Open Veins of Latin America: Five Centuries of the Pillage of a Continent

by Eduardo Galeano

  * Berisso is a meatpacking center with high unemployment. (Trans.)

  Dependent industrialization further concentrates income at the regional and social level. The wealth it generates does not spread through the whole country or the whole society, but consolidates and deepens existing inequalities. Not even its own—ever less numerous—“integrated” workers benefit to an equal extent from industrial growth; the fruits of higher productivity, bitter for so many, go to the highest strata of the social pyramid. In Brazil between 1955 and 1966, the mechanical, electrical, communications, and auto industries raised productivity by about 130 percent, but in the same period their workers’ wages only grew 6 percent in real value. Latin America offers cheap labor: in 1961 the average hourly wage in the United States was $2; in Argentina it was $.32, in Brazil $.28, in Colombia $.17, in Mexico $.16, and in Guatemala barely $. 10. Since then the gap has widened. To earn what a French worker gets in one hour, the Brazilian now has to work 2.5 days. A little more than ten hours’ work gets the U.S. worker the equivalent of a month’s work by a Brazilian. And to earn more than a Rio de Janeiro worker gets for an eight-hour day, the British or German workers puts in less than half an hour. Latin America’s low wage scale is reflected in the low prices the region gets for its raw materials in the international market, to the benefit of consumers in the rich countries. In the internal markets, where denationalized industry sells manufactured goods, prices are kept high to maintain the inflated profits of the imperialist corporations.

  All economists agree on the importance of growing demand as a catapult of industrial development. But Latin America’s foreign-dominated industry shows no interest in widening and deepening the mass market, for this could only be achieved on the basis of practical steps to transform the socioeconomic structure, which would involve troublesome political storms. With trade unions dominated or annihilated or tamed in the more industrialized cities, the growth of a wage earner’s purchasing power is too small, and prices of industrial articles do not go down. This, then, is a vast region with an enormous potential market and a real market shrunken by the poverty of its masses. The consumers to whom big auto and refrigerator plants direct their products are only 5 percent of the Latin American population. Hardly one in four Brazilians can really be considered a consumer. Forty-five million Brazilians have the same combined income as 900,000 privileged citizens at the other end of the social scale.75 *

  * According to this same ECLA study, “A significant process of progressive income redistribution took place in Argentina in the years prior to 1953. Of the three years for which more detailed information is available, this was precisely the one in which there was least inequality, while it was much greater in 1959 … in Mexico, in the more extended period from 1940 to 1964 … there are indications to suggest that the loss was not only relative but also absolute for 20 percent of the lowest-income families.”

  THE INTEGRATION OF LATIN AMERICA UNDER THE STARS AND STRIPES

  Some innocents still believe that all countries end at their frontiers. They say that the United States has little or nothing to do with Latin American integration, for the simple reason that the United States is not a member of the Latin American Free Trade Area (LAFTA), or of the Central American Common Market. Integration, they say, is as the liberator Simón Bolívar wanted it: it goes no further than the border separating Mexico from its powerful northern neighbor. Those who sustain this seraphic notion suffer from a form of amnesia which may not be wholly disinterested. They forget that a legion of pirates, merchants, bankers, Marines, technocrats, Green Berets, ambassadors, and captains of industry have, in a long black page of history, taken over the life and destiny of most of the peoples of the south, and that at this moment Latin America’s industry lies at the bottom of the Imperium’s digestive apparatus. “Our” union makes “their” strength to the extent that our countries, not having broken from the molds of underdevelopment and dependence, integrate their own respective serfdoms.

  Official LAFTA documents exalt the role of private capital in the development of integration—and we have seen in previous chapters in whose hands that private capital lies. In mid-April 1969, the Consultative Council on Business Affairs met in Asunción. Among other things, it reaffirmed “the orientation of the Latin American economy, in the sense that economic integration of the zone must be achieved fundamentally on the basis of the development of private enterprise.” It recommended that the governments introduce common legislation for the formation of “multinational enterprises, made up predominantly [sic] of capital and entrepreneurs from the member states.” All the keys were handed over to the thief. Back in April 1967, in the final declaration of the Punta del Este conference—on which Lyndon Johnson himself placed his golden seal—the creation of a common market of shares was even proposed, a kind of integration of stock exchanges, so that enterprises located anywhere in Latin America could be purchased anywhere in Latin America. Official documents went so far as to recommend openly the denationalization of public enterprises. The first gathering of the meat industry within LAFTA, in Montevideo in April 1969, resolved “to request the governments … to study suitable methods to achieve progressive transference of state meatpacking plants to the private sector.” At the same time, the Uruguyan government, one of whose members chaired the meeting, pursued an all-out policy of sabotage of the state-owned Frigorífico Nacional packing plant in favor of those privately owned by foreigners.

