The Infamous Son: Raul Prebisch’s Dependency Theory in

Post-Peronist Argentina

Development Politics

Professor David Blaney

Ezequiel Jimenez

Macalester College
Ezequiel Jimenez

“He venido simplemente para colaborar y luchar hasta que los otros se convenzan o hasta que
yo me convenza”1 2

Mesa Redonda del Informe Prebisch, Buenos Aires 1955

Introduction to Raúl Prebisch

Among the many intellectual Latin America has given to the world, Raúl Prebisch influence in
the social and economic development of the sub-continent is one of the greatest in impact and
accomplishment. His Dependency Theory was rooted on the multiple issues such as economic
and social that Latin-America had to deal with after the Second World War. He pushed and
fought for equality, freedom and prosperity while transforming the world with his
revolutionary ideas on development. Don Raúl, as his was known by his closest friends; today
remains best known and most prestigious intellectual on development studies of Latin
America.

However Raúl Prebisch, the Argentinean, persists even today in the view of the public opinion
and inside intellectual circles with a conflictive reputation that denotes a political struggle
since the Government of Juan Domingo Peron (1945-1955) took office. Prebisch, a
distinguished economist and promising figure in the world of international development was
always opposed to the Peronist regime, denying his collaboration with Peron’s regime. His
refusal affected him to the extent that he had to seek exile in Santiago de Chile in 1948
working for the first time with the Economic Commission for Latin America and the Caribbean
3
(CEPAL). During his years at the CEPAL Prebisch elaborated most of his later famous works on
import substitution, industrialization and unequal exchange. But, in Argentina he was still a
figure related to “foreign interests”4. Nonetheless, Prebisch was indeed an authority on
development and had never forgotten his own country or neglected possibilities to apply his
theories in the country. However, his strong views against the Peronist regime were an
impediment for him to get involved in Argentina’s development between 1943 and 1955.

Once his team in Chile had articulated the first postulates of Dependency Theory, Prebisch was
known worldwide and the extent of his ideas penetrated many Latin-American countries such
as Colombia, Bolivia and Cuba, but not Argentina. However, after the overthrown of the
Peronist regime in 1955 by a military coup called La Revolucion Libertadora, Prebisch was
invited to advice and write an economic plan to recuperate Argentina’s lost time. As the

1
(Economicas, 1955) page 8
2
Translation by the author: I came just to work and fight to convince the others or until I am convinced
3
(Dosman, 2008) page 184-185
4
(Sikkink, The Influence of Raul Prebisch on Economic Policy-Making in Argentina: 1950-1962, 1988)
page 101

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political atmosphere was finally welcoming towards Don Raúl, he accepted the task of writing
the General’s economic plan, which is known as The Prebisch Plan. The Plan was created not
without great political consequences for his foremost reputation in the country; he was seen
as a supporter of an illegal coup. In 1956 Prebisch delivered to General Aramburu the finalized
Plan to be taken by the coup which was facing criticism across the political spectrum. His
reputation at this time was that of an “external” advisor linked to conservative groups5.
However, the political struggle in Argentina during the government of the Revolucion
Libertadora did not provide the conditions for Prebisch’s Plan to be fully realized because the
lack of a strong democratic state and the political unwillingness of the Generals. However,
what were the recommendations Prebisch gave? Furthermore, would The Plan Prebisch
resemble what his early works in the CEPAL had been? Did he apply his Dependency ideas to
Argentina? Was his Plan a way to dismantle Peronist economic doctrines?

In this research paper I will not find definitive answers to these historical questions rooted on
political games. Rather I will explore and analyze the causes and consequences of Prebisch’s
Plan in comparison to his Dependency Theory with a special focus on industrialization and
state re-structuralism6. Namely, I will assess the degree into which his worldly famous
Dependency Theory ideas were applied in Argentina between 1955 and 1960. The paper will
be structured in six sections. First I will explore the early Prebisch in the Public Administration
1921-1935 to understand his economic experience background as the General-Director of the
Banco Central de la Nacion Argentina. Secondly, I will study what were the political and social
implications of Peron’s rise to government that affected Prebisch later decisions. Thirdly, I will
study the years Prebisch worked in the CEPAL elaborating the Dependency Theory. Fourthly I
will briefly describe the nature of the Peronist Economic Plan to contextualize Prebisch
recommendation to the Generals. Fifth order I will explain the historical context of the
Revolucion Libertadora and assess Prebisch’s recommendation to the Generals. The sixth part
will be devoted to the study of the Prebisch Plan in Argentina and the connections to his CEPAL
ideas.

5
(Sikkink, The Influence of Raul Prebisch on Economic Policy-Making in Argentina: 1950-1962, 1988)
page 91
6
The reason why I decided to focus on these two main factors of Prebisch’s theory is because it will
facilitate the comparison and assessment between his Plan for the coup in 1955 and his earlier thinking.
These two categories are central to his plan and, therefore it will help the reader to conceptualize and
understand the difference between Prebisch’s dual recommendations. In a personal note, I am
convinced these two factors are conditioned by their historical context, making them inseparable from
the events of 1955 in Argentina. Prebisch’s ideas of industrialization and State transformation are
intrinsically connected to a larger criticism of the Peronist government, but not necessarily original since
Peron also implemented these two ideas to some extent with his own economic ideology.

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The Young Bright Raúl Prebisch: The Central Banker

Graduating from the School of Economics at the Buenos Aires University in 1923, Raúl Prebisch
gained reputation as a high level intellectual already by 1921 when he wrote “Notas Para la
Historia Monetaria Agentina”. His paper reflected one of his later main themes: how the
Argentinean cycle of grain exports affected the capacity of banks to give long-term loans in
order to expand the economy7.Prebisch interest in the monetary system of Argentina was
highly influenced by John H. Williams’s works, which he translated in 1922. Williams’s ideas
about economic cycles and balance of payment adjustments with capital movements gave him
the idea to more deeply analyze Argentina’s “mechanism not envisaged in current
international trade history”8. He was highly concerned on the difficulties rooted in Argentina’s
export cycle of cereals, as Roberto Conde explains: “Argentina had an economy which
depended on its exports of cereals, and this gave it a seasonal nature and also made it very
vulnerable, since it was affected both by weather and by the big fluctuations in international
trade”9. Furthermore, he continues: “there was also a monetary system which further
accentuated such fluctuations... there was shrinkage in national income and the banks reduced
their credit during winter”10. During his years at the Central Bank, Prebisch would deal with
these issues.

Raúl Prebisch’s high profile and concerns over the unhealthy Argentine economic system gave
him the opportunity in 1922 to work as Director of Statistics of the Sociedad Rural, the bastion
of the landholding elite in Argentina11. During his years in the Sociedad Rural, Raúl Prebisch
worked closely with members of the powerful conservative party whom in 1933 proposed his
name for Under Secretary of Finance under the military government of Jose Felix Uriburu.

In 1933, together with Minister of Finance Pinedo, an executive suggestion was given to
President Uriburu to create the Central Bank of Argentina to control the economy. Roberto
Cortes Conde explains: “the creation of the Central Bank was designed to achieve monetary
stability and reduce the disturbances of the economic cycle. Prebisch maintained that in view
of the characteristics of the cycle in Argentina, the Central Bank should intervene to smooth
out the fluctuations by using absorption instruments”12 such as “absorption certificates which
made it possible to sterilize purchasing power (savings), as well as buying back part of the

7
(Caribe, 2001) page 82
8
Ibid page 81
9
(Caribe, 2001) page 82
10
Ibid page 82
11
(Sikkink, The Influence of Raul Prebisch on Economic Policy-Making in Argentina: 1950-1962, 1988)
page 93
12
(Caribe, 2001) page 83

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external debt in dollars”13. In 1935 the Banco de la Republica Argentina was created where
Raúl Prebisch served as Director-General for eight years (1935-1943). As Director-General,
Prebisch led several negotiations with Great Britain about the Roca-Runciman Pact, which
benefitted Britain by implementing low tariffs on English products in exchange for a constant
beef quota bought by the British Government. However, Prebisch also developed the currency
system and began to advocate pro-industrialization processes14. Further, he urged the
development of the agricultural sector by devaluing the peso and purchasing the surplus
harvests in order to give the population greater purchasing power15. Nonetheless, these
measures promoted by Prebisch in Argentina were done under the auspices of the
conservative party in conjunction with elite groups.

