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Rethinking Marxism: A
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The Tenuous Credentials of
Latin American Democracy
in the Age of Neoliberalism
Steve Ellner
Published online: 07 Dec 2010.
To cite this article: Steve Ellner (2002) The Tenuous Credentials of
Latin American Democracy in the Age of Neoliberalism, Rethinking
Marxism: A Journal of Economics, Culture & Society, 14:3, 76-93, DOI:
10.1080/089356902101242305
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76 Ellner RETHINKING MARXISM Volume 14, Number 3 (Fall 2002)
The Tenuous Credentials of Latin American
Democracy in the Age of Neoliberalism
Steve Ellner
Recent democratic breakthroughs in Latin America continue to lend credibility to
the optimistic notion that democratization and globalization go hand in hand. Indeed,
with the ending of seventy-one years of single-party rule in Mexico, and then with
Alberto Fujimoris call for new elections in Peru, it was easy for Latin American
democrats to be euphoric and attribute it all to the benevolence of globalization. A
New York Times Op-Ed Page article by Paul Krugman called Vicente Foxs triumph
a vindication of NAFTA, a success story for globalization, and proof that glo-
balization tends to promote freedom (New York Times, 5 July 2000). In another
plus for globalization and for the optimists who write on the subject, the Organiza-
tion of American States and the Carter Center received glowing praise for their key
role in Perus democratic opening. Both events are seen as part of a worldwide demo-
cratic wave, as Samuel Huntington (1991) put itthe largest in history. It began
with the military coup in Portugal in 1974 and peaked with the fall of Communism
in Eastern Europe.
I do not share the optimism of those encouraged by these developments, as the
following article on democracy in the era of globalization and neoliberal policies
will make evident. The world has not gone all that far in the direction of authentic
democratization over the last quarter of a century. During Boris Yeltsins rule, un-
scrupulous business syndicates rooted themselves in power in Russia, while Afri-
can democracy has failed to put an end to internecine conflicts. Many political
analysts attribute these problem areas to the specificity of conditions in both con-
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Neoliberalism and Latin America 77
tinents: Eastern Europes lack of a democratic tradition and Africas staggering
levels of poverty. Some conclude that Latin America is a completely different story.
Indeed, Huntington (1997) points to Latin American elites adherence to liberal
democracy and Christianity as auguring well for democratic stability, and for that
reason calls on U.S. policymakers to extend that region preferential treatment. The
fate of the regimes that have emerged in Latin America during the current demo-
cratic wave is thus considered to be a benchmark for the rest of the underdevel-
oped world.
Actually, the current prospects for Latin American democracy leave room for both
optimism and pessimism. On the one hand, the continent has never been so demo-
cratic. Central American nationsspecifically Guatemala, El Salvador, and Nicara-
gua, where repression and military dictatorship are endemichave established rep-
resentative democracies and have incorporated former guerrilla movements into the
political system. Furthermore, with the exception of Chile and Uruguay, existing
democratic regimes in Latin America have been around longer than at any other time
in the history of each respective nation.
Now for the negative side of the continentwide balance sheet. The phenomenon
of hyperpresidentialism, which includes the weakening of congress and other
countervailing institutions, recalls the presidents on horseback known as caudil-
los who ruled throughout the nineteenth century. Part of the explanation for insti-
tutional atrophy is Latin Americas response to the economic stagnation that
has characterized the continent for over two decades. In their rush to implement
unpopular shock treatment reforms, neoliberal presidents in Latin America have
spurned congresses and even their own political parties, thus reversing a century
of institution building. At the same time, they generally fail to level with voters by
giving them advanced notice of austerity measures, thereby undermining democracys
credibility. Disillusionment with politics and politicians reflects itself in declin-
ing party membership. Political scientist Frances Hagopian (1998, 116) has com-
pared statistics on popular identification with parties in major Latin American
and European nations over the last two decades. While the tendency on both
continents is toward decline, by the 1990s as much as 70 percent of the popula-
tion identified with parties in Great Britain, 75 percent in Germany, and 63 per-
cent in Italy, as opposed to 25 percent in Argentina and 49 percent in Brazil and
Mexico.
