NOTES AND MATERIALS ON CONTEMPORARY PERU (III, continuation c.)

We hereby share an article published by Nuevo Peru. You can red the previous part here.

Continuing from the letter by Marx, which we have largely quoted in the previous appendix, as we mentioned earlier, the document from ECLAC supports our assertion that this “modern sector” (directly from imperialist companies or their agents within the big local bourgeoisie) does not contribute to the development of the national economy. This is because its exchange with other sectors of the economy is minimal, its machinery and equipment, as well as its knowledge, come from imperialist countries, and it only employs 1.5% of the economically active population (EAP), which are in total 16 million. Most of its super-profits are exported, and its new investments are largely aimed at importing machinery and equipment from its parent companies in imperialist countries. In other words, it does not have a significant “multiplicative factor in the economy”, or, as is often said, it does not benefit the economy either upstream or downstream. In short, as has been written since Mariátegui, imperialism only fosters an industrialism that serves its interests; this bureaucratic capitalism only serves imperialist interests.

What we have just said shows us the thread that continues from our comments on the ECLAC FDI-2024 report, where reference is made to “stagnation, and even decline, in productivity. (…) the reprimarization of the 1990s and 2000s”. In another report of the same organization (Economic Study of Latin America and the Caribbean • 2024), the section of the “Economic Profile…” discusses the “enclave economy”. This is how we have come to present the data on the economic production relationships that characterize our country and other countries in Latin America and the Caribbean. All of this has led us to present most of the letter from the founder of Marxism (see the previous annex). Following this thread, before returning to the topic of FDI in forthcoming contributions, we are addressing another ECLAC report on MSMEs, which is concomitant with all the previous studies.

The ECLAC study on MSMEs documents that the large companies of imperialism or the big local bourgeoisie, which dominate primary exports, along with medium or national companies, constitute the so-called modern sector of the economy. The vast majority of the rest belongs to the precapitalist economy (semi-feudalism).

What is referred to in the previous paragraph is similar to how Chairman Mao described the Chinese economy in 1948 (see Volume IV of his Selected Works), which, according to him, had 10% of modern enterprises made up of imperialist and big bourgeois companies, while the remaining 90% consisted of those belonging to handcrafts and agriculture, which were akin to ancient (pre-capitalist) times.

Continuing, to better understand reality, because only by understanding reality can we solve problems, the study on MSMEs later states:

“C. MSMEs in Latin America

Considering the formal economy, MSMEs represent 99.5% of the companies in the region, and the vast majority are micro-enterprises (88.4% of the total).

This distribution has remained relatively stable over the last decade, although there has been a relative increase in small and medium-sized enterprises and a slight reduction in micro-enterprises.

The presence of micro-enterprises is predominant in all sectors of the economy, and in some cases, it exceeds 90% of the total number of companies: for example, in commerce and in the sector of ‘other community, social, and personal activities.’ In particular, commerce is a sector where the largest number of formal micro-enterprises is concentrated (…) the proliferation of very small-sized companies (…) responds more to self-employment strategies and economic survival than to a true process of business development.

In commerce, there is also a significant number of small and medium-sized enterprises (SMEs); however, in the case of these companies, the industry, particularly when it comes to medium-sized enterprises, and ‘real estate, business, and rental activities’ concentrate a significant number of productive units.

(MSMEs in Latin America: A Fragile Performance and New Challenges…, ECLAC)”

Thus, the large enterprise of imperialism or of the local bourgeoisie, at its service, controls the entire economic process in Peru: our natural resources, export products, industry, banking and finance, etc.

We emphasize this undeniable truth: bureaucratic capitalism is the capitalism that is generated by imperialism in underdeveloped countries, tied to a feudalism that is outdated and subjected to imperialism, which is the final phase of capitalism, serving not the majority but the imperialists, the big bourgeoisie, and the big landlords. Because the capitalism that develops is a delayed process and only allows for an economy that serves its imperialist interests. It is a capitalism that represents the big bourgeoisie, the big landlords, and the wealthy old-type peasantry, classes that constitute a minority and exploit and oppress the vast majority, the masses.

Once again, the report indicates that the large monopolistic business with its subsidiaries in the country and its economic agents from the big bourgeoisie, along with medium or national companies, constitute the so-called modern sector of the economy, while the vast majority of the rest belongs to the precapitalist economy (semi-feudalism). This is what the cited reports refer to as “heterogeneous economy,” “heterogeneous productive structure,” “heterogeneous employment structure,” etc., to describe the social relations of production in our countries, contrary to their true scientific characterization.

Chairman Gonzalo, referring to the problem we are addressing, states that the semi-feudal base of society will generate, due to the critical aggravation it is experiencing, migration of the peasantry to the cities, which, upon not finding work in factories due to unemployment, will swell the service sector and informality, which is where the lack of jobs drains into; thus, micro and small production is formed, which, as we have seen, is very extensive and operates under the harshest and most difficult conditions. To this, we add that the proletariat decreases in proportion. (II. Plenary of the CC of the PCP)

Here, it is necessary to clarify that the ECLAC study refers only to a portion of businesses and employment, specifically to formal businesses and formal employment. It does not consider that informality in micro and small enterprises, as well as in employment, accounts for the largest number of workers, the majority of whom are self-employed, as noted in the following statement:

“In 2022, 4,000 large companies concentrated 57% of the total formal jobs in the country, according to a study by Apoyo Consultoría. A total of 2.2 million workers were registered in these businesses.

It is worth noting that by the end of last year, there were 4.1 million formal workers registered, according to the Ministry of Labor and Employment Promotion. Additionally, informality stood at 75.5%, while the remaining 24.5% of employees belonged to the formal sector.”

And this report explains the previous diagram as follows:

“Bolivia and Colombia are two of the Latin American countries with the highest percentage of self-employed workers relative to the total employed population, according to estimates from the International Labour Organization (ILO). As shown in this Statista graph, approximately half of the people employed in these countries work for themselves. In Mexico, the proportion rises to fewer than three out of ten workers (27.5%), while Chile records one of the lowest percentages in the region, with only 25.9% of self-employed individuals among the total employed population. The average in Latin America and the Caribbean stands at 34% of self-employed workers relative to the working population.

The most common way to engage in self-employment in Latin America is through a sole proprietorship. Nearly nine out of ten self-employed workers in the region are involved in developing their own business or venture without having employees. Only a minority of them have collaborators in a dependent relationship. These figures do not include family workers who contribute to the business and are not registered as direct employees.

A high percentage of self-employed workers is often associated with higher levels of labor informality, especially in regions in development. Furthermore, according to the ILO, national legislation on social security focuses on meeting the needs of wage workers, which places self-employed individuals at a disadvantage regarding retirement and pensions. Many independent workers are excluded from receiving social security benefits because they do not meet certain eligibility criteria, such as minimum income levels.” (How common is self-employment in Latin America? SELF-EMPLOYED WORKERS, Marina Pasquali, April 25, 2023, Statista).

It is necessary to continue with this subtopic in relation to the underlying theme, which is about ECLAC FDI-2024 report, in order to show through various studies the differences between the social relations of production in our country and those in Latin America and the Caribbean compared to imperialist or oppressing countries, where the development of capitalism has led them to the stage of monopolistic capitalism or imperialism, its superior and final phase.

To be continued soon…