The Bolivian Revolution

Why Nations Fail/

Daron Acemoglu and James Robinson

socialistcore.org

In Why Nations Fail we have emphasized that the roots of economic divergence between North and South America lie in the different ways that colonial institutions formed. Latin America is poorer today because the Spanish developed economic institutions designed to exploit indigenous people. Nowhere was this system more pernicious than in Bolivia. The “old regime” based on the extractive colonial institutions lasted until 1952 when a revolution, masterminded by a political party, the MNR (Movimiento Nacionalista Revolucionario – National Revolutionary Movement) overthrew the traditional political and economic system. As in many Latin American countries, in Bolivia the rise of new interests and cleavages in the early 20th century had led existing elites, often rurally based, to enter into a governing coalition with the military. This coalition was demolished in Bolivia in 1952.
The three great families that owned the tin mines were expropriated and the mines nationalized. All of the great haciendas and landed elites were expropriated and the land distributed to the peasants. The coalition which had represented these interests in politics, known as La Rosca, was displaced, universal suffrage was introduced, the military was disarmed, and pongueaje, the last form of colonial unpaid labor service, was abolished.
On the face of it this political revolution and the changes in economic institutions which it apparently brought ought to have led to a dramatic change in the development prospects for Bolivia. But it didn’t. The next figure from Jonathan Kelley and Herbert S. Klein’s seminal book Revolution and the Rebirth of Inequality shows the impact of the revolution on inequality. By 1960, 8 years after the revolution this had fallen by about 30%. More >>