Why Nations Fail

repartimiento
, the forced labor draft, had never been
abolished after independence, but now it was increased in
scope and duration. It was institutionalized in 1877 by
Decree 177, which specified that employers could request
and receive from the government up to sixty workers for
fifteen days of work if the property was in the same
department, and for thirty days if it was outside it. The
request could be renewed if the employer so desired.
These workers could be forcibly recruited unless they could
demonstrate from their personal workbook that such
service had recently been performed satisfactorily. All rural
workers were also forced to carry a workbook, called a
libreta
, which included details of whom they were working
for and a record of any debts. Many rural workers were
indebted to their employers, and an indebted worker could
not leave his current employer without permission. Decree
177 further stipulated that the only way to avoid being
drafted into the 
repartimiento
was to show you were
currently in debt to an employer. Workers were trapped. In
addition to these laws, numerous vagrancy laws were
passed so that anyone who could not prove he had a job
would be immediately recruited for the 
repartimiento
or
other types of forced labor on the roads, or would be forced
to accept employment on a farm. As in nineteenth- and
twentieth-century South Africa, land policies after 1871
were also designed to undermine the subsistence
economy of the indigenous peoples, to force them to work
for low wages. The 
repartimiento
lasted until the 1920s; the
libreta
system and the full gamut of vagrancy laws were in
effect until 1945, when Guatemala experienced its first brief
flowering of democracy.
Just as before 1871, the Guatemalan elite ruled via
military strongmen. They continued to do so after the coffee
boom took off. Jorge Ubico, president between 1931 and
1944, ruled longest. Ubico won the presidential election in
1931 unopposed, since nobody was foolish enough to run

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against him. Like the Consulado, he didn’t approve of
doing things that would have induced creative destruction
and threatened both his political power and his and the
elite’s profits. He therefore opposed industry for the same
reason that Francis I in Austria-Hungary and Nicholas I in
Russia did: industrial workers would have caused trouble.
In a legislation unparalleled in its paranoid repressiveness,
Ubico banned the use of words such as 
obreros
(workers),
sindicatos
(labor unions), and 
huelgas
(strikes). You could
be jailed for using any one of them. Even though Ubico was
powerful, the elite pulled the strings. Opposition to his
regime mounted in 1944, headed by disaffected university
students who began to organize demonstrations. Popular
discontent increased, and on June 24, 311 people, many of
them from the elite, signed the Memorial de los 311, an
open letter denouncing the regime. Ubico resigned on July
1. Though he was followed by a democratic regime in
1945, this was overthrown by a coup in 1954, leading to a
murderous civil war. Guatemala democratized again after
only 1986.
The Spanish conquistadors had no compunction about
setting up an extractive political and economic system. That
was why they had come all the way to the New World. But
most of the institutions they set up were meant to be
temporary. 
The 
encomienda
, for example, was a
temporary grant of rights over labor. They did not have a
fully worked-out plan of how they would set up a system that
would persist for another four hundred years. In fact, the
institutions they set up changed significantly along the way,
but one thing did not: the extractive nature of the institutions,
the result of the vicious circle. The form of extraction
changed, but neither the extractive nature of the institutions
nor the identity of the elite did. In Guatemala the
encomienda
, the 
repartimiento
, and the monopolization of
trade gave way to the 
libreta
and the land grab. But the
majority of the indigenous Maya continued to work as low-
wage laborers with little education, no rights, and no public
services.
In Guatemala, as in much of Central America, in a typical
pattern of the vicious circle, extractive political institutions
supported extractive economic institutions, which in turn
provided the basis for extractive political institutions and

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the continuation of the power of the same elite.