The Collapse of Argentina, part 2: The "golden age"

Louis Proyect lnp3 at panix.com
Sun Apr 14 13:03:42 MDT 2002


Marxists have to maintain a constant vigilance against stereotypical 
thinking, especially when it comes to Latin America. In researching 
the Brenner thesis, I observed a kind of 'Iberiantalist' imagery 
about vainglorious hidalgos in Peru or New Spain who wasted gold and 
silver on luxuries in contrast to thrifty, hardworking British 
colonists. Recent research, however, reveals that the Spanish were 
fully capable of capitalist growth despite not being raised in the 
Protestant faith. D.A. Brading states that there was little to 
distinguish 18th century Mexico City from Boston of the same time. In 
fact, the textile mills of Mexico City, capitalized by mining 
revenues, put Boston to shame.

Ironically, the opposite kind of stereotype seems to have developed 
around Argentina. Instead of seeing it as a semicolony whose 
development has been stunted by imperialism, much of the left seizes 
upon superficial aspects and groups it with Australia, Canada or New 
Zealand. Granted, all these countries have lots of prairies and 
European immigrants, and enjoyed a modicum of prosperity in the 20th 
century, but much more analysis is required. This post will try to 
supply that.

To begin with, we have to acknowledge that at first blush Argentina 
did give the impression of being on the fast-track to capitalist 
success in the early 20th century. Between 1869 and 1929, 
productivity rose at an average of nearly 5 percent, while total 
capital rose at an average of nearly the same rate. Income per capita 
jumped from 2,308 pesos (at constant 1950 prices) in 1900-1904 to 
3,207 pesos in 1925-1929.

The national censuses of 1869, 1895 and 1914 also display impressive 
growth. By 1914, 5.9 million immigrants, of whom 3.2 million became 
permanent residents, joined the 1.9 million who were resident in 
1869. The city of Buenos Aires grew by 786 percent (!) between 1869 
and 1914.

The land under cultivation increased from 1.5 million hectares in 
1872 to 25 million hectares in 1914. The railroad network, albeit a 
tentacle of British control, was 35,800 km. long in 1914. Reflecting 
British confidence in the economy, their investments in Argentina 
increased fro 5 million pounds in 1865 to 365 million in 1913. 
(Corradi, 335)

Yet, this rapid growth would eventually hit the wall for a simple 
reason: the engine propelling the vehicle was based on the latifundia 
agro-export model. Argentina had become the main supplier of beef, 
hides and grain to Great Britain. The profits from such sales were 
not, however, re-invested in industry. Although far less class 
polarized than Cuba or Brazil, whose economies also revolved around 
the plantation or ranch, Argentina's difficulties--even to this 
day--reflect the domination of a class alliance between the landed 
gentry and foreign capitalism. For Argentina to have enjoyed 
long-term prosperity, it would have to institute radical land reform, 
foster the growth of local industry in a protectionist setting and 
develop a balanced internal market for both agrarian and urban goods. 
Needless to say, that is impossible under capitalism.

Michael Johns describes the class relations that determined the 
Argentine economy in the following terms:

"In sum, the agrarian rent that anchored Argentina's ruling class, 
the merchant's capital that exported the Pampa's produce and imported 
European commodities, and the finance capital that enabled the elite 
to profit from an erratic economy and sustain a monopoly hold on land 
governed the Argentine economy. These three factors thwarted the 
formation of a more rigorous economic logic by frustrating the 
development of a strong manufacturing sector and, consequently, the 
discipline that a commanding circuit of industrial capital would have 
imparted to the economy as a whole. Argentina, I show, lacked a 
consummate industrial capital that disseminated its logic throughout 
the economy, a logic critical to capitalist development because it 
demands continuous investments of fixed capital, technological 
improvements (and thus increases in labor productivity), an 
accelerated turnover of capital, and greater competitiveness. 
Argentina's turn of the century capitalism was consequently 
parasitic, inefficient, and led by a coalition of rentiers, 
financiers, and merchants who relied on Argentina's truly 
comparative, if fleeting, advantage in the world market." (194)

The consumption/investment habits of the Argentine ruling class was 
typical of those of other Latin American economies dominated by the 
latifundia. Based mostly in Buenos Aires, the bourgeoisie received as 
much as 25 percent of Argentina's GDP through land rent. With this 
revenue, they spent a significant portion on goods manufactured in 
the USA or Europe. As Johns points out, "The elite's ardent desire to 
prove its cosmopolitan stature translated into a fetishism of foreign 
goods." No doubt such consumption habits shaped the cultural views of 
a sector of Argentine artists, who identified more with Europe than 
their own gaucho realities.

