Latin America and the Theory of Imperialism

'Eduardo Galeano

LATIN AMERICA AND THETHEORY OF IMPERIALISM

While Lenin was writing his fundamental work on im-perialism in the spring of 1916, the imperialist powers werelocked in a bloody conflict for control of the world. This cen-tury of ours is passing with the speed of several millennia. Inthe second imperialist war to redivide the world, it was p0s-sible, thanks to the progress that had been made in killing ourfellowmen on the earth and in the sky, to reap an even moreawesome harvest-the survivors were able to count ten times asmany corpses as in the First World War. And today their pastfeats are being overshadowed by even greater accomplishments.More bombs have been dropped in an undeclared war on asmall, poor country in Southeast Asia than fell on Germany,Italy, and Japan in the 19408. The same giant that is conduct-ing the bloodbath in Vietnam is simultaneously sending astro-nauts to the distant surface of the moon. Wember Von Braunis worried about raw materials. "In 1970," he announced, ''weintend to orbit a space laboratory at an altitude of 400 kilo-meters. .. . We will be able to explore all the riches of theearth from this marvellous observation platform: the unknownoil deposits, the copper and zinc mines .... "

More than half a century after Lenin wrote his book,monopoly capitalism has shown that it has more than the pr0-verbial nine lives; and imperialism, its logical extension, hassurvived with unsuspected vigor, centered now around a singlegreat power. But the instruments of this universal system of ex-ploitation are no longer simply the ones Lenin described. Im-perialism has evolved and has become more effective, both inrobbing as well as in killing. It has polished its methods, ex-

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26 EDUARDO GALEANO

tended into new areas, and constructed new models of domina-tion that were unknown on the eve of the Russian Revolution.In this era of electronic computers, the "multinational" cor-porations do not count their profits on their fingers, to put itmildly.

The goal of this brief paper, a very modest tribute toLenin's brilliant work and exemplary life, is to provide somedata and ideas that may help to clarify certain new featuresin the system of seizing the world's markets and national re-sources. Weare concerned above all with imperialism in LatinAmerica at the present time-an interlocking system of conquest,domination, extortion, and pillage, in which deceptive charac-teristics are not lacking.

Colonialism and Dependence

In Imperialism, the Highest Stage of Capitalism, Leninwarned, in refuting Kautsky, that the domination of financecapital not only does not lessen the inequalities and contradic-tions present in the world economy, but on the contrary ac-centuates them. Time has passed and proven him right. Theinequalities have become sharper. Historical research has shownthat the distance that separated the standard of living in thewealthy countries from that of the poor countries toward themiddle of the nineteenth century was much smaller than thedistance that separates them today. The gap has widened. In1850 the per capita income in the industrialized countries was50 percent higher than in the underdeveloped countries. To havean idea of the progress that has been achieved in the develop-ment of inequality, we have only to listen to President RichardNixon: ", . . and I think about what this hemisphere, the newworld, will be like at the end of this century. And I considerthat if the present growth rates of the United States andof the rest of the hemisphere have not changed, at the end ofthis century the per capita income in the United States will be15 times higher than the income per person of our friends, ourneighbors, the members of our family in the rest of the Berni-sphere."1*

• Notes will be found at the end of the article.

LATIN AMERICA AND IMPERIALISM 27

The oppressed nations will have to grow much more rapid-ly just to maintain their relative backwardness. Their presentlow rates of development feed the dynamic of inequality: theoppressor nations are becoming increasingly rich in absoluteterms, but they are richer still in relative terms. The overallstrength of the imperialist system rests on the necessary inequalityof its component parts, and that inequality is achieving evergreater proportions. Capitalism is still capitalism, and unequaldevelopment and widespread poverty are still its visible fruits."Centralized" capitalism can afford the luxury of creating andbelieving its own myths of opulence, but myths cannot be eaten,and the poor nations that constitute the vast capitalist "peri-phery" are well aware of this fact. Imperialism has "modern-ized" itself in its methods and characteristics, but it has notmagically turned into a universal philanthropic organization. Thesystem's greed grows with the system itself.

Nowadays imperialism does not require the old-style colonialadministrations. The archaic Portuguese model of control overAngola and Mozambique is no longer the most "convenient."Lenin described the reality of his time, saying that "natural-ly ... finance capital finds it most 'convenient,' and is able toextract the greatest profit from a subordination which involvesthe loss of the political independence of the subjected countriesand peoples." In his report to the Twenty-second Congress ofthe CPUSSR in 1961, Nikita Khrushchev reached the conclu-sion that "imperialism has irrevocably lost its control over mostof the peoples of the world." According to his report, 40.7 per-cent of the population of the world, without counting the s0-cialist countries, had won their independence after 1919, andthe total number of people living in colonies, semi-colonies, anddominions included, at the beginning of the 1960s, less than3 percent of the world's population. "The revolutions of na-tional liberation have dealt a demolishing blow to the colonialBastille," Khrushchev said. "Forty-two sovereign states haveemerged on the ruins of the colonial empires."

