Posts Tagged ‘Peru’

Doe_Run_smelter_Herculaneum_22 DoeRunPeruviaTimCampion

Herculaneum, Missouri and La Oroya, Peru. I’ve never been to the former but, when I visited La Oroya in 1975 (about a year after the Peruvian military government had nationalized it), it looked and felt one of those dark, rainy, cold scenes in a dystopian film (like Blade Runner) or, closer to home, the South Works in Chicago. From what I’ve read, Herculaneum was no better.

As it turns out, the two cities are closely connected: the Doe Run Co., one of the world’s largest lead producers (and part of the Renco Group, the private holding company of New York mining mogul Ira Rennert), has operated smelters in both places.* And, in both company towns, workers and their families have suffered high levels of lead poisoning.

As Mother Jones explained back in 2006:

The story of these two towns and how they found each other illustrates an increasingly common pattern: A company faced with mounting public pressure and environmental costs in the United States expands its dirty operations abroad, where regulations are lax, labor costs low, and natural resources abundant–and where impoverished people become dependent on the jobs and charity of the very business that causes them harm.


After decades of battles, beginning with an ugly labor dispute in the early 1990s and dozens of lawsuits, the Herculaneum smelter was finally closed (in 2013), after Doe Run decided not to make the investments necessary to meet U.S. Clean Air standards. Now, it’s part of the Southwest Jefferson County Mining Site, a superfund project.


Smelting operations in La Oroya, on the other hand, which in 2013 was classified (by the Blacksmith Institute) as the fifth least recommended city to live on the planet (based on the presence of heavy metals, mercury, arsenic, pesticides and radionuclides in air, soil and water samples and the number of people exposed to pollution), may soon be reopened. Peru’s new president, former Wall Street executive Pedro Pablo Kuczynski, “says Peru needs to relax air-quality standards to attract investors to buy and restart the century-old complex, which processes mineral concentrates into high-value metals for export.”

“Why send concentrate to China or elsewhere when you could smelt it here?” Mr. Kuczynski, who took office Thursday, said in an interview recently. “To do that, you have to have environmental standards that are realistic.”


*This is the same Rennert who, in 2015, was found guilty of looting his bankrupt magnesium producer (to the tune of $117 million) and, earlier this year, was forced to restore full pension benefits for 1,350 retired steelworkers who worked at Renco’s bankrupt RG Steel unit. Doe Run Peru halted operations at La Oroya in 2009. The smelter is now controlled by Doe Run’s former creditors, who have until 27 August to find a new buyer. Kuczynski is now trying to extend the liquidation deadline.


Posted: 30 August 2012 in Uncategorized
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Only in the world of Thomas Friedman—and Reuters—is the arrival of McDonald’s a sign that development in Huancayo and the rest of Peru is taking place.

I have no doubt that, in Peru and elsewhere, the aspiring middle-class equates development with access to fast food and shopping malls. But that is very different from arguing that economic and social development—for the poor and working classes—is actually occurring.

Disclosure: I spent a year studying in Huancayo, from 1975 to 1976, at the Universidad Nacional del Centro del PerĂş.

We’ll fulfill five-year plan in four years!

Neoclassical economics has long been structured around the dichotomy between markets and planning as alternative mechanisms for the efficient allocation of resources. And, of course, neoclassical economists have long concluded that decentralized markets are better at that task than central planning.

The problem with that formulation is that it presumes there’s one essential economic problem—the efficient allocation of scarce resources—and that markets and planning are just different ways of accomplishing the same objective. In other words, it’s an approach that denies the role of history and social conditions, that different economic institutions—such as markets and forms of planning—arise under (and in turn serve to create) different historical and social conditions.

Now, Daron Acemoglu and James Robinson want to modify the discussion but keep the same method. In their view, “central planning is not about the efficient allocation of economic resources, it is about control.”

Central planning maximizes the extent of control that the state, and the people running the state, exercise. The desire to control others is a constant in history and is part and parcel of the construction of states. If the state can grab all the land and resources and control who and on what terms people get access to them, then this maximizes control, even if it sacrifices economic efficiency.

