Venezuela, ALBA, and the Limits of

Postneoliberal Regionalism in Latin

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Cusack
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STUDIES OF THE AMERICAS

VENEZUELA, ALBA,
AND THE LIMITS OF
POSTNEOLIBERAL
REGIONALISM IN LATIN
AMERICA AND
THE CARIBBEAN

Asa K. Cusack
Studies of the Americas

Series Editor
Maxine Molyneux
Institute of the Americas
University College London
London, UK
The Studies of the Americas Series includes country specific, cross-­
disciplinary and comparative research on the United States, Latin America,
the Caribbean, and Canada, particularly in the areas of Politics, Economics,
History, Anthropology, Sociology, Anthropology, Development, Gender,
Social Policy and the Environment. The series publishes monographs,
readers on specific themes and also welcomes proposals for edited collec-
tions, that allow exploration of a topic from several different disciplinary
angles. This series is published in conjunction with University College
London’s Institute of the Americas under the editorship of Professor
Maxine Molyneux.

More information about this series at

http://www.palgrave.com/gp/series/14462
 Asa K. Cusack

Venezuela, ALBA, and

the Limits of
Postneoliberal
Regionalism in Latin
America and the
Caribbean
Asa K. Cusack
Latin America and Caribbean Centre
London School of Economics and Political Science
London, UK

Studies of the Americas

ISBN 978-1-349-95002-7    ISBN 978-1-349-95003-4 (eBook)
https://doi.org/10.1057/978-1-349-95003-4

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For Shay, the best of men
 Acknowledgements

As any student of regionalism will tell you, there is no escape from the fact
that every level matters: the global, the regional, the national, the local,
and often even the individual. To analyse a given regional governance
project even in theory is a serious undertaking, but to try to get down to
the nuts and bolts of real-world implementation is even more daunting.
Member-states must be visited, histories read, cultures absorbed, political
landscapes surveyed, stakeholders identified, contacts made, trust gained,
pertinent questions asked, data analysed, and ultimately a coherent account
produced. There is no getting around the size of the task, but thankfully
it is rarely one that is taken on alone, and my case is no different.
One of the longstanding constraints on understanding the Bolivarian
Alliance for the Peoples of Our America (ALBA) has undoubtedly been
the very practical issue of fieldwork, which is both prohibitively expensive
and uniquely valuable. As such, I would like firstly to thank the UK
Economic and Social Research Council (ESRC) for its funding of the
original research for this project, as well as for its part in the joint Sheffield
Institute for International Development-ESRC fellowship that enabled a
second period of primary research. My gratitude also to the Institute of
Latin American Studies (ILAS), part of the University of London’s School
of Advanced Study, for the postdoctoral Stipendiary Fellowship which was
crucial in allowing me to make sure this research would see the light of day
via these pages.
But fieldwork alone does not a research project make, so thanks first of
all to Jean Grugel, Graham Harrison, and Nicola Phillips for their aca-
demic insight and personal dedication during the long gestation of this

vii
viii ACKNOWLEDGEMENTS

work, as well as to Maxine Molyneux for her judicious guidance at critical

moments. Likewise, Carlos Romero and Rosalba Linares in Venezuela,
Ernesto Vivares and Fredy Rivera in Ecuador, and Matt Bishop and
Norman Girvan in the Caribbean also contributed in many and varied
ways to the development of this project through their support and advice.
Though they must largely remain nameless, direct participants—ranging
from heads of state and ministers to activists and everyday citizens—were
fundamentally important to this research, and I very much appreciated
their willingness to engage openly and meaningfully, often in the hope
that lessons could be learnt. In Venezuela particularly, the friendship and
generosity of David Chávez Sáez and Cristina Daza was also crucial. On
the editorial side at Palgrave Macmillan, thanks to Sara Doskow, Anca
Pusca, Chris Robinson, Katelyn Zingg, and especially the long-suffering
Anne Schult for finding the right balance of patience, encouragement, and
vigilance along the rocky road from proposal to printed page.
And finally, my gratitude—and my apologies—to those forced to follow
this one-man telenovela from start to finish: Shay, Mar, Barry, Conor,
Noel, Gid, Mathilde, and especially Jen, thank you for continuing to tune
in even when the plotlines started to repeat themselves and the perfor-
mances became decidedly unconvincing. I promise you that the drama is
over. Until the next exciting episode…
 Contents

1 Approaching Venezuela, ALBA, and Postneoliberalism   1

2 Getting to Grips with ALBA’s Brand Governance  27

3 The National Roots of ALBA  57

4 The People’s Trade Agreement (TCP)  93

5 The Unified Regional Compensation System (SUCRE) 119

6 Petrocaribe 153

7 Venezuela, ALBA, and the Limits of Postneoliberal

Regionalism 191

Index 213

ix
 List of Figures

Fig. 1.1 Geography of ALBA membership 5

Fig. 2.1 Official representation of ALBA’s governance structure 36
Fig. 5.1 Value of SUCRE trade, 2010–2016 129
Fig. 5.2 Value of individual trade relationships within the SUCRE zone,
Jan–Jun 2012 129
Fig. 5.3 Balances of SUCRE trade by participating state, 2011 130
Fig. 6.1 Impact of Petrocaribe on effective price of oil imports, 2003–
April 2016 165

xi
 List of Tables

Table 6.1 Official Petrocaribe participants by region and language 155

Table 6.2 Relationship between oil price, upfront cost, and soft
financing of Petrocaribe oil imports 157
Table 6.3 Mean annual value of Petrocaribe financing relative to
macroeconomic indicators, 2008–2012 166

xiii
 CHAPTER 1

Approaching Venezuela, ALBA,

and Postneoliberalism

The story of Venezuela, ALBA, and postneoliberal regionalism in Latin

America and the Caribbean is one of spilt milk.
At 4:30 a.m. on a smallholding nestled beneath the Cayambe volcano
in northern Ecuador, a family of dairy farmers gather their cattle for milk-
ing. The herd is bigger than it was, thanks to a small loan from a local
finance cooperative, and they can produce enough for themselves plus a
little bit more. Along with their neighbours they sell excess production to
a local storage collective, gaining a steady income through regulated pric-
ing. Until their children graduate from secondary school, this extra
income will be complemented by $50 from a conditional cash transfer
programme, allowing them to consider taking on a farmhand, upgrading
their equipment, or improving their living conditions. They are not
directly involved in politics, but they feel more included and supported
than they used to.
As local production has increased, the storage collective has begun to
explore export opportunities. Officials from the Ministry of Agriculture
and the new Directorate of Inclusive Commerce highlight unmet demand
in Venezuela, offering to facilitate access to potential import partners.
There are inevitably ideological differences between the two governments,
but there are also many commonalities in development strategies and for-
eign policy, so officials are eager to strengthen trade relations. Improving
the lives of local people is their priority, but if this also provides Venezuela

© The Author(s) 2019 1

A. K. Cusack, Venezuela, ALBA, and the Limits of Postneoliberal
Regionalism in Latin America and the Caribbean, Studies of the
Americas, https://doi.org/10.1057/978-1-349-95003-4_1
2 A. K. CUSACK

with a dependable, affordable source of a product in short supply, the

benefit becomes mutual. Pressure to identify such win-win situations has
always been strong under President Correa, but it has only increased since
Ecuador joined the Bolivarian Alliance for the Peoples of Our America
(ALBA), which advocates creation of a cooperative, complementary “eco-
nomic zone of shared development”. The same officials even informed the
collective about a new ALBA virtual currency called the SUCRE that will
allow them to export to Venezuela quickly and easily, with lower transac-
tion costs, and backed by the Ecuadorian Central Bank. “If the system is
successful here”, they said, “other countries might sign up, which would
mean more demand for your products and bigger foreign-exchange sav-
ings for all of the countries involved”.
Their commercial partner in Venezuela is a state distributor providing
foodstuffs to social programmes and state-subsidised shops in poor neigh-
bourhoods. Its buyers are pleased to find a regional supplier of a vital
product that can be hard to source locally, even after a major dairy pro-
ducer was nationalised. Thanks to the SUCRE initiative, local currency
can be used, making the transaction cheaper, while top-down pressure
should also expedite clearance by the bureaucratic Foreign Exchange
Commission (CADIVI). The company’s directors know their superiors at
the Ministry will be happy: they have been directed to favour regional
partners over extra-regional ones, especially where precious foreign
exchange can be saved by using the SUCRE.
Once the Ecuadorian milk arrives, the distributor allocates it to a small
Mercal (Food Market) store in the barrio of Catia, in western Caracas. The
store’s employees have been asking for supplies since stocks ran out a week
earlier, and the local communal council has also been in touch. If short-
ages spread, the officials responsible for the Mercal at the state oil com-
pany will get it in the neck from President Chávez, so this problem is also
a priority for them. There are elections around the corner, and the ruling
party knows nothing is more damaging than disruption to social pro-
grammes like Mercal that have made a real difference to supporters’ lives.
Chávez and his development planners also know that Mercal’s subsidised
staples mean better nutrition for many families, as well as time or money
freed up for involvement in empowering community education pro-
grammes or neighbourhood politics. And because the milk comes from
small producers in friendly Ecuador rather than hostile corporations at
home or abroad, there is less chance that any dependence will be wielded
as a political weapon against their administration.
 APPROACHING VENEZUELA, ALBA, AND POSTNEOLIBERALISM 3

