The Internationalization of Palace Wars: Lawyers, Economists, and the Contest to Transform Latin American States 9780226144276

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The Internationalization of Palace Wars

The Chicago Series in Law and Society Edited by William M. o 'Barr and John M. Conley

THE * * * * * * * * * * * * INTERN ATI 0 N ALIZATI ON OF PALACE WARS * * * * * Lawyers, Economists, and the Contest to Transform Latin American States

YVES DEZALAY BRYANT G. GARTH

The University of Chicago Press Chicago and London

YVES DEZALAY is a director at Maison des sciences l'homme, Centre National de la Recherche Scientifique, Paris. BRYANT G. GARTH is director of the American Bar Foundation. Together they wrote Dealing in Virtue: International Commercial Arbitration and the Construction of a Transnational Legal Order, published by the University of Chicago Press, and coedited Global Prescriptions: The Production, Exportation, and Importation of a New Legal Orthodoxy. The University of Chicago Press, Chicago 60637 The University of Chicago Press, Ltd., London © 2002 by The University of Chicago All rights reserved. Published 2002 Printed in the United States of America II

1009 oS 07 06 05040302

ISBN: ISBN:

12 345

0-226-14425-9 (cloth) 0-226-14426-7 (paper)

Library of Congress Cataloging-in-Publication Data Dezalay, Yves, 1945The internationalization of palace wars: lawyers, economists, and the contest to transform Latin American states I Yves Dezalay, Bryant G. Garth. p. cm. - (The Chicago series in law and society) Includes bibliographical references and index. ISBN 0-226-14425-9 (cloth: alk. paper) - ISBN 0-226-14426-7 (pbk.: alk. paper) I. Latin America-Foreign relations-United States. 2. United States-Foreign relations-Latin America. 3. Latin America-Politics and government-194S19S0. 4. Latin America-Politics and government-19 So- . 5. Globalization. 6. Latin America-Economic policy. 7. Expertise-Political aspects-Latin America. S. Law Reform-Latin America. 9. Law and economic development. I. Garth, Bryant G. II. Title. III. Series. F141S.D49 2002 9S0.03'3-dC21

2001053003

@) The paper used in this publication meets the minimum requirements of the American National Standard for Information Sciences-Permanence of Paper for Printed Library Materials, ANSI Z39.4S-1992.

Contents

Acknowledgments vii Chronologies ix Terminology and Abbreviations xm PART ONE

Imperial and Professional Strategies within the Field of State Power Introduction 3 Retooling Statesmen to Restructure the State: From Heritiers of European Legal Culture to the Technopols Made in the USA 17 3. The Internationalization of Palace Wars 32 I.

2.

PART TWO

Hegemony Challenged: Making Friends, the Cold War Roots of a Reformist Strategy 4. The Archeology of the New Universals: The Cold War Construction of Human Rights and Its Later Avatars 61 5. The Chicago Boys as Outsiders: Constructing and Exporting Counterrevolution 73 6. Fostering Pluralism and Reformism 95 7. The Paradox of Symbolic Imperialism: The Southern Cone as an Explosive Laboratory of Modernity 1 10 PART THREE

Competing Universals: The Parallel Construction of Neoliberalism in the North and the South 8. The Reformist Establishment out of Power: Investing in Human Rights as an Alternative Political Strategy 127 9. From Confrontation to Concertaci6n: The National Production and International Recognition of the New Universals 141

vi Contents PART FOUR

Reshaping Global Institutions and Exporting Law Fragmented Governance: A Washington Agenda for Reshaping Global Institutions and National Expertises I63 II. Top-Down Participatory Development: Putting a Human Face on Market Hegemony and Trying to Stem the Social Violence of Globalization I 8 6 12. Lawyer Compradors as Opportunistic Institution Builders I 9 8 13. Reformist Strategies around the Courts 220 14. The Logic of Half-Failed Transplants 246 10.

Notes 251 References 3 0 I Index 317

Acknowledgments

We are grateful for the support of the many individuals and institutions that made it possible for us to undertake this research and bring it to fruition. The American Bar Foundation has provided most of the resources and a great institutional setting for the project's home. The research was also blessed with a generous grant from the National Science Foundation (grant no. SBR-95I0925). Our research approach required us to conduct numerous interviewsin this case close to four hundred-in places that at the outset were relatively new to us. While the sheer number of interviews and confidentiality constraints preclude providing a complete list of names here, suffice it to say that we have met a fascinating array of people, including leaders of major human rights institutions, insider journalists, powerful and influentiallawyers and economists, and even two former presidents. Interviews were conducted between March 1995 and October 1998 in the following cities: New York; Mexico City; Monterrey, Mexico; Rio de Janeiro; Sao Paulo; Brasilia; Washington, D.C.; Buenos Aires; Cordoba; Santiago, Chile; Atlanta; and San Diego, California. Because finding out who to contact, contacting them, and persuading them to talk to us is never a simple matter, we obviously owe much to individuals willing to share insights into not only their own institutions but also the people who inhabit and construct those institutions. In Argentina, we were especially helped by Carlos Rosencrantz and Catalina Smulovitz of Buenos Aires and Carlos Lista and Maria Ines Bergoglio of Cordoba; in Brazil, by Eliana Junqueira and Lydia Segovia in Rio de Janeiro and by Afranio Garcia, Roberto Grun, and Sergio Miceli in Sao Paulo; in Chile, by Jorge Correa and Edmundo Fuenzalida; and in Mexico, by Hector Fix Fierra and Sergio Lopez Ayllon. Maria Dakolias belongs on this list for her insights into the World Bank and the people who inhabit it. Several u.S. scholars with strong links to the countries we studied have also been extremely useful, especially two from the University of Wisconsin: Joe Thome, who shared his insights about human rights lawyers and court reform in Chile, and David Trubek, who provided key contacts in Brazil at the outset and then provided essential insights about vii

viii Acknowledgments

how to understand what we found. We have also been fortunate in finding two graduate students doing related fieldwork, and we very much appreciated their willingness to talk to us about their own research: Lisa Hilbink, who was studying the role of the courts in Chile, and Christopher James Welna, who was studying human rights organizations in Mexico. Our work has been presented in many places, and we have learned much from the interactions with our audiences, but we also want to single out a few people who read portions or all of the manuscript and made especially helpful comments. In addition to some of those already named, we would like to mention Maria Gloria Bonelli, Javier Couso, Marisa Navarro, Ben Ross Schneider, and Arthur Stinchcombe. A young scholar who was for a time also a research assistant on this project, Sarah Babb, made important contributions to our research on economists and on the economies of the countries under study. Finally, two readers of an earlier version of the entire manuscript, Pierre Bourdieu and executive editor John Tryneski, at the University of Chicago Press, deserve special thanks for their gentle encouragement to revise the manuscript, substantially reducing the length by eliminating chapters devoted to single countries and enhancing the more comparative and theoretical chapters. The book is definitely much stronger and more readable as a result of those suggestions. We also want to note how grateful we are for the encouragement that we have received from the board and staff of the American Bar Foundation (ABF). Roz Caldwell, the assistant to the director of the ABF, skillfully keeps the project organized and manages all the correspondence, manuscripts, and papers that this kind of work produces. Finally, we thank Joanne Martin, the associate director of the ABF, whose competence and dexterity in handling administrative matters at the ABF makes it possible for Bryant Garth to undertake the extensive travel necessary for this research.

Chronologies

Note: We have drawn extensively on the recent histories of five countries and numerous organizations in the writing of this book. It may be helpful to some readers, therefore, to have a list of some of the important events that provide the setting for the discussions in the text. These chronologies, however, are meant neither to summarize the reading we've done about the countries' histories nor, necessarily, to highlight what historians would deem to be most significant. They are meant simply as aids to readers of this book who are unfamiliar with the broader historical settings.

Argentina 1946

Juan Peron elected president after coming to power through military coup

1955

military coup topples Peron

1958 - 62 Arturo Frondisi elected president 1966

military coup brings Juan Carlos Ongania to power

1973

Juan Peron elected president, returns to Argentina, and then dies; his wife Isabel Peron assumes power

1975

military coup brings Argentine generals to power; Jose Martinez de Hoz becomes minister of economy and serves until 1981

1976 -79 "dirty war" by government against political opposition

through "disappearances" 1982

debt crisis commences

1982

Falklands/Malvinas War lost by Argentina, ending generals' control

1983 - 8 9 Raul Alfonsin becomes president following democratic

election 1983-84 Comision Nacional de Desaparecidos (CONADEP) takes

testimony about human rights violations and reports on these violations in Nunca mas ix

x Chronologies

1985

trials of the generals

1989-99 Carlos Menem from the Peronist Party serves as president 1991-96 Domingo Cavallo becomes minister of the economy 1999

Fernando de la Rua elected president

Brazil 1964

military coup topples "populist" government of Belchior Marques Joao Goulart

1966

law and development begins with the creation of the Center for Study and Research in Legal Education (CEPED) in Rio de Janeiro

1968-74 Antonio Delfim Netto appointed minister of finance; serves as minister of planning 1979-84 1968-69 beginning in December 1968, the hardliners in the military take over and increase repression over opposition; denunciation of torture by Amnesty International 1969

Centro Brasiliero de Analise e Planejamento (CEBRAP) established by Fernando Henrique Cardoso and others in Sao Paulo with funding from the Ford Foundation

1985

civilian government returns with election of Tancredo Neves; Jose Sarney becomes president when Neves becomes ill and dies

1988

new Brazilian constitution

1992

President Fernando Collor de Mello impeached for corruption

1995

Fernando Henrique Cardoso elected president

Chile 1957-70 Chile Project: about IOO Chilean economics students are educated at the University of Chicago-the so-called "Chicago Boys" 1965-66 Chile Law Project of the Ford Foundation begins with an initiative of the faculty of the University of Chile Law School. 1970

Salvador Allende elected president

1973

military coup brings Augosto Pinochet to power; Chicago Boys provide economic program of "shock treatment" to

Chronologies

XI

contain inflation; strong repressive measures taken against political opposition I975

Initial Peace Committee set up to protect targets of repression disbanded by Pinochet and brought under the umbrella of the Catholic Church as the Vicariate to stay alive

I980

new "Constitution of Liberty" ratifies Pinochet rule

I982

debt crisis in Chile

I988

plebiscite on the continuing rule of Pinochet results in a no vote, leading to a presidential election

I990

Patricio Aylwin begins term as elected president, returning Chile to civilian rule

I990-9I Commission for Truth and Reconciliation investigates and

reports on human rights violations 2000

Pinochet taken into custody, initially in London, for human rights violations

Mexico I9IO-20 Mexican Revolution begins, leading to the fall of the govern-

ment of President Porfirio Diaz I9I7

Mexican Constitution

I928

the Partido Nacional Revolucionario (PRN) created as a single party to unite all the supporters of the Mexican revolution, which then becomes the Partido de la Revoluci6n Mexicana (PRM) in I938 and the Partido Revolucionario Institucional (PRI) in I946; the PRI remains in power until 2000 and the election of Vincente Fox of the PAN (Partido Acci6n Nacional)

I982

debt crisis begins

I988

Carlos Salinas elected president after disputed election

I990-93 negotiations culminating in the North American Free Trade

Agreement (NAFTA) I994

Ernesto Zedillo elected president

2000

Vincente Fox of PAN elected president

xii Chronologies

United States and More General Events I952

International Commission of Jurists formed

I96I

Alliance for Progress announced by President John F. Kennedy

I 96 5 - 66 law and development program begins in Latin America I968

Vietnam War divides Democratic Party; Richard Nixon elected president

I973

Heritage Foundation established

I973

Watergate break-in against Democratic Party

I977

Jimmy Carter becomes president, partly on platform of human rights

I977

Amnesty International wins Nobel Prize

I978

Lawyers Committee for Human Rights established in New York

I982

Human Rights Watch established in New York

I982

Inter-American Dialogue established in Washington, D.C.

I982

debt crisis threatens U.S. banks including especially Citibank

I983

Ronald Reagan elected president; the approach identified with Jeanne Kirkpatrick, Reagan's ambassador to the United Nations, justifies support for "authoritarian states" as opposed to "totalitarian states"

Terminology and Abbreviations

Note: We undertake here to provide general definitions of some of the terms that may be unfamiliar to readers. These definitions, as well as definitions of some of the key acronyms and abbreviations found in the text, can be helpful, but we must point our that any effort to give too much precision to many of the terms is inconsistent with the recognition-crucial to our approach-that the contests over the legitimacy of terms and their authorized meanings are critical aspects of the palace wars that are our focus. BHC:

Banco Hipotecario de Chile (Chile)

CEBRAP: CEDES: CEP:

Centro Brasilerio de Analise e Planejamento (Brazil) Centro de Estudios Sociales (Argentina)

Centro de Estudios P6blicas (Chile)

CEPAL:

La Comision Economica para America Latina (Chile)

CIEPLAN: Corporacion de Investigaciones Economicas para Latinoamerica (Chile) Chicago Boys: a term coined originally in Chile to refer to University of Chicago-educated economists who entered the government seeking to implement the neoclassical theories learned in Chicago; groups in other countries have similarly been labeled comprador: a term that was developed in Asia to refer to locals who could serve as brokers or agents for foreigners seeking to conduct business in their location; we use the term only when referring to someone who is in the position of speaking both for the foreigners to the locals and for the locals to the foreigners Concertaci6n:

Concertacion de Partidos para la Democracia (Chile)

clientelism: a term that suggests criticism or a discrediting of a reliance on personal and familial relationships to govern the state and economy; we use the term only to note the continuing role of personal relationships CNDH:

Comision Nacional de Derechos Humanos (Mexico) xiii

xiv Terminology and Abbreviations

developmental state: a term that originally referred to the Japanese state and the role of the government in promoting development, it then became a term applied to other governments to justify taking a leadership role in economic development; whether the term succeeds in presenting a legitimate strategy for economic management is highly contested dollarization: originally designed to refer to the process of pegging a country's currency exactly to the u.s. dollar, exemplified by Argentina, we use this term also to refer to the way that ideas and expertise can also be valued abroad according to what they can buy in the United States FIEL: Fundacion de Investigaciones Economicas Latinoamericas (Argentina) FLACSO:

Facultad Latinoamericana de Ciencias Sociales (Chile)

a French term for heirs that also refers to the notion of descendants from the established elite

heretiers:

I-AD:

Inter-American Dialogue (United States)

IDES:

Instituto de Desarrollo Economico y Social (Argentina)

ICJ:

International Commission of Jurists (Switzerland)

IEERAL: Instituto de Estudios Economicos sobre la Realidad Argentina y Latinoamerica I1J:

Instituto des Investigaciones Juridicas (Mexico)

law and development: the phrase used to characterize a movement in the I960s and I970S to make law part of the package of expertise used to promote economic development neoliberalism: a term used to characterize the economic recipes that were associated with economists such as Milton Friedman OAB:

Ordens de Los Abogados do Brasil (Brazil)

PAN:

Partido Accion Nacional (Mexico)

PRI:

Partido Revolucionario Institucional (Mexico)

rule of law: for our purposes, the term refers not to a condition that can be measured but, rather, to a shorthand phrase or slogan used to promote investment in law and legal institutions technopols: a term used to characterize and to promote a group of Latin American leaders educated in the United States and identified with approaches considered appropriate in U.S. economic and political circles UNAM: Universidad Nacional Autonoma de Mexico (Mexico) USAID: U.S. Agency for International Development

Terminology and Abbreviations

xv

Washington consensus: a phrase developed in I990 to suggest that the u.s. government and the multilateral organizations in Washington had come to an agreement on what kind of state and economy would be appropriate in Latin America; from the beginning, the phrase has been subject to much debate, and recently it has been discredited for implying that liberal economics can be successful without building complementary institutions-thus we now see groups promoting post-Washington consensus approaches

Chapter I

Introduction

T

he four countries we studied in Latin America-Argentina, Brazil, Chile, and Mexico-are full participants in a growing global industry promoting the import and export of the "rule of law" (Carothers I996, I998, I999; McClymont and Golub 2000; Metzger I997; Pistor and Wellons I999; Quigley I997; Rose I998; Widner 200I). In Africa, Asia, Eastern Europe, and Latin America, a burgeoning group of consultants, think tanks, philanthropic foundations, and national and transnational agencies has come to the conclusion that, whatever the problem, an essential part of the solution is an independent and relatively powerful judicial branch. "Good governance" requires the rule of law and a set of institutions to preserve it. One group seeks to promote an independent judiciary, access to the courts, public interest law, and better judicial remedies in order to protect the environment, reduce violence against women, and control police misconduct. Another invokes essentially the same institutional ideals in order to ensure safe streets and to promote the security of financial investments. Even fair elections are supposed to be guaranteed by a strong and independent judiciary. Law is once again, as in the I960s and I970s, central to the development agenda. The "law and development" movement of the I960s and I970S similarly set about to export a set of institutions and practices intended to build the rule of law. Some individuals clearly benefited. From the perspective of a generation later, we can see that, for example, those Brazilians who gained access to U.S. legal technologies, U.S. credentials, and U.S. contacts through the programs funded as part of law and development 3

4 Chapter I

were able to turn these U.S.-based assets into impressive careers as brokers between their home countries and multinational business investors. The efforts to change the status of law in the countries we studied were, however, far less successful. The promised reforms in legal education and legal research did not take place. Law schools continued to be dominated by part-time professors active in politics, litigation, the judiciary, business, or elsewhere. As a result, the "failure" of law and development is now generally conceded (Gardner 1980; Trubek and Galanter 1974).1 Its critics had pointed out a certain naivete in the law and development movement, noting that the proponents had optimistically promoted their own agendas without considering how those agendas would interact with state power in the countries targeted for change. It was on the strength of the criticisms that the movement to study "law in context" was built (Garth and Sterling 1998; Twining 1997). Despite this strong base for skepticism, however-which is grounded in an awareness of the importance of social context and the structure of the states in which legal institutions operate-the new wave of law and development, including many of the earlier critics, pays very little attention to that context. There are certainly fervent critics of the efforts to export the rule of law, but they tend to argue that it is merely a question of finding the right approach (Carothers 1998; Hammergren, 1998; Lawyers Committee for Human Rights 1996). This relatively optimistic view operates especially, if paradoxically, among those who focus on legal strategies supposed to help the disadvantaged-those, that is, involved in public interest law, advocacy law, or progressive lawyering, which is termed "the emancipatory pillar" by Boa Santos (Keck and Sikkink 1998; McClymont and Golub 2000; Santos 1995; Sarat and Scheingold 1998). It is their beliefthat a good legal program will improve the position of the disadvantaged. This optimism, from our point of view, is part of the social context that must be explained. The participants in these efforts to export a socially progressive or otherwise reformist agenda tend to be characterized by a partial blindness that is structurally determined by who they are and their strong conviction about that role. The blindness also relates to the fact that, while the United States has stepped into the shoes of the European imperial powers, U.S. power comes in part from an anti-imperialism long dressed in benevolent ideals (Smith 1994). There are reasons, therefore, for the literature on the new law and development to be overly optimistic and to minimize again the attention given to social context and to the structures of state power. The literature tends not to recognize that, even if "successful" in the sense of gaining a local foothold, fundamental differences in the role of legal education and, more generally, the place of law in the state will ensure that any practical social impact of public

Introduction

5

interest law, for example, will not be elsewhere what it might be in the United States. Rather than condemning the new law and development or insisting that it must always fail, we wish to renew attention to what the existing critics and the proponents tend to neglect: the place of law in specific national contexts to which law is exported or imported. The failures so apparent in the earlier law and development movement-and now in the new one-make it obvious that law cannot be considered merely a matter of technology to be acquired off the shelf as the best or most efficient practice. Our ambition in this book begins with this basic critical insight. We hope, in addition, to go beyond reminding everyone what they knew a generation ago. We aspire to develop a positive social analysis of how law relates to the field of state power and its reproduction and transformation over time. Such an analysis must begin by recognizing that law is at the core of the processes that structure, produce, and reproduce the field of power. More concretely, the key to the position of law is its relationship to two sets of more or less closely connected institutions-the faculty of law and the state. The faculties of law serve central roles in the reproduction of knowledge, governing elites, and the hierarchies among elites and expertises. Efforts to transform the faculties of law, such as that represented by the law and development movements, inevitably touch the relatively fragile fabric of power, legitimacy, and domination embedded in the basic structures of those faculties. In order to understand what happens with legal exports, therefore, it is necessary to study in depth how law is constructed, the power equilibriums it embodies, and the position of law in the reproduction of power. Framed in this manner, it is clear that the problem of legal export and import should be seen both as internationally significant and as an internal domestic matter of some importance to the countries involved. For example, the fragile equilibrium behind the Brazilian state has been repeatedly challenged over the course of the twentieth century, both from inside and from outside the law. The law was challenged, in part, because a relatively conservative group of law graduates cloaked in legal legitimacy claimed to represent Brazilian society and social forces. Outsiders from and newcomers to the establishment were constantly challenging that position, helping to promote varying degrees of turmoil in national politics and governance. As part of that challenge and the responses to it, Brazilians could turn to imports from outside, but they would do so only if the imports suited their own local strategies. The success of the import therefore is inevitably tied to domestic palace wars and to the international competition to export state expertises.

6 Chapter I

The role of law and development-today and a generation ago-thus requires an examination of a combination of internal and external forcesnot just internal and external to the law but national and international forces as well. A focus on law inevitably invokes the international in any event, since law has always been a vehicle for colonial politics. Lawyers have prospered as compradors serving to connect the local and the international-speaking alternatively for one side and then the other. The countries that we study in this book-all with strong legal traditions derived from colonialism-reveal the long and close historical relationship between the national and international. The reproduction of the local elite has been legitimated and constructed through international borrowingrepresented for many decades by elite voyages to Paris or Coimbra for a legal doctorate that would assure a high position back home. A European education reinforced the colonial relationships even while it provided a basis to challenge colonialism-at least partly. This colonial relationship continues to exist, but the relative power of Europe has declined. Law is now involved in a competition between Europe and the United States, with the United States gaining influence. As in the past, furthermore, leading global powers, including the United States, tend to export not just specific approaches or products but also their internal fights and the strategies used to fight those fights. In the period since the end of World War II, therefore, Cold War policy in the United States and the internal conflicts resulting from it have been closely linked to U.S. international strategies generally. These Cold War strategies included strong scholarly as well as idealistic dimensions-as can be seen in the title of Walt Rostow's The Stages of Economic Growth: An AntiCommunist Manifesto, published in 1960. Economic theory based at the Massachusetts Institute of Technology was formulated and mobilized as part of the fight against communism. This approach, which provided a key role for intellectual production, can also be seen in the Alliance for Progress, the programs of USAID and the Ford Foundation, the law and development movement, liberal economics, the human rights movement, and elsewhere. These export programs have been heavily implicated in recent Latin American transformations and are our focus in the book. These topics necessarily result in a rather complicated and multidimensional story involving national and international dimensions, law and other kinds of expertise that challenge law, and the changing role of the state. The post-World War II period that we cover, moreover, is one of major transition, from strong states focused on economic development to states predominately organized according to neoliberal economic policies. This period also encompasses major shifts from authoritarian politics to contested and relatively open elections. The challenge is to find a way to

Introduction

7

make sense of both these major transformations and the complex factors and relationships connected to and connecting law and the state. Our research strategy has two main components. The first takes as a starting point the finding that law is so integral to local "palace wars" that it can be used to gain entry into larger questions. In other words, we use the law, legal actors, and legal institutions as points of access to local struggles. Once preliminary research has been undertaken, we can use those findings to decode and go beyond the story of law. We emphasize, therefore, that law provides a point of entry but only an entry. Instead of putting law at the center of our story, as do accounts of judicial reform or particular legal institutions or organizations, our method aims to use law to produce a work more akin to comparative politics. In order to understand law better, it is necessary to look outside the law. The concept of international strategies-the second component-provides a means to study the relationship between global influences and state transformations. International strategies refer to the ways that national actors seek to use foreign capital, such as resources, degrees, contacts, legitimacy, and expertises-which we pluralize in order to highlight the competing forms and technologies-to build their power at home. Examples of international strategies used to fight local palace wars include the use of Chicago economics by the Pinochet government and its allies to discredit the government they replaced and the use of international human rights law by the opponents of Chile to discredit Pinochet's regime. Foreign expertise is used, that is, to fight against opponents for control over state power. We employ this approach for two basic reasons, one theoretical and one practical. The theoretical rationale is that law, and more generally the state, is always shaped by interactions and competition between states. The international competition therefore leads naturally into the construction of the national field of state power. This international dimension of national stories, with relatively few exceptions (e.g., Smith 1996), is also typically neglected in area studies and even in comparative politics. The practical justification is that international relations is in one way or another the point of entry for everyone who seeks to study issues involving the transformation of the state. The literature itself, including area studies as it developed after World War II, is a tool, a by-product, and the result of international strategies including the Cold War (Chomsky 1997). The literature necessarily leads into battles about the field of state power. International strategies, moreover, are often learned strategies. To begin with, scholarly capital in the form of books and articles serves as a kind of currency that can be used to validate the credentials of those seeking to invest internationally (as shown also in Dezalay and Garth 1996b).

