Conquered but not Vanquished: Indigenous Entrepreneurs in the Shadow of Violence

• In Event: Historical Legacies of State Capacity, Conflict, and Insurgency

Abstract

Under what conditions can members of poor disenfranchised communities survive and even foster entrepreneurship in environments where violence is cheap? How do such conditions alter ethnic identities and political institutions? In this paper, we examine the fortunes of indigenous communities following one of the most traumatic episodes in history: the Conquest of Mexico. Producers of cochineal dye–New Spain’s most valuable processed good- provided a complementary service that was both hard to replicate and to expropriate, due to its fragility and the embedded human capital involved in its production. We exploit microclimatic variation in cochineal production in the growing season to trace the effects of cochineal production on pre-Columbian communities. We show that cochineal producing settlements were more likely to survive the Conquest, exhibited greater capital accumulation in 1910, less support for the hegemonic party thereafter, and more small firm creation, greater benefits for women and the indigenous, its main producers, 150 years after it was displaced by synthetic dyes. However, cochineal producing municipios show greater evidence of cultural assimilation as early as 1790, were more unequal in 2010, and were less likely to adopt highly redistributive indigenous political institutions (usos). We contrast the performance of these municipios with others producing valuable goods that were easy to expropriate, such as gold or silver, and or easy to replicate elsewhere like cacao. We interpret the effects as reflecting how robust inter-ethnic complementarity permitted the development of indigenous entrepreneurs despite the threat of violent expropriation.

Authors

• Alberto Diaz-Cayeros, Stanford University

• Saumitra Jha, Stanford University