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       by Róbinson Rojas
(from R. Rojas Sandford, "Latin America: Blockages to Development", 1984)
      Beginning in the mid- nineteenth century, the presence of the
United States in the continent has been strongly felt: economically,
politically, militarily, socially and culturally.  Until the 1930s,
nevertheless, the focus of U.S. imperialism's activities was in Mexico,
the Caribbean Islands, and Central America.  There is no need here to
substantiate the exploitation that the continent suffered by the deeds
of the most powerful representative of the capitalist mode of
production.  There is an enormous amount of research on that.

      Dealing with contemporary events, Lowenthal states that

     "the Senate's Chile Report shows that the U.S. government engaged
for over a decade a massive, systematic, and sustained covert campaign
against the Chilean Left... What the U.S. government did in and to
Chile during the 1960s  and early 1970s was not unique in U.S.-Latin
American         relations, although it was in some ways anachronistic,
a residue of programs set in motion early in the 1960s, at the height
of the cold war and of the Alliance for Progress.  The covert
intervention in Chile was probably unprecedented in scope, style and
duration, perhaps because   the circumstances were so special: no other
socialist revolutionary movement has come close to triumph in South
America, much less elected to office. But though the degree of
clandestine U.S. intervention against Allende may have been
exceptional, particularly as late as the 1970s, none of the specific
activities undertaken in Chile was unprecedented. On the contrary,
what the U.S. government did in Chile climaxed an extended era of U.S.
interventions in Latin America". (1)

      Reagan's international policies in the 1980s related to the
government in Nicaragua and the social unrest in El Salvador, underline
the fact that the era of U.S. interventions in Latin America has not
come to an end.  Evidence shows that U.S. intervention has been always
been carried out to support the ruling classes in each nation-state

      From the 1930s on, the whole of South America has been subjected
to this special relation with the United States, the latter being the
last resort for the landowners-merchants-industrialist ruling class in
Latin America when its position of dominance was at stake.  Even in
recent times, when domestic manufacturing growth reached a point where
some contradictions appeared between Latin American entrepreneurs and
American investors, the scope of economic nationalism never overlapped
with the political sphere, and U.S. imperialism continued as the main
bodyguard for the Latin American social structure.

      Statistical evidence shows that this special relationship
benefits U.S. capital:


                                           TOTAL 1950-61     ANNUAL AVERAGE

Net new U.S. investment:                       2.965               247
Profit and interest remittance on above:       6.875               573
Net movement of private capital:              -3.910              -326
Total U.S. aid:                                3.384               282
Official U.S. debt repayments:                -1.151              - 96
Interest on debt to U.S. government:          -  404              - 34
Net movement of public capital:                1.829               152
Net movement of all capital                   -2.081              -174

Source: U.S. Department of Commerce and Agency for International

        The data refers specifically to Argentina, Brazil, Chile,
Colombia, Mexico, Peru and Venezuela.  These countries comprise nearly
90 per cent of the population and income of the entire Latin 
American region (2)

      Nevertheless, it is not at the economic level that the main
contribution of U.S. imperialism to underdevelopment has been carried
out. To illustrate my point some comparison is necessary:

     "Foreign direct investment in the Latin American countries does
not, on the whole, appear to be greater, nor to be more involved in the
economic process, than in some European countries such as Belgium,
and possibly even France...the best estimates available indicate that
United States firms employ some 4 per cent of the labour force in Latin
America's manufacturing industry, which compares approximately with the
situation in France, where in 1970 United States companies employed
4 per cent of industrial workers. The significance of foreign private
investment in Canada appears to be greater than in Latin American     
  countries: in Canada, sales of United States subsidiary companies as
a percentage of total sales was 21.8 per cent in 1964, as compared with
only 7.9 per cent in Latin America.  In one extremely important
respect, however, Latin America differs from the countries mentioned. 
These have pursued rational economic policies, and foreign
investment has contributed to their development and general economic
progress". (3).

