III

THE SENSES OF CAPITALISM IN LATIN AMERICA

Often enough two serial infractions (Weaver 1979) have been critically associated with neoclassical and dependista accounts on Latin American late industrialization. Firstly, in what amounts to a case of mistaken identity, both traditions tend to t Latin American reality into an historically sterile model of competitive capitalism, concurrently identifying and asserting the status of obstacles to industrial growth on such trumped-up grounds. Secondly, they tend to write regional industrial history in unilinear fashion from an outsiders viewpoint in which external structures (e.g., foreign trade and investments) and agencies often take home too much credit for the making or unmaking of development. Misinformed and malfocused as such, these accounts lend themselves easily in the nal analysis to the habit of addressing the problem of industrial change simply as a logistical question, i.e., appropriating from without (as in the neoclassical borrowing to catch-up sense) or re-appropriating from within (as in the dependista borrowing breeds Catch-22 sense), if you like, resources which Latin American economies either purportedly lack or do possess, but were coercively being siphoned away by external forces. An antidote to noted defects may, according to Weaver, consist of an historical-structural insiders approach, one which bonds late industrial history with the workings of what he labels as dual historical movementsstandard-setting changes in the internal structure, conditions of growth and operational (or agency) requirements dening different phases of global industrial capitalism in conjunction with how disparate national and local experiences internally measure and, in sundry ways, cope up with (or substitute for) those changes. It is in sync with those changes that the merits or demerits of alleged external and internal obstacles to industrial growth (e.g., population, agrarian stagnation, foreign trade and investments) should be judged. As far as late industrializers are concerned, it is suggested that the more historically authentic loci for those pace-setting changes were the nancial and later monopoly, rather than competitive capitalist phases. Moreover, instead of reducing the issue of industrial change simply to logistics, one can instead explore how, under prevailing conditions and constraints, available resources were actually used for the sake of late industrialization in different national contexts, whether in the core or periphery. In effect, this approach is an attempt to unite the best of both worlds. Like the dependistas it acknowledges, albeit without overrating, the general and partially corrupting impact of global and external forces on regional development. Unlike them, and more akin to the neoclassicists, but without overstating the point, it argues that the same forces delivered tangible gains as well, the actual translation for industrial purposes of which varied according to the type and character of local productive systems as well as the class and state

structures and agencies operating therein. Within this framework then, standard accounts will tend to remain surrealistic because they either refuse to recognize (as among dependistas) the existence of these partial benets, or automatically take these gains for granted (as among neoclassicists) without tracing the extent to which they were put into actual industrial use. Following the above approach, one may begin to map out the mainstream features of three consecutive (competitive, nancial, and monopoly) phases of global industrial capitalism denoted respectively by: type, technical character, and organization of predominant industrial structure; vital growth and social preconditions; operational mechanisms and leading agencies. Accordingly, cross-phase movements or industrial regime shifts correspond with dramatic changes in the technical character, scale, and organization of the avant-garde sector of modern industrial productionfrom small-scale, labor-intensive wage goods to large-scale, capital-intensive intermediate and capital goods, and nally to modern consumer goods product-ion. Increasingly as industrial production scales up from one phase to another, the mode and agency of resource mobilization crucial to that process progresses in similar directions from decentralized (market-led) to more centralized (cartel and state-led) forms. Depending on the timing, the overall character of the local productive system, and the class and state structures and agencies under current disposition, industrializing wannabes met current strategic problems of growth differently. Historically, in other words, as the rites of passage changed so did the strategic choices and routes to industrial development alter.

