Reversal of Development in Argentina: Postwar Counterrevolutionary Policies and Their Structural Consequences

by Carlos Horacio Waisman

Overview

This book is a sociological interpretation of the reversal of development in Argentina. It focuses on why Argentina became an underdeveloped society.

Product Details

ISBN-13:	9780691633633
Publisher:	Princeton University Press
Publication date:	04/19/2016
Series:	Princeton Legacy Library , #811
Pages:	346
Product dimensions:	7.10(w) x 10.10(h) x 1.30(d)

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Reversal of Development in Argentina

Postwar Counterrevolutionary Policies and Their Structural Consequences

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By Carlos H. Waisman

PRINCETON UNIVERSITY PRESS

Copyright © 1987 Princeton University Press
All rights reserved.
ISBN: 978-0-691-07740-6

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CHAPTER 1

The Argentine Riddle and Sociology of Development

A story is told about a conversation between two diplomats in Buenos Aires Says the first "This country is a riddle to me I have been here five months and I can't understand what is going on" Says the other "Congratulations You have a very keen apperception I have been here for five years and have just reached the same conclusion"

— Felix J Weil, The Argentine Riddle

The failure of Argentina is one of the mysteries of our time

— V S Naipaul, The Return of Eva Perón

The Argentine Question

The economic and political development of Argentina for the past one hundred years raises what in nineteenth-century language would have been called "a question" the failure of the country to become an industrial democracy As with the other "questions" — peasant, national, etc — the issue here is an apparent anomaly, an encounter with stubborn facts that challenge preexisting generalizations And this anomaly is significant enough to become a problem for theory in this instance, an opportunity to extend the theory of development in order to encompass what appears as a deviant case

Argentine reality in the past decades — stagnation and hyperinflation in the economy, authoritarianism and praetorianism in the polity — may appear "natural" to the casual observer, who is likely to lump Argentina together with other countries into a stereotype called "Latin America," a kind of society in which these traits are normal and therefore expected A more sophisticated reader might argue that what I am calling the "Argentine question" is a pseudoproblem the issue of why some countries develop economically and politically while others do not is certainly valid, but I would be asking the question from the wrong perspective In the tradition of Weber and Parsons, the problem is to understand the specific characteristics of the few countries that have established advanced capitalist economies and stable liberal democracies, for these are the deviant cases It is the understanding of their peculiarities that would enable us to explain why all the other nations, Argentina included, have remained in the periphery or semi-periphery of the world system

Argentine development, however, has puzzled observers and scholars for several decades now Familiar comments made by economists (Simon Kuznetz used to say that there were two countries whose evolution could not be understood by economic theory: Japan and Argentina, while W. Arthur Lewis characterized Argentina as "strikingly backward in relation to its relative riches") reflect the perspective from which the Argentine question is pertinent: Argentina, as a society rich in resources and with a population mostly made up of European immigrants who settled there in the late nineteenth and early twentieth centuries, resembles the "new countries" or "lands of recent settlement," such as Australia, Canada, New Zealand, and the United States. There is a long tradition in economic and social thought, from Adam Smith to the staple theory of growth, which hypothesizes that these societies will evolve along the lines of dynamic capitalism and stable liberal democracy. The development of these nations — and also of Argentina, up to the Depression — bears out these expectations. It is, then, in relation to these "new countries" that Argentina appears as a deviant case. The contrast with Australia or New Zealand seems especially relevant, for Argentina shared with these nations, until the Depression, the position of supplier of grains, beef, and wool to Europe, and especially to Britain.

The Argentine case is also baffling for an empirical reason: the country's economic and political development has been curvilinear. The century 1880–1980 can be divided into two halves, whose characteristics are sharply different. Up to the Depression, Argentina was both a fast-growing economy and an expanding and relatively stable liberal democracy. The political crisis appeared in 1930, when the establishment of a military regime interrupted almost seventy years of constitutional legality and the economic crisis became evident around 1950, when stagnating tendencies emerged. There was, then, a reversal of economic and political development, and the period between the Depression and the end of World War II was the watershed.

In the second half of the nineteenth century, Argentina was fully incorporated into the international division of labor as an exporter of temperate agricultural commodities. The period from the seventies up to the Depression was one of rapid economic and social change. The population was 1.7 million in 1869, but from 1870 to 1930 it was engulfed by over six million European immigrants, over half of whom eventually remained in the country. At the end of the century, Argentina had attained a relatively high level of economic development: "As early as 1895, according to Michael M. Mulhall, the Argentine per capita income was about the same as those of Germany, Holland, and Belgium, and higher than those of Austria, Spain, Italy, Switzerland, Sweden, and Norway." And Lewis writes that Argentine exports grew "at an average rate of 6 percent per annum, making Argentina compete with Japan for the title of the fastest growing country in the world between 1870 and 1913." From the beginning of the century up to the Depression, the GDP grew at a rate of 4.6 percent per annum.

