Latin America In The World Economy

Mercantile Colonialism To Global Capitalism

Frederick Stirton Weaver, Frederick Weaver

• Publisher: Routledge
• Year: 2018
• eBook ISBN: 9780429978982
• Topic: Politics & International Relations
• Subtopic: Politics
• Index: Politics & International Relations

Latin America in the World Economy considers the dual aspect of Latin American development: how external factors (phases of world capitalism since Columbus) interweave with internal factors (Latin American culture, politics, and social groups). Weaver skillfully demonstrates how domestic social conflicts and power relations have consistently capitalized on changes in the international economy while, conversely, engagement with the international economy has consistently constrained local struggles and patterns of change. Over half of Latin America in the World Economy focuses on the short twentieth century (after 1930), and the way that the book frames recent events and processes in broad historical and comparative terms is appropriate for courses on world history and comparative development as well as for more specialized courses on Latin America.

1
The Changing World Economy: Introduction and Early History

For more than five hundred years, international economic and political forces have profoundly and continuously influenced Latin America. And there is no single, homogeneous "Latin America"; the experiences of the people in the Western Hemisphere south of the United States have varied enormously by nation and within nations. These are two of the few general statements that can be made about Latin America and its history that will not immediately provoke sharp responses from anyone familiar with the region.

Yet, there are definite tensions between these two statements. For example, foreign influences were definitely factors in the beginning and end of colonial rule in Latin America, the export economies of the late nineteenth century, post-World War II industrial growth, and the debt crises of the 1980s, each of which occurred around the same time throughout the region. This sounds like quite a bit of commonality, so what happened to heterogeneity?

It is alive and well; these general categories of events obscure highly divergent processes among locales and social groups in Latin America. Despite a long tradition that represents Latin America as passive in respect to world events,¹ the extent to which foreign influences became local influences depended mainly on the varying configurations of social power within Latin America that underlay local responses to the opportunities provided and limitations imposed by external pressures. The recognition of active agency within Latin America does not deny that decisive power was often located elsewhere, but outside circumstances have not been simple determinants of Latin American history.

Some Preliminary Principles and Terms

The purpose of this book is to show how the interplay between international and local forces has shaped the major directions of Latin American political economy. For this reason, the book presents a conceptual framework that sets Latin American domestic social structures and conflicts firmly in the context of a changing international political economy.² My emphasis on politics and economics is often deliberately provocative, but political economy is not all there was and is. Without a sound grasp of the historically changing character of the political economy, however, it is extremely difficult to figure out, say, the roles of contingency, institutions, individual motives and attitudes, and culture.

Much of this book is about imperialism, a term that I do not restrict to capitalist expansion or to the formal establishment of colonies (cf., Weeks, 1983). In this book, I use "imperialism" in the broad sense of powerful groups of people dominating the less powerful in other regions to advance their economic and geopolitical interests. Intention is not all, however, and the imperialist enterprise has not always been successful for the initiators. Whether or not profitable for imperialists, it has seldom been disadvantageous for everyone in the dominated areas.

The character of imperialism changes historically, as noted in an oft-cited quotation by Lenin (1917: 97-98; emphasis in original):

[G]eneral disquisitions on imperialism, which ignore, or put into the background, the fundamental difference between social-economic systems, inevitably degenerate into the most vapid banality or bragging, like the comparison: "Greater Rome and Greater Britain." Even the capitalist colonial policy of previous stages of capitalism is essentially different from the colonial policy of finance capital.

These changes reflect what elites in dominant nations want and need from other places. These needs and wants in turn reflect shifts in imperialist nations' political economies that are conditioned by such factors as the social organization of production, developments in the forces of production (e.g., technology, machinery, transport facilities, skilled labor), increased international competition, seismic shifts in domestic politics, and so on.

