The Consequences of Colonialism: The Continued Exploitation of Latin America Through Capitalism

Latin America is and always has been a geographically diverse region of the world rich in resources, cultures and ecological diversity and the first Spanish colonizers certainly recognized this. The early Spaniards were quite explicit about their intentions to usurp this new territory, plundering the lands and relentlessly subjugating the indigenous peoples for generations. And, as a result of over five hundred years of colonial exploitation, the poorest in Latin American societies, usually people who are of indigenous or of African decent have been continually marginalized. These neglected and impoverished populations of Latin America continue to suffer to this day under the continuation of aristocratic rule. This paper will briefly examine what the key aspects have been in creating and maintaining those economic structures which have preserved power for the elite and sustained contemporary social neglect for the most impoverished people of Latin America. However, because modern Latin American history is robust and varies from issue to issue and from country to country, I will only focus on the components that do apply or have applied principally to most regions of Latin America at one time or another.

The economic and political power structures that are in place throughout Latin America today began with Spanish colonialism in the 1500’s. When the Spanish colonized Latin America, privileges were always reserved for those who were richest and most powerful in the new lands. The aristocracy established these privileges by using force in taking over the land and controlling the population. This structure of control through force became firmly entrenched in the evolution of the economic and sociopolitical construction of Latin America that was important to colonialists in establishing power as well as profit. As Thorp notes, “the social and economic processes of export-led growth, building on the land grants and monopolies of the colonial period, had cemented inequality” (Thorp 1998, 24-25). It is precisely from these roots of inequality that further weakened the position of the poor and strengthened that of the rulers. Fishlow underscores this concept when he notes that after colonialism, neo-classical policies produced unequal exchanges, profits from cheap exports were based on artificially low wages therefore, it is this trade which impoverishes rather than enriches (Mitchell & Fishlow 1988, 98). This reinforces Thorp’s aforementioned notion that, the cemented inequality persisted through whatever political turbulence may have swept through Latin America. The benefit of having such abundant resources with a large work force was unquestionable. Green and Branford note the subsequent difficulties facing local populations, “for the indigenous peoples everywhere in the continent, the conquerors’ military victory was only the beginning of the process of extermination. […] Enslaved to the Spanish lust for gold, those who survived smallpox, influenza, measles and other new diseases committed mass suicide by poisoning and hanging” (Green & Branford 2013, 17-18). Between fighting for food, land, their health and culture, it is unsurprising to see that the result of such appalling conditions led to widespread poverty and further oppression by subsequent regimes and generations of control.

Following the colonial era, capitalism began to emerge as the ruling economic and political force in Latin America. Essentially capitalist ideals preserved the most useful aspects of colonial policies while simultaneously moulding a new doctrine from which to govern. Consequently these ideals would continue the subjugation of poor mixed and indigenous peoples while consolidating elite control over resources. As Ascher points out:
The conservative oligarchies, largely military-dominated governments supported by the landed elite, offered less hope for the poor. Instead, their use of dictatorial power in defense of the economic status quo fuelled the commitment of their opponents to employ authoritarian means of their own to redress the imbalance of wealth. (Ascher 1984, 49).
This suggests a blatant move by the Latin American elite to preserve the status quo, which is complete monetary and political control. Additionally, the method of operation was of little importance, as Isbester & Rice illustrate in Venezuela, “the weakness of the country’s governing apparatus in the aftermath of the Independence Wars led to a reliance on local militias and their leaders as the foundations of authority. These paramilitary groups formed the nation’s local and regional governments” (Isbester & Rice 2011, 231). Certainly, the preservation of wealthy, oppressive and militant regimes maintains control of the population and their means to an end. As a result, exports continued to flow out of Latin American countries through trade agreements and corporations which replaced the colonies. Additionally, the labour force, the poorest people in society saw little change with independence as mentioned earlier, land redistribution was a dream and serf-like conditions the gloomy reality of the situation. Galeano’s analysis of more recent absurdities regarding low wages is not much different than the historical norm for the region. “ Latin America’s low wage scale is reflected in the low prices the region gets for its raw materials in the international markets, where denationalized industry sells manufactured goods, prices are kept high to maintain the inflated profits of the imperialist corporations” (Galeano 1997, 251). While this economic and socio political system of resource extraction, low wages and persecution of the impoverished continued unabated, the actors in charge would constantly vie for a position to control a piece of the riches. “To a degree, power still operates through informal, non-democratic institutions. Partially due to neoliberalism, the state has been made unable to achieve autonomy from its economic elite who has become more entrenched in policy-making as well as continuing to dominate the economic sector” (Isbester 2011, 352). Indeed, the system of power put in place during the colonial era set the precedent for the continuation of elite policies through unstable governments, authoritarian rule and or military dictatorships. However, Malloy’s postulation reinforces Isbester’s idea while also reinforcing the idea that capitalist ideals took on many different forms through its Latin American evolution. “The contemporary trend toward authoritarian corporatist regimes in Latin America must be viewed against the backdrop of the region’s previous pattern of economic development, which is best described as delayed dependent capitalist development” (Malloy 1977, 5). As has been noted, the emergence of capitalism through the foundations of colonialism maintained and even widened the gap between the elite and the poor, economically, politically and even physically. The result has been a continuation of these structures weighted heavily in capitalist activities including, resource extraction, agro-export economies, land accumulation and “free market” privatization of anything not tied down, not to mention the ongoing abuse of the poor and indigenous people of Latin America.

