"ITS economies may have improved recently, but much of Latin America has performed poorly over the past two generations. The gap in income per head between the region and developed countries has widened since 1960, while many east Asian countries that were poorer have leapfrogged ahead. The root cause has been Latin America’s slow—or even negative—growth in productivity."(1)
And so begins a new report attempting to place the mal-development of Latin America within the discourse of productivity growth. The report fails on this 'productivity growth is the holy grail of development' foundation, it is not. But what does productivity growth mean? Well, simply put it means—gains in the efficiency with which capital, labour and technology are used in an economy. During the apparent heyday of productivity growth in the nations of advanced(Imperialist)capitalism, say from 1950-1975, productivity growth was averaging 4% per annum, due to high rates of investment in capital goods; infrastructure projects et al. The report makes much play of this comparison with Latin America, where:
"the short answer is that the typical Latin American firm is a small, inefficient service business and may well be operating in the informal economy. Productivity growth tends to be higher in manufacturing and agriculture than in services (see chart 2). It also tends to be higher in large firms which benefit from economies of scale. And it is much higher in formal businesses, which can invest in innovation.
However, Latin American manufacturers are also much less productive than they might be. This is partly because clogged, inefficiently run ports, airports and other transport systems make freight costs unduly high—for example, it shockingly costs more to get goods to the United States from most Latin American countries than it does from distant China or Europe.
But 60% of Latin Americans work in service firms. Many of these businesses are held back by lack of credit and by public policies that give them little or no incentive to become bigger or to operate legally. Latin American tax codes are inordinately complicated: it takes an average of 320 hours per year for a firm in the region to file its tax paperwork, compared with 177 hours in rich countries. The IDB found that a disproportionate share of tax is paid by big companies. Simplified tax regimes for small companies have been set up in 13 of the 17 countries the bank studied. Perversely, that encourages them to remain small."
For those not dominated intellectually and politically by pro-capitalist development ideology, such sweeping statements and half formed data sets provide little more than an example of the capacity of social scientists to pawn themselves to Imperialist capitalism. It is impossible to speak of Latin America in general. Mexico is massively different than Honduras, and Cuba is massively different to every other Latin American state. It is this comparative method-not comparing like with like-which allows a technically correct conclusion of low productivity growth. If we in fact break the region down into its constituent parts then we can come to find states with very impressive growth in productivity. For example, Cuba has managed to become a leading bio-tech state and make enormous strides in development the productivity of agriculture and industry, despite the US imposed blockade and constant subversion. It has managed all of this due to an internalisation of the concept developed by Che Guevara that capitalism had become impossible in the dependent countries by the 1950s. Similar recognition has been accepted in Venezuela and Bolivia, where socialist Presidents and mass movements have taken huge steps towards breaking the shackles of landlord-ism and capitalism, although the failure as yet to fully de-link from the Imperialist world system has meant the revolutionary processes are very much still in danger.(2)
The report reads less like an attempt to understand the true causes of development decay, and more like a snap shot, a literal stitch in time, of a region which has a rich and varied history, born of collosal struggles for the very development the reports authors make clear are the basis for poverty alleviation and sustainable development. No mention is made of the 5%growth of the Argentinian and Brazilian economies in the period from the late 1930s to the 1960s; no mention is made of the growth under nationalist regimes throughout the entire hemisphere, including Mexico. Such uncomfortable truths are omitted so as not to spoil the discourse flowing like swine effluent from the heartland of Imperialism-Washington and Wall Street. The conclusion, at odds with history, must always be: the state should get out of development, should reduce taxes, privatise and export raw materials and finished goods. This is how Brazil can be taken as a model. The report states: "Productivity growth in Brazil has surged recently: after being negative in the late 1990s, it rose to over 2% in 2007 and 2008 according to the Central Bank." This in a country the size of the USA, and yet with an economy smaller than Italy's, and in which the income gap is the highest of anywhere in the world, and where the status of women, children and the rural poor is akin to the time of the rampaging Slavocracy.(3) Brazil's government, whether under the conservative Cardosa, or the 'socialist' Lula, has consistently championed the rural latifundia ranchers and their genocidal model of development based upon cattle, biofuels and soya export, a model implicated in both the extreme hunger of the increasingly landless workers in the enormous Brazilian hinterlands, but also the direct murder of landless workers who resist heroically the logical outcome of 'increasing capitalist productivity'.(4)
