The Evolution of Property Rights in Argentina, 1853-1949 By Tonya Caprarola Giannoni B.A. May 1990, The George Washington University MBA May 2000, Johns Hopkins University A Dissertation submitted to The Faculty of Columbian College of Arts and Sciences of The George Washington University in partial fulfillment of the requirements for the degree of Doctor of Philosophy May 16, 2010 Dissertation directed by Cynthia McClintock Professor of Political Science and International Affairs The Columbian College of Arts and Science of The George Washington University certifies that Tonya Caprarola Giannoni has passed the Final Examination for the degree of Doctor of Philosophy as of 24 March 2010. This is the final and approved form of the dissertation. The Evolution of Property Rights in Argentina, 1853-1949 Tonya Caprarola Giannoni Dissertation Research Committee: Cynthia McClintock, Professor of Political Science and International Affairs, Dissertation Director Kimberly Morgan, Associate Professor of Political Science and International Affairs, Committee Member Peter Flindell Klarén, Professor of History and International Affairs, Committee Member ii © Copyright 2010 by Tonya Caprarola Giannoni All rights reserved iii Dedication To my husband and our families, who always believed I could finish no matter what the obstacles were. To my aunt Stephanie who gave me my desire to travel and learn about the world. Sadly, through her death I learned what I needed for life. iv Acknowledgments The author wishes to thank her research committee. This project evolved incrementally much like property rights in Argentina. The puzzle of Argentina motivated me to pursue a doctorate degree. With the assistance and guidance provided by Cynthia McClintock through my studies and research, I gained the clarity to bring this project to completion. Kimberly Morgan’s questions kept me asking more. I would like to thank those in the Political Science and History departments, who along the way provided me key insights and inputs to keep going. I could not have done this research without the primary materials available in the Library of Congress. It is an incredible national treasure. The staff of the Newspaper Reference Room of the Argentine Library of Congress, the Archivos General de la Nación, and the Central Bank always accommodated my need for just a little more time. There are countless unnamed individuals at this institution that really have no idea of how their professionalism helped me get through this project. Last but not least, the continuous support and patience of my husband and his family that accepted my critical examination of their history and always gave me purpose. v Abstract of Dissertation The Evolution of Property Rights in Argentina, 1853-1949 The political economy of Argentina has puzzled scholars, and has led to a large body of research. Yet, the institution of property rights has been understudied. Most literature on institutions in Argentina has utilized either a ‘big bang’ explanation or a critical juncture framework (Waisman, 1987) that emphasizes the actions of Juan Perón in the 1940s. In contrast, new institutional economics (North, 1990) suggests that the characteristics of property rights in a country like Argentina are predetermined by Spanish colonialism. This dissertation refutes these theoretical perspectives. It argues that the evolution of property rights was the result of a multitude of individual, incremental policy reforms (Streeck and Thelen, 2005) often made in response to economic and social crises. It brings back to the study of property rights the relevance of its social/political dimensions that have been sidelined by a focus on its material/economic dimensions by the new institutional economists and political economists. Beginning in the late 1910s, the social function of property was debated in political and academic circles in Argentina. Change was nevertheless incremental with the social function of property first emerging de facto. This happened when political and economic actors began to perceive that the Argentine national government had the bureaucratic capacity to exploit petroleum and enforce the social function of property. Consequently, the de jure redefinition of property rights in the 1949 constitution was an artifact of what had become a de facto—not a ‘big bang’—change. vi While the theory of incremental change may explain how the institution evolved, it cannot explain why. The dissertation indicates that de jure and de facto conditions of property rights have different explanations. The characteristics of de jure changes are explained by variation in the status of the ‘formula for prosperity,’ socio-economic conditions and bureaucratic capacity. In contrast, de facto conditions are largely susceptible to the unintended consequences of the de jure changes and the law of limited cognitive ability. This new understanding of the evolution of property rights contributes a piece to solving the Argentine puzzle. vii TABLE OF CONTENTS Dedication ............................................................................................................................................ iv Acknowledgments ................................................................................................................................ v Abstract of Dissertation ..................................................................................................................... vi List of Figures ...................................................................................................................................... xi List of Tables ...................................................................................................................................... xii Glossary of Terms and Acronyms .................................................................................................. xiv Chapter 1. Introduction to Argentina’s Institutional Puzzle ......................................................... 1 1.1. RESEARCH QUESTION, FINDINGS, AND THEORETICAL PERSPECTIVES ......... 6 Major Findings .......................................................................................................................................................... 9 Theoretical Perspectives ........................................................................................................................................ 17 1.2. INSTITUTIONAL CHANGE FRAMEWORK FOR PROPERTY RIGHTS.................... 27 Part 1: Formula for Prosperity and Institutional Change ................................................................................ 28 Part 2: Conceptualizing de jure and de facto property rights............................................................................... 32 1.3. EVOLUTION OF PROPERTY RIGHTS IN ARGENTINA ............................................... 33 Origins of the Concept of Property Rights........................................................................................................ 34 Property Rights and Land in the New World .................................................................................................... 36 Changes in de jure and de facto Property Rights in Argentina: 1853 to 1949 .................................................. 39 1.4. METHODS AND OUTLINE OF CHAPTERS ....................................................................... 42 Methods .................................................................................................................................................................... 42 Organization of the Chapters ............................................................................................................................... 49 Chapter 2. Defining Property Rights ............................................................................................... 53 2.1. DECODING THE ENIGMA OF PROPERTY RIGHTS ..................................................... 58 Key One: Reconciling Multiple Definitions ...................................................................................................... 58 Key Two: Placing a Property Rights System on the Absolute and Limited Continuum ........................... 61 Key Three: Categorizing Ideal Types of Ownership: Property Rights Regime ........................................... 64 Key Four: Distinguishing between Ownership and Possession..................................................................... 65 Key Five: Disaggregating Sub-Characteristics: Right to Use, Benefit, and Transfer .................................. 66 Key Six: Classifying Kinds of Property............................................................................................................... 67 Key Seven: Understanding the Difference between de jure and de facto Property Rights ............................ 69 Unlocking the Enigma ........................................................................................................................................... 70 2.2. THEORETICAL PERSPECTIVES: EXPLAINING THE ORIGINS AND EVOLUTION OF PROPERTY RIGHTS ......................................................................................... 72 Intentional versus Unintentional ......................................................................................................................... 73 Economic/Material versus Social/Political Dimensions of Property Rights .............................................. 77 2.3. ALTERNATIVE FRAMEWORK APPLIED