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Notes on Feudalism and Capitalism in Chile and Latin America

Author(s): Kyle Steenland


Source: Latin American Perspectives, Vol. 2, No. 1, Confronting Theory and Practice
(Spring, 1975), pp. 49-58
Published by: Sage Publications, Inc.
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NOTES ON FEUDALISM AND CAPITALISM IN CHILE
AND LATIN AMERICA
by
Kyle Steenland

Our review of Chilean history has shown that it was capitalism, with its internal
contradictions itself which generated the underdevelopment of Chile and deter-
mined its forms; that this remains as true today as it was in the past; that Chile's
underdevelopment cannot be attributed to the supposed partial survival of a feu-
dal structure, which never existed there in whole or in part (Frank, 1967:115).

The landowning class has not been transformed into a capitalist middle class,
ally of the national economy. Mining, commerce, and transport are in the hands
of foreign capital. The "latifundistas" have been satisfied to serve as the latter's
intermediaries in the production of sugar and cotton. This economic system has
kept agriculture in a semi-feudal organization that constitutes the heaviest bur-
den on the country's development.
The agrarian problem is first and foremost the problem of eliminating feudalism
in Peru, which should have been done by the democratic-bourgeois regime that
followed the War of Independence. But in its one hundred years as a republic,
Peru has not had a genuine bourgeois class, a true capitalist class. The old feudal
class - camouflaged or disguised as a republican bourgeoisie - has kept its pos,
ition (Marictegui, 1928:17-18,32).

In the last few years a spirited debate has taken place about whether Chile
has ever been a feudal country. Gunder Frank has taken the position that Chile
has been a capitalist country since the time of conquest, basing his assumption on
the fact that Chilean agriculture always produced for export during the colony,
and that at no time was Chilean agriculture a closed natural economy, with pro-
duction for subsistence alone (Frank 1967). This contention has been tied to the
theory of dependency, what Frank calls the "development of underdevelopment."
The dependency theory holds that Chile has always been integrated into the world
market system and that as a result of this integration Chile is a poor country. The
metropolis has always stolen a surplus from the Chilean economy and prevented
the accumulation of capital which might have been used for national develop-
ment. The dependency theory is opposed to the "dualist" theory of Latin Ameri-
ca, which holds that a stagnant, feudal sector coexists with a modern, capitalist
sector. The solution for underdevelopment for dualists has been the elimination of
the feudal sector, the taking of political power- from the landowning oligarchy,
and the development of national capital by the modern, urban, and national bour-
geoisie. The solution for underdevelopment for those who believe in the dependen-
cy theory is, on the other hand, a socialist revolution conducted against both the
landowning and industrial capitalists. The left in Latin America has been divided
on these questions. One sector of the left has called for a bloc between the urban
working class, the peasantry, and the national bourgeoisie to create a full democ-
racy and a national capitalist development free from imperialism. Only at a later
stage would the struggle be for socialism. This has often been the position of Latin
Latin Amekan Pecpieshu. 4, Spring 1975, V.I. II, W. I

49

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50 LATIN AMERICAN PERSPECTIVES

