Come for the barbed, politically incorrect, period political cartoons; stay for the incisive, empathetic, intellectual history. Margarita Fajardo's The World That Latin America Created: The United Nations Economic Commission for Latin America in the Development Era traces the trajectory, from the late 1940s to the early 1970s, of the international organization usually called CEPAL, from its initials in Spanish and Portuguese. CEPAL has been arguably the most influential and autonomous “regional” organization in Latin America, despite its formal status as a mere subordinate unit of the United Nations. For Latin Americanists, along with historians of economic ideas, the volume's draw will be Fajardo's engaging origin stories—deeply researched in English, Spanish, and Portuguese—for a body of ideas that were subsequently, and not entirely justly, conflated as “dependency theory.” For the wider business history and international relations reader, the book fleshes out two truths. First, economic policymakers engage in daily firefighting, but responsible leaders also have an underlying theory about what is important and why. Sincere or desperate political leaders heed experts, particularly in democracies, even partial or occasional ones including all of the larger Latin American countries during these years. Thus, compelling and policy-relevant hypotheses about the interactions of industrialization, development, and international inequality matter in the real world. Second, educated Anglophones tend to know quite a lot about the debates in the global North among, inter alia, Keynesians, neoliberal advocates of balanced budgets, and prophets of East Asian state-promoted industrial capitalism. But few comprehend the arguments, articulated first and most consistently in Latin America, that undergird the default development views of policymakers and intellectuals throughout what we now term the global South (a designation also including most of Asia and Africa, as well as low- and middle-income countries everywhere). This readable volume dispels confusion.
Three broad strands of economic ideas emerged from CEPAL. Fajardo terms the first cepalino, built with the ideas of Argentine Raúl Prebisch, German Briton Hans W. Singer, and Brazilian Celso Furtado. The fruit of vigorous advocacy by an entrepreneurial Chilean diplomat, CEPAL was provisionally created in 1948 and sited in Santiago. Since the only then-admissible justification for a regional organization within the UN was postwar reconstruction, the new institution's advocates carefully ticked the boxes by highlighting the region's need to recover from the economic damage wrought by wartime price swings in international trade. Prebisch became CEPAL's head in 1950, as that institution successfully fended off efforts by the U.S.-dominated Organization of American States to absorb it, and in 1964 he also founded and directed the United Nations Conference on Trade and Development (UNCTAD), from then until now probably the best-known and most globally influential face of economic development theory and policy recommendations emanating from the global South. The key innovation of Prebisch—and of Singer, who articulated similar ideas independently but was less associated with CEPAL—was to conceptualize the international economy not as a decentralized free market open to all but rather as comprised of patterned, and biased, structures linking the capitalist center (or centers) and periphery (or peripheries), and persisting even after the end of formal colonial ties. The center-periphery framing, now accepted as a first principle in much of the world, has profound implications: first, global markets are fundamentally unfair, as outcomes for individual producers and purchasers depend on geography as much as price and quality; and second, development strategies relying solely on domestic economic policy innovations (reciprocally conflated in much of the global South under the umbrella term “modernization theory”) cannot succeed.
The cepalinos marshaled evidence for a secular decline in the international terms of trade for the primary-sector agricultural and mining commodities mainly exported by Latin America, in comparison with the industrial products Latin America imported. (We should, by the way, recall that economists of the 1950s and 1960s could not draw on today's abundance of reasonably credible economic statistics, so the scant data they could access was painstakingly assembled. Any reader who has coordinated a multisite collaborative project will enjoy the tale of the CEPAL staff struggling to articulate a multi-country statistics-collection project and then chivvy a far-flung team of researchers into producing reasonably parallel reports. Our technology may have improved, but the herding-cats metaphor remains relevant; see pp. 32–34). Ergo, the only exit would be industrialization in the periphery. But, as Furtado emphasized, herein lay a development paradox: industrialization for latecomer countries would necessarily rely on imported “basic inputs” such as steel, cement, and fuel, as well as sophisticated capital goods. To earn the foreign exchange for these, exports of coffee, beef, grain, copper, and petroleum would be necessary, but they suffered from high volatility and falling prices over time, inhibiting planning. These led to characteristic cepalino, and thus Latin American, demands in international organizations and negotiations for policy shifts elsewhere: open markets in advanced economies, commodity price stabilization agreements, and development aid, alongside policy space for developing countries to compensate for their structural disadvantage by imposing tariffs on consumer goods imports.
The mainstream CEPAL vision thus sought continued international economic integration in support of domestic industrialization and economic development, unabashedly understood as higher income per capita. To the far left, a second group followed expatriate European cepalino Andre Gunder Frank, who concluded that there was no escape from the “development of underdevelopment” short of outright revolution and relocated to Havana, hoping to become a founding theorist of the Cuban Revolution. Third, and on the moderate left, Brazilian sociologist Fernando Henrique Cardoso pushed for the cepalino oeuvre to include study of the domestic socioeconomic consequences of “associated dependent development” in the periphery, such as adverse distributional results of direct investment by multinational corporations. A surprising number of CEPAL's most influential theorists eventually plunged into the rough-and-tumble of politics, including Cardoso, later a two-term president—of the center-right. Pithy anecdotes stud the narrative, this reader's favorite being Enzo Faletto's snarky caricature to coauthor Cardoso of Prebisch's heavy-handed edits of their (subsequently famous) manuscript (p. 181). There is of course much, much more, but for that one really should read the book.
