imperialism and populism in latin america: the case of peru 1968-75

by David Broder

For many mainstream commentators, the clashes following the coup against soft-left Honduran president Manuel Zelaya fit into the usual analysis of a continent-wide battle between pro-US conservative parties and a radical “pink tide”.  It is indeed striking how prominently supporters of the Honduran military coup allege interference in the country by Venezuelan leader Hugo Chávez, a theme also particularly commonplace in the political discourse of the right in Nicaragua, Ecuador and Bolivia. The Times[1] this week approvingly quoted one observer to the effect that “Chávism versus anti-Chávism is a new version of Communism versus anti-Communism”.

However, while the Venezuelan president is evidently an influential and controversial figure and the focus of much attention, we must go beyond the typical media epithets about his personality – ‘firebrand’, ‘outspoken’, and so on – and ask: what dynamics and social forces do these conflicts represent? Why has Chávism and anti-Chávism generalized across Latin America, how irreconcilable are the divisions, and to what extent are these questions of anti-imperialism and class struggle?

To understand what is taking place, it is important to contextualize the supposed “pink tide” led by Chávez in the history of Latin America, and in particular the continent’s many examples of ‘populist’ governments with supposedly ‘anti-imperialist’ and statist agendas. This article looks in particular at the case of the ‘Revolutionary Government of the Armed Forces’, which governed Peru from 1968 to 1975.

Peru’s Revolutionary Government

The Peruvian colonels came to power amidst a period of significant change in US imperialism[2]’s relationship to Latin American countries, almost all of whom had won their independence from Spain (in Brazil’s case, Portugal) in the 1810s-20s. Broadly speaking, the traditional relationship of foreign capital to the continent had been one of “enclaves” of imperialist control of enterprises autonomous from the local ruling class, focused on extracting primary resources such as in the agricultural, mining and oil sectors and based on steeply unequal balance of trade. The 1960s industrialization process demanded state machines play an increasingly important role in building infrastructure and laying the foundations for ‘modernisation’, with US imperialism changing its mechanisms of domination from simple resource-plundering to more complex integration with ‘local’ ruling classes’ development projects and efforts to become ‘equal partners’ rather than simply subordinate agents of US policy . Although not identical, to a certain degree some of the same realignments are being attempted today (where the primary development is certain states’ backtracking from the full-on IMF-backed neo-liberal reforms which characterized the 1990s).

The Peruvian economy was a typical example of this developmentalist dynamic, while the 1968 coup d’état in Lima against centrist president Fernando Belaúnde and the end of civilian rule also ensured the ‘Revolutionary Government’s’ credentials as one of the military juntas presiding across most of the continent. However, the manner in which the Peruvian colonels – led by President General Juan Velasco Alvarado – went about reforming the economy and their relationship with US imperialism, as well as how they presented their actions and how they were received by the left and workers’ movement, is what makes Peru a particularly interesting case study from today’s standpoint.

After its 1968 seizure of power the new régime took sweeping measures to reorganize the economy in its so-called Peruvianisation programme: the ‘revolution’ was to be both anti-capitalist and non-communist but would build a ‘nationalist’, ‘humanist’ and ‘communitarian’ social order. The régime was not afraid to violate the rights to private property even of multinationals, for example the military occupation of the La Brea and Pariñas installations of the International Petroleum Company (a subsidiary of Standard Oil) and the expulsion of the company from the country without compensation; and the expropriation of the British-owned sugar cane plantations of WR Grace & Co..

An April 1970 speech by the president outlined terms whereby all multinational investments would have to proceed via contracts with the Revolutionary Government under strict terms. Contracts would last for a fifteen to twenty-year period, with foreign capital typically limited to 30% of investment in an enterprise and the state taking the bulk of control (less so in the case of supplementary private domestic investment) and then winning full ownership of the company upon the expiry of the contract.