American Communist parties. On the other hand, since the Cuban revolution
many sectors of the Latin American left have held that the revolution to be car-
ried out must be both anti-imperialist and socialist at the same time, that there is
no "dualism" in Latin American society, and that the national bourgeoisie cannot
fulfill its historical role of freeing the economy from imperialism.
This is obviously an old debate in colonized or neo-colonized countries, dating
at least from Lenin's discussion of the development of capitalism in Russia in 1899
(Lenin, 1967). Its renewal in the sixties in Latin America has been due to the im-
pact of the Cuban revolution, the inability of the traditional Communist parties to
carry out a revolution, the new weakness of the United States due to its loss in
Vietnam, and so on.
This author believes that the dualist conception has been quite correctly re-
jected by the majority of the left in Latin America. The national bourgeoisie has
proved itself incapable of leading an anti-imperialist and anti-oligarchic revolu-
tion. To the failure of such traditional reform parties as APRA in Peru, AD in
Venezuela, and the MNR in Bolivia, must now be added the failure of Juan
Per6n's most recent Presidency. The penetration of imperialist economic inter-
ests into manufacturing production in Latin America has meant a qualitatively
different situation than that of countries in Africa or Asia where a comprador
bourgeoisie can be isolated from a national bourgeoisie. In Latin America, the
industries developed during the import-substitution period (1930s-1940s) helped to
develop an internal market. After the Second World War, U.S. capital took advan-
tage of this internal market by investing directly in manufacturing, thereby either
destroying or subjugating the national bourgeoisie.
There can be no stage of "national" capitalist development in many Latin
American countries because there is little truly "national" capital. Native capital
is predominantly the willing servant of foreign capital. The most striking demon-
stration that a consistent anti-imperialist policy in Latin America can only coin-
cide with socialist measures has been offered by Cuba.
The position of many Maoist groups in this debate is interesting. For Latin
America, Maoism advocates an alliance of the national bourgeoisie, the petty
bourgeoisie, the working class, and the peasantry in an attack on imperialism.
The goal is a national capitalist revolution, a stage of "new democracy." This is
the same position as that of the Latin American Communist parties who are
aligned with Moscow. On the other hand, the Maoists insist that the working class
or the peasantry play the leading role in the alliance, and the victory of such a
revolution can only come about through the military defeat of the comprador
bourgeoisie. These two positions of course sharply differentiate the Maoists and
the Soviet-aligned Communist parties.
The Maoists are advocating a strategy which proved successful in China. But
in China the weight of feudalism was much heavier. There was little manufactur-
ing capital, whether foreign or domestic. Cities were few; the economy was al-
most entirely based on agriculture. There was plenty of room for a capitalist de-
velopment of the forces of production. In Latin America, however, there exists a
great deal of manufacturing capital, dominated by foreigners. A victory against
imperialism would mean the expropriation of much manufacturing capital and a
determined struggle against those native capitalists politically allied with imperi-
alism (which means almost all of the strong domestic bourgeoisie who own large
industrial capital). After the expropriation of the most important industrial capi-
tal, a stage of capitalist development or new democracy is scarcely logical.

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STEENLAND:NOTES ON FEUDALISM 51

The contradictions inherent in the Maoist position are reflected in the dilem-
ma of military tactics. In most Third World countries, Maoism calls for peasant
armies led by the communist party - the same tactic used in China. But in many
countries in Latin America (most clearly Chile and Argentina) such a peasant
army is not feasible because the population is overwhelmingly urban and the ur-
ban working class is the leading force. In such countries, any mass-based military
attack on imperialism means an insurrection led by the urban working class
against imperialist interests, the large native bourgeoisie, and the state's armed
forces. Such an insurrection, if successful, will not be followed by a stage of capi-
talist development, but by socialism.
However, even while denying that Latin America is predominantly feudal and
needs a stage of capitalist development, it is necessary to reject Gunder Frank's
assertion that Chile (and Latin America) has been capitalist since the mid-1500s.
It is quite possible to reject both the dualist interpretation and that of Frank. As
has been discussed by numerous authors (most clearly by Laclau), Frank's view
is based on the identification of capitalism with production for the market, and
ignores the relations of production internal to the economy (Laclau, 1971). A study
of those relations of production reveals- that they certainly were not capitalist
throughout most of Chile's history. Indeed they have been marked by extra-eco-
nomic coercion on the part of the landowners, the ownership of some means of
production by the peasant labor force, and a restriction of the internal market
which has impeded the development of capitalism.
A study of Chile with an emphasis on the internal relations of production has
led this author to conclude that the country's history can be divided into four main
periods. The first period, from 1540 to about 1680, was that of a slave economy
oriented towards exports. During this time the Indian population was enslaved in
order to enable the Spaniards to produce precious metals and then tallow and
hides. The feudal institution of the encomienda which was supposed to protect
the Indian proved ineffective. Agricultural laborers were bought and sold until the
late 1600s, when Indian slavery was abolished and when the Indian population had
shrunk to almost nothing due to disease and brutality. The second period, between
about 1680 and 1860, was a semi-feudal one, when wheat became the main product.
Wheat was produced primarily for export, for the world market. That Chile's
economy produced commodities for exchange on the world market in this period
means that during this time the economy cannot be labelled feudal. Nevertheless,
the relations of production were feudal. The agricultural laborer (called an "in-
quilino") could not be bought and sold, but neither did he have freedom to sell his
labor on the market. He did own some means of production, including tools and
animals. He had use of a small plot of land which he worked to provide his own
subsistence. Most of the time he worked for the landlord.
In the late 1800s, mineral production, again for export, began to overshadow
wheat. The labor force in the mines was paid in wages, the level of which was
determined by the market. Labor became a commodity. Gradually an average
rate of profit began to govern new investment, whether mineral or agricultural.
At this point the economy as a whole can be described as capitalist. However, in
agriculture, the relations of production continued to be predominantly feudal,
characterized by the restriction of free wage labor. This period lasted from ap-
proximately 1860 to 1930.
After 1930 a fourth period began. The relations of production in agriculture
Lati,n Amro P.r4 ctv s 4, Sptin,g 1 97S, Vol. 11, No. I