      The contribution of foreign
investment to the well-being of a nation is directly related to its
allocation in the economy, and the "rationality" of this allocation, in
its turn, is directly related to the pattern of the system of
production dominant in the specific nation.  Therefore, it is not
surprising that in France and Canada, being capitalist countries,
foreign investment can be allocated in such a way that it contributes
to the development of its capitalist mode of production.  
Conversely, in Latin America, investment has been historically located
in those areas critical for its system of production: raw materials and
foodstuffs for export, and after the 1930s, also in the manufacturing
sector producing for the domestic market until the early 1970s, and for
the international market thereafter.
      Thus, foreign investment in Latin America has been allocated to
contribute to the development of its specific system of production, in
the first place, and secondarily as a result of pressure from U.S.
      It seems to me that in order to understand deeper the role of
U.S. imperialism in the region, the analysis of its presence must start
from a rather more general approach.
      It is apparent that from the Industrial Revolution until World
War I, the capitalist mode of production appeared as the only emergent
system of production capable of unifying the entire planet under its
hegemony.  It is the period of colonization, annexation, imperial
occupation of land and people.  Even capitalist nation-states contend
between them to colonize the world in open wars.  At the same time
there was not an alternative social formation capable of questioning
capitalist domination.
      Latin America, as  a whole, resisted attempts at military
colonization made firstly by Britain and then by United States. 
Consequently, the main relation between the region and capitalist mode
of production became centred on trade.  The capitalist centre, sells
manufactured goods, Latin America sells raw materials and foodstuffs. 
Latin America feeds its emergent industry by buying machinery in the
centre.  But this industry does not form the basis of a capitalist mode
of development, but a Latin American one, with an utterly limited
domestic market and a pre-capitalist social structure.  In the process
of trading, foreign capital invades the region as partner of the ruling
class in the continent.  Not imposed on that ruling class, but accepted
in the best conditions available to the system of production, to make
richer the richest in the continent. 
      As O'Brien describes, British investment in Chilean nitrate in
the late XIX century, was a mortal wound inflicted upon:

     "the only Chilean-controlled sector of the industry, and opened
the way for a complete foreign monopoly.  It is clear that this course
of action was the result of demands of both foreign investors and
Chile's own ruling class...Chile's entire economic elite could take
comfort in the fact that a solution to Chile's worsening economic
crisis had been found without abandoning the traditional economic and
fiscal structure". (4)

      In a word, without altering the unequal distribution of income,
the system of production, and, the social structure. So, in general,
the partnership between foreign capital (representative of the foreign
capitalist ruling class) and the Latin American ruling class was made
in the best interests of the latter.
      Therefore, these first steps in what afterwards came to be known
as relations of dependence between the Latin American economies and the
capitalist economies, came as an effect of the mode of development
within the continent.  Moreover, the reason for the lack of capitalist
development of the productive system in the region, must be located
within the structure of the Latin American system of production at the
time, and not in the "marginal pressure" exerted by the import of
foreign capital.
      In 1917 a completely new historical event took place: the
bolshevik revolution, which was intended to be the cradle of a new mode
of production, in opposition to capitalism.  Moreover, this event made
socialism an alternative model of development to the capitalist and
pre-capitalist modes of production present in the world.
      Consequently, capitalist type of colonization, either military or
economic, faced a new problem: that of the linkage between national
struggles of liberation with socialist revolution.  Hence, the
capitalist system now faced the problem of dominating the rest of the
world in such a way that didn't permit socialist revolutions to spread. 
Generally speaking, the capitalist system began to utilize a twofold
approach to domination: on the one hand, establishing close political
links with the ruling classes of non-capitalist nations in order to
maintain the social order in the dominated countries, and on the other
hand, attempting to convince these ruling classes to introduce some
social reforms, and even economic reforms, mainly in the rural areas,
as a barrier to insurgency. 
      Both ways, the imperialist approach to non-capitalist countries
was one of supporting the social structure prevailing there.  Thus
military occupation gradually receded to make room for political,
economic, and cultural domination through economic, political, military
and cultural links with the ruling classes of these countries.  The
whole process of decolonization since the end of World War II until the
1970s was carried out through this approach by the capitalist system.
      There is now a new order of the world: capitalist system versus
socialist system, this confrontation passing through different stages
of "war preparations" for mutual eventual annihilation.  The former
trying to avoid the collapse of its system of world domination, the
latter fostering that collapse.


