From Feudalism to Oligarchy in Latin America, 1500–1830

Scott, Bruce R.

doi:10.1007/978-1-4614-1879-5_6

Bruce R. Scott²

2825 Accesses

Abstract

Europeans embarked upon the colonization of Latin America early in the 16th century, about 100 years before colonizing North America. Latin America seemed an auspicious choice at the time, in part because there were reports of gold and silver in the Caribbean and to the south, but also because the Caribbean and northeastern part of Brazil would prove to be promising areas for the cultivation of sugar cane. With this head start, estimated incomes in Latin America were generally higher than those in North America for the first 250 years of settlement, or until about 1750. Then, for the next 125 years, Latin America approached stagnation, while North America prospered and pulled ahead. Since about 1875, Latin America has experienced improved performance but has not achieved the convergence that economic theory would lead one to expect. What are the underlying causes of this poor economic performance over the last 250 years or so? Why has Latin America had such a hard time taking advantage of the increased opportunities in world markets, including in our own time?

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Notes

1.
For an illustration of this naïve view see The Commanding Heights, either in the original text by Daniel Yergin and Joseph Stanislaw, or the WGBH documentary complete with interviews with key participants: Daniel Yergin and Joseph Stanislaw, The Commanding Heights: The Battle Between Government and the Marketplace that it Remaking the Modern World (New York: Simon & Schuster, 1998); William Cran and Greg Barker, “Commanding Heights: The Battle for the World Economy” (WGBH Boston, 2002).
2.
de Soto, The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else, 5. De Soto seems to have overlooked the fact that capitalism appears to be alive and thriving throughout East Asia, where real incomes adjusted for purchasing power have come from levels much lower than those in Latin America to pass them and also to converge toward those in the West.
3.
de Soto, The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else.
4.
Ibid., 6–7.
5.
Christopher Woodruff, Review of The Mystery of Capital, by Hernando de Soto, Journal of Economic Literature 39, no. 4 (December 2001): 1216.
6.
“Of Property and Poverty,” The Economist, August 26, 2006.
7.
Woodruff, Review of The Mystery of Capital, by Hernando de Soto, 1220.
8.
Ibid., 1218.
9.
Ibid.
10.
Stanley L. Engerman and Kenneth L. Sokoloff, Factor Endowments, Inequality, and Paths of Development Among New World Economies, NBER Working Paper (Cambridge: National Bureau of Economic Research, 2002), 49, Table 6.
11.
Woodruff, Review of The Mystery of Capital, by Hernando de Soto, 1222–1223.
12.
David de Ferranti et al., eds., Inequality in Latin America and the Caribbean: Breaking with History? (Washington, DC: The World Bank, 2004), 17.
13.
Engerman and Sokoloff, Factor Endowments, Inequality, and Paths of Development Among New World Economies, 17–18.
14.
Maddison, The World Economy: A Millennial Perspective, 90, Table 2-22a.
15.
Engerman and Sokoloff, Factor Endowments, Inequality, and Paths of Development Among New World Economies, Table 1.
16.
Ibid., Table 2.
17.
Ibid.
18.
Ibid.
19.
See John H. Coatsworth, “Economic and Institutional Trajectories in Nineteenth-Century Latin America,” in Latin America and the World Economy Since 1800, ed. John H. Coatsworth and Alan M. Taylor (Cambridge: Harvard University Press and David Rockefeller Center for Latin American Studies, 1998); Engerman and Sokoloff, Factor Endowments, Inequality, and Paths of Development Among New World Economies.
20.
John DeWitt argues that, despite the Braganca King’s declaration that “‘Britain is Portugal’s milch cow,’” the “milch cow was Britain’s. Portugal was merely the milkmaid, skimming off a little cream before passing the brimming bucket to Great Britain.” See John DeWitt, Early Globalization and the Economic Development of the United States and Brazil (Westport. CT: Praeger, 2002), 4.
21.
Rex A. Hudson, ed., Brazil: A Case Study (Washington, DC: Federal Research Division, Library of Congress, 1997).
22.
