Managua’s Economic Crisis—How Do the Poor Survive?

Envío team

The portrait of Nicaragua painted by much of the international media relies on stereotypical features, among them these: Nicaragua is a country polarized between the bourgeoisie and the proletariat. The country is in economic chaos, with lines, lines, scarcity, even hunger, and inflation is so terrible that everyone must rely on the black market to survive. The poor speculate against each other and incentives to produce have disappeared completely. In such a situation, the Sandinista economic model is on the point of crumbling. Political support for the FSLN is eroding due to the economic crisis—provoked more by the Sandinistas themselves than by the war.

In this article envío analyses the impact of the economic crisis on the life of Managua's poor sectors. We demonstrate from several economic and ideological angles why people's economic discontent is not being transformed into political discontent, and why such inflation does not provoke a rejection of the government's economic messages.

Managua: A peculiar and difficult city

Managua is where foreign journalists spend the majority of their time. They wait for interviews with Sandinista leaders in the comfortable Hotel Intercontinental or the Camino Real, attend press conferences, meet and dine with opposition leaders and venture off occasionally on a tourist visit to the Oriental Market or to the poor neighborhoods that take root like dandelions in the empty spaces between middle class ones. It is in Managua that the widespread stereotypes about the new Nicaragua are generated.

The grassroots urban sectors, basically the urban poor, represent over 80% of the aggregate population of all Nicaragua's cities, and some 45% of the country’s total population. These were the main protagonists of the insurrection against the Somoza dictatorship and are today the cornerstone of the Sandinista revolution. Although their behavior is strictly conditioned by the peasantry’s productive and revolutionary response, it’s still possible to say that as these urban sectors go, so goes the revolution; they are the country's best political thermometer.

In the huge metropolitan area of Managua-Masaya (Masaya is some 18 miles from the capital), the urban poor total more than 900,000 people, just under 30% of the national population. As a proportion of the national population, the Managua-Masaya metropolitan area is one of the largest of the hemisphere. It has an even higher hyper-urbanization than Mexico City or Santiago, Chile, which respectively concentrate 19% and 33% of their total populations; only Uruguay's capital, Montevideo, has a higher percentage of the national population, but it is a large, sophisticated urban center, while Managua is barely a capital and even less urban or sophisticated. In fact, it’s an immense, sprawling small town.

Managua is difficult—even its rural character is far from bucolic. It’s full of dust in the dry season and mud in the rainy season. With its infrequent traffic lights and even more infrequent sidewalks, the city is actually a knitted belt of neighborhoods circling a wasteland made empty by the 1972 earthquake. This non-heart of the city is now pasture for a few cattle that vie with equally few trucks, cars and motorcycles for right-of-way on the long, uninterrupted thoroughfares ringing it. In the lakeside area known as los escombro (“the rubble"), once the government and commercial center, the flat prairie skyline is only occasionally pierced by the shell of a deeply fissured multi-story building, silent testimony to the tragedy that befell the city. Another reminder of the capital that once was are the reference points for travel directions, so confounding for visitors, which begin "de donde fue," ...from where the Pepsi plant was, or from where the little tree used to be.

Transport and communication, already difficult before the war, are now nearly impossible. The steamy city lacks recreation or diversion centers, with the exception of some baseball lots and a few badly air-conditioned movie theaters where, given the lack of foreign exchange to rent new films, scratchy old Kung Fu films are now billed as "first runs." Although at least free of the vision of poverty that comes with urban overcrowding, the city's destitution jumps out at the newly arrived visitor. Even in its most dynamic economic heyday (1973-78), this city would have offered any journalist accustomed to the sophistication of other really urban capitals of the hemisphere the image of great hardship and economic chaos.

Managua is incredibly quiet, with fewer indices of crime than most other capitals of the continent. Watched over by the profile of the Momotombo volcano across Lake Xolatlan, Managuans rise very early; by nine at night darkness reigns and the city seems almost abandoned.

Nicaragua's capital is a creature of the dictatorship, product of an agro-export enclave model that shut off possibilities of development to the peasant class and stimulated an extraordinary rhythm of urban growth. This city of the Somozas is a new city, full of peasant immigrants. In 1940, it only had 62,500 inhabitants. Today it has a million.

Managua is today the city hardest hit by the economic crisis. Without seeing the war, Managuans suffer its multiple economic manifestations. The suffering feels even greater because until the revolutionary triumph the capital’s population was economically the most privileged in the country. Even after the triumph, facilities for improving housing and subsidies for all basic market basket items and for transport enormously improved the life of Managuans, who had suffered tremendous destruction when Somoza ordered the bombing of the poor (read Sandinista-supporting) barrios in his last days of desperation. So many advantages attracted more peasants. Revolutionary Managua continued being the lake into which waves of immigrants from the countryside emptied, now at a rate even greater than occurred in the last years of the dictatorship.

Contrary to the popular image of rural-urban migration, immigration to Managua is not and never was made in one leap. It occurs in stages—from the countryside to the cities of the same department, from there to the cities that ring the capital, and only as a final step to Managua, where the immigrant moves through various neighborhoods before establishing a final home. Case studies show that the so-called “new barrios” of Managua aren’t those of recent peasant migrants, but are the last leg of a venture that began perhaps 15 years ago in an impoverished peasant area of Estelí, León, Matagalpa, Jinotega or Chontales.

The proliferation of new poor, grassroots neighborhoods, or barrios, is one of the most characteristic features of Sandinista Managua. There are two types: progressive urbanization barrios and spontaneous settlements.

