How Utopia Worked: An Unknown Chapter from the History of Public Economics
One of the marginal yet very interesting problems analyzed within the field of public economics is the economy of communities which, continually albeit seldom successfully, pursue their main goal of perpetually emancipating themselves from the system of general economic patterns. In this respect, the possibly most successful and longest-lasting communities were the indigenous self-governing settlements formed by the Jesuits in the province of Paraguay in the 17th century. The Jesuit missions spawned and fostered the development of a self-governing unit named Republic of Guaranis, 30 pueblos, which was a Jesuit-organized state existing for over 150 years and eventually subverted not by economic breakdown or popular disssent, but exclusively by the results of extensive political action conducted against the Jesuit order in Europe. The research into the economic and administrative structures of this autonomous formation actually represents a probe into community economics and enables us to document how the institutions of culture and religion help to establish a functional and lasting economic system.
Key words: community economics, institutions, public ownership
No matter how much forgotten today, the project of Reductions appeared fascinating to the intellectuals of the time, mainly because of the fact that it embodied the introduction of civic structures into a society that positively did not know or imagine any concept of state. The cooperation between the indigenous peoples and the Jesuits was in full, effective progress at a period when Europe found itself preoccupied with different problems of political anthropology, namely the nature of what was referred to as the society of “savages”, and the character of state. Being realized on a non-violent basis and with the general agreement of the local people, the Reductions represented a successful introduction of the structures of state into a concrete native society. Unlike other organizations, the Jesuits managed to make their civilizing mission effective in terms of introducing indigenous people into the political, religious, and cultural institutions of the West. However, the operative factor in the success of the Jesuits consisted in their ability to graft the good elements of their culture onto the indigenous culture of the Guarani tribe. “The project of Reductions, which developed ripened through a somewhat long period of time, was rather a continuation of indigenous traditions than the introduction of European patterns. The flexibility in the organization of a community, the good balance between the influence of the indigenous chieftains and the responsibilities of the local councils, the equalitarianism, the provision of the family - all these aspects corresponded with the efforts and expectations of the indigenous peoples (cit. , p. 64).
The story of the Reductions was therefore not unknown in Europe at the time, yet most writers and analysts of the problem did not perceive the Reductions as a system where indigenous customs and manners naturally intertwined with the rules of the Loyola-founded order. Rather than that, the Reductions were understood as a proof of the potential of social engineering and a real embodiment of the ideals that best corresponded to the thinkers' taste. For Voltaire, on the one hand, the success of the project constituted a victory of humanity that compensated for the cruelties committed by the preceding conquerors; on the other hand, however, he also interpreted the Reductions as a modern model of the “ancient Spartan rule”.
Montesquieu considered the Reductions to be an image of Plato's Republic, other thinkers recognized them as the true realization of ideas presented in Utopia by Thomas More or in The City of the Sun by Tommaso Campanella. Indeed, the Reductions shared certain features with these abstract social structures, but the features were assumed merely insofar as permitted by the principles of Christianity and the rules of the Jesuit order. Thus, there may be found parallels to public ownership or provision for subsistence minimum; yet we can still perceive crucial discrepancies regarding the problems of morals or individual liberty.
If the Reductions proved to be successful, then this success was not so much based on the utopian concepts of philosophers, but rather on the everyday experience and trouble faced by Jesuit missions in this part of the world. The Jesuits were aware of the common truth saying that “those never fare well who, instead of observing reality and wishing to see what people are like, use their own desires and ideas to build the world as it should be” (cit. , p. 52). Therefore, they used their own experience with indigenous people together with the practical principles of their monastic life as the proper foundation stones for their activities. And as there, amid these Jesuit principles, can also be found adherence to the ability to become quickly adapted to new conditions, dispositions, and mentality of the indigenous people whose tribe was chosen as a mission destination, the Jesuits managed to win the respect of the people as their approach represented precisely the point where they markedly differed from other Europeans coming to the colonies. This positive difference consequently led to the establishment of the much-admired “Republic”.