The political turmoil in Argentina grew significantly during Prebisch’s period at the Central
Bank. The military faction known as Grupo de Oficiales Unidos (GOU) was extremely opposed
to the regime of President Castillo and his position of neutrality in World War Two. In 1943,
the GOU overthrew Castillo and took control of the government. Raúl Prebisch was removed
from his post at the Central Bank in 1943 perhaps because his ties with the “traditional
conservative landholding interest”16and his pro-English bias. In 1948, after Juan Domingo
Peron took office, he was removed from the University of Buenos Aires and exiled to Chile. But
why did the Peronist Government oppose from Prebisch’s brilliant ideas? Why did Prebisch
refuse to collaborate with the Peronist regime?

Prebisch-Peron: The Anti-Ideology

“You didn’t tell me that you had resigned”17 where the exact words of Adelita, Prebisch’s wife,
the morning of 19 October 1943 after reading La Nacion. Prebisch did not have breakfast that
morning and rushed into the Central Bank as soon as reading the paper. Prebisch’s forced
resignation was the result of the new military government plan of detaching from the
conservative party replacing it policies and ministers. However, Prebisch was targeted for two
main reasons: his denial to collaborate with the Peronist economic doctrine and his opposition
to the peronist stand of pro-axis alliance during the Second World War. Prebisch was indeed a
victim of intellectual persecution which ruined his career at the new International Monetary
Fund after Washington vetoed his position as Senior Adviser fearing an impact on the US-
Argentina diplomatic relationship. In this section, I will explain the main reasons and
consequences of Prebisch and Peron ideological battle.
13
Ibid page 84
14
(Sikkink, The Influence of Raul Prebisch on Economic Policy-Making in Argentina: 1950-1962, 1988)
page 93
15
(Caribe, 2001) page 83
16
(Sikkink, The Influence of Raul Prebisch on Economic Policy-Making in Argentina: 1950-1962, 1988)
page 93
17
(Dosman, 2008) page 168

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Ezequiel Jimenez

In January 1942, during the Rio Conference in Brazil, organized by the United States, top
diplomats tried to “obtain a joint declaration of all the American Republics that they feel it
necessary to sever relation with the Axis powers”18. The argentine position was from the
beginning far from neutral as the political turmoil increased in Buenos Aires. The government
of Castillo was losing power as the rising discontent against his administration by GOU officers
grew. In preparations for the Rio Conference, Argentina’s position was radically changed from
neutrality to a pro-axis alliance backed by GOU’s main ideologist, Juan Domingo Peron who
was linked with a “corporatist ideology and an affinity for the fascist experiments in Italy,
Germany and Spain”19. In the opening of the Conference, the Foreign Minister Ruiz-Guiñazu
“made it clear Argentina would not join the inter-American wartime symphony and rejected
the US resolution calling for the severance of relations with the Axis”20.

Raúl Prebisch was part of the delegation that attended the Conference. He was extremely
convinced in the atrocities committed by the Nazi regime and he favoured the alliance with the
United States. In addition, according to Dosman, Prebisch had first accounts of the Nazi-camps
when Adelita’s brother in mid-1942 came to Buenos Aires from Europe21. However, he was just
only an economist with no influence over foreign policy making. Nonetheless, Prebisch had to
accommodate with his own personal position to the coup one. After the diplomatic incident,
the United State requested, under the article 5 of the Rio Conference, the Central Bank for
“financial and commercial activities”22 with foreign powers to control Argentina’s collaboration
with the Axis powers making Prebisch administration of the Central Bank increasingly
invigilated by the US government and the military coup. His cooperation with the US requests
and his personal beliefs, made it easier for the militarily controlled press to call him an anti-
patria23. In October 1943, Raúl Prebisch was dismissed from his position as General-Director of
the Banco de la Nacion Argentina for his ideological differences with the coup, but more
specifically, with Juan Domingo Peron.

The rising figure of Peron after the coup against President Castillo in 1943 was determinant for
Prebisch future in the Central Bank. However, as Dosman argues, Prebisch and Peron had
areas of common agreement such as both “supported industrialization through import-
substitution and endorsed the creation of a regional market”24 comprising Chile and Brazil with
Argentina. In addition, the biographer comments that Prebisch did request a meeting with

18
Ibid 145
19
Ibid 164
20
Ibid 147
21
Ibid 167
22
Ibid 150
23
Ibid 152
24
Ibid 171

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Ezequiel Jimenez

Peron, who in 1943 was Secretary of the War Ministry and the true ideologist behind the coup.
The meeting never happened because Peron “wanted to monopolize this contact with a rising
personality in the country”25. However, some authors such as Sikkink, Krieger Vasena, Schwartz
and Brenta26 have claimed that Peron did indeed invite Prebisch to comment on his economic
plan, El Plan Quinquenal, receiving a negative answer27. Brenta explains that Prebisch had to
leave the University of Buenos Aires after “compulsively reject his involvement with the Plan
Quinquenal”28 and Vasena agrees stating that “he was ousted from his professorship by the
peronist government in 1948 because he refused to lecture on Peron’s first Five-Year Plan”29.
Thus, as the scholars explained, Peron did offer Prebisch a place in his government realizing his
brilliant input, but Prebisch decided on moral and personal grounds to reject any position in
the Peronist government while being ousted from the Central Bank and the University of
Buenos Aires in November 1948.

Once Prebisch was forced out of his public positions, he appealed to his colleagues in the
United States, Camille Gut, for a place in the recently created International Monetary Fund as
a senior adviser in the Operation Department30. But soon enough, the battle against Peron’s
ideology and his rejection to work with the Peronist administration affected his professional
career at the IMF. Prebisch was denied a place in the IMF after Washington vetoed his
appointment fearing a crisis with the Peronist government who had identified Prebisch as a
public enemy. Edgar Dosman writes for the CEPAL Review:

“Peron vigorously opposed Prebisch for any influential position in the IMF,
even though Argentina was not a member of the Fund; while he had agree
six months earlier to support him for ECLA (presumably to ease him out of
Buenos Aires into a marginal position in Santiago), the Argentine president
did not want a domestic opponent in a key position in Washington”31

25
Ibid
26
Sikkink wrote an extensive paper on Prebisch’s influence in Argentina policy-making interviewing him
twice. Krieger Vasena was a close associate of Prebisch during his writing of the Prebisch Plan; also he
served as Secretary of the Advisory Committee on Economic and Finance in 1955-1956, as well Finance
Minister in 1957-1958. Hugh Schwartz is part of the Inter-American Development Bank. Noemi Brenta is
an expert in the relationship between the IMF and Argentina and current professor at the University of
Buenos Aires.
27
(Sikkink, The Influence of Raul Prebisch on Economic Policy-Making in Argentina: 1950-1962, 1988)
page 110
28
(Brenta, 2008) page 237
29
(Vasena, 1988) page 115
30
(Caribe, 2001) page 92
31
Ibid 93

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Ezequiel Jimenez

Dismissed from his executives positions, neglected the opportunity to put in practice his ideas
in the IMF and persecuted by a the Peronist regime because of his morals, Raúl Prebisch found
in the Economic Commission for Latin America and the Caribbean a chance to investigate and
research about the economic and social issues of Latin American countries he observed at the
Banco Central..

