* The making of a fractured society: the case of Latin America.
------------------------------------------------------------------
PRODUCTION, DISTRIBUTION, EXCHANGE AND CONSUMPTION
A FRACTURED SYSTEM OF PRODUCTION
TABLE 1: Latin America, average productivity by active persons by
sector. Late 1960s, and in US dollars of 1960
TABLE 2. UNITED STATES, PRODUCTIVITY BY ACTIVE PERSON,
YEAR 1957, IN US DOLLARS OF 1950
TABLE 3. GROSS DOMESTIC PRODUCT BY ACTIVE PERSON IN UNITED STATES,
GREAT BRITAIN AND LATIN AMERICA, 1960
TABLE 4. LATIN AMERICA - HEAVY INDUSTRY AS A PERCENTAGE OF TOTAL
MANUFACTURES, BY GROUPS OF COUNTRIES
A FRACTURED SYSTEM OF DISTRIBUTION
TABLE 5. LATIN AMERICA: INCOME DISTRIBUTION BY INCOME GROUPS
TABLE 6.- SELECTED AMERICAN COUNTRIES: ESTIMATED INCOME DISTRIBUTION
( percentage of total income corresponding to each decile)
A. CHILE: INCOME DISTRIBUTION, FAMILIES, 1968, IN LEGAL MINIMUM
WAGES (SUELDOS VITALES)
B. CHILE: CONSUMPTION STRUCTURE (PERSONAL) BY INCOME GROUP
A. % OF POPULATION WITH INCOMES BELOW THE NATIONAL AVERAGE INCOME
B. % OF POPULATION WITH ONE TO TWO TIMES THE NATIONAL AVERAGE
INCOME
1. INCOME OF THE MIDDLE 60 PER CENT OF THE POPULATION
2. INCOME OF THE 15 PER CENT BELOW THE UPPER 5 PER CENT
3. INCOME OF THE UPPER 5 PER CENT
A FRACTURED SOCIAL STRUCTURE
INCOME DISTRIBUTION IN BRAZIL YEAR 1960
YEAR 1929 INDUSTRIAL PRODUCTION
WORKING CLASS (MANUAL WORKERS AND EMPLOYEES) INCOME DISTRIBUTION
IN THE USA AND THE UK
LATIFUNDIO - MINIFUNDIO RATIOS (a) IN SELECTED LATIN AMERICAN
COUNTRIES (1950-1960)
--CHILE - TOTAL PUBLIC AND PRIVATE SECTOR LABOUR FORCE IN THE
UNIONS, 1966
THE ROLE OF THE ARMY
A CRITICAL ASSESSMENT
ENGLAND AND WALES - INCOME DISTRIBUTION
PERCENTAGE OF VALUE ADDED IN COMMODITY PRODUCTION
FOOTNOTES
=====================================================================
[pp. 190-241] SECOND SECTION
CHAPTER TWO
=====================================================================
PRODUCTION, DISTRIBUTION, EXCHANGE AND CONSUMPTION
Latin America: blockages to development
190
The concept combining production, distribution,
exchange and consumption as "members of a totality, distinctions within a unity"
(1) is a basic analytical tool within the marxian theory of modes of production. It gives
us a basis for dealing with the mutual interaction between economics and society, ie, the
definite relations between a system of production and its social structure. To my thesis,
this concept is basic for explaining the internal dynamics of Latin American society.
In Marx's words:
"a definite production thus determines a definite consumption, distribution and
exchange as well as DEFINITE RELATIONS BETWEEN THESE DIFFERENT MOMENTS. Admittedly,
however, IN ITS ONE-SIDED FORM, production is itself determined by the other
moments...Mutual interaction takes place between the different moments. This is the case
with every organic whole." (2)
In other words, although initially a specific form of
distribution is a product of a specific historical mode of production, the former may
constitute the basis for a new form of production, eg. the case of the conquistadores in
Latin America transforming the Indian system of production to fit the relations of
distribution they brought from feudal Iberian peninsula.
And, again, this new form of production reshapes the
relations of distribution which were its starting point, to make them fit with the new
form of production, eg. the case of the Latin American mode of production, as we saw in
the first section.
This occurs because production, distribution,
exchange and consumption constitute relations between human beings, means of production,
and products. That is, "whenever we speak of production...what is meant is always
production at a definite stage of social development - production by social
individuals" (3). Therefore, since social individuals are grouped into social
classes, it is the specific arrangement between these social classes at a specific stage
of social development which gives shape to specific forms of distribution. From this, it
follows that even relations of distribution are a product of relations of production,
specific forms of distribution are nevertheless the outcome of class struggles. |
Latin America: blockages to development
191
As Marx puts it, "production is determined by
natural laws, distribution by social accident, and the latter may therefore promote
production to a greater or lesser extent". (4).
The notion of "accident" in this context
refers to the fact that even when class struggles are the motive force of historical
development, the outcome of each historical class struggle is not given beforehand, it is
not determined beyond the particular circumstances of the particular historical moment in
which it occurs, and even this determination is not absolute but related to odd
circumstances.
Consequently, the limits of production in a
particular historical moment are posited by the level of development of the productive
forces and the structure of the relations of production consistent with this level. Yet,
within those limits, the limits of distribution are posited by the occurrence of
"social accidents", that is, the outcome of class struggles. The latter may lead
to a further development of the productive forces or, conversely, to delaying or even
reversing that development, through, for instance, establishing a particular form of
distribution. (5).
On the other hand, for the same reason, a specific
mode of production may incorporate within it alien forms of labour processes (and alien
relations of production with them) without any overall change in its social structure
(class relations) and succeed in giving shape to a system of production which reproduces
the social structure through a specific mode of distribution, which, in its turn is the
product of a "social accident"; that is, the outcome of a class struggle in
which the ruling class in the specific mode of production continues to rule the society
and adapts itself to the alien relations of production incorporated in it. Furthermore,
the mode of distribution reproduces its structure in the system of production, and the
latter becomes a form of production that accommodates the reproduction of the original
social structure with only marginal modifications.
This has been the case with the Latin American social
formation from the XIX century onwards, ending up in the 1980s in what J. G. Taylor
describes as "a restricted and uneven capitalist development" (6).
In the XIX century, the Latin American ruling class
faced an assault by the capitalist mode of production, absorbing it and digesting it. The
possibility to do this arose from the outcome of class struggle: on the one hand, the
Latin American ruling class succeeded in submitting |
Latin America: blockages to development
192
the direct producers in the continent, and on the other hand, entered into an association
with the world capitalist ruling class, after the failure of the latter's attempt to
conquer the region by military means: a "social accident".
Therefore, both internal and external dynamic factors
gave shape (with marginal difference at the level of nation-states) to the Latin American
system of production.
In this chapter I will concentrate on the basic
domestic influences on the dynamics of the development of the region. Therefore I will not
deal with the dual role of imperialism until the next chapter, ie. as a carrier of
capitalist relations of production and exploiter of pre-capitalist relations of
production, and the most important external supporter for the ruling class in the
continent during the twentieth century.
A FRACTURED SYSTEM OF PRODUCTION
As I outlined in the last chapter, the region entered
into the world capitalist economy in the XIX century, following the path of exporting raw
materials and foodstuffs in order to finance the consumption, both productive and
unproductive, of the ruling class (an arrangement that was in the best interests of both
the international capitalist bourgeoisie and the Latin American oligarchy), while the
domestic system of production was coping with the needs of a social structure underpinned
by the original relation hacendado-peon. (7)
Consequently, there was no need to develop the
industrial sector except in those areas supporting export production.
On the other hand, the manufacturing sector had a
tiny domestic market with a monopolistic structure and an intensive use of labour power,
maintaining a low technical level.
The case of Argentina is illustrative because in the
early XX century it was the most industrialised country of the region, hence its
production structure reflected the highest stage of development reached in the continent
at the time. |
Latin America: blockages to development
193
Between 1900 and 1930 the distribution of the labour
force in Argentina was as follows:
--------------------------------------------------
Manufacturing, mining & building 26%
Commerce, financing, personal services,
transport, communications, electricity etc. 38%
Agriculture 36%
--------------------------------------------------
Nevertheless, unlike countries such as England and
the United States where the distribution of the labour force was broadly similar, this
relative diversification in Argentina was caused by a high level of productivity in
agriculture and a high concentration in landed property. This system of landed property
stood in the way of incorporating a greater proportion of the population into rural
activities and impeded the creation of a strong rural middle class, even when there was a
great pressure from immigration (between 1869 and 1929, the country's population grew from
1,737, 000 to 11,600,000).
