From Mercantilism to Neoliberalism Determined Latin America's Economic Progress
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Frederick Stirton Weaver. Latin America in the World Economy: Mercantile Colonialism to Global Capitalism. Latin American Perspectives Series. Boulder: Westview Press, 2000. xix + 252pp. $25.00, paper, ISBN 978-0-8133-3809-5. Reviewed by Ralph Lee Woodward Published on H-LatAm (April, 2002) From Mercantilism to Neoliberalism determined Latin America's economic progress. In a work more substantial than its relatively Its focus places Latin America within the chang‐ few pages might suggest, Frederick Stirton ing international political economy. Nor is it nar‐ Weaver succinctly summarized and analyzed the rowly economic deterministic, for the author im‐ relationship between Latin American develop‐ parts a good sense of social and cultural issues ment and the world economy since the sixteenth that are related to the economic history of the re‐ century. He develops and refines ideas and ap‐ gion. And while he provides considerable atten‐ proaches that frst appeared in earlier articles, es‐ tion to economic theories and forces, he con‐ pecially his "Capitalist Development, Empire, and cludes that Latin America's future ultimately de‐ Latin American Underdevelopment: An Interpre‐ pends on human political choices, not simply on tive Essay," Latin American Perspectives 3: 17-53, the forces of technology and the market. A profes‐ and more recently for Central America in his In‐ sor of economics and history at Hampshire Col‐ side the Volcano: The History and Political Econo‐ lege, Weaver offers this book as "part of a continu‐ my of Central America (Boulder: Westview, 1994). ing dialogue among those committed to under‐ The author's ability to synthesize concisely large standing current changes in ways that might en‐ periods and concepts and his clear and didactic able more people in the world to live with less style makes this an especially appropriate work material deprivation and political oppression" (p. for undergraduate courses on Latin America's xiv). economic history, or even for general surveys of More than half the book focuses on the latter Latin American history. two-thirds of the twentieth century, yet the three It is not primarily, however, an economic his‐ chapters synthesizing the previous four centuries tory of Latin America, but rather an analysis of are remarkably sound. While this reviewer would the ways in which economic systems and process‐ have preferred greater elaboration on several as‐ es in the North Atlantic world have affected and pects of earlier history, he nevertheless must ap‐ H-Net Reviews plaud the work's success at condensing a very rhetoric that accompanied it, however, it is diffi‐ large literature into an effective summary. cult to determine whether the operation was prin‐ An initial chapter overviews the rise of Euro‐ cipally an old-fashioned helping hand for rich pean capitalism and its application to the New friends or whether it was informed mostly by a World (1492-1700), while a second treats competi‐ global anti-Communist strategy that genuinely tive capitalist industrialization, free trade imperi‐ saw Guatemala as a bridgehead for an assault on alism, and Latin American independence the Americas. But beyond the usual mix of mo‐ (1700-1850). The third chapter deals with the rise tives, it is important to note that preserving a cap‐ of fnance capitalism, the New Imperialism and italist system of private property in production Latin American export economies from 1850 to (anti-Communism) and preserving the private 1930, in which Weaver notes important differ‐ property of a powerful U.S. corporation abroad ences between nineteenth-century German-led in‐ (corrupt connections) can easily be made to sound dustrial growth and England's eighteenth-century like the same thing" (pp. 109-10). industrial revolution, both drawing Latin America A ffth chapter explains import substitution more fully into the North Atlantic trading system and industrialization in Latin America in the mid- with its agroexports. twentieth century, weighing the varying effects-- Much of the work focuses frst on the eco‐ successes and failures--of this approach to Latin nomic history of Europe and the United States and American economic development. Again, the au‐ then relates how they affected Latin America. thor's ability to condense to few words complex Chapter 4 describes the rise of transnational cor‐ historical developments is evident, as, for exam‐ porations and the dominant features in the inter‐ ple, in his treatment of the Argentine in the late national economy. It contains a splendid synthesis twentieth century: "The most serious problem for and analysis of international theories dominating the military government...was the enduring lega‐ world trade and relations in the mid-twentieth cy of Perón's political mobilization of large pro‐ century. It does a particularly good job of explain‐ portions of the working population. The military ing the increasingly complexity of U.S. business government's failures in trying to demobilize the interests in Latin America. His synthesis of