Bolivia’s modern history is in many ways a distillation of the crises, reforms, uprisings, and transformations that have beset most developing countries at one time or another, but in more concentrated form. An insightful political economy analysis of these changes and how they relate to the character and action of the Bolivian state should be of broad interest, not just to Latin Americanists but to those concerned with the problems and processes of development worldwide. A book like this one that attacks such issues with extensive, original empirical research is especially welcome because the changes in question are dramatic indeed.
Bolivia entered the 1950s much as it had the 1750s, a polarized society whose immense mineral riches were monopolized by a small, Spanish-speaking elite who used the state to oppress the indigenous majority, thus sustaining a vast inequality that directly benefited them. Two examples are telling: i) Only “white” Bolivians could pass through the gates at either end of La Paz’s main avenue and walk along the alameda; and ii) government policy prohibited the teaching to indigenous children of Spanish, the language of official Bolivia. There are many others (see Decentralization and Popular Democracy: Governance from Below in Bolivia by J. P. Faguet, 2012). How did the country go in just two generations from extreme racial oppression, via revolution and counterrevolution, to an indigenist regime that seeks to redress the injustices of the past and “refound” the nation?
The arc of this story is both grand and dramatic, and any attempt to explain it in a unified theoretical framework is necessarily ambitious. Andreas Tsolakis begins with the global relations of production, and applies a blend of neo-Gramscian and Open Marxist theory that finds the drivers of the transformation of the Bolivian state in the successes and failures of a Bolivian “transnational elite fraction” to incorporate itself into an “expanding transnational historic bloc.” In this reading, the Bolivian state is the “fluid, contradictory organization of subjection.” Unlike most left-wing critiques, here the state is not treated as a reified instrument of the ruling class, nor as an entity autonomous from the market, but rather a social relation that participates in class conflict and is itself “a terrain of both intra-elite and class struggles” (p. 316).
The 1952–53 nationalist revolution redistributed land and extended civic and political rights to the indigenous poor, provided them with health, education, and so on, and nationalized the “commanding heights” of the economy in a concerted effort to break the back of Bolivia’s tin barons and landed elite and to transform society. Government was transformed very quickly from a small, conservative, laissez-faire administration that interfered little in economic and social affairs into a huge apparatus that owned most productive capital, employed armies of workers in various sectors, produced many goods and services and regulated others, and otherwise reached into most aspects of daily Bolivian life. And so the revolution “cemented the capitalist form of the state by constraining it to engage massively in production for the world market” (p. 70).
If these changes were dramatic—and they were—revolutionaries’ grip on power was not complete. The forces of reaction launched coups and sustained military governments of varying duration and coherence in the 1960s–80s. Bolivia returned to democracy in 1982 beset with decreasing public-sector efficiency, falling export revenues, and unsustainable foreign debt. A weak left-wing government financed chronic fiscal deficits through heroic money creation, which led quickly to hyperinflation, economic collapse, and a national crisis of historic proportions.
The reformist government into whose hands these ruins fell implemented a coherent program of shock therapy that stabilized the economy and reduced inflation from 60,000 percent to single digits in a matter of days (see Jeffrey Sachs, “The Bolivian Hyperinflation and Stabilization,” 1987). Some of the main provisions of the reform included a drastic devaluation of the exchange rate, sharp rises in public-sector prices (especially oil products), market liberalization and opening to international competition, and the firing of 30,000 miners from the loss-making state-owned mining corporation. This marked a stunning about-face for the Revolutionary Nationalist Movement MNR Party and indeed for the president, Victor Paz Estenssoro, who had led the revolution 30 years earlier. Economic stability quickly became a totemic achievement of democracy and Bolivia’s “political class.” The main tenets of the reform were first maintained and later deepened by Paz’s main collaborator, Gonzalo Sánchez de Lozada. “Goni” sought to go beyond stability and kick-start growth by privatizing the main state-owned enterprises, decentralizing government, reforming education, and reorganizing the executive branch. The first three of these reforms were intensely controversial, but they were pushed through Congress by a technocratic cabinet and a large coalition majority (Faguet, “Decentralization and Local Government Performance: Improving Public Service Provision in Bolivia,” 2000). According to Paz himself, the revolution was now undone.
