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Industrial Transformation and Labour Relations in Puerto Rico: From ‘Operation Bootstrap’ to the 1970s*

Published online by Cambridge University Press:  05 February 2009

Pedro A. Caban
Pedro A. Caban
Affiliation:
Pedro A. Cabán is Assistant Professor of Political Science at Fordham University, New York.
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Extract

During the 1950s and 1960s Puerto Rico's industrial transformation was accompanied by social stability and relatively peaceful labour relations, which were essential for a development programme dependent upon foreign investments. The state took a central role in this process, as it guided economic activity and mobilised vital human and material resources. However, by the late 1960s profound changes in the island's political economy threatened this state-guided development programme. This essay traces the history of Puerto Rican economic change and the relationship between industrial transformation and the state's capacity to manage the operation of the economy, particularly industrial relations up to the late 1970s. Four features of this process will be examined: (1) labour relations during the early phase of industrialisation; (2) the changes in the economy resulting from the expansion of capital-intensive industrial sectors; (3) the impact of these changes on the state's capacity to manage the political economy, particularly its fiscal policy; and (4) how these changes altered the nature of state-labour relations.

Type
Research Article
Information
Journal of Latin American Studies , Volume 21 , Issue 3 , October 1989 , pp. 559 - 591
Copyright
Copyright © Cambridge University Press 1989

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Footnotes

*

I would like to thank Frank Bonilla, James Dietz, Jeffry Frieden and Mark Naison for their comments on earlier versions of this article.

References

* I would like to thank Frank Bonilla, James Dietz, Jeffry Frieden and Mark Naison for their comments on earlier versions of this article.

1 See Dietz, James, ‘Puerto Rico in the 1970s and 1980s: Crisis of the Development Model’, Journal of Economic Issues, vol. 16 (06 1982), pp. 497–506CrossRefGoogle Scholar for a succinct, but insightful, discussion on how the industrial promotion programme impeded domestic capitalist development.

2 PPD relations with organised labour in the post-Second World War period are discussed in Cabán, Pedro A., ‘Industrialization and Labor Organizations in Puerto Rico’, Latin American Perspectives, vol. 2 (Summer 1984), pp. 49–72.Google Scholar

3 Ley No. 130, 8 May 1945, artículo 1.

4 A useful compendium of labour related legislation appears in Toledo, Evaristo M., Sindicalismo IV: Legislacioón del Trabajo en Puerto Rico (Bayamón, Puerto Rico, 1974).Google Scholar

5 Ley No. 177, 22 March 1946.

6 Cabán, , ‘Industrialization and Labor Organizations’, p. 162.Google Scholar See Galvin, Miles, The Organized Labor Movement in Puerto Rico (Rutherford, N.J., 1979)Google Scholar and ‘The Puerto Rican Labor Movement: The US Connection’, in Jorge Heine (ed.), Time For Decision: The United States and Puerto Rico (Lanham, Md., 1983).Google Scholar According to Galvin in 1963 26 AFL–CIO internationals had local affiliates on the island, in Heine, p. 73.

7 NACLA's (North American Congress on Latin America), ‘U.S. Unions in Puerto Rico’, Latin America and Empire Report (May–June 1976).

8 Wells, Henry, The Modernization of Puerto Rico, (Cambridge, MA, 1969)CrossRefGoogle Scholar discusses the ‘value or normative implications’ of Operation Bootstrap, pp. 170–2.

9 Muñoz Marín is quoted as stating that ‘Within our just obligation to all people, we must continue exercising specific dedication to all workers. This dedication, naturally, is not demonstrated by some workers arriving at some government posts or boards. This dedication is demonstrated among other(ways), by the fact that today the workers of Puerto Rico have right here in the Fortaleza an unshakeable defender of their justice’, quoted in Anderson, Robert, Party Politics in Puerto Rico (Stanford, 1965), p. 219.Google Scholar

10 Dietz, James L., Economic History of Puerto Rico: Institutional Change and Capitalist Development (Princeton, N.J., 1986), p. 223.Google Scholar See also Cabán, Pedro A., ‘Interest Associations, the State and Economic Growth in Puerto Rico’, Ph.D. diss., Columbia University, 1981, chs. 5 and 7Google Scholar; García, Gervasio and Rivera, Angel Quintero Desafío y solidaridad (San Juan, 1982)Google Scholar; and Angel Quintero Rivera, ‘El movimiento obrero y el modelo puertorriqueño de desarrollo: algunos apuntes’, paper presented at the XV Congreso de Sociología, Managua, Nicaragua, October 1983 for various discussions of Muñoz's dealings with organised labour.