Kathleen E.A. Monteith and Glen Richards, eds., Jamaica in Slavery and Freedom: History, Heritage and Culture (Kingston, Jamaica: University of the West Indies Press, 2002), 83.
23.
Ibid., 82.
24.
Ibid.
25.
Ibid., 80.
26.
Ibid., 73.
27.
Samuel J. Hurwitz and Edith F. Hurwitz, Jamaica: An Historical Portrait (New York: Praeger, 1971), 55.
28.
Ibid., 88.
29.
Ibid., 140.
30.
Ibid., 120.
31.
Ibid., 124.
32.
Ibid., 126.
33.
Ibid., 127.
34.
Ibid., 134.
35.
Ibid., 140.
36.
Ibid., 148 ff.
37.
Ibid., 189.
38.
“Country Profile: Haiti” (Library of Congress, Federal Research Division, May 2006), 2.
39.
Ibid., 3.
40.
Jared Diamond, “One Island, Two Peoples, Two Histories: The Dominican Republic and Haiti,” in Collapse: How Societies Choose to Fail or Succeed (New York: Penguin Books, 2005).
41.
Engerman and Sokoloff, Factor Endowments, Inequality, and Paths of Development Among New World Economies, 12.
42.
Ibid., 4.
43.
Mark A. Burkholder and Lyman J. Johnson, Colonial America, 4th ed. (Oxford: Oxford University Press, 2001), 83 ff.
44.
Ibid., 86.
45.
Ibid.
46.
See Burkholder and Johnson, Colonial America.
47.
Ibid., 87–90.
48.
Coatsworth, “Economic and Institutional Trajectories in Nineteenth-Century Latin America,” 23–54.
49.
Ibid., 34.
50.
Ibid.
51.
The French heritage in Lower Canada is discussed briefly in the next chapter.
52.
Engerman and Sokoloff, Factor Endowments, Inequality, and Paths of Development Among New World Economies, 4.
53.
Stephen Haber, “The Efficiency Consequences of Institutional Change: Financial Market Regulation and Industrial Productivity Growth in Brazil, 1866–1934,” in Latin America and the World Economy Since 1800, ed. John H. Coatsworth and Alan M. Taylor (Cambridge: Harvard University Press and David Rockefeller Center for Latin American Studies, 1998), 282.
54.
Ibid.
55.
See Haber, “The Efficiency Consequences of Institutional Change: Financial Market Regulation and Industrial Productivity Growth in Brazil, 1866–1934.”
56.
Ibid., 283.
57.
Ibid., 285–286.
58.
Ibid., 286.
59.
de Ferranti et al., Inequality in Latin America and the Caribbean: Breaking with History?
60.
Ibid., 5–6.
61.
The World Bank, World Development Indicators 2000 (Washington, DC: The International Bank for Reconstruction and Development/The World Bank, 2000).
62.
Andre Shleifer and Simon Johnson, “Coase v. the Coasians” (Harvard Institute of Economic Research Working Paper 1885, November 1999).
63.
Ludovico Alcorta and Wilson Peres, “Innovation Systems and Technological Specialization in Latin America and the Caribbean,” Research Policy 26: 1998.
64.
Coatsworth, “Economic and Institutional Trajectories in Nineteenth-Century Latin America,” 34, 33.
65.
Ibid., 40.
66.
Engerman and Sokoloff, Factor Endowments, Inequality, and Paths of Development Among New World Economies, 27.
67.
Coatsworth, “Economic and Institutional Trajectories in Nineteenth-Century Latin America,” 34.
68.
Colin Brock, “Latin America: An Educational Profile,” in Education in Latin America, ed. Colin Brock and Hugh Lawlor (London: Croom Helm, 1985), 3.
69.
Engerman and Sokoloff, Factor Endowments, Inequality, and Paths of Development Among New World Economies, 27.
70.
Elisa Mariscal and Kenneth L. Sokoloff, “Schooling, Suffrage, and the Persistence of Inequality in the Americas, 1800–1945,” in Political Institutions and Economic Growth in Latin America: Essays in Policy, History, and Political Economy, ed. Stephen Haber (Stanford, CA: Hoover Institution Press, 2000), 162.
71.
Ibid., 170.
72.
Ibid., 197.
73.
Engerman and Sokoloff, Factor Endowments, Inequality, and Paths of Development Among New World Economies, table 4.
74.
de Ferranti et al., Inequality in Latin America and the Caribbean: Breaking with History?, 112.

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Harvard Business School, Boston, MA, 02163, USA
Bruce R. Scott (Paul W. Cherington Professor Emeritus)

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Scott, B.R. (2012). From Feudalism to Oligarchy in Latin America, 1500–1830. In: Capitalism. Springer, New York, NY. https://doi.org/10.1007/978-1-4614-1879-5_6

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DOI: https://doi.org/10.1007/978-1-4614-1879-5_6
Published: 19 September 2011
Publisher Name: Springer, New York, NY
Print ISBN: 978-1-4614-1878-8
Online ISBN: 978-1-4614-1879-5
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