When Charles Goodyear discovered in 1850 that combining sulfur with rubber enabled it to preserve its elasticity under conditions of changing temperature, the technical basis for the development of rubber tires was established.  At that time, the Brazilian Amazon was home to nearly all of the rubber trees of the world.  By 1890, rubber became the second most important export from Brazil, second only to coffee, which also was at its height at that time.  The city of Manaus, the capital of the world rubber commerce, had seen its population grow from 5000 inhabitants in 1849 to 70,000 by 1900 (Galeano 2004:119-20).

     The labor for the product was provided by farmers who had emigrated from areas that had been struck by draught.  They traveled to the Amazon River, where they were stacked in ships’ holds for transport to their final destination.  Already weakened before they began the journey by low levels of nutrition and the spread of disease, many died en route.  In 1878, for example, 120,000 of the 800,000 inhabitants of Ceará left for the Amazon, but less than half were able to arrive (Galeano 2004:118).

     The forced labor for the export of rubber was a form a debt peonage similar to slavery.  In addition to the original debt for transport to the Amazon, other debts accumulated for work tools and food.  In general, the older the worker, the greater was the debt that had accumulated.  There was an agreement among the companies that no worker with pending debts with another company would be employed, and rural guards were placed along the rivers, firing shots at fugitives (Galeano 2004:118-19). 

     But by 1919, the Brazilian exportation of rubber had crashed.  In 1873, an Englishman named Henry Wickham had clandestinely taken seeds of the Brazilian rubber trees, and this would eventually lead to the cultivation of rubber trees on plantations in Malaysia and Ceylon in a rational system of production, which did not have the extractive problems of the natural production in the Amazon.  There was, however, a brief revival of Brazilian rubber during the World War II with the Japanese occupation of Malaysia (Galeano 2004:121). 
 

References

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.

__________.  2004.  Las Venas Abiertas de América Latina, tercera edición, revisada.  México: Siglo XXI Editores.


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, rubber, Open Veins of Latin America, Galeano, Brazil, Amazon

 

Posted October 14, 2013

     During the fourth stage of the modern world-system, coinciding with the emergence of monopoly and finance capitalism and facilitated by the development of imperialist policies and neocolonial structures, Latin America continued to play a peripheral role in the world-economy, supplying cheap raw materials to the core on a base of low-waged labor.   Natural resources flowed from the region, as though it were destined to have open veins, as expressed by the imagery of Eduardo Galeano.  
 
      The reader is invited to review various posts that are relevant here. On the four stages of the world-system, see “Immanuel Wallerstein,” 7/30/2013; on monopoly and finance capital, see “Lenin on Imperialism,” 9/10/2013; on imperialist policies, see “Imperialism as basic to foreign policy,” 10/10/2013; on neocolonial structures, see “The characteristics of neocolonialism,” 9/16/2013; on the peripheral role in the world-economy, see “The modern world-economy,” 8/2/2013; and on previous discussion of the open veins of Latin America and coffee, see “The open veins of Latin America: Gold and silver,” 8/16/2013, “Indigo, coffee, and liberal reform,” 9/2/2013, and “The Open Veins of Latin America: Coffee,” 9/4/2013, which are found in the section on Latin American history.. 

       Coffee, as we have seen in the post of 9/4/2013, was first developed as a significant export in the nineteenth century, and it became an important commerce during the twentieth century.  By the 1950s, Latin America produced four-fifths of the coffee that was consumed in the world.  Brazil, El Salvador, Colombia, Guatemala, Costa Rica, and Haiti were the principal producers.  The plantation workers were salaried, but their wages were at the level of superexploitation (see “Unequal exchange”8/5/2013), and the forms of social control had in some respects feudal characteristics (Galeano 2004:129-41).

      A general tendency during the twentieth century was declining terms of exchange for raw materials exports.  Galeano notes, for example, that in 1967, Colombia had to pay the equivalent of fifty-seven bags of coffee in order to buy a jeep, whereas in 1950, sixteen bags had been enough. In 1967, Brazil needed 350 bags of coffee to pay for a tractor, but in 1953 seventy bags had been enough (Galeano 2004:132).

      Galeano also observes that as the price of coffee fell, a greater quantity of dollars was taken by the consuming country, the United States.  But these dollars did not go directly to US citizens, as the price to the consumer continued to increase.  The dollars were usurped by US companies that managed its distribution in the United States. But US citizens benefited indirectly, as the distribution and sale of coffee provided jobs for hundreds of thousands of persons, and the usurped capital may have had other positive secondary effects for the US economy (Galeano 2004:132-34).  Galeano writes: “Coffee benefits much more those who consume it than those who produce it.  In the United States and in Europe it generates income and employment and generates a high level of capital; in Latin America it pays hunger wages and accentuates the economic deformation of the countries placed in its service.  In the United States coffee provides work to more than 600,000 persons: the North Americans who distribute and sell the coffee earn salaries infinitely higher than the Brazilians, Colombians, Guatemalans, Salvadorans, or Haitians that plant and harvest the grain on the plantations” (2004:134; 1997:101).

