Thus for the corporations’ greater glory their subsidiaries dispose of the scanty foreign currency of the Latin American countries. The operating plan of satellized industry does not differ much from the traditional system of imperialist exploitation of raw materials. Antonio García maintains that “Colombian” export of crude petroleum has in fact always been the physical transfer of crude oil from a U.S. oil field to refining, marketing, and consumption centers in the United States, and “Honduran” or “Guatemalan” banana export has been a transfer by U.S. companies from certain colonial plantations to certain U.S. marketing and consumption areas.60 But the “Argentine,” “Brazilian,” and “Mexican” factories—to mention only the most important—also occupy an economic space that has nothing to do with their geographical location. Along with many other threads, they make up an international web of corporations whose head offices transfer profits from one country to another, invoicing sales above or below the real prices according to the direction in which they want the profits to flow.* The mainsprings of external trade thus remain in the hands of U.S. or European concerns, which orient the countries’ trade policies according to the criteria of governments and directorates outside Latin America. Just as U.S. affiliates do not export copper to the USSR, nor sell oil to Cuba, neither do they get raw materials and machinery from the cheapest and most convenient sources.
* The mechanism is certainly not new. The Anglo meatpacking plant has always run at a loss in Uruguay in order to get subsidies from the state and pyramid the profits of its 6,000 London butcher shops, where each pound of Uruguayan meat sells for four times the price at which Uruguay exports it.61
This efficient coordination of global activities, completely outside of any “free play of market forces,” is not of course translated into lower prices for local consumers, but into profits for foreign shareholders. The auto industry is a graphic example. Latin American countries offer an abundant and extremely cheap labor force and an official policy in every way favoring expansion of investments—free gifts of land, privileged electricity rates, state rediscounts to finance sales on credit, easily accessible money; and as if this were not enough, some countries have even exempted the companies from income or sales taxes. Control of the market is further facilitated in advance by the magical prestige attached, in the eyes of the middle classes, to makes and models promoted by global publicity campaigns. Yet far from making Latin American-produced cars cheaper than those produced in the companies’ home countries, all these factors make them far more expensive. True, Latin American markets are much smaller; but it is also true that in these countries the corporations’ appetite for profits is more leonine than anywhere else. A Ford Falcon made in Latin America costs three times as much as in the United States,62 an Argentine-made Valiant or Fiat more than double its price in the United States or in Italy,63 and the same goes for the relation between the Brazilian Volkswagen and its price tag in Germany.64
THE GODDESS TECHNOLOGY DOESN’T SPEAK SPANISH
Congressman Wright Patman considers that 5 percent of the shares in a big corporation can often suffice for an individual, family, or economic group to control it.65 If 5 percent is enough to control one of the United States’ mighty enterprises, what percentage is needed to dominate a Latin American enterprise? In fact, it can be done with less: the “mixed” company, one of the few remaining objects of pride for the Latin American bourgeoisie, merely adorns foreign power with a national capital participation that may constitute the majority but is never decisive over the foreign elements. Often the state itself goes into partnership with an imperialist enterprise which, thus transformed into a “national” concern, gets all the desirable guarantees and a cooperative—even an affectionate—climate. The “minority” participation of foreign capital is usually justified by the need for technical and patent transfers. The Latin American bourgeoisie, a bourgeoisie of merchants lacking any creative character, umbilically tied to the power of the land, prostrates itself before the goddess technology. If foreign shareholdings (however small) and technological dependence (rarely small) are evidence of denationalization, how many factories can really be considered national in Latin America? In Mexico, for example, foreign owners of the technology often demand shares in an enterprise, in addition to decisive technical and administrative controls, the sale of the product to specific foreign middlemen, and the importation of machinery and other goods from their head offices, in return for contracts to transmit patents or “know-how.”66 And not only in Mexico. Countries of the so-called Andean Group (Bolivia, Colombia, Chile, Ecuador, and Peru) have worked out a plan for common treatment of foreign capital in the area, stressing rejection of technology-transfer contracts that contain such clauses. But to countries that will not accept the plan, it proposes that foreign concerns holding patents should fix the prices of products resulting from the patents, or ban their export to specific areas.