5% of the rural population owned 90% of the
cultivated land and obtained more than 70% of the rural gross income. 65% were landless
workers who received 20% of the rural gross income, while the remaining 30% were
minifundistas and tenants receiving only 10% of the rural gross income.
This lack of access to ownership of land pushed down
the level of rural wages, while the high level of capital invested pushed a vast surplus
of labour power into the town, exerting pressure on the supply of labour power, thereby
pushing down the level of urban wages, with resulting high rates of unemployment - between
5% and 20% in this period.
Overall, the resultant highly regressive distribution
of income fostered a low technological level of manufacturing, and the need to carry out
accumulation through imports.
About 25% of domestic demand was met through imports
(roughly, imports were 40% consumer goods, 30% intermediate goods and combustible, and 30%
capital goods). Thus, domestic industry supplied only the demand for consumer's goods and
capital goods related to export industries such as frozen meat and packaged foodstuff,
alongside transport and shipping.
When, after the Great Depression in the capitalist
mose of production, Argentinian development entered into an import- substitution phase,
the system of production developed underpinned by what I have described above, resulting
in renewed concentration. For instance,
|
Latin America: blockages to development
194
in 1955, 0.4% of the labour force in Argentinian manufacturing obtained 35% of the gross
income of the sector, and controlled 65% of total manufacturing production.
Manufacturing development from the 1930s onwards was
mainly directed at coping with the requirements of the ruling class, giving birth to a
"fractured" system of production which was prevalent at that time throughout
Latin America (8).
This "fractured" system was founded on the
industrial sector, with its congruent modern framework emerging as a "superimposition
on the traditional structure, the latter having no modifications except in those areas
where the effects of the primary-export model were concentrated" (9), hence, the
resulting system of production was constituted by the synthesis of three clearly
differentiated strata of productivity:
- The primitive sector, with levels of productivity and personal
income that were similar to those of the colonial period, and in some cases to precolonial
times;
- The modern sector, with levels of productivity fairly similar
to those in some sectors in the United States and Western Europe (see Tables 1, 2 and 3)
in the same period. It was mainly centred on export orientated activities, although some
industries and services (usually monopolies) were supplying the domestic market during the
import-substitution phase;
- In between, the intermediate sector, with a productivity level
always below the average in the domestic economy, and whose product was destined solely
for the domestic market (10). The dimension of each sector and its participation in the
whole is illustrated in Table 1 (overleaf).
The data shows that more than one third of the labour
force created only 5% of the total product, about half of the labourers created less than
42% of the total product, and little more than one tenth of the workers produced almost
54% of the total. The "fractures" are apparent. The manufacturing sector
reflects its share of the fracture with less than one fifth of the workers creating more
than 62% of the total product in the sector, almost two thirds of the workers creating
only 36% of that total, and about 18% of the workers in this sector producing only 1.5% of
the total manufacturing product (11). |
Latin America: blockages to development
195
-------------------------------------------
TABLE 1: Latin America, average productivity
by active persons by sector.
Late 1960s, and in US dollars of 1960
-------------------------------------------
ALL SECTORS
%of work Average
force prod.(US$)
TOTAL 100.0 1,371
Agriculture 42.2 694
Mining 1.0 6,484
Manufacturing 13.8 2,517
a) manufacturing 7.7 4,168
b) handicraft 6.1 419
Building 4.5 1,116
Basic Services 5.5 2,174
Commerce 10.1 2,731
Other Services 17.3 1,283
--------------------------------------------
MODERN SECTOR
TOTAL 12.4 5,909
Agriculture 6.8 4,830
Mining 38.0 15,606
Manufacturing 17.5 8,938
a) manufacturing 28.1 9,800
b) handicraft 4.1 1,760
Building 24.8 2,322
Basic Services 25.0 4,276
Commerce 14.0 8,990
Other Services 16.2 2,713
---------------------------------------------
INTERMEDIATE SECTOR
TOTAL 47.7 1,194
Agriculture 27.7 830
Mining 34.2 1,420
Manufacturing 64.9 1,400
a) manufacturing 71.9 1,960
b) handicraft 55.9 470
Building 64.9 800
Basic Services 71.6 1,530
Commerce 76.1 1,990
Other Services 70.5 940
----------------------------------------------
PRIMITIVE SECTOR
TOTAL 39.9 203
Agriculture 65.5 205
Mining 27.8 246
Manufacturing 17.6 220
a) manufacturing - -
b) handicraft 40.0 220
Building 10.3 203
Basic Services 3.4 220
Commerce 9.9 340
Other Services 13.3 160
----------------------------------------------
RATIO MODERN/PRIMITIVE (average productivity)
TOTAL 29.0
Agriculture 24.0
Mining 63.0
Manufacturing 41.0
a) manufacturing -
b) handicraft 8.0
Building 11.0
Basic Services 19.0
Commerce 26.0
Other Services 17.0
-----------------------------------------------
DISTRIBUTION OF THE WORK FORCE
MODERN INTERMEDIATE PRIMITIVE TOTAL
TOTAL 12.4 47.7 39.9 100.0
Agriculture 6.8 27.7 65.5 100.0
Mining 38.0 34.2 27.8 100.0
Manufacturing 17.5 64.9 17.6 100.0
a) manufacturing 28.1 71.9 - 100.0
b) handicraft 4.1 55.9 40.0 100.0
Building 24.8 64.9 10.3 100.0
Basic Services 25.0 71.6 3.4 100.0
Commerce 14.0 76.1 9.9 100.0
Other Services 16.2 70.5 13.3 100.0
-----------------------------------------------
Source: Anibal Pinto, "Distribución y Redistribución del Ingreso
en América Latina", EL TRIMESTRE ECONOMICO, No. 162,
April-June 1974, Mexico, p. 372
-------------------------------------------------
|
Latin America: blockages to development
196
The most striking differences between the modern and
primitive sectors are in mining, with a ration of 63 to 1; in manufacturing, with a ratio
of 41 to 1; agriculture, with a ratio of 24 to 1, and commerce, with a ratio of 26 to 1.
All these sectors are directly related to exports.
In short, the modern sector has a productivity level
comparable to that of the industrialised countries, and the primitive sector one
comparable to that of one century ago, or more. In the latter, more than one third of the
population is trapped, in the former only about one tenth of the population participates.
-------------------------------------------------
TABLE 2. UNITED STATES, PRODUCTIVITY BY ACTIVE
PERSON, YEAR 1957, IN US DOLLARS OF 1950
Agriculture 3,352
Mining 7,583
Manufacturing &
Building 7,140
Services 7,571
AVERAGE 6,977
-------------------------------------------------
Source: Anibal Pinto, INFLACION, RAICES
ESTRUCTURALES, FCE, Mexico, 1973, p.54
-------------------------------------------------
If we compare the modern sector with the data in
Table 2, it is possible to conclude that the productivity level of the former in the 1960s
is comparable with the productivity level in the United States in the late 1950s:
agriculture, 3,352 in USA and 4,830 in Latin America; mining 7,583 in the United States,
and 15,606 in Latin America; manufacturing and building, 7,140 in the United States, and
5,060 in Latin America; and with an average of 6,977 for the USA, and 5,909 for Latin
America. That is, 85% of the productivity level of the United States.
Conversely, the intermediate sector had a
productivity level of only 17% of that of the United States, and the primitive sector
hardly 3%. All this illustrates a specific articulation of different labour process in a
unique system of production in which capitalist relations of production are dominant.
Table 3 (overleaf)
|
Latin America: blockages to development
197
gives us a point of reference for visualising the huge structural differences between the
capitalist and Latin American systems of production, and to go one step further in our
understanding that Latin American development is not a "late capitalist
development" but a "different" one.
-----------------------------------------------
TABLE 3. GROSS DOMESTIC PRODUCT BY ACTIVE
PERSON IN UNITED STATES, GREAT BRITAIN
AND LATIN AMERICA,1960
Sector United States G.B L.A.
-----------------------------------------------
Total 100 100 100
-----------------------------------------------
A Agriculture 47 93 51
B Non-Agriculture 105 100 151
I. Goods & Basic Services 128 102
a) Mining 133 90 473
b) Manufacturing 125 97 184
c) Building 120 99 81
d) Basic Services 147 128 159
II. Services 90 98 94
-----------------------------------------------
Source: Yearbook of National Accounts
Statistics 1965; Statistical
Abstract of the United States, 1964;
and Anibal Pinto, op.cit in Table 1
-----------------------------------------------
All the above data are a reflection of a highly
monopolistic system of production, where a tiny minority rules the whole society through a
mode of distribution that enables the functioning of mechanisms of reproduction. In order
to understand this statement, we must take a closer look at the Latin American mode of
distribution. But, before that, lets examine Anibal Pinto's analysis of the
"fractured" system of production as a summary of the above (12):
Pinto infers that, as he terms it, "the
heterogeneous" system of production (and therefore, heterogeneous social system)
comes from the way in which the stage of "outward growth" (1800s until 1930s)
deepened the colonial disparities through an uneven and dislocated spreading of technical
progress. It follows that there is a coexistence and interaction of diverse labour
processes related to relations
|
Latin America: blockages to development
198
of labour and appropriation. Hence, this "heterogeneous system" is the
"original" factor underpinning the relations of distribution in Latin America.
