Underdevelopment in Peru. A profile of peripheral capitalism

Underdevelopment in Peru At a time when Peru continues to reel from the impact of Covid-19 and the eruption of corruption scandals involving five former presidents, this book analyzes the persistence and the structural underpinnings of underdevelopment in Peru. During the commodities boom of 2004–2011, Peru experienced strong levels of economic growth, bringing poverty down and increasing the middleclass population. In the Covid-19 pandemic, however, the severe lack of structural economic and social improvements has been exposed. With the arrival of the pandemic, hospitals collapsed, oxygen supplies dwindled, and informality rose, with dire consequences for the vulnerable, and for those already working on subsistence wages. Delving into the history of the country, Jan Lust outlines the structural problems that came about following Peru’s post-colonial entrance into the world economy and the subsequent neoliberal extractive development model adopted in the 1990s. Only by understanding Peru’s specific political, economic, and social conditions can a path towards development be found. This book will be of interest to researchers working within politics, economics, critical development studies, and Latin American studies. Jan Lust has a PhD in Development Studies. He is Researcher and Professor at the Postgraduate School of the University Ricardo Palma in Peru and forms part of the Board of Directors of this University’s Research Centre. He is the author of Lucha revolucionaria. Perú, 1958–1967, a book on the history of revolutionary struggle in Peru in the 1960s, and of Capitalism, Class and Revolution in Peru, 1980–2016, a book that analyzes the political, economic, and social reasons why the Peruvian socialist left has not been able to carry out its revolutionary project of social transformation. His academic interests encompass international political economy, Peruvian political, economic, and social development, labor issues, class, social movements, and guerrilla struggle. Routledge Critical Development Studies Series Editors Henry Veltmeyer is co-chair of the Critical Development Studies (CDS) network, is Senior Research Professor at the Universidad Autónoma de Zacatecas, Mexico, and Professor Emeritus of International Development Studies (IDS) at Saint Mary’s University, Canada. Paul Bowles is Professor of Economics and International Studies at UNBC, Canada. Elisa van Wayenberge is Lecturer in Economics at SOAS University of London, UK. The global crisis, coming at the end of three decades of uneven capitalist development and neoliberal globalization that have devastated the economies and societies of people across the world, especially in the developing societies of the global south, cries out for a more critical, proactive approach to the study of international development. The challenge of creating and disseminating such an approach, to provide the study of international development with a critical edge, is the project of a global network of activist development scholars concerned and engaged in using their research and writings to help effect transformative social change that might lead to a better world. This series will provide a forum and outlet for the publication of books in the broad interdisciplinary field of critical development studies – to generate new knowledge that can be used to promote transformative change and alternative development. The editors of the series welcome the submission of original manuscripts that focus on issues of concern to the growing worldwide community of activist scholars in this field. To submit proposals, please contact the Development Studies Editor, Helena Hurd (Helena.Hurd@tandf.co.uk). 12 The Essential Guide to Critical Development Studies (2nd Ed) Edited by Henry Veltmeyer and Paul Bowles 13 From Extractivism to Sustainability Scenarios and Lessons from Latin America Edited by Henry Veltmeyer and Arturo Ezquerro-Cañete 14 Underdevelopment in Peru A Profile of Peripheral Capitalism Jan Lust For more information about this series, please visit: www.routledge.com/Routledge-CriticalDevelopment-Studies/book-series/RCDS Underdevelopment in Peru A Profile of Peripheral Capitalism Jan Lust First published 2024 by Routledge 4 Park Square, Milton Park, Abingdon, Oxon OX14 4RN and by Routledge 605 Third Avenue, New York, NY 10158 Routledge is an imprint of the Taylor & Francis Group, an informa business © 2024 Jan Lust The right of Jan Lust to be identified as author of this work has been asserted in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library ISBN: 978-1-032-26658-9 (hbk) ISBN: 978-1-032-26689-3 (pbk) ISBN: 978-1-003-28945-6 (ebk) DOI: 10.4324/9781003289456 Typeset in Sabon by codeMantra Contents Acknowledgments List of abbreviations List of tables List of figures ix xi xiii xvii Introduction 1 1 Capital and peripheral economic development 1.1 The international character of capitalism 10 1.2 The