Figure 1.--This photograph probably taken in the 1920s is labeled "Cholas women working in the field." It was taken near Arequipa, a beautiful white colonial city. Chola is a term that is variously used in Latin America, sometimes derisively. Based on my experience in Ecuador along the Perivan border, the term with the femine 'a' endin meant aculturated Indian women moving into towns or mestiza. This is not, however, just a field image of women field workers, but also many kids and others who wated to be included in the photograph. What it shows more than anything else is how primitive farming was in Peru, basically unchanged since Spanish colonial times. It is the fundamental, but not the only reason, Peru was such a poor country.

Peru is the only successful country in history with a socialist economy. Of course this was before Karl Marx invented the term socialism, but in the Inca Empire land and wealth was controled by the state and assigned to peasant farmers to work. The system suppoted a higher density of population in Peru than until very modern times. The Inca were only the most recent people to dominate the andean Highlands, but they built the lagest of all the Amerindian empires streaching from what is now the Chilean Central Valley north to the Ecuadorian-Colombian border and knit together with an impressive network of roads. This was important because of the different climatic zones and the natural resources to be exploited. In adition to griculture, the Inca were masterul weavers. Trade was, however, limited by the failure to master the wheel and the lack of large animals like horses and oxen. Peru played a fundamental role in the development of modern Europe. While the Conquistadores in the 16th century were primarily after gold, the humble potato made possible a population explosion that played a key role in the industrial revolution and the making of modern Europe. Peru was regarded as vital to the Spanish colonial empire, not because of the potato, but because of the mineral wealth--especially silver. The silver resource was part of colonial Peru, but the Potosi mines were located im modern Bolivia. The silver was shipped back to Spain (through the Spanish Main/Caribbean) and to China (through the Philippines) to finance Spanish trade there. The silver was shipped through Callao, the port of Lima. Agiculture was the mainsty of the colonial economy, but it was based on the hacienda, vast Andean estates using an essentialy feudal system of Native American workers--the Ecomienda system. Peru was the most conservtive part of Spanish Empire and the bastion of Spanish Royalist power during the revolutions which began in the Napoleonic era. The Royalist forces were finally defeated at Ayachucho on the easstrn slope of the Andes (1824). Independence did not significantly transform Peruvian society and the country limped into the 20th century with a backward agricultural economy supported by cotton and mineral (mostly copper) exports.

The Inca

Peru is the only successful country in history with a socialist economy. Of course this was before Karl Marx invented the term socialism, but in the Inca Empire land and wealth was controled by the state and assigned to peasant farmers to work. Stalin would have been truly impressed. The Inca economy functioned without the need for markets and money. It was based on on an essentially totalitarian ststem by which peasant farmers worked state lands ad contributed a share of the their harvest and labor. The Inca masterfully organized state managed agriculture, mining, and textile production. They oversaw well-engineered infrastructure. Steep slopes in the Andes were transformed into terraces which could be darmed. Irrigation projects supported agriculture in arid regions. The Inca farmed the corn developed in Meso-America as well as the potato which earlier Andean people had developed. Both are crops with high yields, higher yield than te wheart cultivated in Europe. The salt 'mines' of Qoripujio (near Cusco) were exploited to supply the Empire and for trade. The Inca made sure the peasant farmers were well fed and clothed and privision wa made for periods of poor harvests. The system suppoted a higher density of population in Peru than until very modern times. The Inca were only the most recent people to dominate the Andean Highlands, but they built the lagest of all the Amerindian empires streaching from what is now the Chilean Central Valley north to the Ecuadorian-Colombian border and knit together with an impressive system of transport and communication. This was important because of the different climatic zones and the natural resources to be exploited. In addition to agriculture, the Inca were masterful weavers. The Peruvian textile industry was based on the the ancient cultivation of cotton. They mastered dyeing and weaving techniques developed by earlier cultures. Trade was, however, limited by the failure to master the wheel and the lack of large animals like horses and oxen to serve as beasts of burden. Metalurgy had begun, but was largely limited to gold and silver. Even before Pizarro reached cajamarca, European disseases had negun to ravage the ibdigenous popuation.