     "understanding themselves to be locked in a worldwide and all-out
contest with the Soviet Union, U.S. officials undertook intervention in
Latin America not for its own sake, nor for economic exploitation but 
for what they regarded as defensive reasons.  But one important point 
is clear: all these interventionist activities flowed from America's 
hegemonic presumption - the belief in this country that the entire 
hemisphere was a rightful sphere of U.S. influence.  That belief led 
U.S. officials to regard as unacceptable the emergence of an
anti-American political group in any Latin American country.  An      
overwhelming U.S. power made it feasible for this country to involve 
itself deeply in internal politics throughout the Americas in
order to ensure that any group which challenged U.S. domination did 
not come to power, or did not last".  (5)

      Consequently, a new contradiction  appeared for the capitalist
social formations: on the one hand, the urgent need to enlarge the
world market through spreading capitalist relations of production in
the dominated countries, and on the other hand, the need to support the
ruling classes of pre-capitalist social structures in these countries
with the aim of avoiding socialist revolutions.  And this situation
occurred in an epoch when the development of the capitalist mode of
production reached a level which provokes more and more the crisis of
lack of markets.
      In the 1960s, U.S. economic planners tried to open up the Latin
American social structure to the encroachment of capitalist relations
of production and blueprinted the Alliance for Progress, underpinning
its results on agrarian reform in the continent.
      If the theories of modernization were accurate, then the ruling
class in Latin America would have been compelled to carry out the
agrarian reform as proposed by U.S. officials, and start a capitalist
model of development.  Nevertheless, the entire idea of an Alliance for
Progress was rejected by the Latin American ruling class and failed. 
Predictably enough, the political power of the large landowners was
sufficient to stop and shelve the Alliance for Progress.  This was so
because economic dependence from the capitalist mode of production is
a product of the structural needs of the ruling class in Latin america. 
The latter is a "partner" of the world capitalist bourgeoisie in the
exploitation of Latin American direct-labourers, not a foreman. What
really happens to a great extent is that the ruling class in Latin
America utilizes the economic and political power (military more often
than not) of imperialism in order to submit the working class to its
rule, using the threat of "communist subversion": in its turn,
imperialism gets its share from profits for this service - high rates
of profits from investment, loans with state guarantee, special rights
upon exploration and extraction of raw materials, and of course, a free
hand to fight "socialism" whatever its meaning in the region.
      Of course, this partnership is capitalist, and, therefore,
belongs to the realm of capitalist competition.  Thus, it contains
capitalist contradiction between the various sectors of the productive
system.  But, all in all, it is a protective partnership from the point
of view of the ruling class in the continent, because it helps to
maintain the prevailing social structure.
      One interesting indicator is that in Latin America foreign
investment has followed the pattern of the regional production system,
and that during the import-substituting industrial phase, foreign
investors shifted to that sector, and that in the newest phase of
"outward growth", they are again allocating their investment in the new
      Nayyar gives evidence of a contemporary growing trend towards
exports of manufactures from the poor countries to capitalist
countries, and the growing participation of foreign investment in that
type of industrialization.  Exports of manufactures from poor countries
grew almost 500%  between 1966 and 1974, and in Latin America, in the
same period, this growth was of almost 600% (6)

      Nayyar states that

     "the past two decades...have witnessed an increasing incidence of
private foreign investment in the manufacturing sector of
underdeveloped economies. In the beginning, such investment was
concentrated in import-substituting industries"... "but..disenchantment
with import substitution, which came to the surface during the
1960s"... "led a few countries to adopt a set of measures that has come
to be known as outward-looking policies"..."the export expansion has
frequently been  associated with a new type of foreign investment in
manufacturing which is directed towards overseas sales rather
than domestic markets". (7)

      Nayyar adds that the major determinant in foreign investment
going to such type of business is "labour costs", 'the absolute
differences in wage rates between rich countries and poor, for workers
engaged in the manufacturing sector, are indeed phenomenal"..."less
than one-tenth the level prevalent in industrialized countries". 

