That is the never-ending

paradox – the poor live in nations that are rich from the generosity of
nature”
José Cecilio del Valle, 1830
Introduction
Countries that specialize in exporting primary goods as the main source of revenue for their
economies are apparently doomed to poverty – precisely because they are “rich” in natural
resources (Schuldt 2005). Their economies and indeed their societies are trapped in a pernicious
mindset known as the “paradox of plenty” or the “resource curse” – stated in more inflammatory
terms, the “curse of plenty” (Acosta 2009).
Since the early days of colonization, many of these economies exporting primary goods have
been linked to global markets. This linkage immediately resulted in countries rich in natural
resources taking passive and submissive positions in the international division of labor since they
were obliged to acquiesce to global market demands. This pattern has stymied the efforts of
these countries to achieve the chimera called “development.”
Although at first it does not seem very likely, recent evidence and much experience have
supported the assertion that the economic difficulties of these countries are in some way related
to natural resource wealth (Schuldt and Acosta 2006), leading to the conclusion that countries
rich in natural resources, with economies mostly based on the extraction and export of these
resources, find it more difficult to ensure the well-being
of their citizens. In particular, countries
that are well endowed with one or a few primary products seem to be doomed to underdevelopment
(as opposed to development).
The high availability of natural resources, especially minerals and oil, tends to exacerbate
already distorted economic structures and the allocation of productive factors within countries.
Consequently, it is common to see regressive distribution of national income and greater concentration
of wealth in a few hands, while at the same time, economic value is being drawn
from the peripheries toward the capitalist centers. Further, out of extractivism comes authoritarianism,
with its inseparable companion: corruption (Gudynas 2017; Acosta and Cajas-Guijarro
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2017). This situation is further aggravated by a series of endogenous “pathological” processes
that accompany this abundance of natural resources.
Despite much evidence for the above, one of the basic tenets of free markets, considered the
end-all
and be-all
of the (orthodox) economy and beyond, is the frequent repetition of the old
argument of comparative advantage, that is, to intensify extractivism. Free trade advocates
preach that we must be consistent in how the advantages provided by nature are exploited and
how to make the most of them. This list of doctrines can include several others that accompany
extractivism: globalization as an indisputable option; the market as supreme regulator; privatization
as the only path; and competitiveness as a virtue par excellence.
At this point, it should be noted that the concept of extractivism is relatively new. It
emerged in the mid-twentieth
century as “extractive industries,” becoming very popular due
to the promotional activities of international organizations such as the World Bank and even
the United Nations, but its most significant symbolism has emerged from the resistance to
these “industries” (Gudynas 2015).1 Theories about “curses” are the outcome of much deliberation
that was first based on dependency theories (Acosta 2016). The combination of these
inputs leads to interpretations that are both powerful and profound due to their mobilizing
capacity and the opportunity to better understand the sociopolitical phenomena caused by
extractivism.
Box 23.1 Extractivism: a definition
Extractivism, in general and throughout history, refers to activities that remove (almost always
intensively) large volumes of natural resources (minerals or oil) and that grow food crops for
export using agroindustrial methods with minimal processing; since they are intended for export,
these products are deemed commodities. Normally (but not always, as in some gold mining activities),
these extractive activities require large investments and have significant macroeconomic
effects, as well as serious social, environmental, and cultural impacts in the affected areas. Extractivism
is not limited to minerals or oil. Other forms exist, such as extractivist agriculture, forestry,
and fishing and even extractivist tourism. Thus, in accordance with Eduardo Gudynas (2015), one
of the authors who has delved deeply into this subject, it is more accurate to discuss extractivisms.
However, we must be very precise in definitions because an overly broad approach would lead to
misunderstandings and limit the ability to identify suitable alternatives.
The curse of alarmist literature
Overcoming their state of underdevelopment seems to be a difficult challenge for these types of
economies. For example, the Inter-American
Development Bank (IDB) has even expressed a
certain geographical determinism: the countries richest in natural resources and closest to the
Equator (tropical countries) are fated to be more backward and poorer. Their environmental
and geographical conditions determine their state of “underdevelopment” (Gudynas 2009).
According to this narrative, the situation is even more serious for inland countries, such as landlocked
Bolivia and Paraguay.2
In contrast with these alarmists are those that contend that countries are successful because
they are forced to be competitive and more efficient due to their limited natural resources and
because of the effects of more temperate and even cold climates. 3 This interpretation is definitely
simplistic because severe climates are not exclusive to the tropics.
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393
Those who express these theories clearly ignore (or attempt to hide) that the primary-product
exporting economies have colonial origins. Even the system that concentrates land ownership
(even more concentrated today) largely dates from this period. Those who espouse these alarmist
views do not understand that the unrelenting processes of conquest and colonization not only
have impacts today, but they also replicate in bad ways. The free traders do not consider the
demographic, social, and cultural hecatomb that resulted from the arrival of Europeans in the
Americas. They are not concerned with the inequalities and structural inequities that abound in
this type of primary-product
exporting economy but are instead interested in a socioeconomic
reality that is definitely much more complex than “climate” and “geography” can explain.
Here, we must highlight the historical role that colonialist labor and wealth extraction played
(and still plays) in contributing to the “success” of the economies considered to be “developed.”
