Background: Pre Depression Latin America
Transcript of Background: Pre Depression Latin America
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Latin America:Latin America: 18201820 ± ± 19301930
From Independence to the eve of Great Depression
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There will be a general overview of Latin America(LA) on each of the
three areas: Economy, Society and Politics
After the overview, there will be specific section, exploring each area in
detail
The areas¶ inter-connection and viewpoints will be explored in the tutorial
The next background power-point will be about the Great Depression.
StructureStructure of this presentationof this presentation
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³Guerra a muerte´(1814 ± 20): Conventional warfare decimated the continent¶s population within Latin America
Cost of maintaining armies leave little capital
Independence cut off trade with Spain, a major trading partner Neglected communication systems between former colonies mean the loss of
oversea trade is not compensated by raise in regional trade.
PrePre--DepressionDepression Latin America:Latin America:
Economy (I)Economy (I)
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Post-Independence (1820 ± 30)
Post-independence violence further deters regional trade, e.g. Mexico before 1850, Brazil until
1840s.
New governments, with substantial public debt for army upkeep, unable to rebuild the economy.
(Prime debt source being UK)
Government¶s inability to collect tax revenue, plunging it further in debt.
1830 ± 1850
Latin America export of primary goods to N orth America steadily increases.
At the same time, Import from European industries for manufactured goods increases
Small-scale LA industry out-competed by European (especially British) Industry, leaving thecontinent with little industrial base to produce manufactured goods
LA export remain to be primary products, e.g. Chilean nitrate, which is plentiful but prices
fluctuates greatly in the international market, whereas manufactured goods¶ price remain
relatively constant.
PrePre--Depression Latin America:Depression Latin America:
Economy (II)Economy (II)
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Independence war drove out the Spanish colonial elites, leaving a political vacuum. (except
Brazil)
Indigenous people, who fought on both sides of the independence war, pleased neither the old
colonial, nor the new elites.
At the same time, indigenous population fall dramatically, leaving a labour gap The independence war created a meritocratic military, which weaken social stratification
based on race and status. And widen the pool of new elite.
Nonetheless, this changed little on the unequal land distribution, favouring large landowners.
Despite increased women participation in public sphere, with examples such as Manuela
Saenz, women participation post-independence witnessed little change from the colonial
period.
PrePre--Depression Latin America:Depression Latin America:S
ociety S
ociety
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Two movements: Decentralisation/Regionalisation vs. Centralisation.
C reol e (native of pure Spanish descent) Landowners¶ withdrawal from politics leaves political
power gap, which are filled by army generals-turn-politicians, known as caudillos
C audillos government are largely unstable, due to weak government finance deny caudillo to
reward their followers.
Emergence of ³strong-man´: Not exclusively military, individuals emerge to strengthen
central authority, e.g. Diego Portales (Chile), Juan Manuel de Rosas (Argentina)
Indigenous Indians lost special status under colonial law and communal lands---Whilst
military and politics increase social mobility for middle class me stizos (people of mixed
European and indigenous descent), indigenous Indians suffered.
PrePre--Depression Latin America: PoliticsDepression Latin America: Politics
Outliner: Brazil.1. They acquired a ruling elite, when the Portuguese crown migrated to Brazil during the
Peninsular war.
2. Unlike other Latin American countries, they inherited a monarchy, not a republic.
3. Military played little role in widen membership of elite.
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Economy Economy
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Economics: Too much resources, no one else wants them, and those do offer a tempting price---Why not?
Abundance of raw materials
High raw material prices due to high demand from industrialising nations.
Foreign import¶s superior quality and scale of production drove out local industry, deepen the dependence on
foreign manufactured goods.
Self-sustaining landowners, ranchers and mine owners have no d ome stic market , with the export market often
their only.
Highly stratified socioeconomic structure, with 90% population being manual labour, there is little scope for a
domestic market for local manufacture goods
Politics: No one say otherwise!
No powerful industrial lobby.
Chief beneficiaries of Export-Import model, i.e. merchants, are economically and politically powerful
LA governments are heavily indebted to its customers.
Increase protectionism would have discouraged trade, and reduce tariff revenue. Without tax revenue,government often heavily dependent on it.
Social: We can¶t do any other way
The combination of labour-intensive primary industry, i.e. agriculture, mining, and lack of skilled labour force,
undercut development of manufacture industry, and favour primary industry
Wide consensus amongst LA elites in progress only thr ough free trade. A consensus encouraged by its
European and American customers.
W hy W hy diddid ExportExport--Import work?Import work?
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V olatile international price for raw materials destabilise LA economic growth
Export-Import model leave little excess money to build up the necessary capital toreinvest and improve production
Foreign import gave often destroys local manufacture industry
Investment depends on industrial nations, e.g. Britain.
