The Infamous Son: Raul Prebischs 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 convenza1 2 Mesa Redonda del Informe Prebisch, Buenos Aires 1955

Introduction to Ral Prebisch Among the many intellectual Latin America has given to the world, Ral 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 Ral, as his was known by his closest friends; today remains best known and most prestigious intellectual on development studies of Latin America. However Ral 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 Perons 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 interests4. 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 involved in Argentinas 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 and write an economic plan to recuperate Argentinas lost time. As the
1

(Economicas, 1955) page 8 Translation by the author: I came just to work and fight to convince the others or until I am convinced (Dosman, 2008) page 184-185

(Sikkink, The Influence of Raul Prebisch on Economic Policy-Making in Argentina: 1950-1962, 1988) page 101

Ezequiel Jimenez

political atmosphere was finally welcoming towards Don Ral, he accepted the task of writing the Generals 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 groups5. However, the political struggle in Argentina during the government of the Revolucion Libertadora did not provide the conditions for Prebischs 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 and analyze the causes and consequences of Prebischs Plan in comparison to his Dependency Theory with a special focus on industrialization and state re-structuralism6. 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 implications of Perons 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 Prebischs recommendation 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.

(Sikkink, The Influence of Raul Prebisch on Economic Policy-Making in Argentina: 1950-1962, 1988) page 91
6

The reason why I decided to focus on these two main factors of Prebischs 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 Prebischs dual recommendations. In a personal note, I am convinced these two factors are conditioned by their historical context, making them inseparable from the events of 1955 in Argentina. Prebischs ideas of industrialization and State transformation are intrinsically connected to a larger criticism of the Peronist government, but not necessarily original since Peron also implemented these two ideas to some extent with his own economic ideology.

Ezequiel Jimenez

The Young Bright Ral Prebisch: The Central Banker Graduating from the School of Economics at the Buenos Aires University in 1923, Ral 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 economy7.Prebisch interest in the monetary system of Argentina was highly influenced by John H. Williamss works, which he translated in 1922. Williamss ideas about economic cycles and balance of payment adjustments with capital movements gave him the idea to more deeply analyze Argentinas mechanism not envisaged in current international trade history8. He was highly concerned on the difficulties rooted in Argentinas export cycle of cereals, as 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 trade9. 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 winter10. During his years at the Central Bank, Prebisch would deal with these issues. Ral Prebischs 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 Argentina11. During his years in the Sociedad Rural, Ral 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 instruments12 such as absorption certificates which made it possible to sterilize purchasing power (savings), as well as buying back part of the

(Caribe, 2001) page 82 Ibid page 81 (Caribe, 2001) page 82 Ibid page 82

10

11

(Sikkink, The Influence of Raul Prebisch on Economic Policy-Making in Argentina: 1950-1962, 1988) page 93
12

(Caribe, 2001) page 83

Ezequiel Jimenez

external debt in dollars13. In 1935 the Banco de la Republica Argentina was created where Ral Prebisch served as Director-General for eight years (1935-1943). As Director-General, Prebisch led several negotiations with Great Britain about the Roca-Runciman Pact, which benefitted Britain by implementing low tariffs on English products in exchange for a constant beef quota bought by the British Government. However, Prebisch also developed the currency system and began to advocate pro-industrialization processes14. Further, he urged the development of the agricultural sector by devaluing the peso and purchasing the surplus harvests in order to give the population greater purchasing power15. Nonetheless, these measures promoted by Prebisch in Argentina were done under the auspices of the conservative party in conjunction with elite groups. The political turmoil in Argentina grew significantly during Prebi schs period at the Central Bank. The military faction known as Grupo de Oficiales Unidos (GOU) was extremely opposed to the regime of President Castillo and his position of neutrality in World War Two. In 1943, the GOU overthrew Castillo and took control of the government. Ral Prebisch was removed from his post at the Central Bank in 1943 perhaps because his ties with the traditional conservative landholding interest16and his pro-English bias. In 1948, after Juan Domingo Peron took office, he was removed from the University of Buenos Aires and exiled to Chile. But why did the Peronist Government oppose from Prebischs brilliant ideas? Why did Prebisch refuse to collaborate with the Peronist regime? Prebisch-Peron: The Anti-Ideology You didnt tell me that you had resigned17 where the exact words of Adelita, Prebischs wife, the morning of 19 October 1943 after reading La Nacion. Prebisch did not have breakfast that morning and rushed into the Central Bank as soon as reading the paper. Prebischs forced resignation was the result of the new military government plan of detaching from the conservative party replacing it policies and ministers. However, Prebisch was targeted for two main reasons: his denial to collaborate with the Peronist economic doctrine and his opposition to the peronist stand of pro-axis alliance during the Second World War. Prebisch was indeed a victim of intellectual persecution which ruined his career at the new International Monetary Fund after Washington vetoed his position as Senior Adviser fearing an impact on the USArgentina diplomatic relationship. In this section, I will explain the main reasons and consequences of Prebisch and Peron ideological battle.
13

Ibid page 84

14

(Sikkink, The Influence of Raul Prebisch on Economic Policy-Making in Argentina: 1950-1962, 1988) page 93
15

(Caribe, 2001) page 83

16

(Sikkink, The Influence of Raul Prebisch on Economic Policy-Making in Argentina: 1950-1962, 1988) page 93
17

(Dosman, 2008) page 168

Ezequiel Jimenez

In January 1942, during the Rio Conference in Brazil, organized by the United States, top diplomats tried to obtain a joint declaration of all the American Republics that they feel it necessary to sever relation with the Axis powers18. The argentine position was from the beginning far from neutral as the political turmoil increased in Buenos Aires. The government of Castillo was losing power as the rising discontent against his administration by GOU officers grew. In preparations for the Rio Conference, Argentinas position was radically changed from neutrality to a pro-axis alliance backed by GOUs main ideologist, Juan Domingo Peron who was linked with a corporatist ideology and an affinity for the fascist experiments in Italy, Germany and Spain19. In the opening of the Conference, the Foreign Minister Ruiz-Guiazu made it clear Argentina would not join the inter-American wartime symphony and rejected the US resolution calling for the severance of relations with the Axis20. Ral Prebisch was part of the delegation that attended the Conference. He was extremely convinced in the atrocities committed by the Nazi regime and he favoured the alliance with the United States. In addition, according to Dosman, Prebisch had first accounts of the Nazi-camps when Adelitas brother in mid-1942 came to Buenos Aires from Europe21. However, he was just only an economist with no influence over foreign policy making. Nonetheless, Prebisch had to accommodate with his own personal position to the coup one. After the diplomatic incident, the United State requested, under the article 5 of the Rio Conference, the Central Bank for financial and commercial activities22 with foreign powers to control Argentinas collaboration with the Axis powers making Prebisch administration of the Central Bank increasingly invigilated by the US government and the military coup. His cooperation with the US requests and his personal beliefs, made it easier for the militarily controlled press to call him an antipatria23. In October 1943, Ral Prebisch was dismissed from his position as General-Director of the Banco de la Nacion Argentina for his ideological differences with the coup, but more specifically, with Juan Domingo Peron. The rising figure of Peron after the coup against President Castillo in 1943 was determinant for Prebisch future in the Central Bank. However, as Dosman argues, Prebisch and Peron had areas of common agreement such as both supported industrialization through importsubstitution and endorsed the creation of a regional market24 comprising Chile and Brazil with Argentina. In addition, the biographer comments that Prebisch did request a meeting with
18