It suffices to mention the processes of accumulation by dispossession as presented by David
Harvey (2004) and even the sort of original, worldwide accumulation described by Karl Marx,
in which transnational corporations and metropolitan countries actively participate. Similarly,
extractivism uses “land grabs” (Landnahme, as expressed by Rosa Luxemburg) and “extrahection”
– violent appropriations of natural resources (Eduardo Gudynas). All of these concepts
contribute to an understanding of modern capitalism but especially to how “development” and
“underdevelopment” are two sides of the same process. Without these types of approaches, it is
impossible to understand that extractivism is an essentially violent act against nature and human
beings themselves.
Box 23.2 Potential of the “extractivism” concept
Extractivism is a concept that helps to explain the colonial and neocolonial looting, accumulation,
concentration, and devastation, as well as the evolution of modern capitalism and even the ideas
of “development” and “underdevelopment,” as two sides of the same process. In fact, extractivism
was forged more than 500 years ago with the conquest and colonization of the Americas and
did not end with their eventual domination by Europe.
Throughout the region, whether in countries with neoliberal or “progressive” governments,
extractivism is expanding rapidly while colonial practices persist. One of the great contributions
of this concept, which has been solidified by the struggles of those resisting extractivism, is that it
helps to overcome the traditional understanding of primary-product
exporting economies that
demand nationalist responses and focus on government action – a clearly inadequate approach.
It is interesting to note that conventional interpretations do not consider the aberrations resulting
from economies historically tied to an unfair and inequitable foreign trade regime, even
environmental regimes. They are even less interested in the harmful impacts of the extractive
policies of neoliberalism or neo-developmentalism
that further increase the dependence of the
primary-product
exporting countries. In short, they do not incorporate the still-present,
destructive
effect of the “coloniality of power.”4
This lack of incorporation is why they make no mention of the historical and ecological
debts that should be attributed to imperialist nations. In addition to these debts is the biopiracy
committed by several transnational corporations that obtain patents in their home countries for
a range of indigenous plants and knowledge. In short, we could assert that not only is there a
commercial and financially inequitable exchange, as suggested by dependency theories, but
there is also an ecologically unbalanced and destabilizing exchange.
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A look at what underlies this age-old
curse
At first glance, the starting point for answering this question seems to be to examine how natural
resources are extracted and used, as well as how the proceeds of the extraction are distributed.
There has also been much ink spilled on attributing existing problems to the presence of transnational
interests that affect the operation and even the existence of state entities. However, the
problem is much more profound, as shown below.
We must ask ourselves why the massive extraction of natural resources for export in these
countries has not stopped the spread of poverty, nor has it prevented recurring economic crises.
Instead, it seems to have solidified “rentier” mentalities (another addiction to overcome). We
know from experience that all of these factors further weaken already fragile and inadequate
institutions, encourage corruption, and degrade the environment. Complicating this situation
are the clientelist and paternalistic practices that are employed and that hinder the development
of citizenship. When viewed in this light, the “the curse of plenty” issue surrounds all of society,
including its political and cultural life, and extractivism triggers a number of “spillovers”
(Gudynas 2015) that ultimately encompass entire countries and even extend beyond their
borders.
As Gudynas noted, these “spillover effects” extend far beyond the precise locations of each
extractive activity. They include impacts on many other areas and environments and affect the
comprehension and meaning of various public policies (such as environmental, social, or economic
policies), as well as the way in which politics, justice, democracy, the environment, and
nature are understood. They have an impact on property relationships and sovereignty within
countries, as well as on their connections to the rest of the world. Even various perspectives on
development are influenced by extractivism, which in one way or another encourages the
pursuit of a phantom: the development and progress that are directed by global markets from
beginning to end.
Thus, the reality of a primary-product
exporting economy (that is, an exporter of nature) is
also manifested in a lack of interest in investing in the domestic market, which constrains the
export sector’s integration with domestic production. There are no incentives to develop and
diversify domestic production or to link it to export processes, which in turn should transform
natural resources into goods with higher added value. As confirmed on a daily basis, these societies
have for decades preferred products “made elsewhere” over domestic products and solutions.
It would seem that there is a curse that prevents us from even discovering our potential.
This situation can be explained by the relative ease of securing income from a bountiful
natural environment and inexpensive labor. The benefit from these activities goes to wealthy
economies – the resource importers that later earn even higher profits by processing the primary-
products
and selling finished goods – while the primary-product
exporting countries, which
earn minimal income from nature (or Ricardian income), bear the burden of environmental and
social liabilities.
If one accounted for all of the economic costs of the social, environmental, and productive
impacts of oil or mineral extraction, as well as the hidden subsidies from these activities, many
of their potential economic benefits would disappear. However, our leaders never venture this
far since they are mired in free trade beliefs or trapped in development sects that have extractivist
parentage.
Added to this situation is the massive concentration of nature’s income in a few powerful
groups, mostly transnationals. These extractivist groups and broad business sectors, obsessed
with rent seeking, do not find or create incentives for investments in domestic markets. They
prefer to encourage the consumption of imported goods. They often remove their profits
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395
from the country and manage their businesses through companies incorporated in “tax
havens.”