In this connection, it can well be said that Latin Amer-ica is a prophetic zone within the Third World. The politicalindependence of almost all of the Latin American countriesdates back to the beginning of the nineteenth century. It was as

28 EDUARDO GALEANO

a result of that independence, however, that Latin Americaconsolidated its dependence. Power passed from the "foreign"viceroys to "national" merchants advocating free trade, but itwas precisely then that all obstacles were removed for the totalincorporation of the entire region into the international divisionof labor that was centered in England. The words "sovereignty"and "independence" were not then, and still are not in mostcases, more than the lip service that vice pays to virtue. Inreality, most Latin American countries have never controlledtheir own internal markets nor the destination of the economicsurplus generated by their productive forces. The control oftheir basic resources has always been in foreign hands, eitherthrough direct appropriation of the sources of the productionof raw materials and food, or through the monopoly of demandin the foreign markets. The humiliating conditions under whichthey have received "foreign aid" have always facilitated thepenetration of foreign products and capital. Exactly one cen-tury after Argentina achieved its "independence," Lenin wasable to describe that country as a British semi-colony, and hewarned that "finance capital is such a great, it may be said,such a decisive force in all economic and international rela-tions, that it is capable of subordinating to itself, and actuallydoes subordinate to itself, even states enjoying complete politicalindependence." Subsequently this Latin American nation, per-haps the most fortunate in its relations with imperialism, passedthrough a rather intense process of industrialization and ac-celerated urbanization: Buenos Aires is one of the largest andmost attractive capitals in the world. But this does not keepArgentina from being today a U.S. semi-colony, at least in re-gard to its oppressive financial dependency on Washington andthe omnipotence that direct investments by U.S. corporationsenjoy in its internal market.

The threads that make up the dense web of imperialistpower have multiplied and become more subtle. It is not bychance that the world-wide process of capitalist integration underthe hegemony of the United States, a process filled with ten-sion and conflict, has coincided with the irreversible decline ofthe old colonial powers and their methods of control. The


eminent Brazilian anthropologist Darcy Ribeiro described thenew situation in America as follows:

Hegel, in his classic study on the philosophy of history, fore-saw the war between the Latin and Anglo-Saxon peoples of theAmericas. This war is already taking place. However, instead oftroop movements and pitched battles, it is being waged by con-spiracies, bribery, contracts, intimidation, coups, programs of so-ciological studies, economic plans, and publicity campaigns.Through these means of pressure and compulsion, the UnitedStates is implementing, extending, and strengthening its own planfor exploiting our resources,organizingour societies,regulating ourpolitical life, determining the sizeof our population, and determin-ing our destiny,"

The Investments Change Thelr Direction

The First World War was followed by the well-knownwithdrawal of European interests from certain underdevelopedareas of the world. In Latin America, due to obvious geopol-itical reasons, the devastating advance of U.S. imperialism tookplace before and with greater speed than it did in other regions;already by the end of the nineteenth century the Caribbean wasthe Mare Nostrum of the United States. When Lenin wrotehis book on imperialism, however, U.S. capital still representedless than a fifth of all private, direct, foreign investment in LatinAmerica; today it represents close to three fourths. What con-cerns us most here is to point out that after the Second WorldWar there was an important change in the direction of theseinvestments. The tendency is clear. Capital invested in publicservices and mining has been losing its relative importance, whilethe proportion invested in petroleum and, above all, in man-ufacturing industries is increasing. Forty years ago U.S. invest-ments in manufacturing represented only 6 percent of the totalvalue of U.S. capital in Latin America; in 1960 the propor-tion had come close to 20 percent; and at present almost athird of total U.S. investments is in manufacturing.

The three largest countries in Latin America-Argentina,Brazil, and Mexico--are the ones that offer the mast attractivemarkets for foreign industrial capital. The Organization ofAmerican States (OAS), the United States' traditional "Min-istry of Colonies," describes the process as follows:

30 eDUARDO GALEANO

Latin American enterprises are beginning to achieve superi-ority over already established industries and technologiesof lessersophistication,and private North American investments and prob-ably also investments from other industrialized countries are rapid-ly increasing their participation in certain dynamic industries thatrequire a relatively high degree of technology and are more im-portant in determining the course of economic development,"

The penetration has been successful; the potential of U.S.factories located south of the Rio Grande is much greater thanthat of Latin American-owned industry in general. It can beseen from data released by the U.S. Department of Commerceand the Inter-American Committee of the Alliance for Progressthat, based on an index of 1961 = 100, industrial production inArgentina rose to 112.5 in 1965, while during the same periodsales by U.S. subsidiaries in Argentina rose to 166.3. The re-spective figures for Brazil are 109.2 and 120; and for Mexico,142.2 and 186.8.

