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Latin America and Underdevelopment

This is a slightly abridged version of a speech delivered by Leo Huberman to the Methodist Student Christian Citizenship Seminar on Latin America,on February 4,1964. It is being published here for the first time. We would like to thank the University of Oregon Special Collections for providing access to this manuscript from their collection of Leo Huberman ‘s papers.We thank Elizabeth Huberman for her help in publishing this talk.Huberman ‘s talk had no title.The present one is supplied by the editors.

On NBC Television News, last Friday night, pictures were shown of American refugees who had fled from Panama following the rioting there. One woman, relating the frightening experience of her husband, said: “His car was overturned, rocks were thrown at him, and he barely made it into the Canal Zone.”

Another woman said, “I wish the American people would take an interest in what is going on there. We just giveand give and this is what they do to us.”

I, too, wish the American people would take an interest in what is going on in Panama and in the rest of Latin America. If they did so, if they really studied the facts, then they would get out of the habit of swallowing whole the propaganda fed them on the air and in the press, that other nations are always villainous or inferior, while the United States is always moral and noble. If the American people knew their history as it really was, not as it is taught in their schools, then they would immediately be aware of the fact that the formulation by the refugee from Panama was upside down; not “We just give and give, and this is what they do to us,” but rather “We just take and take, that is what we do to them.”

The story of how we took the Panama Canal Zone proves the point. In 1903, Panama was a province of Colombia. When the Senate of Colombia rejected an agreement giving the United States the right to build a canal, a “revolution,” in quotes, was staged by the members of the ruling class of Panama, instigated and guided by the United States. Panama seceded from Colombia, and the moment it did so, the new government was recognized and it gave the United States the right to build the canal. We have this on the best authority—Theodore Roosevelt, who was President of the United States at the time. He described how the revolution started in these words; “I simply lifted my foot.” And, he added, “I took the Isthmus, started the Canal, and then left Congress—not to debate the Canal, but to debate me.”*

You have seen the newspaper stories, quoting Secretary of State Rusk, designed to make you believe that Fidel Castro and the Communists were partly responsible for the recent rioting in Panama. This has been denied by the spokesmen for the Panama government. The technique of blaming Communists whenever a revolution breaks out anywhere is a familiar one. The charge may or may not be true. But what we know is true is that the government of the United States, in furtherance of its own ends, staged a phoney “revolution” in Panama in 1903, and again in Guatemala in the 1950’s, and most recently in Saigon.

I am suggesting that “we just take and take, that is what we do to them.”

In an article entitled, “Brazil: Exploitation or Aid,” in the Nation of November 16, 1963, Professor Andre Gunder Frank, formerly at Wayne State University in Detroit, and currently visiting professor of economics at the University of Brasilia, cites figures to show how much “we just take and take.”

For the years 1947–1960, the total amount of new investment and loans that flowed into Brazil was $1,814,000,000.

The amount that flowed out of Brazil in profits and interest payments was $2,459,000,000. This means that $645,000,000 more was paid out by Brazil than came into Brazil. Add to that figure an estimated additional billion dollars for “services,” representing mainly secret remittances abroad, and the total outflow becomes nearly twice as much as the inflow.

Another statistic, this one from the Joint Brazil–U.S. Economic Commission, is even more startling. In the fourteen years from 1939 to 1952, withdrawals to the United States from Latin America came to sixty-one times the amount of long-term investments. You heard that correctly—sixty-one times as much money withdrawn from Latin America than was invested, in those fourteen years.

In the specific case of Brazil, it doesn’t matter which years you take, the picture is the same. An ECLA study shows that “in no decade of the past century has the total flow of goods and services out of Brazil been smaller than the flow into Brazil.”

For Latin America in general we have other revealing figures from the U.S. Department of Commerce: For the period 1950–1961, net new private U.S. investment came to $2,962,000,000 but the profit and interest on that sum came to $6,875,000,000; which means that well more than double the amount put in, was taken out.

Ah, yes, you may point out, but those figures pertain only to private investment, and in that same period the U.S. government was giving and giving and giving to the countries of Latin America. To present a true picture you must include, in addition to the amount of private capital, the amount of public capital poured into Latin America.

Quite correct. Let me now include the amount of public capital—again the figures are from the U.S. Dept. of Commerce. United States aid, and loans, came to the truly munificent sum of $3,910,000,000. But the repayments and the interest thereon, were also munificent—they come to $1,554,000,000 to date, and more still to come. So, adding up both private and public capital poured into Latin America by the United States, against profits, repayments, and interest poured into the United States by Latin America, we find a net capital movement to the United States of over two billion dollars.

The refugee from Panama who told her television audience that “we just give and give,” was spouting what she and most Americans have been led to believe was the truth. But it is not the truth. The truth is that “we just take and take.”