      Brazil developed an industry for the production and export of instant coffee.  It produced cheaper and higher quality instant coffee than a younger US industry dedicated to the fabrication of the same product. But the core countries, preachers of free trade, imposed taxes on Brazilian imports of instant coffee, establishing a protectionist obstacle to the development of the Brazilian industry (Galeano 2004:134).  Instant coffee, a manufactured product developed on a base of higher wages, is a core-like activity, beneficial for the development of a nation’s economy.  The cultivation and export of coffee beans or ground coffee beans is a peripheral activity based on low-waged labor, promoting underdevelopment of the regions where it is produced, particularly when the region is characterized by mono-production rather than a diversity of production.

       Like a grain of sugar, a coffee bean provides a lesson in political economy, helping us to understand the structures of domination that are integral to the modern world-system.  
 

References

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.

__________. 2004.  Las Venas Abiertas de América Latina, tercera edición, revisada.  México: Siglo XXI Editores.


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, colonial, neocolonial, blog Third World perspective, coffee, open veins of Latin America, Galeano

Posted October 15, 2013

     Banana enclaves in Honduras, Guatemala, and Costa Rica were developed by North American companies at the beginning of the twentieth century (Galeano 2004:141, 144).  In the 1870s, a company owned by a US citizen was granted land in Costa Rica.  The company, which later became the United Fruit Company, was granted the land as payment for the construction of a railroad.  The company used the land to cultivate bananas for export to markets in the United States.  The labor utilized was low-wage labor of African descent imported from the English-speaking Caribbean (Booth and Walker 1993).  
 
      In 1899, the United Fruit Company began to operate plantations in the Caribbean coast in Guatemala.  Three decades later, it established banana plantations on the Pacific coast.  The plantations utilized labor primarily from the Caribbean and from El Salvador (Booth and Walker 1993).  
 
      In Honduras, banana production grew rapidly in the 1890s, and by the 1920s Honduras had become the world's leading exporter of bananas.  Prior to 1899, there were more than 100 small-scale enterprises, owned by Hondurans, which sold bananas to North American merchants, who in turn sold them in North American markets. In 1899, two North American banana-producing enterprises were formed, and a third was founded in 1905.  As the demand for bananas in the world market rapidly expanded, an increasing amount of capital became necessary in order to clear the tropical forest, develop a transportation system, modernize the productive process and develop a system of refrigeration for maritime transport. The North American producers, with greater access to the necessary credit and capital, were able to become more competitive than the Honduran producers.  By 1911 the three North American producers had displaced the Honduran producers and completely dominated the market (Booth and Walker 1993; Murga 1978:58).

     The North American banana companies were aided by concessions from the Honduran government in their rapid domination of Honduran banana production and in their rapid expansion after 1911.  These concessions included free grants of the richest land, permission to construct railroads and to control the administration of the railroads, and exemptions from taxes and tariffs on imported equipment and construction materials and on exports.  The government permitted the North American companies to have complete control of the entire system of transportation and commerce on the north coast, the region of the banana  production.  These concessions to the banana companies were the culmination of the liberal reform program of the late nineteenth century (Murga 1978:63-66; Molina 1976).

     The liberal reform program in Honduras depended on the development of foreign capital, due to the limited amount of capital in Honduras.  As the government pursued a policy of attracting foreign investment in raw-materials export production, foreign capital became the most important economic and political force in the country.  The banana companies came to own not only banana enterprises, but also related industries, including transportation, communication, energy, food, and retail outlets.  This dominance by foreign economic interests inhibited the development of a national bourgeoisie able to formulate and defend national interests.  Local elites became employees or consultants of foreign companies, serving as intermediaries between them and the government, defending their interests and seeking new concessions.  In this role, local elites were not in a position to accumulate capital.  Given the limited potential for local accumulation of capital, and given the low-wage labor in raw materials export production, the country would not be able to develop the capital or the home market necessary for industrial development (Murga 1978:26, 68, 74-85, 97-98; Meza 1982).

       The strategy of the government of Honduras in the development of the banana export industry illustrates a dependent capitalist model of economic development.  It takes as given that the nation ought to assume the peripheral role in the world-economy.  It provides free and open access of foreign companies to the natural resources and labor of the country.  It does not seek to defend the interests of emerging national producers.  This strategy precludes the possibility for the autonomous economic and cultural development of the nation.  It retards the development of a national bourgeoisie. It condemns the nation to underdevelopment, and it ensures the continued impoverishment of the people.  It was developed in the service of particular interests.