Ibid 145 Ibid 164 Ibid 147 Ibid 167 Ibid 150 Ibid 152 Ibid 171

19

20

21

22

23

24

Ezequiel Jimenez

Peron, who in 1943 was Secretary of the War Ministry and the true ideologist behind the coup. The meeting never happened because Peron wanted to monopolize this contact with a rising personality in the country25. However, some authors such as Sikkink, Krieger Vasena, Schwartz and Brenta26 have claimed that Peron did indeed invite Prebisch to comment on his economic plan, El Plan Quinquenal, receiving a negative answer27. Brenta explains that Prebisch had to leave the University of Buenos Aires after compulsively reject his involvement with the Plan Quinquenal28 and Vasena agrees stating that he was ousted from his professorship by the peronist government in 1948 because he refused to lecture on Perons first Fi ve-Year Plan29. Thus, as the scholars explained, Peron did offer Prebisch a place in his government realizing his brilliant input, but Prebisch decided on moral and personal grounds to reject any position in the Peronist government while being ousted from the Central Bank and the University of Buenos Aires in November 1948. Once Prebisch was forced out of his public positions, he appealed to his colleagues in the United States, Camille Gut, for a place in the recently created International Monetary Fund as a senior adviser in the Operation Department30. But soon enough, the battle against Perons ideology and his rejection to work with the Peronist administration affected his professional career at the IMF. Prebisch was denied a place in the IMF after Washington vetoed his appointment fearing a crisis with the Peronist government who had identified Prebisch as a public enemy. Edgar Dosman writes for the CEPAL Review: Peron vigorously opposed Prebisch for any influential position in the IMF, even though Argentina was not a member of the Fund; while he had agree six months earlier to support him for ECLA (presumably to ease him out of Buenos Aires into a marginal position in Santiago), the Argentine president did not want a domestic opponent in a key position in Washington31

25

Ibid

26

Sikkink wrote an extensive paper on Prebischs influence in Argentina policy -making interviewing him twice. Krieger Vasena was a close associate of Prebisch during his writing of the Prebisch Plan; also he served as Secretary of the Advisory Committee on Economic and Finance in 1955-1956, as well Finance Minister in 1957-1958. Hugh Schwartz is part of the Inter-American Development Bank. Noemi Brenta is an expert in the relationship between the IMF and Argentina and current professor at the University of Buenos Aires.
27

(Sikkink, The Influence of Raul Prebisch on Economic Policy-Making in Argentina: 1950-1962, 1988) page 110
28

(Brenta, 2008) page 237 (Vasena, 1988) page 115 (Caribe, 2001) page 92 Ibid 93

29

30

31

Ezequiel Jimenez

Dismissed from his executives positions, neglected the opportunity to put in practice his ideas in the IMF and persecuted by a the Peronist regime because of his morals, Ral Prebisch found in the Economic Commission for Latin America and the Caribbean a chance to investigate and research about the economic and social issues of Latin American countries he observed at the Banco Central.. Don Ral: The Economic Commission for Latin America and the Caribbean The Havana Manifesto Humiliated by the Peronist government and his former colleagues, Ral Prebisch found in Chile the revival of his ideas and main concerns over Latin American socio-economic problems. Prebisch seized this opportunity to prove and theorize his ideas in the 1948 first Economic Survey of Latin America for the Economic Commission for Latin America and the Caribbean (CEPAL). By stating the main factors affecting Latin American economical inefficiencies and problems, he developed his structuralism or Dependency Theory. Prebisch explained through core concepts like centre-periphery and the asymmetries in international trade the ultimate reasons to advocate for industrialization in developing countries moving away from the theory of comparative advantage. In this section, I will first contextualize his arrival at the CEPAL in 1948. Secondly, I will explicate Ral Prebischs main postulates of his theory of structuralism with a special focus on industrialization and the necessity of State transformation to ensure successful development. The Economic Commission for Latin America (ECLA) was established by Economic and Social Council resolution 106(VI) of 25 February 1948 and began to function that same year32. The CEPAL resolution was an attempt by UN member states to detach from their already excessive focus on Europe after the Second World War. As Dosman argues: a sense of injustice was boiling up again as Washingtons priorities focused on Europe and Asia33 because the large scale implementation of the Marshall Plan. However, the CEPAL was openly criticized by senior advisors questioning its importance and relevance as an UN subsidiary body. Prebischs appearance in the CEPAL was mainly to answer these criticisms with a powerful and well-documented analysis on Latin Americas economies, which was known as the Economic Survey of Latin America. His expertise as the first central banker and his high reputation among Latin American intellectuals were the main reasons why the CEPAL invited Ral Prebisch to write the report to be presented at the 1949 UN Conference in Havana.. Thus, Prebisch responsibility of writing the report was at the centre of the CEPAL survival. During the first months in Chile, according to Dosman, Prebisch was stagnated and incapable of writing the report that could satisfy the CEPAL expectations. He was extremely influenced
32

(CEPAL) (Dosman, 2008) page 240

33

Ezequiel Jimenez

by his personal and professional disappointments, the depression of daily life in Peronist Argentina, watching its growing isolation and cultural decline34. In April 1948, Prebisch circulated a draft of the report to be read by CEPAL advisors like Celso Furtado, who, according to Dosman, read the manuscript and was disappointed35. With the introduction to a paper wrote by Hans Singer in 1948 called Post-War Price Relations between Under-developed and Industrialized Countries, by Francisco Croire, a former mentee of Prebisch, he received the stimulus he needed to escape from his mounting frustration and fear of failure36. According to Dosman, Prebisch recognized in Singers paper most of his own theories, but what Singer provided was a well-detailed data to argument forward the need of restructuration in international trade. Grateful enough for Singers contribution, Prebisch wrote The Economic Development of Latin America and Its Primary Problems in three consecutive days. His report, after the Havana Conference, was known as the Havana Manifesto. In March 1949, the Havana Manifesto was praised among Latin American leaders as a memorable response to UN critics of the CEPAL, but even further, as the re-launch of economic development in Latin America detaching from the old centre domination of the economy. As Dosman explains: Prebisch framework of structuralism offered a new approach to international development; he had declared for an activist state and industrialization in a new language that challenged the old doctrine of comparative advantage37 Before the conference, Prebisch was known as brilliant economist persecuted by the peronist government and disregarded by stubborn politicians. After the conference, his ideas in the Havana Manifesto raised his figure as the father of Dependency Theory influencing numerous countries in Latin America. He was not Ral Prebisch anymore, but he was now Don Ral. Prebischs Dependency Theory Insights Jose Antonio Ocampo38, former CEPAL Executive Secretary has identified three main elements in Prebischs thinking. The asymmetries in international trade, the transformation of the State

34

Ibid 241 Ibid 241 Ibid 243 Ibid 247

35

36

37

38

The author worked with Prebisch in the CEPAL and wrote the essay Raul Prebisch and the development agenda at the dawn of the Twenty-first Century to commemorate the hundredth anniversary of the birth of Prebisch. I decided to use his essay to articulate a less heavy-theorize analysis of Prebisch ideas, but rather an explanation that is closer to a current analysis of Dependency Theory.