1. The Origins of Jesuit Missions in Paraguay
The political, economic, and social climates of the time were not inclined towards granting support for the Jesuit missionary efforts in the Reductions. From the political point of view, the central problem consisted in the Treaty of Tordesillas of 1494, which specified the borderline between the proprietary demands claimed by Spain and Portugal with respect to the newly discovered territories. Owing to the vague wording of the treaty, however, there sprang up conflicts over South America, and in consequence of these skirmishes the actual existence of the Reductions was jeopardized. To find the main reason for the situation, it is necessary to mention the fact that the territiories claimed by the Portuguese had already fallen within the auspices of the Spanish Jesuits (and thereby the king of Spain too), and thus the process of establishing the first Reductions had already started. It was not by accident that the numerous sprees of bandits pillaging the Reductions shot forth from regions in Portuguese possession, namely Sao Paulo. From the economic point of view, the Jesuits made enemies of a substantial number of Spanish settlers called encomenderos. The encomienda system can be best described as a transformation of the European feudal system realized in the New World conditions. Within the system, local people were obliged to provide the Spanish conquerors (or the beneficiaries of the king of Spain) with a certain amount of work in exchange for the safety, education and evangelization granted by the colonizers. However, one of the goals set by the Jesuites consisted in securing freedom and equal treatment for the indigenous peoples, and as the Jesuit Reductions were exempted from the encomienda system, the Jesuits inevitably found themselves out of the white settlers'favour and had to face a constant pressure on their part.
Socially, for the Reductions there existed the endangering problem of perception of the indigenous individuals as unfit for enjoying the full scale of rights and privileges. Not even the different letters patent given by the king or the encyclical issued by Pope Paul III. in 1537, which condemned as servants of Satan all people who assert the view that “natives of the West and the South, together with the newly discovered beings, should be regarded as beasts created to serve our purposes”, were effective enough to convince the conquerors that the “savages” are their equals and that together they are all equal subjects of the one Spanish king. Needless to say, the Valladolid debate of 1550-51 also failed to meet its objective (virtually identical with respect to the encyclical), declaring that all people are born free and equal and, regardless of race, they possess the same rights and fulfill the same duties. In 1640, still, the publication of a bull made by Pope Urban VIII. and featuring the excommunication of all people who hunt or trade slaves led to numerous riots in the regions of Sao Paulo, Santos and Rio. The first Reduction founded by the Society of Jesus was the settlement of San Ignacio Guazu. In this village, the Jesuits acquired a seminal piece of knowledge: a period of two months spent by the indigenous people of the settlement at nearby Spanish plantations in the company of conquistadors was long enough to unerringly obliterate all accomplishments of religious and moral cultivation carried out by the missionaries. “The natives return to the settlement as arrogant, dissolute beings brazenly crossing all bounds of decency” (cit. , p. 37)...“For the Spaniards not only make serfs of the natives, but they also - being laden with sins never recognized by our rustic native people - lead them to corruption” (cit. , str. 339). In spite of monitoring the conditions and length of the indigenous individuals'duty at the plantations, the Jesuit patres were well aware of the fact that a far better and more efficient organization would be granted by the establishment of isolated Reductions located within a considerable distance from the Spanish towns and populated with natives who could not get into contact with the colonizers. The Spanish, Portuguese, black, mulatto and mestizo people would be denied access to the indigenous settlements. The fragile balance between the rights of the Spaniards and the interests of the indigenous peoples, which was, after 1611, successfully introduced by the Jesuits and with the assistance of the governor Francisco de Alfaro, nevertheless proved to be only temporary and was ruined by the appointment of a new governor in 1628. This official openly sided with the encomenderos and showed a substantial degree of prejudice against the Jesuits. Importantly, it was this period that spawned the raids of bandierantes, squads of bandits that, in addition to ravaging and looting the Reductions, practised capturing indigenous people and trading them as slaves at Sao Paulo markets.