With a diminished internal market, local industry had unfavorable 
conditions for growth. Also contributing to the structural weakness 
was the low incomes of the urban proletariat that earned about 
one-half the wages of workers in England and about one-fifth those in 
the USA. Finally, "high urban land rents further reduced the 
effective demand of urban wages, as did the unsystematic import 
tariffs, which afforded industry little protection but did finance 
the government at the cost of increasing the prices of imported 
goods." (Johns, 194)

If class relations in the countryside were typified by sharecropping, 
seasonal labor and other forms of super-exploitation, the situation 
in the city was not much better. In fact, the urban proletariat was 
either unemployed for much of the year or was forced to work at 
pittance wages on the big estates of the pampas. In a study of the 
Buenos Aires proletariat, Juan Alsina wrote:

"the workers in factories and workshops are usually day workers who, 
without any definite skills or job description, learn a job quickly. 
These are highly mobile workers earning minimum wages, able to 
perform several tasks and transfer to other jobs rapidly; they even 
leave their city jobs for five to six months to work in the 
countryside shearing wool or harvesting grain." (Johns, 196)

Because manufacturers could rely on what amounted to a part-time 
force, it was under no particular pressure to introduce labor-saving 
machinery. Hiring or firing workers on a contingency basis ensured 
profits, but only at the expense of long-term productivity. They also 
made extensive use of the "putting out" system, which effectively 
reduced fixed costs. Enormous retail houses such as Gath y Chaves, 
which was the Macy's of Argentina, employed five times as many female 
homeworkers as their permanent staff. (Retailers typically 
manufactured their own goods.) In total, such retail houses and 
clothing factories employed 10,000 while at least 50,000 worked out 
of their homes.

With manufacturing in such a primitive state, it is no surprise that 
Argentine goods were viewed as second-rate. The tanneries, for 
example, could not produce high-quality goods, which were in great 
demand overseas. Furniture shops also faced capital shortages and 
tended to employ artisans who turned out pieces one by one.

It is also important to consider the nature of Argentine immigration, 
which despite being massive, tended to be far less permanent than 
that found in countries like Canada, the USA or Australia. Since much 
of the labor was based seasonally around agrarian enterprises, the 
work force found it necessary to return to Europe when work dried up. 
This prompted the nickname "golondrina", or swallow, after the birds 
that migrate annually.

Because the Argentine economy was based in Buenos Aires and the 
nearby pampas, the immigrants tended to concentrate near the city and 
the adjoining coast. As Corradi points out, this led to 
over-urbanization in an agrarian society, a characteristic of all 
third world countries relying on agro-export. He writes:

"The majority of the people in a predominantly agricultural country 
came to live in cities: over-urbanization in an agrarian society. 
Ecological disequilibrium resulted in a fan-shaped distribution of 
natural resources and population, with the hub of the fan located 
approximately at the city of Buenos Aires-an icon of outward growth 
and dependency.

"Immigration provided a mass of laborers, some qualified personnel, 
and a small number of entrepreneurs. However, the characteristics of 
Argentine economic expansion, under British international control and 
under circumstances which left the basic agro-export structure 
unchanged, tended to channel entrepreneurial initiative away from 
industrial activity and into commercial and speculative ventures 
while increasing urbanization very fast. The upshot was a distorted 
social structure. Under the continued dominance of the landed 
bourgeoisie the social mobility of the newcomers ended up inflating a 
disproportionately large tertiary sector, characterized by a large 
number of unproductive activities. Immigration, therefore, furthered 
modernization but left intact the productive structure of society."

Since Argentina seemed to share an identical place in the capitalist 
world system as Canada, namely supplying meat and grain exports, it 
would be useful to see why Canada succeeded and Argentina did not. 
This will require us to look at the specific differences in some 
detail. Fortunately, Marxist scholar Jeremy Adelman has done an 
excellent job. Apparently, there is a rather substantial literature 
around the differences between Argentina and the British speaking 
agriculture-based countries and we are fortunate to have a Marxist 
contingent that includes Adelman, whose work has also appeared in New 
Left Review as well as specialized journals on "comparative studies".