Ezequiel Jimenez

policies towards development and regional integration39 are ultimate factors in Prebischs structuralism theory40. In this section I will describe how the first two elements play in the theory utilizing the concept of centre-periphery and the need for industrialization through import-substitution. Prebischs theory was largely a reflection of the association between advance capitalist countries and backwards nations. This dialectical relationship based on economic domination by the advance capitalist countries with access to high levels of technology, is what Prebisch famously called the centre and periphery model41. This relationship is a key in Prebischian thought because it adjudicates the moral justification States to modernize by setting high barriers to external competitors and protecting national industries. In addition, the centreperiphery model was intrinsically connected to the possibility to generate economic growth by acquiring access to technology through industrialization. Ocampo and other CEPAL economists argue that Prebisch saw in the level of technology achieved by centre countries the real seed of economic growth42. The discrepancies in access to technology conceived two forms of economic domination: unequal exchange of goods and the incapacity for peripheral countries to absorb surplus of labour from rural areas resorting in large cities. According to Prebisch, the absence of high productive industries technologically able to reproduce economic growth that absorbs the majority of the labour force is the ultimate cause for underdevelopment. The large movement of rural population to technologically unable productive centres, cities, resorts then in the impossibility of industries to absorb the surplus of labour creating unemployment and poverty. This concept of high tech industries linked to sustainable employment, is what Prebisch called structural heterogeneity43. Prebisch identified this problem as the core issue of his theory. Furthermore, as backward countries cannot compete with high tech production of the centre countries, exporting raw materials feeding their industry was the prototypical economic activity for peripheral nations. But, as Prebisch noted, the extraction of raw materials and its exports were not value added goods which left peripheral countries with low productivity rates and impoverishment. In addition, Prebisch explains that as the consumption of value added commodities through imports increases radically but demand for raw materials does not, resorting in inequality: la demanda de manufacturas que importamos tiende a elevarse con celeridad, las exportaciones primarias se acrecentan con relativa lentitud, en gran parte por razones ajenas a los paises

39

For further analysis in this Prebischian element: CEPAL Review Number 75, page 34 (Caribe, 2001) page 23 Ibid 40 Ibid 23 Ibid 41

40

41

42

43

10

Ezequiel Jimenez

latinoamericanos. Hay, pues, una tendencia latente al desequilibrio que se agudiza con la intensificacion del desarrollo economico44 45. Thus, Prebisch elaborates on how the State can successfully implement a developmental program to curve the unequal exchange and reformulate the asymmetries in international trade. He advised a strong and committed administration responsible for planning programs for industrial development. In addition, he explains the need for a revision of the state-society relationship together with a competent regulatory structure to oversee the economy and pursuing industrialization through a mixed program of import-substitution (ISI) and export oriented industrialization (ESI) to, in Prebisch terms, develop within the nation 46. Prebischs postulates are a radical detachment from the old natural comparative advantage of nations to an opportunity to experience centre-like industrial policies. Ral Prebisch advocated for a strong State which could enforce and play the role of the agent for development from within. Ocampo defines this Prebischian element as essential because the accumulation of national human capital and technological capacity (knowledge capital) and institutional development are essentially endogenous processes 47. Further, the ideal strong State for Prebisch would be consistent with a rigorous planning on development. On this point, Prebisch was largely criticized by the private sector fearing a wave of nationalization of private capitals by the State. However, Prebisch envisioned a complete different strategy. He pursued for an intense partnership between public and private capitals: is not a Soviet-style takeover of the private sector, it is not a complete intervention in business or production, but instead it assists with specific instruments to ensure that they achieve specific objectives and volumes48. Prebischs model of the State was indeed an intimate partnership between the State and the capitalists for an efficiently planned industrialization. In addition he argues that the State in order to develop a strong economy should implement an import-substitution-industrialization (ISI) program. Prebisch argued that ISI is the most efficient way to correct and balance the difference between the growing inelastic demands of the core-countries and backward nations. Because the value added commodities represented bigger profit for core-countries, they expenditure capacity increased and was reinvested in technological innovations. Thus, if the State wanted to increase its profit margin, domestic
44

(Calderon, 2003) page 7

45

Translation by the author: the demand for imported manufactures tends to rise quickly; primary exports grew relatively slowly, largely for reasons unrelated to the Latin American countries. So there is a latent tendency to an imbalance exacerbated by the intensification of economic development
46

(Caribe, 2001) page 24 (Caribe, 2001) page 24 (Dosman, 2008) page 283: Prebisch speech at the Industrial Union of Brazil.

47

48

11

Ezequiel Jimenez

industrialization by replacing current imports was an incentive to escape from underdevelopment. In order to implement an ISI model, Prebisch argued that the protection of the infant industry trough subsidies and taxes to imports49 was necessary. At the same time, Prebisch in his theory explained the importance of an ISI model as to absorb the surplus labour, increase the average national income, the internal savings and investments in technology raising the quality of life50. However, Prebischs inclination towards an ISI model was soon challenged by other CEPAL economists such as Cardozo and Kunkel. They argued that, a model based on ISI could suffer from important inefficiencies in the context of a free market economy. In addition, balancing industrial production of value added commodities was put into question since the same economic effort could have been made by the State to promote an export oriented economic policy. On the other hand, ISI was determinant to develop from within because it claimed necessary labour absorption mechanism. However, as the pace of industrialization grew, the CEPAL observed the necessity to study export-oriented industrialization models in order to enter the global market with higher returns. Mixed models were then pursued by dependistas economies. Ocampo explains clearly: The possibilities of inefficiency in import substitution, especially in highly fragmented markets, as well as the need to ensure that industrialization was not carried out at the expense of agriculture or export development, were evident to Prebisch even in his earliest publications in CEPAL. Therefore, from the late 1950s on, Prebisch and CEPAL began to advocate a mixed model which combined import substitution with the promotion of new exports, especially of industrial origin. Over time, CEPALs view became increasingly pro-export, although it never favoured the abrupt elimination of protection arrangements51. Therefore, Ral Prebisch Dependency Theory was reformulated by numerous rigorous critiques by other CEPAL assistants. However, his economic thinking was revolutionary for Latin American leaders such as Salvador Allende in Chile because it explained in financial terms the need for a nationalistic economic plan for development in accordance to their internal capacities and not by external dictation of priorities. By generating a conscious and efficient plan for industrialization by governments implementing a mixed model and protection for infant industries, Ral Prebischs reputation grew internationally. However, in Peronists Argentina, he was related to foreign interests, the conservative party and as Perons ene my.