Of the fifty largest Argentinian businesses (those with asales volume in excess of 7 billion pesos annually), half of thesales volume originates in foreign businesses, a third in state en-terprises, and only a sixth in private Argentinian businesses.' In1962, two enterprises operating with private Argentinian capitalranked among the five largest industrial enterprises in LatinAmerica; by 1967 both of them had been taken over by for-eign capital." A study carried out by the Institute of SocialSciences of the Federal University of Rio de Janeiro and pub-lished in 1965 revealed that of the fifty-five multi..•billionaireprivate groups in the Brazilian economy, twenty-nine were for-eign, twenty-four Brazilian, and two of mixed foreign and Bra-zilian capital; of the Brazilian groups, only nine had no linksthrough stockholders with foreign groups or enterprises. A sub-sequent study by the Brazilian Congress provided new datawhich spoke eloquently of the denationalization process that isproceeding at breakneck speed in that country's industry," Aminister of the Brazilian government said publicly in 1969 that"with a few honorable exceptions, the only strong sector in Bra-zil, besides the government itself, is foreign capital.:" His state-ment is valid not only for Brazil. According to figures publishedin 1962, fifty-six of the hundred most important enterprises in

LATIN AMERICA AND IMp·ERIALlSM 31

Mexico are totally or partially controlled by foreign capital,twenty-four belong to the state, and twenty to Mexican privatecapital." These twenty private Mexican concerns account forbarely 13.5 percent of the total sales volume of the one hun-dred enterprises under consideration.

Except in the case of petroleum and some public services-activities in which the state clearly predominates in Argen-tina, Brazil, and Mexico-almost all of the other enterprisesincluded in the above-mentioned studies are manufacturing in-dustries, and it is precisely in this sector that foreign capital ismost prominent. If this is the situation in the strongest coun-tries in Latin America, it would be redundant to offer exam-ples of foreign penetration of the few industries in the weakercountries. By far the largest part of these investments in man-ufacturing belongs to U.S. corporations, although there are Eu-ropean enterprises with quite considerable interests in LatinAmerica. For example, Volkswagen do Brasil, the largest man-ufacturer of automobiles in Latin America, is a German concern.

The interest of imperialist corporations in appropriating thefruits of Latin American industrial growth for themselves andcapitalizing it for their benefit does not imply, certainly, a lackof interest on their part in all the other traditional forms ofexploitation. It is true that the railway which used to belongto United Fruit in Guatemala was no longer profitable and thatElectric Bond and Share and the International Telephone andTelegraph Corporation made a splendid profit when their prop-erties were nationalized in Brazil and they were paid indemnitiesin gold for outmoded installations. But this abandonment ofpublic services in search of more lucrative activities does notoccur in the case of many raw materials and foodstuffs. Whilea relative decline has been registered in the total volume of newinvestments in minerals, the U.S. economy cannot do withoutthe supply of vital materials corning from the southern part ofthe hemisphere. In The Age of Imperialism, Harry Magdoffhas shown that the United States' need for iron, copper, anda long list of strategic materials is steadily increasing; the pro-portion of imports is growing as the internal production of theUnited States declines. This is also the case with petroleum.After all, the splendid iron deposits in the Brazilian valley of

32 EDUARDO GALEANO

Paraopeba caused the fall of two Presidents before the depositswere graciously ceded to the Hanna Mining Company; coppercertainly has something to do with the disproportionate amountof military aid that Chile receives from the Pentagon; bauxitewas certainly a factor in the conspiracy to overthrow CheddiJagan in Guyana; Cuban nickel explains the blind fury of theEmpire even better than sugar; while the largest U.S. militarymission in Latin America is located in Venezuela, the great oilpreserve of Standard Oil and Gulf.

But all of this should not keep us from emphasizing theimportance of this new phenomenon, which has occurred longafter Lenin's period: the capture of markets from within. Theaffiliates of U.S. and European corporations jump at a singleleap over Latin American tariff barriers, paradoxically erectedagainst foreign competition, and seize control of the internalprocesses of industrialization. They export factories or, frequent-ly, take control of and devour the already existing national fac-tories. For this they can count on the enthusiastic aid of themajority of the governments of Latin America.

