The Latin American debt

The main purpose of this study is to contribute to a theory of the causes of the Latin American international debt in the framework of the sociology of change and development, which has analyzed international debt only in passing. The study first examines international debt in the nineteenth and early twentieth centuries from the elaboration of the world-system up to the economic depression of the 1930s. Using data from the International Monetary Fund, the Bank for International Settlements, the Economic Commission for Latin America and other primary and secondary sources, the thesis analyses the process which begins after the Second World War and the efforts to create a new international financial order at Bretton Woods which has led to the contemporary debt crisis that has been especially severe in Latin America. The study indicates that debt crises are a recurrent phenomenon. It is suggested that the periodic occurrence of debt crisis is due to the functioning of capitalist production and accumulation. It is further argued that the cycle of debt begins with an excessive accumulation of money in the financial markets, and that this excessive liquidity is the result of depressive tendencies in the productive sectors of the economy. To solve the problem of diminished circulation, banks and other financial institutions energetically promote off—shore lending, which increases international indebtedness. A coincidence of interests between a segment of the ruling elites in debtor countries, and the financial sectors in the creditor countries tends to increase the debt load and exacerbate economic problems. This has been particularly the case in Latin America since the 1960s which has led to the crisis of the 1980S. The thesis suggests that, contrary to common belief, the international capitalist system can emerge from debt crisis with added strength. The self-serving pattern of elite management of such crisis, however, reinforces and deepens social and economic inequalities.