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After Neoliberalism? The Left and Economic Reforms in Latin America. By Gustavo A. Flores-Macías. New York: Oxford University Press, 2012. 288p. $99.00 cloth, $27.95 paper. - Creative Destruction? Economic Crises and Democracy in Latin America. By Francisco E. González. Baltimore: The Johns Hopkins University Press, 2012. 296p. $45.00 paper.

Published online by Cambridge University Press:  18 September 2013

Leslie Elliott Armijo*
Affiliation:
Portland State University
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Abstract

Type
Book Reviews: Comparative Politics
Copyright
Copyright © American Political Science Association 2013 

The two books under review frame their studies as “Latin American” political economy, when in fact they are more broadly applicable, addressing general questions of comparative political economy that will prove of interest to a wide range of scholars.

Both volumes pose compelling questions. After Neoliberalism? has the clearer argument of the two. “Why do presumptive radical leftist leaders, once in office, sometimes promote rather centrist, moderate economic policies?” queries Gustavo A. Flores-Macías. His cases constitute the entire (small) universe of Latin American instances of leftist administrations entering office on the heels of a previous administration that implemented significant neoliberal reforms. Although his dependent variable—the net ideological character of the new successor administration's overall economic policy—is inherently fluid, subjective, and hard to define, Flores-Macías captures it (pp. 22–59). He takes five arenas of neoliberal economic reform (privatization, taxes, public spending, external trade and financial liberalization, and antipoverty programs), and assesses the leftist government's change in policy vis-à-vis the preceding neoliberal administration. Thus, the new government either continues with planned privatizations (a “pro-market” result, coded as +1), interrupts the previous process (“neutral” result, coded 0), or renationalizes privatized firms (“statist” outcome, coded −1). The results are averaged across the five policy arenas. The measure is straightforward, replicable, and clever.

Flores-Macías proposes that a country's inherited political institutions, especially their national political party systems, differentially translate candidates' leftist beliefs and rhetoric into actual national policy choices. Institutionalized, stable, legitimate party systems offer politicians “centripetal” incentives to work within the existing party system, thus strengthening it. In this case, centrist rather than extremist candidates are likely to rise to the position of party nominee. Moreover, once elected, the new chief executive will be more inclined to work with the legislature, allowing it to perform a balancing role in response to more radical reforms, thus shifting policy choice and implementation toward the middle. In contrast, poorly institutionalized party systems display “centrifugal” tendencies, favoring success by antisystem candidates who, once elected, criticize and compete with, rather than cooperate with, their legislative colleagues, even those of the same party or coalition. The three prototypical cases are Venezuela (least politically institutionalized, most radical in economic policies), Brazil (intermediate on both dimensions), and Chile (most institutionalized party system, with the least break from the preceding neoliberal economic policy framework). In addition, the author usefully considers five alternative explanations for variation in the ideological tenor of economic policies implemented, from the availability of natural resource rents to executive branch dominance in political institutions.

The case studies are not perfect. Thus, in Brazil the legitimacy and predictability of the party system improve while the postliberal leftist government is working through its economic policy choices, thus throwing into question the causal logic. Still, the overall argument is intuitively plausible and consistent with other recent research. For example, Flores-Macías's observations dovetail with the finding that increasing increments of mass democracy (including both institutionalized political competition and reliable mass suffrage), while not associated with higher mean growth than autocracy, do predict lower growth volatility and fewer deep crises, as policymakers are pushed toward incremental rather than radical policy shifts.

In Creative Destruction? Francisco E. González begins with the accurate observation that economic crisis often provokes political regime change. He wants to know when and why existing democracies survive economic shocks and when crisis-induced democratization survives and thrives. The book displays a solid understanding of the political economy of financial and economic crises, and the author, whose previous work compares democratic Chile and Mexico, gives excellent comparative historical analyses of Chile, Uruguay, and Argentina. However, his theory is unnecessarily complicated, and the case studies are not ideal for evaluating it.

González reasonably asserts that democracy survives (or successful democratic transitions occur) when the net costs and benefits of democracy look more attractive to key political actors than those of autocracy: The theory thus proposes a societal tipping point or threshold after/above which democracy prevails (pp. 26–33). There are six categories of contributing factors: institutions, interests, and ideas, each of which has both an international and a domestic dimension (p. 7 and passim). The decision regarding which factors to place in each category is somewhat arbitrary. Thus, a society's generalized belief that rule by senior army officers has been discredited is a domestic “institutional” factor, while the defeat of the fascist great powers in the World War II provokes a shift in international political “ideas.” Financial globalization enters the model as a change in international “interests.” More problematically, all of the independent factors appear to matter equally: The tipping point is reached by summing relevant shifts across all dimensions.