Under the Sign ofProgress1"The export of capital," wrote Lenin, "greatly affects and

accelerates the development of capitalism in those countries towhich it is exported." Historical experience has demonstratedthat this is not so. The imperialism that Lenin knew-the greedof industrial centers in the search for world markets for theirexcess production and the capture of all the possible sources ofraw materials; the extraction of iron, coal, and oil; the railwayscementing their control of the areas under exploitation; theusurious loans made by the financial monopolies; the militaryexpeditions and the wars of conquest-certainly did not ac-celerate anything except "the development of underdevelop-ment," as Andre Gunder Frank expresses it so well. Contraryto Midas, imperialism has turned everything it touched intoscrap. But now some are tempted to deny this, basing them-selves on the supposedly different situation that exists today. Itis possible that Lenin was mistaken when he attributed an ac-celerated effect on development to the "old model" of imperial-ist exploitation, they argue, but this is not the case with the

LAT~N AMERICA AND IMPERIALISM 33

"new model." There is no lack of technocrats today preparedto demonstrate that foreign capital, in its new positive guise,benefits the areas it penetrates. To the degree that the modelof exploitation has changed, they tell us, its consequences havealso changed. Previously, imperialism razed the places where acolony or a semi-colony might have dared to erect its ownfactories, but 'now the rich countries stimulate the industrializa-tion of the poor nations. This "industrializing imperialism" ofour day, they maintain, contrary to the imperialism of pasttimes, has an inevitable civilizing effect on a universal scale.Now guilty consciences no longer need alibis, since they are nolonger guilty; modem imperialism radiates technology and prog-ress, and it is even in bad taste to use that hateful word todescribe it.

What actually are the effects of the increasing shift offoreign investment toward manufacturing industries in LatinAmerica?

In the first place, it is necessary to note that this processof industrial denationalization has not required a large influx ofcapital. After all, direct investments of U.S. origin in 1966 inArgentinian, Brazilian, and Mexican industry, so important forthe virtual monopolization of "key" manufacturing industries,were barely 3, 3.8, and 3.6 percent respectively, of the totalamount of U.S. capital invested on a world-wide basis. Andit must be noted that even those investment figures are inflated.In effect, since the rapidity with which technology is advancingis shortening at an ever increasing rate the length of time neededfor the amortization of fixed capital in the advanced economies,the vast majority of the manufacturing installations and equip-ment exported to Latin America has already passed through acomplete productive life cycle in its country of origin and hasbeen completely or partially amortized before it is exported.This "detail" is not considered for the purposes of calculatingthe amount of foreign investment-the value placed on themachinery is fixed at an arbitrarily high level and would notbe even remotely so expensive if the frequent cases of priordepreciation were taken into account. But why should the parentcompany incur expenses to produce in Latin America goodswhich were previously sold there after being manufactured in

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the home country? The Latin American governments them-selves make sure that the foreign companies do not incur theseexpenses, by extending aid to the affiliates that are being in-stalled, they say, to redeem the Latin American countries fromtheir condition of underdevelopment. The affiliates have accessto local credit from the moment they first post a sign on theland where the factory is to be built; they can count on foreignexchange privileges for their imports-imports which the com-panies usually purchase from themselves-and in some cases(such as Brazil) they can even count on special exchange ratesfor the payment of their foreign debts, which frequently aredebts that they owe to the financial branch of the same cor-poration. The affiliates are also exempted from numerous taxesover long periods of time, and it is even common for themto receive guarantees against the risk of expropriation and mone-tary devaluation. They finance their subsequent expansion byreinvestment of part of their juicy profits and, above all, bymeans of the credit they receive in the country where they areoperating. According to the OAS, an unimpeachable source inthis respect, barely twenty cents of every dollar that U.S. in-dustrial affiliates use for their operations and expansion comefrom the United States. The remaining eighty cents come fromLatin American sources, through credits, loans, and the reten-tion of profits. U.S. affiliates employ Latin American capitalalmost exclusively to finance their various operating needs," Thischanneling of national resources into foreign enterprises is duein large part to the proliferation of U.S. bank branches spreadthroughout Latin America in order to pour national savingsinto foreign hands. There were 78 branches of U.S. banks inthe area in 1964; in 1967, the number had risen to 133.10 TheBank of New York acknowledges publicly that the most im-portant among its new goals in Latin America is the captureof domestic savings for the benefit of the multinational cor-porations, so as to meet their production and sales needs," It isworthy of note that the number of national banks which, with-out a change of name, are coming under foreign banking con-trol is growing. Even those Latin American banks which havenot been infiltrated or captured find it highly convenient tosatisfy the credit requests of foreign affiliates, which are solidly


backed and have a very considerable sales volume. The mobili-zation of local resources does not have, of course, the slightesteffect on the capital structure of these enterprises. In general,99 percent of the affiliates' stock is controlled by the parentcorporation."