Co-management and ‘Industrial Committees’

Moreover, any workplace with six or more employees (or smaller firms with an annual gross income of at least one million soles) was governed by a corporatist Industrial Committee (IC) whereby all of the personnel – whether managers or employees – were represented on boards in a co-management system. In such cases a full 50% of stock in the firm would be made available to the workforce to buy, each of them as individual shareholders. The IC system also forced companies to reinvest profits (the first 15% tax free), and as with the restrictions on the major landowners, the state sought to force the pace of development by promoting new industries and technological innovation as against the rather more lethargic traditional oligarchic families. Furthermore, since such a ‘nationalist’ system of redistributing ownership supposedly tended to the abolition of classes, workers now became ‘owners’ in their ‘co-operatives’, with the spin that the shares allocated to each ‘worker’ (including management) were tied to their existing salaries.

State interventionism coupled with these elements of ‘workers’ participation’ in management had the clear objective of co-opting the labour movement into the heart of the capitalist apparatus and to muzzle the working class by tying them in to responsibility for profitability. For that very reason, the flip side of ‘co-management’ and the ICs was repression: while the trade union leaderships welcomed the ICs, as did the Peruvian Communist Party, in the agro-industrial co-operatives the unions were abolished and collective bargaining outlawed. There was supposedly no need for workers to organise to defend themselves from their employer, when they themselves were among the ‘co-managers’. The result was that despite sustained high growth rates the state in fact pressured wages downwards relative to inflation – this at the same time as Velasco was denouncing imperialism “sucking money out of our country”, as Quijano explained in 1971[3]:

“The workers of Talara did not get the 25 percent wage increase they demanded and were obliged to accept the mere 12 percent proposed by [state energy controller] PETROPERU, with no pay for days not worked. The workers in factories which closed down did not win any of their demands. The mining workers, too, got only the increases offered by the imperialist Toquepala, Cerro de Pasco, and Marcona companies, and other smaller ones. In all these cases of demands for higher wages the regime argues that the cost of living went up only 5.6 percent in 1970 and that wage increases above this percentage are not justified. It should be remembered, however, that this 5.6 percent comes on top of the rise in the cost of living between 1967 and 1969, and that workers have had their wages practically frozen during all these years, since the only wage increase allowed during this period was a 1969 increase of 10 percent over the 1966 level.”

The workers supposedly represented on ICs and in control thanks to their co-operative status proved to have little opportunity to use such channels to assert their interests, since effectively they operated similarly to any company reacting to market imperatives and with traditional capitalist hierarchy in the workplace and wage differentials kept in force. Such participation and taking responsibility for someone else’s profits is much unlike workers’ control, whereby workers are able to veto management decisions by asserting their strength on the shop-floor, and still less akin to workers’ self-management, when individual workplaces and communities are run collectively with no state apparatus, market relations or managers. The Peruvian experience made clear that the state was not a ‘neutral’ arbiter of relations between the American mining companies and Italian banks and the working class in a ‘humanist’ economy, but in fact was firmly on the side of the former. Precisely the goal of the state-capitalist measures undertaken by the régime was to rationalize the economy to allow more efficient imperialist penetration, state capital and state power guaranteeing profitability in general. The Revolutionary Government’s apparently daring measures to expropriate certain elements of the bourgeoisie in no way implied affinity with the working class or opposition to capitalism.

At this point we might digress and note that the Peruvian colonels’ clever attempt to identify the interests of the working class with that of the benevolent ‘revolutionary’ state machine was far from unique. It has been also been a hallmark of state socialism from the stage in the Russian revolution where it was determined that the working class needed no defence from ‘their’ state and thus no organizing rights were necessary (Lenin’s opposition to Trotsky’s very explicit position on this score in the 1920 ‘trade union debate’ was rather at odds with what had already happened to the factory committees) through to Hugo Chávez’s Venezuela, where another ‘co-operative system’ plays the same role, as Charles Reeve discussed with El Libertario[4]:

“C.R. – Now let’s talk about the co-operatives movement. A Venezuelan friend said that the government’s cooperatives movement, in the last analysis, amounts to a sort of institutionalisation of labour precarity and black market work. He mentioned the recent (2007) strike by dustmen in part of Caracas, during which the strikers asked for Barreto, mayor of Caracas, to intervene – he who quotes Foucault and invited Toni Negri over. The mayor told them that he could do nothing, since they had accepted the transformation of the old company into a co-operative. Which meant that there was no collective bargaining, since the workers were considered to be associates of the co-operative on the same level as the administrators!