Don Raúl: The Economic Commission for Latin America and the Caribbean

The Havana Manifesto

Humiliated by the Peronist government and his former colleagues, Raúl Prebisch found in Chile
the revival of his ideas and main concerns over Latin American socio-economic problems.
Prebisch seized this opportunity to prove and theorize his ideas in the 1948 first Economic
Survey of Latin America for the Economic Commission for Latin America and the Caribbean
(CEPAL). By stating the main factors affecting Latin American economical inefficiencies and
problems, he developed his structuralism or Dependency Theory. Prebisch explained through
core concepts like “centre-periphery” and the asymmetries in international trade the ultimate
reasons to advocate for industrialization in developing countries moving away from the theory
of “comparative advantage”. In this section, I will first contextualize his arrival at the CEPAL in
1948. Secondly, I will explicate Raúl Prebisch’s main postulates of his theory of structuralism
with a special focus on industrialization and the necessity of State transformation to ensure
successful development.

The Economic Commission for Latin America (ECLA) was established by Economic and Social
Council resolution 106(VI) of 25 February 1948 and began to function that same year32. The
CEPAL resolution was an attempt by UN member states to detach from their already excessive
focus on Europe after the Second World War. As Dosman argues: “a sense of injustice was
boiling up again as Washington’s priorities focused on Europe and Asia”33 because the large
scale implementation of the Marshall Plan.

However, the CEPAL was openly criticized by senior advisors questioning its importance and
relevance as an UN subsidiary body. Prebisch’s appearance in the CEPAL was mainly to answer
these criticisms with a powerful and well-documented analysis on Latin America’s economies,
which was known as the Economic Survey of Latin America. His expertise as the first central
banker and his high reputation among Latin American intellectuals were the main reasons why
the CEPAL invited Raúl Prebisch to write the report to be presented at the 1949 UN
Conference in Havana.. Thus, Prebisch responsibility of writing the report was at the centre of
the CEPAL survival.

During the first months in Chile, according to Dosman, Prebisch was stagnated and incapable
of writing the report that could satisfy the CEPAL expectations. He was extremely influenced

32
(CEPAL)
33
(Dosman, 2008) page 240

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Ezequiel Jimenez

by his “personal and professional disappointments, the depression of daily life in Peronist
Argentina, watching its growing isolation and cultural decline”34. In April 1948, Prebisch
circulated a draft of the report to be read by CEPAL advisors like Celso Furtado, who, according
to Dosman, “read the manuscript and was disappointed”35. With the introduction to a paper
wrote by Hans Singer in 1948 called Post-War Price Relations between Under-developed and
Industrialized Countries, by Francisco Croire, a former mentee of Prebisch, he received “the
stimulus he needed to escape from his mounting frustration and fear of failure”36. According to
Dosman, Prebisch recognized in Singer’s paper most of his own theories, but what Singer
provided was a well-detailed data to argument forward the need of restructuration in
international trade. Grateful enough for Singer’s contribution, Prebisch wrote The Economic
Development of Latin America and Its Primary Problems in three consecutive days. His report,
after the Havana Conference, was known as the Havana Manifesto.

In March 1949, the Havana Manifesto was praised among Latin American leaders as a
memorable response to UN critics of the CEPAL, but even further, as the re-launch of
economic development in Latin America detaching from the old “centre” domination of the
economy. As Dosman explains:

“Prebisch framework of structuralism offered a new approach to

international development; he had declared for an activist state and
industrialization in a new language that challenged the old doctrine of
comparative advantage”37

Before the conference, Prebisch was known as brilliant economist persecuted by the peronist
government and disregarded by stubborn politicians. After the conference, his ideas in the
Havana Manifesto raised his figure as the father of Dependency Theory influencing numerous
countries in Latin America. He was not Raúl Prebisch anymore, but he was now Don Raúl.

Prebisch’s Dependency Theory Insights

Jose Antonio Ocampo38, former CEPAL Executive Secretary has identified three main elements
in Prebisch’s thinking. The asymmetries in international trade, the transformation of the State

34
Ibid 241
35
Ibid 241
36
Ibid 243
37
Ibid 247
38
The author worked with Prebisch in the CEPAL and wrote the essay “Raul Prebisch and the
development agenda at the dawn of the Twenty-first Century” to commemorate the hundredth
anniversary of the birth of Prebisch. I decided to use his essay to articulate a less heavy-theorize analysis
of Prebisch ideas, but rather an explanation that is closer to a current analysis of Dependency Theory.

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policies towards development and regional integration39 are ultimate factors in Prebisch’s
structuralism theory40. In this section I will describe how the first two elements play in the
theory utilizing the concept of “centre-periphery” and the need for industrialization through
import-substitution.

Prebisch’s theory was largely a reflection of the association between advance capitalist
countries and backwards nations. This dialectical relationship based on economic domination
by the advance capitalist countries with access to high levels of technology, is what Prebisch
famously called the “centre and periphery” model41. This relationship is a key in Prebischian
thought because it adjudicates the moral justification States to modernize by setting high
barriers to external competitors and protecting national industries. In addition, the centre-
periphery model was intrinsically connected to the possibility to generate economic growth by
acquiring access to technology through industrialization. Ocampo and other CEPAL economists
argue that Prebisch saw in the level of technology achieved by centre countries the real seed
of economic growth42. The discrepancies in access to technology conceived two forms of
economic domination: unequal exchange of goods and the incapacity for peripheral countries
to absorb surplus of labour from rural areas resorting in large cities.

According to Prebisch, the absence of high productive industries technologically able to

reproduce economic growth that absorbs the majority of the labour force is the ultimate cause
for underdevelopment. The large movement of rural population to technologically unable
productive centres, cities, resorts then in the impossibility of industries to absorb the surplus
of labour creating unemployment and poverty. This concept of high tech industries linked to
sustainable employment, is what Prebisch called “structural heterogeneity”43. Prebisch
identified this problem as the core issue of his theory. Furthermore, as backward countries
cannot compete with high tech production of the centre countries, exporting raw materials
feeding their industry was the prototypical economic activity for peripheral nations. But, as
Prebisch noted, the extraction of raw materials and its exports were not value added goods
which left peripheral countries with low productivity rates and impoverishment. In addition,
Prebisch explains that as the consumption of value added commodities through imports
increases radically but demand for raw materials does not, resorting in inequality: “la demanda
de manufacturas que importamos tiende a elevarse con celeridad, las exportaciones primarias
se acrecentan con relativa lentitud, en gran parte por razones ajenas a los paises

39
For further analysis in this Prebischian element: CEPAL Review Number 75, page 34
40
(Caribe, 2001) page 23
41
Ibid 40
42
Ibid 23
43
Ibid 41

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Ezequiel Jimenez

latinoamericanos. Hay, pues, una tendencia latente al desequilibrio que se agudiza con la
intensificacion del desarrollo economico”44 45.

Thus, Prebisch elaborates on how the State can successfully implement a developmental
program to curve the unequal exchange and reformulate the asymmetries in international
trade. He advised a strong and committed administration responsible for planning programs
for industrial development. In addition, he explains the need for a revision of the state-society
relationship together with a competent regulatory structure to oversee the economy and
pursuing industrialization through a mixed program of import-substitution (ISI) and export
oriented industrialization (ESI) to, in Prebisch terms, “develop within the nation” 46. Prebisch’s
postulates are a radical detachment from the old natural “comparative advantage” of nations
to an opportunity to experience centre-like industrial policies.