Ultimately, a Catia resident will chance upon the milk on the way home
from work and be relieved to see it back in stock. That means neither hav-
ing to waste time queuing for it elsewhere nor being forced to pay more
to resellers or in a private supermarket. He remembers all too well how
bad things were in the late 1980s, and despite problems with public ser-
vices, he feels much more positive about his situation now. His wage may
be low, but he recently received title deeds to the house he has occupied
for years, plus he and his family have access to free medical care and educa-
tion. Chávez is not perfect, but opposition politicians neither understand
nor care about his life.
This transnational chain of people, policies, and prospects is the politi-
cal economy of ALBA’s postneoliberal regionalism writ small: a poor
Ecuadorian farmer’s life is improved by his ability to improve the life of a
poor Venezuelan barrio-dweller. Writ large, it involves two prominent
governments of Latin America’s “Left Turn” (1998–2015) leveraging
regional governance to reinforce common preferences for endogenous
development, reassertion of autonomy, and empowerment of long-­
marginalised constituencies. Throughout the “postneoliberal” period, this
vision of mutually reinforcing cooperative development was important to
activists and academics alike. Both saw a return to regionalism as a central
characteristic of the novel development models of the New Left. And
understandings of this new wave of regionalism were shaped more by
ALBA than by any other regional project. For some, it even became a
beacon of hope for contestation of neoliberalism at a global level.
The problem is, the milk was spilt.
The details are imagined, but the transaction is real enough—until it
reaches the Venezuelan border. In reality, the milk was held up there for
days while customs officers—either overloaded or expecting “a little some-
thing for the sodas”—completed the necessary paperwork.1 By the time it
reached Venezuela’s public food distributor it had gone off, so they refused
to pay for it. The smallholder in Ecuador had already been paid by the
local storage collective, but given these unexpected complications, they
would think twice about exporting again. Since Ecuadorian development
aimed to promote the social economy both to diversify exports and to
combat poverty, the government reluctantly absorbed the loss.2 But like
the exporting producer, officials would think twice about promoting

1
“Algo para los refrescos” is the stereotypical euphemism used in requesting a bribe.
2
Personal interview, 30 April 2015.
4 A. K. CUSACK

future ventures involving Venezuela, particularly via the SUCRE: it was

supposed to reduce transaction costs but instead had raised them. In the
small world of regional technocrats and businessmen, this stoked the exist-
ing distrust of regional initiatives backed by left-of-centre governments,
not least those within ALBA.
This work is about the nature, origin, and impact of these differences
between ALBA in theory and ALBA in practice. If ALBA has been seen as
an integral part of its members’ postneoliberal development and a radical
alternative to neoliberal regionalism, then what do real-world contradic-
tions and complications say about these processes? Which characteristics of
its member-states, the regional context, and the global order led to this
divergence? What did it mean for the Left’s attempts to consolidate power
in the twenty-first century? What were the internal and external challenges
facing these post- and anti-neoliberal governance projects? And were their
collective regionalist endeavours even “postneoliberal” at all?
Contrary to the popular dictum, there is a lot to be gained from crying
over ALBA’s spilt milk.

Approaching Venezuela and ALBA: The Core

of the Left Turn in Latin America and the Caribbean

Put simply, ALBA is a regional governance project that emerged in opposi-

tion to US-backed attempts to institutionalise free trade across the entire
hemisphere via the Free Trade Area of the Americas (FTAA). With the
FTAA defeated in 2005, ALBA morphed into an attempt to reinforce mem-
ber-states’ pro-social, autonomist, state-led development strategies through
the cooperative pooling of regional strengths. It has 11 members and spans
Andean South America, Central America, and the Caribbean (see Fig. 1.1):

• Venezuela and Cuba (since 2004)

• Bolivia (2006)
• Nicaragua (2008)
• Dominica (2008)
• Ecuador (2009)
• St Vincent and the Grenadines (2009)
• Antigua and Barbuda (2009)
• St Lucia (2013)
 APPROACHING VENEZUELA, ALBA, AND POSTNEOLIBERALISM 5

Fig. 1.1 Geography of ALBA membership. Source: Author’s elaboration using

an outline provided by Free Vector Maps, http://freevectormaps.com

• Grenada (2014)
• St Kitts and Nevis (2014)

ALBA’s flexible attitude to participation has seen a proliferation of ini-

tiatives at all levels of governance and extending even into non-member-­
states. Its core initiatives, however, are regionalised social programmes in
health and education (social “missions”), a soft loan scheme for energy-­
dependent states of the Caribbean basin (Petrocaribe), an alternative trade
framework for facilitating cooperative commercial agreements (the
People’s Trade Agreement), state multinational companies (grandnational
6 A. K. CUSACK

enterprises), a virtual currency permitting intraregional trade without use

of the US dollar (SUCRE), a development bank providing productive
investment (the ALBA Bank), and a region-level Social Movements
Council allowing unprecedented bottom-up involvement in regional
governance.
The problem is, ALBA has rarely been put simply. Like its founders
Venezuela and Cuba, ALBA has been for some a source of inspiration
and for others a source of dread, polarising opinion within electorates,
media, governments, and regional diplomacy. For supporters of its left-
of-centre governments, ALBA represented both a revival of Simón
Bolívar’s dream of Latin American unity and more immediately a
regional facilitator of vital mutual support for besieged leaders. For its
ideological opponents at home and abroad, it was a vector for Cuban
communism and the clientelistic practices of messianic, authoritarian
firebrands. For some officials in the region, it represented (at last!) a
supranational initiative providing effective solutions to urgent social
problems. For others, it was romantic hogwash with nothing to offer in
the core areas of trade and investment. North of the Rio Grande, ALBA
constituted a serious threat to US hemispheric influence, not least
because it served to prop up the old enemy—Cuba. And for activists the
world over, it held great promise as “‘a perfect example of genuinely fair
trade’ … creating a zone of relative economic calm and predictability”
that could challenge the dominance of “disaster capitalism” (Klein
2007, p. 456, quoting Emir Sader).
Of course, ALBA cannot be all of these things at once, and establishing
a clearer picture of its nature and impact matters in theory and in practice,
now and in future, and at every level of society, from everyday citizens to
global elites. This is because ALBA and its driving force Venezuela have
provided the twentieth century’s most influential regional challenge to
neoliberal globalisation. Understanding the successes and failures of this
challenge helps us also to understand:

• the rise and fall of Chavismo in Venezuela;

• the impact of internal differentiation within Latin America’s Left
Turn;
• the real distinctiveness of this postneoliberal era;
• the contradictions of postneoliberal regionalism.

Another name for these successes and failures, which are the focus of
this book, is implementation. Focusing on implementation provides a way
 APPROACHING VENEZUELA, ALBA, AND POSTNEOLIBERALISM 7

of adjudicating between often extreme and incompatible interpretations

of the same phenomena. This is particularly useful in the case of ALBA,
given that the freewheeling verbosity of its heads of state, particularly
Hugo Chávez, can provide discursive evidence for all manner of claims.
The discourse in itself is significant and should not be ignored, but ulti-
mately it will not get an Ecuadorian dairy farmer’s milk across the border
any quicker, and the lived experiences and tangible impacts associated with
institutionalised initiatives are at least as important.
The fog of war surrounding Venezuela and ALBA is here cleared fur-
ther by adopting an unambiguous approach to implementation. I focus
specifically on ALBA’s attempt to create an “economic zone of shared
development”, but only as a way into other possible understandings of
how the organisation really functions and to what end. Success is not pre-
supposed, nor is a determining role for any one state, whether internal
(usually Venezuela or Cuba) or external (as a reaction to US hegemony or
Brazilian rivalry). This also means focusing on the initiatives with the
greatest potential to bring about a zone of shared development given the
depth, breadth, and continuity of their impact: namely, the People’s Trade
Agreement (Tratado de Comercio de los Pueblos, TCP), which aimed to
regulate trade and investment across the entire ALBA space; the SUCRE
virtual currency, which incentivised this intra-ALBA trade; and Petrocaribe,
which promised cheap development financing and cooperatively negoti-
ated barter trade for nearly 20 Caribbean and Central American states.
This in turn defines the national political economies to be considered in
greatest detail, with Venezuela at the core of all three, Ecuador for the
TCP and SUCRE, and Dominica, St Vincent and the Grenadines, and
Antigua and Barbuda providing a window on Petrocaribe’s role in its
debtor states.
Proper reassessment also calls for open-mindedness about the actors
and processes interacting within these clear parameters. That means treat-
ing ALBA as a regional political economy enmeshed both in its various
national political economies and in the wider global political economy, a
product both of state-guided “regionalism” and of unguided “regionalisa-
tion” processes involving private actors great and small (Mansfield and
Milner 1999, p. 589; Phillips 2004, pp. 34–39). This includes obscure,
illicit areas of national, regional, and global political economies—drug
smuggling or corruption, say—that may undermine or reinforce regional
initiatives in ways unforeseen by member-states (Phillips and Prieto 2011).
Neither is a coherent “region” the logical endpoint of ALBA’s attempt at
integration because any complex mix of actors, processes, borders, and
8 A. K. CUSACK

