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The Theory of Sectoral Clashes and Coalitions Revisited

Published online by Cambridge University Press:  24 October 2022

Markos J. Mamalakis
Markos J. Mamalakis*
Affiliation:
University of Wisconsin-Milwaukee
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According to the theory of sectoral clashes and coalitions, the sectoral element plays a unique role in affecting, on the one hand, the interrelationships between the economic processes of income creation, distribution, and allocation and, on the other hand, the interrelationships between economic, social, political, and institutional processes that make for change and progress. The objective of this essay is to extend the previous formulation of the theory of sectoral clashes and coalitions along two lines: first, by presenting statistical information from all of Latin America which prima facie supports the theory's basic premises; second, by defining and expanding these premises and the basic framework in an effort to obtain a clearer vision of the theory and its links to economic, political, and social reality. Although most criticisms of the theory find a specific answer and most of the suggestions for improvement are followed, this article is more than a rebuttal. In response to the urgent need for its further development, cited by all commentators and those who have applied and tested the theory in Argentina, Bolivia, Chile, Cuba, Mexico, and Peru, this essay seeks to open new ground and explore new dimensions.

Type
Topical Review
Information
Latin American Research Review , Volume 6 , Issue 3 , Fall 1971 , pp. 89 - 126
Copyright
Copyright © 1971 by the University of Texas Press

References

Notes

The basic statistical research of the present essay was made possible by an SSRC grant, and by general support from the Graduate School of the University of Wisconsin-Milwaukee. The writing of this paper was greatly stimulated by the published and unpublished comments, questions and criticisms and the various articles that have applied or tested the theory in Latin America.

1. See Markos J. Mamalakis, “The Theory of Sectoral Clashes,” Latin American Research Review, 4: 3: 9-46 (1969). This essay will be referred to in the future as “Sectoral Clashes,” and the journal as LARR.

2. See the comments which accompany the Mamalakis article, in the issue of LARR cited above, by Bo Anderson, Charles W. Anderson, Jorge I. Domínguez, Manuel Gottlieb, Gilbert W. Merkx, Miguel S. Wionczek, and Luciano Barraza.

3. The authors and essays applying the sectoral clashes theory to a Latin American country are the following. On Argentina, Gilbert Merkx, “Sectoral Clashes and Political Change: The Argentine Experience,” LARR, 4: 3: 89-114 (1969), and Luciano Barraza, LARR, 4: 3: 73-87 (1969), and the following unpublished papers, which were delivered at the AAAS Boston Meeting, December 1969: On Bolivia, James Malloy, “Patterns of Sectoral Clashes in Bolivia Between 1900-1964”; on Chile, Markos Mamalakis, “Sectoral Coalitions and Clashes in Chile: 1880-1930”; on Cuba, Jorge I. Domínguez, “Sectoral Clashes in Cuban Politics and Development” (published in a revised form in the present issue of LARR); on Mexico, Luciano Barraza, “The Effects of Sectoral Clashes on Growth and Distribution of Income. The Mexican Case.” (Barraza points out the need and strongly recommends further refinement and development of testable hypotheses of the theory of sectoral clashes). On Peru, Myron Frankman, “Sectoral Preferences of the Peruvian Government, 1946-1965.”

4. The key ingredients of the framework are presented in M. Mamalakis, “Sectoral Clashes,” LARR, 4: 3: 17-24.

5. A nation exists when, first, it possesses resource-surplus generating sectors and, second, when it has full control of the distribution and allocation of its domestic resource surpluses. In this framework, imperialism is defined as the manipulation by a nation or a group of nations of the sectoral resource-surpluses of another nation or group of nations in a manner that leads to a distribution and allocation of this resource surplus that is optimum to the former nation or group of nations.

