central idea, one which would not only mould his own conceptual framework, but also the framework of an entire generation of Latin American economists: the idea that countries could be categorised into two different types – those that were in the centre and those that were in the periphery . The distinction made between separate economic and political worlds – those being the first, second, and third worlds – and the idea that these worlds require different strategies and policies to achieve sustainable economic growth, has long been accepted by economic institutions in Latin America – however it was not always the case. The dominant liberal orthodoxy in Argentina during the early twentieth century long held the view that the economic realities of Argentina were no different to that of Europe. The Argentinian private banker and minister of finance, Norbeto Piñero, was one such proponent of this view. In his La Moneda, el Crédito y los Bancos en la Argentina , Piñero argued that the business cycle in Argentina was in essence a replication of the European experience. 168 Excessive credit accumulated when times were good would eventually create crises of imbalance through excess consumption and the subsequent flood of imports, followed by an imbalance in trade and the flight of gold. Eventually this imbalance would be automatically corrected through the market: interest rates would rise resulting in short term capital being pulled back into the market. This view was essentially one of the “sacred assumptions of liberal equilibrium theory” 169 widely taught at the University of Buenos Aires, and one that was broadly accepted in Argentine intellectual circles. But the comprehensive historical analysis of Argentine boom-and-bust cycles undertaken by Prebisch and his team, from Argentina’s independ ence in 1810 to the First World War, strongly contradicted Piñero’s conclusions. Not only did the research reveal that neither Piñero nor
168 Norbeto Piñero, La Moneda, el Crédito y los Bancos en la Argentina (Buenos Aires: J. Menéndez, 1921) 169 Dosman, The Life and Times of Raúl Prebisch 1901-1986, page 37.
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