CORE CAPITALISM CONTRASTING LATE INDUSTRIAL PATHS

Juxtaposing the archetypal cases of early (Britain) and late (Germany and Russia) core starters, comparatively illustrates how these radically changing rites of passage to industrial career-building logically motivated over time contrasting strategies and routes to that effect. Britain, the class act of early 19th century competitive capitalism, enjoyed the luxury of living out her industrial puberty fully for more than a hundred years before entering the nancial and monopoly phases. She had the advantage of early agrarian and proto-industrial transformation, and none of the olympic scale resource mobilization demands of the latter phases when she started her career. Similarly, when the need to restructure industry towards intermediate, capital, and later modern consumer goods emerged, British economy was, given the benet of natural aging in the preceding competitive era, auspiciously well-stocked with the technical (welldeveloped forward and emerging backward-linked industries), institutional (well-integrated domestic and overseas markets, relatively unhampered sectoral factor mobility, expanding cartelization, banking and state infrastructures), and class (a large and seasoned cadre of industrial entrepreneurs) furniture to meet the more formidable demands of the new phase. For late runners like Germany and Russia, making their industrial debut immediately in the nancial phase with remotely any of the advantages enjoyed by the British, these same demands were even more awesome. Reeling among others under stagnant agrarian economies controlled by strong quasi-feudal elites, enormous sectoral factor mobility problems, miniature and weak industrial bourgeoisies, they inevitably had to jump-start their careers via simulation and substitution from above as it were of/for vital growth prerequisites under the direction of a herculean statewhich under given conditions was the single most viable large scale resource mobilizing agencyin alliance either with agrarian Junker elites and aggressive military industrialists as in Germany, or, as in the Russian genre, with foreign capital and relatively detached from local conditions.

Different historical-structural means may have justied the ends of getting into nancial capitalist ranks, but once admitted, industrial veterans and rookies alike were subject soon enough to compelling supply (undersupply of cheap staples and raw materials versus oversupply of industrial goods and capital) and demand problems (underconsumption stemming from skewed income patterns) typical of the new phase. The impulses generated by these needs contributed in shaping contemporary global patterns of trade and production along lines of increasing division of labor (or what has otherwise been euphemistically called by dependistas and neoclassicists as the age of classic dependency, or old international division of labor, or the age of classic laissez faire or comparative advantage)turning many core and peripheral economies into world producers and exporters of manufactured goods/portfolio capital and primary staples/ industrial raw inputs, respectively.

PERIPHERAL CAPITALISM VERNACULAR INDUSTRIAL ROUTES

Pre-1930 integration into the world economy as heavy primary staple producers and consumers of nished core goods and capital marked the prelude of late industrialization in Latin America. Like most of their late running core counterparts, Latin American debutantes wrote their rst industrial chapter in the global context of nancial capitalism. Yet, unlike in the former case, the tone and ux of infant industrialization in the region came to be anecdotally lack-luster and off-beat or, as Weaver puts it, off-phase. Technically, it was spearheaded not by intermediate nor capital goods, but by the wage goods sector amidst the wider local context of staple export systems. Certainly, as has been familiarly described by dependistas and some structuralists, peripheral integration into world staple markets and production did bear signicant off-phasing implications. While this generally validates hitherto accounts of the legendary mitigating contributions of foreign trade and investments and staple export systems to this off-phasing, it is here argued that there were also important internal variations, which for all intents and purposes, remain incognito in the dis-course.1 This lacuna is crucial indeed, for as succeeding events of the Great Depression and World War II will show, the impact of exogenous shock-forces on the course of post-1930 industrialization articulated in fact more idiomatically than assumed, and varied according to distinct historical structural attributes and degrees of internal/external integration among different staple export systems. Using input-output analysis and a structural perspective, Weaver shows, with particular reference to Argentina, Peru and Chile, how staple export systems varied in terms of
1Technically,

indeed, the legendary dependence of agro-export based industrialization on imported Western or core capital and intermediate inputs reduced the potential for fully integrated backward-linked industries and technological progress, as well as limited dynamism to forward-linked processing and light consumer goods manufacturing. Moreover, staple export systems, while precariously vulnerable (in terms of output and demand) to the boom and bust swings of world primary commodity markets, generally imparted limited multiplier and linkage effects to other sectors of the national economy. This in combination with import dependency often led to chronic balance of trade (BOT) and forex crises, which place a ceiling on industrial growth. In standard dependista and structuralist accounts of pre-1930 Latin America, this situation has often been equated to the surplus expropriating devices of foreign trade and investments (via e.g., unequal terms of trade, compulsive and massive prot repatriations)ferreting away surfeit resources, which could otherwise have been channelled to sustainable industrial growth in the periphery. It is often assumed that core industrial economies dispose of coercive economic and political powers to this effect. Evidence of systematic coercion, according to Weaver, is however few and far between. In fact, examples of direct political coercion have been more frequent in core rather than peripheral cases (e.g., Germany and Russia). Neither can one simply assume that staple export dependency would necessarily mitigate industrial growth as the concrete cases of for example Canada and Denmark have shown. In the case of the periphery, where staple exports have been vital, there are therefore valid reasons, just as in the latter core cases, to actually explore how potential benets from export trade and production were or were not transmitted or maximized in favor of industrial expansion.

