Blaney & Jimenez - The Infamous Son Raul Prebisch’s Dependency Theory in Post-Peronist Argentina

The Infamous Son: Raul Prebisch’s Dependency Theory in Post-Peronist Argentina

Development Politics

Professor David Blaney

Ezequiel Jimenez

Macalester College

Ezequiel Jimenez

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“He venido simplemente para colaborar y luchar hasta que los otros se convenzan o hasta que

yo me convenza”1 2

Mesa Redonda del Informe Prebisch, Buenos Aires 1955

Introduction to Raúl Prebisch

Among the many intellectual Latin America has given to the world, Raúl Prebisch influence in

the social and economic development of the sub-continent is one of the greatest in impact and

accomplishment. His Dependency Theory was rooted on the multiple issues such as economic

and social that Latin-America had to deal with after the Second World War. He pushed and

fought for equality, freedom and prosperity while transforming the world with his

revolutionary ideas on development. Don Raúl, as his was known by his closest friends; today

remains best known and most prestigious intellectual on development studies of Latin

America.

However Raúl Prebisch, the Argentinean, persists even today in the view of the public opinion

and inside intellectual circles with a conflictive reputation that denotes a political struggle

since the Government of Juan Domingo Peron (1945-1955) took office. Prebisch, a

distinguished economist and promising figure in the world of international development was

always opposed to the Peronist regime, denying his collaboration with Peron’s regime. His

refusal affected him to the extent that he had to seek exile in Santiago de Chile in 1948

working for the first time with the Economic Commission for Latin America and the Caribbean 3(CEPAL). During his years at the CEPAL Prebisch elaborated most of his later famous works on

import substitution, industrialization and unequal exchange. But, in Argentina he was still a

figure related to “foreign interests”4. Nonetheless, Prebisch was indeed an authority on

development and had never forgotten his own country or neglected possibilities to apply his

theories in the country. However, his strong views against the Peronist regime were an

impediment for him to get involved in Argentina’s development between 1943 and 1955.

Once his team in Chile had articulated the first postulates of Dependency Theory, Prebisch was

known worldwide and the extent of his ideas penetrated many Latin-American countries such

as Colombia, Bolivia and Cuba, but not Argentina. However, after the overthrown of the

Peronist regime in 1955 by a military coup called La Revolucion Libertadora, Prebisch was

invited to advice and write an economic plan to recuperate Argentina’s lost time. As the

1 (Economicas, 1955) page 8

2 Translation by the author: I came just to work and fight to convince the others or until I am convinced

3 (Dosman, 2008) page 184-185

4 (Sikkink, The Influence of Raul Prebisch on Economic Policy-Making in Argentina: 1950-1962, 1988)

page 101

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political atmosphere was finally welcoming towards Don Raúl, he accepted the task of writing

the General’s economic plan, which is known as The Prebisch Plan. The Plan was created not

without great political consequences for his foremost reputation in the country; he was seen

as a supporter of an illegal coup. In 1956 Prebisch delivered to General Aramburu the finalized

Plan to be taken by the coup which was facing criticism across the political spectrum. His

reputation at this time was that of an “external” advisor linked to conservative groups5.

However, the political struggle in Argentina during the government of the Revolucion

Libertadora did not provide the conditions for Prebisch’s Plan to be fully realized because the

lack of a strong democratic state and the political unwillingness of the Generals. However,

what were the recommendations Prebisch gave? Furthermore, would The Plan Prebisch

resemble what his early works in the CEPAL had been? Did he apply his Dependency ideas to

Argentina? Was his Plan a way to dismantle Peronist economic doctrines?

In this research paper I will not find definitive answers to these historical questions rooted on

political games. Rather I will explore and analyze the causes and consequences of Prebisch’s

Plan in comparison to his Dependency Theory with a special focus on industrialization and

state re-structuralism6. Namely, I will assess the degree into which his worldly famous

Dependency Theory ideas were applied in Argentina between 1955 and 1960. The paper will

be structured in six sections. First I will explore the early Prebisch in the Public Administration

1921-1935 to understand his economic experience background as the General-Director of the

Banco Central de la Nacion Argentina. Secondly, I will study what were the political and social

implications of Peron’s rise to government that affected Prebisch later decisions. Thirdly, I will

study the years Prebisch worked in the CEPAL elaborating the Dependency Theory. Fourthly I

will briefly describe the nature of the Peronist Economic Plan to contextualize Prebisch

recommendation to the Generals. Fifth order I will explain the historical context of the

Revolucion Libertadora and assess Prebisch’s recommendation to the Generals. The sixth part

will be devoted to the study of the Prebisch Plan in Argentina and the connections to his CEPAL

ideas.


page 91

6 The reason why I decided to focus on these two main factors of Prebisch’s theory is because it will

facilitate the comparison and assessment between his Plan for the coup in 1955 and his earlier thinking.

These two categories are central to his plan and, therefore it will help the reader to conceptualize and

understand the difference between Prebisch’s dual recommendations. In a personal note, I am

convinced these two factors are conditioned by their historical context, making them inseparable from

the events of 1955 in Argentina. Prebisch’s ideas of industrialization and State transformation are

intrinsically connected to a larger criticism of the Peronist government, but not necessarily original since

Peron also implemented these two ideas to some extent with his own economic ideology.

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The Young Bright Raúl Prebisch: The Central Banker

Graduating from the School of Economics at the Buenos Aires University in 1923, Raúl Prebisch

gained reputation as a high level intellectual already by 1921 when he wrote “Notas Para la

Historia Monetaria Agentina”. His paper reflected one of his later main themes: how the

Argentinean cycle of grain exports affected the capacity of banks to give long-term loans in

order to expand the economy7.Prebisch interest in the monetary system of Argentina was

highly influenced by John H. Williams’s works, which he translated in 1922. Williams’s ideas

about economic cycles and balance of payment adjustments with capital movements gave him

the idea to more deeply analyze Argentina’s “mechanism not envisaged in current

international trade history”8. He was highly concerned on the difficulties rooted in Argentina’s

export cycle of cereals, as Roberto Conde explains: “Argentina had an economy which

depended on its exports of cereals, and this gave it a seasonal nature and also made it very

vulnerable, since it was affected both by weather and by the big fluctuations in international

trade”9. Furthermore, he continues: “there was also a monetary system which further

accentuated such fluctuations... there was shrinkage in national income and the banks reduced

their credit during winter”10. During his years at the Central Bank, Prebisch would deal with

these issues.

Raúl Prebisch’s high profile and concerns over the unhealthy Argentine economic system gave

him the opportunity in 1922 to work as Director of Statistics of the Sociedad Rural, the bastion

of the landholding elite in Argentina11. During his years in the Sociedad Rural, Raúl Prebisch

worked closely with members of the powerful conservative party whom in 1933 proposed his

name for Under Secretary of Finance under the military government of Jose Felix Uriburu.