The 800 pound gorilla in the room, as with all of the guff produced by 'elite' institutions in the West and North, is the refusal to place human development at the heart of an approach to development. It would be quite possible for Latin America to grow by 10% per year for 30 yrs and see very little in the way of social and human index progress. The experience of the restoration of capitalism in China, with its attendant destruction of the welfare state, family agriculture, the rights of workers etc should be a warning to anybody who is taken in by the narrow focus on productivity growth.(5) Human development placed front and centre has allowed the Venezuelan revolution to reduce poverty from 70% to less than 20%, whilst all but eliminating extreme poverty. All this whilst facing the threat of constant counter-revolution and external invasion. These poverty rates measure only cash income; they do not include non-cash benefits to the poor such as access to health care or education. If Venezuela were almost any other country, such a large reduction
of poverty in a relatively short time would be noticed as a significant achievement. However, since the Venezuelan government, and especially its president, Hugo Chávez Frías, are consistently disparaged in major media, government, and most policy and intellectual circles, this has not happened. Instead, the reduction in poverty
was for quite some time denied, although it acts as a beacon for the masses in the dominated countries of the global South and East.(6)
The problem of growth and development is political, not primarily economic, and social, not cultural. Latin America is a region richer in raw materials and productive workers and small farmers than any reasonable level of social development could require. The basis is there for a rich continental economy united and integrated on a firm anti Imperialist and socialist basis, using the pioneering example of Cuba as both guide and goal. The obstacle is the vampire of the North, sucking the lifeblood and the wealth from the South via policies based on the report reviewed here; demanding and securing access to cash crop exports and dollar earnings for debt; demanding access to national firms for purchase and incorporation; demanding that capitalist classes toe the line with the US Empire, and of course receiving such fealty. Resistance was met in the 50s, 60s and 70s by fascist coups and military dictatorships, which goes a long way to explain why the develop-mentalist strategies which proved so successful in the past broke down and became discredited. This is where Guevara's legacy is so important. Not for him was capitalism in the dependent countries simply obsolete in the abstract, no, for Guevara it had become obsolete because the small window of opportunity for a national capitalism had closed with the end of WW2 and the emergence of the US as the global counter revolutionary force. Faced with a revolutionary struggle against Imperialism, mobilising the workers and farmers for land reforms and pro worker economic and social policies, the capitalist classes of the dependent countries baulked and capitulated. In that sense only is capitalism obsolete in Latin America. The fact that moderately reformist governments such as Hugo Chavez in Venezuela have become radicalised and anti-capitalist merely proves that point, as the Cuban revolution did before it. The ALBA alliance of the Americas, incorporating Cuba, Bolivia, Venezuela, Nicaragua and several smaller nations-based on non capitalist, non market exchanges-points towards the sort of social and economic exchange required to liberate Latin America and the Caribbean from the nightmare of Imperialist capitalism. The movements of the last decade must settle accounts with domestic and regional capitalist classes. The US will not be bogged down in West Asia forever. The Columbian option of renewed counter revolutionary warfare and subversion will move back centre stage, assisted by domestic capitalists.(7)
(1) The Age of Productivity: Transforming Economies from the Bottom Up, edited by Carmen Pagés, Inter-American Development Bank and Palgrave Macmillan.
(2)Helen Yaffe, Che Guevara: The Economics of Revolution, MacMillan, 2009
(3)James Petras, Empire with Imperialism: The Globalizing Dynamics of Neoliberal Capitalism, Luciano Vasapollo, Zed Books, 2006
(4)Wright and Wolford. To Inherit the Earth: The Landless Movement and the Struggle for a New Brazil, Food First Books, 2003.
(5)see, http://monthlyreview.org/100201hart-landsberg.php
(6)Mark Weisbrot, Poverty Reduction in Venezuela: A Reality-Based View, ReVista, Harvard Review of Latin America, Fall 2008
(7)http://www.guardian.co.uk/commentisfree/cifamerica/2010/mar/18/venezuela-election
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