Nuevo Peru: NOTES AND MATERIALS ON CONTEMPORARY PERU (III, continuation, d.)
We hereby publish an article by Nuevo Peru:
We hereby publish an an article by Nuevo Peru:
I
As we have seen, the Economic Commission for Latin America and the Caribbean (ECLAC) study on Micro, small and medium-sized enterprises (MSMEs) documents that the large enterprises of imperialism or of the country’s big bourgeoisie, at its service, which is the one that dominates primary exports, plus the medium-sized or national enterprises constitute the so-called modern sector of the economy, the rest belonging in its vast majority to the pre-capitalist economy (semi-feudalism).
This path of development based on imperialist investment and oriented towards the export of primary goods is the path of bureaucratic capitalism, the dominant path that imperialism imposes on a backward country like ours, in a semi-feudal and semi-colonial country. In addition, the State that directs that base cannot develop the productive forces because it is at the service of the three mountains that oppress us: imperialism, bureaucratic capitalism and semi-feudalism. It is important to understand this problem, because in this way we will be equipped to combat the thesis of the capitalist character of the country and its political derivations.
This path is based on the extensive use of imperialist capital, its experts and technology provided by this foreign capital, and “aid” only serves to maintain backwardness and the domination of the three mountains that oppress us. It is about breaking with imperialist domination, bureaucratic capitalism and semi-feudalism through People’s War to complete the New Democratic Revolution.
The growth and accumulation of capital – in the economy of bureaucratic capitalism – is at the service of imperialism, therefore, it is oriented towards export as the primary objective, there is no self-sustaining and coordinated growth of agriculture, domestic industry and trade, but rather is it subordinated to foreign capital and the imperialist world market and prevents the coordination of the national economy. We will not be able to develop national industry without sweeping away the three mountains that oppress us, Chairman Mao teaches us. Chairman Gonzalo has established that: “Bureaucratic capitalism in Peru is anti-peasant, destroys the production of peasants and ever more deepens the misery of the peasantry, stalls the rural industry and the artisans”.
We know, according to Lenin, when he studied the development of capitalism in Russia and in the agriculture of the United States, that the rise of industrial development creates a market for agriculture and determines its intensification and a more marked capitalist character. The number of independent farmers in proportion to the rural population as a whole decreases, while the number of farmers dependent on exploitation, that is of wage laborers, increases. In the development of capitalism without semi-feudal ties, the increase in the use of wage labor exceeds the increase in the rural population and the number of peasants. This is the typical development of capitalism freed from feudal constraints by the bourgeois revolution.
In our country and other countries of Latin America and the Caribbean (LAC), where there has not been a bourgeois revolution, semi-feudalism has not been destroyed and, therefore, it only evolves and becomes the main obstacle to this development; Thus, while the number of wage laborers (agricultural proletarians and semi-proletarians) is increasing due to the development of bureaucratic capitalism in the countryside, based on large estates, the number of small peasants and their economic units is maintained and even increased.
Characteristic of this process of slow evolution from semi-feudalism to bureaucratic capitalism is the increase in minifundia, expressed in the number of small economic units (in Table 1 below, they are listed as small farms) and the concentration of land in large estates (on the other hand); see also the index of land concentration in Table 1.
It states: “The countries of Latin America and the Caribbean (LAC) have an agrarian structure considered among the most inequitable on the planet. One of the clear expressions of the heterogeneity of LAC can be read in the agrarian structure itself (…) the agrarian structure of the subcontinent shares some elements that are related to the concentration of land and other resources of the rural sector in a few hands, a high degree of legal insecurity of land tenure and uses of the resource that configure indicators of low productivity (…) Likewise, the products consumed in the region are produced, in their great majority, in small farms.
(…) The agrarian structure of LAC has changed over time and today presents a diverse and contrasting condition in the countries of the region: the data indicate that there is a progressive tendency towards fragmentation and minifundization in some countries, while the existence of land concentration processes is noted in others (see table 1)
(…) Particularly striking are the values and the trend of the land concentration index for some countries (see last column of table 1). In general, all the values of the coefficient are very high, which shows the high concentration of land (in fact, 12 countries out of the 23 with complete information present Gini index values equal to or greater than 0.8; 1.0 means a degree of total concentration). Among the countries that register a tendency to increase the index, all have values greater than 0.8.”