The effects of this, Pinto adds, can be grouped in a
fracturing of social classes, a tiny domestic market which feeds back the existence of
oligopolies, the concentration of the labour force in units of production (which
potentially helps the organisation in trade unions of the industrial workers), the
disparity of salaries, which, in its turn, creates a fracture at the level of solidarity
of the workers; and, finally, that the structure of employment is inelastic, adding to the
appearance in the modern sector of a labour aristocracy through their trade unions.
In a nutshell, the "fracture" goes through
the whole social fabric, affecting relations of labour, property, and political power.
Again, the fractured relations of political power in the system favour the upper strata of
owners of means of production, professionals and bureaucrats, and organised groups among
the wage earners (the labour aristocracy).
Of course, the quantitative limits of this favoured
segment of society go beyond this 12-13% of the population involved in the "modern
sector".
I agree with Pinto's approach to the problem, and I
will come back to some of his concepts further on, in order to attempt further elaboration
of some basic points.
Before I start my analysis of distribution, however,
it seems to me that it is necessary to explain my use of data for Latin America as a
whole; what I attempt is to provide a tool for analysis, not arguing that every corner in
the region is wholly similar. There are considerable differences, for instance, between
Argentina and Guatemala, Mexico and Chile, or Brazil and Peru, but those differences are
not qualitative. They correspond to different stages in the development of the original
"capital sin", the Latin American mode of production, entering into contact with
and absorbing capitalist relations of production, and giving birth to this particular mode
of development which I am calling " a fractured system of production". One
parameter for categorising countries in accordance with their stage of development may be
the relative development of the heavy industry in the manufacturing sector as Table 4
(overleaf) shows: |
Latin America: blockages to development
199
------------------------------------------------------------------ TABLE 4.
LATIN AMERICA - Heavy industry as a percentage of total manufactures, by groups of
countries
| Industries |
Group I |
Group II |
Group III |
USA |
| |
|
|
|
|
| Chemicals |
12.4 |
9.2 |
5.7 |
7.6 |
| Petroleum & coal derivatives |
6.0 |
4.5 |
2.3 |
4.0 |
| Mineral prod. other than metals |
6.2 |
4.2 |
3.6 |
2.6 |
| Basic metals |
8.8 |
6.5 |
0.8 |
8.5 |
| Metal products |
- |
4.3 |
4.3 |
6.0 |
| Machinery, except electric |
6.5 |
1.7 |
0.6 |
8.8 |
| Machinery, electric |
4.4 |
2.5 |
0.7 |
7.8 |
| Transportation equipment |
8.5 |
3.4 |
1.0 |
12.7 |
| TOTAL |
46.8 |
36.3 |
19.0 |
58.0 |
Group I: Argentina (1963), Brazil (1965), Mexico (1965)
Group II: Chile (1966), Colombia (1966), Peru (1965)
Group III: Bolivia (1965), Costa Rica (1962-63),
Dominican Republic (1967), Ecuador (1966),
Guatemala (1968), Honduras (1966), Panama (1966),
Paraguay (1963).
----------------------------------------------------
Source: John M. Hunter and James W. Foley, ECONOMIC PROBLEMS OF LATIN AMERICA, Houghton
Mifflin Co, Boston, USA, 1975, p.117
----------------------------------------------------
I chose this particular table because it helps us, again, to realise how, in the case of
group I, the similarities with the United States at the technical level do not have their
counterparts at the social level: distribution and social structure.
A FRACTURED SYSTEM OF DISTRIBUTION
Returning to the Marxian theory of modes of production, we find that distribution as such,
is composed of the following levels: "1) the distribution of the instruments of
production, and 2) which is a further specification of the same relation, the distribution
of the members of the society among different kinds of production. (Subsumption of the
individuals under specific relations of production)"..."3) the distribution of
products"...which..."is evidently only a result of this distribution (means of
production and kinds of production, R.Rojas), which is comprised within the process of
production itself and determines the structure of production. To examine production while
disregarding this internal distribution within is obviously an empty abstraction; while
conversely, the distribution of products follows by itself from this distribution |
Latin America: blockages to development
200
which forms an original moment of production" (13).
Therefore, if we analyse the distribution of products, what we are doing is analysing the
external appearance of the system of production and we should be in a position to discover
some of the determination of the system. On the other hand, 1) and 2) have been fairly
described in the First Section and Chapter one of this section, and we have roughly
indicated this above in this chapter; so we are in a position to investigate the
distribution of the product, having in mind the determinations at the level of production,
and go further in the quest for the "synthesis of many determinations" that
comprises the Latin American social formation.
Of course, the distribution of product has its equivalent for the purposes of my analysis
in the distribution of income, which, in turn, is a profitable way of approaching the
heart of the matter: the dynamics of the system of production (14), since this enables us
to grasp the dynamics of consumption which, in its turn, shapes the system of production.
An ECLA survey on income distribution in 1968 reads as follows:
"The most striking fact that emerges from a comparison of the distribution patterns
of a significant number of Latin American countries is their relative uniformity, despite
the differences in these countries average per capita incomes and general level of
development. On this basis, it is possible to pick out some general features of income
distribution in Latin America which are markedly different from those in more developed
economies.
The estimates also reveal some significant differences between the Latin American
countries, although these are of much less importance than the features that differentiate
the region as a whole from the industrialised countries. They are due to a number of
factors, including those relating to the level of concentration of property ownership, and
other institutional factors." (15). |
Latin America: blockages to development
201
----------------------------------------------
TABLE 5. LATIN AMERICA: INCOME DISTRIBUTION BY
INCOME GROUPS
Income group average average
income per
% share (regional capita
total inc. (=100) (US $)
L.A. U.S.A. L.A. L.A.
Poorest 20% 3.5 5.9 18.0 68
30% below the median 10.5 19.7 35.0 133
30% above the median 25.4 31.3 85.0 322
15% below the top 5% 29.1 27.1 194.0 740
Top 5% 31.5 16.1 629.0 2,400
-----------------------------------------------
Source: ECLA (The figures, expressed in dollars at
1960 prices, are for 1965)
-----------------------------------------------
If we assume that the pattern of distribution of income in the United
States is typical for a capitalist society, as it is, because that country is the most
developed between the capitalist countries, then we can take it as a reference. The main
features of this pattern are that the 60% in the middle of the scale shares more than 50%
of the total income, while the top 20% shares less than 50% enabling the existence of a
domestic market that reaches the majority of the population.