49

(Calderon, 2003) page 9 Ibid (Caribe, 2001) page 24-25

50

51

12

Ezequiel Jimenez

Did Argentina implement Prebischs worldwide famous ideas? What was Perons economic plan? Did it resemble Prebischs ideas? The Plan Quinquenal: Perons Economic Policies When Ral Prebisch was exiled to Chile, his biggest accomplishments in terms of economic policy were systematically destroyed by Juan Domingo Perons government. With the 52% of the votes, in 1946 Peron started his ten-year presidency deeply transforming the Argentine society and economy. Perons doctrine of an economically independent and a sovereign nation52 represented the centre of his fiscal policies implemented by his two Planes Quinquenales. In this section I will analyze Perons economic plans during his years in government. This section is vital to understand because is the base-argument for Prebischs harsh report on the Argentine economy after Perons fall. Prebisch would argue that the Peronist economic doctrine was a complete failure for Argentina. However, as it was previously stated, Prebisch and Peron did agree on several points; industrialization and the role of the State are examples of their communion. Antonio Cafiero53, Minister of Foreign Commerce during the second presidency of Peron (1952-1955) in his book De la Economia Social-Justicialista al Regimen Liberal-Capitalista (1961) explains the nature of the Plan Quinquenal and its applications. He assesses in great deal the success of Perons economic doctrine of industrialization and the state role. Cafieros insight is so valuable and rich that Perons, from exile, claims: Es, sin lugar a dudas, la mayor obra que se ha editado en la postrevolucin; su valor es incuestionable no solo por las verdades que contiene, sino tambin por el esclarecimiento a que conduce al destruir los sofismas y falsedades de un sistema y de unos hombres que han hecho de la hipocresa, la mentira y la calumnia sus armas nicas de combate 54 55

52

(Cafiero, 1961) page 143

53

Antonio Cafiero is par excellence the consulted author about Peronist economic policies. He served as Perons economic advisor and Minister during Peron second presidency. As well, Cafiero is today one of the referents of the Peronist Party in Argentina. He was ambassador to the Vatican, Belgium and United States; he held a parliamentarian position in 2001 and was governor of Buenos Aires after the return of democracy (1987-1991). Furthermore and very interestingly, Cafiero, alike Prebisch, graduated from the University of Buenos Aires in 1944 and held numerous meetings with CEPAL economists as well with Prebisch.
54

(Cafiero, 1961) preface

55

Translation by the author: It is without doubt the greatest work has been published in the postrevolution, its value is unquestionable not only for the truths it contains, but also for the investigation that leads to destroy the fallacies and lies of a system and men who have made hypocrisy, lies and slander their unique combat weapons.

13

Ezequiel Jimenez

When Peron won the elections of 1946, according to Cafiero, the economy was largely stagnated in backwardness. By making a rigorous analysis about the Conservative Party economic plans, in which Prebisch had a large influence, he identified seven causes of the economys stagnation. The focus on agricultural production underestimating the possibility of industrialization, the lack of an internal consumption market, the domination of foreign capital in public services, the unequal distribution of national income, the increasing unemployment and the lack of opportunity for workers to unionize56 were, according to Cafiero, the economic legacy from the Conservative Party years. In 1946 Juan Domingo Peron presented before the new Congress his first Plan Quinquenal (1947-1951). The plan was designed to, in Perons words, consolidar y expandir el crecimiento equilibrado de la economa nacional, integrando una economa agro-industrial, independizada al mximo de las contingencias externas y atendiendo especialmente a la elevacin sustancial del nivel de vida de la poblacin trabajadora57 58. To realize the economic independency from foreign capital, Peron together with his economic team, in which Cafiero definitely played an important role, pursued economic policies directed towards the national industry. The transformation of the economic structure by expanding and consolidating a process of industrialization, the nationalization of the Central Bank and public services, the redistribution of national income through a heavy investment on education, health and housing; the autonomous policy towards international organizations represented by a prepared delegation of negotiators and the entire mobilization of resources for industrialization to foment an internal consumption market, were the primary objectives of the first Quinquenal Plan59. The outcomes of Perons economic plan were evident by 1950. According to Cafiero , from the year 1943 to 1950, the investments in the national industry grew from 16.556 to 22.783 million pesos60. The metallurgic, textile and construction industry benefited from the State investment which resulted in an increase of the 20% in the workers real salary. In 1951, Juan Domingo Peron was re-elected with 62% of the votes. Cafiero explains this abrupt victory to the successful redistribution of the national income through the investment on welfare. However, Peron knew that the infant industry created by the State had to be protected and strengthen by his second Plan Quinquenal. Thus, import-substitution was the centre of his second economic plan, while at the same time creating the Ministry of External Commerce, which Cafiero held, to increase the flow of the Argentine exports. The second Plan
56

(Cafiero, 1961) pages 143-145 Ibid page 151

57

58

Translation by the author: to consolidate and expand the balanced growth of the national economy, integrating an agro-industrial economy independent of external contingencies and by paying special attention to the substantial rise in living standards of working people
59

(Cafiero, 1961) page 151 Ibid page 153

60

14

Ezequiel Jimenez

Quinquenal strategically proposed: the harmonization of the fiscal policy instruments to stimulate the development of the state investments in the industry, address and invest on energy sources such as petrol to further expand the industry, stimulate an ISI model to protect the infant industry, propose a regional integration with Chile and Bolivia to enlarge national exports and coordinate and call for the participation of unions and private capitalists into the government economic policy-making forums61. However, the totality of the Plan was never achieved. The political situation was not as favourable as in 1945 for Peron. The conflict with the Conservative Party, the Church and different factions of the army over Perons autocratic government increased the social turmoil affecting the implementation of the Plan. In June 1955 the armed forces backed by conservative and church members, identified as the Revolucion Libertadora, bombed the La Casa Rosada, the government building, killing 300 civilians; however Peron remained in power until September when the political violence between the Peronists and the Right-win groups was increasing with Churches burned and Peronist supporters kidnapped and killed. Juan Domingo was exiled for 18 years in Madrid, Spain. The political and economic repercussions of Perons removal were accentuated as the majority of the workers, who were naturally peronists, enforced successive strikes threatening Perons economic achievements. In ten years, as Antonio Cafiero argues, the Planes Quinquenales put Argentina in a desirable position for future investments enjoying an increase in the quality of life. The diversification of national production into agrarian and industrial, the elimination of vulnerable elements in the economy by import-subsitution, the nationalization of natural resources and public services, the efficient distribution of the national income in the form of investments in welfare and the incentives for workers to unionize and participate in the governments economic policy62, are for Cafiero, the biggest achievements of the Peronist economic doctrine. In ten years, Argentinas Gross Domestic Product increased by 30% and income per capita by 2%63, the import of value added commodities decreased by 36%64 and the returns from the national industry went from 48.873 in 1945 to 68.894 million pesos in 1955 65. Antonio Cafiero then argues: Podemos afirmar razonablemente que si los lineamientos generales del Segundo Plan Quinquenal hubiesen sido mantenidos, a la fecha el pas ostentara una situacin econmica privilegiada66 67.