8 Chapter r

Equally important, scholarship functions as a weapon in international competition: descriptions that purport to define reality can be used to influence politics and political legitimacy. Finally, learned practitioners play a major role in international transformations not only as academics but also as lawyers and consultants of one form or another. A number of aspects of international relations and the scholarship around it therefore point to the battles that take place around the states. Our point of entry has its own dangers. There is a temptation to decontextualize the international strategies into such categories as "epistemic communities" or "advocacy networks," which highlight only the international character of the actors. A related temptation is to take as given the ideals of science produced in the north to create these cosmopolitan communities and ask only about how those in the south came to share those "preferences"-for example, asking how southern economists converted to u.s. approaches to economic transformation; the construction of the preferences of the elites in the United States is ignored or simply taken for granted. This silence, which relates again to the tendency of the exporters not to question their own universals, is particularly important in the world of international strategies, since international strategies are typically played out in a space where the borders and categories are blurred. Moving from one country to another, it is difficult to evaluate such resources as family backgrounds, the prestige of schools, and the titles of various nationally held positions. The terminology is frequently not the same, even when the words are expressed in the same language, and those with the same name may occupy very different social positions. A judge or a professor in one country, for example, may have little in common with presumed counterparts in different countries. It is even more difficult to assess affiliations such as the head of an institute or human rights organization, or the value of national capital such as a family name or a relationship formed at school. This context, which provides some of the opportunity (and risk) of international strategies, also makes it difficult for scholars to make sense of actors and preferences. Our focus on international strategies therefore emphasizes the national fields of power in which they are embedded. We cannot look at importers and exporters without seeing how their strategies are shaped and determined by their positions in the national fields of the north and the south. International strategies are not ends in themselves. They reshape and redefine the national fields of state power according to agendas of both the north and the south. The focus on international strategies, therefore, leads toward an understanding of the construction and redefinition of the state-and the hegemonic processes and new universals that are so important in that transformation.

Introduction

9

International strategies, finally, tend to be highly class determined. The cosmopolitan families who speak English well enough and have sufficient material resources to take advantage of opportunities in the United States, for example, are not just average families. The people who follow these strategies are typically individuals who have some inherited resources and a disposition to take advantage of foreign opportunities. Those who study changes associated with "globalization" tend to neglect this aspect of the agents who bring the change. It is important to ask who gets the advanced degrees in the United States, who is invited to key international conferences, and generally who speaks on behalf of the south in the north (and of course, vice versa). Our research, to summarize briefly, seeks to contribute to an explanation of the way in which the field of state power has been reproduced and transformed in the decades since the end of World War II. During this period, international strategies have been an important but almost completely neglected component of this process. Using law as a point of entry and international strategies as our major research tool, our ambition is to shed new light on processes of social construction of law and the state. Research Strategy

We rely heavily on lengthy personal interviews, which follow a strategy that can be characterized as relational biography. We especially seek out the brokers, courtiers, and learned compradors who are key actors in the import and export of expertises. A major risk of listening to these individuals tell their stories is the temptation simply to accept their view of the world if it fits our own views and strategies. The first step in our research strategy, which comes from reflexive sociology, is designed to minimize that risk. It is essential to find ways to understand who these individuals are and where they come from in order to see the relationship between what they say and their own strategic positions. Biography provides a way to learn how their points of view and strategies define their possibilities, who their competitors are, and what capital they can mobilize. Following Bourdieu (1993; 1996a) and our prior work (Dezalay and Garth 1996b), we use biographical accounts of individual choices and career strategies to reveal the hierarchical structures and institutions in which the individuals and groups operate. Biography also makes it possible to gain some knowledge about family capital, which is rarely discussed by scholars but is highly relevant to international strategies. In addition, this method helps to overcome the artificial segmentation that prevents an understanding of relationships and influences that cut across existing categories and institutions. This approach therefore over-

IO

Chapter I

comes some of the limitations of the new institutionalism and of more focused sociologies of professions or elites that, with a few exceptions (e.g., the work of Roderic Camp 1980; 1989), do not consider the field of power. Tracing the careers of particular individuals makes it obvious, for example, that the world of foundations and that of human rights nongovernmental organizations (NGOs) have always been very closely related; how the World Bank interacts with local situations through concrete networks and careers moving back and forth between the bank and national government; and how corporate law firms or advocacy organizations modeled on those in the United States are brought to new terrains. Biographies link categories that have been constructed, in part, to hide connections. A focus that takes for granted existing divisions between "professions" or between "institutions" neglects the way that particular professions and institutions are constructed and legitimated. In contrast, the emphasis on careers and biographies allows researchers to see how institutions and professions are made and gain legitimacy out of various kinds of professional and social capital. Put another way, the purpose of individual interviews focused on biography is to reveal the collective biography of relatively autonomous fields. From this perspective, the individuals do not just exist per se, but they also provide a way to examine and decode the complex fights and divisions that characterize a particular field at a particular time. Our biographical method is therefore cumulative since the information from each interview can be used to build up and to examine the more general biography of the field. We see, in other words, what moves groups into the field of state power, what they bring in terms of expertises and networks, how they operate, and how they are oriented on terrain characterized by intense competition and constant change. The accent on structures and relations is also meant to avoid the problems that arise when individuals are invested with particular fixed identities-for example, for or against human rights, politically progressive or conservative, a supporter or opponent of neoliberalism or democracy. Identities adopted in particular contexts must be related to the structure of the field and the opportunities that are presented at particular times and places. An individual can act as a political scientist in one context, for example, and a lawyer in another; a spokesperson for nationalistic values in one context, a booster of the international "rule of law" in another. The international arena, to repeat, multiplies the possibilities for double strategies of smugglers, compradors, and brokers, since there are many potential uncertainties and mistranslations surrounding individual positions. A reflexive approach is not alone sufficient to avoid providing a partial and biased account. It is also necessary to obtain multiple points of entry

Introduction

I

r

in order not to be captured by one point of view. The multiplication of points of entry is also necessary to produce a relational and collective biography of the field. Detailed research on fields of power therefore depends on finding various ways to enter the field and, once there, to find more than the story that facilitated entry. It is essential to find a way to talk with opposing camps to learn of the divisions that structure the field and define its possible orientations. We use the fact that we come from countries that, as Bourdieu has suggested (in Dezalay and Garth 1996b), are among the principal international competitors offering models of law and other expertises involved in state power. Our own national biographies and related points of entry help provide a first cut in exploring opposing camps. In Brazil, for example, there was a particularly strong division between an older generation that looked more toward France for its models (and spoke French) and a younger generation more oriented toward English and the United States. Since knowledge is a key weapon in the field of power, we also try to use our points of initial access to gain knowledge about conflicts and divisions in the field that can be used to expand the range of potential contacts. Following a tactic familiar to journalists, we use our accumulating knowledge to meet others and to gain access to further depth and complexity. We carried out more than three hundred interviews exploring the north and the south, the national and the transnational, and the law and the fields around the law. We started this research with some preliminary ideas about the relationship between transnational phenomena and national transformations, and we wanted our study to cover changes associated with both idealism and the demands of global business-often presented in opposition to each other. We have therefore focused on the international human rights movement, on the one hand, and on trade and the management of the various debt crises, on the other. Actors involved in those arenas have led us, not surprisingly, to philanthropic foundations, multinational law firms, the World Bank, and the International Monetary Fund (IMF), as well as to the universities and think tanks that are also central to the stories. One of the challenges of transnational research is to determine the names of relevant actors and how to contact them for interviews. It is relatively easy to find internationally oriented lawyers through the MartindaleHubbell international directory (Martindale-Hubbell 2000 ), and there are also some directories of nongovernmental organizations. Academic experts with strong connections to particular countries are also essential in providing names and helping to map the local landscapes. These academics not only possess valuable expertise but also typically are involved in a

L2

Chapter

I

number of important activities, such as consulting with international organizations, promoting activist groups, and working with foundations. From our perspective, it is essential both to learn from these actors and to situate them in the fields in which they operate. As suggested earlier, our different national backgrounds help us to find networks oriented toward the Continent and the French language as well as those oriented more toward the United States and the English language. We use the interviews and literature searches to find individuals who are not especially prominent on our own maps-local activists who do not speak English or French, for example, and who do not receive support from international funding sources. Given that our focus is on the relationship between the national and the transnational, it is also important to find people who reject the relationship-and have no international connections and interests. Despite our efforts, we recognize that some groups are much easier for us to locate than others. We try to build that understanding into our analyses, and we are confident that the groups we have examined do reveal the relevant processes we wish to explain. We recognize, however, that our analyses are necessarily stronger and more detailed with respect to some groups than others. A second methodological challenge is trying to master the historical and contextual detail so important for each country. As we became more familiar with the worlds that we are studying, we learned of topics and concerns that-had we known more at the outset-might have been addressed earlier in settings we could not revisit systematically. Readers with different experiences and networks will immediately think of topics that we might have explored and that would contribute to a full narrative. Similarly, while our approach draws on history, we do not have the command of the historical literature possessed by Latin American specialists. We have tried to find the most sophisticated secondary sources available, but we have necessarily drawn especially on those historical accounts that appear best to illuminate what we have found in our interviews. As with respect to the material taken from our interviews, we are most confident about our findings and interpretations when we are close to law and legal institutions. The paradox is that the role of law can only be understood if it is situated in relation to competing institutions and expertises around the law; yet the act of placing law at the center or using it as a point of entrylinked also to our training and careers to date and our access to literature and to people-inevitably limits what can be learned about competitors. While recognizing this paradox, we also make no apologies for using law as a point of entry into the role of transnational processes in the transfor-

Introduction

L3

mation of the state and its legitimization. The point is simply that much more can be said about many of the topics that we address. Finally, even if we try to control for our biases and limitations, we also must recognize one fundamental bias that is built into our approach: we overemphasize the international because the international actors are more visible from our point of view. This built-in bias leads to what we can be seen as the basic problematique of our research.

Problematique Our basic problematique-roughly translated as our own set of issuesis embedded in our strategy. Since we know that there is a structural bias in our approach in favor of the international, we try to make that bias the core of what we explain. The question is whether what we observe through our approach is the product mainly of national histories or whether it is determined by international factors-meaning especially the power of the United States and institutions behind it, such as the World Bank and the IMF. This definition of our task can be related to a variety of literatures. While our focus is sociological, we have much in common with the idea of path dependency that has recently been embraced by economists (see Krugman 1994, 221-44). Transformations in the state depend on the structure of the institutions that are already in place. The same idea is of course also central to area studies, which highlight national distinctions and histories, and even more so with respect to microsociologies of national legal systems and professions and to the recent rediscovery among economists and political scientists that "culture matters" (Harrison and Huntington 2000). On the other side, our approach relates to those who, in contrast to the national approaches just mentioned, emphasize the international dimensions seen, for example, in epistemic communities (e.g., Slaughter on the judiciary [2000]), advocacy networks (Keck and Sikkink 1998), "denationalized" elites (Sassen 1996), or a "transnational capitalist class" (Sklair 2001). We try to find a way to evaluate these two partial approaches, and in doing so we have adopted an approach that necessarily relates to world systems theory (see Wallerstein 2000). What is different in our approach, however, is that we try to uncover the links between the micro and macro positions. As a few others have noted with different but complementary approaches, the mechanisms of interchange are crucial to explain domestic transformations (Gereffi 1995; Maxfield 1997). The domains we consider-especially law, knowledge, institutions, the state-are symbolic fields with specific logics. The story, therefore, is much more complicated

I4

Chapter I

than the stories of power and hegemony that are so pronounced in world systems theory. We also continue to accept the basic integrity of the national perspective, which is even reinforced by the blurring of categories, the frauds, and the uncertainties connected with international strategies. Hegemonic processes, furthermore, produce paradoxical results. For example, the Cold War objectives of the u.s. foreign-policy establishment were brought to fruition by people-including human rights activistswho saw themselves as opposed to the establishment. Similarly, the leading opponents of the United States in the I960s, represented especially by Fernando Henrique Cardoso of Brazil, are now many of its leading friends. These paradoxical results lead to our core hypothesis: the results of particular exports of state expertises will depend on the extent to which there are structural homologies in the respective state fields of the importers and exporters. One example that we will develop is the intersection between reformist establishments out of power in the United States and in Chile, which provided the basis for the success of the human rights movement in the I970S and I980s. A second example, which we will also develop, is the upstart offensive against the reformist establishment by the Chicago economists in the United States and their counterpart "Chicago Boys" in Chile. Both these examples can be contrasted to the structural incomprehension of the early law and development movement when the work of the missionaries in Brazil seemed only to produce technocrats serving generals.

Organization of the Book The organization of the book reflects our effort to capture the microlevel processes of transformation that operate simultaneously in the north and the south. For practical reasons, we do not provide detailed case studies of each of the countries that we studied. We have produced such studies, and they are available for more detail and support for our conclusions about each country (Dezalay and Garth I996a, I997a, I998a, I998b, I999). Case studies, in addition, cannot elucidate the central hypothesis and basic problematique of the book in the way that more thematic chapters can. The book is thus organized around northern objectives and exporters and southern importers. The chapters should make it possible to see directly how similar northern strategies behave differently according to the position of the importers in the south. The power of the north and its specific objectives, in addition, makes it important to get deeper into the construction of those specific strategies-to produce a genealogy or

Introduction

15

archeology, in Foucault's terms. The story of state transformations is a story about the construction of new universals around human rights, the Washington consensus, and democracy and about how they relate in a complex way to what happened and happens in the south. The book is divided into four parts. In the first part, we explore the commonalities and differences in the structures of state power in Argentina, Brazil, Chile, and Mexico. The discussion beginning in chapter 2, which focuses on people, provides the framework for understanding the transformations that have taken place. In this chapter we profile the statespersons who can be seen to characterize the different structures of power and the state. The profiles reveal that there has been a move-a retooling of state elites-from law to economics and from European learning toward what is produced in the United States. This move, at the same time, reflects only one part of the current scene. The national differences continue to be important, and we highlight them in the second chapter in this part (chap. 3), which provides the basic story of the structural logic of the four different paths of transformation. We proceed, in this chapter, along two different axes. In one, we take the four countries and compare the way they received the exports of state expertise coming from the north. In the second, we concentrate on particular issues and expertises, specifically neoliberal economics, business law, and public interest law. There are strong differences among the states and among the issues and expertises. In the second part, we move back to trace the early roots of the new universals in the north. We begin (chap. 4) with the foreign policy establishment of the United States, the Cold War, and the beginning of the construction of the human rights movement. In the following chapter (chap. 5), we then trace the genealogy of what became the other pillar of the Washington consensus-the development of neoliberal economics centered at the University of Chicago. In chapters 6 and 7 we concentrate on how these and related state expertises or technologies of governance were exported and imported and on the very different results in the different structural settings. We there provide more detail and evidence of the microlevel processes that played out in the very different structural settings. In the third part (chaps. 8 and 9), we turn to the national production and international recognition of the new universals-human rights and neoliberal economics. The experience was more dramatic in the south, involving almost full-scale civil war, but we see the same process in the north of an establishment being divided, then pushed out of power, and finally regaining its position, in part, by championing human rights along

I6

Chapter I

with the new economic orthodoxy adopted by those who took power from them. In part 4 we canvas the current landscape and raise some questions about the durability of the new orthodoxy. The consensus appears far more solid when it is looked at from the north in terms of the perspective of the leaders of the south. If we look more carefully, using law as a point of entry, we see, in particular, that there are major differences between business law and the core of the institutions connected to law. What appears as a uniform "dollarization" of state expertise-where the values of expertise in the south depend on their market value in the United Statesis in fact quite asymmetrical. This unevenness raises questions about the legitimacy of the new state expertises in southern countries that-to date-appear to have embraced them. In the conclusion we seek to use the structural analyses to answer the question of why, given that there has been so little success in building the "rule of law" through judicial reform, the efforts continue and are even gaining momentum. The structural position of the importers representing a cosmopolitan elite, we suggest, leads both to the continuing efforts and to their limited impact.

Chapter 2

Retooling Statesmen to Restructure the State: From Heritiers of European Legal Culture to the Technopols Made in the USA

T

he focus of this book is on the field of power and transformations in the state and in the economy. We seek to explore the processes that led from the developmental or activist states in the I960s to the neoliberal democracies typical of today's world. Unlike most discussions of these processes and transformations, our approach highlights the actors. It is clear that the people who serve developmental states, for example, do not have the same profile as those who serve the neoliberal democracies. In addition, since the countries in Latin America are essentially dominated by more powerful countries in the north, the actors involved in the restructuring of the states must be related to shifting patterns of hegemony and dominance. The basic shift, seen throughout this book, is from an emphasis on law oriented toward the European Continent to an emphasis on economics oriented toward the United States. The basic shift, however, is not simply from one category to another. While it can be described as a change from the gentlemen lawyers of the state to a group of economists now linked to democracy, and we will employ that language at times, it is more complicated and more variable than those categories suggest. Indeed, there are no such things as the categories themselves. Each relates to a different kind of state and construction of the field of power. Our description of particular individuals is therefore not meant to determine so much whether they fit a category but, rather, to reveal the underlying institutions and structures that produce them. In Chile and Brazil, according to what we describe as the classic pattern (see chap. 3), gentlemen lawyers played dominant roles in and around the state. In Mexico, the legal elite replicated the major divide in the field of

I8

Chapter 2

power between those who governed the state and those who represented private power. And in Argentina, in another major variation, those closest to the cosmopolitan gentlemen lawyers, confronted with a fragmented and almost absent state, tended to invest only in gray areas around the state-actually avoiding the state. In contrast to these very diverse stories, the actors oriented toward economics made in the United States appear much more homogeneous. They appear to occupy much more similar positions in the different states. Given this increased homogeneity, organized around economics and the United States, how does one explain why it happened? It might simply be the product of a natural evolution. Better communications and international exchange, coupled with the natural development of new expertises that are more technically sophisticated than generalist law, could simply bring a general agreement about what states need to be successful. Increased homogeneity could also be the specific analogue to U.S. global hegemony-an export of a specific expertise built initially around Chicago economlcs. We are convinced that there is more homogeneity today, but we want to emphasize that these are questions of degree. New experts who look very much alike across different countries are still the products of particular trajectories rooted in different national histories and structures. As actors within those national contexts, they will necessarily follow diverse trajectories. Accordingly, we will operate at two levels in this chapter. We will seek both to distinguish the "gentlemen lawyers" from the "technopols" and to situate each actor characterized as one or the other in the quite distinctive national structures that make them operate in distinctively national patterns. We will combine concrete pictures of national fields of state power with sketches of the trajectories of individuals who illustrate patterns of behavior forged in those national fields. Gentlemen Politicians of the Law The gentlemen politicians of the law represent a kind of aristocratic ideal of government. According to this ideal, which still has many adherents (e.g., for the United States [Kronman 1993]), learned law graduates draw on their general legal training and practical wisdom to occupy the leading positions in the social order-as intellectuals, politicians, business leaders, and, above all, intermediaries between public and private, the learned world and the world of affairs. The generalist knowledge that they celebrate has been attacked from at least the time of Auguste Comte, but these politicians of the law have been able to maintain their position to varying degrees in most of the places where Western law was imported or

Retooling Statesmen to Restructure the State

I9

imposed. In the classical pattern in Latin America, represented in this book by Brazil and Chile, the dominance of the gentlemen politicians of the law was an enduring feature of government and society. Ambitious and well-connected individuals knew that the way to power and influence, even to reform, came through a career centered on the law. The classical Latin American pattern was found in Brazil until at least the 1960s.1 In the words of Joaquim Falcao, "It is impossible to understand Brazilian politics, economic life, or culture without noticing the historic role of the law graduate" (1988,412). The role of the law schools, especially those of Sao Paulo and Recife (Levine 1978, 106), had a number of closely linked dimensions that are evident both from the available literature and from certain institutional remnants today. First, law and legal education served to bind together the various segments of the ruling elite. 2 Second, law and legal education provided a means for the exchange, conversion, and reproduction of social or relational capital of the dominant families. Third, law provided a language and an authority that legitimated control over the state. This legitimacy was produced in Brazil through international scholarly capital that was acquired typically through a Paris (or sometimes other Continental) doctorate. 3 As a result, the role of law served also to reproduce the international hierarchy of states and the north-south process of export and import (Love and Barickman 1989,9; Badie 1993).4 Ironically, the important role of law and legal education meant a disqualification and devalorization of the institutional bases for the autonomy of law-evident in the operation of both legal education and the judicial system. If individuals were seen as "just" professors or lawyers or judges, it meant that they were disqualified from high status and achievement. 5 They were essentially members of a second-class elite. The highest elite, in contrast, controlled the key legal institutions, but they did not use their positions to invest substantially in legal autonomy. The members of the elite accumulated positions, either consecutively, over a lifetime, or simultaneous with one another. 6 These positions were frequently in the legal field, but those positions outside-or, more precisely, above-the legal field were more important (see Miceli 1983, 3537). Even positions on faculties of law served as bases for other positions, whether held at the same time or at different times. Indeed, the faculty at the traditional law schools often provided a home base for those temporarily out of state power or aspiring to gain it (Dulles 1986; Love 1980, 154). This phenomenon has a continuing vitality in Brazil. We see examples today of how law training is considered by many as primarily a tool for careers above that of lawyer, judge, or full-time professor. An encounter by one Brazilian lawyer in his forties with a classmate from law

20

Chapter 2

school in Sao Paulo illustrates this point: the classmate, who was on his way to a political event in Brasilia when the lawyer encountered him on an airplane, remarked with surprise and some deprecation, "Are you still a lawyer?" Those who are able to rise above or beyond a profession in the law typically require social and relational capital that cannot be learned in school (McDonough 1981, 71,96).7 That capital comes especially from connections to leading families. The usefulness of family capital and connections does not mean that family is all that counts or that the mix is static. In fact, the system has never served only as a means for the elite to replicate itself. Even when the system was far less open than it is today, some individuals, who were particularly gifted or had both ambitions to join the elite and links to its ruling class, built elite careers on the basis of their connections and credentials. Others might have converted a declining social capital into a path that was more elite, perhaps by marrying into money or into a well-connected family. 8 Social and institutional reinforcement kept the law and legal education static and conservative. 9 This resistance to change was also tied to the place of law in the hierarchy of power and to the various parts of the legal elite who functioned at the intersection of many social groups-especially from the different regions. Law was positioned such that it could enact "social compromise," allowing the elites to maintain peace (Pecaut 1989, 15). Social compromise involved a certain amount of democracy and social mobility, and even strongly reformist strategies, but the law primarily served as a way for the ruling elite to sustain their social and relational capital. Consequently, as stated earlier, this pattern did not lead the elite to invest substantially in potential institutional bases for the autonomy of the law. The abundant literature we draw on to describe this relatively conservative elite in Brazil is a component of the attack on that elite. Scholars from many disciplines have denounced the patterns of reproduction of a Brazilian elite that inhibited social change and "modernization" in the 1960s and 1970s. This literature was part of the more general effort to discredit the generalist lawyer-statesmen in favor of new expertises and new entrants into the competition for state power. Potential new players formed international academic and professional alliances in part to advance in these domestic palace wars. Indeed, the abundant Brazilian literature is evidence itself of another feature of the Brazilian elite: its many regional and other variations. The size and diversity of Brazil's elite meant not only that it was quite competitive but also that individuals had incentives to use whatever resources and capital-scholarly, international-could be mobilized to advance

Retooling Statesmen to Restructure the State

2I

over others. This constant investment by ambitious individuals in whatever might give them an advantage made Brazil a natural importer of new expertises. It allowed alliances and a diversity of expertise within the elite that could facilitate adjustments when political or economic circumstances changed. Conversely, while this same classic pattern is found in Chile, there has been relatively little academic scrutiny of it (exceptions are Bauer [I975] and Urzua [I978])-and more homogeneity among the elite. The context for the development and thriving of the classic pattern in Chile was the long period of relative stability that began late in the nineteenth century, which was characterized by a parliamentary system in which the members, typically representing the rural elite, managed to rotate control of the government in an "aristocratic game" of "musical chairs" (e.g., Blakemore I 993).10 This rotation was the analogue to the social peace through compromise that prevailed among elites in Brazil. The system in Chile, as in Brazil, was relatively closed, but there was here too some opportunity for new entrants. I I And as with Brazil, the management and reproduction of Chile's system of elite domination centered on the traditional faculties of law, especially that of the University of Chile. The classic pattern of control can be seen in the careers of the Allesandri, one of the dominant political families of the twentieth century in Chile. Arturo Allesandri, who served as president of Chile from I920 to I924 and again in the period I9 32 - 38, was one of the many Chilean presidents who graduated from the faculty of law at the University of Chile. 12 His grandfather came to Chile from Italy in I82I, and the family became wealthy enough to have a substantial rural estate as well as a house in Santiago. Allesandri's father made an alliance with a prominent and aristocratic neighbor, who introduced the family to Chilean politics (Aranciba, Gongora, and Vial I996, 20-2I). Allesandri attended the faculty of law in Santiago, commencing in I888. He was active in student politics, getting to know those who could later be expected to be his competitors and allies in political life. After graduating in the I890S, Allesandri obtained a series of positions in legal practice and became a law professor at the university. He then ran for office, serving as a representative of the Liberal Party in Congress for almost twenty years before becoming president (see also Blakemore I 9 93, 70).13 In one of the very few studies of this elite, Urzua describes the professional careers of prominent lawyer-politicians in terms that apply well to Allesandri: His process of incorporation into the ruling class begins in the moment when his family decides to send him to study in Santiago, at one of the

22

Chapter 2

schools [/iceos {iscales 0 colegios] traditionally frequented by sons of families of that class. It continues with the study of law and the beginnings of a political career in one of the parties representative of that class. Participation in the internal political life of the party continues in the first years of the profession, which are generally passed in some service of public administration. Later and thanks to good contacts made in political life, he is installed in a studio, amasses a fortune with successful cases, is converted into a deputy or senator, and begins to teach classes in the university. (I978, I83)

The classical pattern did not require all politicians to be law graduates, but the law provided the key network of relationships and legitimating language. Arturo Allesandri had two sons. The first, Arturo Allesandri Rodriguez, became a very prominent lawyer and dean of the University of Chile faculty of law. In a family division of labor, the second son, Jorge Allesandri, became an engineer but eventually moved into politics as well. Jorge Allesandri served as finance minister from I 94 7 to I9 50 before moving into the business world linked to the same elite families that controlled the state. Partly through connections with the very prominent Matte family, into which his sister married, Jorge Allesandri became president of Papelera, a major private business entity. The Papelera became the "flagship company of the powerful Matte conglomerate" (Silva I996, 47), and Allesandri became a key figure in the Sociedad de Fomento Fabril (SOFOFA), an organization designed to negotiate business relationships with the state. Jorge Allesandri thus maintained the Matte family's position in the center of the economy with good political connections, and he served as both their representative and broker. This powerful set of family alliances was cemented not only through his sister's marriage but also through the role of Arturo Allesandri Rodriguez as dean of the faculty of law. The dominance of the Allesandri-and later the Aylwins and the Freis-in and around the state in Chile was emblematic of an elite united through the faculty of law, extended families, and multiple positions. Argentina: Competing Cosmopolitan Elites without a State

The stability of the institutions and families of the state in Brazil and Chile contrasts strikingly with the situation in Argentina. Argentine actors have long relied on international-as well as more national-strategies to gain political power, but these professional strategies have not been successfully translated into state institutions, including the law. As a result, those who accumulate international capital, even when invested at one time or

Retooling Statesmen to Restructure the State

23

another in public legal institutions or the state, typically end up in "gray areas" outside of or away from the core of the state. The institutional weakness of the Argentine state relates to several historical factors. The first is that the territory that became Argentina was never unified into one colonial administration that could be used to promote a single national identity. After independence early in the nineteenth century, there was therefore considerable conflict between various regions and Buenos Aires (Smith 1974, 1-2). No pattern of social compromise among various elites emerged akin to that seen in Chile and Brazil. Second, in terms of ideas and institutions, there has always been a strong international presence in Argentina, especially in Buenos Aires. This presence came originally from Buenos Aires's status as an entrepot (Lynch 1993: 1) and was accentuated by the shape of the economy after independence, when the economy became organized around large estancias that produced cattle and sheep for foreign markets (Smith 1974, II). Argentina's long period of prosperity at the end of the nineteenth century and until the 1930S was built on this export business. As a result, unlike Chile in particular, it was never necessary for promoters of international expertise to mount an offensive against more nationalist ideas. Third, and related to the first two features, the form of political organization in Argentina came from the estancia. The dominant features were, therefore, clientelism and patronage. Clientelism meant that local caudillos from the large landowning groups used their military power and their personal and extended family relationships to fight for and gain political power (Smith 1974, 16-17; Walter 1985, 18-22). Unlike in the other countries, however, this conflict was not contained within any relatively stable compromise. As elsewhere, part of the legitimization provided to the system built on clientelism and family connections came from the law and the university. Describing generations spanning the nineteenth century and into the twentieth, Balmori, Voss, and Wortman point out a generational movement seen elsewhere. The traditional families moved from "merchant or trader in the first [generation], estanciero in the second, and public officer in the third .... Both the second and third generations moved into professional fields, but mainly in one area-law" (1984, 146-47). The activities of the "lawyers," as elsewhere, had relatively little to do with the practice of law. The elite held public office mainly (148)-"to link their economic interests with the nation's and allow ... no others to compete or interfere" (140). Again, however, in contrast to Brazil or Chile, the elite move into the state did not translate into investments in state autonomy or institutional capacity.14 The "field" of the state in Argentina was, instead, mainly a battlefield over who would govern.

