Debtor Coalitions and Weak Tax Institutions in Latin America: Insights from Argentina and Brazil

  • Ryan Saylor
Chapter
Part of the Latin American Political Economy book series (LAPE)

Abstract

Latin American countries maintained weak tax institutions during the nineteenth century, despite frequent wars, which increased public debt and should have impelled institutional development. But Latin American leaders balked, at the behest of their underlying political coalitions. When net creditors in a country’s credit market are part of the ruling political coalition, they should press governments to diversify taxes and strengthen fiscal institutions to ensure debt service. When net debtors hold political sway, governments should be indifferent to debt servicing, because it can produce an economic gain for coalition members. Case studies of Argentina and Brazil in the aftermath of the War of the Triple Alliance (1864–1870) illustrate how debtor coalitions foiled the development of fiscal states.

References

  1. Abreu, M., & Lago, L. (2001). Property Rights and the Fiscal and Financial Systems in Brazil. In M. Bordo & R. Cortés-Conde (Eds.), Transferring Wealth and Power from the Old to the New World: Monetary and Fiscal Institutions in the 17th through the 19th Centuries (pp. 327–377). Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  2. Adelman, J. (1995). The Politics of Money in Mid-nineteenth-century Argentina. In J. Harriss, J. Hunter, & C. Lewis (Eds.), The New Institutional Economics and Third World Development (pp. 233–249). London: Routledge.Google Scholar
  3. Baldacci, E., & Kumar, M. (2010). Fiscal Deficits, Public Debt, and Sovereign Bond Yields. IMF Working Paper 10/184. Washington, DC: International Monetary Fund.Google Scholar
  4. Bauer, A. (1975). Chilean Rural Society from the Spanish Conquest to 1930. Cambridge: Cambridge University Press.Google Scholar
  5. Bordo, M., & Cortés Conde, R. (Eds.). (2001). Transferring Wealth & Power from the Old to the New World: Monetary and Fiscal Institutions in the 17th through the 19th Centuries. Cambridge: Cambridge University Press.Google Scholar
  6. Bulmer-Thomas, V. (1994). The Economic History of Latin America Since Independence. Cambridge: Cambridge University Press.Google Scholar
  7. Calomiris, C., & Haber, S. (2014). Fragile by Design: The Political Origins of Banking Crises and Scarce Credit. Princeton, NJ: Princeton University Press.Google Scholar
  8. Cardoso, F. H., & Faletto, E. (1979). Dependency and Development in Latin America. Berkeley: University of California Press.Google Scholar
  9. Cardoso, J., & Lains, P. (Eds.). (2010). Paying for the Liberal State: The Rise of Public Finance in Nineteenth-Century Europe. Cambridge: Cambridge University Press.Google Scholar
  10. Carmagnani, M. (1995). Las finanzas de tres estados liberales: Argentina, Chile y México, 1860–1910. In R. Liehr (Ed.), La deuda pública en América Latina en perspectiva histórica (pp. 77–89). Madrid: Iberoamericana.Google Scholar
  11. Catão, L., & Terrones, M. (2005). Fiscal Deficits and Inflation. Journal of Monetary Economics, 52(3), 529–554.CrossRefGoogle Scholar
  12. Centeno, M. (1997). Blood and Debt: War and Taxation in Nineteenth-Century Latin America. American Journal of Sociology, 102(6), 1565–1605.CrossRefGoogle Scholar
  13. Centeno, M. (2002). Blood and Debt: War and the Nation-State in Latin America. University Park: Pennsylvania State University Press.Google Scholar
  14. Centeno, M., & Ferraro, A. (2013). Paper Leviathans: Historical Legacies and State Strength in Contemporary Latin America and Spain. In M. Centeno & A. Ferraro (Eds.), State and Nation Making in Latin America and Spain: Republics of the Possible (pp. 399–416). Cambridge University Press: Cambridge.CrossRefGoogle Scholar
