The Capitalist Crisis and the Chilean Coup
The contrast between the Popular Unity (UP) government headed by President Salvador Allende and the current military regime of General Augusto Pinochet could hardly be more striking. Allende's...
...Lagos, La concentracion, 99...
...We have seen that foreign capital tended to concentrate in those areas of the economy characterized by a higher level of productivity...
...In contrast, the bourgeoisie, as we have seen, was divided, bickering and on the defensive...
...This linking determines an international division of labor in which the capitalist center dominates advanced industrial production and the capitalist periphery produces raw materials and low-level manufactured products: As this bond becomes consolidated not only economically (based on the more advanced material forces of production in the center), but politically, ideologically and militarily as well, it cements the dynamic of dominance-dependence which today characterizes center-periphery relations...
...of Strikes Workers Affected 1958 120 48,395 1959 204 82,188 1960 257 88,S18 1961 262 111,911 1962 401 84,212 1963 416 117,084 1964 564 138,474 1965 723 182,359 1966 1,073 195,435 1967 1,114 225,470 1968 1,124 292,794 1969 1,277 362,010 1970 1,819 656,17C Source: International Labor Organization, Year- book of Labour Statistics as cited in Francisco Zapata, 'The Chilean Labor Movement Under Salvador Allende, 1970-73," Latisn American Perspectives, Vol...
...4 2 (Our emphasis) Thus, as the crisis matured, the bourgeoisie began to circumvent its own political parties and strengthen its command over other apparatuses...
...David Horwitz, "Economic Interest Groups within the Chilean Bourgeoisie: 1970," unpublished mss., 1976, formulated with the computer data of Roger Burbach...
...This it does, absorbing large quantities of labor during times of boom and laying them off during times of stagnation...
...III, No...
...In 1966, 17 percent of all firms in Chile controlled 75 percent of the shares of all joint stock companies...
...III, No...
...In fact, the trend was moving in the opposite direction...
...On the one hand, workers seriously threatened the expansion of capital accumulation through their activities on an eco- nomic plane, above all, in the work place...
...Therefore, even though its explanation lies outside the scope of this Report, we must note that the general context of the Chilean crisis of domination * which led to the 1973 coup is to be found in the current crisis in capitalism worldwide, and a full examination of the Chilean crisis must of necessity analyze its relationship to the capitalist crisis...
...Studies of the Chilean economy in 1943, 1954, 1966 and 1968 demonstrated the trend toward increasing monopolization in production...
...See Table I-1] A. EMPLOYMENT The level and rate of unemployment always represent major points of contention between workers and capitalists...
...Although it is beyond the scope of this article to analyze the political and ideological organization of the Chilean working class in the period of capitalist crisis, we will note two general stages of working class activity...
...This provides an opportunity for smaller capitalists to enter the market...
...As the English journal, Quarterly Economic Review, intimated shortly after the coup, "the indications 3 are that the senior officers of the armed forces want to turn the clock back to a pre-Allende status quo, but one which inclines toward a new organization for Chile that may take the country back much further than that...
...Very little theoretical or empirical work has been under- taken to explain political crises in dependent countries...
...Most of his economic policies were designed to benefit the growth of that sector, often to the detriment of the more traditional industrial sectors...
...7 (El Area Social) (Santiago: Quimantu, nd), 4; and, Santiago del Campo, et...
...For example, in 1970, output in the traditional consumer goods industry stood at 7,724 escudos per worker, while it was 10,071 escudos in the durable consumer and capital goods industry and 14,889 escudos in the intermediate goods industry...
...Studies of the Chilean economy in the 1960's show that capitalists were only investing approximately 10 percent of their gross surplus in fixed capital items (e.g., buildings, machinery, items which require a high amount of capital but which are the basis of future growth...
...Capital contains a major contradiction as it expands...
...Accumulation, as we noted earlier, implies both the extraction of surplus from workers and its reinvestment in the economy...
...Popular victories in Southeast Asia and Southern Africa form the new backdrop for U.S...
...4. For more on this point see Sergio Aranda and Alberto Martinez, "Estructura economica: Algunas caracteristicas fundamentales," in Anibal Pinto, et...
...dissertation, Department of Political Science, University of California, Berkeley, 1975...
...It was born, as we have seen, out of a period of intensified class struggle between workers and capitalists...
...in Var...
...1 (JulySeptember 1973), 9-28...
...IMPERIALISM AND THE CLASS STRUGGLE As capital from Western Europe and the United States penetrates Third World countries, shaping their capitalist character, it forges a unity between the two, albeit a unity of unequal partners...
...Realidad Chilena (Santiago: Editorial del Pacifico, 1961...
...Nicos Poulantzas, Fascism and Dictatorship (London: New Left Books), 1974...
...Chile is a good example of this...
...Chile will resolve its economic problems and will again become the Chile of 1894...
...As for the 8 firms which were formerly under foreign control, nearly all were in traditional industry as well...
...1 (July- September 1973), 9-28...
...Seen in this light, we can then understand how the State serves a very critical role in determining the relationship between capitalists as well as between capitalists and workers...
...There is a close relationship between these two phases in that centralization of capital often allows for periods of concentration, or dynamic expansion, because it allows for technological advances, the implementation of economies of scale, etc...
...and Falleto and Ruiz, "Conflicto politico...
...position in the world has slumped dramatically since its heady days following World War II...
...The first, the "pre-revolutionary" stage (early 1970-mid-1973), found many working class sectors on the offensive, constructing new organizational forms, confronting reactionary sectors in the factories and the streets even though the Left was not unified and, on many occasions, demonstrated a lack of clear leadership...
...and Subdesarrollo y revolucion (Mexico: Siglo XXI, 1975...
...30...
...also Burbach, "The Chilean Industrial Bourgeoisie...
...See Table 1-6] By 1970 the public sector accounted for 46.7 percent of the Gross Domestic Product and employed over 40 percent of the economically active population...
...Furthermore, to the extent that the UP concentrated its nationalizations on the consumer goods industries (textiles and food production leading the way), tactical disputes between the two fractions were exacerbated, at least in the early part of the UP government...
...These points are neither simple nor immediately apparent...