In 1933, together with Minister of Finance Pinedo, an executive suggestion was given to

President Uriburu to create the Central Bank of Argentina to control the economy. Roberto

Cortes Conde explains: “the creation of the Central Bank was designed to achieve monetary

stability and reduce the disturbances of the economic cycle. Prebisch maintained that in view

of the characteristics of the cycle in Argentina, the Central Bank should intervene to smooth

out the fluctuations by using absorption instruments”12 such as “absorption certificates which

made it possible to sterilize purchasing power (savings), as well as buying back part of the

7 (Caribe, 2001) page 82

8 Ibid page 81


10 Ibid page 82


page 93


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external debt in dollars”13. In 1935 the Banco de la Republica Argentina was created where

Raúl Prebisch served as Director-General for eight years (1935-1943). As Director-General,

Prebisch led several negotiations with Great Britain about the Roca-Runciman Pact, which

benefitted Britain by implementing low tariffs on English products in exchange for a constant

beef quota bought by the British Government. However, Prebisch also developed the currency

system and began to advocate pro-industrialization processes14. Further, he urged the

development of the agricultural sector by devaluing the peso and purchasing the surplus

harvests in order to give the population greater purchasing power15. Nonetheless, these

measures promoted by Prebisch in Argentina were done under the auspices of the

conservative party in conjunction with elite groups.

The political turmoil in Argentina grew significantly during Prebisch’s period at the Central

Bank. The military faction known as Grupo de Oficiales Unidos (GOU) was extremely opposed

to the regime of President Castillo and his position of neutrality in World War Two. In 1943,

the GOU overthrew Castillo and took control of the government. Raúl Prebisch was removed

from his post at the Central Bank in 1943 perhaps because his ties with the “traditional

conservative landholding interest”16and his pro-English bias. In 1948, after Juan Domingo

Peron took office, he was removed from the University of Buenos Aires and exiled to Chile. But

why did the Peronist Government oppose from Prebisch’s brilliant ideas? Why did Prebisch

refuse to collaborate with the Peronist regime?

Prebisch-Peron: The Anti-Ideology

“You didn’t tell me that you had resigned”17 where the exact words of Adelita, Prebisch’s wife,

the morning of 19 October 1943 after reading La Nacion. Prebisch did not have breakfast that

morning and rushed into the Central Bank as soon as reading the paper. Prebisch’s forced

resignation was the result of the new military government plan of detaching from the

conservative party replacing it policies and ministers. However, Prebisch was targeted for two

main reasons: his denial to collaborate with the Peronist economic doctrine and his opposition

to the peronist stand of pro-axis alliance during the Second World War. Prebisch was indeed a

victim of intellectual persecution which ruined his career at the new International Monetary

Fund after Washington vetoed his position as Senior Adviser fearing an impact on the US-

Argentina diplomatic relationship. In this section, I will explain the main reasons and

consequences of Prebisch and Peron ideological battle.

13 Ibid page 84


page 93



page 93

17 (Dosman, 2008) page 168

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In January 1942, during the Rio Conference in Brazil, organized by the United States, top

diplomats tried to “obtain a joint declaration of all the American Republics that they feel it

necessary to sever relation with the Axis powers”18. The argentine position was from the

beginning far from neutral as the political turmoil increased in Buenos Aires. The government

of Castillo was losing power as the rising discontent against his administration by GOU officers

grew. In preparations for the Rio Conference, Argentina’s position was radically changed from

neutrality to a pro-axis alliance backed by GOU’s main ideologist, Juan Domingo Peron who

was linked with a “corporatist ideology and an affinity for the fascist experiments in Italy,

Germany and Spain”19. In the opening of the Conference, the Foreign Minister Ruiz-Guiñazu

“made it clear Argentina would not join the inter-American wartime symphony and rejected

the US resolution calling for the severance of relations with the Axis”20.

Raúl Prebisch was part of the delegation that attended the Conference. He was extremely

convinced in the atrocities committed by the Nazi regime and he favoured the alliance with the

United States. In addition, according to Dosman, Prebisch had first accounts of the Nazi-camps

when Adelita’s brother in mid-1942 came to Buenos Aires from Europe21. However, he was just

only an economist with no influence over foreign policy making. Nonetheless, Prebisch had to

accommodate with his own personal position to the coup one. After the diplomatic incident,

the United State requested, under the article 5 of the Rio Conference, the Central Bank for

“financial and commercial activities”22 with foreign powers to control Argentina’s collaboration

with the Axis powers making Prebisch administration of the Central Bank increasingly

invigilated by the US government and the military coup. His cooperation with the US requests

and his personal beliefs, made it easier for the militarily controlled press to call him an anti-

patria23. In October 1943, Raúl Prebisch was dismissed from his position as General-Director of

the Banco de la Nacion Argentina for his ideological differences with the coup, but more

specifically, with Juan Domingo Peron.

The rising figure of Peron after the coup against President Castillo in 1943 was determinant for

Prebisch future in the Central Bank. However, as Dosman argues, Prebisch and Peron had

areas of common agreement such as both “supported industrialization through import-

substitution and endorsed the creation of a regional market”24 comprising Chile and Brazil with

Argentina. In addition, the biographer comments that Prebisch did request a meeting with

18 Ibid 145

19 Ibid 164

20 Ibid 147

21 Ibid 167

22 Ibid 150

23 Ibid 152

24 Ibid 171

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Peron, who in 1943 was Secretary of the War Ministry and the true ideologist behind the coup.

The meeting never happened because Peron “wanted to monopolize this contact with a rising

personality in the country”25. However, some authors such as Sikkink, Krieger Vasena, Schwartz

and Brenta26 have claimed that Peron did indeed invite Prebisch to comment on his economic

plan, El Plan Quinquenal, receiving a negative answer27. Brenta explains that Prebisch had to

leave the University of Buenos Aires after “compulsively reject his involvement with the Plan

Quinquenal”28 and Vasena agrees stating that “he was ousted from his professorship by the

peronist government in 1948 because he refused to lecture on Peron’s first Five-Year Plan”29.

Thus, as the scholars explained, Peron did offer Prebisch a place in his government realizing his

brilliant input, but Prebisch decided on moral and personal grounds to reject any position in

the Peronist government while being ousted from the Central Bank and the University of

Buenos Aires in November 1948.

Once Prebisch was forced out of his public positions, he appealed to his colleagues in the

United States, Camille Gut, for a place in the recently created International Monetary Fund as

a senior adviser in the Operation Department30. But soon enough, the battle against Peron’s

ideology and his rejection to work with the Peronist administration affected his professional

career at the IMF. Prebisch was denied a place in the IMF after Washington vetoed his

appointment fearing a crisis with the Peronist government who had identified Prebisch as a

public enemy. Edgar Dosman writes for the CEPAL Review:

“Peron vigorously opposed Prebisch for any influential position in the IMF,

even though Argentina was not a member of the Fund; while he had agree

six months earlier to support him for ECLA (presumably to ease him out of

Buenos Aires into a marginal position in Santiago), the Argentine president

did not want a domestic opponent in a key position in Washington”31

25 Ibid

26 Sikkink wrote an extensive paper on Prebisch’s influence in Argentina policy-making interviewing him

twice. Krieger Vasena was a close associate of Prebisch during his writing of the Prebisch Plan; also he

served as Secretary of the Advisory Committee on Economic and Finance in 1955-1956, as well Finance

Minister in 1957-1958. Hugh Schwartz is part of the Inter-American Development Bank. Noemi Brenta is

an expert in the relationship between the IMF and Argentina and current professor at the University of

Buenos Aires.


page 110

28 (Brenta, 2008) page 237

29 (Vasena, 1988) page 115


31 Ibid 93

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Dismissed from his executives positions, neglected the opportunity to put in practice his ideas

in the IMF and persecuted by a the Peronist regime because of his morals, Raúl Prebisch found

in the Economic Commission for Latin America and the Caribbean a chance to investigate and

research about the economic and social issues of Latin American countries he observed at the

Banco Central..