  15. Chiaramonte, J. (1971). Nacionalismo y liberalismo: Económicos en Argentina, 1860–1880. Buenos Aires: Solar/Hachette.Google Scholar
  16. Cortés Conde, R. (1989). Dinero, deuda y crisis: evolución fiscal y monetaria en la Argentina, 1862–1890. Buenos Aires: Editorial Sudamericana.Google Scholar
  17. Dean, W. (1971). Latifundia and Land Policy in Nineteenth-Century Brazil. Hispanic American Historical Review, 51(4), 606–625.CrossRefGoogle Scholar
  18. della Paolera, G., & Taylor, A. (2001). Straining at the Anchor: The Argentine Currency Board and the Search for Macroeconomic Stability, 1880–1935. Chicago: University of Chicago Press.CrossRefGoogle Scholar
  19. Dincecco, M. (2011). Political Transformations and Public Finances: Europe, 1650–1913. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  20. Eckstein, H. (1975). Case Studies and Theory in Political Science. In F. Greenstein & N. Polsby (Eds.), Handbook of Political Science (Vol. 7, pp. 94–137). Reading, MA: Addison-Wesley.Google Scholar
  21. Fairfield, T. (2015). Private Wealth and Public Revenue in Latin America: Business Power and Tax Politics. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  22. Ferns, H. S. (1960). Britain and Argentina in the Nineteenth Century. Oxford: Oxford University Press.Google Scholar
  23. Fetter, F. (1931). Monetary Inflation in Chile. Princeton, NJ: Princeton University Press.Google Scholar
  24. Gallo, C. (1991). Taxes and state Power: Political Instability in Bolivia, 1900–1950. Philadelphia: Temple University Press.Google Scholar
  25. Góngora, M. (1986). Ensayo histórico sobre la noción de estado en Chile en los siglos XIX y XX. Santiago: Editorial Universitaria.Google Scholar
  26. Graham, R. (1990). Patronage and Politics in Nineteenth-Century Brazil. Stanford, CA: Stanford University Press.Google Scholar
  27. Greenhill, R. (1977). Merchants and the Latin American Trades: An Introduction. In D. C. M. Platt (Ed.), Business Imperialism, 1840–1930: An Inquiry Based on British Experience in Latin America (pp. 157–197). Oxford: Oxford University Press.Google Scholar
  28. Hirschman, A. (1963). Inflation in Chile. In Journeys Toward Progress: Studies of Economic Policy-Making in Latin America (pp. 159–223). New York: Twentieth Century Fund.Google Scholar
  29. Huber, E., & Stephens, J. (1995). Conclusion: Agrarian Structure and Political Power in Comparative Perspective. In E. Huber & F. Safford (Eds.), Agrarian Structure and Political Power: Landlord and Peasant in the Making of Latin America (pp. 183–232). Pittsburgh, PA: University of Pittsburgh Press.Google Scholar
  30. Karl, T. (1997). The Paradox of Plenty: Oil Booms and Petro-States. Berkeley: University of California Press.Google Scholar
  31. Kurtz, M. (2013). Latin American State Building in Comparative Perspective: Social Foundations of Institutional Order. Cambridge: Cambridge University Press.Google Scholar
  32. Leff, N. (1997). Economic Development in Brazil, 1822–1913. In S. Haber (Ed.), How Latin America Fell Behind. Essays on the Economic Histories of Brazil and Mexico (pp. 34–64). Stanford, CA: Stanford University Press.Google Scholar
  33. Levi, M. (1988). Of Rule and Revenue. Berkeley: University of California Press.Google Scholar
  34. Levy, M. (1995). The Brazilian Public Debt – Domestic and Foreign, 1824–1913. In R. Liehr (Ed.), La deuda pública en América Latina en perspectiva histórica (pp. 209–254). Madrid: Iberoamericana.Google Scholar
  35. Lieberman, E. (2003). Race and Regionalism in the Politics of Taxation in Brazil and South Africa. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  36. López-Alves, F. (2001). The Transatlantic Bridge: Mirrors, Charles Tilly, and State Formation in the River Plate. In M. Centeno & F. López-Alves (Eds.), The Other Mirror: Grand Theory Through the Lens of Latin America. Princeton, NJ: Princeton University Press.Google Scholar
