prebisch singer thesis in hindi

Prebisch-Singer Thesis: Assumptions and Criticisms | Trade | Economics

In this article we will discuss about:- 1. Introduction to Prebisch-Singer Thesis 2. Assumptions in the Prebisch-Singer thesis 3. Criticisms.

Introduction to Prebisch-Singer Thesis:

There is empirical evidence related to the fact that the terms of trade have been continuously moving against the developing countries. On the basis of exports statistics concerning the United Kingdom between 1870 and 1940, Raul Prebisch demonstrated that the terms of trade had secular tendency to move against the primary products and in favour of the manufactured and capital goods.

This viewpoint has been strongly supported by H. W. Singer. The essence of Prebisch-Singer thesis is that the peripheral or LDC’s had to export large amounts of their primary products in order to import manufactured goods from the industrially advanced countries. The deterioration of terms of trade has been a major inhibitory factor in the growth of the LDC’s.

Prebisch and Singer maintain that there has been technical progress in the advanced countries, the fruit of which have not percolated to the LDC’s. In addition, the industrialised countries have maintained a monopoly control over the production of industrial goods. They could manipulate the prices of manufactured goods in their favour and against the interest of the LDC’s.

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Except the success of OPEC in raising the prices of crude oil since mid 1970’s, there has been a relative decline in the international prices of farm and plantation products, minerals and forest products. Consequently, the terms of trade have remained unfavourable to the developing countries.

Assumptions in the Prebisch-Singer thesis:

The main assumptions in the Prebisch-Singer thesis are as under:

(i) As income rises in the advanced countries, the pattern of demand shifts from primary products to the manufactured products due to Engel’s law.

(ii) There is slow rise in demand for products in the developed countries.

(iii) The export market for product of LDC’s is competitive.

(iv) The export market for products of developed countries is monopolistic.

(v) Wages and prices are low in LDC’s.

(vi) The appearance of substitutes for products of LDC’s reduces demand for them.

(vii) The benefit of increased productivity is not passed by the producers of manufactured products in advanced countries to the LDC’s through lower prices.

(viii) The economic growth in the LDC’s is indicated by income terms of trade.

Singer has pointed out that the recent increase in debt problem of the LDC’s has imparted another twist to the hypothesis of secular deterioration of terms of trade for them in two ways. Firstly, a high proportion of proceeds from exports are not available for imports.

Secondly, there is an increased pressure upon the LDC’s to raise exports in order to repay external debts on account of IMF-induced adjustment polices. These pressures make the debt- ridden LDC’s to compete with other poor countries to enlarge their export earnings. It results in decline in the prices of export products of these countries.

Criticisms of Prebisch-Singer Thesis :

The Prebisch-Singer Thesis has come to be criticized on several grounds:

(i) Not Firm Basis for Inference:

The inference of secular deterioration of terms of trade for the LDC’s rests upon the exports of primary vis-a-vis manufactured products. In this regards, it should be remembered that the LDC’s export wide variety of primary products. Sometimes they export also certain manufactured products.

They, at the same time, do not import only manufactured products but also a number of primary products. It is, therefore, not proper to draw a firm inference about terms of trade just on the basis of primary versus manufactured exports.

(ii) Faulty Statement of Gains and Losses of Primary Exporters:

Jagdish Bhagwati has pointed out that the index of terms of trade employed in this thesis understates the gains of exporters of primary products. At the same time, there is over­statement of losses of primary producers.

(iii) Faulty Index of TOT:

The Prebisch- Singer hypothesis rests upon the index, which is the inverse of the British commodity terms of trade. This index overlooks the qualitative changes in products, appearance of new varieties of products, services like transport etc. The generalisation based on British terms of trade for the period 1870 to 1930, according to Kindleberger, is not true for the other developed countries of Europe.

(iv) Neglect of Supply Conditions:

In the determination of terms of trade, the Prebisch-Singer thesis considers only demand conditions. The supply conditions, which are likely to change significantly over time, have been neglected. The relative prices, in fact, depend not only upon the demand conditions but also on the supply conditions.

(v) Little Effect of Monopoly Power:

One of the arguments in support of this thesis was that the higher degree of monopoly power existing in industry than in agriculture led to secular deterioration of terms of trade for the developing countries. In this connection, it was also agreed that the monopoly element prohibited the percolation of benefits of technical progress to the LDC’s. The empirical evidence has not supported such a line of argument.

(vi) Inapplicability of Engel’s Law:

The secular decline in the demand for primary products in developed countries was attributed to Engel’s Law. But this is not true because this law is applicable to food and not to the raw materials, which constitute sizeable proportion of exports from, the LDC’s.

(vii) Benefits from Foreign Investment:

The deterioration of the terms of trade for the LDC’s is sometimes linked not to non-transmission of productivity gains to them by advanced countries through lower prices of manufactured goods, yet the benefits from foreign investments have percolated to the LDC’s through the product innovations, product improvement and product diversification. These benefits can amply offset any adverse effects of foreign investment upon terms of trade and the process of growth.

(viii) Difficult to Assess Variation in Demand for Primary Products:

The secular deterioration in terms of trade of the LDC’s during 1870 to 1930 period was supposed to be on account of the declining world demand for primary products. During that period, there were tremendous changes in world population, production techniques, living standards and means of transport. Given those extensive developments, it is extremely difficult to assess precisely the changes in world demand for primary products and the impact of those changes upon the terms of trade.

(ix) Export Instability and Price Variations:

The Prebisch-Singer thesis suggested that export instability in the LDC’s was basically due to variations in prices of primary products relative to those of manufactured products. Mc Been, on the contrary, held that the export instability in those countries could be on account of quantity variations rather than the price variations.

(x) Development of Export Sector not at the Expense of Domestic Sector:

In this thesis, Singer contended that foreign investments in poor countries, no doubt, enlarged the export sector but it was at the expense of the growth of domestic sector. This contention is, however, not always true because the foreign investments have not always crowded out the domestic investment. If foreign investments have helped exclusively the growth of export sector, even that should be treated as acceptable because some growth is better than no growth. It is far­fetched to relate worsening of terms of trade to the non-growth of domestic sector.

(xi) Faulty Policy Prescription:

Prebisch prescribed the adoption of protectionist policies by LDC’s to offset the worsening terms of trade. Any gains from tariff or non-tariff restrictions upon imports from advanced countries can at best be only short-lived because they will provoke retaliatory actions from them causing still greater injury to the LDC’s.

In the present W.TO regime of dismantling of trade restrictions, Prebisch suggestion is practically not possible to implement. There should be rather greater recourse to export promotion, import substitution, favourable trade agreements and adoption of appropriate monetary and fiscal action for improving the terms of trade in the developing countries.

(xii) Lack of Empirical Support:

The studies made by Morgan, Ellsworth, Haberler, Kindelberger and Lipsey have not supported the secular deterioration of terms of trade hypothesis, Lipsey has observed, “Although there have been very large swings in U.S. terms of trade since 1879, no long term trend has emerged. The average level of U.S. terms of trade since World War II has been almost the same as before World War I.” This objection of lack of empirical support against the Prebisch-Singer hypothesis is actually not very sound. A number of more recent empirical studies have, in fact, gone in favour of this hypothesis.

Despite all the objections raised against the Prebisch-Singer thesis, the empirical evidence has accumulated in support of it. The studies made by UNCTAD for 1950-61 and 1960-73 periods showed that there was a relative decline in the terms of trade of LDC’s vis-a-vis the developed countries. A study attempted by Thirlwall and Bergevin for the period 1973-82 indicated that there was an annual decline of terms of trade of LDC’s for all the primary commodity exports at the rate of 0.36 percent.

On the basis of their study related to exports of manufactured products for LDC’s to the advanced countries during 1970-87 period, Singer and Sarkar found that the terms of trade of LDC’s declined by about 1 percent per annum. Even the World Development Report 1955 recognised that the world prices of primary products declined sharply during I980’s and the terms of trade of LDC’s deteriorated during 1980-93 period.

According to the 1997 Human Development Report of UNDP, the terms of trade for the least developed countries declined by a cumulative 50 percent over the past 25 years. According to South Commission, compared with 1980, the terms of trade of developing countries had deteriorated by 29 percent in 1988. The average real price of non-oil commodities had declined by 25 percent during 1980-88 period compared with the previous two decades. The terms of trade of non-oil developing countries had deteriorated during 1980-88 period by 8 percent compared with 1960’s and 13 percent compared with 1970’s.

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Prebisch-singer hypothesis and terms of trade peripheral capitalism in the 1980s Rameshwar Tandon

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• History of Political Economy

The Origins and Interpretation of the Prebisch-Singer Thesis

• J. F. J. Toye , Richard Toye
• Duke University Press
• Volume 35, Number 3, Fall 2003
• pp. 437-467
• View Citation

Additional Information

John Toye and Richard Toye

The Prebisch-Singer thesis is generally taken to be the proposition that the net barter terms of trade between primary products (raw materials) and manufactures have been subject to a long-run downward trend. The publication dates of the first two works in English that expounded the thesis were nearly simultaneous. In May 1950, the English version of The Economic Development of Latin America and Its Principal Problems , by Raúl Prebisch, appeared under the UN's imprint. In the same month Hans Singer published an article, "The Distribution of Gains between Investing and Borrowing Countries," in the American Economic Review . The continuing significance of the "Prebisch-Singer thesis" is that it implies that, barring major changes in the structure of the world economy, the gains from trade will continue to be distributed unequally (and, some would add, unfairly) between nations exporting mainly primary products and those exporting mainly manufactures. Further, inequality of per capita income between these two types of countries will [End Page 437] be increased by the growth of trade, rather than reduced. This could be, and has been, taken as an indicator of the need for both industrialization and tariff protection.

Prebisch and Singer identified two types of negative effects on primary producers' terms of trade. One effect occurs because of systematically different institutional features of product and factor markets, such as cost-plus pricing and the unionization of labor in industry. Another negative influence is that of technical progress, both from the asymmetric distribution of its fruits, but also from its asymmetric impact on future demand, favorable to that of industry while unfavorable to that of agriculture. The empirical significance of the thesis has been much disputed and continues to be controversial after more than fifty years. One recent investigation has claimed that these two effects have operated strongly in the forty years after the Second World War, and that they have indeed outweighed the positive influences on primary producers' terms of trade arising from capital accumulation and the growth of industrial production. This particular study suggested that the economic mechanisms that disfavor primary product producers, which were specified by Prebisch and Singer, have had significant impacts, even though the net secular decline of primary producers' net barter terms of trade has been found to be relatively small, at around 1 percent a year (Bloch and Sapsford 1998).