The progressive urbanization barrios originated in 1980-82 with an unplanned urban reform, product of the grassroots sectors' pressure on their new government. Immense areas of Managua were invaded by families that had been forced by their poverty to live two or three families to a house, or in shacks located along the edges of the major water ditches that crisscross Managua, or alongside the lake polluted to death by Somoza’s urban policies. In such barrios, Managua's Reconstruction Junta and the Housing Ministry supported these squatter initiatives with programs of electricity, drinking water and other urban infrastructure. Including similar projects in other neighborhoods that sprang up after the earthquake—such as one called "Open 3" before the triumph and "Ciudad Sandino" afterward—the populations living in this type of neighborhood total a quarter of a million people, more than 20% of the Managua-Masaya metropolitan area’s total population. The spontaneous settlements, a product of more recent occupations that have still not received state support, represent another 4-5% of the capital's population.

What's happening in Managua?

There is little serious research into what is going on among the poor sectors in this city so altered by the "rural-urban avalanche," as this recent social phenomenon has been baptized. Thus the importance of the investigation done by students of the Sociology Department of the Central American University (UCA), on which this envío article relies.* The study is based on a series of in-depth case studies aimed at qualitatively analyzing the complexity of the economic and political awareness of Managua's popular classes.

*"Hipóteses sobre la estrategia de sobrevivencia de las clases populares en Managua y el impacto del mensaje económico gubernamental," a study by the UCA’s Sociology Department, presented as a paper in the Nicaraguan Social Sciences Congress, held in Managua October 9-12, 1986.

Recent public opinion soundings in Nicaragua indicate that the level of political support for the FSLN is as high as ever. But these efforts did not attempt to go after elements such as changes in the quality of this support, signs of new trends in popular awareness, indications of what might be cracks in the support, or the depth of anti-imperialist attitudes.

Qualitative research like that of this study does not pretend to be absolutely representative, as would a more quantitative methodology. Rather it seeks to generate hypotheses about the relationship between the war and the economic crisis, about grassroots survival strategies to confront that crisis, about the acceptance of the Sandinistas' economic message and about the political consciousness of the grassroots sectors.

To grasp these relations and dynamics, students spent between 15 and 20 hours talking with each of the selected families. The selection process itself consisted of preliminary interviews with some 120 families. A pre-census form was then filled out regarding a series of variables: number of family members, age and sex; head of family; principal source/s of income; years of residence in Managua; origin of parents; economic level (compared to other families in the barrio); level of political participation in Sandinista organizations; level of religious participation and level of confidence and openness demonstrated by the interviewee toward the interviewer.

From these, 50 families were selected, according to two basic criteria: to include the greatest possible variety of survival strategies and to study these strategies for Managua's newest poor barrios, both those developed after the 1972 earthquake (Ciudad Sandino, Colonia Centromérica, Ducualí), and those born after the revolutionary triumph (Jorge Dimitrov, Nueva Libia, Georgino Andrade, El Recreo). The Sociology Department plans to do more case studies among families of relatively more affluent neighborhoods, whether of the middle classes such as Altamira, or other grassroots ones with longer histories, such as Monseñor Lezcano. In the end, only 45 of the 50 cases selected had the necessary quality of information to be incorporated into the study.

By virtue of the cases selected, the study tended to favor the progressive urbanization barrios. It should be mentioned that there the housing policies of the revolution have achieved a firm alliance with the population, supporting and empowering their economic struggle by providing them with assistance to put up their own house and thus improve their living standards. This is indeed one of the things that can be most clearly appreciated in the research, in multiple testimonies: “After the triumph, I bought land here, the organization [CDS] helped me with materials and hauling, and I put in the labor. This lets me leave a house to the kids. To have one's own house and not be renting! During the dictatorship we didn't have such opportunities. Now, right, I have my little house. Before, I lodged.”

One of the most deeply rooted dreams of the poorer classes is to be able to "leave a house" to the children. Among those polled was a maid who had suffered more than a year, postponing a needed hernia operation because she was afraid of dying during the operation and leaving her new house unfinished. To work, to live and even to defend the revolution could be summed up in the attaining of that house, as another worker also said: “You have to work like an ox. If not, we're going to die of hunger. To defend the revolution in the mountains... first, God, I want to get my little house put together, so that if I die I’ll leave something to my children and my woman.”

Economic survival strategies

The UCA study discovered four basic family strategies for survival among those interviewed. Each one represents a different approach to the country’s economic reality.

1. The strategy of the upwardly mobile self-employed worker family
2. The salaried family strategy
3. The women's production collective strategy
4. The strategy of the single mother, the abandoned woman and other marginalized families

These survival strategies operate according to complex, informal logical systems intimately tied to the "secrets" of the grassroots family culture. Faced with such a jungle of complexities, the Sociology Department studied the survival strategy as an economic logic that moves according to three basic tactics:
* "Defending oneself," as people say, by combining various types of insertion into the labor market.
* Achieving "good connections"—another popular phrase—to get the best paid work, the most favorable supply channels and the most advantageous markets.
* Mobilizing family relations and all the tasks of family reproduction around the search for the best conditions and connections for survival.

These survival strategies are not coldly calculated options. They are the sum of a long series of day-to-day decisions, forged of successes and failures in handling these three tactics. They are the combination of astuteness, ingenuity and unplanned luck.

