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The History of Costa Rica
National Geographic’s Guide to Costa Rica observes that this tiny country, roughly the size of Scotland or the state of West Virginia, “seems to contain the entire world within its small compass,” 1. Rich and varied topography, biodiversity, and historical influences are abundant within 51,100 sqkm.
Situated at the thin end of the Central American Isthmus, Cost Rica forms a unique land bridge between two oceans and two dramatically distinct continents. As a crossroads of trade routes, exchange, species and cultures, the country’s unique geographical circumstances are an inherent characteristic of its natural and social identity. These characteristics have also provided the basis for its economic development models. The country’s agricultural export industry and its rapidly developing ‘Ecotourism’ market are possible as a result of its abundance of natural and cultural attractions and the geological and climatic conditions that encourage such prolific growth and cultivation.
Table of Contents
Pre-Columbian Costa Rica (12,000BC to 1500AD)
Social Relations within the Coffee Sector
Conditions within the Banana Industry
Calderon, Figueres and the Civil War of 1948
The Transformation of the Coffee Industry
1980 Onwards: From Economic Crisis to Neo-liberalism (1980 – 2007)
Nicaragua, Civil War and a Nobel Peace Prize
The Price of Structural Adjustment and the Move Towards 'Free Trade'
The History of Costa Rica - Bibliography
Geological Formation
In geographical terms, the narrow land mass that is Central America, stretching from the Isthmus of Tehuantepec in Southern Mexico to the Isthmus of Panama, where it joins with the Colombian Pacific lowlands, is relatively young, forming for the most part in the Pliocene period, a mere 3 million years ago.
The region lies within the critical juncture where five important tectonic plates converge and crumple; the North American, Pacific, Coco's, Nazca and Caribbean plates; its formation primarily the result of the 'subduction' or sliding, of the Coco's plate under the Caribbean plate. The southernmost end of this isthmus, including the area that is now Costa Rica, sits along the western edge of the Caribbean plate where it is contested by the Coco's plate.
The tectonic movement and subsequent volcanism that gave rise to this landmass began some 15-25 million years ago, in the Miocene period. At this time the Coco's and Caribbean plates started moving towards one another, slowly colliding.
The Coco's plate, shoving against the western edge of the Caribbean plate, nudging it eastwards, was heavier, containing a higher proportion of dense oceanic crust. As the two plates jostled together, wrestling for position, the heavier plate began to sink, nose-diving beneath the edge of the Caribbean plate. The 'subducting' plated descended beneath the Earth's lithosphere, creating huge amounts of friction and heat and converting the heavy rock into less dense magma and gases. These then rose back upwards, collecting in intensely pressurized magma chambers and eventually erupting through the ocean floor; cooling to form an archipelago of submarine volcanoes bordering the Pacific in an arc extending from Guatemala to Panama.
Propelled by Coco's dynamic burrowing, volcanic activity continued to thrust the ocean floor upwards, throwing more and more material down the slopes of the volcanoes until they emerged from the sea forming small islands. Deposits of sediment and rock, from both North and South America, slowly filled in the areas between them, eventually coalescing to form a continuous landmass approximately three million years ago.
Scientists describe this event as one of the most significant geological occurrences of the last 60 million years, the formation of the isthmus having had an enormous influence on the Earth's climate and biological environment.
Where once the waters of the Pacific and Atlantic flowed and intermingled freely, this land bridge acted as a stopper, re-routing the marine currents, forcing Atlantic flows northwards to form new patterns of circulation, including what is today known as the Gulf Stream. The Gulf Stream sends warm Caribbean waters towards Europe, increasing the Continent's temperature by as much as 10°C and thereby both directly and indirectly affecting global rainfall and other climatic, atmospheric and subsequently topographic patterns.
The development of a land bridge between the Continents of North and South America also played a vital role in facilitating biotic exchange between these two regions. This allowed both plant and animal species to migrate, mix and overlap, filling the area with a profusion of unique and exotic flora and fauna. The sustained volcanic activity that gave the region its extremes of elevation and relief was crucial in producing this impressively rich biodiversity; resulting in a vast array of micro climates draped over a characteristic spine of volcanoes, mountains and valleys stretching from Guatemala into Western Panama.
Costa Rica alone, despite representing less than 0.1% of the Earth's surface contains some 112 volcanoes, 5 of which are still described as active; 3 large mountain ranges, the Cordillera de Guanacaste in the North, the Cordillera Volcanica Central and the Cordillera de Talamanca in the South - which contains the country's highest peak, Mt Chirripo, at 3,819m - and is home to a huge 5% of global diversity.
Pre-Columbian Costa Rica (12,000BC to 1500AD)
According to popular belief, when Columbus and subsequent Spanish Conquistadores first arrived on Costa Rican shores they were met by a diminutive indigenous population of only around 25,000 people. Due to a lack of precious metals or stone, and no substantial indigenous workforce to exploit, these Spanish settlers were forced to till the land alone, becoming independent subsistence farmers rather than feudal lords or latifundistas, as in other parts of Central and South America, and thus there developed a “rural, classless democracy of peace-loving, white farmers who greatly valued freedom and family.” 2.
Until very recently this served as the generally accepted version of colonial history, becoming part of a 'national ideology', the unifying myth of the nation, what historian Theodore Creedman has described as 'leyenda blanca' or white legend 3. Over the last few years archeological discoveries and research have led historians and sociologists to discredit and rewrite this 'myth', suggesting that it not only underplays the cruel treatment and exploitation of indigenous peoples, but also ignores the diverse cultural influences within the region, 'over-exaggerating the whiteness of Costa Ricans' and denying existing class differentiation and unequal division of wealth and power. 4
It is now thought that on the eve of conquest, in 1502, there were actually as many as 400,000-500,000 people living in the area that is Costa Rica, dispersed throughout the region in distinct cultural groups that show influences from both Mesoamerican and South American civilizations.
Archeologists have found evidence of hundreds of residential sites and thousands of artifacts that attest to the movement, migration and interaction of peoples throughout the surrounding areas and to important agricultural, social and stylistic divisions that correspond to these ethnic and cultural differences.
There is little evidence to indicate when exactly the region was first inhabited.
It is estimated that large waves of primitive people first reached the North American Continent between 20,000 and 40,000 years ago, probably migrating from Asia, particularly Mongolia and Siberia to settle in the North West. Gradually, over many thousands of years, these people traveled southwards, eventually reaching Tierra del Fuego, the southernmost tip of Argentina, adapting to the varied climates and environments they encountered.
Evidence of occupation in Costa Rica dates back to about 12,000BC. Remnants of rudimentary tools, particularly spearheads, attest to the influence of both North American and South American civilizations in the region, suggesting that early settlers arrived not only from the North but also from Andean America, revealing the intermingling of the two distinct cultures even at this early stage.
These first inhabitants of Costa Rica were nomadic hunter-gatherers, moving in small bands across a land dominated by tropical forest, hunting animals for the most part now extinct, as well as fishing and gathering fruit, nuts, grains and eggs, moving as food supplies became scarce or exhausted.
As these early peoples began to gain knowledge of plant species, to explore their potential uses in food consumption, medicines, fibers and construction materials, and to gradually select species for cultivation, a rudimentary form of agriculture was established. This in turn laid the foundations for a more sedentary existence, with more permanent settlements. The transition into agricultural production happened primarily between 4000 and 1000BC, with evidence of permanent settlements found in the area from about 2500BC onwards.
As experience and expertise, and consequentially, food supplies, increased, so populations grew, settlements became more complex and sophisticated and agriculture intensified. At this point the existence of an important social and agricultural divide, reflecting ethnic differences became evident, marking the region as the approximate boundary between Mesoamerica and Andean America.
Tribes living in the northwestern and central areas of the region showed Mesoamerican influence, growing grains, particularly maize and beans, crops typical of the semi-arid zones of Mexico, while contact with South America was evident among the semi-nomadic tribes of the southern Pacific and Caribbean, where slash and burn cultivation of yucca and other tubers, and pejibaye, a kind of palm nut, all common to South American regions was prevalent. The chewing of coca leaves, an Andean custom was also common.
Tools and instruments of labor developed according to these agricultural advances and geographical and ethnic differences. In the drier areas of Guanacaste and Nicoya ceramic vessels for storing water and grains have been found, along with elaborately carved metates - stones for grinding corn- all showing stylistic influences originating from Mesoamerican cultures, while artifacts found in the Caribbean regions show workmanship and decorative styles similar to those of the Andean cultures.
