Business And Politics In Peru

The State And The National Bourgeoisie

Francisco Durand

• Publisher: Routledge
• Year: 2021
• ISBN:
  9780429715464
• Edition: 1
• Topic: Business
• Subtopic: Trading
• Index: Business

An analysis of business/government relations in Peru which focuses on the complex and changing linkages between the social class that controls key material resources and the State. The author argues that, despite its traditional weakness, the national bourgeoisie has become a key political actor.

1
Introduction

The incorporation of emerging social actors in the political system, and their participation in the power game, has been one of the key issues in Latin American politics during the twentieth century. This itself has been a period of profound social and economic transformation brought about by industrialization and urbanization. Much has been written about the politicization of blue collar workers, peasants (campesinos), informal urban dwellers and the middle class, but there have been fewer in-depth studies and more controversy regarding the role of the national bourgeoisie.

In the post-World War II period, the national bourgeoisie was initially viewed by different schools of thought (modernization and dependency theory) as playing a leading role in the transition to modernization. However, this argument was quickly dropped as the evidence increasingly pointed away from this interpretation. The national bourgeoisie could not keep up its heroic role as economic and political modernizer, as analysts initially described the business class. Thus, the national bourgeoisie became the "ugly duckling" of Latin American politics, a class that did not correspond to the expectations of prejudiced observers. Fritz Wils, one of the first to notice the pessimistic outlook that pervaded the analysis of business people, correctly stated that an overextended set of theoretical expectations led to the disillusionment that the industrialists were the driving force of economic modernization (Wils 1979:25). Even more alarming than this initial misinterpretation of the situation was the lack of intellectual attention which followed (Acuña 1985:2).

Until very recently the national bourgeoisie was a political actor not only misunderstood but, worst of all, understudied. In the late 1970s and 1980s, however, the early paradigms began to lose ground and a realist approach tended to predominate, with a number of studies starting to emerge in several countries. The active role played by the business sector in key regional events, the political transition from militarism to civilian democracy, and the policy transition from economic protectionism to free trade policies, forced analysts to review the old paradigms about the political role of the businessmen.

In the transition to democracy, a gradual, troublesome and yet incomplete process of regime change, business people made sure that political parties guaranteed their economic interests because the civilian political class urgently needed business support to isolate the authoritarian coalition led by the military. The political transition also forced the national bourgeoisie to focus on its general interests as soon as new constitutions were adopted and profound changes in a number of policy areas took place: These changes demanded class cohesion and common stances on key constitutional and legal problems. An innovative form of collective bargaining between interest groups and the state (known as concertación, concerted action) was adopted during this period of democratic consolidation, in order to facilitate communication between civil society (interest groups) and the state.

In addition to the political transition, the adoption of a new set of liberal-exporting macroeconomic policies taken in a context of severe economic recession, prompted collective business action. The Great Depression of the 1980s forced governments to pay more attention to business demands and to stimulate investment which was badly needed to stabilize the economy. Business people became politically important to policy-makers interested in changing the rules of the game and to administrations besieged by economic problems. It must be noted that the business sector did not always collectively support these changes. In the midst of the economic recession and policy transition a number of opportunities to speculate arose, opportunities that were often more attractive than productive investments. Furthermore, the recession and the economic policy changes frequently divided business interests and affected class cohesion. Those class fractions negatively affected by the recession and/or hit by free trade and stabilization policies (predominantly industrialists), tended to oppose policy changes and demanded state protection. Those fractions who benefited from policy changes (or who were powerful or competitive enough to remain unaffected by the recessionary trends) disagreed with the industrialists and supported government actions. The business sector as a whole, however, also exerted collective pressure on a number of policy areas such as the modification of labor laws, privatization of state-owned firms, reformation of bureaucracy and reduction of the welfare system. These actions were often coordinated and channeled through trade associations. Collective action was also considered necessary to fight proposals that threatened business interests whenever populist and/or socialist forces gained momentary political influence, another factor that prompted class cohesion and forced businessmen to consider collective and not the individualistic behavior common in normal times.