A kind of multi-faceted strategy predominates among the poorer classes, combining salaried work with self-employment in small-scale manufacturing or services and petty commerce. Of the four strategies identified in the study, l, 3 and 4 are those of small producers, domestic employees and petty merchants who participate in the urban informal sector (UIS). The UIS represents some 45% of Managua’s economically active population. The UIS is immense, including:
* Self-employed family enterprises and activities of a productive, service or commercial nature, whose main objective is to assure the survival of the families involved;
* Enterprises whose consumption activity is difficult to separate from its productive or commercial activity, as in the case of the market sellers who give their children some of the same foods they sell;
* Enterprises that don’t enter into official statistics or enjoy social benefits.

The upwardly mobile self-employed worker family

In this strategy, the central figure is the skilled worker, one who has found a space in the government's economic policy to create or expand a small family business. These are the best-off families among the popular classes. If it weren’t for the war, they would have already moved into the lower strata of Managua's middle-income bracket. They are families on the rise.

Roberto and Maria's family is an example of the super-effort necessary to achieve this mobility. Roberto, a 39-year-old worker, learned various skills during his youth, specializing as an electrician. Ten years ago he got a job maintaining the electrical plant of Nicaragua’s supermarket chain. As a salaried electrician he earned 30,000 córdobas a month in June 1986, plus the good system of supplies that supermarket workers currently enjoy. Roberto also uses his salaried work post as a kind of office to tend to his own business in electrical maintenance. Weekends he works as a troubleshooter, repairing installations in private homes. This earns him an additional 120,000 córdobas a month. Together with other troubleshooters, Roberto is organizing a cooperative expressly created to get the electrical parts brought in from neighboring countries by a state-licensed import merchant. In his free time, Roberto works on a collective garden that he and other neighbors have planted in a vacant lot in his neighborhood, Ciudad Sandino.

In a family such as this, the man is normally the authority of the house, even though he spends the majority of his time working away from home. The woman is typically a captive of the traditional housewife role. Maria used to make clothes in the house both to sell and for her children, thus making a small contribution to the household economy. Given the current scarcity of cloth she has had to become a domestic worker in Altamira, a middle-class neighborhood. In some cases, such as this one, the current crisis has helped "liberate" the housewife.

In this strategy, the children are subject to a strong and disciplined work regimen. They help with the household chores and are apprentices in the father's work. The family tends to be small. Roberto and Maria have two sons (13 and 12 years old) and two daughters (5 and 3). This type of family usually helps its less well-off relatives.

Other cases in this group include those who have left their salaried work to dedicate themselves to their own small enterprise. They normally contract a couple of men as helpers in, for example, construction or the production of popular consumer goods. Others are skilled artisans.

As can be seen in the table, some 50% of the total family income in this strategy comes from self-employed activities. Services contribute 23%, salaried work 17% and sales—for example of Maria's homemade clothes—10%. Such petty commerce, however, is not commonly part of the survival strategy of most cases in this category; only two of those studied were also merchants. The work strategy is mixed, as we see in the case of Roberto, who earns a salary, produces food with his neighbors, works free-lance doing electrical installations in new houses—productive work in the construction industry—and repairs in old ones. His principal source of income is production, which is always the case in the strategy of the worker on the rise.

The salaried family

The UCA students had difficulty finding families that lived only from their salaries. They selected 15 cases that were supposedly proletarian families, but a closer analysis showed that just six depended fundamentally on their salaries, and even then not exclusively, as can be seen in the table. Three of these families came from extreme poverty, with significant levels of illness, making self-employment in the informal sector nearly impossible. These families, then, were more sub-proletarian than proletarian. Given their physical limitations, they opted for wage work—as guards in workplaces, for example. As one man put it, "I don't earn much at work. If I were in good shape, and not sick, I’d work somewhere else." Families that can, search for self-employment opportunities in this "somewhere else," since the salary strategy in its pure form offers no perspectives in today's Managua.

The other three families that lived basically from their salaries were the ones with the highest per capita incomes of all the cases. But they achieved it through a strategy called the "salaried clan," because the family economically defends itself by its large number of salaried workers. The majority of these salaried jobs are in professions—as secretaries, nurses, professors, government functionaries, etc.—not in manual labor.

There are five salaried workers in the family of Humberto and Cecilia. Humberto is a 62-year-old skilled worker and Cecilia, his wife, is a housewife and activist in the neighborhood's Sandinista Defense Committee (CDS). As with the other families in this strategy, the children are grown and contribute their salaries to the common family fund, keeping out whatever they need for clothes and lunches. One son, Jaime, 24, is a telecommunications technician. He and his wife Maria have two small children. Maria is a nurse in the military hospital and Cecilia takes care of the grandchildren while Maria is at work. Jaime and Maria are both studying at night in the university. Jaime's sister Josefina is a psychology graduate student in the university and works full time as an FSLN militant. Carlos, the youngest son, teaches in secondary school.

This family is not the classic model of a proletarian family, but in Nicaragua it’s the only kind of salaried family that can survive the economic crisis. The high number of professional salaries in this "clan" strategy permits a per-capita household income of 24,000 córdobas—the highest of any studied in this category.

Humberto and Cecilia's family is very united. They eat together every night and are all involved in popular organizations. Normally the families in this strategy are large. Twelve people live in Humberto and Cecilia's house. This type of family tends to have more democratic relations, i.e. greater equality between the woman and the man, than in the other types researched. As we saw in the previous case the man dominated; in the other two, the woman is the dominant figure.