levels can equally produce a disintegrative outcome (Hettne and

Söderbaum 2002, p. 38). In short, influences and interactions of actors
and processes across borders, levels, and time are taken as empirical ques-
tions rather than assumed a priori. An empirical basis in extended periods
of fieldwork in 2010, 2011, and 2015 also allows for openness to changes
in ALBA from its birth in 2004 to its stagnation in the present day.
As the opening dairy farming anecdote demonstrates, this work does
make certain epistemological commitments, however, with an avowed
preference for understanding ALBA in minor detail and at a human level.
People are both the key source of insights into ALBA and the ultimate
stakeholders—unwitting or otherwise—in its successes and failures. In the
former sense, irrespective of what we might think about the agency of the
politicians, officials, activists, and beneficiaries of ALBA initiatives, all
social action occurs via people; so their beliefs, postures, and ideas matter.
The institutional opacity of ALBA and its member-states makes this all the
more important. In the latter sense, regional governance is a victim of its
own scale: the thread linking hard-won international agreements to the
average citizen’s day-to-day existence can become imperceptibly thin as it
stretches across countries, levels, and institutions. Grand theorising for the
sake of parsimony can cut the thread altogether, robbing us of the motive
and the means to make claims on regional institutions. If ALBA’s bureau-
cratic failures deprive a dairy farming family in Cayambe of potential
income, both we and they need to know about it. The set of roughly 100
interviews at the empirical heart of this work includes a great deal of first-­
hand testimony from key participants in ALBA’s core initiatives and gov-
ernance, allowing for a uniquely rich account of the regional relationships
that produce the uneven and unstable real-world ALBA.
Theoretical analysis here centres on the major concepts of develop-
ment, autonomy, and legitimacy which run through Chavismo, the Left
Turn, and postneoliberal regionalism alike. To different degrees each has
involved:

• a more state-led, socially focused, inward-looking “endogenous”

form of development;
• region-level cooperation targeting increased autonomy for individ-
ual states and Latin America and the Caribbean (LAC) more broadly;
• novel means of legitimising the governments and institutions charged
with implementing these changes.
 APPROACHING VENEZUELA, ALBA, AND POSTNEOLIBERALISM 9

But in line with the open approach already outlined, deterioration,

dependence, and delegitimisation are also possible unintended outcomes
of initiatives in these areas. Legitimacy in particular is further separated
into three subtypes, allowing for exploration of the peculiarities of each
aspect and of the interactions between them (after Tholen 2007,
pp. 21–25):

1. input legitimacy or facilitation of government “by the people”;

2. output legitimacy or provision of effective solutions “for the
people”;
3. control legitimacy or guaranteeing of accountability “to the people”.3

Applying this framework to the dairy farmer anecdote, for example, it

appears on the surface that Ecuador’s and Venezuela’s endogenous devel-
opment models and autonomy are bolstered by an ALBA initiative, with
output legitimacy also boosted by positive knock-on effects for previously
marginalised constituencies at both ends. Yet, the reality is that a failure of
accountability (control legitimacy) scuppered the transaction, ultimately
turning supposed developmental gains into losses, thereby delegitimising
and disincentivising deeper regional cooperation.
Inverting interpretations of ALBA in this way has powerful implications
for our understanding of contemporary Venezuela, the postneoliberal shift
in Latin American political economy during the first two decades of this
century, and especially the regional aspect of postneoliberalism.

Venezuela: From Revolution to Dissimulation

Chavismo’s challenge to prevailing trends in Latin American political
economy has been hugely important, stirring more conflict, controversy,
and conviction than any government since Cuba’s Fidel Castro took
power in 1959 (Buxton 2009, p. 147). Reactions only intensified, when in
2005 Chávez settled on the notion of twenty-first-century socialism,
which remained at the core of Venezuelan development even beyond his
death in 2013. Though a precise definition of twenty-first-century social-
ism has remained elusive, analysis of Venezuelan political economy has
tended to focus on moves towards greater social participation (or “pro-
tagonism”) both in governance and in the economy.

3
The addition of “to the people” in point three is my own.
10 A. K. CUSACK

Opportunities for institutionalised participation expanded at every

level, from national referenda and citizen assemblies to local planning
committees and communal councils (López Maya and Lander 2011,
p. 74). Communal councils in particular were given significant legislative
and financial support, even taking on competences usually reserved for
other levels of government, from the local to the national (Ellner 2011,
p. 429). Concern for effective rather than formal access to democracy
implied an urgent need to address structural inequalities and repay the
“social debt” to previously marginalised groups. And this necessity
invented the novel social “mission” concept, whereby fast-acting welfare
programmes, often designed and sometimes resourced by Cuba, were
delivered to and by the country’s most disadvantaged communities
(Buxton 2009, pp. 166–67). Tackling basic human development issues of
illiteracy, deficits in primary and secondary education, food price inflation,
and preventable illness (amongst others) also bolstered support for Chávez
amongst the majority for whom such issues were critical. The latest in a
long line of attempts to diversify away from oil focused on reasserting the
state’s regulatory role, retaking the “commanding heights” of the econ-
omy through nationalisation of “strategic” industries, and increasing the
power of small- and medium-sized enterprises and especially the associa-
tive sector (mainly cooperatives and worker-managed companies). Social
protagonism in governance and the economy was meant to spark subjec-
tive revolutions within citizens themselves, making them the long-term
guarantor of twenty-first-century socialism’s sustainability. For many on
the left and in academia, these were the beginnings of a major societal
transformation that demonstrated the possibility of socialist transition by
democratic means.
Yet, a very different and often contradictory set of processes occurred
in parallel. Chávez preached and promoted a kind of popular subsidiarity,
whereby decision-making should take place as close as possible to the peo-
ple affected and with their involvement. But his administration was also
characterised by creeping centralisation of power in the presidency. And
the dependence of his transformative project on securing democratic legit-
imacy in a never-ending series of elections turned independence and inter-
nal dissent into threats. Disciplining or cooptation through discretionary
state funding and top-down appointment of party loyalists undermined
Bolivarianism’s bottom-up, participatory ethos, but this was deemed a
price worth paying. Even welfare missions designed to alleviate fundamen-
tal social problems and empower the citizenry risked creating clientelistic
 APPROACHING VENEZUELA, ALBA, AND POSTNEOLIBERALISM 11

relationships that entrenched popular passivity and dependence. The same

rocketing oil revenues that funded the social economy, nationalisation of
strategic industries, and an agricultural push for food sovereignty also
severely damaged the competitiveness of local production: rather than
diversifying, the economy became ever more oil dependent.4 Top-down
discretional power over huge resources within a dysfunctional currency
regime also created both the opportunity and the incentive for politicians
and bureaucrats to use their positions for private gain: this favouring of
self-serving transgression was the polar opposite of the collectivist subjec-
tive transformation envisaged by Hugo Chávez.
Crucially, a newly empowered state was able to reform oil taxation,
thereby providing massive revenues to fund Chavismo’s transformative
project. Having already faced significant obstruction from within the state,
Chávez opted to use the national oil company PDVSA—under his effec-
tive control—to deliver social programmes targeting long-marginalised
sectors of society, many of which proved both effective and popular.
Meanwhile, participatory governance initiatives and associative enterprises
spread rapidly throughout the country. Outwardly, these changes sug-
gested endogenous development was gathering pace and the incumbent
government was consolidating its input and output legitimacy. But many
of these mechanisms were created in parallel to existing institutions,
whereas their basis in presidential improvisation also meant that they
lacked proper planning or accountability structures.
Though Venezuelan political economy has often been understood as a
grand clash of ideologies, with Bolivarianism being the counter-­hegemonic
challenge to entrenched neoliberalism, rather drab operational issues like
planning and accountability have also defined the strength of that chal-
lenge. Indeed, effective control over development is all the more impor-
tant—and difficult—given the country’s distorting abundance of oil,
which naturally militates against economic, bureaucratic, and social trans-
formations (Karl 1999). Yet, the same participatory institutions deemed
central to producing revolutionary cultural change—cooperatives, com-
munal councils, worker-led firms—were themselves at the mercy of the
self-serving mentality that they intended to counteract, with many ulti-
mately succumbing to it. The resulting continuation and even ­intensification