24

Chapter 2

The combination of a weak set of state institutions and easy access to foreign capital and ideas led to a vicious circle. The fragmented state field in Argentina provided a space for intense battles, and foreign capital and legitimacy were used to fight those battles (Smith 1974, 3, 9). The frequency and intensity of the often violent battles in Argentina then meant that the holders of state power could not occupy the terrain long enough to build something (Sikkink 1991). There were of course some changes, but the lack of state structures meant that the state and economy continued to operate mainly on the basis of patronage, clientelism, and military power, rather than on the basis of the ideas and institutions associated with foreign capital and legitimacy-including law. At the same time, however, Buenos Aires developed a very strong set of institutions for foreign investors, including, in particular, a set of internationally oriented law firms that could use their family and other personal relations to facilitate exchange and business. These institutions around the state then became the domestic homes for those who followed international and professional strategies. Accordingly, the elite importers of "modern ideas" inhabited not the state but the "gray areas" around the state. Although not a lawyer, the career of Raul Prebisch, no doubt the most famous of the Latin American and Argentine economists, is instructive. Prebisch came from the traditional Argentine elite. He worked for the Sociedad Rural-strongly identified with the elite-as a consultant in the 1920S (Sikkink 1991, 75-76; see also Love 1996a, 122-25).15 In the mid1930S, he served the Conservative administration of General Jose Uriburu (a distant relation), helping to create the Central Bank and then serving as its director from 1935 to 1943. He also was a professor of political economy (1925-48) at the University of Buenos Aires (Pastore 1989, 209). Although an economist, he occupied a position akin to that of the legal elite described earlier. There were important Argentine differences, however. First, reflecting the very early embeddedness of the Argentine elite in international networks and debates, Prebisch was quite internationally oriented-perhaps also explaining his precocious investment in economics (Love 1996a, 124-25). The investment of the Argentine professional elite abroad, in fact, corresponded to the lack of opportunities for successful professional investment at home. When Peron came to power in 1946, Prebisch and all those who worked with him were excluded from the government and even the university.16 Prebisch went to Santiago to become the executive secretary of the Comision Economica para America Latina (CEPAL), then just getting started by the United NationsY From that international forum, Prebisch was enormously influential in promoting the idea of economic develop-

Retooling Statesmen to Restructure the State

25

ment through import substitution. When Peron was overthrown by the military in 1955, Prebisch came back to advise the government. Once again, however, when the government changed a few years later, Prebisch left Argentina and returned to CEPAL. Continuing a pattern of professional investment mainly outside Argentina, he later went on to lead the United Nations Conference on Trade and Development (UNCTAD). Prebisch and his professional expertise represented a presence in Argentine politics spanning three decades, but apart from his early career, he did not (and could not) invest his expertise heavily into Argentine institutions. He invested in international organizations and sought to influence the Argentine state only from a position outside of the state. The career of Prebisch is indicative of the Argentine pattern for professional elites. There was no enduring social peace or game of rotation among those in control of the government. Political losers found it advisable to invest abroad, since changes in government typically brought not a rotation among elite professionals but, rather, purges even from faculty positions, or in domestic institutions that kept their distance from the state. Mexico's Divided Elite

The divided field of power largely explains Mexico's model of governance. A pattern of domination by a relatively unified elite-seen in Brazil and Chile-was shattered by the Mexican Revolution of 1910. The divided elite mirrors the revolution, which placed, on one side, a liberal-peasant alliance and, on the other, the dominant landowning and business elite that had governed Mexico throughout the Porfirian period of the late nineteenth century. The "revolutionary family" that dominated Mexican government after the revolution maintained its power and authority, in part, by speaking for the alliance of peasants and workers and keeping its formal distance from the earlier landed elite (see, e.g., Camp 1989; Lomnitz and Perez-Lizaur 1987; Maxfield 1987, 2; Wasserman 1993). As a result, the state's ruling elite has been divided formally from the industrial bourgeoisie. Individuals educated in the law who are in the field of the state have been divided from their potential counterparts in the field of business, with major consequences for law, the state, and business. ls The leading landowning and business families, such as the TerrazasCreel family in Chihuahua, were the visible targets of the Mexican Revolution, and land reform was a rallying cry. While the leading families were able to regroup and regain their power in a relatively short time, they nevertheless had to change their public profile. 19 They also were continuing targets of efforts to promote land reform and redistribution-efforts that reached their peak in the 1930S under President Cardenas. This embattled

26

Chapter 2

business elite therefore sought to maintain and support family ties that could be used to protect their worlds and their businesses from the state and the alliance that they had confronted in the revolution. 20 The extraordinary role of the families in business is documented in Larissa Lomnitz and Marisol Perez-Lizaur 's (1987) remarkable study of one family business network lasting from 1890 to the present, spanning five generations and some 150 nuclear families. This business network of economic interdependence-with quasi-independent enterprises staffed by the brothers and cousins who did not inherit the main businesseswas held together by a patronage system and supported by "centralizing women" (or mujeres centralizadoras) who promoted the effective exchange of information through family channels and events. The family system facilitated effective access to capital, survival against external threats, and a kind of private welfare system for the members of the extended families. It operated according to a logic of maintaining family eminence, rather than obeying strict market criteria, and of avoiding identification with the state. This general approach adapted quite successfully to Mexico's economic situation until at least the 1960s.21 Law and lawyers did not playa major role as such in this familial business sector. Many of the leading business families after the revolution, for example, did not bother to send their children for formal schooling (Lomnitz 1987). They preferred to let their sons rotate in various positions prior to inheriting the business. This choice tells us about the perceived value of the professional degree in comparison to family capital. Despite the relatively low prestige of law, there were, of course, private lawyers and business leaders with law degrees. Many of the "poor cousins" of the business families obtained law degrees that they could place in the service of the prosperous family enterprises. And indeed, several law schools, most notably Escuela Libre in Mexico City, founded in 1912, educated individuals who were directed into the business world as lawyers or business people. Law thus remained a credential of some importance to the old elite in Mexico. 22 We find a similar-but separate-pattern in the public sphere, but since the rules of inheritance are different in the state than in the private world, the story is not primarily about enduring family relationships.H The equivalent to the family business organization with respect to government has been the persistent role of what are generally termed camarillas. The source of the original camarillas was the Mexican Revolution, through a parallel logic to the family enterprises. The revolutionaries controlled the presidency, and their personal networks-formed in battlesshaped their approach to government. The revolutionary camarillas and their "descendants" since the 1920S have been termed the "revolutionary

Retooling Statesmen to Restructure the State

27

family" (e.g. Knight 1992), and they can even be traced into the present (Centeno 1994).24 The continuing importance of the bonds of personal loyalty, however, also relates to the hostility that the new governing elite felt from the landed and business elites. Here, too, the personal networks provided a kind of fortification that could be used against the attacks of the old ruling elite (Saragoza 1988). Insecurity on both sides encouraged strong personal ties of loyalty. Unlike the business families, however, the political camarillas came to be formed mainly through educational institutions and career connections, in addition to family connections. As was the case prior to the revolution, a legal education, and in particular a legal education from the Universidad Nacional Autonomo de Mexico (UNAM), was a key aspect of a political career. 25 But what had once been the source of the Porfirian ruling elite, closely associated with the landed aristocracy, became the source for a new ruling elite formed in a revolution against that aristocracy. The same institution served both groups, but the new elite had even less use for law itself than its predecessors. They had no desire to support courts that invoked independence to thwart land reform activities, and they had no reason to staff UNAM with persons who would take the law more seriously than the politics of the revolutionary alliance. Legal education has fostered success in Mexican politics more through the development of "social skills and contacts than specialized expertise" (Smith 1979, lI8; see, generally, Lomnitz and Salazar, in press). The line between part-time professors and politics was, in any event, blurred: "Professors have often drawn students into their camarillas, and vice versa; on frequent occasions, ex-students have rewarded their former professors with political appointments" (Smith 1979, 121). Classes at the UNAM law school were relatively small, around 150 per year, until at least the 1950s, facilitating close alliances. Many came from the provinces, and in addition, they often came from "the middle and popular classes" (Smith 1979, 150). Later, of course, they also came from the political elite within Mexico City. Just as the family businesses were held together in part through a kind of private employment and welfare agency, the political camarillas could not govern solely on the basis of personal loyalty to each other. Some of the cement that held the system together was what is now seen as corruption (see Riding 1989,113-33), part of which involved the political class taking care of each other financially (reinforced by the sexenio-single six-year term-system of the presidency). Also of great importance, however, was a continuing populism associated with the revolution-which also kept the business and landowning families on the defensive. The law in Mexico, as a result of this historical divide, occupied a mar-

28

Chapter 2

ginalized, dominated, and segmented position in the governance of the state and the economy. A vicious circle-one result of the segmentationprevented the formation and success of those who might have sought to build the autonomy of the law and the status of lawyers. Law was accordingly much more marginal than it was in Brazil or Chile. For different reasons, its position was more akin to the position in Argentina. Chicago Boys Cloaked in Democracy

The gentlemen politicians of the law can be contrasted with the new generation of economists converted to the virtues of democracy. When discussing this new generation, we will not use the same style of presentation that we used in the discussions of the gentlemen lawyers. Instead of concentrating on the structures and institutions that fostered the role of the gentlemen lawyers, we will provide a snapshot of those who are the result of the transformations that are the subject of this book. These are the individuals whose rise to power we seek to explain in subsequent chapters. This generation has been christened and celebrated as "technopols" to emphasize the combination of their technical expertise and political involvement (Centeno and Silva 1997; Dominguez 1997). The term technopol highlights an orientation toward economics, and the authors who write about them also emphasize their connections to the United States. We could find a substantial amount of literature within the United States and among the Ph.Do's produced in the United States to celebrate and promote the virtues of this particular group. Our purpose is not to accept that particular self-promotional literature at face value, however, but rather to interrogate it. We will highlight the similarities of the different national structural patterns, but we will also draw attention to some of the differences that are often neglected. As noted above, the technopols have more similarities across the four countries than did the groups of gentlemen lawyers of the state. It is easy to find economists in all four countries who speak the same language, have similar educational experiences, know each other, and approach problems of economics and the state from precisely the same perspective. As Jorge Dominguez says about the individuals described in his edited volume on technopols, "Cosmopolitan ideas, understood, applied, and developed according to universalistic professional standards, became part of their selves" (1997, 16). Their careers even overlap through comparable service in the international financial institutions or as visiting or even tenure-track professors in the United States. These individuals are much more closely linked to the United States than the cosmopolitan lawyers were to the European Continent. Again, however, the increased homogeneity should not

Retooling Statesmen to Restructure the State

29

obscure the important differences or the limitations of the particular term as a key to explaining the state transformations. Pedro Aspe, who served as the secretary of the treasury under Carlos Salinas, is given much of the credit for Mexico's radical economic transformation (see, generally, Golub I997). Aspe is part of a generation that came of age in the I960s during a period of economic and social crisis. 26 In contrast to economists from previous generations, the group with which Aspe is associated invested in the United States-using "U.S. doctorates as the 'universal' measure of professional legitimacy" (Golub I997, I03).17 The son of a lawyer-businessman and a descendant from one of the leading landowning families of Michoacan, Aspe grew up as part of the upper middle class in Mexico City. He went to the most prestigious private school in Mexico City, Instituto Tecnol6gico Aut6nomo de Mexico (ITAM), prior to going to the United States to earn his doctorate in economics from the Massachusetts Institute of Technology (MIT) in I978. According to Camp, Aspe met Salinas in Boston while Salinas was studying at Harvard (Camp I993, I6). Aspe returned to Mexico in I987, began teaching at ITAM, and soon joined the PRI. He also became the chair of the ITAM economics department, where he continued to teach until I982. Instead of staying out of the government, as was the rule for people of his family background, he used the ties he had built with Salinas and the credibility of his economic expertise to cross the traditional barrier that defined the Mexican elite. He began by entering the Miguel de la Madrid administration in the early I980s, and Salinas then made him secretary of the treasury in I9 8 8. Aspe's education abroad not only gave him a credential and an internationally recognized expertise, but it also gave him an international network of contacts who reinforced that expertise. Aspe's professors at MIT provided one key reference point, and his Boston area classmates, including Domingo Cavallo of Argentina and Alejandro Foxley of Chile, provided another. 28 Not surprisingly, Aspe felt quite comfortable helping to renegotiate Mexico's debt by dealing with the International Monetary Fund and others, and he was able to be taken seriously as a "first-rate professional economist" (Golub I997, I27) committed to opening up the Mexican economy, controlling inflation, and moving toward privatization. In presenting the case for the agreements worked out in Washington, D.C., Aspe lectured the Mexican opposition from the" 'high ground' of superior technical knowledge" (Golub I 9 97, I3 I). His opponents, he suggested, simply did not understand what good economics required. Aspe's economic expertise, close connection to the United States, and open embrace of the Washington consensus, along with democratic politics, makes him a good representative of this group of technopols.

30

Chapter 2

Opposing Models

The general move from the gentlemen politicians of the law to the economists termed technopols has a few general features that have already been highlighted, the most basic of which is that the leading expertise of the technopols has been economics, while that of the gentlemen was the law. To speak in terms of expertise, however, is to understate the contrast. The technopols invest strongly in their international state expertise, using it to advance their careers and to build ties with others inside and outside their countries. To have legitimacy and credibility as economists, for example, they must earn doctorates in the United States, publish in journals with international credibility-meaning particularly Englishlanguage and, above all, U.S. journals-and in many cases teach at an American university (d. Loureiro 1998). In short, whether in terms of economics or in terms of other professional expertises, the technopols are strongly embedded in an international market of expertise modeled on the United States. The market is relatively open, highly competitive, and highly international. It is also hierarchical: economic approaches in the periphery-away from the northern centers-need validation in the north before the technopols will take them seriously. There are also continuities, however, between the generations of state elites. First, most of the technopols also have very well-connected and relatively elite family backgrounds. What is different is that they rely relatively less on familial capital and relatively more on their expertise and a cosmopolitan network formed concurrently with the acquisition of their expertise and developed further in their subsequent careers. It remains true that social capital is extremely important in determining who is able to gain an advanced degree in the United States and participate in transnational networks. It takes an ability in English that is best acquired through travel, not classroom instruction, and it takes social resources to locate appropriate scholarship opportunities and other sources of funding for foreign study. The more meritocratic and open processes associated with the technopols disqualify some descendants of the elite, and the processes open up possibilities to newcomers. The result, however, is not to displace an elite. It is simply reproduced statistically rather than directly through family capital. The economists celebrated as technopols have been key actors in the transformation of the states that we have studied. It is important to recall, however, that they are not the only actors on the scene. The core bases of the old elite-law and legal institutions-remain and, as we shall see, have not changed very much. If we focus on judicial reform, for example, the story of dramatic change becomes very hard to sustain. The relatively

Retooling Statesmen to Restructure the State

3r

good match between the northern and southern economists cannot be replicated in the older and more nationally embedded institutions of the law. It is a completely different picture. Subsequent chapters will highlight this confrontation, which is really about the pull of history and structure on the field of power. We trace this confrontation through the channels of international and, especially, U.S. forces and expertises of change: the Chicago Boys, neoliberalism, international human rights. The channels can be treated as discrete, but they serve generally both as potential bastions of the old elite and as core expertises for a new one. We can see this role in a variety of institutions. We shall highlight, for example, the corporate law firms that are proliferating in Latin America and explore also the less developed world of public interest law. But we could also have traced the very same processes in other places that still need detailed study-among others, the investment banks and consulting firms that now populate the globe with the mission of restructuring economies and states.

Chapter 3

The Internationalization of Palace Wars

W

e seek to provide, in this chapter, not a summary of the book but, rather, a way to link together the parts of this book and provide some common threads that unite the particular episodes and vignettes that make up the supporting material for our argument. The following chapters take particular examples to illustrate national patterns and counterpatterns. For example, in the field of human rights, we highlight the Vicariate in Chile, the most famous of the Latin American human rights institutions, and we also explore why we see somewhat different approaches-counterexamples-elsewhere. Examples allow us to trace the way transplants are used in and shaped by local palace wars. But with respect to human rights and the other topics we discuss, we have not provided lengthy case studies of how each potential transplant or expertise interacts with each national setting. In place of that potentially overwhelming detail, we have sought to create shortcuts that will reveal the general processes. The danger of these shortcuts, however, is that they may obscure a larger picture that involves close comparative study of four countries and a variety of expertises and potential transplants. In this chapter we therefore bring together general features that illustrate the continuity and coherence of our approach and findings. The book itself is about moments of complex histories that require an interplay of diachronic and comparative narratives. While we seek in this chapter to generalize, we do not aspire to produce a static comparative study. It is essential to show the relationships-especially north-south -that are central to our account. Our comparisons in this chapter, therefore, come 32

The Internationalization of Palace Wars

33

from two basic axes. One is by nations or states, and the other is by issues or technologies. Cosmopolitan Scholarly Strategies in and around the State

Our basic idea is that the import and export of dominant u.s. expertises is shaped by national agendas and national histories. These histories determine the position of the importers within the field of state power. Because of our emphasis on this history, our first account concentrates on the pathdependent stories of national developments. As conceived by economists, "path dependency" simply means that the paths already taken determine the possibility and desirability of potential futures. The major exception to the focus on path dependency is that our account also highlights the importance of shocks-including new states, military coups, and new postauthoritarian governments-that transform the positions of the importers and exporters. Our first account is of two pairs: Brazil and Chile versus Argentina and Mexico. There are common threads within each pair, but the variations within the first pair are much smaller than the variations in the second. The key variable for comparative analysis is the structure of the state. By structure of the state, we do not mean descriptions like strong state, democratic state, or authoritarian state. Rather than provide such labels, we seek to approach this comparison more in the tradition of political sociology (e.g., Rueschmeyer and Skocpol 1996) and concepts that relate to hierarchies and the division of labor of domination within a power elite.! One key difference is the degree of homogeneity within the elites of different countries, which relates to size but above all to history. The Argentine and Mexican elites are much less homogeneous than are their counterparts in Brazil and Chile, and the Brazilian elite is much more diversified than the Chilean. The Mexican elite, as discussed in the previous chapter, is characterized by a single major divide, while that in Argentina is much more fragmented. Another key difference among all four countries is in the circuits, vehicles, and institutions for the production and reproduction of state expertise. These factors are crucial because battles around the state are fought in symbolical terms relative to knowledge of the state and about statecraft. These differences are sufficiently apparent that, as we shall see in part 2, even if organizations such as the Ford Foundation have a uniform agenda at any given moment, they also adjust it to the local conditions-thereby also helping to produce different outcomes.

34

Chapter 3

The different landscapes of state power in the period after World War II were bound to lead to different international strategies, with different local consequences, since the conversion of international capital into state legitimacy proceeded along different paths. As a general matter, international strategies can offer an opportunity for an excluded elite (or aspiring elite) to mount a counteroffensive. The group can use international credentials, expertise, and connections to build capital that they can reinvest in domestic public arenas. The international capital provides the ticket for admission. Depending on the balance of exchange between state and foreign capital, which is also subject to conflict and change, international strategies can lead to new opportunities that ultimately produce state transformations. This is the process that informs the title of this chapter and the book. The internationalized palace wars are also challenges to the hegemony of a traditional state elite. A Military and Reactionary New Deal

Brazil and Chile provide variations on what is essentially the classic pattern in Latin America: they were characterized, that is, by the hegemonyalways relatively fragile and threatened -of a relatively small group, which managed the assets of the state, the private sector, and the scholarly academy. The broad combination of institutions under their control made it easy to characterize these elites as an "establishment," and law played a major role in legitimating and holding together the compromises among elite groups that allowed this establishment to maintain its power over time. This establishment occupied a role with many similarities to that occupied by the Eastern establishment of the United States-that is, the Protestant elite closely tied to the Ivy League schools. It also had much in common, in a different way, with the Argentine elite, which had particularly strong base in private power around-but not in-the state. These gentlemen lawyers of the state often had their role and legitimacy challenged by groups excluded from power. One such challenge took place in the 1930S at the time of the great Depression. In particular, internationally legitimate economics-centered in such institutions as CEPAL in Santiago, Chile (led by Raul Pre bisch, an Argentine investing internationally; see chap. 2)-gained prestige over the generalist knowledge of the lawyers who controlled the state and the institutions around the state. In the 1930S and 1940s, this investment promoted a strong state, import substitution, and state ownership of major enterprises and industriespolicies that came to be identified with the "developmental state." The legal elite was able to absorb the challenge and maintain its dominant

The Internationalization of Palace Wars

35

position, but the challenge helped set the stage for more recent confrontations that were closely connected to the Cold War and to what has been called the "intellectual cold war." Challengers to a relatively small group of lawyer-statesmen in Brazil and Chile gradually built their credibility through scholarly investment over time. At particular moments, especially moments of crisis, the challengers found opportunities to use this investment to build their positions in the field of state power. As long-term investments gained value over time and new generations came to maturity, it became much more difficult for the legal elite to contain their challengers. A natural result was the combination and multiplication of turf battles directed against that elite, which provided a common target. Individuals from relatively excluded groups could develop a new state knowledge or expertise for government-based on economics or sociology, for example-and an alliance with the United States to challenge the hegemony of European-oriented politicians of the law. Aspiring elites could all have a common target and point of reference. There was also considerable investment in the post-World War II period from the United States in the reform of education in Latin America (e.g., Puryear 1994). The reform, which was supported both by governmental agencies and the major philanthropic foundations, concentrated on upgrading the quality not only of economics but also of other disciplines, including anthropology, political science, and sociology-all in the name of modernization and economic development. The emphasis was on developing specialized disciplines, on scholarly research and publication, on doctoral degrees, and on study abroad. Potential challengers to the generalist lawyers-especially from groups that lacked the familial and social capital to move ahead through traditional circles-could take advantage of these new opportunities. From the perspective of the United States, especially after Castro came to power, these programs sought to make friends and fight communism by the introduction of ideas and technologies that would lead to economic development without promoting the left. Some individuals within the domain of law sought to counter these challenges to their dominant position, and they formed partnerships with governmental entities and foundations to make the case that law was a tool that also could be modern and helpful to development. The resultant law and development programs in Brazil and Chile, however, could not claim the kind of academic successes that their counterparts in economics and social science produced. Law became even more discredited and anachronistic. Neither country's program could make any real impact on legal