After ten to twenty years of neoliberal-style democracy in Latin America, attention
needs to be drawn to neoliberalisms deplorable record on the political front. Such a
discussion will go a long way toward debunking myths regarding neoliberalisms po-
tential to deepen democracy and the natural affinity between political and eco-
nomic liberties. Democracys impressive expansion on a worldwide scale has become
the most tangible accomplishment of globalization, now that the latters claim of achiev-
ing an economic miracle for the third world has lost credibility.
The following article deals with the impact of neoliberalism on democracy in Latin
America. Rather than discuss how globalization distorts democracy by influencing
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78 Ellner
class formation and political structures, as several important scholarly works do,
1
the piece concerns itself with the ramifications of neoliberal policies and strategy at
the national level. Although global trends are clearly at the heart of the deterioration
of democracy, the nationalas opposed to globalfocus of the article reflects my
belief that the nation-state is still very much a part of the political picture in the third
world. More specifically, the defense of national sovereignty by such traditional
political actors as political parties and organized labor, which appeal to nationalist
sentiment in opposition to powerful foreign interests, is still a viable strategy for
achieving thoroughgoing change. In contrast, writers across the ideological spectrum
who highlight the all-encompassing impact of globalization tend to minimize the
possibility that political actors will shape their nations destiny.
2
Indeed, this skepti-
cism regarding the ability of individual third-world nations to overcome the constraints
of global forces reflects itself in scholarly priorities, which have moved away from
national studies over the recent past.
A second part of the article critically examines the misplaced emphasis of numer-
ous political scientists on centralism as a root cause for the continents political prob-
lems, and their general failure to recognize the damage inflicted on democracy by
neoliberalism. If this position were confined to academic circles, I would have lim-
ited my discussion of it to a few footnotes. In fact, not only do key actors such as
political activists, the media, and business groups defend this staunchly anticentralist
viewpoint, but it constitutes a major theme in neoliberal discourse.
Neoliberal Idealism and the Transition to Democracy
Latin American democracy has always ebbed and flowed; the 1980s were a pe-
riod of flow in that military rulers in one country after another returned to the bar-
racks. But unlike in the past, the spread of democracy in the 1980s was devoid of
internecine conflict and radical change. The Brazilian democratic transition was the
most gradual of any country, taking as long as six years. In Chile, continuity was
particularly evident in the nations economic orientation, in that the coalition of
Christian Democratic and Socialist parties that won the presidential elections in 1989
retained Pinochets market reforms. Throughout the continent, recently elected presi-
dents kept their pledges to military predecessors of avoiding redistributive policies,
which would have sharpened social tensions. Actually, the fledgling democracies were
more willing to assume political risks by initiating unpopular neoliberal reforms than
had been the case with former military regimes (Pinochet being the exception).
1. William I. Robinson (1996), for instance, attributes the weakening of democracy to the authoritar-
ian tendencies of hegemonic transnational capital, which displaces the former governing coalition
consisting of populist parties, labor leaderships, and business sectors.
2. The globalizaton focus underestmates the importance of the defense of national sovereignty and
opposition to U.S. hegemonyor writes off these struggles completely. One forerunner of this approach
on the Left was Leon Trotsky with his thesis of world revolution.
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Neoliberalism and Latin America 79
While Latin Americans may have worried about the pressing economic difficul-
ties that the newborn democracies inherited, they had reason to be sanguine about
the political climate. Nonleftists were encouraged by what Huntington observed as
characteristics of third-wave democracies in general: political openings which were
the result of compromise arrangements engineered by middle-class parties adverse
to notorious isms. But leftists also had cause to be buoyant. Social movements had
triggered the struggle against dictatorial regimes, and they pointed in the direction
of a novel, participatory democracy. Latin American social movements upheld dif-
ferent goals and employed different methods than the new social movements (anti-
nuclear, womens, gay, and environmental organizations) that, according to Alain
Touraine, prefigured a new type of democracy for Europe. Nevertheless, the new
social movement paradigm caught the attenton of and inspired Latin American ac-
tivists and scholars in the 1980s. Some of them were emboldened by the Sandinista
revolution, which privileged social movements. When Venezuelas Movement to-
ward Socialism (MAS) broke off from the Communist party, it called itself a move-
ment of movements and promised to subordinate party interests to those of civil
society. Brazils Workers Party headed by Luis Ignacio Lula da Silva, Mexicos
Democratic Revolution party (PRD) led by Cuauhtmoc Crdenas, and Perus United
Left (IU) led by Limas mayor Alfonso Barrantes also developed a special relation-
ship with social movements based on a two-way communicational flow.
