Industrial relations and social change in Latin America


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Industrial relations and social change in Latin America
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ix, 177 p. : ; 24 cm.
Form, William Humbert, 1917-
Blum, Albert A. ( joint ed )
University of Florida Press
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Subjects / Keywords:
Industrial relations -- Latin America   ( lcsh )
Labor unions -- Latin America   ( lcsh )
Sindicatos -- Hispanoamérica
Relations industrielles -- Amérique latine   ( rvm )
Syndicats -- Amérique latine   ( rvm )
Industrialisierung   ( swd )
Sozialer Wandel   ( swd )
Social conditions -- Latin America   ( lcsh )
Condiciones sociales -- Hispanoamérica
Conditions sociales -- Amérique latine   ( rvm )
Lateinamerika   ( swd )
bibliography   ( marcgt )
non-fiction   ( marcgt )


Bibliography: p. 149-169.
Statement of Responsibility:
Edited by William H. Form and Albert A. Blum.

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Industrial Relations and Social Change
in Latin America

Industrial Relations and Social Change
in Latin America

Edited by and

University of Florida Press Gainesville 1965

A University of Florida Press Book

Library of Congress Catalog Card No.: 65-18667

List of Contributors

ROBERT J. ALEXANDER, Professor, Department of Economics,
Rutgers University
TAYLOR G. BELCHER, Director, Office of West Coast Affairs,
Department of State
ALBERT A. BLUM, Associate Professor, Department of Social Sci-
ences and Assistant to the Director, School of Labor and
Industrial Relations, Michigan State University
WILLIAM H. FORM, Research Professor, Department of Sociology
and Anthropology and Acting Director, School of Labor and
Industrial Relations, Michigan State University
CARROLL HAWKINS, Associate Professor of Political Science, Michi-
gan State University
CLAUDE MCMILLAN, Professor, Department of Management, Michi-
gan State University
WILBERT E. MOORE, Professor of Sociology, Princeton University
K. H. SILVERT, Professor, Department of Government, Dartmouth
WILLIAM FOOTE WHYTE, Professor of Industrial Sociology, New
York State School of Industrial and Labor Relations, Cornell
GARLAND P. WOOD, Professor, Department of Agricultural Eco-
nomics and Director, Latin American Studies Center, Michi-
gan State University


I n the decades since the end of the Second World War, United
States students of industrial relations have been focusing their at-
tention more and more on union-management affairs in foreign
countries. Fulbright awards and foundations have made these stud-
ies easier for scholars; the pressures of world affairs have made them
essential. An important ingredient in these analyses has been the
commonly held belief that the state of a country's industrial rela-
tions has had something to do with bringing about social change.
What that "something" is has troubled scholars, but implicit in much
of their writing has been the hope or belief that the "something,"
when understood, would help bring about a better society, that les-
sons could be learned from these studies, and that by studying such
works, those concerned in the underdeveloped countries might learn
not to make the same mistakes as others made.
Aside from the hope of influencing policy decisions, these studies
attempted to evolve theories of industrial relations through compara-
tive analysis. American scholars abroad did not forget the American
scene while talking to a local union officer in New Delhi, a person-
nel officer in Buenos Aires, a government official in Ghana, or a
college professor in Copenhagen. And many of their foreign studies,
through implicit and explicit comparison, helped illuminate for
students the industrial relations scene in the United States.
When the staff of Michigan State University's School of Labor
and Industrial Relations began to discuss a theme for its series of
lectures for the 1962-63 academic year, it decided that some of the
work being done in this important area of comparative industrial
relations ought to be brought to the attention of students, faculty,
labor and management representatives, and the community. We de-
cided to concentrate on one area of the world to see what effect
industrial relations was having on social change there. The area we
chose was Latin America. We then invited Professor Wilbert E.
Moore to provide the background on the relationships between in-
dustrial relations and social change, Professor Robert J. Alexander to
discuss the role of unions, Professor William F. Whyte to report

on his study of industrial relations in Peru, Professor K. H. Silvert
to analyze the role of government, and Taylor G. Belcher to discuss
the influence of American foreign policy, and more particularly, the
Alliance for Progress. These lectures formed the basis of this pub-
lished collection. In preparing them for publication, it became clear
that other articles were needed to provide a well-rounded story. We
called on our colleagues, Professor Garland P. Wood to write an
essay on agricultural labor, Professor Claude McMillan to pre-
pare a general article on management in Latin America, and Pro-
fessor Carroll Hawkins to analyze the international labor organi-
zations in the area. To assist those who wish to read further in this
field, we have also included a selected annotated bibliography of a
number of works in English which deal with some of the themes
raised in the volume.
All this would not have been possible without the cooperation of
a number of people to whom the editors are most thankful. First,
the contributors themselves cooperated most enthusiastically. Second,
the staff of the School of Labor and Industrial Relations made nu-
merous suggestions and helped in many other ways. In particular,
we would like to thank Dr. Jack Stieber, the School's director, for
initiating the series of lectures, and Richard P. Gale for his general
criticisms and assistance. We also wish to extend our appreciation to
Michigan State University's Office of International Programs, and
more particularly to its dean, Dr. Glen L. Taggart, without whose
aid this volume could not have come to print. This study was sup-
ported in part by the Michigan State University International
Programs-Ford Foundation grant.
As editors of this volume, rather than its authors, we are able to
make a rare disclaimer. We are not responsible for anything in this
book except the introduction, the conclusion, and the bibliography.
It is not that we do not wish we could take credit for everything, but
that, unfortunately, we cannot. We can, however, take whatever
blame there is for the choice of authors, and in this we feel quite
securely above reproach.





List of Contributors v

Introduction vii
Backgrounds of Social Change I
Agriculture and Social Change 12
Industrial Leaders in Latin America 24
Common Management Strategies
in Industrial Relations--Peru 47
The Latin American Labor Leader 70
The ORIT and the American Trade-Unions
Conflicting Perspectives 87
Social Change and the Role of Government 105
United States Foreign Policy and Social Change 121
Industrial Relations and Social Change 135
Selected Annotated Bibliography 149
Glossary of Abbreviations 170
Index 171



Backgrounds of Social Change

The rediscovery of Latin American societies as a significant area
for study by social scientists no doubt owes much to the practical
concerns of foreign policy in the United States. The enduring shock
of the nearby Castro Revolution in Cuba and the major impetus to
technical assistance provided by the Alianza para Progreso combine
to command the attention of the general public and that of students
of Latin American culture and social organization. Yet the source
of interest in any field of inquiry presumably has no bearing on the
validity of the results yielded. Rather than adopting an attitude of
protecting their esoteric specialty, scholars long interested in Latin
American studies should perhaps welcome the signs of wider par-
ticipation and the appearance of wider audiences for these studies.
My mission here is introductory: to provide a preface to the
analysis of the roles of management and labor in the changing pat-
terns of social life in Latin America. This introduction should
permit us to take a very broad view of social change and to make
generalizations that will require more detailed, specialized, and
localized information before precise predictions can be made and
knowledge can be used to shape a program of social policy. Indeed,
the organization of my comments underscores the emphasis on
backgrounds because my discussion has two introductions, not much
middle, and a very short end.
The social scientist's aim is to order and predict the phenomena
of change in the rapid transformation of the type of societies en-
countered in Latin America. It is now commonplace to lament the
absence of a theory of social change. Yet this pessimism is scarcely
justified if the demand for theory is made a bit less global than is
usually implied.1* Among the various approaches and propositions
*Textual notes appear at end of chapter.


relating to social change, those focusing on societies undergoing
modernization are perhaps superior to others, owing to the wide-
spread interest in economic development and its social concomitants.
Yet even in this more limited sphere it is necessary to clear away
a pair of common conceptual fallacies before social theory can be
utilized effectively.
Two fallacies.-Students of modernization rely on some assump-
tions and conceptual models that cannot survive even the test of
the crude facts of social experience. One such assumption may be
called the sociologistic fallacy, a term that perhaps exhibits my
parochialism as a sociologist, for the fallacy is shared by practition-
ers in several other disciplines. In brief, and subject to further
clarification later on, the sociologistic fallacy assumes that history
began yesterday, if not this morning, at least as far as modern-
ization is concerned. A second error, the functional equilibrium
fallacy, views societies as normally existing in a steady state of bal-
anced and interdependent actions and forces, exceptionally and
temporarily disrupted by the intrusive influence of economic and
related changes.
The works of students of economic development usually imply,
if they do not explicitly state, that the leading element of modern-
ization is economic change and that such change impinges directly
on nonwestern societies which are typically changeless. Sociologists
have been in close enough touch with anthropologists not to be-
lieve that all traditional societies are alike. Yet the perceived dif-
ferences among societies have been, if anything, understated. More-
over, they have not generally paid much attention to the historic
paths to the present, or, more specifically, to the ways these societies
have been changing over considerable periods of time prior to
Fortunately, there are some exceptions to this fallacy of ignoring
the past. De Vries,2 for example, recounts the influences of political
colonialism, economic exploitation, and missionary efforts in break-
ing the web of traditional relations. Blanksten,8 attending primarily
to political modernization and with special attention to Latin
America, exhibits a commendable sense of history in tracing out
contemporary difficulties.
The functional equilibrium fallacy is closely related to the neglect
of history, for it too minimizes attention to long-term and continu-
ous change. The perfectly legitimate detailed study of interdepend-
ent systems leads many social scientists to concentrate solely on


cross-sectional or atemporal relationships. There is nothing wrong
with this kind of scholarly approach. In fact, the approach has
helped validate claims that studies of the social order merit the
honorific designation of being scientific. The mischief arises from an
inadequate modification of the conceptual model of an interdepend-
ent system for use in the study of large-scale societal change.
What has happened, in effect, is that a three-stage model has
been widely, though usually implicitly, used to characterize develop-
ing societies.' In keeping with the sociologistic fallacy, the pre-
industrial stage is seen as static. Industrialization or other forms of
modernization are seen as providing a dynamic "transitional" stage,
during which other elements of the social system must adjust or
adapt to a major alteration of a basic component of the society.
The consequences are usually depicted as a substantial homogeneity
among "developed" societies, that is, they are becoming alike. And-
though this is never made explicit, because to do so would immedi-
ately reveal the fallacy-societies on the far side of the industrial
revolution are once more seen as in a steady state.
It is ridiculously easy and patently unfair to poke fun at these
theoretical models. Despite their crudeness, they have produced
many empirically tested "relational" propositions of great generality.
But these are not enough. What is clearly needed is a conception
of social systems that focuses on their changeful qualities and in-
trinsic strains while not sacrificing the useful and valid view that
social behavior indeed does display interdependence, the essential
characteristic of social systems.
Some useful theories.-Although this introductory discussion of
the kinds of theoretical baggage we need has postponed our Latin
American visit, we may now make a positive selection of useful
equipment. What follows can scarcely avoid resembling a shopping
or packing list, as neither time nor the purpose at hand warrants
extensive discussion.
The first and most general point to be noted is that social change
is a universal feature of human societies, although the rate and
breadth of change do vary through time and space. One major factor
in this variation is the frequency and extensity of contact between
societies. The assumption that traditional societies are static remains
a fallacy, but the error is least where effective isolation has pre-
vailed for considerable periods.
Change in the modem era is, however, characterized by two
distinctive features: (1) Its magnitude has increased enormously.

It is certainly more rapid in more places and more constantly so
than ever before. (2) By any crude measurement, most contemporary
social change is either deliberate or is the secondary consequence of
deliberate change.
Industrialization (or other forms of economic development) every-
where produces some characteristic changes in other aspects of social
systems. Moreover, there are some social patterns that cannot sur-
vive economic modernization. Thus, to a certain degree, the position
of functional determinism, which asserts that industrial development
must everywhere produce societies which are very similar because
industrialism is related to other parts of society in fixed ways, is
partially exonerated. Yet, there are several major reasons for doubt-
ing that successful industrialization will everywhere produce socie-
ties that are functionally alike.5 These reasons may be reduced to
three: (1) Some features of the past are always relevant to the
present, and the historical heritage persists in some form even in
postrevolutionary regimes. (A specific application of this point to
Latin America will be made in the following section.) (2) General
world history also bears on the differentiation of societies. Countries
now embarking on a course of rapid modernization need not repeat
all of the contemporary content of advanced societies, and most
conspicuously need not replicate either the rate or sequence of
changes as they developed historically. (3) Arising from both the
particular historical legacies and from what we may call the trajec-
tory of modernization, the characteristic tensions are likely to differ
from one society (or closely related group of countries) to another,
and the way those tensions are managed is also likely to be different.
Managing tensions is the state's special social responsibility. Without
elaborating this argument further, this set of considerations serves
to explain the grossly evident fact that industrialism is consistent
with a wide variety of political regimes.
The need for disposing the sociologistic fallacy is immediately
apparent as our attention turns to social change in Latin America.
Though the countries south of the Rio Grande (or the Rio Bravo
as it is called by those who look north) qualify in varying degrees
as traditional and underdeveloped, we must remember that they
have been under western influence for four centuries or more. In
some areas that influence has been so overwhelming that virtually
no indigenous population has survived. In others, the resulting

social order is based on both European and native customs, as well
as on a mixture of the two.
Colonialism and its aftermath.-When Spain and Portugal con-
quered and colonized Latin America, they were behind northern
Europe in the emergence from feudalism. For this reason many
feudal-like patterns were transplanted and adapted in the New
World. The Iberian governments were attentive both to the economic
aspirations of their colonizers in exploiting the resources of the con-
quered territories and to the solicitude for native welfare voiced by
at least some elements of the Roman Catholic clergy. Grants of land
generally included the right to use native labor, whose spiritual
and, to a degree, material welfare was entrusted to the new land-
lords. These grants established what might be loosely identified as
a paternalistic system of labor. The clergy protested against outright
enslavement of the Indians, although they did not voice similar
objections to the importation of African slaves in the Caribbean,
tropical Central America, and Brazil.
The colonial elites were composed essentially of three groups:
the landlords, the clergy, and the military and civilian governors.
More than most plural elites, these were all family-based and strongly
interlocking-a characteristic of social stratification evident in Spain
to this day.
Political independence early in the nineteenth century removed
the power of Spain and Portugal and thus also reduced the ascend-
ancy of immigrant rulers and other Iberian-born settlers-the
peninsulares. Although political independence increased the author-
ity of the descendants of colonists (the criollos), it did little to
alter the shape of the social structure.
The nineteenth century saw considerable economic growth in
the resources-rich "ABC countries" (Argentina, Brazil, and Chile),
but in all of Latin America there prevailed a politically flavored
economic colonialism and a kind of endemic and chronic political
instability. The frequent revolutions were more commonly coups
d'dtat than genuine alterations of the basic institutional order and
often affected rural populations very little. This was, of course, not
the situation with the genuine revolutions in Mexico, where actual
civil war took place and where rural populations benefited from
changed institutions. Bolivia, too, had such a revolution.
Why did Latin America on the whole stagnate throughout the
last century, and, with notable exceptions, why does it continue to
do so today? A precise set of historical generalizations, specifying

the relevant conditions, is not feasible. We are thus thrown back
on a multiple causation explanation, which however inadequate is
preferable to no explanation at all.
Throughout Latin America income distribution is highly uneven.
Poverty and illiteracy are widespread. To a lesser degree, this is also
true of Mexico, which has had its social revolution. Even in Mexico,
the growth of a middle income group is slow. It is not far advanced
in the ABC countries, and scarcely evident in the remaining Latin
American countries. Remnants of feudal patterns persist in most
rural areas, and full-fledged peonage (debt servitude), although
nominally outlawed, flourishes in some of the Andean countries.
Commerce was never very widely accepted in Hispanic culture,
and in Latin America it most often remains in the hands of ethnic
minorities. The term Turcos (Turks) for the ubiquitous Levantines
is ethnically erroneous, but as a term of opprobrium it sets the
trader apart from social acceptability. Europeans and North Ameri-
cans generally move in more elevated commercial and financial
circles, and they do encounter some Latin counterparts, but the
shortage of an indigenous merchant class is ever present.
The political instability noted above inhibits commercial growth
to some degree. It is extremely inimical to industrial investment for
long-term returns. Fixed capital installations are especially vulner-
able to civil disorder or confiscation, but such hazards are perhaps
not as severe as the less obvious ones of currency instability, un-
reliability of contractual agreements, and essentially whimsical
changes of the rules of the entrepreneurial game.
Such economic modernization as has taken place often fits the
model of the colonial economy. Exploitation of mineral and agri-
cultural resources has yielded profits for investors. However, these
profits have either gone back to the countries which put up the
capital, been spent by local entrepreneurs, or been used to acquire
additional land in order for owners to qualify for the time-honored
privileges and prestige of the landed gentry. Today, some Latin
American countries are clearly poorer in natural resources and per-
haps in per capital income than they were a century ago.
Untapped and underutilized resources remain in Latin America,
and the rich cultural heritage of the Old World and the New is by
no means purely and entirely reactionary. Still it remains true that
contemporary Latin America abounds with anachronisms and that
potentials for improvement in the material conditions of life remain

Some cautions.-Generalizations about Latin America often fall
into the error earlier discussed, of assuming that preindustrial socie-
ties are alike. They clearly are not alike in many ways, and their
differences are important both for precise prediction of future trends
and for implementing appropriate social policies.
The Hispanic background provides a unifying factor; but geogra-
phy, resources, and especially the historic heritage of Indian culture
(in Middle America and the Andean countries) and Negro slavery
(in the sugar islands and Brazil) make for very great differences.
These differences falsify easy generalizations. It is also true that
our information about social structure and change in Latin America
is woefully inadequate. In the short sections that follow some edu-
cated guesses may provide a partial substitute for missing facts.
Most of the countries of Latin America are at least nominally
pluralistic in political structure, and thus permit a moderate to ex-
tensive degree of private enterprise in the production and distribu-
tion of goods and services. It is thus perfectly appropriate to examine
the roles of management and labor in the present and future trans-
formation of the institutional structures of those countries. Yet still
another caution is in order, for it is virtually inevitable that eco-
nomic modernization will take on a political urgency that will reduce
the pervasiveness of decentralized and market-oriented decisions
characteristic in the classical forms of a liberal economy. One can
expect that capital flow and international trade will come under
governmental surveillance, and that there will be attempts to super-
vise prices and wages. Here and there state-owned enterprises may
appear. Managers and workers there will be, and these productive
segments of the population may have varying degrees of independ-
ence from political control and manipulation. But we should not
expect that independence to be very complete.
Management.-In most of Latin America the managers of in-
dustrial and commercial enterprises are still disproportionately com-
posed of foreigners or persons of fairly recent Latin American
settlement. Surprisingly, Spaniards figure prominently among these
foreign managers, especially in textile production and particularly
in Mexico and Peru. English enterprises were at earlier times
important in Mexico (notably in railroad construction) and in
Argentina (often in meat packing). They remain an important
commercial element in Peru.

German migrants have had a major influence in Chile. Germans
and Japanese have been very influential in Sdo Paulo, which is the
most rapidly developing area of Brazil. Buenos Aires in Argentina
is virtually an Italian colony. And, of course, the Yankees, or
gringos, are to be found everywhere. Substantial numbers of in-
digenous entrepreneurs in commerce and industry are to be found
in the ABC countries and in Mexico, and a few elsewhere.
What can one say negatively of Latin American managers with
respect to the problems of economic growth? The charges against
them have some basis in fact and may as well be presented.
First, it is commonly noted that, whether in commerce or in-
dustry, the Latin American enterpriser emphasizes high unit prof-
its-the "quick buck"-at the possible expense of higher volume
with lower and more continuous, though slower, returns. Although
subtle cultural or motivational elements may be involved here, one
should not leap to those explanations without giving due credit to
the foreshortened time horizons that political instability prompts.
In addition, profits are more likely to be spent on luxuries or on
land that yields low or negative returns, rather than in industrial
reinvestments. Although cultural factors are difficult to deny, the
uncertainty of the business environment must be re-emphasized.
Second, the narrow and family-based circle of the elite inevitably
influences the choice of entrepreneurial personnel and the relations
among firms. The degree of nepotism and favoritism, when com-
pared to advanced industrial societies, is scarcely surprising; nor is it
automatically mischievous if indeed the social system limits educa-
tion and other qualifications to a small segment of the population.
The broadening opportunities for education will make such policies
increasingly irrational, and in one way or another they are likely to
disappear. That is, if the basis of recruitment is not broadened as
a matter of sound business practice, the result will certainly be en-
forced by revolutionary regimes.
Third, and closely related to prevailing nepotism and the im-
portance of personal contacts in personnel placement, is the culture
of corruption. The establishment of an apolitical civil service is very
incomplete in Latin American countries, and the laws are complex
and often repressive as viewed by the businessman. Licenses, per-
mission to operate in contravention of legal restrictions, as well as
the more conventional quest for public contracts, all lead to a wide-
spread payment of bribes. The mordida-the bite-is an expressive
local term for the surreptitious support of public functionaries.

