Exceptional Argentina Di Tella, Glaeser and Llach - Thomas Piketty

Argentine primary sector and ensure exports to Great Britain. In exchange, Argentina promised to
reduce tariffs on British imports and made other concessions to British companies that operated in
the country. Although the treaty was not fully honored by Argentina, it did spur the debate about
the role of industry. For the first time, industrialists began to call for economic independence,
self-sufficiency and autarky as Argentina's answer to the new international order, and they
continued to do so during the uncertain period of the Second World War.
This process of import substitution intensified during the Second World War under the shelter of
the trade barriers associated with the war. By the end of the war, the manufacturing sector was
playing a significant role in the economy, but manufacturers were arguing that a strong policy of
commercial protection and subsidies was needed in order for them to survive, especially if the
terms of trade were likely to improve. It was under the leadership of General Perón, in the midst of
a major political shift, that these demands were to be fulfilled.
4.3 A New Argentina
The 1930s world economic crisis had profound effects on the economic and political life of
Argentina. Certainly, much of the development of Argentine foreign trade seen during the 1930s,
1940s and early 1950s can be seen simply as a consequence of trade agreements and exogenous
shocks coming from the rest of the world. The crisis and its immediate consequences were also a
shock for the political life of the country. By the same token, the economic changes that were
occurring also triggered major changes in the socioeconomic structure which ultimately created
conditions conducive to the development of a populist mass movement.
Argentine politics was monopolized by the landowning elite until 1916, when a major political
shift occurred thanks to an electoral reform law passed in 1912 which ushered in universal adult
male suffrage (though it restricted the right to vote of the large number of unnaturalized
immigrants), secret ballots and compulsory voting. Despite its apparently democratic implications,
this reform was designed to perpetuate the prevailing oligarchic system by extending the vote to
the urban middle-class, whose members had taken part in the economic expansion in the sense that
they were working in the service sector, although they had been excluded from the strongholds of
power. Not surprisingly, the oligarchic elite that ruled the country believed that middle-class
workers were committed to maintaining the existing political and economic structure.
This experiment in limited democracy (the new electoral law gave voting rights to nearly one
million adult males, but this was no more than approximately 40% of the adult male population)
was interrupted in 1930, when the army carried out a coup and installed itself as the dominant
factor in Argentine politics. Over time, the popular base of the democratic system expanded. In
1946, 3.4 million adult males had voting rights (see Cantón, 1968). Thus, the voice of the people in
the Argentine political system grew substantially between 1916 and 1946, despite the intervening
military coup. By 1946, the economic configuration had changed dramatically. The political
alignment between landowners and workers had broken down. Instead, workers --now mainly
employed in the secondary sector-- found their perfect ally in the capitalists of the manufacturing
sector, because their political preferences were aligned both in the short and in the medium terms
(see Section 3.2). Under Peronist policies, more capital and labor shifted to the secondary sector,
thereby furthering the process of industrialization and consolidating both this alliance and the