The salary strategy doesn’t permit acceptable levels of social reproduction except in cases of "salaried clans." For this reason the majority of families in Managua’s grassroots classes are found in the other three strategies.

The women's production collective

As the table demonstrates, the third strategy shows the same dependence on petty production as the main source of income that we saw in the first strategy. The difference is that while the central figure of the first was a skilled male worker, in the second it is a group or collective of women who collaborate in the production and sale of popular consumption goods. In this strategy, the family is made up of women and children. There are few men either in the home or outside who help maintain the family.

In Nicaragua, as in most of Central America, abandonment of women and children is an all too common phenomenon. In 1978, an estimated 48% of heads of Nicaraguan households were single women. This third strategy, then, is at base the answer of several women to the problem they all share. Instead of living in poverty and loneliness like the abandoned women in strategy four, these women strengthen their position by uniting in one single home and creating a circle of cottage production in which the children also help. Generally, the circle is composed of close relatives: sisters, daughters-in-law and sisters-in-law.

Rosario, 36, her daughter Claudia, 16, and her sister Isabel, 29, work together in a collective that makes sweetened fruit drinks and atol (a thick drink made with cornstarch and flavored milk). Rosario has two more small daughters who help prepare the drinks and accompany her when they can to sell them or get more ingredients. Claudia produces and studies. Isabel, who also has three small children, takes the major responsibility for care of the house. The children of these families work harder than those in other strategies. The per-worker income in this model is much less than that obtained in the first type, but so many women and children collaborate in the production collective that the total per-capita income ends up being a bit higher than in the first group.

Outside of the production circle described above, but helping the group, is Rosario's niece Roxana, 22, who cleans the floors in the Agrarian Reform Ministry and contributes to the family with her CAT (worker's provisions center) card which gives her and other public employees the right to buy certain products at very favorable prices.

In this economic strategy, it’s very difficult to distinguish between production and consumption. The production and sale of the drinks is intimately linked to feeding the family since these products are an essential part of popular eating habits.

There are some variations in this strategy. One is the "production and sales group," which as can be seen in the table depends on both aspects. This group has a per-worker income very inferior to that of families like Rosario's. In the cases studied it was discovered that these families have a tendency to abandon their commercial activities in favor of a more productive strategy like that of Rosario's family.

The other variant is the "matriarchy." This is a multi-generational collective headed by a grandmother who directs her children and grandchildren. The matriarchy is a much more complex survival formula than the women's cottage production collective.

In the case of Juana's family, 23 people live in the house. The great majority are the children of Juana's own children who live with her and contribute to the family's maintenance with their salaries. While Rosario's family was a closed women's circle, the matriarchy is an open one, and includes an extended family of up to 56 members. Juana, together with her grandchildren, produces tortillas and are responsible for selling them each day. Members of the extended family who work fields near Managua supply the corn and firewood. The sons and daughters have very badly paid salaried work, but since they are so many, the family income from salaries is equal to that obtained from selling the tortillas. As shown in the table above, the matriarchy strategy combines cottage production and salaries.

The economic crisis is hitting Juana's family very hard, because it largely depends on the low salaries her family members get; they are employed in the lower strata of the working class, with wages that have been seriously eroded by the galloping inflation.

The marginalized and impoverished family

These families tend to be smaller units than those of the other types. Ana was abandoned by her husband Ramón. She’s part of the cleaning crew at the Ministry of the Interior and makes children's clothes at home. Her daughter Ruth works as a maid in the well-off residential zone of Los Robles. The other daughter, Isabel, takes care of the house and of her two smaller brothers. Ramón occasionally contributes a bit from his watchman's salary, but both his presence and his help are very irregular. Ana doesn’t have her own sewing machine and the difficulty getting thread and other materials means that very little time can be dedicated to her dressmaking.

As shown in the table, the incomes in this type of family are very equally distributed among the sources. Ana's family income comes from her salary, her daughter's service work and the sale of the children's clothes. Although the income sources are diverse, however, the work of these abandoned women is always the least remunerated on the scale, whether in personal services, cottage production, selling or salaried work. To be able to survive, these families have to seek income where they can—as maids, lawn cutters, cigarette vendors, kitchen assistants, guards, shoe shiners—and they often even share the polish, brush and shoeshine box between two families. These are the families that are most dependent on sales for their incomes, but the kind of irregular sales they make doesn’t permit them even an adequate income much less the possibility of accumulating anything.

The struggle for survival within these families is so all-consuming that their political and social participation are at the lowest levels. They are also the most disintegrated families and the children tend to slip out from under any family control. Family instability in this group is high, thus demonstrating why "living peacefully" and having "a house for the kids" becomes so important.

The following is a typical family story found among this group: at age 14 Mercedes married a man of 36. During the insurrection she "hooked up" with a buhonero (state-licensed small importer) and after the revolutionary triumph returned to her neighborhood, Ciudad Sandino, to sell fruit, vegetables and beans. Soon the man abandoned her, leaving her with five children. She got sterilized and married a cousin who took her to the peasant zone of San Andrés de la Palanca, near Managua, to make brooms. Her mother-in-law’s meddling provoked the couple to return to Ciudad Sandino, where she dedicated herself to sewing and work as a guard. Her husband became ill and began to drink heavily, mistreating her until they finally separated. For a woman with such a life, the revolutionary dream is for "calm" more than anything else: "I had hoped life wouldn't be so full of change."

