Argentina's "Golden Age"?
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.
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