Humanist Modernization and the "Noncapitalist" Path in Peru

The coup d'état of October 1968, the eighth in this century, took place after nearly five years of civilian constitutional rule and produced nearly unanimous protests from the parties and labor unions.^[5] Nevertheless, neither the statute of the revolution or the manifesto of the revolutionary government repeated the old military phraseology. It was not a question of the threat of international communism, or of preserving order or defending patriotism, but of putting an end to the "abandonment of the natural sources of wealth,"^[6] of condemning "an unjust social order," and of "transforming social, economic, and cultural structures."^[7] The first important decision of the junta that deposed President Fernando Belaunde was not to arrest the heads of the labor unions or dissolve the parties of the left, but to seize the refinery of Talara and the oil wells that belonged to the International Petroleum Company, an affiliate of Standard Oil of New Jersey, and then to nationalize the holdings of that American company without compensation. The government also proclaimed the date that Talara was seized as "The Day of National Dignity."

The new government, which did not claim to follow any model and rejected capitalism as well as communism and anticommunism, as a way to conceal a refusal to change,^[8] sought to achieve a "humanist revolution" that would result in the establishment of a "social democracy with full participation."^[9] In fact the "process" of "the Peruvian experiment," as those who carried it out called it, was inspired, President Velasco Alvarado himself said,^[10] by "revolutionary socialism." And as Velasco Alvarado said in a speech in July 1969,

Almost ten months ago . . . the armed forces in the first revolutionary movement in their history took over the government of Peru. It was not just one more military coup d'état but the beginning of a nationalist revolution. . . . The whole nation and the armed forces took up the march towards their definitive liberation, and established the bases for their genuine development by breaking the power of an egoistic and colonialist oligarchy, recovering their sovereignty despite foreign pressures.

It is not surprising also that the military in Peru, unlike the others, received revolutionary endorsement from Fidel Castro beginning in 1969.^[11]

The orientation, however, was not only explained in "revolutionary" declarations, but also expressed in action. The junta that replaced President Belaunde was determined to use its position to force the reforms that the weak constitutional government had been incapable of carrying out. To that end it was going to struggle on two fronts—to modernize the very archaic Peruvian society and to lessen the external dependence of the country while taking account of geopolitical constraints. The objective consisted in removing the internal and external obstacles to a harmonious development in solidarity. Observers of different persuasions generally agree on that point.^[12]

The measures adopted formed a system in which basic reforms continued to be carried out with a view to the necessity of increasing the political "capital" of the military government. The expropriation of IPC was both a quasi-symbolic act and the beginning of a program. Just as the denunciation of Belaunde's Act of Talara, which gave huge advantages to the IPC in return for the recovery by Peru of a declining oil well, had set off the

coup, the expropriation asserted the authority of the Peruvian state over foreign economic interests. At the same time, the reinforcement of the state through the resolution of an old conflict legitimized the actions of the military in the eyes of the public. While it was easy to obtain the unity of the army on that theme, the "patriotic" decision by the junta also disarmed any "democratic" or legalist opposition.

Although the government had announced that the nationalization of the IPC was a special case, the possibility of a conflict with the United States was not removed. However, the specific threat by the government in Washington to apply the Hickenlooper Amendment—which provided for the suspension of economic aid in cases of the expropriation of American goods without adequate compensation—and the possibility of economic pressure (suspension of the sugar quota, reduction of international loans) were viewed with calm by Lima. The Peruvian government also adopted a tough position regarding the extent of its territorial waters. The announcement of the suspension of military aid by the United States in response to interference with American fishing boats produced Peruvian action that made the Nixon government think twice,^[13] since it seems that it did not wish to radicalize the military, with whom Washington counted on being able to cooperate.