Don Raúl: The Economic Commission for Latin America and the Caribbean

The Havana Manifesto

Humiliated by the Peronist government and his former colleagues, Raúl Prebisch found in Chile

the revival of his ideas and main concerns over Latin American socio-economic problems.

Prebisch seized this opportunity to prove and theorize his ideas in the 1948 first Economic

Survey of Latin America for the Economic Commission for Latin America and the Caribbean

(CEPAL). By stating the main factors affecting Latin American economical inefficiencies and

problems, he developed his structuralism or Dependency Theory. Prebisch explained through

core concepts like “centre-periphery” and the asymmetries in international trade the ultimate

reasons to advocate for industrialization in developing countries moving away from the theory

of “comparative advantage”. In this section, I will first contextualize his arrival at the CEPAL in

1948. Secondly, I will explicate Raúl Prebisch’s main postulates of his theory of structuralism

with a special focus on industrialization and the necessity of State transformation to ensure

successful development.

The Economic Commission for Latin America (ECLA) was established by Economic and Social

Council resolution 106(VI) of 25 February 1948 and began to function that same year32. The

CEPAL resolution was an attempt by UN member states to detach from their already excessive

focus on Europe after the Second World War. As Dosman argues: “a sense of injustice was

boiling up again as Washington’s priorities focused on Europe and Asia”33 because the large

scale implementation of the Marshall Plan.

However, the CEPAL was openly criticized by senior advisors questioning its importance and

relevance as an UN subsidiary body. Prebisch’s appearance in the CEPAL was mainly to answer

these criticisms with a powerful and well-documented analysis on Latin America’s economies,

which was known as the Economic Survey of Latin America. His expertise as the first central

banker and his high reputation among Latin American intellectuals were the main reasons why

the CEPAL invited Raúl Prebisch to write the report to be presented at the 1949 UN

Conference in Havana.. Thus, Prebisch responsibility of writing the report was at the centre of

the CEPAL survival.

During the first months in Chile, according to Dosman, Prebisch was stagnated and incapable

of writing the report that could satisfy the CEPAL expectations. He was extremely influenced

32 (CEPAL)

33 (Dosman, 2008) page 240

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by his “personal and professional disappointments, the depression of daily life in Peronist

Argentina, watching its growing isolation and cultural decline”34. In April 1948, Prebisch

circulated a draft of the report to be read by CEPAL advisors like Celso Furtado, who, according

to Dosman, “read the manuscript and was disappointed”35. With the introduction to a paper

wrote by Hans Singer in 1948 called Post-War Price Relations between Under-developed and

Industrialized Countries, by Francisco Croire, a former mentee of Prebisch, he received “the

stimulus he needed to escape from his mounting frustration and fear of failure”36. According to

Dosman, Prebisch recognized in Singer’s paper most of his own theories, but what Singer

provided was a well-detailed data to argument forward the need of restructuration in

international trade. Grateful enough for Singer’s contribution, Prebisch wrote The Economic

Development of Latin America and Its Primary Problems in three consecutive days. His report,

after the Havana Conference, was known as the Havana Manifesto.

In March 1949, the Havana Manifesto was praised among Latin American leaders as a

memorable response to UN critics of the CEPAL, but even further, as the re-launch of

economic development in Latin America detaching from the old “centre” domination of the

economy. As Dosman explains:

“Prebisch framework of structuralism offered a new approach to

international development; he had declared for an activist state and

industrialization in a new language that challenged the old doctrine of

comparative advantage”37

Before the conference, Prebisch was known as brilliant economist persecuted by the peronist

government and disregarded by stubborn politicians. After the conference, his ideas in the

Havana Manifesto raised his figure as the father of Dependency Theory influencing numerous

countries in Latin America. He was not Raúl Prebisch anymore, but he was now Don Raúl.

Prebisch’s Dependency Theory Insights

Jose Antonio Ocampo38, former CEPAL Executive Secretary has identified three main elements

in Prebisch’s thinking. The asymmetries in international trade, the transformation of the State

34 Ibid 241

35 Ibid 241

36 Ibid 243

37 Ibid 247

38 The author worked with Prebisch in the CEPAL and wrote the essay “Raul Prebisch and the

development agenda at the dawn of the Twenty-first Century” to commemorate the hundredth

anniversary of the birth of Prebisch. I decided to use his essay to articulate a less heavy-theorize analysis

of Prebisch ideas, but rather an explanation that is closer to a current analysis of Dependency Theory.

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policies towards development and regional integration39 are ultimate factors in Prebisch’s

structuralism theory40. In this section I will describe how the first two elements play in the

theory utilizing the concept of “centre-periphery” and the need for industrialization through

import-substitution.

Prebisch’s theory was largely a reflection of the association between advance capitalist

countries and backwards nations. This dialectical relationship based on economic domination

by the advance capitalist countries with access to high levels of technology, is what Prebisch

famously called the “centre and periphery” model41. This relationship is a key in Prebischian

thought because it adjudicates the moral justification States to modernize by setting high

barriers to external competitors and protecting national industries. In addition, the centre-

periphery model was intrinsically connected to the possibility to generate economic growth by

acquiring access to technology through industrialization. Ocampo and other CEPAL economists

argue that Prebisch saw in the level of technology achieved by centre countries the real seed

of economic growth42. The discrepancies in access to technology conceived two forms of

economic domination: unequal exchange of goods and the incapacity for peripheral countries

to absorb surplus of labour from rural areas resorting in large cities.

According to Prebisch, the absence of high productive industries technologically able to

reproduce economic growth that absorbs the majority of the labour force is the ultimate cause

for underdevelopment. The large movement of rural population to technologically unable

productive centres, cities, resorts then in the impossibility of industries to absorb the surplus

of labour creating unemployment and poverty. This concept of high tech industries linked to

sustainable employment, is what Prebisch called “structural heterogeneity”43. Prebisch

identified this problem as the core issue of his theory. Furthermore, as backward countries

cannot compete with high tech production of the centre countries, exporting raw materials

feeding their industry was the prototypical economic activity for peripheral nations. But, as

Prebisch noted, the extraction of raw materials and its exports were not value added goods

which left peripheral countries with low productivity rates and impoverishment. In addition,

Prebisch explains that as the consumption of value added commodities through imports

increases radically but demand for raw materials does not, resorting in inequality: “la demanda

de manufacturas que importamos tiende a elevarse con celeridad, las exportaciones primarias

se acrecentan con relativa lentitud, en gran parte por razones ajenas a los paises

39 For further analysis in this Prebischian element: CEPAL Review Number 75, page 34


41 Ibid 40

42 Ibid 23

43 Ibid 41

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latinoamericanos. Hay, pues, una tendencia latente al desequilibrio que se agudiza con la

intensificacion del desarrollo economico”44 45.

Thus, Prebisch elaborates on how the State can successfully implement a developmental

program to curve the unequal exchange and reformulate the asymmetries in international

trade. He advised a strong and committed administration responsible for planning programs

for industrial development. In addition, he explains the need for a revision of the state-society

relationship together with a competent regulatory structure to oversee the economy and

pursuing industrialization through a mixed program of import-substitution (ISI) and export

oriented industrialization (ESI) to, in Prebisch terms, “develop within the nation”46. Prebisch’s

postulates are a radical detachment from the old natural “comparative advantage” of nations

to an opportunity to experience centre-like industrial policies.