6. A resource surplus is defined as the amount of resources a sector produces in excess of the subsistence requirements of its labor force. A resource surplus exists in those sectors of a low income country that have an above-average productivity. This definition of a resource surplus is similar to the notion of an agricultural surplus used by Dale W. Jorgenson, in “Development of a Dual Economy,” Economic Journal, 71: 309-334 (1961). It differs from the related agricultural surplus concept based on disguised unemployment which is used by Gustav Ranis and J. C. H. Fei, “A Theory of Economic Development,” The American Economic Review, 51: 4: 533-565 (1961).

7. A lengthy explanation of the concept of power and an unequivocal emphasis on the income distribution problem is found in Richard N. Adams, Crucifixion by Power; Essays on Guatemalan National Social Structure, 1944-1966 (Austin, 1970), in particular, pp. 117-123, 380-437. Even this excellent pioneering work suffers because it occasionally relies on such ambiguous concepts and ideas as the “lower sector” and the “upper sector,” which cannot always be properly identified, and on power, sources of power, consequences of power, conflict due to use of power, which are presented as synonyms and used interchangeably (pp. 117-123). According to my theory, the sectoral resource surplus is the source leading to power at the macro-nation-level, and this power is determined by its distribution between nations, classes, and regions. It is also the source of power at the micro-level, shaping the relationships between the entities that create, own, control, dispense, receive, or aspire to a share of the resource surplus. See also Richard N. Adams, The Second Sowing, Power and Secondary Development in Latin America (San Francisco, 1967), pp. 1-72, and 225-266.

8. Three types of productivity estimates are presented. Type (a) uses gross domestic product (GDP) statistics in current prices and labor force statistics prepared by the individual countries. Type (b) uses GDP figures in current prices and labor force statistics corrected by the Economic Commission for Latin America. Type (c) is based on deflated GDP or national income statistics and the ECLA labor force figures. These alternative productivity estimates are presented because the concept of income is measured in a variety of ways leading to different productivity estimates, not necessarily because one estimate is better or worse than another. Insofar as the sectoral labor force statistics are concerned, the corrected ECLA figures should be considered as the best available.

9. Bruce F. Johnston, “Agriculture and Structural Transformation in Developing Countries: A Survey of Research,” American Economic Review, June 1970, p. 378, presents some related arguments.

10. An interesting analysis of the manpower structure in Latin America is found in Zygmunt Slawinski, “The Structure of Manpower in Latin America: Evolution during the Last Few Decades and Long-Term Prospects,” in Human Resources Planning in Latin America (Paris: Organization for Economic Co-operation and Development, 1967), pp. 123-174.

11. A small mining surplus was also occasionally generated.

12. The service sector and the role of services in political, economic, and social development and transformation have received scant attention. As an example, see Barrington Moore, Jr., Social Origins of Dictatorship and Democracy, Lord and Peasant in the Making of the Modern World (Boston, 1966).

13. See Osvaldo Sunkel, “Política nacional de desarrollo y dependencia externa,” Estudios Internacionales, 1: 1: 1-43.

We may conclude at this point that because the relative capacity of a sector to generate a resource surplus is measurable, predictable and, within limited time horizons, known, and because this capacity plays a major role in shaping the nature and strength of government-sectoral coalitions and clashes, the coalition and clash patterns are non-random and predictable.

14. This should clarify the point raised by Richard P. Schaedel, LARR, 4: 3: 4 (1969), Miguel S. Wionczek, LARR, 4: 3: 70 (1969).

15. The statistical evidence of this essay was specifically developed to dispel the notion that sectoral clashes are a unique Chilean experience. See M. S. Wionczek, LARR, 4: 3: 71 (1969). As Merkx has shown, Argentina has also been afflicted by prolonged sectoral clashes: Merkx, LARR, 4: 3: 89-114.

16. The theory of sectoral clashes claims that internal sources of conflict prevent a country from acquiring the ability to eliminate bottlenecks constraining growth. The tests of the sectoral clashes theory by Luziano Barraza, LARR, 4: 3: 73-87, (1969), are highly informative but can neither reject nor validate the theory. Tests of the theory would have to consider all sectors of the economy and test, first, the hypothesis that some sectoral income shares are “artificially” high and, second, that productivity inequalities can inhibit growth by distorting all three economic processes.