     "the timing of this phenomenon can be explained in terms of two
basic factors: competition between advanced capitalist countries, and
conflict between capital and labour within the industrial economies...
What is more, trade unions have become more militant and,
therefore, less willing to accept reductions in real wages or
employment in a crisis ...On the other hand, the industrial workforce
in poor countries is frequently not organised, or it is
systematically repressed, so that transnational corporations can
eliminate industrial disputes and need not worry about cutting back   
 on employment in times of recession" (8).

      The author quotes typical statements by executives of
transnational firms on why they invest in manufacture: 

     "We won't go into that country until the government gets the union
in line". "We need to be able to get goods, people and money in and out
easily". "We need political stability  and labour docility".
      That is, exactly the conditions of labour that the Latin American
social structure must maintain.  This fresh sectorial development
appeared from within the continental productive system thus suits the
needs of foreign investors.  Analyzing the same aspects, the economist
Amin points out that:

     "in theory, the new unequal division of labour would suit the
bourgeoisie of the peripheries and the monopolies of the centres.  For
the transfer of industries would make it possible to recreate in the
centre a reserve army of unemployed which a quarter of a century of
growth had reduced to such an extent that the system has lost its
'normal' flexibility. And this unemployment would raise the rate of
surplus value in the centre itself"...(9)

      In 1969, the vice president of the United States, Nelson
Rockefeller, in his "Report on the Americas", released after his fact-
finding visit to a dozen Latin American countries, stated:

     "what is needed now is a broadening division of labour among   the
nations of the Western hemisphere.  At present, the United States is
producing, at high cost behind tariff walls and quotas, goods which
could be produced more economically by other hemisphere
nations.  The U.S. is short of skilled labor and, if anything, this
shortage promises to get worse.  The shortage of skilled labor is     
  intensified when the U.S. continues to keep workers in lines which
are, by definition, inefficient, since production can only be
carried on here behind tariff or quota barriers.  National productivity
would be enhanced by shifting workers and capital out of protected
industries   into industries where advanced technology and intensive
capital investment permits the U.S. to pay high wages and still remain
competitive in world markets.  The goods the United States is now
producing inefficiently would be imported, mainly from less
developed countries.  Consumers would gain through lower prices,
workers would receive higher wages, and the return on capital would be
     "the less developed countries would also gain.  With abundant
supplies of labor and wage levels well below those in the United
States, they could export processed foods, textiles, apparel, footwear,
and other light manufactures, as well as meat and other farm
products"..."such nations would become better customers for the high-
technology products of the United States". (10)

      In a word, as far as the Latin American countries are concerned,
the new shifting of its economy to export production follows a pattern
that maintains the level of domestic consumption low, with a lower
standard of living for the majority of the population, and carries on
the same path of economic development characterising the "fractured
system of production".  This path is receiving overall support from
foreign investment, and U.S. imperialism.  This comes as no surprise,
because this "new" outward-looking industrialisation is no more than
the same old mechanism utilised in the XIX century to cope with the
absorption of capitalist relations of production: at that time, the
international market only needed raw materials and foodstuffs, so these
were the products extracted from the continent.  Now, in the late XX
century, when there is a relative demand for manufactured goods of low
technology in the international market, the fractured system of
production takes advantage of its regressive distribution of income to
produce these goods utilising cheap labour.  That is, qualitatively
there is no major change attached to this outward-looking
industrialisation.  On the contrary, it is a fresh consolidation of the
old  social structure, which is being carried on at a different level
of development of the world capitalist system, on the one hand, and, at
the internal productive system, on the other.  This being so, it is not
surprising that the political form to put this fresh pattern of
industrialisation into practice is military dictatorship.  The latter
at a "new" level also - with higher technology to terrorise and
dominate the direct-labourers. (11)
      For U.S. imperialism, as always, this is a matter of little
concern, it being a partner with the ruling class in the region. 
      In August 1977, the U.S. Senate Foreign Relations Committee
discussed the situation of countries with imminent debt problems
(mainly Brazil, Mexico, Chile, Argentina, in Latin America) in relation
to the International Monetary Fund's measures to cope with it.  Part of
the records of that discussion read as follows:

     "The measures that the IMF and the private banks stimulate the
deficit countries to adopt usually include limitations to the growth of
the money supply, reductions in public spending and devaluation. These
measures are destined to maintain the level of domestic
consumption low and to reduce the demand for imports.  The growth of
export industries are regarded as very important to help equilibrate
the balance of trade and to assure that the country receives enough
foreign exchange to service its foreign debt.  Countries may also
be stimulated to create a favourable climate for foreign investment and
for private sector in general...The problem with these measures is
that, although they may be the most effective way quickly to compensate
the balance of payments deficit of a country, they can also lead to
greater unemployment, to the reduction in social welfare and
to a lower standard of living for the people...In the poorest
countries, in which the majority of the population barely reaches a
minimum level of subsistence, the government decision to impose a
program of strict economic austerity can create social and political
disturbance...Finally, and as we have shown, in many countries there
seems to be a direct correlation between economic difficulties and
political repression. The Carter government, therefore, may see itself
obliged to choose between continuing its efforts in favour of human
rights or to support the creditor demands to implant drastic economic
austerity programs that could only be imposed at the expense of civil
liberties in the countries that adopt them." (12)

      To summarise, my argument is that imperialism did not distort the
pattern of development in Latin America; at most, it made more apparent
the distortion already existing there.  These distortions,as compared
with "normal" capitalist modes of production, were component parts of
a specific system of production consistent with the social structure
prevailing, and with the functioning of the whole social system. 
Moreover, U.S. imperialism supported that social system, even when at
times its low level of development was at odds with the needs of the
capitalist mode of production for an enlarged market. Therefore, the
major mechanisms that keeps reproducing what is called "Latin American
underdevelopment" are not to be found solely as a product of the
dominance of U.S. imperialism in the region, but as a component of the
internal parts of the system of production in the region, the latter
being shaped by the social structure existing there.  On the other
hand, U.S. imperialism protects this social structure as a political
safety-valve against the threat of socialist revolution.  But again, as
far as my analysis in this thesis is concerned, this does not mean that
U.S. imperialism is the cause of the permanence of such a social


 (1)  Abraham F. Lowenthal, "THE UNITED STATES AND LATIN AMERICA:     
ENDING THE HEGEMONIC PRESUMPTION", in Foreign Affairs, Vol. 55, no.1,
1976, pp. 199-200

      G. Allen and Unwin Ltd, London 1969, pp. 144-145

 (3)  Krieger Vasena and Pazos, op. cit., p. 140  

CHILEAN NITRATE POLICY, 1980-82, in J. of L.A. Studies, London, Vol II,
no.1, 1979, pp. 101-121  

 (5)  Lowenthal op.cit., p. 201

EXPORTS FROM POOR COUNTRIES", The Economic    Journal, Vol.88, no. 349,
March 1978, p.59
 (7)  Ibid,  p.59

 (8)  Ibid,  p.73

   ORDER", Monthly Review, Vol. 29, no.3, July/August 1977

(10)  Nelson Rockefeller, "REPORT ON THE AMERICAS", Quadrangle Books,
London 1970, pp. 102-103

(11)  In ECLA Review no.11, August 1980, Anibal Pinto's article      
policy as follows:

     "In unfettered opening-ip of the economy runs the   
risk of re-establishing, creating or deepening economic and social
features which have long been criticised in Latin America, and the
correction of which is a priority objective of most official
policies proclaimed in the region, sometimes even in the very countries
which appear to be taking a different road" ..."because its (the new
policy) very nature is to give pride of place to external rather than
domestic demand, above all in terms of the relative and dissimilar
grwoth of each.  Furthermore, since the level of earnings is a decisive
element in external competitiveness, a rise in the former must by
definition have a negative effect upon the latter". "An
additional danger, which has materialised in some cases, is that the
unbalanced emphasis on exportable agricultural products results in
a decline, or slow growth of crops for domestic consumption". (pp.41-
(12)  U.S. Senate Foreign Relations Committee, August 1977, reproduced
in Comercio Exterior, Mexico, November, 1977, pp.179-80 and
retranslated from the Spanish.

( Robinson Rojas, "Latin America: Blockages to Development",London, 
PhD Dissertation, 1984).Pages 242-251 and 294-295