The first system of patents to protect ownership of inventions was created almost four centuries ago by Sir Francis Bacon. Bacon liked to remark that “Knowledge is power,” and it has since become clear how right he was. There is little universality in scientific universals; objectively they are confined within the frontiers of the advanced nations. Latin America does not apply the results of scientific research to its own advantage for the simple reason that it has none; consequently it is condemned to suffer the technology of the powerful, which attacks and removes natural raw materials, and is incapable of creating its own technology to sustain and defend its own development. The transplantation of the advanced countries’ technology not only involves cultural—and, most definitely, economic—subordination. It has also been shown, after four and a half centuries’ experience of proliferating modernized oases amid deserts of backwardness and ignorance, to resolve none of the problems of underdevelopment. This vast region of illiterates invests 200 times less than the United States invests in technological research. There are less than 1,000 computers in Latin America and 50,000 in the United States; the electronic models and programming languages that Latin America imports are, of course, designed and created in the United States. Latin American underdevelopment is not a stage on the road to development, but the counterpart of development elsewhere; the region “progresses” without freeing itself from the structure of its backwardness and, as Manuel Sadosky points out, the “advantage” of not participating in progress with its own programs and goals is illusory.67 * The symbols of prosperity are symbols of dependence. Modern technology is received as railroads were received in the past century, at the service of foreign interests which model and remodel the colonial status of these countries. “What happens to us is what happens to a watch that loses time and is not regulated,” Sadosky writes. “Although its hands continue moving forward, the difference grows between the time it shows and the real time.”
* To illustrate the nature of the developmental illusion, Sadosky cites the testimony of an OAS specialist: ’“The underdeveloped countries,’ says George Landau, ’have some advantages over developed countries because when they introduce some new process or technique they usually select the most advanced of its type, and thus reap the benefit of years of investigation and the fruit of considerable investments that more industrialized countries had to make to achieve those results.’”
On a small scale, Latin American universities turn out mathematicians, engineers, and programmers who can only find work in exile: we give ourselves the luxury of providing the United States with our best technicians and ablest scientists, who are lured to emigrate by the high salaries and broad research possibilities available in the north. At the same time, whenever a Latin American university or center of higher learning tries to stimulate the basic sciences, to lay the foundations for a technology that is not copied from foreign patterns and interests, a timely coup d’état destroys the experiment on the pretext that it is an incubator of subversion. The University of Brasilia, crushed in 1964, was an example of this. And the truth is that
the armor-plated archangels who guard the established order are not mistaken: an autonomous cultural policy, when it is genuine, requires and promotes deep changes in all existing structures.
The alternative is to depend on foreign sources: to imitate, apelike, the advances spread by the great corporations, which monopolize the most modern techniques of creating new products and improving the quality or reducing the cost of existing ones. The electronic brain has infallible methods of calculating costs and profits, and thus Latin America imports production techniques designed to economize on labor, although it has labor to spare and in several countries the unemployed may soon be the overwhelming majority. And thus our own impotence puts the progress of the region at the will or whim of foreign investors. For obvious reasons, control of the technological levers gives the multinational corporations a hold on other decisive levers of our economy. The head offices never, of course, give their affiliates the latest innovations or promote an independence which would not suit them. A survey made by Business International for the IDB concluded that “clearly the subsidiaries of international corporations operating in the region make no significant efforts in the direction of ’research and development.’ In fact, most of them lack any department for this purpose and only in very rare cases take on the job of technical adaptation, while another small minority of enterprises—almost invariably located in Argentina, Brazil, and Mexico—undertake modest research activities.”68 Raúl Prebisch notes that “U.S. enterprises in Europe install laboratories and undertake research which helps strengthen the scientific and technical capacity of those countries, something that has not happened in Latin America,” and makes a very serious point: “For lack of specialized knowledge (’know-how’) on the part of national entrepreneurs, most of the transferred technology consists of techniques that are in the public domain but are licensed as specialized knowledge.”69
Technological dependence costs dearly in more ways than one: in hard-cash dollars, for instance, although the companies’ versatile sleight-of-hand in declaring their remittances abroad makes the amount hard to estimate. Official figures nevertheless indicate that the dollar drain for technical aid to Mexico rose fifteen-fold between 1950 and 1964, while in the same period new investments were not even doubled. Three-quarters of the foreign capital in Mexico today is in manufacturing industry, a rise from one-quarter in 1950. This concentration of resources in industry implies only a reflected modernization, using second-hand technology, for which the country pays as if it were the very latest. The auto industry has drained $1 billion from Mexico in one way or another, but a United Auto Workers leader wrote after touring the new General Motors in Toluca: “It was worse than archaic. Worse, because it was deliberately archaic, with the obsolescence carefully built in.… Mexico’s plants are deliberately equipped with low-production machinery.”70 * What should we say of the gratitude Latin America owes to Coca-Cola and Pepsi, which collect astronomical industrial licensing fees from their concessionaries for providing them with a paste that dissolves in water and is mixed with sugar and carbonation?
