The Paradox Of Development In Argentina From The Perspective Of New Economic History - Institutional Change And Pendulum Development

Establishing a basic system for a long term and stable economic growth has always been a core topic among the economists, in this regards, Argentina, may have offered an example as to apply a comparative study. The Great Depression and the Second World War have divided the country, along time lines, into two distinctive development stages: the good old days in which a wealthy and promising nation that enjoys her economic prosperity and political stability and years that follow when the South American country is trapped in the vicious circle of the pendulum swing, and hence the 20 th century is known to the Argentinians a lost century. What are the reasons that lie behind the Argentine development paradox? From an academic point of view, one may find answers based on culture determinism, dependency theory, political crisis or failure in handling politics.Based on a close observation on the Argentine development trajectory, we come to the conclusion that the fundamental reason of her decline lies in the lack of political and institutional guarantee for properties. Despite the establishment of the notion of private property and its trading in the market when the republic was newly founded, the supremacy of large estate based on its abundant natural resources and colonial traditions, coupled with the large quantities of agricultural and livestock products as the main exportation in its international trading, has led to an unbalanced political and economic development during the Argentine modernization and held up the development of a middle class and the development of a modern system. As the modernization evolves, there’s been an increase presence of immigrants with stronger economic power, however, the oligarchies in the agriculture and cattle raising sector, which are basically controlling the government, repel the immigrants, causing an inconsistency of the political power with the economic power and thus escalating the crisis of governance. The oligarchic government, with the intention of bringing the raising middle class into the political field through the general elections, is caught by surprise when the lower working class actually becomes part of the political picture, a panorama in which one perceives a dualism social structure with the working class against the agricultural export institutions. As is left by the colonialism, the caudillismo and its patron-client relationship stand in the way of the development of a citizen society, meanwhile, numerous atomized urban workers offer a nursery for the hatch of populism. As Juan Peron assumes the presidency, the movement model and corporatism model accelerate the social division and escalate conflicts between interest groups, as a result, the particular interests of each group have replaced the common interests to be the mainstream of the society. In such a highly politicalized society, where there’s an absence of consensus about a basic system, the various groups see the “capture” of the government as the only way to achieve and secure his own interest, hence the state has become the “sacking hand” in the ploy of interest redistribution. The “winner takes all” rule propels the country into crisis of frequent successions of regime while such social turbulence drives the vulnerable middle class to seek shelter from the army. In a society that lacks expectations of stability, the massive nationalization o privatization, the refusal of acknowledging the debts and keeping printing money become the routine maneuvers that the rules frequently use. As a result, the “bandit’s regimes” take turns to governing, situation that usually ends up with plundering the country.Our study suggests that in order to achieve an economic prosperity, one not only requires an appropriate property system, but also, and in a more urgent way, a political guarantee. The democracy and market oriented economy in form don’t necessarily bring an economic wellness, and such wellness relies on, to a great extent, how the power is managed and what kind of government it is. The “failure” of Argentina, implies that whether it’s a democratic government or a bureaucratic-authoritarian one, the goals of the politicians have always been nothing but seek for one’s own benefits. With the aim of changing the social structure of stimulus and establishing a “reinforced market oriented government”, one should not only make wise decisions on the public policies but also pay a greater attention to long term system arrangement. On one hand, it’s advisable to improve the political parties’ construction to gain a better representation and coordination of the interest of the various groups in a higher level, and on the other hand and more fundamentally, we propose that the government should change the fractured social structure, help to develop a citizen society so that both the government and the civil society, through games and making compromises, have a say in balancing their power and act under constraint in the light of the establishment of a modern system.