The argument in a nutshell

This is how I currently see the argument of my book on Argentina

Today I signed a contract with Polity Press for my book The Poor Rich Nation: Why Argentina Fell Behind. Here’s the argument as I currently see it:

1. In the nineteenth century, there was an unprecedented boom in Argentina’s terms of trade. It was caused by three interrelated factors: (a) trade liberalisation, (b) the industrial revolution, and (c) cheaper transportation. As a result, Argentina’s terms of trade improved by roughly 2,000 percent from the 1780s to the First World War.

2. The boom had uneven impacts. It benefitted the Littoral region, especially Buenos Aires and its vast Pampean hinterland. The more densely populated Interior, on the other hand, fell behind because its cottage industries were unable to compete with cheaper imported goods. The shift from Interior to Littoral led to several decades of intermittent civil war.

3. Enormous inflows of British investment made possible the formation of a national state in the second half of the nineteenth century. Regional oligarchies in the Interior could be co-opted by the promise of railroads, which allowed them to transport their goods to markets in the Littoral. The federal government also used the railroads to send troops to support their allies in the provinces. The civil wars gradually came to an end.

4. Argentina became a wealthy country through its integration into the world market. Government policy aided growth by giving immigrants relatively easy access to the land that was being brought into production in the Pampean region. The Interior’s mestizo peasants were, however, largely excluded from the boom because they were needed to work on vineyards and sugar plantations. Land policies that discriminated against them were justified by the ruling class’ racism, which had been reinforced during the civil wars.

5. The terms-of-trade boom ended with the First World War, and Argentina thereafter declined in relative terms, much like Australia, another land-abundant country that had prospered during the nineteenth century. The small size of the domestic market limited economies of scale in industry, while labour was too expensive for manufacturers to export. Both Argentina and Australia tended, moreover, to underinvest in education due to a mentality of being “lucky countries” that were naturally wealthy thanks to their land abundance.

6. Argentina also mismanaged its relative decline. The problem was its political system. In the nineteenth century, democratisation had been limited due to the exclusion of the Interior’s mestizo population from politics. Politics then became highly conflictual once the terms-of-trade boom ended. The ruling class resisted taxation while appealing to a mythical golden age in which the country prospered thanks to laissez faire. Populists in turn funded their social programmes through inflationary deficit spending, facilitated by a subservient central bank. Financial and political instability then aggravated Argentina’s relative decline.

7. My argument, then, is that the standard narrative of Argentina’s history is only partly correct. Populism contributed to relative decline, but the (neo)liberal reforms of the populists’ opponents often did as well. More important than either was Argentina’s changing place in the world. In the nineteenth century, land abundance had allowed Argentina to prosper, but its luck ran out in the twentieth century, once the terms-of-trade boom ended. That was the most fundamental reason why Argentina fell behind.

So that’s my argument as it stands, but it is liable to change, especially in response to feedback, so please do tell me what you think. And please do consider making a donation to help me write the book if you can.

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I am an independent scholar, so my opportunities for funding are limited. Any donation you can make to help me write The Poor Rich Nation would be fantastic.

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