  37. Mahon, J. (2004). Causes of Tax Reform in Latin America, 1977–95. Latin American Research Review, 39(1), 3–30.CrossRefGoogle Scholar
  38. Marichal, C. (1989). A Century of Debt Crises in Latin America: From Independence to the Great Depression, 1820–1930. Princeton, NJ: Princeton University Press.Google Scholar
  39. Marichal, C. (2006). Money, Taxes, and Finance. In V. Bulmer-Thmoas, J. Coatsworth, & R. Cortés Conde (Eds.), The Cambridge Economic History of Latin America (Vol. I, pp. 423–460). Cambridge: Cambridge University Press.Google Scholar
  40. Marichal, C., & Carmagnani, M. (2001). Mexico: From Colonial Fiscal Regime to Liberal Financial Order, 1750–1912. In M. Bordo & R. Cortés-Conde (Eds.), Transferring Wealth and Power from the Old to the New World: Monetary and Fiscal Institutions in the 17th Through the 19th Centuries (pp. 284–326). Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  41. Martin, I., Mehrotra, A., & Prasad, M. (2009). The Thunder of History: The Origins and Development of the New Fiscal Sociology. In I. Martin, A. Mehrotra, & M. Prasad (Eds.), The New Fiscal Sociology: Taxation in Comparative and Historical Perspective (pp. 1–27). Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  42. McLynn, F. (1984). Consequences for Argentina of the War of Triple Alliance 1865–1870. Americas, 41(1), 81–98.CrossRefGoogle Scholar
  43. Needell, J. (2013). The State and Development Under the Brazilian Monarchy, 1822–1889. In M. Centeno & A. Ferraro (Eds.), State and Nation Making in Latin America and Spain: Republics of the Possible (pp. 79–99). Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  44. Ortega Peña, R., & Duhalde, E. (1968). Baring Brothers y la historia política Argentina: La banca británica y el proceso histórico nacional de 1824 a 1890. Buenos Aires: Editorial Sudestada.Google Scholar
  45. Oszlak, O. (1982). La formación del estado argentino. Buenos Aires: Editorial de Belgrano.Google Scholar
  46. Paige, J. (1978). Agrarian Revolution: Social Movements and Export Agriculture in the Underdeveloped World. New York: Free Press.Google Scholar
  47. Panettieri, J. (1980). La Ley de Conversión monetaria de 1864 y la Oficina de Cambio de 1867. Causas y consecuencias económico-sociales. Desarrollo Económico, 20(79), 383–412.CrossRefGoogle Scholar
  48. Platt, D. C. M. (1983). Foreign Finance in Argentina for the First Half-Century of Independence. Journal of Latin American Studies, 15(1), 23–47.CrossRefGoogle Scholar
  49. Reber, V. (1979). British Mercantile Houses in Buenos Aires, 1810–1880. Cambridge, MA: Harvard University Press.Google Scholar
  50. Resende-Santos, J. (2007). Neorealism, States, and the Modern Mass Army. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  51. Ridings, E. (1994). Business Interest Groups in Nineteenth-Century Brazil. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  52. Rodríguez-Franco, D. (2016). Internal Wars, Taxation, and State Building. American Sociological Review, 81(1), 190–213.CrossRefGoogle Scholar
  53. Sabato, H. (1990). Agrarian Capitalism and the World Market: Buenos Aires in the Pastoral Age, 1840–1890. Albuquerque: University of New Mexico Press.Google Scholar
  54. Saylor, R. (2014a). State Building in Boom Times: Commodities and Coalitions in Latin America and Africa. New York: Oxford University Press.CrossRefGoogle Scholar
  55. Saylor, R. (2014b). Commodity Booms, Coalitional Politics, and Government Intervention in Credit Markets. Review of International Political Economy, 21(3), 640–669.CrossRefGoogle Scholar
  56. Saylor, R., & Wheeler, N. (2017). Paying for War and Building States: The Coalitional Politics of Debt Servicing and Tax Institutions. World Politics, 69(2), 366–408.CrossRefGoogle Scholar
