Caio Prado Júnior’s volume, which first appeared in 1945 (reviewed in HAHR, August 1946) does not wear well. The author’s imprecisions when dealing with analytical concepts, the contradictions that one finds within the volume, the unsubstantiated assertions, and the distortions because of glaring omissions of events can only serve as an object lesson on how not to write interpretative history.

The book is studded with unsubstantiated statements. On p. 49 we are told that in the seventeenth century “o empobrecimento de Portugal.. . . força o êxodo em larga escala de sua população que procurará na colônia americana os meios de subsistência. . . .” There is no indication given as to the magnitude of this exodus, and one is led to wonder why this migration did not result in a colonization pattern similar to other regions where large family groups migrated. On pp. 138-139 the author mentions the plight of the nineteenth-century Brazilian artisans who suffered greatly from the competition of cheaper and better European (especially English) goods. The latter had easy access to the Brazilian market because of the government’s free trade policies. The author says that the “ruína da pequena industria local . . . lançara na desocupação um artesanato que, embora modesto, reunia assim mesmo, sobretudo nos maiores centros urbanos, urna parte apreciável da população.” The difficulties of this “camada social” are said to have increased, resulting in grave social agitations. There is no indication about the importance of this social group in relation to the rest of the society. One also wonders whether at the time the cheapening of manufactured imports might not have had some positive aspects, especially if export prices at the time were stable or rising. However, the possibility of improvements in the terms of trade at the time completely escapes the author.

Throughout the discussion of the nineteenth century Caio Prado mentions the importance of tariffs for revenue purposes and protection without making clear which motive predominated. In this connection, he claims that after 1860, when the average tariff levels rose to fifty percent “aparecem as primeiras manufaturas de certo vulto” (p. 176). No example or source, no direct or indirect quantitative information are given to support this statement. On p. 199 we learn about “o progresso material do Brasil . . . retoma logo depois (after the Paraguayan War) um ritmo axcensional rápido e seguro.” Here too we never learn what evidence led the author to make this assertion. On the same page he claims that the growth of banks and other financial institutions “. . . permite captar e mobilizar em larga escala as fontes de acumulação capitalista. Aparecerá no Brasil uma replica, modesta embora e muito afastada de seus modelos, das grandes praças financeiras da Europa e dos Estados Unidos. . . .” Brazil is still today suffering from underdeveloped capital markets, and it is thus hard to see how it can be claimed that even on a smaller scale Brazil had the financial institutions which could easily capture savings for the purpose of investments. I was especially surprised that Mauá, an important figure in the nineteenth-century Brazilian economic scene, was hardly mentioned.

Probably Caio Prado’s discussion of the influence of foreign capital in the development of the Brazilian economy most clearly exemplifies his weakness as an economic historian. On pp. 320-322, for example, foreign capital which entered Brazil in the interwar period and since World War II to establish manufacturing industries is represented as made up of “trusts” which had to expand and enter countries like Brazil in order to survive. They are described as expanding forces, blocking the way for or even eliminating local en trepreneurial efforts. Foreign capital needs to send home profits; this can only be done by using up some of the export earnings of the country; thus, foreign capital lives off the wealth of the country.

It is true that the entrance of foreign capital implies a future burden on a country’s balance of payments because of profit remissions and interest and amortization payments. What Caio Prado forgets is that foreign capital enables a country for a period to import more than it exports and thus increase the productive structure of the country (especially if foreign capital can be used to build roads, power projects, and new industrial establishments). Thus the drain on a balance of payments which the entrance of foreign capital implies for the future, has to be balanced against the increase in the capacity for production which this makes possible. One has to make a certain type of benefit-cost analysis. This the author never attempts.

Caio Prado certainly exaggerates the importance of foreign trusts on the economic development of Brazil since the thirties. The social laws introduced by Vargas in the thirties, the building of the government steel mill at Volta Redonda (with American financing), the creation of other large government-owned steel mills in the 1950s with foreign financing, the massive expansion of the government into the production of power (with the financing of foreign capital), the deliberate industrialization policies adopted by the government in the fifties—all these give the lie to Caio Prado’s picture of an economy mainly influenced by foreign capital.

How seriously can one take a work so full of unsupported generalizations and so biased in its presentation of facts? I am afraid that I would describe this work as an example of pamphleteering rather than a serious attempt at historical analysis.