This sort of economic and political control — not Marxist ideology — is what central planning is all about.

What they do is substitute one essence—the efficient allocation of scarce resources—with another—control by the elites through the state. The result is that planning remains a singular phenomenon, which they find throughout history: in the Greek Bronze Age, among the Incas, and in the Soviet Union.

Many additional issues can be raised about their approach. Let me mention two. First, I actually think they let Marxism off the hook too easily since, as Jack Amariglio and I argued in Postmodern Moments in Modern Economics, while central planning may not be mentioned in Marx’s writings, there is a long tradition of modernist Marxism that has preferred the presumed order of central planning over the disorder of markets. As we wrote:

The relativism (one-sidedness), uncertainty, and disorder of capitalism are overcome by rational planning whose objective basis—the victory of the proletariat, with its full appreciation of the totality—guarantees in advance the superiority of its knowledge and practice.

Postmodern Marxist economists could not but regard this view as unhelpful and ultimately damaging in distinguishing between capitalism and socialism. For it is clear, to postmodern Marxists at least, that socialism has been and will be beset with the multiplicity of knowledges and the radical uncertainty that goes along with the contingency of events and the persistence of ideology. The debilitating effects that, as many Marxists have pointed out, have been visited both on peoples living under socialist regimes and on the very concept of socialism can be tied directly to the claim by the party or state to have privileged (and not partisan) objective knowledge has been considerable. Socialist planning, in our view, will always be marked by the mediation of different knowledges and subjectivities, and the resulting plan, a contingent act if there ever was one, may need to declare itself as partisan, provisional, and uncertain of its effects if it is to avoid the disasters that have befallen planning mechanisms that have been infused with modernist explanations and ideals, utopian though they may have been.

In this sense, the totalizing promise of rational centralized planning is a modernist one. The declared partiality, relativism, and disorder of planning are, in contrast, postmodern.

And there’s a second issue: while I have no doubt that, in particular instances, state planning has been used to enrich elites, when will Acemoglu and Robinson discover that markets, too, under different historical and social conditions, have been mechanisms whereby elites “control and extract resources from society”?

Protest of the day

Posted: 7 July 2012 in Uncategorized
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The Peruvian government has declared a state of emergency in the mountain region of Cajamarca where thousands have gathered in recent days to protest the expansion of a gold mine owned by the U.S.-based Newmont Mining that is already the largest in South America.

Protest of the day

Posted: 5 December 2011 in Uncategorized
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Peruvians protest the Newmont Mining Corporation’s plans to expand Yanacocha, Latin America’s biggest gold mine.

Poverty in the southern highlands of Peru can be explained by history—in particular, by Spanish colonialism. That’s the argument made by Melissa Dell, a Ph.D. student in MIT’s Department of Economics.

Her work might not be so notable in other disciplines but it is in economics. Because historical institutions are considered an important determinant of contemporary conditions. Because Dell focuses on the mita, the system of forced labor conscription for the silver and mercury mines. And because she actually went to Peru (for a month) and conducted interviews with people. All three dimensions make her work stand out in economics.

In my view, Dell’s working paper, “The Persistent Effects of Peru’s Mining Mita,” warrants scholarly attention and scrutiny. I won’t present a full analysis of it here. However, there are two parts of her argument that concern me: First, I was reminded, the hacienda system (in the non-mita areas) and the mita system did not exist at the same time (which Dell seems to presume); the former emerged as a dominant land-tenure system only after the latter was in decline (as I was reminded of by my favorite Latin Americanist). Second, it’s hard to argue that there’s a positive association between the hacienda system and contemporary economic development; while the hacienda areas might not be as poor as the mita-affected areas, the majority of people in both those areas are still poor, by Peruvian and world standards. The existence of well-defined property rights and public infrastructure (such as roads) might help to sell agricultural commodities but large-scale agroindustrial producers (including agro-exporters), rather than landless and smallholding peasants, are the ones who are benefited, then as now.

Notwithstanding what Dell takes to be the implications of her work, for me and for many Latin Americanists, the history of land inequality and the associated systems of labor exploitation remains a “useful starting point for modeling Latin America’s long-run growth trajectory.”