At the April 2009 Summit of the Americas in Trinidad & Tobago, Venezuelan President Hugo Chávez presented President Obama with a copy of Uruguayan writer Eduardo Galeano’s book The Open Veins of Latin America.1 Galeano’s 1971 tome is essentially a Marxist explanation of Latin American underdevelopment as the consequence of the region’s “exploitation” by and “dependency” first on Spain and then on the United States. In his speech at the Summit, Costa Rican President Óscar Arias offered Obama a different explanation:
I have the impression that each time that the Caribbean and Latin American countries meet with the President of the United States it’s to request help or complain. Almost always, it’s also to blame the United States for our past, present, and future failures. I don’t think that is fair.
President Arias then reviewed Latin America’s history in a self-critical way that evoked another book, written back in 1976 by a fellow countryman of President Chávez, Carlos Rangel. That book, whose English-language title is The Latin Americans: Their Love-Hate Relationship with the United States, would make an excellent gift—from Obama to Chávez. In it Rangel argued that
Latin Americans now largely accept the idea that our position of inferiority vis-à-vis the United States is due . . . to that country’s exploitation of our subcontinent through the mechanisms of imperialism and dependency. Thus we have fallen prey to the most debilitating and pernicious of several myths through which we have tried to explain our destiny. This myth is debilitating because it attributes all that is wrong in Latin America to external factors. . . . A sincere, rational, scientific examination of North American influence on Latin America’s destiny would have to . . . keep open the possibility that the United States’ overall contribution may have been positive.
Rangel concluded that at the root of Latin America’s problems is neither dependency nor exploitation, but a set of cultural values that impede the consolidation of democratic institutions, the advance of social justice and the achievement of economic development. I am convinced that he was and remains correct, and that cultural change is indispensable to the region’s long-term, sustainable progress.
History and Culture
Unlike in other European countries where early modern capitalist economies had emerged, feudalism still characterized Iberia’s political economy during most of the colonial period. Those who conquered and colonized New World territories came from a society with rigid social hierarchies in which the nobility benefited from land ownership, specifically from the work of those who served them and paid them tribute for the privilege of being exploited. The Spaniards were not interested in hard work, especially manual labor, and they did not value productive activities except for farming. Farming, however, almost invariably translated into a plantation, or hacienda, system, which subjected Indians to the absolutism of imperial or Spanish-supported local authorities. These authorities did not recognize Indian rights and forced them to provide services and make contributions of various kinds that benefited only their overlords.
Over time, Europeans took over more of the land and surrounded themselves with ever-expanding privileges. The natives, despite the protection granted them under the Laws of the Indies, lacked rights, even the right to education. In the cities, a growing class of mestizos was also limited to menial duties and lived without political rights. In tropical areas, blacks fared even worse as slaves and de facto chattel. The religiously and ideologically hegemonic Catholic Church, which itself owned large pieces of property within the Latin American colonies, aligned itself with the hacienda owners. It legitimated the inequitable social structure, gave its blessing to the divinely ordained inevitability of poverty, condemned charging interest on borrowed money, and for religious reasons looked suspiciously on both profit and science, key elements for the advancement of economic activities and the development of societies. Meanwhile, the mild climate of the temperate regions, along with the abundant, year-round yields from fertile soils and plentiful cheap labor, promoted indolence among all social classes, but especially among whites.
The collision of the values the Spanish brought to Latin America with the subjugation of the indigenous people led to the formation of highly structured and rigid societies. These societies reflected and reproduced a characteristic set of attitudes that survived almost unchanged well into the independence period. These were societies that did not encourage hard work, initiative or entrepreneurial risk-taking. Agricultural property bestowed social prestige as an end in itself; hacienda owners rarely thought of land as an economic asset that could be tapped for other purposes. The upper classes looked upon commerce as a low-social-status activity, a belief that in turn hampered improvements in communications and transportation. The discounting of infrastructure improvement as a governmental responsibility, the low value placed on work by both rich and poor alike, and the absence of economic incentives for those who performed efficiently all combined to retard economic development.