A form of foreign penetration which does not require anyinvestment at all is becoming increasingly common in LatinAmerica. Even the OAS itself recognizes in the above-citeddocument that the development of U.S. companies in LatinAmerica is due to a great degree to "the acquisition of LatinAmerican industrial enterprises by U.S. interests, a phenom-enon that has been observed over the last few years." Everymethod of financial coercion is employed for this purpose, in-cluding dumping, financial blackmail, and the infinite possibil-ities for exerting financial pressure provided by an overwhelmingtechnological superiority. The old mechanism by means ofwhich the creditor acquires the debtor's property, for example,is employed on a large scale. Debts acquired through the pur-chase of supplies, the use of patents and trademarks, etc., com-plicated by monetary devaluations that force the national enter-prise to pay more pesos for the same amount of dollars, fre-quently lead to bankruptcy. Since the end of the 1950s, eco-nomic recessions, monetary instability, tighter credit, and thedrop in the buying power of the internal market have all facil-itated the task of bringing national enterprises to their kneesbefore the large foreign corporations. Besides, since the affiliatesof these corporations are no more than cogs in a world-widesystem, they can afford the luxury of losing money for a yearor two or indeed for whatever time is necessary. Consequently,they lower their prices and wait for their victim's demise. Thesiege begins. The banks collaborate, and the national enter-prise is found not to be as solvent as it seemed-it is there-fore denied assistance. The national enterprise, completely sur-rounded, soon raises the white flag. Both sides then merrilycelebrate the surrender. The Latin American "national bour-geoisie," which was produced by the old agricultural export-ing system, rediscovers its destiny-the local capitalist becomeseither a junior partner or a functionary of his conquerors. Or hegains the most coveted prize of all; he receives the ransom of

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his goods in stocks in the foreign parent corporation and endshis days living the soft life of a shareholder.

The great corporations, then, do not need to bring manydollars along with them. Quite to the contrary, they take themout of the country. "Under modem capitalism, when monop-olies prevail, the export of capital has become the typical fea-ture," wrote Lenin. In our days, as Baran and Sweezy havepointed out, imperialism imports capital from the countrieswhere it operates. In the 1950-1967 period, new U.S. invest-ments in Latin America totaled, without including profits whichwere reinvested, $3,921 million. In the same period, $12,819million were repatriated by those enterprises in profits and div-idends. The earnings which have been drained off are morethan three times as much as the total amount of new capitalinvested in Latin America. But this is a conservative estimate.A good part of the money which was sent back to the U.S.as amortization was really profits, and the figures also do notinclude payments abroad for patents, royalties, and technicalassistance; nor do they reveal other invisible transfers that usual-ly appear under the heading "errors and omissions"; nor dothey take into account the profits that the corporations re-ceive when they inflate the prices of supplies sold to their af-filiates and when they inflate, with equal enthusiasm, theiroperating costs. The negative flow of capital reflects increasing-ly greater profits, above all in the most underdeveloped areas:Latin America, Africa, and, to an even greater degree, Asia.

The profound structural deformations in the Latin Amer-ican economy, which can be seen everywhere and at all times,like a bone laid bare by a wound, are also reflected in thesimple and terrible fact that half of all investments in LatinAmerica are of an unproductive nature," The "internationaliza-tion" of the industrial process has only increased this waste, al-lowing the economic surplus produced in the region to bedrained off by foreign interests. It is becoming more and moreevident that the bread of the oppressive minorities in LatinAmerica is the poison of the oppressed majorities; south of theRio Grande private interests coincide less and less with publicinterests. Foreign investment in industry does not alter this pic-ture of things; it only confirms it in a dramatic fashion.


When they remove more dollars than they bring, the for-eign enterprises help increase the growing deficit in the balanceof payments; the region that is "benefited" is decapitalized in-stead of capitalized. The loan mechanism then begins to func-tion. And it is important to observe that the international creditorganizations play a very important role in dismantling thedefensive citadels of Latin American industry. Lenin rightlyemphasized the fact that the export of finance capital is, forthe imperialist countries, a means of stimulating the export ofgoods. In this sense, the conditions attached to loans made bythe Alliance for Progress, "tied" to the purchase of goods andservices in the United States, are instructive. This holds true tosuch an extent that the portion of real aid in official U.S. fi-nancial assistance to Latin America is less than half the amountof nominal aid, again according to unimpeachable sources," asa result of the conditions under which it is given. The changesannounced by President Nixon do not significantly alter thesituation. But it is still more important to note the importanceof international credit in "clearing the way" for direct invest-ments by the large corporations. "The characteristic feature ofimperialism," wrote Lenin, "is not industrial capital, but fi-nance capital." The evolution of capitalism since then impliesan evolution of imperialism. In the last half century changeshave taken place within the capitalist system; in the UnitedStates banks no longer control industrial corporations, but areinstead integral parts of the same system." And just as themultinational corporations are multinational because they oper-ate in the four comers of the capitalist globe, while their proper-ty is in no way international, so the international monetaryorganizations are in no way at the service of the numerouscountries that provide the capital with which they operate, butinstead fulfill the designs of the great integrating power ofworld capitalism-the United States. The death of the systembased on the gold standard, which signaled the definitive de-cline of the British Empire, enormously increased the interna-tional supply of finance capital and made possible the appear-ance of organizations such as the World Bank, the InternationalMonetary Fund, and, on the regional level, the Inter-AmericanDevelopment Bank, which reserve for themselves the right of

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governing the Third World and of determining the course tobe followed by the countries that benefit from the credit theyextend. The presence of the marines is becoming less and lessnecessary; the international technocrats disembark instead (tearsflow, not blood) and mount assaults on the central banks andthe key ministries of the poor nations.