...Within the capitalist economy, two general forms exist for increasing the degree of exploitation of labor, for getting more value out of workers...
...13 In terms of workers employed, the ratio of capital to labor, percentage of production and other factors, strikingly few firms have dominated most sectors of Chilean industry in the last 20 years...
...3s To adequately define the principle contradictions in the bourgeoisie, one would have to understand the mechanisms by which each class fraction obtains and maximizes its profits and the ensuing conflicts which this produces...
...Horwitz, "Economic Interest Groups...
...3. See, The Union for Radical Political Economics, Radical Perspectives on the Economic Crisis of Monopoly Capitalism (New York: URPE/PEA, 1975), 6-13 and David Yaffe, "Inflation, the Crisis and the Post-War Boom," Revolutionary Communist (England), 12...
...But, to again refer to Poulantzas' account of the rise of fascism in Germany and Italy, "with the beginning of the rise of fascism, while the 'parliamentary democratic' form of State apparently remains intact, the relations between the ruling class and class fractions on the one hand and the State apparatus on the other, are no longer mainly established through the medium of these political parties, but increasingly directly...
...I. CLASS STRUGGLE AND ACCUMULATION In this section we will demonstrate that the growing strength of the working class was the major factor precipitating the Chilean capitalist crisis of the late 1960's and early 1970's...
...This was evident in a study of the hundred largest Chilean industrial companies in 1970...
...2) monopolization...
...Barbara Stallings, "Economic Development and Class Conflict in Chile, 1958-1973," unpublished Ph.D...
...Not5 every capitalist, however, can introduce new machines to increase the productivity of their workers since this requires more capital than many have...
...David Barkin, "Automobiles and the Chilean Road to Socialism," in Johnson, The Chilean Road, 513-525...
...A study of seven major Chilean economic groups revealed that only the two smallest did not have any foreign investment in their firms...
...The workers' strength was manifested in two arenas...
...7 In Chile, however, workers were sufficiently organized and strong to be able to challenge the capitalists as they attempted to employ such methods to increase their profits...
...Io And the trend is even more telling when we compare variations in real wages and productivity during these same years...
...C. THE SEPARATION BETWEEN THE BOURGEOISIE AND THEIR POLITICAL PARTIES The conjuncture of fascism and the start of the growth of fascism correspond to a crisis of party representation...
...Thus, State encouragement of the Chilean auto industry greatly expanded the arena for small and medium capitalists...
...Afrique-Asie Footnotes I. THE CAPITALIST CRISIS AND THE CHILEAN COUP 1. Economist Intelligence Unit, "Chile, #4," Quarterly Economic Review (London), 1973, 2. 2. El Mercurio (Santiago, International Edition), September 5-11, 1976...
...see also 313-330...
...And yet, concrete analysis of Chilean reality demonstrates that, in terms of the various trends which together constitute Chile's economic, social and political traditions, the funda- mental break came on September 11, 1973, and not three years earlier...
...in 1954 the top 5 percent accounted for 32 percent of sales...
...1 (JulySeptember 1973), 20...
...47 There are, as one writer notes, "no absolutely unsolvable situations for the capitalist economy...
...This is the case on a general level with capitalists in the peripheral countries relative to capitalists in the dominant center (although it does not hold for every capitalist or every branch of industry...
...The bourgeoisie's share of the national income began to decline after 1964 while the share goinf to the workers and the middle sectors began to increase...
...Since their costs were lower than those of the average firm, this enabled them to generate higher profits, "superprofits...
...4 The second stage led up to the September 11th coup...
...Sergio Ramos, Chile, una economia en transicion...
...In Chile-where, similar to other Latin American countries, the average unemployment level approaches 10 percent without including a very large sector of underemployed or unproductively employed workersunemployment between 1961 and 1973 (as well as the absolute number of unemployed workers) remained stable or even decreased...
...Two points stand out about these industrial sectors...
...In the first place, both were significantly more capital intensive than traditional industries...
...INDAL, El Partido Comunista de Chile en el Gobierno de Unidad Popular, Dossier No...
...We can briefly detail some of the indicators of this generalized crisis by looking at the United States...
...Sixty-one percent of all U.S...
...Many books and articles have been written which have this contrast as their guiding structure, which discuss the Popular Unity period as a major departure from Chilean economic and political traditions and which see the Junta's rule as a return to the status quo ante before Allende...
...We now return to this topic to point out that, on a theoretical level, while crises represent the exacerbation of contradictions inherent in capitalism, they also imply the temporary resolution of these contradictions...
...21 To the extent, then, that monopolization was used as a basis for deriving "superprofits" and not as a springboard for higher production to the extent that the process of centralization and not concentration characterized monopolization in Chile, monopoly capitalists became an obstacle to capital accumulation, an internal contradiction which reduced economic growth and exacerbated internal divisions in the bourgeoisie...
...On the other hand a variety of other factors of a more structural nature tended to discourage a high rate of reinvestment of profits...
...2) between sectors of the bourgeoisie associated with foreign capital and local, non-associated capital...
...By focusing on this intensifying crisis, we can then understand the reality underlying the Junta's attempt to resolve the crisis as well as the significance of alternatives to the current regime...
...Ricardo Escobar Lagos, La concentracion del poder economico...
...Even though the vast majority of large Chilean firms (81 of the top 100) were associated with foreign capital, and even though it is difficult to calculate a true rate of profit, it nevertheless seems likely that in general foreign capital was obtaining a higher rate of profit on its investments in Chile than were their Chilean counterparts...
...Among these, the high degree of monopolization was one of the most important...
...But if we are to more clearly understand the present Chilean dictatorship, as well as similar regimes which currently plague Latin America, we must analyze what they really signify...
...III, No...
...On this point, see Castells, La lucha de clases en Chile, 74, 151, 210...
...This should be kept in mind as we turn to examine the Junta's political economy, the bourgeoisie's attempt to resolve its crisis of domination...
...The State can also expand or reduce the role of small and medium capitalists...
...Nevertheless, we will concentrate only on the former in this article: how working class organization threatened the expansion of capital accumulation...
