Post-Colonial Economic Patterns and Aberrations in Latin American Countries
During the colonial period, European countries practiced mercantilism. This encouraged in their colonies the production of mineral products and agricultural products which could be exported to the mother country as raw materials for industries there. It also extended the influence of the money economy into the economic life of the colonial peoples. As increasingly larger amounts of land were switched from growing food crops to growing “cash crops,” colonies became less and less self sufficient in food production and often turned from being surplus food producing areas to being food importing areas. This pattern benefited the business community in the mother country in two ways:
The colonies produced crops which could be used by businesses in the mother country: cotton, sugar cane, indigo, coffee, cacao, tea, hemp, sisal, etc.
The colonies imported food products from businesses in the mother country.
When Spain and Portugal colonized what is now called Latin America, their social structure was still largely feudalistic at a time when feudalism was on the decline in other parts of Europe, such as England. The Spanish and Portuguese imposed a feudal social and economic system in their colonies which persisted long after they had achieved independence. The Europeans who came to the Spanish colonies, in particular, did not plan to stay and build new homes. Spain sent largely men who were anxious to seek adventure, obtain wealth, and return to Spain to the “good life.” The Spaniards who came were often the third or fourth sons from aristocratic families. They had good family names, but they had no title, land or money. America, to them, was to be a temporary stop in life’s journey – a stop where they got wealthy and then moved on. They came with attitudes more suited to economic exploitation of the Americas than to long-term development.
Even when the Spaniards did obtain large land-grants from the king of Spain, they usually didn’t live on the land and develop it. They established large estates, often referred to by the Latin term latifundia, These were structured much like the feudal manors in Europe. The landowner had a large home with its associated buildings. The laborers lived in villages on the landowner’s estate. The estate was managed by a manager because the landowner rarely lived on the estate for long periods of time. For most of the year, the landowner lived in a townhouse in the nearest large city. A rigid class structure was established with those of European descent at the top and little or no social mobility for those below.
The peasants who worked as laborers were much like the serfs on feudal estates in medieval Europe. The laborers were dependent on the landowners for work on the estancia or hacienda, as the large land holdings were called. These laborers, like serfs, had no homes, tools, or land of their own. They were completely at the mercy of the manager who worked for the owner and made the day-to-day decisions about the operation of the estancia or hacienda. With the lack of social mobility, those of the laboring class, and their descendants, tended to be locked into the system for life. Often uneducated because the landowners saw no need for educated laborers, their opportunities were limited. When laborers worked somewhat as sharecroppers, they were usually in debt to the landowner for the purchase of necessities on credit. These debts bound them to the estancias or haciendas.
This absentee landlord arrangement fostered an inefficient agricultural system. The landlords weren’t very interested in investing in the long-term growth of the colony, or after independence of the country. As long as they earned enough to pay for their lifestyle, they were satisfied. After the Spanish colonies achieved independence from Spain, the politicians who shaped and ran the countries largely came from this class of aristocratic landowners. The feudal or semi-feudal relationships between landowners and laborers continued. Low agricultural productivity continued to be accepted. The privileged few continued to live well, while the masses had much less. The upper class of “Europeans” guarded their hold on political power in the country. The upper ruling class often followed policies that were good for those in their class, but may not have been good for the long-range welfare of the whole country. The ruling class also fostered the colonial attitude that work with the hands is demeaning or degrading and that such activity should be shunned by those with culture and social standing.
The effects of the negative attitude toward work retarded the economic development of countries in Latin America as late as the early and middle 20th century. Education in most Latin American countries was the privilege of those who could afford it. This meant that most people who were educated came from the wealthy, ruling class. Many of the men of the upper class obtained college degrees in law, the classics, or philosophy. Men of good breeding and high social standing wouldn’t consider getting a college degree in business, engineering, agribusiness, agriculture, or animal husbandry. Those who did get college degrees got them more for status than for occupational opportunities. A young man with a law degree would probably not practice law – that would be working. This attitude toward work began to change somewhat in the last third of the 20th century, and educational opportunities expanded to more young people below the traditional upper class. For almost 150 years after achieving independence and “liberty,” economic development in Latin America was retarded by the lack of people educated in and willing to work in the fields that lead to growth and development.
Not all farming in Latin America has been done on large, under-productive, estancias and haciendas which focus on producing cash crops. In many Latin American countries, a sizable part of the agricultural labor force work on tiny farms referred to as minifundias. These are farms that are so small that they do not provide employment for two persons. The quality of the land is usually lower than that of the estancias and haciendas. The farmers on the minifundias are usually as oppressed by circumstances as the landless laborers on the estancias and haciendas. They have little or no capital, storage facilities, or means of transporting crops to distant markets. The surplus they may produce must be sold in the nearest village market. In that market, there may be but one large buyer, so the farmer has little control over the price he receives for this surplus production. While these farmers may vote, the nature of politics in many Latin American countries for most of the past 170 years has been such that the winners in elections are chosen by conspiracy of the elite.
Where latifundia and minifundia exist in the same country, often in the same areas, the peasants living on the minifundia provide a labor pool of peak-season agricultural help for the haciendas or estancias. Rather than subsistence crops, some of the minifundia grow coffee as a cash crop. The production of these tiny farms is so small, that each farmer has no influence on price. They must accept the going price being offered in the nearest coffee market.
In some parts of Latin America, plantation agriculture occupies much of the better agricultural land. Being large-scale operations, these usually require large-scale investment to be commercially marketable. In some countries, the plantations are owned by large foreign-owned companies. For many years, the United Fruit Company, a United States company, owned many of the banana plantations in Central America. Here, again, the land is used to produce cash crops for export at the expense of producing food crops for the home market. Plantations differ from the latifundia in that these are large-scale commercial ventures undertaken for profit. Efficiency and maximizing the economies of scale are crucial to the financial success of these ventures. The latifundia and the plantations are similar in that they are usually large operations, but in their fundamental natures they are quite different. The latifundia are really a way of life, a social institution; whereas, the plantations are primarily economic enterprises.
Five hundred years ago, the Spanish arrived in the Americas. They brought with them a social system, feudalism, which was past its “time” in Europe and institutionalized it in their colonial possessions. The rigid social structure and the attitudes of the upper class slowed the economic and political development of Latin American countries for more than a century. The mercantilist economic thinking of European countries in the 16th through 19th centuries established an economic system designed to produce primary products (raw materials) for the European mother countries. Increasing amounts of land were used to produce cash crops for export and fewer and fewer acres were used for domestic agricultural needs.
In many countries, agriculture concentrated on producing one or two main cash crops, rather than a diversified variety of farm products. In a world where these products were available from many countries, these producers had little control over the prices for which their products were sold. Changes in the international market could have profound effects on the economies of these countries. If there were a worldwide boom year for coffee production, the market price for coffee beans would drop. A country that depended heavily on coffee exports for foreign exchange currency would find that it would receive less foreign exchange currency than it had expected. The country would not be able to buy as much from developed countries as it has hoped that year for lack of sufficient foreign exchange currency. It can be risky for a country to depend too much on the export of one or two products, but this was the pattern which was encouraged under colonialism and continued after independence in most of Latin America.
y the end of the second millennium, this pattern was changing in most Latin American countries. Education had reached more people and farther down the social ladder. Latin Americans were more willing to invest in the commercial and industrial development of their own countries. Secondary and tertiary industries were being established in some countries. Brazil had achieved a GDP that ranked in the top ten in the world. The influence of colonial Spanish and Portuguese social and economic institutions is clearly declining in many c
ountries, but that change “has been a long time in coming.