Latin America held back by its stunted legacy

My first direct exposure to a Latin American country occurred when I visited Mexico in 1968. Naturally I was struck by the poverty. However, I met an American woman there who said that building factories was solving the problem—she had been the partial owner of one. Well, today factories proliferate around Mexico City, creating a tremendous amount of pollution, but the misery remains. Over the years the gap in the standard of living between North America and the lands south of the Rio Grande has widened, fostering vast streams of illegal immigration.

The years after World War II saw the recovery of the lands that had achieved economic advance, but had been devastated by the conflict. France, Germany, Italy, Japan, and the Netherlands are prime examples. This almost miraculous result was due in some measure to US aid, but primarily it came about because of the reservoirs of human capital available in those lands. There were educated people who knew how to make things work. Now these countries, those of the G7 group and the smaller ones associated with them, have achieved remarkably high and uniform levels of prosperity. Yet these high-achieving European countries, so we were told forty years ago, reflected a dichotomy likely to remain permanent. Except for Japan, the Third World was condemned to grinding poverty. However, this prediction has not proved to be the case—at least not uniformly. First, South Korea, Taiwan, Hong Kong, and Singapore moved forward to prosperity. Now mainland China and perhaps India are joining them.

So Third World status cannot provide the sole explanation for the developmental lag in Latin America.

Conventional wisdom offers a number of reasons for this underdevelopment, prominent among them selfish domination by the US. However, Cuba’s escape from the clutches of the colossus of the North did not liberate its economic energies. Later in this essay we will briefly revisit the reasons for the popularity of this pseudo-explanation.

Now comes a book with a startling new thesis. In their “Fabricantes de miseria” (Barcelona, 1998) Plinio Apuleyo Mendoza, Carlos Alberto Montaner, and Alvaro Vargas Llosa suggest that the Hispanic heritage itself may be at fault. They point out that of all the types of society exported from Western Europe only that stemming from Spain has left its daughter societies in a seemingly permanent state of misery. That is the US, Canada (including Quebec), Australia and New Zealand all have a high standard of living. Most of these countries have substantial bodies of immigrants from other European lands, including Ireland, Germany, the Netherlands and Italy. All have prospered. Sub-Saharan Africa, colonized by the British, French, and Portuguese may seem an exception. Actually it is not, for most colonies in Africa were simply exploited by the imperial powers, not settled. The one that was settled—and where the settlers have mostly remained--South Africa, is now doing reasonably well.

Not so the former Spanish possessions. In earlier times, there was a tendency to dismiss this approach as “Spain-bashing,’ which took the form of the so-called Black Legend. The time has come to ask, though, whether this legend was really so legendary.

A possible intermediate case, lusophone Brazil, will not be treated here. In terms of development Brazil occupies a gray area. Sometimes it seems poised to assume First World status; sometimes it falls disappointingly behind. If Brazil were included, one should address the issue of the cultural deficit of Ibero-America. This enlargement would not substantially alter the argument offered here.

A revealing parallel is with the former Spanish colony of the Philippines. While its Asian neighbors to the north and west forge ahead, that countries suffers from Latin American-type misery.

What then are the factors that make up the bill of particulars of the Stunted Legacy bequeathed by Spain?