     During the course of the twentieth century, popular movements in Latin America and the Caribbean would emerge that would reject the dependent capitalist model of development.  The popular movements have experienced renewal since 1995, creating a new political reality in the region, a phenomenon that we will discuss in future posts.  
 

References

Booth, John A. and Thomas W. Walker.  1993.  Understanding Central America, Second Edition. Boulder:  Westview Press.

Meza, Victor.  1982.  Honduras: La Evolución de la Crisis. Tegucigalpa: Editorial Universitaria, Universidad Nacional Autónoma de Honduras.

Molina Chocano, Guillermo. 1976.  Estado Liberal y Desarrollo Capitalista en Honduras.  Tegucigalpa: Banco Central de Honduras.

Murga Frassinetti, Antonio.  1978.  Enclave y Sociedad en Honduras. Tegucigalpa: Editorial Universitaria, Universidad Nacional Autónoma de Honduras.


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, colonial, neocolonial, blog Third World perspective, open veins of Latin America, Galeano, banana, Honduras, Central America


 
        
 

Posted October 16, 2013

     Since the conquest and peripheralization of vast regions of America by Spain and Portugal in the sixteenth century, the exportation of raw materials to the core has been constant.  But there has been an evolution in the characteristics of the peripheral role.  During the sixteenth century, gold and silver were central, and their exportation played an important role in the economic development of northwestern Europe. During the sixteenth through the nineteenth centuries, agricultural products emerged as the most important exportations: sugar, indigo, coffee, and rubber.  During the twentieth century, sugar, coffee and bananas continued to be significant, but petroleum and mineral resources also came to be essential exportations, integrally tied to the technological development of the United States

      In his description of the open veins of Latin America, Galeano describes the increasing dependency of the United States on the petroleum and minerals of Latin America during the twentieth century, including copper, tin, iron, bauxite, magnesium, and nickel.  Given their importance in the development of the economic and military power of the United States, Galeano refers to them as the “underground sources of power” (2004:175-221).  Writing in 1970, he notes that petroleum, copper, zinc, bauxite, iron, manganese, nickel, and tungsten were necessary for the US Armed Forces, which at the time were engaged in the Vietnam War.  He writes:  “The growing dependency with respect to foreign supplies causes a growing identification of the interests of North American capitalists in Latin America with the national security of the United States.  The internal stability of the world’s greatest power appears intimately linked to North American investments south of the Río Grande.  Nearly half of these investments are dedicated to the extraction of petroleum and the exploitation of mineral wealth, ‘indispensable for the economy of the United States as much in peace as in war’” (2004:175-76; 1997:134-35; quoting Edwin Lieuwen).  By the 1960s, Latin American governments had granted generous concessions to US companies providing access to: iron, manganese, and radioactive elements in Brazil; lead, silver, and zinc in Bolivia; petroleum in Venezuela; copper in Chile; nickel and manganese in Cuba (prior to 1959); and bauxite and manganese in British Guiana (Galeano 2004:175-81; 1997:135-39).

      We will be exploring in subsequent posts the efforts of the United States to ensure its access to Latin American petroleum and to copper in Chile, tin in Bolivia, and iron in Venezuela and Brazil.  


References

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.

__________. 2004.  Las Venas Abiertas de América Latina, tercera edición, revisada.  México: Siglo XXI Editores.


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, colonial, neocolonial, blog Third World perspective, open veins of Latin America, Galeano, petroleum, minerals


 

Posted October 17, 2013

     In 1970, Eduardo Galeano wrote of petroleum:  “No other magnet attracts foreign capital as much as ‘black gold’ . . . .   Petroleum is the wealth most monopolized in the entire capitalist system.  There are no companies that enjoy the political power that the great petroleum corporations exercise on a universal scale. Standard Oil and Shell lift up and dethrone kings and presidents; they finance palace conspiracies and coups d’état; and they dispose of innumerable generals and ministers; and in all regions and languages, they decide the course of war and peace. . . .  The natural wealth of Venezuela and other Latin American countries with petroleum in the subsoil, objects of assaults and organized plundering, has been converted into the principal instrument of their political servitude and social degradation. This is a long history of exploits and of curses, infamies, and defiance” (Galeano 2004:203-6; 1997:156-59).

      During the twentieth century, the transnational petroleum companies exploited the petroleum of Latin America in an abusive form that did not recognize the right of Latin American governments to control their natural resources and to utilize them for the long-range economic and cultural development of the nation.  The oil companies defied efforts of Latin American governments to apply national labor laws to the foreign petroleum companies operating in their countries.  In addition, the foreign companies drained oil deposits rapidly, without concern for the long-term development of the industry.  And they sold Latin Americans their own oil at prices higher than those for consumers in the United States and Europe.  Any effort by governments of Latin America to control their petroleum resources were greeted with aggressive resistance by the companies and the US government.  
 