Raúl Prebisch advocated for a strong State which could enforce and play the role of the agent

for “development from within”. Ocampo defines this Prebischian element as “essential

because the accumulation of national human capital and technological capacity (“knowledge

capital”) and institutional development are essentially endogenous processes”47. Further, the

ideal strong State for Prebisch would be consistent with a rigorous planning on development.

On this point, Prebisch was largely criticized by the private sector fearing a wave of

nationalization of private capitals by the State. However, Prebisch envisioned a complete

different strategy. He pursued for an intense partnership between public and private capitals:

“is not a Soviet-style takeover of the private sector, it is not a complete intervention in

business or production, but instead it assists with specific instruments to ensure that they

achieve specific objectives and volumes”48. Prebisch’s model of the State was indeed an

intimate partnership between the State and the capitalists for an efficiently planned

industrialization.

In addition he argues that the State in order to develop a strong economy should implement

an import-substitution-industrialization (ISI) program. Prebisch argued that ISI is the most

efficient way to correct and balance the difference between the growing inelastic demands of

the core-countries and backward nations. Because the value added commodities represented

bigger profit for core-countries, they expenditure capacity increased and was reinvested in

technological innovations. Thus, if the State wanted to increase its profit margin, domestic

44 (Calderon, 2003) page 7

45 Translation by the author: “the demand for imported manufactures tends to rise quickly; primary

exports grew relatively slowly, largely for reasons unrelated to the Latin American countries. So there is

a latent tendency to an imbalance exacerbated by the intensification of economic development”



48 (Dosman, 2008) page 283: Prebisch speech at the Industrial Union of Brazil.

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industrialization by replacing current imports was an incentive to escape from

“underdevelopment”. In order to implement an ISI model, Prebisch argued that the protection

of the infant industry trough subsidies and taxes to imports49 was necessary. At the same time,

Prebisch in his theory explained the importance of an ISI model as to absorb the surplus

labour, increase the average national income, the internal savings and investments in

technology raising the quality of life50.

However, Prebisch’s inclination towards an ISI model was soon challenged by other CEPAL

economists such as Cardozo and Kunkel. They argued that, a model based on ISI could suffer

from important inefficiencies in the context of a “free market” economy. In addition, balancing

industrial production of value added commodities was put into question since the same

economic effort could have been made by the State to promote an export oriented economic

policy. On the other hand, ISI was determinant to “develop from within” because it claimed

necessary labour absorption mechanism. However, as the pace of industrialization grew, the

CEPAL observed the necessity to study export-oriented industrialization models in order to

enter the global market with higher returns. Mixed models were then pursued by dependistas

economies. Ocampo explains clearly:

The possibilities of inefficiency in import substitution, especially in highly

fragmented markets, as well as the need to ensure that industrialization

was not carried out at the expense of agriculture or export development,

were evident to Prebisch even in his earliest publications in CEPAL.

Therefore, from the late 1950s on, Prebisch and CEPAL began to advocate a

“mixed model” which combined import substitution with the promotion of

new exports, especially of industrial origin. Over time, CEPAL’s view became

increasingly pro-export, although it never favoured the abrupt elimination

of protection arrangements51.

Therefore, Raúl Prebisch Dependency Theory was reformulated by numerous rigorous

critiques by other CEPAL assistants. However, his economic thinking was revolutionary for

Latin American leaders such as Salvador Allende in Chile because it explained in financial terms

the need for a nationalistic economic plan for development in accordance to their internal

capacities and not by external dictation of priorities. By generating a conscious and efficient

plan for industrialization by governments implementing a “mixed model” and protection for

infant industries, Raúl Prebisch’s reputation grew internationally. However, in Peronist’s

Argentina, he was related to foreign interests, the conservative party and as Peron’s enemy.

49 (Calderon, 2003) page 9

50 Ibid

51 (Caribe, 2001) page 24-25

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Did Argentina implement Prebisch’s worldwide famous ideas? What was Peron’s economic

plan? Did it resemble Prebisch’s ideas?

The Plan Quinquenal: Peron’s Economic Policies

When Raúl Prebisch was exiled to Chile, his biggest accomplishments in terms of economic

policy were systematically destroyed by Juan Domingo Peron’s government. With the 52% of

the votes, in 1946 Peron started his ten-year presidency deeply transforming the Argentine

society and economy. Peron’s doctrine of an “economically independent and a sovereign

nation”52 represented the centre of his fiscal policies implemented by his two Planes

Quinquenales. In this section I will analyze Peron’s economic plans during his years in

government. This section is vital to understand because is the base-argument for Prebisch’s

harsh report on the Argentine economy after Peron’s fall. Prebisch would argue that the

Peronist economic doctrine was a complete failure for Argentina. However, as it was

previously stated, Prebisch and Peron did agree on several points; industrialization and the

role of the State are examples of their communion.

Antonio Cafiero53, Minister of Foreign Commerce during the second presidency of Peron

(1952-1955) in his book De la Economia Social-Justicialista al Regimen Liberal-Capitalista

(1961) explains the nature of the Plan Quinquenal and its applications. He assesses in great

deal the success of Peron’s economic doctrine of industrialization and the state role. Cafiero’s

insight is so valuable and rich that Peron’s, from exile, claims:

“Es, sin lugar a dudas, la mayor obra que se ha editado en la postrevolución;

su valor es incuestionable no solo por las verdades que contiene, sino

también por el esclarecimiento a que conduce al destruir los sofismas y

falsedades de un sistema y de unos hombres que han hecho de la

hipocresía, la mentira y la calumnia sus armas únicas de combate”54 55

52

(Cafiero, 1961) page 143

53 Antonio Cafiero is par excellence the consulted author about Peronist economic policies. He served as

Peron’s economic advisor and Minister during Peron second presidency. As well, Cafiero is today one of

the referents of the Peronist Party in Argentina. He was ambassador to the Vatican, Belgium and United

States; he held a parliamentarian position in 2001 and was governor of Buenos Aires after the return of

democracy (1987-1991). Furthermore and very interestingly, Cafiero, alike Prebisch, graduated from the

University of Buenos Aires in 1944 and held numerous meetings with CEPAL economists as well with

Prebisch.

54 (Cafiero, 1961) preface

55 Translation by the author: It is without doubt the greatest work has been published in the post-

revolution, its value is unquestionable not only for the truths it contains, but also for the investigation

that leads to destroy the fallacies and lies of a system and men who have made hypocrisy, lies and

slander their unique combat weapons.

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When Peron won the elections of 1946, according to Cafiero, the economy was largely

stagnated in backwardness. By making a rigorous analysis about the Conservative Party

economic plans, in which Prebisch had a large influence, he identified seven causes of the

economy’s stagnation. The focus on agricultural production underestimating the possibility of

industrialization, the lack of an internal consumption market, the domination of foreign capital

in public services, the unequal distribution of national income, the increasing unemployment

and the lack of opportunity for workers to unionize56 were, according to Cafiero, the economic

legacy from the Conservative Party years.