For the families of strategy four, the mere fact of survival—remunerated work, the search for essential food supplies, domestic tasks—is excessively draining, absorbing 94% of all active time. But it’s not much easier among the other groups and strategies: in type one, 91% of the time is spent in survival, in type two, 84% and in type three, 90%.

The fundamental role played by the woman in strategies three and four, however, cannot be underestimated. In fact in all the strategies, the women work more than the men. They dedicate an average 69 hours a week to remunerated work and 95 to domestic tasks, for a total average of 164 hours weekly dedicated to survival. The men dedicate only an average 10 hours a week to domestic tasks and 68 to remunerated work, for a total of 78.

Rethinking the stereotypes

This brief summary of the family survival strategies of Managua's popular classes raises questions about the stereotype of Nicaragua as a country polarized between the bourgeoisie and the proletariat. As this study demonstrates, Managua has a very fluid class structure; there are no purely proletarian or merchant or small manufacturing families. In fact, Managua's industrial base is so small and recent that the minimal proletariat that does exist is first generation for the most part. Rather, there are complex family strategies for survival, which combine diverse social sectors and interests under the same roof.

Managua's salaried worker is not politically inclined to support policies that restrict freedom of the market, because he/she or other family members may very likely have a small enterprise of their own. On the other hand, small manufacturers and merchants won’t be likely to form a movement against the interests of the working class, because their own families depend on salaried work.

One of the most important bases of the Sandinista policy of national unity and mixed economy can be found in the very roots of the grassroots classes' overlapping and complementary interests. Furthermore, this lack of polarization in the economic structures of these classes is buttressed by a growing nationalism and patriotism that unites Nicaraguans in the face of foreign aggression.

The government's economic messages

Over the years, the government has tried to educate the population about the economy with an informational campaign that both attempts to explain the situation and calls on people to take part in certain activities that will help the country develop, advance and survive.

This campaign took off in 1980, with the creation of an animated character, Clodomiro, who was used to emphasize the dignity and value of work as well as to explain some concrete details of the yearly economic plans to people.

The campaign took on the characteristics of a hard-hitting political offensive as the war of aggression escalated beginning in 1983. This was particularly obvious after President Reagan declared the economic embargo against Nicaragua in May 1985. The "economic war," "economic battles" and "economic resistance" to the embargo soon became daily themes in the Sandinista campaign.

Overall, it hasn’t been consistent or effective enough, but there have been serious attempts to disseminate economic information through the newspapers, radio and TV. As time passes and the war drags on, these informational efforts are having a greater impact upon people. After five years of Reagan's war of erosion, the government's economic line can be boiled down to four main points:

1. The counterrevolutionary war of erosion and the economic blockade that is part of that war are the main causes of the economic crisis: the majority of the country's economic resources are channeled into the defense effort, which explains much of the scarcity: “Everything for the war fronts, everything for the combatants.” “We won't surrender because of hunger.”

2. Austerity, efficiency, discipline and sacrifice are essential in order to overcome the crisis. All these attitudes are crucial to helping increase productivity: “Produce something, brother, produce!” “We should plant more in order to eat better.” “We can all work harder in our little part of the country.”

3. National unity and unity between the state and all agricultural producers and industrial workers is necessary for progress: “I can help out, too” is one of the most recent “economic slogans” to appear in the newspapers, accompanied by characters who represent all working sectors: a coffee picker, a worker, a secretary, a student, a state employee, etc.

4. Fighting against speculation is critical to overcoming the economic crisis. Operation “Iron Fist,” launched by the Ministry of Domestic Commerce (MICOIN) against speculators made a big splash in the media. Since “Iron Fist,” the news media have continued to cover speculators who are caught red-handed, printing their full names and exact details concerning the confiscated goods as a warning to other or potential speculators.

How people understand the
government campaign against speculation

With an annual inflation rate of 700%, many foreign observers assume that there are no longer any incentives to produce and that the popular classes have started to speculate against each other; they thus take for granted the collapse of the Sandinista economic model. Contrary to this, the UCA study shows that the popular classes aren’t living off of commercial speculation. Rather, the government's 1985 economic measures seem to have had a positive effect on this great majority of Managua residents, in that they’ve switched from commercial activities to productive ones, especially in the area of basic consumer goods. (See the table.) Admittedly, however, the method they have chosen to confront the crisis is self-employment in productive work, rather than work in the country’s few factories.

Although this response can’t guarantee control over inflation, it at least shows that incentives exist which encourage the grassroots classes to produce despite all the problems they face in obtaining inputs and food along with the increasing inflation. The people themselves have been working to improve the distribution mechanisms for food and basic goods.

At times, the government's economic policy and information campaign has resulted in more disorder and the generation of myths about economic problems instead of helping to regulate them. This is clearest in the case of the campaign concerning speculation.

Among the most heavily stressed points of the government's economic campaign are the fight against speculation and the criticism of speculators—including denouncing them as enemies of the people. Because of this, the popular classes dedicated to informal commerce have been identified by some Nicaraguans as a sector of "snakes" and speculators.

But this is a myth. The problem is a generalized confusion between what it means to sell things at high prices vs. to speculate. Almost all the small producers and merchants with whom the UCA students spoke, on the other hand, differentiated clearly between the two and strongly criticized those who engage in speculation.

