Nuevo Peru: NOTES AND MATERIALS ON CONTEMPORARY PERU (III, continuation b.)
We hereby share an article by Nuevo Peru.
Continuing with these notes or comments on the ECLAC (Economic Commission for Latin America and the Caribbean; translator’s note) report on FDI-20024, we will return later to for later the topic of the export of imperialist capital as “an apparent inflow of financing and in reality a great plunder” of our country (Voz Popular 1972, VP 1977).This is necessary to clarify some issues that appear in the long quote on the economic-productive profile of the country today:
First, it expresses the continuation of the old economic path of the development of bureaucratic capitalism, in its third phase or general crisis, in the semi-colonial and semi-feudal Peruvian society. The dynamics of the economic process in our country, as in other Latin American and Caribbean countries, in the 80s and 90s of the last century up to the present, has been driven by large imperialist companies (the so-called transnationals) and imperialist investment, to a greater extent than in all previous phases of our economy. This is summarized in the “Profile…” when it refers to the “primary export character” “oriented towards the global market” of the same and its lack of linkage with the overall economy: an “enclave economy,” which does not generate employment, etc.
The character of the Peruvian economy as a “primary exporter” is not new. This is not a “new productive structure,” as the author of the “Profile” believes, but rather just a variation in terms of who plays the main role in economic activity, whether it is the state enterprise and investment or singular company and investment. This process occurred in the 1980s and 1990s in our countries with the implementation of the imperialist economic policy known as “neoliberalism”, through which the state relinquished its role as the main driver of economic activity regarding investment and business activity, transferring it from the state to singular entities. What had been accumulated by the states over decades was “privatized”, leading to a greater process of dispossession of land and public properties and communities, resulting in “a process of migration without industrialization that harmed the countryside, (…) the predominance of informal employment over formal employment. In 2007, the informal employment rate was 79.9%, while formal employment was only 20.1%; a decade later, the variation is minimal: the informal employment rate is 72% and formal employment is 28%.”
What conclusion can we draw from what we have just said?
That not every process of dispossession of large masses of people from their traditional means of production and subsistence turns them into wage earners (proletarians), but rather into a miserable and hungry mass that has to resort to self-employment and other forms of survival, which is how bureaucratic capitalism unfolds based on semifeudalism and serving imperialism, as is the case in Peru and Latin America and the Caribbean. Similar cases have occurred many times throughout history. See, in this regard, Marx’s letter to the director of OTECESTVENNIYE ZAPISKY [Late 1877] in the annex, but here we quote the following from it:
“Thus events strikingly analogous but taking place in different historic surroundings led to totally different results. By studying each of these forms of evolution separately and then comparing them one can easily find the clue to this phenomenon, but one will never arrive there by the universal passport of a general historico-philosophical theory, the supreme virtue of which consists in being super-historical.”
The so-called deindustrialization is nothing other than, both in Peru and in other countries of our continent, the transition from an “industry” increasingly dependent on imperialism and foreign capital, based on the import of inputs, patented equipment and other intangible foreign assets to the direct import of manufactured goods without the almost always minimum percentage of “added value” of the country. Where the income from the export of primary goods is destined to the import of these manufactures. This determined the increase in the external debt and the so-called “debt crisis.” This means that the export of imperialist capital to our country and Latin America and the Caribbean (LAC) took one form with the so-called “industrialization” by import substitution and another with the “neoliberal” economic “reforms” of the last two decades of the last century until today. On the so-called “industrialization by import substitution” you can consult E. Anaya Franco in his work “Imperialism, industrialization and technology transfer in Peru”, cited in VP 1977, p. X and in the work of J.A. Torres Z. “Economic Structure of the Peruvian Industry”. Both refer to the fact that this industrialization process was driven by imperialist investments and the penetration and control of this process by imperialist companies and the process of direct control of the purchasing companies by foreign investment, which as cited in the “Profile” constitutes the foreignization of companies in Peru in the present century. Let us read the quote again:
“Another element that characterizes the PESER is that there is a strong foreign investment by transnational groups, which are becoming the majority in several companies. The economic elites are the extractive ones (mining, gas, electric energy and the logistic apparatus linked to the export and industrial sector) and the banking sector. The most important bank, the Banco de Crédito del Perú, has as its main shareholder Crefast, a North American investment fund, with more than 50%; pension funds (AFPs) have 12% of the shares, and 24% is in the hands of a Panamanian offshore company. Meanwhile, the Romero family holds a small percentage of shares. The economy has become foreignized ‘through direct investments by Repsol, Yanacocha, etc. Or through the purchase of shares in Peruvian companies such as Graña y Montero, Ferreyros, Intercorp. The emerging groups have more control over their property because they are very reluctant to sell shares on the stock market. They know what will happen to them’ (Durand, 2017). (…) they have been generating monopolies and oligopolies in various sectors. This has made it vulnerable to the ups and downs of international trade, giving rise to enclave economies with little internal connection, and generating scarce employment or low-productivity jobs.”