This condition is again not peculiar to Latin America, or indeed
to underdeveloped countries. The matter is one of degree, but the
degree of corruption is sufficiently advanced that a highly rational
and moral administration, public or private, is rare.
Finally, Latin American management stands sharply apart from
the rank and file of workers.7 The complex gradations of skill and
authority, the highly paid manual workers and the lesser paid cleri-
cal workers, are not nearly so common as in advanced industrial
countries. This radical polarization of the work force is, again, not
peculiar to Latin America. Rather it is typical of early industrializa-
tion everywhere, confirming in space the Marxian diagnosis which
was so grievously wrong as a prognosis in the continuing course of
industrialization. Yet it remains true that between the managers
and the managed "there is a great gulf fixed," though certainly not
fixed for all time.
Against this catalogue of disabilities, what is there to be said
that is optimistic or favorable about the role of Latin American man-
agers in economic development? In all honesty, not a great deal
that is applicable to the present and immediate future can be said.
Yet clearly some managers, whether educated at home or abroad,
have a vision of the future and seek to break with the feudal past.
The influence of governmental planners is, perforce, gaining, and
some of them are strongly influenced by the able economists of the
Economic Commission for Latin America (ECLA, or CEPAL in its
Spanish version). If Latin American countries continue to provide
any room for private enterprise, it should be expected that it will
be in the context of a mixed economy. The rationalization of man-
agerial selection and practices may not be decisive in determining
the basic features of economic management, but continued inepti-
tude will certainly make private enterprise increasingly unlikely.
Labor.-At first glance the older debates about labor availability
for modern economic activity appear to have been tedious and ten-
dentious. There is no numerical shortage of available workers in
any developing country, if we set aside considerations of quality.
Stationary or actually deteriorating conditions of life in rural areas,
set against a pervasive quest for material improvement, have pro-
duced the overwhelmingly visible signs of surplus labor in the
extremely rapid urbanization characteristic of Latin American cities.
Explosive population growth in city and countryside alike-ex-
ceeding 3 per cent a year in many countries-further expands the
potential labor force. Despite this crude evidence of labor avail-


ability, both technical and motivational impediments stand in the
way of a full-fledged and fully committed industrial labor force.8
Aspiration levels of workers are often very low. Simple regular
manual employment is still beyond the reach of many. The uni-
versal public education provided everywhere by national laws is far
short of attainment even where the greatest resources have been
devoted to the goal, and in some countries it is a sham. Thus, ac-
ceptance of a kind of class position by workers and would-be workers
is common.
Just as education is nominally universal, so is political democracy,
for voting privileges are often dependent on the very education that
the state has not provided. The effective denial of political participa-
tion to substantial segments of the population produces sporadic
political disorders. The paradox observed elsewhere is confirmed in
Latin America: abject poverty does not produce the leadership of
protest. This comes from those who have fared relatively well, and
particularly from union leaders and even from salaried employees
in government and private enterprise.9 The labor movements in
Latin America appear to have a high revolutionary potential and
perhaps a low potential for orderly reconstruction of archaic insti-
tutions. Unions, which with few exceptions are predominantly ideo-
logically oriented, may in effect become the spokesmen for groups
much broader than their own membership.10
One mitigating factor in the basic polarization of management
and labor must be regarded as transitory, if not anachronistic. The
paternalism of feudal patterns was after all not entirely harsh and
exploitative. The industrial recruit may in fact seek the protection
of a patron in the form of his employer or administrative superior,
and become in a sense overcommitted to a particular employer.
Rational impersonality in employment relations is more likely to
prevail among managers than among workers. At least until higher
skill levels are developed among workers and the bargaining power
of labor shortage is added to the bargaining power of union repre-
sentation, workers may be pathetically grateful for any employment.
On the other hand, the universal confidence in education as an
avenue of personal and social improvement represents a possible
route to orderly change both in individual life chances and in the
transformation of the social order itself.
Social revolution of some form or degree is extremely likely in
virtually every Latin American country except possibly Mexico,
which experienced a genuine revolution over four decades ago.



What will emerge in the postrevolutionary era is impossible to pre-
dict in detail, as science does not find itself comfortable with unique
events. One can, however, be confident of certain structural changes.
There is likely to appear a great "Puritanism" in social recruit-
ment and standards of performance. In particular, technical compe-
tence is likely to be emphasized, perhaps intermixed with political
(rather than, say, familial) acceptability. Both public and private
affairs are likely to be characterized by a strongly technological
orientation, including a very pronounced emphasis on education as
a channel of mobility. The social order is likely to undergo a grad-
ual, but by no means rapid, reduction of the radical disparity be-
tween manager and the managed, innovators and reluctant followers,
and the rich and the poor.
The outcome of modernization will certainly not be stable social
orders in static equilibrium. Such stability cannot be predicted any-
where, and a society that embarks on a program of modernization
has no fixed destination. The foregrounds of social change in Latin
America are at least as complex as the backgrounds.

1. See Wilbert E. Moore, "Reconsideration of Theories of Social
Change," American Sociological Review, XXV (1960), 810-15. For a more
extended discussion see Moore, Social Change (Englewood Cliffs, N.J.:
Prentice-Hall, 1963), especially Chap. 5, "Modernization."
2. Egbert de Vries, Man in Rapid Social Change (Garden City, N.Y.:
Doubleday, 1961).
3. George I. Blanksten, "Transference of Social and Political Loyalties,"
Bert F. Hoselitz and Wilbert E. Moore, eds., Industrialization and Society
(Paris and The Hague: UNESCO and Mouton, 1963), Chap. 9.
4. See Arnold S. Feldman and Wilbert E. Moore, "Industrialization and
Industrialism: Convergence and Differentiation," Transactions of the Fifth
World Congress of Sociology, II (September, 1962), 151-69.
5. Ibid.
6. The title is borrowed from Sol Tax et al., The Heritage of Conquest
(Glencoe, Ill.: Free Press, 1952).
7. See, for example, Charles A. Myers, "Management in Chile," Fred-
erick Harbison and Charles A. Myers, Management in the Industrial World
(New York: McGraw-Hill, 1959), Chap. 9.
8. See Wilbert E. Moore and Arnold S. Feldman, eds., Labor Commit-
ment and Social Change in Developing Areas (New York: Social Science
Research Council, 1960), particularly Chapters 1-4 by the editors.
9. See Clark Kerr et al., Industrialism and Industrial Man (Cambridge:
Harvard University Press, 1960), especially Chap. 8, "The Workers: Impact
and Response."
10. See George I. Blanksten, "The Politics of Latin America," Gabriel A.
Almond and James S. Coleman, eds., The Politics of the Developing Areas
(Princeton, N.J.: Princeton University Press, 1960), p. 512.



Agriculture and Social Change

A s agriculture was once a major way of life in our country, so
it still dominates that great region south of the United States border.
There, a hundred million people are in agriculture, one-half the
population of Latin America. Latino agriculture is as primitive as
the planting stick and as modern as the great combines and cotton-
picking machines-with the former being dominant. Although its
society has been tradition-oriented and resistant to change, it is
now moving through a period of great social stress. Mexico's half
century of breaking and rebuilding her rural institutions has had
dramatic impact on her total society. Bolivia has been moving
through this rural revolution for a decade. Venezuela, Peru, Brazil-
in fact, nearly all the nations of Latin America-feel the stresses
of a stirring rural society.
Political leaders and scholars write alarmed articles about the
symptoms of this stirring. As they observe the rapid migration of
the campesino to the cities, their alarm mounts for they know that
there are insufficient jobs for the urban-born worker, let alone for
the daily stream of immigrants from the countryside. The rural
migrant is added to the swollen ranks of propertyless, unskilled,
and unhealthy workers in the city slums. As the social restraints
of his rural community are removed and as he is exposed to new
stresses, crime and other social decay increase.
If this bleak picture is not a figment of imagination, why do they
come, these people from the plains and forest? Most of them know
before they arrive that jobs are scarce and that hunger and other
problems face them. Most have no friends or kin in the city to
which they move, and yet they come. The pull of city lights is an
inadequate and naive explanation. Also, "the coercion of hunger
does not exhaust the available pressures."1' Often there are stronger
forces which drive them from their homes. There is direct political
*Textual notes appear at end of chapter.


coercion of forced labor and rural violence in Colombia and her
sister republics. The city provides new alternatives to the deviant
who wishes to avoid these oppressive controls.
It cannot be denied that urban attractions exist, but they are
more like straws at which a drowning man clutches. Families which
are rural born and reared do not joyously pack up their earthly be-
longings and leave their ancestral homes. With fear and trembling
they leave the social and economic security provided by the ex-
tended family system. "Family solidarity is greater in Latin America
than in the U.S. The Latin American tends to think in terms of
family income as well as of individual income."2 There a man is
expected to help his unemployed cousin with cash or food to tide
him over. In the United States, family help usually takes the form
of sympathy or advice about where to find another job.
There are other evidences of stirring in Latin rural societies. The
peasant leagues of northeastern Brazil articulate the frustrations of
a multitude. In Cuba we witnessed the rise of a leader who chan-
neled this restlessness into personal glory. There are the rural leagues
of Bolivian peasants, farmers' unions and syndicates in Colombia,
and less articulate rural groups in other countries to the south. In
order better to understand the reasons for these restless stirring
we must know something of the Latin American agrarian structure.
Land is more than a factor of production in Latin America's
culture. The rewards of the large landholder are prestige and po-
litical power as well as economic power. He helps write the laws
and dictates their administration. He and his fellows hold the
balance of power in the state and national congresses of most Latin
Landownership is highly concentrated, with roughly 90 per cent
of the land belonging to 10 per cent of the owners. The small
farmers of Latin America operate 73 per cent of all the farm units,
yet only 3.7 per cent of the agricultural land is at their disposal.
In Chile, landownership is even more concentrated because about
2 per cent of the Chilean landholders own 75 per cent of the agri-
cultural lands. Generally these large holders make little or even no
use of much of their lands. Land taxes do not force a higher inten-
sity of land use, for these same landholders either write tax laws
favorable to their interests or prevent the implementation of un-
favorable ones. In Chile, while over 20 per cent of the irrigated



lands in the most valuable agricultural areas lie fallow, the country
is forced to import much of the food it consumes.
Latifundios.--The large farm units of Latin America may be sub-
classified as haciendas and plantations. The terms vary from country
to country.
The hacienda is typically a livestock-cereal operation, with low
capital investment and labor input per unit of land area.8 Absentee
ownership is general and labor is provided by a share-crop system
or one of its variants. Barraclough adds: "The labor organization
is usually traditional, hierarchal and authoritarian. Salaries are close
to the subsistence minimum. The owner is seldom a resident on his
holding and the incentive for the resident administrator and the
labor force to adopt modem innovations is small. The owners and
their representatives generally have in their hands nearly all the
communities' sources of power including prestige, control of local
government, control of alternative job opportunities, and control
of public services and law enforcement agencies."'
The plantation is characterized by ample capital, strong, well-
organized markets, often an exterior market, as contrasted with the
usual hacienda method of using limited capital and poorly organized
markets. The plantation generally has a well-organized labor force,
and production per hectare is generally high.5
Minifundios.-Most of the farms of Latin America are small.
They are so small that even if more modern technology were applied
there would be little possibility of giving the farm family an accept-
able minimum standard of living. In Latin America, there are 3.6
million farm units with less than 5 hectares each, or 48 per cent
of the total listed farm units. These units average 1.75 hectares
each. They are not only small but generally have poor, infertile soils
and are located on steep slopes subject to erosion. In general, the
small holdings have limited resources of land and capital, abundant
labor, and undeveloped managerial talent.
Communal lands.-Communal landholding is the dominant pat-
tern for the 5 to 6 million Indians living on the plateaus and in the
valleys of the Andean chain. They are descended from the Incas,
and the area in which they now live stretches from northern Ar-
gentina to the southern border of Colombia. Their communal land
system is an aggregation of extended family holdings subject to
community claims and interest. Much of the farm work is done on
an exchange basis. The individual land unit is small and has low
productive capacity. The legal status of these communal landhold-


ings is generally insecure. The Andean communal holdings are
characterized by social rigidity and reflect a stagnant agriculture.
The communal landholding system of Mexico, called the ejido,
came partly out of the Mayan-Toltec culture. The communal system
was largely dissolved by the conquering Spanish soon after the Mexi-
can conquest. For several hundred years, these Indian lands re-
mained incorporated into the latifundios that dominated Mexican
agriculture. After the Mexican Revolution of 1910, great areas of
land were once again incorporated into community-held ejido lands.
Government lands.-The countries of Latin America have large
areas of undeveloped state-owned lands. Many of these lands are in
regions of drouth and flood. Vast government lands are isolated by
mountains or are separated by great distances from populated centers
of the countries. Large investments would be needed in roads, medi-
cal centers, schools, and marketing institutions to make these lands
add appreciably to the Latin American economies.
Rural institutions.-The rural family is the extended type that
includes many relatives. It provides a large degree of economic
security through its pattern of sharing even though the standard of
living approaches the subsistence minimum. The same pattern may
discourage initiative since the one who "makes good" must share his
fortunes with the extended family or he loses its social approval and
that of the community. The traditional or conservative influence of
the family has been widely recognized. The conservatism of the
mother may result from her religious attachments, her general with-
drawal from political activities, and her lack of involvement in the
great social issues of the society. This conservatism is passed on to
the next generation.
The rural church is largely Roman Catholic. It ranges widely in
its scope of responsibilities. In some countries it dominates the civil
government; in others it is closely circumscribed by law. Generally
the Church is conservative; yet occasionally it will be found in the
forefront of social change. The Catholic Church receives most of its
active support from women and makes its influence felt through
them. It serves as a stabilizing influence and as a retarder of needed
social change.
Local government is characteristically weak. The local people
generally do not participate in decisions that affect their welfare be-
cause they are discouraged by the nature of the political system and
vested interests. Formally and informally organized groups dedicated
to achieve some specific purpose are noticeably lacking in rural Latin


America. This contrasts strongly with the situation in rural United
States during the westward expansion of the frontier. There were
house raising, quilting bees, debating societies, school boards, com-
munity improvement associations, temperance societies, range asso-
ciations, vigilantes, and on and on. Perhaps the satirical fun poked
at the Americans' tendency to overorganize has obscured the contri-
bution which such organizations have made to America's growth.
In any effective government, the people must be willing to give
up a certain amount of freedom of action to become part of any
governed group. In so doing they rightfully expect additional bene-
fits from this association. The latino's strong insistence on individ-
ualism and his unwillingness to participate in group efforts have
often approached anarchy. This trait has inhibited the rise of social
and economic organizations required if the latino is ever to realize
his stated desires for an improved standard of living.
Educational institutions.-Rarely has so much dependence been
placed on one institution for the future well-being of so many people
as has been placed on rural Latin America education. Unfortunately
this dependence is being put on a weak and poorly lead institution.
Of course there are notable exceptions but, in general, the rural
school system's curriculum, physical facilities, shortage of trained
teachers, administrative weaknesses, antiquated methods of teaching,
and lack of relation to society's needs cause despair even to the
stouthearted. Somehow these rural schools must be vitalized if rural
Latin America is to move out of its storied but bitter past and
"struggle upward toward the sun, toward a better life."6
Isolation.-Much has been written about the lack of roads and
communication in rural Latin America. Physical isolation has slowed
the flow of technology and ideas, leadership, and capital into the
rural community. Isolation has prevented the movement of the
farmer's product to larger markets to enable him to purchase goods
and services including those of the doctor and teacher. Economic
and cultural isolation caused rural Latin America to surpass Rip van
Winkle by sleeping not twenty years, but fifty, a hundred, or even
more, as the world passed by.
Man creates the institutions by which he governs his relations
with his fellow man and controls the physical world around him.
How capable are the people of Latin America of being the catalyst
for a change? Have their physical resources been so weakened by



disease, their mental abilities so blunted by malnutrition, their
motivations so weakened by many generations of frustration, their
altruism so atrophied by injustice that change can come only by
revolution? No one can be certain, for we are only beginning to
study rural Latin America in terms of its human resources. We do
know something of the rates of literacy, the conditions of health,
and the levels of productivity. In their new social groupings and in
their movements to the cities we see new facets of the life of the
Education.-The rate of literacy in Latin America as a whole is
generally estimated at 50 per cent. In the rural areas, it is much
lower. If one were to define literacy as the ability to write with some
ease and read with comprehension-or the ability to read and write
as a fourth-grade student-then four-fifths of rural Latin Americans
would be classified illiterate. Even if more schools were built and
better trained teachers were available a large problem would remain.
The Latin American classical tradition of education does little to aid
the student in understanding the world around him. Nor does it
encourage him to use his knowledge to solve life's problems.
There are only a very limited number of schools devoted to voca-
tional and industrial instruction. In recent years we have been en-
couraged to note increased support for vocational and industrial
schools. We visited agricultural schools for rural youth in Mexico,
Colombia, and Argentina. There are schools now in operation which
teach industrial skills to the urban dweller and the rural migrant.
More schools are being built and supported by industrial groups and
international funds. This training effort is moving well in some
countries, in others it has not yet started.
Health.-How might one properly evaluate the health of these
people? If he travels the dusty streets of a hot river town, he will
see weakened, parasite-infected children. He can hear their fevered
cries in the night. If he stops at the neighboring cemetery, he will
note that many have died at an early age. If he visits the countless
villages perched on hills or mountainsides, he soon hears about
fevers, typhoid, hookworm, and other diseases. Nor are the Indian
dwellers of the high Andes secure from the ravages of disease. The
masses suffer from a second cause which contributes to the first-
malnutrition. Malnutrition dulls the eye, blunts the mental power,
and slowly saps the people's will to work. In rural Latin America
there are too few doctors, nurses, dentists, and hospitals. Through-
out large regions where roads are poor, there are no hospitals or


clinics. And where such facilities do exist the campesino and the
landless worker cannot afford them. Drugs and medicines are some-
times available, but without a doctor to guide their use, they may
do more harm than good.
In many countries the inhabitants are now being educated in
the need for sanitation. The importance of a pure water supply is
being stressed. Yet even in the major cities it is well for the traveler
to inquire about the safety of the water supply. Latrines are being
built-though not always used-and tiled floors are being put in
the homes to reduce the danger of hookworm and similar diseases.
These health conditions may be discouraging. Yet the bright-eyed,
energetic children and the tenacious energy of those who cultivate
the land are good omens.
Productivity.-The fecundity of the Latin American is well
known. Population is increasing faster in Latin America than in any
other major area of the world. A number of Latin American coun-
tries will double their population in 20 to 25 years. But their
productivity in goods and services is low. The productivity of the
average agricultural worker is less than 30 per cent of the non-
agricultural worker.7 The use of fertilizer, better seeds, better
transportation and marketing, educated managers, irrigation, flood
control, a tenure system that rewards effort, national policies that
stimulate the agricultural industry, all these favor the development
of a viable agriculture. Such an agriculture can feed and clothe a
nation as well as furnish raw materials for many of its industries
or produce products for export. The typical Latin American farmer
has limited land and too little knowledge and capital to make effi-
cient use of the land he does farm. He does well to feed and clothe
his family in even a meager fashion. Little is left over to sell or
trade. Yet there are commercial farms in Latin America located on
rich land that would be the envy of our own midwestern farmers.
There is still a key lacking to understanding why people with
comparable skills and resources fail to achieve equal economic levels
of well being. There is increasing evidence that their goals may be
different. Part of the low productivity of the agricultural worker is
due to his limited resources of technology, capital, and land. But
the rural dweller also has fewer wants than his urban neighbor be-
cause of his isolation and the unavailability of means to satisfy his
wants. A refrigerator is of little value without electricity or fuel to
run it. The community itself is a powerful force in discouraging
materialistic desires.


The landless worker.-Volumes have been written about the
minifundios of Latin America. Relatively little has been written
about the most depressed of all economic groups-the farm worker
who does not own land. He may be a sugar-cane worker in Brazil,
an Indian working as a serf on a feudal estate in Peru, or a share-
cropper on a tobacco farm in Colombia. These workers are widely
scattered geographically, generally unorganized and illiterate. They
have few resources and no bargaining power-at present.
Currently, there are more agricultural laborers than farm owners
in Latin America.8 This agricultural labor force is composed of
tenant laborers under an arrangement typically known as the colono
system. The laborer and his family may work a specified number of
days for the owner, or the laborer has the responsibility of tilling
a plot of land whose production goes to the owner. There are many
variations in the system in Latin America. Although it provides some
security to the colono, it does not provide incentive for innovations.
The income for all workers in Latin America is low; the income
for those engaged in agriculture is even lower, and that of the land-
less laborer is lowest of all. A contributing factor to the low pro-
ductivity of agriculture is its underemployment.
Thus for example, a rural worker works an average of 218 actual
days a year in Argentina, 210 in Chile, about 200 in Colombia
and barely 180 days in El Salvador. The position is even more
serious if national averages are set aside and the particular case is
considered of individual areas where farming depends on circum-
stances or where a single main crop is grown for export-especially
coffee, sugar cane and cotton-and labor is needed only for a
short period every year. There the rural worker only works 80 to
100 days a year and often has to travel great distances in search
of work.9

