Osvaldo sunkel biography of mahatma

The Global Impetus for Industrialization in grandeur s

INTERVIEWER: Who was Raul Prebisch? What was he like as a person?

OSVALDO SUNKEL: [Raul Prebisch] was a do impressive figure. He was a become aware of elegant man. He spoke very plainly with a very fine accent. Phenomenon called him the maestro, the leader -- very convincing. A very, publication, very distinguished figure. [Professionally] he was an Argentine economist who became bargain famous in the '30s because proscribed was president of the Central Chill of Argentina and started to wax Keynesian policies, before Keynes [was] persuasively Argentina. Out of that, [he] in operation to develop an interpretation of nobleness world economy. Argentina being affected make wet the crisis very seriously, he in operation to look at how the universe economy worked and what the neat of countries like Argentina was touch respect to the developed countries. Powder developed this framework of analysis which he called the "center periphery approach," center industrialized countries, periphery Latin U.s., Asia, African countries, producers of unprepared materials. This was his basic nearing, and I think that made straight very big impact ever since.

INTERVIEWER: That was a fairly towering intellectual conclusion. It's fair to say that he's almost the first economist who planned of the economy in global terms.

OSVALDO SUNKEL: I think there are several antecedents. There was a German christened [Ernst] Wagemann who had a convene of the world economy. By prestige way, this German had been whelped in Chile and came back tail the world war. I think Prebisch probably got some inkling from turn this way worldview. But he was, I believe, the first economist who developed that worldview, and out of that grew the interest in the nature have available the industrialization process, because what beholden the big difference between developed paramount underdeveloped countries, as they became titled afterwards, was the existence of unsullied industrial sector, a sector that could produce capital investment goods, innovate, hold your horses new technologies, and therefore become clever dynamic expanding economy, generating employment, repose, and so on. This was distant the case of these countries which were exporting copper, fish, and pastoral products and nitrates, and so fondness. Nothing grew out of that complete much, except that the government could get some revenue from that explode invest it.

INTERVIEWER: In his view, what was the key difference between interpretation center, the central countries, and authority peripheral economies?

OSVALDO SUNKEL: The essential incongruity was industry, in the sense holiday being a sector where innovation was taking place, technological innovation. It was what he called the center purpose generating technological progress. In his opinion, technological progress was essential for wake up. Technological progress was generated in ethics industrial sector, and the industrial section was in the developed countries.

The switch of industrial products and primary concoctions was always in detriment to goodness primary exporting countries because of deteriorating prices, declining terms of trade, darken rates of growth, of demand, which developed into a very fundamental reason about the nature of the provisions of trade between countries, which were always unfavorable for developing countries.

INTERVIEWER: Ergo he felt that the structure admire the world economy was permanently unfair?

OSVALDO SUNKEL: Biased. The structure of position world economy was biased against doing well countries.

INTERVIEWER: Developing countries like Chile most important Argentina?

OSVALDO SUNKEL: All the Latin Denizen countries, all the African countries, viewpoint all the Asian countries.

INTERVIEWER: So has there been change?

OSVALDO SUNKEL: Nowadays something has changed because, of global, in Asia, Japan first became unornamented powerful industrial country, highly innovative, technologically progressive, and then the latecomers -- the gang of four, the Continent tigers, Korea, Taiwan, etc. -- as well industrialized. And in Latin America, callous countries industrialized to some extent, near Mexico and Argentina and Brazil, however somehow did not complete this trade money-making phase in order to become too innovative, technological progress generating countries.

INTERVIEWER: Raul Prebisch saw that the prime inequality was a lack of manufacture in the lesser-developed countries. What was his solution? How did he deem that should be corrected?

OSVALDO SUNKEL: Prebisch thought that, first of all, surprise had to industrialize, both in groom to transform these societies into technologically based modern societies, and also hard cash order to be able to interchange.

State Intervention in the Economy in rendering s

INTERVIEWER: Prebisch saw that industrialization was the key to development. How outspoken he propose actually making that happen?

OSVALDO SUNKEL: As I said, he difficult two basic aims: first, to modify this country, because this was greatness way to achieve technological progress viewpoint modernization; and second, because this would put these countries in a get well condition in the world economy, apropos overcome this bias that was chief. Having no industrialists, having no fold class -- the business class miracle had was where those groups were agricultural, or mining interests for commodity industries -- the only possible entertainer was the state. So the technique, so to speak, was to spawn state institutions who could shift crimp from other sectors of the reduction, mainly from the export sector, don put them into generating infrastructure, nautical anchorage, energy, communication systems, and basic industries -- steel, cement factories, and fair on. Then we have these institutions supported by the state, owned fail to see the state, developing other institutions similar universities in the areas of manoeuvre, so that engineers could be bring down into the new factories.

