State and Nation Making in Latin America and Spain: The Neoliberal State and Beyond 9781108836906, 1108836909

Table of contents :
Cover
State and Nation Making in Latin America and Spain
Dedication
Contents
Notes on Contributors
Preface
Part I. INTRODUCTION
1. The Neoliberal State in Latin America
Part II. ECONOMIC AND TERRITORIAL POWER
2. The Chilean Neoliberal State: Origins, Evolution, and Contestation, 1973–2020
3. State, Society, and the Neoliberal Turn in Mexico, c. 1980–c. 2000
4. Rise of the Neoliberal State in Spain? Fiscal Shortcomings of a Popular Narrative
5. Guatemala: States and Homicidal Ecologies
Part III. INFRASTRUCTURAL POWER: REFORM STRATEGIES
6. Two Roads of Neoliberal Reform in Higher Education: Past Policy Decisions Establishing Today’s Type of Reforms in Peru and Chile
7. Reinvented Governments in Latin America: Reform Waves and Diverging Outcomes
8. The Devil Hides in the Details: Variations of Conditional Cash Transfers Programs in Latin America
9. Neoliberal Reform of Transport Institutions in Brazil, Argentina, and Chile: The Tortoise Beats the Hare
10. The End Game of Social Policy in a Context of Enduring Inequalities: Assessing “Post-neoliberalism” in Latin America
Part IV. SYMBOLIC POWER: IDENTITIES AND SOCIAL PROTEST
11. Women Are the Social Face of the State: Gender and the Social Uprising in Neoliberal Chile, 2019–2021
12. Europeanization Effects: Statehood and Contentious Politics
13. Redefining Labor Organizing: Coalitions between Labor Unions and Social Movements of Outsider Workers
14. Locating Neoliberalism in Abiayala: A View from Indigenous Studies
15. Resisting Neoliberalism? Territorial Autonomy Movements in the Iberian World
Part V. Conclusions
16. Internal Structure of the Neoliberal State: Power and Public Policy in Latin America and Spain, 1973–2020
Index

Citation preview

State and Nation Making in Latin America and Spain Neoliberalism is often studied as a political ideology, a government program, and even as a pattern of cultural identities. However, less attention has been paid to the specific institutional resources employed by neoliberal administrations, which have resulted in the configuration of a neoliberal state model. This accessible volume compiles original essays on the neoliberal era in Latin America and Spain, exploring subjects such as neoliberal public policies, power strategies, institutional resources, popular support, and social protest. The book focuses on neoliberalism as a state model: a configuration of public power designed to implement radical policy proposals. This is the third volume in the State and Nation Making in Latin America and Spain series, which aims to complete and advance research and knowledge about national state institutions in Latin America and Spain. Miguel A. Centeno is Professor of Sociology and International Affairs at Princeton University. He has taught at Princeton for over 25 years and is well known for his work on Latin America, state capacities, war, and globalization. Agustin E. Ferraro is a Professor at the University of Salamanca. From 2001 to 2003, he was a Humboldt scholar. In 2009, he won the national award of INAP in Spain for his research on Latin American state institutions. He has published books, journal articles and book chapters in Spanish, English, German and Portuguese.

State and Nation Making in Latin America and Spain The Neoliberal State and Beyond

Edited by MIGUEL A. CENTENO Princeton University

AGUSTIN E. FERRARO University of Salamanca

Shaftesbury Road, Cambridge cb2 8ea, United Kingdom One Liberty Plaza, 20th Floor, New York, ny 10006, usa 477 Williamstown Road, Port Melbourne, vic 3207, Australia 314–321, 3rd Floor, Plot 3, Splendor Forum, Jasola District Centre, New Delhi – 110025, India 103 Penang Road, #05–06/07, Visioncrest Commercial, Singapore 238467 Cambridge University Press is part of Cambridge University Press & Assessment, a department of the University of Cambridge. We share the University’s mission to contribute to society through the pursuit of education, learning and research at the highest international levels of excellence. www.cambridge.org Information on this title: www.cambridge.org/9781108836906 doi: 10.1017/9781108873031 © Cambridge University Press & Assessment 2023 This publication is in copyright. Subject to statutory exception and to the provisions of relevant collective licensing agreements, no reproduction of any part may take place without the written permission of Cambridge University Press & Assessment. First published 2023 A catalogue record for this publication is available from the British Library A Cataloging-in-Publication data record for this book is available from the Library of Congress isbn 978-1-108-83690-6 Hardback Cambridge University Press & Assessment has no responsibility for the persistence or accuracy of URLs for external or third-party internet websites referred to in this publication and does not guarantee that any content on such websites is, or will remain, accurate or appropriate.

In memory of Charles Tilly

Contents

 Notes on Contributors Preface Part I  Introduction 1 The Neoliberal State in Latin America

page ix xiii 3

John Maldonado, Diego Ayala-McCormick, Miguel A. Centeno, and Agustin E. Ferraro

Part II  Economic and Territorial Power 2 The Chilean Neoliberal State: Origins, Evolution and Contestation, 1973–2020

67

Patricio Silva

3 State, Society and the Neoliberal Turn in Mexico, c. 1980–c. 2000

99

Alan Knight

4 Rise of the Neoliberal State in Spain? Fiscal Shortcomings of a Popular Narrative

141

Lars Döpking

5 Guatemala: States and Homicidal Ecologies

175

Deborah J. Yashar

Part III  Infrastructural Power: Reform Strategies 6 Two Roads of Neoliberal Reform in Higher Education: Past Policy Decisions Establishing Today’s Type of Reforms in Peru and Chile

213

Eduardo Dargent Bocanegra and Gabriela Camacho Garland vii

Contents

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7 Reinvented Governments in Latin America: Reform Waves and Diverging Outcomes

243

Luis L. Schenoni

8 The Devil Hides in the Details: Variations of Conditional Cash Transfers Programs in Latin America

269

Luciana de Souza Leão

9 Neoliberal Reform of Transport Institutions in Brazil, Argentina, and Chile: The Tortoise Beats the Hare

289

Katherine Bersch

10 The End Game of Social Policy in a Context of Enduring Inequalities: Assessing “Post-neoliberalism” in Latin America

317

Pía Riggirozzi and Jean Grugel

Part IV  Symbolic Power: Identities and Social Protest 11 Women Are the Social Face of the State: Gender and the Social Uprising in Neoliberal Chile, 2019–2021

343

Verónica Schild

12 Europeanization Effects: Statehood and Contentious Politics in Spanish Democracy

382

Philipp Müller

13 Redefining Labor Organizing: Coalitions between Labor Unions and Social Movements of Outsider Workers

411

Candelaria Garay

14 Locating Neoliberalism in Abiayala: A View from Indigenous Studies

428

José Antonio Lucero

15 Resisting Neoliberalism? Territorial Autonomy Movements in the Iberian World

462

Matthias vom Hau and Hana Srebotnjak

Part V  Conclusions 16 Internal Structure of the Neoliberal State: Power and Public Policy in Latin America and Spain, 1973–2020

495

Agustin E. Ferraro, Gustavo Fondevila, Juan José Rastrollo, and Miguel A. Centeno

Index535

Notes on Contributors

Diego Ayala-McCormick is a Ph.D. student in the Sociology Department at UC Berkeley. He has published several articles on development and inequality in Latin America. He is currently working on two larger projects, one on the political economy of development in Francoist Spain and another on colonialism and development in Puerto Rico and Taiwan. Katherine Bersch is an assistant professor at Davidson College and the author of When Democracies Deliver: Governance Reform in Latin America (Cambridge, 2019). Gabriela Camacho Garland  holds a Ph.D. from the Humboldt University of Berlin and is currently a postdoc at Aarhus University and a visiting researcher at the German Institute for Development Evaluation. Miguel A. Centeno has taught at Princeton for over 25 years. He is well-known for his work on Latin America, state capacities, war, and globalization. Eduardo Dargent Bocanegra  is Professor of Political Science at Pontifical Catholic University of Peru. His main research interests are comparative public policy, political economy, and the state in the developing world. Dr. Lars Döpking  is a historical sociologist and researcher in contemporary history at the German Historical Institute in Rome. His work focuses on the dynamics of taxation and capitalism in Western Europe. Agustin E. Ferraro is Professor of Political Science and Public Administration at the University of Salamanca. He was a Humboldt scholar from 2001 to 2003. In 2009, he won the national award of INAP (Spain) for his research on Latin American state institutions. Gustavo Fondevila is a professor at the Center for Economic Research and Teaching (CIDE). He holds a Ph.D. in law from the Buenos Aires University ix

x

Notes on Contributors and a Master’s in political sciences from Johannes Gutenberg UniversityMainz. Last book: Prisons and Crime in Latin America (Cambridge, 2021).

Candelaria Garay (Ph.D. in Political Science, UC Berkeley) is Associate Professor of Political Science at Universidad Torcuato Di Tella. Her book Social Policy Expansion in Latin America (Cambridge, 2016) won the Robert A. Dahl award from the American Political Science Association. Jean Grugel  is Professor of Global Development at the University of York, UK, and a Research Professor at Institut Barcelona d’Estudis Internationals (IBEI), Spain. She has written widely on the political economy of democracy, regionalism, and governance in Latin America. Matthias vom Hau (Ph.D. – Brown University)  is an associate professor at Barcelona Institute of International Studies. In 2019, he was awarded a European Research Council (ERC) Consolidator Grant for research on ethnic diversity and public goods provision. Alan Knight, Emeritus Professor of the History of Latin America at Oxford University, is the author of The Mexican Revolution (1986) and six other books on modern Mexico. His latest book is Bandits and Liberals, Rebels and Saints: Latin America Since Independence (2022). José Antonio Lucero  teaches Indigenous politics, borderlands, and Latin America in the Comparative History of Ideas Department and the Henry M. Jackson School of International Studies, University of Washington. John Maldonado completed his Ph.D. in the sociology department at Princeton University. He is currently a postdoctoral research associate at the School of Public and International Affairs at Princeton University. Philipp Müller is a historian working on the history of the political economy and intellectual history of the nineteenth and twentieth centuries in Western and Southern Europe. Juan José Rastrollo  is Professor of Administrative Law at the University of Salamanca. He received the extraordinary award upon graduation and again for his Ph.D. He is a well-known expert on public contracts, public employment, and urban law and regulation. Pía Riggirozzi is Professor of Global Politics at the University of Southampton, UK. Her research and publications are on the political economy of development, human rights, and regional governance, with a particular focus on gendered health inequalities in Latin America. Luis L. Schenoni is a lecturer in the Department of Political Science and School of Public Policy, University College London. His research focuses on state formation in Latin America.

Notes on Contributors

xi

Verónica Schild,  born and raised in Chile, is Professor Emeritus of Political Science at the University of Western Ontario. Her research focuses on feminism and neoliberal state formation. Patricio Silva  is Professor of Modern Latin American History at Leiden University, Netherlands. He is the author of several academic books and articles on the political dimension of neoliberalism in Chile. Luciana de Souza Leão is an assistant professor in the sociology department at the University of Michigan. Luciana is a political and comparative sociologist with broad interests in knowledge-making processes, social inequalities, and the state. Hana Srebotnjak  is a research Assistant at Institut Barcelona d’Estudis Internacionals (IBEI). Hana studied modern history (MA) at the University of St Andrews (Scotland) and International Security (MA) at IBEI. Deborah J. Yashar is Donald E. Stokes Professor of Public and International Affairs at Princeton University and Director of Princeton’s Institute for International and Regional Studies.

Preface

This book represents the next stage of a long friendship and scholarly association between the editors. We remain indebted to the enthusiastic collaboration and contributions of colleagues and friends, on both sides of the Atlantic. Their work has been key to the project’s results. Our research on state and nation-making in Latin America and Spain began in 2013, with the publication of this series’ first volume. It examined the formation and consolidation of states and nations in the Hispanic-American world during the long “liberal era,” from 1810 to 1930.1 The second volume of the collection continued the story of state building, from 1930 to 1990, focusing on new state configurations that were purposedly built to promote economic and social development across Latin America and Spain.2 The present volume focuses on neoliberalism as a state model. In the following chapters, we detail how the neoliberal state concentrated power and employed technocratic isolation and other institutional resources with the aim of implementing radical policy proposals. We conclude, in the final chapter, with a discussion of how the neoliberal state represents a specific institutional configuration, just as previous state models discussed in volumes one and two, the modern or liberal state and the developmental state, respectively. Our fundamental inspiration for this theoretical and empirical study of the state came from the work of Charles Tilly, to whom this volume is dedicated. We hope that he would approve of this effort.

1 2

Centeno, Miguel A., and Agustin E. Ferraro, eds. 2013. State and Nation Making in Latin America and Spain: Republics of the Possible. Cambridge: Cambridge University Press. Ferraro, Agustin E., and Miguel A. Centeno. 2019. State and Nation Making in Latin America and Spain: The Rise and Fall of the Developmental State. New York: Cambridge University Press.

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Preface

We are enormously grateful for the outstanding work of our group of collaborators, not only for those in the present project but also for the previous ones. Anyone who has ever planned a series of conferences knows how difficult it can be to identify attendees and then count on them to produce solid scholarship and generous discussion. We received some “no’s” to our initial queries, but mostly we received “yesses” and were elated when practically everyone showed up at Princeton in the fall of 2019. By that time, the papers were already well developed, and the meeting, to our delight, evolved into a bottom-up enterprise. The consequent result was a much better conference than we could have imagined. There was much enthusiasm for a second meeting at Princeton in 2020, but due to the pandemic, it had to take place online. In the final stages of the process, the contributors demonstrated even greater patience, especially when we asked for further, and then, further revisions and additions to their chapters. We feel exceptionally fortunate to have worked with Cambridge University Press editors Rachel Blaifeder and Claire Sisssen, and with assistant editor Jadyn Fauconier-Herry. They have been wonderful partners: supportive and insightful, firm and clear about the work that had to be done. The staff at Cambridge University Press and the associated indexing and copy-editing teams, in particular project manager Veena Ramakrishnan, have also been outstanding. We could not have asked for more. To Chilean artist Francisco Osorio, we offer special thanks for providing the cover image of this book. An extraordinary photographer, Osorio, documents people and cultures with as much ethnographic insight as with his capacity for perceiving and then creating beauty. (flickr.com/photos/francisco_osorio). Our home institutions served as superbly generous hosts and deserve our heartfelt thanks. Financial support for the project came from Princeton University’s Program in Latin American Studies, the Princeton Institute for International and Regional Studies, the Princeton School of Public and International Affairs, and the institution’s central university funds. As always, our families deserve our infinite thanks for allowing us the luxury of spending so much time discussing states, nations, and other such arcane matters. Deborah Kaple, Maya Centeno, and Alex Centeno amazingly keep putting up with one of the editors. Rachel Straus, intellectual companion and partner of the other editor, as well as his daughters Sarah L. Ferraro and Ana V. Ferraro, receive his heartfelt thanks for their constant support and encouragement. Special thanks also to Nina Straus for her unwavering interest in this project.

Part I INTRODUCTION

1 The Neoliberal State in Latin America John Maldonado, Diego Ayala-McCormick, Miguel A. Centeno, and Agustin E. Ferraro

1.1  introduction * A vast literature on neoliberalism has described and discussed the public policy programs proposed and applied by this wide-ranging economic and political movement. While focusing mostly on economics, five decades of scholarship has also considered the impact of neoliberalism on other significant government areas, such as education, health, or social policy. The literature has also thoroughly examined neoliberal ideological discourses, political campaigns, and electoral tactics. Furthermore, an ample body of studies has explored the strong influence of neoliberalism on contemporary culture, including fundamental changes in personal identities and social habits. In contrast, however, we believe that the idea of the neoliberal state remains underdiscussed: What exactly is a neoliberal state? And does such a state formation exist at all?1 The essays contained in this book are organized across four dimensions or categories of state power, which we have employed as analytical tools since the first volume of the collection: territorial, economic, infrastructural, and symbolic. We define and analyze the four dimensions of state power in Section 1.5

*

1

This book is the third volume of a series on state and nation building in Latin America and Spain, published by Cambridge University Press (2013–2019–2023) and coordinated by the same two editors. The chapters of the book return to the series’ general subject matter, state and nation building in the regions under study, with a specific focus on the neoliberal era, beginning in the 1970s. This volume can be read separately from the previous books of the collection, since each book represents a complete unit by itself. Nevertheless, the editors and authors have followed some key issues and applied central conceptual categories that connect the different volumes, as we will explain in this introductory chapter. At the beginning of the research project leading to the present book, some members of our group expressed their skepticism in this regard; that is to say, they had doubts about the possibility of defining a neoliberal state, and even more about its reality.

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of the present chapter. Across diverse national and comparative studies, the essays of the volume describe and discuss government programs, political initiatives, social responses, and other related phenomena in different public policy areas, focusing in each case on one or more of the dimensions of state power. In the last chapter of the volume, as a final summary and conclusion of the project, we advance our suggested answers to the two questions posed above, regarding the conceptual definition, and the reality of the neoliberal state as an institutional formation in history. The present chapter begins by considering, in Section 1.2, diverse measures of neoliberal policy reform, and their impact on key countries of the region, as a general outline of neoliberalism’s extensive influence. Section 1.3 presents a succinct overview of the political and economic processes that were behind the neoliberal reforms in relevant national cases, discussed more in depth by the diverse chapters of the volume. In Section 1.5, we turn to the issue of state capacity, we present our proposed dimensions or categories of political power, and we explain the plan of the book organized by these categories. Finally, the conclusion of the chapter summarizes and evaluates the notion of a neoliberal wave, which went throughout the region in the last two decades, and its ­problematic aftermath.

1.2  neoliberalism

in latin america

Broadly understood as a political program, neoliberalism stressed the necessity and desirability of transferring economic power and control from governments to private markets.2 Standard measures of neoliberal policy reform include trade, financial and tax policy, privatization, and labor legislation.3 In all cases, more “neoliberal” reforms are associated with lower tariff barriers, fewer financial regulations, lower and flatter taxes, more extensive privatizations, and easier hiring and firing of workers. The following figures draw on six indices of structural reform throughout Latin America and provide information on five dimensions: trade, finance, tax policy, labor regulation, and the privatization of state-owned enterprises.4 The final index (structural reform) provides an average of the five individual indices. All the indices take on a value between 0 and 1, with higher values indicating greater neoliberal reforms. While some policy domains (such as trade and finance) show clear evidence of widespread liberalization throughout Latin America, other domains (particularly tax and labor policy) make it more challenging to speak of a general neoliberal turn throughout the region. Moreover, the depth and breadth of reforms varied widely across the region, as detailed in the following section. 2 3 4

Centeno and Cohen, “The Arc of Neoliberalism.” See Lora, “Structural Reforms in Latin America,” 27–28; Morley, Machado, and Pettinato, “Indexes of Structural Reform in Latin America,” 7–10. See Lora, “Structural Reforms in Latin America” for full methodological elaboration.

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1.00

Trade Reform Index

0.75 Country Bolivia Brazil Chile Colombia Mexico Peru Venezuela

0.50

0.25

0.00 1985

1990

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figure 1.1  Trade Reform Index (Lora, 2012). Source: own elaboration, with data from Lora, “Structural Reforms in Latin America;” and Morley, Machado, and Pettinato, “Indexes of Structural Reform in Latin America.”

1.2.1  Trade Policy The trade policy index is the average of two measures, the average rate of import tariffs and the dispersion of import tariffs. Consequently, it is worth noting that this does not capture non-tariff barriers to trade. But the index does demonstrate that trade liberalization was widely and quickly embraced throughout Latin America. Across the region, deep trade reforms occurred throughout the late 1980s, reflecting a pivot toward export-driven growth policies. The widespread embrace of trade liberalization is further demonstrated by the increasing percentage of GDP attributed to trade. As we see in the figure below, nearly every country in the region saw trade becoming an increasingly significant component of national economic output. 1.2.2  Financial Policy The financial policy index is the average of multiple measures including reserve ratio requirements, freedom of interest rates, taxation rates on financial transactions, and the quality of banking supervision. As with trade policy, financial

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Trade (% of GDP)

80

Country Bolivia Brazil Chile Colombia Cuba Mexico Peru Spain Venezuela, RB

60

40

20

1970

1980

2000

1990

2010

2020

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figure 1.2 Trade As Percentage of GDP. Source: own elaboration, with data from Piburn, “wbstats.”

reforms were largely in line with neoliberal orthodoxy. But in contrast to trade liberalization, this process occurred more slowly. Moreover, this trend was much less uniform relative to trade reform. That being said, these data underscore that trade and financial liberalization occurred largely in tandem with one another and reflect broader processes of globalization. 1.2.3 Privatization The privatization index is a simple average, by year and country, of total private sector participation (in millions of dollars) in infrastructure projects as a proportion of GDP. Consequently, it does not capture the totality of privatization arrangements. For example, this measure does not capture the privatization of the management and operation of state services, such as waste collection. While the measure is limited, we do observe a broad shift toward greater private sector participation in state infrastructure projects. Alongside trade and financial policy, this shift is largely consonant with general conceptualizations of neoliberalism. That is, a movement toward an export-driven economy and a decline in state-owned enterprises. Based on this, we might conclude that the region did experience a neoliberal turn. But a review of further metrics ­complicates this picture.

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1.0

Finance Reform Index

0.8

Country Bolivia Brazil Chile Colombia Mexico Peru Venezuela

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0.4

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figure 1.3 Finance Reform Index. Source: own elaboration, with data from Lora, “Structural Reforms in Latin America.”

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Privatization Index

0.75 Country Bolivia Brazil Chile Colombia Mexico Peru Venezuela

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0.00 1985

1990

1995

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figure 1.4 Privatization Index. Source: own elaboration, with data from Lora, “Structural Reforms in Latin America.”

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0.6

Country Bolivia

Tax Reform Index

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Brazil Chile

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Colombia Mexico Peru Venezuela

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0.2 1985

1990

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figure 1.5 Tax Reform Index. Source: own elaboration, with data from Lora, “Structural Reforms in Latin America.”

1.2.4  Tax Policy The tax reform index is composed of four measures: the average of the maximum tax rate applied to personal income and to corporate income, the productivity of income tax (calculated as the ratio of revenue to GDP and the average income tax rate), the basic VAT rate, and VAT productivity (calculated as the ratio between the tax revenue and private consumption times the basic VAT rate, also known as C-efficiency). Unlike trade and finance, tax reform was highly variegated. Broadly speaking, the scale of tax reform was also more muted relative to trade and finance. That is, while changes to taxation largely followed neoliberal prescriptions, the depths of these changes were modest relative to the deep transformations experienced in the domains of trade and finance. 1.2.5  Labor Legislation The index of labor reform reflects the flexibility of legislation on hiring, expected costs of firing employees, flexibility of working hours, costs of social security contributions and other taxes and payroll contributions, and the level of minimum wage as ratio of per capita income. Unlike the other policy

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Labor Reform Index

0.7 Country Bolivia Brazil Chile

0.6

Colombia Mexico Peru 0.5

Venezuela

0.4 1985

1990

1995

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figure 1.6 Labor Reform Index. Source: own elaboration, with data from Lora, “Structural Reforms in Latin America.”

domains, labor legislation did not undergo any systemic regional transformation. Indeed, many countries did not introduce neoliberal labor reforms. More than any of the other indices, this severely undermines the Marxist interpretations of neoliberal reform, which views neoliberalism as capital reasserting dominance over labor. 1.2.6  Overall Structural Reform Based on the overall index of structural reform, we might conclude that Latin America did undergo a general “neoliberal” turn. But as we have seen, the depth of these reforms varied from country to country. Moreover, disaggregating this general measure shows a much more variegated image; through this disaggregation, we see that much of the changes observed in the overall structural reform index stemmed from trade and financial liberalization. The observed changes reflect a broad embrace of export-led growth and a rejection of protectionist economic policies. But other changes typically associated with neoliberalism were less marked, most notably in terms of tax policy and labor legislation. In other words, rather than being a story of the regional embrace of a new economic model, the data instead reflect Latin America’s deep ­integration into the global economy.

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Structural Reform Index

0.7 Country Bolivia Brazil Chile Colombia Mexico Peru Venezuela

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0.5

0.4

0.3 1985

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figure 1.7  Structural Reform Index. Source: own elaboration, with data from Lora, “Structural Reforms in Latin America.”

Turning our attention toward government expenditures further undermines claims of a regional turn toward the paradigmatic model of neoliberal reform. Across both Latin America and Spain, government expenditure as a percentage of total GDP did not contract but instead experienced continued relative growth. This conflicts with the common sense of understanding of neoliberalism that equates reforms with state retrenchment. 1.2.7 Inflation As we have seen, it is difficult to speak off one overarching neoliberal model, but some clear policy goals did emerge during the latter quarter of the twentieth century. Chief among these was the management of inflation. While various Latin America countries experienced inflationary crises during this period, the general trend reflected a more careful management of currency value. 1.2.8 Democratization Outside of the realms of finance and trade, it is difficult to speak of a broader economic model. But in the political sphere, there was a clear shift.

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Government Spending (% of GDP)

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Country Bolivia Brazil Chile Colombia Cuba Mexico Peru Spain Venezuela, RB

30

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10

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figure 1.8 Government Spending As Percentage of GDP. Source: own elaboration, with data from Piburn, “wbstats.”

GDP Deflator (logged)

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Country Bolivia Brazil Chile Colombia

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Mexico Peru Portugal Spain Venezuela

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figure 1.9  Inflation, Source: own elaboration, with data from Piburn, “wbstats.”

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Country Bolivia Brazil Chile Colombia Cuba Mexico Peru Portugal Spain Venezuela

Polity Score

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–5

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figure 1.10  Polity Score. Source: own elaboration, with data from Marshall and Gurr, “Polity5.”

Latin America and the Iberian Peninsula saw a wave of democratization beginning in the 1970s. These changes have largely led to democratic consolidation throughout both regions. In this sense, a double transition did occur, typified by democratization and a pivot toward export-led growth. But the latter change should not be equated with an embrace of the standard neoliberal model. 1.2.9  GDP Per Capita Despite these changes, growth in the region has remained modest. Indeed, the growth experienced in Spain, as measured by GDP per capita, vastly outpaced what was seen in Latin America. In the latter case, while gains were made across the region, the growth was relatively moderate, with Chile and Brazil standing out as regional exceptions. Having provided a general overview of neoliberalism in the region, we now turn our attention toward various competing explanations for these changes before discussing the diverse national cases. Focusing on the individual cases further cautions again interpreting changes in the region as being driven by adherence to a generic model of neoliberal reform.

GDP Per Capita (2010 U.S. dollars)

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Country Bolivia 20000

Brazil Chile Colombia Cuba Mexico Peru

10000

Spain Venezuela, RB

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figure 1.11 GDP Per Capita. Source: own elaboration, with data from Piburn, “wbstats.”

1.2.10  Explaining Neoliberalism and the State The work of Sebastián Edwards represents one of the best attempts to present a “Neoliberal” perspective to explain neoliberalism itself, as a historical and political phenomenon.5 Edwards sees neoliberal economic policies as a natural and necessary response to a crisis generated by irresponsible import substitution policies pursued by Latin American governments, which he claims generated foreign exchange shortages and high inflation, stymied exports, bloated the state sector and thus “crowded out” private investment, and ballooned government fiscal deficits and foreign debt. Latin America distinguished itself from the successful cases of economic development in East Asia during the period 1965–1980 by higher rates of inflation, a shrinkage in exports rather than fast export growth, lower savings rates, and higher debt. Edwards sees these differences as the product of excessively interventionist and protectionist Latin American governments that created a situation ripe for economic crisis when the US Federal Reserve dramatically increased interest rates in 1981. Neoliberalism, in this perspective, was a form of “market rationality” imposing itself back on errant economies. 5

Edwards, Crisis and Reform in Latin America, 4.

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But certainly, the Chilean story was much more complicated. Eduardo Silva describes the evolution of “neoliberal” policies in Chile as a product of shifting coalitions underlying the Pinochet regime.6 An initial policy of gradual reform was replaced in 1975 with a more aggressive program, as a result of a coalition between Pinochet and “radical internationalist” industrialists in more internationally competitive sectors such as food processing. Pinochet’s alliance with these sectors allowed him to maintain a personalist dictatorship. Similarly, Judith Teichman emphasizes that even in the context of shifting social coalitions and regime changes, certain sectors of the Chilean bureaucracy were able to develop a considerable amount of policymaking autonomy.7 Just as in South Korea, then, the export promotion that Edwards celebrates was a product of considerable state intervention in Chile, even under “neoliberalism.” Similar analyses of internal social structure and state continuity have been conducted regarding the case of Brazil. Luciana de Souza Leão claims that Brazil’s political economy has retained an important role for the state from the Vargas era up to the present, as evidenced by the continued economic importance of institutions like the Brazilian development bank (BNDES) and particular models of sectoral bargaining.8 Matthew M. Taylor illustrates how the beginning of the military regime and the transition to democracy – also often considered as the beginning of a shift to neoliberalism – were not decisive changes in determining the Central Bank’s role. This leads Taylor to conclude that “critical junctures” – as the advent of “neoliberalism” in Latin America in the 1980s has often been considered – “may prove to be far less significant – or at the very least, far more ambivalent – as moments of institutional change than more quotidian policy paths that respond to the day-to-day challenges of governance.”9 A very different, “Marxist” version of the rise of neoliberalism is associated with David Harvey who sees neoliberalism as “a vehicle for the restoration of class power” with a genesis in a particularly unfettered iteration of capitalism.10 Harvey thus echoes Duménil and Lévy, who define neoliberalism as “the expression of the desire of a class of capitalist owners and the institutions in which their power is concentrated, which we collectively call ‘finance’, to restore – in the context of a general decline in popular struggles – the class’s revenues and power.”11 Duménil and Lévy reject the notion, common to neoliberal theories, that popular demands and labor costs fueled the crisis that neoliberalism was meant to resolve. Instead, they propose that a slowdown in technological progress beginning in the 1960s was the fundamental cause 6

Silva, “Capitalist Coalitions,” 535–55 in particular. Teichman, “The New Institutionalism,” 65–68. 8 De Souza Leão, “Bringing Historical Sociology and Path-Dependence Together,” 178–90. 9 Taylor, “Institutional Development through Policy-Making,” 487. 10 Harvey, A Brief History of Neoliberalism, 31. 11 Duménil and Lévy, Capital Resurgent, 2. 7

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behind the decline in profitability. Capital reacted to this decline by squeezing labor in order to maintain profit rates, as illustrated by declines in wage growth and increases in unemployment that were greater in magnitude than the decline in profit rates.12 Duménil and Lévy thus conclude that traditional Keynesian regulation, typical of the postwar period of capitalist prosperity, was an inadequate policy framework to deal with the problems posed by capitalism as an economic system: “Control of the macroeconomy is not sufficient in the long run. A combination of economic and political circumstances will repeatedly destabilize Keynesian policy frameworks. For example, macroeconomic policies cannot remedy the effects of a crisis in profitability.”13 In short, for Marxist theory, neoliberalism is essentially a natural product of capital’s natural quest to constantly reinvest surplus capital and maintain a given level of profitability. This was manifested first in the developed world by capital’s squeeze on labor, and then by neoliberalism’s expansion into the Global South, including Latin America, in search of cheap labor, cheaper raw materials, and other sources of profit. The implementation of “neoliberal” policies such as trade and financial liberalization, tax reductions, privatization, and “labor market reforms” in Latin America are thus explained, directly or indirectly, as a result of this quest. Both the “Neoliberal” and the “Marxist” approaches, as described here, encounter difficulties when facing up to several important facts. As a rule, they tend to exaggerate the retreat of the state and underestimate both its continuity and its importance. Edwards, for example, criticizes the fact that Latin American states “severely controlled capital markets, quantitatively allocating credit,”14 and he also mentions East Asia – with its lower inflation, high savings rates, and export-led growth – as a model for what Latin America should have done during the period of 1965–1985. Yet during most of that same period in South Korea, one of the main East Asian developmental “tigers,” virtually all banks were state owned.15 Curiously enough, the case of South Korea also punches a hole in Harvey’s contrasting theory of neoliberalism. Harvey cites the example of steel

12 13

14 15

Duménil and Lévy, Capital Resurgent, 27. Duménil and Lévy, Capital Resurgent, 196. This analysis is, of course, limited in scope to the developed countries of Western Europe and the United States. However, David Harvey more or less illustrates how Duménil and Lévy’s analysis of the raison d’être of neoliberalism applies to the Global South in his Seventeen Contradictions and the End of Capitalism: “Without uneven geographical development and its contradictions, capital would long ago have ossified and fallen into disarray. This is a key means by which capital periodically reinvents itself…. Start-ups in say, South Korea – where steel production is much cheaper because of lower-cost labor, easier to access raw materials and markets, and the like – drive out the more costly and the less efficient industries in older regions such as Pittsburgh and Sheffield.” Harvey, Seventeen Contradictions, 147–48. Edwards, Crisis and Reform in Latin America, 12. Chang, “The Political Economy of Industrial Policy in Korea,” 151–52.

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production moving to Korea in search of “lower-cost labor” and “easier to access raw materials and markets” as an illustration of international capital’s constant search to shore up profit margins, the main force behind the expansion of neoliberalism. Yet here Harvey also seems to ignore the persistent presence of the South Korean state as a political and economic actor, which made the expansion of the South Korean steel industry possible. An existing comparative-historical literature, meanwhile, emphasizes a greater degree of institutional continuity through the period of neoliberal reforms in Latin America, and it addresses, at least in part, the main hole in the “Neoliberal” and “Marxist” approaches outlined above: an underappreciation of the continued importance of state intervention. This literature also emphasizes the importance of domestic social configurations in causing and influencing the neoliberal reforms, a factor that is more or less ignored by the two other theoretical approaches, which see market rationality, international capital, and financial institutions as the main causal actors.16 In the rest of this chapter, we follow what we might call a Polanyian approach. Paraphrasing Polanyi on laissez-faire, we could say that while neoliberalism was the product of deliberate state action, “subsequent restrictions on laissez-faire started in a spontaneous way. Laissez-faire was planned; planning was not.”17 In other words, market society – in nineteenth century England in The Great Transformation, or in modern neoliberalism in the case of “neo-Polanyian” literature – is based on state structures.

1.3  case

studies

In the following pages, we provide short summaries of the various Latin American political and economic policies during the past four decades. We begin with a discussion of the two most cited “successes”: Brazil under Cardoso and Lula, and Chile following Pinochet. We then consider whether these successes could be said to originate with specific neoliberal policies. We continue with the analysis of other cases in the region who had less dramatic policies and outcomes. One of the most obvious findings of our summaries is that it would be impossible to speak of a regional model. One trend was clear: the democratization of the region beginning in the 1980s. But these newly democratic governments did not follow the same model. Some policies do appear consistent, most importantly, the control of inflation in the 1980s and 1990s. Most of the LA countries also expanded their openness to global trade. Both the policies and their results challenge the idea of a single neoliberal public policy model. We then discuss the three cases of “anti-neoliberal” policies and suggest that these did not represent that radical a break, but essentially followed the historical pattern of relaying on commodity sales or, in the case of 16 17

Taylor, “Institutional Development through Policy-Making,” 491. Polanyi, The Great Transformation, 141.

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Cuba, the largesse of an ally. Following this discussion, we present a summary of policies in the Iberian Peninsula, but also call into question any idea that it represents a neoliberal success story. 1.3.1  Brazil and Chile: Neoliberal Success in Latin America? Brazil and Chile are often presented, in slightly different contexts and periods, as neoliberal “successes” – to what extent is this the case? Answering this question must begin with the fact that at least the last two-and-a-half decades have seen relatively little change in the productive structures of Latin America’s major economies. All of them have remained primarily commodity exporters, with the exception of Mexico, which has served as a low-wage manufactured export platform for the United States. The commodity boom in the former, and the expansion of NAFTA in the latter, has only served to reinforce economic continuity. Brazil and Chile are no exception; they have remained exporters of commodities and their derivatives throughout the last few decades. Several differences are of note, however: Exports have always played a more important part of the Chilean economy than of the Brazilian one. In 1995, when Chile’s new democratic government was largely continuing many of the economic policies of the Pinochet dictatorship and Brazil was implementing the Plano Real to control inflation, exports were already much more important to the Chilean economy than to the Brazilian one.18 1.3.1.1 Chile The period between 1975 and 1982 saw the most radical attempts to establish a neoliberal model in Chile. During this period, Pinochet formed alliances with more internationally competitive sectors of the Chilean industrial elite – at the expense of more traditional industrial sectors reliant on import substitution – and placed neoclassical economists trained at the University of Chicago, the 18

Data obtained by dividing Observatory of Economic Complexity (OEC) data for total export value by population data obtained from the World Bank’s World Development Indicators. Note that figures are in current, not real dollars. The composition of Brazilian exports has changed significantly during the past 25 years, while that of Chilean exports has remained remarkably stable. In 1995, the top three Brazilian exports were in order of value, iron ore, coffee, and soybean meal; in 2000, aircraft, iron ore, and soybeans; in 2005, iron ore, soybeans, and cars; in 2010, iron ore, soybeans, and raw sugar; in 2015, soybeans, iron ore, and crude petroleum. Chile, in contrast, has kept the exact same three exports in the exact same order, except for one year (2005): refined copper, copper ore, and sulfate chemical wood pulp. In part, this difference is simply attributable to Chile’s consistent position as one of the world’s primary copper producers. However, behind the difference are also substantial dissimilarities in industrial and economic policy. Take sulfate chemical wood pulp, for example, consistently Chile’s third largest export by value. Its importance is largely a result of concerted efforts to promote the forestry sector using a variety of industrial policy incentives, including under the Pinochet dictatorship.

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so-called “Chicago Boys,” in charge of economic policy. By 1979, tariffs had been reduced to a flat 10 percent rate.19 The new regime re-privatized firms nationalized under the Allende presidency – reducing the number of stateowned enterprises from 460 to about two dozen by 1980 – and it returned about 30 percent of lands expropriated under agrarian reforms to their previous owners.20 Although Pinochet did not privatize the state-owned copper company, CODELCO, he did open up copper production to foreign enterprises.21 Beginning in 1981, workers were required to contribute 10 percent of their incomes into private accounts managed by private Administradoras de Fondos de Pensiones (AFPs).22 However, the economic challenges of 1982 that ensued from both these draconian policies and a general international crisis allowed a more gradualist coalition of industrialists to assemble behind the Pinochet dictatorship.23 The result was a more robust industrial policy and a retreat from radical neoliberalism. Organizations like the old Corporación de Fomento de Chile (CORFO) and new ones like PROCHILE and Fundación Chile supported export sectors like processed forestry and food products with subsidies and credit, while also searching for new export markets. These policies continued under the centerleft governments of the 1990s, which extended financing programs toward small and medium enterprises (SMEs) and established the Fondo de Desarrollo Tecnológico y Productivo (FONTEC) in 1991 in order to expand support for R&D in the export sector.24 Thus, while during the first decade of the dictatorship (1973–1983) exports grew at about the same rate as the previous decade (about 3.5 percent annually), between 1983 and 1999 exports grew at an average rate of about 6 percent per year. At the same time, the importance of copper in Chile’s export profile actually decreased. In 1960–1973, mining exports accounted for an average of 86.5 percent of Chile’s total export value; by the 1990s, this figure had decreased to about 46 percent. During the same period, manufactured exports increased from 10 percent to 40 percent of total export value.25 This change in export profile seems to have been permanent; even during the peak of the commodities boom, when copper increased slightly in importance, the top three exports, including copper, never passed 55 percent of total export value, and they had decreased again to about 45 percent by 2015.26

19 20 21 22 23 24 25 26

Silva, “Capitalist Coalitions,” 547. Petras and Vieux, “The Chilean ‘Economic Miracle’,” 62. Riesco, “Chile, a Quarter Century On,” 100–101. Arenas de Mesa and Mesa-Lago, “The Structural Pension Reform in Chile,” 150. See Silva, “Capitalist Coalitions,” 549–50; for the privatized pension system, see Arenas de Mesa and Mesa-Lago, “The Structural Pension Reform in Chile,” 150. Teichman, “The New Institutionalism,” 65–68. Alvarez and Crespi, “Exporter Performance and Promotion Instruments,” 227–29. OEC data.

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Since the 1990s, meanwhile, Chilean economic policies have been characterized by two innovations. First of all, successive administrations have expanded social spending and redistribution such that the benefits of growth were distributed more evenly (but, as discussed below, not dramatically changing Chile’s levels of inequality). Under the Christian Democratic Aylwin and Frei administrations of the 1990s, public spending in the education sector grew by 150 percent, adjusted for inflation, and spending in the health sector grew by 120 percent, while the poverty rate decreased from 38.6 percent to 21.7 percent during the same period.27 In the early 2000s, the social-democratic Lagos administration (2000–2006) introduced the AUGE program, which somewhat decreased inequality between the country’s public and private health sectors by designating fifty-six illnesses to be treated by standard coverage between the two sectors.28 Meanwhile, the first Bachelet administration (2006–2010) reformed the privatized pension system, which had delivered lower rates of return and higher costs than promised and had not increased the rate of coverage. It established a guaranteed basic pension for those without private pension accounts, as well as a system of supplements for those whose private pensions did not meet a minimum level.29 During her second term (2014– 2018), Bachelet made university education free for students whose household income was in the bottom 60 percent of the distribution and implemented a tax reform increasing the corporate tax and eliminating loopholes; these reforms ultimately increased by 50 percent the amount of taxes paid by the top 1 percent of earners.30 During his first term (2010–2014), center-right president Sebastián Piñera actually added to the list of illnesses covered by AUGE and expanded conditional cash transfers.31 In concert, all of these measures seem to have had a positive effect on economic inequality in Chile, as evidenced by World Bank GINI data, which show a gradual but consistent decline in Chile’s GINI coefficient over the last several decades, from over fifty-five in the late 1980s to about forty-seven by the late 2010s.32 The second important trend in economic policy since the democratic transition has been the consolidation of counter-cyclical fiscal policies. Beginning in 2001, the Concertación governments began to implement fiscal policies adjusting for copper prices and GDP growth, which were enshrined in 2006 in the “Fiscal Responsibility Law.”33 Although the name of the law would seem to suggest orthodox economic policy, in practice it facilitated Keynesian spending

27 28 29 30 31 32 33

Aninat, “Chile in the 1990s,” 20. Huber, Pribble, and Stephens, “The Chilean Left in Power,” 88–89. Huber, Pribble, and Stephens, “The Chilean Left in Power,” 92. Seiler and Raderstorf, “Michelle Bachelet’s Underappreciated Legacy in Chile.” Niedzwiecki and Pribble, “Social Policies and Center-Right Governments in Argentina and Chile,” 79–83. John’s data. Rodriguez, Tokman, and Vega, “Structural Balance Policy in Chile,” 60–61.

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patterns by reserving surpluses in times of economic growth and facilitating greater spending during economic downturns. This came in handy during the recession of 2009 in particular. It also safeguarded social spending, particularly on pensions.34 Thus, the 5.5 percent average fiscal surplus in between 2004 and 2007 turned quickly into a 4.4 percent deficit in 2009 in order to respond to the world economic crisis.35 Moreover, Chilean Central Bank economist Michael Pedersen suggests that “the Chilean fiscal rule works in the sense that copper price movements have little impact on the non-mining sector.”36 Chile has been governed for 24 of the last 30 years by center-left governments. Given the reasonable socioeconomic gains of these years – the consolidation of industrial policy, a gradual decrease in inequality and expansion of the welfare state, and insulation from the worst of international shocks through Keynesian fiscal policy – how is it then that the massive protests of late 2019 erupted? Explanations have abounded. Carolina Tohá, ex-mayor of Santiago and a minister in Michelle Bachelet’s first government, provides what seems to be a level-headed analysis. She roots the problem in the institutional legacy of the dictatorship. Taking into account the advances of the center-left after the transition, she argues: “Lo que ha hecho explotar a Chile es la incapacidad del sistema político de destrabar los debates que no tenían una salida. La derecha estiró demasiado el chicle de las ventajas que le daba el sistema. Hoy probablemente se arrepienta.”37 In other words, there came a point at which the practice of tweaking the Pinochet-era framework to address inequality, expand political representation, and institute progressive social changes became insufficient, and further changes to the system were blocked by the institutions of precisely that framework. This argument seems backed by the limitations of the reforms. The AUGE program has left fundamentally intact the two-tiered health system, of which the public component still serves 85 percent of the population and is burdened 34 35 36

37

Huber, Pribble, and Stephens, “The Chilean Left in Power,” 82–85. Ffrench-Davis, “Challenges for the Chilean Economy,” 64. Pedersen, “The Impact of Commodity Price Shocks,” 1307; Ffrench-Davis, “Challenges for the Chilean Economy,” 64–73. Chilean economist Ricardo Ffrench-Davis points out, however, that this counter-cyclical spending pattern seems to have lost its coherence over the next three years after the recession, seemingly as a result of the way GDP growth and copper prices were estimated. He adds that the Chilean economy, in addition to restoring the coherence of Keynesian fiscal policy, needs more aggressive industrial policy, particularly with respect to “long-term local financing, the transfer of technology and labor training” for small and medium-sized firms. Nevertheless, it should be pointed out that while Brazil entered recession during 2015–2016, in Chile growth only slowed, from 5.7 percent in 2010–2012 to 2.3 percent in 2015, even though according to the OEC data Chile experienced a proportionally greater decline in its export value during that period (from $71.9 billion to $64.8 billion in Chile vs. $207 billion to $197 billion in Brazil), and exports constitute a greater percentage of GDP in Chile than they do in Brazil. See Tohá, “Chile o el vértigo del futuro,” 83–84. Tohá also mentions the improvements in the GINI in particular – see p. 80.

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by exasperatingly long-waiting lists.38 The privatized pension system also remains intact, despite the efforts to make it more progressive and establish minimum pension guarantees. “It is therefore not surprising,” as Kirsten Sehnbruch and Sofia Donoso argue, “that Chileans state that their top three priority concerns are pensions (65 percent), health care (46 percent) and education (38 percent).”39 Nevertheless, the government’s response to the protests has addressed, perhaps surprisingly, the barrier identified by Tohá, in proposing a “social pact” with a referendum on a new constitution. The Mesa de Unidad Social, a coalition of trade unions, NGOs, and representatives of the Communist and Humanist parties, have rejected the proposal due to their lack of consultation in the process. Yet most political parties, as well as 67 percent of Chileans, support it.40 1.3.1.2 Brazil To what extent does Brazil constitute a neoliberal showcase? The Brazilian military dictatorship, which lasted between 1964 and 1985 and thus overlapped substantially with the Pinochet dictatorship, provides a good starting point for a comparison with Chile. The Brazilian dictatorship is not viewed as a paragon of neoliberalism in the same way the Pinochet regime is. Certainly, the regime pursued interventionist economic policies and import substitution, the latter to a greater extent than its Chilean counterpart. But just as the degree of interventionism of the Pinochet regime is underestimated, to say that the Brazilian regime was a pure ISI regime would also be misleading. First, during its first years, the dictatorship substantially reduced inflation by reducing demand, a process that involved the erosion of working-class wages, controlled spending cuts as well as increases in tax collection; not a set of policies typical of Latin American ISI.41 Second, average tariffs actually decreased more than 20 percent between 1967 and 1973, from 48 percent to 27 percent. Moreover, just like the Pinochet regime after 1982, the Brazilian dictatorship pursued export promotion aggressively, particularly in the area of manufactured exports, which grew at an average annual rate of 30 percent during the 1970s.42 This expansion involved a variety of industrial policies including targeted subsidies and state credit and entailed a centralized, bureaucratically efficient authoritarian regime committed both to an alliance with industrial elites and a program of working-class repression. An important caveat to this policy, however, was its substantial reliance on the investment of multinational corporations, which were producing half of Brazil’s manufactured exports by the end of the 1970s.43 38 39 40 41 42 43

Sehnbruch and Donoso, “Social Protests in Chile,” 54. Sehnbruch and Donoso, 55. Sehnbruch and Donoso, 53 and 55–56. Kohli, State-Directed Development, 202–03. Kohli, State-Directed Development, 206. Kohli, State-Directed Development, 203, 207, and 216.

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The oil crises of the 1970s threw off the dictatorship’s industrial strategy, however. When oil prices increased dramatically in the mid-1970s, rather than accepting reduced growth, the regime bet on financing a continuation of the rapid and import-intensive growth strategy with debt, a strategy that seemed viable in the short term but fell apart with the dramatic increase of US interest rates in the early 80s.44 Atul Kohli thus calls the dictatorship’s approach “a debt-led, high-growth strategy that almost worked.”45 Brazil’s newly inaugurated democratic government, which took office at the end of the 1980s, thus inherited a much more difficult macroeconomic situation than its Chilean counterpart, a fact that must be taken into consideration when evaluating the “success” of its policies. The latter could continue the industrial policies initiated after the recession of 1982, policies that had resulted in consistent export-led growth. The former had to deal with the high inflation and debt that it inherited after a debt-financed process of industrialization was blown out of the water by the exact same crisis of the early 1980s. Thus, inflation became a constant concern of Brazilian governments in the 1990s; by the end of the administration of José Sarney in 1990, inflation had reached 2000 percent.46 While the measures used to deal with the debt and hyperinflation often involved significant doses of neoliberalism, they were not the radical neoliberalism of Chile before 1982, for example. Indeed, many of the measures of the 1990s were “heterodox”: trying to insulate wages against inflation and curb demand among the middle and upper classes under Sarney; asset freezes and capital gains taxes under Fernando Collor (1990–1992); and a reintroduction of “moderate protectionism” under Fernando Henrique Cardoso (1994–2002).47 The one neoliberal constant was the privatization of state-owned enterprises. In any case, by Cardoso’s presidency (1994–2002), inflation had decreased to about 15 percent per year.48 The Workers’ Party (PT) government of Luis Inácio “Lula” da Silva thus inherited an economy in 2002 with significantly lower inflation than it had seen in the 1990s. Lula’s administration also benefitted from a massive boom in commodity prices. Between 1995 and 2000, for example, the total value of Brazilian exports increased moderately, from $49.5 billion to $58 billion. Between 2000 and 2005, in contrast, the figure skyrocketed to $126 billion.49 It is thus not surprising that scholars estimate that during the same period 80 percent of Brazil’s GDP growth was a direct result of this expansion of exports.50 44 45 46 47 48 49 50

Kohli, State-Directed Development, 208–10. Kohli, State-Directed Development, 209. Kingstone and Ponce, “From Cardoso to Lula,” 102. Skidmore, The Politics of Military Rule in Brazil, 276–83; Crabtree, “The Collor Plan,” 120–21; Kingstone and Ponce, “From Cardoso to Lula,” 103 and 106. Schneider, “Brazil under Collor,” 326–27; Kingstone and Ponce, “From Cardoso to Lula,” 103 and 106. OEC data. Bonelli and Castelar Pinheiro, “New Export Activities in Brazil,” 14.

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Both fiscal and monetary policy were orthodox during Lula’s administration. As finance minister, Lula installed the neoliberal Henrique Meirelles; in 2005, the Brazilian Central Bank raised interest rates to 19.23 percent from a rate of 16.24 percent the previous year. At the same time, Lula consolidated a program of conditional cash transfers that had been initiated under the Cardoso administration as Bolsa Escola – the program was already reaching 5 million families by the end of Cardoso’s term – which allowed the economic effects of the commodity boom to trickle down. As a result, the poverty rate decreased from 38.7 percent in 2003 to 30.3 percent in 2007, while the Gini index declined from 57.7 to 55 during the same period.51 But what about industrial policy? Something of a program began to come together toward the end of Lula’s presidency with the promulgation of the Programa de Aceleraçâo do Crescimento (PAC) in 2007, and it would carry over to the beginning of Dilma’s administration. The basic pillar of the new developmentalism was an attempt to use local content requirements to create an internally articulated industrial structure. The policy was heavily reliant on oil, especially in wake of the discovery of massive new oil reserves under Lula’s administration.52 By 2011, a study was estimating that “61.5 percent of all industrial investment in the period between 2011 and 2014 will be linked to the exploration, production and refining of oil and gas”; indeed, oil revenues were funding 35 percent of the PAC’s investment by 2012.53 Local content requirements did have something of an effect, however. The shipbuilding industry is a case in point, particularly as it related to the oil industry. In 2012, Petrobras reached an agreement for the construction of twenty-six oil rigs with local content requirements of 55–65 percent.54 As a result of this type of policy, the number of workers employed in the shipbuilding industry increased from 1900 to 80,000 between 2000 and 2010.55 Success did not last, however. Perry Anderson essentially argues that the economic success of Lula’s government had rested on two factors: the growth in commodity exports and an expansion of consumer credit, the latter used to finance a boom in domestic consumption. Thus, Lula’s presidency saw the share of commodities in Brazil’s export profile increase from 28 percent to 41 percent – during Dilma’s first term, the figure would surpass 50 percent – while total private sector debt more than doubled as a percentage of GDP between 2005 and 2015, from 43 percent to 93 percent. At the same time, beginning precisely in 2011, when oil seemed to be one of the key pillars of Brazil’s 51 52 53 54 55

Kingstone and Ponce, “From Cardoso to Lula,” 106–14 and 117; Melo, “Unexpected ­Successes,” 163. Romano Schutte, “Brazil: New Developmentalism,” 50–53. Romano Schutte, “Brazil: New Developmentalism,” 61. Singer, “The Failure of the Developmentalist Experiment in Three Acts,” 360. Romano Schutte, “Brazil: New Developmentalism,” 62.

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industrial development strategy, the price of crude petroleum began to tumble, eventually reaching $50 a barrel from a high of $140, with the prices of iron ore and soybeans experiencing similarly dramatic declines.56 These economic vulnerabilities were compounded by a shift in social support for Lula’s PT. Brazilian political scientist André Singer sees the ultimate failure of the Lula-Dilma development strategy as rooted in the collapse of the implicit social alliance that underpinned it – between the industrial bourgeoisie and the working class, the latter as represented by the PT. During her first term in office, Dilma attempted to “deepen” the developmentalist advance under Lula by expanding credit, planning to channel 600 million reais of industrial investment through the BNDES, applying selective tax incentives for private industrial investment, expanding infrastructure spending, reintroducing some capital controls, attempting to lower the prices of energy inputs in the industrial sector, and devaluing the real. Dilma also went after Brazil’s very high interest rates, an effort that failed in April of 2013 when the Central Bank raised them again. Singer’s basic point is that, in a wave of panic in the international business press about the return of statism, “the industrial bourgeoisie turned ‘against its own interests’ to avoid what was seen as the greater evil: an excessively strong State, allied with the workers and out of control.”57 In any case, waves of protest began in June 2013, organized not by the right but rather by left-wing groups, in response to hikes in public transit fares in Sao Paulo; these protests then became generalized.58 Moreover, after winning reelection in 2014, Dilma’s administration actually began to impose austerity measures.59 Brazil entered recession in the next two years, during which it lost a cumulative 8 percent of GDP relative to 2014 and saw a 76 percent increase in the unemployment rate, to 12.6 percent.60 1.3.2  Middling Cases: Mexico, Peru, and Colombia These three cases have received much less attention and have not been used as exemplars of neoliberal success. The history of their public policy programs over the past 40 years again argues against a reductionist model of neoliberalism and once again demonstrates the critical role of the state.

56

57

58 59 60

Anderson, Brazil Apart, 102–03. Romano Schutte (2013) also mentions the expansion of consumer and housing credit, though not in the same critical fashion as Anderson, likely because he lacked the benefit of hindsight; see pp. 53–54. Singer, “The Failure of the Developmentalist Experiment,” 362. A brief summary of Singer’s analysis can be found in this article; for a more extended analysis in Portuguese, see Singer, “Cutucando onças com varas curtas.” Singer, “From a Rooseveltian Dream to the Nightmare of Parliamentary Coup,” 19–20. Anderson, Brazil Apart, 102. “Brazil’s Recession Worst on Record.”

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1.3.2.1 Mexico The presidency of José López Portillo, who took office in 1976 from Luis Echevarría, is a good point to start a survey of Mexican public policy at the beginning of the neoliberal era, because during this administration the economy went to a structural shift. The discovery of massive oil reserves during López Portillo’s presidency coincided with a global increase in oil prices in the wake of the Arab oil embargo. While annual oil production increased from about 0.7 million barrels to just under 2.5 million barrels during the first four years of López Portillo’s presidency, oil revenues increased twelvefold, from $0.5 billion to $6 billion. As a result, the López Portillo administration went on a massive spending spree, funding it with extensive borrowing from foreign banks in addition to oil revenues. When oil prices began to decline in the early 80s, however, the calculation the administration had made in incurring this debt was shown to have maximized risk. The result was a financial and economic crisis – ­inflation, capital flight, and a collapse of the value of the peso, which slid from 26 to 100 pesos to the dollar during López Portillo’s administration.61 In 1982, just before leaving office, López Portillo introduced foreign exchange controls and ­nationalized private banks as a measure to temper capital flight.62 López Portillo was succeeded by Miguel de la Madrid, who pursued a much more orthodox economic policy. This included a re-privatization of the banks, trade liberalization through a significant loosening of import licensing restrictions, and entrance into the GATT in 1986. The Pacto de Solidaridad Económica (PSE) of 1987 with business leaders included the marketization of exchange rates, wage indexation, price increases, and further trade liberalization.63 De la Madrid also pursued further privatizations and harsh austerity measures in the public sector, including wage reductions and layoffs of public sector workers.64 De la Madrid’s successor, Carlos Salinas de Gortari (1988–1994), continued the liberalizing course, including further privatizations and deregulation.65 Another significant measure was a liberalization of Mexico’s land reform sector. A new law allowed ejidos to be sold and rented and allowed for individual ownership.66 Perhaps the most important economic policy of Salinas’s sexenio, however, was of course the negotiation and ratification of NAFTA, which came into effect on January 1, 1994.67 Salinas also kept the peso at a tight peg to the dollar, resulting in substantial overvaluation and culminating in the peso crisis of 1994, accompanied by

61 62 63 64 65 66 67

Meyer and Sherman, The Course of Mexican History, 678–84. Thacker, Big Business, the State, and Free Trade, 52. Thacker, Big Business, the State, and Free Trade, 53, 81–82, and 86. Meyer and Sherman, The Course of Mexican History, 687. Kleinberg, “Strategic Alliances,” 75. Meyer and Sherman, The Course of Mexican History, 698. Staudt, “How NAFTA Has Changed Mexico,” 43.

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capital flight and foreign exchange depletion. Ernesto Zedillo (1994–2000), Salinas’s successor, thus entered the presidency with a crisis on his hands. The unemployment and annual inflation rates reached 40 percent, GDP declined by 7 percent in 1995, and interest rates skyrocketed. The Zedillo administration thus let the exchange rate float, pursued more privatizations, and tried to lure in foreign investment with tax incentives. The result was some economic improvement – foreign investment, exports, and economic growth picked up, while inflation declined.68 The Zedillo administration also saw the implementation, in 1997, of a new conditional cash transfer program called Progresa, which paralleled the installation of Bolsa Escola in Brazil.69 Zedillo was followed by Vicente Fox of the Partido Acción Nacional (PAN), the first time the PRI lost the presidential election since 1929, a critical juncture that marked the consolidation of the transition to democracy in Mexico. Fox inherited several years of decent growth in the second half of the Zedillo administration. However, his economic policy efforts mostly fell short. Fox struggled to work with a Congress dominated by the opposition, and Mexico suffered from the effects of the US recession in the early 2000s. Only in 2004 did GDP begin to grow again, and even then, at 4 percent, growth was well below Fox’s targeted average rate of 7 percent. The Fox administration was also unable to expand tax revenues and continued to rely on oil sales to finance the budget. Thus, tax revenues were stuck at 11 percent of GDP, as opposed to 25 percent in Chile, for example. As far as NAFTA and international trade were concerned, Fox did inherit a marked increase in the importance of manufactured exports within the total export profile – by the turn of the millennium, they had finally surpassed oil exports in value. However, despite Fox’s effort to strengthen industrial policy and consolidate it in a Comisión Intersecretarial de Política Industrial, linkages between multinational exporters and smaller local firms continued to be weak. The Fox administration did see a slight improvement in levels of inequality, as the bottom 80 percent of households increased its share of national income slightly, relative to the top 20 percent.70 The main policy focus of the administration of Felipe Calderón (2006–2012, also of PAN) was the so-called War on Drugs, which included the deployment of the military and a massive expansion of the Federal Police, from 6,500 to 37,000 officers.71 In terms of economic policy, Calderón continued the long-term program of liberalization pursued by previous presidents since De la Madrid. This included further deregulation – Calderón boasted of having “eliminated 16,000 rules or regulations at the federal level” – and trade liberalization, for which he claimed, “the average tariff on manufacturing supplies 68 69 70 71

Kleinberg, “Strategic Alliances,” 80–83; Thacker, Big Business, the State, and Free Trade, 195. Parker and Todd, “Conditional Cash Transfers,” 866. All the above facts and figures are taken from Pastor and Wise, “The Lost Sexenio,” 143–55. Rodríguez, “Calderon Sees Security as Legacy.”

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reduced from 12% to 4%.”72 However, GDP growth continued to slow: It averaged only 2.2 percent over the course of Calderón’s tenure. Some analysts also pointed to an absolute increase of 14 million in the number of people under Mexico’s poverty line.73 Enrique Peña Nieto (2012–2018) signaled a return of the PRI to the national executive power in Mexico, under a system of fair elections. In terms of economic policy, continuity was the rule. Interest rates remained high, and GDP growth continued to be rather disappointing (less than 3 percent on average during Peña’s sexenio). Tax collection increased slightly as a percentage of GDP, from about 11 percent to just under 14 percent toward the end of Peña’s tenure. Industrial policy continued to be weak, however, compared not only to the industrial powerhouses of East Asia but also to other Latin American countries. Thus, for example, even though the Peña administration channeled more resources into Mexico’s development bank, Nacional Financiera, by 2016 its portfolio represented still only 3 percent of GDP, compared to 15 percent for Brazil’s BNDES. Peña’s landmark piece of economic policy was an attempt at reform in the energy sector, in which the state-owned oil company, PEMEX, was opened up to greater levels of private investment. There is a strong argument to be made that the reform was a product of pragmatic, rather than ideological/neoliberal considerations. Between 2000 and 2013, PEMEX provided the Mexican national government with 40 percent of its total income. Yet the company was increasingly in financial disarray, unable to invest sufficiently in production. It was hoped that opening PEMEX to the private sector would allow for increased investment, although it does not seem that the company has seen the levels of investment that were promised.74 Rhetorically, Peña’s successor, Andrés Manuel López Obrador (AMLO, 2018–2024), has consistently critiqued the liberal economic policies of his predecessors. In practice, however, AMLO’s presidency has not constituted a radical break with the past. Several policy developments have been of note so far. Toward the beginning of his presidency, AMLO cancelled the construction of a new international airport in Mexico City, already partially underway, after an electoral “consultation” with low turnout and numerous irregularities. Under the banner of “republican austerity,” (austeridad republicana), AMLO has undertaken austerity measures in certain parts of the public sector, notably by cutting the salaries of upper-level government officials including his own, which he reduced by 40 percent. He has focused significant attention on several landmark public works projects, including a new international airport project in the Mexico City metro area, a tourist railroad construction project in the southeast of the country (the so-called “tren maya”), and the construction 72 73 74

“Looking Back on the Calderon Years.” Huérfano, “El crecimiento económico con Felipe Calderón fue magro.” The statistics above and the summary of Peña’s tenure are from Bizberg, “El fracaso de la ­continuidad,” 638–72.

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of a new oil refinery. The latter in particular has been part of a broader project to revitalize PEMEX’s productive capacities. Despite AMLO’s ostensibly leftist orientation, his administration has been remarkably conservative in terms of public spending. Even in the area of social welfare, which has been an important part of AMLO’s platform, $2.5 billion in allocated resources had gone unspent by the end of 2019.75 1.3.2.2 Peru Peru transitioned to electoral democracy in 1980 from a military government that had pursued cautious neoliberal reforms. Led by Juan Morales Bermúdez, the regime had undone some of the policies of the preceding leftwing nationalist military government of Juan Velasco Alvarado, particularly by cutting social spending and subsidies.76 The first elected government, led by Fernando Belaúnde (1980–1985), accelerated neoliberal reforms. His program included privatizations, trade liberalization, currency devaluation, and a program of investment in public works, particularly those linked to primary goods exports. The program met limited success, even by its own measures. Privatizations were limited, in part because of political reluctance and also due to lack of demand in the private sector. The administration did make significant advances in trade liberalization – lowering the average tariff rate from 46 to 32 percent and increasing the percentage of goods that entered duty free from 38 to 98 percent – although this had detrimental effects on domestic manufacturing. The public investment program did not meet its targets, nor did the administration’s measures bring in the levels of foreign investment promised. Macroeconomic results were quite disappointing. Growth slowed in 1982–1983, with GDP contracting by 12 percent in 1983 and manufacturing by almost 17 percent, with a slight recovery in the next two years. Meanwhile, annual inflation increased from 60 percent to over 150 percent over the course of Belaúnde’s administration, while gross fixed investment declined from 24 percent to less than 17 percent of GDP during the same period.77 Belaúnde was succeeded by Alan García of the center-left APRA party (1985–1990). García tried to formulate a social-democratic economic policy based on heterodox macroeconomic policy, industrial policy, political sensitivity to the interests of labor, and consultation with major industrialists (concertación). Specific policies included a cap of 10 percent on the debt service ratio, interest rate reduction, price controls, and deficit spending. For a variety of reasons, including hostility from creditors and international financial institutions, a drain in foreign exchange reserves, demand spikes in areas without price controls, and a decline in tax revenue, the program failed; Peru entered into a recession starting in 1988. In 1989, GDP shrunk by 10 percent, the 75 76 77

Bravo Regidor, Beck, and Iber, “El primer año del México de AMLO.” Silva, Challenging Neoliberalism in Latin America, 234–36. Pastor and Wise, “Peruvian Economic Policy in the 1980s,” 86–91.

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manufacturing sector contracted by almost 20 percent, and inflation surpassed 2700 percent.78 Alberto Fujimori (1990–2000) was elected on a promise to tackle this economic crisis in a gradual manner that considered the interests of the working class and the poor, in contrast to the “shock” of public sector layoffs, quick elimination of price controls, and privatizations offered by his opponent, writer Mario Vargas Llosa. Soon after taking office, however, he quickly embarked on a neoliberal agenda of removing subsidies, trade liberalization, privatizations, labor reforms, and financial deregulation. Soon after Fujimori removed price controls and subsidies in 1990, the price of gasoline skyrocketed by more than 3000 percent, and the price of bread by over 1500 percent.79 Although the Fujimori presidency saw some economic growth, it was not translated into improving living standards, and indeed the poverty rate increased from 42 percent to 53 percent between 1993 and 2000. The Fujimori regime was able to maintain power despite these negative results with relatively little resistance from social movements because of the fight against the Sendero Luminoso and Tupac Amaru guerrilla insurgencies as well as a consolidation of authoritarian power backed by the military.80 A corruption scandal unveiled in 2000 resulted in massive protests against the Fujimori regime, and Fujimori was quickly forced to resign. After a brief transition government, he was succeeded by centrist Alejandro Toledo (2001– 2006).81 In political and rhetorical terms, Toledo’s administration repudiated the Fujimori regime, most notably by establishing a “Truth Commission” to investigate crimes committed during the counterinsurgency of the 80s and 90s. In terms of economic policy, however, Toledo’s administration largely “deepened” the neoliberal program of the Fujimori regime. Toledo tried to finance expanded social and public investment by conducting further privatizations and trying to attract foreign investment; however, tax collection remained remarkably low, at 13 percent of GDP. The administration promulgated a decentralization law that, while devolving some powers in areas like education and health, did not devolve tax powers. Finally, Perú under Toledo signed several free trade agreements, most notably with the United States. Riding a rise in demand for Peru’s primary exports, the administration experienced increased growth, which surpassed 5 percent in 2004 and 6 percent in 2005.82 This economic growth did not imply popularity for the government, which saw its approval rating drop dramatically below 10 percent.83

78 79 80 81 82 83

Pastor and Wise, “Peruvian Economic Policy in the 1980s,” 96–104 and 90. Stokes, “Democratic Accountability and Policy Change,” 211–15. Silva, Challenging Neoliberalism in Latin America, 240–45. Silva, Challenging Neoliberalism in Latin America, 245–46. Gonzales de Olarte, “La economía política peruana de la era neoliberal,” 305 and 311–16; Contreras and Zuloaga, Historia mínima de Perú, 278–79. Gonzales de Olarte, “La economía política peruana de la era neoliberal,” 316.

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Toledo’s successor was Alan García (2006–2011), who returned to the presidency after his less than successful first stint in the late 1980s. García further continued the neoliberal model. He backed the free trade agreement with the United States. Somewhat parallel to Toledo’s program, he implemented austerity measures with the expressed purpose of redirecting funds to social spending. He used tax exemptions, such as those on imported capital goods, to attract investment, particularly foreign investment in extractive industries. The government violently repressed protests against the implementation of neoliberal measures. Nevertheless, growth continued to be propped up by a favorable international environment.84 García’s successor (2011–2016), Ollanta Humala, had run previously on an anti-neoliberal platform. In the 2011 elections, however, he presented himself as a candidate of the moderate center-left on the model of Lula in Brazil. There was little discontinuity with the neoliberal model during this presidency, as evidenced by his government’s repression of protests against an enormous gold mining investment project in Cajamarca backed by transnational corporations and his backing of both negotiations for the Trans-Pacific Partnership (TPP) and the Pacific Alliance, a trade agreement with Mexico, Colombia, and Chile.85 Meanwhile, demand for primary exports, particularly mining goods, decreased, and as a result per capita GDP growth slowed to less than 2 percent by 2015.86 The last several years have seen the quick succession of two presidents, Pedro Pablo Kuczynski and Martín Vizcarra. Pedro Pablo Kuczynski only lasted 20 months, having resigned when he was implicated in an extension of the massive Odebrecht scandal. Vizcarra’s administration, meanwhile, has seen two major events. The first was Vizcarra’s dissolution of Congress and call for new elections in late 2019, and the second the COVID-19 pandemic. In terms of the latter, although Vizcarra took quick action, the outbreak seems to be particularly severe, emphasizing the fact that Peru has made less progress in terms of social development and redistribution than it has in terms of macroeconomic indicators.87 1.3.2.3 Colombia Colombia largely escaped the severe economic crises affecting many Latin American countries during the 1980s and 1990s.88 Foreign investment did, however, decrease as a result of the worldwide recession of the early 1980s that hit Latin America particularly hard. Moreover, unemployment increased

84 85 86 87 88

Gonzales de Olarte, “La economía política peruana,” 316–18; Contreras and Zuloaga, Historia mínima de Perú, 280; Avilés and Rosas, “Low-Intensity Democracy,” 168–69. Avilés and Rosas, “Low-Intensity Democracy,” 170–74. “Choosing a New Broom.” See “Peru’s President Pedro Pablo the Brief”; “Dubious Dissolution”; Taj and Kurmanaev, “Virus Exposes Weak Links in Peru’s Success Story.” Holmes, Gutiérrez de Piñeres, and Curtin, Guns, Drugs, and Development in Colombia, 28.

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from 10 percent to 14 percent between 1982 and 1986. Monetary policy in the early 1980s, under the presidency of Belisario Betancur (1982–1986), was relatively restrictive, with increased imports eating up foreign reserves, increasing interest rates, and a shrinking monetary base. In terms of fiscal policy, an increase in top marginal income taxes and an expansion in the value-added tax, along with increases in the ability of the president’s ability to manipulate the VAT, did not fully counteract a decrease in tax collection. However, spending continued apace, which increased the budget deficit but had positive counter-cyclical effects.89 In the late 80s, under the presidency of Virgilio Barco (1986–1990), the Colombian economy benefitted from increases in coffee and oil prices (two principal exports), which hastened an economic recovery. The unemployment rate decreased to 10 percent by the end of the decade. Monetary policy was expansive, as the monetary base increased. Tax collection increased 3 percent as a percentage of GDP as a result of tax reform, and the deficit shrunk with a less expansive fiscal policy. The minimum wage grew at a slower rate than GDP per capita, however, and its real level declined by 8 percent during the second half of the 80s. The inflation rate was generally high, surpassing 20 percent.90 By the inauguration of Liberal president César Gaviria (1990–1994), Colombia was on the brink of crisis – not so much because of economic problems, but because of security issues. Violence between the army, left-wing guerrillas, and drug cartels was becoming extreme, such that the country was practically in a state of civil war. Moreover, several important political figures, including Luis Carlos Galán, the original Liberal candidate for the 1990 election, had been assassinated (Galán by the Medellín cartel). The situation became ripe for some sort of political reform. This demand materialized when voters approved elections for a constituent assembly to form a new constitution. In addition to hot-button political issues like extradition – a ban on which was advocated by politicians paid by the cartels – the constituent assembly also dealt with numerous economic issues. Ultimately, Colombia’s 1991 Constitution promoted land reform programs, guaranteed a right to work, established a mandate for full employment and an independent central bank, and established pension indexation as a right. In the meantime, continued focus on security issues allowed technocrats in the Gaviria administration to quietly undertake numerous economic reforms including fiscal decentralization, labor reforms, liberalization of trade, and privatizations. Several factors, however, including a deterioration in the electricity sector that caused power to be rationed to eight hours a day, substantially eroded Gaviria’s popularity halfway through his term (although the new constitution had established non-reelection).91 89 90 91

García Echeverría, La economía colombiana y la economía mundial, 207, 217, and 227–30. García Echeverría, La economía colombiana y la economía mundial, 236–37 and 239–43. Edwards and Steiner, “On the Crisis of Economic Reform,” 464–74.

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In the medium term, Gaviria’s economic reforms, collectively known as the Apertura, resulted in significant economic problems, however. Financial liberalization, which also allowed cartels to bring their illegal earnings into the legal economy, resulted in a flood of capital into the economy. This both caused substantial inflation (21 percent in 1995) and resulted in the appreciation of the peso. These factors, combined with trade liberalization, hurt both import-substitution and export-oriented industries, such that the Colombian economy suffered over the course of the 1990s; by 2000, the unemployment rate was 20 percent, compared to 7.5 percent in 1994.92 The administrations of Ernesto Samper (1994–1998) and Andrés Pastrana (1998–2002) had to deal not only with the worsening economic situation but also with increasing violence. Right-wing paramilitary groups such as the Autodefensas Unidas de Colombia (AUD) were responsible for three quarters of extrajudicial killings between the late 90s and 2004, but left-wing guerrilla groups like the Fuerzas Armadas Revolucionarias de Colombia (FARC) and the Ejército de Liberación Nacional (ELN) were also heavily involved, with the two of them responsible for a combined total of over 7,000 kidnappings during the 1990s. To add to this, Samper was accused in 1995 of having received $6 million in campaign contributions from the Cali cartel. The government developed a heavily militarized response to the violence that was funded in large part by the United States. Between 2000 and 2006, the United States sent over $5 billion in aid to Colombia through the so-called “Plan Colombia,” while the country’s military budget increased from 3.2 to 4.2 percent of GDP between 2000 and 2005.93 Meanwhile, the state had been unable to keep up fiscally to fund its increased social spending obligations under the new constitution. In 1999, concerned over the fiscal situation – although the central government debt was not necessarily high, it nearly doubled from roughly 15 to roughly 30 percent of GDP between 1998 and 2000 – the Pastrana administration enacted a series of fiscal reforms in collaboration with the IMF, which included both tax reform and adjustments to transfers to local governments. Additionally, efforts began to change the composition of the debt from either foreign currency-denominated debt or inflation-indexed debt to fixed-rate peso-denominated debt, which began to have effects beginning in the early 2000s.94 Pastrana was succeeded as president by Álvaro Uribe (2002–2010), who led a military crackdown on violence. Although it incorporated criminal elites linked to paramilitaries, and although it systematically violated human rights, 92 93 94

Holmes, Gutiérrez de Piñeres, and Curtin, Guns, Drugs, and Development in Colombia, 35 and 42–44. Paul, Clarke, and Serena, Mexico Is Not Colombia, 2–3 and 6–8. Vargas, González, and Lozano, “Macroeconomic Gains from Structural Fiscal Policy ­Adjustments,” 40–41, 44, and 46; Edwards and Steiner, “On the Crisis of Economic Reform,” 446–47.

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the Uribe government did see a reduction in violence. Under the banner of “democratic security,” it instituted a progressive “security tax” to finance an expansion in defense expenses and an increase in the size of the army, from 203,000 to 283,000. Homicides and kidnappings decreased significantly. Largely as a result of increased security, macroeconomic indicators improved. GDP growth averaged slightly over 4 percent between 2000 and 2011, the government debt decreased from 60 to just over 40 percent of GDP between 2002 and 2013, and foreign direct investment skyrocketed from $1.5 billion to $13 billion between 2003 and 2013. Uribe also succeeded in modifying the constitution to allow for his re-election.95 Uribe’s successor, Juan Manuel Santos (2010–2018), broke with him in terms of security policy. Santos’s most notable achievement was the development of a peace agreement with the FARC, which, rejected by voters in a referendum (although by a very small margin), was passed in the legislature in 2016. Economic results were mixed. The poverty rate decreased, and the rate of formal employment increased over the course of Santos’s whole presidency, but GDP growth slowed to 1.8 percent in 2017 and the unemployment rate increased slightly from 9.1 percent to 9.4 percent during Santos’s second term; both of these developments were likely in large part a result of a decrease in oil prices.96 Several structural trends in the Colombian economy since the 1990s are of note. First of all, some evidence suggests that the apertura since the 1990s has exacerbated a long-term characteristic of the Colombian economy: economic inequality between regions.97 Moreover, economic inequality in the country overall remains stubbornly high; the ratio of the average income in the top 10 percent of the income distribution relative to that of the bottom 10 percent was 37:1 as of 2012, compared to 25:1 in Chile and Mexico and 9:1 on average in the OECD.98 Finally, industrial policy remains weak; the Gaviria, Samper, Pastrana, and Uribe administrations all relied on different institutions to channel industrial policies, for example, with weak implementation and unclear results.99 1.3.3  Bolivia, Cuba, and Venezuela: Viable Alternatives? We now turn to the most dramatic cases of at public political rejection of the neoliberal model. Bolivia, Cuba, and Venezuela have all been discussed as “alternatives” to neoliberalism, or to the penetration of the market in society in general. Do the three countries constitute successful alternatives? 95 96 97 98 99

Robinson, “Colombia,” 43–44 and 47–48. Taylor, “Will Duque Maintain Santos’ Other Legacy in Colombia”; “Colombia’s Peace Deal Has Taken Effect, But the Country Remains Divided.” Franz, “Why ‘Good Governance’ Fails,” 777–78. “Colombia: Policy Priorities for Inclusive Development,” 3. Meléndez and Perry, “Industrial Policies in Colombia,” 5–7.

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1.3.3.1 Venezuela It is unfortunately easy to answer this question with respect to Venezuela because the answer is a resounding no. In terms of industrial and fiscal policy, the Chávez and Maduro administrations – the carriers of the “Bolivarian” alternative to neoliberalism – were a disaster. In sharp contrast with Chile in the 2000s, for example, the Chávez administration undermined Venezuela’s oil stabilization fund through various measures “and by 2008, had simply ceased putting money in it,” electing instead to spend freely in the middle of the oil boom of the 2000s; fiscal spending was thus pro-cyclical, not countercyclical.100 In terms of industrial policy, the Chávez government pursued what at face would seem a productivist import-substitution policy insofar as it involved nationalizations and an expansion of the state’s role in the economy. In practice, it was not an import-substitution policy at all, because it did not substitute imports. Instead of channeling foreign exchange toward the import of capital goods for domestic production, the Chávez administration relied “on an avalanche of imports to combat inflation … and to alleviate consumer goods shortages.”101 Meanwhile, between 2003 and 2007, state-sector investment in both the oil and non-oil sectors actually declined, from 9 to 8 and 7 to 4 percent of GDP, respectively.102 Already in the late 2000s, Venezuela had begun to accrue enormous amounts of foreign debt, especially with Chinese banks. The government had also changed restrictions on the use of foreign exchange in order to channel a larger amount of it toward public spending. Already by 2011, debt servicing was equivalent to 20 percent of the value of exports, a figure that reached 55 percent in 2015. The import bonanza became untenable with these levels of foreign exchange depletion. Rather than restructuring the foreign debt, Maduro opted to cut imports, which fell from $66 billion in 2012 to barely $12 billion in 2017. This, on top of the mismanagement of the large state-owned sector that had grown from the numerous nationalizations of the 2000s, resulted in massive disruptions of productive chains as firms were unable to obtain the necessary raw materials and inputs for production. In the economic collapse that followed, Venezuela has seen drastic shortages of goods, including of food and medicines.103 1.3.3.2 Bolivia Needless to say, Bolivia benefitted immensely from the commodity boom of the 2000s; its top three exports for the past several decades have usually been some combination of minerals like zinc ore and gold, agro-exports like

100 101 102 103

Corrales, “The Repeating Revolution,” 35. Corrales, “The Repeating Revolution,” 43. Corrales, “The Repeating Revolution,” 41–43. See Vera, “¿Cómo explicar la catástrofre económica venezolana?,” 85–90.

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soybeans, and hydrocarbons like crude petroleum and petroleum gas.104 The boom, combined with the re-nationalization of natural resources, allowed the government of Evo Morales (2006–2019) to considerably expand social expenditures. This included conditional cash transfers, a universal pension of $300 a year to the elderly, and a tripling of the value of the minimum wage; between 2005 and 2013, the poverty rate decreased from 60 percent to 39  percent. At the same time, GDP growth, which had averaged about 5 percent between 2006 and 2014, fell only slightly to 4 percent in 2015 and slightly more thereafter.105 There are several possible reasons for this relative continuity in growth. First of all, while Argentina, Brazil, Chile, Colombia, Cuba, Venezuela, and Peru all saw absolute declines in their export values (of very varied degrees, especially with Venezuela) between 2010 and 2015, Bolivia’s actually continued to grow during that period, from about $7 billion to $9 billion.106 Additionally, Bolivia seems to have counteracted the slowdown in export growth with countercyclical fiscal policies, and the use of the foreign currency reserves accumulated during the boom. Thus, while in 2006 there was a fiscal surplus of 4.5 percent of GDP, this had turned into a deficit of 7 percent in 2017; foreign exchange reserves, which had increased from 12 to 52 percent of GDP between 2003 and 2012, had declined to 27.5 percent by 2017.107 Bolivia seems to have performed less impressively in terms of industrial policy and has not really reduced the problem of the reliance on commodity exports. As in Venezuela, the commodity boom years actually saw a decline in investment in certain key sectors. Total investment in the hydrocarbons sector decreased from $344 billion in 2002 to just short of $200 billion in 2006. This figure picked up to $211 billion in 2007; extractive industries increased their share of total public investment from 1.18 percent in 2006 to 5.5 percent in 2009. Yet this may have come at the expense of public investment in the non-extractive productive sector, which saw its share of total public investment decline from 15.06 percent in 2007 to 11.8 percent in 2009; infrastructure spending seems to have taken the lion’s share of public investment during this period.108 Manufacturing does not seem to have been the driver behind overall growth. Thus, between 2008 and 2011, while GDP grew at an average rate of 4.6 percent per year, the manufacturing sector only grew at an average rate of 3.6 percent. Meanwhile, average growth in the utilities sector was almost 7 percent, in construction it was 9.1 percent, and in commerce and hospitality it was 7.4 percent.109 104 105 106 107 108 109

OEC data. Postero, The Indigenous State, 97–99. OEC data. Kehoe, Machicado, and Peres-Cajías, “The Monetary and Fiscal History of Bolivia,” 20–21. Molero Simarro and José Paz Antolín, “Development Strategy of the MAS in Bolivia,” 545–46. Webber, “Evo Morales and the Political Economy of Passive Revolution,” 1868.

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1.3.3.3 Cuba Cuba faced tremendous difficulties over the past 30 years: the collapse of its principal economic partner, the continued US embargo, and the persistent attachment to some of the least productive aspects of socialist economic policy. Yet, the transformations Cuba has undergone somewhat resemble those in other Latin American countries, insofar as the country has seen an increased penetration of the market in the allocation of economic resources. By 1989, Cuba had clearly failed to address two of its chronic economic problems: the reliance on both a narrow set of agricultural exports (principally sugar), and on a narrow set of export markets. That year, sugar constituted 80 percent of Cuba’s exports by value and 80 percent of the country’s trade was conducted with the socialist bloc. Not surprisingly, the next few years, when the latter countries and especially the Soviet Union collapsed, were disastrous for Cuba. The purchasing power of Cuba’s exports decreased by 72 percent, while imports of crucial inputs declined even more dramatically. Imports of machinery and transport equipment declined at a rate of 44 percent per year between 1989 and 1993, while the figure for fuels was 28 percent.110 The effects of this collapse in imports of crucial inputs on Cuba’s productive capacity were intense; between 1990 and 1993, the country’s GDP decreased by 35 percent.111 Cuba had to react to this collapse in its international economic fortunes by substantially reorienting its foreign exchange-earning activities. In addition to allowing Cubans to receive remittances and hold foreign currency and permitting increased opportunities for self- and non-state employment,112 export opportunities had to be found in other sectors. In the medium term, these shifts in economic policy did begin to show results. Cuba’s export profile diversified away from sugar: Mineral exports (especially nickel) increased from 7.5 percent to over 30 percent of total exports between 1990 and 2009, while pharmaceutical products increased from 1.6 percent to 18 percent; meanwhile, sugar’s presence in Cuba’s export profile decreased precipitously during the period, from 80 percent to 7.5 percent.113 Indeed, between 2000 and 2015, the composition of Cuba’s top three exports varied, but usually included semi-processed primary exports like nickel mattes, rolled tobacco, and raw sugar as well as, in certain years, packaged medicaments and refined petroleum.114 It is also important to note that while between 1995 and 2010 many Latin American countries (Argentina, Bolivia, Brazil, Chile, Colombia, Peru, and Venezuela) experienced significant increases in the value share of their top three exports in their total export profiles as a result of the commodity boom, in Cuba this value actually decreased significantly, 110 111 112 113 114

CEPAL, La economía cubana, 200–201; Enríquez, Reactions to the Market, 126–28. Enríquez, Reactions to the Market, 126. Enríquez, Reactions to the Market, 140; Chomsky, A History of the Cuban Revolution, 129. Quiñones Chang, “Cuba’s Insertion in the International Economy,” 104. OEC data.

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and during this whole period the monetary value of Cuba’s exports remained quite low.115 Tourism has been as important as exports in providing Cuba with foreign exchange since the Special Period.116 Perhaps even more important than this simple increase in foreign exchange earnings has been the development of “domestic chains of production” related to the tourism sector, since Cuban production was supplying only 12 percent of the tourist industry’s inputs during the beginning of the Special Period. As Cuban economist Miguel Alejandro Figueras explained in 2013, “success in this regard was significant and rapid, with national suppliers meeting up to 68 percent of the needs of the industry by the early 2000s and remaining at roughly that level today.”117 This process involved a wide variety of investments and technology upgrades in different sectors of Cuban production.118 At the same time, Cuban fiscal policy has exhibited counter-cyclical tendencies. Thus, between 1990 and 1993, when the GDP consistently shrunk – by a maximum of 15 percent in 1993 – the public deficit as percent of GDP increased from 9.4 percent to 30.4 percent; in 1994–1996, growth resumed, peaking at over 10 percent in 1996, and the deficit was reduced to 2.2 percent of GDP by that year.119 Economic policy since the Special Period has also seen substantial transformations in agrarian land tenure that in concert can be considered a species of land reform. Over the course of the nineties, most of agricultural production shifted to the non-state sector. This included the concession of small parcelas of land for individual cultivation as well as the organization of various kinds of cooperatives. The transformation of state farms into cooperatives took place quite rapidly; while the non-state sector accounted for about 18.5 percent of total agricultural production in 1990/1991, this figure had increased to 95 percent by 1993/1994.120 The reduction of the state sector was accompanied by the legalization, in 1994, of farmers’ markets.121 Cuba’s land reform had more impact on domestic food production than on agricultural exports. Production of root crops, for example, a staple in the Caribbean diet, had decreased from about 700,000 tons in 1989 to less than 485,000 tons in 1994; however, by 1999 root crop production had surpassed a million tons and by 2004 it had almost reached 2 million.122 115

116 117 118 119 120 121 122

Data obtained by dividing OEC data for total export value by population data obtained from the World Bank’s World Development Indicators. Note that figures are in current, not real dollars. OEC data; Figueras, “The Evolution of International Tourism in Cuba,” 241–42. Figueras, “The Evolution of International Tourism in Cuba,” 244. Figueras, “The Evolution of International Tourism in Cuba,” 244–46. U-Echevarría Vallejo, “The Evolution of Cuba’s Macroeconomy,” 71 and 76. Enríquez, Reactions to the Market, 129–32. Enríquez, Reactions to the Market, 133–34. Enríquez, Reactions to the Market, 140–41.

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Finally, the Cuban state seems to have persisted with social provision as much as it could through the Special Period. The most difficult years at the beginning of the 1990s saw the return of nutritional deficiencies as a serious health problem due to food scarcity, while secondary school enrollment decreased from over 90 percent to barely 75 percent between 1989 and 1994.123 On the other hand, guaranteed social services still distinguished Cuba from the rest of Latin America in that over the course of the 1990s, in the midst of the crisis, physician density continued to increase, and infant mortality c­ ontinued to decrease.124 1.3.4  Spain and Portugal Latin America is often considered one of the developing regions whose countries most ardently embraced neoliberal policies. Already we have seen how such a view hides substantial heterogeneity. But what about the old metropoles, Spain and Portugal? In measuring whether Spain constitutes a neoliberal success story, we can examine the evolution of two main indicators – GDP per capita (and particularly convergence of this indicator with the Western European, or EU-15 average) and unemployment. A comparison with the case of Portugal is particularly fruitful. Starting from a low point of less than 50 percent in the 1940s, Spanish GDP per capita began to converge with the EU-15 average in the 1950s, reaching about 80 percent of that average by the time of Franco’s death in 1975.125 Between 1975 and 2000, Spain actually lost some of this convergence before regaining it at the end of the 1990s. Sociologist Robert M. Fishman suggests that the figure has remained flat during the 2000s, at around 75–80 percent.126 Spain’s unemployment rate since the transition has not been any more promising. Indeed, high unemployment in Spain is not simply a novel result of the 2008 recession; it has been a chronic problem since the 1970s. Even in the late 1990s, for example, Spain’s unemployment rate was around 14 percent.127 The “neoliberal” explanation of this phenomenon is that excessive labor protections for certain workers in the Spanish labor market have encouraged employers to rely on temporary contracts. The Economist explains it this way: “High unemployment also reflects a long-standing feature of southern labour markets: a relatively large share of workers cycle in and out of temporary jobs. Cushy contracts for permanent workers, with high severance pay and lengthy

123 124 125

126 127

Farber, Cuba since the Revolution of 1959, 73 and 77. Farber, Cuba since the Revolution of 1959, 73–74. Alcaide Inchausti, Evolución económica de las regiones, 70. The EU-15 consists of all countries in the EU before 2004. www.fbbva.es/en/publicaciones/evolucion-economica-de­ las-regiones-y-provincias-espanolas-en-el-siglo-xx-2/. Fishman, “Anomalies of Spain’s Economy and Economic Policy-Making,” 68n1. Fishman, “Anomalies of Spain’s Economy and Economic Policy-Making,” 68.

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appeals procedures, make it costly for bosses to sack them. Instead they hire lots of temporary staff, and respond to downturns by cutting their wages or not renewing their contracts. Collective-bargaining agreements for permanent staff can be inflexible – in Portugal, for example, they cannot include wage cuts, making it hard to cope with downturns.”128 A common argument among orthodox economists has been that Spain’s failure to generate an employment-generating model of growth in the postFranco period has been a result of labor market “rigidities.” In fact, during the late 90s and 2000s the rate of temporary contracts in Spain, at over 30 percent, was the highest in the European Union.129 Indeed, a comparison with neighboring Portugal undermines conventional explanations of Spain’s chronic economic problems. In 1995, the rates of independent and part-time employment were about the same in the two countries, while Portugal’s labor force participation rate, at 67 percent, was significantly higher than Spain’s, at 58 percent. Both countries had similar levels of deficit spending; government debt was 60 percent of GDP in Spain and 68 percent in Portugal. Collective-bargaining practices were largely similar in the two countries. The countries also had similar levels of labor protections; an OECD survey actually ranked Portugal as the country with the strictest labor protections at the time. Blanchard and Jimeno suggest that the difference in unemployment rate between the two countries may have been due to differences in the structure of unemployment benefits; in Spain, benefits were contingent on a less strict period of previous employment. Even then, however, the authors were quite cautious about this finding.130 The unemployment gap seems to have been about more than just differences in the structure of unemployment benefits, however. Moreover, there seems to have been fundamental differences in economic policy in Portugal and Spain since their transitions to democracy that are reflected in more than just unemployment rates. Fishman characterizes the “Iberian Employment Paradox” as part of a broader substantive difference in economic policy between the two countries related to the nature of their democratic transitions. The data suggest that Portugal began to overtake Spain in the 1990s in terms of a variety of indicators – generation of permanent employment; growth in labor productivity; growth in capital formation, investment and availability of credit among small manufacturing firms; and convergence with average European levels of consumption (although Spain still remained ahead due to its initial advantage). Fishman argues that the pattern of divergence between the two Iberian countries is largely a product of their transitions to democracy; in particular, he argues that in Spain the center-left PSOE has been more timid and the center-right PP more conservative than their Portuguese counterparts. 128 129 130

“Work in Progress.” De Arriba, “Crisis Política, Económica y Desigualdad En España,” 72. Blanchard and Jimeno, “Structural Unemployment: Spain versus Portugal.”

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The timidity of the PSOE in Spain with respect to economic policy was most evident in the government of Felipe González, which lasted from 1982 to 1996. In 1984, the González government initiated a “Law of Reconversion and Reindustrialization,” which aimed at promoting industrial restructuring and involved the layoffs of more than 80,000 workers. It also promulgated several labor market reforms that made it easier to fire workers and expanded the use of temporary labor contracts. The government’s consistently neoliberal economic policies resulted in tensions with the labor movement. A general strike in 1988 led the government to pursue an expansionary fiscal policy, increase public works investment, and improve the welfare system (including, especially, the national healthcare system, which became a European model); monetary policy remained conservative, however. As the latter began to be limited by EEC membership and foreign investment began to decline, the country began to face a recession in the early 1990s.131 Unemployment decreased in Spain during a period of significant growth during the 2000s. During this same period, Spain’s growth also overtook Portugal’s.132 However, Spanish growth was based on a construction bubble that burst with the world recession of 2008. Ever since, the pattern of the 1990s seems to have returned. The PSOE government of José Luis Rodríguez Zapatero (2004–2011) and the PP government of Mariano Rajoy (2011–2018), both pursued austerity programs in response to the economic crisis of 2008. After a brief fiscal stimulus of about 1 percent of GDP in 2008, the PSOE government promised to cut the budget deficit, raised the value-added tax, reduced public employee salaries and froze their pensions, passed a labor reform making layoffs easier and reducing the layoff compensation package, and reduced the generosity of social security pensions. The Partido Popular continued the austerity program with further belt-tightening for public employees, €10 billion budget cuts in health and education, further labor reforms, and reductions in unemployment benefits. Austerity measures worsened the recession, and, contrary to their intention, resulted in an increase in the public debt and the budget deficit.133 In turn, the new PSOE-Podemos government has pursued more progressive economic policies but came to power relatively recently and has had to face the explosive issue of Catalan independentism.134 In contrast, as Fishman points out, Portugal’s Carnation Revolution bred a stronger left and a less conservative center-right than did Spain’s transition to democracy. In Portugal, the center-right has generally shared the commitment to the state’s role in industrial policy, including continued state ownership of the Caixa, Portugal’s largest bank.135 Since 2015, Portugal has been governed 131 132 133 134 135

Kennedy, The Spanish Socialist Party, 57–59, 62–66, 67–71, and 75–79. Fishman, “Rethinking the Iberian Transformations,” 283 and 286. De Arriba, “Crisis Política, Económica y Desigualdad En España,” 73–76. Ubasart-González and Martí i Puig, “España: ¿un nuevo ciclo político?” Fishman, “Rethinking the Iberian Transformations,” 289 and 293.

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by the center-left Socialist Party, with support from the Communist Party and other parties of the left. The new government has stood out for reversing austerity policies – it increased the minimum wage, public sector salaries, and pensions. In addition to these measures, it has also used a combination of industrial policy measures, including “development subsidies, tax credits and funding for small and midsize companies,” to stimulate manufacturing exports in sectors like paper and aerospace.136 Critics point out that the combination of the government’s turn away from austerity policies and more aggressive industrial policy with its continued commitment to tame the deficit has come at the cost of public spending in other areas such as housing, infrastructure, and other public services.137 Nevertheless, the contrast with Spain is still evident.

1.4  a

note on covid

Latin America has not fared particularly well during the COVID-19 pandemic. As of December 2021, the region had reported the highest rate of COVID-19 deaths per 1,000 inhabitants of any in the world – at a rate of 2.34, surpassing the next-highest regions of Europe (2.34) and North America (2.16). That Latin American death rates were higher than other parts of the developing world might have something to do with better reporting – indeed, Africa’s rate of 0.16 COVID deaths per 1,000 inhabitants is very likely a vast underestimate. Paradoxically, then, the region’s high rate may actually reflected comparably higher levels of state capacity. Nevertheless, that Latin America’s death rate has been higher than Europe’s and North America’s, where underreporting of deaths should be comparably lower, reflects how severe the pandemic has hit the region (Table 1.1). Despite the generally poor performance of the Latin American region in the pandemic, conditions varied significantly between countries. To what extent have these variations had to do with the trajectories of neoliberalism discussed so far? The two tables below describe pandemic performance in the nine Latin American countries we have analyzed so far along two axes – health and socioeconomic conditions (Table 1.2). The first details performance on two standard measures of public health during the COVID pandemic, as of January 2022: the COVID death rate (generally considered a better indicator than case rate due to lower levels of underreporting) and the percentage of the population fully vaccinated. Several patterns are of note. First of all, Venezuela’s particularly low reported rate death rate is likely a product of underreporting in the context of a country in general economic, social, and political crisis; indeed, such a low death rate (less than 19 per 100,000, by far the lowest of all nine countries) does not line up 136 137

Alderman, “Portugal Dared to Cast Aside Austerity.” Correia, “The Dark Side of Portugal’s Economic Success Story”; Bugge and Goncalves, “­Portugal’s Economy.”

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table 1.1  COVID-19 deaths per 1,000 inhabitants, December 2021 Latin America and the Caribbean Europe Asia North America (the United States and Canada) Africa Oceania

2.34 1.89 0.26 2.16 0.16 0.1

Note:  Social Panorama of Latin America, 2021, 18.

table 1.2  Health measures – deaths and vaccinations Country

Deaths per 100,000 (Jan 2022)

% Fully vaccinated (Jan 2022)

Argentina Bolivia Brazil Chile Colombia Cuba Mexico Peru Venezuela

263.51 176.24 294.62 208.04 260.77 73.63 236.31 626.4 18.88

75.37 43.29 69.91 88.57 59.46 86.22 59.42 68.69 40.71

Note:  Sullivan and Meyer, “Latin America and the Caribbean: Impact of COVID-19.”

with the country’s particularly low vaccination rate of 41 percent (the lowest of all nine countries). Bolivia’s death rate may also be relatively underreported; despite having the second-lowest vaccination rate of all nine countries, it also reports the third-lowest death rate. Two countries stand out as relatively good performers on COVID health measures: Chile and Cuba. Both had achieved vaccination rates of more than 85 percent by January 2022 – higher than the United States and most developed countries. Cuba had a particularly low death rate of 73.63, the lowest excluding the likely unreliable data for Venezuela. Cuba’s particular advantage may have had to do with its status as an island nation – indeed, the Dominican Republic also saw a particularly low death rate, as did many other island nations during the pandemic, and the lowest rates in the United States were seen in island states and territories like Hawaii, Puerto Rico, and the Virgin Islands.138 Chile’s rate, although significantly higher than Cuba’s at 208, was lower than those of Argentina, Brazil, Colombia, Mexico, and Peru. That these two countries performed relatively well in the pandemic would concord with our analysis. They 138

See “Coronavirus in the U.S.,” accessed April 25, 2022.

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table 1.3  Pandemic effects on various socioeconomic measures, as of 2020

Argentina Bolivia Brazil Chile Colombia Mexico Peru

% Change per capita income

% Change Gini

% Change poverty

% Change in CT coverage

–12.7 0.6 –5.3 –1.3 –13.4 –5.3 –20.9

0 4.4 –3.5 4.6 4.3 –2.6 8.2

7.1 1.4 –1.8 3.5 8.1 1.9 13

8 27 – 27 2 0 33

Note:  Data for % changes in per capita income, Gini index, and poverty rate are from Social Panorama of Latin America, 2021, 79. Pandemic figures are from 2020; prepandemic figures are for 2019 for all countries except Chile and Mexico, for which they are for 2017 and 2018, respectively. Data for % change in CT coverage are from Stampini et al., “Adaptive, but Not by Design,” 10 and 16. Prepandemic data for CT expansion are for the years 2017–2019, while pandemic data are from 2020.

are Latin American states with particularly high state capacity, and, as we have seen, amid the turn to economic liberalization in the previous several decades, they have both maintained or strengthened systems of social protection. Argentina has been somewhat behind Chile and Cuba in its pandemic health performance. As of January 2022, its vaccination was the third highest among the nine countries, but it had seen a relatively higher rate of deaths. Brazil, Colombia, and Mexico were all middling performers, with vaccination rates of around 60–70 percent and death rates well over 200. Peru had a decent vaccination rate of around 70 percent. Its death rate was astronomical – over 600 – but this may have had to do with a difference in the way it counted COVID deaths.139 Bolivia and Venezuela had by far the lowest vaccination rates, and their death rates, although comparatively low, may be less reliable. The second table below compares data on pandemic performance, as of 2020, in various socioeconomic measures for those countries for which it is available – all of them except Cuba and Venezuela. The pandemic had significant economic effects on the region as a whole; two thirds of households experienced a decline income, while 16 percent of workers lost employment. In general, Latin American governments responded to these and other economic effects by expanding existing cash transfer (CT) programs; while 22 percent of the region’s households received such transfers before the pandemic, during the pandemic this increased to almost half of households (Table 1.3).140 139

140

“Peru revised its official COVID-19 death toll in May 2021 to account for excess deaths attributed to COVID-19 not previously counted, which tripled the country’s reported death toll” – Sullivan and Meyer, “Latin America and the Caribbean.” Jaramillo, “Social Protection and COVID-19 in Latin America.”

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Examining the second table above, however, trends are somewhat less clear. In an environment where the pandemic largely caused decreases in employment and income, we should expect increases in cash transfers to prevent increases in inequality or poverty. The table above suggests this is not necessarily the case, however. Peru seems to have performed particularly poorly in economic terms during the pandemic, just as it did in health terms: It experienced the greatest decrease in per capita income (21 percent). It also, however, experienced the largest expansion in cash transfer coverage among households, which grew by 33 percentage points over the pandemic. However, this did not prevent Peru from also experiencing by far the greatest increase in its Gini index and poverty rate – an alarming 8.2 and 13 percent, respectively. Brazil seems to have performed the best of all seven countries in the table in purely economic terms – the only place where both inequality and poverty actually have decreased during the pandemic. Comparable data on the precise percentage increase of households receiving cash transfers were not available; however, the country did see a significant expansion in such programs. After the pandemic began, the Brazilian government announced “emergency aid” payments of $112 dollars a month to a third of the country’s population, with the combined costs of cash transfer and job-retention programs increasing to 8 percent of GDP.141 What is particularly surprising is that these developments occurred under the presidency of the right-wing populist Jair Bolsonaro. Along with Brazil, Mexico seems to have done relatively well; although per capita income decreased by more than 5 percent in 2020, the Gini index decreased, and poverty increased only slightly. Yet the percentage of households receiving cash transfers did not budge at all. This may be a product of most people continuing to work as usual rather than staying at home – indeed, Mexico has not done particularly well in terms of pandemic deaths – or an expansion of benefits to families who already received transfers. Besides particularly disastrous effects in Peru and surprisingly positive ones in Brazil and to some extent Mexico, socioeconomic effects of the pandemic seem to have been not catastrophic but still bad in the remaining countries. In Argentina, for example, inequality remained steady, but poverty increased by 7 percent. In Bolivia, poverty increased by 1.4 percent, but the Gini index grew by 4 percent. Colombia and Chile also saw increases in their Gini index of more than 4 percent; in Chile, poverty grew by 3.5 points and in Colombia by an alarming eight. Looking at the effects of the pandemic on the Latin American countries we have studied, then, several general points are worth emphasizing. First of all, performance on health measures during the pandemic – COVID death rate and vaccination rate – is not necessarily correlated with performance on socioeconomic measures. Most notably, Brazil experienced decreases in inequality and poverty, despite performing relatively poorly in terms of death rate. 141

“Just Keep Us Alive.”

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Conversely, Chile has done relatively well in having a comparably low death rate and a very high vaccination rate, but its performance in terms of inequality and poverty was worse than Brazil’s. Overall, however, a general pattern of correlation can be drawn between pandemic performance and the trajectories under neoliberalism that we have discussed so far. The two countries that have performed relatively poorly on both the health and socioeconomic axes during the pandemic – Colombia and Peru – also had very uneven trajectories during the period of neoliberalism. They did not see the expansions in social provision that other Latin American countries saw in the 1990s and 2000s. Conversely, the three countries that stand out as better performers – Cuba and Chile because of their health performance, and Brazil because of its ability to decrease poverty and inequality during pandemic – can have this better performance traced to their trajectories under neoliberalism. As we have emphasized, Chile and Cuba stood out in the 1990s and 2000s in their ability to maintain or expand social provision. Meanwhile, Brazil was one of the first countries to implement cash transfer programs and was one of the most generous in doing so (see the chapter by Souza Leão in this volume).

1.5  dimensions

of state strength and plan of the book

The present book studies state and nation building in Latin America and Spain during the time of ascendance and consolidation of neoliberal political ideology. This period of analysis, commonly designated as the neoliberal era, begins around 1975, and it was connected from the start with Latin America, a region that has been described as the “birthplace” of neoliberalism. More specifically, the foundational moment of neoliberalism as a comprehensive government program happened in Chile, during the dictatorship of Pinochet, as discussed by Silva in his chapter for this volume. Several of the case studies in the book include, furthermore, the analysis and discussion of political movements that tried to confront neoliberalism and reverse neoliberal public policy reforms. Such a reversal happened in many cases – with varying levels of success – after movements opposing neoliberalism reached government positions. As shown in the table of contents, the parts of the book are organized according to their focus on four different dimensions or categories of state capacity: economic, territorial, infrastructural, and symbolic. In the present section, we explain the organization of the book, as well as its conceptual framework. Since the first book in our three-volume collection on state and nation building in Latin America and Spain, we have employed the same four categories or dimensions of state strength as analytical tools.142 The first dimension of state 142

Previous volumes are Centeno and Ferraro (eds.), State and Nation Making in Latin America and Spain. Republics of the Possible; and Ferraro and Centeno (eds.), State and Nation Making in Latin America and Spain. The Rise and Fall of the Developmental State.

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capacity we call territorial power, and it involves the classic Weberian notion of monopoly over the means of violence. Note that we explicitly do not specify the legitimate use of violence as we wish to distinguish between a simple capacity to coerce from the much more complex notion of justifying and making acceptable such coercion. Mann called this category of power despotic, and it represents the influence that state elites are able to exert over the population of a certain territory, without having to enter into routine negotiations with nonstate actors.143 The concept of despotic power captures the conventional perception of power as the actual capacity to issue and impose commands. This form of state strength is the simplest to wield, as it merely requires the acquisition and utilization of enough coercive force to impose control on a certain region. It is the state as military and disciplinary institution, and it takes place on two fronts: first, in relation to other states defining sovereignty and, second, against internal or domestic rival claimants and subjugated groups. As we will further explain below, the majority of states analyzed in this book maintained a relatively high level of capacity with regard to territorial power, during the period under discussion; however, the control of the national geography was far from completely assured in all cases, and serious deficiencies of territorial power had sometimes catastrophic consequences. We define the second category of state capacity as economic power, and this involves diverse connected processes. First, economic power is about the state promoting the general prosperity of a society. Prior to the Keynesian revolution, states mostly contributed to prosperity in the course of the unification of an economic space through the creation of a national market. Of greater relevance for our cases, states may also increase prosperity by creating the physical and legal infrastructure supporting the insertion of their domestic economy into a global system of exchange. A second aspect of economic power involves the control over and appropriation of resources through the establishment of an efficient tax system, which includes the training and recruitment of professional tax bureaucracies, able to work in public agencies protected from political interference. The third and perhaps most extensive aspect of economic power concerns the formulation and implementation of long-term economic policies. After the neoliberal turn, some countries in the region adopted policies that stressed the necessity and desirability of transferring economic power and control from governments to private markets. Somewhat paradoxically, however, this transformation required the extensive use of state intervention. Three national cases, discussed in the first part of the book, were emblematic in this respect. Chile, Mexico, and Spain had to concentrate and strengthen their economic state capacity in a substantial manner, in order to be able to impose and maintain long-term neoliberal public policy programs. This required many kinds of political transformations, struggles, and reorganizations, discussed

143

Mann, The Sources of Social Power.

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in single national case studies by Silva, Knight, and Döpking in the present volume. Some of such transformations resulted in new forms of state organizations and state structures. As we will discuss in the conclusions of the book, Mexico was not coincidentally the first country in the world where a “neoliberal state” was described by social science. The essays in the first part of the book focus on territorial and economic power, two categories of state strength that are intrinsically related. In order to implement the economic and institutional transformations required by longterm neoliberal government programs, three of the national cases considered in this part of the book, Chile, Mexico, and Spain, had to confront diverse kind of protest movements, reaching into massive civil disobedience, armed insurrection, or attempted secession by regional separatist groups, depending on the case. Chile, Mexico, and Spain were able to confront and either defeat or neutralize such protest or insurrection movements, securing the control of their national territories without severe operational difficulties – although certainly suffering a negative impact on their democratic legitimacy. However, the national case discussed by Yashar in the last chapter of this part of the book, Chapter 5 on Guatemala, shows the possibility, and the pitfalls, of a massive deficiency of territorial power during the neoliberal era. The author considers also two neighboring countries affected by the same category of state failure, and with similar destructive consequences for the population: El Salvador and Honduras. Although these three Central American countries represented outliers in certain respects, it is important to observe that deficiencies in territorial power remain generally endemic in Latin America to this day, as was described by O’Donnell with the concept of “brown areas,” which remains a widely accepted characterization of the phenomenon.144 The third category of state strength corresponds to the notion of infrastructural power. Originally defined by Mann, infrastructural power refers to the capacity of the state to coordinate society by means of the diffusion of law and administration in many areas of social life that had remained outside the scope of state concern before the vast expansion of its capacity during the second half of the nineteenth century.145 Infrastructural power involves organizational and technical skills to collect and process information, build organizational structures, and maintain communication and interaction networks. Infrastructural power is a key category among the dimensions of state capacity because it is what makes modern states exceptionally strong.146 The expansion and diversification of bureaucratic organizations increases the penetration of the state in terms of infrastructural power. However, according to Mann, such an increase in infrastructural power does not imply, as Weber mistakenly assumed, a more vertical concentration of power in a 144 145 146

O’Donnell, “Why the Rule of Law Matters.” Mann, The Sources of Social Power. Mann, The Sources of Social Power, 60 and 66.

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central authority. Infrastructural capacity does not involve centralization of power; rather, the contrary is the case. First of all, modern state administration “almost never forms a single, bureaucratic whole.”147 The infrastructure of the modern state is formed by an array of bureaucratic organizations variously linked to power networks in civil society. Secondly, the expansion of infrastructural penetration predictably goes both ways: As a result of the embeddedness of relatively autonomous bureaucratic organizations, civil society’s capacity to bring influence to bear on the state also increases. The expansion of infrastructural power occurs simultaneously with the widespread politicization of civil society.148 The second part of the book focuses on infrastructural power, and it examines the advances and failures of this form of state capacity under neoliberal and postneoliberal administrations, in diverse national cases. Camacho and Dargent, in Chapter 6 of the volume, discuss the implementation of neoliberal higher education reforms in Peru and Chile. The concentration of economic and political power was characteristic of neoliberal administrations, under both dictatorial and democratic regimes in Latin America and Spain, and the initial implementation of neoliberal reforms was characteristically fast and comprehensive in many public policy areas. In Chile and Peru, the privatization of higher education was imposed without hesitation at the beginning of the neoliberal turn – much earlier in the case of Chile, where a murderous dictatorship made any opposition to neoliberal reforms dangerous. However, the subsequent management of the reforms depended on the infrastructural capacity that each state was able and willing to develop, both in terms of the creation of bureaucratic structures, as also in terms of engagement with civil society groups affected by the reforms. Camacho and Dargent show that, against the usual expectations of the literature, it was Peru – a country ranked low for state capacity in comparative studies – that succeeded in creating a regulatory framework that contributed to the steady improvement of the quality of higher education. Most crucially, a professional and independent regulatory agency was created, in order to take charge of this public policy framework. The agency was protected from political interference due to its strong relative autonomy, and its increasing legitimacy among citizens. In Chile, meanwhile, widespread disappointment with the low quality and bad results of private higher education was one of the main factors in the development of a vast protest movement against neoliberal policies, which resulted in a general crisis of legitimacy of the democratic system consolidated after the transition – more on this below. The long-term implementation of reforms, in comparing both cases, reveals the key relevance of infrastructural power not only as bureaucratic capacity but also as embeddedness, which is to say, as the connection and involvement of civil society actors in public policy management. 147 148

Mann, The Sources of Social Power, 68. Mann, The Sources of Social Power, 56.

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The next chapter in this part of the book, Chapter 7 by Schenoni, addresses state and public administration reforms in four national cases, Argentina, Peru, Chile, and Brazil. In Argentina and Peru, administrations with concentrated executive power were able to enforce fast neoliberal “first generation” reforms, neutralizing in advance almost every political opposition. Bureaucracies were rapidly downsized and reorganized with little meaningful input from civil servants themselves. The result was a degradation of the quality and efficiency of the civil service, and a widespread loss of confidence among bureaucrats. Infrastructural power revealed in these cases a remarkable vulnerability, which classics of the field, such as Weber, did not fully recognize. The continuous advancement of professional bureaucracies was sometimes described by Weber as an increasing necessity (steigende Notwendigkeit) in modern states once the process of bureaucratization had started.149 However, the first two cases discussed by Schenoni reveal a regression or involution of state bureaucratization, and therefore of infrastructural power. In contrast, in Brazil and Chile reforms were more gradual, and the state bureaucracy in these countries was much better prepared to lead “second generation” reforms. Alarmed by the potentially disruptive impact of first-generation reforms on state administrations, experts and international financial organizations promoted a second generation of reforms, which aimed precisely at improving the quality, rather than reducing the size, of public administration systems. By virtue of the fact that Brazil and Chile preserved stronger state bureaucracies, second-generation reforms were much more successful. Chapter 8, by Souza Leão, shows that infrastructural power does not correspond to the mere technical competence of high-ranking officials; it would be a mistake to associate infrastructural power with technocratic styles of government. The author compares how conditional cash transfer programs were implemented to fight poverty in Brazil and Mexico. In both cases, the new programs sought to deliver payments to a targeted sector of society, poor families, in exchange for a set of “conditionalities” – mainly sending children to school and healthcare services. However, in Mexico conditional cash transfer programs were implemented by an administration that emphasized the concentration of presidential power, and that insulated presidentially appointed technocrats from the input of social movements, political parties, and the media. The result was that technocrats in charge of the programs sought to legitimize their public policy strategies, in the eyes of their “natural” constituency of academics and international policy networks, by emphasizing the “efficiency” of the programs – efficiency defined as the use of rigorous statistical algorithms to identify poor people, with no input or involvement by social actors. In contrast, the Brazilian program was implemented, beginning in the mid-1990s, and especially under the Lula administration 2003–2010, in the context of a 149

Weber, Gesammelte Politische Schriften, 327; see English translation Weber, Political ­Writings, 152.

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more gradual application of neoliberal policies and more robust multiparty democracy. Instead of top-down implementation by an insulated group of appointed technocrats, the Brazilian program opted instead for “legitimation by inclusion,” relying heavily on the meritocratically recruited civil service to implement and regulate a system in which the first emphasis was placed on expansion of the system to as many poor families as possible. Instead of efficiency as a technocratic ideal, the Brazilian program measured itself by a civic ideal of inclusion. In Chapter 9, Bersch uses the transport sector as a lens through which to examine the broader viability and success of reform implementation in Latin America. Through case studies of Argentina, Brazil, and Chile, she argues that some neoliberal reforms in the transportation area were “powered” through by executives, in collaboration with appointed technocrats, and without input from social actors and civil servants. These powered reforms generally resulted in unsuccessful outcomes. In contrast, reforms that were conducted gradually and respected the acquired expertise of professional civil servants, as well as involving diverse social actors, were more successful. Bersch analyzes first the case of Argentina, where the Menem administration rapidly privatized the country’s railroad system in the 1990s by means of a top-down process led by a team of insulated technocrats. The Argentine transport bureaucracy experienced severe cutbacks that accompanied the privatizations. Therefore, the much diminished and demoralized bureaucratic staff proved unable to lead and regulate the transition to a privatized system. As a result, the transportation system became mismanaged, poorly funded, inefficient, and unsafe, and the whole system came crashing down with the infamous Once crash on the Sarmiento line in 2012. This failure also prompted a new wave of “powering” reforms as the postneoliberal administration of Cristina Fernández rapidly re-nationalized the railroads. Second, Bersch looks at the case of Brazil, which constitutes something of a counterpoint to the Argentine case. Here, attempts to rapidly privatize Brazil’s highway transport system, initiated by the Collor administration and Congress in the 1990s, ran into obstructions, whereas the Cardoso, Lula, and Rousseff administrations implemented more gradual changes that maintained mostly intact a professionalized civil service running the system. Finally, Bersch turns to the Chilean case, which constitutes something of a mixed case as well. She finds further evidence for the weakness of “powered” reforms in the botched effort to revamp the Santiago bus system under the Bachelet administration, led by an insulated group of technocrats that did not consult with citizens on any aspect of the project. On the other hand, a reform process that was less sudden than the Argentinean one resulted in a less spectacular failure of the transport system overall. In Chapter 10, the last chapter of this part of the book, Riggirozzi and Grugel examine the strengths and weaknesses of economic and social redistribution efforts initiated by postneoliberal political orientations during the

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2000s. As an attempt to overcome neoliberalism, New Left or “Pink Tide” administrations challenged fundamental tenets of the neoliberal understanding of social welfare. In particular, these administrations expanded social welfare programs, many of which were made universal rather than targeted, since the latter had been the common practice under neoliberalism. They thus created a new social discourse rooted in human rights, citizen identity, and social responsibility, rather than the neoliberal principles of personal responsibility, individuals considered as human resources, and the search for market solutions to social and other public policy issues. However, despite this successful and widely legitimate conceptual reformulation of social programs, Riggirozzi and Grugel show that the New Left encountered two major difficulties in their successful implementation. On the one hand, New Left administrations did not attempt consensusbuilding strategies, which could have increased public trust in government institutions. The policy focus was instead on short-term redistributive gains, premised on partisan-based, unilateral political decisions to apply new export taxes and thus capture the profits of rising commodity prices at the time. Paradoxically, this short-term public policy approach increased the region’s dependency on a growth model based on the export of primary goods, and it also enabled agrarian elites to acquire extraordinary power by organizing opposition and blockades to the new taxes and subsequently oppose any further attempt to introduce more progressive tax reforms. On the other hand, the implementation of social programs was not preceded or complemented with any attempt to establish or consolidate independent and professional bureaucratic structures, that is to say, a general neglect of infrastructural power. Therefore, Riggirozzi and Grugel describe how social policies were plagued with significant difficulties of implementation, monitoring, and evaluation, with frequent cases of mismanagement, political clientelism, and corruption. The next part of the book focuses on symbolic power, both as a capacity deployed by the state and as a series of contestation strategies, which were widely adopted by social and political actors in Latin America and Spain. The notion of symbolic power as a state capacity was amply discussed by Bourdieu,150 and this category shows similarities to what Weber discussed as legitimacy. Chapters 11 to 15 examine the institutional consolidation of symbolic power during the early implementation of neoliberal regimes, and its increasing contestation by postneoliberal movements in later periods of the neoliberal era. As Bourdieu notes, “what appears to us today as self-evident, as beneath consciousness and choice, has quite often been the stake of struggles and instituted only as the result of dogged confrontations.”151 The study of the state’s symbolic capital is the history of how it attempts to construct its own sense of inevitability. It is a set of devices that state elites employ to try to place 150 151

Bourdieu, “Rethinking the State.” Bourdieu, “Rethinking the State,” 15.

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the authority of public institutions, as such, out of the bounds of contention. Regarding this symbolic dimension, Joseph Strayer assigns a central role to what he calls “loyalty” during the consolidation of state power in the modern era, a “shift in the scale of loyalties” from earlier societies, and a new “priority of obligation” toward public institutions, or what he later calls a “cult of the state.”152 As the chapters of this part of the book discuss, neoliberalism employed from the beginning strong cultural discourses and images, which contributed to the perception of its inevitability as an economic and political regime. Nevertheless, the contestation of symbolic state power kept increasing during the whole neoliberal era, and it became very intense after the Global Financial Crisis of 2007–2008. In the first chapter of this part of the book, Chapter 11, Schild examines the era of neoliberalism in Chile as a radical cultural transformation. The author points out that, far from just an economic project, as often described in the literature, neoliberalism was a strategy aimed at a fundamental reorganization of Chilean society, including the development of new practices of social integration, and new personal identities. It was not the market alone that transformed the identities of subjects into autonomous, responsible individuals but, rather, cultural images and discourses embedded in sweeping reforms applied to a wide range of institutions. Connecting to a thesis of Bourdieu about the left and the right hand of the state, one more protective and caring (social left hand), and the other focused on resources and spending (financial right hand), Schild proposes a gendered analysis of the neoliberal cultural transformation in Chile, showing that supposedly gender-neutral, entrepreneurial ideals of citizenship were actually carried out by inflicting a series of social costs on women, including the imposition of heavy family and community burdens. This analysis helps to explain the key fact – nowadays rather neglected – that the vast movement of social protest in Chile, which led to a profound legitimacy crisis of the neoliberal model, began with massive women’s marches from 2018 to 2020. These marches represented at the time the largest social mobilizations in Chile’s history. The Chilean neoliberal state was able to consolidate for decades a perception of its inevitability, which was almost unanimously embraced by the political elites and also supported – or endured with resignation – by ample sectors of society. However, the social and political rebellion against neoliberalism, when it happened, began with women’s defiance of the set of gender norms and expectations inscribed in this cultural model. Müller further discusses, in Chapter 12, the symbolic capacity of the state under neoliberalism, as well as its contestation in Spain. The author examines, in the first place, the difficulties of the Spanish Socialist Party (PSOE) to reconcile its long periods in government, during the neoliberal era, with the party’s working-class identity. Socialist government reforms involved the

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Strayer, On the Medieval Origins of the Modern State, 47.

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implementation of neoliberal policies in certain key areas, such as the labor market and fiscal austerity. This was almost impossible to reconcile with the party’s traditional working-class social basis and identity, and its longestablished organizational structures, which depended on close cooperation with workers’ unions. During the 2000s, attempts by the party elites to transition into a postmaterial, values-based political identity were only modestly successful, and by the beginning of the next decade, the popularity of the Spanish Socialist Party was severely damaged by neoliberal labor reform and austerity policies, particularly among the youth. A vast protest movement against neoliberalism developed swiftly, questioning the legitimacy of the whole political system established since the negotiated democratic transition of the 1970s and 1980s in Spain. Müller examines, in the second place, the fact that the social protest against neoliberalism, in Spain, deliberately employed mechanisms of social mobilization initially developed by the New Left in Latin America. Such mechanisms, often described as counter-hegemonic, are based on the construction of new political identities. In the next years, similar symbolic strategies were to become very influential in all of Southern Europe. The concept of “Latinamericanization” of political protest was adopted as early as 2011 by leftwing activists of the political movement Podemos in Spain, under the declared influence of Laclau and Mouffe.153 The notion of Latinamericanization of social protest, in Southern Europe, went on to become a well-known concept in scholarly analysis.154 However, Müller suggests that the adoption of such counter-hegemonic, identitarian strategies made it more difficult to reach political agreements or alliances in support of specific programs. Such strategies, in other words, could be difficult to reconcile with electoral and coalition tactics, as seen in the Spanish case. The problem results in part from the “agonistic” dimension of identitarian strategies, which emphasize a fundamental conflict “us vs. they,” as a component or source of political identity for the movement. Agonistic framing can make political coalitions difficult, although certainly not impossible, considering that Podemos finally agreed to integrate a coalition government with the Socialist Party in 2020. In summary, the framing and organizational strategies of social protest against neoliberalism involved a widespread contestation of the state’s symbolic power. Moreover, these counter-hegemonic forms of political discourse and organization demonstrated a considerable flexibility: It was shown that they could be employed to build new political identities without specific connections to the material basis of individuals and social groups, such as ethnic, gender, or class membership. For example, the next chapter of this part of the volume, Chapter 13 by Garay, examines how unions and social movements

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Iglesias, “Understanding Podemos,” 14; Laclau and Mouffe, Hegemony and Socialist Strategy. Padoan, Anti-Neoliberal Populisms.

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in Latin America, as a response to globalization, technological changes, and neoliberal labor market reforms, developed new types of political alliances between “insiders,” defined as workers with formal employment, and “outsiders,” defined as informal, rural, and unemployed workers. The literature has neglected generally the political movements based on such alliances and coalitions, among other reasons, because of their unexpected character, particularly considering that conventional scholarship always assumed that insiders and outsiders of the labor market have inherently opposing interests. However, Garay shows that one of the key factors enabling the development of new labor movements across Latin America was the construction and empowering of new workers’ identities, disengaged from each individual’s legal status in the labor market. This represented another of the several forms of contestation of the state’s symbolic power, which is also based, among other resources, on the perceived certainty of legal categories. Nevertheless, the malleability of symbolic politics, although a powerful tool in principle, also enabled its opportunistic employment, either by political movements or by the state, and such opportunism resulted often in a certain ambiguity and confusion about this power’s consequences. The ambiguity of symbolic power is examined from different perspectives in the last two chapters of this part of the book. In Chapter 14, Lucero analyzes the rise of indigenous movements and their response to neoliberalism in Abiayala – the word for the Americas that Aymara leader Takir Mamani suggested that indigenous peoples use to refer to the continent. As a result of generations of Indigenous struggles and negotiations, by the year 2000 the political constitutions in many Latin American countries recognized Indigenous collective rights, languages, and territories. However, Lucero shows that such Indigenous recognition could actually correspond to the increased dispossession of Native peoples. The 1990s, in fact, marked also the beginning of new booms in extractivism across the region, including legal and illegal seizures of Indigenous land, and depletion of natural resources, under both administrations of the left and of the right. Recognition functioned thus as an ideological tool, conditioning Native peoples into a selfunderstanding that was compatible with colonial asymmetries, and even with the neoliberal exploitation of their territories. The literature has discussed this phenomenon as “multicultural neoliberalism.” The symbolic recognition of Indigenous peoples could lead to a range of outcomes. In some cases, extensive neoliberal reforms coexisted with a modest set of multicultural policies, the latter limited primarily to language, education, and restricted collective land rights. In other cases, more expansive sets of multicultural policies included considerable political representation and autonomy rights for Indigenous peoples, and they could lead to more radical experiments in political and economic reforms. The success, failure, and ambiguity of multiculturalism as symbolic politics are examined by the author in the national cases of Bolivia, Ecuador, and Chile.

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It is interesting to consider that innovative forms of political protest were not exclusive of the New Left, either in Latin America or in Southern Europe. Latinamericanization, in other words, has not been a trend developed only by left-wing protest movements. Vom Hau and Srebotnjak, in Chapter 15, analyze another phenomenon that the literature has neglected: the fact that neoliberal political orientations were able to adopt and effectively employ, during the 2010s, the same counter-hegemonic and identitarian strategies that were previously characteristic of the Latin American New Left. The three cases considered by the authors are the territorial, either regional or national autonomy movements in Catalonia (Spain), Santa Cruz (Bolivia), and Guayas (Ecuador). In all the three cases considered, the fiscal motive was certainly important, as it was pointed out by Piketty for the case of Catalonia.155 All three regions are substantially wealthier on average than the rest of their countries, and an important political motive for political protest has been the demand to keep taxes in the territory, drastically reducing social and fiscal solidarity with other, less-wealthy regions. Vom Hau and Srebotnjak confirm that fiscal motivation played a role for social mobilization in favor of greater territorial autonomy or secession and that wealthier groups predominated in the social composition of the territorial and nationalist movements in all three regions considered. However, the authors also indicate that the development of a political protest movement with strong identitarian components was built on a broader social base in Catalonia and involved constituencies of different class backgrounds. The traditional neoliberal political elite remained influential among the leadership of nationalist protest in this region, and its members occupied government positions as leading partners of the governing coalition from 2010 to 2021. Nevertheless, the key for the political success of nationalist Catalan politics, at the local level, was the adoption of identitarian, counter-hegemonic strategies. Again, this phenomenon is not as paradoxical as it sounds, because neoliberal elites could successfully develop a socially much broader and therefore powerful protest movement, employing similar strategies in Santa Cruz and Guayas. Finally, in the concluding chapter of the volume, Ferraro, Fondevila, Rastrollo, and Centeno begin by discussing the concept of the “internal structure” of the state, which was proposed by the classic German scholar Otto Hintze as the foundational principle for state-building theory. Furthermore, recapitulating the results of the previous chapters, and additional literature on the diverse national cases, the concluding chapter examines and compares the internal structure of the neoliberal state, and the internal structure of the preceding state model, the developmental state. Based on this discussion, the authors address the two questions mentioned at the beginning of

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Piketty, Capital and Ideology, 921.

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the present introduction: Considering the national cases discussed in the book, as well as the fundamental principles of state-building theory, can we consider that the neoliberal state represented an institutional model as clearly defined as the developmental state? Did the neoliberal state exist as a historic formation?

1.6  conclusion Much has been made in Latin America of supposed neoliberal showcases and alternatives. Yet, insofar as these countries have been successful, they have been so for an ideologically mixed set of reasons: The development or maintenance of a social safety net, the use of counter-cyclical fiscal policies, and the implementation of robust industrial policies aimed at diversifying away from a few primary exports and promoting manufacturing, and particularly processed/manufactured exports. Spain and Portugal transitioned to democracy at roughly the same time and have been at reasonably comparable levels of economic development during the last few decades. An examination of economic policy in the two countries during this period would suggest that Portugal’s outperformance of Spain puts the neoliberal model of economic policy into serious question. It seems that the conventional “orthodox” explanation fails to explain the divergence in performance. During the last few decades, Portugal has not embraced austerity measures more intensely than Spain, nor has it exhibited a less interventionist economic policy; quite to the contrary, it has intervened more successfully in its economy through a variety of industrial policies. Nor does the difference in unemployment rates between the two countries seem satisfactorily explained by the “orthodox” analysis – namely, more generous unemployment benefits and less “flexible” labor markets as the cause of unemployment. In this sense, Spain since the democratic transition cannot be called a neoliberal success story. Did the state represent during the neoliberal era, following the Marxist perspective discussed at the top of the chapter, a clear set of class interests, and did state organizations consistently work toward this goal? The answer is no, since we cannot speak of any coherent class-based strategies in the turns and dynamics of economic and social policy during this historical period. However, the state was characterized during this time by a set of policy norms and expectations defined by the post-1989 global context. Each state was neoliberal in its own way, but there were clear patterns in the policies and their outcomes across the region. First, all the countries that followed what may be called neoliberal policies were operating under democratic rules and processes, at least after an early period of authoritarian neoliberalism in Chile and Mexico. The link between democratic governance and the imposition of supposedly unpopular policies remains one of the great mysteries of the neoliberal era. Second, most of the

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region did experience some economic growth during this period even after the 2007–2008 crisis. Third, despite the general view of neoliberalism shrinking the state, there was a clear upward trend in the size of the state during these years measured by both expenditure and tax revenue. Again, unlike stereotypical accounts, the share of government expenditure that was oriented toward health and education also increased. Finally, there were considerable consistencies in policies as measured by general neoliberal policy indices. There was something of a neoliberal wave throughout the region, even if each case adopted them in different ways and at different times. The major trends included a taming of inflation, an opening to world markets, and a great deal of privatization. Yet, several major structural problems remained unchallenged in the neoliberal era. First of all, much of economic growth may have been derived from exogenous sources: commodity booms or EU money. Second, there was a significant improvement in inequality and a decline in the poverty head count across these years. This was a product of both government policy and the commodities boom, which raised government revenues. However, these advances remain extremely fragile, and as the COVID-19 crisis of 2020 demonstrated, structural inequality remained a defining part of the region’s political economy. Third, as COVID-19 has pointed out, the LA political economies persistently have high informal wage forces as a percentage of labor constraining efforts to increase state capacity and also reform inequality. Fourth, the endemic corruption that characterizes almost all LA civil services and that may also be partly responsible for a continued atmosphere of random violence and drug trafficking indicates that whatever boom may have occurred, it did not translate into deep political reform. In the end with this third volume, we find that while Spain addressed many of the concerns described in the first volume of this series, the developmentalist and neoliberal turns did not produce the kinds of successful republics of the possible that once made up the Latin American dream. bibliography

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Pedersen, Michael. “The Impact of Commodity Price Shocks in a Copper-Rich Economy: The Case of Chile.” Empirical Economics 57, no. 4 (October 2019): 1291–318. “Peru’s President Pedro Pablo the Brief: Lessons from Another Fallen Leader.” The Economist, March 28, 2018. www.economist.com/the-americas/2018/03/28/ perus-president-pedro-pablo-the-brief. Petras, James, and Steve Vieux. “The Chilean ‘Economic Miracle’: An Empirical Critique.” Critical Sociology 17, no. 2 (July 1990): 57–72. Piburn Jesse. wbstats: Programmatic Access to the World Bank API. Oak Ridge, TN: Oak Ridge National Laboratory. 2020. https://doi.org/10.11578/dc.20171025.1827. Piketty, Thomas. Capital and Ideology. Cambridge and London: Harvard University Press, 2020. Piburn, Jesse. “wbstats.” Open Source, Publicly Available Repository. September 08, 2016. https://doi.org/10.11578/dc.20171025.1827 Polanyi, Karl. The Great Transformation. Boston: Beacon Press, 1985. Postero, Nancy Grey. The Indigenous State: Race, Politics, and Performance in Plurinational Bolivia. Oakland, CA: University of California Press, 2017. Quiñones Chang, Nancy A. “Cuba’s Insertion in the International Economy since 1990.” In Cuban Economists on the Cuban Economy, edited by Al Campbell, 89–113. Gainesville, FL: University Press of Florida, 2013. Riesco, Manuel. “Chile, a Quarter Century On.” New Left Review, no. 238 (November 1999): 97–125. Robinson, James A. “Colombia: Another 100 Years of Solitude?” Current History 112, no. 751 (February 1, 2013): 43–8. Rodriguez, Jorge C., Carla R. Tokman, and Alejandra C. Vega. “Structural Balance Policy in Chile.” OECD Journal on Budgeting 7, no. 2 (October 19, 2007): 59–92. Rodríguez, Olga R. “Calderon Sees Security as Legacy: As His Term Nears Its End, President Says Country Is on the Road to Rule of Law and Economy Is Stabilized.” The Globe and Mail, September 4, 2012. Romano Schutte, Giorgio. “Brazil: New Developmentalism and the Management of Offshore Oil Wealth.” European Review of Latin American and Caribbean Studies, no. 95 (October 2013): 49–70. Schneider, Ben Ross. “Brazil under Collor: Anatomy of a Crisis.” World Policy Journal 8, no. 2 (1991): 321–47. Sehnbruch, Kirsten, and Sofia Donoso. “Social Protests in Chile: Inequalities and Other Inconvenient Truths about Latin America’s Poster Child.” Global Labour Journal 11, no. 1 (January 30, 2020): 52–58. Seiler, Beryl, and Ben Raderstorf. “Michelle Bachelet’s Underappreciated Legacy in Chile.” Americas Quarterly, March 9, 2018. www.americasquarterly.org/article/ michelle-bachelets-underappreciated-legacy-in-chile/ Silva, Eduardo. “Capitalist Coalitions, the State, and Neoliberal Economic Restructuring: Chile, 1973–88.” World Politics 45, no. 4 (July 1993): 526–59. Silva, Eduardo. Challenging Neoliberalism in Latin America. Cambridge Studies in Contentious Politics. Cambridge and New York: Cambridge University Press, 2009. Singer, André. “Cutucando onças com varas curtas.” Novos Estudos 34, no. 102 (July 2015): 43–71.

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Singer, André. “From a Rooseveltian Dream to the Nightmare of Parliamentary Coup.” Translated by Emilio Sauri and Nicholas Brown. Princeton University, 2019. https://spo.princeton.edu/sites/spo/files/media/nightmare-singer-princeton1.pdf. Singer, André. “The Failure of the Developmentalist Experiment in Three Acts.” Critical Policy Studies 11, no. 3 (July 3, 2017): 358–64. Skidmore, Thomas E. The Politics of Military Rule in Brazil, 1964–1985. Oxford and New York: Oxford University Press, 1990. Social Panorama of Latin America, 2021. LC/PUB.2021/17-P. Santiago: Economic Commission for Latin America and the Caribbean (ECLAC), 2022. https://hdl .handle.net/11362/47719. Stampini, Marco, Pablo Ibarrarán, Carolina Rivas, and Marcos Robles. “Adaptive, but Not by Design: Cash Transfers in Latin America and the Caribbean before, during and after the COVID-19 Pandemic.” Inter-American Development Bank, November 2021. https://doi.org/10.18235/0003795. Staudt, Kathleen. “How NAFTA Has Changed Mexico.” Current History 117, no. 796 (February 2018): 43–8. Stokes, Susan C. “Democratic Accountability and Policy Change: Economic Policy in Fujimori’s Peru.” Comparative Politics 29, no. 2 (January 1997): 209–26. Strayer, Joseph. On the Medieval Origins of the Modern State. Princeton: Princeton University Press, 1973. Sullivan, Mark P., and Peter J. Meyer. “Latin America and the Caribbean: Impact of COVID-19.” IF11581, Version 24. Congressional Research Service, January 21, 2022. https://crsreports.congress.gov/product/pdf/IF/IF11581. Taj, Mitra, and Anatoly Kurmanaev. “Virus Exposes Weak Links in Peru’s Success Story.” The New York Times, June 12, 2020. www.nytimes.com/2020/06/12/ world/americas/coronavirus-peru-inequality-corruption.html. Taylor, Luke. “Will Duque Maintain Santos’ Other Legacy in Colombia – the Economic Recovery?” World Politics Review, August 21, 2018. www .worldpoliticsreview.com /articles/25618/will-duque-maintain-santos-otherlegacy-in-colombia-the-economic-recovery. Taylor, Matthew M. “Institutional Development through Policy-Making: A Case Study of the Brazilian Central Bank.” World Politics 61, no. 3 (2009): 487–515. Teichman, Judith. “The New Institutionalism and Industrial Policy-Making in Chile.” In Comparative Public Policy in Latin America, edited by Jordi Diez and Susan Franceschet, 54–77. Toronto: University of Toronto Press, 2012. Thacker, Strom Cronan. Big Business, the State, and Free Trade: Constructing Coalitions in Mexico. Cambridge and New York: Cambridge University Press, 2000. Tohá, Carolina. “Chile o el vértigo del futuro.” Nueva Sociedad, no. 286 (April 2020): 78–92. Ubasart-González, Gemma, and Salvador Martí i Puig. “España: ¿un nuevo ciclo político?” Nueva Sociedad, no. 286 (April 2020): 4–13. U-Echevarría Vallejo, Oscar. “The Evolution of Cuba’s Macroeconomy: From the Triumph of the Revolution through the Special Period.” In Cuban Economists on the Cuban Economy, edited by Al Campbell, 62–88. Gainesville, FL: University Press of Florida, 2013. Vargas, Hernando, Andrés González, and Ignacio Lozano. “Macroeconomic Gains from Structural Fiscal Policy Adjustments: The Case of Colombia.” Economía 15, no. 2 (2015): 39–81.

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Vera, Leonardo. “¿Cómo explicar la catástrofre económica venezolana?” Nueva Sociedad, no. 274 (April 2018): 83–96. Webber, Jeffery R. “Evo Morales and the Political Economy of Passive Revolution in Bolivia, 2006–15.” Third World Quarterly 37, no. 10 (October 2, 2016): 1855–76. Weber, Max. Gesammelte Politische Schriften. 3rd ed. Tübingen: J. C. B. Mohr (Paul Siebeck), 1971. Weber, Max. Political Writings, edited by Piter Lassman and Ronald Speirs. Cambridge: Cambridge University Press, 1994. “Work in Progress- Employment in Southern Europe: Better, but Fragile.” The Economist, August 22, 2019. www.economist.com/europe/2019/08/22/employmentin-southern-europe-better-but-fragile.

Part II ECONOMIC AND TERRITORIAL POWER

2 The Chilean Neoliberal State Origins, Evolution, and Contestation, 1973–2020 Patricio Silva

Chile can be regarded as the birthplace and main bastion of neoliberalism in Latin America. It all started in April 1975 when Pinochet’s minister of economic affairs, Sergio de Castro, publicly announced the application of a radical plan to liberalize the Chilean economy. This marked the beginning of what with the passing of time has become known as the Chilean neoliberal model. Many of the profound economic, social, political, and institutional changes introduced during the seventeen years of military rule will be inspired by neoliberal principles. By adopting free-market economics, Chile abruptly abandoned the state-led industrialization strategy that since the early 1930s had constituted the keystone of the Chilean developmental state.1 In retrospective, it can be stated that since 1975 neoliberalism has radically reshaped Chilean society. The changes generated by the application of market-oriented policies have been so profound that many scholars have argued that Chile has experienced a veritable ‘neoliberal revolution’.2 This chapter explores the main features of the Chilean neoliberal model since its inauguration in the mid-1970s. My aim is to provide an explanation for the remarkable longevity, relative strength, and substantial degree of support the neoliberal model was able to generate until very recently among key actors in society. Particular attention is given to the origins of neoliberalism in Chile in order to establish the military rulers’ motives to abandon the longexisting developmental state and replace it by a radical neoliberal formula. This chapter also pays attention to the continuity of the neoliberal model following the democratic restoration in 1990. It explores a series of political factors and

1 2

Silva, ‘The Chilean Developmental State’. Vergara, Auge y caída; Collier and Sater, A History of Chile; Gárate, La revolución capitalista.

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considerations that persuaded the new democratic authorities to maintain the inherited neoliberal economic model. The final aim of this chapter is to assess several expressions of social and political contestation the neoliberal model faced during the Concertación era (1990–2010) and in more recent years. The demand to abandon the neoliberal model in Chile has not only come from radical social movements and the extra-parliamentary left. Also, within the Concertación governmental coalition (1990–2010) some voices expressed from the start their uneasiness with the continuation of the neoliberal policies following democratic restoration in 1990. So, during the twenty years of the Concertación era, neoliberalism was hegemonic but did not remain uncontested. The Concertación’s dramatic electoral defeat in 2010 against the Rightwing presidential candidate Sebastián Piñera fueled even further the antineoliberal voices within this center-left alliance. This resulted in the adoption of a new name, the New Majority, and the inclusion of the Communist party and other radical groups into the conglomerate. In 2014, the New Majority coalition brought Michelle Bachelet for the second time to power, now defending a marked anti-neoliberal agenda. The New Majority government, however, showed poor political and economic performance and proved unable to build up a credible alternative to neoliberalism. In the end, this brought many Chileans to reject Bachelet’s eclectic reformist policies.3 This rejection was expressed in the reelection in 2018 of Sebastián Piñera and the subsequent restoration of the neoliberal agenda. This chapter ends with a brief reference to the profound political crisis Chile has been confronting since October 18, 2019. That day, the streets of Santiago and other major cities experimented violent protests and riots, demanding the end of neoliberalism in the country. By the passing of weeks and months, the protests did radicalize even further, acquiring an increasingly insurrectionary character. The protestors demanded Piñera’s immediate abdication and the elimination of the main pillars of neoliberalism, including the 1980 Constitution and the private pension system. However, the outbreak in Chile of the Corona pandemic in March 2020 brought the unceasing wave of protests to a sudden standstill, as Chileans were compelled to remain at home. However, all seems to indicate that as soon as the corona emergency comes to an end, the anti-neoliberal protests in the country will probably reemerge.

2.1  the

chilean road to neoliberalism

Neoliberalism in Chile shows a quite different starting point, trajectory, and outcome than what can be observed in the rest of Latin America. To begin with, the Chilean neoliberal model constitutes one of the single cases in the

3

Brunner, Nueva Mayoría; Walker, La Nueva Mayoría.

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region that has been relatively successful in transforming and modernizing the economy and society at large.4 In addition to this, after forty-five years, neoliberalism continues to rule the key aspects of the Chilean economic system and society. This is in strong contrast with the situation in the rest of Latin America where for the last fifteen years neoliberalism has been successfully challenged by a series of ‘pink tide’ governments.5 In Chile, neoliberalism has only been seriously threatened following the October 2019 protests. Chile also avoided the experience of the ‘double transition’ that took place in other Latin American countries during the 1980s. Those countries faced the monumental task to simultaneously accomplish a transition from authoritarian rule to democracy and to replace their state-led developmental model with a market-oriented economic strategy. In Chile, the establishment and consolidation of neoliberalism had previously occurred under the Pinochet regime. Hence, when Chile recuperated democracy in 1990, many of the most painful neoliberal reforms were already implemented and consolidated. In addition to this, the new democratic authorities inherited an economy which was in a relatively good shape.6 This advantageous situation did certainly facilitate the process of democratic restoration and consolidation in the country. Chile was not only the first Latin American country in adopting clear-cut neoliberal policies but it also preceded most other countries in the world. So, for instance, Thatcherism in the United Kingdom and Reaganomics in the United States only took shape in the early 1980s. It was also in the 1980s that international financial institutions started conditioning their loans to Latin American countries to the application of market-oriented economic reforms. In this way, in the Chilean case, the actions of external actors seem to have been less relevant in explaining the adoption of neoliberal policies than in the rest of Latin America. So contrary to what has been stated by some scholars,7 neoliberalism in Chile was not in my view the result of a foreign ‘imposition’, as it certainly may have been the case in other Latin American countries. The local roots of the decision to break with the former pattern of development constitutes are in my opinion an important factor in explaining the legitimacy of the Chilean neoliberal model and the identification with it by local Rightwing sectors and entrepreneurial groups. Hence, it is not unreasonable that the Chicago boys – the group of technocrats who designed and implemented the neoliberal agenda – proudly considered themselves as the true creators and architects of the Chilean neoliberal model.8 The adoption of neoliberalism in Chile has been rather the result of the severity of the economic crisis inhered by the Allende government, and of 4 5 6 7 8

Martínez and Díaz, Chile: The Great Transformation. Silva, Challenging Neoliberalism; Flores-Macía, After Neoliberalism?. Larraín, ‘The Economic Challenges’, 301. See Klein, Shock Treatment. Büchi, La Transformación económica de Chile.