     In Uruguay, in response to the history of abuse of petroleum resources by foreign companies, a state-owned company was established in 1931, which was dedicated to the refining and sale of petroleum.  It was the first state-owned refinery in Latin America.  Along with the refining of Uruguayan crude oil, the government contracted with the Soviet Union the purchase of cheap Soviet crude oil for refining in the Uruguayan state-owned refinery.  The oil cartel reacted swiftly and aggressively, threatening to impose an embargo on Uruguayan purchase of crude oil or machinery.  In March 19933, a coup d’état occurred, and the new dictator annulled the right of the state company to monopolize the importation of crude petroleum.  The country eventually became obligated to buy forty percent of its crude oil from Standard, Shell, Atlantic, and Texaco, at prices set by the oil cartel (Galeano 2007:208; 1997:160-61).

      In Mexico, twenty years of foreign ownership of the oil industry had left the country with exhausted fields and antiquated refineries by the 1930s.  In response, Mexican president Lázaro Cárdenas “converted the recuperation of the petroleum industry into a great national cause.” In 1938, he nationalized the foreign companies and formed Petróleos Mexicanos (Pemex), which assumed control of the production and marketing of Mexican petroleum.  The global powers reacted by imposing an international embargo from 1939 to 1942 on Mexican petroleum exports and on the importation of supplies necessary for wells and refining.  The dispute was resolved by the Mexican government paying compensation from 1947 to 1962.  In spite of these penalties, Pemex became a successful company during its first thirty years (Galeano 2007:207).

     Coups d’état, like the one in Uruguay, were common.  From 1930 to 1966, seven coups d’état occurred in Argentina as governments were about to sign a petroleum agreement in which the interests of the international cartel were at stake.  In Peru as well, one year after nationalizing the reserves and refinery of an affiliate of Standard Oil of New Jersey, the nationalist general Alfredo Ovando was overthrown by a military junta (Galeano 2007:210-14; 1996:162-65).  
 
     The war between Bolivia and Paraguay from 1932 to 1935 was provoked by competition between Standard Oil of New Jersey and Shell.  Standard financed the Bolivian Army, and Paraguay was backed by Shell.  Since Paraguay and Bolivia were among the two poorest countries of South America, the war came to be known as “the war of the soldiers without clothes” (Galeano 2007:210-14; 1996:162-65).

     The US government supported the international petroleum companies in their aggressive pursuit of interests in Latin America.  “The North American government always makes their own the cause of the private petroleum companies” (Galeano 2007:212).  In 1950, the US ambassador in Bolivia, in his report to the White House, expressed pride in his accomplishing the denationalization of Bolivian petroleum industry, which he described as “nationalization in reverse” (Galeano 2007:212-13; 1997:164).

    In our next post, we will discuss the Latin American country that has the largest petroleum reserves, Venezuela.


 References

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.

__________.  2004.  Las Venas Abiertas de América Latina, tercera edición, revisada.  México: Siglo XXI Editores.


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, colonial, neocolonial, blog Third World perspective, open veins of Latin America, Galeano, petroleum, oil


 

Posted October 18, 2013

     Venezuela has the largest oil deposits in Latin America and the Caribbean.  Prior to 1960, the governments of Venezuela for the most part granted to foreign oil companies the rights to extract the oil, with terms that were favorable to the oil companies and that undermined the potential to use the petroleum to promote the independent economic development of the nation.  The government of Juan Vicente Gómez, a dictator who ruled from 1908 to 1935, was particularly known for granting favorable terms to Shell, Standard Oil, and Gulf, and for enriching himself and his family and friends as a result of the shares granted to him in exchange.  The Venezuelan petroleum law of 1922, edited by representatives of three US firms, established a separate police force, which prohibited entrance to oil lands by anyone not authorized by the companies.  During the period of the initial penetration by foreign oil companies, indigenous communities were dislodged from their lands, and independent family farmers lost their property (Galeano 2004:218-19; 1997:168).    

      In response to this situation, popular movements demanded greater national control of this natural resource, giving rise after 1960 to what came to be called petroleum nationalism, where the state seeks to maximize its income from the exportation of petroleum.  The era of petroleum nationalism culminated with the nationalization of the petroleum companies in Venezuela in 1976.  A state petroleum company, Petróleos de Venezuela, Sociedad Anónima (PDVSA), was formed.  
 
      Ironically, nationalization had the consequence of creating more autonomy for the petroleum industry and more influence for the international petroleum companies.  Distinct from the nationalization of the petroleum industry in Mexico in 1938, the nationalization in Venezuela was gradual, and it occurred with the cooperation of the international petroleum companies in Venezuela.  By the time of the nationalization in Venezuela in 1976, the management of the companies was Venezuelan, as a consequence of Venezuelan pressure during the era of petroleum nationalism.  So the nationalization had the effect of changing ownership from international petroleum companies to the Venezuelan state, but the companies continued to be managed by Venezuelans who had been socialized into the norms and values of the international petroleum companies and had internalized the perspective of international capital.  
 