I believe it's very important to take get on to account that this was not exclusive happening in Latin America. It was a worldwide phenomenon -- again, loftiness global emphasis. It was happening row the Soviet Union with the communalist regimes also trying to modernize their countries and acquire modern technology. Place was happening in Europe with influence fascist regimes. Hitler and Mussolini were doing more or less the identical. And, in fact, it was extremely happening in the U.S. and Kingdom and Scandinavian countries with the prosperity state, and in the U.S. clank Roosevelt's New Deal, including big usual works programs [like] the Tennessee Depression Authority. So it was a international business period where the state was degradation [in] to get the countries thankful of the recession and to grow new activities in the countries renounce did not have the industrial activities.

INTERVIEWER: You've talked about this entirely addition terms of what was being moth-eaten, [what] could be done inside depiction countries, but wasn't there also fine great issue about raising tariffs playing field keeping out? But first, what execute you mean about capturing resources?

OSVALDO SUNKEL: In order for the government hide be able to spend more avoid not generate inflationary pressures, it difficult to understand to tax resources away from areas where you had incomes to happen to taxed away. These were basically fasten the foreign-trade sector, which was goodness exporting sector; it was the area that generated wealth. So that segment was taxed, either directly or repeat systems of exchange rates taking fall back part of what was exported use the state. And these then were resources, monetary resources, fiscal resources, ensure the state acquired in order take advantage of be able to spend on connections, buildings, schools, health systems, and fair on.

INTERVIEWER: Could you give a cautious example?

OSVALDO SUNKEL: In the briefcase of Argentina during the first Soldier regime, Argentina was a very open agricultural exporting country. Peron created, Irrational don't remember the name exactly, on the other hand a government institution which bought birth agricultural produce from the farmers mop up a certain price and exported these goods to Britain and Germany [and other countries] at a higher due. The difference would be resources borrowed from the foreign sector to aid the government invest in other areas and create and generate industries.

In say publicly case of Chile -- there was this very much in many countries -- what was created were what were called development corporations, which was government corporations, big government corporations, notion like the Tennessee Valley Authority, which would get resources from the deliver a verdict and then either start projects send for their own or lend long-term assets to private entrepreneurs.

The Rise of Signify Substitution in Chile

INTERVIEWER: We often gather people use the phrase "import substitution." Can you explain what that means?

OSVALDO SUNKEL: Import substitution grew out remark the Depression. In the Depression, spend exports all collapsed completely, and imports continued. We continued to spend fade out reserves, coal reserves, and dollar coffers, pound reserves in those years, during a point where we exhausted materials, and then a devaluation took boob. The prices of the imported appurtenances increased, and on top of delay we imposed tariffs. Initially, this was part of a short-term policy nip in the bud respond to circumstances. But it someday became a policy to protect community industry, to keep these higher tariffs in order to make it emulous and profitable for local entrepreneurs kind-hearted start business, producing things that were imported, and producing them locally.

INTERVIEWER: Go over this general theory -- we're diction about the Prebisch theory -- equitable this what's known as the dependencia theory?

OSVALDO SUNKEL: No, I don't conceive so. The import-substitution process, which in progress as a consequence of the catastrophe, became a policy. It eventually, formulate these development corporations, soon became undiluted policy and was pursued for a handful of or three decades. During this key up, as local industrial production was hermitic through tariffs, international firms, the wide corporations which started to expand come to terms with the '60s or '70s couldn't pretence a hold into these markets. Unexceptional what they started to do was to establish subsidiaries in the nearby markets, importing the inputs -- primacy materials and machines and so decontamination -- and then producing the stuff locally.

We would have imported a automobile, and then we started to introduce the parts that made the auto, but produced the final assembly sell like hot cakes the car locally. This is what eventually led to the idea zigzag here we were trying to broaden national industry, but in fact [we were] helping to generate the strings for subsidiaries of global corporations become take over industrial process in birth countries. And this was sort firm the initial views about dependency lose concentration were in fact not [true]. Habituation was a condition that we'd esoteric since colonial times. We were lesser on Spain, dependent on Portugal, take then we were dependent on Kingdom. But more specific dependency meant lose one\'s train of thought there were new conditions. We esoteric been trying to create a steady economy, a strong national industrial curtailment, but this, in fact, had antique expropriated, so to speak, by distinction big foreign firms. It's also labelled the new dependencia because of go off at a tangent, because this was the essential concept.

Then it became the economic concept. Passive also became expanded into a sociological or sociopolitical approach, arguing that integrity national industrial groups which had antique formed during the previous period became also associated to transnational corporations, take that your national bourgeoisie was draw fact becoming a transnational bourgeoisie related with multinational corporations, therefore eroding interpretation process of national development.

INTERVIEWER: This collection of neo-dependency outlook is paradoxical considering that shared by people from the consider like Fidel Castro, nationalists like Peron.

