Forgotten Continent: The Battle for Latin America’s Soul
By Michael Reid
Yale University Press £19.99

In 1971, Richard Nixon advised a young Donald Rumsfeld, the future defence secretary, which part of the world to avoid if he wanted a brilliant career: “Latin America doesn’t matter. People don’t give a damn about Latin America now.”

It is a judgment that has largely held true ever since, with the region neither poor enough to attract pity, dangerous enough to excite strategic calculation, nor sufficiently economically powerful to interest corporate boardrooms.

However, in a persuasive new book Michael Reid provides a powerful argument to take more notice of the “forgotten continent”, arguing that it should be seen as “the far west”, the “world’s most important and testing laboratories for the viability of democratic capitalism as a global project”.

Reid’s contention is based on a very readable history of Latin America since its independence at the beginning of the 19th century. At its core is the skilful demolition of the myths that have blurred understanding of the region. Sweeping all-encompassing theories have explained Latin America’s backwardness in terms of its subjection to foreign influence or the intrinsic culturally-based incapacity of its people to embrace modernisation, says Reid.

Conservatives have argued that Iberian and Catholic anti-capitalist and hierarchical traditions have doomed Latin America to backwardness. They “seemed to believe that Latin Americans were a poor hot-headed lot, too immature for democracy and in need of the smack of firm government from a capitalist strongman,” he says. More recently, the right has been so contemptuous of the ability of local elites and institutions they placed exaggerated faith in free markets.

The left, by contrast, often laid the blame for the region’s problems on international capitalism. The central concept for them is dependency theory, which argues that the poverty of the countries in the periphery is the result of the manner of their integration of the world system. This influenced nationalist Latin American thinking in the second half of the 20th century. In its most radical variant, the theory was blended with Marxist class analysis to underpin the rationale of Cuban socialism, the more recent political experimentation of Venezuela’s Hugo Chávez, and their respective followers in Europe and the US. Reid is especially contemptuous of the latter: “Rich world leftists, while enjoying the freedom and prosperity of capitalist democracy . . . presumed that benevolent socialist strongmen were a worthy solution for what they saw as the corruption and poverty of capitalism in the rest of Latin America,” he argues. Non-governmental organisations are condescending towards ordinary Latin Americans and too ready to preach anti-capitalism while “offering no plausible alternative path to development for peoples who urgently needed it”.

The dependency myth is resilient, partly because it has been reinforced by the prejudices of liberal intellectuals and writers. In a scene in Gabriel García Márquez’s novel, One Hundred Years of Solitude, troops, deployed at the behest of a US banana company, machine gun 3,000 striking workers. The story is based on a real massacre of 75 people in 1928, an event so traumatic that it triggered a change of government and reforms in Colombia. But for many Márquez’s more apocalyptic version and its subtext – the genocidal character of US imperialism – has come to assume the status of truth.

As he unpicks these legends, Reid shows Latin American history has been more complex. He argues that US political sway has been historically limited mainly to the northern Central American and Caribbean region and that local elites, especially in Mexico and the richer southern countries, have enjoyed more room for manoeuvre.

Market-based reforms of the 1980s and 1990s failed because governments did not properly regulate the newly liberalised banking systems or private monopolies. Nor did they give due priority to social policy. But these were Latin American problems, not the inevitable result of following policies dictated by the World Bank or the US Treasury. The most persuasive proof of that is the way the centre-left governments of Chile have, since 1990, maintained market friendly policies while pursuing reforms that have all but eliminated extreme poverty. That success – as well as the more marked progress of Spain since the 1980s – also gives the lie to Iberian pessimists.

Reid may underestimate the staying power of commodity-based populists like Mr Chávez, but is right that Chilean-style democratic reform will prove more sustainable than radical populism and to call for a “sense of perspective”. After all, it is not so long ago that much of Latin America lived under military dictatorships. The persistent denial of progress will not help it face up to the challenge of globalisation.

The writer is the FT’s Latin American editor