1776 in the US and Latin America
The approaching 250th anniversary of the United States’ Declaration of Independence on July 4th, 1776, is a significant milestone in American history. However, this same year holds a different meaning for Latin America, where 1776 marked a pivotal turning point in the opposite direction. While the United States was breaking away from imperial control and establishing a system based on limits to power and individual freedom, Latin America was experiencing a shift towards centralization and authoritarian rule under the Spanish Crown.
In the United States, the events of 1776 were the culmination of a grassroots movement towards self-governance and institutional agreement. In contrast, Latin America faced the imposition of the Bourbon Reforms and the creation of the Viceroyalty of the Río de la Plata, leading to a tightening of economic and bureaucratic control by the Spanish Crown. The timing of these events underscores the fundamental difference in the paths taken by the two regions.
Mexican writer Octavio Paz’s essay, “El laberinto de la soledad,” provides a compelling framework for understanding why liberalism thrived in the United States but struggled in Latin America. Paz argued that Latin America’s historical heritage, rooted in centralized authority and communal structures, was not conducive to the adoption of liberal values. Unlike the United States, where liberalism was built on a foundation of historical continuity and shared civic myth, Latin American nations often embraced liberalism as an imported philosophy, disconnected from their social realities.
Economic historian Douglass North highlighted the importance of institutional frameworks in shaping long-term economic success. While the United States established resilient institutions that protected property rights and limited leaders’ power, Latin America inherited a complex institutional landscape that favored rent-seeking over productive investment. This institutional divergence, as Deirdre McCloskey pointed out, was also reflected in a contrast of ideas and rhetoric, where Latin America remained culturally tied to an anti-bourgeois ethos inherited from the Counter-Reformation.
The post-independence era in Latin America was marked by a struggle to reconcile imported liberal ideas with deeply entrenched authoritarian legacies. The region faced ongoing instability, violence, and conflicts as different political projects clashed without a common understanding or alignment of laws and customs. This lack of institutional consensus hindered economic development and resulted in a significant wealth disparity between Latin American nations and the United States by the end of the 19th century.
Paz’s central political lesson, emphasizing the need to break free from the colonial mindset and build strong, stable institutions, remains relevant today. As Latin America continues to grapple with the legacy of its history, the path to sustainable economic development and political stability lies in creating a framework of credible commitments that reduce risks and promote long-term investments. By learning from the mistakes of the past and forging a new path towards institutional strength and collective understanding, Latin America can overcome its historical challenges and pave the way for a brighter future.
Reference:
– McCloskey, D. N. (2010). Bourgeois Dignity: Why Economics Can’t Explain the Modern World. University of Chicago Press
– North, D. C. (1990). Institutions, Institutional Change and Economic Performance. Cambridge University Press
– North, D. C., Summerhill, W., & Weingast, B. R. (2000). Order, Disorder and Economic Change: Latin America vs. The United States. In B. Bueno de Mesquita & H. L. Root (Eds.), Governing for Prosperity. Yale University Press
– Paz, O. (2019). El laberinto de la soledad, Postdata, Vuelta a El laberinto de la soledad. Fondo de Cultura Económica. (Original work published 1950)