Raúl Prebisch advocated for a strong State which could enforce and play the role of the agent
for “development from within”. Ocampo defines this Prebischian element as “essential
because the accumulation of national human capital and technological capacity (“knowledge
capital”) and institutional development are essentially endogenous processes” 47. Further, the
ideal strong State for Prebisch would be consistent with a rigorous planning on development.
On this point, Prebisch was largely criticized by the private sector fearing a wave of
nationalization of private capitals by the State. However, Prebisch envisioned a complete
different strategy. He pursued for an intense partnership between public and private capitals:
“is not a Soviet-style takeover of the private sector, it is not a complete intervention in
business or production, but instead it assists with specific instruments to ensure that they
achieve specific objectives and volumes”48. Prebisch’s model of the State was indeed an
intimate partnership between the State and the capitalists for an efficiently planned
industrialization.

In addition he argues that the State in order to develop a strong economy should implement
an import-substitution-industrialization (ISI) program. Prebisch argued that ISI is the most
efficient way to correct and balance the difference between the growing inelastic demands of
the core-countries and backward nations. Because the value added commodities represented
bigger profit for core-countries, they expenditure capacity increased and was reinvested in
technological innovations. Thus, if the State wanted to increase its profit margin, domestic

44
(Calderon, 2003) page 7
45
Translation by the author: “the demand for imported manufactures tends to rise quickly; primary
exports grew relatively slowly, largely for reasons unrelated to the Latin American countries. So there is
a latent tendency to an imbalance exacerbated by the intensification of economic development”
46
(Caribe, 2001) page 24
47
(Caribe, 2001) page 24
48
(Dosman, 2008) page 283: Prebisch speech at the Industrial Union of Brazil.

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industrialization by replacing current imports was an incentive to escape from

“underdevelopment”. In order to implement an ISI model, Prebisch argued that the protection
of the infant industry trough subsidies and taxes to imports49 was necessary. At the same time,
Prebisch in his theory explained the importance of an ISI model as to absorb the surplus
labour, increase the average national income, the internal savings and investments in
technology raising the quality of life50.

However, Prebisch’s inclination towards an ISI model was soon challenged by other CEPAL
economists such as Cardozo and Kunkel. They argued that, a model based on ISI could suffer
from important inefficiencies in the context of a “free market” economy. In addition, balancing
industrial production of value added commodities was put into question since the same
economic effort could have been made by the State to promote an export oriented economic
policy. On the other hand, ISI was determinant to “develop from within” because it claimed
necessary labour absorption mechanism. However, as the pace of industrialization grew, the
CEPAL observed the necessity to study export-oriented industrialization models in order to
enter the global market with higher returns. Mixed models were then pursued by dependistas
economies. Ocampo explains clearly:

The possibilities of inefficiency in import substitution, especially in highly

fragmented markets, as well as the need to ensure that industrialization
was not carried out at the expense of agriculture or export development,
were evident to Prebisch even in his earliest publications in CEPAL.
Therefore, from the late 1950s on, Prebisch and CEPAL began to advocate a
“mixed model” which combined import substitution with the promotion of
new exports, especially of industrial origin. Over time, CEPAL’s view became
increasingly pro-export, although it never favoured the abrupt elimination
of protection arrangements51.

Therefore, Raúl Prebisch Dependency Theory was reformulated by numerous rigorous

critiques by other CEPAL assistants. However, his economic thinking was revolutionary for
Latin American leaders such as Salvador Allende in Chile because it explained in financial terms
the need for a nationalistic economic plan for development in accordance to their internal
capacities and not by external dictation of priorities. By generating a conscious and efficient
plan for industrialization by governments implementing a “mixed model” and protection for
infant industries, Raúl Prebisch’s reputation grew internationally. However, in Peronist’s
Argentina, he was related to foreign interests, the conservative party and as Peron’s enemy.

49
(Calderon, 2003) page 9
50
Ibid
51
(Caribe, 2001) page 24-25

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Did Argentina implement Prebisch’s worldwide famous ideas? What was Peron’s economic
plan? Did it resemble Prebisch’s ideas?

The Plan Quinquenal: Peron’s Economic Policies

When Raúl Prebisch was exiled to Chile, his biggest accomplishments in terms of economic
policy were systematically destroyed by Juan Domingo Peron’s government. With the 52% of
the votes, in 1946 Peron started his ten-year presidency deeply transforming the Argentine
society and economy. Peron’s doctrine of an “economically independent and a sovereign
nation”52 represented the centre of his fiscal policies implemented by his two Planes
Quinquenales. In this section I will analyze Peron’s economic plans during his years in
government. This section is vital to understand because is the base-argument for Prebisch’s
harsh report on the Argentine economy after Peron’s fall. Prebisch would argue that the
Peronist economic doctrine was a complete failure for Argentina. However, as it was
previously stated, Prebisch and Peron did agree on several points; industrialization and the
role of the State are examples of their communion.

Antonio Cafiero53, Minister of Foreign Commerce during the second presidency of Peron
(1952-1955) in his book De la Economia Social-Justicialista al Regimen Liberal-Capitalista
(1961) explains the nature of the Plan Quinquenal and its applications. He assesses in great
deal the success of Peron’s economic doctrine of industrialization and the state role. Cafiero’s
insight is so valuable and rich that Peron’s, from exile, claims:

“Es, sin lugar a dudas, la mayor obra que se ha editado en la postrevolución;

su valor es incuestionable no solo por las verdades que contiene, sino
también por el esclarecimiento a que conduce al destruir los sofismas y
falsedades de un sistema y de unos hombres que han hecho de la
hipocresía, la mentira y la calumnia sus armas únicas de combate” 54 55

52
(Cafiero, 1961) page 143
53
Antonio Cafiero is par excellence the consulted author about Peronist economic policies. He served as
Peron’s economic advisor and Minister during Peron second presidency. As well, Cafiero is today one of
the referents of the Peronist Party in Argentina. He was ambassador to the Vatican, Belgium and United
States; he held a parliamentarian position in 2001 and was governor of Buenos Aires after the return of
democracy (1987-1991). Furthermore and very interestingly, Cafiero, alike Prebisch, graduated from the
University of Buenos Aires in 1944 and held numerous meetings with CEPAL economists as well with
Prebisch.
54
(Cafiero, 1961) preface
55
Translation by the author: It is without doubt the greatest work has been published in the post-
revolution, its value is unquestionable not only for the truths it contains, but also for the investigation
that leads to destroy the fallacies and lies of a system and men who have made hypocrisy, lies and
slander their unique combat weapons.

13
Ezequiel Jimenez

When Peron won the elections of 1946, according to Cafiero, the economy was largely
stagnated in backwardness. By making a rigorous analysis about the Conservative Party
economic plans, in which Prebisch had a large influence, he identified seven causes of the
economy’s stagnation. The focus on agricultural production underestimating the possibility of
industrialization, the lack of an internal consumption market, the domination of foreign capital
in public services, the unequal distribution of national income, the increasing unemployment
and the lack of opportunity for workers to unionize56 were, according to Cafiero, the economic
legacy from the Conservative Party years.

