Latin America- Confronting Global Challenges, The Great Depression

Latin America in the 30’s - 60’s

• From the 1930s to the 1960s, Latin America underwent abrupt and sometimes painful transitions of modernization. Global events intruded more forcefully than ever, especially in the form of the Great Depression (1929–1939), World War II (1939– 1945), and the Cold War (1947–1989).

• In the 1930s, Latin American nations were unable to sell all their traditional exports while remaining dependent on the import of basic necessities. The loss of export earnings caused critical shortages of imports that provoked an increase in domestic manufacturing, that eventually led to a new economic nationalism throughout the region.

• World order deteriorated in the late 1930 s and collapsed into all- out war. From Asia to Europe, Africa to America, conflict swept the world into a vortex of destruction and death. Most of Latin America experienced shortages of basicimported goods (consumer and machinery), intelligence breaches, political challenges, and even armed clashes

Government and dictatorships in the depression

• The Depression decade became a watershed in most countries in the hemisphere when urbanization and Industrialization transformed communities and lives. In countries like Chile and Mexico, discontent among mining and factory workers over their lack of rights spilled over into labor actions, and rural workers across the region irritated against the authority of large landowners.

• This threatened power of traditional elites; thus dictatorships became even more common, probably as a response to these events and the liberal inability to manage them. One by one, governments fell to military strognmen regimes in the 1930s

• Some leaders, influenced by communism, fascism, and Nazism, began to experiment with radical forms of Leadership.

• Even the U.S. government, alleged proponent of democracy often gave its blessings to dictators who could maintain the peace and protect U.S. interests. Where the military did not rule overtly, it wielded great influence from behind the scenes.

Impacts of the great depression

• Many coups and attempted coups erupted in Latin America during the 1930s. At first, largely because of the economic crisis of 1929 hat triggered the Great Depression.

• In 1930 alone, six civilian governments were overthrown by their respective militaries. Soon more fell or simply collapsed from stagnation and ineffectiveness. The achievements of the populists and democrats during the first decades of the century evaporated

• In Latin America, many lost faith in republicanism, as the liberals who dominated the governments seemed too inept, self-interested, or corrupt to deal effectively with the unfolding crises.

• This crisis led many to support the growing role of the military in public life, believing it could restore order amid chaos and collapse

As the U.S. and Europe retreated to deal with their own crises, the Great Depression sparked a new sense of nationalism in Latin America, as well as a spirit of defensiveness and the determination to protect what each nation had.

In country after country, writers, politicians, middle-class professionals, and economic elites dwelt on the need to create strength within their borders. They pledged to develop stronger governments, effective militaries, robust and independent economies, and more loyal citizens.

The Welfare state 

• The concept of the welfare state emerged in the 20 th century as a response to the economic and social challenges posed by industrialization, urbanization, and economic inequality, with Keynesian economic principles playing a significant role in its development

John Maynard Keynes 

• John Maynard Keynes (1883-1946) was a British economist who made significant contributions to the field of macroeconomics and is widely regarded as one of the most influential economists of the 20 th century.

• His ideas and theories played a central role in shaping economic policies, particularly during the Great Depression and in the post- World War II period.

• Keynes advocated for government intervention in the economy, particularly through fiscal policy. In times of economic downturn.

• He suggested that the government should increase public spending and reduce taxes to stimulate demand and boost employment

• Keynes' ideas were influential in the development of the welfare state and the establishment of social safety nets to protect citizens from economic insecurity.

Key characteristics of a welfare state typically include:

Social Safety Nets: Welfare states provide various forms of social safety nets, including unemployment benefits, healthcare, old-age pensions, and disability benefits. These programs are designed to assist individuals and families in times of need.

Universal Access: Many welfare state programs are intended to be accessible to all citizens, regardless of income, to ensure that basic needs are met, and economic inequalities are reduced.

Healthcare: In a welfare state, access to healthcare is often provided as a fundamental right. The government may fund or provide healthcare services to citizens.

Education: Educational services, including public schools and sometimes higher education, are typically funded, and administered by the government in welfare states.

Labor Protections: Welfare states often establish labor protections, including minimum wage laws, workplace safety regulations, and workers' rights, to ensure fair working conditions.

Progressive Taxation: To fund these programs, welfare states often have progressive taxation systems where the wealthy pay a higher proportion of their income in taxes

ECONOMIC NATIONALISM AND SOCIAL REFORM- The problem/ background

• Along with the new nationalism came new economic ideas designed to foster independence or better insulate Latin America from the shock waves of international depression.

• In the larger countries especially, bureaucrats and intellectuals began to favor long-term industrialization as a solution to the cyclical booms and busts to which their economies were subjected in the global arena.

• Primary products faced prolonged market crises and had to be subsidized.

• Prices were notoriously unstable, with exports subject to restrictions by importing countries.

• Each downturn in economic fortunes caused widespread unemployment and suffering in Latin America.

• Moreover, the loss of export earnings hurt public coffers, which relied heavily on trade taxes, and caused critical shortages of imports that crippled domestic life

ECONOMIC NATIONALISM AND SOCIAL REFORM- the “solution”/ Autarky

• The solution, according to many, was to diversify and strengthen the economies by promoting domestic manufacturing (ISI). Argentina, Brazil, Chile, and Mexico were especially interested in this possibility.

• They, along with many other countries around the world, joined in the general debt moratorium of 1932 and considered the possibilities of getting out of the international market altogether.

