History
In a brief summary of economic approaches in the region, several main stages can be identified. During the early expansion of capitalism, pre-colonial indigenous civilizations were devastated and much of the continent emerged as a rich field for imperialist plunder.
The distant, centralized administrative authority of Spain and its trading monopoly established a colonial export economy ruled according to mercantilist principles, in contrast with the liberal model of British colonialism associated with free markets (Lange, Mahoney, and vom Hau, 2006). For centuries, Spain focused on the extraction of silver and gold, maintaining agriculture as a subsistence activity. Indeed, it was the peripheral and poorest areas of the empire, with smaller indigenous populations, that tended to become later the most developed. This hierarchy of relative affluence continued in the post-colonial period and is evident to this date (Mahoney, 2003).In the eighteenth century, mercantilism was revitalized during the Bourbon administrative and commercial reforms aimed at reversing Spain's economic decline. The changes reduced the significance of metals in favor of agricultural exports, strengthened trade restrictions for other European powers while partially liberalizing commercial ties among the colonies. But not until the second half of the nineteenth century did the ideology of economic liberalism become dominant in the former Spanish dominions. This happened as international trade resumed following the period of economic dislocation linked to independence. New export activities emerged while countries grew increasingly dependent on external lending. Foreign merchants and bankers, often British, invested in communications and infrastructural projects to ease integration into the world economy. For decades free trade ideas had been stifled by the legacy of Spanish mercantilism, intra-elite conflict between liberal-minded groups, and landed interests intent on preserving semi-feudal structures supported by military and other conservative and nationalist groups.
Subsequently, when the old vulnerabilities of export economies were reconstituted in neocolonial ties with Britain and then the United States, adherence to the creed of national industrialization gained strength across the region. Particularly after the 1930s, broad political and class coalitions supported development projects with some resemblance with Keynesianism but that evolved into what came to be known as structuralism, the most distinctive school of economic thought in Latin America (http://prebisch.cepal.org/en/project). By the 1980s, the heavily indebted region was reverting to export-led strategies, reclaiming the theory of comparative advantage to strengthen international competitiveness and regain creditworthiness in financial markets. In fact, the Washington Consensus policies were implemented first in Latin America and more fully than in other world areas. As in the past, however, the transnational propagation of prevailing economic doctrines involved adaptive emulation and resistance to outright convergence. More recently, a new framework, appropriately labeled neo-structuralism, represents an effort to rebalance markets and state and restore the maligned legacy of Latin American structuralism (Sunkel, 1993; Bielschowsky, 2009).
The transmission of economic ideas during the neo-liberal age was again a multidirectional process, with Latin Americans actively deploying their own versions of market fundamentalism. Peru, for example, was the source of the international celebrity for the idea that the keys to innovation and development were hidden in the state-strangled entrepreneurship of informal, underground markets, rendered invisible by inefficient and corrupt bureaucracies (de Soto, 1989). The thought that the previously protectionist Chilean state was a theoretical and practical world model for economic revival entered the revolutionary rhetoric of free market advocates after that country privatized, among other things, its social security system, promising that every worker would become a financially empowered small capitalist. Although the debt crisis of the 1980s forced policy adjustments throughout the region, there were also episodes of heterodoxy in which macroeconomic reforms were combined with anti-inflationary efforts to reduce growing income disparities, as in Argentina with the Austral Plan and Peru with Plan Inti.
While discontent with the excesses of dominant laissez-faire grew in Latin America and elsewhere, the history of economic thought seemed again in vogue, at least in some circles. In an unprecedented move, for example, the European Society for the History of Economic Thought and Latin American colleagues recently began meetings in Latin America. Parallels with the Great Depression were invoked after 2008. Changes in mainstream economic thinking were then advocated to avert other devastating crises. Some thought that if the marketization fervor eroded in the United States, the hub of world economics where economists were publicly questioned about their involvement in the financial meltdown, Latin America would follow suit, just as the collapse of international trade in the 1930s had brought doctrinal revision, with the region changing the “outward-orientation” of its economies. At the turn of this century, leftist governments coming to office in several South American countries gave credence to these beliefs. Although the issue is far from settled, market orthodoxy seems weakened (Flores- Macias, 2012).
Because of variation in national politics and intellectual traditions, much needs to be understood about how and why diverse roots influenced the history of economic thought in different countries within the same region. Few scholars have considered the connections among autochthonous traditions of economic knowledge in different parts of Latin America. Few comparative analyses have explored the broader ideational context of pre-professionalized economic essayists of the nineteenth and early twentieth centuries. Even less is known of economic ideas in older systems, such as the Inca Empire, which effectively covered a vast territory but lacked money and markets. Oreste Popescu's Studies in the History of Latin American Economic Thought (1997) is a rare effort to present a longer term perspective (sixteenth to the twentieth century), including Spanish Scholasticism — considered a precursor of modern economics.
Occasionally, fragments of these overlooked indigenous thought systems did resurge within Latin American mixed streams of Catholic, positivist, Marxist and populist ideas, adding to the syncretism of Latin American economic thought. Lacking place and worth in many strictly Eurocentric academic worldviews and the narrowly defined disciplinary jurisdiction of economics, the study of those doctrinal currents was left to historians and other social scientists. Currently, a call for “epistemological decolonization” has surged, along with Latin American indigenous movements fighting for greater control over increasingly privatized lands and natural resources (Stavenhagen, 2011).
The 2007 Bolivian constitution and the 2008 Ecuadorian constitution, for example, adopt as a central principle the concept of sumak kawsay (“good living” in Quechua), in order to recognize the significance of Andean heritage and non-Western systems of thought. The Ecuadorian strategic plan proposes a moratorium of the word “development” to promote greater harmony with nature. The question of whether these epistemic shifts will eventually affect the boundaries of modern economics or future approaches to the history of economic thought in Latin America still remains open.