The Prebisch-Singer thesis contradicted a long tradition of contrary belief among economists. The nineteenth-century English political economists believed that the terms of trade of industrial manufactures relative to agricultural produce would tend to decline. This belief underpinned their pessimism about the sustainability of rapid population growth. That manufactures' terms of trade would decline, and that rapid population growth was therefore unsustainable, were two propositions that caused political economy to be dubbed the "dismal science." This basic framework of ideas remained remarkably stable throughout the entire century and a quarter from Robert Malthus to the early works of John Maynard Keynes. Although, by the late 1940s, this proposition was rarely stated explicitly, when Prebisch and Singer came to reverse the classical expectation of declining terms of trade for manufactures, their conclusions were immediately controversial, and are still so regarded by some today. 1 [End Page 438]

Prebisch is frequently credited with having formulated the declining terms of trade thesis before Singer did. Joseph Love (1980, 58–59) claimed that "Prebisch clearly seems to have reached his position earlier than Singer." Other authors have held that Singer discovered the thesis independently and simultaneously. Cristobal Kay (1989, 32) wrote that "Singer . . . reached his conclusions independently from Prebisch and around the same time [so that] the thesis on the deterioration in the terms of trade is known in the economic literature as the ‘Prebisch-Singer thesis.'" This second view was indeed that held by Singer himself. 2 Our account of the events surrounding the United Nations Economic Commission for...

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The Origins and Interpretation of the Prebisch-Singer Thesis

2003, History of political economy

Related Papers

Journal of International …

Prabirjit Sarkar

CEPAL Review

Armando Di Filippo

Matias E Margulis

The Global Political Economy of Raúl Prebisch offers an original analysis of global political economy by examining it through the ideas, agency and influence of one of its most important thinkers, leaders and personalities. Prebisch’s ground-breaking ideas as an economist – the terms-of-trade thesis and the economic case for state-led industrialization – changed the world and guided economic policy across the global South. As the head of two UN bodies – the Economic Commission for Latin America and the Caribbean (ECLAC) and later the United Nations Conference on Trade and Development (UNCTAD) – he was at the frontline of key North–South political struggles for a fairer global distribution of wealth and the regulation of transnational corporations. Prebisch increasingly came to view political power, not just economic capabilities, as pivotal to shaping the institutions and rules of the world economy. This book contextualizes his ideas, exploring how they were used and their relevance...

The Global Political Economy of Raúl Prebisch

The Global Political Economy of Raúl Prebisch offers an original analysis of global political economy by examining it through the ideas, agency and influence of one of its most important thinkers, leaders and personalities. Prebisch’s ground-breaking ideas as an economist – the terms-of-trade thesis and the economic case for state-led industrialization – changed the world and guided economic policy across the global South. As the head of two UN bodies – the Economic Commission for Latin America and the Caribbean (ECLAC) and later the United Nations Conference on Trade and Development (UNCTAD) – he was at the frontline of key North–South political struggles for a fairer global distribution of wealth and the regulation of transnational corporations. Prebisch increasingly came to view political power, not just economic capabilities, as pivotal to shaping the institutions and rules of the world economy. This book contextualizes his ideas, exploring how they were used and their relevance to contemporary issues. The neoliberal turn in economics in North America, Western Europe and across the global South led to an active discrediting of Prebisch’s theories and this volume offers an important corrective, reintroducing current and future generations of scholars and students to this important body of work and allowing a richer understanding of past and ongoing political struggles.

Matias Vernengo

Octavio Rodríguez

Studies in Comparative International Development

RAMON ALEJANDRO GOMEZ

Arturo O'Connell

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Revisiting Prebisch and Singer: beyond the declining terms of trade thesis and on to technological capability development

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P. Sai-wing Ho, Revisiting Prebisch and Singer: beyond the declining terms of trade thesis and on to technological capability development, Cambridge Journal of Economics , Volume 36, Issue 4, July 2012, Pages 869–893, https://doi.org/10.1093/cje/bes011

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Rather than the thesis of a secular decline in the commodity terms of trade, Prebisch and Singer were more concerned with the income terms of trade. Consequently, they advocated (moderate) import substitution (IS) and recommended having it interweaved with export promotion (EP). To avoid technological dependence but achieve integrated industrialisation while coordinating IS with EP, Prebisch emphasised enhancing indigenous ‘technological densities’ and Singer stressed building the indigenous ‘capacities to create wealth’. That means while foreign direct investments should be attracted, those activities should be managed and directed accordingly. Prebisch hoped to narrow the gap in centre–periphery technological uneven development while Singer aimed at tackling international dualism between rich and poor countries in the use of science and technology.

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IMF Working Papers

Testing the prebisch-singer hypothesis since 1650: evidence from panel techniques that allow for multiple breaks.

Author/Editor:

Rabah Arezki ; Kaddour Hadri ; Prakash Loungani ; Yao Rao

Publication Date:

August 15, 2013

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Free Download . Use the free Adobe Acrobat Reader to view this PDF file

In this paper, we re-examine two important aspects of the dynamics of relative primary commodity prices, namely the secular trend and the short run volatility. To do so, we employ 25 series, some of them starting as far back as 1650 and powerful panel data stationarity tests that allow for endogenous multiple structural breaks. Results show that all the series are stationary after allowing for endogeneous multiple breaks. Test results on the Prebisch-Singer hypothesis, which states that relative commodity prices follow a downward secular trend, are mixed but with a majority of series showing negative trends. We also make a first attempt at identifying the potential drivers of the structural breaks. We end by investigating the dynamics of the volatility of the 25 relative primary commodity prices also allowing for endogenous multiple breaks. We describe the often time-varying volatility in commodity prices and show that it has increased in recent years.

Working Paper No. 2013/180

Agricultural commodities Commodities Commodity markets Commodity price fluctuations Commodity prices Financial markets Prices

9781484341155/1018-5941

WPIEA2013180

Please address any questions about this title to [email protected]

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The origins and interpretation of the prebisch-singer thesis.

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Prebisch-Singer Hypothesis

The Prebisch-Singer hypothesis is an economic theory that suggests that the prices of primary goods (such as raw materials and agricultural products) tend to decline relative to the prices of manufactured goods over time. This theory was developed by Raul Prebisch and Hans Singer in the 1950s and 1960s, and it has been influential in shaping policy debates about trade and development. According to the Prebisch-Singer hypothesis, the relative decline in the prices of primary goods has negative consequences for developing countries, which tend to be major exporters of primary goods and therefore rely on them for a significant portion of their foreign exchange earnings. As a result, the Prebisch-Singer hypothesis has been used to support policies such as import substitution (which promotes domestic production of goods that are normally imported) and export promotion (which encourages the export of goods to increase foreign exchange earnings).

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The Prebisch Singer Hypothesis

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Prebisch Singer thesis (1960S)

Named after Argentine economist Raul Prebisch (1901-1986) and German-born British economist Hans Singer (1910- ); Prebisch-Singer thesis asserts that, given the permanent tendency for the terms of trade to go against agricultural products, it is in the interest of developing countries to erect protective tariffs behind which they can industrialize.

Source: R Prebisch, The Economic Development of Latin America and its Principle Problem (New York, 1960); H W Singer, ‘The Distribution of Gains between Investing and Borrowing Countries’, American Economic Review, vol. XL (May, 1950), 473-85c

A common explanation for this supposed phenomenon is that manufactured goods have a greater income elasticity of demand than primary products, especially food. Therefore, as incomes rise, the demand for manufactured goods increases more rapidly than demand for primary products.

In addition, primary products have a low price elasticity of demand, so a decline in their prices tends to reduce revenue rather than increase it.

This theory implies that the very structure of the global market is responsible for the persistent inequality within the world system. This provides an interesting twist on Wallerstein’s neo-Marxist interpretation of the international order which faults differences in power relations between ‘core’ and ‘periphery’ states as the chief cause for economic and political inequality (However, the Singer–Prebisch thesis also works with different bargaining positions of labour in developed and developing countries). As a result, the hypothesis enjoyed a high degree of popularity in the 1960s and 1970s with neo-Marxist developmental economists and even provided a justification for an expansion of the role of the commodity futures exchange as a tool for development.

Singer and Prebisch noticed a similar statistical pattern in long-run historical data on relative prices, but such regularity is consistent with a number of different explanations and policy stances. Later in his career, Prebisch argued that, due to the declining terms of trade primary producers face, developing countries should strive to diversify their economies and lessen dependence on primary commodity exports by developing their manufacturing industry.

The hypothesis has lost some of its relevance in the last 30 years, as exports of simple manufactures have overtaken exports of primary commodities in most developing countries outside of Africa. For this reason, much of the recent research focuses less on the relative prices of primary products and manufactured goods, and more on the relationship between the prices of simple manufactures produced by developing countries and of complex manufactures produced by advanced economies.