pyramid of the international division of labor 17 1.3 Extractive development models in Latin America 23 1.4 The global chains of exploitation 28 1.5 Conclusions 34 References 37 9 2 The peripheral capitalist development of Peru 2.1 Dependent capitalist economic development 43 2.2 Productive heterogeneity and economic dualism 51 2.3 Marginality and the CSE 57 2.4 The dependent capitalist state: a theoretical framework 60 2.5 Conclusions 64 References 67 42 3 Peru in the world economy 3.1 Peru and the international division of labor 74 3.2 Peru’s participation in global value chains 80 3.3 The advanced economy and the capitalist subsistence economy in Peru 85 3.4 Conclusions 89 References 91 73 vi Contents 4 The business structure of capitalist development 4.1 Concentration and centralization of capital 96 4.2 Transnational and big (national) extractive, financial, and communication capital in Peru 97 4.3 The function of small and micro businesses in the Peruvian economy 102 4.4 Profit rate, the organic composition of capital, and profit outflow 106 4.5 Conclusions 109 References 111 95 5 The social class structure 5.1 Class and class structure 116 5.2 International division of labor and the class structure 119 5.3 A broad outline of the Peruvian class structure 121 5.3.1 The bourgeoisie 122 5.3.2 The middle class 123 5.3.3 The proletariat 126 5.3.4 The peasantry 129 5.4 Class analysis 130 5.5 Conclusions 133 References 135 116 6 Labor 6.1 Labor precarity 140 6.1.1 Definition and characteristics of precarious labor 141 6.1.2 The precariat 142 6.2 Labor conditions in micro businesses 144 6.2.1 Type of contract 146 6.2.2 Bonuses 147 6.2.3 Pension fund 147 6.2.4 Weekly working hours 149 6.2.5 Remuneration 149 6.2.6 The situation on the work floor 150 6.3 Educational levels 151 6.4 Chains of exploitation 153 6.4.1 The relationship between the AE and the CSE 155 6.5 Conclusions 157 References 160 139 Contents vii 7 Social segmentation 7.1 Economic structure and superstructure 166 7.2 Development 167 7.3 Education 168 7.4 Consumption 171 7.5 Healthcare insurance 175 7.6 Conclusions 176 References 178 165 8 The state 8.1 The economic model and economic policies of underdevelopment 180 8.2 State capture 184 8.3 The practice of a peripheral state: a weak state 188 8.4 The Left and the Right 192 8.5 Conclusions 195 References 196 180 9 Covid-19: the state, the economy, and the people 9.1 The structural causes for the expansion of Covid-19 200 9.2 The State’s measures against the expansion of the virus 201 9.3 Class virus instead of a democratic virus 203 9.4 Conclusions 208 References 210 199 10 Conclusions Appendices Appendix 2.1 Total Factor Productivity level at current PPPs (USA = 1) Appendix 3.1 Terms of trade and real GDP growth rates, 1980–2019 Appendix 4.1 The calculation of the rate of profit and the organic composition of capital Appendix 6.1 Educational Levels 2004–2019 (in percentages of total educational level) Index 211 71 93 114 163 217 Acknowledgments This book is product of years of study, analysis, reflection, and discussion. My work on the revolutionary struggle in Peru in the 1960s; my doctoral studies on Peruvian capitalist development and class struggle turned into a book on capitalism, class, and revolution in Peru in the decades of the 1980s, 1990s, and the 2000s; and my research on the Peruvian middle class and the labor conditions in micro companies, my papers on the Peruvian extractive development model, the structure of its economy, labor precariousness in Peru’s micro businesses, revolutionary social transformation, local development, class struggle and also the coronavirus, among others, heavily contributed to this book by helping to mature my ideas. In this book, everything seems to come together. My studies and publications, the preparation of my classes for undergraduate students of economics and sociology, discussions with students and colleagues, my talks, and conferences on Peru in national and international contexts, and my political work with Peruvian and foreign comrades are embodied in this work. Many friends, colleagues, and comrades have contributed to this book or the ideas that are presented in this volume on the persistence of underdevelopment in Peru. I can name many, and definitively I will forget more. Therefore, I will mention only one. I thank Carolina, the love of my life, for her strength, support, passion, love, and comradeship in all these years that we have been together, loving, discussing, and fighting for a Peru without exploitation, oppression, racism, discrimination, and sexism. Abbreviations AE APEIM CSE EAP ECLAC FDI GDP GNI ICU IMF INEI NSE OCC OECD UN UNCTAD WB WHO WTO Advanced Economy Asociación Peruana de Empresas de Inteligencia de Mercados (Peruvian Association of Market Intelligence Companies) Capitalist Subsistence Economy Economic Active Population Economic Commission for Latin America and the Caribbean Foreign Direct Investments Gross Domestic Product