There is also no incentive or pressure to invest the income from primary-product
exports in
the export activity itself since the comparative advantage lies in the generosity of nature, rather
than in the innovative efforts of human beings. For example, the oil industry – which should
not be confused with oil extraction activities – has developed almost exclusively in the industrialized
countries that import oil and not in the countries that extract and export it, with the
exception of Norway.5
If we accept for now that things have an economic value because of the average “work” or
“effort” that society requires for their extraction, then that primary-product
exports depend
more on the generosity of nature than on human effort raises the question of how much extractivist
activities actually create value or whether they are truly only rent-seeking
activities that
suck the value out of productive activities through speculation (e.g., speculation on raw material
prices in international markets). Therefore, if extractive activities are rent seeking (even speculative)
and nonvalue creating, it is easier to understand why the income from such activities is
highly volatile and unstable and further distorts the underdeveloped capitalist economies that
depend on it.
These economies are, as has been demonstrated throughout history, closely linked to global
markets. These markets are the source of the motivation to expand (or not) the extractivist
activities and the economy itself. Further, when the reserves of a product decline or are affected
by technological changes, governments focus their attention on other natural resources.
Dependence on foreign markets, although paradoxical, is even more pronounced in times of
crisis, especially in the event of generalized government blockades. Most economies dependent
on primary resource exports fall into the trap of forcing up extraction rates when prices drop.
They seek to sustain, by any means possible, the revenues generated by primary exports. This
policy can prove beneficial: a larger supply of raw materials – oil, minerals or food – in times of
depressed prices creates a surplus, which reduces prices even further, thus generating “impoverishing
growth” (Bhagwati 1958).
It is also important to consider the link between primary-product
export prices and the major
cycles of the global capitalist economy identified, for example, by Nikolai Kondratieff (1935).
Similarly, it would be useful to review the link between these cycles and those that specifically
influence extractivist economies, which in one way or another play minor roles in these profound
technological transformations, although their undervalued raw materials help to finance
these changes.
In extractivist economies with high demand for capital and technology that function as
enclaves (they do not integrate the primary-product
export activities with the rest of the
economy and society), the productive apparatus is subject to the vicissitudes of the global
market. In particular, it is vulnerable to competition from other countries in similar positions,
which seek to sustain their income levels without paying sufficient attention to adequate price
management. Opportunities for regional integration, which are indispensable if domestic
markets are to expand, disappear if neighboring countries produce similar raw materials,
compete with one another, and suppress export prices instead of working together in regional
blocks that expand their markets and increase the complexity of their productive
apparatuses.
Furthermore, by applying simple logic, it is impossible to accept that all countries producing
similar primary goods (which are many) will grow with the expectation that international
demand will be sustained at sufficiently high levels over time to guarantee the satisfactory performance
of their economies.
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A core point must be made here. Actual control of national exports depends on certain key
countries, even if significant foreign investment has not been made in extractive activities. Even
many state enterprises of primary-product
exporting economies (with the consent of their
respective governments) seem to be programmed to react only to foreign stimulus. Moreover,
because their operations often have socio-environmental
impacts that are equal to or greater
than those caused by transnational corporations, sometimes these state entities raise the flag of
nationalism to defeat resistance by communities in areas of oil or mining expansion. It is the
activities of the transnational and state companies, both motivated by external demand, that
decisively influence the primary-product
exporting economies.
Somewhat complementing the above are the few (or nonexistent) linkages that enable new
lines of production, even from the extractive activities themselves. There are few to no productive
conglomerates, either for the domestic market or for expanding and diversifying the range
of export products. Distribution of income is inadequate, and ultimately the required tax revenue
falls short because these economies are always overwhelmed by repressed or fictitious demands.
Furthermore, because this form of (capitalist) accumulation is so severely focused outward, it
strengthens a cultural scheme dependent on the outside, which minimizes or thoroughly marginalizes
local cultures. Thus, an “imperial way of life” (Brand and Wissen 2017) takes root
among the elites and middle classes and even has a demonstration effect on the working class
and the poor.
Due to these conditions and the technological characteristics of extractivist activities, such as
oil, mining, or monocultures, there is no massive and direct generation of employment. The
highest demand for labor comes from the processing of these raw materials in the industrialized
countries and not from their extraction. This fact also explains the contradiction of countries
that are rich in raw materials but where most of the population is unemployed or underemployed
and is consequently impoverished. While production in wealthy countries is oriented
toward mass consumption, production in poor countries is almost always aimed at consumption
by elites, who also consume large quantities of imported products.
This type of accumulation does not require an internal market and can even function under
decreasing wages. There is no social pressure to reinvest in productivity improvements or to
respect nature. Moreover, the income from nature, as the main source of financing for these
economies, determines the productive activity and the rest of the social relationships. To make
matters worse, extractivism – especially oil and mining – fosters social relationships. For example,
if we examine the pernicious effects of the community relationships and investments of these
companies that ultimately replace the state itself in the provision of social services, although it is
not their function.
Moreover, the rentier states build legal frameworks that favor extractive companies, which
have sometimes embedded their own officials or intermediaries in government positions. In
fact, there is a whole apparatus of lawyers and technicians who not only pursue foreign investment
in the country but also monitor legal reforms to ensure that they are advantageous to
foreign investment.