Result: our economy is more dependent on the needs of imperialism (world market), consequently greater backwardness in the economy as a whole and greater plundering and exploitation of the four classes that make up the people in the democratic revolution, and has not led to capitalist economic development as the revisionist and capitulationist ROL says, a historical and political impossibility, because what develops on the semi-colonial and semi-feudal basis is bureaucratic capitalism as the dominant path that imperialism imposes in our countries.
And, we repeat, what the author of the “Profile” says in academic terms: “This has made it vulnerable to the ups and downs of international trade, giving rise to enclave economies with little internal connection, and generating scarce employment or low-productivity jobs.” As has already been said, “it doesn’t rain either up or down.”
This determines an economy that they call “rentier,”, meaning that the income generated by the export of natural resources has not been destined to change the productive orientation; on the contrary, they resort to the import of goods such as machinery and equipment for these “extractive activities” in these “enclave economies” and non-productive consumer goods.
This “modern sector” (directly from the imperialist companies or from their agents from the big local bourgeoisie) therefore does not serve the development of the national economy, because its exchange with the other sectors of the economy is minimal, because its machinery and equipment, knowledge, comes from the imperialist countries and only employs 1.5% of the economically active population (EAP), which is 16 million. Most of its super profits are exported and its new investments in machinery and equipment are to import them. That is to say, it does not have a great “multiplier factor in the economy” or, as it is also often said, it does not rain either up or down.
The large companies of imperialism or of the big local bourgeoisie, at its service, is the one that dominates primary exports, while the medium-sized or national companies constitute the so-called modern sector of the economy, the rest belongs in its vast majority to the pre-capitalist economy (semi-feudalism). The ECLAC reports themselves confirm this, as we read in the prologue of a study by the director of the institution at that time, which says:
“(Regarding sustained growth and the UN Agenda 2030) Micro, small and medium-sized enterprises (MSMEs) cannot be left out of this process. Furthermore, their weight in the productive fabric (99% of formal Latin American companies are MSMEs) and in employment (61% of formal employment is generated by companies of that size) makes them a central actor (…)”.
Hence, 99% of formal companies are micro, small and medium-sized, therefore, without counting companies in the informal sector. Formal MSMEs provide employment for 61% of formal employment, so 39% of formal employment is shared between large companies and the State. In the case of Peru, formal employment varies between 28 and 22%, if we take into account that informal employment went from 78% to 72% of the EAP in the last two decades. Most of the employment in formal micro and small businesses is self-employment and the absolute majority of informal employment is self-employment. These are important data for understanding the social relations of production in the country (pre-capitalist = semi-feudal).
And to characterize their function within the economy, he also says:
“In many aspects, Latin American MSMEs still present, with limited exceptions, the weaknesses and fragilities that have characterized them for decades: they continue to be on the margins of the most dynamic markets and their contribution to exports remains extremely limited; they participate marginally in more dynamic productive relations with large companies, and they rarely integrate into associative models with other companies to generate economies of scale and collective goods. Likewise, they fail to accelerate their innovation process and production processes, continuing to operate with obsolete or minimally productive technology.
All of this results in poor performance of MSMEs, whose most significant indicator is the persistence of a large gap in labor productivity compared to large companies (…)” (MSMEs in Latin America: fragile performance and new challenges…, ECLAC, Santiago 2020, with a foreword by Alicia Bárcena).
This part of the quote is important, because it expresses that most of the country’s companies are still backward and “backwardness is semi-feudalism” (President Gonzalo). Likewise, it shows what had already been said in a previous paragraph, that the large companies of imperialism or of the big local bourgeoisie at its service, which have minimal productive or exchange relations with the other sectors of the economy or as it is said in the underlined part, that the MSMEs (formal), not to mention the informal ones, “participate marginally in more dynamic productive relations with large companies.” We add that this “marginal participation… with large companies” should predominantly involve medium-sized enterprises.