36 Chapter 3

education. There were side effects. The Brazilian emphasis on corporate law reinforced the power of one relatively marginal part of the legal elitethe comprador bar serving foreign businesses-which was able to profit from the decline elsewhere among the legal elite (discussed in chap. 12). But the reformist aims were not realized. International strategies in the context of the Cold War served to ignite major state crises in these countries. The military in Brazil hardened its position against those identified with the left in 1969, excluding a large portion of the descendants of the elite from state power, and it raised the stakes with the violent suppression of dissent. In Chile, the Pinochet dictatorship, which came to power in 1973 following the divisions associated with Allende, exiled or killed many of those who had formerly been in power. Both military interventions were made in the name of the Cold War and strongly defended the private property of the old elites, but the new groups in power had very little respect for the oligarchies that had ruled the state in the name of the law. The challenges had effectively undermined the old elites. The new arrivals in power were therefore quick to persecute the reformists from the old elite who had embraced leftist ideologies, and they did not look to the legal establishment to provide the leadership of the new governments. In Chile, the military allied with the Chicago Boys, who obliged by providing an agenda that put law and lawyers in a relatively marginal position. In Brazil, the situation was more complicated, but economists generally-and especially Delfim Nettoemerged to play dominant roles in the military governments and their successors. The position of core legal institutions in Brazil and Chile, in particular the courts and the faculties of law, was substantially weakened through these successive challenges. Both had gained their prestige and legitimacy in part through their connections to the old families, on the one hand, and to European legal authority, on the other. The prestige of the judiciary and the law professors-many of whom were also judges-declined as they came increasingly to seem anachronistic and out of touch with the expertises necessary to promote economic progress. Law professors appeared as dilettantes, not real scholars or systematic researchers, and courts were practically irrelevant to the major issues of governance. The position of law in the institutions of the state therefore declined, despite the efforts of the promoters of law and development. The military coups encountered very little resistance from the courts or the law faculties in Brazil or Chile. The success of the challenges to this elite in the 1970S and 1980s was evident from the fact that the courts and law faculties played relatively minor roles after the coups. The elite regrouped, though in somewhat different ways in each coun-

The Internationalization of Palace Wars

37

try. Because of the relatively differentiated Brazilian elite, that group could fight back using existing institutions, especially the Brazilian Bar Association. In Chile, in contrast, the fight required new institutions, including the human rights NGOs that became so prominent in Chile and that then became the model elsewhere. Compradors as Opportunistic Statesmen

The starting points were very different in Mexico and Argentina. As shown in the previous chapter, the colonially produced legal elite-cosmopolitan scholars, statesmen, and heritiers of the landed aristocracy-had largely been eliminated as a source of governmental power and legitimacy by the I930S. The Porfirian elite in Mexico-the historical counterpart to what was seen in Brazil and Chile-was defeated in the Mexican Revolution early in this century, creating a durable division in Mexico's elite. The traditional elite did not go away, but it stayed outside of the state and concentrated on building and maintaining family landholdings and enterprises. The political compromise that emerged from the revolution-and that lasted more or less to the present-allowed the old elite to thrive but excluded it from the government. The landed aristocracy and its descendants among the Mexican bourgeoisie did not participate directly in state governance. The state elite, in contrast, comprised a legally educated group, the members of which had descended from the winning side in the Mexican Revolution and built their base in the PRI, Mexico's longdominant political party. While largely the product of the same educational institutions that had produced the prerevolutionary state elite, the new ruling elite in Mexico did not connect to private power in the same way that the gentlemen lawyers of Brazil and Chile did. In Mexico, therefore, the courts and even the faculties of law were folded closely into the PRI and the structures of incentive it provided. Law professors gained prestige and power mainly through connections to political power and the PRI, and the same was true of members of the judiciary. In comparison to the situ~tions in Brazil and Chile, therefore, the judiciary and legal scholarship played an even more marginal role in the governance and legitimacy of the state. Instead of a seamless relationship between old families, courts, and the faculties of law, each reinforcing the stability and legitimacy of the state, the courts and the law were much less integral to the PRI-dominated Mexican state-which claimed its mandate from the Mexican Revolution. Argentina's history led to perhaps even weaker positions for the judiciary and the faculties of law, but the source of this weakness was very different. Frequent crises-including more than twenty coups in the twen-

38

Chapter 3

tieth century-provided a legacy that severely limited the extent of scholarly and professional investment in the construction of any state institutions, including legal ones. Professional groups who were willing to invest in a particular regime were typically thrown out of the state (even the country) when the regime-whether populist or military-changed. Each time regimes exchanged power, they changed completely the identity not only of those managing the state but also of the judiciary and even the faculties of law. State institutions were weak because of the repeated purges and what it meant for professional investment in those institutions. Professionals understandably tended to invest elsewhere, including abroad, rather than to run the risk of investment in the highly unstable Argentine state. Lawyers and professors of law, therefore, had no special connection to the state as such, either through their families or their expertise. They occupied no dominant position akin to what was found in Brazil or Chile, or even in the state elite in Mexico. The institutions associated with the law-the faculties of law and the courts-were extremely weak and marginal in the violent struggles for state power. The stories in Mexico and Argentina, therefore, do not demonstrate the battle lines seen in Brazil and Chile. Mexico and Argentina were divided and fragmented societies, and the forms of accumulation of foreign capital were consequently bound to be different. In particular, we find parallel international strategies that, in contrast to the situation in Brazil and Chile, could practically ignore each other. They did not have a common enemy that they could eventually undermine. In addition, it is almost axiomatic that elite investment in cosmopolitan strategies tends to relate inversely to the strength of the elite's connection to local state institutions. In other words, elites who are relatively privileged but have weak and fragile positions in the state will typically be far more cosmopolitan than their counterparts who are well connected in the state. Accordingly, strategies of cosmopolitanism in Argentina and Mexico were enacted by those relatively prosperous and privileged elites who had been excluded from state power. In Brazil and Chile, in contrast, the relatively privileged elites were, although to different degrees, sufficiently well connected to state institutions to have less need of cosmopolitan strategies. These differences were taken into account in U.S. programs directed toward Latin America. In Brazil and especially in Chile, there was a heavy emphasis on supply from abroad (Puryear I994), reflected especially in the quite visible U.S. investment in education and knowledge. That active foreign investment in law and development was not, however, necessary for the Mexican private elite or for the Argentine professional elites in order for them to gain familiarity with U.S. ideas and technologies, includ-

The Internationalization of Palace Wars 39

ing legal ones. The Ford Foundation, for example,could simply step into the shoes of the di Tella Foundation when it began investing in Argentina rather than creating something new as a good portion of the elite there had already been Americanized. Mexico was characterized by one basic divide, with distinct public and private sectors translating into two very different legal worlds with separate family backgrounds, law schools, and potential career trajectories. The strategies of each side of that basic divide were therefore very different. Within the public side, cosmopolitan investment did not gain any influence in the state until the late 198os. Only then did a scholarly strategy built on human rights turn into a strategy to move into state power. In contrast, cosmopolitan legal strategies for the private bourgeoisie and the groups descended from the traditional prerevolutionary Mexican elite produced a small foreign legal enclave providing services to foreign businesses, with very little spillover into the state. This group of private lawyers occupied a very different legal world than did the lawyers from the public side, and, despite their links abroad, they did not invest substantially in technical legal expertise. International strategies have challenged the divide between the two legal sectors in Mexico, but it continues to exist. Economists, as relative newcomers to state governance in Mexico, were initially dominated by a state elite built largely on personal relationships and needed to build stature and autonomy with respect to the lawyers in the state. They invested relatively early in technical knowledge, which led them to the United States after the prestige of U.S. economics had been established internationally. They used this expertise to gain a foothold in state institutions, but they tended to serve mainly as "technocrats," cut off from the chief sources of political power. The growing importance of this technocratic state knowledge, however-which was made especially salient with the economic crises of the 1970S and the debt crisis of the 198os-prompted a number of the offspring of the existing political elite to invest in legitimate economics. Their international strategy allowed them to join with economists who came from the private side and were produced from the private schools. Linked through their educations abroad and through their shared expertise, the economists from both sides of the divide-including Pedro Aspe (see chap. 2)-became the "technopols" of the Salinas and Zedillo administrations. Along with the rise to power of the technopols, increasing pressures from abroad, including the then-thriving international human rights community, brought the Salinas government to draw on those who had invested in the international strategy of developing human rights expertise. These activities, along with those of the economists, undermined traditional PRI

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clientelism. The North American Free Trade Agreement (NAFTA), election reform, and the anticorruption and antidrug campaigns have further accelerated this investment in new forms of international legal legitimacy. Those who invested in human rights have made very prominent political careers within the PRI through the National Commission on Human Rights (CNDH) and the Office of Attorney General. The same is also true for those lawyers who invested in economics expertise, whether through NAFTA negotiations or work in the government's more U.S.-oriented and technical departments. On the other side, the private law firms, which have long connected lawyers from the old elite families with foreign businesses, have also taken advantage of the considerable expertise and foreign know-how they gained in the negotiations around the debt crisis of the early I980s, and they have used this technical legitimacy to connect to human rights issues such as fair elections. As a result, they have moved much closer to the government and state power. Within the Mexican landscape, therefore, international strategies have helped to bring the old private elite back into the statefirst through economics and later through law. More generally, international legal investment has helped to bridge the divide between the two elites now converging around U.S.-minted expertises, including economic law and human rights. The trajectory in Argentina is similar to that in Mexico, but the situation is more complex. There has been no simple divide that international strategies might seek to overcome, and, more important, there has been no real state to take over or to use in order to stabilize their professional investments. Foreign capital has long been readily available and usable in Argentina. There was also relatively early access in Argentina to the United States by lawyers and other professionals. For example, in contrast to Mexico, the Argentine elite, exemplified by Raul Pre bisch, has long invested quite substantially in international institutions. For related reasons, Argentine elite professionals have also invested in hybrid institutions located around the state. The two main hybrid vehicles found in Argentina-the corporate law firm and the private think tank-are both distinctly U.S. oriented, but that orientation did not require aggressive export policies akin to what was seen in Brazil and Chile. These institutions were home produced and then were reinforced by foreign connections and investment. The corporate law firm represents, in Argentina, an institutionalization of the role of comprador. The stability of the corporate law-firm sector stems from an ability to connect foreign capital, the Argentine business community, and the Argentine state-even while the state changed dramatically from one regime to another. The family structure of the firms enabled them to

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accumulate wealth and reproduce themselves over time. Cosmopolitan gentlemen lawyers generally stayed out of the state in Argentina. As the value of u.s. expertise ascended, these lawyers increasingly sent their children to the United States to purchase a degree, gain expertise, and build connections, all of which could be used to sustain this privileged professional sector. The family organization of Argentina's law firms has been quite successful, even if it is always somewhat fragile: limited options for entry sometimes leads to professional tensions, and family feuds can cause some firms to divide. In addition, family firms from which lawyers have moved into the state can be hurt by the next regime's politics of revenge. Still, with strong incentives among this elite sector not to invest directly in the state, or even in the courts or the faculties of law, these family firms have for the most part thrived, with international strategies helping to build and maintain them. Potential competition to the powerful corporate law firms in Argentina was typically not even seen as such. Lacking the legal hegemony that existed in Brazil or Chile, law was not a particular target for aspiring elites. Also, since the legal elite in Argentina already depended for its legitimacy on foreign ties and expertises, potential competitors were in the same boat as corporate lawyers in terms of determining where international investment could be brought to bear locally. The problem of the weak autonomy of law faculties extended to universities generally, making it difficult to invest either in the universities or in the state. As a result, the other dominant institutional form for this kind of international investment in Argentina was the private think tank, again a typically American form but at the same time a clearly local product. Since the di Tella family acted very much like the Rockefeller family in the United States at the turn of the century, investing in legitimacy through state-like institutions, there was almost a predetermined convergence. Consequently, the result for the newer social sciences-especially economics and sociology-was quite similar to that seen in the corporate law-firm sector. The think tanks could keep the channels of communication open between foreign expertise and capital on the one side and whatever form of state existed on the other. While think tanks and law firms both existed outside the state, both were able to provide brokers with access to whoever was in power at a particular moment. However, the historically weak status of law, constantly purged by new governments that destroyed any residue of previous ones, meant that there was no strong state to reform along the lines of new state expertises. With no established state institutions, there was nothing in Argentina to seize except political power. Entry into the state, therefore, came only from

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playing politics and from becoming sources of patronage for Argentinestyle camarillas. Family connections might limit individual risk, but there were severe costs to political strategies when power changed hands. In the Argentine context, therefore, the new technologies of power, like the old ones, were employed only as instrumental political tools. The rhetoric might be state-of-the-art internationally, but its true objective was to knock off the opposition. Unlike in the United States, it was simply not possible in Argentina to combine scientific credibility and political advocacy without destroying the scientific credibility. The result was that the Argentine state was repeatedly torn apart, and new expertises did not lead to any lasting institutional change. While a clear dividing line was evident in Argentina, unlike in Mexico, between the military and the new democratic regime, change came about not because of an accumulation of investment of resources in the state but, rather, because the Falklands/Malvinas war simply discredited the military, forcing them to leave. The Peronists were at that time relatively weak, and the result was that the Radical Party, the traditional party of old and new professionals, came to power. The Radicals could not find the tools to handle the debt crisis, and they were then pushed out of power, allowing the Peronists under Carlos Menem to regroup, win the election, and then finally to begin to accumulate some investment in the state. The Peronists converted to economic orthodoxy by purchasing what was respectable according to foreign standards, and they annexed the leading economics think tank to the government. They also paid at least lip service to professional legal orthodoxy, offering the appearance of legality while taking advantage of the legal system's lack of autonomy. Within this climate, economists began to invest more in the state and even in the rule of law, seeking to legitimate their own positions within the state. At the same time, professional actors from outside the state, including law firms, have been able to take advantage of the relative stability to invest more in legal institutions, including private business-law schools, alternative dispute resolution, and the beginnings of court reform. These various activities are part of a variety of potentially complementary investments in and around the state and law. The greatest successes of Argentina's international strategies, however, are the thriving institutions outside of the state: the think tanks and the family law firms. In contrast to Argentina and Mexico, international legal strategies in Brazil and Chile in the 1980s and 1990S can be understood as efforts to rebuild and reconstruct a social peace that was shattered-and to redefine the role of law and lawyers in transformed states. As we shall see, however, the reinvestment in law and in the state, now oriented toward U.S. expertises, has proceeded in a pronounced asymmetric fashion: economics

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has proceeded further than law, and business law further than public interest law. The primary point of this section of the chapter is that international strategies have been played out on dramatically different institutional landscapes in the four countries. In Brazil and Chile, international legal strategies helped facilitate a return of the law-and the return of traditional elite families able to retool their credentials-to a key place in governance. In Argentina and Mexico, in contrast, international strategies did not fit this challenge-and-response model. Instead, such strategies played into complicated domestic structures of power that allowed some descendants of the traditional elite in Mexico to cross the border between public and private elites and some individuals close to the PRI to upgrade the PRI governing technologies. In Argentina, international strategies have begun to transform the government, especially with respect to economic matters, but they have above all built and transformed business law firms and think tanks. Finally, while relatively easy to explain, given Argentina's political structure, it is ironic that the country most embedded in the international market of expertise in the period we studied was the country whose field of state power was least transformed by the domestic investment of international expertise. Asymmetric Dollarization

We proceed diachronically in the second part of this chapter as well, but we shift the axis to expertises and issues instead of countries, concentrating on law and economics, developmentalism, and neoliberalism. The expertises and issues are two faces of the same challenge (Abbott I988). Professions are able to create markets when they successfully define new problems using their own language and expertise. In Bourdieu's terms, it is necessary to create a belief by outsiders in the people who invest in the new knowledge (Bourdieu I993; Dezalay and Garth I996b). In contrast to the first part of this chapter, in which we look backward at the early histories of the states, we look forward here, providing a greater focus on outcomes: the consequences of the investment of new orthodoxies and universals in the south. In spite of this different perspective, the general approach remains the same. The emphasis is again on path dependency and the contexts surrounding both the old knowledge, found in the courts and law faculties, and the new knowledge coming from the north. Both kinds of knowledge are linked to processes of social production, and both require attention to how the processes are transformed to take on new issues. The degree to which the northern expertises take hold in the south, therefore, is deter-

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mined by what become the new issues, and the entire process is greatly facilitated by shocks and "new deals," including coups, declines of the military, the Cold War divisions of Vietnam, and economic crises such as the debt crisis of the early 1980s. Finally, even though we write in terms of an archeology of the new hegemonic universals, the key to explanation comes from a focus on the reconfiguration of alliances in the north and the south. Similarly, terms such as a "strong state" or "democratic state" are again too broad to facilitate understanding of these transformations, which can only be seen beneath the broad categories. The mode of explanation is therefore paradoxical. We can see the transformations as the result of new issues and technologies that produce new knowledges of government, especially human rights and neoliberalism, or we can focus on particular configurations that open up new spaces of opportunity, such as those that enabled the lawyer-compradors to prosper in recent decades. One way to describe the process we examine is as "dollarization": linking the value of expertises in the south precisely to buying power in the United States. The key feature of the expertises promoted by and through the technopols is their link to what is acceptable on the campuses and in the think tanks in the United States. Nevertheless, even if our general story can be portrayed as one of a move from gentlemen lawyers to technopols, or dollarization, it is essential to recognize that this general move has not operated at the same speed everywhere. Some professional milieus are more global than others, including, especially, newer disciplines such as economics. Within the law, corporate lawyering is well ahead of cause lawyering or public interest law in terms of dollarization. This highly unequal process, which aggravates the current disequilibrium in the market of expertise, is a microcosm of what is at stake in globalization or dollarization. In order to highlight this unequal process and the structural features that produce it, we will elaborate somewhat on the example of economics and two examples from law-corporate lawyering and public interest law. Using these examples, we can examine how a focus on national fields of power and the professions themselves can explain how the national and the transnational connect-or misconnect-at particular moments. Looking beyond the category of technopols, therefore, we see important differences and tensions in the processes of dollarization. The Dollarization of Economics

The story of economics is a near-perfect example of technopols and dollarization. Economics had to establish its autonomy from law in Latin

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America and even to some extent in the United States. The first generations of economists after World War II were closely linked to the legal establishment in the United States and in Latin America (and to the PRI in Mexico). Many of the leading economists in Latin America were in fact trained in law schools, which also controlled accounting. Keynesian and developmental economics worked very well in the post-World War II period to sustain relatively strong states that maintained-and modernized -the position of the gentlemen lawyers, especially in Brazil and Chile (and the United States) but also within the public elite in Mexico. International strategies played an important role relatively early in the evolution of economics in Latin America, since foreign legitimacy could be used to contest the power of the dominant legal elite-which needed relatively less foreign investment because of its more established position. The Washington consensus developed both in the south and the north out of structural similarities in the position of a group or economists outside of the establishment. The first key ingredient was scholarly investment as a legitimating basis for what was then an "unholy alliance." The University of Chicago economists-almost all of whom were first or second generation immigrants-lacked social capital and connections and therefore invested in mathematics, public choice, and media strategies. They formed alliances early on with a then-marginal group of very conservative Republicans and business people hostile to tl1e cozy relationships that made up the establishment. The Chicago economists also developed powerful mathematical arguments to build their position in "pure" economics against the essayists at Harvard closely linked to the Eastern establishment. The struggle on the terrain of economics was also a fight against the Keynesian economists of the establishment who served the Kennedy administration as so-called action intellectuals. The U.S. government was denounced as the product of rent-seeking behavior that led to inflation and economic stagnation. Chicago economists in the 1950s, at a time when neoliberal economics was still relatively weak in the United States, invested internationally. Led by Arnold Harberger of the University of Chicago, they took advantage of USAID and the philanthropic foundations to invest in potential counterparts in the south, especially in Catholic University in Santiago, Chile-the home of the original "Chicago Boys" (see Valdes 1995). The investment in Chile could be directed against CEPAL-the U.N. organization in Santiago-and Raul Pre bisch, himself the perfect embodiment of the well-bred cosmopolitan economist. The U.S. investment was relatively even-handed between Keynesians and neoliberals, but mainstream Keynesian or developmentalist economics was built into the Chilean establishment at the University of Chile. The young economists at Catholic University came in

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large numbers to Chicago, and they formed similar political alliances in Chile to those that were being formed among conservatives in the United States. They were ready when Pinochet came to power in I 97 3. They used their mathematical economics, ties with the media -especially El Mercurio, the Chilean analogue to the Wall Street Journal-and their connection to the Chicago economists, then gaining power within the economics profession in the United States, to call for "shock treatment" and a series of reforms that became the Bible for neoliberal attacks on the interventionist state elsewhere, including Britain. The almost perfect parallel between the University of Chicago and Catholic University made for a remarkable story of export and import, which then helped to build the credibility of the emerging Washington consensus and to provide the basis for structural adjustment after the debt crisis and the Reagan election in the 198os. In Brazil, Delfim Netto, a first-generation economist who gained power with the military, used the state and developmentalism against the old establishment that had dominated the state. The second-generation descendants of the establishment, exemplified by Pedro Malan, built their base at Catholic University in Rio de Janeiro. Since economics was still relatively new in all these countries, the new generation of economists could invest abroad, return, and essentially take over an economics department and align it with the emerging global market. The new generation used U.S. economics and the legitimacy of mathematics against the strong state and relatively high inflation characteristic of the policies of Delfim Netto in the 197os. The debt crisis further built their position. Argentina's think tanks-always well connected internationally-did not need economics to challenge the establishment or the military, but economists, led initially by Domingo Cavallo, found their way relatively easily into the international markets in economic expertise. Mathematics could be used to challenge converted lawyers like Martinez de Hoz. In Mexico, a new generation within the PRI establishment, exemplified by Carlos Salinas, used economics to gain power within the state establishment and to build bridges to economists from private schools and the private sector, exemplified by Pedro Aspe. Latin American economists enhanced their domestic positions with the debt crisis of the 198os.Their training and approach allowed them to get along well with those who negotiated the debt crisis on the other side. Drawing on their proficiency in English, their technical economics, their connections in the economics communities in the United States, as well as the democratic sympathies that this generation picked up while swimming in U.S. academic waters, they became the core of the technopols celebrated in the United States. Indeed, many of the most prominent economists in

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Latin America met and formed friendships in the United States, especially at MIT or Harvard, where much of the post-Chicago generation was educated. They became the southern side of the more democratic version of the Washington consensus. The market integration of economic expertise has only increased in the succeeding years. It is not just that international degrees are required as a matter of course in order to make any credible claim to economic expertise, but it is also increasingly necessary to have held a position in the United States that would provide further professional credibility-including visiting professorships or even tenure track appointments. One result is that there are quite a number of Latin American economists teaching and even tenured in U.S. universities, and there are many others who have done a stint at the World Bank or the IMP. This phenomenon is wellillustrated by the number of state economists in the south watching and monitoring the careers of their younger compatriots teaching and publishing in the United States to determine their suitability for home positions, while those working in the United States are concerned that a return will "ruin their careers." Some economists will return to their home countries, but many will make their careers mainly in the United States, contributing to the brain drain from the south to the north. Once Chicago-trained economists were in positions of power in the north and the south, both sides- along with international financial organizations in Washington, D.C.-moved seamlessly toward the new focus on institutions and the state: the so-called move beyond the Washington consensus. Economists were simultaneously embedded in the structures of state power-even more so as talented sons and daughters of the elite invested in U.S. economics-and the international market of expertise. The transnational field itself moved to legitimize and preserve its conquest of power. And economists now see the law as a means of legitimizing and preserving the policies that were put in place in the 1970S and 1980s, along with their places in power. Some of the interest in court reform in Latin America comes directly from economists in the state and in think tanks around the state. The economists in power increasingly recognize that to extend the market they need strong institutions and international legitimacy. Recent economic attacks on the IMF, for example, are more intended to consolidate rather than to condemn the hegemony of economic expertise made in the United States.

