Gerardo della Paolera and Alan M. Taylor, editors, A New Economic History of Argentina. New York: Cambridge University Press, 2003. xvi + 397 pp. $60 (cloth), ISBN: 0-521-82247-5.

Reviewed for EH.NET by Joseph S. Tulchin, Woodrow Wilson International Center for Scholars.

It has been a full generation since Carlos Diaz Alejandro published his monumental Essays on the Economic History of the Argentine Republic (1970). That volume, which was part of an immense research project at the Economic Growth Center of Yale University resulting in half a dozen lengthy books on as many different countries in Latin America and dozens of articles, offered a "new" economic history. What was new was the insistence of Diaz Alejandro and his colleagues at Yale, insofar as they were able, to compile complete sets of data on the critical variables in studying economic policy over time. His book was not only a fount of good sense and judgment about important questions in Argentine history, particularly in the twentieth century, but it also was a rich trove of statistical data that never before had been published in one place.

In the thirty-five years that have passed since the publication of the Diaz Alejandro book, two important developments have occurred in the field of economic history: first, we have had literally hundreds of doctoral dissertations or scholarly articles based on meticulous studies of specific statistical series -- for Argentina, for other countries in Latin America, and for the United States. We have a lot more data now about a lot more things than did Diaz Alejandro. The second major change in economic history is that having established the methodological rigor of the sub-field, practitioners today have brought back in consideration of "softer" variables, variables like institutions, the rule of law and questions of political behavior that were once the domain of political economy.

Having once digitized the entire Argentine census of 1914 and all of the transactions by the Banco de la Nación sending money to branches in the interior, I am a big supporter of making historical statistics available, and the editors of this volume must be praised for including in the volume a CD chocked full of statistical data.[1] The data are described in a special chapter, "Historical Statistics," by della Paolera, Taylor, and Carlos G. Bózzoli. Advances in information technology together with the efforts of dozens and dozens of scholars have made this treasure trove possible.

The essays in this volume cover a wide variety of subjects and the entire history of the country since independence. Some, like "Between Independence and the Golden Age: The Early Argentine Economy," by Ricardo D. Salvatore and Carlos Newland, which provides a comprehensive picture of the economy immediately after independence; "Banking and Finance, 1900-1935," by Leonard I. Nakamura and Carlos E. J. M. Zarazaga; the chronological limits of which are in the title; and "International Trade and Commercial Policy," by Julio Berlinski, which focuses on the period after World War II, deal with specific periods. Others, such as "Economic Cycles," by Adolfo Sturzenegger and Ramiro Moya; "Business, Government, and Law," by Sergio Berensztein and Horacio Spector; and "Industry," by María Inés Barbero and Ferando Rocchi, offer a rapid rush through the entire history of Argentina since independence. Two chapters, "The Labor Market," by Sebastian Galiani and Pablo Gerchunoff, and "Agriculture," by Yair Mundlak and Marcelo Regúnaga, set out to offer a broad view; but actually focus on specific periods, Galiani and Gerchunoff on the twentieth century and Mundlak and Regúnaga on the most recent decades. Therefore, as in any edited volume, there is a certain asymmetry in the chapters, despite the fact that the participants got together to discuss their chapters in a meeting before the book went to press.

The two chapters by the editors deserve special mention. Taylor's essay, "Capital Accumulation" deals with one of the central issues of development, and in a manner that never calls attention to his obvious expertise. He pulls together an impressive amount of complex evidence, in the best manner of the new economic history, and adds to it some careful judgments about policy mistakes that made investment either difficult or unproductive, especially in the past half century. In the context of Taylor's chapter it is interesting to refer to the conclusion of Nakamura and Zarazaga that the Buenos Aires stock exchange was a perfectly good source of capital until 1920, when it "faltered" (p. 312).

The chapter by della Paolera, Maria Alejandra Irigoin and Carlos G. Bózzili is a tour de force. They study all the presidential administrations since consolidation and, using two indexes they devise, the Classical Macroeconomic Pressure Index and the Fiscal Pressure Index, they evaluate the policy performance of each and every one of them. I am in awe of their effort. However, I am not sure that their chapter is a good example of the new economic history. How does the bad performance they document and measure fit with the evidence about weak institutions and rules of the game? I agree with their assertion that economic history is more than a reflection of economic policy and they put it well when they say that history does matter, that past mistakes "have narrowed the choice set for decisionmakers" and that a country once rich "must learn to live with scarcity" (p. 76).

