Capital and Capitalists
By the end of the 1930s, Argentine industry was no longer an orphan. It attracted more investment and employed more labor than agriculture, and it enjoyed greater prestige among modern planners and politicians as being the key to national economic independence. But even though it had come a long way, its rate of progress had been uneven: great surges forward were separated by periods of slower growth. Table 4.1, which shows the rate and sources of capital accumulation at intervals between 1900 and 1945, helps to explain why.
Argentine capitalism moved ahead so quickly in the years preceding World War I obviously because it had an abundance of capital to work with. Between 1900 and 1914, capital accumulated at an average rate of about 9 percent a year. Meanwhile, the population grew by only 4 percent a year, leaving an appreciable net gain in the country's per capita wealth. This trend ended with the war. The rate of accumulation dropped sharply and steadily until, between 1917 and 1920, there was a net loss of capital. The war years had an average accumulation rate of only 1.5 percent that was not enough to keep pace with a 3 percent growth in the population.
After the war, the rate of accumulation began to increase again, recording an average of 2.4 percent annually during the 1920s: not as high as before but enough to keep up with the population's growth. Moreover, capital formation began to gather momentum as the decade wore on. Once again, however, progress was halted, first by the Great Depression and then by World War II. There was a net loss of capital in the early 1930s followed by a weak rally that lasted until war broke out again, after which there was almost complete stagnation. Considering that capital accumulation averaged only 1.8 percent a year from 1930 to 1945 while the population increased by about 2 percent, it is evident that Argentine capitalism had lost its earlier dynamism. Small wonder that capital-starved industry turned to labor-intensive methods.