“M. – Of course, we have a totally different idea of cooperatives. For us, a co-operative is an initiative which comes from below. For the Chavistas, on the contrary, enterprises in what they now call the “social economy sector” must operate in the form of state-aided cooperatives. Every day people start organising cooperatives – people who are totally foreign to the spirit and practice of co-operativism… because it is the quickest way of getting contracts and state credit! In many industries the law obliges the state to give priority of tenders to “co-operatives” above private enterprises. So many malign people have started creating cooperatives in order to win contracts with government bodies. That was the case with the public roads initiative. A private enterprise was thus transformed into a co-operative to win the tender, and at a stroke the workers lost all their rights and bonuses. They now have three-month renewable contracts, such that the “co-operativist” (in reality, the new name for the boss!) has no duties towards them. Thanks to this lie, after a few months it could be said that there were 200,000 co-operatives… All this in order to make propaganda showing that society has changed. But it is all artificial, created by decree.

“I. – I would add that, after the oil workers’ strike, the government learned that it had to control the world of work. First it explained that the state would create a new form of organisation based on solidarity and where all workers would benefit from the same privileges. The co-operatives! At a stroke the government broke the services contracts it had with private companies (particularly for cleaning), which by law had to pay workers ‘social bonuses’. The workers were laid off and forced to seek temporary work with these co-operatives now dealing with the state. They lost the bonuses and rights which they had previously (in theory at least) had. Moreover, many of these co-operatives disappeared as soon as they were created. So we are witnessing, as your friend is right to emphasise, the casualisation of work.”

State capitalism and development

Indeed, in the summer 1971 edition of  Monthly Review referred to above, devoted entirely to Peru, Quijano’s study basically asserts that the populist and left-nationalist rhetoric used to generate support for ‘Peruvianisation’ was shallow, with the régime not even following a consistent course of taking over multinational interests: the ‘Peruvianisation’ of the wholly-foreign-owned car industry, which saw price controls and restrictions on importing locally available materials, along with the new structures of finance via the establishment of state holding firm COFIDE, could not and did not seek to actually push back imperialist ownership as such but all the better to integrate it with state capital while modernizing industry. The Peruvian colonels were ‘anti-imperialist’ only in the sense that they wanted to establish a more equal status in partnership with US capital rather than serve as its direct agents.

Some Trotskyists in Latin America might criticize such leaders, as well as the likes of Chávez in Venezuela or Evo Morales in Bolivia for ‘not going far enough’ – being reticent or unwilling to carry through ‘the revolution’ to its full course, they vacillate and accommodate to imperialist interests, and have to be pushed further. This type of analysis of left nationalists as an ally who need to be pressured along (as put into action with disastrous effect by the mass Partido Obrero Revolucionario in the 1952 Bolivian revolution) has two central flaws conceptually speaking. Firstly, we would of course object to any notion that the state machine can implement socialism from above given sufficient determination to carry out a reform process, an idea clearly counterposed to the working class overthrowing the state apparatus via their own self-activity (to which many such left nationalists are overtly hostile). Secondly, it misunderstands the project of the partisans of statified capitalism, which is not a ‘mistaken’ or ‘misdirected’ attempt to abolish capitalism but rather to rationalize and re-organise it in the interests of different sectors (e.g. the prioritization of light industry as against agriculture under Velasco), combat underdevelopment and to support domestic capital, even if these things may cause some degree of antagonism with US capital.

Surely, however, when we say that state capitalism in Latin America in fact rationalizes investment and develops infrastructure for the sake of serving the interests of capital in general, this merely begs the question: why is it so polarizing, and why does it provoke such strife within the bourgeoisie itself? If the nationalization of most of the Chilean economy by Salvador Allende in 1970-73 only had the intention of better organizing the exploitation of the working class, or if the Peruvian colonels were laying the basis for greater profitability (and if Chávez, Morales, Zelaya and Correa are doing the same today), why such strong opposition from the majority of the capitalist class? Why did it take so long for ‘ordinary’ parliamentary-civilian rule to stabilize in almost every country in Latin America, and why does that seem under threat today?