In 1998, Singer argued that the thesis he pioneered has joined the mainstream:

One indication of this is that the PST is now incorporated, both implicitly and explicitly, in the advice given by the Bretton Woods Institutions to developing countries. They are warned to be prudent even when export prices are temporarily favourable and to guard against currency overvaluation and Dutch Disease, with all the unfavourable impact on the rest of the economy and all the dangers of macroeconomic instability which a sudden boom in a major export sector could imply. They are warned to remember that the outlook for commodity prices is not favourable and that windfalls will tend to be temporary, with the subsequent relapse likely to be greater than the temporary windfall. This is exactly the warning which the PST would give. [3]

Recent statistical research has given the idea qualified support. [1] [2]

During the 2000s commodities boom, the terms of trade of most developing countries improved, while east Asia (which exports mostly manufactured goods) saw deteriorating terms of trade—the opposite of what the hypothesis generally predicts. [4]

Critics argue that it is not possible to compare the prices of manufactured goods over time because they change rapidly. The price relationship of Prebisch–Singer does not take into account technological change. The important thing is not the price of the goods but the service provided by said goods. For example, in 1800 an American worker could buy a candle that provided one hour of light for six hours of work. But in 1997 an American worker could buy an hour of light provided by a light bulb with barely half a second of work. That is to say, the invention of Edison improved by other North Americans managed to reduce the price drastically. Another case that we can see are personal computers that provide the service of calculations per second. Since the 1970s computers doubled their capacity of calculations per second every two years for the same amount of constant dollars. The fall in price is so rapid, that it has been necessary to invent new words because of the immense growth in the capacity of computers. First they were measured in bytes, then, kilobytes, megabytes, terabytes, yottabytes, etc … Today’s harvesters harvest many more hectares per hour than they did half a century ago, but they also have a geo-satellite system, combined with a chip that allows to improve productivity; plus air-conditioned, hermetic cabinets, which prevent dust intake and improve the quality of life of the operator, as well as radio and DVD player to improve his comfort. These examples suffice to show that if we correct the imports/exports price relationships by technological change, we will obtain a conclusion opposite to that of Prebisch–Singer. It is therefore argued that the peripheral countries that export commodities benefit from trade with the central powers to a greater extent than they do, because by incorporating the new technologies incorporated into manufactures they multiply their productivity. In fact, if we could easily find examples of the gap reduction of GDP per capita between rich and poor countries when they open to free trade. Such is the case of Argentina and England between 1875 and 1930. Or China and USA between 1980 and 2018, or many other countries. [5]

Prebisch’s lectures from 1945 to 1949 revealed the development of the theoretical strands of his argument. [6]  What he did not have was a statistical argument. In February 1949, Hans Singer, then working in the United Nations Department of Economic Affairs in New York City, published a paper titled “Post-war Price Relations between Under-developed and Industrialized Countries”, which suggested that the terms of trade of underdeveloped countries had declined significantly between 1876 and 1948. Inspired by this, Raúl Prebisch presented a paper of his own discussing the decline at the United Nations Economic Commission for Latin America and the Caribbeans second annual meeting, in Havana in May 1949. [7]

Therefore, the statistical argument about the long-term trend in terms of trade of underdeveloped countries must be attributed to Singer. However, both seem to have independently invented similar explanations, stressing that the terms of trade moved against the ‘borrowing’ (i.e., underdeveloped) and in favour of the ‘investing’ (i.e., developed) countries. However, Prebisch specifically deals with the economic cycle and highlights to a greater extent than Singer the reasons for the different behaviour of wages in developed and underdeveloped countries, and received much greater recognition for his work, in part because of efforts by industrialized countries like the United States to distance themselves from his work.

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The Origins and Interpretation of the Prebisch-Singer Thesis

John Toye and Richard Toye

The Prebisch-Singer thesis is generally taken to be the proposition that the net barter terms of trade between primary products (raw materials) and manufactures have been subject to a long-run downward trend. The publication dates of the first two works in English that expounded the thesis were nearly simultaneous. In May 1950, the English version of The

Economic Development of Latin America and Its Principal Problems, by Raúl Prebisch, appeared under the UN’s imprint. In the same month Hans Singer published an article, “The

Distribution of Gains between Investing and Borrowing Countries,” in the American

Economic Review. The continuing significance of the “Prebisch-Singer thesis” is that it implies that, barring major changes in the structure of the world economy, the gains from trade will continue to be distributed unequally (and, some would add, unfairly) between nations exporting mainly primary products and those exporting mainly manufactures.

Further, inequality of per capita income between these two types of countries will be increased by the growth of trade, rather than reduced. This could be, and has been, taken as an indicator of the need for both industrialization and tariff protection.

Prebisch and Singer identified two types of negative effects on primary producers’ terms of trade. One effect occurs because of systematically different institutional features of product and factor markets, such as cost-plus pricing and the unionization of labor in industry. Another negative influence is that of technical progress, both from the asymmetric distribution of its fruits, but also from its asymmetric impact on future demand, favorable to that of industry while unfavorable to that of agriculture. The empirical significance of the thesis has been much disputed and continues to be controversial after more than fifty years.

One recent investigation has claimed that these two effects have operated strongly in the forty

2 years after the Second World War, and that they have indeed out-weighed the positive influences on primary producers’ terms of trade arising from capital accumulation and the growth of industrial production. This particular study suggested that the economic mechanisms that disfavor primary product producers, which were specified by Prebisch and

Singer, have had significant impacts, even though the net secular decline of primary producers’ net barter terms of trade has been found to be relatively small, at around one per cent a year (Bloch and Sapsford 1998).

The Prebisch-Singer thesis contradicted a long tradition of contrary belief among economists. The nineteenth-century English political economists believed that the terms of trade of industrial manufactures relative to agricultural produce would tend to decline. This belief underpinned their pessimism about the sustainability of rapid population growth. That manufactures’ terms of trade would decline, and that rapid population growth was therefore unsustainable, were two propositions that caused political economy to be dubbed the “dismal science.” This basic framework of ideas remained remarkably stable throughout the entire century and a half {Au: Would “quarter” be more accurate?} from Thomas Malthus to the early works of John Maynard Keynes . Although, by the late 1940s, this proposition was rarely stated explicitly, when Prebisch and Singer came to reverse the classical expectation of declining terms of trade for manufactures, their conclusions were immediately controversial, and are still so regarded by some today.1

Prebisch is frequently credited with having formulated the declining terms of trade thesis before Singer did. Joseph Love (1980) claimed that “Prebisch clearly seems to have reached his position earlier than Singer.” {Au: What page of Love 1980 does this quote appear on? Note that later this appears as “had reached”; which is correct?} Other authors have held that Singer discovered the thesis independently and simultaneously. Cristobal Kay (1989, 32) wrote that

“Singer . . . reached his conclusions independently from Prebisch and around the same time

[so that] the thesis on the deterioration in the terms of trade is known in the economic literature as the ‘Prebisch-Singer thesis.’” This second view was indeed that held by Singer himself.2 Our account of the events surrounding the United Nations Economic Commission for Latin America (ECLA) conference in Havana in May 1949 reveals that Prebisch did not discover independently that the terms of trade of primary products were secularly declining, but relied wholly on the previous work of Singer. The false impression that he had made the discovery (either first or simultaneously) was the consequence of political tensions between the developed and the underdeveloped countries that had welled up at Havana, and the way in which the top administrators of the United Nations secretariat responded to those tensions.

For at the time Prebisch and Singer made their respective contributions, both were working for the UN. Prebisch was working for ECLA in Santiago de Chile and Singer was in the Department of Economic Affairs (DEA) at UN headquarters in New York. It might seem odd that the United Nations, whose role it was to find solutions to world economic problems in order to promote peace, should be the cradle of such a controversial doctrine, one that lent itself so readily both to the economic nationalism of the underdeveloped countries and to the polemics of the Cold War. Here we tell exactly how this came about, and show how, in fact, it was the UN’s own eagerness to disclaim responsibility for the doctrine that brought

Prebisch into the limelight. The consequent widespread belief that Prebisch had first made the discovery in turn invested the thesis with an enhanced significance in hemispheric politics. Moreover, the UN’s failed stratagem for distancing itself from Prebisch’s ideas had the unintended consequence of making the world organization itself appear as a nursery of

Latin American economic radicalism.

Precursors of the Prebisch-Singer Thesis

By the time of World War II, the belief had already begun to gain ground that agricultural countries had better reasons than industrial ones to be pessimistic about their economic prospects. The experience of the interwar years had appeared to demonstrate this. As the

Swedish economist Gustav Cassel noted in a League of Nations study in 1927, “From 1913, a very serious dislocation of relative prices has taken place in the exchange of goods between

Europe and the colonial world” (Love 1991, 2). The world crisis of 1929 drew further attention to such questions, particularly in Latin America. As Sanford A. Mosk noted in

1944, when reviewing trends in the continent’s economic thought, “The relatively unfavourable price position for raw materials and foodstuffs that prevailed in the interwar period, and especially during the depression of the 1930s, profoundly affected the outlook of

Latin Americans” (Whitaker 1945, 143). This perception had already led to the claim, which had become increasingly commonplace in the region, that primary product exporters were at a disadvantage in international trade, compared to exporters of industrial products (see, for example, Simonsen 1939, 15).

Primary-commodity exporting countries like Brazil and Argentina were starting to see their future economic security in terms of promoting industrialization. The war years intensified such resolve, and also raised confidence that an industrialization drive, particularly if organized by the government, could succeed.3 Charles Kindleberger (1943b,

349) bolstered this conviction, by suggesting as early as 1943 that industrialization was the path of the future, invoking Engel’s law of demand against the classical orthodoxy on the terms of trade. In that year he wrote that “inexorably . . . the terms of trade move against agricultural and raw material countries as the world’s standard of living increases (except in time of war) and as Engel’s law of consumption operates.” It is well established that another of Kindleberger’s articles (1943a), with a similar pro-industrialization message, based both

5 on the differing elasticities of demand for primary and manufactured products and on the special “institutional organisation of production in industry,” was read by Prebisch.4

Although many North American neoclassical trade theorists reacted very critically to the Prebisch-Singer thesis in the 1950s, others among them were not immune from this emerging current of opinion. Paul Samuelson has been frequently caricatured as the high priest of an over-abstract and ideological neoclassical orthodoxy.5 Yet, remarkably, in 1948 he himself asserted the tendency of the terms of trade of primary producers to decline. He wrote at the end of his famous article on the equalization of factor prices as a result of trade:

“[Now] the terms of trade are abnormally favourable to agricultural production. Without venturing on rash prophecy, one can venture scepticism that this abnormal trend of the terms of trade, counter to historical drift, will continue” (Samuelson 1948, 183–84; emphasis added). Up to this time, however, anticipation of the Prebisch-Singer thesis remained in the category of remarks en passant, or obiter dicta made during the course of the demonstration of other, quite distinct, propositions. It is nevertheless surprising that one of these stray anticipatory remarks was from the pen of the economist {Au: i.e., Samuelson?} who was later set up as the archenemy of structuralism, and that this fact has been hitherto generally overlooked.

Prebisch’s Intellectual Formation

Prebisch was born in Argentina in 1901. By the time he entered the UN, he had had a long career of public service in his home country, culminating in his tenure as head of its central bank. He was forced to resign this post in 1943, as a result of a Perónist stratagem, and went on to spend five years at the University of Buenos Aires, struggling as an isolated intellectual to write a book, titled Money and the Rhythm of Economic Activity, that was never completed or published.6 He later recalled being offered the post of executive secretary to

ECLA just after it was established in February 1948 (Love 1994, 414; Magariños 1991, 128).