The Left, however, did not have a monopoly on utopian-tinged visions of radical
democracy underpinned by an autonomous civil society. Ironically, it was exalted
by some of those who embraced the allegedly new paradigm called neoliberalism.
The neoliberal idealists refrained from eulogizing military regimes established over
the previous two decades, even though their raison dtre was to block the triumph
of socialism and radical populism. Thus, for instance, the pro-neoliberal Liberal
Institutes, which sprang up throughout Brazil during the transition period, severely
criticized the technocrats who played leading roles in the nations military govern-
ment for being bad for capitalism. They also warned that the shock treatment
approach, which ruled out open debate over market reforms, would scare off busi-
ness sectors, thus forfeiting their support for neoliberal formulas. One Institute mem-
ber commented, Shocks need the armed forces to impose them, and that wont con-
vince anyone (Nylen 1993, 309). The neoliberal idealists stressed political reform
such as decentralization, specifically the invigoration of local government and orga-
nizations of civil society, while often playing down economic policy. Their discourse
on the role of the common citizen in democracy might easily have been taken from
the pages of de Tocqueville. This fascination of neoliberal idealists with civil soci-
ety and local democracy was a logical result of their characterization of centralism
as the embodiment of all evil. (The visionary dimension of neoliberalism explains
why the movement attracted utopianism-prone leftists such as Mario Vargas Llosa,
although many of them were subsequently overtaken by pragmatism.)
The idealistic goals of this wing of neoliberalism, however, were overshadowed
by more pressing imperatives. Far from a democracy predicated upon an autonomous
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80 Ellner
civil society and decentralized decisionmaking as the neoliberal idealists envisioned,
the democracy that emerged in the 1980s was a restricted democracy. The gener-
als who had ruled for over a decade conditioned their acceptance of democratic transi-
tion on guarantees that firebrand populists and leftists be excluded from decision-
making and substantive social reforms be ruled out. In Chile these limitations were
embodied in the Constitution of 1980, which to this day has blocked badly needed
labor legislation sponsored by the governing coalition. The pragmatic logic of re-
stricted democracy survived electoral restoration, as technocrats retained consider-
able power and Congress was largely shunted aside.
The same pragmatic impulse also subordinated social movements and civil soci-
ety as a whole to the negotiation strategy of nonleftist political parties, once the tran-
sition process got off the ground. Most observers agree that neoliberal governments,
with their lean budgets and reduced presence in society, have inadvertently or inten-
tionally weakened and fragmented civil society, whose vitality in Latin America has
always been contingent on its relationship with the state (Roxborough 1997, 5960).
Educational institutions afford a good example of how this has worked out in prac-
tice. Neoliberal policies have promoted the steady displacement of public education
by private schools which, at the university level, now take in 30 percent of the stu-
dent population, up from 5 percent in thirty years (Arnove, Franz, Morse, and Torres
1997, 286). This process has cut into the strength of student and teachers movements,
which are largely absent in privately run institutions.
Neoliberal discourse was deceptive in other ways. Its emphasis on the need to
circumscribe the power of the central government and promote decentralization was
often a smoke screen to gain acceptance for the real end-allnamely, widespread
privatization. Thus, for instance, one of the first comprehensive neoliberal statements
coming out of Venezuela, entitled More and Better Democracy, was put together
by media executive Marcel Granier in 1987 and issued by the business-sponsored
Roraima Group. The manifesto adduced the neoliberal argument on the need to
counter excessive state paternalism, promote decentralization, and treat political
parties as just one more organization of civil society (Grupo Roraima 1987, 140).
Nowhere, however, did the document make reference to privatization, an omission
which was not surprising since the word was practically taboo in Venezuela in the
decade following the nationalization of the oil industry in 1976. Once the allegedly
pernicious nature of centralism gained widespread acceptance, however, members
of the Group embraced privatization and the government placed practically all the
nations basic industry along with the telecommunications sector on the auction block.
The electricity and salt industries and port system were decentralized only to be then
offered to private interests. Actually, the fate of these sectors was a foregone conclu-
sion because state governments simply lacked the resources, technology, and expe-
rience to take charge of their operation.