Selling things at high prices is a result of the inflationary spiral. Petty manufacturers typically have no capital accumulation that would permit them to buy a quantity of inputs for future production. Thus, if they can’t quickly sell what they’ve produced at a high enough price to buy new inputs at the next round of prices, they’re out of business. Selling dear is the only way to guarantee continued production and survival. From this point of view, the small manufacturers' and small merchants' criticism of speculators is neither hypocritical nor a disguise for their own activity.

Fundamentally, speculation is not selling things at high prices but rather hoarding products and storing them until they double or triple in value due to inflation. Speculation means having the economic wherewithal to accumulate a stock of sales merchandise without having to unload it immediately. The artisan producers-merchants of the informal urban sector obviously can’t do this. They must sell their products immediately or else they couldn’t buy what they need to continue their work.

Small merchants, to be sure, do participate in what could be called “mini-speculation.” There are thousands of poor people who buy tiny quantities of the scarcest goods at high prices when an opportunity falls their way, then immediately resell them at extremely high prices. For example, during a recent temporary milk shortage, merchant women could be found with half a dozen tins of precious powdered milk, selling them at five times the normal price. What the study shows, however, is that this “mini-speculation” is not central to their survival strategies.

The little boy who sells chewing gum on Managua's main thoroughfares, earning a fair amount this way, can’t count on working every day as the buhoneros don’t supply him with enough gum in the goods they bring in from abroad. As the table above shows, income from commercial activity isn’t a significant component in the overall income of the popular classes. Even in strategy four, more dependent on commerce than the other strategies, only 26% of the families’ income comes from purely commercial activities. As shown earlier, there’s a tendency among Managua's popular classes to give up purely commercial activity, opting instead for self-employment in the production of basic consumer goods.

The stereotype that the informal sector is dominated by small-time speculators steeped in petty bourgeois ideology, then, is false. By extension, the interpretation of the current speculation as a symptom of the deteriorating level of people's consciousness or a generalized political crisis among the popular classes is equally invalid.

The speculation that does exist is carried out by and large by members of the petty bourgeoisie and middle classes. In addition, the possibility for speculation exists inside the more formal and institutionalized commercial and distribution channels, both public and private.

Popular reaction against speculation is very strong, and is expressed in a number of ways. In Managua's poorer barrios, for example, it is common practice for tortilla-sellers to use two price scales. If they can secure maize at MICOIN (subsidized) prices, they sell the tortillas for 40 córdobas apiece. But if they have to buy it at higher prices, through speculative channels, the tortillas go for 100 córdobas each. Raising the tortilla prices in this way isn’t speculation, although it might appear so to an outside observer. The tortilla-sellers are exercising a form of control and at the same time demanding that MICOIN provide them with maize so they can avoid the black market channels.

This entire economic context determines how the informal sectors interpret the official government position against speculation and speculators. They agree on the need for a hard line, "an iron fist," but they exclude themselves, instead identifying as speculators those richer sectors able to hoard and stock goods. For this reason, they react very strongly against MICOIN's attempts to impose controls on their activities. In fact, from their point of view, some of the speculation is going on within MICOIN itself. Because they control large quantities of goods, certain MICOIN officials stand to gain personally from their positions. Thus, many people in the informal sectors have turned the official anti-speculation campaign against the large state-owned warehouses, and several well-publicized instances of huge quantities of food rotting as it sat in storage. They have also attacked unscrupulous state officials who do business with the middle-class speculators, urging the government to keep an eye on its own workers and inspectors because some of them have their hands in the cookie jar. The government puts someone in a job who gives something to someone else, who then resells it. The state sector, which is the biggest speculator of all, isn't being monitored.

Other 'reinterpretations' of the economic campaign

Given the severe nature of the economic crisis, studying the impact of the government's economic campaign is essential to an evaluation of the strength of political support for the FSLN and the revolutionary project.

As we’ve seen, the message against speculation reaches people and is accepted by them, but it goes through a reinterpretation that’s not always favorable to the government and its officials. According to the UCA study, the other three major points in the government's economic campaign (linking the war to the economic crisis; calling for more discipline and effort in workplace; and national unity) were ideologically accepted by people from all four economic strategies. One initial hypothesis assumed the campaign would be hard for people to accept because of the technical language sometimes used. But this wasn't the case, and people have both understood and accepted the campaign.

We’ll explore the impact of the three other points of the government's educational drive in more detail by looking at them from the perspective of the four family groups and their experiences in dealing with the economic crisis.

The self-employed working class families don’t face problems obtaining food that endanger their very survival, as do the other groups. Their major criticisms of the revolution's economic policies come about when the family encounters obstacles trying to expand its reproductive strategies—for example, difficulties obtaining certain inputs or the high prices they must pay for them.

This group has a mixed vision of class struggle. They criticize the professionals and public employees as "privileged sectors" and see themselves as among the worst off in the present situation because they’re "not well educated" or "organized," etc. But they understand quite clearly that the revolution is "for the benefit of the people, without distinction to class" and they appreciate the policy of national unity that guarantees them space, even when they're not organized. Others are less trusting: "The people who created this problem aren't going to help you."

They see the agrarian reform as the major revolutionary achievement in the countryside. One of the most sophisticated political opinions was expressed by a woman in this group: "The state has given land to the peasants to work in cooperatives, so there aren't any more big landlords, and everyone who lives in the coop works together.... Inside the coop, the exploitation of one person by another ends."