The editors are preoccupied with a question, what they refer to as the "Argentine puzzle," that has concerned students of Argentina for nearly half a century and that continues to torture Argentines: What went wrong? Argentina was doing so well in the half century between national consolidation in the 1860s and the First World War, and even continued to do pretty well until after World War II. Then, it seems as if everything fell apart. The latest crisis, in 2001, which beggared nearly half the population, is not the first time that a period of relative prosperity and rapid economic growth was followed by an economic and political disaster. The editors want to see if the tools of rigorous economics, together with the latest studies of institutions and the rule of law, can help solve that puzzle. And, in fact, they do. To simplify a powerful, complex conclusion, the editors and a number of chapter authors insist that Argentine leaders made very, very bad decisions about the rules of the game and the distribution of resources, over and over again. Argentina was among the ten richest countries in the world until the Great Depression, with a population that was convinced that their country would continue to grow at high rates and that it was destined to be among the great powers of the world. Indeed, many Argentines continued to believe it was their destiny to be a great power for many years after the critical bad decisions had taken Argentina out of the first tier of nations. As Mundlak and Regúnaga put it, growth is not a right, you have to work for it (pp. 258-9).

In their "Epilogue," a model of clarity, della Paolera and Ezequiel Gallo are very direct in placing blame on failures in institutional and legal design (p. 372). It is people who made the bad choices, each time growth resumed following a crisis, the nation's leaders avoided establishing clear rules of the game (p. 375). And, again, we must ask, why did the best and the brightest of the Argentines make bad decisions over and over again? Based on my own research in the period between 1880 and 1930, and the research presented in this excellent collection of studies, I would venture to suggest that the first major errors actually caught the leadership by surprise and that they did not respond by strengthening the institutions or the rules of the game because those deficiencies didn't matter and because they actually suited their own personal and corporate convenience, at a time when the state was run by a tiny minority, an oligarchy that made decisions in close collaboration with a socio-economic elite that continued to wax wealthy. Most of the political oligarchy remained convinced until the Great Depression that the crises suffered to that date were anomalies, and that the country would right itself and soon achieve its destiny. By the time the polity had become more open and decisions were contested among a diverse set of actors and interests, the accumulated experience of crisis had turned Argentina into a zero-sum society in which rational choices among viable policy options were made very difficult. Certainly, it is clear that in the last few decades hard choices were avoided because resolution of legitimate differences was impossible.[2]

Notes: 1. My publications describing this data and my interpretation of it can be found in "Capitalist Development and Social Structure in Argentina, 1890-1930," with Hugo F. Castillo, in Konrad Jarausch and Wilhelm H.Shroeder, editors, Historisch Sozialwissenschaftliche Forschungen, vol. 21 (1987); "The Relationship Between Labour and Capital in Rural Argentina, 1880-1914," in Guido Di Tella and D.C.M. Platt, editors, The Political Economy of Argentina, 1880-1946 (London: MacMillan, 1986); and "El credito agrario en la Argentina," Desarrollo Económico, no. 71, vol. 18 (Oct-Dec, 1978).

2. In our recent volume, The Strategic Dynamics of Latin American Trade [Vinod K. Aggarwal, Ralph Espach, and Joseph S. Tulchin, editors, Stanford, CA: Stanford University Press, 2004], it is clear that of the nations studied -- Argentina, Brazil, Chile and Mexico -- Argentina is the only one that has no trade strategy because neither the state nor the private sector can resolve differences among actors.

Joseph S. Tulchin is director of the Latin American Program of the Woodrow Wilson International Center for Scholars. Before moving to Washington, he taught at Yale and the University of North Carolina at Chapel Hill. His recent work deals with trade strategies, published in the volume cited in the note above, and with international relations, as in Latin America in the New International System (Boulder, CO: Lynne Rienner Publishers, 2001).