11 A valuable theoretical discussion of the role of the state in socialising the costs for the reproduction of labour power is provided by Pontusson, Jonas, ‘Comparative Political Economy of Advanced Capitalist States: Sweden and France’, Kapitalistate, vol. 10/11 (1983), pp. 43–74.Google Scholar

12 García, and Rivera, Quintero, Desafío y solidaridad, p. 133.Google Scholar

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1949 1954 1958 1963 1967 1972 1977 1978

Employmenta 10,805 17,645 17,998 26,622 34,474 39,624 37,197 36,241

% of Manufacturing 19.59 25.56 25.58 27.00 27.51 26.90 25.77 23.24 labour force$sup/sup$

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20 The issue of the relatively low levels of unionisation and militancy during the labourintensive phase are discussed in Cabán, ‘Industrialization’, and Miles Galvin, ‘The Puerto Rican Labor Movement: The U.S. Connection’.

21 Comité interagencial de la estrategia de Rico, Puerto, El Desarrollo económico de Puerto Rico, Una Estrategia para la próximo década (San Juan, 11. 1975), pp. 27–31Google Scholar, and Dietz, , Economic History, p. 252.Google Scholar

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25 The primary elements of the post-1966 development strategy are analysed in Comité Interagencial Estrategia de Puerto Rico El Desarrollo económico de Puerto Rico; Denis, Robert and Rafuse, Robert W. Tax Exemption and its Alternatives: Investment Incentives in the Development Program of Puerto Rico (San Juan, 01. 1976).Google Scholar On the integration of different industries see EDA, Some Key Issues of Industrial Development Strategy.

26 Dietz, , Economic History, p. 272.Google Scholar Weisskoff, Richard and Wolff, Edward, ‘Development and Trade Dependence: The Case of Puerto Rico, 1948–1963’, Review of Economics and Statistics (11. 1975), pp. 470–7.CrossRefGoogle Scholar

27 EDA, Some Key Issues of Industrial Development Strategy.

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29 USDC, Economic Study, 11, 1979, p 141.Google Scholar

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31 Ibid., table A-25, p. 25; table A-8, p. 8.

32 EDA, Competitive Position of Mnaufacturing Industries (San Juan, 09. 1975), p. 22.Google Scholar For the ten highest wage industries, employment increased between 1964 and 1974 from 4,525 to 25,340 and for the ten lowest from 25,357 to 26,710.

33 USDC, Economic Study, ii, 1979, table 13, p. 38.Google Scholar

34 Ibid., 11, 1979, p. 42, author's calculations.

35 Ibid., table 6, p. 30–1, and Appendix B of USDC; author's calculations.

36 Ibid., table 6 and table 9.

37 The Committee to Study Finances, Puerto Rico's, Report to the Governor (San Juan, 12. 1975), p. 41.Google Scholar The authors of the report argue that profit levels are much higher since these capital-rich corporations invest accumulated earnings in various financial instruments yielding a return of from 35 to 60% on their assets.

38 Calculated from USDC, Economic Study, 11, 1979, tables 16, 39.Google Scholar

39 Data from Planificación, Junta de, Balanza de Pagos, 1983 (San Juan, 07 1984), table 1, pp. 1–2.Google Scholar

40 Ibid., pp. 17–18.

41 Under Section 931 income of US corporations derived from sources operating in certain US territorial possessions, including Puerto Rico, is exempt from federal taxation if the corporation derives at least 80 percent of its gross income from investments within the possession.

42 Committee to Study Finances, Puerto Rico's, Report, p. 44.Google Scholar

43 Ibid. The figure for first investment is misleading since according to the Committee direct investment ‘includes all increases in the net worth of external firms, including paper assets such as Commonwealth bonds’. The Committee estimates that about 80% of recorded direct investments in Puerto Rico is accumulation of profits on past direct investments. Ibid.

44 The passage of Section 936 of the US internal revenue code had a major effect on corporate planners, for they could establish subsidiary branches and shift earnings from overseas sites to Puerto Rico and repatriate them to the United States. For a detailed discussion of this subject see Department of the Treasury, , The Operation and Effect of the Possessions Corporations System of Taxation, Third Annual Report (Washington, DC., 06 1980).Google Scholar

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46 USDC, Economic Study, 1 (1979), p. 106Google Scholar, with a resulting loss of approximately 1,900 jobs. US Bureau of the Census, Census of Manufactures 1973, 1975 (Washington, DC).Google Scholar

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48 The terms are borrowed from Weisskoff, Richard, Factories and Food Stamps (Baltimore, 1985), p. 58.Google Scholar

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51 Calculated from Junta de Planificación, Informe Económico al Gobernador, 1976, tables 2, 23, 28.

52 Ibid., p. 49.

53 Committee to Study Puerto Rico's Finances, Report to the Governor, p. 31.Google Scholar

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55 Ibid.