The quoted part of the study of Germán Escobar, published by the foundation of the German imperialism, in spite of the attempts to watch the reality by means of the use of the terminology of the academician, sample with the facts contributed, that come affirming on the character of our economy. Our highlights serve to stand out the before affirmed. Likewise, the underlined in the reports and annexes are ours, except observation in contrary.
Chairman Gonzalo says:
“The division of the land, the parceling out, leads to minifundism and this determines a setback in the cultivation of the soil because the possibility of applying new forms of agricultural production is restricted. On the plot, the whole family works until exhaustion, a great labor force is invested but the net product progressively decreases as the gross product increases.
The same applies for all the small production, as we have previously analyzed, the more gross consumption, the less net consumption and no one escapes this law, but this is optimal for imperialism because it buys at a lower cost, exploiting immensely. This phenomenon in the countryside also has repercussions against the proletariat because the countryside has to consume less, production has to fall, workers’ wages are reduced and there is a lot of room for unemployment. In another text, Marx tells us that small property is condemned by history.”
II
It is necessary to see in the report on the MSMEs, although it only deals with formal enterprises, an interesting comparison (see graphs I.1 and I.3), which allows us to differentiate the productive structure of our countries with that of the developed or imperialist capitalist countries, starting, for our part, from the fact that we cannot erase the differences between the large enterprise of imperialism and the large enterprise of the countries of bureaucratic capitalism. We cannot say that “everything is a monopoly”, although both have this character, the large imperialist monopoly enterprises play the dominant role, while the large monopoly enterprises of (of the country) bureaucratic capitalism are intermediaries of the former, that is, economic agents of imperialism.
The aforementioned report also allows us to document that we cannot see imperialism as a whole, as Lenin warned in his polemic against Bukharin (see appendix), because there is no such whole, but rather the conjunction of the two contradictory “principles” of competition and monopoly; this is all the more true for its sick child, bureaucratic capitalism, that is, the dominant path that imperialism imposes in a semi-feudal and semi-colonial country. There is not only the large companies, but also the medium or national, the small and even the so-called micro-companies.
Chairman Mao specified:
“(…) and the controlling positions are held by a minority of monopoly capitalists. But there are a great number of small and middle capitalists as well. Thus it is said that American capital is concentrated but also widely distributed. ” (Reading Notes On The Soviet Text Political Economy)
“China already has a modern industry constituting about 10 per cent of her economy; this is progressive, this is different from ancient times. (…)
China still has scattered and individual agriculture and handicrafts, constituting about 90 per cent of her entire economy; this is backward, this is not very different from ancient times — about 90 per cent of our economic life remains the same as in ancient times. (…)
China’s modern industry, though the value of its output amounts to only about 10 per cent of the total value of output of the national economy, is extremely concentrated; the largest and most important part of the capital is concentrated in the hands of the imperialists and their lackeys, the Chinese bureaucrat-capitalists.
(…) China’s private capitalist industry, which occupies second place in her modern industry, is a force which must not be ignored. Because they have been oppressed or hemmed in by imperialism, feudalism and bureaucrat-capitalism, the national bourgeoisie of China and its representatives have often taken part in the people’s democratic revolutionary struggles or maintained a neutral stand.” (Chairman Mao, Report to the Second Plenary Session of the Seventh Central Committee of the Communist Party of China, 5 March 1949).
The report of the ECLAC on the MSMEs, as we will see, refers to our countries as having a “heterogeneous productive structure”, trying to conceal the true nature of the same. We will leave aside, for the moment, the part of the report that refers to the category of companies and employment. Let us see:
“In relation to the European Union, the most relevant differences refer to the greater relative weight of formal micro-enterprises and the consequent lower participation of other categories of companies, including large ones, which in Latin America are 0.5% of the total, while in the European Union they reach 0.2%”.
Then, further on, it says:
“The participation of large companies is very high in the areas of mining; electricity, gas and water, and financial intermediaries (…), which are the three sectors of greatest productivity in Latin America: compared to the average of the economy (…)
(…) in Latin America (…) smaller companies in low productivity activities. This suggests a heterogeneous productive structure in which a small number of companies concentrate a large part of the regional GDP, in sectors with very high productivity, while the rest are in activities whose performance is quite poor. In this sense, it is worth highlighting that, in the region, the three sectors with the highest productivity represent 26.9% of the added value, but only 8% of total employment and 1.8% of the number of companies.”