The technique of ceramic modeling itself is thought to have originated in Colombia or Venezuela and traveled up into Central and North America, again reinforcing the idea that Pre-Columbian peoples across the continents did not live in isolation but had regular contact and exchange through trade, migration and conquest.
Population growth and the increasing complexity of settlements allowed for a diversification of production into crafts as artisans began to fashion objects beyond those necessary for survival. In recent decades archeologists have found thousands of intricately worked artifacts throughout the country; jewelry, decorative ceramics, elaborately carved stone and jade figures, gold and silver work and woven textiles again show marked stylistic and technical differences corresponding to cultural movement and exchange. The use of materials not sourced in Costa Rica confirmed the existence of huge mercantile circuits throughout the region; Guatemala was probably the principal source of jade, while gold and silver are thought to have been imported from South America.
Cacicazgos... or Village Life
Between 1000BC and 1000AD these tribal settlements, supported by agricultural production and trade grew into more sophisticated societies, consolidating to become small villages, so that at the time of conquest the village was the basis of indigenous civilization, where all religious, artisanal and commercial activity took place.
As methods of production developed and diversified, social relations and political organization also changed. Specialized roles became necessary, resulting in a more complex division of labor, and the essentially egalitarian nature of the hunter-gatherer band, and the early tribal settlements gave way to a strictly stratified social and political hierarchy and exploitative labor relations.
At the head of this hierarchy was the figure of the 'cacique' or warrior chieftain, a position normally inherited through matrilineal succession and enhanced by claims to supernatural and religious powers.
The cacique governed with a Council of Elders, a kind of indigenous nobility, made up of priests, commercial leaders, warriors, and of course the shaman, who fulfilled various functions as the main intermediary between the supernatural realm and that of everyday reality. This nobility held immense power, distributing and disseminating wealth, power and knowledge, consolidating their privileged positions to exploit their inferiors and gain access to riches and slaves. The lower strata of society, the great majority, were made up of artisans and peasants, and below them, slaves and prisoners of war.
Over the years the villages and their populations grew, beginning to subdivide, giving rise to further village units linked by origin and kinship ties. These groups of villages then united to become networks or confederations known as 'cacicazgos' or chieftainships. Each cacicazgo marked out a specific territory and was ruled over by one cacique. These early political associations operated primarily as a basis for commerce and warfare, and were part of a hierarchy of regional power organized according to size of population and territory. Beyond this, cacicazgos could integrate themselves into larger political and military units known as señorios. A señorio was a kind of fiefdom, covering a vast territory and population, ruled over by a lord who held an almost mythical and limitless power, while caciques maintained power over each individual cacicazgo.
The system of cacicazgos and señorios flourished in the 750 years prior to conquest. Influenced by the advanced agricultural and architectural techniques and knowledge of astronomy found in both Inca and Mayan (later Aztec) civilizations, farming made significant advances, natural fertilizers were discovered and sophisticated systems of irrigation were employed; while artesian skills were developed to construct bridges, roads and temples in the principal settlements.
While no monumental ceremonial centers, like those found at Tikal or Chichen- Itza, have been found in Costa Rica - probably due to the country's much smaller population - recent excavations have revealed that Pre-Columbian civilizations in the region were far more advanced than had previously been believed.
The Eve of Conquest
When Columbus landed in 1502 there were approximately nineteen different chieftainships across the country– a mixture of both cacicazgos and señorios – accommodating a combined population of between 400,000 and 500,000 in politically and ethnically distinct groups, interacting only through socio-economic activity and warfare.
At this point the principle chieftainship was the Nicoya, situated in the Pacific North. The señorios of Guarco and Garabito in the Central Valley, and the cacicazgos of Voto on the San Carlos Plain, Corobici in the Central Highlands, Boruca and Coto in the Pacific South and Talamanca in the Caribbean Lowlands were also important.
The inhabitants of the Nicoya chieftainship and most of the area that is now Guanacaste were the Chorotegas. These people were thought to have originated in Southern Mexico, traveling down to Costa Rica in the 13th Century, probably to escape enslavement in their own country - the name actually means 'fleeing people'. Most of the information we have about the Chorotegas was collected by Gonzalo Gerandez de Oviedo, a Spanish explorer who lived among them in 1529.
Heavily influenced by Olmec culture, they developed the most advanced societies in the region, bringing with them accomplished agricultural and military systems very like those of the Mesoamerican societies. Outstanding farmers, they often produced as many as three corn harvests a year, and introduced cacao, using the beans as currency. They used a ritual calendar and practiced religious rites resembling those further north. Human sacrifice existed although it was less prevalent than in Mayan and Aztec civilization, and was usually performed in celebrations coinciding with the corn harvest. Inter-tribal tension was widespread and wars to 'defend tribal identity,' 5 take slaves and to obtain women to procreate with were endemic.
The Chibcha and Diquis people, living in the South Pacific region, probably migrated up from Colombia, bringing with them Andean customs and practices. They had a highly developed slave system and were particularly war-like - perhaps due to their possession of gold - living in towns surrounded by fortified palisades. The Chibchas and Diquis were accomplished goldsmiths, creating expertly worked amulets, tweezers, beads, pendants and religious icons, decorated with fantastical animist imagery and motifs reminiscent of those found further south. They were also famed for their embroidered cloth work. These people are thought to be responsible for the granite spheres that lie in linear formations in the Rio Terraba Valley, the Golfito region and on Caño Island, off the Osa Peninsula. These spheres ranging from the size of a grapefruit to 2.5m in diameter and 16 tons in weight are one of Costa Rica's Pre-Columbian mysteries.
The Caribs who lived in the Southern Atlantic region originated in the jungles of Venezuela, Brazil and Ecuador, migrating up about 200 years before Columbus's arrival, to settle on the islands of the Southern Caribbean and the Atlantic coasts of Costa Rica, Panama and Northern Colombia. The Caribs were part of huge mercantile circuits including Panama, Ecuador, Brazil and Colombia. The burial mounds of these people have yielded a huge number of artifacts originating throughout these regions.
Finally, the important settlements of the Central Valleys and Highlands were inhabited by the Corobici and the Nahuatls who were thought to be of Mesoamerican descent, but who benefited from the influence of both northern and southern cultures. Remains of hundreds of settlements have been found in the area revealing towns similar to those of the Andean regions, with wide cobble-stone walkways, plazas, decorative pools and water cisterns fed by sophisticated aqueduct systems. Decorative ceramic and stonework showed the use of South American motifs. This area is also home to the largest and most significant of Costa Rica's archeological sites found to date. El Guayabo, on the slopes of Turriabla volcano, is an impressive ancient city surrounded by forest and thought to have housed as many as 15,000 people. Dating from around 1000BC it was abandoned for unknown reasons in about 1400AD. It is now open to the public as a National Monument.
The Arrival of the Spanish
On 15th September 1502, on his fourth and final voyage to the New World, Columbus landed at the Bay of Cariari (now Limón), on the Atlantic Coast of Costa Rica, after a violent storm wrecked his ships. During the eighteen days that he and his crew stayed to rest and make repairs they visited several coastal villages where they were welcomed by native people dressed in impressive gold and jade jewelry, who treated them with great hospitality, such that they imagined the region to be rich in mineral wealth, whose friendly inhabitants would be easily conquered. Columbus’s journal of the time records; ‘I saw more signs of gold in the first two days than I saw in Española in four years’. ⁶
Columbus never returned to the country, however as stories of its apparent wealth spread, the prospect of gold and riches drew other explorers to the region, which became known as 'Costa Rica' or the rich coast. This name must have seemed like a cruel irony to the prospective settlers who arrived to find there was no pot of gold; encountering only difficult terrain with dense forest, sweltering, swampy lowlands and impenetrable mountains, tropical diseases, lack of food and an aggressive native population.
In 1506 King Ferdinand of Spain sent a governor, Diego de Nicuesa, to colonize the Atlantic coast. The expedition was disastrous, the governor's ships ran aground off the coast of Panama and he and his men were forced to march north along the inhospitable coast. Tropical diseases and starvation reduced the group by more than half and hostile natives used guerilla tactics to attack the strangers and burned or uprooted their crops to deny them food.
Over the next forty years several largely unsuccessful attempts were made to conquer this coast, all thwarted by the difficult terrain and climate and fierce indigenous resistance.