With the democratic system in Latin America flawed in serious ways, those like
Samuel Huntington (1991, 57) who defended the transition process opted for
Joseph Schumpeters minimalist definition of democracy as elections with a mo-
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Neoliberalism and Latin America 81
dicum of liberty. Given the deficiencies of these fledgling democracies, a more de-
manding definition would have easily disqualified them from entering the ranks of
democratic nations. Latin American leftists, who had come a long way from the days
when they wrote off existing democracy as bourgeois, embraced a distinct view.
3
Their substantive definition of democracy rested on the supposition that extreme social
inequality (a fatal weak spot of neoliberal thinking) is antithetical to the system, and
that popular participation and incorporation are intricately a part of it (Boron 1995,
1904). The substantive view concerned itself with the quality of democracy. It thus
rejected the black-and-white notion of the minimalists, which has been preferred by
U.S. diplomats for the purpose of tracking and censuring countries that have strayed
from the democratic classification (particularly ones that threaten U.S. interests). In
future years, the minimalist definition of democracy and the broader, substantive
perspective would clash, not only in academic circles but also in international fo-
rums such as the Organization of American States annual assembly in 1999. The
State Department dismissed the concept of participatory democracy as tantamount
to mob rule (Rousseau has never been liked in the United States, not even among
academicians), while the term made its way into the constitutions of President Hugo
Chvezs Venezuela and Fujimoris Peru.
For all its practicality as an instrument to impose sanctions against governments such
as that of Fujimori, the minimalist definition passes over the real shortcomings of
neoliberal-style democracy in Latin America. These deficiencies include arbitrary ex-
ecutive action and the exclusion of the very poorwho have come to constitute the
majority of the populationfrom the political, economic, and cultural life of the na-
tion. At the outset of transition in the 1980s, the expectations created by democracys
triumph made these defects seem excusable, if not momentary. Fifteen or twenty years
later, they are at the heart of the problems confronting the current political system
thus the need (recognized by a growing number of political scientists of different ideo-
logical backgrounds) to broaden the definition of democracy in order to include much
more than elections every so many years.
What Went Wrong with Democracy la Neoliberalism?
In the early transitional years in the 1980s, political analysts generally assumed
that if only Latin American democracies could survive the awesome economic chal-
lenges of the period, they would create solid institutions and become increasingly
democratic. Even though by the 1990s democratic regimes had withstood the test of
time, this hoped-for consolidation failed to take place. Far from developing strong
political parties and shoring up other institutions such as congress and organized labor,
neoliberal democracy showed an unmistakable preference for strong presidents. It is
3. Marta Harnecker points out that if anything positive came out of the military dictatorships of the
1970s and 1980s, it was teaching the Left the value of democratic regimes, regardless of how limited
they are (1999, 335).
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82 Ellner
remarkable that no political party on the continent distinguished itself as being in-
strumental in bringing about important changes (from any ideological viewpoint) or
enjoyed the same degree of prestige that parties did in Latin America decades be-
fore. Perus Fujimori and Brazils Fernando Collor de Mello represented an extreme
in that they largely spurned political parties. More typically, leaders who promoted
neoliberalismsuch as Carlos Salinas (Mexco), Carlos Andrs Prez (Venezuela),
Carlos Menem (Argentina), and Fernando Henrique Cardoso (Brazil)made clientel-
istic concessions in return for party backing. Ironically, this practice, referred to as
the old way of doing politics, was anathema to neoliberal discourse (Panizza 2000,
75963). In spite of the deals, however, neoliberal presidents kept party stalwarts
out of cabinet posts in charge of formulating economic policy, which were reserved
for technocrats. In short, if democratic consolidation means buttressing institutions
such as political parties, then the terms appropriateness for political developments
in the 1990s is open to question.