To begin with, Adelman points out that the state played different 
roles with respect to land allocation. In Canada, public land was 
allocated in 160-acre lots starting with the 1872 Dominion Lands Act. 
After 3 years of settlement and a 10-dollar administrative fee, a 
homesteader could gain title. By contrast, the process of land 
allocation was largely a private affair in Argentina. There newcomers 
seeking to purchase their own land could only turn to the private 
market, where prices were unaffordable for the average immigrant.

Furthermore, the Canadian ruling class, far less interested in land 
ownership than their counterparts in Argentina, preferred to allow 
pioneer families to entail all the risks of land development. Since 
the Argentine pampas was far more fertile than the Canadian plains, 
the risks were far less. Canada had a much different attitude toward 
immigration as well. It actually sought *permanent* settlement and 
discriminated against those who were not agreeable to becoming a 
stable part of the population. They also tended to look to Northern 
Europe and the USA for potential immigrants, since there was a much 
higher likelihood that investment for land and machinery could be 
found in these quarters. Less than 20 percent of Canadian immigration 
came from the non-English speaking world.

Another difference between Canada and Argentina was the easy access 
to credit in the northern country. Banks, mortgage houses and other 
lending institutions, which could be found across the prairies, 
helped farmers expand their homestead and buy machinery. In 
Argentina, bankers took little interest in agriculture and preferred 
to loan money to large ranchers and merchants who were part of the 
agro-export network. Mortgage lending was unavailable to the poor 
tenant farmer, who tended to come from poverty stricken Southern 
Europe.

Finally, social relations also dictated the kind of technology that 
became institutionalized in both regions. In general, the rate of 
capital formation on the Canadian prairies was high in comparison to 
Argentina. In order to produce a profit on the relatively barren 
plains, machinery had to be introduced as rapidly as possible. 
Writing in 1906, agronomist W.R. Motherwell noted that:

"twenty-five years ago our prairie wheat crop was handled very much 
in accordance with Eastern Canadian customs and methods. That is, it 
was permitted to ripen well, carefully stocked and capped, stacked 
and allowed to properly sweat [sic] before threshing. But during more 
recent years, the rapidly extending wheat areas, with the consequent 
scarcity of farm labour, has introduced entirely new, cheaper and 
more expeditious methods."

In Argentina, not only was the growing season was much longer than it 
was in Canada, the land itself was far less in need of mechanical 
improvement. Indeed, one commentator noted that the "absence of 
weeds" actually impeded the operation of harrows and other 
soil-turning devices. (Don't ask me why!)

Wealthy landowners complained constantly about their tenant's 
tendency to plough superficially and work in a top layer of mulch. 
According to an American agronomist, the tenants: 

"merely scratch the ground a little and leave the rest to providence. 
. . . They dislike to spend money for help or better machinery if 
they can possibly get the crop planted in any way without such 
expenditures. They do not understand the wisdom of spending a dollar 
to save five. Their only object is to get as much money as they can, 
and keep it."

Another writer noted:

"The uniqueness of our agriculture consists precisely in the little 
that the land is ploughed and harrowed. ... In no part of the world 
is the land cultivated as superficially as here. It is that nature 
itself had already prepared it well for sowing, and consequently we 
can produce so cheaply."

Until the Great Depression, such backward practices could be carried 
out in Argentina with few social or political consequences. But after 
1929, the contradictions they introduced would finally lead to the 
powerful left-nationalist movement led by Juan Perón. This will be 
the subject of my next post.

Sources:

1. chapter on Argentina by Juan Eugenio Corradi in Latin America: the 
struggle with dependency and beyond, edited by Ronald Chilcote & Joel 
Edelstein.

2. Jeremy Adelman, "The Social Bases of Technical Change: 
Mechanization of the Wheatlands of Argentina and Canada, 1890 to 
1914," Comparative Studies in Society and History, Apr. 1992.

3. Michael Johns, "Industrial Capital and Economic Development in 
Turn of the Century Argentina", Economic Geography, Apr. 1992


-- 
Louis Proyect, lnp3 at panix.com on 04/14/2002

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