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52 LATIN AMERICAN PERSPECTIVES

became capitalist. The number of "inquilinos" declined, and wage labor came to
dominate in the countryside. Agricultural production declined, and Chile became
a net importer of food. The depression led to a collapse of the world market for
minerals and agricultural products. Imperialist capital, which dominated Chile,
stagnated or withdrew. Revenues from the mines and commerce shrank, and
Chile was unable to import manufactured goods from the metropolis. A period of
import substitution began, as the Chilean bourgeoise entered industrial produc-
tion. Those who had based their wealth on mining, commerce, or agriculture of-
ten made a smooth transition to industry. However, the internal market for man-
ufactured goods was weak because the mass of the people were excluded from
consumption due to the unequal distribution of income. The manufacturing bour-
geoisie, although dominant in Chile after the 1930s, was weak compared to imperi-
alist interests. After the Second World War, U.S. capital once again was invested
in Chile, and the Chilean manufacturing bourgeoisie became a junior partner to
U.S. interests. Production in industry remained oriented towards the consump-
tion of the middle and upper classes.
In order to determine on what basis the above conclusions about Chilean his-
tory have been reached, it is necessary to once again define what is meant by
feudalism and capitalism. Based on the definition provided by Marx, feudalism
means: 1) an economy where wealth is based predominantly on privately owned
land; 2) where the owners of the land extract the surplus production from the
peasantry (production exceeding subsistence) by extra-economic coercion of one
form or another; 3) production is primarily for use, not for the market - the econ-
omy is a closed natural economy; and 4) the peasantry owns its own means of
production, including usually a small plot of land. Marx stressed two aspects of
feudalism: the relations of production were characterized by the fact that labor
was not free (and possessed some means of production) and production was pre-
dominantly for consumption, not for commodity exchangel. In order for capital-
ism to develop, the peasantry had to be free to establish a contract with the lan-
downer or farmer and had to be dispossessed of its means of production.
Marx emphasized neither the one nor the other of these two sides of feudal-
ism. Both are important. So one cannot define as capitalist an economy which
produces predominantly for the market but in which labor is not free. This is the
main problem with Frank's analysis. On the other hand, it is clear that an econo-
my which produces for the market, in which the main goal of the landowners or
farmer is commodity exchange, cannot be called feudal. Chile from the late 17th
century until the late 19th century produced predominantly agricultural exports
for an external market, and yet the mass of the labor force was subject to extra-
economic coercion, was not free, and continued to possess certain means of pro-
duction. Therefore we cannot call Chile during this period either feudal or capital-
ist, strictly speaking, but we will choose the term semi-feudal.
The definition of feudalism used here has a specificity which precludes econo-
mies based on slave labor. The peasant is not free, but he does possess some
means of production and some traditional rights. He himself is not a commodity.
Thus he is not a slave. The Indian in Chile was enslaved, first in the mines, and

'See Marx, (1967a, Vol I: Chapters 26-32 and Vol. III: Chapter 47) "The mere appearance
of the the circulation of commodities and the currency of money does not suffice to supply
the historical conditions necessary for the existence of capital. It arises only where the
owner of the means of production and the means of subsistence finds in the market a free
worker who offers his labor for sale" (1967a, Vol. I: 170).