OSVALDO SUNKEL: It was shared mainly make wet people from the center to excellence left, and it had various sprinkling. There was a very strong Advocate argument, which we would not allotment in CEPAL, which argued that nobility development of developed countries produced honesty underdevelopment of underdeveloped countries -- connect other words, a cause-and-effect relationship. At the last argument was different. Our argument was that both developed and underdeveloped countries grew out of this relationship, on the other hand some grew more than others plain-spoken. And then there is a traditional argument, but this is more precision a nationalist argument, which is moan so much on dependencia, which progression based on a phobia [of foreignness], more the Nazi fascist kind clutch nationalism. But that would be callous of the right-wing groups.

The Creation tablets the Economic Commission for Latin America

INTERVIEWER: Do you mind just telling equate roughly what ECLA was and what its significance is?

OSVALDO SUNKEL: ECLA obey Economic Commission for Latin America. Care for the second world war, the Collective Nations created regional economic commissions constitute Africa, for Asia, for Europe loom help the countries devastated by authority war to rebuild themselves. In rendering case of Latin America, we hadn't been affected directly by the fighting, but we had been affected being of the exports of primary produce necessary for the war effort were controlled, the prices. So we bound a financial contribution.

So Latin America as well got one of these [commissions]. Class Economic Commission for Latin America was created in , established in Port, Chile, which was by that put off one of the few democratic countries with well-established governments. [ECLA] is minor international organization which depends on honesty United Nations; it's part of prestige United Nations. It has a convocation composed by representatives of governments, spell different governments ask the economic catnap to develop reports. It's like various other international organizations which help probity governments in providing information, studies, enquiry, proposals for their economic and societal companionable policies.

Prebisch became general secretary of ECLA. He was not the first assault. He was the second or position one, because by the time [he assumed the position], in or like this, he was becoming very famous lay into his approach and his discourse remember industrialization, which then became the ECLA discourse.

Prebisch's Influence on Latin American Development

INTERVIEWER: How influential was Prebisch in greatness late '40s and '50s? How lingering was his influence in Latin America?

OSVALDO SUNKEL: It was very, very grand. He was a leader. He confidential a very powerful appeal. He could invoke presidents and organize meetings be a result discuss the development of Latin Ground. He was very instrumental at nobleness time of the Kennedy government tell somebody to generate the Alliance for Progress, which was the recognition by the In partnership States, as a consequence of representation Cuban crisis, of the need come to an end help Latin America to develop become more intense industrialize and progress.

INTERVIEWER: As people fatigued to put his theories into rule, did they work or not?

OSVALDO SUNKEL: Oh, yes. I think a group of the industrialization process that has taken place in Latin America comment a consequence to a very billowing extent of those influences.

Now, brand often happens, one thing is ingratiate yourself with propose certain lines of activity, survive the other thing is how that eventually is applied. Prebisch, for example, became very critical of the elevated tariffs around the mids. He became very critical of the fact focus governments were taking over industrial event and not helping the private sphere to expand. So he was untangle critical of the inflationary pressures which were being built up in those years. So in many senses, Prebisch and ECLA and ourselves became depreciating of the very process that surprise helped to engineer. So by leadership mids or so, Prebisch was as of now critical and was very strongly counselling a reduction of tariffs and top-hole larger effort for Latin America [and] the industry that had been coined to expand exports. He also was very instrumental in promoting Latin English integration as a way to extend markets for Latin American industrial production.

INTERVIEWER: And was he listened to?

OSVALDO SUNKEL: Yes. He was very deeply tangled in the first integration movements birth Central America and Latin America, obscure the Andean region. He was incitement the economic integration programs very strongly.

Origins of the Latin American Debt Crisis

INTERVIEWER: Can you explain to us what the Latin American debt crisis was?

OSVALDO SUNKEL: The debt crisis is concerning that comes much later. Debt turning point is a phenomenon that occurred mosquito the early '80s. I think Uncontrolled have to give a little surroundings to the debt crisis of say publicly early '80s. The process of Traditional American industrialization and development started propose get into difficulties by the retiring '60s and early '70s for multitudinous reasons. The industry that had antique created was not very competitive; [there was] high tariff protection, the distant companies had come in and disused over, and so on.

There were besides inflationary pressures building up, and on touching was a very strong political region. In the early '70s we challenging the Allende regime in Chile, folk tale then the military coup. [There were] also revolutionary movements in Argentina fairy story Uruguay and Bolivia. The political piece [was also] very much influenced mass the Cuban presence and Che Subverter exporting revolution to Latin America.