Current writers on the topic of economic development generally
argue that the solution for underemployment and the unemployed in
agriculture is to pull rural workers to the city and put them to work.
This movement, called urbanization, has been taking place at an
accelerated rate in Latin America. It isn't necessary to do much pull-
ing, for people are being pushed out of the rural regions by the
millions. But putting these millions to work is another matter. In
western culture, urbanization and industrialization have generally
gone hand in hand. Hoselitz has pointed out that the two processes



are not necessarily related.10 Urbanization has been taking place at
a very rapid rate without a comparable increase in industrialization.
As a result, industry is not growing fast enough to absorb the new
workers born in the cities, let alone the rural migrants.
Labor unions in agriculture.--How much effort have labor unions
put into organizing the agricultural worker in his rural environment?
In Mexico, rival unions claim membership of tens of thousands of
agricultural workers. In private discussions, knowledgeable Mexican
officials suggested that such claims have little meaning. In Mexico
and most other Latin American countries, labor unions have made
little effective effort to organize agricultural labor. This effort, dif-
ficult at best under agricultural conditions, is further complicated in
many Latin American countries by the absence of legislation to pro-
tect the freedom of association and collective bargaining rights of
agricultural workers. While it is true that labor unions have some-
times supported legislation that would improve the conditions of the
agricultural worker, much of this legislation has never been imple-
mented and the effort has been largely wasted.
Recent events in Peru may indicate more success. For many
years, the political party Alianza Popular Revolucionaria Americana
(APRA) has attempted to organize farmers in cooperative enter-
prises. Through a coalition of farm laborers and industrial workers,
APRA has sought to break the political domination of the large
landholders. The recent impetus given to agrarian reform and
the reorganization of the taxing system provide evidence that a new
balance of power has come into being.
Agrarian unrest in Colombia and Venezuela has encouraged labor
organizers to exploit this unrest for their own political benefit. The
peasant leagues of northeastern Brazil are growing steadily in num-
ber. Now their demands are being heard and supported by governors
and congressional leaders. But the growing power of the leagues has
attracted a wide assortment of politicians, labor leaders, and univer-
sity students, who would like to capture the loyalty of these rural
groups to aggrandize their personal political fortunes.
Rural industry.--Industry has been constructing most of its plants
in the urban areas. But there has also been some investment in plants
in rural regions. Since these plants are often designed to serve only
a limited population they tend to be small. They may process milk
products, handle building materials, or even manufacture farm
equipment. Since the number of employees is small and since em-
ployees have a traditional, paternalistic orientation toward authority,



labor unions are weak. But when the plant size increases or when
foreign capital becomes involved, organizational activity increases.
Foreign employers, including United States employers, often pay
higher wages than the domestic employers for two reasons: they
want more efficient workers and less turnover. Domestic business-
men do not appreciate this disturbance of the status quo. The labor
organizer who attacks the foreign investor as an imperialist and
exploiter finds a willing ear among naive workers, support from am-
bitious politicians, and silent approval from native employers.
Foreign capital and industry are rarely welcomed by domestic
employers unless the new investment complements their own. The
domestic businessman doesn't want competition, a disturbance of
a favorable labor situation, a threat to his high profit ratio, or an
end to his near monopoly. Not uncommonly, Latin American gov-
ernments grant a monopoly or a near monopoly power to a particu-
lar company. For example, in Colombia, the company monopolizing
the tobacco industry was able, through an intensive press campaign
and governmental pressure, to cause a foreign industry to write off
its initial $5 million investment and stay out of the country.
The harassment of foreign capital, the threats of expropriation,
and the failure of local businessmen to invest at higher rates has
resulted in a slowdown of both rural and urban capital investments.
This slowdown has coincided with the greatest number of new
workers coming into the labor market. With millions already under-
employed in agriculture, with insufficient jobs in agriculture and
agriculture-related industries, the migration to the city has mounted
Labor unions.-How do existing labor unions view the city-
bound worker? Do they see him as a source of additional pressure
on an already overcrowded labor market and thus having a de-
pressive effect on wages? The impression I gained in visits with
labor leaders and labor attaches, and in visits with officials at the
international office of the Inter-American Regional Organization
of Workers (ORIT) in Mexico City indicated that labor unions
have little concern for the agricultural worker. They have done little
to help him organize unions in the rural areas and made little or
no effort to facilitate his transition to the urban industrial culture.
In fairness, we should remember that the labor unions of South
America are not strong. Their problems are so immediate and press-
ing that they have not had time to concern themselves with the
agricultural laborer either as a rural worker or as a part of the



urban-industrial labor reservoir. One of their most pressing prob-
lems is their political orientation, which makes them closely identi-
fied with one political party or another. An ORIT official stated
that in Peru labor leaders are attempting to separate the labor union
movement from its traditional allegiance to the Aprista party and
its politics. They feel that a continued identification of the labor
movement with one political party will seriously cripple its future
growth. A related problem which labor unions have to solve is their
dependence on indirect governmental aid. Labor unions continue
to function at the sufferance of the ruling government of various
countries and many have been dissolved.
The migrant.-To return to the rural migrant in the city, it is
best to recognize openly that he is poorly equipped for industriali-
zation. A large proportion of these people cannot be considered as
part of "our industrial reserve army" but as a demoralized, un-
healthy, pitiful people. "Even if a sudden spurt of industrial in-
vestment were to take place in these cities, it would be difficult to
transform these people into disciplined, effective factory workers." "
The agricultural migrant to the city is usually without industrial
skills. As a result, he is at the very bottom of the labor force and
is employed sporadically in marginal occupations with very low pay.
He has little or no economic or social security.
There are three adjustments the rural migrant must make to the
urban industrial complex: he must adjust to a new environment,
learn new skills, and accommodate himself to new social relations.
It is easier for him to learn new skills than to adjust to the serious
psychological strains the urban environment imposes on him in
terms of uncertain employment, low wages, separated families, and
anonymity and impersonality in his new relationships. But it is the
restructuring of his social relations that most severely disrupts the
traditional sources of social and psychological security. Added strain
results when people of high traditional status must obey orders of
others below them in traditional status simply because a restruc-
turing of the skill hierarchy in the city requires it. Curiously, the
farther the factory is removed from the center of these traditional
relations, the easier it is for the rural migrant to adjust to the new
social patterns.
The urban migrant tends to maintain close ties with his native
village. He often returns to the village at various times of the year,
especially for harvesting and planting. He is not a true city dweller
but a temporary resident. Some consequences of this continuous



ebb and flow of labor from country to city and back again are the
infusion of new political thoughts in the rural area, an increased
unwillingness to conform to the traditional system, and a desire for
more and better things. The migrant may even bring back the con-
cept of labor union organization and its potential for increased bar-
gaining power. These new wants and attitudes increase the ferment
for economic, social, and political changes.

Will the agricultural society play a dominant role in initiating
social change in Latin America? I think not. There is little reason
to expect this to happen in the near future. True, there is hardship
and disease, illiteracy, and human exploitation in rural Latin Amer-
ica. There is also increasing restlessness and stumbling efforts toward
creating a new political organization to articulate the demands of
the rural masses. But on the whole, traditionalism is still dominant.
Political leaders still represent the vested elite. The indigenous
leaders of the masses have not come forth to lead their people
"upward toward the sun, toward a better life."

1. Wilbert E. Moore, "Labor Attitudes toward Industrialization in Under-
developed Countries," American Economic Review, XLV, 2 (May, 1955),
2. Harry Stark, Social and Economic Frontiers in Latin America (Du-
buque, Iowa: Wm. C. Brown Company, 1961), p. 153.
3. Thomas F. Carroll, "The Land Reform Issue in Latin America," Albert
0. Hirschman, ed., Latin American Issues (New York: The Twentieth Cen-
tury Fund, 1961), p. 162.
4. Solon Barraclough, Latin American USOM's Seminar on Agrarian
Reform, February 21-24, 1961, Santiago, Chile (Washington: I.C.A., 1961),
pp. 42-43.
5. One hectare equals 2.47 acres.
6. Jose Figueres, former president of Costa Rica.
7. United Nations, "Productivity of Labor and Land in Latin America in
Agriculture," Economic Survey of Latin America 1956 (New York: Depart-
ment of Economic and Social Affairs, 1957), p. 168.
8. International Labour Office, Conditions of Agricultural Workers, Re-
port IV, Seventh Conference of American States, Members of the Inter-
national Labour Organization, Buenos Aires (Geneva: I.L.O., 1961), pp.
9. United Nations, Economic Bulletin for Latin America, VI, 2, 1961, 4.
10. Bert F. Hoselitz, "The City, the Factory, and Economic Growth,"
American Economic Review, XLV, 2 (May, 1955), 166-84.
11. Ibid., p. 178.



Industrial Leaders in Latin America

Industry in Latin America is owned and managed either by Latin
American industrialists, Latin American governments, foreign-based
enterprise, or by some combination of these. In the major indus-
trializing nations-Brazil, Mexico, Argentina, Colombia, and Vene-
zuela-ownership and management are still largely in private hands.
In this section,"' we endeavor to establish the identity of Latin
America's private industrial leadership and to develop some under-
standing of the environment in which it functions, the fashion in
which it manages, its attitudes, and its potential as a factor of
change. While we are primarily concerned with the Latin American
industrial leader, we devote considerable attention to the non-Latin
-the managerial representative of the foreign-based enterprise
operating in Latin America. Since World War II, direct foreign
manufacturing investment in Latin America, particularly American,
British, German, Japanese, and Italian, has replaced trade as the
dominant element in foreign economic involvement.
The majority of the managerial functions associated with operat-
ing a foreign-owned industry in Latin America are performed by
Latin American managers. But in most foreign firms the top man-
agement functions are under the direction of non-Latins, sent by
their employer firms from abroad. These are "company men," chosen
partly because of their managerial experience or technical skills, but
mostly because of their familiarity with the policies of their em-
ployer firms. As a consequence of their presence, industrial leader-
ship in Latin America is probably the most thoroughly international
of all the developing regions of the world. In the intimate relation-
ships which become established in this international involvement,
contrasting management philosophies, business practices, cultural
backgrounds, and value systems confront one another. These con-
trasts are important both for their effect on industrial growth and
*Textual notes appear at end of chapter.

their implications for social change and international relations. We
center on the thoroughly international admixture of Latin and non-
Latin industrial leadership and try to develop some understanding
of this admixture, partly by examining the contrasts among its
component parts.
The Latin American industrialist does not enjoy the status of his
counterparts in the United States and Western Europe. Industry,
however, probably enjoys higher status in Latin America than in
the United States or Western Europe. The opponents of "industri-
alization at all costs" have relatively few sympathizers. In spite of
the proven costs of forced draft industrialization, government spon-
sorship of projects designed to accelerate the pace of industrial de-
velopment is a high order of political business.
There is strong emotional appeal in industrialization: it means
economic modernity; if economic progress is elusive and uncertain,
new industry brings visible "proof" of growth; and perhaps most
important of all, industrialization brings economic emancipation
from foreign manufacturers. The strength of these appeals is fre-
quently manifested. In mid-1960, when President Eisenhower an-
nounced a new United States' approach to aid for Latin America
(the beginning of the Alliance for Progress), some people reacted
negatively, for the new approach emphasized elevating the standard
of living of the lower classes rather than industrial progress. Shortly
after the new aid program was announced, the following editorial
appeared in the Journal do Brasil. "The United States' aid plans
for Latin America are based on the mistaken belief that basic prob-
lems can be tackled by secondary measures. President Eisenhower
in his recent announcement of aid to Latin America referred to
housing projects and educational programs. If the U.S. has nothing
to offer except schools, hospitals, and houses, training courses and
scholarships, and some financing of activities that do not compete
with U.S. trade, it will lose influence."
The determination to become industrialized rapidly is not with-
out merit. Increasing per capital income is partly dependent upon
increasing output or productivity per man hour of effort. The great-
est gains in productivity are the result of the use of more and better
equipment. If per capital income is to rise, therefore, industrial
capital must be acquired and used efficiently.
There is a close correlation between a country's standard of living


and the amount of industrial capital per worker. There is also close
correlation between the rate of industrial investment and the pace
of economic growth. Colombia and Venezuela have been investing
over 20 per cent of their gross domestic output in fixed capital forma-
tion. In Chile less than 9 per cent of gross domestic product has
been invested in fixed capital formation in recent years and, as a
result, virtual stagnation prevails in Chile, whereas Colombia and
Venezuela have experienced relatively high growth rates.2 The
same applies for agriculture. Mexico pioneered in land reform and,
over a period of several decades, redistributed a substantial portion
of her large landholdings. Uruguay's land is not so equitably dis-
tributed, but its agricultural productivity is about ten times as high
as Mexico's. The difference is due largely to Uruguay's level of
mechanized farming.
While high productivity does not automatically accompany the
acquisition of industry, it is impossible without the products of in-
dustry. Thus, with some justification, Latin Americans view indus-
trialization as a desirable national goal. In view of this it is strange
that although such industry enjoys widespread popular acclaim, its
leaders do not. In this respect the Latin American industrialist
differs from his counterpart in the United States.
We lack extensive data about the attitudes of Americans toward
big business and its leaders. However, those studies which have
been conducted tend to show that by and large Americans view big
business and its leaders as the pace setters of the economy, as the
nation's chief technological innovators, and as the main force which
can marshal and utilize efficiently the massive resources required
for large-scale, low cost production.
In a survey conducted in 1951, The University of Michigan's
Survey Research Center found that almost no one was worried about
the political power of big business.3 Only 3 per cent of those sur-
veyed felt that big business had too much power over institutions
such as government, newspapers, and schools. When asked to rank
the influence of big business over "how things go in the U.S.A."
with that of "businesses that are not big," with labor unions, and
with national and state governments, they ranked labor unions
ahead of big business and viewed labor's greater influence with
some concern.
Clearly, there is little evidence that Americans generally view the
managers of big business with apprehension. In Latin America,
business leaders are often viewed with ambivalence, fear, and even



hatred. Although the burgeoning industry of Latin America is fre-
quently compared with the United States economy of 75 years ago,
the popular attitudes toward industrial leaders are not comparable.
No Horatio Alger heroes exist in Latin America. In fact, the busi-
nessmen are frequently caught in the vortex of ideological disputes
involving their role in the industrialization process. If ideology is
dead in the United States today, as Daniel Bell argues, it is still
the way of life south of the Rio Grande.4
The relatively low and uncertain status of Latin American in-
dustrial leaders can be explained by three principal factors: their
cultural heritage, the current revolutionary mood, and their class
Cultural heritage.-The structure and value systems of Western
Hemisphere nations became crystallized during the early stages of
colonization. In the non-Latin portion of the hemisphere, colonizing
was largely by Britain, France, and other European immigrants
who had already begun to acquire the attributes of industrial peo-
ple. But Spain and Portugal, from which Latin America received
its heritage, were still largely feudal, patriarchal, and agricultural.
The oligarchic system of agrarian life and the pattern of state pa-
ternalism which were basic to the Iberian heritage were, to be sure,
modified by the emerging industrial life of Latin America, but they
by no means disappeared.
This heritage helps explain why governmental service, including
the military, is viewed as a noble career to which the sons of the
landed aristocracy have traditionally aspired. Until very recently,
the landowners' oligarchy has been the single major influence in
political affairs and in the determination of economic policies. The
landed aristocracy governed through personal influence rather than
through parties. It opposed change and was largely responsible for
the succession of caudillos who substituted one corrupt government
for another for the major part of 150 years.
That governmental service should be looked upon as a noble
pursuit is one of the baffling anomalies of Latin America. Govern-
ments have been notably unsuccessful as instruments for dealing
effectively with social problems. Corruption has been rife, the law
vindictive, and change halting. The Latin today reserves his most
bitter jokes for his government and its leaders.
The revolutionary mood.-Despite this apparent lack of respect,
the Latin continues to look to the state for solutions to social prob-
lems. Albert 0. Hirschman documents, by way of case studies in



Chile, Colombia, and Brazil, the recurrent pattern which charac-
terizes government acceptance of responsibility for social problems
in Latin America and the styles employed for dealing with them.5
The problems for which the state accepts responsibility are either
those which are forcefully brought to its attention, those which
must be met as prerequisites to successfully meeting emergencies,
or those which appear to be soluble because new strategies and
policy instruments have been invented.
Action for dealing with such problems is typically assigned to
new administrative agencies endowed with loosely defined and in-
adequate powers. The motivation for resolving the problems out-
runs understanding of how to deal with them, and the initial effort
generally falls considerably short of success. In time, new problems
take priority and earlier ones fade into obscurity, to re-emerge later
when pressure for action again builds up. Meanwhile, the previous
effort has fallen into total disrepute and is publicly ridiculed.
The contemporary Latin industrialist is both a victim and a con-
tributor to this condition. He is a victim because his competence
as an agent for dealing with economic conditions is more seriously
challenged today than ever before; and he is a contributor because
he is part of the class which is most dissatisfied with the economic
condition and most determined to take effective measures to deal
with it.
The current concern of Latin Americans for their economic con-
dition is intense. It has not always been so. The Latin American
attitude toward its state of relative underdevelopment has under-
gone a number of changes since independence. It was some decades
after receiving independence from Europe before Latin American
writers devoted serious attention to development and to an explana-
tion of the failure of political independence to bring economic
progress. Initially they blamed themselves, pointing to their char-
acter traits, such as lack of initiative, perseverance, and morality,
inability to cooperate, and ostentatiousness. These were attributed
variously to education, religion, the European cultural heritage, the
climate, the soil, or the diet. Progress could come only through a
reformation of the Latin American character and through imitating
other, more successful societies. While the contemporary mood is
much less self-effacing, writers such as Gilberto Freyre and Vianna
Moog still refer to shortcomings in the Latin American character
as a partial explanation for its failure to achieve full economic



Following World War II the mood shifted. Now, the outside
world was to blame. Latin American hostility toward Yankee im-
perialism became more pervasive, and men who followed Haya de
la Torre argued that Latin America was backward because it was
exploited, and that the solution lay not in imitating others but in
developing a new and unique Latin American socioeconomic sys-
tem. These men both reflected and stimulated the rising tide of
nationalism found in Latin America today. While ultranationalism
may have disturbing consequences, the current pride and self-
confidence of Latin America nations are more conducive to progress
than the self-effacing mood of the nineteenth century. So long as
the cause of backwardness was attributable to basic character quali-
ties, natural resources, and cultural heritage, no ready solution could
be envisaged. But when more tangible causes for underdevelopment
were identified, notably exploitation from abroad, the Latin Ameri-
can impatience for immediate state action soared.
Increased awareness of the well-being of the advanced world and
of Latin American industrial development following the depression
of the 1930's and World War II gave a powerful impetus to the
conviction that the problem could and should be solved. Evidence
that progress was possible increased the determination to have it.
The Economic Commission for Latin America (ECLA) sparked
a drive for governmental action to deal with these issues by pro-
viding the theoretical apparatus needed to buttress a defense for
greater state intervention. In the ECLA doctrine, exploitation from
abroad need not be deliberate; exploitation is inherent in Latin
America's relationship to the world with which it trades. As pro-
ductivity increases in the advanced nations, ECLA argued, these
nations progress. But as these nations prosper, the gains from in-
ternational trade are unequally distributed. The terms of inter-
national trade become less favorable to the underdeveloped nations,
"the periphery."
The contrasting traditional economic view had been that in the
long run each national economy would adjust itself to the world
economy, that rising labor costs in the advanced nations would
result in higher prices for their manufactured export products, and
that this would stimulate the manufacture of these products in
countries whose labor costs were lower. Thus, no governmental
action would be required to insure favorable terms of trade. In fact,
most maladjustments were considered to be the consequence of gov-
ernmental interference through import-export restrictions, manipu-



lation of the exchange system, and other tamperings with the in-
ternational market.
Traditional economic theory, however, is not appropriate for
Latin America, ECLA argued. Neither the international nor domes-
tic market had responded as classical theory held it should. The
machinery for ready accumulation and utilization of large amounts
of investment capital had not developed automatically, and the en-
trepreneurial initiative required from business leaders had not been
forthcoming. Clearly, a special economic theory for Latin America
was needed, one calling for strong governmental initiative.
The theory of unequal distribution of productivity gains is only
one of the elements in the ECLA doctrine, but like the others it
calls for vigorous governmental action, specifically: controls on im-
ports and exports, regulation of the exchange mechanism, direct
support of favored industries, and government sponsorship of specific
industries both as owner and owner-manager.
The recurrent claim among Latin America's development theorists
has been that local business leadership has failed and that govern-
ment must provide the leadership required for industrial develop-
ment. Ironically this distrust of private industrial leadership occurs
at a time when it is performing most commendably. The major in-
dustrializing nations of Latin America are at or near Rostow's "take-
off stage." This stage has been reached largely during the past
several decades, and it is traceable chiefly to private Latin American
initiative-not to governmental or foreign initiative. Yet the very
success of private Latin American performance since the depression,
and more particularly since World War II, has served to sharpen
appetites for a vastly accelerated growth and has led to increased
impatience with industry's performance.
The contemporary mood, therefore, is a reform mood, if not a
revolutionary one. And it leads to insistence on governmental ad-
ventures in the economic field, many of which are only remotely
related to the economic problems at hand, and some of which are
destructive to an economic environment most suitable for rapid in-
dustrial development. To many non-Latins, one of the ironies of
this mood is that Latin American business and industrial leaders do
not serve as a restraining and constructive influence. They are not
effective in demanding fiscal reform, elimination of corruption in
government, increased efficiency in government services, and more
adequate educational facilities-the traditional demands of their
class during industrialization.