With its direct investments, imperialism bleeds dependenteconomies. With its loans, it administers the drug necessary tokeep them on their feet and takes control, in an increasinglyarrogant way, of the internal power structure. Imperialism firstmakes its subject ill, and then it constructs the hospital inwhich the patient lies imprisoned and without any possibility ofbeing cured. Latin America is now living through what econ-omists call the "debt explosion." It is a vicious circle of stran-gulation: loans and investments increase, and as a result thepayments of amortizations, interests, dividends, and other ser-vices also increase. In order to make these payments, new in-jections of foreign capital that generate greater obligations areneeded, and so on successively.According to the World Bank,payments for services in 1980 will completely cancel out theinflux of foreign capital to the underdeveloped world. In thedecade 1956-1965, Latin America's public foreign debt climbedfrom $4 billion to close to $11 billion. In 1965, the influx ofcredit was already less than the capital leaving the region tomeet commitments previously contracted.

The World Bank, the Alliance for Progress, and Ll.S. priv-ate banks make their loans contingent on approval by the In-ternational Monetary Fund (IMF). The IMF uses the magicphrase "monetary stabilization" to impose on Latin America thepolicies of liberalization of trade, tightening internal credit, freez-ing wages, discouraging state activities, and monetary devalua-tions that are theoretically intended to stimulate exports butthat in fact only stimulate the internal concentration of capitalin the hands of the large landowners, the bankers, and the bigspeculators. This is a policy intended to destroy national de-fenses against the omnipotent penetration of foreign private cap-ital. The terrain is prepared in advance for the conquerors.

All these imperialist organizations for international philan-thropy insist on the struggle against internal and external im-


balances in the Latin American economy. Their prescriptionscorrespond to the diagnosis. We cannot, given the brevity ofthis study, demonstrate the many ways by which the policyimposed by them aggravates those imbalances instead of lessen-ing them, What interests us here is simply to observe the effectthat imperialist investments in the field of industry have on oneof the most important factors in Latin American economic im-balance-foreign trade. The "trade gap" is becoming widerand wider because the need to import products is growingsteadily in relation to the financial resources generated by ex-ports. Only a tenth of Latin American exports are providedby manufactured products. The region depends on sales of un-processed or hardly processed primary products that have veryunstable prices on international markets controlled by the richcountries and their powerful corporations. Latin American ex-ports grow in volume but their prices tend to fall-or, in thebest of cases, they remain stagnant-while the prices of in-dustrialized products imported by the region rise. Buying poweris diminishing. Taking 1950 prices as a base and adding datafrom various documents published by the United Nations Eco-nomic Commission for Latin America and the UN itself, it canbe seen that Latin America lost, due to the deterioration of itsterms of trade, more than $18.5 billion in the ten years from1955 to 1964. Now then, imperialist investments in the industrialsector have had absolutely no effect on these terms of interna-tional trade. Latin America continues to exchange its primaryproducts for specialized articles produced in the metropolitaneconomies. The importance of "traditional" exports is actuallygrowing within the total picture rather than diminishing, and theproportion of foreign sales by foreign affiliates is steadily de-creasing within the total volume of sales.

The head of a U.S. technical mission to Brazil, John Ab-bink, announced prophetically in 1950: "The United Statesmust be prepared to 'guide' the inevitable industrialization ofunderdeveloped countries if it wants to avoid the blow of veryintense economic development outside of U.S. influence....Industrialization, if it is not controlled in some way, will leadto a substantial reduction in U.S. export markets,'?" There wasabsolutely no reduction in the Latin American market for U.S.

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goods. One of the paradoxes of industrialization to reduce im-ports is that it forces an increase in imports. Certain goods thatpreviously were imported are produced intemaI1y, but suchinternal production generates a "derivative" demand for in-termediate products and capital goods, the magnitude of whichgoes far beyond the original saving in foreign currency. TheUnited States now sells Latin America a greater proportion ofmore sophisticated products requiring a higher level of tech-nology. "In the long run," says the U.S. Department of Com-merce, "as Mexican industrial production increases, there aregreater opportunities for additional exports from the UnitedStates... .'llT The affiliates of great corporations have leapedthe tariff barriers to supply Latin American markets fromwithin, and they obtain additional benefits to the degree thatthey make purchases abroad, buying materials from their parentcorporations or from other affiliates at prices set deliberatelyhigh.

