During the 19th century, Latin America underwent major changes in its land/labour ratio, which effected inequality. In this period, there was greater demand for land intensive commodities, in which Latin America could provide, so in the 1870s, Latin America reintegrates into the world economy. This period saw the abolition of slavery which led to a large level of migration from Europe, as well as indentured servitude predominantly from Asia. This migration crucially changed the land to labour ratio and had large impacts on inequality, which this essay will explore. Firstly, this essay will highlight the relevant changes in Latin American countries and the shifts seen in this period. Then, it will focus on two different countries in particular, Brazil and Argentina and investigate the historical debates around this topic. It will then assess the effects of these changes on inequality in the nineteenth century, concluding that inequality increased as a result of these changes, as well as return migration.
Inequality from 1800 to 1820 is rather clear; slaves and some indigenous people were much poorer than the land-owning elites in Latin America. During this period of colonialism, Latin America was very rich in natural resources, but had low land to labour ratios. Williamson states that population density has a negative impact on inequality, contrary to what would be expected. Williamson argues that this may be because agrarian societies that had high population densities had per capita incomes that were lower than urban societies, and higher food prices, requiring higher nominal subsistence which would lower the inequality level. Wars and independence that reduced labour in Latin America also reduced inequality; Williamson suggest that inequality in Latin America was lower before 1870 than in the industrial US.
Since Latin America had great uncertainty in its agricultural economy, the most reliable asset was land. During the 19th century, the government turned to selling land for private use in order to generate revenue. These large sales in a short time period shocked existing markets and changed the relative price of factors. This meant that the landholding was concentrated to a few wealthy elites, and a fall in the relative price of labour which lowered real wages. For example, in the 1900s, 2.4% of household heads in rural America owned land, compared to 74.5% for the US and even 87.1% for Canada. This demonstrate the large inequality of land holding in Mexico specifically, compared to North America.
The major change in the second half of the 19th century was “the first globalisation” in which production of exportable commodities boomed and migration increase the amount of labour. The changes in global markets, with industrialisation taking place in Europe and later North America led to an increase in demand for natural resources, which were abundant in Latin America. This led to an enlargement in production in land-intensive industries, which differed across different regions of Latin America. For example, grain and wool was heavily produced in more temperate areas, minerals in the more mountainous areas and sugar, coffee and bananas in the more tropical areas, such as Brazil and Cuba.
The nature of labour changed throughout the 19th century, with slavery constitution a smaller and smaller proportion until its abolition from the 1850s onwards. This undoubtedly reduced inequality, with many former slaves, though severely and socially disadvantaged working for a wage. According to Costa, the coffee industry was in need for labour the most, and this is a useful example of when the increase in land to labour ratio did not bring high productivity as planned. Costa describes the changes in Latin America land to labour ratio, particularly focussing on Brazil, which became a labour scarce economy after the abolition of the slave trade. As a result, they sought immigration to increase the proportion of labour and this came mainly from Europe (mainly Portugal, Germany and Switzerland). They created new settlements (núcleos coloniais). However, this policy failed for many reasons, one of which increased inequality. The adjustment from salve to free labour was a challenging for the Brazilian planters. Prior to the arrival of the immigrants from Europe, much of the best land was monopolised by the planters . The method of production of coffee exasperated inequality in Brazil; migrants had very little surplus after half of their profits were given to their planters, and only a marginal amount was left after tax and transportation costs, indicated in a first hand-account by Silveira da Mota . These low profits, coupled with high interest rates of a minimum of 6%. This form of labour greatly exasperated inequality in Brazil and throughout Latin America in the 19th century, as it formed a kind of debt bondage. With this, the rich landowners kept the migrants in a cycle and made them unable to escape their debts. Many simply abandoned their crops. Costa highlights the move to the sharecropping system, in which immigrants were recruited from Europe to increase the labour supply on plantations. But this system eventually failed again because it was not a system of free labour. There was a distinct lack of machinery, so though labour was plentiful, it became impossible to economize on labour.
Williamson argues that there is a causal relationship between inequality and globalisation in Latin America, between 1870s and 1913 in particular. He states that the large increase in demand for labour-intensive manufactured goods increased rapidly, so the demand for labour fell, as well as the wage to land ratio. He also notes a large increase of land rents to wages by up to 10-fold from 1880 to 1919.
Another factor that affected inequality in Latin America in the 19th century was return migrations. In Uruguay in 1860, 35% of the population was foreign born, compared to only 17% by 1908, which was partly due to return migrations. Though return migration mainly took place at the beginning of the 1900s, it is still important in the debate regarding land to labour ratio and inequality. One reason for return migration was, as mentioned, the fact that there was little land available by the time migrants arrived in Latin America, so land was relatively more expensive, meaning that migrant tended to reside in cities. The high rate of return migration was due to inequality. There was a decrease in land to labour ratio since there were more workers on less land. This led to a reduction in wages and increased rents by an average of 7.9% per decade between 1850 and 1870, whilst the elite benefitted from the use of labour to meet the growing international demand . This widens the income gap and subsequently increases inequality. The improvements in transportation throughout the late 19th centuries allowed for much cheaper travel from Latin America to the migrants’ homes, which meant that many migrated seasonally and worked at the harvest without getting them to commit. Because of this, many migrants invested back into their homes. However, this increase in temporary migration exacerbated inequality, since migrants that were only settling temporarily had lower savings and therefore were unable to progress their own economic situations within Latin America itself.
Adelman describes the social implementation that derived from the scarcity of labour and expansion of the agricultural sector. The main factor that has been argued to increase migration into Latin America was high wages. However, Adelman argues that this alone was not enough to attract workers, and the authorities campaigned to attract them. In North America, migrants were able to have their own piece of land, which created laws and democracy. However, land was concentrated in the hands of a few wealthy elite in South America, who used extractive methods and did not create an environment of equality. The inequality was demonstrated through social unrest as rural wages stopped rising in the 1890s, and the living standards of rural workers was poor.
Overall, the changes in land to labour ratio in Latin American countries increased inequality during the 19th century, from 1870, the re-integration of Latin America into the world market due to industrialisation and demand for natural commodities led to a boom in exports, which was a dominating factor of Latin American countries growth. Land and mineral resources were held by the top elites, who gained largely from this export boom, but this meant that inequality widened. The increase in labour, mainly from European immigration to Latin America increased the income gap and where the biggest increase in inequality came was from the 1870s onwards.