The Political Evolution of the Industrial Bourgeoisie in Peru: Industrialists, Bankers and the Garcia Government, 1985-1990
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The Political Evolution of the Industrial Bourgeoisie in Peru: Industrialists, Bankers and the Garcia Government, 1985-1990 Thesis submitted to the University of London in partial fulfilment of the requirements for the degree of Ph.D. Caroline M. Sahley London School of Economics and Political Science November 1994 l UMI Number: U074B75 All rights reserved INFORMATION TO ALL USERS The quality of this reproduction is dependent upon the quality of the copy submitted. In the unlikely event that the author did not send a complete manuscript and there are missing pages, these will be noted. Also, if material had to be removed, a note will indicate the deletion. Dissertation Publishing UMI U074375 Published by ProQuest LLC 2014. Copyright in the Dissertation held by the Author. Microform Edition © ProQuest LLC. All rights reserved. This work is protected against unauthorized copying under Title 17, United States Code. ProQuest LLC 789 East Eisenhower Parkway P.O. Box 1346 Ann Arbor, Ml 48106-1346 I l+ c S £ S For Mom and Dad, Cathy, Teddy and Mery ABSTRACT This thesis examines the political evolution of the industrial bourgeoisie in Peru. It argues that the industrial bourgeoisie has been undergoing a rapid and dynamic process of economic development and political formation in the period since the reforms of 1968 which reduced the power of the landed oligarchy. The experience of the Garcia government (1985-1990) is used as a case study to illustrate the changing role of industrialists in the Peruvian development process. The Garcia government, a populist government with reformist tendencies and redistributive objectives, nonetheless attempted to forge an alliance with the industrial bourgeoisie as part of its heterodox economic strategy. This approach was later abandoned, as the government attempted to gain greater autonomy from the bourgeoisie through the expropriation of the financial system. This thesis examines the way in which the industrial bourgeoisie organises itself to intervene in politics, and considers the political and economic factors which acted to stimulate this political development. In this period, industrialists demonstrated an increased ability to forge alliances with other fractions of the bourgeoisie to act collectively in the political sphere; first, through the formation of a confederation of industrial organisations known as CONFIEP, and second, through the successful opposition to the expropriation of the financial system in 1987. This thesis concludes, therefore, that the Garcia government acted as a catalyst for the political development of the industrial bourgeoisie which by 1990 had become a more prominent social and political actor. 3 TABLE OF CONTENTS ABSTRACT ................................................................................................................3 LIST OF TABLES .....................................................................................................6 LIST OF ACRONYMS .............................................................................................7 1. INDUSTRIAL BOURGEOISIE AND STATE IN PERU: A FRAMEWORK FOR ANALYSIS.............................................................9 1.1 Classes, Economic Conflict and Political Interests 1.2 Economic and Political Interests of Third World Bourgeoisies 1.3 The Political Representation of Economic Interests 1.4 The Industrial Bourgeoisie as Political Actor: Study Objectives 2. EMERGENCE OF THE INDUSTRIAL BOURGEOISIE .........................44 2.1 Industrial Growth in Peru 1950-1968 2.2 The Velasco Government and the Industrial Bourgeoisie 2.3 Industrialists and Neoliberalism 1975-1985 3. THE ECONOMIC AND POLITICAL ORGANISATION OF THE INDUSTRIAL BOURGEOISIE...................................................................82 3.1 From Agrarian Oligarchs to Urban Industrialists 3.2 Organisation of the Bourgeoisie: the Formation of CONFIEP 4. APRA, INDUSTRY AND THE HETERODOX M O D E L ....................... 110 4.1 The APRA Party and Industry 4.2 The Neo-Structuralist Resurgence 4.3 Industrial Restructuring 4.4 Concertacidn: The State-Private Sector Alliance 4 5. THE INDUSTRIAL BOURGEOISIE AND THE REFORMIST GOVERNMENT: 1985-87 ....................................................................... 141 5.1 The Heterodox Shock 5.2 Concertacidn: The First Steps 5.3 Increasing Tensions: December 1985-June 1986 5.4 Investment Strategy: July 1986-July 1987 5.5 Limits to Private Sector Investment 5.6 Concertacidrf! 