This interference, encouraged by multilateral organizations, is seen again and again in the oil
and mining sectors, in which the same company managers or their lawyers take management
jobs in state regulatory agencies or in the extraction companies: the revolving door is the order
of the day. Another twisted situation occurs when inexperienced people manage these companies,
which soon deteriorate and create the conditions for transnationals to come and save the
day at the last minute.
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397
Box 23.3 Violence – a necessary condition
Violence is a consubstantial element of extractivism – a “biocidal model.” Examining only the
violence unleashed by the extractive companies themselves, there are various levels: state repression;
criminalization of the defenders of life; civil war; open warfare between countries; and imperial
aggression by some powers committed to securing natural resources by force (especially
hydrocarbons and minerals, in recent times).
This point is essential. Violence for appropriating natural resources that are extracted by trampling
human rights and the rights of nature “is not a consequence of a certain type of extraction
but a necessary condition for appropriating natural resources,” as Eduardo Gudynas (2013) rightly
pointed out. This appropriation is perpetrated regardless of the harmful social, environmental,
and even economic impacts of extractive projects. In fact, the complete depletion of resources
and its consequences are often not even considered.
Let us go one step further. In the words of Michael J. Watts (1999), we can conclude that “the
entire history of oil is replete with criminality, corruption, the raw exercise of power, and the worst
aspects of frontier capitalism.” This statement is fully applicable to all types of extractivism.
A culture of miracles threatens democracy
Everything mentioned in the previous point weakens democratic governance because it establishes
or facilitates permanent governments, which must be authoritarian and clientelistic, as
well as voracious companies that are also clientelistic. The often-wasteful
management of the
income from massive exportation of raw materials and the absence of forward-looking
policies
end up weakening the existing institutions or preventing their development. In effect, these
extractive countries are not held up as examples of democracy but quite the opposite.
Latin America has extensive experience in this area. Venezuela has been a paradigmatic
example since the beginning of the twentieth century. Other Latin American countries have
also undergone authoritarian periods spawned by the primary-product
export accumulation
modality, propped up by only a few mineral resources. The same could be said for other oil-exporting
countries, such as Nigeria. Similarly, Saudi Arabia and the United Arab Emirates,
along with other countries in their region, are very wealthy, with enormous financial resources
and high levels of per capita income. However, they cannot be included in the ranks of the
“developed” countries due to the many areas of intolerable inequality (such as gender and ethnic
inequality). Additionally, their governments are not only undemocratic but are characterized by
profoundly authoritarian practices. The situation in many countries that depend on mineral
exports (like many African countries) is even more drastic.
Regarding Latin America, in recent years, we have seen how governments, progressive and
neoliberal alike, pursue more revenue by expanding extractivism to promote ambitious “development”
projects and sustain broad welfare programs for a society with many needs and ever-increasing
demands. In fact, social demands are one of the main reasons for maintaining and
supporting primary-product
export activities. Governments hope to finance action on these
long-delayed
social demands through these efforts, and as we saw earlier, this level of extractivist
pressure is sustained even when the prices of raw materials are in crisis.
During boom times, several governments with economies rich in natural resources have
even predicted the impending “defeat of underdevelopment.” In recent history, Iran is one of
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the most often-evoked
examples of this phenomenon. Shah Mohammad Reza Pahlavi, one of
the United States’ closest allies in the Middle East, encouraged by the country’s lofty oil revenues
in the 1970s, claimed that his country would be among the five wealthiest and most
powerful nations on the planet before 2000. This dream did not last long because his government
was overthrown a few years later by a broad popular movement led by the ayatollahs.
As Fernando Coronil (2002) stated regarding Venezuela (a situation that can be extrapolated
to other countries), a “magical state” flourishes in these types of economies, with the ability to
deploy the “culture of the miracle.” Thanks to the considerable revenue generated by oil and
mineral exports, the rulers of this type of state often presume to be the bearers of the collective
will and attempt to accelerate the leap toward coveted western (capitalist) modernity. This
process is how short-lived
miracle models emerge, as was seen in Ecuador’s commodities boom
during President Rafael Correa’s administration.
The exploitation of nonrenewable natural resources on a massive scale in these countries has
led to the emergence of paternalist states, the influencing capacity of which is tied to their political
capacity to negotiate a greater or lesser share of the rents from mining or the oil industry.
These states have added a monopoly on political violence to the monopoly on natural resources
(Coronil 2002). Although it might seem paradoxical, a state of this type, which often delegates
a substantial part of its social obligations to the oil or mining companies, abandons vast regions
in development terms, and under these conditions of state “deterritorialization,” they become
police states that repress victims of the system while refusing to meet their social and economic
obligations.
In these oil and mining enclave economies, the political structures and dynamics that have
taken shape are not only authoritarian but also greedy. During the boom years in particular, this
greed took the form of an often-disproportionate
increase in public spending and, above all,
discretionary distribution of public funds. This type of political practice (especially during export
booms) is also explained by the determination of governments to remain in power and/or by
their intent to accelerate a series of structural reforms that seem essential to them to transform
atavistic societies (from the still dominant perspective of coloniality, which marginalizes and
represses ancestral knowledge and practices). This increase in public spending and investment is
also the result of the growing conflict over distribution that breaks out between the most disparate
groups with power. As noted by Jürgen Schuldt (2005), “it is thus a dynamic and never-
ending
power play that arises endogenously from the boom. And the discretionary public
spending increases more than the revenue attributable to the economic boom (pro-cyclical
fiscal
policy).”