In 1946 Juan Domingo Peron presented before the new Congress his first Plan Quinquenal

(1947-1951). The plan was designed to, in Peron’s words, “consolidar y expandir el crecimiento

equilibrado de la economía nacional, integrando una economía agro-industrial, independizada

al máximo de las contingencias externas y atendiendo especialmente a la elevación sustancial

del nivel de vida de la población trabajadora”57 58. To realize the economic independency from

foreign capital, Peron together with his economic team, in which Cafiero definitely played an

important role, pursued economic policies directed towards the national industry. The

transformation of the economic structure by expanding and consolidating a process of

industrialization, the nationalization of the Central Bank and public services, the redistribution

of national income through a heavy investment on education, health and housing; the

autonomous policy towards international organizations represented by a prepared delegation

of negotiators and the entire mobilization of resources for industrialization to foment an

internal consumption market, were the primary objectives of the first Quinquenal Plan59. The

outcomes of Peron’s economic plan were evident by 1950. According to Cafiero, from the year

1943 to 1950, the investments in the national industry grew from 16.556 to 22.783 million

pesos60. The metallurgic, textile and construction industry benefited from the State investment

which resulted in an increase of the 20% in the worker’s real salary.

In 1951, Juan Domingo Peron was re-elected with 62% of the votes. Cafiero explains this

abrupt victory to the successful redistribution of the national income through the investment

on welfare. However, Peron knew that the infant industry created by the State had to be

protected and strengthen by his second Plan Quinquenal. Thus, import-substitution was the

centre of his second economic plan, while at the same time creating the Ministry of External

Commerce, which Cafiero held, to increase the flow of the Argentine exports. The second Plan

56 (Cafiero, 1961) pages 143-145

57 Ibid page 151

58 Translation by the author: to consolidate and expand the balanced growth of the national economy,

integrating an agro-industrial economy independent of external contingencies and by paying special

attention to the substantial rise in living standards of working people

59 (Cafiero, 1961) page 151

60 Ibid page 153

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Quinquenal strategically proposed: the harmonization of the fiscal policy instruments to

stimulate the development of the state investments in the industry, address and invest on

energy sources such as petrol to further expand the industry, stimulate an ISI model to protect

the infant industry, propose a regional integration with Chile and Bolivia to enlarge national

exports and coordinate and call for the participation of unions and private capitalists into the

government economic policy-making forums61. However, the totality of the Plan was never

achieved.

The political situation was not as favourable as in 1945 for Peron. The conflict with the

Conservative Party, the Church and different factions of the army over Peron’s autocratic

government increased the social turmoil affecting the implementation of the Plan. In June

1955 the armed forces backed by conservative and church members, identified as the

Revolucion Libertadora, bombed the La Casa Rosada, the government building, killing 300

civilians; however Peron remained in power until September when the political violence

between the Peronist’s and the Right-win groups was increasing with Churches burned and

Peronist supporters kidnapped and killed. Juan Domingo was exiled for 18 years in Madrid,

Spain. The political and economic repercussions of Peron’s removal were accentuated as the

majority of the workers, who were naturally peronists, enforced successive strikes threatening

Peron’s economic achievements.

In ten years, as Antonio Cafiero argues, the Planes Quinquenales put Argentina in a desirable

position for future investments enjoying an increase in the quality of life. The diversification of

national production into agrarian and industrial, the elimination of vulnerable elements in the

economy by import-subsitution, the nationalization of natural resources and public services,

the efficient distribution of the national income in the form of investments in welfare and the

incentives for workers to unionize and participate in the government’s economic policy62, are

for Cafiero, the biggest achievements of the Peronist economic doctrine. In ten years,

Argentina’s Gross Domestic Product increased by 30% and income per capita by 2%63, the

import of value added commodities decreased by 36%64 and the returns from the national

industry went from 48.873 in 1945 to 68.894 million pesos in 195565. Antonio Cafiero then

argues: “Podemos afirmar razonablemente que si los lineamientos generales del Segundo Plan

Quinquenal hubiesen sido mantenidos, a la fecha el país ostentaría una situación económica

privilegiada”66 67.

61 Ibid 261-262

62 Ibid 269-278

63 Ibid 280

64 Ibid 275

65 Ibid 270

66 Ibid 267

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The economic situation Argentina had when Peron was overthrown was indeed one of the

most notoriously balanced and healthy in Latin America. However, the coup leader, Eduardo

Lonardi systematically destroyed Peron’s accomplishments accusing them of “fascist-like”

policies. Nevertheless, the Generals lacked an economic understanding of the situation they

were trying to challenge. In 1955 Raúl Prebisch was invited to advice and to write a report on

the economic situation of the country after the Peronist years with the intention to

reconstitute Argentina’s economy. The Generals intended to implement his policies derived

from this document which was known as the Prebisch Plan. Nonetheless, was the Prebisch

Plan based on his CEPAL ideas? Was Prebisch able to implement his economic policies in the

post-peronist Argentina?

The Prodigious Son: Prebisch in Buenos Aires

Raúl Prebisch, at the time Peron was overthrown by the Revolucion Libertadora, was in Bogota

delivering a CEPAL Conference on regional trade. A few days later, October 1, Prebisch was

arriving at Buenos Aires after accepting a post as the new economic advisor68 to the new de

facto President, General Eduardo Lonardi. Within three weeks of his arrival, Prebisch

elaborated his famous report on the post-peronist Argentine economy: the Prebisch Plan. In

this section I will study Prebisch’s recommendations to the coup to later analyze its

resemblance with Dependency Theory postulates. First, I will briefly describe the difficulty of

an historical assessment of the Revolucion Libertadora as well its political nature and

consequently, the Prebisch Plan focusing, as I previously explained, on the policies for

industrialization and the state structure.

The Revolucion Libertadora

The historical debate over the reputation of the Revolucion Libertadora differs greatly among

historians. One crucial notion the reader has to bear at this point is that the post-peronist

period in Argentina is the most debated period among academics. Thus, the danger to

generalize is functional to its purpose. I will describe the nature of the coup utilizing the

perspective of Prebisch biographer, Edgar Dosman, and the famous Argentine economist

Noemi Brenta to help understand the reader the incredible unstable political and economic

context Prebisch was influenced at the moment he wrote his plan.

According to Dosman, Lonardi “was a new species of military leader, not a typical power-

hungry Latin dictator but rather a loyal officer committed to constitutional government who

would restore democracy as soon as the electoral rolls could be put in order”69. Although is not

clear Prebisch himself had this opinion, Lonardi approach to the country instability was

67 Translation of the author: We can reasonably say that if the general guidelines of the Second Five Year

Plan had been held, the country currently would have had a privileged economic situation

68 (Brenta, 2008) page 236

69 (Dosman, 2008) page 298

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conciliatory. While parts of the army, who later took power, asked for a perpetual war against

Peron’s followers, Lonardi’s strategy was incorporating the peronists into a concrete political-

peace deal to reconstruct Argentina. His motto was ni vencedores, ni vencidos; that means

“neither winners nor losers”. Dosman, then, argues: “There would be national reconciliation

instead of revenge, he (Lonardi) promised, and the former supporters of Peron were reassured

that they were also welcome for the task of reconstruction”70. Once in Buenos Aires, Raúl

Prebisch immediately met General Lonardi and gathered his economic team in charge of

drafting the Revolucion Libertadora’s economic doctrine. According to Dosman, Prebisch first

meeting with Lonardi “confirmed his belief in the seriousness of the Revolucion Libertadora”71.

To further illustrate this point, Raúl Prebisch during a famous public meeting, known as the

Mesa Redonda del Informe Prebisch, with his closest economic advisors discussing his Plan,

emotively said about Lonardi:

“Si alguna duda quedaba en algo, esa duda no tardo en disiparse: cuando

me vi en frente, en la Casa de Gobierno, con aquella figura tan noble y

austera que junto con otros compañeros de armas desvaino su espada para

derribar una dictadura y no para levantar otra en este suelo sufrido de

América Latina”72 73

However, as I previously stated, Lonardi did not enjoy full support from the same institution

that had brought him into power: the army. In November 12, Lonardi was ousted from the

government by General Pedro Aramburu. He represented the most radical faction of the army.