He said that at this time he “emphatically refused.” His motives were that he did not want to give up his university post, and also that he doubted that an international organization would take seriously the point of view of underdeveloped countries (Magariños 1991, 128–29).

Gustavo Martínez Cabañas, a Mexican, was appointed executive secretary instead, but he only took up his post in January 1949. Thus, Eugenio Castillo, a Cuban, who was his deputy, was in effect running the commission before this date.

Later in 1948, the Argentine government barred Prebisch from teaching (Ferrer

1990). He definitively resigned his university post in November and began to consider working outside the country.7 The managing director of the IMF, Camille Gutt, and his deputy Edward M. Bernstein visited Buenos Aires in November 1948 and offered Prebisch a senior post in the Fund. This followed up an offer of a short-term assignment in Washington, made in the previous January. When in late December 1948 Gutt cabled that the terms of the offer would have to be changed, Prebisch replied that he was “quite willing to join the Fund on the basis proposed.” However, the executive board of the IMF decided not to proceed. The

U.S. government had reversed its favorable position on the appointment, because it wanted to improve relations with Peron, and Brazil also voted against Prebisch.8 On 11 March 1949

Maurice L. Parsons, director of operations at the IMF, wrote an extremely apologetic letter to

Prebisch, expressing personal regret at the Fund’s failure to secure his services.9

Simultaneously, Eugenio Castillo of ECLA asked Prebisch for help in preparing an economic survey of Latin America. He was at first unwilling to commit himself, because he

10 much preferred to accept the IMF offer. It was only on 10 January the following year {Au:

11 i.e., 1949?} that he agreed to work for ECLA as a consultant on a short-term contract. His allotted tasks were to coordinate and pull together in final form the commission’s planned

Economic Survey of Latin America, which was to be presented to the ECLA conference in

Havana in May 1949. Up to this point, he had made only one public contribution on the terms of trade issue that needs to be noted. The depression of the 1930s had created exceptionally unfavorable terms of trade for exporters who relied on agricultural products and raw materials. By 1932, export prices had fallen in Argentina to 37 percent of what they had been in 1928, and her net barter terms of trade were down to 68 from a 1928 value of 100, indicating a less precipitous fall of import prices (Thorp 1998, 105, table 4.1). Prebisch had documented this when was he was director of research at the National Bank of Argentina. He published an article in 1934 arguing that “it is a well-known fact that agricultural prices have fallen more profoundly than those of manufactured articles,” and that Argentina had to export

73 percent more than before the depression to obtain the same quantity of manufactured imports (Prebisch [1934] 1991, 341). However, Prebisch was merely noting a fact, and did not provide any theoretical analysis of it (Magariños 1991, 63–64). He saw it as a feature of depression economics, that is, as a short-run cyclical problem. He believed that the remedy was to be found in expansionist economic policies, not, as the Prebisch-Singer thesis would later imply, in major changes in the structure of the international economy.12

Prebisch attended the World Economic Conference in 1933, and The Means to

Prosperity, which Keynes published at this time, powerfully affected his hitherto orthodox thinking (Magariños 1991, 100).13 His views must also be seen in the context of the emerging current of opinion in Latin America, previously mentioned, that asserted that primary producing nations were at a particular disadvantage in relation to industrialized countries.

Before 1949, Prebisch played only a marginal role in promoting this discourse. During his years at the University of Buenos Aires, the focus of Prebisch’s research was on the international business cycle, in the tradition of Wesley Mitchell (1927) and Joseph

Schumpeter (1939), and on the prospects for the use of Keynesian countercyclical policies.14

It was in this context that he first used the terms cyclical center and periphery.15 In his

8 introductory class in 1945, he referred to the maintenance of full employment as the supreme responsibility of the United States, as “the monetary and economic center of the world,” although he did not use the term periphery in this particular lecture (Prebisch 1945, 529). In an intervention in a meeting of American central bankers in 1946, he used both terms together, to argue that the responsibilities of the “cyclical center” {Au: The “cyclical center” meaning or being what? The major economic powers such as the US and Britain whose economies are subject to economic cycles? Revise?} had been too much emphasized, and that the “countries of the periphery” themselves must resolve disequilibria with internal causes (Prebisch 1946, 163–

64). In 1948, he reverted to his previous (1945) theme that the main responsibility for carrying out a countercyclical investment policy rested with the cyclical centers (Prebisch

1948b, 161).

A glimpse of Prebisch’s overall research program at this time can be found in a letter to Eugenio Gudin.

I believe that the cycle is the typical form of growth of the capitalist economy

and that this is subject to certain laws of motion, very distinct from the laws of

equilibrium. In these laws of motion the disparity between the period of the

productive process and the period of the circulation of the incomes therefrom

holds a fundamental importance. So I have tried to introduce systematically

the concept of time into economic theory and also that of space, which in the

ultimate instance resolves itself into a problem of time. It is precisely the

concept of space that has led me to study the movement in the center and the

periphery, not with the aim of establishing formal distinctions but to point out

transcendent functional differences.16

He also believed that, more generally, economic theory required “renovation” in order to bring it nearer to reality.17

Love has stated, on the evidence of a transcript of lectures given by Prebisch in 1948, that “Prebisch implicitly already had his opinions about the direction of Latin America’s long-range terms of trade, since he had argued in the classroom in 1948 that the benefits of technological progress were absorbed by the center.” Furthermore, “Prebisch had formulated the elements of his thesis before the appearance, in 1949, of the empirical base on which the thesis rested in its first published form—the UN study, Relative Prices” (Love 1980, 57, 65;

1994, 417–18) {Au: The quote beginning “Prebisch implicitly” is on p. 57 of Love 1980? What’s the function of the citation to p. 65? The quote beginning “Prebisch had formulated” is on pp. 417-18 of Love 1994?}. Part of

Prebisch’s 1948 lectures did discuss the case where one country (call it A) experiences technical progress in some of its economic activities (manufacturing) and then trades with another country (B) that does not experience technical progress. Prebisch argued that country

A can retain for itself the fruit of technical progress, and specifically asserted that, historically, both Great Britain and the United States had done so. His argument about the conditions under which this happened was, however, confused, and in the course of it he did not actually use the terms center and periphery (Prebisch 1948a, 87–98). The argument is not sufficiently well specified to permit the claim that it could have only one logical implication for the net barter terms of trade of country B. In the context, one would certainly not have been surprised if Prebisch had asserted that country B’s terms of trade would continuously decline, but the crucial point is that he did not do so.

Before he became aware of the UN data, Prebisch never explicitly stated the thesis that Latin America’s terms of trade had been subject to long-term decline, as opposed to the sharp short-term decline that he noted in 1934.18 Nor does Love claim that he did; he claims only that “he implicitly already had his opinions.” Prebisch had clearly by 1948 arrived at the

10 idea that the fruits of technical progress could be distributed unequally, an idea that he would later refine and integrate into his explanation of the secular decline phenomenon. But his chief concern at the time was still the study of the business cycle, as the typical form of growth of the capitalist economy; of the secular decline phenomenon itself, he remained unaware. The following year, however, he publicly stated that secular decline was taking place. To understand how this happened, why priority of discovery was subsequently claimed for Prebisch and how this priority claim then affected the meaning that contemporaries attached to the thesis, it is necessary to trace a complex sequence of political events and administrative decisions. We start with Singer’s arrival at the United Nations.

Singer Starts Work on the Terms of Trade

Singer, the younger of the two, came to the UN via a rather different route than Prebisch, although his story also included escape from persecution. He was born in the German

Rhineland in 1910, and studied under Joseph Schumpeter in his Bonn period. After the Nazi seizure of power in 1933, Schumpeter used his contacts with Keynes to place Singer in a scholarship to undertake a Ph.D., on secular trends in land values, at Cambridge. In 1940, the

Nazis put Singer on their “Special Wanted List GB,” to be arrested by the Gestapo in the event of a German invasion of Britain (Schellenberg 2000, 242). Singer’s doctoral work led him to wartime employment in the Ministry of Town and Country Planning, but he intended to return to academia after the war. However, David Owen, the head of the UN DEA, invited

Singer to join the United Nations. In 1946, Owen sent a formal request to this effect to

Glasgow University, Singer’s employer, and Singer quite reluctantly agreed to go on a two- year leave of absence, one that ultimately turned into a twenty-two-year period of UN service.19

He arrived in New York in April 1947, knowing there only Michal Kalecki and Sidney

Dell, while Owen was absent at the international trade negotiations in Geneva. He found himself unrestricted in his choice of research subject and immediately began to work on trade problems, although his previous economic background had not been specifically related to trade issues. Singer later recalled:

A strong influence among the early colleagues in the United Nations was that of Folke

Hilgerdt, the Swedish economist who had already shaped the League of Nations

publications on the Network of World Trade. Working with him was Carl Major

Wright, a Danish economist who was particularly interested in the relationship of

primary commodity prices to trade cycles and economic growth in industrial countries.

Two other staff members in the trade section were Walter Chudson (United States) and

Percy Judd (Australia), the latter being very expert in the economics and details of

commodity agreements. Discussions with these four must have drawn my attention

quickly to problems of terms of trade. (Singer 1984, 280)

The official stimulus for this work was the report of first session of the UN Sub-Commission on Economic Development. The members of the subcommission were elected on 5 June

1947. Considering problems of economic development in underdeveloped countries, the report of its first session contained the following comment:

The recent rise in the prices of capital goods and transport services has made the task of

economic development particularly difficult in the case of the under-developed and the

least developed countries. The Sub-Commission therefore considers it important that a

careful study be made of the prices of capital goods and of the relative trends of such

prices and of prices of primary products, so that it may be in a position to make

appropriate recommendations concerning the problem. (United Nations 1949b, 1)

As a result, the UN secretariat began to study the terms of trade. The task was to address a short-term problem. The original objective was not to discover the historical drift of the terms of trade, or what had happened over the long run. The problem was that, during the war, a number of underdeveloped countries had run export surpluses that they subsequently wished to use to import capital goods for development. In the interval, the prices of capital goods had risen, so the export surpluses were worth less in terms of imports than they had been when they were earned. This provoked the question of whether underdeveloped countries’ terms of trade could be expected to continue to deteriorate in this way, and the implication of this for their economic development. This was the official purpose of the research on which Singer embarked.