Explorers arriving on the Pacific coast had marginally more success. In 1522 Gil Gonzalez Davila explored the Pacific North, trading with the natives and receiving large amounts of gold, and in 1524 Francisco Fernandez de Cordoba founded the first settlement, at Villa Bruselas. However, sickness, starvation, native attacks and disputes among the Spanish themselves eventually forced both expeditions to abandon the country.
While most of Central America was conquered between 1519 and 1523, with Spanish conquistadores moving down in two waves, from Mexico down and from Panama up, Costa Rica was largely left alone until 1560.
At this point King Philip II of Spain, together with the Royal representatives of the Kingdom of Guatemala - which had jurisdiction from the Chiapas region of Mexico as far as the southern border of Costa Rica - decided it was time to explore the interior of the country and 'Christianize' the natives. The King promised that future colonists could divide the indigenous population among themselves through a system of encomienda, whereby native family groups were allotted to landowners and obliged to provide labor, services and agricultural and artisan goods for at least two generations; in return their masters would 'protect and Christianize them'.
However, by 1561, when Juan de Cavallon's expedition arrived to penetrate the Central Valley region, establishing the small settlement of Garcimuñoz (now the Rio Oro de Santa Ana area), the epidemic diseases and fighting introduced by the earlier attempts to colonize, had decimated the indigenous population, reducing numbers to around 120,000 people. This meant that although the new arrivals faced far less resistance and were able to take control more easily, the exploitable labor force was very small.
Juan Vasquez de Coronado, who was sent as the new governor in 1562, is considered the real conqueror of Costa Rica. He explored the Central Highlands and valleys and in 1563-4 founded the city of Cartago, Costa Rica's colonial capital.
He treated the natives more humanely than his predecessors, opting for the use of persuasive tactics to forge alliances and gain their cooperation, enabling him to make Cartago a permanent settlement and allowing the Spanish to gain their first real foothold in the region.
By the end of the 16th Century Spanish control was consolidated and the native population was largely wiped out. Whereas the encomienda system had initially allocated each landowner several hundred slaves, within a century most had only three or four, between the 1560s and 1611, the workforce had dropped by 70%, with only 7,000 - 8,000 natives remaining in the country. 7
Colonial Life
Scarcity of labor and lack of mineral wealth meant that Costa Rica, late to join its isthmus neighbors in the colonial process, remained a poor and somewhat marginal backwater throughout this period.
In place of the huge haciendas and plantations found under the feudal el latifundio system elsewhere in South and Central America - which depended on a large exploitable workforce - in Costa Rica, family-managed, small-scale subsistence farming became the norm. Spanish settlers were generally forced to clear plots and till the soils themselves (in 1719 the governor himself reports having to sow and reap his own crops or otherwise starve), living in small agricultural communities, largely isolated from each other by the difficult terrain and climate and lack of transportation systems.
In this sense the aforementioned 'leyenda blanca' contained some element of truth, although the notion of a 'rural egalitarianism of the poor' was the result of a mass destruction of the native population, rather than any lack of indigenous civilization.
Also contradictory to Costa Rica's homogenizing narrative of 'equality' was the existence of a burgeoning slave trade. Black slaves were imported from Africa and the Caribbean to augment the dwindling labor supply. The slave trade was most active between 1690 and 1730, with most slaves working on the cacao plantations near the Atlantic coast town of Matina. Slavery in Costa Rica however was never as brutal as in other colonial areas, the region's poverty making slaves a valuable investment. Most were eventually able to purchase their freedom, over time becoming ethnically and socially incorporated through mestizaje, or racial mixing.
Throughout the 17th and early 18th centuries the population of Costa Rica remained small and the lifestyle humble. In fact by 1709 Spanish money had become so scarce that settlers had resorted to using cacao beans as currency, like the Chorotegas hundreds of years earlier. When Volcan Irazu erupted in 1723, covering Cartago with ashes, reports reveal that the capital consisted of only seventy adobe houses, two churches and two chapels.
Remote, isolated and largely forgotten by the 'Mother Country', colonial Costa Rica was seen as the poor sister, or 'Cinderella', of its neighbors. However, this left it largely free from the intrusion of the Guatemalan authorities, for the most part autonomous and self-sufficient in its poverty, allowing it to develop its own rural political character, distinctly different from that of surrounding regions.
The one area that did not follow this pattern through the colonial period was the Nicoya Peninsula and what is now Guanacaste. At this time the area came under the separate jurisdiction of Nicaragua and vast cattle ranches, haciendas, arose on its semi-arid plains, made possible by a larger indigenous workforce and the extensive exploitation of imported black labor. The cattle ranching economy and subsequent growth of a defined, class-based society still persist today. Guanacaste did not become part of Costa Rica until 1825, after Independence, this was not officialized until 1858 when the San Juan River was agreed upon as the new boundary between the two countries.
Independence (1750-1850)
During the 18th Century the country finally began to produce some agricultural surplus, enough to maintain trade with Nicaragua, Panama and Cartagena, Colombia. Exports of wheat, tobacco and mules put the economy on a sounder basis, encouraging population growth and more intensive settlement, especially across the Central Valley region. A more urban culture began to develop as settlers migrated from dispersed rural communities to re-settle near churches and commercial centers. In 1717 the town of Heredia was established, followed by San Jose in 1737, Alajuela in 1782 and Escazú in 1793. San Jose, particularly, prospered from trade in both tobacco and mules, becoming the agrarian capital.
By the beginning of the 19th Century, just prior to Independence, the overwhelming majority of Costa Rica's 60,000 people resided in the Central Valley, which had become firmly established as the social and political center.
The economy was still driven by a largely egalitarian, peasant farming population; although a small merchant elite had developed in conjunction with the export industry.
However, despite economic and social development, Costa Rica still remained so remote from Central America's political and commercial centers as to be practically self-governing. Although the country's leadership was aware of the independence movement in neighboring colonies, they had not been actively involved and were somewhat surprised to hear that independence from Spain had been declared in Guatemala on 15th September, 1821. In fact, such was Costa Rica's isolation that the news took almost a month to arrive!
At the moment of independence, the country's political organization consisted of a fragmented sovereignty dispersed through separate town councils, giving each of the four major towns significant, regional power. Each had distinct ideas about how to meet the challenges of this newly independent society, and all claimed equal right to be the capital city.
The conservative and aristocratic towns of Cartago and Heredia favored accession to the Mexican Empire, while the more progressive liberals of San Jose and Alajuela preferred to become part of federalist attempts to unite the states of Central America. This initiated a period of conflict and unrest, resulting in a series of skirmishes over the next twenty years. In 1823, after a battle in the Ochomongo Hills near Cartago, the republicans were victorious and San Jose was declared the capital. Mexico was rejected and Costa Rica joined the Republic of Central America, participating in this 'federalist experiment' until its collapse in 1840.
San Jose's right to power was again questioned in 1835, when the 'War of the League' broke out, and all three cities attacked it. However the Republicans emerged victorious for a second time, confirming San Jose as the seat of government and liberalism as the prevalent ideology.
Costa Rica's great achievement of this time was its diplomatic success in avoiding involvement in the horrendous civil wars dominating the region, where the forces of conservatism linked to the Catholic church were pitted against the liberalism, entrepreneurs and free trade of the 'new world'.
In Costa Rica, where religious institutions had never been particularly strong or influential, and whose largely rural, agrarian economy had prevented the growth of a bureaucratic conservative elite, liberalism easily took hold.
Rather than turning to war and repression, Costa Rica was able to concentrate on economic expansion, taking advantage of the new opportunities offered by independence; free trade, foreign investment and a wealth of new markets; to propel the economy out of its early poverty.
In 1824 Juan Mora Fernandez was elected the country's first Chief of State. He established a sound judicial system, founded the nation's first newspaper and expanded public education. He promoted commerce and industry by offering rewards to anyone who would open up roads and ports and encouraged coffee production, giving land grants to small farmers to grow beans and encouraging larger landowners to establish processing plants.
Braulio Carrillo took power as a 'benevolent dictator' after the War of the League in 1835. He imposed measures to re-establish national unity after the disagreements of the previous years, establishing an orderly public administration system and replacing antiquated Spanish laws. He also promoted the coffee industry, exempting growers from tithes and giving free plants to would-be producers.
In 1838, with the Federal Republic of Central America still little more than a name, he declared Costa Rica a 'Sovereign State', although it would not become a Republic in its own right until 1848, when it was clear that the Central American enterprise had failed.