Gross National Income Intensive Care Unit International Monetary Fund Instituto Nacional de Estadística e Informatica (National Institute of Statistics and Informatics) Niveles socioeconómicas (Socioeconomic Levels) Organic Composition of Capital Organisation for Economic Co-operation and Development United Nations United Nations Conference on Trade and Development World Bank World Health Organization World Trade Organization Tables 1.1 Gross National Income per capita and the three principal export goods and weight in the export basket, according to regions, 2019 1.2 Export and import value of services in current prices, according to regions, 2019 (in US$) 1.3 Gross National Income per capita and the three principal export products and weight in export basket for 12 countries in 2019 1.4 Ranking of the biggest 50 companies the world in 2021 (market capitalization) 1.5 The 50 biggest mining companies in the world (market capitalization, end 2021) 1.6 Inward FDI in natural resources (hydrocarbons, mining, agriculture) in Latin America and the Caribbean: 2008–2019 (in millions of US$) 2.1 Balance of FDI as a contribution to capital, according to economic sectors, 1997–2020 (in millions of US$) 2.2 Total factor productivity level at current PPPs (USA=1) 2.3 Overall rate of underemployment and rate of underemployment based on income, 2001–2020 2.4 Ranking of 35 selected countries of patent applications (abroad and resident), 2019 2.5a Labor productivity according to economic sectors in soles, 2007–2013 2.5b Labor productivity according to economic sectors in soles, 2014–2020 3.1 Export structure, 1980–2019 (in percentages) 3.2 Economic growth of China and Peru’s export growth: 2000–2019 3.3 Export value by company structure, 2011–2019 3.4 Unit labor costs in US$ per hour, 1980–2019 3.5 Weight of Peruvian exported manufactures according to technological intensity, as a percentage of technology “based” manufactures, 1980–2019 19 19 20 22 24 28 47 48 50 53 55 55 75 77 83 84 85 xiv Tables 3.6 3.7 4.1 4.2 4.3 5.1 5.2 6.1 6.2 6.3 6.4 6.5 6.6 6.7 7.1 7.2 7.3 7.4 Number of private formal companies according to sales, 2012–2019 Ranking of selected countries according to the rate of complexity, 1995–2019 Number and position of mining, petroleum, and gas companies in the top ten of the biggest corporations, according to sales, presented by América Economía, 2000–2019 Occupied EAP according to economic sectors and branches in percentages of total occupied EAP, 2007–2020 The surplus of workers to operate the development model in place in percentage of the occupied EAP, 2008–2020 Division of the proletariat in manual and mental labor performing individuals, 2004–2019 (as a percentage of total proletariat) Division of manual and mental labor performing individuals in micro businesses, 2004–2019 The occupied EAP that receives a remuneration below the poverty line (in percentage of total occupied EAP) Type of contract of workers (main occupation) in companies that employ one to ten individuals: 2004–2019 (as a percentage of all workers in micro-enterprises) Reception of bonuses for national holidays and Christmas by workers in companies that employ one to ten individuals: 2004–2019 (as a percentage of all workers in micro-enterprises) Affiliated to a pension system by workers in companies that employ one to ten individuals: 2004–2019 (as a percentage of all workers in micro-enterprises) Weekly hours worked by workers (main occupation) in enterprises employing one to ten individuals: 2004–2019 (as a percentage of all workers in microenterprises) Minimum nominal wage level of the main occupation of workers in companies that employ one to ten individuals, including the independent worker, 2004–2019 (as a percentage of all workers paid in micro-enterprises) Selected educational levels: 2004–2019 (in percentages) Average number of years of education of the population of 25 years and older, according to area of residence and natural region, 2002–2019 Educational levels attained according to areas of residence of the population of 25 years and older, 2002–2019 Distribution of individuals according to NSE (in percentages), 2013–2020 Distribution of family income according to NSE (in soles), 2013–2020 86 87 100 105 106 128 128 146 147 148 148 149 150 152 169 170 173 173 Tables xv 7.5 7.6 7.7 7.8 8.1 8.2 9.1 Weight of selected expenditures of families as a percentage of total expenditures according to NSE (in percentages), 2013–2020 Available selected goods and services in homes of families according to NSE (in percentages), 2013–2020 Percentage of individuals not affiliated to a healthcare insurance according to NSE, 2013–2020 Access of families to selected basic necessities according to NSE, 2013–2020 Tax income and non-tax income as a percentage of current income of the Peruvian Central Government The contribution of a selected group of taxes to total tax income in the years between 2000 and 2021 The average rate of individuals that labor