      After nationalization, the Venezuelan state relaxed its oversight of the petroleum companies, believing that the industry was now securely in Venezuelan hands. But the Venezuelan managers did not seek to utilize petroleum income to promote national development.  With the intention of reducing payments  to the Venezuelan state, PDVSA adopted a strategy of channeling surpluses to investments in production and sales, in order to minimize profits and corresponding payments to the state.  PDVSA bought refineries and distributorships in other countries in order to transfer surpluses out of the country, beyond the reach of the Venezuelan state.  An example is CITGO, a Venezuelan owned company in US territory that consisted of eight refineries and 14,000 gas stations.  Yet the Venezuelan state never received any income from CITGO; all of the profits remained in the United States. Hugo Chávez estimated that Venezuela gave to the United States billions of dollars through “the perverse business of the CITGO Company” (Chávez 2006:142, 321).

      PDVSA, therefore, had emerged as a state within the state, with significant autonomy and with limited effective control by the state.  In 1999, Hugo Chávez became President of Venezuela, bought to power by a popular movement in reaction to the neoliberal project.  Chávez sought to reduce the autonomy of PDVSA and to incorporate its resources into a project of national development.  The Chávez government appointed new directors of PDVSA, replacing the directors appointed by previous governments.  With the new leadership of PDVSA, the income to the state from petroleum became significantly higher, and these funds were directed toward various social projects and toward elimination of the foreign debt.  As Chávez has expressed, “We have stopped being a petroleum colony. . . .  We have begun to sow the petroleum, to utilize the petroleum wealth as a lever for social development and for economic development” (Chávez 2006:318-19).  
 
      The measures taken by the Chávez government generated conflict. The US government and the international petroleum industry as well as the Venezuelan petroleum management were opposed, inasmuch as the measures sought to eliminate control of Venezuelan oil by the international petroleum industry.  To some extent, workers in the Venezuelan oil industry were resistant to change, since their wages reflected international levels in the industry, far above the wages earned by workers in other industries in Venezuela.  From the outset, the US government has engaged in a persistent ideological and destabilization campaign against the government of Hugo Chávez and his successor, Nicolas Maduro.

      The story of petroleum in Venezuela illustrates that nationalization in and of itself does not necessarily contribute to the autonomous development of the nation.  State control of the Venezuelan petroleum industry became an effective tool when it was integrated into a program of national development implemented by a government that was brought to power by a popular movement and that was committed to govern in the interests of the popular sectors.  
 
      At the same time, strategies other than nationalization can be effective, such as the formation of joint ventures, cooperatives and self-employment, if implemented as part of a national plan for the autonomous economic and cultural development of the nation, as the case of Cuba illustrates.  So we learn from experience that various forms of property can be developed along the road to true independence, and that each form of property ought to be an intelligent response to the concrete situation in which the nation finds itself.  The key is not the form of property, but the integration of the various forms of property into a plan for autonomous development, implemented by a government that seeks to promote and defend the rights of the majority, struggling to keep at bay those powerful sectors that act aggressively  in pursuit of their particular interests.


Bibliography

Chávez Frías, Hugo. 2006.  La Unidad Latinoamericana. Melbourne: OceanSur.  
 
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.

__________. 2004. Las Venas Abiertas de América Latina, tercera edición, revisada. México: Siglo XXI Editores.

Guevara, Aleida.  2005.  Chávez, Venezuela, and the New Latin America.  Melbourne: Ocean 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, colonial, neocolonial, blog Third World perspective, open veins of Latin America, Galeano, petroleum, oil, Venezuela

Posted October 22, 2013

      We have been observing what Eduardo Galeano has called the “open veins of Latin America,” the flow of agricultural products and minerals from the region for the benefit of others.  In the twentieth century, the petroleum and minerals flowing from the region were essential for the US armed forces, inspiring Galeano to refer to them as the “underground sources of power.”  In the posts of 10/17, 10/18 and 10/21/2013, we have observed: the aggressive pursuit of petroleum in Latin America by the transnational oil companies, supPoported by the US government: and the efforts of some Latin American governments, supported by popular movements, to take control of their petroleum resources.  This dynamic of popular movement has been most fully expressed by the Bolivarian Revolution in Venezuela, led by Hugo Chávez, which today constitutes a significant challenge to the neocolonial world-system.