This imperialism that even exports entire factories cor-responds to the highest stage in the development of monopolycapitalism. In Lenin's time, free competition was already amuseum piece. Today the corporations comfortably enjoy thecontrol of prices in the countries where they operate. In LatinAmerica they protect themselves behind a Chinese Wall of pr0-tective tariffs to produce, at prices two or three times higher,products that they used to export to our countries from abroad.Investments are low, manpower is as abundant as it is cheap,and the state subsidizes the financing of installment buying.Nevertheless, everything is more expensive. Control over themarket is facilitated by the complete freedom which these enter-prises enjoy, by the magic prestige of U.S. trademarks andadvertising slogans in English, benefiting from an unparalleledand effective international publicity campaign, and from thefact that foreign industrial investments control the "modern sec-tor" of the dependent economies which, by its own dynamics,subordinates all the other sectors to it.

The internal markets, then, provide juicy profits, eventhough the significant consumers in Latin America representonly a very small part of the total population. Barely one outof every four Brazilians can be considered a real consumer. The


population is growing at a dizzy rate, and yet the develop--ment of dependent capitalism-a voyage with more disastersthan survivors--Ieaves more people on the margin of the econ-omy than it integrates into it. In the majority of Latin Amer-ican markets there is only an elite with buying power. Foreignindustry is aimed, above all, at that elite, and it does not showthe slightest interest in expanding the consumption of the massesbeyond a certain limit. The market could only be expanded bothhorizontally and vertically if profound changes were made inthe entire socio-economic structure. Fernando Henrique Cardosohas noted'" that national capital in Argentina and Brazil isstrongest in the "traditional" industrial sectors, those with alow technological level which depend to the greatest degreeon a mass market, while the foreign affiliates or the nation-al capitalists subjected to "structural dependency" only "re-quire the strengthening of economic links between the islandsof development in the dependent countries and the interna-tional economic system, and subordinate internal changes tothis primary objective."

The studies that have been carried out concerning theneed for agrarian reform are very instructive in this regard,above all if one takes into account the fact that the agrarianquestion is the main bottleneck in Latin American develop-ment. In Argentina as well as in Brazil, "the managerial sectorshows a marked tendency to opPOSeagrarian reform,'?" andthe studies that have been made show clearly that the moredependent the managerial sector is on the "international modeof production," the sharper is its opposition to changes inthe agrarian structure. The industrially less complex sectors arethe ones that favor drastic broadening of the market. The mostcomplex sectors, when they represent national capital, are usual-ly bound to foreign interests by their technological or financialdependency, and the payment on account of patents, profits,interest, royalties, stock dividends, or "know-how" is accom-panied by an attitude of resistance to possible structural changes.There is a direct relationship between the manager's degree ofdependency and his political Panic when there is the slightestpossibility of change in the power structure from which hebenefits. The latifundium continues untouched-it is his ally.

42 EDUARDO GALEANO

The continued existence of the rural latifundium generatesa constant and growing flow of workers moving from the coun-tryside to the cities, but the factories do not provide employ-ment for the surplus workers. On the contrary, industrial pro-ductivity is increasing in the face of ever-diminishing job op-portunities-and Latin America has the highest demographicgrowth rate in the world. The "internationalized" industrializa-tion has an exclusive character; the enterprises bring a tech-nology along with them to save on manpower in countries wheremanpower has no employment. The proportion of workers inmanufacturing industry is diminishing in relation to the totalactive population in Latin America. Factory workers represent-ed 14.5 percent in the decade of the fifties, but only 11.6 percentin the decade of the sixties." A fourth of the active population iscurrently unemployed or underemployed; in the large cities agrowing multitude is crammed into the [aoelas, the villas mise-rias, the ranchos, the cantegriles, and the callampas, broad beltsof poverty around the wealth of the urban centers. The systemvomits forth men, but industry gives itself the luxury of sacri-ficing manpower to an even greater degree than European in-dustry does." In contrast to the "classical" models of capitalistdevelopment, there is no coherent relationship between avail-able manpower and applied technology. Rich lands, vast under-ground wealth, and very poor people-that is the panoramapresented by this realm of abundance and need. Great num-bers of workers are abandoned by the roadside by the systemwhich condemns them to a marginal existence and frustratesthe development of the internal market and lowers the wagelevel. The eruption of the urban bourgeoisie onto the stage ofhistory has not provoked, in contrast to Europe and the UnitedStates, any agrarian revolution; dependent industrializationfunctions on the structure just as it is. It is true that "poles"are developing around which the production and wealth ofeach country are being concentrated, but they do not share thebenefits of their growth. They are oases of prosperity in thedesert, the shining cities that feign their existence amid the deso-late landscape of widespread poverty. The new type of foreigncapital, which raises smokestacks in underdeveloped areas, isconcentrated around these poles in such a way that it not only


sharpens social contradictions by segregating the labor forceand polarizing wealth still further, but also sharpens regionalcontradictions within the borders of each country and withinthe overall limits of Latin America. The efforts that are beingmade to form a Latin American Common Market reflect, inthis sense, the desire to lay the basis for a new division of laborthat would benefit the most developed urban centers, thusbroadening the markets for the denationalized industry, whileleaving intact the structure each country must endure.

