A Comparative History of the Process of State Building in Latin America

Introduction

In 1954, Joseph Schumpeter, in an article that defined an entire current of research, underlined the importance of fiscal history as the point of convergence of history, economics and sociology. Until now, however, no one has heeded his call and tried to write a comparative history of the process of state building in Latin America by taking fiscal history as the starting point. It is thus this very challenge that we propose to undertake in this project. The construction of the Nation-State in Latin America during the nineteenth century is initially founded on the sectors of the bureaucracy and the army that were inherited from the colonial period. It undergoes, however, great transformations starting from the Revolution of 1810 and especially during the wars of Independence (1810-1825). In most of the new nations that are being forged, the wars of Independence and the ensuing long years of civil war demand that stable military and police forces be formed in order to construct the indispensable monopoly of legitimate violence that characterizes state domination. This process can be understood more readily in the light of the model that John Brewer and others formulated for the case of the modern English or French State. It required the localization of the enough resources to cover the enormous expenses that these military forces incurred. At the same time, a corps of bureaucrats had to be created and paid, so that it would take on the task of creating a system to generate resources, gathering the sums that had been collected and delivering them to those who directed these military forces.

State-of-the-art

Thanks to information gathered about a few isolated periods and a few concrete cases that we have previously analyzed [province and State of Buenos Aires 1825-1860, Federal Republic of Central America 1830, Guatemala 1840, Brazil 1845-1865, Bolivia 1830-1840], we already know that the expenses generated by the military, police and to a lesser extent, the judiciary, weigh the heaviest in the budget of the Latin American states until the end of the period under consideration. Likewise, it is clear that the principal resources that the state obtains come from two primary sources for these same cases and periods. In all of the countries where the indigenous presence represents a significant part of the population ( the three Andean nations of Bolivia, Peru and Ecuador and the Argentine province of Jujuy as well as the Republic of Guatemala and the Mexican state of Yucatan), the indigenous tribute continued to represent one of the pillars of state’s resources. On the other hand, in the rest of the new nations of Latin America (just as in the USA before the Civil War [Studenski and Krooss]) the budget of the state is based on income derived from foreign trade. It results primarily – almost always more than 75 % – from duties paid on importations and not on exportations for obvious reasons (the dominant groups that control the agrarian and miners sectors were not willing to tax themselves, by imposing export taxes on the agricultural, ranching and mining merchandises that they produced). After these two principal sources of revenue follow those that are drawn from the monopolies inherited from the colonial period and above all, those imposed on alcoholic beverages (brandy, rhum, pulque) tobacco and in certain countries such as the Federal Republic of Colombia, on salt.

At this rate, even if the states’ revenues effectively depend to a large extent on the volume of foreign trade, the revenues that sustained these budgets were almost entirely derived from importations. It ultimately means that these sources of revenue were paid by the entire population through the subsequent consumption of imported products. In brief, consumers, who already paid indirect taxes such as those created by the monopolies, ferriages, bridge tolls, sealed paper, the post office and others, and also paid taxes when they consumed imported merchandise. The growth of the state (and therefore, the growth of the budgets of the military, police and judiciary) is born by the same population that has to endure the presence of the armed corps, which in turn repress in the name of the state “in formation.” Foreign debt represents another source of revenue for the state; the pioneering work of Carlos Marichal has already indicated a very fruitful path to follow as the general framework he describes lends itself to other historical situations; a detailed analysis would of course add many interesting elements for each case.

Objectives of the Investigation

The objective of this project is to compare the forms and rhythms that characterize the process of state building in a series of selected national cases. In order to carry out this study it would be necessary to collect detailed data from the budgets of the selected states for the period 1820-1870. Even if our previous investigations have allowed us to sketch the general outline of this process following the analytical framework that we just discussed, innumerable interrogations and questions remain unanswered.

Let us now offer a few examples of questions that clearly require more research. We know that the state spends the most on expenses incurred by the armed forces and for internal security; When, however, did a professional “regular army” truly come into existence in each nation? What was the relationship between this “regular” army, the militia – sometimes called National Guards – and those created by other forms of recruitment, such as the armed groups that were lead by landowners? Obviously, the answer to these two questions will then lead us to a subsequent series of questions about the composition of the diverse armed corps and their systems of recruitment and maintenance. Also, we plan to analyze the relation between a corps of professional officers (or not, since we can frequently identify authentic family networks established among the notables) and an armed force composed primarily of peasants and Indians, who were recruited by force (though, they can also take part as “clients” of powerful owner, or even represent instances of rural sectors and of the urban lower-class who follow a “charismatic” leader). As it is clear, these unanswered questions certainly deserve answers, but only an analysis that goes beyond general resumes of the budgets of the military will provide them. To further demonstrate the importance of these questions, let us just point out the role of the military in state construction and the political reality of Latin America to the present.