17. See Hammond Innes, The Conquistadores (New York, 1969), p. 309.

18. An excellent and classic understanding of the conquest is offered by William H. Prescott, History of the Conquest of Mexico, and History of the Conquest of Peru (New York). Prescott's quotations on the title of his book on Peru described the mood and heritage of the conquest: “Congestae cumulantur opes, orbisque rapinas accipit” (Claudian, In Ruf., lib. i., v. 194); “So color de religion/Van a buscar plata y oro/Del encubierto tesoro” (Lope de Vega, El Nuevo Mundo, Jorn. I.)

19. For an analysis of governmental capabilities, see the very informative work by G. A. Almond and G. B. Powell, Comparative Politics: A Developmental Approach (Boston, 1966), pp. 190-212.

20. The values of productivity differentials presented earlier underestimate the real size and social impact of the true productivity and income inequalities since they lump together multi-million dollar mining colossi with primitive copper, tin, silver, and other excavations.

21. Both the Castro revolution and, to a lesser degree, Perón's, succeeded in achieving a rapid transformation in the distribution process. This is consistent with the advantages seen in revolution by Moore, Social Origins, p. 505. It would be incorrect to conclude from this, that rapid change and transformation, especially in income distribution, is impossible in a democracy. It is possible, as long as the problem is recognized and its solution is given due priority; furthermore, democratic change can be achieved without the human and social costs inevitable in revolutionary change.

22. This section attempts to answer the interesting questions raised by M. S. Wionczek, LARR, 4: 3: 69-70 (1969).

23. “Sectoral Clashes,” LARR, 4: 3: 19-23 (1969).

24. This is an extension of Hypothesis 4, according to which government is an agent. Because of the nature of government as a conglomerate of “sub-agents,” internal conflict, conciliation, changes in orientation, and use of instruments in pursuing objectives, and so forth, are part of a normal pursuit of business.

25. Robert Dix, unpublished “Comments on ‘Sectoral Coalitions and Clashes in Chile: 18801930‘ by Markos Mamalakis,” AAAS meeting, Boston, Dec. 1969, p. 1. The material in parentheses has been added.

26. The ownership element has provided the foundations for rebellion of the colonies against the crown, of nationals against foreigners, of the Spanish and assimilated ethnic groups against unassimilated middle classes, of the Indians against the whites, and of the poor against the rich. The conflicts, revolts, and rebellions have always existed. The groups involved are constantly changing.

27. Innes, The Conquistadores, p. 309.

28. See Harry G. Johnson, “Toward a Generalized Capital Accumulation Approach to Economic Development,” in Economic Development, Readings in Theory and Practice, Theodore Morgan and George W. Betz, eds. (Belmont, 1970), p. 84.

29. Moore, Social Origins, pp. 485-487.

30. In the present section, I have attempted to link more rigorously the various patterns and stages of sectoral clashes and coalitions with each other and with the three processes of income creation, distribution, and allocation. This expanded framework can be used in assessing and expanding the work by Barrington Moore and others and in rethinking the traditional explanations of development in both Latin America and elsewhere.

31. The most serious misconception and misinterpretation comes from Jorge Domínguez, who claims that the theory of sectoral clashes and coalitions is part, and a subset of, interest group theory. See Domínguez, “Sectoral Clashes in Cuban Politics and Development,” in this issue of LARR.

32. Almond and Powell, Comparative Politics, pp. 73-97; 190-212.

33. Almond and Powell, Comparative Politics, pp. 42-72, provides a detailed description of these concepts.

34. The sectoral base of interest groups is partially recognized by David B. Truman, The Governmental Process (New York, 1965), pp. 63-93. However, the treatment is too superficial and institutional to permit one to grapple with the multiple, changing interactions between sectoral bases and transformation, on the one hand, and, on the other, with political development and transformation.