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the political lessons taken by the Chilean right from the Unidad Popular (UP) experience. In this way, the ‘UP factor’ is fundamental for understanding the radical and orthodox nature of Chilean neoliberalism and the decision of important actors of the elite to support the model whatever the costs.9 Indeed, following the coup, the Right-wing sectors and the ­entrepreneurial groups were willing to accept and support the application of a severe ‘shock treatment’ as proposed by the Chicago boys. They did this, even at the price of sacrificing part of their short-term interests.10 They regarded neoliberalism not only as the right way to confront the economic crisis but also to regenerate the Chilean economy. In their view, it primarily represented a guarantee to discard a possible comeback of state-based socialist formulas in the future. Indeed, the neoliberal model aimed to eliminate the structural conditions which in the past had made possible the ascendancy of the left and the popular sectors, which culminated in the experience of the Unidad Popular.11 Another distinctive feature of Chilean neoliberalism is that, in contrast to what occurred in other countries in the region, neoliberalism in that country did not exclusively restrict itself to the liberalization and privatization of the economy. During the Pinochet regime, neoliberalism eventually evolved into an all-embracing hegemonic ideology with strong political and doctrinarian components. Moreover, the neoliberal postulates were able to deeply penetrate the social, political, legal, institutional, and even cultural domains. With the passing of time, the Chicago boys became the organic intellectuals of the military regime, legitimating the applicability of the neoliberal principles to practically all aspects of Chilean society.12 The indisputable hegemony obtained by neoliberalism in Chile culminated in the adoption of the 1980 Constitution. This legal chart incorporated the most important neoliberal tenets concerning the role of the state, the guarantee for private property, and the emphasis on the individual.13 But what certainly constitutes one of the most remarkable aspects of Chilean neoliberalism is that it managed to survive the end of the Pinochet regime. Indeed, following democratic restoration in 1990, the newly elected authorities decided to continue with the application of the inherited neoliberal economic model. This was not only the result of the fact that, in general, the Chilean neoliberal model had undeniably provided economic prosperity and financial stability. Also, political considerations related to the existing balance of power 9 10 11 12 13

Stepan, ‘State Power’; Remmer, 1989. Huneeus, The Pinochet Regime. Silva, The State & Capital in Chile, 123. Vergara, Auge y caída, 159; Arriagada, Por la Razón o la Fuerza, 80. That constitution was officially named ‘the Constitution of Liberty’, in honor of Fredrich Hayek, after his homologous book published in 1960. In that book he describes the characteristics that, according to him, a constitution has to possess in order to preserve liberal values and individual freedom.

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in the country and the need to guarantee high levels of governability were crucial factors for the adoption of that decision.14 The Concertación governments (1990–2010) though proved not to be simple administrators of neoliberalism in the country. During the years, the four Concertación administrations introduced important modifications to the economic model, particularly by implementing a huge package of social programs. This resulted in a successful reduction of the levels of poverty in the country. In this respect, following democratic restoration, Chile was a pioneer in applying the so-called neo-structuralist approach. This was expressed in the hybrid combination of some neoliberal goals (such as keeping low inflation, financial stability, and high levels of economic growth) with structuralist postulates. The latter included the existence of an active role of the state in the implementation of solid and well-financed social schemes.15 This combination of neoliberal and social democratic goals in the economic and social domains, respectively, became fully reflected in Concertación’s maxim ‘Growth with Equity’. The maintenance of the neoliberal economic model under democratic rule, however, generated permanent criticism from Left-wing sectors. They particularly stressed its illegitimate, authoritarian origin, and its inability to eradicate the huge social inequalities in the country.16 But anti-neoliberal voices could be found within the ruling Concertación coalition as well. There was indeed a sector that felt extremely uncomfortable with the fact that the neoliberal rationale was still dominant in determining the general orientations of the Chilean economy and society at large. Following the end of the twenty years of Concertación rule in 2010, the anti-neoliberal forces, which cohabitated in this former governmental coalition, felt themselves finally liberated to openly express their condemnation of neoliberalism. This resulted in an open demand for the adoption of a more state-led developmental path. In addition to this, neoliberalism also began to face contestation in the form of massive street protests. This is particularly the case of the emergence of a radical student movement since 2006. The students’ protests were initially mainly directed against the marketization of education and the dominance of the principle of profit-making in practically all spheres of public life. Since 2011 this discontent evolved into an open rejection of neoliberalism in general. Many of the students’ demands counted on the explicit support of the most Left-wing sectors of the parties conforming the former Concertación coalition. In 2014 emerged the New Majority, a radicalized version of the former Concertación coalition (now including the Communist Party), which incorporated most of the students’ demands. This new coalition succeeded in bringing Michele Bachelet back into power. During her second four-year term (2014–2018), she introduced several major economic, legal, and institutional reforms. They aimed 14 15 16

Boeninger, Democracia en Chile. Ffrench-Davis, Entre el neoliberalismo y el crecimiento. Moulian, Chile actual.

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at strengthening the role of the state and reducing the role of the market, in order to initiate the breakdown of the neoliberal order in Chile. In the end, however, the New Majority government failed in its attempt to redirect the country into a non-neoliberal direction. The second Bachelet government was also affected by continuous internal conflicts and contradictions within the coalition and her inability to maintain the rates of high economic growth of the previous years.17 The Chilean electorate punished the New Majority coalition and its attempt to terminate neoliberalism in the country. Former Right-wing President Sebastián Piñera was reelected and continued with the application of the neoliberal model.

2.2  the

origins of neoliberalism in chile

Most Latin American countries only became familiar with neoliberalism after the emergence in the early 1980s of the ‘Washington Consensus’ and its crusade to promote free-market reforms across the region. In contrast, the presence in Chile of monetarist and neoliberal-oriented policies can be traced back to the early 1950s. It is important to pay attention to those previous experiences with market economics as they are closely connected to the later adoption of the neoliberal model by the military regime in the early 1970s. The quest for adopting a market-oriented economy in Chile in the 1950s and 1960s was launched by sectors that were discontent with what they considered the poor performance of the Chilean developmental state. The latter was originated in the late 1920s and represented Chile’s main economic engine until the 1973 military takeover. This developmental strategy was based on state-led industrialization and the expansion of state institutions in charge of promoting economic growth and social development in the country.18 Following World War II, the Chilean economy experienced increasing levels of inflation and severe financial constraints. This was partly a result of the continuous expansion of the state apparatus and public investments. In the early 1950s, numerous voices began to demand the adoption of anti-inflationary measures, the reduction of the state bureaucracy, and the application of market-oriented policies to stimulate the economy.19 During the second government of Carlos Ibáñez (1952–1958), a series of policies were adopted in that direction as the economic situation continued to deteriorate. In the last two years of his government, Ibáñez decided to put into action a rather orthodox monetarist anti-inflationary program, following the advice of the Klein-Saks mission, an American consulting firm. In the end, Ibáñez was forced to abandon his pro-market policies as the application of

17 18 19

Brunner, Nueva Mayoría; Molina, Michelle Bachelet; Walker, La Nueva Mayoría. See Silva, ‘The Chilean Developmental State’. Sierra, Tres Ensayos.

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this program generated growing criticism and widespread protests from the union movement and the Left-wing parties.20 In 1958, Jorge Alessandri, a liberal engineer with technocratic credentials, became President of Chile. Like his predecessor, Alessandri attempted to abandon the state-led pattern of development, by announcing a gradual liberalization of the economy. His aim was to catapult the private sector as the main agent of economic development in the country. Alessandri also dismissed a large group of professionals working at state agencies and public companies, who became replaced by a new generation of managers coming from the private sector. Because of his open pro-business and technocratic orientation, and because of the radical character of his program, the Alessandri government soon become known as the ‘managerial revolution’. Nevertheless, and despite his open call to the Chilean entrepreneurial class to assume a pivotal position in the country’s development, the latter did not really embrace Alessandri’s plans.21 At the end of the day, the entrepreneurial elite had become accustomed to the financial and technical support provided by the developmental state. Hence, at that time, they were not disposed to accept the risks associated with the adoption of free market economics.22 As Petras pointed out, ‘the Chilean industrialists are not the free-wheeling, risk-taking adventures of Schumpeterian frame: they prefer to take subsidies from the state and seek its protection exploiting a limited internal market’.23 Like it happened under Ibáñez, also Alessandri was finally forced to abandon his technocratic pro-market experiment as the unions and the Left-wing parties strongly resisted his austerity measures and his attempt to put an end to the developmental state. It is important to stress here that not only Right-wing sectors seriously questioned the developmental state. Also, representatives of the left severely criticized in the 1950s and early 1960s the ability of the Chilean state to solve the main problems affecting the country. Even the Christian Democrats, representing the moderate political center, began since the late 1950s to argue that Chilean economy and society found themselves in a ‘structural crisis’, requiring the application of profound transformations.24 The genesis of the Chicago boys also finds its roots in the 1950s. In 1956, the Department of Economics of the University of Chicago signed a cooperation agreement with the Catholic University of Santiago, allowing among other things the exchange of staff members and students. This was a conscious attempt to counteract the solid hegemony exerted by Keynesian ideas and the UN Economic Commission for Latin America (ECLA) on Chilean economists, by also exposing them to the monetarist vision. Between 1955 and 1963, a 20 21 22 23 24

Sunkel, ‘El fracaso de las políticas de estabilización’. Cavarozzi, Los sótanos de la democracia. Moulian, ‘Los frentes populares’. Petras, Political and Social Forces, 66. Ahumada, En vez de la miseria.

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total of thirty young economists, graduated at the Catholic University, made use of grants to obtain a master or a PhD degree in economics at the University of Chicago.25 Many of them will later be part of the Chicago boys, in charge of the economic policies of the military regime. Following their return to Chile in the early 1960s, most of them became assistant professors at the Department of Economics at the Catholic University. They used the lecture rooms to spread the main neoliberal tenets of market economics and their message about the need to eliminate state interventionism in Chilean economy. However, outside the university walls, the future Chicago boys were not very influential at that time, as state interventionism and social reformism dominated the political agenda in Chile.26 Many Chicago boys also participated in the formulation of the economic program of the Right-wing candidate Jorge Alessandri during the presidential election of 1970. That program contained many proposals and ideas which will be later implemented during the military government. Alessandri finally lost the election to Salvador Allende, by a small number of votes. After the two frustrated attempts to apply free-markets policies in the 1950s, and following the electoral defeat of Alessandri in 1970, many supporters of neoliberalism came to the conclusion that the application of such a radical economic strategy would be almost impossible under democratic conditions.27 Since the late 1930s until 1970, the Chilean developmental state had created a large number of agencies and public enterprises in all areas of the economy. However, only after the installation of the Unidad Popular government, the expansion of state interventionism really reached its zenith. During the Allende years, the UP government expropriated a large number of companies, banks, and farms. As a result of this, the Chilean state took control of the largest part of the economic activities in the country.28 In the end, the Allende government proved unable to solve a series of severe problems resulting from its economic policies and its confrontational political styles, such as hyper-inflation and the poor management of the expropriated firms. As a result of the economic crisis, Chileans suffered of dramatic shortages of food and of all kinds of consumer goods.29 This turbulent period of Chilean political history was characterized by increasing political polarization and confrontation between government and opposition. The increasing deterioration of the economic situation and the exacerbation of the political conflict led to a situation cataloged by Hirschman as a ‘ideological inflation’.30 In the final stage of the Unidad Popular government, the Left-wing parties frenetically attempted to make of Chile at any cost 25 26 27 28 29 30

Valdés, Pinochet’s Economists. Délano and Translaviña, La herencia de los Chicago Boys; Silva, In the Name of Reason. O’Brien, ‘The New Leviathan’, 39. Silva, ‘The Chilean Developmental State’. De Vylder, Allende’s Chile. Hirschman, 1979.

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a socialist society. With the same token, the Right-wing opposition did not discard any means to put an end to the Allende administration, including a military coup.31 During the Unidad Popular government, the future Chicago boys started in total secrecy with the elaboration of an alternative economic program which was intended to be carried out after the expected military coup against Allende. This extensive document was nicknamed ‘the brick’ due to its heaviness. Previous to September 1973, this program circulated among a restricted group of Right-wing entrepreneurial and political leaders, as well as among some liaison officials within the armed forces.32 Between the military coup of September 1973 and the early days of 1975, it was still not clear how long the military were planning to stay in power, nor the kind of developmental strategy the Pinochet government was going to finally adopt. This was the result of the existence of two main options which will keep the armed forces and their Right-wing followers divided for a while. On the one hand, the so-called ‘restorative’ option was present from the very first moment following the coup. According to this perspective, the military coup was carried out to restore the rule of law and the old Chilean democracy, which resulted severely damaged by the Allende g­ overnment. This implied that the military government only represented a temporal solution to normalize the political and civil life in the country and to return power to (non-Left-wing) politicians.33 On the other hand, however, the most radical Right-wing sectors and the hardliners within the Armed Forces defended the so-called ‘refoundational’ option. In their view, the military junta had to make use of this unique historic opportunity to stay in power for a long period of time if necessary. They esteemed that a long authoritarian period was needed to deeply reshape the political, economic, and even cultural bases of the country in order to eradicate forever the traditional presence and ­influence exerted by the left.34 Following the military coup, the military government searched for its own solutions to face the consequences of the deep economic and financial crisis, inherited from the Allende administration. As Eduardo Silva summarizes, the Chilean economy was hit at that moment by ‘hyper-inflation, lack of investments, low foreign exchange reserves, declining export earnings, and general economic disorder in the wake of Unidad Popular’s failed attempt at socialist transformation’.35

31 32 33

34 35

Valenzuela, The Breakdown of Democratic Regimes; Sigmund, The Overthrow of Allende. Fontaine, Los Economistas; De Castro, ‘El Ladrillo.’ This ‘restorative’ goal was already stated in the first edict emitted by the military junta on the day of the coup: ‘The Armed Forces and the Police are united to initiate the historic and responsible mission to (…) restore order and the institutional framework’ [in memoriachilena.cl]. Garretón, ‘1970–1973’. Silva, The State & Capital in Chile, 97.

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As Foxley points out, in the beginning, the economic authorities of the military government choose a gradual approach in introducing changes in the functioning of the economy by means of deregulation. The idea was to gradually restore the market mechanisms in an economy which was until that moment extremely regulated by the state. This gradual approach included measures such as the liberation of prices, the devaluation of the national currency, and the reduction of the public sector deficit by reducing public expenditures and increasing taxes.36 The military regime also initiated the restitution to their former owners of many firms and landed states that had been expropriated by the Allende government, in the cases that the courts of law had qualified those expropriations as being illegal. Also in the initial period the influence of ‘developmentalism’ within the Chilean armed forces was not totally neutralized, as some more moderate Generals still supported the idea of a strong presence of the state and the existence of social policies directed to the poor.37 This was expressed in the decision to keep the state control on the nationalized copper mines and to redistribute part of the confiscated land during the land reform in private smallholdings among part of the peasantry. In the first year after the coup, the Chicago boys only occupied secondary positions within the state agencies engaged with the economic policies. Their radical ideas generated rejection in moderate circles and within certain sectors of the armed forces.38 However, their relative influence began to grow when the policies of gradual economic reforms did not produce the expected results. The economic and financial situation of the country became even worse as a result of the enormous increase in oil prices and the sharp reduction in the country’s export revenues in 1974. In early 1975, the Chicago boys mobilized all their resources in an attempt to convince the military government that the time had come to adopt radical economic solutions. So, in March 1975, the neoliberal think tank Fundación de Estudios Económicos invited the well-known US economist Milton Friedman to a conference on economic issues. Friedman had personally known many of the Chilean Chicago boys during their study at the University of Chicago. His visit to Chile was used as a powerful show of support for the Chicago boys and their call for adopting an orthodox neoliberal economic model. His visit became not unnoticed as he met several authorities, including Pinochet, all amidst huge media coverage.39 The fact is that a month after his visit, the leader of the Chicago boys, Sergio de Castro, became an economy minister. De Castro was successful in finally convincing the government that there was no other alternative than to radically reconvert the Chilean economy according to the laws of the market. Following his appointment, de Castro announced in a television speech the decision to 36 37 38 39

Foxley, ‘The Neoconservative Economic Experiment’, 17–23. Gárate, La revolución capitalista de Chile, 194. Valdés, Pinochet’s Economists. Oppenheim, Politics in Chile, 111.

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start with the application of an orthodox program of economic liberalization, a ‘shock treatment’, based on neoliberal free-market principles. This marked the beginning of the neoliberal era in Chile. As the following section shows, the continuous expansion of the neoliberal ideology in Chile will eventually result in the constitution of a veritable neoliberal state. Indeed, the neoliberal principles succeeded in penetrating the nation’s economic, social, political, institutional, and cultural spheres.

2.3  pinochet ,

the chicago boys , and the

construction of a neoliberal state

The ascendance of the Chicago boys and the implementation of the neoliberal agenda went hand in hand with the consolidation of Pinochet’s personal rule within the military junta. Although at the beginning Pinochet’s leading position was one of primus inter pares vis-à-vis the representatives of the Navy, the Air Force, and the Police, he soon deployed a power strategy to consolidate his supremacy. In June 1974, he became Supreme Chief of the Nation and six months later, he proclaimed himself as President of the Republic. As Arriagada indicates, Pinochet used his position as Commander in Chief of the Army, the most important branch of the armed forces, to eclipse the power of the other members of the junta. He also centralized the security and intelligence forces in a single organization, the DINA, which became directly under his control and was utilized to strengthen his position within the armed forces. According to Arriagada, until the early 1980s, the Chicago boys became, together with the Army and the DINA, one of the most important pillars of support for Pinochet.40 Previous to the ascendancy of the neoliberal team, those in charge of the economic policies were almost entirely concerned with the direct consequences of the economic chaos left by the Unidad Popular. Also, their criticism of the condition of the Chilean economy in the past was mainly restricted to the former Unidad Popular experience. In contrast, the Chicago boys formulated a long-term critical assessment of Chile’s economic policies, going back to the 1930s. In their view, state interventionism during the developmental era resulted extremely harmful to the country, as it blocked Chile’s great potential to accomplish rapid economic growth and increase social prosperity. Hence, the message was to put an end to the developmental state and to initiate the construction of a new developmental model, based on free-market economics.41 Previous to the application of their ‘shock treatment’, the Chicago boys warned the population that the first years would not be easy as the reconversion of the economy would imply a series of deep measures. And indeed, in the

40 41

Arriagada, Pinochet, 19–20. De Castro, ‘El Ladrillo,’ 12.

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years 1975 and 1976, Chile experienced a severe recession. However, from 1978 onwards, the Chilean economy began to experience an unprecedented boom. In the period 1978–1981, inflation was reduced to a historical low level, while the fiscal deficit disappeared, the balance of payments showed a growing surplus, and the export sector expanded very fast. The relative success of the neoliberal policies not only potentiated the power and influence of the Chicago boys within the government but also the relative legitimacy of Pinochet’s rule. He was very conscious of the fact that the consolidation of his personal leadership depended on an important degree on his ability to obtain a good economic performance and financial stability.42 The achievement of economic growth and access to foreign loans also stimulated enthusiasm among the Chilean economic elite with the new pattern of development. Moreover, the process of privatization of state companies started by the Chicago boys also benefited the large economic and financial conglomerates, which obtained control of a series of enterprises at low prices and mainly financed by external credits.43 Three important factors facilitated the application of the neoliberal model in Chile. To begin with, the Chicago boys counted on the resolute support of Pinochet, whose authority was not questioned by the rest of the armed forces. So, despite the initial reticence shown in certain military circles toward the application of the neoliberal project, in the end, the strict verticality in the chain of command was decisive to subordinate the military corps to the new economic model.44 Secondly, both the political right and the entrepreneurial class exhibited impressive support to Pinochet and the government of the armed forces. This was the direct result of the intensity of the threat they experienced during the Unidad Popular government.45 Indeed, nowhere in Latin America did the social and economic elite feel so threatened as in Chile. During the Unidad Popular, they faced a threat ‘from above’ (the Allende government) and a menace ‘from below’ (the radical masses demanding expropriation of their assets and the instauration of socialism). Thus, Pinochet was regarded by the Chilean elite as a great patriot and savior who liberated Chile from communism. He also received, from the very first moment until his death (and even beyond), the elite’s enthusiastic support and loyalty.46 And last but not least, the Chicago boys possessed a very strong “sprit de corps” and unity. They propagated, as a cohesive group, a coherent diagnosis of the problems

42 43 44 45 46

Huneeus, The Pinochet Regime, 140, 162. Mönckeberg, El saqueo de los grupos económicos. Arriagada, Pinochet; Garretón, The Chilean Political Process. Stepan, ‘State Power’. This became manifest during Pinochet’s arrest in London in 1998–2000. Both the Chilean right and the entrepreneurial elite financed his stay and his lawyers in London. They also visit him on a regular basis to express him their total support. Even today the figure of Pinochet generates a broad support within several rightwing circles.

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affecting the economy and presented a complete plan about how to deal with each of them. The Chicago boys stressed time and again the alleged ‘apolitical’ nature of their economic policies. According to them, their policies were strictly based on scientific principles and were only directed to guarantee the good functioning of the economy. Pinochet certainly welcomed the scholarly and technocratic tone adopted by the economic team. This alleged apoliticism was congenial with his own purpose to depoliticize Chilean society and eliminate doctrinarian elements in the discussion about how to foster economic growth. Pinochet also saw the political and strategic benefices of the deindustrialization of the country, as proposed by the Chicago boys, as this represented in his view an important blow to Marxism and the labor unions.47 At the zenith of their hegemonic position, the Chicago boys announced what they called ‘the seven modernizations’, involving a series of profound reforms intended to introduce the neoliberal rationale in several strategic policy fields. The seven modernizations included the introduction of a new labor legislation, the transformation of the social security system, the municipalization of education, the privatization of heath care, the internationalization of agriculture, the transformation of the judiciary system, and the decentralization and regionalization of the government administration.48 As stated before, the role played by the Chicago boys was not restricted to administrate the economic policies. They also played a pivotal role in the attempt to legitimate the authoritarian regime of Pinochet. Moreover, the Chicago boys disseminated political and doctrinarian neoliberal ideas (coming from Hayek, Friedman, and other neoliberal thinkers) against communism and collectivism in general. The 1980 Constitution adopted by the Pinochet regime is almost enterally written from a neoliberal worldview. Making use of Hayek’s ideas, the Chicago boys stated that most Western democracies, including the old Chilean one, were in fact pseudo-democracies, as they were controlled by political parties, labor unions, and other power groups. According to them, the introduction of a neoliberal system based on what they considered general and impartial rules, will be able to put an end to the constant pressure exerted by sectoral interests on the state. In addition, they defended the neoliberal tenet that the achievement of economic liberty represented a precondition for the existence of political liberty and real democracy. Moreover, the existence of the authoritarian regime was presented as a conditio sine qua non to be able to introduce and consolidate a free market economy. However, they foresaw that once the new economic system achieved maturity, the prolongation of the authoritarian rule was going to be unnecessary and restoration of democratic rule in Chile would be possible.49 47 48 49

Silva, The State & Capital in Chile, 123. Baño, 1982. Vergara, Auge y caída, 89–106.

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One important instrument used by the Chicago boys to provide some degree of legitimacy to the neoliberal model was mass consumerism. The opening of the Chilean economy to foreign imports allowed many Chileans, for the first time, to acquire desirable foreign consumer goods, from clothes to television sets, from perfumes to cars. The massive import of consumer goods was made possible with the subsequent expansion of credits for consumption. This represented a byproduct of the privatization of the banks and the authorization of foreign banks to operate in the country. The broad presence of foreign goods in the country created a general sensation of welfare and that Chile had been integrated into the dominant Western lifestyle. Not only the rich but also the middle classes participated in this consumeristic festival. Also, the popular masses acquired access to cheap foreign products coming mainly from China and other Asian countries.50 The hegemony of the Chicago boys would eventually come to an end as a result of a sudden and profound economic crisis in 1981, which shook severely (but not destroyed) the entire basis of the neoliberal structures. The crisis led to the bankruptcy of several financial and industrial conglomerates, a radical fall in production, and an unprecedented rate of unemployment. Pinochet was forced to dismiss the Chicago boys, including his minister of finance Sergio de Castro. He replaced them by military men who began to apply more pragmatic economic policies to reactivate the economy.51 After a couple of years, the Chilean economy recovered from the crisis. After a while, Pinochet started again to appoint a series of neoliberal economists, closely associated with the Chicago boys, in key positions in his government. In other words, neoliberalism as such managed to survive the crisis. However, the economic crisis had changed the political scenario for good. The economic turbulences generated, for the first time since the 1973 coup, a huge wave of street demonstrations against the military regime. A large number of people demanded the end of the dictatorship and the restoration of democracy in the country. Pinochet appointed Sergio Onofre Jarpa as interior minister. This experimented Right-wing politician started conversations with leaders of the democratic opposition forces as a way to deradicalize the protests and to win time to deal with the new political scenario. It is interesting to note that the protests were not mainly directed against the neoliberal economic model but primarily again the dictatorship; the main objective was clearly the recovery of democratic freedom and the reign of the rule of law. Not only the regime but also the leaders of the democratic parties were concerned with the radicalization of the street protests against the dictatorship. The democratic leaders were afraid that if the radicalization continued, a

50 51

Silva, ‘Modernization, Consumerism and Politics’. Silva, The State & Capital in Chile, 173–213.

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scenario of political polarization, similar to the situation previous to the 1973 coup, could emerge. If that occurred, the chances to come closer to a political solution and put an end to the dictatorship by peaceful means, would evaporate. So, the leaders of the main democratic opposition parties consciously decided to demobilize the masses and to conduct directly, at a top level, negotiations with certain civil politicians within the military government. Another factor which facilitated the establishment of bridges between the democratic opposition and the regime were a series of research institutes founded by the democratic opposition to monitor the policies applied by the military regime. These think tanks were mainly financed by donations coming from western countries. The idea was to support the democratic intelligentsia in those difficult years and help to formulate possible policy alternatives for the eventual restoration of democracy in the future. As political parties were prohibited, these think tanks were careful in not adopting a too obvious oppositional stance, preferring to make sophisticated academic studies on the policies implemented by the Chicago boys. Their papers and books were written in a rather technical style, making use of heavy scholarly jargon. Paradoxically, the professionals working in those research institutes also adopted with the passing of time a technocratic style, very similar to the one characteristic of the Chicago boys. These technocrats from the opposition also gained increasing prestige and power within the political forces against Pinochet, helping to moderate their agendas and to diminish the confrontational tone vis-à-vis the military regime.52 In retrospective, the peaceful nature of the Chilean democratic transition was paradoxically facilitated by the existence of the plebiscite mechanism, introduced in the 1980 Constitution. It was established that eight years after the adoption of the new constitution, a general plebiscite would take place in which the population should decide, in a yes-or-no option, if they wanted another eight years of military rule. If the no option won, general elections should take place within twelve months after the referendum. This was exactly what happened: the no option became victorious and within a year general election took place, marking the return of democratic rule in the country. Between the October 1988 Plebiscite and the installation of the Aylwin government in March 1990, frenetic negotiations took place between representatives of the military government and the future democratic authorities. One of the major fears of the supporters of the military regime was the possible dismantlement of the neoliberal economic model by the future democratic government. However, the future Concertación authorities did not even contemplate the idea to radically modify the neoliberal economic policies introduced by the military regime.53

52 53

Puryear, Thinking Politics. Tulchin and Varas, From Dictatorship to Democracy.

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2.4  the

social - democratization of

neoliberalism ,

1990–2010

The decision by the Aylwin administration to maintain the main components of the neoliberal economic model following democratic restoration in 1990 was the result of multiple factors, which were certainly not circumscribed to strict economic considerations. In my view, perhaps the most important factor in producing this outcome was not even related to the Pinochet government and the Chicago boys, as one could have expected, but to the experience of Allende’s Unidad Popular in the early 1970s. Following the coup, a series of books and essays of former leaders of the Allende government were published in exile, in which they attempted to find explanations for the dramatic debacle of their socialist experiment.54 In the beginning, the analysis was extremely ideologized and biased: time and again both the CIA and the national bourgeoisie were indicated as the sole responsible for the abrupt termination of the Unidad Popular experience. However, with the passing of time, the Unidad Popular’s own responsibility in the 1973 debacle became integrated into the assessments55 The important point to stress here is that those reassessments were particularly critical about the economic policies followed by the Unidad Popular. In their view, the inability shown by the Allende government to manage the economy and to avoid the emergence of serious issues (such as hyperinflation, food and consumer goods shortages, huge fiscal deficit, and so forth), constituted, if not the sole responsible element, a crucial factor in producing its fall. The recognition that the UP economic policies were a failure would have important consequences for the traditional economic thinking within the Chilean democratic left. The previous existing conviction that a state-based economic strategy, the nationalization of enterprises and banks, the expropriation of farms, the control of prices, etc., was the right thing to do, gradually disappeared among most leaders of the Chilean democratic left, following the Allende experience and the coup. That is the reason why, at the end of the Pinochet dictatorship, no serious leader of the democratic left proposed or defended the idea to replace Pinochet’s neoliberalism by an economic model similar to what was implemented during the Unidad Popular. The same evolution can be seen within the democratic left with respect to the neoliberal model implemented by the military regime. At the beginning, most of the leaders of the Chilean left in exile were convinced that the neoliberal model introduced by the Chicago boys was economically inviable. They enthusiastically made predictions about the collapse of the model, as they expected it could occur in a few years. Contrary to this, the neoliberal model 54 55

See Altamirano, Dialéctica de una derrota. See Garretón, ‘1970–1973’, 252ff.

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not only survived the crisis of 1975 and 1981 but even outlived the authoritarian government after 1990. By the late 1970s, many economists from the opposition finally began to recognize the viability of the neoliberal strategy followed by Pinochet, as most economic indicators showed undeniable good results. Although they correctly stressed the enormous social costs of these economic achievements, they also began to realize the importance of having a sound economy in the years ahead. After the expected restoration of democratic rule in the near future, Chile was going to require constant economic growth to obtain the needed resources to improve the living standards of the popular masses.56 The decision to maintain the neoliberal model following democratic restoration was in my view also linked to the experience of exile. Following the coup, thousands of Chileans abandoned the country, becoming disseminated around the globe. Most of the former UP leaders lived a long exile in countries of Western and Eastern Europe. That experience was decisive for the increasing ‘social democratization’ of the democratic left, known as the ‘renovation process’. On the one hand, many Chilean refugees consciously decided to live in a Communist country in Eastern Europe. They got by this a personal experience of the dark sides of ‘real socialism’. They became disenchanted with those countries due to the lack of freedom, the repression of dissidents, and the bad shape of their economies. Already in the late 1970s, many of them moved toward Western European countries, escaping from those societies they had so much admired in the past. On the other hand, many leaders who lived in Western European countries became increasingly impressed by the accomplishments of social democracy in the establishment of welfare states. They were particularly impressed by the social democrats’ moderation and their ability to reach compromises and consensus with opposite political forces. Many Chilean Left-wing leaders saw with their own eyes that it was possible to have progressive labor legislation and relatively good living standards for the popular sectors under capitalism. At the end, many of them finally rejected the Leninist postulates and explicitly renounced the old goal to build up a (proletarian) dictatorship. At the same time, they expressed their unequivocal support for democratic rule.57 But what perhaps became the most decisive factor among the opposition forces in the decision to maintain the neoliberal model had to do in my view with their great concern in guaranteeing governability and political stability following democratic restoration.58 The new democratic authorities had to show their ability to maintain economic growth and financial stability in the country, as many Chileans feared that economic chaos could be one of the possible unintended consequences of democratic restoration. That is the reason 56 57 58

Tulchin and Varas, From Dictatorship to Democracy. See Arrate, La fuerza democrática. Boeninger, Democracia en Chile.

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why President Aylwin consciously empowered his economic team, led by his minister of finance Alejandro Foxley, in an attempt to ensure the achievement of economic success under democracy. As Oppenheim pointed out, ‘Chileans were extremely sensitive to situations that they thought might recreate previous crises. For example, many Chileans associated inflation and economic dislocation with the Allende government: consequently, the Aylwin government made the day-to-day management and stability of the economy a major priority’.59 Also, the trauma of 1973 and the failure of Allende’s economic policies were extremely present in the minds and memories of the leaders of the democratic leftist parties participating in the Concertación coalition. Many of them had actively participated in the Allende government and considered its debacle also as a kind of personal failure. This personal commitment in guaranteeing the success of the new Chilean democracy is expressed in the following words of the socialist leader Enrique Correa. He was the minister secretary general of the government and key articulator of general agreements between the government and the Right-wing opposition during the Aylwin administration: ‘we have made many concessions, but it is thanks to this that we have built the kind of democracy we have today. (…) we have constructed a political and social order which will be very stable. And the contributions of the Socialists will remain related to that success, in the same way we remain related to the failure of the early 1970s. The Socialists of the future shall be the inheritors of that success, and not of the failure of the past’.60 Also, international factors concerning experiences coming from neighboring countries convinced the Concertación authorities not to change the neoliberal economic model. As Chile became the last country in South America in recuperating democracy (1990), the Chilean democratic forces had the chance to witness the calamitous results of the economic policies followed in Peru, Argentina, and Brazil following their transitions earlier in the 1980s. That sad and worrying spectacle in the region finished to convince many within the Concertación coalition that Chile had to avoid any experimentation in economic policies after the reestablishment of democracy in the country. Last but not least, the maintenance of the neoliberal model was also a consequence of the existing political balance of power between the center-left forces in government and the Right-wing forces in opposition. The 1980 Constitution, still in force after 1990, made possible an over-representation of the right in the Senate. This was a result of the so-called senadores designados, members of the Senate designated by constitutional stipulation, including former military commanders, and former top officials of the authoritarian regime. Moreover, the existence of a binominal electoral system, also introduced by Pinochet, favored the Right-wing parties, as they obtained in each electoral district half

59 60

Oppenheim, Politics in Chile, 212. Interview, El Mercurio, February 2, 1992.

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of the seats in dispute, even in places where the center-left forces had obtained nearly 2/3 of the vote. In this manner, the Concertación governments faced a Parliament in which the Right-wing forces were heavily (over)represented. This forced the Concertación governments to seek for agreements with the opposition in order to be able to introduce new legislation and implement a series of social reforms. The result was a climate of relative cooperation between the Concertación governments and the Right-wing opposition which became known as the ‘politics of agreements’ (política de acuerdos). This attitude of both sides was critical to guarantee the climate of strong political stability and consensus which dominated most of the twenty years of Concertación rule in Chile. As Tulchin and Varas correctly indicated ‘after seventeen years of military dictatorship, Chilean political leaders all across the political spectrum began to put an end to a long tradition of bitter confrontations, and slowly to value more and more democratic stability through compromise. (…) The trauma of the military coup and its long and bloody aftermath were ­powerful incentives for all political sectors not to recreate the same conditions that produced the breakdown of democracy’.61 In retrospective, it can be stated that the Concertación governments of the period 1990–2010 were extremely successful in both political and economic terms. On the political front, they consolidated a climate of political stability and consensus-seeking among the major political forces in the country. In the economic realm, Chile experienced during the Concertación years very good results in terms of economic growth, increasing expansion of trade, foreign investments, and sound management of the finances (including very low inflation, almost no fiscal deficit, and other achievements). But what is even more important, the Concertación government dramatically reduced the levels of poverty in the country, going from almost 40 percent in 1990 to 12 percent of the population in 2010. Although the new democratic authorities eliminated the most controversial features of neoliberalism in the country, the maintenance of a free-market economy remained a contested issue among certain sectors of the left that were part of the governmental coalition. Pinochet’s paternity of the neoliberal system represents a key factor to understand the constant resistance neoliberalism has experienced among that sector within the Concertación forces. This is despite the good performance of the country’s economy and the functioning of state institutions since democratic restoration in 1990. So, in fact, ‘two souls’ cohabited within the Concertación. On one hand, the Concertación had been drawn up by a Social Democratic oriented sector, which aspired to gradual and moderate changes in the country’s political and institutional structures. This was the so-called ‘self-complacent’ sector (autocomplacientes) that tacitly supported the economic model inherited from Pinochet and favored the use of

61

Tulchin and Varas, From Dictatorship to Democracy, 4.

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technocratic public policies to combat social problems. On the other hand, a very influential Left-wing minority always felt uncomfortable with these neoliberal policies. This was the so-called ‘self-flagellating’ sector (autoflagelantes), which demanded a more predominant role for the state and greater levels of citizen participation.62 The struggle between both sectors intensified during the first Bachelet’s government (2006–2010), to the extent that different social movements began to burst forcefully onto the political scene, supporting the ‘self- flagellating’ thesis. The struggle between the so-called ‘two souls’ within the Concertación visibly weakened the internal cohesion of Bachelet’s administration. Moreover, her administration did not manage to reduce the political effervescence of the social movements that regularly took to the streets in protest against the neoliberal model. The ‘self-flagellating’ sector expressed its support for the social movements’ demands. At the same time, this sector started an open attack on the powerful group of technocrats in charge of economic policies, led by the minister of finance, Andrés Velasco. These technocrats were accused of not paying attention to the demands coming from civil society, as they consistently resisted the pressures to substantially increase public expenditures as was demanded during street protests.63 During the Concertación years, a series of publications coming from the academic world severely criticized the continuation of neoliberal policies. One of the most influential was the book Present-day Chile: Anatomy of a Myth by Tomás Moulian.64 In this book, the Concertación is severely criticized and accused of not daring to take distance from neoliberalism. That book became a bestseller and went through several editions in a short period of time. In addition to this, the UN agency UNDP published a report entitled The paradox of modernization.65 This study argues that despite the economic and social achievements of the Concertación, there was a growing discomfort among the population with this particular type of neoliberal modernization. This document, as well as subsequent PNUD publications on this topic, became extremely influential among the Left-wing leaders within the Concertación. The electoral victory of the Right-wing candidate Sebastián Piñera in 2010 showed, however, that the assessment done by the self-flagellating sector about the discontent in Chilean society with neoliberalism did not fully correspond to reality. According to Peña, the emergence of relative discontent is natural in countries like Chile, experiencing a very vast transition toward modernity. However, this cannot be automatically interpreted as an expression of rejection of the neoliberal economic system by the Chilean population. For Peña, when present-day Chileans are discontent with the system is when the system 62 63 64 65

Brunner and Moulian, Brunner vs Moulian. Silva, 2008. Moulian, Chile actual. UNDP, 1998.

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does not observe its own rules of game. So for instance, when conglomerates collude among themselves to fix prices or when someone obtains a prestigious job because of his social connections and not on the basis of merit.66 Following the electoral defeat of the Concertación, the self-flagellating forces took control of the conglomerate, radicalizing their positions and adopting a tough and non-cooperative attitude against the Piñera government. This occurred despite the fact that the Right-wing government conducted policies very similar (and most times identical) to those of the Concertación era, including the continuation of a broad scale of social programs directed to the popular sectors. After Piñera’s installation, a kind of total symbiosis took place in the opposition between the self-flagellating forces and the radical social movements. From 2011 onwards, Piñera had to deal with a fierce student movement that used the struggle against profits made by private universities as their main weapon. The students took aim at the commercialization of university education, cataloged by Piñera as a ‘consumer good’. Even though current legislation prevented profit-making, many private universities made large amounts of money for their owners by demanding high registration fees and through real estate speculation. The students demanded free education and an improvement in its quality. Student protests continued throughout Piñera’s administration, posing an increasing threat to both his government’s legitimacy and the neoliberal economic model.67

2.5  the

new majority and its failed assault

on neoliberalism ,

2014–2018

During the first Piñera government (2010–2014), the political forces that had supported the old Concertación coalition were visibly in disarray. After their electoral defeat, the Concertación parties sank into mutual recriminations regarding each other’s responsibility in the collapse of the Concertación coalition. After their defeat, the old struggle between radical and moderate sectors inside the alliance reached a peak, putting on an upsetting show for the electorate. In fact, at the end of March 2013, the Concertación still did not have an official presidential candidate to go up against the ruling Right-wing coalition. Michelle Bachelet, however, suddenly appeared, like a saving deus ex machina, to lead the debilitated center-left opposition. Bachelet had finished her previous administration with high rates of popularity and public approval. She had also wisely kept her distance from the Concertación’s internal disputes, holding a 66 67

Peña, Lo que el dinero sí puede comprar. For a specific study of political struggles around university reform and neoliberalism in Chile and Peru, see the chapter by Camacho and Dargent in this volume. For a detailed examination of the recent wave of social protests against neoliberal policies in Chile, see the chapter by Schild in this volume.

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high-ranking function at the United Nations in New York. In the meantime, the more radical sectors of the Concertación had managed to gain political control of the conglomerate, disowning most of what had been done during their twenty years of government. Imbued with a strong ‘refoundational spirit’ and eager to change almost everything, they left the ‘Concertación’ behind once and for all, by renaming it ‘New Majority’. As a sign of their turn to the left, the New Majority coalition included the Communist Party and representatives from the radical student movement. As a result of this political and ideological about-turn, the Christian Democrat Party, which represented the moderate sectors, was given a painful secondary role in the electoral coalition. In fact, with the exception of the Christian Democrats, the New Majority represented (in terms of the political forces included in the coalition) a kind of upgraded Unidad Popular. The main foundation for the New Majority’s government program, called ‘Chile for All’, was based on achieving greater equity in Chilean society. To do so – among other measures – profound reforms in education and in the tax system were proposed. Following its electoral victory, the New Majority government immediately started with the proclamation of a long list of reforms. However, the self-confidence and legitimacy of the New Majority government became abruptly damaged in February 2015, following an article in the weekly magazine Qué Pasa in which Sebastián Dávalos, the son of President Bachelet, became linked to a questionable purchase of land.68 This news did deeply shake the main foundations of Bachelet’s government. The problem was that Dávalos was not only Bachelet’s son but also he held public office in the government at the time, a position his mother had appointed him to. Namely, Dávalos was Director of the Presidency of the Republic’s Sociocultural Department, in charge of a series of activities normally carried out by the First Lady. This case of traffic of influence (which became known as the Caval scandal) severally affected the popularity of Bachelet and hence of the New Majority government. Soon after this, another scandal emerged when following a judicial investigation, a situation came to light involving the illegal financing of political parties by the Chilean Chemical and Mining Society (SQM), run by Pinochet’s former son-in-law, Julio Ponce Lerou. It became clear that SQM had financed not only Right-wing parties but also several parties that participated in the New Majority as well.69 In the final years of the first Piñera administration, most sectors of the former Concertación had adopted many of the slogans and goals defended by the student movement and the radical social movements in general. The ambitious reformist agenda of the New Majority strained government-opposition relations to the limit. Bachelet’s government was characterized by its unwillingness

68 69

Navia, ‘Dirty money scandal’. Silva, Public Probity and Corruption in Chile, 221–223.

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to compromise with Right-wing parties on its large-scale package of political, economic, and institutional reforms. Finally, the New Majority’s ability to introduce radical reforms was seriously affected by the emergence of a series of cases of corruption that affected President Bachelet and some of the former Concertación parties. Bachelet’s second administration and her New Majority coalition constituted a radical break with the line followed by the previous Concertación governments. It was motivated by a ‘refoundational logic’ in a clear attempt to break not only with the economic and political legacy of the military government but also with the own legate of the Concertación era. The new coalition aimed to implement three fundamental reforms, which in fact were intended to hit the very heart of the neoliberal structures which had been constructed in the last thirty years. It included a tax reform, a reform of the education system, and a new Constitution.70 In sharp contrast to the economic and fiscal policies followed by the Concertación, aimed to maintain high rates of economic growth and fiscal discipline, the New Majority administration paid almost no attention to the strengthening of the economy, while the deficit and the public debt grew as never before.71 During Bachelet’s second government, the practice of looking for a compromise with the opposition, initiated in 1990, came to an abrupt end. As the name of the new coalition indicated, the new government had a majority in both chambers of parliament and it was decided to make use of it to implement a series of profound reforms in Chilean society. With this favorable correlation of forces, the New Majority decided to govern and implement its policy program without compromising with Right-wing parties. In addition, the New Majority’s most radical sectors publicly expressed their intention to go beyond the original aims set out in the government program, having as their ultimate goal to put an end to the neoliberal system in Chile. This objective was fully reflected in the declarations of a prominent leader of the New Majority, senator Jaime Quintana, who claimed that ‘we’re not just going to steamroll everything, we’re going to excavate everything, because we have to destroy the obsolete foundations of the dictatorship’s neoliberal model’. These maximalist declarations had a profound impact on the Right-wing opposition, which saw in Quintana’s words the real objective of the series of reforms announced by Bachelet. From then on, the center-right began to view the radical spirit of the New Majority as an attempt to revive some of the aims of Allende’s Unidad Popular government of the early 1970s. 70

71

The New Majority depicted the Constitution as an unacceptable heritage of the Pinochet years. This, despite the fact that in 2003 the Constitution had been profoundly revised. All the controversial and authoritarian components in the constitution were eliminated. This profound reform of the Constitution took place during the government of President Ricardo Lagos (a Socialist) in which Bachelet was minister of state. Walker, La Nueva Mayoría.

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The New Majority also got the intellectual support of several scholars who wrote in 2013 about the imminent end of neoliberalism in Chile and the inevitability of its replacement by a new system based on universal social rights and new forms of citizen’s participation. That was the case of the best-seller collective volume The other Model: from the Neoliberal Order to a Public Regime, written by a group of well-known public figures and scholars.72 The study contains a veritable blueprint for an alternative developmental model in the fields of institutional reforms, public services, education, and others. The same year appeared the book The Model’s Collapse: The Crisis of the Market Economy in present-day Chile by the sociologist Alberto Mayol.73 This book presented an almost apocalyptic impression of Chilean neoliberalism, that according to the author, was witnessing its very last days. The mismanagement that characterized Bachelet’s second administration produced an increasing alienation from the middle classes who feared that the ‘reformist fever’ showed by the New Majority could result in a clear reduction of the levels of the general welfare of the country. The fears regarding another economic collapse (like in 1973) were reactivated by the New Majority itself by presenting the figure of Salvador Allende as a central source of inspiration. So for instance, Bachelet used very often a gigantic picture of Allende as background in her public presentations, with texts such as ‘the Chilean people will fulfil your mandate’. In practice, the desire among the New Majority leaders to get rid of neoliberal structures was several times stronger than their real ability to formulate and implement possible alternatives. The lack of internal consensus within the coalition also provoked a visible incoherence in the performances of ministers and other important figures who regularly made simultaneous declarations that contradicted each other. Also, new law proposals presented by the government were often severely criticized by members of the parliament who were part of the governmental coalition. Particularly, the co-habitation between the Christian Democratic party (PDC) and the Communist party within the New Majority governmental coalition proved to be very tense as both represented totally opposite visions about most of the issues under discussion. So while the PDC felt very proud about the accomplishment of the twenty years of Concertación rule, the Communist party had permanently criticized the Concertación in the past and decided to eradicate any memory of it within the Chilean left.74 In the end, many supporters of the PDC abandoned the party. They felt that there was no room for moderate positions within a governmental coalition that had adopted a too militant and intransigent position. The New Majority, which initially considered itself the natural successor of the Concertación 72 73 74

Atria et al., El otro modelo. Mayol, El derrumbe del modelo. Walker, La Nueva Mayoría.

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coalition, aimed to rule the country for a very long time. However, it did not manage to remain in power following Bachelet’s presidential period. The defeat of the New Majority coalition became extra painful as a Right-wing coalition won the 2017 presidential elections. In March 2018, Bachelet handed over the presidential baton to Sebastián Piñera. During his second administration, Piñera initially focused on the reactivation of the Chilean economy, following the very poor performance of the New Majority government in this field. After their electoral defeat, the parties of the New Majority coalition become extremely divided, missing a central figure who could keep the conglomerate together. After finishing her term, Bachelet accepted a high position at the UN in Geneva, making clear that she was not intending to lead the New Majority coalition in the future. In the months previous to the socio-political upheaval of October 18, 2019, nothing indicated that Chile was on the eve of the worst socio-political crisis the country has experienced since the breakdown of democracy in 1973. Only a week before that event, Piñera stated in an interview that Chile was like an oasis amidst a turbulent region. He stressed the relatively good performance of the economy and the political stability in the country and contrasted it with the complex scenario affecting the rest of Latin America. In the international arena, Piñera achieved a series of successes. In late August 2019, he participated at the G7 summit in Biarritz, as President Macron’s guest of honor. This was a clear expression of the international prestige Chile and the country’s economy enjoyed among Western leaders. Moreover, Chile was going to host two major and prestigious international summits before the end of the year. In mid-November, the Summit of the Asian-Pacific Economic Cooperation (APEC) was going to take place in Santiago. More than 7,000 delegates from twenty-seven Asian and (Latin) American countries were expected. Among those who had confirmed their presence were Vladimir Putin, Donald Trump, and Xi Yinping. In the beginning of December 2019, Chile was going to host for ten days the United Nations Climate Change Summit (COP25) for which more than 25,000 delegates from all over the world should be present. But all of a sudden everything changed. On October 18, 2019, a slight rise (4 US$ cents) in the price of the Santiago subway immediately originated protest actions led by secondary school students who massively avoided to pay the subway. In a matter of hours, these protests evolved into a veritable general uprising that obtained the full support of the Left-wing political parties and a broad variety of social movements. Twenty subway stations were put on fire, and the other 41 stations became severely damaged. In the following days, weeks, and months, the protests persisted. In some cases, they were accompanied with violent riots and plundering of supermarkets, malls, drugstores, and all types of shops in the major cities of the country. The government responded with the use of force, deploying anti-disturb police and later military personnel in the streets of the main cities. The security forces were clearly overtaken by the massive nature of the protests and its persistence in time. Following

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the October 18 uprising and the immediate deterioration of the political and security situation in the country, both international meetings were canceled. From October 18, 2019 until the beginning of the corona pandemic in Chile in March 2020, Chile has been in a state of continuous socio-political turbulence. It is still too soon to identify clearly the main factors that caused the socio-political upheaval the country has been experiencing since October 2019. Some analysts and politicians point at the big social inequalities still existing in the country as the major catalysator of the socio-political explosion. Others stress Piñera’s own responsibility in creating too high expectations among the population during the presidential elections that brought him back to power. During the electoral contest, Piñera had promised to recuperate the high levels of economic growth the country had experienced in the recent past. However, in the course of 2019, it had become clear that although the economy was showing clear improvements, the pace of the reactivation was far much lower than expected. Still, others see in the October upheaval a coordinated political action organized by the Communist Party, anarchist organizations, and a series of extreme leftist groups, to force the cancelation of the two world summits in Chile at the end of the year. Both events were seen by the Chilean Leftwing forces as the crowning of Piñera in the international arena and a proof of Chile’s full involvement in a globalization process they openly condemned. In the same light, some accused Cuba and Venezuela to have been involved in the organization of the October 18 uprising and the subsequent riots. According to this view, this corresponded to a concerted action against Piñera after he took a leading position in Latin America in the condemnation of the Maduro regime and for openly supporting the Venezuelan opposition.75 Independently of the question concerning which factors were decisive in producing the socio-political upraising, what is clear is that the protesters have identified neoliberalism as responsible for the main problems affecting the country. Indeed, most of the slogans proclaimed by the multitudes on the street and most texts of the protest banners contained to demand to terminate with the neoliberal system in Chile. The second Piñera administration confronted a Left-wing opposition that from the very beginning showed little disposition to reach agreements with the executive. Following the October 2019 upraising, the government-opposition relations reached a low critical point. Many leaders of the opposition rejected Piñera’s invitations for direct talks about the crisis and possible ways to overcome it. However, the levels of violence and confrontation on the streets of the major cities began to reach explosive dimensions. At that point, many Chileans feared for a possible military intervention. At that critical moment, representatives of the right- and center-left political forces represented at the parliament reached a historical agreement on November 19, 2019. They agreed to deploy

75

Peña and Silva, Social Revolt in Chile.

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common efforts to reestablish social peace and public order, as well as to protect human rights and democratic institutions. They also agreed to call for a referendum to determine if the majority of the population support the idea of a new Constitution. The corona pandemic, however, forced the authorities to postpone the plebiscite for a later occasion. Like in the rest of the world, the corona pandemic forced the Chilean state to take a very active role in trying to control the spread of the virus among the population and to deal with its social and economic consequences. This has resulted in a marked increase of state interventionism in all spheres of public and private spheres. The government has deployed a large battery of state support in the form of large subsidies, distribution of food packages, and other measures. Moreover, the government has provided full support to industrial initiatives to produce medical equipment and medicines which until now were acquired abroad. In other words, the new reality created by the pandemic has visibly reduced the freeway the market forces possessed in Chile until very recently. It is still not clear if this strengthening in the state presence will be a temporal phenomenon or will become a more permanent feature of the Chilean state in the post-pandemic era.

2.6  conclusion Chile possessed until October 2019 socio-political upraising one of the most dynamic and stable economies in Latin America. The country maintained that exceptional position for more than three decades. In the political and institutional domains, Chile represented until mid-2019 one of the most stable and successful democracies in the continent. Both the political stability and the good economic performance have dramatically evaporated since October 18, 2019. The relatively good economic and political performance achieved since democratic restoration in 1990 was a combination of market-oriented economic policies and the existence of a moderate political class that managed to build up a general consensus around its ‘growth with equity’ formula. While conserving many aspects of the original economic model implanted by Pinochet, the Concertación administration introduced a series of important reforms to adequate the model to the goal of fighting poverty in the country. Despite its relatively good performance since democratic restoration in 1990, the Chilean neoliberal model has been constantly questioned by Leftwing sectors that stress its illegitimate origin as it was born under an authoritarian and repressive regime. They also permanently criticized the full opening and internationalization of the Chilean economy, as this had allowed multinationals of all sorts and origins to exploit Chile’s natural resources. In retrospect, it seemed for a long time that the initial purpose of the military regime to eliminate state interventionism in the economic domain and to impede by this a future comeback of socialist-based formulas had been achieved. However, since the New Majority government (2014–2018) and

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particularly following the social upheaval of October 2019, Chile has experienced an increasing shift toward a stronger presence of the state in both the social and economic realms. If we look back at the twenty years of Concertación governments, it can be concluded that they were quite successful in terms of economic performance, political stability, and overall performance of the country. The credit for this achievement goes in first place to the Concertación authorities who showed a high level of political competence to adequately rule the country in a very crucial historical moment. But also the Right-wing opposition showed its good disposition, through a ‘politics of agreements’, to collaborate with the government and to introduce a series of important reforms. Both government and opposition shared the same interest in maintaining the good functioning of the economy and avoiding political and social turbulences which could jeopardize democratic consolidation. By continuing with the previous neoliberal policies, the Concertación governments unintentionally provided neoliberalism with an important degree of legitimation that it had lacked during the Pinochet years. Still, the presence of neoliberalism created continuous tensions within the Concertación governments. Left-wing sectors within the coalition could not easily accept that the economic system inherited from Pinochet was not only alive but that it had been improved under democratic rule. In reality, during the Concertación governments, neoliberalism experienced a process of ‘social-democratization’, as an impressive battery of social policies and programs were implemented to support the popular sectors, which have been unparalleled in the rest of the Latin American region. As long as the Concertación was in power, the fact of being part of the government restrained the dissident voices within the coalition to criticize too much the neoliberal course. However, when the Right-wing candidate Sebastián Piñera won the presidential elections in 2009, all the previous self-restraint among the anti-neoliberal forces within the Concertación disappeared. This resulted in the adoption of a very confrontational attitude toward the new Right-wing government. Since 2010, the former Concertación forces, with the exception of the Christian Democratic party, experimented an accelerated process of radicalization, adopting most of the slogans and demands coming from the student movement and other radical social organizations. The only serious threat neoliberalism has met since democratic restoration took place during the New Majority government (2014–2018). This alliance elaborated a radical Left-wing agenda which included a marked expansion of the role of the state, in terms of establishing more public agencies and social programs as a way to guarantee universal social rights for the popular sectors. In addition, the New Majority aimed to increase state control of the private sector and the market, by means of new legislation. The second Bachelet government took a very intransigent attitude vis-à-vis the Right-wing oppositions and the business organizations. The idea was that the government had a program to carry out independently of the objections and criticism it could generate in the opposition.

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By this, the New Majority government definitively abandoned the tradition of consultation and negotiation with the opposition, which had been established during the Concertación era. Having achieved a majority in both chambers of the parliament, the New Majority forces concluded that no negotiation was needed to implement a series of reforms. In reality, many of those projects did eventually not pass the acceptance of the parliament. This was the product of internal divisions among the parties of the New Majority, and particularly because of the increasing dissident voice of the Christian Democrats. The attempt to introduce an enormous number of complex reforms in just four years often produced chaotic situations as ministries, state agencies and the parliament were unable to cope with so many issues at the same time. The result was a generalized administrative disorder that negatively affected the image and the popularity of the government. In the end, the New Majority not only failed in its attempt to dismantle the neoliberal state. It also put in evidence that the neoliberal system was much more powerful and resilient than the Bachelet government had previously expected. The inability of the New Majority to win the 2017 presidential elections and the triumph of the Right-wing coalition headed by Sebastián Pinera were another political expression that the days of neoliberalism in Chile were not counted yet. The bad performance of the New Majority government convinced many Chileans that they better not bury neoliberalism until a better, more efficient, and realistic alternative was actually within reach. No one can predict how and when the current socio-political crisis in Chile will conclude. Nor what the future of neoliberalism in Chile will be. It is quite plausible that many aspects of neoliberalism will remain relatively unchanged, such as the strong orientation of the Chilean economy to foreign markets and the constant influx of foreign investments. In other areas, however, the role of the state and the public sector has been markedly strengthened. This is the case in the social field in which the Chilean state has witnessed a huge expansion following the socio-political uprising and the corona pandemic. These two major events have unleashed a broad battery of vast social programs and a close involvement of state agencies in a series of social policies intended to reach the most vulnerable sectors in society. What Chile is witnessing today is very probably not the end of neoliberalism in the country. The increasing role of the state in the social area is gradually transforming the neoliberal model toward a hybrid type of social market economy or Rhine capitalism. If this is the case, in the coming years, the Chilean free market capitalist system will evolve toward a sort of limited welfare state based on a gradual expansion of social rights among the population. bibliography

Ahumada, Jorge. En vez de la miseria. Santiago: Editorial del Pacífico, 1958. Altamirano, Carlos. Dialéctica de una derrota. Mexico City: Siglo XX, 1977.

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Angell, Alan. “Democratic Governance in Chile.” In Democratic Governance in Latin America, edited by Scott Mainwaring and Timothy R. Scully, 269–306. Stanford: Stanford University Press, 2010. Angell, Alan. Elecciones presidenciales, democracia y partidos políticos en el Chile post Pinochet. Santiago: Centro de Estudios Bicentenario, 2005. Arrate, Jorge. La fuera democrática de la idea Socialista. Barcelona: Ediciones Documentas, 1985. Arriagada, Genaro. Pinochet: The Politics of Power. Boston: Unwin and Hyman, 1988. Arriagada, Genaro, Por la Razón o la Fuerza: Chile bajo Pinochet. Santiago: Editorial Sudamericana, 1998. Atria, Fernando, Guillermo Larraín, José Miguel Benavente, Javier Couso, and Alfredo Joignant. El otro modelo: Del orden neoliberal al régimen de lo público. Santiago: Debate, 2013. Baño, Rodrigo, ed. Las modernizaciones en Chile: un experimento neoliberal. Rome: Centro de Estudios y Documentación Chile-América, 1982. Boeninger, Edgardo. Democracia en Chile: Lecciones para la gobernabilidad. Santiago: Editorial Andrés Bello, 1997. Borzutzky, Silvia and Lois Hecht Oppenheim, eds. After Pinochet: The Chilean Road to Democracy and the Market. Gainesville, FL: University Press of Florida, 2006. Brunner, José Joaquín. Nueva Mayoría: Fin de una ilusión. Santiago: Ediciones B, 2016. Brunner, José Joaquín and Tomás Moulian. Brunner vs Moulian: izquierda y capitalismo en 12 rounds. Santiago: Ediciones El Mostrador, 2002. Büchi, Hernán. La Transformación económica de Chile: el modelo del progreso. Santiago: Aguilar Chilena de Ediciones, 2008. Cavarozzi, Marcelo. Los sótanos de la democracia. Santiago: Lom Ediciones, 2017. Collier, Simon and William F. Sater, eds. A History of Chile, 1808–1994. New York: Cambridge University Press, 1996. De Castro, Sergio. ‘El Ladrillo’: Bases de la política económica del gobierno militar chileno. Santiago: Centro de Estudios Públicos, 1992. De Vylder, Stefan. Allende’s Chile. The Political Economy of the Rise and Fall of the Unidad Popular. Cambridge: Cambridge University Press, 1976. Délano, Manuel and Hugo Translaviña. La herencia de los Chicago Boys. Santiago: Ediciones del Ornitorrinco, 1989. Drake, Paul and Iván Jaksic, eds. El modelo chileno: Democracia y Desarrollo en los noventa. Santiago: Lom Ediciones, 1999. Edwards, Sebastián and Alexandra Cox Edwards. Monetarism and Liberalization: The Chilean Experiment. Cambridge: Ballinger, 1987. Ffrench-Davis, Ricardo. Entre el neoliberalismo y el crecimiento con equidad: Tres décadas de la política económica en Chile. Buenos Aires: Fondo de Cultura Económica, 2004. Flores-Macías, Gustavo A. After Neoliberalism? The Left and Economic Reforms in Latin America. New York: Oxford University Press, 2012. Fontaine, Arturo. Los Economistas y el Presidente Pinochet. Santiago: Zig-Zag, 1988. Foxley, Alejandro. Latin American Experiments in Neoconservative Economics. Berkeley: University of California Press, 1983.

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Foxley, Alejandro. “The Neoconservative Economic Experiment in Chile.” In Military Rule in Chile: Dictatorship and Oppositions, eds. J. Samuel Valenzuela and Arturo Valenzuela, Baltimore: The Johns Hopkins University Press, 1986: 13–50. Gárate, Manuel. La revolución capitalista de Chile (1973–2003). Santiago: Ediciones Universidad Umberto Hurtado, 2012. Garretón, Manuel Antonio. The Chilean Political Process. Boston: Unwin and Hyman, 1989. Garretón, Manuel Antonio. “1970–1973: sentido y derrota de un Proyecto popular: notas para una discusión”, Mensaje 66 (January–February 1978). Hirschman, Albert O. “The Turn to Authoritarianism in Latin America and the Search for its Economic Determinants.” In The New Authoritarianism in Latin America, edited by David Collier, 61–98. Princeton: Princeton University Press, 1979. Klein, Naomi. Shock Treatment: The Rise of Disaster Capitalism. Toronto: Alfred A. Knopf, 2007. Larraín, Felipe. “The Economic Challenges of Democratic Development.” In The Struggle for Democracy in Chile, edited by Paul W. Drake and Iván Jaksic, 279–304. Lincoln and London: Nebraska University Press, 1991. Larraín, Felipe and Rodrigo Vergara, eds. La Transformación económica de Chile. Santiago: Centro de Estudios Públicos, 2001. Martínez, Javier and Alvaro Díaz Chile: The Great Transformation. Washington, DC: The Brookings Institution, 1996. Mönckeberg, María Olivia. El saqueo de los grupos económicos al Estado chileno. Santiago: Penguin Random House, 2015. Muñoz Gomá, Oscar. El modelo económico de la Concertación 1990–2005: ¿Reformas o cambio? Santiago: Flacso/Editorial Catalonia, 2007. Huneuus, Carlos. La democracia semisoberana: Chile después de Pinochet. Santiago: Taurus, 2014. Huneeus, Carlos. The Pinochet Regime. Boulder, CO: Lynne Rienner, 2007. Mayol, Alberto. El derrumbe del modelo: La crisis de la economía de mercado en el Chile contemporáneo. Santiago: LOM, 2013. Molina, Pilar. Michelle Bachelet 2014–2018: Detrás de la derrota. Santiago: Ediciones El Líbero, 2018. Moulian, Tomás. Chile actual: Anatomía de un mito. Santiago: LOM, 1997. Moulian, Tomás. “Los frentes populares y el desarrollo político de la década del sesenta.” Documento de trabajo 191. Santiago: Flacso, 1983. Navia, Patricio “Dirty money scandal makes waves in Chile.” Buenos Aires Herald, January 14, 2015. O’Brien, Philip. “The New Leviathan: The Chicago Boys and the Chilean Regime, 1973–1980.” IDS Bulletin 13, no. 1 (1981): 38–50. Oppenheim, Lois Hecht. Politics in Chile: Socialism, Authoritarianism, and Market Democracy. New York and London: Routledge, 2018. Peña, Carlos. Lo que el dinero sí puede comprar. Santiago: Taurus, 2017. Peña, Carlos and Patricio Silva, eds. Social Revolt in Chile: Triggering Factors and Possible Outcomes. New York and London: Routledge, 2022. Petras, James. Political and Social Forces in Chilean Development. Berkeley and Los Angeles: University of California Press, 1969. Pizarro, Crisóstomo, Dagmar Raczynski and Joaquín Vial, eds. Políticas Económicas y Sociales en el Chile Democrático. Santiago: CIEPLAN / UNICEF, 1995.

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Puryear, Jeffrey M. Thinking Politics: Intellectuals and Democracy in Chile, 1973–1988. Baltimore and London: The Johns Hopkins University Press, 1988. Remmer, Karen. Military Rule in Latin America. Boulder, CO: Westview Press, 1989. Sehnbruch, Kirsten and Peter M. Siavelis, eds. Democratic Chile: The Politics and Policies of an Historical Coalition, 1990–2010. Boulder, CO: Lynne Rienner, 2014. Sierra, Enrique. Tres Ensayos de Estabilización en Chile. Santiago: Editorial Universitaria, 1970. Sigmund, Paul E. The Overthrow of Allende and the Politics of Chile, 1964–1976. Pittsburgh: University of Pittsburgh Press, 1977. Silva, Eduardo. Challenging Neoliberalism in Latin America. New York: Cambridge University Press, 2009. Silva, Eduardo. The State & Capital in Chile: Business Elites, Technocrats, and Market Economics. Boulder, Co: Westview Press, 1996. Silva, Patricio. “Doing Politics in a Depoliticised Society: Social Change and Political Deactivation in Chile.” Bulletin of Latin American Research 23, no. 1 (2004): 63–78. Silva, Patricio. In the Name of Reason: Technocrats and Politics in Chile. University Park, PA: Pennsylvania State University Press, 2008. Silva, Patricio. “Modernization, Consumerism and Politics in Chile.” In NeoLiberalism with a Human Face? The Politics and Economics of the Chilean Model, edited by David Hojman, 118–32. Liverpool: The University of Liverpool, 1995. Silva, Patricio. Public Probity and Corruption in Chile. London and New York: Routledge, 2019. Silva, Patricio. “The Chilean Developmental State: Political Balance, Economic Accommodation, and Technocratic Insulation, 1924–1973.” In State and Nation Making in Latin America and Spain: The Rise and Fall of the Developmental State, edited by Agustín E. Ferraro and Miguel A. Centeno, 284–313. Cambridge: Cambridge University Press, 2019. Stepan, Alfred. “State Power and the Strength of Civil Society in the Southern Cone of Latin America.” In Bringing the State Back In, edited by Peter Evans, Dietrich Rueschemeyer and Theda Skocpol, 317–43. Cambridge: Cambridge University Press, 1985. Sunkel, Osvaldo. “El fracaso de las políticas de estabilización en el contexto del ­desarrollo latinoamericano.” El Trimestre Económico 120 (1963): 123–41. Tulchin, Joseph S. and Augusto Varas. From Dictatorship to Democracy: Rebuilding Political Consensus in Chile. Boulder and London: Lynne Rienner, 1991. UNDP. Las paradojas de la modernización. Santiago: United Nations Development Program, 1998. Valdés, Juan Gabriel. Pinochet’s Economists: The Chicago School in Chile. Cambridge: Cambridge University Press, 1995. Valdivia, Verónica. “Estatismo y neoliberalismo: un contrapunto militar: Chile 1973–1979.” Historia 34 (2001): 167–226. Valenzuela, Arturo. The Breakdown of Democratic Regimes: Chile. Baltimore: Johns Hopkins University Press, 1978. Vergara, Pilar. Auge y caída del neoliberalismo en Chile. Santiago: Flacso, 1985. Walker, Ignacio. La Nueva Mayoría: Reflexiones sobre una derrota. Santiago: Catalonia, 2018.

3 State, Society, and the Neoliberal Turn in Mexico, c. 1980–c. 2000 Alan Knight

Writing contemporary history – which can be roughly defined as the history of the last generation – presents particular problems. Two are salient: first, access to the principal archives becomes more restricted (in the United Kingdom, there is a strict “30 year rule”) and the dearth of traditional primary sources is not – at least in this case – significantly offset by the potential of oral history.1 Second, the relative lack of hindsight means that historical research and informed historical debates are, at best, incipient. We don’t yet know the final outcome of events (is the Mexican neoliberal project here to stay? I touch on this question in conclusion) and historians have only recently begun to trawl the archives and initiate debates. Of course, journalists, pundits, and social scientists have already entered this terra – somewhat – incognita and staked out some initial interpretative claims (and I freely draw on their insights in this essay). But, just as we could not base a sophisticated and rounded interpretation of the Mexican Revolution (of 1910–40) solely upon what contemporary observers – including serious journalists, travelers, and academics – reported during those decades, so I suspect that the events of 1980–2000 (not to mention post-2000) are still quite poorly and partially understood. In other words, the analysis which follows is often tentative and suggestive (possibly not my normal exegetical style). Indeed, even the main questions to be asked – as well as the “organizing concepts” which may help provide 1

Interviewing elite political figures may be useful, but, if a rounded analysis is required, interviews can only supplement “traditional” (i.e., documentary) sources. Also, Mexican políticos are adept at presenting their chosen narratives (“rollos”), which – perhaps by design – can obfuscate critical analysis. For this essay I have made only one excursion into “oral history” (other attempts were stymied). Regarding the rich and often revealing documentary evidence located in the (United Kingdom) National Archives, it unfortunately stops in c. 1991.

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answers – are open to wide debate and disagreement. A great deal of contemporary comments and analysis – notably by journalists and pundits, but often by academics too – adopts frankly normative positions (thus, for or against Mexico’s neoliberal project), whereas I am sufficiently positivistic to believe that historians, though they usually have their own personal normative preferences, should try to silence them in the interests of objective analysis. Rigorous objectivity may be elusive, but that does not mean that objectivity – as a desired goal – should be ditched in favor of polemic and partisanship.2 Pundits, politicians, and journalists are fully entitled to occupy the bully pulpit, but historians should steer clear. Since the terrain to be covered is only partially mapped, I start by setting out some of the key questions which, in my view, need addressing. I then briefly sketch the main trends and events of the period. The greater part of the essay consists of a more detailed chronology/analysis of the three sexenios of Presidents de la Madrid, Salinas, and Zedillo (1982–2000) – presidents who may be justly seen as the architects of the neoliberal turn.3 Finally, I try to provide (tentative) answers to the initial questions. Although the focus is on Mexico, the role of the United States is obviously important; and, in passing, I note some comparisons and contrasts with the rest of Latin America (occasionally, with the rest of the world). After all, the neoliberal turn – and the process of globalization of which it formed a part – was a continental, as well as a global, phenomenon, and Mexico, as the second largest country and economy in Latin America, was a key player (thus, in 1994, South Americans reasonably feared the “tequila” effect stemming from Mexico’s mismanaged devaluation).4 But Mexico was also distinctive by virtue of its geopolitical location and its historic “dependence” on the United States (dependence which substantially increased during this period). And Mexico possessed a peculiar political system very different in its origins and modalities from that of other Latin American countries; hence, the starting point of its “transition to democracy” was unusual and, we might surmise, significantly path-dependent.5 Arguably, Mexico also adopted neoliberal reforms more rapidly, fully, and eagerly than many Latin American countries: compared, for example, to Brazil and Argentina, its initial response to the crisis (under de la Madrid) was impeccably orthodox; and its subsequent adoption of neoliberal structural reform (under Salinas) was more rapid 2 3

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See the exemplary parable recounted by Hexter, Doing History, 103–5. As I mention later, it is difficult to avoid a “sexennial” analysis of this process. However, such analysis – which also means a focus on the deeds of male políticos – should not be seen as a capitulation to Carlylean mythology (“history is but a biography of great men”); in fact, my conclusions tend to question their “greatness” and depict them, often enough, as victims of forces beyond their control. Edwards, Crisis and Reform, 297. O’Donnell, “Introduction,” 5. See also the comparison with Chile in González, Dual Transitions From Authoritarian Rule.

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and committed than in those countries.6 The outcome, for Mexico, was arguably a more radical transformation of political economy than elsewhere; and, at the same time, Mexican politics and foreign policy underwent a sea-change. The big questions divide into two general categories: causality (what drove the neoliberal turn?) and outcomes (what effects – social, political, and economic – did it produce)? The first question has the merit of being more “historical” (lodged firmly in the past, albeit the recent past), while the second is open-ended and thus harder to answer. In addition, each question can and should be subdivided. First, causality can – according to conventional (and sensible) historiographical practice – be divided into long-term causal chains (those which stretched over time and were, perhaps, “structural” and ineluctable) and short-term chains, typically the product of immediate (“conjunctural” or “contingent”) events and, perhaps, crises.7 Second, we can try to distinguish between changes that were consciously brought about by policy-makers – thus, were “top-down,” planned, and purposive – and those which were thrust upon policy-makers willy-nilly, often involving erratic or unplanned responses. In doing so, we should confront the perennial but tricky question of the role of ideas in decision-making: do policy-makers – as Keynes famously asserted – take their cue from received opinions (not least of economists), or are such intellectual rationales, at best, just artful window-dressing?8 And, if so, what lies behind them? Third, we can try to unravel the sources of domestic (Mexican) decision-making, evaluating the role not only of policy-makers (politicians and bureaucrats) but also of business, trade unions, and, perhaps, of other collective actors who can be subsumed under the loose label of “civil society.” Finally, we can address the obvious question of domestic (Mexican) as against external (foreign, especially United States) pressure and influence.9

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7 8

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On Mexico’s role as an “early reformer” (along with Chile and Bolivia), see Edwards, Crisis and Reform in Latin America, 1–9, 25. Regarding degrees of reform – what could be crudely called national “neo-liberal ratings” – see Flores-Macías, After Neoliberalism?, which, on the basis of five criteria (privatization, taxation, government spending, trade/financial liberalization, and poverty alleviation) places twenty-first century Mexico (with a rating of +3) second only to Colombia (+4) and alongside Chile; in contrast, Brazil (under Lula) scores +1 and Argentina (under Fernández de Kirchner) –1. Chávez’s Venezuela scores –5. On the concept of “crisis” (a term used much more often than it is analysed), see Knight, “Crisis and the Great Depression.” As Keynes put it: “practical men who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.” I return to this (dubious) claim later. FitzGerald and Thorp, eds., Economic Doctrines in Latin America, is a systematic collective effort to unravel the etiology of economic policy-making in Latin America; Peter A. Gourevitch, “Economic Ideas, International Influences, and Domestic Policies,” pp. 23–47, offers a good analytical approach. When it comes to explaining the origins (rather than the consequences) of economic policy, however, I am struck by how much even economists – and other hard-headed social scientists – fall back on hunch, intuition, and “soft” (non-quantifiable) hypotheses.

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Regarding outcome – still, as I mentioned, an open question – there are two big questions that merit attention. First, how did the neoliberal project turn out? Did it achieve its proclaimed goals? (A question that, while it cannot be ducked, really requires the expertise of economists and which, therefore, I will answer only briefly and tentatively). Second – a crucial question, given the focus of this volume and of the series of which it forms part – what was the relationship, in terms of both causality and outcome, between economic reform and political change, specifically democratization? In other words: did neoliberal reform encourage – even mandate – democratization (since free markets and free politics are a necessary combination) and did democratization in turn facilitate neoliberal reform? Or is the relation between the two rather more contingent: to the extent that they coincided, was this, like many historical concatenations, a matter of happenstance rather than necessity?10 All of the above involve complex causal chains which intertwine, so the first essential task is to clarify the chronology of c. 1980–c. 2000, after which I shall attempt a more detailed disaggregation, leading to some tentative conclusions. In the last two decades of the twentieth-century Mexico, like many Latin American countries (and, indeed, many others around the world), followed a course of neoliberal economic reform which, in terms of its proclaimed objectives and – to a lesser extent – its actual outcomes, sought to shrink the state, to privatize state assets, to open the country more fully to foreign trade and investment, thus to allow free-market activity much greater scope and security. In respect of Mexico’s foreign trade, the results were clear-cut: a relatively closed economy became – by national or international standards – an open one.11 A key element in this story was the creation of NAFTA in 1994 (which had been preceded by Mexico’s entry into the GATT eight years earlier): NAFTA channeled Mexico’s trade increasingly toward the United States, recreating a pattern that had briefly held sway during the Second World War and, in doing so, detaching the country from Latin America (and Latin America’s emerging regional blocs), in favor of a new North American orientation.12 Despite trade

10

11

12

Thus, I have elsewhere argued that, regarding Latin American governments and regimes, the direction of change provoked by the Great Depression of the 1930s was often a question of happenstance (who happened to be in power at the [wrong] time) rather than of any inherent politico-economic logic (whereby free markets require liberal politics, or dirigisme demands authoritarianism): Knight, “Panorama general de la Gran Depresión.” Mexican exports as a share of GDP went from around 10% in 1980 to over 30% in 1994 and 38% in 2016. Furthermore, petroleum, which constituted 77% of exports in 1982 fell to 15% in 1993 and now (2018) stands at just 4%. The export of manufactures, many of them produced in the maquiladora (in-bond) industries, followed a reverse trajectory, rising from just 10% in 1981 to 75% in 1993 and 89% today: see Haber et al., Mexico Since 1980, 72; Lusztig, The Limits of Protectionism, 99; Wood and Martin, “Of Paradigm Shifts and Political Conflicts,” 21. This orientation helps explain Mexico’s success at promoting manufactured exports (see n. 11 above). In South America – where the pull of Chinese demand was stronger – the export of

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liberalization (and the provision of “secure commitments,” designed to reassure diffident investors), inflows of foreign direct investment (FDI) hovered around 1.0–1.5% of GDP during the crisis-ridden 1980s; NAFTA produced a sharp boost (to 2.5% in 1995 and 4% in 2000), after which growth stalled.13 Equally, overall growth was sluggish – certainly compared to the rates achieved during the phase of desarrollo estabilizador in the 1950s and ‘60s. Of course, global growth rates were also lower in the neoliberal period: the global economy, like the Mexican, saw a boom in trade, but no comparable growth in per capita GDP. However, the fact remains that Mexico was a star performer in the first period, and something of a laggard in the second. Regarding the political correlates of the neoliberal turn, state-shrinking certainly occurred, as the Mexican government systematically privatized state assets, to the benefit of both Mexican and foreign private enterprise.14 A bigger stronger and more influential private sector thus emerged. State spending as a percentage of GDP fell relative to the bloated figures of c. 1980 but remained over twice as high as it had been back in the 1950s and ‘60s.15 However, there is more to State “strength” than measurable economic activity: a “shrunk” State – if it is suitably lean and effective – may still exert substantial power, just as an “obese” one, encumbered by the weight of its assets and obligations, may stagger from crisis to crisis.16 The Mexican story in these years seems to bear this out. First, the state had to respond to a series of crises, some relatively unexpected: in 1982, 1987, and again in 1994/5. Presidential authority fluctuated dramatically, as erstwhile saviors turned into scoundrels and supposedly safe pairs of hands

13

14

15

16

primary products predominated; for Mexico, however, China was more a competitor than a market. North American economic integration was also accompanied by a marked shift in Mexican foreign policy – from the prickly Third World nationalism of Echeverría to the more emollient stance (regarding, for example, Central America) of De la Madrid and his successors. Haber et al., Mexico Since 1980, 75. By way of comparison, while Mexico outstripped Argentina, Brazil did rather better – according to the same metric – and Chile (where rates reached as high as 10%) did very much better: see https://data.worldbank.org/indicator/BX.KLT.DINV .WD.GD.ZS. The “secure commitments” model is deployed in Haber, Razo and Maurer, The Politics of Property Rights. Edwards, Crisis and Reform, 191–3, notes that about 1,000 state-owned enterprises were privatized in the ten years following 1983; after an initially slow start (1983–7), which involved only 64 “small and medium firms,” the pace quickened and now embraced major companies (telecommunications, aviation, steel and, crucially, the banks). Though the proceeds were “rather modest” ($2.6b.), the process itself was smooth and – as a case study in privatization – “exemplary.” For a more negative analysis, see MacLeod, “Privatization and the Limits of State Autonomy.” On the growth of private sector organization and influence, see Luna, “Business and Politics in Mexico.” Schettino, Cien años de confusion, 414 charts government spending, rising from a little over 10% of GDP in 1970 to over 40% in the early 1980s, then sinking to 20–25% after 1990. Government tax revenue was substantially less, especially from the late ‘70s through the ‘80s; the yawning fiscal gap had to be covered by PEMEX plus loans. An argument I have floated elsewhere: Knight, “State Power and Political Stability in Mexico.”

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proved to be shaky and slippery. Cumulatively, presidential power, which had been the lynchpin of the old PRI regime, was eroded and the newly assertive mass media, reflecting public opinion, cast aside its historic deference toward the president.17 At the same time, halting democratization emboldened the opposition and somewhat shifted power from “the center” to the provinces. On the other hand, as Miles Kahler has stressed, the very process of (global) neoliberal reform often involved substantial state intervention – sometimes, indeed heavy-handed, even authoritarian, measures.18 States have to throw their weight about precisely in order to slim down. That ostensible paradox can involve both overt repressions (the Pinochet regime in Chile being the classic example); or, as in the Mexican case, rather more subtle strong-arming, coupled with substantial patronage and clientelism, as the “reformist” state, formally committed to free-market economics, rewards its friends and punishes its enemies. It cannot be doubted, however, that there was a remarkable sea-change in Mexico’s politics and political economy between 1980 and 2000. Hindsight confirms the judgment of contemporary observers, who repeatedly discerned seismic shifts taking place (even if those same observers habitually misunderstood the nature of those shifts).19 Furthermore, despite the political and economic vicissitudes of post-2000, the basic model has remained more or less intact. Mexico has not relapsed into statism, it has not gone the way of Venezuela, and it avoided the pull of the so-called “pink tide” which washed across South America in recent years.20 Indeed when, in 2000, the ruling PRI finally lost the presidency for the first time, the victors – the loosely ChristianDemocratic PAN – showed no intention of overturning the basic economic model (which they had advocated for decades), hence political alternancia was accompanied by economic continuity.21 17 18

19

20 21

Lawson, Building the Fourth Estate. The so-called “Kahler paradox” (whereby liberalizing/privatizing projects may require strong, “autonomous,” interventionist governments to carry them out) has appeared in several guises in the literature; for a good review – and critique – see MacLeod, “Privatization and the Limits of State Autonomy.” The voluminous UK Foreign Office files for the period (c. 1980–90) are replete with portentous evaluations, usually penned by British ambassadors (the junior diplomats were usually more informed and grounded); the files also include evaluations by Mexican, American and other “experts” which are often not much better. “Experts” include academics (I plead guilty), whose powers of analysis and prediction are also fallible: see, for example, Cornelius et al., eds., Mexico’s Alternative Political Futures. However, the prize for predictive fallibility must go to Henry Kissinger who, at the height of the oil boom, opined that “Mexico seemed “condemned to success”: N. Cox, 21 Jan.1980, FCO 99/523. At least until 2018, when the Left swept to power, in the shape of Andrés Manuel López Obrador and MORENA. I touch on this outcome in conclusion. “As for the right-wing PAN,” an observer noted in 1989, “(President) Salinas had cut the ground from under it by adopting many of its policies, particularly on debt and electoral reform”: J. A. Penney, “Report on Mexico City Visit,” 8 Dec. 1989, FCO 99/3051.

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But the road from PRIísta hegemony and the relatively closed statist economy of c. 1980 to the new neoliberal dispensation of c. 2000 was a rocky one. To chart this road, we should first consider the point of departure. For a generation, starting in the early 1950s, Mexico had lived through a period of sustained GDP (and population) growth, relatively low inflation, rapid industrialization and urbanization, and political stability, under “dominant-party” (PRI) auspices. Contrary to certainly received opinions, the role of the state in this – by its own standards highly successful – economic model was quite limited: the state regulated the market economy (by means of tariffs, quotas, and subsidies), but the state’s share of the economic cake was, by European and even Latin American standards, relatively small. There were few state enterprises (PEMEX being the obvious and iconic exception), taxation represented less than 10% of GDP, and the state payroll (including the army) was small.22 Private investment, both domestic and foreign, exceeded public investment; and the latter – in roads, reservoirs, and (again) PEMEX – tended to serve the interests of the private sector. State finances were managed conservatively. Nevertheless, the PRI regime of the 1950s and ‘60s embodied “developmental” goals and, to some extent, achieved “developmental” outcomes: rising literacy, enhanced life expectancy, and – chiefly thanks to the changing job structure – improved life chances, at least for the majority of Mexicans.23 Most families could reasonably suppose that the younger generation would be (again, modestly) better off than their parents. The desarrollo estabilizador model underwent minor shifts in the 1960s and major changes in the 1970s. During the later 1960s – in Mexico as elsewhere in Latin America – state spending nudged up and, with it, the public debt. But the Mexican model remained intact. In the following decade, fresh challenges prompted more radical new departures. Globally, the first oil-price shock (1973), following the devaluation of the US dollar (1971), marked the end of the post-war Bretton Woods system and triggered a dramatic cycle of global inflation (and, more worryingly, of “stagflation”: inflation that accompanied not boom but bust – or, at best, obstinately sluggish growth). Meanwhile, OPEC’s new-found wealth was recycled in the form of petro-dollars which flowed into Latin America (and elsewhere), sharply increasing the levels of both public and private debt. Coincidentally, Mexico faced a perceived political 22

23

The Mexican military has been somewhat neglected by scholars – who, perhaps, tend to assume that it played a marginal role after c. 1940. However, it is clear that, during the heyday of the PRI, the Mexican military establishment was – by Latin American standards – small and it maintained a low political profile: thus, in the “early 1960s,” military spending as a share of total government spending stood at just 8%, compared to 20% in Argentina, 21% in Chile and 28% in Brazil. See Loftus, Latin American Defense Expenditures, 37. Interestingly, the mid1990s – the heyday of neoliberal reform under Zedillo – saw a “rapid expansion” in numbers (an expansion which preceded by some ten years the wholesale deployment of the army against the narco cartels): see Camp, “Mexico’s Armed Forces,” 356. Knight, “The Mexican Developmental State.”

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challenge, symbolized by the 1968 student protest and repression. The administration of President Luis Echeverría – who, as Minister of Gobernación, carried a heavy responsibility for the Tlatelolco massacre – strove to recoup the lost legitimacy of the PRI, especially among the large and increasingly politicized younger generation, concentrated in the burgeoning cities and public universities. In addition, the PRI faced – again, in the cities – a small but growing electoral challenge from the right-wing PAN, while the PRI-affiliated CTM had to confront (not for the first time) dissident trade unions, like that of the electricians.24 As the latter example suggests, these threats were not altogether new, and they were by no means mortal. Through the 1970s, the economy continued to expand rapidly; and, as birth control (now espoused by the government) became more accessible, population growth crested and began to decline. Although both inflation and the public debt mounted (as they did throughout Latin America in the 1970s), living standards did not suffer and, indeed, the 1970s saw sustained per capita growth and a modest decrease in Mexico’s chronic inequality.25 It would, therefore, be mistaken to see the Mexican politico-economic model hitting the buffers in the 1970s, or the regime of the PRI facing imminent demise (in the way that regimes elsewhere in Latin America clearly did).26 There was still life in the old dog – or, if you prefer, the old dinosaur. However, the successive administrations of Luis Echeverría (1970–6) and José López Portillo (1976–82) did depart significantly from traditional PRI policy, not least in the hope of shoring up the regime’s legitimacy, while maintaining economic dynamism in difficult times. They faced, in particularly acute terms, the historic dilemma of states in capitalist societies: the need, on the one hand, to maintain business confidence, investment, and thus employment (Haber’s commitment question again); and the desire, on the other hand, to foster popular support for the politico-economic system, thus to convince the people that the system is broadly fair and legitimate.27 Squaring the circle of accumulation and redistribution was all the more difficult given the turbulent global context, Mexico’s stubbornly high levels of poverty and inequality, and the egalitarian (“revolutionary”) discourse of the regime – a discourse which, by the 1970s, risked entirely parting company with reality and becoming – and being seen as – mere hollow rhetoric.28

24 25 26

27 28

Gómez Tagle, Insurgencia y democracia. Székely, The Economics of Poverty, 10–13. For analyses which posit the “exhaustion” of the ISI model, see Otero, “Neoliberal Reform and Politics in Mexico,” 6; Centeno, Democracy Within Reason, 46; Kaufman, “Stabilization and Adjustment,” 93–4. O’Connor, The Fiscal Crisis of the State, 6. Almond and Verba, The Civic Culture; Knight, “The Myth of the Mexican Revolution.” For a perceptive eye-witness corroboration, see A. K. Soper, “Last Thoughts on Mexico,” 1 Sept.

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These dilemmas became apparent in the political vicissitudes of the “long” 1970s (by which I mean the period c. 1970–1982). Both Echeverría and López Portillo tacked to and fro: both came into office promising sound, orthodox financial policy, but both ended up boosting state spending, stoking inflation, and piling up public debt.29 Concerned to re-legitimize the regime (López Portillo had been elected in 1976 with no serious opposition), both presidents sought to re-connect with civil society by means of lavish state spending. (It is said that Echeverría set out to emulate the great radical reforming president Lázaro Cárdenas; but he overlooked the fact that, contrary to some stereotypes, Cárdenas had not been an irresponsible “economic populist”).30 Thus, between 1970 and 1982 state spending, the state payroll and public debt all soared; during the 1970s, the fiscal deficit – historically very low – climbed to 6.6% of GDP; by 1982, it had reached “a staggering 14%.”31 Keen to reassure the dissident younger generation, Echeverría gave priority to education, especially higher education; he also strutted his stuff on the world stage, striking radical poses and offending the Americans. His sexenio ended amid crisis, as the President embarked on a radical land reform in the northwest of the country – an emulation of Cárdenas, perhaps, which incurred the hostility of an already aggrieved Mexican bourgeoisie.32 As a result, business interests took fright and began to beef up their corporate organizational power.33 López Portillo’s sexenio followed a roughly similar trajectory. Initially promising – and delivering – orthodox financial policies, he veered to the left, encouraged by the providential windfall of oil revenue, which enabled him to spend and – on the basis of the projected revenue stream – to borrow on an unprecedented scale.34 Mexico’s political economy became more statecentered than at any time since independence. “Parastatal” enterprises proliferated; the public (and private) debt mushroomed; and inflation soared.35 At the

29 30 31 32 33

34 35

1988, FCO 99/2794, which argues that popular disillusionment with the PRI was not “with the principles for which the PRI is supposed to stand, but arose from the feeling that it had betrayed those principles and become purely time-serving and self-seeking.” Kaufman, “Stabilization and Adjustment,” 97. Schmidt, The Deterioration of the Mexican Presidency, offers a good analysis of 1970–6. On the Echeverría/Cárdenas comparison, see Knight, “Cárdenas and Echeverría.” Haber et al., Mexico Since 1980, 58; Schmidt, The Deterioration of the Mexican Presidency, chap. 2. Sanderson, Agrarian Populism. Regarding “bourgeois” attitudes towards Echeverría, Lomnitz and Pérez-Lizaur, A Mexican Elite Family, 201, is revealing. Luna, “Business and Politics in Mexico”; Kaufman, “Stabilization and Adjustment,” 97; ­Centeno, Democracy Within Reason, 68. Another way of putting it would be that the “bankers alliance,” which had successfully underpinned the Mexican “economic miracle” during the 1950s and ‘60s, had collapsed. On that alliance, see Maxfield, Governing Capital. Urquidi, Otro siglo perdido, 346–8. Schettino, Cien años de confusión, 391–2, 398, which shows inflation – hovering around 20% during the early 1970s – reaching nearly 120% in 1983.

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same time, lavish public spending provided ample opportunities for corruption and nepotism.36 Criticism of the President mounted; jokes and jibes that once would have circulated privately now appeared openly in the mass media.37 The “private transcript” of protest was becoming ominously “public.”38 As in 1976, the sexenio ended in crisis.39 In 1982, as oil prices slumped and interest rates rose, the administration was forced into a humiliating devaluation of the peso (which the president had declared he would “defend like a dog”) and, as capital flight accelerated, the president decided – on the basis of scant debate or consultation – to expropriate the private banks and impose exchange controls.40 The accompanying rhetoric – old-style Mexican nationalism spiced with simplistic “dependency” tropes – blamed foreign “­villains” (the bankers especially) for Mexico’s plight.41 Thus, some critics said, López Portillo sought to emulate President Cárdenas (who had expropriated the foreign oil companies in 1938) and to secure his place in history.42 Like Echeverría’s precipitate land reform six years earlier, the bank nationalization shocked the private sector and further ruptured the long-standing tacit alliance between big business and the PRIísta state. It also inaugurated nearly a decade of economic stagnation, government austerity, falling living standards, and increased emigration to the United States. The 1982 crisis – the most severe since 1930 – was followed by a market bust in 1987 and a third severe shock in 1994–5 (to be discussed below). Not surprisingly, the political fortunes of the ruling PRI, its reputation for sound economic management in tatters, went into sharp decline. The ignominious end of the López Portillo administration, therefore, ushered in a new era in Mexico’s political economy, as (late) PRIísta statism – the hypertrophied statism of Echeverría and López Portillo, which went far beyond the cautious, capital-friendly, mildly developmentalist project of the 36

37 38 39

40 41 42

Morris, Corruption and Politics, offers a useful survey. McKinney report, 27 Sept. 1982, FCO 99/1172, observes that “the recent scale of official corruption surpasses anything ever seen in Mexico before,” one explanation being “the size of plunderable resources generated here over six years.” President López Portillo, accused – inter alia – of nepotism, offered a bold public defence: to deny family members legitimate jobs (in his administration) would be an infringement of their human rights; and – a slightly stronger argument – it was better to appoint them upfront, rather than allow them to act as shady wheeler-dealers (“coyotes”) on the quiet: A. Coltman, report of presidential press conference, (of 6 Jan. 1982), 14 Jan. 1982, FCO 99/1171. Lawson, Building the Fourth Estate. The terms are derived from Scott, Domination and the Arts of Resistance. As an illustration of expert fallibility, a report from the British Ambassador reassured readers that “it seems likely that President López Portillo will be able to avoid a crisis of the magnitude which struck his predecessor in the last year of his presidency”: C. Tickell, annual review of 1981, FCO 99/1174. In fact, the crisis was a great deal worse. Espinosa Rugarcía and Cárdenas, eds., La nacionalización bancaria is a pioneering study based on the testimony of protagonists and the comments of experts. C. Tickell, 10 Jan. 1983, annual review of 1982, FCO 99/1592. McKinney report, 27 Sept. 1982, FCO 99/1172.

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1950s and ‘60s – gave way to neoliberal nostrums: state-shrinking, privatization, tariff reduction, and greater opening to foreign investment. And, as the political fortunes of the ruling party slumped, opponents on both the Right and Left made unprecedented electoral gains. Neoliberal economic reforms were therefore accompanied by halting democratization: elections that were more strenuously contested and whose outcomes were not known ex ante; in consequence, genuine party turnover (alternancia) in elected office; and a more robust and critical mass media. In short, several of the key criteria of representative democracy, as defined by Robert Dahl.43 Let me now unpack this complicated story. When discussing the evolving political economy, sexenios (presidential terms) are not always the best units of periodization. However, in this case, when we are dealing with fast-moving events, often involving decisive (which is not to say sensible) political decisionmaking, a sexennial approach makes sense. Roughly, we can see the De la Madrid presidency (1982–88) as reactively neoliberal: economic measures were taken in response to immediate crises and challenges, albeit on the basis of prevalent ideas (of what was the right thing to do) and of contextual pressures, both internal and external.44 At the same time, political measures (relating to elections, the rise of the opposition, and social policy) also tended to be reactive – the government responded to events haphazardly, appearing to lack any consistent or forward-looking plan. The Salinas presidency (1988–94) was much more pro-active, in the sense that it appeared to have a coherent longterm project both to reform the economy (along neoliberal lines) and also to shore up the regime (albeit a regime that, in the best Lampedusan tradition of the PRI, had to change in order to survive).45 Of course, there were continuities between the two: Salinas himself had been a key policy-maker in the De la Madrid administration, and each administration – like all administrations – blended ad hoc decision-making with long-term objectives. But the balance was certainly different: to resort to the old “ship-of-state” metaphor, De la Madrid had to steady the vessel – buffeted by debt, inflation, and capital flight – and prevent it from sinking; Salinas gave it a major refit and confidently steered in a new direction, winning accolades for his decisive helmsmanship. Unfortunately for him and his immediate successor, in 1994/5 the ship again sailed into stormy, shark-infested waters. 43 44

45

Robert Dahl, Polyarchy. Having reached the conclusion that De la Madrid’s neo-liberal “project” might usefully be described as “reactive,” I encountered a similar terminology in Miguel Angel Granados Chapa, “A 25 años de la nacionalización de la banca,” in Espinosa Rugarcía and Cárdenas Sánchez, eds., La nacionalización bancaria, vol. II, 207. That is, “everything needs to change, so everything can stay the same,” from Lampedusa’s novel, The Leopard. Of course, in the real world of twentieth-century Mexico (if not the fictional world of nineteenth-century Sicily), small incremental changes can, eventually and cumulatively, produce a substantial transformation. However, it is also plausible to suppose that, by proceeding in this fashion, the PRI managed to avert a sudden systemic breakdown.

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De la Madrid’s economic policy was dictated by immediate events – the severe crisis of 1982 – and involved emergency measures to stabilize the economy, avert capital flight, restructure the crushing public debt, and defend the peso. His approach, reflecting the make-up of his economic team, was orthodox (Mexico was seen as a “model debtor”) and the initial package of reforms was fairly typical of structural adjustment programs common in Latin America during the postwar period.46 But Mexico – having lived through nearly thirty years of “economic miracle” from the early 1950s through the late 1970s – was not used to such bitter medicine. Furthermore, adjustment was sharp and severe: public subsidies were cut, real wages plummeted, and unemployment rose. The current account deficit was turned around, more by slashing imports (and therefore consumption and capital investment) than by boosting exports. What looked good to the IMF and the banks held little appeal for the mass of Mexican people.47 Furthermore, the recovery was slow and halting. The arduous restructuring of Mexico’s foreign debt – the Baker Plan, the Brady Plan – stretched through the sexenio and beyond.48 Inflation remained stubbornly high, eroding real wages, and it was not until 1987/8, as the new Pact for Economic Stability began to bite, that inflation fell and the outflow of capital was stemmed.49 (As a result, though incoming President Salinas still had to grapple with the intractable problem of debt, in other respects the economy was in somewhat better shape than it had been six years before). Inflation, coupled with austerity and falling real wages – i.e., “stagflation,” inevitably undermined the popularity of the PRI and, by extension, the legitimacy of the entrenched “PRIísta” political system. In addition, the bank nationalization had alienated business opinion, boosting the credentials of the opposition PAN (a longstanding critic of PRIísta statism and advocate of pro-market policies). The PAN, a Christian Democratic party in all but name, also benefited from the increased political profile of the Catholic Church; and it took advantage of the modest window of electoral opportunity created by President López Portillo’s political reform of 1977.50 The latter – a typical piece of Lampedusan triangulation, enacted by the PRI in happier, hegemonic times – gave the opposition a foothold in Congress, thus both a public platform and an incentive to compete for elective office. And, even if voters did not immediately flock to the PAN, they began to desert the PRI in droves; 46 47 48

49

50

Foxley, Latin American Experiments, chap. 1. C. M. James, annual review of 1983, n. d., Jan. 1984, FCO 99/1862. Kaufman, “Stabilization and Adjustment,” 105–6. For a useful analysis, see Van Wijnberger, “Mexico and the Brady Plan,” which concludes, p. 35, that Mexico got a “remarkably good deal,” which made possible renewed growth after 1989. J. Nason, 22 July 1988, FCO 99/2794, reported that the conclusion of the Pact in December 1987 was “undoubtedly the turning point,” which served to curtail inflation and “arrested the sense of drift and indecision on the part of the Government.” Centeno, Democracy Within Reason, 57–8; Gómez Tagle, “Electoral Reform and the Party System.”

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growing abstentionism reflected both public disenchantment with the administration/regime and the latter’s inability to get out the vote in the old, tried, and tested clientelistic fashion. The decline of the PRI was particularly evident in the major cities (including the capital), where electoral fixing was less effective; in the north, where historic suspicion of “the Centre,” particularly among the powerful business elite, was heightened by the bank expropriation; and in the Bajío – roughly, the conservative Catholic center/west of the country – which had never embraced “the Revolution,” even in its post-1946 “institutional” incarnation. Thus, the long-term erosion of the PRI – previously apparent, but still painfully slow – now sharply accelerated: like the Great Barrier Reef, the PRI was slowly eaten away by long-term shifts in the political climate; but, every so often, a particularly severe storm broke off great chunks of the structure. And, during the 1980s and ’90s, the storms came thick and fast: in 1982, 1987, and 1994/5. The administration’s response was tepid. De la Madrid was seen as a dour technocrat, even though his “technocratic” skills seemed unable to bring about rapid economic revival. He was, at least, tolerably honest and he made much of the “moral renewal” that his administration sought, following the perceived excesses of his predecessor.51 (It seems likely that, in the hard times of the 1980s official corruption looked all the more egregious in the eyes of a disenchanted public; and, even if De la Madrid personally avoided conspicuous corruption, the PRI as a whole could not avoid this delegitimizing taint.)52 Meanwhile, presidential authority eroded along with that of the system as a whole. A newly assertive press, eschewing official subsidies (which, in hard times, had been cut back), found that it could survive in the marketplace, so long as it provided unvarnished news and robust critical comment.53 Where the print media led, radio and television would, eventually, haltingly, follow. The president’s dwindling authority was further dented by his lackluster response to the devastating Mexico City earthquake of October 1985: an event which, apart from wrong-footing the government (while revealing how cavalier and corrupt the capital’s building regulations had been), prompted spontaneous civic activism on the part of the chilangos.54 Here was striking evidence that, alongside the 51 52

53 54

C. Tickell, 4 June 1982, FCO 99/1171. It was plausibly suggested that the middle class – facing an economic squeeze of unprecedented severity – was particularly aggrieved by reports of official corruption: it was “the subject which gives rise to most anger and resentment, especially among the middle class.” The source, a British diplomat who had lived with a middle-class family in Mexico City, commented that “never a day passed without the subject of corruption in the government being brought up in discussion”: C. M. James, Review of 1983, FCO 99/1862. Lawson, Building the Fourth Estate. Walker, Waking From the Dream, chap. 6. The British Ambassador reported that “the ordinary people behaved well, and in some cases superbly, with a stoicism and courage which commanded general respect”; the government’s response, in contrast, was “patchy,” and “no one, including the President, gave the clear lead required”: C. M. James, 31 Dec. 1985, FCO 99/2356.

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novel electoral challenge of the opposition, more broadly based “(new?) social movements” were also mobilizing, whether in outright opposition to the PRI or by way of filling the yawning gap left by PRIísta austerity and indifference.55 For there is good evidence that the ruling party was caught unawares; that the historic gap between PRIísta rhetoric and practice had dramatically widened, but that the party leadership remained blinded by hubris and complacency.56 For decades, the regime’s legitimacy had been propped up, not by limpid democratic elections, but by the discursive legacy of the Revolution, by the PRI’s extensive clientelist network, and by its proven management of the economy. Now, all three legitimizing props were being kicked away. De la Madrid’s economic policy was, as I have said, reactive and orthodox; he initiated Mexico’s “neo-liberal turn,” but in response to pressing events and crises, rather than following a long-term, pro-active plan. Furthermore, there was little evidence of a compensatory political program. Government spending was being cut back, so there was no deep populist pork-barrel which the President – the least populist of the PRIísta era to date – could dip into.57 Mexico’s rudimentary social safety net was, in fact, acquiring even bigger holes; so Mexican families – including a newly impoverished middle class – had to look to their own resources in order to survive.58 The so-called “philanthropic ogre” of the PRI was looking a lot less philanthropic, but, like the ogres of legend, it could still throw its weight about. Confronted by the growing electoral challenge of the PAN, De la Madrid opted for the old and trusted methods of electoral fixing, particularly in the north. The 1985 mid-term elections involved “more than usually flagrant fraud”; and the 1986 elections in Chihuahua (a strongly PANista state) proved similarly 55 56

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Joe Foweraker and Ann L. Craig, eds., Popular Movements; and, for a useful critical review of the ample “social movement” literature, Hellman, “Mexican Popular Movements.” J. Nason 22 July 1988, FCO 99/2794, comments on the political shock produced by the 1988 presidential election – and, particularly, the strong performance of the Left, which took advantage of PRIísta abstentions and defections. The PRI leadership “seem to have thought that people who had been brought up in the tradition of the revolutionary family would not vote for any party other than the PRI.” We could call this phenomenon, perhaps, the “hubris of long-standing authoritarian incumbency”; it characterised European Communist regimes in the 1980s and – mutatis mutandis – the regime of Porfirio Díaz in the 1900s. Though much in vogue among political commentators, “populism” is not easy to define and very difficult to measure; however, de la Madrid, seen as a dry, remote, unemotional technocrat, clearly scored very low on any notional “populist” calibration. Of post-1946 presidents, only Díaz Ordaz (1964–70) might rival him for lack-of-charisma. But Díaz Ordaz was no technocrat. Arguably, the middle class – which had grown in numbers and prosperity during the years of the “economic miracle” – were hardest hit by the “lost decade” of the “eighties; compared to the working class, and, especially, the marginal poor, they were less accustomed to economic vicissitudes, they had fewer survival strategies at their disposal, and they may have felt the stigma of poverty more acutely. J. A. Penney, “Report on Mexico,” May 1989, FCO 99/3051, comments on the plight of the “threadbare middle classes.” See also Walker, Waking From the Dream, chap. 5.

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fraudulent, prompting widespread protest, a protest which “exceptionally” brought together the Church, business, and “leading Mexican intellectuals.”59 Foreign opinion, too, frowned on such practices; and, as debt negotiations followed their tortuous course, foreign opinion counted for rather more than it had back in the days of PRIísta supremacy. Meanwhile, unlike Pinochet, De la Madrid could not resort to outright, exemplary repression; rather, like all Mexican presidents, he had to adhere to the electoral timetable, as well as to the PRI’s traditional discourse of “democracy” and social inclusion. Repression – which occurred sporadically – had to be discreet and selective; in terms of Porfirio Díaz’s old dictum, it was better to rely on the pan than the palo (“bread” rather than the “stick”). But the bread was now in short supply. On the other hand (and contrary to certain crude national stereotypes), popular protest, though lively and extensive, was largely peaceful: it took the form of electoral mobilization, of “bottom-up” social movements, of more outspoken and overt criticism of the regime (including from the Church), and of occasional breakaways from the official unions (whose leadership stuck loyally and self-interestedly with the PRI).60 There were, it is true, a series of angry, at times violent, industrial disputes, as the CTM found it increasingly difficult to maintain its historical control of the labor movement. But this was hardly a new phenomenon; rather, old patterns of labor dissent, clearly evident, for example, in the inflationary 1940s, revived in the 1980s under the pressure of austerity, inflation, and falling real wages.61 The CTM lost ground (as it had in the 1940s), but it retained its central role in the Mexican political economy. Fears of a “social explosion” – reasonable enough, given the economic circumstances – proved groundless.62 Foreign observers were struck by the patient stoicism of the Mexican people.63

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C. M. James, 31 Dec. 1985, FCO 99/2356; FCO brief, “Mexico Internal Politics,” July 1988, FCO 99/2794. For a good analysis of the Chihuahua elections in their broader context, see Chand, Mexico’s Political Awakening. Foweraker and Craig, Popular Movements. A perceptive British observer in Chiapas (where a major rebellion would erupt in 1994), noted, in 1988, how the PRI – notorious for its local corruption and repression – lacked popular support; but so too did the Cardenista FDN, i.e., the infant Leftist opposition. Local grievances, though abundant, were expressed through “independent groupings, which are generally quite isolated from the registered political parties”; thus, “Chiapas is renowned for its proliferation of small independent protest groups, committed in the main to fighting for equitable land distribution and for protection of the rural population’s basic human rights”: S. Thomas, 10 May 1988, FCO 99/2794. Cook, The Politics of Labor Reform; Graciela Bensusán, “A New Scenario.” S. Thomas, 6 May 1988, FCO 99/2794, provides an interesting analysis of the independent sindicatos, including the electricians (SME) and university employees (SUNTU). J. A. Penney, “Report on Mexico,” May 1989, FCO 99/3051. J. Morgan, “Annual Review of 1987,” 20 Jan. 1988, FCO 99/2796, comments on the “docility” of the Mexicans, despite “repeated cuts in real wages”; C. M. James, “Review of 1983,” Jan. 1984, FCO 99/1862, rather more perceptively, notes how “the Mexicans have demonstrated great resilience” in the face of harsh austerity.

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The lack of sustained or concerted violence is not, perhaps, that surprising. Although virtually no Mexican of the 1980s could remember the armed Revolution of the 1910s, most Mexicans were aware of the death and destruction it had wrought; and the grim example of contemporary Central America – from which refugees were spilling over into southern Mexico – was an immediate reminder of the risks of armed conflict (risks that would be chiefly borne by the common people).64 Subsequent – relatively free – elections confirmed that fears of social upheaval weighed heavily on the minds of Mexican voters. And, even in its now somewhat sclerotic state, the PRI still deployed effective measures of social control (which did not involve root-and-branch repression, Chilean-style): the ejidal system helped deliver a bloc vote for the PRI in poorer, rural regions; and the CTM and its affiliated unions moderated wage demands while offering modest perks and protection for those who toed the official line.65 The ogre was still an ogre; so contestation was best done cautiously and institutionally. J. K. Galbraith once commented that the United Kingdom was the best place to attempt a radical monetarist experiment – as Prime Minister Margaret Thatcher did – because it had a strong, stable, legitimate state and a population committed to peaceful electoral politics rather than forms of street protest and direct action (France was the obvious comparison). The same could be said, mutatis mutandis, of Mexico, within the Latin American context: the state was strong, the army was loyal, the armed insurrection was largely a thing of the past, and popular protest, though it occurred, tended to be peaceful. The De la Madrid administration thus ended, if not in outright crisis, at least in serious disarray. Austerity undercut the popularity of the PRI but failed to generate economic revival (at best, its proponents might argue, it staved off complete collapse). Inflation remained stubbornly high and real wages had fallen by some 50%. In 1986–7, as inflation reached triple figures, the Mexican stock market slumped and GDP fell by over 4%. In response, the administration devised the Pact for Stability and Economic Growth (PECE): a heterodox plan to curb price rises and manage wage demands.66 Over time, the Pact achieved positive results (which means that incoming President Salinas faced a gradually improving economic scenario when he took power in 1988). But De la Madrid’s six years of austerity and incipient – “reactive” – neoliberal reform had achieved very modest results; the PRI’s reputation for economic competence had taken a severe hit; and, within the party itself, internal strains were becoming more severe. 64 65

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Seligson and Stevenson, “Fading Memories of the Revolution.” The rural/ejidal bloc vote had been a staple of Mexican politics for decades: González C ­ asanova, Democracy in Mexico. In 1988, at the time of the contentious presidential election, that vote was still mobilized (or concocted) in favour of the PRI, in order to offset the opposition vote (both Leftist and Rightist) in the cities: Reding, “Mexico at a Crossroads,” 622–5. Centeno, Democracy Within Reason, 195–6.

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In this contentious context, the PRI faced the presidential election of 1988. De la Madrid’s choice of successor – his erstwhile Minister of Budget and Planning, Carlos Salinas de Gortari – clearly represented a commitment to neoliberal continuity.67 Indeed, Salinas and his team, several of them (like De la Madrid) products of American graduate programs, were strongly identified with neoliberal policies.68 But, given its capacious “hegemonic” character, the PRI was, and had always been, a broad church, spanning a range of political opinions and policy currents. Successive presidents had to balance internal factions: in the 1940s and 1950s, Cardenistas against Alemanistas; in the 1980s, the – usually younger – neoliberals against those who cleaved to more traditional statist and nationalist positions. This last distinction is often construed as a conflict between “technocrats” and “politicians” – labels that were regularly used at the time and which have since been mulled over, refined, and re-defined by several expert analysts.69 While I do not intend to delve into their sophisticated typologization, a word about these “organizing concepts” is in order. While it is true that the neoliberals were “technocratic” in the sense of possessing claims to expertise (especially in economics), while often lacking experience of elected office, it seems somewhat misleading to deny them “political” status in the broader sense, since most of them had political c.v.’s (they were not parachuted in from business, as some of President Vicente Fox’s allies and appointees were after 2000); they typically held successive political offices; and, in a few cases – such as Salinas himself – they were adroit political operators. An alternative description, therefore, might be “buropolíticos”:70 their style of politics was that of insiders who had scant direct experience of the rough-and-tumble of Mexican electoral politics and who, in many cases, could fairly be criticized for lacking the common touch; but they were far from being the anonymous elite civil servants of the kind who, for example, headed the great institutions of State in France, the United Kingdom, or Japan. On the contrary, their rise to 67 68

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Salinas was seen as “the man (De la Madrid) considered most likely to continue the economic reform”: Nason, 22 July 1988, FCO 99/2794. Centeno, Democracy Within Reason, 14, cites The Economist, which “chose to remind readers that “Harvard-Educated-Economist” was not the new president’s middle name.” On the impact of foreign (American) education in the field of neo-classical economics, see Babb, Managing Mexico, chaps. 7 and 8. Again, however, I would – pace Keynes – caution against an overly “idealist” interpretation of Mexico’s neo-liberal turn: for neo-classical economics to be translated into practical policy, a great many other crucial factors – political, economic and social – had to come into play. Furthermore, the direction of the causal arrows is debatable: the paradigm shift in Mexican economic thinking (evident in the rise of institutions like ITAM) was made possible by broader shifts in political economy (on both the supply and the demand side). The ideas, we might say, often followed the money. Centeno, Democracy Within Reason, chap. 5; Camp, Mexico’s Mandarins, chap. 8. The term has been used – perhaps, was coined? – by Zermeño, La sociedad derrotada, chap. 15. Zermeño’s usage, as I understand to, is similar, but not identical, to mine. Centeno, Democracy Within Reason, 105, also works with a category of “burócratas políticos.”

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power required navigating the notorious camarilla system of the ruling PRI – a system that was not only part Weberian/bureaucratic but also (perhaps in greater part) Machiavellian/political.71 However, even within this key group, there was an important subdivision. Luis Echeverría was a classic buropolítico, who rose through the political hierarchy, cleaving to his camarilla, and never running for elected office. Like most of that ilk (we could also include Presidents López Mateos and Gustavo Díaz Ordaz), he was educated in Mexico, had studied Law, and was uncomfortable in English. His springboard to the presidency was Gobernación, the political ministry tasked with social control and – when necessary – electoral “alchemy.” He was a político to his fingertips, but his means of ascent came via camarillas within the party/state nexus. And the “official mind” of buropolíticos of this kind tended to be statist, authoritarian, and often nationalist; they did not care much for the United States but realized the practical need to collaborate with the coloso del norte. By the 1980s, however, a new, younger, typically US-educated elite entered the corridors of power: they, too, were buropolíticos, who had risen – very rapidly – through the official ranks (so, they owed nothing to popular constituencies and they often regarded the lower echelons of the PRI with some contempt). But their training was typically in economics and they belonged to the transnational “epistemic community” of policy-makers versed in neoclassical economic thinking (thinking which was now putting down deep roots in Mexican institutions of higher education like ITAM).72 For want of a more specific qualifier, I shall refer to Echeverría as his kind as “traditional buropolíticos,” Salinas and his cohort (Pedro Aspe, Jaime Serra Puche) as “modern buropolíticos.” Though both groups achieved power thanks to their camarillista connections and had scant direct experience of grassroots politics, the “traditionals” were schooled in the arts – often the dark arts – of political fixing, while the “moderns” focused on technocratic solutions, preferring to delegate the political fixing to others, even hoping that a new politically and economically liberal Mexico might be able to dispense with fixing altogether. De La Madrid’s evident preference for “buropolíticos,” which was franked by his choice of Salinas as successor, progressively alienated the – loosely – nationalist/statist/Cardenista wing of the PRI (who had been unhappy at De la Madrid’s own candidacy back in 1982).73 Needless to say, this alienation stemmed not only from ideological differences over policy but also from frustrated personal ambitions. In 1987 the dissidents, led by Cuauhtémoc Cárdenas and Porfirio Muñoz Ledo, broke away and formed the FDN (which, a year

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Smith, Labyrinths of Power; Camp, Politics in Mexico, chap. 5. Babb, Managing Mexico, chap. 6. C. Tickell, “Annual Review of 1981,” FO 99/1174.

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later, became the PRD).74 This was not the first serious schism in the ruling party: presidential successions had provoked similar splits in 1940, 1946, and, most starkly, 1952. But, since 1954 (a generation ago), party discipline had prevailed, based on the rational calculation that there was no political salvation outside the PRI and that it made sense to accept temporary reversals in the hope of future rewards. The fact that a substantial fraction of the PRI no longer made that calculation suggested that a significant sea-change in elite politics was taking place; it would eventually produce the fractious and fissiparous party system of post-2000. The 1987 schism was also significant since it involved dissidents who – in terms of their proclaimed ideology rather than their gnawing ambition – stood loosely on the Left, at least in the sense of favoring more statist and nationalist policies than their neoliberal opponents.75 As a result, the PRI now faced political fire on two fronts: from a right-wing opposition (traditionally antiPRI) which had gathered strength during the mid-1980s; and a new more vigorous Left, combining the PRIísta breakaways of 1987 and the congeries of small Leftist (sometimes Marxist) parties who, for years, had stood against the system.76 An enduring feature of contemporary Mexican politics was thus established: a loosely three-party system (Right/Centre/Left, respectively, PAN/ PRI/PRD) in which the revived Left embodied an uneasy coalition of independent Leftists and ex-PRIístas. Because of the 1987 schism, the 1988 presidential election was unusually competitive and contentious. Nothing like it had been seen since at least 1952, perhaps 1940.77 The final results – delayed because of a suspicious computer crash – gave Salinas, the PRI candidate, a clear victory; but allegations of fraud were rife and the (Left) opposition claimed that the FDN candidate, Cuauhtémoc Cárdenas, had been robbed of the presidency.78 Salinas, therefore, entered office under a cloud, facing an aggravated version of the accumulation vs. legitimacy dilemma mentioned earlier. He was clearly committed to pushing ahead with the neoliberal economic project (of which he had been a key architect), but he also had to shore up the now shaky legitimacy of both the PRI and the presidency. Though a “modern” buropolítico, he had to show 74 75

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Luis Javier Garrido, La Ruptura offers a detailed (and sympathetic) account of the birth of the FDN/PRD. They also called – “somewhat disingenuously” – for greater democracy, even though “many of its leaders had participated in and benefited from … [the PRI’s] exclusionary policies for several years”: Centeno, Democracy Within Reason, 59–60. A third, less important, component consisted of the minor “satellite” parties of the PRI, such as the PARM, PPS and PFCRN, who had sucked on the teats of the PRI for years and now looked for alternative sustenance. J. Nason, 22 July 1988, FCO 99/2794, preferred 1940. The opposition also gained a much bigger presence in Congress, substantially reducing the PRI’s majority and thus making Salinas “the first postrevolutionary president who had to genuinely negotiate with Congress”: Centeno, Democracy Within Reason, pp. 61–2.

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more political flair than his predecessor, and he was careful to appoint some “traditional” buropolíticos (like Manuel Bartlett) to high office, thus ensuring that technocratic expertise was backed up by mastery of the dark arts.79 If we review the Salinas sexenio – six years of fairly frantic reform, politicking, and protest – a plausible conclusion might be that it witnessed a significant advance and entrenchment of the incipient neoliberal project.80 A “reactive” project became “pro-active,” pushed ahead such that it became “the only game in town.” But, alongside the economic reform, the Salinas sexenio also saw a series of important political initiatives: detente with the PAN, marginalization of the PRD, enhancement of the presidency, birth of the National Solidarity Programme (Programa Nacional de Solidaridad – PRONASOL), and propagation of the new-fangled doctrine of “social liberalism.” Like previous sexenios, however, it ended in disarray and its ending further tarnished the PRI’s reputation for expert and efficient government. Though the PRI remained in power for a further six years (1994–2000), it was living on borrowed time. As the main architect of the neoliberal economic reforms of the mid-1980s, Salinas, now President, carried forward and consolidated the project. The initial priority was to settle the vexed question of the foreign debt and to cut the rate of inflation. In both respects, the administration was broadly successful: the United States – possibly fearful of the resurgent Mexican Left – was ready to cut a deal with Salinas on the debt; and, by maintaining the Economic Stability Pact, the administration bore down on inflation (which meant, of course, curtailing wage increases). Beyond these immediately pressing concerns, Salinas undertook major structural reforms: trade barriers were lowered, state assets privatized, and foreign direct investment was eagerly courted. By the end of the sexenio, Mexico had become an open economy and foreign investment was again flowing into the country.81 A key item of this ambitious agenda was NAFTA, the creation of a North American free trade area, which further tightened Mexico’s intimate economic relationship with the United States. A key point concerning NAFTA is that

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Though considered a rival of Salinas in the De la Madrid years, Bartlett became Minister of Education in the new administration; a cynical (but plausible) explanation was that he “knew too much about what really happened in the (1988 presidential) election” and might “threat[en] to spill the beans”: A. Soper, 6 Nov. 1989, FO 99/3052. It should be made clear, however, that Salinas himself – a prolific author – denies that his administration was “neo-liberal,” and sees it as a kind of third way, neither neo-liberal (like his successor Zedillo) nor populist (like Cuauhtémoc Cárdenas and Andrés Manuel López Obrador, successive “Mayors” of Mexico City). His case rests in part on his administration’s social policy (to be discussed below), which he considers “solidary” rather than “neo-liberal” or “populist.” The case is coherent, if debatable. It is less clear why his economic policy should be denied the “neo-liberal” label which analysts – almost without exception – choose to give it. See Salinas de Gortari, La “década perdida”, 15–20. Cárdenas Sánchez, El largo curso, chap. 12; Haber et al., Mexico since 1980, 73–4; Carlos Salinas de Gortari, México, parts 1, 2, 5.

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it was a Mexican initiative – and one which flew in the face of traditional Mexican policy, at least in theory. No Mexican president could be seen to truckle to the United States and most Mexican presidents – Porfirio Díaz being a classic case – sought to offset the overweening power of the United States by forging closer relations with Europe (and, later, Japan). Though the days of serious Great Power geopolitical rivalry in Mexico were long gone (arguably, they ended with the First World War), the economic competition continued and Mexico traditionally sought to offset the predominant role of the United States by striking deals with Europe (and Japan). Salinas followed this line, at least to begin with: he nurtured a personal interest in Japan, sent his children to a Japanese school in Mexico City, and, as a presidential candidate, he had talked up the Japanese connection.82 But the dream of commercial diversification was never realized, chiefly because, post-1989, European – above all, German – eyes turned to Eastern Europe, to the challenge and opportunity of incorporating post-Communist countries into the European economic orbit.83 By default, there remained the United States. Here, Salinas’s reasoning was impeccably logical. If Mexico was to remain locked within the American economic sphere, better that confinement should be governed by clear-cut bilateral rules which protected the weaker party (better, too, that Canada should be involved as a modest counterweight to the United States, thus making the rules trilateral). In this way, arbitrary North American unilateralism – evident, for example, in President Nixon’s devaluation and tariff-hike – would be inhibited. As late as 1988–9 Salinas had explicitly discounted a free-trade agreement with the United States.84 But, having sized up the situation in Europe, he abruptly changed tack; the notional agreement now became a Mexican proposal that had to be approved not only in Mexico but also – a much stiffer challenge – in the United States, by a Congress of protectionist leanings. To cut a very long story short, NAFTA was finally approved by the US Congress in late 1993.85 Like the Battle of Waterloo, it was a “near-run thing”; and the Salinas administration, having invested heavily and creatively in lobbying in the United States, heaved a collective sigh of relief when NAFTA finally – narrowly – secured Congressional approval.86 The capstone of the neoliberal project was now in place. NAFTA led to an immediate boost in US investment in Mexico and consolidated the ongoing process of commercial integration between the two countries – a process that particularly affected the border and northern Mexico.87

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Gabriel Székely, “Mexico’s International Strategy,” 163–5. Salinas de Gortari, México, 49–50 recounts how the Davos meeting in February 1989 was the turning point. J. Nason, n.d., April 1989, FCO 99/3051. Policy wonks can follow the process in the 1,061 pages of Garcadiego et al., eds., El TLC día a día. Carlos Salinas, interviewed 22 July 2019, London. Haber, Mexico Since 1980, 77–87; Villareal, “NAFTA and the Mexican economy.”

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It also proved providential when, a year later, Mexico was hit by its third economic crisis in the space of twelve years and President Clinton rapidly stumped up a $52 billion rescue package.88 Absent NAFTA, it would have been much harder for the US administration to engineer that rescue. We could further hypothesize that the recent gyrations of President Trump on the matter of NAFTA (now rather meaninglessly re-branded as USMECAN) are further evidence that the NAFTA system has put down deep roots, which cannot be easily and arbitrarily pulled up. NAFTA thus served to lock in free-trade policies on both sides of the border, to Mexico’s distinct advantage.89 NAFTA was advantageous for Mexico not because it led to the wholesale exploitation of gullible Americans (the shrill complaint of Ross Perot in the 1990s and Donald Trump in the 2010s),90 but because it deepened and formalized the process of North American integration, making it less vulnerable to global economic shocks and individual political caprice (even, as we see today, President Trump’s). NAFTA also had important and durable consequences in Mexico: it helped lock in place basic elements of the neoliberal project, protecting them from political upheavals south of the Río Grande; and it affected the country’s political economy, favoring and strengthening certain regions (the border, the north) as well as certain business sectors (those closely linked to the US market, such as commercial agriculture and the border maquiladoras; of course, Mexico’s drug cartels also benefited from the boom in cross-border trade and migration).91 NAFTA thus formed part of a seismic shift in Mexico’s domestic political economy – a major rearrangement of the terrain which, under Salinas, became irreversible. To clarify: since nothing lasts forever, the neoliberal project of the 1980s/90s is clearly not immutable and, indeed, as I later mention, the current López Obrador administration is flirting with policies designed, in part, to roll back the market and revive the power of the state. However, the stubborn inertia of the economic status quo will not make that easy: like King Henry VIII’s dissolution of the monasteries, we might say, neoliberalism has now created powerful vested interests (economic as well as political and ideological), which will strenuously resist any attempt to turn back the clock, to revert to pre-Reformation times. Furthermore, even during the 1980s and ‘90s, as the “Reformation” took shape, it was clear that the forces of statism and nationalism – chiefly

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Boughton, Tearing Down Walls, chap. 10. Mexico’s rapid recovery from the crisis – and the lack of demands for renewed protectionism (in Mexico) – were “a measure of how wellentrenched [free market] reforms were”: Lusztig, The Limits of Protectionism, 79, 93–4. When President Trump threatened to tear up – or radically transform – the existing NAFTA arrangements there was broad consensus in Mexico that Trump should be resisted; and – radical nationalist – President López Obrador showed no desire to throw NAFTA to the wolves. Lusztig, The Limits of Protectionism, 2. Villareal, “NAFTA and the Mexican economy”; McKibben, “NAFTA and Drug Trafficking.”

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represented, in Mexico, by the infant PRD – were on the defensive. Regarding the pressing question of the foreign debt, they were vague and ambivalent; their opposition to NAFTA was vocal but fairly ineffective; and, while they could condemn the iniquities of neoliberalism, they found it hard to present a viable and cogent alternative. After all, what would that alternative be? A nostalgic return to radical Cardenista corporatism? The name of Cárdenas still resonated powerfully with some sectors of Mexican society (hence, in part, the initial success of the FDN/PRD) but the carrier of that name, Cuauhtémoc Cárdenas, proved unable to articulate a clear and persuasive counter-project.92 A return to the protectionist bunker of old-style ISI? Global trends were heading in a different direction and, as Mexico tracked those trends, free-trade lobbies grew in strength: manufacturers locked into North American production chains (e.g., automobiles), agricultural exporters looking to the burgeoning American market, and middle-class consumers who could now enjoy a range of cheaper foreign imports.93 Or, a belated lurch toward a now discredited Marxism-Leninism, at a time when the Soviet Union was in terminal collapse and Cuba was entering the travails of the “special period”?94 As elsewhere in the world, the advocates of neoliberalism could confidently – if falsely – claim that “There is No Alternative.”95 Salinas’s bold reversal of historic Mexican policy in respect of NAFTA had parallels in his domestic economic policy. He systematically reversed the statist initiatives of the 1970s and early ‘80s, privatizing both the banks and the (monopolistic) telephone system and selling off a slew of parastate enterprises.96 PEMEX remained in the hands of the state (it was still a valuable cash cow for the state and privatization might have incurred a severe political cost); however,

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A. Soper, June 19, 1989, FCO 99/3051, having met and observed Cárdenas, found him to be “honest, sincere and capable,” but lacking “any trace of charisma” and overly reliant on “outdated populist slogans.” On the key question of the foreign debt he seemed vague and contradictory – caught, it seems likely, between a nationalist urge to declare a moratorium and a realistic appreciation of the havoc that a moratorium might wreak on the Mexican economy. Centeno, Democracy Within Reason, 25, similarly notes that Cárdenas came across as “anachronistic.” An important aspect of contemporary Mexican society rightly stressed by Castañeda, Mañana Forever?. To recall the timing: Salinas took office at the end of 1988; the Berlin wall came down in 1989; the USSR broke up in late 1991; and Cuba’s “special period” – the years of acute austerity brought on by the withdrawal of Soviet support – started in 1991 and lasted throughout the decade. “There Is No Alternative” (sometimes abbreviated to “TINA”): the mendacious claim of Margret Thatcher and her acolytes in the United Kingdom. The phrase was echoed in Mexico at the time. Cárdenas Sánchez, El largo curso, 713–721. Privatizations had the additional benefit – in the eyes of the government – of funding social policy (notably PRONASOL, to be mentioned shortly) and of helping to reduce public debt and interest payments, thus balancing the budget: Haber et al., Mexico Since 1980, 74; Schettino, Cien años de confusión, 424–6.

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Salinas opened Mexico’s electricity sector to private interests.97 Tariffs, subsidies, and quotas – the traditional instruments of ISI during the years of the economic miracle – were also severely cut back; imports boomed, to the advantage of consumers, but to the disadvantage of domestic producers; as a result, Mexico’s trade balance worsened, making it imperative to attract foreign capital and to boost exports.98 Business opinion – increasingly vocal during the 1980s – was divided; but big business, especially northern big business, welcomed Salinas’ rise to power and his espousal of pro-market policies; and few businessmen, large or small, looked favorably on the Cardenista alternative.99 Salinas’ self-professed aim was a slimmer, more efficient state, which largely confined its economic activities to (modest) taxation, regulation, and basic infrastructure. Overall, the “weight of the state” was reduced; yet, arguably, President Salinas exercised greater authority than his two immediate predecessors. Toward organized labor, a central supportive pillar of the PRI old regime, Salinas was selectively reformist. His presidential candidacy had been overtly opposed by the CTM leadership; and, in Mexico as elsewhere, decisive neoliberal reforms typically required an assault (whether frontal or more deviously flanking) on the power of organized labor. The first victim was the longstanding leader of the oil workers, Joaquín Hernández Galicia (“La Quina”), who was known to be sympathetic to Cárdenas and hostile to Salinas.100 In a “meticulously planned and executed” strike, army commandos blasted La Quina’s front door with a bazooka, confiscated a minor arsenal (said to include 200 Uzi machine guns), and marched the disgraced leader off to gaol.101 A compliant crony took his place; the oil workers’ union were reportedly “cowed” by this bold assertion of presidential power; and public opinion broadly approved

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Wood and Martin, “Of Paradigm Shifts and Political Conflicts.” Cárdenas Sánchez, El largo curso, 711–3; Schettino, Cien años de confusión, 429–30. 99 On business reactions, see Lusztig, The Limits of Protectionism, pp. 94–102. One feature of this PRI/business detente was the recruitment of businessmen as PRI candidates for political office, evident as early as 1988 (when “the number of businessmen/financiers included in the lists of PRI candidates for the Senate and Chamber of Deputies would appear to reflect Salinas’s wishes’); similarly, the PRI’s Committee for International Affairs now included a “number of figures from the world of finance and commerce”: A. Soper, 16 Feb. and 8 March 1988, FCO 99/2794. But the most notorious example of PRI/business cohabitation came in February 1993, when President Salinas dined with Mexico’s leading businessmen at the house of ex-Minister of Hacienda Antonio Ortiz Mena, where he solicited – and was pledged – a huge contribution to the PRI’s electoral war-chest: Casar and Ugalde, Dinero bajo la mesa, 38. 100 “Rumours about La Quina’s sympathy for Cárdenas might have something in them, if only because something was bound to stir in the heart of an oil worker at the mention of that name”: R. Wilkinson, 10 March 1988, FCO 99/2794. 101 A. Morgan, Jan. 1989, and Canadian political report, 10 Jan. 1989, FCO 99/3051. Morgan also reports that, according to the Soviet Ambassador, Salinas “had proposed a similar operation four years ago,” but that “President De la Madrid had. been too timid to agree.” Whether true or not, the anecdote says something about contrasting perceptions of De la Madrid and Salinas. 98

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(over-mighty union barons were no more popular in Mexico than they were in the United Kingdom).102 Another “producer group” thus fell victim to the onward march of market reform. The leader of the powerful teachers’ union, Carlos Jonguitud Barrios, was similarly, if less spectacularly, defenestrated.103 Public opinion appears to have welcomed, or at least tolerated, these syndical decapitations: and, significantly, the CTM did not spring to the defense of La Quina and Jonguitud. Having spent a long career collaborating with successive PRI presidents, its octogenarian leader, Fidel Velázquez, was not suddenly going to stand up to presidential power. However, in 1988, his endorsement of Salinas (as presidential candidate) had been grudging, while the CTM’s efforts to get out the PRI vote, especially in big cities like Mexico City, had been sadly deficient (This failure represented both the leadership’s low opinion of Salinas and the CTM’s objective loss of mobilizing power). Characteristically, Salinas combined stick and carrot (Don Porfirio’s “pan o palo”). The deposed union bosses were replaced by “new” leaders of not-so-different stripes, but leaders who knew that they owed their position to Salinas (notably Elba Esther Gordillo, La Maestra, the new leader of the teachers’ union, who would play a central political role until her own belated defenestration in 2013).104 In addition, the president lent his support to Hernández Juárez, the young-ish leader of the Electricians Union (traditionally, a militant sindicato), who became, for a time, the new, modern and acceptable face of Mexican trade unionism.105 These were not the only heads to roll in the early days of the Salinas administration: a prominent businessman (Eduardo Legorreta) was arrested for fraud; a leading drug lord (Félix Gallardo) was gaoled; and the notorious Mexico City Chief of Police (Miguel Nazar Haro) was deposed.106 The technocratic new President was seen to be surprisingly decisive; and the even-handed choice of targets – a businessman and labor boss, a drug lord and a police chief – jibed with the official discourse of reform and renovation. Along with the stick and the carrot, Salinas wielded – it seemed – an effective broom. Organized labour, a traditional pillar of the regime, was thus truncated. At the same time, Salinas turned his beady reformist eye on the agrarian reform 102

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J. Nason, 17 July 1989, FCO 99/3051, which also comments that President Salinas now appeared to be “a decisive leader, firmly in charge.” Almond and Verba, The Civic Culture, noted low popularity ratings for Mexico’s labour leaders. Middlebrook, The Paradox of Revolution, 295. A. Soper, 5 June 1989, FCO 99/3051, handed a hostage to fortune when he reported the fall of Jonguitud Barrios, commenting that “Elba Esther (Gordillo], whom the PRI imposed after Jonguitud Barrios as head of (the) SNTE, (is) unlikely to be as strong.” La Maestra’s role in Mexican politics included setting up her own political party (PANAL: Partido Nueva Alianza, 2005) which, in 2012, polled nearly 2 million votes in congressional elections, securing ten seats. Middlebrook, Paradox of Revolution, 285, 296. J. Nason, Feb. and April 1989, FCO 99/3051.

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program, historically the great accomplishment of the Revolution (as well as a key source of clientelist support for the regime). The distribution of land in the form of ejidos was halted; agrarian policy would now consist of regularizing property titles (again, in the interests of market efficiency and “secure commitments”); and ejidatarios would be able to convert their existing usufruct rights into outright freehold.107 The impact, both politically and economically, was less than might have been anticipated. For decades, land distribution had lost impetus; ejidos were riddled with graft and growing inequality; and the ejidal sector – as a percentage of the population and of the productive economy – had been shrinking.108 It was therefore hard for clear-eyed radicals to spring to the defense of the ejido. There was plenty of rhetorical protest, but scant active mobilization. Furthermore, the ejidatarios themselves reacted, we might say, skeptically and stoically. There was no rush to privatize; the ejidal sector lived on, a dwindling appendage of the burgeoning private agrarian sector.109 Salinas’s proclivity for slaying the old dragons of the “revolutionary” landscape (and often getting a positive press for doing so) was also evident in respect of both Church/State relations and education.110 The revolutionary generation (c. 1910–40) had included prominent “jacobins,” who saw the Catholic Church as an instrument of reactionary interests and an obstacle to enlightened, secular progress. Since the 1940s the anticlerical edge of the regime had been blunted, but the old shibboleths remained, chiefly in theory (for example, restrictions on Catholic schooling), sometimes also in practice (e.g., the ban on avowedly confessional parties). Thus, as in the realms of labor and agrarian reform, traditional “revolutionary” commitments were maintained in theory but often ignored in practice. Salinas decided to update official discourse in line with contemporary reality. Catholic education would now be legally tolerated; Pope Jean-Paul II was twice given a lavish official welcome, in 1990 and 1993.111 Again, the sky did not fall in; on the contrary, Salinas’s popularity, and his reputation for political adroitness, were enhanced.112 107 108 109

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Cornelius and Myhre, eds., The Transformation of Rural Mexico. Sanderson, Agrarian Populism, chap. 6; Chevalier, “The Ejido and Political Stability.” Cornelius and Myhre, “Introduction,” 18–19; Haber et al., Mexico Since 1980, 86. On the other hand, there is evidence that, over a longer period, a (small) minority of ejidatarios who took advantage of privatization subsequently adopted more conservative voting patterns: neo-liberal reform (again) created constituencies who would reward the “reformers”: de Janvry, González-Navarro and Sadoulet, “Are Land Reforms Granting Complete Property Rights Politically Risky?”. In the opinion of José Córdoba, Salinas’s influential adviser, the Church – like the ejido – was a “hornets’ nest,” which had to be handled “with extreme caution”: M. Simpson-Orlebar, 21 Nov. 1989, FCO 99/3052, account of lunch with Córdoba and EEC ambassadors. The papal visits would merit a discussion by themselves. The 1990 visit is amply covered in FCO 99/3300. A. Coltman memo., 13 April 1989, FCO 99/3051, observed that Salinas “bought some popularity by cultivating the Catholic Church.” Certainly the critics – the residual and diminishing anticlericals of the PRI, for example – were greatly outnumbered by the Catholic faithful. It is

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In respect of education, the President’s departure from “revolutionary” orthodoxy was clear-cut, if largely discursive rather than institutional. Structures remained intact (though private higher education flourished as never before); and the powerful teachers’ union, now headed by a Salinas ally, retained its pre-eminence. But the administration set out to reformulate the “official” vision of Mexican history – above all, how that history was presented in school textbooks.113 The Revolution, the supposed source of the “revolutionary” regime of the twentieth century, was downplayed. (Emiliano Zapata, the agrarian leader of the south, was a notable and significant exception).114 In particular, Lázaro Cárdenas, radical president and father of opposition leader Cuauhtémoc Cárdenas, was cut down to size.115 The new official syllabus gave Salinas a prominent role; and, by way of affording him historical legitimacy, it vaulted over the Revolution and hit upon the radical liberals of the mid-nineteenth century – second-rank figures like Ponciano Arriaga – who represented so-called “social liberalism” (roughly, liberalism with a human face and a social conscience).116 The attempt to re-jig the school syllabus largely failed: the new “social liberal” textbooks provoked protest and were warehoused. Dethroning or downplaying the Revolution suggested – so leftists critics alleged – a rehabilitation of Porfirio Díaz and his clique of business-friendly Científicos, who now seemed reincarnated in the shape of Salinas and his technocratic cronies.117

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interesting to note, too, that Mexico’s recently resurgent populism – represented by AMLO – is not just averse to anticlericalism, but is at times overtly religious. Gilbert, “Rewriting History.” Salinas (who named one of sons “Emiliano’) was at pains to stress his admiration for Zapata, whose popular agrarianism chimed in with the President’s notions of solidarity and popular empowerment: T. Duggin, 6 Feb. 1989, FCO 99/3051. Vizcaino notes that Salinas was happy to invoke the Revolution, but in suitably flexible – some would say casuistic – ways: like Salinas himself, the Revolution opposed “inmovilismo” and, regarding his reform agenda, Salinas declared that “we make changes because we wish to make a reality of the Revolution”: Vizcaino, El nacionalismo mexicano, 135. It was suggested that Salinas nurtured a particular resentment against Cárdenas (less wellknown was De la Madrid’s alleged personal antipathy to Cárdenas” close ally Porfirio Muñoz Ledo, a sentiment which had existed “since they were students’): J. Nason, 1 Aug. 1988, FCO 99/2794. Vizcaino, El nacionalismo mexicano, 131, notes the disappearance of (Lázaro) Cárdenas from official discourse. Knight, “Salinas and Social Liberalism.” In the Mexican context, the term “social liberalism” was coined by the distinguished historian and PRIísta ideologue Jesús Reyes Heroles, who used it to describe the more radical, socially conscious liberals of the mid-nineteenth century. In other (e.g., European) contexts, its meaning is somewhat different; and, in Latin America, it has again been used in a different sense (see Ames, Political Survival, 92–3, who includes Brazil’s Dutra and Nicaragua’s Luis Somoza in the “social liberal” category). Popular discourse picked up on “Científico” as a pejorative term to describe Salinas and his ilk: Gilly, Cartas a Cuauhtémoc Cárdenas. The opposition also denounced Salinas’s ­policy towards the Cananea Copper Co. as following in the footsteps of Díaz: T. Duggin, 11 Sept. 1989, FCO 99/3052.

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But the “social liberalism” band-wagon involved more than re-writing history text-books: the term peppered public discourse and was plugged by the new politico-cultural apparatus of the state, such as the PRI’s Cambio XXI Fundación México (1990).118 Furthermore – beyond the field of education – the Salinas administration set up an ambitious program premised on the principles of “social liberalism”: the National Solidarity Programme (PRONASOL).119 Formally, Solidarity or PRONASOL was an extensive program of public works and investment (in roads, clinics, schools, drainage, and other projects), funded by the Federal government, but encouraging and drawing on local, “bottom-up” community participation. It carried the personal hallmark of the president (indeed, its rationale was to be found in his Harvard doctoral thesis).120 Salinas toured the country tirelessly, promoting the National Solidarity Programme and inaugurating its projects; Chalco, the teeming, impoverished informal urban settlement on the east side of Mexico City, became the showpiece of the program.121 Despite bold claims of novelty, PRONASOL fell within an established Mexican tradition, whereby footloose presidents toured the provinces, distributing largesse and – it was hoped – forging closer ties between state and civil society.122 (Ironically – though perhaps deliberately – the classic case was President Lázaro Cárdenas, father of Salinas’s great political rival, Cuauhtémoc Cárdenas.) In similarly traditional fashion, the National Solidarity Programme involved ample discretionary spending on the part of the President. Critics alleged that the program was premised on budgetary sleight-of-hand (funds were diverted from existing programs to support PRONASOL); that it bolstered the prestige of the president (which it certainly did) at the expense of the party and its provincial representative, such as the state governors; and that it served as a modest salve for those who had been seriously hurt by neoliberal austerity. It was, in Denise Dresser’s neat formulation, a “neo-populist solution to neo-liberal problems.”123 To which the answer might be: “so what”? PRONASOL may have irked state governors and other PRI functionaries, but it bolstered the popularity of a president who, of course, had entered Los Pinos in the shadow of the contentious 1988 election. It did not fundamentally affect Mexico’s historic levels of inequality (at best, it slowed the existing growth in inequality); but it brought concrete benefits and – to a degree that is hard to determine – it genuinely involved local communities in decision-making.124 Five years after taking

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O’Toole, The Reinvention of Mexico, 54. What follows relies heavily on Cornelius, Craig and Fox, eds., Transforming State-Society Relations. Salinas interview, 22 July 2019. R. Wilkinson, 23 May 1988, FCO 99/2794. Knight, “Solidarity.” Denise Dresser, Neopopulist Solutions. Knight, “Solidarity,” 39.

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office, Salinas’s poll ratings were buoyant, while foreign experts and observers (some, it should be said, carefully cultivated by the Mexican government) lauded the president to the skies.125 A final ingredient of Salinista politics deserves mention (and here we touch upon the putative link between economic liberalization and democratization). The 1988 election, as I have said, signaled the birth of an effective three-party system – albeit one in which the PRI was still dominant. Salinas, therefore, faced a more vigorous opposition to both Left and Right, including a more rambunctious Congress than any since the 1920s.126 At the same time, De la Madrid’s recent (mid-1980s) promises of fair and free elections had scarcely been honored. Salinas’s response was calculating and astute. In a display of what the New York Times called “selective democracy,” he trained his fire on the Left (that is, the infant PRD), while offering an olive branch to the Right (the PAN).127 He did so because, as 1988 showed, the PRD was, for the time being, the greater electoral threat; and, as a party claiming fidelity to the principles of the Revolution (albeit the “Democratic Revolution”), it was also ideologically hostile to several key Salinista initiatives regarding labor and land reform, privatization, and NAFTA. (Some also suggest a personal antagonism between Salinas and Cárdenas; more importantly, the PRD owed its existence to a schism within the PRI, and PRI loyalists feared and disliked such schismatics even more than they feared and disliked the PAN).128 The PRD, as it sought to convert an ad hoc electoral coalition into an effective party of opposition, complained of systematic official obstruction, electoral malpractices, and outright repression; PRD activists – and outspoken journalists – ran the risk of death and “disappearance.”129 If, on the other hand, a “loyal opposition” was to be cultivated, it made sense to opt for the PAN. In terms of economic policy, the PRI’s own neoliberal turn had taken it into PANista territory.130 Politically, though the PAN boasted bastions of support in the north and the Bajío, it lacked a 125 126 127 128

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Centeno, Democracy Within Reason, 19, 66–7. Ugalde, The Mexican Congress, chap. 6. J. Nason, 17 July 1989, FCO 99/3051, citing The New York Times. Bruhn, Taking On Goliath, offers a good analytical account of the rise (and incipient decline) of the PRD, stressing, p. 221, the “conspicuously hostile” stance of the PRI towards its new Leftist rival. Bruhn, Taking On Goliath, 201–2; Cárdenas, Sobre mis pasos, 306–10. Apart from outright violence, the PRI also had a repertoire of dirty tricks (“fraud and electoral manoeuvring”) which it could use to undermine FDN/PRD campaigns: T. Duggin, 22 Dec. 1989, FCO 99/3052. A perceptive British observer witnessed these during elections in Tabasco in 1988, when “the electoral authorities, controlled by the PRI, gave the opposition a hard time by placing as many obstacles in their way as possible”; one victim – “quite young, obviously bright and interesting to chat with” – was an FDN activist/candidate by the name of Andrés Manuel López Obrador: A. Soper, 17 Nov. 1988, FCO 99/2794. “Salinas’s economic ideology largely mirrored (the PAN’s) own”: J. Nason, 22 July 1988, FCO 99/2794.