This “greed effect” leads to desperate pursuit and abusive appropriation of a significant proportion
of the surplus generated in the primary-product
export sector. In the absence of a broad
national agreement about how to manage these natural resources, without solid democratic
institutions (which can only be built with widespread and sustained citizen participation), and
without respect for the rights of humans and nature, various uncooperative powerful groups
appear on the scene, desperate to obtain a share of mining or oil rents. In addition, as large forested
areas are opened up as a result of mining or oil activities, other extractive activities are
undertaken that themselves cause serious environmental and social problems, such as logging
and monoculture plantations.
Those embroiled in this dispute over natural resource rents are, above all, the transnational
corporations directly or indirectly involved in these activities and their local allies, international
banks, broad business and financial sectors and even the armed forces and some politically influential
sectors of society. Trade union groups linked to this type of extractive activity, known as
the “labor aristocracy,” also obtain significant benefits. Understandably, this struggle over the
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distribution of rents, which can be conflict ridden, provokes new political tensions that facilitate
authoritarian governments.
In many countries that export primary-products,
the governments and the ruling elites, the
“new corporate class,” not only control the state (without major checks and balances) but have
also co-opted
important media outlets, pollsters, business consultants, universities, foundations,
and law firms. Thus, things such as privatization and the increasing commodification of knowledge
are the order of the day. Undoubtedly, even “science” is ever more dependent on the
hegemonic powers that have fixed their sights on the systematic appropriation of nature and the
control of strategic territories.
With this focus, the large extractivist transnationals have become a “privileged political actor”
by having “levels of access and influence the likes of which no other interest group, stratum, or
social class enjoys”, which enable them to “push for the reconfiguration of the rest of the social
pyramid […] it is an invisible hand of the state that grants favors and privileges, and once
obtained, tends to hold onto them at any cost”, considering them to be “acquired rights”
(Durand 2006).
This reality entails multiple economic costs: the undervaluation of foreign sales or the overvaluation
of costs to reduce taxes or tariffs; temporary and surprising reductions in extraction
rates to generate higher profits; the growing presence of all types of intermediaries that hinder
production and add costs to transactions; and even the reduction of sectoral investments, at least
by the most serious companies. Furthermore, so much reliance on the generosity of nature
marginalizes productive innovation and even marketing efforts.
Walking hand in hand with the “curse of plenty” is the “everlasting debt” resulting from
external credit (Acosta 1994). In the midst of an economic boom, public debt (especially external)
grows in greater proportion than the boom itself (it is also true that it increases due to
external conditions produced by capital accumulation). Here, again, the “greed effect” appears,
driven by the appetite to feast on the enormous influx of income from international banks
(private and multilateral) or from countries (such as China today), which are jointly responsible
with the multilateral organizations for the external debt processes.
As a result of the high tax collection from the exploitation of natural resources, governments
tend to stop collecting other taxes, such as income tax. In reality, they apply minimal tax pressure.
This laxity, as Schuldt (2005) pointed out, allows citizens to develop “bad habits.” Even
worse, “what this means is that the public does not demand government transparency, fairness,
representativeness, and efficiency in spending”: it is often heard that it is not so bad when a
public official steal if he or she is “getting things done.” This lack of attention is concerning
since the demand for democratic representation in government, as Schuldt reminded us, usually
arose as a consequence of tax increases, for example, more than 400 years ago in Great Britain
and in France at the beginning of the nineteenth century.
Rentierism and clientelism mindsets and even consumerism are quite different from citizenship
and can even impede its development. Further, these clientelist practices, by encouraging
individualism, can counteract communal proposals and actions, affecting social organizations
and, even worse, the sense of community. These governments attempt to repress social movements,
and if they fail to do so, they impose parallel structures controlled by the state itself.
Without minimizing the importance of providing for the consumption levels needed by the
traditionally marginalized population, there will surely be some who (ingenuously) see democratizing
elements in consumerism. They often do so without considering the imported goods
consumption patterns that emerge and without considering that growing demand is almost
always fulfilled by the supply from large economic groups and even by imported goods.
The upsurge in consumerism, which can last as long as the boom itself, is nothing less than a
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psychological issue, in political terms. This increase in material consumption is confused with an
improvement in the quality of life, which is clearly consistent with the fetishist nature of the
exchange of goods. Thus, governments can gain legitimacy from the consumerism mindset,
which is not environmentally or socially sustainable.
In these economies, an inhibiting “one-track
export mentality” is exhibited that stifles the
creativity of and incentives for local entrepreneurs, who might have been willing to invest in
economic activities with high added value and returns. This almost pathological “pro-export
mentality” also extends to the heart of government and even spreads to the citizenry. All of this
change leads to a denigration of the country’s human, communal, and cultural capabilities and
potential. It injects a type of extractivist DNA into the entire society, starting with its leaders,
and of all this transformation does not go unnoticed in the political arena.
The governments of these primary-product
exporting economies not only have significant
resources (especially in boom times) to undertake the necessary public works, but they can also
afford to implement measures and actions aimed at co-opting
the public to ensure a level of
“governability” that enables them to introduce the reforms and changes that they consider
necessary. However, good intentions frequently lead to authoritarian and messianic government
practices that, at best, disguise themselves as “delegative democracies.”