4
The increase in oil revenues was not only based on rising global demand but also on tax
legislation enacted by the Chávez government and successful diplomatic efforts that ensured
OPEC production targets were respected.
12 A. K. CUSACK

of the worst practices of the pre-Chávez era—short-termism, improvisa-

tion, opacity, and corruption—then undercut the materially transforma-
tive aspect of twenty-first-century socialism and the output legitimacy
associated with it.
Rather than correct the increasingly evident failings in the model, first
Chávez then his successor Nicolás Maduro continued to promote it,
announcing ever grander projects that would transform the nation even as
past initiatives unravelled or lay incomplete. Though the aim was to create
a revolutionary state sensitive to the demands of the Venezuelan people,
by 2017 they had produced instead another incarnation of Venezuela’s
“dissimulative state”, playing at government but deceiving no one
(Cabrujas 1987). Political and economic dominance within ALBA made
this style of governance profoundly influential in its dysfunctional devel-
opment, whereas the country’s democratic slide under Maduro proved
lethal to ALBA’s credibility.

Venezuela, Ecuador, and the “Postneoliberal”

Left Turn
Venezuela matters also because “virtually all observers agree that … Hugo
Chávez is charting a fairly radical and contestatory political and policy
course for contemporary Latin America” (Weyland 2010, p. 4): it was
undoubtedly the archetype and spearhead of the “Left Turn” or “Pink
Tide” that saw myriad left-of-centre governments achieve power across
Latin America during the first two decades of the twenty-first century. But
here our second focus country, Ecuador, is also crucial as a way to disag-
gregate this trend, so often subject to crude simplifications.
The most notorious—and influential—simplification came from for-
mer Mexican foreign minister Jorge Castañeda, who drew a bluntly nor-
mative distinction between a “right left” and a “wrong left” (later
morphing into categories of “good” and “bad”). Though the entire New
Left “stresse[d] social improvements over macroeconomic orthodoxy
[and] egalitarian distribution of wealth over its creation”, the more radi-
cal “bad” left in particular had little concern for economic performance
or democratic values, secured support for authoritarian leaders through
“virulent” nationalism, seized natural-resource-based revenues to fund
scattergun spending on social programmes, and “pick[ed] fights” with
Washington wherever possible (Castañeda 2006, pp. 32, 38–39). ALBA
 APPROACHING VENEZUELA, ALBA, AND POSTNEOLIBERALISM 13

was implicated not only indirectly through an empirical focus on its major
Latin American members Bolivia and especially Venezuela, but also
directly through depiction of its incipient social initiatives as a wedge
designed to split the hemisphere in terms of postures towards the United
States. Critical scholars saw instead popular mobilisation, inclusive par-
ticipatory democracy, redistributive economic policies, reassertion of
control over natural resources to fund solutions to urgent social prob-
lems, and a prioritisation of regional cooperation and solidarity in foreign
policy (Dello Buono and Bell Lara 2007).
As the New Left spread and consolidated, this also began to be seen as
a turning point for neoliberalism in the region, and possibly beyond.
Commonalities were detected in reassertion of the state’s role in strategic
guidance of the economy through public investment, redistribution, and
renationalisation; in experimentation with collective management and
ownership; in promotion of participatory democracy; and in advancement
beyond the conventional commercial bounds of LAC regional institutions
despite reaffirmation of sovereignty at the global level (Ramirez Gallegos
2006, pp. 43–44). This partial rollback of neoliberalism was taken as evi-
dence of an emerging postneoliberalism, but both the significance of
“post”—paradigm shift, counter-movement, or unstable hybrid—and the
degree of rollback were contested (cf. Arditi 2008; Macdonald and
Ruckert 2009). On the whole, it was clear that the “bad left” ALBA states
of Venezuela, Bolivia, and Ecuador weighed far more in the empirical bal-
ance than their “good left” neighbours. While these ALBA states appeared
to show movement towards the core domestic aspects of postneoliberal-
ism (drawn from a comprehensive review by Yates and Bakker 2014,
p. 71)—refounding the state around the social sphere, socialisation of the
economy, and repoliticisation of society—associated practices like decom-
modification, plurinationalism, institutionalised participatory decision-­
making, and strengthened solidarity economies were far harder to detect
in Bachelet’s Chile, Vázquez’s Uruguay, or Lula’s Brazil.
But this appearance of movement owes in part to scholarship’s inherent
attraction to novelty and political economy’s disciplinary bias towards
codification (in policy, in law) as an indicator of change. Focusing instead
on implementation reveals that these practices were far less widespread
and impactful than the idea of a postneoliberal shift suggested. If flagship
Venezuelan policies like communal councils and cooperatives—amongst
the most radical and best championed within the sphere of the Left Turn—
failed to achieve their aims of deepening democracy and socialising the
14 A. K. CUSACK

economy, the distinctiveness of postneoliberalism has been severely weak-

ened. By contrast, Ecuador’s less radical variant eschewed democratic and
economic transformation in favour of a focus on the effectiveness of more
modest reforms. This resulted in less pushback from traditional elites, a
deeper embedding in existing state structures, and a level of popular
acceptance that points to greater sustainability. In the long term, it may be
that the superficially shallow Ecuadorian Citizens’ Revolution proves
more significant than its more radical Bolivarian counterpart. This is espe-
cially true given the calamitous disintegration of the Venezuelan model
after the slump in oil prices in 2014. In Ecuador, meanwhile, though
Correa has been both succeeded and sidelined by his former vice president
Lenin Moreno, much of his socially focused policy platform has been
retained, enjoying a popular acceptance that implies electoral security for
the medium term at least. But just as in Venezuela, there has been no fun-
damental reshaping of social or economic structures, suggesting that post-
neoliberalism might better be understood as a counter-neoliberalising
challenge whose durability and ultimate potential for success remain
unclear (see Yates and Bakker 2014, pp. 76–82).

ALBA and Postneoliberal Regionalism

The fourth and final core aspect of postneoliberalism is externally facing:
pursuit of a new regional political economy via a form of regional integra-
tion characterised by economic and political autonomy (Yates and Bakker
2014, p. 71). Venezuela’s place at the forefront of this cooperative, anti-­
imperial, autonomist regionalism is again undoubted. Before ALBA was
even launched, Chávez had already proposed a regional Bank of the South
(2004) that would mitigate reliance on World Bank development funding,
as well as a new regional association comprised of every independent South
American state, even historically isolated Guyana and Suriname (the
Community of South American Nations, 2004, later becoming UNASUR).
Chávez also led the campaign against the US-backed Free Trade Area of
the Americas, which was successfully derailed in late 2005 with the help of
Nestor Kirchner in Argentina and Lula da Silva in Brazil. Ecuador, mean-
while, played a more technical—but no less energetic—role, particularly
through its regional promotion of a New Regional Financial Architecture
(NRFA) consisting of a virtual currency (SUCRE, later incorporated into
ALBA), the Bank of the South, and a Common Reserves Fund. This archi-
 APPROACHING VENEZUELA, ALBA, AND POSTNEOLIBERALISM 15

tecture aimed at mimicking the functions of multilateral institutions but

under regional control. Even without taking ALBA into account, the for-
eign policy of its major Latin American members clearly corresponded with
this region-facing aspect of postneoliberalism.
But the collective regional projects of postneoliberal states—especially
ALBA and UNASUR—have also been understood as a distinct wave of
regionalism in Latin America and the Caribbean. “Post-liberal” regional-
ism has centred on various returns vis-à-vis the preceding wave of open
regionalism: the return of the state, of politics, of the development agenda,
and of sovereignty as valid means and ends of regionalism (Sanahuja 2008;
Serbin 2011). “Defensive regionalism” detected curbs on the political,
economic, social, and cultural power of the United States. This entailed
acceptance of aspects of liberalisation, but only alongside efforts to elide,
forestall, or redress associated adjustment costs, allowing the state to resist
and shape international markets on behalf of domestic actors and create an
“inner circle of consensus with key domestic constituencies and some
other selected states” (Tussie 2009, p. 188). “Post-trade” regionalism,
meanwhile, saw twenty-first-century LAC regionalism as a transitional lull
of hybridity between the preceding open regionalism wave and an incho-
ate model drawing on the structuralism of the import substitution indus-
trialisation era. This brought a renewed emphasis on autonomy and shared
productive development, alongside “an active role of the State, supple-
mented by civil society participation and granting the regional institutions
with redistributive capacities” (Dabène 2012, p. 17). Finally, a diffuse,
hybrid “post-hegemonic” regionalism again went beyond trade-focused
integration, rehabilitated political integration, and fostered “trans-societal
welfarist projects reclaiming the principles of cooperation and solidarity”
(Riggirozzi and Tussie 2012, p. 10).
Yet, beyond the clear and significant exceptions of regional health pol-
icy and especially collective defence of democracy, UNASUR has remained
institutionally shallow. And having prioritised inclusiveness over ideologi-
cal alignment, it has tended to avoid the crucial but contentious issue of
economic integration (Carrión 2017, p. 24). This restricted palette con-
tributes some colour to the theoretical picture of postneoliberal regional-
ism, particularly with regard to political concertation and increased
concern for autonomy. ALBA, however, not only reinforces these two
characteristics but also substantiates virtually all of the others:
16 A. K. CUSACK