The second design problem derives from case selection. After justifying the choice of the three Southern Cone countries as early democratizers and early industrializers in Latin America, González sets up three pairs of “economic crisis and political response” cases (p. 19 and passim): 1) Authoritarian Chile around 1930, at the beginning of the Great Depression pairs with authoritarian Chile around 1980, at the beginning of the wave of Latin American debt crises; 2) democratic Argentina around 1930 compares to democratic Argentina during the emerging market crises of the late 1990s; and 3) democratic Uruguay around 1930 is evaluated against democratic Uruguay during the emerging market crises of the late 1990s. In the early 1930s, all three incumbent regimes (one dictatorship, two democracies) fell, to be replaced by an opposite regime. In the more recent crises, all three incumbent regimes (again, one dictatorship and two democracies) survived. Chile's enduring dictatorship subsequently made a gradual, pacted transition to a civilian regime (1990) and eventually a full democracy (2005). There is no difference between the fate of political regime types but, instead, a clear distinction between the two time periods.

These findings suggest a more parsimonious explanation. Either the Great Depression was simply a deeper, tougher crisis to begin with—as González acknowledges probably was the case (p. 219)—or something about the international environment allowed incumbent governments, in general, to cope better with economic shocks than their predecessors in the 1930s were able to do. New and influential international economic conditions in the latter period included the availability of emergency financing from international financial institutions and the ideological respectability of Keynesian countercyclical economic policies, both factors discussed by the author at length. Why do we need additional explanatory factors to explain the survival of all of the contemporary regimes? To account for the eventual democratic transition of Chile, like Uruguay and Argentina, to stable democracy, we may also look to global political support, both rhetorical and material, for democracy. González concurs, writing (p. 163): “Compared with the 1930s, international institutions created in the aftermath of the Second World War evolved politically into a sector that rewards and promotes electoral democracy and, synchronically, attempts to raise the costs for anti-democracy organization and actions.” The availability of vastly increased international ideological and material support for participants in the liberal world order—liberal economies and/or liberal democratic polities—during the economic shocks of the late twentieth century is a sufficient explanation for the different outcomes as compared to the 1930s.

Both authors' core theses are convincing, particularly if one accepts my simplified version of the González argument. In fact, one might go still further in recognizing the influence of the U.S-dominated international context within which Latin American political actors long have operated. Understandably, Latin Americanists have tended to focus on instances in which the status quo major powers—the members of the Group of 7, and particularly the United States—have been hypocritical or biased in their dealings with countries less able to exercise international influence themselves. Mainstream scholars of Latin American political economy have not typically highlighted the positive contributions of the United States to Latin American democracy.

Meanwhile, perhaps the greatest contemporary concern of international relations specialists is the coming shift toward a multipolar balance of capabilities among major states. This means the relative rise of China, and perhaps other emerging or reemerging powers, such as India, Russia, and Brazil, paralleled by the gradual relative decline of Western Europe and Japan, a shift that may have negative implications for the liberal internationalist global political economy. There is little evidence as yet that any of the rising powers cares to disrupt existing global governance institutions; their preferences are for evolution, not radical reform. Yet when the BRICS (Brazil, Russia, India, China, and, since late 2010, South Africa) decide to act jointly—for example, in pressing for expanded voting rights in the International Monetary Fund or in declining to authorize the use of force even against governments the West has designated as “rogue states,” such as Libya or Syria in 2011—they exercise considerable influence. In the coming years, poorer Western European political parties will be less willing or able to help support well-institutionalized party systems in Latin America, while global governance institutions with the strong presence of China, Russia, or even India are not going to be activist champions of democratization.

Advocates for Latin American democracy, such as the authors of both of these books, will need to keep an eye on future challenges appearing over the international horizon. To import greater awareness of the global context into our intraregional political economy analyses, we might continue to push ourselves to compare the analyses of scholars such as the two authors discussed here with similarly themed research employing cases drawn from a different world region. This suggestion is easy to write and harder to implement—but worth it.