Class origin of industrial leaders.--This deviation from the tradi-
tional posture for the man of commerce and industry is partially
explained by the class from which he comes-the upper middle
class. Although much has been written about the emerging middle
class in Latin America, little can be said about it with confidence.
Its members are identified chiefly by their income, educational level,
and occupations-business and industry, the professions, and gov-
ernment service. The ranges within these classifications are extreme.
The size of the middle class is unreliably estimated. John J.
Johnson has proposed that the middle class in Argentina accounts
for about 35 per cent of the population, in Chile about 30 per cent,
and in Mexico and Brazil about 15 per cent.6 Whatever its num-
bers, the middle class offers little or no promise as an instrument
for maintaining political stability and promoting constructive change
through democratic processes. In Chile and Argentina, the middle
class is perhaps the least prepared to accept change through an
orderly social system which contains violence and preserves demo-
cratic processes. In the remaining major industrializing nations the
class shows somewhat more promise, but as a collectivity it lacks
sufficient cohesion, self-confidence, and contentment with its own
status required to achieve orderly and peaceful reform. It is in-
secure. It harbors a haunting feeling that respectability is still asso-
ciated with landownership rather than commerce. Its members run
the technical and professional affairs of business and government
but its roots are still in the soil. This explains some of the restrained
commitment with which smaller businessmen pursue their business
affairs. They view the fate of their enterprises with a certain
equanimity, as though a return to the real life back on the land is
always an available choice.
The Latin American middle manager comes from this insecure
and volatile middle class. His ideological position on questions not
directly related to business and industry rather closely parallels that
of other segments of the middle class, but politically he is its least
active member. He leaves politics largely to his fellows-the profes-
sionals, the intellectuals, the civil servants, and the labor leaders.
On questions related to business and industry, his position can
be summed up as follows: (1) He demands government protection
from competition, particularly foreign. (2) He expects direct or
indirect government subsidy. (3) He does not oppose government
ownership or management of industry.
To a large extent the attitudes of industrialists are the result of



a long tradition of heavy government protection of industry through
import tariffs. Such protection to stimulate industry is as old as
industry itself. The first government development agency was prob-
ably the Mexican Banco de Avio, which, in 1830, collected one-
fifth of the customs revenue from the importation of cotton goods.7
The duty was imposed to create a favorable environment for national
industry, and the revenue was to buy machinery and equipment
abroad to develop the Mexican textile industry. Similarly, govern-
ment protection in Brazil dates back to 1844, when tariffs were
placed on certain manufactured goods. Subsequent major tariff
legislation in 1879, 1888, and 1953 brought increasing numbers
of manufactured products under tariff protection.
Latin America's record of protection is not unique, for most
nations have adopted some form of support to stimulate the develop-
ment of domestic industry. But in Latin America protection has
tended to breed dependence on government and, lacking adequate
domestic competition, industry has not achieved competitive effi-
ciency. The bulk of industry today, whether domestic or foreign-
owned, could not compete with foreign manufacturers. Even Latin
American operations of many United States-owned firms could not
compete with their own parent companies if trade barriers were
Thus far we have made no distinction between middle manage-
ment, which comes from the middle class, and that group of owner-
managers which constitutes Latin America's wealthy industrial elite.
An increasing portion of the wealthy families comes from the latter
group, whereas formerly wealth was almost entirely an attribute of
the landed aristocracy. Of course, it is inaccurate to consider pro-
prietors as part of the middle class or even the upper middle class.
Yet they appear to share many of the traits of their fellow indus-
trialists at less affluent levels. Many are second- or third-generation
Europeans, especially Italian and German, and in most Latin Ameri-
can countries only a few are Iberian. Many of these leaders are
partners, suppliers, or competitors of foreign enterprises, particularly
those owned and managed by Americans. They bring to Latin
America some of the technical and organizational skills and the dis-
cipline and singleness of purpose which increase efficiency in the
marshaling and utilization of resources. Yet they seem to acquire
readily other attributes of their adopted culture, for their disposi-
tion to turn to the government for support and protection is
thoroughly Latin. In conformity with tradition, they regard govern-



ment service as the highest calling, and when they become actively
involved in political affairs they defend the interests of the aristoc-
racy more than those of the industrialists.
Among foreign industrialists in Latin America, the most prev-
alent nationalities are American, German, British, Italian, and
Japanese. Accurate data concerning their relative numbers are not
available. However, somewhat dependable data are available on the
magnitude of direct foreign investment in Latin America, and since
most foreign-controlled industrial firms rely rather heavily on their
own nationals to man the top management positions, the distribu-
tion of investment provides some indication of the relative impor-
tance of various nationalities among Latin America's industrial
United States managers outnumber other nationals in all the
major industrializing nations of Latin America. If the numbers of
United States managers are compared to the total number of native-
born managers, the American community would be relatively small.
But when we compare the number of local employees working for
United States-owned firms with the number employed by locally
owned firms, the significance of the United States management is
greatly magnified.
The original initiative for industrial development in Latin Amer-
ica was Latin. Heavy United States involvement began well after
local industrialists had begun to exploit growing domestic markets
and largely after United States firms recognized that establishment
of manufacturing operations in Latin America, in the face of in-
creasing governmental restrictions on the importation of manufac-
tured products, was the only alternative to being squeezed out of
Latin America entirely. Today United States firms are deeply in-
volved; in some fields of manufacture they account for well over
half the domestic output. They are responsible for much of the
accumulation and investment of growth capital. As importers of
new technologies, organizational methods, and personnel policies,
they contribute significantly to industrial change.
In the remainder of this section, we shall broaden our under-
standing of the Latin American industrialist and the foreign indus-
trial leader by comparing their situations in Brazil. Most of the data



in this case study were obtained through personal interviews with
United States and Brazilian leaders from 1958 through mid-1960
in Sdo Paulo and Rio de Janeiro.
The United States manager is from a society which has no dis-
tinctive owner-manager class and no ruling families. Ownership in
the United States is widely dispersed, and management tends to be
professionalized. Thus, the United States manager in Brazil has a
different social character than a member of the business-owning
families of the Brazilian aristocracy has. The latter is a member
of the elite class and he knows it. The United States executive, on
the other hand, who may sometimes live as well and who may have
the material accoutrements of this class, is not an aristocrat in his
society and does not feel that he is. While he enjoys considerable
prestige in his own society by virtue of his success in business, he
thinks of himself as middle class. While he may enjoy a higher
economic status than the average American, the distinction is much
less harsh than that prevailing between the owner-manager and the
average family in Brazil. A United States executive with managerial
responsibility over an operation employing 5,000 men may receive
less than five times the income of the average American family after
taxes. A Brazilian owner-manager with comparable responsibility
might enjoy an income twenty to thirty times that of his average
industrial worker, and the average industrial worker's income is
well above that of the average Brazilian family.
There are a number of Brazilian owner-managers in industry
whose feelings toward the United States businessman in their midst
are heavily influenced by past unfavorable dealings with norteameri-
canos. One firm, resentful that a United States company refused
to accept it as a partner and chose instead to compete with it, for
a number of years accompanied each of its published financial
statements with a plea to exclude foreign enterprise, which was
allegedly bleeding the country.
Some of Brazil's own political observers believe that the threat
of competition inspires most of the antiforeign feeling among Brazil's
industrialists. Many seek license agreements with foreign firms as
a means of eliminating competition with them. Others prefer joint
ventures, or selling out to prospective United States competitors.
Intermittently, anti-American business sentiment flares into open
conflict, and, on isolated occasions, local industrialists provide the
initial impetus. However, these incidents are not common. A silent
truce prevails most of the time between foreign business leaders and



Brazilian industrialists who are antagonistic toward foreign competi-
tion. Even the most hostile Brazilian industrial leader tends to recog-
nize that an attack on foreign enterprise is an attack on enterprise
itself, and that his own interests are poorly served by the upheavals
these attacks generate.
In their dealings with United States managers, Brazil's owner-
managers display contrasting customs, some of which are worth
noting. Americans attach more importance to written contracts than
do Brazilians. To the American, the contract is a clear statement
of the obligations and considerations of the contracting parties, and
it is employed to minimize misunderstanding and to enforce com-
pliance. Brazilian managers view the written contract more as an
expression of intent at the time the agreement was made; one whose
applicability and value deteriorate with time. They are often appalled
at the length and detail of the American's written contract pro-
posal, but seldom object since they do not feel the written contract
is to be taken too seriously.
The American disposition in negotiations to get down to business
with a minimum of amenities is not shared by Latins. Knowledge
of these and other cultural formalities, which contrast with practices
in the United States, is soon acquired by the observant or guided
American newcomer, who then partially adapts himself to the man-
ner of his associates. However, complete adaptation is difficult and
not regarded as desirable by most Americans. The American's in-
ability or refusal to adapt to Brazilian manners is frequently cited
as limiting his effectiveness. However, cultures adapt quickly to
economic needs. Contrary to the claims of some anthropologists,
contrasting personality characteristics and behavior patterns prob-
ably do not seriously limit the foreign manager's net effectiveness in
business dealings in the developing nations of the world.
The United States manager's lack of fluency in Portuguese is
also commonly cited as a serious shortcoming. The great majority
develop some competency in Portuguese, but few learn to speak it
well. Most avoid using Portuguese in serious business negotiations.
Brazilian lawyers generally counsel their United States clients to
avoid parading their deficiencies in Portuguese during serious dis-
cussions. The Portuguese of most United States businessmen is a
grammatically corrupt commercial parlance. It contains a number
of Latinized versions of English technical words for which there
is no precise equivalent in the Portuguese language. It serves in
the trade, but it is offensive to the educated, articulate Brazilian.



Americans who master Portuguese with some success are gratified
that they have done so; those who do not admit that this sometimes
places them in a disadvantageous and an occasionally embarrassing
position. Yet the extent to which the lack of fluency in Portuguese
limits their effectiveness is debatable. Many managers who are al-
most totally ignorant of the language have been highly successful
and appear to enjoy good relations with their fellow Brazilian
Brazil has had a substantial influx of immigrants since World
War II. Many are highly skilled industrial craftsmen. One fre-
quently encounters a firm in which five or six different languages
are spoken regularly. That work gets done under these conditions
suggests that the problem of communication in industry is possibly
In summary, there is little question that some Brazilians resent
the inability of foreign businessmen to speak Portuguese well. We
know little about how prevalent this resentment is, or how much
it affects the image of the United States businessman or firm in
Educational background.-In spite of efforts to extend education
to a greater segment of the population, education in Brazil is still
largely for the few. Except for Argentina, which has Latin Ameri-
ca's highest literacy rate, this is true of all Latin America. The
aristocratic character of education in Brazil is revealed by the fact
that about 60 per cent of all the expenditures for education each
year goes for the education of some 80,000 Brazilians in university-
level institutions; 30 per cent goes for about 800,000 who never
get beyond the secondary level; and 10 per cent goes for 5,000,000
who complete elementary school only. With education so tailored
to the aristocratic elite, the practical fields of study command less
popularity and resources.
Engineering and economics are emerging as increasingly popular
and respected fields of study, but law still predominates. About 20
per cent of Brazil's university graduates in 1957 held law degrees,
as compared to 2V2 per cent in the United States.8 On the other
hand, 35 per cent of the United States managers surveyed held
engineering degrees; 27 per cent held degrees in business admin-
istration; 17 per cent in liberal arts; and only 2 per cent in law.
To the extent that one's education either reflects or influences his
interests, the United States manager is obviously more absorbed in
the affairs of business than his Brazilian counterpart.



Management philosophy.-As in all of Latin America, there is
a paternalistic and patriarchal quality to Brazilian management
leadership. Brazilian culture was heavily influenced by the planta-
tion system which was basic to the economic and political struc-
ture of the country until the beginning of the twentieth century,
and which still dominates the northeast states. The semifeudal
plantation system was thoroughly patriarchal, with the ruling family
assuming a paternalistic responsibility toward its tenant-employees.
Although strong economic barriers existed between owner and
worker, there were no hard social gradations like those prevalent
in Spanish America, or even like those in southern United States.
The worker identified himself not with the physical property to
which he was attached, but with the patriarchal property owner
to whom he was a ward.
This cultural heritage is evident in the employer-employee rela-
tions among Brazilians. The Brazilian top manager does not, like the
United States manager in his midst, invite middle management par-
ticipation in decision-making. He is highly suspicious of merit
rating and wage systems in which reward is tied to measurable out-
put. Nor does he vigorously emphasize training, development, and
upgrading, which enable the worker to pass from a lower to a higher
status. As an economic decision-maker, he views labor as having a
fixed capacity to produce. He feels that total labor costs are mini-
mized by paying the lowest possible wage, which is usually the legal
minimum wage. If output is insufficient, one simply hires more
workers at the minimum rate.
This same reasoning carries over into the industrialist's policies
in dealing with his subordinate managers. Some managerial em-
ployees insist that they cannot live on the low salaries they are paid.
Their employers agree that this is true and therefore permit them
to work for other employers simultaneously. One does not change
jobs in Brazil; one accumulates them. By sanctioning this practice,
the Brazilian employer fosters a system in which several part-time
employees are hired to do one full-time job, and the benefits of
specialization are partially foregone.
In their operations in the United States, many American firms
have some executive personnel who serve as members of the boards
of directors of other companies, and others who partly own outside
firms. Few United States companies tolerate outside interests when
there is any risk of conflict, or when the outside interest interferes
in any way with the employee's execution of his responsibilities.



The prevalent philosophy is that the employing firm contracts for
the full productive time of its employees and that managerial per-
sonnel are kept too busy to engage in outside business activities.
United States firms in Brazil also insist on full-time employment
for their managerial employees, and middle management employees,
including those at the division and branch level, are expected to
have even less time for other business activities. Most United States
employers feel that getting their Brazilian managerial employees to
accept this policy is not difficult. Also, in contrast to his Brazilian
counterpart, the United States manager sees labor as more variable
in output, with minimum total cost being achieved by paying a
high wage, rewarding individuals in proportion to their productivity,
and employing fewer of them.
Some Brazilian and United States managers, particularly those in
partnership, believe that Brazilian managers will more readily em-
ploy a man whose qualifications for a job are questionable and will
keep him on the payroll longer after his usefulness has ceased. Once
on the payroll, however, he is treated more as a ward by his Bra-
zilian employers than as an economic partner. The United States
manager, in contrast, is more selective in hiring a new employee,
treats the employee more as a responsible team member, and is
correspondingly less disposed to tolerate substandard performance.
Some Brazilian industrialists have defended their management
philosophy by arguing that Brazilian workers, much more than
United States workers, distrust merit rating and prefer that all em-
ployees be treated alike. Brazilian law has attempted to solidify
this by requiring equal pay for equal work. Furthermore, Brazilian
industrialists argue that their philosophy is more humane. The em-
ployer should hire as many workers as possible, because providing
employment is a responsibility of the property owner. To the United
States employer this practice is neither humane nor efficient, for in
practice it yields equal pay for unequal work, which is neither just
nor effective. These contrasting practices are largely a matter of
degree, and are not entirely based on ideologies, but partly on what
United States and Brazilian managers believe to be efficient and
expedient. Although the policy of paying higher wages for fewer
workers (which in the United States has yielded more employment
and a higher standard of living) has not been fully accepted by
Brazilian management, in practice wages are increasingly being tied
to productivity.
In order to reward the employee who makes the larger contribu-



tion, both Brazilian and United States employers in Brazil create
separate jobs, whenever practicable, with different job descriptions
for essentially the same function, thereby beclouding a precise
comparison of the two jobs.
Those United States managers who have succeeded in rewarding
good performance, particularly in skilled and managerial positions,
contend that the Brazilian employee does not distrust being judged
and rewarded for merit. Rather he tends to become a more satisfied,
responsive, and productive employee who does not feel unjustly
penalized for the inefficiency of his fellow employees.
Employee relations. -Interviews with United States managers in
Brazil generally revealed that they are good employers. They pro-
vide good working conditions and opportunities for training, de-
velopment, and advancement. American firms tend to be innovators,
introducing into Brazil special employee benefits which Brazilian
legislation does not require, but which are standard policy in the
United States. Finally, the United States employer treats his em-
ployees with dignity and respect, and he pays them well. A number
of Brazilian ultranationalist labor leaders have conceded privately
that United States employers are among the best in Brazil.
When their corporate citizenship in Brazil is challenged, as it
frequently is, United States managers hasten to point with pride to
their good employee relations. Very probably they are among the
country's best employers. Their labor turnover appears to compare
favorably with locally owned firms. Most United States firms have
long lists of applicants waiting for an opening. Skilled employees
who have left jobs with United States firms regard their association
with these firms as a salable asset.
Yet, while United States managers cite these facts as evidence of
good citizenship, Brazilian employers do not readily admit to being
second-rate employers. And Brazilian employees of United States
firms seldom speak forcefully of their satisfaction with their em-
ployer. To do so smacks of entreguismo. Entreguismo means the
delivery of one's country into the hands of its foreign exploiters.
An entreguista would sacrifice his country's well-being for personal
gain. Being an entreguista, like being a lackey of the Yankees, bears
a powerful social stigma.
Brazilian professional managers as well as Brazilian workers are
troubled by their relationships with United States businessmen.
Many of them, potentially Brazil's most valuable economic asset,
are managerial employees of United States firms. Like Brazilian



employees at the worker level, they view their association with
United States firms as a marketable asset. As managers, however, they
sometimes have a difficult role to play. They feel obliged to demon-
strate a measure of loyalty-which many doubtless sincerely feel-
toward their foreign managerial associates, and to side with them
in dealings with labor, government, and public opinion. Yet, being
Brazilians, they sometimes find themselves in the unpleasant posi-
tion of defending those who are allegedly exploiting their country.
This is particularly difficult when anti-American feeling is running
The ambivalent attitudes which national and foreign "partners"
in Latin American industry have toward one another make accurate
appraisal of their relationship difficult. Studies designed to deter-
mine attitudes have not been sufficiently systematic and thorough.
Yet we do know that in an opinion survey conducted in 1958 a
remarkably large portion of the Brazilian population, in varying age
groups, geographical location, educational level, and economic
status, had a clear understanding of the meaning of entreguismo.
In the Opinion Research Corporation's survey in 1959 of some
700 West European employees, American employers received a high
rating, but mostly for the wages they paid.9 Although we may
assume that those characteristics of American operations which
create a favorable image in one part of the world are also present
elsewhere, the applicability of stateside personnel employment poli-
cies, and their impact on other cultures, particularly given the
Brazilian's feelings concerning entreguismo, may alter their effect.
In a survey conducted by a hired research team whose employer
was not disclosed to the employees, one United States firm in Brazil
found employees preferred working for United States supervisors
rather than for Brazilians. A later survey showed, however, that this
preference occurred largely because the Americans were in top man-
agement and advancement depended on catching their attention.
Communication.-Managers the world over are occasionally ac-
cused of being oblivious to the state of mind of their workers.
They tend to concentrate more on what their supervisors are think-
ing than on what their subordinates feel. Only when a serious
breach of normality occurs does the employer think his employees
might be discontent. United States managers in Brazil probably are
less cognizant of what is on the worker's mind than are their state-
side counterparts. First-line supervision is in the hands of Brazilians.
Thus, the United States manager communicates with workers at



second hand. The imperfection of this communication is aggravated
by the Brazilian's greater disposition to tell his supervisor what he
believes the supervisor wants to hear, particularly when the alterna-
tive is unpleasant. While this common Latin practice is a charming
quality of a courteous and hospitable people, it does not promote
effective communication. Communication among Brazilians is supe-
rior to that between Brazilians and Americans. By employing Brazil-
ians in first-line supervision, United States managers obtain good
communication at lower levels, but at the same time they reduce
effective communication between higher management and the
Labor and management.-The United States manager in Brazil
finds an environment in which the interests of labor are supposedly
protected by government through legislation, but in which unions
are relatively weak, except as a political force. Weak union mem-
bership results in minimum competition for the employee's allegi-
ance. Brazilian unions are supported by a tax collected by the
federal government, which controls them to a great extent. Although
the law permits collective bargaining, little of it is practiced. Work-
ers do not view their government-sponsored and sometimes
Communist-dominated unions as agencies to promote their interests.
In contrast to other parts of Latin America, there are no shop
stewards of the United States variety in Brazilian industry, and
correspondingly there are no labor and industrial relations officers.
Many United States managers are enthusiastic about this situation
and point to the greater ease of enlisting cooperation from em-
ployees. Other United States managers in Brazil do not agree, point-
ing out that the absence of effective unionism poses problems for
management. Labor union membership is heavily infiltrated by Com-
munist sympathizers even though unions are government-sponsored
and the Communist party is outlawed. While they seldom voice the
collective opinion of their members, Brazil's unions, like their
Spanish-American counterparts, make themselves heard as a distinct
political force. Union leaders are loath to sit with management at
the bargaining table and discuss problems of mutual concern, pre-
ferring to go to the press-often with misquotes and false charges
against the "foreign trusts."
Despite the fact that the manager in the United States is con-
tinually preoccupied with labor unions, he recognizes that as collec-
tive spokesmen for workers they perform a useful communication
function for management. Brazilian union leadership, which does



not adequately represent the worker in dealing with management,
lacks this useful feature.
Although unions do not interfere significantly with management's
rule-making powers, government does. The architects of Brazil's
labor laws prided themselves on social legislation which they called
"one of the most advanced in the world." By restricting manage-
ment's freedom to establish wage differentials and to discharge em-
ployees, Brazilian law ostensibly protects workers from discrimina-
tory and arbitrary treatment and provides them with guaranteed
job security.
In practice, this legislation tends to aggravate what it sought to
alleviate. The effect of Brazil's Indemnification Law-which makes
discharging an employee with ten years' seniority most difficult and
costly-is to induce many managements to discharge and some-
times to rehire employees just prior to their tenth year of service.
Most United States managers in Brazil invariably refer to the In-
demnification Law as one of the most undesirable features of Brazil-
ian labor legislation. Yet most argue that, although it is not in the
interests of the worker, it is not difficult for the employer to live
with it. The law does, however, limit management's freedom to
enlist optimum worker contribution to company objectives through
reward for merit and the promise of long-term career development
-features which are basic to United States management philosophy.
United States managers in Brazil are under less compulsion to
probe the attitudes of their workers than they are in the United
States. In the absence of effective union leadership, there is little
collective harassment by labor. Enlisting the allegiance of workers
is easier, and motivating employees, most United States managers
agree, is not difficult. Thus, although skills are in short supply,
labor troubles are not a serious problem to United States managers
in Brazil. In contrast, the Brazilian employer views labor as a serious
problem. This is partly due to his unfamiliarity with encroachment
upon management's rule-making authority by really effective union
leadership and his unawareness of the character of real labor prob-
lems. It is also partly due, United States managers feel, to the
elementary stage of development of Brazilian managerial arts. Al-
though highly skilled and knowledgeable Brazilian managers do
exist, their numbers are small. Few are professional managers; some
are paternalistic and authoritarian members of the owning family
class, and they are loath to accept responsibility for their workers'
low productivity.