For the purposes of exposition, the book presents the historically changing nature of imperialism through a series of phases, each defined by the specific features of the leading imperialist nations in particular historical periods. These phases of the imperialist impulse and international political economy are analytical rather than strictly chronological categories, and although there is a definite historical sequence among them, the historical movements are uneven and overlapping. In an important sense, we have several moving targets: changing economic and political patterns in the imperialist nations; the resulting alterations in the pressures exerted through the international political economy; and the shifting configurations within the various Latin American nations that selectively govern the response to these forces. Finally, it is not a one-way street, since the role of Latin America within the international political economy affects the operation of the international economy and therefore of the imperialist nations.

All this sounds unduly grandiose and complicated when laid out in the abstract, but the book's actual presentation is quite straightforward and unencumbered by grand theoretical aspiration. The remainder of this chapter introduces the kind of analysis found in the rest of the book through its discussion of both Tribute and Mercantilist imperialism (capitalized as categories for purposes of clarity) and the manner in which they affected, indeed defined, Latin America through Spanish and Portuguese conquest and colonization.

The second chapter takes the study through the eighteenth and early nineteenth centuries, analyzing the character of Competitive Capitalism through an interpretation of the English industrial revolution, followed by a description of the resulting "Free Trade Imperialism" and what it meant for the early years of Latin America independence. This chapter, which is the first to consider the dynamics of capitalism, introduces what I see to be the three driving forces of capitalist change. The first is the wage labor system, with the resulting conflict between propertyless workers, who have only their labor services to sell, and the propertied classes and their agents who purchase labor services. The second is the competition among profit-motivated private firms in product markets to realize profits. The labor-capital struggle and capital-capital competition are the two defining elements of capitalism, and they are set in national political frameworks with shifting government-citizen relationships (David Gordon, 1994b). Although the particular mix and implications of these three elements change historically, keep these three elements in mind as you read the book, because they are central to the arguments of the book.

The third chapter follows the same format and begins by tracing the character of Finance Capitalism through a case study of Germany in the late nineteenth century. This brief case study vividly illustrates the ways in which the social and political nature of capitalism altered in a century and sets the stage for understanding subsequent changes. The chapter goes on to show how the "New Imperialism" was produced by Finance Capitalism, and it concludes with the manner and implications of Latin America's becoming more fully integrated into world markets.

The fourth and fifth chapters together parallel the organization of the previous two chapters. The fourth chapter introduces the mass productionmass consumption phase of capitalist development with a study of twentieth-century United States to the 1970s and goes on to describe how this new phase of capitalist development was reflected in the international political economy, reorganized after years of depression and war. The fifth chapter shows how new political configurations in Latin America came out of the 1930s and early 1940s, political configurations that supported extensive post-World War II efforts to foster industrial growth by insulating national economies from international markets.

The sixth chapter reverses the direction of causation established in earlier chapters. It argues that changes in the international political economy stemming from competition among several advanced industrial nations were themselves the primary force in affecting the leading economic powers, and Chapter 7 outlines the watershed significance of this new political economic environment for Latin America.

The last chapter presents the greatest difficulties in identifying the key aspects of changes, which are in the making as I write and you read. This is not because the processes are necessarily more complicated; rather, well-organized, reliable information as well as sound analyses developed through considered debate are scarce, and being caught up in the immediacy of the present makes it hard to find a solid vantage point.

But enough of these preliminaries.

Tribute-Seeking Empires

Ancient empires were typically land-based, in which tribute from militarily subjugated areas was regularly levied for the benefit of the imperial center. Benefits from these arrangements did not flow exclusively in one direction; in so-called hydraulic societies, the tribute helped support large, centrally administered irrigation systems, and in others, the tribute amounted to involuntary protection payments for relative peace and security. In any case, for an area to be an attractive acquisition for a Tribute-seeking empire, it had to be able to produce above subsistence, with a surplus that could be requisitioned over time for use by the imperial center.