It is worth noting that in this period the business elites, particularly the grupos, the most powerful class fraction, found effective, silent, and less visible ways to maintain and improve their access to the state. Informal mechanisms used by the grupos however, were not the sole, nor predominant form of political action in all cases.

Several business peak associations (also known as comprehensive associations or umbrella organizations)¹, were formed or reactivated in a number of countries (Costa Rica, Dominican Republic, Guatemala, Honduras, Mexico, Nicaragua, Panama and Peru). In others, the peak association became well organized and enjoyed greater political recognition (Bolivia, Chile and Venezuela).² Moreover, national entrepreneurs now felt more inclined to directly and openly intervene in politics, another important dimension of the politicization process. Trade associations demanded a greater share of power and, in many cases, business leaders decided to participate in party politics either by supporting new right political movements or traditional parties.

Analyses of these developments can be found in recent studies of several countries and reveal the region's surge of business political activism. In Peru political analysts talk about the "awakening" of the national bourgeoisie (Castillo 1988: 195; Rospigliosi 1991); in Chile its vigor to participate in "the battle over ideas" (Campero 1988: 262-263); in Ecuador its "consolidation" (CEDIS 1988: 31). In Brazil, probably the most spectacular case, analysts have debated the "strengthening as a political actor" of the national bourgeoisie and, even more so, its "hegemony" (Diniz and Boschi 1988: 307 and 310; Cueva 1988: 66; Touraine 1984:16). In Mexico several analysts have often made remarks about its "new political will" (Casar 1988: 211). In Nicaragua a most interesting case, the national bourgeoisie became a key political player to defeat the Sandinistas and articulate an alternative political coalition. The national bourgeoisie certainly cannot continue to be ignored as a political actor (Castillo Aramburú 1987:97-120; Spalding 1992).

In this context Peru is, without a doubt, a fascinating case. It shares the basic traits of business political activism found generally in the region, but has special elements due to a political climate defined by extreme uncertainty, a continuing economic recession and unusually intense and ceaseless forms of social and political violence. Peru is one of the few countries in which the relations between the national bourgeoisie and the state in the 1980s suffered constant changes and occasionally violent confrontations. The industrialists and the grupos, for example, participated as partners in a governing coalition headed by Alan García in 1985. Two years later, relations were broken when the government suddenly attempted to nationalize the banking system, a proposal that was stopped by the mobilization of the private sector led by Mario Vargas Llosa, leader of the new right. In 1990, Alberto Fujimori was elected president and, despite the fact that most business people supported his opponent, Vargas Llosa, they, particularly the grupos and the exporters, were able to restore relations with the state. In Peru, the national bourgeoisie operates in a highly unstable and politically uncertain climate, characterized by high levels of violence and the destabilizing influence of the economic crisis.³ Peru, not surprisingly, has often been described by analysts as a "worst case scenario," as a "disaster" area (Palmer 1990). The intense political and socio-economic conflict in Peru has, in turn, accelerated the political transformation of the national bourgeoisie.

This process, however, has its limits arid must be carefully assessed. The political changes studied in this book are measured more in terms of the national bourgeoisie's ability to have access to the state in a time of crisis; in terms of its organizational gains that enable it to act collectively through a peak association; and, finally, in terms of an innovative way to express and politically defend its collective interests through the party system. These modifications cannot be seen as a return to the old paradigms of early analyses (modernization and Marxist theory) which viewed the national bourgeoisie as a conquering class, as the driving force of Latin American modernization. This book does not discuss a transformation of the national bourgeoisie into a "leading," "ruling," or "hegemonic" class. It points out specific organizational and political developments from a realist perspective, which implies the recognition of changes as compared to a preceding period; it attempts a cold assessment of the national bourgeoisie's political capability viewed as a process that is yet unfinished. The social recognition of its economic importance and the ideological consensus that other bourgeoisies enjoy in developed nations as economic forces, that is, its integration to society, is still not accomplished in the Latin American case.