...Secondly, by claiming that Chile's political and economic trajectory was interrupted in 1973 *Throughout the Report we will use the term "capital accumulation" in its simplest definition...
...Although clear guidelines are lacking on this, and although political (party) lines and economic (fraction) lines cut across each other, it seems that the division between the two major monopoly fractions-that associated with modern industry and that associated with traditional industry-lay at the root of this dispute...
...The former concerns us here...
...And monopolization was just as prevalent in finance and control of credit...
...Production has stagnated and the growth rate of GNP has declined, as has business activity in general...
...Competition among capitalists causes each to search constantly for ways to reduce costs, increase prices, and control markets and technology...
...Is it not true that the political parties opposing the UP played a major role in provoking the overthrow of that government...
...The relationship between capital and labor forms the cornerstone of the process of accumulation in Chile just as it does in the United States...
...Su teoria...
...Gross domestic product rose at 5 percent per year during those years and the industrial product advanced at an average of 7.3 percent per year...
...39...
...On the one hand, because of competition between capitalists, each will try to reduce the amount of labor they employ relative to their amount of capital...
...7. See, for example, the following works by Ruy Mauro Marini, Dialectica de la dependencia (Mexico: ERA, 1973...
...Formed around the core of a bank or insurance company, these groups exercise a massive influence on the Chilean economy...
...Allende's government was pledged to expand democratic rights, redistribute income in a more equitable fashion, increase the State's role in the economy and control both strategic foreign investment and domestic monopolies...
...Elmar Altvater, "Notes on Some Problems of State Interventionism (II)," in Working Papers on the Kapitalistate, No...
...THE STATE TAKES UP THE SLACK Chilean capitalists came to rely increasingly on the State to make the investments that they either would not or could not make...
...To the Party and the People of Chile: Manifesto of the Communist Party of Chile," New Times (September 1975), 26-32...
...Enzo Faletto and Eduardo Ruiz, "Conflicto politico y estructura social," in Pinto, Chile Hoy, 228-231...
...The growth of the size of productive plants, the mergers or absorption of one firm by another and the integration of productive and banking capital are all part of this same process of competition and are necessary for firms to be able to raise their profits...
...Essentially, we must begin to look at the nature of the capitalist crisis in Chile which led to the coup of September 1973...
...The whole form of the movement of modem industry depends, therefore, upon the constant transformation of a part of the labouring population into unemployed or half-employed hands...
...symbolic acts as the pruning of trees in the Korean DMZ...
...Furthermore, a comparison of foreign industrial investment entering Chile via the basic foreign investment law (DFL 258) between the 1959-64 period and 1965-70, demonstrates a trend away from the traditional industries and into much more capital intensive industries: chemicals, oil, plastics, paper, basic metals and durable consumer goods...
...1 (Winter 1976), 86...
...Ibid., 488...
...and, Mauro Marini, "El desarrollo industrial dependiente," 19...
...231...
...Patrick Peppe, "Working Class Politics in Chile," Unpublished Ph.D...
...Rather than attempt such an analysis here, we will make use of the conclusions of a study of political crises in Germany and Italy by Nicos Poulantzas in order to draw out some points of comparison with the Chilean case...
...Most significantly, at least in the long run, there has been a general decline in the rate of return on capital (loosely, profits) since the late 1940's...
...In countries of the capitalist periphery, the possibilities of constructing a highly productive, capital intensive base which can take advantage of modern technology are severely limited...
...One has to remember that the later modern technology arrives to a peripheral country, the sharper is the contrast between the small level of income and the considerable magnitude of capital necessary (for technological development in order to rapidly increase the level of this income...
...Stallings, "Economic Development and Class Conflict," 463...
...We have also noted, however, that these divisions can be misleading, as in the case of the owner of a small machine shop who is objectively (and subjectively) linked to the large monopoly automobile producers...
...As Table 1-4 indicates, wages and salaries took up an increasing percentage of the capitalists' income in every year from .1964 to 1971 (and this trend continued through September 1973...
...5. For basic material on the Chilean working class see Alan Angell, Politics and the Labor Movement in Chile (London: Oxford University Press, 1972...
...SOFOFA, Actas de sesiones del Conseio Directivo, June 2, 1971, cited in Stallings, "Economic Development and Class Conflict," 346...
...The significance of these divisions would be most clearly demonstrated during elections when the voice of the sectors of small capitalists would be heard more clearly...
...See in particular New Chile (NACLA: Berkeley, 1973...
...Or, as the Junta's naval representative put it so bluntly recently...
...Ibid., 71...
...Ibid., 73...
...Looking at the Chilean economy, it appears that there were periods when the high degree of monopolization served as a structural base encouraging industrial expansion, such as in the 1960-1965 period when industrialists began to expand Chile's "modern" industrial sector...
...Since the 1930's and, particularly since the formation of the Chilean State Development Corporation (CORFO) in 1938, the State's role in capital formation has been of strategic proportions...
...TABLE I-3 YEARLY VARIATIONS IN REAL WAGES AND PRODUCTIVITY: 1959-1972 (Percent) Var...
...46 We began this article by discussing the nature of the capitalist crisis in Chile...
...it will not fall as a rotten apple from its tree...
...Characterized by distinct class relationships, economic bases, and internal balance of forces, nevertheless fascism and military dictatorship may both be produced by a similar set of factors which is what concerns us here...
...and, 4) the nature of foreign investment...
...B. THE CRISIS OF HEGEMONY In the case of the growth of fascism and of fascism itself, no dominant class or class fraction seems able to impose its 'leadership' on the other classes and fractions of the power bloc, whether by its own methods of political organization or through the 'parliamentary democratic' State...
...In itself it does not imply that the quantity of surplus value extracted from a worker is either greater or less than in countries which tend toward the extraction of "relative surplus value" (productivity increases...
...4 8 Capitalism will not crumble away from within...
...See Table 1-5] TABLE I-5 STRATIFICATION OF CHILEAN INDUSTRY: Large (200+ workers per firm) 1963 Medium Small (20-200 (5-20 workers) workers) % of firms 3% 30% 67% % of jobs 44 40 16 % of capital 58 35 7 % of value 51 38 11 added "% of gross 52 38 10 surplus* Gross surplus defined as value added less salaries, wages and employer contributions to social secur- ity...