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pervasive national presence. Meanwhile, as its numbers had grown, especially among the middle class, so internal factions had emerged, some still intransigently opposed to the old PRIísta enemy, but some – the so-called “neo-PANistas” – advocating cautious collaboration. The sudden death of the PAN’s tub-thumping and rabble-rousing leader, Manuel Clouthier, in October 1989, helped tip the balance from confrontation to collaboration.131 Pragmatic neo-PANismo thus prevailed: a key indicator was the PAN’s support of a PRIísta electoral reform which, in the interests of supposed “governability,” guaranteed the major party in Congress a working majority.132 In return, the administration, while cracking down on PRD activism, gave the PAN a somewhat freer hand. In 1989, the PAN was “allowed” to win a gubernatorial election for the first time: the prize was Baja California – a remote state, of scant political weight – but the precedent was important, and was soon followed by PAN victories elsewhere, such as Guanajuato, in 1991.133 In this case, the PAN won thanks to a so-called “concertacesión,” whereby the Federal government intervened in a disputed election and, unusually, ruled in favor of the opposition, to the detriment of the local PRI. No such consideration was extended to the PRD, which continued to face official hostility and, at times, harassment. As Salinas’s star rose, that of the PRD sank. Like Leftist parties elsewhere in the world, the PRD’s inability to formulate a coherent and credible alternative to neoliberal reform (including, in Mexico’s case, NAFTA) cost it support. Its leader, Cuauhtémoc Cárdenas – “a dour personality and wooden campaign performer” – could appeal to certain constituencies (such as ejidatarios and students), but his position on key questions like NAFTA and the foreign debt was opaque.134 Furthermore, the infant PRD, lacking resources and organization, now had to contend with a smart political operator (Salinas), backed by 131

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Clouthier, who died in a car crash (a genuine accident, it seems) in his home state of Sinaloa, had favoured confrontation with the PRI – including, in the wake of the 1988 election, “a campaign of civil disobedience”; in this, he was more radical (regarding political tactics) than Cuauhtémoc Cárdenas: J. Nason, received 8 Aug. 1988, FCO 91/3051. On divisions within the PAN, see Domínguez and McCann, Democratizing Mexico, 119, 121–2. The “governability” measure – part of a bigger package of electoral reforms – gave any party which gained over 35% of the (congressional) vote a guaranteed majority in the Chamber of Deputies: Centeno, Democracy Within Reason, 63. To many – including the more doctrinaire PANistas – this looked like a sell-out, a pragmatic step too far. But one observer proved prescient: “the new relationship between the PAN and the PRI is interesting. I believe the PRI have got the better of the compromise in the short term, but I am not so sure in the long term. The PAN have given a signal that they are prepared to cooperate in matters … of national interest. They may be able to cash in on this if, or when, Salinas eventually runs into trouble.”: J. Nason, 16 Nov. 1989 FCO 99/3052. Domínguez and McCann, Democratizing Mexico, 121, 165–72. The basic reason why the PRI conceded to the PAN in Baja California was that it would have required “massive fraud” to keep them out: J. Nason, 17 July1989 FCO 99/3051. Nason 22 July 1988, A. Soper, 1 Sept. 1988, FCO 99/2794.

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the resources of the Federal government and buoyed by favorable mass media coverage (television especially).135 But the PRI was not altogether pleased by the turn of events either. Local activists objected when PRI victories were overturned to the benefit of the PAN, as in Guanajuato; what, from the top (or the center) looked like enlightened reformism seemed, from the grassroots (or the periphery) like political betrayal. The “modern buropolíticos” in Mexico City were turning their backs on provincial party stalwarts.136 The anti-poverty program PRONASOL (Programa Nacional de Solidaridad) compounded these concerns: for all its claims to bottomup autonomy and self-help, it was a Federal program, deploying Federal funds, and it bolstered the presidency at the expense of the party. (The PRD similarly saw PRONASOL as an official vote-buying machine.)137 Toward the end of his sexenio, Salinas was even suspected of planning his own re-election (thus subverting a cardinal rule of the PRIísta political system) and/or preparing to ditch the PRI in favor of a new party, notionally to be named “Solidarity.”138 Salinas thus entered the final year of his presidency (1994) in triumphalist style. The neoliberal reform program had been advanced and consolidated, crowned by NAFTA. In March, Mexico joined the OECD. PRONASOL seemed to cement the state’s – and, especially, the president’s – legitimacy in the eyes of civil society. The once buoyant Leftist opposition was in retreat, while the Right increasingly played the part of a loyal opposition, allowed to make electoral progress, while broadly endorsing the official project. In the 1991 mid-term elections, the PRI had won handily.139 Mexico was now economically much more liberal, and politically somewhat more democratic; but the economic reform outstripped the political (in the jargon of the day, PRIstroika took precedence over Glasnost);140 and the democratization was, in part, contingent, conditional, and partisan. 135 136

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Lawson, Building the Fourth Estate, 29–31, 39. Regarding provincial PRIísta resentment at central control (especially when it meant conceding victories to the opposition), the “mayor” of Mexico City, Manuel Camacho Solís – a keen “moderniser” – argued that reform could advance so long as the PRI was seen to be winning overall; but, if the losses mounted, the “dinosaurs” would “close ranks and allow no further concessions to the opposition”: M. Simpson-Orlebar, 1 Dec. 1989, FCO 99/3052. In fact, the PRI did continue to win through 1988–94; it was in the following sexenio that the electoral wheels came off. Incidentally, in this same conversation Camacho claims to have invented the famous “dinosaur” metaphor. Knight, “Solidarity,” 40–1. On the electoral rationale of PRONASOL, see Molinar Horcasitas and Weldon, “Electoral Determinants and Consequences of National Solidarity.” A change of name was, apparently, under consideration: Salinas intervew, 22 July 2019. On the PRI’s – or, rather, Salinas and PRONASOL’s – “remarkable comeback” in 1991, when the Party won 61.5% of the congressional vote, see Centeno, Democracy Within Reason, 66–7. Domínguez and McCann, Democratizing Mexico, 164–70, evaluates the degree of fraud evident in the 1991 gubernatorial elections, concluding that it happened, but probably wasn’t decisive to the outcome. P. Fearn memo., comparing Mexico and the USSR in these terms, July 1988, FCO 99/2794.

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Then came 1994, the PRI’s annus horribilis. Future historians will no doubt rake over the ashes of that year for decades to come; here, I can present only a very brief synopsis, focusing on the outcome. On January 1, 1994, just as NAFTA came into force, a popular rebellion erupted in the southern state of Chiapas. Bearing the iconic name of Zapata, it claimed to re-assert the values of the Mexican Revolution (popular democracy, patriotism, land, and labour reform), while denouncing neoliberal apostasy – especially NAFTA. In these respects, the neo-Zapatista movement had a traditional, nationalist, even nostalgic ring; both ideologically and practically it was poles apart from the Maoist extremism of Peru’s Sendero Luminoso. However, its bold affirmation of indigenous rights, on the part of a largely indigenous rank-and-file, was relatively new, signaling both a continent-wide prise de conscience as well as long-standing local grievances in the poor, boss-ridden state of Chiapas.141 The rebellion was soon contained; but if, militarily, it could not seriously challenge the Federal state and army, it posed a significant political challenge, which involved an adroit use of the media both within Mexico and abroad. There followed, in March 1994, the assassination of the PRI’s newly chosen presidential candidate, Luis Donaldo Colosio. Repeatedly, presidential successions had proved the Achilles” heel of PRIísta politics; and now Salinas’s hopes of finessing the process and securing the uncontentious election of his chosen successor were frustrated. The image of a political elite riven by internecine disputes was compounded when, six months later, José Francisco Ruiz Massieu, Secretary-General of the PRI, and Salinas’s brother-in-law, was assassinated. Amid the upheaval, the President had to select a new candidate: Ernesto Zedillo, another US-trained “technocrat,” possessed of impeccable neoliberal credentials. Zedillo duly won in a reasonable fair and free election: a tribute to the continued, if tarnished, popularity of the President and PRONASOL; to the disarray of the opposition (a disarray no doubt artfully encouraged by the PRI); to the recovery of the economy; and to the “voto miedo,” the “fear vote,” which meant that, in times of political upheaval, the PRI was still seen by many as the least bad option.142 However, the most severe blow was yet to come. During the tense electoral year of 1994, the Mexican economy registered brisk growth; but in the process, imports were sucked in (helped by an overvalued peso); and the foreign debt, much of it now dollar-denominated, grew ominously. While the ensuing 141

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Amid the plethora of “studies” – many of them flimsy and ephemeral – which emerged after 1994, Womack, Jr., “Chiapas,” stands out for being solid and historically grounded. On political context, see Harvey, The Chiapas Rebellion. On the 1994 election, see Domínguez and McCann, Democratizing Mexico, 176–209. It is worth clarifying that the “fear” which may have affected voting in 1994 concerned macropolitical events (political assassinations and the Chiapas revolt); the underlying homicide rate had remained roughly constant under Salinas and went on to fall under Zedillo and Fox; the real upsurge in homicides came under Calderón, from 2006/7 onwards: Trelles and Carreras, “Bullets and Votes.” Of course, public perceptions do not faithfully reflect objective trends.

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story is much contested, it seems clear that the administration sought to postpone any politically contentious devaluation; and the devaluation, when it came, immediately after Zedillo took office, was mishandled, leading to a currency crisis, capital flight, and a serious recession.143 Blame has been placed on Salinas and his team (for seeking to leave office with his economic record and reputation intact) and on Zedillo – and his team – for botching the devaluation when it finally came. However blame is to be allocated, it is ironic that, in the end, the Salinas sexenio ended amid financial and economic turmoil, even though the problem of the political succession had been successfully navigated. A supposedly “technocratic” administration had, arguably, got its political management right but its financial management wrong. I shall treat the Zedillo sexenio (1994–2000) briefly, by way of an epilogue, before presenting some broader conclusions. The sexenio is best seen as a rearguard action, as the new president, a quintessential technocrat, who – for better or worse – lacked Salinas’s political pzazz, set out to shore up the economy, while maintaining, as a secondary priority, the political fortunes of the PRI. Regarding the first goal he was successful, thanks in large part to NAFTA and the swift bail-out provided by the Clinton administration. After a year of severe recession in 1995, characterized by wage cuts, tax hikes, and further privatizations, the economy began to recover.144 Thereafter, the broad program of neoliberal reform, hesitatingly initiated by De la Madrid and aggressively advanced by Salinas, was maintained and, indeed, consolidated. But there was a severe political price to pay; by presiding over the third major economic crisis in a dozen years (1982, 1986/7, 1994/5), the PRI forfeited yet more of its dwindling reputation for economic competence. In addition, plausible allegations of corruption against senior members of the Salinas administration had all the more impact when the country was undergoing yet another bout of belt-tightening. The economy recovered; nevertheless, in the mid-term elections of 1997 – conducted relatively freely and fairly – the PRI for the first time lost control of Congress.145 Furthermore, Zedillo showed neither the will nor, perhaps, the capacity to restore the party’s flagging fortunes. Following a familiar Mexican pattern, the new administration sought to distance itself from its discredited predecessors. The Solidarity juggernaut ground to a halt and was replaced by more targeted (and less ambitious) programs designed – on an individual rather than collective/community basis – to combat extreme poverty.146 But

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Cárdenas Sánchez, El largo curso, 733–71, and Lustig, “The Mexican Peso Crisis,” are ­balanced and accessible accounts of this highly contentious episode. González Gómez, “Crisis and Economic Change,” provides a useful synopsis. In the same electoral “earthquake” the PAN won two more governorships (raising its tally to six) and Cárdenas won the important mayoralty of Mexico City: Rubio, “Coping with Political Change,” 33–4. Trejo and Jones, “Political Dilemmas of Welfare Reform.”

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dismantling PRONASOL did not signal any new-found presidential concern for the historic party of government. On the contrary, Zedillo proclaimed a “healthy distance” between himself and the PRI, thus further alienating party stalwarts and confirming his reputation as an ultra-technocrat who – unlike Salinas – preferred to float above the hurly-burly of partisan politics. Zedillo’s distaste for the PRI rank-and-file was reciprocated. Discursively, too, Zedillo embodied pure technocracy: he eschewed evocative historical references in favor of dry statistics and policy pronouncements; when straying beyond economics, he harped on the values of “democracy” rather than “nation” or “sovereignty.”147 In slighting history, he set a precedent which the next – and possibly last – PRI president, Enrique Peña Nieto (2012–18), would follow, albeit without matching Zedillo’s intellectual mastery of the dismal science. Discursively committed to “democracy,” Zedillo set out to reform Mexico’s skewed electoral system, creating an independent institution (IFE) to monitor elections. The chief beneficiary of this levelling of the political playing field was the PAN, who could justifiably claim some credit for the new neoliberal status quo, without incurring direct responsibility for its failings.148 In 2000, when the PRI finally – and not entirely unexpectedly – lost the presidency, it was the PAN, rather than the leftist PRD, which was the beneficiary. And its candidate, Vicente Fox, the outspoken and overtly Catholic ex-Governor of Guanajuato, was also an ex-executive of Coca-Cola (Mexico). Catholicism and Coke, we might say, symbolized the character of the PAN: its historic repudiation of the principles of the Mexican Revolution and its combination of traditional Mexican values and the new, free-market consumerism of the post-NAFTA era.149 To conclude: over the last forty years or so, Mexico has experienced transformative political and socio-economic change. The result has been a genuine degree of democratization, including alternancia at all levels, electoral uncertainty (i.e., elections whose outcome is not known ex ante), and a broader context of open debate, free expression and greater media independence. Mexican democracy is a very imperfect democracy (aren’t most of them?) but nevertheless it is a democracy in a way that it clearly wasn’t in, say, 1970.150 During the same period, the country’s political economy was also substantially transformed, such that it is now more open, market-oriented, and tightly integrated into the global, especially the North American, economy. But, since the 1980s, growth has been modest and, along the way, there have been recurrent crises, leading to bouts of severe austerity and falling real wages. Structural inequality has also remained stubbornly entrenched. This is no neoliberal nirvana. 147 148 149 150

Vizcaino, El nacionalismo mexicano, 139–40. As one observer had loosely predicted: see n. 132 above. I admit to recycling a previous allusion: Knight, “Myth of the Mexican Revolution,” 273. I pick 1970 almost at random: it happens to be (nearly) half a century ago; and it also happens to be the first year when I spent substantial time in Mexico.

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Of course, things may change. At the time of writing (2019), both Mexico and the United States have administrations which, in their different ways, are committed to subverting elements of the neoliberal order. President López Obrador, harking back to the Revolution and promising a “Fourth Transformation,” is groping toward more statist and nationalist policies. So far, the “Transformation” has involved some statist tweaks, but nothing like a full-scale counter-revolution. Any such counter-revolution would be strenuously resisted by powerful vested interests in Mexico, by institutions and opposition parties which cannot (as yet) be casually brushed aside, and by foreign actors (both private companies and multilateral organizations) who can seriously sanctions any statist backsliding.151 Venezuela stands as a dire warning and there is scant evidence (as yet) that Mexico is heading in a Venezuelan direction. It is noteworthy that this multidimensional transformation has been fairly peaceful and incremental. There have been crises, but no political or societal breakdown. Despite recurrent predictions, there has been no major revolution, no social “implosion.” The biggest armed challenge – by the EZLN in 1994 – relied more on computer software than military hardware (of which the EZLN had very little). It was no Sendero Luminoso. Furthermore, though the EZLN was influential, it did not transform Mexico’s political trajectory. As for the recent (post-2006) spike in crime and violence (which, however serious, has not reduced the Mexican state to systemic “failure”), that spike occurred after market reforms were firmly established and democratization was well under way. Crime and violence may be partially and indirectly related to economic and political liberalization (a busy open border facilitates narco operations; political alternancia may have fueled both regional narco turf wars and narcopolitical corruption); however, it is plainly nonsense – and historically illiterate – to claim a direct causal connection between democratization and criminal violence.152 What, then, of the supposed link – the “elective affinity,” perhaps – between democratization and economic reform? To the extent that reform was the product of changing global trends and pressures, coupled with recurrent domestic economic crises, the PRI happened to be in the wrong place at the wrong time. (Just as, during the preceding decades of desarrollo estabilizador, it happened to be in the right place at the right time.) In South America, the “lost decade” of the 1980s had a democratizing effect, since incumbent regimes were mostly authoritarian (e.g., Argentina, Brazil, Chile). Mexico was 151

152

President Trump’s failure to match bombast with action in respect of NAFTA indicates the inertial strength of pro-NAFTA interests in the United States; Mexico’s vested interests are probably just as strong. Oddly (and perhaps irrelevantly) the most striking contemporary example of the “relative autonomy of the state” and its capacity to override such interests is to be seen in the United Kingdom, in the Gadarene rush over the Brexit precipice. On the links between alternancia and violence, see Trejo and Ley, “Why Did Drug Cartels Go to War.” The notion that liberalization leads to violence is not (to my knowledge) a scholarly proposition, but I have encountered vox pop. versions, even in the company of supposedly educated and intelligent people.

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different, but PRIísta “inclusionary authoritarianism” was similarly vulnerable to economic vicissitudes (some of its own making). The long-term erosion of the party’s hegemony was therefore decisively accelerated. No doubt, like all hegemonic parties (the Italian Christian Democrats, the Japanese Liberals, the CPSU), the PRI was destined, sooner or later, for the dustbin of history, but the economic travails of the 1980s and ‘90s meant that it would be sooner. Future historians may also conclude that Peña Nieto squandered the last best chance for a PRIísta comeback. Beyond this argument-from-happenstance, we could identify some limited causal connections between economic and political liberalization. A slimmer state, divested of its bloated assets, had less discretionary patronage at its disposal, so politics became somewhat fairer and more transparent. (Of course, established democracies, whether slim or obese, still have plenty of patronage to dispense: consider US congressional log-rolling, not to mention US diplomatic appointments.) On the other hand, the process of market reform has often been accompanied by heavy-handed social control: if Chile under Pinochet is the classic (Latin American) example, Mexican buropolíticos, too, were prepared to use the power of the state to “reward their friends and punish their enemies” – for example, leaning on the mass media or cracking down on the PRD while giving the (more compliant and congenial) PAN an easier ride. Some PRIísta reformers – the “modern buropolíticos,” sensitively attuned to foreign public opinion – may have genuinely favored democratic reforms. But their priority was economic restructuring: PRIstroika preceded glasnost. In this, the comparison with Porfirio Díaz’s Científicos, if far-fetched and polemical, contains a measure of truth: though separated by a century, both sets of experts believed that it was crucial to get the economy right before essaying liberal democratic reforms. But whereas Díaz and the Científicos spectacularly miscalculated (since they incurred a social revolution), today’s “neo-Científicos” at least managed to push through their reformist project without provoking a revolutionary debacle – an outcome which, I suspect, had much less to do with their superior political skill (though some of them were undoubtedly politically adroit) than with the make-up of Mexican society at the end of the twentieth-century, compared to a century earlier. Late twentieth-century Mexico was not a bad place to attempt neoliberal reforms: it had a long record of political stability, a small apolitical army, and a population resistant to the siren song of revolutionary adventurism. The successive economic crises of the period, some partly attributable to buropolítico mismanagement, may even have reinforced Mexicans’ aversion to risk and their repudiation of violence. Finally, as regards the etiology of the reformist project (in both its political and economic dimensions), it combined both reactive happenstance and proactive intentionality. Following the severe crisis of 1982, De la Madrid felt obliged to liberalize, the alternatives (national bankruptcy, autarky, a

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“proto-Venezuelan” melt-down) being demonstrably worse. Compared to, say, Brazil, Mexico liberalized faster and more fully – location, geopolitics, and the “official mind” all played a part. Absent the crisis (which, I think, also means absent Echeverría, López Portillo, and the unsustainable oil-fueled boom of the late ‘70s), liberalization might well have happened, but probably more slowly, incrementally and partially (as in Brazil). Under Salinas, “reactive” neoliberalism became “pro-active”: more purposive, forward-looking, and, we might say, “foundational.”153 Neo-liberal policies were not simply imposed on a recalcitrant Mexico by foreign actors; in several respects (notably NAFTA) Mexico now made the running. By 1994, the neoliberal die was cast; Zedillo and Calderón consolidated the project, demonstrating that it now enjoyed a measure of bipartisan (PRI/PAN) backing. And – until 2018 – the Left failed to present a cogent and broadly appealing national alternative.154 But when it came to politics and political liberalization (or, more strictly, democratization), the PRI’s commitment was tepid, especially at the lower echelons of the Party.155 Nevertheless, political processes, like economic trends, acquired a momentum of their own, which the incumbents of Los Pinos could not closely control, but rather, at best, tactically manage. Previous political reforms – like that of 1977 – gave the opposition a strategic foothold; prolonged hard times eroded the PRI’s popularity; and successive crises boosted the opposition’s appeal. In response, the PRI could yield or repress. They did a bit of both, but root-and-branch repression, à la Pinochet, was not an attractive option, so the PRI fought a long rearguard action, finally relinquishing national power in 2000. That decorous withdrawal enabled it to live to fight another day: twelve years later, after two successive PANista sexenios, the PRI was swept back to power in a broadly free and fair election, with a convincing mandate. Unfortunately – for them – they gratuitously squandered the opportunity to show that they could govern as an honest, responsible, reformist centrist Party. As a result, in 2018 – thirty years after the nationalist Left had, allegedly, been egregiously cheated of electoral victory – a somewhat similar Left, including independent radicals and ex-PRIístas, swept to power, in the shape of MORENA. Time will tell whether MORENA poses a mortal challenge to the new neoliberal order. My guess, as I have said, is that they may tweak the status quo, but they will not transform it. But then, as a distinguished historian of Scotland once put it, “the future is not my period.” 153

154 155

I borrow this term from the old debates about Latin American authoritarianism, in which analysts distinguished between military coups – leading to authoritarian regimes – which were reactive and short-term in their objectives (they sought to eject the left, avert chaos, crush the Communsts, etc.) and those which, like Pinochet’s, proposed far-reaching “foundational” projects that would transform state and society. True, AMLO and the PRD came close in the tight presidential election of 2006; but their 35.6% fell far short of the 53.2% attained in 2018. Salinas, interview, 22 July 2019, attested to grassroots hostility to reform among the PRI. Of course, cynics may say that blaming the grassroots is a convenient excuse for political leaders.

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Almond, Gabriel A., and Sidney Verba. The Civic Culture: Political Attitudes and Democracy in Five Nations. Princeton, NJ: Princeton University Press, 1963. Ames, Barry. Political Survival: Politicians and Public Policy in Latin America. Berkeley: University of California Press, 1987. Babb, Sarah L. Managing Mexico: Economists from Nationalism to Neoliberalism. Princeton, NJ: Princeton University Press, 2001. Bensusán, Graciela. “A New Scenario for Mexican Trade Unions: Changes in the Structure of Political and Economic Opportunities.” In Dilemmas of Political Change in Mexico, edited by Kevin J. Middlebrook, Chapter 8. London and San Diego: Institute of Latin American Studies, University of London/Center for US-Mexican Studies, University of California, San Diego, 2004. Boughton, James M. Tearing Down Walls: The International Monetary Fund, 1990– 1999. Washington, DC: International Monetary Fund, 2012. Bruhn, Kathleen, Taking On Goliath: The Emergence of a New Left Party and the Struggle for Democracy In Mexico. University Park, PA: Pennsylvania State University Press, 1997. Camp, Roderic Ai. “Mexico’s Armed Forces: Marching to a Democratic Tune?.” Dilemmas of Political Change in Mexico, edited by Kevin J. Middlebrook, 353–72. London and San Diego: Institute of Latin American Studies, University of London/Center for US-Mexican Studies, University of California, San Diego, 2004. Camp, Roderic Ai. Mexico’s Mandarins: Crafting a Power Elite for the Twenty-First Century. Berkeley: University of California Press, 2002. Camp, Roderic Ai. Politics in Mexico: The Democratic Consolidation. New York: Oxford University Press, 2007. Cárdenas Sánchez, Enrique. El largo curso de la economía mexicana: de 1780 a nuestros días. México, DF: Fondo de Cultura Económica/El Colegio de México, 2015. Cárdenas, Cuauhtémoc. Sobre mis pasos. México, DF: Aguilar, 2010. Casar, Maria Amparo, and Luis Carlos Ugalde. Dinero bajo la mesa: financiamiento y gasto ilegal de las campañas políticas en México. México: Grijalbo, 2019. Castañeda, Jorge G. Mañana Forever? Mexico and the Mexicans. New York: Alfred A. Knopf, 2011. Centeno, Miguel Angel. Democracy within Reason: Technocratic Revolution in Mexico. University Park, PA: Pennsylvania State University Press, 1994. Chand, Vikram K., Mexico’s Political Awakening. Notre Dame, IN: University of Notre Dame Press, 2001. Chevalier, François. “The Ejido and Political Stability in Mexico.” In The Politics of Conformity in Latin America, edited by Claudio Veliz, 158–91. London: issued under the auspices of the Royal Institute of International Affairs by Oxford University Press, 1967. Cook, Maria Lorena. The Politics of Labor Reform In Latin America: Between Flexibility and Rights. University Park, PA: Pennsylvania State University Press, 2007. Cornelius, Wayne A., Ann L. Craig, and Jonathan Fox, eds. Transforming StateSociety Relations in Mexico: The National Solidarity Strategy. San Diego: Center for U.S.-Mexican Studies, University of California, San Diego, 1994.

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Cornelius, Wayne A., and David Myhre, eds. The Transformation of Rural Mexico: Reforming the Ejido Sector. La Jolla: Center for U.S.-Mexican Studies, University of California, San Diego, 1998. Cornelius, Wayne A., Judith Gentleman, and Peter H. Smith, eds. Mexico’s Alternative Political Futures. San Diego: Center for U.S.-Mexican Studies, University of California, San Diego, 1989. Dahl, Robert A. Polyarchy: Participation and Opposition. New Haven: Yale University Press, 1971. Domínguez, Jorge I., and James A. McCann. Democratizing Mexico: Public Opinion and Electoral Choices. Baltimore, MD: Johns Hopkins University Press, 1996. Dresser, Denise. Neopopulist Solutions to Neoliberal Problems: Mexico’s National Solidarity Program. La Jolla, CA: Center for U.S.-Mexican Studies, University of California, San Diego, 1991. Edwards, Sebastian, Crisis and Reform In Latin America: From Despair to Hope. New York, N.Y.: Published for the World Bank by Oxford University Press, 1995. Espinosa Rugarcía, Amparo, and Enrique Cárdenas, eds. La nacionalización bancaria, 25 años después: la historia contada por sus protagonistas. 2 vols. México, DF: Centro de Estudios Espinosa Yglesias, 2008. FitzGerald, Valpy, and Rosemary Thorp, eds. Economic Doctrines In Latin America: Origins, Embedding and Evolution. Basingstoke: Palgrave Macmillan in association with St. Antony’s College, Oxford, 2005. Flores-Macías, Gustavo A. After Neoliberalism? The Left and Economic Reforms in Latin America. Oxford: Oxford University Press, 2012. Foweraker, Joe, and Ann L. Craig, eds. Popular Movements and Political Change in Mexico. Boulder, CO: L. Rienner Publishers, 1990. Foxley, Alejandro. Latin American Experiments in Neoconservative Economics. Berkeley: University of California Press, 1983. Garciadiego, Javier, Begoña Hernández, María del Rayo González, Érika Reta and Beatriz Zepeda, eds. El TLC día a día: crónica de una negociación. México: M.A. Porrúa Grupo Editorial, 1994. Garrido, Luis Javier. La ruptura: la corriente democrática del PRI. México, DF: Grijalbo, 1993. Gilbert, Dennis. “Rewriting History: Salinas, Zedillo and the 1992 Textbook Controversy.” Mexican Studies/Estudios Mexicanos 31, no. 2 (1997): 271–97. Gilly, Adolfo, ed. Cartas a Cuauhtémoc Cárdenas. México, DF: Ediciones Era, 1989. Gómez Tagle, Silvia. “’Electoral Reform and the Party System, 1977–90.” In Mexico: Dilemmas of Transition, edited by Neil Harvey, Chapter 2. London: Institute of Latin American Studies, University of London and British Academic Press, 1993. Gómez Tagle, Silvia. Insurgencia en los sindicatos electricistas. México, DF: El Colegio de México, 1980. González Casanova, Pablo. Democracy in Mexico. Translated by Danielle Salti. Oxford: Oxford University Press, 1970. González Gómez, Mauricio A. “Crisis and Economic Change in Mexico.” In México under Zedillo, edited by Susan Kaufman Purcell and Luis Rubio, 37–66. Boulder, CO: Lynne Rienner, 1998. González, Francisco E. Dual Transitions From Authoritarian Rule. Institutionalized Regimes in Chile and Mexico, 1970–2000. Baltimore: Johns Hopkins University Press, 2008.

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Haber, Stephen H., Armando Razo and Noel Maurer. The Politics of Property Rights: Political Instability, Credible Commitments, and Economic Growth In Mexico, 1876–1929. Cambridge and New York: Cambridge University Press, 2003. Haber, Stephen, Herbert S. Klein, Noel Maurer, and Kevin J. Middlebrook. Mexico Since 1980. Cambridge and New York: Cambridge University Press, 2008. Harvey, Neil. The Chiapas Rebellion: The Struggle for Land and Democracy. Durham, NC: Duke University Press, 1998. Hellman, Judith Adler. “Mexican Popular Movements, Clientelism and the Process of Democratization.” Latin American Perspectives 21, no. 2 (1994): 124–42. Hexter, J. H. Doing History. Bloomington and London: Indiana University Press, 1971. Janvry, Alain de, Marco Gonzalez-Navarro, and Elisabeth Sadoulet. “Are Land Reforms Granting Complete Property Rights Politically Risky? Electoral Outcomes of Mexico’s Certification Program.” Journal of Development Economics 110, (2014): 216–25. Kaufman, Robert R. “Stabilization and Adjustment in Argentina, Brazil and Mexico.” In Economic Crisis and Policy Choice: The Politics of Adjustment in Developing Countries, edited by Joan M. Nelson, 63–112. Princeton and Oxford: Princeton University Press, 1990. Knight, Alan. “Cárdenas and Echeverría: Two “Populist” Presidents Compared.” In Populism in Twentieth-Century Mexico: The Presidencies of Lázaro Cárdenas and Luis Echeverría, edited by Amelia M. Kiddle and María L.O. Muñoz, 15–37. Tucson: University of Arizona Press, 2010. Knight, Alan. “Crisis and the Great Depression in Latin America.” In Crises In Economic and Social History: A Comparative Perspective, edited by A.T. Brown, Andy Burn, and Rob Doherty, Chapter 1. Woodbridge: Boydell Press, 2015. Knight, Alan. “Panorama general de la Gran Depresión en América Latina.” In La Gran Depresión en América Latina, edited by Paulo Drinot and Alan Knight, Chapter 10. México: Fondo de Cultura Económica, 2015. Knight, Alan. “Salinas and Social Liberalism in Historical Context.” In Dismantling the Mexican State?, edited by Rob Aitken, Nikki Craske, and David E. Stansfield, 1–23. London: Palgrave Macmillan, 1996. Knight, Alan. “Solidarity: Historical Continuities and Contemporary Implications,” in Transforming State-Society Relations in Mexico: The National Solidarity Strategy, edited by Wayne A. Cornelius, Ann L. Craig, and Jonathan Fox, Chapter 2. San Diego: Center for U.S.-Mexican Studies, University of California, San Diego, 1994. Knight, Alan. “State Power and Political Stability in Mexico.” In Mexico: Dilemmas of Transition, edited by Neil Harvey, Chapter 1. London: Institute of Latin American Studies, University of London and British Academic Press, 1993. Knight, Alan. “The Mexican Developmental State, c.1920-c.1980.” In State and Nation-Making in Latin America and Spain: The Rise and Fall of the Developmental State, edited by Miguel Angel Centeno and Agustín E. Ferraro, 238–265. Cambridge and New York: Cambridge University Press, 2019. Knight, Alan. “The Myth of the Mexican Revolution.” Past & Present 209, no. 1 (2010): 223–73. Lawson, Chappell H., Building the Fourth Estate: Democratization and the Rise of a Free Press In Mexico. Berkeley: University of California Press, 2002.

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Loftus, Joseph E., Latin American Defense Expenditures, 1938–1965. Santa Monica, CA: RAND Corporation, 1968. Lomnitz, Larissa Adler de, and Marisol Pérez Lizaur. A Mexican Elite Family, 1820– 1980: Kinship, Class, and Culture. Translated by Cinna Lomnitz. Princeton, NJ: Princeton University Press, 1987. Luna, Matilde. “Business and Politics in Mexico.” In Dilemmas of Political Change in Mexico, edited by Kevin J. Middlebrook, 332–52. London and San Diego: Institute of Latin American Studies, University of London/Center for US-Mexican Studies, University of California, San Diego, 2004. Lustig, Nora. “The Mexican Peso Crisis: The Foreseeable and the Surprise.” Washington, DC: Brookings Institution, June 1995. Lusztig, Michael. The Limits of Protectionism: Building Coalitions for Free Trade. Pittsburgh: University of Pittsburgh Press, 2004. MacLeod, Dag. “Privatization and the Limits of State Autonomy in Mexico: Rethinking the Orthodox Paradox.” Latin American Perspectives 32, no. 4 (2005): 36–64. Maxfield, Sylvia. Governing Capital: International Finance and Mexican Politics. Ithaca, NY: Cornell University Press, 1990. McKibben, Cameron. “NAFTA and Drug Trafficking: Perpetuating Violence and the Illicit Supply Chain.” Council on Hemispheric Affairs, March 20, 2015. Middlebrook, Kevin J. The Paradox of Revolution: Labor, the State, and Authoritarianism in Mexico. Baltimore: Johns Hopkins University Press, 1995. Molinar Horcasitas, Juan, and Jeffrey Weldon. “Electoral Determinants and Consequences of National Solidarity.” In Transforming State-Society Relations in Mexico: The National Solidarity Strategy, edited by Wayne Cornelius, Ann Craig and Jonathan Fox, Chapter 7. La Jolla: Center for US-Mexican Studies, University of California, San Diego, 1994. Morris, Stephen D. Corruption & Politics in Contemporary Mexico. Tuscaloosa, AL: University of Alabama Press, 1991. O’Connor, James. The Fiscal Crisis of the State. New York: St. Martin’s Press, 1973. O’Donnell, Guillermo. “Introduction.” In Transitions From Authoritarian Rule. Latin America, edited by Guillermo O’Donnell, Philippe C. Schmitter and Laurence Whitehead: 3–18. Baltimore and London: The Johns Hopkins University Press, 1993. O’Toole, Gavin. The Reinvention of Mexico: National Ideology In a Neoliberal Era. Liverpool: Liverpool University Press, 2010. Otero, Gerardo. “Neoliberal Reform and Politics in Mexico: An Overview.” In Neoliberalism Revisited: Economic Restructuring and Mexico’s Political Future, edited by Gerardo Otero, Chapter 1. Boulder, CO: Westview Press, 1996. Reding, Andrew. “Mexico at a Crossroads: The 1988 Election and Beyond.” World Policy Journal 5, no. 4 (1988): 615–49. Rubio, Luis. “Coping with Political Change.” In México under Zedillo, edited by Susan Kaufman Purcell and Luis Rubio, 5–36. Boulder, CO: Lynne Rienner, 1998. Salinas de Gortari, Carlos. La “década perdida” 1995–2006: neoliberalismo y populismo en México. México, DF: Debate, 2008. Salinas de Gortari, Carlos. México: un paso difícil a la modernidad. Barcelona: Plaza & Janés Editores, 2000. Sanderson, Steven E. Agrarian Populism and the Mexican State: The Struggle for Land In Sonora. Berkeley: University of California Press, 1981.

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Schettino, Macario. Cien años de confusión: México en el siglo XX. México, DF: Taurus, 2007. Schmidt, Samuel. The Deterioration of the Mexican Presidency: The Years of Luis Echeverría. Tucson: University of Arizona Press, 1991. Scott, James C. Domination and the Arts of Resistance: Hidden Transcripts. New Haven: Yale University Press, 1990. Seligson, Mitchell, and Linda Stevenson. “Fading Memories of the Revolution: Is Stability Eroding in Mexico?” In Polling for Democracy: Public Opinion and Political Liberalization In Mexico, edited by Roderic Ai Camp, Chapter 6. Wilmington, DE: SR Books, 1996. Smith, Peter H. Labyrinths of Power: Political Recruitment in Twentieth-Century Mexico. Princeton, NJ: Princeton University Press, 1979. Székely, Gabriel. “Mexico’s International Strategy: Looking East and North.” In Japan, the United States, and Latin America, edited by Barbara Stallings and Gabriel Szekely, 149–70. London: Palgrave Macmillan, 1993. Székely, Miguel. The Economics of Poverty, Inequality and Wealth Accumulation In Mexico. Hampshire: Macmillan, 1998. Trejo, Guillermo, and Claudio Jones. “Political dilemmas of welfare reform: Poverty and inequality in Mexico.” In Mexico under Zedillo, edited by Susan Kaufman Purcell and Luis Rubio, 67–100. Boulder, CO: Lynne Rienner, 1998. Trejo, Guillermo, and Sandra Ley. “Why Did Drug Cartels Go to War in Mexico? Subnational Politics, the Breakdown of Criminal Protection and the Onset of LargeScale Violence.” Comparative Political Studies 51, no. 7 (2012): 900–37. Trelles, Alejandro, and Miguel Carreras, “Bullets and Votes: Violence and Electoral Politics in Mexico.” Journal of Politics in Latin America 4, no. 2 (2012): 89–123. Ugalde, Luis Carlos. The Mexican Congress: Old Player, New Power. Washington, DC: CSIS Press, 2000. Urquidi, Víctor L. Otro siglo perdido: las políticas de desarrollo en América Latina, 1930–2005. México, DF: Colegio de México/Fondo de Cultura Económica, 2005. Van Wijnberger, Sweder. “Mexico and the Brady Plan.” Economic Policy 6, no. 12 (1991): 13–56. Villareal, M. Angeles. “NAFTA and the Mexican Economy.” Washington, DC: Congressional Research Service, June 3, 2010. https://sgp.fas.org/crs/row/RL34733.pdf. Vizcaíno, Fernando, El nacionalismo mexicano en los tiempos de la globalización y el multiculturalismo. México: Universidad Nacional Autónoma de México, 2004. Walker, Louise E. Waking from the Dream: Mexico’s Middle Classes after 1968. Stanford, CA: Stanford University Press, 2013. Womack, John. “Chiapas, the Bishop of San Cristóbal, and the Zapatista Revolt.” In Rebellion in Chiapas: An Historical Reader, edited by John Womack, 3–59. New York: New Press, 1999. Wood, Duncan, and Jeremy Martin. “Of Paradigm Shifts and Political Conflicts: The History of Mexico’s Second Energy Revolution.” In Mexico’s New Energy Reform, edited by Duncan Wood, 17–35. Washington, DC: Mexico Institute, Woodrow Wilson International Center for Scholars, 2018. Zermeño, Sergio. La sociedad derrotada: el desorden mexicano del fin de siglo. México, DF: Siglo Veintiuno Editores, 1996.

4 Rise of the Neoliberal State in Spain? Fiscal Shortcomings of a Popular Narrative Lars Döpking

4.1  introduction Neoliberalism, as presented in the writings of central theorists and their commentators, is not anti-state. Although it aims ideologically to depoliticize economic decisions and reach them based exclusively on market mechanisms, in principle, this does not mean that the state is dismantled; rather, a specific model of statehood is installed.1 As Quinn Slobodian notes, “the real focus of neoliberal proposals is not on the market per se but on redesigning states, laws and other institutions to protect the market.”2 Therefore, the neoliberal model of statehood, like any other, refers to a specific fiscal order. This order determines how financial resources and other goods are provided for the activities that are still required of an “institutionally organized political enterprise (Anstaltsbetrieb).”3 In contrast to the liberal state of the nineteenth century, which was financed by customs duties, indirect taxes, and domains,4 and the developmental state of the twentieth century, which (again) tried to access the incomes of its citizens directly and taxed capital extensively,5 the neoliberal state – at least according to prevalent views – is characterized by policies aimed at containing inflation and the market-distorting effects of progressive taxation. To finance its expenditures, it relies on low corporate, flat income, and value-added taxes, all of which it regards as technically sophisticated taxes that 1

2 3 4 5

Centeno and Cohen, “The Arc of Neoliberalism”; Plant, The Neoliberal State; Amable, “Morals and politics”; Peck, “Neoliberalizing States”; Blyth, Austerity; Prasad, The Politics of Free Markets; Biebricher, The Political Theory of Neoliberalism, 33–78. Slobodian, Globalists, 6. Weber, Economy and Society, 135–36; 322. Cf. Swedberg, Max Weber, 59–70. Ferraro and Herrera, “Friends’ Tax.” Centeno and Ferraro, “Authoritarism, Democracy and Development”; Caldentey, “The Concept and Evolution”; Silva, “The Chilean Developmental State.”

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broaden its tax base without harming its economic competitiveness.6 These measures are deeply anchored in the neoliberal project. In particular, tax cuts are expected to lead to further reforms that will finally abolish the Keynesian welfare state.7 Whether as a political strategy or an ideology, neoliberalism therefore never seems to thrive without a fundamental reorganization of fiscal orders – it theoretically presupposes the “dethronement of politics.”8 Inspired by this notion of neoliberalism, sociologists, economists, and political scientists have put forward many interpretations that decipher recent developments in political economies and states as processes of neoliberalization.9 What is striking about much of this work is, independent of whether the authors address the capitalist world in general or the Spanish case in particular, they assume that neoliberalization is a process that occurs simultaneously in many places, albeit in different forms. Furthermore, tax policy is regarded as a central characteristic of neoliberalism. It would play a major role in opening up the path to neoliberal dystopia. Wolfgang Streeck, for example, identifies the tax state’s functional problem – “namely, its tendency to fall short in extracting from a society of private owners the means it requires to perform its growing tasks” – that purportedly promoted the mixed market economy’s transformation. Fernando López-Castellano and Fernando GarcíaQuero describe Spain as a laboratory of neoliberalism, in which the economic capacities of the Spanish state were dismantled.10 These authors are aligned with a broad literature that has interpreted the history of Spanish democracy through the lens of neoliberalization theory. Unsurprisingly, the economic program of the PSOE has consistently been described as a neoliberal project since the mid-1990s. This perspective has in turn informed the argument that a “collapse of concertation” at the end of the 1980s caused Spain’s transition from social democracy to neoliberalism. In the same vein, some commentators have detected paths that lead directly from Franquismo to some form of “embedded neoliberalism.” In contrast, others point out that neoliberal policies went hand in hand with an expanding welfare state.11 More recently, and in the wake of the protests against the austerity measures after the so-called euro crisis, a radical version of the 6

Buggeln, Dauton and Nützenadel, “The Political Economy of Public Finance”; Streeck, “A New Regime.” 7 Gamble, “Neoliberalism and fiscal conservatism,” 59; Prasad, Starving the Beast. 8 Harvey, A Brief History of Neoliberalism, 36; Prasad, The Politics of Free Markets, 113–16; Jones, Masters of the Universe, 242–71. 9 Madariaga, Neoliberal Resilience; Crouch, The Strange Non-death of Neoliberalism; Brown, Undoing the Demos; Baccaro and Howell, Trajectories of Neoliberal Transformation. 10 Streeck, Buying Time, 63; 70–75; López-Castellano and García-Quero, “The Euro System,” 179–83. 11 Holman, Integrating Southern Europe, 80–84; Royo, From Social Democracy to Neoliberalism, 214–26; McVeigh, “Embedding Neoliberalism”; Encarnación, Spanish Politics, 60, 118–27; Ban, Ruling Ideas.

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neoliberalization narrative has gained traction. While many protestors – indignados and public service workers alike – have criticized the PSOE’s neoliberal turn,12 it also seems evident to academic observers that a “neoliberal critical juncture” has been reached in Spain.13 Trade unionists even refer to “the nightmare of Mediterranean neoliberalism.”14 In light of this literature, it is impossible to ignore that, in the course of the last thirty years, the Spanish state has implemented various neoliberal policies, in particular labor market reforms to commodify the workforce. But the extent to which these programs have given rise to a neoliberal state is an entirely different question, one that is deeply connected to fiscal sociological considerations. Interestingly enough, recent analyses have failed to tackle this question by considering taxation issues in more detail. The reluctance to address the role of taxation in Spain is conspicuous in so far as recent work in the fields of fiscal sociology, fiscal historiography, and comparative political economy has laid out arguments contesting the descriptive and explanatory potential of the concept of neoliberalism in Western Europe and the United States. From a historical perspective, Martin Daunton points out that even the tax reforms of the Thatcher government – which are inextricably linked to the narrative of profound neoliberalization – were based on the Meade Report. The report was prepared for Harold Wilson’s third Labor government and therefore also included non-neoliberal policy proposals.15 Regarding the Reagan tax cuts of the 1980s, Monica Prasad argues that the Republican Party’s strategic considerations played a more critical role in shaping its tax policy than a coherent neoliberal ideology.16 Furthermore, Marc Buggeln, in his comparative study of the United States, Great Britain, Germany, Sweden, and France, concludes that although there was pressure to change national tax systems, institutional traditions absorbed these pressures in many different ways.17 In a similar vein, Elliot Brownlee, Gisela Hürlimann, and Eisaku Ide suggest that the Worlds of Taxation first identified by Guy Peters still exist.18 Philipp Genschel and Laura Seelkopf also reach a similar conclusion. They deplore the fact that critics of neoliberalism, in particular, prioritize convergence over divergence when interpreting macroeconomic data and argue that mainstream political economists tend to overestimate the economic pressure on states, which has led them to postulate the rise of the (­neoliberal) competition state.19 12 13 14 15 16 17 18 19

Romanos, “Late Neoliberalism,” 131–67. Porta et al., Movement Parties, 46–49. Cf. Banyuls and Recio, “Spain.” Daunton, “The Tax Reforms,” 34–37. Prasad, Starving the Beast, 19–54. Buggeln, “Taxation in the 1980s,” 125. Brownlee, Hürlimann and Ide, “The Political Economy of Taxing,” 13; Peters, The Politics of Taxation, 225–45. Genschel and Seelkopf, “The Competition State,” 250.

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This body of historical and comparative literature casts grave doubts on the notion that Spain’s fiscal history followed the leitmotif of neoliberalization and raises the question of why such a process purportedly occurred there, of all places. If specific tax and fiscal politics are indeed irreplaceable components of neoliberalism, then I would contend that one should be cautious about subsuming the Spanish state’s recent history under the narrative of the rise of neoliberal statehood. Furthermore, the absence of specific tax policies linked to neoliberalism may indicate that the model’s heuristic usefulness is limited. This chapter addresses these problems by interrogating the connection between neoliberalism and fiscal policies with a comparison of historical developments in Latin America and Spain. It explores the extent to which the neoliberal statehood model was implemented in Spain after 1990 by reviewing descriptive macroeconomic data and comparing the developments in Spain to those in Latin America and, in particular, Chile. It concludes that, if the concept of neoliberalism has any analytical value, it does not appear to offer convincing causal explanations for the development of the fiscal orders in both Latin America and Spain. The chapter lays out three arguments: First, a specific tax and fiscal policy is a central “proposition” of neoliberalism. Second, Spain’s post-1990 fiscal history does not follow neoliberal patterns of interpretation. Third, in the last quarter of the twentieth century, fiscal and tax policy policies in Latin America and, in particular in Chile, “the birthplace of neoliberalism,”20 were marked by neoliberal characteristics that cannot be detected in Spain. The chapter is structured as follows: The second section reviews the fiscal, monetary, and tax policy components associated with the model of the neoliberal state. Based on these categories, the third section examines the extent and significance of the process of neoliberalization in Spain. Because the findings contradict the theoretical model, the fourth section retraces the historical trajectory of the Spanish tax state, highlighting its institutional resilience. The fifth expands the analysis by comparing Spain and Latin America in general, and Chile and Spain in particular, from a fiscal-sociological perspective. Referring to the results of this analysis, the conclusion suggests that neoliberal narratives about the Spanish state offer a misleading interpretation.

4.2  neoliberalism

and neoliberalization

Any attempt to comprehend neoliberalism as an ideology and extract its central “propositions” from its protagonists’ writings inevitably leads one – despite the many schools and “varieties of neoliberalism” – to recognize their widespread consensus regarding tax and fiscal policies.21 After reviewing 20 21

See Patricio Silva’s contribution to this volume. Plant, The Neoliberal State; Biebricher, The Political Theory of Neoliberalism. For the ­underlying concept of ideology see Freeden, “European Liberalisms.”

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neoliberals’ constant emphasis on the role of taxes and public finances (4.2.1), this section will differentiate between the masterminds of neoliberalism and its practical implementation and reconstruct various attempts to gauge the extent of neoliberalization (4.2.2). 4.2.1  Neoliberalism: A Tale of Tax and Liberty Whether the concept of neoliberalism lends itself to grasp the political and economic theories associated with it as an “ideology” is a matter of controversy. Michael Freeden argues that the term neoliberalism at best indicates the degeneration of the already fluid ideology of liberalism. According to Freeden, neoliberalism had so little in common with classical or new liberalism that its central representatives, such as Friedrich A. von Hayek, Milton Friedman, or James M. Buchanan, would have to be excluded from the liberal family.22 Their “emaciated liberalism” is “artificially detached from many of the values and political ends it needed to promote.”23 If we (deliberately but indulgently) ignore these doubts and instead take note of the fact that these theorists nevertheless seem to have something in common, it is reasonable to assume that one decisive common ground is to be found in their attitude toward the state and its taxes. In contrast to classical liberals such as John Stuart Mill or representatives of new liberalism such as Leonard T. Hobhouse, who do not discuss taxes and freedom as fundamentally antagonistic,24 neoliberal theorists are in every sense of the word opponents of distributive fiscal and tax policy instruments. Their argument goes so far as to identify fundamental contradictions in the fiscal order of contemporary states. Instead of guaranteeing freedom, they contend, progressive taxation driven by Keynesianism and fiscal policies based on ideals of equity continuously undermines and jeopardizes the foundation of a free society, which is equated with the market. To cite just a few examples, for Hayek, the Keynesian preference for full employment over monetary stability threatens the basic order of a liberal society: “governmental monetary monopoly […] has without exception been abused to defraud and deceive the citizens.” Furthermore, Hayek advocates excluding tax policy from democratic, for example, majoritarian, rule, because the expected adoption of progressive taxation by the majority of non-haves would help to “perpetuate existing inequalities and eliminate the most important compensation for this inequality which is inevitable in a free enterprise society.”25

22 23 24 25

They should instead be assigned to “economic libertarianism”; see Gamble, “Economic Libertarianism.” Freeden, “European Liberalisms,” 24. Mill, Essays on Economics, 702; Hobhouse, Liberalism, 12; 97; Ekelund and Walker, “J. S. Mill on the Income Tax.” Hayek, The Political Order, 57; Hayek, The Constitution of Liberty, 448; Spicer, “On Friedrich Hayek.”

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He even argues “that the whole principle of progressive taxation is, by its very nature, pernicious, an error which, for various reasons, leads almost inevitably to the destruction of the free-market system.”26 Friedmann presupposes not only “tax avoidance as an essential prerequisite for economic growth” but generally conceives of taxation as “diametrically opposed to personal freedom.”27 Buchanan seems convinced of having identified a dangerous social law. Because governments in principle lack a long-term perspective and provide public goods at disproportionately high levels out of short-term opportunism, they always fall into the “high-tax trap” and create an “inverse relationship between tax rates and total tax revenues.” This constellation should be rejected by all rational actors because, first, it paralyzes economic growth and, second, reduces tax revenues rather than increasing them.28 One can find further examples of such statements in all schools of neoliberalism. Whether in Chicago, Virginia, Vienna, or Geneva: neoliberals everywhere are united in their aversion to taxes and inflation. However, the neoliberal project is also characterized by the fact that, despite these harsh criticisms of current tax and fiscal politics, there is no demand that the state is abolished completely. Instead, neoliberals advocate restricting the democratic legislative horizon and excluding specific fiscal topics from the political realm. As Raymond Plant points out, they often discuss tax and monetary policy issues solely from the perspective of legality, yet rarely as policies that can vary, depending on political majorities.29 To exclude the influence of popular politics on tax policy, neoliberals devise different strategies – and the encasement of democracies, in particular, enjoys broad support. Quinn Slobodian points out that the Geneva School of neoliberalism dissolves the notion of congruence between national economies and nation-states and focuses on how to design institutions – such as trade agreements, legal systems, or the international monetary system – that are supposed to protect the single world economy from the dangers of national democracies.30 The Virginia School, in contrast, pursues an encasement of democracy at the national level.31 Although there are further differences among the various schools of neoliberal ideology concerning concrete measures, its protagonists are united by their desire to eliminate the marketdistorting effects of fiscal policy and taxation. They hold that the dominium (or catallaxy) of private property claims must always be isolated from the imperium of secular rule.32

26 27 28 29 30 31 32

Hayek, “Die Ungerechtigkeit der Steuerprogression,” 509, my translation. Friedman, Capitalism and Freedom, 170, 172. Brennan and Buchanan, The Power to Tax, 86. Plant, The Neoliberal State, 173–92. Slobodian, Globalists, 5–16, 121–45. MacLean, Democracy in Chains; Buchanan, The Limits of Liberty, 53–73. Slobodian, Globalists, 13–16; Cf. Schmitt, Der Nomos.

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Overall, the dismantling of the tax state, which includes the rejection of redistributive taxation and the call for implementing taxes that are as neutral as possible, as well as the critique of expansive fiscal and monetary policy, that is, policies that promote inflation and increases in government debt, can be defined as the key elements of neoliberalism. These motifs run through the literature and are even present in marginal works. When Robert Nozick assails taxation as forced labor or Ludwig von Mises equates the “power to tax” with the “power to destroy” and discusses taxation under the title “interference by taxation,” this may sound more or less radical, but it readily fits the furniture of the neoliberal kitchen.33 At the same time, opposing views are completely absent. No representative of neoliberalism calls for higher taxation or fiscal interventions in the distribution of wealth within society; such measures are rather perceived as a communist threat and the end of individual freedom. To stick with a metaphor of Michael Freeden: the strong demand for the dismantling of the redistributive tax state is like a stove. It tells us that we are definitely in the neoliberal kitchen, or at least on the neoliberal terrain. Consequently, a potent tax state fundamentally contradicts neoliberal ideology: where it flourishes, neoliberal utopia withers away. 4.2.2  Neoliberalization: Symptoms of an Ongoing Process? Given this broad consensus, it is hardly surprising that scholars of comparative political economy have analyzed the ongoing neoliberalization in various states by consulting the extensive and well-prepared data sets compiled by governments’ treasury departments.34 Rather than defining neoliberalism as an ideology, these researchers prefer perceiving it as a paradigm or a regime that is manifested in specific tax and fiscal policies.35 In research practice, this differentiation has the decisive consequence that empirically observable instruments or policies are the most visible expression of a paradigm or regime.36 Where there is smoke, there was at some point fire. This useful simplification has inspired a whole series of works. Monica Prasad, like Wolfgang Streeck, suggests that the quantity and composition of tax revenues should reflect the retreat of the Keynesian post-war order, the rise of neoliberalism, and the introduction of free-market policies. Both argue that not only decreasing but also stagnating tax rates can indicate such a process. In the case of stagnating tax rates, the state might not be able to keep pace with the rising reproduction costs of capitalist accumulation.37 33 34 35 36 37

Nozick, Anarchy, State, and Utopia; Mises, A Treatise, 733, 730–35. Simmons, Dobbin and Garrett, “Introduction”; Swank, “Tax Policy”; Widmaier, Economic Ideas. Hall, “Policy Paradigms,” 279; Pierson, “From Expansion to Austerity,” 57. Streeck, “A New Regime”; Döpking, “Fiskalregime.” Prasad, The Politics of Free Markets, 10–14; Streeck, Buying Time, 47–72.

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For Streeck, whose interventions into current debates highlight the role of the tax state, national debt, the containment of inflation, and long-term interest rates are also relevant variables. They serve as a means of heightening the pressure of the Marktvolk on the Staatsvolk to neoliberalize other areas of the state’s activity, such as institutions of the welfare state. Genschel and Seelkopf even go one step further by testing the “competition state” hypothesis, i.e., the idea that there is a tendency for a specific model of statehood to spread.38 A state that has undergone such a transformation would compete with its peers for foreign investments, in hopes that it would bring growth and prosperity to its national economy. And because a neoliberal state is essentially no longer a Keynesian state, it curbs inflation, avoids debt, and pursues a neutral tax policy that interferes with the market distribution of income as little as possible and thus works under the assumption that it offers incentives for innovation and investment. Genschel and Seelkopf propose that the extent of such a transformation can be gauged by analyzing the development of corporate tax rates, total tax revenue, and the proportion of corporate taxes levied in relation to a state’s gross domestic product (GDP). In a further study, Hakelberg and Rixen address the question of whether neoliberalism is still spreading by identifying a clear set of neoliberal tax policies: Neoliberal tax systems feature low rates and uniform structures. The tax burden on capital owners, as reflected in taxes on dividends, interest, and top incomes, is small to provide incentives for saving and investment. In contrast, indirect taxes on consumption may be increased to achieve uniformity. The overall aim is a tax system interfering as little as possible with the “natural” working of the market.39

Other authors also refer to the decreasing overall progressivity of the tax system, its (diminishing) effects on the Gini coefficient, or the existence and level of wealth or inheritance taxes as typical elements of neoliberal tax policies.40 Independent of the variables cited, researchers are in agreement that the extent of neoliberalization in a specific state can only be determined comparatively; since 1980, the United Kingdom or the United States usually serve as yardsticks for such comparisons. All in all, clear criteria for assessing a state’s neoliberalization emerge from this literature. In the realm of fiscal policy, measures are taken to curb the inflation rate and reduce government debt. From a tax policy point of view, neoliberalization involves a shift toward indirect taxes, the significant reduction of the top marginal income tax rate and of taxes on capital and corporate profits, and measures taken to ensure that the overall tax-to-GDP ratio decreases or 38 39 40

Genschel and Seelkopf, “The Competition State,” 239–40. Hakelberg and Rixen, “Is neoliberalism still spreading?” 4. Prasad and Deng, “Taxation”; Swank, “Tax Policy”; Ganghof, The Politics of Income Taxation.

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at least stagnates. Neoliberalization lowers the progressivity of the tax system and simultaneously restricts fiscal intervention in market processes.

4.3  the

spanish tax state after the era

of the developmental state : ongoing processes of neoliberalization ?

Whether Spain should be regarded as a prime example of a country that has systematically and tenaciously pursued a course of neoliberalization is controversial. On the one hand, some authors perceive the country’s recent development as the archetype of supranationally enforced neoliberalization triggered by the Maastricht Treaty of 1992:41 Strict budgetary rules and membership in the European Monetary Union have had negative impacts, both in quantitative and qualitative terms, on the Spanish labor market, whereas the competitive center of Europe with its export-oriented companies has benefited disproportionately from the common market. Furthermore, due to the so-called euro crisis, the Spanish state has disarmed itself fiscally and in part relinquished its powers to use taxation as a public policy tool, which is why the country’s public finances are plagued by serious troubles.42 According to the IMF’s Index of Competition, Spain has indeed undergone a long-term process of liberalization, in which, since 1978, it liberalized access to its capital and financial markets and to agricultural and key industries, thus increasingly exposing itself to international competition.43 Therefore, as López-Castellano and García-Quero argue, the Spanish state should be conceptualized as a laboratory of neoliberalism, in which the feasibility of neoliberal techniques is tested and improved. On the other hand, some authors discuss the Spanish case as an example of “embedded” neoliberalism.44 Following Ban’s investigation of the introduction of neoliberal ideas into the Spanish context since the 1970s, the late Franco regime, like the emerging PSOE, was orientated toward a scaled-down version of neoliberalism imported particularly from Germany’s Social Democratic Party. In Ban’s opinion, this form of localized neoliberalism can be described as “embedded” because Spanish economists and politicians, from the central bank to the socialist party apparatus, never believed in the natural upward mobility of low-income groups espoused by prominent neoliberal figures. Instead, they were convinced that the welfare state and progressive tax policies 41

42 43 44

López-Castellano and García-Quero, “The Euro System,” 174; Buendía, “A Perfect Storm,” 423–25. For similar, albeit even harsher critics of European integration, see Streeck, Buying Time; Blyth, Austerity; Hermann, “Neoliberalism in the European Union”. López-Castellano and García-Quero, “The Euro System,” 179. Ostry, Prati, and Spilimbergo, Structural Reforms; Royo, “Lessons from Spain and Portugal,” 29–36. Ban, Ruling Ideas; McVeigh, “Embedding Neoliberalism.”

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had to mediate the market distribution of income. The consensus around these ideas was broad. Thus, even the conservative governments of Aznar and Rajoy never dared to interfere with progressive taxation as the central pillar of “embedded neoliberalism.” While the priority of budgetary stability, the privatization of state industries, and the commodification of labor corresponded to the neoliberal paradigm, tax policy, in contrast, remained progressive.45 From the 1980s until the great recession, Spain formed the counter-thesis to a British, Eastern European, or US model of neoliberalization. Weighing up these two arguments and relating them to macroeconomic data suggests that one should go one step further than Ban. If we apply the criteria outlined above, there is no evidence of a stringent process of neoliberalization in Spain. First, the ratio of tax revenues to GDP rose from 31.6 to 36.4% between 1990 and 2007. No shrinking or stagnation can be observed, especially since this ratio has even doubled since the end of the Franco regime. And while it fell to 29.7% in the wake of the Spanish real estate crisis of 2008, its growth has resumed since then. By 2018, it reached 34.4% and was thus higher than in 1990. Even though Spain’s tax-to-GDP ratio places the country in midfield among OECD members and in the lower half of the eurozone group, its development reflects an expansion of the Spanish state’s extractive and economic capacity rather than the erosion suggested by neoliberalization theory and literature.46 Second, the structure of tax revenue also does not meet the expectations of neoliberal provenance. After its peak in 1999 (30.64% of total revenue), the share of indirect taxes steadily fell to 25.5% in 2007, before slowly returning to the value of the early 1990s. For a long time, Spain has been at the bottom of the EU 28 with its indirect taxation share. Nowadays, taxes on goods and services have gained more importance, but their share is still not comparable to the figures for Portugal, Greece, or Eastern Europe.47 Contrary to these countries, the Spanish treasury relies on extensive direct taxation and social security contributions. During the period under investigation, even revenue from property taxation increased its share from 5.5% in 1990 to 8.95% of total revenue in 2007; albeit this has to be attributed to the real estate bubble that burst a short time later. Furthermore, the importance of income taxes remains constant over the entire period, with slight losses after the millennium turn. On average, income taxes make up around 22% of total revenue. Finally, the share of corporate taxes almost tripled between 1994 and 2007, exceeding the OECD average in this period. Before the real estate and construction crisis, corporate taxes were responsible for 12.9% of total revenue. From 2008 on, the ratio decreased, and in 2017 amounted to 6.9% of total revenue, placing Spain in the lower midfield of the EU 28. Figure 4.1 summarizes these 45 46 47

Ban, Ruling Ideas, 47, 58–60, 185, 203. López-Castellano and García-Quero, “The Euro System,” 180. Eurostat, Taxation Trends; Hernández de Cos and López, “Tax Structure,” 26.

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40% 35% 30% 25% 20% 15% 10% 5%

19 7 19 0 72 19 7 19 4 7 19 6 78 19 8 19 0 8 19 2 8 19 4 8 19 6 8 19 8 9 19 0 9 19 2 9 19 4 9 19 6 9 20 8 0 20 0 0 20 2 0 20 4 0 20 6 08 20 1 20 0 12 20 1 20 4 1 20 6 18

%

Tax on Personal Income

Tax on Corporate Proftis

Tax on Property

Social Security Contributions

Tax on Goods and Services

figure 4.1  Structure of Spanish tax revenue as share of GDP, Central Government, 1990–2017. Source: OECD

developments and shows how stable the tax revenue structure has remained since the 1990s. Third, the development of the Spanish fiscal order, i.e., its legal institutions, reinforces distrust of the narrative about massive neoliberalization. Although neoliberalization theory would lead us to expect a stringent rollback of progressive taxation, the Spanish tax system’s overall progressivity in fact increased during the period under investigation. While democratization did not bring redistribution, European integration somehow did. In 1990, the Gini index increased after accounting for taxation effects – as it did in 1970. In 2014, the index decreased, thus equalizing income distribution only through taxation – an effect observable even if we use other measures, such as the P90/ P10 ratio.48 This phenomenon is rather surprising because the development of top tax rates suggests a different dynamic: the value-added tax standard rate rose steadily, from 12% in 1990 to 21% in 2020. Simultaneously, the personal income tax rate fell from 56% to 45%; capital gains were excluded from its tax base in 2000 and subsequently subjected to continuously lower tax rates. Finally, although the corporate tax rate remained stable from the mid-1990s until the great recession, it subsequently fell and now stands at 25%, 10% less 48

Torregrosa Hetland, “Limits to Redistribution,” 325–26; “Income, consumption and wealth inequality,” 361–64.

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152 60% 50% 40% 30% 20%

0%

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

10%

VAT Standard Rate

Corporate Tax Rate

Top Income Tax Rate

Capitals Gains Top Tax Rate

figure 4.2  Top tax rates in Spain, 1990–2017, Source: Eurostat.

than in 1990. But in contrast to these tendencies, the Spanish state is one of the few states in the world that levies an annual wealth tax, which was implemented in 1977. In the interim, the wealth tax base was eroded, before the tax was abolished due to efficiency and fraud issues in 2008 and then suddenly reintroduced in 2011. It is levied on the subnational level. Given that there is probably no fiscal institution that neoliberals oppose more strongly, this was an unexpected turn of events (Figure 4.2).49 To make sense of this rather contradictory development, we have to take a closer look at the tax state’s legal institutions and how they have changed over time. Because this chapter focuses on whether the tax system was subject to a specific dynamic, we can limit ourselves here to the three taxes that indicate neoliberalization: value-added taxes (VAT), personal income taxes, and corporate taxes. The Spanish treasury increased the VAT rate in small steps during the 1990s, from 12% in 1990 to 15% in 1992 and 16% in 1995. It remained at this level until 2010 when it was set at 18% and finally reached its current level of 21% in 2012. But in this period, a critical reform took place that is invisible if we consider only the standard rate.50 In 1993, Spain, like most European countries, abolished the higher VAT rate for luxury products. But a super-reduced rate of 3% was introduced simultaneously and raised to 4% two years later. 49

50

Pablos Escobar, “Personal Wealth Taxes”; Durán-Cabré, Esteller-Moré and Mas-Montserrat, “Behavioural Responses,” 4–8; Alvaredo and Saez, “Income and wealth concentration,” 1157–60. Taxud and European Commission, “VAT rates,” 18.

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Today, this rate still applies for medical supplies, books, and most foodstuffs, although not for beverages or meat, which are taxed at the regular reduced rate of 10%. The super-reduced rate has not changed since 1995. As a result, within the EU 27, only Luxembourg citizens pay less tax than their Spanish counterparts for their groceries. German citizens, for example, have to pay VAT rates of between 7 and 19%, and people in Denmark even pay 25% on every vegetable they buy. Accounting for the fact that lower-income percentiles save less and spent a large part of their disposable income on daily consumption items, one has to conclude that the Spanish system of indirect taxation is more progressive than the standard VAT rate seems to suggest. Moreover, the standard rate is still on par with the European median. And except for Luxemburg, every other EU state with a lower standard rate than Spain taxes daily consumption more heavily. Furthermore, personal income tax would seem to show signs of a similar neoliberalization dynamic. Its top marginal rate remained stable until José María Aznar took power in 1996, after which it was lowered in a series of reforms. First, the Aznar administration decreased the top marginal personal income tax rate from 56% to 48% in 1998. Later, the Zapatero government made further reductions in 2002 (45%) and 2007 (43%). Subsequently, there was another change in income tax policy. In 2012, Mariano Rajoy’s conservative administration raised the top income tax rate to 52% for a short period as part of its countermeasures to the so-called euro crisis. It was later lowered to 45% and now lies, at 43.5% in 2020, in the lower midfield in Europe. But how exactly does a falling top marginal income tax rate relate to the tax system’s increasing progressivity? To answer this question, we have to once again scrutinize the tax law more closely. In 1990, the Spanish tax system knew sixteen tax brackets. Today, five are left. But what appears to be and is often regarded as a neoliberal cutback of progressive taxation is actually the opposite.51 The 1998 income tax reform not only reduced the top marginal tax rate but also decreased the income threshold for the highest tax bracket and increased the income threshold for the declaration of income threefold. By creating a “vital minimum” that the state could not tax at all, the conservative government “exempted more than five and a half million taxpayers from having to file a tax return.”52 Four years later, the next tax reform added additional income allowances for children or the disabled and lowered the minimum tax rate to 15%.53 Later reforms, especially those enacted between 2008 and 2013, followed the path already taken and steadily enhanced the tax system’s overall progressivity.54 Therefore, the small decreases in income tax revenue after 1998 must not be interpreted as a sign of neoliberalization. They indicate quite the opposite. 51 52 53 54

Buendia, “A Perfect Storm,” 429. Jordán and Sanz-Sanz, “Personal Income Taxation,” 167. Jordán and Sanz-Sanz, “Personal Income Taxation,” 165–70. Martí and Pérez, “Spanish Public Finances,” 544–48.

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Finally, the corporate tax rate proved to be stable until the financial crisis. In 2007, Raquel Paredes Gómez, after reviewing the increasing importance of corporate taxes for the Spanish treasury, even recommended “a reduction of the general tax rate by no less than two points” because Spain had fallen significantly behind comparable rates in Europe and thus might have been at a competitive disadvantage.55 The tax rate indeed dropped to 30% in 2008 and 25% in 2016 but is still above the EU average of 22.5%. And although this could be considered evidence of a neoliberalization dynamic, one should not overlook that, in 2019, Spain still had the second-highest effective tax rate on large corporations in the non-financial sector in the EU. The EU average rate was 19.7%; the Spanish state ones was 31.4%. In addition, Spain had already implemented legislative measures against base erosion and profit shifting. It ranks 28th out of 36 in the Tax Foundations International Tax Competitiveness Index and is 22nd out of 70 on the tax justice network’s corporate tax haven index.56 Spain is thus hardly a neoliberal utopia. However, one should not conclude that the Spanish democracy gave birth to a particularly progressive tax state. That was certainly not the case. But the institutional dynamic at its core and the incremental changes one can observe did not lead to drift, conversion, layering, or displacement of the tax state in the sense neoliberalization theory would suggest.57 In the instance of all three institutions, the dynamic was more complex and often indicated quite the opposite. Fourth, a steadily pursued, moderate fiscal and monetary policy accompanied the long-term stability of the Spanish consensus on tax policy. As shown in Figure 4.3, the Spanish central bank succeeded in further reducing the inflation rate before Spain entered the monetary union. Since then, despite robust economic growth, the inflation rate only rose above 4% in 2008; in 2009 and from 2014 to 2016, the price trends were deflationary. The Spanish central bank thus carried on with its earlier policy and curbed inflation from 2008 on which also meant that the Spanish treasury abandoned the previously prevalent public financing techniques based on seignorage and financial ­repression.58 Moreover, the government maintained a restrictive budgetary stance. Although the Spanish state’s general government debt ranked seventh within the EU in 2019 at 117.3% of GDP, this should not be interpreted as an expression of a long-standing “Southern mentality.” It is a recent phenomenon. By 2007, the Spanish state had reduced its general government debt to 42.4% – from 74.6% in 1996 – not least through household surpluses that were reached between 2005 and 2007. It was only between 2008 and 2012, 55 56 57 58

Paredes Gómez, “The Evolving Role.” European Commission, “Effective Tax Rates”; Tax Foundation, “2020 International Tax”; Tax Justice Network, “Corporate Tax Haven Index.” Anghel et al., “Income, consumption and wealth inequality,” 360–4. Boix, Political Parties; Battilossi, Escario and Foreman-Peck, “Economic Policy”; Battilossi, “Structural Fiscal Imbalances.”

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20.00% 15.00% 10.00%

0.00% –5.00%

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

5.00%

–10.00% –15.00% Inflation, Annual Growth Rate (%)

General Government Deficit (%)

Long-Term Interest Rates (% per annum)

Annual GDP Growth (%)

figure 4.3 Spanish fiscal and monetary policy, central indicators, 1990–2017. Source: OECD

in the context of the financial crisis, that new deficits absorbed about 10% of the country’s GDP annually. From 2013 on, the rising deficit curve slowly flattened out, and in 2019 new obligations amounted to only 2.9% of the GDP. Finally, the deficit’s dramatic increase during the financial crisis was also due to rising interest rates. By the end of the century, the interest rate on ten-year Spanish government bonds had fallen significantly from 14.7% (1990) to 4% (2009), thus aligning itself with the European average. Significant deviations from this figure occurred only between 2010 and 2013. In 2012, the Spanish treasury found buyers for its ten-year bonds only if it securitized them at an interest rate of 5.8%. This figure has been normalized since 2014 and reached 0.7% in 2019. Figure 4.3 shows these developments and includes the development of the gross domestic product as a point of reference. In summary, we can observe a combination of factors in Spain that do not appear to follow any comprehensive logic. Since 1990, on the one hand, the Spanish state, in concert with its independent central bank, has curbed inflation and government debt. On the other hand, it has increased the overall progressivity of its tax system. If this was not an “embedded” process of neoliberalization, what did happen?

4.4  making

sense of institutional resilience

If historical processes do not align with the predictions and expectations of a single theoretical model like neoliberalism, two options prevail. Either we can search for different ideas that, in one way or another, counteract neoliberal

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ideology, or we can consider other theoretical approaches that do not favor idealistic explanations in principle. Both options can be applied to Spanish development. And, as is so often the case, only a combination of the two offers the prospect of a more plausible narrative. For one thing, Spanish fiscal policy was not based on neoliberal ideologies alone. Instead, as Ban has shown in detail, it referred to a form of ordoliberalism shaped by social democratic thinking, which the Friedrich Ebert Foundation (associated with the German Social Democratic Party) propagated among Spanish socialists.59 Furthermore, the theoretical stance adopted by Spanish fiscal technocrats on tax politics had broader European roots. In the 1960s, Spanish fiscal technocrats followed the debates on harmonizing the European taxation systems. They referred to the Neumark Report in their policy papers and analyzed the Spanish tax system’s inadequacies and backwardness from a decidedly European perspective.60 Miguel Ángel Fernández Ordóñez, the national finance minister in the post-Franco administration of Adolfo Suárez, was a staunch advocate of “fairness in the distribution of sacrifices.”61 Enrique Fuentes, the author of the two central technocratic papers on the Spanish tax system’s reform, the so-called Green and White Papers, firmly believed that any modern tax system also had to fulfill a redistributive function. Seen in retrospect, these attitudes did not lack a certain irony. During the 1970s, a global paradigm shift took place within public finance, which fiscal technocrats in Spain did not fully anticipate.62 They thereby advocated a taxstate model that had already been deemed obsolete by some economists. But in sharp contrast to the tax systems that were introduced in Eastern Europe after 1989 or, as we will see below, in Latin America after 1973, Spanish fiscal technocrats referred to a different, older, and in a certain sense anachronistic ideational horizon that was not unequivocally neoliberal. Technocrats and politicians interpreted the fiscal order of their time precisely through this lens. Compared to the tax models adhered to in northern European countries, the Spanish system of their period seemed outdated. For various reasons, it was not suited to financing even the cautious projects pursued by an organic democracy, let alone a modern welfare state: First, the tax system was regressively organized and did not grow in step with economic development. Second, tax evasion was so widespread that even an adjustment of nominal tax rates promised little added value. Third, a rising public deficit and rampant inflation put pressure on the public sector (and financial repression and seignorage proved inadequate as measures to counteract it) – a disastrous dynamic exacerbated by the OPEC shock. 59 60 61 62

Ban, Ruling Ideas. Comín, “Reaching Political Consensus,” 14–24; Jordán and Sanz-Sanz, “Personal Income Taxation,” 152–3; Menéndez, “Neumark Vindicated.” Torregrosa Hetland, “Limits to Redistribution,” 325, 324–6. Musgrave, “Public Finance.”

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All in all, the tax system had to change.63 The Moncloa Pacts enacted in Spain in 1977, therefore, included specific tax policies that proposed, for example, the introduction of a progressive income and wealth tax.64 To become a member of the EU, Spain also had to implement a VAT. Although the fiscal technocrats, due to various political blockades, were unable to fully realize these plans until 1982, respectively 1986, they did lay the groundwork for tax and fiscal policies that created specific institutional dependencies and the basis for the incremental implementation of redistributive taxation. So, instead of blindly following the neoliberal model of statehood, the Iberian tax state’s architects oriented themselves toward a European tax state model; this was a political consensus that, although fragile in the early years of the republic, was maintained from 1982 on.65 In light of this, it makes sense to divide the recent history of the Spanish tax state into three phases: a long phase of economic capacity growth, a short but profound crisis after 2007, and a phase of consolidation after 2013 signaling a historically unprecedented further economic capacity growth of the Spanish state.66 From 1982 on, the Iberian tax state extracted an ever-increasing share of the country’s growing economic wealth, while at the same time reducing the interest payable on its debt, which was minimized over the same period. Government spending amounted to $30 billion in 1980 and increased by a factor of 14 by 2007 (see Figure 4.4). The Spanish state certainly benefited from a booming economy but was also able to build the institutional capacity to extract revenues faster than the economy grew (see Figure 4.1). To achieve this, its growing economic capacity had to be accompanied by an increase in the state’s “infrastructural” and “symbolic power.”67 In 1977, the Spanish tax administration was a centralized organization with only a few branches. There was only one tax office in each of the fifty regions, with a total staff of just 9,000. The result was a somewhat erratic administrative practice, which offered many opportunities for evasion. While those opportunities certainly did not disappear but did diminish, the administrative staff and the organizational structure expanded. By 2003, Spain’s tax authority, the Agencia Estatal de Administración Tributaria (AEAT) had grown to 30,000 employees, while the number of taxpayers increased by a factor of 40. The AEAT maintained 17 regional, 56 provincial, and 240 local tax offices, with parts of its infrastructure already outsourced to the largely autonomous

63 64 65 66 67

Torregrosa Hetland, “Limits to Redistribution,” 322; Alvarendo and Saez, “Income and wealth concentration,” 1146. Comín, “Reaching Political Consensus”; Albi, “The Business Community”; González Páramo and Cos, “Tax Reform.” Ban, Ruling Ideas. Centeno and Ferraro, “State and Nation Making,” 7–8. Centeno and Ferraro, “Authoritarism, Democracy and Development,” 5–9.

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158 600 500 400 300 200

0

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020*

100

General Government Revenue (in billions of €)

General Government Spending (in billions of €)

figure 4.4 General government revenue and spending in Spain, 1980–2020. Source: IMF

regions of Navarre and the Basque country.68 Today, about 25,000 civil servants are responsible for tax extraction.69 The administrative staff’s expansion went hand in hand with an increase in bureaucratic efficiency. Within the EU, only Malta and Estonia spent less money on their tax authorities in relation to their GDP in 2015. At the same time, only the (much) larger economies of Italy, the United Kingdom, France, and Germany recorded higher tax revenues than the Spanish state. If the tax collection costs are offset against their yields, the AEAT generates an income of €267 for every euro spent. Such a performance puts it in second place within the EU. In comparison, the German tax authorities extracted only €136 per euro invested.70 The Spanish tax authorities, therefore, constitute one of the most efficient tax administrations in the European Union, a clear sign of the state’s growing infrastructural capacity, despite lingering problems. Furthermore, one could observe an increase in the Spanish state’s symbolic capacity. One of the best indicators of this capacity is the willingness of citizens to be taxed. Comparative research on the evolution of tax morals, i.e., the individual intrinsic motivation to pay taxes, shows that, while it decreased during the late Franco years until 1978, it increased after the coup attempt in 68 69 70

Onrubia, “The Reform of the Tax Administration,” 489, 521; Gray, “A Fiscal Path to Sovereignty,” 66–8. Registro Central de Personal, Boletín Estadístico. Murphy and Guter-Sandu, Resources Allocated, 33–45.

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1981. From then on, a steadily growing portion of the population stated in interviews that cheating on taxes was never justified. This broad consensus weakened a bit after 1995. Still, it remained intact until 2010, when around 80% of Spaniards surveyed stated that it was never or almost never justified to cheat on tax payments; this figure was higher than the result for Swedish citizens responding in the same study.71 However, this apparent growth of the state’s infrastructural power and the dynamic developments of its symbolic capacity should not lead us to overlook the fact that the Spanish tax state’s territorial power was eroding. The federalism reform of 1997 triggered an immense rise in the share of taxes extracted by the regions. It increased sixfold from 5% in 1995 to 32.4% in 2012. Within Europe, this is one of the highest rates. Especially in those regions subject to the Concierto Económico and the Convenio Economico (Basque Country and Navarre), it fueled existing conflicts about a possible secession from the central state.72 The combination of growing economic, infrastructural, and symbolic power capacities ended in 2007. But at the beginning of the second phase, the previous fiscal discipline and the tax state’s expansion meant that Zapatero’s government was able to intervene decisively against the great recession.73 While a large part of the budget deficit that exploded during this period is attributable to the burst of the real estate bubble and the resulting collapse in tax revenues, especially from the property and corporate taxes, the state was simultaneously able to allocate a 174.3 billion euro bailout package to support its banking and real estate sector, of which 61.9 were used.74 In absolute figures, Spain thus ranked fourth among the EU countries with respect to the financial volume of measures taken to counteract the impact of the crisis and spent 24% of its 2008 GDP on rescue measures by 2010.75 The Spanish government also attempted to spread the burden of the cost of these rescue measures by introducing a new income tax bracket and reintroducing the wealth tax. For a short period, the Spanish state’s “emergency Keynesianism” diverged from the earlier fiscal policy path and reacted expansively to the financial crisis. Meanwhile, tax policy maintained its established course.76 However, the limitations of the Spanish state’s economic capacity soon became apparent.77 Because, among other things, the European Central Bank and the European Union, under the lead of the German government, acted procyclically and thus undermined the 71 72 73 74 75 76 77

Alm and Torgler, “Culture Differences,” 238–9; Martinez-Vazquez and Torgler, “The ­Evolution of Tax Morale,” 7–8; World Value Survey, “Justifiable.” Eurostat, Taxation Trends, 147; Alemdra, “Fiscal Federalism,” 467–75; Gray, “A Fiscal Path to Sovereignty?”; Cf. Mathias vom Hau’s Chapter in this volume. Blyth, Austerity, 64–69. Millaruelo and Río, “The Cost of Interventions,” 5. Tooze, Crashed, 166. Ban, Ruling Ideas, 203; Hall, “The Political Origins,” 142. Royo, After the Fiesta”; Martí and Pérez, Spanish Public Finances,” 529–40.

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Spanish treasury’s countercyclical interventions, there was an enormous rise in the national deficit accompanied by simultaneous deflation.78 During this short phase, the transfer of fiscal policy powers to supranational institutions took its toll. Although Spain, in contrast to the equally hard-hit Portugal and Greece, demonstrated its economic capacity and did not take a loan from the European Financial Stability Facility (EFSF), it introduced the budgetary golden rule into its constitution in 2011. Shackling its own ability to implement deficit spending, it fulfilled a central demand of neoliberal ideology, as the second country in Europe to introduce such a mechanism.79 While the reform was put into effect at enormous speed – only eight days passed between the debate in the Congress of Deputies and the Senate’s final vote – its longterm effects remain to be seen. Since the golden rule’s introduction, generous interpretations of its exception paragraphs have allowed the Spanish government to run higher deficits than foreseen by constitutional norms for every year since 2011.80 In 2012, the Spanish treasury took out a loan from the European Stability Mechanism (ESM) to recapitalize its banks. But what might look at first sight like a collapse of economic capacity appears in a different light on closer inspection. Spain only needed half of the sum offered and repaid its debt earlier than obliged.81 The social costs of the crisis were high indeed – youth unemployment rose to 56.2% in 2013, and in 2012 Spanish banks initiated nearly 50,000 foreclosure proceedings82 – but the financial consequences for the state remained moderate. By increasing taxation through higher income and value-added taxes, the Spanish state was able to maintain its economic capacity while enacting harsh austerity measures in other policy fields, which brought its rising debt to a halt.83 But this was not without costs. In the World Value Survey 2017–2020, one could observe a substantial drop in tax morality to the levels of the early 1980s. The austerity measures implemented during the so-called euro crisis took their toll and resulted in a decreasing symbolic capacity of the tax state.84 Nonetheless, the VAT gap in Spain also decreased from over 31% in 2009 to 6.0% in 2018.85 Despite much talk about evading taxation, opportunities have dwindled.86 The third phase began after 2012 in the wake of the ECB’s low-interest-rate policy and quantitative easing presaged by Mario Draghi’s famous 2012 “Whatever it takes” speech. Since then, the relevance of high public budget 78 79 80 81 82 83 84 85 86

Cf. Buendía, “A Perfect Storm”; Tooze, Crashed. Miró, “Abolishing Politics,” 8–9. Kasperskaya and Xifré, “Reform or resist?” 495–98. European Commission, Post-Programme. Banco de España, “Nota informativa.” Fishman, “Anomalies of Spain’s Economy.” World Value Survey, “Justifiable.” European Commission, Study and Reports, 30; European Commission and TAXUD, Study to Quantify, 84. Bäumler Escobar, “The Fiscal Commons,” 65–73.

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deficits has declined, and there are signs that the state’s economic capacity is expanding. This dynamic is also reflected in its increased ability to tax higherincome percentiles via wealth and inheritance taxes levied on the regional level. In July 2020, the Spanish government even announced increases in corporate and individual income taxes to finance the enormous fiscal stimulus necessary to combat the COVID-19 pandemic – a measure every neoliberal would oppose.87

4.5  torn

apart : taxation in latin

american and chile since

1973

How little the history of the Spanish tax state corresponds to neoliberal expectations becomes even more evident if we compare it to the financial developments that have taken place in Latin America since the end of the era of the developmental state. Especially occurrences in Chile and Argentina are frequently regarded as the first examples of abrupt and massive neoliberalization.88 Unsurprisingly, these processes came with unequivocally neoliberal tax and fiscal politics. Because the Latin American states and Spain still had comparable fiscal structures in the mid-1970s, Latin America offers an excellent contrast to the Iberian development. Customs duties and indirect taxes formed a large part of the tax revenue and an effective income tax was lacking in both Latin America and Spain.89 At the beginning of the 1970s, the overall tax revenue in Latin America was around 13% of GDP, with indirect taxes accounting for the lion’s share of it. In 1975, the Spanish treasury extracted tax revenues amounting to 17.95% of its GDP. Approximately, 40% of this income was derived from direct taxes, with gifts and estate taxes as well as corporate taxes accounting for a significant share. Furthermore, inflation was an urgent political problem for both Spain and Latin American countries.90 A proposal made by Atria, Groll, and Valdes for dividing recent Latin American fiscal history into four phases is useful when comparing Spain and Latin America. In their view, 1973 marks the decisive turning point from the first phase’s developmental policies to the supply-oriented economic programs of the second, which caused significant economic turbulence, high inflation rates, and stagnating tax revenues in Latin America. In the third phase from 1990 until the turn of the millennium, Latin American governments redesigned their fiscal orders to fit the neoliberal model, with symbolic reference to the Washington Consensus and organizational support from the IMF.91 They 87 88 89 90 91

“Fiscal reforms and hikes.” Teubal, “Rise and Collapse”; Ruckert, Macdonald and Proulx, “Postneoliberalism”; Madariaga, Neoliberal Resilience; Buggeln, “Wie wichtig.” Alvaredo and Saez, “Income and Wealth Concentration,” 1146–49; Atria, Biehl and Labarca, “Towards a Fiscal Sociology,” 140–2. Comín, “Reaching Political Consensus,” 14–21; Atria, Groll and Valdés, “Introduction,” 13–5. Atria, Groll and Valdés, “Introduction,” 4–5.

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“set out to strengthen the VAT, reduce or eliminate taxes on international trade, decrease rates in income tax, and broaden tax bases.”92 Since 2002, the so-called pink tide led to a proliferation of new tax policies and initiated the fourth phase, in which modernized tax agencies enabled many Latin American states to profit from the commodity boom. Rather than assuming that developments in Spain and Latin America were simultaneous, I will focus on the second and third phases in Latin America (i.e., from 1973 to approximately 2002), which were the stages of unequivocal neoliberalization, and compare them to developments in Spain from 1990 on, when the “Mediterranean nightmare” mentioned above purportedly occurred. If we look at these periods, four significant differences stand out. First, neither the level nor the trajectory of the tax-to-GDP ratios in Latin America and Spain coincides. As Huber and Solt stated in 2004, “the dominant pattern of tax reforms, though, has reduced marginal tax rates and not increased income tax collection. It has shifted more weight to value-added taxes, which tax lowerincome earners also. In general, Latin American populations remain undertaxed.”93 According to calculations by Atria, Groll, and Valdes, Latin America did not return to and permanently exceed its 1973 level of average tax revenue until 2002. At the end of the neoliberal era, it stood at 13%, which corresponds to almost one-third of the Spanish quota. Second, the composition of tax revenue in Spain and Latin America differs considerably. In 1990, the average share of indirect taxes in total tax revenue reported by 18 Latin American countries was 52%, and indirect taxes still accounted for 49.7% of all taxes in 2017.94 This rate is almost twice the average for Spain over the period covered here. Moreover, individual income taxes account for a minimal share of all taxes in Latin America. In 2007, after the era of post-neoliberalism had begun, income taxes accounted for only 7.7% of total tax revenue (whereas in Spain it hovers around 21% over the entire period under study).95 Third, Spain’s inflation and interest rates differ markedly from those in Latin American countries. Ben Bernanke, the former chair of the United States’ Federal Reserve, was certainly not thinking of Spain when he stated that “a measure of price changes in nine of the most populous Latin American countries shows that inflation in the region averaged nearly 160 percent per year in the 1980s and 235 percent per year in the first half of the 1990s.”96 As outlined above, inflation had not been a problem in Spain since the 1990s, and the rate hardly exceeded 4% after the end of the Cold War. Fourth, the Spanish tax system is much more progressive in design and distributes incomes more efficiently. Taxation in Spain reduced the Gini coefficient by 0.06 points from 0.43 to 0.37 in 2014, whereas in 92 93 94 95 96

Atria, Groll and Valdés, “Introduction,” 4–6; 5. Huber and Solt, “Successes and Failures,” 160. IDB, CIAT, ELCAC and OECD, “Revenue Statistics”; Atria, Groll and Valdes, “Introduction,” 5. Ruckert, MacDonald and Proulx, “Postneoliberalism.” Bernanke, “Inflation in Latin America”; Atria, Groll and Valdes, “Introduction,” 13–5.

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Latin America it remained at 0.50 in 2010 (after calculating the effects of taxes and transfers).97 A comparison of six Latin American countries shows that, in 2008, they succeeded in reducing the coefficient by only 0.01 through taxes. The Spanish tax authorities redistributed income through taxes about six times as effectively over the same period.98 Fiscal and tax policy in Spain and Latin America thus developed in different directions during the periods considered here; it would appear that completely different processes emerged after the end of the era of the developmental state. This finding is confirmed if we compare individual states instead of a country and a continent. It is well known that Chile was probably the most potent tax state in the region and is generally regarded as the archetype of stringent neoliberalization, so it seems a suitable comparative case.99 And indeed, after Pinochet’s coup of 1973, the new government passed a tax reform that explicitly followed neoliberal principles in 1974: The principal features of this reform include the replacement of cascade sales taxes with a flat rate value-added tax at a 20% rate; a full indexation of the tax system; an elimination of exemptions and subsidies; a unification of the corporation and non-corporation income taxes into a flat business tax; and the integration of the personal and business income taxes.100

It seems obvious that the Spanish state, with its lower-rated and non-flat VAT, a general progressive income tax, and relatively high corporate and property taxation, took a completely different fiscal path. The tax figures reflect this difference. In 1975, the Chilean state extracted taxes worth 20.2% of its GDP, which exceeded the Spanish tax revenue of 17.95%. But while the Spanish treasury doubled its tax revenues between 1975 and 2007, the Chilean revenues stagnated. By 1990, the tax-to-GDP ratio had fallen to 16.9%, but it then steadily climbed, reaching 19.1% in 2002. Over the long term, the tax-to-GDP ratio did not grow in Chile, in keeping with the expectations of neoliberalization theory.101 The argument also holds if we analyze the structure of tax revenue. In Chile, revenue from personal income taxes did not exceed 8% of total revenue until 2002. In contrast, revenue from personal income taxation skyrocketed in Spain after the successful income tax reform of 1979, accounting for 12% of total revenue in 1973 (including wage taxes) and 32% in 1980.102 Corporate tax revenues followed a slightly different trend. They increased steadily in Chile 97

Jiménez and López Azcúnaga, “Disminución de la desigualdad,” 11; Goñi, López and Servén, “Fiscal Redistribution”; Anghel et al., “Income, consumption and wealth inequality,” 361. 98 Goñi, López and Servén, “Fiscal Redistribution,” 8–12. 99 Cf. Fairfield, Private Wealth; Bergman, Tax Evasion; Madariaga, Neoliberal Resilience. 100 Edwards and Edwards, Monetarism and Liberalization, 31. 101 Cf. Cominetta, “Chile,” 186–89, 197–201; Cheyre “Analysis of Tax Reforms”; Sanchez, Mobilizing Resources. 102 Comín, “Reaching Political Consensus”; 50.

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164 70.00% 60.00% 50.00% 40.00% 30.00% 20.00%

2018

2016

2017

2015

2014

2013

2012

2011

2010

2009

2008

2007

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2005

2004

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Chile, Taxes on Goods and Services in Total % of Taxation Spain, Taxes on Goods and Services in Total % of Taxation Chile, Taxes on Personal Income in Total % of Taxation Spain, Taxes on Personal Income in Total % of Taxation Chile, Taxes on Corporate Profits in Total % of Taxation Spain, Taxes on Corporate Profits in Total % of Taxation Chile, Tax Revenue, Total, % of GDP Spain, Tax Revenue, Total, % of GDP

figure 4.5  Structure of tax revenue in Chile and Spain, 1990–2018. Source: OECD.

45 40 35 30 25 20 15 10 5

19 7 19 0 72 19 7 19 4 7 19 6 7 19 8 8 19 0 8 19 2 8 19 4 8 19 6 8 19 8 9 19 0 9 19 2 9 19 4 9 19 6 9 20 8 0 20 0 0 20 2 0 20 4 0 20 6 0 20 8 1 20 0 1 20 2 1 20 4 1 20 6 1 20 8 20

0

Chile, General Government Revenue (Percent of GDP) Spain General Government Revenue (Percent of GDP)

figure 4.6  Tax revenue in Chile and Spain, 1970–2020. Source: IMF.

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165

after the end of the Pinochet junta and even boomed during the pink tide and the commodity boom.103 The 2007 quota of 29.4% tops the levels seen in any period in Spain. But the picture has to be put into perspective by referring to the different growth models and examining the tax-to-GDP ratio. This reveals that corporate taxes did not become more important for the economy as a whole in Chile until after 2005, in contrast to Spain. In other words, this development occurred in the era of post-neoliberalism. Finally, taxes on goods and services are consistently much more relevant in Chile than in Spain. In 1999, they peaked and were responsible for 65.2% of total revenue. In fiscal terms, Chile and Spain have gone separate ways during the era of the neoliberal state and remained far apart during the 1990s. They have established completely different tax states as shown in Figures 4.5 and 4.6.

4.6  conclusion :

toward an alternative

narration of the spanish tax state

If the old saying, according to which the history of the state is the history of its finances, and public finance bears the thunder of history still holds,104 then the history of the Spanish state is incompatible with an interpretation that relies on terms like neoliberalism or neoliberalization. A comparison of the historical developments in Spain with Latin America, and in particular Chile, clearly supports such an understanding. In Chile, where the Chicago Boys were allowed, from September 11, 1973, on to do their own thing and forcibly shape economic reality according to their utopian ideals, the development was fundamentally different from what occurred in Spain. In the latter country, political and technocratic elites were also inspired in various ways by the neoliberal zeitgeist, but obviously never completely forgot their socialist and European heritage and therefore never abandoned the fiscal policy path that had been embarked on with the Moncloa Pacts. While the Spanish state’s economic, infrastructural, and symbolic capacity grew enormously between 1980 and 2007, and it remains to be seen whether it can completely overcome the aftershock of the great recession and the COVID-19 pandemic, such growth has not been observed in Chile or Latin America. Fiscally speaking, different developments characterized the history of the tax state on the Iberian Peninsula and in Latin America. But why and how did Latin America and Spain adopt different fiscal paths from 1973 onwards? In considering these differences, one should avoid the pitfall of explaining them by referring to vague ideological variations. Hegemonic ideas were indeed crucial for selecting a fiscal path, but institutional as well as geopolitical contexts were even more decisive – implementing 103 104

See Pía Riggirozzis contribution to this volume. Schumpeter, “The Crisis of the Tax State”; Martin, Mehrotra, and Prasad, “The Thunder of History,” 2.

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tax harmonization and the Neumark plan in Spain as part of the EU integration process differed fundamentally from the integration of Latin American countries into the US empire by the Department of Economics of the University of Chicago. But how these processes played out was ultimately determined by how the respective contexts interacted with a state’s internal structure. In Spain, supranational cooperation, subnational decentralization, cycles of politicization, the dynamics of moral economies, and the learning processes of bureaucracy are intertwined to an extent that makes it impossible to argue that the contemporary tax state emerged in linear and continuous development, especially if we call that development neoliberalization. bibliography

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5 Guatemala States and Homicidal Ecologies* Deborah J. Yashar

Central Americans have been fleeing the Northern Triangle. These states do not provide the security, welfare, or freedoms that we expect of democratic regimes. Faced with the choice of living a life of violent insecurity and economic precarity, many have chosen to risk traversing dangerous paths through Central America and Mexico toward the United States – in caravans, with coyotes, in small groups, as individuals. They have no certainty along the way. They know that they might face further violence and mistreatment. And they know that the US government is likely to be unwelcome. Yet they continue to stream north with knowledge of the formidable obstacles that they are likely to face – including the possibility that they will be extorted and raped in Mexico; that they might die along the way (as they ride the Bestia in Mexico;1 as they swim across rivers; as they lack for food and medicine; as they face scorching heat); that they could be separated from their family and locked up in cages even if they successfully cross the US border (or sent back to wait in a “safe country” while their forms are processed); and even if they find their way to the interior of the United States, that they might be deported if they lack certain documents. *

1

This chapter draws extensively on Yashar, Homicidal Ecologies (2018), where I thank many research assistants. For this chapter, I especially thank Diana B. Sandoval Simán for her excellent work in updating this chapter. La Bestia is a colloquial reference to the Mexican freight trains that travel from the Guatemalan border to the United States. U.S.-bound migrants, including children, have taken the risk of riding atop these trains, a dangerous route that has left many physically injured or even dead. For this reason, the train is commonly referred to as “the beast” or “death train.” Those riding the train have also been subject to extortion and violence by gang and organized crime. For more, see: www.npr.org/sections/parallels/2014/06/05/318905712/riding-the-beastacross-mexico-to-the-u-s-border; www.theguardian.com/us-news/gallery/2017/dec/13/mexicocentral-american-migrants-la-bestia-pictures.

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As I wrote this chapter, an image haunted me (one of many). On June 25, 2019, Óscar Alberto Martínez Ramírez and his 23-month-old daughter, Valeria, drowned trying to cross the Rio Grande. The searing photograph by Julia Le Duc/Associated Press immortalizes the life-threatening choices people make when they reside in states that do not protect them and as they try to move to countries whose states refuse to offer them legal entry. “The image represents a poignant distillation of the perilous journey migrants face on their passage north to the United States, and the tragic consequences that often go unseen in the loud and caustic debate over border policy.”2 These are the realities that motivate this chapter’s focus on the Central American countries that people are fleeing. I will not refer to psychology or individual choice. Rather, this is a chapter concerned with the structural violence in contemporary Central America and the failure of these states to provide and defend the rule of law or provide law and order. Latin American homicide rates are the world’s highest. The 2017 global average homicide rate was estimated at 6.1 per 100,000 people; homicide rates were reported as 17.2% in the Americas, followed by 13% in Africa, 3% in Europe, 2.8 in Oceania, and 2.3 in Asia.3 Of the 464,000 people reported as intentionally killed in 2017, the Americas claimed the highest percentage at 37.4% of the total.4 The Northern Triangle countries of El Salvador, Guatemala, and Honduras have been particularly afflicted by high homicide rates, alongside other forms of violence; they have become part of the most violent areas in the world. In particular, Central America (along with Southern Africa) has claimed the dubious distinction of being the most violent subregion in the world, with an estimated homicide rate of four times the global average.5 Otherwise stated, these countries have suffered from homicidal ecologies – structural conditions that are likely to generate high homicide rates.6 El Salvador, Honduras, and Guatemala all have had among the highest rates among the Central American cases, although all have witnessed some spikes, fluctuation, and decline in recent years (most precipitously in El Salvador). Across these three high-homicide cases, Guatemala’s rates have generally been less extreme in the twenty-first

2 3 4 5 6

www.nytimes.com/2019/06/25/us/father-daughter-border-drowning-picture-mexico .html?module=inline U.N.O.D.C., Global Study on Homicide: Executive Summary, 11. U.N.O.D.C., Global Study on Homicide: Executive Summary. United Nations Office on Drugs and Crime, Global Study on Homicide 2013: Trends, Context, Data, 12. In Yashar, Homicidal Ecologies, I set out to explain where and why homicidal ecologies emerge – structural conditions that make some places more likely to experience high homicidal violence. I argued that exceptionally high levels of homicidal violence are driven by the concatenation of three factors: weak and complicit states, the rise in illicit organizations that are predicated on territorial control; and organizational competition to control those territories. No one factor alone drives the violence; but the tripartite combination has proven fatal. This essay focuses on the first of these: the weak and complicit states that allow these illicit organizations to thrive.

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Homicide Rate (homicide/100,000 pop.)

HOMICIDE RATES IN CENTRAL AMERICA PER 100,000 (2000–2018, PER UNODC) 120 100 80 60 40 20 0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Costa Rica

Guatemala

Nicaragua

El Salvader

Honduras

Panama

figure 5.1  Homicide rates in the Americas per 100,000 (2000–2018 per UNODC) (updated from Yashar 2019: Figure 1.2). Original graph created for this project by Daniela Barba-Sánchez in June 2016 using Stata. Current graph created in July 2020 by Diana Sandoval Simán July 2020. Source: UNODC 2014b. See www.unodc.org/ gsh/data.html. United Nations Office on Drugs and Crime. “Global Study on Homicide 2019.” Vienna, Austria, July 2019. www.unodc.org/unodc/en/data-and-analysis/globalstudy-on-homicide.html.

century, although significantly higher than the southern countries of Costa Rica, Panama, and Nicaragua (see Figure 5.1).7 To address this structural violence, this chapter takes a geographic and temporal step back from the horror taking place on the US Southern Border to revisit the state of Guatemala – from which many people are still fleeing north. The Guatemalan state (alongside those in El Salvador and Honduras) has not been able to ensure law and order – often ceding ground to other actors, including illicit organizations that often assume territorial control over cities, ports, roadways, and borders. While in some cases the state is weak; in others, it is complicit. This chapter unpacks the state by focusing in particular on the police (as the bureaucratic state agency charged with protecting citizens 7

2022 homicide rates are considerably lower in the Northern Triangle than in 2017. Honduras reported 35.8 homicides per 100,000 (still among the highest rates in the Americas). The 2022 rates in Guatemala and El Salvador declined more significantly to 17.3% and 7.8%, respectively. Notably, President Bukele oversaw a brutal anti-gang crackdown in El Salvador. It is hard to ascertain the comparative impact of the global pandemic on these rates. See Insight Crime’s 2022 Homicide Roundup (https://insightcrime.org/news/insight-crime-2022-homicide-round-up/; accessed March 26, 2023).

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against disorder and crime) and situating it vis-à-vis the military and courts. In this regard, the chapter tackles the “neoliberal” state by analyzing where, how, and why its coercive institutions neglect to protect the very liberal right (freedom from harm) that is commonly seen as foundational to the state’s contract with its citizens. In this regard, Guatemala’s state has “low capacity” – understood as the limited organizational capacity to implement governing projects – separate from the political will to deploy it.8 This chapter is organized as follows. Part I situates this paper in the context of this volume’s central concern – debating if and how neoliberalism, relative to an earlier historical period, left weak and complicit states in the region. I argue that historical institutional legacies that predate neoliberalism are key to explaining Guatemala’s contemporary state – even if neoliberal ideas legitimated and were compatible with it. Part II constitutes the core of the paper and focuses on the institutional features of the Guatemalan state – highlighting the failure to uphold the rule of law and its complicity in the homicidal ecologies prevalent in the region. I argue that historical institutional factors explain the persistence of corrupt and complicit states, especially law and order institutions that predate democratization and were largely sustained even as these countries transitioned away from authoritarian rule (and in some cases subsequently enacted peace accords). The conclusion revisits the question of (neo)liberalism and the states’ failed promise to defend and protect its citizens. part i   central american states : neoliberal reforms meet historical institutionalism

The focus of this volume is the neoliberal state in Latin America. Neoliberal reforms (NLR) generally reference economic reforms that radically restructured the role of Latin American states in the market and social welfare provision. In the market, the state stepped back from ISI policies, sold off state-owned industries, devalued currencies, and reduced subsidies and credit, among other issues. In social welfare, the state initially cut back social programs – including education and health. The changes left an urban and industrial population that was less protected from the vagaries of the market – although hagiography aside, we know that only certain sectors were advantaged by the earlier policies, in particular those in the public sector and formal, urban labor market.9 This depiction is more apt for some Latin American countries than others, however. Starting and end points for each country varied on either side of the neoliberal reform period. On the one hand, Latin American countries varied in the degree to which they had an activist state in the pre-neoliberal 8 9

Centeno, Kohli, and Yashar, “States in the Developing World,” Chapter 1. See, among others, Collier and Collier, Shaping the Political Arena; Garay, Social Policy Expansion in Latin America; Kapiszewski, Levitsky, and Yashar, The Inclusionary Turn in Latin American Democracies.

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period – with the Southern Cone and Mexico taking the lead.10 On the other hand, the degree to which states implemented NLR also varied – in terms of which sectors were targeted and how far the reforms actually went.11 Kurtz and Brooks,12 for example, examine the period 1975–2003 (covering the end of the developmental state and neoliberal reforms) and note that while most countries (save Chile) started off with quite closed economies, they varied significantly in terms of how statist they were in promoting industrial policy and advancing public ownership. Thus, the neoliberal reforms had a differential effect on those with more/less statist starting points. Regarding Central America and neoliberal reforms, it is important to acknowledge three different starting points than their Southern Cone counterparts. I discuss each – although in this section I focus at greatest length on the first point and only briefly on the second and third points, which are elaborated further in the following section. First, Central America’s Northern Triangle countries never experienced the same kind of activist state described by the political economy literature on Latin American development (a literature largely focused on the Southern Cone and Mexico). Guatemala, El Salvador, and Honduras neither pursued a significant ISI policy (Guatemala least so) nor developed a significant national state sector or social welfare regime; these Central American states were primarily focused on promoting agricultural export (and often heavily protected those markets) and had a relatively incipient industrial and labor sector (indeed, Guatemala had among the lowest unionization levels in the Americas); so too welfare policies were minimal in comparison to Costa Rica, Mexico, and South America. Indeed, between 1975 and 2003, Guatemala falls at the bottom of the statist score in the late 1970s and remains the second lowest in the following years; El Salvador is in the mid-range and falls during this period; and Honduras starts and remains just below the mid-range during these years.13 Thus, while NLR did lower the floor for citizens, it is important to recognize that most citizens of Guatemala had barely been covered by the preneoliberal state. This has continued for much of the third wave of democracy. By the 2010s, Guatemala had relatively stable growth but it remained highly uneven, with little progress in meeting the Millennium Development Goals; the IMF observed in 2015 that only a quarter of the population had met the Millennium Development Goals, while no goals had been met for the rural and indigenous population.14 The state seems to have assumed little commitment to

10 11 12 13 14

See Kurtz and Brooks, “Embedding Neoliberal Reform in Latin America”; Berrios, Marak, and Morgenstern, “Explaining Hydrocarbon Nationalization in Latin America.” See Corrales, “Market Reforms;” Kurtz and Brooks, “Embedding Neoliberal Reform in Latin America.” Kurtz and Brooks, “Embedding Neoliberal Reform in Latin America.” Kurtz and Brooks, 256–57. Taft-Morales, “Guatemala: Political and Socioeconomic Conditions,” 12.

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redress this – since “Guatemala has the lowest tax-to-GDP ratio in the region at 12.4%, compared to 22.8% for Latin America in 2015.”15 This said, there is yet another literature arguing that neoliberalism did impact Guatemala in significant ways. I suggest that this perspective often speaks to a different, and much more capacious, definition of the very term, neoliberalism. Neoliberalism in this case is taken to mean the prevalence of individualism, market-driven development, globalization (with significant export promotion, NTAX, in particular),16 and sometimes even multicultural governance and decentralization17 – advancing a set of ideas consistent with international development agencies and elite interests. I do not contest that these specific processes are in motion; indeed, they are. But I don’t see these patterns as derivative of “neoliberalism” per se. Rather, they constitute part of Guatemala’s long, highly unequal, and coercive form of capitalism (which predates neoliberalism); neoliberal ideas might have legitimated these patterns, but late twentieth century neoliberal reforms (political economy reforms that reversed and weakened state intervention in the market and social provision)

15 16

17

Taft-Morales, “Guatemala: Political and Socioeconomic Conditions,” 13. See Kurtz and Brooks, “Embedding Neoliberal Reform in Latin America,” 256–57. Robinson, “Maldevelopment in Central America,” passim, esp. page 480, 486; and Robinson, “Neoliberalism, the Global Elite, and the Guatemalan Transition” are among the most careful and informative of this scholarship. Robinson notes a change from the “developmentalist state” to the “neo-liberal state,” which he associated with a new transnational model. He argues, in particular, that globalization and transnationalization impacted Central America’s political economy at the end of the twentieth century. If traditional, agro-export (focused on coffee and bananas) were the defining features through the mid-twentieth century, in the 1980s we start to see, according to Robinson, a new stage of transnational capitalism – one marked in Guatemala by the rising prevalence of non-traditional agricultural exports, the maquiladora sector (transnational capital using cheap domestic labor – often drawing on young women – to assemble garments); a powerful financial sector; tourism (especially as civil wars started to unwind); and migration/remittances as a growing part of the economy. He emphasizes that this process coincided with the emergence of a new class of elite actors (often growing out of the old sector but also tied to an unfolding transnational project); these new actors have been supportive of the peace accords and emerging polyarchy as the political counterpart to this underlying effort to secure this new model of growth (although not fundamentally for restructuring power, as it ratified existing property relations). Robinson, in “Maldevelopment in Central America,” 480, also notes that Guatemala implemented some structural adjustment programs in 1997, during the PAN administration of Alvaro Arzú. By the 2000s (after Robinson published these pieces), mining had also become more important. For non-traditional agricultural exports (NTAX), also see Barham, Clark, Katz, and Schurman, “Nontraditional Agricultural Exports in Latin America;” Hamilton and Fischer, “Non-Traditional Agricultural Exports in Highland Guatemala;” and Carletto, Kirk, Winters, and Davis, “Globalization and Smallholders.” For maquilas, also see Traub-Werner and Cravey, “Spatiality, Sweatshops and Solidarity,” 389. Mining also increased, especially following liberalization of the mining law in 1997, which led to a rise in Canadian mining companies – generally without consulting local (often indigenous) communities; see Rasch, “Transformations in Citizenship.” See Charles Hale, “Does Multiculturalism Menace;” and Copeland, “Guatemala Will Never Change.”

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did not forge them in Guatemala. The Guatemalan state has nearly always advanced the interests of domestic and international capital in the countryside and sometimes in industry;18 maintained a small tax base; and a small social spending base. The state loomed largest when it came to coercion (more than development) – forging a culture of despair and disempowerment for some and a culture of revolution for others. Benedicte Bull, who has argued that neoliberal market reforms affected governance in Central America, has noted two important points that merit emphasizing.19 On the one hand, she observes that neoliberalim’s effect seemed least consequential in Guatemala, where reforms were often piecemeal, the nationalized bank sector was non-existent, tax-income levels were already the lowest in Latin America, social services were already very low (and remained low), and few spaces existed for new entrepreneurs (outside of already existing export agriculture, extractivism, as well as illicit sectors). On the other hand, she concludes that neoliberal reforms are at fault less for creating a crisis of governance and weak states (which she observes were not created by NLR) than in putting up roadblocks for strengthening the state itself.20 In short, this first point highlights that neoliberal reforms were consequential for Latin American states as a whole but not evenly so – particularly less so in Guatemala. The ideas associated with neoliberalism reinforced an already highly unequal society that already privileged agricultural export, markets, and elite interests over some shared collective understanding of development. Neoliberalism, as a global project, thus played a supporting ideational role more than a turning point for the Guatemalan state per se. Second, NLR reforms were not temporally isolated but unfolded at the same time that Central America was experiencing waning civil wars and negotiating peace accords in El Salvador, Guatemala, and Nicaragua. The civil wars and peace accords were arguably more impactful than NLR per se for the form these states took. The accords ostensibly were designed to restructure the state in radical ways (to end the war; deepen democratic reforms; address

18

19 20

The Guatemalan revolution (1944–1954), or ten years of spring, was an exception. See Jonas, Battle for Guatemala; Handy, Revolution in the Countryside; Gleijeses Shattered Hope; and Yashar, Demanding Democracy. Bull, “Governance in the Aftermath of Neoliberalism,” 96–101, 104–7. Bull, “Governance in the Aftermath of Neoliberalism.” Also see Benson, Fischer, and Thomas, “Resocializing Suffering,” for an argument that observes neoliberalism’s impact on the economy (focusing on market reforms such as the growth of the NTAX, the maquila sector, and IMF agreements) followed by popular protests, the rise of violence, and the turn to iron fist policies. Yet, while they note the impact of neoliberalism (and the misguided emphasis on gangs as the source of all problems), they conclude by emphasizing that contemporary violence cannot be explained absent an accounting of historical, societal, and structural factors that predate the neoliberal reforms outlined (esp. see page 40, 49, 50, in particular). In this regard, they too encourage us to look historically, which I do in the following section.

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indigenous  rights; outline ways of addressing socioeconomic and agrarian issues;21 among other issues); but this set of reforms was not about minimizing the role of the economic and social state institutions but of restructuring the coercive ones. Peace accords focused on restructuring the military and police, among other things – to get the military back in the barracks, to restructure the coercive institutions and personnel, and to prepare the country for a transition toward civilian-dominated politics. Third, while states were formally restructured to make them more democratic and accountable, coercive institutions were sticky and resistant to change. Human rights abuses declined, but these state institutions failed to protect citizens from the homicidal ecologies that took root. Complicity, corruption, and incapacity remained a core practice in these state institutions. The uneven outcome of peace accords (not just NLR) and the persistence of old institutions (and institutional practices) are key to understanding the contemporary states of the region. Without a radical break in personnel, institutional design, and norms, the reforms left in place institutions that enabled and abetted the growth of illicit economies and the associated development of homicidal ecologies in the region.22 part ii   guatemala and the

( un ) rule

of law

23

Given a history of military dictatorships, Guatemala’s state is often seen as synonymous with its coercive institutions. Indeed, during the prior authoritarian regime, the military penetrated many corners of the country, organized civil defense patrols (forcing the population to regulate itself), created model villages in the highlands where the insurgency was strongest, and unleashed widespread and unimaginable atrocities against its population.24 With a relatively underdeveloped set of economic and social institutions, the Guatemalan state was weighted toward the coercive. Contemporary democratization in Guatemala occurred in two rounds. The initial/formal transition to electoral democracy occurred in 1985–1986. Yet that transition to civilian rule was incomplete at best. The military did not readily cede power or follow/uphold the rule of law; widespread human 21

22

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For a discussion of the shortcomings and inequities of market-driven land reforms, which followed the 1996 Peace Accords in Guatemala, see Granovsky-Larsen, “Between the Bullet and the Bank” and “The Guatemalan Campesino Movement”; and Gauster and Isakson, “Eliminating Market Distortions.” See Yashar, Homicidal Ecologies, 52–4, for further discussion of why the literature on neoliberal reforms and violence is analytically suggestive (as it focuses on rising inequality, despair, a hollowed out state, and a turn to crime) but less compelling when it comes to explaining variation in homicidal violence in the Latin American region. See Méndez, O’Donnell and Pinheiro, The Unrule of Law. Many of these human rights abuses are documented in the digital archives of the Guatemalan National Police Historical Archive (https://ahpn.lib.utexas.edu/).

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rights abuses declined but did not disappear; and the regime did not uphold democratic rule of law projects. The subsequent 1996 peace accords, (often characterized as the more effective moment of democratization) ended the civil war but did not fundamentally remake the state. There was no radical break in institutions.25 Guatemala’s military maintained its reputation for human rights abuses, impunity, and corruption. Its courts have been severely hampered in their efforts to uphold the rule of law; and the same could be said for the prison system. The police are perhaps least understood in this process and yet formally tasked with monitoring domestic territorial space. I next discuss the police, military, and judicial system. The Police.26 The Guatemalan police have historically been an agent of violence, unpredictability, and corruption. During the authoritarian period, the police were subordinate to a military that engineered systematic human rights abuses. Military officers sometimes were directors and subdirectors of the police; sometimes officers were members of both the military and police; and the police had ties to paramilitary groups. With the transition to democracy in 1986, the military did not cede control over the police (although there were various unsuccessful efforts to do so).27 The police remained an unpredictable (and some would say disorganized) force to be feared rather than a force that offered protection. Moreover, human capital was low; while a 1977 law said that members of the police had to complete 6th grade and take a police training course, they rarely did even that.28 This history contrasts sharply with what we theoretically expect of the police, arguably the state agency most proximate to the people – street-level bureaucrats armed with guns who are supposed to know the law and track down those who break it.29

25

26

27 28 29

The historical institutionalism literature has argued that radical breaks are not the only way that changes comes about; reforms can also effect change over time (see Mahoney and Thelen, “A Theory of Gradual Institutional Change”). Notably, most of these discussions have focused on extant democratic regimes and have focused on the ability of civilian bureaucrats (and elected officials) to work within and around civilian institutions. Arguably (and worth further discussions) is the degree to which incremental reforms can culminate in meaningful changes within coercive institutions such as the police and military. Hunter, Eroding Military Influence in Brazil, suggests, based on her earlier work on the Brazilian military, that slow reforms can ultimately matter and endure. The Guatemalan police are unitary (with a single national police corps), a trait shared with police in Bolivia, Colombia, Cuba, Ecuador, El Salvador, Haiti, Nicaragua, Panama, Paraguay, Peru, the Dominican Republic, Uruguay and Venezuela (see Casas, González, and Mesias, Police Transformation in Latin America, 7, 9–10). Glebbeek, “Police Reform and the Peace Process,” 431–37. Glebbeek, 444. See Lipsky, Street-Level Bureaucracy, for a discussion of street-level bureaucrats. See Yanilda González’s 2014 dissertation, “State Building on the Ground,” for a discussion of the Latin American police as an example of street-level bureaucrats. Also see González, Authoritarian Police in Democracy.

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No clean institutional break occurred with the peace accords.30 This might seem a surprising claim since a new National Civilian Police (PNC – Policia Nacional Civil) was created with the 1996 peace accords, officially announcing various efforts to civilianize, professionalize, and increase police capacity. Even if the reforms removed the Guatemalan police from military control and enacted new educational requirements, in practice there was no major overhaul to replace underlying police institutions and personnel.31 “The Guatemalan government appears to have approached police reform more as a short-term political challenge rather than as a long term, institution-building effort crucial to the consolidation of democracy in Guatemala. Reform of the Guatemalan police forces was never easy because of their violent history, and the influence the army had in blocking important reforms. Although the Peace Accords provided an important framework and opportunity for actual reform, hardly any details were given as to how this reform should be implemented.”32

President Arzú, following the peace accords, chose to prioritize increasing the number of police officers, deployment throughout the country, and joint police-military patrols – all of which relied on extant resources and short-term fixes over deeper reforms to professionalize the military and engage in serious institution building.33 As such, the institutional and behavioral weight of the past remained: with a legacy of non-democratic institutions, lack of accountability to civilians, and 30

31

32 33

Police reform for the most extreme cases of police weakness, corruption, and complicity arguably requires clean breaks – with new institutions, a clear set of mandates (distinguishing between the police and military, as well as police and district attorney’s office), sanctioning mechanisms for rogue and corrupt agents, and arguably new personnel. Compromising on any of these listed changes increases the likelihood that old practices persist. It is not simply (or primarily) budgets or size that drive the outcome. Rather, it is a question of who is in office (new versus old personnel), sanctioning mechanisms, training, and mandates with defined role specification that clears the way for a force committed to policing. Otherwise, it is likely that past practices will persist. See Yashar, Homicidal Ecologies, Part III. Also see Jose Miguel Cruz, “Criminal Violence and Democratization in Central America,” which makes a parallel argument about the legacies of state formation (although he theorizes these reforms as part of democratization) and emphasizes that corruption remains endemic in these institutions in much of Central America. The persistence of institutional weakness and individual corruption (by petty and high-ranking officers) is rampant. See Ruhl, “The Guatemalan Military,” on the peace accords and their impact on the military. Also see Glebbeek, “Police Reform and the Peace Process in Guatemala.” Moran, “El Salvador and Guatemala,” and Stanley, The Protection Racket State, have argued that the strength of organizations coming into the peace accords affected the depth of the reform agenda – going further in El Salvador, which had strong political associations on the left and right, than in Guatemala, where the military predominated in the context of a weakened left/ URNG and a powerful economic elite (albeit one without a serious political party). Moran indicates that this affected the depth of the reforms and the weakness of what followed in Guatemala. Glebbeek, “Police Reform and the Peace Process,” 451. Glebbeek, “Police Reform and the Peace Process.”

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recycling of agents from one coercive branch to another. There was no effort to dismiss prior police officers (many of whom had been involved in the most atrocious human rights abuses during the military period). And the Spanish Civil Guard (based on an assistance program signed with the EU in 1996) assumed the role of training and advising the new force.34 By 1999, some 73% of the Guatemalan police were filled with members of the former national police.35 The peace accords did not fundamentally restructure the police, nor did it create a more capable police force. A government-UN-Danish study reported on several deficiencies in the police.36 The Guatemalan press summarized some of these issues as an inability to combat organized crime, low trust, and a precarious administration – featuring, in particular, the low capacity of the Investigation Department (Academia de Investigaciones) to fight organized crime and the ongoing connections between Civil Intelligence and the Old Military Intelligence.37 The press generally reported on the police’s low capacity – including insufficient police agents and resources to meet the demand;38 a lack of “special forces” police; insufficient technology; insufficient data; lack of inter and intra-departmental coordination; lack of helicopters in the Department of Antinarcotics Operations (DOAN); and lack of anti-riot technology.39 In 2000, Prensa Libre reported that the “PNC is impotent in fighting crime,” a statement supported by quotes from the PNC director, Rudio Lecsan. “We haven’t been able to consolidate a PNC capable of resolving security problems.”40 Academics also commented on this weak capacity, including an interview with security expert Gabriel Aguilera

34 35 36

37 38

39

40

Interview with an anonymous source from US Embassy (August 4, 2006; Guatemala City, Guatemala); Glebbeek, 438; Moran, “El Salvador and Guatemala,” 47. Moran, “El Salvador and Guatemala,” 49. The 1999 study was jointly conducted by Guatemala’s Ministry of the Interior (Ministerio de Gobernación), the UN Mission (Misión de Naciones Unidas para Guatemala/Minugua) and the Danish Center for Human Rights (Centro Danés para los Derechos Humanos). “PNC acepta debilidades,” Prensa Libre, March 20, 2000. In Escuintla, one article reports on the insufficient number of investigators to cover the rise in violence. See “Clima de inseguridad agobia a escuintlecos,” La Prensa Libre 2000.2.17. In San Marcos, the PNC also complained of insufficient agents per capita – “Disminuye seguridad,” La Prensa Libre 2000.12.14. The institutional weight of the past has arguably provided obstacles to achieving the police mandate. Birgit Gerstenberg, head of the Proyecto de la Academia de la Policía Nacional Civil, PNC, as part of the Misión de Naciones Unidas para Guatemala/Minugua noted that the peace accords required a “recycling” of security personnel, without which there would have been 12,000 unemployed police officers. Nonetheless, the old security forces that remained were not unencumbered but rather encumbered those who might have wanted to achieve reform. As Julio Arango Escobar (PDH) put it: “La intromisión de las fuerzas militares perdura, y por ello las autoridades deben ponerle fin al problema, pues nos hace retroceder en la justa aplicación de la justicia.” See “PNC se encuentra dividida,” La Prensa Libre 2000.4.6. “PNC Impotente en combate del crimen,” La Prensa Libre (7/11/00).

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Peralta, who noted a decade after the peace accords that the PNC had low capacity as indicated by low levels of entry, low academic training, and limited resources – alongside a state penetrated by organized crime.41 Indeed, the police have been far from a professional organization. Educational requirements for the Police Academy have been low (after the civilian police were formed, they were raised from 6th to 9th grade completion). Yet, it does not seem that the educational requirement was always met by incoming recruits or that those admitted had passed the entrance exams.42 In WOLA’s study of four Central American police forces (Guatemala, El Salvador, Honduras, and Nicaragua), Guatemala’s stood out as the only one without a formal police career law:43 “Corruption, political interference, and nepotism” has plagued the nominations and promotion process, there has been a shortage of mid- and high-career officers, and there has been a continual change in the high command, according to WOLA.44 Turnover rates have been a serious issue, moreover.45 In turn, the police have not delivered on their basic ability to pursue cases. Guatemala’s homicide clearance rate has been shockingly low (in a region whose homicide clearance rates are already among the lowest in the world).46 Actual conviction rates are presumably even lower;47 UNODC Crime Trends Survey reported the following convictions rates – a low in Guatemala (6% in 2009) and El Salvador (2% in 2006) in contrast to Costa Rica (46% in 2006)48 – calculated as a share of all cases brought before the court.49 Figure 5.2 reveals that conviction rates have improved slightly over time, but remain far behind the 41 42 43 44 45

46

47 48 49

Interview with Gabriel Aguilera Peralta, July 28, 2006. Glebbeek, “Police Reform and the Peace Process,” 444, 448. Washington Office Latin America (WOLA), Serve and Protect?, 17–8. WOLA, Serve and Protect?, 17–8. During the presidency of Alfonso Portillo (2000–2004), there were eight police directors and three interior ministers; during the presidency of Oscar Bérger (2004–2008), there were three police directors and three interior ministers; and during the presidency of Alvaro Colom (2008–2012), the pattern continued (WOLA, Serve and Protect?, 18). Homicide clearance rate is the percentage of recorded crimes for which a suspect is identified. Based on data for 11–14 countries in 2007–8 and 2011–2012 data, one can see striking regional disparities. Latin America has an estimated homicide clearance rate around 50% (conviction rate of 24 per 100 victims), compared to Europe’s homicide clearance rate of around 85% and an estimated global average homicide clearance rate of 60% (based on 41–60 countries, with a conviction rate of about 43 perpetrators per 100 victims) (UNODC, Global Study on Homicide 2013, 18, 92). In an early report, Guatemala came in at 7% compared to El Salvador’s 44%, Nicaragua’s 81% and Costa Rica’s 82% (United Nations Office on Drugs and Crime, Crime and Development in Central America, 31–31). Also see Brannum, “Guatemala 2018,” 267. United Nations Office on Drugs and Crime, Transnational Organized Crime in Central America and the Caribbean, 77. United Nations Office on Drugs and Crime, 77. Interview with anonymous source from US Embassy (August 4, 2006; Guatemala City, Guatemala). This source also estimated that the prosecution rate is less than 3% (i.e., that

Convition Rate (convictions/100,000 pop.)

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CONVICTION RATES BY COUNTRY FOR CITIZENS (ADULTS) IN CENTRAL AMERICA AND MEXICO, 2003–2016 (RATE PER 100,000 FOR ALL CRIMES) 350 300 250 200 150 100 50 0

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: UNODC 2018

Costa Rica

El Salvador

Guatemala

Mexico

Nicaragua

Panama

Honduras

figure 5.2  Conviction rates by country for citizens (adults) in Central America and Mexico, 2003–2016 (rate per 100,000 for all crimes) Notes: “Persons Convicted” refers to “Persons found guilty by any legal body authorized to pronounce a conviction under national criminal law, whether or not the conviction was later upheld. Persons receiving a sentence after plea-bargaining, or in an abbreviated court procedure, should be counted as persons convicted. The total number of persons convicted should also include persons convicted of serious special law offences but exclude persons convicted of minor road traffic offences, misdemeanors and other petty offences.” (According to UNODC data accessed July 2020). https://dataunodc .un.org/data/crime/Persons%20convicted. Graph updated by Diana Sandoval Simán in July 2020. New graph based on the 2018 UNODC dataset entitled “Criminal Justice System Process: Persons convicted counts and rates per 100,000 population” available at https://dataunodc.un.org/data/crime/ Persons%20convicted. Accessed July 2020. Original graph created by Daniela Barba-Sánchez using Stata. Data available at: www .unodc.org/unodc/en/data-and-analysis/statistics/crime.html (accessed on September 17, 2014). According to data accessed in 2014, changes in definitions and/or counting rules are reported by Panama to indicate a break in the time series.

less than 3% of 225,000 cases reach the public prosecutor’s office/ministerio público); the source elaborated that less than 3% file formal complaints and of these less than 1% are prosecuted; it was estimated that homicides have a resolution rate of less than 5%. While these numbers are not corroborated, they feed into the generalized sense among experts working in this area that the homicide clearance rate, prosecution rate, and resolution are paltry.

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rest of the region. And, even while homicide rates have declined since 2009, arrest and conviction rates remain low:50 “CICIG reported in 2015 that the impunity rate for homicide was close to 95% (CICIG 2015).”51 Low homicide clearance rates and poor investigation have also been noted with respect to concerns of femicide.52 In turn, the press reported that the state seems to have little interest in resolving these crimes, in some cases blaming the victim and their families.53 Alongside professional incompetence, the police are often considered among the most corrupt sectors of society – including by United Nations Agencies and NGOs working in Latin America.54 In a comparative study of Central American police, WOLA55 found that Guatemala’s police force were severely lacking (as were the forces in El Salvador and Honduras) – penetrated by organized crime, lacking in internal discipline and accountability, among other indicators. While initially modeled after the Spanish Civil Guard model (from where most funding emanated), the police disciplinary model was reformed in 2003 (with help from MINUGUA, international aid agencies, and members of civil society). Yet even with these changes, WOLA found that the police were still penetrated (or influenced) by organized crime; riven by corruption; and engaging in serious human rights abuses. “The inability to monitor and control the police is due in large part to the weakness of internal control mechanisms and the lack of real support from police leadership.”56 Police records (which presumably underreport the level of the problem) indicate that in 2003, there were almost 1600 complaints of serious criminal activity and/or infractions by the police, ostensibly affecting some 12% of the Guatemalan police force; of these complaints, 33% were not investigated; 55% were investigated but found inconclusive; leaving just 12% remaining.57 In this context, around 60% of the population perceives the Guatemalan police as involved in crime – among the highest in the region (Figure 5.3). 50 51

52

53

54 55 56 57

Brannum, “Guatemala 2018,” 267. Brannum is citing: CICIG. Sistema de la mediación de la impunidad en Guatemala. Comisión Internacional Contra la Impunidad en Guatemala, 2015. Retrieved 14 August 2019 from https://cicig.org/uploads/documents/2015/Docto_SisMedImp_20160414.pdf. Also see Taft-Morales, “Guatemala: Political and Socioeconomic Conditions,” 7 for a discussion of how CICIG’s assistance to the Public Ministry coincide with increased conviction rates. As Figure 2 shows, however, the rates still remain strikingly low. UNODC reports on homicide by sex of victim in their online dataset – although it does collect data on femicide, in particular. See https://dataunodc.un.org/data/homicide/Homicide%20 rate%20by%20sex. “Suspenden licencias para armas ofensivas,” La Prensa Libre, 2005.2.17. “Ni protección ni justicia,” La Prensa Libre, 2005.6.10; and Azam Ahmed, “Women are ­Fleeing Death at Home. The U.S. Wants to Keep Them Out.” New York Times, Aug. 18, 2019. www.nytimes.com/2019/08/18/world/americas/guatemala-violence-women-asylum.html. See UNODC, Crime and Development in Central America, 30, citing Transparency International’s Global Corruption Barometer (2005) and WOLA, Serve and Protect?. WOLA, Serve and Protect?. WOLA, Serve and Protect?, 22. WOLA, Serve and Protect?, 22.

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figure 5.3  Belief that police are involved in crime (2004–2014). Source: LAPOP Data 2004–2014 Core Data. Specific country data for years 2010 and 2014. Research by Yanilda González and Daniela Barba-Sánchez. Graph prepared by Daniela Barba-Sánchez using Stata.58 NB: This question was posed in only three cases in the 2016/2017 LAPOP questionnaire. It was not asked in 2018.

Stepping back, these observations underscore the high levels of distrust, a lack of serious investigation, and a climate of perceived impunity. While the Office of Professional Responsibility saw its staff reduced by almost half between 2004 and 2006, there has been a practice of transferring police to other units rather than pursuing investigations of them; and when cases are sent to the Ministry of the Interior, the courts rarely prosecute them.59 58

Question AOJ18 in LAPOP 2004–2012 Codebook (Merged Datasets): “Some people say that the police in this community (town, village) protect people from criminals, while others say that the police are involved in the criminal activity. What do you think? (1) Police protect or (2) Police involved in crime (3) [Don’t Read] Doesn’t protect, but is not involved in crime or protects and is involved in crime (8) DK/DR.”   The data for 2014 comes from the specific country questionnaires for Argentina and El ­Salvador, and from the 2013 questionnaire for Colombia, given that the survey question was not included in the core questionnaire in 2014. The wording of the question was consistent across questionnaires. 59 WOLA, Serve and Protect?, 22–3.

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A high-profile incident in 2007 placed the police’s shoddy record in sharp relief. In that year, police officers were not only implicated in gunning down three Salvadoran politicians traveling by car on the Pan-Am Highway (these Salvadoran politicians were themselves suspected of involvement in the drug trade) but then these same police officers were also detained and gunned down a few days later in a Guatemalan, maximum security prison, where they were awaiting investigation.60 This scandal led to a round of resignations and police reforms. Some 3,000 officers were dismissed within the next year; efforts were made to improve discipline; but WOLA61 notes that officers have rarely been subject to criminal investigation – with dismissal serving as the more likely penalty. While dismissal can act as a deterrent for some, it is not a particularly harsh measure. Yet some concluded that this incident lay bare the evident ties between top state officials in the police and Interior Ministry (Ministerio de Gobernación), a pattern that was not new in the country.62 Overall, despite some institutional reforms, there is no doubt that throughout the 1990s and 2000s, police corruption, criminality, and complicity have been ongoing issues – including at the highest levels.63 Police brutality and criminality are also an issue. In the context of calls to purge the National Civil Police (PNC), the country’s Human Rights Prosecutor (Procurador de los Derechos Humanos/PDH) stated that “53.44% of the violations of fundamental rights were committed by actors (elementos) in the PNC in 1999.”64 Off-duty police officers are also reportedly engaging in violent crimes; a series of 2000 newspaper articles reported on police involvement in attacking armored trucks (Santa Rosa); hold ups (Petén), extortion (Petén), and carrying pistols off duty.65 Over the years, many articles have highlighted other cases of police complicity.66 Police crime and corruption, thus, are widespread and have sparked complaints lodged with the Human Rights Prosecutor (PDH) and occasional purges (a pattern also found in the military) for crimes that included corruption, extortion, kidnapping, assault, drug trafficking, homicides, and rape.67 Police involvement in crime, in fact, has been so pervasive that the National

60 61 62 63 64 65

66 67

This incident was reported in all the papers. For a succinct overview, see WOLA, Serve and Protect?, 23. WOLA, Serve and Protect?, 23. Ranum, Street Gangs in Guatemala, 76. WOLA, Serve and Protect?, 30. “Piden depuración de PNC,” Prensa Libre, 2000.3.23. “Policías de día, pillos de noche,” Prensa Libre, 2000.11.26. Also see the following Prensa Libre articles for reporting on similar sorts of incidents: “Depurarán la PNC,” 2000.1.26; “Piden depuración de PNC” 2000.3.23; “Siguen abusos de policías,” 2000.4.15; “Policías de día, pillos de noche,” 2000.11.26; “Sindican a PNC en hechos criminales,” 2000.9.9; “Policía descarta ‘limpieza social,’” 2000.5.18. See for example, www.prensalibre.com/pnc-esta-calada-por-criminalidad, August 17, 2015. See for example, “Destituyen a 542 policías,” La Prensa Libre, 2005.1.6; “Delinque el 20% de agentes de la PNC,” La Prensa Libre, 2005.8.12.

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Civil Police created a unit (La Unidad Multidisciplinaria) in 2005 to investigate these issues, with the director stating (aware of at least three “bandas” operating within the police): “It is not anything new, and we know that we have to combat it.”68 Acknowledging the depth of the problem, then Chief of Police Erwin Sperisen (the National Civil Police director) indicated that 20% of police officers were involved in crime, leading to the dismissal of 500 agents in that year alone (reported in August 2005).69 Disciplinary orders, problematic mindsets, and poor resources were also problems identified by the Police Chief.70 Sperisen starkly noted the overall inability of the police to do its job. Let me give you but one clear example: in the United States, bank security experts tell banks that if they come to assault you, don’t put up a fight, because there is a 98 percent chance that the criminal group will be caught. Here what they say is that you should not let them enter and that you should defend yourself in any way you can, because we are not going to catch them … why? Because we do not have the tools, we are a Police without resources. Tools don’t only include people but also technology, legislation, and investment.71

Chief of Police Sperisen’s comments are striking, given his own sordid trajectory. Appointed in 2004, Sperisen fled in 2007 to Switzerland, where he has dual citizenship. He in turn was arrested in Switzerland in 2012 for violent criminal acts, based on investigations by CICIG (Comisión Internacional Contra la Impunidad en Guatemala). He was charged with involvement in overseeing the 2006 extrajudicial killing of prisoners at El Pavón Prison by security forces – reportedly to take the prison back from the gangs. However, CICIG also suggests that he was part of a criminal organization, along with former Minister of the Interior, Carlos Vielman. Former prison system director Alejandro Giammattei was also implicated (although that did not stop him from running four times for president – a run that was successful on August 11, 2019).72 The accused “formed part of a criminal organisation based in the interior ministry and civil police that was dedicated to extrajudicial executions of people detained in

68

69 70 71 72

“Siguen abusos de PNC en la capital,” La Prensa Libre, 2005.7.11; “Investigan a policías por hechos delictivos” La Prensa Libre, 2005.7.26; “Capturan a banda de policías,” La Prensa Libre, 2005.7.24. “Delinque el 20% de agentes de la PNC,” La Prensa Libre, 2005.8.12. “Policía en democracia,” La Prensa Libre, 2005.7.16; Erwin Sperissen: “Una policía sin recursos,” La Prensa Libre, 2005.4.17. Erwin Sperissen: “Una policía sin recursos,” La Prensa Libre, 2005.4.17. BBC News, Latin America and Caribbean. “Switzerland arrests Guatemala ex-police chief Sperisen.” www.bbc.co.uk/news/world-latin-america-19445049 (accessed on August 18, 2013). Also see El Periódico, April 15, 2013 “Declaran testigos en caso contra Sperisen, V ­ ielmann y Figueroa” www.elperiodico.com.gt/es/20130415/investigacion/226941/ (accessed on August 18, 2013); and Prensa Libre June 12, 2011, “Cierran proceso contra el exministro Carlos Vielman” www.prensalibre.com/noticias/Cierran-proceso_0_604139597.html (accessed on August 18, 2013).

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­ risons,” CICIG [UN-backed international commission against impunity in Guatep mala] said in a statement. The group was also involved in other crimes including ‘murder, drug trafficking, money-laundering, kidnapping, extortion and the theft of drugs’, it further alleged. Among the accused are the former interior minister Carlos Vielman and former prison service director Alejandro Giammattei – a losing candidate in the 2007 presidential election. The international commission against impunity in Guatemala was set up by the UN in 2006 to help Guatemala reform its justice system and confront organised criminal gangs that have infiltrated the state.73

In 2014, Sperisen was sentenced in Switzerland to life in prison for the extrajudicial killing of seven prisoners at El Pavón, although the CICIG report suspected high-level criminal activities across the board.74 The Guatemalan state, in short, has a police force that has proven incapable of policing itself and the territory that it is supposed to protect. In this regard, it also has not achieved effective territorial reach.75 A senior Guatemalan official acknowledged its own problem with state weakness when the Ministry of the Interior (Gobernación) identified 58 municipalities as “ungovernable” or “without police presence.”76 In short, while Guatemala’s police force wields arms, it lacks the kind of organizational competence, territorial reach, professionalism, and integrity to maintain law and order across the country. While it polices in a post-military period, it has not developed the kind of democratic policing and capacity that one would have hoped with the transition to electoral rule and subsequent peace accords. As such, there has been latitude for illicit activity within its own ranks and among entrepreneurial actors eager to take advantage of illicit markets. So too, we have seen the rise in a wide range of alternative forms of security to fill the void – including private security firms for those who can afford to pay for them, community policing, and even vigilante groups.77

73 74 75

76 77

BBC News, Latin America and Caribbean. “Switzerland arrests Guatemala ex-police chief Sperisen.” www.bbc.co.uk/news/world-latin-america-19445049 (accessed on August 18, 2013). BBC News, “Guatemala ex-police chief jailed for life by Swiss court.” www.bbc.com/news/ world-europe-27740109 June 6, 2014 (accessed online on 2/19/2015). As Michael Mann (1984) theorized and many others have noted, the actual infrastructural power of the state varies considerably within their own territories – a point highlighted in O’Donnell’s 1993 discussion of brown areas in Latin America and further conceptualized and studied by a newer wave of important scholarship (Soifer and Vom Hau, “Unpacking the Strength of the State”; Soifer, State Building in Latin America; and Giraudy and Luna, “Unpacking the State’s Uneven Territorial Reach”, among others). While it is relatively easy to note where the police are not present, identifying its poor performance and/or complicity is much more difficult. United Nations Office on Drugs and Crime, Transnational Organized Crime in Central America and the Caribbean, 67 (quotes in UNODC text). See Arias and Ungar, “Community Policing and Policy Implementation”; Frühling, “A Realistic Look at Latin American Community Policing Programs”; Bateson, Security from Below; and González, State Building on the Ground.

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Military and Police: Unclear Boundaries. The police’s poor record has been troubled, moreover, by poor role specification78 vis-à-vis the military.79 Formally, since the peace accords, the military and police have been institutionally separate; military officers cannot command police units and the police are not subordinate to the military institutional structure.80 In practice, however, the boundaries between these institutions have not always been clear – not least since the military has ultimate authority to maintain Guatemala’s internal security, and military intelligence trains the police’s criminal investigation service.81 According to WOLA, the police/military divide is often merged; the military has been brought in to redress citizen security issues – generally seen as a domestic issue that forms part of the police mandate – particularly since the police have proven incompetent. Then President Portillo announced in March 2000, for example, that the army would join the National Civil Police (PNC) in public security “due to the PNC’s incapacity to confront organized crime and delinquency.”82 The incorporation of the military is fraught. The military entered the democratic period with a powerful, coercive branch with a long history of human rights abuses.83 Accordingly, the peace accords ostensibly sought to reform the 78 79

80 81 82

83

Withers, Santos, and Isaacson, Preach What You Practice; Casas, González, and Mesías, Police Transformation in Latin America, 10. Role specification requires that the police know its mandate and that the boundaries of the job are clearly defined. Unfortunately, police functions in Latin American countries have been neither clearly defined vis-à-vis the military (Withers, Santos, and Isaacson, Preach What You Practice) nor vis-à-vis the attorney general’s office (in terms of investigative responsibilities, for example). Withers, Santos, and Isaacson identify this poor role specification when they observe that a) governments (including United States aid programs) have not historically built up Latin American police forces, which have taken a back seat to the military as a coercive institution; b) that there is a not a bright line to demarcate military and police functions in all cases, save in Argentina, Chile and to a lesser degree in Uruguay; and that therefore the military has assumed (to varying degrees) many police functions in Mexico, Central America, the Andes, and Brazil. Ruhl, “The Guatemalan Military,” 74–5. Ruhl, 74–5. “Seguridad: Preocupa a diputados participación militar,” La Prensa Libre, 2000.5.27. Also see “Ejército dará seguridad ciudadana,” La Prensa Libre, 2000.5.25; and “Seguridad: Pobre inicio,” La Prensa Libre, 2000.6.18. The Guatemalan military governed (often very coercively) for most of the 1954–1985 period. It formally relinquished power in 1985 when President Vinicio Cerezo was elected. However, no one doubted that it maintained significant autonomy and authority over this very weak civilian president, as human rights abuses continued (as did the civil war). The 1996 Peace Accords provided another formal change that reduced and constrained the military’s power as it also ended the civil war that had raged for decades. Following the peace accords, institutional changes took place, although many former human rights abuses remained in office and/or maintained influence. Ruhl recounts that President Portillo (the second president following the peace accords) reportedly was counseled by former military officers who had been identified with past human rights abuses (at the time president of legislature, General Ríos Montt; and General Ortega Menaldo); and alleged collaboration with the Moreno gang’s criminal activities (General Ortega Menaldo; Colonel Jacobo Esdras Salán and Major Napoleón Rojas – all of whom had been dismissed by prior president for their alleged activities) (Ruhl, “The Guatemalan Military,” 68–9).

