The penetration of foreign capital in Latin America during the semi-colonial republics of the nineteenth century destroyed what had been, prior to independence, an emerging industrial development, which had been developing in spite of the limitations imposed by Spanish and Portuguese colonial rule. At the beginning of the nineteenth century, a significant textile manufacturing industry had developed in Mexico, Peru, Chile, Brazil, Bolivia, and Argentina. But it was newer than British textile manufacturing, and its transportation infrastructure was not sufficiently developed. It therefore could not compete with British manufacturing. Under the control of the landlords and the merchants, the newly independent Latin American republics adopted a policy of free trade, rather than protecting infant Latin American industry through tariffs and other mechanisms (Galeano 1997:173-81).
Thus the economic relation that emerged between Britain and the Latin American republics in the nineteenth century was a core-peripheral relation. Britain exported textiles and other manufactured goods to Latin America and imported cattle products from Argentina, guano and nitrates from Peru, copper from Chile, sugar from Cuba, and coffee from Brazil (Galeano 1997:174, 177). This core-peripheral relation benefitted the Latin American estate bourgeoisie, because it provided markets for the Latin American raw materials, and because it was an arrangement that provided for the landlords cheaper manufactured goods than would be possible under protected national industry. And it expanded business for merchants connected to the core-peripheral trade.
But the core-peripheral relation undermined Latin American industry, and it thus weakened the emerging urban industrial bourgeoisie, which was in an embryo stage of development and did not have sufficient influence over political structures to defend its interests. Ultimately, for a project of industrialization to be successful, the domestic market would have to be expanded, and this would require raising the standard of living of the superexploited rural masses, which formed the majority of the population. However, such an improvement in the standard of living of the rural peasantry and the working class would undermine the position of the Latin American estate bourgeoisie, whose exportation of raw materials was based on an international standard of superexploited low wage labor. The Latin American estate bourgeoisie therefore always has been opposed to the development of a “genuine national capitalism” (Galeano 1997:185).
The core-peripheral relation and free trade policies were integrally connected. Free trade rejects tariff protection of national industry. The defenders of free trade claim to be promoting a free market, but they ignore a fundamental fact: the prevailing social and economic conditions of underdevelopment and mass poverty were not established by a free market, but by brute force, in the form of conquest and forced labor. In the context of these social and economic conditions, a newly independent government that seeks true independence would have to act decisively in the economy, seeking to promote autonomous industrial development and an improvement in the standard of living of the masses. The protection of infant national industry would simply be one measure in a comprehensive plan for autonomous national development. But free trade negates this possibility, and it promoted the deepening of the core-peripheral relation during the semi-colonial republics of the nineteenth century
The free trade policies of the nineteenth century did not emerge from a political vacuum. They were promoted by particular social classes, namely, the landed estate bourgeoisie and successful merchants of the periphery, which acted in alliance with the core. These classes defended their particular interests at the expense of the well-being of the nation as a whole in the long term. They disseminated ideologies that confused and divided the people. It could be said of them that their conduct was self-interested and unpatriotic. Indeed, such would be said of them and their contemporary kindred spirits by the popular anti-neocolonial movements that emerged during the twentieth century and that continue today.
Galeano, Eduardo. 1997. The Open Veins of Latin America: Five centuries of the pillage of a continent, 25th Anniversary Edition. Translated by Cedric Belfrage. Forward by Isabel Allende. New York: Monthly Review Press.
Key words: Third World, revolution, colonialism, neocolonialism, imperialism, democracy, national liberation, sovereignty, self-determination, socialism, Marxism, Leninism, Cuba, Latin America, world-system, world-economy, development, underdevelopment, capitalism, peripheralization, estate bourgeoisie, free trade