35. For a definition of “lawful” and “unlawful”, according to Plato and Aristotle, see Almond and Powell, Comparative Politics, p. 190. The notion of “good” in defining a political rule should be interpreted as establishing an optimum relationship between sectoral and political transformation.

36. It is worth noting that Almond and Powell, Comparative Politics, p. 308ff., have not recognized (or even mentioned) the unique importance of the “sector” as the foundation, tool and, even in part, objective of development. They therefore create numerous “formal” systems (p. 308ff.,) which seem to lack substance.

37. This should clarify the misunderstanding and partial misinterpretation of the theory by Jorge Domínguez in his adjoining essay. Although the main part of Domínguez's essay is well prepared, some of the conclusions do not follow his main analysis. Domínguez's statements that “existing theories of economic development are also adequate to explain Cuba's choice,” and that “growth occurs for other reasons which are explained by existing economic theory,” remain unproven and, furthermore, suggest a state of knowledge of development economics far above the generally accepted one. As Fei and Ranis point out: “the really essential issue of any viable growth promotion policy … is how to facilitate the various learning processes … with the help of foreign aid, rather than how to calculate foreign aid requirements… In other words, we must pay increasing attention to the rules governing changing behavior patterns in the course of economic growth.” J. C. H. Fei and G. Ranis, “Foreign Assistance and Economic Development: Comment,” American Economic Review, (Sept., 1968), p. 910. The theory of sectoral clashes is concerned with the impact of government—sectoral coalitions on the learning processes that shape production, distribution, and allocation, and social, political, and economic development.

38. Interest group analysis is at such a primitive stage of development that a claim of the existence of sets and subsets cannot be made. The foundations, tools, objectives, and interactions of interest groups have not yet been properly explored. This is an additional reason why it is misleading to argue that the theory of sectoral clashes is a subset of interest group theory.

39. For example, democracy of a predominantly agricultural, rural, open-land economy is a different democracy, in terms of the aforementioned rules, than the one based upon an industrial-service, predominantly urban economy.

40. This idea has a long history, as shown by B. Moore: “Like Winstanley before him, Babeuf regarded political equality a sheer deception if unsupported by economic rights.” See Moore, Social Origins, p. 501.

41. Although economists favor economy-wide, transectoral policies, such as a one-wage policy, extensive sectoral income inequalities make such class-oriented policies impossible to implement. In Chile, Argentina, and elsewhere, inflation has remained uncontrolled because a “one-wage” policy could never please all sectors and a “multiple-wage”' policy that could accommodate sectoral differences has not yet been devised. Even in the United States, social and political behavior stems from sector-related wage and salary differentials giving rise to almost as many “classes” of workers and capitalists as there are sectors.

42. Joint action by all sectoral income groups can be desired by one or more classes in a sector. The mere desire provides no guarantee for action, however. Unions frequently press management to raise output prices, suggesting that capitalists as well as workers are bound to gain. Management may or may not accept, depending on whether it feels that the price increase will stick and the expected benefits will materialize. Management and capitalists occasionally provide extremely high wages and fringe benefits to their workers, hoping to turn them into a political force lobbying in their favor with government. There is no guarantee that workers will reciprocate. In some instances they do, in others they do not. In Latin America, such policies by foreign mining, agricultural, and industrial concerns have frequently backfired. Social unrest and sectoral conflict was intensified as such policies increased the sectoral income differentials to socially and politically intolerable levels. The end result has frequently been nationalization or discrimination against the foreign-owned enterprises and sectors.

43. See Anderson, LARR, 4: 3: 48 (1969).

44. In the more common pattern, parties control sectoral voting blocks, or particular sectoral income groups control a party. For example, landowners control one party while industrial and mining workers overwhelmingly vote for another party. Since funds donated to party campaigns by landowners emanate predominantly from agriculture, its level and distribution of income and wealth can be used as a yardstick to predict the economic strength, but not necessarily the political appeal, of a party.