In addition, spending more public money on clientelist activities reduces the latent pressure for
greater democratization. It is a sort of “fiscal pacification” (Schuldt 2005), aimed at tamping down
social protest. Here, we see the various types of financial bonds used to alleviate extreme poverty,
especially those framed in a pure and hard clientelism that rewards the most submissive.
The government’s considerable revenues enable it to oust or prevent the formation of
opposition or independent groups and factions of power that would be able to demand political
and other rights (human rights, justice, shared government, etc.). Considerable resources have
even been expended to persecute opponents, such as those who do not understand the “indisputable
benefits” of extractivism. The government can allocate large sums of money to the
reinforcement of its internal controls, including the repression of opponents. In addition,
without effective citizen participation, democracy becomes hollow regardless of how much the
public is consulted at the ballot box.
Box 23.4 Hyperpresidentialism hand in hand with hyperextractivism
Dependence on nonrenewable natural resources often consolidates authoritarian governments
due to the following factors:
• state institutions that are too weak to enforce laws and control government activities;
• an absence of rules and transparency that encourages discretionality in the use of public
funds and communal property;
• conflict over the distribution of rents among powerful groups that, by consolidating rentierism
and patrimonialism, reduces investment and economic growth over the long term; and
• short-term
and poorly planned government policies.
In addition, these presidentialist governments that serve clientelist social demands are the breeding
ground for new forms of sociopolitical conflict because the causes of poverty and marginality are not
structurally addressed. Similarly, the significant environmental and social impacts typical of these
large-scale
extractive activities reduce governability, in turn leading to new repressive action.
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401
As long as inadequate institutional frameworks persist, the environmental, social, political, and
even economic costs (related to the use of public power) of containing the confrontations
incited by large-scale
mining or oil activities (for example) will not be negligible. In addition,
the effect of this almost planned social instability on other productive activities in mining regions
must be expected. All of these factors require extractivist governments, regardless of their stated
ideological affiliations, to respond with authoritarian measures to repress any dissidence.
The effects of these conflicts and violence also impact regional and municipal governments,
for example. These bodies can be attracted by the siren songs of companies dedicated to mass
extractivism, offering financial contributions. However, sooner or later, these states will have to
bear the costs of this complex and conflictive relationship among communities, businesses, and
government. Local “development” plans will be jeopardized since mining or oil activities reign
supreme, even over justice at times. Thus, it is not surprising that this activity could end up
demolishing plans developed by local inhabitants in a participatory and purposeful manner. This
issue cannot go unnoticed.
To conclude this point on the impact of the primary-product
export mindset on the political
life of a country, we should recall that extractivist economies usually severely and irreversibly
degrade the natural and social environments in which they function. In the long run, this
Box 23.5 Aggression – the umbrella for all extractivism
In Colombia, President Juan Manuel Santos used the figurative “mining locomotive” to symbolize
his country’s mining-driven
journey to the coveted state of “development,” attacking any attempt
at criticism (in our understanding). Bolivia’s Vice President Álvaro García Linera gave a speech
laced with attacks and insults but without substantiation, and he did not hesitate to label the
critics of extractivism “green Trotskyites.” Something similar occurred with Ecuadoran President
Rafael Correa, who described opponents of extractive activities as “childish ecologists or indigenists.”
Correa said, “we have lost too much time for development; we don’t have a second to lose
[…] those who delay us are the same demagogues that say no to mining, no to oil; we waste all
our time discussing nonsense. Listen, in the United States, they’d say get out of here with that
nonsense; in Japan, they’d put them in an insane asylum.”
The truth is that these government leaders, who assume the role of the Holy Inquisition to
protect the extractivist faith (propped up by the infallible experts of the extractivist inner sanctum),
have no credible arguments when they attack the heretics (the theologians who defend “the true
religion”) but instead use caricatures, threats, and dismissive rhetoric against opponents, thus
preventing a more insightful debate.
In short, the neoliberal rulers and the “progressives” cling similar to castaways to a single
lifeline: comparative advantage as a basic reference point for all economies specializing in producing
and exporting raw materials. In fact, they adopt this ideological vision similar to a theology,
regardless of its predatory consequences for human beings and nature. They defend a consumerist
ideology, with the market as the sole regulatory instrument of socioeconomic relationships,
with exploitation and domination as their raison d’être. In addition, “progressive,” or neoliberal
governments, with their various formal nuances, are both fervent believers in the religion of economic
growth (which has capitalist accumulation as its foundation). All of these issues poison the
environment and somehow obscure a clearer vision of the path to follow to attain a dignified and
harmonious life for all human beings and for human beings with nature.
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degradation can generate economic, social, and environmental problems that can cause irreversible
problems if a new export product is not found that can replace the products in crisis. These
problems range from the depletion of several nonrenewable resources (and even renewable
ones) to declines in public welfare, and all these issues lead to various types of violence.
Understanding the main pathologies of these curses
To address so many curses, one must fully understand the problems to be solved and the capabilities
available to tackle them. Let us seek to understand, then, the pathologies of the economies
upon which their governments and dominant elites have laid their bets; these wagers
prioritize the extraction and export of natural resources – an option that has become practically
indisputable.