The Hybridization of Business Law The situation for law is different, in part, because of the much longer history of legal institutions in Latin America and their strict embeddedness

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in historical structures of state power. The positions of the faculties of law and the courts are thus the product of long histories producing patterns of behavior and hierarchies of power that are very difficult to change. The failure of the law and development movement to have any real impact on legal education in Brazil and Chile shows the way that this mismatch played out in the 1960s and 1970s. Law, the state, and legal education in the south completely clashed with what was found in the United States, the country seeking to export models and expertise in these areas. The main success of the law and development movement in Brazil was not the transformation of legal education, law, or the state but, rather, the building of relationships between people who were roughly in the same positions in their own countries. The elite lawyers of Brazil used their law and development training and connections to follow relatively traditional Brazilian routes to state power. The differences were that their bases of international strength were friendship with leading actors in the United States and some familiarity with U.S. business law, which allowed them to advance their positions as the economists came to power. More generally, we can use this perspective to try to understand the Alliance for Progress. The action intellectuals of the Kennedy era in Washington sought to export what they represented to places with very different structures of state power. They did not find counterparts in the south capable of implementing their technical programs of anticommunist reform. Even when they were quite successful in making friends, some of the critical technical recipes, such as that favoring land reform, were not accepted by the political establishment in the south. Put another way, individuals in the south who pursued an international strategy of investing in northern reformist expertises-Iand reform, in particular-were not paid dividends proportional to their technical investments. Many ended up being labeled as Communists and exiled by the military regimes that came to power. The failure of the "third way" programs identified with the Alliance for Progress in the 1960s and 1970S foreshadowed and contributed -along with economic decline-to the demise of the reformist establishment in the United States a short time later. One of the reasons for Jeanne Kirkpatrick and the Reagan administration to support authoritarian regimes that were identified as anticommunist was that they did not want to see another Allende gain power and confuse the divisions of the Cold War. Some of the friendships made in the 1960s and 1970S came together again when both sides were kicked out of power by new groups of conservatives linking the Cold War and neoliberalism. The international human rights movement is a product of that linkage. To see the legacy of that

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particular connection, however, and especially what it means for the dollarization of law, it is useful to explore two different aspects of legal intersections. The first is the business law firm, and the second is the public interest law firm in the sense that could be applied to the most famous legally oriented human rights group in Latin America, the Vicariate of Chile. By doing so, we can see the very different ways that these two kinds of law have taken root in Latin America. The tradition of law firms as family enterprises can be found in varying degrees throughout Latin America. The relatively few law offices with cosmopolitan capital, typically also well connected to the state and the leading families, served as compradors and double agents for foreign traders and investors. The internationalization of corporate law firms is thus a joint venture between social capital and legal capital, with the proportions different on each side. The venture could be characterized, as it was in Mexico, as a coming together of local know-who and u.s. know-howthat is, U.S. legal technology and Mexican social connections. In Mexico, in fact, the division of labor was made clear with the firm name Baker, Botts, Miranda and Prieto: the Mexican always came at the end. Those who made the connections, however, were structurally closer than at first seems. For Baker and Botts, for example, Henry Holland, the former assistant secretary of state for Latin American affairs, used his connections in Mexico to facilitate the new law firm. Other joint U.S.-Mexico law firms brought U.S. partners who had in effect gone native, marrying into Mexican society, gaining law degrees at UNAM, and therefore already becoming highly "Mexicanized." On the other side, the alliance was facilitated by the fact that those who were willing to be listed with U.S. lawyers in the 1960s and 1970S were descendants of a Mexican elite cut off from careers in the PRIor the Mexican state. They could bear the condemnation that inevitably was heaped on these law firms by Mexican nationalists. The other model for establishing business law firms is more frequent in and typical of countries where U.S. law firms and U.S. expatriates were not so present. This type of law firm was built on informal alliances among local notables of business law who used referrals and apprenticeships to cement relationships and facilitate the exchange of legal technologies. The pioneers of these law firms in Argentina were old family law firms who internationalized very early and obtained degrees and connections abroad; in Brazil, the leading such firm was started by someone outside of the faculties of law and the traditional legal hierarchies. The Chilean law firms appear to have developed largely out of the old legal families. The debt crisis and the economic activity that characterized the

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198os, in particular, put all of these law firms in very close contact with u.s. law firms that needed counterparts and local correspondents in the south. Indeed, legal technologies for the management of the debt crisis were originally worked out in Mexico, and the very same u.s. law firmsmainly Shearman and Sterling for Citicorp and Cleary, Gottlieb for the debtor countries-and often even the same lawyers ensured that the model was put in place in the other debtor countries. The close contact between the various lawyers through seminars and exchanges also facilitated the movement of innovations in one country to another-renegotiation according to particular criteria, debt for equity swaps, privatizations, the creation of capital markets in the emerging markets. Law firms on both sides thrived through these innovations, which occurred with the restructuring of the Latin American and U.S. states. Law firms in the south that once almost exclusively served a foreign clientele built a much more domestic business clientele by serving a variety of new joint ventures and privatized enterprises. The contacts also substantially increased the value of u.S. law degrees in all the countries. The family firms grew and divided, making it easy to draw a family tree that explains the community of internationally oriented business law firms. The process led also to a dynamic of family feuds, where heritiers and others would fight over the relative values of family capital and legal capital. The growth of these family firms and their spinoffs, their relative prosperity, and the obvious value of the u.s. education has produced a tremendous increase in the number of lawyers with U.S. law degrees and experience. A large number of these new hybrid lawyers now face double glass ceilings. The business law firms in their home countries remain, for the most part, family law firms, and, while they are much more open than in the past, the opportunities for outsiders remain limited. They are typically still second-class citizens. It is also almost impossible for them to make partner in one of the law firms in the United States unless they stay in the U.S. market. The fluidity or dollarization that can be seen increasingly in economics, with relatively few exceptions, does not exist in the field of business law. It appears that this relatively large pool of ambitious and talented people, therefore, is finding opportunities through alliances with nonWall Street providers of legal services, including Baker and McKenzie, Clifford Chance, and the Big Five accounting firms.2 This growing and somewhat dissatisfied reserve army of talented lawyers may provide a vehicle for further change. They can challenge both the structures of power within the thriving family law firms and the comfortable position of the elite U.S. law firms. They are not, however, so far

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numerous enough to take on the professional organizations, nor do they express much interest so far in the courts. But they have helped in a number of countries to mount an offensive against traditional legal academia, which is relatively weak now, by forming new private law schools-many of which are attached to business schools. In a variety of ways, therefore, this reserve army of lawyers may produce a domino effect. They may help raise the stakes for the old business elite by enlarging the field and competing with them. At the same time, the activity of the new competitors helps the old business elite demand more recognition and more autonomy within the legal field. The structural positions of the business law firms from the north and south, in sum, matched pretty well. These brokers between multinational business and the state were able to evolve together to extend and develop the market in corporate legal expertise. The alliance especially proved to be a link between Latin American social capital and northern legal capital. Results can be seen in legal reforms and practices in such areas as intellectual property, trade, securities, and antitrust. On the public interest sidethat is, law for the disadvantaged-the situation is rather different, however. There were remarkable successes that came out of the structural conditions that existed in the I970S and I980s, but the legacy of that period has not caused the legal profession to embrace public interest law in the same way that business law has been embraced. We can understand these two-stage developments best by first recalling some very substantial historical differences in the position of law and the legal profession in Latin America and the United States.

The Human Rights Moral Drain

In the United States, the legitimacy of law comes in part through the schizophrenic position of those who serve corporate interests. Since the late nineteenth century, corporate lawyers have combined service to business with investment in public service and law reform. A business lawyer in the United States, for example, who hopes to pursue an elite career is expected to invest in the promotion of legal services for disadvantaged persons. This pattern has been reinforced over time and built into elite law schools and careers. Law schools proclaim their commitment to public interest law as well as to corporate law-even if the market leads most graduates, in practice, to seek jobs in the corporate sector-and the profession as a whole recognizes and rewards those who act on behalf of the disadvantaged and their legal rights. The position of the legal profession in the United States contrasts starkly with the position traditionally maintained in Latin America, which

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was illustrated by the reaction of the Argentine corporate bar to a visit by corporate lawyers from the New York City bar to Buenos Aires in the mid1970s. Acting according to u.s. custom within their profession, the New York lawyers came to ascertain the human rights situation. The Argentine lawyers simply could not understand, however, why business lawyers would support communists and terrorists. The legitimacy of law and the position of law graduates in Latin America, in contrast to the United States, came much less from investment in legal rights for those out of power and more in terms of traditional politics. The business lawyers saw relatively little need to invest in the legitimacy of law, and the elite of the profession did not see any place for legal strategies for the disadvantaged or those persecuted by the state. Ambitious law graduates seeking to help or speak for the disadvantaged did not pursue legal avenues. Instead, they primarily became active in political parties in order to gain power in the state. Law provided some legitimacy for the state, but there was no pattern of professional investment in the development and enforcement of legal rights as a legal career strategy. That would be seen as politics and not a practice that merited professional recognition. Corporate lawyers and faculties of law would not see any reason to invest in this kind of public interest law. Put another way, a lawyer who was interested in a career involving high-status public interest law in the United States would be recognized and even rewarded by corporate lawyers-even offered jobs. Such an investment would not be rewarded within law in Latin America. Nevertheless, as the following example shows, structural circumstances did build up public interest law at a particular historical moment in Chile and other places. After Pinochet came to power in 1973 and began to persecute those who had worked with the Allende regime, some lawyers who sympathized with the Allende group joined with the church-which still strongly reflected the social gospel-and sought to try some legal remedies. They had few options in politics or in the legal profession, and this route achieved little in the way of success in the short term. As it turned out, however, they linked with international actors in a way that facilitated the construction of the human rights movement. Amnesty International, which took a strong interest in Chile, had worked assiduously to build the idea that human rights were not merely tools for political groups out of power, but reflected universals that proscribed torture and disappearance. A relatively marginal group of legal academics in the United States-linked to Amnesty and the International Commission of Jurists-had worked toward the same end by drawing on European principles and postwar devel-

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opments such as the European Convention on Human Rights. They sought to build the credibility of human rights as international law. The investment of these groups was recognized in and augmented by the split in the foreign policy establishment in the United States over the Vietnam War. The breach in the U.S. side of the Cold War opened up new possibilities. As a result of the breach, the Democratic doves held hearings in the United States following the Pinochet coup and sought to use this human rights expertise to challenge the hawks who had supported and aided the coup. The Cold War split was found also in the Ford Foundation, where young idealists had decided after 1970 to work with Allende despite pressure from the CIA and the State Department. After the coup, they sought to protect the individuals with whom they had worked. The Ford Foundation did not immediately invest in human rights, but they and the Democratic doves formed an alliance with reformers from the Allende establishment who were now out of power. The alliance was therefore between close counterparts in the north and the south. The alliance drew, at first, on the shared investment in neutral social science, but human rights developed as a legal analogue linked personally and intellectually to the social scientists who had worked with the Allende regime for land reform and other social programs. Both in the north and the south, the opposition actors joined with the media to build the credibility of human rights as a discourse that suited both sides perfectly. Amnesty thrived, winning the Nobel Prize in 1977, and Jimmy Carter became president, in part, on a human rights platform. By 1977, after the Ford Foundation's board of trustees had visited the Vicariate in Santiago, the Ford Foundation was willing to create a program in human rights and use the Vicariate model-which had seemed to be "curiously legalistic"-to expand to other terrains. During the time of the Reagan administration, which was also the time of the debt crisis and the softening of the authoritarian regimes in Latin America, legally oriented human rights organizations thrived in the north and the south. Responding to the changing field of state power in the United States, in addition, Human Rights Watch developed new approaches to challenge Amnesty International's leadership and emerged as the leading global human rights organization. The model from Chile exerted a great influence around the world, interacting in particular with parallel developments in Brazil and somewhat similar developments in Argentina-where, however, the church offered no support and the Madres of the Plaza de Mayo were the only strong voice at the outset. The growing legitimacy of international human rights discourse in the late 1970S and 1980s meant that it also came to Mexico, where it was used by groups who sought to exploit legal expertise to chal-

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lenge and upgrade the PRI. Since, as a Ford Foundation official stated, "the model worked everywhere else," philanthropic foundations were also available to help those who wished to try this international strategy in Mexico. Human rights organizations were a thriving form of public interest law in the 1980s throughout Latin America and the United States. The international market in human rights expertise was a plausible counterpart to the international market in economic expertise. Both were centered in the north, especially on university campuses in the United States. Both were closely connected to the media and had become increasingly competitive. The human rights movement helped to make the rules for transitions to democracy, and lawyers active in the human rights movements became key players in the new regimes. Once actors in the human rights movement succeeded in gaining power in Chile, Brazil, and elsewhere, however, they abandoned institutions like the Vicariate in order to invest in the new state. 3 The human rights movement hardly exists anymore in Chile, in the sense of a movement seeking to hold the state accountable through legal institutions. The same general conclusion could be reached for Argentina, Brazil, and Mexico. For example, Raul Alfonsin in Argentina -the first president after the military dictatorship-came from a human rights background to elite party politics and the institutions of the state. In all the countries we studied, in fact, the investment of the first generation in human rights provided an excellent base for political activity after the transition. What was left behind was not replenished by a new generation eager to mimic the careers of their predecessors. The particular conjuncture that had united moral activism with law through the church and international actors did not continue. The newly created institutional structures that built the human rights NGOs unraveled, revealing the structures that had been in place prior to the 1970s. Nevertheless, local human rights organizations, once formed, can continue to exist in the south, even if they no longer resemble what they represented earlier. Many, for example, have shifted their focus to causes and issues such as the control of crime or the prevention of violence against women. They are much more outposts of international development assistance than the activist legal institutions challenging the state, which we identify as public interest law. Legal professionals are involved, but it is hard to see these organizations as professional analogues to public interest law. The patterns may change over time, however, and there may already be some exceptions in the south involving institutions that continue to follow the approach of moral investment in law against the state. In

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Brazil, for example, Viva Rio is one instance of a mix of social movements, religion, politics, and law. Its activities, which grew out of the human rights movement, focus on crime, hunger, and police violence in Rio de Janeiro, and it draws on elite lawyers as well as social activists. In Chile, activities centered at the University of Diego Portales, a private university originally designed to produce business lawyers, continue to emphasize human rights and public interest law. Argentina seems to offer the most promise for public interest law, since the long pattern of professionals investing in institutions and organizations outside the state could provide a base for such activity. Such entities as Poder Ciudadano and a recent and related entity termed the Association for Civil Rights (Associaci6n por los Derechos Civiles [ADC]), which is dedicated to the protection of civil liberties in Argentina and funded primarily by the Ford Foundation, provide examples of this type of advocacy. In contrast to the general pattern in the south, the leading international human rights organizations in the United States are thriving in the legal profession. Instead of abandoning their investment in legal expertise to join political parties and movements, human rights organizations continue to invest legal resources and techniques at the cutting edge of U.S. foreign policy. As with power corporate lawyers in Washington, D.C., some go into the government on the basis of their experience and expertise, but their legal bases continue to thrive through their symbiotic relationship with the state. Two further developments relate to the structural asymmetry between the north and the south in the present period. First, those Latin American lawyers who have continued to invest professionally in the field of human rights have tended to go abroad, where their expertise and investment in international human rights remains validated and recognized. This legal morality and brain drain from the south to the north -where there is opportunity for those with their credentials-helps to legitimate the international human rights organizations based in the north. The northernbased NGOs can show that they include actors from the south, and they can adjust their programs to give some influence to those actors. This openness allows them to further legitimate their positions of leadership in the field of international human rights. The thriving of human rights organizations based in the United States, in contrast to their absorption and reincorporation into the state in the south, is consistent with what our structural model would expect. New forms of symbolic capital-in this instance, the human rights movement-tend to gravitate toward the more established and dominant symbolic banks where they can be better valued, guaranteed, and exchanged. This means in the United States that symbolic innovators continue to

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gravitate to the powerful and relatively autonomous professional milieus-especially given the fairly amorphous and porous u.s. state. Human rights initiatives and actors move into the sphere of "public interest law." In Chile, to make the obvious contrast, the state provides the dominant symbolic bank. Those whose careers gain value through human rights activity translate that value into state power. For structural reasons, therefore, the current situation reveals only a partial transplant of the u.s. professional model of legal legitimacy. The partial transplant reinforces u.s. hegemony and helps to sustain the longterm prosperity of the u.s. professional model at home. International activities add a key dimension to a U.S. legal elite that combines hired guns, reformers, and public interest lawyers acting on the basis of legal noblesse oblige. 4 In the field of human rights (as well as the environment and the movement to protect women against violence), the local prestige and power of u.s. organizations draws extensively on international activities and expertises. Within national settings outside of the United States, however, there has been far more lasting success in transplanting U.S.-style business law than U.S.-style public interest law. Within the business law firms, there is a move parallel to that of the economists toward investment in the state and its institutions. The notion of professional strategies of using law against the state and business, however, which is a key ingredient of the legal field in the United States, has not been able to thrive beyond a particular time period-when segments of the establishment united against the authoritarian states that evicted them from power. Asymmetric Governance

The processes of professional dollarization and the dollarization of state knowledge, captured in the shift from gentlemen lawyers to technopols, are therefore highly uneven. Elite economists can make their professional careers locally through investment in and legitimacy from the international market of expertise centered in the United States. They legitimate their superiority to the rank-and-file economists of their own countries while drawing on the latest economics of the campuses in the north. The U.S. professional ranking of economists outside the United States translates directly into professional prestige and recognition at home. There is a brain drain to the north, including to the World Bank and the IMF, but there is enough return traffic to maintain the crucial connections. We can trace the development of this international field through interactions between the north and the south that flourished in the development of the Washington consensus. The relative newness of the technical economics generally, but especially in the south, and the need for the discipline to

The Internationalization of Palace Wars 57

develop autonomy from law and the legal establishment helped to facilitate these developments. Business lawyering, falling in line behind the rule of the economists, has also tended to thrive professionally in both the north and the south. A relative abundance of young law graduates from the south now seek graduate degrees abroad and careers as business lawyers. As with respect to economics, the business lawyers are able to build domestic careers by relying on expertise minted abroad. Dollarization is less complete, however, since the relative mixes of social and legal capital are still different in Latin America and the United States. The law firms in the south are still largely family law firms, limiting local opportunities. There may now be an overproduction of business lawyers who lack opportunities either with the elite of the United States or with certain family firms at home. If unable to pursue other opportunities, they will likely gravitate toward second-tier transnational law firms and toward the Big Five accounting firms, fueling these business law competitors to the U.S. elite and the local family firms. With all these entities seeking to offer business lawyering, the professional strategy is taking hold quite strongly in Latin America. The same is not true for public interest law, despite the remarkable professional and legal success that went into the construction of the field of human rights. The institutional prosperity of public interest law in the United States draws on the schizophrenic model of corporate lawyers that developed in the nineteenth century. It is also closely linked to the role of courts and to the elite law schools in the United States. The professional role of public interest lawyer, however, has not taken root in Latin America so far. The human rights movement fit parallel structural histories in the north and the south, but the south did not have institutions akin to the family law firms that could be used to put public interest law on a more lasting indigenous path. It remains to be seen whether this "emancipatory" side of U.S. professionalism will take root alongside the business side-and whether a joint effort might mount a real challenge to the traditional positions of the courts and the law faculties in Latin America. In both law and economics, the criteria for legitimate expertise are set according to the international market centered in the United States. There is a new hierarchy that places elite U.S. professionals at the top (whether they are the product of a brain drain or homegrown does not matter), and within each country there is also a two-tier professional hierarchy. There is a cosmopolitan elite and an increasingly provincialized mass of professionals in law, economics and other fields who have taken advantage of the expansion of educational opportunity in the postwar period. Each of these hierarchies raises questions about legitimacy that have not yet been confronted.

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First, each of these international fields-economics, business law, human rights-is dominated by the United States and its mechanisms for legitimating expertise: elite private universities, philanthropic foundations, transnational NGOs, think tanks, academic journals, the U.S. state, and global media. Those who are largely excluded from participating in the making of the governing rules and the operation of these institutions may question the legitimacy of the international expertise as applied to themand form alliances with those who seek to promote competing expertises (e.g., accountants) and even models of states (e.g., the Japanese). Second, at the national level, it is possible to raise similar questions about the cosmopolitan elite. They can be accused by, among others, the professional rank and file of "selling the state" on the international market in order to promote themselves and their internal power. None of the hierarchies are stable or inevitable, and the legitimacy of states built out of this cosmopolitan expertise is also far from assured.

Chapter 4

The Archeology of the New Universals: The Cold War Construction of Human Rights and Its Later Avatars

T

he movement from the gentlemen lawyers of the state to the generation of technopols promoting the new universals of liberal democracy took place simultaneously in the north and the south. The resultant dollarization of expertise, as we have seen, has varied substantially in different countries in different professional expertises. The chapters in this part look in more detail into the exportation of palace wars in the north into the south. We trace the development of the international human rights movement and neoliberal economics-the two strands that came together to produce the Washington consensus and "liberal democracy." Looking backward, in this chapter, at the production of this asserted consensus around U.S.-based universals, we trace the genealogy of the human rights movement. We begin by connecting the human rights strategy with the Cold War and the foreign policy establishment that dominated the United States in the 1950S. In the following chapter, we move to the challenges to that establishment mounted by a new generation of economists. The focus on the two contending groups makes clear the complexity of what are often characterized as monolithic imperial processes. What was exported-discussed in the concluding two chapters to this part and subsequent chapters in the book-"':"'can only be understood in relation to conflicts and battles that took place in the field of power in the United States. The founding fathers of the human rights groups and the leaders of postwar philanthropy belonged to the small elite of cosmopolitan business lawyers-the U.S. version of gentlemen lawyers-who constituted the core of the foreign policy establishment at the close of the Second 6I

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World War. This social proximity of the early proponents of human rights and the group in charge of u.s. foreign policy is not an accident. The close relationship among a wide number of parallel institutions arose from the fact that they were oriented toward the same objective: an active foreign policy with the national interest defined as the fight against communism. The fight against communism justified the leadership of this particular cosmopolitan elite in the postwar period. 1 Their elitist strategy was entirely consistent with the social position that they put to work-and thus justified-in the fight against communism. The ideological approach and network of clientele that they represented, in addition, served as the basis for an international alliance of notables mobilized in the name of the fight against communism. They could count on their counterparts among gentlemen lawyers abroad to work with them and support their elitist strategy. The early human rights movement came precisely from this alliance. A Counteroffensive on the Terrain of the Great Legal Principles

Any history of the international human rights movement would give a prominent place to the International Commission of Jurists, located in Geneva and founded in the early 19 50S (Korey 1998; Tolley 1994}.2 It was created at the beginning of the Cold War by elite u.s. lawyers identified with the Council of Foreign Relations. The impetus was the desire to mount a counterattack against a rival organization, the International Association of Democratic Jurists (IADJ), which was launched in 1946 by leftist French lawyers who had been connected to the Resistance. In the name of legal principles, the IADJ overtly attacked MacCarthyism and supported the defense of the Rosenbergs. Recognizing the vulnerability of the United States, a small group of political lawyers-including Allen Dulles, president of the Council on Foreign Relations and deputy director of the CIA, and John J. McCloy, then the high commissioner for Germany and later labeled the "chairman of the establishment" (Bird 1992}-decided to engage the battle on the terrain of law. According to Tolley'S detailed account of the International Commission of Jurists (ICl), this founding group worried that pro-Soviet organizations such as the IADJ had "stolen the great words-Peace, Freedom, Justice" (Tolley 1994, 29). The objective of the U.S. counterattack was to create international organizations, financed through secret funds supplied by the CIA, that would, in Tolley'S words, "mobilize the forcesin particular the juridical forces-of the free world for the defense of our fundamental legal principles, and in doing so to organize the fight against all forms of systematic injustice of the Communist countries" (34). The

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strategy of these notables was in their own overtly elitist image: "The AFFJ [American Fund for Free Jurists] directors favored the Council on Foreign Relations approach-the organization of a highly exclusive elite, selected and governed by a small inner circle" (Tolley 1994, 51). The directors of this parent organization (AFFJ) belonged to the elite of the New York bar. The majority combined success as business lawyers, a reputation for service to civic organizations, and strong anticommunist convictions. Characterized by a strong sense of "noblesse oblige," they mobilized the establishment of gentlemen lawyers and their friends for the defense of the free world according to the same logic that pushed them to invest in domestic public affairs. They recruited their counterparts from abroad-notables and politicians of law-as their natural allies. According to Tolley, "The committee selected only men with high standing and considerable experience in public life-cabinet ministers, parliamentary deputies, appeal court judges. Elite status would give access to national officials as well as to international organizations" (1994, 36). A further benefit of this strategy was that "the multinational ICJ would inspire trust by the eminence of its members" (55). 3 At the top of this quite hierarchical organization, the ICJ represented a kind of high international court. It authenticated the criticisms made by lawyers expelled from communist countries and rejected the claims of the new communist regimes to the great universal principles of Western law. These judgments were used by the media or diffused through adherents or sympathizers of the national sections. In order to increase its credibility, the ICJ recruited well-known persons from the academic or diplomatic worlds to serve as secretaries-general. Those who served have included Norman S. Marsh, barrister and fellow of University College Oxford; Jean Flavien Lalive, an eminent Swiss jurist who had held leading positions in the International Red Cross, the United Nations, and the Court of Justice at the Hague; Sir Leslie Munro, ambassador from New Zealand and president of the United Nations General Assembly; and then, in 1963, Sean McBride. In many respects, McBride represented the culmination of this strategy of legitimation-at least until his dismissal in 1967, when the press revealed the secret financial backing of the ICJ by the CIA. It is hard to imagine a better profile than this lawyer and journalist, who was the son of Irish revolutionaries, born in Paris, and imprisoned many times by the British before becoming a parliamentary deputy, then minister of foreign affairs. As the minister of foreign affairs, he became one of the founders of the Council of Europe and a signatory of the European Convention on the Human Rights. McBride also displayed considerable entrepreneurial energy. He multiplied the activities of the ICJ, campaigning in the UN for

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the creation of the post of high commissioner for human rights. Further, as will be discussed below, he was one of the founders and, later, leaders of Amnesty International, which grew out of Justice, the British section of the ICJ. Constructing a Grand Alliance of Professional Elites

The revelation in 1967 of the relationship between the CIA and ICJ led to a period of profound questioning of that relationship. From the perspective of the 1950S and early 1960s, however, the relationship appeared quite natural. There was little distinction between the Ford Foundation, the CIA, the State Department, and even the Ivy League universities in terms of their approach to the Cold War. The human rights strategy seen in the ICJ was thus a tiny part of a concerted effort led by the foreign policy establishment. 4 The Council on Foreign Relations provided a kind of private "shadow cabinet" (Shoup and Minter 1977) where a small elite of professionals could be found, including McCloy, Allen and John Foster Dulles, Eugene Black, Paul Hoffman, and others. 5 This group also included a group of economists educated in the wake of the depression, exemplified best by Walt Rostow but also including Richard Bissell, Max Millikan, and David Bell. 6 Although fortified with an expertise then gaining in importance, these economists were also squarely rooted in the establishment through a dense network of personal relations.? The key individuals of the foreign policy establishment had served the war effort in the name of noblesse oblige prior to following dual careers serving both business and politics. 8 In support of their strategic objectives, they were able to rely on the full network of institutions oriented toward international matters. These, after all, were institutions that they had helped to create (World Bank, CIA, USAID) or that they controlled (e.g., the Ford, Rockefeller, and Carnegie foundations).9 This "cultural cold war," recently chronicled by Frances Stonor Saunders, drew "on an extensive, highly influential network of intelligence personnel, political strategists, the corporate establishment, and the old school ties of the Ivy League universities ... to build a 'consortium' whose double task it was to inoculate the world against the contagion of Communism, and to ease the passage of American foreign policy interests abroad" (1999, 1-2). The strategy of cultural containment was put into practice in a systematic and even luxurious fashion. The task was divided between the different institutions-international institutions, private foundations, and state agencies like the CIA-that the small elite of the foreign policy establishment controlled. They also sought to maintain at least the appearance of institutional autonomy essential to their credibility-or at