People fault the state for some things, but they lay much more blame on Somoza and the condition he left the country in. Still more problems are attributed to the war. "As long as the war goes on, we can't go forward, because they're blocking our progress. If it wasn't for the war, we'd be doing fine." Or, "Once we defeat the aggression, then the workers will really feel the benefits of the revolution. But even in this situation, people feel the benefits."

These people see Nicaragua's new hospitals and schools as the main achievements of the government's economic policies. They point to a number of problems with the administration of these programs, and feel that more grassroots pressure on the state is needed to resolve the problems. Hearing the government call for more discipline and sacrifice in the work place, this group feels that these attitudes are even more necessary at the barrio level. And they have a number of criticisms concerning the poor leadership in the mass organizations. Nevertheless, they're quite aware of the government efforts in their favor: "Despite the lack of parts, the embargo and the war, the government’s doing everything it can for the people."

Despite the difficulties salaried families have coping with the economic situation, it’s noteworthy that their concerns go beyond their immediate interests. More than the other groups, they talk of issues that affect the whole society: the urgency of peace for Nicaragua; problems with military service; improving relations with the United States. This group most clearly understands the relationship between the US aggression and the deteriorating standard of living.

According to their understanding of class struggle, the merchants are best off at this stage of the crisis "because they take advantage of the situation" and "because the government has been too easy on them." But they also realize that they’re doing all right, and in fact are somewhat privileged: "Before we had no place to live. We're not better off than the rich people, because they have their money so they're doing well, but we poor people are okay too. The workers have their jobs and live better than the peasants. And here in the city you don't really feel the war too much. In the countryside, the peasants suffer more."

Their understanding of the state is overall a positive one. They are well informed on the revolution's structural transformations (nationalization of the banks and natural resources; programs in health, education and housing; new development projects) and they have confidence in the revolutionary project, noting that "today we have more than before."

Their harshest criticisms of the state are for its inefficiency in enforcing strict controls on commercial activity. For them, MICOIN represents the worst expression of this inefficiency and is clearly seen as the villain of the show. They also direct strong criticisms against the state bureaucracy. Their idea is that this sector is some sort of "free zone," where people don’t maintain schedules or do their work, where there’s a high rate of absenteeism and general irresponsibility, where there’s too much room for inefficiency, arrogance and poor management. However, these criticisms do not affect their confidence in the revolution's leaders or in the revolution itself.

This group has the highest level of class consciousness and they have easily assimilated the information in the government's economic campaign: "The costs of the war shouldn't be so high, but there you are. It's like with a sick child, you'd spend your last cent to help it," said one. Another explained that "the programs and improvements the country needs can't really happen, because the contras won't let us alone. The government wants to do all these things, but the war is stronger than the best of intentions."

Families in the women's production collectives have a more immediate vision of the situation and the country's crisis. Their notion of the economic situation is filtered through the lens of the problems they face obtaining food, etc., every day. The scarcity of certain products is a problem that dominates their daily lives: "There are many problems, but what the people need is to be fed. This is the key thing; the other problems take care of themselves on the way."

The principal concerns of this group revolve around their children: that they be able to study and prepare themselves. They recognize that "before this was very hard; it cost so much and often wasn't possible." Everyone acknowledges the benefits the revolution has brought—hospitals, schools, child care centers: "With the little left over after defense, you can see what they've done for the people. Imagine how it would be if it wasn't for the aggression."

These women hold somewhat contradictory views of class struggle. A considerable number of them see the poor classes as better off and think the merchants and professionals are worse off "because they have to pay so many taxes." Others think the merchants are actually doing better now "because they're capitalists making it off the sweat of the people" and the lot of the poor has gotten worse because "they work more and earn less."

These women have a spontaneous and emotional anti-imperialist attitude that is always at the base of their understanding of what’s happening in their country today: "Nicaragua is rich and has all sorts of resources. The problem is this crazy old guy Reagan, who won't leave us be—so there could be all-out war at any moment."

For others, the economic problems cause confusion: "They say that the gringos robbed Nicaragua of its resources, but I don't ever remember having lived with such scarcity." These women think the state is disorganized. "They waste things because they're poorly organized."

For all their problems, they still maintain a clear distinction between the state and the revolutionary leaders: I don't think the President has paid enough attention to the bureaucracy here," or, "The situation today is our own fault, not Daniel's."

MICOIN is the most heavily criticized by these women. They feel it’s regulating people it shouldn’t be, and not applying any controls at all to the sectors that need regulation. In spite of all this, they still think the state is defending the interests of the majority and see the war as making things so difficult even while seeing it as a necessity: "The war is something we have to do, although we don't like to. Because what would become of us without food and arms for the ones in the mountains? The contras would have killed us, they would own us now."

The marginal families of the impoverished informal sector see class struggle as the difference that exists between those who can buy things and those who can't. They see the best-off sector these days as “those who have money,” “those who can afford to pay dearly for things.” Although these people don't have much money and can't afford to pay dearly for anything, they think they're better off now than before: “Before the triumph there were a lot of things to buy, but we didn't earn very much. There wasn't anything for the poor. Now we have houses that are better than before, but we're worse off with food. But that's because of the aggression.”

They have a very paternalistic conception of the state: “The government is like a father of the people who has to look out for his country; he has to ask other countries for help so his children don't suffer too much; he has to sell the little he has to buy necessities.” In this context, they place a high value on international aid: “They go to other countries to explain the country's situation, that there's war and hunger here, so they can get help. The 'yankees' don't give support to run things in Nicaragua, like they used to during Somoza's time.” Within this same personalist understanding of the state, one man saw the solution to the country's current problems this way: "The leaders of Daniel Ortega's government have to get together and reach an understanding."