in companies that employ one to five individuals and own-account workers as a percentage of the occupied EAP, and the percentage of Covid-19 infected individuals, according to corresponding districts in Metropolitan Lima in the period 2020–2021 173 174 175 176 189 190 205 Figures 1.1 1.2 1.3 1.4 1.5 1.6 3.1 3.2 3.3 3.4 3.5 3.6 3.7 4.1 4.2 4.3 4.4 9.1 World exports of merchandise, 1971–2019 (in current US$) Total number of Regional Trade Agreements Notifications, 1958–2021 World rate of profit (G 20 countries), 1950–2010 FDI Net Inflows (Balance of Payments), 1971–2019 (in current US$) Exports of primary products as share of total exports for Latin America & the Caribbean, 1980–2020 Export of manufactures, developing to developed regions, 1995–2020 FDI flows (in millions of US$) and Real GDP growth rates, 1995–2019 Terms of trade and international prices of copper and gold, 2012–2019 Terms of trade, 1950–2019 Terms of trade and Real GDP growth rates, 1980–2019 Export intermediate goods as a percentage of total exports of goods, 1992–2019 Export of manufacturing goods as a percentage of total exports of goods, 1992–2019 Rate of complexity of Peru, 1998–2020 Profit rate, 1980–2019 Organic composition of capital, 1980–2019 Surplus value, 1980–2019 (in millions of US$ 2017) Outflow of utilities of the private sector and financial account of the private sector (in millions of US$) Rate of unemployment in Metropolitan Lima 12 13 14 14 26 33 78 79 79 80 81 81 87 107 107 108 109 208 Introduction Introduction When we started with the elaboration of this book, Peru had a progressive oriented political government. As a matter of fact, it was for the first time in its republican history that the country had a declared left-wing president. The 2021 presidential elections had been won by Pedro Castillo with an extremely slight difference of around 45,000 votes. The liberal and conservative candidate Keiko Fujimori was beaten. The victory of the Left in the last presidential elections did not come as a surprise. What might have been surprising, however, was the radical character of the left candidate who won the elections. In his Governmental Plan, the newly chosen president proposed a Second Agrarian Reform. Small peasants and peasant communities would receive structural governmental support. An extra tax would have to be paid by transnational mining capital in the case of super profits and the fiscal stability pacts would be renegotiated. Access to nationally produced gas for all Peruvians would be guaranteed and national production would be protected against unfair foreign competition. Also, a referendum would be organized to consult the population if it would like to change the country’s constitution (Peru Libre, 2021). Although since the implementation of neoliberalism in the 1990s the political Left had weakened enormously and had not been able to put the political Right and capital really with their backs against the wall, the electoral successes starting from the presidential elections of 2011 are remarkable. The 2011 elections were won by the nationalist candidate Ollanta Humala. Backed by the Left, he succeeded to beat Keiko Fujimori, daughter of the imprisoned former president Alberto Fujimori. Without any real political organizational insertion in the population as expressed in the presence of party committees in popular districts, in the 2016 presidential elections, the Left succeeded to obtain about 20% of the valid vote. The electoral success of the political Left in the 2021 presidential elections is principally the result of the fact that it has been able to capture the vote of the unsatisfied masses. The current neoliberal extractive development model, in place since the beginning of the 1990s, did not fulfill their socioeconomic DOI: 10.4324/9781003289456-1 2 Introduction perspectives anymore. In 2011, the poverty rate stood at 27.8%. In 2021, this was still 25.8%. The rates of underemployment were, respectively, 51.1% and 47.4%.1 In 2010, the Gini index in 2010 was 45.5. Ten years later, the Index had slightly reduced to 43.8.2 It appears that the corruption scandals of the last five years and the fact that individuals who are living in the popular districts have been the principal economically, socially, and sanitarily affected population by Covid-19, were the triggers for the oppressed and exploited majority to turn their back, for the first time since the 1990s, to the proposals of the political Right. Unfulfilled promises and a State that was not able to guarantee welfare for all, contributed to the choice of the majority of the population to put, apparently, their hope on a radical transformation of the State and the economy. Data show that in six of the seven poorest regions, Castillo won the big majority of the votes. In the remaining region, he lost only with a slight difference.3 In December 2022, the political situation radically changed. Although in the period July 2021–December 2022 the political