Center and Periphery: An Original Institutional Economics Analysis of Raúl Prebisch’s Structuralism

ABSTRACT

The present article focuses on Raúl Prebisch’s center and periphery framework, connecting his early, mid-career, and later work to cast a different light on one of his most enduring contributions. Using an original institutional economics approach, the article shows that Prebisch held a structuralist perspective throughout his career, but while early on he maintained a standard structuralist position, by the 1960s Prebisch embraced a less rigid version of structuralism, understanding the relationship between center and periphery through a multi-layered analysis. A movement in such direction enriches economic theory, creating a dynamic framework that views social, economic, and political transformation as a result of interactive actions (Lawson [1997]. Economics and Reality. London: Routledge) between agents and structures.

KEYWORDS:

• Core and periphery
• development economics
• structuralism
• institutional economics
• economic methodology

JEL CODES:

• B25
• B41
• B52
• O2
• O54

Acknowledgements

I would like to thank the two anonymous referees for their insightful comments, as well as John F. Henry and A. Reeves Johnson for reading and making thorough suggestions on earlier version of the article. Finally, I am grateful for the comments of colleagues from the History of Economics Society and Duke’s Center of History of Political Economy for their input during presentations of the article’s ideas in its early stages.

Disclosure Statement

No potential conflict of interest was reported by the author.

Notes

1 Ahistorical is used here in the Marxist sense, that is, that capitalism evolution is taken for granted as the unavoidable outcome and other economic systems are not analyzed or, if they are, the analysis implies abstractions that are universal.

2 Prebisch used the terms ‘center’ and ‘periphery’ for the first time in 1922. In the 1920s, the terms were popularly used in Argentina to describe the cities on the coast (the periphery) and the cities in the interior (the center). During this early period, the center and periphery connoted domestic geographical entities, holding only an indirect relationship with international affairs: the periphery was actively engaged in international trade, while the center was either isolated or indirectly engaged through the intermediation of the periphery (Prebisch 1921–1922, pp. 292–293).

3 The Singer–Prebisch thesis was the core of import–substitution–industrialization (ISI) policy, which was a common development strategy in Latin America during the 1950s and 1960s.

4 During the 1947 Havana Conference, many economists at the UN at the time — among them, Michal Kalecki and Nicholas Kaldor — agreed on the importance of intentionally promoting full employment but, during discussion at the UN, US political pressure ultimately redirected the focus away from the full employment theme towards discussions of economic development (Toye and Toye 2004, pp. 90–100). Despite the realignment at the UN, Prebisch did not abandon his view on the importance of employment creation on the periphery, veiling it with the industrialization discourse (Prebisch 1961, 1969a).

5 Prebisch also understood that governments could use fiscal policy to change the amount of money available in the economy but warned against it in a peripheral economy. Randall Wray (1999; 2012, p. 88) asserts that, when a country depends on importation of capital goods to produce its vital commodities, its government does not have much discretion in pursuing a full-employment policy through government spending even in a system of floating exchange rates.