Economic Culture and Identity: Latin America
I feel like taking a break from English history. For a limited time this blog will turn its attention to Latin American identity. Let me tell you what provokes the new mini-series. I was reading a chapter on “identity” in the Cambridge History of Latin America in which Richard Morse supports the opinion of Leopoldo Zea, a Mexican philosopher, that Latin America’s nineteenth century was a “lost century”. Latin America did not 'exist' because it lacked aboriginal consciousness. Latin American elites, complains Morse, “were prepared neither to question the implications of Western technology, rationalisation and imperialism nor to promote broad consensus on matters of national culture”. Latin American identity emerged only when elites found a “popular voice, featuring the disinherited”.
Characterising the 1800s as “lost” is absurd, but this is how scholarship politicises questions of identity. In a series of posts this blog will revisit aspects of Latin America's Iberian cultural heritage and its lasting impact on the region's economic and political development. These are normative intellectual conditions expressed in a Baroque spirit, philosophies of organic statism, Roman and civil law tradition, the legitimacy of holding public office as private property, and tolerance for economic monopolies. I will look at how Hispanic legacy was questioned after independence by intellectuals wanting to construct identities that reject or reassert Hispanic heritage. The intellectual reconstructions of Latin American identity have had significant influence on subsequent economic policy.
Latin America has experienced periods of real development. In the 1950s and 60s, for example, when world conditions were favourable, and before statist import-substitution industrialisation (ISI) ran into trouble, many Latin American countries achieved moderate to strong growth. Yet comparative success was short-lived. However temporarily functional the models might have been, the populist often semi-socialist political and economic underpinnings of import-substitution industrialisation strategies were the basic cause of destructive debt crisis in the 1980s.
Arguably more important was Latin America’s modernisation in the second half of the nineteenth century. It is not often realised that rapidly increasing institutional capacity and ideological innovation during this period facilitated naturally-occurring industrialisation under liberal outward-looking regimes in the early twentieth century, long before the dangerous move to dirigiste industrialisation. In his 1971 book A Bias for Hope, Albert Hirschman called the liberal phase “import swallowing” spurred by “natural market forces” rather than import-substitution. Industrialisation “has taken place in many erstwhile nonindustrial countries as a result of the gradual expansion of an economy that grows along the export-propelled path. As incomes and markets expand in such a country and some thresholds at which domestic production becomes profitable are crossed, industries come into being without the need of external shocks or governmental intervention”.
It would become extremely unfashionable to remember the reasons for increasing prosperity in the last decades of the late nineteenth century, a ‘miracle’ that can largely be attributed to Latin America’s openness to foreign investment, globalisation, and pursuit of comparative advantages in the export sector, as well as European-derived philosophies of governance, knowledge, and social engineering (which look morally repugnant to modern eyes).
Explanations of Latin American development usually articulate a perception of lost opportunity and delay. With justification, since the historical contrast with other areas of the New World is quite dramatic. Spanish America had a head start. European settlement, proto-capitalist productive and commercial enterprise, administration and urbanisation, and establishment of higher education institutions -- all these things started earlier in Latin America. The Venezuelan writer Carlos Rangel noted in 1976 that “as late as 1700, the Spanish American empire still gave the impression of being incomparably richer (which it was!), much more powerful, and more likely to succeed than the British colonies of North America”. Some historians calculate that in per capita GNP the United States may already have been slightly ahead of Mexico by 1700. A century later, at around $500 per capita, Mexico appeared stuck, whereas the USA had reached $800 per capita product. Others estimate that in real gross national product per capita Latin America and North America were still more or less equal in 1800. Either way, the gap widened sharply during the twentieth century.
Recent Argentine history provides the most extreme examples of missed opportunity and stalled development. After decades of rapid export-led growth, by the beginning of the twentieth century Argentina was among the wealthiest countries in the world. Its standard of living in terms of an astonishing variety of social indicators and consumption measures, for example as documented by Carlos H. Waisman, were as high or even higher than the richest European countries. In income per person terms, Argentina ranked only marginally behind English-speaking agricultural areas of new settlement like Australia and Canada. Yet by the 1950s Argentina had entered a long -- and still unreversed -- decline.