Right had made it almost impossible for President Castillo to govern, it was Castillo himself who put an end to his presidency. Various attempts of the political Right to impeach Castillo had failed. However, in the morning of December 7, in a message to the nation, Castillo proposed to dissolve the parliament, to establish an emergency cabinet, and to call for new parliamentary elections. The new parliament should elaborate a new constitution. The intention to dissolve the parliament was considered an auto-coup. The right-wing majority in parliament, accompanied by members of the former governing party Perú Libre, reacted by successfully impeaching Castillo. At the moment of writing, Castillo is imprisoned, accused of rebellion. The impeachment of Castillo led to massive and continuous protests in the southern regions of the country (Puno, Ayacucho, Andahuaylas, and Cusco), causing dozens of deaths by police repression. In January 2023, the protests expanded to all regions. Starting from a few days before the first national protest day on 19 January 2023, Peru’s capital city Lima became one of the principal centers of the class struggle, led by regional defense platforms, principally from the South. The political crisis that was started by Castillo’s supposed auto-coup in December 2022, prolonged as his former vice-president Dina Boluarte had not been able to pacify the South. The violent repression of the protest deepened and expanded the crisis. Various ministers resigned and various countries in Latin America denounced the brutal repression of the protest. At the moment of writing (January-February 2023), in Lima and in the regions, on a daily basis, protests are organized and the death rate is rising. The protesters want the actual president to resign, general elections in 2023, and a Constituent Assembly. The problems for president Boluarte and parliament are increasing as national polls indicate that the big majority of the population demand the resignation of the president, general elections in 2023, and a Constituent Assembly.4 Peruvian society is becoming militarized and ungovernable. One of the principal mining companies is planning to stop production as roads are blocked.5 Introduction 3 The persistence of underdevelopment In this book, we argue that the persistence and structural character of underdevelopment in Peru is principally the product of the country’s role in the international division of labor. Underdevelopment can be defined as the absence of sustainable inclusive economic development. Sustainable inclusive economic development can be defined as an economic development that not only is environmentally friendly but is also based on the direct political, economic, social, and cultural interests of the large majority of the population and structurally elevates the political, economic, social, and cultural consciousness of the currently exploited and oppressed majorities. Sustainable inclusive economic development depends on the creative capacities of the population. The insertion of Peru in the world economy since colonial times, has caused an economic structure and mode of development that does not permit to advance economically and socially. Furthermore, not only the apparent division of the Peruvian economy into an advanced economy (AE) and a capitalist subsistence economy (CSE) forms a constraint for economic, political, and social progress but also the character of the Peruvian State and the country’s class structure. The tenacity of underdevelopment seems to give the impression that Peru is a country without future for the big majority of its population. The many promises of the current neoliberal extractive development model such as an increase of foreign investments, economic growth, and a bigger middle class really did happen. However, the model did not succeed in structurally elevating the welfare of the masses. This can easily be understood as the welfare of the rich is product of the exploitation and the oppression of the working masses, leading to their relative and absolute poverty. There are no recipes for turning an underdeveloped capitalist country into an advanced capitalist nation. Political, economic, social, and cultural differences between countries, between North and South, between North and North, and between South and South, make a general recipe of no use. Although there are structural conditions that impede, in general terms, the development of the underdeveloped nations, it is the comprehension of the concrete workings, politically, economically, and socially, of these conditions in every particular country, that may help to design a concrete program that contributes, in this case of Peru, to advance towards development. Objectives of the book and theoretical framework This book pretends to provide a political, economic, and social analysis of the persistence of underdevelopment in Peru. Starting from the international character of capitalism, the particularities of peripheral capitalist development, and the role of Peru in the globalized capitalist world economy, we discuss how these economic factors (or economic base) are interrelated to Peru’s business structure, class structure, state apparatuses, and the social segmentation of society. 