productive organization, degree of integration to the national economy and linkage effects, and impact on class and state structures.2 Specifying these internal variations provides a vital clue as to why some more than other Latin American economies succeeded to phase in industrial growth along monopoly capitalist lines in the 1930s and 1940s. Thus, at the pre-Depression juncture, staple export economies relative to the degree of integration, gave impetus to two forms of city-centric (import-) dependent industrial growth, namely, one directly related via forward and backward linkages, and another, centered on local consumer goods production. Wheat and livestock exporting Argentina typies the case of a relatively integrated economy. The wheat sector, productively organized in small farm units operated mostly by immigrant farmers and laborers under tenancy, gave rise to a powerful estanciero oligarchy, which locally captured a sizable chunk of the fortunes of staple trade and did partially invest in urban-based forward-linked processing industries. While the staple economy tended to tie down industrially re-investable surpluses and fostered skewed property, income and luxury-prone consumption patterns which undercut spin-off effects during booms, Argentinas strategic urban commercial networks propelled both the rapid urbanization of Buenos Aires and the simultaneous expansion of the local wage goods market and production. For all the anti-industrial conservatism it spawned among estancieros, the staple export economy induced the creation of a substantial social overhead (infrastructure, communication, and transport) which benetted edgling manufacturing industries. In contrast, Peru and Chile illustrate the case of more disintegrated enclave-type primary export systems based on extractive guano and nitrate industries. These vital extractive, laborintensive industries relied heavily on state mediation, imported capital and workforces, and operated (from production to delivery) virtually in isolation from the economy at large. For instance, Peruvian guano, a natural product easily extracted by manual labor, went literally straight from the mines to overseas shipment on container vessels docked in nearby ports. While Argentinian wheat exports exercised comparatively wider socio-economic impact, Peruvian and Chilean mineral extraction yielded more political spin-off effects. Fiscal revenues delivered by the mineral bonanza beefed up both the economic and political position of the state-bureaucracy relative to local ruling class structures, which the enclave economy neither involved nor transformed. In this sense, hence, what wheat did to enhance oligarchic power vis--vis the state in Argentina, minerals in Peru and Chile reversed in favor of the the latter. On the average, however, primary exporters inherently sustained the common rule of off-phase dependent industrialization in pre-1930 Latin America. That rule would soon be jolted by the exogenous shock-forces of the Great Depression and World War II, triggering off a general chain of events and institutional changes which inadvertently widened the frontiers of domestic demand and output, initially in favor of traditional competitive small-scale light industries, followed later in the postbellum era by non-traditional large-scale manufacturing in producer and modern consumer goods. However, while many Latin American economies made rst base into import substituting light industries (elsewhere referred to as the easy ISI period), only a select few succeeded to hit the home-run and go all the way to monopoly capitalist industrial growth. These lucky

Weavers attempt to trace tangible gains from trade to the staple export sector and disaggregating them by employing input-output analysis, otherwise a standard instrument for macroeconomic planning, has rarely been done on historical data. As it is used today, the technique tabulates along horizontal and vertical axes data pertaining to inter-industry transactions (sales and purchases between product groups/sectors and market types). It shows how the output of each industry is distributed among other industries and sectors, and traces the origins of inputs to each industry from other industries and sectors. From the tabulated data, one can among others get a comprehensive picture of the degree of intersectoral linkages (forward and backward) and income multiplier effect. Nafzinger (1984) briey discusses the advantages and limitations of this method.
2