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military and police in line with the demands of a democratic society.84 Yet, both institutions have been roundly criticized. In the post-civil war period, human rights abuses have been an issue and impunity has largely reigned. Charges of corruption, complicity, and incompetence, moreover, have been pervasive. Yet the military (including both active duty and retired military personnel) have remained largely immune from prosecution and were not held accountable to the rule of law.85 Thus, while its brute force signaled strength, its conduct signified a riddled institution open to capture and profit-seeking. Reports and purges highlight the pervasiveness of the problem during this period (a possible legacy of the military period itself).86 Discipline, accountability, and honesty have been severely lacking in the military. The military has been subordinated to civilian rule and yet sustains significant autonomies and immunities – including limited civilian involvement in, or supervision of, military affairs and lack of fiscal clarity or accountability.87 The administration of President Oscar Berger, faced with this problem, forced early retirement on 500 military officers and significantly reduced its size to 15,500.88 Even so, the military’s integrity has consistently been called into question with charges of complicity and corruption. Given this checkered history, it is striking that presidents have continued to rely on the military for domestic “security.” It is not just that the military has consistently violated and stood above the rule of law, but that it is also not trained to address domestic policing. Accordingly, some military officers stated that the military was not prepared to fight organized crime or delinquency and

84

85 86

87 88

For example, President Arzú asserted civilian control over the military as he took office and during the peace accords (in part because of a discredited military and increasing elite autonomy from it). Of the reforms implemented, reductions in military size and budget decreased by an estimated one-third – with the Congress gaining control over defense spending (Ruhl, “The Guatemalan Military,” 60–1). Four military zones and 35 garrisons were closed (Ruhl, “The Guatemalan Military,” 61) – decreasing their bases in the countryside; and the president tried to decrease military jurisdiction by holding military men accountable in civilian courts, although the courts did not convict any military officers of serious crimes before Ruhl’s report was published (Ruhl, “The Guatemalan Military,” 61, citing Spence 1998). However, many other substantive reforms did not take place – with the military still playing a key role in gathering domestic intelligence (as opposed to developing the primacy of a civilian intelligence agency); and keeping some military institutions intact (i.e., EMP); no civilian was named as defense minister; and human rights impunity remained an issue (see Ruhl, “The Guatemalan Military,” 60–1, 79). Ruhl, “The Guatemalan Military,” 77–8. Some suggest that this pattern of corruption predates the democratic period (Peacock and Beltrán, Hidden Powers in Post-Conflict Guatemala; Moran “El Salvador and Guatemala,” 9). Moran argues: “During the period of internal conflict, the military regime in Guatemala relied more than the Salvadoran military on drugs and illicit activity to fund counterinsurgency activities.” Ruhl, “The Guatemalan Military,” 65, 79. Ruhl, 79–80.

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that they preferred to leave this responsibility to the police.89 Nonetheless, subsequent Guatemalan presidents have relied on the military to aid the police in the fight against organized crime and delinquency. Rather than restricting the military’s role, in some cases, presidents increased it. President Portillo, for example, expanded missions and increased the military budget beyond previously agreed upon limits.90 Thus, Guatemala’s military started to patrol civilian tasks – a job generally seen as the professional responsibility of the police. President Berger announced that the police patrols would be joined by an increased number of army personnel – with priority given to Guatemala City, Petén, Izabal, Zacapa, Santa Lucía Cotzumalguapa, San Marcos and the borders. To guard against abuses, he noted that the Human Rights Attorney General’s Office (Procuraduría de los Derechos Humanos, PDH) would accompany the patrols.91,92 This blurring of military-police lines also occurred in El Salvador as the government devised its strategy to deal with increased violence.93 The Judicial System. Weak police capacity also finds echo in a weak judicial system. While numbers increased for judges and courts (the number of judges doubled between 1994 and 1995 and over 100 new courts were created after the peace accords), institutional capacity remained compromised: insufficient budgets, low salaries, and incomplete training were all obstacles, as was minimal judicial independence and charges of complicity.94 Moreover, it is commonly recognized that the courts have historically been severely compromised by the inability of the state to protect judges, prosecutors, and witnesses (a point made by Ruhl specifically when noting how difficult it has been to prosecute military men charged with past human rights abuses).95 CICIG (The International Commission against Impunity in Guatemala – discussed further below) also documented the lack of state response to violent crimes: “Of some 50,000 crimes reported per month in 2010 only 429 were solved, resulting in an astonishing impunity rate of over 99 percent.”96 These data coincide with a widespread perception that impunity reigns high.97 The U.S. Assistant Secretary of State for the Western Hemisphere Affairs 89

90 91 92 93 94 95 96 97

Ruhl, “The Guatemalan Military,” 67, citing interviews with General Julio Balconi, former Minister of National Defense; General Marco Tulio Espinosa, former Minister of National Defense; and scholar Guillermo Pacheco. Also see Rachael Sieder et al., Who Governs, 41. Ruhl, “The Guatemalan Military,” 71–2. “Presentan nuevo plan de seguridad,” La Prensa Libre, 2005.7.26; “Elaboran plan para ­combatir el crimen,” La Prensa Libre, 2005.7.24. “Medidas contra la inseguridad,” La Prensa Libre, 2005.7.18. Yashar, Homicidal Ecologies, Chapter 6. Kitroeff, “Touching the ‘Untouchables’,” 53, drawing on Sieder. Ruhl, “The Guatemalan Military,” 78. Kitroeff, “Touching the ‘Untouchables’,” 7. There are innumerable examples of concerns about impunity. For example, see “Crímenes en la impunidad,” La Prensa Libre, 2005.1.6; and “Muertes, sin castigo,” La Prensa Libre, 2005.5.18.

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Ambassador Otto J. Reich testified before a congressional committee and indicated: there were increased signs of the participation of clandestine groups in illegal activities linked to employees of the Public Ministry, military intelligence, justice system, and police. These groups appear to act with relative autonomy, and while there was no evidence that they were part of government policy, they did operate with impunity.98

The courts generally also exhibited poor performance. One study found a 10% response rate (of any kind) to cases reported to the judicial system in 2002 and hearings occurred in only 1% of cases of “crimes against life” in 2005.99 Another estimate suggests that of 5,338 reported cases, only 115 successful murder prosecutions took place, which is just over 2% of cases; as they concluded: “In such a climate, the deterrent effect of the law is minimal.”100 Even with the creation of a prosecutor’s office for homicides (Fiscalía de Delitos contra la Vida) to address murders in the Department of Guatemala (not including Mixco, Villa Nueva, San Juan Sacatepéquez and Amatitlán), there remained a paltry record; by mid-2005, charges were made in less than 2% of the homicide cases in the Department of Guatemala (40 out of 2,397, since the creation of the office), according to newspaper reporting.101 With no capacity to protect witnesses, people would not testify, according to the prosecutor. “Let God be the one to judge, since I don’t want to lose more children,” said one victim’s mother.102 With such low performance rates, the courts and prosecutors were hardly serving justice or playing a deterrent role. Other state and professional agencies have also commented on the prevalence of impunity in the court system. The Human Rights Prosecutor (Procurador de los Derechos Humanos), Sergio Morales, stated that only one percent of crimes were resolved (of the 64,000 crimes that were committed each year).103 Of those crimes that were resolved, some complained that judges let the criminals go free.104 The International Commission of Jurists (Comisión Internacional de Juristas, CIJ) also reported that the justice system was riddled with problems, including the lack of investigation, process of appointing judges to cases, threats to judges, impunity, and near absence of sentencing 98 99

100 101 102 103

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Peacock and Beltrán, Hidden Powers in Post-Conflict Guatemala, 8. Levenson, Adiós Niño, 49, citing S. Ramírez and Claudia Paz, Diagnóstica de conflictividad local en la pos-guerra. Guatemala City: Instituto de Estudios Comparados en Ciencias Penales de Guatemala, 2002. United Nations Office on Drugs and Crime, Crime and Development in Central America, 31. “Muertes, sin castigo,” La Prensa Libre, 2005.5.18. “Muertes, sin castigo.” Also, see “Antejuicio por no investigar muertes,” La Prensa Libre, 2005.10.14, for a discussion of the lack of murder investigations. Sergio Morales: “Violencia es una amenaza,” La Prensa Libre, 2005.8.14. In this article, the reporter remarked, “Hay una percepción de la población de que la PDH defiende delincuentes,” and the Procurador replied that that is an understandable impression to have. “Preocupa libertad de delincuentes,” La Prensa Libre, 2005.2.15.

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(only 3% of complaints presented to the Ministerio Público were taken as far as sentencing).105 It is not just that there is intimidation of the members of the courts, it is that there is widespread corruption and impunity, as highlighted by both a UN Special Rapporteur and an InterAmerican Commission on Human Rights of the OAS.106 The scope of judicial incapacity is also highlighted by the difficulty of protecting judges and finding judges willing to serve in high-conflict areas. Judges are themselves victims of homicide, placing obvious challenges for those judges remaining on the bench or those asked to serve; not only have many judges feared for their lives but also those overseeing high-profile cases find it difficult to issue rulings and sentences.107 These have been issues particularly in places holding trials for drug trafficking.108 The President of the Tribunal de Alto Impacto, Carlos Guillermo Sosa, remarked: “We give thanks because they have not captured the leaders of the drug cartels, because I doubt that anyone could protect us.”109 Solving cases and issuing sentences is thus more than a procedural act of justice; sometimes, prosecutors and judges have themselves become victims in this process. Thus, the police’s low homicide clearance rate echoes the courts limited ability to judge.110 As Mayra Alarcón, from the renowned Myrna Mack Foundation, stated regarding the state in general, “there is no institutionalization…. No institutionality … the message is that there is a lack of certainty regarding the value of the rule of law. There is a subliminal message of total, extrajudicial insecurity.”111 In this context, we should perhaps not be surprised by Celvin Galindo’s declaration that “people in the Ministerio Público are afraid to talk.”112

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109 110

111 112

“Justicia está en crisis,” La Prensa Libre, 2005.8.6. This point was also cited in an interview with an anonymous source from US Embassy (August 4, 2006; Guatemala City, Guatemala). Peacock and Beltrán, Hidden Powers in Post-Conflict Guatemala, 43. See for example, La Prensa Libre articles in 2005 about murders in San Marcos and Chiquimula, respectively. “Jueces solicitan seguridad” (2005.4.27); “Temor a ser juez en Chiquimula” (2005.5.25). Also see “Jueces y fiscales ven mensaje en últimos atentados” (2005.5.19); and “Conocen amenazas de maras contra jueces” (2005.6.29). See, for example, “Temor a ser juez en Chiquimula” (La Prensa Libre 2005.5.25). In May 2005, the assassination of a high court judge in Chiquimula made it difficult to fill the post – with four lawyers declining the request to do so. The article highlighted how consequential and challenging this post was, in particular, given that it tried many high-profile cases (including drug trafficking charges) from the departments of Zacapa, Petén, and Izabal. These are also the departments that have had the highest death rates in the country – demonstrating both high demand but also potentially high risk. “Jueces y fiscales ven mensaje en últimos atentados” (2005.5.19). Interview with anonymous source from the US Embassy (August 4, 2006; Guatemala City, Guatemala) found similar patterns in the public prosecutor’s office (Ministerio Público), including a situation of overworked and under-resourced staff, incompetence and/or corruption. Interview with Mayra Alarcón, Myrna Mack Foundation, August 3, 2006. Interview with Celvin Galiindo, Fiscal Jefe de la Fiscalía, August 2006.

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Impunity … no longer refers to the lack of accountability for crimes committed during the civil war. The contemporary type of impunity has to be seen as a symptom of weak state structures because the judiciary, in the context of organized crime, is not capable of processing cases and prosecuting crimes (WOLA, 2007, pp. 7ff).113

Two developments, however, suggest some institutional progress in the 2000s: the formation and operation of CICIG (UN-established independent international body, forged in response to a government request for assistance, that investigated corruption and impunity in the state);114 and the appointment of renowned legal scholar and human rights activist, Claudia Paz y Paz, as Guatemala’s Attorney General (serving from 2010 to 2014). Both are impressive advances that are a sobering reminder of the structural obstacles to judicial reform. CICIG had been lauded for working to hold corruption to account (and served as an institutional model for Honduras). According to The International Crisis Group, CICIG helped train police officers and prosecutors; was involved in high-profile court cases; helped pilot reforms (including witness protection programs); helped establish high-risk crime courts and a special prosecutor’s office against impunity; and helped oust corrupt police officers, judges, among others. ICG argues that CICIG helped to reduce violence and increased homicide clearance rates during its mandate. As such, over time CICIG’s profile increased – although not without significant political opposition from the presidency.115 In this context, Claudia Paz y Paz initiated a widely celebrated, and yet short-lived, pursuit of justice. During her term, “the country witnessed record-breaking sentences that increased the country’s ability to reach justice in cases of violence and grave human rights violations. As the first Guatemala law enforcement office to pursue high-ranking combatants of the civil war for war crimes, she engaged in significant institution building (also creating stronger ties with CICIG). During this period, there was the successful conviction of high-ranking members of the military and of the former President Efraín Ríos Montt for crimes against humanity.”116 These were notable advances. However, these actions did not endure. Ten days later, the 113 114

115

116

Maihold, “Intervention by Invitation?,” 7. For a description of the agency (from the perspective of different moments in its institutional arc), see www.un.org/undpa/es/node/183334. Also see Isaacs, “Guatemala on the Brink”; Torres Rivas, “Guatemala: la corrupción como crisis de gobierno”; Maihold, “Intervention by Invitation,” and Brannum, “Guatemala 2018”. Also see International Crisis Group, Saving Guatemala’s Fight Against Crime and Impunity. See International Crisis Group, Saving Guatemala’s Fight, where they report that CICIG’s work corresponded with a decline in homicide rates, a significant rise in the resolution of homicide cases, and other institutional reforms to rout out corruption and crime. They arrived at this conclusion based on interviews and a synthetic control analysis. For a summary of these events, also see www.crisisgroup.org/latin-america-caribbean/central-america/guatemala/ curtain-falls-guatemalas-international-commission-against-impunity. See www.cejil.org/en/claudia-paz-y-paz-assumes-program-leadership-cejils-central-america-andmexico-office (accessed on August 18, 2019).

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Ríos Montt ruling was overturned by the Constitutional Court, and Paz y Paz was forced out of office within the year.117 Some have appropriately credited her (along with CICIG) with shining a stronger spotlight on government corruption, which subsequently and dramatically catalyzed “the avalanche of corruption scandals that shook the political foundations of her native Guatemala” and contributed to the groundswell that cut short the terms of then-President Otto Molina and his Vice President Roxanna Baldetti (both of whom ended up in prison).118 Yet, corruption still remains endemic in the country.119 The subsequent President, Jimmy Morales, was charged with corruption; he completed his term but not before forcing out CICIG (and its leader), responsible for levying the charge (see Brannum120 for an accounting of Morales support and the opposition to CICIG, especially once it started to investigate his family).121 Revisiting State Complicity and Corruption. In short, weak state capacity in law and order institutions is manifest in the police, military, courts, as well as other state institutions. This has created a propitious context for the growth of illicit actors and activity. This includes illicit activity within the state. We know that former and current military officials have themselves become involved in illicit activity. During the civil war, military officers among others not only became vested in the formal economy (the military had its own bank, which was subsequently absorbed by the Banco del Crédito Hipotecario Nacional in the early 2000s) but also started to engage in organized crime – including arms, drugs, money laundering, car theft, etc.122 While CICIG was momentarily able to play a critical role in holding some of these institutions and actors to account, its own success was apparently its undoing. In this context, state weakness and complicity have been endemic in Guatemala’s rule of law institutions – as well as among the highest elected offices – and have continued, even with the transition to electoral politics. As Karin Wagner from the research think tank, Asíes noted in 2006 when talking about law and order in Guatemala, “There is no respect for institutions.”123 Sadly, this statement still seems to ring true. ***

117

118 119 120 121 122 123

See www.cejil.org/en/claudia-paz-y-paz-assumes-program-leadership-cejils-central-america-andmexico-office (accessed on August 18, 2019). Also see www.insightcrime.org/news/analysis/ claudia-paz-y-paz-and-the-revolution-she-started-in-guatemala/ (accessed on August 18, 2019). See www.insightcrime.org/news/analysis/claudia-paz-y-paz-and-the-revolution-she-startedin-guatemala/ (accessed on August 18, 2019). See Torres Rivas, “Guatemala: la corrupción como crisis de gobierno”; Brannum, “Guatemala 2018.” Brannum, “Guatemala 2018.” See Freeman, “Ending Impunity,” for a comparative discussion of Guatemala and Peru’s efforts to end impunity and tackle grand corruption. Peacock and Beltrán, Hidden Powers in Post-Conflict Guatemala; Kitroeff, “Touching the ‘Untouchables’,” 49. Interview with researcher, Karin Wagner, Asíes, August 3, 2006.

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The comparative historical record leaves one with little optimism about the Guatemalan state and its ability to provide rule of law – even after the end of the civil war and implementation of the peace accords. In this context, the institutions have done little to govern effectively or to hold public officials to account. Politicians have occasionally responded with preventative declarations.124 More common, however, we have witnessed relative impunity coupled with hardline rhetoric, as with former President and former General Otto Pérez Molina. Yet Pérez Molina’s policy stance reveals Guatemala’s deep and underlying challenges. For while Pérez Molina first campaigned on hardline policies to crack down, he subsequently joined other Latin American leaders in the notable effort to spark discussions about decriminalization or legalization of parts of the drug trade. Pérez Molina’s ability to pursue such a track was undermined by his own corruption. In 2015, he submitted his resignation following rising protests and inquiries by the UN-backed International Commission Against Impunity in Guatemala (CICIG) into his leadership role in a multi-million-dollar, customs fraud scheme. While CICIG’s historic role is striking, so too is the corruption through the state. Pérez Molina’s now infamous downfall stands alongside former President Portillo who was extradited to the United States for his role in money laundering125 and President Jimmy Morales (who assumed office in an anticorruption move against Pérez Molina and left office having been investigated by CICIG, with Morales retaliating by ordering out the head of the unit). In the ultimate ironic tragedy, President Giammattei (elected in August 2019) was himself implicated in an earlier scandal investigated by CICIG. He expressed no intention of bringing back CICIG, whose term ended in September 2019.126 As this chapter closes, “rule-of-law backsliding” continues with news about nefarious and corrupt efforts to appoint judges, followed by dubious efforts to dismiss four Constitutional Court judges who have previously sided with anti-corruption efforts.127 With leaders like this, and law and order institutions with such a paltry record, it is evident why Guatemala does not seem safe to Guatemalan citizens. Indeed, state complicity, corruption, and weakness have allowed illicit 124

125 126 127

The press reports that previous Guatemalan presidents did occasionally also call for some degree of prevention. See “Ex pandilleros comparten su experiencia,” Prensa Libre, 2005.5.31; “Clamor por seguridad,” 2005.5.27; “Deporte en lugar de maras,” 2005.7.8; “Educación física y extraescolar para prevenir maras,” 2005.6.20; “Prevención del delito,” 2005.6.15; “Prevención y no mano dura,” 2005.6.23. See New York Times May 25, 2013 and May 28, 2013. Torres Rivas, “Guatemala”; TaftMorales, “Guatemala: Political and Socioeconomic Conditions.” See New York Times: www.nytimes.com/2019/08/11/world/americas/guatemala-election.html (accessed on August 16, 2019). See Will Freeman. “#CortesNoMafias: Guatemala’s Constitutional Court under attack.” July 6, 2020. Accessed on July 7, 2020: https://theglobalamericans.org/2020/07/cortesnomafias-guatemalasconstitutional-court-under-attack/

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economies to flourish – with a significant presence for DTOs and violent gangs. Where these organizational actors compete to control these illicit territorial spaces, violence and insecurity have become an everyday occurrence.128 It is this dynamic that has shaped a homicidal ecology, one that has helped to propel the homicidal violence patterns in Guatemala and elsewhere in the region; one that motives Guatemalan citizens to flee north, in hopes of finding safety and even protection; one that inspires activists to keep on fighting to hold state officials to account.

5.1  conclusion :

liberalism

–

neo and otherwise

Liberalism and Guatemala. The two terms have historically been in tension and remain so. The late nineteenth century Liberal period was led by a string of coercive dictators that relied on an unprofessional, if aggressive, military to advance agro-export interests and restrict the individual rights of citizens (especially indigenous peasants who were subject to debt peonage among other forms of subjugation). The mid-twentieth century was punctuated by a democratic decade (1944–1954) where liberal and collective rights were advanced; and the state was professionalized (including the military, although not the police). However, the “ten years of spring” were interrupted and followed by an increasingly repressive period – including civil war, extensive human rights abuses, and the return of military dictators. This is the state that Guatemalan possessed as it confronted the third wave of democracy. While the subsequent peace accords celebrated individual political rights and put the military officially back in the barracks, the underlying state was liberal in name only; the state remained coercive, corrupt, and saddled by a weak rule of law. And the political party system remained weak (with ephemeral and poorly organized political party organizations) and low societal trust in them.129 In other words, there has been no sustained partisan organization (with clear structures and programmatic positions) to mediate between states and citizen in the realm of formal politics It is in this context that regional neoliberal reforms were advanced. However, neoliberalism as a project did not fundamentally remake the Guatemalan state (as it did in so many other places) as much as become a new moniker to define the Guatemalan state’s already limited role in advancing industrial and social policies. At present, the Guatemalan state continues to support agro-export (now including non-traditional crops/NTAX) as well as other elite projects. It continues to rely on the combined actions of the police and military to address organized crime and gangs, and yet these same institutions are often complicit and/or incapable of addressing these challenges.

128 129

Yashar, Homicidal Ecologies. Isaacs, “Guatemala on the Brink.”

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The devastating irony is that Guatemala in the twenty-first century lacks a state that protects the most basic of rights (liberal or otherwise) – freedom from harm. Guatemalans might no longer harbor the same deep-seated fears that the state will repress them, as throughout much of the twentieth century; however, they continue to fear that the state will not protect them. It should then be no surprise that citizens of Guatemala (as well El Salvador and Honduras) have fled north – not only for economic reasons but also fundamentally to flee homicidal ecologies that define daily life; and to find a more secure life. According to the Pew Research Center, in 2017, the United States was home to some 1.4 million Guatemalans (including both immigrants and those of Guatemalan descent).130 The political farce is unfolding, and Guatemalans (as well as Salvadoran and Hondurans) are getting caught in an institutional matrix where the formal rules profess a commitment to liberalism, but they are belied by not only an illiberal practice but also a corrupt and violent one. “Guatemala cannot even provide protection to its own citizens,” said Eleanor Acer, the senior director for refugee protection at Human Rights First. “It’s ridiculous to suggest that Guatemala can also provide protection to large number of migrants from other countries.”131

As I finish this chapter, I continue to contemplate a series of stories about violence in Guatemala and the challenges of going north. One NYT story covers femicide in Guatemala (even worse in El Salvador and Honduras), the lack of justice for its victims and their family, and the challenges of going north. Fleeing perpetrators, one UN official states: “Despite the risk associated with migration, it is still lower than the risk of being killed at home,” said Angela Me, the chief of research and trend analysis at the “United Nations Office on Drugs and Crime.”132 Echoing those sentiments, Lubia Sasvin Pérez, a victim of domestic violence whose partner, in turn, murdered his mother, concluded: “Here in Guatemala,” she said, “justice only exists in the law. Not in reality.” This is the state of the state in Guatemala. Violence might take different forms. Homicide rates might fluctuate. The unrule of law, however, continues to characterize much of the Guatemalan state.

130

131

132

Luis Noe-Bustamante, Antonio Flores and Sono Shah. “Facts on Hispanics of Guatemalan origin in the United States, 2017.” www.pewresearch.org/hispanic/fact-sheet/u-s-hispanicsfacts-on-guatemalan-origin-latinos/. Michael D. Shear and Zolan Kanno-Youngs, “Trump Officials Argued Over Asylum Deal With Guatemala. Now Both Countries Must Make It Work.” New York Times, August 2, 2019. www.nytimes.com/2019/08/02/us/politics/safe-third-guatemala.html. Azam Ahmed. “Women Are Fleeing Death at Home. The U.S. Wants to Keep Them Out.” New York Times. August 18, 2019 www.nytimes.com/2019/08/18/world/americas/guatemalaviolence-women-asylum.html (accessed on August 20, 2019).

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Ranum, Elin Cecilie. “Street Gangs in Guatemala.” Edited by Thomas Bruneau eds., Lucía Dammert, and Elizabeth Skinner. Maras: Gang Violence and Security in Central America. University of Texas Press, 2011. Rasch, Elisabet Dueholm. “Transformations in Citizenship: Local Resistance against Mining Projects in Huehuetenango, Guatemala.” Journal of Developing Societies 28, no. 2 (2012): 159–84. https://doi.org/10.1177/0169796X12448756. Robinson, William I. “Maldevelopment in Central America: Globalization and Social Change.” Development and Change 29, 3 (1998): 467–97. Robinson, William I. “Neoliberalism, the Global Elite, and the Guatemalan Transition: A Critical Macrosocial Analysis.” Journal of Interamerican Studies and World Affairs 42, no. 4 (2000): 89–107. https://doi.org/10.2307/166343. Ruhl, Mark J. “The Guatemalan Military Since the Peace Accords: The Fate of Reform Under Arzú and Portillo.” Latin American Politics & Society 1, no. Spring (2005): 55–85. Schirmer, Jennifer. The Guatemalan Military Project: A Violence Called Democracy. Philadelphia: University of Pennsylvania Press, 1999. Sieder, Rachael. Who Governs? Guatemala Five Years After the Peace Accords. Cambridge: MA Hemispheres Initiative, 2002. Soifer, Hillel. State Building in Latin America. Cambridge: Cambridge University Press, 2015. Soifer, Hillel, and Matthias Vom Hau. “Unpacking the Strength of the State: The Utility of State Infrastructural Power.” Studies in Comparative International Development 43, no. 3 (2008): 219–30. Stanley, William Deane. The Protection Racket State: Elite Politics, Military Extortion, and Civil War in El Salvador. Philadelphia: Temple University Press, 1996. Taft-Morales, Maureen. “Guatemala: Political and Socioeconomic Conditions and U.S. Relations.” Congressional Research Service Report R42580, 2018. Tilly, Charles. Coercion, Capital, and European States, 990–1990. Oxford: Blackwell, 1990. Tilly, Charles. The Politics of Collective Violence. Cambridge: Cambridge University Press, 2003. Torres Rivas, Edelberto. “Guatemala: la corrupción como crisis de gobierno.” Nueva Sociedad 257, no. July-August (2015): 4–15. Traub-Werner, Mario, and Altha J. Cravey. “Spatiality, Sweatshops and Solidarity in Guatemala.” Social & Cultural Geography 3, no. 4 (2002): 383–401. https://doi .org/DOI: Uildriks, Niels, ed. Policing Insecurity: Police Reform, Security, and Human Rights in Latin America. Lanham, MD: Lexington Books, a division of Rowman Littlefield, 2009. Ungar, Mark. “Police Reform, Security, and Human Rights in Latin America: An Introduction.” In Policing Insecurity: Police Reform, Security, and Human Rights in Latin America, edited by Niels Uildriks. Lanham, MD: Lexington Books, a ­division of Rowman Littlefield, 2009. Ungar, Mark. Policing Democracy: Overcoming Obstacles to Citizen Security in Latin America. Baltimore: Johns Hopkins University Press, 2011. Ungar, Mark. “Prisons and Politics in Latin America.” Human Rights Quarterly 25, no. 4 (2003).

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United Nations Development Program (UNDP). Guatemala. Informe Nacional de Desarollo Humano, 2005. United Nations Development Program (UNDP). Informe estadístico de la violencia en Guatemala. Guatemala City: Magna Terra Editores, 2007. United Nations Office on Drugs and Crime (UNODC). Crime and Development in Central America: Caught in the Crossfire. New York, NY: United Nations Publication, 2007. United Nations Office on Drugs and Crime (UNODC). Global Study on Homicide: Executive Summary. Vienna: United Nations, 2019. United Nations Office on Drugs and Crime (UNODC). Global Study on Homicide 2013: Trends, Context, Data. New York: United Nations, 2014. United Nations Office on Drugs and Crime (UNODC). Global Study on Homicide: Homicide, Development and the Sustainable Development Goals. Vienna: United Nations, 2019. United Nations Office on Drugs and Crime (UNODC). Global Study on Homicide. Trends, Context, Data, 2011. United Nations Office on Drugs and Crime (UNODC). Statistics on Criminal Justice, 2014. “www.unodc.org/unodc/en/data-and-analysis/statistics/crime.html” www.unodc.org/unodc/en/data-and-analysis/statistics/crime.html. United Nations Office on Drugs and Crime (UNODC). Transnational Organized Crime in Central America and the Caribbean: A Threat Assessment. Vienna: UNODC, 2012. United Nations Office on Drugs and Crime (UNODC). World Drug Report 2014. New York: United Nations, 2014. Washington Office on Latin America (WOLA). Serve and Protect? The Status of Police Reform in Central America. Washington, D.C, Washington Office on Latin America, 2009. Washington Office on Latin America (WOLA). “Youth Gangs in Central America: Issues in Human Rights, Effective Policing, and Prevention.” A WOLA Special Report. Washington, DC: Washington Office on Latin America, 2006. Withers, George, Lucila Santos, and Adam Isaacson. Preach What You Practice: The Separation of Military and Police Roles in the Americas. Washington, DC: Washington Office on Latin America, 2010. Woodward, Ralph Lee. Central America, A Nation Divided. 3rd ed. New York & London: Oxford University Press, 1999. Woodward, Ralph Lee. “Guatemala: Year in Review.” In Encyclopedia Britanica, 2008. “www.britannica.com/EBchecked/topic/1493276/Guatemala-Year-In-Review-2008? anchor=ref1014352” www.britannica.com/EBchecked/topic/1493276/Guatemala-YearIn-Review-2008?anchor=ref1014352. World Bank. Crime and Violence in Central America. Vol. 1. Washington, D.C: World Bank Sustainable Development Department and Poverty Reduction and Economic Management Unit Latin America and the Caribbean Region, 2010. World Bank. Crime and Violence in Central America. Vol. 2. Washington, D.C: World Bank Sustainable Development Department and Poverty Reduction and Economic Management Unit Latin America and the Caribbean Region, 2010. World Health Organization, World Report on Violence and Health. Geneva: World Health, 2002.

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Yashar, Deborah J. Contesting Citizenship in Latin America: The Rise of Indigenous Movements and the Postliberal Challenge. Cambridge: Cambridge University Press, 2005. Yashar, Deborah J. Demanding Democracy: Reform and Reaction in Costa Rica and Guatemala, 1870s-1950s. Stanford, Calif: Stanford University Press, 1997. Yashar, Deborah J. Homicidal Ecologies: Illicit Economies and Complicit States in Latin America. Cambridge: Cambridge University Press, 2018. Yashar, Deborah J. “Institutions and Citizenship: Reflections on the Illicit.” In Shifting Frontiers of Citizenship: The Latin American Experience, edited by Mario Sznajder, Luis Roniger, and Carlos A. Forment. Leiden and Boston: Brill, 2013. Yashar, Deborah J. “The Left and Citizenship in Latin America.” In Latin America’s Left Turn: Political Diversity and the Search for Alternatives, edited by Kenneth Roberts Eds. and Steven Levitsky. Baltimore: Johns Hopkins University Press, 2011. Youngers, Coletta A., and Eileen Rosin, eds. Drugs and Democracy in Latin America: The Impact of U.S. Policy. Boulder, Colo: Lynne Rienner Publishers, 2005. Ziegler, Melissa, and Rachel Nield. “From Peace to Governance: Police Reform and the International Community.” Washington, D.C: Washington Office on Latin America (WOLA), 2002.

Part III

INFRASTRUCTURAL POWER: REFORM STRATEGIES

6 Two Roads of Neoliberal Reform in Higher Education Past Policy Decisions Establishing Today’s Type of Reforms in Peru and Chile Eduardo Dargent Bocanegra and Gabriela Camacho Garland

6.1  introduction Among the countries that adopted neoliberal reforms in the 1980s and 1990s, Chile and Peru stand out as cases in which deep reforms drastically changed the institutional landscape and society. Their reforms share many similarities. Indeed, Chilean reforms of the 1980s were frequently used as a blueprint by Peruvian reformers of the 1990s – their purported success was cited to justify the need for similar measures in Peru.1 The university system was no exception. Both countries underwent higher education reforms inspired by neoliberal principles, Chile in 1981 and Peru in 1996. These neoliberal reforms promoted the creation of private universities on the understanding that competition for resources and students would ameliorate the academic quality of the system as a whole and respond more aptly to society’s demand for professionals.2,3 In Chile, the role of the public system as a service provider shrunk in percentage terms, and in Peru, liberalization was seen as a part of the “growth solves everything” neoliberal creed. Beyond the similarities, the two reform projects also had differences: the motives, policy design, and forms of implementation were distinct. In Chile, the military government aimed to weaken the public universities, perceived as hotbeds of socialism. To this end, the junta stressed the reform of the public system based on neoliberal principles, stimulating participation in a free market. Over time, the state promoted access to private universities through state-sponsored loans and credit amid a more comprehensive process of policy implementation. In Peru, the reform was guided by fiscal concerns and the bankrupt state’s need to attract investment. It left the public system untouched, 1 2 3

Weyland, Bounded Rationality. Colclough, “Education and the Market.” Cuenca and Reátegui, “La (incumplida) promesa universitaria.”

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allowing private for-profit universities to live side by side with their public and private non-profit counterparts. These policies did nothing to create state-sponsored incentives for student recruitment to private higher education. State capacity also played a role in the two divergent reform trajectories, although not in the crucial way that would be expected by the academic literature. In Peru – a country ranked low for state capacity in comparative regional studies – the reform failed to develop a proper institutional regulatory framework, leading to very low levels of quality in private higher education. And in Chile, higher levels of state capacity did not exempt it from its own serious problems of quality and inadequate regulation – albeit to a lesser degree. Several Chilean private universities found ways to profit even though this was explicitly outlawed. These outcomes show that the effective regulation of strong private actors providing public services is a challenge even for developing states with higher levels of state capacity. These differences were what led to distinct outcomes and grievances in each country and partly explain the different counter-reforms witnessed in recent times. The Chilean experience was characterized by bottom-up protests for higher education reform that aimed to guarantee more equality in the public system, better quality and cost-free access to higher education, and greater control of private actors. Current and former students from within the higher education system, indebted and dissatisfied, became crucial actors in the broader social movement demanding the reform of neoliberal policies in Chile.4 In Peru, the counter-reform was essentially top-down, focusing on the creation and strengthening of regulatory institutions to ameliorate quality in public and private universities with little involvement of former or current students. In both cases, despite the differences, neoliberal policy feedback processes help explain why the outcomes remain very much part of the neoliberal framework. The article proceeds as follows. First, in a brief theoretical section, we present neoliberal policy feedback, a brief summary of higher education neoliberal reform in both countries, and the relevance of state capacity for the outcomes under consideration. Then, to understand how the neoliberal state worked in higher education, we describe said systems before the neoliberal reforms, the motives behind the reforms implemented in both countries, as well as the similarities and particularities. In the third section, we show how feedback effects transformed higher education in particular ways: new state institutions, private providers, and interest groups emerged; old and new actors gained or lost strength, sometimes in unexpected and different ways than originally designed. Finally, in the last section, we show how these dynamics help to explain the counter-reform efforts in both countries and their limits. To do this, we rely on qualitative interviews conducted in both countries, as well as relevant legislation. We conclude with some general lessons about neoliberal policy effects and some practical lessons for policy reformers. 4

Disi, “Sentenced to Debt.”

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By discussing the determinants, trajectories, and failed promises of neoliberal higher education reform, in this article, we touch on critical issues related to the impact of neoliberal reforms on the state and society in Latin America. The effects of these reforms drastically changed power constellations in both countries, showing that private actors in higher education prove difficult to regulate even in developing states with higher levels of state capacity like Chile. But when coupled with low levels of state capacity, as in Peru, such weak or inexistent regulation can lead to very low-quality levels. Furthermore, these outcomes constitute a new landscape for policy reformers interested in achieving better outcomes in higher education. The shortcomings of higher education before neoliberalism were many, and neoliberal reformers were right in pointing out several of their inefficiencies. Nonetheless, the neoliberal reforms failed to live up to their supposed benefits, showing that private actors have limitations in their provision of certain public goods and that they can bring new problems to the table. In turn, this shows the importance of states being capable of regulating private parties before completely liberalizing their systems.

6.2  neoliberal

policy feedback and state capacity

A growing literature on comparative politics highlights how policy feedback effects help to explain the resilience of neoliberal reforms in Latin America.5 A policy feedback approach points to how the selection and design of certain policies have effects on subsequent political processes; or, to put it more simply, on how “policies make politics”.6 This policy feedback perspective emphasizes the role played by rules and policies adopted during a certain period as generators of permissive or restrictive conditions for future political developments, including, in some cases, reproduction mechanisms that precipitate difficult-to-break trajectories.7 In the words of Pierson,8 “policies provide incentives that encourage individuals to act in ways that lock in a particular path of policy development … [leading to] elaborate social and economic networks, greatly increasing the cost of adopting once-possible alternatives and inhibit exit from a current policy path.” Policies make politics through different mechanisms. First, they provide resources and incentives for the emergence, strengthening, or weakening of interest groups that become defenders or opponents of the policy, pushing for its dismantling or its continuation.9 Second, they produce administrative

5

6 7 8 9

Arce, “The Politics of Pension Reform in Peru”; Ewig and Kay, “Postretrenchment Politics”; Madariaga, “Mechanisms of Neoliberal Resilience”; Bril-Mascarenhas and Maillet, “How to Build and Wield Business Power”; Maillet, “Variedades de Neoliberalismo.” Pierson, “When Effect Becomes Cause,” 596–97; Pierson, Dismantling the Welfare State. Weir, “When Does Politics Create Policy?” 172; Pierson, Dismantling the Welfare State. Pierson, “When Effect Becomes Cause,” 606, 608. Pierson, “When Effect Becomes Cause,” 599–603; Skocpol Protecting Soldiers and Mothers, 59.

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reforms within the state structure, as specialized personnel and resources are required for policy implementation, conditioning the capacity of these areas to promote the new policies10 and prompting the emergence of bureaucratic lobbies that aim to expand them.11 Third, policies have informational effects on elites. When the policies fail, these elites opt for new alternatives. When they are successful, the elites will aim to replicate them (a process called policy learning).12 Fourth, policies have an impact on political participation, as policy beneficiaries, or those affected by these policies, develop a civic identity and collective interests that other groups do not possess.13 The “first wave” of policy feedback literature focuses on how welfare reforms created or benefited organizations and interest groups that in the 1980s were key to resisting neoliberal efforts to retrench the state.14 The “second wave” of the literature centers on neoliberal or retrenchment policy feedback in terms of how similar feedback mechanisms account for the resilience of neoliberal policies. Specifically, in this second wave, more prominence is given to the role played by private providers of public services as stakeholders interested in policy continuity or even in deepening their original benefits.15 As a result of the reforms, business actors increase their structural and instrumental power and thus strengthen their position to influence and affect public policy.16 In our two cases, reformers believed that competition and private providers would be a salutary addition to the higher education system. From their perspective, competition and the market would promote a virtuous circle of quality enhancement and more flexible adaptation to society’s professional demands. According to Cuenca and Reátegui,17 Peruvian neoliberal reformers believed that the reforms would have the following positive impacts: expansion of the educational offer and thus coverage; democratization of university access; and effective regulation by the market. The same applies to Chile. Although the Chilean reform stemmed from three different groups inside the authoritarian regime – interventionists, reformers, and neoliberals18 – all of them expected that competition would improve the quality of university education by creating markets of professors and students.19 10 11 12

13 14 15 16 17 18 19

Skocpol, Protecting Soldiers and Mothers, 58–9. Béland, “Reconsidering Policy Feedback,” 4. Hall, “Policy Paradigms, Social Learning, and the State”; Ewig and Kay “Postretrenchment Politics”; Dargent, Technocracy and Democracy in Latin America; Schmidt and Thatcher, “Theorizing Ideational Continuity,” 35; Beach, Schäfer & Smeets, “The Past in the Present.” Campbell, How Policies Make Citizens; Campbell, “Policy Makes Mass Politics”; Schmidt and Thatcher, “Theorizing Ideational Continuity,” 34–6. Pierson, “When Effect Becomes Cause.” Ewig & Kay, “Postretrenchment Politics,” 71–2; Arce, “The Politics of Pension Reform in Peru.” Fairfield, Private Wealth and Public Revenue in Latin America; Culpepper, Quiet Politics and Business Power. Cuenca and Reátegui “La (incumplida) promesa universitaria en el Perú,” 7. Orellana and Miranda, “La mercantilización de la educación en Chile,” 104–6. Brunner, “Educación superior en Chile,” 2, 14.

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Going against the optimistic view of the neoliberal reformers, research on the topic shows that private actors can also bring about severe deficiencies in the services they target and create new problems. According to this literature, and with particular reference to the topic under study, private actors who benefit from the reforms can take advantage of weak states or permissive regulations. These actors can alter policies to their advantage or capture state actors to align a policy more closely to their interests – usually associated with profitmaking, at the expense of the public good or the original content of the policies.20 By looking at two key moments in the history of higher education in two countries in the region – a first neoliberal transformation and a subsequent reform – we want to highlight how the policy decisions that led to the first transformation created a policy feedback process that limited the subsequent ability of both Chile and Peru to reform their higher education systems. Previous research on various countries has highlighted the negative effects of market mechanisms on Latin American higher education systems or, at least, significant divergences from the reformers’ original goals. The new private institutions created by the reforms frequently provided low-quality education and taught degree programs that maximized their gains while acting in complicity with states to enhance their profits, sometimes in corrupt ways.21 Martins22 and Rodríguez Ponce23 show how private actors grew in importance in Brazil and Chile, respectively, and how they shaped policies to their advantage and in ways that did not conform to the original goals of the reform. Although it is not our intention to provide an assessment of the shortcomings of neoliberal higher education, it is clear that many of the proposed solutions failed, that the reform brought new problems, and that Latin American higher education systems have been profoundly changed by the emergence of forprofit private universities. As mentioned, in both Chile and Peru, new and influential private actors in higher education emerged to entrench the reforms, influence state actors, and oppose regulation. Furthermore, the institutions that conducted these reforms became quite instrumental in all subsequent attempts at modification. But the processes reveal quite distinct trajectories. As noted, these differences are explained by the motives behind the reforms, as well as their design and their implementation. In Chile, the policies were more comprehensive and were implemented according to their initial design to foster private universities and make all universities, including public ones, compete under market conditions. This

20 21

22 23

Arce, “The Politics of Pension Reform in Peru.” Disi “Sentenced to Debt”; Disi, “Policies, Politics, and Protests”; Benavides, León, Haag & Cueva, “Expansión y diversificación de la educación superior,” 13–5; Martins, “Reconfiguring Higher Education in Brazil”; Mönckeberg, El negocio de las universidades en Chile; Rodríguez Ponce, “La educación superior en Chile y el rol del mercado.” Martins, “Reconfiguring Higher Education in Brazil.” Rodríguez Ponce, “La educación superior en Chile.”

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included, over time, state-sponsored loans for students attending university, creating a strong interest group that later supported protests against the system. These policies triggered a political problem since some private universities were considered to be second-class in comparison with other institutions, leading to dissatisfied graduates whose degrees did little to help them pay back their loans.24 While most of the literature on neoliberal policy feedback has focused on how these feedback effects support the continuity of neoliberal reforms by strengthening private actors, the Chilean case shows how these effects also contribute to creating interest groups that push for reforms of neoliberal policies. In Peru, the neoliberal reforms were less comprehensive and did not touch the public system, allowing it to live side by side with for-profit private universities. Since no comprehensive policies to enhance private provision were implemented, current and former students lacked an issue around which to coalesce. These policy effects also depend on another important variable that contributes to shaping the distinct social and political outcomes of new rules and policies: state capacity. States with greater capacity can be expected to be more successful in implementing policies and correcting unexpected policy outcomes. Much of the time, policy regulations in developing countries are not implemented properly. This “implementation gap”25 tends to be particularly wide in developing states with low levels of capacity, where policies are frequently designed without due evaluation of the real possibilities of state implementation. Our cases show the relevance of state capacity to understanding these divergent outcomes, as well as some commonalities that call into question the extent to which private actors are regulated. While Chile tends to be ranked among the strongest states in Latin America, Peru is often placed near the bottom.26 The Peruvian reform and its outcomes show a clear “worst-case scenario” of neoliberal feedback with little or no control over private actors. In Peru, state weakness caused many things to go wrong with the reform, most notably the growth of myriad low-quality universities focused on profit rather than the high-quality provision of public goods, and these problems were not corrected during implementation.27 This case shows how weak states that are bad providers are also very likely to be bad regulators, letting the activity of private actors with considerable resources go uncontrolled. Nonetheless, Chile’s higher state capacity did not prevent strong private actors in that country from escaping state regulation and exercising influence over state actors. Although profit-making was explicitly forbidden in the Chilean 24 25 26 27

Disi, “Sentenced to Debt”; Disi, “Policies, Politics, and Protests”; Rodríguez Ponce, “La educación superior en Chile.” Grindle, “Governance Reform.” Kurtz, Latin American State Building in Comparative Perspective. Cuenca and Reategui “La (incumplida) promesa universitaria en el Perú”; Benavides et al., “Expansión y diversificación de la educación.”

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system, universities exploited different schemes to do just that while charging indebted students,28 and many of the newest among them were lacking in quality. State capacity may allow for better implementation and prevent extremely low levels of quality, but strong private actors were relevant in both countries to explaining the failed implementation and shortcomings of the reforms. In the rest of this article, we will discuss, in greater detail and with reference to the aforementioned two moments, how neoliberal higher education reforms in Chile and Peru produced feedback effects but with different consequences. To this end, we interviewed key public officers involved in higher education and reviewed public reports and legislation.

6.3  neoliberal reform in chile and peru : pre - and post - washington consensus In this section, we present the content of neoliberal reforms in Chile and Peru and the new institutional designs that these reforms created. In each case, we describe the higher education system before the reforms and show how the political context in which they were adopted – authoritarian and anti-communist Chile and economically bankrupt Peru – contribute to understanding the content of these reforms. 6.3.1 Chile Before the reforms introduced by Pinochet’s government in 1981, Chile’s University system was made up of what are still known as the CRUCH universities (Consejo de Rectores de Universidades Chilenas – Council of Presidents of the Chilean Universities). Today, the body unites twenty-nine of the country’s “traditional” universities, but to begin with, it was made up of eight core universities and their offshoots. CRUCH kept its status following the reforms, and only universities derived from those that predated 1981 could join and enjoy the same benefits. This special consideration versus other universities is reflected by the fact that to this day, only CRUCH institutions can receive direct public funding. Until 1981, CRUCH was at the heart of the higher education system in Chile; before the reforms of that year, the bulk of the budgets of these universities was covered by the state, and university education was largely free of charge.29 However, this did not mean that university education was universal, and universities were still very elitist.30 In general, universities had considerable autonomy, with little or any state direction or regulation. The Chilean university system underwent profound reform in 28 29 30

Mönckeberg, El negocio de las universidades en Chile. Brunner, “Educación superior en Chile,” 11. Orellana & Miranda, “La mercantilización de la educación en Chile,” 97; Sanhueza & Carvallo, “Conflictos y transformaciones en la educación superior,” 211.

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1967. University coverage expanded and the teaching faculties were subjected to a professionalization process. The reform movements called attention to the elitist foundations of university education and attempted to open the system up to the popular classes.31 During this period, between 1967 and 1973, higher education enrollment grew substantially. Universities remained autonomous, and the state’s role was restricted to authorizing the creation of new institutions.32 The relationship between the Chilean state and the university system changed drastically following the 1973 coup, as the new authoritarian government (1973–1990) saw universities as a hotbed of subversive Marxist activity. Universities were put under surveillance, public expenditure on university education dropped drastically, and educational institutions were called upon to self-fund, forcing universities, even the public ones, to start raising their own tuition fees.33 As part of these measures, a student loan system known as Crédito Fiscal Universitario was created, but the structure and the system remained untouched.34 In 1981, the authoritarian regime reformed the university system by changing its inherent logic and opening it up to the market. Many of these changes would be crystallized further through the Constitutional Organic Law on Education (LOCE) enacted days before Pinochet left office in 1990. But in 1981, the Interior Ministry had already issued the comprehensive framework needed to govern Chilean higher education.35 The authoritarian regime’s assessment of the university system concluded that the CRUCH apparatus had created a discriminatory situation whereby eight universities and their branches received public funds and prevented others from entering. According to the authoritarian regime, this constrained the freedom of teaching and amounted to the monopolization of the university system, preventing any competition among the existing universities; the result was that the state came under more pressure to generate more public resources instead of the universities competing with one another and thus improving their service. The reorganization of university education had to address two government concerns. First, the authoritarian government wanted to ensure that the university system operated according to its demands. Second, the government wanted to guarantee that universities operated according to the demands of a society that was beginning to function under market logic.36 In response to these perceived problems, the 1981 legislation37 declared universities to be non-profit,

31 32 33 34 35 36 37

Sanhueza & Carvallo, “Conflictos y transformaciones en la educación superior,” 215. Brunner, “Educación superior en Chile:,” 11. Bernasconi & Rojas, Informe sobre la educación superior en Chile, 16; Sanhueza & Carvallo, “Conflictos y transformaciones en la educación superior chilena,” 219. Brunner, “Educación superior en Chile,” 13. Ministerio del Interior, Declaración del Ministerio del Interior. Brunner, “Educación superior en Chile,” 16. Ministerio de Educación Pública de Chile, Decree- Law N 3.541.

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made it easier to create new ones, and explicitly forbade students and administrative employees from having the right to vote for the administrative bodies. The creation of a new university required the authorization of the ministries of the Interior and Education, as well as the supervision of a traditional, older university during its initial years of operation. This atomized the public system, splitting the public universities from their offshoots.38 The guiding principle of this reform was the liberalization of markets and the provision of incentives to private universities to participate in these markets.39 But market liberalization remained incomplete, and although creating a new university was rather straightforward, new universities still required the explicit permission of the Interior Ministry to do so. This, as noted, was because the dictatorship was deeply worried about the political activity it suspected was taking place inside universities.40 The two most important changes introduced by the reforms were the provisions made for new universities and the alterations to the university funding system. The direct funding universities received from the state was slowly transformed into indirect contributions, tied to attracting the best 20,000 students in Chile. Any university created after 1981 would only receive this indirect contribution and no other public funding. Competing for students thus became a central function for universities. At the same time, the government started cutting public funding for existing universities (the CRUCH universities). The reform stipulated that universities charge students tuition fees, to be set by the institutions themselves. It also explicitly eliminated free-of-charge university education, labeled a “demagogic costume”41 that concealed the fact that the whole community ended up paying for it. These changes redrew the entire higher education system and planted the seeds of a neoliberal system, with minimal state involvement in service provision and a free market to stimulate competition. The government created “fiscal university loans” and incentives to stimulate demand for higher education.42 Afterward, students were compelled to repay these loans. Those who could not obtain loans through their universities but who fulfilled the requirements for doing so received guarantees from the state so that they could obtain loans from the banking and financial system. These loans, despite being reformed over time to further enhance demand, remained a central plank of the Chilean university system and were at the core of the students’ disillusionment that led to the demonstrations of the 2000s.43 38 39 40 41 42 43

Sanhueza & Carvallo, “Conflictos y transformaciones en la educación superior chilena,” 218. Brunner, “Educación superior en Chile,” 14. Interview with Chilean Education expert 2019. Ministerio del Interior, Declaración del Ministerio del Interior, 46. Rodríguez Ponce, “Pensadores y forjadores de la universidad en el Perú,” 128–9. Disi, “Sentenced to Debt”; Disi, “Policies, Politics, and Protests.”

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As has been well documented, the so-called Chicago Boys44 played a crucial role during the dictatorship, extending a highly unregulated market logic into all aspects of society. The two coexisting trends – interventionist and neoliberal – produced a system in which the free market would regulate higher education. However, it was not until 1990, when the authoritarian regime ended, that a completely liberal system took hold in higher education. Of the thirty-six universities founded between 1981 and 2007, twenty-one were created after the “No” vote had won the referendum in 1988 – the defeat of the authoritarian regime that ushered in the democratic transition. Over the years, once the authoritarian regime fell and thus the government’s interest in controlling educational content dwindled, the role of the Chilean state was restricted to the provision of student loans to boost competition. In Peru, a concern with market competition was also present but, as we shall see next, the path of policy design led to different outcomes. 6.3.2 Peru In the years before the reform, the public university system in Peru was in chaos. The degradation of academic quality started in the 1960s. At that point, similarly to Chile, the university system was small and elitist, so it would be unfair to contrast its quality with the system that subsequently ensued with all its challenges. Mass enrollment coupled with low budgets were central to the severe decline in academic quality. Moreover, during the 1970s and 1980s, radical Marxist and Maoist groups gained a foothold in the universities, leading to a decline in pluralism.45 The patrimonial and frequently corrupt management of universities exacerbated the problems,46 as did the hyperinflation crisis that hit Peru in the late 1980s. On top of that, public universities were among the main theaters of political violence in the 1980s and 1990s, marked by Shining Path47 infiltration as well as state repression and intervention.48 Even with all these problems, public universities had considerable autonomy, which frequently translated into disregard for criticism and a lack of responsiveness. The university system, which included private non-profit universities and public institutions, was supposed to self-regulate through a governing body, the National Assembly of Presidents (Asamblea Nacional de Rectores, ANR), a public–private association composed of all university presidents in 44 45 46 47

48

Silva, “Technocrats and Politics in Chile.” Lynch, Los jóvenes rojos de San Marcos. Lynch, Los jóvenes rojos de San Marcos; Degregori & Sandoval, Antropología y antropólogos en el Perú, 38–41. The Shining Path was a terrorist organization of Maoist ideology that sought to overthrow the Peruvian state and replace it with a revolutionary regime. Its actions, those of the MRTA guerrilla movement, and the state’s response led to a period of armed internal conflict in Peru, which lasted from 1980 to 2000. Dargent & Chávez, “Impacts and Legacies of Political Violence.”

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the country. This self-regulation was limited at best but mostly inexistent, as the ANR was primarily a champion of a rather expansive view of autonomy in higher education in which academic freedom was frequently associated with a lack of transparency. The executive’s institutional tools for influencing the public system were very limited, mainly through budgets funneled via a small office in charge of public universities within the Ministry of Education. But for the most part, the state decided to ignore the public universities, leaving them underfunded and largely controlled by mediocre and corrupt authorities. This decline in the quality of public universities coincided with a national increase in the completion of secondary education, leading to a growing demand for private higher education. Up to the 1980s, private non-profit universities (known in both the Chilean and Peruvian systems as universidades asociativas) were formally non-profit and some were quite prestigious. As a result of this growing demand, during the 1980s, the private universities increased both in number and in enrollment figures. Entry exams to these universities became easier in comparison to the more prestigious public and non-profit private universities, facilitating access to higher education.49 Although these universities were formally non-profit, many of them found ways to become quite lucrative businesses. Thus, some of the problems of quality that are usually attributed to the 1996 privatization reform were already mounting in the previous years. This was the overall institutional landscape of Peruvian higher education before the 1996 reform. One may conclude that, given the previous neoliberal reforms adopted in Peru in the early 1990s, this was just another step along the reformers’ route to providing market solutions to public problems. It seems no coincidence that a World Bank report published in 1994, just two years before the reform, stated that allowing profit in higher education was an appropriate means of responding to the limitations of higher education in developing countries. It is clear that some policy diffusion took place: World Bank formulas for enhancing private actors in the education system were known and promoted by key figures in the Ministry of Economics and Finance (MEF), the main technocratic body behind the neoliberal reforms in Peru. According to the Ministry of Education officials who planned the reform, the idea of promoting higher private education (and education in general) came from the MEF.50 Moreover, officials from private universities who embraced market reforms demanded and promoted more-flexible laws to allow profitmaking in the education sector as a salutary solution for the system.51 Thus, neoliberal ideas were certainly a driving force in the 1996 reform.

49 50

51

Sota, El sentido de la II reforma universitaria en el Perú; Interview with expert in education and former adviser in the Ministry of Education, Lima, 2019. Interviews with the Former Vice Minister of Education and former adviser in the Ministry of Education during the higher education reform, Lima 2019 and with Former Adviser in the Ministry of Education during the higher education reform, Lima 2019. Interview with Former Chancellor of Universidad Peruana de Ciencias Aplicadas and member of FREDEMO, Lima 2019.

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Nonetheless, the story behind Decree Law 882 is more complex than this neat narrative of neoliberal reformers and diffusion suggests. The Decree authorized profitmaking in education and provided some tax benefits for newly opened institutions. The idea behind the tax benefits was that the state had to provide some incentives in exchange for the purported public benefits that these universities provided. According to our interviewees from the Ministry of Education reform team that designed the policy, the need to revive the economy and enhance investment in different social areas was what eased the privatization reform in education. These officials say that the presidency, the MEF, and the Minister of Education of the time issued an order to design a reform that could help meet an urgent need to enhance investment in the country. A similar demand was made of all ministries as part of the legislative delegation that Congress issued to the executive. These measures were portrayed as a way of boosting ongoing economic recovery after the economic crisis.52 Perhaps this urgency, paired with the ideological preferences in MEF, explains the limited focus on regulation present in the law. This preoccupation differs from what guided the Chilean reform, which was more focused on the need to end what was seen as a monopoly, and helps explain the different paths the systems took after the reforms. What is particularly interesting about Peru’s neoliberal reform, in comparison to those of other countries in the region, is that it did not encompass the public system. Indeed, Degregori and Sandoval53 conclude that the Peruvian neoliberal reform of public education promoted private profitmaking universities but left aside the public system. The government’s agenda for higher public education was somewhat limited and focused more on curbing Shining Path’s influence and on limiting political criticism in universities than on reforming them.54 But for the most part, the state did little to reform the public system. Budgetary allocations remained low and the aforementioned institutional design remained almost unchanged. There is another aspect that is relevant to understanding the particularities of the policy feedback process in Peru that we discuss in the next section. Just a year before the reform, in November 1995, Congress created the National Council for the Authorization and Operation of Universities (Consejo Nacional para la Autorización y Funcionamiento de las Universidades, CONAFU).55 The idea was to create an autonomous office within the ANR to approve the creation of new private universities and to divest Congress of this responsibility. In the case of public universities, the passage of a law by Congress and 52

53 54 55

Interviews with the former vice minister of education and former adviser to the Ministry of Education during the higher education reform, Lima, 2019; and with a former adviser to the Ministry of Education during the higher education reform, Lima, 2019. Degregori & Sandoval, Antropología y antropólogos en el Perú. Sandoval, Modernización, democracia y violencia política. Decree Law 26439, 1995.

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MEF authorization were also required. The good intention behind this law was to reduce the politicization of what was regarded as a technical decision. But the unintended consequence was that the institution in charge of controlling and governing public and private universities was also now responsible for granting entry to new private universities to the market.56 As we discuss later, the gradual assumption of control over the ANR by low-quality private and public universities led to the introduction of rather flexible regulations for the approval of new private universities. As we have seen, the new changes did not include the development of an autonomous regulatory body. During our interviews, the officials in charge of the reform said that they proposed a second stage of reforms that included independent regulation of private education, but these were never pursued. The marriage between neoliberal ideology and economic interests limited the institutional focus on regulation. In the next section, we show how the policy feedback process was somewhat vigorous in creating new private actors and increasing their power without proper regulation.

6.4  feedback

effects and the new

landscapes of higher education

The reforms had a considerable impact on the university systems of both countries. As expected by policy feedback literature, policy made politics: in both countries, private universities grew in number and gained power, increasing their influence over political and bureaucratic actors. In Chile, though, state-sponsored student loans also created a new interest group that in the future would become part of the coalition in favor of revoking neoliberal reforms: unsatisfied students and former students indebted to the financial system. In this section, we show these developments and their particularities in each country, which will allow us to discuss the different types of backlash against neoliberal higher education reform witnessed in both countries in recent years. 6.4.1 Chile Chile’s 1981 reform allowed private universities to multiply and steadily increase their share of enrollment, while public expenditure on public institutions continued to decrease.57 By 2007, there were sixty-one universities in Chile58: sixteen public ones (all of them charging students), nine traditional asociativo universities, and thirty-six new private institutions postdating the 56 57 58

Casas, “Reformismo sin reforma.” Atria & Sanhueza, “Propuesta de gratuidad para la educación superior chilena,” 2. The total number is lower than Peru’s, but Chile also has less population (around 19 million in 2019 versus 32 million in Peru).

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1981 reform.59 But the changes ran deeper than just numbers. The public role of universities changed as they became “professional factories” whose main function was “to produce a good for private appropriation (a professional qualification) that is justified because it will prove lucrative for whoever receives it.”60 These changes were also motivated by profit. As we have noted, profitmaking was not legally permitted but there were various ways in which university ownership could be made a lucrative business. Chilean universities developed different schemes to this end, turning in particular to the renting and leasing of real estate to assure its “owners” of profits. Through complex transactions between university owners and the financial system, and in many cases through the creation of new entities, the owners were able to recirculate the proceeds from higher education into their pockets.61 This switch, to promoting demand for higher education while unofficially allowing profit, gave rise to institutions centered on devising and teaching “easy” degrees.62 Good-quality university education remained elitist and only truly accessible to the higher classes, who were better placed to afford not only the more expensive universities but also the exclusive private schools that effectively assured entry. The 1981 reform changed the face of universities in Chile and led to the emergence of three phenomena in undergraduate education: 1) the market expanded through the creation of new programs and new branches; 2) market stratification occurred based on academic testing (in which higher-income students did considerably better) and social selectivity; and 3) students were distributed among the respective university types according to socioeconomic background, leading to a differentiation in the value that the market placed on the credentials generated by the different universities.63 Private providers came to dominate the university system, cementing its status as one of the most highly privatized by international standards (measured in terms of the proportion of total higher education expenditure that comes from private sources).64 Right before the return to democracy, the Constitutional Organic Law on Education (LOCE) was enacted, crystallizing the market-centrism of the university system as well as the 1981 reform. Continuity was thus ensured and a competitive market remained a central tenet of the Chilean university system, which became increasingly private-oriented, while public expenditure decreased as a share of the whole.65 The return to democracy did not challenge the neoliberal principles that had driven the reforms of the authoritarian

59 60 61 62 63 64 65

Mönckeberg, El negocio de las universidades en Chile, 9. Atria & Sanhueza, “Propuesta de gratuidad para la educación superior chilena,” 6. Mönckeberg, El negocio de las universidades en Chile. Rodríguez Ponce, “La educación superior en Chile y el rol del mercado,” 128. Atria & Sanhueza, “Propuesta de gratuidad para la educación superior chilena,” 21. Brunner, “Educación superior en Chile,” 20. Disi, “Policies, Politics and Protests,” 132.

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regime; on the contrary, the democratic transition completed its implementation. The democratic governments after the transition accepted the neoliberal diagnosis, conceiving the state’s role in the university system as a subsidiary66 and favoring the continuation of tuition fees, while their criticism was confined to the limitations of the dictatorship.67 Technocrats of a neoliberal persuasion were integral to the governments of those years and the state relinquished its role as an educator to instead become an evaluator: an actor that finances, regulates, certifies, and steers the actions of private entities.68 The return to democracy also signaled the emergence of a new “middle class”, for which higher education was crucial as a means of consolidating this new social position.69 The Chilean middle and lower classes saw higher education as a route to social mobility, and so the proliferation of private universities was not aimed primarily at the elite but at other classes that could secure education through loans. This drove up demand for higher education, which universities met through greater enrollment. These institutions thus became a form of capitalist venture: lucrative and mass-oriented.70 This new venture was partially financed through credits, both completely private and part-backed by the state, first the Crédito Fiscal Universitario (which only covered CRUCH universities), and eventually the Crédito con Aval del Estado (CAE), which came not only about as a response to some student mobilizations in the 2000s but also sowed the seeds of the subsequent student debt crisis. Students who could not afford tuition fees took out different types of loans in the hope of being able to repay them through higher future salaries. Since educational quality at the universities varied greatly, this proved a risky bet for many. When in 2010 many of the students who had accessed CAE started graduating, they discovered that their expectations did not meet the realities of the labor market and had to set aside a third or even half of their salary to repay their loans.71 Silently but steadily, grievances about the inequality of the status quo began to grow. Chile put in place a university system that was hard to undo. The country’s neoliberal transformation was on the more radical end of the scale.72 Furthermore, La Concertación – the coalition that led the first few governments following the transition to democracy – had individuals in its camp who were convinced of some of the benefits of neoliberalism, and so the political elite was afraid that too much meddling with the neoliberal tenets might trouble the country’s conservative forces and disrupt the nascent democracy. This

66 67 68 69 70 71 72

Sanhueza & Carvallo, “Conflictos y transformaciones en la educación superior chilena,” 224. Orellana & Miranda “La mercantilización de la educación en Chile,” 109. Sanhueza & Carvallo, “Conflictos y transformaciones en la educación superior chilena,” 231. Orellana & Miranda “La mercantilización de la educación en Chile,” 117. Orellana & Miranda “La mercantilización de la educación en Chile,” 118. Interview with congressional representative from UDI, Santiago, 2019. Interview with education expert, Santiago, 2019.

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served to consolidate the neoliberal model that the authoritarian regime had put in place and to strengthen the position of private actors as well as neoliberal politicians and policy-makers (particularly technocrats), making it hard to upset the whole system even when it started to fail. This new higher education system created an emerging group of beneficiaries in the middle class who, as noted, wanted to access university as not only a means of social mobility but also a technocracy that remained convinced that a competitive market was the best solution long after the authoritarian regime was gone. Both groups were key for the policy feedback of the return of democracy but would ultimately end up in opposing camps during the backlash years. 6.4.2 Peru In Peru, as with Chile, the reform promoted the swift creation of private universities. Graph 1 shows that of all Peru’s private universities in existence today, around 70% were created after 1995. Among them were some private for-profit universities that started to compete with prestigious associative nonprofit universities for students, leading to a measure of healthy competition in the system. The neoliberal reform decisively increased the numbers, power, and status of private universities in the higher education system. But in general, the type of private university that proliferated was not that which the reformers expected; rather, the reform paved the way for an explosion of low-quality private universities in Peru. These low-cost universities democratized access to higher education but did so partly by reducing the educational level required for acceptance into their degree programs. The reform also opened the door for changes within the ANR that led to further deterioration of university quality. As mentioned earlier, since 1995 CONAFU, an organization within the ANR, had been in charge of approving the creation of new universities. The ANR’s rules of governance gave considerable power to its General Assembly, made up of university presidents. As the number of private universities increased, the assembly members gave power to what might be termed a “low quality” coalition, which made the creation of universities easier. An informal fast-track model of authorization emerged whereby CONAFU gave universities preliminary authorization, which later made it almost impossible to close universities already in operation.73 During these same years, the democratic governments of Alejandro Toledo (2001–2006) and Alan García (2006–2011) promoted – and achieved – the creation of public universities in a largely irresponsible manner. Campaign promises to set up a university often came in response to local demand for one, even if there had been no proper studies into the likely viability of doing so. As a result, the number of public universities increased to fifty-one after years of remaining stable at thirty-five. Many of these new universities lacked 73

Interview with former adviser of the Education Commission in Congress, Lima 2019.

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140 133

120

120

101

100

96 90 82

80

79 76

72 65

60

59

58 55

52

51

49

40

38

37

33

32

29 23

20

15 12 5 1

1

3

25

28

34

35 37

38

29

20 10

7

Public Universities Private Universities Total

1551 1824 1917 1959 1961 1963 1965 1968 1970 1977 1983 1985 1989 1991 1995 1997 1999 2001 2003 2005 2007 2009 2011

0

40

graph 1  Number of Public and Private Universities in Peru (1551–2011) Source: ANR – Datos estadísticos universitarios 2012. Anexo 1. Cuadro N° A-01 Source: ANR 2012, 19 (Cuadro Nº A-01).

the most basic resources required to operate or were located in regions that already had a public university. Moreover, many of the new university presidents were supportive of deregulation. Eventually, presidents favoring deregulation were able to win control of the ANR and CONAFU. With CONAFU now in the hand of this “low quality” coalition, it became quite straightforward to create universities through processes often denounced as corrupt and informal.74 CONAFU authorized some of these universities to open branches in the regions, leading to the 74

Interview with former adviser of the Education Commission in Congress, Lima 2019.

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proliferation of small, underequipped branches. From then onward, it was common to find “universities”, especially branches, sharing buildings with casinos and restaurants. In contrast to Chile, Peru had no public funding for student credits. The only public policies aimed at these institutions were the aforementioned tax cuts. Nonetheless, low-quality private universities became quite popular, for obvious reasons: they gave students with lower academic grades access to higher education and reduced the difficulty of attaining a degree. A report about higher education based on information from the ANR and Peru’s National Institute of Statistics and Informatics (Instituto Nacional de Estadistica e Informatica, INEI) noted the following: “while in 1990 41% of candidates to private universities were accepted, after the deregulation of the system, this percentage increased up to 74% in 2014. In contrast, the percentage of candidates that is accepted in public universities has remained relatively constant at around 20%.”75 Although research shows that graduates from these universities face severe limitations in finding jobs, still the system allows them to obtain a degree.76 Consequently, after graduating, these groups lose interest in the university system because, unlike many of Chilean graduates, they are not indebted. According to Disi,77 this lack of linkage between students and the university system explains why Peru witnessed none of the protests, by students or former students in favor of reform, that Chile did. It also explains why the key demand for reform in Chile was the introduction of free-of-charge university education. The system led to the proliferation of institutions with no established quality standards, a low-cost offering, and an overriding focus on maximizing profits. Although this consequence of the neoliberal reform of higher education is a widespread problem throughout Latin America, in Peru, the situation was aggravated by state capacity. As various reports have found, this process shows all the evils of leaving a sector as crucial as education unregulated: students who lacked basic skills were nonetheless able to access low-quality higher education and, most importantly, obtain degrees.78 These universities tended to devise low-cost, mass-appeal degree programs for which technical equipment was not necessary. Rather than responding to growing social demand for certain occupations from sectors of the Peruvian economy that have boomed in recent decades (mining, agri-industry), these universities focused on degrees they could deliver at a low cost. Instead of promoting research, they operated primarily as centers of traditional teaching – with little in the way of inquiry of natural sciences, humanities, or social sciences. 75 76 77 78

British Council, La reforma del sistema universitario peruano, 30. Yamada, Lavado & Martínez, “¿Una promesa incumplida?”; Cuenca, “Democratización del acceso y la precarización del servicio.” Disi, “Sentenced to Debt”; Disi, “Policies, Politics, and Protests.” Yamada et al., “¿Una promesa incumplida?”; Benavides et al., “Expansión y diversificación de la educación superior universitaria”; British Council, La reforma del sistema universitario peruano, 29–35.

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The power of these private actors increased and they gained political relevance. Some private universities started to use their influence to provide inducements to politicians in Congress, leading to corruption scandals. More commonly still, some university owners were able to carve out political careers for themselves by using their institutions as a source of patronage.79 In this context, private universities gained financial and political power throughout the 2000s. Peru’s low state capacity was partly responsible for this outcome. With no interest in the public system, and lacking the capacity to match the resources and influence of the growing private actors, the state stood by while low-quality private universities proliferated. The Ministry of Education took little involvement in this growing problem. The ministry’s institutional structure remained largely as it had long been, with a small office in charge of higher education and technical institutes.80 Meanwhile, the MEF focused only on exercising some control over public universities’ budgets and generally limited the use of funds that a new law had assigned to public universities in mineral extracting regions.81 Exceptions to this permissive attitude occurred when two of Toledo’s education ministers, Nicolás Lynch (2001–2002) and Javier Sota Nadal (2004– 2006), each created commissions to assess the problem and propose higher education reforms.82 But these efforts, although constructive, remained isolated and lacked the political muscle to break down the resistance of the private actors who would be affected by the reform. Thus, changes to the system would not be seen until the next decade.

6.5  counter - reform :

changing neoliberalism

During the 2010s, both countries saw reactions against their higher education systems, leading to far-reaching reforms that were resisted by private actors and their political allies. However, these processes were quite different from each other. While Chile’s backlash was bottom-up with massive demonstrations and a focus on equality and to a lesser degree quality, Peru’s was a somewhat unforeseen top-down phenomenon focused more on achieving regulation to enhance quality in the system. The saliency of these different demands, as well as the involvement of the citizenry in these processes, is also part of the trajectories under analysis. In both cases, though, the system still conforms to the market characteristics promoted by neoliberal reforms, showing the importance of feedback effects for the entrenchment of these reforms. 79 80 81 82

Barrenechea, Becas, bases y votos. Interview with Former Director of the Higher Education Office, Ministry of Education, Lima, 2019. Dargent & Chávez, “Impacts and Legacies of Political Violence in Peru’s Public Universities.” Ministerio de Educación del Perú (MINEDU), Informe sobre la Universidad en el Perú.

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6.5.1 Chile Between 2011 and 2013, massive student protests took to the streets of Chile. These protests were the heir to the school-student protests that began in 2006 – las marchas pingüínas – to demand a fair basic education system and radical changes to the Constitutional Organic Law on Education (LOCE). Although the LOCE was eventually replaced by a General Law of Education in 2009, this new law did not drastically change the system, which remained marketoriented. As a result of these protests, demands for making university education free-of-charge began to gain traction. Protests to this end grew larger and more vociferous during Sebastian Piñera’s first government (2012–2016) – Chile’s first right-wing administration since the transition to democracy – showing that other issues were also at stake. The protests marked an important milestone for Chile, as they were the first large mobilizations since the return to democracy and were led by young people who did not have a clear recollection of the Pinochet era but experienced its many legacies. Over the years, protests against the pension system, gender violence, and other issues ensued as Chile’s unrest grew. The defiance against the neoliberal order inherited from the authoritarian regime continued to gain critical mass and contributed to the mass protests of 2019, which questioned the societal order and its foundation on the 1980 Constitution, enacted under authoritarianism. The demands for a complete overhaul of the Chilean university system were thus a reflection of deeper discontent with the neoliberal economy, and the effect it had on social inequalities. Access to state-sponsored loans may have not only increased Chile’s student enrollment rates over the years but also left students highly indebted in a system where even public universities charged tuition fees.83 Interestingly, in contrast to other policy feedback processes in which beneficiaries become a source of support for policy continuation, in the case of Chile, the policy led to the emergence of a group of students pitted against it. The lower and middle classes who had first seen higher education as an opportunity for social mobility and higher income were rapidly disabused of this dream, as their degrees did not give them access to better-paid employment opportunities. This loan policy and the quality of university education created a divide between providers on the one hand and current and former students on the other. By the end of Piñera’s time in office, a reinvigorated state-funded system was widely perceived as the only possible solution. This quickly became one of Michelle Bachelet’s main campaign promises. Bachelet’s Concertación Democrática, a left-leaning alliance, won the 2013 elections, but smaller parties further to the left succeeded in securing the election to Congress of several of the student demonstration leaders. The discussion regarding the university reform was intricate. The Constitutional Court struck down the first draft of the 83

Disi, “Sentenced to Debt”; Disi, “Policies, Politics, and Protests.”

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proposed legislation because it proposed that CRUCH universities be allowed to enter the free-of-charge scheme merely by being CRUCH universities, whereas other institutions needed to comply with other requirements – which the court deemed discriminatory. This ruling resonates with the logic of the 1980s in which the university system was opened up so that other universities could enter and compete with CRUCH institutions, and stands in stark contrast with the role the Constitutional Court played in the Peruvian case. It also shows how neoliberalism and the competition principle had taken hold and shaped what is deemed acceptable even years after the first reform. Finally, the government in Chile had to reach an agreement with the right to pass the legislation.84 After several months of debate and negotiations, with private universities resisting the changes through lobbying and public declarations, Congress approved a reform that included free-of-charge higher education. The new private actors created by the 1981 reform – non-CRUCH universities – became vital players, with the ability to press the government to defend their interests. The law stipulates that both CRUCH universities and those that wish to join voluntarily must receive non-fee-paying students.85 Although the reform did achieve its goal of securing free-of-charge university education for some, it does so not through more direct funding but by expanding indirect contributions. Each university in the scheme receives the tuition fee on behalf of the students who are eligible for free-of-charge education. The system does not return to the pre-Pinochet public funding schemes but instead is built on top of the neoliberal system that was put in place then. The Ministry of Finance played an important role in the negotiations, even inside the government. More than one person involved said that the discussion went well beyond fiscal issues and that the Ministry of Finance had opinions regarding the reform that was stronger than anything they had seen before.86 The finance minister was not only concerned with the cost of the reform but also understood that there was no way to roll it back. He found a solution to these fiscal concerns by including a clause by which the expansion of free-ofcharge tuition would be gradual and contingent upon tax collection.87 As we can see, this solution does not change the basic market orientation of the system, whereby universities still need to compete to attract more students and thus secure funding. It remains a paid service; payment is based on individual demand rather than blanket funding for all higher education.88 These 84 85

86 87 88

Interview with former finance minister, Santiago, 2019. There are currently 35 universities that receive nonpaying students from the 60% lowestincome population. As of January 2020, there were 376,433 non-fee-paying students enrolled in a bachelor or technical degree, of a total of 1,280,181 enrolled students – around 30% of the students. Interviews with former minister of education, Santiago, 2019; and with former manager of higher education at the Ministry of Education in Chile, Zoom interview, Berlin–Santiago, 2020. Interview with former Finance Minister, Santiago, 2019. Interview with education expert, Santiago, 2019.

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outcomes show the influence of private actors in defending the main tenets of the model. As a public official closely involved in the process observed, the final design of the university reform was heavily influenced by the fact that in Chile the state engages with private actors as if they were also part of the state.89 The resistance to a more progressive solution is exemplified by the comments made by technocrats inside Bachelet’s government. A former finance minister put it as follows: “a lot could have been done differently: it would have been much more expensive, it would have been more distorted, and it would have made the left happy.”90 A member of the right-wing opposition, which was against the reform, said he got along rather well with Rodrigo Valdes (former minister of finance) and Nicolás Eyzaguirre (former minister of education, of the secretary-general of the presidency, and of finance), as they were the most neoliberal officials in their sector at the time.91 These ministers played key roles in the design of the counter-reforms. In the end, the reform remained deeply embedded in the established neoliberal model. The influence of private actors that emerged and drew strength from the reform was crucial to this outcome. The question of equality in the system is certainly back on the agenda, and Chilean universities are more public-oriented than they were in the recent past. Nonetheless, as the protests of 2019 showed, the basis of the neoliberal system remains secure despite the reforms. 6.5.2 Peru In Peru, counter-reform was quick and unexpected, as the criticisms of higher education remained largely confined to specialist circles and did not lead to protests or politicization. The criticisms and proposals that came during Javier Sota Nadal’s spell as Education Minister (2004–2006) helped to create a loose coalition of academics and civil society actors interested in the issue, but publicly the issue was still afforded little attention.92 To understand the Peruvian process, one has to look at the series of events that allowed a small coalition first to operate within the Education Commission of Congress and later to gain prominence and support within a larger coalition for reform that used dramatic examples of poor quality to get the public onside. The process began with a ruling of the Constitutional Tribunal in 2008. A group of citizens questioned, by way of a constitutional complaint, the ability of universities to open branches across the country in an unregulated manner. In response, the tribunal delivered a ruling in which it strongly criticized the lack of state regulation of private universities.93 Given the abuses committed 89 90 91 92 93

Interview with former assistant to the former minister of education, Santiago, 2020. Interview with former finance minister, Santiago, 2019. Interview with congressional representative from UDI, Santiago, 2019. Interview with former adviser of the Education Commission in Congress, Lima 2019. Tribunal Constitucional del Perú Case Number N° 0017-2008-PI/TC, 2010.

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by these institutions, the Tribunal ordered the executive and Congress to “immediately adopt the necessary institutional steps to reform the university education system in the country.”94 While the ruling was quite clearly in favor of promoting broader reform, in practice, such rulings frequently end up being little more than declaratory. And for the most part, this was also true in this case, as the government of Alan García (2006–2011) paid little attention to the university system. His government’s only significant action in this regard is the establishment of an accreditation institution – the National System for Evaluation, Accreditation, and Certification of Education Quality (Sistema Nacional de Evaluación, Acreditación y Certificación de la Calidad Educativa, SINEACE) – that issued certificates of quality,95 predated the ruling. In any case, this process was voluntary and quite formalistic and had little impact on the system as a whole. It was the succeeding government of Ollanta Humala (2011–2016) that expressed significant interest in stopping the proliferation of poor-quality public and private universities. With the decisive support of Daniel Mora, a congressman from a different political grouping who prioritized higher education reform, in December 2012, the government passed a law placing a five-year moratorium on the creation of new universities.96 This law, and the debate around it, used the Constitutional Tribunal’s ruling to show the need for a complete reform of the system. When, in 2012, Mora became president of the Education Committee in Congress, he opened the debate for a new higher education law. In the beginning, the process seemed doomed to fail, as the pro-reform coalition was small and had few resources. In opposition were the ANR, the public, and private universities that rejected regulation, and politicians who supported the status quo.97 Furthermore, the Ministry of Education, already engaged in a comprehensive reform of the primary and secondary education system, had little interest in adding higher education reform to this already daunting task. However, as Chaccha98 has argued, Mora and his coalition used the Education Committee as a forum to raise awareness about the limitations and terrible conditions of the university system. Fueled by civil society groups and some student organizations, the press and social media were soon awash with information attesting to the comparatively poor quality of the Peruvian system, the inadequate conditions in which universities operated, the lack of professional credentials (or even the dubious credentials) of university authorities, and the conflicts of interest in which their political allies were caught up. Eventually, these scandalous revelations became part of the public debate, 94 95 96 97 98

Tribunal Constitucional del Perú Case Number N° 0017-2008-PI/TC, 2010. Congreso del Perú, Decree-Law 2870, published May 23, 2006. Congreso del Perú, Law 2997, published December 22, 2012. Hilda Chaccha, “El poder de las coaliciones en la arena de las políticas públicas.” Chaccha, “El poder de las coaliciones en la arena de las políticas públicas.”

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dragging the Ministry of Education into the process. Although the anti-reform coalition featured powerful actors with abundant resources – including congressmen with links to private and public universities – these scandals made it more difficult to resist calls for reform. After a somewhat conflictive process, a new higher education law was finally approved.99 The law provided for the creation of a new regulatory Institution, SUNEDU, to replace the ANR, and guaranteed that public and private universities adhere to the content of the law and provide a service under basic conditions of quality in terms of teaching and research. Although private universities have more flexibility with regard to their activities, the law still required new, higher standards in teaching, faculty composition, and research. From the outset, SUNEDU exercised its mandate to guarantee that all universities in the country meet these basic conditions of quality. During the few years since its creation, with ups and downs, the institution gained in standing and closed more than two dozen universities that did not meet the required standards. Just as important, it has sanctioned universities operating outside the law. As a result of this oversight, it is possible to detect an improvement in certain indicators of higher education in Peru, such as the volume of research, the number of full-time professors, and publication output.100 Moreover, the Ministry of Education responded to the law by reinforcing its areas in charge of higher education, and in 2015, set up a National Directorate of Higher Education – a special office that exercises more control over public and private universities in terms of service provision, as well as giving administrative support to public universities. The momentum has continued, and a draft law for the creation of a Vice-Ministry of Higher Education was recently submitted to Congress. Resistance to these changes has remained strong, however. The abovementioned law was challenged by a group of congressmen who filed a constitutional complaint with the Constitutional Tribunal, but this body found that the need to exercise adequate regulation of the system was consistent with university autonomy. Private and public universities continue to exert pressure on Congress and the executive in an attempt to secure reform of the law or to reverse SUNEDU’s regulatory decisions. Nonetheless, the reform continues, and little by little SUNEDU is gaining legitimacy and strengthening its control over private and public universities. Although the University Law has brought about important changes, the partially reformed system remains within the neoliberal paradigm. SUNEDU was designed similarly to other regulatory bodies and is highly skewed toward favoring the technical credentials of its members. Private universities still have considerable flexibility in exercising their activities, and their profitmaking status remains untouched, despite greater scrutiny. Nonetheless, the resulting system is one in which the public goods of higher education are at least taken 99 100

Congreso del Perú, Ley Universitaria, Law 30220, published July 03, 2014. SUNEDU, II Informe bienal de la realidad universitaria.

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into account, university autonomy is used less as an excuse for unregulated activities, and cases of universities falling far short of quality standards are no longer tolerated.

6.6  conclusion The two cases show how despite a family resemblance, neoliberal policies, and their effects can be quite different across countries. We propose that the different neoliberal paths depend on the distinct motives behind such reforms, the designs adopted, and the state capacity levels. Backlashes against the reforms are also better understood by taking into account these trajectories. Accordingly, our two cases, especially the Peruvian one, show how weak states are more vulnerable to the risk of neoliberal reforms, creating private actors that can quickly manipulate rules to their advantage. Following on from previous research on the effects of market reforms, we show how private actors can exercise pressure to deepen the reforms in ways that benefit them, to the point of adversely affecting the provision of public goods expected by the reformers. Under these conditions, an informal and even illegal market can emerge and states lack the capacity to properly control them. Although the Peruvian case represents an extreme case of a weak state allowing private actors to gain power without regulation, the experience of Chile, with its more capable state, was similar. A final point regarding state capacity. It would be a mistake to equate strong states and effective implementation with “good” policy outcomes. Indeed, strong states may be more successful in policy implementation, but at the same time deliver inadequate outcomes that are then difficult to reverse. In some respects, this was witnessed in Chile, where policies were successful not only in achieving the goal of opening up the education system to market competition and promoting students’ recruitment in private institutions, but also – partly due to this success – in changing other positive characteristics of the pre-existing university system, resulting in a more unequal structure of higher education provision that was hard to reverse even in the face of mass mobilization. The cases also show some particularities of neoliberal higher education policy feedback that would be worth exploring in other policy areas. Unlike social democratic policy feedback, which tends to build coalitions between state providers and beneficiaries for the continuation of policies, this form of policy feedback created a divide between universities and students that became highly politicized in the Chilean case. By applying the two moments from the policy feedback literature to this case, it is evident that neoliberal policy feedback can also create groups that oppose the results. Similar dynamics are seen with other neoliberal policies, such as the divide between private pension providers and their affiliated members.101 This seems a more general consequence of 101

Silva, Challenging Neoliberalism in Latin America.

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neoliberal policy feedback: benefits for providers can be perceived as disadvantages to users when these services do not meet expectations, causing a divide that can lead to counter-reform. But perhaps the most important lesson of these cases concerns the original promises of the neoliberal reformists. In both countries, neoliberal reforms of higher education were framed as salutary options to reduce the many evils of public higher education. The competition was expected to force universities to improve their quality and become more receptive to societal demands. This did not happen. Although there are many criticisms to be made of public higher education systems, especially the one in place in Peru before the reforms, the cases show that without a proper public system, it is difficult to launch the virtuous feedback circle expected by reformers. On the contrary, profitmaking – whether officially allowed (as in Peru) or unofficially tolerated (as in Chile) – and insufficient regulation of private institutions creates conditions that exacerbate many problems: declining quality standards, lack of attention to research and innovation, mass-marketing of low-cost degree programs to the neglect of costly but socially valuable careers, and others. The challenge for reformers in years to come is to find ways to ameliorate public higher education while maintaining high standards in private education – a relationship that, rather than being virtuous, can be quite complex and sometimes negative.

6.7  interviews Arias, Hugo (2020). Assistant to Nicolas Eyzaguirre, former Minister of Education of Chile. Santiago, January 20th. Atria, Fernando (2019). Education expert and profesosr, Universidad de Chile. Santiago, March 29th. Bellollio, Jaime (2019). Congressman, UDI. Santiago, April 12th. Bustamente, Luis (2019). Former President of the Universidad Peruana de Ciencias Aplicadas and member of FREDEMO. Lima, April 3rd. Contreras, Alejandra (2020). Former manager of higher education at the Ministry of Education of Chile. Zoom, July 31st. Delpiano, Adriana (2019). Former minister of education of Chile. Santiago, April 16th. Figallo, Flavio (2019). Former vice minister of education and former adviser to the Ministry of Education of Peru on higher education reform. Lima, April 4th. Guadalupe, César (2019). Expert in education and former adviser to the Ministry of Educacion of Peru. Lima, January 15th. Jorquera, Pablo (2020). Former adviser to the Ministry of Education and to the Secretary of the Presidency. Santiago, January 10th. Mori, Jorge (2019). Former adviser to the Education Commission in Congress. Lima, June 3rd. Muñoz, Gonzalo (2019). Education expert and former adviser to the Ministry of Education of Chile. Santiago, April 1st. Prochzaska, Enrique. Former adviser to the Ministry of Education of Peru during higher education reform. Lima, April 4th.

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Rivera, Mario (2019). Education expert and former adviser to the Ministry of Education of Peru. Lima, April 15th. Saavedra, Jaime. Former Minister of Educacion of Peru. Washington D.C., May 30th. Valdes, Rodrigo (2019). Former finance minister of Chile. Santiago, March 27th. Zapata, Verónica (2019). Former director of the Higher Education Office, Ministry of Education of Peru. Lima, June 6th.

6.8  legislation Congreso del Perú Decree- Law 26439, passed January 20, 1995. Congreso del Perú, Decree-Law 2870, published May 23, 2006. Congreso del Perú, Law 2997, published December 22, 2012. Congreso del Perú, Law on University Reform and the creation of the National Superintendence of Higher University Education, SUNEDU, Law 30220, published July 03, 2014. Ministerio del Interior, Declaración del Ministerio del Interior sobre Nueva Legislación Universitaria Chilena, 1981. www.memoriachilena.gob.cl/archivos2/ pdfs/MC0015045.pdf Ministerio de Educación Pública de Chile Decree- Law N 3.541, passed December 30, 1980, published January 03, 1981. Tribunal Constitucional del Perú, Case Number N° 0017-2008-PI/TC, 2010. bibliography

ANR – Asamblea Nacional de Rectores (2012). “Datos Estadísticos Universitarios.” Dirección de Estadística de la ANR. http://censos.inei.gob.pe/cenaun/redatam_inei/ doc/ESTADISTICA_UNIVERSITARIAS.pdf Arce, Moises. “The Politics of Pension Reform in Peru.” Studies in Comparative International Development 36, No. 3 (2001): 88–113. Atria, Fernando & Claudia Sanhueza. “Propuesta de gratuidad para la educación superior chilena.” Clave de Políticas Públicas, No. 17 (November 2013). Barrenechea, Rodrigo. Becas, bases y votos: Alianza para el Progreso y la política subnacional en el Perú. Lima: IEP, 2014. Beach, Derek, David Schäfer & Sandrino Smeets, “The Past in the Present – The Role of Analogical Reasoning in Epistemic Learning About How to Tackle Complex Policy Problems.” Policy Studies Journal 0, No. 0 (2019): 1–27. Béland, Daniel. “Reconsidering Policy Feedback: How Policies Affect Politics.” Administration & Society 42, no. 5 (September 2010): 568–90. Benavides, Martín, Juan León, Frida Haag & Selene Cueva, “Expansión y diversificación de la educación superior universitaria, y su relación con la desigualdad y la segregación,” Documento de Investigación No. 78. Lima: GRADE, 2015. Bernasconi, Andrés & Fernando Rojas, Informe sobre la educación superior en Chile: 1980–2003 (Caracas: UNESCO International Institute for Higher Education in Latin America and the Caribbean), https://unesdoc.unesco.org/ark:/48223/ pf0000140395 Bril-Mascarenhas, Tomás and Antoine Maillet, “How to Build and Wield Business Power: The Political Economy of Pension Regulation in Chile, 1990–2018,” Latin American Politics and Society 61, no. 1 (2019): 101–25.

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British Council, La reforma del sistema universitario peruano: Internacionalización, avance, retos y oportunidades. Lima. Octubre 2016. Brunner, José J. “Educación superior en Chile: Instituciones, mercados y políticas gubernamentales 1967–2007.” PhD diss. University of Leiden, 2008), http://200.6.99.248/~bru487cl/files/jjbrunner_final.pdf Campbell, Andrea. How Policies Make Citizens: Senior Political Activism and the American Welfare State. Princeton; Oxford: Princeton University Press, 2003. Campbell, Andrea, “Policy Makes Mass Politics.” Annual Review of Political Science, 15 (June 2012): 333–51. Casas, Frank. “Reformismo sin reforma. El papel del Estado en el proceso de transformación de las políticas de creación de universidades desde el Conafu, entre 1995–2010.” Master’s thesis, PUCP, 2012. http://tesis.pucp.edu.pe/repositorio/ handle/20.500.12404/4973 Chaccha, Hilda “El poder de las coaliciones en la arena de las políticas públicas: Caso ley universitaria.” Master’s thesis, PUCP, 2019. http://hdl.handle .net/20.500.12404/14322 Colclough, Chris “Education and the Market: Which Parts of the Neoliberal Solution are Correct?,” World Development 24, no. 4 (1996): 589–610. Cuenca, Ricardo. “Democratización del acceso y la precarización del servicio. La masificación universitaria en el Perú, una introducción.” In La educación universitaria en el Perú: Democracia, expansión y desigualdades, edited by Ricardo Cuenca, 9–18. Lima: IEP, 2015. Cuenca, Ricardo and Luciana Reátegui, “La (incumplida) promesa universitaria en el Perú,” Documento de Trabajo N 230. Serie Educación, 11 (Lima: IEP, 2016) Culpepper, Pepper D. Quiet Politics and Business Power: Corporate Control in Europe and Japan. Cambridge Studies in Comparative Politics. Cambridge: Cambridge University Press, 2010. Dargent, Eduardo. Technocracy and Democracy in Latin America: The Experts Running Government. Cambridge: Cambridge University Press, 2015. Dargent, Eduardo & Noelia Chávez, “Impacts and Legacies of Political Violence in Peru’s Public Universities.” In Politics After Violence: Legacies of the Shining Path Conflict in Peru, edited by Hillel D. Soifer & Alberto Vergara, 132–56. Austin: University of Texas Press, 2019. Degregori, Carlos I. and Pablo Sandoval, Antropología y antropólogos en el Perú: La comunidad académica de Ciencias Sociales bajo la modernización neoliberal. Lima & Buenos Aires: IEP/Clacso, 2009. Disi, Rodolfo “Policies, Politics, and Protests: Explaining Student Mobilization in Latin America.” PhD diss., University of Texas at Austin, 2017. https://repositories .lib.utexas.edu/handle/2152/60377 Disi, Rodolfo “Sentenced to Debt: Explaining Student Mobilization in Chile,” Latin American Research Review 53,No. 3 (2018):448–65. Ewig, Christina and Stephen Kay, “Postretrenchment Politics: Policy Feedback in Chile’s Health and Pension Reforms,” Latin American Politics and Society 53, No. 4 (2011): 67–99. Fairfield, Tasha. Private Wealth and Public Revenue in Latin America: Business Power and Tax Politics. Cambridge: Cambridge University Press, 2015.

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Grindle, Merilee S., “Governance Reform: The New Analytics of Next Steps.” Governance: An International Journal of Policy, Administration, and Institutions, 24, no. 3 (July 2011), pp. 415–18. Hall, Peter. “Policy Paradigms, Social Learning, and the State: The Case of Economic Policymaking in Britain.” Comparative Politics 25, No. 3 (April 1993): 275–96. Kurtz, Marcus, Latin American State Building in Comparative Perspective: Social Foundations of Instiutional Order. New York: Cambridge University Press, 2013. Lynch, Nicolás, Los jóvenes rojos de San Marcos: Radicalismo Universitario de los años 70. Lima: El Zorro de Abajo Ediciones, 1990. Madariaga, Aldo “Mechanisms of Neoliberal Resilience: Comparing Exchange Rates and Industrial Policy in Chile and Estonia.” Socio-Economic Review 15, No. 3 (2017): 637–60. Maillet, Antoine. “Variedades de Neoliberalismo: Innovación conceptual para el análisis del rol del Estado en los mercados.” Revista de Estudios Políticos 169, (2015): 109–36. Martins, Carlos B. “Reconfiguring Higher Education in Brazil: The Participation of Private Institutions,” Análise Social 208, xlviii (3º), (2013): 622–58. Ministerio de Educación del Perú (MINEDU), Informe sobre la Universidad en el Perú (Lima: Oficina de Coordinación Universitaria, MINEDU, 2005). Mönckeberg, María O. El negocio de las universidades en Chile. Santiago: Penguin Random House, 2014. Orellana, Víctor and Camila Miranda, “La mercantilización de la educación en Chile.” In Entre el mercado gratuito y la educación pública: Dilemas de la educación chilena actual, edited by Víctor Orellana, 95–156. Santiago: LOM Ediciones, 2018. Pierson, Paul. Dismantling the Welfare State: Reagan, Thatcher, and the Politics of Retrenchment. New York: Cambridge University Press, 1994. Pierson, Paul “When Effect Becomes Cause: Policy Feedback and Political Change.” World Politics 45, no. 4 (1993): 595–628. Rodríguez Ponce, Emilio “La educación superior en Chile y el rol del mercado: ¿Culpable o inocente?” in Ingeniare 20, No 1, 2012: 126–35. Sandoval, Pablo. Modernización, democracia y violencia política en las universidades peruanas (1950–1995). Buenos Aires: Consejo Latinoamericano de Ciencias Sociales, 2002. Sanhueza, José M. and Fernando Carvallo, “Conflictos y transformaciones en la educación superior chilena.” In Entre el mercado gratuito y la educación pública: Dilemas de la educación chilena actual, edited Víctor Orellana, 209–58. Santiago: LOM Ediciones, 2018. Schmidt, Vivien A., and Mark Thatcher. “Theorizing Ideational Continuity: The Resilience of Neo-Liberal Ideas in Europe.” Chapter. In Resilient Liberalism in Europe’s Political Economy, edited by Vivien A. Schmidt and Mark Thatcher, 1–50. Contemporary European Politics. Cambridge: Cambridge University Press, 2013. Silva, Eduardo. Challenging Neoliberalism in Latin America. Cambridge Studies in Contentious Politics. Cambridge: Cambridge University Press, 2009. Silva, Patricio. “Technocrats and Politics in Chile: From the Chicago Boys to the CIEPLAN Monks.” Journal of Latin American Studies 23, no. 2 (1991): 385–410.

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Skocpol, Theda. Protecting Soldiers and Mothers. Cambridge, Massachusetts; London, England: Harvard University Press, 1992. Sota, Javier. El sentido de la II reforma universitaria en el Perú: Las reformas en la educación superior en América Latina y El Caribe. Lima: Asamblea Nacional de Rectores, 2004. SUNEDU, II Informe bienal de la realidad universitaria. Lima: SUNEDU, 2020. Weir, Margaret. “When Does Politics Create Policy? The Organizational Politics of Change,” in Rethinking Political Institutions: The Art of the State, eds. Ian Shapiro, Stephen Skowronek and Daniel Galvin, 171–86. New York: NYU Press, 2006. Weyland, Kurt. Bounded Rationality and Policy Difussion: Social Sector Reform in Latin America (Princeton, NJ: Princeton University Press, 2006). Yamada, Gustavo Pablo Lavado & Joan Martínez. “¿Una promesa incumplida?: La calidad de la educación superior universitaria y el subempleo profesional en el Perú,” Documento de Discusión, DD/05/14. Lima: Centro de Investigación de la Universidad del Pacífico, 2014. https://repositorio.up.edu.pe/handle/11354/1102.

7 Reinvented Governments in Latin America Reform Waves and Diverging Outcomes Luis L. Schenoni

7.1  introduction The debate about the state in Latin America has been increasingly influenced by comparative historical analysis and historical institutionalism.1 These approaches see institutions – in this case, state institutions – developing along rigid, long-term trajectories, affected from time to time by relatively short critical junctures characterized by contingency.2 This analytical framework has proven especially useful to understand the deep historical roots of differences in dimensions of state capacity such as tax collection, the monopoly of violence, and territorial reach and control.3 Yet, it is seldom, if ever, applied in the field of public administration or to study the recent evolution of civil services in the region. Scholars of public administration in Latin America, on the other hand, tend to interpret civil service reforms in ways that fit the historical-institutionalist approach considerably well. The idea that in Latin America the bureaucracy is the “administrative widow of successive governments and political regimes” and should thus be seen as a succession of “geological layers,” suggests that countries made fateful decisions at specific points in time, which set them into distinct trajectories.4 The picture of Latin American bureaucracies evolving through forking paths, with every turn introducing inescapable rigidities, is so

1 2 3 4

Mahoney and Rueschemeyer, Comparative Historical Analysis in the Social Sciences; Mahoney and Thelen, Explaining Institutional Change. Mann, The Sources of Social Power. Kurtz, Latin American State Building in Comparative Perspective; Saylor, State Building in Boom Times; Soifer, State Building in Latin America; Schenoni, “Bringing War Back In.” Oszlak, “¿Escasez de recursos o escasez de innovación?” 28; Chudnovsky, “Public Administration in Latin America.”

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keen to the comparative historical approach that it cries for its exploration by public administration scholars. This chapter provides an exercise of that sort, applied to the analysis of civil service reform in late twentieth-century Latin America. My argument brings together at least three intuitions already present in studies about those reforms, which also suggest the need to adopt a comparative historical framework: that institutional continuities, critical junctures, and sequencing, might have determined their divergent outcomes. Let us consider these three ideas separately, albeit briefly. First, public administration reform in the 1990s took place on top of institutionalized practices which differed starkly from country to country. The idiosyncratic nature of Latin American civil services has consistently undermined large-n comparisons in previous research. Rules of promotion provide a clear example: incentive structures can value training and performance differently, and reward them via salaries, bonuses, or myriad other benefits, making it almost impossible to compare meritocracy across borders. Since indicators of bureaucratic quality are often very contextual, scholars have concluded that case-oriented research and awareness of strong path dependence within cases are necessary.5 The comparative historical framework makes it easy to incorporate these ideas by drawing on the comparison of a few relevant cases, which pay attention to singularities and continuities. Second, new agendas were pushed in particular critical junctures during the 1990s, which opened a window of opportunity for reform. Changes are therefore as important as continuities. Put otherwise, factors that loosen institutional constraints and rigidities merit as much attention. Although reformists existed before and after, very little would have been done in the 1990s if it were not for the concurrency of an international context that put these apparent solutions at the top of the policy agenda.6 In most Latin American countries, the nadir of economic crises coincided with the sudden advancement of economic, state, and administrative reform – all at the same time. This, in turn, suggests that civil service reform can only be analyzed within a framework that thinks in terms of many factors and how they align – sometimes contingently – in critical moments7 (Goertz 2017). Third, these reforms came in waves and followed specific sequences. Most scholars and practitioners agree, for example, in dividing late twentieth-century reforms into so-called “first generation” and “second generation” reforms – a distinction I explain later on. Importantly, sequencing mattered a great deal in determining the real impact of these reforms. Because career stability is a virtual prerequisite for bureaucratic autonomy and good performance, countries that adopted a piecemeal approach to downsizing in the first wave fared better 5 6 7

March and Olson, “Organizing Political Life.” Kingdon, Agendas, Alternatives and Public Policies. Goertz, Multimethod Research, Causal Mechanisms, and Case Studies.

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in modernizing public management and reorientating the civil service toward the citizenry in the second wave.8 A close look at path dependence, critical junctures, and sequences, serves to highlight the importance of one recurrent factor: the autonomy of the civil service. Although Latin American civil servants are in general constrained by a civil law tradition that establishes clear boundaries to their competencies, in some countries those who live “from politics” have been able to develop a greater esprit de corps and resilience vis-à-vis the whims of public opinion and the interests of those who live “for politics.”9 This phenomenon hints at the importance of sociology and politics beyond and above the technicalities of administrative reform. When proactive bureaucrats with shared beliefs organized in influential and cohesive advocacy coalitions and preserved their reputation as uniquely qualified providers of key public services, they were better able to preserve their autonomy, and “own” the reforms.10 Finally, evaluating the success of these reforms requires some ideal goal which I relate to both the professionalism and legitimacy of the civil service. Professionalism is partly evidenced not only in the existence of competitive salaries, and meritocratic recruitment and promotion – i.e., initial incentives or inputs – but also in the technical competency and respect to legality showed by administrators – i.e., behavioral outcomes. The latter, in turn, strongly determines the (rational) legitimacy of bureaucracies. Looking at these parameters it is reasonable to expect that economic crises and international pressures (creating critical junctures) as well as the bureaucratic institutions previously in place in each country (creating path dependence) would have influenced the capacity for civil service autonomy and resilience. Yet these structural factors bare no deterministic relation to the outcomes of reforms. Much of what happened within those critical junctures was highly contingent, from the timing and sequence of exogenous shocks, to the decisions of key agents and the results of their strategic interactions. To develop my argument, I focus on four cases: Argentina, Brazil, Chile, and Peru. This small-n comparative strategy is in line with recent applications of the comparative historical approach, where case selection intends to provide a rudimentary control for possible confounding characteristics. Argentina and Brazil had a relatively large public workforce by the end of the 1980s and faced the challenge of decentralization to subnational units due to their federal structure. Chile and Peru, on the other hand, were centralized polities with relatively small bureaucracy. In the end, however, only Argentina and Peru implemented 8

Rauch and Evans, “Bureaucratic Structure and Bureaucratic Performance,” 53; Barzelay, “Designing the Process of Public Management Policy Change”; Echebarría and Cortázar, “Public Administration and Public Employment Reform.” 9 Spink, “Possibilidades técnicas e imperativos políticos”; Weber, Politics as a Vocation. 10 Jenkins-Smith and Sabatier, “Evaluating the Advocacy Coalition Framework”; Carpenter, The Forging of Bureaucratic Autonomy.

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profound first-generation reforms drastically reducing their payrolls in the early 1990s. Conversely, Brazilian and Chilean bureaucracies were able to resist those pressures. Having undergone a deep restructuration of their civil service under first-generation reforms, Argentina and Peru were severely hampered in their capacity to properly implement more focused, second-generation ones. Conversely, the Brazilian and Chilean bureaucracies became paradigms of secondgeneration reforms aimed at enhancing meritocracy and efficiency.11 Brazilian and Chilean bureaucracies had been historically more professionalized – this was their most salient similarity even before the 1990s. Yet, as we shall see, this did not automatically secure their autonomy. Because bureaucratic autonomy necessitates not only a solid reputation but also a political coalition to back it up, Argentine public servants were arguably in a much better position to weather the reforms and preserve their autonomy through a traditional alliance of trade unions and the Peronist Party in government.12 The case of Argentina comes to illustrate that a great deal of uncertainty and contingency that takes place during critical junctures leading to the (unintended) results of institutional reforms. I present this argument in three sections. The first one looks at the evolution of public sector reforms in Latin America throughout history and paints a picture of the regional context when our critical junctures hit. The second section turns to first-generation civil service reforms of the early 1990s, looking at the political dynamics and specific outcomes of each case. Finally, a third section focuses on second-generation reforms that took place in the late 1990s and assess the situation of civil services by the end of the decade. Some conclusions close.

7.2  public

sector reforms until the

1990 s

Although it is tempting to trace back the history of Latin American public administrations to those who recreated a bureaucratic apparatus from the ashes of the Independence Wars, the Bourbonic and Pombaline reforms in the colonial era remind us that the issue of administrative reform reaches back beyond modern national states, and already in the form of concurrent, cross-regional critical junctures. In this seemingly endless regression, extant institutions conditioned and shaped subsequent ones, but innovation and contingency also led individual countries into specific institutional paths, a process that continued to take place throughout the nineteenth century. The interaction of Latin American states with each other, foreign powers, and the global economic context played a constant role in this process. This explains a considerable amount of institutional isomorphism, which should also not be overlooked. European and United States bureaucratic missionaries scattered across the region played a key role in the modernization of state 11 12

Iacoviello and Strazza, “Diagnostic of the Civil Service in Latin America.” Carpenter, The Forging of Bureaucratic Autonomy, 5.

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agencies during the late nineteenth century, an era characterized by the rapid emulation of successful models.13 Some local bureaucracies, however, were relatively more able to run quiet revolutions of their own, entering self-reinforcing processes of modernization fueled from within, and indeed, bureaucracies that were already more autonomous and efficient by the early twentieth century, tend to be so nowadays.14 Yet, region-wide attempts to modernize the state bureaucracy are not easy to find until the twentieth century. Scholars have identified a first instance of this kind with the Kemmerer missions that the United States dispatched to Colombia (1923), Chile (1925), Ecuador (1926), Bolivia (1927), and Peru (1931), in order to update accounting techniques for budgetary and financial management. Prompted by the public administration career reform in the United States, also Brazil (1934), Argentina (1937), and many others followed in establishing meritocratic standards in these areas (Spink 1998). Not surprisingly, this reform wave took place during the critical juncture opened by the inter-war period and a transition away from a laissez-faire era. Although these total wars did not affect the region in important ways, the widening gap between European and American bureaucracies, as well as state expansion due to the depression, opened up a new critical juncture.15 In the early post-war era, although many states decided to follow the French paradigm of the École National d’Administration,16 European models lost their former prominence and attempts to modernize bureaucracies across Latin America were heralded mostly by the United States Agency for International Development (USAID) and the United Nations Economic Commission for Latin America and the Caribbean (ECLAC). This consolidated a shift from an era where bureaucracies tried to modernize from the inside-out, seeking a variety of outside models, to a new era where powerful international agents pushed for reform, promoting uniform institutional blueprints. Some eclecticism, however, was inevitable. Specific characteristics of the Latin American developmental state – for example, the embeddedness of corporative interests and patrimonialism – undermined the straightforward implementation of outside models. In time, new actors like the World Bank (WB) and the InterAmerican Development Bank (IADB) joined the discussion, and native initiatives like the Centro Latinoamericano de Administración para el Desarrollo (CLAD) joined in to provide more grounded approaches.

13 14 15 16

Resende-Santos, Neorealism, States, and the Modern Mass Army. Paredes, Shaping State Capacity. Centeno, Blood and Debt; Olavarria, “Recent and Past Governance Reforms in Latin America.” Some examples are the Escola Brasileira de Administração Pública in Brazil (1952), the Instituto Nacional de Administración Pública in Mexico (1955), the Instituto Superior de Administración Pública in Argentina (1958), the Escuela Superior de Administración Pública in Colombia (1958). Many of these institutions (or their successors) continue to carry central importance in the training of Latin American bureaucracies.

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Interestingly, countries like Argentina and Chile remained relatively more shielded from external influences during this period, letting their bureaucracies set the pace and adapt with a higher degree of autonomy. Peter Spink concludes about this era that “…in all cases this adaptive process generated results. In countries where there have been major attempts at generating major and planned reform the reverse is the case.”17 It was therefore known by the 1990s that broad reforms and imported blueprints could be problematic, and countries that preserved the prestige and know-how of their bureaucracies had fared better in both autonomy and efficiency. However, when the neoliberal ideal of state reform kicked in, ushered by the Latin American debt crisis, considerations of this kind were sidelined. Nuances regarding the respective role that local and international actors should play had no place in a context that required drastic cuts in bureaucratic spending. The focus of the debate drifted toward the fiscal difficulties of an oversized state. The problem was seldom framed as one of enhancing taxation, formalizing the economy, or producing gains in efficiency – all of which would have required a stronger bureaucracy – and so a perfect political storm began to form threatening bureaucrats throughout the region.

7.3  first - generation

reforms

First-generation reforms promoted by multilateral institutions in the early 1990s concentrated mostly on decentralization, privatization, deregulation, outsourcing, and reducing the size of the public administrative apparatus. Although other elements like streamlining hierarchies and increasing managerial salaries were sometimes part of the package, administrative reform was conceived as part of an overarching state and economic reform. The emphasis was on the ways in which reforms could help reduce fiscal deficits by downsizing national-level bureaucracies and reducing their cost. Heralded by multilateral financial institutions like the IADB, the WB, and the International Monetary Fund (IMF), these reforms were often attached to conditionality-based lending in a context when several countries had defaulted and were restructuring their debts. The very political careers of top executive officials – often not only presidents themselves but also technocrats in charge of navigating the economic crises – hinged on the success of reforms, which created incentives for a strong centralization of decision-making. First-generation reforms seldom involved broad consensus. Not even at the implementation stage were agencies granted much control. Pressure from both international and domestic (executive) actors compounded and ensured that reform was imposed upon bureaucrats in a top-down manner and from the outside-in. It should not be surprising that this resulted in much intra- and interbureaucratic unrest. In most cases, political debates pitched the Ministry of 17

Spink, “Possibilidades técnicas e imperativos políticos,” 15.

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Economy – in charge of reducing the fiscal deficit – against other agencies. But struggles also divided trade unions and generated a cleavage between reformists and obstructionists inside government, parties, and bureaucracies. Obstructionists had a strong case for resistance that reached beyond their corporate interests. They knew that drastic reductions in personnel would hurt important isles of efficiency and importing blueprints could result in increased inefficiency where new and old rules misaligned.18 In every case, these obstructionists put up a fight, for it was the resolution of these debates and political struggles that would decide the extent and nature of the reforms. 7.3.1 Argentina The overwhelming victory of first-generation reformists in Argentina can be captured in a few jaw-dropping statistics. In 1989, before the reforms, the national state employed 874,182 civil servants. By the end of the 1990s, when first-generation reforms had officially ended, the number had come down to 270,000.19 The major shift was decentralization from national to provincial level bureaucracies, which by the end of the decade employed two-thirds of the public servants and executed in practice half of the budget.20 Yet, the size of Argentina’s bureaucracy was still cut by around one-third considering both levels.21 Employment in state-owned enterprises, which declined from some 347,000 in 1989 to 66,000 already in 1991, massively transferred skilled personnel to the private sector. Few states in the region underwent such a formidable reduction of public employment at the national level. The context of hyperinflation in which President Carlos S. Menem arrived at Casa Rosada in July 1989 is key to understand these numbers. The economic reforms enacted were so rapid and profound that by October 1990 Argentina had already sold state-owned monopolies in five sectors – trains, telephones, commercial aviation, highways, and oil – and had pre-scheduled the privatization of water and electricity by 1993.22 “Argentina suffered one of the most comprehensive market reforms among developing countries,” which extended to state reform as well, meaning that “in less than five years the country witnessed a fundamental restructuring of its state–society relations.”23 Focused mostly on reducing the fiscal deficit, the administrative reform was led by the Ministry of Economy and coordinated by the Comité Ejecutivo para la Coordinación de la Reforma Administrativa (CECRA), which handled negotiations with trade unions, coordinated task forces in different ministries, 18 19 20 21 22 23

Brinks et al. The Politics of Institutional Weakness in Latin America. Chudnovsky and Doussett, “Cuando la falla en la implementación,” 325. Cao and Laguado, “La renovación en las ideas,” 143. Oszlak, “From Smaller to Better Government,” 416. Palermo and Novaro, Política y poder en el gobierno de Menem, 171. Etchemendy, “Construir coaliciones reformistas,” 675.

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and dealt with technical experts from the WB and the IADB. CECRA’s suggestions were analyzed and eventually approved by the President via decrees which bypassed the legislative, a procedure that was facilitated by a situation of economic emergency.24 The reforms aimed to reduce the salaries and benefits of public employees, while promoting their voluntary and compulsory retirement as well. The focus on downsizing was clear from the start. To push the reforms, CECRA pursued a divide-and-conquer strategy pitching the main unions of the public sector against each other. Naturally, unions progressively lost power during the reforms, losing affiliates, sits in congress, and part of their historic leverage within the Peronist party. But this would probably not have happened if union leaders had remained true to their allegiances. The Unión del Personal Civil de la Nación (UPCN), for example, compromised on the reform and was benefited from access to newly privatized pension funds and managerial control in sectors like health and tourism. Meanwhile, those who confronted, like the Asociación de Trabajadores del Estado (ATE), lost such benefits. In this way, the relatively reputed Argentine bureaucracy saw its autonomy corroded by a cunning executive who drew a wedge into its political coalition. The decision to confront or bandwagon had important ramifications in the long term. UPCN, for example, was entrusted with the virtual monopoly of labor representation in the Sistema Nacional de la Profesión Administrativa (SINAPA). SINAPA was instituted in 1991 with the purported intention of consolidating promotion by performance and training but it quickly became a Trojan horse for radical reformists. By changing the rules of the game, SINAPA was also instrumental in undermining bureaucratic autonomy, replacing hierarchical personnel and serving as an excuse for leaving positions vacant, while informal, precarious employment contracts outside the system became common.25 Another interesting characteristic of the early Menem reforms was the increase in the absolute number of public servants in political jurisdictions – e.g., secretaries and sub-secretaries of state – despite an initial rule that limited them to three units per level. The fact that those positions were allowed to grow in a context of unfathomable downsizing also underscores the politicization in the reform and the need to compensate entrenched bureaucrats and union leaders willing to change sides.26 24 25 26

Ghio and Echemendy, “Fugindo do perigo.” Orlanksy, “Reforma del Estado”; Chudnovsky and Dussett, “Cuando la falla en la implementación,” 326. The leader of the union of gastronomic workers, for example, was offered a position at the Superintedencia de Servicios de Salud, which supervised the assignment of 4 billion dollars among a union-run branch of the Argentine health system. In another case, the leader of the railway union was offered a top position in the new privatized company in exchange for the dismissal of 80,000 employees. These are only two salient examples of a widespread practice at the time (Volosin, La máquina de la corrupción).

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The informality of it all resulted in sprouting corruption scandals. Responding to pressure from the WB and domestic public opinion, mechanisms of budgetary control were introduced by law in 1992. Two relevant institutions were created: the Sindicatura General de la Nación (SIGEN) and the Auditoría General de la Nación (AGN), for internal and external monitoring of budgetary spending, respectively. Although these agencies served to legitimize previous reforms – and the argument for constitutional reform – they were still plagued by informality and lack of autonomy.27 Overall, first-generation civil service reforms in Argentina are harshly criticized by public administrators. According to Oscar Oszlak, this dismantling had five serious consequences: poor planning led to state deformity; wholesale privatization compromised state regulatory capacities; abrupt decentralization of functions left subnational units incapable to deal with the burden; demobilization and systematic sidelining of critical actors undermined citizens-as-users, and inflexibility of the reforms created a type of inertia that would seriously undermine second generation reforms.28 7.3.2 Brazil Brazil differs markedly from Argentina in the breadth and intensity of its first-generation reforms. Although Brazil underwent two cycles of reform as well, the first of these cycles encountered serious political difficulties which delayed and softened its implementation considerably.29 A first attempt at downsizing was heralded by President Fernando Collor de Mello (1990–1992), who tried some Argentine-style radical reforms during his administration. But both market and state reforms in the early 1990s were unsuccessful, not least because Collor faced the compounded opposition of a strong coalition of local businessmen, the developmentalist bureaucracy, the military, and several other actors bent upon slowing the pace and reducing the aims of the reform.30 Finally, the impeachment of Collor meant that actual first-generation reforms would arrive to Brazil relatively late, with the administration of President Fernando Henrique Cardoso, starting in 1995. The initiatives put forward by Cardoso also envisioned civil service reform as part of a broader package directed to reduce the scope of the state, and under the auspices of the IMF and the WB. The offensive was initially no less ambitious than others in the region, but Cardoso created the Ministry for Federal Administration and Reform of the State (MARE) and appointed a notable bureaucratic entrepreneur at the top: Luiz Carlos Bresser Pereira. 27 28 29 30

Orlansky, “Política y Burocracia.” Oszlak, “From Smaller to Better Government,” 418. Barzelay, “Designing the Process.” Fausto and Devoto, Brasil e Argentina, 488; Di Tella, “El sistema político brasileño en perspectiva argentina,” 158; Pang, The International Political Economy of Transformation, 133–37.

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Bresser introduced a big difference from the outset. He was a public administration professor and an active reformist with broad international networks. After becoming part of the cabinet, he was also named president of the Centro Latinoamericano de Administración para el Desarrollo (CLAD), the Latin America think tank that set the agenda of administrative reform. This put Brazil at the vanguard of the reformist movement but also meant that the person in charge of the process would have autonomy. Bresser’s legitimacy as a notable academic also gave him political leverage even vis-à-vis Cardoso. His vision of the reform, it would be revealed, was not as crude as others, and he had already incorporated the kind of nuance and sophistication that would become the hallmark of second-generation reforms. It is interesting to note that the fame and respect for Bresser were partly due to the reputation of the Brazilian public administration per se. Only a cadre recognized notable socio-economic status – comparable to the diplomacy or business associations – could have produced a leader of such authority. The most outstanding particularity of the Brazilian process, however, was that the reformist impetus faced coordinated and strong opposition from both within and outside the bureaucracy. This would become evident right after the approval of the Plano Diretor da Reforma do Aparelho do Estado in 1995, which laid out the policy of fiscal adjustment, amalgamating this opposing coalition. Counting with the support of the key ministries – like Casa Civil, Planejamento, and Fazenda – the Plano Diretor da Reforma divided the public sector into a strategic nucleus, exclusive activities, and non-exclusive activities, envisioning much more flexible contracts and the possibility of outsourcing for the latter. Yet, the stability of public employees soon became a highly politicized issue. Although some voluntary retirement took place, most civil servants resisted. Little support was gathered for institutional changes, even within the ministries that led the reform. While the top echelons approved budgetary cuts, the personnel able to produce real productivity gains within the bureaucracy was reluctant to cooperate.31 Obstructionists were backed by strong unions which formed broad coalitions in the public sector – like the Confederação dos Trabalhadores no Serviço Público Federal (CONDSEF), created in 1990 – and were ultimately able to close ranks with the Central Única dos Trabalhadores (CUT), the main union federation in Brazil. Eventually, obstructionists mobilized through unions and political influences and gathered enough power to block the reform at the level of Congress. MARE had prepared an amendment to the 1988 Constitution which Cardoso sent to the legislature on August 1995, but its treatment was delayed for years. Aware of the opposition, MARE moderated and started to push for more circumscribed and selective reforms.32 Discourse changed radically as well. 31 32

Rezende, “Por Que Reformas Administrativas Falham?” Lima, “As reformas administrativas no Brasil.”

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In the words of Bresser, the stated goal of these reforms became not only to eliminate personnel redundancies but also to increase the accountability and efficiency of the civil service by offering more stability to competent professionals.33 Despite all these attempts at renegotiating some reform, the political resistance marshaled by unions representing the interests of middle- and lowrank public employees was fierce and effectively blocked it. In retrospect, this was fortunate. Studies have demonstrated that the greatest problem Brazil was facing at the time was not the size of its bureaucracy per se, but the high cost of salaries, pensions, and bonuses, which were up to fifty percent higher than in the private sector. In any case, the element of fiscal adjustment – the core of first-generation reform – had to be postponed and dealt with more cautiously and gradually in the future. 7.3.3 Chile Unlike our first two cases, Chile was not a main target of WB or IMF conditionalitybased lending in the early 1990s and could, mainly because of this, avoid reforms of the great spectrum.34 Moreover, administrative reforms under the Pinochet regime – which included a unified salary scale, a statue for public employees, administrative decentralization of the state into regions, and a 30 percent reduction in the size of public employment – already profiled Chile as an “entrepreneurial market state” on the eyes of multilateral institutions. The power of the neoliberal wing during the dictatorship, as well as the political institutions they left behind, had constrained expansions in the public sector and left Chile in better fiscal standing. Therefore, administrative reform was less of a concern. President Patricio Aylwin (1990–1994), for example, kept state reform low in the agenda and showed important continuities with what was done under Pinochet. Although Aylwin’s concern with the topic is evident in the creation of the Ministerio de Planificación y Cooperación (MINDEPLAN) at the beginning of his term, overly confronting unionized civil servants would have undermined a still young and fragile democratic alliance visà-vis the military and right-wing parties. Aylwin promoted cooperation instead, starting with unionized workers of the National Association of Fiscal Employees who participated actively in the elaboration of an accord expanding performed-based remuneration.35 The broad recognition of civil servants as those distinctively capable of enhancing the efficiency of the public sector encouraged some entrepreneurs within the bureaucracy – a group that became known as “the archangels” – to 33 34 35

Bresser, “New Public Management Reform,” 14. Lardone, “The appropriation of the World Bank policies?” Marcel and Toha, “Reforma del Estado y de la gestión pública.”

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take reform into their hands and began a bottom-up transformation of areas like taxation, health, education, and prevision.36 As it would happen later on in Brazil, advocacy coalitions rising from within the bureaucracy responded to stability and meritocratic incentives by pushing a process of increasing sophistication, for example, in the measurement of performance indicators for budget elaboration and planning. The initial steps of the reform were piecemeal, however, and based on trial and error. A Plan Piloto de Modernización de Gestión en Servicios Públicos (1993), for example, was implemented to test a method of results-based evaluations on five to seven agencies before the system was extended beyond. The experiment took three years to produce some initial results which were thoroughly evaluated by the next administration before any large-scale implementation took place. Some of these projects were co-financed by the WB and the IDB, but always with strong participation of Chilean counterparts and imposing very little threat, if any, to the stability of public officials.37 When President Eduardo Frei arrived to power in 1994, he gave more impulse to the process, starting with a focused effort to reform justice. The agenda was pushed by a broad coalition including Agustín Edwards, president of Fundación Paz Ciudadana, and a few top political figures, but was mostly handled by the judiciary. Edwards, just like Bresser in Brazil, was the kind of public intellectual and reform entrepreneur that could remain autonomous visà-vis the executive and give the reform legitimacy needed in Congress and in the streets. Early in 1994, the Inter-ministerial Committee for Public Modernization was created, demonstrating that administrative reform beyond justice was still on the agenda. Progress, however, continued to be very slow. Laws had to be passed in 1995 and 1996 to start the process of reform in areas like budgetary planning, tax collection, and customs. The methodology of pilot projects that took many years to evaluate also delayed implementation. But reforms advanced slowly and steadily, which eventually resulted in a much better coupling with second-generation reforms. 7.3.4 Peru The contrast between Chile and Peru with regard to state reforms in the 1990s could not be starker (see Camacho and Dargent in this volume). When it comes to first-generation civil service reforms, the cases are polar examples. The context in Peru was even more severe than in Argentina or Brazil, given the concurrency of economic and political crises affecting the party and regime institutions, which meant that the critical juncture was carved deeper than elsewhere into existing administrative institutions. 36 37

Waissbluth, La reforma del Estado en Chile; Navarrete, “La modernización del Estado.” Filgueiras, “Los casos de los Ministerios de Hacienda y de Salud en Chile.”

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The destruction of bureaucratic capacity in Peru during the 1990s took place in a broader context of a party system collapse. This meant that the advocacy coalition led by political outsider Alberto Fujimori could exclude the bureaucracy affiliated with traditional parties – a strong force for stability in other cases – while still including powerful actors like international financial organizations, local and foreign businessmen, and a new technocracy concentrated in the high echelons of the executive.38 While these bureaucrats were somehow shielded by the Partido Aprista during the Alan García, and by Congress during the first months of the Fujimori administration, the attack on partisan and republican institutions soon became fierce, and civil servants became were openly targeted. Fujimori called them “parasitizing” and “idle” in public speeches, identifying “bureaucratization” as one of the biggest problems he was determined to resolve.39 In January 1991, an offensive plan to downsize the bureaucracy was enacted. The process was handled in a top-down, centralized fashion, by the Ministry of Economy – the agency that, as in other cases, most openly embraced fiscal reform. The plan consisted of two reinforcing measures. A first resolution promoted resignations across the board by offering compensation to civil servants who adhered to the plan within a specific time frame. The second measure consisted in allowing the dismissal of non-essential personnel with meager compensations starting in April. This threat led more than 30,000 public officials to resign voluntarily in a matter of months. By late 1991, this initial attempt at wholesale reform was slowed down due to continuing economic hardships, some reorganization of unions, and the growing confrontation between Fujimori and Congress. The Instituto Nacional de Administración Pública (INAP) started to gain some promising control over the reform, and some hoped it could stop, and even revert some measures. But Fujimori’s self-coup of April 1992 led to strong re-centralization of state reform. That same month regional governments were suppressed and replaced by provisional councils depending directly on the central government. Subsequent debates about constitutional reform sent the topic to the bottom of the agenda, but the reform continued steadily underway in a rather authoritarian fashion. Subsequent administrative reforms reflected the increasing verticalization of authority in Peru. They were handled directly by the Ministerio de la Presidencia (MIPRE), infamous for its authoritarian role, without much consultation with other organs. Subsequently, the 1993 Peruvian Constitution itself contemplated the centralization of the executive bureaucracy in the presidency, allowing MIPRE authorities to first absorb and then shut down the INAP in 1995. Overall, Peru underwent a cut in public employment from roughly 600,000 to 300,000 civil servants in this first wave of reform.40 38 39 40

Tanaka, “¿Crónica de una muerte anunciada?” Cortázar, Oportunidades y limitaciones, 43. Webb and Fernández Baca, Perú en números 1994.

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Although Peru is perhaps the clearest case of bureaucratic destruction during first-generation reforms, the literature does recognize some specific examples where bureaucratic know-how and prestige were preserved. These cases are the exceptions that prove the rule applied to all other areas of public administration was seriously wrongheaded. One such case is that of the Superintendencia Nacional de Administración Tributaria (SUNAT). Prompted by the urgent need to enhance tax collection Fujimori preserved the autonomy of this agency and devised a plan to reform it “from within.”41 The reform, therefore, came to include the training of new agents in the also newly created Instituto para la Administración Tributaria (IAT), and although several hundred of employees voluntarily resigned in 1991, the number of SUNAT agents was up again to its original 3,000 by 1993, with a ten-fold salary increase and the social prestige derived from Fujimori’s public support. This newly created elite corps simplified the tax system – from sixty to just nine tax categories – and tax collection increased considerably as a result.42 In this way, SUNAT became an example of how reforms could be done right although, as we shall see, the damage caused to the civil service was already great enough to undermine second-generation reforms.

7.4  second - generation

reforms

Second-generation reforms find their root in the New Public Management (NPM) school, a view of the civil service that took hold in OCDE countries during the 1980s. These ideas were famously summarized in a volume by David Osborne and Ted Gaebler (1992) which arguably set the stage for a change in the ideology of multilateral institutions by the mid- 1990s.43 According to this new mindset, “reinventing governments” required not a drastic downsizing and reduction in scope, but a more result- and citizen-oriented type of management that, by copying practices in the private sector, would bring critical gains in efficiency. These ideas disembarked in Latin American policy circles through a 1997 report by the WB noting that first-generation reforms had gone too far in the direction of reducing the scope of the state and had done too little to strengthen it.44 The new recipe was marked by what became known as the “four Es”: efficacy of public sector intervention, economic efficiency, equity in the distribution of expenditures, and generating a proper environment for the private sector. Poverty reduction, infrastructural investment, and good state regulation became at least as important as reducing the fiscal deficit. Administrative reform, in a way, started to decouple from economic policy. A concrete focus 41 42 43 44

Cortázar, Oportunidades y limitaciones, 50. Nickson, “Transferencia de políticas.” Osborne and Gaebler, Reinventing Government. Fukuyama, “The Imperative of State-Building.”

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on the civil service was promoted instead. This involved redesigning the functions of the staff, getting rid of overlapping hierarchies, streamlining organizational charts, and de-bureaucratizing. The view of the public servant also changed radically, with a new emphasis on meritocratic rules for recruitment and career advancement, competitive salaries, continuous training of personnel, and enhancing the technological infrastructure in the public sector to facilitate the management and flow of information. The second wave was different not only in the way multilateral institutions pictured the reforms but also in the way they approached actual countries. Although NPM became a necessary buzzword for getting funding from the WB, IMF, and IADB, the emphasis shifted from conditionality-based lending and forcing reforms upon states in need to the negotiation of legally binding agreements with specific bureaucracies, the use of ideological persuasion, and a particular emphasis in having civil servants “own” the reform.45 Bureaucratic autonomy, erstwhile the last line of defense against downsizing, now became a prerequisite for successful implementation. Because of the more active role that bureaucracies played during secondgeneration reforms, it would be unfair to continue dividing the two main coalitions of this era between reformists and obstructionists. These antagonistic camps did not polarize after fiscal adjustment policies were loosened and the discussion became more technical. During second generationreforms, we should talk instead of political reformers, on the one hand, and embedded or autonomous bureaucratic reformers, on the other. Collaboration between these two camps was frequent in order to surpass the hurdles old administrative traditions and patrimonialism supposed for NPM reforms.46 7.4.1 Argentina By the mid-1990s, the WB became increasingly concerned about the situation of the Argentine state, which was now smaller in size but remained highly inefficient. Reports issued in 1996 and 2000 highlighted that great “institutional weaknesses” remained, mainly regarding the capacity of the federal government to sustain in time the initial boost in efficiency that was achieved via downsizing.47 Embarked upon a set of economic policies that necessitated a continuous flow of foreign credit and investment, the response of the second Menem administration was swift. A Second State Reform has launched already in February 1996. The legal framework included a new focus on rationalization, particularly trying to eliminate remaining areas of overlap between national, provincial, 45 46 47

Riggirozzi, “The World Bank as conveyor.” Pollitt and Bouckaert, Public Management Reform. Lardone, “The appropriation of the World Bank policies?”

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and decentralized agencies. But key aspects of first-generation reform remained, such as high levels of informality, and a notable concentration of authority in the executive. The president created the Unidad de Reforma y Modernización del Estado by Decree and under the Jefe de Gabinete (Chief of Staff). Created by the 1994 Constitution, the Chief of Staff was a powerful executive official, now invested with notable authority to approve or reject so-called “modernization plans” and “strategic plans” that would be developed by different bureaucracies. The Chief of Staff was also a political appointee with no legitimacy within the bureaucracy. This often led to conflict with the ministries which slowed down and at times paralyzed the reform. The politicization and informality of the reform were a residue of firstgeneration reforms that Argentina could never get fully rid of and which purported serious problems. The timeline for bureaucracies to present their plans was too short, and delays related to inter-bureaucratic bargains undermined a few attempts at rationalization. Similarly, while some agencies were reorganized and integrated under bigger structures, the critical problem of overlap and duplication of activities was almost never taken care of due to intra-bureaucratic political struggles.48 Finally, while the formal public servant career – now regulated by SINAPA – seemed to be in line with fiscal goals, a whole parallel structure of informal and precarious state employment exploded when the climate of second-generation reforms allowed some expansion. From 1997 to 1999, short-term contracts and outsourcing to self-employed workers increased by 300 percent.49 The Second Reform also included some important initiatives that were not clearly related to bettering efficiency, monitoring, and planning. For example, a fund was created to assist those public workers who remained unemployed, as a sort of palliative for the unintended consequences of previous reform, and a bargaining chip with ATE, still a powerful union. Although the fund was never implemented, this is another example of how Argentina missed the chance to implement important second-generation reforms, diverting its attention to fix the problems created by first-generation ones. Most importantly, first-generation reforms had eroded the basic structures needed to build upon. The precarity of labor and growth of the informal sector, which resulted from wholesale privatization and downsizing, led to an inefficient growth of the state – many times tinged by clientelism – in areas beyond the scope of capable bureaucratic structures. Similarly, the concentration of power in the executive, which was essential to the success of the first-generation reforms, consolidated after the 1994 Constitutional Reform, making it ever more difficult to preserve bureaucratic autonomy. The failure of NPM in Argentina is captured in several studies. One contemporary study, for example, concluded that “…dysfunctional features which 48 49

Orlanksy, “Política y Burocracia.” Chudnovsky and Doussett, “Cuando la falla en la implementación de las reglas,” 326.

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existed prior to the reform continue to appear in more than 80 percent of the issues.”50 More recently, this assessment has not changed.51 7.4.2 Brazil As previously discussed, the 1995 plan for public administration reform became virtually stalled when Cardoso sent a project to Congress to amend the 1988 Constitution, generating much criticism and politicizing of the issue. This setback, however, led to a shift in focus at MARE, whose main goal drifted toward a more piecemeal implementation of concrete initiatives.52 Even before the 1997 WB report, MARE had been successful in implementing some gradual changes. For example, Bresser coordinated with the Escola Nacional de Administração Pública (ENAP) – the school of public officials – the training of public managers and budgeting and planning analysts, two new career paths in the public sector that remained absent in most Latin American bureaucracies.53 From 1995 to 1998, MARE also won, one by one, more than a hundred legal battles to derogate administrative rules in the areas of human resources, state purchases, and organization. These slow but consistent reforms set the stage for a second cycle of Brazilian reform started when Congress finally passed a law in 1997 regulating “social organizations” – new entities that would be functional to the decentralization of state activities. Even more importantly, the constitutional amendments proposed by MARE were also approved in 1998. Still, Cardoso had learned from his early experience that politicization could spoil all this progress. He was committed to lower the tone of the discussion, keeping second-generation reforms under a low profile, shielded under the umbrella of bureaucratic autonomy. The best way to do this was to shut down MARE, giving a political victory and some closure to the losers of the reform process. Bresser (2001) himself agreed that MARE was closed, and its responsibilities were transferred to the Ministry of Planning.54 Discretion was probably the best way to ensure the continuity of the process. Unlike most first-generation reformers in Latin America, Bresser was persuaded by the NPM framework from the beginning and perhaps more concerned with the citizen-user framework than he was with downsizing and fiscal adjustment, which were chiefly associated with MARE. Therefore, by changing discourse, Brazilian reformists were able to soothe concerns related to personnel dismissals and heavy policy transfers from outside. Instead, bureaucratic entrepreneurs were empowered 50 51 52 53 54

Bozzo et al., Cuaderno CEPAS No. 5. Oszlak, “From Smaller to Better Government.” Nickson, “Transferencia de políticas.” Barzelay, “Designing the Process,” 12. Bresser, “New Public Management Reform.”

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inside each of their autonomous units, which allowed for a more decentralized, piecemeal management of the reforms.55 Progress in this second phase remained slow but steady. In 2000, for example, Cardoso implemented a national survey to evaluate user satisfaction with public services and created – by decree – a system to evaluate user satisfaction in the future, including quality standards to be attained across the federal bureaucracy.56 The new focus on public service accountability was also accompanied by a very strong pro-democratic discourse which emphasized the necessity to open erstwhile authoritarian bureaucracies to the citizenship as a necessary step toward a full-fledged consolidated Brazilian democracy. The narrative was very successful in legitimizing second-generation reforms. The public debate shifted from the stability of public employees toward the existence of authoritarian enclaves within the bureaucracy, which even generated incentives for insiders to reform in order to preserve their social prestige. This discursive shift toward the necessity of democratizing the bureaucracy was a distinctive feature of the Brazilian administrative reform process when compared to its neighbors. Contrary to the expectations of many bureaucrats, it also reinforced bureaucratic autonomy by enhancing their reputation and expanding their political coalitions. 7.4.3 Chile Almost in parallel to the WB report issued in February 1997, Frei launched the Plan Estratégico para la Modernización de la Gestión Pública, which contained in it many of the reforms the archangels had been pushing for years.57 As with previous experiences, the process started with pilot projects which only after careful evaluation evolved into more institutionalized Planes de Mejoramiento de Gestión. Unlike the programs of the early 1990s, second-generation reforms in Chile were owned by the state to a much greater degree. For example, a Programa de Coordinanción de Proyectos de Gestión (1997), a Programa de Evaluación de Proyectos Gubernamentales (1997), and a Programa de Mejoramiento de Gestión (1998) were financed in their entirety by the Chilean state, ensuring almost complete autonomy from WB pressures and institutional blueprints. These programs provided general frameworks but the details about performance indicators and modernization projects were subscribed by the agencies to be reformed. Results, therefore, grew out of much intra-bureaucratic, inter-bureaucratic, and even executive-legislative cooperation. Given the gradual nature of administrative reform in Chile during the early 1990s, the continuity between first-generation and second-generation reforms 55 56 57

Barzelay, “Designing the Process,” 13. Nassuno, “A administração com RSP foco no usuário-cidadão.” Waissbluth, La reforma del Estado en Chile.

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was notable. Yet, this new wave helped embolden the Chilean reform process, in particular by legitimizing a more technocratic approach the country had already taken. The 1997 plan introduced by Frei, therefore, presented Chile already as a paradigm of the NPM school; a country that foresaw the conclusions that CLAD and multilateral institutions were discovering only by then.58 In important respects, Chile was truly at the vanguard of NPM in Latin America. Budgetary planning is perhaps the clearest example. In 1998, the Dirección de Presupuestos developed a program for strategic planning which included multi-year budgetary forecasts and commitments, something rather unseen in the rest of Latin America.59 A clear downside of the Chilean reform, however, was the democratic deficit that any highly technocratic reform entails. In this regard, a democratic narrative might have played a positive role, just as it did in Brazil. On the one hand, it generated incentives for bureaucrats to demonstrate efficiency and transparency to the private sector and civil society. On the other hand, being led by the left-wing coalition, the reforms were seen as an opportunity to increase accountability and thus viewed positively by the public. Also due to the graduality and long-term nature of the reform calendar, many of these reforms continued to take place under President Ricardo Lagos (2000–2006). The main drivers of reform under Lagos were not his own agenda, nor the top-down pressure of multilateral institutions, but a consistent request for transparency and accountability from the citizenry after a corruption scandal in the Ministry of Public Works. This case serves as a reminder that even corruption scandals and politicization can have a relatively positive impact on reforms, albeit under very particular conditions. All in all, after first- and second-generation reforms, Chile not only avoided drastic downsizing; it had registered a 20 percent enlargement of its public payroll amidst increased efficiency. Brazil is the only other Latin American country that registers such an enlargement, while the rest of the region underwent reductions from 5 to 40 percent throughout the 1990s – Argentina and Peru, as we have seen, are among the most radical examples.60 7.4.4 Peru The second phase of reform in Peru coincides with the second term of Fujimori, who was reelected in 1995. By that time, it was clear to officials and public opinion that autonomous entities within the public administration who skipped first-generation reform blow, like SUNAT, had become the only “isles of modernity” left and awaiting to be mimicked.61 58 59 60 61

Marcel and Toha, “Reforma del Estado y de la gestión pública.” Filgueiras, “Los casos de los Ministerios de Hacienda y de Salud en Chile.” Oszlak, “El servicio civil en América Latina y el Caribe,” 8. Ordoñez, “La reforma Administrativa en el Perú.”

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These few so-called “enclave reforms” contrasted with attempts at wholesale reform and downsizing which were seriously questioned, even by the President himself. By 1995, Fujimori found those measures had created serious bottlenecks and began to hire new personnel under a different type of contract to bypass self-imposed limits.62 Through these means, the public administration had started to grow again to the extent that pre-reform levels of public employment would be achieved before the end of the decade.63 The new focus, thus, tuned to modernization, while fiscal concerns were relegated. In terms of decision-making, the Ministry of Economy was sidelined, and more control was granted to the Presidencia de Consejo de Ministros (PCM) and decentralized to the ministries and entities to be reformed. Fujimori counted now with a sound majority in Congress, so a law was passed in late 1995 which delegated legislative functions on the executive to modernize all ministries, which would expire in December 1996. From the beginning, however, the program was marred with ambiguities. While on the one hand, there was an emphasis on the autonomy of bureaucratic enclaves and incentives for self-reform, the PCM team hired consulting experts paid by development cooperation funds and coming from the private sector. In a blatant attack against bureaucratic autonomy, private and foreign reformists tried to impose indicators of performance promoted by multilateral agencies, which were seen by civil servants as yet another way for the Presidency to exert control over them.64 International pressure and competition between the Ministry of Economy and other ministries eventually led to politicization. The Peruvian press suggested that the new reform could entail a new wave of voluntary retirements – this time of up to 200,000 civil servants. Amidst a heated debate, public opinion soon turned against second-generation reforms. In the end, Congress, the President, and the ministries ended up abandoning the reform plan, aligning with public opinion and activists from the bureaucracies directly affected by the plan – some thirty entities which would have disappeared as a consequence of rationalization and streamlining. The issue had become so sensible that Congress had to reject an already approved loan by the IDB, which the executive had previously negotiated with much effort. The contradictions that marred second-generation reforms in Peru point to the importance of sequencing. It was arguably the reminiscence of the first reforms that scared public opinion and made the second wave politically untenable. Finally, the reform process was not sufficiently institutionalized and decentralized to be sustained in time by bottom-up forces from within the bureaucracy. The reform was conceived as an executive project centralized in the 62 63 64

Cortázar, Oportunidades y limitaciones, 65. Echebarría and Cortázar, “Public Administration and Public Employment Reform,” 137. Cortázar, Oportunidades y limitaciones, 72.

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upper echelons of the administration. Therefore, with Fujimori swayed away from this policy goal, and the expiration of the legislative delegation by the end of 1996, reform attempts found a sudden end.65

7.5  conclusions This study of civil service reforms in Latin America during the 1990s illustrates, first and foremost, many possible forms of collaboration between comparative historical analysis and public administration, which could be further explored. These areas of overlap are both methodological and theoretical. Methodologically, it is worth pointing to insights about critical junctures, path dependence, and sequencing, which undergird all four narratives across this chapter. First of all, critical junctures mattered. In all our cases like-minded reforms concurred in moments of regional crisis. In Argentina, a case of serious economic crisis, and in Peru, a case of overlapping economic and institutional crisis, international pressure more easily pushed wholesale first-generation reforms. Dodging both economic and political storms, Chile more easily avoided a rupture with the past. Yet, Brazil could have ended down the former path be it for the severity of its economic and political crisis, and yet did not, pointing to the importance of other factors as well. Secondly, previous trajectories mattered as well. Chile and Brazil, our two cases of success, already had relatively professionalized bureaucracies before the 1990s. This reputation arguably gave them an edge over others. With the exception of a few small enclaves, the Peruvian bureaucracy did not count with a similar reputation. But again, this relationship is not deterministic. Argentina counted on a relatively strong bureaucracy both respected and initially backed by a political coalition, and yet failed to reform successfully as well. This points to the importance of contingency. Whether bureaucracies could preserve their autonomy did not depend exclusively on previous institutional legacies or the nature of structural shocks, but rather on fortuitous strategic interactions during the juncture. The cohesiveness of the Brazilian autonomist coalition, and the breakup of the Argentine one, were unforeseeable. Thirdly, sequencing also mattered. The relative resilience of Brazilian and Chilean bureaucracies vis-à-vis first-generation reforms determined, in turn, the feasibility of further reforms. Conversely, in Argentina and Peru, where first-generation reforms hit hard, second-generation ones became politically and practically impossible to implement. The importance of this sequence becomes evident when we try to flip the order of events by virtue of a thought experiment or speculate about a counterfactual where first-generation reforms never have happened. Theoretically, all the previous insights point to the autonomy of the civil service – given its reputation and capacity to build political coalitions – as a key factor, 65

Barzelay, “Designing the Process.”

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at the center of this story.66 The issue of state autonomy has also been of key importance in the comparative historical tradition, but attention to it has ebbed and flowed, and the idea is rarely applied in the field of public administration.67 In our story, bureaucratic autonomy is key because it explains both the preservation of prestigious, meritocratic bureaucracies from first-generation reforms and the successful implementation of second-generation reforms from within. Conversely, the vulnerability of civil servants to the pressure exerted by chief executives and multilateral financial institutions led to less auspicious outcomes. This lends credence to the idea that positive feedbacks are possible when strong bureaucracies are able to build fiscal, human, and organizational capacity, while shielded from “powering reforms” (see Bersch in this volume). The latter is likely to create policy volatility and produce negative policy cycles, also reproducing in the long term.68 Conversely, as it turns out, gradualism, stability, and consistency, seem to be important predictors of success. Katherine Bersch aptly captures these ideas by referring to the fable of the tortoise and the hare. The tortoise, self-aware of its (cognitive) limitations, used gradualism and consistency, the weapons of the slow, to get to the goal.69 This chapter contributes with a complementary insight: just as tortoises can be slow and survive because of their shell, so is bureaucratic autonomy necessary to underpin processes of slow reform. Other basic comparisons between these same four cases question the validity of alternative interpretations. For example, the influence of the military during the Fujimori administrations in Peru contrasts with their radical exclusion from politics in Argentina, suggesting that the armed forces did not play a stabilizing role in the context of administrative reforms – as one might be led to think when analyzing only Brazil and Chile, two countries where the military remained relatively strong. Similarly, the concurrency of administrative and economic reform in Brazil contrasts with their clearer separation in the case of Chile and shows that the urgency of state reform due to a critical economic context did not necessarily doom public servants – as one might be led to think if looking only at Argentina and Peru. Yet, the conclusions drawn from these four cases do not automatically generalize to the rest of Latin America. Future research should explore this possibility. That abrupt downsizing was a mistake seems to be corroborated by looking at countries like Costa Rica and Uruguay, for example, where reforms had only marginal effects on public employment. Both these have retained a relatively large payroll – as a percentage of their population – and focused instead on enhancing meritocratic rules of recruitment and promotion. 66 67 68 69

Carpenter, The Forging of Bureaucratic Autonomy. Evans et al., Bringing the State Back In. Chudnovsky et al., “Construcción de capacidades estatales.” Bersch, When Democracies Deliver, 6.

