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Gabriel Ondetti, Property Threats and the Politics of Anti-Statism: The Historical Roots of Contemporary Tax Systems in Latin America (Cambridge and New York: Cambridge University Press, 2021), pp. 320, £75.00 hb; E-book.

Published online by Cambridge University Press:  27 December 2021

Anthony Spanakos*
Affiliation:
Montclair State University
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Abstract

Type
Reviews
Copyright
Copyright © The Author(s), 2021. Published by Cambridge University Press

Good empirical social science has a clear sense of what it seeks to accomplish and what is beyond its scope. Gabriel Ondetti's Property Threats and the Politics of Anti-Statism, the Latin American Studies Association Economics and Politics Section book-prize winner of 2021, is exemplary in this regard. It argues that the specific political context in twentieth-century Latin America – particularly a relatively distant independence period and significant contemporary demands for radical change in a ‘regional context exceptionally averse to such change’ − led to ‘many instances of equalizing reform that either fell short of revolution or were quickly rolled back, or both’ (p. 252). These elements are fundamental in explaining differences in state taxation in Latin America, as Ondetti argues, but he also acknowledges the ‘difficulty of applying this book's argument outside of Latin America’ (p. 251). His final chapter shows that the argument applies to other cases in Latin America (Guatemala and Ecuador) but that it is not as successful in explaining taxation in other parts of the world. In recognising the desirability of generalisable causal accounts but balancing that against the strength of empirical evidence, Ondetti's approach runs counter to most high-profile work in comparative politics in that he deliberately restricts the geographic and temporal validity of his argument. The result is a more convincing argument and a stronger book.

Building on previous research on land reform and tax policy, Ondetti argues that the very significant difference in taxation (revenue, type of taxes, level of taxes) in Latin American countries is due to the presence or absence of an earlier episode in which the property of wealthy elites was substantially threatened. Such threats helped organise collective action among otherwise diverse wealthy elites and supported immediate political responses as well as the creation of ongoing organisations which aimed at reducing the size of the state, thus preventing future redistributive efforts. Importantly, the activities of these groups, and the ‘anti-statism’ they espoused, had long-term effects and explain why Mexico and Chile have much lower tax revenue as a percentage of GDP than Argentina and Brazil. The book's primary case studies examine the reaction to threats to private property in these four countries during the middle third of the twentieth century, but shorter case studies of Guatemala and Ecuador are offered in the conclusion to extend the argument in Latin America.

Ondetti's thesis is a clever response to an empirical puzzle. Since the mid-twentieth century, Latin American states have grown along with their tax revenue, but some are substantially larger than others. Argentine and Brazilian tax revenues hover around 31 per cent and 32 per cent of GDP, respectively, while in Chile and Mexico the numbers are closer to 20 per cent and 15 per cent, again respectively (p. 5). There are, of course, important distinctions between the types of taxes (indirect, direct), the taxing authority (national or local) and the effects of taxation (regressive, neutral, progressive). Ondetti's main focus, however, is on the growth of state disposition and capacity to tax with the understanding that only a state in possession of resources can redistribute them (though, clearly, neither possession nor redistribution necessitates a reduction in inequality). Although the reduction of inequality is not central to his argument, it looms in the background and is raised in the conclusion when he finds that the experiences studied suggest that the growth of state revenue in Latin America has been accomplished more effectively when its development did not lead to the crystallisation of an anti-statist group of veto players, and reforms were incremental over time. Again, the increase in taxation ability does not by itself reduce inequality but it does create conditions in which a state has capacity to act in such a way. What may lead a state in such a direction seems a likely question for further enquiry.

Ondetti's contributions to the literature on political economy, beyond the broad question of what leads to or prevents the development of state taxation, are many. First, using a comparative, qualitative and case study-oriented approach, the book identifies causal mechanisms which responded to a richly described context. This is rather crucial as he avoids crude assumptions such as people who are rich/poor will oppose/support property reform or modern mass politics will always be propitious to populism and/or revolutionary programmes for redistribution. Instead, the political contexts of the four countries explain why different groups became politically active and successful (or not) based on their responses to specific critical moments. Second, challenging more structural arguments (commodity-driven, international capital), he assumes an actor-centric approach. His account recognises the role of the political Left but it gives greater attention to the organisation of business and pro-capitalist groups who are able to generate ‘anti-statist’ policy preferences which he identifies as ‘not simply a dislike of paying taxes, but rather a general wariness of the effects of state economic intervention’ (p. 15). In the most recent collapse of commodity prices, a number of conservative parties and candidates have had considerable success and the strategies and experiences Ondetti highlights give insight into why the Right has returned and what to expect of it. Third, the book demonstrates clear cases in which the political outcome at a particular moment constrained and conditioned future political action in that area. That is, the outcomes in the four countries were path-dependent upon the responses to the presence or absence of substantial threat to property values. Path dependence remains a valuable term in the field and this book represents an excellent demonstration of how to recognise the structure and limitations of the past while acknowledging the spaces for agency in the present.