While the United States manager is probably less aware of the
state of mind of his employees than he would be at home, he prob-
ably knows it almost as well as his fellow Brazilian industrialist.
The United States manager's understanding and responsiveness
are undoubtedly responsible for much of the good employee-
management relations which prevail among United States sub-
sidiaries in Brazil. Other contributing factors, as suggested before,
are superior working conditions, higher pay, and special benefits.
Some observers criticize United States managers for their failure
to call the attention of their employees and the larger community to
these superior conditions. But this is difficult to do. If the employer
is excessively vocal, both the employees and the community will
react negatively. Employees who leave a firm are likely to be the
most dissatisfied and they would deny the employer's claims. Work-
ers who remain would probably react unfavorably to repeated claims
that theirs is an enviable state.
Contrasting cultures.-As suggested, the United States manager's
contact with the Brazilian owner-manager is mostly outside the
subsidiary, and it is here that their contrasting cultures, motives,
and managerial philosophies confront each other most forcibly.
Focusing on the Brazilian manager's values will help explain the
contrasts between the two groups.
Brazil is Latin America's most rapidly industrializing nation. By
and large it is proud of this. Other Latin American nations, how-
ever, appear to view Brazil's mid-twentieth-century metamorphosis
with a measure of contempt, and they regard her as a crass, uncul-
tured, upstart cousin. Other Latin American nations, some ob-
servers have felt, have had a more identifiable culture-originating
in Europe but uniquely Spanish-American and generally superior.
Young Brazil was not so sure of itself as other Latin American
nations. Its aristocratic class, until recently, identified with the arts
and letters of Europe. Rather than contributing to Brazilian culture
it tended to discredit it. As Gilberto Freyre, Brazil's best known
sociologist, suggests, they were in but not of Brazil. Whereas Spanish
America was proud of its own culture (and proud of its pride),
Brazil was diffident. Its emerging, unique culture, which has re-
cently been identified and brilliantly extolled by Freyre and others,
was not cherished and nourished by its own intelligentsia, but was
largely ignored.
Like the post-Civil War United States, Brazil was viewed as an
inferior by her "cultured and mature" neighbors. Their occasional



references to the amorphous and "mongrel" society of Brazil un-
doubtedly would have hurt the sensitive Brazilian. However, direct
insults were rather infrequent because Latin American nations
seldom have bothered with one another. But for their common
attitude toward the United States, there is little consort among
Latin American nations.
Modern Brazil is proud of its industrial achievements and the
fiercely modern architecture of its cities. Diffidence has been re-
placed by an emerging self-awareness, and this has stimulated strong
nationalist sentiment. Although Brazil has gained much self-
confidence through its burgeoning industrial activity, it views its own
economic course with mixed feelings. The older, agrarian Brazil is
not sure that the industrial South is really part of Brazil, just as
some citizens in the western United States are not sure that New
York is really part of the United States of America. Even Paulistas
(citizens of SAo Paulo) view with some misgivings the enthusiastic
claim that Sao Paulo is the Chicago of South America.
The successful professional businessman is still highly respected
in North American culture, and the United States manager in
Brazil is a product of his culture. Many of Brazil's wealthier in-
dustrial leaders-among whom he moves, with whom he negotiates,
trades, and enters into partnership-share his business interest, but
they tend to lack his singleness of interest. As members of the
family owner-manager class, they have a patriarchal view of their
business properties. They take their business obligations seriously,
but feel that their stature as leaders of society is more effectively
promoted through politics.
In their presence, the United States manager appears narrow,
overspecialized, and much less aristocratic. As young men, aristo-
cratic Brazilians are prepared for more exalted roles. Most of them
study law or medicine-both fields being viewed as the nobler,
more aristocratic disciplines-and either field is somehow considered
as proper preparation for a career in almost any area, including
By his Brazilian owner-manager associates, the American is re-
garded as an excessively single-minded fellow, a bit harried and not
sufficiently interested in the arts. One is often asked why United
States sends this sort of person to Brazil. Brazilian-American rela-
tions would be better served, they argue, if the United States were
more selective. While the complaint may have merit as it applies
to United States diplomatic personnel in Brazil, it is moot in its


applicability to United States businessmen. It is not the United
States that sends businessmen to Brazil; private business sends them,
and it chooses them according to professional and economic criteria.
Regardless of their relative cultural qualifications, which may very
well suffer by comparison with Brazil's owner-manager class, the
basic economic interests of Brazil and the United States are better
promoted by the use of technological, administrative, and economic
criteria in selecting United States businessmen for service in Latin
While the governments of Latin America's major industrializing
nations have sought to attract foreign industry, both the Latin
American citizen and his government have an ambivalent attitude
toward foreign firms. The United States manager in Brazil is kept
continually aware that the desirability of his presence is debated.
The intellectual Latin challenges the foreign presence either be-
cause it is private and-more important-because it is from the
United States, or because of its impact on the Brazilian economy.
Prevalent arguments are that foreign firms produce cosmetics, soft
drinks, portable radios, and breakfast cereals, and thus divert na-
tional resources from needed basic industry. Through sales pro-
motion and easy credit practices, they increase the already insatiable
consumer demand for consumption goods and thereby add to an
unmanageable inflation rate. Through their exchange operations they
complicate the balance of payments and other problems. The far
left opposes the foreign presence because it is the principal repre-
sentative of capitalism, because it is from the United States, and
because Communism in Latin America has nothing to gain from
industrial progress which is achieved under non-Communist leader-
To the Brazilian people as a whole, foreign industrial presence
is more or less accepted, except for its exportation of profits. In the
opinion survey of 1958 mentioned earlier, the exportation of prof-
its was revealed to be almost synonymous with exploitation in the
minds of Brazilians of all economic levels and age groups. They
did not object to the profits or even to high profits, for Brazilians,
like most Latins, are accustomed to high profits. They object to the
exportation of profits per se. It seems curious that although a re-
ceptive attitude toward foreign capital exists, Brazilians should also
object to the exportation of profits. Such attitudes seem incredible
to foreign managers who see the making and remitting of profit as
a major corporate objective. They cannot understand this as a charge


of exploitation. Like their Latin American counterparts, they are
disturbed that their contribution to the general economic well-being
is not appreciated.
The environment in which the United States manager in Latin
America functions contrasts strongly with that of his stateside
counterparts. His business philosophy contrasts even more strongly
with that of his fellow Latin American industrialists. And yet, in
spite of their contrasting attitudes and sometimes conflicting in-
terests, they manage to negotiate, compromise, and trade, and to-
gether to allocate and utilize national resources with remarkable
success. As nations progress economically, they do not become
economically independent. On the contrary, the more advanced a
nation becomes, the more it becomes interdependent upon its ad-
vanced neighbors. Latin America will become more rather than
less dependent upon foreign industry as it achieves industrial prog-
ress. It will almost certainly become more dependent on imported
industrial leaders. As the pace of technological innovation accel-
erates, greater interdependence between nations and greater depend-
ence upon world enterprise will result. The extent to which
peaceful and progressive change takes place in Latin America is
dependent in a large way on the continued successful collaboration
of these two groups of industrial leaders.

1. Part of the material in this section is adapted from a book published
in 1964 by the Bureau of Business and Economic Research, Michigan State
University, under the title: International Enterprise in a Developing Econ-
omy by Claude McMillan and Richard F. Gonzalez.
2. United States-Latin American Relations, U.S. Senate Committee on
Foreign Relations Publication No. 6 (Washington, D.C., March, 1960).
3. Burton R. Fisher and Stephen B. Withey, Big Business From the View-
point of the Public, Survey Research Center Publication Series (Ann Arbor,
Michigan, 1951).
4. The End of Ideology (Glencoe, Ill.: Free Press, 1960).
5. Journeys Toward Progress (New York: Twentieth Century Fund,
1963), especially Chap. 4.
6. Political Change in Latin America: The Emergence of the Middle Sec-
tors (Stanford: Stanford University Press, 1958).
7. Henry G. Aubrey, "Deliberate Industrialization," in Lyle W. Shannon,
Underdeveloped Areas (New York: Harper & Brothers, 1957), p. 262.
8. Statistical Abstract of the United States, 1959 (Washington: United
States Bureau of Census, 1959), p. 129; Annuario Estatistico de Brasil,
1959 (Rio de Janeiro: Instituto Brasiliero de Geografia e Estatistica, 1960),
p. 354.
9. Business Week, October 10, 1959, p. 109.


With the collaboration of HERNAN CASTILLO and MARIO VALLEJOS

Common Management Strategies in
Industrial Relations-- Peru

W hat strategies do Latin American executives devise for han-
dling their union-management relations? And how do these strate-
gies work out in practice? These and related questions were posed
during a fourteen-month field study of "Human Problems of In-
dustrial Development" in Peru.1* Although this paper concentrates
mainly upon the Peruvian situation, it offers some suggestions in
the conclusion concerning Peru's position in a general Latin Ameri-
can pattern.
With four Peruvian assistants, I carried out a series of field
studies in several industrial plants. Limiting ourselves almost ex-
clusively to national or Peruvian firms, we began our research in
the Lima-Callao metropolitan area, where three-quarters of the
country's manufacturing is concentrated. After briefly studying
fifteen very small concerns which were hardly beyond the artisan
stage, we launched into more intensive studies of six large plants
in a variety of industries. With this background experience, we
then made brief field trips to five provincial cities to interview other
union and management leaders.
The report which follows is based upon these case studies.
Limited as we were by the necessity of winning management and
union acceptance, we cannot claim that we studied a representative
sample of Peruvian industry. Nevertheless, we did secure a wide
range of industries in our sample, with the best data coming from
plants in two old industries (textiles and breweries) and plants in
two new ones (fish meal and steel).
Let us first place Peruvian industry in the perspective of its
economic environment. Like other developing countries, Peru's
*Textual notes appear at end of chapter.


population is still predominantly engaged in agriculture. The Banco
Central de Reserva in 1958 gave the following distribution of the
economically active population:2
Agriculture ..............................6..... 60.2%
Mining ........................................... 1.8
Manufacturing ..................................9.0
Services ..................................... .... 3.8
Commerce ..................... 5.1
Government ................................... 3.5
Various ......................................... 6.2
Agriculture in Peru may be divided into two quite distinct areas.
Along the coast are found most of the commercial farms, particu-
larly sugar cane and cotton, which provide agricultural wage em-
ployment and contribute heavily to the value of Peru's exports. In
the rural areas of the sierra, where the indigenous population lives
under semifeudal conditions, a subsistence economy persists. This
sector produces little surplus and buys little from the national
market. In fact, it has been estimated by various authorities that
only about 3.5 million of Peru's population of almost 11 million
participate actively in the national market.
In recent years Peru has experienced quite uneven growth rates.
Through the 1950's, the gross national product rose an average of
3.7 per cent per year, but the population growth reduced the net
gain to around 1 per cent per capital 3 In fact, agriculture in the
sierra has probably lost ground in relation to population growth
during this period. On the other hand, there has been a marked
industrial expansion. The percentage of the economically active
population employed in industry remained practically stationary be-
tween 1942 and 1956, but then rose from 17.5 to 19.1 per cent
in 1959.4 This employment shift is probably continuing because
the Banco Industrial reported a gain in production of manufactur-
ing of 18.4 per cent from 1959 to 1960, and of 8.1 per cent
from 1960 to 1961.5 Many hoped that the passage in 1960 of
the Law of Industrial Promotion, with tax concessions and other
inducements for investment, would further stimulate this growth.
Although the industrial growth rate appears promising, indus-
trialists in Peru are acutely conscious of the barriers to expansion
imposed by the limited buying power of the population. Unless and
until the sierra, where about 60 per cent of the people live, is turned
into a productive and consuming segment of the economy, indus-


trialists are inclined to think in terms of immediate profits rather
than in terms of long-term expansion.
Before examining industrial relations at the plant level, we need
as background answers to several questions: Who are the manage-
ment men? What are the characteristics of unions and union
leaders? What role is played by government?
Management men.-We made no systematic study of the social
origins, educational background, and other characteristics of in-
dustrial managers in Peru. Consequently, what follows is neces-
sarily impressionistic, but it is based upon the cases in our field
study and reinforced by extensive discussions with management
One impressive fact is the scarcity of Peruvian entrepreneurs in
industry. A large part of the industrial activity in the country is
carried out by foreign concerns. Of the Peruvians who have founded
industrial enterprises, a large proportion are immigrants or sons of
immigrants. The Peruvian entrepreneur, coming from several gen-
erations of Peruvians, indeed does exist, but is quite rare.
Members of the Peruvian upper class have been concerned tra-
ditionally with agriculture, not industry. There is some evidence
that this situation is changing. For example, studies of career choices
of present high school seniors show that many of the children of
the elite are expecting to go into industry. However, there is as
yet little evidence that the growth of the entrepreneurial values is
firmly embedded in Peruvian culture.
As a result, although our study concentrated almost exclusively
on Peruvian concerns, we must note the strong influence of foreign
concerns in industrial relations. Peruvian managers are inclined to
feel that the American and British firms are more advanced in the
development of personnel management and industrial relations, and
there is a strong tendency to look for guidance to industrial rela-
tions experts in their companies, particularly during crises. Al-
though practices of foreign concerns are not accepted and copied
unquestionably, nevertheless they do exert a strong general influence
on local practices.
The role of the personnel man in Peruvian industry.-Although
the situation varies from firm to firm, in general even where the
specialized personnel function exists, mainly in larger firms, there
is considerable doubt about how it should be defined. Is the per-
sonnel manager primarily a recordkeeper? Is he a lawyer equipped
to deal with government on labor matters? Is he a social worker


who oversees the welfare of workers within the limit of the com-
pany's budget? Or is he a specialist in industrial relations? All these
roles are found in Peruvian industry. Although there is certainly
a trend toward role specialization in industrial relations, in most
Peruvian firms the personnel man clearly has little to do with union-
management relations and may not participate in the bargaining
at all.
Although the beginnings of the labor union movement in Peru
date back to the late nineteenth century, unions began to play an
important role on the national scene with the struggle for the eight-
hour day, which was won by political demonstrations and finally
by legislation in 1919. Some leaders of this movement, including
Haya de la Torre, founded the American Popular Revolutionary
Movement (APRA) a few years later. Since that time, the history
of the union movement has been inextricably intertwined with the
stormy history of this party.
This has meant that when dictatorial governments came to power
and outlawed APRA, the union movement also suffered the effects
of suppression. Prominent union leaders were jailed or forced into
exile, and union activities were restricted by government surveil-
lance and control. The period since 1956, when Manuel Prado
became president with APRA support, has been one of freedom for
union activities. Nevertheless, alternating periods of suppression and
freedom have adversely affected the development of unions and
union leadership in the country.
The Peruvian Confederation of Labor (CTP) has been dom-
inated by APRA-minded leaders since the launching of that party.
Yet there have always been internal political divisions, and now
there is evidence that APRA control is weakening. There are federa-
tions with left-wing leaders within the confederation and others
outside it. Many union locals are split along political lines.
Finances are a constant problem for the CTP and for its con-
stituent federal unions. The checkoff of union dues is rarely found,
and much effort is expended in collecting the minimum funds
necessary to keep the union alive. The local union receives little
help from the federation office. In the way of specialized knowl-
edge, the most it can hope for is the occasional service of a legal
counsel. Other specialists, such as industrial engineers and research
economists, are unknown.



A source of union strength not always present in other Latin
American countries is that a given body of workers is represented
by only one union-as in the United States.
There are important differences among organizations and within
regions in the closeness of ties between a local and its federation.
In some cases, the city or regional organization seems to carry much
more weight than federation membership. For example, a manu-
facturer in Cuzco told us that, if his plant were struck, within three
days all the workers in all the unions of Cuzco would be on strike.
Such city general strikes have occurred in Cuzco and in other cities.

The role of the Peruvian government in industrial relations pre-
sents us with an apparent paradox. Through most of its history,
Peru has been dominated by conservative governments, and yet
much labor and social security legislation opposed by industrial
management people has been passed. The explanation seems to be
that the controlling national hierarchy has been predominantly
oriented to agriculture and not to industry. It has thus been in a
position to satisfy the demands of the masses of industrial workers
for labor and social security legislation without hurting itself. This
is apparent even in the latest constitutional government of President
Manuel Prado, a member of one of the leading families of Peru.
Supported by APRA, the Prado government in 1961 passed a law
extending the blue-collar workers' paid vacation from two weeks
to one month to match the period already specified for white-collar
workers. According to my management informants, this law was
passed with little or no opportunity for them to express their
As is characteristic of most Latin American countries, the Min-
istry of Labor is heavily involved in dispute settlements. Many cases
are mediated in the central or regional offices of the Ministry. When
mediation fails, and there is sufficient public clamor, the Ministry,
in one way or another, dictates the terms of the settlement. Does
the involvement of the Labor Ministry tend to favor the side of
management or of the union? Union leaders at the local level claim
that the Ministry favors management, while many managers claim
that it tends to favor the unions.
Which claim is correct? Clearly, a systematic answer to that
question is beyond the scope of our study, but I can present one
hypothesis that may help to provide background for our analysis of



union-management relations. Paradoxical as it may seem, both
parties may be correct in their claims that the Ministry favors their
opponents. The simplest explanation of the paradox is to say that
who is right depends upon which government is in power. This is
certainly true to some extent. Yet recently under President Prado,
who heads an essentially conservative government in alliance with
APRA, the APRA-dominated unions supported the government. It was
during this period that I came to the conclusion that both parties'
claims might be correct. To provide an explanation, we must dis-
tinguish between the Ministry's day-to-day dealings with affairs and
its dealings with crises. Management people may well have the
advantage in day-to-day dealings with the Ministry. The companies
have both the expertise and personal influence in the Ministry,
whereas the unions generally are lacking both specialists to repre-
sent them and the necessary funds for effective work.
The situation may be quite different during strikes which receive
widespread public attention. Here the pressures on Ministry officials
may be so great as to push them to settle the strike at all costs, with
the result that managers are well supplied with horror stories of
settlements in which the Ministry dictated the terms.
Although we have little systematic evidence to support this hy-
pothesis, at least we have a plausible explanation for the disorder
that has marked the industrial relations scene in Peru in recent
years. If union leaders become convinced, rightly or wrongly, that
they can make little headway in direct negotiations with manage-
ment or in handling their cases with labor inspectors and other
Ministry officials, but that they can make gains through strikes, the
natural outcome will be an increasing tendency to resort to strikes.
This general background provides the setting for the cases we
are to examine. In considering management strategy in these cases,
we must ask what management is trying to achieve. In Peru, as
elsewhere, various managements pursue a variety of objectives, yet
we can say that all managements are seeking the answers to two
basic questions.
1. How can management achieve stability in industrial rela-
tions? By stability I do not mean a static equilibrium. Peru is a
country in the midst of rapid social and economic changes. We can
only think in terms of a moving equilibrium, in which changes take
place within an orderly framework. During my period of investi-


gation, industrial relations seemed to be marked by disorganization
and disorder.
2. How can the companies accelerate technological progress in
their industrial plants? I am sometimes asked whether unions in
Peru have the effect of pushing wages up too fast, thus slowing
down economic progress. That seems to me a false issue. Wages are
low, even when we take into consideration the immediate monetary
value of fringe benefits, which constitute a much higher proportion
of the wage bill than they do in the United States. The basic labor
problem for management is not pressure on wages but rather pres-
sures toward rigidity in the management of the labor force. Many
managers feel that the unions exert a braking effect upon economic
progress because they seek to prevent them from discharging or trans-
ferring workers who may be displaced by technological advances.
Management people have no uniform answers to these questions.
In fact, we were impressed by the varieties of union-management
relationships we observed. However, we can make no progress if
we assume that each case is unique. We can present five types of
relationships that seem to cover reasonably well the cases studied,
even though some cases appear to have elements of more than one
type. Ordering the cases in this way seems to advance our knowl-
edge at this exploratory stage. The types can be given these names:
(1) Control through personal favors; (2) Paternalism: control
through general good works; (3) The union dominated by the
company; (4) The company dominated by the union; (5) Nego-
tiating the exchange of values.
Control through personal favors.-In this situation, it is the aim
of management to control the union by distributing favors to union
leaders. We did not observe any current case in which we could
be certain that this kind of policy was in effect. Naturally, manage-
ment and union leaders would be reluctant to provide corroborating
information. Nevertheless, one of the cases we studied most inten-
sively was a plant in which such a policy had been in effect only
a few years earlier, and we secured full information concerning its
past practices from the successors to the plant manager who had
originally granted favors to union officials.
The former manager in this case had in his pay a union leader
representing each political faction. The responsibility of each of
these local leaders was to keep the manager informed about what

was going on in each political faction. These men also received
more than the regular pay for their jobs and had few work require-
ments. The manager was especially generous in granting them ad-
vances in pay and in forgetting these advances when they were not
repaid. At the time, there was no orderly payment system or system
of worker rights within the plant. Everything seemed to depend
upon the manager's personal judgment. He himself was a very
sociable individual who spent much time going from department
to department in the plant talking with his workers. So successful
was his personal approach that he was popular with the workers
even though it was widely known that he was favoring some union
What were the fruits of this policy? To answer the question, we
must distinguish between the short run and the long run. In the
short run, the manager was successful in his maneuvering. He en-
countered no major difficulties with the union. On the other hand,
it must be acknowledged that he served through a period of pros-
perity for his industry, so that he was able to provide some general
improvements for the work force at the same time that he took
much better care of the leaders than of the rank and file. In the
long run, the results did not appear to be so favorable. One result
of this policy, of course, was the existence of widespread inequities
in wage payments. In fact, it would be hard to say that the plant at
this time had any real system of wage administration, at least inso-
far as job responsibilities and skills were concerned. This naturally
caused a good deal of dissatisfaction. Another important result was
a lack of faith on the part of union members in their union leaders.
This lack of faith persisted under a new administration of the plant,
even though the policy of favoring union leaders as individuals had
been eliminated. In fact, the union's chief officer's pay had been re-
duced by 1,600 soles a month (approximately $60, which is an
enormous sum in Peru) to bring him more closely in line with the
salary in comparable jobs (although he still received more than
workers on the same job), and now he is required really to do some
work. Interestingly enough, the new managers were able to engi-
neer changes of this nature without provoking any explosions within
the union. Apparently the men most directly affected felt vulnerable
because of past favoritism. Nevertheless, the workers' suspicion of
the union leaders did not disappear, and during the period of our
observation, management had great difficulty in gaining acceptance
for a proposition that the union leaders themselves acknowledged


