The Collapse of Argentina, part 2: The "golden age"
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
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
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.
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
"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
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.
1. chapter on Argentina by Juan Eugenio Corradi in Latin America: the
struggle with dependency and beyond, edited by Ronald Chilcote & Joel
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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