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Volume 61 / Social Sciences


JO-MARIE BURT, Assistant Professor of Government and Politics, George Mason University

Recent research on the political economy of Latin America has focused on the "dual transition" of the 1980s and 1990s from authoritarianism to democratic governance and from state-led models of development to a market-based model. Early work focused on the political determinants of reform, but with neoliberal reforms in place for two decades, a growing body of research is now focusing on the consequences of neoliberalism in different national and subnational contexts, and with an eye not only to the economic and social consequences of market reform but to its effect on explicitly political forms of organization. The works reviewed in this chapter, which focus on the political economy of Peru and Bolivia, offer important insights on the effects of neoliberalism in each country while also illuminating current trends in the discipline.

Two broad intellectual frameworks have come to shape the literature on political economy: liberalism and structuralism. The former focuses on government failures while the latter emphasizes market failures, and each offers distinct policy prescriptions for improving economic performance and social development. The works reviewed here clearly fall into these two broad paradigms. Those authors writing from the liberal tradition take the correctness of the neoliberal model and its policy prescriptions as a given. Their research tends to emphasize the positive outcomes of reforms (such as tax reform in Peru in the 1990s), while explaining failed policies and undesired outcomes as most likely the result of misapplication, corruption, or some other institutional factor that "interfered with" the market mechanism (item #bi2002006155#).

Authors writing from a structuralist perspective are scathingly critical of the neoliberal model, its tendency to reduce economic policy-making to a technical process devoid of politics, and its failure to address socioeconomic imbalances and indeed, its tendency to exacerbate them (items #bi2002006152# and #bi2002006161#). Some, adopting a neodependency perspective, argue that "peripheral" economies such as those of Peru and Bolivia have an inherently limited ability to develop given the current configuration of global power (item #bi2002006159#). The sharp difference in opinion and approach between these two frameworks might confuse the nonspecialist, but in fact serve to reinforce the notion that ideology, values, and interests—in other words, politics—informs economic ideas and models and their outcomes.

Following a trend in the broader political economy literature, some of the works reviewed here attempt to move beyond the closed defense or unbridled critique of neoliberalism to examine the way in which institutional structures and incentives shape political behavior and choices as well as to provide more detailed and nuanced studies of the concrete social, economic, and political consequences of neoliberal reform. Lozada and Saavedra, for example, examine the way in which, in the mid-1980s, existing political parties in Bolivia agreed to govern via a series of pacts based on the strict application of neoliberalism and a notion of governability defined as the principle of state authority over society (item #bi2002006151#). These authors examine the ways in which access to state power and the benefits that flow therein became the core motivating factor of political behavior in Bolivia, erasing programmatic differences among the parties and contributing to the rise of an antipolitics sentiment in Bolivia. Given the emergence of a radical anti-neoliberal opposition politics in Bolivia over the last few years, this argument seems worth consideration, even if it appears too neat an explanation for such complex phenomena as political behavior and economic decision making.

This also suggests a broader theme within the political economy literature dealing with the relationship between neoliberal reform and democratization, and the evident gap between the promise of neoliberal reform and the reality, not only in terms of socioeconomic outcomes—over half of all Latin Americans remain poor, and the region is still the most unequal in the world, even after two decades of neoliberal reform—but also in terms of its impact on democracy. Indeed, many have noted the failure of new democracies, most of which have implemented market reforms to one degree or another and have fallen short of their promise of improving people's daily living standards. In turn, this has led to a disheartening disillusionment with democracy as noted by a recent UNDP study, in which over half of Latin Americans surveyed said they would prefer an authoritarian government if it meant that their living conditions would improve.

Another trend within the political economy literature emphasizes empirical research of the concrete socioeconomic and political effects of neoliberal reform. Some of the works reviewed here examine the implications of neoliberal reform for decentralization in Peru (item #bi2002006154#), while others study the effects of neoliberal social policy reforms in the health, education, and pension sectors; in employment trends; and in relation to gender and poverty issues in Bolivia (item #bi2002006156#). Others examine the effects of neoliberalism on political identities and social movement formation, offering an interesting avenue for future comparative research across the region on the concrete impact of market reform on social movements. One such book examines the way in which privatization of Bolivia's state-owned mines, which was followed by massive lay-offs, reduced the power of that country's labor movement, providing a rich ethnography of how market reforms contributed to the fracturing of a once-powerful social movement (item #bi2002006162#).

No study of political economy in the Andean region could be complete without consideration of drug trafficking. Again there is a sharp division in approaches and assumptions in the study of the drug trade. Mainstream writers and government agencies tend to accept acritically the existing supply-side approach to combating the illegal drug trade long championed by the US government and implemented widely in the Andean region throughout the past two decades, while critics question the viability of a supply-side model to reduce drug flows and drug consumption in the North, while also criticizing the "collateral damage" caused by prohibition-style policies, the involvement of the armed forces in the drug trade given the fragility of Andean democracies, and the criminalization of coca growers. The one work reviewed here on the drug trade is of the latter mind, and provides a thorough theoretically informed critique of prohibition-style approaches to the drug trade and the ubiquitous use of repression of poor peasants often driven to coca growing given the lack of other economic alternatives in Bolivia (item #bi2002006153#).

Is it possible to achieve a more synthetic approach to these debates and issues so that rather than talking past each other, as seems to happen in much of the political economy literature, authors writing from diverse perspectives can learn from each other to more fully understand the impact of market reform, including its successes but also its failures? This seems the most logical way to begin to devise new sets of policy prescriptions that address the gross socioeconomic inequities that continue to plague Latin America today and also to address the growing gap between the political and the social that has led many a worried voice to express concern about authoritarian leaders, social instability, and "ingovernability."

The works examined here that focus on the effects of neoliberal reform offer some guidance in this direction, but it would be foolhardy to think that these studies can escape the value-laden divisions within the discipline. Hence critics of neoliberalism may be more likely to study the negative effects of market reform on social movements such as Bolivia's unions, while those favorable to it may be more inclined to consider other outcomes, such as the decentralization. Nevertheless, an emphasis on outcomes, if approached with intellectual honesty, can provide us with a more integral understanding of how and to what extent neoliberalism has reshaped the social, economic, and political landscape in Latin America, and what changes may be necessary in the model that has, after all, become hegemonic but that is also not without its critics.

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