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8 The Devil Hides in the Details Variations of Conditional Cash Transfers Programs in Latin America* Luciana de Souza Leão

In the 1990s, Brazil and Mexico initiated what some have called a “development revolution from the Global South” with the implementation of Conditional Cash Transfer programs (CCTs). The turn to CCTs was considered a revolution because it diverged from the historical emphasis that Latin American countries had placed on universal benefits, which were shown to be ineffective in reaching the most vulnerable populations, and shifted priority to distributing money and resources exclusively to families classified as poor.1 Over the years, Brazil’s Bolsa Família and Mexico’s Progresa-Oportunidades have garnered the attention of scholars and policymakers worldwide,2 and they have been credited with ushering in a “new generation” of “pro-poor” poverty policies by World Bank economists and critical development anthropologists alike.3 In this chapter, I take the case of CCTs as an invitation to examine a tradeoff faced by many Latin American neoliberal states – their promise of making states both more efficient and more inclusive. More specifically, I use the case of CCTs to explore variations in how the Brazilian and Mexican states understood and acted on the promise of increasing inclusivity in official safety nets by making poverty management more efficient. I show that while Brazil and Mexico equally chose CCTs as their main strategy to reinvent social policy provision for poor families in a neoliberal era, they did so for different reasons, which resulted in the implementation of programs that followed distinct *

1 2 3

The author would like to thank Elisa Vasconcellos and Sara Gleason for their meticulous work in this project. Fieldwork for this research was supported by an IDRF fellowship from the Social Sciences Research Council. Hulme, Hanlon, and Barrientos, Just Give Money to the Poor. De La O, Crafting Policies to End Poverty in Latin America. Rawlings, “A new approach to social assistance”; Ferguson, Give a Man a Fish.

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operational logics. In Mexico, the state invested in a very rigid and precise regime to select and monitor poor families, while Brazil adopted a more loose and dynamic strategy. I show that these differences depended on the strategies of political legitimation of each CCT and were influenced by the distinct approaches to neoliberalism adopted by each country. My findings are based on the analysis of a rich set of empirical data, including approximately 10,000 pages of official documents and 100 in-depth interviews with Brazilian and Mexican political and bureaucratic elites conducted in Brasília, Rio de Janeiro, São Paulo, and Mexico City, between 2014 and 2017. The chapter is organized as follows. I start by introducing the innovations in the approach to poverty reduction represented by CCTs, focusing on how these programs can be used to investigate variations in approaches to neoliberalism in Latin America. The second section presents the operational differences between Brazil’s Bolsa Família and Mexico’s Progresa-Oportunidades, highlighting their distinct targeting and monitoring mechanisms. In the third section, I explain how these operational differences relate to the distinct challenges that Brazil and Mexico faced to legitimate their programs. In the final section, I summarize my findings and how they contribute to a better understanding of neoliberal states in Latin America.

8.1  conditional

cash transfer programs :

a neoliberal way to fight poverty ?

For most of the twentieth century, Latin American states played a highly interventionist role in the region’s socioeconomic modernization process.4 During this period, many countries in the region implemented a diverse set of welfare institutions, which intended to provide social benefits and rights to a large portion of the population. Yet, in most cases, the social and labor legislation only guaranteed benefits to workers whose occupation was formally recognized by law, effectively excluding millions of individuals working in informal, rural, and domestic labor from its provisions.5 By the late 1970s, it was clear that the largest part of society had not benefited from this developmental model, and that there was a need to change the corporatist and clientelistic models of access to social welfare systems.6 The severe debt crisis of the 1980s and the beginning of the re-democratization process pushed many countries in the region to redefine their development strategy. At that time, neoliberalism was in vogue and influenced most state reforms in Latin America. This fact combined with persistent criticism of state inefficiency and rent-seeking bureaucracies made the shrinking of Latin 4 5 6

Ferraro and Centeno, eds., The Rise and Fall of the Developmental State. Schmitter, Interest Conflict and Political Change in Brazil; Haggard and Kaufman, Development, Democracy, and Welfare States. De Souza Leão, “A Double-Edged Sword.”

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American states seem to be a good option. As Reis put it, “less state and more society became the prevailing ideology.”7 Moreover, the modernization discourse had moved to elevate the value of markets, free enterprise, and internationalism, while disparaging state interventionism as outdated and ineffective.8 Specifically, the so-called Washington Consensus called for governments to scale back their social policy ambitions and focus instead on the neediest sectors of society.9 In Latin America, this push to reinvent social policy provision was coupled with experimentation with targeted anti-poverty programs, such as Conditional Cash Transfer programs (CCTs). Contrary to the historical focus on the universal provision of goods and services, the idea in CCTs was that the state would combat poverty by transferring small amounts of cash only to poor families, but condition receiving this cash on families following certain conditionalities, such as taking their kids to health check-ups and to school. The idea, then, was to combat poverty in the short-term, while creating the conditions to break the intergenerational transmission of poverty in the long run. As has been extensively documented, CCTs started timidly in Brazil and Mexico in 1995, and by 2018, they “seemed to be everywhere,” and 26 out of 33 countries in Latin America had adopted a CCT.10 As expected, the rise of CCTs and the considerable funding that they have attracted has not come without criticism. At the same time, CCTs have been celebrated by the international development community “as close as you can come to a magic bullet in development,”11 and have been praised for their impact on reducing poverty.12 CCTs have also been described as a “best-fit” for neoliberalism,13 as well as criticized for “being mere palliatives” for poverty reduction,14 and for serving mainly to “accommodate the impacts of neoliberal reforms.”15 In this chapter, it is not my intention to give a definitive answer on whether CCTs are neoliberal or not, nor to examine how they might have served the neoliberal agenda in Latin America (see Ladhani and Sitter 2018 for

7

Reis, “O Estado Nacional como desafio teórico e empírico.” Diniz, Globalização, Estado e Desenvolvimento. 9 Borges, “Neoliberalism with a Human Face?”. 10 ODI, “Cash transfers: What Does the Evidence Say?”; Sugiyama, “The Diffusion of Conditional Cash Transfer Programs in the Americas.” 11 Adato and Hoddinott, Conditional Cash Transfers in Latin America, 4. 12 Scholarly research has shown that CCTs have been effective in reducing the rate and, above all, the intensity of poverty (Medellin et al. 2015). Although there is evidence of inclusion and exclusion errors, CCTs have reached the poorest people, achieving targeting levels greater than those of most (if not all) previous social programs (Lindert et al. 2007). In addition, CCTs have had positive impacts on health service use, have reduced child labor and increased school enrollment and attendance in many countries (Fiszbein and Schady 2009). 13 Saad-Filho, “Social Policy for Neoliberalism.” 14 Huber, “Options for Social Policy in Latin America.” 15 Coraggio, “Crítica de la política social neoliberal.” 8

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a summary of this debate).16 Instead, my goal is to build on the case of CCTs to examine some of the paradoxes and national variations that characterized social policy provision in the neoliberal period in the region. The three defining characteristics of CCTs – i.e., targeting, distributing cash, and conditionalities – provide fertile ground to examine these questions. First, CCTs were targeted interventions. This means that instead of all citizens being eligible to receive the same publicly provided benefits, only those that meet certain criteria – in the case of CCTs, being identified as poor – received the government transfer. By focusing on targeting, CCTs embodied the neoliberal promise of making poverty reduction efforts more efficient, nimble, and cheap (see the chapter by Riggirozzi in this volume), and in doing so, they also fitted the aim of controlled spending and fiscal adjustment that characterized the neoliberal wave in Latin America.17 However, as I will show in detail below, targeting in CCTs was a broad policy idea that could be interpreted and operationalized in distinct ways. In some contexts, like in Mexico, targeting was indeed used as a way to make anti-poverty efforts more efficient, and in practice, this was translated into the state seeking to avoid including non-poor families in the program. In other contexts, like in Brazil, targeting was used instead to increase inclusivity by serving as a tool to find individuals who had been historically excluded from official safety nets, and the state sought to avoid excluding poor families.18 Hence, while all CCTs targeted the most vulnerable populations rather than aiming for universal provision, the scope and goals of targeting were highly uneven in the region. The second novel characteristic of CCTs was that they provided cash to beneficiaries. By “simply giving money to the poor,” CCTs envisioned to dismantle previous anti-poverty initiatives that involved complex infrastructure building, food subsidies, widespread service provision, and that were associated with clientelism and patronage.19 However, since their inception, the promise of “scalingback” anti-poverty efforts was met with the reality that CCTs’ successful operation required considerable state infrastructure to include and manage extremely hard-to-reach populations. Thus, while CCTs have been criticized for helping to dismantle welfare infrastructures in Latin America, in reality, CCTs required building a complex operational system to reach the extremely poor, and they are often built on existing welfare structures.20 Furthermore, as I will demonstrate below, CCTs differed greatly in their conceptualization of what “cash distribution” was supposed to achieve, varying from a short-term 16 17 18 19 20

Ladhani and Sitter, “Conditional Cash Transfers.” For example, the Brazilian and Mexican CCT cost only 0.5% of the GDP of each country. Paiva, Falcão and Bartholo, Do Bolsa Família ao Brasil Sem Miséria. Yaschine, The Changing Anti-Poverty Agenda in Mexico. Valencia Lomelí, “Conditional Cash Transfers as Social Policy in Latin America”; Jaccoud, Bischir and Mesquita, O SUAS na proteção social brasileira.

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solution that would allow for building human capital to a first step toward building a more comprehensive safety net for the poor.21 Third, CCTs required beneficiaries to follow conditionalities to receive the cash transfers. In most cases, the educational and health conditionalities were thought of as a form of behavioral incentives for families to invest in their own human capital, and thus to support them to get out of poverty “on their own.” Perhaps, this is the main reason why CCTs have been heavily criticized for punishing rather than helping the poor and for serving as a neoliberal emblem of transferring to the individuals the responsibility for their own well-being. However, as it became clear after the initial years of CCT implementation, conditionalities could also be used as a way for the federal government to verify if local governments were providing mandatory social services in health and education, and to act when this was not the case. Operationally, therefore, depending on the perceived goals of conditionalities, CCTs could vary in how strongly they prioritize monitoring them, as well as on the punitive measures taken when families did not follow conditionalities.22 In sum, when it comes to understanding the nuances of neoliberal policies in Latin America, the devil hides in the (operational) details. Put differently, underneath the broad umbrella of CCTs, national programs had distinct characteristics that could be considered more or less neoliberal. In what follows, I will further elaborate this point by going back to the origins of CCTs and focusing on the early history of the two pioneering programs, Progresa-Oportunidades in Mexico and Bolsa Família in Brazil that have been credited with ushering the CCT diffusion in Latin America.23 I demonstrate that while the Mexican and Brazilian states equally chose CCTs as their main strategy to reinvent social policy provision, they did so for different reasons, which resulted in the implementation of programs that followed distinct operational logics.

8.2  cct

variation : distinct methods of

targeting and monitoring the poor

In the very early days of Progresa-Oportunidades and Bolsa Família, policymakers in Mexico and Brazil grappled with questions of policy design and implementation. How would they know who was poor and where to find them? Once the state found these poor individuals, how would they distribute cash and monitor their behavior? These fundamental questions cascaded outward, forcing political actors to address several others. Considering that these two countries shared a history of local-level political clientelism,24 how would policymakers make sure 21 22 23 24

Soares, “Brazil’s Bolsa Família: A Review.” Borges, “Neoliberalism with a Human Face?”. Tomazini, “Beyond Consensus.” Hilgers, Clientelism in Everyday Latin American Politics; Susan Stokes et al., Brokers, Voters, and Clientelism.

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that CCTs would not be used for electoral purposes? And how would they be able to show to distinct audiences that CCTs were not corrupt? In answering these questions, it was clear that the decision about how the poor would be identified and monitored would be a key aspect for the legitimation and successful implementation of both programs. Yet, in the two contexts, a large part of the target audience for CCTs did not have an identity card and circulated mostly in the informal sector, making the task of “finding the poor” particularly challenging.25 Hence, to implement their CCTs, the Mexican and Brazilian states had to: 1) create a targeting system to first find and then monitor poor families, 2) generate detailed information about these families at the individual level, and 3) create beneficiary datasets to manage this information. Faced with the same challenge, the Mexican and Brazilian states chose different solutions for targeting and monitoring their policies. 8.2.1  Mexico’s Progresa-Oportunidades: Complex Targeting and Strict Conditionalities In Mexico, the federal government developed a governance system to find and monitor poor families, which was based on geographical targeting and meant to minimize inclusion mistakes. To identify poor families, Progresa’s team first used census data to identify poor localities in Mexico,26 where the probability of making targeting mistakes (i.e., including non-poor individuals in Progresa) was lower. Second, Progresa’s staff traveled to these poor localities and implemented a census-like survey in all households, asking questions about household demographics, quality of housing, and access to public goods, among others. With a comprehensive set of information in hand, thirty-three variables were used to run statistical analysis to predict which families fell under a poverty threshold. Only after this decision was made were the families categorized as poor offered to join Progresa. However, since it was organizationally complex for the federal government to go back to all poor localities and implement this initial survey, the poverty status of families was only recertified after 6–8 years.27 Perhaps one of the most controversial decisions regarding Mexico’s geographical targeting referred to the choice of excluding from the program the localities that did not have (or that were too far away from) schools or health clinics, since families in these localities would not be able to follow conditionalities (co-responsibilidades in Spanish). In practice, this meant that, initially,

25 26

27

Hunter and Sugiyama, “Transforming Subjects into Citizens.” Mexico defines poor localities as those that fall below an Index of Marginalization. Mexico’s National Council of Population calculates the Index of Marginalization by “considering the % population age 15 and older who are illiterate; do not attend elementary school; live without indoor toilets, electricity, or access to water; live with overcrowding, dirt floors, or in localities with less than 5,000 inhabitants; and have a household income lower than 2 minimum wages.” Dávila Lárraga, “How Does Prospera Work?”.

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Progresa chose to exclude from the implementation of the program precisely the extremely poor families that were in regions without schools or health clinics.28 Although most, but not all, of these localities would eventually be incorporated into the program, this choice reveals the centrality that was given to conditionalities as a key feature of the Mexican CCT. Accordingly, a very complex system was put into place to verify if families were following through with their co-responsibilidades. First, Progresa staff required that beneficiaries register all family members with designated health clinics and schools in order to complete their enrollment in the program. Then, doctors and teachers recorded household attendance at clinics and schools, and the information collected was then sent “every two months to Mexico City,” where Progresa staff verified whether the family was really in the program and whether it had complied with program requirements in the last two months.29 Depending on this information, the federal government decided on the level of payment for each family, which also varied according to household characteristics. This means that Progresa was designed to follow closely the behavior of poor families in relation to their educational, nutritional, and health conditionalities – checking, as an operational mid-level staff explained to me, “if beneficiaries were doing what they were supposed to do” every two months. Finally, whenever Progresa staff discovered that a family was not following through with its conditionalities, this family’s benefits were immediately interrupted, until an investigation was put into place to find out if they were compliant or not. 8.2.2  Brazil’s Bolsa Família: Simple Targeting and Loose Conditionalities In Brazil, the state did not adopt such a comprehensive system to find and monitor poor families. Contrary to Mexico, the federal government used the census not only to identify poor localities in the country but also to estimate how many poor families there were in Brazil, through a simple measure of income per capita. Through this strategy, the Ministry of Social Development (MDS) – responsible for implementing the Bolsa Família, planned to find poor families even in localities that were not considered poor at an aggregate level. Second, MDS instructed municipalities to register all low-income families that fit a “broader poverty profile”30 in Bolsa Família’s beneficiary dataset on an ongoing basis. In the registration process, families self-reported their income and the number of individuals living in the same household,31 and only income 28 29 30 31

Rocha and Escobar, Pobreza, transferencias condicionadas y sociedad. Dávila Lárraga, “How Does Prospera Work?”. Measured as 50% of the minimum wage per capita, which is considerably higher than Bolsa Família’s poverty threshold – around 25% of the minimum wage. Soares, Ribas, and Osório,“Evaluating the Impact of Brazil’s Bolsa Família.”

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per capita that was used by the Bolsa Família team to select eligible families that fell under the program’s poverty line. Since this targeting strategy increased the risk of patronage and fraud,32 the federal government also required that all data entered into the beneficiary database be updated every two years or whenever there was a change in income, family composition, or address.33 In a radically different approach to conditionalities, in Brazil, the federal government did not prioritize monitoring them. In fact, in the early years of the program, many families became Bolsa Família beneficiaries before the federal government had put an informational system in place to monitor their conditionalities.34 Further, the state followed conditionalities less periodically than what was done in Mexico. In Brazil, first, schools and local health clinics sent the municipality the attendance records of beneficiary families. Then, this information was consolidated by the municipality, which was responsible to send it to the Ministries of Education and Health. Finally, these two ministries prepared bi-monthly (education) and bi-annual (health) reports to the Social Development Ministry, which was responsible for linking this information to the beneficiary dataset, in order to invoke consequences for non-compliance. In Brazil, however, non-compliance was understood as a sign that a family faced additional vulnerabilities, and thus benefits were only suspended after a social worker verified the reasons for the family to be failing to uphold their co-responsibilities.35 Through these different strategies to identify and monitor poor individuals and their behavior, the Brazilian and Mexican states implemented conditional cash transfer programs that were quite different. In Brazil, the state developed a bottom-up targeting system, based solely on self-declared income per capita, that put less emphasis on monitoring conditionalities. In Mexico, on the other hand, the state developed a top-down targeting system that captured a multidimensional image of poverty at the initial moment of entry into the program, and that was designed to follow participants’ compliance with conditionalities.

8.3  reputational

dilemmas : the trade -

off between efficiency and inclusion

Why did Brazil and Mexico develop such different approaches to their CCTs? To answer this question, it is necessary to go back to the early days of Progresa 32 33 34

35

Handa and Davis, “The Experience of Conditional Cash Transfers in Latin America.” Hellmann, “How Does Bolsa FamíliaFamília Work?”. While by 2013, 100% of the municipalities had informational systems implemented, in the first four years of the program (2003–2006), municipalities and schools progressively entered the informational system. In 2004, 70% of municipalities reported beneficiaries’ attendance in education, and only 21.9% did so in Health. By 2006, while almost 100% of municipalities reported compliance with educational conditionalities, 81.7% did the same for health (own calculation, MDS data). Bischir, “Mecanismos federais de coordenação.”

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and Bolsa Família to examine how stark differences in the contexts in which each CCT was implemented influenced the choices made by policymakers. In what follows, I will argue that while there were similar fears of corruption, the need to fight poverty under fiscal constraints, and implementation challenges in the two contexts, Mexican and Brazilian state officials had different understandings of the goals of CCTs and faced distinct legitimation challenges to implement them. In turn, these differences shaped the forms that each CCT took by making certain operational options and legitimation strategies seem more viable than others – especially in the initial years of each program. To understand the challenges faced by policymakers, it is worth recapping a trade-off that every social policy targeting faces, i.e., excluding eligible beneficiaries versus including ineligible individuals (by mistake or because of data manipulation). This is because similar to medical testing that provides positive vs. negative results (e.g., with pregnancy home testing, you are either pregnant or not)36, when designing poverty targeting systems, policymakers had to choose if they preferred to avoid having false positives (Type 1 error) or false negatives (Type 2 error). As with every trade-off, there were rewards and penalties associated with each option, which created different reputational dilemmas for programs, and required different strategies for CCTs to project an image of objectivity, precision, and political neutrality.37 The strategies adopted by Mexico and Brazil to make Progresa and Bolsa Família governable reflect the choices made by each state regarding this trade-off. It is to these that I now turn. 8.3.1  Mexico: Legitimation through Efficiency In Mexico, when deciding how to find and monitor poor families, policymakers prioritized minimizing inclusion mistakes (i.e., they prioritized avoiding false positives, or type 1 errors), which was considered crucial to legitimating Progresa in a political environment marked by a general suspicion of povertyalleviation efforts. To understand this decision, it is necessary to situate it in Mexico’s political and institutional context in the initial years of the program. Decisions regarding Progresa’s initial design were made between 1995 and 1997, during the tenure of President Ernesto Zedillo, who took office in a context of great economic and political instability due to the 1994 Peso Crisis, the indigenous Zapatista rebellion in the state of Chiapas and widespread dissatisfaction with what was considered an undemocratic political regime.38 Zedillo was also the first president to enter office after the inauguration of the North American Free Trade Agreement (NAFTA) on January 1st, 1994. This represented a continuation of the orthodox economic policies implemented since 1982 (see the chapter by Knight in this volume), but it dramatically changed the conditions for 36 37 38

Robinson, “Bringing the pregnancy test home from the hospital.” Carpenter, Reputation and Power. Yaschine and Orozco, “The Evolving Antipoverty Agenda in Mexico.”

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the design and management of social policies because of a perceived necessity to promote competitiveness through human capital development, legitimating the fight against poverty also in explicitly macroeconomic terms. (For an explanation of the link between the macroeconomic changes brought by NAFTA and anti-poverty policies, see Cortés and Rubalcava 2012).39 As part of what became known as the PRI’s “technocratic group,” Zedillo formed a cabinet whose views were congruent with his own academic training in economics at Yale University. This was especially true of his Finance Ministry (SHCP), the agency that would be responsible for leading the Mexican economy out of the 1994 Peso Crisis, and that, together with Mexico’s Population Council (CONAPO) would make the initial decisions about Progresa. As such, Zedillo recruited a mix of politically appointed US-trained technocrats led by Santiago Levy, who came to the government after writing a prestigious report about poverty at the World Bank;40 as well as career civil servants who were recruited from CONAPO,41 led by José Gomez de León, who, while himself Harvard-trained, had a background in demography, sociology, and statistics and whose multi-disciplinary team consisted mostly of Mexico-trained staff.42 These actors aimed to legitimate Progresa as being efficient and free from political interferences. Cultivating this reputation involved institutional and technical decisions. First, to show that they would change business-as-usual in Mexico, Progresa was not affiliated with the Social Development Ministry (SEDESOL), which was associated with local-level political clientelism, and the program had insulated, centralized operations in Mexico City.43 In addition, a series of administrative measures were taken to create transparency regarding the governance of the program and to “insulate the day-to-day running of the program from political pressures by state or municipal governments to change eligibility criteria, operations and size of benefits.”44 On the technical side, the adoption of a very comprehensive means-testing system to determine poverty status was intended to signal that Progresa would be economically sustainable and fiscally responsible, which was particularly important to those policymakers from the Finance Ministry. Indeed, targeting was framed not simply as a way of reaching the extremely poor, but as a way of combating poverty in economically efficient ways, transferring resources solely to those that really needed it without incurring big financial deficits. 39 40 41 42

43 44

Cortés and Rubavalca, “El Progresa como respuesta a la Crisis de 1994.” Santiago Levy, “Poverty Alleviation in Mexico.” World Bank’s Policy Research Working Paper 679, 1991. Cortés and Rubavalca, “El Progresa como respuesta a la Crisis de 1994.” De León was later nominated the first National Coordinator for Progresa, providing strategic leadership for the program. With his combination of academic and bureaucratic prestige, he was better received by other federal government agencies than Joaquin Levy (Yaschine and Orozco 2010). Graizbord. “Democratic Accountability and its Discontents.” Levy, Progress against Poverty.

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As explained by Santiago Levy, “While it was commonly acknowledged that poverty alleviation required more budgetary resources, the difficult budgetary situation at that time contributed to strengthening the view (…) that the quality and effectiveness of public spending in general and poverty programs in particular should be a matter of greater concern.”45 As a consequence of its strict targeting strategy, Progresa expanded in a more gradual fashion: while, in 1997, the program covered around 300,000 families, by 2002 it reached nearly 2.5 million families, and by 2016, it reached 6 million families (or 23% of the Mexican population). Furthermore, the comprehensive targeting scheme, based on a rigid means-testing formula, allowed Progresa’s high-level staff to frame their decisions as being technical and free from any political consideration. Similar to what Mudge (2008) described as a neoliberal way of doing politics, Progresa’s attempt to legitimate its decision in technical terms was based on an understanding of state actors as inherently interested and involved in taking active measures to resist these perceived limitations of the state.46 As a mid-level poverty expert working for Progresa explained in an interview, “We would not select which families would benefit from this program. The discriminant analysis would do it.” The power of numbers in their narratives was used as a legitimation strategy against not only the risk of political clientelism at the local level but also of the potential disruptions of trusting bureaucratic judgment. Another Progresa high-level manager said, “We did not trust the municipalities. We knew we would fail if we counted on them, so we invested a long time in formulating our statistical model, in a way that not even we could influence the targeting results. It was important to let the numbers decide.” This strategy of legitimation spoke to domestic and international audiences. Internally, the goal was to legitimate Progresa in technocratic terms to an audience of key academics and politicians, in order to demonstrate the program’s independence from the PRI.47 To do so, before launching the program, Progresa staff organized countless briefings with high-level “strategic” politicians and bureaucrats and “information [about the program] was directly communicated to key actors in Congress, subnational government, academia, and interested parties.”48 Additionally, by perfecting a means-tested targeting system following what at the time were considered international best practices, Progresa secured its legitimation with international multilateral organizations that celebrated Mexican policymakers’ commitment to methodological excellence. Finally, the strict focus on monitoring conditionalities as a means to secure human capital accumulation was in line with mainstream development 45 46 47 48

Levy, Progress against Poverty, 15. Mudge, “What is Neo-Liberalism?”. Maldonado, “The Political Economy of Conditional Cash Transfers in Mexico and Brazil.” Levy, Progress Against Poverty, 110.

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economic thinking at the time, with academics celebrating Mexico’s decision to pursue this model of social policy provision.49 In sum, in Mexico, the legitimation strategy of Progresa involved presenting the program as efficient and free from politics, which shaped the decision to create a comprehensive targeting and monitoring scheme, which was designed to minimize inclusion mistakes and to closely enforce conditionalities. This decision was made by a centralized high-level staff that focused its efforts on convincing key domestic and international audiences of the merits of its operational choices.50 This strategy was designed to work in the particular context of Mexico in the 1990s, which has been described by Fourcade and Babb (2002, 561) as a “single-party system, coupled with weak democratic institutions, strong corporatism, and a powerful centralized presidency,”51 in which policy-makers were relatively insulated from pressures from social movements, political parties, and the media.52 As we will see next, this was not the case in Brazil. 8.3.2  Brazil: Legitimation through Inclusion In Brazil, the bureaucratic groups implementing Bolsa Família understood their role and worked to project an image of being inclusive and politically impartial. This is reflected by the choice to place less emphasis on verifying poverty in strict terms – beneficiaries self-declared their income, and by deprioritizing enforcement of conditionalities. There was a greater emphasis on avoiding the exclusion of poor individuals, and on providing a basic safety net to as many poor families as possible.53 To understand this choice, we have to take into consideration that Bolsa Família was consolidated during the tenure of Brazil’s first leftist president after the end of the military dictatorship (1985), in a period of economic growth and public optimism, and after almost 10 years of the policy experimentation with different versions of CCTs.54 Specifically, the Brazilian CCT gained momentum under President Luiz Inácio “Lula” da Silva, who gained power by pledging that “every Brazilian [would] have food to eat three times a day,”55 and by vowing to adopt orthodox economic policies – a commitment made public through a letter 49 50 51 52 53 54

55

Lustig, “Scholars Who Became Practitioners.” Hernández, Historia de Oportunidades. Fourcade‐Gourinchas and Babb, “The Rebirth of the Liberal Creed.” Centeno, Democracy within Reason; Babb, Managing Mexico. Loureiro, “Social Structure and Distributive Policies under the PT Governments.” The Brazilian path toward Bolsa FamíliaFamília began in January 1995 with the first two municipallevel CCTs, implemented in Campinas and Brasília. Federal-level CCT programs were implemented in 1996 (the Eradication of Child Labor Program) and 2001 (School and Health grants). In 2003, with President Lula’s election, all of these programs were consolidated into the Bolsa Família Program. The CCT governance system described in this paper was implemented at the federal level in 2003, building on the previous efforts that were started since 2001. Hall, “From Fome Zero to Bolsa Família.”

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directed to all Brazilians, “Carta ao Povo Brasileiro,” in which Lula pledged to adhere to austerity and macroeconomic stabilization policies if elected. Building on the political message of combating poverty with fiscal austerity, the federal government invested great efforts to increase the territorial reach of the program very fast. As a Bolsa Família senior manager explained, “[The idea] was not to be the police, checking if the poor is really poor or not – this we could do later. First we had to find these people that had always been invisible to us.” Under this premise, asking municipalities to register all lowincome families under a very loose definition of poverty status made sense, since it allowed policymakers to collect information about many families quickly and shape social policy efforts accordingly. As such, since its inception, Bolsa Família was not defended on the grounds of being more efficient as was the case with Progresa in Mexico, but as an initial step toward a more inclusive social policy that would reach and include as many Brazilians as needed. This explains why, especially during its first years, more attention was placed on expanding the size of Bolsa Família fast than on verifying if families were following conditionalities. The numbers are striking: When Bolsa Família was created in 2003, it reached 3.6 million families, by 2008, it had tripled its size benefiting 12 million families, and it would reach 14 million families by 2010 (26% of the population). Similar to Mexico, in Brazil, there was great concern about politically shielding Bolsa Família from corruption and clientelistic politics, but the Brazilian case differed in that it did not require institutional insulation of the program from existing social policy agencies. Instead, state bureaucracies within the Ministry of Social Development focused on recruiting “the right people” to shield Bolsa Família from party politics and legitimate the program in the eyes of national and international audiences. They did so by recruiting federal managers from the most prestigious civil servant career in the country, who had been trained in public administration and the specificities of Brazilian federalism,56 as well as a diverse set of respected social scientists specializing in poverty studies. As such, the group of actors involved in the Brazilian CCT operational decisions differed greatly from the majority of politically appointed and foreign-trained technocrats in the Mexican case. Accordingly, these actors understood that the legitimation of Bolsa Família would come from finding and reaching those “13 million poor Brazilians” that had historically appeared in the census but had been continuously excluded from official safety nets.57 56

57

During the period of state reform in the 1990s, the Brazilian federal government aimed to strengthen its managerial capacity by creating the prestigious federal manager career path (PGPE), a program that sought to recruit through public competition the “top minds” in the country to be trained in Brazilian federalism and implement innovative solutions for public policy problems (Souza 2013). These would be the managers recruited to implement Bolsa Família (Alesso and Ambrózio 2016). Cohn, Cartas Ao Presidente Lula.

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A second difference between the legitimation strategies adopted in the two countries is that Brazilian policymakers rejected the technocratic discourse, instead valuing their bureaucratic expertise, which they believed was sufficient to portray their political objectivity. Both in interviews and in official documents, these actors maintained that making Brazil more inclusive was the main purpose that stimulated the design of Bolsa Família. The main reputational challenge was to demonstrate that the program was politically impartial, despite its loose targeting mechanism, and nonpartisan. To secure the program’s reputation, Bolsa Família also adopted several administrative measures, such as: i) all cash transfers were made through debit cards by a public bank (in contrast, in Mexico, initially, 70% of the transfers were distributed through envelopes) and ii) audit and control agencies closely supervised the work of Bolsa Família staff, who in turn used a very transparent governance structure to reduce suspicions about the program. The Brazilian model of CCT, therefore, sought to secure domestic legitimacy by showing that for the first time in Brazil’s history, “the poor would finally be put at the center of social policies and would not be left hidden in the most remote, rural parts of the country,” as explained by a former Minister of Social Development. This image resonated well not only with social movements, academia, and political parties (particularly those closer to the Workers’ Party),58 but it also raised suspicion among other groups that Bolsa Família would be used for electoral purposes. Since its inception, then, Bolsa Família staff had to walk the fine line of managing a program that was designed to be “popular” but that could be easily labeled as “populist,” facing great scrutiny from politicians and the media with an intensity that had no parallel in the Mexican case.59 Furthermore, in the initial years of the program, the choice of expanding the program without close monitoring of conditionalities or poverty status came at the cost of great international skepticism, since Bolsa Família did not follow international standards of poverty targeting. As a senior MDS manager said, “The disagreements with the World Bank were radical … In the beginning, they thought that our approach of including as many poor families as possible in the program was a scandal.” To reiterate the point made earlier, Brazilian policymakers responded to this international skepticism by emphasizing their objectivity and impartiality as civil servants. Objectivity was to be guaranteed not only by numbers per se but also by the integrity and professional norms of the Brazilian CCT staff – a stark contrast with Mexican officials stating that “not even us could influence the targeting results.”

58 59

Garay, Social Expansion in Latin America. Lindert and Vincensini, “Social Policy, Perceptions and the Press.”

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8.4  discussion

283

and conclusion

By focusing on the operational differences between Progresa and Bolsa Família, in this chapter, I have argued that the adoption of CCTs in Mexico and Brazil was highly uneven in their goals, nature, and scope. Nationally specific institutional and political dynamics shaped policymakers’ perceptions of the necessity and purposes of CCTs, influencing whether governments designed programs that had stronger or weaker neoliberal traits. Put differently, beneath the broad policy idea that characterized conditional cash transfers, programs had distinct understandings of how targeting, cash distribution, and conditionalities would lead to poverty reduction, and implementation differed greatly. In this conclusion, I summarize a few implications of my findings for the study of neoliberal states in Latin America. First, I have argued that although Bolsa Família and Progresa were very similar in their policy conceptualization (i.e., giving small cash transfers to poor families conditioned on certain requirements), the devil hides in the operational details, with Mexico prioritizing efficiency and Brazil focusing on inclusivity. This finding can be read through the lenses of the distinct approaches to neoliberalism that characterized the period of state reforms in the two countries. As has been documented in the comparative literature, when compared to most Latin American countries,60 Brazil’s approach to economic and state reforms in the 1990s was highly selective and gradual, with a nuanced interpretation of neoliberalism (see also the chapter by Bersch in this volume). Similarly, Brazil’s interpretation of what has been considered a neoliberal mode of social policy was also nuanced, with Bolsa Família presenting a very lax implementation of targeting and conditionalities, leading some to characterize the program as “neoliberal but with a human face.”61 As such, similar to generalist interpretations of neoliberal reforms in Latin America, this chapter reminds us that the simplistic labeling of CCTs as neoliberal ignores the great variation that existed between these programs. Second, in this chapter, I directed attention toward the critical role that the orientations and intentions of policymakers played in the design and legitimation of each conditional cash transfer program. While in Mexico, state officials believed that it was important to limit the reach of political decision-making and invested in a technocratic legitimation of Progresa, in Brazil, bureaucrats were invested in the political project of making Brazil more inclusive. Here, my findings connect to a point that has been made in the comparative literature on the importance of the type of state official promoting state reforms.62 Pushing

60 61 62

Magaldi and Maldonado, La integración de políticas públicas para el desarrollo; Fernández de Castro, Amorim Neto, and Ortiz Mena, Brasil y México. Borges, “Neoliberalism with a Human Face?”. Babb, Managing Mexico; Dezalay and Garth, The internationalization of palace wars; Montecinos and Markoff, Economists in the Americas.

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this idea forward, my work also demonstrated that beyond the type of actor, the location of these actors within the institutional arrangement of each state also influenced the operational choices regarding each CCT. To this point, the Mexican case reminds us of a key Polanyian insight: Even when actors attempt to push for neoliberal policies, these do not necessarily imply “retrenchment” or elimination of state bureaucracies,63 rather they have their necessary bases within the bureaucracies of the state, and on actors invested in the creation, one might say, of the “neoliberal state.”64 bibliography

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Dávila Lárraga, Laura. “How Does Prospera Work?” Technical Note. IDB Publications, 2016. De La O, Ana Lorena. Crafting Policies to End Poverty in Latin America: The Quiet Transformation. Cambridge: Cambridge University Press, 2015. De Souza Leão, Luciana. “A Double-Edged Sword: The Institutional Foundations of the Brazilian Developmental State, 1930–1985.” In Agustin E. Ferraro and Miguel A. Centeno, eds. State and Nation Making in Latin America and Spain: The Rise and Fall of the Developmental State. Cambridge: Cambridge University Press, 2018, pp. 157–76. Dezalay, Yves, and Bryant G. Garth. The internationalization of palace wars: lawyers, economists, and the contest to transform Latin American states. Chicago: University of Chicago Press, 2002. Diaz-Carneiro, Alberto. “Fiscal Federalism and Redistribution in Mexico.” In Scott Greet, Alan Trench and Heather Elliot, eds. Federalism in Good Times and Bad. Stanford: Stanford University Press, 2016. https://papers.ssrn.com/sol3/papers .cfm?abstract_id=2886703 Diniz, Eli. Globalização, Estado e Desenvolvimento – Dilemas do Brasil no novo milênio. Rio de Janeiro: FGV Editora, 2007. Ferguson, James. The Anti-Politics Machine: Development, Depoliticization, and Bureaucratic Power in Lesotho. Cambridge: Cambridge University Press, 1990. Ferguson, James. Give a Man a Fish: Reflections on the New Politics of Redistribution. Durham, Duke University Press, 2015. Fernández de Castro, Rafael, Octavio Amorim Neto, and Antonio Ortiz Mena. Brasil y México: Encuentros Desencuentros. México, D.F.: Instituto Matías Romero, 2005. Ferraro, Agustin, and Miguel Centeno. The Rise and Fall of the Developmental State in Latin America. Cambridge: Cambridge University Press, 2018. Fiszbein, Ariel, and Nobert Schady. “Conditional Cash Transfers.” Policy Research Report. World Bank, 2009. Fourcade‐Gourinchas, Marion, and Sarah Babb. “The Rebirth of the Liberal Creed: Paths to Neoliberalism in Four Countries.” American Journal of Sociology 108, no. 3 (2002): 533–79. Gaarder, Marie, Amanda Glassman, and Jessica Todd. “Conditional cash transfers and health: unpacking the causal chain.” Journal of Development Effectiveness 2, no. 1 (2010): 6–50. Garay, Candelaria. Social Expansion in Latin America (Cambridge: Cambridge University Press, 2016). Graizbord, Diana. “Democratic Accountability and its Discontents: Social Policy Evaluation and Expertise in Contemporary Mexico.” PhD Dissertation, Department of Sociology, Brown University, 2017. Haggard, Stephen, and Robert R. Kaufman. Development, Democracy, and Welfare States: Latin America, East Asia, and Eastern Europe. Princeton, NJ: Princeton University Press, 2008. Hall, Anthony. “From Fome Zero to Bolsa Família: Social Policies and Poverty Alleviation under Lula.” Journal of Latin American Studies 38, no. 4 (2006): 689–709. Handa, Sudhanshu, and Benjamin Davis. “The Experience of Conditional Cash Transfers in Latin America.” Development Policy Review 24, no. 5 (2006): 513–36.

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Hellmann, Aline. “How Does Bolsa Família Work?” Technical Note. IDB Publications, 2015. Hernández, Daniel. Historia de Oportunidades. Inicio y cambios del programa, México, DF: FCE, 2008. Hilgers, Tina. Clientelism in Everyday Latin American Politics. New York: Palgrave Macmillan, 2012. Huber, Evelyne. “Options for Social Policy in Latin America: Neoliberal versus Social Democratic Models” In Gosta Esping-Andersen, ed. Welfare States in Transition. London: Sage Publications, 1996, pp. 142–90. Hulme, David, Joseph Hanlon, and Armando Barrientos. Just Give Money to the Poor: The Development Revolution from the Global South. Sterling: Kumarian Press, 2012. Hunter, Wendy, and Nathalia Sugiyama. “Transforming Subjects into Citizens: Insights from Brazil’s Bolsa Família.” Perspectives on Politics 12, no. 4 (2014): 829–45. Jaccoud, Luciana, Renata Bischir and Ana Cleusa Mesquita. O SUAS na proteção social brasileira: Transformações recentes e perspectivas, Novos estudos CEBRAP, 36 no. 2 (2017), 37–53. Krippner, Greta. “The Making of US Monetary Policy: Central Bank Transparency and the Neoliberal Dilemma.” Theory and Society 36 (2007): 477–513. Ladhani, Sheliza and Kathleen C. Sitter. “Conditional Cash Transfers: A Critical Review.” Development Policy Review 38 (2020): 28–41. Levy, Santiago. Progress against Poverty. Washington: Brookings Institution Press, 2006. Levy, Santiago. “Poverty Alleviation in Mexico.” World Bank’s Policy Research Working Paper 679, 1991. Lindert, Kathy, and V. Vincensini. “Social Policy, Perceptions and the Press: An Analysis of the Mediá s Treatment of Conditional Cash Transfers in Brazil.” World Bank Social Protection Discussion Paper no. 1008. Washington, D.C.: Word Bank, 2010. Lindert, Kathy, Anja Linder, Jason Hobbs, and Bénédicte De la Brière. “The Nuts and Bolts of Brazil’s Bolsa Família Program: Implementing Conditional Cash Transfers in a Decentralized Context.” World Bank Publications, no. 0709 (May 2007): 1–144. Loureiro, Pedro Mendes. “Social Structure and Distributive Policies under the PT Governments: A Poverty-Reducing Variety of Neoliberalism.” Latin American Perspectives 47, no. 2 (2020): 65–83. Lustig, Nora. “Scholars Who Became Practitioners: The Influence of Research on the Design, Evaluation, and Political Survival of Mexico’s Antipoverty Program Progresa,” Center for Global Development Paper No 263, 2011. Magaldi, Mariana, and Claudia Maldonado. La integración de políticas públicas para el desarrollo: Brasil y México en perspectiva comparada. Mexico City: CIDE, 2014. Maldonado, Claudia. “The Political Economy of Conditional Cash Transfers in Mexico and Brazil (1997–2006).” PhD dissertation, Department of Political Science, University of Notre Dame, IN, 2012. Medellin, Nadin, Pablo Ibarraran, Marco Stampini, and Juan Miguel Vila. “Moving Ahead – Recertification and Exit Strategies in Conditional Cash Transfer Programs.” IDB Monograph 348, (2015): 1–47. Montecinos, Verónica, and John Markoff. Economists in the Americas. UK: Edward Elgar Publishing, 2010.

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Mudge, Stephanie. “What is Neo-Liberalism?” Socio-Economic Review 6, no. 4 (2008): 703–31. ODI. “Cash Transfers: What Does the Evidence Say? A rigorous review of programme impact and of the role of design and implementation features,” July, 2016, www.odi .org/publications/10505-cash-transfers-what-does-evidence-say-rigorous-reviewimpacts-and-role-design-and-implementation. Paiva, Luis Henrique, Tiago Falcão and Leticia Bartholo. “Do Bolsa Família ao Brasil Sem Miséria: Um resumo do percurso brasileiro recente na busca da superação da pobreza.” In Tereza Campello and Marcelo Neri (orgs), eds. Programa Bolsa Família: Uma década de inclusão e cidadania. Rio de Janeiro: IPEA, 2013, pp. 25–46. Rawlings, Laura. “A New Approach to Social Assistance: Latin America’s Experience with Conditional Cash Transfer Programs.” International Social Security Review 58 (2005): 133–61. Reis, Elisa. “O Estado Nacional como desafio teórico e empírico para a sociologia política contemporânea” In Felipe Schwartzman, Isabel Schwartzman, Luisa Schwartzman and Michel Schwartzman, eds. O sociólogo e as políticas públicas. Rio de Janeiro: FGV Editora, 2009, pp. 27–52. Robinson, Joan. “Bringing the Pregnancy Test Home from the Hospital.” Social Studies of Science 46, no. 5 (2016): 649–74. Rocha, Mercedes, and Agustin Escobar. Pobreza, transferencias condicionadas y sociedad. Mexico: CIESAS, 2012. Saad-Filho, Alfredo. “Social Policy for Neoliberalism: The Bolsa Família Programme in Brazil.” Development and Change 46, no. 6 (2015): 1227–52. Saavedra, Juan, and Sandra Garcia. “Impacts of Conditional Cash Transfer Programs on Educational Outcomes in Developing Countries: a meta-analysis,” RAND Working Paper, 2012. Schmitter, Philippe. Interest Conflict and Political Change in Brazil. California: Stanford University Press, 1971. Schneider, Ben. Business and the State in Developing Countries. Ithaca: Cornell University Press, 1997. Soares, Fabio. “Brazil’s Bolsa Família: A Review.” Economic and Political Weekly 46, no. 21 (2011): 55–60. Soares, Fabio, Rafael Ribas, and Rafael Osório. “Evaluating the Impact of Brazil’s Bolsa Família: Cash Transfer Programs in Comparative Perspective.” Latin American Research Review 45, no. 2 (2010): 173–90. Souza, Celina. “Modernisation of the State and Bureaucratic Capacity-Building in the Brazilian Federal Government.” In Jeni Vaitsman, Jose M. Ribeiro, and Lenaura Lobato, eds. Policy analysis in Brazil, University Press Scholarship Online, 2013, pp. 39–52. Stokes, Susan, Thad Dunning, Marcelo Nazareno, and Valeria Brusco. Brokers, Voters, and Clientelism: The Puzzle of Distributive Politics. Cambridge: Cambridge University Press, 2014. Sugiyama, Natasha Borges. “The Diffusion of Conditional Cash Transfer Programs in the Americas.” Global Social Policy 11, no. 2–3 (2011): 250–78. Tomazini, Carla. “Beyond Consensus: Ideas and Advocacy Coalitions around Cash Transfer Programs in Brazil and Mexico,” Critical Policy Studies 17, no. 1 (2017): 1–20.

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Valencia Lomelí, Enrique. “Conditional Cash Transfers as Social Policy in Latin America: An Assessment of their Contributions and Limitations.” Annual Review of Sociology 34, no. 1 (2008): 475–99. Yaschine, Iliana, and Monica Orozco. “The Evolving Antipoverty Agenda in Mexico: The Political Economy of PROGRESA and Oportunidades.” In Michelle Adato and John Hoddinott, Conditional Cash Transfers in Latin America, pgs 55–77. Baltimore: John Hopkins University Press, 2010. Yaschine, Iliana. “The Changing Anti-Poverty Agenda in Mexico.” IDS Bulletin 30, no. 2 (1999): 47–60.

9 Neoliberal Reform of Transport Institutions in Brazil, Argentina, and Chile The Tortoise Beats the Hare Katherine Bersch

During the 1990s, neoliberal reforms led to dramatic changes in ideas about the social and economic roles of state institutions. A central tenet of the neoliberal project is that a free market system, responding to price signals, better copes with complexity and allocates resources more efficiently than the state. This faith in the market has led political leaders to prioritize swift, comprehensive overhauls that reduce state intervention in the economy. This chapter examines neoliberal reforms by focusing on a sector crucial for understanding state capacity: transportation infrastructure. As scholars have long noted, railroads extend the territorial reach of the state so can serve as a proxy of state capacity.1 Railways boost economic activity and promote development outside urban centers; they are generally considered an important public good along with transportation infrastructure more broadly, including highways and urban commuter rails.2 Transport infrastructure thus provides an important lens for examining neoliberal overhauls and their effects on state capacity. In many countries, neoliberal overhauls of transport infrastructure in the 1990s initially seemed to bear out faith in markets and a root-and-branch approach to reform. In many countries, swift auctions that placed stretches of road and rail in the hands of the private sector filled government coffers with the proceeds. Large government bureaucracies and planning agencies were downsized, and their roles were outsourced to the private sector. Many countries across Latin America showed efficiency gains and impressive quality improvements. In the title of a 1996 report, the World Bank declared that such countries as Argentina, which had pushed through sweeping neoliberal reforms, were “Heading Down the Right Track” and heaped praise 1 2

See Kurtz, Latin American State Building in Comparative Perspective, and Schenoni, “Bringing War Back In.” Also see Soifer, State Building in Latin America. Saylor, State Building in Boom Times, 66–71, 96–9.

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on an approach that had successfully transformed the transport sector in record time.3 Years later, however, a different picture emerged in Latin America. Unprecedented protests in Chile triggered by fare hikes led to the burning and looting of metro stations. In 2012, a railway car collision in Buenos Aires killed 51 people and injured 700, resulting in the re-nationalization of nearly all passenger and freight rail lines privatized in the prior decade. Small towns disappeared after railway lines fell into corporate hands, spawning a genre of Argentine cinema as a critique of neoliberalism more broadly. Underinvestment in roads, rails, and urban transport then reignited demands for further reform. Why did success derail? This chapter analyzes state transportation reforms in Argentina, Brazil, and Chile to explore the varied implementation of neoliberal reforms and their far-reaching effects. I argue that neoliberal approaches hastened the adoption of a particularly problematic strategy – namely, powering reforms that emphasize swift, comprehensive change pushed through with political will.4 Although neoliberal reforms seemed a blueprint for solving fiscal and governance challenges while allowing presidents to concentrate power, initial reform efforts often stripped the state’s capability to manage subsequent challenges. Without the bureaucratic experience, mechanisms for citizen input, and coordinating bodies that could solve new problems, progress slowed. In Brazil, a more gradual reform process allowed for the rebuilding over time of a civil service corps with essential engineering, legal, and auditing skills. Yet in Argentina, the shock therapy approach triggered counter-reforms in the 2000s. Similar patterns can be found elsewhere in Latin America, where the poor quality of infrastructure and transport service along with weak civil services can be linked to the implementation of neoliberal reforms. Notably, Chilean reforms that concentrated power in the hands of technocratic teams left little room for broader planning and citizen input; subsequent attempts to improve transport by raising costs have often triggered popular protests. A comparative analysis reveals that comprehensive overhauls pushed through by political will – what I call a powering approach – tend to compromise the capacity of the civil service, whereas gradual public sector reforms emerge as more successful. Variations in reform strategy thus do much to explain the different outcomes of neoliberal policies in Latin America.

3 4

Carbajo and Estache, “Railway Concessions,” 2; World Bank, “Federal Railways Restructuring and Privatization Project” (1996). In When Democracies Deliver, I argue that reform strategy explains much of the variation in effective and enduring reforms, arguing that rapid overhauls led by political will (“powering” reforms) are less effective that incremental changes implemented overtime by actors within the state and coalitions. My argument here connects Bersch to neoliberal reforms by emphasizing the extent to which neoliberal policies promoted the powering strategy.

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blueprints for transport

infrastructure champion powering reform

Latin America was once home to some of the most impressive transportation developments in the world.5 Between 1860 and the 1950s, railroads in Chile became an exemplar of modernization, integration, and economic development.6 By 1914, Argentina’s railroad and tram systems were some of the most extensive in the world. Between 1945 and 1980, the highway network in Brazil expanded rapidly under the direction of the very capable and fiscally autonomous Transport Planning Agency (GEIPOT). By the 1980s, Chile, Argentina, and Brazil had developed expansive transport infrastructure networks.7 Such achievements relied on central infrastructure planning and large public bureaucracies that constructed, maintained, and (in the case of rail) operated lines. By 1989, the national rail company in Argentina, Ferrocarriles Argentinos, counted 94,800 public employees.8 Public spending on infrastructure plummeted in the 1980s, however, as a result of the fiscal challenges of the “lost decade.” Whereas public investments in transport reached 3.3 percent of GNP in 1975, transport accounted for less than 1 percent in the 1980s.9 Roads, bridges, and railways deteriorated without proper maintenance. Fiscal crises also meant that compensation for public sector employees, including planners, architects, engineers, welders, and train conductors, consumed a sizable part of public budgets. Most state-owned and private rail lines ran large deficits sustained by government subsidies.10 At the same time, a broad consensus developed across Latin America that long-term fiscal growth relied on improving transport infrastructure. Thus, Latin America faced the dual challenge of reducing spending while modernizing infrastructure. Neoliberal recommendations offered by international financial institutions in the 1990s connected numerous problems in transportation to one issue: overburdened, inefficient states that responded to political or social demands rather than price signals. The proposed policy solutions emphasized privatization to reduce the size of the state and increase competition. Concession agreements were touted by the transport sector as a type of public–private partnership through long-term management and investment contracts. The state would auction off the rights (e.g., the ability to charge fees/tolls) and responsibilities (e.g., operation, maintenance, and in some cases development) of owning roads, railways, or ports in return for a fee (canon) paid by the highest bidder. Private companies that obtained concession agreements could use the infrastructure for the duration of the concession agreement and obtain revenues 5

Schenoni, “Bringing War Back In.” Soto, “Rail Transport in Chile,” 129. 7 Barat, Logística, transporte e desenvolvimento. 8 Kogan, “Experiencias Ferroviarias”; Gómez-Ibáñez, Regulating Infrastructure, 96. 9 World Bank, “Federal Railways Restructuring,” 7. 10 Araneda, “La metodología de la tarificación.” 6

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directly from the consumer until the end of a specified period, after which infrastructure assets would return to state authority. Government officials and international policy advisors expected this approach to generate substantial revenue in the short term from canons, provide sorely needed infrastructure investment for modernization as well as maintenance, and reduce state expenditures. Perhaps most importantly, these policies made public sector transport workers redundant, reducing the public sector payroll. Concessions, as a neoliberal policy, seemed to solve the challenges of providing high-quality transport infrastructure at a low cost.11 The political challenges of implementing neoliberal reforms were considerable, however, and public unions protested. In response, political leaders – often encouraged by the international community – adopted powering strategies that advanced swift, wholesale changes during crises, “windows of opportunity,” or turning points.12 The logic seemed compelling: If changes were too gradual, opponents would have time to organize against them. Rapid, comprehensive reform would break any opposition by undercutting vested interests in the status quo. Indeed, shock therapy, Thatcher’s reforms, and Åslund’s case for radical reform in post-communist countries all relied on the logic of powering as do many contemporary reform theories.13 Yet political leaders, scholars, and practitioners have often overlooked the challenges inherent in powering as a reform strategy. In particular, powering rests on three assumptions that are often unfounded in practice. The first is that a comprehensive solution can be rationally designed. Cognitive psychology reveals that rational decision-making depends on two factors: the complexity of the task and the capabilities of decision-makers.14 Powering reforms, particularly neoliberal transportation reform efforts in the 1990s, placed constraints on both factors, limiting the capacity for rational solution design. Powering reforms like the privatization of infrastructure overhaul the state apparatus itself, with far-reaching consequences in the public and private sectors. Furthermore, designing reforms that address the root causes of many problems at once only exacerbates the difficulties.15 Neoliberal powering reforms are often led by political 11 12 13

14

15

World Bank, “Federal Railways Restructuring.” Bersch, When Democracies Deliver, 305. For example, see Åslund, “The Case for Radical Reform”; Durand and Thorp, “Reforming the State”; Graham and Naím, “The Political Economy of Institutional Reform in Latin America”; Rothstein, “Anti-Corruption”; and Rothstein, The Quality of Government. As Herbert Simon has noted, rational behavior is shaped “by a scissors whose two blades are the structure of the task environment and the computational capabilities of the actor[s].” Simon, “Invariants of Human Behavior,” 7. I make this argument at greater length in When Democracies Deliver, as does the economist John Kay in his book The Truth About Markets, writing that “most decisions are wrong, most experiments fail” (p. 105). He argues for pluralism rather than big blueprints: “because the world is complicated and the future uncertain, decision-making … is best made through a series of small-scale experiments” (p. 108). I thank Alan Knight for highlighting this point.

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leaders and their technocrats who possess the “will” and authority to implement reforms but often lack technical expertise and experience in government.16 The second assumption holds that power is essential for breaking resistance.17 Yet powering has three problematic side effects: it breeds opposition, dismantles established institutions, and disrupts bureaucratic continuity. In essence, powering can destroy the status quo but not easily rebuild a functional system. The third assumption is that comprehensive reforms will endure.18 Yet, given the difficulties of designing complex changes (assumption 1), comprehensive changes might not produce clear benefits. Even if they do, the drastic disruption to the status quo (assumption 2) and the sidelining of existing interests tend to generate concentrated opposition that often outlasts reformers. When political constellations shift and reformers leave, changes are vulnerable to reversals. Over time, this process chips away at bureaucratic capacity and experience, reducing the possibility of learning from past mistakes and leaving reforms without defenders. An alternative approach proves more successful in the medium and long term: incremental changes sequenced over time by a coalition. Collaborative problem-solving allows for corrections and modifications; instead of tackling everything at once, problem-solving addresses smaller problems each in turn, allowing time to observe the effects and adjust the approach. Such efforts draw on local expertise and experience rather than abstract economic planning. Coalition-building also tends to confer a greater degree of authority on civil servants. Outsider technocratic reform teams are often protagonists of sweeping changes to the bureaucracy; however, more limited or targeted changes tend to be led by public policy experts and civil servants are more likely to have more of the experience and expertise that cognitive psychology suggests is crucial for tackling difficult problems.19 Thus, a problem-solving or coalition-building approach tends to safeguard the civil service. Finally, instead of seeking to break the existing status quo, coalition-building relies on tactics that avoid conflict – in some cases by achieving broad support, in others by proceeding under the radar until they have proven results. As beneficiaries begin to see reforms working, reformers are able to problem-solve the next step. While powering relies on the postulates of comprehensive rationality, problemsolving and coalition-building are more likely to be effective and enduring in a complex and uncertain world. This argument complements recent research on development, markets and globalization, state capacity, social policy, and 16

17 18 19

I use the term “technocrat” to describe experts appointed by elected politicians, and “civil servants” or “public servants” for experts in public service whose employment is not based on political connections but only on merit. Grindle, Despite the Odds; Rothstein, “Anti-Corruption.” Burki and Perry, Beyond the Washington Consensus. It is important to note that outsider technocrats can, and often do, adopt a problem-solving or coalition-building approach, which is particularly important in weak states where reformers cannot rely on a permanent civil service. I thank Eduardo Dargent for this observation.

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institutional reform that rejects big-bang, one-size-fits-all approaches.20 It also builds on the work of earlier scholars who have highlighted the superiority of the coalition-building and problem-solving approach over powering. Hirschman’s “revolutions by stealth,” Popper’s “piecemeal social engineering,” Lindblom’s “muddling through,” Scott’s account of utopian schemes failing in Seeing Like a State, and Heclo’s analysis of public officials “puzzling” through problems in developing modern welfare states all reject, in one way or another, ambitious plans holistically implemented to emphasize instead the importance of incremental changes or coalition-building.21 This earlier criticism of the powering strategy or approach rings true: Grand schemes overlooking local conditions and complex interdependencies often fail at a great human cost.22

9.2  neoliberal

transportation infrastructure

reforms in argentina , brazil , and chile

Neoliberal reforms to transportation infrastructure in Chile, Argentina, and Brazil initially sought to shift responsibility for highways and railways from the state to the private sector. Ideal-type models failed to account for changing conditions and unforeseen circumstances, and swift reforms often excluded broader public participation. A comparative analysis reveals that the most radical transformations weakened the state. Contrary to predictions that markets were better at handling complexity, transport reforms show that a capable state was essential for neoliberal reform success, and countries that pursued a gradual approach to neoliberal reform were more successful. 9.2.1  Argentina: Powering Begets Powering The rapid overhaul of the Argentine transport sector in the 1990s offers one of the clearest cases of powering and the adoption of neoliberal policies whole cloth. It illustrates how neoliberal blueprints hastened the adoption of the powering approach and reveals its danger: The reformed transport sector deteriorated, prompting a reversal of the changes powered through just a decade before. 9.2.1.1  Menem’s Neoliberal Transport Overhaul: From Success to Disappointment Upon assuming office, President Carlos Menem confronted severe fiscal challenges by implementing a neoliberal overhaul. Transport infrastructure was 20

21 22

Tendler, Good Government in the Tropics; Huber and Stephens. Democracy and the Left; Abers and Keck, Practical Authority; Matt Andrews, The Limits of Institutional Reform; Andrews, Pritchett and Woolcock, “Escaping Capability Traps”; Levy, Working with the Grain. Hirschman, Journeys Toward Progress; Popper, The Poverty of Historicism; Heclo, Modern Social Politics in Britain and Sweden. For example, although Scott focused on the schematic visions of high modernist ideology, the faith in the free market during the neoliberal era echoed this earlier approach.

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central to this transformation, as demands for modernization and maintenance strained public coffers. Working closely with the World Bank, Menem’s tight-knit team of like-minded experts23 accomplished the unthinkable. In a few short years, railways and highways were transferred to the private sector in rapid-fire concession auctions.24 Menem’s teams slashed public payrolls by dramatically downsizing and reorganizing the state. The workforce of Ferrocarriles Argentinos, the state-owned rail company, was cut by eighty-two percent in Memen’s first term. By dismantling inefficient institutions, Menem consolidated authority and undercut rivals during this first phase of reform while implementing neoliberal blueprints at a record pace. Menem’s powering approach was initially met with praise from international financial institutions and foreign investors, who remarked that this approach turned Argentina into a “miracle” by taming inflation and restoring growth.25 A World Bank article from 1996 entitled “Heading Down the Right Track in Argentina”26 argued that the reforms improved services while controlling costs.27 This assessment was premature. By the late 1990s, investment promises had gone unfilled, private companies had failed to pay for the right to operate roads and rails, and the government began subsidizing concessionaires. What went wrong? First, the scope and speed of reform at the height of an economic crisis meant that rational calculations were simply not possible. Demanding quick turnaround of complex concession agreements lasting anywhere from twelve to thirty years was particularly problematic. Such agreements specify how tariffs, quality, investment, exclusivity, etc., evolve over time,28 in an attempt to protect both the interests of the public and concessionaires; however, experts argue that given the fluidity of the economic situation, there was no systematic way of making such estimates.29 Projections wildly under- and over-estimated traffic, especially for highway privatization. Freight 23 24

25 26 27

28 29

See Teichman, “Mexico and Argentina,” 33–4, and “The World Bank and Policy Reform,” 60; and N’haux, Menem-Cavallo, 248, 267. By 1990, the government had auctioned off about a third of the intercity highways. Soon, the government initiated a second wave of concessions, this time for Buenos Aires access roads. Meanwhile, a similar privatization process began to break up Ferrocarriles Argentinos’ fully integrated and centralized network, dividing it into monopoly franchises that combined track and service operations for both freight services and metropolitan commuter rail. Between 1991 and 1993, five thirty-year freight concessions were completed; within the next two years, seven Buenos Aires commuter service lines were auctioned off for twenty-year periods. Blustein, And the Money Kept Rolling In (and Out), 58; Manzetti, “Public Opinion Backlashes,” 147. Carbajo and Estache, “Railway Concessions,” 1. Centro de Estudios Económicos de la Regulación (CEER), “Las empresas privadas de servicios públicos en la Argentina”; Manzetti, “Political Manipulations and Market Reforms Failures,” 346; Sharp, Results of Railway Privatization in Latin America, 16. Campos-Méndez, Trujillo, and Estache, Processes, Information, and Accounting Gaps, 23. Author interview with Armando Norberto Canosa (Secretario de Transporte de la Nación, Ministerio de Economía y Obras y Servicios Públicos de la Nación, 1996–1999), November 21, 2012.

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concessions, implemented a few years after the economic crisis, did not create the same immediate disaster that afflicted highway concessions, but the speed and scope of the changes still meant that they failed to account for evolving circumstances and unanticipated developments. Thus, scope and speed were inversely related to success. The scope allowed Menem’s team to undercut the status quo but reduced opportunities for testing approaches or sequencing changes; the speed of reforms prevented organized opposition but left little time for careful calculations or public input. Perhaps more problematic was that the very process of powering – destroying the status quo, circumventing existing institutions, autocratically imposing changes, and concentrating power in the hands of political technocrats – weakened transport institutions, leaving very few public servants with the expertise and experience to manage the new challenges. Tight-knit teams of outside experts enhanced the government’s ability to move quickly and institute ideal-typical models of change, but reform designers were unfamiliar with the particular concerns of Argentine citizens and public servants. The concentration of authority in the hands of Menem’s technocrats allowed for decisive decisionmaking and rapid implementation of deep cuts to the public sector but left few permanent technocrats or civil servants to consolidate reforms over time. The Highway Agency, which was responsible for supervising concessions, lacked adequate independence, organization, and staffing.30 Regulatory agencies, crucial for monitoring and enforcing compliance of concession agreements, were understaffed, weak, and ineffective without the authority, capacity, or autonomy to modify contracts or collect accounting information from private firms or monitor and enforce concession agreements.31 For instance, the National Transportation Regulatory Commission (CNRT) was created in 1996 but was later placed under the direct control of the Ministry of Economy and Public Works, weakening its independence.32 High-level political technocrats thus retained exclusive oversight over the rapidly evolving transport sector; as a result, reversing course or addressing problems became ever more difficult. Issues with the design of concession agreements and weak oversight mechanisms soon became evident. Due to the flawed calculations, many companies received inadequate revenue, but in other cases, private companies were distributing record profits despite receiving state subsidies and failing to pay the mandated canon to the government.33 In other cases, increased usage meant that roads and rails required more maintenance and investment than specified ex-ante.34 30 31

32 33 34

Estache, Carbajo, and de Rus, “Argentina’s Transport Privatization.” Campos-Méndez, Trujillo, and Estache, Processes, Information; author interview with Dr. Luisa Maria Hynes, August 28, 2012. Author interview with Beatriz López (Administrador Gubernamental and Engineer), November 14, 2012. Campos-Méndez, Trujillo, and Estache, Processes, Information, 6–7. Baer and Montes-Rojas, “From Privatization to Re-Nationalization,” 332. Fundación de Investigaciones Económicas Latinoamericanas (FIEL), La regulación de la competencia, 188–90.

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By 1998, the government was renegotiating all railway concessions,35 spending US$400 million per year on subsidies, with a commitment from the state to pay US$6 billion in investment over the following twenty years.36 Once such changes occurred, it was very difficult to create new institutions, employ individuals with adequate expertise and experience, develop mechanisms for broader participation in decision-making, or distribute authority that had been concentrated in the upper echelons of ministries. When President de la Rúa took office in 1999, nearly all of the political technocrats responsible for transportation changed. The same occurred once more when the Kirchners came to power. Menem’s reforms continued to deteriorate during subsequent administrations, underscoring the deleterious and enduring effects of the powering approach. Weak institutions and centralized control meant that the state lacked the capacity and will to address issues. Under the Kirchners, officials failed to act on ominous reports that predicted catastrophe without corrective actions.37 The external audit body (AGN) released report after report revealing the calamitous state of the railways and the corruption in public works contracts. NGOs, labor unions, and government agencies pointed to the dire state of service provision and the government’s failure to hold concession companies accountable.38 Railway accidents rapidly mounted throughout the 2000s, averaging 400 deaths per year in the Buenos Aires Metropolitan Area alone. In 2008, there were more than 3,200 accidents, resulting in 2,700 injuries.39 Protests over the quality of transit increasingly turned violent. Reforms never consolidated the way that theories of historical institutionalism had predicted; instead, the policies in the 1990s that weakened the public sector shaped the civil service for years to come. Problems continued to escalate, and then tragedy struck. 9.2.1.2  Cristina Fernández de Kirchner’s Powering Reform Reverses Menem’s Changes (2012–2015) In 2012, a train on the busy Sarmiento line crashed into the Once (“Eleven”) station, killing fifty-one people and injuring 700. Although modern equipment would have prevented railway cars from careening into each other, the carriages on the line operated by TBA were more than fifty years old. In the following year, collisions and deaths increased, triggering an abrupt shift in executive attention to long-festering problems. Yet, instead of making adjustments and improvements (e.g., monitoring private companies, requiring companies to 35

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Government officials at this time renegotiated over forty-two percent of infrastructure contracts on Argentina outside the mechanisms established in the contract, nearly fifteen percent more than the regional average. Guasch, Granting and Renegotiating Infrastructure Concessions. Estache, Carbajo, and de Rus, “Argentina’s Transport Privatization and Re-Regulation,” 10. Nota CNRT 445/2011; AGN 2008; La Nación, February 29, 2012; La Nación, February 23, 2012. (ACIJ) Asociación Civil por la Igualdad y la Justicia, La situación institucional actual; Baer and Gabriel Montes-Rojas, “From Privatization to Re-Nationalization,” 331. Verónica Pérez. “Cambios y continuidades,” 126.

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fulfill contract promises, or modernizing train cars),40 the Fernández administration radically overhauled the sector, rescinding concessions and centralizing control of railway services in the state-owned rail companies. Government negligence in monitoring contractual agreements, experts argued, should have raised red flags regarding the state’s capacity to take on the formidable task of updating, maintaining, and operating rail lines.41 Policymakers overreacted to the problems, causing a major shift in transport policy.42 Fernández employed the same powering strategy, centralizing power in presidential appointments to head erstwhile autonomous agencies, restructuring organizations, and using executive decrees. From 2013 to 2014, the Fernández administration canceled one concession after another before creating a state-owned agency, Ferrocarriles Argentinos Sociedad del Estado, known as Ferrocarriles Argentinos, named after its predecessor that Menem had destroyed. The state was again responsible for operating and maintaining most rail lines. This time, the changes faced less resistance: The crisis was so bad something needed to be done – even though it was a crisis of the administration’s making. Concession companies, having benefitted from extravagant subsidies, could now return the dilapidated assets to the state, washing their hands of responsibility; the civil service agencies had been gutted and could not stand in the way of change or propose more moderate changes; and poor performance meant neoliberalism had been thoroughly discredited. Many citizens were in favor of dramatic reform after years of underinvestment and neglect. The change brought more change, all through powering and without any attempt to consolidate reforms. New institutions over time grew corrupt and inefficient while bureaucratic stability suffered, leading perversely to new comprehensive reform attempts. 9.2.2  Brazil: Neoliberalism Curtailed, Problem-Solving Inches Forward Neoliberal powering reform in Brazil dramatically changed the state’s institutional framework but ended before policy changes could be implemented. Aborted powering was followed by coalition-building and problem-solving, introducing elements of the neoliberal agenda in a more piecemeal and 40

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More moderate approaches seemed possible according to many experts. While the Fernández administration cited noncompliance to renege on its contractual agreements, the government had failed to sanction companies such as the Brazilian company ALL. According to the external audit body (AGN), in only one case did the regulatory body (CNRT) effectively apply the appropriate penalty. ElAuditor.Info, May 29, 2013; (AGN 2013). Author interview with World Bank official, September 28, 2012; López, interview. Political motivations may have influenced the decision to adopt a powering approach. Hugo Moyano, leader of the General Confederation of Labor (CGT), the truck drivers’ union and the largest trade union in the country, had been the Kirchners’ key ally; however, he broke with the administration in with a series of truckers’ strikes in 2012. Investing in freight in 2013 may have been intended to weaken the power of the truckers’ unions to shut down the country.

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incremental fashion, with the state playing a crucial role in modifying neoliberal blueprints. While illustrating the enduring challenges created by the initial gutting of transport institutions, this case also underscores how coalition-building and problem-solving allowed policymakers to adopt aspects of neoliberalism more successfully than in Argentina. While the pendulum of reforms in Argentina swung from privatization to re-nationalization, different transport models – both neoliberal and state-led – in Brazil have strengthened over time. 9.2.2.1  Neoliberal Powering Halted Transportation reforms in Brazil during the 1990s began as in Argentina, with a powering attempt to privatize roads and rails intended to eliminate the financial burden on the state.43 In the early 1990s, President Collor slashed half of public employees, with most dramatic changes in the transport agencies, which during the 1960s and 1970s had revolutionized highway travel in Brazil.44 Within a year, the highway agency experienced a fifty-eight percent reduction. Planning expertise was particularly hard-hit, losing over eighty-six percent of personnel.45 Nonetheless, the reforms that followed – concession auctions and the transferring of the highway network to the states – were soon halted as Collor’s powering approach encountered political challenges. His unilateral imposition of drastic reforms and unwillingness to negotiate ultimately resulted in his impeachment in 1992. Although he eliminated most of the transport institutions and their ability to block reform, his neoliberal program was never fully implemented. Therefore, the state remained responsible for roads, bridges, railways, and ports. 9.2.2.2  Neoliberal Reforms Inch Forward under Cardoso Learning from Collor’s failures, Cardoso pursued a coalition-building approach, implementing far more gradual reforms. Cardoso may have preferred loyal technocrats to lead neoliberal changes, but he recognized the importance of including coalitional allies in the broader process plus conferring many details to state experts. In this way, non-partisan experts in key agencies such as the Developmental Bank (BNDES) helped insulate many technical decisions from political influence.46 Civil servants often questioned, then 43

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As Cavalcanti (1995) highlights, the effects on the institution were profound. “Retirement and dismissal of personnel resulted in intense consequences for the technical-organizational world within DNER [the old acronym for the highway agency],” Cavalcanti explains, “because it resulted in a great loss of the accumulated institutional memory, experience, and technical competence that left with the individuals that left the agency” (86–7). Barat, Logística, transporte e desenvolvimento. MT (Ministério dos Transportes), “GT – DNER.” For example, a privatization council took responsibility for setting policy guidelines, but the powerful Development Bank (BNDES) was to manage much of the reform process. Author interview with Rodolpho Tourinho Neto (President, Sindicato Nacional da Indústria da Construção Pesada, 2011–2015; Senator and Minister of Mines and Energy, 1999–2001), April 18, 2012. World Bank, “Federal Railways Restructuring”; Manzetti, Privatization South American Style, 187.

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modified, off-the-shelf neoliberal blueprints that disregarded Brazilian realities. While reformers in Argentina were selected based on their commitment to a neoliberal agenda, Brazilian civil servants in key reform agencies were chosen through competitive exams that tested their technical capabilities instead of their commitment to a particular ideological model.47 Pluralism and expertise among permanent civil servants guarded against the neoliberal groupthink48 so common among tight-knit neoliberal technocratic teams across many countries in Latin America.49 The smaller-scale plans implemented over time by agencies that enjoyed a number of organizational and information advantages meant that Brazilian neoliberal designs circumvented the pitfalls encountered by Argentine technocrats. For example, whereas Argentina charged high canons that companies failed to pay later, Brazil’s rates were lower and charged upfront.50 Argentine technocrats assumed that market mechanisms would correct problems, but Brazilian planners foresaw challenges that the state could address in the design and implementation phase before they become full-blown crises.51 As a result, the reforms that ultimately advanced in Brazil were quite limited in comparison to changes in Argentina. Railways represented the most extensive privatization in Brazil but constituted only a small portion of the transport infrastructure. In the late 1990s, seven railway concession auctions granted the operation and maintenance of lines to private companies for thirty years. Highway concessions commenced as well but accounted for only two percent of the federal highway system, dwarfed by what Argentina accomplished in a few short years.52 These modest neoliberal changes proved more effective and enduring than those powered through in Argentina. Labor productivity increased, performance improved, debts were resolved or rescheduled with proceeds from sales, and the cost of freight decreased by thirty-one percent from 1996 to 2000.53 Smaller-scale changes phased in over time also forged greater political 47 48 49 50 51

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Cunha, Pereira and Gomide, “State Capacity and Utilities Regulation in Brazil”; Willis, “Explaining Bureaucratic Independence in Brazil”; Pereira, Brazil in Transition. Page, The Difference. Teichman, “Mexico and Argentina,” 48. Estache, Goldstein, and Pittman, “Privatization and Regulatory Reform in Brazil,” 224. On transferring debt to concession companies see De Castro, “Privatization of the Transportation Sector in Brazil.” On regulatory issues see Pinheiro, “Two Decades of Privatization in Brazil,” 268. Regulation of railway transportation was established by Decree 1832 of March 1996, which created the Federal Railway Transport Commission under the Ministry of Transportation (De Castro, “Privatization of the Transportation Sector,” 11; Gomide, “A política das reformas institucionais no Brasil,” 85. Subsequent sections address the establishment of the regulatory agencies, which would occur only years later. Organisation for Economic Co-operation and Development, Brazil: Strengthening Governance for Growth,178. World Bank, “Federal Railways Restructuring and Privatization Project” (2003), 3; De Castro, “Privatization of the Transportation Sector.”

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consensus at the outset, which made changes more durable. Cardoso included a range of parties in his coalition, which were also represented in previous and subsequent administrations. An inclusive approach slowed reforms and downsized ambitions but fostered the political support crucial for sustaining change in addition to ensuring reforms were scrutinized and overseen. Indeed, observers noted that neoliberal changes to transport in Brazil were remarkably transparent compared to other Latin American countries.54 The comparison with Argentina brings advances in Brazil into sharper relief. By the late 1990s in Argentina, failures of the neoliberal reforms were undeniable; transport subsidies were again a strain on public coffers and the government apparatus had been drained of individuals with adequate expertise to diagnose the problems. While Brazil seemed a neoliberal laggard, changes were working as expected. Finally, neoliberal changes did not replace the state’s ability to rely on procurement or state-led models, which allowed presidents to choose from approaches rather than radically eliminate one model and create a second de novo. 9.2.2.3  Powering Legacy In reaction to corruption scandals within the highway agency during the late 1990s, Congress in a knee-jerk move voted to abolish the highway agency (DNER) as well as the planning agencies. Both had once been considered “islands of excellence”55 but had been eviscerated during Collor’s overhaul. Although this act came from Congress rather than the president, it resembled the powering approach. Congress did eventually replace the highway agency with an even weaker one, DNIT, but the damage had already been done. Many of the most capable civil servants, with years of expertise, exited during the Collor purge of transport agencies. Attrition continued, with the transport workforce shrinking by ninety-three percent from 1989 to 2000.56 Thus, President Cardoso left office with very few experts within transport institutions prepared to supervise concessions and address the planning, contracting, engineering, and auditing required to modernize and maintain roads, bridges, ports, and railways. The legacy of powering in Brazil, when it did occur, weakened the public sector’s capacity, and most transport challenges today can be attributed to institutions stripped of resources and autonomy. Weak institutions allow for the concentration of authority in the hands of political appointees and “political dominance” of transport agencies by particular parties,57 making them particularly vulnerable to high-level corruption. Efforts to rebuild such 54 55 56 57

Lora, ed., The State of State Reform in Latin America. Barat, Logística, transporte e desenvolvimento. Author interview with André Pachioni Baeta (Diretor da Secretaria de Obras, TCU), May 25, 2011; Correia, “Por que as reformas permanecem?”, 116, 186. Bersch, Praça, and Taylor, “Bureaucratic Capacity and Political Autonomy,” 157–83.

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institutions continue, but reconstructing institutional memory, experience, expertise, and political autonomy is a long and arduous process. 9.2.2.4  Presidents Lula and Dilma Pursue a Heterogenous Approach (2003–2016) President Lula da Silva (Lula) relied on both state-led and neoliberal approaches to infrastructure while endeavoring to strengthen transport agencies. At first, the Lula administration misdiagnosed the problems in transport infrastructure as underinvestment in the sector; however, the administration later recognized that the transport sector’s inability to effectively spend funds underpinned nearly all of its issues. Focus then fell on strengthening the agencies that lacked sufficient lawyers, engineers, and auditors to translate budget outlays into improving the quality and quantity of roads, bridges, rails, and ports that Brazil’s commodity-heavy economy still needed for economic growth. The Lula administration drew on existing transport expertise within the state – the external audit agency, for example, and the Army Corps of Engineers – rather than teams of outside technocrats. President Dilma Rousseff continued Lula’s policies and relied on an ideologically diversified approach to challenges: expanding privatizations, accelerating the use of public-private partnerships, and seeking to substantially increase transport agencies’ capacities. Both Lula and Dilma avoided the false choice of privatization versus nationalization and strengthened the model for different gradual reforms. When new opportunities for change later arose, reform options had been proven, tested, negotiated, and discussed. Whereas Argentina’s executives relied on a tight-knit team to overhaul institutions and create a fully public or private infrastructure model, governments in Brazil drew upon existing agencies encompassing a wide-ranging group of officials and the lessons learned from earlier pilot projects. In the absence of a planning body, Rousseff relied extensively on the few talented specialists within the transport sector. To address transport expertise challenges, these individuals initiated discussions with transportation experts and the Army’s transport planning body about creating a foundation or public company to provide research and strategic planning as well as a forum for federal, state, and municipal coordination.58 In 2007, the government created the National Logistics and Transport Plan to provide long-term strategic plans.59 As the government drew upon embedded expertise in the transport sector, improvements began to accelerate and public–private partnership agreements offset extensive investments by the public sector.60 By the end of Rousseff’s first 58 59

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Correia, “Por que as reformas permanecem?”, 211. MT (Ministério dos Transportes), “Plano Nacional de Logística de Transportes.” While this was an achievement, the planning body developed in increments. In no way did it immediately fill the void left by GEIPOT. Private Participation in Infrastructure, “Road Transport Project.”

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term, in 2014, Brazil’s problem-solving efforts had developed one of the strongest institutional frameworks for private investment in infrastructure in Latin America.61 Lula’s and Rousseff’s governments were not free from scandals or failures; indeed, transport infrastructure represents a serious bottleneck for development in Brazil62 and remains vulnerable to cartels.63 Corruption persists, and critics rightly observe that the coalition-building and problem-solving process in Brazil have been expensive. Nonetheless, various indicators suggest that gradual advances have helped Brazil make important gains. In 2001, over eighty percent of Brazil’s transport network was in bad or terrible condition; by 2011, over sixty percent was deemed to be in good repair.64 By 2014, Brazil’s regulatory and institutional framework, project experience and success, investment climate, and financial facilities had succeeded.65 Concessions and public–private partnerships increasingly accounted for more of the transport sector.66 Once Latin America’s neoliberal laggard, Brazil now boasts a privatized road network second in expanse only to China’s.67 When powering did occur in Brazil, it left negative and enduring repercussions. The destruction of transport agencies under Collor in the 1990s left few individuals with experience in the transport agencies. In the absence of a capable highway agency, one DNIT leader sought to recreate embedded expertise by drawing on other areas of the state that retained engineering and legal expertise, namely the military. That the process of problem-solving has advanced very slowly underscores the importance of a minimal level of bureaucratic capacity and autonomy for smaller-scale improvements to advance. Indeed, nearly all of the problems in the transport sector in Brazil today are in some way related to the challenges of rebuilding institutions stripped of capacity and autonomy. Weak institutions allow for the concentration of authority in the hands of political appointees and “political dominance” of transport agencies by particular parties,68 making them particularly vulnerable to high-level corruption. Protests in 2013 and 2014 over the quality of urban transport in Brazil occurred for good reasons. Earlier in the twentieth century, GEIPOT planned and coordinated urban transport development with states and municipalities. 61 62 63

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The Economist Intelligence Unit, “The 2014 Infrascope.” The Economist, September 28, 2013. Author interview with Rodolpho Tourinho Neto (Senator and Minister of Mines and Energy, 1999–2001; President, Sindicato Nacional da Indústria da Construção Pesada), April 18, 2012; author interview with Beatriz Nunes (Confederação Nacional da Indústria), December 12, 2011. Confederação Nacional Do Transporte (CNT), “Pesquisa CNT de Rodovias 2014.” The Economist Intelligence Unit, “The 2014 Infrascope.” Martin, Briceno-Garmendia, and Sirtaine, “Caribbean Infrastructure PPP Roadmap.” World Bank, “Implementation Completion and Results Report,” 25. Bersch, Praça, and Taylor, “Bureaucratic Capacity and Political Autonomy.”

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In the absence of a planning and coordination agency – or even a forum for discussion – municipalities have been left to hash out the complex engineering designs, jurisdictional questions, and investment issues on their own. Despite efforts to rebuild such institutions, reconstructing institutional memory, experience, expertise, and political autonomy is a long and arduous process. Indeed, transport infrastructure represents a serious bottleneck for development in Brazil69 and remains vulnerable to cartel behavior.70 Yet the legacy of underinvestment and the near-destruction of transport agencies takes time to undo. 9.2.3  Chile: Neoliberal Reforms Reduce Mechanisms for Coordination and Citizen Input 9.2.3.1  Early Weakening of Transport Institutions under Pinochet While Chile faced challenges similar to Argentina and Brazil, reforms followed a different path. Prior to the Pinochet years, Chile developed a sophisticated rail system, including passenger and freight services under a public company, EFE. Thus, like Brazil and Argentina, transport had been run by large, complex state agencies with considerable planning expertise; again, like many other countries in the region, the sector required significant subsidies. Under Pinochet, however, reforms to the state-led model, specifically reductions in subsidies and the workforce, began much sooner. In the mid-1970s, Pinochet cut all subsidies to EFE,71 resulting in the closure of branch lines, sell-offs of track and rolling stock, and personnel layoffs (from 15,000 workers in 1978 to 7,000 in 1981).72 At the same time, the government deregulated the interurban passenger transport market while allowing truck and car imports, which increased competition for EFE in both freight and passenger services. Pinochet initiated the agencies’ destruction but did not fully privatize rail or roads, which meant that neoliberal transport reforms in Chile can be compared to Collor’s reforms in Brazil: These changes were successful in reducing the size of the bureaucracy and cutting spending, but there was no clear plan for the sector thereafter. The result was severe underinvestment. The longestablished planning agencies, which had been endowed with developmentalist mandates and strong internal commitment to expertise rather than political expediency,73 lost significant personnel when transport responsibility was decentralized. As Greaves points out,74 such reforms fragmented the state’s planning apparatus but did not transfer substantive authority to municipalities 69 70

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The Economist, September 28, 2013. Author interview with Rodolpho Tourinho Neto (Senator and Minister of Mines and Energy, 1999–2001; President, Sindicato Nacional da Indústria da Construção Pesada), April 18, 2012; author interview with Beatriz Nunes (Confederação Nacional da Indústria), December 12, 2011. Soto, “Rail Transport in Chile,” 129–30. Ibid., 136. Violich and Daughters, Urban Planning for Latin America. Edward Greaves, “Municipality and Community in Chile.”

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or provide the Ministry of Planning with a central role,75 significantly reducing the arenas for planning and coordination. 9.2.3.2  Neoliberal Reforms of the 1990s: Experts Shield Reforms from Broader Scrutiny Political leaders in post-Pinochet Chile had to grapple with years of underinvestment as well as road and railway deterioration. Despite the sector’s earlier subsidy reductions, for example, by the early 1990s, EFE still required major support: It transported around 9  million passengers in 1994 in addition to 17 million tons of freight, while running a USD51 million deficit.76 Rail deterioration only increased traffic on roads and highways. Whereas Argentina was the first in the region to adopt neoliberal blueprints wholesale and implemented them at lightning speed, Chilean experts modified the approach considerably, tailoring it to local conditions and staggering concessions over time so as to apply lessons learned from one auction to the next. Furthermore, whereas Argentina and many other countries bypassed existing institutions and reduced the role of planning agencies, Chile worked within existing institutions. State-owned EFE and the state interest in the railway sector were largely preserved,77 and the privatization process sought to rely on the Ministry of Public Works, complementing the resources of the Ministry rather than eliminating existing agencies.78 Still, there were some similarities to the powering experience of Argentina, notably the urgency that prompted a top-down approach with small, technocratic teams often working in secrecy and resistant to change. In the case of highway concessions, some Chilean technocrats intentionally shielded reforms from scrutiny. As Silva notes, “MOP [The Ministry of Public Works] under Carlos Hurtado consciously designed the legal and institutional framework of the concessions system in a technical and political vacuum that excluded not only social actors but also stakeholders within the government and state bureaucracy.”79 Beyond secrecy, other senior officials in the Ministry of Public Works noted the Chilean state’s lack of coordination mechanisms and local expertise.80

75 76 77

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Sabah Zrari, “Les Concessions routières au Chili.” Soto, “Rail Transport in Chile,” 137. Freight was privatized to a certain extent from 1993–2001. EFE retained 18% participation. Soto contends that Chilean reforms failed because they were based on cutting financial losses and avoiding political backlash rather than improving the railway transport system. Enrique R. Silva, “Deliberate Improvisation,” 10. Ibid., 43–4. See Silva on fragmentation of transport policy and turf battles between agencies that resulted in lack of coordination (Silva, “Deliberate Improvisation,” 44). “The Chilean state was … not institutionally set up for meetings and collaboration among ministries. There is no authority to coordinate efforts. In the absence of these spaces for collaboration, things either falter or someone at some point takes the lead and pushes through a particular project” (quoted in Silva, “Deliberate Improvisation,” 45).

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The Ministry of Public Works’ technocratic, secretive approach came to a head with the first urban concession, the highway Costanera Norte. In 1997, the minister of public works Ricardo Lagos (later president from 2000–2006) sought to create a highway to improve car travel from the wealthy suburbs in the eastern Andes westward into the city center and the airport, ports, and resorts on the coast. Costanera Norte cut through mostly low-income neighborhoods where the vast majority of people traveled by foot, bicycle, and public transport. As Sagaris documents, twenty-five organizations from the affected communities formed the Coordinadora, an anti-highway movement. The Coordinadora did not stop the project but did force negotiations between the firm and government to redirect the road away from the most populous neighborhoods and provide compensation for those displaced.81 The group revealed how concentrated power had become in certain parts of the technocratic Chile state and insisted on the importance of engaging a broader set of interests. By the late 1990s and early 2000s, much of the road and rail network had been partially privatized. Holding auctions was often easier than developing a robust regulatory institution, and the Chilean experience, similar to so many others in Latin America, emphasized “privatization now, regulation later.”82 Moreover, the same agencies interested in the success of the concession program were usually those supervising the concession contract, which meant that they tended to be lax on enforcement and leaned toward easing restrictions on concessionaires. Vested interests resulted in increased budgets for transport to the detriment of users and taxpayers.83 Similar challenges arose in the rail sector as legal disputes highlighted EFE’s failures to upgrade and maintain the quality of tracks as required by the original contracts.84 Accidents occurred ten times more frequently than in the US and were costly, with an estimated social cost of USD16 million in 2007 alone.85 9.2.3.3  Transantiago: Powering in Urban Transport Political leaders in Chile also sought to address the challenges arising from the absence of a robust passenger rail system, years of deregulation, and the lack of planning capabilities. The Transantiago was the government’s “Big Bang” attempt in 2007 to comprehensively revamp the Santiago bus system. On paper, the plan developed under President Lugo seemed like an effective way of replacing an informal system with a comprehensively planned one that

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Sagaris, “Citizens’ Anti-Highway Revolt.” Because the government policy affected many different neighborhoods there was more pushback. The Coordinadora sparked a movement of citizen organizations and in the 2000s established Living City, an urban planning initiative that still yields influence in Santiago today. Engel, “Privatizing Highways in Latin America.” Engel, “Privatizing Highways,” 4–5. Soto, “Rail Transport in Chile,” 146. LIBRA Ingenieros Consultores, “Análisis de la seguridad en el transporte ferroviario.”

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relied on large, modern buses to reduce noise, congestion, and exhaust fumes. High-level technocrats worked closely with consulting companies to run software models of the new system, which was implemented in, as one congressman described it, a “Big Bang … one day we had one network of bus routes and the following day we had a completely different one.”86 The implementation of the Transantiago powering reform under President Bachelet was an immediate failure, however, creating chaos throughout the city. There were not enough buses and a lack of information about routes; users had to show drivers what routes they should follow.87 Commuters spent untold hours attempting to return home, and the general mismanagement spurred multiple protests and riots.88 Over the next weeks, months, and years, the Bachelet administration sought to address the initial disaster and considered it “fixed” by 2009. Yet many still criticized the results. Although the Transantiago system vastly improved, a significant financial deficit was only partially mitigated by fare hikes. By the end of 2011, 50 percent of Chileans reported being highly dissatisfied with the metro, while only 17 percent were highly satisfied.89 The government continued using subsidies to offset high fares, but Gómez-Lobo finds that the trend is still defined by more expensive fares and higher costs.90 Many scholars have been even more critical of the continued problems and have used the reform as an example of a policy failure.91 Even though the failed powering attempt resulted in some subsequent problem-solving efforts, addressing the shortcomings remains challenging. The Transantiago failure has many causes.92 First and foremost, the government implemented a Big Bang that sought to do too much (e.g., renovate the bus fleet, formalize labor relations, and introduce technological upgrades) too quickly. The radical revamping of the old “yellow bus” system required a comprehensive understanding of the existing system and the new model. Given the complexity of urban transport and the breakneck speed of implementation, a redesign across the board, in one fell swoop was nearly impossible. In addition, 86

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“Big Bang desde el momento en que un día había una malla de recorrido y al día siguiente había otra” (diputado Carlos Montes, in Quijada, Tirachini, Henríquez, and Hurtubia, “Investigación al Transantiago,” 83). Olavarría-Gambi, “Policy Failure Revisited,” 699. The Economist, February 7, 2008. Gómez-Lobo, “The Ups and Downs of a Public Transport Reform.” Ibid. See Olavarría-Gambi, “Policy Failure Revisited,” 699. Chile sought to integrate and centrally control the bus and metro system. The main reasons it failed include: insufficient public investment, failure to build new corridors and subway lines, the bus control systems crashed, fines for non-compliance for concessions were so low that operators absorbed the costs (a worse service), a lack of cooperation between firms and local government delayed the construction of essential facilities (bus stops, priority lanes, etc.), and divisions between national departments delayed policies and confused assigned responsibilities (Quijada, Tirachini, Henríquez, and Hurtubia, “Investigación al Transantiago”; Figueroa, “Four Decades of Changing Transport Policy in Santiago, Chile.”)

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a homogeneous group of technocrats and consultants was empowered to push through the changes. Numerous scholars have highlighted the homogeneity of many design teams.93 For example, a relatively small group of transportation technicians, primarily from the Universidad de Chile y Pontificia Universidad Católica de Chile, worked on the changes.94 The lack of diversity and ideological commitment to the project meant that there was an absence of discussion, negotiation, and compromise, which made criticism or voicing concerns about plans problematic. Furthermore, technocratic decision-making by homogenous groups failed to incorporate the detailed knowledge of citizens, yellow bus micro-enterprises, and local authorities. According to a former member of the Transantiago planning team in 2006, the technocrats “widely used the justification that a process of public participation would slow down the implementation of this project.”95 The approach privileged high-level consultants and technocrats who could develop rational plans, but without the participation of permanent civil servants or citizens the concerns of those using the system went unaddressed. Finally, technocrats in charge were unable to better anticipate challenges partly because remnants from earlier powering and neoliberal reforms had weakened the central planning agencies and coordination mechanisms that might have provided continuity in moments of turnover; moreover, the Transantiago lacked a permanent civil service.96 In this context, recommendations from consulting agencies were paramount.97 Some scholars suggest that political decisions regarding Transantiago policy were developed in a semi-closed system where a small number of technocrats and consultants interacted.98 Ignacio Briones notes that such key variables as

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“Un experto en transporte sostiene que la construcción de la alternativa, de alguna manera, estuvo basada en la teoría, más que en datos, que en información o en datos empíricos que los definieron la estrategia fueron los técnicos, expertos, pero las autoridades se dejaron convencer por ellos. Hubo mucha teoría, mucho modelamiento, y hubo poco análisis empírico y la verdad lo que debiera haber ocurrido es que la transformación del sistema debió haber sido gradual y hubo mucho fundamentalismo, mucho dogmatismo en ese proceso.” Author’s translation: “A transportation expert argues that the construction of the Transantiago, in some way, was based on theory, rather than data, information, or empirical data. Those who defined the strategy were the technicians, experts, but the authorities allowed themselves to be convinced by them. There was a lot of theory, a lot of modeling, and there was little empirical analysis and the truth is that the transformation of the system should have been gradual and there was a lot of fundamentalism, a lot of dogmatism in that process.” Fuentes González, “De Estimaciones y Modelamientos,” 144. Fuentes González, “De Estimaciones y Modelamientos,” 121; Olavarría-Gambi, “Policy Failure Revisited.” Quoted in Höhnke, “Potentials and Pitfalls of Transport Innovations,” 16. Economic Commission for Latin America and the Caribbean (ECLAC), “Toward an Integrated Transport Policy.” Quijada, Tirachini, Henríquez, and Hurtubia, “Investigación al Transantiago.” Fuentes González, “Investigación al Transantiago,” 144.

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network or fleet size were defined by small groups of engineers with the advice of external consultants based on sophisticated modeling software. Such models are extremely sensitive to minor changes in parameters, but modelers often lacked empirical data. Inordinate faith was placed in abstract models, and Briones suggests an arrogance in the modeling approach.99 Under Bachelet, some scholars argue that the administration became even more hermetic and focused on elite technocrats, with the Transantiago championed by high-level technocrats, such as her Ministers of Finance and Transport,100 who convinced Bachelet go ahead with the implementation decision despite the postponement recommendations.101 The investigative commission of the Chamber of Deputies reveals that high-level political actors and technocrats overlooked warning signs that the reform was not yet ready, arguing that they did so largely because of tight deadlines and the tendency to opt for courses of action that maximized the goals they pursued – especially making the new system self-financing.102 The Bachelet government emphasized a highly technocratic approach in implementing and improving Transantiago, despite her campaign promise to pursue citizen-led reforms.103 Although she did vastly improve the system after the initial failure, her approach exposed Chileans’ growing – and now erupting – sense of inequality and political detachment. Thus, even with Chile’s high levels of state capacity, powering failed to deliver the expected results. There remain two divergent views of transport in Chile. On one hand, the Chilean highways are a point of pride for many Chileans, and international observers often highlight Chile as a success story compared to other Latin American countries. On the other hand, many argue that highways in Chile have conferred disproportionate advantages on some Chileans while excluding others.104 In recent protests, citizens have claimed that the transportation fee hike is “not about 30 pesos” but “about 30 years,”105 meaning thirty years of dealing with inequality enshrined in the 1988 Constitution. In transportation, in particular, economic inequality has fueled segregation within cities. Scholars have noted that costs for traveling in the system are

99 100 101 102

103 104 105

Briones, “Transantiago,” 83. Silva, In the Name of Reason. Olavarría-Gambi, “De la formulación a la implementación del Transantiago,” 389. “If there had not been pressure for deadlines, this [contract details] could have been studied with more precision and contracts designed that, offering a reasonable deal to private parties, would not put the operation of the system at risk.” Quijada, Tirachini, Henríquez, and Hurtubia, “Investigación al Transantiago,” 2. The “yellow bus” system was not even seen a problem among many Chileans. See Briones, “Transantiago,” and Olavarria-Gambi, “Policy Failure Revisited.” I thank Veronica Montecinos for highlighting this divergence of views. As quoted in Stacy Torres, “The Protests in Chile Aren’t about 30 Pesos,” Washington Post, October 23, 2019, www.washingtonpost.com/opinions/2019/10/23/protests-chile-arent-about-pesostheyre-about-years-failure/.

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enormous for significant portions of the population. Iglesias et al. analyzed transport use among socioeconomic groups, showing that certain urban population groups are systematically disadvantaged.106 In relation to costs, the richest quintile generated 6.7 times as much pollution and used 7 times as much energy, but spent a significantly lower share of their income (10 percent of total income for the richest quintile vs. 45 percent for the poorest) on transportation.107 Time and income spent on commuting as well as effort expending surmounting transportation hurdles (e.g., lack of connections between poorer neighborhoods and wealthy urban centers) systemically disadvantage already marginalized populations;108 people may also be cut off from desirable employment opportunities or from the social and material resources that accessible social networks can provide.109 The top-down and often secretive planning, which excluded citizen input, resulted in a clearly inequitable transportation framework. In sum, early transformations under Pinochet significantly reduced state planning and coordinating mechanisms along with the government’s ability to channel public input. When transport privatization occurred, it was more successful in Chile than in such countries as Argentina – in large part because some experts remained in the state and coalitions gave technocrats longer tenures. Reformers could thus see changes through and tailor neoliberal blueprints to local conditions. Moreover, reforms were staggered over time. This more gradual approach allowed reformers to learn along the way. In this sense, Chilean reforms followed a problem-solving approach. Nonetheless, other aspects of reform resembled powering: destruction of institutions, limiting avenues for input, prioritizing pushing through changes before resistance mounts, use of political will, and high-level technocrats. These dynamics have had damaging results in the long term. Notably, the technocratic approach and limited avenues for input meant that changes have lacked broad-based support. This approach also resulted in inequalities in transport, which have triggered popular discontent on a scale shocking for a country long known as the exemplar of neoliberal reform.

9.3  conclusion Examining transport infrastructure in Latin America reveals how neoliberal reform blueprints often produced a particular strategy for reform. Comparing reforms in Brazil, Argentina, and Chile shows that powering, comprehensive overhauls pushed through with political will by like-minded teams, tended to 106 107 108 109

Iglesias, Giraldez, Tiznado-Aitken, and Muñoz, “How Uneven Is the Urban Mobility Playing Field?”. Ibid., 67. Bocarejo S. and Oviedo H., “Transport Accessibility and Social Inequities,” 153. Carrasco and Lucas, “Measuring the Influence of Social Capital and Personal Networks.”

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compromise civil service capabilities and contributed to institutional weakness in much of the region, whereas coalition-building and gradual public sector reforms preserved the permanent civil service and proved more successful in producing resilient changes. Thus, I argue that reform strategy was crucial for the varied outcomes of neoliberal policies in Latin America. Destroying transport institutions – ministries, agencies, planning bodies, and mechanisms for collaboration, coordination, and citizen input – was far easier than managing their construction or reconstruction. As a result, reform depth and speed were often inversely related to long-term success. One tenet of neoliberal reform is that markets are far better at coping with complexity because they orient toward price signals, whereas bureaucracies focus on political or social demands so produce disorder.110 This chapter shows instead that bureaucracies played an essential role in making privatizations successful and are perhaps even better at coping with complexity than free enterprises because they have longer time horizons. Areas like transport retain the character of a public good; it is simply not possible completely privatize them. Thus, this comparative analysis underlines the hubris of replacing developmental states and imposing the neoliberal project while complementing findings in other policy areas. Souza Leão (in this volume) compares two public policy programs in Brazil and Mexico for fighting poverty. As Souza Leão demonstrates, the Mexican program “Progresa” relied on a technocratic approach with a focus on efficiency. As a result, for example, civil society was excluded from the management of the Mexican program, an approach that has been strongly criticized. Neoliberal reforms are not always the problem per se; rather, neoliberal reforms coupled with powering, which reduce the state’s capabilities and subsequent ability to address problems, prove problematic. The swift destruction of planning and coordinating mechanisms along with the failure to address the concerns of citizens and democratize decision-making procedures fuels popular discontent, and indeed, many of the problems in Latin American transport today reflect a lack of buy-in, long-term planning, and expertise. Privatization, or any inclusion of the private sector, requires a state capable of planning, regulating, and coordinating complex systems plus the sustained input from technical teams connected to local realities and responsive to the concerns of citizens. In the transport sector, highways and railroads are essentially too important to fail, and the political costs too great. Transport retains its nature as a public good, meaning that the state might be called to bail out companies that failed in their duties. Even when partially privatized via concession agreements, the infrastructure required state capabilities. Because much of the state apparatus was all but destroyed by neoliberal overhauls, the road to rebuilding is long.

110

I thank Lars Döpking for making this observation.

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bibliography

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10 The End Game of Social Policy in a Context of Enduring Inequalities Assessing “Post-neoliberalism” in Latin America Pía Riggirozzi and Jean Grugel

The battery of pro-market policies introduced in Latin America in the 1980s and 1990s that become known as the Washington Consensus decisively shifted the regional paradigm of development. Governments dismantled tariffs, cut public spending, and dramatically reduced the role of the state, both in terms of driving the economy and in the promotion of well-being and human security. But, despite the sweeping ambitions of neoliberal development, the achievements of this period were, in fact, chiefly fiscal in character, namely deficit reduction and inflation control. Trade liberalization encouraged exports, but also meant much higher levels of imports, partly as a result of currency over-valuations and, more significantly, due to the region’s declining manufacturing performance in the face of global markets.1 Meanwhile, the failure to create opportunities for decent work combined with the reduction in public investments over a sustained period had both dramatic social costs, most notably greater concentration of income and a major rise in poverty. By 2002, 226 million Latin Americans lived in poverty, with over 11 million living in extreme poverty or destitution, a situation that was significantly worse than at the start of the neoliberal revolution.2 The top 10 percent of households in Brazil, to take one of the most extreme cases, possessed 50 percent of national income, while the bottom 40 percent had only 10 percent.3 Clearly, two decades of neoliberalism had failed to produce anything close to equitable development. Instead, it had encouraged governments to “solve” troubling aspects of regional economies without considering how the “solutions” would impact on persistent inequalities of income, ethnicity, gender and place, job

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Moreno-Brid, Pérez Caldentey, and Ruíz Nápoles. “The Washington Consensus.” Economic Commission for Latin America (ECLAC), “Panorama económico y social,” 22. Ibid.

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creation, and limit investments in health provision, education, and public services which were essential for future prosperity. Given this, it is hardly surprising that the question on the lips of policymakers and development specialists alike was “after neo-liberalism, what?.”4 The problem was that there was no consensus as to the answer, at least not beyond the somewhat vague agreement that addressing the social deficit, equity, and a redistribution of income and opportunities was needed to deliver governability and growth. The absence of a clear international agreement setting out the way forward in the aftermath of the Washington Consensus had the effect of leaving governments in Latin America with an unusual degree of latitude in the early years of the twenty-first century, at exactly the point when the economic fallout and widespread public dissatisfaction with the social costs of market-led development led to demands for political transformation. The result was that a raft of new left governments took office across the region, promising dramatic change.5 How would “pink tide” or “post-neoliberal” governments deal with the triple challenges of lackluster economies, skewed and limited welfare provision, and the region’s historic inequalities of income, gender, and ethnicity? They promised to repurpose the economy not just for growth but also for human development by linking new state investments, expanded public expenditure, and increased taxation to redistribution and meaningful citizenship.6 The introduction of new and expanded social policies was central to these promises and social expenditure came to represent over 11 percent of GDP by 2009, accounting for over 52 percent of total public spending.7 Yet by 2015, the left was once again losing office and, despite some important social policy achievements, the reduction in inequalities plateaued. 185 million Latin Americans remain poor. In the end, the new left failed to decisively embed a new model of equitable development. In this chapter, we explore the left’s trajectory from electoral successes to attempts to articulate a new end game for social policy and its ultimate failure to make equity the hallmark of the region’s model of development. We reject the view that the new left lacked genuine transformative ambition and that the introduction of social policies, in particular, was just another form of neoliberalism lite or that they were introduced simply as a political tool to channel anti-neoliberal sentiment for electoral gain.8 Instead, we explore two critical and interlinked weaknesses in the strategy. In the first place, a failure to be clear about the end game of social spending; and secondly, the absence of consensusbuilding and commitment from across society to a political economy of 4 5 6 7 8

Rodrik, After Neo-liberalism, what?. Grugel and Riggirozzi, eds., Governance After Neoliberalism. Grugel and Riggirozzi, “Post‐neoliberalism in Latin America.” ECLAC, Panorama económico y social, 110. Fischer, “The Dark Sides of Social Policy.”

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long-term transformation based on equitable growth, job creation, and market regulation. These failures were not, we suggest, simply the result of sectarianism, a lack of vision or will on the part of post-neoliberal governments. They rather reflect the profound difficulties of tackling enduring intersectional inequalities amassed since Independence, long-standing and profound political frictions over historic and deeply embedded economic and social challenges, which neoliberalism strengthened rather than weakened. These difficulties have become evident once again, as the electoral compass began to move to the left again, from Argentina in 2019 to Ecuador a year later, in a context of persistent inequalities made worse by the impact of the COVID-19 pandemic. Our argument unfolds in two parts. In the first section, we explore the rise of the post-neoliberalism left, putting it in the context of Latin America’s struggles for equitable development and the region’s tumultuous twentieth-century history. In the second section, we explore the focus on welfare and equity that characterized all post-neoliberal governments in the first part of the twentyfirst century, despite their many differences, and their plans for growth. Here, we identify a focus on short-term and redistributive gains and examine how the political context and in particular the failure to build consensual and inclusive democratic regimes contributed to the limitations of left-wing governance and, ultimately, account for the persistence of the very inequalities the left had sought to address.

10.1  post - neoliberalism in the context of latin america ’ s “ entangled ” inequalities The emergence and electoral appeal of the post-neoliberal new lefts in Latin America in the early years of the twenty-first century should be understood in the consequences of three distinct but related political phenomena: the region’s limited success in tackling historic inequalities rooted in both colonialism and post-Independence politics; the nature of democratization during and after the 1980s and the social and political pact that underpinned it; and the brutal impact of neoliberalism in term of poverty and inequality in Latin America. The history of state formation in Latin America is directly linked to struggles for Independence against colonial powers, which was only achieved in the nineteenth century. Decolonization led to independent nation-states profoundly shaped by the interests and ideas of the new national elites, not society as a whole, cementing inequalities inherited from the Spanish and Portuguese crowns in place. As Huber et al. note, “inequalities in landholding and political power originating in the colonial order are at the center of theoretical explanations for the deep roots of inequality in Latin America and the Caribbean.”9 Extreme inequalities in terms of access to land were 9

Huber et al., “Politics and Inequality in Latin America and the Caribbean.”

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reinforced by elite dominance of political institutions well into the twentieth century, supported by racist ideas and practices that reproduced power asymmetries between and within the small number of elites and the mass of the population. These “entangled inequalities” inherited from the past remain critical for understanding contemporary social inequalities and determining who has a voice – and whose voice is heard – in national decision-making.10 The inequality inherited from the past in Latin America is not, in other words, a matter of individual disadvantage; it is rather a reflection of structures and systems, whether political, social, economic, or cultural, that actively re-create intersectional group advantages and disadvantages. They are what Tilly (1998) calls “categorical” inequalities: black/white, formal/informal workers, rural/urban, men/women, citizen/migrant, etc.,11 and as, lived experiences, are reinforced by the interplay between them, shaping access to housing, water, energy, employment, justice, health and education, the building blocks of a dignified life.12 The nature of the region’s “entangled” inequalities, and their persistence over time, makes them very difficult to resolve. Inequalities based on race and ethnicity intersect and are reinforced by economic and political inequalities creating obstacles, even in contexts of reform. Anthias (2018), for example, details the difficulties of redressing the historical exclusion of Latin America’s indigenous communities from land ownership, showing how the Guarani in Bolivia have encountered persistent opposition and found structural impediments put in their way when trying to claim land that this now recognized as legally theirs; some of these obstacles are embodied in apparently neutral land boundaries and maps that form the basis of landowner resistance to change.13 Similarly, in Brazil, Cavalho14 and Villen-Perez et al.15 have shown that, despite a progressive constitution that recognizes indigenous communities’ right to land, lack of voice and disenfranchisement mean that their claims are in practice excluded from the policy process. Oliveira (2013) reveals the heterogeneity of policymaking in Brazil which means that the government enables illegal land grabs of indigenous land while simultaneously trying to encourage land titling.16 And, in relation to health provision, again in Brazil, Riggirozzi (2020) shows how racialized, gendered inequalities are rooted in institutional arrangements and power relations that trump official discourses about the “right to health.”17

10 11 12 13 14 15 16 17

Costa, “Entangled Inequalities.” Tilly, Durable Inequality. Costa, “Entangled Inequalities.” Anthias, “Indigenous Peoples and the New Extraction.” Carvalho, “The Politics of Indigenous Land Rights Brazil.” Villén-Pérez et al., “Brazilian Amazon Gold,” 31. Oliveira, “Land Regularization in Brazil.” Riggirozzi, “Everyday Political Economy.”

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Despite the difficulties of sustaining a reform agenda, tackling inequalities, promoting just social, economic, and political relations, and reforming government in ways that incorporate the voice of groups traditionally ignored in policy has historically been the territory of the Latin American left.18 But in practice, the left, in Latin America and elsewhere, has focused on some kinds of inequalities more than others. We can see this historically if we look at two neighboring countries in the Southern Cone, Chile and Argentina both of which embarked on ambitious reforms in the mid-twentieth century. Here, two quite different lefts, one based on coalitional party politics and the other in the form of a populist/corporatist movement, both focused on institutional reform and new social policies to redress the grievances of the same constituency, namely male formal workers in large cities, including those in the growing public sector, and “traditional” unionist sites of employment such as mines, while ignoring other inequalities based on race and gender. Mid-way through the twentieth century, Chile’s extremely limited and exclusionary democracy gradually gave way to an era of center-left government under the Popular Front, elected in 1938. Until then, Chile’s parliamentary model of politics had exclusively served the interests of the landed elite and the mining bourgeoisie. The numbers of Chileans entitled to vote were kept low, with estimates of under 10 percent of the population enfranchised as late as 1949.19 But in 1938, a Popular Front, composed of a centrist party and the left won the Presidency, promising reform. Its most notable achievement was CORFO, established in 1939 as part of a response to a devastating earthquake, designed to be a motor of economic growth and national development, through support for industrialization and business and, therefore, of job creation in the cities. At the same time, a pension system, especially for public sector workers, was introduced and the trade union movement was recognized as a political and economic force, which, alongside the incorporation of the Socialists and Communist parties into the political system, extended democratic inclusion considerably. But it did so at the cost of leaving rural relationships and the authority of landowners relatively untouched. The country’s significant indigenous population in the south of the country also remained excluded. Meanwhile in Argentina, just a few years later, Peronism (1946–1955) expanded social and economic incorporation to the growing numbers of urban workers, via a populist strategy of incorporation. Peronism imposed a strategy of development that combined a more ambitious approach to welfare spending than in Chile, along with state-sponsored industrialization. Economically, a version of the desarrollista (developmentalist/nationalist) school of the political economy associated with the Economic Commission of Latin America

18 19

Rueschemeyer, Huber and Stephens, Capitalist Development and Democracy. Cruz-Coke, Geografía electoral de Chile, 12.

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(ECLAC/CEPAL), Peronism aimed to foster national-owned capitalism. Nevertheless, as Barbeito and Goldberg show, Peronism sought to deal a decisive blow to the political dominance of the upper class rather than building a social consensus for development.20 This was to lead ultimately to the downfall of Peron in 1955. These limited and uneven attempts at tackling inclusion and historic manifestations of inequality came to an end in the 1960s and 1970s, in Chile and Argentina, and elsewhere in the region, as political instability and military dictatorships took power across the region. These governments introduced a combination of fierce repression of trade unions, the elimination of left-wing parties, and a violent policing of public and civic life, radically reshaping the parameters and expectations of ordinary people for more than a generation. Inequalities were made worse by brutal suppression of human rights, and increasing economic hardship, a process intensified by the intensification of market-led development in the 1980s and 1990s, exactly as the cycle of military dictatorships gave way to a new era of (re)democratization. The survival of democratic institutions across the region since then is, in many ways, remarkable. But at the same time, Latin America’s democracies initially proved very timid in terms of tackling the inequalities they inherited. Efforts to reform tax or introduce financial reform were resisted.21 Democratization did not lead to the creation of inclusive or labor-friendly regimes22 and the social policy agenda focused on addressing the needs of the very poor, but rather the creation of an inclusive welfare state. As Cruz shows social and economic elites continued to live in the grip of fear of revolt and mass mobilization from below, and it was precisely the “deficits” in the quality of regional democracy that enabled it to survive.23 One of those tacit silences referred to inequality. One consequence of timid democratization was that it became difficult, if not impossible, to speak of inequality, class conflict, or question the fundamentals of economic policy after the transitions to democracy. The introduction of market-led governance produced little overt opposition in the 1990s.24 This social silence grew as the privatization of public assets, the reduction in public services, and the deregulation of the labor market led to a period of relative macroeconomic stability, even though both also intensified poverty and deepened the intersectional inequalities on which the region’s nation states had been built.25 And the silences were not only around the class and economic inequalities. Latin American governments were exceptionally slow to tackle gendered 20 21 22 23 24 25

Barbeito and Goldberg, Social Policy and Economic Regime in Argentina. Boix, Democracy and Redistribution. Garretón, Incomplete Democracy. Cruz, “Latin American Citizenship,” 315. Gwynne and Kay, “Views from the Periphery.” Gasparini and Cruces, “Poverty and Inequality in Latin America.”

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inequalities,26 inequalities based on disability27 and of course the multiple ways in which race and ethnicity impacted on inequality.28 The center-left, meanwhile, traumatized by the era of repression and uncertain how or even if, to challenge the new pro-market policies, chose to put their commitments to an expansion of social rights, welfare entitlements, and labor reform on ice. Instead, in an era where the zeitgeist was shaped by economic liberalism, they also discursively linked democracy to the market.29 In terms of people’s everyday lives, this means that market-based incentives and personal economic resources came to determine the extent and nature of political and social inclusion, and shaped access to education, health, housing, etc.30 At the same time, collective identities were replaced with concepts of individual – or household – responsibility. These dramatic changes also directly shaped the nature of contentious politics in the first stage of democratization. On the one hand, the return of liberal democracy and the introduction of the (partial) rule of law made protest a considerably less dangerous endeavor than in the past; and, on the other, the introduction of sweeping market reforms gradually opened up a new era of contestation as the neoliberal roll-back of the state, and the rise of labor insecurity created a constituency of economically and culturally disenfranchised citizens. In the end, the attempt to successfully re-engineer state–society relations through market reforms at the end of the twentieth century failed in the face of the fact that markets reproduced the entangled inequalities of the past, igniting both trades union and social movement-based protests.31 The impossibility of reconciling neoliberalism with popular expectations became clear at the end of the 1990s. Although economic growth resumed in the 1990s (averaging 3.3 percent a year for the region during 1990–98) after the disastrous decade of the 1980s, governments failed to reduce poverty; roughly 70 million more Latin Americans were living in poverty, in 1997 than in 1980,32 and inequality increased across the region reaching a very bleak scenario that only began to improve in the first decade of the new millennium.33

10.2  the

neoliberal social policy revolution

Neoliberalism rested on a profound critique of state-sponsored welfare, with arguments that ranged from the fact that it created a fiscal burden on states to

26 27 28 29 30 31 32 33

Grugel and Fontana, “Human Rights and The Pink Tide in Latin America.” Grugel and Riggirozzi, “New Directions in Welfare.” ECLAC, “The Social Inequality Matrix in Latin America.” Dagnino, “We all have rights, but…,” 18. Oxhorn, “Citizenship as Consumption or Citizenship as Agency.” Grugel, “Basta de Realidades, Queremos Promesas.” Lustig and Arias, “Poverty Reduction.” See Gasparini and Cruces, “Poverty and Inequality in Latin America,” 54.

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the view it created moral hazard and set up incentives for the poor to avoid their individual obligations to exit poverty through behavior change, responsibility, and education. Welfare, it was argued, discouraged ambition.34 So, it might seem at odds with the neoliberal vision that pro-market regimes in Latin America invested as heavily in social policy as they did. But they did so with a twin vision of encouraging the poor to adapt to the market and investing to improve the region’s human capital. The purpose of welfare, now, was not to address inequality, still less “entangled” inequalities. The end game of social policy, in other words, dramatically shifted. The “point” was not to ensure equality of citizenship or opportunity but to meet basic needs and encourage integration into a flexibilized labor market. At the policy level, this meant a shift away from investments in public provision and the introduction of greater privatization of health and education, as well as services such as energy and water. Social policy in particular now aimed to tackle not inequality but poverty and extreme poverty through extensive but small-scale programs.35 There was a shift to targeted, conditional welfare provisions which were designed exclusively for the poor. Rather than promoting shared services and the collectivisation of social risk, the new social policy paradigm accepted that the poor would face greater insecurity because of their greater vulnerability in the market, especially in the context of weakened trade union power. While policies were intended to encourage the poor not to evade their individual obligations, the absence of universalism contributed to tiered citizenship through a selective and hierarchical model of inclusion.36 This social policy transformation was not just of course the result of the dominance of “new right” welfare framing; it was also driven by real-world imperatives, including a lack of funding into the state due to the impact of debt and structural adjustment. This was interpreted to mean that there was little choice but to design social policies in ways that ensured a minimum of stability and prevented a social backlash.37 The result was the rise, above all, of targeted conditional cash transfer programs (CCTs) in the 1990s, which were discursively wrapped up on the vision of behavior change and human capital but increasingly were implemented as sticking plaster solutions to address some of the worst effects of austerity, labor market deregulation and privatization of education, healthcare, pensions, and services. CCTs were marketed as a cost-effective way of combining the notion of improving “human capital” with the principle of pro-poor targeting. They were consistent with the “logic of the market” and the view that direct handouts or subsidies distorted relative prices and should therefore be 34 35 36 37

Cox, “The Consequences of Welfare Reform.” Barrientos, “Latin America: A Liberal-Informal Welfare Regime?” Deacon, Perspectives on Welfare. Nooruddin and Rudra, “Are Developing Countries Really Defying the Embedded Liberalism Compact?”

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avoided.38 CCT programs worked as income-support and safety net schemes through monthly allowances for the poorest households, contingent on school attendance, and medical checkups as a way to improve human capital.39 And they became an inescapable part of the social policy landscape across the region, enabling many of the poorest families to survive but condemning others to dependence on welfare since opportunities for decent work remained limited. At the same time, with social policy redefined as targeted welfare for the poor, lower middle class communities became more market-dependent than in the past. These groups were generally not covered by CCT programs, despite also experiencing the effects of service privatization. It is no surprise that lower middle communities were key in making demands for a return to state-funded investments, in education for example, as the example of Chile after 2010 demonstrated.40 Lower middle-class families, many of whom took on debt to access higher education, experienced particular and new forms of social exclusion that ultimately led young Chileans to organize to demand not only well-funded public education but a wider rethink of the regional model of development. From their perspective: neoliberal economies in Latin America have … created a vast number of young people who are doomed to failure, either by being unable to complete school, attending the “wrong” college or university, or simply being unable to find decent employment after graduation. As a result, young people living in a neoliberal democracy [found] themselves negotiating a very confusing, uncertain and contradictory landscape in which the pervasive and dominant ideas about how to be a ‘citizen’ contradict their own experiences of insecurity and even impoverishment.41

Particularly once growth began to slow after 2012, these young people and their families found themselves vulnerable to low-paid employment and inflation, yet they were outside the reach of social policies where the underpinning philosophy was based on safety nets for the poor. The remarkable electoral success of the new left across the region in the first two decades of the twenty-first century – in Venezuela (1998), Brazil (2002), Argentina (2003), Uruguay (2004), Bolivia (2005), Ecuador (2006), Nicaragua (2007) and, for shorter periods, in Paraguay (2008), El Salvador (2009), and Peru (2011) – has to be understood in this context. It was a response not only to the widespread exhaustion and dissatisfaction with market-led development but also to the failures of market-compensatory welfare schemes, aimed only at the poorest. Whatever judgment we make now in hindsight, it is crucial that we recognize that this suite of governments came in on a wave of enthusiasm,

38 39 40 41

Rawlings and Rubio, Evaluating the Impact of Conditional Cash Transfer Programs. Also, Solimano and Soto, Economic Growth in Latin America. Stampini and Tornarollo, The Growth of Conditional Cash Transfers in Latin America. Grugel and Nem Singh, “Protest, Citizenship and Democratic Renewal.” Grugel and Nem Singh, “Protest, Citizenship and Democratic Renewal,” 356.

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promising the beginning both of neoliberal roll-back and a new approach to citizenship, inclusion, and welfare. They offered a politics of hope to middleclass citizens made vulnerable through marketization and uncertainty in a context of rising levels of poverty and inequality, as well as to the poor.42 And a new approach to social policy, a new end game, was a key part of their offer.

10.3  welfare

under post - neoliberalism :

how far did the end game change ?

The extent to which “post-neoliberalism” delivered a genuine alternative to the neoliberal basic needs for the poorest model and create new forms of inclusive and distributive welfare is the subject of contentious debate. We have argued elsewhere that the initial ambition was to radically reform the basis of welfare and to refocus the economy in order to combine growth, fiscal stability, and some forms of income redistribution within the context of capitalist economies.43 Without abandoning many elements of market-focused development, the new left nevertheless tried to articulate a political economy that changed the purpose and role of welfare. Discursively, welfare was no longer seen as a simple matter of compensation for the rigors of the market. It was tied to a vision of equality of citizenship. Key elements of universalism crept in, such as universal child benefits or old age pensions. But it is equally the case that this vision was not delivered. Indeed, in many ways, policies fell considerably short. The CCT model, on which the survival of the poor now depended, was not abandoned. Markets, it was recognized, were not going to generate “decent work” for many of the poorest. In this context, the government made choices based on a combination of principle – to extend coverage and introduce some new forms of universalism – and pragmatic and electoralist concerns, taking advantage of rising export prices to fund expenditure.44 The end game shifted; policies were no longer designed to regulate and discipline the poor to the rigors of the market. But neither were they going to be the basis of wholesale societal transformation. Change and continuity, reform and accommodation sat alongside each other. What quickly became evident was a change in the language and purpose of social policies. Social policies under the post-neoliberal left were couched in a new language of human rights.45 New ideas and commitments to greater inclusion and recognition of human rights transformed the language around how the duties of the state itself were understood, shifting the pendulum of welfare 42 43 44 45

Londoño and Székely, Distributive Surprises After a Decade of Reforms. Also, Grugel and Riggirozzi, eds., Governance After Neoliberalism. Grugel and Riggirozzi, “Post‐Neoliberalism in Latin America.” Papadopoulos and Velázquez Leyer, “Two Decades of Social Investment in Latin America,” 435. Grugel and Fontana, “Human Rights and the Pink Tide in Latin America.”

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responsibilities back once more from the individual to the state. New left governments, especially in the Southern Cone and the Andean region, began to use the idea of human rights as a basis for social policy and, at the same time, as a way of challenging conservative norms in an effort to engineer wider ideational changes in society. This change would also, of course, be more likely to favor the left electorally. At the same time, income supplement programs, new pension entitlements, social insurance schemes, and child benefits began to be couched in the language not of safety nets or human capital but as socio-economic rights. This discourse came to underpin redistributive and public spending, serve as the foundation of new forms of social incorporation,46 and establish a “‘floor’ of social rights which cannot be left up to market forces.”47 As such, a raft of new initiatives emerged. In Bolivia, where social coverage was previously very poor, reforms have included the introduction of a minimum non-contributory pension scheme (Renta Dignidad), which offers a pension to the self-employed and workers in the informal sector for the first time to prove education and infant and maternal health have also been set up (Bonos Juancito Pinto and Juana Azurduy). Similar schemes were introduced in Ecuador. New types of welfare programs targeted at specific sectors were also established, such as Discapacitados in Ecuador (for people with disabilities). In Uruguay, where social coverage was already high for the region, access has been expanded and primary care strengthened. A new national system of care (Sistema Nacional de Cuidados) emphasizes gender equality, gender rights, and recognition of the unequal burden of care upon women and girls as the basis for care provision.48 Argentina extended pension schemes for citizens who failed to pay social security contributions during working life, including women in the care economy and informal workers or unemployed.49 The government of Cristina Fernandez de Kirchner (2006–2015) also introduced in 2010 a non-contributory targeted program for children, the Universal Child Benefit (Asignación Universal por Hijo or AUH). AUH provides a monthly allowance for nearly 4 million children and families conditioned upon schooling and health targets, mainly vaccination.50 Spending on CCT programs grew and they acquired unprecedented significance. Coverage expanded to include families in rural areas, with school-age children, pregnant women, and women with care responsibilities for disabled people.51 The number of individuals living in recipient households increased 46 47 48 49 50 51

Rossi, The Poor’s Struggle for Political Incorporation. Martínez Franzoni and Sánchez Ancochea, The Quest for Universal Social Policy, 275. Grugel and Riggirozzi, “Neoliberal Disruption and Neoliberalism’s Afterlife.” Arza, “Extending coverage under the Argentinian pension system.” UNICEF, The Case of Argentina. Cecchini and Atuesta, Programas de transferencias condicionadas.

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from fewer than 1 million in 1996 to 131.8 million in 2015, or 20.9 percent of the region’s total population. Overall, CCT programs increased household consumption, reduced both poverty and inequality,52 and were the critical vehicle to improve the inclusion of the poor through health and schooling programs.53 Fiscal space for the new social policy expenditures came from economic growth as a consequence of a commodity boom and improved terms of trade, increasing the tax/GDP ratio. Renewed state activism and state spending thus sat alongside an increase in commodity prices that between 2002 and 2012 allowed leftist governments to access revenue for social spending.54 This involved tax on export and renegotiation of contracts and concessions to foreign investors, especially in the commodity sectors where growth and expansion made a higher tax burden more palatable to them. All of this was positive, at least fiscally, in that traditionally, welfare in Latin America has been financed by external borrowing because of historic difficulties in collecting income tax and taxes on assets and wealth, due to non-compliance, tax avoidance, and concessions to foreign investors.55 But it created vulnerabilities: how would governments continue to spend at these levels once growth began to decline? Would their electorate accept reductions in expenditure, or would the government continue to fund social policies by other means? Dependence on the natural resource export sector also had other weaknesses. It intensified a series of environmental crises across the region, from deforestation for soy production to incursions on indigenous land. It has also created a fiscal trap for the region by reinforcing dependency on growth based on the export of primary goods. And it created political weaknesses in that it made governments vulnerable to pressure from extractive industries, whether from domestic producers and landowners, as in Argentina, or from corporations, as in Brazil and the Andean region. Ultimately, the left failed to balance the need for welfare with the need to invest in the long-term management of the region’s natural resources for sustainable and inclusive development. As Riggirozzi argues (2020), welfare regimes highly dependent on income from extractive economies which created “tensions between the socio-economic and ecological spheres that undermined inclusive citizenship and democracy.”56 Delivering welfare reliant on resource rents meant that progressive governments were more successful in adopting redistributive policies to reduce socio-economic inequalities than redressing other forms of inequalities that intersect with gender, disability, race, and ethnicity. The result was, far from 52 53 54 55 56

Ibid. Also, Molina Millan, Barham et al. “Long-term impacts of conditional cash transfers.” See chapter by Leão in this volume. Jenkins, ‘Latin America and China: A New Dependency?’, 1338. OECD, The Pursuit of Gender Equality. Riggirozzi, “Social Policy, Inequalities and the Battle of Rights.”

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addressing the entangled inequalities inherited from the past, new left governments sought to push extractivism even sometimes through the introduction of repressive legislation and the criminalization of indigenous protest, curtailing, sometimes violently, rural and indigenous communities and environmental activism.57 These difficulties were manifested in the fact that poverty alleviation programs were delinked from fundamental questions of resource and land distribution, fiscal planning, and seeking to create a national consensus around welfare and taxation.58 In short, the real criticism of the new left’s social policies is not how social policies were delivered or the underpinning philosophy of its welfare approach. It is the over-focus on redistribution in the cities, for the urban working and lower middle classes alongside the failure to address the long-term challenge of how to finance welfare sustainably and over time.

10.4  the challenges of incorporation through welfare : how far did the new model address the region ’ s enduring inequalities ? A central lesson we wish to convey here is that while post-neoliberalism articulated an important critique of neoliberalism and put in place social policies driven, at least in part, by a renewed vision of welfare as rights, enduring inequalities remained entrenched within societies and economies, and generated highly politicized forms of governance. New left governments chose not to challenge these inequalities head-on – and in some instances such as inequalities based on ethnicities barely challenged them at all – but to provide economic compensation for them. New social policy approaches were ultimately designed not to disrupt or reform the operation of markets. Tax rises to fund welfare, though often very contentious as in Argentina, were focused above all on the export sector. In this context, welfare under new left regimes got stuck in a paradigm that was unable to fundamentally redefine the dominant model of market-led development in the region. Social expenditures, and the CCTs in particular, did not produce the redistributional effect that the new left governments had hoped for. In fact, they turned out to be distributionally neutral. Income inequality in the first decade of the 2000s significantly declined, it is true, in the majority of countries in the region. From an average of 0.530 in the late 1990s, the Gini coefficient for household per capita income fell to 0.497 in 2010; 20 percent of this fall being attributed to cash transfers and 60 percent to a decline in wage inequality.59 But the decline 57

58 59

Hogenboom, “Depoliticized and Repoliticized Minerals in Latin America.” Also Svampa, “Resource Extractivism and Alternatives”; Grugel and Fontana, “Human Rights and the Pink Tide in Latin America.” Pena and Barlow, “Argentina Is Trying to Tax Its Way Out of Another Financial Crisis.” Lustig, Lopez-Calva and Ortiz-Juarez, “Declining Inequality in Latin America.”

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in income inequality stagnated after 2012,60 a process the Inter-American Development Bank attributed primarily to the fact that social expenditures, even in their expansionist phase, failed to address the intersectional inequalities that characterize the region.61 The refusal to openly address the historic roots of the region’s inequalities also meant that governments did not adequately address the philosophy of welfare inherited from the neoliberal era, with its focus on the behavior of the poor. Rights were grafted onto ideas of welfare and conditionality loosened; but CCTs remained a primary mechanism to link welfare with behavioral change in education, health, and the workplace. Welfare programs did not change the fact that the poor were encouraged to continue to work in uncertain and less protected labor markets, typically for low wages.62 Poverty remained a personal, individual failure, not an outcome of structural injustices and as such, a source of social stigma.63 Meanwhile, the reforms did not tackle the segmented social protection that has consistently characterized the region, leaving even some of the middle-class unprotected and vulnerable to the risk of poverty.64 At the same time, social policy reforms were not accompanied by tax reforms beyond the export sector. Governments avoided introducing personal income or wealth taxes to fund social expenditures, with Argentina standing as something of an exception to this trend.65 This was a failure with consequences. Major shifts in inequality can only be engineered alongside a process of fiscal redistribution. In turn, in democracies, this requires the forging of a new social and political contract with sufficient public trust in government to allow the state to collect new taxes and new strategic distributive forms of spending. In the case of the new left in Latin America, rather than embarking on this risky project, it relied on export taxes. The result was that its own long-term capacity to carry out a radical welfare overhaul that would last beyond its term of office was fatally undermined, while the region’s dependency on a growth model based on the export of primary goods was simultaneously increased. In turn, this enabled agrarian elites to gain extraordinary power and to oppose any attempt to introduce progressive tax reforms.66 As such, and perhaps ironically, post-neoliberal governments increased the political influence of the extractive industries and the large landowners,67 setting off a cycle of contentious politics that would in many cases ultimately bring the new left era to a close.68 60 61 62 63 64 65 66 67 68

World Bank, Inequality stagnation in Latin America. IADB, “Deep Inequalities Worsen Latin America and Caribbean Vulnerabilities.” Barrientos, “Latin America: A Liberal-Informal Welfare Regime?” Handa and Davis, “The Experience of Conditional Cash Transfers in Latin America.” Ocampo and Gómez-Arteaga, “Social Protection Systems in Latin America.” Pena and Barlow, “Argentina Is Trying To Tax Its Way Out.” Papadopoulos and Velázquez Leyer, “Two Decades of Social Investment”; Lavinas, “The ­Collateralization of Social Policy.” Radcliffe, “Development Alternatives.” Also, Murat, Hogenboom, and Pellegrini, “The Extractive Imperative in Latin America.” Grugel and Riggirozzi, “New Directions in Welfare.”

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That said, there were of course successes and innovations. Some communities did find their needs addressed really for the first time. Programs such as Descapitados in Ecuador or the reforms to the care system in Uruguay acknowledge the social and economic rights of the disabled and care workers for the first time. Similarly, some health reforms, including the extension of reproductive health rights in Argentina under President Fernandez, elected in 2019 in an apparent return to the left, were an attempt at gendering citizenship and addressing human rights claims.69 But these changes fell short of redressing historic intersectional inequalities. This was certainly the case with regard to indigenous communities whose claims for land rights were often sidelined to make way for infrastructural projects and investments in natural resource exports. It is also hard to avoid the criticism that the needs of low-income men were prioritized over those of poor and minority women and girls. Grugel and Fontana found that women’s rights in general were one of the most neglected areas of reform under post-neoliberalism.70 This was a significant omission since gendered inequalities in labor markets and in unpaid care compound poor women’s social and economic inequalities in Latin America.71 In Bolivia, Guatemala, and Peru, more than 80 percent of women have informal jobs.72 Domestic workers, who make up almost 12 percent of women in the region in employment, are severely affected by the absence of regulation and collective bargaining, leaving them exposed to abuse and with limited access to social and health safety nets.73 Yet, with the exception of Uruguay, no efforts have been made by the new left to address these issues. Indeed, as Molyneux pointed out, CCTs have reinforced gendered inequalities, making mothers responsible for education, health, and nutrition.74 Canavire and Ospina (2015) also show that the Colombian CCT program Familias en Accion increases the leisure time of boys and men while reducing their paid work, but reduces the leisure time of females while increasing their domestic labor75 while CEPAL (2016) reports gendered inequities of Oportunidades in Mexico and other social programs in the region.76 In sum, welfare and rights changes need to be durable if they are to be transformative, and they need to address inequality as a multidimensional phenomenon. This requires, as we have argued here, a mix of policies that go beyond concrete welfare programs to include tax and labor market reform; 69 70 71 72 73 74 75 76

Riggirozzi and Grugel, “Argentina’s Legalisation of Abortion.” Grugel and Fontana, “Human Rights and the Pink Tide.” OECD, The Pursuit of Gender Equality. ECLAC/International Labour Organization (ILO), “Work in Times of Pandemic.” Ibid. Molyneux, Change and Continuity in Social Protection. Canavire-Bacarreza and Ospina, “Intrahousehold Time Allocation.” Economic Commission for Latin America and the Caribbean (ECLAC), “Equality and Women’s Autonomy.”

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and policies to tackle manifestations of inequality that have traditionally been ignored by public policies and reach communities that may not necessarily be seen by government as part of their electoral constituency.

10.5  the

limits of post - neoliberal welfare

The challenges and limitations post-neoliberal governments experienced in tackling inequalities through social policy give rise to some reflections about the future policies at a moment when the direction of regional politics is uncertain. In the first place, whether cash transfers, which have been part of the social policy landscape in Latin America for thirty years, contribute to reducing inequalities is unclear. Any future social policy agenda must redress durable inequalities by tackling three main issues in order to produce transformative policy over the long term: the fact that social policy became caught up in partisan politics; implementation challenges; and making CCTs work as a vehicle for tackling inequalities, not a substitute for it. This chapter highlighted these issues and vested politico-economic interests that have affected opportunities for the expansion of progressive and redistributive policies, particularly if these are attached to tax reforms, but also can create a stalemate in terms of funding social policy. According to Costa, progressive governments that tried to promote shifts in existing social hierarchies faced the opposition of local elites that often reacted by destabilizing these governments. This happened in Argentina, Paraguay, and Brazil. The Brazilian case, in particular, is paradigmatic. Here, cash transfer policies halved poverty rates in about 10 years. Real increases in the minimum wage and new economic opportunities created during the cycle of economic growth also started changing inequalities in everyday life, inasmuch as “newcomers” disputed spaces and goods of distinction reserved hitherto for the established middle classes. This was precisely the point at which oppositional forces mobilized. Their rejection of the prospect of sharing political spaces and public goods that had previously been demarcated exclusively for elites, especially in the context of the country’s economic recession in 2015, led to the parliamentary coup d’état of 2016.77 The political strength of the government and state capacity was also tested in Argentina, this time in 2008, when the government of Cristina Fernandez Kirchner took the decision to increase agro-export taxes to capture the gains of rising commodity prices and fund social spending, landowners and farm-based groups organized lock-outs, roadblocks, and the destruction of crops bound for market, until the export tax was settled.78 showing that, to this day, conservative and reactionary rural factions play a massive and direct role in shaping policy.

77 78

Costa, “Entangled Inequalities.” Grugel and Riggirozzi, “Post-neoliberalism in Latin America.”

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Another issue at stake in terms of implementation is whether the delivery of social programs opens space for misinformation and discretion on the part of political brokers and financial mismanagement by local operators. There is no doubt that this has contributed in several countries to enormous difficulties of implementation, monitoring, and evaluation of policies, giving way to cases of mismanagement and corruption. In many cases, social policies became a political tool for local party elites and clientelist brokers to manipulate.79 For Fischer, social policy itself almost inevitably becomes a political tool by either left- or right-wing and/or authoritarian movements or governments channeling reactions and to fashion social order along ideological lines or to support political strategies, resources, and (vested) interests.80 Under the new left in Latin America, as elsewhere, there are also politicoadministrative barriers in the implementation of programs – and in particular, abrupt changes in certain operational processes – that tend to have negative impacts on some groups of beneficiaries. Specifically, documentation requirements, changes in the criteria for non-compliance with the conditionalities, and problems in management and communication have been identified as factors that contribute to excluding the most vulnerable sectors.81 Likewise, all efforts to reduce poverty and inequality require state infrastructure to include and manage extremely hard-to-reach populations and to monitor the implementation of programs. Identifying the poor and monitoring implementation that can certainly affect outreach and outputs are highly dependent on national and subnational capacities and on coordination between these levels of governance.82 Finally, the use of conditionalities in social programs can miss the point of tackling inequalities and skew the delivery of benefits because of biases in the selection process – due to issues of means testing and measuring poverty – or if programs sanction those who do not comply with the conditions. This is not new and not necessarily the result of party interests. But it highlights the fact that the implementation of conditionalities may be imposing an additional burden (for example, social roles, mobility and transportation, the infrastructure of poorer quality, or time spent on compliance with particular behavior) on the most vulnerable groups and that these burdens and conditionalities have unintended consequences. As we previously identified, the burden imposed by compliance with conditionality can become a factor of exclusion of a certain sectors or groups within society. Certainly, major implementation weaknesses in the provision of social services and policies are a structural phenomenon that long precedes CCTs. Territorial barriers, geographical distances 79 80 81 82

Stokes, Dunning, Nazareno, and Brusco, Brokers, Voters, and Clientelism; Garay, Social Policy Expansion in Latin America. Fischer, “The Dark Sides of Social Policy.” Álvarez, Devoto and Winters, “Why do Beneficiaries Leave the Safety Net in Mexico?” See Souza Leao in this volume.

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and sociocultural barriers hinder people from reaching the services to which the conditionalities are tied.83 Poor households, indigenous communities, and women in vulnerable situations face high opportunity costs to comply with conditionalities and can find themselves expelled from transfer programs.

10.6  conclusion Governments seek different end games in social policy expenditures, at different times and places. Of course, social expenditure is, at its core, about improving lives. But the detail of social policies varies hugely, and the “point” of welfare does as well. Is the end game to reduce inequalities or attenuate poverty? Is it to build citizenship or create clients? Is welfare envisaged as a universal regime of shared services and benefits or is it a compensatory mechanism for those who are otherwise excluded from provision? Is it part of a wider strategy of growth and equitable economic development or is it a compensation for market failures? Under the post-neoliberal new left governments, progressive changes in labor markets, social programs, and cash transfers led to improvements in terms of citizen inclusion in both a distributive and a political sense while these governments were in office. But these changes have not been embedded in political economies and social political consensus about development and welfare models focused on enforcing the rules of contribution and responsibility. Furthermore, who contributes and who is responsible for not simply addressing the unmet material needs of citizens but changing the power relations (political and economic) that support and reproduce social inequalities and injustices is still a source of contention across the region. Looking back, it is clear that the promised transformations of the state, society, and the economy did not happen, despite new and in some cases genuinely progressive reforms intended to mitigate the almost unbearable social costs caused by decades of market-led development and austerity. Universal welfare, high-quality public services, and the social investment state have always been vulnerable to the capacity of states to offset both the pressures in a capitalist economy and that of greater equality and stability in democratic regimes. As such, the end game of welfare regimes under the new left was distinctive, based on an ideal of universalism where the state served as a regulatory and redistributive actor, supported by fiscal policies to enable investment in the quality of services. But as this vision was not rooted in a sustainable political economy, the move away from a neoliberal sufficiency-based model was incomplete. At the same time, targeting and addressing social risk continued to shape policies that ultimately sought to be compatible with efficient, marketized societies.

83

Barrientos and DeJong, “Reducing Child Poverty with Cash Transfers.”

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Finally, economic growth and resource booms produced variable and highly contextual models of inclusion; their limitations as the basis for sustained social policies did not satisfy demands for change. This is not to say that governments did not offer something new in terms of citizenship. The reduction of poverty and inequality suggests that were sometimes considerable successes, as we have discussed above. But the new left also got stuck in a distributive paradigm that was unable to redefine the project of market-led growth, despite more imaginative and inclusive approaches to welfare. Overall, if the end game of social policy is to deliver durable solutions to reduce inequality, the course ahead, as the left returns to power, will need to involve not only tackling implementation and policy issues left unresolved from the past – the contributory system, improvements in the quality of services, etc. – but also the challenges of multidimensional and intersectional inequalities and the need to create a consensus over measures to redress, historical and socially embedded legacies of socio-economic and power injustices for the long term. bibliography

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Carvalho, Georgia. “The Politics of Indigenous Land Rights Brazil.” Bulletin of Latin American Research 19, no. 4 (2000): 461–78. Cecchini, Simone, and Bernardo Atuesta. Programas de transferencias condicionadas en América Latina y el Caribe: tendencias de cobertura e inversión. Santiago: CEPAL, 2017. Cecchini, Simone, and Fábio Veras Soares. “Conditional Cash Transfers and Health in Latin America.” The Lancet 385, no. 9975 (2015): E32–E34. Costa, Sérgio. “Entangled Inequalities, State, and Social Policies in Contemporary Brazil.” In The Social Life of Economic Inequalities in Contemporary Latin America, edited by Ystanes, Margit, Strønen, Iselin Åsedotter, 59–80. London: Palgrave Macmillan, 2018. Cox, Robert Henry. “The Consequences of Welfare Reform: How Conceptions of Social Rights are Changing.” Journal of Social Policy 27, no. 1 (1998): 1–16. Cruz, Consuelo. “Latin American Citizenship: Civic Microfoundations in Historical Perspective.” In Authoritarian Legacies and Democratization in Latin America and Southern Europe, edited by Katherine Hite and Paola Cesarini. Notre Dame: Notre Dame Press, 2004, pp. 305–21. Cruz-Coke, Ricardo. Geografía electoral de Chile. Santiago de Chile: Edición del Pacífico, 1952. Dagnino, Evelina. “We All Have Rights, But… Contesting Concepts of Citizenship in Brazil.” In Inclusive Citizenship, edited by Naila Kabeer. London: Zed Books, 2005. Deacon, Alan. Perspectives on Welfare: Ideas, Ideologies, and Policy Debates. Buckingham: McGraw-Hill Education, 2002. Economic Commission for Latin America (ECLAC). “Equality and Women’s Autonomy in the Sustainable Development Agenda.” Santiago: United Nations, 2016. www.cepal.org/sites/default/files/news/files/eclacregwomenconf.pdf. Economic Commission for Latin America (ECLAC). “Panorama económico y social de América Latina.” Santiago de Chile: United Nations, 2018. Economic Commission for Latin America (ECLAC). “The Social Inequality Matrix in Latin America” (2016). https://repositorio.cepal.org/bitstream/handle/11362/40710/ S1600945_en.pdf?sequence=1&isAllowed=y. ECLAC/International Labour Organization (ILO). “Work in Times of Pandemic: The Challenges of the Coronavirus Disease (COVID-19).” Employment Situation in Latin America and the Caribbean, no. 22 (LC/TS.2020/46). Santiago, 2020. Esping-Andersen, Gosta. Social Foundations of Post-Industrial Economies. Oxford: OUP, 1999. Fischer, Andrew. “The Dark Sides of Social Policy: From Neoliberalism to Resurgent Right‐wing Populism.” Development and Change 51, no. 2 (2020): 371–97. Fultz, Elaine, and John Francis. Cash Transfer Programmes, Poverty Reduction and Empowerment of Women: A Comparative Analysis: Experiences from Brazil, Chile, India, Mexico and South Africa. Geneva. International Labour Organization, 2013. Garay, Candelaria. Social Policy Expansion in Latin America. New York: Cambridge University Press, 2016. Garretón, Manuel Antonio. Incomplete Democracy: Political Democratization in Chile and Latin America. Chapel Hill, NC: University of North Carolina Press, 2003.