Modern day Latin America is still a maturing region and, capitalism is playing an important role. Globalization has made it difficult for countries to avoid being caught up in free market economic endeavours. While some countries have disengaged the markets, such as more recently elected left wing governments in Venezuela and Bolivia, there still remains vast inequality throughout Latin America with foreign presence dictating the flow of wealth and goods. The disparity between the rich and poor undermine the democratic process in two ways. One, poor people are essentially shut out of the political process while concentrating on issues such as shelter, health and unemployment. And second, the political apparatus of a given country has become just another vehicle of capitalism, through bought out governments, foreign financial institutions or crippling free trade agreements. Considering a similar position, Isbester notes, “high levels of inequality erode social norms such as trust and tolerance, which are conducive to democracy. Finally, inequality offers the elite undue access to the corridors of power, hollowing out democratic institutions. The political and economic elite merge, and cronyism trumps transparency” (Isbester 2011, 358).

Latin Americas’ powerful and influential neighbour to the north, the United States, has no doubt been an influential player when it comes to gaining favourable conditions for them and their corporations. Gil reinforces this position, “Implicit in these objectives is the maintenance in Latin America of stable regimes capable of safeguarding U.S. interests” (Gil 1988, p. 3). Part of these interests is to keep the flow of exports such as resources and agriculture to the U.S. high while keeping the costs as low as possible. Herrera notes:
Latin America’s economic relations with the rest of the world continue to follow the traditional pattern of raw material exports and imports of manufactured goods of varying technical complexity. This has led to a progressive weakening of the region’s foreign trade, […]. This situation is one of the chief causes of development lag, but it also conditions other features of the economy, including the dominance of export activity and agricultural stagnation—except for export products—because of the social structure and insufficient modernization of production. (Herrera 1965, 248).

The more recent governments of Latin America that have experienced heavy lobbying through multinational corporations and global banking institutions such as the International Monetary Fund (IMF) and World Bank have been willing to go along with their programs. Agreeing to unrealistic debt repayment programs with the IMF has essentially superimposed them over Latin American countries as executives of the state. Galeano posits that, “with the Latin American economy getting steadily weaker over the past two decades, the state’s influence upon it has been reduced to an all-time low by the good offices of the International Monetary Fund” (Galeano 1997, 209).

However, even this long-standing system of structural violence and deeply rooted partisan rule that has lasted for centuries will have a breaking point. The IMF is losing traction as left leaning governments are gaining power and finally investing more money into the people. “The backlash against neoliberalism in Latin America is now leading to confrontations between several of the region’s governments and two major international lending institutions, the World Bank and the International Monetary (IMF)” (Fireside & Reuss 2008, 113).

Not only this, but more frequent social actions by the most marginalized in society are also pushing for change. The diffusion of less profit-orientated ideologies in governments and the growing demands for social and environmental justice appear to be shaking the foundations of the global free market juggernaut. Using the Zapatista movements as an example Stahler-Sholk notes, “The Zapatista movement had its roots in independent rural organizing initiatives that demanded rights rather than clientelisitic privileges” (Fireside & Stahler-Sholk 2008, 161). This type of organizing for human rights and the environment seems to be gaining momentum as the gears of capitalism increase inequality not just in Latin America, but worldwide.

Given the information presented, it is clear that the drive to accumulate wealth and impose a new way of living by the colonial era Spanish, created the political and economic infrastructure upon which capitalism sits perched upon today. This paper has mainly focused on the transition of colonialism to capitalism and briefly touched on how the most marginalized people in Latin American society have been victims of this structure. However, it must be recognized that the paper has been a general overview and may not apply to specifically countries or specific times unless otherwise stated. Furthermore, a more complete investigation on the effects of modern day capitalism’s affects on the impoverished, the role of women, social movements and the rise of left wing governments would offer a more detailed picture of Latin America’s social and geopolitical situation. Alternately, a country case study could also be conducted to magnify important concepts. In the end, the fact remains that there is still significant work to be done in Latin America, living and working conditions must be improved for all, poverty reduction and education initiatives must be undertaken, and a substantial decrease in the gap of inequality must be made. Until profit is removed as the main component of all global trade, difficulties will always remain in all parts of society. It is the responsibility of our generation to learn, teach and implement the strategies necessary for a healthy and peaceful future for all, one not based on money, but rather each other.



Ascher, W. (1984). Scheming For The Poor: The Politics of Redistribution in Latin America. Cambridge: Harvard University Press.

Fireside, D., Morales, P., Reuss, A., Thornton, C., & Tilly, C. (Eds.). (2008). Real World Latin America. Boston: Dollars & Sense Economic Affairs Bureau.

Fishlow, A. (1988). Changing Perspectives in Latin American Studies: Insights From Six Disciplines (C. Mitchell, Ed.). Stanford: Stanford University Press.

Galeano, E., & Belfrage, C. (1997). Open Veins of Latin America: Five Centuries of The Pillage of a Continent. New York: Monthly Review Press.

Gil, F. (1988). United States Policy in Latin America: A Quarter Century of Crisis and Challenge, 1961-1986 (J. Martz, Ed.). Lincoln, Neb.: University of Nebraska Press.

Green, D. (2013). Faces of Latin America (4th ed.) (S. Branford, Ed.). New York: Monthly Review Press.

Herrera, F. (1965). Obstacles to Change in Latin America (C. Velliz, Ed.). London: Oxford University Press.

Isbester, K., Patroni, V., Phillips, L., Rice, R., & Teichman, J. (2011). The Paradox of Democracy in Latin America: Ten Country Studies of Division and Resilience. Toronto: University of Toronto Press.

Malloy, J. (Ed.). (1977). Authoritarianism and Corporatism in Latin America. Pittsburgh: University of Pittsburgh Press.


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