Cores, Peripheries, and Globalization

Chapter 1: The Latin American Contribution to Center–Periphery Perspectives: History and Prospect

ChaPter one the latin american Contribution to CenterPeriphery Perspectives: history and Prospect Joseph L. Love the analytical framework of center (or core) and periphery, whose parts interact in complementary but unequal ways, has played an important role in the work of ivan berend.1 this perspective on the world economy and its component parts has taken on a heightened relevance with the intensification of globalization in the 1990s, following the collapse of the soviet empire and the formulation of the Washington Consensus . the center-periphery approach is not only useful in understanding the contemporary international economy, but is increasingly employed in economic historiography as well. the center-periphery scheme, implying an enormous asymmetry in the global economy (and often within regional economies), is identified in the nineteenth and twentieth centuries with the division of the world into a group of industrialized countries around which is arrayed a periphery of agriculture- and mineral-exporting countries. Moreover , the notion of economically differentiated space, with its nodes and fields, is at the heart of the discipline of economic geography (with its related traditions of central place theory and its american cousin, regional science).2 in this essay i will trace the formulation of the latin american contribution to center–periphery analysis, its diffusion, crisis , reformulation, and decline. i further consider how center–periphery perspectives may be reincorporated into (standard) neoclassical economics. this is a story of multiple, often independent, discoveries. the focus on the world economy as a site of imperialist expansion for the industrialized countries of the european core was developed by Marxists and others, but in the well-known literature by hobson, lenin, bukharin , hilferding, and luxemburg, the emphasis was almost exclusively on processes occurring within an industrial and financial metropolis, i4 globalization.indb 15 2011.01.05. 10:35 16 Joseph l. love rather than within imperial or informal domains of that metropolis. however, one could find writers from peripheral regions who had more complex interpretations, using a core-periphery focus. i have in mind two in romania: Constantin dobrogeanu-Gherea and Mihail Manoilescu , but surely there were others elsewhere.3 Prebisch and Center-Periphery latin american structuralism, as the doctrine in question came to be known in the 1960s, and its center–periphery framework found a major platform in a United nations agency, the economic Commission for latin america. this agency, best known by its spanish acronym, CePal, was dominated in its early years by the ideas, personality, and programs of raúl Prebisch (1901–1986).4 since the agency was so much Prebisch’s creation, we must consider his early career and formative experiences during the depression and War years in order to understand how the CePal theses of 1949 crystallized. born in the argentinean city of tucumán in 1901, Prebisch studied at the University of buenos aires, whose department (Facultad) of economics at the time was probably the best school of economics in latin america.5 Prebisch gave early promise of a distinguished career within argentina ’s economic establishment. in 1923, upon completing a master’s degree in economics, he was asked to join the faculty at the university. Meanwhile, he was developing an intimate association with the elite sociedad rural (stockbreeders’ association). in 1927, he published a rural-sponsored study that became the basis for government action on behalf of stockbreeders in the foreign meat market.6 Prebisch also played a key role in the creation of argentina’s Central bank—with powers to control interest rates and the money supply—in 1935. From its inception until 1943, Prebisch served as its director-general. before the depression it was considered axiomatic that argentina had prospered according to the theory of comparative advantage. the benefits of export-led growth, based on an international division of labor, made comparative advantage a near-sacrosanct doctrine.7 the twenties had been a period of disequilibrium as well as expansion in world trade, and though argentina prospered, the country experienced the same problems as other primary-producing nations in the final i4 globalization.indb 16 2011.01.05. 10:35 17 The Latin American Contribution to Center-Periphery Perspectives years before the october 1929 crash—namely, falling export prices, rising stocks, and debt-payment difficulties. Following britain’s departure from the gold standard, in october 1931, argentinean authorities introduced exchange controls to try to stem the outflow of capital and facilitate the repayment of loans negotiated in hard...