61

Ibid 261-262 Ibid 269-278 Ibid 280 Ibid 275 Ibid 270 Ibid 267

62

63

64

65

66

15

Ezequiel Jimenez

The economic situation Argentina had when Peron was overthrown was indeed one of the most notoriously balanced and healthy in Latin America. However, the coup leader, Eduardo Lonardi systematically destroyed Perons accomplishments accusing them of fascist-like policies. Nevertheless, the Generals lacked an economic understanding of the situation they were trying to challenge. In 1955 Ral Prebisch was invited to advice and to write a report on the economic situation of the country after the Peronist years with the intention to reconstitute Argentinas economy. The Generals intended to implement his policies derived from this document which was known as the Prebisch Plan. Nonetheless, was the Prebisch Plan based on his CEPAL ideas? Was Prebisch able to implement his economic policies in the post-peronist Argentina? The Prodigious Son: Prebisch in Buenos Aires Ral Prebisch, at the time Peron was overthrown by the Revolucion Libertadora, was in Bogota delivering a CEPAL Conference on regional trade. A few days later, October 1, Prebisch was arriving at Buenos Aires after accepting a post as the new economic advisor68 to the new de facto President, General Eduardo Lonardi. Within three weeks of his arrival, Prebisch elaborated his famous report on the post-peronist Argentine economy: the Prebisch Plan. In this section I will study Prebischs recommendations to the coup to later analyze its resemblance with Dependency Theory postulates. First, I will briefly describe the difficulty of an historical assessment of the Revolucion Libertadora as well its political nature and consequently, the Prebisch Plan focusing, as I previously explained, on the policies for industrialization and the state structure. The Revolucion Libertadora The historical debate over the reputation of the Revolucion Libertadora differs greatly among historians. One crucial notion the reader has to bear at this point is that the post-peronist period in Argentina is the most debated period among academics. Thus, the danger to generalize is functional to its purpose. I will describe the nature of the coup utilizing the perspective of Prebisch biographer, Edgar Dosman, and the famous Argentine economist Noemi Brenta to help understand the reader the incredible unstable political and economic context Prebisch was influenced at the moment he wrote his plan. According to Dosman, Lonardi was a new species of military leader, not a typical power hungry Latin dictator but rather a loyal officer committed to constitutional government who would restore democracy as soon as the electoral rolls could be put in order69. Although is not clear Prebisch himself had this opinion, Lonardi approach to the country instability was
67

Translation of the author: We can reasonably say that if the general guidelines of the Second Five Year Plan had been held, the country currently would have had a privileged economic situation
68

(Brenta, 2008) page 236 (Dosman, 2008) page 298

69

16

Ezequiel Jimenez

conciliatory. While parts of the army, who later took power, asked for a perpetual war against Perons followers, Lonardis strategy was incorporating the peronists into a concrete political peace deal to reconstruct Argentina. His motto was ni vencedores, ni vencidos; that means neither winners nor losers. Dosman, then, argues: There would be national reconciliation instead of revenge, he (Lonardi) promised, and the former supporters of Peron were reassured that they were also welcome for the task of reconstruction70. Once in Buenos Aires, Ral Prebisch immediately met General Lonardi and gathered his economic team in charge of drafting the Revolucion Libertadoras economic doctrine. According to Dosman, Prebisch first meeting with Lonardi confirmed his belief in the seriousness of the Revolucion Libertadora71. To further illustrate this point, Ral Prebisch during a famous public meeting, known as the Mesa Redonda del Informe Prebisch, with his closest economic advisors discussing his Plan, emotively said about Lonardi: Si alguna duda quedaba en algo, esa duda no tardo en disiparse: cuando me vi en frente, en la Casa de Gobierno, con aquella figura tan noble y austera que junto con otros compaeros de armas desvaino su espada para derribar una dictadura y no para levantar otra en este suelo sufrido de Amrica Latina72 73 However, as I previously stated, Lonardi did not enjoy full support from the same institution that had brought him into power: the army. In November 12, Lonardi was ousted from the government by General Pedro Aramburu. He represented the most radical faction of the army. They claimed the total ban of the Peronist Party, the dismantling of its institutions as well the political persecution of its leaders. The ascendance of Aramburu represented the catastrophic end of Lonardis reconciliation policy. The new dictator launched a violent persecution towards the General Workers Centre (CGT), a peronist workers bastion, dissolving the institution and repressing its leaders: indiscriminately killing and jailing most of them74, for example Antonio Cafiero. Although Ral Prebisch presented the first part of the tripartite report on the economic conditions of Argentina under Lonardis government, according to Professor Sikkink, Prebisch accepted to remain the economic advisor to Aramburu. However, Prebischs decision

70

Ibid page 299 Ibid (Economicas, 1955) page 8

71

72

73

Translation by the author: If any doubt was at stake, that certainly did not take long to dissipate: When I was in the Government House in front of that figure so noble and austere that with other fellow soldiers shelled his sword to overthrow a dictatorship and promised not to build another tyranny on this suffered land of Latin America.
74

(Brenta, 2008) page 234

17

Ezequiel Jimenez

did eventually, and perhaps wrongly, became indentified with the repressive ideology of the coup along with its virulent anti-Peronism75. The Prebisch Plan: El Informe Preliminar Acerca de la Situacin Econmica76 The 25th of October, nearly two weeks after Prebisch arrived to Buenos Aires, President Lonardi presented, addressing the nation, the Prebisch Plan. The first impressions of the Plan reflected the correct decision by the government to ask Prebisch, a world famous figure, economic advice. The press, unlike in 1940s, instead of attacking Ral Prebisch, they saw him as the symbol77 of the new Argentina. However, the political turmoil and instability under Aramburus rule did not construct the preferable atmosphere for Prebisch to implement his recommendations. In addition, because these recommendations were subject to an austerity plan, workers and peronists followers did not comply with Prebischs final economic analysis of the Peronist regime and fostered multiple manifestations against the foreign advisor78 of the de facto president. The Prebisch Plan was strictly formulated after two intensive weeks studying the legacy from the Peronist government. Most of the data analyzed by Prebischs team came from the CEPAL headquarters. The fact that the economic data received from the CEPAL was previously studied by Prebisch made the process of writing fairly straightforward. However, as I will analyze in the next section, Prebisch could have been biased at the time of analysis. Nevertheless, Prebisch concluded that: Argentina is in the worst economic crisis of its history after ten years of irresponsibility and corruption 79. He was specifically concerned about the low growth of productivity: 4%80 after ten years. In the context of the Mesa Redonda del Informe Prebisch, he stated: una de las expresiones ms impresionantes del desastre econmico que ha vivido el pas, y sigue viviendo, es el escassimo crecimiento del producto por hombre en los ltimos diez aos81 82. Thus, the Prebisch Plan investigated how to resolve

75

(Sikkink, The Influence of Raul Prebisch on Economic Policy-Making in Argentina: 1950-1962, 1988) page 95
76