few, todays manufacturing moguls in the region (e.g. Argentina, Brazil), were also those relatively integrated primary exporting economies severely hit by global depression and war. Ironically, comparatively unscathed enclave economies like Peru and Venezuelawhere the compulsion to diversify was incidentally lesserwere in the long-run unable in the same manner to meet the sine qua non of large-scale industrial restructuring. As such, these economies were to languish in the backwaters of traditional light industries. To understand this diverging trend, one should accordingly rst outline the summary effect of contrasting changes in the terms of trade imparted by depression and war on industrial structure, social and political congurations in Latin America. In general terms, the Great Depression implied disastrously negative terms of trade for primary exporters which drastically reduced forex income, fueled widespread disinvestments, undermined import capacity and domestic output, and exacerbated chronic balance of trade and budgetary maladies down the line. These critical conditions engendered signicant shifts in the composite structure of demand and output in tandem with remedial state protectionist and exchange control measures. Both demand and output moved increasingly away from foreign and high-income markets and primary export production (to pay for imported consumerables) towards domestic low-income markets and import substituting manufacturing. Such a trend was most lucidly communicated by the dramatic tilt in import compositionnot so much away from import dependency as a whole asfrom nished consumer to intermediate inputs and capital goods. Under current supply constraints, however, due as earlier noted to the drop in aggregate income and therefore import capacity, state reallocation of these imported inputs via protectionism and exchange control policies inadvertently worked in favor of larger more capital-intensive local and foreign manufacturing rms (subsidiaries eventually proliferated in the sheltered sectors on account of exemptions from forex and import restrictions afforded them) in both the traditional and modern consumer goods industries. In the face of unabated import dependency on producer goods, perpetuating as such proverbial backward-linkage problems, ISI policies spawned mounting centralization and cartelization within manufacturing. As a result, the industrial structure became in the long haul vulnerable to segmentation along technically dualistic lines, where a small capitalintensive monopoly sector dominated by a few large foreign and domes-tic rms evolved in juxtaposition with a huge competitive sector populated by small labor-intensive rms. By the end of World War II when primary export markets were in upswing, peripheral economies recorded unprecedented trade surpluses. Nonetheless, backward-linkage issues prevailed on account this time of core supply debilities, which placed a ceiling on importdependent industrial growth. Amidst rising domestic demand, the need to relieve attend-ant pressures on output stimulated large-scale investments by the state, TNCs and local big capital in certain basic producer goods industries in several Latin American economies. The need for sporadic and later more deliberate forms of state intervention to marshal the growing imperative of largescale resource mobilization and protectionism following in the wake of industrial structural scaling-up and ISI, made traditional agro-export elites and bourgeoisies more dependent on the state. In many cases, this operated in favor of relative political autonomy vis--vis local ruling elites and portended the rise of s-c developmentalist statism in the region. For reasons earlier noted, structural and institutional changes unraveling since the 1930s varied among different countries in rate, scope and direction. In countries where these changes matured farthest, industrial growth was nally to rhyme in with the prerequisites of monopoly capitalism by 1945 onwards. They were at long last able to catch up and cope with the rules of modern industrial production, albeit quite late relative to their core counterparts.

Occurring at the close of World War II, this industrial spurt exhibited the main attributes of noted monopoly phase. As such, it was led by the modern consumer and backward-linked intermediate goods sectors; demand and output dynamism would come from upper/middleclass marketsdue to yet skewed income patternsand large-scale capital-intensive local and foreign rms in the monopolyrather than competitive industrial sector (cf technical dualism). The centrality of plant scale and leviathan resource mobilizing capability to this phase would eventually as it were naturally select out the most viable monopoly industrial players among those with the largest home-markets and seasoned dirigistic state traditions like Brazil, Mexico and Argentina. That monopoly capitalism is the contemporary rule of the industrial game, whether in core or periphery, whether one likes it or not, is demonstrated by the fact that state attempts to reorient growth on false competitive capitalist premises, like in the Chilean case, did end up in abject failure. While both core and periphery share the common catch inherent in monopoly capitalist industrialization (increasing socialization costsi.e., welfare, social security, prots continue to be privately appropriated), there appears to be more of it in the latter than in the former. In the peripheral variant, this added catch or ne-print to development is clearly embodied in skewed income patterns. Here, insofar as the monopoly sector has been intrinsically attached to upper/middle-class markets even modest redistributive reforms tend to jeopardize growth, a debility which often invites politically repressive rather than welfare solutions.