...Victor Brodersohn, "El caracter dependiente de la burguesia chilena," Referencias (Universidad de la Habana, Cuba), Vol...
...But, as a series of careful studies has shown, this latent contradiction has not given rise to a "national bourgeoisie" whose interests are independent of the imperialists...
...B. PRODUCTIVITY But what of capital's ability to obtain more from the workers it employed...
...25 As long as the economy expanded in the mid-1960's, the growth of the new industrial sector and the concomitant *The intermediate goods sector consists of production of wood, paper, leather, rubber products, chemicals, petroleum, non-metallic minerals, and basic metals, in other words, industrial inputs...
...For more on this point, see Nicos Poulantzas, Classes in Contempor- ary Capitalism (London: New Left Books, 1975), 111-116...
...Forty-two of the 100 largest firms were directly under foreign control...
...On the other, it implies the reinvestment of this surplus by the capitalist back into the production process...
...The durable consumer goods (or "modern") sector of industry includes production of metal products, non-electrical machinery, electrical equipment and transportation equipment...
...for example, one firm taking over a smaller firm...
...See Los Gremios Patronales (Santiago: Quimantu), 1973...
...Nevertheless, due to the limited size of markets, which are quickly saturated, the ability of few firms to corner imported technology, machinery and industrial inputs, monopolies in the peripheral capitalist countries often deter rather than encourage a high level of productive reinvestment...
...On the other hand, these profits were not ploughed back into the economy...
...Peter Winn, "Loosing the Chains: Labor and the Chilean Revolutionary Process, 1970-73," in Latin American Perspectives, Vol...
...At present] technical innovations require a high level of capital per person...
...The Chilean automobile industry is a good illustration...
...Many writers see this trend, which they label the "super-exploitation" of labor, * as one of the most characteristic features of the labor-capital relation in Latin America...
...See Marcelo Jose Cavarozzi, "The Government and the Industrial Bourgeoisie in Chile...
...This stage was marked by the defensive posture of many sectors of the working class and underlined the growing ideological and political crisis within the largest parties of the Chilean Left...
...Its two basic components are durable consumer goods such as stoves, refrigerators, cars, TV's, etc, and capital goods or machinery...
...The crisis in the capitalist center, then, provides the general context for a fuller understanding of events in Chile, but not an understanding itself...
...Although it is a simplistic error to see this relationship as one between the puppeteer and his marionette, nevertheless any analysis of a peripheral capitalist country which makes no reference to events in the imperialist center will produce a seriously misleading portrait...
...This could only exacerbate the growing crisis of accumulation, especially as the local capitalists could not, in 1970, increase their profits by increasing their exploitation of the workers, given the level of worker organization...
...Similarly, it is difficult to find many sectors of large capital which are not associated with foreign capital...
...For example, a petro- chemical firm employing 50 workers but with a very large amount of capital per worker could be considered a monopoly firm whereas a textile firm employing 1,000 workers in a labor-intensive fashion might not be a monopoly...
...On the one side it implies the extraction of surplus from workers (receiving more from workers than what they are actually paid...
...3" POLITICAL CRISIS, REVOLUTIONARY CHALLENGE AND THE COUP D'ETAT By examining the fundamentally weak nature of the capital accumulation process in Chile, we have attempted to emphasize the severity of the crisis which buffeted Chile about in the early 1970's...
...2 Two points should be clarified immediately regarding this statement...
...Yet there are significant differences between how this process occurs in dependent coun- tries and in countries of the capitalist center, and these differences affect both sides of the accumulation process: the extraction of surplus from workers and the process by which surplus is reinvested in the economy...
...It did not change the nature of the chain, and this was to prove highly problematic for the Popular Unity...
...La acumulacion capitalista dependiente y la superexplotacion del trabajo," unpublished mss...
...it will not collapse simply because GNP moves backward for one year or forty...
...Santiago: Universidad de Chile, Facultad de Economia Politica...
...credits entering Chile, for example, went into Chilean industry in 1967...
...For example, manufacturers' associations such as SOFOFA (the Chilean National Manufacturers' Association) had been important lobbying tools of the bourgeoisie since the end of the nineteenth century...
...TABLE 1-2 EMPLOYMENT AND UNEMPLOYMENT, 1961-72 ('000) Year Employed Unemployed % Unemployed 1961 2,345.0 203.9 8.0% 1962 2,399.2 205.8 7.9 1963 2,463.1 199.7 7.5S 1964 2,531.6 190.6 7.0 1965 2,604.6 178.1 6.4 1966 2,669.6 173.4 6.1 1967 2,751.9 135.7 4.7 1968 2,759.4 142.2 4.9 1969 2,783.0 177.6 6.0 1970 2,825.0 186.4 6.1 1971 2,951.0 142.0 4.6 1972 3,050.0 127.0 4.0 Source: ODEPLAN, Balances eoonomnios de Chile, 1960-1970 and Salvador Allende, Mensaje Presidente Allende ante Congreso Pleno, May 21, 1973.6 It is already evident that the Chilean working class was sufficiently well organized to contend with the capitalists on the question of unemployment...
...A similar argument has been advanced by Dore for the Peruvian mining industry, "Crisis and Accumulation...
...3 Although Germany and Italy are examples of a fascist regime and Chile corresponds more closely to a military dictatorship, both types of regimes are examples of what Poulantzas terms the "exceptional State...
...Manuel Castells, La lucha de classes en Chile (Mexico: Siglo XXI, 1974), 210...
...Similarly, the temper of the working class can be seen in its militant response to the Bosses Strike of October 1972...
...Brodersohn, "El caracter dependiente," 54...
...Given that strong sectoral divisions never developed between an agricultural bourgeoisie, an industrial bourgeoisie, a commercial bourgeoisie, etc., the major contradictions within the bourgeoisie seem to have developed between monopoly fractions together with the smaller sectors of capital linked to them through production lines and non-monopoly fractions who generally produced in the traditional industrial sectors and were not associated with foreign capital...
...In the industrial sector, 144 firms controlled all branches and sub-branches of manufacturing...
