Inflation proved to be a staggering problem for most of Latin America in the 1970s. This collection of papers, the outgrowth of an Oxford seminar in 1978, is an invaluable handbook most obviously relevant to economists and political scientists, but also a godsend to anyone studying or teaching recent Latin American history. Gathered here are reasonably comparable analyses of six major Latin American stabilization attempts of the 1970s.
The three largest countries are here: Argentina (Guido di Telia), Brazil (John Wells), and Mexico (E. V. K. FitzGerald). Di Telia focuses on the years of the Peronist restoration (1973–76), during part of which he was an economic policy-maker. The period culminated in chaos as inflation accelerated toward 500 percent and helped bring an anticipated military coup. For Brazil, Wells looks not at the most obvious years of initial stabilization (1964–68), but at the post-OPEC world where Brazil could maintain high growth only at the cost of rapid foreign indebtedness. Yet its high credit rating also allowed Brazil to avoid committing itself to formal stabilization policies of the IMF variety. In analyzing the Mexican case, FitzGerald explores the strains on the “hard money” policy of a government that stubbornly refused to accept the consequences of the overvalued peso its policies had helped create. Long committed to an “open model” of development, the Mexican government saw little choice but to swallow the medicine of orthodoxy.
The smaller countries considered here include Chile (Lawrence Whitehead), Peru (Rosemary Thorp), and Uruguay (M. H. J. Finch). The Chilean story is the best known. Whitehead goes back to 1970 for the background, then shows how the University of Chicago–trained Chilean technocrats used their mandate from the military to go far beyond stabilization and to impose a new “liberal” economic model, sweeping away industrial protectionism and reducing the state sector. Chile, Argentina, and Uruguay have followed parallel policies in this respect, producing a new capitalist era in the Southern Cone. In none of the countries could such policies have been pursued without the blessing of the men on horseback, and the support of North Atlantic economic powers, both private and public.
Readers curious about post-1945 Uruguayan history will be grateful for Finch’s lucid chapter, which is an economic history of that ill-starred land’s past twenty-five years. Although Peru is another of the more studied cases, Thorp does an admirable job of tracing the weaknesses and vulnerabilities that persisted during the attempt at military-directed reformism.
In their introductory and concluding chapters, the editors offer a number of useful insights. All the authors write from a “political economy” approach in the sense of assessing the political factors that helped decide how policies got adopted, amended, rejected, or jettisoned. There is also attention to changing factors in the world context: revision in IMF standards, the rapid emergence of the Eurodollar credit market, and the increased attractiveness of monetarist doctrines in years of hyperinflation.
The practical relevance of this book’s subject is unfortunately all too evident in the price of this excellent book.
