Desarrollo industrial y subdesarrollo económico: el caso chileno (1860-1920)

Abstract

This is a classic work. Originally published in 1971, the major reasons for reviewing it are to notify Chileanists and students of modern Latin American economies that they no longer need to consult it with an Italian dictionary in hand, and to reflect on what remains after so much time. Carmagnani made the decision, as he explains in a brief comment, not to revise the work. Eduardo Cavieres helps maintains the work’s value with an excellent introduction, placing it in the context of Chilean economic historiography.The core of the work consists of four lengthy essays followed by 22 appendixes (anexos) and 17 graphs. The economic data that Carmagnani pulled together, from price and wage series to government revenues and trade indices, remain fundamental. The essays consist of two closely reasoned analyses of industrial formation, concentrating on a series of census information from the 1890s to 1920. The most important sectoral analysis focuses on the period with the best numbers, that is, from 1910 to 1919. These two concentrated descriptions of numbers and their meanings are followed by a couple of essays that are more expansive and reflective: one on the origins and gradual success of industrial protectionist views and another on Chile’s insertion into the world economy from 1860 to the end of World War I.Throughout these essays, Carmagnani asks the key questions of underdevelopment: Why did Chile develop industry in the pattern it did? Why did these industries lack dynamism? Why did they not become the center of economic growth rather than the periphery of a trade-based economy? And finally, how did Chile’s dependence on Great Britain shape its own economic prospects? The essay on the rise of protectionist sentiment and the obstacles it faced before gaining prominence is alone worth the price of this book. Carmagnani demonstrates that protectionism had strong support by the 1890s and argues that it was triumphant and industries were receiving government subsidies by 1920.Camagnani offers insights on the absence of labor contracts and what that meant for the demand side of growth, the nightmarish consequences of a government that covered its bills by printing money, and the importance of Chile’s balance of payments as the key to its sorry economic record. Then, he proposes a theory that should have received far more attention since he wrote this book. Many have argued that Chile took a wrong turn at the start of the nitrate era, around 1880. Carmagnani makes the case that linkages between Chile and Great Britain became seriously unbalanced only in the 1870s. Until then, despite its structural weaknesses, Chile had a balanced economy in its international payments but was vulnerable to external shocks. After the late 1870s and throughout what European historians call the Great Depression, that is, into the 1890s, Britain’s role within Chile allowed the dominant power to pass on the costs of its own troubled economy to a weaker partner. In making this argument, Carmagnani traces out sectoral linkages rather than imperialist actors as the engines of dependence. After the onset of the Great Depression, Chile’s economy was never, in terms of international payments, balanced again. Cycles of government indebtedness and transfer payments to foreign investors led to a steady monetary devaluation and an ever more asymmetrical relationship with foreign powers.While the analysis stays close to key economic issues, it never becomes bogged down in jargon of any kind. The work’s new accessibility will mean that a new generation of Latin American economic historians will pay attention to what it says.