Conversely, the Latin American pattern shows that the 60% in the middle of the scale
shares only 36% of the total income, while the top 20% appropriates above 60% of the total
income. This feature leads to the conclusion that the domestic market in Latin America is
narrower than that of the United States, and that less than half the population is in the
situation to consume goods above the subsistence level. Table 6 gives a more detailed
picture. |
Latin America: blockages to development
202
-------------------------------------------------
TABLE 6.- SELECTED AMERICAN COUNTRIES:
ESTIMATED INCOME DISTRIBUTION
(percentage of total income corresponding
to each decile)
-------------------------------------------------
ARGENTINA (families): 1953 1959 1961 1970
1st 10 per cent 3.2 3.0 2.9
2nd 10 per cent 4.3 3.9 4.1 4.4(20%)
3rd 10 per cent 5.0 4.4 4.9
4th 10 per cent 5.6 5.1 5.5 9.7(20%)
5th 10 per cent 6.5 5.7 6.1
6th 10 per cent 7.4 6.5 7.1 14.1(20%)
7th 10 per cent 8.3 7.8 8.1
8th 10 per cent 9.8 9.0 9.8 21.5(20%)
9th 10 per cent 13.2 12.8 12.6 15.1
10th 10 per cent 36.8 41.8 39.0 35.2
Upper 5 per cent 27.2 31.8 29.4 -
Top 1 per cent - - 16.3 -
--------------------------------------------------
MEXICO (families): 1950 1957 1963 1977[1984]
1 2.7 1.7 1.3
2 3.4 2.7 2.2 2.9 4.1
3 3.8 3.1 2.8
4 4.4 3.8 3.8 7.4 7.8
5 4.8 4.3 4.9
6 5.5 5.6 6.2 13.2 12.3
7 7.0 7.4 8.0
8 8.6 10.0 11.3 22.0 19.9
9 10.8 14.7 17.4 17.7
10 49.0 46.7 42.2 36.7 55.9
Upper 5 per cent 40.0 37.0 28.8 -(10th=
Top 1 per cent - - 12.0 - 39.5)
--------------------------------------------------
BRAZIL 1960 1972 [1989]
(pop. rec.rem.)(families)
1 1.8
2 2.4 2.0 2.1
3 3.1
4 4.2 5.0 4.9
5 5.3
6 6.0 9.4 8.9
7 8.1
8 10.3 17.0 16.8
9 13.8 16.0
10 4 50.6 67.5
Upper 5 per cent 33.0 - (10th=51.3)
Top 1 per cent 18.0 -
--------------------------------------------------
CHILE (active population) 1968 1981 [1989]
1
2 4.4 1.8 3.7
3
4 9.0 4.6 6.8
5
6 13.8 9.3 10.3
7
8 21.4 18.0 16.2
9 16.6 12.3
10 34.8 54.0 62.9
Upper 5 per cent - - (10th=48.9)
Top 1 per cent 37.6
--------------------------------------------------
VENEZUELA (families) 1962 1970 [1989]
1 1.4
2 1.6 3.0 4.8
3 3.0
4 3.7 7.3 9.5
5 4.6
6 6.0 12.9 14.4
7 8.3
8 13.4 22.8 21.9
9 17.3 18.3
10 40.7 35.7 49.5
Upper 5 per cent 26.5 - (10th=33.2)
Top 1 per cent 9.0 -
--------------------------------------------------
PERU (families) 1961 1972 [1985-86]
1 1.0
2 1.5 1.9 4.9
3 2.2
4 3.3 5.1 9.2
5 4.3
6 5.9 11.0 13.7
7 7.6
8 9.8 21.0 21.0
9 15.2 18.1
10 49.2 42.9 51.4
Upper 5 per cent 39.0 - (10th=35.4)
Top 1 per cent 25.4 -
--------------------------------------------------
COSTA RICA (families) 1961 1971 [1989]
1 2.6
2 3.4 3.3 4.0
3 3.8
4 4.0 8.7 9.1
5 4.4
6 5.4 13.3 14.3
7 7.1
8 9.3 19.9 21.9
9 14.0 15.3
10 46.0 39.5 50.8
Upper 5 per cent 35.0 - (10th=34.1)
Top 1 per cent 16.0 -
--------------------------------------------------
COLOMBIA (active population) 1962 [1991]
1 2.5
2 3.4 3.6
3 4.1
4 4.9 7.6
5 5.3
6 6.1 12.6
7 7.5
8 9.5 20.4
9 14.0
10 42.7 55.8
Upper 5 per cent 30.4 (10th=39.5)
Top 1 per cent 10.0
--------------------------------------------------
PANAMA (pop. rec. rem.) 1960 [1989]
1 1.9
2 3.0 2.0
3 3.7
4 5.9 6.3
5 6.0
6 6.5 11.6
7 7.0
8 9.4 20.3
9 12.6
10 44.0 59.8
Upper 5 per cent 34.5 (10th=42.1)
Top 1 per cent 16.5
--------------------------------------------------
EL SALVADOR (active population) 1961
1 2.4
2 3.1
3 3.2
4 3.3
5 4.0
6 4.8
7 7.2
8 10.6
9 15.8
10 45.6
Upper 5 per cent 33.0
Top 1 per cent 18.0
--------------------------------------------------
UNITED STATES (families) 1960-62 [1985]
1 1.9
2 4.0 4.7
3 5.4
4 6.6 11.0
5 7.7
6 8.8 17.4
7 10.5
8 12.0 25.0
9 15.1
10 28.1 41.9
Upper 5 per cent 16.1 (10th=25.0)
Top 1 per cent
-------------------------------------------------
Source: ECLA and World Development Report 1979,
The World Bank, 1979
[] data added in 1995 by R.R.
-------------------------------------------------
|
As ECLA puts it:
"in the two upper income groups, average income is relatively
very high, which means that there% is a heavy concentration of
total personal income in them. Taken together, their average
income is almost twelve times that of the poorer half of the
population, a difference which is of great significance and has
far-reaching effects. For this is not a comparison between two
small groups, but between the fifth of the population at the top
of the income scale and the poorer half of the population. If
this situation is contrasted with that of an industrialised
western area with a similar population density, it will be found
that the average income of the richest fifth of the population of
the United States is less than five times that of the poorer half
of the population; in the socialist countries the proportion
appears to be a little less than three times as much...
Moreover in the two upper income groups, income rises very
rapidly and unevenly. At the lower limit of the 15% of the
population immediately below the top group, per capita income is
under 500 dollars, while at the upper limit, it is almost three
times that amount. The income of the top 5% is, of course, much
higher still, with a considerable concentration of income." (16).
about three times as much, even in countries as "industrialised"
as Argentina, and as "primitive" as El Salvador (see Table 6,
column "upper 5 per cent").
Moreover, the upper 5 per cent in the United States receive an
income per capita that is 6.25 times that of the poorer half of
the population, while in Argentina it is more than 14 times as
much, in El Salvador more than 20 times as much; Chile about 46
times as much, Brazil more than 19 times as much (in 1960) and
Mexico about 18 times as much.
These figures are important because they prove that in Latin
America so-called "modernisation" did not solve the "fracture" in
the social structure or in the system of production, and, again,
distribution of income reflects both "fractures". Thus, what we
are dealing with here is not a problem of
"underindustrialisation" or "underdevelopment" but one of a
specific model of development, with a specific system of
production and specific system of distribution, hence specific
social structure, and, of course, specific internal dynamics.
As Pinto argues, it is in the upper 5 per cent that receives
about 2,400 dollars per capita where the most of the market
demand is concentrated (17), and, therefore the pattern of this
particular demand acts on the production system in such a way
that, again, reproduces inequalities throughout society.
Sunkel states that:
"as far as internal conditions are concerned, the first and
foremost is obviously the size of the domestic market for the
manufacturing industries that are being established. It is not
only that incomes per head are relatively low in Latin American
countries but that a very unequal income distribution
considerably reduces the possibilities of developing mass markets
for most manufactures. On the other hand, modern technology has
largely been created for mass markets, so that relatively small
markets may mean the uneconomic use of technically up-to-date
equipment, or alternatively the use of uneconomical, deficient
techniques or worn-out equipment". (18).
I will take the case of Chile in 1968 to prove this unequal
distribution of income shapes demand and acts on the system of
production. This choice is valid as representative, because Chile
at that time typified the development of the region as a whole.
To follow my argument, we need the following two sets of data
(19):
----------------------------------------------------------------
A. CHILE: INCOME DISTRIBUTION, FAMILIES, 1968, IN LEGAL MINIMUM
WAGES (SUELDOS VITALES)
l.m wages % of families % of total income
-----------------------------------------------------------------
GROUP I 0-2 61.4 27.7
GROUP II 2-4 25.0 30.1
GROUP 111 4-6 7.4 15.8
GROUP IV 6-8 2.7 8.0
GROUP V 8 and more 3.7 18.4
TOTAL 100.0 100.0
-----------------------------------------------------------------
B. CHILE: CONSUMPTION STRUCTURE (PERSONAL) BY INCOME GROUP
GROUP I GROUP II GROUP III GROUP IV GROUP V
Light Consumer
Goods 80.3 78.9 77.4 77.3 60.5
Chemicals 11.6 11.9 12.0 12.6 12.0
Basic primaries 0.2 0.3 0.2 0.2 0.2
Consumer durables 8.0 8.9 10.4 10.0 27.3
-----------------------------------------------------------------
100.0 100.0 100.0 100.0 100.0
-----------------------------------------------------------------
Source: (20)
-----------------------------------------------------------------
Elaborating on A and B, it is possible to demonstrate that 15% of
the national light consumer goods market, 19% of chemicals, above
18% of the basic primaries, and, most importantly, above 41% of
the domestic consumer durables market was covered by spending by
the upper 3.5 per cent (21).
And this happened in a society where, approximately, the upper 5%
of the scale received about 23% of the total income. In Table 6,
it appears that the same stratum received almost 30% in
Argentina, 29% in Mexico, 33% in Brazil, 27% in Venezuela, 39%
in Peru, 35% in Costa Rica, 30% in Colombia, 35% in Panama, and
33% in El Salvador.