The Interpretative Framework

A detailed analysis of the literature published this century on the national bourgeoisie in Latin America reveals, with few exceptions, a number of characteristics that are worth mentioning. First of all, the literature is mostly concerned with the idea of entrepreneurs as forces of economic change, as agents of economic modernization. Secondly, it is usually focused only on the leading business segments (the landed oligarchy, the industrialists, the grupos, multinational corporations). Thirdly, it is usually based on secondary sources and, occasionally, on interviews. This book shifts the focus from the economic to the political developments of the Peruvian national bourgeoisie; it emphasizes its formation as a collective political actor and its participation in governing coalitions. The analysis is not limited to one business fraction. Rather, it studies the internal differentiation of the business sector as a whole (strong and weak fractions of different economic sectors) from an organizational and political viewpoint. Finally, while this analysis strongly derives from primary sources (in-depth interviews and observation of entrepreneurial events such as congresses and conferences), it also relies on the extensive consultation of secondary material (governmental reports and documents, journals and newsletters published by business trade associations).

The approach here views the relationship between economic and political power (the bourgeoisie and the state) as complex and variable. The national bourgeoisie controls key economic material resources but it is not the only agent in the economic system (the state and foreign capital are the two other economic agents to be considered). The national bourgeoisie's ability to have access to political power is conditioned by economic factors, demonstrated by the fact that the most powerful fraction usually has easier and more constant access to the highest offices to defend specific interests. But its individual and collective ability to defend general interests is conditioned, mediated, by political variables. Business people have to develop an ability to act cohesively, overcome internal divisions, form organizations that formally and permanently unite the different business segments and influence both the state, other institutions (the armed forces, political parties) and society. These forms of organization and actions are, in turn, influenced by the rules of the political system. Both sets of factors, economic and political, are thus complexly combined and have to be adequately examined. The changing, variable nature of the relationship between business and politics is conditioned by the ups and downs of the economic cycle and the variable circumstances of the political process: regime changes, the shifting balance of forces in society as a whole and within political institutions (the executive, the Congress, the party system), and public policy changes that define (redefine) the role of the state in society. An analysis of the national bourgeoisie as a political actor since the late 1960s to the early 1990s reveals changing patterns of bourgeois/state relations that express this complex and variable relationship. A detailed and careful analysis of these patterns is critical to understanding the modalities and the extent of influence of business in Peruvian governmental politics. The approach adopted must also be defined as realist because it does not start with an assumption of what the business people ought to be. The analysis does not have particular expectations of entrepreneurs as economic and/or political agents. A realist view discusses the national bourgeoisie as it actually is.

Defining Concepts

A definition of the main concepts used in this book is necessary before continuing further. The national bourgeoisie is understood to be the class that owns the property and controls the management of firms whose capital belongs either completely or almost completely to citizens and whose higher decision-making centers are controlled by nationals who live in the country.⁴ This class is, at the same time, divided into several fractions (segments) that share the characteristics mentioned above, but do however have specific differences.

Fractions of the national bourgeoisie are distinguished according to size (big or medium-sized capital) and location within the economic structure (capital specialized in agroexporting activities operating in the external market and/or urban industrial activities operating in the domestic market.) At the top of the pyramid are the grupos, the most powerful contemporary economic agents who are characterized by a diversified investment portfolio. The grupos have investments in several economic activities and usually exert a tight control over the financial system. Below them are the weaker fractions that, unlike the grupos, have specific sectoral locations and less economic power. Whether in the urban-industrial area or the primary-exporting export area, these fractions limit their investments to one sole economic sector. They are defined as "sectoral fractions" because their actual location defines a particular set of interests. This distinction is crucial to the analysis. Traditionally, the national bourgeoisie has been identified with the industrialists, that is, a sectoral fraction with a well defined location within the economy. As noted above, the grupos' main characteristic is their control of powerful firms across several economic sectors.⁵ Therefore, the industrialists and the grupos comprise structurally distin...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Contents
• List of Tables
• Acknowledgments
• 1 Introduction
• 2 The National Bourgeoisie as a Political Actor
• 3 The Economic Power Structure in Contemporary Peru
• 4 The Internal Structure of the National Bourgeoisie
• 5 Forms of Organization and Mediation with the State
• 6 Business Politicization and Governing Coalitions
• 7 A Leap Forward
• 8 The Political "Making" of the National Bourgeoisie
• Bibliography
• Index