• This strategy, called “autarky” (economic self-sufficiency) was a more elaborate form of protectionism that had always been present in one form or another in international trade. None actually sought full autarky, but with nationalist economic policies they began to reverse the effects of the Great Depression, gain some independence from global markets, and accelerate the transition from agricultural to industrial economies.

ECONOMIC NATIONALISM AND SOCIAL REFORM- results

• New international deals not requiring hard currency could revive trade; for example, Brazil exchanged coffee for German machinery without cash payments. In addition, high tariffs were part of a general plan to develop industries and broaden domestic markets.

• Multiyear plans would set production targets and direct public and private investment to national priorities. In addition, government and industry groups deployed mass propaganda campaigns to promote pride in domestically produced goods

• The words “Hecho en México,”“Indústria Brasileira,” and “Producto Argentino” began to appear on goods and in advertising. Economic nationalism became a major feature of Latin America from the 1930s through the 1970s

Government involvement pre vs. during/ post Great Depression

• Until the widespread suffering of the Great Depression struck, labor management relations had been left to the market, with very little involvement by government except when force was needed to suppress a strike or demonstration.

• This contributed to a variety of glaring social problems: strikes, the proliferation of slums, periodic crises of unemployment, abandonment of laborers injured on the job or too old to work, child labor, and hostility toward the elites

• The 1930s saw far more actual legislation passed and real institutions created to deal with labor and social problems.

• Labor codes became common, governments stepped in to mediate industrial conflict, social security systems were set up, public education expanded rapidly, and new programs began to provide food and medicine to the destitute.

• The social question was transformed from a charitable concern for the poor into a commitment by progressive governments

Race and nationalism

When elites in Latin America took up the “social question” in the 1930s, they faced challenges distinct from those of their counterparts in Europe. The debate over race took on renewed vigor as elites struggled to define more inclusive nations. In Mexico they invented the “raza cósmica,” which united all Mexicans within a single nation.

In Brazil, where slavery had played such a prominent and divisive role in its recent history, race was particularly central to the social question. Like most other Latin Americans, white Brazilians held deeply racist views of human society, and during the early twentieth century promoted education and immigration as a path toward whitening.

But Brazil was also a country where beginning in the 1920s, modernist artists and writers began to celebrate tropical and African themes in their work.

Gilberto Freyre

• Similarly, Brazilian intellectual and writer Gilberto Freyre invented a new racial past for his people. Freyre objected to the widespread denigration of nonwhites.

• He sensed that Brazil had inherited a unique society, one that its ancestors had forged in the tropical plantations

• From his studies he devised an account of Brazil’s past, which he published as The Masters and the Slaves. The book became an immediate best seller and was followed by sequels in the 1940s and 1950s.

• In this work, Freyre singlehandedly rewrote his nation’s past and constructed a new self-image for Brazil.

• His most innovative ideas had to do with racial mixing

• Brazil became, then, a crucible for blending these populations and cultures into a new people especially fit for life in tropical America

Brazil and blending

The blending, both physical and cultural, took place largely in the plantation big house, where members of all races commingled.

All of the children, regardless of race and class, played together in the big house and learned from their African and Afro-descendant nannies.

Food recipes, children’s games and stories, home medicine, folklore, and all other aspects of daily life became fused into a peculiarly Brazilian synthesis.

Meanwhile, according to Freyre, familial relations among all in the big house ameliorated the harsh aspects of slavery and plantation production.

The upshot was the racially mixed and culturally blended Brazilians

The Myth of Racial Democracy

Educated Brazilians applauded Freyre’s theories and disseminated them in school books, magazine articles, poetry, and newspapers. His views on race relations became a virtual consensus by the 1950s, allowing Brazilians to acknowledge their complicated racial past while ignoring its basis in exploitation and the continued injustices faced by Brazil’s black majority

Conclusions and Issues

The 1930s proved to be a complex, troubled, and dangerous time in Latin America. The Great Depression created severe hardships and suffering for the masses, and it bankrupted many governments. Partly as a result, rival parties and groups sought power, provoking a series of revolts and coups in the region.

The unrestrictive economic policies that had prevailed before 1929 had left governments open to indebtedness and financial shocks, and many wealthy families faced ruin. Disenchantment with the old liberal order led Latin American leaders and intellectuals to turn inward in search of national preservation

They sought strength in their own people and traditions, and they offered protection for native industry. At the same time, some of the radical experiments of the era, like communism in the USSR, fascism in Italy, and Nazism in Germany, appealed to young people. Radical movements arose and competed with the traditional parties, sometimes leading to violent clashes

In most cases, the wealthy elite managed to retain control over their countries’ governments. Many governments sought to soften the harsh effects of the Depression with enlightened social policies, like retirement benefits and free health care.

Their response to labor assertiveness tended to be stiffer:they used police to beat down strikers and created government-sanctioned unions that could be controlled from the top down. Most countries abandoned democratic procedures, if they existed, and relied on autocratic regimes and controlled elections to maintain stability

In some areas, outright dictatorships emerged in the 1930s, some with the blessing of the U.S. , which had decided no longer to station military forces in the region (excepting in Panama, Puerto Rico, and Cuba). The leaders of these regimes became the classic dictators, portrayed in movies and novels about Latin America. Although not representative of the region as a whole, they do form a coherent group of leaders who reflected an important phase in circum-Caribbean leadership during the era of the Good Neighbor policy