“We can no longer allow the free play of economic forces; we must act upon them, channel them, control and direct them if economic development is to be achieved in a relatively short time.” “A Dynamics for Latin American Development” is a master plan on just how to use these forces to make them yield the economic development desired for Latin America.
This work is divided into three parts with a long appendix on the “false dilemma between economic development and monetary stability.” The first is a general presentation of the various problems confronting development and in the other two Dr. Prebisch examines the problems more concretely and suggests practical solutions.
These problems—including inflation—spring mainly from two sources: one, from the internal structure—land tenure structure, tax structure, social class structure with its lack of mobility, and an incredible imbalance between income distribution and consumption; the other, from the unprivileged economic position of the “peripheral”—or underdeveloped—countries with respect to the “large centers”—or industrially developed nations.
Since the economy of “peripheral” countries depends mainly on the trade of basic products which sell at very low prices and for which there is relatively little demand, while that of the “large centers” rests chiefly on the sale of very highly priced industrial goods which enjoy a fast and ever increasing rate of demand, capital accumulation is almost impossible for the “peripheral” countries, and therefore so is their economic development. This unfair disparity leads inevitably to what Dr. Prebisch has termed “the strangulation from abroad,” the ever-recurring theme and basic theory of the author. It is imperative, says the distinguished economist, that the “large centers” cooperate with the “peripheral” nations to correct this gross injustice, not merely out of a sense of fairness but as “a grand political design,” for in the long run they stand to gain much both economically and politically by aiding their development. This would mean nothing less than price-stabilization and even price-support of basic commodities on an international scale.
The clear style, logical analysis and presentation, imaginative thinking, constructive purpose and sincerity of the author all combine to lend this book a unique merit and interest. It is also an invaluable guideline for Latin Americans to follow in their sorely needed economic development planning.
Original in his thinking, unorthodox in his approach, Dr. Prebisch often disregards the “classical” laws of economics as irrelevant to the Latin American economic “reality.” Like a skilled craftsman he has conceived a delicate and complex machine in which every part is assigned and expected to perform specific functions. However, there will be so many conditions to be met, so many human factors and conflicting interests involved, that one cannot help but fear what will happen if any sector fails to perform properly its prescribed function. The degree of civic-mindedness, sense of responsibility, unselfishness, vision, and political discipline required for its smooth operation is high, indeed. Dr. Prebisch knows all this well, yet remains optimistic about the workability of his program.
This last book of his may also have been born under a “heretic” sign. Already known as “the Manifesto,” its revolutionary and controversial nature, as well as the transcendental implications of its theories, will surely cause quite a stir. The main thesis lends a quasi-scientific basis to the notion of “economic imperialism” practiced by the developed nations. The realization that the United States pays 120 an hour for Latin American labor while they pay 15 times as much for ours will further persuade them that they are indeed subsidizing our high standard of living.
Dr. Prebisch’s work should he translated and widely known among educated Americans.