Then, it shows us graph 1.1 and 1.3, where a certain similarity can be seen in terms of the companies structure of both types of economy:
Chart I.3 European Union: distribution of companies by size, 2016 (Percentages) Micro-, Small, Medium and Large Enterprises. Source: Prepared by the authors, based on official data.
But, beyond the similarity, the same report talks about the differences between companies in our LAC countries (oppressed nations) and companies in the imperialist countries of the EU:
“In the European Union, the relative weight of MSMEs in formal employment is even greater than in Latin America and reaches 69.4%, although this is not the main feature of the differences between the two regions, as will be seen later.
The information on production shows more clearly the heterogeneity of the productive structure in Latin America. MSMEs account for only 24.6% of production (24.9% in 2009), despite representing 61.2% of employment and 99.5% of companies.
The situation is very different in the European Union, where in 2015 MSMEs accounted for 56.2% of added value.”
However, the broadest base is made up of micro-enterprises, where self-employment is found. The report does not mention this, but self-employment in Latin America is not subject to dependency (wage) relations, while in the EU, the wage relationship of the employment contract is disguised as a service contract between companies, which the International Conference of Labour Statisticians of the ILO calls “atypical forms of employment” (CIET, 2018, Resolution I). In the countries of the European Union, around 25% of “non-salaried workers” are, in fact, salaried workers, economically dependent on a client or a very small number of them”, according to EUROFOUND, 2017. That means, legal ways have been created to circumvent their own labor regulations and those of the World Trade Organization, so that companies can employ workers as if they were independent entrepreneurs, disguising the employment contract as if it were a service provision contract. In the USA self-employed workers make up around 6%.
Bearing in mind the above clarification, let us continue with the report, which says:
“The biggest differences between the two regions can be observed in the micro-enterprise segment.
In Latin America, micro-enterprises correspond to 88% of formal companies and contribute 27% of employment and barely 3.2% of production, while in the European Union they represent 93% of companies, 30% of employment and 20% of production.”
Furthermore, it is necessary to clarify, in order to see the depth and extent of the differences: that in Peru, 78% to 72% of employment is informal, therefore, adding all the categories, formal employment varies from 22% to 28% of the employed EAP [Economically active Population]; this further shows the backward character of our economy, its semi-feudal character, like of the other LAC countries.
Continuing, the report shows the following graphs:
“This situation reflects the characteristics of microenterprises in the region (as well as some MSMEs), since they are companies that operate in limited local markets that depend on the evolution of internal demands, in sectors with low barriers to entry and exit, as many companies are found and quit, and that, many times, respond more to self-employment and survival strategies than to a dynamics of business development.”
The above clarifies the pre-capitalist character, not only of micro but also of small and even some medium-sized companies, “the foundation of quitting of many companies”, they are created and die because they operate in closed or limited markets, that is, with little development of production because the machinery, equipment and even the inputs come from abroad, therefore, limited markets, internal demands limited by the vile exploitation of the immense mass of small agricultural producers, who produce below the physical limit and who supply the internal market with 80 or 90% of internal consumption, thereby keeping wages and demands low. This serves to keep wages low in the large companies of imperialism and its country’s economic agents, the big bourgeoisie. It is not a problem of rising or falling prices but of an exchange of unequal values.
The small peasant allocates part of his production to self-consumption and sells the rest on the market, which together constitutes the return on his production costs, but without obtaining the parts of the price destined to cover the profit. In this way, the surplus product, the part to return the surplus work, is appropriated as pre-capitalist (semi-feudal) rent from the land by the State, the landowners, the big bourgeoisie, all for the benefit of imperialism through unequal exchange in world trade and, mainly, the investment of imperialist capital in its various forms. (…) In what consists the exploitation, see the difference, in the way of exploitation: like an organized class the bourgeoisie exploits through the State by using taxes; and like capitalists, in the modalities of the usury, of the loan, of the capital, of the interest, those who are not paid are charge with the mortage. And how exploits the Big Landlord? By the rent. Such different is semi-feudality” (Chairman Gonzalo). All on the basis of imperialist oppression over our countries, economic monopoly of imperialism over our economy.
III
The report, elaborating on the differences, goes on to say:
“The various sectorial specializations and productive structures that differentiate Latin American MSMEs from European ones are also evident in the participation of these companies in exports. Here the dominance of large companies is even greater than with regard to production. (see Table I.5)
While in the countries of the European Union, smaller companies can generate more than half of exports, in Latin America, if we consider the few cases in which reliable information is available, large companies easily exceed 80% of foreign sales.”