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least, as with respect to the IC], the appearance of a separate entity (see Berman I983, 6I). The private foundations occupied a central place in this division of labor. The foundations could assure a close relationship with the scholarly world. Indeed, since the beginning of the century, the foundations had been the basic instrument for the conception and promotion of reformist political change within the liberal establishment (Bremner I988; Howe I982; Silk and Silk I980). This strategy concentrated initially on the regions that were most exposed to the communist threat, in particular Europe and Asia, but it soon covered most of the globe. lO After Castro came to power, Latin America became a priority. While now under the banner of "development," systematized and made official by President Kennedy in the Alliance for Progress, the basic goal remained a policy of containment. As pointed out by Peter Smith, "It was one minute to midnight .... Latin America stood on the brink of massive revolution .... Gradual reform would provide the antidote to radical revolution" (Smith I996, I44-46). The tactic in Latin America was to build up the "friends of America" while exporting U.S. learning-especially but not only economics. These investments were directed toward building a new technocracy of development that was both competent and reformist and could be counted on to avoid polarizing the political field between an ultraconservative right and a radicalized left acting like revolutionaries. The social profile, professional trajectories, and the political options of Kennedy's "action intellectuals" from Cambridge (Tanzer I96I) suggest their continuity with the learned element of the foreign policy establishment. There were numerous personal connections with the earlier generation of the Council on Foreign Relations. The most obvious example is McGeorge Bundy, the principal organizer of Kennedy's elite group and later adviser to the president for foreign affairs (Bird I998). Bundy was a direct descendent from a traditional eastern WASP family, a graduate of Yale, and the son-in-law of Dean Acheson-one of the famous "wise men" of the foreign policy establishmentY Bundy's cosmopolitan career also included service as a very young dean of the Harvard College of Arts and Sciences, the Council of Foreign Relations, National Security Advisor, and finally the leadership of the Ford Foundation, which he directed from I967 to I979 (and used to save the ICJ when its CIA funding stopped). This continuity of objectives and people in the Cold War strategy of cultural containment did not prevent pragmatic adjustments in tactical orientations. By definition, in fact, the success of this investment in human capital implied a flexibility and pragmatism necessary to adjust to ongoing redefinitions of social relations. Pragmatism was dictated also by the fact that the basic strategy was less about leading than accompanying changes

66 ChapteT4

in social relations. The selection of a cadre of new ruling elites was an art of the possible in which the objectives had to be modified as a function of the play of local positions-or the opportunities offered by particular political conjunctures. 12 The elitism and clientelism evident in the U.S. Cold War strategy corresponded not only to international relations but also to the more general social structure and attitude after the Second World War-in the United States and elsewhere. The denunciation of the foreign policy establishment as a conspiracy of elites is generally a more recent phenomenon, evidence of later egalitarian challenges exacerbated by the contradictions of an elite that purported to be meritocratic-the best and the brightest. In the setting of the I940S to the early I96os, however, the idea of a great alliance of elites was much more likely to be accepted by observers as a matter of course. In any event, it is not necessary to posit a conspiracy to explain the points of convergence within the United States and between the United States, Europe, and elsewhere. In the United States, this convergence was the product of a common worldview and approach, inculcated through a career path beginning in prep schools, leading to Wall Street and Washington, and cemented along the way at Yale and Harvard. At the same time, this path was sufficiently open to assure a degree of diversity and flexibility (Barnet I972; Bill I997; Bird I992, I998; Bissell I996; Grose I994; Isaacson and Thomas I986). In European countries, similar social processes assured a small cosmopolitan elite a quasi monopoly on international relations and practices. Within this elite, the key dynamics of reproduction were related to a system of notables and cadets: those who began their careers in cosmopolitan apprentice positions. Family connections allowed cadets, early on, to serve cosmopolitan notables, and those connections helped to build-typically much later-the international capital of another generation of notables. Apotheosis and Crisis of the Model of Notables

The I960s saw the culmination of the Cold War's strategic model of notables, as well as the start of profound questioning of this model or approach. President Kennedy, while not himself belonging to the Council of Foreign Relations, surrounded himself with pure products of the eastern establishment. He cultivated the image of a government of intelligencethe best and brightest. He adopted also the strategy that had been pursued by the "wise men," which implicated simultaneously the carrot and the stick. The Alliance for Progress enlarged and made official the objective that had until then been assigned to the philanthropic foundations. They

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sought the construction of an alliance of professional elites in the service of a politics of modernization-theorized by Rostow as an antidote to communism (Rostow 1960). While waiting for this "high-minded attempt by the US to make friends-quite literally in the sense of creating the friends" (Smith 1996, 153) to bear fruit, the CIA and its proteges were utilized to hound all movements of the left suspected of sympathizing with Castro. 13 After the assassination of Kennedy, this double strategy bent in the direction of repression, aided by the fact that the politics of modernization was either running out of steam or reaching its limits. The second half of the decade was thus marked by an increase in the contradictions inherent in this hegemonic strategy. The intervention in Vietnam only served to exacerbate these difficulties by destroying the consensus within what remained of the liberal establishment-a consensus fundamental to the division of the tasks, at once opposed and complementary, on which the imperial strategy rested. 14 There was a pronounced contest internal to the system. It emanated from the cadets and the generation they represented. They were quite aware of the double game of their predecessors and conscious of the limits of a meritocratic ideology that formed part of their own identities. Tensions were found especially in the institutions that were charged with bringing the combat to the terrain of ideas, precisely because they were situated where the field of power met that of learning. This site of articulation was crucial in the production of political legitimacy-which was at stake in this restructuring. In fact, the concatenation of crises that affected these mechanisms was extraordinary. It included the revelation in 1967 of the CIA's financing of the International Commission of Jurists. There were also investigations and criticisms, in Congress from 1965 to 1969, of philanthropic foundations, led by the populist Wright Patman and focusing on their privileged economic position and the secrecy that surrounded foundation activities (Nielsen 1985, 26).15 The politics of academic investment that provided the fundamental legitimacy for the eastern establishment contributed also to the questioning of the social homogeneity and implicit consensus that provided its strength. As Ivy League colleges gained autonomy and broadened (in relative terms) their recruitment policies (e.g., Freeland 1992), they opened the door of the establishment's networks of power to new arrivals, less disposed to accept the prevailing orthodoxy and hierarchy (cf. Jencks and Riesman 1968). Unlike the preceding generation of so-called wise men, the newcomers had not, as a rule, passed through the prep schools of Groton, Lawrence, St Paul, Andover, or Exeter. They lacked the shared background that allowed the preceding generation to acquire very early a

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social habitus that also dictated the strategic choices that were at the root of their political vision. 16 As these paths from Ivy League colleges to the institutions of Wall Street and Washington, D.C., became more saturated, the new generation had to invest in new spaces of professional practice. One set of opportunities was connected to the expansion of such areas as developmental assistance, including the Peace Corps and programs launched in the name of the Alliance for Progress in the early 1960s. Another set was linked to the many projects of social integration that came to be identified with the Great Society of Lyndon Johnson (Smith 1991, 149-50). Within the legal profession, the War on Poverty encouraged many young idealists to work in the program of legal services for the poor, and lawyers became more aggressively involved in the civil rights movement with the establishment of the Lawyers Committee on Civil Rights under Law in 1963. The process of serving these and related programs allowed many young professionals to identify more closely with dominated social groups, and it also led them to a greater awareness of the limits and contradictions of the hegemonic political strategy. The new arrivals' investment in idealism, however, frequently came to a double impasse. The impasse covered both their personal career hopes and the political projects in which they were so invested, whether those hopes and projects centered on modernizing the Third World or accelerating the social integration of inhabitants of urban ghettoes into American society. Aware that social progress did not always coincide with economic development, they often felt that they had been the dupes of the technocratic and meritocratic ideology handed to them by the action intellectuals working with Kennedy and Johnson. The revolt of these new generations in the I 960s-including the relatively new entrants and some who turned on their mentors-was thus the product of their feeling of deceptionY Professionalization and Politicization of Philanthropy

At the same time that the edifice of U.S. hegemony was shaken, the monopoly of the eastern establishment in the field of power was put into question. This shake-up was translated into institutional changes and organizational evolutions that were at the origin of the professionalization and evolving autonomy of the areas of human rights and philanthropic practice. Professionalism emerged, in part, out of the increasing scrutiny of the foundations in the 1960s. Nielsen (1985, 29-36) asserts that the criticisms from Congress in the late 1960s played a salutary role in forcing a renovation of the sector. The challenges opened up the strategic choices

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of the foundations to public debate and promoted considerable reform activity. The suspicions that had been aroused as a result, especially, of an almost secret system of administration had to be addressed, and one consequence was that the universe of foundations had to reorganize and rationalize. Among the many examples of this process, the foundations created a center for information and revitalized the Council on Foundations. The council's publication, The Foundation News, became a more professional publication. In a parallel fashion, the systematization of recruitment of "professional staff" led to the "gradual emergence of a functioning, interactive philanthropic community" (Nielsen 1985, 32). One of the reasons for the increased scrutiny of the foundations was that several of them had moved to a more activist stance in the 1960s. The Ford Foundation became a champion of the professionalization of activism in social and racial matters. Especially under McGeorge Bundy's strong reformist leadership, which began in 1966 (Bird 1998, 376-95), the foundation invested heavily in the fight against poverty, the promotion of community development, the assertion of the rights of minorities, and the launching of centers for legal services and, later, public interest law. IS The function of all these fronts was to support and finance the efforts of those young reformers who had been strongly marked by the idealism evident, then, on college campuses. 19 The foundation's parallel strategy for the international sector entailed a reorientation of its investments-from general programs supporting foreign universities to the creation of centers of research shielding leftist intellectuals from the threats of the military regimes of Latin America. 2o This strategic reorientation led them gradually to active support of the human rights movements created to defend the victims of state terrorism. 21 These new orientations, which were inscribed in the foreign policy establishment's strategy of "creating friends of America," led the Ford Foundation to operate rather differently than it had in the 1950S. In Latin America, in particular, the Ford Foundation began in the 1970S to appear as the opponent, even the antidote, for the other pillar of Pax Americana, the CIA.22 Paradoxically, these initiatives, which moved the foundation away from the strategy of the CIA, were protected by the authority of McGeorge Bundy, a perfect embodiment of the establishment's Cold War consensus. 23 His mix of social capital, academic capital, and politics permitted him to shift the foundation away from the support of authoritarian regimes identified with anticommunism. The more rigid and conflictual division of tasks between the institutions in this period rendered more delicate the management of this politics. Thus in 1969-at the time the Brazilian office of the Ford Foundation recommended funding a research center involving Fernando Henrique

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Cardoso-the head of USAID in Brazil warned one of the Ford Foundation officials that recommending the grant would be "bad for his career" and that he should "desist." According to one of the Ford Foundation officials involved at the time, an official of the CIA then visited the foundation officer and tried to show that Cardoso was a "leftist." Ford nevertheless made the grant. In Chile, where the Ford Foundation, as reported by one of its officials, "decided to take seriously Allende's pronounced commitment to a legal democratic transition to socialism," "it was a clear split from u.s. foreign policy. And it meant that there was ... not a lot of fraternizing-to understate the case-between the u.s. embassy and the Ford Foundation." After the coup in Chile, then, it was natural for the Ford Foundation to build on "relationships of trust" made earlier. 24 This relationship of trust in part led to the funding of human rights groups after the coup-even though, "back then, some of our colleagues back at the Ford Foundation still believed .... What they knew about Amnesty International suggested that it was a communist front organization." 25 Up to that point, the members of the establishment had been able to cope with internal conflicts in a manner that was both pragmatic and discrete. The professionalization of practices within and around institutions claiming their autonomy thus progressed at the same rhythm as the deterioration of the networks of social connivance on which the facade of political consensus-and indeed the power of the eastern establishmenthad rested. The international implications of this process were magnified because the process took place in other national settings and marked the beginning of the recomposition of the political and social order of the postwar period. 26 Amnesty International: From Elitist Moralism to a Mass Organization Staffed by Professionals Given that the Cold War provided one of the principle triggers for the development of the two rival organizations, the lAD] and the IC], it is not surprising that the succeeding generation sought to gain a distance from such partisanship and elitism. In England in I96I, the founders of Amnesty International thus sought to construct a mass organization, financed exclusively by activists, and characterized by " a quasi-obsessional identification with neutrality." 27 Rather than acting more discretely through personal relations, they sought systematically to focus the attention of the media on their campaigns and activities (see Korey I998, I59-80). More specifically, from the launching of the first great international campaign in the Observer and Le Monde, Peter Benenson -a London barrister-proposed the notion of "three networks." This notion, designed to

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affirm Amnesty's impartiality, required Amnesty groups to adopt simultaneously three political prisoners-one each from communist, Western, and Third World countries. This deliberate demarcation from more political organizations also led Amnesty to limit its objectives and mandate very strictly.28 It gave priority to prisoners of conscience punished for the expression of their opinions, and it excluded those who had committed or encouraged acts of violence. The founders of Amnesty also sought to mobilize public opinion on behalf of their campaigns, and initially they could count on the support of some sympathetic journalists, such as David Astor, editor of the Observer and an old friend of Benenson. Building on this initial alliance, Amnesty worked diligently to build credibility with the media more generally.29 These innovations were important, but the break between the first and second generation of human rights was not absolute. One clear difference was that the notables of the ICJ privileged battles on the terrain of legal standards, while the mass campaigns and publicity of Amnesty had more concrete objectives. But the notables had an important part to play in Amnesty's mobilization of the "tribunal of public opinion." In particular, they commanded the attention and credibility of the media at the time of Amnesty's missions to various trouble spots. Despite its overt concern for internal democracy, this mass organization depended on a dual structure. 30 Next to the masses of militants were the great names whose authority could be mobilized during missions to increase the potential media audience. Continuities are also quite evident in the personal relations between Amnesty and the ICJ. The majority of the founders of Amnesty were leaders of Justice, the British chapter of the ICJ, which publicly supported the new organization. 3 ! Indeed, Sean McBride later became Amnesty's president. While the innovations were significant, based on the reaction by the founders to a too-open partisanship in the name of human rights, it was more a matter of nuances than of fundamental differences. Amnesty's investment in the resistance to Pinochet in Chile after 1973 and in struggles against other authoritarian states helped to legitimate Amnesty and build its membership. In the 1960s, nine hundred prisoners were the focus of Amnesty campaigns with a staff of one full-time and one part-time salaried person. The budget was only £10,000. In 1976, the staff numbered about forty. Amnesty gained further credibility by winning the Nobel Peace Prize in 1977, which, according to Korey, was due in large part to the report on Argentina, published in March of that year (1998, 179). In 1981, Amnesty supported the campaigns of four thousand prisoners with 250,000 members, a budget of £2 million and a staff of ISO persons handling many tasks and maintaining contacts "at the world's top tables" (Larson 1979).32 Investment in Latin America began to produce

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strong domestic dividends in the field of human rights. 33 Some of the consequences of this investment, particularly when the Reagan administration succeeded in pushing the foreign policy establishment our of power, will be seen in chapter 8. Amnesty paved the way for the new and more technical role of lawyers in foreign policy that arrived late in the 1980s and has continued to the present.

Chapter 5

The Chicago Boys as Outsiders: Constructing and Exporting Counterrevolution

I

n order to clarify the strategies of power that have facilitated the success of the Chicago School of economics, we have selected a few episodes out of an extended competition. This process of competition has permitted a small core of dominated intellectuals to place themselves (and their ideas) at the center of the field of state power and also the field of learned economics. The strategies, which were as much ideological and public relations oriented as strictly scientific, involved different components or, more precisely, different moments of the same strategy geared toward recognition and pursued on different terrains. After making his investment in the scientific terrain, for example, Milton Friedman engaged the battle in the public arena, built an alliance with conservative forces, and took extensive advantage of the tribunals offered to him by the financial press and the television networks.! The fights about pure economics took place in the tribunals of the media and in the field of power. The two different places were in fact very closely connected. The move of these doctrinal confrontations into the media served only to extend into the public sphere the same, often violent, confrontations found in academic seminars. The acquisition of economic theory-as studies of the educational process have shown-is also an apprenticeship in the competition for supremacy in economic learning (Klamer and Colander 1990). Investment in pure economics thus responds to a competitive logic, often exacerbated by the similarity of positions of the producers. The fact that the Chicago School became the emblem of the new ideology of the market is closely related to a process of ferocious competition 73

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between immigrants and the children of immigrants. The violent confrontation between the producers of models and the econometricians of the Cowles Commission made Chicago the major training ground for Nobel Prize-winning economists in the postwar period. 2 The impact was not limited to the crowning of the stars. It also served to playa fundamental role in the restructuring of this relatively new learned field-and then the field of state power. In particular, it promoted a process of competition in which mathematics provided the principle for determining academic hierarchies and scientific legitimization. The two aspects are strictly connected. Mathematical competence represented the essential part of the intellectual capital of the relatively dominated or immigrant scientists. They could not draw on family resources or social connections, since they had none. They therefore put their mathematical skills to work in the learned competition. The mathematical rigor of this path to scientific innovation helps to explain the scope of the triumph over the disciples of Keynes. 3 Investment in mathematics is a strategy of symbolic valorization that is quite useful in affirming the legitimacy of a new field of learning (Porter I99 5). The strategy could also be useful in seeking to disqualify the rhetorical competence of the "gentlemen lawyers" who, in the United States and elsewhere, dominated the field of state expertise-and thus indirectly that of economic knowledge. 4 The mathematical requirement permitted the new generations of theorists to disqualify economic "essayists" as lacking in rigor and mathematical sophistication. 5 This political strategy could not have succeeded if the small group of innovators had not made great gains in terms of their academic legitimacy-including conquering new terrains of activity that would be valid for the field as a whole. It appears, in fact, that the success of mathematical modeling came in part because it went along with the introduction of a market logic into the mode of production of this field of learning. It facilitated the recruitment of new producers fortified with talent and motivation, and it permitted the new arrivals to impose their own criteria of scientific rigor in the hierarchy of the field. Finally, it opened a new market to the holders of this new expertise of statistical economics. The university experts and their students could use their legitimate expertise to advise and join state agencies. In this respect, it is instructive that the sixties witnessed a tremendous growth in the education of economists and the official consecration of Keynesian doctrines along with the triumph of mathematical techniquesnotably, in the elite institutions of the Ivy League. 6 In this way, for example, the leading disciples of Keynes, including Samuelson, Tobin, and Solow, when invited to join the ranks of Kennedy's "action intellectuals"

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and then the Council of Economic Advisors, defined their scientific ambitions-and their economic politics-in terms of effecting a synthesis of the Keynesian revolution and neoclassical methods. 7 This convergence, which put the accent on indicators and the construction of models, corresponded precisely to the type of learning required by the new market in information and economic management. State institutions for economic planning and evaluation-or consulting organizations such as Rand or Brookings, which developed in strict symbiosis with these state institutions-recruited specialists who could apply economic calculations relevant to the "fine tuning" of the economy and, to an even greater extent, the new ideology of effective and rational management symbolized by McNamara and his "whiz kids" at the Department of Defense. 8 The valorization of this quantitative competence was part of a meritocratic strategy. It offered an opportunity to promote a young "math whiz" better endowed with scholarly competence than social capitaU The growth of this new career path came at the same time as the relative opening of elite higher education to students not belonging to the eastern establishment. This increased opportunity in the academic arena was one of the side effects of the moderately reformist strategy of the notables of the Council on Foreign Relations. This hegemonic power of economics from the United States had also benefited greatly from the breaking apart of Central Europe, which permitted U.S. universities to absorb the elite of the Vienna schoo1. 10 The valorization of mathematical language was supported by and facilitated the integration of these refugees. The flow of learned immigration into economics continues today. By minimizing the importance of linguistic and cultural competence, mathematical economics represents an attractive route for the integration of foreign students in the United States. The process of assimilation has therefore nourished the universalistic pretensions of North American economic science-which the Nobel Prize has further sanctified. Economic science is, thus, a U.S. science. It is, at the same time, the product and the showcase of the American dream, which makes it a formidable tool in the diffusion of the model privileging competitive markets as the quasi-exclusive basis for constructing social hierarchies and social solidarities-including those in the field of learned economics.u The success of mathematics was in this way inseparable from the exacerbated competition that facilitated the growth of this new discipline. Mathematics offered not only a common language but also weapons and a space of competition. 12 Better still, mathematical economics and the notion of competitive markets also furnished the instruments by which to measure "objectively" the performance of each of the models-and, at the

76 Chapter 5

same time, to rate the producers. 13 Few other disciplines so assiduously and openly cultivate a star system, sustained by the media and supported by a permanent competition among the major universities. University departments fight for the producers with the greatest market value, since the results of those competitions determine their own ranking. This spirit of competition is cultivated in the very first years of an economics education (Klamer and Colander 1990). From the Ph.D. to the Nobel Prize, passing through the John Bates Clark Medal (for those younger than forty years old) and inscription on the list of those named and nominated for the Nobel Prize, the professional career is marked by a series of great tournaments. Each competitor is able to measure precisely his or her rank and value in an academic market that is constantly readjusting. 14

Mathematicians in the Service of Financiers The emergence and recognition of a science of financial markets illustrates well how the repeated efforts of a small number of relatively marginal producers can contribute to the redefinition of a space of practice-in a process characterized by internal divisions and external alliances. The good fortune of these innovators came from a double opportunity presented to them. The development of computers permitted them to valorize mathematical expertise that was still not yet widely diffused, and they were able to apply their skills to a subject that was scorned by the theoreticians but rich in quantitative facts: financial markets. Furthermore, the financial crisis of 1973-74, then the internationalization of financial markets and the restructuring of their mode of administration under the influence of institutional investors, had sufficiently shaken up the world of practitioners to allow the penetration of new technologies. The practitioners were naturally reticent about these technologies for handling the financial markets, since they put into question the artisanal mode of production and reproduction of a pragmatic know-how (d. O'Barr and Conley 1992). According to Bernstein (1992), the historian of this "revolution," the contempt among the university economists for these new ideas paralleled the complete indifference of the practitioners. At the same time that the new ideas challenged methods of financial administration and the hierarchy of subjects of pure economics, the growth of this branch of econometrics brought a rapprochement between the two spaces-which in turn were crucial in the "financialization" of the economy characteristic of the Reagan years (and of those Latin American countries restructured after the debt crises of the 19 80S). While the generation of

The Chicago Boys as Outsiders 77

Keynes's disciples put his knowledge in the service of state institutions, the new economists did not hesitate to become consultants in, indeed even players on, the financial markets (Bernstein 1992, 199 ).15 While this double success-scholarly and financial-is extraordinary, it is important to remember that the beginning period was very difficult. Before being recognized, these pioneers were long considered to be "freaks"even around the University of Chicago, where they were housed. The young scientists recruited by Cowles did not have the usual profile of learned economists. They were mathematicians, physicians, engineers, even "computer nerds" or, conversely, MBA's interested in financial management. 16 Obstinacy and the financial and social capital of Cowles allowed this enterprise to obtain some early recognition in learned circles. 17 The resistance of Friedman with respect to the dissertation of Markowitz is simply confirmation of the general contempt for the marginal researchers who seemed to use mathematics and computers to justify unsound practices. 18 These violent criticisms were also part of a strategy of territorial affirmation, which doubled as a political opposition. When Friedman arrived in Chicago in 1947, after having been rejected by the University of Wisconsin (Friedman and Friedman 1998, 91-104; Sobel 1980, 153), the Cowles Commission had been in place in Chicago for seven years. The brilliant students associated with the Cowles Commission included Marschak, Koopmans, Arrow, Klein, and Simon. 19 The conflict was therefore all the more violent because of the socioprofessional proximity of the careers of the competitors. They were all competing in the same relatively marginal terrain in economics, and the scientific challenges also fed on ideological differences. 2o The conflict contributed to the creation of the intellectual cauldron that built the reputation of Chicago as well as that of the various intellectual protagonists. 21 The tensions were such that a splintering was bound to come very quickly. The process was also facilitated by the growth of this field, which brought efforts by the great universities to match the Cowles success. The growing reputation of the Cowles Commission-and the relationships of its founder, a graduate of Yale-permitted him to approach the east coast centers of learned power. Thus Yale, which hardly existed in the field of economics, welcomed the commission in 1953 in order to try to compete against Harvard and MIT-then the leading academic economics institutions. And the new director, James Tobin, was a perfect representative of the learned elite that reached its zenith of power in the Kennedy years. He was the child of bankers, part of a family of liberal intellectuals and strong partisans of the New Deal. He attended Harvard and was a preco-

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cious Keynesian, a professor at Yale, and winner of the John Bates Clark Medal before being named to the Council of Economic Advisors. In short, he followed the royal path to honors culminating, of course, with the Nobel Prize. By facilitating their diffusion in the learned world, as well as that of business, these prestigious affiliations contributed to the growing reputation of scholarly works that continued to accumulate with the arrival of new recruits. 22 These young scholars had at their disposal major scholarly weapons that they could deploy to further the project initiated by their predecessors. The majority of the economists of the new generation possessed advanced mathematical skills and, above all, a passion for computers, which they could indulge with machines and programs that became ever more powerful. Finally, the potential audience of this scholarship grew with the launching of specialized journals-notably Institutional Investor and the Financial Analysts Journal, directed by practitioners close to the learned world. 23 These publications addressed themselves to a small fringe of innovative practitioners, anxious to rationalize their know-how to respond to a market that was growing rapidly through the activities of institutional investors-whose needs in terms of volume and profit could not be accommodated by traditional artisanal practices (Bernstein 1992, 243).24 These evolutionary changes, which were both convergent and complementary, made the time propitious for the theoretical advances of the end of the 1960s. Practitioners and academics who had been either ignorant or contemptuous of the new ideas were now ready to embrace them. During the 1970s, the practitioners provided the impulse to accelerate and multiply the paths between the universities and Wall Street. An initiative came from Wells Fargo Bank, which brought together a small team of learned practitioners and avant-garde managers, fortified with a comfortable budget that allowed them to do the work necessary to apply modern theories to portfolio management. By transforming theoreticians into consultants or vulgarizers (Bernstein 1992, 238-4°), they aided corporate pension funds in applying the new technologies. Some academics were even incited to exchange their academic apparel for business suits. While some managers complained that their business was being "turned into a science" (Bernstein 1992, 245), the counterpart was that many of the theorists became entrepreneurs who succumbed to the mirages of Wall Street.25 The profits grew in relation to the astronomical sums that were put into play.26 The opportunities were multiplied with the opening of the Chicago Board Options Exchange in 1973, then further expanded in the decades of internationalization and the restructuring of the world finan-