World War I was the first major crisis of the international division of labor since the "big depression" of 1873, and after it the Argentine economy slowed down: whereas, during the years 1900–14, the GDP grew by 6.3 percent per annum, the rate fell to 3.5 percent during the years 1914–29. In comparison with other countries, as indicated in Table 1.1, Argentina's per capita GDP at the outbreak of World War I was almost equal to Switzerland's and higher than Sweden's or France's. When the Depression hit, and in spite of the postwar slowdown, the GDP was still much higher than those of Austria or Italy.

The economy not only grew, but it also diversified. Manufacturing, which began in the late nineteenth century as a forward linkage of agriculture, expanded in the twenties on the basis of foreign investment, and in the thirties and forties as a consequence of the automatic protection that followed the Depression and the war. Around 1940, the contributions of manufacturing and agriculture to the GDP were comparable, and in the early forties the labor force in the secondary sector was larger than the one in the primary sector. In the mid-forties, the proportion of the population living in cities over 100,000 was higher than in the United States and most of Europe.

Economic growth and diversification allowed a relatively high standard of living. At the outbreak of the Depression, indicators of nutrition, health, consumption, and access to higher education placed Argentina ahead of most of Europe. It is not easy to reconcile the image of Argentina as a typical Latin American society with facts such as that, at the time of the Depression, it ranked ahead of Britain in per capita number of automotive vehicles, or that at the beginning of World War II, it had more physicians per capita than any country in Europe except Switzerland and Hungary. Colin Clark included Argentina among the countries with the highest standards of living in 1925–34, together with the United States, Britain, the British dominions, and Switzerland.

Before the turning point, the political system can be characterized as an expanding elite democracy. Pluralism and, more specifically, toleration of peaceful opposition existed, but participation was severely restricted by the electoral practices and the large proportion of foreigners, a negligible proportion of whom adopted Argentine citizenship. Power was monopolized by the landed elite, labeled "the oligarchy" by its opponents, but pressures for participation by the large middle class led to an electoral reform that established secret and universal manhood suffrage — but only for natives, it should be remembered. At the time of World War I, power was peacefully transferred to the opposition Radicals, who represented a heterogeneous constituency with a large middle class component.

A prominent member of that oligarchy, former finance minister Federico Pinedo, melancholically surveyed the Argentina of the Centennial (1910) from the vantage point of the turmoil of the sixties and described the political system thus:

... [the country] ... had already "taken off" and surged, accompanying the wealthiest and most progressive peoples in their triumphal march. Already, no one would have considered it among the backward countries, euphemistically called "underdeveloped" half a century later. ... We had the characteristics of a well-ordered nation, prone to peaceful evolution and to the gradual overcoming of difficulties. One could argue about the degree of reality of our republican-representative institutions, but ... at least in respect to civil life, the fundamental institutions characteristic of the most civilized and prosperous nations of that time reigned here. ... It is good to remember ... that a period of sixty or seventy years of continuous political peace and regular succession of governments since the middle of the last century was not had by the United States, which underwent in this period the tragedy of the war of secession. It was not had by France, which saw in that lapse of time the fall of the "censitaire" monarchy, the birth and crumbling of the Second Republic, the appearance, apogee, and fall of the authoritarian [Second] Empire ... and attended the turbulent awakening of the Third Republic. It was not had by Spain, which saw its monarchy fall and rebound; neither Italy knew it, nor the Germanic world, which went through bloody convulsions and tearings before reaching national unity. Not even the quiet Swiss enjoyed it completely....

The situation after the Depression and World War II has been a sharp reversal. Standards of living continued to be relatively high, as indicated for instance by the fact that life expectancy in the late seventies was still in the same range as in the United States and Europe, or that enrollment in higher education was higher in the mid-sixties than in any European nation except the Netherlands. But well-being was deteriorating or remaining stagnant in many areas, while European and other Latin American countries continued improving theirs.

Steady economic growth came to a halt after a spectacular upsurge immediately after World War II. The per capita GDP grew at an annual rate of only 0.9 percent in the fifties, jumped to 2.8 percent in the sixties and 2.3 percent in the first half of the seventies, fell to almost zero (0.3 percent) during the rest of the decade, and was negative in the early eighties. Argentina was not literally stagnant after World War II, but its economy was characterized by sharp fluctuations — stop-go cycles — so that "good" and "bad" years almost cancelled each other out. The growth rate of the per capita GDP in the period 1950-83 was about 1 percent. The significance of this sluggishness is apparent when the Argentine performance is compared to that of other nations. Argentina slipped: its development, as measured by per capita product, is now closer to Latin American levels than it is to European or those of "new" countries. If in 1913, as Table 1.1 shows, Argentine per capita product was comparable to that of Switzerland, twice as large as that of Italy, and almost half that of Canada, in 1978 the corresponding proportions were less than one sixth, half, and one fifth. The contrast with Japan, the other country whose development economic theory could not understand, is dramatic: the Argentine per capita product, which was over five times that of Japan around World War I, and almost three times larger in the late fifties, was just one fourth in the early eighties. Further, the gap that separated Argentina from Brazil or Mexico in the late fifties was reduced by half in the late seventies.

