Blaney & Jimenez - The Infamous Son Raul Prebisch’s Dependency Theory in Post-Peronist Argentina

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The Infamous Son: Raul Prebisch’s Dependency Theory in Post-Peronist Argentina Development Politics Professor David Blaney Ezequiel Jimenez Macalester College Ezequiel Jimenez “He venido simplemente para colaborar y luchar hasta que los otros se convenzan o hasta que yo me convenza”1 2 Mesa Redonda del Informe Prebisch, Buenos Aires 1955 Introduction to Raúl Prebisch Among the many intellectual Latin America has given to the world, Raúl Prebisch influence in the social and economic developm
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    The Infamous Son: Raul Prebisch’s Dependency Theory in Post-Peronist Argentina Development Politics Professor David Blaney Ezequiel Jimenez Macalester College  Ezequiel Jimenez 2 “ He venido simplemente para colaborar y luchar hasta que los otros se convenzan o hasta que yo me convenza ” 1   2   Mesa Redonda del Informe Prebisch, Buenos Aires 1955 Introduction to Raúl Prebisch Among the many intellectual Latin America has given to the world, Raúl Prebisch influence in the social and economic development of the sub-continent is one of the greatest in impact and accomplishment. His Dependency Theory was rooted on the multiple issues such as economic and social that Latin-America had to deal with after the Second World War. He pushed and fought for equality, freedom and prosperity while transforming the world with his revolutionary ideas on development. Don Raúl, as his was known by his closest friends; today remains best known and most prestigious intellectual on development studies of Latin America. However Raúl Prebisch, the Argentinean, persists even today in the view of the public opinion and inside intellectual circles with a conflictive reputation that denotes a political struggle since the Government of Juan Domingo Peron (1945-1955) took office. Prebisch, a distinguished economist and promising figure in the world of international development was always opposed to the Peronist regime , denying his collaboration with Peron’s regime. His refusal affected him to the extent that he had to seek exile in Santiago de Chile in 1948 working for the first time with the Economic Commission for Latin America and the Caribbean 3 (CEPAL). During his years at the CEPAL Prebisch elaborated most of his later famous works on import substitution, industrialization and unequal exchange. But, in Argentina he was still a figure related to “foreign interests” 4 . Nonetheless, Prebisch was indeed an authority on development and had never forgotten his own country or neglected possibilities to apply his theories in the country. However, his strong views against the Peronist regime were an impediment for him to get invo lved in Argentina’s development between 1943 and 1955.  Once his team in Chile had articulated the first postulates of Dependency Theory, Prebisch was known worldwide and the extent of his ideas penetrated many Latin-American countries such as Colombia, Bolivia and Cuba, but not Argentina. However, after the overthrown of the Peronist regime in 1955 by a military coup called La Revolucion Libertadora, Prebisch was invited to advice an d write an economic plan to recuperate Argentina’s lost time. As the   1  (Economicas, 1955) page 8 2  Translation by the author: I came just to work and fight to convince the others or until I am convinced 3  (Dosman, 2008) page 184-185 4  (Sikkink, The Influence of Raul Prebisch on Economic Policy-Making in Argentina: 1950-1962, 1988) page 101  Ezequiel Jimenez 3 political atmosphere was finally welcoming towards Don Raúl, he accepted the task of writing the General’s economic plan, which is known as The Prebisch Plan. The Plan was created not without great political consequences for his foremost reputation in the country; he was seen as a supporter of an illegal coup. In 1956 Prebisch delivered to General Aramburu the finalized Plan to be taken by the coup which was facing criticism across the political spectrum. His reputation at this time was that of an “external” advisor  linked to conservative groups 5 . However, the political struggle in Argentina during the government of the Revolucion Libertadora did not provide the conditions for Prebisch’s Pl an to be fully realized because the lack of a strong democratic state and the political unwillingness of the Generals. However, what were the recommendations Prebisch gave? Furthermore, would The Plan Prebisch resemble what his early works in the CEPAL had been? Did he apply his Dependency ideas to Argentina? Was his Plan a way to dismantle Peronist economic doctrines? In this research paper I will not find definitive answers to these historical questions rooted on political games. Rather I will explore an d analyze the causes and