At the same time, there’is a less personalist vision of the government among this group: "The government has to talk with the people so we can help it out." The criticisms of the state are directed against the administrative sector for its wastefulness, disorganization and excessive bureaucracy.

Although the families of this most impoverished group don’t understand the economic terms used by the mass media—real salary, foreign exchange, economic development, etc.—they do absorb the main ideas the government is trying to get across. And they incorporate these ideas of discipline, sacrifice and organization into their daily lives much more than the salaried or self-employed families who have a better understanding of the economic terms. One man explained the reasons for the price changes in 1985 this way: "The people are paying a little bit more to increase the state's budget a little."

In the same way, they recognize the need to sacrifice their consumption levels for the war effort: "There shouldn't be so much spent on defense. With that money, we could have more food and medicine. But at the same time, it's necessary, because otherwise the contra would get in." "Whatever is necessary should be spent. The most important thing isn’t clothing the body, but maintaining it."

There are three main tendencies among the grassroots response to the government's informational economic campaign:

* Spontaneous support, with a reinterpretation of the message
* Complete absorption of the message
* Non-assimilation and spontaneous rejection of the message

The women's production collectives and the impoverished informal sector offer spontaneous support for the revolution, but have the least understanding of the government's campaign, particularly when it comes to understanding specific economic terms. For example, they don't understand what 'real salary,' 'purchase power,' 'inflation' or the 'international economic crisis' mean. A typical definition they use would be that real salary is the same as "nothing because it's used up so quickly."

This group generally reinterprets all the government's messages. One clear case of this is their understanding of the ongoing contra war. "This war is happening because the government didn't want to pay the money that Somoza owed the gringos. That's why there's a war now."

Their understanding of the current political situation and the economic crisis is contradictory. The following are good examples of the contradictions: "You can't deny that people were better off before. We had things better, although we were under the yoke of the yankees." "[All the defense costs] are so that the US government won't impose a dictator and military regime like we had before. We have a military government now, but not with the repression we had in the past. Today there isn't repression."

The principal source of information for the impoverished informal sector and the women integrated into production collectives is what they hear (then often reinterpret) in their neighborhoods, in the markets, waiting in line, etc. The major difficulty blocking a better understanding of the reasons for the economic crisis is that their day-to-day reality doesn’t always square with the official interpretation.

The self-employed and salaried workers have a better understanding of the government's economic campaign. They understand the economic terms and are able to make sense of the information. Because of this, they have a base from which to question and analyze contradictions between the official information and the reality. One concrete example is the following: "The problem of scarcity is obvious. For example, a box of (30) eggs is available anywhere for 2,500 córdobas, but you can't find them in the neighborhood provision centers. It would seem that the MICOIN people are selling them to intermediaries. Although these people work for the government, they're counterrevolutionary, because they want the people to blame this situation on the government."

Among this group, people understand the economic campaign and along with that understanding tend to participate in the political process more than those from other groups. There's a clear relationship between participation and greater objectivity in people's criticisms.

Finally, a complete lack of comprehension of the official economic campaign, and hence rejection of it, is found only among a small group in the women's production collectives.

If the UCA sociology study shows one thing, it’s that there’s no relation between the poorer sectors' criticisms of the economic situation and their political position. The economic crisis these people are living through isn’t translated into domestic political criticism. The concrete economic reality of the poor sectors, along with their nationalism, means that they take their discontent out on US policy rather than Sandinista policy.

Until mid-1983, Managua’s popular sectors experienced far-reaching changes in their lives thanks to the government policies in health, education and particularly, as we have shown, housing. The upsurge in the contra war and US aggression towards the end of 1983 forced the government to dedicate up to 45% of the national budget to defense. While the grassroots sectors of Managua were hearing about the war through the mass media and above all, experiencing it with the implementation of the military draft in November of 1983, the brakes were being put on the economic advances they had enjoyed for more than three years.

The ideology of Managua's popular classes includes the clear image of a government that began to aid them in a variety of ways until the war cut off the possibilities for further advancement. This is the basis of their understanding and acceptance of the government's economic campaign, as the UCA study shows. The study also shows that there are differences in these sectors, with regard to both their economic survival strategies and their responses to the official information concerning the economy. Yet there’s one common denominator: as a general rule, the economic discontent isn’t directed against the revolutionary government or high-ranking Sandinista leaders, but rather focuses on middle-level political cadre and local government representatives. "The process" and the Sandinista leadership have moral authority among the people, due to all the advances in the social wage, education, health and housing that were carried out from 1979-1983.

Lastly, there’s one point not explicitly transmitted in the government campaign, but which the people have nevertheless picked up on and which comes through in their responses to the situation. Fundamentally, all grassroots sectors have a sense and a certainty that, once the war is over, it will be possible to "take the sky by storm": "We can't talk about success now, but I'm telling you that once the war is over, the government will be able to achieve everything it wants to."

This dream being nourished in the hearts of the Nicaraguan people as they live through this difficult phase of resistance also carries an important political message: despite all the negative consequences brought about by the war of aggression, including a generation of social conflicts, this stage is seen as a transition period. In this sense, the war increases people's hope and confidence in the revolutionary project the same way that the difficult Sandinista struggle against the Somoza dictatorship always sustained people's hope for a better future, a future "with peace, so we’ll be happier."

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