The change from political parties as heroes and major actors to villains left on the
sidelines was nowhere more evident than in Venezuela. At the time of the impeach-
ment of Venezuelan President Carlos Andrs Prez on charges of corruption in 1993,
an activist of the governing Democratic Action party (AD) reminisced about the good
old days of party politics: As students in the 1960s all of us who belonged to a party
be it AD, Copei or the Communist Partyfelt that membership in the organization
defined us as individuals. We were proud of belonging to the party that we did. Party
membership is now devoid of such romantic notions, and some of us feel ill at ease
about belonging to them (Alfaro 1993). Naturally, dramatic changes like these in
subjective conditions have a heavy impact on objective ones. The weakness of Vene-
zuelas traditional parties was made blatantly clear with the election of the antiestab-
lishment Hugo Chvez as president in 1998. Chvezs fervent antiparty rhetoric struck
a responsive chord, even among those Venezuelans who voted against him. Allegedly
nonpolitical institutions such as the media, the business organization FEDECAMARAS,
and the Catholic Church were more effective in galvanizing public opinion against
President Chvez than were the vehemently antigovernment parties of the opposition.
In brief, political parties are no longer what Venezuelan democracy is all about.
In Peru a similar story played itself out, but with certain variations. By the time
Fujimori took office in 1990, the political establishment was aging, predominantly
white, and closely linked to Limas patrician society. Fujimori owed much of his
political success to his image as a man of humble origin belonging to an ethnic group
different from that elite. Like Chvez in Venezuela, Fujimori created a party for the
purpose of launching his own candidacy. By refusing to strengthen the party, how-
ever, Fujimori was truer to his antiparty rhetoric than Chvez. In Peru, short-lived,
independent electoral groups oriented around individual candidacies replaced the
well-established parties at both national and local levels. Each time elections were
held, Fujimori created a new party while passing over his political loyalists by fa-
voring business allies and military officers with government appointments.
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Neoliberalism and Latin America 83
The political landscape throughout the rest of Latin America vividly confirms the
trend toward political party decline. Gone are the days when one party with strong
influence in organized labor, peasant leagues, and the student movement did most of
the work and deserved most of the credit for winning presidential elections. When
such renowned figures as Juan Domingo Pern, Rmulo Betancourt, Eduardo Frei,
and Victor Paz Estenssoro triumphed at the polls, voters were depositing their faith
as much in the candidates respective party as in the candidate himself. This pattern
is now a rarity in the major countries throughout the continent. In Chile and Argen-
tina, presidents have won thanks to the support of a broad interparty alliance, not
just one dominant party. Similar party fragility is evident in Mexicos governing
National Action Party (PAN). Fox formed the Friends of Fox as a vehicle to gain
PANs nomination, but the makeshift organization became a parallel structure dur-
ing the campaign and even ended up with more members than the party itself. Fox is
not at all beholden to PAN, particularly because he represents a pragmatic current
within the party that is not at all to the liking of the doctrinaire rightists who control
its apparatus. Unlike the above cases, extreme party fragility and fragmentation have
always characterized Brazilian democracy. Even though some political scientists
consider President Cardoso the only real success story in Latin American politics of
the 1990s (thanks to his relatively open and gradual approach to neoliberal reforms),
the notorious weakness of the nations party system has not been overcome in the
least.
4
The vitality of political parties and other democratic institutions in Latin America
has been undermined by globalization and neoliberal policies. That neoliberalism
has triggered worker dislocations and aggravated social tensions is hardly an un-
known, but political scientists have generally failed to consider it as a root cause for
the deformation of democracy. In addition to socioeconomic factorsparticularly
social polarization, which abrades democratic governabilitythe political dimen-
sion of neoliberalism has undermined democracy in three basic ways.
Neoliberalism by Deceit
Those presidents who definitively broke with their nations deep-rooted tradition
of state interventionism and embarked on neoliberal programs did little to prepare
the general population for the radical changes that were in store for it. Indeed, dur-
ing their campaign for the presidency, they defended continuity and attacked the
economic planks of rivals who were identified with neoliberal policies. In the 1988
elections in Venezuela, for instance, Carlos Andrs Prez led voters to believe he
would reimplement the same interventionist program of his first administration that
had allegedly generated the prosperity of the 1970s, in contrast to his major rival
4. See, for example, the introduction, conclusion, and chapter on Brazil by Mettenheim and Malloy
(1998).
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84 Ellner
who was more up-front about supporting the opposite policies. Prior to his presidency,
Carlos Menem identified himself with the Peronist legacy, which included national-
ization of the very industries he ended up privatizing. But the most blatant example
of reversal and deceit was Fujimoris 1990 campaign, which staunchly opposed the
platform of neoliberal true believer Mario Vargas Llosa. Fujimoris antishock elec-
toral program, which included a significant dosage of state intervention and the de-
fense of free education at all levels, drew the support of the moderate and far Left in
the runoff elections but, once in office, he did a complete about-face on economic
policy.