ANNEX:
167. LETTER FROM MARX TO THE DIRECTOR OF
OTECESTVENNIYE ZAPISKY
[End of 1877]
(…)
To conclude, as I am not fond of leaving “something to be guessed,” I will come straight to the point. In order that I might be qualified to estimate the economic development in Russia to-day, I learnt Russian and then for many years studied the official publications and others bearing on this subject. I have arrived at this conclusion: If Russia continues to pursue the path she has followed since 1861, she will lose the finest chance ever offered by history to a nation, in order to undergo all the fatal vicissitudes of the capitalist regime.
The chapter on primitive accumulation does not pretend to do more than trace the path by which, in Western Europe, the capitalist order of economy emerged from the womb of the feudal order of economy. It therefore describes the historic movement which by divorcing the producers from their means of production converts them into wage earners (proletarians in the modern sense of the word) while it converts into capitalists those who hold the means of production in possession. In that history, “all revolutions are epoch-making which serve as levers for the advancement of the capitalist class in course of formation; above all those which, after stripping great masses of men of their traditional means of production and subsistence, suddenly fling them on to the labour market. But the basis of this whole development is the expropriation of the cultivators.
“This has not yet been radically accomplished except in England….but all the countries of Western Europe are going through the same movement,” etc. (Capital, French Edition, 1879, p. 315). At the end of the chapter the historic tendency of production is summed up thus: That it itself begets its own negation with the inexorability which governs the metamorphoses of nature; that it has itself created the elements of a new economic order, by giving the greatest impulse at once to the productive forces of social labour and to the integral development of every individual producer; that capitalist property, resting as it actually does already on a form of collective production, cannot do other than transform itself into social property. At this point I have not furnished any proof, for the good reason that this statement is itself nothing else than the short summary of long developments previously given in the chapters on capitalist production.
Now what application to Russia can my critic make of this historical sketch? Only this: If Russia is tending to become a capitalist nation after the example of the Western European countries, and during the last years she has been taking a lot of trouble in this direction – she will not succeed without having first transformed a good part of her peasants into proletarians; and after that, once taken to the bosom of the capitalist regime, she will experience its pitiless laws like other profane peoples. That is all. But that is not enough for my critic. He feels himself obliged to metamorphose my historical sketch of the genesis of capitalism in Western Europe into an historico-philosophic theory of the marche generale [general path] imposed by fate upon every people, whatever the historic circumstances in which it finds itself, in order that it may ultimately arrive at the form of economy which will ensure, together with the greatest expansion of the productive powers of social labour, the most complete development of man. But I beg his pardon. (He is both honouring and shaming me too much.) Let us take an example.
In several parts of Capital I allude to the fate which overtook the plebeians of ancient Rome. They were originally free peasants, each cultivating his own piece of land on his own account. In the course of Roman history they were expropriated. The same movement which divorced them from their means of production and subsistence involved the formation not only of big landed property but also of big money capital. And so one fine morning there were to be found on the one hand free men, stripped of everything except their labour power, and on the other, in order to exploit this labour, those who held all the acquired wealth in possession. What happened? The Roman proletarians became, not wage labourers but a mob of do-nothings more abject than the former “poor whites” in the southern country of the United States, and alongside of them there developed a mode of production which was not capitalist but dependent upon slavery. Thus events strikingly analogous but taking place in different historic surroundings led to totally different results. By studying each of these forms of evolution separately and then comparing them one can easily find the clue to this phenomenon, but one will never arrive there by the universal passport of a general historico-philosophical theory, the supreme virtue of which consists in being super-historical.
On the Russian rural community, Marx and Engels wrote in the preface to the Russian edition of the Communist Manifesto (January 21, 1882):
“Now the question is: can the Russian obshchina, though greatly undermined, yet a form of primeval common ownership of land, pass directly to the higher form of Communist common ownership? Or, on the contrary, must it first pass through the same process of dissolution such as constitutes the historical evolution of the West?
The only answer to that possible today is this: If the Russian Revolution becomes the signal for a proletarian revolution in the West, so that both complement each other, the present Russian common ownership of land may serve as the starting point for a communist development.”
• Otiéchestviennie Zapiski (“National Annals”). This letter was written in French. (Ed.)
•• N. K. Mikhailovsky: prominent theoretician of the petty-bourgeois party of the Populists. (Ed.)
From Correspondence, p. 288 ff.
We will continue with this topic in the next installment.