Clearly underlying class relations in a country like Peru is the importance of foreign investment and imbalance of trade, the dependence of the whole economy on the United States (including the orientation of production and technology to the demands of western capital) and therefore a relatively small, super-rich and ‘outward-facing’ domestic bourgeoisie desperate to hold onto an alliance which guarantees its own privileges and at the same time subordinates the interests of the national economy’s development to those of imperialist exploitation. Although there is a ‘local’ bourgeoisie with different objectives than the working class, it appears that across the 19th and 20th centuries underdevelopment has been the direct product of the domination of foreign capital:

“In Latin America, the international monopoly corporation uses [its] technology to compete with and eliminate or absorb local rivals, who lack the funds or suppliers to buy, or cannot get import licences for similar equipment… The international corporation which controls this technology thus increases its monopoly power over its Latin American associates in their common mixed firms, over its Latin American rivals in other firms, and over the Latin American economy in general. In the latter, as a result, the capital/labour ratio rises, excess capacity grows, and the general wage level declines. Fore these reasons and because this foreign investment has a largely foreign multiplier and does not increase domestic purchasing power correspondingly, periodic over-investment crises become more frequent and prolonged, while cyclical and structural unemployment increases in Latin America.”[5]

Of course, this is not uniformly the case on the continent, particular in the wealthier south. Chile until 1973 was a longstanding bastion of parliamentary democracy, “from the beginning the republic was ruled by a domestic ruling class, that of the great conservative landowners like Portales and then the industrial bourgeoisie from Manuel Montt onwards. A country of mining enclaves, Chile was nonetheless ruled by a united ruling class with a strong capacity for integration. By the early 20th century the separation between finance and rural capital had almost disappeared.”[6]

For the most part, however, the local ruling classes in the region are highly vulnerable both to struggle by an immiserated working class with no stake in the dependent bourgeoisie’s profits, and to crises in the world’s main capitalist centres. For their part, state capitalists prioritise economic development, seeking to build ‘national unity’ and blunt class antagonisms by sinking roots in society for domestic capital. But an effort to rationalize ‘ordinary’ ‘national’ class relations would mean curbing the monopoly of power belonging to oligarchs and the dependent ruling class. Although such a path may assist capital accumulation in general terms, the old oligarchic families are forced to confront the would-be state capitalist ruling class for fear of not being integrated into the new order.

Nationalist movements in Latin America who set themselves against oligarchs and US imperialism – or ‘populists’ – have long been able to find support among the working class and peasantry but also significant sections of the administrative and professional middle class and the non-dependent ‘national’ bourgeoisie’. Because they rest on more than one class force, such régimes talk out of both sides of their mouth, insisting on their ability to manage capitalism (we need only recall Chávez’s “I will deactivate the bomb of revolution” speech[7]) at the same time as denouncing imperialists and oligarchs. They do however have a contradictory relationship with the workers’ movement: breaking down the old state apparatus and economic hierarchies, and indeed splits in the military, may rouse the working class into more assertive action, as has undoubtedly taken place in Venezuela since the defeat of the 2002 coup against Chávez. Moreover, for want of the support of a socially weighty domestic ruling class, such ‘populists’ may desire to harness the strength of the working class via co-option of trade unions and leftist rhetoric. Zelaya, upon coming to power in Honduras 2005 – much like Chávez in Venezuela in 1999 – was a Third Way centrist, and yet thanks to the vociferous opposition of much of the traditional ruling class, was pushed to the left. Zelaya, leader of the long-standing major conservative force, the Partido Liberal, was faced with crisis as oil prices soared and the IMF exerted pressure, and therefore he adopted a ‘populist’ course:

“…a classic situation started to come about: a bourgeois government, which is opposed by the majority of the bourgeoisie, tries to survive on the basis of mass-movement support. In Honduras the rise of struggles led by the [Coordinadora Nacional de Resistencia Popular] gave substance to this option.