W ithout industrialisation, economic liberalism does not translate into politicalliberalism like industrial nations
W ithout local capital, Impetus for capital investment are largely foreign. Inconsequence, key economic sectors, e.g. mining, railway, are left in foreign hands.
The problem with ExportThe problem with Export--ImportImport
In Summary: Export-Import model made LA countries depend on the
international economy entirely to survive, in the most unpredictable way.
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Objective: Economic autarky by building local manufacture industry
Why? R educe dependence on exporting raw material for income
R educe dependence on foreign manufactured import
Improve current balance of payment¶s health by reducing import.
R egain control of industry and raw material ownership by capital accumulation
How ? Build industrial base to manufacture consumption and capital goods for domesticmarket.
Stage 1: Purchase capital goods to create the light industry base for consumers¶ goodsproduction, e.g. T V
Stage 2: Purchase capital goods to create the heavy industry base for producing capitalgoods, e.g. Tractors
ImportImport--SubstitutionSubstitution IndustrialisationIndustrialisation(ISI): The Theory (ISI): The Theory
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Society Society
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During the colonial times, economic power, in the form of land, retained in threehands: The Crown, the Church and Landowners, as well as a small number of indigenous communities, retaining their communal land.
After independence, indigenous communities have lost their special status, with it,their communal land.
As a result, Indigenous people often are economically and politically under, in somecases not, represented to their majority status in demography(e.g. Peru, Mexico)
Another effect of land distribution inequality is a highly stratified socioeconomicstructure, this nature restricted political debates and decision making to the elite,usually less than 5% of population.
Land and Social Hierarchy Land and Social Hierarchy
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Trade Union: To keep up with expanding export-import trade, countries without endow of a large
indigenous population, such as Argentina, began to pursue aggressive pro-immigrationpolicy, especially in 1880s.
(Compare to Mexico, with its large indigenous endowment, meantMexico did not pursuesimilar policy)
This creates a growing working class population, e.g. railway workers, docks worker, whichorganised themselves by union of craft (similar to guild) rather than industry, reflecting thesmall size of LA industry
As firms in Latin America are of small scale, and concentrated on export-import industries,such as transport, industrial actions seriously disrupt export-import trade.
W ith the countries¶ dependence on export-import industry, disruption in trade present anequally serious disruption in national economy.
Elite¶s, or governmental, responses varies, from cooperation democracy/Populism torepression/strong-man.
In turn, this creates variety in political system, from cooperative democracy to integrativedictatorship.
Church
Many Latin American countries are predominately Catholic, this also gives the church highlevel of social legitimacy. As it will be seen, the church is often a powerful social forcecountering government actions.
Social forces: Trade Unions and ChurchSocial forces: Trade Unions and Church
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M achismo: based on chivalry, coballerosidad and other medieval conceptions of knighthood, men in Latin America was often expected to express themselves in public
sphere, often on the women¶s behalf. M arianismo: Named after the V irginMary, women¶s role in Latin America were
confined at the private sphere, whilst remain deferral to men in public matters.
This social conception has affected women¶s role as a political force, and itscontrollability.
M achismo M achismo andand M arianismo M arianismo: Gender: GenderMattersMatters
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PoliticsPolitics
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As export-import trade expands, the emergence of workers and professional class, and their
economical and political demand, provides a threat to the elites¶ interest.
On the other hand, partly out of belief in liberalism, partly out of interest to ensure minimal state
intervention in export-import trade, the elites were encouraged to participate in politics to safeguard
their interest.
The political emphasis of the elite were stability and social control. Namely, no disruption on trade,and suppression of social forces, such as trade union, to preserve stability. In turns, attract foreign
investment and stimulate economic growth.
In turns, foreign investments are used to further centralise power, i.e. use of railway to mobilise
national forces against local authorities.
This is impossible to achieve with particularistic caudillos
In short, the elite seeks to centralise power to a national bureaucracy.Two methods:
Direct oligarchic control of the government, with occasional co-operation, e.g. Chile, Argentina.
Support dictatorial strongman, e.g. Porfirio Diaz (Mexico), Dom Pedro II (Brazil)
The Fall of The Fall of C audillos, or,C audillos, or,
TheR
ise of N
ational Bureaucracy TheR
ise of N
ational Bureaucracy
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K ey Comparative themes:
- Economic: Domestic-based, or foreign driven, growth?
Concentration vs. diffusion of wealth?
- Social: Stratification or social mobility?
Men vs. W omen?
Indigenous vs. Creoles & Metizos
- Political: Centralisation vs. R egionalisation?
Tax vs. R ent
Latin America: the self Latin America: the self--convincedconvincedperiphery periphery