was eminently reasonable. The labor leaders were very apprehensive
about even presenting this proposition to the membership.
A second case was provided by the new head of industrial rela-
tions for a Peruvian company. He described a talk given at a meet-
ing by an expert from another Latin American country:
The expert had presented in a very systematic form all the ele-
ments of a personnel program, but he had not said anything
about relations with unions. During the question period, some-
one asked him his formula for getting along with unions. The
only thing he had to suggest was an idea about dealing with
union leaders: "You should give them certain incentives like
good jobs and rates of pay. You should get to know them well
and if, for example, the son of a union leader should need a
scholarship, you should give him something. The important thing
is to try to attract them. ." We have followed this policy
during this year, and it has given us very good results.
Thus we see the policy carried on in Peru, this time successfully.
But we should note that the reported results in this case cover only
one year of experience. The negative aspects of this policy, even
from managements point of view, can be expected to appear only
over the long run.
One further item of evidence about the possible prevalence of
this strategy was provided by the experience of a foreign plant man-
ager in a company which had recently been bought out by Peruvian
interests. In one of his early meetings with his new Board, one of
the Directors suggested to him, "Wouldn't it be a good idea if you
paid some of the union leaders a little extra money so they would
bring you information from time to time on what the union is
planning to do?" In this case, the manager declined to follow the
advice and therefore failed to provide us with a further example
of this type. Nevertheless, it is important to note that the sugges-
tion was offered quite casually as if it represented a policy widely
practiced and therefore deserving of consideration.
Paternalism: Control through general good works.-Under the
management policy that we call paternalism, as in the previous type,
management maintains the initiative in its relations with the union
leaders, but under paternalism the aim is to win the support of
workers through general good works: wages, working conditions,
and fringe benefits superior to those granted in other plants in the
surrounding area. Note that the policy is aimed at the workers in
general rather than at union leaders as individuals. We studied two



plants that would fit under this general heading, and we found that
the relationships achieved with the union were sharply contrasting.
Why these differences?
In the case of cooperation, the works manager called meetings
of the union leaders in his office regularly at least once a month and
also was freely available to them on their initiative. He used these
meetings as a means of informing the union leaders about the state
of the business and about any changes contemplated. The union
leaders reported to us that they felt free to express their own
opinions and to raise their own problems with the manager in these
The works manager also took the initiative in arranging for pay
increases. He customarily called a meeting with the union leaders
early each year, after he received the financial results for the previ-
ous year from his accounting department. He would then tell the
union leaders that the results of the previous year justified an in-
crease and that he proposed to pay, for example, 5 per cent across
the board and another 5 per cent to be distributed to workers on
a merit basis, according to the judgment of their supervisors. Ac-
cording to the general manager, the union leaders always accepted
his proposals and so did the rank and file. The union leaders them-
selves confirmed this statement. There has never been a strike in
this particular plant.
In this case, we were impressed particularly by the distribution
of increases according to merit, determined solely by the judgment
of the supervisors, and we wondered whether this did not create
problems between union and management and among workers. Our
interviews with the union leaders brought out no difficulties on this
point. Since this was one of the cases studied in a provincial city
where we had interviews only with management and union leaders,
we were not able to ascertain the rank-and-file reaction. We can
only say that there were no difficulties between labor and manage-
ment officials on this particular point.
The general manager also took the initiative in the field of fringe
benefits. When we visited his plant, he was discussing with the
union leaders a housing development in which the company would
make available land and would provide some kind of financial as-
sistance for worker housing. While the company was proposing to
contribute substantially to this development, we should note at least
that the union leaders were actively involved in discussion of plans.
The case in which we found intense conflict presented quite a


contrast. It was similar to the above case in that management paid
high salaries and offered generous fringe benefits. It differed in that
management sought at all costs to avoid any consultation with the
union. For example, at the time of our study, to the accompaniment
of much publicity, management had just opened a new worker
housing development. Not only had the union leaders never been
consulted regarding the project, but they were not represented in
the public ceremonies opening the project. In this case, the labor
leaders perceived the paternalistic policy as motivated by a desire to
undermine the union. They opposed management at every oppor-
tunity. The case was the most conflict-ridden of any we studied.
Shortly after I arrived in Peru, newspaper stories reported a pro-
longed sit-down strike in the plant, and accompanying expressions
of mutual recrimination. When we examined the case, less than a
year later, the union was at the point of striking again, this time
ostensibly to challenge management's right to name the supervisor
in a given department-a direct challenge to management pre-
rogatives. The union officers were also talking more broadly in
terms of codetermination.
While we cannot safely generalize from two cases, the prelimi-
nary evidence suggests that paternalism may at this time be a feasi-
ble policy for Peruvian management-provided the union is involved
in the implementation of the policy.
The union dominated by the company.-In this type, manage-
ment again holds the upper hand in its relations with the union.
But in contrast to the preceding two types, it is possible under
certain conditions for the company to dominate the union without
either buying union leaders or trying to buy the employees' good
will through paternalism. We observed four cases of this type. What
conditions did they have in common?
1. Low social status of the workers and low level of adaptation
to industrial and urban life. For a large proportion of the workers,
this was the first factory job or at least the first such job of any
duration. Compared to workers in the plant situations already ex-
amined, these workers had achieved a very low level of education.
They had come more or less directly from rural areas into factory
work. While the wages were low by our standards, these men were
receiving far more money than they ever had received before. A
number of them told our researchers frankly that they felt very
fortunate to have a factory job. Clearly they were not in a very
demanding frame of mind.


2. Isolation from the union movement. In each of the four cases,
the locals in question were independent unions-or company unions.
In fact, in one case, management had organized the union at a
time when there was a general unionization drive in the industry.
Management hired a consultant to give the workers a training course
in the nature of unions, what offices should be established, what
procedures should be followed, and so on. Furthermore, without
embarking on any elaborate scheme of benefits, management kept
wages just enough above the going rate for the industry to dis-
courage efforts at affiliation with the union movement.
3. Size, shift work, and organization problems. Other things
being equal, we can assume that the smaller the local unit, the
easier it is for management to retain control of the work force;
the larger the unit, the better chance for workers to build a strong
and cohesive organization. While the cases described for the first
two types involve plants of substantial size for Peru, running be-
tween 350 and 500 workers, one of the company-dominated unions
was very small, having only approximately 50 members. Another
had 85 workers, but the plant had a three-shift operation. The two
remaining cases involved plants of just over 200 workers each, but
here again the plants had a three-shift operation. In the latter three
cases, the union leaders had difficulty in assembling all the work
shifts at any one time. In situations of this type, the managers know
more about industrial relations and even about unions than do the
union leaders. The managers are able to maintain the initiative and
make concessions only as they see fit. In the cases studied, the firms
received very little pressure from the union.
This type of management policy seems to work under certain
conditions at present. If the union movement becomes better organ-
ized and more effective, thus reaching these plants, if the workers
become more adjusted to urban and industrial life, and if better-
educated workers come into the work force, we can expect manage-
ments to have increasing difficulty in maintaining this type of
The company dominated by the union.-We studied, with vary-
ing degrees of intensity, five cases that appear to fit into this type,
and we had data indicating that other cases might also fit. We shall
examine the two cases we know best, especially since they present
an interesting comparison between a very old plant and a very
new one.
The old plant had machines which dated back to the early years


of this century and seemed overdue for transfer to an industrial
museum. Furthermore, there was practically no new equipment in
the building. Since the founding of the plant before the turn of
the century, there had been no policy of replacing old machines
with new ones. The workers were also older than average and very
experienced in union activities. In fact, several union leaders of
national stature had risen out of this plant. Moreover, the union
local has played a prominent role in the history of its own federation
and in the history of the union movement in Peru.
At the time of our study, top management fully recognized that
this particular plant was an economic anachronism, and manage-
ment was not inclined to initiate the massive changes required to
modernize the plant. Instead, it was expanding its activities in
another plant built much more recently and equipped with fairly
modern machinery.
We found in the old plant the most stable social organization
that we encountered in all Peru. Since machines did not change,
neither did the jobs or job responsibilities. Furthermore, each worker
had come to look upon his machine as his personal property. He
referred to himself as the titular of the machine. The plant was
ruled by what Peruvians call the law of custom. The union vigor-
ously and successfully opposed any changes in work loads, work
methods, or personal assignments to machines. The works manager
had given up hope of introducing changes into the plant; and the
supervisors, though frustrated, could do nothing to regain the initia-
tive from the union.
Technologically, our second case is a striking contrast to the first.
Yet we find somewhat similar social results, at least in the locus of
power. The second case is represented by a series of interrelated
plants of the same company in an industry new to Peru. This in-
dustry requires of its managers and supervisors a high level of
technology and correspondingly a high level of engineering and
scientific knowledge.
When the company plunged into this completely new area, man-
agement developed elaborate plans to train and develop managers,
supervisors, and engineers in the engineering and technical aspects
of the industry. A foreign country supplied several hundred man-
agers, engineers, technicians, and even skilled workers to start pro-
duction. Even before the plants went into operation, a number of
Peruvians were being trained in the educational institutions of this
foreign country and in companies in the same industry. Other

Peruvians were being trained on the job. Within two years after
opening the plants, Peruvians had taken over all of the manage-
ment and engineering positions from the top down. There remained
only a small corps of technical advisers from the foreign country.
From this standpoint, the program was a great success. In fact,
I have never known of a management program in such a technical
industry in which such a complete change-over was accomplished
in so short a time. It is clearly beyond my competence to evaluate
the technical performance of the Peruvian managers and engineers,
but I can report that they spoke with confidence and pride regard-
ing the technical aspects of their performance and were happy to
point out that they were getting more production out of some of
the plants than the engineers who built them had estimated would
be possible-and they had done so by developing some of their
own technical innovations.
The systematic planning of technical training was counterbal-
anced by a complete absence of planning for personnel and indus-
trial relations. Management at the outset had not established any
rules of behavior for the plants and, when we were studying the
case, was still struggling with the task of getting the union to agree
to some plant rules. Although highly trained specialists were used
to establish the new industry, no expert guidance was sought in
the field of industrial relations. The industrial relations department
simply grew in response to problems and crises. The men we en-
countered on the job were intelligent and eager to learn but had
no training for the field.
Local management was also plagued by a problem of centraliza-
tion. Major decisions were made in a city several hundred miles
away-and tended at times to become embroiled in national politics.
The local managers sometimes found themselves agreeing with union
leaders on a given proposal, only to find themselves reversed at
headquarters. This resulted in great inconsistencies in industrial
relations policies.
In this case, management was facing a large and unruly work
force of approximately a thousand. While the workers did not have
the years of industrial experience of those in the older plants, they
were not fresh from the rural areas as in the situations of the union
dominated by the company. In fact, a large number had worked
on one or two construction projects before coming to work in the
plants. Nevertheless, considerable adaptation is required in moving
from a construction project to work in a factory. The workers and


management encountered many difficult problems of discipline that
generated ill feeling on both sides.
The problem came to a head in negotiations for a new contract.
The local managers thought they could reach agreement with the
union, but the top managers in the home office refused to accept
the kind of settlement that the men on the scene favored, and a
bitter strike developed. It endured for over a month, attracted nation-
wide attention, gave rise to union and political disturbances,
and resulted in a violent clash between police and demonstrators in
which several demonstrators were killed. The strike was disastrous
for management, especially since the settlement reached was on
almost the same terms that could have been reached in earlier
local negotiations.
The strike was disastrous for management in another respect,
because it completely took discipline of the workers out of the hands
of supervisors and line management. The system that evolved is
too complicated to describe here, but essentially it left the super-
visors only with the power to report infractions. The determination
of the penalty, if any, was left to a union-management committee
in which management was represented by members of the industrial
relations department. Situations arose, like the one we observed,
in which management began arguing for the discharge of a worker
and finally settled for a three-day suspension. It might be added
that the defendant in the case had a right to sit through the entire
proceedings and thus see for himself how vigorously the union
representatives defended him. As might be expected, the superin-
tendents and supervisors felt generally frustrated, believing that
they had no power to manage the plants. They told us that the
plant was seriously overstaffed. This had not come about through
faulty technical planning. It was simply that one experienced and
skilled worker could now do the work that had required two un-
skilled and inexperienced workers when the plants had been put
into operation. But what was to be done with the surplus personnel?
At this question, the managers threw up their hands in despair.
Against this background of experience, one might expect that
top management would now be pushing as fast as possible toward
organizing its industrial relations program and planning future ac-
tivities and policies. At least during the time of our research, this
was not the case. An executive said to me: '"We are now planning
our plant expansion and our production into the 1970's. We haven't
planned our industrial relations program for next month."



Dissimilar as these two cases are in technological organization,
they seem to have one important thing in common. In neither case
was any attention given to planning an industrial relations program
or to planning policies of union-management relations. In each
case, management simply responded to the industrial relations situa-
tion as it arose. In this respect, the only difference between the
two cases is that the condition of union domination that had grown
over the years in the old plant came to pass very rapidly in the
new industry when management planned a technological revolu-
tion and left the human aspects completely unplanned.
Negotiating the exchange of values.-In the three cases placed
under this heading, we find large and well-organized union locals
affiliated with labor federations facing managements that are also
well organized and have a highly developed collective bargaining
policy. In these three cases we see technological changes introduced
by management through the collective bargaining process.
In the first case, management wished to introduce a second and
third shift of workers in certain sections, thus saving on overtime
payments and gaining the benefits of increased efficiency that go
with a continuous process in this type of industry. It proposed this
change in general terms to union leaders. There followed a nine-
month process of discussion and negotiation, including a number
of meetings between the union leaders and the rank and file. Finally,
the parties arrived at a contract establishing the new system. What
were the values exchanged in this case?
The union gained these advantages. All of the immediate savings
to the company in the elimination of overtime payments and in-
creased efficiency were converted into higher basic salaries for the
workers. Thus the workers were earning as much as before but
working fewer hours, and their fringe benefits were based upon a
higher basic salary.
The management's gains were these. In the case of future wage
increases, management would not have to pay overtime based on an
increased hourly wage. In other words, although management gave
up the immediate overtime savings, the value of this saving would
increase as basic wages rose year after year on a regular hourly basis.
Management gained in a more immediate sense by being able under
the new system to establish better control over the process and
greater efficiency through elimination of certain abuses that had
grown up as a matter of custom.
The second case involved negotiating the per man work load with



the introduction of new machines. Both sides agreed to a combina-
tion of heavier work loads, increased wages, and reduction of
personnel, accomplished mainly through early retirement made pal-
atable by special concessions from management. All this was ac-
complished in three stages of negotiations over a twelve-year period.
Consequently, one of the oldest plants was transformed into one of
the most efficient in that industry. At the same time, the workers
who remained on the job gained increased pay and more effective
protection for their jobs in an industry that was growing steadily
more competitive.
In the third case, union leaders and management agreed on a
formula for sharing the gains of increased efficiency, on a case-to-
case basis. For example, if management proposed to introduce an
improvement that would enable two workers to do a job that had
been previously done by three, the immediate saving would be the
wages of the third worker. One-third of this saving was divided
between the two remaining workers, one-third went to management,
thus reducing costs directly, and the remaining third was divided
among the other workers in the same section. At the same time, the
displaced worker was transferred to other operations. It should be
added, however, that at one time when the market was poor, man-
agement was able to negotiate with the union for a substantial
reduction in the work force.
In this case, over an eight-year period, the wages of the workers
had risen more than 250 per cent, whereas the cost of the product
during that time had risen only a small fraction of this percentage.
The union leaders spoke very highly of management and of the plant
situation in general. The works manager told us flatly: "My friends
in management in this city think I am crazy, but I tell them I want
a strong union in my plant. I want a strong union so I can negotiate
our problems with the union leaders and know that any agreement
we reach will be effective with the rank and file." The managers
of the other two cases expressed themselves in somewhat similar
fashion. They seemed to take it for granted that negotiation was
an established part of plant life, and that this was the primary
means of adjusting their problems with workers.
Are these types peculiar to Peru or to Latin America? Or could
we find examples of each type in the United States?



Certainly we can find in the United States at least a few examples
to fit each of the Peruvian types. The more interesting question
deals with prevalence: Comparing the two countries, are there
significant differences in the proportions of cases falling into each
type? Lacking data from a systematic sample in either country, I
can only report impressions, but even these may help place the
Peruvian observations in perspective.
My first impression is that "control through personal favors" is
much more common in Peru than in the United States. If this is
true, it does not necessarily demonstrate the superior morality of
United States management and union leaders. In the period of or-
ganizing our mass production unions-a period through which Peru
is still going-many American firms used labor spies and dispersed
various forms of personal favors to allegedly influential workers to
gain the upper hand in dealings with unions. Now that unions are
firmly established, the personal favor approach seems little used.
Whatever their ethical standards, managers soon learn that there is
no sense in buying off a local union leader who cannot deliver the
support of the rank and file. Such payoffs are effective only in cases
in which the payee exercises dictatorial control and the reactions
of the rank and file are of little immediate relevance. In Peru we
still find managers bribing union leaders and then being disappointed
when they discover that they have not bought the rank and file
in the bargain.
Before leaving the discussion of the control through favors, we
should recognize the importance of the institutionalization of the
rights of the local union leader. This institutionalization has pro-
ceeded much farther in the United States than it has in Peru, and
some of the confusion and conflict in Peruvian industrial relations
seems to reflect this fact.
No one in Peru will publicly argue that it is legitimate for an
executive to buy the support of a union leader or for the union
leader to accept such a bribe. On the other hand, we observed many
situations in which it was impossible to distinguish between a right
and a personal favor. For example, suppose a union leader has a
job which allows him considerable freedom of movement around
the plant. Is this job his right, as a union leader, to enable him to
perform his legitimate union functions more effectively? Or is the
job given him as a favor, for which he is expected to render some
special service to management? Suppose he is granted time off the
job, with pay. How much of this is his right as a union leader?


How much represents a personal favor designed to make life easier
for him? Such questions can receive uniform answers only if man-
agement and union jointly evolve standards to specify the rights of
union leaders. This process of institutionalization has begun in Peru,
but it has not yet proceeded very far.
We have some company unions in the United States, but this type
is probably more common to Peru. In the United States, "paternal-
ism" tends to be found mainly in nonunion situations. When a
union does become established, this type of relationship generally
shifts into something else.
"The company dominated by the union" is probably quite rare
in the United States-except in cases of large international unions
dealing with small employers. In Peru this type of case can appar-
ently exist without the extreme imbalance of power.
Perhaps the most clear-cut difference between the countries is to
be found in "negotiating the exchange of values." This type is ex-
ceedingly common in the United States and might be considered
our classic collective bargaining model. In Peru it seems to be very
rare. Indeed, of the three cases I have presented, only one can be
called authentically Peruvian. One plant was included in the study
because the union-management relationship was especially interest-
ing, even though the plant manager was a foreigner and the plant
a part of the foreign company. In the second case, the plant was
Peruvian-owned but only recently bought from foreign interests,
and the key managers who negotiated the agreement described were
of foreign extraction.
Why should negotiating exchange of values be rare in Peruvian
industrial relations? This type of situation is based on recognition
of equality in power between the two parties. This recognition of
a power balance makes possible the exchange we call bargaining.
The concept of a power balance seems foreign to Peruvian culture
and experience. Traditionally power has been heavily concentrated
at the top of the society, with those of lower economic and social
status expected to accept the authority of their superiors. However,
acceptance has never been automatic. Superiors have held their
power through a variety of strategies-personal favors, paternalism,
and coercion. These strategies have been carried over onto the in-
dustrial scene and are represented in three of our types.
When these strategies fail and management no longer has pre-
ponderant power, it seems to lose control of the situation altogether,
and the company becomes dominated by the union. Here the man-


agers continue to think in terms of authority, recognizing that they
have lost it and becoming so passive that it is inaccurate to refer to
their behavior as a collective bargaining strategy. They simply seek
to respond to the situations thrust upon them by the union.
This analysis suggests a basic problem for Peruvian managers-
a problem that will become more severe as union power grows.
Management must find an active response to union pressures in
situations approximating a balance of power. Our analysis of Peru-
vian culture suggests that this may be very difficult. Nevertheless,
the fact that we found even one authentically Peruvian case of this
type shows that the approach can evolve out of Peruvian culture.
This case was represented by the manager who said, "I want a
strong union in my plant." Perhaps the emotional acceptance of
the power of the union is a necessary condition for "negotiating the
exchange of values."
Before closing our discussion of comparative types of union-
management relations, we should note one type which is found in
the United States but which we were unable to find in Peru. This
is the situation in which workers and union representatives are
involved with management in a cooperative program to increase
efficiency, with much of the initiative coming from the side of the
workers and the union leaders. Of course, this type of situation is
not common in the United States, but we do find a number of
companies employing the Scanlon Plan and other plans which have
developed along similar lines. We looked for this type of situation
in Peru but were unable to find it. Furthermore, none of our Peru-
vian informants believed that such a situation existed in the country.
Thus we are led to conclude that a relationship involving worker
and union initiative in improving plant performance is not com-
patible with the contemporary culture of industrial relations in Peru.
It has been possible for us to describe these types of union-
management relationships so far with only passing reference to
politics, even though nearly every student of industrial relations in
Latin America is inclined to emphasize the political nature of union-
ism. I have presented our findings in this way, not to deny the im-
portance of political influences, but to indicate that much of what
we find in union-management relations, at least at the plant level,
can be explained without reference to politics. In fact, I suspect that
many events in industrial relations are attributed to political in-



fluences, whereas they have more adequate explanations in the con-
ditions arising in the immediate work situation.
For example, we were fortunate enough to study one case in
which there was a complete change in union leadership shortly after
we began our field work. After many years of control, the officers
who predominantly represented APRA were overthrown by a group
of officers known as anti-APRA, and indeed two of the men were
said by their opponents to be Communists. In this case, it would
have been all too easy to explain the overturn in political terms. I
shall attempt no complete explanation here, but let me present
enough data to indicate that some very familiar forces were at- work
within the plant.
When we plotted the departmental location of jobs of both the
previous and the new governing board of the union, we found that
the previous board members had been most heavily concentrated in
production departments. The new board members most heavily
represented the maintenance department and related skilled groups.
Some weeks before the overturn, the old executive board had signed
an agreement with management that was thought in some quarters
of the plant to be unduly favorable to the production workers and
failed to give sufficient recognition to the skills and responsibilities
of the maintenance and skilled workers. Furthermore, a year earlier
all the workers had gone out on strike to support the union position
on a problem that was found exclusively within one of the produc-
tion departments. Management held firm in this case, and the union
leaders finally felt compelled to call off the strike after two weeks,
without having gained anything that they could advertise to the
rank and file. The futile strike was naturally a strong campaign
issue for the new opposition leaders. Finally, the chief leader of
the old group had been intermittently absent from the plant for
many weeks before the election, involved in APRA and federation
activities above the plant level, thus neglecting the local situation.
Here indeed we note a political influence, but the importance of
the influence was that it pulled a leader away from contact with
his followers. So far as we could tell, ideological differences played
little, if any, role in the campaign.
To what extent do these conclusions regarding Peru apply to other
Latin American countries? Without research of the same type in
other countries, we can give no firm answer to this question. Never-



theless, the existing literature suggests certain common elements.
In the first place, the shortage of Peruvian entrepreneurs finds a
parallel in most, if not all, countries of Latin America. This phe-
nomenon was recently highlighted in Entrepreneurship in Argentine
Culture.7 It is the case history of the Sociedad Industrial Americana
de Maquinarias and of Torcuato di Tella, the man who launched
it and led it to its present prominence. Torcuato di Tella was born
in Italy and settled permanently in Argentina at the age of thirteen.
He typifies the prominence of immigrants and sons of immigrants
who appear nearly everywhere we look in Latin American industry.
Our Peruvian observations about social structure and social and
labor legislation seem to apply to a number of other countries. Con-
servative landowning groups in many instances have been willing
to satisfy popular pressures by passing such legislation-to be paid
for largely by the industrialists who have not been strongly repre-
sented in these controlling groups. The industrialists have been
undertaken to develop such relations with the government depart-
ments that would enable them to minimize the impact of such
The involvement of the government in labor relations and of
unions in politics in Peru is also quite general elsewhere in Latin
America. However, here we have done more than confirm a general
condition. We have asked: Given this involvement, are labor rela-
tions within the plant necessarily determined by these outside
forces? Or is it possible for the parties to settle their problems with-
in the plant itself? While we grant the great importance of gov-
ernment and politics, our experience suggests that these all too
visible influences tend to be overrated. Even within the framework
of these influences, there are possibilities for the parties to face and
resolve their problems within the local situation.
We have found no one typical pattern of handling industrial re-
lations problems. On the contrary, we have identified several types
of relationships. It is our hope that an objective description of cases
and an identification of patterns will enable Latin American man-
agement and union leaders to achieve a better understanding of
their joint problems. Such increased understanding would be at least
a small contribution toward economic progress and industrial rela-
tions stability.