The major action of the new regime was the preparation and implementation of the agrarian reform law. The crisis in the countryside that had fed the guerrillas in 1965, the massive exodus from the sierra highlands to Lima, as well as the deficit in food production and the increase in imports fixed the overall direction of a reform that constituted the key element of social change. In Peru the unequal distribution of land and the concentration of landed property, which are not unique to that country,^[14] also became an ethnic question that paralyzed development because of the size of the Indian population. Large masses of peasants who produced and consumed little were left at the margin of the national community. The moderate reformist government of "the architect" Belaunde had not been able to impose an overall land reform program on a conservative congress. The weak "technical" law adopted in 1964 that placed the burden of a limited (and rarely applied) reform on the most archaic sector of

the country (the highlands) was satisfactory for the large landholders, especially those who had modern industrialized plantations on the coast that were exempted. The law had as its purpose the reduction of peasant pressure, but not the modification of the precarious equilibrium of Peruvian society.

The principal characteristic of the agrarian reform adopted by the military government was its universal application. In fact, it affected the large cotton and sugar plantations, which were left intact but transformed into cooperatives that also included related industries. Still, it was not a revolutionary reform. Related to the programs of "American presidents and specialized organizations of the United Nations,"^[15] it provided, in line with the recommendations of the Alliance for Progress and the Economic Commission for Latin America of the United Nations (ECLA), for compensation to the former owners. The program had as its limited objectives: (1) to defend the small and medium-sized property holders; (2) to develop cooperatives; and (3) to increase production.^[16] Nevertheless, it had considerable economic and social consequences.

It seemed at first that the aim was to reduce the dualism of Peruvian society, which the military felt was excessive, and to make it more fluid by destroying the property bases of the great families of the oligarchy. Certainly, that essentially coastal oligarchy had all the elements of a modern capitalist elite, and its interests were not limited to agriculture, or export, but included large areas of finance, commerce, and industry. The extraordinary concentration in landholding and the congenital interpenetration of foreign interests and the holdings of the oligarchy appeared to the military in power as an obstacle to a program of national development. Thus the expropriation of the coastal plantations was a first step in weakening and "nationalizing" a dominant economic group that controlled public affairs and the development of the society.

An increase in production through the elimination of archaic social relationships in the highlands and the reinvestment of the profits of agricultural enterprises was one of the main thrusts of that voluntarist reform that left no room for spontaneous peasant demands. Thus, in order to overcome the social and cultural heterogeneity of the Andean Indian sectors, Agri-

cultural Societies of Social Interest (SAIS) were created in the highlands that allowed the indigenous communities to participate in structural transformations, while maintaining the productivity of the large holdings that most often were based on lands from which the comuneros had been expelled. These groups that linked the expropriated haciendas and the communities cleverly allowed the former workers and sharecroppers, aided by technicians, to be grouped with the Indians, who received incomes from the SAIS but did not recover their lands. Similarly, in the large cooperatives on the coast, "cooperativization" did not mean absolute self-management. The important role of the state representatives, the attempts to weaken the former unions,^[17] and the underrepresentation of the largest and less well off categories were measures designed to prevent an exclusive concern with immediate social satisfaction.

The text of the law specifically emphasized in the case of the coastal plantations the "inalterability of the structures of production" and "administrative continuity."^[18] While sodal justice was listed first in the introduction to the reform law, and the official slogan, "Peasant, the boss will no longer live from your poverty," recalled the Tupac Amaru Indian revolt of the eighteenth century, the transformation of agriculture was actually directed at "forming a large internal market."^[19] That is why very few of the holdings were divided: the individual beneficiaries of the reform were only a tiny minority (around 10 percent). Furthermore, the desire not to destroy the agrarian economy while giving special attention to sodal considerations and responding to the land hunger of the most backward peasants led to the creation of a large bureaucracy in the cooperative sector which, certain studies claim, was the principal beneficiary of the reform.^[20] In any case some 10 million hectares and more than 350,000 families, or 2 million persons out of the 6 million in the rural population, were affected by the reform.

