Latin America: Reconciling a Legacy of Colonialism

Terry Lynn Karl contends that Latin American inequality can largely be explained by

looking at how the “past [still] has its claws in the present,” asserting that “hierarchical political

structures based on arbitrary executive dominance, an extremely weak rule of law, and excessive

militarism” are the core obstacles colonialism persists even today (Karl, 2003, 139). At their

respective times of independence throughout the 19th century, the majority of Latin American

countries struggled to find their national and cultural identities, relying on Western philosophical

doctrine such as positivism initially to explain social, political, and economic shortcomings. In

both Mexico and Venezuela, Porfirio Díaz and Juan Vicente Gómez were able to successfully

rise from their place as regional caudillos, to charismatic strongmen at the helms of national

governments, eventually leading to full military regimes. In this analysis, I will argue that

through despotic leadership, the concentration of resources, and the perpetual reliance on foreign

investment throughout the 19th and 20th centuries, a vicious cycle of inequality has been born

from harsh legacies of colonialism in both Mexico and Venezuela.

The philosophical idea of positivism grew from western ideologues who advocated the

theory as a legitimate explanation for the socio-economic lag taking place in Latin America. The

struggle to establish an independent national identity and explain failing economic and

bureaucratic systems by means of racial inferiority became prominent features of the 19th

century, and was responsible for violent civil wars as well as mass internal uprisings within Latin

American countries (Hirschman, 1961, 5). Theorists at the time such as García Calderón would

go as far to claim that “race was the key to the incurable disorder that divides [Latin] America

(Hale, 1986, 401).” In Mexico, the first signs of socio-political reform took place during La

Reforma in the 1850’s (Hilbink, 2014, 2/10). Influence from the United States impacted multiple

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regions of Latin America by systematically creating monoculture economies such as sugar and

cacao, which not only demanded economic dependence on the part of Latin American nations,

but is also responsible for the severe underdevelopment in the region throughout (Hellinger,

2011, 87-88). With regional caudillos being the popular choice of leader for the masses,

ultimately the rise of long term repressive dictatorships early on in both Mexico and Venezuela

during the 20th century account for the further lag that took place in these countries, maintaining

that even with their independence, the legacy of colonialism would live on. What initially began

under the encomienda system, the distribution of income and assets became heavily skewed and

unequal, concentrating large amounts of political and economic power into the hands of a small

group of elites (Karl, 2003, 139). Escaping the claws of this legacy has prompted revolution and

civil war throughout Latin America.

Reigning for 35 years through a façade constitutionalist dictatorship, Porfirio Díaz was

responsible for putting Mexican politics on a national level, rather than the regional caudillismo

level of politics previously taking place. Coming out of a positivist ideology, it is not difficult to

see how a charismatic caudillo like Díaz came to power when the ideology prescribes either

enlightened despotism or oligarchic democracy as the two viable solutions when democracy

must be delayed (Hilbink, 2014, 2/10). As a proprietor of anti-imperialism, Díaz’s reign held

many implications for the structuring of economic and political systems. With extreme

disparities between the landed oligarchy and the peasantry, the concentration of wealth further

isolated the ability for the masses to organize in any sort of political fashion, also a byproduct of

the clientelism, corruption, and social repression that was taking place during the Porfiriato. The

severely unequal distribution of land, violent government repression, and political corruption

during the Porfiriato are factors that explains how the masses were kept in poverty for years

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while a few hundred elite families controlled Mexico’s wealth. Severely unequal distribution of

resources is one central factor in how Karl explains a perpetuated vicious cycle. While Díaz was

extremely successful at centralizing the state and concentrating power into the executive, he left

the middle class virtually non-existent, illiteracy rates at 75%, and 90% of the peasantry landless

(2/17). These effects would linger until around 1911, when the Industrial Revolution had

previously since united the social working classes into revolt, and Madero forced Díaz into

resignation (Chávez, 206). Prolonged military dictatorships like the Porfiriato era illuminate how

social and economic distributions can become further polarized, causing inequality to grow, and

the legacy of colonialism to live on. During the Díaz regime, the presence of the landed

oligarchy grew, continuing the structurally unequal system started under the encomienda system.

Engerman and Sokoloff illustrate the inequality by concluding, “These estates were not unlike

feudal manors, where lords held claims on the local population that could not be easily

transferred and where labor mobility was limited (2000, 125).”

With the death of Símon Bolivar and the fall of Gran Colombia, Venezuela would start

down a path promoting a vicious cycle of inequality. In the first installation of long-term

dictatorships, José Antonio Paéz focused the Venezuelan economy exclusively on the exportation

of coffee (Hilbink, 2014, 2/10). Relying on a monoculture export economy, little bureaucratic

state building was implemented during any of his eighteen year rule from 1830-’48, and when

coffee export prices took a sharp dip, nationalist movements were quick to challenge his

legitimacy as leader (2/19). The use of liberal oppression socially and politically by Venezuelan

leaders continued throughout the late 19th century with Antonio Guzmán Blanco, where power

was left concentrated in the executive, with few checks on power or protections for the masses.

