TALLINN UNIVERSITY OF TECHNOLOGY Faculty of Social Sciences Ragnar Nurkse School of Innovation and Governance Otto René Mena Barrios INDUSTRIALIZATION AND THE INTELLECTUAL FOUNDATIONS OF SOCIO-ECONOMIC DIVISION IN GUATEMALA Master’s Thesis Supervisor: Associate Professor Erik Reinert Tallinn 2018 I declare that I have written the master’s thesis independently. All works and major viewpoints of the other authors, data from other sources of literature and elsewhere used for writing this paper have been referenced. Otto Mena................................... (Signature, date) Student’s code: 146117 HAGM E-mail: [email protected] Supervisor Associate Professor Erik S. Reinert The thesis conforms to the requirements set for the master’s thesis ......................................... (Signature, date) Chairman of the Defence Commission Permitted to defense .................................................. (Title, name, signature, date) Table of Content ABSTRACT ................................................................................................................................................ 5 INTRODUCTION ....................................................................................................................................... 6 DEFINITION OF THE PROBLEM ................................................................................................................ 7 Unit of analysis .................................................................................................................................... 7 The geographical area of Study. .......................................................................................................... 8 Limitations of the study ....................................................................................................................... 8 BACKGROUND: Power of the State, but which Type of State ................................................................. 9 Power relations ................................................................................................................................. 10 INTRODUCTION TO THE FAMILY NETWORKS ........................................................................................ 13 Family networks ................................................................................................................................ 14 Families and institutions: the state as a veil ..................................................................................... 17 IDEAS DIVIDED: José Cecilio del Valle y Antonio Batres Jáuregui ......................................................... 20 Latin American Liberal Intellectual edifice ........................................................................................ 20 The Central American liberal thought of José Cecilio del Valle and Antonio Batres Jáuregui. ......... 22 General perspectives in Valle and Batres .......................................................................................... 23 The homeland and nation-building in Valle and Batres .................................................................... 24 Big and Small fatherland ................................................................................................................... 25 José Cecilio del Valle, an eclectic liberal with continental nuances .................................................. 30 The failure of liberal thought ............................................................................................................ 35 Alternative intellectual influences .................................................................................................... 36 Alberto Masferrer and his Minimum vital ......................................................................................... 36 INDUSTRY .............................................................................................................................................. 39 The brief situation of the industrialized world .................................................................................. 39 Early industrial policies: Guatemala and Costa Rica contrasted ................................................... 42 Coffee and Bananas ........................................................................................................................... 42 Costa Rica productive structure .................................................................................................... 43 Guatemala as coffee and banana republic .................................................................................... 46 Subsequent industrial policies .......................................................................................................... 49 Industries and its promotion ............................................................................................................. 50 The genesis of the Central American Common Market ........................................................................ 54 Ten years of democratic spring ......................................................................................................... 56 The Central American Common Market ........................................................................................... 58 The early neoliberal era and today ................................................................................................... 61 Universities ........................................................................................................................................ 62 University Francisco Marroquín .................................................................................................... 63 Other universities .......................................................................................................................... 64 RESULTS: Consequences of the ideology .............................................................................................. 65 Distorted industrial policy ................................................................................................................. 65 One of the smallest states in the world ............................................................................................ 67 Industrial bank as a bond seller ......................................................................................................... 68 State capture ..................................................................................................................................... 68 Other conclusions: ............................................................................................................................. 70 ANNEXES ................................................................................................................................................ 72 REFERENCES .......................................................................................................................................... 75 ABSTRACT Drawing from the German Historical School method, the present work investigates the trajectories and divisions throughout the history. Family networks in Guatemala that function as a corporation, with 22 families in the core and 26 adjacent, have used the state as a veil to maintain the power. The element that as family networks allowed them to survive during an economic crisis and power emptiness, has been its ability to diversify its economy and take the place of the State to preserve their domain and remain stay in power as a cohesive block. It is examined the evolution of two countries of the postcolonial Central American Federation. Costa Rica and Guatemala, and how early on different kind of elites and production matrix produced utterly different societies. It is for this reason that the present study present as units of analysis the history of industrialization from the colonial time, the relations of power and role of the elites and their ideology embodied in institutions, the legal system, and universities as vehicles to propagate the ideas. The ideology is promulgated by intellectuals that provide specific social imaginaries that are key for these families to maintain the political hegemony of their ancestry. The role of the two foremost intellectuals of the post-colonial time is examined. Keywords: Industrialization, Family Networks, Organic Intellectuals, Power Relations, Universities, INTRODUCTION The industry is the engine that drives the economy and is in close relation with liberty. Economic development requires not only the individual will and wit but industrial policy and then trade supported by a network of entwined institutions. Guatemala that Albert Hirschman loved and reminded him of Switzerland, with the added anthropological appeal of Mayan villages has a complicated trajectory. (Nicaragua Notes 1955 in Adelman, 2013, p. 314). Guatemala is not and has never been a reference in industrialization. Nonetheless, the present work digs into the rise of industrialists to explain contemporary socio-economic and political situation. Beginning with the attempt to modernize the economy, the state was the protagonist through deliberated policies to the industrialization that emerged in the 1870s. The work basis itself on snapshots of different eras. More precisely, inflections on the history are described as critical junctures or punctuations for significant changes at long and irregular intervals (Pollitt, 2008, p. 45). The perspective on historical development,