Republic of Capital: Buenos Aires and the Legal Transformation of the Atlantic World (review)

Republic of Capital: Buenos Aires and the Legal Transformation of the Atlantic World. By Jeremy Adelman. Stanford: Stanford University Press, 1999. Maps. x, 376 pp. Cloth, $55.00.

Argentina remains an attractive subject to historians and analysts who puzzle over how things went wrong economically, for the nation seems to have gone from rags to riches and back again to rags. Not long ago, the neoclassicists and structuralists commanded the debate, arguing over the long-term impact of exporting primary products. Now scholars are questioning the institutional legacies by which Argentina has grown into stagnation. Nobel Laureate Douglass C. North provides the point of departure with the New Institutional Economics (NIE). In 1997, some of the most prominent Latin Americanists attending the International Economic History Association meeting in Madrid devoted a plenary session to evaluating Latin American development according to the NIE. Others have put out a volume of essays on Mexico and Brazil with the purpose of ascertaining How Latin America Fell Behind, a reference to North's comparison between England's institutional arrangements that promoted economic growth in its American colonies and the bureaucratic legacy that stifled Spain's colonial economies. Now the NIE has come to Argentina. In Republic of Capital, Jeremy Adelman utilizes the framework of the "new institutionalism" more rigorously than any other historian of Latin America. The book displays both the virtues and the problems of this paradigm.

Adelman sets out to analyze how Argentina made the institutional transformation from "a colonial mercantile economy" in the late eighteenth century to one of commercial capitalism in the late nineteenth century. He deals with matters of political economy, such as competing ideas and interests, the economic impact of civil strife, and the process of nation-building. Adelman is particularly interested in the evolving institutional arrangements for debts, property rights, and monetary emissions. The author uses the new institutionalism for its heuristic value in identifying problems, posing questions, and suggesting the importance of investigating the institutional framework of economic exchange. In effect, Adelman accompanies others in "bringing the state back in" to economic history, and not totally as a negative factor in development. The investigation of the state as an agent of "third party enforcement" in commercial contracts fits nicely into North's prescriptions.

At the outset, Adelman describes Argentina's eighteenth-century economy in rather bleak institutional terms befitting its mercantilist character. Late-colonial Buenos Aires produced little. Instead, it relied on Bolivian silver for most of its exports. Spanish policy prevented trade with foreign interlopers, rent-seeking merchants formed a tight-knit guild to restrict the entitlements to trade, and land titles came in "a myriad of forms." "In general, [colonial] merchants sold their goods at collusively inflated prices and bought rural produce at seasonally depressed prices --a neat system of unequal exchange between the country and city" (p. 38).

To Adelman, Argentina's revolution for independence began the destruction of mercantilist institutions and generated new notions of property rights and monetary policy. He begins his analysis with those who advocated prerevolutionary reforms, creole intellectuals like Manuel Belgrano, Manuel José Lavardén, and Mariano Moreno. They questioned Spanish trade policies. They argued for "free trade," an end to monopolies, the creation of wealth through agricultural production, and equality between Spanish and creole (native-born white) merchants. According to Adelman, these Argentinean pensadores envisioned a world in which "rights should eclipse privileges and profit-seeking should displace rent-seeking; interests should obey market, not political rules" (p. 74). In tracing the emergence of modern institutions favoring low-cost transactions beneficial to economic expansion, Adelman intertwines his narrative of the revolution with the fitful appearance of alternative rules of the game. He notes correctly that many early reform proposals floundered on the rocky shoals of internal political strife. Nevertheless, Adelman says, the revolution did rent asunder once and for...