Proefschrift DEF stramien 14-09-2005 09:35 Pagina 1 The Chilean miracle PATRIMONIALISM IN A MODERN FREE-MARKET DEMOCRACY Proefschrift DEF stramien 14-09-2005 09:35 Pagina 2 The Chilean miracle Promotor: PATRIMONIALISM IN A MODERN Prof. dr. P. Richards FREE-MARKET DEMOCRACY Hoogleraar Technologie en Agrarische Ontwikkeling Wageningen Universiteit Copromotor: Dr. C. Kay Associate Professor in Development Studies Institute of Social Studies, Den Haag LUCIAN PETER CHRISTOPH PEPPELENBOS Promotiecommissie: Prof. G. Mars Brunel University of London Proefschrift Prof. dr. S.W.F. Omta ter verkrijging van de graad van doctor Wageningen Universiteit op gezag van de rector magnificus van Wageningen Universiteit, Prof. dr. ir. J.D. van der Ploeg prof. dr. M. J. Kropff, Wageningen Universiteit in het openbaar te verdedigen op maandag 10 oktober 2005 Prof. dr. P. Silva des namiddags te vier uur in de Aula. Universiteit Leiden Dit onderzoek is uitgevoerd binnen de onderzoeksschool CERES Proefschrift DEF stramien 14-09-2005 09:35 Pagina 4 Preface The work that follows is an attempt to blend together cultural anthropology with managerial sciences in a study of Chilean agribusiness and political economy. It also blends together theory and practice, in a new account of Chilean institutional culture validated through real-life consultancy experiences. This venture required significant cooperation from various angles. I thank all persons in Chile who contributed to the fieldwork for this study. Special Peppelenbos, Lucian thanks go to local managers and technicians of “Tomatio” - a pseudonym for the firm The Chilean miracle. Patrimonialism that cooperated extensively and became key subject of this study. I thank all tomato in a modern free-market democracy growers (especially Don Nano) and all machinery contractors (especially Alejandro del Río) for exciting learning experiences out there in the field. I thank Ovidio Melo for excellent assistance in constructing the tomato chain platform. I thank Jaime Crispi, CEO of Surfrut, for his unique trust and openness, allowing me to assist in staff meetings. I Key words: supply chain management, patron-client organization, Chile, tomato thank Ernesto Sahr, ex-CEO of Empresas Iansa, for sharing his view from the top in a industry, cultural grid-group theory series of interviews. I thank the agribusinesses that received me, the peasant cooperatives that worked with me, the persons who provided me brokerage, and the policymakers, managers, experts and other persons in Santiago who found time for an interview. I thank all persons who guided me in the research process. I thank Francisco Matus, associate professor at Talca University, for exciting discussions on scientific method and Chilean culture while drinking a cup of real coffee. I thank Paul Engel, associate professor at Concepción University, for helpful suggestions and sharing his vast experience in Latin America. Special thanks go to Ab van Eldijk, senior teacher at Wageningen University, for neverending inspiration and personal coaching throughout these years. I thank Cristobál Kay, associate professor at ISS, for a wonderful exchange of ideas between a Chilean scholar living in the Netherlands and a Dutch scholar trying to make sense of Chilean society. I thank my colleague Sietze Vellema for sharing his research experiences on contract farming, which provided great support early on in the research process. Special thanks go to Paul Richards, professor at Wageningen University, for intellectual inspiration and pleasurable supervision, and for awakening in me a passion for cultural © Copyright Lucian Peppelenbos, 2005 theory. I thank both my Chilean and my real family for unconditional support in hard times. I All rights reserved. No part of this publication may be reproduced, stored in a retrieval thank WOTRO-NWO for financial support to the study. I thank Thirza Peppelenbos for system, or transmitted, in any form or by any means, electronic, mechanical, the graphic design of the book. I thank Simone for editorial revision of the book. photocopying, recording or otherwise, without the prior permission of the author. All translations from Spanish and Dutch are my own. Dollars are US dollars. Where gendered language is used, he also refers to she. ISBN 90-8504-245-3 Proefschrift DEF stramien 14-09-2005 09:35 Pagina 6 Table of contents Preface Lists of Tables, Figures and Boxes Introduction Neo-liberal globalization and the Chilean miracle 1 The Chilean miracle: a neo-liberal triumph? 