...Paul Mattick, cited in Ibid...
...and Pedro Vuskovic, "La eco- nomia chilena: problemas y perspectivas," Referenciar, Vol...
...The State's role, however, encompasses much more than can be seen in its direct and indirect investments in the economy alone...
...More precisely, though, monopoly refers to a new relation between capital and labor which is not evident in terms of size alone...
...We can see a graphic example of this during the Frei government (1964-1970...
...8 As technology allows capital to expand rapidly, and since new capital always will require new labor power, the capitalist class must be able to call on this "industrial reserve army" at will...
...40 Objective contradictions within the bourgeoisie proved to be a source of instability for the system of capitalist domination which, at times, became quite serious...
...Stallings, "Economic Development and Class Conflict," 412...
...Vuskovic, "La economia chilena," 31-2...
...Among the many studies on monopolization in Chile, see Instituto de Economia, Universidad de Chile, El desarrollo economico de Chile, 1940-1956 (Santiago: Editorial del Pacifico, 1956), 143...
...But when the economy began to contract, as it did during the recession of the late 1960's, tensions began to rise and competition over the smaller pie grew fiercer...
...Among the numerous articles and documents discussing this point are the following: Chile: The MIR and the Tasks of the Resistance (Oakland: Resistance Publications, 1976...
...and by 1968 the figure was up to 48 percent...
...policy making in the future...
...If the working class can maintain a low level of unemployment even during times of recession, this is a clear sign of its strength...
...Monopolization, therefore, has historically served as a stimulus to accumulation...
...Only the political actions of the working class can topple capitalism and imperialism...
...Economically, politically and ideologically, the bourgeoisie could no longer recreate or reproduce the conditions for its existence and continued domination...
...Of these, 31 percent were in traditional industries and 69 percent were in the intermediate or modern sectors...
...3" Secondly, foreign investment was highly concentrated in those same two sectors, and all indications pointed to a process of growing concentration...
...Although the two are lumped together, in Chile production of high-priced consumer goods has always been more important See Ruy Mauro Marini, "El desarrollo industrial dependiente y la crisis del sistema de domi- nacion," Mwxismo y Revoluction, (Santiago, Chile), No...
...The 1970 presidential election was a good illustration of this split within the bourgeoisie...
...The traditional or wage goods sector consists of production of food, beverages, tobacco, textiles, clothes, shoes, etc...
...There may be contradictions between senior and junior partners in a firm given that one receives a higher salary than the other...
...and Francisco Zapata S., "The Chilean Labor Movement Under Salvador Allende, 1970-73," in Ibid., 85-97...
...The study divided these firms into four categories: 1) firms under foreign control...
...James Petras and Maurice Zeitlin, El radicalismo politico de la clase trabajadora chilena (Buenos Aires: Centro Editorial de America Latina, 1969...
...Not that this class struggle is not shaped and influenced by the current stage of imperialism...
...32 When each of these categories is subsequently broken down into the three industrial sectors (traditional, intermediate and modern), we have a useful, if rough, picture of foreign investment in Chilean industry...
...By this we mean that the majority of the means of production were still in private hands and that economic programs and planning were dictated by market relations...
...Economically, many of the trends are familiar...
...For example, through its taxation and pricing policies, the State may favor industry over agriculture, thereby bolstering the industrial capitalists...
...Ricardo Ffrench-Davis, Politicas economicas en Chile, 1952-1970 (Santiago: Ediciones Nueva Universidad, 1973), 252-254...
...In order to understand this process, how the crisis in accumulation became a crisis in the system of bourgeois domination, we turn to four related topics as they appear in Chile: 1) the relationship between capitalists and workers, the capital-labor relation...
...CESO, 1973...
...There is a split between the dominant classes and class fractions and their political parties...
...Now SOFOFA expanded into a leading force in the political struggle...
...Even though smaller capitalists obtained their highest rates of return during 1971 and 1972, they rejected these immediate profits in favor of their long-range class interests...
...Yet the lack of a recognized "leader" in the bourgeois fractions proved even more critical...
...This "crisis of hegemony" was manifested in a series of tactical disputes within the bourgeoisie in the early part of Allende's government which greatly reduced its ability to oppose the popular forces...
...Controlled by a few large corporations at the top, the industry nevertheless requires a huge number of smaller machine shops to provide it with essential parts...
...3) Chilean firms with no foreign penetration...
...o0 There can be little doubt that this mainline injection of foreign investment helped stimulate the patient out of its profound slump, but there is also little question that continued use of the drug would prove as harmful to the user as it was beneficial to the dealer...
...17 On the other hand, we can speculate that during periods of recession, competition over smaller surpluses furthers the centralization process...
...The first refers to the expansion of a given capital, its dynamic growth...
...In other words, size often permits firms to raise profit levels, increase productivity and thereby reflect a "mono- poly relationship", but it does not guarantee that this will happen...
...al., Chile Hoy (Mexico: Siglo XXI, 1970), 62...
...Thus, not only did the Chilean State provide direct or indirect investments in the productive sector, services and planning to create a basis for capital accumulation, but State investments provided a major encouragement for private investments...
...1938-1964," unpublished Ph.D...
...mining investments in the early twentieth century...
...44 Similarly, the bourgeoisie, even as it tightened its grip on the armed forces (through forced resignations of anti-coup officers and the imprisonment of anti-coup soldiers and sailors), created its own paramilitary squads...
...6 In other words, capitalists in the peripheral countries in general will turn to the more traditional forms of extracting surplus from the working class: they lengthen the work week, intensify work or, for defined periods of time, drive wages below levels needed for the survival or healthy reproduction of the working class...
...8. Karl Marx, Capital, Vol...
...On a theoretical level, the process of monopolization incorporates two processes, "concentration" and "centralization...
...Electoral statistics are not an adequate measure of this, but the April 1971 municipal elections do demonstrate that at least 50 percent of the population rejected a well defined bourgeois alternative...
...and Oscar Guillermo Garreton, "Monopoly in Chile and the Participation of Workers and the State in Economic Management," in Dale L. Johnson, ed., The Chilean Road to Socialism (Garden City: Anchor Books, 1973), 440...
