Fans of science fiction and fantasy often consider world creation among the genres’ most appealing aspects. The magical realism associated with Latin America Boom authors is another example. And now, Sarah Lawrence College Professor of History Margarita Fajardo’s excellent 2022 work, The World that Latin America Created: The United Nations Economic Commission for Latin America in the Development Era, argues that economic policy makers in Latin America from the 1940s to the 1970s created a world that we all, in some ways, still inhabit. The book is a well-researched examination of the ideas and politics that led to the building of CEPAL (the acronym for the United Nations Economic Commission for Latin America and the Caribbean in Spanish or Portuguese), the economic contributions and political engagement of cepalinos, and the nuanced divergence between these and the dependentistas (dependency theorists). Fajardo’s objective is to present a narrative in which Latin Americans take proactive actions, becoming creators rather than mere adopters or assimilators of what originated in what is now referred to as the Global North.
This compelling book has been reviewed widely and has received, among other accolades, the best book award of the Latin American Studies Association’s Economics and Politics section. Given that, this review briefly reviews the content of the book and then concentrates on the effort to understand how knowledge is produced, a fundamental part of Fajardo’s book, which has received less attention.
CEPAL was a product of global discussions late in World War II, and Fajardo highlights how the economic policy makers and scholars involved deliberately chose to establish a Latin American-oriented site for research and policy advocacy and knew that doing so within the UN umbrella was the only viable option available. There has been and is no regional economic body associated with the UN that has the prestige or influence of CEPAL. Moreover, US support in the immediate postwar era was not forthcoming. A further challenge was that Bretton Woods established the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (World Bank [WB]), but the discussed International Trade Organization never materialized (only a more inchoate General Agreement on Tariffs and Trade). The Latin American economists insisted on the importance of global research and coordination on trade policies, and also saw an opportunity emerge in which they could deploy their expertise in a space where superpowers and wealthy countries had been given less multilateral and institutional prestige. That they did so from Santiago and not New York or Brussels is critical.
The importance of trade was highlighted by Raúl Prebisch, perhaps the most well-known cepalino, whose Prebisch-Singer thesis argues that commodity-producing countries face a permanent decline in terms of trade vis-à-vis industrialized countries. As Fajardo notes, his time as Central Bank president in Argentina had made the existential challenge posed by access-to-currency and balance-of-payments crises clear to him. CEPAL, formally established in Santiago, Chile, in 1948, brought together a diverse group of statesman with government experience like Prebisch, economists who had worked for the IMF and WB, as well as recently trained economists out of elite Latin American, US, and European universities. Some of its more influential members included Celso Furtado (Brazil), Osvaldo Sunkel (Chile), Aníbal Pinto (Chile), Regino Boti (Cuba), Jorge Ahumada (Chile), José Antonio Mayobre (Venezuela), and Víctor Urquidi (Mexico).
In addition to highlighting terms-of-trade and balance-of-payments challenges and the need to facilitate domestic industrialization, the cepalinos made two other major contributions. The first is a theory of structural inflation, though this receives less attention in Fajardo’s book. The latter, the core of the book, is that by taking an extant Marxist idea of “core” (wealthy areas where industrial production and capital are located) and “periphery” (capital- and technology-poor areas where commodity production is primary) and applying them, first, as a description (normative and analytical) of the current global trading system and, then, of the world broadly, CEPAL created an ontological vision that is used throughout the world.
Although Fajardo’s historical accounts of the institution building of CEPAL, the political and policy contributions of CEPAL, and, later, the dependentistas, are very valuable, the main contribution of the book is that the ideas and papers emanating out of Chile (and Latin America) had an outsize influence on how politicians, policy makers, and scholars think of and discuss international economic (and political) relations, particularly when thinking of trade and development. Making this claim means taking away the presumptive monopoly on agency of Western academies and think tanks. Importantly, Fajardo makes a persuasive case that monetarism, generally associated with the University of Chicago and Milton Friedman, found much of its policy and practical origins, as well as intellectual justification, in Latin America. It was in the context of moderate to high inflation, and in dialogue with (and inside) CEPAL, that monetarist claims and policies emerged first in Latin America. Although the economic crises in the 1980s (and sometimes 1990s) are associated with IMF plans that had monetarist prescriptions, Latin Americanist accounts highlight the role of reversals in terms of trade and the importance of structuralist approaches to reducing hyperinflation without massive shifts in domestic demand. Thus, under the headline-grabbing IMF “packages,” CEPAL’s influence continued to be, in most countries, quite dominant.
Why does this matter if the goal is taming inflation and making a predictable environment for labor, investment, and trade markets? Deng Xiaopeng famously asked about the importance of the color of the cat chasing mice. Fajardo’s book offers an important response: knowledge-driven policy can be and has been developed in the Global South, and such knowledge-driven policy can be highly influential in distant regions, including in traditional “power” centers. The normative consequences of such a claim are important, but it is worth giving more attention to how the claim is made as it is Fajardo’s methodology that truly impresses. Her book has rich layers of primary and secondary sources, the product of careful archival research that leads to layers of depth and nuance that escape many traditional accounts. She also includes interviews with key figures, which add a layer of humanity to what could otherwise be a sterile academic discussion and offer insights that are simply unattainable through mere textual analysis.
The multiple types of sources make more persuasive the narratives she traces, which demonstrate internal discussion, external debates, and political posturing by leaders within CEPAL and elsewhere. Knowledge, produced in Latin America, was the result of the actions of interacting agents and the consequence was that the framing, conceptualization, and efforts to resolve issues in regions far from Latin America happened within the cepalino representation of the political-economic world, giving priority to core–periphery relations and structuralism. This raises some interesting questions not addressed in the book. So often students of the non-West lament the lack of fit between concepts, policies, and politics that seemed to originate in the West and their (perhaps uncritical) application elsewhere. Should a core–periphery framing, structural theories of inflation, and research into terms of trade in, say, Africa, be revisited in a more critical manner? Fajardo is correct in pointing to the specificity of Chilean, Brazilian, and Argentine domestic politics during the Cold War, particularly following the Cuban Revolution, in terms of the (further) politicization and production of cepalino and dependista knowledge. How should students of the political economy of the non-Western regions respond to such insights?