4 Introduction We show that the persistence of underdevelopment in Peru is based on a broad range of interrelated, political, economic, and social factors, national and international. This means that a solution to the problem of underdevelopment cannot be solved by economic and social support measures. The solution is a revolutionary social transformation. The revolutionary social transformation of a capitalist society is the complete transformation of all aspects of social life. The concept of revolutionary social transformation might be considered similar to systematic change; however, we believe that a revolutionary social transformation is irreversible and takes a considerable time to ‘mature’ after a systematic change has occurred. A systematic change is reversible. An understanding of the fundamental causes of underdevelopment is the start of a process that may lead to the eradication of underdevelopment. On the basis of this knowledge, we can begin designing short-term, mediumterm, and long-term policies. However, we must underline that these policies cannot be reduced to the national sphere. Development economists consider that the causes of underdevelopment can be found in the economic and social structure of the underdeveloped countries. Although they criticize these structures, they do not seem to relate these structures to their functionality for the worldwide capitalist system. Development economists criticize the international division of labor or the role of the periphery in the globally functioning capitalist system; however, instead of broadening and deepening their scope of criticism to the workings of capitalism itself, they tend to propose policies that help the underdeveloped countries to better adapt to the international division of labor imposed by the countries at the center of the world capitalist system. The state should provide the political, economic, and social conditions for ‘adequate’ capitalist development or to further the capitalist development of the underdeveloped societies. The data on Peru show that neoliberal capitalist development has not provided welfare for all. The neoliberal extractivist development model in place can definitively be criticized as a model that will not generate a form of capitalism that, supposedly, benefits all citizens (Furtado, 1980; Rostow, 1961; Lewis, 1955; Prebisch, 1950). We believe that Marxist dependency theory and Marxist political economy are crucial for getting a full understanding of the structural reasons for underdevelopment. Marxist dependency theory helps to comprehend the workings of imperialism and the relations between the Metropolis and the periphery. However, it has a lot of difficulty explaining the structural and endogenous character of underdevelopment in formerly colonialized countries. The recipes developed in the 1950s and 1960s to pass from underdevelopment to development have turned out to be disastrous. Not only the implemented policies of import substitution caused severe economic problems, but the failure of industrialization also produced a political and social space for neoliberal policies. Introduction 5 Marxist political economy sheds light on the dynamics of the accumulation of capital and the interrelations between the economic base and the superstructure. All elements that compose the superstructure react upon each other and upon the economic base. The labor theory of value helps to understand processes of labor exploitation and labor oppression. It contributes to the comprehension of the general development of the class struggle as it determines the surplus value produced and appropriated. It is also the point of departure for the analysis of capital movements in search for the highest profit rate. Marxist political economy in cooperation with Marxist dependency theory provides a clear vision of the workings of the dependent capitalist state. As we will explain in Chapter 2, the economic base of the dependent capitalist state is the international markets. The dependent capitalist state needs to make the national base fit the international base. Sources of the book For the elaboration of this book, we have used multiple sources. Of course, the data bases of the Peruvian National Institute of Statistics and Informatics (INEI, for its acronym in Spanish), the Peruvian Central Bank, and the Ministry of Production were our prime sources. We also made use of the data bases of the United Nations Conference on Trade and Development (UNCTAD), the World Trade Organization (WTO), the World Bank (WB), the Economic Commission for Latin America and the Caribbean (ECLAC), the United Nations (UN), the University of Groningen, and Harvard