Above all, however, that reform was an effort at "economic rationalization" that was to provide, among other things, "the necessary capital for the rapid industrialization of the country."^[21] The expropriated landowners could, under certain conditions that were rather advantageous, convert the bonds given in compensation into shares in industry.^[22] Perhaps there was a

desire here to convert an agriculturally based oligarchy that was oriented toward the exterior and hesitant to invest, into a genuine industrial bourgeoisie. In any case the financial transfer was organized, as noted above, in such a way that in the last analysis the agricultural workers who were the "beneficiaries" of the agrarian reform were supposed to finance new industries with the payment on the compensation bonds, and the Indians of the highlands were to support the dynamism of the coast.

A whole series of measures by the military government involving the extension of the public sector was aimed in the same direction. The nationalization of the export trade in certain products that were principal sources of foreign exchange such as iron ore and fishmeal,^[23] as well as the banking reform that limited the share of foreign capital after the state bought out the large commercial banks, were aimed at channeling national savings into productive investment while avoiding the temptations of overseas tax havens. We can ask if the creation through the General Industrial Law of a mechanism of association of capital and labor—which was applauded by the Peruvian Communist party as a "limitation on capitalist property"^[24] and violently denounced by all the employer confederations as collectivist—did not tend to link to the goal of "social harmony" through worker involvement a continuing requirement of self-financing that would act as an additional guarantee against "denationalization." That clause mandating worker participation called in effect for the employer to turn over 15 percent of annual profits to the "industrial community" to which the wage earners belonged, and these funds were to be reinvested in the enterprise up to a limit of 50 percent of its capital.

The extension of the public sector, the increased role of the state in promoting development by (among other things) the creation of a national development bank,^[25] the preference given to collective forms of agrarian organization, the creation (late and after much controversy, it is true) of a sector of self-managed "social property,"^[26] did not mean, however, that the strategy of the Peruvian military regime was anticapitalist. Thus the Industrial Law, while providing for state control of basic industries, heavy chemicals, and steel, left a large area to the private sector, while foreign capital, although subject to strict regulation in in-

dustry notwithstanding certain advantages, was invited to invest preferentially in the mining sector.^[27]

The ambiguity of the revolutionary government which, while proclaiming its intention to limit foreign economic dependence invited foreign capital to develop the natural resources of the country, has been pointed out. In fact, in 1969 the junta imposed a strict development calendar and a list of specific obligations that the foreign companies were required to honor under penalty of losing their rights. Many large companies returned their undeveloped concessions to the state at that time. In 1973 Peru nationalized the powerful copper company, Cerro de Pasco, a symbol of neocolonialism that engaged in practices that were not compatible with the economic and social concerns of the government, and had ceased to invest in 1968. Nevertheless, the rich copper mine of Cuajone was developed by an affiliate of American Smelting that planned a considerable investment ($ 620 million). Also, departing from the example of Talara and the IPC, the military government, while it gave the national oil company a legal monopoly on production, signed a number of contracts with foreign companies, especially in Amazonia. These arrangements, however, involved very strict risk and deadline conditions. There is no doubt that the military government, despite strong criticism from its "anti-imperialist" supporters on the left, believed that it was possible to make good use of foreign capital provided that it was subject to conditions imposed by a strong state determined to defend the national interest. From their productionist point of view, the main consideration was strengthening the country's economic potential and the state, which for the "revolutionaries" in uniform were the sole guarantees of national independence.