6. THE EXPROPRIATION OF THE FINANCIAL SYSTEM: POPULISM REVIVED .................................................................................................191 6.1 Populism Revived 6.2 The ‘Financial Circuits’ as a Model of Development 6.3 The Peruvian Financial System 7. FROM PROTEST TO POLITICS: 1987-90 220 7.1 The Private Sector Response 7.2 The Industrial Bourgeoisie and the Rise of the New Right in Peru 7.3 The Crisis of the Peruvian State in the 1980s 7.4 The 1990 Elections 8. THE POLITICAL EVOLUTION OF THE INDUSTRIAL BOURGEOISIE IN P E R U .........................................................................254 8.1 The Bourgeoisie and Collective Action in the 1980s 8.2 The Industrial Bourgeoisie and State in Peru 1980-90 APPENDIX.......................................................................................................... 278 BIBLIOGRAPHY............................................................................................... 283 5 LIST OF TABLES Volume of Manufacturing, Agriculture, and Mining Production 1950-1974 .................................................................................... .48 U.S. Direct Investment in Manufacturing 1950-1968 .............. 49 Composition of GDP 1950-85 .................................................... .51 Ownership of Manufacturing: Percentage of Gross Output . 62 Ownership in the Manufacturing and Mining Sectors 1986 . 64 Key Economic Indicators 1977-1985 ......................................... .70 Volume of Manufacturing Production 1979-1984................... 71 Top Industrial Conglomerates 1988 ......................................... .86 Elite Oligarchic F am ilies ............................................................ .86 Top Economic Groups in Peru 1988 ......................................... .92 Sectors of the Economy and Selected Indicators 1981 ........... 133 Monthly Inflation Rate July-December 1985 ........................... 145 Selected Economic Indicators 1984-86 ...................................... 145 Breakdown of Average Production Costs July-August 1985 . 152 Investment as a Percentage of GDP 1980-87 ........................... 171 Gross Fixed Investment 1985-87 .............................................. 171 Growth of Real Income 1986 .................................................... 185 Deposits in the Peruvian Financial System July 1987.............. 207 Selected Economic Indicators 1985-90 ...................................... 244 6 LIST OF ACRONYMS ABP Asociacion de Bancos Peruanos Association of Peruvian Banks ADEX Asociacion de Exportadores Association of Exporters AP Accion Popular Popular Action Party APRA Alianza Popular Revolucionaria Americana American Popular Revolutionary Alliance BCR Banco Central de Reservas Central Reserve Bank CADE Conferencia Anual de Ejecutivos Annual Conference of Executives CAEM Centro de Altos Estudios Militares Centre for Higher Military Studies CERTEM Certificado de Reintegro Tributario para Empleo Certificate of Tax Reimbursement for Employment CERTEX Certificado de Reintegro Tributario para la Exportacion Certificate of Tax Reimbursement for Exports CGTP Confederacion General de Trabajadores Peruanos General Confederation of Peruvian Workers CONACO Confederacion Nacional de Comerciantes National Confederation of Commerce CONFIEP Confederacion Nacional de Instituciones Empresariales Privadas National Confederation of Private Entrepreneurial Institutions ESAN Escuela de Administracion de Negocios para Graduados Graduate School of Business Administration FIE Fondo de Inversion y Empleo Investment and Employment Fund 7 FREDEMO Frente Democratico Democratic Front IDESI Instituto de Desarrollo del Sector Informal Institute for the Development of the Informal Sector IMF International Monetary Fund INP Instituto Nacional de Planificacion National Planning Institute IPAE Instituto Peruano de Administration de Empresas Peruvian Institute of Business Administration IPC International Petroleum Corporation ISI Import Substitution Industrialisation IU Izquierda Unida United Left MEF Ministerio de Economia y Finanzas Ministry of Economy and Finance MRTA Movimiento Revolutionary Tupac Amaru Revolutionary Movement Tupac Amaru PAIT Programa de Apoyo de Ingreso Temporal Programme of Support for Temporary Income PPC Partido Popular Cristiano Popular Christian Party PROEM Programa de Empleo Employment Programme SBS Superintendencia de Banca y Seguros Superintedent of Banks and Insurance Companies SNI Sociedad Nacional de Industria National Society of Industry UEPP Union de Empresarios Privados Peruanos Union of Private Peruvian Entrepreneurs 8 CHAPTER ONE THE INDUSTRIAL BOURGEOISIE AND STATE IN PERU: A FRAMEWORK FOR ANALYSIS Introduction In 1985, the election of Alan Garcia Perez was heralded as a new opportunity for social change and economic growth for the crisis ridden country of Peru. This event raised popular expectations as it was the first time Peru’s longest established party, the reformist APRA (American Popular Revolutionary Alliance) had assumed power.