“This “left turn”, seeking support among the mass movement, was done without making significant material concessions to the working class or peasantry. Beyond small increases in the minimum wage, suspension of water privatisation and other small concessions, Mel [Zelaya’s] populist turn was more a matter of speeches, embracing Chávez and the Castro brothers and meetings with the CNRP.”[8]

Ultimately, the aforementioned behaviour towards the working class of Peruvian Revolutionary Government type régimes and machine politicians pushed to the left, like Chávez and Zelaya, is not substantially different to those populists with origins in the traditional left – like Salvador Allende in Chile, 1970-73 or Evo Morales today. In each one of these cases the government at once tries to elicit mass support and mobilisation and at yet at the same time effectively smother working-class forces with integration into the state and the breaking up autonomous movements which go too far. Throughout his rule Allende repeatedly attempted to broker compromise with the military, bringing numerous officers into his cabinet and sending soldiers into factories and poor barrios in weapons raids to stop revolutionary organization on the part of the working class, which culminated in a right-wing coup. In August 2008, at the same time as the Bolivian oligarchy’s forces were marching through the streets of provinces like Beni, Pando and Santa Cruz in an effort to split the country in two and re-establish their cosy relations with western energy firms, Evo Morales, proclaiming the need for national unity, sent police to break up miners’ picket lines near Oruro as evidence of his ability to keep the working class in line (he calls his desired system ‘Andean capitalism’).

Such opposition to revolutionary working-class struggle is not in itself a sufficient guarantee of the stability of any given government, since the ruling class is sharply differentiated amongst itself. Other elements of the ruling class may well be wary of moves which create space for the workers’ movement or threaten alliance with US capital even if they are not anti-capitalist as such; as we have seen, that in no way implies that the working class has a particular interest in supporting the ‘left-nationalist’ section of the ruling class or that it can use state channels to advance resistance to capitalist austerity.

Conclusion

Populism in Latin America has continually re-emerged, expressing the desire of certain local ruling classes to build ‘national’ economic development and lessen dependence on US imperialism and also relying for support on its perceived resistance to the traditional structures of capitalist rule. In certain ways the struggle between state capitalists basing themselves on popular movements hostile to oligarchs and US imperialism, and traditional conservative forces has in some countries appeared to substitute itself for direct struggle between classes with clearly delineated interests. For want of an ‘independent’ domestic bourgeoisie class lines can be blurred and left nationalists are able to position themselves as if advocates of the masses, whether from a traditional left background, forced to seek working-class support by the resistance of oligarchs or determined agents of state-capitalist development. Superfically radical measures may thus be taken to restrict the power of certain elements of the bourgeoisie. Yet it is clear that whatever the importance of ‘populism’ in the context of a Latin America dominated by foreign capital, it is illusory to believe that the working class can develop its own fight for socialism via alliance with such forces: in fact, to back state-capitalist development is precisely to support the project with the strongest strategy for rationalizing the rule of the domestic bourgeoisie and battening down the hatches of class struggle.

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[1] ‘Cold War fears sparked by Venezuelan diplomats’ stand-off in Honduras’, The Times, 23^rd July 2009

[2] The United States of America had been the dominant power in its ‘backyard’ ever since the 19th century collapse of Spanish colonialism – culminating in the 1898 Spanish-American War – and to a certain extent, thanks to the early 20^th century decline of the long-time British influence over Argentina and Chile. It was also the case that this period saw re-emerging European interests in much of the continent, as well as the rise of Japanese finance projects, and therefore a “multi-lateralisation” of foreign investment.

[3] Aníbal Quijano, ‘Nationalism and capitalism in Peru’, Monthly Review July-August 1971, p. 113

[4] ‘Charles Reeve interviews El Libertario’, The revolution delayed: a decade of Hugo Chávez, The Commune, February 2009, pp. 13-15

[5] Capitalism and underdevelopment in Latin America, Andre Gunder Frank, Pelican, London, 1973, pp. 332-333

[6] Vie et Mort du Chili Populaire, Alain Touraine, Seuil, Paris, 1973, pp. 64-65

[7] “I said this before becoming president: Venezuela is a kind of bomb. We are going to begin to deactivate the mechanism of that bomb. And today, it’s not that it is totally deactivated, but I am sure that it is much less likely that this bomb will explode today.” – Hugo Chávez speaking to a conference of US and Venezuelan business leaders, 2005

[8]‘¡Movilización de masas hasta derrotar a “Pinocheletti”!’, Roberto Ramírez, http://socialismo-o-barbarie.org/centroamerica_y_caribe/090702_entre_consolidacion_y_rebelion.htm