Coffee and Power (1800-1900)
The efforts of Fernández and Carrillo finally provided Costa Rica with its long sought after link to world markets as coffee cultivation led to a flourishing export industry and transformed the weakest economy in Central America into the most prosperous nation in the region. The ‘grano de oro’ or ‘golden bean’, also initiated the development of a new set of social and production relations that would prove fundamental in determining its democratic future; as well as the formation of a new elite class, the cafetaleros, who would come to dominate the political arena until their decline after the Civil War of 1948.
By the mid-19th Century coffee had become very popular in Europe and prices were high. Despite Costa Rica's access and transportation difficulties the country established its first export line to Chile, for re-export to Europe, in 1830.
Then, in December 1843, Captain Le Lacheur of England arrived, offering to take Costa Rican coffee directly to the UK, and promising to return with payment in pounds sterling. Thus began a flourishing trade with England that provided Costa Rica with a much needed injection of wealth and social progress.
The fact that the country had not really developed any significant agro-export industry earlier proved an advantage, enabling farmers to focus on the coffee crop, and ensuring that large areas of land were available for cultivation. Costa Rica's climatic conditions, its combination of altitude, plentiful rainfall and volcanic soils also proved ideal for coffee growth.
By 1850 coffee wealth had transformed the previously impoverished and scarcely populated nation into a cosmopolitan, European -influenced society.
Transport, domestic and telecommunications services increased and improved, streetlamps, pavements and taxis appeared, printing presses were established and European ideas were widely read.
The success of the coffee market also prompted the 'colonization of the coffee frontier' 8, as coffee cultivation spread from the confines of the Central Valley outwards, establishing the towns of San Ramon (1854) and Grecia (1856) en route, replacing jungle and forest with planted fields, cleared pasture and new settlements. By the end of the century most of the country, with the exception of the Caribbean and Pacific lowlands was given over to coffee cultivation and the 'golden bean' accounted for 90% of the export market.
However, while the coffee boom benefited the country as a whole, the privatization and cultivation of previously common, virgin lands, led to the dispossession of the remaining indigenous groups and poor peasantry who were forced further into the wilderness and jungle, and condemned to marginalization, underdevelopment, poverty and neglect, firmly excluded from the new found economic and cultural wealth and dominant social structure.
Social Relations within the Coffee Sector
In place of the hugely exploitative and repressive agricultural labor relations that emerged from the large latifundio estates of neighboring countries, Costa Rica developed a two-tier system of small-holder, landowning growers and wealthy, aristocratic, capitalist processor/exporters, able to finance milling and shipping. These elite cafetaleros grew some coffee themselves but bought most of their product directly from numerous small, family-run farms. Hence, rather than developing a huge rural proletariat of impoverished, ‘alienated’ wage-laborers, Costa Rican producers were invested in their product, felt themselves to be independent, valued, contributing members of society and, most importantly, were included in the new buoyant economy.
The significance of the coffee industry in Costa Rica lay not only in the wealth it brought, but also in the re-distributive properties of that wealth, which returned a profit even on a small share of the product. The coffee elite of Costa Rica saw more economic gain in collaboration and cooperation with producers than in exploitation, nurturing a relationship of interdependence and symbiosis in which both parties recognized their dependence on the other to generate profit. This system arose from the tradition of land-distribution and individual subsistence-farming throughout the Colonial Period and from those measures taken by Fernandez and Carrillo to promote coffee cultivation, offering land and grants to growers.
While 19th Century Costa Rica was certainly no classless, agrarian idyll, its early poverty, liberalist tradition and the organization of coffee production all contributed to make it a more equitable, less acutely polarized and less exploitative society than those surrounding it. This was an important factor in the future development of democracy and the avoidance of major civil conflict.
The largely collaborative small-holder producer vs. capitalist processor relationship was regarded as the backbone of Costa Rican culture, vital to the maintenance of rural society and fundamental in allowing peace, harmony and tranquility to reign, to the extent that some even claimed coffee to be the 'essential force' that 'underlies our political and social stability'. 9
However, despite these seemingly equitable relations, coffee and power have always been closely linked and Costa Rica was no exception in this. The cafetalero elite, comprised of wealthy, aristocratic families, mostly of pure Spanish descent, and newer European immigrants, amassed a fortune through the booming industry, gaining huge political and economic power and influence.
They maintained this dominant position until the mid-20th Century after which social and economic reforms brought about their decline. However, the most prominent families continue to have influence even today, in fact President Oscar Arias is grandson of Julio Sanchez Lepiz, one of Costa Rica's most prominent coffee producers and can trace his heritage back to the original conquistador, Juan Vasquez de Coronado. 10
Coffee Presidents
Throughout the boom period this group consolidated their power through a series of personal hegemonies in which the wealthiest families vied for dominance and leadership transitions were generally determined by military coups and interventions. Fortunately, although militarism played a role in making and toppling presidents, the leaders installed followed in the country’s liberal tradition and were surprisingly progressive, in favor of reform and social welfare, a kind of ‘benevolent oligarchy’.
In addition to its contribution to social peace and economic stability, the coffee industry's other great legacy is its commitment to the liberalist agenda that continues today. The coffee oligarchy, professional and educated, was heavily influenced by Enlightenment principles and the 'ideology of progress' They were the 'true heirs of the European Enlightenment' 11 a somewhat paternalistic elite promoting ideals of education, rationality, secularism and the pursuit of science and technology; discouraging the influence of the Church and of traditional customs and beliefs and creating a hegemonic reality based on economic and intellectual freedom. In this way they consolidated what had previously been a vague tendency, making 'Liberalism' the only viable political and economic standpoint.
In 1847 the Costa Rican Congress named Jose Maria Castro, an enlightened supporter of education and freedom of the press, as the first 'President' of the new Republic. Castro inaugurated the University of Santo Tomas, the country's first university; founded the first high-school for girls and established a new national newspaper. However, the increasingly powerful cafetaleros announced their ascendancy by using the army to force his resignation and replacing him with their own candidate, Juan Rafael Mora (1849 -1859), a leading personality within the coffee aristocracy and the first in a
long line of 'coffee presidents' serving the industry's needs.
Initially Mora faced opposition and was not accepted by the general populace. However, his actions during the invasion of US filibuster William Walker and the subsequent 'National Campaign of 1856-57', made him a national hero, temporarily at least.
The William Walker Episode
William Walker, a tiny man, only 5ft3 and weighing 100lbs, was responsible for one of the ‘most transcendent events’ in Central American history, ¹² which would result in the death of over 20,000 men. Walker was a ‘megalomaniacal adventurer’ who believed it was the manifest destiny of the U.S. to control others!13 He traveled to Central America in 1855 with the aim of conquering Nicaragua and constructing a trans-isthmic canal there. He wanted to create a sea-route, far more efficient than the difficult over-land route, that could be used by Easterners transporting gold from California, and saw Nicaragua’s San Juan River as the ideal base for this.
He was supported in his endeavor by a group of wealthy and powerful Americans, on the condition that he institute slavery in Nicaragua. Walker proposed converting the whole of Central America to slave territory and annexing it to the confederacy of Southern U.S. States. He arranged for an invite to support the Nicaraguan Liberal Party who were embroiled in civil war. He arrived in June, 1855, bringing men and arms from California, and quickly overpowered the opposition Conservative forces, declaring himself 'President of the Republic of Nicaragua.'
He then proceeded to invade Guanacaste, Costa Rica, in March 1856. However, the Costa Rican envoy to Washington had sent President Mora advanced warning of Walker's intentions. Mora pulled together a make-shift army of 9000 men, comprised of all classes - campesinos, artisans, merchants and bureaucrats - all wanting to defend their country. He led this army north to meet the invading forces, aided by none other than Captain William Le Lacheur of England, who used his ships to carry soldiers and ammunition.
In September 1856, this ragtag army attacked the filibustero forces and defeated them in only 14 minutes at the Battle of Santa Rosa. Those who survived fled back into Nicaragua, followed across the border by Mora and 2000 men, to their stronghold at Rivas, where fighting continued. On 11th April, 1857, Walker's forces had barricaded themselves into a farmhouse from which they refused to be dislodged. According to popular legend, Juan Santa Maria, a lowly drummer-boy from Alajuela, ran up and torched the roof of the house, dying in a hail of bullets, but forcing Walker's retreat and ensuring Costa Rica's victory. Juan Santa Maria id now recognized as a national hero, the victory is celebrated every year on the 11th September and Costa Rica's International Airport is named after the boy. Walker was eventually captured in Honduras in 1860 and was executed by the Honduran army.