Why did countries in Latin America not continue to Australian or United States levels of prosperity despite the possible advantage of earlier European colonisation, and despite economic potential and opportunity? Perhaps Latin America was victim to geographic, climatic, geo-political, geo-economic, or cultural disadvantages. Or perhaps countries simply made wrong or unlucky choices about economic policy and systems of government. All these issues are relevant to some extent. However, the ones which received least attention in the twentieth century were the cultural factors. In the nineteenth century cultural explanations of underdevelopment were much more common. Then, in the 1990s, a spate of books emphasised cultural or attitudinal and institutional brakes on development as part of a growing scholarly revaluation of domestic not purely economic determinants of growth.
The culturalist turn, led initially by north American scholars like David Landes and Lawrence Harrison (I would also include the institutionalist influence of Douglass North dating from 1990), occurred in the context of final empirical and theoretical repudiation of the ideas of ‘dependency’ and ‘imperialism’ which had dominated twentieth century analyses of Latin America with their emphasis on external causes of underdevelopment. A common theme in the new work was that Latin American countries habitually reverted to historically-rooted economic, political, and sociological behaviour patterns (path dependency as opposed to imperial dependency!) that hinder development. The new literature suggested the relevance of Alexis de Tocqueville’s description of “customs”, “the mass of ideas which constitute their character of mind, the whole moral and intellectual condition of a people”. Latin America’s alleged cultural obstacles to development included catholicism, political authoritarianism, corporatist and centralist conceptions of society, clientelism, economic monopolisation and rent-seeking.
By the time I came to write Capitalism, Institutions, and Economic Development I had entirely rejected the premises of ‘culturalist’ explanations of underdevelopment. Earlier, however, in papers and university teaching, I much enjoyed exploring the cultural-institutionalist literature of the 1990s. It was a great relief to collectively turn away from the negative and very damaging marxist literature that my generation was raised on. Even though I argue against culturalism, it is undeniable that certain aspects of Hispanic legacy are important for understanding contemporary patterns of regional political economy – a nebulous proclivity towards stasis, lingering spirits of colonialism, interrelated attitudes to law and economy, and private interest aspects of public office. When revisiting the history it is instructive to see how new culturalist-institutionalist writing was anticipated by nineteenth century Latin American and European scholars who had notable success influencing the adoption of the breakthrough ‘positivist’ development ideas.
Cultural factors never tell the whole story. Some causes of Latin America’s ‘malogro’ (failure) and Asia’s ‘milagro’ (miracle) were homespun. Others were universal or culture-neutral. The latter are most important for policy, whereas the former are most important for entertainment, arts, and identity.
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| 'The Giant of Paruro' by Martin Chambi, Peru 1925 |
Characterising the 1800s as “lost” is absurd, but this is how scholarship politicises questions of identity. In a series of posts this blog will revisit aspects of Latin America's Iberian cultural heritage and its lasting impact on the region's economic and political development. These are normative intellectual conditions expressed in a Baroque spirit, philosophies of organic statism, Roman and civil law tradition, the legitimacy of holding public office as private property, and tolerance for economic monopolies. I will look at how Hispanic legacy was questioned after independence by intellectuals wanting to construct identities that reject or reassert Hispanic heritage. The intellectual reconstructions of Latin American identity have had significant influence on subsequent economic policy.
Latin America has experienced periods of real development. In the 1950s and 60s, for example, when world conditions were favourable, and before statist import-substitution industrialisation (ISI) ran into trouble, many Latin American countries achieved moderate to strong growth. Yet comparative success was short-lived. However temporarily functional the models might have been, the populist often semi-socialist political and economic underpinnings of import-substitution industrialisation strategies were the basic cause of destructive debt crisis in the 1980s.
Arguably more important was Latin America’s modernisation in the second half of the nineteenth century. It is not often realised that rapidly increasing institutional capacity and ideological innovation during this period facilitated naturally-occurring industrialisation under liberal outward-looking regimes in the early twentieth century, long before the dangerous move to dirigiste industrialisation. In his 1971 book A Bias for Hope, Albert Hirschman called the liberal phase “import swallowing” spurred by “natural market forces” rather than import-substitution. Industrialisation “has taken place in many erstwhile nonindustrial countries as a result of the gradual expansion of an economy that grows along the export-propelled path. As incomes and markets expand in such a country and some thresholds at which domestic production becomes profitable are crossed, industries come into being without the need of external shocks or governmental intervention”.