The myth is that unselfish, beneficent, American (or English, or French) private and public capital goes to the underdeveloped countries, at a considerable sacrifice, to provide the wherewithal, the technology, the know-how to help develop these backward countries.

The reality, not surprising to those who know how the capitalist system works, is quite different. The goal of investment capital is to benefit the investors. And that’s precisely what capitalist investment in the underdeveloped countries of Latin America (as well as of Asia and Africa) has done—it has benefited the investors.

I am not suggesting that some benefits do not flow to the people of the underdeveloped countries, as a byproduct of the desire by capitalist investors to enrich themselves. But the slight gains to the underdeveloped countries are far outweighed by the severe damage done to them in this colonial relationship—the plunder of their natural resources, the distortion of their economies, the hindrance to their economic growth, their low productivity especially in agriculture, their loss of dignity, the poverty and disease and hunger and illiteracy which is the inevitable accompaniment of trying to live on a per capita income of $300 a year. I am suggesting that the result of our policy of “just take and take” is to make rich North Americans very much richer and poor Latin Americans very much poorer.

There are some nations in the world which are poverty-stricken because they lack natural resources. But that is not true of the Latin American countries. They have an abundance of the resources necessary to make a country rich. No continent in the world compares with Latin America in the amount of cultivable high-yield soil, or in reserves of timber. List the metals important to industrial development—copper, tin, iron, silver, gold, zinc, lead—all of them and many others, as well as oil and hydroelectric power, are found in great abundance in Latin America.

Yet the people of Latin America are desperately poor. The statistics presented to Congress by former President Kennedy in his message proposing the Alliance for Progress program, on March 14, 1961, tell the story:

  • The average per capita annual product is only $280, less than one-ninth of the United States—and in large areas, inhabited by millions of people, it is less than $70….
  • The average American can expect to live seventy years, but life expectancy in Latin America is only forty-six….While our rate of infant mortality is less than 30 per thousand, it is less than 110 per thousand in Latin America….
  • Illiteracy extends to almost half the adults, reaching 90 percent in one country. And approximately 50 percent of school-age children have no schools to attend….
  • In one major Latin American capital, a third of the total population is living in filthy and unbearable slums. In another country, 80 percent of the entire population is housed in makeshift shacks and barracks….
  • Poverty, illiteracy, hopelessness and a sense of injustice—the conditions which breed political and social unrest—are almost universal in the Latin American countryside.

Mr. Kennedy not only described the need, he also advised on the steps to be taken: “A program for improved land use, education, health, and housing…. There is an immediate need for higher and more diversified agricultural production, better distribution of wealth and income, and wider sharing in the process of development.”

The statement of the problem by Mr. Kennedy and what must be done about it were convincing and the Congress of the United States adopted his “Alliance for Progress” aid program. Today, almost four years later, it has become apparent to almost everybody, that the plan has one important defect—it won’t work. Not because the appropriation isn’t enough—the plan wouldn’t work if the appropriation were multiplied ten times.

It won’t work because it doesn’t affect the imperialist relationship which is the fundamental cause of the conditions which the United States says it wants to alleviate. Latin American countries are rich in natural resources but their people are poor, because their economies are lopsided; the wealth flowing from their natural resources is appropriated by U.S. monopoly corporations which have distorted these economies in their concentration on the extraction of profitable raw materials. The land which is not in the hands of foreign interests is held by the native bourgeoisie—the traditional land-owning aristocracies now intertwined with the financial, commercial, and manufacturing classes. Much of the land is out of production and much of the rest is underutilized. Unless and until these two ruling groups—the foreign and domestic capitalists—are forced to give up their power, property, and privilege, unless the economic and social structure of these Latin American countries is radically altered, then nothing fundamental will be changed. The people will remain hungry.

The aid program won’t do what Mr. Kennedy said it would do because it does not give the Latin American countries genuine national independence, it does not break the economic stranglehold that U.S. imperialism has on the whole continent. Without national independence, the Latin American countries will remain, in effect, colonial appendages of the North American metropolis. And their most basic difficulties arise precisely from their past history and present status as colonial appendages.

If the Alliance for Progress won’t solve the problem for the Latin American countries, what will? My own answer is socialism. I am convinced that Latin America, as well as the other underdeveloped areas of the world, must have socialism because capitalism, which is inseparable from imperialism, is incapable of generating the kind and degree of economic development that is absolutely essential to provide rising living standards for rapidly growing populations.

Socialism, on the other hand, would make it possible for the Latin American countries to take the steps necessary for economic development. As I wrote in “Which Way for Latin America?” in Monthly Review in March 1961, Political independence, though of the utmost importance, is not enough; they must win economic independence too. And economic independence in the sense of establishing their own control over their own economic surplus so they can apply it to productive capital investment for the planned economic development of the whole nation, involves those far-reaching social changes which spell revolution and socialism.”

Notes

* See Dwight Carroll Miner, The Fight for the Panama Route, Columbia University Press

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