They claimed the total ban of the Peronist Party, the dismantling of its institutions as well the

political persecution of its leaders. The ascendance of Aramburu represented the catastrophic

end of Lonardi’s reconciliation policy. The new dictator launched a violent persecution towards

the General Worker’s Centre (CGT), a peronist worker’s bastion, dissolving the institution and

repressing its leaders: indiscriminately killing and jailing most of them74, for example Antonio

Cafiero. Although Raúl Prebisch presented the first part of the tripartite report on the

economic conditions of Argentina under Lonardi’s government, according to Professor Sikkink,

Prebisch accepted to remain the economic advisor to Aramburu. However, Prebisch’s decision

70 Ibid page 299

71 Ibid


73 Translation by the author: If any doubt was at stake, that certainly did not take long to dissipate:

When I was in the Government House in front of that figure so noble and austere that with other fellow

soldiers shelled his sword to overthrow a dictatorship and promised not to build another tyranny on this

suffered land of Latin America.

74 (Brenta, 2008) page 234

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did eventually, and perhaps wrongly, became indentified with the repressive ideology of the

coup along with its virulent anti-Peronism75.

The Prebisch Plan: El Informe Preliminar Acerca de la Situación Económica76

The 25th of October, nearly two weeks after Prebisch arrived to Buenos Aires, President

Lonardi presented, addressing the nation, the Prebisch Plan. The first impressions of the Plan

reflected the correct decision by the government to ask Prebisch, a world famous figure,

economic advice. The press, unlike in 1940s, instead of attacking Raúl Prebisch, they saw him

as the “symbol”77 of the new Argentina. However, the political turmoil and instability under

Aramburu’s rule did not construct the preferable atmosphere for Prebisch to implement his

recommendations. In addition, because these recommendations were subject to an austerity

plan, workers and peronists followers did not comply with Prebisch’s final economic analysis of

the Peronist regime and fostered multiple manifestations against “the foreign advisor”78 of the

de facto president.

The Prebisch Plan was strictly formulated after two intensive weeks studying the legacy from

the Peronist government. Most of the data analyzed by Prebisch’s team came from the CEPAL

headquarters. The fact that the economic data received from the CEPAL was previously

studied by Prebisch made the process of writing fairly straightforward. However, as I will

analyze in the next section, Prebisch could have been biased at the time of analysis.

Nevertheless, Prebisch concluded that: “Argentina is in the worst economic crisis of its history

after ten years of irresponsibility and corruption”79. He was specifically concerned about the

low growth of productivity: 4%80 after ten years. In the context of the Mesa Redonda del

Informe Prebisch, he stated: “una de las expresiones más impresionantes del desastre

económico que ha vivido el país, y sigue viviendo, es el escasísimo crecimiento del producto

por hombre en los últimos diez años”81 82. Thus, the Prebisch Plan investigated how to resolve


page 95

76 Translation by the author: The Initial Report of the Economic Situation

77 (Dosman, 2008) page 300

78 Ibid 305

79 Ibid 303

80 Ibid


82 Translation by the author: one of the most impressive expressions of the economic disaster the

country has experienced and continues to live, is the low growth of output per worker in the past ten

years

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the inefficiency of the national industry and the reconstruction of the economic sectors with a

set of recommendations especially focused in fostering the agricultural productivity.

The Prebisch Plan contained two sections: a series of emergency measures to deal with the

short term economic situation and a set of longer-term to guide the government. The

immediate measures were focused to strengthen the agricultural sector: the devaluation of

the peso to provide price incentives for agricultural exports, liberalization of the foreign

exchange market, previously controlled by the State agency IAPI83 (instituto Argentino de

Promoción e Intercambio); a freeze on salaries and wages, and an expansion of foreign loans,

which implied the necessity to re-structure the economy in order to join the International

Monetary Fund. The long-term recommendations included the creation of a program to

technify the agricultural sector, the development of the steel, petrochemical and mechanical

industries as well investment in petrol energy, transportation and expanding the electric

capacity84. But more importantly, the Plan was designed to respond to short-term issues by

empowering the agricultural sector to obtain and save revenue from exports. Prebisch

explained that “there will be no sound development of the industry unless they are based on a

thriving agriculture”85. However, as Aramburu’s oppressive policies towards the peronist

increased, Prebisch had to face with an escalating discontent and opposition from workers

country-wide.

In terms of industrialization, CEPAL’s core-recommendation, the Plan did not call for a heavy

investment in the national structure, but rather concentrate in the export-oriented sectors.

The Plan stipulated a special focus in the agricultural sector to increase the national assets

together with accessing to international credit. Prebisch, during the Mesa Redonda Meeting,

repeats numerous times the importance of the agricultural sector to recuperate Argentina’s

national growth and to plan a cohesive development project for the heavy industry. Prebisch

argued that once Argentina joins the Monetary Fund and creates a credible atmosphere for

external investment; all efforts should be directed to steel, oil and petrochemical industries86.

But, unlike the Peronist regime, Prebisch called for the dismantling of State-owned industries

to curve inflation and stabilize the state expenditure. In addition, Prebisch recommended a

drastic reduction in the workforce, especially in the railways, which he claimed it was exceeded

by 20.000 labourers87, while freezing wages. The reaction by the workers was seen

immediately after Prebisch delivered his Plan to the coup. The 9th of June, a massive strike and

83 Argentine Institute for Promotion and Exchange


page 97


86 Ibid page 6

87 (Jaureche, El Plan Prebisch: Retorno al Coloniaje, 1955) page 70

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mobilization to the Government House by peronist workers ended with Aramburu’s ordering

repressing the manifestation with twenty-seven men executed and hundreds imprisoned and

wounded88. Prebisch was now at the centre of every newspaper in Buenos Aires, which re-

examined old themes about his past years at the Banco Central. His reputation of foreign

advisor, UN diplomat and focus on the agricultural sector soon linked Prebisch with the elite

groups of Argentina he once worked for. Raul Scalabrini Ortiz, the most prestigious peronist

philosopher, historian and journalist, criticized Prebisch’s industrialization policy as returning

to the old colonial days: “the Plan Prebisch is capricious and confusing, worse than irrelevant;

the only explanation for such distortion is his selling out to foreign investors, opposing

industrialization, and returning Argentina to the agrarian days of the oligarchy”89. But

Prebisch’s recommendations of dismantling the State-inefficient apparatus encountered

further criticism.

In 1955, during the Mesa Redonda Meeting, Prebisch clearly explained that the size of the

State affected considerably its efficient dealing with problems of inflation and social welfare.

The Peronist model, he argued, was close to State Capitalism isolated from the external market

rules and benefits. The lack of participation in the world market eventually affected

Argentina’s access to foreign credit to fuel the process of industrialization. The size of the

State, which absorbed the banking system, according to Prebisch, intervened in every aspect of

the economic sphere controlling prices and enterprises to rigidly follow the government’s plan.

However, Prebisch did not, by dismantling the State intervention mechanisms, advocate for a

weak government playing in the free market, but rather together with the State, he called for

private investment as well as foreign credit.