1. The idea of limpieza de sangre—purity of blood. This criterion emerged in the state of cultural impoverishment that ensued after the expulsion of the Jews and Moors from the peninsula (1492ff.). Converts were allowed to remain. However, their descendents were regarded as racially tainted, their blood impure (no limpio).
2. The “culture of poverty” which emerged in the Asturias, the hardscrabble lands in the north of the peninsula that were the cradle of the Christian Spain of the Reconquista.
3. The failure of Spain to develop a native merchant class. Italians and Flemings, who excelled in banking and commerce, handled much of the trade of the peninsula.
The fact that for long periods parts of Italy and the Low Countries were Spanish possessions facilitated this takeover.
4. The Inquisition and the Counterreformation. These developments affected all of Catholic Europe, but nowhere so balefully as in Spain. For that reason we speak of a distinctive Spanish Inquisition, an institution fully active in the New World.
5. Held back by these factors, Spanish intellectuals never developed their own substantial version of the Enlightenment (even though there was some encouragement under the Bourbon kings in the 18th century). There is no Spanish Voltaire, no Spanish Swift, and no Spanish Kant. Indeed Spanish literature does not seem to form an organic whole. It has only two high points—the Siglo de Oro (of the 16th and 17th centuries) and the modernism of Unamuno, Lorca and company. No wonder that many Latin American intellectuals prefer to do their reading in French and English.
6. The preceding tendencies all contributed to the idea that Spain was “not part of Europe.” Europe ended at the Pyrenees. This separation was affirmed in the authoritarian Spain of the caudillo Francisco Franco. By contrast, one of the accomplishments of today’s Spain is finally to join Europe. Yet while Spain languished outside of Europe, it could not bequeath European civilization to its daughter societies. It could only devastate what many already had—advanced Pre-Columbian civilizations.
7. In her Transatlantic possessions Spain imposed restrictivist trade policies, which favored the mother country and kept down interregional exchange. An elite corps of Peninsulares tightly controlled everything. Bureaucrats and nobles came out from Spain, insulating themselves from those they governed. Despite the advantages of climate, to this day Mexico has trouble developing viticulture. In colonial times all the wine had to be imported from Spain. The continuing problem of the stranglehold of dirigisme, centralized government authority, has been well highlighted by the Peruvian economist Fernando de Soto.
8. An exclusionist domination of the criollos (whites born in the Americas) followed the expulsion of the peninsulares in the third decade of the 19th century. Thus only the very topmost smidgen of the white upper crust was scraped off. In a result very different from that in the US, the mass of the people were in no way empowered. They were left in a series of castes, with mestizos (those of mixed blood) generally at the top, then various groups of Amerindians and Africans, who were left to contend for places at the bottom, their numbers notwithstanding.

The above is a formidable indictment. No doubt it will be faulted as politically incorrect. But in view of the obstinacy of the problem of Latin American underdevelopment, no stone must be left unturned.

In conclusion, we turn to some competing theories that have long held the field.

1. The thesis that Third World countries have been kept in poverty by having to serve as suppliers of raw materials, accepting high-priced industrial goods in exchange. The remedy, much favored in the 1940s and 50s was to impose high tariffs on industrial goods in order to encourage “import substitution.” However, the locally made refrigerators and automobiles were generally inferior. Besides, as the Asian dragons have shown, what is needed is to produce some high-quality product that other countries will be willing to buy.
2. The false notion that foreign investment is holding these countries back. This is refuted by the history of the United States itself, which grew rapidly in the 19th century owing to European investment.
3. The US solely to blame. With a dulling frequency, this rationalization emanates from guilty Latin American whites of the ruling class who need a scapegoat for the mismanagement their group has imposed for so many generations. It is true that there has often been collaboration between local oligarchies and Yankee interlopers. However, US influence in Europe and Asia has not held those nations down. Despite its popularity in some circles, this blame-the-gringos claim does not hold up.
4. Leftist theories that capitalism itself is to blame. This notion, still popular in some quarter, fails to explain why some countries, indeed an increasing number of them, have prospered mightily under capitalism. Why not Latin America as well?
5. A prideful sense that there is a precious quality of Latin civilization, Arielismo (using the term coined by the Uruguayan writer Rodo’) that must be preserved in the face of vulgar Yankee hucksterism and consumerism. But is this an either-or? Why not have both—a sense of courtesy together with progress? The Japanese certainly manage it.
6. Now for the final taboo: there are too many Indians and too many blacks in these countries to make modern societies. In view of the effects of artificially induced Indian inferiorization for the benefit of the conquistadores, not to mention the illiteracy and general abjection imposed on these groups for so many generations, this explanation should not be embraced without exhausting the others. Moreover, if the magic of whiteness (a new version of limpieza de sangre) were the key, the European-sourced peoples of the southern cone (Argentina, Chile, and Uruguay) should have surged mightily forward. Yet in 2003 the gross domestic product per head of Argentina was a mere $7,700, not that much higher than racially mixed Mexico, counting $5,860 per head. Hence the argument of this paper, that the Hispanic legacy is the common factor.