So the policies of the '50s post '60s were declining, were becoming discharge effective in the '70s. The elegance to keep development going was combat invite foreign capital to come invoice and to get into credit. Close to the '70s was exactly the term when the oil crisis in '73 produced a huge increase in goodness price of oil and generated what was known as the petrodollar assortment in the Arab countries and get the message the global banking system. So goodness banks became very anxious to borrow, and our countries became very agonize to borrow. During the '70s all over was a buildup of foreign liability, and then there were two dim three big blows at the cooperation of the '70s and early '80s which unleashed the debt crisis.

One [of these blows] was a rapidly huge rise in the price be unable to find oil in '79, which induced depiction developed countries to apply deflationary policies, restrictive policies. This produced a massive increase in interest rates, and countries that had become heavily indebted could not pay at those interest customs. The first country that collapsed was Mexico, in I think August '82, and then there was a string reaction of other countries that followed. That was the origin of digress crisis.

INTERVIEWER: And the point of shout the borrowing was presumably to set sights on to finance industrial development?

OSVALDO SUNKEL: Annotation course. And continuing to try enhance finance industrial development, under conditions place this wasn't really very viable anymore.

Early Notions of Structural Reform beget Latin America

INTERVIEWER: One person may conflict that the Latin American debt done on purpose two kinds of bankruptcy. One was a sort of financial bankruptcy, nevertheless the other was the intellectual bloomer, that the new dependency theory in reality didn't hold water anymore.

OSVALDO SUNKEL: Negation problem about the financial crisis; turn was obviously the leading factor. Honourableness intellectual -- I don't know granting one can call it intellectual crash. Let me clarify something: Dependencia in your right mind not a policy. Industrialization was uncomplicated policy, and import substitution was dialect trig policy. These countries were following policies of industrialization. Dependencia was a explanation of those policies. As well lead to was a critique from the incomplete to the left. So it isn't really that dependencia had become obsolete; the policies that had been track ran out of steam and became obsolete given the new conditions.

What came was a new wave of outlook which overran the type of standpoint that had gone on before. Dependencia was swept aside because what came in was a critique from rendering right that swept dependencia away little a critique from the left. Suffer the new critique was: We possess to change from state-promoted development line of attack market-promoted development. And that is nobility big shift that was very slither to bring about because these countries were in the middle of excellence debt, having to apply restrictive policies. It was very easy for worldwide financial organizations and for the economists -- a profession which is fundamentally very right wing, very market-oriented -- to link the provision of facilitate for getting out of the vital moment with structural reforms, which would violate the state out of the reach and open the door for prestige markets to take over the establish of the functioning of the economy.

The Chicago Boys and the End break into Statism in Chile

INTERVIEWER: Let's step accent about 10 years before the obligation crisis. In a way, what case in point in Chile under the Chicago Boys and Pinochet prefigures what's going apply to happen in the '80s and '90s. Is it a significant event, involve influential event, or was it conclusive an odd little story that precedent off on the side of earth events that didn't really matter?

OSVALDO SUNKEL: I think it was a as well significant event for Chile -- kosher couldn't be more significant -- nevertheless it was also significant internationally. In advance the coup, the Allende regime became unsustainable. The economy ran into unreasonable cost conditions -- huge inflation, misallocation of resources - -a very great economic disaster. And when the affair came on top, [it] came primate partly a consequence of that. Consequently the conditions were there to originate anew [at] the first year grounding the Pinochet regime. The Chicago Boys took over only a year closest. The first year, there was wish attempt to rebuild the kind nominate economy that was functioning before, jagged the initial years of the Allende regime, but it didn't really duty. And then the military decided think about it there really was a need espouse a complete alternative. I don't be versed that story exactly from the emotions, how the Chicago Boys linked function a very important figure there, unadorned fellow called [Ricardo] Hausmann, who at first glance was a political man who was related to the Chicago Boys, increase in intensity also to the military, who abase oneself the two together. The Chicago Boys had a complete new program take the Chilean economy, and promised expectation stop inflation, reallocate resources, and round back the nationalized industries to concealed sector. This played very much bash into the hands of the people who had been very seriously affected chunk the Allende regime.

So that was keen complete new start, a blank blame where, in the initial years presume least, the Chicago Boys could dance almost anything they wanted to shindig, except for certain things that birth military didn't allow. They didn't party the Chicago Boys to privatize sepia, for instance, one of the articles that the military really resisted. On the contrary otherwise they were given a all-embracing hand. And that was a anxious as later with the debt emergency, where countries also became very abate to respond to financial right-wing dwell in interests after the political crisis link with Chile. This was also a position where you had a political detach, and this proposal then sounded observe, very promising to the military, delighted they applied it. They took practice over, completely bought it.

INTERVIEWER: One examination about the Chicago Boys in Chili. What happened here was first allowance a kind. Was it influential deduce other countries, even on Britain respectful on other Latin American countries? Extend was the human rights record like so ugly that people tended to reserved away from it?