Singer worked under the general guidance of Folke Hilgerdt, who, as director of the

UN Statistical Office, provided a key link between its work and the statistical work of the former League of Nations on trade. Hilgerdt was the principal author of a series of studies on commerce and commercial policy, which the Economic, Financial, and Transit Department of the league issued as part of its program of studies on postwar problems. The final volume,

Industrialization and Foreign Trade (1945), included an appendix on the statistics of international trade between 1871 and 1938. Appendix tables 7 and 8, when read in conjunction, show that between those dates the price index of manufactured articles fell significantly less than that of primary products. However, nothing was made of this in the summary of findings of the report. The statistical base for this study was available for

Singer’s research (League of Nations 1945, 154–67, 116–21). Moreover, Hilgerdt expressed puzzlement to Singer over the behavior of the British terms of trade data (Singer 1991, 9).

In his Ph.D. dissertation, Singer had studied problems of the very long run. Unlike

Hilgerdt and Wright, he was not interested in cyclical effects on the terms of trade produced by booms and slumps in industrial countries. He, being more influenced by Gunnar Myrdal, focused on structural differences between industrial and nonindustrial countries, and their long-term effect on the evolution of the terms of trade between them. His overarching concern was that of distributive justice. His question was not whether gains from trade existed, which he did not doubt, but the “fairness” of the distribution of those gains between the countries that traded. If there were power differences between countries—disparities in market power or in technological power—did trade, and changes in the terms on which it was conducted, become a mechanism of “un-equalizing” growth between countries globally? His interest in the commodity terms of trade was thus a derivative of the larger question of worldwide un-equalizing growth. That question itself was framed by the historical context of the process of decolonization, as in the transition of India to independence in 1947. Were the colonial powers, he wondered, willing to relinquish control of their colonies only because the international economic system would now spontaneously generate the same world division of labor that had previously been enforced militarily and politically?

The results of Singer’s research were presented in a UN document titled Post-war {Au:

This is “Post War” in the title in the reference list; which is correct? } Price Relations between Under- developed and Industrialized Countries that appeared on 23 February 1949 (United Nations

1949b).20 This was an advance version of the terms of trade study, subject to final checking of the data, which was made available to the Sub-Commission on Economic Development.

The document was retitled Relative Prices of Exports and Imports of Under-developed

Countries for its general circulation in late 1949, with the subtitle A Study of Post-war Terms of Trade between Under-developed and Industrialized Countries. It was a remarkable piece of work. It included an attempt to see what historical statistics indicated about the long-term

14 trend in the agriculture versus {Au: Why is this emphasized here?} manufactures terms of trade, although its origin lay in developing countries’ concern with future relative prices as industrialization drives gathered pace. It showed that the terms of trade of underdeveloped countries had improved between 1938 and 1946–48. This recent improvement was, however, placed in a much longer historical perspective, showing that between 1876 and 1948 they had seriously deteriorated. The historical section contained the report’s most dramatic finding. It was that “from the latter part of the nineteenth century to the eve of the Second World War, a period of well over half a century, there was a secular downward trend in the prices of primary goods relative to the prices of manufactured goods” (United Nations 1949c, 7).

Singer recalled that he and Hilgerdt together spotted this trend in the data.21 The cumulative effect of secular decline was calculated to be substantial.

By 1938, the relative prices of primary goods had deteriorated by about 50 points, or

one-third, since (the 1870s) and by about 40 points, somewhat less than 30 per cent,

since 1913. (23)

The statistical evidence for this downward trend was given in table 5 of the report, of which a simplified version is presented in our table 1. {Au: Note that the third column of the table is headed

“board of trade index,” rather than “terms of trade index”; is that correct?}

What was the significance of this secular decline? The report was careful not to suggest that if a country’s terms of trade improved, its welfare necessarily increased. It might or might not, depending on the circumstances in which the rise in export prices takes place. If the price rise was a result of a failure of supply, it might not leave the exporting country better off. Nevertheless, in general, an improvement in terms of trade would increase the availability of resources for development. A secular decline for underdeveloped countries

15 meant a loss of capacity to absorb foreign financing for development, and thus to respond to the “added incentive towards industrialization” (United Nations 1949c, 16, 127). A further, far more controversial, implication was also drawn, that “the under-developed (had) {Au: Is

“had” your insertion?} helped to maintain . . . a rising standard of living in the industrialized countries, without receiving, in the price of their own products, a corresponding equivalent contribution towards their own standards of living” (126). This carried a clear message of historical injustice, and this message was, as we shall see, very shortly to be rejected by the subcommission.22

Singer had already announced this message in a seminar that he gave to the graduate faculty of the New School of Social Research, New York, on 23 December 1948. There he said that “Marxist analysis, in which rising standards of living for given groups and sections are somehow held to be compatible with general deterioration and impoverishment, is much truer for the international scene than it is for the domestic.” He attributed the growing inequality in the distribution of world income to the change in price relations between primary materials and manufactured goods (Singer 1949, 2–3).23

How Prebisch Made Use of the Singer Study

The creation of ECLA had resulted from “an act of audacity” by Hernán Santa Cruz, the

Chilean representative on the UN Economic and Social Council (ECOSOC) (Magariños

1991, 136). He felt that Latin America was being unjustly ignored by the great powers, and conceived the idea of a UN commission to deal with the region’s economic and social problems, on the model of the UN Economic Commission for Europe. Receiving no orders to the contrary from his government, he took the initiative and submitted his proposal as an item for the UN ECOSOC agenda (Santa Cruz 1995). On 1 August 1947, he formally introduced his resolution to a meeting of ECOSOC. Although the United States and other industrial

16 countries much disliked the idea, their opposition was not sufficiently determined, and in early 1948 ECLA duly came into being. 24

One of the justifications for establishing ECLA was to provide better information about economic conditions in the region as a whole.25 Originally, it was assumed that this could be achieved merely by collating statistics submitted by the individual Latin American governments. When most governments failed to provide the required figures, the commission realized that it would have to collect them itself, for the first Economic Survey of Latin

America, which was due to be presented to the ECLA conference in Havana in May 1949.

Additionally, the first ECLA conference, in June 1948, had passed a resolution asking for the preparation of “a study of the movements of import and export prices, the determining factors of such movements, and the consequences thereof on the balance of payments.”26 By the autumn of 1948 it became clear that these tasks were beyond the unaided capacity of the

ECLA office in Santiago.27 The weak statistical abilities of the fledgling commission thus form an important background factor in the preparations for Havana.

Accordingly, Louis Shapiro, a statistician in the Department of Economic Affairs, was sent from the UN office in New York on deputation to Santiago for three months between December 1948 and March 1949, in order to organize these tasks. It was during this mission that he received from Hans Singer the provisional draft of his study on the terms of trade. From Santiago, Shapiro wrote Singer a letter of acknowledgment dated 5 January

Thank you most kindly for your letter of 17th December 1948, and for the enclosed

provisional draft of the General Part of your study on the Terms of Trade. I have also

received via the pouch drafts of the country sections of Terms of Trade for which many

thanks. I have read quite carefully the General Part and find it most admirable. Your note

on the methodology and the statistical “caveats” are especially noteworthy. I have passed

this on to Mr Castillo {Au: Re-identify Castillo here, or perhaps in the footnote? It’s been a while since he

was identified.} who also agrees that this is an excellent piece of work. ECLA plans to

include a substantial statistical section on the terms of trade in the forthcoming Survey of

Latin America and will, with your permission and clearance, rely heavily on your data.28

The International Monetary Fund (IMF) had also promised to send ECLA a study on the terms of trade. Shapiro reported to Singer that he had not been encouraged by its progress and content when he had visited Washington, but indicated that ECLA would study carefully the IMF work in conjunction with Singer’s own, and that Castillo was “in complete agreement with this procedure.” Shapiro also asked to be sent revised drafts of the “general part” and of the Latin American country sections as they were completed.29

A version of the IMF study was available by March 1949, although it was not published as an IMF staff paper until the following year. It dealt mainly with the period 1938 to 1946 and included no data at all from before 1925. It found (as indeed had Singer’s study; see table 1 above) that the terms of trade of Latin America as a whole had improved between

1938 and 1946. {Au: Is your reference to your table 1 appropriate, since that table deals with the UK and not

Latin America?} The IMF study made no comment, however, on the UN study’s thesis of secular decline since the 1870s (Ahumada and Nataf 1950). Nevertheless, the IMF study left a larger imprint on the Economic Survey of Latin America than did Singer’s study. In the event, the survey’s one mention of secular decline in the terms of trade of primary producers was extremely brief (United Nations 1949a, xix, 216–20), and almost certainly inserted after

Prebisch had completed and circulated the document that became The Economic

Development of Latin America (Prebisch 1950). Thus Singer’s work did not create any real impact in ECLA until it had reached the hands of Prebisch himself.

How did it get there? The second route by which the Singer study was transmitted to

Latin America was via Martínez {Au: In subsequent spellings, the “i” is has no accent mark; which is correct?} Cabañas. Before arriving at ECLA, Prebisch had gone to Mexico to deliver lectures at the Universidad Nacional Autónoma de México, arriving in mid-February.30 In late

February or early March, Francisco Coire, head of the Latin American section of the DEA in

New York, sent him both the Singer study and the IMF study.31 On 5 March, Martinez

Cabañas wrote from New York to Prebisch in Mexico drawing both these works to his attention.

Our friend Coire has informed me that he has already sent you two studies on

questions relating to foreign trade: one drawn up by Sr. Singer which is to be

found under the number E/CN.1/Sub3/W5 with the title Post-war Price

Relations in the Trade between Undeveloped and Industrialised Countries . . .

the other study is from the International Fund and refers more concretely to

the theme of Foreign Trade.

He reported that the conclusions of the Singer study had been “much debated.” He pointed out to Prebisch that both studies had a bearing on a problem—the terms of trade—which was

“one of the most important of those that will be treated in the general study that we are going to present at the Havana Conference.” He repeated to Prebisch that he (i.e., Prebisch) would have the final responsibility for drawing up that report.32 Thus it was the Martinez Cabañas visit to New York, rather than the early version seen and favorably commented upon by

Castillo, that made the effective link from Singer to Prebisch.