Colonial Era

Peru played a central role in the development of modern Europe. While the Conquistadores in the 16th century were primarily after gold, the humble potato made possible a population explosion that played a key role in the industrial revolution and the making of modern Europe. Peru was regarded as vital to the Spanish colonial empire, not because if the potato, but because of the mineral wealth--especially silver. The silver resource was part of colonial Peru, but the Potosi mines were located im modern Bolivia. The silver was shipped back to Spain (through the Spanish Main/Caribbean) and to China (through the Philippines) to finance Spanish trade there. The silver was shipped through Callao, the port of Lima. The Spanish fundamentally changed the social and economic world of Peru. The Spanish placed a far greater emphasis on metals. They introduced money and coins to the Amerindian people. Agiculture continued to be the mainstay of the colonial economy, but the Incan social and economic structures were destoyed. The new Spanish system was based on hacienda, vast Andean estates using an essentially feudal system of Native American workers--the Ecomienda system. The Spanish exploited the country converting the indigenous population to a condition very close slave labor. The huge decline in the indigenous population greatly affected the colonial economy. Peru was the most conservtive part of Spanish Empire and the bastion of Spanish Royalist power during the revolutions rising in the Napoleonic era.

Independence (19th Century)

The Royalist forces were finally defeated at Ayachucho on the eastern slope of the Andes (1824). Independence did not significantly transform Peruvian society and the Spanish colonial economy. Political turmoil adversely affected the econony. There was also a devestating series of wars, all of which Peru lost. The wars induded: Colombia (1828-29), Chile (1836-39) and War of the Pacific (1879-84). The War of the Pacific was particularly devestating. After the War, the government initiated economic reforms of varying value. A major impedimant to ecomomic develoment was the barrier to trabsport imposed by the towering Andes. The development of railroads was thus important. American railroad builder, Henry Meiggs, built two standard gauge lines. One from the southern port of Mollendofrom up into the Andes (Arequipa and Cuzco). He had trouble recruiting Peruvian workers and imported Chinese to build his railoads (1868-77) Another from the port of Callao near Lima into the Andes (Huancayo). He and political turmoil managed to bankrup the Peruvian Government. Much of the agrcultural land, mostly in the sierra, however, remained in the hands of hacendados with large estates. Much of the large indigenous population lived on these estates and were largely outside the monied economy. This was the result of the colonial Encomienda system. What Peru did not attempt was a real capitalist economic system including free trade and social reforms to fully utilize its human talent. The colonial economy was dominated by silver mining with the mines mostly located in what is now Bolivia. The major change was the develoment of mineral resources with export markets. The mining industry was expaned in the 19th century. Mining activity included gold, silver, lead, zinc, bismuth, but primarily copoper. The country limped into the 20th century with a backward agricultural economy. Incredibly, agriculural production in many areas was more productive suring during the Inca era than at the turn-of-the century. The agricultural economyprimarily was limited to the domestic market. This was supported by cotton and mining (mostly copper and guano) exports. The Peuvian economy at the turn-of-the 20th century was little changed from the colonial and 19th century independence era.

Modern Era (20th Century)

The economy was stimulated by World War I, but adversly affected by falling export prices during the Great Depression and falling export prices (1930s). Manuacturing was largely limited to mining ore reduction and textile mills. Like many Latin American countries, the modern economic era began with Wold War II. The demand for raw materials benefitted the Peruvian and other latin American counties. A major development was the rise of a entire new activity--industrail fishing. The rich coastal waters support huge catches, primarily reduced to fishmeal exported for animal feed. Unfortunately, Peru after the War was governed by military juntas. The result was some 30 years of economic mismanagement. Like many Latin American countries, Peru underwent an intentional process of state-driven industrialization, yet the country did not emerge from this period with a competitive industrial fabric. This was apattern repeated througout the region. It reflected thevstrength of socailist ideas among the public and political leaders. The economy if not ruined was sevely damaged. The country finally elected a reform minded democratic Government (1980). This did not solve economic problems. The democratic governmnt was confronted with a range of serious economic problems especially high inflation and terrorism. Peru and its counterparts in the region were strongly impacted by the regional debt crisis. The crisis, accompanied by strong political divisions and internal armed conflicts. Peru had to request International Monetary Fund (IMF) intervention (1988). The Peruvian economy today is the seventh largest in Latin America. There have been important structural change since the 1980s. The services sector is the main contributor to the country’s economy. Nearly 60 percent of the econmy comes from the services sector. Telecommunications and financial services are the two major compnents, compriing for some 40 percent of the economy. The country lags behind in modernization and competitiveness of the important service sectors. Manufacturing represents about 35 percent of the economy has been moderizing. And emplyment gas been increasing in the sector. What is notable throughout Latin America is that there are no capitalist Tiger economies like we find in Asia. And Peru is no exceptiin to that phenomenn. Our asessment is the strength of socialist thought in the region, but are interested in thoughts from Peruvian readers.

Created: 6:57 AM 2/11/2018
Last updated: 7:46 AM 8/13/2019