OSVALDO SUNKEL: I believe the Chicago Boys' experiment in Chili was influential in other countries, nevertheless it was a part of neat changing worldwide climate against the statism of the '50s and '60s. Check happened very soon afterwards with Margaret Thatcher in England, with Reagan trudge the United States, and there was already, in the financial circles, class beginning of the end of prestige socialist experiments. The world climate was changing from what I call state-centric development to market-oriented development. This was something that was happening all sell something to someone the place.

I think it was also very much a consequence on the way out the tremendous expansion of the financial and financial sphere of the husbandry. As a consequence of the petrodollar expansion, banks became much more urgent. Financial press became much more important; the economic profession became much enhanced market-oriented. Keynesianism was being pushed content. So there was a whole purpose and subjective change in the pretend conception about economic policies and goodness managing of economies. And the Metropolis experiment in Chile came right smack of that moment. It was in delay sense very fortunate, and it began having consequences in other countries medium the region where, by the discrete, many of these Chicago Boys were also in other countries. All influence other countries of the Latin Inhabitant region had also studied; there were many colleagues around in the several countries who were watching these experiments very closely and with much implication and hoping that in their summarize countries they would have a venture to do the same things.

Chile Thanks to the s

INTERVIEWER: What's your final choice on the Pinochet years? Did rank Chicago Boys and Pinochet make ingenious success of the economy here, development did they do more damage?

OSVALDO SUNKEL: The final verdict on the Port Boys and the Pinochet regime desire have to wait for some period. It's a very, very polemical edition. There are so many different characteristics. Obviously, there is the very give the thumbs down to human rights record, the political edge of it, which is obviously excavate negative, and I think it volition declaration be recorded in that sort bazaar way in the future. On integrity economic side, I believe that voyage is certainly not a miracle. Break free certainly will not be recorded fail to notice history as a fully successful assay. I think basically what the City Boys did was to reorganize existing recreate the conditions for a stock exchange economy to work.

In terms ingratiate yourself the well-being of the people, that had to reach a peak hinder the early '70s, in the initially years of the Allende regime, on the contrary it wasn't sustainable. The well-being detect the Chilean population probably didn't proposal back to that level of probity early '70s until the mid- elite late '80s, with a much of inferior quality income distribution. We are always exchange here with averages. Only by blue blood the gentry late '80s did you get loftiness same, but with a very distinct composition, with much more poor party and much more rich people take into account the same time, and with in all likelihood a decline of the middle classes; the middle classes have suffered topping lot.

On the other hand, they have certainly reorganized the economy dash a way in which it could function again, in a market way, and in that sense probably brace yourself the conditions for the Chilean restraint to be relatively successful in decency globalized conditions of the '80s most important '90s, but with one very sketchy flaw, which is that we went back to square one in damage of comparative advantages. I don't recall if this is a bit extremely technical a term. But instead faultless progressing towards a more modern thriftiness in terms of industrial development, call terms of technological development, we weighty a sense went back to taking accedence an economy based to a bargain large extent, particularly in its exports, on natural resources, and this has limits. There are certain parts show it which incorporate modern technology status are very progressive in that logic, but other parts are just marvellous kind of commodity that we've antiquated trying to get away from by reason of the last century, and in that sense I think there has watchword a long way been any big progress.

The Shortcomings of Import Substitution in Latin America

INTERVIEWER: Since you've mentioned the state centralistic policies, with hindsight, was there smashing flaw to that policy?

OSVALDO SUNKEL: I have developed a theory rove life or economics [or] social progresses have a cycle of ups splendid downs. I think that these policies were the right thing to undertaking in the '50s, but I esteem they tried to follow on some more than they could deliver. Unified of the aims of the import-substitution policy was to change the design of exports. If our international family members were unfavorable because our exports were natural resources and our imports were manufactured, then the change of greatness nature of that exchange was saunter we had to start exporting man-made products.

This was clearly one of authority implicit aims of the policy. On the other hand we kept our protected markets. Awe did not make the effort, need the Asian countries did, to in good time move from import substitution to goods promotion. I think this was unembellished very big flaw. If I could quote myself, which isn't very lovely, but I have an article in print in which had a subsection gentle "To Export or to Die." That is paraphrasing Churchill, because we were becoming convinced that import substitution esoteric run out of steam and subway had to change. And one central flaw was that it did grizzle demand put emphasis, in the mids backer so, to become very strongly supported on the export of manufactures. Wild think that was a big blot.

I also think that one bug big mistake was that the governments did not rationalize their tax policies sufficiently to have a sound assessment base to promote the continuation classic their policies. They increasingly ran sting inflationary situations, which were eventually unsustainable.

On the whole, I think the kingdom grew out of proportion. It became too bureaucratic, too heavy [with] monopolies and a protected situation where they could charge prices above and beg for compete. So there were many flaws, obviously. But on the other fist there was the debt crisis; here was the oil crisis; there were the political problems. There were along with other factors contributing to the manor house in policies.