In 1946 Juan Domingo Peron presented before the new Congress his first Plan Quinquenal
(1947-1951). The plan was designed to, in Peron’s words, “consolidar y expandir el crecimiento
equilibrado de la economía nacional, integrando una economía agro-industrial, independizada
al máximo de las contingencias externas y atendiendo especialmente a la elevación sustancial
del nivel de vida de la población trabajadora”57 58. To realize the economic independency from
foreign capital, Peron together with his economic team, in which Cafiero definitely played an
important role, pursued economic policies directed towards the national industry. The
transformation of the economic structure by expanding and consolidating a process of
industrialization, the nationalization of the Central Bank and public services, the redistribution
of national income through a heavy investment on education, health and housing; the
autonomous policy towards international organizations represented by a prepared delegation
of negotiators and the entire mobilization of resources for industrialization to foment an
internal consumption market, were the primary objectives of the first Quinquenal Plan59. The
outcomes of Peron’s economic plan were evident by 1950. According to Cafiero, from the year
1943 to 1950, the investments in the national industry grew from 16.556 to 22.783 million
pesos60. The metallurgic, textile and construction industry benefited from the State investment
which resulted in an increase of the 20% in the worker’s real salary.

In 1951, Juan Domingo Peron was re-elected with 62% of the votes. Cafiero explains this
abrupt victory to the successful redistribution of the national income through the investment
on welfare. However, Peron knew that the infant industry created by the State had to be
protected and strengthen by his second Plan Quinquenal. Thus, import-substitution was the
centre of his second economic plan, while at the same time creating the Ministry of External
Commerce, which Cafiero held, to increase the flow of the Argentine exports. The second Plan

56
(Cafiero, 1961) pages 143-145
57
Ibid page 151
58
Translation by the author: to consolidate and expand the balanced growth of the national economy,
integrating an agro-industrial economy independent of external contingencies and by paying special
attention to the substantial rise in living standards of working people
59
(Cafiero, 1961) page 151
60
Ibid page 153

14
Ezequiel Jimenez

Quinquenal strategically proposed: the harmonization of the fiscal policy instruments to

stimulate the development of the state investments in the industry, address and invest on
energy sources such as petrol to further expand the industry, stimulate an ISI model to protect
the infant industry, propose a regional integration with Chile and Bolivia to enlarge national
exports and coordinate and call for the participation of unions and private capitalists into the
government economic policy-making forums61. However, the totality of the Plan was never
achieved.

The political situation was not as favourable as in 1945 for Peron. The conflict with the
Conservative Party, the Church and different factions of the army over Peron’s autocratic
government increased the social turmoil affecting the implementation of the Plan. In June
1955 the armed forces backed by conservative and church members, identified as the
Revolucion Libertadora, bombed the La Casa Rosada, the government building, killing 300
civilians; however Peron remained in power until September when the political violence
between the Peronist’s and the Right-win groups was increasing with Churches burned and
Peronist supporters kidnapped and killed. Juan Domingo was exiled for 18 years in Madrid,
Spain. The political and economic repercussions of Peron’s removal were accentuated as the
majority of the workers, who were naturally peronists, enforced successive strikes threatening
Peron’s economic achievements.

In ten years, as Antonio Cafiero argues, the Planes Quinquenales put Argentina in a desirable
position for future investments enjoying an increase in the quality of life. The diversification of
national production into agrarian and industrial, the elimination of vulnerable elements in the
economy by import-subsitution, the nationalization of natural resources and public services,
the efficient distribution of the national income in the form of investments in welfare and the
incentives for workers to unionize and participate in the government’s economic policy62, are
for Cafiero, the biggest achievements of the Peronist economic doctrine. In ten years,
Argentina’s Gross Domestic Product increased by 30% and income per capita by 2%63, the
import of value added commodities decreased by 36%64 and the returns from the national
industry went from 48.873 in 1945 to 68.894 million pesos in 1955 65. Antonio Cafiero then
argues: “Podemos afirmar razonablemente que si los lineamientos generales del Segundo Plan
Quinquenal hubiesen sido mantenidos, a la fecha el país ostentaría una situación económica
privilegiada”66 67.

61
Ibid 261-262
62
Ibid 269-278
63
Ibid 280
64
Ibid 275
65
Ibid 270
66
Ibid 267

15
Ezequiel Jimenez

The economic situation Argentina had when Peron was overthrown was indeed one of the
most notoriously balanced and healthy in Latin America. However, the coup leader, Eduardo
Lonardi systematically destroyed Peron’s accomplishments accusing them of “fascist-like”
policies. Nevertheless, the Generals lacked an economic understanding of the situation they
were trying to challenge. In 1955 Raúl Prebisch was invited to advice and to write a report on
the economic situation of the country after the Peronist years with the intention to
reconstitute Argentina’s economy. The Generals intended to implement his policies derived
from this document which was known as the Prebisch Plan. Nonetheless, was the Prebisch
Plan based on his CEPAL ideas? Was Prebisch able to implement his economic policies in the
post-peronist Argentina?

The Prodigious Son: Prebisch in Buenos Aires

Raúl Prebisch, at the time Peron was overthrown by the Revolucion Libertadora, was in Bogota
delivering a CEPAL Conference on regional trade. A few days later, October 1, Prebisch was
arriving at Buenos Aires after accepting a post as the new economic advisor68 to the new de
facto President, General Eduardo Lonardi. Within three weeks of his arrival, Prebisch
elaborated his famous report on the post-peronist Argentine economy: the Prebisch Plan. In
this section I will study Prebisch’s recommendations to the coup to later analyze its
resemblance with Dependency Theory postulates. First, I will briefly describe the difficulty of
an historical assessment of the Revolucion Libertadora as well its political nature and
consequently, the Prebisch Plan focusing, as I previously explained, on the policies for
industrialization and the state structure.

The Revolucion Libertadora

The historical debate over the reputation of the Revolucion Libertadora differs greatly among
historians. One crucial notion the reader has to bear at this point is that the post-peronist
period in Argentina is the most debated period among academics. Thus, the danger to
generalize is functional to its purpose. I will describe the nature of the coup utilizing the
perspective of Prebisch biographer, Edgar Dosman, and the famous Argentine economist
Noemi Brenta to help understand the reader the incredible unstable political and economic
context Prebisch was influenced at the moment he wrote his plan.

According to Dosman, Lonardi “was a new species of military leader, not a typical power-
hungry Latin dictator but rather a loyal officer committed to constitutional government who
would restore democracy as soon as the electoral rolls could be put in order”69. Although is not
clear Prebisch himself had this opinion, Lonardi approach to the country instability was

67
Translation of the author: We can reasonably say that if the general guidelines of the Second Five Year
Plan had been held, the country currently would have had a privileged economic situation
68
(Brenta, 2008) page 236
69
(Dosman, 2008) page 298

16
Ezequiel Jimenez

conciliatory. While parts of the army, who later took power, asked for a perpetual war against
Peron’s followers, Lonardi’s strategy was incorporating the peronists into a concrete political-
peace deal to reconstruct Argentina. His motto was ni vencedores, ni vencidos; that means
“neither winners nor losers”. Dosman, then, argues: “There would be national reconciliation
instead of revenge, he (Lonardi) promised, and the former supporters of Peron were reassured
that they were also welcome for the task of reconstruction”70. Once in Buenos Aires, Raúl
Prebisch immediately met General Lonardi and gathered his economic team in charge of
drafting the Revolucion Libertadora’s economic doctrine. According to Dosman, Prebisch first
meeting with Lonardi “confirmed his belief in the seriousness of the Revolucion Libertadora”71.
To further illustrate this point, Raúl Prebisch during a famous public meeting, known as the
Mesa Redonda del Informe Prebisch, with his closest economic advisors discussing his Plan,
emotively said about Lonardi:

“Si alguna duda quedaba en algo, esa duda no tardo en disiparse: cuando
me vi en frente, en la Casa de Gobierno, con aquella figura tan noble y
austera que junto con otros compañeros de armas desvaino su espada para
derribar una dictadura y no para levantar otra en este suelo sufrido de
América Latina”72 73