The Peruvian model, which only lasted until the fall of General Velasco Alvarado at the end of 1975,^[28] was very difficult for observers to understand. This was especially true since, while the national business groups and the bourgeoisie were fiercely opposed to a strategy of development that spoke in deprecating terms of the "relative importance" of the private sector^[29] and imposed an unacceptable system of worker comanagement on it, the international financiers were rather favorable to the model. Its prudent fiscal policy and restraint of

wages in order to fight inflation seemed to them a good sign, as did the absence of a collectivist ideology and the pragmatism of the military.^[30]

While Marxists refused to use the term "socialist" and preferred to speak of "corporatism of the left" or "Neo-Bismarckism," the more serious studies seemed to lack a way to classify this attempt at a third economic approach and its experiments at "self-management in uniform."^[31] The search for causes and origins of that "revolution," which was not "foreseen in any text,"^[32] led to much writing and created a considerable mythology that the civilian ideologues of the regime were happy to spread. If we limit ourselves to the explanations that concentrate on the emergence of a "new military mentality in Peru,"^[33] leaving aside imaginary instrumentalist approaches, the large number of factors discussed is surprising. In fact none is persuasive and all present a part of the truth. The following have been proposed: the lower-class origins of the Peruvian officers and their social isolation from the upper classes;^[34] the military's more profound understanding of the reality of the nation; the impact of the guerrilla movement that they had to repress in 1965 and the awakening of a new social sensitivity;^[35] the movement to the right of their hereditary enemy, the APRA populist party, which ended the alliance of the military with the oligarchy;^[36] and finally, the influence of the Center for Advanced Military Studies (CAEM), in which the officers since 1951 had studied the nation and in which economics and sociology were taught, have often been presented as decisive.^[37]

However, each of these explanations taken by itself is ambiguous since it could also just as well have made the leaders of the Peruvian army incline in the direction of a vigilant defense of the status quo. The sodal origins of the Peruvian military had not changed for the half century before 1968 during which the military appeared to act as "the watch dogs of the oligarchy" and the Chilean officers were no less cut off from the civilian elites than their neighbors to the north. The assignment of garrisons throughout the whole of the territory and the direct contact as a result of conscription with the lower-class elements were also characteristics that were common to the armies of Argentina, Brazil, and Chile. The "traumatism resulting from

guerrilla warfare" generally orients military attitudes in a counterrevolutionary and antireformist direction. The traces of an Aprista influence on the ideology of the military and the good relations of certain leaders of the process with the leaders of the APRA refute an interpretation based on a dialectical evolution between related enemies.^[38]

As for the CAEM, it is a good idea to minimize its role. First of all, none of the leaders of the revolution—Colonels Leonidas Rodríguez, Jorge Fernández Maldonado, Enrique Gallegos, and Rafael Hoyos Rubio—went to the CAEM, but all went to the School of Information and Intelligence Services.^[39] General Velasco Alvarado was not an alumnus of the School of Advanced Military Studies, and none of the members of the initial revolutionary group had participated actively in the struggle against the guerrillas. Finally, we should understand that the study of the national policy is not carried out only in Lima. Similar institutions exist in Rio de Janeiro and Buenos Aires, and their progressive influence seems rather slight. It was only because of the presence among the civilian professors and collaborators of certain radical intellectuals that that institution was able to play a decisive role in the opening of the military to the problems of dependence and social development. The content of the education is not the key. It is necessary to explain why the experts of the Economic Commission for Latin America, Father Lebret of Economie et Humanisme, and leftist sociologists and technocrats returning from Israel and Yugoslavia were invited to teach at the CAEM. Thus, we have the eternal problem of the chicken and the egg.

On the other hand, that bundle of apparently disparate factors cannot be isolated from the specific functions of the military and internal political mechanisms related to the work of the armed forces. The military role is the result of a special international and domestic combination of forces. The doctrine of "internal security" arose out of the concern of the CAEM with the preparation of national defense of the nation that placed the struggle against underdevelopment and poverty and the "attainment of optimal social well-being" in the first rank of the objectives of the military. As General Marin, creator of the CAEM, put it very clearly, "It is necessary to give Peruvians

something worth defending."^[40] The activist officers who took power in 1968 because of the political deadlock were convinced of that. However, they were only a minority. By erecting an institutional facade over their action, they succeeded for a time in involving the whole of the armed forces behind them.