...6. Economic Commission on Latin America, United Nations, Economic Survey of Latin America (United Nations, 1949...
...I (Moscow: Progress Publishers), 592-3...
...Thus, the study con- firmed the high degree of concentration of foreign investment in those sectors characterized by higher levels of productivity...
...Jorge Barria, El movimiento obrero en Chile (Santiago: Universidad Tecnica del Estado, 1971) and Historia de la CUT (Santiago: Ediciones Prensa Latino Americana, 1971...
...Los 'Piranas': Radiografia de un clan economico," Documentos Especiales No...
...Increasingly broad social strata began to question the ability of the bourgeoisie to insure stability, and they turned to the proletariat for an answer...
...In the first place the Junta, quite obviously, does not propose to replace capitalism with any other economic system and, in that sense, it differs only in degree from earlier administrations...
...During Frei's administration, durable consumer goods, capital goods and intermediate goods replaced traditional industry as the focus of investment policy...
...If the productivity level, the output per worker, were high or increasing during the 20 year period before 1973, then the accumulation process might have gone forward smoothly regardless of trends in employment...
...This same type of movement could be discerned among all major bourgeois and even petty bourgeois organizations...
...We must at the same time explain what happens to that portion of capital which remains in Chile...
...3) the role of the State...
...and a variety of articles appearing in Chilean Resistance Courier (Oakland: Resistance Publications...
...It provided a much larger arena for small and medium capitalists because of the possibilities of subdividing work...
...This recession and consequent intensification of competition fed directly into the division of the bourgeoisie in the 1970 presidential election and the sharpening of the capitalist crisis of domination in the 1970-73 period...
...2 (1971), 25-40...
...The economy was not expanding enough to be able to incorporate new sectors of workers who were outside of the labor market...
...See "Chile: The Story Behind the Coup," NACLA's Latin America & Empire Report, Vol...
...MONOPOLIZATION: STAGNATION OR GROWTH...
...The second refers to the process by which a single capital absorbs other capitals...
...20 The other indication that monopolies did not encourage dynamic growth can be found in the extremely high level of idle capacity which characterized Chilean industry, including monopoly firms...
...The modern industrial sector was as monopolized as the traditional sector, even more so because of the predominant role of foreign capital, but it differed in at least one important respect...
...Estimates of idle capacity in Chilean industrial plants average around 50 percent in the late 1950's and no less than 25 percent in 1970...
...For the capitalist, as Marx wrote, high unemployment (which he called "surplus population") "becomes...
...it only mirrored the (slightly greater than 2 percent per year) increase in the population as a whole...
...This competition helped produce the split in the bourgeoisie which led to the UP electoral victory in 1970...
...This was not just a short-term recession, not just another rollercoaster dip in the economic graph line...
...11 (March-April 1976), 43-46...
...23 In essence, then, we can see that the rapid expansion of the State sector after Allende's election was unusual only in that it involved the State taking over a large number of firms against the wishes of their owners (requisitioning and intervening firms) as well as buying shares on behalf of the State...
...2) Chilean-owned films displaying foreign penetration...
...In this sense, it is a scientific and not a moral category...
...Soldiers storm the Presidential Palace, September 11, 1973...
...But if it could at one time confidently police most of the world, it now must settle for more limited areas...
...FOREIGN INVESTMENT: PRODUCTIVITY AND PROFITS Previous NACLA publications have examined in depth the issue of foreign, particularly U.S., investment in Chile...
...In June 1971, Orlando Saenz, an aggressive young metals manufacturer, took over the reigns of the musty old organization and began to whip it into shape: "We have to broaden our bases," he exorted, "and carry the mystique and struggle of SOFOFA to all the industrialists in Chile in order to defend what we believe in and what we have learned to honor and love in life...
...Poulantzas, Fascism and Dictatorship, 72...
...By 1973 few, if any, private capitalists were investing in the Chilean economy...
...A. CONTRADICTIONS IN THE BOURGEOISIE The appearance and rise of fascism correspond to the deepening and sharpening of the internal contradic- tions between the dominant class and class fraction, which is an important element of the political crisis in question...
...2 (1971), 41-57...
...But its model of capital accumulation *-where and how it plans to generate growth in the Chilean economy-is substantially different from those of the past 20 or more years...
...s We will examine the significance of this for Chile, a country of the capitalist periphery, and discuss three major issues of contention between capital and labor: employment, productivity and wages...
...Monopolization of the economy has also given rise to the emergence of a small number of extremely powerful economic groups, clans of people with common sets of investments and shared directors...
...State investments in (or encouragement of) certain branches of industry can foster the growth of small or medium capitalists even though monopolies may dominate that industry...
...In short, there was a large contradiction operating in the economy: the workers were fighting to hold down unemployment levels while the economy could not create enough jobs to absorb a growing population...
...The second involves increasing the mass of what workers produce by increasing productivity, mechanizing and introducing technical advances in the production process...
...Marine invasions (or threats of invasion) have given way to covert actions, "shuttle diplomacy," reliance on reactionary allies, and such *In speaking of a "crisis of domination," we are referring to the most serious crisis of the bourgeoisie as reflected by its growing inability to recreate its system of control on an economic, political and ideologic- al level...
...VII, No...
...imperialism has not played its final hour on the world stage, however, far from it...
...22 Public investments in fixed capital, for example, have been extremely high in contrast to the very low private investments...
...Bourgeois groups split over whether or not to ratify Allende's plurality electoral victory in parliament, on whether or not to sell shares in their firms to the State, on whether to leave Chile or stay and organize an opposition to the UP, on whether to develop an "elite" or a "mass" opposition to Allende...
...It is not at all surprising, therefore, that even right-wing parties have been excluded from political life since the coup...
...See Table 1-21 Unemployment figures, however, do not highlight the full story of the industrial reserve army and its relation to the expansion of capital...
...1 The so-called "Pi...
...But they are structurally linked to the same company and both have a common interest in protecting the firm...
...We should note that "super-exploitation" refers only to a reliance on the extraction of what Marxian economics calls "absolute surplus value" (lengthening the working day, intensifying work, etc...