In addition, the widespread paternalism that marked economic, social and political relations among the classes, as well as the emphasis on personal ties over institutional ones, undermined the institutionalization of legal systems. The economic and cultural isolation in which the Spanish Crown maintained the American colonies, along with the religious teachings of the Catholic Church and their baleful influence over schools and universities, undervalued the kinds of knowledge, skills and economic practices that were the foundations of modernity. Latin America did not become backward because it was exploited in any simple, material way by external forces; it became backward because its people internalized a set of values inimical to their own development, a phenomenon certainly not limited to Latin America alone.
Dependence and Independence
In the early decades of the 19th century, the Latin American peoples gained independence and founded democratic republics, but the economic and social structures that had characterized their societies for almost 300 years, and the deeply rooted attitudes associated with them, did not change as a consequence. The Catholic Church maintained its ideological influence. Education continued to be theoretical rather than practical, and it was also socially restricted. And the merely decorative role of law persisted.
In some ways, independence made things worse. Economic and political power, which had previously been separate in the colonial regime, became concentrated in the hands of the dominant group. The haciendas expanded, and the colonial legislation that had protected at least some Indian property, if not their rights, was allowed to lapse. The hacienda owners, whose sway now extended to the urban population, took on political functions. They dispensed favors, formed political cliques and acted as de facto officials. They became the center around which society revolved and public life operated, a condition that persisted in most countries for half a century after independence.
Things began to change thanks to a spurt of economic growth in the second half of the 19th century in some countries, and in the first half of the 20th century in others. This spurt was fostered both by the initiative of Latin Americans and by the creation of a liberal international trading order largely under British aegis. Latin American elites thought they could prosper in this new global economy; and they did, thanks to the boom in agricultural, livestock, mineral and petroleum exports. They did not realize, however, that new wealth would unleash social energies and, ultimately, a new normative environment that would threaten their privileges.
Public services expanded as new revenues flowed in. Infrastructure developed, enabling a degree of geographical integration through roads, railroads, ports and modern communication systems, first telegraphs and then, years later, telephones. Commerce, industry and finance grew. Business opportunities and employment increased. Urban economies developed, and a relative decrease in the importance of agriculture reduced the influence of the hacienda owners. Foreign companies began to tap previously unexplored natural resources and promoted a new work ethic as modern technologies, business and labor practices became the new standard. European, Arab, Jewish, Chinese and Japanese immigrants transformed urban life with all sorts of business initiatives. They also demonstrated how economic benefit flowed from hard work, deferred gratification and savings.
With new practices came new attitudes, and new attitudes reinforced and spread new practices. This genuine dialectic of development picked up momentum throughout the 20th century. Latin America’s rigidly hierarchical societies were no longer accepted as part of a natural moral order. Material progress stimulated thinking about political and cultural change. Political parties, labor unions, intellectuals, technical experts and international organizations such as the Alliance for Progress, the Inter-American Development Bank and the World Bank promoted public policies to improve general well-being. In the 1960s, thanks to Pope John XXIII and Paul VI’s aggiornamento, or updating, the Catholic Church distanced itself from the traditional, stratified Latin American society and preached social justice. Protestant churches attracted a growing following, stressing, in good Weberian fashion, the value of life on earth and inculcating their members with values that encouraged the pursuit of economic success and personal well-being. They also preached the importance of fulfilling one’s personal, professional and community obligations responsibly.
It is natural for entrenched elites to resist change that they see as threatening to their interests. But elites are also intelligent enough to bend lest they break. Latin America’s upper classes made room for some small, medium-sized and even large-scale entrepreneurs to take initiatives and run risks. Citizens began to criticize idleness, prejudices against manual labor decreased, and business came to be seen as a source of wealth. As a result, social mobility increased, and a middle class formed and grew. In those countries that progressed furthest (Argentina and Uruguay, for example), the middle class acquired economic, social and political importance.
During the second half of the 20th century, political and social developments that had at first affected only a few countries extended throughout all of Latin America to one degree or another. Today, in the 21st century, these changes are accelerating thanks in part to globalization and its technological handmaidens: computers, cell phones and the Internet. New jobs in the export sector have opened up; more wealth enables more successful local businesses to arise and thrive. Latin Americans are no longer trapped in a self-limiting loop of premodern attitudes that abet premodern practices. They are, for the first time, nearly two centuries after independence, free.