The bewilderment and trauma for the general population were aggravated by the
abruptness with which the shock treatment of neoliberal reforms was applied. Prez,
Menem, and Fujimori as well as Presidents Collor de Mello of Brazil and Salinas of
Mexico unveiled their radical program just days after they took office. The argument
for the shock treatment was that any forewarning or tip-off would provide the bu-
reaucrats and party brokers precious time to organize resistance and allow capital-
ists to send their dollars abroad.
The popular sensation of being hoodwinked translated itself into outrage and then
protest, which served as a backdrop to the removal of Prez as well as Collor de Mello
and Ecuadors Abdal Bucaram from office. True, some born-again neoliberals
(Fujimori, Menem) have been reelected, but only after using state resources to con-
solidate themselves politically; their popularity was enhanced thanks to neoliberal-
isms one success area: controlling runaway inflation. Neoliberalisms refusal to play
fair by bringing its slogans to the electoral arena from the outset and its use of deceit
reflect the unpopularity of its banners in Latin Americanotwithstanding the un-
precedented promotion of its ideas by conservative and right-wing institutions, par-
ticularly U.S. think tanks. Moiss Nam, Prezs former Development Minister and
currently editor of Foreign Policypublished by one such think tank, the Carnegie
Endowment for International Peaceinadvertently provided an idea as to why neo-
liberalism has a hard time winning elections. Nam listed the array of forces that avidly
support, and those that put up resistance to, neoliberal policies. The pro-neoliberal
group included foreign-trained technocrats, the World Bank, and those inspired
by the demonstration effect of the Asian Tigers and elsewhere. The opposite list
consisted of the components of the discredited populist coalition: politicians, labor
leaders, and inefficient businessmen (Nam 1993). Thus neoliberalismlike non-
governing, orthodox Communist parties in bygone daysfinds itself in the unten-
able position of being identified with foreign banners and ideas and pitted against
native-based groups.
In the long run, liberalization by deceit has discredited not only neoliberal ideas,
but all politicians and the democratic system in general. This in large part explains
the precipitous decline in voting participation in nine of twelve major Latin Ameri-
can countries in the recent past (Hagopian 1998, 120). It also explains the electoral
successes of nontraditional politicians, and why the major candidates in Venezuelas
1998 elections consisted of a former military conspirator, an exMiss Universe, a
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Neoliberalism and Latin America 85
successful businessman, and a traditional politician. The politician received 0.4 per-
cent of the vote.
Undoing Half a Century of Popular Reform
History teaches that whenever a sector of the population is subject to massive
displacement, it justifiably or unjustifiably blames the resultant hardships on a spe-
cific group: the capitalist class, foreign interests, ethnic groups, or the like. In Latin
America large numbers of people have held the political class (i.e., politicians)
responsible for the disequilibrium set off by globalization and neoliberal policies.
(More recently, global forces such as the International Monetary Fund and the World
Bank have been targeted, as shown by the representation of Latin American causes
at the Seattle protests.) This is only natural. The most cherished benefits eliminated
by neoliberalism are government-sponsored ones guaranteeing job stability and so-
cial security in societies where the majority is outside the formal economy and chronic
unemployment-underemployment is a way of life.
The relative ease with which Latin American government privatized labor and
welfare programs and did away with others is striking. Neoliberal stalwarts such as
Pinochet, Fujimori, Menem, and Carlos SalinasErnesto Zedillo pioneered in the
privatization of social security, leaving far behind their idological counterparts in Eu-
rope and the United States who were less successful in attempting to do the same. Latin
Americas old populist parties, which had fought hard to achieve social security bene-
fits decades before, were at best lukewarm in defending these historic conquests.