  57. Schneider, A. (2012). State-Building and Tax Regimes in Central America. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  58. Schulz, J. (2008). The Financial Crisis of Abolition. New Haven, CT: Yale University Press.CrossRefGoogle Scholar
  59. Schwartz, H. (1989). In the Dominions of Debt: Historical Perspectives on Dependent Development. Ithaca, NY: Cornell University Press.Google Scholar
  60. Scobie, J. (1954). El desarrollo monetario de la República Argentina durante el período 1852–1865. Revista del Museo Mitre, 7, 15–44.Google Scholar
  61. Soifer, H. (2015). State Building in Latin America. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  62. Stein, S. (1958). Vassouras: A Brazilian Coffee County, 1850–1900. Princeton, NJ: Princeton University Press.Google Scholar
  63. Stein, S., & Stein, B. (1970). The Colonial Heritage of Latin America: Essays on Economic Dependence in Perspective. New York: Oxford University Press.Google Scholar
  64. Summerhill, W. (2015). Inglorious Revolution: Political Institutions, Sovereign Debt, and Financial Underdevelopment in Imperial Brazil. New Haven, CT: Yale University Press.CrossRefGoogle Scholar
  65. Sweigart, J. (1980). Financing and Marketing Brazilian Export Agriculture: The Coffee Factors of Rio de Janeiro, 1850–1888. Unpublished doctoral dissertation, University of Texas at Austin.Google Scholar
  66. Taylor, A. (2006). Foreign Capital Flows. In V. Bulmer-Thmoas, J. Coatsworth, & R. Cortés Conde (Eds.), The Cambridge Economic History of Latin America (Vol. II, pp. 57–100). Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  67. Thies, C. (2005). War, Rivalry, and State Building in Latin America. American Journal of Political Science, 49(3), 451–465.CrossRefGoogle Scholar
  68. Tilly, C. (1992). Coercion, Capital, and European States, AD 990–1992. Cambridge, MA: Blackwell.Google Scholar
  69. Topik, S. (1985). The State’s Contribution to the Development of Brazil’s Internal Economy, 1850–1930. Hispanic American Historical Review, 65(2), 203–228.CrossRefGoogle Scholar
  70. Topik, S. (1987). The Political Economy of the Brazilian State, 1889–1930. Austin: University of Texas Press.Google Scholar
  71. Topik, S. (2002). The Hollow State: The Effect of the World Market on State-Building in Brazil in the Nineteenth Century. In J. Dunkerley (Ed.), Studies in the Formation of the Nation State in Latin America (pp. 112–132). London: Institute of Latin American Studies.Google Scholar
  72. Villela, A. (1999). The Political Economy of Money and Banking in Imperial Brazil, 1850–1870. Unpublished doctoral dissertation, The London School of Economics and Political Science.Google Scholar
  73. Warren, H. (1978). Paraguay and the Triple Alliance: The Postwar Decade, 1869–1878. Austin: University of Texas Press.Google Scholar
  74. Williams, R. (1994). States and Social Evolution: Coffee and the Rise of National Governments in Central America. Chapel Hill: University of North Carolina Press.Google Scholar
  75. Williamson, J. (2012). Commodity Prices over Two Centuries: Trends, Volatility, and Impact. Annual Review of Resource Economics, 4, 185–206.CrossRefGoogle Scholar
  76. Yun-Casalilla, B. (2012). Introduction. In B. Yun-Casalilla & P. O’Brien (Eds.), The Rise of Fiscal States: A Global History 1500–1914 (pp. 1–35). Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  77. Yun-Casalilla, B., & O’Brien, P. (Eds.). (2012). The Rise of Fiscal States: A Global History 1500–1914. Cambridge: Cambridge University Press.Google Scholar

Copyright information

© The Author(s) 2018

Authors and Affiliations

  • Ryan Saylor
    • 1
  1. 1.Department of Political ScienceUniversity of TulsaTulsaUSA

Personalised recommendations