• challenging open regionalism and US power, including directly in

the form of the FTAA;
• reasserting the role of the state and the importance of a different,
more socially focused development model;
• promoting shared productive development, redistributive mecha-
nisms, and solidarity-based transnational welfare projects at a regional
level;
• attempting to incorporate civil society into regional governance.

This is why, as at the domestic level, consideration of ALBA’s real-­

world implementation is so damaging to the idea of a novel and distinct
wave of postneoliberal regionalism. Civil society has not been incorpo-
rated into regional governance in any significant sense, instead remain-
ing highly intergovernmental unless forced into momentary coherence
by heads of state, particularly Hugo Chávez. Despite significant efforts,
advances towards shared productive development have been weak, with
contradictions in Venezuelan political economy allowing Ecuador to
use ALBA’s SUCRE virtual currency to boost national production at
Venezuela’s cost. Worse, owing to Venezuela’s currency regime, the
SUCRE has also facilitated regional currency arbitrage networks that
redistribute in the wrong direction, from the state to the rich.
Petrocaribe, meanwhile, has been more successful in redistributing
Venezuelan oil wealth amongst recipient-states, but often by the back
door of concessionary loan conditions and opaque barter pricing, lead-
ing to political objections at home. Transnational welfare projects have
been massively impactful for target populations, but their roots, reach,
regularity, and resilience have been overstated. The state’s role may
have been reasserted, but it has also been discredited by severe gover-
nance failings and corruption. Open regionalism has been challenged,
but that challenge was severely weakened when negotiations towards
ALBA’s People’s Trade Agreement, a framework for alternative eco-
nomic integration, were abandoned. Autonomy has been boosted
mainly in the Eastern Caribbean by Petrocaribe, as its buffering of rising
oil prices and provision of cheap credit have allowed small, developing
island-states some leeway to revise their development strategies. Overall,
recognition of ALBA as implemented leaves postneoliberal regionalism
significantly diminished.
 APPROACHING VENEZUELA, ALBA, AND POSTNEOLIBERALISM 17

Structure of the Book: Reassessing ALBA

from the Ground Up

What Is ALBA?
The unambiguous yet open-minded reassessment of ALBA that makes
this recognition possible begins in Chap. 2 with a brief recap of ALBA’s
founding and a more in-depth review of its mixed bag of major and minor
initiatives. Aside from introducing many of the key players in the drama
that follows, this allows us to broach the vital but often underplayed issue
of ALBA’s limits and how they relate to the project’s governance. At
ALBA’s birth we find the unusually diverse founding agreements signed
between Venezuela and Cuba in 2004, as well as the extension of the
international health and education “missions” that these enabled. But
this is quickly followed by a rapid expansion of economic initiatives that
begin to build towards the ideal of an “economic zone of shared develop-
ment”. Three of these—the People’s Trade Agreement (Chap. 4), the
SUCRE virtual currency (Chap. 5), and the Petrocaribe soft loan scheme
(Chap. 6)—represent the empirical foundations of this work. But since
ALBA’s initiatives are often designed to be integrated, with the progress
of one modulating the impact of another, major economic initiatives such
as compensatory funds, grandnational companies, and the ALBA Bank
also need to be introduced. Besides illustrating the complexities of analys-
ing the project as a whole, I also outline a number of smaller, more
peripheral initiatives undertaken within ALBA’s formal membership, fol-
lowed by a further set of initiatives that involve non-members but are
sometimes considered part of ALBA nonetheless.

Who Controls ALBA and to What Effect?

The question of what exactly counts as ALBA is then tackled head-on,
both to avoid any ambiguity and as a way into the practical impact of
strategically fuzzy boundaries on attempts at effective governance. In a
foreshadowing of later chapters, I critique the ideal of ALBA governance
present in its own discourse by comparing it to the reality that I observed
in mapping relations between five of ALBA’s member-states, most nota-
bly Venezuela and Ecuador. Over a third of the bodies in ALBA’s gover-
nance structure have essentially no sustained existence and therefore no
significant influence. Ministerial councils are infrequently convened and
18 A. K. CUSACK

­ ureaucratic support scant, with a serious lack of capacity and clarity

b
undermining effectiveness and accountability. Crucially, there is no one
body, from the presidential council down to the Executive Secretariat,
that even knows ALBA’s extent, let alone has control over it. I argue that
ALBA’s governance is best understood as a “brand” that presents pre-
existing, improvised, and more thoroughly planned projects as a coherent
entity, whereas in reality Venezuela has ultimate control over the brand
and a defining influence in its governance. The nature and effects of brand
governance are revealed in analyses of Venezuela-Ecuador grandnational
companies and especially of the ALBA Bank. None of these have achieved
their aims, with Venezuelan inconstancy, improvisation, and even impro-
priety at the heart of their difficulties. A more realistic depiction of ALBA’s
governance has the Venezuelan presidency at its centre, supported by
state development funds under the control of close allies and irregularly
serviced by local and foreign officials. The official version of ALBA gov-
ernance is merely a regional extension of Venezuela’s “dissimulative
state”, which produces outward signs of formal institutions and proce-
dures while action proceeds informally and unsystematically. The negative
impacts and poor results of this governance have rendered ALBA a toxic
brand for its internal and external stakeholders, making it ever more dif-
ficult to concretise initiatives new or old. The fact that governance
arrangements vary so widely across initiatives means that its effects also
vary, but ALBA’s brand governance is crucial to understanding the proj-
ect’s overall implementation.

The National Roots of ALBA

An open reassessment of ALBA from the ground up also means going
back to the state level to analyse the constituent national political econo-
mies brought into contact by the ALBA initiatives. Chapter 3 provides the
varied palette of Ecuadorian, Dominican, Vincentian, Antiguan, and espe-
cially Venezuelan colour upon which later chapters draw to depict the
implementation and impact of the People’s Trade Agreement, the SUCRE
virtual currency, and Petrocaribe. In line with many accounts of ALBA, I
find that there have indeed been significant overlaps between member-­
states, particularly with regard to the role of the state in fostering inward-­
looking development, the promotion of national and regional autonomy
within a context of multipolarity, and legitimacy garnered both from new
participatory institutions (input) and from welfare provision to the newly
Another random document with
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readiness for what might happen. These two engines were both in
successful operation when my own operations ceased; the
remaining three engines were to be added as their business
required.
The engineer of that company was an original investigator. He had
a battery of return-tubular boilers, each one crammed full of tubes
according to the usual methods of boiler-makers. He provided
himself with pieces of lath one inch wide, one eighth of an inch thick,
and four inches long, and laid one in the front end of each tube in
one of his boilers and left them there for twenty-four hours. He had
made a diagram of his boiler on which he numbered every tube and
put a corresponding number on every piece of lath. In taking them
out they presented an astonishing revelation, which he showed me.
Some of the pieces were burned almost to a coal and some were
scarcely discolored, while the great body of them presented various
effects of heat between these extremes. These showed distinctly the
enormous differences in the temperature of the gases passing
through the different tubes, and that fully one half of the tubes did
little or no work in evaporating the water. They taught a lesson which
boiler-makers, who count every additional tube they can get into a
boiler as so much added heating surface and rate their boilers
accordingly, have no anxiety to learn, but which I afterwards turned
to good account, as will be seen.
About the last and the most interesting engine that I built while in
Philadelphia was one for the firm of Cheney Brothers, silk-
manufacturers, of South Manchester, Conn. This was a cross-
compound, the first and the last compound engine that I ever built,
and it is the only engine in this country to which I applied my
condenser. The cylinders were 12 and 21 inches in diameter, the
stroke 24 inches, and the shaft made 180 revolutions per minute.
The condenser presented a new design in one respect; the air-pump
was double-acting and made only 45 double strokes per minute,
being driven by a belt from the engine shaft and the motion reduced
by gears 1 to 4. This engine ran perfectly from the start, and I looked
forward with confidence to a demand for many more of the same
type. The diagrams made by it are here reproduced.
 Scale, 1″ = 32 Lbs.
Atmosphere
Scale, 1″ = 16 Lbs.
Atmosphere

Diagrams from my First and Only Compound Engine.