The question of the state’s sources of income provides yet another example. We know that importations provide the bulk of such funding. It is therefore necessary to evaluate the historical evolution of the different systems of taxing in order to show whether or not efforts were made to collect direct taxes (those which really affect the wealth of individual contributors) and when this type of tax starts to count in the budget. While the different answers to this question are certainly going to reveal failed attempts as well as a few successful cases, they will all demonstrate distinct ways of thinking and acting in relation to the respective society. The studies of Jorge Gelman and Daniel Santilli have already shown how rich such approaches can be.

One more interrogation: how is the phenomenon that we have named the “deployment” of the state perceived? The groups that lead the process of state building and the invention of the nation rapidly understand that the state should take on functions that go beyond repression, such as, education, health care and public works. Time, however, proves to be the problem, as it is impossible to make plans for schools or hospitals when an army has to be equipped in order to stay in power. But, as we have just stated, the groups that carry on the process also realize that the State cannot remain indefinitely “seated on the bayonets”- paraphrasing von Klausevitz- and in order to maintain its hegemony the state must dedicate a part of the resources to several of the functions that we have just enumerated. Identifying the rhythms and moments of this process of “deployment” is therefore fundamental in order to understand the form that the framework of the state progressively acquires in the nineteenth century.

It would be easy to add numerous other examples (the rhythm of the creation of the bureaucracy- as it is transformed from an instrument of power to a locus of power- the role of the juridical system that emerged from Iberian culture and the changes that it undergoes under the influence of codification) but the examples presented here certainly show some of the innumerable lines of research that emerge from the core of this project. Right now the answer to even just a few of these questions would explain the diverse forms that the domination of the state takes on during the twentieth century in Latin America and which in a few cases even continue until the present.

The Stages of the Investigation

While the general annual budgets for the period 1820-1870 have been printed in the majority of the proposed cases (and even in one or two cases are accessible on the Internet), they were not published in newspaper or journals that can be easily consulted in libraries in Latin America. It is therefore necessary to track them down in national libraries or documental archives, in the collections of Government, Treasury, War and Justice. In addition, these general printed budgets does not always allow for an in-depth analysis of many of the aspects that are central to the project that we are proposing and (that we have partially undertaken in the aforementioned examples). Consequently, the consultation of primary sources located in national archives – and sometimes even in provincial, regional or state ones- would prove to be indispensable, so that we can consult the primary sources that will allow us to analyze each of these questions profoundly. For these reasons, this project will only be viable if it is includes a network of direct collaborators in each one of the selected national cases.

Proposed Cases

We have selected the cases that we will now present for the reasons that we discussed above, and above all, because they clearly represent the general panorama of the history of state formation in Latin America. Chile: a case of early, successful formation, in the context of a society that was lucky enough not to have to endure a true war for independence. For this reason, the “aristocratic” social structure inherited from the colonial period underwent fewer changes that in the rest of Latin America. Argentina: the situations of the diverse provinces should be analyzed here. On the one hand, the province of Buenos Aires overwhelmingly dominates the process of construction of the state, thanks to its control over the revenues obtained from foreign trade. On the other, the remaining provinces barely have any access to such revenue. The Republic of Uruguay: Closed in by her powerful neighbour and the Empire of Brazil, Uruguay ´s economy rivalled that of Buenos Aires, as civil war continued without almost without interruption during the entire period under consideration Colombia: presents the reality of regions confronting each other militarily for the control of the process of construction of the state, but no single region is able to impose its control over all the others; this situation of “hegemonic tie” will weigh forcefully on the form the state takes in Colombia. Costa Rica: the atypical case of Central America, with the process of construction of the State launched early in a “spanish” society of peasant stock. Guatemala and Ecuador: two situations of state building the indigenous presence predominates, but wich develop rather differently.

As Mexico represents one of the few national cases for which a detailed analysis of the budgets of each state of the Federation has already been undertaken since some time, thanks in particular to the works of Marcello Carmagnani, Carlos Marichal, Antonio Ibarra, Luis Jáuregui, José A Serrano Ortega and others, it will be particularly fruitful to compare their results to the ones we obtain. At the same time, the examples of Guatemala and Ecuador will also allow us to draw contrasts with the studies already published about the two Andean nations (Perú and Bolivia). Brazil represents yet another national case that will lend itself to comparison, as a current of research dedicated to the theme of fiscal history and the construction of the State already exists.

January, 2009