However, as I previously stated, Lonardi did not enjoy full support from the same institution
that had brought him into power: the army. In November 12, Lonardi was ousted from the
government by General Pedro Aramburu. He represented the most radical faction of the army.
They claimed the total ban of the Peronist Party, the dismantling of its institutions as well the
political persecution of its leaders. The ascendance of Aramburu represented the catastrophic
end of Lonardi’s reconciliation policy. The new dictator launched a violent persecution towards
the General Worker’s Centre (CGT), a peronist worker’s bastion, dissolving the institution and
repressing its leaders: indiscriminately killing and jailing most of them74, for example Antonio
Cafiero. Although Raúl Prebisch presented the first part of the tripartite report on the
economic conditions of Argentina under Lonardi’s government, according to Professor Sikkink,
Prebisch accepted to remain the economic advisor to Aramburu. However, Prebisch’s decision

70
Ibid page 299
71
Ibid
72
(Economicas, 1955) page 8
73
Translation by the author: If any doubt was at stake, that certainly did not take long to dissipate:
When I was in the Government House in front of that figure so noble and austere that with other fellow
soldiers shelled his sword to overthrow a dictatorship and promised not to build another tyranny on this
suffered land of Latin America.
74
(Brenta, 2008) page 234

17
Ezequiel Jimenez

did eventually, and perhaps wrongly, became indentified with the repressive ideology of the
coup along with its virulent anti-Peronism75.

The Prebisch Plan: El Informe Preliminar Acerca de la Situación Económica76

The 25th of October, nearly two weeks after Prebisch arrived to Buenos Aires, President
Lonardi presented, addressing the nation, the Prebisch Plan. The first impressions of the Plan
reflected the correct decision by the government to ask Prebisch, a world famous figure,
economic advice. The press, unlike in 1940s, instead of attacking Raúl Prebisch, they saw him
as the “symbol”77 of the new Argentina. However, the political turmoil and instability under
Aramburu’s rule did not construct the preferable atmosphere for Prebisch to implement his
recommendations. In addition, because these recommendations were subject to an austerity
plan, workers and peronists followers did not comply with Prebisch’s final economic analysis of
the Peronist regime and fostered multiple manifestations against “the foreign advisor”78 of the
de facto president.

The Prebisch Plan was strictly formulated after two intensive weeks studying the legacy from
the Peronist government. Most of the data analyzed by Prebisch’s team came from the CEPAL
headquarters. The fact that the economic data received from the CEPAL was previously
studied by Prebisch made the process of writing fairly straightforward. However, as I will
analyze in the next section, Prebisch could have been biased at the time of analysis.
Nevertheless, Prebisch concluded that: “Argentina is in the worst economic crisis of its history
after ten years of irresponsibility and corruption” 79. He was specifically concerned about the
low growth of productivity: 4%80 after ten years. In the context of the Mesa Redonda del
Informe Prebisch, he stated: “una de las expresiones más impresionantes del desastre
económico que ha vivido el país, y sigue viviendo, es el escasísimo crecimiento del producto
por hombre en los últimos diez años”81 82. Thus, the Prebisch Plan investigated how to resolve

75
(Sikkink, The Influence of Raul Prebisch on Economic Policy-Making in Argentina: 1950-1962, 1988)
page 95
76
Translation by the author: The Initial Report of the Economic Situation
77
(Dosman, 2008) page 300
78
Ibid 305
79
Ibid 303
80
Ibid
81
(Economicas, 1955) page 5
82
Translation by the author: one of the most impressive expressions of the economic disaster the
country has experienced and continues to live, is the low growth of output per worker in the past ten
years

18
Ezequiel Jimenez

the inefficiency of the national industry and the reconstruction of the economic sectors with a
set of recommendations especially focused in fostering the agricultural productivity.

The Prebisch Plan contained two sections: a series of emergency measures to deal with the
short term economic situation and a set of longer-term to guide the government. The
immediate measures were focused to strengthen the agricultural sector: the devaluation of
the peso to provide price incentives for agricultural exports, liberalization of the foreign
exchange market, previously controlled by the State agency IAPI83 (instituto Argentino de
Promoción e Intercambio); a freeze on salaries and wages, and an expansion of foreign loans,
which implied the necessity to re-structure the economy in order to join the International
Monetary Fund. The long-term recommendations included the creation of a program to
technify the agricultural sector, the development of the steel, petrochemical and mechanical
industries as well investment in petrol energy, transportation and expanding the electric
capacity84. But more importantly, the Plan was designed to respond to short-term issues by
empowering the agricultural sector to obtain and save revenue from exports. Prebisch
explained that “there will be no sound development of the industry unless they are based on a
thriving agriculture”85. However, as Aramburu’s oppressive policies towards the peronist
increased, Prebisch had to face with an escalating discontent and opposition from workers
country-wide.

In terms of industrialization, CEPAL’s core-recommendation, the Plan did not call for a heavy
investment in the national structure, but rather concentrate in the export-oriented sectors.
The Plan stipulated a special focus in the agricultural sector to increase the national assets
together with accessing to international credit. Prebisch, during the Mesa Redonda Meeting,
repeats numerous times the importance of the agricultural sector to recuperate Argentina’s
national growth and to plan a cohesive development project for the heavy industry. Prebisch
argued that once Argentina joins the Monetary Fund and creates a credible atmosphere for
external investment; all efforts should be directed to steel, oil and petrochemical industries86.

But, unlike the Peronist regime, Prebisch called for the dismantling of State-owned industries
to curve inflation and stabilize the state expenditure. In addition, Prebisch recommended a
drastic reduction in the workforce, especially in the railways, which he claimed it was exceeded
by 20.000 labourers87, while freezing wages. The reaction by the workers was seen
immediately after Prebisch delivered his Plan to the coup. The 9th of June, a massive strike and

83
Argentine Institute for Promotion and Exchange
84
(Sikkink, The Influence of Raul Prebisch on Economic Policy-Making in Argentina: 1950-1962, 1988)
page 97
85
(Economicas, 1955) page 5
86
Ibid page 6
87
(Jaureche, El Plan Prebisch: Retorno al Coloniaje, 1955) page 70

19
Ezequiel Jimenez

mobilization to the Government House by peronist workers ended with Aramburu’s ordering
repressing the manifestation with twenty-seven men executed and hundreds imprisoned and
wounded88. Prebisch was now at the centre of every newspaper in Buenos Aires, which re-
examined old themes about his past years at the Banco Central. His reputation of foreign
advisor, UN diplomat and focus on the agricultural sector soon linked Prebisch with the elite
groups of Argentina he once worked for. Raul Scalabrini Ortiz, the most prestigious peronist
philosopher, historian and journalist, criticized Prebisch’s industrialization policy as returning
to the old colonial days: “the Plan Prebisch is capricious and confusing, worse than irrelevant;
the only explanation for such distortion is his selling out to foreign investors, opposing
industrialization, and returning Argentina to the agrarian days of the oligarchy” 89. But
Prebisch’s recommendations of dismantling the State-inefficient apparatus encountered
further criticism.

In 1955, during the Mesa Redonda Meeting, Prebisch clearly explained that the size of the
State affected considerably its efficient dealing with problems of inflation and social welfare.
The Peronist model, he argued, was close to State Capitalism isolated from the external market
rules and benefits. The lack of participation in the world market eventually affected
Argentina’s access to foreign credit to fuel the process of industrialization. The size of the
State, which absorbed the banking system, according to Prebisch, intervened in every aspect of
the economic sphere controlling prices and enterprises to rigidly follow the government’s plan.
However, Prebisch did not, by dismantling the State intervention mechanisms, advocate for a
weak government playing in the free market, but rather together with the State, he called for
private investment as well as foreign credit.

