The relationship between literacy and "people's power" within the context of Mozambique's project of socialist reconstruction was explored through an ethnographic analysis of literacy education practices at the Matola Industrial Company, which is considered one of many embodiments of Mozambique's colonial past. First, the role of the colonial schooling system as an instrument to create failure rather than success in schooling and thus regulate flows of cheap labor was examined along with the relationship between literacy, the popular state, and people's power and the spontaneous movement of self-education in Mozambique. Next, qualitative methods were used to examine the following: the fundamental tensions between time for schooling and time for production in the workplace-based literacy program at the Matola Industrial Company; the role of literacy centers as "spaces" for social communication; the interlocking hierarchies organized through class, race/ethnicity, and gender that affect literacy students' and teachers' lives; and experiences of literacy as indicators of fundamental problems in the broader process of socialist construction and the movement for renewal within state-sponsored literacy programs. (Contains 18 tables/figures and 181 references. Appended are the survey instrument and two discussion documents examining problematic areas in ABE in the Matola Industrial Company.) (MN)