1. The project was financed by a Fulbright Fellowship and by grant
number M-4844 of the National Institute of Mental Health, from June,
1961, to August, 1962. Sponsorship was provided by the School of Indus-
trial Engineering, National Engineering University, CENIP (the national
productivity center), and xPAE (Instituto Peruano de Administraci6n de Em-
presas), a member of the International Committee of Scientific Management.
IPAE and its then acting director, Robert Braun (now secretary general of
cros), were especially helpful in winning management collaboration. The
field work for this section was done primarily by Hernan Castillo and Mario
2. Because of rounding out, figures do not total 100 per cent.
3. Kenneth Levene, 'Totencial Econ6mico y Financiero del Peru," Ex-
preso (Lima), December 27, 1961.
4. Manuscript report by Dr. Vergilio Roel, Instituto de Estudios Eco-
n6micos, Facultad de Ingenieria Industrial, Universidad de Ingenieria.
5. La Prensa, June 27, 1962.
6. For a comparative view, see Miles E. Galvin, Unionism in Latin Amer-
ica, Bulletin 45 (Ithaca: Cornell University, New York State School of In-
dustrial and Labor Relations, 1962).
7. Thomas C. Cochran and Ruben E. Reina, Entrepreneurship in Argen-
tine Culture (Philadelphia: University of Pennsylvania Press, 1962).


The Latin American Labor Leader

It is hard to generalize about the "typical" Latin American labor
leader. We are dealing with people in twenty different countries, or
even more if we include Jamaica, Trinidad, and the other English-
speaking areas of the Caribbean. The labor movements of which
they are a part differ markedly in antiquity, strength, and political
orientation. The Latin American labor leadership includes such
varied types as the Communist officials of the so-called "unions" of
Castro's Cuba, the highly sophisticated chiefs of the Argentine and
Mexican labor movements, and the heads of what are virtually
artisans' mutual benefit societies, which still constitute a large part
of the labor movement in Ecuador.
The economic conditions and the political circumstances in which
the Latin American labor leader is called upon to function vary
greatly from one country to the other. Legal controls over workers'
organizations and their collective bargaining with their employers
also show a wide degree of contrast.
Yet, after all of this has been noted, there are certain character-
istics which one can find widely distributed among the genus lider
laboriensis latinoamericanus, if that is the correct Latin phrase. In
the discussion which follows we shall try to identify and describe
at least some of these. But before doing so, we shall describe the
political and social milieu in which these labor leaders operate. This
milieu includes the general revolutionary situation, the legal frame-
work of unionism, and the political nature of unions.
Revolutionary situation in Latin America.-The Latin American
labor leader operates in an atmosphere of revolution. Profound
social, economic, and political transformations are in process
throughout the area. This complex pattern of overall societal changes
we shall call the Latin American Revolution. No country is immune

to it. In a few nations the Revolution is an accomplished fact; in
most, it is in full development; in a handful, it is just beginning.
This Revolution is largely the result of the impact of the indus-
trialization of Western Europe and North America upon the Latin
American countries. Beginning during the last quarter of the nine-
teenth century, the search by these first industrial powers for raw
materials and foodstuffs in Latin America began to undermine the
traditional social order, which was based on a society completely
dominated by a landowning and commercial aristocracy, and in
which the great majority of the people worked on the land but
owned no property, had no social respectability, and possessed vir-
tually no voice in government and politics.
The Latin American Revolution seeks to overturn this aristocratic
system once and for all, and to give participation in civic affairs
and social recognition to the new middle-class and working-class
groups which have grown up as the result of the continued de-
velopment of the national economies during the twentieth century.
It has also sought to achieve self-consciousness and self-expression
for the nations of the area. The traditional system, in which the
aristocracy had more in common with parallel classes in Europe
and the United States than they had with their own fellow country-
men, and in which the agricultural workers, who made up the
majority of the population, were often unaware of the existence of
the nation, had little room for popular nationalism. However, with
the development of urban middle-class and working-class groups,
nationalism has become the single most important ideology in Latin
The Latin American Revolution has also sought to bring about
the most rapid possible development of the economies of these
nations. Increasing numbers of citizens have become convinced that
only through rapid economic development and industrialization will
their nations be able to become truly independent and to raise their
levels of living.
Finally, most advocates of the Latin American Revolution have
sought to develop a democratic societal and political life. They have
worked to achieve a form of government in which the majority
rules and the rights of the minority are secure.
However, there have been important Revolutionists who have
repudiated the democratic aspects of this Revolution. Since 1959,
this has not been a secret to anyone. The future of the hemisphere
largely depends upon whether these antidemocratic elements are


able to convince the masses of Latin America that social change,
national self-expression and independence, and rapid economic de-
velopment can be achieved only by totalitarian methods.
The Revolution has advanced at varying paces in the twenty
Latin American republics. The first country which felt its impact
was Mexico, where the Revolution began in 1910, but is still far
from completed. Political upheavals which took place in Chile in
1920 and in Brazil in 1930 began the process of change, but the
slowing down of this process in recent years has brought these
countries to the verge of new upheavals.
The Bolivian National Revolution began in 1952 with similari-
ties to the Mexican Revolution in its program to redistribute the
land and incorporate the Indian masses in the life of the nation.
In Venezuela, Costa Rica, Honduras, and the Dominican Republic
one finds the basic movement for social, economic, and political
change adapted to the particular conditions of those countries.
The Cuban Revolution, the latest phase of which has been led
by Fidel Castro, is the only case so far in which the Latin Ameri-
can Revolution has resulted in the establishment of a thoroughgoing
totalitarian state. However, it is by no means certain that it will
remain unique.
The labor movement itself is an integral part of the Latin Ameri-
can Revolution. It represents one of the classes in Latin American
society which has been emerging during the last generation: the
urban, wage-earning class. Because it is essentially a revolutionary
force, the labor movement in Latin America inevitably has a wider
scope of activities and different attitudes than the labor movements
prevalent in such economically developed and politically stable
countries as the United States. Latin American labor movements
are not only interested in bread-and-butter questions, but also in
the whole process of achieving for its members full participation in
the economic, social, and political life of the countries.
Legal framework of Latin American unionism.-Another area
which we must comprehend in order to understand the nature of
the Latin American labor leader is the legal system in which he
functions. Generally, the organized labor movement of the Latin
American countries operates under a legal system more strict, at
least on paper, than that to which we are accustomed in the United
States. Most of the countries have labor codes, which spell out in
considerable detail the nature, scope, and activities of the trade-
unions and the way in which they must conduct collective bargain-



ing. These codes also encompass factory legislation and social
Almost all Latin American unions are "legal," that is to say, they
have legal recognition, which gives them certain advantages but also
imposes some serious restrictions. Without such legal recognition,
labor organizations in most Latin American countries are not sup-
posed to engage in collective bargaining. However, these laws are
not always enforced. In Chile, for instance, some of the most power-
ful labor organizations, such as the Railroad Workers Federation,
do not have legal recognition, but nonetheless engage in collective
negotiations with the employers. In Brazil, in contrast, no union can
function effectively without such recognition. The chief advantage
of having legal recognition is that employers may not refuse to
negotiate with a duly recognized labor organization. In most coun-
tries, however, unions must fulfill certain prerequisites and submit
to extensive regulation in order to obtain legal standing. Some of
these regulations and restrictions should be briefly considered.
First, a legally recognized union must conform to the jurisdiction
laid down by the government and the law. In Chile, in the great
majority of cases, this means that unions must encompass the work-
ers of a single factory or mine. In Brazil it means that each local
union must cover all the workers of a given category in a munici-
pality. In Argentina and Brazil it means that most unions are
industry-wide and national in scope.
Second, a recognized union must submit to extensive government
supervision of its finances. The law usually limits the things upon
which a union can spend its funds and provides that unions must
account to the government for how they propose to spend their
money and how they actually do use it. In practice, most ministries
of labor are not adequately staffed to maintain as strict supervision
of union finances as the law requires. Nevertheless, the menace of
investigation of their economic affairs always hangs over unions and
can be used against them if the government in power so desires.
Third, union elections are widely subject to governmental con-
trol. Ministries of labor are often empowered to have officials pre-
side over elections, to pass on their validity, and even to remove
officials whose election they question. Here again, the actual appli-
cation of the law is not always so severe as the letter of the law
Fourth, there are extensive restrictions on the rights of certain
kinds of workers to organize. Some countries, such as Chile and



Brazil, do not permit government employees to form legal unions;
others, such as Mexico, do not allow government unions to join any
central labor organization. A number of countries limit or absolutely
prohibit the organization of agricultural workers.
In addition to controls over the unions, there are also extensive
regulations of the process of collective bargaining. In Brazil, the
government control of labor-management relations went so far as
virtually to abolish collective bargaining during 1937-45. At that
time, President Getulio Vargas was presiding over a regime which he
called the Estado Novo, or New State, which was patterned after
those of Mussolini in Italy and Salazar in Portugal. The Vargas
regime completely destroyed the independence of the labor move-
ment. At the same time, it substituted a system of labor courts for
collective bargaining. These courts handled practically every request
by workers for changes in their working conditions, and requests
were few in number. Almost all individual grievances were also
handled by the government's labor tribunals. More than a decade
and a half after the overthrow of the Vargas dictatorship in 1945,
the influence of the Estado Novo regime was still being felt. Al-
though in Rio de Janeiro, Sdo Paulo, and other major industrial
centers collective bargaining had become the rule, the labor courts
still substituted for direct labor-management negotiations in large
areas of the republic.
Most countries in Latin America have made no attempt to abolish
collective bargaining, but they have generally circumscribed it.
There is usually compulsory mediation, presided over by govern-
ment officials, and voluntary arbitration. Only after such mediation
does a strike become legal. In most cases government employees are
forbidden to strike and, in some instances, the same prohibition
applies to agricultural workers.
Political nature of Latin American unions.-Latin American
unions are much more deeply enmeshed in politics than are Ameri-
can unions. It is fair to say that the great majority of trade-unions
in Latin American countries are dominated by one or another of
the many political parties.
A major reason for this situation is the revolutionary nature of
trade-unions, which seek fundamental changes in society and which
quite naturally ally themselves with those political parties that
support these changes. Secondly, organized labor is perhaps the first
institution to appear on the Latin American political scene which
has the potential to challenge the armed forces as the final arbiter


of governmental power. Through the power of the general strike,
the unions can, if well organized and united, overthrow govern-
ments dominated by the military, or help defend governments
favored by the workers against attempted coups by the armed forces.
A third reason for the political nature of Latin American union-
ism is the political instability which characterizes the area and the
wide prevalence of dictatorial regimes. The organized workers know
that in order for their unions to function effectively, their countries
must enjoy a democratic atmosphere. They therefore usually follow
the lead of parties which are struggling for the establishment of
such an atmosphere.
The weakness of the labor movements has also undoubtedly been
a factor inviting their domination by political parties and by gov-
ernments. One -aspect of this weakness is the lack of adequate
finances, which has plagued labor movements in a number of coun-
tries. The workers of Latin America have not been accustomed to
paying dues to a trade-union or any other organization. Their in-
come has generally been so low that any dues would constitute a
serious drain upon their meager resources. Thus, unions have
needed the support of politicians from the middle and upper classes
in order to enjoy more or less normal development and to meet their
financial burdens.
Finally, the very tradition of political domination of Latin Ameri-
can labor tends to feed upon itself. From their inceptions, the Latin
American unions have been controlled by politicians of one kind
or another, and this tradition is a hard one to break. Even with
stable political relations and a friendly political atmosphere, it would
probably require several decades before political ties could be totally
Since World War II, the labor movement in the United States
has spent much energy and considerable money in trying to con-
vince Latin American labor leaders of the danger of being too closely
tied to political parties. Although this "missionary" work has had
its impact, it has not yet fundamentally altered the situation. Nor
is it clear that the kind of nonpartisan labor movement characteristic
of the United States is appropriate for Latin America. As long as
democracy remains insecure in the area, organized labor will un-
doubtedly find it advantageous to be closely associated with parties
and political leaders which will give it some assurance of having
the kind of political atmosphere it needs to function with some
semblance of normality.


Before leaving the question of political control of organized labor,
we should note the relative imperviousness of the Latin American
trade-unions to the Communists and the new Jacobin Leftists, which
have arisen in the area in recent years, particularly since the advent
of Castro. Although during its first months the Castro regime had
considerable appeal to the organized workers, it lost most of this
appeal once it took a totalitarian and Communist direction. Except
for the Cuban Worker's Confederation (cTc), no national labor
group has willingly joined the extreme Left since 1959, and the
Jacobins and Communists were able to capture the Cuban labor
movement only because Castro decreed that they should do so,
despite the wishes of the rank and file.
Later in 1959, when Castro put the Jacobin Leftists among his
labor supporters in charge of the CTC, the Cuban labor confedera-
tion issued a call to form a new hemispheric confederation to rival
the Inter-American Regional Organization of Workers (ORIT),
the American regional unit of the world free labor movement. How-
ever, when the founding conference of the new hemispheric group
was formed in September, 1962, there was no significant national
recruitment to the Jacobin-Communist trade-union camp except the
Brazilian Confederation of Industrial Workers, which had been
captured by pro-Communists for reasons having nothing to do with
Fidel and the Cuban Revolution, and even it finally decided not to
join the new Communist hemispheric group.
In view of his background, what are the principal characteristics
of the Latin American labor leader? His social profile may be high-
lighted by describing his educational level, his political roles, moral
standing, and recent professionalization.
Educational level.-The first apparent characteristic of the Latin
American labor leader is that he is a considerably better educated
man than are most Latin American workers. This is partly the re-
sult of the labor laws of these countries, which generally require
that trade-union officials be able to read and write. In view of the
high degree of popular illiteracy, particularly among the older work-
ers, the literacy of union officials naturally sets them apart from
many of their followers.
An educated labor leadership has roots in the history of the Latin
American labor movement. Among the pioneer leaders, the anarcho-
syndicalists had a strong educational emphasis. As original believers



in worker education, they organized numerous discussion groups,
classes, and other enterprises to teach their members and followers
not only the fundamentals of reading and writing, but also a great
deal about politics, economics, and sociology.
Another significant force was the important role which intellec-
tuals played in the early organization of trade-unions in Latin
America. A sizable number of teachers and professional men, usually
members of political parties anxious to win labor following, threw
themselves into the job of organizing the workers. In a number of
countries, some of these intellectuals continue to hold important
positions in the labor movement. This is particularly the case in
Jamaica, Trinidad, and other English-speaking areas in and around
the Caribbean.
In recent years, the labor movements of Latin America have
organized extensive labor education institutions. Unlike the earlier
efforts of the anarchosyndicalists, these have generally concentrated
on training for trade-union and political leadership rather than, as
formerly, on general education. This drive towards worker education
has received considerable impetus from the international organiza-
tions to which most of the Latin American unions belong. Thus,
since its inception, the hemispheric affiliate of the International
Confederation of Free Trade Unions has sponsored an extensive
program of leadership training. It has not only held seminars for
labor leaders of various countries on a regional basis but has also
prepared materials to be used for labor education. Recently, it es-
tablished a full-time leadership training school in Mexico. The In-
ternational Trade Secretariats, with which an increasingly large
number of Latin American unions have become affiliated in recent
years, have also done extensive educational work. Especially worthy
of mention are the efforts of the Postal, Telegraph and Telephone
Workers International Federation. The American regional affiliate
of the International Federation of Christian Trade Unions, known
by its Spanish initials as the CLASC, has also been active in this
field during the last three or four years. It has organized an ex-
cellent training school in Caracas, Venezuela, to which labor leaders
from almost all countries of the hemisphere come to receive rather
extensive training.
On a national basis, some of the labor movements have also
carried out leadership training activities. Under Per6n, the Con-
federaci6n General del Trabajo established an extensive system of
labor schools, and its work has continued since 1955 on a more



modest scale and with a somewhat different bias and purpose. In
Brazil and one or two other countries, the federations and con-
federations of Catholic Workers Circles have conducted extensive
training activities. For some time, this was really the only rival to
the Communists in the field in Brazil. The Peruvian labor move-
ment, in which the memory of anarchosyndicalism still lingers, has
always placed considerable emphasis on labor education. Both the
trade-unions and the Aprista party have extended their efforts in
the field of education.
Finally, the role of the United States labor movement and the
United States government in training Latin American labor leaders
should be mentioned. For more than a decade, trade-unionists from
all over Latin America have been attending the Labor Institute of
the University of Puerto Rico, which continues a training course
originally started by the ORIT and sustained financially throughout
most of its existence by the United States foreign aid program. More
recently, the American Institute for Free Labor Development, jointly
sponsored by the AFL-CIO, various employers, and the United States
government, has launched a truly impressive program. It runs three-
month courses in Washington, D.C., for 25-30 people per course,
on a year-round basis. In addition, it has established regional train-
ing centers in Venezuela, Ecuador, Colombia, and Chile, and now
is organizing centers in Peru, Central America, and other areas.
Under this program, the Institute not only trains its students, but
keeps them on its payroll for some time after they return home, thus
encouraging them to put into practice what they have learned in
the classroom.
Partly as a result of these intensified efforts at labor education
in recent years, the Latin American labor leader is inclined to be
a person of considerable sophistication. Although his formal educa-
tion may be limited, he has considerable knowledge, particularly in
the social sciences. Increasingly, he is likely to be something of a
world traveler, having visited other Latin American countries, the
United States, and perhaps even Western Europe and the countries
behind the Iron and Bamboo curtains. He is not likely to be so easily
swayed by demagoguery as is the rank-and-file worker or citizen.
Political roles.-The Latin American trade-union leader is gen-
erally also a politician. This is true in the sense that he more often
than not owes his election to union office to the fact that he belongs
to, or has the support of, a particular political party. In fact, labor
leaders often look upon their trade-union position as a step to a



political career. Many of them are party officials, and a considerable
number hold elective political office.
Trade-union leaders play an important leadership role in both
the democratic and totalitarian parties of the Latin American Revo-
lution. In the Communist parties and in some of the democratic
revolutionary groups, their position is definitely secondary to full-
time professional politicians, who are usually drawn from the middle
classes. However, in a few Communist parties, such as those of
Chile and Mexico, many professional political leaders began their
careers as trade-unionists. Trade-unionists have also played primary
leadership roles in a number of non-Communist parties. Thus, in
Bolivia during the early years of the Revolution which began in
1952, trade-unionists constituted the backbone of the government.
Officially, the administrations of Victor Paz Estenssoro (1952-56)
and Hernin Siles (1956-60) were "cogovernments" of the MNR
party (Movimiento Nacionalista Revolucionario) and the unions
associated with the national labor center, Central Obrera Boliviana
(coB). In recent years, with the growing role of the peasants in
the structure of power in the nation, the importance of the urban
trade-unions within the MNR and the government has declined.
Nonetheless, it is worth noting that in 1960 the leading labor
leader of the MNR, Juan Lechin, was elected vice president of the
Republic and seemed a likely party nominee for the presidency in
the 1964 election.
Again, in the Acci6n DemocrAtica party of Venezuela, there is
little doubt that President Romulo Betancourt relied very heavily on
the solid support of the trade-unionists within the party. Their
almost unanimous support early in 1962 of his leadership prevented
a split within the party's ranks (led by some of its middle-class
secondary leaders) from assuming major proportions. In the Peron-
ista party of Argentina, trade-union leaders held first-rank positions
in party councils from the beginning of the organization. With the
overthrow of Per6n and his exile from Argentina in 1955, leader-
ship of the party within the country has devolved principally upon
its trade-unionist leaders. Finally, in Mexico, where, since the
middle 1930's, the great majority of the country's trade-unions have
been directly affiliated with the government party (now known as
the Partido Revolucionario Institucional), the labor movement has
always had a key voice in party affairs. However, during the last
two decades, the influence of organized labor has declined vis-A-vis
other groups belonging to the PRI.