The victory made President Mora a popular hero, this however was short-lived as the real price of the war was yet to come. Costa Rican soldiers had been infected with cholera in Nicaragua, and in 1857 the epidemic spread rampantly through the country killing approximately 10% of the population. This, combined with the costs of the 'National Campaign', put Costa Rica's economy into recession and together with Mora's attempts to establish a National Bank, challenging the cafetalero's economic control, turned the tables against the president, and when he attempted a third term in power the army helped to topple and exile him.
He came to an unseemly demise in 1860 when he attempted a coup d'etat against the new president and was subsequently executed by a firing squad.
The Guardia Era (1870-1882)
Tomas Guardia Gutiérrez came to power in 1870 after overthrowing the recently elected president Bruno Carranza Ramírez in another successful military coup. He ruled on and off until 1882, somewhat paradoxically as both unelected authoritarian dictator and ‘benefactor of the people’, a ‘benevolent dictator’.
His reign is now perceived as a 'watershed for the nation,' 14 setting in motion forces that would shape the modern democratic state and announcing the shift towards representative politics and more peaceful transitions of power.
Guardia was a real reformist, expanding public administration and creating a strong, centralized government to back him up, he used coffee earnings and demanded high taxes to finance social programs, investing in public health, education and particularly transport infrastructure, aiming to increase efficiency for the coffee industry.
He abolished capital punishment, and, in a landmark revision to the Constitution of 1869, made primary education for all, 'obligatory, free and at the cost of the nation.'
By strengthening public institutions and thereby increasing political authority he managed to initiate a decline in the role of militarism and to curb the power of the cafetalero oligarchy. He convinced them that a secure and stable regime was better for business interests than the inherently unstable reliance on military intervention to resolve power struggles. Instead he believed in raising the consciousness of the 'masses' through education and ideological means, encouraging political participation and eventually, peaceful, if still fraudulent, elections.
Guardia's reforms made him the true 'founder of the Liberal Order' in Costa Rica. His rule, and those of his successors, Prospero Fernandez and Bernardo Soto, saw the real consolidation of the Liberal agenda and the rise of a group of young intellectuals - teachers, journalists, lawyers and politicians - known as the 'Olympians', or the 'Generation of 1888'. These 'priests of progress' 15 had a clear plan of reform, aiming to create a modern nation state, based on a capitalist agricultural-export system.
Taking cues from their predecessors, they promoted a doctrine of progress, liberty and democracy, espousing principles of economic and intellectual freedom, land privatization and independence. Believing that a free-market, capitalist economy would lead to prosperity for all, their 'Project' of social reform was intended to transform all material, legal and political bases of society.
The 'Olympians' saw themselves as pioneers, leading a backwards, rural nation into the 'Modern Age'. The expansion of education was part of a mission to 'civilize' and instruct the campesino masses, to incorporate these lower classes into the nation through legal and political relations and to install in them new skills and values in accordance with their particular agenda. Despite their 'democratic' rhetoric they were members of the elite and their policies were aimed at preserving the dominant social and economic framework and maintaining oligarchic control in the political arena. Electoral fraudulence and corruption were accepted as inevitable within this paternalistic approach to government.
The Olympian's efforts culminated in 1889 with what was widely perceived to be the first 'democratic' election in the country. Ironically, their attempts at raising political consciousness had worked so well that the public voted in the opposition candidate. The liberals, in true oligarchic fashion, failed to recognize the new president until 10,000 protestors took to the streets of San Jose and they finally had to accept him as rightfully elected. The election process may not have been entirely 'democratic' on this occasion, but the subsequent protests and their result were certainly the first democratic manifestation of public power in Costa Rica.
True parliamentary democracy would not arrive until 1948, although the direct vote, for men, was approved in 1913.
A National Ideology Made Law
The values of the Liberal cafetalero elite were so predominant at this time as to become firmly entrenched as a ‘national ideology’; an expansion of Theodore Creedman’s aforementioned ‘leyenda blanca;’ in which Costa Rica is portrayed as ‘an idyllic democracy without violence or poverty,’ 16 ‘an egalitarian, agrarian nation where harmony and peace reign supreme,’ ¹⁷ a rural ‘arcadia’ – an ideology described as ‘one of the most attractive and widely disseminated of any Latin American country’. ¹⁸
This unifying myth was essential to Costa Rica's national identity and self- perception throughout the coffee boom period, providing a justification and program for the political and economic structures that strengthened and supported the coffee export order.
The small-holder grower vs. capitalist processor/exporter production relations of the coffee industry can be seen as the 'substructure' from which this ideology or leyenda blanca arises. This 'interdependent' relation imparting a sense of value, inclusion and fair distribution, and combining with the colonial image of the 'yeoman farmer working the land,' to ensure that the ideologies of both aristocrats and peasants alike converged and coincided.
The deep-seated economic, social and political relations, described by historian Gloria Rodriguez as the 'coffee pact', consolidated under Guardia's rule, were finally enshrined in law in 1933, when Law 121, regulating relations between producers and processor/exporters and establishing a National Coffee Institute that would oversee all transactions, was drawn up and passed.
This legislation was subsequently expanded with Law 2762 in 1961, and came to be seen as the guarantor of social peace in Costa Rica, leaving no room for any perception of exploitation or injustice within the industry.
To the oligarchic cafetaleros then, their product and its 'equitable' relations, as the foundation of Costa Rica's society and economy, was responsible for the consistency of its order; the spirit of peace, community and collaboration; the love of freedom and independence that would eventually lead to democracy; and for the image of equality, harmony and tranquility that persists today - to the particular advantage of the new 'ecotourism' economy.
However, despite containing some elements of truth - coffee wealth and power were indeed shared, but never equally! - and propagating an image of 'inclusion', this 'national ideology' was always exclusive; refusing representation to poor, landless 'unfree', 'alienated' wage-laborers, suppressing the voices of the marginalized, displaced indigenous and immigrant populations, promoting a notion of 'classlessness' that presupposed any development of organized class-struggle or class-consciousness.
As sociologist Jeremy Paige suggests, the leyenda blanca was simply an 'idealized reflection of the elite's experience of actually exhibiting relations of production in coffee' 19another privileged, white version of historical and social development.
It was this suppression, together with the desire to expand their industry and increase its efficiency, that led the cafetaleros not only to pave the way for a competitive economic challenge to their control of the export market, but also to create the conditions for a political challenge to their dominant ideology.
Conditions within the Banana Industry
Bananas brought real capitalist relations to Costa Rica, permanently eroding the dominant ideology of the bourgeois coffee elite and their ‘harmonious, rural egalitarian’ idyll.
The banana industry operated under entirely different relations of production. Banana operations were largely foreign-owned, with most profits leaving the country, and with vast areas of plantation owned by a very wealthy few, who exploited a mass of 'unfree', 'alienated', often immigrant, wage-laborers, to make profit. A highly differentiated class structure of multi-national corporations vs an impoverished, racially-mixed proletariat was the norm here.
Bananas meant a dependence on foreign investment, reliance on U.S. rather than European markets, and the beginnings of a commercialized agro-industrial, import/export economy - dependent on the import of manufactured products, foodstuffs and raw materials, and therefore subject to the fluctuations of world markets - the consequences of which are only really becoming apparent in the 21st century.
Working conditions in the banana industry were also very different; workers generally lived in squalor in primitive encampments on the plantations; they were badly paid, had few rights and were subject to indiscriminate firings and wage reductions.
Plantations were simply abandoned once the lands they had exploited were exhausted, devastating whole communities who had become not only economically reliant but also dependent on the strategic services they provided - water, electricity, transport - which were cut off when they left.
Foreign control and exploitative relations eventually led to the fomentation of anti-imperialist sentiments amongst sections of the Liberal class and social conflict within the industry itself. 1888 saw the country's first ever strike, when railroad workers protested, and several banana workers strikes followed between 1910 and 1934. Carlos Luis Falla, Costa Rica's greatest literary figure, published his best known work, 'Mamita Yunai', describing the terrible conditions of plantation life at this time.
The social conflict, the arrival of Panama Disease infecting banana plants and a drop in market prices, led to the eventual decline of the industry after 1925.
However, by this time, the diversification of exports had come to include other products - sugar, cacao, hardwoods, cattle-ranching - consolidating capitalist relations in the region, and prompting extensive clearing and destruction of forest areas, thereby increasing class-differentiation; creating a substantial landless peasantry, a significant laboring class and the beginnings of what would become a new, dominant elite of self-made entrepreneurs.