* The foreign affiliates are, however, far more modern than the national enterprises. For example, in the textile industry—one of the last bastions of national capital—the degree of automation is abysmally low. According to ECLA reports, in 1962 and 1963 four European countries invested six times more in new equipment for their textile industries than all of Latin America invested for that purpose in 1964.
SURPLUS PEOPLE, SURPLUS REGIONS
“Grow with Brazil.” Display ads in New York newspapers exhort U.S. businessmen to join the precipitous growth of the giant of the tropics. The city of São Paulo sleeps with its eyes open. The din of development shatters its eardrums; factories and skyscrapers, bridges and highways, sprout with the suddenness of tropical plants. But if accuracy had a place in publicity, the slogan would be: “Grow at the expense of Brazil.” Despite its deceptive splendors, this development is a banquet to which few are invited and whose main dishes are reserved for foreign stomachs. Brazil already had 90 million inhabitants and will double that number by the end of the century, but its modern factories economize on labor and, in the hinterland, the intact latifundio is no more promising a source of jobs. A small boy in rags gazes with shining eyes at the world’s longest tunnel, recently opened in Rio de Janeiro. The ragged boy is rightly proud of his country, but he is illiterate and steals in order to eat.
Throughout Latin America the invasion of foreign capital for manufacturing, received with so much enthusiasm, has sharpened the contrast between “classical models” of industrialization as described by the developed countries’ historians, and the process characteristic of our part of the world. The system vomits men, but in Latin America industry sacrifices labor more than it does in Europe. There is no coherent relation between the labor available and the technology applied, unless the convenience of using one of the world’s cheapest labor forces can be so described. Rich land, richer subsoil, poverty-stricken people, in this kingdom of abundance and dereliction: the legion of workers the system sweeps onto the roadside frustrates the development of an internal market and holds down the wage level. The perpetuation of the established landholding system not only aggravates the chronic problem of low rural productivity through waste of land and capital in large unproductive haciendas, and of labor in proliferating minifundios; it also involves a copious and increasing stream of unemployed workers toward the cities. Rural underemployment turns into urban underemployment. Bureaucracy grows, slums spread out as bottomless sewers for people robbed of the right to work. Factories cannot absorb the surplus labor, but the existence of this huge, always available reserve army keeps wages fifteen or twenty times lower than those of workers in the United States or Germany. Wages can remain low while productivity rises, and productivity rises at the expense of cuts in the labor force. The nature of “satellized” industrialization is to exclude: in this region with the highest demographic growth rate on earth, the masses multiply at dizzying speed but the development of dependent capitalism—a voyage with more shipwrecks than navigators—marks many more people “surplus” than it is able to use. The proportion of workers in manufacturing industry to Latin America’s active population falls rather than rises: in the 1950s, 14.5 percent were factory workers; today it is only 11.5 percent. In Brazil, according to a recent study, the total number of new jobs that need to be created will average 1.5 million a year during the next decade.71 Yet the total number of workers employed by factories in Brazil, Latin America’s most industrialized country, is barely 2.5 million.