The political transformation has been total. From 1930 to the coming to power of the constitutional government in 1983, Argentina wavered between authoritarian or exclusionary regimes and populist-corporatist ones, all highly unstable. Between 1930 and 1980, there were five major military coups (1943, 1955, 1962, 1966, and 1976), and countless minor ones. There were twenty-two presidents in this period, one of whom (Perón) was in power for about ten years. As for the nature of the deviation from liberal democracy, there were in this period nineteen years of military rule (1930–32, 1943–46, 1955–58, 1966–73, and 1976–80), thirteen years of Peronism, a regime with a populist-corporatist ideology, and nineteen years of restrictive democracy (1932–43 and 1958–66), an intermediate type that preserved constitutional forms but banned the majority parties (the Radicals in the thirties and the Peronists in the sixties). In the second half of the period (1955–80), political instability reached critical levels. There were then fourteen presidents, and all the elected ones were overthrown, except for one, Peron, who died after being in office for less than a year. Moreover, urban terrorism broke out in the seventies, and it triggered massive state terrorism.

The awareness of the downfall from the ranks of the rich to those of the poor came slowly to the Argentines, and the response was one of pain. Pinedo himself reacted in this way to the realization that Argentina was not a founding member of the OECD:

A few months ago, when a certain institution was founded that was devoted to aiding underdeveloped nations and engaged in having those with the highest standards of living contribute to raising the conditions of the unfortunate peoples, the Argentine Republic was not placed among the countries in a position to help, but among the peoples that needed help. Among the countries deemed capable of giving aid we find not only little Denmark, a seller of meat and butter, but also others with a predominantly rural production and a makeup similar to ours, such as Australia, New Zealand, and South Africa. We also find, among those who must help to improve the life conditions of countries with as little fortune as ours, the great European people out of which in the course of the years came more than a million of its children. They came to this soil in search of a better standard of living than their fatherland could give them. This is a humiliating aberration.

This pattern of reversal raises the question about Argentina's failure to become an industrial democracy. Economic sluggishness and the breakdown of the liberal regime are, as can be suspected and as we will see in later chapters, causally interrelated. "Argentine exceptionalism" does not reside in the economic or in the political evolution of the country, but in the peculiar interaction between economy and polity. Before 1930, the two had a functional relationship: economic expansion made an expanding liberal democracy possible, and political stability contributed to economic growth. After World War II, however, the relationship between economy and polity is such that economic languidness and instability trigger political instability, and this in turn contributes to the worsening of the economic crisis.

The problem is: why has Argentina been incapable of coupling an industrial society with liberal democracy? Even if the predictions based on the inclusion of the country among the lands of recent settlement are discarded, the problem is still puzzling, for Argentina, in the postwar period, had many of the prerequisites for liberal democracy postulated by different theories. It had no feudal past nor a precapitalist peasantry. Also, it had a population with a relatively high level of cultural and religious homogeneity, a high level of urbanization, a large manufacturing sector, central productive resources largely controlled by domestic groups, a large middle class, relatively high levels of education, well-established and highly organized interest groups and political parties, and it lacked a mass radical Left.

Some of the most obvious explanatory factors that come to mind, such as culture or dependency, do not, at first sight, appear adequate. Supporters of the proposition that Argentine development differs from that of the lands of recent settlement because the Latin-Mediterranean population, unlike the Anglo-Saxon one, is not prone to dynamic capitalism or to liberal democracy, would have to grapple with the fact of discontinuity. Since culture changes slowly, it cannot explain a sharp reversal of economic and political evolution. As for dependency or imperialism, it cannot be argued that the outcomes under discussion are the result of foreign domination, for, as we shall see, Argentine dependency decreased rather than increased when the economic and political decline took place.

(Continues...)

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Table of Contents

• FrontMatter, pg. i
• Contents, pg. vii
• List of Tables, pg. ix
• Preface, pg. xi
• 1. The Argentine Riddle and Sociology of Development, pg. 1
• 2. Is Argentina a Deviant Case? Resource Endowments, Development, and Democracy in Sociological Theory, pg. 24
• 3. Images and Facts: Argentina Against the New Country and Latin American Mirrors, pg. 36
• 4. In Search of Argentina: The Adequacy of Various Factors for the Explanation of the Reversal, pg. 94
• 5. Why the State Became Autonomous in the Forties, pg. 128
• 6. The Primacy of Politics: The Question of Revolution in the Forties, pg. 164
• 7. Social Integration and the Inordinate Fear of Communism, pg. 207
• 8. The Disadvantages of Modernity, pg. 253
• Bibliography, pg. 287
• Index, pg. 319