large cities a growing multitude is crammed into the ‘fave las’, the ”, the ‘rancho’s’, the ”, and the ‘cal lampas’, broad belts of poverty around the wealth of the urban centers. The system vomits forth men, but industry gives itself the luxury of sacrificing manpower to an even greater degree than European industry does. (21) In contrast to the ‘classical’ models of capitalist development, there is no coherent relationship between available manpower and applied technology. Rich lands, vast underground wealth, and very poor people -that is the panorama presented by this realm of abundance and need.
Great numbers of workers are abandoned by the roadside by the system which condemns them to a marginal existence and frustrates the development of the internal market and lowers the wage level. The eruption of the urban bourgeoisie onto the stage of history has not provoked, in contrast to Europe and the United States, any agrarian revolution; dependent industrialization functions on the structure just as it is. It is true that ‘poles’ a redeveloping around which the production and wealth of each country are being concentrated, but they do not share the benefits of their growth. They are oases of prosperity in the desert, the shining cities that feign their existence amid the desolate landscape of widespread poverty. The new type of foreign capital, which raises smokestacks in underdeveloped areas, is concentrated around these poles in such a way that it not only sharpens social contradictions by segregating the labour force and polarizing wealth still further, but also sharpens regional contradictions within the borders of each country and within the overall limits of Latin America. The efforts that are being made to form a Latin American Common Market reflect, in this sense, the desire to lay the basis for a new division of labour that would benefit the most developed urban centres, thus broadening the markets for the denationalized industry, while leaving intact the structure each country must endure.
The native Latin American bourgeoisie, a bourgeoisie of merchants without creative spirit, connected by its umbilical cord to the power of the land, is on its knees before the altar of the goddess technology. It is in the name of technological progress that national enterprises pass into the hands of foreign interests, sometimes in the most direct and brutal fashion and at other times through the consolidation of multiple hidden forms of dependency. Raul Prebisch himself warns that ‘U. S.
enterprises in Europe install laboratories and engage in research that helps strengthen the scientific and technical capacity of those countries, something which has not occurred in Latin America.’ And he reveals a very serious fact.’ National investors,’ he says, ‘due to their lack of specialized knowledge (know-how), carry out most of their transfer of technology by receiving techniques THAT BELONG TO THE PUBLIC DOMAIN AND THAT ARE IMPORTED AS THOUGH THEY WERE LICENSES OF SPECIALIZED KNOWLEDGE… .’ (22) This ‘national’ bourgeoisie with its clipped wings is defeated in advance. The great multinational corporations, which stand at the controls of technological progress, obviously also hold the keys to the Latin American economy. The transfer of power to foreign interests is, when things are seen in their proper perspective, much more serious than the statistics indicate.
It is also necessary to keep in mind that the large imperialist investments in the most dynamic sectors of the Latin American economy provide those corporations with limitless power to manipulate the consumer market, which is increasingly attracted byU. S. advertising, to channel national savings and the economic surplus produced by our countries, to use advertising and the various other ways of creating public opinion, and, also, to exert that political pressure required by imperialism’s digestive needs. The new type of imperialism does not make its colonies more prosperous, even though it enriches its ‘enclaves’; it does not alleviate social tensions, but on the contrary sharpens them; it extends poverty and concentrates wealth; it takes over the internal market and the key parts of the productive apparatus; it appropriates progress for itself, determines its direction, and fixes its limits; it absorbs credit and directs foreign trade as it pleases; it does not provide capital for development, but instead removes it; it encourages waste by sending the greatest part of the economic surplus abroad; it denationalizes our industry and also the profits that our industry produces. Today in Latin America the system has our veins as open as it did in those distant times when our blood first served the needs of primary accumulation for European capitalist development.