Remittances, the Rescaling of Social Conflicts, and the Stasis of Elite Rule in El Salvador

• Date: 01 May 2020
• Published date: 01 May 2020
• DOI: 10.1177/0094582X19898502
• Subject Matter: Other Articles

https://doi.org/10.1177/0094582X19898502

LATIN AMERICAN PERSPECTIVES, Issue 232, Vol. 47 No. 3, May 2020, 202–220

DOI: 10.1177/0094582X19898502

© 2020 Latin American Perspectives

202

Remittances, the Rescaling of Social Conflicts, and the

Stasis of Elite Rule in El Salvador

by

Hannes Warnecke-Berger

Remittances are the dominant factor in the contemporary economy of El Salvador,

which is enjoying a new comparative advantage in the international economic system—

the export of cheap labor to the Global North and particularly the United States. The

Salvadoran economy is part of a transnational economic space, but this space is perverse:

Although the poor are nominally receiving more money, remittances cause them to be

caught in a vicious cycle of economic instability. At the same time, the elites are able to

access remittances indirectly by becoming a Keynesian oligarchy—an oligarchy that

extracts wealth by controlling the demand structure of the economy instead of production.

Remittances represent bread and butter for the poor and a vehicle for transnationalization

for the rich, and this leads to a new stasis of elite rule: remittances provoke the rescaling

of social conflicts in favor of elites. Transnationalism in this regard must be interpreted as

an elite strategy for suppressing the bargaining power of the subaltern class. In this trans-

national remittances economy, opportunities for the subaltern class and migrants to par-

ticipate directly in reshaping this economic space are limited or nonexistent. As a

consequence, they must rely on translocal moral economies linking migrants with their

families at home, where they are still able to impose some control. Meanwhile, elites foster

transnationalism by dismantling these very modes of control. In this sense, remittances

are the silver bullet for facilitating neoliberalism in the Global South. In El Salvador, they

produce ultrastability for the oligarchy and chaos for the poor.

Las remesas son el factor dominante en la economía contemporánea de El Salvador, que

goza de una nueva ventaja comparativa en el sistema económico internacional en la expor-

tación de mano de obra barata al Norte Global y particularmente a los Estados Unidos. La

economía salvadoreña es parte de un espacio económico transnacional, pero este espacio es

perverso: aunque los pobres reciben nominalmente más dinero, las remesas hacen que se

encuentren atrapados en un círculo vicioso de inestabilidad económica. Al mismo tiempo,

las élites pueden acceder a las remesas indirectamente al convertirse en una oligarquía

keynesiana— una oligarquía que extrae riqueza controlando la estructura de la demanda

de la economía en lugar de la producción. Las remesas representan el pan de cada día para

los pobres y un vehículo para la transnacionalización de los ricos, y esto lleva a una nueva

estasis del gobierno de la élites: las remesas provocan la reescalada de los conflictos sociales

a favor de las élites. El transnacionalismo a este respecto debe interpretarse como una

estrategia de élites para suprimir el poder de negociación de la clase subalterna. En esta

economía transnacional de remesas, las oportunidades para que la clase subalterna y los

migrantes participen directamente en la remodelación de este espacio económico son lim-

itadas o inexistentes. Como consecuencia, deben contar con las economías morales trans-

locales que vinculan a los migrantes con sus familias en El Salvador, donde aún es posible

Hannes Warnecke-Berger is a senior researcher in the Departement of International and

Intersocietal Relations at the University of Kassel, Germany. He thanks the Latin American

Perspectives reviewers for their very helpful suggestions.

898502LAPXXX10.1177/0094582X19898502LATIN AMERICAN PERSPECTIVESWarnecke-Berger / REMITTANCES AND ELITE RULE IN EL SALVADOR

research-article2020

Warnecke-Berger / REMITTANCES AND ELITE RULE IN EL SALVADOR 203

imponer cierto control. Mientras tanto, las élites fomentan el transnacionalismo desman-

telando estos mismos modos de control. En este sentido, las remesas son la bala de plata

para facilitar el neoliberalismo en el Sur Global. En El Salvador, producen ultra estabili-

dad para la oligarquía y caos para los pobres.

Keywords: El Salvador, Migration, Remittances, Transnationalism, Elite rule

Remittances are a dominant factor in the contemporary economy of El

Salvador. Not only is the country economically dependent on its diaspora but

its entire economy is growing into the U.S. economy. When the Salvadoran cen-

tral bank published its annual statistics on remittances transfers in late January

2017, no one wondered at its new figures. Expatriate Salvadorans had sent more

than US$4.5 billion during fiscal year 2016 (BCR, 2017). In absolute terms, remit-

tances peaked in 2009 with the onset of the world financial crises but soon recov-

ered and now continue to increase. In line with this increase, remittances

additionally compensate for a continuously growing balance-of-payments defi-

cit. According to a recent statistical survey by the Ministry of Economics, more

than 20 percent of the population received remittances in 2014 (DIGESTYC,

2015). The average remittance-receiving household obtained more than US$180

per month, representing 46 percent of average household spending and around

33 percent of average household income. The majority of remittance-receiving

households are not classified as poor, but many are vulnerable to falling back

into poverty if remittances cease. Many Salvadorans therefore depend on expa-

triate money to cover their daily expenses. El Salvador enjoys a new compara-

tive advantage in the international economic system—the export of cheap labor

to the Global North and particularly the United States. One-fourth of its popula-

tion lives abroad, and remittances are the single largest item of foreign exchange

earnings. A recent study estimates that the Salvadoran diaspora in the United

States produces more than three times the gross domestic product of El Salvador

(Hinojosa-Ojeda, 2016: 12), and many Salvadoran migrants in the United States

send a considerable part of their income back home. In short, El Salvador has

gone transnational (Robinson, 2003; Roniger, 2011; Coutin, 2007).

This article approaches the transnational remittances economy from the

Salvadoran perspective. Notwithstanding that this transnational economy is

heavily influenced by processes within the United States such as migration

policies and economic interests, the Salvadoran economy is part of a transna-

tional economic space that includes both domestic and diasporic economic

activities. Massive and still increasing remittances circulating between the

United States and El Salvador have given rise to an entirely new economic situ-

ation. Compared with the economic models dominating much of the twentieth

century, today’s transnational remittances economy does not rely on state inter-

ventions by the Salvadoran government, bi- or multilateral trade agreements,

or other ways of managing economies.

The flow of remittances leads to a vicious cycle of instability for the poor,

despite their nominally receiving more money. It inhabits a still poorly under-

stood micro-macro divide, and this is particularly important because remit-

tances mitigate poverty but at the same time produce new social insecurities.

The increasing importance of remittances parallels the ongoing self-modern-