Prebisch must have arrived in Santiago soon after 9 March, when he had received a telegram from Castillo asking him to come immediately.33 This was shortly after Shapiro’s

19 return to New York. It seems that before long Prebisch turned his mind to the question of the terms of trade, as one would have expected, given the strong urgings of Martinez Cabañas.

Then, on 1 April 1949, Prebisch sent a request, through Castillo, to Shapiro in New York for three types of additional data—additional, that is, to the data contained in United Nations

1949b, which it seems clear that Prebisch had now read.34 Castillo did not explain the reasons behind Prebisch’s request, but the wish for data starting in 1873, the year the British Great

Depression began, suggests an interest in the respective experience of the United Kingdom and the United States as “cyclical centers,” a problem he returned to in the Economic Survey of Latin America in the following year (United Nations 1951).35 Prebisch was also anxious to see an early draft of Kalecki’s study on inflation and Coire’s draft of part 2 of the survey.36

Celso Furtado, an ECLA staff member, later recalled how Prebisch initially worked very much on his own, and then a month after his arrival (presumably in mid-April), circulated within ECLA a first draft of an introduction to the Economic Survey. Furtado described this draft as a digest (Fr. mouture) of the papers that Prebisch had brought with him from Buenos Aires. The subjects covered were disequilibria in the balance of payments, the declining U.S. import coefficient, capital controls, low saving leading to domestic inflation, and the limits of industrialization. Thus, the first draft of Prebisch’s introduction did not cover the terms of trade, according to Furtado’s account of it.37 He did employ his “center- periphery” terminology, and acknowledged the importance of industrialization. It seemed to

Furtado that “this text contained extremely interesting ideas, but the author placed himself on the defensive.” {Au: On what page of Furtado 1987 does this quotation appear?}

Furtado (1987, 64–66) recalled as follows:

We had hardly started to discuss the document, when it was suddenly discarded, without

any explanation. Prebisch’s new text was not circulated for discussion. I suppose that it

was ready on the eve of the Havana Conference, because it was sent to us typewritten, in

its final version, shortly before we left. It was a much longer text including tables and

charts. The tone had changed, now it was a manifesto urging Latin American countries to

launch into industrialisation. One could discover there a definite taste for a polished and

polemical style. {Au: Does this passage really span pp. 64-66?}

This account suggests that mid-April 1949 was the decisive point in Prebisch’s drafting process. At this point, however, Prebisch had not had any reply to Castillo’s data requests of

1 April. The reply was not sent until 27 April, and it was the third channel of transmission of

Singer’s study. Shapiro scribbled the words “in Singer Paper” over Prebisch’s second request, and this was the only one he could fulfill (apart from the U.S. national income figures for 1910–29).38 However, it is almost certain that this data arrived too late to have any influence on Prebisch’s introduction. There are no traces of it in the finished product, which, as far as the terms of trade are concerned, contains only the U.K. part of the data in table 5 of

United Nations 1949b, slightly reformulated. Prebisch spliced one of the U.K. series down to

1913 with another of the U.K. series thereafter, and put them on a base of 1876–80 = 100, instead of 1938 = 100 as originally (Spraos 1980, 107; 107 n. 2; 111–12, table 1 and the single-asterisk note).

If it was not the arrival of additional information, then, what was it that stimulated

Prebisch to abandon his original draft? This remains unclear. Around this time Prebisch received Coire’s draft of part 2 of the Economic Survey. Only one chapter of this was used in the finished product (United Nations 1949a, 247 n. 1), and is now apparently lost, but from

Coire’s remarks to Prebisch it seems clear that it had a strong pro-industrialization message and had a polemical tone in places.39 This, or perhaps further reflection on the implications of the Singer study, may have given Prebisch extra inspiration.

Prebisch dealt with the whole issue of secular decline extremely briefly in his new text. The introduction that summarizes its argument does not even mention the terms of trade.

The subject is then handled in the first three pages of chapter 2. Prebisch’s only comment on the terms of trade statistics, albeit one that was to resonate through the subsequent critical debate, was that “it is regrettable that the price indexes do not reflect the differences in quality of finished products” (Prebisch 1950, 8–10) {Au: We could not find this quotation in the page range indicated; can you double-check the page citation? In any event, it seems unlikely that the quotation would span 3 pages.}. This short but crucial section powerfully reinforced his other main arguments— that the international division of labor was an “out-dated schema,” and that “industrialization is the only means by which the Latin-American countries may fully obtain the advantages of technical progress” (Prebisch 1950, 1, 16).

Anonymity of Authorship in the UN

As has been seen, it is not possible to sustain the claim that Prebisch was the first to discover the phenomenon of the secular decline in the terms of trade of primary producers. On the ground that Prebisch’s contribution was complete by May 1949, while Singer’s paper was not presented to the American Economic Association meeting until December 1949, Love (1980) concluded that “Prebisch had reached his position earlier than Singer.” {Au: Which page in Love

1980 does this quotation appear on? Early in your paper, this appeared as “seems to have reached,” rather than “had reached”; which is correct?} This was faulty reasoning, given Singer’s authorship of the UN study, something of which Love does not seem to have been aware. John Spraos has commented on the general lack of awareness of Singer’s authorship, and correctly attributed it to the UN rule

40 of anonymity of authorship of its publications. {Au: or “the UN rule that authors of its publications remain anonymous,” to avoid the triple succession of “of’s”?} Anonymity is indeed the general fate of the authors of UN publications.41 Since the

UN has employed many distinguished economists, it has become a standard task for their

22 biographers to try to disentangle those sections of UN publications that they authored.42 What is odd in the present case is not that Singer’s authorship should have been invisible, but that

Prebisch’s should have been visible. What was originally intended to be the introduction to the ECLA survey for 1948 eventually appeared under Prebisch’s name as The Economic

Development of Latin America and Its Principal Problems. Had the piece been retained as the introduction to the survey, its author would, like Singer, have remained anonymous. In the event, however, it appeared as a separate UN publication, but with the author personally identified. The UN rule of anonymity was applied to Singer and Prebisch asymmetrically.

This came about in the following way.

The Sub-Commission on Economic Development held its third session, from 21

March to 11 April 1949. It discussed Singer’s study, Post-War Price Relations. {Au: This appears as “Post War” [no hyphen] in references; which is correct?} It accepted, somewhat grudgingly, the statistical evidence, but rejected the lessons that had been drawn from it. Its report said that

the Sub-Commission is constrained to point out that the study under review contains

certain conclusions in regard to the price relationship between developed and under-

developed countries which, in its opinion, do not represent a correct picture of the

actual position. As a result of the discussion, the Sub-Commission agreed that while the

document contained an adequate study of relative price trends of primary commodities

and manufactured goods, it was necessary to broaden the scope of the study into that of

the terms of trade between under-developed and industrialized countries, including

prices and quantities traded, and in extending it, to cover the most recent movements in

these fields. (United Nations 1949d, 12) {Au: We could not find this passage on p. 12 of UN 1949d

(formerly UN 1949b); can you double-check the page citation?}

The most controversial of the suggestions that Singer had made in interpreting his findings, was, of course, that underdeveloped countries were helping to maintain a rising standard of living in industrialized countries without receiving any equivalent compensation. This was potentially politically explosive. While it appealed to the underdeveloped countries, it appealed not at all to the developed. It seems plausible to suggest that the subcommission used the (acknowledged) fact that the picture presented by the study was in some ways incomplete as an excuse for disclaiming its radical conclusions.

It is probable, given the slow rate of circulation of UN documents, that Prebisch was not aware of the subcommission’s report when he wrote. Be that as it may, in the final version of his introduction, he repeated the implication to which it seems the subcommission had objected by quoting the relevant passage from Singer’s study (Prebisch

1950, 10 n. 3). Worse, by using his terminology of center and periphery, he further dramatized it:

The enormous benefits that derive from increased productivity have not

reached the periphery in a measure comparable to that obtained by the peoples

of the great industrial countries. Hence, the outstanding differences between

the standards of living of the masses of the former and the latter and the

manifest discrepancies between their respective abilities to accumulate capital.

When he presented this version in Havana, it received the acclaim of the delegates of the

Latin American countries (Magariños 1991, 130). However, what was music to the ears of the delegates of Latin American countries would have displeased the industrial countries,

24 especially the United States. This fact appears to have caused some consternation among UN high officials in New York, who were anxious to distance the UN from Prebisch’s introduction. Accordingly, after the Havana conference was over, it was submitted to the secretary-general as an “essay” commissioned in the process of “fostering research.”43 It was then proposed to the UN publications committee to break the rule that authors of UN publications should not be identified by name. This course of action was designed to ensure that Prebisch took “credit (and responsibility) for the report . . . in order to emphasize that the views expressed . . . were those of the author and not those of any UN organ.” The proposal was presented “as an exceptional one, unlikely to recur but in the present circumstances very desirable.”44 Prebisch’s suspicion that no international organization would feel comfortable with the viewpoint of the underdeveloped countries was thus confirmed.

The UN’s tactic backfired. The Spanish original had been issued in May 1949, but, as

Furtado has noted, it was some time before both this, and the English translation, were eventually published in New York by the United Nations, being circulated, as he put it, “with the slowness characteristic of official documents” (Furtado 1987, 80). Meanwhile, however, a Portuguese translation of the Spanish original, undertaken at Furtado’s own urging, was published in Brazil in September 1949. It is at this point that the history of Prebisch’s enormous influence began, spreading out from Brazil eventually to become worldwide.45 The publication of the English version of The Economic Development of Latin America and Its

Principal Problems merely strengthened that effect in North America and Europe. In fact, this was how Singer now discovered the existence of Prebisch. “I believe it was between presenting my paper to the AEA in December 1949 and its publication in the summer of 1950 that I discovered that Raul Prebisch, my colleague at the UN, had developed very similar opinions and had also put the problem of poor terms of trade for primary products into the centre of thinking of the Economic Commission for Latin America” (Singer 1997, 141). The

25 main result of identifying the author was that the polished and polemical Prebisch rapidly gained greater recognition in Europe and North America as a “UN economist” than did the more understated Singer, who had published under his own name only in academic journals.

Prebisch’s Contribution: The Economic Mechanics of Secular Decline

Given the evidence outlined above, it seems clear that, if the Prebisch-Singer thesis is defined as the statement of the phenomenon of secular decline in the terms of trade of primary products, and that if anyone can be said to have anticipated Singer, it would be Kindleberger or Samuelson, rather than Prebisch. After all, both of them, unlike Prebisch, made explicit published remarks on the issue. Prebisch, however, made a contribution distinct from that made by Singer. This was to advance a cyclical-cum-structural mechanism to explain the decline, one more complicated than the purely structural interpretation of Singer.