the workers set the stage for severe fscal crises. Con‐ U.S. intervention in Guatemala in 1954 is charac‐ tinuing working-class political pressure hindered teristic of his brief yet perceptive analyses: the government's ability to curtail social expendi‐ "Democracy in Guatemala (1944-1954)...had wor‐ tures or shift the tax burden onto the shoulders of ried the Truman administration a bit, but it be‐ the poor. Tax reductions for the well-to-do, then, came deeply disturbing to the U.S. government in led to such general declines in tax rates that tax the early 1950s when the United Fruit Company, revenues shrank not only as proportions of GDP which had close connections with the very top but even in absolute terms" (p. 141). The result echelons of the Eisenhower administration, had is throughout the Southern Cone, he argues, was property threatened by the reformist govern‐ that "the mobilization of workers had gone too far ment. Corrupt connections and the fear of Com‐ for standard military coups or the resumption of munist influence in Guatemala, in good part pro‐ ISI [Import-Substituting Industrialization], and all duced by an extensive media campaign by the three military governments [Uruguay, Argentina, United Fruit Company, were a powerful combina‐ and Chile] abandoned the ISI project altogether tion, and in 1954, the CIA went ahead with its and opted for another economic model. There is plans to overthrow the Guatemalan govern‐ no question that the ISI project contained serious ment....Despite the overheated anti-Communist technical problems, and its prospects for propel‐ ling continued economic dynamism were not 2 H-Net Reviews bright. Nevertheless, the frst nations to jettison shifting government-citizen relationships" (p. ISI were not responding to failures of ISI's eco‐ 150). nomic logic to generate economic growth; rather Much of the fnal chapter is devoted to what they were reacting to its political logic: the real Weaver calls Neoliberal Democracy, as he argues and immediate political challenges that ISI's eco‐ that "contrary to conventional wisdom, the mutu‐ nomic successes had produced. The military gov‐ al compatibility that links democracy with free ernments used brutal force to dismantle the state- markets is not a common commitment to individ‐ centric ISI structures and to replace them with po‐ ualism and decentralized authority; the presence litically safer 'free market' mechanisms. Unlike of large, powerful corporations makes such asso‐ earlier, short-lived experiments of this kind, how‐ ciations highly tenuous. The principal connections ever, these shifts in policy occurred at a time between free markets and democracy are to be when the contradictions of Modern Times in the found in other directions, and Neoliberal Democ‐ leading capitalist powers were already producing racy is my name for the powerful combination of new patterns of economic organization and inter‐ debt crisis, neoliberal political economy, and elec‐ national political economics. The politically op‐ toral politics" (p. 188). In Weaver's view, "neoliber‐ portunistic policies, then, were economically con‐ al reforms have been essentially negative, elimi‐ sonant with new patterns that changed the con‐ nating public policies that restricted the wealthy texts of actions so markedly that entirely new or protect the poor. Free markets mean freedom courses were forged throughout the world" (p. for capital, and therefore national democratic 144). (i.e., electoral) procedures prevail at the time that In a sixth chapter, Weaver focusses on more political channels are closed as a means for citi‐ recent times and international competition and zens to affect the material welfare, which is dele‐ the dissolution of the "Modern Times," as he la‐ gated to undemocratic decisions by private capi‐ bels the relationship that had emerged following tal, foreign and domestic" (p. 189). Weaver warns World War II. This chapter deals almost exclusive‐ of the danger of a "tightly knit global elite" (p.205) ly with United States economic development as he with its "increasing concentration of income and lays the foundation for a fnal chapter, in which private power throughout the world," as he con‐ he describes Latin America in terms of its "debt, cludes with a condemnation of neoliberal policies. democracy, and uncertain transformations" (p. Closing on an optimistic note, however, he assures 169). Acknowledging that capitalism has changed us that "This era, like all prior eras, is a time of in significant ways over the last two hundred transition, and the outcomes of the process will be years, he insists that there are two fundamental determined primarily by humans' political efforts characteristics that are still "integral to its very and choices and not by Technology, History, The definition as a mode of production: the frst is the Market, or any other mystical influence" (p. 206). wage labor system, with the resulting conflict be‐ Weaver is thus highly effective at synthesiz‐ tween propertyless workers, who have only their ing Latin America's economic development within labor services to sell, and the propertied classes the context of world economic history.