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STEENLAND:NOTES ON FEUDALISM 53

then throughout most of the 17th century. Only after that could the agricultural
laborer no longer be bought and sold and began to control important means of
production.
Furthermore, this definition of feudalism is not tied to serfdom. Serfdom dis-
appeared from most of Europe in the 14th century, in the sense of the serf being
the vassal of the lord. In the 14th century the Black Plague reduced the labor
force considerably, as did the One Hundred Years' War. The population boom be-
tween the 9th and the 13th century seems to have already died down before these
disasters of the 14th century. At the same time, major peasant rebellions took
place, which had as their goal the abolition of personal vassalage (Hilton, 1973).
Depopulation due to war and plague meant that the labor force was more in de-
mand and in a better bargaining position, and also that there was an additional
amount of uncultivated land to which serfs could flee. The landlords, in the face of
this difficult situation, accelerated a trend which had begun earlier. They divided
their desmesnes amongst their serfs, who then became hereditary tenants with
fixed rents in money or kind2. Many of the onerous burdens of serfdom, including
the lord's absolute right to dispose of the person of his vassal, as well as chevage,
leyrwite, etc., disappeared or were sharply reduced, often in return for payment
(Tawney, 1912: 42, 53). But the lord continued to exercise jurisdiction in manorial
courts and receive payments for all kinds of pasture and mill services. He contin-
ued to collect a rent in kind or money which was hereditary and required of the
peasant, who had no right to bargain. Labor remained unfree, and rent did not
allow any profit for the tenant. No average rate of profit affected the amount of
rent, as is the case under capitalism. The replacement of labor services by money
rent or rent in kind is not an indication that feudalism no longer exists, and much
of the formal structure of serfdom as it existed from the ninth to the fourteenth
century could largely disappear, without the disappearance of feudalism3.
This much said about feudalism, a few words are in order about merchant
capital. In Chile, the landlord produced for export, at first gold, then hides and
tallow, and finally wheat. Sale of these exports meant an accumulation of com-
mercial capital, which at first benefitted the landlord, who was also the mer-
chant, and then was divided between them, in as much as they became separate
persons4. The accumulation of this capital did not provide a point of introduction
for capitalism. Instead, the capital accumulated from exports was wasted on the
consumption of the landlords, and was not invested in production. The slave and
then feudal relations of production remained the same or grew more intense. The
accumulation of merchant capital is ordinarily associated with the destruction of
feudalism in Western Europe, and rightly so. However, Marx's discussion of mer-
chant capital makes it clear that it does not necessarily contribute to the develop-
ment of capitalism, that is, to wage labor and the investment of capital in indus-
try. Ironically, production for export and commodity exchange may in fact hinder
the development of commodity exchange in the home market, and this is what
happened in Chile.

-This process began earlier in France than in England. See Bloch (1961: 94-101 and Taw-
ney, 1912: 91).

'See Marx on rents (1967a, Vol III: 797).

4The potential conflict between landlord and merchant did not develop in Chile. Unlike in
Europe, where landlord and merchant frequently had distinct sources of wealth (eg. Ita-
ly), in Chile both depended on agricultural production until the mid-19th century.
tatin Amwonk wpectkowiue 4, Spwing 1975, Vol. tl, 124. I

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54 LATIN AMERICAN PERSPECTIVES

The independent and predominant development of capital as merchant's capital


is tantamount to the non-subjection of production to capital, and hence to capital
developing on the basis of an alien social mode of production which is also inde-
pendent of it. The independent development of merchant's capital, therefore,
stands in inverse proportion to the general economic development of society
(Marx, 1967a, Vol. III: 327-328).

Marx holds that the development of commercial capital may or may not help
capitalism develop, depending on the relations of production of that society where
the merchant capital develops.

However, in its first period - the manufacturing period - the modern mode of
production developed only where the conditions for it had taken shape within the
Middle Ages. Compare, for intance, Holland and Portugal. And when in the 16th,
and partially still in the 17th, century the sudden expansion of commerce and the
emergence of a new world-market overwhelmingly contributed to the fall of the
old mode of production and the rise of capitalist production, this was accom-
plished conversely on the basis of the already existing capitalist mode of produc-
tion (Marx, 1967a, Vol. III: 333,).