The native Latin American bourgeoisie, a bourgeoisie ofmerchants without creative spirit, connected by its umbilicalcord to the power of the land, is on its knees before the altarof the goddess technology. It is in the name of technologicalprogress that national enterprises pass into the hands of for-eign interests, sometimes in the most direct and brutal fashionand at other times through the consolidation of multiple hiddenforms of dependency. Raul Prebisch himself warns that "U.S.enterprises in Europe install laboratories and engage in re-search that helps strengthen the scientific and technical capacityof those countries, something which has not occurred in LatinAmerica." And he reveals a very serious fact. "National inves-tors," he says, "due to their lack of specialized knowledge (know-how), carry out most of their transfer of technology by re-ceiving techniques that belong to the public domain and thatare imported as though they were licenses of specialized knowl-edge.... "%2 ,This "national" bourgeoisie with its clipped wingsis defeated in advance. The great multinational corporations,which stand at the controls of technological progress, obviouslyalso hold the keys to the Latin American economy. The transferof power to foreign interests is, when things are seen in theirproper perspective, much more serious than the statistics in-dicate. It is also necessary to keep in mind that the large im-perialist investments in the most dynamic sectors of the LatinAmerican economy provide those corporations with limitlesspower to manipulate the consumer market, which is increasinglyattracted by U.S. advertising, to channel national savings andthe economic surplus produced by our countries, to use advertis-ing and the various other ways of creating public opinion, and,

EDUARDO GALEANO

also, to exert that political pressure required by imperialism'sdigestive needs.

The new type of imperialism does not make its coloniesmore prosperous, even though it enriches its "enclaves"; it doesnot alleviate social tensions, but on the contrary sharpens them;it extends poverty and concentrates wealth; it takes over theinternal market and the key parts of the productive apparatus;it appropriates progress for itself, determines its direction, andfixes its limits; it absorbs credit and directs foreign trade as itpleases; it does not provide capital for development, but in-stead removes it; it encourages waste by sending the greatest partof the economic surplus abroad; it denationalizes our industryand also the profits that our industry produces. Today in LatinAmerica the system has our veins as open as it did in thosedistant times when our blood first served the needs of primaryaccumulation for European capitalist development.

(Translated by William Rose)

Notes1. Richard M. Nixon, speech to the OAS, April 14, 1969. Of course,

it is also necessary to take into account the rate at which the gapseparating the poor from the rich widens within Latin American coun-tries-per capita income is a deceptive average.

2. Darcy Ribeiro, "EI dilema latinoamericano," unpublished.3. General Secretariat of the OAS, El financiamiento esterno para el

desarrollo de la America Latina (Washington, 1969). A document oflimited distribution presented to the sixth annual meeting of the Inter-American Economic and Social Council.

4. Quoted by the United Nations Economic Commission for Latin Amer-ica, (Estudio Econ6mico de America Latina, 1968).

5. Rogelio Garcia Lupo, Contra la ocupaeio« extranjera (Buenos Aires,1968).

6. See Eduardo Galeano, "The De-nationalization of Brazilian Industry,"Monthly Review, December 1969.

7. Speech by Minister Helio Beltrao before the Commercial Associationof Rio de Janeiro, Correio do Poco, May 24, 1969.

8. Jose Luis Cecefia, Los monopolies en Mexico (Mexico, 1962).9. OAS, op. cit.

10. International Banking Survey, ]ouT'nal of Commerce, New York, Feb-ruary 25, 1968.

11. Robert A. Bennett and Karen Almonti, International Activities ofUnited States Banks (New York, 1969).

12. Celso Furtado, La economla latinoamericana desde la Conquista Ibi-rica haste la Revoluci6n Cuban'll, (Santiago de Chile, 1969).

LATI N AMERI CA A NO 1M PERIALIS M 45

13. AIdo Ferrer, "Distribuci6n del ingreso y desarrollo econ6mico," Eltrimestre economieo, Mexico, April-June 1954-.

14-. OAS, op. cit.15. Paul Baran and Paul M. Sweezy, Monopoly Capital (New York, 1966).16. ]ornal do Comercio, March 23, 1950.17. International Commerce, a U.S. Department of Commerce weekly,

April 24-, 1967.18. Fernando Henrique Cardoso, "Politica e desenvolvimento em socieda-

des dependentes: ideologias do empresariado industrial argentino ebrasileiro," unpublished thesis, Sao Paulo, 1968.

19. Ibid.20. United Nations Economic Commission for Latin America, op. cit.21. OAS, op. cit.22. Raul Prebisch, "La cooperaci6n internacional en el desarrollo latina-

americano," Desarrollo, Bogota, no. 12, January, 1970. (Emphasisadded.)

Documents

Latin America and the Theory of Imperialism