  Tariff disarmament, which is gradually freeing the circulation of merchandise within the LAFTA area, is intended to reorganize the distribution of Latin American production centers and markets for the benefit of the great multinational corporations. The “escalation economy” now prevails: the first phase, carried out during these recent years, has seen the consolidation of foreign power over the launching platforms—the industrialized cities—from which the regional market as a whole is to be dominated. The enterprises in Brazil with the greatest interest in Latin American integration are precisely the foreign ones and, above all, the most powerful ones.76 Of the multinational corporations—mostly U.S.-owned—replying to an all-Latin American questionnaire sent out by the IDB, more than half were planning or proposing that their activities in the second half of the 1960s be in the extended LAFTA market, creating or strengthening regional departments.77 * In September 1969, Henry Ford II announced at a Rio de Janeiro press conference that he wanted to join in the Brazilian economic process “because the situation is very good. Our initial participation consisted of purchasing Willys Overland do Brasil.” He said he would be exporting Brazilian vehicles to several Latin American countries. Caterpillar Tractors— “a firm that has always treated the world as one single market,” according to Business International—took advantage of the tariff reductions as soon as they were negotiated, and in 1965 was already supplying various South American countries with bulldozers and tractor spare parts from its plant in São Paulo. With equal speed, Union Carbide began showering electrotechnical products on Latin American countries from its Mexican factory, availing itself of customs, tax, and advance-deposit exemptions in the LAFTA area.78

  * Sixty-four percent of the enterprises, taking advantage of LAFTA concessions, were exporting within the region chemical products and petrochemicals, artificial fibers, electronic materials, industrial and agricultural machinery, office equipment, motors, measuring instruments, steel pipes, and other products.

  The Latin American countries—impoverished, incommunicado, de-capitalized, and facing serious structural problems within their own frontiers—progressively dismantle their economic, financial, and fiscal barriers in the monopolies’ favor. The result is that the monopolies, which are still strangling each country separately, can move outward and consolidate a new division of labor on a regional scale by specializing their activities by countries and spheres of activity, fixing optimum sizes for their affiliated enterprises, reducing costs, eliminating competitors outside the area, and stabilizing markets. The aff
iliates of the multinational corporations can point to the conquest of the Latin American market in certain spheres and under certain conditions not affecting the global policies of their head offices. As we saw in an earlier chapter, the international division of labor continues functioning as it always did for Latin America: the changes are only within the region. The presidents declared at Punta del Este that “foreign private initiative will be able to perform an important function to assure achievement of the objectives of integration,” and they agreed that the IDB should increase “the sums available for export credits in intra-Latin American trade.”

  Fortune in 1967 assessed the “enticing new opportunities” which the Latin American Common Market opens to northern business: “In many a boardroom, the common market is becoming a serious element in planning for the future. Ford Motor do Brasil, which makes Galaxies, thinks it could mesh nicely with Ford of Argentina, which makes Falcons, thus deriving economies of scale by producing both cars for larger markets. Kodak, which now makes photographic paper in Brazil, would like to make exportable film in Mexico and cameras and projectors in Argentina.”79 The magazine cited other examples of “rationalizing” or “expanding” operations by corporations such as ITT, General Electric, Remington Rand, Otis Elevator, Worthington, Firestone, Deere, Westinghouse, Air Brake, and American Machine and Foundry. Nine years ago Raúl Prebisch, a vigorous advocate of LAFTA, wrote: “Another argument I often hear, from Mexico to Buenos Aires, passing through São Paulo and Santiago, is that the Common Market will offer foreign industry opportunities for expansion that it does not now have in our limited markets. … It is feared that the benefits offered by the Common Market will be taken advantage of principally by foreign industry, and not by national industries.… I shared and share this fear, not only in imagination but because I have verified the reality of that fact in practice.”80 This verification did not prevent Prebisch from later signing a document concerning integration in progress in which it is stated that “foreign capital undoubtedly has an important role in the development of our economies,”81 and proposing that mixed companies be founded in which “the Latin American entrepreneur may participate efficiently and equitably.” Equitably? Yes, “equality of opportunity” must of course be preserved. Anatole France aptly said that the law in its majestic equality forbids the rich as well as the poor from sleeping under bridges, begging in the streets, and stealing bread. But it happens that on this planet and in this epoch one enterprise alone, General Motors, employs as many workers throughout the world as the entire active population of Uruguay, and earns in a single year four times as much money as the whole gross national product of Bolivia.

  The corporations know, from their experience of previous integrations, the advantages of acting as “insiders” in the capitalist development of other areas. The fact that the total sales of worldwide U.S. affiliates are six times the value of U.S. exports tells its own story.82 In Latin America as elsewhere, the United States’ inconvenient antitrust laws do not apply. Here, with full impunity, countries become pseudonyms for the foreign concerns that dominate them. The first LAFTA implementation agreement was signed in August 1962 by Argentina, Brazil, Chile, and Uruguay, but in fact it was an agreement between IBM, IBM, IBM, and IBM. It eliminated import duties in the four countries on computers and their components, while raising duties on these machines imported from outside the area: IBM “suggested to the governments that if they eliminated duties on trade between themselves, it would build plants in Brazil and Argentina.…”83 Mexico added its signature on the second agreement: this time it was RCA and Phillips (Dutch) which promoted the exemption for radio and TV equipment. And so on. The ninth agreement, in the spring of 1969, divided the Latin American market in electrical generating, transmission, and distribution equipment between Union Carbide, General Electric, and Siemens (German).