University. In addition, organizations such as visualcapitalist.com, mining.com, investinperu.pe, the Peruvian Association of Market Intelligence Companies (APEIM), the World Intellectual Property Organization, the Observatory of Economic Complexity, and the magazine América Economía, provided valuable information. Academic literature, books, and journals, in English and in Spanish, principally contributed to the analysis of the data extracted from the mentioned sources above. They were also important informants regarding the location of the necessary data. Chapter 6 of this book is dedicated to the question of labor, especially the labor conditions in Peruvian micro businesses. Apart from the statistical data provided by the INEI and information extracted from academic literature, we have also used information on labor conditions from our interviews with a variety of workers in micro businesses (11 workers interviewed), four ownaccount workers, and two microbusiness owners in the confection industry. Structure of the book This book is structured according to our theoretical framework, i.e., Marxist political economy and Marxist dependency theory. We consider that economic development in Peru is determined by capital’s objective to accumulate 6 Introduction capital. The hegemonic fraction of capital is transnational extractive capital. Hence, this book starts with the international character of capitalism. Society’s economic base (social relations of production) determines in the last instance the development and organization of the country’s superstructure (state, ideology, culture). For this reason, Chapters 1–5 are dedicated to economic development and the country’s class structure. Chapters 6–8 discuss labor issues, the social segmentation of society, and the character of the Peruvian State. In Chapter 9, the analysis of the effects of the expansion of the coronavirus in society in the period 2020–2021 shows how the international base, the national base, the country’s superstructure, and Peru’s economic model are interrelated. Chapter 1 presents a general theoretical and analytical framework for the analysis of the persistence and structural character of underdevelopment in Peru. It forms the basis for our understanding of the structure and development of the Peruvian economy, the character of the State and the policies that have been implemented since, at least, the 1990s, and the structure of Peruvian society. We start with an analysis of the international character of capitalism. Then, we turn to the international division of labor. We argue that the world economy can be organized on the basis of what we call the pyramid of the international division of labor. In the third section, we discuss the role of the extraction of natural resources for economic development. This chapter closes with an analysis of what we have denominated as the global chains of exploitation. We describe how the developing countries are inserted in globalization through the provision of cheap labor, i.e., through their participation in the production of intermediate and manufacturing goods or through their participation in global value chains. The theoretical basis for the understanding of the particularity of capitalist economic development in the Latin American periphery of globalized capitalist development and of Peru in particular is presented in Chapter 2. First, we outline the characteristics of what is known as dependent capitalist economic development with special emphasis on the dominant role of the extractive sectors in the peripheral economies and the incorporation of these economies in globalized value chains. Next, we discuss the structure of peripheral societies and the question of marginality. In relation to this last concept, we examine the issue of informality, the industrial reserve army, and super-exploitation. In the last section, a theoretical framework of the dependent capitalist state is presented. In Chapter 3, we discuss Peru’s insertion in the globalized capitalist world. We start with an examination of the country’s role as a provider of mineral resources for economic development in the advanced capitalist countries and China. Subsequently, we take a look at Peru’s insertion in global value chains. In the third section, we show how these roles in the globalized capitalist world economy are expressed in the division of the Peruvian economy into an AE and a CSE. Chapter 4 provides a close view of how Peru’s functions in the globalized capitalist world economy are expressed in its business structure. The different Introduction 7 types of micro companies are defined, the interrelationships (interrelated dependencies) between the AE and the CSE are outlined, and the functionality of the CSE for the Peruvian economy as a whole is discussed, among others their importance for outsourcing activities. We conclude this chapter with an analysis of the Peruvian profit rate and the problem of capital outflow. Peru’s class