I have a pleasant memory connected with this engine. The silk-mill

is located in a very large park, scattered about which are the
residences of different members of the family. About twelve years
after the engine was built, in company with my wife, I was visiting
relatives in Hartford, from which South Manchester is about twelve
miles distant. One day we were driven over there with our friends to
make a social call. On our arrival I left the party to make a visit to my
old engine. The mill seemed to have been changed very much, and I
lost my way. Finally I recognized, as I thought, the old engine-room
and went in. My engine was not there, but in its place stood another
engine, a pair of tandem compounds of much larger dimensions.
These had evidently just been erected, as they stood idle. “Oh,
dear,” said I to myself, “my engines have been superseded for some
reason or other.” While I was indulging in that reflection the engineer
came in. I introduced myself and said to him: “I see that my old
engines have been supplanted.” “Oh, no,” said he, “your engines are
all right; they are running just where they always have been. They
have built a new mill twice as large as the old one, and your engines
have been giving such satisfaction they have ordered another pair of
compounds from the Southwark Foundry, and these are the engines;
they have not been started yet, as the mill is not ready for them and
won’t be for a month.”
He directed me to the old engine-room, where I found my engines
gliding away as though they had been erected yesterday. At that time
I regarded these engines as only a stepping-stone to far higher
things. I was engaged on a plan for a great development of the high
speed system, but which has not materialized. I still consider it as on
the whole superior to the turbine, a superiority, however, which may
never be established.
In the spring of 1881, in our anxiety to revive the manufacture of
the engine, we were foolish enough to send one to the Atlanta
exhibition. We eagerly believed the promises of the agent that we
should find all the machinery that we wanted to drive, and sent an
engine finished with great care, and a skillful man to erect and run it.
We also printed the heading of a lot of diagrams, to be given to
visitors. The facts were found to be that we had nothing to drive but
an idle line of shafting and one Clark’s spool-winder, while the
exhaust main was so small and choked with the exhausts from other
engines that we had a back pressure of ten pounds above the
atmosphere; so we could take no diagrams; and the fact that we did
not take any was used as a conclusive argument against high-speed
engines; so the exhibition did us harm instead of good.
I pass over other distressing experiences at the works, and come
at once to the final catastrophy in the late fall of 1882.
Another exhibition opened in the fall of 1882, for which I made
great preparations, and from which I anticipated important results.
This was the exhibition of the New England Manufacturers’ and
Mechanics’ Institute, held in Boston. I obtained an important
allotment of space with plenty of machinery to drive, and, besides a
fine engine, sent a large exhibit of our finished work, in the parts of
several sizes of engines, expecting to attract the attention of all New
England manufacturers. I prepared for a regular campaign. I rented
an office and engaged a young man to represent us in Boston as our
agent, and another, Mr. Edwin F. Williams, to travel and solicit orders
and take the charge of erecting engines. Our engine arrived without
a piston. Mr. Merrick had thought he had found a defect in the piston,
and ordered another one to be made. When we came to put the
engine together in the exhibition, this piston would not enter the
cylinder. On examination it was found to have been turned conical,
the bases of the two cones meeting in the middle, so the middle was
one eighth of an inch larger in diameter than the faces. We had to
get a coarse file and file down the middle of the piston all around
until it would enter the cylinder. Then I had a great disappointment—
the greatest I ever experienced—the engine thumped badly on both
centers. The only way in which we could stop the thumping was by
shutting off the steam until the initial pressure was brought down to
the height reached by the compression of the exhaust. In this plight
we had to run through the exhibition. We could not take a diagram
and had to watch the engine constantly, for whenever the pressure
rose ever so little too high in the cylinder it would begin to thump. I
attributed this to the shocking condition of the surface of the piston. I
could not comprehend how this should cause the thump, but it must
be that, for I could conceive of nothing else that could produce it.
This thump made my exhibition a total failure, and necessitated the
abandonment of all my plans.
 At the close of the exhibition I went home utterly discouraged.
When I went into the shop the first person I met was the foreman of
the lower floor, where the engine had been built. I told him of the
plight in which I found myself placed and to which I attributed my
failure. The fellow gave me the lie direct, saying with a conceited
smirk: “It is impossible, Mr. Porter, that any such work as you have
described can have gone out of this establishment.” I turned on my
heel and left him, and in less than half a minute I saw at a distance
of fifty feet a 22-inch piston being finished for an engine we were
building for the Tremont and Suffolk Mill. The workman had finished
turning the piston and was then cutting the grooves for the rings. The
reflection from the surface showed me the same two cones meeting
in the middle. I went up to the lathe, the back side of which was
toward me, and told the workman to stop his lathe and bring me a
straight-edge. This rocked on the edge in the middle of the piston,
opening nearly one eighth of an inch on each face alternately. I sent
a boy to find the foreman and asked him what he thought of that and
left him. I had influence enough to have both the foreman and the
workman discharged that night. Think of it; superintendent, general
foreman, the foreman of the floor, and workman, altogether, never
saw what I detected at a glance from the opposite side of the shop.
I want to stop here to express my disgust with the American
system of making the tailstock of a lathe adjustable, which enables
either an ignorant, careless or malicious workman to ruin his work
after this fashion. To their credit, English tools have no such feature.
The very next day we received a call from Mr. Bishop, the
engineer of the works of Russell & Irwin at New Britain, Conn., to tell
us that their engine just put in by us had a very bad thump which he
was afraid could not be cured as it was evidently caused by the
piston projecting over the admission ports when at the end of its
stroke. “Impossible,” I exclaimed; “I never made such an engine in
my life.” I should here state that in experimenting with the first little
engine that I made before I went to England, I at first made the
piston project over the port one quarter of an inch, and the engine
thumped. I satisfied myself that this was caused by the impact of the
entering steam against the projecting surface of the piston, driving it
against the opposite side of the cylinder; this was aggravated in
high-speed engines. In this case the engine made 160 revolutions
per minute and the steam was admitted through four simultaneous
openings, so it entered the cylinder with great velocity. I turned a
quarter of an inch off from each face of the piston, and the thump
disappeared. I then made it a law from which I never varied, that the
piston should come to the admission port and not project over it at
all, and this feature was shown in every drawing.
Mr. Bishop replied to me: “It does project, Mr. Porter; it projects
seven eighths of an inch over the port at each end of its stroke, for I
have measured it.” I rushed up to the drawing-office and called for
the horizontal sectional drawing of that cylinder, and there I saw the
piston not only drawn, but figured—projecting seven eighths of an
inch over the port. I felt as though I were sinking through the floor.
That was what had ruined my Boston exhibition and sent me home
disgraced and broken-hearted and the badly fitting piston, shameful
as that was, had nothing to do with it. The first question that occurred
to me was: “How came this drawing to exist and I to know nothing
about it?” The answer to this question was simple.
When the first pair of Willimantic engines was started I was
disappointed in their economy, and made up my mind that the
excessive waste room was accountable for it. The proportion of
cross-section area to the stroke being fifty per cent. greater than in
my table of sizes increased in the same degree the proportion of
waste room to the piston displacement. I felt that there was need
here for improvement. By far the greatest amount of waste room was
in the exhaust ports. I accepted a modification of the exhaust valves
by which this item of the waste room was reduced fully one half and
made a new pair of cylinders for this engine. The improvement in the
economy was so marked that I determined to change the exhaust
valves of all the engines. Only the exhaust valves and ports needed
to be changed. These were drawn anew in pencil and carefully
studied and approved of by me. It was necessary that the entire
combined cylinder drawing should be retraced, but this, except only
the exhaust ports and valves, was to be copied over the existing
tracings. This did not require my attention, and I gave no thought to
it. Here was the superintendent’s opportunity. In copying these
tracings he had only to move the straight line representing each face
of the piston on the longitudinal section of the cylinder seven eighths
of an inch, thus adding this amount to the piston at each end, and
shorten the cylinder heads to correspond, and the job was done; and
there did not exist among the large number of persons in the
drawing-office and shop who must have been aware of this change,
loyalty enough to let me know anything about it.
We had also recently finished two engines for the Cocheco Mill at
Dover, N. H., and about this time we received a letter from the
superintendent of that mill expressing his admiration of the engines
in every other respect, but complaining of a bad thump in the
cylinders. He said he would be glad to invite the superintendents of
other mills to see them, but he could not show the engines to
anybody until that thump was cured.
I went directly to the president and demanded authority to change
the pistons and heads of these engines. To my astonishment he
refused point-blank, saying he had spent money enough on these
alterations, and he would not spend another cent. I replied to him
that there was one other alternative and that was to abandon the
business, to which he made no reply. But why did I need to go to the
president; why not make these changes myself? The answer to this
question is very humiliating to me. An account had been made up of
the cost of the alterations here described and presented to the board
of directors, showing this to amount to $20,000. I was aghast at this
statement; I had never seen a figure pertaining to the business,
except the single bill already mentioned. I told the directors that any
good pattern-maker would have taken the contract to alter those
exhaust valves and ports on our twenty sizes of cylinders for an
average price of fifty dollars each, and made a profit of fifty per cent.
in doing it. The cost of the new drawings and the price of cylinders
for the Willimantic engine could not more than double this sum, and
by some hocus-pocus this $2000 had been changed to $20,000;
probably by transfer from other losing accounts. The president
replied that was the cost of the alterations as it appeared on the
books, and the directors, without making any investigation, adopted
a resolution that no further alterations should be made unless
expressly ordered by the president.
 I did not believe that in making this addition to the length of the
piston the superintendent had any intention to wreck the business.
He could have had no idea of its fatal nature; his only thought was to
make a considerable further reduction of waste room and gratify his
itching to change my drawings. But of course doing this without my
knowledge was criminal, and should have caused his instant
discharge; but his whole conduct from the beginning had been the
same and the president had sustained him. I had no opportunity to
pursue this matter further.
On receiving the president’s refusal I determined to appeal to the
directors, but first I thought I would lay the matter before Mr. Henry
Lewis, whom I regarded as the most open-minded of all. What was
my amazement when, after listening to my statement, he replied:
“We shall sustain the president, Mr. Porter.” Then I knew the end had
come. It was idle for me to butt against the Philadelphia phalanx. A
day or two after a committee of the directors headed by Mr.
Shortridge, called at the office and asked to see our order book. This
showed that in more than a month preceding we had not received a
single order. On this state of affairs it was evident to the directors
that a change must be made in the management. I had long realized
that the great gulf that I had dug between the stockholders and
myself, as already described, had never been filled. Neither the
directors as a body, except on the single occasion already
mentioned, nor any director individually, had ever conferred with me
on any subject whatever. They knew nothing, except what they might
have learned from the president; he had no mechanical knowledge
or ability to form a mechanical judgment, and the superintendent
influenced him in a degree which to me was unaccountable. His
want of comprehension of the business was shown in his answer to
the life-or-death question which I had presented to him. The next day
I received a communication from the directors requesting me to send
in my resignation, which I promptly did. Mr. Merrick was also
requested to resign. This was evidently a put up job, to let me down
easy. Mr. Merrick had for some time expressed a wish to be relieved
from his position which he found very uncomfortable.
The directors elected as president one of their own number, who
had nothing else to do, to sit in the president’s chair and draw his
salary, and committed the practical management of the business to
an oily-tongued man who had never seen a high-speed engine, and
whose qualifications for the position were that he was a friend of one
of the directors and was a Philadelphian, and who I learned received
a large bonus for leaving his own business and accepting the
position vacated by me.
Benjamin F. Avery
 CHAPTER XXVII