A myriad of laborers flees the poorest areas of each country: the cities attract and cheat whole families with hopes of work, of a chance to better their condition, of a place in the magic circle of urban civilization. But hallucinations do not fill stomachs. The city makes the poor even poorer, cruelly confronting them with mirages of wealth to which they will never have access—cars, mansions, machines as powerful as God or the Devil—while denying them secure jobs, decent roofs over their heads, full plates on the midday dinner table. At least 25 percent of Latin American city populations, according to a United Nations estimate, live in “quarters that fall short of modern standards of urban construction”72—a technician’s lengthy euphemism for slums: the favelas of Rio de Janeiro, the callampas of Santiago de Chile, the jacales of Mexico, the barrios of Caracas, the barriadas of Lima, the villas miserias of Buenos Aires, and the cantegriles of Montevideo. In tin, mud, and board, hovel-colonies on the cities’ outskirts sprout new additions every night; the marginal populations drawn by poverty and hope keep piling up. Huaico means landslide in the Quechua language, and that is what Peruvians call the human avalanche let loose from the mountains upon the coastal capital: nearly 70 percent of Lima’s inhabitants come from the provinces. In Caracas they are called toderos because they do a bit of everything (todo). The surplus people get an occasional nibble at a job, or perform sordid or illegal tasks; they become servants, sell lemonad
e or what-have-you, get pick-and-shovel or bricklaying or electrical or sanitary or wall-painting odd-jobs, beg, steal, mind parked cars—available hands for whatever turns up. Since the human surplus grows faster than the “integrated” element, the United Nations survey foresees that within a few years “the makeshift camps will house the majority of the urban population.” The defeated will be the majority. Meanwhile, the system prefers to hide the dirt under the rug. It is clearing the favelas from the bay area and the villas miserias from the national capital at gunpoint, sweeping the human surplus out of sight by the thousands upon thousands. Rio de Janeiro and Buenos Aires conjure away the spectacle of the poverty the system produces: soon only the mastications of prosperity, but not its excrement, will be seen in these cities where the wealth created by all of Brazil and Argentina is squandered.
The international system of domination suffered by each country is reproduced within each. The concentration of industry in particular areas reflects the previous concentration of demand in the big ports or export zones. Eighty percent of Brazilian industry is located in the southeastern triangle—São Paulo, Rio de Janeiro, and Belo Horizonte—while the famished Northeast participates less and less in the national industrial product. Two-thirds of Argentine industry is in Buenos Aires and Rosario. Montevideo embraces three-quarters of Uruguayan industry, as do Santiago and Valparaíso in Chile. In Lima and its port is concentrated 60 percent of Peruvian industry.73 The growing relative backwardness of the great hinterlands, submerged in poverty, is not, as some maintain, due to their isolation, but on the contrary to direct or indirect exploitation by the old colonial centers now converted into industrial centers. According to an Argentine trade union leader: “A century and a half of our history has witnessed the violation of all the solidarity agreements, the breaking of the faith sworn in hymns and constitutions, the domination of the provinces by Buenos Aires. Armies and customs houses, laws made by few and endured by many, governments that with some exceptions have been agents of foreign powers, built this proud metropolis that accumulates wealth and power. But if we seek the explanation of that grandeur and the penalty of that pride, we will find it in the missionaries’ yerba mate plantations, in the dead communities of the Forestal Land, Timber, and Railways Company, in the despair of Tucumán sugarmills and Jujuy mines, in the abandoned ports of the Paraná, in the exodus from Berisso:* a whole map of misery surrounding a center of opulence secured by the exercise of an internal domination which can no longer be dissimulated or accepted.”74 In his study of the development of Brazilian underdevelopment, Andre Gunder Frank observed that while Brazil is a U.S. satellite, the Northeast plays internally the role of satellite to the “internal metropolis” located in the southeast. The polarization shows itself in numerous phenomena: not only in the concentration of the immense majority of private and public investments in São Paulo, but also in the city’s fraudulent appropriation—through unfavorable trade exchange, an arbitrary price policy, privileged internal tax scales, and a massive cornering of skilled brain and labor power—of capital generated in the whole country.
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