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cial markets (Moran 1991),27 These academic entrepreneurs also furthered a more general process of rapprochement between economic learning and the world of business, initiated in the 1960s by avant-garde entrepreneurs (d. Citibank, discussed later in this chapter) and accelerated by the promoters of the conservative counterrevolution. 28 Media Strategies in the Service of an Ideological Counterrevolution

The extraordinary intellectual vitality in the economics community in Chicago had great difficulty surviving the loss of the Cowles Commission to Yale. Nevertheless, the departure allowed Friedman free reign to remodel the department around his ideas-and his students. The exclusion of the econometricians and the lack of access to federal bureaucracies, which made them less receptive to Friedman's criticisms of the monetary policy of the Federal Reserve, combined to orient the department to "pure economics." This position of retreat from the places of power conformed with the spirit that then prevailed at the University of Chicago more generally. The professors tended to consider the ruling elite of the east coast in terms of "us against them." The 1960s reinforced this sentiment of exclusion, since that remarkable period of economic growth went to the credit of the Ivy League universities. Kennedy invited the best-known partisans of Keynes, in particular Tobin and Samuelson, to join his team of advisers. And they recruited their students to Washington, where they could increase their experience in setting economic policy. This resentment with respect to the establishment that excluded them, despite their recognized scientific merit, made the pioneers of pure economics the natural allies of the promoters of the conservative counterrevolution that began to take off in the 1970S (and included many businesses that felt that establishment organs-the New York Times and the Ford Foundation, e.g., had become "antibusiness" [Silk and Silk 1980]). Each group shared a hostility to the welfare state-and perhaps more important-to the eastern establishment, which dominated the field of state power in part through its investments in the intellectual field. 29 This strategy of a learned counteroffensive-conducted under the banner of institutions such as the Hoover Institute, the American Enterprise Institute, the Heritage Foundation, and the Cato Institute-offered to these dominated theoreticians the long-awaited opportunity to gain public recognition for their ideas. 30 But this political alliance, which placed them again in a dominated position, forced them to engage in ideological combat and in media vulgarizations of their theories. James Buchanan, a disciple of Chicago who received the Nobel Prize in

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1986 as the "father" of the new scholarship of public choice, described his position of outsider, hostile to the establishment, as the source of his application of neoclassical economics to the analysis of political choices. 3 ! His objective was to show that the holders of power were only following their own interests or those who stood behind them. In addition to extending the imperialism of the neoclassical paradigm to new objects, this approach served, above all, to justify the postulates of the Chicago theoreticians in favor of the market economy. The market could be justified as a way to avoid the inevitable rents associated with governmental intervention. Therefore, "in addition to providing a theoretical abstraction, public choice became a tool utilized above all to nourish and reinforce tactical arguments against monopolies, intervention, and state regulation" (Stone 1996, 156). The reactionary think tanks were the principal instrumental users of this theory. The interests of "pure theory" thus coincided perfectly with the antiestablishment strategy of the populist right, and one reason was that each side occupied a very similar position in the field of power. One of Buchanan's students recognized this connection as follows: "We were all heretics who were excluded from the academic world by the pure thinkers .... We had to make our way in policy circles instead. That's why so many of Jim Buchanan's students turned up in the Reagan administration" (Craig Roberts cited by Warsh 1993,96), adding that policy think tanks like the Heritage Foundation and the Cato Institute were also full of them. In this ideological counteroffensive, these "outsiders" skillfully managed to gain support through marketing and media promotions. The task was to produce messages that would be simple, readily identifiable, and easy to diffuse: in other words, "sound bites." 32 According to its director, the Heritage Foundation, established in 1973, specializes in "marketing" and "packaging" university ideas for mass consumption. The conservative policy entrepreneurs from the Heritage Foundation were put at the disposal of the press in order to organize ideological debates in the media. 33 These debates permitted them to put into question the image of neutrality and scholarly objectivity on which a good part of the authority of the eastern establishment rested. In addition, the emerging journalistic scene allowed them to place themselves on an equal footing with their opponents-despite the inequality of forces on the terrain of learned production. 34 Furthermore, this strategy built on the media had fallout in the learned world. It allowed certain producers to "short-circuit ... slower academic routes to prominence," since they could build themselves up on the basis of the media visibility offered by the conservative networks (which were

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also quite well-funded [Smith 1991, 206]). This strategy obliged their competitors-and the universities themselves-to adapt themselves to this new set of circumstances-under the threat of seeing themselves disqualified from the new market of general diffusion of learned thought. The ideology of the market put forward by the conservative policy entrepreneurs thus came to function as a self-fulfilling prophecy. As underlined by Smith (1991, 201), by behaving as sellers of ideology, concerned above all with marketing and media impacts, the promoters of neoliberal theories contributed to making the logic of the market penetrate in the learned world. 35 Beginning in 1966, Friedman published an opinion column in Newsweek and essays for the editorial page of the Wall Street Journal. 36 In the 1980s, he launched a series on television aimed at the more general public entitled Free to Choose (Malabre 1994, 69). In this market of vulgarization of ideas, politics took priority over science. 37 The purpose was to convince, and oversimplified presentations of monetarist theories were thus quite acceptable. Malabre, who contributed in the role of journalist for the Wall Street Journal, did not hesitate to characterize this enterprise as "deceit," and he also saw the process as important in the ultimate success of the monetarist policies. 38 "Super salespeople" thus disseminated these deceptive illusions in order to satisfy their political and professional ambitions, selling their doctrine as a miracle remedy for the ills of the economy. The economic conjuncture was propitious for this political counteroffensive. The return of inflation and budgetary deficits, exacerbated by the expenses of the Vietnam War, underscored the limits of Keyneseian regulation. The portrait of Friedman on the cover of Time Magazine in 1969 (and the cover of the New York Times Magazine in 1970 [Friedman and Friedman 1998,409]) attests to the success of the strategy of vulgarization-made also in strict alliance with the financial milieu, which had never accepted Keynesian doctrine (Helleiner 1994).39 In this domain, as in others, Citibank played a role in promoting any implementing of this learning. Walter Wriston, the chief executive officer, also played a preeminent role in the small circle of entrepreneurs and notable professors, such as Friedman and Stigler, who met regularly at the Bechtel Corporation. Bechtel was led by George Schultz, a former professor at the University of Chicago business school before being named secretary of the treasury by President Ford in 1974, then secretary of state by Reagan. This small group formed the "core of the economic brain trust that in 1981 would introduce the nation to Reaganomics" (Zweig 1995, 449; see also Friedman and Friedman 1998, 390-95).

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The press was also at the center of this alliance between Chicago and Citibank. The economic review done by the bank mobilized considerable resources in the service of monetarism, including especially a team of some fifty economic journalists working in symbiosis with the department of economic studies at Chicago. Leif Olsen, who served as chief economics and editorial chief of Citibank, had formerly worked with the Wall Street Journal, where he apprenticed with Clark (Malabre 1994, 161). The episode surrounding the invention, and then successful marketing, of the Laffer curve, represents the apotheosis and caricature of this media strategy. Invented in 1974 by Arthur Laffer, a young economist at the University of Chicago, the Laffer curve gained prominence in a process where media resources served to promote theoretical legitimacy. This process thus had become part of the rules of the game for learned competition. 40 As Malabre observed from his insider position, "Without the editorial page of the Wall Street Journal as a platform, it is doubtful that the theses of Laffer would ever have gained such wide support in Washington or among so many of the nation's business leaders (1994, 184) The great priests of monetarism only promoted Laffer's thesis because it provided a justification to reduce federal expenditures. 41 The conclusion of this history is ironic and revealing. A worshipful press flattered Laffer as a "high priest of a new economic religion based on the virtues of tax reduction" (Malabre 1994, 193) and gave him credit for being the architect of the long cycle of expansion from 1982 to 1990. But Laffer, almost universally disqualified by his peers in economics, has become a guru, enjoying the consulting fees that came from his media popularity. Finally, as noted earlier, the Chicago economists did not neglect the potential rewards of international strategies. Arnold Harberger, in particular, encouraged the Chile Project, which trained scores of Chilean economists with funding from the u.s. government and the Ford Foundation in the 19 50S and 1960s. According to Valdes (1995), the University of Chicago was not gaining its share of the top students in the United States, who typically opted for one of the Cambridge programs, and the international strategy helped attract good students. More generally, Chicago invested in Chilean students and in Chile, and the Chicago School was rewarded with considerable influence in the government of Pinochet. In addition, as pointed out by David Warsh, the apparent success of Chile's "sweeping economic transformation" according to Chicago recipes "astonished the world," helping to set in motion similar moves in Portugal and Spain and eventually the United States and Great Britain (Warsh 1997). As the "very first market revolution of the late 20th century" (Warsh 1997), Chile could be assimilated into the arguments and media

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campaigns in support of the new liberal economics (see Friedman and Friedman 1998, 397-408).

The Dominated Bureaucrats of Globalization Fifty years after their creation, the institutions of Bretton Woods have become the subject of considerable criticism. Experts at the IMF and the World Bank appear to have all the attributes of international authority, but they remain somewhat uncertain about this arrival to power. Within the space of Washington, they occupy a paradoxical position. They are close to the places where the key decisions are made, but that proximity only underscores their own lack of autonomy in games of power over which they have very little control. This situation of dominated-dominant has not changed much since the creation of these institutions. It continues to mark all their efforts to construct their own autonomy. Despite their investments in the field of learning, these experts remain at the margins of scholarly economics-which devalues the practical learning of the experts of the IMF and the World Bank. The academic elites of the university regard them as mainly the representatives of the lucrative business of marketing the Washington consenSUS. 42 The multiple networks of alumni and collaborators of the bank and the IMF contribute also to build the essential relational capital around these international bureaucracies. 43 The international network, however, only reinforces the relatively weak position of the two institutions, since the national field of power is structured in important respects by an opposition between two places, Wall Street and Washington, D.C., neither of which is willing to promote the autonomy of international financial institutions. Even before the creation of the Bretton Woods institutions, financiers and the New Deal administration found themselves in opposition about the institutions designed to organize the postwar economic order (Helleiner 1994; Pauly 1997). The disagreement around these institutions condemned them to a relatively marginal role. The World Bank and the IMF compensated their employees for this comparative impotence by offering high salaries and relatively easy working conditions. Only with the launching of a worldwide project of reformism by President Kennedy did the World Bank itself begin to act on its mandate to promote development, and the move by Robert MacNamara to the World Bank presidency then accelerated the focus on this more ambitious role (Kapur, Lewis, and Webb 1997, 139-329). After a beginning period that was almost as difficult, the IMF sought to renovate itself in relation to the financial crises that

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marked the end of the Bretton Woods monetary order. With the debt crisis, the IMF could present itself as a protector of financial markets-applying the same recipes classically prescribed by "money doctors" (Drake 1994). The World Bank in the 1980s then sought to reconvert itself into an institution focusing on how to transform government policies to conform to the new economic order (Kapur, Lewis, and Webb 1997, 331-78). The successive reorientations of these financial institutions underlined their relative lack of autonomy from the political conjunctures of the u.s. national field. And mimicry increased the tensions that were present at the origins of these institutions. They were created to serve and promote markets, but they also partook of the reformist New Deal philosophy, suggesting that they should eradicate obstacles to development. The tension was quite evident when the commitment to development was accentuated, since it could put the financial institutions in a position of attacking what they had helped to create. The difficult reconversion was not sufficient to quiet the critics, especially those of the right, since the free market zealots distrusted the commitment of state bureaucrats to markets-which the bureaucrats could, after all, control. The more these institutions developed, the more they became the object of criticism that put their very missions into question. The financial and political stakes were high enough to place the experts of the World Bank and the IMF at the center of complex battles, but the experts lacked the power to assert control over the outcomes. As a result, the experts developed a defensive posture that contrasts greatly with the arrogance ascribed to them in the various journalistic critiques. Looked at closely, these new "masters of the world" could better be described as bureaucrats, concerned, above all, with their status and perquisites. 44 Jt is instructive that many commentators with inside knowledge emphasize the importance in careers at the World Bank of relationships of clientele and of various clans that may join or oppose each other. Indeed, the clientelistic patterns of behavior found in the daily lives of these organizations are also characteristic of the market of international expertise that they support. Paradoxically, clientelism continues to playa crucial role in structuring the import and export of economic rationality. The Washington experts preach in favor of the restructuring of the bureaucracies of the Third World in order to limit economic rents. But they resist the application of the draconian recipes of adjustment to their own situations. The recent history of the World Bank is thus characterized by a number of profound restructurings-notably in 1987 and 1997. But the strong defensive reactions of the bank have only reinforced the existing feudalities (Caufield 199 6).

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The Dominated of the Dominant Despite the relational and learned capital that the World Bank and the IMF have accumulated, they remain deeply marked by the ideological and political conflicts that characterized their beginnings. A history that sees the dominated nature of these organizations within the dominant economic powers makes it easier to see how the Keynesian consensus of the 1960s became the Washington consensus of the 1980s. In each case the consensus represents a precarious compromise addressed to power struggles that have involved-and structured-these institutions since their creation. According to Helleiner, two camps opposed each other initially. One side was characterized as "a new alliance of Keynesian-minded state officials [d. Barber 1989; Colander and Landreth 1996; Hall 1989], industrialists, and labor leaders, who had increasingly replaced private and central bankers in positions of financial power" (1994, 4). They favored interventionist states and considered the control of movements of international capital indispensable to provide their margin of national political maneuver (Helleiner 1994).41 On the other side were financiers, "who worried that New York's position as an international financial center would be weakened" by exchange controls. According to them, "any U.S. obligation to control speculative flows would remove what had been a lucrative business in the 1930s-receiving capital flight from Europe" (Helleiner 1994, 31,57,39). In addition to the interests of the financiers, the very definition of the legitimate functions of the state was at stake in this fight. Keynes and White wanted to preserve the freedom for state intervention characteristic of the welfare state. In contrast, "some of the bankers also applauded speculative flows for the healthy discipline they exerted on countries attempting to pursue such 'unsound' policies" (Helleiner 1994,4°). Along with these reasons rooted in internal politics, the financial community, whether European or American, also distrusted international institutions. They were more comfortable with the informal channels of coordination than international statelike entities. The result of these first encounters was a kind of ambiguous compromise. States would have the right to control movements of capital, but in exchange, the representatives of the financial community would take control of the international organizations charged with putting into place the new international order. The putting into place of this compromise, however, was immediately jeopardized. The beginnings of the Cold War incited the foreign policy establishment to modify its priorities. The re-

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inforcement of state intervention appeared to be indispensable in terms of taking on the communist threat. Reconstruction and development took priority over financial orthodoxy. At the same time, the acceleration of capital flight from Europe rendered utopian any liberalization of monetary exchange, and the Marshall Plan marginalized the role of the IMF with respect to the stabilization of European currency. In this political context, there was scarcely place for a strategy of securing autonomy. The economists of the two organizations, nevertheless, sought to try by following very different itineraries. The Golden Exile of the Washington Institutions In order to build the IMF, Edward Bernstein, an economist from the U.S. Department of Treasury close to White, appealed to a small network of professional contacts assembled in the preparatory negotiations for the Bretton Woods meeting (Polak 1997, 215). While familiar with the world of politics, these economists of the state were major "political animals" in the sense of Keynes or White (Polak 1997, 216). Kept aside from the great monetary debates of the postwar period, they devoted themselves to the construction of the IMF, which they controlled through their erudite competence. An indicator of their strength in the IMF was the fact that the various departments were all directed by the members of the research service. In addition, they divided the key roles, circulating between the board of executive directors and the staff of the IMF. Finally, they also built strength by cultivating ties with the academic elite. It was to build ties with this intellectual community that the IMF created an internal publication series (IMF Staff Papers) that addressed this new domain of international financial relations (Polak 1997 ). The description of this learned strategy-even if perhaps embellished by those who implemented it-offers a dramatic contrast with the increasing banality of the economists of the World Bank. The bank's economists could not build a successful career without conforming to the rules defined by the financiers who controlled the bank. This dominated position is surprising given that economists represented roughly one-fourth of the bank's professional staff. But it is underlined not only by the absence of any research department but even more so by the perceived need for the economists to renounce their professional identities. This loss of professional identity shocked the refugees from the IMF who came to the World Bank to rescue the World Bank's scientific legitimacy.46 Even if accentuated by the alumni from the IMF, who have become the leading commentators and historians of the two institutions, this contrast brings to mind a kind of Yalta with respect to the financiers and the

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bureaucrats of the New Deal. With the exception of McNamara and Conable, the leaders of the World Bank have been from the financial community, close to the foreign policy establishment (Kraske 1996). Their principal function has been to reassure Wall Street, which wished to make sure that this institution did not encroach on their profitable markets. During the first decade of the bank's operation, therefore, development was an affair of engineers under the control of financiers (Coats 1986; Love 1996a, 1996b; Pechman 1989). This devaluation of economic learning lasted until the 1960S, when George Woods became the head of the bank. He gave carte blanche to Irving Friedman, recruited from the IMF, to bolster the ranks of economists (Kapur, Lewis, and Webb 1997, 212-14). This late recognition coincided with the triumph of Keynesians on the national scene. But this palace revolution responded also to a double logic: both internal and political. Kennedy was launching the decade of development, and Woods sought to give the bank-finally-a place at the front rank. Unfortunately, according to the financial criteria then in place, the majority of the poorer countries of the world had already reached the limit of their permissible debt. Friedman and the economists of the World Bank's bureau of research thus had the task of finding new instruments-the "economic rates of return" (ERR)-that would redefine and raise the limits of tolerable debts by taking into account the expected contributions of the investments to the growth of the national economies (Caufield 1996; Oliver 1995).

From Missionaries of Development to Money Doctors With the demise of the monetary system of Bretton Woods in the early 1970s, the distance between the trajectories of the two organizations began to grow, before converging, through the debt crisis, toward a "structural" approach to the monetary difficulties of "emerging" economies (Caufield 1996; David 1985). In particular, the emergence of an offshore market of Eurodollars in the 1960s permitted banks-led by Citicorp (Zweig 1995, 1I2, 158-59)-to break with the constraints of the state (with the connivance and even the support of the state financial authorities). This financial safety valve facilitated the handling of some of the contradictions of the welfare states. The Bank of England saw the possibility of rebuilding the place of London as a leading financial center, despite the constraints of Labour governments. And American businesses-and also the U.S. federal authorities-saw the Euromarket as a means to handle some of the problems caused by the U.S. balance of payments situation.

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The conflicts that had inhibited the original Bretton Woods accords also lost some of their importance. Instead, the new situation created new forms of conflict-with an increase in monetary instability and the multiplication of financial crises. The IMF benefited from this instability-at least to an extent. Its means of intervention were reinforced to permit it better to block increases in speculative capital movements. But, at the same time, competition increased in the market for international financial regulation. The leaders of the central banks revived the tradition of regular meetings of the Club of Bale (Helleiner 1994). They also built up the role of ad hoc regulation-through the Paris Club or that of Londonto handle discretely and pragmatically the difficulties that came to the surface. The influx of petrodollars accelerated the process, marginalizing the financial institutions of Bretton Woods. President Nixon, encouraged by neoliberal economists-including Gottfried Haberler, George Shultz, Milton Friedman, and Paul Volker-contributed to putting aside some of the potential restrictions, since the United States profited from a private market dominated by American actors. A report of the federal government underlined the fact that "the United States would benefit if OPEC [Organization of Petroleum Exporting Countries] funds were recycled via the private markets because 'the size and the depth of the U.S. financial market' ensured that it would 'receive the largest share of Arab investment'" (Helleiner 1994, 114). Helleiner sees in this situation the emergence of market power as a substitute for the state regulatory framework promoted by Bretton Woods. Contrary to dire predictions, the international financial system proved itself capable of surviving the crises that threatened it, thanks to internal norms and regulations that evolved with each new development. Besides, nothing was going to get in the way of the chain reaction toward deregulation and the establishment of a "global" market, handled discretely and pragmatically by the international community of bankers-Club of Bale, Club of Paris, Club of London. The Bretton Woods institutions had little choice but to rally to these solutions-with the speed of the conversion depending on the particular institution. Thanks to the learned investment of the founding fathers, the IMF was able to claim to be in the vanguard of these developments. The IMF had accumulated considerable data and learning with respect to issues of balance of payments and monetary policy. It also cultivated a network of contacts in the central banks and ministries of finance. Finally, reflecting the isolation and pride of the pioneers, the IMF economists had already multiplied their ties with the academy. The proximity of the IMF to the

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new trends accelerated as recruits replaced the pioneers who retired or chose to cash in on their expertise, as, for example, Constanzo and Friedman at Citibank. The successor recruits were in the image of the academic world of the United States, from which they were largely recruited. They compensated for a lack of social capital with competence in mathematics and statistics and a classical approach to economics. The impacts of change were strongly felt in a renaissance of the IMF (Pauly 1997) that occurred with the monetary crises in the 1980s. The increase in the workload of the IMF, combined with the increase in the competition within economic research outside (Barber 1989), also led the IMF to open itself more to university economists, inviting many more of them to spend periods of time in Washington, D.C., at the IMF. University professors also began to contribute about one-fourth of the staff papers, and the IMF staff published some three-fourths of its papers in academic journals outside the IMF. The IMF thus lost some of its specificity with respect to the university economics departments. This evolution, which economic pioneers noted with some regret (see Polak 1994), helped make the IMF move quickly to the new economic policies of the Washington consensus. In contrast, the World Bank affirmed its specificity throughout the 1970s. The personality and political capital of McNamara allowed him to follow the reformist strategy of development advanced initially under Kennedy-even though it became more and more contested in Washington and on the campuses. As one of the economists then working in the World Bank stated, McNamara had a management style that could be described as managing from "the outside in," drawing in particular on his contacts among "foreign policy elites." McNamara's "crusade against poverty" was the activity of an "IBM machine with legs" (Caufield 1996), brought with a mixture of missionary zeal and a passion for statisticsY The World Bank in the 1960s was dominated by financial advisers and engineers who focused on "development through public institutions." They concentrated on planning and inputoutput models of development. Under McNamara's direction, the annual amount of loans went from $1 billion to $12 billion, the number of personnel was multiplied by three, and a very selective form of recruitmentthe "young professionals"-was put into place. This spectacular growth was not without contradictions. In order to respond to the new cry for "redistribution with growth" (Chenery 1974), the bank engaged in a wide range of aggressive lending activities, without much attention to social or environmental costs. Moreover, the technocratic conviction that the multiplication of investments would by itself lead to an "economic take-off" served as a justification for ever-increasing levels of debt-with new loans

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increasingly necessary to payoff the loans becoming due. Idealism and technocratic rationality conspired to support the comfortable notion that "growth would take care of debt." When the major private banks joined this lending frenzy in order to recycle petrodollars, the process grew and accelerated. Wall Street picked up the baton for the religion of development, launched by Kennedy and rationalized by McNamara. It imposed its own logic while making it a market matter-both professionally and in terms of finance. Friedman, a veteran of the IMF and inventor of the technique of "country risk analysis," was used by Citibank in the creation of this new market. The economists of the World Bank then amassed statistics to produce the analyses. With this infatuation of the financial community with the new market of development, all the ingredients were in place for a classic boom and bust. The wake-up was bound to be even more brutal as the euphoria prolonged the lending frenzy. After the decade of "economic miracles," Latin America entered a period of dramatic economic and social repercussions. For the bank, the losses, even if they were only symbolic, were quite important. The losses may explain the rapid conversion from the ideology of development to that of structural adjustment. The critics of the bank saw in the quasi-bankruptcy of the countries of Latin America the tangible proof of the failure of the politics of development. The bank found its own role increasingly put into question. The bank had followed its policy of promoting development throughout McNamara's term in the 1970s. The scholarly world, however, was increasingly on the attack-divided among those who challenged the bank's role according to the tenets of the conservative counterrevolution (Toye 1987), those who criticized developmental assistance as a hegemonic tactic (Gardner 1980), and those who condemned the bank for its neglect of environmental issues (Rich 1994). The nomination by Reagan of A. W. Clausen, the president of the Bank of America, and his choice of Anne Krueger, an academic advocate of public choice theory, as chief economist to replace Chenery, made official the reconversion of economics at the World Bank to the tenets of mathematical modeling and neoliberal orthodoxy (Caufield 1996).48 The handling of the debt crisis accelerated the process of conversion. Following the bank's restructuring in 1987, a new generation of very orthodox macro economists joined the bank-eight hundred in number, according to George and Sabelli (1994). This reorganization confirmed a change in priorities. 49 The policy of financing large projects had reached an impasse-the result of not only the problem of excessive debt but also the vociferous criticism by NGOs of the social and environmental costs of the projects. Nevertheless, the bank could not interrupt the loans that were necessary for the heavily indebted countries to convert some of their

