The Role of the State in Development Processes by Claude Auroi

Author:Claude Auroi [Auroi, Claude]
Language: eng
Format: epub
Tags: Political Science, General
ISBN: 9780714634937
Google: QElPOh_hEKUC
Goodreads: 4010792
Publisher: Routledge
Published: 1992-01-15T13:33:09+00:00

The Weimar hypothesis

Of course these cause-and-effect phenomena are the object of intense controversy, basically a re-enactment of the 1920s dispute concerning German hyperinflation. The Weimar government placed war reparations (equivalent to the present Latin American debt) as the origin of the inflationary spiral, while the Allied Powers accused the German government of excesses in public expenditure and its monetary policy. The issue was not only theoretical but different stands clearly mirrored the interests at stake. Discussion on the German experience has been renewed in recent years and new arguments have been put forth. These arguments, both in their substance and in their nature, appear to be closely entwined with the positions and interests present in the dispute on the Latin American debt and soaring inflation. It is not possible to state that the issue has been settled, either theoretically or historically. It is a fact that German stabilisation in 1923 was able to put an end to the inflationary problem thanks to internal adjustment together with a de facto moratorium on reparations payments. Each side, therefore, feels free to emphasise one of those two aspects in order to defend its views.

Even though the current controversy follows a course similar to that of the 1920s, the resemblance is closer with regard to the views than with the actors, since the latter do not correspond precisely to present creditors and debtors. A stand reflecting the prevailing position presents the Latin American crisis as a consequence of mistaken local strategies (which is partly true) and tends to deny the harmful effects of the debt. This view is held by the creditors but also by the ruling classes who are willing to pay for different reasons. The other view, presenting the debt as the cause of the crisis, has been losing ground and is increasingly reflecting a theoretical diagnosis whose validity seems to have an inverse relation to its diffusion.

The last stand, placing the debt as the cause underlying the crisis and the reforms, logically deduces a political corollary: the so-called foreign debt generating a radical reshuffle of domestic power relationships within Latin American societies. To accept this means to adopt certain strategies and to turn down others, thus eliminating the possibility of different alternatives which have been attempted in the past; such as in a take-it-or-leave-it game where one puts everything at stake. To reject it implies, in turn, breaking with the system as a whole, something that conditions all decisions in this respect. It is not the first time in history that a similar situation has provided the creditors with a negotiating capacity unthinkable under other circumstances. Due to the debt predicament, creditors have mostly allied themselves with different power sectors (both in creditor and debtor countries) so as to be able to impose their views and interests in theory and practice. It is not only a matter of collecting their dues but also of the consolidation of a political and economic system in accordance with their perspectives and those of their allies.

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