Unlike the 1948 lectures, which singled out restrictions on labor immigration from countries not experiencing technical progress (type B), the new mechanism was based on institutional factors that permitted the retention of productivity gains by labor in countries where there was technical progress (type A). Prebisch (1950, 12) further argued, characteristically, that “the existence of this phenomenon cannot be understood, except in relation to trade cycles and the way in which they occur in the centres and at the periphery, since the cycle is the characteristic form of growth of the capitalist economy, and increased productivity is one of the main factors of that growth.” He suggested that, even though in the boom primary product prices typically rise faster than industrial prices, deterioration in the commodity terms of trade of the periphery is nevertheless possible, if, in the slump, primary commodity prices decline steeply enough, compared with industrial prices. The explanation offered of why primary product prices declined severely in the slump compared with industrial prices was “the well-known resistance to a lowering of wages” at the center. By

26 contrast, “the characteristic lack of organization among the workers employed in primary production prevents them from obtaining wage increases comparable to those of the industrial countries, and from maintaining the increases to the same extent” (13).46

However, instead of leaving matters there, Prebisch also made another argument that seemed to undermine his first explanation. He identified industrial production and primary production with groups of countries, described as “center” and “periphery.” He then argued that the differing strength of organized labor at the center and the periphery was not the crux of the matter, because even if workers at the periphery were able to resist wage decreases as strongly as industrial workers were, adjustment would take place by another process. The high prices of primary products would force a contraction of industrial production, which in turn would cut the demand for primary products. Recalling the experience of the Great

Depression, {Au: the Great Depression of the 1930s, as opposed to the British Great Depression that began in

1873?} Prebisch commented that “the forced readjustment of costs of primary production during the world crisis illustrates the intensity that this movement can attain” (13–14). This was the germ of the idea, later taken up by dependency and world system theorists, that the

“center” was able to drain resources away from the “periphery,” regardless of their {Au: “their” meaning the countries at the periphery?} respective states of labor organization.

As has been seen, Prebisch had arrived at his explanation in April and May 1949.

Prebisch and Singer probably arrived at their respective explanations of primary commodity terms of trade decline independently, although again Singer was first. Singer had presented his explanation, in embryonic form, in a paper originally presented in December 1948 and published in March 1949, then more fully in another paper to the American Economic

Association conference in December 1949.47 This further paper explored factors that had

“reduced the benefits to under-developed countries of foreign trade-cum-investment based on export specialization in food and raw materials.” The first of these was that the secondary and

27 cumulative effects of foreign export enclave investment were felt in the investing country, not the country where the investment was made. The second was that countries were

“diverted” into types of economic activity offering less scope for technical progress and internal and external economies. {Au: In the preceding sentence, what offered less scope for technical progress and internal and external economies: the types of economic activity, or the fact that countries were diverted into types of economic activity? (If the latter, a comma should go after “activity.”)} The third factor, “perhaps of even greater importance,” was the movement of the terms of trade. Singer, while conceding that the statistics in Relative Prices (United Nations 1949c) were open to doubt and objection in detail, regarded the general story that they told as “unmistakable” (Singer

[1950] 1975, 43–57). {Au: What page does the word “unmistakable” appear on? (I take it the text you are using is the 1975 version, since the 1950 version appears on pp. 473–85.)} Singer’s proposed mechanism of secular decline was less complicated and based less on business cycles than Prebisch’s. It was an asymmetric process whereby (1) the gains from technical progress in manufacturing are distributed to the producers in the form of higher incomes, while (2) the smaller gains from technical progress in primary commodity production are distributed to the consumers in the form of lower prices. On this basis, the industrialized countries have the best of both worlds, as producers of manufactures and as consumers of primary products. The underdeveloped countries have the worst of both worlds, as consumers of manufactures and as producers of primary products. Thus the benefits of foreign trade are shared unequally, and traditional foreign investment in plantations and mines did, after all, “form part of a system of ‘economic imperialism’ and of ‘exploitation,’” albeit not in the classical Marxist or Leninist sense (49–51).

Prebisch’s interpretation of the secular decline, although possessed of its own ambiguities, gave an illusion of greater concreteness than Singer’s. Instead of two sets of countries defined by the types of products that they exported and imported, Prebisch’s concept of center and periphery seemed to have a spatial, even geographical, reality to it. His

28 introduction of economic cycles into the mechanism allowed the short and medium term to be integrated with the long term, and countered the static quality of the purely structural approach. In general, this more complex schema opened the door to broader analyses of the economic conjuncture and policy recommendations on the issues of immediate concern to

Latin American economists. Although fertile in these ways, Prebisch’s interpretation itself was still very succinct, perhaps reflecting the novelty of the secular decline thesis even to him, and it therefore remained obscure on a number of crucial questions (Cardoso [1980]

1984, 27, 29–30; Furtado 1987, 66–67). It was also quite different from the theoretical model that Prebisch published in 1959, which resembled the standard neoclassical model of a small open economy, but with the exception of a small number of special assumptions (Prebisch

1959).48 The ambiguities notwithstanding, Prebisch’s “heresies,” boldly laid out “a la

Bernard Shaw” {Au: Is “a la Bernard Shaw” a quotation from Prebisch, or does it represent something that he was known to have said or thought? If the former, what is its source, and does the “a” not have an accent mark over it?} (as he put it), proved as appealing to the underdeveloped countries of Latin America as they were anathema to UN headquarters in New York (Magariños 1991, 129).

Summary and Concluding Reflections

The United Nations ECLA had been born against the wishes of the United States. In preparing for its first major conference it lacked the statistical infrastructure to discharge one of its primary tasks, to survey the common economic and technical problems of the region.

This provided the cue for statistical help from UN headquarters in New York. During the preparations for the conference, Singer’s work was transmitted to ECLA by three different channels between December 1948 and April 1949. An early version arrived in December

1948, but does not seem to have been followed up by Eugenio Castillo. The second transfer was via Martinez Cabañas and Coire to Prebisch before the latter arrived in Santiago, and this was the critical route. At Martinez Cabañas’s prompting, Prebisch “latched onto the terms of

29 trade idea,” in the words of Victor Urquidi,49 and meshed it with his own framework of thought in April/May 1949. The additional data he requested from New York (the third route) arrived too late to be useful. The document that became The Economic Development of Latin

America and Its Principal Problems thus contained—as far as the terms of trade was concerned—merely a small part of the original UN study data, minimally reformulated.

Thus the conventional view, that Prebisch achieved priority over Singer in stating the thesis of secularly declining terms of trade for primary producers, is not based on an accurate chronology of ideas. The near simultaneity of the dates of the first English publications of the thesis by Prebisch and Singer cannot be relied upon as a means of dating the two men’s contributions. The key events did not take place in 1950 at all, but in 1948 and 1949 in the run-up to and the aftermath of the ECLA conference at Havana. Prebisch’s presentation to the Havana conference was a resounding success, turning him into a champion of the interests of the underdeveloped countries. Senior UN officials attempted to distance themselves from Prebisch by identifying him as the author of the views to which the developed countries took exception. In so doing, they unwittingly heightened his prestige.

The common belief that the thesis of the deterioration of the terms of trade was first picked up from Latin America by North American and European scholars during the 1950s is therefore inaccurate (Kay 1989, 8). What happened in the 1950s was in fact the transmission of the thesis back again. The more detailed chronology of events given here has also indicated a further unsatisfactory aspect of the conventional wisdom, namely, the general lack of precision about what constitutes the Prebisch-Singer thesis. Is it to be understood simply as a claim about a long-run downward trend in the terms of trade of primary producers, that is to say, the statistical phenomenon of secular decline? Or, is it the delineation of an economic mechanism that could account for a long-run secular decline? Or is it both? If the thesis is the empirical fact of a secular decline, it is clear that Singer had

30 priority, and Prebisch’s work was wholly derivative. If it is the specification of a theoretical mechanism to account for a secular decline, Singer also had priority, but Prebisch’s contribution was independent—and also more elaborate, if convoluted.

In terms of the dissemination of these ideas, however, it is clear that Singer benefited from the existence of Prebisch as much as Prebisch had previously benefited from the existence of Singer. Let us ask what would have happened to the ideas of each, had the other been absent. If Singer had not overcome his personal reluctance to join the UN, Prebisch may well not have integrated declining terms of trade into his text. However, if Prebisch had gone to work for the IMF and not ECLA, the impact of Singer’s study in Latin America might have amounted to no more than the very faint mark that it left on the 1948 Economic Survey.

From the viewpoint of publicity and political repercussions, therefore, it was indeed the

“Prebisch-Singer thesis.”

The thesis promptly entered the Cold War battlefield. The initial U.S. response was an attempt to close down ECLA in 1951.50 Having failed, successive administrations slowly learned that Prebisch was in fact more pragmatic than he was polemical. By 1961, President

Kennedy proposed to the UN a “development decade” and launched the Alliance for Progress in the hope of a more constructive U.S. relationship with Latin America. Mr. M. V.

Lavrichenko, deputy head of the Department of the USSR Ministry of Foreign Affairs, argued in the Second Committee of the General Assembly, that ECOSOC “should devote more of its attention to such urgent economic problems as the prevention of the economic plundering by the imperialist Powers of the countries of Asia, Africa and Latin America.” In support of this claim, he reminded his listeners that “a United Nations survey published in

1949 concluded that, in the course of almost half a century, there had been a steady drop in the prices of raw materials in comparison with those of industrial goods.”51 Thus he demonstrated the long-lasting controversial power of the thesis that Prebisch and Singer had

31 between them articulated, and that the United Nations had attempted to bury, yet inadvertently had ended up making world famous.

Correspondence may be addressed to John Toye, Department of Economics, University of Oxford , Manor Road, Oxford OX1 3UQ, United Kingdom; e- mail: [email protected] . The authors are grateful for the generous assistance they have received from Jose {Au: No accent over the “e”?}-Antonio Ocampo and the staff of ECLAC and ILPES in Santiago; from Aurora Tang-Keko at the UN archive in New

York; and from the United Nations Intellectual History Project and its directors, Louis

Emmerij, Richard Jolly , and Tom Weiss. We especially thank Sra. Adela Prebisch for permission to quote from the Prebisch papers in her possession. Valuable comments and materials were received from James Boughton, Edgar J. Dosman, Valpy FitzGerald, James

N. Miller, John Shaw, and two anonymous referees. Translations are the authors’ own, and all errors remain their sole responsibility.