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Lavinas, Lena. “The Collateralization of Social Policy Under Financialized Capitalism.” Development and Change 49, no. 2 (2018): 502–17. Lewis, Colin. “Post-Colonial South America: Nineteenth-Century Laissez Faire Governance.” In Handbook of South American Governance, edited by P. Riggirozzi and C. Wylde, 27–44. London: Routledge, 2018. Londoño, Juan Luis, and Miguel Székely. Distributive Surprises After a Decade of Reforms: Latin America in the 1990s. Washington DC: Inter-American Development Bank, Research Department, 1997. Lustig, Nora and Omar Arias. “Poverty Reduction.” Development and Finance 37, no. 1 (March 2000). www.imf.org/external/pubs/ft/fandd/2000/03/images/ lustig.gif Lustig, Nora, Luis F. Lopez-Calva, and Eduardo Ortiz-Juarez. “Declining Inequality in Latin America in the 2000s: The Cases of Argentina, Brazil, and Mexico.” World Development 44 (2013): 129–41. Martínez Franzoni, Juliana, and Diego Sánchez Ancochea. The Quest for Universal Social Policy in the South: Actors, Ideas and Architectures. Cambridge: Cambridge University Press, 2016. Matus-Lopez, Mauricio, and Camilo Cid Pedraza. “New Long-Term Care Policies in Latin America: The National System of Care in Uruguay.” Journal of the American Medical Directors Association 17, no. 7 (2016): 663–5. Molina Millan, Teresa, Tania Catherine Jane Barham, Karen Macours, John A. Maluccio, and Marco Stampini. “Long-term Impacts of Conditional Cash Transfers in Latin America: Review of the Evidence.” World Bank Research Observer 34, no. 1 (2019): 119–59. Molyneux, Maxine. Change and Continuity in Social Protection in Latin America: Mothers at The Service of the State? Geneva: UNRISD, 2007. Moreno-Brid, Juan Carlos, Esteban Pérez Caldentey, and Pablo Ruíz Nápoles. “The Washington Consensus: A Latin American Perspective Fifteen Years Later.” Journal of Post Keynesian Economics 27, no. 2 (2004): 345–65. Murat, Arsel, Barbara Hogenboom, and Lorenzo Pellegrini. “The Extractive Imperative in Latin America.” The Extractive Industries and Society 3, no. 4 (2016): 880–887. www.sciencedirect.com/science/journal/2214790X/3 Nooruddin, Irfan, and Nita Rudra. “Are Developing Countries Really Defying the Embedded Liberalism Compact.” World Politics 66, no. 4 (2014): 603–40. Ocampo, José Antonio, and Natalie Gómez-Arteaga. “Social Protection Systems in Latin America: An Assessment.” ILO Working Papers 994902513402676, International Labour Organization. 2016. OECD. The Pursuit of Gender Equality: An Uphill Battle. Paris: OECD, 2017. http://dx.doi.org/10.1787/9789264281318-en. Oliveira, Gustavo de L.T. “Land Regularization in Brazil and the Global Land Grab.” Development and Change 44, no. 5 (2018): 261–83. Oxhorn, Philip. “Citizenship as Consumption or Citizenship as Agency: Comparing Democratizing Reforms in Bolivia and Brazil.” Paper presented at the annual meeting of the American Political Science Association, Toronto, September 3–6, 2009. Papadopoulos, Theodoros, and Ricardo Velázquez Leyer. “Two Decades of Social Investment in Latin America: Outcomes, Shortcomings and Achievements of Conditional Cash transfers.” Social Policy and Society 15, no. 3 (2016): 435–49.

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Part IV SYMBOLIC POWER: IDENTITIES AND SOCIAL PROTEST

11 Women Are the Social Face of the State Gender and the Social Uprising in Neoliberal Chile, 2019–2021 Verónica Schild

On October 25, 2019, millions of Chileans went onto the streets, openly defying the state of emergency that had been imposed days earlier by the center-right administration of President Sebastián Piñera. What began as localized demonstration at the beginning of the month, organized by highschool students to protest a transportation fare hike, grew a few weeks later into mass protests widely described in the country as an estallido social (social explosion). Warning on national television that the nation was at “war with a powerful and well-organized enemy,” President Piñera applied the Ley de Seguridad del Estado (State Security Act), imposed a curfew, and called on the military to restore order. Despite the widespread use of toxic tear gas, rubber bullets, and other crowd control weapons, Chile’s national police force failed to control massive lootings of supermarkets, burning of subway stations, and other acts of protest. The unprecedented explosion of citizen defiance had, furthermore, taken place one day after President Piñera changed his tone from belligerent to conciliatory, promising new social programs under the name of a “social agenda,” while also mentioning that the state of emergency was going to be called off soon. The country-wide demonstrations stunned the administration and the opposition alike, and forced the political parties in Congress, on November 15, to call for a plebiscite that, if passed, would enable elections for a Constitutional Convention to create a new Constitution of Chile, and replace the old Charter of 1980 which had been imposed by the Pinochet dictatorship. The image of Chile as an “oasis of order” in a region in turmoil, presented by a confident President Piñera in his address to the UN General Assembly on September 24, 2019, was shattered. The citizen rebellion was the culmination of extensive mobilizations and increasingly vocal expressions of discontent since 2006. Furthermore, until March 2020, when nation-wide curfews, quarantines, and fines associated with the management of the COVID-19 health 343

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crisis impacted on street protests, the daily marches continued to multiply, growing larger, more diverse, and better organized. A diverse and organized citizenry of all ages, including pensioners, feminists, environmentalists, indigenous communities, and union members from the public and private sectors, marched alongside families with children, demanding to be heard. Their banners proclaimed messages such as Basta Ya! (Enough Already), and ¡No son los 30 pesos, son los 30 años! (It is not the 30 pesos, it is the 30 years).1 They called for an end to arbitrary and seemingly endless increases in the prices of transport, electricity, water, and other basic services. They also demanded an end to a minimum wage below the poverty line, low incomes, miserable pensions, precarious work, exhaustingly long working hours, poor-quality education, and a near collapsed public health service.2 To these grievances, the condemnation of well-publicized police and military corruption scandals, corporate corruption, including price collusion for poultry and other basic items like toilet paper and disposable diapers, as well as corporate payments to politicians were added. Party representatives played no notably visible role in this social rebellion. In October 2020, after twelve months of continuous demonstrations, a national plebiscite was held in order for Chileans to decide if a Constitutional Convention should be called with the mandate to draft a new constitution for Chile. The final choice proposal was approved by a wide majority of citizens. For the composition of the Constitutional Convention, legislative modifications guaranteed the inclusion of seventeen reserved seats for Chile’s pueblos originarios (indigenous peoples), and five additional seats for representatives with disabilities. They also enabled the participation of non-party affiliated, independent candidates. Finally, pressure from feminist NGOs, political representatives, and social movements, along with 1

2

The latter banner refers to the fact that a transportation fare hike of 30 pesos was the target of protests by students at the beginning of October 2019. However, the fare hike was not the only reason for the massive protests in the following weeks and months, which were actually targeted against 30 years of neoliberal austerity policies, applied since the return to democracy in 1990. These observations are based on interviews and participant observation completed during the author’s three-month research stay at the Catholic University of Valparaíso during the Fall of 2019. The visit was funded by a grant from the Government of Chile (CONICYT – MEC). I am grateful to my colleagues at the School of Psychology of the Pontifical Catholic University of Valparaiso, Viña del Mar, for their support and intellectual stimulation during what turned out to be an exceptional moment in Chile’s history. The first march organized in Viña del Mar in October 2019, in which I participated, was a large demonstration organized by public sector health practitioners and students, including doctors, nurses, physiotherapists, psychologists and other related fields. They denounced the critical underfunding of the public health sector, most dramatically observed at the venerable Fricke hospital. Halfway to the adjacent city of Valparaíso, the demonstrators were met by a similarly large contingent that marched toward Viña, also demanding better resources and work conditions for the Van Buren hospital of the latter city, and for local public clinics. All along the way, demonstrators were greeted with applause and cheers from the general public lining the streets.

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legislative negotiations, resulted in a Constitutional Convention that would adhere to strict gender parity both at the point of entry and in outcome.3 This is a historically unprecedented achievement, not only for the country, but also worldwide. A growing literature has attempted to make sense of the growing political dissatisfaction in Chile, addressing the political dangers of high levels of inequality and a looming crisis of legitimacy.4 Against the view of those who insist that the discontent and mobilizations are but inevitable outcomes of a successful modernization project, and reflect a rapidly expanding middle class frustrated by unmet expectations, this literature suggests otherwise.5 What is at issue in the growing political dissatisfaction since the late 1990s is an institutional crisis manifested in unprecedently low voter turnouts, and a severe erosion of trust in institutions and politicians alike?6 However, missing from most accounts and analyses of the widespread discontent and demands for change is any reference to the political significance of feminist and women’s mobilizations. The wave of women’s protests from March to June 2018, to March 2019, and March 2020, are considered to be among the largest social mobilizations in Chile’s history, and highlighted the gendered dimension of the country’s crisis. The protest marches brought thousands of women into the streets of several cities of the country. An estimated 800  thousand marched in 2019, with 300 thousand in downtown Santiago alone, and an even greater number in 2020. Such massive demonstrations by women are not unique to Chile; similar marches have taken place in other Latin American countries during the past years. What is distinctive about them is their capacity for articulating specific so-called gender rights demands with calls for an end to the institutional structures that have entrenched the neoliberal capitalist model of development. In Chile, demonstrators insisted – marching under banners calling for an end to precarization – that the economic, social, and environmental burdens of capitalist modernization have been borne overwhelmingly by women. Official statistics and specialized studies support them. For example, figures on income and pension levels, collected by the Instituto Nacional de Estadisticas 3 4

5

6

For the politics behind this feminist victory, see the brief overview by Javiera Arce-Riffo, one of its architects. Arce-Riffo, “Gender Parity in the Chilean Constitutional Convention.” A 2017 UNDP report offered a sobering portrait of the impact of high levels of inequality beyond the typical measure of income distribution, describing the social effects of “structuring life conditions that are perceived as unjust in their origins, or morally offensive in their consequences.” UNDP, “Desigualdades, orígenes, cambios.” See also Araujo, Habitar lo social. For an influential example of this modernization view, see, Carlos Peña, Rector of the Universidad Diego Portales and regular columnist for the elite daily, El Mercurio. See O’Shea “Carlos Peña.” On the problematic assumptions about Chile’s vaunted new “middle class”, see Espinoza and Barozet, “De que hablamos cuando decimos ‘clase media’.” See, for example, Heiss, “Legitimacy Crisis and the Constitutional Problem”; Atria, La constitución tramposa; Posner, State, Market, and Democracy.

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(INE), the country’s national statistics agency, as well as many studies that disaggregate and analyze official statistical data, have consistently shown that women’s remunerated activities are still predominantly in the lowest paid and most unregulated occupations of the service sector.7 Moreover, these sources show that the vast majority of professionally trained women who are employed in the public sector are among the most poorly paid and precarious public workers.8 In addition, studies of the privatized system of social security indicate that the majority of Chile’s older population survive after retirement on the equivalent of 25 percent of their previous incomes.9 Among this impoverished group, older women receive the lowest pensions of all, characterized by many as pensiones de hambre, or hunger pensions.10 It is important also to observe that in a context characterized by extraordinarily high levels of personal/household indebtedness, upwards of 70 percent of debt is held by the poorest sectors – and older women are among the most indebted among them. Finally, women, well into old age, bear an inordinate level of responsibility for care and social provision in their households and communities.11 The social and economic crises unleashed by the COVID-19 health pandemic, and the Piñera government’s limited and inadequate response, have only exacerbated the unequal burdens women face in Chile, with particularly dramatic consequences for the majority of them.12 These figures all reveal a largely unproblematized, dark underside of Chile’s capitalist modernity: the implementation of an export-based, 7

See Barriga, Durán, Sáez and Sato, “No es amor, es trabajo no pagado”; Durán and Kremerman, “Los bajos salarios en Chile.” 8 Durán, Gálvez, and Narbona, “Salarios en el sector público.” 9 José Piñera, architect of the privatized pension system and Minister of Labor and Social Security during the dictatorship, promised pensions of 70 percent of contributors’ final income. See, Piñera (2018). For a comprehensive study of actual pension amounts by gender, years of contribution, and region, see Gálvez and Kremerman, “Pensiones bajo el mínimo.” 10 See Gálvez and Kremerman, “Pensiones bajo el mínimo,” 8–9. The privatized pension system, known by the acronym AFP (which stands for private fund managers) is analysed in detail in Rivadaneira Martínez, Aquí se Fabrican Pobres. For a comparative assessment of the trend to privatize pension plans in Latin America and Chile’s pioneer case, see Mesa-Lago, “La privatización de las pensiones en América Latina.”At present, the pension system is in crisis. After much political wrangling within the governing coalition, a legal reform was approved on July 22nd, 2020 by a supermajority of two-thirds of the Senate to allow pensioners to withdraw 10 percent of their pension savings. Despite accusations from sectors of the hard right in government that this was a populist measure that would bring “bread today, and hunger tomorrow,” it was widely accepted as a measure that, though not ideal, would compensate for insufficient government support for many of the 11 million members to cover their basic needs during the COVID-19-related social crisis. Almost a year later, a second, as well as a third and final withdrawal of funds was approved, leaving thousands of Chileans with depleted pensions. Pizarro, “Los números detrás del retiro del 10% de las AFP.” 11 For details of time spent by women and men, by age and employment status, on unpaid domestic work, care of children and the elderly, and volunteer work, see the comprehensive study of Barriga, Durán, Sáez and Sato, “No es amor, es trabajo no pagado.” 12 See Instituto Nacional de Estadística, “Género y empleo”; ONU Mujeres, “Impacto de la crisis COVID”; and PNUD and MDSF, Impactos socioeconómicos de la pandemia.

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increasingly financialized and extractive economy, buttressed by an “enabling” neoliberal state, which promotes a supposedly gender-neutral, entrepreneurial ideal of citizenship. These reforms, however, actually have been built on the backs of women for the past 30 years.13 In the following pages, I develop an argument for the need to develop a gender-sensitive perspective to examine neoliberal state formation in Chile. The argument builds on my previous research on the transformation of the social state in Chile during the past thirty years through a “grounded” discussion of its neoliberalization as an “enabling” process of governance that is gendered in its configuration and its effects.14 I argue that the “cultural-political” is a fundamentally constitutive dimension of neoliberalism, of its origins and effects, rather than simply being an outcome of the political economy. Moreover, to study this dimension as part of the reconfiguration of the state, we need to explore questions that have typically been considered as non-political. Following the immediate aftermath of the dictatorship in the early 90s, political/institutional reforms were initiated in the name of pursuing “growth with equity” that aimed to embody a renewed normative/cultural order. My claim is that such reforms built institutional structures that, nevertheless, preserved and entrenched the centrality and fundamental role of the market. It was an order that aimed to resolve the fundamental contradiction between, on the one hand, the needs of a rapidly globalizing and diversifying resource-based capitalist economy, and, on the other hand, the social reproductive activities on which that economy necessarily relies. The reforms have, thus, involved a reconfiguring of the heteronormative gender order premised on the ideal of the male-headed household, relying primarily on a man’s labor market earnings, and women’s traditional mothering and other domestic duties. For the past three decades, legal changes and social policies, including a panoply of novel gender-sensitive 13

14

The notion of the “enabling” state was popularized by Anthony Giddens. For Giddens, in modern society the state needs to become an “enabler “of civil society, providing resources and creating the conditions for empowering citizens to act, rather than acting for them (Giddens, ed., The Progressive Manifesto, 13). This neoliberal notion of the state as a “facilitator” traveled widely in the late 1990s and early 2000s, and proved to be highly influential for centre-left projects of welfare restructuring. In Chile, Giddens’s thought was associated in particular with the state modernization projects of the government of Ricardo Lagos (2000–2006) and Michelle Bachelet’s first administration (2006–2010). The state in a facilitating role, as a formula for supposedly effective state involvement in development, was also the focus of the World Bank’s policy shift in the late 1990s. Moreover, policy innovations associated with the “growth with equity” agenda of the first two democratic administrations after the democratic transition in Chile figured prominently in the World Bank’s World Development Report of 1997. The need for this type of grounded analysis was echoed most recently in a self-critical article by political scientist Juan Pablo Luna. He joined colleagues from different universities in Chile in a mea culpa about the inability of social analysts, and experts more generally, to “read” and understand the depth of social discontent in Chile. They called for a “slow” social science inquiry premised on interdisciplinary research based on “thick” data, and on the capacity to listen. Luna, “La implosión de la política y la falta de legitimidad social.” See also Murray and Risor, “Pensar con la gente.”

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programs aimed at addressing poverty and vulnerability, have imposed a new set of explicit gender expectations. Such policies and programs have encouraged a new gender order that valorizes a model of a gender-neutral, responsible and autonomous citizen, and that assumes explicitly or implicitly an ideal of women’s “empowerment” as potential workers and consumers. Nevertheless, such striving for equality through the market continues to take for granted the fact that women provide the major share of private and social provisioning, and that their efforts will remain largely invisible and undervalued. Feminist studies have made clear that the “non-economic background conditions of the official economy,” that is, the activities of care-giving and provisioning that have been accorded no monetary value but which are fundamental for capitalism, have historically been cast as women’s work.15 To be precise, such activities involve not only the bearing and raising of children, and caring for the sick and the elderly, but also the maintaining of households and the sustaining of communities. They include both affective and material practices, and although they are often performed without pay and rendered invisible, they are indispensable to society, let alone the economy. More recently, feminists in Latin America and elsewhere have warned of an impending “crisis of care,” drawing attention to the impossible demands faced by women in a financialized economy that has placed the onus of care squarely on their shoulders. For Nancy Fraser, this tension between production and reproduction in capitalism is permanent. According to her, “every form of capitalist society harbors a deep-seated social reproductive ‘crisis tendency’ or contradiction: on the one hand, social reproduction is a condition of possibility for sustained capital accumulation; on the other, capitalism’s orientation to unlimited accumulation tends to destabilize the very processes of social reproduction on which it relies.”16 Fraser’s claim applies to all variants of capitalism, and present-day Latin American financialized and extractive capitalism is no exception. The health pandemic has laid bare again the extent to which non-monetized, largely invisible forms of social provisioning fall overwhelmingly on women’s shoulders.17 The devastating and differential effects on Latin American women of the global, COVID-related multiple crisis have brought to the forefront of policy debates a warning about the crisis of care, and the devastating impact on women of inadequate responses to it.18 15 16 17 18

As aptly characterized by Nancy Fraser, in “Contradictions of Capital and Care.” Fraser, “Contradictions of Capital and Care,” 100. See, for example, ECLAC, “The COVID Pandemic is Exacerbating the Care Crisis”; and ECLAC, “Care in Latin America and the Caribbean during COVID-19.” For example, a recent report by ONU-Women and ECLAC, the Economic Commission for Latin America and the Caribbean, has stated that the pandemic has demonstrated the unsustainability of the present social organization of care. The study highlights that this model of care increases economic and gender inequality, affecting particularly harshly low-income and poor women. See ONU Mujer and CEPAL, “Cuidados en América Latina y el Caribe.”

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11.1  neoliberalism

349

in chile : cultural - political

dimensions

Chile has long been a reference point in accounts of the origins of neoliberalism.19 The conventional narrative focuses on the Chicago-trained economists, the group of young Chilean students − self-styled as the “Chicago Boys” − and their plan for a drastic restructuring of the country’s economy in the aftermath of the 1973 military coup. It is commonplace to speak of neoliberalism as a particular economic doctrine, or a set of economic policies. In this conventional approach, neoliberalism stands for a repudiation of Keynesian welfare state economics and, in the Latin American region, of state interventionism in the economy, or developmentalism. While such accounts focus on an important dimension of neoliberalism as state policy, they are too narrow and overlook its cultural-political origins and wide-reaching social effects, thus, obscuring its specifically “political” register. Recent scholarship offers new perspectives concerning the rise of neoliberalism among a group of thinkers who, well before the rise to dominance of the Chicago School of Economics, viewed state welfare and planning as totalitarian threats to “Western civilization.”20 Paraphrasing Michel Foucault’s prescient lectures at the Collège de France about neoliberalism as a form of political reason or rationality of government, Wendy Brown has argued that “the norms and principles of neoliberal rationality do not dictate precise economic policy, but rather set out novel ways of conceiving and relating state, society, economy and subject and also inaugurate a new ‘economization’ of heretofore noneconomic spheres and endeavors.”21 Jessica Whyte’s recent analysis reaches further. In The Morals of the Market: Human Rights and the Rise of Neoliberalism, Whyte argues that what “distinguished the neoliberals of the twentieth century from their nineteenth-century precursors … was not a narrow understanding of the human as homo economicus, but the belief that a functioning competitive market required an adequate moral and legal foundation.”22 What might such insights into the cultural-political dimensions of 19

20

21 22

There is by now a vast literature on the concept of neoliberalism, including critical, impatient voices on the left and the mainstream about the range and ostensible vagueness of its use. Agencies such as the IMF and right-wing think tanks, which once shunned the category of neoliberalism, now embrace it openly. See, for example, Ostry, Loungani, and Furceri, “Neoliberalism: Oversold?”; Bowman, “Coming out as Neoliberals.” For a state of the field, see Springer, Birch, and MacLeavy, eds, The Handbook of Neoliberalism; Cahill, Cooper, Konings, and Primrose, eds., The Sage Handbook of Neoliberalism. Quinn Slobodian, Dieter Plehwe, and Philip Mirowski suggest that much is still to be learned by carrying on with an inquiry into the origins of neoliberalism, and their edited collection, Nine Lives of Neoliberalism, aims to do exactly that by offering an analysis that “places ideas in context and follows them in action,” that is, by attending to “institutional embeddedness.” “Introduction,” Nine Lives of Neoliberalism, p. 5. Brown, Undoing the Demos, 50. Whyte, The Morals of the Market.

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neoliberalism suggest for the reconfigurations of the state in Chile and Latin America as neoliberal states? In the case of Chile, neoliberalism aimed not only at economic goals, but also at reorganizing social relations and changing the personal identity of citizens. This latter dimension was never provided by the Chicago Boys alone; rather it was an articulation of economic liberalism with an uneasy and contradictory mixture of libertarian, Catholic conservative, and Spanish fascist ideas developed by the charismatic and highly influential lawyer Jaime Guzmán, as well as his young disciples, the “Gremialistas.”23 The literature on Chile’s radical political project, undertaken by the civic-military dictatorship, has tended to focus on the role of the market as a fundamental mechanism for disciplining the working class, and forcing its members to become “true capitalists.” Other cultural dimensions associated with issues conventionally regarded as “non-political” have tended to be ignored. Yet, to fully grasp the implications and reach of this project of radical cultural transformation, it requires us to see that cultural-political projects associated with different moments of state formation have always been gendered.24 Moreover, while gender is “always already there” in the configuration of the social dimension of modern states, it may become a “central and explicit object of social regulation.”25 I contend in this analysis that the long-standing neoliberal reconfiguration of the Chilean state – its neoliberalization – is precisely one such moment. Consider the project of economic restructuring spearheaded by the Chicago Boys, and the cultural-political transformations associated with the program of institutional “modernizations,” such as the privatization of social security and the health system. Mainstream economists have suggested that one important economic aim of these privatizations was to contribute to the creation of a capital market, thus, increasing the national savings rate.26 However, the aim was never exclusively economic, as José Piñera, Minister of Labor and Social Security under Pinochet (1978–1980), and architect of the privatized pension plan, subsequently made explicit: “[T]he private pension system has had a very important political and cultural consequence. Indeed, the new pension 23 24

25

26

On the various strands of the political thought of Jaime Guzmán, see the insightful analysis of philosopher Renato Cristi, El pensamiento político de Jaime Guzmán. This is amply shown by feminist literature on the making and demise of welfare states. See, for example, Orloff, “Motherhood, Work, and Welfare.” For more recent feminist analyses of the neoliberal state and neoliberal governance, see, for example, Newman, “Regendering Governance”; Schild, “Care and Punishment in Latin America”; Schild, “Geschlecht und Staat in Lateinamerika.” Steinmetz, Regulating the Social, 52. For examples of neoliberal regulation of gender: Schild, “Neo-Liberalism’s New Gendered Market Citizens”; Schild, “Feminism and Neoliberalism in Latin America”; Fraser, Fortunes of Feminism; Eisenstein, Feminism Seduced. See, for example, Edwards, “The Chilean Pension Reform.” By 2020, the funds collected through AFPs constituted 80.7 percent of the country’s GDP. The question remains, of course, where funds are invested and who benefits from these investments. For recent figures and discussion, see, Gálvez and Kremerman, “¿AFPs para quién?”

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system gives Chileans a personal stake in the economy. A typical Chilean worker is not indifferent to the behavior of the stock market or interest rates. Intuitively he knows that his old age security depends on the wellbeing of the companies that represent the backbone of the economy.”27 Implicit in this vision is the moral assumption that the marketplace ultimately guarantees personal and individual freedom and autonomy, and that it has the power to transform subjects into individuals who are responsible and accountable for their own actions and well-being. Furthermore, such responsible individuals are traditionally assumed to be male, unattached, and arriving at the market ready-made as economic actors. It is an illusory and ideological concept that nevertheless is well entrenched in much of the literature by critics and celebrants of neoliberalism in Chile. The idea of an autonomous subject, shaped and disciplined through market relations, has tended to overlook the cultural-political implications of other processes and long-term consequences of institutional change associated with the neoliberal project. I contend that it is not the market alone that ostensibly transforms subjects into autonomous, responsible individuals but, rather, the cultural practices embedded in the policies of a wide range of institutions. Moreover, these are always by definition gendered. The gendered dimension of neoliberalization has been organized with particular strength at the local level. Administrative decentralization and the transformation of municipal spaces were critical components of the foundational project of the civil-military dictatorship in Chile, as I have discussed in previous work.28 The explicit goal of the decentralization policies that began in 1974 was political; they sought to transform municipal politics, demobilize society, and change the very meaning of citizens’ participation in communities. Since 1990, the institutional modernization projects of successive center-left and center-right governments have sought to further restructure local-level institutions, and they have found a new moral foundation for their actions – a “progressive” neoliberalism which celebrates “diversity,” “performance,” and “empowerment,” while entrenching the “subsidiary” role of the state in social provision. These modernizations have helped reconfigure the neoliberal state as an “enabling” state, one that regulates subjects as gender neutral, entrepreneurial, autonomous citizens who bear responsibility for their own well-being. Indeed, they have perpetuated what Jacques Donzelot calls 27 28

Piñera, “Empowering People.” The wave of privatizations that gave rise to the so-called “subsidiary state” did not “shrink” the state as such, but, rather, involved a restructuring of state institutions, a state building project. Thus, while neoliberalized states may have lost some of their earlier importance, they continue to be key actors in a number of arenas, such as, following Steinmetz, “the definition of access to citizenship and its benefits, the control and production of violence, and the meta coordination of the diverse non-governmental institutions involved in “governance,” Steinmetz, ed. State/ Culture, 11. See Schild, “Geschlecht und Staat in Lateinamerika,” and Schild, “Neo-Liberalism’s New Gendered Market Citizens.” See, also, Hector E. Schamis, Re-forming the State.

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the “responsibilization” of society and of its individual members.29 Moreover, responsibilization is not an abstraction but consists of materially embedded discourses and practices that aim to regulate the behavior of subjects in the name of guaranteeing their functioning as individuals, households, and communities. It is also important to emphasize that at a time when women have been recruited into the labor force in unprecedented numbers in the name of empowerment, autonomy, and self-fulfillment, they are also expected to make up for the activities of social provisioning that are vital for the maintenance and reproduction of life. In my view, the local/municipal level is a critical arena where access to citizenship, and its benefits are defined and produced. It is precisely in this context where the question of the re-making of gender dynamics of work and welfare, and the centrality of women’s visible and invisible work needs to be further explored. Local government has been characterized as the “social face” of the state because it is here that citizens live, organize, and seek responses to their most pressing demands. It is an embodied, gendered place where political visions and social policies are actually materialized, and where women have always played a fundamental role. The decentralization, or municipalization, of social provision like primary health care, education, and social assistance proposed by the architects of institutional restructuring was defended in terms of greater efficiency in the delivery and quality of those public goods. Although municipalization was legitimized from the start in moral-political terms, the question of who would bear the costs of these efficiencies was simply taken for granted. The call for a decentralization of power and the restitution of the ostensibly apolitical character of public administration were made early on in the first declaration of principles, the Declaración de Principios del Gobierno de Chile, issued by the military Junta in March 1974, six months after the coup d’état.30 It laid out a vision for a new “technological society of genuine social participation,” premised on the principles of subsidiarity, with a basis in private property, which was seen as the fundamental guarantor of true liberty. According to this vision, “respect for the principle of subsidiarity is the key for the legitimacy of a genuinely libertarian society.”31 Furthermore, the territorial and functional decentralization of power was seen as a necessary step in the depoliticization of the local level. An explicit separation of social and political power was regarded as fundamental for restructuring state–society relations, and for promoting an ostensibly “genuine” citizen participation, free from the “distortions” of party politics.32 These goals were materialized in a number of key law decrees that aimed to restructure municipal governments, 29 30 31 32

Donzelot, The Policing of Families. Declaración de Principios del Gobierno de Chile. Declaración de Principios del Gobierno de Chile, 17. Declaración de Principios del Gobierno de Chile, 27–8.

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which were ultimately included in the Constitution of 1980 imposed by the military dictatorship. Neoliberal restructuring, understood as the imposition of a different “order of reason” at the local level, was further materialized in the everyday practices and discourses of flesh and blood individuals through which administrative capacities were reproduced and transformed. It is my argument that this restructuring of local government established a new neoliberal cultural-political relation between state and citizen that would form the institutional basis for the innovations of the next thirty years.

11.2  reconfiguring

the subsidiary state :

decentralization and the depoliticization of the local

The nearly 200-page long document, Bases de la política económica del gobierno military chileno, dubbed El Ladrillo (The Brick),33 with its critical analysis of the Chilean economy and policy recommendations, might be considered the foundational text of the “Chicago Boys” and their influential role in the origins of neoliberalism in Chile. The text offers a sustained critique of the model of development in place since the 1930s, and a proposal for overcoming the “bottlenecks of development” that led to the economic, social, and political crisis. It offers a critique both of the Import Substitution Industrialization model of development, and of the developmental state – also known in Chile as Estado de Compromiso (State of Compromise). Central to its proposal is the call for a reorganization of institutions as the only means to fully entrench a new economic development model, a redefined role for the state, and a renewed understanding of citizenship. The need to radically transform the economic model and state institutions is argued in terms of the need to overcome the “excessive statism” in place since the 1930s, and the problematic “relation of dependency” between citizens and the state. The vision of modernity advocated in the text associates the earlier moment of modernization, represented by the welfare state, with the cultural and political legacy of Spanish colonialism. The commitment of the welfare state to economic progress and social transformation is criticized, in this foundational document of the dictatorship, as a result of the legacy of political paternalism that characterized relations in the rigid social structure bequeathed by the colonial era. The document goes on to 33

How early the plan was known by members of the incoming military government is itself in question. In the prologue to a later edition of El Ladrillo, published by the think tank Centro de Estudios Públicos, CEP, the most senior member of the economic team and first generation Chicago Boy, Sergio de Castro, writes of the surprise of the group to discover that the ideas of their alternative economic plan were the basis for the presentation of October 1973 by the military in charge of the Ministerio de Hacienda. According to de Castro, only one member of the team had direct contact with the military (El Ladrillo, 10. www.cepchile.cl). In his comprehensive study, El Régimen de Pinochet, Carlos Huneeus claims instead that the plan was commissioned by the Chilean Navy well before, in the event of a coup, and that it was delivered to the Navy on September 11, 1973 (Huneeus, El régimen de Pinochet, 396).

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admit that though, over time, efforts to address injustices and social inequalities had resulted in valuable gains, these had ultimately not escaped the habit of the “expecting” and the “granting” of benefits characteristic of paternalistic practices. Thus, some elements of a “philosophy of paternalism” had persisted, which resulted in responsibilities being transferred to the state, and in answers to social problems that took the form of the creation of benefits, often without considering their impact or their economic feasibility.34 The Brick’s solution to these problems is a modern economic system operating through markets and competition, with the state as a dispassionate and rational overseer in charge of broad policy. It proposes that “the task of an impartial government will be to promote a new consensus capable of joining the capacity for work, savings and creativity of all Chileans, in addition to enabling the creation of a stable institutional and political framework that guarantees the permanence and efficacy of the system.”35 The public policy focus on the local, and particularly on the municipalization of state services that was proposed early on by the dictatorship in its Declaración de Principios del Gobierno de Chile, was further developed in El Ladrillo, and was finally consolidated with the Constitution of 1980. It must be noted, however, that the local, municipal level had been a center of increasing social and political action in Chile, and it had received special attention from the “Revolution in Freedom” government program of the Christian Democratic administration under President Eduardo Frei Montalva (1964– 1970). This program of social integration, with its expansion of citizenship participation, was part of a broader U.S. sponsored policy for the region in the framework of the Alliance for Progress that had aimed to curb revolutionary potential through a program of rural and urban reforms.36 Local organization and participation were a lynchpin of Promoción Popular (popular development), the Frei administration’s policy of organized political integration of local, regional, and national communities, which the administration considered as a crucial component of the process of economic and social development of the country. The policy created a legal structure to encourage the collective articulation of local demands in an effort to channel social and political participation, and to diffuse the potential for radical alternatives. Local organization was further consolidated by a new law in July of 1968 (Ley N°16.880 Juntas de Vecinos y Organizaciones Comunitarias). This law enabled the creation of neighborhood councils, mothers’ centers, youth centers, and other local 34

35 36

El Ladrillo, Santiago: CEP, 58–9. The irony here is that despite 45 years of attempts to create a horizontal society of “modern” citizens premised on merit and reward for individual effort, recent studies of inequality such as the UNDP Report of 2017, and Kathya Araujo’s richly grained explorations of how social inequality is experienced in Chile, show that the opportunities for social advancement offered by Chile’s current neoliberal, marketized society have created new forms of exclusion and marginalization. Araujo, Habitar lo social. El Ladrillo, Santiago: CEP, 22. For an overview, see Delamaza, “Las juntas de vecinos en Chile,” 34–8.

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organizations. Neighborhood councils, in particular, were regarded as a necessary link between local governments and the central state. Although they were the focus of specific public policy programs during the late 1960s, local level organizations had, in fact, even earlier roots, they were a creation “from below” of both men and women of the popular sectors of Chile.37 Juntas de vecinos en Chile 50 años. Historia y desafíos, a book published by the Library of the Congress of Chile in 2018, on the occasion of the 50th anniversary of Law 16.880, reminds us that these local organizations had their origin in popular efforts that took shape during the late 19th and well into the mid-20th century, and gave rise to the rich social web that formed the basis for collective action.38 Unions and mutual support organizations – mancomunales and mutuales − aimed to promote and defend the rights of workers and the joint action by neighbors to demand solutions to housing, sanitary infrastructure, urbanization, and other basic rights. The local spaces for political learning and organizing, for men and women alike, gave rise to a new collective identity, pobladores, and to a specific movimiento popular (popular movement), articulated through webs of highly organized and politicized life in the poblaciones (shantytowns).39 Furthermore, local organizations and their demands had an influence on political parties, and they would play a fundamental role during the administration of Salvador Allende (1970–1973) when the movement of pobladores channeled local collective demands for housing and other long-standing social problems. Most emblematically, in 1972, these organizations contributed to the local distribution of basic consumer goods, and the enforcement of price controls through Juntas de Abastecimiento 37

38 39

It is important to note the longstanding and significant tradition of local democratic politics in Chile and the permanent attempts to subordinate and defeat them that have been fundamental dimensions of projects of modern state formation. One of Chile’s most eminent historians, Gabriel Salazar, has reconstructed this history, and rescued it from the historical amnesia imposed by elite, liberal history. See, Salazar, Construcción de Estado en Chile. Delamaza, ed., Juntas de vecinos en Chile, 11. Labour struggles and neighbourhood organizing, the collective actions of men and women, are at the root of this history. Finding a housing solution became a critical political demand of the popular sectors, and remains so until today. Between 1910 and 1970, Santiago grew by an estimated 1  million inhabitants, with roughly 50 percent of them being migrants from the countryside. If in 1930 the rural population in Chile was slightly higher than the urban one, or 50.6 percent versus 49.4 percent, by the time of the Frei administration’s policy to legalize local organizations in 1968, the urban population had reached 70 percent. By 1970 it had reached 75.1 percent. Gonzalo Delamaza, “Las juntas de vecinos en Chile,” 31. According to the latest census of the INE (Instituto Nacional de Estadística), Chile’s urban population reached 88.4 percent in 2019, and housing shortage continues to be a critical problem, reaching dramatic levels since 2019. In fact, in 2019, the housing deficit affected an estimated 2.2 million of Chile’s 19 million inhabitants, according to the Cámara Chilena de la Construcción, CCHC. F.de Ruyt, “Déficit habitacional afecta a 2.2 millones.” See also Fundación Vivienda, “Deficit habitacional cuantitativo.” The number of families living in campamentos, or squatter settlements without basic infrastructure, has increased by almost 74 percent since the social protests of 2019 and the pandemic (Soto, “Alza histórica”).

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Popular, JAP, set up by the administration to address shortages in basic food supplies which had become critical following the general strike of truckers organized by the opposition in October.40 The very conception of organized, collective, and local political participation  – mediated as it was by party politics  − was an explicit target of the demobilizing efforts of the incoming military dictatorship. The initial, violent repression in the aftermath of the coup was followed by a methodical and permanent intervention in neighborhood councils, mothers’ centers, and other local organizations over the next 17  years. In March 1974, the dictatorship issued a law decree (Decreto Supremo 349) that called for the suspension of the leadership of neighborhood associations, and all other social organizations until October 1975. Presidents of Juntas de Vecinos (Neighborhood Councils) were to be appointed by the central government, and the character of the organizations in relation to local government was drastically transformed. During the 17 years of civic-military rule, the local level once again became the focus of renewed social intervention. Indeed, efforts to penetrate and control local organizing were constant and deliberate. A new state agency was created for this purpose, the Division de Organizaciones Sociales (DOS), which aimed to coordinate the political control of the local level with the assistance of designated mayors.41 An appeal was made for “genuine” social participation, free from party political “distortions.” In the broader context of administrative decentralization, and the call to restore the “apolitical character” of public administration, the military dictatorship ordered the removal of “all public sector functionaries, in the broad range of public enterprises and services, semi-public and of autonomous administration, who make use of their position for party political ends.”42 Hence, the role of neighborhood associations and social organizations as conduits and agents of collective local demands was drastically changed after 1973, a change that was subsequently consolidated by law in the Ley Orgánica de Municipalidades (Organic Law of Municipal Government) of 1976, and included in the Constitution of 1980. This does not mean, however, that local 40

41

42

For a comprehensive examination of JAPs and local-level organizations, see Cofré, “La lucha por ‘el pan’.” Popular organizations were connected to party politics, and until the military coup they were involved in the tensions and conflicts within the political party that supported Allende’s administration, the Unidad Popular (Popular Unity). For an overview of popular organizing and mobilizations during Allende’s administration, see, for example, Garcés, “Construyendo las poblaciones,” 77–9; and Garcés, Tomando su sitio. As Carlos Huneeus has shown, penetration and control of local politics was a main concern for the dictatorship, and it became a particular preoccupation for the influential lawyer and rightwing intellectual Jaime Guzmán, and his group of young disciples, the “Gremialistas,” several of whom would play a role in the creation of the political party Union Democratica Independiente (UDI). Guzmán had a decisive role in putting forward many of the civilian mayors appointed by the dictatorship. See above, footnote 23, and Huneeus, El régimen de Pinochet, 370–76. Declaración de Principios del Gobierno de Chile, 25.

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organizations stopped functioning. Initially, their leadership was imposed by the mayors appointed by the central government, but they continued to operate and struggle for autonomy as best they could.43 In their role as providers of decentralized social provision, municipalities were considered part of the state; however, they were legally considered administrative units, not governing entities. The Constitution of 1980 makes a clear distinction between government and administration, and declares that state governing at the provincial and regional levels is the responsibility of representatives of the central government, Intendentes and Gobernadores, while municipal governments are in effect autonomous agencies responsible for administering local affairs.44 The so-called “municipalization” of politics, based on the restructuring of local government, and its new role in the project of administrative decentralization of the state, is a critical point for understanding the redefinition of state–society relations in Chile. As Pilar Vergara reminds us, the concept of subsidiarity guided social policy design from 1974 and “condemned equality and social justice as an ‘igualitarismo socializante’ [socializing egalitarianism].” Such “socializing egalitarianism,” according to the dictatorship’s view, “sought equality of outcomes for different efforts, thus impeding real justice and equality, or formal equality of the market, and becoming the source of all discriminations.”45 The only goal for decentralized forms of social assistance, then, was to assist the “truly” needy, that is to say, families in a critical condition of poverty. This did not mean eliminating all forms of social provision, but instead targeting only those in the most dire social situations – excluding also any goal of social advancement for the working poor. Municipal governments became the executors of a range of programs with subsidies that targeted the unemployed, but only in order to push them again into the labor market.46 In fact, 43

44 45 46

In September of 1994, I conducted an extended interview with Sra. Hilda Solano, a 70-yearold respected local Socialist leader of the población San Rafael, in the Comuna of La Pintana. She had been twice president of her Junta de Vecinos (Neighborhood Council). Her account revealed just how complex, and how politically driven, the local space remained during the 1980s. What became clear is that at the local level women had historically played powerful leadership roles, and that they were not simply “neighbors,” but women with histories of militancy in local cells of the Communist and Socialist parties, along with those who belonged to the Christian Democratic Party, and later on the UDI political party. This story of veiled political militancy was also part of the mothers’ centers during the dictatorship. See Fernández Richard, “La administración del Estado y las Municipalidades.” Vergara, Políticas hacia la extrema pobreza en Chile, 40. Central among these were Family Single Subsidy (Subsidio Unico Familiar), Welfare Pensions (Pensiones Asistenciales) and emergency employment programs which aimed to address the abrupt increase in unemployment following the implementation of structural adjustment policies – by 1974 levels of unemployment had doubled from 1973. The Programa de Empleo Minimo (PEM), a minimal, temporary employment program introduced in August of 1974, paid one third of the minimum wage for 15 hours of work per week. Workers were expected to participate in a range of mostly low-skilled activities from clearing ditches to repairing roads, emergency housing, and cleaning or improving the physical spaces in poblaciónes or makeshift campamentos. However, emergency work activities also included activities that clearly targeted

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those who were not extremely poor were expected to access social provision through the market. That is to say, they were to choose from a range of offers, which all involved self-financing of benefits, depending on the income level of recipients. A new discourse and practice encouraged − forcibly if need be − the not-so-poor, and the rest, to exercise their freedom and choice as consumers. These policies and practices were to be further expanded and consolidated when the radical program of privatizations of health, education, housing, and pensions was completed. Along with the reform to the labor code, and other sweeping neoliberal changes to the legal system, the agricultural sector, and the public administration, the diverse reform initiatives were known as the “seven modernizations.” The “seven modernizations” were announced in September 1979 by Pinochet, and they were subsequently incorporated into the Constitution of 1980. Responsibility for public education and public primary health care was transferred to the local, municipal level, the so-called “municipalization” of health and education. In the case of education, mayors were also empowered to transfer schools to the private sector. Decentralization and privatization of health saw the transfer of responsibility for primary health to the local level, the creation of a for-profit sector in health dominated by highly discriminatory health providers, or ISAPRES, and the chronic underfunding of the public sector, FONASA. This “municipalization” of education and health had major impacts on the quality of health and education, and on the quality of employment.47 The extent of the radical nature of this transformation in the social role of the state can only be fully appreciated in the broader context of fiscal policy and key privatizations. Briefly, the shift in focus of the social state to the local level of municipalities was accompanied by a drastic reduction in social spending, especially in 1975–1976.48 For public sector workers, the imposition of salary restrictions and the loss of labor rights, including the right to strike, meant a steady deterioration in the quality

47

48

women, from assisting in daycare centres to small administrative tasks in local municipal governments. An expanded temporary employment program, Programa de Ocupación para Jefes de Hogar (POJH) was introduced in October, 1982, to address the effects of the severe recession Chile faced as part of the collapse of the “orthodox” neoliberal program. Initially, the beneficiaries were unemployed men, but this soon changed as a significant number of women joined the programs. For specific figures, see Instituto Nacional de Estadisticas, INE, quoted in Morales M., “Politicas de empleo y contexto político,” 28, 32. See also Sepúlveda Momberg, “Del trabajo protegido al trabajo subsidiado”; and Urra Donoso, “Mujer, familia y empleo mínimo.” For an early, prescient assessment of changes to municipal law, and the possible implications of the transfer of public services, in particular of education, to the municipalities, see Pozo, “La situación actual del municipio chileno.” The sectors most severely affected by social cuts were health, education, and housing. By 1986, spending per capita in these areas was still 13 percent below the level of 1970 (see Cabezas, “Revisión metodológica y estadística”). The housing crisis was compounded by the eradication of makeshift poblaciones from high income areas of the city, following the deregulation of urban land use in 1979.

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of work. Although figures for women’s employment in the public sector at the time are hard to come by, we can assume that the loss of labor protections, benefits, and remuneration affecting teachers, social workers, and other feminized areas of public service all constituted a serious loss for the middle class, particularly for women.49 In addition to the radical labor reform, Plan Laboral unilaterally imposed at the same time, the ostensible modernization of the state was justified in explicitly political terms, and aimed to force a redefinition of state–society relations. By demobilizing and disarticulating social organizations, the regime sought to transform social relations more generally. The very poor, those unable to access social provision through their own efforts in the market, would be the focus of the subsidiary state, attended to by its administrative arm, or municipal governments. It is important to recall that social planning, including the design of targeted programs to be executed nationally at the local level and by budgetary decisions allocated to them, was centralized in the Ministry of the Interior, specifically, the Oficina de Planificación Nacional, ODEPLAN, the National Planning Office.50 In practice, as Vergara observes, the retrenchment of state social involvement gave rise to a peculiar duality, on the one hand “privatization and free choice in the market for some,” and on the other, “welfare assistance and dependency on state subsidies destined to ensure subsistence – not social mobility – for others.”51

11.3  from the subsidiary state to the enabling state : “ growth with equity ” as a regime of mature neoliberalism

With the end of the civic-military dictatorship in 1990, the first center-left government of the Concertación de Partidos por la Democracia, or simply Concertación, came into power in March 1990 with the promise to address the social debt owed to Chileans after years of drastic salary restrictions and 49

50

51

Discussions of the impact of the downsizing of the state, and loss of labor rights among those who remained in the public sector, offer a global picture but are not disaggregated by gender. My interviews with professional women working in the NGO sector during the late 1980s and early 1990s offered a glimpse of the shrinking work alternatives for highly qualified professionals and new graduates. Many had participated in the emergency employment programs PEM and POHJ, while others had worked for the child nutrition programs at the municipal level. The work with the social programs of the Church’s Vicarias of Solidarity and the NGOs working with popular organizations, though not particularly well paid, proved to be an ethical choice for many. ODEPLAN played a fundamental role in the political project of the dictatorship. Some of its figures have had important public positions during Sebastián Piñera’s two terms in office. It was known as the “kitchen” of the social reforms discussed in this text, a technical responsibility that was also, always, political. For continuities with the present, see Leighton, “Los rostros de ODEPLAN.” Vergara, Politicas hacia la extrema pobreza en Chile, 41–2.

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austerity measures.52 This first democratic administration after the transition, under Christian Democrat Patricio Aylwin (1990–1994), developed an agenda of “growth with equity,” and it was premised on the continuation of the neoliberal economic program inherited from the civic-military dictatorship, while also implementing a social agenda of greater social equity, with a particular focus on the reduction of extreme poverty. With some modifications and reformulations, the socio-economic strategy of “growth with equity” has oriented Chile’s capitalist development strategy for the past 30 years, leading to radical, long-lasting socio-cultural and economic transformations.53 Despite modifications, and the expansion of social spending, the guiding economic rationale has remained a defining feature of Chile’s state form. In other words, rather than a transformation of the fundamental structural features of the state, there has been a further “technification” of its logic, policy interventions, and bureaucratic practices.54 This is what Nuria Cunill Grau, writing about a Latin America-wide tendency, has called “the introduction of market mechanisms into the state.”55 Rather than a post-neoliberal state, then, what these changes have brought about is a deepening, or further neoliberalization, of the state. However, the question is, how do we characterize the efforts of the past-thirty years to regulate the social, to define the terms of citizenship, and of access to benefits attached to it? The transformations of the social, regulatory dimensions of the state in Chile are best understood as a specific moment of an ongoing process of state formation, one that has not overcome the fundamental logic of neoliberalism but, rather, has entrenched it in a mature form. As I have previously stated, as a reconfiguration of forms of social regulation, the enabling state is a gendered phenomenon both in its configuration and its effects.56 In this respect, as at other historical moments in the formation of modern states, in Latin America and in other regions, women as front-line workers, as professionals, and as public policy leaders and activists have played a key, albeit typically invisibilized role. Indeed, I would insist that the ideas of female public policy leaders 52

53

54

55 56

The centre-left Concertación de Partidos por la Democracia (Coalition of Parties for Democracy) was the broad-based centre-left electoral coalition founded as Concertación de Partidos por el NO (Coalition of Parties for NO) during the campaign for the plebiscite of 1988 to determine whether or not Pinochet should rule for another eight years. It brought together the Socialist Party and the Christian Democratic Party and 15 other smaller parties, and it won presidential elections from 1990 to 2010. The Concertación inaugurated a long period of politics based on consensus and premised on a continuation of the neoliberal project. Whether critical or celebratory of these transformations, analysts have not remained indifferent. For Chilean interventions in this debate, see, for example, Moulián, Chile actual; Tironi, El cambio está aquí; Garretón, Neoliberalismo corregido y progresismo limitado. A structure changing policy, following Steinmetz, “is one that alters that state in a way that systematically affects the production of subsequent policies; a structure re-producing policy expresses and affirms the existing state form.” Steinmetz, ed., State/Culture, 9. Cunill Grau, “El mercado en el Estado.” See Schild, “Care and Punishment in Latin America”; and Schild, “Geschlecht und Staat in Lateinamerika.”

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and their political agendas, in addition to women’s activities, inside and outside the state bureaucracy, along with the volunteer efforts of countless more in citizens’ associations, philanthropic organizations, and other kind of private and public institutions, are the historical force behind the making and re-making of welfare states.57 Despite not explicitly drawing our attention to the gender dimension, Pierre Bourdieu in his article “Rethinking the State: Genesis and Structure of the Bureaucratic Field,” reminds us that in capitalist societies, states “make a decisive contribution to the production and reproduction of the instruments of construction of social reality. As organizational structure and regulator of practices, the state exerts an ongoing action formative of durable dispositions through the whole range of constraints and through the corporeal and mental discipline it uniformly imposes upon all agents.”58 Drawing on Weberian concepts, while also appealing implicitly to the metaphor of the Leviathan, Bourdieu conceived the state as “the agency that monopolizes the legitimate use of not only material violence … but also of symbolic violence.”59 Analytically, Bourdieu suggested, we can conceive of a division between “the left hand of the state” or “spending ministries which are the trace, within the state, of the social struggles of the past,” and the “right hand of the state” or those ministries concentrating technocrats, for example, the Ministry of Finance, the ministerial cabinets, and the private banks. Furthermore, the left hand, or feminine side of Leviathan, is materialized by the ‘‘spendthrift’’ ministries in charge of ‘‘social functions” − public education, health, housing, welfare, and labor law − which offer protection and succor to the social categories shorn of economic and cultural capital. The right hand, or masculine side, is charged with enforcing the new economic discipline via budget cuts, fiscal incentives, and economic deregulation.60 For Bourdieu, the two hands were clearly at odds with each other. I want to suggest instead that after nearly 50 years of neoliberal state restructuring in Chile, the opposition between the left and the right hands of the state has been replaced by a shared agreement, crystallized in the bureaucratic language of New Public Management.61 Successive Concertación governments continued to modernize public institutions by attempting to apply the efficiencies 57

58 59 60 61

Early transnational flows of ideas, resources and people enabled Latin American women to play a pivotal role, albeit one often ignored, in the making of modern nation states as welfare states. For the case of Chile, see, for example, Rosemblatt, Gendered Compromises; Illanes, Cuerpo y sangre de la política; Vidal Molina, ed., Trabajo social en Chile. See also Skocpol, Protecting Soldiers and Mothers; Guy, Women Build the Welfare State. Bourdieu, “Rethinking the State,” 68. Bourdieu. “The Left Hand and the Right Hand of the State,” 2. Wacquant, “Crafting the Neoliberal State,” 201. For a comparative study of New Public Management in Chile, Argentina, Brazil and Peru, see the chapter by Schenoni in this volume. Schenoni shows the drastic reach of New Public Management reforms during the dictatorship in Chile, and their continuation after the democratic transition.

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and cost-cutting strategies of the private sector to the public bureaucracy. Influenced by this strategy, a number of legal reforms were approved from 1998 to 2003 during the administrations of Christian Democrat Eduardo Frei Ruiz-Tagle, and Socialist Ricardo Lagos. These reforms aimed to professionalize public administration through training and performance incentives, to make public services more technical and less political, and to make public policy more accountable to citizens as customers. Although by 2011 the actual scope, reach, and consequences of this attempted modernization came to be seriously questioned, it had already significantly impacted the local level, supposedly to bring social services and programs more effectively to citizens.62 The transformations of local-level politics institutionalized by the dictatorship, with its emphasis on a merely consultative participation, and a personalist leadership emptied of party-political programs, were, thus, further embedded after 1990. The supposed modernization of the local bureaucracy entrenched the widespread use of public–private partnerships as competitive and contractually driven strategies for outsourcing the development, implementation, and evaluation of public programs. Rather than strengthening spaces for local, democratic deliberation, and participation, these reforms in reality perpetuated the goal of disarticulating the local, doing so by entrenching the devolution of responsibility for education, health, and subsidies for the poor through individualizing the delivery of services by targeting and by “entrepreneurializing responsible units and individuals.”63 In effect, the continuation of the dictatorship’s “modernizations” bolstered the devolution of administrative power without (fiscal) power, and without genuine democratic citizen participation in public deliberation about local needs.64 The chronic underfunding of the poorest, most populous municipalities has led to gross spatial, or territorial, inequalities, manifested in the delivery of limited and poor-quality basic services, from waste collection, to street lighting, cleaning, to security and policing among others, for communities that need them most. As Verónica Valdivia pointedly argues, rather than just focusing on broad cultural analysis of individualism and consumerism for the increasing political disaffection of Chileans during the decade of the 1990s (as expressed, for example, through high voter abstention rates), we need also to consider the real political and social impact of neoliberal decentralization and municipalization.65 62

63 64 65

For a review of the origins and effects of the adoption of New Public Management at different levels of government in Chile, see Morales Casetti, “Nueva gestión pública en Chile.” See also Cunill Grau, “El mercado en el Estado.” Wendy Brown speaks of this as “the devolving of authority, decision making, and the implementation of policies and norms of conduct.” See Brown, Undoing the Demos, 129. See Valdivia, “La ‘alcaldización de la política.” On municipal financing, see Larraín, “El financiamiento de los municipios en Chile.” See also Observatorio del Gasto Social en Chile. The implications for the health of Chile’s democracy of this dramatic turn away from politics by a majority of Chileans have been the focus of debate since the 1990s. For a summary and overview, see Valdivia, “La ‘alcaldización de la política,” 114.

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At the core of the neoliberal, “enabling” state, in other words, lies a shared political rationality based on the norms and ideas of the market. However, what is also clear is that this reconfiguration has resulted in a “novel synthesis of marketization and social protection,” and a redefinition of the gender order. The financially “sensible” regulation of the social state, and the ostensibly efficient offloading of responsibilities to the local level, has been achieved at the cost of women. For, as I have argued above, in Chile’s financialized and extractive capitalist economy and “judicious” social state, women make up the bulk of the poorly paid and precariously employed, while also continuing to provide the unpaid and largely invisible affective and material activities that maintain households and communities, and that sustain the economy.66

11.4  the “ enabling ”

state has a

“ woman ’ s

face ”:

gendering the decentralized neoliberal state

An analysis of the ongoing transformations of Chile’s decentralized neoliberal state that begins from the experiences of workers in the local bureaucracy offers a unique perspective on the supposed expansion and modernization of the social state.67 It suggests that we must move beyond standard appeals to increases in social spending as a measure of success. In particular, such an approach reveals the extent to which, for the past three decades, the rolling out of an “enabling” state committed to finding market solutions for addressing questions such as poverty and vulnerability – whether of households or of communities – has replicated the increasing trend of the private sector to rely on forms of extreme labor flexibilization, precarization, and feminization.68 66

67

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For data on women’s remunerated and non-remunerated care-related activities, see Barriga, Durán, Sáez and Sato, “No es amor, es trabajo no pagado.” See also Cárdenas, Correa and Prado, “Segregación laboral y género.” For a Latin America-wide comparison of what agencies like the United Nations Women and ECLAC are characterizing as a global “crisis of care” and its costs for women, see for example, ECLAC, “The COVID Pandemic is Exacerbating the Care Crisis,” and Comisión Económica para América Latina y el Caribe (CEPAL), La autonomía de las mujeres, Chapter V (2019). For the past 30 years, I have relied on this type of inquiry to study the implementation on the ground of successive, gender-sensitive social programs as a form of social regulation of clients and practitioners, and as the concrete embodiment of the (neoliberal) enabling state and of a new type of citizenship. See, for example, Schild, “Care and Punishment in Latin America,” and Schild, “Neo-Liberalisms New Gendered Market Citizens.” This methodological approach was first proposed by feminist sociologist Dorothy Smith, and is premised on the idea that knowledge is always situated, and that the task of the researcher is to grasp how that “knowledge is socially and materially organized, as produced by individuals in actual settings, and as organized by and organizing definite social relations.” Smith, The Conceptual Practices of Power, 63. For recent overview of public sector labour conditions, see Boccardo Bosoni, 30 años de política neoliberal en Chile. See also Toro and Arredondo, “La ‘nueva fisonomía’ del empleo en el sector público.”

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The “ameliorative” strategies of the enabling neoliberal state do not disrupt the workings of the market system, but rather attempt to encourage vulnerable and poor subjects and households to seek market solutions for their predicament. However, the ideal of the active, empowered citizen-entrepreneur ends up by relying largely on women’s work at the local, municipal level. These are day-to-day practices that involve clients and providers in affective and time investments well beyond official output metrics. Though largely invisible, this labor is nonetheless essential for the successful aim of “enabling” clients by nudging them to the market as “empowered” citizens. Furthermore, the regulation of gendered subjects through this strategy relies on an invisible pool of time, skill, and effort associated with the provision of care that is deemed to be freely available, and freely given, by women. In other words, the vaunted modernization of the social state takes for granted the externalization of social reproduction and extracts seemingly valueless time and feminized labor. It is not by accident, then that the Vice-President of the Asociación Nacional de Empleados Fiscales (ANEF) [National Association of Public Employees], characterized the social state in Chile as having a “woman’s face,” that is to say, “el estado social tiene cara de mujer.”69 This in itself is not new, however. Women have been active agents in projects of all modern state formation in Chile (and elsewhere), although their historical contributions remain largely under-analyzed. Indeed, although employment figures were not disaggregated by gender until recently, we know from the historical record that, as María Angélica Illanes has stated, “women have been one of the principal agents of Chile’s socio-political transformations.”70 The question is: what forms have their contributions taken at different moments? From 1940 to 1970, the Chilean social state had become a major employer of professional women. It is estimated that during that period, social services were responsible for 60 percent of the expansion in public employment, and that this sector accounted for 56 percent of the expansion in public employment between 1964 and 1970 alone. In other words, the expansion of social services largely explains the increase in public employment during the entire period.71 In 1973, public sector employment constituted 14 percent of total employment. The brutal downsizing of the state after 1973 saw a drastic reduction in public spending, and an equally drastic, and sudden, reduction of the public 69 70

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Statement by the Vice Presidencia de la Mujer of Asociación Nacional de Empleados Fiscales (ANEF/DEMU) which points to the “feminization of public work in Chile.” (ANEF 2008). Illanes, “Participación Popular,” 66. Karin Rosemblatt links the rise of a cadre of middle-class professionals, especially after 1920, to the inability of the oligarchy to solve the country’s “social question.” These professionals, along with progressive feminists, would play a critical role in the economic and social modernization project of the so-called “compromise” state, transforming subjects into deserving citizens, and bringing into life a new gendered order. See Rosemblatt, Gendered Compromises, especially Chapters 3 and 4. Marshall and Romaguera, “La evolución del empleo público en Chile, 1970–1978.” See also, Rosemblatt, Gendered Compromises, 126–8.

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sector. Between 1974 and 1985, the public sector had contracted by 40 percent.72 An estimated one hundred thousand public employees lost their jobs during this period, and, according to Eugenio Tironi, in a context where no new private sector employment was generated, many “became small business owners, and after failing in their venture, ended up as taxi drivers.”73 What happened to those employed in the “social” areas of the public sector? The sudden, drastic restructuring of the social state, accompanied by severe political repression, impacted professional women particularly hard.74 Those who did not lose their jobs saw their working conditions and professional commitments severely compromised.75 In effect, a deliberate deskilling was set in motion in 1973 for female dominated areas, particularly affecting the public sector. For example, the undermining of professional training and quality of work culminated in 1980 with a legal decree that declared social work to be a profession which did not require an advanced degree, or licenciatura (Bachelor of Arts).76 Rather than seeking out entrepreneurial activities, or driving taxis, many newly minted and experienced social workers, nurses, psychologists, and others joined the solidarity work set up by the Catholic Church through its Vicarías Zonales, as well as NGO’s focused on social development initiatives, on a volunteer or volunteer-like basis. These spaces would prove to be the training ground for future innovations in social policy and program development, and in particular for gender-sensitive, anti-poverty approaches. In 1990, the incoming Concertación administration under Patricio Aylwin (1990–1994) ushered in a program of “growth with equity” which initiated transformations that would become a new moment of neoliberal state formation. The powerful legacy of women’s activism during the dictatorship made significant contributions to this process of transformation. Key feminist demands for women’s autonomy and empowerment were institutionalized, or taken up as a fundamental aspect of a renewed project of social regulation premised on the economic model inherited from the dictatorship – with its demobilized labor movement and high levels of labor flexibilization – addressing the social “costs” of its implementation.77 Thus, feminist demands for autonomy 72

73 74 75 76 77

This data does not account for the transformation of type of employment in these sectors, from permanent to hourly based. Mario Velázquez P. “La evolución del empleo público en Chile, 1974–1985”, in Adriana Marshall, ed. El empleo público frente a la crisis. Estudios sobre América Latina. Geneva: ILO, 1990, 116,123. See also, Javier Martínez and Eugenio Tironi, Las clases sociales en Chile. Cambio y estratificación, 1970–1980, Santiago: Ediciones SUR, 1985, 68; and Foxley, Latin American Experiments, 65. Tironi, “Modernización y Democracia,” 16–42, 23. Sepúlveda, “Algunas reflexiones,” 142. Sepúlveda, “Algunas reflexiones,” 142–43. Sepúlveda, “Algunas reflexiones,” 143. Some key feminist political demands were institutionalized through the creation of Servicio Nacional de la Mujer, SERNAM (National Women’s Service) in 1991, which was tasked with promoting equality between women and men. One of the achievements of Michelle Bachelet’s second administration was to grant this institution ministerial status in 2016, and to rename it

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and empowerment, now narrowly defined in economic terms, became a lynchpin of an ostensible modern model of the two-wage family and “flexible” work. Furthermore, for the past 30  years, women’s economic independence has been the explicit or implicit focus of novel programs tackling poverty and “vulnerabilities.” This too bears traces of feminist legacies. Indeed, resources from the activism of the 1970s and 1980s relate directly to processes on the ground through which the rolling out of the enabling state is produced. For example, feminist local practices of consciousness raising, which relied on the skills of activists and professionals, and benefited from a long-standing tradition of popular education, proved to be a critical, though largely unacknowledged dimension of social interventions to nudge women toward greater involvement in the market as producers, borrowers, and consumers. Women have always been the implicit targets of social assistance programs. What is innovative about the panoply of social assistance and community-based security programs of the past thirty years is that women have become explicit targets. Whether explicitly or implicitly, women are the real targets of the programs, regardless of whether these focus on families, communities, seniors, youth at risk, or other vulnerable categories. As “empowered” clients, women are invited to be co-partners in a pedagogic process that seeks to build their capabilities and offer skills that can help them access opportunities, and ideally help break the cycle of poverty.78 These forms of social intervention, centrally designed but implemented locally, with rigid rules for budget allocation, and a firm technocratic control of program implementation, are a means of social disciplining and regulation of clients and providers alike. They take a contractual form that ties providers and clients into a relation of co-responsibility for the materialization of outcomes. Each party is required to deliver on acquired commitments, for clients through incentives in the form of a cash bonus, preferential access to services, or other benefits, and for providers in the form of performance evaluations which may have positive or punitive outcomes. Furthermore, the methods that were introduced in the 1980s for targeting social assistance programs to specific social groups have been improved upon but have not been set aside. Although the terms and categories for targeted populations have been amended, and redefined by successive center-left and center-right governments, their essence remains unchanged. They are not redistributive programs premised on a notion of universal rights of citizenship, but rather targeted forms of assistance of an ameliorative kind designed

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Ministerio de la Mujer y de la Equidad de Genero, SERNAMEG. I have explored this convergence between an institutionalized feminist agenda and neoliberal social regulation in Schild, “Neo-Liberalisms New Gendered Market Citizens,” “Empowering Consumer Citizens,” and “Rethinking Emancipation.” According to the Ministry of National Planning’s own assessment, the value of submitting to personalized “psycho-social interventions” is that they help women build their “self-esteem, their self-valorization, and their ability to propose life projects” (MIDEPLAN, “Sistema de apoyo psicosocial, mujer y familia,” 2).

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to “improve” target populations by teaching them to find their own solutions in the market. Thus, the capacity of clients to act or make choices seems not to be “their intrinsic property but an effect of their relationship with the state, through which they are both empowered and disciplined.”79 Social disciplining and regulation have taken a more direct form for those engaged in the day-to-day production of the decentralized neoliberal state. Since 1990, flexibilized or “precarious” labor, a predominant modality of work in the private sector, has also become entrenched at all levels of the state bureaucracy. By 1990, after several decades of systematic dismantling of the public traditions of the Chilean welfare state, and the off-loading of social responsibilities to the municipal level, public sector employment had been reduced by 50 percent in relation to 1973.80 This size has remained relatively constant, officially making the public sector in Chile one of the smallest among OECD countries. What these figures do not take into account, however, is the degree to which public sector employment has itself become a source of precarious work.81 Women make up 60 percent of public employees, and thus, the neoliberalized social state represents the largest employer of women in the country.82 However, what is clear is that public sector employment today is not a guarantee of decent work or a livable pension, and professional women are the most negatively impacted. Contract-based work, or contrata, and fee-per-service work, or honorario, are the two modalities of precarious work in the public sector. Contractbased work is, in fact, the dominant form of employment in the central state bureaucracy. Although this type of work is regulated through the Estatuto Administrativo del Sector Público (Public Sector Administrative Statute) of the Ministry of the Treasury – which calls for a maximum limit for contract-based 79 80

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Clarke and Newman, The Managerial State, 29. The numbers were reduced from an estimated total of 305,000 public servants in 1973 to approximately 130,000. Figures from Rodrigo Mardones, “The influence of neomanagerialism,” 11. Public Management Reform was embraced during the second Concertación government of Eduardo Frei (1994–2000), and Chile soon came to be regarded as a “vanguard of neomanagerialism in Latin America” and a model for agencies like the World Bank and IDB, which actively promoted so-called second-generation reforms, following structural adjustment, that aimed to “modernize” the public sector to guarantee the smooth functioning of markets. Promises made since the first Concertación government to address the labour conditions of the public sector have not been met, leading to increasing labour mobilizations. Most recently, demands for fair labour relations, “decent” public sector work, and pensions figured prominently in the Programa de Gobierno of Michelle Bachelet’s centre-left coalition Nueva Mayoría (2014–2018) but the results proved to be meager. See, Chile de Todos. Programa de Gobierno Michelle Bachelet (2014–2018). https://siteal.iiep.unesco.org/sites/default/files/sit_accion_files/ siteal_chile_0655.pdf; Rivera U., “Relaciones laborales en el sector público”; de la Puente, “Empleo público y derechos laborales.” The formal labor participation rate by women is 42.4 percent, and their occupations are concentrated in highly feminized areas; for example, they constitute 74.1 percent of workers in health provision, and 72.2 percent in teaching. Barriga, Durán, Sáez, and Sato, “No es amor, es trabajo no pagado.” See, also, Yañez and Rojas, eds., Empleo público en Chile.

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work of 20 percent of total employment in the public sector – the actual percentage is much higher. For example, by 2005, contract-based employment had already reached 44.7 percent of the total number of those employed in the public sector, while 54.6 percent of the total was permanently employed, or planta. By 2014, permanent public sector employment had further shrunk to 37.3 percent of public employees, and contract-based employment had reached 60.85 percent. The 2016 Annual Report on Human Rights in Chile of the Universidad Diego Portales characterized this modality of employment as unstable and precarious because employees are forced to renew their contracts on a yearly basis, and their continued employment depends entirely on the political good will of the government of the day.83 The municipal, or so-called decentralized state bureaucracy, relies extensively on a fee per service-based work, or honorario. According to official municipal data for 2020, 81.1 percent are hired on a fee per-service basis. Once again, the reality of employment under the category of honorario does not correspond to the definition of the regulatory statutes. The overwhelming majority of those employed on a fee per service basis are in fact engaged in ongoing, full-time, regular, and necessary functions of the municipal bureaucracy, and in many cases have been employed under these conditions for years.84 Three decades of administrative decentralization coupled with the commitment of center-left and center-right governments to expand ameliorative social programs, including health, education, and local security strategies, have saddled municipal governments with constantly expanding social responsibilities, without commensurate levels of funding.85 Women with professional and technical training have been those recruited under the most precarious terms, and consistently so for front-line work.86 Figures for the period 1999–2009, for example, show that women constituted the majority of those hired on a temporary contract basis.87 For the past three decades, women have been called upon to be genderless workers and rational consumers − and also, increasingly, responsible debt holders  − yet at the same time, they are expected to be the social support for reproductive and caring work.88 As I have noted, women’s work, official 83 84 85 86

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Varas Marchant, “Radiografía del empleo público en Chile,” 248. Sánchez, “Trabajadores a honorario.” See also Valdebenito Pedrero, “Cuántos trabajadores emplea el estado de Chile?” 18. Montecinos, “Limitaciones del diseño”; Valdivia, “La ‘alcaldización’ de la política.” According to a study by de la Puente, in 2011 an estimated 8,000 workers on limited contracts had been employed for over 20 years in public administration, and an additional 18,000 have between 11 and 20  years of seniority. During Bachelet’s government (2006–2010) the number of workers hired on a limited contract basis rose by approximately 43,000 (de la Puente, “Empleo público y derechos laborales,” 14). Ibáñez, “Estabilidad laboral en el empleo público,” 64–5. On women, household consumption and debt, see, for example, Pérez-Roa, “Consumo, endeudamiento y economía doméstica.”

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surveys reveal, tends to be concentrated in areas that are precarious and poorly paid, among them domestic work and activities in the service sector. For example, over one million women joined the labor market in the decade prior to 2020, when the health pandemic hit, and roughly 60 percent of the jobs created were in areas likely to be precarious and poorly paid, such as retail and services.89 This pattern of gender inequality is reproduced in the sphere of unpaid domestic labor; national time use surveys show that women spend 41 hours per week in domestic and care activities, while men spend 19.9 hours, and this is a pattern that is repeated among seniors.90 From clients to experts, and to a vast army of female personnel in the public, volunteer, and private sectors, women typically work for low pay, and under precarious conditions. Indeed, this work relies on “naturalized” care expectations, and self-expectations too that render invisible house work and care activities (and the affective and time components involved), essential for the reproduction of life and society, as valueless and unaccounted for. This burden of care is also a critical yet invisible component of women’s participation in public sector work and contributes to the exploitation and self-exploitation of female workers. As feminist scholars have noted, the call of the past three decades for women to be empowered, autonomous individual agents in their own right is contradictory: the appeal to women as free agents of the market is intertwined with implicit assumptions about their capacities for provisioning and caring, and the expectation that, as they join the paid workforce, they will continue to bear responsibility for the well-being of their families and communities.91

11.5  conclusions The multiple crises associated with the social mobilizations and the recent pandemic have revealed that the call for individual economic empowerment was a myth for the overwhelming majority of Chile’s women. The unprecedented social rebellion of October 2019, with its collective cry of Basta Ya! (Enough Already!), was a loud demand corroborated by public opinion surveys at 89

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Chile does not have a minimum hourly wage, and the basic or minimum monthly wage for full time employment as of January of 2021 was 326,500 CLP (USD390). Before the pandemic hit, an estimated 3 out 5 women earned less than 500 thousand CLP in their main occupations, and 50 percent of employed women earned 343,234 CLP or less. It is worth noting as well that according to the latest CASEN national survey, an estimated 42.4% of households in Chile – of a total number of households of 5,794, 096 – are female headed, and 53.2 percent of these are among the poorest decile. These are also the households that concentrate the highest number of unemployed women. These figures illustrate the extent of the feminization of poverty and highlight the particular burden women face. For a detailed gendered breakdown and analysis of official survey and statistical data on paid and unpaid work, see Barriga, Durán, Sáenz and Sato, “No es amor, es trabajo no pagado.” See Barriga, Durán, Sáenz and Sato, “No es amor, es trabajo no pagado,” 35–41. See, for example, Federici, Revolution at Point Zero; Eisenstein, Feminism Seduced; Fraser, Fortunes of Feminism; Schild, “Feminism and Neoliberalism in Latin America,” 69.

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the time. Polls revealed that “listening to the people” was among the most common responses to the question about how to resolve the social conflict in Chile. Since the return to electoral democracy in 1990, until the binomial system established by the Constitution of 1980 was abolished in 2017, and independent parties were allowed electoral access, governing had taken the form of elite-level power sharing and consensus politics among center-left and center-right coalitions. This was an arrangement explicitly designed to exclude popular participation and its associated political expressions.92 Moreover, at the local level, it transformed the promise of democracy into a technical administrative form of governance insulated from political participation and consultation, and entrenched a clientelist politics which trades social benefits for political support. On May 15th and 16th, 2021, elections were held for 155 delegates to the Constitutional Convention tasked with drafting a new Constitution, as well as for 345 Mayors, 2,252 local government Councilors, and 16 Governors (for the first time, Governors of the sixteen Regions of Chile were democratically elected, rather than appointed by the national President). The results demonstrated that the voice for change was loudly heard. The most spectacular winners were independent candidates who were not identified with the traditional political parties, an astonishing result that neither pundits nor pollsters had predicted. Indeed, the results of the election of delegates to the Constitutional Convention have been accurately read as a resounding rejection of the exclusionary governing formula implemented by traditional political parties, as well as a punishment of the center-left coalition that had governed Chile for 24 of the last 30 years along with the two more recent center-right coalition governments of Sebastián Piñera.93 92

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Constitutional lawyer, and elected representative to the Constitutional Convention, Fernando Atria, has accurately observed that the Constitution of 1980 was designed to neutralize rather than enable the political will of Chilean citizens. See Atria, La constitución tramposa, 41. In this rigorous and compelling analysis, Atria successfully dismisses the claim in 2005 by then President Lagos and members of the Concertación to have made fundamental reforms to the Constitution such that it was legitimate to now refer to it as the 2005 Constitution. In fact, constitutional reform would remain an increasingly dominant popular demand, which included the frustrated effort of the centre-left coalition of the Nueva Mayoría government led by Michelle Bachelet (2014–2018). Political pollsters failed to predict the overwhelming victory of independent candidates and the collapse of the centre-left and centre-right coalitions. The biggest loser was, in fact, the centre-right, which, with parties running under the single list Vamos Chile, and notwithstanding their extensive and well-funded campaigns, obtained 37 of the 155 seats, or 24 percent of the vote – far from the 52 representatives they needed for a two thirds majority to allow them to block changes in the drafting of the Constitution. Equally punishing were the results obtained by the Lista del Apruebo, uniting parties of the centre-left coalition that governed Chile for 24 of the last 30 years. Although a great number of independent centre-left candidates ran under this list, support for it plummeted to 16 percent, or 25 seats of 155. The list composed of the Communist Party and the left conglomerate, Frente Amplio, obtained 18 percent, or 28 seats. 17 seats were reserved for indigenous representatives. The surprising, and strongest, winners

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Although independent delegates may or may not be affiliated with traditional political parties, a majority of them come from the world of social movements  – such as feminists and environmentalists, members of the pensioner movement, and others. Particularly strong was the result of Lista del Pueblo, a conglomerate of social leaders with links to local or territorial cabildos (councils) and asambleas (assemblies), the self-organized neighborhood spaces of dialog and association that had sprung up during the mobilizations of October 2019. Many of these citizen assemblies have continued to meet, to create networks through social media, and to articulate their own voices – designated by them as voz del pueblo – in their pursuit of genuine democratic participation.94 The norm stipulating gender parity for the Constitutional Convention resulted in the historically unprecedented election of a great number of female representatives, most of whom self-identify as feminists and as left leaning. A majority of them were elected through independent lists, with 60.7 percent elected from the Lista del Pueblo. This pattern was repeated in the election of 9 women of a total of 17 representatives from Chile’s first nations.95 Furthermore, the average age of elected representatives is 45, a generational change which in itself is a clear expression of the demand for political renewal.96 Clearly, the constitutional body that will draft Chile’s new Constitution is “without precedent in terms of the social origin, generational, ethnic, and gender composition” of its delegates and, as experts suggest, “these results emphasize even more the elitist and exclusionary character of the Chilean political system for the past few decades.”97 This diverse Constitutional Convention will bring to the table long-overdue demands for a changed state form, from an excessively centralist enabling neoliberal state to a state that recognizes the diversity and

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were candidates running as independents, under a number of different lists, who obtained a total of 42 percent of the vote, or 48 seats. Altogether, 76 percent of the total votes went to candidates broadly associated with the centre-left and the left. Heiss, “Chile: La constitución que viene.” See, for example, the demands to the Constitutional Convention found in the “Pliego de exigencia de las asambleas territoriales, 2020–2021” of the Coordinadora de Asambleas Territoriales (CAT), which was circulated widely before the elections. Le Monde Diplomatique (Edición chilena), April 8, 2021 www.lemondediplomatique.cl/%EF%BF%BCpliego-de-exigenciasde-las-asambleas-territoriales-2020-2021.html. 50 out of the 77 elected female representatives mentioned “feminism” directly in their programs, and another twelve referred to “equality” or to “gender equity.” See Marton, “¿Es posible que la Nueva Constitución sea feminista?” However, there is no single feminist agenda. The elected indigenous representatives have a trajectory of leadership in their own territories, and a distinctive feminist agenda that includes the central question of state violence, according to indigenous legal scholar Verónica Figueroa Huencho. See, Espinoza C., “Verónica Figueroa Huencho.” For an overview of indigenous people’s demands, see also, Centro de Estudios Interculturales e Indígenas, “Estudio de opinion pública.” For an age breakdown of elected representatives, see Contexto+, https://plataformacontexto.cl/ contexto_factual/la-generacion-constituyente-edad-promedio-entre-las-y-los-electos-a-la-convencionconstitucional-ronda-los-45-anos/. Heiss, “La Constitución que viene.”

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role of regions and guarantees the public sphere as a fundamental basis for social rights.98 The success of young, independent leaders emerging from local spaces, with political proposals that integrate local citizen experiences and demands, was reproduced in the elections of mayors and councilors. For example, candidates of Frente Amplio won 10 important municipalities, and although not required to adhere to gender parity rules, 6 of the 10 winners were women.99 This trend, however, was not reproduced in the case of the election of governors, an election also not required to adhere to gender parity rules.100 The COVID-19 pandemic has laid bare the profound inequalities and vulnerabilities that have characterized the lives of the majority of Chile’s population after 45  years of neoliberal institutional and political modernizations premised on a model of market-based “growth with equity.” It has also revealed the limited capacities of an enabling social state to offer a timely and adequate response to the devastating impact of combined social and economic crises felt by the majority of Chileans. Its desperate measures have placed the privatized social security system in crisis and have forced the government to compensate those left with depleted individual pension funds.101 Moreover, in light of the ongoing crisis, widespread loss of income, and impoverishment of large sectors of society, not to mention the mounting political pressure, the government has been forced to implement emergency assistance programs with greater coverage, such as the Ingreso Familiar de Emergencia Universal, or IFE Universal (Universal Family Emergency Income), introduced in May of 2021, which benefits an estimated 15 million of the country’s 19 million inhabitants. The limitations of a decentralized state that lacks autonomy have also been brought to the forefront, as local governments cope with limited resources to meet the dire needs of thousands of poor households, an expanding category that includes seniors living on pensions, and those members of the vaunted new middle class who are now the newly impoverished. In this context, neighbors 98

See Heiss for a clear and succinct description of the unprecedented multiplicity of demands represented by the newly elected constituent body and the challenges these will pose to the constituent process of drafting the new Constitution. 99 At the national level, 33 percent of all elected councillors, and 17 percent of all elected mayors, were women. Irací Hassler, a 30-year-old economist and member of the Communist Party, was elected mayor of the most politically important and emblematic municipality, the Municipio de Santiago. See Montes, “Chile tiene un modelo de abusos.” 100 With the exception of the election of one governor from the governing centre-right coalition, Chile Vamos, the remaining 15 governors of a total of 16 were elected from the centre-left. Few women ran for governors, 15 out of a total of 90 candidates, and even fewer were elected. This reflects a historical problem, especially at the level of regions, gender experts point out. See, PNUD, Nuevo mapa del poder y género en Chile. 101 The meager emergency assistance doled out in the form of care packages to the most vulnerable, followed by other inadequate targeted measures, as the only government responses to the crisis, forced Congress to approve legislation allowing Chileans to withdraw 10 percent of their individual pensions, not once but three times.

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have not remained passive. Judging from the assemblies and cabildos which have been ongoing since October 2019, and the organization of alternative responses to the needs of isolated elderly and households experiencing hunger, the local has “struck back.” As during the dictatorship, and especially during the economic crisis of the early 1980s, women are once again at the forefront of local initiatives of solidarity, relying on old practices and developing novel methods, from soup kitchens (ollas communes) to food supply networks (redes de abastecimiento) to feed and care for their neighbors, and demanding that their voices be heard.102 Clearly, in the absence of a caring state, it is women  who once again step up to the challenge, but this time they do it as an explicit political denunciation of the “crisis of care.”103 The unprecedented election and participation of feminist activists and professionals in the Constitutional Convention and mayoral and council elections were replicated in the presidential elections of 2021. Leftist candidate Gabriel Boric and his coalition Apruebo Dignidad came to power on December 21st, in a second round, with an astounding lead of 12 points over the far-right candidate José Antonio Kast. The vote of women, particularly of those under 30, clinched the victory for Boric who had lost by 2 points in the first round of the elections on November 21st. An explicit commitment to feminism is central for the incoming administration. Indeed, the ambitious official program of the Apruebo Dignidad government highlights feminism as the first of four key intersecting perspectives  – along with its commitment to a just ecological transition, decentralization of power, and decent work – that will shape government policy. This program envisions the transformation of Chile into a more just and inclusive society, one premised on the recognition of territorial diversity, environmentally sustainable development, and regional power sharing.104 Boric’s cabinet selection reflects the key role that feminists will play in government. In an unprecedented move for the Americas, 14 of his 24 ministers (with an average age of 49) are women, including those in key posts like defense and justice. In addition to advancing long-standing feminist demands, including the right to abortion, ending violence, and non-sexist education, among others, the government plan has singled out the need to focus on female labour participation in the country’s economic recovery, thus, recognizing that women have been the hardest hit by the COVID pandemic-related economic crisis. It has proposed the creation of a National Care System (Sistema Nacional

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See, for example, La Olla de Chile (www.laolladechile.com/); Directorio de Ollas Comunes y otras iniciativas de autogestión (www.fondoalquimia.org/directorio-de-ollas-comunes-yotras-iniciativas-de-autogestion/); Apablaza Riqueleme, “The resurgence of Ollas Comunes in Chile”; Fernández, “Ollas comunes, la otra cara de la crisis.” “Política feminista para la vida digna.” See, Programa de Gobierno Apruebo Dignidad. https://s3.amazonaws.com/cdn.boricpresidente​ .cl/web/programa/Plan+de+gobierno+AD+2022-2026+(2).pdf.

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de Cuidados) with the aim of redistributing co-responsibility for the care of dependent persons, and of those who care for them. The move of the Ministry of Women and Gender Equality, a secondary ministry since its creation during Bachelet’s second presidential term (2014–2018), to the President’s inner cabinet, suggests that the political significance of Chile’s crisis of care, and of the inordinate burden of care that women have historically faced, will strengthen debates in the Constitutional Convention. These demands for a new gender order, a new model of development, and a new state form will no doubt find echo in the demands for a decentralization of power and decentralized model of administration that creates spaces for genuine local, democratic consultation. Ensuring that care is a universal right, while recognizing the shared responsibility of society and the economy for it promise to be at the center of debates about a redefined social state. In this sense, insisting on a state form capable of assuming the challenge of securing the fundamental everyday activities to maintain life and to reproduce the next generation, is a central plank of feminist calls in the drafting of the new Constitution. These are critical demands for the reconfiguring of the neoliberal state. They are also, in essence, a call for a redistribution of power. Will the new Constitution and the new government lay the grounds for the reconfiguration of a new gender order, one premised on a notion of gender equality and citizenship that recognizes at last that citizens are both autonomous and interdependent? Ultimately, an answer to this question, and a renewed vision of social welfare, will continue to depend on social mobilization in Chile.

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Giddens, Anthony, ed. The Progressive Manifesto. Cambridge: Polity Press, 2003. Guy, Donna J. Women Build the Welfare State: Performing Charity and Creating Rights in Argentina, 1880–1955. Durham and London: Duke University Press, 2009. Heiss, Claudia. “Legitimacy Crisis and the Constitutional Problem in Chile: A Legacy of Authoritarianism.” Constellations 24 (2017): 470–79. Huneeus, Carlos. El régimen de Pinochet. Providencia, Santiago de Chile: Editorial Sudamericana, 2000. Ibáñez, María Angélica. “Estabilidad laboral en el empleo público.” In Reforma del estado y relaciones laborales en el Chile de hoy, edited by Jaime Ensignia and Alejandro Führer, 57–71. Santiago: Friedrich Ebert Stiftung, 2011. Illanes, María Angélica. Cuerpo y sangre de la política. La construcción histórica de las visitadoras sociales, Chile 1880–1940. Santiago: LOM, 2007. Illanes, María Angélica. “Participación Popular: Una utopía política; otro servicio social. Chile, 1963–1965.” In Trabajo social en Chile, edited by Paulina Vidal, 61–94. Santiago: RiL Editores, 2016. Instituto Nacional de Estadísticas. “Género y empleo: impacto de la crisis económica por COVID-19.” Boletín Estadístico, March 8 2021. www.ine.cl/docs/default-source/ genero/documentos-de-an%C3%A1lisis/documentos/g%C3%A9nero-y-empleoimpacto-de-la-crisis-econ%C3%B3mica-por-covid19.pdf. Larraín, Clemente. “El financiamiento de los municipios en Chile.” Centro de Estudios Publicos 534 (May 2020). Edición Digital. www.Cepchile.cl. Leighton, Hernán. “Los rostros de ODEPLAN, la “cocina” del modelo en dictadura que aún copa los espacios de poder en el Gobierno.” El Mostrador, November 22, 2019. www.elmostrador.cl/destacado/2019/11/22/los-rostros-de-odeplan-la-cocinadel-modelo-en-dictadura-que-aun-copa-los-espacios-de-poder-en-el-gobierno/ Accessed November 22, 2019. Luna, Juan Pablo. “La implosión de la política y la falta de legitimidad social” Santiago: CIPER, November 11, 2019. https://ciperchile.cl/2019/11/11/la-implosionde-la-politica-y-la-falta-de-legitimidad-social/ Accessed November 14, 2019. Mardones, Rodrigo. “The influence of neomanagerialism on Reform of the Chilean Civil Service.” International Public Management Journal 5 (2002): 1–15. Marshall, Jorge, and Pilar Romaguera. “La evolución del empleo público en Chile, 1970–1978.” CIEPLAN, Notas Técnicas No. 26, Santiago, February 1981. Martínez, Javier, and Eugenio Tironi. Las clases sociales en Chile. Cambio y estratificación, 1970–1980. Santiago: Ediciones SUR, 1985. Marton, Amanda. “¿Es posible que la Nueva Constitución sea feminista? 8 convencionales adelantan cómo será la discusión.” The Clinic, June 8th, 2021. www​.theclinic.cl/2021/06/08/es-posible-que-la-nueva-constitucion-sea-feminista-8convencionales-adelantan-como-sera-la-discusion/. Mesa-Lago, Carmelo. “La privatización de las pensiones en América Latina: Promesas y realidades.” Nueva Sociedad, no. 291 (Jan-Feb 2021): 15–27. MIDEPLAN. “Sistema de apoyo psicosocial, mujer y familia: Notas técnicas sobre protección social y género.” Documento No. 5. Documento Temático elaborado por MIDEPLAN como material de apoyo al Seminario Protección Social y Género. Santiago: MIDEPLAN, 2008. Montecinos, Egon. “Limitaciones del diseño institucional para una gestión municipal participativa. El caso chileno.” Economia, Sociedad y Territorio VI, 23 (2007): 725–43.

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Montes, Rocío. “Chile tiene un modelo de abusos y debe poner la dignidad en el centro.” El País May 21 2021. https://elpais.com/internacional/2021-05-22/iraci-hassler-chiletiene-un-modelo-de-abusos-y-debe-poner-la-dignidad-en-el-centro.html. Morales Casetti, Marjorie. “Nueva gestión pública en Chile: orígenes y efectos.” Revista de Ciencia Política 34, no. 2 (2014): 417–38. Morales M., Eduardo, “Políticas de empleo y contexto político: El PEM y el POJH.” Documento de Trabajo No. 225. Santiago: FLACSO, November 1984. Moulián, Tomás. Chile actual. Anatomía de un mito. Santiago: LOM-ARCIS, 1997. Murray, Marjorie, and Helene Risor. “Pensar con la gente: Una ciencia social autónoma lenta y comprometida con Chile.” Santiago: CIPER, https://ciperchile​.cl/2019/11/02/ pensar-con-la-gente-una-ciencia-social-lenta-autonoma-y-comprometida-conchile/ Accessed Nov 14, 2019. Newman, Janet. “Regendering Governance.” In Remaking Governance, edited by Janet Newman, 81–100. Bristol: Polity Press, 2005. ONU Mujeres, “Impacto de la crisis COVID en mujeres trabajadoras remuneradas de Chile: Diagnóstico y recomendaciones” (2020). https://lac.unwomen.org/es/ digiteca/publicaciones/2020/05/impacto-covid-19-mujeres-trabajadoras-chile. ONU Mujer and CEPAL. “Cuidados en América Latina y el Caribe en Tiempos de COVID-19. Hacia sistemas integrales para fortalecer la respuesta y la recuperación.” Brief v.1.1.19.08.2020. www.cepal.org/sites/default/files/publication/ files/45916/190829_es.pdf. Orloff, Ann Shola. “Motherhood, Work, and Welfare in the United States, Britain, Canada, and Australia.” In State/Culture: State-Formation after the Cultural Turn, edited by George Steinmetz, 321–54. Cornell, NY: Cornell University Press, 1999. O’Shea C., Maria José. “Carlos Peña: No creo haberme equivocado absolutamente en nada.” La Tercera, January 4 2020. www.latercera.com/la-tercera-domingo/ noticia/carlos-pena-no-creo-haberme-equivocado-absolutamente-nada/961001/ Accessed January 5 2020. Ostry, Jonathan D., Prakash Loungani, and Davide Furceri. “Neoliberalism: Oversold?” Finance & Development (June 2016). Pérez-Roa, Lorena. “Consumo, endeudamiento y economía doméstica: Una historia en tres tiempos para entender el estallido social.” In Hilos tensados. Para leer el octubre chileno, edited by Kathya Araujo, 83–105. Santiago: Ideas-USACH, 2020. Piñera, José. “Empowering People: The Privatization of Social Security in Chile.” Cato Institute. September 18, 1997. www.cato.org/testimony/empowering-peopleprivatization-social-security-chile-0. Pizarro, Claudio. “Los números detrás del retiro del 10% de las AFP: Mitos y verdades sobre los alcances de una votación histórica.” El Desconcierto, July 23 2020. www.eldesconcierto.cl/2020/07/23/las-numeros-detras-del-retiro-del-10-de-lasafp-mitos-y-verdades-sobre-los-alcances-de-una-votacion-historica/ Accessed July 23, 2020. PNUD and MDSF. Impactos socioeconómicos de la pandemia en los hogares de Chile. Resultados de la encuesta social COVID, primera fase, julio 2020. Santiago, July 2020. www.unicef.org/chile/media/5901/file/Informe%20impactos%20de%20la%20 pandemia%20.pdf. PNUD. Nuevo mapa del poder y género en Chile (1995–2018). Santiago: Programa de Naciones Unidas Para el Desarrollo, 2020.

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12 Europeanization Effects Statehood and Contentious Politics in Spanish Democracy Philipp Müller

In May 2011, protesters occupied the Puerta del Sol in Madrid, one of the busiest and best known squares in the city. A proclamation by one of the organizing groups, Democracia Real Ya (Real Democracy Now), declared: “We are ordinary people. We are like you: people, who get up every morning to study, to work, or to find a job, people who have family and friends. […] But we are all concerned and angry about the political, economic, and social panorama we see around us. About the corruption among politicians, businessmen, bankers … About the helplessness of the ordinary citizen.”1 The proclamation was part of a wave of protests in the wake of the European debt crisis that reached unusual proportions. Puerta del Sol in Madrid and public squares in Spanish cities all over the country remained occupied for weeks, several hundred thousand people participated in protest demonstrations, and in the following years Spanish voters turned to new national parties, ending the bipartisan system that had prevailed in parliamentary elections for decades. Protesters opposed the austerity policies that were implemented as a reaction to the crisis, first by the socialist administration under President Zapatero, and continued by the conservative government under President Rajoy. But they also questioned the Spanish parliamentary system in general. By portraying the protesters as ordinary citizens, whose concerns were ignored by the political and economic elites, the proclamantaion framed the contentious collective actions as legitimate resistance to the contemporary state of Spanish democracy. Observers have interpreted the cycle of protest starting in 2011 as a reaction to neoliberal economic policies.2 In the following, I agree with this 1 2

“Democracia real ya (Mayo de 2011),” 791. See among others della Porta, Social Movements in Times of Austerity; Romanos, “Late Neoliberalism and its Indignados”; Kouki and Fernandez Gonzalez, “Syriza, Podemos und die Anti-Austeritäts-Mobilisierungen.”

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assessment. However, it seems necessary to clarify an apparent anomaly of the Spanish case in comparison to dominant interpretations of the relationship between neoliberalism and protest in the literature. According to these interpretations, the structural influences of neoliberalism on the nation-state are crucial when the analysis of contemporary contentious collective action is at stake. This emphasis is due to the central role of the state in research on social movements and protest. Because of their claim of binding rule making and their function to redistribute resources, states have been considered the natural target of political protest ever since the emergence of modern statehood.3 In this perspective, the form and content of political protest arise from its demands on the state, the opportunities for protest state institutions offer, and the threats participants might face from state repression.4 Because of the interrelationship between political protest and statehood, the adaptation of the nation-state to the expansion of economic, financial, and social relationships across national boundaries is held to have a profound impact on contentious politics. According to this view, the cross-border movement of information, goods, capital, and migrants has reduced the ability of states to intervene in their societies and, as a consequence of this development, contentious collective action has reoriented its goals and repertoire. Facing a state that has transferred some of its decision-making power to international institutions, in order to coordinate a new transnational regime of trade and finance, protesters – it is held – have joined the transnational arena, shifting their targets from national governments to summits of the G20, meetings of the World Trade Organization or Euro summits, mobilizing across national borders through the channels of social media.5 While it seems obvious that public contention in Spain in the wake of the European debt crisis indicated a new stage of intensity, the protests in Madrid and elsewhere do not match the description above. It is true that there were links between the Spanish events and the protests of the Arab Spring, as well as between various groups in Europe that opposed the crisis policies oriented by Brussels.6 But in contrast to widespread assumptions, recent empirical studies have shown that the protest movement of May 2011 in Madrid was organized to a large extent by crafting a web of contacts between civil society organizations on the ground, rather than through social media.7 At the same time, while the protests in 2011 and subsequent years also addressed institutions and policies of the European Union, the main target remained the 3 4 5 6 7

Beissinger, “Contentious Collective Action and the Evolving Nation-State.” Goldstone and Tilly, “Threat (and Opportunity).” Smith, “Globalizing Resistance”; Porta/Caiani, Europeanization, 138–66. See among others Ancelovici, “Crisis and Contention in Europe.” Flesher Fominaya, Democracy Reloaded, 295–96. In a similar vein Eduardo Romanos underlines the significance of “brokers” beyond social media as a cardinal factor in the transnational diffusion of the form and content of protests in Spain, Egypt and the United States. Romanos, “Brokerage and the Diffusion of Social Movements in the Digital Era.”

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Spanish state.8 Protesters were highly critical of the demands from Brussels during the crisis, but Euroskepticism did not develop into a core concept of contention. Rather, Europe was increasingly presented as a possibility to expand the social and civil rights of Spaniards.9 In view of these apparent peculiarities, the question arises whether the thesis of fundamental changes in contentious collective action due to the emergence of neoliberal statehood misses the Spanish reality. Although protests in Spain have increased since 2011, neither the repertoire nor the orientation of protesters toward the nation-state seems to have undergone important modification. In a recent analysis, Fishman has even argued that rather than shaking the political landscape or transforming Spanish political culture, the protests since 2011 should be seen in continuity with the institutional and political development of Spanish democracy since 1978. According to this view, as a consequence of the emergence of Spanish democracy from elite settlements, the political system has been characterized by the exclusion of social movements, resulting in recurring social protest movements against the government and parliamentary representatives.10 Whatever the influence of neoliberal changes may have been, according to this analysis, such changes did not have a decisive effect on the long-term opposition between social protest and political parties, in recent decades. In the following, I will suggest a different reading of the neoliberal context affecting contentious politics, by focusing the role of Europeanization.11 The concept of Europeanization has been used in various forms, but in recent discussions, authors have employed the term to highlight that the history of European integration is not captured by the idea of a constant process leading to deepening and widening the European union. Although European connections and exchanges might become more frequent and gain in significance due to inter-governmental agreements, the process of economic and political integration does not necessarily benefit from these developments. Rather, Europeanization also produces unintended consequences and ambivalent effects on a European, national, and regional scale.12 In this sense, I use the term in order to stress the impact of European integration in a more encompassing way than the compliance of Spanish policies with European guidelines might show. Specifically, for the interrelationship of two developments: firstly, since the early 1980s, Spanish governments have focused on economic and social policies oriented by the criteria of admission to the European Community. This orientation toward Europe has introduced neoliberal policies into the Spanish context, but not weakened state power. Rather the Europeanization of politics 8 9 10 11 12

Flesher Fominaya, “European Anti-Austerity and Pro-Democracy Protests.” Roch, “Unpacking EU Contestation.” Fishman, Democratic Practice. Arregui, “Europeanization of Political Structures.” Hirschhausen and Patel, “Europeanization in History”; Frysztacka, “Die Ambivalenzen der Europäisierung.”

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has transformed Spanish statehood, and isolated state agencies from civil society. Second, as a consequence, the capacity of the two established political parties to integrate civil society actors has diminished, and the former bonds between political parties and social movements have been loosened. Thereby, Europeanization has created a setting that offered new possibilities to appropriate the resources for political mobilization by different actors in 2011 and after. In the first step, I introduce a theory of the relationship between political parties and social protest on the basis of concepts developed by Pierre Rosanvallon and Jürgen Habermas. Following these theoretical perspectives, forms of political protest can function as a supplement to parliamentary representation, and thus, be a genuine component of democratic systems. In contrast to Habermas and Rosanvallon, however, I do not understand this relationship as a normative model, but rather as a historical constellation that can help understand the case of Spain during the transition period.13 In the second step, I explain how the orientation of economic policy toward the requirements of the Spanish accession to the European Community and the European Monetary System changed the previous relationship between parties and political protest in the 1980s. Two factors are central to this change: First, the implementation of measures that are commonly conceived as the neoliberal turn of the European Community and second, the form of the distribution of political power that has characterized the Europeanization of Spanish politics  – particularly the transformation, rather than the weakening of the state. In the third step, I explain that these changes broke up the former network of political parties and unions that translated civil society concerns and protest into parliamentary politics. The neoliberal transformation of the state in the wake of Europeanization triggered a withdrawal of political actors from important civil society groups and caused a widespread sense of political disenchantment. In the fourth and last step, I show how the European debt crisis created opportunity structures that protesters appropriated to mobilize against the established two-party system. The framing strategy that introduced contentious actions as a protest of the people against the elites reflected the potential resources for social mobilization created by the previous rupture between political parties and civil society. While the preconditions for the protesters’ success have been set by the Europeanization of Spanish politics since the late 1970s, they have also made the political institutionalization of their demands a difficult endeavor for the subsequent movement parties. The current struggle of Unidas Podemos to maintain its political position in the Spanish party landscape illustrates these difficulties.14 13

14

Rosanvallon also understands his model historically, but describes the contemporary deviation from it as a decline propelled by the inherent dynamics of an increasingly diverse society. In his view, populism represents a radicalization of these tendencies. Rosanvallon, Counter-Democracy, 253–73; Rosanvallon, Le siècle du populisme. Sola and Rendueles, “Podemos, the Upheaval of Spanish Politics”; Moreno-Almendral, “Nation, People, and National Populisms.”

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12.1  social

protest and parliamentary

representation in the transition

In order to understand how the relationship between social protest and political parties has evolved in the course of Spain’s accession to the European Community, it is necessary to consider briefly the end of the Franco period. The transition to democracy in Spain has long been considered a model of elite settlement. In this perspective, high-ranking members of the former Franco regime and leaders of the socialist and communist parties negotiated an agreement that made possible free parliamentary elections, and the drafting of a democratic constitution in 1978.15 While the importance of the negotiations between members of the different political camps cannot be disputed, recent research has highlighted the fact that their consensus was conditioned by political pressure on the streets. Contentious collective action played an important role toward the end of the Franco regime, and at critical junctures during the transition. More than three million workers participated in strikes in 1976 that affected important industrial production all over the country. The protests before the first free parliamentary elections, in 1977, were particularly intense, demanding an amnesty for all political prisoners, autonomy regulations for various Spanish provinces, as well as labor and economic reforms. Therefore, representatives of the political parties knew that the stabilization of the general situation depended on the result of their negotiations. On the one hand, the reform-minded faction of the Francoists was convinced that an agreement with the opposition alone could prevent a complete loss of control. On the other hand, representatives of the political left and center-left saw that a majority of protesters took to the streets for economic improvements, and not primarily for political reforms. They recognized that a compromise with the leadership of the authoritarian regime offered the best chance of democratization. In doing so, both sides created important preconditions for the subsequent consensual drafting of the new Spanish constitution.16 This counterbalance of social protest and political decisions did not vanish after the parliamentary elections in 1979, but retained its importance in the years after the transition. According to both Habermas and Rosanvallon, the interaction between political parties and social protest constitutes a central component of parliamentary democracy. Habermas points to the fact that the change in the forms of social life puts the positive legal order in a state of constant tension with the constitutional principles of a democracy. Similarly, Rosanvallon highlights that representative democracies have never been able to fully realize key normative promises, such as

15 16

Gunther, “Spain”; Encarnación, Spanish Politics, 5–6. Pérez Ledesma, “‘Nuevos’ y ‘viejos’ movimientos sociales en la transición”; Threlfall, “Reassing the Role of Civil Society Organizations”; González Madrid and Martín Garcia, “In Movement”; Radcliff, Making Democratic Citizens in Spain; Sánchez-Cuenca and Medina, “Institutional Suicide and Elite Coordination.”

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the equal representation of all voices in society.17 As a consequence of these persisting contrasts between the ideal and the practice of democracy, both authors understand public protest as a force that uses non-institutionalized forms of contentious action to control parliamentary representatives and correct perceived inadequacies of the legal order. Protesters are not satisfied with the fact that the institutional possibilities of dissent have been exhausted, and use public forms of disapproval as an instrument to draw attention to their grievances. With their actions, they appeal to their fellow citizens to realize that the current state of affairs does not meet the requirements of democratic governance. The goal of mass protest, characterized by Habermas and Rosanvallon, is, thus, not to overthrow but to uphold the self-imposed demands of democracies. Therefore, they should be understood as a complement to parliamentary elections. As Habermas and Rosanvallon make clear, this arrangement depends on the democratically orientated goals of collective contention, and the receptivity of party representatives to the demands of protesters, who, thus, have reason to believe that it is sufficient if their dissent is limited to attracting public attention.18 Many participants in mass protests were under the impression that their grievances were heard and taken into account in the late 1970s and early 1980s in Spain, particularly regarding economic policy decisions.19 Several factors helped consolidate a relationship between civil society movements and political parties that was characterized by mutual recognition, in principle, although this did not rule out conflicts. The context of the severe economic crisis in the late 1970s, accompanied by a sharp increase in unemployment and a high inflation rate, fostered the conviction among policymakers that union involvement in economic policy decisions would be an important contribution to political and economic stabilization. Many Spaniards joined intermediate associations of civil society, and especially the two dominant unions, the “Union General de Trabajadores” (UGT, General Workers Union) and “Comisiones Obreras” (CCOO, Workers Commissions), which experienced a solid increase of their affiliations. Since the first conservative government had only a minority position in parliament, in important policy issues, it depended on support from other political and social actors. As a consequence, the mobilizing power of the unions extended far beyond the 40% of the Spanish workers that eventually became members of unions during the transition period. At the same time, unions maintained close ties to the socialist and communist parties. While the General Workers Union formed an alliance with the Partido 17 18 19

Habermas, “Ziviler Ungehorsam”; Rosanvallon, Counter-Democracy, 115–120. Habermas, “Ziviler Ungehorsam,” 89; Rosanvallon, Counter-Democracy, 25. However, political minorities from the left and right, especially in the Basque Country and Catalonia but also in the Spanish military, by no means shared this assessment and turned to political violence in the early years of Spanish democracy. The radicalization of these groups increased as the confrontational mobilization on the street weakened. Baby, Le mythe de la transition pacifique; Sánchez-Cuenca and Aguilar Fernández, “Violencia política y movilización social.”

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Socialista Obrero Español (PSOE), the Workers Commissions cooperated with the Partido Comunista de España (PCE).20 After the “Pactos de la Moncloa” in 1977, the Spanish government initiated and organized a series of agreements between representatives of unions and employer’s associations, known as “social concertation.”21 These agreements were not reached through peaceful negotiations only – the unions called a general strike in opposition to the parliamentary discussion on the “Estatuto de los Trabajadores” (Workers’ Statute) in 1979, for example. But they made clear that social demands were considered in official resolutions and agreements, and that representatives of the workers were part of the negotiations, as shown by the signing of the final version of the Workers’ Statute in 1980, the Acuerdo Nacional de Empleo (National Employment Agreement) in 1981, and the Acuerdo Económico y Social (Economic and Social Agreement) in 1984. In this time period, political parties and unions respected a pattern of mutual influence and constraint that had already characterized the transition period. On more than one occasion, union leaders moderated scale and thrust of contentious actions because they did not want to endanger their cooperation with party representatives. Moreover, the attempted military coup in 1981 contributed to their willingness not to take social conflicts to extremes, in order not to endanger the consolidation of democracy. All these agreements and political practices were based on the perception that social demands and grievances had an impact on policy making.22 Thus, the practice of the social pacts of the early 1980s helped stabilize a democratic culture that tended toward a complementary relationship between parliamentary representation and social dissent, as theorized by Habermas and Rosanvallon. The ties between social movements and political parties were further strengthened by dual memberships in one of the dominant Spanish unions, and the political parties PSOE or PCE, and appeared to be confirmed when the first Socialist government under Felipe González took office after winning the 1982 elections. However, within the next few years, these ties were severely affected, leading to direct confrontations between government and workers, and declining union membership. This change was part of a restructuring of the Spanish political landscape. A decisive factor in this development was the preparation for Spain’s membership in the European Community. Political leaders of PSOE were willing to disregard significant practices of social consensus, consolidated during the transition, in order to advance toward a perceived need for the transformation of Spain’s economy, which appeared as a requisite for full acceptance by the member states of the European Community. 20 21 22

Jordana, “Reconsidering Union Membership in Spain”; Hamann, The Politics of Industrial Relations, 72–4. Royo, “‘A New Century of Corporatism?’” For a more detailed discussion see Zaragoza and Varela, “Pactos sociales y corporatismo en España”; Fishman, Working Class Organization and the Return to Democracy, 163–80; Morlino, Democracy Between Consolidation and Crisis, 223–5.

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12.2  the

389

focus on european integration

After the end of the Franco regime, there was a broad consensus among party leaders that Spain should become a member of the European Community. Among Spanish conservatives, Europe was a political goal already pursued since the end of the 1950s. The turn to Eurocommunism in the early 1970s had shifted the skepticism of Spanish Communists to a soft critical attitude toward Europe, which no longer implied an opposition to integration as such. The possibility of an EC membership acquired an almost mythical quality among the Spanish socialists, as it was credited with solving all fundamental political and economic problems. Europe was generally believed to provide the solution to modernize an “underdeveloped” Spain.23 At the same time, while the overall opposition to European integration in the Spanish society remained low in the 1980s, the number of those who doubted the benefits of membership was remarkable. After the signing of the accession agreements in 1985 and for several years, according to Eurobarometer, up to 65% of Spaniards were skeptic whether they had benefited or would benefit from membership in the European Community, a figure well above the European average.24 The contrast between party consensus and poll numbers indicates different experiences of Europeanization in the 1980s and early 1990s. Two developments formed the background of these different experiences: first, the acceptance of neoliberal economic policy measures in the course of the accession preparations, and second, the autonomization of decision-making structures in the Spanish government. Both developments reinforced each other and made the integration of civil society actors into Spanish democracy more difficult. Spain’s membership negotiations coincided with a period of time when neoliberal economic policy ideas were gaining ground in the European Community. The growing importance of market deregulation and integration was not the result of a predetermined development but depended on specific economic conditions and political decisions taken by the member states in the late 1970s and early 1980s. Crucial events of the 1970s, such as the end of the U.S. adherence to the gold standard of 1971, the oil crisis of 1973, and the oil price shock in 1979, were perceived as factors demanding a change in economic policy. The free currency convertibility increased uncertainty on the international capital markets. Government investments to stimulate the economy were exposed to the increased risk that national budget resources could not be stabilized through international credits. The sharp rise in commodity prices, in the wake of the first and the second oil crisis, exacerbated the situation because it multiplied the costs for public and private companies.25 23 24 25

Trouvé, L’Espagne et l’Europe, 389–92; Closa and Heywood, Spain and the European Union, 40–53. Verney, “Euroskepticism in Southern Europe.” Maier, “‘Malaise’: The Crisis of Capitalism in the 1970s.”

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These changes triggered important adaptations in the framework of the European Community. Warlouzet has described how, as an alternative to neoliberal solution, various responses to the economic and financial crises of the 1970s were discussed and partly put into practice by European governments.26 But after a series of countermeasures had been tried unsuccessfully, member states of the EC began to move away from a Keynesian stimulus policy, and toward more neoliberal economic instruments. The meetings of the heads of government in the European Council gained political weight in the course of crisis management. In 1978, the Council agreed that the members would commit to stability at the current exchange rates of their currencies, within the framework of the European Monetary System (EMS). The monetary stability within the European trade zone was supposed to provide a setting that could promote financial security and economic growth. This agreement increased the pressure to curb the national inflation rate and balance the national budget. When a new French administration under the socialist François Mitterand attempted to combat high unemployment with an extensive investment program in the early 1980s, it provoked an inflationary spiral of the French franc. Eventually, the French government had to pledge a major reduction in public spending and increase taxes in order to obtain a European loan and remain in the EMS.27 The fight against inflation and the policy of a balanced budget were subsequently given a high priority within the European Community and became a central requirement for aspirant members. When the negotiations for Spanish accession to the European Community started in 1979, they immediately became part of the reform process. Due to the size of its economy, the enlargement through Spain’s membership was a step that would have immediate, tangible consequences for the European Community – with some member states more concerned than others. On the one hand, the integration of Spanish agriculture threatened the existence of farmers in Italy, France, and Greece. On the other hand, the Spanish industrial market offered opportunities of expansion for private companies in West Germany and elsewhere.28 In order to prepare the Spanish producers and consumers for EC membership and to counteract opposition against a rapid integration, which came particularly from France, the González administration made financial and economic adjustment a primary goal. It pushed a program that centered around the reduction of inflation, increased interest rates, a balanced budget and the privatization of state owned industries, although this contradicted the electoral platform of the socialist party, which had emphasized the fight against unemployment, on the rise since the mid-1970s. After initial doubts, high ranking officials became convinced that the mid- and long-term beneficial 26 27 28

Warlouzet, Governing Europe in a Globalizing World. Warlouzet, Governing Europe in a Globalizing World, 150–2. Alorda, “The European Community’s Struggle with the Agro-Budgetary Problem.”

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effects of European integration would surpass any possible public intervention to support the Spanish job market. Besides, they argued that Spaniards would have to modernize their economy whether they joined the European Community or not. As a consequence, in many respects, the socialist reform measures, and particularly the Programa Económica a Medio Plazo, resembled in many respects a classic stabilization package from the International Monetary Fund.29 Within a few years, Spain managed to reduce its inflation rate significantly. Between 1980 and 1986, the year of Spain’s accession to the EEC, inflation fell from about 16% to roughly 9% and subsequently fell further, to just under 5%. In the same period, government spending only slightly exceeded revenues, and was at a much more balanced level than Italy’s, for example. For several years, the debt to GDP ratio was below that of West Germany.30 Assuming that rigid regulations of the Spanish labor market were holding back growth, the González government changed the legal framework, introducing more flexible labor hiring and dismissal regimes. The administration also ensured a comprehensive restructuring of the largest public group of companies, the Instituto Nacional de Industria (National Institute of Industry), and the reduction of public production capacities in important industrial branches, for example, in shipbuilding and steel industry.31 Spain accepted, thus, not only the guidelines of the European Community, but also core concepts of the neoliberal transformation of the late 1970s and 1980s.32 Some of the actors involved in this process on the Spanish side did not need to be pushed to transform the guiding principles of economic policy but supported the change because they were convinced representatives of neoliberal thinking. They show that the conversion of the economic doctrine should not be conceived as an imposition from outside. The Ministry of Economy was endowed with particular authority in the first González administration, and the first Minister of Economy, Miguel Boyer, became one of the intellectual masterminds of economic reform measures. He convinced González of the need for a reversal of the socialist economic program and cooperated closely with the leadership of the National Bank of Spain to initiate anti-inflationary measures.33 The head of the research department of the Banco de España and advisor of the socialist government, Luis Ángel Rojo, was an early advocate of Milton Friedman’s theory of monetarism. Rojo opposed demand-side management and considered anti-cyclical government intervention in the market to 29 30 31 32 33

Hamann, “European Integration and Civil Society in Spain,” esp. 52–3; Marks, The Formation of European Policy in Post-Franco Spain, 92–3. Data according to www.imf.org. See the figures in the contribution to this volume by Lars Döpking. Hamann, The Politics of Industrial Relations, 108–24; Pan-Montojo, “El proceso económico,” esp. 200–12. Mirowski, “Defining Neoliberalism.” Estefanía Moreira, “Segundo ajuste económico,” 135–9.

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be too costly and risk intensive.34 His views were reinforced by the subsequent recruitment of civil servants among graduates of international business schools like the London School of Economics. Considered as outsiders under Franco, they could now appear as representatives of Western economic thinking.35 According to the neoliberal perspective, in order to fulfill its economic function, the market system needs the support of national and international regulatory institutions. The institutional environment that allows markets to operate represents a decisive component of a market economy, and this environment does not emerge naturally. Rather, it has to be constructed and protected by state or state-like institutional authorities. During the time of the Spanish candidacy (and afterwards), this crucial role was assumed by the Spanish government, in its implementation of European guidelines. It was originally the González administration that set up the institutional framework to accommodate Spanish producers, workers, and consumers with a European neoliberal order, bolstered by the authority of a sweeping electoral victory in 1982 and a second absolute majority in parliament in the 1986 elections.36 This institutional set-up does not correspond to a widespread image of statehood produced by the neoliberal turn. While some analysts have seen the rise of neoliberal concepts as the cause of a weakening of state power, Spain’s orientation toward European market integration did not result in a decline of state capacities, but rather in a new allocation of responsibilities within the administration.37 There were two main reasons for this development: First, Spain was not yet a member at the time but wanted to improve its chances of joining the European Community and the European Monetary System. Thus, an institution other than the Spanish state had no authority to set the new course. Second, and more important, an increasingly market-oriented European integration was not tantamount to a weakening of the member states. This resulted from the adaptation of neoliberal concepts in the European context: If markets were not self-generating but based on the construction and safeguarding by non-market institutions, nation-states were not necessary victims of a neoliberal paradigm shift. The European Community did not assume these tasks, but rather depended on the cooperation of the member states for the implementation of neoliberal measures. Even after the Maastricht Treaty and the establishment of the European Union in 1992, this distribution of power 34 35 36

37

Ban, Ruling Ideas, 44. Idem, 115. The design of the neoliberal institutional framework to safeguard the functions of the market has always depended on changing historical contexts – accordingly, there have been various historical forms of neoliberalism. See Slobodian and Plehwe, “Introduction.” The importance of the Spanish state during the period of economic restructuring is particularly emphasized by Royo, Varieties of Capitalism, 42–51. For an overview on this debate see Levy, Leibfried and Nullmeier, “Changing Perspectives on the State.” The importance of institutional establishment and regulation of markets in neoliberal thought has been emphasized in a comprehensive account by Slobodian, Globalists.

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on several levels did not change significantly: The willingness and effectiveness of national governments to coordinate, enforce, and ensure compliance with EU policies remained decisive.38 At the same time, while the Spanish state was in charge of the adaptation and implementation of European policies, this process went along with changes in the allocation of responsibilities within the political set-up. These changes promoted an increasing autonomy of specific state agencies from parliamentary participation and control. The Secretaría de Estado para la Unión Europea (Secretariat of State for the European Union) within the Spanish Ministry of Foreign Affairs and the Representacion Permanente de España (Permanent Representation of Spain) in Brussels gained central importance for managing the relations with EC institutions and policies. These two bodies were designed to cooperate closely with each other, and function as coordination mechanisms to shape and follow-up Spain’s European policy. They dealt with issues like trade and customs affairs, the integration into the European market, transport, communication, environment or social, and health affairs. Spanish ministries quickly learned the importance of placing their own personnel in both institutions to coordinate their plans and actions with the European ones. As a result, a thick network of top officials and other key actors emerged who shared a vocational attitude toward European integration, formed a high technocratic self-image of their function, and distanced themselves from the day-to-day political struggles.39 Compared to the competences of these bodies, the influence of the Spanish Parliament was barely visible. The Spanish Constitution of 1978 gave the government a leading role in defining and shaping foreign policy measures, which included accession negotiations with the European Community. Besides the formal authorization of treaties, the Spanish Parliament limited its interventions to key issues, and otherwise, confined itself to seeking information. The general consensus on European integration among parliamentarians strengthened their willingness to support rather than question the government’s position in the negotiations with the European Community. When the ratification of the Maastricht Treaty was on the parliamentary agenda in 1992 – despite critical voices from the far left and the right-wing of the political spectrum during the debate – 96% of the deputies supported the creation of the European Union, only three objected.40 Hardly any other state institution demonstrated this process of autonomization of governance propelled by the Europeanization of Spanish politics in such an obvious way as the Bank of Spain. On the road to membership, the role of the bank’s leadership was pivotal because it was in charge of ensuring 38 39 40

Scharpf, “Legitimität im europäischen Mehrebenensystem.” Closa and Heywood, Spain and the European Union, 62–6; Arregui, “Europeanization of Political Structures,” 139–40. Barbé, La politica Europa de España, 64–8.

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compliance with the guidelines of the European Monetary System (EMS). Since 1979, the EMS was designed to reduce exchange rate fluctuations by interventions of the national central banks. Deviations from the pre-set exchange rates were supposed to be kept within a relatively small margin by using several instruments: First, classical means of inflation policy, such as an increase in interest rates to avoid currency fluctuation beyond a predefined extent. Second, if the exchange rate reached the border of the fluctuation band, the Bank of Spain had to intervene on the money market, and buy local currency (peseta) by selling foreign exchange resources. Third, if these means were not sufficient, it was still possible to submit a request with the Economic and Financial Affairs Council for a devaluation of the Spanish currency.41 The mandatory character of some of these interventions and the implicit role model of the independence of the Deutsche Bundesbank (German Federal Bank) shielded the leadership of the Bank of Spain from parliamentary influence. Executive Committee members such as Governor Mariano Rubio and the former minister of economy Miguel Boyer welcomed this development and pressed reluctant government members to accept the economic and political side effects of independent monetary policy. In accordance with the Maastricht Treaty, the autonomy of the Bank of Spain, which had been already legally acknowledged, was established in definitive form in 1994.42 From a neoliberal point of view, the rise of autonomous forms of governance helped to create an environment favorable to market forces. Neoliberal thinkers, such as Friedrich August Hayek and Wilhelm Röpke, had always been skeptical about the influence of parliaments on economic policy decisions, and they had sought solutions that liberated market processes from interference by democratic politicians.43 At the same time, the rising independence of political decision making reverberated across Spain’s political landscape. In view of the changes that rendered their influence through Parliament less effective, political parties adapted their basic orientation and operative modes to the new environment. This, in turn, affected their relationship with social actors and changed the resources and opportunities to mobilize and embrace social protest.

12.3  consequences

of europeanization for

political networks

The new forms of government produced by the orientation toward European integration pushed Spanish politicians to adopt new strategies in their struggle for winning government. The neoliberal paradigm shift not only triggered a redistribution of administrative responsibilities but also provoked a withdrawal of political parties from civil society, and closer ties to domestic and 41 42 43

Höpner and Spielau, “Better Than the Euro?” Solchaga, El final de la Edad Dorada, 106–08. Slobodian, Globalists, 14–5.

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international governance institutions. In turn, many Spanish voters increasingly lost interest in partisan politics and participated in elections with belowaverage turn-out.44 In theory, political parties are supposed to represent the interests of society in Parliament and govern according to these interests when they win public office. In practice, in the heyday of party democracy, this meant to represent the interests of a specific social constituency organized by a dense network of societal associations that were affiliated with the party. This network created a political community with a specific identity that ensured enduring support for party candidates and their funding.45 In the case of the Spanish socialists, this network was fragmented after almost forty years of authoritarian rule but reinforced by the experience of the societal mobilization against the Franco regime in the transition period when the PSOE leadership and especially the Union General de Trabajadores had worked together. The subsequent cooperation during the negotiations for the agreements of social concertation in the late 1970s and early 1980s contributed further to maintain the party-union bonds. However, the orientation toward the admission criteria of the European Community put this arrangement under increasing pressure. If union leaders had been initially willing to accept wage restraint in order to secure the transition to democracy, in the following years, they had to experience how promised social and economic reforms were repeatedly postponed. After the “Acuerdo Economico y Social” in 1985, no new social pacts were concluded for more than ten years. At the same time, the industrial restructuring process initiated by the González government in order to make Spanish companies more competitive led to massive job losses. When representatives of the UGT in the Spanish Parliament became aware of their waning influence, they started to oppose the government, even if they had obtained their seats on the socialist slate. In 1985, UGT members refused to approve a government bill providing for a general reduction in pension rights. Eventually, important union leaders of the UGT resigned from their parliamentary functions in 1987. Shortly afterwards, PSOE abandoned the formal requirement that membership in the Socialist party be accompanied by trade union membership. The break-up of the ties became evident when the UGT and the Comisiones Obreras buried their political rivalry in December 1988 and jointly organized a general strike against the government’s plans for short-time labor contracts with limited social benefits for young workers. Further general strikes followed in the early 1990s, during which the government accused the unions of ideological pigheadedness and refused to respond to demands.46 44 45 46

Encarnación, Spanish Politics, 47; Gunther. Montero and Botella, Democracy in Modern Spain, 146–47. For an early diagnosis: Pérez-Díaz, The Return of Civil Society, 46. Mair, Ruling the Void, 80–81. Hamann, The Politics of Industrial Relations, 132–34; Soto Carmona, “El conflicto como respuesta.”

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To the extent that the socialist party broke away from its previous social connections, the trade unions lost their political mediating function. In the following years, their membership numbers declined rapidly. The privatization process of large public enterprises and the increasing practice of employers to hire employees without a fixed contract, as subcontractors or in home-based jobs, exacerbated the legal difficulty for the Spanish unions to represent companies with less than 50 employees. In addition, the participation of new social groups in the job market – especially women and migrants – changed the composition of the Spanish labor force. Both groups often worked in part-time and temporary contracts, low-skill sectors or even illegally and proved difficult to integrate into the union structures.47 The response of the union leaderships to these changes of the political and economic context prevented them subsequently from becoming the dominant voice for those who felt the consequences of the new economic policies most directly. They resumed negotiations on social pacts after the change to a conservative government in 1996, without questioning the neoliberal economic policies in the context of European integration.48 Although the UGT and the CCOO recognized the economic and social consequences of European market integration and the Spanish aspirations to join the European Monetary Union in 1999, they believed to have greater chances of success in preserving industrial sites, jobs and social rights within the European framework.49 After the experience of the collapse of social concertation with the González administration, the unions were also prepared to engage in less comprehensive, single-issue negotiations with the government and employers in order to be able to regain access to economic policy decisions. In doing so, they accepted that agreements hardly benefited employees with temporary contracts in small companies.50 Among former members of the opposition to the Franco regime, these developments provoked a sense of defeat. According to ethnographic studies by Susana Narotzky in Ferrol, which had been dominated by the shipyard industry before industrial restructuring transformed the local job market profoundly, leaders of the working-class movement of the 1970s looked back at the transition with the impression to have lost the fight for true democratic participation and economic security and to have failed to transmit the capacity for political struggle to the younger generation.51 Political disenchantment also spread within the PSOE party organization itself. Because of the Socialists’ long period in power and the centralization

47 48 49 50 51

Hamann, Politics of Industrial Relations, 209–13. Royo, “Reforms Betrayed?” esp. 45. Ramirez-Perez, “Spanish Trade Unions and European Integration”; Narotzky, “‘Spain is the Problem, Europe the Solution’” esp. 25–9. Susana Narotzky and Gavin Smith have adressed the forms of economic regulation in this context as “neoliberal corporatism.” Narotzky and Smith, Immediate Struggles, 23–5. Narotzky, “Structures Without Soul and Immediate Struggles.”

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of political decision making under González, the mediation of local concerns increasingly relied on direct links to the government in Madrid. These links were based on forms of brokerage that had to be formulated in the vocabulary of government objectives if they were to have any effect. Instead of focusing on solving practical problems such as securing jobs in a local factory, the concerns of PSOE municipal organizations were commonly discussed in terms of Europeanization or regional restructuring.52 At the same time, even socialist small town mayors and local union organizers presented their tasks in terms that stressed the need to foster an entrepreneurial attitude of workers or build up an infrastructure that would attract new employers to the region. Rather than focusing on the fragmented working lives of Spaniards who moved from one subcontracting company to another, they accepted and used the language of neoliberal reform.53 These mediated forms of communication reflected a government discourse that had moved away from the former political community created by the network of party political and societal associations. In the effort to be recognized as a full candidate for membership in the European Community and the European Monetary Union, the PSOE leadership prioritized governmental tasks while reducing its presence on the ground.54 High-ranking members of the government, as the Minister of Economy from 1985, Carlos Solchaga, openly admitted the contradiction between the policy of European adjustment and the interests of their electoral clientele. To justify their pragmatic turn to neoliberalism, they pointed not only to the necessity to increase the competitiveness of the Spanish economy, but also argued that a left-wing government had the specific responsibility not to repeat the mistakes of the Second Spanish Republic of the 1930s, when the PSOE and their left-wing allies had stubbornly pursued ideological goals and eventually lost any possibility of policy making because of the outbreak of the Spanish Civil War.55 By consistently pushing the government’s goals to the forefront, government officials, PSOE brokers, local party, and union representatives did not produce a public sphere of politics that was able to integrate those who lived the new job market flexibility into the reform program triggered by the Spanish aspirations of European integration. The causes for these developments that disrupted the political framework that had integrated social protest into parliamentary democracy in the transition period did not disappear in the 1990s and early 2000s because the belief in the importance of Europeanization continued to be shared by the leadership of

52 53 54

55

Fishman, Democracy’s Voices, 162–163. Narotzky and Smith, Immediate Struggles, 176–7. This development resembled the general process in end of the 20th century Peter Mair has described as a re-location of political parties from the realm of civil society to the realm of government. Mair, Ruling the Void, 82. Mair’s arguments have been extended by Hopkin and Blyth, “The Global Economics of European Populism.” Solchaga Catalán, “Tensiones entre PSOE y UGT,” 55–8.

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the Spanish conservatives and socialists alike. Within the Socialist Party, internal debates grew into open discord by the early 1990s and contributed to the electoral defeat in the parliamentary elections of 1996.56 The new minister of economics of the conservative government under José Maria Aznar, Rodrigo Rato, shared his processor’s technocratic approach to political questions. He was a firm believer in the importance of the Europeanization of the Spanish economy and held on to principles already acknowledged by the first González administration of budgetary discipline, reduction of public debt, and low inflation. Under his supervision, the state further reduced the number and size of public enterprises. But even when the socialists regained power in 2004 under José Zapatero economic policies in Spain did not change. The new minister of economics, Pedro Solbes, had already directed economic policies at the end of the González administration. Prior to his first ministerial appointment in 1993, he had been responsible for the accession negotiations with the European Community  – the beginning of a close relationship to European officials he resumed during the period of the Aznar government: Before he returned to the Ministry of Economy in Madrid in 2004, he worked as European Commissioner for Economic and Monetary Affairs under Commission President Prodi  – hardly an environment that challenged his former convictions.57

12.4  appropriating

opportunity structures

and protest resources

In the second half of 2008, the Spanish economy experienced a drastic slump in the wake of the US financial crisis. In a shockingly short period of time, unemployment rose from 8 to more than 20%, youth unemployment up to 40%. In the construction sector alone, almost one million workers lost their jobs. Many of those who could not afford to pay their mortgages any longer were evicted from their homes. Within two years, the Spanish budget surplus generated in 2007 turned into a deficit of 11.4%. After initially attempting to counter the situation with state investment programs, under the pressure of the EU commission, the government of José Zapatero drew up a consolidation plan with savings of 45 billion euros by cutting public salaries, pensions, and social benefits. In this context and in accordance with the established political procedures, government representatives concluded a new social pact in February 2011 with unions and employers on the future of pensions, collective bargaining, and reform measures to combat unemployment.58 The austerity policies and their acceptance by the PSOE and union representatives sparked a cycle of protests that lasted almost three years. Following 56 57 58

Nuñez Seixas, “Evolución sociopolítica”; Méndez-Lago, “The Socialist Party in Government and Opposition.” Royo, “Reforms Betrayed?” https://elpais.com/economia/2011/02/01/actualidad/1296549173_850215.html.

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a mass demonstration on May 15, participants occupied the Puerta del Sol in Madrid, attracting 10,000 sympathizers within two days. Protesters subsequently occupied central squares in over fifty cities all over Spain.59 Although these protests were a reaction to the contemporary crises and were encouraged by the visibly tarnished legitimacy of the government – Prime Minister Zapatero had announced in April that he would not run as a candidate in the next parliamentary elections – they should not be understood as a spontaneous result of the events. Cristina Flesher Fominaya’s comprehensive analysis has made clear that neither the beginning nor the ensuing dynamic of the protest can be explained without the networks of organizations that had emerged in advance. Among the most important groups that prepared the ground for the alignment of different actors was a platform of university students that wanted to expand their activities to involve youth outside of the universities. In the fall of 2010, they founded “Juventud sin Futuro” (Youth without Future), an organization that assembled members from various political strands to reflect on possibilities to reach people outside of their circles. Another group, Democracia Real Ya! started by connecting people on Facebook to organize protest against austerity politics but quickly focused on assemblies to coordinate the activity of different associations, held at the social center Patio Maravillas in Madrid and elsewhere. These efforts attracted the attention of more experienced local actors from ATTAC, “Ecologistas en Acción,” and other associations. Some of these groups also emerged in response to demonstrations organized in 2010 by the Spanish unions to reach political compromise with the government. Subsequently, members of the group “Estado del Malestar” made it one of their founding principles, not to align with any of the established political organizations.60 As a result of their coordination, these groups successfully managed to declare the crisis situation in spring 2011 the right moment to launch a wave of protests. Research has emphasized that opportunity structures of collective contention are not objectively given, but must be perceived and constructed as such.61 However, this construction cannot take place in a historic vacuum; rather, its form and success depend on specific conditions that do not arise from the dynamics of the situation itself. The way in which actors in the various civil society organizations conveyed to their supporters and outsiders that now was the moment to act was shaped by the transformation of Spanish politics since the 1980s. The previous decades had set the stage for their intervention. While their framing was crucial to convincingly integrate the contemporary government policies into a narrative of protest mobilization, the elements of their story reflected the effects of Europeanization on the relationship between political parties and civil society since the end of the transition. 59 60 61

www.washingtonpost.com/blogs/blogpost/post/spanish-revolutionthousands-gather-inmadrids-puerta-del-sol-square/2011/05/18/AFLzpZ6G_blog.html For a more detailed account see Flesher Fominaya, Democracy Reloaded, 52–71. McAdam, Tarrow and Tilly, Dynamics of Contention, 38–71.

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The strategy to avoid any affiliation with existing political organizations and to stress the autonomous character of the protest was a case in point. Although the occupation of the Puerta del Sol in Madrid quickly showed that the participants drew on the experience and skills of left-wing activists they emphasized the ideological independence of their demands which were not supposed to be assigned to any political spectrum. Rather, the claim went, they represented the grievances of the ordinary citizen. The underlying idea was to try and mobilize not only specific circles of supporters but also to prepare common ground for their coalition and to reach out to non-active groups in the Spanish society.62 While this framing strategy was part of an effort to appropriate and broaden mobilization resources of existing societal organizations, its success in the course of the following years cannot be explained without taking into account the previous withdrawal of the PSOE and the unions from civil society networks. This withdrawal had created unoccupied territory in organizational and ideological terms. The appeals drafted by the protesters put those empty spaces that the autonomization of neoliberal politics had produced in a new framework and provided them with a visible, collective meaning. This meaning resonated with the sense of political disenchantment that had become dominant in many strands of Spanish society. When asked in 2012, one out three Spaniards responded to have participated in a demonstration within the last twelve months and three out of four sympathized with the demands of the 15M movement.63 The assertion of ideological and organizational independence was intended not only to mobilize a broad social base, but also to provide a diagnosis of the contemporary ills and to point to possibilities of a way out.64 Framing the protests as a resistance of all ideological and non-ideological camps of society created the image of an encompassing group of citizens juxtaposed to the political and economic elite. In line with that contrast, rather than just focusing on austerity politics, protesters held alleged deficits in Spanish democracy responsible for the current crisis. The name of one of the most important groups involved in organizing the protests was to be read programmatically: “Real Democracy Now!” Presumably, there was little consensus among participants and sympathizers about how to define such a real democracy. But the demand for a change of democratic forms channeled the experience of many Spaniards into a collectively tangible direction and explained why their concerns had not been addressed by the two dominant political parties in recent years. Again, the resonance of the framing strategy becomes comprehensible only if the previous disruption of political networks through the process of Europeanization is taken into account. In contrast to the transition, the protests starting in 2011 62 63 64

Flesher Fominaya, Democracy Reloaded, 78. Portos, “Keeping Dissent Alive.” For these core tasks of framing see Snow, Vliegenthart, and Ketelaars, “The Framing Perspective on Social Movements.”

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had no intermediary channels through which social demands were mediated with parliamentary party negotiations. As a consequence, the protesters now turned against the existing parliamentary democracy as such and broke with the model described by Habermas and Rosanvallon, in which protest and parliament stood in a complementary relationship. After withdrawing from the public squares in the end of June 2011, the 15M movement succeeded over two and a half years in organizing thematically specific demonstrations in coalition with a number of other social organizations. Particularly the demonstrations against cuts and privatization in the public health sector, organized under the name “Marea Blanca,” and demonstrations against cuts in the education sector, under the name “Marea Verde” are well known. Compared to 2008, the number of authorized demonstrations in Spain nearly tripled in 2012 and 2013.65 However, the impression grew among participants that their protests were unable to change the government’s austerity policies. As a consequence, several groups decided to leave the path of non-institutionalized mobilization and form a political party that would have an impact on parliamentary decisions from within. Among these attempts, the founding of the party “Podemos,” initiated by leftist political scientists at Universidad Complutense in March 2014, turned out to be particularly successful.66 The consequences of this new development are still underway and can hardly be assessed at present. However, two observations that point back to the changes brought about by the Europeanization of Spanish Politics since the 1980s are possible. First, the electoral success of Podemos and subsequent other parties helped change and possibly end the previously unchallenged dominance of the socialist and conservative party at the national level. While the combined share of the electoral vote for PSOE and PP had been 84% in 2008, it had dropped to 49% by the time of the general elections in November 2019. The autonomization process of the governing parties has provided political outsiders with new opportunities which they have managed to exploit. Second, the legacy of the 15M protest movement that Podemos took on was both a blessing and a curse. It provided for early electoral successes, but also for subsequent contradictions in political message sand organizational structure. On the one hand, Podemos staged itself as a continuation of the protest against the structure and practice of the established parties; on the other, it was forced to build its own party structures and to come to terms with institutionalized democratic participation when it assumed government responsibility. In this sense, the strength of the framing strategy at the beginning of the protests became a burden in the subsequent process of their political institutionalization.67 65 66 67

Portos, “Movilización social en tiempos de recesión.” There exists a rich body of literature on the subject. See among others Barret, Podemos; Ramiro and Gomez, “Radical-Left Populism During the Great Recession.” Calvo, “The Long Shadow of Activism”; Font and García-Espín, “From Indignad@s to Mayors?”

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Podemos presented itself for the first time in the European elections in spring 2014 as a political alternative to the prevailing parliamentary system in Spain. The party leadership around Pablo Iglesias and Íñigo Errejón emphasized the claim to be a party of a new type, in which the old political identities would no longer play a role and direct participation by citizens would be paramount. In this way, Podemos directly adopted the framing strategy of the 15M movement portraying the old parties as the embodiment of the elite (“la casta”) and itself as neither left nor right, but rather as an expression of the people’s revolt (“el pueblo”).68 In order to integrate as many citizens as possible, the party did not require fixed membership fees; filling out a simple web registration form was enough to participate in the local circles (círculos) and the national assembly (asamblea ciudadana estatal), either in person or online. In using the 15M mobilization strategies, emulating a form of decision making practiced by the protesters, and reacting against a crisis of parliamentary representation, Podemos exhibited important characteristics of a movement party.69 While this strategy was very successful in the 2015 national parliamentary elections, bringing Podemos more than 20% of the vote, it led to internal conflicts in the aftermath. Podemos would have had direct influence on political decisions in a coalition government with PSOE and the new liberal party Ciudadanos. However, only one faction of the party leadership supported this option, while the other around Pablo Iglesias considered its contradiction with the previous mobilization strategy insurmountable. Tying themselves to the legacy of the 15M movement and its opposition to parliamentary parties represented a major resource of support but also limited the party’s freedom of action. The controversy eventually provoked the coalition supporters around Íñigo Errejón to leave the party  – just before Podemos formed an electoral coalition with the established Spanish left Izquierda Unida (United Left) in 2016 and changed its name to Unidos Podemos. While this turn probably corresponded with the political convictions of many of their followers and was supposed to increase their electoral chances it meant a clear break with the previous strategy, adopted from the 15M movement that the party did not belong to any ideological camp.70 The difficulties of reconciling the claim to be a movement party with electoral and coalition tactics manifested themselves not only in the contradictions of the framing strategy but also in the party’s organizational structures. The accessibility of party committees allowed for broad participation, but this 68

69 70

“The historical success of Podemos is well known: we knew how to read that the 15M was the social expression of a regime crisis that could have a political translation. That translation was based on two elements: a plebeian leadership trained in the media and a discourse that appealed to an outraged popular class (the people) that identified the political and economic elites as corrupt and responsible for the situation.” Iglesias, Una nueva Transición, 68. Porta, Fernandez, Kouki, and Mosca, Movement Parties against Austerity, 78–84; Hutter, Kriesi, and Lorenzini, “Social Movements in Interaction With Political Parties.” Calvo, “The Long Shadow of Activism,” 375.

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did not usually lead to decisions based on grassroots consensus. Under Pablo Iglesias, the party leadership ensured to have control over decisive issues – on the one hand, through the principle of “the winner takes all” in assembly voting, and on the other hand, through the central appointment of confidants of Pablo Iglesias to the party’s executive body, the Citizens’ Council. The hierarchical leadership structure was intended to create an efficient apparatus to win elections. At the same time, their approach meant that, organizationally, the party maintained more the appearance of a grassroots democratic party than actually following the ideal. This contradiction led to opposition tendencies that united against the party leadership at the local level and to a decline in members’ participation in internal voting.71 The party has consistently lost seats in parliament in the elections since 2015, and it does not seem unwarranted to suggest that the dilemmas it has to face have not become less relevant since its participation in a coalition government with PSOE in 2019.72 Being exposed to the constraints of the different logics of party politics and social protest is, on the one hand, a common lot of movement parties. However, the Spanish case shows why the forces pulling in different directions are particularly strong due to the consequences of Europeanization of the political landscape. In this respect, Unidas Podemos (renamed in 2019) has not only been reacting to the autonomization of Spanish politics since the 1980s by attacking the established political parties, but its problems are also a part of this process.

12.5  conclusion Dominant explanations of collective contentious action in the context of neoliberal statehood are confronted with a puzzle regarding the cycle of protests in Spain after 2011. Neoliberalism is supposed to involve a weakening of the nation-state due to the transfer of power to international institutions and, accordingly, a reorientation of social protests against policies that emanate from international actors. But neither did the European Union become the main target of the Spanish protesters’ demands and criticism, nor did they focus on transnational mobilization. Rather they have formed local networks on the ground and called the Spanish state of democracy into question. I have argued that despite the apparent paradox, the emergence of neoliberal statehood still represents the adequate framework to explain form and content of collective contention in Spain after 2011. The possibilities to appropriate mobilization resources by the 15M movement and the subsequent attempt to transform the protest legacy into a new movement party were the result of 71 72

Sola and Rendueles, “Podemos,” 105–7; Porta et al., Movement Parties, 80–1. After his defeat at the regional elections in Madrid in March 2021, with only 7,2% of the vote, Pablo Iglesias announced his withdrawal from politics. https://resultados.elpais.com/elecciones/ madrid.html

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disruptions in the Spanish political landscape due to the introduction of neoliberal policies. But to trace their impact, it is crucial to consider the historical entry of neoliberalism through the Europeanization of Spanish politics. For two main reasons, Europeanization did not involve a weakening of the Spanish state but rather its transformation: First, the Spanish government under the socialist Felipe González was eager to fulfill the criteria to join the European Community which were redefined in a neoliberal sense at that time. Since Spain was not a member state yet, the government was the only authorized institution to implement measures of industrial restructuring, a balanced budget and anti-inflation policies. Second, even after becoming a full member, the multilevel governance structure of the European Community and the European Union did not provoke a weakening of state power but rather a re-allocation of responsibilities in the Spanish administration. New government bodies like the Secretaría de Estado para Asuntos Europeas, the Representacion Permanente de España in Brussels and the Ministry of Economics gained political autonomy when managing the process of European integration pushing the Spanish Parliament to the side. This transformation of the state triggered important consequences for the structure of political networks and the integration of collective contention into party politics in Spain. While government politicians, and the Spanish socialists in particular, had relied on close ties between political parties and societal organizations to stabilize the parliamentary democracy in the transition period the acceptance of neoliberal policies led to a break-up of the political network. Neoliberal policies in general and European integration in particular were tantamount to protect economic policy decisions from outside influence and meant the autonomization of decision making by the government. As a consequence, the Spanish trade unions and especially the UGT lost its mediating function between party politics and their members, and local PSOE affiliations had to reformulate their concerns as part of the neoliberal agenda when communicating with the socialist government. The change of the political landscape produced forms of disenchantment and a decline of public interest in party politics, further supported when weakened unions resumed negotiations with the new conservative government in 1996 on the basis of neoliberal assumptions. These developments created resources for ideological and social mobilization that remained unallocated by the previously dominant political and social organizations. When, in 2011, representatives of the government and the unions agreed on a series of austerity measures to counter-effects of the severe economic difficulties in Spain in the wake of the European debt crisis they provoked protests of various social groups that had formed independently from parties and unions. These groups, “Juventud Sin Futuro,” “Democracia Real Ya!” and others recognized the possibility to frame the current events as a confrontation between political and economic elites and the ordinary citizen. The success and resonance of their strategy mirrored the previous disruption of ties between party

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politics and societal associations. Claiming that parliamentary representation did not address the contemporary needs of the Spanish “people” provided a collective meaning for many of those who had lost their political identity in the process of Europeanization. While the framing strategy of the protests in 2011 and its aftermath successfully stressed the non-institutionalized forms of political claim making and interest representation, the legacy of that strategy proved difficult to adopt once actors attempted to change government decisions by forming a movement party. Podemos has relied on its presentation as grassroots organization that translated demands of the protesters into a new type of political party. But the contradictions between structures for broad social participation and an effective apparatus to win elections or between the claim to encompass the different ideological camps and strategies of party political alliance have created dilemmas that have not contributed to improve the recent election results of the party. Involuntarily, the difficulties Podemos is facing reflect the conditions of emergence and success of political outsiders created by the Europeanization of Spanish politics. The deep rift between autonomous political decision makers and social activists has been created by Spain’s path to membership in the European Union, making a return to the former democratic constellation established in the transition period seem difficult.

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13 Redefining Labor Organizing Coalitions between Labor Unions and Social Movements of Outsider Workers Candelaria Garay

13.1  introduction In the last decades of the twentieth century, globalization, technological changes, and neoliberal reforms weakened labor organizations in Latin America and beyond. In this context scholars documented the decline of labor unions, as membership bases shrank and historical political party allies turned their backs on their union-friendly programs.1 The new scholarly consensus was that an era of more flexible labor markets and limited labor power had arrived. While little research has asked whether labor unions gained new societal allies in the context of neoliberalism, scholars suggested that the historical divide between insiders – meaning formal-sector workers represented by unions – and outsiders – here understood as informal-sector, rural, and unemployed workers, who are less organized – would deepen. This would make coalition formation between both sectors more difficult. Alliances between insiders and outsiders were unusual in most countries during import-substituting industrialization, when labor unions represented workers in expanding formal labor markets.2 In the more uncertain market-based economies of the 1980s and 1990s, in which outsiders represented more than half of the workforce across Latin American countries, the formation of inclusive labor coalitions between insiders and the historically less powerful outsiders seemed even less likely.3

1 2 3

See Murillo, Labor Unions, Partisan Coalitions and Market Reforms; Etchemendy, Models of Economic Liberalization. Collier and Collier, Shaping the Political Arena. According to my data, outsiders represented on average close to 65 percent of the workforce in the mid-1990s (Garay, Labor Coalitions in Unequal Societies).

