Capital formation in Latin America and the inflationary process | Raúl Prebisch


From The Economic Development of Latin America and its principal problems

Raúl Prebisch, 1950. Translated by ECLA.


The margin of savings depends ultimately upon the progressive increase of labour productivity. Though the level of productivity achieved by some Latin-American countries is such that, by means of a judicious policy, they would be able to reduce the amount of foreign capital needed to supplement national savings to moderate proportions, in the majority of them this capital is admittedly indispensable.

In actual fact, productivity in these countries is very low owing to lack of capital; and the lack of capital is due to the narrow margin of savings resulting from this low productivity. The temporary help of foreign capital is necessary if this vicious circle is to be broken without unduly restricting the present consumption of the masses, which, generally speaking, is very low. If this capital is effectively used, the increase in productivity will, in time, allow savings to accumulate which could be substituted for foreign capital in the new investments necessitated by new technical processes and the growth of the population.

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Parmenides of Elea

Continuously walk on the road of Reason; never arouse yourself with the imperceptible. But the road never appears on the front of life—it is only staged and mystified on its back. In Parmenides we see a much different concretion than that of Heraclitus and… And what? It bothers the mind; it excites the spirit. Poetry and philosophy arrive at a coherence, here. This “coherence” permeates the trace and line draped around Philosophy, so far, in abstraction. Present what is, artistically through incursion in thought and excursion of poems. Proem and poem. Parmenides knows that whatever comes in his direction, will be dealt in a proper manner. When our philosopher speaks, the Divine is to be heard. Such is the point of his disdain: there is no other way of comprehending and dissenting than through intervention. How can there be a becoming if what is already is? Procedural sublimation of conflicting pluralities is illusory, for our philosopher. Sense perception is to be understood as incapable of reaching truth, if it concerns itself solely with contradictions.

As it was with Heraclitus, with his disgust towards common opinions, so it was with Parmenides. He presented his own words as the enunciation of Truth, stemming from a Goddess. Truth was divine and had to be declared in a poetic form. Such is the reason, from the beginning of his poem until the moment the Goddess reveals the Truth itself, for the existence of a sacred movement—followed with sacred images and fantastical allegories—in  the staging of Parmenides’ thought. Positioned as a philosopher-poet, Parmenides delivered his thought in such manner. His poem dealt with a major problem of Philosophy: that of being. In this case, although making himself to be a carrier of divine words, Parmenides expelled instead philosophical words. Such interrelation to the religious is, without a doubt, a result of the influence he absorbed from Pythagoras’s religious sects. As a citizen of Elea, he was made to be concerned with the public interests of the Polis, subjected to the discursive reason that reigned within the confines of the city.

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