The Capitalist Revolution in Latin America / Edition 1

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The political and social upheavals that have transformed the economies of Eastern Europe and the former Soviet Union during the past ten years have sparked considerable interest and speculation on the part of Western observers. Less noted, though hardly less dramatic, has been the revolutionary spread of free market capitalism throughout much of Latin America during the same period. In a wide-ranging survey that illuminates both the history and present business climate of the region, Paul Roberts and Karen Araujo describe the economic transformation currently taking place in Latin America. And as they do so, they also reexamine many of the prevailing orthodoxies concerning international development and the regulation of markets, and point to the success of privatization and free enterprise in Mexico, Argentina, and Chile as harbingers of the economic future for both hemispheres.
The potential strength of the economies of Central and South America has always been obvious, the authors point out. Abundant natural resources, combined with vast expanses of fertile land and a sophisticated and relatively cohesive social culture, are found throughout the region. But the authors show that the Latin American nations were slow to discard the economic and social climate that they had inherited from their Spanish colonial masters, who had ruled by selling government jobs—creating a network of privilege—and by suppressing through over-regulation the development of markets for goods, services, and capital. The prevalent cultural attitude in Latin America was hostile to commerce, trade, and work—indeed, it was more socially acceptable to court government privilege than to compete in markets. The authors further show that U.S. aid packages to the region actually reinforced this culture of privilege and further hampered the growth of a free economy. Not until the 1980s did the picture begin to change, largely in response to the economic crises brought on through catastrophic national debts and hyperinflation. The book describes the efforts of the Salinas, Pinochet, and Menem governments to combat the established interests of the local elites and the international development agencies, to privatized state industries, and to established independent markets. In this new climate, private capitalists and entrepreneurs are feted and celebrated, and productivity has risen to levels unimagined only a few years before. But this dramatic economic turnaround, the authors show, is a mixed blessing for the U.S. For if it provides us with a vast new market for our goods, it has also created a powerful new competitor for capital investment. To keep American and foreign capitalists investing in America, the government needs to make changes, which the authors outline in a provocative conclusion.
Central and South America have a combined population of 460 million people, a potential market greater than the United States and Canada combined or the European Community. Thus the rise of free market capitalism in Latin America is of vital interest to the United States. The Capitalist Revolution in Latin America provides an insightful portrait of this dramatic economic turn-around, illuminating the economic consequences for our own society.

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Editorial Reviews

From the Publisher
"Eye-opening appraisals of the extraordinary potential of Latin American countries. Essential reading for those who have, or wish to have, commercial relations with our neighboring continent, Roberts and Araujo brilliantly combine a free market philosophical perspective with a proper appreciation of the region's history."—Steve Forbes

"A compelling blend of substance and ideas—illuminates the 'why' of revolution in economies in Latin America—and elsewhere—and the need for revolution in the multilateral financial institutions. Readable and rewarding."—George P. Shultz

"Lessons from socialist failures have been learned more quickly in Latin America than in Europe or the United States. This book lays out the record of Latin American accomplishments to date, along with a precautionary assessment of near-term prospects."—James Buchanan, Nobel Laureate in Economics, 1986

"The lesson of this book is evident: Only open economies and open societies provide the adequate framework for prosperity."—Pedro Aspe, Finance Minister of Mexico, 1988-1994

"While the world's attention has been focused on the demise of socialism and planning in Central and Eastern Europe, the quite remarkable liberalization of markets—both international and domestic—that has occurred in Latin America has gone larely unnoticed. Roberts and Araujo now bring us the story of the tortuous path that has brought capitalism and markets to Latin America."—Gale Johnson, Professor of Economics, University of Chicago

The Capitalist Revolution in Lain America is a carefully crafted account of how the peddlers of quack ideas created an ecnomic disaster zone and how the descendants of Turgot have begun to alter the Latin landscape. Roberts and Araujo eschew Newspeak. The result is a refreshing, 'politically incorrect' volume that would meet with George Orwell's approval."—Steve H. Hanke, Advisor to Argentina's ex-Minister of Economy, Comingo Cavallo, and Professor of Applied Economics, The Johns Hopkins University

Surveys the history and present business climate of Latin America, describing the spread of capitalism in the region and what it means to countries outside the region. Reexamines many of the prevailing orthodoxies concerning international development and the regulation of markets, showing that US aid packages hampered the growth of a free economy, and describes the efforts of various leaders to privatize state industries and establish independent markets. Annotation c. by Book News, Inc., Portland, Or.
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Product Details

  • ISBN-13: 9780195111767
  • Publisher: Oxford University Press, USA
  • Publication date: 4/28/1997
  • Edition description: New Edition
  • Edition number: 1
  • Pages: 224
  • Lexile: 1450L (what's this?)
  • Product dimensions: 6.38 (w) x 9.56 (h) x 0.92 (d)

Meet the Author

Paul Craig Roberts is Chairman of the Institute for Political Economy in Washington, D.C. and Research Fellow of the Independent Institute in Oakland, California. A former Assistant Secretary of the U.S. Treasury, he is a columnist for Business Week and a director of companies with business interests in Latin America. Karen Lafollette Araujo is President of the Hemispheric Studies Institute, Research Associate at the Institute for Political Economy, Research Fellow of the Independent Institute, and Visiting Fellow of the Universidad Nacional Andres Bello, in Santiago, Chile.

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Table of Contents

1 Latin America on the Rise 3
2 The Economic Transformation of Latin America 10
3 The Blocked Society 52
4 Development Planners in Their Heyday 102
5 Latin America's Statist Tradition 135
6 Outdated International Development Institutions 160
7 Implications of Latin American Capitalism for the United States 186
Bibliography 195
About the Authors 202
Index 204
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