      Conflict between Latin America and the neocolonial power to the north also has expressed itself in Chile, which has the largest copper reserves in the world. During the Great Depression, with the consolidation of US neocolonial domination of Latin America and the final displacement of Britain, Chilean copper fell under the control of the United States.  The two largest reserves were owned by the Anaconda Copper Co. and the Kennecott Copper Co., “two companies intimately tied with each other as part of the same world consortium” (Galeano 2007:187; 1997:144).  And “the owners of copper were the owners of Chile” (Galeano 2007:188).

      From the 1930s through the 1960s, Chilean copper expressed the extreme inequalities that pertain to the world-system.  On the one hand, during this time the two principal companies had remitted four billion dollars from Chile to their corporate headquarters, even though they had not invested more than 800 million dollars, and nearly all of this investment came from profits earned in Chile.  On the other hand, “Chilean minors lived in narrow and sordid cabins, separated from their families, which inhabited miserable hovels on the outskirts; separated also from the foreign personnel, which in the large mines inhabited a universe apart, a mini-state within the state, where only English was spoken” (Galeano 2007:189-90).  “The average salary in the Chilean mines was one-eighth the basic salary of the refineries of Kennecott in the United States, even though productivity was at the same level" (Galeano 2007:189; 1997:145).  The taxes paid by the companies to the Chilean state did not begin to compensate for the exhaustion of this non-renewable resource.  In 1965, the government signed an agreement with Kennecott that supposedly established the government as a partner, but in fact established a new tax scheme that enabled the company to triple its profits (Galeano 2007:190; 1997:146). 
 
      In the 1970 elections, Salvador Allende was elected president.  He had been the candidate of the Popular Unity, a multiple-party coalition consisting of the Socialist, Communist, and Radical parties as well as former members of the Christian Democratic Party who, influenced by liberation theology, had formed a separate organization.  Nationalization was central to the Popular Unity program, and in its first year, the Allende government nationalized copper, iron, and nitrate industries, all of them previously owned by US corporations (Cockcroft 2000; Hart 2009). 
 
     The government of Salvador Allende was brought to an end by a coup d’état on September 11, 1973, during which Allende died.  Army Commander Pinochet was named President, beginning a brutal and repressive dictatorship that lasted nearly 20 years, before it was cast aside by the“transition to democracy” that swept Latin America in the 1980s and 1990s.  Under Pinochet, Chile was the first country in Latin America to impose the neoliberal project.  Much has been written over the role of the United States in trying to prevent Allende from assuming the presidency in 1970, in seeking to destabilize the Allende government, in supporting the September 11 coup, and in supporting the Pinochet dictatorship.  
 
      Salvador Allende will always be with us. He is present in the popular movements that today seek a just and democratic world.  We will write more on Allende and his vision of “revolutionary democratic socialism” in a future post.


References

Cockcroft, James. D., Ed.  2000.  Salvador Allende Reader: Chile´s Voice of Democracy.  Edited with an introduction by James D. Cockcroft.  With translations by Moisés Espinoza and Nancy Nuñez. New York: Ocean Press.

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.

__________. 2004. Las Venas Abiertas de América Latina, tercera edición, revisada. México: Siglo XXI Editores.

Hart Dávalos, Armando. 2009.  “Sobre Salvador Allende” in Fidel Castro, Chile y Allende: Una mirada al proceso revolucionario chileno. México D.F.: Ocean Sur.


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, colonial, neocolonial, blog Third World perspective, open veins of Latin America, Galeano, copper, Chile, Salvador Allende

Posted October 23, 2013

      In the 1870s, Simón Patiño, in a condition half dead from hunger, discovered in the Bolivian high plains the richest vein of tin in the world. The concentration was so high that the tin could be sent directly to the port, without need for a process of concentration.  Patiño became the “King of Tin” and one of the richest men in the world.  “From Europe he for many years lifted up and overthrew the presidents and ministers of Bolivia, planned the hunger of the workers and organized their massacre, and expanded and extended his personal fortune.  Bolivia was a country that existed in his service” (Galeano 2007:191; 1997:147).

     A popular movement in Bolivia first emerged in the 1930s.  By the early 1950s it had become an advanced social revolutionary movement under the leadership of the Revolutionary Nationalist Movement.  Its social base consisted of unions of mine workers, peasants, and factory workers.  It reached its zenith in 1952, when the Bolivian government nationalized the mines and distributed land to peasants.  
 
     However, the nationalization of the tin mines did not change the situation.  In the first place, the tin mines had been exhausted.  In the mountain where the rich vein had been found by Patiño, the degree of purity was reduced 120 times from what it had once been.  For every 156,000 tons of rock, only 400 tons of tin were obtained (Galeano 2007:191; 1997:147).