Tribute-seeking empires were qualitatively different from more primitive kinds of predatory expansion in which nomadic "barbarian hordes" passed through a settlement, pausing just long enough to steal and despoil whatever was available. Smash-and-grab looting was still common during Tribute-seeking empires' conquest of new areas, but imperial authorities had to contain pillage in order to avoid destroying the newly conquered areas' ability to produce regular tribute. In addition, the political organization required to establish and maintain a tribute relationship was far more elaborate than needed for pillage, and frequently the conquerors adapted for their own purposes already-existing mechanisms by which local elites in newly conquered regions had traditionally obtained goods and labor services from direct producers. If this was feasible, a Tribute seeking empire did not need to meddle extensively in the lives of the subjugated and alter existing organizations of production, hierarchies, or culture.³ For example, the sixteenth- and seventeenth-century Ottoman empire in the Balkans was less interested in converting conquered peoples to Islam than in ensuring the flow of tribute.

The tribute relationship entailed a more sophisticated political organization than pillage and looting. Nevertheless, the extent to which the imperial center could benefit from its empire was strictly limited by the rather rudimentary levels in the development of the forces of production (technology, equipment, work organization, labor skills, and so on). Whether the tribute was in the form of a monetary tax, goods, or direct labor services (coerced workers and soldiers), the result typically was restricted to enhanced availability of, say, foodstuffs to relieve subsistence pressures in the imperial center, luxuries to extend the range of elites' pleasures, services to increase imperial security, and little else.

The Ottoman Empire, reaching its zenith in the sixteenth and seventeenth centuries, was the last large-scale example of this genus in Europe. While it did change over time and acquired some modern trappings (Sunar, 1987), it possessed the core features of earlier Tribute empires such as the Mesopotamian, Egyptian, and Roman. New World examples of a Tribute empire were the Aztec and Inca empires, both of which began no earlier than the thirteenth and fourteenth centuries and were still expanding at the time of the Spanish invasions in the sixteenth century. In addition to levying tributes, the Aztecs engaged in some commerce both within and without their empire. Within the Inca empire, however, the movement of goods was almost exclusively either tribute or the transfer of grain from one region of the empire to another to alleviate the effects of crop failures.

Mercantilism and Commercial Expansion, 1450–1750

Considerable material benefits flowed into the centers of the most successful Tribute-seeking empires, but none of these empires contained the internal tensions that created the capitalism of Western Europe. The genesis of the development of capitalism was not found in these empires. In fact the institutions required for operating a successful Tribute empire—a powerful standing army, highly centralized political organization, and elaborate bureaucracies—impeded the development of the social and political conditions for the emergence of capitalist relations.⁴ Specific historical examples of these general points are not difficult to find. When one looks at the thirteenth- and fourteenth-century Ottoman and Chinese empires, it is hard not to be struck by how much greater were their levels of commercial activity, urbanization, centralized political control, scientific and cultural sophistication, and concentrated wealth than were found in Western European feudalism of the same period.

Nevertheless, it was the relatively primitive and decentralized feudalism of Western Europe that successfully adopted such technical and organizational changes as the water mill and new ways to rotate crops, design plows, and use draught animals. These innovations, often drawn from distant lands, significantly promoted the growth of land yields and labor productivity in Europe from the ninth to the thirteenth centuries. The twelfth and thirteenth centuries, complete with Gothic cathedrals, was a period of feudal opulence when returns to the nobility were rising while more centralized political orders reduced their local military function and encouraged vigorous urban and commercial growth (Duby, 1972; 207-212; Lopez, 1971).

By the early 1300s, an overburdened soil, climatic cooling, increased long-distance trade, extensive religious pilgrimages, and the Hundred Years' War all contributed to the virulence of the Black Death—a series of plagues that began among Mongol troops in the Crimea and swept through Eurasia from the 1340s to the early fifteenth century (McNeill, 1976: 158-171). By the mid-fifteenth century, the population in Europe was probably only 60-70 percent of what it had been one hundred years earlier, and the plagues seriously weakened the position of the landlord class. Even when landlords survived physically, it was very difficult for them to obtain adequate numbers of workers and prevent them from migrating to empty lands. Peasants' resistance to feudal bonds was on the whole successful in Western Europe but was crushed in Eastern Europe.⁵