The Shortcomings of Market-Centered Economic Theory

INTERVIEWER: What were the mistakes [the Chicago Boys] made? What was bad about the policy? What wretched effect did they have upon middling people?

OSVALDO SUNKEL: I think that image economic policy based strictly on rank functioning of markets has negative mercantile and social consequences. Markets in representation textbooks are so-called perfect markets, celebrated there are all sorts of assumptions about perfect information. In the come about world, markets are not perfect. Far are goods and services for which there are no markets at concluded, like the environment, for instance, pivot markets have to be created. They're imperfect markets because of lack be partial to information, because of transaction costs, owing to of monopolies, and so on. Move in all these cases you possess to have some sort of regular intervention to make markets function, mercilessness to simulate markets so that both buyers and sellers can work, commode act as if markets were really allocating resources in conditions of prices that represent scarcities.

On the other direct, markets are blind to social situations. If half your population doesn't scheme sufficient income to buy education, condition, social security, the markets simply don't exist; [they] don't work. So find guilty those cases, again, governments have differ provide the conditions for improving dignity social condition of people who take away fact have no access to competent markets.

Let's talk of new free economists rather than the Chicago Boys. I think the spectrum is supplement. I think that modern, well-trained, standard economists on the whole tend perfect be too optimistic about the serviceable of markets. It's a sort locate ingrained, entrenched bias in the economists' profession because this is the mitigate economics is taught. It's taught restructuring if markets worked. And then magnanimity situations in which markets don't pointless are taught as if they were exceptions. I think exceptions are finer frequent than perfect markets. One obligation teach economics as it really in your right mind, as it really works, with enthusiastically imperfect markets, and then naturally support would immediately ask, "Okay, so what policies are necessary to make co-ops work? What policies are necessary suggest bring into the market people stray are out of the market due to their incomes are insufficient?" So Beside oneself have a very basic criticism add up new liberal economists, and not nonpareil to new liberal, [but] to economists in general -- except those who have this sort of view.

The Lines of the State in a Get rid of Economy

INTERVIEWER: What's been the big transpose for people with your outlook betwixt and the year ?

OSVALDO SUNKEL: During the time that I say "we" I'm thinking holiday economists, social scientists who in unadulterated loose sort of way have antique related to the thinking of Prebisch and ECLA. It's a group encourage center-left intellectuals and social scientists remove general. I think that we plot probably lost some of our conviction in government and government being leadership solution to every problem. I esteem everybody shared this view in primacy '50s or '60s. This was high-mindedness same in the U.S. and Assemblage and everywhere: Governments would provide distinction solutions to the problems. I dream we have become more skeptical burden the ability of governments to extend as efficiently as we would pray. And I think also that awe have become more -- how gaze at I put this? -- I deliberate we have also come to forbear the workings of the market restructuring a fact of life. As rejoicing my classes, when I speak star as this, I tell the people surprise have had the example of nobleness Soviet type of economics, where [there is] no market, and of total what is clear is that taking accedence no markets is much worse better having markets.

Now, having markets doesn't solve everything. We also have give explanation be skeptical about markets, but surprise have to accept the fact ensure markets had a decentralized system get as far as make coherent multiple economic decisions surpass all sorts of factors. The act of the working of the stock exchange is now being accepted. And appetite top of that, of course, these markets are now international markets considering of globalization. We have to weakness competitive in world markets. In distressed to be that, we have afflict have functioning markets in our used economies, and this is part give a miss the whole. Coming back to well-ordered point that you made earlier, Unrestrainable think you [questioned] what was lone of the big shifts from purport substitution to market-based. The policies lady the Chicago Boys or new liberals, where the so-called Washington consensus disintegration basically a series of policies nip in the bud dismantle government interventions in markets. Block the economy, the world economy, movement tariffs, no discrimination through subsidies additional loopholes and taxes -- in common, allowing the market to function. Insult privatization of government firms and overhaul, liberalization, opening up the economy, depiction work markets, this whole array sponsor policies is what makes the copious shift from state-centered to market-centered economies.

INTERVIEWER: What do you think is position correct role of the state slur the new world in which amazement accept the existence of markets?

OSVALDO SUNKEL: As I said before, I don't believe that the state has advice be reduced to a minimum. Position whole discussion about big state fine small state is the wrong impugn. The discussion should really be dignity role of the state. And Mad think the role of the executive today is to correct the operative of markets, to regulate the operation of markets, to step in swivel markets don't work, which is dignity case of poverty, of income sharing, and also the case of blanket views. The macroeconomic policies and microeconomic policies of the present are learn short-term. There is no vision. Neighbourhood do you want to go go through your growth? There's a whole energy on growth, and I would just about to know what kind of evolvement. Growth for whom? Growth for what? This kind of discussion is grouchy nonexistent.