With growth being impeded by high levels of poverty and inequality, and growth rates

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subsequently too low to address these problems, Karl’s vicious cycle emerges (Karl, 2003, 135).

This pattern continued with the installment of Juan Vicente Gómez in 1908, where oil facilitated

the height of inequality in Venezuela.

With Venezuela now being regarded on the global scale in a major way for the first time

since their independence, their lucrative oil industry sparked the interest of foreign investors,

especially those of the United States. Poised around massive state consolidation and

centralization, Gómez was quick to ally with the United States in oil pacts, and the 1920’s

witnessed a “dance of concessions (Di John, 2009, 188). With little regard for institution

building, the trend of concentrated wealth in the hands of a landed oligarchy and socio-politically

oppressed masses continued. The oil era produced what John Rawls would coin as the “birth

lottery (Karl, 2003, 150).” In Latin America, this term can be defined more successfully as a

“commodity lottery.” This self-reinforcing system of producing a winner-loser setup dynamic in

the economic sector is what Karl deems a “fundamental basis for the vicious cycle of unequal

development in the region (150).” Furthermore, due to the weak political and business

organizations within the country, social reformists were left scattered and unable to conjure a

voice (189). Finally, the domestic bourgeoisie within the agriculture and manufacturing sectors

were weakened and suppressed. This recurring theme throughout Venezuela’s industrialization

era helps to illustrate the shortcomings of the private sector’s capacity as it pertained to non-oil

tradable production (189).

While Western Europe and the United States were able to successfully grow their

bureaucracies and foster institution building out of war, war did not provide the same results in

any of the Latin American nations. One reason for this difference is that countries like Venezuela

did not have to rely or build their domestic economies in order to raise capital (Centeno, 1997,

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1569). In his argument, Miguel Centeno finds that the failure of Latin American countries to

embark on the “extraction-coercion” cycle is a prominent reason accounting for the lack of

nation-building in general (1569). The reliance on foreign investment by both Mexico and

Venezuela was counter-conducive towards the realization of any sort of independent state

capable of producing its own surplus, and as a result, prolonged the stagnation and instability of

Latin American economies as a whole. In the case of Mexico, excessive state borrowing both

domestically and internationally, and the increasing reliance on the crutch of agiotistas (Short-

term, high interest private loans) heavily indebted the country, and made institution building a

non-priority (1585). In both Mexico and Venezuela, their initial independence wars placed them

into insurmountable debt, and essentially destroyed their economies when combined with the

alternative sources of financing they respectively pursued. One outcome from the wars is that a

legitimate national bourgeoisie wasn’t established until after the Porfiriato and the Mexican

revolution in the early 20th century, and the polarization between landed elites and impoverished

masses was further extended. The reliance on export-based economies, alternative sources of

financing, and the failure to produce independent domestic surpluses can be linked directly to the

heavy reliance on foreign investment and monoculture based export economies, which would

combine to produce long-lasting effects including economic instability, impoverished masses,

and the prevention of state-building or socio-political reform and organization. For these reasons,

a vicious cycle of poverty, economic disparity, and inequality have been perpetuated throughout

time.

Beginning with positivism, Latin America was philosophically disadvantaged by

prescribing itself a faulty solution for their socio-economic setbacks. The rise of monoculture

economies under colonialism created a crutch of dependence on foreign investment, and the

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installation of long-term military dictators like Díaz and Gómez stunted the growth of

bureaucratic politics and concentrated power carte blanche into the hands of enlightened despots,

while detracting any thoughts of state or bureaucratic legitimacy by the masses. Finally, the

absence of the rule of law, and the State’s ability to extract capital from its citizens hindered the

process of institution building, thus halting political organization and progress. What

differentiates the Latin American experience from the Western experience then is that out of war

came new strength and unified state building overseas, while it left Latin American nations

initially deeply divided and in shambles. Latin America lacked the substance it needed to build a

successful state, which produced long-lasting socio-economic and political consequences, and

facilitated the presence of lingering neocolonialism. These are the haunting claws of the vicious

cycle that still clench Latin America today.

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 Work Cited

Centeno, M. A. (May, 1997). Blood and Debt: War and the Nation-State in Latin America.

Pennsylvania State University Press, PA.

Chávez, A. H. (2006). Mexico: A Brief History. University of California Press, Berkeley.

Di John, J. (2009). From Windfall to Curse? Oil and Industrialization in Venezuela, 1920 to

Present. Pennsylvania State University Press, PA.

Engerman, S., Sokoloff, K. (2000). Factor Endowments, Institutions, and Differentiating Paths

of Growth Among New World Economies: A View From Economic Historians of the

United States. Westview Press.

Hellinger, D.C. (2011). Comparative Politics of Latin America: Democracy at Last? Routledge,

NY.

Hilbink, L. (2014). Latin America Politics. University of Minnesota Twin-Cities.

Hirschman, A. (1961). Ideologies of Economic Development in Latin America. Latin American

Issues: Essays and Comments.

Karl, T. (2003). What Justice? Whose Justice?. Univeristy of California Press. Berkeley, Los

Angeles, London.

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