To remain grounded in reality with some key points, noted here are several of these pathologies
that are the outcomes of this accumulation scheme, which feeds and empowers itself in
vicious circles that are progressively more pernicious. This interpretation is complemented by
the approach offered by Gudynas (2015) on “extractivism spill-over,”
which is sometimes confused
with oil spills or mining effluent, for example.
• It is normal for these economies to experience a series of “diseases,” particularly “Dutch
disease” (Schuldt 1994). The abrupt and massive influx of foreign currency overvalues the
exchange rate, and the local currency loses competitiveness, with adverse effects on the
manufacturing and agricultural export sectors. When the real exchange rate appreciates,
resources shift from the secondary sector to nontradable segments and to the booming
primary-product
export activities or areas affected by the boom. This movement distorts
the economy by reducing investment funds that could be directed toward the very sectors
that provide the greatest added value, more employment, greater technical progress, and
linkage effects.
• In the long term, specialization in the export of primary goods has been a negative strategy
due to the trend of declining terms of trade. This decline positively affects imports of industrial
goods and negatively affects exports of primary goods. The reasons for this decline
include that primary goods have low income elasticity, they can be substituted by synthetics,
they do not have any monopoly power due to their low technological contribution and
level of innovation (they are commodities – their prices are established mainly by market
perception), the trends of reduced raw material content of manufactured products, etc.
These trends prevent any widespread sharing in the rewards provided by worldwide economic
growth and technical progress by countries specializing in the export of highly
homogeneous goods.
• The high profitability of primary goods, due to the substantial differential or Ricardian
rents (derived from nature’s bounty rather than human effort), leads to their overproduction,
which can even result in “impoverishing growth,” as previously mentioned. In addition,
these rents – when the corresponding royalties or taxes are not collected – lead to excess
profits that further distort the country’s resource allocations, hence the importance of
“nationalizing oil,” at least when it is intended as a redistribution of the extraordinary
profits and oil revenues acquired by these companies.
• The volatility of raw materials prices in global markets has caused the primary-product
exporting economies to suffer recurring problems with the balance of payments and fiscal
accounts, resulting in heavy dependence on external financing and causing unpredictable
fluctuations in domestic economic and sociopolitical activities. All of these factors are
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aggravated when prices fall in international markets, and the balance of payments crisis
deepens. This critical situation is exacerbated by the massive flight of foreign capital that
entered the country to profit from the boom years, along with the flight of local capital,
intensifying external constraints and the pressure to resort to debt.
• The boom in primary exports also attracts the ever-vigilant
international banks, which
freely disburse loans during the boom years as if it were a sustainable process. This financing
has been received with open arms by government leaders and businessmen, who believe in
permanent miracles. In such circumstances, the overproduction of primary resources accelerates,
increasing the distortions in economic sectors. However, most importantly, as past
experience has shown, the future of the economy is mortgaged when the inevitable time
comes to start repaying the massive amounts of external debt contracted during the export
euphoria, and logically, this debt service becomes even more onerous when export
prices fall.
• Several times, the abundance of external resources fueled by the flow of oil or mineral
exports created a boom in consumerism with the aforementioned impacts. Resources were
then wasted when domestically produced products were substituted by imported products,
driven by the exchange overvaluation resulting from the massive influx of foreign currency.
If appropriate measures are not undertaken, more investment and higher public spending
encourage imports instead of domestic production. In the end, experience has taught us
that there is no suitable use for the abundant resources that have been made available.
• This experience also shows us and confirms that extractivism does not generate the dynamic
linkages necessary for the proper functioning of the economy. No reliable forward or backward
integrating and synergistic links are established, and final demand (consumption and
fiscal) cannot be assured. Even less likely is the facilitated and guaranteed transfer of technology
and the distribution of externalities to benefit other branches of the country’s
economy. This failure produces the classic feature of our primary-product
exporting economies,
even during colonial times: its enclave characteristics, with extractivism usually
segregated from the rest of the economy.
• Closely related to the above, the companies that control the exploitation of nonrenewable
natural resources as enclaves become powerful (parastatal) business entities within relatively
weak nation states due to their location and methods of exploitation. As soon as the nation-
state
model weakens, the “deterritorialization” of the state begins. The state neglects the oil
or mining enclaves, leaving (for example) the fulfillment of social demands by the extraction
companies, which leads to disorganized and unplanned management of these regions,
which often even operate outside the reach of the laws of the country. All of these factors
establish an atmosphere of widespread violence and growing marginality that leads to short-
sighted
and clumsy responses from a police state that does not fulfill its social and economic
obligations.
• The low demand for labor and the inequitable distribution of income and assets lead to an
apparent dead end on both sides: the marginal sectors, with higher capital productivity than
modern sectors, do not grow because they lack the resources to invest; and the modern
sectors, with higher labor productivity, do not invest because they lack the domestic
markets that can ensure attractive returns. In turn, these conditions diminish the availability
of technical resources, a skilled workforce, infrastructure, and foreign currency, thereby
discouraging investors and so on. In other words, the structural heterogeneity of these productive
apparatuses becomes more pronounced (Pinto 1970).
