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Andes

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

The Andes appear in the book as both the source of extraordinary mineral wealth and the setting for a colonial labor regime whose consequences persisted long after Spanish rule. Silver drawn from the region helped sustain conquest and exploitation, while the geographic reach of the Potosí mita left a lasting institutional divide between neighboring communities.

Silver, conquest, and the Inca state

The Spanish search for precious metals in South America initially misread the sources of the wealth they encountered. In 1516, Juan Díaz de Solís named the Río de la Plata the River of Silver after finding silver among local people, but that silver had traveled from the Inca state in the Andes. The distinction mattered: the estuary itself had no silver or gold for the newcomers to seize, while the wealth they sought lay far to the west, in the highland world of the Incas.

The Spanish conquest of Peru turned that search into a campaign to capture political authority and extract resources. In November 1532, Francisco Pizarro reached Cajamarca, where the Inca emperor Atahualpa was encamped. Atahualpa had recently defeated his brother in a succession struggle and had heard reports of Spanish abuses, including the violation of a temple to Inti. The Spanish seized him in a trap, then demanded gold and silver as the price of his release. He supplied the treasure, but they reneged on the agreement and killed him in July 1533. That November, Spanish forces captured Cusco; Inca aristocrats were imprisoned for further demands, and the gold was stripped from the city’s Temple of the Sun and melted into ingots.

Conquest was followed by the division of the Inca population into encomiendas, allotments assigned to Pizarro’s companions to organize and control Indigenous labor. This system soon stood alongside a more extensive mechanism. In 1545, a local man named Diego Gualpa was searching for a shrine high in the Andes when a gust of wind threw him to the ground and exposed silver ore. The Spanish named the immense deposit El Cerro Rico, the Rich Hill. The mining center that grew around it, Potosí, had an estimated population of 160,000 at its height in 1650—larger than Lisbon or Venice at the time.

The Potosí mita

To supply the mines with workers, the Spanish Crown sent Francisco de Toledo, the viceroy who arrived in Peru in 1569 with the task of solving the labor shortage. He spent five years traveling through the territory and commissioned a large-scale survey of its adult population. He then moved much of the Indigenous population into settlements called reducciones, concentrating people in places that made their labor easier for the Crown to control.

De Toledo also adapted the Inca mita, a system of labor service whose name in Quechua means a turn. In the Inca system, forced labor had supported plantations that supplied food to temples, aristocrats, and the army; the Inca elite provided famine relief and security in return. Under Spanish rule, the mita—especially the Potosí mita—became a vast and onerous scheme for extracting labor. Its catchment area covered about 200,000 square miles, from central Peru across much of what is now Bolivia. One-seventh of the male inhabitants within it were required to work in the Potosí mines. The system lasted throughout the colonial period and was abolished only in 1825. Its reach overlapped the Inca heartland and included Cusco, the former imperial capital.

The mita formed part of a broader set of measures to redirect Indigenous labor and resources toward Spanish interests. De Toledo consolidated the encomienda into an annual head tax, payable in silver by every adult man; the obligation pushed people into the labor market and helped reduce wages for Spanish landowners. His administration also spread the repartimiento de mercancias, a system in which Spaniards compelled local people to buy goods at prices they set. The trajin made Indigenous people carry heavy loads—including wine, coca leaves, and textiles—for Spanish business interests, substituting human carriers for pack animals. Together, these arrangements extended extraction beyond the mines into taxation, commerce, and transport.

A colonial boundary in present-day inequality

The book traces the mita’s legacy through the contrasting fortunes of Acomayo and Calca, two neighboring highland provinces whose residents are descendants of the Incas and speak Quechua. Although they share broad similarities in geography and crops, Acomayo is much poorer: its inhabitants consume about one-third less than people in Calca. Residents themselves recognize the difference and ask visiting outsiders why they would come to a poorer place.

The contrast is also visible in access and economic life. The road from Cusco to Calca is surfaced; the route to Acomayo is in poor repair, and traveling beyond it requires a horse or mule. People in both provinces grow the same crops, but in Calca they sell them in markets for money, while in Acomayo they mainly produce food for their own subsistence. The book connects these disparities to different institutional histories: Acomayo fell within the Potosí mita’s labor-drafting territory, while Calca did not. The geographical boundary of an extractive colonial institution thus outlasted the institution itself in sharply unequal local conditions.

The Andes in the book’s wider argument

The Andean case demonstrates how political power can shape economic rules that benefit a narrow elite at the expense of a much larger population. In the book’s account, extractive economic institutions depend on political arrangements that allow elites to impose them and resist opposition; the wealth those institutions generate can in turn strengthen the elites’ political dominance. Spanish colonial institutions in Latin America exemplify this mutually reinforcing pattern, with coerced labor and resource extraction supported by concentrated authority.

The Andes therefore signify more than a store of silver or a landscape crossed by colonial boundaries. The region connects an episode of conquest to a durable process: a resource boom created demand for labor, Spanish authorities reorganized settlement and labor obligations to meet that demand, and the resulting institutional divisions remained legible in later differences in infrastructure, markets, and consumption. The comparison between Acomayo and Calca gives this long historical argument a local measure, showing how a colonial labor map could continue to shape economic life centuries after the Potosí mita ended.