In order for Argentina to benefit from the world market, the liberal reforms Prebisch advised

were directed to join the International Monetary Fund. Although Prebisch argued extensively

his opposition to foreign credit, the problematic of inflation, debt and decreased national

assets indicated to Prebisch that foreign capital was urgently needed90. Thus, Prebisch

recommended cutting staff and budget; privatizing inefficient state companies like Aerolineas

Argentinas (Argentine Airlines); reducing public expenditure; removing price control; reducing

the deficit; reforming taxation to increase revenue and prevent evasion; promoting the

agricultural production and exports, including the establishment of the National Institute of

Agrarian Technology; attracting foreign capital and joining the IMF91. Prebisch was harshly

criticized by the press and the peronist factions, calling him, as he was called before, an

antipatria, selling Argentina to the interests of the imperialistic foreign investors.

88 (Dosman, 2008) page 319

89 Ibid page 312


91 (Dosman, 2008) page 310

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21

Furthermore, the increase of taxation and cuts in welfare programs installed by Peron

provoked a new round of strikes and labour discontent at the same time Peron, in Spain,

recovered his leadership and power base. Oscar Allende, present at the discussion of the Mesa

Redonda Meeting, energetically said “sound money yes, but sound money must not become

the final objective achieved at the expense of the suffering, misery and toil of the lower

income groups”92. In summary, as Brenta argues, the economic policies undertaken since 1955

under the recommendations of Prebisch, Argentina approached the IMF model before

entering the body. Multilateralism, deliverance exchange rate, devaluation of the peso, trade

liberalization and restrictions on domestic credit represented typical IMF requirements93.

Argentina was to follow Prebisch into a liberal economy with great opposition from multiple

popular sectors in society.

In 1956 Raúl Prebisch returned to Chile defeated and tired into his last and second exile.

Attacked by every political group, his most important recommendations were never achieved

under the Revolucion Libertadora: Aerolineas Argentina was not privatized; taxation reform

was postponed; and Aramburu was unable to reform the state; which consumed 42% of the

GDP94. Furthermore, the restructuration of the economy in order to join the IMF was less

satisfactory. The International Bank for Reconstruction and Development rejected financing

investments in electricity and petrochemical projects while grating Brazil $1000 million dollars

the same year. Although Prebisch efforts to contribute to his country were always shared with

humility and hard work; he did not succeed in assessing the political circumstances where to

implement his Plan. The fall of Lonardi’s reconciliation process and the strong peronist

opposition were determinant factors of Prebisch’s disappointment. In addition, the Prebisch

Plan was also criticized by the public opinion, peronists and CEPAL associates because it did

not incorporated most of Prebisch’s famous insights in his Dependency Theory. According to

Arturo Jauretche95, in his famous book El Plan Prebisch: Retorno al Coloniaje96, the differences

are so notorious because Prebisch did not write the Plan, but his closest collaborators Krieger

Vasena, Julio Ceuto Rua and Roberto Alemann97. Nonetheless, in which manners did his Plan

and Dependency Theory differ and agree?

92 (Dosman, 2008) page 312

93 (Brenta, 2008) page 247

94 (Dosman, 2008) page 317

95 Arturo Jauretche, politician, essayist and historian was the most fervent critic of Prebisch. Allied with

Peron in 1955, he remained a critic of the Party until Peron’s fall. Persecuted by Aramburu, Jaureche

wrote extensively during exile in Uruguay about the Revolucion Libertadora illegality.

96 The Prebisch Plan: Returning to Colonial Times

97 (Jauretche, El Plan Prebisch: Retorno al Coloniaje, 1955) page 145

Ezequiel Jimenez

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Assessment of the Prebisch Plan: Another Dependency Theory?

Both Dependency postulates and the Prebisch Plan were differently influenced by their

political and economic context. Dependency Theory was a prompt answer challenging the

economic world order, as the Havana Manifesto explains. On the other hand, The Prebisch

Plan was designed to recuperate the Argentine economy after the Peronist years, claiming a

profound crisis. However, these two documents written by Prebisch seem to greatly disagree

in two of the key Prebischian areas of study: industrialization and the role of the State. Arturo

Jauretche would argue that Prebisch’s “Dr Jekyll and Mr Hyde” complex is largely because he

did not write the plan given to coup, but his closest economic advisors who later took office as

Finance Ministers, for example Krieger Vasena. Kathryn Sikkink, in contrast, argues that

Prebisch regarded the question of industrialization as obvious for his Plan and did not address

it properly. In addition, she argues that Prebisch did not realize how to “play politics” while

presenting his Plan to the coup. In this last section I will analyze the main differences between

the Plan and Dependency theory and propose alternative answers to the problematic.

Was the Prebisch Plan an Exaggeration?

After Raúl Prebisch claimed that the post-peronist Argentina was “in the worse crisis in

history”, the Generals welcomed his recommendations to save the country with great rigour

agreeing with his fatalist views demonizing Peron’s legacy. It was extremely convenient for the

Revolucion Libertadora existence to picture the peronist years as economically catastrophic

with an increasing foreign debt, low growth and industrial inefficiency. However, according to

the Sunday Times Argentina’s debt problem was “low in comparison with her potentialities

once her economic affairs have been restored to an even keel”98. Furthermore, Prebisch’s

theatrical tone in his report to the coup was challenged by the US Embassy arguing that “he

had deliberately exaggerated Argentina’s currency problem to discredit Peronism and had

gone too far in dramatizing the severity of the economic crisis”99. Jauretche, in addition,

harshly writes that Prebisch imagined the crisis of the post-peronist Argentina: “But without

any warning a man who has descended from a plane after a long exile, confounds his

ideas. This is where the common man begins to suspect, much to his regret, that economics is

a mysterious science”100. Prebisch largely used CEPAL data-bases to create the report and

based most of his policies in a deep study of Argentina by cepalistas or anti-peronist

economists such as Krieger Vasena, Julio Ceuto Rua and Roberto Alemann. Thus the excessive

reliance on former colleagues for information and data could have misled his final conclusions.

Jauretche, in his book, gives a detailed and peculiar point-by-point account of Prebisch’s

imaginary crisis. He investigates every aspect of the Plan and compares the data obtained by

the CEPAL with the National Bureau of Statistics. When assessing the question about the size

98 (Dosman, 2008) page 305

99 Ibid


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of the State, Prebisch claims its inefficiency and surplus of workforce, for example in the

railways. While Raúl Prebisch recommended the drastic cut of 20.000 in the State workforce to

reduce the State’s expenditure and increase the railways effectiveness and efficiency,

Jauretche categorically denies Prebisch’s claim by showing an increase in the usage of railways

illustrating the urgent necessity of incorporating extra workers rather than reducing the rail

personal. Between 1937 and 1954 the railway usage, according to Jauretche, increased by

242.2% while the workforce recruitment increased only by 53%101. Thus, he ironically asks:

“Would not it be that Mr. Prebisch is confusing us with Chile or Uruguay?”102

The Lack of CEPAL Elements

Throughout the Prebisch Plan, previously explored, the disparities between the CEPAL theories

and the recommendations given to the Generals are immense. Both Jauretche and Sikkink

point out the differences in language, structure, tone and policies suggested. Although Sikkink

denies the claim by Jauretche of Prebisch absent involvement in the Plan, she does recognize

the missing of his renowned categories of centre-periphery, declining terms of trade and the

need of regional integration103. Unlike problems of inflation, agricultural production and

exports, other elements such as planning and industrialization were always in the background

of the report and did not take any important role in the policy recommendations by Prebisch.