In this way the banana industry, and the agro-capitalist relations it brought to Costa Rica prompted a challenge to the leyenda blanca in the form of a radicalized class consciousness; and provided the conditions for the country's subsequent political and economic re-organization.
The Rise of Tico-comunismo
The period between 1900 and 1935 was marked by rising public power, popular demonstrations and labor conflicts; May Day was celebrated for the first time in 1913.
A paradoxical result of the Liberal 'civilizing mission' was the forming of a new 'radical' generation. By the 1900s the majority of Costa Rica's population was literate and politically engaged to some extent, including the new laboring classes. European and Soviet literature was easily accessible, anarchist and socialist ideas began to circulate within both middle and working-class culture and the contradictions behind the 'glitter of the golden bean' 21 and certainly within the banana industry, began to be detected.
This 'radical' generation saw a growing 'abyss' between an elite wealthy few and the lower classes. The heightened political consciousness and increased class awareness, combined with the global economic collapse of the Depression - which had a catastrophic effect on both industries, discrediting the Liberal elite's free-market dogma - resulted in the formation of two independent leftist political parties. The Reformist Party was founded in 1923, followed by the Communist Party in 1931. These parties participated in elections and won seats throughout the 1930s and 40s.
Revolutionary uprising had previously been avoided primarily due to the absence of any mass base. However, within the banana industry Communism finally found its proletariat to organize. The plantation and dock workers, recruited from the poorest regions of the country; indigenous groups, descendants of slaves, Nicaraguan and Jamaican immigrants, united to offer the first real counter-ideology, an ideology from below, comprised of those voices excluded from the cafetalero vision of social harmony , existing outside of the coffee industry and its social structures.
The Costa Rican Communist Party, founded on June 16th, 1931, and led by Manuel Mora Valverde, initially shared the extreme rhetoric of the Third International, waging battle against 'the capitalist assassins'. However, its somewhat restricted base meant that it quickly adapted to Costa Rican style politics - becoming more moderate; an early form of Euro-Communism with a largely social democratic agenda.
Mora became the voice of a separate, national brand of communism, labeled Tico-Comunismo or Comunismo-Criollo, whose program asked for improvements in the lives of working people; social security, national health, a minimum wage, an eight hour day, union laws and a nationalization of monopolies. In 1945 Mora himself reiterated this departure from communist orthodoxy stating, 'in Costa Rica the class struggle has been replaced by class collaboration,'22 a profound reflection of the entrenched social relations of the coffee order and of the Costa Rican tendency to keep the peace at whatever cost.
However, the Communist Party did play a major role in organizing the 'Great Banana Strike' of 1934, the largest in Costa Rican history. On August 9th, 1934, Carlos Luis Falla, author of 'Mamita Yunai', and chief organizer of the protest, led 10,000 workers out to the strike, which was not resolved until mid-September when the government sent in armed police forces.
The strike did bring about improvements in living and working conditions on the plantations. However, it also encouraged a strengthening and increased converge of ideas within the coffee sector who united in an anti-communist stance which would eventually lead to the suppression and outlawing of the party.
Communism came to represent all those forces threatening change to the established order and rural way of life; the poor, the dark-skinned, landless banana workers, the unemployed, the growing urban proletariat, even the forces of industrial capitalism itself, and anti-communism became a part of the national identity.
The capitalist relations of the new industry came hand in hand with radical social conflict and an increasing polarization between the two worlds of those included and those excluded from the country's 'national ideology'. In the 1940s this polarization brought the country to civil war and the bloodiest event in Costa Rica's history.
Calderon, Figueres and the Civil War of 1948
President Rafael Ángel Calderón was elected in 1940 in the midst of this social turmoil and political upheaval. Closely related to several leading cafetalero families, and grandson of the infamous Tomás Guardia, Calderón was handpicked by President León Cortes, (1936-40), as his successor and achieved a massive 86% of the vote.
A profoundly religious man, trained as a physician, he presented himself as a caring man of the people, a progressive alternative to communism, and did not appear to represent break with the liberal ideology of the coffee elite.
Like his grandfather he was a social reformist. However, he was also deeply influenced by his experience as a physician and by the social Christian values of his religion, which led him to reject both Marxist materialism and Liberal individualism, believing instead in a Christian notion of community and of the responsibility of the State to care for its people.
Once elected he began putting these ideas into practice, implementing a series of ambitious reforms that, despite fierce opposition at the time, would become the basis of Costa Rica's modern welfare state.
Among his achievements were the founding of the University of Costa Rica in 1940; the creation of the country's renowned social security system, la Caja, providing health insurance for all, as well as benefits for unemployment, old- age and dependents; a social bill of rights, known as the ´Social Guarantees'; and a labor code greatly extending workers rights and protection.
Calderon received support from workers unions and the Communist Party, as well as more left-leaning sections of the middle-classes. His principles were also much admired by the Catholic Church, especially after he re-instated religious education (disapproved of by the secular Liberalists) in schools in 1941.
However, the merchants, businessmen and landowning elite felt that these 'improvements' were being made at their expense, and became hostile to the 'progressive' and state-interventionist elements of the reform program. This opposition was further inflamed by Costa Rica's declaration of war against Germany and Japan on December 11th, 1941, and the subsequent internment of German and Italian members of the coffee export trade suspected of Fascist sympathies. Calderon lost the support of the wealthy elite, and, in a bid to increase his voter base, formed an alliance with Mora's Communist Party.
This was the first in a series of unlikely but strategic alliances throughout this tumultuous period, and did indeed increase the President's political strength, ensuring the success of his reforms. However, it further alienated all classes of the coffee sector and increased the intensity of his opposition, leading to extreme polarization in the run up to his second election attempt in 1948.
While Calderon had secured the support of both the urban and rural poor, the Communist Party and the Church, the forces opposed to his government had also united in an unlikely coalition simply calling itself ´The Opposition'.
This 'opposition' comprised of aristocratic members of the coffee elite and their rural followers, outraged by the interventionist, socialist nature of the reforms; and a group of entrepreneurial, pro-capitalist, democratic reformers, who supported Calderon's reforms yet were fiercely critical of what they saw as his 'corrupt' administration and of the 'personality cults' and 'closed-off' economic dominance of the coffee elite; united only in their opposition to Calderon and in their militant anti-communism.
The alliance revolved around two men, aristocratic publisher Otilio Ulate, editor of the conservative Diario de Costa Rica, and representative of the cafetaleros, who proclaimed the reforms an 'opium of the people,' 23 and Jose Figueres Ferrer, a wealthy, self-made agricultural entrepreneur who denounced the State as corrupt, antiquated and incompetent and called for an economic revolution that would transform Costa Rica into a modern, social-democratic, capitalist-industrial nation.
Figueres and his supporters saw armed insurrection and a military victory as the only option that would leave them free to act and clear the way for a new social and economic order, a 'Second Republic'.
Figueres had been exiled to Mexico in 1942, after denouncing the president in a live radio broadcast. Whilst in exile he made contact with other organizations aiming to overthrow the Central American dictatorships, and on his return to Costa Rica in 1944 he began training irregular troops at his ranch in San Isidro de General, forming an 'Army of National Liberation'.
The election campaign of 1948 saw 'The Opposition' candidate, Ulate, pitted against Calderon. Officially, Ulate defeated Calderon by more than 10,000 votes.
However, Congress, which was largely dominated by Calderon supporters, first demanded a recount, amidst allegations of fraud, then voted to annul the results. Thus, negotiations between Calderon and Ulate began, to find a peaceful solution. Figueres used this opportunity to launch his long- threatened armed rebellion, declaring war on the government before any compromise could be made.
On March 12th, 1948, he and his band of revolutionaries took over the town of San Isidro, initiating a civil war that would last 40 days and result in over 2000 deaths.
On April 19th, with government forces suffering heavy losses to the insurgents, and with Figueres preparing to storm San Jose, foreign diplomatic corps finally negotiated a cease-fire and political pact to end the war. Pro- governmental forces agreed to surrender in exchange for amnesty and indemnity for all victims, whatever their affiliation, and a guarantee that the social reforms of Calderon would be respected and kept intact. Figueres then marched into San Jose to initiate his revolution.