The Latin Culture Wars
But Latin Americans are free to fail as well as to succeed. To be able to identify a trajectory of positive change over the past century or so is not to say that all is well. Latin America is now fighting its own kind of culture war, and it is by no means clear who will win, for despite the positive cultural changes of recent decades, customs and beliefs incompatible with development and progress still survive within Latin American societies. These customs and beliefs are many, and they are thoroughly intertwined. For our purposes, six are key: attitudes toward work, social trust, public service, rule of law, authority and opportunity.
Work: Even though work has become part of Latin Americans’ daily lives, it is not always thorough, diligent and efficient. On the contrary, employee conduct is frequently inconsistent and apathetic, especially that of public-sector employees and contract workers. Latin American public-sector employees share a widespread belief that similar work should receive equal pay; that a worker’s needs should be considered rather than his or her capabilities; and that productivity should not play a decisive role in determining salaries. Only 50 percent of Latin Americans agree that an efficient worker should earn more than an inefficient one.1 This point of view, along with a certain egalitarian illusion, has led to the indiscriminate legal protection of all those who have jobs in both the public and private sectors and has stifled the labor reforms Latin American economies need to make them competitive in international markets.
There is also, in a general sense, a disinclination to think in terms of outcomes and to take responsibility for outcomes. When Latin Americans discuss a problem, they tend to have a weak practical grasp of ideas and actions. They often fail to specify viable objectives or forge necessary agreements. They thus have difficulty limiting a discussion in a practical way, reaching an actionable consensus or giving adequately detailed instructions to those who would implement any decisions reached. The result is that jobs are left half-done, or wrongly done, for lack of clear definition.
Similarly, people who must work together to solve a problem or undertake an initiative tend to provide criticism rather than constructive contributions. Latin American workers also seem to lack a natural inclination toward combining individual interests with those of the company or institution they serve. So when difficulties arise, most people are unwilling to make personal sacrifices, such as working overtime or renouncing benefits, to overcome the problem. They are not inherently loyal, and they lack impersonal trust in institutions—a legacy, no doubt, of centuries of highly personalized authority relationships.
Latin Americans also continue their long-standing custom of not saving the harvest of their work. They often spend their earnings on luxuries and frivolities they can ill afford, as though having to save and plan were somehow beneath their social status. They also tend not to trust banks. The unwillingness to plan for the future and the squandering of personal resources make it difficult for Latin Americans to build capital or make significant investments. According to the World Bank, gross savings as a percentage of gross national income in Latin America in 2006 was half what it was in Southeast Asia and the Pacific Rim.2
Social trust: The distrust of others that Latin Americans have traditionally felt is particularly evident when a business deal is being made or a company is being founded. Businessmen commonly suspect that others will not honor their word, even when commitments are backed by legal instruments. They do not assume that others will keep appointments, carry out assigned tasks, meet a deadline or honor a debt. According to the 2008 World Values Survey, only 16 percent of Latin Americans believe that most people can be trusted, and 63 percent think that, if they had the chance, most people would take advantage of others in a business deal. That is very likely why a 2008 World Bank Study of 178 countries placed only three from Latin America in the top third in terms of contract fulfillment.3
The expression viveza criolla (“native cunning”) is the best example of Latin American distrust. It is expressed in the belief that the person who does something shady and gets away with it is successful, while the one who acts in good faith is naive, misses out on opportunities and ends up failing. So great is this inversion of values that trickery and deceit usually inspire admiration rather than admonition.
The climate of distrust in Latin American professional circles means that many business deals are delayed or fall through altogether, business operations become more expensive, joint ventures are limited, and objectives that would benefit everyone are not achieved. Furthermore, to protect themselves from the unpleasant surprises that partnerships with outsiders might bring, businesses tend to be family-owned and operated, limiting capital accumulation, hindering transparency in the payment of taxes, and encouraging noncompliance with the law. It also encourages nepotism, with all of its predictable repercussions on business performance.