It would become extremely unfashionable to remember the reasons for increasing prosperity in the last decades of the late nineteenth century, a ‘miracle’ that can largely be attributed to Latin America’s openness to foreign investment, globalisation, and pursuit of comparative advantages in the export sector, as well as European-derived philosophies of governance, knowledge, and social engineering (which look morally repugnant to modern eyes).
Explanations of Latin American development usually articulate a perception of lost opportunity and delay. With justification, since the historical contrast with other areas of the New World is quite dramatic. Spanish America had a head start. European settlement, proto-capitalist productive and commercial enterprise, administration and urbanisation, and establishment of higher education institutions -- all these things started earlier in Latin America. The Venezuelan writer Carlos Rangel noted in 1976 that “as late as 1700, the Spanish American empire still gave the impression of being incomparably richer (which it was!), much more powerful, and more likely to succeed than the British colonies of North America”. Some historians calculate that in per capita GNP the United States may already have been slightly ahead of Mexico by 1700. A century later, at around $500 per capita, Mexico appeared stuck, whereas the USA had reached $800 per capita product. Others estimate that in real gross national product per capita Latin America and North America were still more or less equal in 1800. Either way, the gap widened sharply during the twentieth century.
Recent Argentine history provides the most extreme examples of missed opportunity and stalled development. After decades of rapid export-led growth, by the beginning of the twentieth century Argentina was among the wealthiest countries in the world. Its standard of living in terms of an astonishing variety of social indicators and consumption measures, for example as documented by Carlos H. Waisman, were as high or even higher than the richest European countries. In income per person terms, Argentina ranked only marginally behind English-speaking agricultural areas of new settlement like Australia and Canada. Yet by the 1950s Argentina had entered a long -- and still unreversed -- decline.
Why did countries in Latin America not continue to Australian or United States levels of prosperity despite the possible advantage of earlier European colonisation, and despite economic potential and opportunity? Perhaps Latin America was victim to geographic, climatic, geo-political, geo-economic, or cultural disadvantages. Or perhaps countries simply made wrong or unlucky choices about economic policy and systems of government. All these issues are relevant to some extent. However, the ones which received least attention in the twentieth century were the cultural factors. In the nineteenth century cultural explanations of underdevelopment were much more common. Then, in the 1990s, a spate of books emphasised cultural or attitudinal and institutional brakes on development as part of a growing scholarly revaluation of domestic not purely economic determinants of growth.
The culturalist turn, led initially by north American scholars like David Landes and Lawrence Harrison (I would also include the institutionalist influence of Douglass North dating from 1990), occurred in the context of final empirical and theoretical repudiation of the ideas of ‘dependency’ and ‘imperialism’ which had dominated twentieth century analyses of Latin America with their emphasis on external causes of underdevelopment. A common theme in the new work was that Latin American countries habitually reverted to historically-rooted economic, political, and sociological behaviour patterns (path dependency as opposed to imperial dependency!) that hinder development. The new literature suggested the relevance of Alexis de Tocqueville’s description of “customs”, “the mass of ideas which constitute their character of mind, the whole moral and intellectual condition of a people”. Latin America’s alleged cultural obstacles to development included catholicism, political authoritarianism, corporatist and centralist conceptions of society, clientelism, economic monopolisation and rent-seeking.
By the time I came to write Capitalism, Institutions, and Economic Development I had entirely rejected the premises of ‘culturalist’ explanations of underdevelopment. Earlier, however, in papers and university teaching, I much enjoyed exploring the cultural-institutionalist literature of the 1990s. It was a great relief to collectively turn away from the negative and very damaging marxist literature that my generation was raised on. Even though I argue against culturalism, it is undeniable that certain aspects of Hispanic legacy are important for understanding contemporary patterns of regional political economy – a nebulous proclivity towards stasis, lingering spirits of colonialism, interrelated attitudes to law and economy, and private interest aspects of public office. When revisiting the history it is instructive to see how new culturalist-institutionalist writing was anticipated by nineteenth century Latin American and European scholars who had notable success influencing the adoption of the breakthrough ‘positivist’ development ideas.
Cultural factors never tell the whole story. Some causes of Latin America’s ‘malogro’ (failure) and Asia’s ‘milagro’ (miracle) were homespun. Others were universal or culture-neutral. The latter are most important for policy, whereas the former are most important for entertainment, arts, and identity.
Michael G. Heller ©2014