The bandit raids experience brought the Jesuits to the recognition of the necessity to build an army to protect and improve the ability of the Reductions to stand against enemy attacks. The system of protection as guaranteed by the encomienda just did not work; thus, it was necessary to establish indigenous armed units. Yet there existed a considerable impediment to the proper act of establishment: the regal instruction prohibiting the use of firearms by the indigenous peoples. As, however, the need of good defence was a pressing issue, the responsible Jesuit assistant made the order to form of an indigenous unit armed with rifles and muskets, whose command and training was in the hands of those Brothers who had military service experience gained in the Spanish army. But even this provision for justice did not quite agree with the regulations in force, therefore Father Antonio Ruiz de Montoya had to be sent to Spain to defend at the royal court the formation of armed units in the missionary settlements. Thanks to the success of Montoya's negotiations, the rights of exemption of the Guarianis from the encomienda were - together with the tax amount to be paid by the Reductions to the royal treasury - incorporated and finally sanctioned by a decree of the new viceroy in 1649. In return for this, the Jesuits committed themselves to protect the eastern borders of Paraguay and to provide Spanish forces operating in the area with an armed unit which, if necessary, could be deployed outside the Reductions proper. In 1652, however, Montoya died in Lima, and his demise clearly marked the end of the first epoch in the existence of the Reductions. In the years to follow, with a total of 38 Reductions abandoned or ruined, the remaining 22 working settlements were established in safer regions. After that, eight more settements increased the total number between 1680 -1707, thus aiding the final formation of a self-governing region that went down in history as the “Jesuit republic”. The reductions were governed through the means of a complex system of administration based on good cooperative and complementary bonds between the individual stages or levels. There existed three interconnected structures of administration, namely the Jesuit order hierarchy, the appointed structures of local government, and the hereditary posts of the indigenous chieftains. From the point of view of political law, the Jesuit state could be labelled rather as a confederation, because the Reductions managed their internal affairs independently, with only military service and foreign trade being the exception and, as such, administered jointly. Regarding their relations to the Spanish crown, the Reductions were considered as a dominion, therefore they enjoyed direct subjection to the king and; thanks to the different royal letters patent, they also had their own and full self-government, justice, and army. The only duties the Reductions were obliged to fulfil consisted in the annual payment of taxes and the necessity to provide support for the Spanish forces in case of war.
 This paper was written within the framework of the financial support provided by Czech Science Foundation, item No. 402/08/P099.
 Perhaps only Chateaubriand, in connection with the Reductions, stressed “the fact revealed to both the Romans and the Greeks, namely that it is not through the abstract principles of philosophy, but through religion that people are refined and empires firmly grounded.”
 This borderline was supposed to run along the line of 370 miles (the unit referred to is the old league) west of Cape Verde islands. All territories located west of the line belonged to Spain, territories east of the line were the property of Portugal. However, the text of the treaty did not specify precisely which of the Cape Verde islands is the one to constitute the marking point, and neither did it specify what type of miles is assumed as the marking unit.
 Two forms of encomienda were generally applied. The more moderate type, or mita, stipulated the obligation of the indigenous people to work for the period of two months a year for their patron. For the rest of the year, the natives were free. Indigenous chieftains, women, children, and people over 50 were completely freed from this bond. Within yanacona, the other variation of encomienda, the natives were considered as prisoners of war and used as workforce on a permanent basis.
 The Jesuit Reductions were, thanks to this regulation as well as the exemption from feudality, distinct from similar settlements governed by diocesan clergy or the Franciscans.
 The squads of bandits (also known as paulistas, mamelucos, malocas) were build upon disreputable individuals, lame ducks coming mainly from Sao Paulo, then a town of 15, 000 people of Spanish, Portuguese, Italian and mixed origin. These slave hunters were substantially aided by the natives of the Tupi tribe, who represented traditional enemies of Guaranis.
 The raids reached top intensity between 1628 -1640. For the dubious business activities of the bandits, the Reductions were actually a blessing. The villains did not have to risk the unpleasant hunting for small and scattered groups of natives in their homely, familiar and protective forests; instead of doing that, the bandits could raid a large group of indigenous people settled in one place. More than 30 Reductions were ruined and over 300.000 natives captured in both the Reductions and the forests between 1612-1638.
 The author of Conquista espiritual hecha por los religiosos de la C. de J. en las provincias del Paraguay, Parana, Uruguay y Tape (1639), a significant book of historical and ethnographical importance. Montoya also compiled a dictionary of the Guarani language.
 The Reductions had a total of 20, 000 armed men capable of quick mobilization. In the period of 1644 - 1766, the indigenous armed units - fighting beside Spanish soldiers - engaged in over 60 conflicts and won respect of Spanish colonial administration. In most cases, military intervention involving the units was carried out with the aim to back the governor of Asuncion during riots or rebellions.