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private debt into long-term loans to the World Bank. The spectacular growth of structural adjustment loans permitted the bank to escape this contradiction, while rendering the bank indispensable to Wall Street (Caufield 1996). These loans, which presented the double advantage of being for large amounts of money and being available quickly, replaced the interventions of the IMF. As with respect to the analogous policies of the IMF, the counterpart of these loans was commitment to structural reformsprecisely those Williamson characterized as the Washington consensus. This consensus was relatively easily exported because the local interlocutors were typically part of the network of alumni from these organizations. They could play the role of informants and advisers. They made the IMF the author of unpopular strategies that also played into their own fights for power in their national political scenes (Centeno 1994; Conaghan and Malloy 1994; Loreiro 1997; Montecinos 1997; Valdes 1995). The experts of Washington also took into account that this new division of international labor valorized those who had until then been marginal in the field of power. The new policies that they promoted conformed to the dominant theories of the learned field. The imperialism of mathematical economics was apparent in the new theories of development, now reduced to a terrain for the application of theories of growth-theories now squarely within neoclassical theory. The research budgets of the Washington organizations thus participated in the production of a learned consensus and the financing of an international market in expertise that reflected the priorities of U.S. academia (Warsh 1993). The conversion to the Washington consensus helped the IMF and the World Bank gain a new position in relation to Wall Street. By helping to manage the debt crisis in the interests of Wall Street, the IMF and the World Bank were able to overcome some of the hostility that had been their major handicap since Bretton Woods. These institutions had been becoming increasingly marginal, and, indeed, after the influx of the petrodollars, their mission had appeared to be positively superfluous. Loans to the Third World, made available in abundance by private banks, reduced any need for public resources. The growing success of the neoliberal ideology had also reinforced the hostility toward these institutions, which were still identified with state interventionism. Still, through a kind of paradox, U.S. politicians and financiers took advantage of the statist capital of these disgraced institutions to imposeespecially with respect to their European allies with different views-a strategy of solving the debt crisis by aggravating the costs for the debtors. For the major U.S. banks, including Citibank, it was essential to gain time. They could not erase the loans from their books without threatening their solvency. They had to pretend at any price that this crisis was only a rela-

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tively unimportant incident, arising through a temporary problem of liquidity. The legal setting required that all the members of the syndicates of creditors agree collectively on new loans to reimburse-fictively-the sums due and to construct a new payment schedule. There was considerable reticence about this strategy, which was both risky and costly, and the obvious beneficiaries were only the banks-especially Citibank, for whom the stakes were its very survival. Wriston, with the support of Volker, mobilized the symbolic authority of the Washington organizations-and, above all, their network of influence among the ministries of finance and the leaders of the central banks-to impose this discipline also on the hundreds of European and Asian banks that participated in the operation. The Wall Street actors were also able to avoid having to intervene officially through the State Department or the Fed (Solomon I995; Zweig I995)· As elsewhere, this operation of financial salvage gave the IMF and the World Bank strong arguments in support of the adoption of structural reforms-liberalization of financial exchange, privatizations, the reform of the state-conforming on all points with the ideology of neoliberalism. The image of the IMF and the World Bank improved substantially in Washington and on Wall Street, which was anxious to open up the emerging markets. The handling of the Latin American debt crisis thus confirmed the recomposition of the means of regulation of international finance around informal and ad hoc mechanisms, which combined the flexibility of private negotiations, the discrete intervention of the institutions of the state, and the role of mediator assigned to the IMF-which had long coveted this role. But this acclaimed role is not without dangers, especially when the financial and political resources are sufficient only to make the mediator a spokesperson, even a sort of majordomo, rather than a powerful orchestra leader. In case of serious crisis, this visibility can also make them convenient scapegoats. The Cadets of Financial Globalization

Our discussion of the development of the Washington consensus can be related to a parallel story of the internationalization of Citibank, which helped promote the debt crisis that culminated in the powerful new weapon of "structural adjustment." The international expansion of Citibank took place through aggressive entrepreneurial activity, a taste for technological innovation, and the recruitment of a young generation noteworthy more for their scholarly competence than their good manners. These choices constituted a complete break with banking tradition. At that time, banks represented a bastion of the WASP elite, where family recommendations

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and a low golf handicap counted more than diplomas or a capacity for hard work (Zweig 1995). The departures from tradition at Citibank, as Zweig makes clear, came from Citibank's position as "poor cousin" in the Rockefeller family. Citibank thus focused its sights and ambitions on the Chase Manhattan Bank controlled by the dominant wing of the Rockefeller family. The strategy of a more meritocratic recruitment and overseas expansion surfaced at the beginning of the century. Frank Vanderlip, a financial journalist close to Theodore Roosevelt, launched the first initiatives in Latin America and began to break with the WASP elite tradition (Zweig 1995, 33). This bold move was financially quite successful. Thanks largely to its one hundred foreign offices producing some 40 percent of the revenues, the bank was able to maintain its dividends throughout the financial crisis of the 1930S. It was under the direction of Walter Wriston, however, that the bank truly became the first global financial institution. After having pioneered in the market for Eurodollars, Citibank became a leader in the recycling of petrodollars from the Third World in the 1970s, which led to leadership in the management of the debt crises of the 1980s. Like his predecessor and mentor, George Moore, Wriston came from a family that was richer in scholarly capital than social capital. 50 Consistent with his relatively modest background, Wriston favored the cult of IQ and the idea of "capitalizing brains" (Zweig 1995, 218,410). This tendency was even more evident in the overseas department, where he chose to make his career. Betting on the increase in international trade, he succeeded in making this sector outside the mainstream of the bank into the cutting edge for the expansion of Citibank. The increase in foreign credits was able to playa role akin to a second Marshall Plan-on a world scale. This politics of accelerated international expansion also, and perhaps especially, was a means to detour around the banking regulations put in place after the financial crises of the 193 os. Since the national rules interdicted any real expansion in the name of preventing concentration in the financial industry, the foreign operation became the place for the financial engineers of Citibank to invent the ways to realize Citibank's ambitions to become a "global, technology based financial services company" (Zweig 1995,197). The method of recruitment and the installation of a new style of management were the techniques of this global strategy. Hierarchy was replaced by a decentralization of responsibilities. Mobility and competition between interchangeable managers substituted for the traditional banking culture's reliance on close personal relations between clients and lending officers who belonged to the same world. 51 Youth, innovation, diversification, and commercial aggressiveness were systematically encouraged and rewarded. Citibank became converted into a kind of think tank

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of technological and financial innovation (Zweig 1995, 355). Inventions like currency swaps, created by Peter Eccles, a brilliant young AfricanAmerican lawyer from Harvard (Zweig 1995, 662), permitted Wriston and Citibank to compete through the exploitation of the multiple loopholes in the national regulations that thwarted Wriston's ambitions. In order to realize his plans, Wriston recruited the most talented and ambitious of the young cadets of the international organizations established after the war, showing them that they could make far better careers with Citibank. He chose, as the head of the overseas department, a young Ph.D. in economics, Gesualdo Constanzo, the son of an Alabama miner, who had gained international expertise during the war. Constanzo had worked first with the Marshall Plan, then as the person in the IMF responsible for Latin America. He brought with him all the capital of personal relations and learning accumulated in those institutions. "Wriston was the first commercial banker in history to realize that lending in dollars required sophisticated balance of payments analysis of the kind that the IMF had been doing for years, and to act on that recognition by hiring officials like Constanzo" (Zweig 1995, 165). Irving Friedman, who had worked in the World Bank and the IMF, where he was reported to have invented the notion of "conditionality," was also recruited to develop the capability to analyze national risks, again an expertise imported from the IMF (Zweig 1995,4 11 ). Citibank is therefore a prime example of a multinational business for which the expansion was supported on the basis of international expertise and a meritocratic recruitment, which brought individuals ready to take risks as the only way to build their careers. The success was remarkable. At the end of the 1970s, Citibank realized 80 percent of its profits from the international operations. The collapse was also spectacular. Bankruptcy was narrowly avoided in the debt crisis that followed (Barnet and Cavanagh 1994). As we have seen, however, the debt crisis led to a series of events that strengthened greatly the position of the creditors and their interests.

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orthern activities and battles, described in the previous chapter, exercised a decisive influence in the transformations in the south. To say that the influence was decisive, however, is not to say that the north could shape what resulted in the south. Divergence resulted, in part, because the southern importers in this importexport enterprise are embedded in different local structures than are found in the north. Divergence also occurred because what is produced for export changes over time according to the palace wars of the north. What began as a Cold War strategy exactly parallel to that of the CIA, for example, was transformed into a challenge to that strategy, and the same strategy later transmuted into the bedrock of the move by U.S.-oriented economists into the new democratic regimes. Further, variation came about because the logic of the symbolic worlds of expertise and knowledge does not operate according to the strict dictates of imperial or hegemonic wishes. This chapter and the following one illustrate how palace wars in the north began to transform countries in the south. We have chosen Brazil as the focal point of this chapter, since the stories of Chile and Argentina in the next chapter can be seen almost as counterexamples to Brazil. Distinctly different structures of state power produced utterly divergent outcomes. In addition, the outcomes relate to the contradictory nature of the U.S. agenda itself, as seen in chapter 4. While there was a rather militant Cold War approach anchored in realpolitik, there was also a heavy influence of idealism and reformism-translated into support for a series of policies thought to promote development. There was a potential con95

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tradiction in this approach between conservative elites and reformist challenges. More precisely, the potential contradictions allowed policies to encompass a range of positions among the importers and the exporters. Local demand, which was rather diverse, could find northern counterparts. The north did not have to force its products on the south. Diversity within Brazil also facilitated major shifts whenever the political environment changed. Different positions-for example, with respect to expertises and to attitudes toward the United States-could emerge within the competing members of the Brazilian elite to take advantage of the new structures of opportunity. We see this in particular in Brazil after the military government, which took power in I964, took a hard-line against the left in the late I960s. The split in the north that took place around the Vietnam War created a diversity of approaches toward the Cold War that also made it possible to take advantage of the changing situation in Brazil. In retrospect, we can see the structural similarities of the positions of groups that later came together to agree on democratic values and liberal economics, but the path of ultimate success in producing a U.S.-friendly state and economy in Brazil was not foreseen at the time. Indeed, the midsixties was a time when there was a growing despair about development and modernism. The northern investment seemed to have produced not an anti-Communist economic and democratic take-off but, rather, an exacerbated conflict and almost civil war. As it turned out, however, the conflict paved the way for a new coming together of state elites-and for a process that turned anti-U.S. radicals into U.S.-inspired reformist technopols. The plurality and diversity of the positions on both sides, as we shall see, produced this unforeseen result. The Professionalization and Internationalization of Economics in Brazil

Imperialism in Brazil is the product of a local demand, rooted in the fabric of the state that existed already by I960. Because of the different regions in Brazil and the various factions that had contended for power, there had long been a variety of reformist positions endorsed by members of the elite. In particular, there was a tradition dating from the nineteenth century in the south of Brazil promoting reform based on Comtian ideals. Brazil's size and its varied population meant that a great many competing reformist groups could be found around the state, including the Comtians, who challenged the relatively traditional legal order. Individuals within these competing groups would seek out products from the north to help them in their local struggles. We can trace these demands for northern assistance in various sectors of Brazilian society. The import of economics, for example, began in the military and dip-

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lomatic sectors, which drew quite strongly on both international ties and the Comtian tradition. International actors such as the Ford Foundation could respond to this demand without affecting other programs and sectors in Brazil. Similarly, there was clearly a demand within law for international investment in upgrading legal technologies, and again it could be met simply by linking up to the local segment of reformers in a particular sector. In this chapter, we explore those processes with economics, law, and social science more generally. The development of U.S.-based economics in Brazil is strongly tied to international opportunities made available after World War II (e.g., Loureiro I997, I998; Silva de Motta I994).1 The story begins with a few individuals in the Brazilian diplomatic core, including Roberto Campos, who used their periods abroad in the United States to gain access to this foreign know-how (see Campos I994, 53).2 This diplomatic beachhead was able to gain power because the diplomats had access to an influential forum in Brazil-their own prestigious teaching institution, the Instituto Rio Branco-which could be used to promote the imported expertise domestically. One sector of the Brazilian elite built their careers through their investment in U.S. economics. Another way to use international ties to build local positions was through various wartime alliances. Members of the Brazilian Expeditionary Force, which fought in Italy on the side of the allies, became prominent in Brazil and built very close ties to the United States after the war. Most even received military training in the United States. 3 This prominent group of veterans included Castelo Branco, the coordinator of the military conspiracy that toppled the elected government in I964 (Skidmore I988, 2I). They established and controlled the War College, which drew on individuals such as Campos in an effort to become another central institution for teaching and learning the new cosmopolitan knowledge, including economics. 4 Another way that bridges were built that facilitated the exchange of expertises was through the Joint Brazil-U.S. Commission for Economic Development, which also involved the World Bank. Set up in the early I950S, important players included Roberto Campos and Jose Luis Bulhoes Pedreira. The Joint Commission played a central role in setting the tone for Brazilian economic policies after the war (Campos I994, I59-67; Sikkink I99I, 64-65). In particular, the developmentalist policies of Brazil in the I9 50S, exemplified by the creation of the BNDE (the National Bank of Economic Development) and some of the large public utilities (e.g., Petro bras, Electrobras), grew out ofthe Joint Commission (Sikkink I99 I). Many of the lawyers who grouped around economics also came from this same set of networks. 5

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Brazilian economics and economic policies also linked up to CEPALthe famous center established by the United Nations in Santiago, Chile. The Commisi6n Econ6mica para America Latina was associated especially with the structural economics of Raul Prebisch and a prominent figure in Brazilian economics, Celso Furtado (see Garcia 1998; Sikkink 1991, 57-59).6 The CEPAL economic approach at times gained ascendancy in Brazil in the 1950S and 1960s. But whether CEPAL's ideas or those of the more orthodox economists associated with the War College and the Instituto Rio Branco were dominant at a particular time, the most important point is that the controversy itself, over which approach would hold sway in the postwar period, made it clear that economics was gaining as the language for debate about economic development. The debates between economic approaches helped to build the legitimacy and autonomy of economics as a discipline.? Economists-drawing on their international connections as well-worked together to build the field of economics (and their roles in it) even while they engaged in major substantive debates. The builders of the new discipline sought to create academic institutions capable of encouraging the new learning and of producing students. Unlike the situation in law, the new discipline could start with virtually new institutions. The two main examples were the Facoldade Nacional de Ciencias Economicas (FNCE), established in 1945 in Sao Paulo, and the Center of Economics established the following year in the Funda~ao Getulio Vargas in Rio (Silva de Motta 1994,94-103). The FNCE grew out of an economics department established in 1938 in Sao Paulo, but that department had focused its attention on accounting. The new breed of economists after the war had something very different in mind. According to Eugenio Gudin (quoted in Silva de Motta 1994,97), another one ofthe principle founders, economists at Harvard told him that the business school and the economics department must be separate. 8 One was for practical teaching and the other was for theory. Gudin followed this dictate and completely changed the focus of the FNCE. He made sure that it mimicked the Harvard division. International foundations were an early part of the story of the rise of economists in Brazil. The Ford and Rockefeller Foundations saw the training of economists in Brazil and elsewhere as a key part of their missions, and they also valued the emphasis on graduate education and full-time teaching positions that could be implemented in the new teaching institutions. 9 The funding provided in the 19 50S by the foundations helped make sure that at least some Brazilians each year would be able to attend graduate school in economics in the United States (Valdes 1995, 102).10 The

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transformation of the teaching of economics and the growing importance of study abroad also enhanced a distinction between the elite of the economics profession who were sophisticated about theory-and thus by definition foreign-trained-and a more parochial rank and file of practical economists or even accountants (d. Loureiro I998). The profession was two tiered from the start. The development of economics out of these various domestic and foreign investments was also, in many respects, directed against the traditionallegal elite. Economics had to fight for autonomy against the traditional domination of the legal profession, using international capital to try to secure a more central place in the academy and the state for itself. But in fact, the emerging economics profession was closely tied to the legal profession until quite recently. In the words of a senior economist who graduated in Sao Paulo just after World War II, when it "was rare to be an economist," "lawyers were the owners of economists." 11 Economists typically were trained as lawyers (with another group coming from engineering).12 The curriculum of the Sao Paulo economics school in the late I930S makes this point clear. For many years there were fewer economics courses than law courses in the Sao Paulo economics department (Silva de Motta I994, I23-27). Economics became "a separate branch" only after I947, and, in the words of a notable senior economist, there reportedly emerged a "clear distinction [between economics and law] only after I957-58."13 Economics could not establish itself without gaining autonomy from law. Many leading economists of the early period, including Celso Furtado of CEPAL, the minister of planning in I963 (see Garcia I998), and Octavio Gouvea de Bulh6es, the minister of economy from I964 to I967, were trained as lawyers. San Thiago Dantas, a well-known lawyer, intellectual, and politician connected to ideas of developmentalism, was the minister of the economy in I963 prior to the "populist turn" that precipitated the military revolt. It is understandable that a leading economist would explain the increasing role of economics in government as a "quite natural development, not an upheaval." Lawyers eased into the position of economist, legitimated by the focus on economic development in international arenas. 14 The variety of positions in law-including especially those close to economics-made it possible for economists to move gradually toward autonomy without major disruptions. The military takeover in I964 led to a break in this steady rise of elite, internationally oriented economists who could provide a relatively gentle challenge to the legal elites. More precisely, the hardening of the regime in I968 led to purges of many of the members of the state elite, opening

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up new spaces for new actors. The key economist to emerge in the new government was Antonio Delfim Netto, who, together with the "Delfim Boys," governed the economy for most of the 1970S until the debt crisis. 15 These individuals were early investors in the new discipline of economics, and they matched pretty well with the relatively meritocratic groups that controlled the military, but they lacked ties to the old elite and the international connections that we have already seen. They were not "Chicago Boys" in any sense. Building on an alliance with major business groups in Sao Paulo, they fit well with the military mix of international sensitivity to Cold War concerns and strong economic nationalism. Both the credentials and the recognized autonomy of these economists, however, were quite limited. They represented a break that came from the military position against the Brazilian elite. The move into power of this new group, however, immediately generated countermoves from the state elite and its descendants. In particular, representatives of the old elite saw opportunities to invest in the United States to counter those who took power in a coup that responded to the Cold War politics of the United States. They could take advantage of the division in the United States over how best to fight the Cold War and the lack of access of those now in power to the leading U.S. expertises. Within economics, therefore, we saw the almost immediate counteroffensive of economists who invested heavily in international expertise and the politics of the north in order to discredit the military and the policies of the Delfim boys. Not surprisingly, the new generation now looks back on Delfim Netto's period as one in which the economic theory was relatively unsophisticated and the economics in practice was "political," lacking sufficient autonomy from the Sao Paulo business elite. 16 Accordingly, a more cosmopolitan and liberal elite-more oriented to the United States-came to dominate the top economic and political positions, and, again not surprisingly, the requirement of mathematical proficiency became a key barrier to entry and respectability. One of the important events in the transformation of economics in the 1970S was the split among the economists of the Funda~ao Getulio Vargas (FGV). Somewhat critical of the ties of some of the FGV economists to the military regime, especially after the return of Carlos Langoni from the University of Chicago to the FGV, a group of economists at the FGV moved to the Pontificia Universidade Cat6lica do Rio ([PUC-Rio] Catholic University in Rio) in 1979. The group that moved had also disagreed with the Vargas Foundation's plans to admit more Ph.D. students, because, with their own credentials and foreign degrees in mind, they felt that students should be encouraged to get their Ph.D.'s abroad rather than

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to obtain a necessarily second-class domestic degree. 17 To a certain extent, therefore, the debate was internal to the developing field of economics. Another dimension to the transformation of economics was evident by late in that decade. Part of the motive for the move from FGV reflected the changing political climate. In the late 1970s, Pedro Malan and Dionisio Carneiro of PUC-Rio organized a group of economists-the Economics Institute of Rio de Janeiro-to establish a distance from the government. They sought to move to a position more akin to that adopted by the organized bar (Ordem dos Advogados do Brazil [OAB]), which had taken a relatively strong stand in favor of human rights. The goal, according to an individual involved in the early plans, was to have economists "get in touch with civil society." Relatively important in the late 1970S and early 1980s, the Economics Institute was one of the few venues in economics where issues of democracy could be debated. This new generation of economists, with stronger ties to the old elite than many of those closest to the government, shared a desire with a growing sector of traditional Brazilian society to gain a distance from a military regime that, by this time, had lost the support of enlightened opinion in the United States and elsewhere. As a result, they could discredit the developmental economics of Delfim Netto both for its lack of mathematical sophistication and for its links to the military authority. Pedro Malan, who became the minister of finance in Brazil, provides a Brazilian example of a technopol rising to power against the economists associated with the military. Coming from a middle class background, he attended private schools that have long been involved in producing the Brazilian elite (Loureiro 1998, 50). Hostile to the military, he was a student activist in Rio de Janeiro before going to graduate school to study economics at the University of California at Berkeley, where he worked with Albert Fishlow. After earning his degree in 1973, he returned to teach at the Catholic University of Rio (PUC-Rio). At the same time that Malan, with Carneiro, established the Economics Institute of Rio de Janeiro, economists at PUC-Rio drew on Ford Foundation funding to build an economics department in the U.S. mold (Loureiro 1998, 48). Malan moved on from PUC to a series of international positions (Loureiro 1998, 50), beginning at the United Nations early in the 1980S and including the World Bank, where he worked as an executive director from the late 1980S. Also in Washington, D.C., he served as Brazil's representative at the Inter-American Development Bank. His friend and the then minister of finance, Marcilio Marques Moreira, then recruited Malan to be Brazil's chief debt negotiator in the summer of 1991 (Griffin 1991, 13). In that position, he helped to negotiate a large IMF loan, in exchange for which Brazil had to make a commitment to control inflation and to pri-

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vatization and economic liberalization policies. Malan then moved to the position of chairman of the Central Bank before Fernando Henrique Cardoso's election in 1995. Cardoso made Malan minister of finance. The group at PUC-Rio, including Malan, garnered substantial support from the Ford Foundation in order to build a first-class department. They emphasized mathematics, declined to offer more than a masters' degree, and sent the best students to study in the United States. The Pontificia Universidade Cat6lica do Rio also insisted that, unlike the law schools, all its professors-at least of its graduate program-be full time. As one of the economists stated, PUC-Rio was "very academic." If someone left to go temporarily to the government, they would replace that person rather than grant a leave of absence. Professors at PUC-Rio were supposed to serve as full-time professors and scholars (which did not, of course, prevent part-time consulting). This conscious academic investment in highly technical, u.S.-oriented economics taught by an elite of full-time professors made PUC-Rio into the leading institution for economists (Loureiro 1998). Their autonomy and prestige, built on academic ties to the major economics departments of North America, changed the field of economics further and empowered PUC-Rio economists in the state. They were able to discredit both the earlier generation of developmental economists and the traditional lawyers who had long dominated the state. When the economics of Delfim Netto were pushed aside, especially after the debt crisis in the early and middle 1980s, the new technical knowhow was represented by the PUC-Rio economists (and a few other elite economists in other places). They moved to the forefront in the attack against inflation, the call for deregulation and privatization, and the emphasis on opening up Brazil to foreign investment. The leaders of this new economics became key players in the governance of the state. They moved from being pure, U.S.- oriented economists to technopols serving in the now democratic Brazilian state. Economists from PUC-Rio now advise all the major parties, including the leftist Workers Party. As one of the economists of PUC-Rio stated, PUC-Rio now has highly respected economists for "any type of government." The elite economists at PUC-Rio and their allies have been able to win, so far, the academic and then the political competition against the "more political" economics of Delfim Netto and the heirs of the more structural-and less mathematical-approach of CEPAL, pushed aside in 1964.18 The victory is in part a social one: the new group is more likely to represent the heritiers of the cosmopolitan elite than the economists associated with Delfim Netto. It also represents, in relation to the old legal establishment, the ascendancy of a somewhat more open and more competitive mode of production of expertise. For the time being, therefore, the

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PUC-Rio economists have been able to turn their social capital and their investment in northern economics into a strong position in Brazil's palace wars. Professional economists, as a rising group, therefore represent an elite that has little in common with the rank and file of ordinary economists who work in relatively low level positions in the bureaucracy, private industry, or accounting. Key economists, it should further be noted, are also operating in important consulting groups that are close to but outside of the government. These consulting groups provide high profile places for a group of highpowered and well-connected advisers who could challenge the earlier dominance of generalist lawyers. 19 These elite consulting groups fit quite well with the new domain of elite state economists. They underscore that the professionalization of economics is not at all inconsistent with its commercialization. Finally, the substantive outcomes should briefly be noted. As underlined by the move of Pedro Malan from student activism to study at Berkeley, to PUC-Rio, to the World Bank, and to the position of minister of the economy, there is now a relatively close convergence between the Brazilian economic approach and that of the United States, the IMF, and the World Bank. 20 The professional and political successes of the PUC-Rio economists came along with the economic approach that is considered the most sophisticated and learned.

Building the Autonomy of Social Science The Ford Foundation joined other foundations in providing early support for the development of the economics profession. This support continued after Ford set up an office in Rio de Janeiro in 1961-a reaction to the Cuban Revolution and the Kennedy proclamation of the Alliance for Progress. Individuals in the Ford Foundation also began to emphasize the importance of other disciplines besides economics. The focus was on "obstacles to development," such as the problems of the "poor and disadvantaged" (see Packenham 1973). Ford began to put into place a strategy of promoting academic ferment through increased competition. 21 This strategy self-consciously reinforced the challenge to the position of the generalist lawyers, since the new disciplines were built to occupy terrain otherwise occupied by the lawyers. 22 Social science support added new dimensions to the offensive led by economists. 23 The original political science grant from the Ford Foundation was to the avant garde, and U.S.-oriented, department in the University of Belo Horizonte, at which the key figure was Bolivar Lamounier-who was also, as it happens, considered a political enemy by the government. 24 The in-

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vestment continued and grew, partly through CEBRAP, discussed below. During the period of the I970S and I980s, therefore, the Ford Foundation funded a considerable amount of social science research and number of social scientists. It also funded Associa