Amazingly enough, presidents belonging to social democratic parties identified
with the interventionist model and organically linked to organized labor often initi-
ated the neoliberal revolution. At least this was the case with Venezuelas AD,
Mexicos PRI, Argentinas Peronistas, and Bolivias Nationalist Revolutionary Move-
ment (MNR). One political scientist called the phenomenon the Nixon-in-China
Syndrome in which a cold war warrior, rather than a less hawkish Democratic presi-
dent, traveled to the Communist country in Asia and reestablished diplomatic rela-
tions (Murillo 1997, 222). In a similar vein, social democratic presidents in Latin
America for ideological reasons were among the least expected to implement neo-
liberalism. Like their counterparts in Europe who did the same, they counted on fel-
low party leaders in organized labor to temper the reaction against market reforms.
Not all the traditional populists supported neoliberal reform, but all of them were
held responsible for its disastrous effects. The problem was not so much the lack of
opposition, but rather, the type of opposition. Most important, they confined their
resistance to congressional committees rather than rallying the general public in a
crusade against neoliberalism (Ellner 1999b, 1169). In Venezuela, trade unionists
who were party companions of neoliberal President Carlos Andrs Prez criticized
the governments economic policies, but refused to vote to censure them in congress.
One of the partys top labor leaders, Csar Gil, bluntly explained why: When we
are in the unions we act according to the interests of the workers, but in Congress we
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86 Ellner
have to abide by party discipline. In short, traditional populist parties have fallen
into disrepute not only because of corruption and clientelist practices, as is generally
assumed, but also because their leaders were too meek in opposing neoliberalism.
Congress Takes the Backseat
Public opinion surveys demonstrate that national congresses throughout Latin
America have also fallen into disrepute, even though they have assumed critical posi-
tions on neoliberal reforms (Conaghan 1994). The reason is that their opposition to
neoliberalism has taken the form of foot-dragging rather than overturning executive-
proposed legislation and assuming principled positions but, precisely because congresses
have not served in a rubber-stamp capacity, neoliberal presidents have made a point of
discrediting them. Fujimori, for instance, attacked Congress for being soft on guerrilla
insurgency because it held up approval of his Draconian measures to combat the Sendero
Luminoso. In fact, a major bloc in Congress was about to reach an agreement with
Fujimori on the matter when the latter staged his autogolpe in 1992. In light of the
emotional nature of the issue of terrorism, the accusation against Congress was the
perfect justification, or excuse, for closing it down. Once this fetter was removed,
Fujimori went on a privatization spree, beginning with social security and culminating
with the telecommunications industry in 1994, when annual sales reached 2.6 billion
dollars.
5
In other Latin American countries, congresses also got in the way of mass
privatization while failing to confront the executive head on. President Menem had
even less of an excuse than Fujimori to issue over three hundred decrees during his
first term since the Peronistas virtually controlled both chambers, but that was the most
expeditious way to dismantle the state sector created by Pern.
Mexico is another case in which congress objected to an executive-sponsored
neoliberal program, but failed to act decisively to halt the process. Beginning with
the Miguel de la Madrid administration in 1983, the government sold off company
after company. The executive also whittled away at the two untouchable industries
which were insulated from the privatization program by the constitution and even
by the NAFTA accord: oil and its derivatives, and electricity. Thanks to constitu-
tional amendments in 1992 and 1995, private capital was able to partake in the gen-
eration of electricity as well as the transportation, distribution, and storage of natural
gas. The government also reduced from fifty to thirty-four and then to eight the num-
ber of petrochemical products considered by law basic raw materials for industry
and thus off-limits to private capital. President Ernesto Zedillo made a valiant effort
to sell the liberated plants lock, stock, and barrel to foreign interests, but due to
congressional insistence he had to settle on 49 percent private ownership. Had it not
been for congressional resistance, Zedillo would have brought Mexico even further
down the road to complete privatization.
5. Thus economic imperatives, and not Fujimoris authoritarian personality as some analysts claim
(McClintock 1999, 331), explain the decision to carry out the autogolpe.
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Neoliberalism and Latin America 87
Executive hegemony, the neoliberal shock treatment, and the predominance of
technocrats in the cabinet all go hand in hand. Although the shock treatment is not
the only way to implement neoliberal formulas, it is the most logical way given the
fact that the technocrats disdain democratic processes and would be hard-put to do
things differently. Political analysts generally play down this relationship between
neoliberalism, on the one hand, and hyperpresidentialism, technocracy, and the
emasculation of congress, on the other. Some attribute hyperpresidentialism to cul-
tural factors by viewing strong presidents as a throwback to nineteenth-century
caudillos (ODonnell 1994). A second explanation also points to factors that are
endemic to Latin American society. These writers see hyperpresidentialism as a jus-
tifiable reacton to the well-entrenched practice of clientelism that breeds inefficiency
and corruption, as the executive branch realizes that assuming emergency powers is
the only way to get things done. In both cases, neoliberalism as a root cause for the
deformation of democracy gets brushed aside.