Translation by the author: The Initial Report of the Economic Situation (Dosman, 2008) page 300 Ibid 305 Ibid 303 Ibid (Economicas, 1955) page 5

77

78

79

80

81

82

Translation by the author: one of the most impressive expressions of the economic disaster the country has experienced and continues to live, is the low growth of output per worker in the past ten years

18

Ezequiel Jimenez

the inefficiency of the national industry and the reconstruction of the economic sectors with a set of recommendations especially focused in fostering the agricultural productivity. The Prebisch Plan contained two sections: a series of emergency measures to deal with the short term economic situation and a set of longer-term to guide the government. The immediate measures were focused to strengthen the agricultural sector: the devaluation of the peso to provide price incentives for agricultural exports, liberalization of the foreign exchange market, previously controlled by the State agency IAPI83 (instituto Argentino de Promocin e Intercambio); a freeze on salaries and wages, and an expansion of foreign loans, which implied the necessity to re-structure the economy in order to join the International Monetary Fund. The long-term recommendations included the creation of a program to technify the agricultural sector, the development of the steel, petrochemical and mechanical industries as well investment in petrol energy, transportation and expanding the electric capacity84. But more importantly, the Plan was designed to respond to short-term issues by empowering the agricultural sector to obtain and save revenue from exports. Prebisch explained that there will be no sound development of the industry unless they are based on a thriving agriculture85. However, as Aramburus oppressive policies towards the peronist increased, Prebisch had to face with an escalating discontent and opposition from workers country-wide. In terms of industrialization, CEPALs core-recommendation, the Plan did not call for a heavy investment in the national structure, but rather concentrate in the export-oriented sectors. The Plan stipulated a special focus in the agricultural sector to increase the national assets together with accessing to international credit. Prebisch, during the Mesa Redonda Meeting, repeats numerous times the importance of the agricultural sector to recuperate Argentinas national growth and to plan a cohesive development project for the heavy industry. Prebisch argued that once Argentina joins the Monetary Fund and creates a credible atmosphere for external investment; all efforts should be directed to steel, oil and petrochemical industries86. But, unlike the Peronist regime, Prebisch called for the dismantling of State-owned industries to curve inflation and stabilize the state expenditure. In addition, Prebisch recommended a drastic reduction in the workforce, especially in the railways, which he claimed it was exceeded by 20.000 labourers87, while freezing wages. The reaction by the workers was seen immediately after Prebisch delivered his Plan to the coup. The 9th of June, a massive strike and

83

Argentine Institute for Promotion and Exchange

84

(Sikkink, The Influence of Raul Prebisch on Economic Policy-Making in Argentina: 1950-1962, 1988) page 97
85

(Economicas, 1955) page 5 Ibid page 6 (Jaureche, El Plan Prebisch: Retorno al Coloniaje, 1955) page 70

86

87

19

Ezequiel Jimenez

mobilization to the Government House by peronist workers ended with Aramburus ordering repressing the manifestation with twenty-seven men executed and hundreds imprisoned and wounded88. Prebisch was now at the centre of every newspaper in Buenos Aires, which reexamined old themes about his past years at the Banco Central. His reputation of foreign advisor, UN diplomat and focus on the agricultural sector soon linked Prebisch with the elite groups of Argentina he once worked for. Raul Scalabrini Ortiz, the most prestigious peronist philosopher, historian and journalist, criticized Prebischs industrialization policy as returning to the old colonial days: the Plan Prebisch is capricious and confusing, worse than irrelevant; the only explanation for such distortion is his selling out to foreign investors, opposing industrialization, and returning Argentina to the agrarian days of the oligarchy 89. But Prebischs recommendations of dismantling the State-inefficient apparatus encountered further criticism. In 1955, during the Mesa Redonda Meeting, Prebisch clearly explained that the size of the State affected considerably its efficient dealing with problems of inflation and social welfare. The Peronist model, he argued, was close to State Capitalism isolated from the external market rules and benefits. The lack of participation in the world market eventually affected Argentinas access to foreign credit to fuel the process of industrialization. The size of the State, which absorbed the banking system, according to Prebisch, intervened in every aspect of the economic sphere controlling prices and enterprises to rigidly follow the governments plan. However, Prebisch did not, by dismantling the State intervention mechanisms, advocate for a weak government playing in the free market, but rather together with the State, he called for private investment as well as foreign credit. In order for Argentina to benefit from the world market, the liberal reforms Prebisch advised were directed to join the International Monetary Fund. Although Prebisch argued extensively his opposition to foreign credit, the problematic of inflation, debt and decreased national assets indicated to Prebisch that foreign capital was urgently needed90. Thus, Prebisch recommended cutting staff and budget; privatizing inefficient state companies like Aerolineas Argentinas (Argentine Airlines); reducing public expenditure; removing price control; reducing the deficit; reforming taxation to increase revenue and prevent evasion; promoting the agricultural production and exports, including the establishment of the National Institute of Agrarian Technology; attracting foreign capital and joining the IMF91. Prebisch was harshly criticized by the press and the peronist factions, calling him, as he was called before, an antipatria, selling Argentina to the interests of the imperialistic foreign investors.

88

(Dosman, 2008) page 319 Ibid page 312 (Economicas, 1955) page 7 (Dosman, 2008) page 310

89

90

91

20

Ezequiel Jimenez

Furthermore, the increase of taxation and cuts in welfare programs installed by Peron provoked a new round of strikes and labour discontent at the same time Peron, in Spain, recovered his leadership and power base. Oscar Allende, present at the discussion of the Mesa Redonda Meeting, energetically said sound money yes, but sound money must not become the final objective achieved at the expense of the suffering, misery and toil of the lower income groups92. In summary, as Brenta argues, the economic policies undertaken since 1955 under the recommendations of Prebisch, Argentina approached the IMF model before entering the body. Multilateralism, deliverance exchange rate, devaluation of the peso, trade liberalization and restrictions on domestic credit represented typical IMF requirements93. Argentina was to follow Prebisch into a liberal economy with great opposition from multiple popular sectors in society. In 1956 Ral Prebisch returned to Chile defeated and tired into his last and second exile. Attacked by every political group, his most important recommendations were never achieved under the Revolucion Libertadora: Aerolineas Argentina was not privatized; taxation reform was postponed; and Aramburu was unable to reform the state; which consumed 42% of the GDP94. Furthermore, the restructuration of the economy in order to join the IMF was less satisfactory. The International Bank for Reconstruction and Development rejected financing investments in electricity and petrochemical projects while grating Brazil $1000 million dollars the same year. Although Prebisch efforts to contribute to his country were always shared with humility and hard work; he did not succeed in assessing the political circumstances where to implement his Plan. The fall of Lonardis reconciliation process and the strong peronist opposition were determinant factors of Prebischs disappointment. In addition, the Prebisch Plan was also criticized by the public opinion, peronists and CEPAL associates because it did not incorporated most of Prebischs famous insights in his Dependency Theory. According to Arturo Jauretche95, in his famous book El Plan Prebisch: Retorno al Coloniaje96, the differences are so notorious because Prebisch did not write the Plan, but his closest collaborators Krieger Vasena, Julio Ceuto Rua and Roberto Alemann97. Nonetheless, in which manners did his Plan and Dependency Theory differ and agree?