56 Junta de Planificación, informe, 1976, table A-14, p. 14.

57 Dietz, , Economic History, p. 298.Google Scholar

58 Junta de Planificación, Informe… 1976, table A-15.

59 See discussion by Weisskoff, Factories, esp. chs. 8, 14, 16.

60 Business International Corporation: Puerto Rico: Critical Choices for the 1980s (New York, 1980), p. 37.Google Scholar

61 Ibid.

62 Frank Bonilla, and Campos, Ricardo, ‘A Wealth of Poor: Puerto Ricans in the New Economic Order’, Daedalus, 110 (Spring 1981), p. 147, and figs. 4, 149.Google Scholar

63 Committee to Study Puerto Rico's Finances, Report, pp. 31, 34.Google Scholar

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66 Bonilla, and Campos, , ‘A Wealth of Poor’, p. 150.Google Scholar

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72 From 1950 to 1977 only two sources of government receipts increased on a percentage basis – individual income taxes from 25.6 to 32.9% and Federal transfers and grants in aid from 17.3 to 5 2.2%, Economic Study, table 13, p. 84.

73 In the Declaration of Aguas Buenas November 1970 the younger leadership of the PPD called for convening a Constituent Assembly to define the nature of a new compact which would supersede the prevailing one.

74 The incumbent governor Sánchez Vilella broke from the PPD and ran for election as a candidate of the Partido del Pueblo.

75 Surprisingly very little has been written on the contemporary social class basis of the dominant political parties. The few exceptions include the work of Ramos, Aaran G., ‘The Development of the Annexionist Politics in Twentieth century Puerto Rico’, in López, Adalberto, (ed.) The Puerto Ricans (Cambridge, MA, 1980)Google Scholar, and Meléndez, Edgardo, Puerto Rico's Statehood Movement (Westport, Ct, 1988).Google Scholar The political and economic thinking of the annexationist movement is provided in Aarón Ramos, Gamaliel (ed.), Las ideas anexionistas en Puerto Rico bajo la dominación norteamericana (Río Piedras, Puerto Rico, 1987).Google Scholar Much of the material in the following two paragraphs is drawn from Meléndez's research. For an analysis of the social class base of the PPD in the 1940s, see the article by Pantojas-García in this issue of the Journal of Latin American Studies.

76 Interviews with PNP administrative personnel in Department of Labor and Economic Development Administration, summer 1977.

77 Departamento de Trabajo, Asociaciones y Federaciones de los Empleados de las Agencias del ELA y los municipios del ELA (mimeo, n.d.). Galvin, , ‘The Labor Movement…’, p. 83Google Scholar, writing about the situation in 1974, notes that ‘in 45 municipalities, 81 associations of municipal employees were certified for dues checkoff. A total of 116 groups received similar certifications in 36 commonwealth departments and agencies’.

78 EDA, Competitive Position…, 1975, p. 26.Google Scholar

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82 Compiled from ‘Comisión del Gobernador para Estudiar’, Informe, iii, p. 21.

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84 See NACLA, ‘U.S. Unions in Puerto Rico…’.

85 See Meléndez, , ‘Accumulation and Crisis…’, pp. 79–83Google Scholar, Cabán, , ‘Industrialization’, pp. 162–3Google Scholar, García and Quintero Rivera, Desafío y Solidaridad.

86 See Galvin, for discussion of relations between AFL–CIO internationals and the Muñoz Marín government.

87 Windmuller, John P., Report on the Creation of a Tripartite Governor's Council on Labor and Social Policies (mimeo, 17 07 1974), p. 1.Google Scholar

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89 For an analysis of internal PPD debate see Passalacqua, Juan Manuel García, La crisis política en Puerto Rico (Río Piedras, Puerto Rico, 1983).Google Scholar

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92 Ibid., p. 1.

93 The Universidad de Puerto Rico, Editorial Universitaria published the report in 1976 and included transcripts of the public hearings.

94 John P. Windmuller, Report on the Creation of a Tripartite Governor's Council on Labor and Social Policies. This is the implication, although the author of the report mentions that the Chamber of Commerce of Puerto Rico recommended the establishment of such a council as well.

95 Office of the Governor, Boletín Administrativo (San Juan, 1976).Google Scholar

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101 For Raymond Carr, increased incidence of strikes and bitter union struggles between the Hernández Colón government and the unions were indications of the degree to which the PPD had lost its control over organised labor. See his Puerto Rico: A Colonial Experiment (New York, 1984), p. 252.Google Scholar

102 Comisión del Gobernador para Estudiar Relaciones, Informe iii, p. 27 for table.

103 El Mundo, 11 Dec. 1974.

104 El Mundo, 1 Dec. 1974, p. 9A.

105 El Mundo, 1 Feb. 1975.

106 El Mundo, 3 March 1975.