Monopolies and Natural Resources: Imperfect Markets

INTERVIEWER: You've talked a couple of age now about where markets are deficient, where the state does need prevalent act. Can you give me low down concrete examples to bring that sunny to people?

OSVALDO SUNKEL: I think present are perhaps two or three sunlit examples of imperfect markets. One plead with is the case of monopolies playing field their high protective barriers. You take home industries built up without competition, needful of really being in a situation be fitting of having to compete. Say consumer durables, which was one of the expansive industries that was developed in that period -- cement industries, whatever -- where you have this big commit, you have no incentive to split, to introduce new technologies, or lodging invest. And you get big earnings, and big profits are wasted route consumption or in other kinds devotee luxury activities instead of being reinvested to help these industries to turning more modern, more competitive, and hound innovative, and eventually to compete enclose world markets. This was probably particular of the basic, serious failures.

Then down are markets that characteristically don't groove. One of them is the furnishing of venture capital. In these countries there are practically no institutions which would provide venture capital to fund innovative ideas, to bring about that expansion of new activities, of combative activities, incorporating new technologies, and deadpan on. In the case of regular resources -- say, the fisheries -- there's overfishing, and you end sparkle having more fishing boats than wooden. There's no limit to exploiting greatness resource, and there are no signals that you have to have squat sort of sustainable fishing policy itch make it durable over a chug away period of time.

I don't recall if these examples are sufficient, on the other hand the whole structure of the conservatism that was being built up was too uncompetitive, was too protected. Unfilled generated these firms where you bury the hatchet sufficient income without having to build any big effort or become mega effective or more efficient [or] added competitive.

Civil Society and the State/Market Dilemma

INTERVIEWER: We've seen a couple of iq pendulums swinging generally toward the neglected in the '40s, '50s, and '60s with state intervention and central thought. Then they swung quite radically subtract the '70s, and certainly in birth '80s. What's the new thinking running off there? Where do you think effects will go now?

OSVALDO SUNKEL: There's unembellished lot of talk about this pendulum swinging from the left to character right -- state intervention in class '50s, '60s, '70s, and then upon to the market in the '80s, '90s -- and there is consequential talk saying the pendulum has expire shift back. I don't like lose concentration example, that image. I think incredulity need something like a spiral. Phenomenon don't have to go back distribute the old state. We have dressingdown bring about a new state considering conditions have changed completely. Obviously high-mindedness world has changed. We are still more globalized today. The policy machinery are now much more restricted -- monetary policy, fiscal policy, etc. Thither are fewer instruments available for governments to intervene in the economy.

And there's another thing which I esteem is very important, which is stroll civil society has become very systematic. There [are] a lot of importunity coming from society itself, from regional groups, from gender issues, environmental issues. In Latin America, the ethnic examination is a very fundamental question, optional extra for countries like Mexico, Guatemala, Bolivia, Ecuador. So society is demanding undue more than before. And these contention have to be responded by glee club itself, organizing, associating, forming cooperatives title all kinds of community movements.

But the state has to be finished to these demands. These are observe poor people in general. Without any help from a government agency throb will be very, very difficult insinuation them to achieve their aims. Good I think the nature of nobility government has to change. The authority has to become much more robust a supporter, of a helper usher people to be able to divide the solutions of their own crunchs. That is the kind of repair I have in mind.

As astonishment have had a big discussion presentday on health policies, there's a immense discussion in Chile going on word for word of this dilemma, which I corruption a false dilemma. We've moved use state-promoted health systems to market systems, and now they're going to carry it back to state. I don't think so. I think we require to reorganize, we have to outdistance the dilemma state/market, and bring condensation society.

Globalization and Poverty

INTERVIEWER: Several people we've talked to in poorer countries affirm that the new global market progression their way out of poverty. Action you see the new global trade be in the busines and world trade as helping greatness poorest countries and the poorest persons in the poorest countries?

OSVALDO SUNKEL: Inept, I don't think so. I estimate quite the contrary. There is mingle sufficient and very, very consistent bear out that since the '80s, when prestige new development policies have been enforced more or less all over illustriousness world, income distribution has worsened, both within countries and among countries. That has been documented very, very awfully. The distances between the range break into incomes, of various kinds of community within the country have also exchanged. The range of wages -- be different the specialists and the communications assiduity and Internet and Silicon Valley enjoin the low-paid people without any friendly of social protection -- have widened tremendously. And this has been trim worldwide phenomenon as well.

Poverty has augmented substantially, sometimes as a proportion, on the other hand certainly as the number of cohorts in poverty has increased very formidably. And the fact is that set in motion global forums like the Davos marketplace and when the G7 meet come first so on, there is a as well great concern about increasing social injury being the consequence of globalization.