  The Central American Common Market, an effort to join the rachitic and deformed economies of five countries, has served to blow down with one puff the feeble national producers of cloth, paint, medicines, cosmetics, and biscuits, and to expand the profits and trading orbit of General Tire and Rubber, Procter and Gamble, Grace, Colgate-Palmolive, Sterling Products, and National Biscuit. In Central America, liberation from customs duties has also gone hand in hand with raising the barriers against “external foreign” competition (as it might be called) so that “internal foreign” firms may sell at higher prices and greater profits: “The subsidy received through tariff protection exceeds the total value added by the domestic production process.”84

  No one has a better sense of proportion than these foreign enterprises: their own and other enterprises’ proportions. What, for example, would be the point of installing a big auto plant, steel blast furnaces, or an important chemical factory in Uruguay, Bolivia, Paraguay, or Ecuador, with their minuscule markets? The springboard sites are chosen elsewhere on the basis of the size and growth potential of the internal markets. FUNSA, the Uruguayan tire plant, depends substantially on Firestone but it is Firestone’s affiliates in Brazil and Argentina that expand with a view to integration. The growth of the Uruguayan plant is braked, applying the same criterion that determines that Olivetti, the Italian firm invaded by General Electric, will make its typewriters in Brazil and its calculating machines in Argentina. “The efficient assignment of resources requires an unequal development of the different parts of a country or region,” says Paul Rosenstein-Rodan, and an integrated Latin America will also have its Northeasts and its poles of development.85 Weighing the eight years of life of the Montevideo Treaty which sparked LAFTA, the Uruguayan delegate said that “differences in degrees of development” between the various countries “tend to sharpen,” for the mere increase of trade in an interchange of reciprocal concessions can only augment the previously existing inequality between privileged poles and submerged areas. The Paraguayan ambassador made a similar complaint: absurdly, he said, the weak countries were subsidizing the industrial development of the free trade zone’s most advanced countries, absorbing their high internal costs through customs exemptions. He added that the deterioration of the terms of trade punished his country as severely within LAFTA as outside it: “For every ton of products imported from the zone, Paraguay pays with two.” The reality, said the spokesman for Ecuador, was that of “eleven countries in different degrees of development, which means greater or lesser capacities to take advantage of the free trade area and leads to polarization of the benefits and handicaps.” The Colombian ambassador drew “just one conclusion: the program of liberation benefits the three big countries in conspicuous disproportion.”86 * As integration proceeds, the small countries will be renouncing their customs income—which in Paraguay finances nearly half the national budget—in exchange for the doubtful advantage of receiving, for example, cars from São Paulo, Buenos Aires, or Mexico made by the same firms that sell them from Detroit, Wolfsburg, or Milan at half the price.† This is the solid fact beneath the frictions increasingly provoked by the integration process. The successful emergence of the Andean Pact, bringing together the Pacific nations, is one result of the three big countries’ visible hegemony in the broader framework of LAFTA: the small countries propose to unite separately.

  * Integration as a simple process of reducing trade barriers will maintain “highly developed enclaves within a generally depressed continent,” according to the director of UNCTAD.87

  † The auto industry is 100 percent foreign in Brazil and Argentina, and mainly foreign in Mexico.88

  But despite all the problems, thorny as they may appear, the markets expand as the satellites keep bringing new satellites into their orbit of dependent power. Under the Castelo Branco dictatorship, Brazil signed an agreement guaranteeing foreign investments which saddles the state with the risks and handicaps of each business deal. Significantly, the official who arranged the agreement defended its humiliating conditions before Congress with the statement that “in the near future Brazil will be investing capital in Bolivi
a, Paraguay, or Chile and will then need agreements of this type.”89 ** In the Brazilian governments following the coup d’état of 1964, a tendency has in fact developed to assign to Brazil a “sub-imperialist” function vis-à-vis its neighbors. A very influential military clique pictures the country as the great administrator of U.S. interests in the region, and calls on Brazil to become the same sort of boss over the south as the United States is over Brazil itself. In this connection, General Golbery do Couto e Silva has invoked a new “manifest destiny”: “All the more so,” wrote this ideologue of “subimperialism” in 1952, “when our manifest destiny does not conflict in the Caribbean with that of our northern elder brothers. …” The General is now chairman of Dow Chemical in Brazil. Certainly the desired subdominion structure has plentiful historical antecedents, from the annihilation of Paraguay on behalf of British bankers after the war of 1865 to the sending of Brazilian troops, just a century later, to head the solidarity operation when U.S. Marines invaded Santo Domingo.