Historical examples of an increase of feudal labor relations at the same time as


increased production for the market are well known; perhaps the most outstand-
ing is Eastern Germany at the end of the 15th century, which produced grain for
export to Western Europe in great quantity at the same time as the landlords in-
creased the feudal oppression of their peasants (Dobb, 1947: 39). Karl Kautsky
(1903: 20), writing in 1902, described Eastern Europe after the nobility crushed
the peasant revolts of the early 1500s:

The victorious nobility began itself to produce commodities for a system which
was a singular mixture of capitalism and feudalism. It began to produce on large
tracts of land, using almost always, not wage labor, but forced labor of a feudal
character.

Similar situations occurred in parts of England in the 14th century (Hilton,


1973: 156). In general, it seems that market production of raw materials for ex-
port to areas of more advanced manufacturing production often produced a pro-
longation of feudal labor relations within the home economy5.
In the case of Chile, we believe that this happened. Frank's assertion that
Chile was a capitalist country since the 16th century because it depended on the
production of commodities for an external capitalist market is incorrect in terms
of Marx's definition of capitalism6. Whereas such production in Chile increased
the accumulation of commercial capital, it went hand in hand with the slave or
feudal exploitation of the peasantry.
Finally a few more comments about definitions. The terms of feudalism and
capitalism were first defined and employed in a thorough fashion by Marx, and
we are trying to use the definitions that he developed. Most historical discussion
of feudalism and capitalism must at least reflect, consciously or unconsciously,
Marx's work. But Marx wrote mostly about capitalism and did not extensively

'On this point see Sweezy's comments (1963: 34). If the exports are to a far-away market,
the increase in commodity exchange and circulation of money may not affect the peasan-
try at all. If the trade is carried on nearby, the participation of the peasantry would at
least be partially related to whether they were tenants on a divided demesne or still sub-
ject to labor services.

6On the other hand, Frank has stated that he never claimed to be a Marxist (Latin Ameri-
can Perspectives, 1974: 98). Even so, if he is to use Marxist terms he must be held ac-
countable for their definitions.

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STEENLAND:NOTES ON FEUDALISM 55

discuss pre-capitalist economic formations. His definition of feudalism, including


an equal emphasis on relations of production on the one hand, and the closed natu-
ral economy on the other, has made it difficult to label economies either feudal or
capitalist in those cases where one of these elements is present, and not the other.
Furthermore, Marx's discussion of other pre-capitalist economic formations -
i.e., slave, Asiatic, and Ancient, as sketched out in the Grundrisse,- is only ten-
tative. In trying to describe Chile, we are using the term semi-feudal to charac-
terize the period from about 1680 until 1860. This term is perhaps unsatisfactory
because it lacks precision. But if we are to follow a Marxist approach to describ-
ing an economy, we cannot but use a compromise term like semi-feudal7.
The transition from feudalism to capitalism, or, in the case of Chile, from
semi-feudalism to capitalism, is by its nature different from the transition from
capitalism to socialism. The former transitions are gradual, with two modes of
production existing side by side and confronting one another, whereas the latter
transition is abrupt, taking place rapidly. Capitalism and socialism cannot coex-
ist within a given economy8. In the case of the transition from feudalism to capi-
talism, the description of the economy as a whole depends upon which element is
dominant. Clearly as soon as an average rate of profit is formed which governs
investment of the majority of capital in the country, then a country as a whole
may be described as capitalist. That is what happened in Chile in the late 19th
century. Nevertheless, in the agricultural sector of the economy rents were not
correlated with the average rate of profit until wage labor dominated agricultural
production, and this took place in the 1930s. So we can say that even when Chile as
a whole can be described as capitalist, the agricultural sector continued to be
dominated by feudal relations of production for many years.
To conclude, it should be pointed out that an emphasis on the internal rela-
tions of production in an analysis of Latin American history does not preclude an
attempt to see how such relations of production were tied to the relationship of
Latin America with the metropolis. In fact, the maintenance of feudal relations of
production in Latin America was probably necessary to capitalist development in
the imperialist metropolis. Laclau speculates that investment in the colonies
might have slowed the falling rate of profit in the metropolis because a higher
rate of profit could be obtained where labor was so much cheaper. He quotes the
tantalizing but tentative lines of Marx concerning the effect of foreign trade upon
the rate of profit (1967a, Vol. II: 238-239). Mauro Marini takes this idea further
still in an important article about dependency, where he describes the role of raw
material-exporting countries in the world division of labor. The industrial coun-
tries can buy raw materials abroad more cheaply than at home, thereby both de-
creasing the cost of maintaining their workers and the cost of raw materials for
production. This means simultaneously increasing the rate of surplus value and
decreasing the amount of constant capital - a combination which means a higher