Many trade-union leaders from a considerable variety of parties
have held important governmental posts because of their political
activities. As early as the 1920's, Luis Morones, leader of the then
dominant Mexican trade-union group, served as Minister of Labor.
From the very beginning, numerous Mexican trade-union leaders
were elected to the national congress, state legislatures, and a few
to state governorships. Under Per6n, in the late 1940's and early
1950's, about half of the Peronista members of the national con-
gress were drawn from the trade-union movement. Several labor
leaders served as ministers, including Angel Borlenghi, Minister of
Interior and one of the most powerful figures in the regime. In
Venezuela after 1959, trade-unionists made up an important bloc
among Acci6n Democritica members of congress, and other labor
leaders served in state legislatures. In Peru, in the few instances in
which the Aprista party has been allowed to have members in con-
gress, a good sprinkling of its deputies and senators have been trade-
unionists. In Chile, there are always trade-union leaders among the
Socialist members of the national legislature.
These are only a few examples of the posts which labor leaders
have gained in government as a result of their political activities.
The list could be enlarged considerably. Certainly we should men-
tion that in nearly every case in which Communists have been
members of congress or local legislatures in the Latin American
countries a number of trade-unionists have been included in the
Communist membership.
Political activities of labor leaders frequently aid the trade-union
movement directly. For instance, for many years the secretary gen-
eral of the Confederaci6n de Trabajadores de Chile, Bernardo
Ibanez, was a Socialist member of the Chamber of Deputies. His
deputy's salary not only made it unnecessary for the Chilean Con-
federation to pay him but also enabled him to relieve the difficult
financial situation of his organization. It is notorious that the financ-
ing of various labor organizations of Mexico for several decades
came largely from the salaries and other incomes which their leaders
received as legislators and government officials. This was also true
in Cuba for a considerable period.
Moral standing.-As a group, the Latin American trade-union
leaders are hard-working, dedicated, and honest. Of course, as every-
where, there are many who are not. However, there is little doubt
that the general moral standing of the Latin American labor leader
can be favorably compared to that of any other important group.



Obviously, the mode for moral behavior varies considerably from
one country to the other, and the susceptibility of the labor leader to
corruption is influenced by the general atmosphere in which he
functions. Thus, in Mexico, Brazil, or pre-Castro Cuba one is likely
to find more corruption among labor leaders than in Venezuela,
Colombia, or Costa Rica. There are various kinds of corruption,
and it may be well to elaborate the types which may be found. We
are inclined to believe that there is very little outright acceptance
among Latin American labor leaders of payment from employers
or the government to betray the interests of the workers. Nor will
one find more than a handful of cases in which labor leaders have
taken advantage of their position to obtain more lucrative jobs on
the management side of the collective bargaining fence, a phe-
nomenon which was once quite widespread throughout the United
However, there are other kinds of corruption. Quite a few of the
more important Latin American labor leaders have used their po-
litical positions or influence in government for illicit purposes.
Sometimes, as we have noted, they have financed the labor move-
ments they headed through such illegitimate governmental sources
of income. In other cases, not all of what they acquired extralegally
has been passed on to their labor organizations. Another kind of
corruption which may be found, particularly among Communist
labor leaders, is the use of union funds for financing activities and
ambitions of the political parties to which the labor leaders belong.
This is, of course, an old story in the Communist movement around
the world, and there are some particularly notorious instances of it
in Latin America. There is, for example, the famous special assess-
ment on the workers of the Chuquicamata copper mine in Chile,
allegedly to construct their union hall, which is generally thought to
have been spent largely to finance the presidential campaign of
Gabriel GonzAlez Videla. At that time Videla was supported by the
Communist party, which also controlled the Chuquicamata union.
Of course, such behavior is not completely confined to the Com-
munists. In Per6n's Argentina there were various scandals concern-
ing the expenditure of union funds to finance political activities
favorable to the government, without authorization of the union
members and in contravention of the law.
There is another kind of debilitation of the moral stamina of
Latin American labor leaders which is prevalent in some countries:
the tendency of labor leaders of all political stripes to put the in-



terests of their particular political parties ahead of those of the
unions which they head. This tendency finds expression in the fre-
quent political general strikes which are called by labor leaders of
many different political inclinations.
Professionalization.-The Latin American labor leader is increas-
ingly becoming a professional. This is a far cry from the situation
in the early days of the labor movement, when the anarchosyndi-
calists were violently opposed not only to re-election of labor leaders,
but also to having employed or paid union officials. They felt that
such full-time paid union leaders were somehow "exploiting" their
followers and were more interested in furthering their own careers
than in fighting the battles of the workers. Today, it is increasingly
the case in the more powerful labor movements that the trade-union
official not only works full time for his organization but also has
long tenure as a union official. Of course, this is more generally
the situation for officers in the national unions and central labor
organizations than for those in local unions.
Various factors foster the development of the career trade-union
official. Economic development is an important part of the explana-
tion. As the economics of the Latin American countries become
more complex and as the number of firms in various industries mul-
tiplies, the job of representing the workers becomes more compli-
cated. In a large factory, even local union officials may have to
spend most of their time handling grievances. Certainly, officials
of national unions need to work full time to service their local or-
ganizations. The increasing complexity of the economy also fosters
the tendency of the trade-union officials to concentrate more on the
economic than the political problems facing their organizations.
Since the union's affairs demand more time of its leaders, it is in-
creasingly called on to support them financially. The generally
improving financial position of the Latin American labor movements
is another factor leading to full-time union leadership. In Mexico,
Argentina, Brazil, Venezuela, and several other countries, the unions
have achieved one or another type of checkoff. They thus have suffi-
cient funds to pay a sizable bureaucracy to look after their interests.
Finally, there is no doubt that the labor education campaigns,
which we have already discussed, are contributing to the develop-
ment of a class of professional union leaders. Officials who have
received considerable formal training in union leadership and man-
agement are more likely to be able to perpetuate themselves in office
than are unschooled officials. Moreover, their training undoubtedly



better equips them to deal with rivals seeking their posts. At the
same time, the rank-and-file members feel that they have more to
lose if they do not re-elect the well-trained leaders to office instead
of inexperienced and untrained amateurs.
In some countries, however, the professional labor leader is still
at a disadvantage. Many trade-unions are too poor to afford full-
time leadership. In Peru and Uruguay the anarchosyndicalist tradi-
tion is still strong enough to prejudice the members of many unions
against full-time officials. Thus the long-time secretary general of
the Confederaci6n de Trabajadores del Peru, Arturo Sabroso, con-
tinues to work his eight hours a day in a textile plant and is a
labor leader only after hours. In other countries, the law hinders
the development of professional labor leaders. Such is the case in
Chile, where unions are forbidden by the labor code to pay salaries
to their leaders. The upshot of this is that most democratic trade-
union officials are labor leaders only after their eight-hour days in
the factory. The group which profits principally from this situation
is the Communists, who support a sizable number of full-time party
workers who double as "union leaders" and are always available to
service unions which need help.
Today no discussion of any aspect of Latin American affairs is
complete without some special reference to Cuba. We shall therefore
devote a few words to that island, which every schoolboy now knows
is just 90 miles from the shores of Florida. Cuba, of course, is the
only country in Latin America in which the labor movement is
unequivocally controlled by the Communists. This is not the fault
of the rank and file of organized labor there, nor even of the ma-
jority of the island's trade-union leaders. Many of those who took
over control of the labor movement after the fall of Batista, almost
all of whom were members of Castro's 26th of July Movement, are
in jail. Many are in exile. A few were executed by Fidel's government.
When Batista fell, every organization in the labor movement was
seized by members of the underground. During the next few months,
elections were held in all local unions, and national conventions
were held in all 34 federations belonging to the CTC. In many of
the local elections, 26th of July slates ran against Communists, and
in nearly all such cases the 26th of July candidates were successful.
The federation conventions likewise were dominated in almost all
cases by members of the 26th of July forces.


Until the first postrevolutionary congress of the CTC in 1959,
the great majority of the 26th of July labor leaders refused to have
anything to do with the Communists. However, at this convention
Fidel Castro and other governmental leaders appeared before the
congress and demanded that the 26th of July followers, who made
up 90-95 per cent of the delegates, share equally the posts in the
new CTC executive committee with the 5 to 10 per cent of the
delegates who belonged to the Communist party. The delegates re-
fused to comply. However, a "compromise" was reached, whereby
the congress authorized the provisional secretary general, David
Salvador, to select a new executive board. In consultation with
Castro, he chose a 26th of July slate, on which no official Com-
munist was present, but which contained a majority willing to work
with the Communists. This new committee then began a "purge"
of the leaders of the national federations. In the following months
almost half of the national groups were "reorganized," that is, their
duly elected leaders were removed arbitrarily, and replaced by Com-
munists or pro-Communists.
Perhaps some of those 26th of July labor leaders who have sur-
vived were honestly convinced by the propaganda of Castro and
his associates. Others were obviously rank opportunists who had
served several previous regimes and who were more anxious to
maintain their well-paying jobs than to further matters of principle.
The positions of many in the 26th of July Movement who have
been displaced have been taken by members of the old Communist
party of Cuba, known until it merged with Fidel's personal followers
as the Partido Socialista Popular. Thus Lazaro Pena, who was a Com-
munist party deputy and presided over the labor movement in the
late 1930's and early 1940's, when the Communists and Batista
were the closest of allies, has replaced David Salvador, leader of
Castro's labor underground and now a prisoner in the Isle of Pines
penitentiary. Pena became secretary general of the CTC in Novem-
ber, 1961.
The leaders of the "new" labor movement of Cuba have followed
policies very similar to those followed by Communist trade-unions
in every country in which the party rules. They have foresworn
most of the social and other gains made by the Cuban labor move-
ment over a period of twenty years. They have formally declared
that the basic job of the Cuban labor movement is to stimulate
production through what they call "group and individual emula-
tion." Thus, the labor leaders of Castro's Cuba are much more Com-


munist than they are Latin American. Or perhaps it may be said
that they represent the extreme of the prostitution of union interests
to party expediencies.
The old saw, "no generalizations are valid, including this one,"
undoubtedly applies to many things described in this chapter. Al-
most any generalization we have made can be refuted by referring
to a particular trade-union or situation in a given country. However,
we believe that the general picture we have tried to give of the
Latin American labor leader is true.
As a group, the Latin American trade-union leaders are a revolu-
tionary element in society. They are generally found on the side
of those who seek to establish democratic stability in their nations.
They seek not only to improve the material well-being of their mem-
bers but also try to gain for their followers fuller participation in
the social and political life of their respective countries. Thus, they
support social change, are moderate but firm nationalists, and seek
the most rapid economic development possible without sacrificing
the interests of their members. The Latin American labor leaders as
a group have a better education than the average worker. In recent
years, they have been receiving an increasing amount of training
for their union jobs. This, plus economic development, has in-
creased the rate of professionalization of their trade-union jobs.
It is always hazardous to predict the future, and it is doubly so
for Latin America, which is in such a state of rapid flux. However,
a few predictions may be offered.
First, the labor leader will remain a figure of major political im-
portance during the next few decades. So long as government in-
stability persists, he will need to be active in the political arena,
while politicians will seek his support and attempt to limit the
potency of his opposition.
Second, as the economies of the Latin American countries be-
come more complex, the trade-union leader will be forced to devote
an increasing amount of energy to negotiating collective agreements
and serving his members. Of course, the degree to which he will
be free to do this will depend greatly upon the development of
sufficient political stability to permit him to divert his attention
from politics.
Third, the trade-union leader will continue to seek basic changes
in Latin American society. He will seek agrarian reform to amplify


the local market for the things his members produce. He will seek
economic development to provide more jobs for his members. He
will seek to break the remnants of aristocratic control of government
and to increase the participation of union members in civic affairs.
All these developments depend fundamentally on the great ma-
jority of the Latin American nations' continuing on the road of
democracy rather than totalitarianism. Which path Latin America
as a whole will take, in turn, will depend much upon the leaders
of organized labor. So far, the trade-union movement has generally
resisted the blandishments of the Communists, Fidelistas, and other
totalitarians. If it continues to do so, the future of democracy may
well be bright in Latin America.


The ORIT and the American Trade-Unions -
Conflicting Perspectives

To all who see in trade-unionism a means of developing social
justice and democracy in Latin America, the Organizaci6n Regional
Inter-Americana de Trabajadores (ORIT) is of signal importance.
Since its founding in January, 1951, this hemispheric federation
of national trade-union centers has been a major force in the con-
tinuing struggle for conditions conducive to free trade-union growth.
The ORIT is the regional affiliate of the world-wide Interna-
tional Confederation of Free Trade Unions (ICFTU), which was
founded in 1949 to oppose the influence of the Communist-
controlled World Federation of Trade Unions (wFTu). It was at a
congress convoked in Mexico City in January, 1951, by the ICFTU
that the ORIT emerged. The ORIT thus comprises all the labor
organizations in the Western Hemisphere affiliated with the ICFTU:
the AFL-CIO and the United Mine Workers of America, together
with the Canadian Congress of Labor, are united in the ORIT
with trade-union centers from most of the Latin American countries.
With some 55 national labor confederations representing more than
28 million workers, the ORIT is the only inter-American trade-
union movement in Latin America embracing members from the
United States and Canada.
Latin American unions are generally poor. Consequently, the
formal dues for membership in the ORIT cover only the expenses
of its secretariat. For underwriting most of the costs of its various
activities the ORIT depends upon the aid it receives from the In-
ternational Solidarity Fund of the ICFTU and the assistance of its
powerful affiliates from the United States and Canada.
The ORIT's ideological orientation is succinctly stated in its
slogan, Pan, Paz, y Libertad (Bread, Peace, and Freedom), taken
from the manifesto issued at the founding of the ICFTU in Decem-
ber, 1949. Together with the other regional affiliates of the ICFTU,


the ORIT proclaims the inseparability of economic and political
democracy. It affirms that the enjoyment of freedom includes not
only the traditional rights of all men, but also the specific freedoms
essential to the growth and maintenance of free trade-unionism.
It asserts that only through economic security, social justice, and
political freedom can the basis of a just and lasting peace be estab-
lished. The ORIT, having in mind the state-dominated unions of
past and present Latin American dictatorships, continually insists
that material gains for workers cannot be really meaningful unless
they are accompanied by a significant freedom and independence
from outside controls. In implementing its ideological commitments
the ORIT has actively fostered the development of trade-unionism
throughout Latin America (in some areas it was responsible for the
creation of the first trade-union movement) and, as its record of
opposition to Per6n, Jim6nez, Trujillo, Castro, and others indicates,
it has vigorously fought dictatorships.
The case involving the Confederaci6n de Trabajadores de Cuba
(CTC), an ORIT affiliate at the time, and the Batista dictatorship
is something of an exception to the consistently forceful opposition
of the ORIT to all types of dictatorship. The leaders of the CTC
throughout most of the Batista regime bought their relative inde-
pendence by abstaining from criticizing the government, and during
the final years of the dictatorship the CTC was its firm supporter.
The situation within the ORIT concerning the attitude of the CTC
during these years was an unhappy one. Some of the leaders of
affiliating centers urged the expulsion of the CTC if it did not dis-
avow its relationship with Batista, but the CTC did not want the
ORIT to oppose the Cuban dictator formally for fear that such
action might bring reprisals. In the end the ORIT did strongly
attack the Batista regime, but it did not repudiate the action of its
Cuban affiliate.1 *
A continuing feature of the ORIT'S many activities has been its
interest in worker education. It has sponsored regional short-course
seminars for workers from different parts of Latin America, created
a central workers' school at the ORIT headquarters in Mexico City,
and cooperated with various outside educational institutions or
centers interested in labor education. In addition, the ORIT pub-
lishes a vast amount of periodical literature, which has ranged in
content from practical manuals to labor's stake in the Alliance for
Progress and to the philosophy of the ORIT. In January, 1964, the
*Textual notes appear at end of chapter.


ORIT sponsored the First Conference of Inter-American Labor
Educators in Mexico City. Major results of the conference included
establishing a special liaison committee concerned with the future
development of free labor education in the hemisphere and pledging
support for the expansion of the program and staff of the ORIT'S
central school, which will be transferred to Cuernavaca (some forty
miles south of Mexico City) upon the completion of a proposed
new building.
Committed to social justice and democracy, revealing in its ex-
pressed zeal for these ends an interest extending beyond immediate
labor concerns, the ORIT'S leadership is faced with enormous diffi-
culties in carrying out its mission. Its problems are diverse. The
roots of many of these problems extend into conditions outside the
organization, and those of others lie in circumstances prevailing
within this autonomous body. Some also involve the influence of
principles of others besides the formal ORIT decision-makers.
I shall briefly examine here some of the problems confronting
the ORIT which arise from its AFL-CIO membership and from the
views and policies of this powerful affiliate concerning Latin Amer-
ica. The value of this study rests on the premise that it is raising
the right questions. I believe that these questions must be posed and
dealt with by the ORIT and its American supporters if Latin
American labor is to be held to the democratic course amidst grow-
ing social revolutionary and populist nationalist sentiments.
Organized labor in the United States has a history of relations
with Latin American unions that antedates World War I. By 1916,
the American Federation of Labor had developed a liaison with the
newly organized Mexican labor unions which sprouted from the
Mexican Revolution. For about a decade following the creation of
the Pan-American Federation of Labor (PAFL) in 1918, the AFL
maintained an active interest in Latin American affairs. With the
decline of the PAFL after 1927, the AFL, which together with the
Mexican CROM had dominated the Pan-American body, lost its
concern with Latin American affairs for some years. During the
decade of the depression it was preoccupied with domestic problems,
including the rise of the rival Congress of Industrial Organizations
During those years it was the cio which took the initiative in
representing American labor in Latin American circles. When the
Confederaci6n de Trabajadores de America Latina (CTAL), an
exclusively Latin American labor movement, was formed in Mexico


City in 1938, cio fraternal delegates, including their organization's
president, John L. Lewis, were in attendance. At the outset the
CTAL represented a true united front of the most important labor
groups from the liberal-left political spectrum in Latin America.
The cio continued for the next decade to maintain friendly re-
lations with the exclusively latino CTAL, which at the end of
World War II became the Western Hemisphere's affiliate of the
newly formed World Federation of Trade Unions. The cio, along
with the British Trades-Union Congress and the Russian trade-
unions, had been a principal sponsor of the WFTU.
In the immediate post-war period the AFL actively resumed its
interest in international affairs and in Latin America in particular.
At that time the labor movement in Latin America was slipping
into Communist hands.2 The AFL refused to join the WFTU,
which it correctly labeled a potential Communist front, and turned
its attention to aiding the Latin American labor unions which were
opposed to the now pro-Communist CTAL. It took the lead in calling
a meeting in which union leaders from Canada and the United
States joined with antitotalitarian Latin Americans. Out of this
conference, held in Lima in January, 1948, the Confederaci6n
Inter-Americana de Trabajadores (CIT) emerged. Composed of
affiliates from unions from all parts of the hemisphere, it stood
in opposition to the pro-Communist CTAL and the Confederaci6n
General del Trabajo (CGT), the proto-fascist Peronista con-
Shortly after the birth of the CIT, the democratic trade-unions
withdrew from the WFTU on grounds that it had become a
Communist-front organization. The AFL quickly moved to join with
them to establish in 1949 a new world organization, the ICFTU.
Then in January, 1951 (some years before it made its peace with
the cio), the AFL, joining with the cio as members of the
ICFTU, was instrumental in the creation of the ORIT as the West-
ern Hemispheric affiliate of the ICFTU. In effect, the ORIT replaced
the short-lived CIT.
In 1955 the major split in American organized labor was healed
with the creation of the AFL-CIO. Subsequent years have revealed
no slackening in AFL-CIO interest in Latin America. This interest
is not only manifest from its position as the most powerful member
of the ORIT, but it has been more directly channeled in recent
years, through a special agency outside the ORIT, the American
Institute for Free Labor Development. The Institute's board of


trustees includes representatives from nonlabor fields, but the ma-
jority are trade-union people. AFL-CIO president George Meany
is also president of the Institute, and J. Peter Grace, president of
W. R. Grace and Company, is chairman of the board. Management,
private foundations, and the American government-together with
American labor-finance the Institute's operations.
Since its beginnings in June, 1962, the Institute's accomplish-
ments have been many. In its brief history it has graduated several
classes of selected workers from its central school in Washington,
D.C. In the field of worker education it has recently converted the
Washington school into a "graduate" center for the most promising
candidates produced in the regional schools. Aware of the value of
having its program carried on in a local setting, the Institute has
expanded its regional centers so that through them it reaches
practically every Latin American country.
The achievements of the Social Projects Department of the In-
stitute are no less impressive. Within a little more than one year
of operation the department had committed about $13 million in
direct loans for workers' housing projects in Latin America. It re-
ceived numerous requests from Latin American trade-unions for
similar future projects. The largest undertaking to date is the John
F. Kennedy Memorial Workers' Housing Project, which went under
construction in Mexico City early in December, 1963.
The Institute also organized a food distribution program through-
out Latin America during the spring of 1964, using organized labor
for distributive outlets in countries where the food shortage is acute.
In all its manifold activities, the Institute and AFL-CIO repeatedly
emphasize that the Institute is an expression of organized labor's
close cooperation with the Alliance for Progress.
Thus, as the most powerful affiliate of the ORIT, and through
the Institute, the AFL-CIO has been a major force in the attempt
to strengthen trade-unionism, combat Communism and crypto-
fascism, help fill the material needs of the Latin American workers,
and relate the Alliance for Progress to labor's needs and influence.
These are ends which the ORIT seeks to achieve. From what quar-
ter, then, do its problems arise?
At the outset it should be noted that, at present, there is no
overt conflict within the ORIT as a result of its inter-American
membership. Indeed, the opportunity which the ORIT offers for
mutual cooperation and the development of understanding between
Latin American and North American representatives of labor has



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