• Added to these factors is the quite obvious fact (unfortunately necessary for reasons
other than technological ones) that, unlike other economic sectors, extractive activity
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(particularly mining and oil) uses little (although well paid) direct and indirect labor. It is
also intensive in capital and imports, hires highly qualified (often foreign) managers, uses
foreign inputs and technology almost exclusively, etc. Therefore, the “internal value of the
return” (equal to the added value that is retained in country) of the primary-product
export
activity is laughable. This fact generates new social tensions, in which these natural resources
are extracted since there are usually very few people in these areas who can join the
workforces of mining and oil companies. Further, in monocultures, in which much labor
is still used, labor relations are very unsteady and even have practices with semislavery
characteristics.
• The increasing concentration and centralization of income and wealth, in addition to political
power, in the hands of a few, are byproducts of primary-product
exports. Transnational
companies benefit the most from these activities, and they attain “merit” for assuming the
risk that accompanies the exploration and exploitation of these resources. There is no
mention of how this process leads to a greater “denationalization” of the economy, partly
due to the financing needed to reach the point of resource exploitation, partly due to the
lack of an established domestic entrepreneurial sector, and to no less extent, partly due to
the government’s unwillingness to form strategic alliances with local entrepreneurs. Moreover,
some transnational corporations have unfortunately taken advantage of their contributions
to the balance of trade by attempting to influence the balance of power in the
country, constantly threatening governments that dare to swim against the tide.
• In these enclave economies, the political structure and dynamics are characterized by “rentierism,”
greed, and authoritarianism of decisions made in the oil business. Greed pushes
public spending to disproportionate heights through discretionary fiscal management practices.
This “greed effect” is seen in the desperate pursuit and abusive appropriation of significant
portions of the surpluses generated by the export sector or by the state providing
compensation. The politically powerful plunder these surpluses, even resorting to corrupt
means, all to remain in power.
• This type of extractivist economy degrades the natural and social environment in which it
operates, despite some company efforts to minimize pollution, as well as the efforts of the
sociologists and anthropologists that they hire to establish “friendly” relationships with the
communities. This process provokes increasing reactions from the affected communities,
which are increasingly repressed by governments and extractivist companies.
Although these pathologies are well known after so many decades of dependence on this type
of extractive activity, there remain very few effective responses. Perhaps the most noteworthy
thing to emerge in recent years is the creation of some stabilization funds, the effectiveness of
which depends on the persistence of low raw material prices in the global market. What is absolutely
clear is that dependence on extractivism has increased, in countries with both neoliberal
and “progressive” governments. All of these governments have embarked upon a new crusade
of development and extractivism.
However, that is not all; there is more going on in the background. With extractivism comes
serious socio-environmental
impacts. A mining pit, for example, has serious impacts on nature
since it is a figurative, forcible amputation that prevents the reproduction and realization of life
itself. In most cases, these extractive activities completely disregard the existence, sustenance,
and renewal of nature’s life cycles, structures, functions, and evolutionary processes. They deny
nature’s right of renewal and restoration. As we know so well, all of these activities can lead to
the extinction of species, the destruction of ecosystems, or the permanent alteration of natural
cycles.
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Nevertheless, despite the enormous weight of the arguments against primary-product
export
accumulation, there is a new positioning of this activity that could be the real curse. The curse
might be the inability to face the challenge of developing alternatives to the primary-product
export accumulation, which seems to persist despite its unmistakable failures.
New horizons of freedom for overcoming so many curses
Someone – whether in bad faith or in ignorance – might be captivated by the following hallucinatory
idea: if the primary-product
export economy generates and perpetuates “underdevelopment”,
the solution would be to halt natural resource exploitation. Obviously, this idea
is a fallacy. In the words of Joseph Stiglitz, “the natural resource curse is not a matter of fate but
a matter of choice” (2006). This curse should be, at very least, a democratic choice that establishes
the bases to drive transition processes that free us from the bonds of extractivism without
risk to life, regardless of the reason.
There are powerful interests that want to remain us on this dead-end
road, and the challenge
lies precisely in promoting change in new directions, with concrete solutions that are not mere
copies of other situations that might have been successful.
To achieve this, we need alliances and consensus that provide answers from the inside out,
taking greater advantage of local and national capacities, including those that offer regional integration
based on a vision inspired by autonomous regionalism and not by the open regionalism
proposed by neo-liberals.
While it is not the focus of this chapter, especially because of space, it
remains necessary to encourage discussions about the democratic construction of solutions that
transform important natural resources into levers for greater well-being,
overcoming the “curse
of plenty” that repeatedly produces underdevelopment.
Overcoming these curses will not occur overnight. Transition strategies are needed that
can be implemented even while natural resources continue to be extracted – resources that in
some way bring about this “curse of plenty.” During this transition, there will still be latent
risks of dependence on these activities, perpetuating the colonial features of raw material
exporters (when emerging from extractivism, we will have to bear its shortcomings for a
while longer).
Successful emergence from extractivism will depend on the consistency of the alternative
strategy that challenges extractivism and other curses that have kept us wandering around the
capitalist labyrinth (Acosta and Brand 2017). Success will depend on the degree of societal
support for these strategies, especially those inspired by visions of a civilizing change that
compels us to seek alternatives to development, such as those proposed in Buen Vivir (Acosta
2017).
These factors demand a sweeping, comprehensive transformation, conceived and executed
based on the protection of human rights and the rights of nature.