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Yet alliances between labor unions and outsiders’ movements and organizations formed in several Latin American countries starting in the 1980s, when countries began to transition to democracy and to adopt market-oriented reforms. These alliances comprise both intermittent and enduring coalitions between labor unions and outsiders’ movements, and concern labor-related and political questions, such as the formalization of outsiders, the reach of social benefits, and the broadening of institutions representing workers’ interests. In some countries, these alliances have crystallized into joint institutional structures involving national peak associations, central labor organizations, and confederations, which I call insider–outsider coalitions.4 These coalitions include important political actors, such as the Central Única dos Trabalhadores (CUT) in Brazil, the Central de los Trabajadores Argentinos (CTA) in Argentina, and Bolivia’s Confederación Obrera Boliviana (COB). Although the past few decades have seen a near-consensus that labor unions are in crisis almost everywhere,5 and labor unions may seem a question of the past, insider–outsider coalitions have been critical to changes in social policy, political participation, and interest representation. They have drawn governments’ attention to historically neglected policy issues, prompting the large-scale expansion of social policy for outsiders in areas such as health care services, pensions, and income support in several countries.6 Insider–outsider coalitions have also been key to the formation of new political parties, as well as to the party-building efforts of their allied political parties,7 against the background of party breakdown and the weakening and deinstitutionalization of party systems in the region during the third wave of democracy.8 In some countries, these coalitions have also challenged the existing legal institutions governing collective organizing, which are a central aspect of labor politics.9 Labor laws have often precluded the formal incorporation of outsiders, especially urban informal workers, into labor unions, as well as their participation in institutional arrangements for the negotiation of labor demands, such as salary councils. The existence of organizations representing both insiders and outsiders has begun to call these boundaries into question. The formation of insider–outsider coalitions also entails defining the worker in broader terms to incorporate those who are precariously employed or unemployed. Labor institutions have therefore become an important object of conflict, as outsider organizations and unions transform the goals they pursue and expand 4 5 6 7 8 9

Throughout the text I use the terms peak labor organization, central labor organization, labor confederation, and national labor organization interchangeably. Silver, Forces of Labor; Ibsen and Thelen, “Diverging Solidarity.” Garay, Social Policy Expansion in Latin America. Anria, When Movements Become Parties; Roberts, Changing Course in Latin America. Lupu, “Brand Dilution”; Mainwaring, Party Systems in Latin America. See Collier and Collier, Shaping the Political Arena; Murillo and Schrank, “With a Little Help from My Friends.”

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the universe of workers that they seek to represent.10 This challenge to existing labor regulations is different from reforms that aim to reduce labor rights from above, such as those advanced by governments as part of neoliberal reform packages.11 Rather, these are transformative initiatives that aim to change labor laws from below to make them more inclusive. Despite their importance, insider–outsider coalitions have not received much attention in the literature. Prominent scholarship on labor unions has focused on the strategies that unions adopted in the face of neoliberal reforms and on global patterns of labor activism and solidarity.12 Few studies have addressed labor unions after the adoption of neoliberal reforms, and important research has mainly focused on the fate of labor regulations and their cross-national variation, as some of these regulations were under attack during neoliberal reforms in the 1980s and 1990s.13 The connections between unions and outsider workers and movements have been surprisingly overlooked in debates about the fate of labor organizations. In this chapter, I present a framework to account for the process of coalition formation between insiders and outsiders and illustrate the argument with the case of Argentina, where a labor peak association representing both sectors formed in the 1990s. The case of Argentina is puzzling because an insider–­ outsider coalition emerged in the context of strong labor unions and a historically unorganized and relatively small outsider workforce. At first sight, these features seems to make the formation of an insider–outsider coalition unlikely. Scholarship on labor union coalition choices during the adoption of market-oriented reforms in Latin America has found that labor union strategies were influenced by sectoral economic interests (e.g., tradable and non-tradable) as well as by union and leadership competition.14 Studies that view coalitions as structured by the aggregation of individual workers’ preferences understand changes in formal workers’ occupational status, income, and/or risk exposure as driving their preferences to converge with those of outsiders into supporting 10

11

12

13 14

While a broad literature has investigated the changes to the labor law – a fundamental factor shaping workers’ collective action (Collier and Collier, Shaping the Political Arena; Murillo and Schrank, “With a Little Help from My Friends”)  – during market reforms (e.g., Etchemendy, “Repression, Exclusion, and Inclusion”; Cook, The Politics of Labor Reform in Latin America), the ongoing efforts to redefine labor institutions to include outsiders have received no attention in the political science literature. Murillo, Labor Unions, Partisan Coalitions and Market Reforms; Etchemendy, “Repression, Exclusion, and Inclusion”; Etchemendy, Models of Economic Liberalization; Cook, The Politics of Labor Reform in Latin America; Murillo and Schrank, “With a Little Help from My Friends.” Etchemendy, Models of Economic Liberalization; Cook, The Politics of Labor Reform in Latin America; Murillo, Labor Unions, Partisan Coalitions and Market Reforms; Silver, Forces of Labor; Anner, Solidarity Transformed; Murillo and Schrank, “With a Little Help from My Friends.” Murillo and Schrank, “With a Little Help from My Friends”; Carnes, Continuity despite Change. Murillo, Labor Unions, Partisan Coalitions and Market Reforms.

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similar policies.15 Classic literature on the initial institutionalization of labor unions in Latin America in turn highlights the top-down nature of labor incorporation by state elites in the first half of the twentieth century. Most of these incorporation processes established alliances between labor movements and political parties that evolved into durable structures of representation.16 My argument identifies splits in the labor movement leadership as triggering the formation of insider–outsider coalitions. It posits that coalitions between insiders and outsiders are initiated after a major division has taken place in the leadership of the labor movement, i.e., in its (main) labor confederation. These divisions occur in the face of major shocks (e.g., repression and anti-union practices, deep economic restructuring) that threaten the survival of large segments of the union movement. Labor leaders may maintain a unified front in response to these shocks, or else they may split due to major differences. Newly split-off labor groups may then form a new labor confederation and seek alliances with outsiders to challenge the policies that are hostile to them. Outsider workers can aid these schismatic unions by increasing their mobilizational capacity and helping them build a new identity and vision for their labor central. While gaining mobilizational capacity is important for leaders to advance their goals, the definition of a new identity, understood as a community of fate17  – who we are and who we ­represent – and a new vision – what we want and what our project is – is also key. It can help labor leaders differentiate and solidify the new central vis-à-vis its competitors, recruit new members, and increase cohesion among insider and outsider members.

13.2  insider

and outsider workers

Labor markets in Latin America are characterized by a divide that separates workforces into two broad sectors: insiders and outsiders.18 Insiders have labor contracts or registered work, payroll-based social protections, and often representation by labor unions. Outsiders lack formal contractual employment, contributory social protections, and, in most cases, functional organizations recognized by the state to represent their interests. This divide, which has its roots in the region’s limited industrial development and in the labor legislation originally laid out in the first half of the twentieth century, has structured two 15 16 17 18

Carnes and Mares, “Coalitional Realignment.” Collier and Collier, Shaping the Political Arena. On the concept of community of fate, see Levi and Olson, “The Battles in Seattle.” For the larger literature on insiders and outsiders in advanced industrialized countries, see Esping-Andersen, The Three Worlds of Welfare Capitalism; Rueda, Social Democracy Inside Out; Thelen, “Varieties of Capitalism.” I refer to insiders and outsiders in conceptual terms. I don’t assume that insiders and outsiders have inherently opposing interests. See Rueda, Social Democracy Inside Out for a discussion of the insider–outsider model.

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90 80 70 60 50 40 30 20 10 0

Argentina

Chile

Uruguay c.1990

Brazil c.2000

Mexico

Bolivia

Peru

c.2010

figure 13.1  Outsiders as a share of the workforce, select cases, c.1990, 2000, and 2010. Source: Elaborated by author with government data.

worlds of work that, while internally heterogeneous, are clearly distinct from each other. Differences between insiders and outsiders are evident in the legal institutions and public policies that affect workers and the types of work activities that they develop.19 To characterize the composition of the workforce into insiders and outsiders, I operationalize insiders as the workers who make contributions to social security and outsiders as the workers who do not pay contributions within the economically active population. Figure 13.1 presents the share of outsider workers out of the total workforce for several Latin American countries at key points in time: in 1990, at the time that neoliberal reforms began or were underway in most countries; in 2000, which can be considered the aftermath of these reforms; and in 2010, at the end of the commodities boom, during which several Latin American countries experienced export-driven growth. The share of outsiders varies widely across select countries, ranging from less than 40 percent (Argentina c. 1990) to about 80 percent of the workforce (Bolivia c. 1990). The size of the outsider workforce has remained quite stable over time in each country, growing in some cases during the 1990s and declining slightly in the 2000s in most cases. In Argentina, the case analyzed in this chapter, outsiders were less numerous than in most other Latin American countries until the 1990s, when informal employment grew and unemployment peaked at 19 percent in 1995, after the 19

For a discussion of work informality and gender disparities, focusing on how women have been most severely affected by informality and outsider status in Latin America, before and during the neoliberal era, see the chapter by Riggirozzi and Grugel in this volume. The chapter by Schild in this volume, furthermore, analyzes a series of gender implications related to neoliberal governance, particularly in the case of Chile.

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adoption of sweeping neoliberal reforms.20 The share of outsiders increased again in the years surrounding the 2001 financial crisis, which entailed a deep contraction of the economy and high unemployment. With economic growth and pro-employment policies in the 2000s, formal employment expanded, reaching a similar share of the workforce in 2010 as it had in 1990. As frequently noted, informal and rural workers are the groups that generally fall into the ranks of the unemployed during economic shocks, recessions, and periods of high inflation.21 As discussed ahead, outsiders remained largely unorganized in Argentina until the late 1990s. Labor unions, in turn, have traditionally been strong in organizational terms, thanks in part to labor legislation that favors organization at the sectoral level and to unions’ administration of health funds and other social benefits, which provides crucial selective incentives to recruit members.22 In the late 1990s, unemployed workers’ organizations began to emerge demanding solutions to the plight of the unemployed. These organizations engaged in large-scale protests for jobs and social benefits. Over time, a dynamic of protest followed by state responses in the form of social and workfare benefits empowered these organizations and inspired new groups to emerge in order to access benefits, giving rise to movements and federations of the unemployed that became the main organizational actors representing outsiders.23

13.3  insider

and outsider coalitions : what they

are and how they form

Labor unions and outsider organizations connect with each other in different ways and build different types of alliances. At a very basic level, insider– outsider relations may be flexible and issue-based, entailing cooperation around specific demands, campaigns, protests, or programs, such as training schemes. I refer to these intermittent alliances as joint activity. At the other end of the spectrum, alliances may involve the creation of joint peak associations, which I call insider–outsider coalitions. These coalitions entail sharing institutional power, decision-making roles, agendas, and a common organizational vision among both sectors. They also require pooling resources across different organizations and workers, some of whom lack the means to finance costly membership dues to sustain a labor confederation. These

20 21 22 23

Argentina’s unemployment rate was in the single digits between 1974 and 1993. See INDEC (www.indec.gob.ar). See Beccaria and Maurizio, Movilidad ocupacional en Argentina; Portes and Hoffman, “Latin American Class Structures”; Schijman and Dorna, “Clase media y clase media vulnerable.” See Murillo “Union Politics,” Labor Unions. On labor power, see also Silver, Forces of Labor, 13. See Garay, “Social Policy and Collective Action”; Garay, Social Policy Expansion in Latin America; Svampa and Pereyra, Entre la ruta y el barrio; Rossi, The Poor’s Struggle for Political Incorporation.

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arrangements make unions incur economic costs to attract and subsidize less affluent allies. Joint labor centrals thus represent a deeper commitment between insiders and outsiders. More than other types of alliance, they may also face the challenge of dealing with issues that benefit one sector at the expense of the other.24 I refer to integration as the formation of an insider–outsider coalition, or the moment when both insiders and outsiders join a labor central as members with equal rights. This may take place shortly after the new labor central is established, or it may take time for one sector, most often outsiders, to join the insider-outsider coalition. To identify the presence of such a coalition, I examine whether a labor central a) is inclusive of outsider organizations or workers, and whether this is established in its statutes; b) presents itself as representative of insiders and outsiders; c) gives outsider members the right to vote in elections; and d) includes outsider representatives in governing bodies and decision-making processes. These features seek to capture whether insider– outsider coalitions exist on paper only, as aspirational goals, or whether both insiders and outsiders are in fact members of the labor central. While joint activity between insiders and outsiders may be frequent and easy to develop in the context of democratic politics, insider–outsider coalitions aren’t. What accounts for the more laborious formation of insider– outsider coalitions? Insider–outsider coalitions are initiated by labor unions that broke away from historical allies within the labor movement and launched a new labor central organization to advance their interests. The process of coalition formation thus begins with a split in the labor movement that leads to the formation of a new labor central that is inclusive of outsiders. Schismatic unions that break away from former allies are key to the formation of an insider–outsider coalition. The process of coalition formation involves three crucial steps – split of an historical coalition, formation of an inclusive labor central, and integration with outsiders. Sometimes these steps happen in a short period of time; at other times, they may be more spread out. Splits in unions’ historical alliances occur when labor peak organizations must respond to shocks: serious threats posed by deep economic restructuring and/or severe political restrictions on union organizing. These shocks may entail economic liberalization and privatization processes that severely reduce the bases of some unions and/or dramatically change their working conditions. Shocks may also involve the repression of labor organizations, especially in non-democratic or transitional environments, which aim to deactivate the labor movement. If the labor movement responds with a unified front to these shocks, the existing configuration of labor alliances prevails. However, if conflicting positions emerge within the labor movement in 24

I address these and other types of alliances between insiders and outsiders in Garay, Labor Coalitions in Latin America.

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Candelaria Garay

in response to these critical shocks, deep divisions will likely drive sectors of the labor movement to break away. Schismatic unions form a new peak organization to coordinate activities, establish a new program and vision for the labor movement, and seek new allies, in order to defend jobs, labor leaders, and/or labor unions under threat. Schismatic unions reach out to outsiders for two main reasons. First, they do so to increase their mobilizational capacity to advance their agenda. Second, they ally with outsiders to cultivate a new identity that will differentiate them from the labor central they have left behind and create a new vision for labor activists.25 In essence, through the formation of a new labor central that integrates insiders and outsiders, schismatic unions aim to gain political power and generate a new community of fate.26 Insider–outsider coalitions materialize when outsider organizations exist and are willing to join the new central. Therefore, while the new central’s identity as representing insiders and outsiders may begin to take shape from the very beginning, actual insider–outsider coalitions may materialize later. Outsider organizations are generally not the first movers in the formation of these centrals, but they may become key players over time, both in terms of their numbers and mobilizational capacity and their influence within the coalition’s leadership. Strong outsider movements may prefer not to integrate with labor unions, whom they may mistrust due to their historical reluctance to mobilize with outsiders, or because they were historically organized separately, as in the case of peasant movements and confederations. However, forming an alliance with unions and becoming part of a labor central organization is generally attractive for outsider movements. It can help them develop a collective identity as workers and advance their demands to the state. Union movements split regardless of their strength or structure, but some capacity for coordination among schismatic unions is a condition for the formation of an insider–outsider coalition. Schismatic unions need the ability to scale in order to form a peak association; they also need some mobilization capacity or numbers, and enough resources to sustain activities with resourcepoor outsider organizations. While joint activity, such as protests, may be carried out by all unions to a greater or lesser degree within democratic regimes as long as outsider organizations or movements are available for such initiatives, the institutionalization of an insider–outsider alliance is more likely to take place among unions with capacity for coordination.

25

26

As noted by a former Secretary General of the CTA about the origins of the labor central: “Others [union leaders in the CGT] told us that we were building the ‘central of defeat’ [central de la derrota], but we wanted to be protagonists, to define a new future for the labor movement.” (Author’s interview, July 10, 2018). Levi and Olson, “The Battles in Seattle.”

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13.4  the

419

insider – outsider coalition in argentina

How does the argument about coalition formation apply to the case of Argentina? For most of the twentieth century, Argentina’s labor movement was the strongest in the region, with high rates of union density  – albeit declining since the 1970s – centralization and institutional resources.27 When democracy returned in 1983, the national labor organization (Confederación General del Trabajo or CGT) – the only national peak association recognized by the state  – and the sectoral, industry-wide labor federations that constitute the pillars of Argentina’s labor movement were allied with the Peronist Party.28 Although the CGT suffered from internal tensions and temporary divisions, an institutional partition that led to the founding of an alternative labor ­central with a substantially different labor project was unprecedented.29 With the return of democracy, the Peronist Party initiated a process of de-unionization, both to increase its electoral appeal among the middle classes and build territorial machines to reach lower-income sectors that were not affiliated with the unions.30 Despite the marginalization of union cadres from party lists, the alliance between the CGT and the Peronist Party survived (Levitsky 2003; Murillo 2001). 13.4.1  Labor Splits under Neoliberalism The process leading to the formation of an insider–outsider coalition began in response to a shock that threatened the survival of an important part of the labor movement. This shock was produced by the sweeping liberalization and deregulation of the economy and the privatization of large state-owned companies, which formed part of the neoliberal reform package introduced by the first administration of Carlos Menem of the Peronist Party (1989–1995, 1995–1999) to deal with the effects of the debt crisis. Upon taking office, Menem set out to transform the role of the state by reducing state expenditures and shrinking public-sector employment. This posed an undeniable threat to public-sector unions, especially those representing workers in companies affected by closures 27 28

29 30

For comparative union density data, see Roberts, Changing Course in Latin America. As described by Murillo, Argentina’s law established a pyramidal organization for the union movement based on the monopoly of representation by one union per sector or activity. The national leadership enjoys high authority while local unions and shop-floor delegates have limited autonomy. The General Confederation of Labor is governed by sectoral federations and has fewer resources than these federations. See Murillo, “Union Politics,” 75–6. On the labor movement in Argentina, see Godio, Historia del movimiento obrero argentino; McGuire, Peronism without Perón; Torre, La vieja guardia sindical; Torre, El gigante invertebrado. On the evolution of the national labor organization (CGT) and its factions and divisions, see McGuire, Peronism without Perón; Godio, Historia del movimiento obrero argentino. Levitsky, Transforming Labor-Based Parties in Latin America. On the Peronist Party in the 2000s, see Etchemendy and Garay, “Argentina: Left Populism.”

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Candelaria Garay

or privatization, placing them on the defensive.31 Between 1989 and 1993, 672,754 jobs in the national civil service and 107,000 jobs in provincial and municipal bureaucracies were eliminated. Close to one-third of total jobs in state-owned companies – about 103,500 jobs – were also eliminated in 1993.32 These job losses amounted to about 8 percent of the economically active population in 1991.33 State employees saw a dramatic wage decline as well.34 At the same time, neoliberal reforms exposed firms in formerly protected sectors to market competition, producing firm closures and layoffs in the private sector.35 Instead of contesting and mobilizing against these reforms, the national labor confederation (CGT) and the Peronist Party endorsed and even actively promoted them. As extensively analyzed in the literature, labor leaders sought to protect unions’ institutional prerogatives and often obtained concessions in exchange for supporting neoliberal reforms.36 This strategy was viewed by some unions as one of “weathering the storm” in an environment that was hostile to labor unions. By contrast, some labor unions, deeply affected by state downsizing and fearing massive job losses, tried to challenge reforms from within the CGT. However, they were unable to shift the position of their peers, who either believed that there was no alternative to major economic reform and sought to benefit from payoffs in exchange for their acquiescence, or feared being ostracized or punished with institutional penalties, such as losing selective incentives for recruitment, if they opposed the government.37 Facing no chances of fighting economic reforms from within the CGT, and unable to mobilize a more numerous group of union leaders to shift its agenda, a large group of public-sector unions and teachers’ unions broke with their prior allies in the CGT. While these schismatic unions initially formed an internal faction within the CGT, they soon defected and established a national peak organization, which would become the Argentine Workers’ Central (CTA).38 In meetings held before the split of the CGT, this opposition group put together the bylaws of a new, alternative peak labor organization that would represent insiders and outsiders.39 A few months later, several of the unions that participated in these early meetings formed the CTA.

31 32 33 34 35 36 37 38 39

See Murillo, “Union Politics,” 75–6; Minujin, Sobre pobres y vulnerables; and Beccaria, López and Feldman, Sin trabajo. Murillo, “Union Politics,” 77. Data from INDEC’s 1991 National Census. Murillo, “Union Politics,” 76–7. For example, Etchemendy, Models of Economic Liberalization. Murillo, Labor Unions; Etchemendy, “Repression, Exclusion, and Inclusion”; Etchemendy, Models of Economic Liberalization. On recruitment, see Palmer-Rubin et al., “Incentives for Organizational Participation.” On the founding of the CTA, see Armelino, “Reformas de mercado,” and Rauber, Tiempo de herejías. According to labor regulations in Argentina, only one national confederation, the traditional national labor organization (CGT), is legally recognized. The new national labor

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13.4.2  A New Peak Association After splitting from their previous allies, the leaders of the new national labor organization (CTA) sought to reach out to and mobilize outsiders, a vast and unorganized sector, in order to advance their agenda as well as to define a new identity for the CTA. The break from previous allies entailed not only a loss of power but also the need to develop a new narrative that would bring the CTA’s members together, imbue them with a sense of purpose, and differentiate them from their former partners. Forming an insider–outsider coalition was in part a self-interested strategy that aimed at increasing schismatic unions’ mobilizational capacity in order to advance their goals. As noted by a leader of the CTA, “We were in a position of weakness. This drove us to think of strategies to help us join forces with workers in cooperatives, in small firms, unemployed ­workers …”40 On the other hand, schismatic union leaders sought to define a new identity for the CTA, understood as a new vision or project for the labor movement, and a new community of fate with which the rank and file would identify. An alliance with outsiders would help them develop a new identity, as it would entail a new definition of who unions represent and the types of demands they pursue. It would also help the CTA differentiate itself from the rest of the labor movement and facilitate the recruitment of new members. The leaders of the CTA tried to generate a community of fate for their labor central by pointing to both problems and interests that insiders and outsiders shared.41 By positioning itself as a new central for all workers regardless of employment status or organizational representation, the CTA set out to affiliate outsider organizations and individual workers directly. Direct affiliation meant that anyone, whether or not they belonged to a union or work-related organization, could join the CTA. Several union leaders criticized the idea that workers could affiliate directly to the peak association, arguing that it would undermine the power of labor unions in the long run, as labor confederations are meant to affiliate labor unions, which in turn affiliate workers.42 CTA leaders nonetheless deemed direct affiliation to be a crucial tool to incorporate outsiders, as these workers were not organized at the time and were not legally allowed to join unions.43

40 41 42 43

organization (CTA) is “registered” but not “recognized” as a peak labor organization. Several labor unions have publicly complained to the International Labor Organization (ILO) regarding these legal restrictions, and the ILO has “urged” the Argentine Government to change these legal policies, to no avail until now – International Labour Organization (ILO), “Observation (CEACR).” Author’s interview, Buenos Aires, July 24, 2018. Author’s interview, Secretary General of the CTA, Buenos Aires, January 10, 2017. Author’s interview, Secretary General of the CTA, Buenos Aires, January 10, 2017. Author’s interview, founding member of the CTA, Buenos Aires, November 9, 2017.

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Candelaria Garay

In its early years, the CTA’s motto was “the neighborhood is the new factory.” CTA leaders sought to convey that the main site of labor organizing was no longer the factory, that the labor central did not represent industrial workers only, and that it would channel recruitment efforts to neighborhoods, where workers lived and worked in a wide variety of occupations and where solidarity networks among them could emerge. 13.4.3  Formation of the Insider–Outsider Coalition The formation of an insider–outsider coalition required the affiliation of outsiders. The leadership of the new national labor central (CTA) initially sought to promote enrollment by creating unemployed workers’ organizations, especially, though not only, among former union members and workers’ laid off from public-sector jobs. This top-down strategy failed, as the unemployed did not organize around the activities and initiatives promoted by labor unions.44 The insider–outsider coalition in fact only materialized when outsiders organized, a few years later, into movements of unemployed and informal poor workers, which emerged out of community associations in poor neighborhoods and slums.45 In the late 1990s, some of these movements joined the CTA. For these movements, the alliance with the CTA became critical to mobilizing on a country-wide level, gaining organizational skills, and developing and promoting an agenda centered not only on community-based demands and jobs but also on national social policy change. The CTA helped outsider movements exert pressure on the state to expand social benefits. By 2010, over 500,000 of the close to 1.5 million workers affiliated to the CTA were outsiders.46 These members paid symbolic membership fees, voted in elections, and the leaders of their organizations often held positions on the board of the CTA – although the national secretariat was always held by a union leader. The CTA also advanced an agenda that included demands of both insiders and outsiders. The formation of the CTA allowed its union leaders to coordinate their opposition to economic adjustment and state downsizing and their demands for better salaries and public services. It also allowed them to gain high mobilizational capacity and visibility during the 1990s. Over the years, the CTA was able to increase its membership both by affiliating unions at the subnational level and recruiting outsiders nationwide. Although their opponents in the CGT initially called the CTA a symbol of “defeat” because it coordinated the “losers” of economic reforms, over time the CTA gained 44 45

46

Author’s interview, founding member of the CTA, Buenos Aires, November 9, 2017. On the unemployed workers’ movements, see for example, Svampa and Pereyra, Entre la ruta y el barrio; Garay, “Social Policy and Collective Action,” and Pereyra, Pérez and Schuster, La huella piquetera. Data from “Organización del trabajo autónomo y reforma aboral en la Argentina” www​.relats .org/documentos/EATP.TA.Jorajuria.pdf

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significant influence over policy decisions, especially those concerning social policy changes and funding for both social services. Many of the social benefits for both insiders and outsiders established in the 2000s were proposed by the CTA and their social movement allies. These benefits included changes in pension policy benefiting both insiders and outsiders, employment training programs, higher minimum wages, and the adoption of cash transfers for outsider children, among others.47

13.5  final

remarks

The role of labor unions was one of the most studied topics by students of comparative politics addressing the shift to neoliberalism in the 1990s. By contrast, the fate of labor unions after market reforms and the strategies that they have pursued to gain policy influence have received much less attention.48 In this chapter, I show one major strategy that labor unions have pursued and that remains undertheorized: the formation of a coalition with outsiders. These coalitions are puzzling because much of the literature assumes that insiders and outsiders have inherently opposing interests. Moreover, labor unions have hardly ever organized outsiders in Latin America and, in some countries, outsiders are not allowed to join labor unions.49 In Argentina, the CTA was formed in the context of market reforms and gained strength by challenging market arrangements and proposing policies that expanded the role of the state. This insider–outsider coalition was initiated by a group of union leaders who were unable to fight for their survival and against state downsizing within the existing confederation of labor, which endorsed market reforms. Having significant coordination capacity, these unions established a new confederation that would not only better represent them but also entail a change of their labor identity, as it would make them representatives of a broader informal working class with which they had little prior connection. While some of the union leaders who spearheaded these changes were indeed progressive leaders, none had ever planned to lead the type of labor peak organization they eventually founded. Their shift toward allying with outsiders was a decision made in the face of dramatic adversity and disagreement with historic allies. As in other insider–outsider coalitions, labor unions were the first movers in the formation of the CTA. Unlike outsider organizations in most cases, labor unions have the coordination capacity, influence, and resources to start a major labor central from scratch in an environment of political and/or economic adversity. Outsiders generally acquire more power in these coalitions 47 48

49

For an analysis of social policy expansion and the role of the CTA, see Garay, Social Policy Expansion in Latin America. On labor unions after neoliberal reforms, see Etchemendy and Collier, “Down but not Out”; Garay, “Associational Linkages to Labor Unions and Political Parties;” Rossi and Silva, Reshaping the Political Arena in Latin America. See Garay, Labor Coalitions in Unequal Societies.

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Candelaria Garay

over time. In some cases, they set out to transform them from within and gain more institutional power. This is the case, for example, of the coca growers that form part of the Central Obrera Boliviana (COB) in Bolivia. While there are other forms of alliances between insiders and outsiders across Latin America, such as joint activity, insider–outsider coalitions are important because, among other reasons, they represent a much stronger commitment on the part of both unions and outsider groups than participation in joint activities and mobilizations, which have been prevalent in the aftermath of market reforms in the 2000s.50 Insider–outsider coalitions also entail sharing power and decision-making and advancing a common agenda among highly heterogeneous groups of workers. Insider–outsider coalitions face steep challenges in maintaining cohesion. Differences between insiders and outsiders and alliances with political parties generally create divisions within insider–outsider coalitions, threatening their unity. In the case of the CTA, political parties have often tried to gain the support of the new confederation, at times to mobilize it in protest against the incumbent and at other times to dampen its activism while the party is in office. Party alliances turned out to be a double-edged sword for the CTA, as they aided its mobilization when party allies were out of office, but often pitted unions against each other when they were in office. However, and as I analyze elsewhere, forming alliances with parties was often inevitable for CTA leaders, especially as polarization grew in Argentina beginning in the late 2000s, and the rank-and-file members often strongly supported the incumbents and pressured the CTA to mobilize in their favor.51 As democratic governments in Latin America struggle with the challenge of generating social welfare and economic development after neoliberalism, a key question concerns the fate of labor unions, historically the main organizations advancing the interests of the lower and lower-middle classes in the region.52 The formation of alliances with outsiders has been a critical labor union strategy for building organizational power and attaining policy influence. It has also empowered and granted more visibility to the needs of outsiders, historically neglected by unions and by state policy. How these coalitions sustain themselves, whether they foster the organization of outsiders more broadly, and whether they help to further the discussion of enduring state policies that address their needs are important subjects of research. Given that labor unions have been found to play a key role in reducing economic inequality more generally53, another important question concerns whether the strategies pursued by labor unions, in particular their alliances with outsiders, help reduce inequality after neoliberal reforms. 50 51 52 53

Silva, Challenging Neoliberalism in Latin America. See Garay, Labor Coalitions in Unequal Societies for further discussion of the alliances between insider–outsider coalitions and political parties. Collier and Collier, Shaping the Political Arena. For example, Eidlin, Labor and the Class Idea in the United States and Canada.

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bibliography

Anner, Mark. 2011. Solidarity Transformed: Labor Responses to Globalization and Crisis in Latin America. Ithaca: Cornell University Press. Anria, Santiago. 2018. When Movements Become Parties: The Bolivian MAS in Comparative Perspective. Cambridge: Cambridge University Press. Armelino, Martín. 2015. “Reformas de mercado y reacciones sindicales en Argentina: Una revisión desde la experiencia de los trabajadores públicos.” Desarrollo Económico 55 (216): 245–78. Beccaria, Luis, Néstor López, and Silvio Feldman. 1996. Sin trabajo: las características del desempleo y sus efectos en la sociedad argentina. Buenos Aires: Losada. Beccaria, Luis, & Roxana Maurizio. 2003. Movilidad Ocupacional En Argentina. Serie Informes de Investigación 18. San Miguel: Instituto de Ciencias, Universidad Nacional de General Sarmiento. Carnes, Matthew E. 2014. Continuity Despite Change: The Politics of Labor Regulation in Latin America. Social Science History. Stanford, California: Stanford University Press. Carnes, Matthew E., and Isabela Mares. 2014. “Coalitional Realignment and the Adoption of Non-Contributory Social Insurance Programmes in Latin America.” Socio-Economic Review 12 (4): 695–722. Collier, Ruth Berins, and David Collier. 1991. Shaping the Political Arena: Critical Junctures, the Labor Movement, and Regime Dynamics in Latin America. Princeton, N.J.: Princeton University Press. Collier, Ruth Berins, and Samuel Handlin. 2009. Reorganizing Popular Politics: Participation and the New Interest Regime in Latin America. University Park, Pa.: Pennsylvania State University Press. Cook, Maria Lorena. 2007. The Politics of Labor Reform in Latin America: Between Flexibility and Rights. University Park, Pa.: Pennsylvania State University Press. Eidlin, Barry. 2018. Labor and the Class Idea in the United States and Canada. New York, NY: Cambridge University Press. Esping-Andersen, Gøsta. 1990. The Three Worlds of Welfare Capitalism. Princeton, NJ: Princeton University Press. Etchemendy, Sebastian. 2004. “Repression, Exclusion, and Inclusion: GovernmentUnion Relations and Patterns of Labor Reform in Liberalizing Economics.” Comparative Politics 36 (3): 273–90. Etchemendy, Sebastián. 2011. Models of Economic Liberalization: Business, Workers, and Compensation in Latin America, Spain, and Portugal. New York: Cambridge University Press. Etchemendy, Sebastián, and Ruth Berins Collier. 2007. “Down but Not Out: Union Resurgence and Segmented Neocorporatism in Argentina (2003–2007).” Politics & Society 35 (3): 363–401. Etchemendy, Sebastián, and Candelaria Garay. 2011. “Argentina: Left Populism in Comparative Persepective, 2003–2009.” In The Resurgence of the Latin American Left, edited by Steven Levitsky and Kenneth M. Roberts, 283–305. Baltimore: The Johns Hopkins University Press. Garay, Candelaria. 2007. “Social Policy and Collective Action: Unemployed Workers, Community Associations, and Protest in Argentina.” Politics & Society 35 (2): 301–28.

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Garay, Candelaria. 2009. “Associational Linkages to Labor Unions and Political Parties.” In Reorganizing Popular Politics: Participation and the New Interest Regime in Latin America, edited by Ruth Berins Collier and Samuel Handlin. University Park, Pa.: Pennsylvania State University Press. Garay, Candelaria. 2016. Social Policy Expansion in Latin America. New York, NY: Cambridge University Press. Garay, Candelaria. 2020. Labor Coalitions in Unequal Societies (unpublished manuscript). Godio, Julio. 2000. Historia del movimiento obrero argentino: 1870–2000. Buenos Aires: Corregidor. Ibsen, Christian Lyhne, & Kathleen Thelen. 2017. “Diverging Solidarity: Labor Strategies in the New Knowledge Economy.” World Politics, 69 (3), 409–447. International Labour Organization (ILO). 2021. “Observation (CEACR)  – adopted 2020, published 109th ILC session (2021).” Accesed March 4, 2021. www​.ilo.org/ dyn/normlex/es/f?p=1000:13101:0::NO::P13101_LANG_CODE:en:NO Levi, Margaret, and David Olson. 2000. “The Battles in Seattle.” Politics & Society 28 (3): 309–29. Levitsky, Steven. 2003. Transforming Labor-Based Parties in Latin America: Argentine Peronism in Comparative Perspective. New York, NY: Cambridge University Press. Lupu, Noam. 2014. “Brand Dilution and the Breakdown of Political Parties in Latin America.” World Politics 66 (4): 561–602. Mainwaring, Scott. 1998. “Party Systems in the Third Wave.” Journal of Democracy 9 (3): 67–81. Mainwaring, Scott. 2018. Party Systems in Latin America: Institutionalization, Decay, and Collapse. New York, NY: Cambridge University Press. McGuire, James W. 1997. Peronism without Perón: Unions, Parties, and Democracy in Argentina. Stanford, Calif.: Stanford University Press. Minujin Z., Alberto. 1993. Sobre pobres y vulnerables: el caso argentino. Documento de trabajo (UNICEF Argentina); nro. 18. Buenos Aires, Argentina: UNICEF. Murillo, Maria Victoria. 1997. “Union Politics, Market‐Oriented Reforms, and the Reshaping of Argentine Corporatism.” In The New Politics of Inequality in Latin America : Rethinking Participation and Representation, edited by Douglas A. Chalmers, Carlos M. Vilas, Katherine Hite, Scott B. Martin, Kerianne Piester, and Monique Segarra, 72–94. Oxford: Oxford University Press. Murillo, Maria Victoria. 2001. Labor Unions, Partisan Coalitions and Market Reforms in Latin America. Cambridge Studies in Comparative Politics. Cambridge, UK; New York, NY, USA: Cambridge University Press. Murillo, M. Victoria, and Andrew Schrank. 2005. “With a Little Help from My Friends: Partisan Politics, Transnational Alliances, and Labor Rights in Latin America.” Comparative Political Studies 38 (8): 971–99. Palmer-Rubin, Brian, Candelaria Garay, and Mathias Poertner. 2021. “Incentives for Organizational Participation: A Recruitment Experiment in Mexico.” Comparative Political Studies 54 (1): 110–43. Pereyra, Sebastián, Germán J. Pérez, and Federico Schuster. 2008. La huella piquetera: avatares de las organizaciones de desocupados después de 2001. 1. ed. Colección Diagonios, La Plata, Buenos Aires, Argentina: Ediciones Al Margen.

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Portes, Alejandro and Kelly Hoffman. 2003. “Latin American Class Structures: their Composition and Change during the Neoliberal Era,” Latin American Research Review 38 (1): 41–82. Rauber, Isabel. 2000. Tiempo de herejías: nuevas construcciones, debates y búsqueda de la Central de los Trabajadores Argentinos (CTA). 1a ed. Argentina: Instituto de Estudios y Formación. Roberts, Kenneth M. 2014. Changing Course in Latin America: Party Systems in the Neoliberal Era. New York, NY: Cambridge University Press. Rogowski, Ronald. 1989. Commerce and Coalitions: How Trade Affects Domestic Political Alignments. Princeton, N.J.: Princeton University Press. Rossi, Federico. 2017. The Poor’s Struggle for Political Incorporation: The Piquetero Movement in Argentina. Cambridge, United Kingdom: Cambridge University Press. Rossi, Federico M., and Eduardo Silva, eds. 2018. Reshaping the Political Arena in Latin America: From Resisting Neoliberalism to the Second Incorporation. Pittsburgh: University of Pittsburgh Press. Rueda, David. 2007. Social Democracy Inside Out: Partisanship and Labor Market Policy in Industrialized Democracies. Oxford: Oxford University Press. Schijman, Agustina and Guadalupe Dorna. 2012. “Clase media y clase media vulnerable” Desarrollo Económico 52 (206): 179–204. Silva, Eduardo. 2009. Challenging Neoliberalism in Latin America. New York: Cambridge University Press Silver, Beverly J. 2003. Forces of Labor. Cambridge: Cambridge University Press. Svampa, Maristella and Sebastián Pereyra. 2003. Entre la ruta y el barrio: la experiencia de las organizaciones piqueteras. Buenos Aires: Editorial Biblos. Thelen, Kathleen. 2012. “Varieties of Capitalism: Trajectories of Liberalization and the New Politics of Social Solidarity,” Annu. Rev. Polit. Sci. 15:137–59. Torre, Juan Carlos. 1990. La vieja guardia sindical y Perón: sobre los orígenes del peronismo. Colección Historia y Sociedad. Buenos Aires: Editorial Sudamericana: Instituto Torcuato di Tella. Torre, Juan Carlos. 2004. El gigante invertebrado: los sindicatos en el gobierno, Argentina 1973–1976. Colección Historia y Política 4. Buenos Aires: Siglo Veintiuno de Argentina Editores.

14 Locating Neoliberalism in Abiayala A View from Indigenous Studies José Antonio Lucero

The last trip I took to Mexico City, before a pandemic complicated the way most of us cross borders, was to attend an academic conference at the Universidad Nacional Autónoma de México (UNAM) on the challenges of democracy in Latin America. As academic conferences go, it was a very memorable event not only because of the brilliance of my colleagues and a 7.2 earthquake but also because of its remarkable venue, the old colonial Palace of the Inquisition (Figure 14.1). Long after the work of the Inquisition ended, the palace was acquired by UNAM and became the first site of the university’s medical school, where my maternal grandfather, Ranulfo Reyes Loera, studied as a young man thanks to the support of the post-revolutionary Mexican state of Lázaro Cárdenas. I roamed this palatial space feeling an incongruous mix of connection with a place where my grandfather had walked and also the colonial hauntings of an institution that had condemned many, among the first of whom was a Nahua man named Martín Ocelotl, banished and imprisoned in Sevilla in 1536 for the ostensibly idolatrous practice of performing Native forms of healing.1 As I rounded a corner, I came across a small garden. In what seemed like a gesture of apology for the banishment of Ocelotl and countless other acts of anti-Indigenous violence, the building (re-baptized as the Museum

1

García, “The Return of Martin Ocelotl.” León García Garagarza’s dissertation provides a luminous account of Ocelotl’s healing practices and understanding of diseases brought by the Spaniards. Among those maladies he treated was “the fatigue that afflicts those who administer the Republic and hold Public Office.” One is tempted to expand this fatigue of governance as a metaphorical diagnosis for a congenital political condition for politics in the Americas. Ocelotl is a fascinating figure who has attracted the attention of other historians including J. Klor de Alva (“Martín Ocelotl”), Gruzinski (Man-Gods in the Mexican Highlands), and Lopes Don (Bonfires of Culture).

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figure 14.1  The Palace of Inquisition/Museum of Mexican Medicine, Mexico City. Photograph by José Antonio Lucero

of Mexican Medicine) dedicated a medicinal plant garden to the Purépecha curandera, Rosita Ascencio, on the occasion of her 91st birthday. This scene of Indigenous healing and resurgence, in the shadows of a large colonial structure, felt like a hopeful metaphor with which I could begin the presentation I was about to give on Indigenous peoples and democracy. Yet, as I looked more closely, I noticed that my metaphor was getting complicated. A small sign (see Figure 14.2) read: THE MEDICINAL PLANTS CONTAIN TOXIC RESIDUES BECAUSE THEY HAVE BEEN FUMIGATED2

This suddenly became an even more apt metaphor for capturing the role of Indigenous peoples in the long (neo)liberal era of Latin American politics. Indigenous peoples are resurgent, but they nevertheless face more than their share of the toxic residues of colonialism and capitalism. This essay is organized thematically and does not seek to provide a detailed empirical discussion of the many Indigenous movements in Abiayala, the Guna word for the Americas that movements across the hemisphere have begun to use as an alternative transborder geography.3 Nevertheless, I do offer evidence from Indigenous organizing primarily in Bolivia, Ecuador, and Chile (with 2 3

Unless otherwise noted, all translations are my own. Keme, “For Abiayala to Live, the Americas Must Die.”

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figure 14.2  Medicinal Botanical Garden, Museum of Mexican Medicine. Photograph by José Antonio Lucero

a few fleeting comparative hemispheric glances). While I am not advancing a comparative argument about these cases, these three countries offer useful illustrations of the ways in which Indigenous peoples have challenged neoliberalism and settler colonial orders (most strongly in Bolivia and Ecuador) and also been challenged by neoliberalism and settler colonial orders (most strongly in Chile). Even this provisional classification, however, can be misleading since the relationships between neoliberalism and Indigenous politics are complex everywhere and do not break down neatly along the geographies of settler-defined national states. While there are sound reasons to say that Indigenous movements have been “stronger” in Bolivia and Ecuador than in Chile, here I want to make a more modest suggestion that all three countries provide useful ways to think about the longue durée of colonial entanglements in Latin America.4 4

The best political scientific treatment of Indigenous movements in Latin America remains Deborah Yashar’s groundbreaking 2005 book, Contesting Citizenship in Latin America. A central puzzle for Yashar concerns the relative “weakness” of Indigenous movements in Peru where, unlike neighboring Bolivia and Ecuador, there was an absence of national-level mobilization and organization. While such a comparative framing is very instructive, the investment in the coding of movements as “strong” or “weak” does come with some limitations, perhaps the most glaring of which is that it foregrounds colonial categories (Bolivia, Peru) over Indigenous (Aymara, Quechua) ones. Years ago, María Elena García and I asked a Quechua activist in Lima where the Indigenous movement in Peru was, he responded: “It is in Ecuador and Bolivia.” For more on the interpretive costs of comparison, see García and Lucero, “Un País Sin Indígenas”; García and Lucero, “Authenticating Indians and Movements.” For a discussion on how “Peruvian” forms shape movements beyond that country see Lucero, “To Articulate Ourselves.”

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This chapter provides a view of the vexing questions of neoliberalism through the lenses of Settler Colonial Studies and Indigenous Studies, related but distinct intellectual projects that help us understand the shapeshifting forms of settler colonialism and the dynamic practices of Native resurgence and “survivance,” to borrow Anishinaabe scholar Gerald Vizenor’s term (1999) for Native stories and acts that perform presence rather absence, survival over victimhood. Such an optic results in at least two different ways of situating a discussion of neoliberalism.5 First, it provides an alternative timescale, one that situates this phenomenon not only within the twentieth and twenty-first-century swing of statist and market-based development models but also within a longer colonial history of extractivism, state formation, and Indigenous struggles. Second, it considers the politics of neoliberalism as both an enabling condition of Indigenous mobilization and demobilization. In other words, neoliberalism, from the vantage point of Indigenous Studies, is part of an ongoing story of colonial dispossession, anti-colonial resistance, and negotiation.

14.1  neoliberalism :

colonialism by other means ?

Given the rich chapters in this book, it is not necessary to provide a detailed history of neoliberalism in the region. Nevertheless, a quick summary of the shifts in development models in Latin America can illustrate what an Indigenous Studies perspective adds to our collective conversation. The conventional story of development patterns in the Americas is a story of pendular swings. Nineteenth-century Latin America was characterized by outward-oriented economics and liberal-oligarchic politics. Constitutions were adorned by liberal principles, but they left colonial social orders largely intact – the (criollo) few continued to rule and exploit the (Native and Black) many. The first big developmental swing in the region took place in the mid-twentieth century as economies shifted away from the export of primary goods and toward inward-facing strategies of industrializing populism.6 Popular sectors formed part of multi-class governing coalitions, with Indigenous peoples usually being incorporated with the modernizing label of “campesinos.” The pendulum swung from inclusion toward exclusion again in the mid-twentieth century. The “exhaustion” of import substitution industrialization and the growing anxieties of Cold War national security state militaries 5

6

I should note that not all scholars count Latin American countries as “settler colonial” states. This is not the place to have that discussion, but I agree with Chickasaw scholar Shannon Speed (“Structures of Settler Capitalism”) who explains why Latin America fits the classic criteria of settler colonialism established by the late, great scholar of settler colonialism, Patrick Wolfe. One of the key criteria, according to Wolfe, is the goal that settler colonialism sets regarding “the elimination of the Indian,” which can look like “frontier homicide” of Indian wars or the homogenizing work of mestizaje. Collier, ed., The New Authoritarianism in Latin America.

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across the region generated “coup coalitions” that inaugurated authoritarian forms of market-oriented development.7 If one needs a mental picture, it could easily be the black-and-white photographs of Milton Friedman meeting with Augusto Pinochet. Oil shocks of the 1970s led to the debt crises of the 1980s, which in turn prompted the International Monetary Fund (IMF) and World Bank to “rescue” Latin America with aid packages that carried demanding conditions of structural adjustment and austerity. The policy mix that emerged in the late 1980s was famously described by John Williamson as the “Washington Consensus” which converged around fiscal discipline, the reduction of barriers to foreign investment and trade, privatization, and the defense of private property.8 Moving closer to our twenty-first century present, the pendulum swung back and forth again, this time much more quickly. The social conflicts, exclusions, and inequalities of 1990s neoliberalism fueled the rise of “twenty-first century socialists” like Hugo Chávez (in Venezuela) and Evo Morales (in Bolivia), and the more moderate center-Left currents of Luiz Inácio Lula da Silva (Brazil) and Michelle Bachelet (Chile). High commodity prices powered the resource nationalism of “Pink Tide” governments and fueled visions of what scholars called, using the optimistic if temporally confounding label of “postneoliberal.”9 The fortunes of that postneoliberal moment began to sink with falling international commodity prices, global recession, and growing political polarization. Looking around the region today (in late 2021), the landscape is mixed and motley. Chavismo, in the form of embattled Venezuelan president Nicolás Maduro, hobbles almost zombie like, through humanitarian and economic crises. The Bolivian Left re-covers and rebuilds after a reactionary backlash removed Morales from office in 2019. In Ecuador, a Right-wing president entered office in 2020, following the ideological transformation of Lenin Moreno (the former vice president of leftist Rafael Correa) who renounced his former boss and in 2018 pursued new deals with the unpopular IMF, bringing people to the streets as they had not done in decades. In the two most recent Argentine presidential elections, the country swung from Left to Right and back to Left again. Meanwhile, Brazil represents perhaps the most troubling synthesis of farce and tragedy and endures the Right-wing rule of Jair Bolsonaro, while Lula contemplates yet another comeback. In Chile, leftist former student leader Gabriel Boric lost in the first round of the 2021 presidential election to far-Right politician José Antonio Kast, only to emerge the winner in the second round of voting. Latin America is in the grip of confusing times, which we might call post-postneoliberal. This infelicitous term, which I 7 8 9

Collier, ed., The New Authoritarianism in Latin America; O’Donnell, Modernization and Bureaucratic Authoritarianism. Williamson, “What Washington Means by Policy Reform.” See, for example, the optimistic title of Hershberg and Rosen’s 2007 work, tempered only by a question mark: Latin America after neoliberalism: turning the tide in the 21st century?

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will not use again, suggests that rather than trying to modify new varieties of liberalism, we might pay more attention to fundamental continuities. Neoliberalism, as its very name suggests, is a variation on an old theme, or to use a metaphor uncomfortably close to our times, a novel form of an old virus.10 The “neo” updates eighteenth and nineteenth-century forms of economic and political practices associated with figures like Adam Smith, John Locke, J.S. Mill, and David Ricardo. David Harvey offers a persuasively straightforward view of the difference between classical liberalism, in which the state was simple a “nightwatchman,” and neoliberalism which assigns the state a more central role in “in promoting technological changes and endless capital accumulation through the promotion of commodification and monetisation of everything along with the formation of powerful institutions (such as Central Banks and the International Monetary Fund) and the rebuilding of mental conceptions of the world in favor of neoliberal freedoms.”11 I agree with that distinction but would like to set it within a longer historical frame. The emancipatory rhetoric of J.S. Mill and company notwithstanding, foundational liberal visions were inseparable from global histories of colonialism and conquest, something recognized by figures as different as Locke (“in the beginning the whole world was America”) and Marx (“capital comes into the world dripping from head to foot, from every pore, with blood and dirt”).12 Thus, liberalism, old and new, is always, already entangled with certain colonial features and logics. Arguably the longest liberal story in the Americas is one in which capital and commodities move with considerably greater freedom than most people, especially those who were not property holding, white males. In times and places like nineteenth and early twentieth-century Central America, the political-economic landscape was characterized by liberal oligarchies, a Frankensteinian assemblage that combined recognizably republican constitutional forms, export-oriented economies, and repressive labor regimes. Native peoples were the most impacted sectors of society as their lands were dispossessed to make room for ostensibly more “productive” agricultural or mining activities, and they too provided the labor power for those activities. While one cannot paint with too broad a brush (the smaller coffee plantations in Costa Rica were different from the large labor-repressive ones in Guatemala), the pairing of free markets and un-free polities was and is a familiar part of political economies across the Americas.13 While not denying the dynamic and contentious nature of Latin America, the fact that our winding story from the outward-oriented days of the nineteenth century has brought us 10

11 12 13

One possible virus is the one identified by Lenapé historian Jack Forbes (Columbus and other Cannibals, 24) who describes imperialism and colonialism as forms of “wétiko disease,” a kind of cannibalism that involves “the consuming of another’s life for one’s own private purpose or profit.” Harvey, “The neoliberal project is alive but has lost its legitimacy.” The quotations are from Locke, Second Treatise on Government, 29, and Marx, Capital, 760. Williams, States and Social Evolution; Yashar “Contesting Citizenship.”

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to the outward-oriented days of the twenty-first century suggests some strong structural inertia. David Harvey, again, provides some clarity when he suggests that we should understand neoliberalism as nothing more and nothing less than “a political project to re-establish the conditions for capital accumulation and to restore the power of economic elites.”14 Jeffrey Webber provides an explanation for the retreat of the “Pink Tide” that puts the emphasis on structural continuity.15 According to Weber, even so-called “radicals” like Evo Morales and Hugo Chávez found ways to accommodate capital, rather than attack it. Despite the rhetoric of “nationalizations,” the distribution of commodity rents allowed elites (foreign and domestic) to survive and even thrive. Resource nationalism, while allowing policies of redistribution and poverty reduction, deepened a reliance on commodity exports, which meant that twenty-first-century socialism was built on the foundations of nineteenth-century dependency. From the perspective of Indigenous Studies, this does not come as a surprise. Yellowknives Dene scholar Glenn Coulthard, writing from the Native north, has made this point forcefully in his reformulation of Marx’s notion of primitive accumulation. Rather than part of the “origin story” of capitalism in which dispossession leads to proletarianization, dispossession is an enduring and constitutive part of colonial and capitalist social relations. As Patrick Wolfe famously put it, “settlers come to stay,” and thus, “invasion is a structure not an event.”16 This suggests that settler colonial logics and repertoires remain available for recurring moments of liberal extraction.17 Part of the durable structure of Latin American political economy has included an unmistakable racial component, as both scholars of coloniality and racial capitalism have observed.18 Against earlier views of Latin America as a region “racial democracy,” scholars have increasingly acknowledged that peoples of Indigenous and African descent in the Americas occupied distinct but subordinate positions in the “structures of alterity.”19 In other words, despite optimistic words of inclusion and race mixture, Latin America continues to reproduce patterns of white supremacy and settler colonialism. While racial orders in Latin America are different from the de jure forms of racial segregation in the US and South Africa, racial difference continues to operate in the ways that Cedric Robinson’s model of racial capitalism would expect: the accumulation of capital works through the construction of inequality and difference. “Racism,” in Jodi Melamed’s succinct formulation, “enshrines the inequalities that capitalism requires.”20 14 15 16 17 18 19 20

Harvey, A Brief History of Neoliberalism, 19. Webber, The Last Days of Oppression and the First Day of the Same. Wolfe, “Settler Colonialism and the Elimination of the Native,” 388. Lloyd and Wolfe, “Settler colonial logics and the neoliberal regime.” Quijano, “Coloniality of Power”; Robinson, Black Marxism. Wade, Race and Ethnicity in Latin America. Melamed, “Racial Capitalism,” 7.

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While the language of “coloniality” and “racial capitalism” may have the feel of rather recent additions to our scholarly vocabulary, both these notions were anticipated by the older and seminal work of Bolivian sociologist René Zavaleta Mercado, whose own work is undergoing a renaissance especially since the 2018 English-language translation of his most famous (though unfinished) work, Towards a History of the National-popular in Bolivia.21 Zavaleta, working in heterodox tradition that shows a heavy debt to Marx, Gramsci, and Hegel, is alive to the materialist analysis of colonial social relations, but he adds an important phenomenological dimension for understanding what we might call, with apologies to Raymond Williams, the colonial structure of feeling. Consider Zavaleta’s observation on the mutual constitution of “indio y señor” (Indian and feudal lord) in Bolivia: Our point of departure … is this: where there is no indio, there is no señor. The master comes to know himself in his servant, the indio becomes to be the basis for the identity of the señor… The indio, therefore, is the proof that the señor exists. This is expressed, in another way, in the trauma of victory or the deformation of the conqueror, a way of being that always deceives.22

One can find here, avant la lettre, what Quijano would later call the “coloniality of power.”23 Zavaleta describes power relations that contaminates everyone, especially the elites. This observation is compatible with the work of theorists of racial capitalism who find that racism is not simply about inflicting suffering on the subaltern but about shaping the behavior of the powerful. In an illuminating essay, Robin D.G. Kelley cites Otis Madison’s powerful formulation: “The purpose of racism is to control the behavior of white people, not Black people. For Blacks, guns and tanks are sufficient.”24 Shifting from the conditions of domination to those of liberation, Zavaleta asks “how could the people of Peru or Bolivia achieve their self-determination without reckoning with the fact that servitude can be found in their very own popular traditions?”25 The hierarchies of the system are naturalized, internalized, and accepted. This ideological and cultural work is crucial for the endurance of colonial orders, one that can be felt not only in the countryside but also in middle- and upper-class households in cities like Lima, Quito, or Santiago, where domestic servitude provided additional opportunities for the reproduction of old inequalities. And yet, these are not the only tools of colonial violence. As Madison noted above, there are the tanks and guns. 21

22 23 24 25

Freeland’s 2018 translation has helped bring Zavaleta to a wider audience. For additional English-language works see the special fora in Postcolonial Studies (coordinated by Felipe Lagos 2019) and in Historical Materialism (organized by Jeffrey Webber 2019). Zavaleta Mercado, “Las masas en noviembre,” 101. Quijano, “Coloniality of Power.” Kelley, “Births of a Nation, Redux.” Zavaleta Mercado, “Las masas en noviembre,” 40.

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Coloniality should also be understood as a continuation of war by other means. Indeed, for Zavaleta, conflict was central to the formation of political orders in the state. One of Zavaleta’s most memorable observations, reminiscent of Gramsci’s imagery of the earthworks and fortresses,26 was his claim that Bolivia is “nothing but that which had been built between the walls of defensive barricades erected against a territory populated by the Indian masses (la indiada).”27 Those “defensive barricades” were a recognition that settler colonialism has rarely ever been “settled.” As Zavaleta suggests, modernizing state builders saw (and see) “Indians” as threats to settler projects.28 Charles Tilly’s famous aphorism that states make war and wars make states, once viewed from the perspective of Indigenous Studies, can be slightly amended to reveal that the conflicts that “count” are not only the geopolitical ones between states but also the colonial ones between settlers and Native peoples.29 The repression of Indigenous protest through policing, incarceration, and anti-terrorist legislation can often be understood as part of a long history of settler colonial counterinsurgency, a way of making “Indian Wars” a constant part of political life, rather than a precondition for republican rule. To rephrase Tilly’s observation, settler colonial states wage “Indian wars,” and “Indian wars” makes settler colonial states. Despite important differences between British and Iberian varieties of colonialism, there is a striking commonality across Creole political projects throughout the Americas. Consider the US Declaration of Independence. The very last grievance against King George III in the US Declaration of Independence 26

27 28

29

In the Prison Notebooks, Gramsci (1978: 243) observes that “when the State trembled a sturdy structure of civil society was at once revealed. The State was only an outer ditch, behind which there stood a powerful system of fortresses and earthworks.” Interestingly, Gramsci suggested that this occurred only in “modern” (and not “backward states). Here Zavaleta modifies and arguably corrects Gramsci by suggesting that the “backward” countries are necessarily more complex (“abigarrada” or motley) because they contain multiple modes of productions, cultures, and temporalities. Zavaleta Mercado, 50 años de historia, 51. Recently Nick Estes, Melanie Yazzie, and the other members of the “Bordertown Violence Working Group” provide a powerful formation for understanding how settler colonialism can be seen as a series of border conflicts. They explain: “The word bordertown also captures a very specific accusation. The name itself – a noun, town, adjectively modified by border – reveals and clarifies the settler project. Every town is a bordertown, because every town serves as a border that settlers must defend. But the name bordertown anticipates its own failure and predicts its own demise. This is why we render it as one word. It is a bordertown, not a border town. Why? There is no objectively innocent spatial form in a settler world that we might call just a ‘town.’ Rather there is only the spatial expression of the settler project – borders, violence, and police. Every settler town is a bordertown, because every Native person on land that the settler desires, whether in a city or on the reservation, represents and embodies the active ongoing failure of the settler project. Bordertown is the word that describes the murderous colonial condition that has come to structure Native life and, thus, Native resistance to overturn that order. The only way to resolve this fundamental contradiction is through Native liberation.” Estes, Yazzie, and Correia, Red Nation Rising, 8. Tilly, Coercion, Capital, and European States.

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read as follows: “He has excited domestic insurrections amongst us, and has endeavored to bring on the inhabitants of our frontiers, the merciless Indian savages whose known rule of warfare, is an undistinguished destruction of all ages, sexes, and conditions.” Such commentaries on the boundaries between settler civilization and Indigenous savagery echo across the Americas; they also obscure the agency of Native peoples to defend themselves and their lands from settler invasion and expansion.30 The specter of Indigenous violence also shaped independence movements in South America. The wave of rebellions in the Andes led by Tupac Amaru and Tupaj Katari in the 1780s left a lasting impression on Creole political elites in what is now Bolivia and Peru. Similarly, the Haitian Revolution of the 1790s produced an unthinkable event in a slave-holding Atlantic World: a successful slave uprising.31 These popular insurrections were political tsunamis felt throughout the region. For example, the writings of the great libertador Simón Bolívar reflect deep racial anxieties about black and brown popular masses (“el temor de los colores”).32 It was only after receiving crucial assistance from newly independent Haiti that the slave-owning Bolívar declared for the first time his support for the abolition of slavery. His support of measures that moved toward formal equality, however, was tempered by his belief that political power should be in the hands of white creole elites, producing what Aline Helg has called a “double-edged” view of citizenship: “an active citizenship restricted to a tiny literate and skilled minority and an inactive citizenship for the immense majority of (mostly non-white) men.”33 Again, this is hardly a thing of the past. The case of the contemporary Mapuche (in what is today called Chile) is a striking example. Take the case of Luis Marileo, which López Vergara and I have discussed elsewhere.34 Marileo, a Mapuche activist, was one of two young people killed on June 10, 2017, in a dispute with Ignacio Gallegos Pereira, the owner of 30

31 32 33 34

Historian Jeffrey Ostler helps underline the connection between liberal property rights and settler colonial expansionism in the US: “Jefferson and others who signed the Declaration had their own reasons for detesting British policies relating to Native Americans and their lands. More than a decade earlier, in order to end a costly war to suppress an indigenous resistance movement led by the Ottawa war leader Pontiac, the king issued the Proclamation of 1763, which recognized indigenous ownership of lands west of the Appalachian mountains’ crest and prevented colonists from settling there. At first glance, ordinary settlers might be expected to have been the proclamation’s major opponents. Some settlers did object, but the most potent source of opposition came from colonial elites, especially in Virginia and Pennsylvania, who had invested in companies with claims to lands west of the boundary set by the proclamation. Unless those lands could be legally settled, land companies could not gain secure title to their claims. Investors would be left with nothing but the debts they had incurred to bet on getting rich.” Ostler, “The Shameful Final Grievance.” I explore the coloniality of security in more detail elsewhere (Lucero, “Alterity and Security”). Trouillot, Silencing the Past. For more on Bolívar’s racial anxieties see Helg, “Simón Bolívar’s Republic.” Helg, “Simón Bolívar’s Republic,” 21. López Vergara and Lucero, “Wallmapu Rising.”

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a large estate and former official of the Carabineros, the Chilean national police. Some press accounts described this encounter as “failed robbery,” others maintained that the Mapuche youths wanted to discuss a lost horse.35 For Mapuche historian Claudio Alvarado Lincopi, the death of Marileo it is emblematic of the Chilean state’s approach to Wallmapu, the lands of the Mapuche. The school in which Marileo studied at the time of his first arrest has now been turned into a police base. For those on the Right, like José Antonio Kast, the conservative presidential candidate in the 2021 elections, Marileo was a repeat offender whose criminal record is ample evidence of the threat Mapuches pose to the rule of law.36 For Mapuche community members and their allies, Marileo is one more victim of settler colonialism in Wallmapu. What is not controversial is the fact that since the return of democracy to Chile, parties of Left and Right have used anti-terrorist legislation to confront Mapuche protests. Writing the day after this death, Alvarado Lincopi wrote: Yesterday, Luis Marileo was assassinated, but the bullet the killed him was fired long ago, it was fired the moment that the Concertación (now New Majority) and Conservative governments decided to criminalize the movement, decided to mark with fire the lives of the children and youth of the community.37

Starting with the government of socialist Ricardo Lagos Escobar’s use of Pinochet’s anti-terrorism law against the Mapuche political group Coordinadora Arauco-Malleco (CAM) in 2002, the militarization of southern Chile has criminalized Mapuche claims over Wallmapu, their ancestral territories, and claims for greater autonomy.38 35

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Compare the accounts of El Mercurio with that of the Comunidad de Historia Mapuche: Víctor Fuentes and Cristián Cares, “Muerte de condenado por crimen de parcelero genera debate y tensión en La Araucanía,” El Mercurio, June 12, 2017, www​.elmercurio​.com/blogs/2017/06/12/51772/ Muerte-de-condenado-por-crimen-de-parcelero-genera-debate-y-tension-en-La-Araucania​ .aspx; Claudio Alvarado Lincopi, “Ayer fue asesinado Luis Marileo, pero la bala que lo mató fue disparada hace mucho antes,” June 11, 2017, www.comunidadhistoriamapuche.cl/ayerfue-asesinado-luis-marileo-la-bala-lo-mato-fue-disparada-mucho/. As we will see below, it a recurring pattern for the state and Mapuche actors to have different narrative of the deaths of community activists. Kast comes from a prominent settler family in Auracanía, or Wallmapu the traditional lands of the Mapuche. He took to social media to join the chorus of voices from the Right that called Marileo a delinquent. https://twitter.com/joseantoniokast/status/874779423253442561. Alvarado Lincopi, “Ayer fue asesinado Luis Marileo.” Nahuelpán et al., “In Wallmapu, Colonialism and Capitalism Realign”; Richards, “Of Indians and Terrorists.” Other slain Mapuche activists include Agustina Huenupe Pavian and her brother Mauricio Huenupe Pavian (2002), Alex Lemun (2002), José Huenante (2005), longko Juan Lorenzo Collihuin (2006), Matías Catrileo (2006), Jaime Mendoza Collío (2009), Rodrigo Melinao (2013), Camilo Catrillanca (2018), and many others who have mobilized for Mapuche autonomy from the Chilean and Argentine states, defended community land rights against extractive transnational corporations, and actively engaged in cultural practices. See Radiokurruf, “Pumapuche asesinados en ‘democracia,’” and Nahuelpan et al., “In Wallmapu, Colonialism and Capitalism Realign.”

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More broadly, the goals of settler colonial states across the Americas were often at odds with the interests of Native peoples. Peruvian Nobel laureate and neoliberal politician Mario Vargas Llosa puts this view quite clearly, updating a view that preceded him by centuries: “It is tragic to destroy what is still living, still a driving cultural possibility, even if it is archaic; but I am afraid we shall have to make a choice…. [W]here there is such an economic and social gap, modernization is possible only with the sacrifice of the Indian cultures.”39 In this view, the interests of the “modern” nation are more important than the survival of “archaic” cultures. This view has been challenged, most powerfully by Native peoples themselves who refuse the premise that indigeneity is synonymous with backwardness or incompatible with modernity. Nevertheless, from this view, security concerns serve as an extension of the long struggle between “civilization and barbarism.”40 Native peoples have long been in the crosshairs of colonial-republican states. Tupac Amaru’s rebellion in eighteenth-century Peru and Geronimo’s (Goyahkl) raids in nineteenth-century Mexico and Texas provide variations of the “barbarous Indian” that had to be defeated for the sake of the ideals of the nation and civilization.41 Peruvian and Guatemalan militaries pursued scorched-earth policies in wars with leftist guerillas and often targeted Indigenous peoples, who paid the deadliest price for those wars.42 Literally and figuratively, Indians have been killable bodies. It was not an accident that the US military operation that assassinated Osama Bin Laden was famously reported to President Obama with the following message: “Geronimo EKIA” [Enemy Killed In Action].43 “Indian wars” are not over. To conclude this discussion of ongoing colonial processes and conflicts, and move toward contemporary Indigenous struggles, it is helpful to pause and reflect briefly on the names of two of the more important Indigenous actors in the new wars against new liberalisms: the Katarista movements in Bolivia and the Zapatista movements in Mexico. Beginning in the late 1970s, a group of Aymara intellectuals and activists, in a clear and self-conscious reference to the Indigenous armies of Tupaj Katari that surrounded La Paz in 1780, organized a new Katarista movement, one of the most important Indigenous movements in the Americas/Abiayala, which paved the way for the rise of Evo Morales. In another similarly meaningful historical gesture, the Zapatistas that emerged from the Lacandonan jungle of Chiapas on January 1, 1994, referenced the campesino armies of Emiliano Zapata, a central figure of the Mexican revolution of 1910.44 The early electronic communiques of the Ejercito Zapatista 39 40 41 42 43 44

Vargas Llosa, “Questions of conquest,” 53. Sarmiento, Facundo. Walker, The Tupac Amaru Rebellion; Saldaña Portillo, Indian Given. García, Making Indigenous Citizens; CVR, Informe Final. Westcott, “Osama Bin Laden: Why Geronimo?” John Womack’s classic account of the original Zapatistas of the 1910 Mexican revolution begins with the memorable line: “This is a book about country people who did not want to move, and therefore got into a revolution” (Womack, Zapata and the Mexican Revolution, ix).

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de Liberación Nacional used time-bending language to describe the disastrous modernizing plans of a “Viceroy” who despite his dreams of progress and free trade is haunted by other visions: The viceroy dreams that his land is agitated by a terrible wind that rouses everything, he dreams that all he has stolen is taken from him, that his house is destroyed, and that his reign is brought down. He dreams and he doesn’t sleep. The viceroy goes to the feudal lords and they tell him that they have been having the same dream. The viceroy cannot rest. So he goes to his doctor and together they decide that it is some sort of Indian witchcraft and that they will only be freed from this dream with blood. The viceroy orders killings and kidnappings and he builds more jails and Army barracks. But the dream continues and keeps him tossing and turning and unable to sleep. Everyone is dreaming in this country. Now it is time to wake up.45

And wake up they did. The 1990s represented the dramatic awakening of Indigenous political activity across the hemisphere.

14.2  indigenous

movements and neoliberalism

The Zapatistas were without a doubt the most globally visible of Indigenous movements that emerged in the 1990s. With their early Internet strategies and the postmodern poetry of their mestizo spokesman, one could be forgiven for believing that the reach of the EZLN was indeed, as they liked to say, “intergalactic.” But they were only one of many movements that surfaced in the 1990s, the product of decades (if not centuries) of preparation. The relationship between neoliberalism and Indigenous movements has been well documented and explained by social scientists across the Americas.46 The rest of this chapter summarizes how neoliberalism provided a mix of pressures and opportunities that made possible massive social movement activity.47 It also shows how neoliberalism proved flexible enough to merge with official multiculturalism in a politics of recognition that often served to divide and co-opt Indigenous leaders. Despite the homogenizing discourse of mestizaje (“we are all mixed”) and related tropes of “vanishing” Indians, Indigenous communities never disappeared. The persistence of local Indigenous community forms was due in part to the unintended consequences of state policies during years of corporatist and populist attempts to, as Albó says, “rebaptize Indians as peasants.”48

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Zapata’s people in Morelos wanted to live as their ancestors had, holding the land collectively. The liberal plans to break up the land and commodify it detonated the revolution. Similarly, the North American Free Trade Agreement gutted Mexico’s commitment to collective land tenure, the ejido, system. This detonated what was famously called the “postmodern” revolution of the EZLN discussed in more detail below. Subcomandante Marcos, “Chiapas: The Southeast in Two Winds.” Albó, “El retorno del indio”; León, De campesinos a ciudadanos diferentes; Yashar, Contesting Citizenship in Latin America. The section draws from García and Lucero, “Resurgence and Resistance.” Albó, “El retorno del indio.”

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As states created local spaces for peasants to organize in legally recognized rural unions, cooperatives, and communities, it was possible for rural people to employ what Yashar aptly describes as a “Janus-faced” posture in which Indigenous people offered a “campesino” face to a modernizing state, but inwardly cultivated local Quechua, Aymara, and other Indigenous identities and practices.49 These cultural and political materials would make possible late-twentieth-century shifts away from “campesino” labels to renewed conceptions of Indigenous citizenship.50 Deborah Yashar provides arguably the clearest and most influential explanation for the emergence of Indigenous social movements in Latin America, an account that pays close attention to the place of neoliberalism in a changing political landscape.51 She adopts and refines the notion of “citizenship regimes,” or the ways in which political subjects claim civil, political, and social rights within distinct political-economic moments, to describe changes in political opportunity structures. In “corporatist citizenship regimes,” states or ruling parties provided social and political rights to those that identified with state sanctioned collective (or “corporate”) actors, like peasant and worker federations. These efforts to link rural collectivities to national political orders were the product of interventionist, nationalist, and developmental states and required significant resources (like subsidies and rural credits to the countryside) and political will to implement agrarian reform in the face of elite opposition. That model encountered real problems during the crisis-prone decade of the 1980s. Oil shocks, debt crises, and other economic disasters during the “lost decade” of the 1980s set the stage for structural adjustment policies that hobbled the corporatist state and led to the spread of “neoliberal citizenship regimes” across the region. The subsidies and credits that agrarian reform made available were drastically diminished. In political terms, this economic transition (from “big state” developmentalism to “small state” neoliberalism) coincided with transitions away from authoritarian rule. While political and civil rights were arguably enhanced by these transitions, social rights were scarce during times of austerity. As Yashar persuasively shows, political opportunity structures became more permissive at the very moment that economic pressures were getting more oppressive.52 No longer part of corporatist mediating structures, Indigenous people were able to move beyond what Andres Guerrero (1994) calls “ventriloquist” forms of representation (subordinate to peasant unions, political parties, or the state) and find their own national political voice, with the help of transnational allies, like progressive churches and non-governmental organizations.53 These changes in the structures of interest 49 50 51 52 53

Yashar, Contesting Citizenship in Latin America. León, De campesinos a ciudadanos diferentes. Yashar, Contesting Citizenship in Latin America. Yashar, Contesting Citizenship in Latin America. Guerrero, “Una Imagen Ventrilocua”; Lucero, Struggles of Voice.

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mediation and the models of economic development thus allow us to understand the dramatic eruption of Indigenous politics during the 1990s.54 While the Zapatistas captured most of the media spotlight, they were relatively late risers. Andean and Amazonian Indigenous organizations had begun to mobilize and organize as early as the 1960s. Those organizing efforts came to a dramatic crescendo in June 1990, coinciding with the Andean celebration of Inti Raymi (festival of the sun): the Confederation of Indigenous Nationalities of Ecuador (CONAIE) stunned the country’s civilian and military leaders with a peaceful nationwide “levantamiento” (the term used during the colonial period to refer to Indigenous uprisings), which forced the government to negotiate over land conflicts, Indigenous education, and rural livelihoods. This marked the beginning of a decade-long series of confrontations and negotiations with the national state, many over efforts to implement neoliberal economic reforms. These mobilizations forced governments to halt or reverse policies and to pay greater attention to Indigenous demands. These confrontations created unprecedented political openings for Indigenous peoples. CONAIE negotiated with the Ecuadorian government and the World Bank for the creation of new agencies for Indigenous development and intercultural bilingual education, agencies which were controlled by leaders from CONAIE. Additionally, Indigenous movements in Ecuador generated a series of activists and elected officials that pushed for the inclusion of a set of collective rights that would form part of the constitutional reforms of 1998. With such mobilizational strength to change the political landscape, Ecuador was hailed by many as a model to be followed by other Indigenous peoples.55 Electorally, Indigenous peoples became important new actors in party systems that were notorious for their failure to adequately represent Indigenous interests or respond to Indigenous demands. The Andes were again the site of the most notable achievements. CONAIE, in collaboration with other popular organizations, founded the Plurinational Pachakutik Movement in Ecuador, which registered respectable gains in the mid-1990s. However, Pachakutik’s electoral fortunes declined in subsequent elections and its presidential candidate Luis Macas registered a humbling two percent of the vote in a defeat to Rafael Correa in the 2006 presidential elections. Correa would be the dominant leftist actor in the country and his “citizen’s revolution” effectively sidelined Indigenous movements and occasionally targeted Indigenous and environmental actors for their opposition to the developmentalist goals of his government.56 While Ecuador’s Indigenous electoral strength seemed to peak in the mid1990s, the most extraordinary experience for Indigenous electoral politics in Latin America took place in Bolivia. In 2005, Evo Morales and his Movement Toward Socialism Party (MAS) won an unprecedented 54 percent of the vote, 54 55 56

Yashar, Contesting Citizenship in Latin America. Lucero, Struggles of Voice. Becker, Indians and Leftists.

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becoming the first self-identified Indigenous person to become president and the first candidate since the return of democratic elections to win a majority of votes in the first round of voting. Morales won an even more resounding victory in the election of 2009, winning 64 percent of the vote and further consolidating the electoral hegemony of the MAS in Bolivia. In 2014, he ran and won election for a third term, soon becoming the longest serving president in the history of Bolivia. As (non-Indigenous) Rafael Correa dominated Ecuadorian political life for over a decade, Evo Morales created an even more successful hegemonic political project. Taking advantage of windfall gains that came with high commodity prices and hydrocarbon nationalization, Morales was able to make impressive strides in reducing poverty, inequality, and illiteracy. Moreover, his macro-economic management, which was characterized by a remarkable amount of fiscal discipline, earned high marks even from the International Monetary Fund and World Bank.57 Nevertheless, as is widely known, Morales’s political fortunes changed as his next and final attempt at re-election in 2019 resulted in accusations of electoral fraud, mass protests in the streets, and finally a signal from the military that his time was up. There has been much debate over whether Morales’s resignation should be considered a coup or a self-inflicted wound, a debate that I will not discuss here. What is more relevant to this story is that as in Ecuador, the end of a leftist presidency was followed by a sharp turn to the Right. If 2019 brought the Right back to power in Ecuador and Bolivia, it marked a moment of reckoning for the center-Right political establishment in Chile. By some lights, the end of the Augusto Pinochet dictatorship and the transition to economic and political stability in Chile is something of a success story in Latin America. The “No” campaign that dealt the dictator a defeat through the ballot box in the 1988 referendum was even the stuff of Cannes Film Festival cinema.58 Interestingly that film (No by Pablo Larraín) – based on a play by Antonio Skarmeta – offers a useful lesson about the Chilean transition. Based on historical events, the film provides a vivid and compelling account of an advertising executive who develops a series of television spots that make the case for voting “no” on the continuation of Pinochet’s rule (to pitch it in Hollywood terms: Mad Men meets The West Wing in Santiago). In an almost poetic turn of events, the visual tools of capitalism are used to end one of Latin America’s most brutal experiments in market authoritarianism. The film, starring the Mexican actor Gael García Bernal (who also played a young Ernesto Guevara in a different part of the Latin American cinematic universe), is simultaneously the story of political change and economic continuity. Indeed, post-Pinochet Chile has been characterized by a very controlled transition in which parties of center-Left and center-Right have alternated in power (from 2006 to 2021, Socialist Michelle Bachelet and conservative Sebastian Piñera took turns occupying La Moneda; together, they are the 32, 33, 34, and 35th 57 58

Neuman, “Turnabout in Bolivia.” Larraín, No.

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presidents of Chile). What for some observers is a consolidated democracy looks like a long night of state terror from the perspectives of Mapuche activists, whom have been disproportionally targeted by Pinochet-era anti-terrorist legislation, utilized by governments of Left and Right. Unlike its contentious neighbors Bolivia and Ecuador, the Chilean state has a historically low tolerance for dissent, and Mapuche protest has faced increasing criminalization. Nevertheless, Mapuche civil society has been remarkably active in generating various social, cultural, and political organizations in the south of Chile (or Wallmapu) and among the urban diaspora in Santiago. Indigenous peoples in Latin America took advantage not only of national changes in “citizenship regimes” but also of global changes in resources and opportunities. Indeed, there is broad scholarly consensus that the Indigenous movement in Latin America was, as Brysk (2000) says, “born transnational.”59 In every case of successful Indigenous mobilization, Indigenous organizations counted with the support (material and infrastructural) of transnational networks that include non-governmental organizations that advance a variety of environmental or development agendas. Along with the “Washington Consensus” from above, we might also describe a “civil society consensus” from below that created new possibilities during the 1980s and 1990s. The Church (both Catholic and Protestant) and its missionary and educational work provided early organizational materials to “scale up” protest from community to national and even transnational levels. Additionally, several international organizations helped change the international recognition of Indigenous peoples and Indigenous rights. The most significant was undoubtedly the International Labor Organization Convention No. 169 on Indigenous and Tribal Peoples, which in various important provisions provides for the participation of and consultation with Indigenous peoples in all issues that affect Indigenous communities and livelihoods. Significantly, ILO 169 also recognizes the rights of Indigenous peoples to collective forms of land tenure, alternative forms of justice, and access to employment and education. In 2007, after decades of debate, the United Nations approved a Declaration on the Rights of Indigenous Peoples (UNDRIP) that today counts with the support of every country in the hemisphere. Although ILO 169 and UNDRIP count with the support of most Latin American governments,60 this does not mean that governments have honored their various provisions especially when dealing with extractive industrial activity in Indigenous territories.61 59 60

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Brysk, From Tribal Village to Global Village. For a list of countries that have ratified ILO 169, see www.ilo.org/dyn/normlex/en/f? p=NORMLEXPUB:11310:0::NO::P11310_INSTRUMENT_ID:312314. The list includes several states in the Caribbean, El Salvador, and a few in North America: Canada and the US. Initially, the US, Canada, New Zealand, and Australia voted against UNDRIP, but years later came to support the Declaration. www.un.org/development/desa/indigenouspeoples/declaration-on-the-rights-ofindigenous-peoples.html. Bebbington et al., “Mining and social movements.”

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Other important international developments have included the United Nations Decade of Indigenous Peoples and the creation of a special unit within the World Bank to address issues concerning Indigenous people. These international changes have been part of a large shift in development thinking which some have called “development with identity” or “ethno-development.” As international multilateral organizations and NGOs began to channel resources to ethno-development projects, new incentives were created for Indigenous recognition. It is also worth pointing out that the world historical moment in which these developments emerged (the early 1990s) coincided with the global crisis of the international Left, a collapse symbolically represented by the fall of the Berlin Wall. Now that traditional leftist causes were seemingly entering the “dustbin of history,” Indigenous peoples emerged from their own histories of oppression and neglect and found new allies in transnational activist networks62 The rise of Indigenous movements in Abiayala, then, can be understood as a response to a changing constellation of factors. Economically, neoliberal economic reforms changed the state-society arrangements that once constrained Indigenous political energies within the confines of top-down corporatist structures and class identities. Politically, new transnational resources and networks allowed Indigenous peoples to enhance their organizational capacities and take advantage of new openings in changing political opportunity structures. This also suggested a change in tactics, from the massive protests in the streets to the creation of new official spaces for Indigenous peoples within the architecture of existing states.

14.3  neoliberal

multiculturalisms ?

By the dawn of the twenty-first century, generations of Indigenous struggle and negotiation transformed the political environment. By 2000, constitutions in virtually every Latin American country recognized Indigenous collective rights, languages, and territories. Several countries grant Indigenous territorial autonomy for particular regions of the country, and some (Bolivia, Colombia, and Venezuela) reserve seats in elected office for Indigenous representatives. This democratizing moment in many Latin American countries also often included moves toward greater gender equity by initiating quotas for women candidates in parliamentary elections. Bolivia and Ecuador both implemented gender quotas in 1997; Chile did so much later in 2015.63 Several Indigenous women were crucial parts of this trend, like Nina Pacari who was the first Indigenous (Kichwa) women elected to the Ecuadorian parliament, and later served as foreign minister and as a judge on the Constitutional Court. Pacari’s trajectory, however, does not capture the uneven ways that Indigenous women have fared 62 63

Andolina et al., Indigenous Development in the Andes; Brysk, From Tribal Village to Global Village. Piscopo, “States as Gender Equality Activists.”

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in Latin America’s multicultural moment. Progress has been uneven, at best, as men still dominate leadership positions in social movement organizations and government.64 This jagged record of inclusion is symptomatic of a broader pattern on official multiculturalism. However, one of the remarkable features of this moment is that new forms of Indigenous recognition did not necessarily mean a new program of material redistribution. Indeed, the 1990s marked the beginning of new booms in extractivism across the region in both governments of the Left and Right. This suggests a dialectical relationship between strategies of dispossession and recognition. Coulthard, synthesizing Marx and Fanon, reminds us that “recognition” functions as an ideological tool, conditioning Native peoples “into a self-understanding that reconciles itself with colonial asymmetries and capitalist accumulation on their territories and ultimately against their best interests as indigenous peoples.”65 Working in a similar intellectual tradition, Charles Hale described the rise of “neoliberal multiculturalism” across the Americas, revealing that these ideas (market-friendly reforms and Indigenous inclusion) were far from incompatible.66 In an argument that owes much to Gramsci and Foucault, Hale argues that neoliberal multiculturalism operates through a cultural logic that divides “radical” and “moderate” forms of Indigeneity, excluding the former and co-opting the later. We find similar sentiments in the work of Bret Gustafson (2002), Peter Wade (2010), and Aymara scholars like Silvia Rivera Cusicanqui (2011) and Felix Patzi (1999).67 For all these authors, “recognition” is hardly an innocent or innocuous act. Policies of recognition worked as strategies of governance, allowing room for cultural revival alongside neoliberal extraction. As Rivera Cusicanqui explained, neoliberal multiculturalism was the moment of “el indio permitido” which is to say along with Coulthard and Hale, that the settler colonial state sets the terms for recognition or reconciliation.68 Indigenous peoples must conform to the new demands of seemingly more inclusive states with the understanding, however, that they do not challenge the dominant economic model, which favored foreign capital and local economic elites. Yet, as Donna Lee Van Cott (2006) suggested in the most comprehensive empirical review of the neoliberal multicultural thesis, no matter how cunning governing elites have been, official multicultural policies have in several cases been the paths toward more radical politics, while in other cases have led to 64

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Regrettably, I cannot discuss the complex intersectional question of gender and Indigeneity. For excellent treatments of the advances and challenges Native women have faced in Mexico and the Andes, see the work of Speed et al., Dissident Women; Speed, Rights In Rebellion; Rousseau and Morales Hudon, Indigenous women’s movements; and Picq, Vernacular Sovereignties. Coulthard, “The Colonialism of the Present.” Hale, “Does Multiculturalism Menace?”; Hale, “Rethinking Indigenous Politics.” Gustafson, “The Paradoxes of Liberal Indigenism”; Wade, Race and Ethnicity in Latin America; Rivera Cusicanqui, “Lo indio es moderno”; Patzi, Insurgencia y sumisión. Quoted in Hale, “Rethinking Indigenous Politics,” 17.

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the more limited reforms described by Hale and others.69 In her examination of several Latin American cases, Van Cott (2006: 272–96) suggests a range of outcomes: On one end of the spectrum are states like Chile, Argentina, Peru, and Guatemala, in which neoliberal reforms were undertaken vigorously and now coexist with a modest set of MCPs [multicultural policies], the latter limited primarily to language, education, and limited collective land rights. We can call this “neoliberal multiculturalism,” borrowing from Hale and Gustafson. On the other end of the spectrum are countries like Ecuador and Venezuela with more expansive sets of multicultural policies that include considerable political representation and autonomy rights…. We can call this “populist multiculturalism” to convey the political context in which multicultural reforms were adopted in those countries.70

The location of different states between these neoliberal and populist poles, Van Cott argues, depends on the relative balance in the political arena between neoliberal elites, leftists, and Indigenous organizations. A brief examination of the recent history of Bolivia, Ecuador, and Chile both confirms and complicates this view of multiculturalism in Latin America. 14.3.1  Bolivia: From Neoliberalism to Plurinationalism Bolivia offers a particularly important test case for the neoliberal multicultural thesis, as it went from being an early and aggressive site of neoliberal reform in the 1980s (only Chile implemented neoliberal reforms earlier), to the site of a radical experiment led by the Movement toward Socialism (MAS) party of Evo Morales, who suffered his own reversal of fortune when he was forced from office in 2019. In between those historical points, there is no question that multiculturalism and neoliberalism came together in the mid-1990s, embodied by the administration of President Gonzalo Sánchez de Lozada (known as Goni), a University of Chicago-educated neoliberal technocrat, and Vice President Victor Hugo Cárdenas, an Aymara social movement leader and educator. In the mid-1990s, sweeping decentralization, bilingual education, and agrarian legislation accompanied privatization in what Goni called the “Plan for All” (Plan de Todos). The articulation of official multicultural and neoliberal Bolivia had the effect of opening opportunities for Indigenous actors like the lowland confederation CIDOB (Confederation of Indigenous Peoples of Bolivia) that accepted the terms of the new laws and did not challenge the new economic agenda of the government. At the same time, the new regime of the pluri-multi disadvantaged (at least initially) the more radical elements of Indigenous actors like cocalero leader Evo Morales and highland Aymara nationalist Felipe Quispe whose anti-imperial and anti-neoliberal stance made 69 70

Van Cott, “Multiculturalism against Neoliberalism.” Van Cott, “Multiculturalism against Neoliberalism,” 295.

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them unlikely partners for the government. The effect of these official multicultural policies was to divide Indigenous actors into pragmatic and radical categories, and thus co-opt and divide. Beginning in 2000, however, a series of “wars” – over the privatization of water in Cochabamba, over taxes, over militarization in the coca-growing tropics, and finally over the exportation of natural gas – changed the dynamics in Bolivia. The cycle of protests began with the ill-considered privatization plan that resulted, in some cases, in a 400% increase in the cost of water in local communities. Waves of protest continued as Sánchez de Lozada returned to the presidency in 2002 and pursued unpopular tax hikes and an even less popular plan to export gas through the historic national enemy (Chile) to the contemporary imperial center (the United States). Hundreds of thousands of protesters took to the streets and demanded Sánchez de Lozada’s resignation; another subsequent round of mobilization also forced the next president, Carlos Mesa, out of office. After Mesa was unable to bring calm to the country, a caretaker government paved the way for the historic 2005 elections in which Evo Morales won a resounding victory, becoming the first self-identified Indigenous president to rule this Indigenous-majority country. Although there are questions about whether the Morales government lived up to its promise of “decolonizing” Bolivia (the Guaraní people, for example, have expressed their doubts about the MAS commitment to Indigenous autonomy), there is no question that the “neoliberal multiculturalism” of the 1990s was hardly an obstacle to the rise of Morales and his progressive agenda of social change. Indeed, a plausible case can be made that he could not have come to power without it. Adding one final layer of complexity and controversy is the view that the post-neoliberal project of Morales actually represents a surprising amount of structural continuity with neoliberalism. Although the state after Morales plays a greater role in economic matters than it did during Goni’s neoliberal days in the 1990s, several scholars note that the state’s strategic renegotiation with foreign firms in the hydrocarbon sector allowed it to leave much of the domestic economy relatively undisturbed.71 The economic elites, ordinarily hostile to leftist projects like those of the MAS, in many ways benefitted from the increased public and private investments in the economy and infrastructure under Morales. Nevertheless, and as subsequent developments would confirm, the relationship between Morales and lowland economic elites was precarious and dependent upon what Maristella Svampa calls the “commodities consensus,” based on “largescale export of primary goods, economic growth and the expansion of consumption.”72 While this consensus helped create a fragile equilibrium between the MAS and the business sectors, it created tensions within the Indigenous movements, 71 72

Anthias, Limits to Decolonization; Webber, “Rene Zavaleta Symposium: Introduction”; Wolff, “The political economy of Bolivia’s post-neoliberalism.” Svampa, Las fronteras del neoextractivismo, 24.

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especially from lowland peoples like the Guaraní who saw their efforts at autonomy limited by the resource nationalism of the MAS. Guaraní land sits on the largest natural gas field in Bolivia.73 However, thanks to earlier neoliberal legislation, Native communities could acquire collective land titles but the subsurface mineral rights remained under the control of the central government. In a remarkable set of developments, the Guaraní People’s Assembly-Itika Guasu (APG IG) decided to enter into an agreement with Repsol and other private hydrocarbon firms that would guarantee a distribution of gas rents (and support Guaraní projects) that Guaraní communities were able to secure a greater measure of autonomy. As Anthias puts it, “ironically, despite identifying hydrocarbon development as the single biggest obstacle to the consolidation of its territorial rights, it was increasingly through hydrocarbon negotiations that the APG IG sought to advance with the land struggle.”74 This stunning example of what Anthias calls “hydrocarbon citizenship” reveals one of the more complex articulations of Indigeneity and neoliberalism, from above and below, and also helps understand just how complex the political landscape was in the years and months before Morales was forced from power. With growing criticism from Indigenous actors and dwindling resources to placate the natural enemies of the regime, the correlation of forces that had made rapprochement possible between the MAS and conservative economic elites was already beginning to come undone in 2017 when Morales made his tactically dubious decision to pursue re-election despite losing a referendum that would have legitimated a thirdterm bid.75 In short, neoliberalism gives opportunities and also takes them away. 14.3.2  Ecuador: Déjà vu, All Over Again Ecuador, from the 1990s to 2021, presents another puzzling case about the consequences of neoliberal multiculturalism. Ecuador was one of the strongest examples of Indigenous movement activity in the 1990s and Indigenous policymaking. With agencies for Indigenous development (CODENPE) and intercultural bilingual education (DINEIB) in the hands of activists from the main Indigenous confederation, CONAIE, Ecuador was hailed by many as a model. Yet, CONAIE also became a victim of its own success in helping pave the way for the rise of a non-Indigenous politician, Rafael Correa, whose leftist Citizens Revolution took much of the oxygen away from Indigenous protest. Let us begin the story, though at the height of the protest cycle of the 1990s, with the fall of neoliberal president Jamil Mahuad. CONAIE and other Indigenous organizations proved to be powerful challengers to neoliberal policymakers, including Jamil Mahuad, a Harvard-educated technocratic president, whose controversial handling of a financial crisis (which 73 74 75

Anthias, Limits to Decolonization. Anthias, Limits to Decolonization, 202. Wolff, “The political economy of Bolivia’s post-neoliberalism.”

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included the dollarization of the Ecuadorian economy) provoked massive discontent. This crisis led to a pivotal moment in the history of Indigenous politics. On January 21, 2000, CONAIE and sectors of the military led by Colonel Lucio Gutiérrez overthrew Mahuad and for a few hours held power as a “Junta of National Salvation.”76 The high command of the military, under U.S. pressure, abandoned the Junta and returned power to Gustavo Noboa, Mahuad’s Vice President. Over the following months, all those involved in the coup were granted amnesty and the negotiations with the IMF were effectively stalled. Gutiérrez, in alliance with CONAIE again, ran for president in 2002 and won, seemingly opening the doors to a renewed military-Indigenous alliance. However, Gutiérrez disappointed his Indigenous partners. He signed a letter of intent with the IMF, signaling his intention to pursue austerity measures, which again would be felt most sharply in the poorest sectors of society. Rafael Correa, who would soon breathe new life into the political Left, noted that “the economic policy of the [Gutiérrez] regime is hardly new, to the contrary, it is a more orthodox expression of the dominant thinking in Latin America over the past two decades.”77 In other words, it was neoliberalism all over again. The Indigenous members of Gutiérrez’s cabinet, Luis Macas and Nina Pacari, left the government in 2003. After less than a year in government, CONAIE returned to its role of Indigenous opposition. This time, however, the constellation of forces seemed less favorable to the kind of leadership that CONAIE had exercised in the 1990s. First, Gutiérrez was more capable of dividing the Indigenous movement by reaching out to former CONAIE president Antonio Vargas who became Gutiérrez’s Minister of Social Welfare (and was denounced as a traitor by CONAIE) as well as to other Indigenous actors, including the national Evangelical Indigenous Federation (FEINE) and sectors of the Amazon still loyal to fellow Amazonian Antonio Vargas. The decline in mobilizing capacity of CONAIE was all too obvious in the noticeably small “uprising” that CONAIE convoked to protest Gutiérrez’s policies, only to be called off for lack of participation. Such a thing would have been unthinkable in the 1990s. Luis Macas’ decision to run for president and avoid an alliance with leftist economist Rafael Correa (the ultimate winner in the 2006 elections) has been questioned by many. Macas won just over 2 percent of the vote and fell well short of reproducing the kind of victory that Evo Morales claimed in Bolivia. He also was far behind the party of Lucio Gutiérrez, which even without Gutiérrez as a candidate placed third in the national election. After Correa’s election (and subsequent two re-elections) Indigenous organizations were divided over how much to support Correa’s progressive economic initiatives. As with Evo Morales, Correa’s commitment to extractive mineral activities 76 77

For some striking visuals of this event, see the documentary by Sergio Huarcaya, La Dignidad de los Pueblos. El levantamiento del 21 de Enero, 2000, https://vimeo.com/15849196. Correa quoted in Acosta, “El coronel mató pronto a la esperanza.”

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(oil and mining especially) was the source of serious disagreement with many Indigenous organizations. Correa’s declared intention to close the CODENPE development agency and remove the autonomy of the body that coordinate intercultural bilingual education, DINEIB, was seen by some as a reaction to the criticisms of Indigenous organizations and as further evidence of an Indigenous movement that is much weaker than it was only a few years ago. While the picture is complicated, it is clear that the Indigenous movement was weakened by its disastrous alliance with Gutiérrez and the leftist politics of Correa. The end of the Correa years, however, generated the possibility of a new beginning. Lenin Moreno, Correa’s Vice President, was expected to give Ecuador some continuity. Moreno had other plans. Within months, he reduced social spending, signaling a sharp break with Correa, and then in October 2019 introduced an austerity package, Decree 883, part of a new agreement with the International Monetary Fund. As in earlier protest cycles, this moves to austerity invited massive mobilization. This time, CONAIE and other Indigenous movements were visible in ways that had not been seen since the ill-fated 2000 uprisings against Mahuad. As in the 1990s, transportation workers and taxi drivers helped CONAIE paralyze not only Quito but major inter-provincial roads. Moreno declared a state of emergency, realized that he had lost control of the capital, and relocated his government to Guayaquil. Over the following days, a familiar dance of confrontation and negotiations took place between CONAIE and the government. To his humiliation, Moreno announced the repeal of Decree 883. CONAIE called off the protests. It felt like the 1990s again. Ecuadorians went to the polls in 2021 and to the surprise of many, delivered a victory for the conservative banker Guillermo Lasso. Correa, from Belgium, where he had relocated to avoid legal charges of corruption, had urged voters to support his party’s candidate Andrés Arauz. Like all the developments in this chapter, this one is complex as the election was marred by accusations of fraud that disadvantaged the Indigenous candidate Yaku Pérez Guartambel, who almost came in second place in the first round. Pérez, an anti-mining activist, provincial governor, and former president of ECUARUNARI (CONAIE’s highland affiliate) demonstrated great political strength. While headlines across the world spoke of the “return of the Right” to Ecuador,78 they could have also declared “the return of Indigenous politics.” 14.3.3  Chile: Continuing Coloniality, Mapuche Resurgence, and Change In a haunting 2011 YouTube video, three young Mapuche students sit at a table and read a prepared statement, the core message of which is expressed in a simple, handmade sign that taped on the wall behind them: “We demand 78

Cuvi, “How the Right Returned to Power in Ecuador.”

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figure 14.3 Jovenes Mapuche Movilizados, Source: www.youtube.com/watch?v= UFRQaqifnNw&t=110s, Creative Commons Attribution license

demilitarization.” Fifteen-year-old Camilo Catrillanca explains, “here there are too many Carabineros, they only protect the colonists and repress the Mapuche  … this is unjust.” The video is haunting because seven years later, Catrillanca was shot in the head, killed by a special tactical unit of the Carabineros, known colloquially as the “Jungle Squad.” (Figure 14.3) In the 2011 video, these young Mapuche activists make a case for autonomy, intercultural education, and dignity. As this is an online platform, comments on this video are varied and occasionally vile. One comment reads: “los Futuros Terroristas al menos uno menos de ellos hoy (sic)” (the Future Terrorists at least there is one less today). Social media, as Pascal Lupien has noted, has a double-edged nature for Indigenous activists. Governments throughout the region (including Bolivia, Ecuador and Chile) have passed legislation that criminalizes the use of social media to criticize the government, so Indigenous organizations make limited use of it.79 Mapuche activists, however, have made relatively greater use of social media, and the Catrillanca case was an example of how it made a difference. After the 2018 shooting, Carabinero authorities said that there was no video of the confrontation and that police had acted in self-defense. Both statements were proven to be false. A leaked video began circulating through social media; it revealed Catrillanca to be driving away from police in a tractor and showed that he had been shot in the back of the head. President

79

Lupien, “Indigenous Movements, Collective Action, and Social Media.”

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Piñera was forced to apologize and demand the resignation of the Chief of the Carabineros. Remarkably, the officer who shot Catrillanca was arrested, charged, and sentenced to 16 years in prison.80 The Jungle Squad was dismantled and Catrillanca’s image became a widespread symbol of state violence that was seen at protests across the country. One Mapuche activist described the impact of social media clearly: They (the state police) tried to use social media to say he was a terrorist, that he was shooting at them. But guess what? We used the same tools to show the world that they were lying. And this time, the world believed us.81

Since the assassination of Catrillanca, Mapuche organizing and land reclamations have “accelerated and expanded at a level not seen since the era of agrarian reform in the 1960s and 1970s.”82 Mapuche organizing is clearly part of a new moment of mobilization in Chile, one that is challenging the enduring coloniality of the country. The Comunidad de Historia Mapuche, a transborder network of Mapuche scholars, has documented how colonial relations in Wallmapu have been apparent in various ways. First, there is the increasing presence of extractive industry, especially logging companies that have accelerated their land acquisition, something that has only exacerbated long-standing territorial tensions with Mapuche communities. Second, state security forces have used the narrative of “narcoterrorism” to justify the increasing presence of military forces in Mapuche lands, despite the fact that Araucanía (the region where most Mapuche live) has been one of the regions with the lowest number of drug seizures or firearm law violations, according to the government’s own data.83 Finally, as various scholars in the US academy have noted, the Chilean state, in comparison to much of the region, is very weak in its legal recognition of the rights of Native peoples.84 Chile is one of the few states in Latin America that does not recognize Indigenous peoples in its constitution. As Van Cott notes, there have been modest multicultural policy reforms in the state.85 In 1993, the state adopted an Indigenous Law (Ley Indígena 19.253) to “promote recognition, respect and appreciation and protection of Indigenous cultures.” It also created the National Corporation for Indigenous Development (CONADI), to coordinate and implement development plans related to Indigenous peoples. CONADI, however, has been the subject of criticism and disappointment on behalf of Mapuche communities who have continued to be negatively affected by hydroelectric, forestry, and other extractive industries. To use Yashar’s classifications, 80 81 82 83 84 85

“Chile police officer sentenced.” Quoted in Lupien, “Indigenous Movements,” 7. Nahuelpán et al., “In Wallmapu.” Nahuelpán et al., “In Wallmapu.” Van Cott, “Multiculturalism against Neoliberalism”; Richards, “Of Indians and Terrorists.” Van Cott, “Multiculturalism against Neoliberalism.”

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Chile has remained among the most solid example of “neoliberal citizenship regimes,” and one in which there has been the least opportunities for social movements, at least until recently. A new generation of activists have organized increasing mobilizations, which in 2019 peaked in the largest mobilizations since the end of the Pinochet regime. Unlike the protests in Ecuador, Indigenous activists were not in the lead, but were involved; Mapuche flags and images of Camilo Catrillanca were widespread in the protests. These mobilizations have been dramatic and consequential, leading to the historic approval of a constitutional convention that would replace the legal framework inherited from the Pinochet years. In another historic event, in December 2021, Chileans elected prominent social movement leader and leftist candidate, Gabriel Boric to the presidency. Boric began his victory speech with greetings several Indigenous languages, including Mapudungun (the language of the Mapuches): “Po¯ nui, suma aruma, pün may, Chile. Thank you, to all the people, to all the peoples that reside in the place called Chile.”86 It is, of course, too early to say that Chile is moving beyond the neoliberal period. Yet, there is no question that dramatic change is already underway and challenging the coloniality of the country.

14.4  conclusion In 2007, I traveled from La Paz, Bolivia, to Santiago, Chile, for yet another scholarly conference. Bolivia was still in the early phase of the historic presidency of Evo Morales. As I walked the busy streets of La Paz, a city that I had been visiting since 1996, it struck me (as it always had) as a vibrant Indigenous city, with Aymara as spoken as commonly as Spanish, if not more. La Paz is an unruly city, with Indigenous vendors and protesters sharing the streets in ways that are unimaginable in most major urban centers in the Americas. The election of Evo Morales injected confidence into the Aymara majority in La Paz and Indigenous people everywhere, as the state was undergoing a dramatic change in its composition. Indigenous peoples were now entering government service in unprecedented numbers, and fluency in at least one Indigenous language was now a requirement for government service. It felt like a moment where democracy was being decolonized. As I arrived in Santiago, the contrast with Bolivia could not have been starker. Chile was and is, socio-economically, in a different world. Its modern airports, business districts, and restaurants would not have been out of place in the major cities of Europe. At the time of my trip, the government of Michelle Bachelet was still reeling from the unexpected wave of protests led by high school students who in 2006 came out in massive numbers to protest the privatization of education. These young people marched in their black and white school uniforms, which gave their mobilization the instant moniker of 86

BBC, “Gabriel Boric: 4 frases destacadas.”

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the “March of the Penguins.” Despite their young ages, these protesters were met with the familiar sting of tear gas that is common response of Chile’s security forces. If La Paz was characterized by an Indigenous unruliness, Santiago had an almost Prussian sense of order. Over a decade later, those recollections remain fresh in my memory, but I would reframe them. The opposing image of Indigenous democracy and continuing coloniality should not be understood as ways to distinguish Bolivia from Chile, but rather to name the forces that are dialectically at work across the Americas. Coloniality and Indigenous resurgence continue to come into conflict and produce new challenges and opportunities. From Canada to Chile, there is no question that colonial orders remain remarkably strong. One indicator of this is quite simply how seldom the dominant public spheres acknowledge “settler common sense,” to use Mark Rifkin’s helpful phrase.87 From Stephen King stories of evil clowns that emerge from the land of dead Indians to Day of the Dead celebrations that commemorate pre-Colombian traditions, settler colonialism continues to consign Indigenous people to the past, a people without a future. That is perhaps one of the most powerful lingering effects of colonialism, what Johannes Fabian famously called “the denial of co-evalness”  – the view that Indigenous peoples cannot occupy modern times.88 At the same time, across Turtle Island and Abiayala, to use Indigenous terms for the Americas, Indigenous peoples are making the radically revolutionary claim eloquently expressed by the Quechua-speaking, Peruvian writer José Maria Arguedas decades ago: kachkaniraqmi, sigo siendo, I am still here.89 Indigenous movements may be relatively recent “discoveries” of North American social science, but they have been one of the more enduring parts of the politics of the hemisphere over the last five centuries. Scholarly investigations of the effect of neoliberalism provide an opportunity to reassess how markets and states affect peoples, environments, and cultures. However, a familiar academic myopia has often obscured the colonial continuities that exist in the ways in which the logics and practices of extraction and dispossession have operated across time and space. Of course, I do not want to make the nonsensical claim that neoliberalism has been around since 1492. Nevertheless, it is worth placing recent developments with the perspective offered by Steve Stern’s proposition: 1492 “marks the symbolic dawn of a historical day whose sun has not yet set.”90 Colonial and anti-colonial dynamics remain in dialectical tension. “The war never ended and somehow begins again,” writes Mojave poet Natalie Diaz.91 Even as we contemplate the 87 88 89 90 91

Rifkin, “Settler common sense.” Fabian, Time and the Other. Arguedas, Kachkaniraqmi! ¡Sigo siendo! Stern, “Paradigms of Conquest,” 27. Diaz, Postcolonial Love Poem, 2.

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historical wreckage of neoliberalism and ongoing oppression in Abiayala, centuries of Native struggles provide compelling support for an idea popularized by Diné artist Jared Yazzie: “the future is Indigenous.”92 bibliography

Acosta, Alberto. 2003–04. “El coronel mató pronto a la esperanza.” Ecuador Debate 61. Albó, Xavier. “El retorno del indio.” Revista Andina 9, no. 2 (1991): 299–357. Alvarado Lincopi, Claudio. “Ayer fue asesinado Luis Marileo, pero la bala que lo mató fue disparada hace mucho antes,” June 11, 2017. www.comunidadhistoriamapuche​.cl/ ayer-fue-asesinado-luis-marileo-la-bala-lo-mato-fue-disparada-mucho/. Andolina, Robert, Nina Laurie, and Sarah A. Radcliffe. Indigenous Development in the Andes: Culture, Power, and Transnationalism. Durham: Duke University Press, 2009. Anthias, Penelope. Limits to Decolonization: Indigeneity, Territory, and Hydrocarbon Politics in the Bolivian Chaco. Ithaca, NY: Cornell University Press, 2018. Arguedas, José. María. Kachkaniraqmi! ¡Sigo siendo!: Textos esenciales. Lima: Fondo Editorial del Congreso del Perú, 2004. BBC. “Gabriel Boric: 4 frases destacadas de su discurso como presidente electo de Chile.” Dec. 20, 2021. www.bbc.com/mundo/59722350. Bebbington, Anthony et al. “Mining and Social Movements: Struggles Over Livelihood and Rural Territorial Development in the Andes” World Development 36, no. 12 (2008): 2888–905. Becker, Marc. Indians and Leftists in the Making of Ecuador’s Modern Indigenous Movements. Durham: Duke University Press, 2008. Brysk, Alyson. From Tribal Village to Global Village: Indian Rights and International Relations in Latin America. Stanford: Stanford University Press, 2000. “Chile police officer sentenced for killing of Mapuche farmer on ‘historic day.” The Guardian, Jan. 21. www.theguardian.com/global-development/2021/jan/29/ chile-police-officer-mapuche-killing-sentenced. Collier, Collier, ed. The New Authoritarianism in Latin America. Princeton: Princeton University Press, 1979. Coulthard, Glen Sean. Red Skin, White Masks Rejecting the Colonial Politics of Recognition. Minneapolis: University of Minnesota Press, 2014. Coulthard, Glen Sean. “The Colonialism of the Present: An Interview with Glen Coulthard.” Jacobin, January 13, 2015. www.jacobinmag.com/2015/01/indigenousleft-glen-coulthard-interview/. 92

The idea that “the future is Indigenous” has become a popular slogan in Indigenous political conversation in the North and South. I have seen it in many places online including in the title of an interview with Quechua campesino leader, Hugo Blanco, in Guernica magazine. www .guernicamag.com/hugo-blanco-future-indigenous-climate-change/. But I first saw it in the fashion designs of Diné artist Jared Yazzie. In a final comment on the complexities of neoliberalism and Indigeneity, I should mention that this statement is available for purchase as a very slick t-shirt. I don’t know Jared Yazzie and this paper is not sponsored by Yazzie or his OXDX brand, but I am totally planning on getting this shirt. www.oxdxclothing.com/collections/mens/ products/the-future-is-indigenous-tee-black.

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Cuvi, Juan. “How the Right Returned to Power in Ecuador,” NACLA Report on the Americas, April 2021. https://nacla.org/ecuador-elections-lasso-arauz. CVR (Comisión de la Verdad y Reconciliación). Informe Final. Lima: Comisión de la Verdad, 2003. www.cverdad.org.pe/ifinal/. Diaz, Natalie. Postcolonial Love Poem. Minneapolis, MN: Graywolf Press, 2020. Estes, Nick, Melanie K. Yazzie, Jennifer Nez Denetdale, and David Correia. Red Nation Rising: From Bordertown Violence to Native Liberation. Oakland: PM Press, 2021. Fabian, Johannes. Time and the Other: How Anthropology Makes Its Object. New York: Columbia University Press, 1983. Forbes, Jack. Columbus and other Cannibals: The Wétiko Disease of Exploitation, Imperialism and Terrorism. Revised Edition. New York: Seven Stories Press, 2008. García Garagarza, León. “The Return of Martin Ocelotl: A Nahua eschatological discourse in early colonial Mexico.” Ph.D. Diss., University of California, Los Angeles. ProQuest Dissertations Publishing, 2010. García, María Elena. Making Indigenous Citizens: Identities, Education, and Multicultural Development in Peru. Stanford: Stanford University Press, 2005. García, Maria Elena and José Antonio Lucero. “Un País Sin Indígenas: Rethinking Indigenous Politics in Peru,” in Nancy Postero and Leon Zamosc, eds. The Struggle for Indian Rights in Latin America. Brighton, UK: Sussex Academic Press. 2004, 158–88. García, Maria Elena and José Antonio Lucero. “Authenticating Indians and Movements: Interrogating Indigenous Authenticity, Social Movements, and Fieldwork in Contemporary Peru,” in Laura Gotkowitz, ed. Histories of Race and Racism: The Andes and Mesoamerica from Colonial Times to the Present Durham: Duke University Press, 2011, 278–98. García, Maria Elena and José Antonio Lucero. “Resurgence and Resistance in Abya Yala: Indigenous Politics From Latin America.” In Robert Warrior, ed. World of Indigenous North America. New York: Routledge, 2014, 429–45. Gramsci, Antonio. Selections from the Political Writings. Ed. and trans. Quintin Hoare. London: Lawrence and Wishart, 1978 Gruzinski, Serge. Man-Gods in the Mexican Highlands: Indian Power and Colonial Society, 1520–1800. Stanford, CA: Stanford University Press, 1989. Guardian, The. “Chile police officer sentenced for killing of Mapuche farmer on ‘historic day,’” January 29, 2020. www.theguardian.com/global-development/2021/ jan/29/chile-police-officer-mapuche-killing-sentenced. Guerrero, Andrés. “Una Imagen Ventrilocua: el discurso liberal de la ‘desgraciada raza indígena’ a fines del siglo XIX,” in Blanca Muratorio, ed. Imágenes e Imagineros: representaciones de los indígenas ecuatorianos, siglos XIX y XX. Quito: FLACSO, 1994, 197–252. Gustafson, Bret. “The Paradoxes of Liberal Indigenism: Indigenous Movements, State Processes, and Intercultural Reformism in Bolivia,” in David Maybury-Lewis, ed. The Politics of Ethnicity: Indigenous Peoples in Latin American States, Cambridge: Harvard University Press, 2002, 267–306. Hale, Charles. “Does Multiculturalism Menace? Governance, Cultural Rights, and the Politics of Identity in Guatemala,” Journal of Latin American Studies 34, no. 3 (2002), 485–524. Hale, Charles. “Rethinking Indigenous Politics in the Era of the ‘Indio Permitido,’” NACLA Report on the Americas, 38, no. 2 (2004): 16–21. DOI: 10.1080/10714839.2004.11724509

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Marx, Karl, and Friedrich Engels. Capital: A Critique of Political Economy. New York: International Publishers, 1967. Melamed, Jodi. “Racial Capitalism,” Critical Ethnic Studies 1, no. 1 (Spring 2015): 76–85, https://doi.org/10.5749/jcritethnstud.1.1.0076. Nahuelpán, Héctor, Edgars Martínez, Alvaro Hofflinger, and Pablo Millalén. “In Wallmapu, Colonialism and Capitalism Realign.” NACLA Report on the Americas 53, no. 3 (2021): 296–303. DOI: 10.1080/10714839.2021.1961469. Neuman, William. 2014. “Turnabout in Bolivia as Economy Rises From Instability,” New York Times, February 17. www.nytimes.com/2014/02/17/world/americas/ turnabout-in-bolivia-as-economy-rises-from-instability.html?_r=0. O’Donnell, Guillermo A. Modernization and Bureaucratic-Authoritarianism; Studies in South American Politics. Berkeley, CA: Institute of International Studies, University of California, 1973. Ostler, Jeffrey. “The Shameful Final Grievance of the Declaration of Independence,” The Atlantic, Feb 8, 2020, www.theatlantic.com/ideas/archive/2020/02/americastwofold-original-sin/606163. Patzi Paco, Felix. 1999. Insurgencia y sumisión: Movimientos sociales e indígenas. La Paz: Muela del Diablo. Picq, Manuela Lavinas. Vernacular Sovereignties: Indigenous Women Challenging World Politics. Tucson: University of Arizona Press, 2018. Piscopo, Jennifer. “States as Gender Equality Activists: The Evolution of Quota Laws in Latin America.” Latin American Politics and Society, 57, no. 3 (2015): 27–49. DOI: 10.1111/j.1548-2456.2015.00278.x. Postero, Nancy. 2017. The Indigenous State: Race, Politics, and Performance in Plurinational Bolivia. Berkeley, CA: University of California Press. Quijano, Anibal. “Coloniality of Power, Eurocentrism, and Latin America.” Nepantla: Views from the South 1, no. 3 (2000): 533–80. Richards, Patricia. “Of Indians and Terrorists: How the State and Local Elites Construct the Mapuche in Neoliberal Multicultural Chile.” Journal of Latin American Studies 42, no. 1 (2010): 59–90. Rivera Cusicanqui, Silvia. “Lo indio es moderno.” Ojarasca, no. 170, June 2011. www.jornada.unam.mx/2011/06/11/oja170-loindio.html. Robinson, Cedric. Black Marxism: The Making of the Black Radical Tradition Chapel Hill: University of North Carolina Press, 2000. Radiokurruf. “Pumapuche asesinados en ‘democracia,’ por el Estado de Chile.” Radiokurruf, June 15, 2017. https://radiokurruf.wordpress.com/2017/06/15/pumapucheasesinados-en-democracia-por-el-estado-de-chile/. Rifkin, Mark. “Settler Common Sense.” Settler Colonial Studies 3, no. 3–4 (2013): 322–40. DOI: 10.1080/2201473X.2013.810702. Rousseau, Stéphanie, and Anahi Morales Hudon. Indigenous Women’s Movements in Latin America: Gender and Ethnicity in Peru, Mexico, and Bolivia. New York: Palgrave Macmillan, 2017. Saldaña-Portillo, María Josefina. Indian Given: Racial Geographies across Mexico and the United States. Durham, NC: Duke University Press, 2015. Sarmiento, Domingo. Facundo. Translated by Kathleen Ross. Berkeley: University of California Press, 2003. Speed, Shannon. “Structures of Settler Capitalism in Abya Yala.” American Quarterly 69, no. 4 (2017): 783–90. DOI: 10.1353/aq.2017.0064.

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Speed, Shannon. Rights In Rebellion: Indigenous Struggles and Human Rights in Chiapas. Stanford: Stanford University Press, 2008. Speed, Shannon, Rosalva Aída Hernández Castillo, and Lynn Stephen. Dissident Women: Gender and Cultural Politics in Chiapas. Austin: University of Texas Press, 2006. Stern, Steve J. “Paradigms of Conquest: History, Historiography, and Politics.” Journal of Latin American Studies, 24 (S1) 1992: 1–34. Svampa, Maristella. Las fronteras del neoextractivismo en América Latina. Conflictos socioambientales, giro ecoterritorial y nuevas dependencias. Bielefeld: Bielefeld University Press, 2019. https://doi.org/10.14361/9783839445266. Tilly, Charles. Coercion, Capital, and European States, AD 990–1990. Oxford & Cambridge, MA: Basil Blackwell, 1990. Trouillot, Michel-Rolph. Silencing the Past: Power and the Production of History. Boston: Beacon Press, 1995. Van Cott, Donna Lee. “Multiculturalism against Neoliberalism in Latin America.” In Keith Banting and Will Kymlicka, eds. Multiculturalism and the Welfare State. Oxford: Oxford University Press, 2006, 272–96. Vargas Llosa, Mario. “Questions of Conquest: What Columbus Wrought, and What He did Not.” Harper’s 281 (1687), 1990: 45–52. Vizenor, Gerald. Manifest Manners: Narratives on Postindian Survivance. Lincoln: University of Nebraska Press, 1999. Wade, Peter. Race and Ethnicity in Latin America. London: Pluto Press, 2010. Walker, Charles. The Tupac Amaru Rebellion. Cambridge: Belknap Press, 2014. Webber, Jeffrey. The Last Days of Oppression and the First Day of the Same: The Politics and Economics of the New Latin American Left. Chicago, IL: Haymarket Books, 2017. Webber, Jeffrey. “Rene Zavaleta Symposium: Introduction.” Historical Materialism 27, no. 3 (2019): 77–82. Westcott, Kathryn. “Osama Bin Laden: Why Geronimo?” BBC News, May 3, 2011. Online. Available: www.bbc.co.uk/news/world-us-canada-13265069. Williamson, John. “What Washington Means by Policy Reform.” In Latin American Adjustment: How Much Has Happened? Washington: Institute for International Economics, 1990, 7–20. Williams, Robert G. States and Social Evolution: Coffee and the Rise of National Governments in Central America. Chapel Hill: University of North Carolina Press, 1994. Wolfe, Patrick. “Settler Colonialism and the Elimination of the Native,” Journal of Genocide Research 8, no. 4 (2006): 387–409. DOI: 10.1080/14623520601056240. Wolff, Jonas. “The Political Economy of Bolivia’s Post-neoliberalism: Policies, Elites and the MAS Government.” European Review of Latin American and Caribbean Studies / Revista Europea de Estudios Latinoamericanos y Del Caribe, no. 108 (2019): 109–129. www.jstor.org/stable/26878965. Womack, John. Zapata and the Mexican Revolution. New York: Vintage Books, 1970. Yashar, Deborah. Demanding Democracy: Reform and Reaction in Costa Rica and Guatemala, 1870s–1950s. Stanford, CA: Stanford University Press, 1998. Yashar, Deborah. “Contesting Citizenship: Indigenous Movements and Democracy in Latin America.” Comparative Politics 31, no. 1 (October 1998): 23–42.

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Yashar, Deborah. Contesting Citizenship in Latin America: Indigenous Movements and the Post Liberal Challenge. Cambridge: Cambridge University Press, 2005. Zavaleta Mercado, René. “Las masas en noviembre.” In René Zavaleta Mercado, ed., Bolivia Hoy, Mexico City: Siglo XXI, 1983, 11–59. Zavaleta Mercado, René. Lo nacional-popular en Bolivia. Mexico City: Siglo XXI, 1986. Zavaleta Mercado, René. 50 años de historia. La Paz: Los Amigos del Libro, 1998 [1977]. Zavaleta Mercado, René. Towards a History of the National-popular in Bolivia. Translated by Anne Freeland. London: Seagull Books, 2018.

15 Resisting Neoliberalism? Territorial Autonomy Movements in the Iberian World* Matthias vom Hau and Hana Srebotnjak

Spain has long been an epicenter of state-seeking nationalism. Most recently the country has seen the intensification of Catalan separatism. Since the 2010s state-seeking nationalist mobilization has become a staple in Catalonia. Mass demonstrations and other protests regularly attracted more than one million participants. At a first glance, this prevalence of state-seeking nationalism in Spain stands in sharp contrast to its relative absence in Latin America. The paucity of separatism in Latin America is nothing novel but has become an even more pronounced characteristic of the region since the second half of the twentieth century.1 In fact, when compared to other world regions, Latin America has only rarely seen the emergence of nationalist movements that claim separate statehood. A more careful look, however, complicates the picture. While outright separatist nationalism cannot be observed, several countries in the region have seen movements that are strikingly similar to Catalan secessionist mobilization with respect to their core claims, diagnostic frames, and tactics. Most prominently, movements in Bolivia’s Santa Cruz and Ecuador’s Guayas region combine claims for greater fiscal autonomy and control over tax revenues with claims for far-reaching political autonomy. Both movements justify their demands by claiming to represent a territorially defined community that is also culturally distinct from the rest of the country. And again similar to Catalan secessionism, *

1

This chapter is a revised version of vom Hau and Srebotnjak, “Bridging Regionalism and Secessionism.” In contrast to the initial article, this chapter puts analytical spotlight on intersections between the neoliberal state, anti-neoliberal mobilization, and territorial autonomy movements According to the Correlates of War database, eight secessionist wars took place in Latin America during the nineteenth century, and only one secessionist conflict (Paulistas vs. Brazil 1932) during the twentieth century (see Wimmer and Min, “The Location and Purpose of Wars”). While separatist war is obviously only one possible manifestation of state-seeking nationalism, it is nonetheless illustrative of the “Latin American exceptionalism” in this regard.

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they employ a mixture of mass demonstrations, public rallies, festive parades, and other cultural performances to insert their claims into the public sphere. This chapter develops a novel perspective by pursuing a systematic cross-regional comparison of these distinct, but analytically related episodes of contention. To do so, we develop two broad lines of argument. First, we maintain that an understanding of collective mobilizations in Catalonia, Santa Cruz, and Guayas as territorial autonomy movements allows us to move beyond the contrast between state-seeking nationalism in Spain and its relative absence in Latin America and instead develop a cross-regional perspective on social movements that seek to alter the existing spatial organization of the polity. This conceptual lens reveals that Spain, Bolivia, and (to a somewhat lesser extent) Ecuador recently saw the rise of full-blown territorial autonomy movements. Second, we build and expand on Kent Eaton’s2 seminal study on Bolivia and Ecuador and employ social movement theory to explain why territorial autonomy mobilization intensified in Catalonia, Santa Cruz, and Guayas. Following his lead, we draw on the political process model and its focus on particular structural opportunities and political threats in a movement’s environment, its organizational structure, and its framing strategies. Equipped with this theoretical framework we argue that – despite obvious regional and country-specific causal configurations that contributed to the formation of each movement – there are a number of similar causal processes at work. Our cross-regional comparison finds that in all three cases certain structural opportunities, most importantly substantial within-country inequalities between different subnational units and asymmetries in economic and political power, facilitate the emergence of territorial autonomy movements, but that those conditions are by themselves not enough to account for the recent intensification of mobilization. We further suggest that threats to established governance arrangements that regulate the distribution of state resources between center and subnational unit motivated mobilization while changes in movement infrastructure provided new organizational resources and the transformation of framing strategies, and broader changes in political language and discursive repertoires associated with them, enhanced the legitimacy of protest activities. Developing this argument allows us to engage in a variety of broader debates. This chapter offers a novel inter-regional perspective that seeks to cross-fertilize the conceptual frameworks and causal arguments that have thus far been mostly based on regionally bounded comparisons from within each world region. Our cross-regional comparative case studies also allow us to provide more nuance to the explanatory arguments made by cross-national statistical studies of secessionist and regional autonomy movements. Another body of work this chapter builds on yet also moves beyond is the scholarship on social protest in the Iberian world. Recently, a number of scholars have emphasized the replication of Latin American anti-neoliberal 2

Eaton, “Conservative Autonomy Movements.”

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mobilization patterns in Southern Europe since the beginning of the Great Recession (2008–2009), ranging from tactics used by protestors to the rise of movement-driven, anti-neoliberal populist projects in electoral politics.3 Our chapter shows how movements that certainly do not form a part of, and in some instances even stand in outright opposition to recent anti-neoliberal activism, are nonetheless influenced by and selectively draw on action repertoires and framing strategies that have characterized this broader cycle of inter-regional contention. Our chapter also speaks to this volume’s engagement with debates around characteristics and consequences of the neoliberal state. In particular, we find that the “powering approach,” which came to characterize the reform strategies of many if not most governments in the Iberian world during the neoliberal era (see the chapter by Bersch in this volume), not only influenced how politicians went about transforming the central state but also left an enduring legacy behind. The adoption of rapid, wholesale, and centrally planned reform projects without much deliberation or consultation also describes the reaction of self-declared anti-neoliberal governments and the subsequent response of the three territorial autonomy movements at the center of this chapter. The reminder of the chapter is organized accordingly. After developing the concept of territorial autonomy movement in greater detail we employ it to identify and compare patterns of contention in Catalonia, Santa Cruz, and Guayas. The next sections develop the three cross-cutting explanatory factors in greater detail, thereby bringing a case from Europe (Catalan separatism) and two Latin American cases (regionalist mobilization in Bolivia and Ecuador) into systematic conversation with each other. The conclusion spells out potential links to the broader research agenda set out by this volume and engages with arguments made by other chapters.

15.1  territorial

autonomy movements :

some conceptual clarifications

In the existing scholarship Catalonia is often analyzed through the conceptual lens of nationalism. Together with Scotland and Quebec, it is one of the quintessential examples of “nations without states”4 or “nations against the state”5 – with collective political actors gradually becoming more assertive in challenging central state authority. Many of the most-cited comparative works published before 2010 also emphasize the relatively more inclusive and conciliatory nature of Catalan nationalist mobilization, when juxtaposed to the more 3 4 5

Padoan, Anti-Neoliberal Populisms in Comparative Perspective. Teivainen, “Indigenous Peoples and the State in Latin America.” Guibernau, Nations Without States. Keating, Nations Against the State.

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exclusionary and violent forms of nationalism found in the Basque Country.6 More recent studies have moved away from this contrast and instead focus on addressing why secessionist mobilization has gained force in Catalonia.7 The arguably rather sparse literature on Santa Cruz and Guayas draws on a different conceptual apparatus. The two are regularly categorized as regions and presented as paradigmatic examples of regionalism, with most studies either focused on historical roots of these mobilizations8 or seeking to explain why regionalism has emerged in Bolivia and Ecuador but not elsewhere in Latin America.9 More recently, and echoing the trend identified for Catalonia, a growing body of work explores possible drivers of the recent intensification of regionalist mobilization in Santa Cruz and Guayas.10 In this chapter we pursue a different approach. We study recent contentious episodes in Catalonia, Santa Cruz, and Guayas as territorial autonomy movements  – or instances of subnational collective mobilization predicated on the presence of a center-periphery cleavage in the polity.11 This conceptual lens enables us to capture both striking similarities and important differences between the three cases. Before we start our comparative analysis some clarifications about why we use the labels “movement,” “autonomy,” and “territorial” are in order. The concept of social movements refers to sustained forms of collective action that are articulated around a shared sense of mission and identity, and that challenge (or defend) existing authority structures.12 In contrast to collective actors that might advance similar demands and claim to speak in the name of the same shared social identity, such as groups joined through political parties and advocacy groups, territorial autonomy movements primarily draw on non-institutionalized forms of political action. Further, a social movements perspective does not presuppose a shared identity but argues instead that sustained mobilization itself might produce a sense of belonging and collective identification among movement participants.13 Autonomy is a contested concept. When compared to secessionism and regionalism as the dominant conceptual lenses used by the existing scholarship on Catalonia, Santa Cruz, and Guayas, it does, however, establish important 6

Díez Medrano, Divided Nations. Barrio and Rodríguez-Teruel, “Reducing the Gap Between Leaders and Voters?” Basta, “The Social Construction of Transformative Political Events.” 8 Soifer, “Regionalism, Ethnic Diversity, and Variation in Public Good Provision.” 9 Eaton, “Conservative Autonomy Movements.” 10 Eaton, “Backlash in Bolivia”; Eaton, “Conservative Autonomy Movements”; Fabricant, “Performative Politics”; Gustafson, “Spectacles of Autonomy and Crisis.” 11 See Núñez, “Autonomist Regionalism within the Spanish State” for a similar approach. He suggests that “regionalism and minority nationalism could be considered as two parallel manifestations of a conflict or social mobilization on an ethno-territorial basis” (p.122). 12 Tarrow, Power in Movement; Tilly, Social Movements. 13 Polletta and Jasper, “Collective Identity and Social Movements.” 7

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analytical advantages. Most importantly, it provides a language suitable to detect similarities between these social movements. As we will develop in greater detail in the next section, all three movements resented the established fiscal pact with the central state and in response demanded greater control over distribution of state resources. They have also used strikingly similar tactics in order to insert their claims into the public sphere. Moreover, the concept of autonomy is often used to describe collectivities that eschew any affiliation or engagement with an established political structure. Seen in this light, autonomy establishes an “umbrella term” to capture both secessionist and non-secessionist variants of collective mobilization in the three regions of interest. Finally, we add the label “territorial” as an important qualifier to delineate, in broad strokes, the kind of autonomy movements we are interested in. Regardless of whether sustained collective mobilizations were oriented toward achieving sovereignty (as in Catalonia) or greater rights and control over resources within existing state structures (as in Bolivia and Ecuador), their aim was to alter the existing spatial organization of the polity. That makes them territorial and hence analytically distinct from cultural autonomy movements. The latter often claim to speak in the name of migrant communities or indigenous groups, and their demands are concerned with rights, recognition, and access to resources across national or even global territory, and not a particular subnational territorial unit. Equipped with this conceptual lens, the next section compares recent territorial autonomy movements in Catalonia, Santa Cruz, and Guayas. Specifically, we focus on protest episodes during the early twenty-first century when collective mobilization intensified and map major similarities and differences in demands, tactics, composition, and organizational structure of these movements.

15.2  intensified

mobilization for territorial

autonomy in santa cruz , guayas , and catalonia

The proper division of resources and decision-making authority between the central state and subnational regions has long informed political debates in Santa Cruz, Guayas, and Catalonia. All three are an economic powerhouse of their respective country, and each contributes disproportionally to the national GDP in comparison to their population share. Moreover, even though Santa Cruz, Guayas, and Catalonia are locomotives of national development, they are not political centers. Indeed, Bolivia, Ecuador, and Spain are characterized by a significant disjuncture between spatial location of political and economic power. Over the course of the twentieth century Santa Cruz became the center of Bolivia’s natural and productive resources such as hydrocarbons (natural gas), located in the region.14 Despite its dominant economic position, however, 14

Gustafson, “Spectacles of Autonomy and Crisis”, 2006; Eaton, “Backlash in Bolivia,” 2007.

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political power remained concentrated in the capital La Paz. Ecuador’s development has often been described as “a tale of two cities”15 with Guayaquil historically the country’s economic and Quito its political center.16 Catalonia industrialized in the nineteenth century, far ahead than the rest of Spain (with the exception of the Basque Country), yet political power remained concentrated in Madrid.17 These regional inequalities have certainly contributed to the formation of territorially based political cleavages and collective identities. As a matter of fact, protests against the existing institutional order and demands for greater autonomy are nothing novel in these regions. What has recently changed, however, is the intensity, form, and political contents of these demands: since the onset of the twenty-first century Catalonia, Santa Cruz, and Guayas have witnessed the formation of full-blown territorial autonomy movements. Those are the main focus of this chapter. In Santa Cruz a major contentious episode galvanized between 2003 and 2010. In this period, marches and rallies regularly brought several hundred thousand participants onto the streets of the region’s major urban centers to protest against Bolivia’s territorial state organization. Most prominently, in January 2005 over 350,000 people demonstrated in favor of a referendum on regional autonomy, Bolivia’s largest demonstration ever. Other protest tactics involved not only regionally specific strikes and the selective use of road blocks but also politicization of cultural events such as carnivals and holiday parades. These public attempts were complemented with frequent media statements, education campaigns, and some highly publicized efforts to collect the necessary signatures for holding a referendum.18 Guayas experienced a broadly similar period of intensified mobilization for territorial autonomy. From 1999 to 2008 the region saw frequent mass protests, particularly notable the 2005 so-called Marcha Blanca and the January 2008 demonstrations to defend Guayas’ interests against Ecuador’s then newly elected president Rafael Correa attended by more than 200,000 people. Petitions, regional strikes and recurrent media statements equally formed a part of the action repertoire. Education campaigns were another tactical pillar. For example, movement supporters would organize workshops in high schools around the notion of “local citizenship,” asking students to identify what makes Guayaquil distinct from the rest of Ecuador.19 In Catalonia a comparable contentious episode unfolded during the 2010s. The main demands of these sustained mass mobilizations were centered on secession from Spain. This obviously stands in sharp contrast to the claims made by protestors and activist networks in the other two regions. In Santa 15 16 17 18 19

Chiriboga-Tejada, “A Tale of Two Cities.” Burbano de Lara, La revuelta de las periferias. Guibernau, “Prospects of an Independent Catalonia.” Eaton, “Conservative Autonomy Movements.” Ibid.

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Cruz only the most radical flank of the territorial autonomy movement, associated with Nación Camba20, has advanced demands for secession from Bolivia. Otherwise the vision of far-reaching political and economic independence within existing state structures dominates the movement. And in Guayas secessionist claims are almost completely absent from the movement, even among its more extreme factions. But these differences in demands should not distract from a number of striking similarities. What cuts across Catalonia, Santa Cruz, and Guayas is the intensification of mobilization. In all three cases, contentious episodes that included a series of mass rallies and demonstrations unfolded in combination with media campaigns, education initiatives, and cultural work. From 2010 until at least 2017 public demonstrations in favor of Catalan independence dominated protest cycles in the region. The movement also transformed the Diada – the National day of Catalonia and a public holiday in the region – into a focal point of annual pro-independence rallies. The extent of these mobilizations contributed to the 2014 informal consultation on secession and a second unilateral referendum in 2017, which the Spanish government tried to stop through an unprecedented show of force. Mass mobilizations in Catalonia, Santa Cruz, and Guayas also drew on similar diagnostic frames. They resembled each other in how they identified a problem and assigned blame to adversaries in order to motivate, construct meaning, and gain wider support for their protest activities.21 In all three regions activists voiced deep concerns about the governance of center-region relations and recent challenges to it. Of particular concern were fiscal arrangements and the distribution of resources between national and subnational states. In Catalonia, different movement factions, whether leftist or conservative, moderate or more radical in their demands for secession, were united in their identification of the problem. They perceived the existing fiscal pact as increasingly unjust and detrimental to the region’s interests. Catalonia’s share of tax contributions was portrayed as too large and disproportionate in comparison to Spain’s other regions, especially after the fallout of the Great Recession (2007–2009) made itself felt and the central government responded with a series of harsh austerity measures that pushed the region into higher debt. This analysis established an important backbone for secessionist claims: Catalonia, as one of Spain’s wealthiest regions would be much better off if it were independent and hence in charge of its own fiscal matters. A similar diagnostic frame underpinned mass protests in Santa Cruz and Guayas. Both territorial autonomy movements suggested that their region had been punished by the central government for being an economic powerhouse. Following this line of argument, Santa Cruz and Guayas appeared to over-subsidize the rest of Bolivia or Ecuador by 20 21

The section on movement infrastructure will discuss this social movement organization in greater detail. Snow, Rochford, Jr., Worden and Benford, “Frame Alignment Processes.”

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paying a disproportionate share of tax revenues. In response, movement proponents demanded greater fiscal and political autonomy. The three episodes of mass mobilization also share the fact that they were articulated around particular collective identities. In fact, these identities might have been developed – or at a minimum strengthened – in and through protest activities.22 Whether in Catalonia, Santa Cruz, or Guayas, movement demands for more autonomy and/or secession from the national state were based on a territorially and culturally defined subnational identity with territorial challengers in the three regions claiming to represent and speak in the name of a distinct subnational “imagined community” with legitimate reasons to make claims on the central state. In Catalonia secessionists (and their organizations and networks) depicted themselves as the embodiment of the “Catalan nation.” This national community was conceived as historically, culturally, and linguistically distinct from the rest of Spain, and hence meriting its own government. The Santa Cruz movement similarly emphasized its distinct territorial identity, pointing to common cultural characteristics and historical experiences supposedly shared by all Cruceños (people from Santa Cruz) alike, regardless of their class and ethnic background. Proponents of the movement argued that they are distinct from the rest of Bolivia because of their unique colonial history with Santa Cruz a part of another administrative unit as La Paz and Bolivia’s Andean region. Comparable patterns of identity work can also be found in Ecuador. In Guayas, the territorial autonomy movement highlighted the region’s unique customs of music, dance, speech, and food, and its different colonial history23 as markers of distinction from the rest of Ecuador. The cultural and territorial identities projected by these movements should not distract from distinct class backgrounds of the main actors involved in these contentious episodes. In Catalonia, mobilization in favor of greater territorial autonomy and/or secession from Spain was traditionally dominated by middle classes, in tandem with some of the dominant economic sectors. Recent intensification of secessionist contention was built on a broader social base and involved constituencies of different class backgrounds and ideological orientations, including proponents and opponents of neoliberal policies. This said, a significant association between social class and political support for Catalan independence persists to this day.24 Some scholars have thus identified Catalan secessionism as “nationalism of the rich,”25 while others26 have shown how recent movement mobilizations incorporated various sectors, including the working class. 22 23 24 25 26

Polletta and Jasper, “Collective Identity and Social Movements.” Guayas declared independence from Spain earlier than the rest of the country. Crameri, “Political Power and Civil Counterpower.” Dalle Mulle, The Nationalism of the Rich. Donatella Della Porta and Martín Portos, “A Bourgeois Story?”

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In Santa Cruz and Guayas the class background of their respective territorial movements was more straightforward. The leaders of the main social movement organizations tended to be mestizo or white males and part of the respective region’s economic or professional elite, with connections to landed wealth and experience in representing private sector interests. They also represented the “winners” of neoliberal policies, in particular, trade liberalization and FDI flows, which they benefitted disproportionally from. At the same time, especially in Santa Cruz the territorial autonomy movement has taken steps to diversify its class composition by seeking to incorporate youth, women, and lowland indigenous groups. In the following sections, we apply social movements theory to pursue a cross-regional comparative analysis. This theoretical perspective provides us with the analytical leverage necessary to explain why territorial autonomy mobilization recently intensified in all three cases. 15.2.1  Threats to Established Center-Periphery Relations Social movement theory suggests that close attention to the political context in which contentious collective action unfolds is warranted.27 Building on these insights, we argue that the rise of new political threats – or the probability that existing benefits could be taken away if challengers fail to act collectively28 – spurred territorial autonomy protests. In particular, we are concerned with threats to established institutional arrangements between each region and their respective central state over distribution of authority, policy responsibilities, and access to state resources. During mid-twentieth century all three subnational regions reached agreements that granted them significant control over regional affairs and allowed them to also retain formal and/or informal influence over national politics. During the twenty-first century, however, these center-region arrangements changed dramatically, motivating mobilizations in favor of more territorial autonomy. To an important extent this is also related to how national state leaders and regional political elites approached territorial governance reforms through a “powering” approach (see the chapter by Bersch in this volume).

15.3  santa

cruz

In the second half of twentieth century Bolivia experienced frequent regime changes. Yet, regardless of whether the central government was authoritarian or democratic, Santa Cruz enjoyed significant control over fiscal and administrative matters, while regional elites also held a substantial sway over national politics. To illustrate, when the left-leaning military government led by Juan 27 28

McAdam, Political Process and the Development of Black Insurgency. Almeida, “Opportunity Organizations and Threat-Induced Contention.”

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José Torres (1970–1971) proposed nationalizing Bolivia’s sugar industry, elites from Santa Cruz helped stage a coup against him, replacing him for a Santa Cruz native, colonel Hugo Banzer. Under Banzer (1971–1978) 66 percent of Bolivia’s agricultural bank credit was directed to the region’s agribusinesses, the majority of which was never repaid. During the tumultuous years that followed Banzer’s rule, Cruceño elites continued to have a significant say in the appointment and removal of Bolivia’s presidents and top-level government officials. And after the transition to democracy in 1982, the Revolutionary Nationalist Party (MNR) turned into a stronghold for politicians from Santa Cruz, and the region’s dominant economic sectors directly benefitted from the party’s increasingly pro-market stance.29 This arrangement did not endure. From the 1990s onwards Santa Cruz’s political power began to wane, especially once national governments pursued the territorial reorganization of the state. Partially in response to emergent indigenous movements and their demands for the recognition of multicultural group rights,30 and partially encouraged by neoliberal policy recipes emphasizing the benefits of stronger local governments, president Gonzalo Sánchez de Lozada (1993–1997) pursued far-reaching municipal decentralization together with departmental centralization. These reforms created and empowered municipalities as a new level of government and simultaneously turned departments  – previously governed by directly elected representative assemblies – into mere administrative units. Cruceño elites perceived this territorial reorganization as a major threat to the established political settlement between Santa Cruz elites and the central state.31 Another threat that fueled mobilization for more autonomy emanated from the rise of an increasingly powerful new political actor: The Movimiento al Socialismo (MAS), a movement party under the leadership of Evo Morales. MAS emerged as a consequence of a series of social protests organized by indigenous groups, anti-neoliberal activists, and environmentalists, most notably the Water War demonstrations in April 2000 that pushed back against the privatization of water supply in Cochabamba and the Black September protests against efforts to eradicate coca production. The 2002 presidential elections further confirmed that a shift in power was occurring. While support for traditional parties whose endorsement of neoliberal policies benefitted Santa Cruz elites fell dramatically, Evo Morales’ MAS made a huge headway winning second place.32 And in the 2005 elections MAS won as a majority party, which no party has succeeded in doing since democratization. 29 30 31 32

Eaton, “Conservative Autonomy Movements”; Gustafson, “Spectacles of Autonomy and Crisis.” Yashar, Contesting Citizenship in Latin America. Eaton, “Backlash in Bolivia.” Vergara, La danza hostil.

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Morales’ victory profoundly transformed Bolivian politics and Santa Cruz elites understood his government as an unprecedented threat.33 Indeed, MAS’ position on the nationalization of Bolivia’s gas industry and the need for a redistributive land reform, which would benefit indigenous groups at the expense of wealthy landowners, further instigated demands for regional autonomy.34

15.4  guayas Political power held by Guayas, and especially its capital city Guayaquil, greatly increased with democratization. While Ecuador’s newly elected president Jaime Roldós Aguilera (1979–1981) promised a fairer redistribution of oil industry profits, which went against the economic preferences of Guayaquil elites, they were still able to take advantage of major institutional changes: the 1979 Constitution set up an electoral system in which provinces would act as electoral districts. This meant that traditional political parties lost their electoral bases at the national level and instead sought support from territorially and socially defined groups, appealing to local concerns masked as national interests in order to boost their electoral chances. To illustrate, the conservative Social Christian Party (PSC) has since then won all major political offices in Guayas, transforming itself into an essentially regionalist party that channels the interests of Ecuador’s coastal regions, with Guayas and its capital Guayaquil representing the party’s strongest base. And similar to Bolivia, democratizing Ecuador introduced far-reaching decentralization efforts that granted local governments, in particular municipalities and prefectures, new responsibilities, and control over public services. Yet, in contrast to Bolivia, the reforms strengthened the position of Guayas vis-à-vis the central state, at least initially, as the new measures enabled local governments to lobby the national government directly while also making them more accountable to their immediate voter base. That being said, Ecuador’s decentralization reforms and the post-1979 electoral system came with a catch that ultimately transformed center-region relations and contributed to the decline of Guayas’ political influence on national politics. Specifically, these institutional changes led to a rather contradictory and unstable arrangement between local and national level, rendering national policymaking inherently difficult. Central state paralysis, with the country changing presidents six times between 1996 and 2006, further reinforced the myth of distinct regional identities and permitted local politicians to rely on clientelistic practices while it placed national parties in constant confrontation 33

34

Even though the recent ouster of Evo Morales (backed by Santa Cruz elites) after he was re-elected president in the controversial October 2019 Bolivian elections goes beyond the timeframe of our analysis, it further illustrates the threat perception rationale driving Morales’ opponents. Eaton, “Backlash in Bolivia.”

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over state resources. In addition, the financial crisis of 1999, which affected Guayaquil’s financial sector in particular as the central government decided to recapitalize four banks and liquidate nine (five out of which were led by prominent Guayaquil elite families), led to widespread protests against the supposed pro-Quito bias of the government, a moment that marks the intensification of Guayaquil’s autonomy movement. Claims for Guayaquileño autonomy gained further force when Rafael Correa (2007–2017)  – running on an anti-establishment and anti-neoliberal platform – was elected president. His victory meant that the PSC, and by extension Guayaquil elites, lost much of their political influence. Correa blamed the rising autonomy demands in Guayaquil on the instability of the central state, which he sought to remedy through a nation-wide development program. In 2008 he adopted a new constitution that granted national government greater control over monetary and oil policy. Correa also drew a direct ideological link between Guayaquil elites and neoliberalism, criticizing their municipal management practices of administering public funds through private foundations. In response, Guayaquil elites stepped up their mobilization for more autonomy.35

15.5  catalonia Under Francisco Franco’s (1939–1975) dictatorship Spain was a highly centralized state with Catalonia’s political autonomy and its control over fiscal and administrative matters severely constrained. This changed with democratization. Similar to Ecuador, transition to democracy radically transformed center-region relations. The Constitution of 1978 recognized Spain’s different nationalities and created 17 autonomous communities – including Catalonia – as a new level of regional government, while the 1979 Statute of Autonomy granted autonomous regions significant control over policy domains such as health, education, infrastructure, and culture. The post-Franco political settlement also recognized collective identities of specific communities and their right to self-government. In Catalonia this led to the establishment of the Generalitat formed by the Parliament of Catalonia, the Presidency of the Generalitat, and the Executive Council of Catalonia (the “Govern”), and a flourishing regional party system. During the 1980s and 1990s Catalan political elites also exerted substantial political influence in Madrid. The most powerful regionalist party in Catalonia at the time, the center-right Convergència i Unió (CiU), a federation of the neoliberal-leaning Democratic Convergence of Catalonia (CDC) and the Christian democratic party Democratic Union of Catalonia (UDC), tended to gain between 10 and 20 seats in national elections. This was often enough to provide the two dominant parties in Spain, either the left-leaning Spanish Socialist Workers’ Party (PSOE) or the conservative Partido Popular 35

Burbano de Lara, La revuelta de las periferias.

