Why Nations Fail: The Origins of Power, Prosperity, and Poverty

gain his freedom, Atahualpa had to promise to fill one room with gold and two more of the same size with silver. He did this, but the Spanish, reneging on their promises, strangled him in July 1533. That November, the Spanish captured the Inca capital of Cusco, where the Incan aristocracy received the same treatment as Atahualpa, being imprisoned until they produced gold and silver.When they did not satisfy Spanish demands, they were burned alive. The great artistic treasures of Cusco, such as the Temple of the Sun, had their gold stripped from them and melted down into ingots.
    At this point the Spanish focused on the people of the Inca Empire. As in Mexico, citizens were divided into
encomiendas
, with one going to each of the conquistadors who had accompanied Pizarro. The
encomienda
was the main institution used for the control and organization of labor in the early colonial period, but it soon faced a vigorous contender. In 1545 a local named Diego Gualpa was searching for an indigenous shrine high in the Andes in what is today Bolivia. He was thrown to the ground by a sudden gust of wind and in front of him appeared a cache of silver ore. This was part of a vast mountain of silver, which the Spanish baptized El Cerro Rico, “The Rich Hill.” Around it grew the city of Potosí, which at its height in 1650 had a population of 160,000 people, larger than Lisbon or Venice in this period.
    To exploit the silver, the Spanish needed miners—a lot of miners. They sent a new viceroy, the chief Spanish colonial official, Francisco de Toledo, whose main mission was to solve the labor problem. De Toledo, arriving in Peru in 1569, first spent five years traveling around and investigating his new charge. He also commissioned a massive survey of the entire adult population. To find the labor he needed, de Toledo first moved almost the entire indigenous population, concentrating them in new towns called
reducciones
—literally “reductions”—which would facilitate the exploitation of labor by the Spanish Crown. Then he revived and adapted an Inca labor institution known as the
mita
, which, in the Incas’ language, Quechua, means “a turn.” Under their
mita
system, the Incas had used forced labor to run plantations designed to provide food for temples, the aristocracy, and the army. In return, the Inca elite provided famine relief and security. In de Toledo’s hands the
mita
, especially the Potosí
mita
, was to become the largest and most onerous scheme of labor exploitation in the Spanish colonial period. De Toledo defined a huge catchment area, running from the middle of modern-day Peru and encompassing most of modern Bolivia. It covered about two hundred thousand square miles. In this area, one-seventh of the male inhabitants, newly arrived in their
reducciones
, were required to work in the mines at Potosí. The Potosí
mita
endured throughout the entire colonial period and was abolished only in 1825. Map 1 shows the catchment area of the
mita
superimposed on the extent of the Inca empire at the time of the Spanish conquest. It illustrates the extent to which the
mita
overlapped with the heartland of the empire, encompassing the capital Cusco.

    Remarkably, you still see the legacy of the
mita
in Peru today. Take the differences between the provinces of Calca and nearbyAcomayo. There appears to be few differences among these provinces. Both are high in the mountains, and each is inhabited by the Quechua-speaking descendants of the Incas. Yet Acomayo is much poorer, with its inhabitants consuming about one-third less than those in Calca. The people know this. In Acomayo they ask intrepid foreigners, “Don’t you know that the people here are poorer than the people over there in Calca? Why would you ever want to come here?” Intrepid because it is much harder to get to Acomayo from the regional capital of Cusco, ancient center of the Inca Empire, than it is to get to Calca. The road to Calca is surfaced, the one to Acomayo is in a terrible state of disrepair. To get beyond Acomayo, you need a horse or a mule. In Calca and Acomayo, people grow the same crops, but in Calca they sell them on the market for money. In Acomayo they grow food for their own subsistence. These inequalities, apparent to the eye and to the people who live there, can be understood in terms of the institutional differences between these departments—institutional differences with historical roots going back to de Toledo and his plan for