92

(Dosman, 2008) page 312 (Brenta, 2008) page 247 (Dosman, 2008) page 317

93

94

95

Arturo Jauretche, politician, essayist and historian was the most fervent critic of Prebisch. Allied with Peron in 1955, he remained a critic of the Party until Perons fall. Persecuted by Aramburu, Jaureche wrote extensively during exile in Uruguay about the Revolucion Libertadora illegality.
96

The Prebisch Plan: Returning to Colonial Times (Jauretche, El Plan Prebisch: Retorno al Coloniaje, 1955) page 145

97

21

Ezequiel Jimenez

Assessment of the Prebisch Plan: Another Dependency Theory? Both Dependency postulates and the Prebisch Plan were differently influenced by their political and economic context. Dependency Theory was a prompt answer challenging the economic world order, as the Havana Manifesto explains. On the other hand, The Prebisch Plan was designed to recuperate the Argentine economy after the Peronist years, claiming a profound crisis. However, these two documents written by Prebisch seem to greatly disagree in two of the key Prebischian areas of study: industrialization and the role of the State. Arturo Jauretche would argue that Prebischs Dr Jekyll and Mr Hyde complex is largely because he did not write the plan given to coup, but his closest economic advisors who later took office as Finance Ministers, for example Krieger Vasena. Kathryn Sikkink, in contrast, argues that Prebisch regarded the question of industrialization as obvious for his Plan and did not address it properly. In addition, she argues that Prebisch did not realize how to play politics while presenting his Plan to the coup. In this last section I will analyze the main differences between the Plan and Dependency theory and propose alternative answers to the problematic. Was the Prebisch Plan an Exaggeration? After Ral Prebisch claimed that the post-peronist Argentina was in the worse crisis in history, the Generals welcomed his recommendations to save the country with great rigour agreeing with his fatalist views demonizing Perons legacy. It was extremely conv enient for the Revolucion Libertadora existence to picture the peronist years as economically catastrophic with an increasing foreign debt, low growth and industrial inefficiency. However, according to the Sunday Times Argentinas debt problem was low in comparison with her potentialities once her economic affairs have been restored to an even keel98. Furthermore, Prebischs theatrical tone in his report to the coup was challenged by the US Embassy arguing that he had deliberately exaggerated Argentinas currency problem to discredit Peronism and had gone too far in dramatizing the severity of the economic crisis99. Jauretche, in addition, harshly writes that Prebisch imagined the crisis of the post-peronist Argentina: But without any warning a man who has descended from a plane after a long exile, confounds his ideas. This is where the common man begins to suspect, much to his regret, that economics is a mysterious science100. Prebisch largely used CEPAL data-bases to create the report and based most of his policies in a deep study of Argentina by cepalistas or anti-peronist economists such as Krieger Vasena, Julio Ceuto Rua and Roberto Alemann. Thus the excessive reliance on former colleagues for information and data could have misled his final conclusions. Jauretche, in his book, gives a detailed and peculiar point-by-point account of Prebischs imaginary crisis. He investigates every aspect of the Plan and compares the data obtained by the CEPAL with the National Bureau of Statistics. When assessing the question about the size
98

(Dosman, 2008) page 305 Ibid (Jauretche, El Plan Prebisch: Retorno al Coloniaje, 1955) page 22

99

100

22

Ezequiel Jimenez

of the State, Prebisch claims its inefficiency and surplus of workforce, for example in the railways. While Ral Prebisch recommended the drastic cut of 20.000 in the State workforce to reduce the States expenditure and increase the railways effectiveness and efficiency, Jauretche categorically denies Prebischs claim by showing an increase in the usage of railways illustrating the urgent necessity of incorporating extra workers rather than reducing the rail personal. Between 1937 and 1954 the railway usage, according to Jauretche, increased by 242.2% while the workforce recruitment increased only by 53%101. Thus, he ironically asks: Would not it be that Mr. Prebisch is confusing us with Chile or Uruguay?102 The Lack of CEPAL Elements Throughout the Prebisch Plan, previously explored, the disparities between the CEPAL theories and the recommendations given to the Generals are immense. Both Jauretche and Sikkink point out the differences in language, structure, tone and policies suggested. Although Sikkink denies the claim by Jauretche of Prebisch absent involvement in the Plan, she does recognize the missing of his renowned categories of centre-periphery, declining terms of trade and the need of regional integration103. Unlike problems of inflation, agricultural production and exports, other elements such as planning and industrialization were always in the background of the report and did not take any important role in the policy recommendations by Prebisch. Industrialization through import-substitution and the role of the State are two important categories Prebisch does not discuss in his Plan to the Generals as a tool to overcome the crisis. Nonetheless, he especially addresses the importance of these in the Havana Manifesto. During and after the meeting in Cuba, the centre-periphery dialectical model was indeed the moral justification for third world countries to challenge the comparative advantage myth in order to develop. If Latin American countries realized their potential to develop, then, Ral Prebisch advocated for a strong diligent state to plan development, industrialization through and ISI model to foster technology advancement which would result in growth and employment, protection of the infant industry, regional integration and autonomy in the world economic order. Thus, in 1949, Prebisch praised Argentina stating: in the post-war, with the determined policy of protection, encouragement and the strong contributions of goods and capital by the government, the Argentine industry went into his face of final consolidation104. According to Hugh Schwartz, from the Inter-American Development Bank, in 1950 Argentina was the foremost example of a nation that was increasing its effort to industrialize, and the countrys extensive public relations campaign

101

Ibid page 70 Ibid

102

103

(Sikkink, The Influence of Raul Prebisch on Economic Policy-Making in Argentina: 1950-1962, 1988) page 95
104