The lack of trust also affects public-sector management. Businessmen who enter into contracts with the state doubt that agreements will be respected, or that officials and judges will handle disputes fairly and in accordance with the law. For this reason, investors find short-term business deals with quick but small payoffs more attractive than the long-term projects crucial for a country’s development. Some businesspeople protect themselves from risk by raising the prices of the goods they sell, which in turn is why many major international corporations shun Latin American partners and invest in safer countries on other continents. This leaves ample room for less scrupulous, more exploitative companies to bid on government projects, take advantage of influence to sign contracts with inflated prices, pad the cost of labor and materials as work progresses, do work of poor quality, and abandon projects before they are completed.
In a business culture where trickery is king, wealth is not viewed as a fair reward for working hard, making good choices, saving, delaying gratification and taking initiative. This means that those who have achieved professional success or who have worked their way up from nothing and become rich are not widely admired. And because high achievers in business do not inspire admiration, they do not inspire emulation either. The levels of competitiveness of Latin American economies and businesses are lower than those on most other continents. According to a 2008 competitiveness study of 131 countries by the World Economic Forum, the only Latin American country that figured within the top third was Chile. Eleven other Latin American countries were in the middle third, and five in the bottom third.4 This severely hampers the successful participation of the countries of the region in the globalized and highly competitive contemporary world.
Public service: In Latin American countries, most citizens lack a strong sense of public service. It is for their own benefit that they seek government posts, privileges or concessions. The populace does not see government’s role as defending public property and general societal interests, serving legitimate rights, demanding fulfillment of contracts, or seeking the common good; rather, they consider it an instrument whereby individuals, social organizations, labor unions, economic groups, government employees, political leaders and private businessmen obtain favors, benefits, privileges and possibly even great wealth. In societies with high levels of impersonal social trust, people use wealth to go into politics; in societies with low levels of impersonal trust, people use politics to attain wealth.
The low standing of public service and public institutions is also reflected in the two widespread and long-standing practices of tolerating contraband and evading taxes. Latin Americans do not consider paying taxes a social duty, as illustrated by the fact that the word “taxpayer” is not part of everyday language. They tend to think of taxes as a form of coercion and admire the skills of those who know how to avoid them. The result, according to the Economic Commission for Latin America and the Caribbean, is that the region’s tax burden in relation to its gross domestic product, including contributions made to the social security system, was 16.1 percent. In the European Union, by contrast, it was 40.6 percent; in the United States, 26.4 percent; and in Japan, 25.8 percent.5
The status of public institutions also explains why hundreds of laws targeting corruption have not yielded the desired results. Latin Americans simply do not assume that government employees will be disinterested public servants. Due to permissive ethics, widespread corruption has prevailed in Latin America. According to the 2007 Corruption Perception Index of 180 countries prepared by Transparency International, only four Latin American countries (Chile, Uruguay, Costa Rica and Cuba) appear among the top third of least corrupt countries, while ten were in the middle third, and five in the bottom third (Venezuela, Ecuador, Paraguay, Honduras and Nicaragua).
Rule of Law: Latin Americans do not trust legal institutions and actors either, whether government courts or private lawyers. Indeed, the deep-rooted, centuries-old custom of flouting the law has been a more powerful influence on the continent than the countless laws passed over the centuries to regulate economic, social and political relations. Latin American legislatures have probably passed more laws over the past 175 years than their counterparts anywhere on the planet, yet never have so many laws been ignored by so many for so long.
Genuine rule of law exists in societies in which citizens have internalized the juridical norms that regulate their day-to-day behavior. When social norms reflected in law are not internalized, government cannot apply juridical norms, nor can judges, police officers and other authorities enforce them. In countries where it is customary to ignore the law, to deliberately misinterpret it, and to evade it through shortcuts and back doors, the “rule of law” becomes problematic. Law becomes a kind of social Potemkin Village that only fools and foreigners take seriously. Thus, according to a Latinobarómetro collection of self-reported information, 48 percent of Latin American citizens say they abide by the law, but 73 percent were not aware of their own duties and obligations.6 At the same time, 80 percent believe other citizens do not abide by the law. In a 2007 World Bank study of 211 countries measuring rule of law, only one Latin American country, Chile, appeared in the top third, with seven in the middle third and nine in the bottom third.7
The lack of widely respected juridical norms puts those who do abide by the law at a disadvantage. It also thwarts equitable economic relations and spites social justice, for under these conditions the state cannot provide juridical security for economic activities or ensure that disputes will be resolved fairly. It cannot guarantee that judges will rule in accordance with the law, or that the legal principles governing contracts will not change essentially at random. The lack of juridical security has kept Latin America from offering the environment of trust necessary to attract foreign investment and foster business growth, on which the economic progress of nations depends.