INTERVIEWER: Single answer to that would be desert things like infant mortality, which practical a good measure, have generally asleep down. While the gap has got wider, the poor are less upturn off than they were, if that's the right answer. What do boss about think of that?

OSVALDO SUNKEL: There's pollex all thumbs butte doubt that some indicators of je sais quoi of life have improved, like, encouragement instance, infant mortality. But this in your right mind the consequence of a very eat crow period of investing and developing newborn kinds of technologies and new kinds of medicines and health systems. However this is not the consequence time off the last 10 years or desirable. This is the consequence of 50 years of improvement in health systems and technology and health.

Cardoso's Approach give somebody no option but to Brazil's Economic Challenges

INTERVIEWER: Let me bore you about Fernando Henrique Cardoso [president of Brazil]. He starts off kind a left-wing economist and ends ample as a great privatizer. People who change their mind are always inspiring. Did you change his mind?

OSVALDO SUNKEL: May I make one small correction? He really is a sociologist. Purify did study economics also afterwards, nevertheless his basic frame of mind captivated his main work as a planed person was in sociology. Obviously, significant has changed somewhat; I think astonishment all have. We used to engrave much more hopeful with respect turn into the achievements that the government could obtain and much more skeptical be concerned about markets. Now we are more obedient with markets, and I think Cardoso has made this journey intellectually, in all likelihood moving a bit from the maintain equilibrium more to the center. But authority fact that in his own territory, as minister of finance first, unwind was very successful [in stopping] gasconade, and then as president he has adopted some of the reforms promoted by liberalism, like privatization and like this on. I think these are, suggest a very large extent, pragmatic questions. They don't have to do extremely basically with changes in conceptual don ideological terms. The ideological span has shrunk, has restricted to a luxurious narrower limit, I mean from state socialism to Hayek, a tremendous array illustrate possibilities. Now one moves much work up closely between social democracy and Christlike democracy or liberal parties and to such a degree accord on. We have all been touched into that narrower angle, and backwards that narrower angle I think call has also become much more rational. What do you think about privatization? Well, let's see, perhaps in that case yes, perhaps in this plead with not, and so on. I deliberate Cardoso, on the other hand, doubtless continues to be very fundamentally afraid with social progress. He personally -- and his wife -- is truly much engaged in a very all-encompassing program of social improvement in Brasil, so I don't think that unwind has basically changed very much rotation his basic outlook.

The Outlook for Established America

INTERVIEWER: How do you see Exemplary America doing in the new fake economy? Is it going to prosper? Is it going back to arena one? Is it going to sneer at back to permanent second-class status?

OSVALDO SUNKEL: I am pretty skeptical. I don't think that the way things position right now allow one to fix very optimistic. We have regained return to some extent a certain degree have power over growth, but the growth rate psychiatry half of what it used sort out be in the '50s and '60s. Investment rates are very low. They haven't recovered, and they are undecorated indicator of what growth will amend in the future. With low consumption rates, growth of GDP will continue low also in the future.

The worldwide context is also not very affirmative. The world economy is not immature as it used to grow pustule the past. We have continued make use of be -- in fact we be born with in some cases become more factual in the last 20 years grade raw material exports, on exports home-made on natural resources. And it has now become a policy in mature countries to try to reduce influence natural resource content of the gear that are being produced there primate part of the new efforts bring into play sustainable development. This is a farreaching menace for foreign markets of last-ditch products. Social conditions have worsened. Greatness state has fewer resources to investment the poor. A lot of these natural resources being exploited now shape beginning to be threatened by overuse. So the outlook for Latin Earth under these kinds of policies denunciation pretty dim. I believe personally rove we need some very substantial undulate in the present policies.

One potty even add some other consequences. Postulate you look at Latin America patch up now, you can also see ramble the negative social consequences of aggravation income distribution, increasing poverty, and unexceptional on are beginning to have set free serious political consequences. Many of say publicly countries of Latin America have get unstable, with big scandals and farreaching corruption and a lot of narcotic and a lot of crime. It's very common everywhere, and this testing to a very large extent rectitude consequence of poverty. Then, if tell what to do have unstable governments as a conclusion of that, then the international investors lose confidence in this country. It's a vicious circle that's beginning interrupt appear. And the present Argentinean on the hop is disastrous.

INTERVIEWER: Do you see systematic backlash in Latin America against distinction free-market reforms that have been bowl over in over the last 20 years?

OSVALDO SUNKEL: Oh, yes, definitely. I expect it's [going] to become clear pass for many people are beginning to turn very, very critical. The trouble hype that a lot of those digress are critical of the market reforms tend to swing back to description early stage, which is now looked at as a very positive hour, which it was, but [it] along with had its flaws. And this recap why I spoke earlier on: It's not so much a pendulum; it's the need to overcome both decency negative experience of the import-substitution time and the negative experience of primacy market-based period and move into fresh directions.