Therefore, in those countries well over 50% of the consumer
durables market must have been covered by the upper 5 per cent
spending. Thus, this "fracture" in the income distribution tends
to shift the demand to consumption of consumer durables (which
include luxury goods). Thus, there is a pressure upon the
production system that works in the following way, as illustrated
by the case of Chile:
From 1960 to 1970 the value added in metal products grew 165%,
machinery and non-electrical equipment 109.3%, machinery and
electrical equipment 145.1%, and machinery and equipment for
transport 185%, while the total growth in manufacturing was only
71.0%. This latter figure being so because the growth in food was
only 63.7%, textiles 59.3%, shoes and clothes 26.3%, and
furniture 11.2%.
The consequences of such industrial growth are roughly as
follows: the pressure on demand for consumer durables by the
richer strata results in a rapid growth of the so-called (by
ECLA) "dynamic sector", with an increasing demand for
sophisticated technology and means of production that cannot be
obtained in the domestic system of production (this because the
structure of the latter is determined by the income distribution,
which in turn, is a further pressure on imports from the
capitalist mode of production, consequently, a further dependence
upon foreign (international) capital).
From this there follows a growing disparity in productivity among
the various economic sectors, hence further unbalance in the
development of the productive forces: ?????????? Page 205 high
level of technology adds to the incapacity of the system to
absorb enough labour power in the productive sector, resulting in
the industrial development in the region tending to reduce the
average absorption of labour power.
Furthermore, distribution of income again limits the utilisation
of the means of production of high technology, and there is a
generalised situation of underutilisation of productive capacity,
which leads to an "overcapitalisation" of the whole system, and,
again, feeds back onto inequalities in distribution of income. A
relative growth of capital goods occurs accompanied by a relative
growth of the domestic market, but both growths are limited by
the social structure that tends to block any significative
enlargement of the domestic market.
A research document on Chile shows that "in the overwhelming
majority of manufacturing sectors 50% of the market was
constituted by the richer 19% of the scale of income
distribution"..."which lead to an unnecessary diversification,
underutilisation of means of production and high costs of
production" (22).
From this follows that in the Latin American system of production
after 1930, and especially after 1950, the fact that certain
industrial sectors have much faster growth rates than others
arises from the determinants of the economic system in the region
(income distribution within the social structure), and, most
importantly, this fact locates and internal dynamics which
reproduces and even increases the social inequalities
underpinning the whole system.
Therefore, from the perspective of the ruling class in Latin
America, the existence of primitive, intermediate and modern
sectors with appalling disparities in productivity, with
chronically high rates of unemployment, and a significant portion
of the population living on the fringes of society (the
"marginados" of the slums), and the close partnership and
dependence of the economy with international capital, are not
economic "distortions", but structural factors necessary for the
reproduction of the relations of distribution, hence, relations
of production suitable for reproducing the social structure that
maintains the dominance of that particular ruling class. Finally,
the "fractures", at the level of production and distribution, are
not "fractures" that militate against the mode of development
suitable to the contemporary Latin American social structure. On
the contrary, they are "fractures" in a "fractures" society
(polarisation between a tiny ruling class and a huge dispossessed
class of sellers of labour power, with the former living in a
capitalist world, and the latter in a pre-capitalist world) and,
because of this, are component parts of the dynamics of the
system.
Sunkel provides us with a fair description of the phenomenon:
"One of the salient features...in Latin America is the
coexistence in all sectors of economic activity of highly
advanced and very primitive production methods. Heavy
construction equipment is found side by side with picks and
shovels; cost accounting, linear programming and computers...are
used in the decision-making processes in some enterprises and
government departments while the rule of thumb still prevails in
others; highly intensive modern agriculture is seen along with
grazing on natural pastures...Since the volume of employment per
unit of output tends to be much lower at the modern than at the
primitive level of technology, and an ever greater share of
economic activity tends to be performed at the modern level,
employment opportunities - particularly for unskilled labour -
tend to grow very slowly. This is especially the case when, as
usually happens, modern activities replace to some extent output
produced by labour-intensive traditional activities. Given this
situation, and a rapidly expanding labour force, the labour
surplus may well be in the process of being enlarged rather than
absorbed.
There are some indications that this is likely. One is the sheer
size of the increase of total and particularly urban labour force
which has occurred since the 1920s. In 1925 Latin America had an
active population of about 32 million people, which increased to
68 million in 1960. This increase was associated with a profound
structural shift; rural labour forced increased only from 20 to
32 millions while non-agricultural employment increased from 13
to 2#36 million people...Of this, only 5 million people were
absorbed into industrial employment, which means that about 18
million have had to employed in other urban activities. The
structure of urban employment - where the great increase has
taken place - shows signs of the impossibility of accommodating
such large quantities of labour in reasonably productive
activities; the participation of industrial in total urban
employment has declined from about 35 per cent in 1925 to only 27
per cent in 1960. This figure, which refers to the region as a
whole, truly reflects the trend of all major individual
countries. The consequence has been a large expansion of
employment in the service sectors...There are other indications
of the insufficient creation of employment opportunities in most
Latin American countries. The most notorious is the growth and
substantial size of shanty towns, slum or marginal urban areas
characteristic of the large - and medium - cities of the region."
(23).
To summarize, then it is possible to argue that the "fractured"
system of production tends to reproduce, under conditions of the
dominance of capitalist relations of production, some of the main
features of the former mode of production (the colonial):
a) through maintaining on the "fringes" of society a vast
surplus of labour power (the Indian communities in colonial
times; the minifundia and shanty towns in post-independence
period), reducing the absolute value of labour power;
b) from a) it follows that the domestic market is unable to
expand significantly through an inner dynamics, unless the social
structure of the system is transformed;
c) a high level of monopolistic property ownership is required
in order to make a) and b) possible, and to structure a system
with labour processes that reproduce the whole structure of
society (the hacienda in colonial times, the "fractured system of
production" in post-independence period);
d) a high level of dependence on external factors, related to an
incorporation into more developed economies in order to be in a
position to put in motion a mode of accumulation that does not
endanger a), b) and c).
Therefore, dependence, in the first place, is a feature built
into the system of production in the region. It is a component
part of its structure without which the inner dynamics of that
structure cannot work.
Therefore, from this viewpoint, imperialism is not the original
cause of the contemporary situation in Latin America. As such,
imperialism tries its best to maintain the status quo within the
limits of a relative "social peace", hence the role of
imperialism as the overall supporter of the ruling class in Latin
America. Imperialism is thus the main obstacle to developing any
other mode of production in the region, since it is the senior
partner in the process of exploitation of direct producers in
Latin America, which underpins in the social structure of the
region.
Nevertheless, within this set of determinations, the internal
ones are decisive, while the external are secondary in the sense
that the "fractured" system of production can do better in
"partnership" with the capitalist mode of production, while the
latter can do without the Latin American mode of development
(24).
Consequently, any attempt to replace this "fractured" system must
contemplate the destruction of the whole set of "fractures"
within it. It is the structure as a whole that is at stake, and
not particular parts of it.
Finally, in order to have a more comprehensive understanding of
the distinctive characteristic of income distribution in Latin
America I will undertake some comparisons with income
distribution in a number of capitalist countries (25):
A. % OF POPULATION WITH INCOMES BELOW THE NATIONAL AVERAGE INCOME
Panama 78.5 Netherlands 65.0
Costa Rica 77.0 France 64.0
Colombia 76.0 United States 61.5
Argentina 76.0 U.K 60.0
Brazil 75.0 Norway 55.0
Mexico 72.0
El Salvador 71.0
Venezuela 68.5
B. % OF POPULATION WITH ONE TO TWO TIMES THE NATIONAL AVERAGE
INCOME
Norway 39.0 Brazil 20.8
U.K 32.8 Venezuela 19.0
United States 31.0 El Salvador 18.5
Netherlands 27.2 Argentina 18.0
France 24.5 Mexico 16.0
Colombia 14.1
Costa Rica 13.5
Panama 13.5
Percentages in A. and B. give us an overall picture of the
differences between the "mass market" in capitalist countries and
the limited market in Latin America. On this basis, we can
examine the region where the "fractures" appear:
1. INCOME OF THE MIDDLE 60 PER CENT OF THE POPULATION
(Arithmetic mean of the income for each country: 100)
Norway 93 Argentina 68
United Kingdom 85 Venezuela 66
United States 83 Panama 65
Netherlands 78 Mexico 64
France 74 Colombia 62
Brazil 58
Costa Rica 57
El Salvador 55
2. INCOME OF THE 15 PER CENT BELOW THE UPPER 5 PER CENT
Venezuela 209 France 190
Mexico 197 USA 170
El Salvador 189 UK 166
Colombia 175 Norway 166
Costa Rica 166 Netherlands 164
Argentina 153
Panama 146
Brazil 145
3. INCOME OF THE UPPER 5 PER CENT
Brazil 790 France 500
Costa Rica 700 Netherlands 470
Panama 690 United States 400
El Salvador 660 United Kingdom 380
Argentina 620 Norway 300
Colombia 610
Mexico 580
Venezuela 530
If we take Argentina and the United States, for instance, we see
that the difference in income from 1. to 2. to 3. are as follows:
United States = 83, 170, 400
Argentina = 68, 153, 620
The above can be transformed into the following:
United States = 1, 2, 4.8
Argentina = 1, 2.25, 9.11
Wealthy Argentinians are twice as rich as Americans, comparing
the middle 60 per cent of each country, and twice as rich
compared with the following 15% of each country, while the
differences between the 60 per cent and the 15 per cent are
almost the same in both countries. Hence, the "fracture" in this
upper 5 per cent in Latin America is apparent.