consequences of Prebisch’s Plan in comparison to his Dependency Theory with a special focus on industrialization and state re-structuralism 6 . Namely, I will assess the degree into which his worldly famous Dependency Theory ideas were applied in Argentina between 1955 and 1960. The paper will be structured in six sections. First I will explore the early Prebisch in the Public Administration 1921-1935 to understand his economic experience background as the General-Director of the Banco Central de la Nacion Argentina. Secondly, I will study what were the political and social implication s of Peron’s rise to government that affected Prebisch later decisions. Thirdly, I will study the years Prebisch worked in the CEPAL elaborating the Dependency Theory. Fourthly I will briefly describe the nature of the Peronist Economic Plan to contextualize Prebisch recommendation to the Generals. Fifth order I will explain the historical context of the Revolucion Libertadora and assess Prebisch ’s recomme ndation to the Generals. The sixth part will be devoted to the study of the Prebisch Plan in Argentina and the connections to his CEPAL ideas. 5  (Sikkink, The Influence of Raul Prebisch on Economic Policy-Making in Argentina: 1950-1962, 1988) page 91 6  The reas on why I decided to focus on these two main factors of Prebisch’s theory is because it will facilitate the comparison and assessment between his Plan for the coup in 1955 and his earlier thinking. These two categories are central to his plan and, therefore it will help the reader to conceptualize and understand the difference between Prebisch’s dual recomme ndations. In a personal note, I am convinced these two factors are conditioned by their historical context, making them inseparable from the events of 19 55 in Argentina. Prebisch’s ideas of industrialization and State transformation are intrinsically connected to a larger criticism of the Peronist government, but not necessarily srcinal since Peron also implemented these two ideas to some extent with his own economic ideology.  Ezequiel Jimenez 4 The Young Bright Raúl Prebisch: The Central Banker Graduating from the School of Economics at the Buenos Aires University in 1923, Raúl Prebisch gained reputation as a high level intellectual already by 1921 when he wrote “Notas Para la Historia Monetaria Agentina”. His paper reflected one of his later main themes: how the Argentinean cycle of grain exports affected the capacity of banks to give long-term loans in order to expand the economy 7 .Prebisch interest in the monetary system of Argentina was highly influenced by John H. Williams’s  works, which he translated in 1922. Williams’s ideas about economic cycles and balance of payment adjustments with capital movements gave him the idea to more deeply analyze Argentina’s “mechanism not envisaged in current international trade history” 8 . He was highly concerned on the difficulties rooted in Argentina ’s export cycle of cereals, a s Roberto Conde explains: “Argentina had an economy which depended on its exports of cereals, and this gave it a seasonal nature and also made it very vulnerable, since it was affected both by weather and by the big fluctuations in international trade ” 9 . Furthermore, he continues: “there was also a monetary system which further accentuated such fluctuations... there was shrinkage in national income and the banks reduced their credit during winter” 10 . During his years at the Central Bank, Prebisch would deal with these issues. Raúl Prebisch’s high profile and concerns over the unhealthy Argentine economic system gave him the opportunity in 1922 to work as Director of Statistics of the Sociedad Rural, the bastion of the landholding elite in Argentina 11 . During his years in the Sociedad Rural, Raúl Prebisch worked closely with members of the powerful conservative party whom in 1933 proposed his name for Under Secretary of Finance under the military government of Jose Felix Uriburu. In 1933, together with Minister of Finance Pinedo, an executive suggestion was given to President Uriburu to create the Central Bank of Argentina to control the economy. Roberto Cortes Conde explains: “the creation of the Central Bank was designed to achieve monetary stability and reduce the disturbances of the economic cycle. Prebisch maintained that in view of the characteristics of the cycle in Argentina, the Central Bank should intervene to smooth out the fluctuations by using absorption instruments” 12   such as “absorption c ertificates which made it possible to sterilize purchasing power (savings), as well as buying back part of the 7  (Caribe, 2001) page 82 8  Ibid page 81 9  (Caribe, 2001) page 82 10  Ibid page 82 11  (Sikkink, The Influence of Raul Prebisch on Economic Policy-Making in Argentina: 1950-1962, 1988) page 93 12  (Caribe, 2001) page 83
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