Neo-extractivism in Venezuela and Ecuador: A weapon of class conflict

Highlights

• The concept of extractivism downplays the context of changes in development models.

• A social class approach better captures the changing role of extractive rent.

• The capitalist class in both Venezuela and Ecuador rejected state-led development.

• Left-wing governments changed the social property relations to recover oil rent.

• Left-wing governments reduced inequalities but restrained popular organizations.

Abstract

Over the last four decades, the role of the extractive sector in the development models of Venezuela and Ecuador has changed significantly. This study examines how class struggle affected the role of rent within three divergent development models: import substitution industrialization (ISI)-corporatist, neoliberal-fragmented, and rentier-controlling. It argues that the attitude of the capitalist class towards the state and the working class was crucial in the transition from the ISI-corporatist model to the neoliberal-fragmented model. It led to a process of privatization in the oil industry and competition among capitalists for rent. In response to the social consequences of this shift, the left-wing governments reclaimed state ownership of hydrocarbon resources and obtained more rent in efforts to recover some state autonomy. A more unified capitalist class in Venezuela reacted more aggressively to this transformation of the social property relations around hydrocarbons, while in contrast, a more divided capitalist class in Ecuador reacted more mildly. However, both governments redistributed rent and created subservient popular sector organizations in order to curb popular power as well as offset the power of the capitalist class. In contrast to some analyses of extractivism, this paper takes a class perspective that emphasizes the changing role of resource extraction within different development models despite outward appearances of continuity.

Introduction

Neo-extractivism is a concept frequently applied in critiques of Latin American governments associated with the “pink tide”, the wave of left-wing governments that have spanned across Latin America since the beginning of the 21 st century.¹ While in the 1990s most Latin American governments were enacting the economic program of the right and left parties were barely winning electoral space (Weyland, 2010), by 2009, almost two thirds of Latin Americans lived under a government associated with the left (Levitsky and Roberts, 2011, p. 1). Despite this important turn, the countries governed by the left have not put in place policies to steer economic structures away from extractivism. This paper examines how class conflict has influenced the development model in Venezuela and Ecuador and the role that the extractive sector has played within it.

Extractivism is a mode of accumulation based primarily on extractive activities, especially mining and oil extraction, but also on primary production for international markets (Acosta, 2011, Acosta, 2009, Gudynas, 2012, Gudynas, 2010, Merino Acuña, 2015, Pellegrini, 2016, Seoane et al., 2013, Veltmeyer and Petras, 2014). The prefix “neo” alludes to the fact that pink tide governments also pursue extractivism, but in contrast with their predecessors, it is now justified by the need to generate the rent necessary to support the poverty alleviation strategies and other social justice programs that characterize their administrations (Gudynas, 2012, p. 134). The high commodity prices of the first decade of the 21st century are being blamed for fostering the convergence that Svampa (2013, pp. 31–6) calls “commodity consensus”: a tacit agreement by most Latin American governments, both on the left and on the right, on the absence of real alternatives to the exploitation of internationally traded commodities. Neo-extractivism, then, expresses the unfulfilled expectations that left-wing governments would radically change the development model to move away from a commodity export-led model. To use the concept of this special edition, an extractive imperative has taken over the logic of other state activities (Arsel et al., 2016, this issue).

Despite the newness of the concept of extractivism,² the reality it describes for countries like Venezuela and Ecuador is far from new. Petroleum has been a dominant product for the Venezuelan economy since the 1920s, and for Ecuador, since the 1970s. In its critique of the development model adopted by underdeveloped countries, the concept of extractivism shares common ground with dependency approaches to development. They both take issue with the importance that primary resources have acquired in peripheral countries. The extraction of these resources, often in enclaves and according to the needs of metropolises, entails little processing at the local level and results in limited technological transfer that could sustain the diversification of peripheral economies (Acosta, 2011). This kinship between critiques in terms of extractivism and the dependency approach, although sometimes recognized, is often rejected by theorists of neo-extractivism due to the limited environmental concerns included within the dependency framework (Gudynas, 2011, pp. 25–27).

While it is certainly right to underline the fact that dependency theorists pay scant attention to environmental questions, is this alone a sufficient reason to dismiss their analyses entirely? The debates between different streams of the dependency approach set the tone for explaining the varying importance of primary resources in underdeveloped social formations. According to Frank (1971), for instance, the history of colonization and the pressure of the world market have created an internal structure in underdeveloped countries that supports a lumpenbourgeoisie, a class that precludes development that departs from primary production and resource extraction. In contrast, Cardoso and Faletto (1979) argue for differentiating between countries driven by national capitalists and those dominated by foreign capital operating in enclaves. While one could be tempted to read this as an attempt to contrast extractivist and non-extractivist economies, it would be more appropriate to read Cardoso and Faletto as avoiding primary resource determinism, trying instead to understand how different balances of class forces influence the roles of specific sectors in a country’s development.