The differences for the other Latin American countries are:
Brazil = 1, 2.5, 13.6
Mexico = 1, 3.1, 9.1
Venezuela = 1, 3.2, 8.0
Colombia = 1, 2.8, 9.8
Costa Rica = 1, 2.9, 12.3
El Salvador = 1, 3.4, 12.0
Panama = 1, 2.2, 10.6
This new set of difference points makes even more apparent the
"fracture" at the upper level, and indicates that it tends to
start at the 15 per cent level.
Summarizing, it is possible to state that in Latin America the
large middle income sectors have a much lower income as a
proportion of the national average than their counterparts in the
capitalist countries, and, conversely, the upper 5 per cent has a
much greater income in proportion to the national average than the
same stratum in capitalist countries. here we have located the
"fracture" that ECLA describes as the "greatest concentration of
income at the top of the scale" which is "the principal factor in
the great inequalities existent in Latin America" (26).
Furthermore, the fracture in income distribution also appears as
a fracture at the social level because "the differences of such
magnitude, the habits of consumption of different strata are
different...the groups with low and middle income have forms of
consumption based on national habits and conditions, while the
groups at the top takes its patterns of consumption from the
standards existent in the industrialised countries" (27).
From here, a "fracture" even at the level of daily life: two
different worlds within the same society...hence, "this extreme
inequality does not encourage savings, but contributes to
establishing disconnected modes of consumption". The social
effects are far reaching, since the extreme differences in income
contribute to a rigid class differentiation. Those at the top may
live in an utter different way than those in the rest of society.
On top of this, the inequality fosters the utilisation of direct
personal services, patronage as a way of social intercourse.
Thus, a complete set of pressures to accentuating the existence
of social classes living in compartments (28)
This leads us on to another appearance of this "fractured"
system of production: the social distribution of power.
A FRACTURED SOCIAL STRUCTURE
According to Marx, a major feature of the introduction of
machinery is:
"the constantly growing numbers of the middle classes, those who
stand between the workman on the one hand and the capitalist and
landlord on the other. The middle classes maintain themselves to
an ever increasing extent directly out of the revenue, they are a
burden weighing heavily on the working base and increase the
social security and power of the upper ten thousand." (29)
It seems to me that it is in these "middle classes" that the
capitalist mode of production finds its capacity to utilise for
long historical periods bourgeois democracy as a system of
government. Bearing in mind that the process of industrialisation
in Latin America is based on capitalist relations of production,
one would expect the same processes pointed out by Marx were
taking place in the region. But this is not the case.
This is so, it seems to me, because of some major differences in
the emergence and process of development between both
"industrialisations".
In Western Europe, industrialisation came as a result of a class
struggle between the ruling class of a pre-capitalist mode of
production (feudal in this case) and a rising middle class from
the fabric of that feudal society (bourgeoisie in feudal times),
mediated by the outcome of a class struggle between landless
rural workers and landowners, creating necessary conditions for
widespread capitalist relations of production in the countryside.
In Latin America, industrialisation came as a necessity mediated
by the crisis of the capitalist mode of production outside the
region, and the same ruling class of the Latin American mode of
production played the role of "industrial bourgeoisie".
"In the earliest years of incipient industrialisation (the 1930s)
entrepreneurial mobility is not properly seen as a process of
rapid vertical mobility through business activity. Rather, the
establishment of new industry constituted a transfer of function,
personnel, and capital from commerce, agriculture, and services
into industrial pursuits. Although the entrepreneurs gradually
improved their economic position in the process of shifting their
activities to manufacturing, few experienced a fundamental change
in their position in the class structure" (30).
"The industrialists in Latin America are rarely self-made men who
have risen from the bottom of society. The great majority are
either drawn from the traditional ruling elites or else they are
middle-class immigrants to Latin America...The entrepreneurs
tend to be orientated towards conserving existing social
relations and to seek the support of political and social groups
which share their outlook...Foreign investors, industrial and
commercial entrepreneurs, and large landowners increasingly are
found as directors and stockholders of the same enterprises...The
extensive overlap between agricultural complexes and big business
largely invalidates the notion that there are basic sectorial
conflicts in Latin America between modern urban elites and
traditional rural elites. One of the major political reasons why
agriculture has not been reformed is that reform requires a
frontal attack on politically influential urban big business. The
absence of major conflicts between urban and rural elites at the
advent of industrialisation in the 1930s can be traced to this
overlapping membership. The existence of kinship ties and
property links between agriculture and business helps to explain
the lack of support for agrarian reform among industrialists".
(31)
To quote Cardoso,
"in the type of industrial growth which exists in Latin America,
the composition and functioning of the economic classes are
largely determined by use of the managerial capacities of
immigrants who are active in smaller industries, or by
manipulation of favourable market conditions by entrepreneurs
whose original activity was linked to the agricultural - export
sector - both groups representing small firms of the 'family
type'...It would be an oversimplification to suppose that the
entrepreneurial groups represent 'modernity' and that their
alliance with the lower-class pressure groups is therefore
natural, and sufficient itself to alter the traditional balance.
On the contrary, the history of Latin America demonstrates the
flexibility of 'traditional society'..." (32).
Thus, to summarise the description of the transition to
industrialisation in Latin America as qualitatively different
from that of Western Europe's let us accept the fact that
"whatever view is taken of the degree of rationalisation of this
process, no valid grounds exist for rejecting the main contention
that in Latin America neither the state nor a rising industrial
bourgeoisie has been the principal social force fostering rapid
economic development. Although the state has played an important,
this has not been the result of deliberate decisions on the part
of a bureaucratic or political elite, but the response to
situation imposed by external circumstances. The fact has
considerable political importance and it must be borne in mind
when other factors are evaluated further on. For the time being
it is sufficient to stress that the main changes that have taken
place in Latin America have been the consequences neither of
gradual, qualitative transformations in the modes of production,
coinciding with changes in social relationships and the
'superstructure' nor of a 'peaceful' confrontation (as in
Britain) or a revolutionary one (as in France) between social
classes associated with either regressive or progressive economic
trends". (33)
From this it follows that, whether Latin America:
a) is passing through a transitional period between a pre-
capitalist mode of production to the capitalist mode of
production, or
b) is taking the path of the early stages of a capitalist mode
of production, neither
1. the class structure and class conflicts in Latin America
society correspond to equivalent periods in the emergence and
development of the capitalist mode of production in Western
Europe, nor, therefore
2. is it scientifically valid to compare both processes of
industrialisation as different stages (in time) of the same model
of development.
My argument is that Latin America society is passing through a
transitional period characterised by the specific features of its
current system of production, which, on the one hand, places
limits on the development of a capitalist mode of production,
and, on the other hand, blocks any other forms of development,
unless its current social structure is destroyed.
Let us turn to our "fractured" social structure, focusing our
attention on the middle classes - not the middle classes which
fought against a feudal ruling class in Western Europe, nor the
middle classes growing and active in a capitalist mode of
production. The latter, unlike its Latin American counterparts,
developed in a social context where the ruling class (the
bourgeoisie) was formerly a revolutionary class, therefore its
"conservative stand" is qualitatively different to the
"conservative stand" of the Latin American middle class. What the
middle class in a capitalist mode of production want to preserve
is the capitalist social structure, unlike the middle class in
Latin America which tried to preserve a pre-capitalist social
structure.
From this it follows that, unlike the industrial societies, in
Latin America bourgeois democracy cannot be the "normal"
political structure, but the typical form of government must be a
type of dictatorship (either military, or bureaucratic, as in
Mexico).