Tsolakis explains this about-face as the product of an emerging, internationally connected business–political elite that sought to “internationalize” the Bolivian state by liberalizing markets and depoliticizing key agencies of economic management, such as the Central Bank and Ministry of Finance, and to strengthen democratic government through competitive elections, as a means of cementing their hegemony and supporting their private accumulation. This elite emerged during the decades following the revolution. The 1985 crisis shook the Bolivian state and society to its foundations, offering a chance for a radical break with the past. Business–political elites, or in the author’s words the “transnational elite fraction,” seized the opportunity and pushed through reforms that not only lowered inflation but also transformed the state and, they hoped, established their preeminence.
Real per capita growth did not return, however, and a second Sánchez de Lozada government, beset by political conflict, was overturned by fierce urban protests in the La Paz–El Alto conurbation. As not just the government but the entire political system collapsed around him, Goni fled. Out of the chaos that ensued emerged the towering figure of Evo Morales as natural leader of a new party, the Movement for Socialism-Political Instrument for the Sovereignty of the Peoples (the MAS) and a new politics, based not on the familiar twentieth-century dichotomy of left versus right/capital versus labor but rather on ethnic identity and historical vindication. With their political organizations barely surviving (the MNR) or dead (all the rest), economic and social elites reformed around regional organizations and demands, and for a time successfully opposed the MAS’s attempts to refound the country with a new constitution, the renationalization of industry, and extensive new social programs. But Morales and the MAS benefited from an unprecedented economic boom, driven by historically high natural-resource prices, and were able to outmaneuver the opposition and impose their will.
Tsolakis explains liberal reformers’ ultimate failure via two factors. First, depoliticization of the state was always only partial, as older, inward-looking elites stymied the transnational elite fraction by continual repoliticization and patronage. And second, the growth that was supposed to follow economic reform never materialized. Perceived clientelism and corruption in a context of stagnation led to social polarization, compounded by the international economic crises of the late 1990s. The urban and mining labor movement, decimated by liberalization and privatization, reformed as a rural/indigenous force represented by new organizations. Into this toxic mix stepped ex-dictator Hugo Banzer, newly elected and eager to please the United States. His double repression of coca farmers in the Chapare, as well as contraband and informal traders more generally, attacked the two major escape valves that released pressure in society by giving the poor access to resources. The resulting explosion blew apart the second Sánchez de Lozada government and sank the entire political party system. This marked the initial triumph of the subaltern poor and indigenous over the transnational elite fraction, a victory subsequently consolidated during Bolivia’s tortuous process of negotiating a new constitution.
The Reform of the Bolivian State is interesting, well researched, and scrupulously documented. Its subject matter and the breadth of its analysis deserve a broad audience. But the dense, abstruse style in which it is written, using the language of the Amsterdam School of transnational historical materialism, is likely to limit its audience to professional academics and students. This is in some ways a shame because the broad analysis is of great interest, and the book gets a number of specific points—about which the literature is often mistaken—right. For example, World Bank and International Monetary Fund staff are knowledgeable of and sensitive to local realities, and often sought to strengthen the institutions of democracy in Bolivia through their programs. They were not primarily responsible for the liberalization and marketization of the Bolivian economy. It is also true that conventional estimates of the Bank’s and Fund’s policy leverage, based on formal rules rather than real incentives, are greatly overstated. Likewise, the Bank and Fund did indeed contribute greatly to the preeminence of the executive at the expense of a “nuisance” legislative branch full of meddling and corruption in Bolivia and beyond.
Today, elites lick their wounds and Morales and the MAS reign supreme. But what are they doing? Tsolakis doubts that the MAS is actually moving toward socialism. Although it is too early to tell, he suspects the Morales government of “effectively deepening capitalist relations in Bolivia” by maintaining fiscal and monetary stability and so providing conditions amenable to investment and growth. Casual observation strongly supports this view. Public-assistance programs deliver far more money to the poor than before, and the discourse and symbolism of public policy have changed radically under the MAS. But the underlying economy has not been restructured. Although the still highly internationalized economic elites are largely shut out of government, Bolivia’s recent economic growth means that they are, if anything, more prosperous than ever. Will they rise out of their comfortable neighborhoods and return to dominate politics and the state? Tsolakis’s argument implies as much, given the largely unchanged relations of production, once the hegemonic MAS fractures into its constituent regional and ethnic parts. If so, the past decade will come to be seen as a missed opportunity of historic proportions for both Morales and Bolivia.