Industrialization through import-substitution and the role of the State are two important

categories Prebisch does not discuss in his Plan to the Generals as a tool to overcome the

“crisis”. Nonetheless, he especially addresses the importance of these in the Havana

Manifesto. During and after the meeting in Cuba, the centre-periphery dialectical model was

indeed the moral justification for third world countries to challenge the comparative

advantage myth in order to develop. If Latin American countries realized their potential to

develop, then, Raúl Prebisch advocated for a strong diligent state to plan development,

industrialization through and ISI model to foster technology advancement which would result

in growth and employment, protection of the infant industry, regional integration and

autonomy in the world economic order. Thus, in 1949, Prebisch praised Argentina stating: “in

the post-war, with the determined policy of protection, encouragement and the strong

contributions of goods and capital by the government, the Argentine industry went into his

face of final consolidation”104. According to Hugh Schwartz, from the Inter-American

Development Bank, in 1950 Argentina was the foremost example of a nation that was

increasing its effort to industrialize, and the country’s extensive public relations campaign

101 Ibid page 70

102 Ibid


page 95


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abroad, laying claim to recent industrialization gains, must have tended to reinforce the

arguments of Prebisch-CEPAL theory105.

On the other hand, greatly different from the Manifesto, Prebisch formulated a totally new

structure and policies to encourage growth in the post-peronist Argentina through the

Prebisch Plan of 1955. As I previously explained, Prebisch’s recommendations to Lonardi and

Aramburu were largely similar to liberal policies. The especial focus in the agricultural sector

instead of strengthening the national industries created by the peronist regime together with

the restructuration of the State to join the IMF delimiting its size cutting welfare programs as

well as privatizing national companies, illustrates Prebisch contradictory thinking. In the case

of industrialization, the Prebisch Plan did not consider the importance and power of the large

vested interests of the highly protected national industry106. Rather, it pursued a program of

dismantling most of the newly created industries by privatizing them and cutting the

workforce. Further, in the case of the role of the State, Prebisch did not advocate for a strong

diligent State, but pursued policies to exterminate most of the Peronist development planning,

worker’s centres and price control institutions. However, as Sikkink argues, neither Prebisch

nor the Revolucion Libertadora leaders were concerned on creating new autonomous

economic policy institutions but erasing every peronist bastion. But, as explained before, each

of Prebisch’s suggestion to the coup was massively opposed by the popular sectors of society

which viewed Don Raul as a foreign advisor and an antipatria. Furthermore, the vast

differences between the main Prebisch’s documents, the Havana Manifesto and the Prebisch

Plan, were also very surprising for his CEPAL colleagues. For example Furtado was “perplexed

and disappointed”107 by Prebisch’s IMF orthodoxy fitting badly with the Prebisch he had known

during his years in Chile. Thus, we must ask: what happened to his revolutionary ideas that

were shaping Latin American countries? What factors helped Prebisch to alter his thinking?

What motives were behind this radical change? In the conclusion below I will try to explore

some of these questions, which urgently need further academic research to fully understand

Raúl Prebisch dual thinking.

“Yo estoy dispuesto a cambiar mi opinión”108 109

Raúl Prebisch arrived in Buenos Aires with a preconceived idea of changing the economic and

political structure led by Peron for ten years. His primary wish, since he was exiled, was to

return to Argentina and serve the country in the same way he did during his years at the Banco

Central de la Nacion. His depression after exiling in Chile resorted in the impossibility to even

105 (Schwartz, 1988) page 125

106 (Vasena, 1988) page 119

107 (Dosman, 2008) page 315


109 Translation by the author: I am willing to change my opinion

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attempt to write academically, as it was explained before. In addition, the unfair circumstances

in which he was ousted from his professorship and the Banco Central fostered his willingness

to come back to Buenos Aires. As it can be seen from the various quotes from the Mesa

Redonda Meeting, he was decisive to construct a new Argentina with solid and honest

leadership during a reconciliation policy promised by Lonardi. Thus, Raúl Prebisch came back

to Argentina believing in an inclusive project that soon fell apart.

I would argue that the political context of intense and violent rivalry between the peronist and

liberal factions, were the main causes of Prebisch’s contradictory thinking. The political

intransigence pictured since the rise of Peron and his autocratic regime and the violent coup

by the revolutionary leaders are just a few examples of a larger theme in Argentine history.

The leaders of the Revolucion Libertadora systematically eliminated every aspect of Peron’s

dominance in Argentina in the same way Peron did with the Conservative Party policies in

1946. What the revolutionary leaders did during the governments of Lonardi and Aramburu

were applying changes rooted in political intransigence without recognizing and further

develop Peron’s economic, social and economic achievements. Raúl Prebisch was a victim of

his historical context. Once appointed economic advisor to the president in charge of planning

their economic doctrine, Prebisch could not fully apply his concepts of Dependency Theory as

they shared great similarities with Peron’s policies. Indeed the CEPAL concepts of

industrialization, international autonomy and regional trade were in vast dimensions applied

by the Peronist government. Prebisch had to please the leaders who brought him back to

Argentina and at the same time present a coherent economic plan which would represent his

own theories. Although most of his policies did not reflect the core of the CEPAL ideas, a great

extent of them, such as joining the IMF, was completely logical to the world context. Indeed,

Brazil, Chile and Uruguay who joined the IMF earlier than Argentina were obtaining large loans

to develop their industries. In addition, Prebisch trusted Lonardi’s reconciliation policy as the

base for Argentina’s development which urgently needed the peronist workers.

However, once Aramburu took power, Prebisch did not have a chance to reformulate his Plan

but to enforce it with a subset of liberal policies such as privatization of state industries and

cuts in the welfare programs. Nonetheless, I do not believe that Prebisch was completely

knowledgeable about Peronist Argentina as the manipulation of statistical data suggest. He did

not recognize some of the success of the Peronist years, such as the welfare programs and the

investments in education, health and infrastructure. Thus, I would argue that together with the

political intransigence of the different factions, his biased against Peron himself blinded him to

write an impartial and de-politicized economic analysis using the existent favourable structure

and replacing the inefficient mechanisms with his ideas developed in the CEPAL.

In conclusion, Raúl Prebisch remains even today a contradictory figure in the world of

development. From his brilliant inputs during his years at the Banco Central de la Nacion, his

famous CEPAL years in Chile and his collaboration with the Revolucion Libertadora, he was

indeed a great economist and academic. However, the volatility of his thinking in the Prebisch

Plan was what pushed him in 1956 to his second exile in Chile. Father of the Dependency

Theory, he pursued a model that was followed with great success by multiple Latin American

Ezequiel Jimenez

26

countries but not at his home, Argentina. His early memories from the cruel Peronist regime,

the veto for his position to the IMF by Peron and his embarrassing exit from the Banco Central

could have been sufficient reasons to re-shape the post-peronist Argentina in a freer manner,

but Aramburu’s anti-peronist reforms precluded Prebisch from implementing his Plan

successfully. As the title-quote of this section illustrates, he did change his mind with great

willingness but failed to understand his role of diplomat and intellectual able to overcome the

intolerance and intransigence practiced by every opposing party in Argentina.

Ezequiel Jimenez

27

Bibliography

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Documents

Blaney & Jimenez - The Infamous Son Raul Prebisch’s Dependency Theory in Post-Peronist Argentina