Falling Behind

It was to be a protracted war—almost six years long—against a large and ruthless French occupation army.

The Spanish royal family was kept in captivity by Napoleon Bonaparte who had forced the abdication of young King Fernando VII in favor of Bonaparte’s brother, Joseph.

The Spanish people then rose up against the usurpers to wage an at times gruesome war of attrition that coined the word guerrilla—“little war”—as myriads of small, ragtag irregular units would relentlessly hound, attack and wear down the more than 65.000 French troops deployed all over the Iberian peninsula.

Eventually, the British would add organized military muscle to the war effort but it was the determination of the valiant Spanish guerrillas that ultimately defeated Bonaparte’s schemes. Many years later, while imprisoned in Saint Helena island, Bonaparte would comment to his retinue that invading Spain in 1808 was the only political and military mistake he was ready to admit.

The Spanish colonies in America also responded with rage to the French occupation. Following a pattern set by the Spanish provinces during the invasion, royalist juntas—Spanish for “committees”—would gather in Mexico City, Caracas, Lima, Santiago de Chile, La Habana, Bogotá or Buenos Aires to pledge allegiance to Fernando VII.

In time, radical factions of a majority of these royalist juntas, weighing up the political opportunity would first have the juntas morph into “autonomist” bodies and, finally, into full-fledged independentist movements. In this way, one unintended consequence of the Spanish War of Independence was the independence of the Spanish American nations.

Thus far I have summarized in a rather simplifying mode what in fact was a long, complex process that took place in most of our countries between 1808 and 1825. As of today, no academic consensus exists on how Latin American independence came about.

Was is it really the result of external forces such as the Napoleonic Wars and the French invasion of the metropolis? Or was it the result of domestic political dynamics silently at work for decades? Or both?

Leandro Prados De La Escosura, a much respected Spanish scholar, affirms that despite any disagreement on the subject, “it is evident that the consequences were the fragmentation of political power, the militarization of society and the mobilization of resources and men for war. Political turmoil did not end with independence. Disputes over national borders and civil wars continued for decades.”1

Independence was certainly followed by a pronounced decrease in economic activity. Per capita income did not return to colonial levels until well into the nineteenth century.

Indeed, breaking with Spain—and for that matter, with Portugal, in Brazil’s case—did not bring any profound changes in the social fabric or the economic structure. Land tenure and other factors, such as labor force, did not show drastic changes after independence. Slavery lasted until the mid-nineteenth century and there were countries, like Cuba and Brazil, where it went on until the 1880s.

Though external trade monopoly ended, a large part of the old regime’s fiscal system remained before collapsing in the mid-nineteenth century. Debt peonage, however, persisted in most countries well into the twentieth century. The immediate benefits, if any, of independence were very limited by new “costs”, civil strife not being the least of them.

“Should the costs of colonialism—asks professor Prados De La Escosura—include not only what was extracted but what was not produced due to wrong incentives created by colonial institutions and path dependency? And why did the elimination of tax and tariffs restrictions fail to promote self-sustained growth? These are recurrent, yet unanswered, questions among historians of Latin America.”2

For all the relevance of these and many other questions, we Latin Americans have for a long time—in fact, for the whole second part of the twentieth century—resorted to grand interpretations and all-inclusive “meta-narratives”, most of them dealing with Latin America as seen in the U.S. mirror.

More often than not, self-deceptive notions have rendered most of these narratives absolutely useless when it comes to understand why we have fared so bad for the last 200 years.

Yet, one of these narratives has received unusual attention up to the point of shaping the region’s current collective understanding of the reasons for our bakckwardness and inequalities.

The provoking, spellbinding and overtly misleading ideas set out by Uruguayan journalist and writer Eduardo Galeano in The Open Veins of Latin America have been around for more than 76 editions ever since it appeared 36 years ago.

Brilliantly written, Open Veins purports a cold examination of our woes that over the years has caught the minds of millions of Latin American readers who still take it as a compelling gospel. Rarely has any failed book on economic history attained such enviable prestige. Wave after wave of populist rulers keep quoting Open Veins in their speeches and newsrooms all over the continent keep a well-thumbed paperback copy among their source book shelves.

Fortunately, in recent decades the Latin American intellectual landscape has experienced remarkable advances in economic history as ideological debates over competing—and utterly failed—economic strategies such as Soviet-oriented socialism or import substitution subsided.

A case in point is Falling Behind: Explaining the Development Gap Between Latin America and the United States. ( New York’s Oxford University Press announces it will reach the stores in June, 2008. I have just read the Spanish edition, Fondo de Cultura Económica, Buenos Aires, 2006.)

Carefully edited by Francis Fukuyama, Falling Behind is a extraordinary collection of papers presented at an international seminar held in Buenos Aires, in November 2005. It reads as a brilliant compendium of work by some of the best economic historians and political scientists currently researching on the subject both in Latin America and the United States.

These papers review the historical context, as in “Two centuries of South American reflections on the development gap between the United States and Latin America”, by Argentinian historian Tulio Halperin Donghi or “Looking at them: a Mexican perspective on the gap with the United States,” by Mexican historian and essayist Enrique Krauze.

Latin America’s lagging development in the second half of the
twentieth century, as well as its various growth strategies at different stages of its recent history, are studied at length in “Does politics explain the economic gap between the United States and Latin America?” by Adam Przeworski and Carolina Curvale. The role of institutions in Latin American equilibrium is thoroughly inspected in “Do defective institutions explain the development gap between the United States and Latin America?,” by Francis Fukuyama. Most illuminating is “Fiscal citizenship in Argentina and the United States”, by Argentinian historian Natalio R. Botana.

“Falling Behind” is good news for 2008, a year that will mark the beginning of a series of independence commemorations meant to last at least until 2025.

No doubt it will help the next generation write our economic history departing from past deceptive distortions.