'Another possible term would be semi-capitalist. For a thorough discussion of Marx's


thought on pre-capitalist formations see Hobsbawm's introduction to Pre-Capitalist Eco-
nomic Formations and Mandel (1971: chap. 8). For a good discussion of the plantation
economies of Latin America, and their classification according to Marxist categories, see
Jay Mandle, Science and Society, XXVI (1972).

8Some market relations can exist in a socialist society (eg., private farms in Cuba) as long
as the private accumulation and reinvestment of capital functions strictly as an auxiliary
to the state sector where investment is not governed by a rate of profit. But capitalism and
socialism cannot peacefully coexist within an economy - one or the other must dominate.
Latin A-eic.nPrpetv. :u 4, Spring 1975, Vol 11, No. I

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56 LATIN AMERICAN PERSPECTIVES

rate of profit. At the same time, the industrialized countries can sell manufac-
tured goods in underdeveloped countries not at competitive prices but at monopo-
ly ones.
The industrial countries can conduct both these operations because of a high-
er development of labor productivity at home and a higher rate of surplus value
(cheaper labor) abroad. The maintenance of pre-capitalist labor relations abroad
becomes a necessity in order to perpetuate these conditions.
Of course, this schema is applicable less and less today. First, there is the
development of capitalist relations of production in industry in Latin America,
followed by the development of a national bourgeoisie and manufacturing produc-
tion in the 1930s. These capitalist relations of production spread to agriculture.
Second, recently we have seen that raw materials are now able to command their
own monopoly prices, thereby fundamentally changing the relation of the under-
developed world to the metropolis (eg., oil, bauxite, etc.).
Nevertheless, the heritage of the past means that Latin American societies
entered the era of national manufacturing production with an extremely weak in-
ternal market, a product of the exclusion of the masses of the population from
market consumption. Ruy Mauro Marini describes this process as follows:

(In the industrial countries) . . . the individual consumption of the workers rep-
resents, then, a decisive element in the creation of demand for the commodities
produced, being one of the conditions which enables the flow of production to be
adequately transformed into the flow of circulation . . .. In the Latin American
export economy, things are different. Since circulation is separated from produc-
tion and takes place basically through the foreign market, the individual con-
sumption of the worker does not interfere in the realization of the product, al-
though it does determine the amount of surplus-value. As a consequence the nat-
ural tendency of the system will be to exploit to the maximum the labor power of
the worker, without worrying about under what conditions that labor power can
be reconstituted, as long as that labor power can be replaced by the incorporation
of new workers in production.
Thus the sacrifice of the individual consumption of the workers, in order to in-
crease exports to the world market, depresses the levels of internal demand and
makes the world market the only way out for production. The increase in profits
which the capitalist derives from this puts him in the condition of wanting to in-
crease his own consumption, without doing so through internal production (which
is oriented towards the world market), but by increasing imports ....
The harmony which is established, at the level of the world market, between the
exportation of raw materials and food, by Latin America, and the importation of
manufactured goods from Europe, covers up the tearing apart of the Latin Amer-
ican economy, manifested by the split of total individual consumption into two
opposing spheres. When, after the world capitalist system has reached a certain
grade of development, Latin America enters the stage of industrialization, it will
have to do it starting from the bases created by the exportation economy (Mar-
ini, 1972).

Except for the reference to the Latin American exporter as a capitalist,


which could be misleading were it to imply that the relations of production in the
export economy were capitalist, this quote sums up the nature of the Latin Ameri-
can export economy. The lack of internal demand, the fundamental result of slave
or feudal oppression of the agricultural laborer, meant that the industrialization
which took place in Latin America was oriented towards the upper class and to-
wards luxury goods.

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STEENLAND:NOTES ON FEUDALISM 57

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