He immediately broke his promise by sending Calderon himself along with thousands of his supporters into exile and outlawing the Communist Party. But, true to his belief in democratic elections, on May 1st he signed an agreement with Ulate, promising to hand over office to the rightfully elected president, after a period of eighteen months during which the country would be ruled by an eleven man junta, the 'Founding Junta of the Second Republic', headed by Figueres himself.
As head of this ruling junta, Figueres, much to the horror of the coffee elite who had supported him, proved to be more radical in many respects than Calderon.
Calderon's reforms were embraced and strengthened, and during its brief tenure the junta issued a further 834 decrees-laws. One of its first acts was the abolition of the Costa Rican army, immediately removing a potential ally of the coffee oligarchy and eliminating the possibility of military intervention in future elections.
Figueres's most controversial moves included the nationalization of all banks and a 10% taxation on wealth, undermining cafetalero control of credit and banking and permanently ending both their political and economic dominance. Although he rejected Socialist state-ownership, he did support intervention in the economy, establishing autonomous state-sponsored entities to take control of key sectors; the first of these was ICE, the Costa Rican Electricity Institute, the system was then expanded to include insurance, telecommunications, aviation, tourism, fisheries and petroleum refining.
In January 1949 a 'New Constitution for the Second Republic' was drawn up which included finally giving the franchise to women and blacks, barring presidents from re-election for 8 years after leaving office and creating an 'Electoral Tribunal' that would ensure the sanctity of electoral democracy, making it an essential principle of the country's politics.
The Costa Rican Communist Party was declared illegal and with this Costa Rica 'symbolically buried' 25 communism and the class divisions, inequality and social questions it had raised 'disappeared' from political discourse. However, despite Figures' profoundly anti-communist stance, the aforementioned demands of Tico-Comunismo were all actually achieved under his reformist regime and remain fundamental principles of Costa Rican politics and consciousness today.
In November 1949 Figueres handed power over to Ulate as promised, but by this time the foundations of economic transformation had already been laid and the coffee elite had suffered a fatal blow from which they would never regain their former dominance.
Post 1948 (1950 – 1980)
In 1951 Figueres and his band of middle-class revolutionaries formed their own political party, the Partido de Liberación Nacional, PLN, in order to promote their developmental reforms through electoral politics.
In the 1952 elections, ironically, it was Figueres who was labeled a 'communist' by the opposition Ulate supporters. Figueres however, won the election legitimately, without military intervention or fraudulent pacts! The first 'democratically' elected president was then able to consolidate his campaign of 'reconstructed', state-centred liberalism and truly initiate his intended economic and industrial transformation of Costa Rica through government-led development programs.
A somewhat paradoxical consequence of Figures' rule was the acceptance of Calderon's heavily contested reforms by even the most conservative elements of the political elite. Despite Calderon's exile his 'social guarantees' were embraced by the Liberacion government and by the mid-1950s had become assimilated into the updated 'national ideology' of the Second Republic, regarded as an essential element of Costa Rica's liberal egalitarian tradition. Calderon himself was permitted to return to the country in 1962 and ran unsuccessfully for president. He died in Costa Rica in 1970.
The Liberacion State
Figures’ first presidency marked the beginning of a thirty year period in which Liberación ‘pro-capitalist developmentalism and welfare-state reformism’ ²⁶ prevailed, defining the economic and political agenda.
The party had a distinct advantage in that the opposition - comprised of another unlikely alliance of the traditional cafetalero elite and their former enemy, the Calderonistas - were largely fragile and incoherent until1983 when they finally coalesced to form the Partido Unidad Social Cristiana, PUSC, and an alternating two party system developed.
1950 to 1970 was a period of unprecedented political stability, economic growth and social progress for Costa Rica. Government control of credit, financing and investment, through the newly nationalized banking system enabled the PLN to achieve a radical overhaul of the country's economy, industrial productivity models and social structures, that would permanently eradicate oligarchic control and create new opportunities for social mobility and wealth accumulation.
Liberacion policies greatly strengthened the agro-industrial sector; between 1944 and 1952 banana exports grew from 3.5 million to 18 million crates annually and between 1940 and 1956 coffee prices rose from $9 to $68 per quintal and by 1970 the annual coffee yield had tripled. This huge expansion in productivity and exports generated extraordinary profits which were then used to finance technological development, agricultural and industrial diversification and social improvements.
The results of this income re-distribution meant that despite a demographic explosion in which the population increased from 800,000 in 1953 to over 2 million in 1973, per capita spending power matched this, more than doubling over the same period.
Social improvements involved a huge expansion of the welfare state and public sector, benefiting lower and middle classes. Meanwhile agro/industrial progress and diversification transformed the traditional export sectors and created new industries - sugar, cotton, pineapple and meat production initially, then textile assembling maquilladora industries, chemical- processing and metal-refining; and allowed for the development of a newly powerful entrepreneurial class within these sectors.
Economist, Juan Manuel Villasuso, depicts the development of the Liberacion State in three distinct stages. The first twelve years are described as the 'developmental stage', in which increased revenues from the export industry boom were invested into the construction of a new 'physical and social infrastructure' to facilitate industrialization Roads, airports and seaports were built, electrical power, water and telecommunication systems were established, and schools, hospitals and clinics were opened all over the country.
The second stage, beginning in the mid-1960s, is described as the 'paternalist state'. During this time the benefits of development were extended to reach those still living in poverty and neglect. The welfare state was expanded until it covered 90% of the population and consumed 40% of the national budget. By 1978 Costa Rica could boast social indices higher than almost any other 'developing' nation with an average life expectancy of 70, infant mortality rate of 20 per 1000, literacy at over 90% and an unemployment rate of only 5% or less. Alongside this the public sector grew and diversified at an incredible rate. By 1970, 25% of the country's workforce was employed by the State and fifty new agencies had been created to promote development in areas as diverse as tourism, foreign investment, fisheries and fertilizer production, and to deal with social and even environmental concerns.
This expansion led to the third stage, the 'entrepreneurial state', beginning in the 1970s. Liberacion government saw state financing as key to their aim of opening opportunities for 'capital accumulation outside of the control of the coffee oligarchy.'28 In accordance with this the State began investing public funds in projects and enterprises deemed socially or economically beneficial to the country. Investment in productive activities under the presidency of Daniel Oduber (1974-78) grew at an extraordinary rate of 183%, in which an ambitious program of business creation in industry and agriculture was initiated, along with development of 'human capital', in the form of training for technicians, professionals and public sector employees. This led to an increasingly efficient and diversified export sector and a highly educated workforce but also, inevitably, to an ever expanding, more expensive, bureaucratized and unwieldy state; the real price of which was yet to become evident.
The three decades of PLN rule created new social and economic forces that could not be contained within the old oligarchic structures; the newly prosperous middle classes, progressive industrial entrepreneurs and forces of capitalism themselves came to dominate and challenge the old order, paving the way for change.
However, although this 'Liberacionista Utopia' described by historians Ivan Molina & Steven Palmer, as a 'world of cheap credit, endless salary increases, stable public employment and opportunities for social mobility through education' 29 was partially achieved, significantly improving the lives of many, it was not without its losers; the entire premise upon which it was founded - attempting to reconcile progressive social reform with a fortification of free-market, capitalist economic structures - containing an inherent central contradiction. In line with capitalist expansion worldwide, the encouragement of large-scale agri-business concentrated land and wealth in ever fewer hands, displacing smaller farmers from their land and condemning them to a future of wage labor and poverty. The former coffee aristocracy themselves lost out to the development of mega- producing operations, while this growth of agricultural production also subjected the environment to an unprecedented assault, with extensive deforestation accompanying the banana and cattle-ranching industries and the use of agro-chemicals leaving significant contamination.
The Transformation of the Coffee Industry
The dynamics and processes of transformation and of the reorganization of industrial and class relations were particularly evident within the coffee industry itself.
Industrial and agricultural development, technical assistance and credit programs within the sector were remarkably successful; replacing the symbiotic smallholder producer vs. aristocratic processor relationship with a two tier system of mega-processors, often allied with foreign wealth, and state- sponsored small-holder cooperatives.
Relaxation of production regulations combined with public investment in technology and infrastructure meant that between 1950 and 1980 Costa Rican coffee production increased six fold although the area cultivated had only doubled; making the country the most efficient and lowest cost coffee producer in the world. This massive increase in production created potential for hugely increased revenues for those who could find the capital outlay to extend and develop their processing facilities. Hence the larger cafetalero elite operations, particularly those who were known on international markets and could secure external funding, were the main beneficiaries of the changes, expanding to become 'mega-processors'.