In order for Argentina to benefit from the world market, the liberal reforms Prebisch advised
were directed to join the International Monetary Fund. Although Prebisch argued extensively
his opposition to foreign credit, the problematic of inflation, debt and decreased national
assets indicated to Prebisch that foreign capital was urgently needed90. Thus, Prebisch
recommended cutting staff and budget; privatizing inefficient state companies like Aerolineas
Argentinas (Argentine Airlines); reducing public expenditure; removing price control; reducing
the deficit; reforming taxation to increase revenue and prevent evasion; promoting the
agricultural production and exports, including the establishment of the National Institute of
Agrarian Technology; attracting foreign capital and joining the IMF91. Prebisch was harshly
criticized by the press and the peronist factions, calling him, as he was called before, an
antipatria, selling Argentina to the interests of the imperialistic foreign investors.

88
(Dosman, 2008) page 319
89
Ibid page 312
90
(Economicas, 1955) page 7
91
(Dosman, 2008) page 310

20
Ezequiel Jimenez

Furthermore, the increase of taxation and cuts in welfare programs installed by Peron
provoked a new round of strikes and labour discontent at the same time Peron, in Spain,
recovered his leadership and power base. Oscar Allende, present at the discussion of the Mesa
Redonda Meeting, energetically said “sound money yes, but sound money must not become
the final objective achieved at the expense of the suffering, misery and toil of the lower
income groups”92. In summary, as Brenta argues, the economic policies undertaken since 1955
under the recommendations of Prebisch, Argentina approached the IMF model before
entering the body. Multilateralism, deliverance exchange rate, devaluation of the peso, trade
liberalization and restrictions on domestic credit represented typical IMF requirements93.
Argentina was to follow Prebisch into a liberal economy with great opposition from multiple
popular sectors in society.

In 1956 Raúl Prebisch returned to Chile defeated and tired into his last and second exile.
Attacked by every political group, his most important recommendations were never achieved
under the Revolucion Libertadora: Aerolineas Argentina was not privatized; taxation reform
was postponed; and Aramburu was unable to reform the state; which consumed 42% of the
GDP94. Furthermore, the restructuration of the economy in order to join the IMF was less
satisfactory. The International Bank for Reconstruction and Development rejected financing
investments in electricity and petrochemical projects while grating Brazil $1000 million dollars
the same year. Although Prebisch efforts to contribute to his country were always shared with
humility and hard work; he did not succeed in assessing the political circumstances where to
implement his Plan. The fall of Lonardi’s reconciliation process and the strong peronist
opposition were determinant factors of Prebisch’s disappointment. In addition, the Prebisch
Plan was also criticized by the public opinion, peronists and CEPAL associates because it did
not incorporated most of Prebisch’s famous insights in his Dependency Theory. According to
Arturo Jauretche95, in his famous book El Plan Prebisch: Retorno al Coloniaje96, the differences
are so notorious because Prebisch did not write the Plan, but his closest collaborators Krieger
Vasena, Julio Ceuto Rua and Roberto Alemann97. Nonetheless, in which manners did his Plan
and Dependency Theory differ and agree?

92
(Dosman, 2008) page 312
93
(Brenta, 2008) page 247
94
(Dosman, 2008) page 317
95
Arturo Jauretche, politician, essayist and historian was the most fervent critic of Prebisch. Allied with
Peron in 1955, he remained a critic of the Party until Peron’s fall. Persecuted by Aramburu, Jaureche
wrote extensively during exile in Uruguay about the Revolucion Libertadora illegality.
96
The Prebisch Plan: Returning to Colonial Times
97
(Jauretche, El Plan Prebisch: Retorno al Coloniaje, 1955) page 145

21
Ezequiel Jimenez

Assessment of the Prebisch Plan: Another Dependency Theory?

Both Dependency postulates and the Prebisch Plan were differently influenced by their
political and economic context. Dependency Theory was a prompt answer challenging the
economic world order, as the Havana Manifesto explains. On the other hand, The Prebisch
Plan was designed to recuperate the Argentine economy after the Peronist years, claiming a
profound crisis. However, these two documents written by Prebisch seem to greatly disagree
in two of the key Prebischian areas of study: industrialization and the role of the State. Arturo
Jauretche would argue that Prebisch’s “Dr Jekyll and Mr Hyde” complex is largely because he
did not write the plan given to coup, but his closest economic advisors who later took office as
Finance Ministers, for example Krieger Vasena. Kathryn Sikkink, in contrast, argues that
Prebisch regarded the question of industrialization as obvious for his Plan and did not address
it properly. In addition, she argues that Prebisch did not realize how to “play politics” while
presenting his Plan to the coup. In this last section I will analyze the main differences between
the Plan and Dependency theory and propose alternative answers to the problematic.

Was the Prebisch Plan an Exaggeration?

After Raúl Prebisch claimed that the post-peronist Argentina was “in the worse crisis in
history”, the Generals welcomed his recommendations to save the country with great rigour
agreeing with his fatalist views demonizing Peron’s legacy. It was extremely convenient for the
Revolucion Libertadora existence to picture the peronist years as economically catastrophic
with an increasing foreign debt, low growth and industrial inefficiency. However, according to
the Sunday Times Argentina’s debt problem was “low in comparison with her potentialities
once her economic affairs have been restored to an even keel”98. Furthermore, Prebisch’s
theatrical tone in his report to the coup was challenged by the US Embassy arguing that “he
had deliberately exaggerated Argentina’s currency problem to discredit Peronism and had
gone too far in dramatizing the severity of the economic crisis”99. Jauretche, in addition,
harshly writes that Prebisch imagined the crisis of the post-peronist Argentina: “But without
any warning a man who has descended from a plane after a long exile, confounds his
ideas. This is where the common man begins to suspect, much to his regret, that economics is
a mysterious science”100. Prebisch largely used CEPAL data-bases to create the report and
based most of his policies in a deep study of Argentina by cepalistas or anti-peronist
economists such as Krieger Vasena, Julio Ceuto Rua and Roberto Alemann. Thus the excessive
reliance on former colleagues for information and data could have misled his final conclusions.

Jauretche, in his book, gives a detailed and peculiar point-by-point account of Prebisch’s
imaginary crisis. He investigates every aspect of the Plan and compares the data obtained by
the CEPAL with the National Bureau of Statistics. When assessing the question about the size

98
(Dosman, 2008) page 305
99
Ibid
100
(Jauretche, El Plan Prebisch: Retorno al Coloniaje, 1955) page 22

22
Ezequiel Jimenez

of the State, Prebisch claims its inefficiency and surplus of workforce, for example in the
railways. While Raúl Prebisch recommended the drastic cut of 20.000 in the State workforce to
reduce the State’s expenditure and increase the railways effectiveness and efficiency,
Jauretche categorically denies Prebisch’s claim by showing an increase in the usage of railways
illustrating the urgent necessity of incorporating extra workers rather than reducing the rail
personal. Between 1937 and 1954 the railway usage, according to Jauretche, increased by
242.2% while the workforce recruitment increased only by 53%101. Thus, he ironically asks:
“Would not it be that Mr. Prebisch is confusing us with Chile or Uruguay?”102

The Lack of CEPAL Elements

Throughout the Prebisch Plan, previously explored, the disparities between the CEPAL theories
and the recommendations given to the Generals are immense. Both Jauretche and Sikkink
point out the differences in language, structure, tone and policies suggested. Although Sikkink
denies the claim by Jauretche of Prebisch absent involvement in the Plan, she does recognize
the missing of his renowned categories of centre-periphery, declining terms of trade and the
need of regional integration103. Unlike problems of inflation, agricultural production and
exports, other elements such as planning and industrialization were always in the background
of the report and did not take any important role in the policy recommendations by Prebisch.