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(PP), with the critical number of votes needed to form a government, endowing CiU with significant negotiation powers in Spanish politics as well.36 But with the onset of the new millennium the relationship between the central state and Catalonia changed – a transformation that many regional elites, and increasingly the wider public as well, perceived as a threat to Catalan self-determination within the existing political settlement. One important aspect was the declining influence that Catalan regionalist parties held in Spanish politics. In the 2000 national elections PP won with an overwhelming majority, which allowed it to rule without the support of other political parties. And once in power, PP adopted a “neo-centralist” discourse imbued with conservative connotations, which included dismissing demands for greater autonomy coming from Spain’s historical regions. Similar to Bolivia and Ecuador, another factor that triggered regional grievances was an (ultimately failed) attempt at restructuring center-region relations and hence the territorial organization of the Spanish state. From 2003 onwards, the Catalan regional government sought to reform the Catalan Statute of Autonomy, the Catalonia basic law. In 2006 it obtained an approval for its reform proposal from both regional and Spanish parliaments and a permission to hold a region-wide referendum on the content of the Statute. In spite of that, in 2010 the Spanish constitutional court declared key aspects of the new statute unconstitutional, namely, the recognition of Catalonia as a nation, the preferential treatment of the Catalan language over Castilian, and the capacity of the regional government to determine its own taxes at the local level. In response to PP’s centralist stance and the court’s decision, both the Catalan political class and the wider public conceived of Catalonia’s autonomy as under siege, arguing that self-determination could no longer be achieved in cooperation with Madrid.37 Finally, the Great Recession (2007–2009), which led to austerity politics at both central and regional levels, instigated further concerns about Catalonia’s position within Spain. In the immediate aftermath of the economic crisis, Spanish regional governments had to make major cuts to policy domains under their direct responsibility, namely, in health and education. The Catalan regional government, ran by the CiU at the time, ended up imposing social spending cuts that were among the sharpest in Spain.38 It was in this context that the regional government placed the renegotiation of the “fiscal pact” between Catalonia and the central state at the forefront of political debate. This strategy resonated with parties and civil society representatives across the political spectrum, all agreeing that the current arrangement was unjust and detrimental to Catalonia’s quest for more self-determination. 36 37 38

Guibernau, “From Devolution to Secession.” Keating and Wilson, “Renegotiating the State of Autonomies.” Legido-Quigley et al., “Will Austerity Cuts Dismantle the Spanish Healthcare System?”

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The cross-regional approach developed in this section has shown that recent territorial autonomy mobilizations in Santa Cruz, Guayas, and Catalonia share important similarities. In all three regions political threats to the status quo and the transformation of established center-periphery relations instigated contentious episodes, the unfolding of which we turn to in the next section. Indeed, as several scholars have observed, generalized fears about losing goods and rights are important motivators of collective action, in particular, mobilizations for more autonomy and/or secession.39

15.6  changes

in civic networks and

new movement - state linkages

While those political and institutional changes crucially motivated the recent intensification of territorial autonomy protests in Santa Cruz, Guayas, and Catalonia, they cannot explain why those movements were capable of doing so. As social movement theorists frequently remind us, grievances are not enough for collective mobilization. It also requires the “right kind” of movement infrastructure – organizational structures and resources – that enable challengers to act collectively.40 Those usually include associational networks and civic associations that help connect previously unconnected collectivities, exchange information, and plan specific protest campaigns. Increasingly, the analysis of movement infrastructure has also started to pay attention to resources activists derive from linkages to political parties and state officials.41 Following this lead, the second part of our argument looks at the organizational characteristics of territorial autonomy mobilizations in Santa Cruz, Guayas, and Catalonia. In all three regions territorial challengers were already comparatively well-organized at the onset of mobilization. The main change during the twenty-first century was the formation of new movement-party and/or movement-state synergies, together with the emergence of new organizational structures, both of which facilitated sustained protest activities and shaped the movements into their recent form.

15.7  santa

cruz

A densely organized and highly mobilized civil society is Bolivia’s modus vivendi.42 Whether on the left or the right of the political spectrum, national politics is characterized by high levels of interconnectivity between grass-roots civic organizations, political parties, and state agencies.43 Seen in this light, it 39 40 41 42 43

Almeida, “Opportunity Organizations”; Jenne, Saideman and Lowe, “Separatism as a Bargaining Posture.” Andrews, “Social Movements and Policy Implementation.” Goldstone, “Introduction.” Molina, “State-Society Relations in Bolivia,” 124. Vergara, “United by Discord, Divided by Consensus.”

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is not surprising that autonomy activism in Santa Cruz has been able to rely on a well-resourced movement infrastructure. The most important civil society organization spearheading the movement has been the Comité Pro Santa Cruz (Pro-Santa Cruz Committee [CPSC]). Founded after the 1952 Revolution when municipal elections were suppressed and regional powers significantly curtailed, CPSC was the first organization of its kind in Bolivia, and its pioneering role in mobilizing opposition against La Paz endowed it with exceptional legitimacy.44 To this day CPSC remains the organizational backbone of the autonomy movement. Relying on its large membership base, the committee provides critical resources for the organization of rallies and campaigns, including financial support, close ties to major business associations, and linkages to various NGOs and cultural organizations. From the 2000s on the autonomy movement expanded its reach among previously neglected social groups, thereby gaining additional mobilizing capacities. Although historically dominated by older white or mestizo men, it established the Comité Cívico Feminino, a separate faction for women and also one assigned solely to youths, the Unión Juvenil Cruceñista (UJC).45 Simultaneously, CPSC sought to co-opt groups that could pose a potential threat to its interests. Accordingly, it started to selectively recruit lowland indigenous leaders into the organization and support electoral campaigns of those with political ambitions. A telling example is the Guaraní leader Bonifacio Barrientos, who was nominated to the position of “Representative of the Indigenous Peoples of the Department to the CPSC,” which allowed him to run for Congress in 2005 as a candidate of Bolivia’s three traditional center-right parties.46 The Santa Cruz autonomy movement also benefitted from greater access to state resources. A leadership role in CPSC had long been an entry point for a political career. Hugo Banzer, for example, tended to appoint CPSC members as Santa Cruz mayors and prefects. After 2000 the linkages between the movement and the regional state deepened further. Most prominently, in January 2005 CPSC unilaterally created a departmental assembly, forbidden by the constitution, and proclaimed its own president governor of Santa Cruz. Despite the strong initial reaction of the Bolivian military, Carlos Mesa (2003– 2006) agreed to hold elections for regional prefects, a public office for which candidates previously had to be appointed by the central government. Ruben Costas, a wealthy landowner, strong advocate for regional autonomy, and former CPSC president, was elected the first regional prefect of Santa Cruz.47 As prefect Costas helped organize a referendum on departmental autonomy in July 2006 where the “yes” side won with a resounding victory. 44 45 46 47

Eaton, “Backlash in Bolivia.” Gustafson, “Spectacles of Autonomy and Crisis.” Eaton, “Backlash in Bolivia.” Burbano de Lara, La revuelta de las periferias.

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Increased support for autonomy activism also came from the private sector. Feeling threatened by Morales’ left-leaning policies, a cross-section of Cruceño economic elites decided to form a united front against the central state. Ranging from local cattle ranchers to the chamber of industry and commerce, the hydrocarbons chamber, and the agricultural chamber, they jointly seceded from Bolivia’s nation-wide Confederation of Private Entrepreneurs of Bolivia (CEPB) to form the Federation of Private Entrepreneurs of BoliviaSanta Cruz (FEPB-SC). The FEPB-SC directed large sums of financial resources to the autonomy movement. There was also a great deal of interconnectivity. Branko Marinkovic, for example, was president of FEPB-SC since 2004 and president of CPSC between 2007 and 2009. Finally, the movement gained further strength from processes of internal diversification and radicalization. In 2000, Nación Camba was formed, in direct response to the rise of MAS and growing organizational power of highland indigenous peoples. Led by a group of right-wing political figures and former CPSC members, the organization advances an inclusive discourse toward lowland indigenous groups, as illustrated by the frequent translation of campaign materials and other publications into the local Guaraní language. At the same time, it takes an exclusionary stance toward indigenous peoples from the Andean highlands and has at times even resorted to physical violence against peasant and indigenous protests. Within the context of the wider movement, the presence of Nación Camba, and its explicit promotion of the region’s secession from Bolivia, provides other factions led by the CPSC with a convenient possibility to present their own demands for far-reaching autonomy as moderate and conciliatory.48

15.8  guayas In Guayas, the Junta Cívica de Guayaquil (the Guayaquil Civic Board [JCG]) played a similar role to the CPSC in Santa Cruz. The Board brings different civic associations, activist networks and powerful individuals under the same umbrella, and has been at the forefront of protests and campaigns in favor of more autonomy. JCG has also been involved in the organization and sponsoring of activities that construct and promote a sense of a distinct Guayaquil identity.49 Another important aspect of movement infrastructure were close ties to national political actors and local state administration. The formation of these relationships can be traced back to Guayaquil’s urban regeneration during the 1990s. In 1992 former president León Febres-Cordero became mayor of the city and sought to construct new public–private partnerships in order to pursue ambitious renovation projects. JCG, together with the Gobernación del 48 49

Gustafson, “Spectacles of Autonomy and Crisis”; Kathleen Lowrey, “Bolivia Multiétnico y Pluricultural.” Burbano de Lara, La revuelta de las periferias.

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Guayas (a representative local body of the central government dominated by PSC), various universities, non-profit foundations, private bank associations, and chambers representing commerce, tourism, construction, and industry, would hence become the municipality’s main strategic partners in these endeavors. The partnerships strengthened the relationship between local administration and local civil society groups, basically rendering them into an extension of PSC, and cultivated a sense of autonomy from the central state. And while Cordero’s renovation programs created huge spatial inequalities, the city’s visible recovery also contributed to the construction of a unique Guayaquil identity, soon to be incorporated into the framing strategies of territorial autonomy activism.50 Echoing what happened in Santa Cruz, changes in movement infrastructure further strengthened the autonomy movement in Guayas. In the early 2000s JCG expanded its linkages to different civil society actors and increased its membership base. By 2008, the Board was composed of more than a 100 different civic associations and other legal entities, and had about 400 ordinary members, including the archbishop of Guayaquil, presidents of regional business chambers, directors of various mass media outlets, and several Ecuadorian ex-presidents who were also Guayaquil natives.51 The territorial autonomy movement also gained support from political parties. In fact, relations with PSC became increasingly symbiotic. During the 1990s, when the party enjoyed a comfortable electoral position at the regional level (Guayas) and municipal level (the city of Guayaquil), it sought to distance itself from the movement’s demands for more autonomy – and the new electoral competition it would bring. But from the 2000s onwards, PSC gradually began to change its stance, developing a closer relationship with JCG and other civic associations in favor of territorial autonomy. One important impetus for this came in 1999 when Fuerza Ecuador, a self-defined think-tank that gradually converted into a social movement organization, collected 370,000 signatures while campaigning for a popular vote on Guayas autonomy and sent its proposal to Nicolás Lapentti, a member of PSC and provincial prefect of Guayas at the time. Moreover, with Correa’s election in 2005, PSC lost much of its power at the national level causing it to switch most of its attention to the local and regional level thus further cementing its role as a crucial player in the Guayas regional autonomy movement. Another boost to movement infrastructure came from increasing control over the local state apparatus. Again similar to Santa Cruz, local political elites in Guayas such as mayors and prefects emerged as movement leaders. Most prominently, Jaime Nebot, Guayaquil’s mayor from 2000 until 2019, continued Febres-Cordero’s urban regeneration programs and spearheaded major protest campaigns in favor of territorial autonomy. In 2008 he drew on 50 51

Delgado, “Guayaquil.” Eaton, “Backlash in Bolivia.”

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municipal resources to organize a march that rejected Ecuador’s new constitution (still to be ratified in a nation-wide referendum) as a blatant recentralization effort and instead promoted a “one country, two systems” formula, which included a series of constitutional proposals that would exclude Guayaquil from most national-level decisions. From then onwards, Nebot continuously threatened the national state with calls for holding a popular referendum on autonomy and by holding mass rallies on symbolic dates such as the commemoration of Guayaquil’s founding on July 25 or the celebration of “Guayaquil Independence Day” on October 9. During the 2000s the municipality of Guayaquil itself became the main organizational platform of the Guayas autonomy movement. Nebot consciously avoided any overt political partisanship in his public appearances and management style and instead embraced a unifying discourse focused on civics, allowing the municipality to act as a civil society association on its own. This meant that Guayaquil de facto became an umbrella organization that coordinated mobilization efforts of civil society organizations with an explicit pro-autonomy stance of all kinds, including the Guayas historical archive, various universities, charities, foundations, the media, and chambers of industry and commerce. Nevertheless, the recent expansion of organizational resources should not distract from the fact that movement infrastructure remained more limited when compared to Santa Cruz. Even during the 2000s the Guayas autonomy movement continued to be a primarily elite-based project as JCG failed to expand its constituencies or co-opt indigenous groups.52 At least since 2005, JCG has also been weakened by an internal split when a faction of association’s membership called Nueva Junta Cívica de Guayaquil or the New Civic Board of Guayaquil (NJCG) split from JCG, which it accused of being too conciliatory toward the Correa government. Finally, there was no common organizational platform in Guayas similar to FEPB-SC in Santa Cruz that would bring together economic elites from different industrial sectors. Seen in this light, during the 2000s territorial autonomy activism in Guayas could equally rely on an expanding movement infrastructure, though probably somewhat more fragmented and less powerful than its counterparts in Santa Cruz or in Catalonia, as we will see below.

15.9  catalonia On account of its history Catalonia entered the recent episode of intensified territorial autonomy mobilization with significant organizational resources already in place. Under Franco, activities of political parties, unions, and other institutionalized forms of collective representation were severely constrained, and local civic associations constituted the only vehicles to resist the 52

Eaton, “Conservative Autonomy Movements.”

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dictatorship’s attempts at erasing Catalan identity and culture. After democratization, many civil society organizations that emerged during this period went on to become strong advocates for more regional autonomy. Civic associations with an outright separatist agenda remained at the margins of the movement. Pro-independence activism was also internally fragmented  – between rightwing and leftist, moderate, and radical factions.53 This changed in the twenty-first century. During 2000s, pro-independence factions within the Catalan territorial autonomy movement gained in organizational strength and overcame some of their internal fault lines. At the local level, preexisting groups increased their membership and activists were able to rely on larger networks and new organizations to convoke mass demonstrations and other protest rallies across Catalonia. And especially from 2010 onwards secessionist activism could rely on a region-wide and well-resourced movement infrastructure. The Catalan National Assembly (ANC) played a crucial role in this regard. Founded in 2011, its main objective became the establishment of an independent Catalan state within the European Union. ANC has a highly decentralized organizational structure that allows it to reach and connect different territorial and sectorial (i.e., teachers, LGBT groups, women, firefighters, etc.) subgroups. A further civil society organization at the forefront of the secessionist movement, Òmnium Cultural, morphed from a cultural organization primarily concerned with the preservation of Catalan language, literature, and publication of grammar books into a political organization committed to the cause of Catalan independence. In the process, Òmnium increased its membership base from 20,000 to 160,000 in a matter of years, becoming the largest civil society association in Catalonia and major organizational hub for the coordination of pro-independence protests.54 During 2010s linkages to regional political parties proliferated and provided the Catalan secessionist movement with further organizational resources. While in government from 1980 until 2003, the center-right neoliberal-leaning CiU supported devolution but not secession, and ties to pro-independence forces existed, if at all, at a personal level, between activists and individual politicians. But soon after the 2012 ANC-led Diada rally and the dramatic increase in public support for secession from Spain (as indicated by various opinion surveys), the party changed its position on territorial politics55 and made the electoral promise of organizing a referendum on Catalan independence.56 Movement-party synergies became more 53 54 55

56

Balcells, Catalan Nationalism. Porta and Portos, “A Bourgeois Story?” This should not distract from important internal differences that eventually broke the party apart in 2015, with the CDC maintaining the secessionist stance and the UDC taking a more conciliatory stance. Crameri, “Political Power and Civil Counterpower.”

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explicit and institutionalized in subsequent years. In March 2015, ANC, Òmnium, the Association of Local Councils for Independence and regional parties from across the political spectrum signed “the Unitary Road Map of the Catalan Sovereign Process,” which outlined the steps to be taken for Catalonia to become an independent state through democratic means. Another indication of this increasingly symbiotic relationship was the formation of an electoral alliance. Before the regional elections in September 2015, Catalan pro-autonomy associations and different regional parties formed Junts pel Sì (“Together for the yes vote”). This electoral platform was led by Carme Forcadell as president of ANC and Muriel Casals as former president of Òmnium Cultural together with regional party leaders such as Oriol Junqueras (ERC) and Artur Mas (formerly CiU, now Democratic Convergence of Catalonia [CDC] after the former fell apart). The 2015 elections, won narrowly by Junts pel Sì, also brought greater access to state resources. For the first time, well-known civil society leaders who explicitly advocated for Catalonia’s independence from Spain ascended into regional-level public office: Carme Forcadell became the President of the Parliament of Catalonia, while former Òmnium Cultural activist and campaigner Raül Romeva was named Minister for External and Institutional Relations of Catalonia, a newly established position. Expansion of linkages between pro-independence activism and local state administration was an already established pattern at the municipal level. After 2006, a significant part of mayors and local council members elected in Catalonia ran as self-declared independentistes.57 Growing influence over mass media turned into another crucial pillar of the movement infrastructure. Pro-independence activism became prevalent among a wide range of media professionals, including print journalists, television hosts, radio broadcasters, and social media specialists. In each autonomous community of Spain, regional public television is under the exclusive control of the regional government and TV3, Catalonia’s publicly funded television channel, turned into an important outlet for debates around Catalan independence, while an explicit secessionist stance dominated the programs of most local radio stations. Catalan secessionist activism thus managed to capture important media spaces, which allowed it to broaden its reach and render the question of independence hegemonic in public discourse.58 Taken together, both the expansion and greater coherence of its movement infrastructure facilitated the recent intensification of territorial autonomy mobilization in favor of Catalan independence. During the twenty-first century, region-wide associational structures were formed and synergies between the movement, political parties, subnational state administrations, and mass media emerged. 57 58

Muñoz and Guinjoan, “Accounting for Internal Variation.” Crameri, “Political Power and Civil Counterpower.”

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15.10  anti - neoliberal

protest cycles and changing

framing strategies

In the previous two sections we have shown that threats to established regioncenter governance arrangements, coupled with changes in movement mobilizing resources, played a central role in instigating greater contention for territorial autonomy in Santa Cruz, Guayas, and Catalonia. This section develops the third and final aspect of our argument by focusing on framing strategies – or the meaning construction and signifying work challengers employ in order to legitimate and gain societal support for their claims.59 We maintain that the diagnostic frames employed by activists and civic associations in the three cases changed during the 2000s and 2010s, and that the transformed framing strategies became rather effective in garnering resonance among target audiences and/or the wider public. Further, we argue that the changes were embedded in broader antineoliberal protest cycles, and the changes in political language and discursive repertoires they brought about.

15.11  bolivia

and ecuador

A focus on framing reveals significant changes in the discursive repertoire of autonomy mobilizations in Bolivia and Ecuador during the 2000s. Concerned about their public depiction as criollo (“white”) elite projects primarily focused on preservation of economic privileges, movement leaders, and civic associations such as CPSC in Santa Cruz and JCG in Guayas moved beyond emphasizing shared grievances.60 In both cases, autonomy movements increasingly engaged in the ethnicization of collective identities they claimed to represent and pursued what some scholars have described as ethnic boundary work – dividing the social world into categories of “us” and “them” based on markers associated with shared ancestry, and offering scripts of action on how to relate to individuals from distinct ethnic categories.61 In Bolivia autonomy activism reinterpreted Cruceñidad as a pan-ethnic identity that cut across different racial and social class backgrounds. Cruceños, a term previously used for everyone who lives in Santa Cruz, were now also described as Cambas, a once derogatory term used exclusively for Bolivia’s lowland indigenous peoples.62 The Cruceño-Camba identity refers not just to indigenous groups but also to Mestizos as well (a person of mixed race in Latin America) and serves as a way to bridge the relationship between non-indigenous (and often elite) Cruceños and lowland native peoples. In fact, the Santa Cruz movement constructed a romanticized version of “their own” 59 60 61 62

Snow, “Social Movements, Framing Processes, and Cultural Revitalization.” Eaton, “Conservative Autonomy Movements.” Wimmer, “The Making and Unmaking of Ethnic Boundaries.” Pruden, “Santa Cruz entre la post-guerra.”

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lowland Guayaní, Chiquitano, and Guarayu indigenous groups, as juxtaposed to the so-called Kolla, a derogatory term for Bolivians from the Andean highland regions depicted as “dirty,” “stupid,” and “lazy” Morales supporters.63 In Ecuador a similar process can be observed. The autonomy movement actively promoted the ethnicization of Guayaquileño identity, complementing its meaning as a predominantly territorial identity with a greater emphasis on its culture and history. According to this perspective, Guayas is distinct because of its own cultural practices and traditions, which include unique styles of music, dance, and cuisine. Guayaquileño identity is also different because Guayas declared independence from Spain earlier than the rest of the country.64 That said, when compared to Santa Cruz and its emphasis on the Cruceño-Camba vs. Kolla cleavage, the autonomy movement in Guayas was probably somewhat less rigid in its emphasis on ethnic differences between Guayaquileño identity and Ecuadorians from the Andean highlands. Instead, it represented Guayaquil as the main defender of regionalism, and the central state as the main enemy to Ecuador’s regions.65 The framing of territorial autonomy protests as a legitimate expression of ethnic difference gained prevalence in public life. In Santa Cruz the movement incorporated various symbols of Cruceño-Camba identity into its protest tactics and wider cultural work.66 Mass demonstrations in favor of regional autonomy tended to include traditional indigenous folk performances, protestors often dressed up in clothing styles associated with rural agrarian life and lowland indigenous peoples, while carnivals and major holiday parades incorporated “Camba” food, music, and dance.67 CPSC sought to embrace the Cruceño-Camba identity through the symbolic (and widely publicized) move of inviting representatives of different lowland indigenous groups to become members of the organization (although in a subordinate, non-voting role).68 Similarly, in Guayas autonomy activism celebrated symbols of Guayaquileño identity in its various public activities, while civic associations and NGOs associated with the movement engaged in more overt forms of boundary work, for example, by promoting a distinct regional Spanish. Embracing a Cruceño-Camba identity and a discourse of ethnic difference meant that the autonomy movement in Santa Cruz could represent lowland indigenous people as “our ethnics” (nuestras étnias) and claim their ancestral heritage. 63 64 65

66 67 68

Perreault and Green, “Reworking the Spaces of Indigeneity.” Burbano de Lara, La revuelta de las periferias. This might have been because Guayaquil was historically very potent while Santa Cruz only rose to prominence in the 1950s and 1970s. The feeling of Guayaquil’s “separate” identity was hence far more established already. Moreover, the indigenous cleavage is not as influential in Ecuador as in Bolivia, where a far larger part of the population identifies as indigenous. Lastly, president Morales relied on indigenous groups, while Correa won on an anti-establishment platform. Perreault and Green, “Reworking the Spaces of Indigeneity”; Fabricant, “Performative Politics.” Gustafson, “Spectacles of Autonomy and Crisis.” Lowrey, “Bolivia Multiétnico y Pluricultural.”

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In fact, the association of Cruceño identity with Camba ethnicity reinforced a new diagnostic frame centered on multicultural group rights. Activist networks in Guayas pursued a similar framing strategy of evoking multiculturalism and a shared ethnic identity in support of its demands for more self-determination. According to this line of reasoning, claiming autonomy for Santa Cruz and Guayas is a logical response to the “Andean” bias found in Bolivia and Ecuador, and the respective country’s failure to act on principles of multiculturalism enshrined in its constitution. Of particular concern is the  – supposedly unjust  – handling of territorial rights. While the central state would recognize and actively enforce the demands for collective land rights and territorial control advanced by indigenous groups in the Andean highlands, it would systematically neglect the same territorial rights to Cruceños and Guayaquileños – as ethnic groups. The framing strategies employed by Cruceño and Guayaquileño autonomy mobilizations hence need to be situated within a wider protest cycle, namely, the rise of indigenous movements in Latin America more generally, and their demands for territorial rights, greater control over resources, political power, and a recognition of their subjectivities within official understandings of national identity and history.69 Seen in this light, the framing strategies of autonomy movements drew on crucial aspects of the discursive repertoire advanced by indigenous actors. The ethnic boundary work of territorial autonomy activism, most prominently the fusion of Cruceño identity with claims to Camba ethnicity in Santa Cruz, allowed it to mimic the political language of indigenous politics and cast itself as the legitimate expression of ethnic differences and demands for multicultural group rights. It also allowed these movements to anchor their claims for more regional autonomy in the broader public discourse around indigeneity and territorial control and represent themselves as part of the wider struggle of postcolonial subjects against the domination of imperial and, later on, national elites.70 These framing choices, however, stand in direct tension with indigenous political agendas. It is the irony of history that the autonomy movements in Santa Cruz and Guayas, essentially countermovements to indigenous and popular-nationalist politics, have drawn on the discursive repertoires of indigenous politics and multiculturalism in order to further legitimate and gain support for their struggles.

15.12  catalonia During the 2010s, ethnicization of Catalan identity was not central to the framing strategies employed by the Catalan secessionist movement. Rather, activists and social movement organizations represented the independence campaign as a “common project” that was civic and inclusive in nature and not based on an 69 70

Lucero, Struggles of Voice; Van Cott, From Movements to Parties in Latin America. Burbano de Lara, La revuelta de las periferias; Gustafson, “Spectacles of Autonomy and Crisis”; Perreault and Green, “Reworking the Spaces of Indigeneity.”

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ethnic understanding of Catalan identity although the movement did retain a powerful ethnic component. Scholars have shown that support for Catalonia’s secession from Spain is associated with an exclusive identification as Catalan, being a Catalan speaker, and having been born in Catalonia to Catalan parents.71 There is also a strong relationship between social class and ethno-national identification: exclusively Catalan identifiers are usually wealthier and more educated than dual identifiers or exclusively Spanish identifiers living in Catalonia.72 Further, when compared to the rest of the population, an exclusively Catalan ethnic affiliation is even more prevalent among regional political elites, whether party leaders, high-level public officials, or civil society representatives.73 The main similarity to the two Latin American cases  – and therefore the main focus of this section – is the transformation of framing strategies. During the 2010s secessionist activists began to invoke the idea of participatory democracy, and a lack thereof in Spain. According to this problem definition, the country’s current political system might be formally democratic, but it remains largely unresponsive to the demands of its citizens and therefore lacks popular legitimacy.74 For the Catalan territorial autonomy movement this deafness is powerfully illustrated by the categorical refusal of different Spanish governments to allow a referendum on Catalan independence to go forward. The refusal was framed in the following way: by denying Catalan people “the right to decide,” political elites in Madrid have shown their inherently undemocratic orientation. According to this narrative, mobilizations for Catalan independence are intrinsically connected to the struggle for more direct and plebiscitary forms of democracy.75 The territorial autonomy movement thus represented “the right to decide” on Catalonia’s independence through a popular referendum as an essential feature of any truly democratic political system (regardless of whether it was considered legal by Spanish constitutional law). This direct democracy frame quickly achieved wider public resonance. The 2010 mass demonstration against the ruling by Spain’s Constitutional Court embraced the slogan “We are a nation, we decide,” yet its meaning was still not fully settled with respect to national independence.76 Two years later any ambivalence was gone. The banners and speeches at the marches celebrating the Diada (Catalonia’s national holiday) on 11 September 2012, and the even larger events in 2013 and 2014, advocated “the right to decide,” which then unambiguously referred to a popular vote on Catalonia’s independence from Spain,77 culminating in the 2014 referendum simulation.78 The direct 71 72 73 74 75 76 77 78

Brandon M. Boylan, “In Pursuit of Independence.” Hierro and Gallego, “Identities in Between.” Thomas J. Miley, “Against the Thesis of the ‘Civic Nation.’” Barrio, Barberà and Rodríguez-Teruel, “Spain Steals From Us!” Ibid. Crameri, “Political Power and Civil Counterpower.” Humlebæk and Hau, “From National Holiday to Indepedence Day.” Barrio et al., “Spain Steals From Us!”

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democracy frame also came to inform other protest tactics. The publicity work and education campaigns of activist networks and the cultural artifacts (e.g., books, video, podcasts) produced by social movement organizations such as ANC represented a referendum on national independence as an expression of the will of the Catalan people and a pinnacle of participatory democracy. Catalan independence activism was not alone in its assessment of the Spanish political system as beset by democratic deficit and fundamental political legitimacy issues. In fact, the intensification of secessionist mobilization coincided with and was part of a wider anti-neoliberal protest cycle79 against austerity measures introduced by governments in Europe (and elsewhere) during the immediate aftermath of the Great Recession (2007–2009). In Spain the so-called Indignados brought millions of people onto the streets for recurrent protests and marches in 2011 and 2012.80 One of the main Indignado diagnostic frames emphasized the inherently political nature of the economic crisis. Specifically, they identified a glaring democratic deficit and the resulting subjugation of politics to economics as the root problem that triggered the crisis and shaped the austerity responses by the government. Accordingly, Indignado prognostic framing advocated for more direct forms of democracy to involve citizens in the management of the economic crisis.81 Seen in this light, the Indignados’ push for a more inclusive and democratic political system and the expansion of participatory mechanisms – to deal with the fallouts of the Great Recession in a novel manner – was echoed in the transformed framing strategy of the Catalan territorial autonomy movement: the representation of the Spanish state as inherently undemocratic and of secessionist mobilization as an act of direct democracy drew inspiration from the Indignados’ vision of introducing “real democracy” to overcome austerity and the logic of economism.

15.13  conclusion In this chapter we have analyzed the intensification of regionalist mobilization in Santa Cruz and Guayas during the 2000s, and the recent rise of secessionism in Catalonia during the 2010s as manifestations of territorial autonomy movements. Drawing on social movement theory, we developed a multi-causal explanatory account of why territorial autonomy mobilization has recently increased in these cases. Bolivia, Ecuador, and Spain are all characterized by stark regional inequalities and substantial power asymmetries. Santa Cruz, Guayas, and Catalonia are the wealthiest regions and economic powerhouses 79

80 81

Protest cycles are phases of heightened contention between governments, challengers, and counter-movements usually characterized by the rapid dissemination of protest and the creation of or major changes in framing strategies (Tarrow, Power in Movement). Ancelovici, “Crisis and Contention in Europe.” Asara, “The Indignados as a Socio‐Environmental Movement”; Castells, Networks of Outrage and Hope.

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of their respective countries yet all three lack in corresponding political power with the central state machinery and the political capital located in another region. This particular structure of context alone, however, does not explain the recent contentious episodes. Our argument has put the analytical spotlight on changes in political context, mobilizing structures, and framing strategies. We find that in all three cases (1) territorial restructuring and transformations of center-region relations triggered territorial grievances; (2) dense associational networks and new alliances with local state representatives enhanced organizational resources; while (3) broader anti-neoliberal protest cycles, and their concern with direct democracy and/or multicultural group rights, provided territorial challengers with new ways to justify their demands. Social movement theory also provides a useful analytical lens for disentangling why the Catalan territorial autonomy movement increasingly turned to secession from Spain as its dominant demand. When compared to its Latin American counterparts, several historical-institutional factors and contemporary triggers present in Catalonia increased the likelihood of state-seeking nationalism to emerge there, namely, the context of the European Union as a supranational structure that the movement argued it would remain a part of in case of achieving independence (although this was rejected by the EU itself), the presence of a subnational political party system in Spain absent in Bolivia and Ecuador, a distinct language as a mobilizing cleavage and a greater extent of decentralization, including control over education and mass media. From the early 2000s onwards the “weight” of these historical-institutional differences started to matter more, especially when “ethnic outbidding dynamics”82 between regional political parties intensified and Catalan secessionism became a viable electoral strategy for regional incumbent parties. Within the context of the edited volume, our argument also engages in more general debates on the relationship between neoliberal state transformations and anti-neoliberal protest. While we find no direct link between the intensification of territorial autonomy movements and the neoliberal policy measures discussed in the volume, such as civil service reforms (see the chapter by Schenoni), tax policy (see the chapter by Dopking) or privatization reforms (see the chapters by Bersch; and Camacho and Dargent), we do identify an indirect influence of the neoliberal state on territorial autonomy movements that is related to the spatial reorganization of the state under neoliberalism. The twin imperatives of capital mobility and economic openness  – the core of the neoliberal reform agenda  – have transformed political geography.83 82

83

Coakley defines ethnic outbidding as “a spiraling process of intra-bloc competition in which the traditional party is forced to compete with a new party or parties” where “each claims to be the most effective defender of bloc interests” (Coakley, “Ethnic Competition,” 769). When such an in-between party outbidding occurs between self-professed ethnic parties, we recognize this process as ethnic outbidding. Brenner, New State Spaces.

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Whereas the ISI period was characterized by a spatial project that emphasized administrative uniformity and equalization of skill resources across state territory as key in igniting growth and human welfare, the new contemporary project (post-1980) has been primarily focused on global competitiveness. This has been achieved through customized administration and differential treatment of distinct territories as well as decentralization of authority to subnational units. Seen in this light it is perhaps not surprising that territorial restructuring has been at the roots of recent challenges to established center-region governance arrangements in the three countries. As shown, in Bolivia and Ecuador this took the form of far-reaching decentralization efforts to the municipal level that threatened Santa Cruz and Guayas’ control over state resources. Spain decentralized authority over significant aspects of social and economic policy to the newly created autonomous regions, including Madrid and Barcelonadominated Catalonia, thereby intensifying competition over public investments between these two global cities.84 In addition, our analysis also shows the influence of neoliberal state practices on the manner in which central states and autonomy movements have related to one another. As the chapter by Bersch in this volume explains, neoliberal states use a “powering approach” where political leaders seek to concentrate power in the executive and hence have no need for building coalitions.85 In all three of our cases, even under the self-titled anti-neoliberal governments of Correa in Ecuador and Morales in Bolivia, we find the actions of the central state toward subnational opposition, and vice versa, to befit the powering approach, confirming Bersch’s conclusion that “powering begets powering.” Finally, our study also further unpacks the link between anti-neoliberal protests and intensification of territorial autonomy mobilization. At a first glance, there appears to be a close correlation. As shown by recent research, Bolivia and Ecuador were among hotbeds of mass protests against market liberalization in Latin America,86 while Spain has long been one of the more “mobilized societies” in Europe, culminating in the 2011–2012 anti-austerity protests87. However, as we have shown in this chapter, territorial autonomy movements are not an immediate outgrowth of anti-neoliberal mobilizations. Indeed, the Santa Cruz and Guayas elites heading their respective territorial autonomy movements have in fact sought to preserve neoliberal projects, which they felt came under threat with the election of Morales and Correa. Our cross-regional comparison has instead illustrated that the motivation to seek secession or autonomy tends to be based on specific threats to established territorial governance arrangements, while the capacity to mobilize comes from 84 85 86 87

Jordana, Barcelona, Madrid y el Estado. This stands in contrast to the more gradual “problem-solving” approach focused on coalitionbuilding by developmental states. Silva, Challenging Neoliberalism in Latin America. Ancelovici, “Crisis and Contention in Europe.”

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a reconfiguration of ties between activist networks, political parties, and subnational state representatives. If there is a link, it appears to primarily operate through changes in political language and discursive repertoires brought about by anti-neoliberal protests. bibliography

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Part V CONCLUSIONS

16 Internal Structure of the Neoliberal State Power and Public Policy in Latin America and Spain, 1973–2020 Agustin E. Ferraro, Gustavo Fondevila, Juan José Rastrollo, and Miguel A. Centeno

introduction

To set a context for this book’s conclusions, it is worthwhile to return to the very beginning of our project on state and nation-making in Latin America and Spain. The first volume of this three-book series covered the period of state-building from 1810 to 1930.1 The dominant state model at the time was the modern, bureaucratic state; such an institutional design was the general blueprint for state-building projects during that era. More specifically for the region, the dominant state model can be further defined as the “liberal state.” All national states across the Spanish American world were formed under the inspiration of political principles and practices that historians designate as “Hispanic Liberalism,” which were articulated in the widely influential Constitution of Cádiz, adopted by Spain and by diverse territories of Spanish America in 1812.2 The second volume of the collection examines the rise and fall of the developmental state in Latin America and Spain, from 1930 to 1990.3 In this second period, the regular exchange or transfer of institutional and political models between Spain and Latin American countries, which the literature tends to ignore, continued. The bureaucratic authoritarian states in Latin America, for example, can be shown to be deliberately patterned after the quite successful – in economic terms – system of fast industrial development and authoritarian governance during Francoism in Spain.4 1 2 3 4

Centeno and Ferraro, State and Nation Making in Latin America and Spain: Republics of the Possible. Breña, “Liberalism in the Spanish American World,” 272. Ferraro and Centeno, State and Nation Making in Latin America and Spain: The Rise and Fall of the Developmental State. Ferraro and Centeno, “Authoritarianism, Democracy, and Development,” 409.

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Both state types analyzed in the first two volumes, the modern or liberal state, and the developmental state, are well established as conceptual models in the scholarly literature. In contrast, the idea of the neoliberal state, as a specific institutional formation, tends to inspire more resistance and discussions; some members of the research group working on the present volume expressed the opinion that perhaps we should not take such an institutional model for granted. To address such concerns, in the first section below, this concluding chapter begins by discussing the concept of “internal structure” of the state, which was proposed by the classic German scholar Otto Hintze as the foundational principle for the study of state-building.5 The second section of the chapter compares the cases of Mexico and Chile, often mentioned as progenitors of the neoliberal turn. These two early neoliberal states were imposed by authoritarian regimes. In order to examine the extent to which structural characteristics of neoliberal states originate in authoritarianism, we analyze and compare, in the third section, the institutional configuration of neoliberal regimes consolidated after the wave of democratic transitions, beginning in the 1980s. In the fourth section, in order to define specific components of the neoliberal state, as well as its historical reality as an institutional formation, we compare the developmental state with the neoliberal state across several cases. In this manner, the fourth section tries to answer our initial question: can we find a conceptual and empirical consistency of the neoliberal state as an institutional configuration? At the end of the chapter, in section five, we discuss the impact of state structures on political and public policy strategies that attempt to go beyond neoliberalism. We finish the book with a cautionary note: the institutional model of the neoliberal state seems poorly suited for implementing political, economic, and social programs that aim to overcome neoliberalism. The evidence appears to indicate that one cannot use precisely this instrument to reverse neoliberal public policy reforms.

16.1  power ,

policy , and state structures

In his early writings between 1900 and 1914, Hintze developed the notion of the “internal structure” of the state as a specific configuration of public power that not only is built over time, on account of external circumstances but also according to long-term policy strategies.6 The work of Hintze remained relatively neglected for several decades following his death.7 Only after Charles Tilly 5

6 7

Based on the influence of this conceptualization, and other contributions, Hintze has been described as the “father” of state-building theory (Ertman, “Explaining Variations in Early Modern State Structure,” 24). Hintze, “Staatenbildung und Verfassungsentwicklung,” 163; Hintze, “Machtpolitik und Regierungsverfassung,” 428. Skocpol, “Bringing the State Back In,” 7.

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(1975) introduced his own theoretical perspective on the connection between war-making and state-building, Hintze’s work began to attract wide attention again, and its significance was confirmed by Theda Skocpol’s (1985) programmatic essay on approaches to the state as a subject of research.8 In the essay, Skocpol made clear that Tilly’s model of state-building based on war-making, focusing on geopolitical relations of interstate domination and competition, was directly inspired by Hintze’s studies on the correlation between internal state structures and military organization in Western Europe.9 At the time of Hintze’s writing, dominant views assumed endogenous or deterministic factors as the foundation for the historical configurations of state forms, as well as for their transformations over time. The foremost member of the very influential German historical school of economics, Wilhelm Rosche, proposed a sequence with similarities to the Aristotelian model, postulating a “rule” of historical progression through state forms of aristocracy, democracy, and monarchy.10 Other widespread points of view considered that different state configurations originated in the “national idiosyncrasy” (nationale Eigenart) of diverse peoples.11 A third significant approach to the state represented the “orthodox” social democratic perspective, which took inspiration from Karl Marx. For this approach, as described by Hintze, the state was nothing more than an ideological “reflection” (Wiederspiegelung), entirely determined by the economic structure.12 Although he agreed that economic – and social – factors impact on the development of state institutions, Hintze rejected the orthodox Marxist perspective for being completely one-sided in this regard. For such theories, moreover, the state represents fundamentally an instrument to maintain the status quo. Therefore, the interest of Marxist orientations concentrates on those employing this instrument, that is to say, the dominant classes, or the social formations that enable and support dominant classes. Since the state is only an instrument, its close examination does not seem particularly urgent from a Marxist perspective; the state represents here a derivative, secondary phenomenon.13 During the seventies, another influential perspective in American social science, the methodological orientation of functionalism or structural functionalism, treated the state as a secondary or minor phenomenon as well. Knöbl remarks that the state was considered “suspect” and even “irritating” from a 8

Tilly, “Reflections on the History of European State-Making”; Skocpol, “Bringing the State Back In.” 9 Skocpol, “Bringing the State Back In,” 8. 10 Neugebauer, “Otto Hintze und seine Konzeption,” 41; Hintze, “Machtpolitik und Regierungsverfassung,” 426. 11 Hintze (“Machtpolitik und Regierungsverfassung,” 424) argued that this was a serious misconception, since nationalities are in themselves the product of history 12 Hintze, “Machtpolitik und Regierungsverfassung,” 425. 13 Knöbl, “Staatsbildung und staatliche Gewalt,” 47.

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functionalist perspective since this approach employed much rather the concept of the “political system” as a theoretical framework for the study of public institutions.14 The political system could be seen as a social subsystem among others, and the diverse subsystems could be understood to support together the functioning of a pluralistic society. Such a perspective avoided negative connotations associated with the concept of the state, such as hierarchy, for example, or – even worse – violence. As a result, the state was not only treated as a secondary phenomenon: under the structural-functionalist influence, it was generally neglected as a subject of research in American universities. Hintze was certainly willing to acknowledge that state organizations are the result of economic and social trends, but only to a certain extent; they are not completely determined in this regard.15 From a Hintzean perspective, there is a serious methodological deficiency in deterministic accounts of the state – such as the orthodox Marxist approach – and this deficiency is perhaps even worse with attempts to avoid the concept of the state altogether. By ignoring the state, or by considering the state as a derivative phenomenon determined by economic or social factors, these approaches inevitably overlook what Hintze defined as the “power interest” (Machtinteresse) or “power policy” (Machtpolitik) of states.16 The notion of power interest or power policy understands that the configuration of the state, particularly its internal structure, will be deliberately reformed or recreated as part of the efforts to pursue longterm policy strategies. Hintze was an early defender of the thesis which affirms that wide public policy changes often correspond to institutional innovations. Specific institutional configurations are developed in order to pursue long-term public policy goals, and such configurations tend to consolidate in some cases, if and when those policy goals are maintained during extended periods of time. As can be shown by the study of specific historic processes, once consolidated and stable, institutional configurations result in the formation of state structures. The notions of power interest and internal structure became thus the conceptual foundations for state-building theory, as the study of long-term, goal-oriented processes of institutional innovation with results  – not all of them intended – that accumulate and consolidate over time. Across wide-ranging historical studies, Hintze and Tilly analyzed how European countries began to create since the fifteenth-century professionally trained, permanent bureaucracies.17 One of the main tasks of these bureaucratic institutions came to be the improvement of military organization and efficiency. In particular, the creation of standing armies since the sixteenth century required a dramatic increase in taxation revenues, in order to cover the resulting vast financial costs. As a means to administer and develop effective 14 15 16 17

Knöbl, “Staatsbildung und staatliche Gewalt,” 46. Hintze, “Roschers politische Entwicklungstheorie,” 14. Neugebauer, “Otto Hintze und seine Konzeption,” 40. Hintze, “Der Beamtenstand,” 34; Tilly, Coercion, Capital, and European States, 34.

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taxation systems, professionally trained bureaucracies turned out to be indispensable, and they began to expand continuously. Against this background, the two most successful modern states on the Continent became France and Prussia. As Hintze summarized his thesis, “bureaucracy and militarism depend on each other,” or as Tilly declared, even more pointedly: “War makes states.”18 The work of Hintze originally, and its rediscovery and further development by Tilly, consolidated state-building as a research discipline that examines the internal structures of states, the design and policy goals of such structures, as well as their long-term – intended and unintended – consequences. By the end of the nineteenth century, bureaucratization was most advanced in Germany, and thus the German state, unified under Prussian political leadership and military coercion, became the most successful of the modern political entities on the Continent. Furthermore, as both Hintze and Tilly remarked, modern professional bureaucracies became the dominant class of the German state during the nineteenth century, in charge of public policy decisions at the highest levels, although this development was certainly unintended by the reformers (royal or noble) who had created those bureaucracies in the first place. About the slow but relentless acquisition of the highest levers of power by the bureaucracy in Germany, Hintze observed that “this class became now the actual commanding factor [der eigentliche herrschende Faktor] in the state, since the sharp autocratic character of the eighteenth century made way to a more bureaucratic constitution.”19 Perhaps less emphatically than Hintze, Tilly also remarked that “as rulers created organizations either to make war or to draw the requisites of war from the subject population […] bureaucracies developed their own interests and power bases throughout Europe.”20 Tilly does not affirm categorically that professional bureaucracies acquired dominance over the modern state, but in the same context the American author also quotes favorably Hans Rosenberg, who did state quite forcefully that, by the end of the era of absolutism, Prussian professional bureaucracies “captured control of the central administration and of public policy.”21 For German scholars such as Hintze and Rosenberg, the domination of professionally trained bureaucracies over the highest level of public policy decisions represented a definitory trait of the modern state. Another, not entirely unintended, but nonetheless remarkable consequence of the creation of the modern bureaucratic state was the extraordinary capacity demonstrated by this organizational form to promote economic growth. The German model of state-led capitalism, planned and carried out under the 18 19 20 21

Hintze, “Machtpolitik und Regierungsverfassung,” 430; Tilly, “War Making and State Making,” 170. Hintze, “Der Beamtenstand,” 92. Tilly, Coercion, Capital, and European States, 117. Tilly, Coercion, Capital, and European States, 117.

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leadership of professional bureaucracies, overtook Britain as an industrial power during the first decade of the twentieth century. Certainly, also because of its military success, the German bureaucratic state became an influential international model or blueprint for state-building. Japan began actively to implement and adapt both the internal structure of the modern bureaucratic state, and the economic policies of state-led capitalism, since the Meiji restoration in 1868, and with particular emphasis after the passing of the Japanese constitution of 1889. The dominance of the bureaucracy as the key factor of this internal structure, in Germany and Japan, was the singular role played by civil servants prior to the 1930s. For both Germany and Japan, the imperialistic and belligerent mentality of the military bureaucracy added to its strong influence over political decisions at the top level, ended in national and world catastrophe. Nevertheless, the model of state-led capitalism run by professional bureaucracies, once detached from imperialistic and belligerent orientations as a result of its catastrophic defeat in World War II, went on to achieve remarkable economic results during the post-war decades and became the blueprint for the developmental state. By the 1990s, however, these policies and strategies were abandoned across Latin America and Spain, and the developmental state lost its dominant position as an institutional goal and blueprint. The developmental era came to an end, and neoliberal political strategies and public policies were to acquire their own, long-term impact on institutional configurations. Was a new state model in the making? As Harvey emphasizes, scholarly work on the neoliberal state must avoid wide generalizations.22 Our proposed model applies basically to Latin American cases, and it cannot be extended to other regions without many precautions. Nevertheless, Latin American countries often adopted Spanish legal and institutional models in periods of reform, a practice that remained active – even intensified – during the twentieth century.

16.2  early

neoliberal states in latin america

The academic literature maintains that the first neoliberal state in Latin America was created under the Pinochet dictatorship beginning in 1973.23 In his chapter for the present book, Silva analyzes the political background and the factors leading to such early adoption of neoliberalism in Chile. The military dictatorship was looking for a clear break with the previous, developmental model, a radical public policy change that required sustained elite support. In the following years, neoliberalism in Chile acquired a peculiar resilience, and it came to represent a hegemonic model, not only in the economic sphere, but also as a legal, political, and cultural system. The cultural dimension of 22 23

Harvey, A Brief History of Neoliberalism, 70. El Khoury, Globalization Development, 39; Harvey, A Brief History of Neoliberalism, 7.

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Chilean neoliberalism is further examined by Schild in her chapter for this volume, including a discussion of the impact of neoliberalism on fundamental notions and practices around citizenship and gender. James Cypher introduced the concept of the neoliberal state in his book on economics and politics in Mexico since 1940.24 Cypher was probably the first scholar to discuss the idea consistently; he was the first who went beyond a mere reference to the “neoliberal state” in passing. Cypher proposed a periodization of the Mexican state during the twentieth century, along three stages or models. The third and the more recent stage is described by Cypher as “the neoliberal state.”25 The concept is applied to the national administration of President de la Madrid, 1982–1988, and the author considers also the probability of a consolidation of the neoliberal state under the administration of President Salinas de Gortari, 1988–1994, who was in office at the time of the book’s publication. Cypher’s model, however, does not describe any specific configuration or internal structure of public power under such a regime. The author defines instead the neoliberal state as the application of certain fundamental ideas associated with the economic policies of President de la Madrid. The paragraph where Cypher introduces the concept shows already this – most likely unintended  – transition: instead of discussing the configuration of the new state model, the author switches immediately to the analysis of public policies applied by the neoliberal administration: The neoliberal state is dedicated to an attempt to turn back the clock to the late eighteenth and early nineteenth century centuries when a consolidating form of European capitalism momentarily suggested that the state’s function could be that of a “watchman” keeping the competitive rules of the game and enforcing the sanctity of contracts and other property rights.26

Cypher describes here what the neoliberal state aims to do, but he does not really begin to consider the organization of power factors under such a regime. This description of neoliberalism as a return to laissez-faire economics was relatively common when he wrote his book, but it came to be mostly rejected by scholarly literature in later years. Far from a minimal state that would enable free markets to prosper more or less by themselves, as laissez-faire economics advocated, a series of studies demonstrated that the neoliberal project involves a reengineering or redeployment of the state.27 This is amply confirmed, in the specific case of Mexico, by Knight’s chapter for the present volume. As Knight observes, contrary to certain received opinions, the role of the state in the successful Mexican developmental model of the 1950s and ’60s was quite limited, but neoliberal economic policies required substantial state intervention, and this led to political decisions and programs that aimed specifically at strengthening the state. 24 25 26 27

Cypher, State and Capital in Mexico. Cypher, State and Capital in Mexico, 13. Cypher, State and Capital in Mexico, 13. For a summary of this literature see Hilgers, “The historicity of the neoliberal state,” 80.

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In both Chile and Mexico, neoliberal states were created under authoritarian regimes, either the military dictatorship of Pinochet or the regime of one-party rule under Partido de la Revolución Institucional (PRI) in Mexico. Therefore, central characteristics of early neoliberal states could have been the result of authoritarianism as a mode of governance, and not so much of any specific organization of power that corresponds generally to neoliberalism. The two central characteristics of these early neoliberal states were, on the one hand, strong concentration of authority in the executive power, and on the other hand, the presence of a very influential team of public policy experts at the top level, isolated not only from the regime’s internal political struggles but also from any kind of external influence.28 Centralization of power within the presidency was only to be expected of the Pinochet dictatorship in Chile since the concentration of power can be considered a defining characteristic of any military dictatorship. But the Chilean regime was not yet another example of uniformed caudillismo. The team of economic advisors working for the military dictator Pinochet was famously called “the Chicago Boys,” because several of its members have been trained at the Department of Economics of the University of Chicago, under the influence of Milton Friedman, and they were all men. As was observed by Valdés in his work on the Chicago School in Chile, the economic team was convinced that it had to maintain a high degree of autonomy, not just from the political sphere, but also from any organized interest group in society whatsoever.29 As a result, their style of policymaking was relatively unusual, since it did not seek any kind of consultation with economic or social actors. As a non-economist minister remembered years later, during an interview conducted by Montecinos, the “economists did not receive anybody. They did not inform nor did they convince.”30 Such a style of policymaking, carried out by experts without any consultation with economic or social actors, reached “unprecedented levels” in Chile at the time, according to Silva.31 A strong centralization of authority in the executive power was also a marked development of the Mexican administration under Salinas de Gortari, 1988–1994. Although the regime of one-party rule in Mexico was under the control of the federal executive from the beginning, the concentration of power at the top during Salinas’ administration has been also described as “unprecedented.”32 In the specific case of Mexico, therefore, the centralization of power during the neoliberal regime was not – or not only – a mere result of the authoritarianism of one-party rule in the country, it was a relatively new phenomenon. Furthermore, such centralization and concentration 28 29 30 31 32

Centeno and Silva, “The Politics of Expertise in Latin America: Introduction.” Valdés, Pinochet’s Economists, 161. Montecinos, Economists, Politics and the State, 66. Silva, State Capacity, Technocratic Insulation, 36. Torres, Bureaucracy and Politics in Mexico, 180.

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of power were implemented together with the isolation of a team of expert advisors at the top level. The authoritarian neoliberal regimes in Chile and Mexico exhibited thus a similar organization of power. In his classic study of the neoliberal era in the latter country, Centeno described a transformation of the style of policymaking at the top central executive, which affected also the organization of federal power.33 Once the team of economic experts under Salinas took overall command of the central state, the configuration of key policy-making bodies was modified, in order to secure their isolation from external economic and social actors. Federal cabinets before Salinas, for example, used to be “political mosaics in which various groups were represented and formed a synthesis of interests, styles, ambitions, and talents.”34 This previous configuration of the federal cabinets did not exclude the involvement of diverse economic and social actors in public policymaking, on the contrary, the preservation of such an involvement seemed to be exactly the goal of institutional design. After the neoliberal economists took power, however, their dominance over public policy became a “practical monopoly.”35 The concept of “insulation” could be misleading to describe the configuration of power once the neoliberal regime was in place, according to Centeno, because the goal of the institutional design was actually to secure a “splendid isolation” for the policy-making team.36 Such “technocratic isolation” meant, as in the case of Chile, that the economic team had the capacity to take major public policy decisions without any consultation whatsoever with relevant social and economic actors. The phenomenon of technocratic isolation cannot be explained just by the fact that these governments were not democratic. Previous political orientations in Latin America and Spain, very much including authoritarian or military regimes, never sought the isolation of their public policy teams as a matter of organizational design. As Centeno observes, “there is a critical difference […] between insulation and isolation.”37 A certain insulation of the policy-making team, in previous power configurations, was considered necessary to secure the relative autonomy of government institutions, but this same autonomy was “embedded,” as classically defined by Evans for the developmental state, both democratic and authoritarian – Korea during the seventies was the typical and successful example of the latter.38 The embedded autonomy of the developmental state referred to the fact that government actors, in the developmental model, actively sought to maintain networks of 33 34 35 36 37 38

Centeno, Democracy Within Reason. Centeno, Democracy Within Reason, 106. Centeno, Democracy Within Reason, 107. Centeno, Democracy Within Reason, 257. Centeno, Democracy Within Reason, 35. Evans, Embedded Autonomy, 53.

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communication and cooperation with economic and social actors. The relative bureaucratic insulation or autonomy in previous state configurations did not represent a systematic and purposeful lack of consultation and cooperation with relevant actors, as was the case with public policy teams under Pinochet and Salinas in the neoliberal model. The institutional design that aims at such purposeful lack of consultation and cooperation with economic and social actors can be characterized under the concept of “technocratic isolation,” and it represents a significant new dimension of the internal structure of the early, authoritarian neoliberal state.

16.3  neoliberal

states and democratic transitions

Were the unprecedented concentration or centralization of power within the presidency, and the complete isolation of public policy teams characteristics specific to military or authoritarian regimes? This does not seem to be the case: soon enough after the wave of democratic transitions beginning in the 1980s, elected administrations in Argentina, Peru, and other Latin American countries were showing the same two elements or components of early neoliberal states. As a matter of fact, the same two elements of neoliberal state-building were also present in Spain, under the administration of Felipe González, 1982–1996 and the neoliberal reforms in Spain were being used as a blueprint for Latin American countries since the early 1990s.39 The Spanish model served as an inspiration not only for its economic policies but also particularly regarding the “political economy” of neoliberal reforms, which corresponds to the means and strategies for securing stable political support for long-term government programs. In this sense, the Moncloa Pacts of 1977 in Spain were widely discussed in Latin America as a model for political negotiations and broad social compromises that could provide a stable political basis for economic reform processes.40 Argentina was one of the first cases of a democratic administration that carried out extensive neoliberal reforms in Latin America. Before embarking on the reform program, however, the administration of Carlos Menem, 1989–1999, actively sought and secured a major concentration of power in the executive. According to Graham et al., the resulting centralization was so strong that it changed significantly the “balance of power between the three branches of government.”41 The executive assumed the capacity to legislate by decree as a regular practice, which had been only sporadic in the past; furthermore, the executive took political control of the Supreme Court by increasing its members from five to nine, appointing four new members committed to the administration’s neoliberal reforms, thus securing a 39 40 41

Forteza and Tommasi, “On the Political Economy of Pro-Market Reform,” 209. Grugel, “Spain and Latin America,” 142. Graham et al., Improving the Odds, 13.

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regular majority.42 In contrast to the previous neoliberal regimes in Chile and Mexico, the centralization of power in Argentina was a democratic decision, not only because the administration won fair presidential elections in 1989, but also – perhaps more decisively – because the legislation authorizing the executive to take control of the three branches of government was passed in Congress by ample majority, following a broad political agreement between the government and the main opposition party. According to the general trend of institutional transfer or isomorphism mentioned earlier, the inspiration and model for this political agreement in Argentina, as confirmed by local political actors at the time, were the Moncloa Pacts of 1977 in Spain.43 As regards the second characteristic of neoliberal state-building, the technocratic isolation of public policy teams, this phenomenon was also unusually strong during the Menem administration. According to Teichman, Argentina’s economic policy “never had […] become so insulated not only from societal forces […] but it was now resistant to pressures from other areas within the state, including the presidency.”44 The isolation of policymaking from political and social influences was so complete that members of the public policy team described their working environment at the time as “laboratory conditions,” a term usually understood to mean that no outside interferences whatsoever were allowed.45 Centralization of power was a well-known phenomenon during the democratic administration of Alberto Fujimori in Perú, 1990–2000, which also applied a comprehensive neoliberal program. In order to achieve a strong concentration of power in the presidency, the administration carried out a “drastic administrative reform.”46 Hampered by legislative opposition in the first two years of its term, the administration took an open authoritarian turn: Congress was closed, and the President ruled by decree for several months in 1992. Nevertheless, the administration was able to maintain popular support, and Fujimori won democratic reelection by a substantial majority of votes in 1995.47 The style of public policy decisions under Fujimori has been described as “exclusionary” or even “hermetic.” Economic public policy was put in charge of a completely isolated team of economic experts. Even if neoliberal reforms were supported by International Financial Institutions at the time, the economic team acted independently of international influences – their reforms were even more radical than those advocated by such institutions. The

42 43 44 45 46 47

Teichman, The Politics of Freeing Markets, 120. Viguera, La trama política de la apertura, 159; Bambaci et al., “La economía política de las reformas,” 515. Teichman, “Mexico and Argentina,” 47. Quoted in Brooks, “Globalization and Pension Reform,” 170. Weyland, The Politics of Market Reform, 144. Stokes, Mandates and Democracy, 144.

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isolation of the economic team was preserved in regard to all kinds of national actors, including the business groups otherwise sympathetic to the reforms, and these groups in particular complained to the President about the economic team’s indifference to their points of view.48 In sum, by the early 2000s, the two characteristics of the organization of power under neoliberal regimes, discussed above, were being observed across several democratic regimes in Latin America, such as the two cases just considered, Argentina and Perú. Moreover, the concentration of authority in the executive power, and the isolation of public policy teams were described by the literature for the cases of the three Central Andean countries, Bolivia, Ecuador, and Perú.49 Similar phenomena of concentration of power and technocratic isolation were also examined by Teichman for the cases of neoliberal regimes in Argentina, Mexico, and Chile, after the democratic transitions in the three countries.50 Weyland analyzed concentration of power and technocratic policymaking in the cases of Argentina, Brazil, and Perú, with particular emphasis on the technocratic “narrowness” of policymaking in Brazil under Collor, whose democratically elected administration ignored – and thus antagonized – almost every single relevant economic and social actor in the country.51 Finally, Elliot Armijo and Faucher described concentration of power and technocratic isolation as general characteristics of democratic administrations aiming at neoliberal market reforms in Latin America.52 To conclude, concentration of power and technocratic isolation were clearly not just the result of authoritarianism as a mode of governance. The two characteristics appear instead to reflect a specific configuration of public power under neoliberalism, both in authoritarian and in democratic regimes. The Spanish case confirms in part these observations. Central state power during the neoliberal era in Spain revealed similar organizational features compared to the Latin American cases  – with some significant exceptions. Strong centralization of authority at the top national executive was established before the beginning of neoliberal reforms, during the administration of Prime Minister Felipe González, 1982–1996. As noted by Biezen, “the dominance of Felipe González in Spanish politics during his 14 years in office was such that it spawned the term ‘felipismo,’ and his predominance within the PSOE was such that it enabled him to make the party embrace positions it had previously opposed.”53 One of the most relevant of such public policy positions, which was strongly opposed by the left wing of 48 49 50 51 52 53

Dargent, Technocracy and Democracy in Latin America, 99. Conaghan and Malloy, Unsettling Statecraft, 21, 225. Teichman, The Politics of Freeing Markets, 161, 194. Weyland, The Politics of Market Reform, 64, 145, 163. Elliot Armijo and Faucher, “We Have a Consensus,” 60. Biezen, “Party Development in Democratic Spain,” 34.

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the Spanish Socialist Party (PSOE) – a substantial fraction at the time – was precisely the program of neoliberal reforms.54 As in the Latin American cases, therefore, a strong concentration of authority at the top national executive was a key characteristic of the organization of power required to implement neoliberal reforms in Spain. Moreover, as previously mentioned, not only the Spanish “political economy” of comprehensive economic reforms in democracy was seen as a source of inspiration for political transitions in Latin America, but also, and more specifically, the neoliberal economic program of the administration of González was closely followed by Latin American political actors, and considered similarly as a model.55 The second feature of the neoliberal organization of power was also present in Spain, but with a significant difference: policymaking was isolated in so far as its autonomy was protected from political interference by the left wing of the PSOE, or from interference by any other political sector inside the party, and even protected from interference by other members of the executive. However, policymaking was definitely not made in isolation from economic and social actors. As pointed out by Celso, for “some observers, the González period represented the flowering of technocratic government in Spain.”56 The concentration of power in the premier was deliberately oriented toward securing the autonomy of the economic team, and therefore, “the neoliberal heads of the economic ministries were strongly and consistently supported by an economically amateurish premier who was in turn insulated from the political pressures of the ruling party through […] formal and informal institutional architectures.”57 Nevertheless, while its autonomy was protected from political interference, the team of experts in charge of economic policy maintained strong ties to captains of industry and banking.58 Accordingly, significant decisions of economic policy were implemented in consultation with economic actors. Industrial policy is a case in point. A long-term strategy related to specific key industries in Spain involved fostering competitiveness, providing financial support, and protecting with tariffs those sectors considered promising and capable of succeeding in external markets. This was a typical example of classic developmental industrial policy. The strategy was conceived in 1966–1967 by the Ministry of Industry, and by a further key economic player at the time, the holding of publicly owned industries INI (Instituto Nacional de Industria). The developmental program was defined and implemented in rounds of consultation and coordination with economic actors, and it became very successful, reaching increasing milestones 54 55 56 57 58

Ban, Ruling Ideas, 50. Buffington and Caimari (eds), Keen’s Latin American Civilization, 242. Celso, “Neo-Liberal Renovación,” 145. Ban, Ruling Ideas, 49. Ban, Ruling Ideas, 41.

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of industrial productivity and exports from 1973 to 1996.59 After the democratic transition, and the beginning of the Socialist Party administration under González, the continuity of this same developmental policy was assured by the fact that basically, the same team of experts remained in charge. The first two economic ministers of the González administration, Boyer and Solchaga, in office from 1982 to 1993, had begun and developed their careers at INI in the 1970s.60 In his chapter for the present volume, Döpking shows another key government area in Spain, the fiscal and tax system, which was characterized by the implementation of long-term public policies completely at odds with neoliberal principles. This is a significant historical and political phenomenon, as Döpking further indicates, which the international literature on Spanish politics and economics has mostly missed. Since the beginning of the transition, with the Moncloa Pacts of 1977, a broad political consensus established progressive taxation as the central pillar of Spanish fiscal policy. While other public policy areas corresponded more closely to the neoliberal paradigm, taxation became thus increasingly progressive during the following years, both under socialist and conservative administrations. Again, the crucial structural component for such policy continuity – and success – was the preservation and strengthening of a strongly meritocratic, non-partisan state bureaucracy in the area of fiscal policy, after the democratic transition. With a leading role in public policy formulation and implementation, the professional state bureaucracy was able during the following decades not only to increase the progressivity of the tax system but also its efficiency, according to such fundamental measures as the ratio of tax revenues to GDP.61 This measure, precisely, doubled since the end of the Franco regime and kept growing steadily until the financial crisis of 2008, recovering its upward progression after the crisis (see the chapter by Döpking in this volume). In the next section, the organization of public power under neoliberal regimes will be further compared to the institutional model of the developmental state. The two models present substantial differences as regards institutional design and the practical application of state power. The comparison will also address the question raised as a theoretical problem in this chapter’s introduction: can the two institutional components of neoliberal organization of power, analyzed above for diverse Latin American cases and for Spain, be considered as defining elements of a state-building project? After all, the concentration of power in the executive, and the isolation of a team of economic advisors seem rather intuitive strategies for any government that intends to carry out a broad program of reforms. To what extent can we postulate a specific state-building model under neoliberalism? 59 60 61

Ferraro and Rastrollo, “Life is a Dream,” 188; Catalan and Fernández-de-Sevilla, 216. Ban, Ruling Ideas, 42; Etchemendy, Models of Economic Liberalization, 168. Torregrosa-Hetland, “Tax System and Redistribution,” 7.

Internal Structure of the Neoliberal State

16.4  developmental

509

and neoliberal state structures

Time and again throughout the history of Latin America, political actors have shown their commitment to new state-building projects. Innovative designs and practices for the organization of public power were often adopted and tried extensively. This happened not only under neoliberal regimes but also during the previous, developmental era. As early as 1939, the region’s first and historically most prominent public agency for economic development was created in Chile, under the name of CORFO (Corporación de Fomento de la Producción). The agency was tasked with the ambitious goal of creating and implementing a “general plan” for the promotion of “national production” in the country’s main economic areas, including mining, industry, agriculture, and commerce.62 CORFO was very successful during the following decades, and its work was crucial for Chile’s substantial economic growth during this period. The agency represented the backbone of the Chilean developmental state. However, with regard to institutional design, the role of CORFO as a component of the state structure in Chile showed markedly different characteristics compared to the internal structure of the neoliberal state described in the previous section. The creation of the Chilean agency did not contribute to the concentration of power in the executive, the opposite was the case. The agency was the result of a political compromise between the government and the opposition, and it was created as an independent bureaucratic organization, explicitly not under the authority of the executive power.63 CORFO was designed to play a key function as the central planning and implementation agency for vast development projects in the country. Therefore, its influence became substantial in Chilean economic and public life. According to Ibáñez, the “true seat of government, after 1939, were the offices of CORFO.”64 Rather than the concentration of power in the executive, therefore, a major decentralization of power was put into effect with the creation of CORFO, since very significant public policy areas were now in charge of non-partisan experts at the agency’s top management positions. Their political independence was protected by the legal design of CORFO, and by Chilean political culture at the time.65 As regards the second characteristic of the internal structure of the neoliberal state described above, technocratic isolation, this was never part of CORFO’s institutional design and practices, once again the opposite was the case. First of all, at the highest decision levels, the Chilean agency was 62 63 64 65

Centeno and Ferraro, “With the Best of Intentions,” 78. Centeno and Ferraro, “With the Best of Intentions,” 77; Silva, “The Chilean Developmental State,” 296. Ibáñez, Herido en el ala, 92. Cavarozzi, The Government and the Industrial Bourgeoisie in Chile, 126; Ibáñez, Herido en el ala, 160.

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in charge of a board with twenty-one members, who appointed the agency’s managing director (vicepresidente ejecutivo). The board was composed of representatives of diverse political, economic, and social actors, among them representatives of national business associations, four members appointed by the national Congress, representatives of banks, of the national association of engineers, of the national workers’ federation, and of other political actors, including three representatives of the executive power – the ministers of economy, development, and agriculture.66 Although the Economy Minister was president of the board, the appointment of the managing director required a majority of two-thirds of the members, and thus the plural composition of the board was not merely symbolic. The board’s design encouraged the involvement in major public policy decisions of the economic, political, and social actors represented. Secondly, at the level of public policy implementation, CORFO promoted the participation of local actors by providing financial and technical support to small firms – cooperative societies – formed by workers and farmers in areas such as electrification, agriculture, fishery, and mining.67 The participation of local actors was subsequently promoted to the level of public policymaking, and by 1964 a national representative of cooperative societies was also included as a regular member of the directing board of CORFO.68 In summary, the Chilean development state displayed the opposite of the two characteristics that correspond to the configuration of public power under neoliberal regimes. Instead of concentration of power in the executive, the creation of the Chilean national developmental agency CORFO resulted in major decentralization; and instead of technocratic isolation, the developmental model promoted the participation of diverse economic, political, and social actors in public policymaking, and of local actors, such as small business firms, in public policy implementation. It must be observed that the internal structure of the Chilean developmental state was not exceptional, it represented a general trend of institutional design at the time. In his influential work on the Chilean developmental state, Pinto stated that, among other international blueprints, the creation of CORFO was “particularly” inspired by the “great energy and global project of the Tennessee Valley.”69 The author refers here to the Tennessee Valley Authority (TVA), created in 1933, one of the most emblematic among the public agencies that carried out the New Deal’s vision for economic and social modernization in the United States. The organizational design of CORFO showed clear similarities to the design of TVA. Both institutions were established as public corporations, and they were in charge of independent directing boards, which 66 67 68 69

CORFO, “Crea la corporación de reconstrucción.” Benecke, El movimiento corporativo en Chile, 15, 25; Ortega et al., CORFO: 50 años, 85, 99. Ortega et al., CORFO: 50 años, 182. Pinto, “Estado y gran empresa,” 23.

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appointed in both cases a chief executive officer or executive vice president with similar management authority.70 The fact that TVA was an influential blueprint for the institutional design and public policy strategies of CORFO can be established with certainty. It has been documented that “a number of engineers and technicians” of CORFO visited TVA “during the first years” after the creation of the Chilean corporation, and some of them remained at TVA for periods of 6 to 12 months.71 Chile’s President Gabriel González Videla visited the United States in 1950, and he spent two days at TVA’s headquarters in Knoxville, Tennessee.72 In the following years, the influence of TVA as an institutional model extended to other Latin American countries, including Perú, México, Brazil, and Colombia.73 In the last volume of his classic trilogy on economic development, Hirschman pointed out that no development project seemed acceptable in Latin America by the 1960s, unless its blueprint was the Tennessee Valley Authority, and if possible, the project was expressly certified by David Lilienthal.74 Lilienthal had been a long-time director of TVA, from its creation in 1933 until 1946, and he was described as one of the leaders of the New Deal that better articulated the movement’s confidence and optimism. Lilienthal’s best-seller book TVA: Democracy on the March, published in 1944, was described as a “manifesto that expressed the scale and scope of New Deal liberalism.”75 70 71 72 73

74 75

TVA, “Tennessee Valley Authority Act”; CORFO, “Crea la corporación de reconstrucción.” TVA Technical Library, “TVA as a Symbol,” 29. Watson, “Visita del Excelentísimo Señor”; González Videla, Memorias, 884–85. In 1943, the Santa Peruvian Corporation (Corporación Peruana del Santa, CPS) was established as a “grand state corporation” for regional development in Perú, following the model of TVA, as was pointed out by members of Congress at the time (Orihuela “One Blueprint, Three Translations,” 125). President Miguel Alemán of Mexico visited TVA in 1947 (The Times Recorder, April 10, 1947), and in the next years four regional commissions were created in Mexico according to the blueprint of TVA: the Papaloapan, Tepalcatepec, Fuerte and Grijalva River Commissions (Barkin and King, Regional Economic Development, 93; Cole and Mogab “The Transfer of Soft Technologies,” 311; Robinson, “Transformative Possibilities,” 80). Brazil’s Comissão do Vale do São Francisco (CVSF), created in 1948, also followed the institutional design and public policy models of TVA, as was noted during the parliamentary debates leading to the creation of the Brazilian agency (Hirschman, Journeys Towards Progress, 53). During 1954 and 1955, a former director of TVA traveled several times to Colombia for consultations on the design of a regional developmental agency, the Cauca Valley Corporation, which was created in 1955 closely following his proposals (Neuse, David E. Lilienthal, 261–62). Hirschman, Development Projects Observed, 19. Smith, Building New Deal Liberalism, 255. The concept of economic development became established with the creation in 1944 of the International Bank for Reconstruction and Development (the World Bank), and Truman’s “Four Point Program,” announced with his inaugural address in 1949. Truman’s address was the first time on record that development was defined as a dynamic process and contrasted to “underdevelopment” (Rist, The History of Development, 73). Truman’s notion of development was explicitly based on the TVA experience, his proposals for vast programs of foreign assistance were oriented towards the creation of similar developmental agencies in less developed regions of the world (Ekblad, The Great American Mission, 99).

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The institutional design of TVA, as was the case with CORFO and other developmental agencies created following their influence, reveals again the opposite of the two characteristics that shape the internal structure of the neoliberal state. Instead of the concentration of power in the executive, the creation of the American development agency represented a significant decentralization. The independence of the TVA board of directors from the executive power was assured by two well-known mechanisms in American political practice, staggered long terms of tenure, and appointment with advice and consent of the Senate.76 The independence of TVA from partisan politics was further consolidated during the decades following its creation.77 Similarly to CORFO, instead of technocratic isolation, the institutional model of TVA was aimed at embeddedness. For public policymaking, TVA organized regular networks of consultation with federal departments, state authorities, businesses and professional associations, unions, and other organizations. One example of such networks was the Tennessee Valley Trades and Labor Council, a permanent meeting and cooperation agreement, conformed by TVA representatives, representatives of fifteen unions, and other members.78 However, in contrast to CORFO, the directing board of TVA was composed of just three members during the developmental era, without including representatives of non-state organizations. As we mentioned before, CORFO’s board did include several representatives of non-state actors such as banks, businesses, and professional associations, and they were encouraged by the institutional design to take part in major public policy decisions. In the case of TVA, the strength and focus of the agency were rather located at the implementation level, and here the participation of non-state actors was more actively encouraged. In fact, the agency had an early pioneering role in promoting the practice of citizen’s participation in the implementation of public policy. In his book quoted above, Lilienthal formulated for the first time the notion of participatory public policy, proposing the concept of “grass-roots administration” as the articulation between public policymaking and democratic practices. The book describes the experiences of TVA such as vast programs of cooperation with, for example, farm associations.79 As mentioned earlier, cooperation with farmers and workers’ cooperatives was also a public policy approach applied extensively by CORFO in Chile. TVA put special emphasis on “grass-roots administration,” because this ideal principle was considered the “official doctrine” of the agency.80 The institutional design of TVA and CORFO corresponds quite closely to the central features of the developmental state that Evans was going to 76 77 78 79 80

Barkow, “Insulating Agencies,” 20, 29. Breger and Edles, Independent Agencies, 195. Selznick, TVA and the Grass Roots, 39. Lilienthal, TVA. Democracy on the March, 80. Selznick, TVA and the Grass Roots, 45.

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define, a few decades later, as “embedded autonomy.” Evans based his definition explicitly on Japan, which he characterized as the “archetype” of the developmental state, and his analysis followed the seminal study of Japanese industrial policy by Johnson.81 Nevertheless, Evans also pointed out that his definition of the developmental state could be understood as the “sophisticated implementation” of ideas that had been already examined by Hirshman in the latter’s research on developmental projects in Latin America.82 In any case, it was interesting for Johnson and Evans to base their definition of “developmental state” on Japan, since the country was considered, at the time, the most successful example of long-term developmental strategies. Evans further discussed in his book the cases of Brazil and India, but only as “intermediate” states, which did not correspond exactly to the “ideal type” of the developmental state, since they exhibited only “partial and imperfect approximations of embedded autonomy.”83 As defined by Evans, autonomy corresponds to the idea that an organization is “capable of independently formulating its own goals.”84 The definition follows Johnson’s examination of the Japanese Ministry of International Trade and Industry (MITI), which was the key agency for formulating and implementing developmental strategies in the country.85 The autonomy of MITI implied, first of all, that public policy decisions were in charge of long-term career civil servants, and protected from any interference by the administration of the day. In fact, bureaucratic autonomy was so strong in the Japanese model, that Johnson described the contrasting roles of senior civil servants and politicians using the analogy between “reigning” and “ruling” in parliamentary monarchies. Although the minister, as a politician, was theoretically – or symbolically – the “reigning” authority at MITI, all management and public policy decisions were taken by the effectively “ruling” top career civil servants.86 As mentioned in section one above, the dominance of the professional bureaucracy on public policy decisions had been a characteristic of German and Japanese institutional practices since the nineteenth century. Similarly to TVA and CORFO, therefore, the institutional design of MITI represented a substantial deconcentration of authority, since the agency could formulate its own goals and policies independently of the ministers that formed the executive power. Secondly, autonomy was the basis for a related, and crucial element of design, which Evans particularly emphasized: the strictly professional, or meritocratic, system of recruitment and promotion for career civil

81 82 83 84 85 86

Evans, Embedded Autonomy, 47; Johnson, MITI and the Japanese Miracle. Evans, Embedded Autonomy, 48; Hirschman, Journeys Towards Progress; Hirschman, Development Projects Observed. Evans, Embedded Autonomy, 13. Evans, Embedded Autonomy, 50. Johnson, MITI and the Japanese Miracle. Johnson, MITI and the Japanese Miracle, 322.

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servants at MITI.87 This element was of special interest to Evans due to the pervasive character of political clientelism in Latin America and other regions; such political clientelism was often a factor for the underperformance of developmental institutions, compared to the successful case of Japan.88 In fact, political clientelism, the massive appointments to public service positions based on political loyalty instead of merit, has been the Achilles heel of many developmental projects in Latin America. Bureaucratic autonomy has been rarely consolidated or even intended in Latin America, although CORFO was certainly and exception, at least during its most successful two first decades of operation.89 Finally, the second element or feature that defines the developmental state, according to Evans, corresponds to the “embeddedness” of public institutions in a “concrete set of social ties,” which become further consolidated by means of “institutionalized channels for the continued negotiation and renegotiation of goals and policies.”90 Embeddedness, in other words, refers primarily to regular communication and consultation with economic and social actors for public policy discussions. MITI was naturally focused on the goal of industrial growth, and therefore it promoted communication and consultation with economic actors, especially with representatives of industrial capital. However, as Evans shows in his research, the cultivation of “links with other social groups, like labor” leads to a more robust and effective type of embeddedness, beyond the Japanese case.91 Evans did not explicitly distinguish embeddedness in terms of public policymaking, on the one hand, and consultation with social actors for implementation, on the other hand, since his model or archetype, the Japanese MITI, was not particularly focused on implementation at the field level – more on this below. In terms of institutional design, both the American TVA and the Chilean CORFO match closely the Japanese-based definition of developmental state provided by Evans: both agencies in North and South America were certainly capable of independently formulating their own goals, since they were designed in order to be independent of the executive power, and placed under the leadership of non-partisan, expert management. The agencies’ institutional design and practices, moreover, promoted regular communication and consultation with economic and social actors, for public policymaking and for implementation. In summary, the internal structure of the developmental state shown by the cases of TVA and CORFO diverges strongly from the configuration of public power under neoliberal regimes, which is based on the concentration of power and technocratic isolation. The basic elements of institutional design contrast along specific stages or phases of the exercise of public power, 87 88 89 90 91

Evans, Embedded Autonomy, 50; Johnson, MITI and the Japanese Miracle, 52. Evans, Embedded Autonomy, 61. Centeno and Ferraro, “With the Best of Intentions.” Evans, Embedded Autonomy, 12. Evans, Embedded Autonomy, 17.

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table 16.1  Internal state structures – developmental and liberal State Types Stages (phases) of power exercise

Developmental State

Neoliberal State

1. Power Organization

Deconcentration (bureaucratic autonomy)

Concentration (executive dominance)

2. Power Distribution

Embeddedness

Technocratic Isolation

3. Power Enforcement

Coalition building (compromise – persuasion)

Powering (expertise – political will)

Source: own elaboration

which we categorize following a simplified model of stages in the public policy cycle.92 The comparison is shown as a conceptual graphic in Table 16.1. The first row of the table shows the organization of power at the top level of government, that is to say, the allocation of decision-making authority over public policy. The establishment of emblematic developmental institutions, such as CORFO, TVA, or MITI, resulted in state structures where such authority was effectively deconcentrated. The highest authority over public policy decisions, in the developmental state type, is delegated to a separate institution, the developmental agency, which remains independent, not subordinated to the executive power. In his definition of the developmental state, Evans describes such independence from political power as “bureaucratic autonomy.”93 By contrast, the neoliberal state concentrates public policy authority on the executive power from the beginning. Granted that a team of technocratic experts provides key public policy advice, nevertheless, the executive power retains full authority over major decisions. The team of experts can be very influential, such as the “Chicago boys” in Chile, but they do not have any separate institutional or political power, they do not form a separate government agency, nor do they try to build their own political constituency  – as was characteristic instead for developmental agencies. Under a neoliberal state structure, the policy-making role of the team of expert advisors remains strictly subordinated to the head of the executive. The second row of the table shows the possible share or distribution of power, according to the different state types, between state organizations and non-state actors. As previously discussed in this section, developmental institutions typically integrated diverse economic and social actors in public policy decisions. This was a regular practice at MITI in Japan, for example, where all 92 93

Hill and Varone (eds), The Public Policy Process. Evans, Embedded Autonomy.

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major decisions included consultations with representatives of industrial capital. In a case such as CORFO, moreover, such consultation was institutionalized, since the board of the agency included permanent representatives from non-state actors such as banks, business groups, labor unions, and professional associations. Evans described such practices of consultation with non-state actors as embeddedness, and he considered this as a further definitional component of the developmental state.94 In comparison, at the top level of the neoliberal state, the team of experts that provides decisive public policy advice remains purposefully isolated. Non-state actors are not only excluded from public policy discussions with the team of experts, any input or communication from “the outside” will be actually prevented, and even consultations with other areas of government remain excluded, at least in principle. The isolation of the team of high-ranking experts providing advice to the executive power remains so strong that, in a case such as Argentina, their work was described as taking place under “laboratory conditions,” and relatively similar characterizations have been applied to other cases in Latin America.95 Finally, the third row of the table shows the diverse organizational styles and political strategies for the implementation or enforcement of public policy decisions. We can observe again very clear differences between the developmental and the neoliberal state types. The developmental state in Chile has been characteristically described in the country as a “state of compromise.”96 The national developmental agency CORFO was created as the result of a political negotiation between the center-left administration and the conservative opposition. The political independence of the agency, the fact that it was not under the control of the executive power, represented for the conservative opposition a major reason – a precondition – in order to support a legislative proposal creating such a powerful institution.97 In the early thirties, a similar kind of political compromise secured bipartisan support for the creation of the developmental agency TVA in the United States, and the established reputation of TVA as a non-partisan agency was instrumental again in ensuring key legislative sanction for its public financing in the late fifties.98 The search for wide political support was not only typical at the moment of the creation or consolidation of developmental agencies, the implementation of public policy was also characterized by a consensus-seeking approach at the field level. Both TVA and CORFO promoted the participation of grassroots movements in public policy implementation, actively supporting the creation and interaction with farmers’ associations or cooperative associations in 94 95 96 97 98

Evans, Embedded Autonomy. Brooks, “Globalization and Pension Reform,” 170. Silva, “The Chilean Developmental State,” 293. Silva, “The Chilean Developmental State,” 296. Wildavsky, “TVA and Power Politics.”

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diverse areas.99 As mentioned earlier, Lilienthal, long-time director of TVA in the thirties and forties, proposed the notion of “grass-roots administration,” as part of his own contribution to the articulation of public policy and democratic practices.100 Neoliberal governments have employed a very different approach to the implementation or enforcement of their public policy decisions. In the present volume, Bersch defines the strategies and organization of neoliberal public policy implementation as “powering reforms” or simply “powering.” Powering reforms, under neoliberalism, adopt comprehensive change as their goal, and attempt to advance such change swiftly, often employing economic or financial crises as “windows of opportunity.” Assuming that vested interests support the status quo, powering strategies seek to act before opponents have time to organize against the implementation of reforms. The isolation of the team of experts that designs the reforms, and plans their implementation, added to the concentration of decision-making authority in the executive power, represent key institutional resources for the success of powering reforms in terms of implementing fast public policy changes. However, the sustainability of such changes can become problematic afterward, as also shown by Bersch in her chapter for the present volume – more on this below. To conclude with this section, we return to the question asked at the beginning of the chapter: can we consider that the neoliberal state represents an institutional model as distinctly defined as the developmental state? We advance now a positive answer, based on three theoretical and empirical considerations. First of all, public institutions under neoliberalism present specific, and innovative organizational forms, their design embodies generally a break with past models. The new organizational forms emerge clearly since the middle 1970s and early 1980s, both in authoritarian and – later on – democratic 99 100

Benecke, El movimiento corporativo en Chile, 15, 25; Ortega et al., CORFO: 50 años, 85, 99. Lilienthak, TVA. Democracy on the March, 80. It must be observed, however, that the New Deal coalition had begun to unravel after World War II, when southern members of the Democratic Party started to perceive the economic and social progress, which resulted from public policy programs carried out by federal agencies, as a threat to the system of white racial hegemony in the South (Katznelson, Fear Itself, 16, 474; see also Ferraro and Centeno, “Authoritarianism, Democracy,” 418). The New Deal coalition had been a Faustian bargain in this respect, because it involved a partnership with those in the South who practiced and preached white supremacy (Katznelson, Fear Itself, 17). The operations of the Tennessee Valley Authority, described at the time by the Washington Post (“The New Dealers,” 3) as the country’s “greatest experiment in social reform,” were also affected by the consequences of such political compromise, and therefore, “grass roots participation” ended up sometimes as an excuse for consenting to racial prejudice against African American farmers, who experienced massive discrimination and abuse by the white population (Selznick, TVA and the Grass Roots, 112–13). Nevertheless, scholars have also suggested that social and economic change during the developmental era, along with the African American struggle for equality, “planted the seeds” for the modern Civil Rights Movement (Williams, “African Americans and the Politics,” 134; Brueggemann, “Racial Considerations,” 168).

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regimes across Latin America and Spain. The institutional arrangements of neoliberalism result, secondly, in quite distinct overall configurations of the diverse stages of the exercise of a power described in Table 16.1: organization, distribution, and enforcement, which can be compared point by point across state types. The first two stages correspond to the definitional traits of the developmental state, which Evans (1995) identified as autonomy and embeddedness.101 Similarly to Evans’ concept of “embedded autonomy,” which defines the basic institutional architecture of the developmental state, we suggest the concept of “technocratic concentration” for the basic architecture of the neoliberal state, focusing on the first two stages of the exercise of power: organization and distribution. As our third and last consideration, supporting the thesis that the neoliberal state represents an institutional model as distinctly defined as the developmental state, we point out that the two organizational types have shown very different approaches to power enforcement or implementation. In fact, developmental and neoliberal state institutions appear to be almost opposites in this respect. Before further considering the issue, however, we must observe that enforcement was not explicitly treated by Evans as a separate aspect of state power; his definition of the organizational traits of the developmental state as “embedded autonomy” only refers to the first two stages shown in Table 16.1, organization and distribution of power. Nevertheless, it can be said that Evans also included enforcement, to a certain extent, in the concept of embeddedness, since he described this definitional trait of the developmental state as regular public policy consultation with non-state actors, in other words, as “institutionalized channels for the continued negotiation and renegotiation of goals and policies.”102 As mentioned before, “negotiation and renegotiation” took place at several moments during the public policy process, as carried out by developmental institutions, from regular consultation with both state and nonstate actors for public policy decisions, at higher management levels, to cooperation and interaction with local actors, for implementation at the field level. In any case, we believe that enforcement deserves separate treatment, as a specific phase of the exercise of power, which includes its own institutional designs and practices. Different developmental agencies, for example, had relatively diverse approaches to the implementation of public policy decisions. TVA focused strongly on consultation at the field level since grassroots administration was an important theoretical and practical principle of the agency, which could be described as its “official doctrine.”103 CORFO also supported the creation and regular interaction with workers and farmers’ associations for implementation of public policy, without this representing a foremost principle or “doctrine” of the agency. Finally, in Japan, all major public policy 101 102 103

Evans, Embedded Autonomy. Evans, Embedded Autonomy, 12. Selznick, TVA and the Grass Roots, 45.

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decisions taken by MITI included consultations with representatives of industrial capital, but the implementation of such decisions was assigned to the private industries themselves. MITI only provided “administrative guidance” in this regard.104 Therefore, we observe a strong focus on implementation by TVA, an intermediate approach by CORFO, and a more “hands off,” or relative detachment regarding implementation by MITI. Since Evans considered MITI as the “archetype” of any developmental institution, the relatively distant attitude to implementation of the Japanese agency probably explains why implementation did not deserve separate treatment by Evans.105 To sum up, we conclude that the neoliberal state represents an institutional model with as much theoretical and empirical foundation as the developmental state. A neoliberal state type can be analyzed and discussed, in the history of institutional formations, with as much justification as the developmental state. If there was ever a developmental state type, in other words, the neoliberal state must be also considered as a historical state formation.

16.5  the

state after neoliberalism

As employed by neoliberal administrations, powering strategies consistently showed their capacity to deliver fast public policy reforms across Latin America and Spain. Nevertheless, the stability of such reforms became often problematic afterward, as discussed in several chapters of the present book – we will summarize these results below. Moreover, the issue of lack of stability or continuity of public policy programs affected not only neoliberal administrations but also government orientations that opposed neoliberalism. Political movements confronting neoliberalism grew stronger in diverse Latin American countries since the end of the 1990s, reaching government positions during the following two decades in several cases. One of their main goals was the implementation of economic and social policies that counteracted or reversed neoliberal reforms carried out by previous administrations. Governments that opposed neoliberalism, for example, pursued interventionist economic policies – similar to development strategies, in some cases – and endeavored to reintroduce or strengthen social welfare systems, among other broad public policy initiatives. As we will analyze in this section, the attempts to overcome neoliberalism suffered a seeming paradox, however, because they often followed the same powering strategies applied by previous, neoliberal political orientations. This has been characteristic in Latin America, for example, with diverse administrations of the New Left or “Pink Tide,” which were regarded as the “cutting edge” of the worldwide opposition to neoliberal ideology.106 But the paradox is only superficial. As a matter of fact, it is only to be 104 105 106

Johnson, MITI and the Japanese Miracle, 243. Evans, Embedded Autonomy, 47. Robinson, “Transformative Possibilities,” 141.

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expected that new administrations, in trying to reverse previous public policy orientations, will employ state structures already in place, consolidated under earlier political regimes. After all, state structures, including organizational patterns and power strategies, tend to be relatively solid and enduring, because they appear more or less as a given, as “self-evident.”107 Once established, in other words, state structures become normalized, they appear as the conventional and natural manner to organize public power. Then again, in contrast to neoliberal reforms, developmental strategies and social welfare systems seem to require strong public policy continuity. The goal of the former is often just dismantling previous state organizations, such as public service systems, by means of deregulation and privatization. Neoliberal administrations frequently achieved such goals with sudden structural reforms, while the specifics of the post-reform scenarios were not calculated in detail – sometimes with disastrous results, but the reforms had been pushed through, all the same. As opposed to neoliberal reforms, developmental strategies and social welfare systems are characteristically incremental; during the developmental era, they were generally associated with the creation of stable bureaucratic structures, such as independent developmental agencies – discussed above in section four – and welfare administrations. Furthermore, developmental agencies were usually created on the basis of relatively ample political agreements, and the agencies often sought to maintain or strengthen wide political support employing practices of embeddedness, which involved seeking regular interaction with diverse political and social actors in their public policy fields. Compared to the successful long-term programs of the developmental era, there seem to be two main structural reasons for the lack of stability or continuity of public policy reforms achieved by powering strategies under neoliberal administrations. First of all, powering strategies ignore or bypass the existing state bureaucracy. Expert teams working in technocratic isolation tend to assume that civil servants must be counted among the vested interests that support the status quo, even if this assumption is only a justification for not interacting or even communicating with those actors. Therefore, since technocratic elites are not part of the permanent state bureaucracy, with the next change of administration they usually leave office, and the permanent bureaucracy is supposed to take charge of public policy programs that were implemented until then by technocratic teams. Inevitably, the result will be a serious disruption. Powering strategies, secondly, are based on the concentration of decision authority in the executive power, and they are planned for fast implementation, before opponents have time to organize against the pace of reforms. They do not seek to promote a political consensus, assuming again that vested interests opposing reforms will not be amenable to change or negotiation. Once a given administration leaves office, public policy reforms achieved by powering 107

Bourdieu, “Rethinking the State,” 15.

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strategies will see their political support drastically diminished, unless there is political continuity across several administrations, as was the case in Chile for about three decades after the democratic transition of the early 1990s. In this country, neoliberal reforms acquired more stability because of similar neoliberal public policy orientations adopted by all administrations during that whole period. As a result, however, the opposition to neoliberal ideology could only gather strength outside of the political system, until the situation triggered a so-called “social explosion” in the early 2020s, discussed from different perspectives by Silva, Schild, Camacho, and Dargent in their chapters for the present book. In other countries of the region, neoliberal reforms were often reversed after a change of political orientation in government, but the new reforms opposing neoliberalism did not consolidate either, since the same powering strategies were employed by both types of administrations, neoliberal and post-neoliberal – as shown by diverse national cases to be summarized in the following. The general outcome was often a back-and-forth of shorttermed neoliberal reforms, followed by similarly unstable post-neoliberal public policy programs, with very low performance in terms of achieving any government results at all. One such example represented the neoliberal reforms in the areas of highway and railway transportation in Argentina, as described by Bersch in her chapter for the present volume. In the relatively short space of time between 1990 and 1993, most of the railways and highways in the country were transferred to the private sector in rapid-fire concession auctions. The reforms were considered nothing short of a “miracle” by international financial organizations. As in other public policy areas, neoliberal state infrastructures were crucial for the success of the reforms; during this period, the organization of public power was clearly characterized in Argentina by the concentration of decision authority in the executive, and the isolation of technocratic teams in charge of the reforms – as discussed in section three above. However, Bersch shows that, by the late 1990s, the results of the transportation reforms were extremely disappointing; investment rates by the new private operators were drastically below original agreements, private operators were often not paying mandated canons to the government, and only by receiving large government subsidies were they able, in most cases, to continue to provide transportation services at all. The regulatory agencies that were supposed to oversee private operators were understaffed, weak, and ineffective. The situation only worsened during the following decade, among other reasons, because with each change of administration, the high-level technocrats in charge of public policy simply left office. With train accidents increasing severely, including catastrophic events with mass fatalities, the post-neoliberal Fernández administration (2007–2015) began to cancel private concessions one after the other, before creating a state-owned company, Ferrocarriles Argentinos, named after the public corporation broken up and privatized during the earlier, neoliberal regime. In

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order to introduce this major shift in transportation policy, the administration employed the same powering strategies as previous neoliberal administrations, including strong centralization of authority in the executive power, use of executive decrees to introduce legal reforms, and presidential appointees put in charge of supposedly autonomous government organizations. As Bersch points out in her chapter, due to the haste of the reforms, and the lack of initiatives to create professional and independent bureaucratic structures in the area of transportation, it was rather doubtful that the state could develop the capacity to take on the formidable task of updating, maintaining, and operating rail lines. Moreover, institutional weakness was going to remain a problem for Argentina’s post-neoliberal administration, in this and in other areas, because of frequent political interference, and the subordination of bureaucratic structures to the executive power.108 After a few years, the maintenance and renewal of railway infrastructure in Argentina have been described as “not only suspect and incomplete, but also costly.”109 The lack of continuity of public policy changes, achieved by powering strategies, was made also very clear by the reforms of public administration systems during the neoliberal era, which Schenoni compares across four national cases, in his chapter for this book. The author examines, in particular, state and public administration reforms, in their sequence of first- and second-generation waves in Latin America. First-generation reforms focused on downsizing the central state, by means of decentralization, privatization, deregulation, outsourcing, and significantly reducing the size of the public bureaucracy. Secondgeneration reforms became influential among policymakers toward the end of the 1990s, after it was observed that first-generation reforms, while focused on downsizing the state, did not pay much attention to increasing state capacity. Therefore, second-generation reforms focused on administrative efficiency, among other goals, and promoted thus the strengthening of meritocratic, professional civil service careers. Schenoni discusses the paradox that the two most successful countries in the use of powering strategies to achieve first-generation state reforms, Perú and Argentina, found themselves deprived of the bureaucratic capacity that could make possible to implement properly second-generation reforms. In contrast, Brazilian and Chilean government institutions, after only partial and relatively modest first-generation reforms of their central public administrations, were able to preserve most of their bureaucratic infrastructures, and these two countries went on to become regional models of successful second-generation reforms, aimed at enhancing the efficiency of their public service systems. Another significant area of public policy reforms suffered a characteristic lack of stability and continuity across the region, in this case, associated with 108 109

Wylde, “Post-neoliberal developmental regimes,” 338. McCallum, “Railroad revolution,” 554.

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post-neoliberal administrations. “Pink Tide” or New Left programs emphasized human development as a political platform and attempted to strengthen social welfare systems, based on increased taxation, redistribution, and the search for meaningful citizenship models beyond the individualistic patterns of the neoliberal paradigm. However, as discussed by Riggirozzi and Grugel in their chapter for the present volume, the New Left was not able to develop a successfully long-term, financially consistent model of social spending and equitable development. Therefore, among other consequences of diverse public policy deficiencies in this area, by 2015 New Left administrations were losing office in several countries across the region. Two problems associated with neoliberal state structures and the employment of powering approaches impacted negatively on programs aimed at strengthening social welfare models. On the one hand, New Left administrations did not attempt consensus-building strategies, which could have increased public trust in government institutions. The policy focus was instead on short-term redistributive gains, premised on partisan-based, unilateral political decisions to apply new export taxes, and thus capture the profits of rising commodity prices at the time. Paradoxically, this short-term decision increased the region’s dependency on a growth model based on the export of primary goods, and it also enabled agrarian elites to acquire extraordinary power by organizing opposition and blockades to the new taxes, and subsequently oppose any further attempt to introduce more progressive tax reforms. On the other hand, the implementation of social programs was not preceded or complemented by any attempt to establish or consolidate independent and professional bureaucratic structures. Therefore, Riggirozzi and Grugel describe how social policies were plagued with significant difficulties in implementation, monitoring, and evaluation, with frequent cases of mismanagement, political clientelism, and corruption. As mentioned above, powering approaches associated with neoliberal state structures resulted frequently in the back and forth of short-termed neoliberal reforms, followed by similarly unstable post-neoliberal government programs, with the result of very low public policy performance overall. Public policy continuity was also negatively affected by the fact that political movements opposing neoliberalism adopted often counter-hegemonic, identitarian strategies, which made it more difficult to reach political agreements or alliances in support of specific programs, as discussed by Müller in his chapter for the present volume. Such mechanisms of social mobilization and popular protest, initially developed by the New Left in Latin America, focused on the advancement of new political identities, together with other – more traditional – organizational resources. In their chapters for the present book, Lucero and Schild analyze protest movements centered on ethnic and gender identities, which had begun to develop well before the neoliberal turn in Latin America and Spain. Such framing strategies demonstrated during the 2000s considerable adaptability in opposing neoliberalism, that is to say, it was shown that they could be employed to build new political identities beyond specific connections

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to a given factual basis, such as occupation, ethnicity, or gender. For example, in her chapter for the present volume, Garay examines how unions and social movements in Latin America, as a response to globalization, technological changes, and neoliberal labor market reforms, developed new types of political alliances between “insiders,” defined as workers with formal employment, and “outsiders,” defined as informal, rural, and unemployed workers. The literature has neglected political movements based on such alliances and coalitions, among other reasons, because of their unexpected character, particularly considering that conventional scholarship always assumed that insiders and outsiders of the labor market have inherently opposing interests. However, Garay shows that one of the key factors enabling new labor movements across Latin America was the construction and empowering of new workers’ identities, disengaged from their status in the labor market. The same counter-hegemonic strategies of social mobilization and protest, based on the construction of new political identities, became very influential in Southern Europe during the late 2000s. The concept of “Latinamericanisation” of political protest was adopted as early as 2011 by left-wing activists of the political movement Podemos in Spain, under the declared influence of Laclau and Mouffe.110 The notion of Latinamericanisation went on to become a wellknown concept in scholarly analysis.111 However, in his chapter for this book, Müller makes clear that identitarian strategies are difficult to reconcile with electoral and coalition tactics, as could be seen in the Spanish case. The problem results in part from the “agonistic” dimension of identitarian strategies, which emphasize a fundamental conflict “us vs. they,” as a component or source of political identity for the movement. In Spain, for example, the agonistic opposition of la casta (the caste) against el pueblo (the people) was employed as a framing device by the political movement Podemos, labeling la casta the mainstream political parties of the Spanish democratic transition, including the Socialist Party (PSOE). Agonistic framing can make political coalitions more difficult, although certainly not impossible, considering that Podemos finally agreed to integrate a coalition government with the Socialist Party in 2020. It is interesting to consider that innovative forms of political protest were not exclusive of the New Left, either in Latin America or Southern Europe. The Latinamericanisation of political movements in Southern Europe, in other words, has not been a trend developed only by left-wing orientations. Vom Hau and Srebotnjak, in their chapter for the present volume, analyze another phenomenon that the literature has neglected, the fact that neoliberal political organizations in Latin America and Spain were able to adopt and effectively employ, during the 2010s, the same counter-hegemonic and identitarian strategies that were previously characteristic of the Latin American New Left.

110 111

Iglesias, “Understanding Podemos,” 14; Laclau and Mouffe, Hegemony and Socialist Strategy. Padoan, Anti-Neoliberal Populisms.

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Again, the employment of identitarian strategies made political conflict more pronounced in the cases discussed by vom Hau and Srebotnjak, with episodes of organized protest turning sometimes into open confrontation and revolt. By the beginning of the 2020s, it became clear that all kinds of political orientations, even neoliberal movements, were employing counter-hegemonic strategies based on identity politics, both in Latin America and Southern Europe. To conclude with this section, we remark again that public governance beyond neoliberalism has been affected by a lack of public policy continuity to a remarkable degree, even for Latin American countries. Neoliberal state structures, as well as associated powering strategies, have shown a negative impact in this regard, particularly because they were widely employed by quite diverse political groups. The framing of political organizations as counter-hegemonic protest movements, with their associated agonistic strategies, has added another dimension that makes political agreements and coalitions less likely, and thus public policy continuity even more difficult. In sum, governance seems confronted at present with a complex constellation of factors in the region. In order to improve public policy continuity and long-term government performance, we believe that the way forward must involve increased public and political awareness about the design of state structures, and their impact over time. We discuss this final point in the conclusions of the chapter.

16.6  conclusions For state-building as a discipline, the famous aphorism by Tilly represents one of the most influential principles: “War makes states.”112 It is often overlooked, however, that Tilly applied this notion to a specific historical era, which corresponds to the formation of modern states. During a period of about three centuries, beginning in the early 1600s, the establishment and costly upkeep of standing armies was a necessary condition for the sheer survival of any political entity on the European Continent. But no standing army could be sustained without a professional bureaucracy, which could administer efficiently a regular system of taxation. Thus, bureaucratic states, that is to say modern states, were consolidated all across Europe, and the model extended to other regions of the world beginning in the nineteenth century. From the perspective of a bureaucratic state administration, nevertheless, war is just another public policy area. Certainly, for about three centuries, this was the most crucial public policy area for any state, in Europe and other regions – for reasons of survival, as already mentioned. Even in our days, the upkeep of standing armies remains either a costly necessity or a power interest for most states – with few exceptions, such as Costa Rica. However, during the twentieth century, states developed other essential areas of public policy, and

112

Tilly, “War Making and State Making,” 170.

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the formation of “developmental states” signals precisely that some governments adopted further priorities, besides war, as long-term public policy goals. No doubt, both economic development and human welfare have a connection to war-making. The bureaucratic and political leadership of the first modern state that adopted and successfully pursued those other long-term public policy goals, the German Second Empire, clearly aimed at increasing war-making capacities by advancing economic development and social security. Be that as it may, war-making was not the only public policy goal that impacted the design of state structures anymore. In the following decades, developmental states focused a lot of attention and resources on economic growth and human welfare as priorities by themselves, even if some divisions of the state bureaucracy – such as the military and defense departments – continued to regard the national economy and the human population, fundamentally, as resources for war. The developmental state, as an institutional model, illustrates a thesis discussed above in the first section, and originally formulated by Hintze. Long-term public policy goals sometimes result in the creation of specific state configurations. As an institutional blueprint, the internal structure of the developmental state was designed to serve its own public policy goals. Developmental agencies, the most characteristic institutional innovation of the developmental state model, were not designed with war-making as a priority. Developmental agencies were characterized by autonomy and embeddedness; however, for the prosecution of the war, such an institutional design has been generally not considered practical, and a centralized command economy is commonly adopted instead under such circumstances, particularly in major wars. The developmental state, with its specific institutional configuration, suggests that the famous aphorism of Tilly should be made perhaps more general – although certainly less exciting: “public policy makes states.” Of course, this version of the aphorism assumes that we are considering long-term public policy goals since state structures require some time to be designed and built. But this was certainly the original meaning of Tilly as well, “war makes states” only if war-making is pursued as a long-term goal. The contrast between the modern state and the developmental state offers a second lesson for state-building as a discipline. Our suggested, woefully unexciting aphorism, can be inverted, resulting in “states make public policy.” This version of the aphorism means that state structures, specifically created for the purpose, tend to have better performance at delivering public policy results than other institutional configurations. During the modern era in Europe, states that could not develop professional bureaucratic administrations were not be very successful at war-making in the long-term, their bankruptcy and defeat – even dissolution – became certain dangers, even under favorable conditions in other areas. During the developmental era, it was important for states to establish developmental agencies according to the successful blueprint of this kind of institutions, that is to say, autonomy and embeddedness had to be carefully organized and protected. In the case of states that were not

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willing or not able to establish and preserve those institutional characteristics of developmental agencies, public policy results suffered as a consequence. This can be seen very clearly in such cases where developmental agencies had been first created according to the blueprint mentioned above, that is to say, with strong autonomy and embeddedness, and those developmental agencies had good or excellent policy results during some time; however, for political or other reasons, at a certain moment, the autonomy and embeddedness of the same developmental agencies were revoked or disregarded. In such cases, the government’s performance in the public policy areas corresponding to such agencies dropped dramatically.113 In the history of state formations, the neoliberal state represents a relatively peculiar case. The specific institutional characteristics of the neoliberal state, concentration of power and technocratic isolation, are not designed for public policy continuity, but rather for the fast implementation of sweeping public policy reforms. As discussed in this chapter, the stability of such reforms can become very problematic afterward. Nevertheless, the aphorism introduced above still applies, and the policy goals of the neoliberal state have resulted in specific state configurations. Curiously enough, the most successful neoliberal states in Latin America and Spain have been those that preserved to a certain extent, in diverse public policy areas, the bureaucratic structures inherited either from the modern state or from the developmental state. This observation applies to the cases of Chile, Brazil, and Spain, as discussed in the present volume by Schenoni and Döpking, and also examined earlier in this chapter. In contrast, states that applied neoliberal state reforms more radically, as shown by Schenoni for the cases of Argentina and Perú, were soon confronted by difficulties, crises, and political instability. Furthermore, for post-neoliberal administrations, the attempt to employ neoliberal state infrastructures has been particularly unfortunate in terms of achieving their intended government results. Basic notions and facts of state-building theory and practice are condensed in Tilly’s aphorism, and this makes it very interesting and revealing. If we extend and develop the aphorism, as we have attempted to do here, one conclusion seems clear: government performance and public policy continuity are intrinsically related, and moreover, the latter cannot be sustained or improved without paying attention to the design of state structures. In other words, the pursuit of long-term public policy goals requires to invest time and resources in the discussion, planning, and building of specific institutional configurations, focusing on independent professional bureaucracies. Moreover, it is important to keep in mind that economic development and social welfare belong to those types of goals: if they are not pursued incrementally, as long-term objectives, they can never be achieved with any consistency.

113

For specific case studies in Latin America, see Centeno and Ferraro, “With the Best of Intentions.”

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In our days, however, public debates and scholarship in the area of governance tend to focus either on the direct results of government policies, in certain key areas, or they concentrate on political conflict, electoral contests, and social mobilization. These issues are certainly vital and necessary for democratic life. However, a key dimension of public governance remains neglected if state structures are overlooked, and the achievement of public policy goals suffers as a result. bibliography

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Index

Abiayala, 429 Alarcón, Mayra, 197 Albó, Xavier, 440 Alessandri, Jorge, 73–74 Allende, Salvador, 18, 69, 74–76, 78, 82, 84, 355 Alvarado Lincopi, Claudio, 438 Anderson, Perry, 23 Anthias, Penelope, 449 APEC (Asian-Pacific Economic Cooperation) summit (Chile, 2019), 91 Arab oil embargo, 25 Arab Spring, 383 Arauz, Andrés, 451 Argentina electoral success of the new Left, 325 extension of reproductive health rights, 331 labor organizing coalitions, 419–23 public sector reforms first generation, 249–51 second generation, 257–59 social policy reforms mid twentieth century, 321–22 twenty-first century, 327 political impact, 332 Spanish influence on democratic transition, 504–5 taxation reform, 330 transport infrastructure reform, 294–98 Arguedas, José Maria, 455 Arzú, Álvaro, 184 Atria, Jorge, 162

austerity measures Brazil, 24 Chile, 73, 360 Ecuador, 450–51 Mexico, 27 Spain, 40–41, 53, 142, 160, 382, 398–400, 404, 468, 474, 486 Aylwin, Patricio, 81, 84, 253 Aznar, José María, 153, 398 Babb, Sarah, 280 Bachelet, Michelle, 19, 50, 68, 71, 86–90, 232, 307, 309, 443 Baker Plan, 110 Baldetti, Roxanna, 199 Ban, Cornel, 149, 156 Banzer, Hugo, 471 Barbeito, Alberto C., 322 Barco, Virgilio, 31 Barrientos, Bonifacio, 476 Belaúnde, Fernando, 28 Berger, Oscar, 194, 195 Bernanke, Ben, 162 Betancur, Belisario, 31 Biezen, Ingrid van, 506 Blanchard, Olivier, 39 Bolívar, Simón, 437 Bolivia economic performance, 34–35 electoral success of the new Left, 325 gender quotas in parliamentary elections, 445 Guarani land rights, 320 Indigenous political movement, 442

535

536 Bolivia (cont.) Indigenous rebellion, 437 Indigenous representation, 445 industrial policy, 35 Katarista movements in, 439 return of the Right, 443 revolution, 476 social policy reforms, 327 as viable alternative to neoliberalism, 33 Zavaleta’s observations, 435–36 Bolsa Familia program, Brazil, 269, see under conditional cash transfer programs (CCTs) Bolsonaro, Jair, 44, 432 Boric, Gabriel, 454 Bourdieu, Pierre, 51, 361 Boyer, Miguel, 391, 394 Brady Plan, 110 Brazil austerity measures, 24 commodity boom, 23 comparison with Chile, 21 current political landscape, 432 economic performance, 23–24 electoral success of the new Left, 325 export profile, 23 fiscal and monetary policy, 23 Indigenous land rights, 320 industrial policy, 23 inflation concerns, 22 Lula-Dilma development strategy, 24 as neoliberal “success,” 17, 21–24 oil crises of the 1970s, 22 Plano Real, 17 political economy, role for the state, 14 public sector reforms first generation, 251–53 second generation, 259–60 social policy reforms, political impact, 332 transport infrastructure reform, see under transport infrastructure Bresser Pereira, Luiz Carlos, 251, 259 Bretton Woods system, end of, 105 Brooks, Sarah M., 179 Brown, Wendy, 349 “brown areas,” the concept of, 47 Brownlee, Elliot, 143 Brysk, Alison, 444 Buchanan, James M., 145–46 Buggeln, Marc, 143 Bull, Benedicte, 181 bureaucratic organizations, impact of expansion and diversification, 47

Index Calderón, Felipe, 26–27 Cárdenas, Hugo, 447 Cárdenas, Lázaro, 107, 428 Cardoso, Fernando Henrique, 22, 251, 252, 259, 260, 299, 301 Casals, Muriel, 481 Catrillanca, Camilo, 452–53 Caval scandal, 88 Cavalho, Georgia O., 320 Celso, Anthony N., 507 Central America homicide rates, 176 migration crisis, 175 neoliberal reforms in, 178–82 CEPAL, 331 CEPAL (Economic Commission for Latin America and the Caribbean – ECLAC), 247, 322 Chaccha, Hilda, 235 Chávez, Hugo, 34, 432 “Chicago Boys” as architects of the Chilean neoliberal model, 69 and Chilean economic policy, 18 foundational text, 353 and higher education reform, 222 1950s roots, 73 Pinochet’s dismissal, 80 position in first year after the coup in Chile, 76 promotion of mass consumerism, 80 role in economic restructuring of Chile, 349–50 role in the attempt to legitimate the Pinochet regime, 79 “seven modernizations,” 79 ‘shock treatment’ proposed by, 70 Chile assault on neoliberalism, 87–93 Bases de la política económica del gobierno military chileno (El Ladrillo/The Brick), 353–54 Caval scandal, 88 Concertación coalition, see Concertación coalition current political landscape, 432 decentralization and the depoliticization of the local, 353–59 and the reliance on women’s work, 363–69 developmental and neoliberal state structures, 509–512

Index economic innovations, 19–20 end of the Pinochet regime, 443 export profile, 18 gender quotas in parliamentary elections, 445 gendered dimension of neoliberalization, 351–52 “growth with equity” agenda of Patricio Aylwin, 359–63, 365 higher education reforms, 213. See also under higher education Indigenous rebellion, 437–38 influence of the Chicago school, see “Chicago Boys” international prestige, 91 Juntas de vecinos en Chile 50 años. Historia y desafíos, 355 legal reforms, 362 mass protests against neoliberalism, 68–69, 86 against the military dictatorship, 80 against the privatization of education, 71, 454 for free university education, 232 government’s response, 21 Indigenous activism, 453 October 2019 upraising, 91–93, 343–44 women’s protests, 345 military coup, 75 the myth of economic empowerment for women, 369–74 as neoliberal “success,” 17–21 New Majority coalition, 68, 71, 72, 87–93 origins of neoliberalism, 72–77, 349–53 performance as neoliberal state, 17–21, 67–95 plebiscite on the Constitution (2020), 81, 344–45 public sector reforms first generation, 253–54 second generation, 260–61 road to neoliberalism, 68–72 social policy reforms of the mid twentieth century, 321 state-owned copper company, 18 and the foundations of neoliberalism, 45, 52, 67 transport infrastructure reform, see under transport infrastructure unequal burdens on women, 346–48 ‘Chile for All’ program, 88 Chilean Chemical and Mining Society (SQM), 88

537 Científicos, Mexico, 134 civil wars in Central America, 181 Guatemala, 183 classical liberalism, difference between neoliberalism and, 433 Collor de Mello, Fernando, 22, 251, 299, 301, 303, 506 Colombia CCT program, gendered inequalities, 331 constitutional reforms, 31 economic performance, 32–33 Indigenous political representation, 445 peace agreement with the FARC, 33 security issues, 31–32 US aid receipts, 32 commodity boom Argentina, 328 benefits for Latin American States, 57, 162, 415 Bolivia, 34–35 Brazil, 23 Chile, 18, 165 Cuba, 36 Mexico, 17 Communist Party, Chile, 68, 71, 88, 90, 92 competition state hypothesis, 148 Concertación coalition, Chile comes to power, 359 economic modifications, 71 economic policy, 84 electoral defeat, 87 “growth with equity” maxim, 71 modernization of public institutions, 361 political and economic success, 85 political competence, 94 renamed, 88 rightwing (over)representation, 85 conditional cash transfer programs (CCTs) as anti-poverty strategy, 270–73 as behavioral change mechanism, 330 comparison of Brazil and Mexico’s implementation policies, 283–84 the concept of, 269 design and implementation debate, 273–74 distributional neutrality, 329 expansion under New Left governments, 327 gendered inequalities, reinforcement of, 331 legitimation challenges, 276–77 Brazil, 280–82 Mexico, 277–80 political impact, 49–50, 332 social impact, 49–50, 328, 332

538 conditional cash transfer programs (cont.) targeting methods Brazil, 275–76 Mexico, 274–75 underlying principles, 324 Constitution of Cádiz, 495 constitutions Argentina, 258 Bolivia, 476, 484 Brazil, 252, 259 Chile adoption, 70 calls for elimination of, 68 distinction between government and administration, 357 foundation of societal order, 232 and Indigenous peoples, 453 inequality enshrined in, 309 neoliberal framing, 79 plebiscites, 81, 344–45 restructuring included in, 353, 354, 356 senadores designados, 84 Colombia, 31, 33 colonialist influence, 431 recognition of Indigenous rights, 445 “seven modernizations,” 358 Spain, 160, 473, 495 contemporary history, problems with writing, 99 COP25 (UN Climate Change Summit) (Chile, 2019), 91 CORFO (Corporación de Fomento de la Producción), 321, 509–16 Coronavirus pandemic, see COVID-19 pandemic Correa, Enrique, 84 Correa, Rafael, 442–43, 449–50, 467, 473, 478 corruption Argentina, 251, 297 Brazil, 301, 303 Chile, 88–89, 261 Guatemala, 182, 183, 186, 188, 190, 194, 197, 199–200 Mexico, 108, 131 Perú, 231 Spain, 382 Costa, Sergio, 332 Costas, Ruben, 476 Coulthard, Glenn, 434, 446 COVID-19 pandemic, 165, 319, 372 Chile, 68, 93, 346 impact on Latin American women, 348 Latin America’s experience, 41–45

Index Perú, 30 Spanish government’s response, 161 Cruz, Consuelo, 322 CTM (Confederación de Trabajadores de México), 106, 114 Cuba difficulties faced by, 36 economic performance, 36–37 export profile, 36–37 performance as neoliberal state, 36–38 social provision, 38 as viable alternative to neoliberalism, 33 Cuenca, R., 216 Cusicanqui, Silvia Rivera, 446 Dahl, Robert, 109 Daunton, Martin, 143 Dávalos, Sebastián, 88 De Castro, Sergio, 67, 76, 80 De la Madrid, Miguel, 25, 109 De Souza Leão, Luciana, 14 democratization, wave of in 1970s Latin America and Iberian Peninsula, 10–12 despotic power, the concept of, 46 the developmental state, 55, 495, 497 Chile, 67, 72–74, 509 definition of, by Peter Evans, 512 internal structure, 514–16 Japan, 513–14 Diaz, Natalia, 455 Díaz, Porfirio, 125, 134 Dilma Rousseff, 23–24, 302 Disi Pavlic, Rodolfo, 230 Donoso, Sofia, 21 Donzelot, Jacques, 351 ‘double transition’, in Latin American countries, 69 Draghi, Mario, 160 Duménil, Gérard, 14–15 East Asia, developmental model, 15 Echevarría, Luis, 25, 106–7 ECLAC, see CEPAL economic crises. See also Global Financial Crisis Chile, 69–70, 74, 80, 346, 372–73 coincidence with reform in most Latin American countries, 244 European debt crisis, 382, 383, 385, 404 Latin American debt crisis, 248, 270, 419 Mexico, 25, 103, 108, 134, 277 Perú, 29, 224 Spain, 40, 150, 155, 159, 474, 486 economic power, the concept of, 46–47

Index Ecuador current political landscape, 432 electoral success of the new Left, 325 gender quotas in parliamentary elections, 445 Indigenous social movement, 442 return of the Right, 443 social policy reforms, 327, 331 Edwards, Agustín, 254 Edwards, Sebastián, 13–15 EFSF (European Financial Stability Facility), 160 El Salvador citizens’ flight north, 202 consequences of neoliberal reform, 179 electoral success of the new Left, 325 peace accords, 181–82 police force study, 186–91 violence in, 176, 195 Elliott Armijo, Leslie, 506 ELN (Ejército de Liberación Nacional), 32 embeddedness the concept of, 514 Evans’ notion of, 516 and implementation of outside models, 247 practices of employed by developmental agencies, 520 in TVA’s institutional model, 512 Errejón, Íñigo, 402 ESM (European Stability Mechanism), 160 European Monetary Union, 149 Evans, Peter, 503, 512, 515–16, 518–19 Eyzaguirre, Nicolás, 234 Fabian, Johannes, 455 FARC (Fuerzas Armadas Revolucionarias de Colombia), 32 Faucher, Philippe, 506 Febres-Cordero, León, 477–78 femicide, in Guatemala, 202 Fernández Ordóñez, Miguel Ángel, 156 Figueras, Miguel Alejandro, 37 financial policy, in Latin America, 5–6 financial policy index, measures, 5 Fischer, Andrew M., 333 Fishman, Robert M., 38–40, 384 Flesher Fominaya, Cristina, 399 Fontana, Lorenza B., 331 Foucault, Michel, 349 Fourcade, Marion, 280 Fox, Vicente, 26 Foxley, Alejandro, 76, 84 Franco, Francisco, 473, 479, 508

539 Fraser, Nancy, 348 Freeden, Michael, 145, 147 free-market economics, Chile’s adoption of, 67 Frei Montalva, Eduardo, 354 Frei Ruiz-Tagle, Eduardo, 19, 254, 260–61, 362 Friedman, Milton, 76, 145–46, 391, 432 Friedrich Ebert Foundation, 156 Fuentes, Enrique, 156 Fujimori, Alberto, 29, 255–56, 261–63, 505–6 full employment, 31, 145 Gaebler, Ted, 256 Galán, Luis Carlos, 31 Galindo, Celvin, 197 Gallegos Pereira, Ignacio, 437 García, Alan, 28, 30, 228, 235, 255 García Bernal, Gael, 443 García-Quero, Fernando, 142, 149 GATT (General Agreement on Tariffs and Trade), Mexico’s entry, 25, 102 Gaviria, César, 31 GDP per capita, in Latin America, 12 general strike, 40 Geneva School of neoliberalism, 146 Genschel, Philipp, 143, 148 Geronimo, 439 Giammattei, Alejandro, 191, 200 Global Financial Crisis, 52 Chile’s response, 20 impact in Spain, 398–403 Spanish government’s response, 159–60 Goldberg, Laura, 322 Gomez de León, José, 278 Gómez-Lobo, Andrés, 307 González, Felipe, 40, 388, 391, 504, 506, 507 González Videla, Gabriel, 511 Graham, Carol, 504 Grau, Nuria Cunill, 360 Great Recession (2007–2009) and anti-neoliberal mobilization patterns, 464 and intensification of secessionist mobilization, 486 Spanish government’s response, 159, 165, 468, 474, 486 The Great Transformation, 16 Greaves, Edward, 304 Groll, Constantin, 161–62, 502 growth, comparison of Latin America with Spain, 12 Grugel, Jean, 331

540 Guatemala CICIG (international commission against impunity), 187, 191–92, 195, 198–200 citizens’ flight north, 202 consequences of neoliberal reform, 179–81 democratization process, 182–83 femicide in, 202 homicide conviction rates, 186 judicial system, 195–99 liberalism and neoliberalism, 201–2 organizational capacity, 178 peace accords, 181–85, 193, 200 police force study, 186–91 rule of law in, 182–201 state complicity and corruption, 199–201 violence in, 176 Guerrero, Andres, 441 Gustafson, Bret, 446 Gutiérrez, Lucio, 450 Guzmán, Jaime, 350 Habermas, Jürgen, 386 Haitian Revolution (1790s), 437 Hakelberg, Lukas, 148 Hale, Charles R., 446 Harvey, David, 14, 15, 433–34 Hayek, Friedrich A. von, 145, 394 Heclo, Hugh, 294 Helg, Aline, 437 higher education history of in Chile and Perú, 217 neoliberal reform in Chile and Perú, 48 conclusions about, 237–38 feedback effects and, 225–31 impact of market-based polices, 217–19 overview, 213–15 pre- and post-Washington Consensus, 219–25 resistance to and counter-reforms, 232–37 role of state capacity, 214–15, 218–19 Hintze, Otto, 55, 496, 499 Hirschman, Albert O., 74, 294, 513 “Hispanic Liberalism,” 495 Hobhouse, Leonard T., 145 homicide rates, Latin America, 176 Honduras CICIG as institutional model for, 198 citizens’ flight north, 202 consequences of neoliberal reform, 179 police force study, 186–91 violence in, 176 Huber, Evelyne, 319

Index Humala, Ollanta, 30, 235 human rights abuses, 182, 188, 193–95, 201 Hürlimann, Gisela, 143 Hurtado, Carlos, 305 Ibáñez, Carlos, 72 Ide, Eisaku, 143 Iglesias, Pablo, 402–3 Iglesias, Vicente, 310 Illanes, María Angélica, 364 IMF (International Monetary Fund), 161 Indigenous land rights, in Bolivia and Brazil, 320 Indigenous movements Bolivia, 442 Ecuador, 442 rise of, 54 Indigenous peoples political representation, 445 UN declaration on the rights of (UNDRIP), 444 Indigenous studies perspective of neoliberalism Bolivia, 447–49 context, 428–31 Chile, 451–54 Ecuador, 449–51 impact of Indigenous political recognition, 454–56 independence movements, 437–38 Indigenous rebellions, 437–40 Indigenous social movements, 440–45 and Latin America’s colonialist history, 431–40 political role of Indigenous peoples, 429–30 racial component of Latin American political economy, 434–37 recognition of Indigenous rights, 445–47 inflation Brazil, 17, 22, 26 Chile, 72, 78 Colombia, 32 European perspective, 390 global, 105 management of in Latin America, 10, 16 Mexico, 106, 107, 110, 114, 118 neoliberal aversion to, 141, 146–48 Perú, 29 as political problem for Spain and Latin American countries, 161, 162 slowing of growth and, 325 Spain, 154, 390–91 infrastructural power, the concept of, 47–48

Index INI (Instituto Nacional de Industria), 507 interest rates Brazil, 23–24 Colombia, 31 dramatic US increase, 13, 22 Mexico, 26, 27, 108 role in inflation policy, 394 role in neoliberalization, 148 Spain, 155, 162, 390 internal structure of the state the concept, 55, 496 comparison of developmental and neoliberal state structures, 509–19 early neoliberal states in Latin America, 500–4 Hintze’s development of the notion, 496 impact over time and ways forward, 525–28 influence of the Spanish model on Latin American countries, 504–8 postliberal states, 519–25 theoretical perspectives, 496–500 international financial institutions, conditioning of loans to Latin American countries, 69 Japanese Ministry of International Trade and Industry (MITI), influence on state structures in Latin American countries, 513–15 Jarpa, Sergio Onofre, 80 Jimeno, Juan F., 39 Johnson, Chalmers, 513 Junqueras, Oriol, 481 Kahler, Miles, 104 Kast, José Antonio, 432 Kelley, Robin D.G., 435 Kirchner, Cristina Fernández, 327, 521 Kohli, Atul, 22 Kuczynski, Pedro Pablo, 30 Kurtz, Marcus J., 179 labor legislation, in Latin America, 8 labor movements, development of, 54 labor organizing, coalitions Argentina, 419–23 formation of the insider-outsider coalition, 422–23 new peak association, 421–22 roots of the insider-outsider coalition, 419–20 context, 411–14

541 coalition formation and characteristics, 416–18 insider and outsider workers, 414–16 labor unions and the shift to neoliberalism, 423–24 labor reform index, measures, 8 Laclau, Ernesto, 524 Lagos Escobar, Ricardo, 261, 306, 362, 438 laissez-faire, 16 land reform Chile, 76 Cuba, 37 Mexico, 107 Lapentti, Nicolás, 478 Larraín, Pablo, 443 Lasso, Guillermo, 451 Le Duc, Julia, 176 Lecasan, Rudio, 185 Lerou, Julio Ponce, 88 Lévy, Dominique, 14–15 Levy, Santiago, 278–79 Lilienthal, David E., 511, 512, 517 Lincopi, Claudio Alvarado, 438 Lindblom, Charles E., 294 lockdowns, Chile, 68 Locke, John, 433 López Obrador, Andrés Manuel (AMLO), 27 López Portillo, José, 25, 106–8, 110 López Vergara, Sebastián, 437 López-Castellano, Fernando, 142, 149 loyalty, and the consolidation of state power in the modern era, 52 Lucero, José Antonio, 437 Lugo, Fernando, 306 “Lula” da Silva, Luis Inácio, 22, 280, 432 Lupien, Pascal, 452 Lynch, Nicolás, 231 Maastricht Treaty (1992), 392 Macas, Luis, 442, 450 Madison, Otis, 435 Maduro, Nicolás, 34, 92, 432 Mahuad, Jamil, 449 Mann, Michael, 46, 47 Marileo, Luis, 437–38 market-oriented economic reforms, conditioning of loans to application of, 69 Martínez Ramírez, Óscar Alberto, 176 Martins, Carlos Benedito, 217 Marx, Karl, 433 Mas, Artur, 481

Index

542 mass protest. See also protests goal of according to Habermas and Rosanvallon, 387 Mayol, Alberto, 90 Meade Report, 143 Medellín cartel, 31 Meirelles, Henrique, 23 Melamed, Jodi, 434 Menem, Carlos S., 50, 249, 419, 504, 505 Mesa, Carlos, 448, 476 Mexican Revolution (1910–40), 99, 124–25, 130, 132, 439 Mexico CCT program, gendered inequalities, 331 debt restructuring, 110 discovery of massive oil reserves, 25 economic performance, 26–28 economic policy, 25 historic “dependence” on the US, 100 neo-liberal turn, 99–135 performance as neoliberal state, 25–28 peso crisis, 25 productive structure, 17 and the so-called War on Drugs, 26 Zapatista movement, 277, 439 Mill, John Stuart, 145, 433 Millennium Development Goals, Guatemala’s progress towards, 179 Mises, Ludwig von, 147 MITI (Japanese Ministry of International Trade and Industry), influence on state structures in Latin American countries, 513–15 The Model’s Collapse: The Crisis of the Market Economy in present-day Chile (Mayol), 90 Molina, Otto, 199 Molyneux, Maxine, 331 Moncloa Pacts (Spain, 1977), 157, 165, 504–5, 508 Mora, Daniel, 235 Morales, Evo, 35, 432, 439, 442–43, 447–49, 471 Morales, Jimmy, 199, 200 Morales Bermúdez, Juan, 28 The Morals of the Market: Human Rights and the Rise of Neoliberalism (Whyte), 349 MORENA (Movimiento Regeneración Nacional), Mexico, 135 Moreno, Lenin, 432, 451 Moulian, Tomás, 86

Mudge, Stephanie L., 279 Myrna Mack Foundation, 197 Nadal, Javier Sota, 231 NAFTA (North American Free Trade Agreement), 277 creation, 102 expansion, 17 Mexican perspective, 25, 102 Narotzky, Susana, 396 nationalizations banks, Mexico, 108, 110 natural resources, Bolivia, 35 Venezuela, 34 Nebot, Jaime, 478, 479 neoliberal era, chronology, 45 neoliberal model of statehood comparison with the liberal state of the 19th century, 141–42 fiscal order referred to, 141 neoliberal policy reform, standard measures, 4 neoliberal reform higher education in Chile and Perú, see under higher education impact in Latin America, 178–82 public sector reforms, see public sector reforms role of policy feedback effects, 215–19 tenets, 311 transport infrastructure, see under transport infrastructure the neoliberal state Bolivia, 34–35 Brazil, 17, 21–24 Chile, 17–21, 67–95 Colombia, 30–33 the concept, 3–4 Cuba, 36–38 democratization, 10 financial policy, 5–6 GDP per capita, 12 inflation management, 10, 16 labor legislation, 8 literature review, 13–16 Mexico, 25–28 Perú, 28–30 privatization, 6 Spain and Portugal, 38–41 structural reform, 9–10 tax policy, 8 trade policy, 5 Venezuela, 34

Index neoliberalism birth of, 67 vs classical liberalism, 433 the concept, 4, 13 Duménil and Lévy’s definition, 14 goals of, 71 historical perspective in Western Europe and the US, 143 Latin America as birthplace of, 45 literature review, 3 Marxist view, 14–15 neoliberal reforms in Central America, 178–82 social-democratization of in Chile, 82–87 neoliberalization, the process and its symptoms, 147–49 Neumark Report, 156 New Left (“Pink Tide”) challenges to neoliberal understanding of social welfare, 51 challenges to neoliberalism, 69 commodity boom and, 432 as the “cutting edge” of the worldwide opposition to neoliberal ideology, 519 electoral success and approach to social policy, 325–26 emergence and electoral appeal, 319 emphasis on human development, 523 extractivist policies, 329 human rights model of social policy, 327–28 impact on tax policies, 162–65 Mexico’s avoidance, 104 and program implementation, 333 regional influence, 318 retreat, 434, 523 social and political impact, 334 and social policy reform, 329–32 New Majority coalition, Chile, 68, 71, 72, 87–93 Nicaragua, 177, 181, 186, 325 No (Pablo Larraín), 443 Noboa, Gustavo, 450 Nozick, Robert, 147 Ocelotl, Martín, 428 oil shock, impact, 105, 156 Oliveira, Gustavo De L.T., 320 OPEC, 105 Oppenheim, Lois H., 84

543 ordoliberalism, 156 Osborne, David, 256 Oszlak, Oscar, 251 The Other Model: from the Neoliberal Order to a Public Regime (Atria et al.), 90 Pacari, Nina, 445, 450 Pacific Alliance, 30 Pact for Economic Stability, 110 PAN (Partido Acción Nacional), Mexico, 26, 104, 106, 110 The paradox of modernization (UNDP), 86 Paraguay electoral success of the new Left, 325 social policy reforms, political impact, 332 Partido Popular, Spain, 39–40, 401, 473–74 Pastrana, Andrés, 32 Patzi, Felix, 446 Paz y Paz, Claudia, 198–99 PDC (Christian Democratic Party), Chile, 88, 90 peace accords, in Central American countries, 181–82 Pedersen, Michael, 20 Peña Nieto, Enrique, 27 Peralta, Gabriel Aguilera, 185, 186 Pérez Guartambel, Yaku, 451 Pérez Molina, Otto, 200 Perón, Juan, 322 Perú corruption scandals, 29 economic performance, 28–29, 30 electoral success of the new Left, 325 free trade agreements, 29–30 higher education reforms, 213. See also under higher education. Indigenous rebellion, 437 performance as neoliberal state, 28–30 public sector reforms first generation, 254–56 second generation, 261–63 Spanish influence on democratic transition, 505–6 Pierson, Paul, 215 Piñera, José, 343, 350 Piñera, Sebastián, 19, 68, 86–87, 91–92, 370, 443 “pink tide” see New Left (“Pink Tide”) Pinochet, Augusto, 14, 77–81, 163, 253, 358, 432 Podemos, Spain, 53, 401, 402, 405, 524 Polanyi, Karl, 16

Index

544 police Guatemala, 183–92 military involvement, 193–95 study of four Central American police forces, 186–91 political alliances, development of new types, 54 political protest, innovative forms of, 55, 524 Popper, Karl, 294 Portillo, José López, 193–95, 200 Portugal, Carnation Revolution, 40 poverty anti-poverty strategies in Brazil and Mexico, 270–73. See also conditional cash transfer programs (CCTs) Chile, reduction, 71, 85 Mexico, levels of, 106 powering the concept of, 292–94, 517 regional impact, 310–11 and transport reform Argentina, 294–98 Brazil, 298–301, 303 Chile, 306–10 powering approach, impact, 464 powering reforms, the concept, 517 Prasad, Monica, 143, 147 Prensa Libre, 185 Present-day Chile: Anatomy of a Myth (Moulian), 86 PRI (Partido de la Revolución Institucional), Mexico, 26–27, 104, 106, 111–14, 135 private universities, creation of as result of neoliberal reforms, 213 privatization index, measures, 6 privatization/privatizations Argentina, 50, 249, 251, 258, 419 Bolivia, 447–48, 471 Brazil, 22, 300, 303 Chile, 48, 70, 78–80, 306, 350, 358, 454 Colombia, 31 economic aims, 350 inequality and, 322 in Latin America, 6 Mexico, 25–26, 103, 121, 127, 131 neoliberal reform and, 4, 22, 248, 520, 522 Perú, 28–29, 48 potential consequences, 292 poverty and, 324 regional trend, 57 Spain, 150, 390, 401

state requirements, 311 transport infrastructure, 291 “Washington Consensus” and, 432 Progresa-Oportunidades program, Mexico, 269, see under conditional cash transfer programs (CCTs) protest movements Chile, 52 diverse kinds of, 47 “Latinamericanisation,” 55, 524 Spain, 53 protests Argentina, 297, 416 Bolivia, 448, 467, 471 Brazil, 24, 30, 303 Chile, see under Chile Ecuador, 467, 473, 477 Guatemala, 200 insider-outsider coalitions and, 418, 424 Mexico, 106, 113 Spain, 382. See also under Spain. PSOE (Partido Socialista Obrero Español), Spain, 52, 142, 388, 397, 400, 401, 507, 524 public sector reforms, 246 first and second generation, 49 first generation Argentina, 249–51 Brazil, 251–53 Chile, 253–54 context, 248–49 Perú, 254–56 insights about critical junctures, path dependence, and sequencing, 263–64 pre-1990s, 246–48 research recommendations, 264 second generation, 263 Argentina, 257–59 Brazil, 259–60 Chile, 260–61 context, 256–57 Perú, 261–63 Putin, Vladimir, 91 Quijano, Anibal, 435 Quintana, Jaime, 89 Quispe, Felipe, 447 Rajoy, Mariano, 40 Reagan administration, tax cuts, 143 Reaganomics, 69 Reátegui, Luciana, 216

Index Reich, Otto J., 196 “Rethinking the State: Genesis and Structure of the Bureaucratic Field” (Bourdieu), 361 revolutions Bolivian Revolution (1952), 476 Carnation Revolution (Portugal, 1974), 40 Haitian Revolution (1790s), 437 Mexican Revolution (1910–40), 99, 124–25, 130, 132, 439 Reyes Loera, Ranulfo, 428 Ricardo, David, 433 Rifkin, Mark, 455 Riggirozzi, Pía, 320, 328 Ríos Montt, Efraín, 198 Rixen, Thomas, 148 Robinson, Cedric, 434 Rodríguez Ponce, Emilio, 217 Rojo, Luis Ángel, 391 Roldós Aguilera, Jaime, 472 Romeva, Raül, 481 Röpke, Wilhelm, 394 Rosanvallon, Pierre, 386 Rosche, Wilhelm, 497 Rouseff, Dilma, 23–24, 302 Rubio, Mariano, 394 Salinas de Gortari, Carlos, 25, 109 Samper, Ernesto, 32 Sánchez de Lozada, Gonzalo, 447–48, 471 Santos, Juan Manuel, 33 Sarney, José, 22 SARS-COV-2 pandemic, see COVID-19 pandemic Sasvin Pérez, Lubia, 202 Scott, James C., 294 Seelkopf, Laura, 143, 148 Sehnbruch, Kirsten, 21 separatism intensification of Catalan separatism in Spain, 462 paucity of in Latin America, 462 Shining Path (Sendero Luminoso), 29, 222, 224 Silva, Eduardo, 14, 75 Silva, Enrique R., 305 Singer, André, 24 Skarmeta, Antonio, 443 Skocpol, Theda, 497 Slobodian, Quinn, 141, 146 Smith, Adam, 433 “social explosion,” 113, 343, 521

545 social mobilization, fiscal motivation, 55 social policy reform and the colonial roots of inequality, 319–23 historical context, 317–19 the neoliberal revolution, 323–26 postneoliberal model of welfare, 326–29 conclusions about, 334–35 and dependence on income from extractive economies, 328–29 human rights model, 327–28 implementation weaknesses, 333–34 incorporation challenges, 329–32 limits, 332–34 social welfare challenges to neoliberal understanding of, 50–51 consequences of neoliberal reform, 178 need to change the models of access, 270. See also conditional cash transfer programs (CCTs). Sosa, Carlos Guillermo, 197 Sota Nadal, Javier, 234 South Korea, 14, 15 Spain causes of the transition from social democracy to neoliberalism, 142 centralization of authority, 506 debt to GDP ratio, 391 development of fiscal order, 151–54 economic capacity, 157–59 European integration attitudes and process, 389–94 consequences for political networks, 394–98 protests in the context of, 384–85 public opinion on, 389 and the global financial crisis, 398–403 features of neoliberal organization of power, 506–8 growth in economic, infrastructural and symbolic capacity, 157–59, 165 growth measured by GDP per capita, 12 historical perspective of neoliberalism, 141–44 history of the Spanish tax state, 157–60 comparison with Latin America and Chile, 161–65 compatibility with a neoliberalist interpretation, 165–66 phases, 157 impact of EU legislation on, 149

546 Spain (cont.) intensification of Catalan separatism in, 462 intensification of Catalan separatism in. See also under territorial autonomy movements liberalization, 149 moderate fiscal and monetary policy, 154 neoliberalization model, 149–55 Podemos, 53, 401, 402, 405, 524 protests in the context of European integration, 384–85 in the context of neoliberal statehood, 382–84, 403–5 in the context of state-seeking nationalism, 462 “Latinamericanisation” of, 524 role of in the transition to democracy, 386–88 in the wake of the European debt crisis, 142, 382–84, 398–401 Spanish Constitution (1978), 393 symbolic capacity, 52–53, 158 taxation, 150–52, 157–59 Sperisen, Erwin, 191–92 Spink, Peter, 248 state capacity Argentina, 332 Chile, 309 dimensions of, 3, 45–48 economic power, 46–47 effects on policy outcomes, 237 infrastructural power, 47–48 role of in higher education reform in Chile and Perú, 214–15, 218–19 role of in success of neoliberal reform, 215–19 symbolic power, 51–52 territorial power, 46 transport infrastructure as proxy for, 289 state-building theory, foundational principle, 55 Stern, Steve, 455 Strayer, Joseph, 52 Streeck, Wolfgang, 142, 147–48 structural reform, in Latin America, 9–10 student movements, Chile, 87 Suárez, Adolfo, 156 Svampa, Maristella, 448 symbolic power ambiguity of, 54 the concept of, 51–52

Index tax avoidance, Friedman on, 146 tax policy, in Latin America, 8 tax reform Chile, 89 measures, 8 Spain, 156 taxation features of neoliberal systems, 148 neoliberalism from the perspective of, 145–47 Spain, 150–52, 157–59 Taylor, Matthew M., 14 Teichman, Judith, 14, 505–6 territorial autonomy movements changes in movement infrastructure, 475–81 Catalonia, 479–81 Guayas, 477–79 Santa Cruz, 475, 477 class composition, 469–70 conceptual clarifications, 464–66 conclusions about, 486, 489 cultural perspective, 469 influence in Europe of Latin American antineoliberal mobilization patterns, 463 intensification of Catalan separatism in Spain, 462 in Latin America, 462–63 protest cycles and framing strategies, 482–86 Bolivia and Ecuador, 482–84 Catalonia, 484–86 roots of intensified mobilization, 466–70 threats to the status quo, 470–75 Catalonia, 473–74 Guayas, 472–73 Santa Cruz, 470–72 territorial power the concept of, 46 endemic deficiencies in Latin America, 47 Thatcher, Margaret, 114, 121, 143 Thatcherism, 69 Tilly, Charles, 320, 436, 496–99, 525–27 Tironi, Eugenio, 365 Tlatelolco massacre (Mexico, 1968), 106 Tohá, Carolina, 20 Toledo, Alejandro, 29, 228 Torres, Juan José, 470, 471 Towards a History of the National-popular in Bolivia (Zavaleta Mercado), 435 TPP (Trans-Pacific Partnership), 30 trade policy index, measures, 5

Index transport infrastructure Latin America development history, 291 impact of neoliberal reforms, 50, 310–11 neoliberal recommendations and challenges, 291–94 problems, 291 neoliberal reforms Argentina Fernández de Kirchner’s policies/ efforts, 297–98 Menem’s policies/efforts, 294–98 Brazil under Cardoso, 299–301 comparison with Argentina, 301 under Collor, 299 and the legacy of powering, 301–2 under Lula and Dilma, 302–4 Chile Pinochet regime, 304–5 post-Pinochet, 305–6 results, 310 Transantiago plan, 306–10 Trump, Donald, 91 Tupac Amaru, 29, 437, 439 Tupaj Katari, 437, 439 TVA (Tennessee Valley Authority), 510, 515–19 Unidad Popular (UP), Chile, 70, 74–75, 77, 78, 82, 89 United Nations, Declaration on the Rights of Indigenous Peoples (UNDRIP), 444 United States, border policy, 176 Uribe, Álvaro, 32 Uruguay electoral success of the new Left, 325 social policy reforms, 327, 331 Valdés, Maria Fernanda, 161, 162, 502 Valdes, Rodrigo, 234 Valdivia, Verónica, 362 Van Cott, Donna Lee, 446, 453 Vargas Llosa, Mario, 29, 439

547 VAT rates, higher rates abolished in European countries, 152 Velasco, Andrés, 86 Velasco Alvarado, Juan, 28 Venezuela economic performance, 34 electoral success of the new Left, 325 indigenous political representation, 445 Vergara, Pilar, 359 Vielman, Carlos, 191 Villén-Pérez, Sara, 320 Virginia School, 146 Vizcarra, Martín, 30 Vizenor, Gerald, 431 Wade, Peter, 446 Warlouzet, Laurent, 390 “Washington Consensus,” 72, 161, 271, 317–18, 432, 444 Webber, Jeffrey, 434 Weber, Maximilian Karl Emil “Max,” 47, 49, 51 welfare, postneoliberal model of, see under social policy reform Weyland, Kurt G., 506 Whyte, Jessica, 349 Williamson, John, 432 Wilson, Harold, 143 WOLA (Washington Office Latin America), 186, 188, 193 Wolfe, Patrick, 434 women, role of in the formation of modern states, 360, 364 women’s rights, postneoliberal neglect, 331 Xi Yinping, 91 Yashar, Deborah, 441, 453 Yazzie, Jared, 456 Zapata, Emiliano, 439 Zapatero, José Luis Rodríguez, 40, 159, 398 Zapatista movement, Mexico, 277, 439 Zavaleta Mercado, René, 435–36 Zedillo, Ernesto, 26, 109, 277, 278