1 The persistence of patron-client organization in neo-liberal Chile 4 Structure of the book 8 Chapter 1 Clientelism in the tomato chain 11 1.1. Introduction 11 1.2. The Chilean tomato industry and its position on the world market 11 1.3. Crisis in the tomato industry 16 1.4. Tomatio's response to the crisis: 'Californization' 19 1.5. The crisis in Tomatio's response to the crisis 23 1.6. Clientelistic management in the tomato chain 26 1.7. Hampered chain performance and frustrated innovation 32 1.8. The paternalistic organization of machine harvesting 35 1.9. The vicious circle of distrust 38 1.10. Interpersonal trust versus institutional trust 42 1.11. Institutional imprisonment? 44 Chapter 2 Theoretical intermezzo 47 2.1. Introduction 47 2.2. The concept of clientelism 47 2.3. The origins and persistence of clientelism 51 2.4. An account of cultural grid-group theory 54 2.5. The hacienda as 'patron-client institutionality' 58 2.6. The proposition of clientelism as 'Chilean institutionality' 62 Chapter 3 The history of clientelism in Chile (1540-2005) 65 3.1. Introduction 65 3.2. Colonial Chile (1540-1818) 66 3.3. The Autocratic Republic (1818-1870s) 69 3.4. The Parliamentary Republic (1880s-1930) 72 3.5. The Compromise State (1930s-1964) 76 3.6. Revolutionary Chile (1964-1990) 80 3.7. Modern democratic Chile (1990-2005) 89 Chapter 4 The cultural reproduction of clientelism in Chile 97 4.1. Introduction 97 4.2. From 'Chilean idiosyncrasy' to 'Chilean institutionality' 97 4.3. The debate on order versus anarchy (the huaso versus the roto)99 4.4. The debate on 'Chilean economic mentality' 108 4.5. Reinterpretation of the idiosyncrasy debate 114 4.6. The reproduction of 'Chilean institutionality' 115 Proefschrift DEF stramien 14-09-2005 09:35 Pagina 8 Chapter 5 Back to the tomato chain 123 List of Tables 5.1. Introduction 123 5.2. Tomatio as a paternalistic hierarchy 123 I.1 Some statistical facts on neo-liberal globalization 3 5.2.1. Tomatio's corporate background 124 1.1 Profile of the Chilean tomato processing industry (1998) 12 5.2.2. Corporate business strategy: 'the big leader and provider' 128 1.2 Mechanization of the crop at Tomatio (1999) 20 5.2.3. Corporate culture: the big patriarchal family 131 1.3 The shift from manual to machine harvesting 25 5.2.4. Corporate failure: overconfidence in authority and big ideas 135 1.4 Perceptions on farmers' authority in crop production (2000) 28 5.2.5. Tomatio as a paternalistic hierarchy 136 2.1 Comparison of quasi-groups and categorical groups 50 5.3. Tomato growers as fatalists 145 2.2 Patron-client organization as 'institutionality' 62 5.3.1. Farmers' chain experiences: 'fairness is not in this world' 145 3.1 The political economy of the compromise state 78 5.3.2. Farmers' resistance strategies: short-term individualism 148 4.1 Value attachment across the world 102 5.4. The vicious circle of distrust revisited 152 5.1 Profile of Empresas Iansa (2002) 125 5.5. Changing the institutionality of the tomato chain 157 5.2 Diversification and internationalization of Empresas Iansa (1990-1997) 126 5.5.1. Strategy and methodology of the chain platform 158 5.3 Development of Empresas Iansa after 1998 127 5.5.2. Experiences and results of the chain platform 161 5.4 Overheated expectations of new business ventures by Empresas Iansa 136 6.1 'Patron-client institutionality' versus concerted cooperative behavior 186 Chapter 6 Paternalism in rural organization 167 7.1 Profile of Don Nano's farm enterprise (2000) 190 6.1. Introduction 167 7.2 Ideal-type comparison of corporate versus paternalistic management 199 6.2. The resilience of clientelism in the Chilean peasant movement 168 7.3 Profile of Surfrut (2000) 202 6.3. Problems and mistakes of peasant organization 174 7.4 Indicators of Surfrut's competitiveness 207 6.4. The reproduction of patron-client institutionality among peasants 182 7.5 Indicators of Surfrut's labor environment 207 6.5. Towards viable peasant organization 185 7.6 Indicators of Surfrut's chain relations 208 E.1 The pro's and contra's of 'patron-client institutionality' 220 Chapter 7 Paternalism on the shop floor 189 7.1. Introduction 189 7.2. Business administration on a farm enterprise 189 7.3. What is Chilean-style business management good for? 194 7.4. Participatory management in an agro-industrial firm 201 Epilogue The Chilean miracle: durability within change 211 List of Figures 1. The context of the study 211 2. The proposition of the study 212 1.1 Exports of Chilean tomato paste (1977-2003) 15 3. The cultural reproduction of 'Chilean institutionality' 215 1.2 Export prices for Chilean tomato paste (1977-2003) 17 4. The real-life reproduction of 'Chilean institutionality' 217 1.3 Tomatio's model of agricultural innovation 22 5. The pro's and contra's of 'Chilean institutionality' 219 1.4 The vicious circle of distrust 41 6. The empirical and theoretical foundation of 'Chilean institutionality' 221 2.1 A vain attempt to grasp clientelism in empirical reality 54 7. The added value of the perspective of 'Chilean