(Jauretche, El Plan Prebisch: Retorno al Coloniaje, 1955) page 153

23

Ezequiel Jimenez

abroad, laying claim to recent industrialization gains, must have tended to reinforce the arguments of Prebisch-CEPAL theory105. On the other hand, greatly different from the Manifesto, Prebisch formulated a totally new structure and policies to encourage growth in the post-peronist Argentina through the Prebisch Plan of 1955. As I previously explained, Prebischs recommendations to Lonardi and Aramburu were largely similar to liberal policies. The especial focus in the agricultural sector instead of strengthening the national industries created by the peronist regime together with the restructuration of the State to join the IMF delimiting its size cutting welfare programs as well as privatizing national companies, illustrates Prebisch contradictory thinking. In the case of industrialization, the Prebisch Plan did not consider the importance and power of the large vested interests of the highly protected national industry106. Rather, it pursued a program of dismantling most of the newly created industries by privatizing them and cutting the workforce. Further, in the case of the role of the State, Prebisch did not advocate for a strong diligent State, but pursued policies to exterminate most of the Peronist development planning, workers centres and price control institutions. However, as Sikkink argues, neither Prebisch nor the Revolucion Libertadora leaders were concerned on creating new autonomous economic policy institutions but erasing every peronist bastion. But, as explained before, each of Prebischs suggestion to the coup was massively opposed by the popular sectors of society which viewed Don Raul as a foreign advisor and an antipatria. Furthermore, the vast differences between the main Prebischs documents, the Havana Manifesto and the Prebisch Plan, were also very surprising for his CEPAL colleagues. For example Furtado was perplexed and disappointed107 by Prebischs IMF orthodoxy fitting badly with the Prebisch he had known during his years in Chile. Thus, we must ask: what happened to his revolutionary ideas that were shaping Latin American countries? What factors helped Prebisch to alter his thinking? What motives were behind this radical change? In the conclusion below I will try to explore some of these questions, which urgently need further academic research to fully understand Ral Prebisch dual thinking. Yo estoy dispuesto a cambiar mi opinin108 109 Ral Prebisch arrived in Buenos Aires with a preconceived idea of changing the economic and political structure led by Peron for ten years. His primary wish, since he was exiled, was to return to Argentina and serve the country in the same way he did during his years at the Banco Central de la Nacion. His depression after exiling in Chile resorted in the impossibility to even
105

(Schwartz, 1988) page 125 (Vasena, 1988) page 119 (Dosman, 2008) page 315 (Economicas, 1955) page 8 Translation by the author: I am willing to change my opinion

106

107

108

109

24

Ezequiel Jimenez

attempt to write academically, as it was explained before. In addition, the unfair circumstances in which he was ousted from his professorship and the Banco Central fostered his willingness to come back to Buenos Aires. As it can be seen from the various quotes from the Mesa Redonda Meeting, he was decisive to construct a new Argentina with solid and honest leadership during a reconciliation policy promised by Lonardi. Thus, Ral Prebisch came back to Argentina believing in an inclusive project that soon fell apart. I would argue that the political context of intense and violent rivalry between the peronist and liberal factions, were the main causes of Prebischs contradictory thinking. The political intransigence pictured since the rise of Peron and his autocratic regime and the violent coup by the revolutionary leaders are just a few examples of a larger theme in Argentine history. The leaders of the Revolucion Libertadora systematically eliminated every aspect of Perons dominance in Argentina in the same way Peron did with the Conservative Party policies in 1946. What the revolutionary leaders did during the governments of Lonardi and Aramburu were applying changes rooted in political intransigence without recognizing and further develop Perons economic, social and economic achievements. Ral Prebisch was a victim of his historical context. Once appointed economic advisor to the president in charge of planning their economic doctrine, Prebisch could not fully apply his concepts of Dependency Theory as they shared great similarities with Perons policies. Indeed the CEPAL concepts of industrialization, international autonomy and regional trade were in vast dimensions applied by the Peronist government. Prebisch had to please the leaders who brought him back to Argentina and at the same time present a coherent economic plan which would represent his own theories. Although most of his policies did not reflect the core of the CEPAL ideas, a great extent of them, such as joining the IMF, was completely logical to the world context. Indeed, Brazil, Chile and Uruguay who joined the IMF earlier than Argentina were obtaining large loans to develop their industries. In addition, Prebisch trusted Lonardis reconciliation policy as the base for Argentinas development which urgently needed the peronist workers. However, once Aramburu took power, Prebisch did not have a chance to reformulate his Plan but to enforce it with a subset of liberal policies such as privatization of state industries and cuts in the welfare programs. Nonetheless, I do not believe that Prebisch was completely knowledgeable about Peronist Argentina as the manipulation of statistical data suggest. He did not recognize some of the success of the Peronist years, such as the welfare programs and the investments in education, health and infrastructure. Thus, I would argue that together with the political intransigence of the different factions, his biased against Peron himself blinded him to write an impartial and de-politicized economic analysis using the existent favourable structure and replacing the inefficient mechanisms with his ideas developed in the CEPAL. In conclusion, Ral Prebisch remains even today a contradictory figure in the world of development. From his brilliant inputs during his years at the Banco Central de la Nacion, his famous CEPAL years in Chile and his collaboration with the Revolucion Libertadora, he was indeed a great economist and academic. However, the volatility of his thinking in the Prebisch Plan was what pushed him in 1956 to his second exile in Chile. Father of the Dependency Theory, he pursued a model that was followed with great success by multiple Latin American 25

Ezequiel Jimenez

countries but not at his home, Argentina. His early memories from the cruel Peronist regime, the veto for his position to the IMF by Peron and his embarrassing exit from the Banco Central could have been sufficient reasons to re-shape the post-peronist Argentina in a freer manner, but Aramburus anti-peronist reforms precluded Prebisch from implementing his Plan successfully. As the title-quote of this section illustrates, he did change his mind with great willingness but failed to understand his role of diplomat and intellectual able to overcome the intolerance and intransigence practiced by every opposing party in Argentina.

26

Ezequiel Jimenez

Bibliography Brenta, N. (2008). Argentina Atrapada: Historia de las Relaciones con el FMI 1956-2006. Buenos Aires: Ediciones Cooperativas. Cafiero, A. F. (1961). De la Economia Social-Justicialista al Regimen Liberal Capitalista. Buenos Aires: Editiorial Universitaria de Buenos Aires. Calderon, M. (2003). Breve Exposicion del Pensamiento Economico de Raul Prebisch. Buenos Aires: Universidad de La Plata. Caribe, C. E. (2001). CEPAL Review 75. Santiago de Chile: United Nations. CEPAL. (n.d.). CEPAL. Retrieved February 18, 2010, from CEPAL: http://www.eclac.org/default.asp?idioma=IN Dosman, E. (2008). The Life and Times of Ral Prebisch. Quebec: McGill-Queen's University Press. Economicas, A. R. (1955). Mesa Redonda del Informe Prebisch. Buenos Aires: Seleccion Contable. Jauretche, A. (1955). El Plan Prebisch: Retorno al Coloniaje. Buenos Aires: A.Pea Lillo. Mallon, R. (1988). The Influence of Raul Prebisch on Economic Policy-Making in Argentina: 1950-1962. A Comment. Latin American Studies , 120-123. Prebisch, A. G. (1980). Interview in Tanzania. Third World Quarterly , 14-20. Prebisch, R. (1961). Joint Responsabilities for Latin American Progress. Foreign Affairs , 622633. Rist, G. (2002). The History of Development: From Western Origins to Global Faith. New York: Zed Books. Schwartz, H. (1988). Raul Prebisch and Argentine Economic Policy-Making: 1950-1962. Latin American Studies , 124-127. Sikkink, K. (1988). The Influence of Raul Prebisch on Economic Policy-Making in Argentina: 1950-1962. Latin American Studies Association , 91-114. Sikkink, K. (1988). The Influence of Raul Prebisch on Economic Policy-Making in Argentina: 1950-1962. Response. Latin American Studies Association , 128-131. Vasena, A. K. (1988). Comments on the Influence of Raul Prebisch on Economic Policy-Making in Argentina: 1950-1962. Latin American Studies Association , 115-119.

27