This refers to the fact that the majority of medium-sized, small, etc. companies in the imperialist countries of the EU are integrated into the different supplier networks of the large monopolies. While in our countries they have little connection with large companies, as can be seen from the following quote, which shows the heterogeneity of the economy, that is, a modern (capitalist) sector and the rest, the majority, the backward sector, the semi-feudal base of the country, the report says:
“When the dynamics and composition of the economy are considered, the explanation for this productivity gap can be found in the concentration of production in a few activities intensive in natural resources (agriculture, fishing, mining and some industrial sectors), which generate a very large amount of foreign currency through exports but operate with very few connections with the rest of the productive structure and do not have relevant effects in terms of technological spillovers, creation of local capacities and territorial development. At the same time, there are also dynamic productive chains, as is the case of the automotive industry in Brazil and Mexico and, to a lesser extent, the aerospace industry in these same countries and the electronics industry in Mexico. But these are isolated cases, whose success is questioned, or at least incomplete, and does not manage to modify the general economic panorama of Latin America.”
We clarify that the report here is referring to that industry integrated within the so-called value chains – or vertical integration of imperialist monopolies -, in general with the same impact on the rest of the country’s economy as the large exporting company, therefore, it is not a national industry, but rather a maquila [duty free and tariff-free] industry. Continuing with the report:
“These differences and sectoral specificity help to understand the structural heterogeneity of Latin America. However, the characteristics of the companies allow us to visualize other equally important aspects of the same phenomenon.
(…) the analysis of internal relative productivity (Internal relative productivity refers to the quotient between the value of the productivity of the work of each segment of the MSMEs and the value of the productivity of the work of the large companies in a given country or region).
(…) In this sense, in Latin America the difference between micro-enterprises and large companies is, on average, seven times greater than that recorded in Europe. Likewise, the differences in performance between the different segments of companies that make up MSMEs are much more marked in Latin America than in the European Union. For example, in the latter, the productivity of a medium-sized company is less than double that of a micro-enterprise, while in Latin America it is more than seven times higher.”
“(…) E. Insertion in the productive structure. The differences that can be seen between MSMEs in Latin America and the European Union reflect different productive systems, in which these companies are clearly not inserted in the same way. In the first case, insertion is secondary, given that a small number of large companies control and produce the majority of the GDP and almost all exports, while in the other case the role of MSMEs is central to guarantee the functioning of the productive structure, the creation of added value and the sales of goods and services abroad (…)
The experiences of productive articulation, both in the form of networks and chains of suppliers, are relatively scarce in Latin America and also suffer from serious limitations, even in the most successful cases (…) a poorly articulated productive system dominated by a small number of large companies.”
The productive structure of the imperialist countries is “coordinated” and subject to the large monopolistic companies generated by financial capital, “centralized and decentralized” (Chairman Mao).
“In the countries of the European Union, most MSMEs are linked together in networks, they are part of supply chains of large national and foreign companies, and they produce specific goods and services that do not compete with the mass-produced products of large companies.
The report on MSMEs in Latin America agrees with what, as we have seen, is summarized in the “Current economic-productive profile of the country” (The challenges of productive transformation in Latin America, National profiles and regional trends, Volume 1: Andean Region, Friedrich-Ebert-Foundation, CHAPTER V Peru —Luis Angel Rodriguez Salcedo), when it refers to the “primary export and service character” “oriented to the world market” of the same and its lack of linkage with the whole economy: “enclave economy”, which does not generate employment, etc.
This “model” corresponds to the late capitalism that imperialism promotes in our countries on a semi-feudal and semi-colonial basis, which generates more backwardness, submission and deformation of the productive structure of the country.
Let us remember that the development of capitalism has followed the opposite path both in Europe and in the United States, Japan, Canada, Australia, New Zealand, that is, from the inside out. For this reason, Lenin, in order to study the development of capitalism in Russia, allowed himself the abstraction of the foreign market following what Marx established in Capital.
IV
Differentiation from the Economic Commission for Latin America and the Caribbean (ECLAC) study on the Micro, Small and Medium-Sized enterprises (MSMEs)
Micro and small businesses, like small peasants, are subject to sinister oppression and encompass a large amount of labor force; as the reactionaries themselves say, they serve as a “social cushion”, since the policies of imperialism and reactionary governments are based on these masses to impose their policies of plundering and new capitalist accumulation, apart from aiming to have a social base of lackeys or followers or deceived masses for a time.