Authority: Authority that works in modern societies is impersonal and law-bound. Legitimate governmental authority then frees citizens to interact among themselves, whether in business or civil society, knowing that their rights and opportunities are secure. The weakness of public authority in Latin American societies has one main cause and one main effect. The cause is paternalism, and the effect is populism.
The paternalistic culture so deeply rooted among Latin American peoples has prevented the evolution of social responsibility and a sense of community from flourishing. Instead of solving problems on their own or uniting with others in their community, the members of paternalistic societies prefer to turn to officials, to the state and to political leaders for help. It has been common in the United States, for example, for private citizens to join together to form and support libraries, sports associations, parks, orchestras and more—all of which are open to the society at large. It would never occur to most Latin Americans to do any such thing. The mass of society instinctively expects government to take care of all such things without citizen input.
Many factors contribute to this phenomenon: the disaffection of the lower classes; the aggressive urbanization brought about by the migration of peasant farmers and people from the interior to cities; the burgeoning voting population due to the lifting of restrictions on suffrage; the predominance of urban voters over the traditionally rural majority; the dissemination of radio and television, to which even poor families have had access; growing awareness of injustices and social inequities; and the absence of community life as a result of migration to urban areas.
The flip side of Latin American paternalism is its populism. Charismatic caudillos and their political organizations have often been more astute than traditional politicians in responding to evolving Latin American realities. With inflamed rhetoric they have exploited social resentments and vowed to confront the oligarchy, do away with class privilege and banish injustice—and do it all in just one presidential term. Citizens who do not trust institutions have attributed boundless personal virtues to the populist caudillos, and have sometimes demonstrated a dedication, sacrifice and solidarity to them that they would never show to any institutionalized government.
Populism reigned supreme in certain countries—Argentina comes to mind—that were rich in natural resources, especially during periods in which the exports of primary-sector products enjoyed high prices. Overflowing coffers allowed populist governments to spend public funds wastefully, grant subsidies indiscriminately, give tax exemptions, implement social-welfare programs and reduce rates for public services. All of these actions were greatly appreciated by the poor, but short-term political expediency led in due course to long-term penury. Again, Argentina comes to mind.
Populism brought with it a number of other negative consequences as well. The state as provider of first resort undermined the development of civil society. The state as savior rather than governor made responsible planning virtually impossible. The reckless spending that led to costly economic and social crises actually worsened poverty levels in many cases, because governments did not spend on programs to build up human capital, education or health care, but on giveaways that made them popular. Furthermore, populist governments did not demand that individuals support the state by paying taxes and paying for the use of public services, thus further vitiating any concept of a social contract. And individuals and governments often effectively transferred blame for their failures to the old oligarchs, Yanqui imperialism, foreign firms, the International Monetary Fund and globalization, which only perpetuated the caudillos in power and enabled them to do more damage.
Nonetheless, populism remains widespread, and all its tactics are still highly visible. Five countries are currently in thrall to populist presidents (Argentina, Bolivia, Ecuador, Nicaragua and Venezuela) and two were recently on the verge of having such regimes (Peru and Mexico). Just as before, some of the current populist Presidents are seeking to remain in office indefinitely. At times, too, their governing styles have been antidemocratic, but many of their decisions have popular majority support. Despite the continent’s modernization, the roots of populism still run deep in Latin America, particularly in Argentina, Ecuador and Venezuela.
