The South American Way

Most people take for granted the disparities of wealth beneath nations, rarely reflected on their root causes. Proponents of the dependency theory offer facile, one dimensional explanations like "resources flow from a "periphery" of poor and underdeveloped states to a "core" of wealthy states, enriching the latter at the expense of the former. It is a central contention of dependency theory that poor states are impoverished and rich ones enriched by the way poor states are integrated into the "world system." This explanation is problematic for multiple reasons, among the more obvious, it rests on the assumption that wealth and power are fixed, rather than something that can be gained or lost through the wise or foolish decisions, through the virtues or vices that it develops. It does not explain how in the early 1800's Latin America was still economically on par with the United States, but in the following century, the latter rapidly eclipsed the former. In his book The Wealth And Poverty Of Nations, Profesor David Landes offers a compelling, multi-causal explanation of the historic poverty of South America, relative to North America. Here are some excerpts from the chapter "The South American Way".

"Latin America followed a very different pattern. It was not poorer to start with, in say the seventeenth century; on the contrary. The Spanish and Portuguese invaders thought of their English rivals as orphans of destiny: How could one compare the woods and fields of North America or the used-up or useless isles of the Lesser Antilles with the silver and gold of New Spain and Peru, or the dye woods and diamonds and gold of Brazil...Even in agricultural potential, Latin America compared well, especially in its temperate parts." 

"But nothing stands still, and yesterday's comparisons are today's history. Gold and silver mines are wasting assets, and some two hundred years later, when the American colonists had won their freedom, North American far surpassed the lands to the south - richer in income per head, richer in its more even distribution of wealth." 

"In the simulacrum of Iberian society, the sjills, curiosity, initiatives, and civic interests of North America were wanting. Spain itself lagged in these respects, owing to its spiritual homogeneity and docility, its wealth and pursuit of vanities; and Span exported its weaknesses overseas. How could it be otherwise? Those Spanish who came to the New World did not go there to break the mold. They went to get rich by it and even bribed people to obtain places and offices; a few years would do the trick. The road to wealth passed, not by work, but by graft and and (mis)rule."

"The contrasts in economic potential were matched by differences in political capability. The North American colonists came out of a society of dissent, moderately open to strangers and new ideas. I do not want to imply that England and its political culture were a liberal romance...But everything is relative, and when one compares English ebullience and diversity with the Counter-Reformation orthodoxy and superstitious enthusiasms of Spain and Portugal - the power of ideas and initiatives in North America as against discontents in the Spanish and Portuguese dominions - one can understand the political outcome." 

"The British colonists made their revolution. They picked and defined the issues, challenged their rules, sought the conflict; and when they had won, thanks in part to the assistance of some of Britain's rivals in Europe, they already possessed a sense of identity, economic aspirations and national purpose...in Latin America, independence came not of colonial ideology and political initiative but of the weakness and misfortunes of Spain (and Portugal) at home, in the context of European rivalries and wars. When Spain proved unable to rule from from across the sea, New World strongmen exploited the vacuum and sized power, encountering only spotty resistance. Independence slipped in - a surprise to uninformed, inchoate entities that had no aim but to change masters. This kind of anarchic negativism invited mach warlordism (caudillismo). No wonder the history of Latin America in the nineteenth century was a penny dreadful of conspiracies, cabals, coups, and counter-coups, with all that these entailed in insecurity, bad government, corruption, and economic retardation." 

Argentine land held the greatest potential for development, but to do so they would have to invite in industrious immigrants, but for two centuries restricted non-Catholics, who possessed the skills and drive they by and large lacked, only reversing this policy at the end of the 19th century. And rather than allow for vast tracks of nearly empty land to be divide up among small landholders, as was done in the United States, the Argentinians distributed huge plots of land to politically connected elites. 

"Meanwhile they (dependency theory) are bad for effort and morale. By fostering a morbid propensity to find fault with everyone but oneself, they promote economic impotence. Even if they were true, it would be better to stow them."