1. For an extended discussion, see Toye 2000, chap. 1. When criticizing the views of

Prebisch and Singer, Jacob Viner (1952, 114) and Gottfried Haberler (1988, 39–40) both made reference to this doctrine, although without endorsing it themselves. {Au: Please double- check the publication date of Haberler; the reference list says 1998.} 2. Singer recalled, “My discovery that Prebisch thought along lines that were so congenial to me came after I had drafted my paper.” This suggests a belief that Prebisch had arrived at both the secular decline thesis and an economic explanation of it independently.

John Toye and Richard Toye, interview with Singer, 12 May 2000.

3. Central European thinkers had advocated state-led industrialization in the 1920s on the grounds of unequal exchange between groups of nations at the center and the periphery of the world economy. This idea, particularly as used by Werner Sombart, was introduced to

Latin America by Ernest Friedrich Wagermann in his Evolucion y ritmo de la economia mundial (1933). See FitzGerald 1990, 94–95. {Au: FitzGerald 1990 not in reference list; there is a 1994, however; did you mean that instead?}

4. See the discussion in Love 1994, 421, 421 n. 84.

5. See, for example, Cardoso [1980] 1984, 23, and Furtado 1987, 101. This view is also to be found in Love 1980, 63, which was endorsed by Kay (1989, 5) and Love (1994,

6. For an exposition of Prebisch’s outline of this planned book, drafted in October–

December 1943, see Dosman 2001.

7. Letter from R. Prebisch to E. Castillo, 23 November 1948, Prebisch Papers. {Au:

Where are the Prebisch papers kept? Are they all in the possession of Sra. Prebisch?} 8. This episode is examined in more detail in Dosman 2001.

9. Letter from J. Marquez to R. Prebisch, 23 January 1948; letter from R. Prebisch to

E. Bernstein, 17 December 1948; letter from M. L. Parsons to Prebisch, 11 March 1949,

Prebisch Papers. James Boughton, currently in-house historian of the IMF, passed on to us this comment from Jacques Polak: “I have absolutely no recollection of any such offer, but it would not be wholly out of character for Bernstein to make it without discussing it with me

(a mere division chief at the time).”

10. Letter from R. Prebisch to E. Castillo, 23 November 1948; letter from Francisco

Coire to R. Prebisch, 24 December 1948, Prebisch Papers.

11. Letter from R. Prebisch to E. Castillo, 10 January 1949, Prebisch Papers.

12. He believed that “the normal oscillation in the economic life of an agrarian country can be supported by the monetary system, if that system is in good condition”

(Prebisch 1991, 2:566).

13. In March 1933, the Times {Au: I.e., the London Times?} published four articles by

Keynes, which, expanded by an introductory and concluding chapter, were published in pamphlet form as The Means to Prosperity. The slightly enlarged American edition is in

Keynes 1973–89, 9:335–66.

14. “Prebisch’s main concern was the international propagation of the business cycle,” according to Furtado (Kay 1989, 9).

15. In 1980, Prebisch did not recollect Sombart’s earlier use of these terms, according to Love (1980, 63). However, FitzGerald (1990, 95) {Au: FitzGerald 1990 not in reference list.} thinks that it is “most unlikely” that Prebisch “was unaware of the origins of the contemporary center-periphery concept.”

16. Letter from R. Prebisch to Eugenio Gudin, 20 December 1948, original in

Spanish, Prebisch Papers.

17. Letter from R. Prebisch to E. Castillo, 23 November 1948, original in Spanish,

Prebisch Papers.

18. Prebisch did, however, use the phrase “persistent fall in the international prices of our exports” in the 1943 outline of his unpublished book, according to Dosman 2001.

19. “I was not very happy. . . . I went—though I really didn’t want to go. For me that was a step down and I was quite looking forward to settling down in Glasgow.” Hans Singer interview with Richard Jolly, 13 October 1995.

20. It should be noted that this is available in the UNOG Library in Geneva, but not in the Dag Hammarskjöld Library at the United Nations in New York.

21. John Toye and Richard Toye, interview with Hans Singer, 12 May 2000.

22. “I thought if you look at foreign trade from the point of view of the poor countries, exporters of primary products, what does it look like? And it appears an unequal system that is weighted against them.” Hans Singer interview with Richard Jolly, 11 October

1995. {Au: Not 13 October, as in footnote 19?}

23. We are most grateful to John Shaw for drawing this document to our attention.

24. On 25 February 1948, a motion establishing the new body was passed, with no votes against, and four abstentions (Byelorussia, Canada, the United States, and the USSR).

As Leroy Stinebower, who was present on behalf of the United States, later recalled, “The forces of globalism were being overwhelmed—or at least over shouted—at that moment by a lot of regionalism stuff. . . . even in my worst dreams I didn’t think that regionalism would go as far as it’s gone in this world.” Leroy Stinebower Oral History, 9 June 1974, pp. 65–66,

Harry S. Truman Library, Independence, Missouri.

25. “The Economic Commission for Latin America . . . shall arrange for such surveys, investigations and studies to be made of the economic and technical problems (of the region) as it may deem proper and participate in the same.” Extract from the Official Records of the

UN Economic and Social Council, {Au: Is “Official Records of the UN . . . the official, formal title of a document or collection?} second year, fifth session, proposal addressed to the secretary-general by the delegation of Chile, document E/468, 12 July 1947.

26. Resolution of the first session of ECLA, 24 June 1948, UN document no.

E/CN.12/71.

27. Celso Furtado (1987, 54–56) tells the story of how he, as a new recruit to ECLA, was urged by the executive secretary, Martinez Cabañas, to bring to Santiago as many documents on Brazil as possible for the purpose of strengthening the survey.

28. Letter from L. A. Shapiro to H. W. Singer, 5 January 1949, UN archive, New

29. Letter from L. A. Shapiro to H. W. Singer, 5 January 1949, UN archive, New

30. Letter from E. Castillo to R. Prebisch, 16 February 1949, Prebisch Papers.

31. Letter from G. Martinez Cabañas to R. Prebisch, 5 March 1949, original in

Spanish; F. Coire to R. Prebisch, 8 April 1949, Prebisch Papers.

32. Letter from G. Martinez Cabañas to R. Prebisch, 5 March 1949, original in

33. Telegram from E. Castillo to R. Prebisch, 9 March 1949, Prebisch Papers.

34. “1. Wholesale prices indices of the United Kingdom from 1873 to 1947, divided, if possible, into indices of manufactured products and raw materials. 2. Price indices for exports and for imports for the United Kingdom and for the United States for the same period. 3. United States national income from 1910 to 1929.”

35. Letter from E. Castillo to L. A. Shapiro, 1 April 1949, UN Archive, New York.

36. Letter from E. Castillo to F. Coire, 1 April 1949, UN Archive, New York.

37. This first draft does not appear to have survived among the manuscript papers and correspondence currently in the possession of Sra. Prebisch, although these have not been fully cataloged.

38. Letter from E. Castillo to L. A. Shapiro, 1 April 1949, and Shapiro’s reply, 27

April 1949, UN Archive, New York.

39. Letter from F. Coire to R. Prebisch, 8 April 1949, Prebisch Papers.

40. “It is an interesting fact, perhaps not widely known because of the anonymity of

UN staff publications, that the principal author [of Post-War Trends {Au: Post War?} and

Relative Prices] was Hans Singer who became the second twin in the ‘Prebisch-Singer thesis’ through a subsequent signed article” (Spraos 1980, 107 n. 3).

41. Alexander Loveday, who directed the economic research of the League of

Nations, wrote critically of “the rigidity of their [the UN’s] anonymity rule,” which he thought hampered the employment of temporary experts. See Loveday 1956, 296.

42. See, for example, the efforts of Jerzy Osiatynski to identify the UN writings of

Michal Kalecki, in Osiatynski 1990–97, 7:552–75.

43. Gustavo Martinez Cabanas to Trygve Lie, 9 October 1949, letter of transmittal printed in Prebisch 1950.

44. H. E. Caustin to A. D. K. Owen, 12 October 1949, UN Archive, DAG-17 box 33; see also Magariños 1991, 129.

45. Its first incarnation was in Spanish, as UN document E/CN.12/89, dated 14 May

1949. It appeared in the July–September 1949 issue of El trimestre economico. At the instance of Furtado, it was published in Portuguese in the Revista Brasileira de economia in

October 1949. It was republished in Spanish in Santiago in April 1950, and again in English later in 1950 in Lake Success, New York, as UN document no. E/CN.12/89/Rev.1. Its subsequent publication history until 1986 is to be found in United Nations 1987, 52.

46. The dislocation to relative prices caused by monopolistic tendencies in the labor and manufactures markets of Europe had been the theme of Gustav Cassels’s 1927 League of

Nations study Recent Monopolistic Tendencies in Industry and Trade (Love 1991, 2).

47. The basic idea of a structural difference between countries where increased efficiency of production leads to higher incomes and those where it leads to falling product prices was already in Singer 1949, 2–3.

48. See the commentary in Flanders 1964 and FitzGerald 2000, 61–69. As FitzGerald indicates, there are two stages in Prebisch’s explanation of terms of trade decline, the first based on a neo-Ricardian model of price formation at the center and technical progress, and the 1959 version, in which there is no functional distribution or technical progress, just certain nonstandard characteristics of exogenous demand.

49. In an interview with Tom Weiss for the UN Intellectual History Project. {Au: Who conducted the interview?} 50. At the 1951 ECLA meeting in Mexico, a U.S. proposal to close the commission down was narrowly averted after Prebisch offered a stout defense of its work (and after a timely intervention from President Vargas of Brazil). See Magariños 1991, 138–141; Furtado

1987, 94; and “Progress Report Made by the Executive Secretary to the Fourth Session,” UN document no. EC/CN.12/220, 29 May 1951.

51. General Assembly, sixteenth session, second committee, 720th meeting, 11

October 1961, pages 22–24. {Au: What document is this page reference to? The minutes of the committee meeting?}

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———. 2000. ECLA and the Theory of Import Substituting Industrialization in Latin

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