Looking back six hundred years, it is clear that these factors were important for the creation of capitalism as the dominant means of economic organization. However, the process within Europe was very uneven, and the most critical theme for our story here is the European struggle to establish coherent nation-states (Anderson, 1983; C. Tilly, 1975). Although this protracted process was not independent of the formation of domestic capitalism, there certainly was no direct, linear link with it. For example, the Iberian nations of Portugal and Spain were successful in their national political projects at this time, although they lagged behind other regions in the domestic development of capitalist relationships. On the other hand, Germany and Italy contained regions with comparatively well-developed capitalist relations but did not become unified nation-states until the nineteenth century.

It was this process of national political consolidation combined with rising productivity in agriculture and the growth of cities and commerce that underlay Western Europeans' expansion in the fifteenth and sixteenth centuries. That expansion began to integrate Latin America, Africa, and Asia into a web of mercantile relationships spanning the world. Although commercial profits were the primary motive behind the European expansion, this was not anything new for merchants, who as an occupational group throughout the world and for centuries had sought commercial profits.

This particular type of mercantile activity, however, was distinguished from earlier commercial endeavors in ways that warrant its being called Mercantilism with a capital M. The defining feature of the European Mercantile phase of economic expansion was that overseas commerce was an integral component of protonational political projects, and monarchs were active partners with merchants. The alliance with national power offered particular merchants protection from competition within the nation, and the buildup of national military power offered protection while operating abroad.

European monarchs' interest in the alliance stemmed from their struggles against the power of local barons—remnants of feudal decentralization—in order to consolidate contiguous regions under monarchical control and to protect their sovereignty from covetous neighbors. In this effort, monarchs were pressed financially, in good part to pay for national navies and mercenary armies not beholden to local lords. Monarchs were especially interested in overseas commerce at this time, because revenue from overseas was not derived from an activity that strengthened local barons or even required their consent. Monarchs gained such revenue by directly investing in expeditions and by selling monopoly franchises for commercial monopolies that facilitated efficient taxation. An active engagement in international commerce at this time required a strong military, and war-making substantially strengthened the institutions of centralized political control (C. Tilly, 1975). The resulting Western European merchant-monarch alliances varied in their mix of relative power between merchants and monarchs, and by the seventeenth century, Holland with its mercantile oligarchy and Spain with its powerful monarchy defined the range of the Western European continuum (Wilson, 1967).

The Mercantilist ideal in these circumstances was to take over an established, lucrative trade and extract profits through a monopoly protected by cannon. The cost of transportation in long-distance trade favored commodities that were valuable in relation to their bulk, and this made the trade between Europe and Asia—"the Orient"—an extremely desirable target in the fifteenth century. The late medieval Crusades to the Middle East, which were looting and pillaging forays that included sacking Christian Constantinople, had whetted European tastes for Chinese silks, porcelain, exotic woods, medicines and drugs such as rhubarb and opium, Indian cotton textiles ("calicoes"), precious stones, and other exotic consumer goods. But while these commodities were important, the prize of the East-West commerce was the trade in spice...

Table of contents

• Cover
• Half Title
• Title
• Copyright
• Dedication
• Contents
• List of Tables
• Foreword
• Preface
• Acknowledgments
• List of Acronyms
• Map of Western Hemisphere
• 1 The Changing World Economy: Introduction and Early History
• 2 Competitive Capitalist Industrialization, Free Trade Imperialism, and Latin American Independence, 1700–1850
• 3 Finance Capitalism, the New Imperialism, and Latin American Export Economies, 1850–1930
• 4 Modern Times, Bretton Woods, and Transnational Corporations, 1920–1970s
• 5 Import Substitution and Semi-Industrialization in Latin America, 1930–1970s
• 6 International Competition and the Dissolution of Modern Times
• 7 Debt, Democracy, and Uncertain Transformations: Latin America in a New World
• References
• Index