structure is presented in Chapter 5. We demonstrate how the country’s functions in the international division of labor not only have an economic internal expression but also find their manifestation in the country’s class structure. After a theoretical discussion on class and class structure within the Marxist tradition, we examine the determining factors of the Peruvian class structure, and we present the country’s class structure. This chapter ends with a class analysis of the country’s economic development. The objective conditions of capitalist development are related to Peru’s class structure. In Chapter 6, we discuss the structural character of labor precariousness in Peru. We study the concept of labor precarity, we examine what has been called the precariat, we review the labor conditions in microbusinesses, we discuss the educational level of the Peruvian population and, in particular, the educational level of workers in micro enterprises, and we analyze the chains of exploitation between the companies in the AE and the CSE. Chapter 7 studies how the division of the Peruvian economy into an AE and a CSE finds its social manifestation in processes of social segmentation. Educational levels, consumption patterns, and access to health insurance are expressions of social segmentation. After a discussion on the relationship between the state’s economic base and the superstructure, and the question of development, we delve into the educational levels and the average number of years of education of the country’s population of 25 years or older, we examine the consumption differences between individuals who pertain to the AE and the CSE, and the access to health insurance. In Chapter 8, we basically apply our theorization on the dependent capitalist state presented in Chapter 2 on the implemented policies. Peru’s commercial policies, labor policies, the tax system, the educational system, and the policies to maintain or to eradicate informality are discussed. We start this chapter with an examination of the economic policies implemented by the Peruvian governments since the 1960s and a discussion of the concept of state capture. The question of state capture is of importance because it may shed light on the power and influence of capital on the Peruvian state apparatuses. It also provides an approach to understand, in general terms, the functioning of the State in society. This chapter closes with a review of the political Left and the political Right. Starting from an analysis of the Castillo government, we argue that the overall political and social weakness of the Left is the prime cause for the continuity of the underdevelopment model in place. The Right is strong because the Left is weak. The effects of Covid-19 on the State, the economy, and the population are discussed in Chapter 9. We examine the structural causes of the expansion of the virus, the State’s measure against the spread of the virus and demonstrate 8 Introduction that Covid-19 is a class virus. Informal workers or individuals employed in microbusinesses have a higher probability to get infected by Covid-19 than individuals who have formal labor contracts and are employed in small, medium-sized, and big companies. Chapter 10 is dedicated to our general conclusions, based on the conclusions of every individual chapter of this book. The structure and superstructure of Peruvian society needs to change drastically in order to provide welfare for its entire population. We hope that the data provided, the information created, and the analysis developed, are converted into tools for class struggle by raising the class consciousness of the population. The topics in this book are definitively not new. However, many people only have a segmented knowledge about the matters we develop in this work. Many may be aware of the political, economic, and social issues presented in this volume but, first, do not succeed to interrelate these questions at the most concrete level. Second, they are not able to relate the multiple concrete realities at a higher abstract level. It is exactly the relation between the concrete realities of the international and national economic structure and superstructure that are crucial for identifying the principal enemy of the population: Capital. Lima, 1 February 2023 Notes 1 Source: https://webapp.inei.gob.pe:8443/sirtod-series/ (consulted 16/01/2023). 2 Source: https://data.worldbank.org/indicator/SI.POV.GINI?locations=PE (consulted 16/01/2023). 3 Source: https://resultadoshistorico.onpe.gob.pe/SEP2021/EleccionesPresidenciales/ RePres/P/200000 (consulted 16/01/2023). 4 Source: https://rpp.pe/peru/actualidad/encuesta-iep-el-73-de-la-poblacion-estaa-favor-de-que-las-elecciones-generales-se-realicen-este-ano-noticia-1463054 (consulted 01/02/2023). 5 Source: https://rpp.pe/economia/economia/protestas-en-peru-las-bambas-paralizariaen-febrero-noticia-1463181 (consulted 01/02/2023). 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