Rose J. Spalding - The Political Economy of Revolutionary Nicaragua

Volume 21

THE POLITICAL ECONOMY OF REVOLUTIONARY NICARAGUA

First published in 1987 by Allen & Unwin, Inc.

This edition first published in 2022

by Routledge

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1987 Allen & Unwin, Inc.

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British Library Cataloguing in Publication Data

A catalogue record for this book is available from the British Library

ISBN: 978-1-032-12623-4 (Set)

ISBN: 978-1-003-26095-0 (Set) (ebk)

ISBN: 978-1-032-12843-6 (Volume 21) (hbk)

ISBN: 978-1-032-12844-3 (Volume 21) (pbk)

ISBN: 978-1-003-22643-7 (Volume 21) (ebk)

DOI: 10.4324/9781003226437

Publishers Note

The publisher has gone to great lengths to ensure the quality of this reprint but points out that some imperfections in the original copies may be apparent.

Disclaimer

The publisher has made every effort to trace copyright holders and would welcome correspondence from those they have been unable to trace.

Cover/jacket photo by William Denton.

Cover/jacket design by Jean Morley.

Copyright 1987 by Allen & Unwin, Inc.

All rights reserved.

Allen & Unwin, Inc.

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George Allen & Unwin (Publishers), Ltd

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George Allen & Unwin (Publishers), Ltd

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George Allen & Unwin Australia Pty Ltd

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First Published in 1987

Library of Congress Cataloging-in-Publication Data

The Political economy of revolutionary Nicaragua.

(Thematic studies in Latin America)

Bibliography: p.

Includes index.

1. NicaraguaEconomic policy. 2. NicaraguaEconomic conditions1979 I. Spalding, Rose J.

HC146.P65 1986 338.97285 86-14095

ISBN 0-04-497014-5 (alk. paper)

ISBN 0-04-497015-3 (alk. paper : pbk.)

British Library Cataloguing in Publication Data

Political economy of revolutionary Nicaragua.

1. NicaraguaEconomic Conditions 1979. 2. NicaraguaPolitics and government1979

I. Spalding, Rose J.

330.97285053 HC146

ISBN 0-04-497014-5

ISBN 0-04-497015-3 Pbk

MANUFACTURED IN THE UNITED STATES OF AMERICA

BILL GIBSON

When a column of 1000 Sandinista troops marched victoriously into Managua on July 19, 1979, it seemed to all that this small Central American nation was on the brink of an historic transformation. The 34-year dictatorship of the Somoza family was at last broken, and the hated National Guard was disbanded. The very conception of what Nicaragua wasa banana republic"1 subservient to U.S. political and economic interestswas shattered. Gone was Somozas crony capitalism" that had served to enrich his friends and associates while impoverishing the large majority of the people. It was now within the power of the architects of the Sandinista revolution to change the basic structures of the society. Three principles illuminated the path forward: popular participation, political nonalignment, and a mixed economy.

Now 7 years after the insurrection, the euphoria of victory has given way to the labor of reconstruction and renewed struggle for self-determination. The Sandinistas have found it much easier to make a revolution than to manage a war economy, especially at time in which the prices of Nicaraguas principal exports have collapsed and a third of export earnings goes to service the foreign debt.2 The fear is that the revolution will stumble under the weight of external pressure and the Sandinistas will renege on their promise to erect a just, equitable, and democratic society. In the years since the revolution, the Sandinistas have clearly tested the limits of the possible within the framework defined by their three guiding principles. Although it is true that Nicaragua has undergone a profound transformation, there are many basic features of the economy that the Sandinistas are powerless to change. Nicaragua remains a poor, underdeveloped country in which policymakers struggle with many of the same dilemmas of economic development which plagued their predecessors.

1. Nicaragua was never literally a banana republic. A combination of bad weather, labor unrest, and disease forced foreign banana plantation owners to abandon their operations until after World War II. Since then, banana export earnings have been only about 1 -2% of the total. The term is nevertheless appropriate for its political connotation.

2. For more details, see the chapter in this collection by Stahler-Sholk.

This chapter is concerned with questions of basic economic structure and how it has evolved under the leadership of the Frente Sandinista. The chapter provides an overview of the changing structure, problems, and policies of the Nicaraguan economy, beginning with the Somocista period. The following section focuses on the nature of the agroexport model, how it was managed under Somoza, and the impact of the model on the people of Nicaragua. By diverting resources to a small class of wealthy landowners (which included the family itself), the Somoza dictatorship intensified the social contradictions that ultimately led to the insurrection of 1979. The third section broadly outlines the nature of the structural change brought about by the Sandinistas. It is argued that the secret of the relative autonomy enjoyed since the revolution lies in the Sandinistas ability to control Nicaraguas participation in the world economy. Through the nationalization of the banking system and foreign trade, Nicaragua has so far escaped the grip of the international financial system. The conclusion of the chapter argues that it is ironically the successes of the Sandinistas that pose the ultimate threat to their existence. Indeed, whether Nicaraguans remain in control of their country now largely depends on the international reaction to the Sandinistas challenge to the traditional means of North-South domination.