Let us examine this social fracture a little more closely,
starting with Jaguaribe's description:
"Latin American societies today are clearly divided between an
upper and middle cluster, forming the new Establishment, and the
rest of the population, forming the mass. The upper class,
understood in a broad sense, represents, on an average, about 5%
of the population and includes, in forms that vary according to
the levels of development and complexity of the country: 1) the
remainder of the former agrarian patriciate, 2) the higher
(commercial and industrial) bourgeoisie, and 3) the upper
professional middle class. The middle class, representing about
15% of the population, presents a traditional sector, including
larger or smaller numbers of liberal professionals, the civil
servants, the military and the lower bourgeoisie, and a modern
sector, which includes the technical and managerial
professionals, some of them in the military. The rest of the
population is distributed among 1) the lower middle class, mostly
represented by the urban lower echelons of the bureaucracy and
the lower white-collar workers, and 2) most of the working class,
including the urban unemployed groups and the peasants". (34).
Income distribution, again, is a good indicator locating the
positions of the major classes in any system of production. In
the United States and United Kingdom, for example, the difference
in income between the middle 60%, the 15% below the upper 5%, and
the upper 5% of the population, is roughly as follows:
United States = 1 - 2 - 4.8
United Kingdom = 1 - 2 - 4.5
While in Latin America, the same relation is 1 - 3.5 - 11.3 (see
Table 5).
It is reasonable to conclude that the middle classes are located
in the upper two sectors of the scale, with the upper middle
class within the upper 5 per cent. If this is so, then it appears
that the upper middle class in the United States and the United
Kingdom earn roughly four times as much as the middle 60% of the
population, and that the upper middle class in Latin America
receives roughly eleven times as much as the middle 60%.
On the other hand, the lower middle class in the United States
and the United Kingdom receives twice the income of the 60%,
while in Latin America it receives 3.5 times as much.
Summarizing, the lower middle class in Latin America shares
almost as much as the upper middle class in the United States and
the United Kingdom (in relative terms), and as a whole, the Latin
American middle class roughly shares almost as much income as the
upper 5% in The United States and the United Kingdom.
This means that, unlike the middle classes in the capitalist mode
of production, which are in the middle of the income spectrum,
the middle classes of Latin america are either in the "fracture"
of their society or on the borders of it, so they cannot serve as
a buffer zone and "increase the social security and power of the
upper ten thousand" in the same way as that of the middle classes
in the capitalist mode of production.
This is because they belong to another world, as different from
the world where 80% and more of Latin American people live.
As Clark W. Reynolds states:
"those who think of themselves as belonging to the 'middle
sectors' in Latin America are actually the affluent groups in the
region. Consequently they are not prepared to accept social and
economic policies which will reduce their level of income...They
read literature, watch television programmes, go the the movies
and travel to the holiday resorts and urban centres of the United
States." (35)
But this first "fracture" is not the only one in the social
structure. The middle classes themselves are "fractured" in the
double sense of reflecting the fracture original to the system of
production between the modern, intermediate and primitive
sectors, and from the point of view of income distribution. We
can provide further statistical evidence to substantiate this
point:
-----------------------------------------------------------------
INCOME DISTRIBUTION IN BRAZIL YEAR 1960
Group A: upper class (property owners, managers)
Group B: upper middle class (some professionals, higher
administrative, medium businessmen)
Group B2: urban middle class (civil Servants and employees,
small businessmen
Group C: wage earners
Group D: rural workers, urban self-employed, "marginales"
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GROUPS % of POPULATION ANNUAL INCOME $ per capita
% of total
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A 1 28 8,400
B1 4 16 1,200
B2 15 21 420
C 30 20 200
D 50 15 90
Source: (36)
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This confirms that the upper middle class corresponds to the rich
in Latin America and that the rest of the middle class receives
almost five times as much as the lower 50 per cent of the
population, making still more apparent the main fracture in
society, but, at the same time, showing a profound
differentiation - almost triple between B1 and B2.
This secondary fracture may explain why in Latin America from the
1930s onwards, civil servants and employees have played such an
important role in trade unionism, political conflicts and even
revolutionary uprisings.
On the other hand, "modernisation" is in no way helping to erase
this fracture within the middle classes. Data for 1970 reveal the
following for Brazil: (37)
Difference between B2 and B1 = 1 - 3.3 (in 1960 was 1 - 2.9)
" " C and B1 = 1 - 10.0 (in 1960 was 1 - 6.0)
" " D and B1 = 1 - 20.0 (in 1960 was 1 - 4.7)
" " D and A = 1 - 120.0 (in 1960 was 1 - 93.33)
" " D and B2 = 1 - 6.0 (in 1960 was 1 - 4.7)
All in all, after six years of "modernisation" in Brazil, the
fractures became more apparent than ever in the period of
industrialization.
Therefore, given this double "fracture" it is hardly surprising
to read the following research findings:
"The emergence of the middle classes, historically and in the
present period, has not led to a reform of land tenure, to
sustained economic growth, or to the development of citizenship
among the working class...preservation of the latifundia system
system allowed the rightist parties to control the rural
population and its votes, thus maintaining their political
power...In Chile...from 1940 to 1954 there was a regressive
redistribution of total income at the expense of the lower-income
groups: wages fell from 27 to 21 per cent of the national income;
the economic gap between the classes had increased.
Two factors were extremely important in conditioning the growth
and orientation of the middle class: 1) the lack of a middle-
class revolution, resulting in the continuation of the
traditional land-tenure pattern; and 2) the large-scale entrance
of foreign capital from already industrialised capitalist
countries.
The growth of an urban middle class did not become the prelude to
social change. The absence of a fundamental social overturn
indicated that the middle class was not destined to eliminate
traditional patterns in order to further its social advancement.
From the beginning of the century, whenever the middle-class
parties faced a mass, independent working-class movement, they
took the side of the traditional Right, set aside disagreements,
and watched hundreds and thousands of workers jailed and
murdered...the Chilean middle-class depended on and was
subordinate to large landowning groups and large foreign
concerns. The development of privately accumulated wealth and of
capitalist enterprise depended on securing government
office...the middle-class parties were reconciled from the start
to the maintenance of the traditional socio-economic
structure..." (38)
"the Brazilian middle class identifies with and shares the
aristocratic social values of the traditional upper class...and
the new industrial capitalists are in fact fusing with the old
traditional upper class to form a new dominant segment of
Brazilian society". (39)
Therefore, the middle classes in Latin America tend to support
authoritarian rule in the different nation-states, as the only
possible political superstructure adequate to a social system
that presents extreme inequalities in income and style of life as
the most dynamic factors of its development. Factors, of course,
that dialectically are at the origin of the main threats to the
stability and order of such social systems.
This leads us on to an explanation of the Latin American working
class.
"The factory-employed working class emerged as a social force in
most Latin American countries comparatively late in history. Until
World War I the urban industrial working class was almost
exclusively composed of artisans in small workshops. Nuclei of
workers employed in foreign-owned economic enclaves were found
only in the larger countries, namely Argentina, Brazil, Mexico
and Chile. On the average, the artisans shops contained less than
five workers. Few trade unions or working-class political
organisations of any size existed except in the mining areas.
Throughout Latin America radical organisations and ideology were
confined to a small number of workers in particular crafts, and
had little or no impact on unskilled labourers or the rural
labour force." (40)
Nevertheless, initially there were some differences, indirectly
illustrated as follows: (41)
YEAR 1929 INDUSTRIAL PRODUCTION
AS % OF GDP
-----------------------------------------------------------
Argentina 22.8
Mexico 14.2
Brazil 11.7
Chile 7.9
Colombia 6.2
In the year 1914, in Argentina, the number of persons working per
manufacturing unit was 10, while in 1895 there were only 7. (42)
In Chile, 1n 1929, 70% of the manufacturing units had less than
five persons each. (43)
But, by the year 1970, manufacturing output as a % of GDP was as
follows:
Argentina 35.3
Mexico 23.6
Brazil 25.0
Chile 25.2
Colombia 18.6
Peru 22.6
Venezuela 12.2
Source: ECLA
With the following percentages of population working in mining,
manufacturing, construction, and basic services:
YEAR 1969 (Source: ECLA)
Argentina 36.9 Guatemala 15.5
Brazil 23.3 Honduras 12.3
Mexico 23.3 Nicaragua 17.4
Colombia 23.0 Panama 17.0
Venezuela 27.2 Dominican Rep. 14.2
Peru 25.8 Ecuador 20.4
Chile 31.6 Paraguay 20.1
Uruguay 31.7 Bolivia 21.1
Costa Rica 19.6 Haiti n.d
El Salvador 19.1
This enables us to state that in at least half the countries of
the region factory workers are a substantial force in society,
and that the rest of the countries are reaching that level very
rapidly. Hence, our analysis of the wage-earners in the region is
valid for the totality of the Latin American nation-states.