Industrialization through import-substitution and the role of the State are two important
categories Prebisch does not discuss in his Plan to the Generals as a tool to overcome the
“crisis”. Nonetheless, he especially addresses the importance of these in the Havana
Manifesto. During and after the meeting in Cuba, the centre-periphery dialectical model was
indeed the moral justification for third world countries to challenge the comparative
advantage myth in order to develop. If Latin American countries realized their potential to
develop, then, Raúl Prebisch advocated for a strong diligent state to plan development,
industrialization through and ISI model to foster technology advancement which would result
in growth and employment, protection of the infant industry, regional integration and
autonomy in the world economic order. Thus, in 1949, Prebisch praised Argentina stating: “in
the post-war, with the determined policy of protection, encouragement and the strong
contributions of goods and capital by the government, the Argentine industry went into his
face of final consolidation”104. According to Hugh Schwartz, from the Inter-American
Development Bank, in 1950 Argentina was the foremost example of a nation that was
increasing its effort to industrialize, and the country’s extensive public relations campaign

101
Ibid page 70
102
Ibid
103
(Sikkink, The Influence of Raul Prebisch on Economic Policy-Making in Argentina: 1950-1962, 1988)
page 95
104
(Jauretche, El Plan Prebisch: Retorno al Coloniaje, 1955) page 153

23
Ezequiel Jimenez

abroad, laying claim to recent industrialization gains, must have tended to reinforce the
arguments of Prebisch-CEPAL theory105.

On the other hand, greatly different from the Manifesto, Prebisch formulated a totally new
structure and policies to encourage growth in the post-peronist Argentina through the
Prebisch Plan of 1955. As I previously explained, Prebisch’s recommendations to Lonardi and
Aramburu were largely similar to liberal policies. The especial focus in the agricultural sector
instead of strengthening the national industries created by the peronist regime together with
the restructuration of the State to join the IMF delimiting its size cutting welfare programs as
well as privatizing national companies, illustrates Prebisch contradictory thinking. In the case
of industrialization, the Prebisch Plan did not consider the importance and power of the large
vested interests of the highly protected national industry106. Rather, it pursued a program of
dismantling most of the newly created industries by privatizing them and cutting the
workforce. Further, in the case of the role of the State, Prebisch did not advocate for a strong
diligent State, but pursued policies to exterminate most of the Peronist development planning,
worker’s centres and price control institutions. However, as Sikkink argues, neither Prebisch
nor the Revolucion Libertadora leaders were concerned on creating new autonomous
economic policy institutions but erasing every peronist bastion. But, as explained before, each
of Prebisch’s suggestion to the coup was massively opposed by the popular sectors of society
which viewed Don Raul as a foreign advisor and an antipatria. Furthermore, the vast
differences between the main Prebisch’s documents, the Havana Manifesto and the Prebisch
Plan, were also very surprising for his CEPAL colleagues. For example Furtado was “perplexed
and disappointed”107 by Prebisch’s IMF orthodoxy fitting badly with the Prebisch he had known
during his years in Chile. Thus, we must ask: what happened to his revolutionary ideas that
were shaping Latin American countries? What factors helped Prebisch to alter his thinking?
What motives were behind this radical change? In the conclusion below I will try to explore
some of these questions, which urgently need further academic research to fully understand
Raúl Prebisch dual thinking.

“Yo estoy dispuesto a cambiar mi opinión”108 109

Raúl Prebisch arrived in Buenos Aires with a preconceived idea of changing the economic and
political structure led by Peron for ten years. His primary wish, since he was exiled, was to
return to Argentina and serve the country in the same way he did during his years at the Banco
Central de la Nacion. His depression after exiling in Chile resorted in the impossibility to even

105
(Schwartz, 1988) page 125
106
(Vasena, 1988) page 119
107
(Dosman, 2008) page 315
108
(Economicas, 1955) page 8
109
Translation by the author: I am willing to change my opinion

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Ezequiel Jimenez

attempt to write academically, as it was explained before. In addition, the unfair circumstances
in which he was ousted from his professorship and the Banco Central fostered his willingness
to come back to Buenos Aires. As it can be seen from the various quotes from the Mesa
Redonda Meeting, he was decisive to construct a new Argentina with solid and honest
leadership during a reconciliation policy promised by Lonardi. Thus, Raúl Prebisch came back
to Argentina believing in an inclusive project that soon fell apart.

I would argue that the political context of intense and violent rivalry between the peronist and
liberal factions, were the main causes of Prebisch’s contradictory thinking. The political
intransigence pictured since the rise of Peron and his autocratic regime and the violent coup
by the revolutionary leaders are just a few examples of a larger theme in Argentine history.
The leaders of the Revolucion Libertadora systematically eliminated every aspect of Peron’s
dominance in Argentina in the same way Peron did with the Conservative Party policies in
1946. What the revolutionary leaders did during the governments of Lonardi and Aramburu
were applying changes rooted in political intransigence without recognizing and further
develop Peron’s economic, social and economic achievements. Raúl Prebisch was a victim of
his historical context. Once appointed economic advisor to the president in charge of planning
their economic doctrine, Prebisch could not fully apply his concepts of Dependency Theory as
they shared great similarities with Peron’s policies. Indeed the CEPAL concepts of
industrialization, international autonomy and regional trade were in vast dimensions applied
by the Peronist government. Prebisch had to please the leaders who brought him back to
Argentina and at the same time present a coherent economic plan which would represent his
own theories. Although most of his policies did not reflect the core of the CEPAL ideas, a great
extent of them, such as joining the IMF, was completely logical to the world context. Indeed,
Brazil, Chile and Uruguay who joined the IMF earlier than Argentina were obtaining large loans
to develop their industries. In addition, Prebisch trusted Lonardi’s reconciliation policy as the
base for Argentina’s development which urgently needed the peronist workers.

However, once Aramburu took power, Prebisch did not have a chance to reformulate his Plan
but to enforce it with a subset of liberal policies such as privatization of state industries and
cuts in the welfare programs. Nonetheless, I do not believe that Prebisch was completely
knowledgeable about Peronist Argentina as the manipulation of statistical data suggest. He did
not recognize some of the success of the Peronist years, such as the welfare programs and the
investments in education, health and infrastructure. Thus, I would argue that together with the
political intransigence of the different factions, his biased against Peron himself blinded him to
write an impartial and de-politicized economic analysis using the existent favourable structure
and replacing the inefficient mechanisms with his ideas developed in the CEPAL.

In conclusion, Raúl Prebisch remains even today a contradictory figure in the world of
development. From his brilliant inputs during his years at the Banco Central de la Nacion, his
famous CEPAL years in Chile and his collaboration with the Revolucion Libertadora, he was
indeed a great economist and academic. However, the volatility of his thinking in the Prebisch
Plan was what pushed him in 1956 to his second exile in Chile. Father of the Dependency
Theory, he pursued a model that was followed with great success by multiple Latin American
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Ezequiel Jimenez

countries but not at his home, Argentina. His early memories from the cruel Peronist regime,
the veto for his position to the IMF by Peron and his embarrassing exit from the Banco Central
could have been sufficient reasons to re-shape the post-peronist Argentina in a freer manner,
but Aramburu’s anti-peronist reforms precluded Prebisch from implementing his Plan
successfully. As the title-quote of this section illustrates, he did change his mind with great
willingness but failed to understand his role of diplomat and intellectual able to overcome the
intolerance and intransigence practiced by every opposing party in Argentina.

26
Ezequiel Jimenez

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