However, under this capitalist logic of unregulated free-market competition, many smaller producer/processors were pushed out and marginalized as the traditional aristocratic families gradually lost their economic hold on the industry.
For the former cafetaleros the problem was further compounded by the Figueres initiated cooperatives scheme, whereby smallholder producers were encouraged to unite and work collectively and were given technical and marketing support, bank credit and tax exemptions in an attempt to prevent total domination of the market by foreign-backed mega production and decrease private-sector share of the crop. By 1980 40% of the national crop was produced by cooperatives whose preferential financing options and tax benefits meant that they too had a distinct competitive advantage over the smaller independent operations.
By introducing competition, deregulation and transnational wealth the Liberacion reforms transformed not only the coffee economy but also its ruling class structure. The apparently 'harmonious' relations of the past, in which many hands, both large and small, saw a share of the profit, began to disappear as what had been a 'low-volume, high-margin, local monopoly business' was converted into a 'high-volume, low-margin, intensely competitive enterprise'.30 the traditional aristocratic processor became a 'vanishing species' and oligarchic control was slowly liquidated.
1980 Onwards: From Economic Crisis to Neo-liberalism (1980 – 2007)
By 1980 the bubble had finally burst and the catastrophic costs of the Liberación post-war development model became evident. Although revenue from the vastly expanded export industries had financed a significant part of the reform program, more still had been made possible by borrowing – a habitual practice in Costa Rica since Guardía’s time. The focus on export production had increased the country’s dependency on imported raw materials and made it ever more vulnerable to fluctuations in world markets.
As international oil prices rose in the late 1970s and coffee, banana and sugar prices plummeted, worldwide growth came to a sudden halt and Costa Rica’s creditors all came knocking, propelling the country into complete economic collapse.
Between 1980 and 1982 GDP dropped by 11%, real salaries and therefore per capita spending power fell by 40%, unemployment levels rose to 10% and annual inflation increased rampantly from 18% to 82%. In September 1981, with a foreign debt of 3.8 billion dollars – the servicing of which consumed 44% of the total value of exports – Costa Rica became the first ever country to default on its loans; causing a banking crisis throughout the Americas. By 1989, with foreign debt increased to 5 billion dollars, it had also achieved the dubious title of the world’s largest per capita debtor.
In essence the country was bankrupt.
Nicaragua, Civil War and a Nobel Peace Prize
A decade of civil war in neighboring Nicaragua did nothing to help Costa Rica’s financial crisis. Initially sympathetic to the Sandinista Liberation Front (FSLN), and their attempt to topple the right-wing dictatorship of ‘Tacho’ Somoza, President Rodrigo Carazo (1978-82), permitted the Sandinista forces to set up camps inside the Costa Rican border. However, when Somoza sent air forces to strike these camps Carazo withdrew his support, closed the camps and severed diplomatic relations with Nicaragua. In 1983 the new president, Luís Alberto Monge (1982-86), declared Costa Rica’s neutrality.
However, by this time, Nicaraguan exiles opposed to the Sandinistas had begun operating in San Jose. Backed by the U.S Reagan administration who wanted the socialist Sandinista threat eradicated, these exiles coalesced to form the Nicaraguan Democratic Front (FDN), otherwise known as the 'Contras', and Monge was put under immense U.S. pressure to commit to and support these 'Contras'.
Fortunately neutrality was restored after the 1986 presidential elections, when a young, liberal, economic lawyer, Oscar Arias Sanchez, won a very close race by declaring himself the candidate for peace. Once in power he expulsed the 'Contras' and worked ceaselessly to develop the 'Arias Peace Plan' that would end civil war throughout the Central American region. On August 7th, 1987, the five Central American presidents signed the accord, and at the end of that year Arias was duly awarded the Nobel Peace Prize. In 1990 Nicaragua held its first ever democratic elections, largely the result of Arias's efforts.
However, the war had further destabilized Costa Rica's economy. Up to 250,000 Nicaraguan refugees and exiles flooded into the country, draining scarce resources, and international confidence suffered as a result of the unrest, causing a 'flight' of foreign capital and a 60% drop in trade.
The Price of Structural Adjustment and the Move Towards 'Free Trade'
Costa Rica was forced to turn to international lending agencies, namely the IMF, World Bank and USAID, for economic assistance, and as a result was subject to the austerity measures and Structural Adjustment Policies (SAPs) imposed as terms of their loan agreements. These SAPs required the State to slash its payroll and drastically reduce its control of and spending on industry, finance, business and even social services; to encourage further foreign investment, privatization of public services and to force trade liberalization by reducing imports on tariffs and offering tax benefits.
Deep cuts in education, health and transport infrastructure spending, in food subsidies and social security, threatened the country's universally admired welfare state systems; and as state activities were transferred to the private sector, quality of life deteriorated with rising levels of crime, unemployment and general social decay.
Increasing industrialization and free-marketism widened the gap between rich and poor so that the middle classes grew poorer, extreme poverty rose by 50% between 1987 and 1991, and by 1995 15-20% of the population took home 70% of national income. However, such was the economic crisis that the governments of Monge and Arias, and their successors, Rafael Ángel Calderon (1990-94), son of former president Calderon and Jose Maria Figueres (1994-98) son of his infamous enemy, had no choice but to comply with these demands.
The state-centered liberal democracy of Figueres and the PLN; and the problematic alliance of welfare-state socialism with capitalist-industrial relations upon which it was founded; resulted in the creation of new economic forces and class structures which have inadvertently led the country into 'neo-liberalism' and the ultra free-market conservatism, minimal state and privatized services always preferred by the cafetalero elite opposition.
Since the mid-1980s and the formation of the PUSC, Liberacion has lost its leading role, with the two parties generally alternating with each election and moving politically closer and closer together within this neo-liberal agenda.
The political, cultural and social costs of SAPs have been high, pushing the country towards the privatized, globalized economy favored by the 'Washington Consensus' lending agencies; a 'new world order' in which 'exchange value is the only legitimate value,' 31 gradually stripping the country of the capacity to shape its own destiny.
In 2007, despite the development of a thriving, high-tech computer manufacturing industry and a booming 'ecotourism' market, crime, poverty and inequality continue to rise, and the forces of globalized, free-market capitalism continue to push relentlessly forward as DR-CAFTA, the Dominican Republic and Central American Free Trade Agreement awaits ratification.
The protests and social unrest surrounding its impending approval suggest that cracks are finally beginning to appear in the glossy surface of the 'leyenda blanca' or national mythology. With its origins in the elite-paternalist social relations of 19th Century coffee production, the notion of 'egalitarianism', was a 'poor guide' to Costa Rica's class relations even in 1948 when it was embraced by the supposedly progressive, social-democratic, PLN government. Today, in an inequitable, highly-competitive neo-liberal world order, it is an 'even less realistic portrait' of the country. 32
Three decades of Liberacion rule actually accentuated the discrepancies and contradictions that always existed at the heart of Costa Rica's social and economic order and DR-CAFTA can be seen as the embodiment of this; a real and tangible challenge to the ideological order that has maintained 'peace' and justified the political hegemony of the ruling classes throughout the country's history.
In May 2006, President Oscar Arias Sanchez was elected to a second term in office, heading a now significantly more right-leaning PLN government that supports DR-CAFTA whilst proclaiming its continued commitment to social improvement. His challenge this time around remains firmly within the domestic arena. The next few years will show whether the infamous arbiter of peace can find a way to reunify his nation and reconcile ratification of the free trade agreement with economic recovery and a return to more equitable social relations.
The History of Costa Rica
Books:
Christopher P Baker, The National Geographic Traveler: Costa Rica, National Geographic Society, U.S 2000, p32.
Mavis Hiltunen Biesanz, Richard Biesanz, Karen Zubris Biesanz, The Ticos: Culture and Social Change in Costa Rica, Lynne Rienner Publishers, USA, 1999
Beatrice Blake, Anne Becher, The New Key to Costa Rica, Ulysses Press, Berkeley, USA, 1994.
Charles A.S. Hall, ed. Quantifying Sustainable Development: The Future of Tropical Economies, Academic Press UK & USA, 2000.
Iván Molina & Steven Palmer, The History of Costa Rica, Editorial de la Universidad de Costa Rica, 1998
Jeffery M. Paige, Coffee and Power: Revolution and the Rise of Democracy in Central America, Harvard University Press, Cambridge, Massachusetts, 1997