...After all, how many parts do you need to produce a pair of shoes or a can of tomatoes...
...Thus Eduardo Frei may have earned his liberal stripes for supporting small and medium capitalists, but this was only the logical structural outcome of his support for the large capitalists in the durable consumer goods industry...
...When we compare variations in production in industry with variations in employment, however, we find that productivity increased by an average of only 1.6 percent per year from 1959 to 1972...
...At the end of 1967 almost 60 percent of all the credit which was granted by the private sector went to a tiny 2.7 Percent of total debtors (some 508 people and companies...
...Having demonstrated the high degree of monopolization of the Chilean economy, the question remains whether monopolization served as a stimulus to capital accumulation...
...This was a major crisis in the bourgeois system of domination...
...al., "The Clans of Chile," in Johnson, The Chilean Road, 395-409...
...III...
...1 (July 1974), 19-38...
...and 3) between that fraction of the bourgeoisie producing primarily in the modern industrial sector and that fraction producing in the traditional sector...
...4111 Does this statement apply to Chile...
...Las dos caras de la oposicion burguesa," Correo de la Resistencia, No...
...This is a difficult question to determine empirically...
...rafias," (after the carnivorous fish of the Amazon), for example, controlled over 60 corporations in 1970 including firms in the durable consumer goods sector, * electronics, cattle raising, insurance, investment banking, real estate, transportation, textiles, communications and mining...
...In the second category, of the 39 Chilean firms displaying some foreign penetration, 46.2 percent were in traditional and 53.8 percent in intermediate or modern industries...
...Among other things, the State can distribute earnings and losses among diverse fractions of the capitalist class...
...Alexander Sobolev, "Revolution and Counter-Revolution: Chile's Experience and Problems of the Class Struggle," Political Affairs (December 1974), 48-57 and "Chile's Experience and Problems of the Class Struggle," Political Affairs (February 1975), 36-46...
...Mauro Marini, "El desarrollo industrial dependiente y la crisis del sistema de dominacion," Marxismo y Revolucion (Santiago), No...
...The small and medium capitalists, the so-called "anti-monopoly" capitalists, joined with the large expropriated bourgeoisie to boycott production...
...During the 1960's, foreign capital entering Chilean industry grew quite rapidly promoting the rapid growth of the durable consumer goods and the intermediate goods industries...
...The economy suffered the consequences...
...See Table 1-3] The results are strikingly clear: capital accumulation was not occuring on the basis of productivity gains...
...Although a certain amount of information is lacking about this period, we can hazard a tentative conclusion about the nature of foreign investment during the 1960's and how this added fuel to the Chilean capitalist crisis of the 1970's...
...The U.S...
...As the blossoming of strike activity in Chile between 1958 and 1970 demonstrates, workers did not remain passive as employers attempted to squeeze more out of them...
...The first is most straightforward: force workers to work longer and harder for the same or less pay...
...This was even lower than the 1954-60 period when 29 percent of surplus went into fixed capital and is considerably lower than averages in the United States or Europe where they tend to approach the level of 60-65 percent...
...Stallings, "Economic Development and Class Conflict," 425...
...the lever of capitalistic accumulation, nay, a condition of existence of the capitalist mode of production...
...3 The political aspects of this crisis are no less significant...
...We should note that they are "excep- tional" only in the sense that they are not parliamentary democracies...
...TABLE I-4 WAGES AND SALARIES AS A PERCENTAGE OF VALUE ADDED: 1960-1971 Year Percent 1960 27.6% 1961 27.1 1962 25.9 1963 25.8 1964 24.7 1965 25.1 1966 26.5 1967 29.9 1968 35.9 1969 38.8 1970 41.6 1971 43.4 Source: ODEPLAN, Cuentas de production y distribuccion del ingreso, 1960-71, cited in Barbara Stallings, "Economic Development," 537...
...24 Similar subdivisions of production among small producers are fairly common in the consumer durable and capital goods industry but less likely among traditional light industry...
...9 (Caracas: INDAL), 1974...
...It is likely that this was the case during 1967-70 when GDP increased by only 3.4 percent per year (a real rate of only 1.2 percent...
...Aranda and Martinez, "Estructura economica" 86...
...Foreign loans, credits and investments began to enter Chile at the time of its independence and reached significant proportions with the first U.S...
...capitalists had invested nearly US$1 billion in the Chilean economy, predominantly in the mining sector, but to an increasing extent in industry...
...In particular, we noted three types of division: 1) between monopoly and nonmonopoly fractions...
...9 TABLE I-i LEGAL STRIKES IN CHILE: 1958-1970 Year No...
...For the working class, on the other hand, it is equally important to keep the level of unemployment as low as possible, particularly as real wages tend to fall in periods of high unemployment...
...The increasing monopolization * of capital is a result of a tendency inherent to capitalist development...
...This point is of fundamental importance if we are to understand fully the nature of the coup...
...1 (Winter 1976), 70-84...
...The United Nation's Economic Commission for Latin America (ECLA) noted this as early as 1949 when it wrote that When those countries which are now the great industrial centers were in a situation comparable to that presented by the present-day peripheral countries, their per-capita income levels were relatively small but the productive technology only required a fairly small amount of capital per person...
...Burbach, "The Chilean Industrial Bourgeoisie," 206-215...
...37 Throughout the first part of this article we have set out a series of factors in Chile's economic history which gave rise to divisions within the bourgeoisie...
...On the other hand, they also need to increase the absolute amount of labor they employ and the total mass of surplus they can extract because, in the final analysis, their profits will depend not only on the rate of exploitation (how much they "get" out of each worker), but on the number of workers employed...
...On the other, they came to challenge the system of capitalist domination through their activities on a direct political level...
...2 (December 1973-January 1974), 76...
...Burbach, "The Chilean Industrial Bourgeoisie," 141-2...
...9 On the basis of the limited amount of information which we have about bourgeois fractions, we can offer the following hypothesis about contradictions within the bourgeoisie...
...They argue that even though monopoly firms had a higher capital and technological base and, hence, a greater productivity, rather than lowering their prices to undersell competitors (or paying their workers more), monopoly firms already had firm control over their markets and so maintained the average price level for their goods...