45. See C. W. Anderson, LARR, 4: 3: 51-52 (1969), for a political scientist's way of looking at suppression of guerrilla movements.

46. See C. W. Anderson, LARR, 4: 3: 51-52 (1969).

47. The sectoral element in international conflict was highlighted at the beginning of 1971, as the negotiations between American and European petroleum companies and the Organization of Petroleum Exporting Countries (which includes Iran, Kuwait, Iraq, Saudi Arabia, Abu Dhabi, Qatar, Libya, Algeria, Indonesia, and Venezuela) broke down repeatedly. The less-developed nations refuse to remain as “milk cows.” They are demanding a rising share of the resource surplus generated in the petroleum sector, a rise in the surplus generated through price increases, and complete sovereignty and independence. Foreign companies do not object to a change in the rules of sharing resource surpluses, but correctly claim that a minimum stability of any set of rules is a required investment incentive.

48. For an extensive analysis of the Good Neighbor policy and its close relationship to sectoral strategies of the United States towards Latin America, see Bryce Wood, The Making of the Good Neighbor Policy (New York, 1961).

49. President Nixon's Partnership policy has been interpreted almost totally in economic and heavily in sectoral terms by Galo Plaza, secretary general of the Organization of American States. Plaza sees the partnership evolving around “trade and development assistance” policies of the United States that will support “Latin America's impressive self-help efforts to accelerate economic and social development and effect reform.” See address by Galo Plaza, secretary general of the Organization of American States, at the convocation for awarding the Maria Moors Cabot Prize at Columbia University, New York City, Oct. 29, 1970. The title of the address was “Partnership in the Americas,” Information Service News Release of the Organization of American States, Oct. 28, 1970, E-177/70, p. 10.

50. Wood, The Making of the Good Neighbor Policy, p. 330.

51. Galo Plaza's address; cited:n.49.

52. See Manuel Larraín Ezzázuriz, “We Must Know the Signs of the Times,” The Religious Dimension in the New Latin America, John J. Considine, M. M., ed. (Notre Dame, Ind., 1966, pp. 215-224. It was Bishop Larraín's plea of August 1965, for international justice, entitled, “Victory or Ruin in Latin America,” which enunciated the theme that Pope Paul VI embodied in his letter to U Thant: “The New Name for Peace is Development,” Considine, The Religious Dimension.

53. Extremely informative in this respect are the following documents and books: “Second General Conference of Latin American Bishops; The Church in the Present-Day Transformation of Latin America in the Light of the Council; I: Position Papers,” pp. 1-280, II; “Conclusions,” pp. 1-290 (Bogotá, Colombia: General Secretariat of CELAM, 1970); Social Revolution in the New Latin America, A Catholic Appraisal, J. J. Considine, M. M., ed. (Notre Dame, Ind., 1965).

54. Bishop Larraín became a forerunner of this movement through his actions in 1962. Ibid., p. 215.

55. Ibid., p. 219.

56. Ibid., p. 218.

57. It has actually made this commitment, according to Leon Josef Cardinal Suenens, “Latin America and the Universal Church,” in Integration of Man and Society in Latin America, Samuel Shapiro, ed. (Notre Dame, Ind., 1967), pp. 337-352.

58. The need for rules curbing the power of specific sectors or sectoral-income groups is being recognized in 1971 at the highest levels of the Republican administration. Thus, President Nixon has labeled the construction situation a “crisis,” and both Paul McCracken, chairman of the Council of Economic Advisers, and Leonard Woodcock, president of the United Auto Workers (Time, Feb. 15, 1971), have singled out the construction wage increases as excessive. The social crisis in the United States is likely to increase along the Latin American pattern, if sectoral income differences continue to rise at the alarming rate of recent years. President Nixon's August 1971 economic policies are a direct consequence as well as recognition of the past lax rules of the game concerning intersectoral and interclass distribution of income.

59. Such a sectoral clash leads to a negative sum game even though the dominant sectors gain by extracting resources from the rest of the economy through relative price changes.