     Secondly, Antenor Patiño, son of Simón, charged considerable compensation for the nationalization, and he continued to control the price and the distribution of Bolivian tin.  The nationalization “had not modified the role of Bolivia in the international division of labor.  Bolivia continued exporting the crude mineral, and nearly all the tin is refined still in the ovens of Liverpool by Williams, Harvey and Co., which is owned by Patiño.  The nationalization of the sources of production of any raw material, as is taught from painful experience, is not sufficient”  (Galeano 2007:192; 1997:148).

     With Bolivian mining after nationalization continuing to conform to the peripheral role in the international division of labor, the Bolivian workers continued to suffer wages of superexploitation and to live in social conditions characteristic of underdevelopment.  They lived in one-room shacks with dirt floors, with 60% of male youth sharing a bed with a sister.  They lacked bathrooms, having instead small public sheds with latrines; the people preferred the garbage dumps, where at least there was open air.  They had to wait for the delivery of water, collecting it in containers when it arrived.  Meals were limited, consisting of potatoes, noodles, rice, maize, and occasionally tough meat.  During dinner, the minors chewed coca leafs, which function to dull hunger and to mask fatigue (Galeano 2007:194-95; 1997:150-51).

       The worst was the dust, which condemned the minors to death by asphyxiation (Galeano 2007:195; 1997:151).  “The slow and quiet death constitutes the specialty of the mine.  Vomiting of blood, cough, and a sensation of a lead weight on the back and an acute oppression in the chest are the signs that announce it.  After the medical analysis come the never ending bureaucratic pilgrimages.  They give a period of three months to vacate the house” (Galeano 2007:196; 1997:151-52).

     Tin mining destroyed the environment, leaving tunnels as well as accumulated grey mounds from the residue that is left after the tin is separated from the rock.  Rains washed the residual tin and deposited it everywhere.  Everything had the dark color of tin, from the mountain streams to the walls of the minors’ shacks (Galeano 2007:194).   
 
     The exhaustion of tin meant that its exploitation could not remain profitable, so the tin industry in Bolivia declined, to be replaced by the exploitation of natural gas, just as tin had previously replaced silver as the principal raw material for exportation from Bolivia.  But as the exported raw material changed from silver to tin to natural gas, the structures remained  intact: the raw materials export industries were owned and operated by foreign companies who paid hunger wages to Bolivian workers, with the cooperation of the Bolivian government.  The core-peripheral structures contributed to the economic development of the nations to the North even as they guaranteed underdevelopment and poverty for Bolivia.

          But as in Venezuela and Chile (see “Petroleum in Venezuela” 10/18/2013 and “Copper in Chile” 10/22/2013), the people formed movements that sought to take control of the natural resources of the nation and thus to make possible the true and full independence of the nation.  During the course of the twentieth century, the popular movements had significant gains, but they did not accomplish the definitive social transformation that they sought.  The struggle of the people continues today, as we will see in future posts.


References

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.

__________. 2004. Las Venas Abiertas de América Latina, tercera edición, revisada. México: Siglo XXI Editores.

 
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, colonial, neocolonial, blog Third World perspective, open veins of Latin America, Galeano, tin, Bolivia

Posted October 24, 2013

     In various posts, we have seen the importance of petroleum, copper and tin as underground sources of the power of the United States, and we have seen the aggressive action by the United States to attain control of these natural resources of Latin America (see “The Underground Sources of Power” 10/16/2013, “Petroleum in Latin America” 10/17/2013, “Petroleum in Venezuela” 10/18/2013, “Copper in Chile” 10/22/2013, and “Tin in Bolivia” 10/23/2013) .  Iron also was a part of this dynamic, and it was exploited in Venezuela and Brazil.

     In the classic work, The Open Veins of Latin America, Eduardo Galeano noted the importance of iron:  In 1970, 85% of the industrial products of the United States contained steel, and you cannot make steel without iron.  This explains the interest of the major US steel corporations in the iron of Venezuela and Brazil during the 1950s and 1960s (Galeano 2004:198; 2007:153).

      Galeano also observed that iron and steel reflect the international division of labor between core and periphery.  “Steel is produced in the rich centers of the world, and iron in the poor periphery; steel pays the salaries of the ‘worker aristocracy,’ and iron, day wages of mere subsistence” (Galeano 2004:199; 2007:153).

      US Steel and Bethlehem Steel directly controlled the extraction and exportation of iron from Venezuela.  Since the iron was destined for their own iron and steel works in the United  States, their primary interest was in obtaining cheap iron and not in maximizing profits from the iron-exporting activities.  Nonetheless, in the single year of 1960 they earned more in profits from the exportation of iron than they paid in taxes to the Venezuelan state during the ten years beginning in 1950 (Galeano 2004:198; 2007:153).

     In Brazil, the exportation of iron was a source of conflict.  A 1952 military accord between Brazil and the United States prohibited Brazil from selling strategic raw materials, such as iron, to socialist countries. In 1953 and 1954, Brazilian President Getúlio Vargas ignored the agreement and sold iron to Czechoslovakia and Poland at prices higher than those being paid by the United States.  This defiance culminated in the president being deposed in 1954 (Galeano 2004:200-1; 2007:154). 