Opportunity: The cultural characteristics of Latin America have hindered the formation of societies capable of offering citizens equal opportunities. Despite the progress made during the second half of the 20th century and in the early years of the 21st, personal relationships and social hierarchies continue to unduly influence which laws are enforced, how institutions act and the way authorities make decisions. In such a culture, how an individual fares professionally depends less on knowledge, capabilities, experiences and responsibilities and more on ties of friendship, kinship, contacts, political affinities and membership in trade or professional associations. Clearly, too, even though socioeconomic structures have become more open and permeable over the last fifty years, skin color continues to influence a Latin American’s destiny. Thus, Indians, blacks, mestizos and mulattos are habitually poor, and whites are only rarely so.
The most serious and widespread form of unequal opportunity in Latin America is in education. Whites from the upper classes commonly study at good private schools, whereas children of color from the lower classes attend public schools, which in some Latin American countries have suffered a severe decline. Inevitably, white children will have important advantages over others when they complete their studies and enter the work force. Thus, 78 percent of Latin Americans consider that access to justice is not equal; according to a 2005 survey, only 24 percent consider that their country is “for everybody.”
The fact is that, to one degree or another, Latin Americans do not regard one another as equals and are not treated as equals by their governments. Under such divisive conditions, countries cannot forge true national identities, and their governments’ ability to implement the reforms needed to speed up economic growth is hampered. Such growth would create more jobs, and there is no more effective way to reduce poverty than for a poor person to obtain a steady and honest job.
Implications for Development
Latin American democracies are among the oldest in the world. Next year the first countries to separate from the Spanish colonial empire and adopt republican forms of government (Ecuador, Venezuela, Argentina, Colombia, Mexico and Chile) will celebrate the bicentennial of their independence. Democracy has not always reigned in the region due to the recurring dictatorships that became a political phenomenon in some countries. Not until the last third of the 20th century did all of the countries of the continent (except Cuba) become formal electoral democracies.
But with the exception of Chile, after more than three decades of democracy few Latin American countries have made significant economic and social progress. This is especially true compared to the young democracies of South Korea, Taiwan and Spain. Half a century ago, these nations had a level of development lower than that of some Latin American countries. Back then, for example, Argentina had the 12th largest economy in the world; it has now dropped to 42nd. The difference in results is more striking still if we note that those other countries do not boast the variety and magnitude of natural resources that most Latin American countries have.
Various reasons have been adduced to explain Latin America’s failures. Some have attributed the continent’s economic outcomes to external factors; such explanations have grown out of theories of imperialism and dependency. Others have blamed faulty economic models and misguided public policies. Most recently, some political scientists have concluded that weak political institutions were not up to the task of implementing policies that would support economic development. This last conclusion is true as stated, but false as intended: Weak political institutions are not so much causes as effects of deeper cultural factors.
The relationship between Latin America’s failures and its culture is a difficult subject to discuss. It is not politically correct, and it evokes awkward emotion, especially when raised by outsiders. Most of the observations I have made here would be overwhelmingly affirmed by Latin Americans speaking privately, but these same people would be very reluctant to voice them in public, particularly in mixed cultural company. Moreover, it is virtually impossible for scholars to quantify culture, and so these days it is easy for them to ignore it. Above all, cultural analysis points to challenges for which there are no quick fixes.
Yet we must tell the truth about Latin America, and not just in private confidences, or we will handicap all of our efforts to improve the situation. Certainly, changing any culture is not easy. It takes time. But until Latin America’s best thinkers and opinion leaders overcome their prejudices and acknowledge cultural issues, Latin America will not change. Yet it must change, and it can. Cultural values are neither immutable nor inherent to a particular race, religious group or social class. They can be transformed through political and juridical actions, through economic and social reforms, through the efforts of enlightened political leaders, and through the power of education in schools, churches and the mass media. And perhaps beneficial outside influences can help too—even from Spain and the United States.
2World Bank, World Development Indicators (Washington, DC, 2008).
3World Bank, Doing Business (Washington, DC, 2008).
4World Economic Forum, Global Competitiveness Report 2007–2008 (Cologne, 2008).
5Economic Commission for Latin America and the Carribean, Taxation in Latin America (Santiago, 2008).
6Corporación Latinobarómetro, Informe Latinobarómetro (Santiago, 2005).
7World Bank, Worldwide Governance Indicators (Washington, DC, 2008).