On the basis of this mass of producers in the city and the countryside subjected to sinister exploitation, who produce in the worst conditions and even below the physical limit of their labor force, the dominant path that imperialism imposes in our country (bureaucratic capitalism) develops, maintaining the low value of the salaried labor force for the benefit of the big bourgeoisie and imperialism. The push of imperialist institutions such as the ECLAC, as its report highlights, and of the different reactionary governments of our country to the policies of promotion of the MSMEs only serve to sap the energy of our people.
These types of companies, both in the city and in the countryside, serve to lower wages and increase profits, says Chairman Gonzalo. This is not surprising in any capitalist system, much more so in the system of bureaucratic capitalism, it is part of its process and those who benefit are the big bourgeoisie and imperialism.
Most of the companies mentioned in the previous paragraph belong to the case of simple commodity production, in which each producer is tied to his own means of production. It is not a question of the naked producer deprived of means of production and of life, even if these are miserable and typical of the state of backwardness produced by semi-feudalism. In addition, in the case of the medium-sized company, the organic composition of the capital is low, and its productivity is much lower than that of the large imperialist company in the country and, much more, is the difference with respect to the companies in the imperialist countries. The same can be said of the large exporting company of mining, agro-export, etc. of bureaucratic capitalism, which have low capital accumulation, are rentiers and produce with salaries by far lower than the large imperialist companies. The micro and small companies, formal and informal, are in their great majority, as can be gathered from the Statista report cited above, pre-capitalist, that is, they express the semi-feudal base of the country.
The Report of the II Plenary Session of the CC of the PCP, from the beginning of the 90s of the last century, says: If we add micro, small and artisanal industries we would have 26% of the GDP, the medium-sized industry contributes 28% alone, that is its strength; and large industry contributes 46%, that is, the largest production is contributed by large industries and comprises 12.3% of the industrial EAP, with few workers it contributes the largest productive percentage and also only with 0.14% of the companies, this is typical of all capitalist systems. So, how can micro, small and medium production be the axis of economic development? It cannot be the driving force, it is not real within its system.
Another policy: overcoming structural disarticulation, particularly between small and medium-sized companies and large companies. What imperialism, CEPAL and reactionary governments are looking for is to tie both, small and medium, to large companies through financial systems and low wages, systematically; All in function of the big industry and this oriented to exportation in service of imperialism.
Then the new model of accumulation imposed by Fujimori at the beginning of the 90s, which continues until now, according to the Chairman: It is nothing but to concentrate the greatest amount of means of exploitation in the hands of the exploiters by dispossessing the small and medium owners and taking from each other, even part of their own property; to increase and concentrate more surplus value, lowering salaries; to appropriate state productive means that would be more than 5,000,000 dollars, according to the University of the Pacific. For this new model, emphasis is laid on economic growth, which is nothing but the mandate of the CEPAL. As for jobs, they insist on small and medium production, it is the mandate of imperialism.
With its development strategy (Fujimori, the ECLAC and imperialism), “it contemplates the simultaneous promotion of growth, inserted from the beginning in the development strategy of the modern sectors, a policy of incentives to the export sector, foreign investment and industrial development. In the traditional and informal sectors, the development of micro and small businesses and the creation of rural markets as well as rural industrialization will be encouraged. The role of the market will be privileged. The State will be called upon to play a guiding role, seeking to reverse a protectionist structure linked to import substitution. We will put an end to the anti-export bias, to low rates of agricultural investment, to capital subsidies and to the pro-urban and anti-rural bias.” In the so-called modern sectors, they seek to produce for export; foreign investment will be highly favorable to imperialism. What industrial development are they talking about if they do not have energy production, which is necessary to promote industrial development? How is the only steel industry there is? How is the petrochemical industry? They have an outdated financial system, a backward commercial system and an agricultural system that does not satisfy the needs of the people; they produce for export and the productive base itself is collapsed. Therefore, words.
The scientific Marxist-Leninist-Maoist prediction of Chairman Gonzalo against the plan of the fascist, genocidal and country-selling Fujimori to re-launch bureaucratic capitalism has been fulfilled. It has totally failed, as demonstrated by the report we have just seen on the current situation (as of 2020) of MSMEs in LAC, which covers the case of Peru.
Annexes to this part.