The fracture at the level of the system of production also
affects the wage-earners. From Table 1 we can see that 17% of the
labour force in manufacturing is working in the primitive sector,
64.9% works in the intermediate sector, and 17.5% in the modern
sector. On the other hand, the same Table 1 shows that 44% of the
workers in the manufacturing sector belong to handicraft
industries.
For the purposes of my analysis we will use the term working
class to include wage-earners and employees. This group forms the
following percentage of the labour force in the following
countries:
Chile 72.8 Colombia 57.3
Argentina 69.9 Peru 48.1
Uruguay 69.5 Brazil 48.0
El Salvador 68.2 Ecuador 47.7
Costa Rica 63.6 Dominican Rep. 44.1
Mexico 63.6 Panama 42.5
Venezuela 60.1 Honduras 39.7
Source: ECLA's Statistics for the late 1960s
For the whole continent about 60 per cent of this working class
is composed of wage-earners, and the remaining 40% employees. In
research undertaken by the author in Chile in 1972 (44) I found
that 1.5 per cent of the wage-earners had an income two to four
times as much as the lower 80% of the wage-earners. This group
had an income lower than twice legal minimum wages, the same
income as roughly 50 per cent of the employees.
Consequently there is ground for stating that the "fracture" at
the level of income distribution appears within the working class
with striking differentiation, which provides sound basis for
fostering a labour aristocracy supporting the system.
One dramatic example of this was the role played by the trade
unions of the copper industry in Chile in the coup d'etat that
overthrew Allende (45)
But this is not only a feature of the Latin American mode of
production. The working class in a capitalist mode of production
also presents a similar pattern of income distribution:
WORKING CLASS (MANUAL WORKERS AND EMPLOYEES) INCOME DISTRIBUTION
IN THE USA AND THE UK
(In percentage of the total income of the sector) (46)
Poorer 20% 30% 30% 15% below upper 5%
the top
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USA
(year 1946) 4.8 17.0 36.8 26.3 15.1
UK
(year 1960) 8.9 21.4 33.5 23.3 12.9
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It is apparent that this pattern is very similar to Latin
American inequalities at the same level. The critical point in
the case of the region I am dealing with is given by the
"synthesis" between these inequalities in income and the
"fracture" at the level of production, together with specific
characteristics of the rural working class and the existence of a
huge percentage of "marginales", which tends to produce a lack of
class solidarity and low level of labour organisation; and again,
a relative degree of "social security" for the ruling class.
"Much greater possibilities exist than in Western Europe and
North America for maintaining tight social domination in
democratic legal forms. This is due above all to the existence of
huge captive rural populations dependent upon local big
landowners...In short, a continent with a ruling class confronted
with little serious threat from below - whether by peasant or
worker insurrection or at the polls by worker's or peasants'
parties. Only in two countries have working class parties got
even a third of the vote: Chile, and Peru in the Constituent
Assembly elections of 1978." (47)
Let us examine firstly these "captive rural populations" through
a description made by Barraclough and Domike in an analysis of
the agrarian structure in seven countries of the region in the
1960s - Argentina, Brazil, Colombia, Chile, Ecuador, Guatemala
and Peru:
"Tenants and workers on the large estates depend upon the PATRON
for employment - there being no alternatives - and for a place to
live. Wage and rental agreements can be adjusted to suit the
landowners convenience so that all productivity increases and
windfall gains accrue to him. Permanent improvements such as
buildings or fruit trees belong to the estate even when all the
costs are borne by the tenant. On many large plantations
residents are strictly forbidden to make improvements without
permission for fear they would acquire vested interests in the
land or take resources away from the production of the plantation
cash crop. Residents of the large estates can be expelled at will
in traditional areas where there is neither a strong central
government nor a labour union to defend them. The ICAD
researchers found haciendas in certain Andean regions which
required that people of the neighbouring communities work without
pay in order to have the right to use the paths and bridges on
the property. In some cases the administration's consent is
required even to receive visitors from outside or to make visits
off the property. Even though it was prohibited as long ago as
the seventeenth century, the practice of "renting out" workers
still persists. And corporal punishment is still occasionally
encountered on some of the most traditional plantations and
haciendas. Tenants and workers depend on the patron for credit,
for marketing their products and even for medical aid in
emergencies. Food and clothing are frequently obtained through
the estate's commissary and charged against wages or crops. With
the abolition of compulsory servitude during the last century
peones and tenants now have the right to leave but, with few
alternatives, job opportunities and little education, this
possibility often appears to be as much of a threat as an
opportunity for improving their lot". (48)
Minifundia in rural areas, and shanty towns (poblaciones
marginales) in the cities are the fences that maintain tenant and
workers in such conditions of labour. About 65.6% of the rural
population lives in the primitive conditions of minifundia, which
means "a lot of land which is too small to provide full
employment for one family (2 man-years\0 and cannot yield an
income sufficient to sustain a standard of living considered to
be the adequate minimum for the region considered" (official
definition of CIDA - International Commission for Agrarian
Development).
According to CIDA, in the 1960s the dimensions of minifundia were
as follows: Argentina, 43.2% of the total number of farms;
Brazil, 22.5%; Colombia, 64.0%; Chile, 36.9%; Ecuador, 89.9%;
Guatemala, 88.4%; Peru, 88.0%.
LATIFUNDIO - MINIFUNDIO RATIOS (a) IN SELECTED LATIN AMERICAN
COUNTRIES (1950-1960)
Countries Area Income
------------------------------------------
Argentina 270 66
Brazil 546 61
Colombia 491 36
Chile 1,549 72
Ecuador 618 165
Guatemala 1,732 399
(a) average land area of a latifundio as a multiple of the
average land area of a minifundio, and income per latifundio
(gross value of agricultural output per farm unit) as a multiple
of income per minifundio.
Source: CIDA
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---
This "fracture" within rural areas at the level of production is
another component part of the structure of domination by the
ruling class, because it is a part of the internal dynamics of
the system in two major ways: - it provides an indirect supply of
labour power and weakens the solidarity within the rural working
class. Thus, it is a mechanism in the entire system of production
as a dynamic factor in the reproduction of the rural relations of
production, and, indirectly, in the mode of production in Latin
America.
The "poblaciones marginales" (shanty towns) play the same role in
the cities as minifundia in the rural areas. According to Dale
Johnson "about 25 per cent of the population of major cities earn
no regular incomes and are crowded into the most squalid of
slums". (49)
Petras describes this sector as a "subproletariat" that
"encompasses a large mass of semi-employed and irregularly
employed individuals who scratch a living through a great variety
of low-paying, unproductive activities: as penny vendors of a few
cheap articles, personal servants, car watchers, shoeshiners,
newspaper and lottery vendors, occasional day labourers, etc. The
urban subproletariat is nor directly related to industrial
production, yet it numerically exceeds the number of all
manufacturing workers, including artisans". (50)
The size of the "marginal" sector is large enough for it to
constitute a major element in the supply of surplus labour power,
with all the variety of effects on the realms of production,
distribution and functioning of the social structure discussed
above.
The other manifestation of "fracturing" within the working class
in the Latin American region is its relative lack of
organisation.
Again for the purpose of my argument, Chile is a good average
example:
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--CHILE - TOTAL PUBLIC AND PRIVATE SECTOR LABOUR FORCE IN THE
UNIONS, 1966
Total Labour Force minus: 2,935,060
-------------------------
a) age group 15-17 that cannot be 172,113
union members
b) employers 39,239
c) armed forces and police 65,000 276,352
------------------------
Total Labour Force that can form unions 2,658,708
Total Labour Force in private sector unions 314,795
Total Labour Force public sector in "associations" 215,781
--------
Total Labour Force in unions & "associations" 530,576
As a percentage of the Total Labour Force: 19.5
Source: Chile's Ministry of Labour figures, compiled by Clotario
Blest for a research in 1970
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As Angell comments "of a labour force of nearly three million,
about 10 per cent are organised in unions recognised by the
state. But if we add to this total those state workers who have
formed gremios or "associations", which in theory should not act
like unions, but in practice do, then the percentage in union-
type organisations rises to nearly 20 per cent - relatively high
for Latin America" (51).
What interests us here is that this low level of labour
organisation occurs for both structural and political reasons. At
the structural level, the e |