My Last Connection with the Company.

will close this account of my engineering experience

by relating two incidents.
Among the orders which I brought from Newark was
one from the firm of B. F. Avery & Sons, plow-
manufacturers, of Louisville, Ky., the head of which
had first established the manufacture of plows in the
Southern States. Mr. George Avery, one of the sons, had come to
me and asked for a list of the engines I had running, and took the
pains to visit a number of them, also those of other prominent
builders, and as a result of this extended comparison he brought me
his order for an 18×30-inch engine, with strong expressions of the
manifest superiority of the high-speed engine. This engine was about
the first one I finished in the Southwark Foundry. By great
carelessness it was permitted to go out without the crank-pin being
hardened and ground, which was contrary to my invariable practice.
The man who erected the engine left the crank-pin boxes too loose,
and young Mr. Avery, who was quite an amateur mechanic,
undertook to tighten them up; he succeeded in heating the pin and
causing it to be badly torn. He made the best job of it that he could
with a file, and the engine ran in that crippled condition.
Soon after I left Philadelphia, they concluded they ought to have a
hardened crank-pin and wrote to the Southwark Foundry respecting
it. They received a reply that it would be necessary to take the shaft
out and send it to Philadelphia, and their works would need to be
interrupted about three weeks. The firm then wrote to me in New
York asking me to come to Louisville and examine the engine and
advise them what to do, which invitation I accepted. The letter to the
Southwark Foundry had been written by their manager, and in it he
stated that the engine pounded so badly that it could be heard two
blocks away, it was so wasteful it was almost impossible to keep up
steam for it, and that they lived in such dread of its breaking down
that their hair was all turning white. I felt that this letter, after making
full allowance for its obvious exaggerations, reflected pretty badly,
not only on the engine, but also on the boilers. These were two
return-tubular boilers which I had designed myself. I had reflected a
good deal on the observation shown to me by the engineer at
Willimantic, and had felt that tubular boilers needed a better vertical
circulation. This was limited by the small space left for the
descending currents, the sides being filled with tubes almost
touching the shell. So I allowed a space five inches wide between
the shell of the boiler on the sides and bottom and the nearest tubes,
as it was evident to me that the water, filled with bubbles of steam,
would rush up among the tubes fast enough if the comparatively
solid water at the sides could only get down. I also left off the upper
row of tubes to allow more space above them for the steam, and
from this arrangement I anticipated very superior results.
On my arrival in Louisville I thought, before presenting myself at
the office, I would go into the works, which was open to everybody,
and see what the state of affairs really was. I was directed to the
boiler-house, on entering which I saw that one of the boilers was
idle. My first thought was that it had been disabled by some accident,
and their being limited to one boiler accounted for the difficulty they
experienced in supplying the engine with steam. I asked the fireman,
who I found sitting in a chair, what had happened to put this boiler
out of commission. He said, “Nothing at all. They used both boilers at
first, but after a while they thought they did not need both, so they
shut one down, and it has been shut down ever since.” “Well,” said I,
“you must have to fire pretty strong to make one boiler answer.” “No,”
said he, “I have been firing boilers over twelve years and this is the
easiest job I have ever had.” He then showed me his thin fire and
damper two thirds closed. So in two minutes I was relieved from a
load of anxiety about both boiler and engine, for I had before me the
evidence of their phenomenal economy, and I gave the manager
credit for one good square lie. I then asked him the way to the
engine-room; he told me, “Right through that door.” I listened for the
pound that could be heard two blocks away and heard a faint sound.
On opening the door, which was opposite the crank, it was more
distinct. There was no one in the engine-room, but while I was
looking the engine over the engineer came in. I introduced myself
and asked how the engine was doing. He said, “Very well, all but that
little knock in the crank-pin.” I asked him if he had any trouble with it.
He said, “None at all.” “No worry or anxiety?” “Never thought of such
a thing,” he said.
A number of years after I met in New York a young gentleman, Mr.
Benjamin Capwell, now of the firm of Kenyon, Hoag & Capwell, 817
Broadway, New York, who had been in the office of B. F. Avery &
Sons at that time. I told him this story. He said he was not at all
surprised; the boys in the office heard this manager every day
dictating letters just as full of falsehoods as this one. I learned
afterward that he held his position through a cabal in the company,
and that soon after I was there the president succeeded in getting rid
of him.
I was now ready to call on the president, Mr. Samuel Avery. He
told me they would like very much to have a hardened crank-pin put
in the engine, but of course they could not afford to interrupt their
work seriously for that purpose. I replied there would be no difficulty
about that. The present pin might be pressed out and a new one
inserted in a few hours; all our work being made to gauge, the new
pin would be sure to fit. I told him he might safely send an order to
the Southwark Foundry to make the new pin, if they would agree to
put the work into the hands of Mr. Williams, who was then in their
employ, who should direct the manufacture of the pin without any
interference, and himself go to Louisville and do the job. The
Southwark Foundry agreed to these conditions, and the work was
soon done.
While engaged on this proof I wrote to Mr. Williams for an account
of setting this pin, and received from him the following interesting
letter.
It will be seen that he took the safer but far more laborious
method, as no one then in the works could assure him about the
crank having been bored to gauge.
 It reads to me as if he found himself obliged to enlarge the hole
just that one thirty-second of an inch.
The method of verifying the alignment of the pin with the shaft by
means of a ground bubble level was originated by me in Newark;
where I found also that the pin could be thrown by riveting.
42 Broadway, N. Y., Oct. 21, 1907.
Chas. T. Porter, Montclair, N. J.
My Dear Mr. Porter: In reply to your request of 14th addressed Cold Springs, I
am pleased to give you such account of the crank pin work at B. F. Avery & Sons,
at Louisville, in 1883, as my memory will admit of.
When I was instructed to do this work I received a letter from you stating that a
new crank pin was to be put in and that it should be “hardened in a furnace,”
allowing it to remain in a crucible with the carbon at a lowered heat for ten hours.
This was done and resulted in a fine job of hardening. The pin was then ground
true and smooth. Don’t think I ever saw a prettier job.
The old pin had to be taken out and the new one put in. The exact diameter of
the old shank was not definitely known. It was thought advisable therefore, to
make the new shank about ¹⁄₃₂″ larger than the drawing dimension; so it would
surely be large enough to admit of drawing the hole which I proposed to do by
hand. Before leaving the works I had a hollow cast iron cylinder or trial plug made,
about twice the depth of the crank pin hole in length, about ¹⁄₁₀₀″ smaller than the
shank of the new pin and slightly tapered at one end.
We cut the bead off the old pin and tried a hydraulic jack on it, but it would not
start. We then drilled five or six 1″ holes in the shank and the pin came out easily.
The hole was then calipered and found to require considerable dressing. The
crank shaft was then tried for level and found by turning in various positions and by
using a very sensitive level, to deflect from the horizontal approximately ¹⁄₂ of
1000th of an inch per foot in length.
The hole was then enlarged by use of file and scraper, its adjustment being
proven as the work progressed by frequent trials of level placed within the hole, at
various points in the revolution of the shaft. Finally, the trial plug was worked into
the hole and used as a surface plate, the “high” spots being scraped down and the
plug found to line with the shaft and the hole by caliper, found to be approximately
³⁄₁₀₀₀″ smaller than the shank of the pin. The pin was then forced in and found to
stand nearly true. The small untruth was easily corrected in riveting up the back
and the pin was thrown approximately ²⁄₁₀₀₀″ away from the center line of shaft
rotation to offset the deflection that would be occasioned when running by the
impact of the steam admission on centers.
I think it quite likely that the pin during the twenty-four years’ service up to the
present date has worn scarcely a measurable amount.
 Very truly,
E. F. Williams.
P. S. I saw the engine about 15 years ago and it was running very smoothly.