      The conflict continued in the early 1960s.  The US company Hannah Mining sought to obtain the rights to mine and export Brazilian crude iron in the late 1950s and early 1960s.  By pressuring the Brazilian government, including the incorporation of high officials of the Brazilian government as directors and advisers of Hannah, the company was able to obtain in 1961 authorization of the right to exploit iron deposits that belong to the government.  However, considering the authorization to be illegal, the President of Brazil cancelled it, restoring the iron deposits to the national reserve. Four days later, the president was forced to resign.  But a popular uprising frustrated the coup d’état, and Vice-President João Goulart assumed the presidency.  The Goulart government put into practice the cancellation of the illegal authorization in July 1962.  However, Goulart was overthrown in a July 1964 coup d’état that was supported by the United States, establishing a repressive dictatorship that adopted economic policies consistent with the interests of the US steel giants.  The decree legalizing Hannah’s authorization was issued on December 24, 1964.  In addition, the military government backed company plans to amplify its port 20 miles from Rio de Janeiro and to construct a railroad for the transportation of the iron. In October 1965, Hanna formed a consortium with Bethlehem Steel for the exploitation of iron.  But US Steel was not left out.  It formed a consortium with a Brazilian state mining company, and by these means it obtained a concession to the iron deposits in the Sierra de los Carajás in the Amazon (Galeano 2004:200-3; 2007:154-56).

      Ultimately, the military government was replaced by civilian governments that cooperated with the United States and US corporations in the implementation of the neoliberal agenda.  And popular opposition to foreign control of natural resources continued. Popular protest led to the overthrow of the neoliberal government of Fernando Collor de Mello in 1992.  And they led to the election of Workers’ Party candidates Luiz Inácio Lula da Silva in 2002 and 2006 and Dilma Rousseff  in 2010.  The Workers’ Party governments have been participating in the process of Latin American unity and integration, which seeks to develop alternatives to the structures that facilitate US control of the natural resources of the region.  The new political reality of Latin America today, established on a foundation of popular movements, will be the subject of future posts.


 References

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.

__________. 2004. Las Venas Abiertas de América Latina, tercera edición, revisada. México: Siglo XXI Editores.

 
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, colonial, neocolonial, blog Third World perspective, open veins of Latin America, Galeano, iron, Brazil, Venezuela

Posted October 25, 2013

     In eleven posts beginning August 16, I have drawn upon Eduardo Galeano’s Open Veins of Latin America (see posts in the section on Latin American history).  The book was given to recently-elected US President Barack Obama by Venezuelan President Hugo Chávez, an indication of the extent to which it is appreciated in Latin America. Written in 1970, the book formulates the Latin American perspective on its role in the world-economy.  It provides a concrete presentation of the core-peripheral relation as seen from the periphery, organizing the presentation according to the various raw materials that played a role in the development of underdevelopment in Latin America and the Caribbean.  In the sixteenth century, the conquest of the indigenous peoples and the forced labor imposed on them established that silver and gold would be the driving engine of the newly emerging world-economy and world-system, promoting the development of Western Europe as it promoted the underdevelopment of Latin America.  During the third stage of expansion of the world-system (1750-1914), sugar and other agricultural monarchs in Latin America were the driving force of the system, incorporating African slaves as forced laborers.  As the world-system entered a stage characterized by imperialism and neocolonial domination during the twentieth century, Latin American petroleum and minerals, underground sources of power, became integral components of the development of the United States.  
 
     Although the world-system has passed through various stages, there has been continuity in its development, established by the Latin American role as supplier of raw materials for the core of the system: gold, silver, sugar, coffee, bananas, petroleum, copper, tin, and iron have played important roles in the development of a Latin American political-economic system in a distorted form, in dependent relation with the core of the world-system.

     This has given rise to movements that seek, not merely formal independence that is negated in practice by a dependent neocolonial relation, but the full and true independence of Latin America and the Caribbean.  Important moments in this quest for independence from the neocolonial world-system include: the Mexican Revolution; the Cuban Revolution; revolutionary democratic socialism led by Salvador Allende in Chile; the Sandinista Revolution in Nicaragua; and the reform and revolutionary movements that have transformed Latin America today, spearheaded by Hugo Chávez in Venezuela, Evo Morales in Bolivia, and Rafael Correa in Ecuador.  We will be discussing these revolutions that have sought and are seeking to transform the neocolonial world-system in future posts.  
 

References

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.

__________. 2004. Las Venas Abiertas de América Latina, tercera edición, revisada. México: Siglo XXI Editores.


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, colonial, neocolonial, blog Third World perspective, open veins of Latin America, Galeano