The True Peru

To the Editors:

In “Ancient Incas and Modern Revolution” [NYR, March 18], Robert Adams displays little hesitancy in identifying Peru’s “real problems” and offering his “outside help” and solutions. His impressionistic views and analysis reflect the naïveté of one who visits an underdeveloped country and discovers mass poverty for the first time; they also reflect the all too familiar Yankee traits of arrogance and paternalism.

Following a review of Peru’s ancient Inca society, our attention is directed to Peru’s current conditions of poverty, distribution of wealth and income, inadequate agrarian reforms, and accelerated rural migration to the cities. It is in attempting to analyze and interpret the root causes of Peru’s recent economic problems and shortcomings that Adams’s casual historism and empiricism lead him astray into a number of inconsistencies.

On the one hand, it is asserted that during the past seven years of the Peruvian revolution (1968-1975), “the main current of events has been shaped, if not directed, by indigenous forces and by national history.” That “the heart of the Peruvian problem is still the old hatunruna—a vast Indian population….” On the other hand, later in the article, we are told that “the real problem in a place as depressed as Peru…is the technical one of increased production” (emphasis added); that the “real solution” to the agrarian problem “would be to provide roads, electric power, farm machinery…” and so forth. In short, Adams believes that what Peru needs is nothing less than “development”—development defined by Adams’s Western-capitalistic value system as being a technical process of increased capital formation in infrastructure and industrial complexes. The “Brazilian model” appears to be what Adams has in mind for Peru—a model that has produced an “economic miracle” in which, according to Brazil’s recent president, “the Economy is doing fine, but the people are not!” Fortunately, Adams volunteers, this kind of development is possible “with luck, self-sacrifice, and outside help (which seems to be available, and might be largely increased by clarifying the rules of the game)….”

Starting with the last point, Adams fails to acknowledge that the “rules of the game” were clarified several years ago for foreign investors by the well-known Andean Investment Code; in essence, this Code has changed the rules of the game in order to increase Peru’s share in the distribution of benefits arising from foreign investment activity in Peru.

If foreign investors are reluctant to offer “outside help” it is not because the rules of the game are unclear; it is because the old rules of the game have been displaced by new rules calling for less “self-sacrifice” by Peru.

Moreover, Adams never questions his basic faith that outside help is part of the real solution for Peruvian economic development. Yet there is ample evidence that outside help is part of the problem itself, i.e., of Peru’s underdevelopment or lopsided development. This is to suggest that, in addition to recognition of “indigenous forces,” the perspective of imperialist-dependency relationships is also needed to understand fully Peru’s continuing underdevelopment and lack of “good luck.” Clearly, Peru has not lacked “self-sacrifice” and “outside help” in the past.

Based on my experience as an international economist with the US Treasury Department several years ago, I will cite one recent example that is directly related to Adams’s views and conclusions. He deplores Peru’s underdeveloped economic infrastructure of transportation and hydroelectric power for reasons cited above. What Adams ignores is that during the past seven years, since the Peruvian revolution in 1968 and the nationalization of certain US investments, the United States government blocked and vetoed all development loans and financing in the World Bank and the Inter-American Development Bank destined for Peru. Yet it is precisely these international lending institutions that provide financing and outside technical advice for infrastructure projects such as transportation and electric power. In addition, the United States cut off all US bilateral development aid and US Export-Import Bank financing for Peru. A major US condition underlying the recent resumption of these multilateral and bilateral aid flows was that Peru provide more compensation for previously nationalized American properties and that it also modify and soften (i.e., “clarify,” as Adams uses the term) the rules of the game for foreign investment and outside help.

While Adams’s article does offer some interesting insights into the legacies of Peru’s ancient Inca society, it is woefully inadequate in helping readers understand the nature of the limitations of attempting a “revolution from above” that is “neither capitalist nor socialist.”

John T. Donnelly

Washington State University

Pullman, Washington