Some time after I had left, the company found that they needed a
descriptive and illustrated catalogue of the engine, and they had no
one to write it; so they came to me, and in my office in New York I
prepared one for them, for which they gave me the credit by printing
on the title-page and cover the line, “By Charles T. Porter.” I took the
same pains with this that I should have done had I owned the whole
place.
The following letter, referring to an engine made by me in Newark,
was sent by the addressee to the Southwark Foundry with an order
while I was engaged on their catalogue. They made a blue-print of it
and sent it to me for insertion.
Youngstown, O., Dec. 21st, 1882
Mr. F. L. Waters—
Mankato Minn.
Dear Sir—
Your favor recd, making enquiry how we like the Porter Allen Engine: would say,
we have now run it four years, it has never failed one minute or cost one cent for
repairs nor varied a revolution from its speed, are using it now non-condensing but
think of using a condenser before long. As we use it in connection with our water
power, which is variable, sometimes too high and sometimes too low, making up
the deficiency with the Engine, be it all or little, we do not know just how much coal
we require for a Barrel in case we had no water, this much I think I know. That it is
the finest Engine made, Simple, durable, and Economical, and always ready for
effective duty.
We run a Buckeye in the Diamond Mill and a good Engine at our mine, but the
Porter-Allen is my favorite by all odds, ours is 13×24, 160 Revolutions (never more
nor less). They are now designed to run 200 Rev. for that size.
If neatness effectiveness durability and Economy & Steadiness is any object to
you, you will always be glad you bought a Porter-Allen, or I am vastly mistaken.
I know that has been my experience. We now run constantly day & night the
year round (Sundays excepted).
Respectfully Yours
Homer Baldwin

With the preparation of this catalogue my part in the development

and introduction of the high-speed engine seems to have ended.
 CHAPTER XXVIII

The Fall and Rise of the Southwark Foundry and Machine Company. Popular
Appreciation of the High-speed Engine.

he reader may be amused by some examples which

came to my knowledge of the achievements of the
new management. The expensive new vice president
was of course a mere figurehead, as he knew nothing
of the engine or the business or my system of work, so
Mr. Merrick’s superintendent had a free hand.
He adhered to his long pistons, and obtained silent running by an
enormous compression of the exhaust steam, commencing soon
after the middle of the return stroke and rising to initial. This involved
a corresponding premature release of the steam during the
expansion. Between the two, about one-third of the power of the
engine was sacrificed, and they were in continual trouble from the
failure of the engines to give their guaranteed power.
I had always advocated giving our attention as much as possible
to large engines, where all the profit lay. My views had so much
weight that, unknown to me, Mr. Merrick and his superintendent
were, before I left, planning a smaller engine, to be called the
“Southwark Engine,” intended to drive isolated incandescent lighting
plants. As soon as I had been gotten rid of the manufacture of this
engine proceeded actively. It was largely exhibited and advertised,
much to the neglect of anything else. This was pursued persistently
until over twenty thousand dollars had been sunk in it, when it was
abandoned.
They had an order from the Pennsylvania Steel Company for an
engine to drive a rolling mill which they were about to establish at
Sparrow’s Point on the Chesapeake Bay below Baltimore, for the
manufacture of steel rails from Cuban ores, which were found to be
especially adapted to the Bessemer process, and where the then
new method of rolling was to be employed, the method by which rails
are rolled direct from the ingot without reheating, which is now in
universal use. This engine was to be much larger than any
previously made, and so requiring new drawings. In making the
cylinder drawings the draftsman omitted the internal ribs, which are
necessary to connect and stiffen the walls of the square steam
chest. The consequence of this almost incredible oversight soon
appeared. The engine had been running but a few days when the
steam chest blew up.
The Porter-Allen valve-gear required in its joints eleven hardened
steel bushings, which had to be finished inside and out. These we
had always made from cast steel bars. This process was extremely
wasteful of both material and time. Shortly before I left I had
ascertained experimentally that I could import from England solid
drawn steel tubing of any size and thickness, sufficiently high in
carbon to harden perfectly well. The new management undertook to
carry out my plans. For this purpose a list was prepared of all sizes
that would be required, with the finished dimensions external and
internal. From this another list was prepared, giving the additional
material required for finishing. A large lot of the tubing was ordered.
When it arrived they discovered they had sent the wrong list, the
tubes were too thin to be finished and were useless for any purpose.
They had an opportunity to estimate for a pair of very large
blowing engines. They got out their estimate for one engine, forgot to
multiply the amount by two, and were astonished the morning after
they had sent in their tender to receive the acceptance of it by
telegraph.
 James C. Brooks

Performances of this kind were expensive. When their capital was

all gone, they borrowed five hundred thousand dollars on their
bonds, secured by a blanket mortgage. This did not last a great
while. Only five or six years after I left the affairs of the company
reached a crisis. They had no money to carry on the business, and
no business worth mentioning to carry on, and they owed a floating
debt of one hundred and seventy-five thousand dollars. In this
emergency the directors invited Mr. James C. Brooks to take the
presidency of the company. Mr. Brooks was then a member of the
firm of William Sellers and Company. He was already well
acquainted with the high character of the engine. He found the works
well equipped with tools, nothing wanting but brains. He felt
encouraged to make this proposition to the directors, that if they
would raise two hundred and fifty thousand dollars by an issue of
preferred stock, to pay off the floating debt and give him seventy-five
thousand dollars to start with, he would take hold and see what he
could do. This proposition was accepted and Mr. Brooks took hold;
and by a rare combination of engineering skill and business ability
and force of character, having no one to interfere with him, he soon
set the business on its feet, and started it on a career of magnificent
development, which under his management, has continued for
nearly twenty years to the present time.
Of all this, however I was ignorant. I was so situated as not to
have any knowledge of the company. I only observed that their
advertisements had long ago disappeared from the engineering
journals. In the fall of 1905, being in Philadelphia on a social visit, in
the course of conversation I asked my host “Is the Southwark
Foundry still running?” With a look of amazement he exclaimed,
“Running! I should say it was running and is doing a tremendous
business.” “Is Mr. Brooks still at the head of it” I asked. “Yes,” he
replied, “you will find him at his old post, and no doubt he will be glad
to see you.”
The next day I called, and was most cordially received by Mr.
Brooks. He said he discontinued advertising a number of years ago,
“because the business was not of a nature to be benefited by