...There is little doubt that the largest opposition parties, the National Party and the Christian Democratic Party, used all their political wiles to undermine the popular government...
...And this also gave monopoly firms a disproportionate control over the nation's surpluses, as Table 1-5 demonstrated...
...Pinochet's regime, on the other hand, has sharply curtailed all human and civil rights, regressively redistributed the nation's wealth, cut back the State sector of the economy, opened Chile's doors to all investors and aided the growth of monopolies...
...TABLE I-6 PUBLIC INVESTMENT AS A PERCENT OF TOTAL INVESTMENT IN FIXED CAPITAL: 1961-69 Year Percentage 1961 46.6 1962 60.6 1963 51.1 1964 53.9 1965 60.9 1966 65.0 1967 69.2 1968 72.6 1969 74.8 Source: ODEPLAN, La inversion public en el periodo 1961-70, cited in Barbara Stallings, "Economic Developnent," 111.9 blossoming of smaller capitalists could occur without major tensions...
...We have examined at length how this was true on an economic level: production and accumulation had ground to a halt by 1972...
...12 For example, in 1943, the top 5 percent of all textile firms (in terms of sales) accounted for *Monopolization is most often used to refer to an oligopolistic command over markets and to the large size of a firm...
...Ibid., 74...
...28 But neither had the UP established its control...
...Mauro Marini, "El desarrollo industrial," 20-21...
...By expropriating the largest monopolies, the UP simply replaced the top of this chain of production...
...Ibid., 16...
...dissertation, Department of Political Science, Stanford University, August 1975, 535...
...Brodersohn, "El caracter dependiente," 41-44...
...For this we must focus on the development of contradictions within the Chilean economy and society, on the class struggle in Chile...
...Oscar Guillermo Garreton, Algunas caracteristicas del proceso de toma de decisiones en la gran empresa: la dinamica de la concentracion (Santiago: ODEPLAN-SEROTEC, 1970...
...Divisions and competition among these groups provided an important input into the emerging crisis in the system of domination...
...The crisis of domination did not affect the bourgeoisie in isolation from the other social classes in Chile...
...This was not unusual for, as we have seen, their existence was tightly linked to the monopoly firms...
...There have been swift increases in consumer prices, inflation, the level of unemployment and the federal deficit...
...Because of the unequal strength of the two capitals, there will always be a latent contradiction between them...
...The strength of the working class (and the capitalists' lack of a previous capital base which would allow them to increase productivity) choked off the capitalists' possibility of extracting more surplus from them...
...26 Even though the small and medium capitalists became a source of friction within the ruling class, they never consolidated around any "anti-monopoly" position, as Allende was to learn...
...Roger Burbach, "The Chilean Industrial Bourgeoisie and Foreign Capital, 1920-1970," unpublished Ph.D...
...and, 4) firms formerly under foreign control...
...On the other hand it is also clear from Table I-2 that the level of employment did not rise rapidly either...
...0 f . 9.14 and not 1970, we are also asserting that even though Allende and the Popular Unity coalition expressed the desire to move the country to socialism, even though the UP had begun to broaden the State sector of the economy, Chile was still a capitalist country in 1973...
...8 (October 1973), 24-5...
...Obviously, these two are firmly linked, the workers' strength at the work place level deriving from and adding to their ability to form organic links to well organized political parties...
...29 Here we will discuss only one aspect of this question: how foreign investment, seen as the solution to all of Chile's development problems, actually exacerbated the crisis of accumulation through its ability to earn higher profits than local capital...
...C. WAGES A further point of contention between capital and labor is the wage level...
...In so far as productivity advances allow one firm to produce the same commodity for less than a firm lacking similar technology, it can be said that, all other things being equal, firms with a higher productivity can earn higher profits than their competitors...
...And, as a major source of debate in the Chilean Left, it should be studied and analyzed...
...310 This argument would seem to pose a serious contradiction between "national" and foreign capital in Chile...
...35...
...And, similarily, any analysis of the imperialist center without reference to events in the periphery can explain very little...
...We will now briefly examine this process on a political level...
...dissertation, Columbia University, 1971...
...Rui Mauro Marini, "Dos estrategias en el proceso chileno," Cuadernos Politicos (Mexico), No...
...dissertation, Department of History, Indiana University, 1975...
...exico Cit -rr r 1 w,l - w w I8 In general, most economists have found sufficient information to sustain the thesis that, in Chile, monopolization became a method of generating "superprofits" rather than an agent of dynamic growth...
...In other words, by increasing the productivity of their workers, they can get a leg up on competitors...
...9. Ibid., Chapter 9; and, Elizabeth Dore, "Crisis and Accumulation in the Peruvian Mining Industry: 1968-1974," unpublished ms., August 1976...
...Santiago: Prensa Latinoamericana, 1972), 78...
...But, to put it another way, it is not enough to account for the weakness of the Chilean economy by noting the (considerable) exodus of capital from its borders to the coffers of the world's largest multinational corporations...
...And, of the 11 firms showing no foreign penetration, all were in the traditional industrial sector...
...By the late 1960's, U.S...
...Capitalists will always try to keep wages down, but they are particularly concerned when the cost of their wage bill begins to dip into their profits...
...Source: CORFO, El desarrollo industrial de Chile, 1966, cited in Ruy Mauro Marini, "El desarrollo industrial dependiente y la crisis del sistema de dominacion," Marismo y Revolucion, No...
...in Year Real Wages Productivity 1959 - 1.0% 11.5% 1960 - 2.0 - 4.9 1961 9.0 1.0 1962 4.4 8.1 1963 - 7.4 1.9 1964 2.5 3.9 1965 9.0 0.8 1966 14.6 4.3 1967 5.0 1.4 1968 3.3 0.6 1969 4.4 2.4 1970 10.0 - 2.2 1971 29.1 6.3 1972 -12.2 - 2.1 Source: Barbara Stallings, "Economic Development and Class Conflict in Chile, 1958-1973," 536.7 20 percent of all sales...
...We should also note that this reflected changes in the distribution of national income in general...
Vol. 10 • November 1976 • No. 9