New Schools of Thinking That Dont Break with the Past
These developments have placed in doubt the continued validity of standard theory
regarding Latin American democracy. For years, political scientists writing on Latin
America considered nonrevolutionary, cohesive, mass-based parties, with well-
established links to institutions such as organized labor, a sine qua non for stable
democracy. Because these parties were popularly oriented with a commitment to cer-
tain nationalist goals, they invariably promoted economic development through gov-
ernment interventionism, particularly in the form of the policy of high tariffs known
as import substitution.
Some of the political analysts who embraced the political party-institutionalist
model received the blessing of the U.S. State Department or its infamous ally, the
International Department of the AFL-CIO. The latter was the case with Rutgers
University Professor Robert Jackson Alexander, a confirmed social democrat who
for over half a century published dozens of books extolling institutionalized parties
located on the U.S. side of the cold war divide. Alexander interviewed hundreds of
these party leaders and developed a friendship with many of them. Heand others
who wrote in a less personalized, more academic fashion while painting the same
general pictureinfluenced U.S. policymakers to tighten relations with these same
institutionalized parties. But there was a certain progressive side to their writing in
that leaders of the multiclass, mass-based parties defended government intervention-
ism much as Franklin D. Roosevelt did.
Alexander and other political analysts singled out Venezuela as a showcase de-
mocracy. According to them it was no coincidence that Venezuela, the most stable
democracy in South America from the 1960s to the 1980s, was the only country whose
major parties (AD and Copei) met all the basic requirements: they were highly dis-
ciplined (unlike the Peronistas in Argentina), had strong roots in labor unions (un-
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88 Ellner
like the Radicals in Argentina), were multiclass (in contrast to the strong class bias
of parties in Chile and Colombia), went back in time (unlike the more ephemeral
parties in Brazil), and were highly committed to the democratic system (again, un-
like the Peronistas). In addition, their national leadership was predominantly middle
class, allegedly the sector most committed to democracy. This was the magic for-
mula according to the institutionalists.
Now that AD and cousin parties throughout Latin America have lost credibility,
political scientists and political actors have begun searching for alternative explana-
tions for what it takes to build a healthy democracy and why political parties fell
short of the task. Some political scientists have qualified their own previous view
that strong, institutionally linked parties in themselves ensure the viability of the
democratic system. Thus, for instance, Juan Linz, the dean of the party-based school,
now questions the notion that the stronger the political party system, the more solid
the nations democracy, by pointing out that parties can be overinstitutionalized.
In effect, this means that some Latin American parties, rather than exerting a healthy
influence on organized labor, have become hegemonic, limiting union autonomy
along with that of civil society in general. These excesses notwithstanding, Linz and
company continue to view existing strong parties as basic assets to democracy in Latin
America (Diamond, Hartlyn, and Linz 1999, 27).
Other political analysts go beyond Linzs moderate critique of Latin Americas
party-based democracy. Like neoliberal economists and politicians, they blame cen-
tralism for the continents political and economic problems, specifically for holding
back much-needed state and market reforms. These writers posit a state-centric ma-
trix (SCM) consisting of a nexus of vertically structured parties, overprotected, inef-
ficient national industries, and corrupt government officials. As correctives, they
support thorough privatization and decentralization and the complete overhaul of
centralized structures, specifically political parties and the state.
Few political analysts or actors would take issue with the assertion that central-
ism in Latin America has bred extreme inefficiency and has blocked participation at
lower levels. Nevertheless, depicting centralism as the root cause of the distortions
in the democratic system in the age of neoliberalism overlooks socioeconomic de-
velopments that are so glaring as to demand the attention of political scientists. First
on the list is the astronomical growth of the informal economy and microbusinesses,
whose members are not easily organized into unions or autonomous organizations
of civil society. This tendency undermines democracy by eliminating everything that
stands between the general populace and the state. Also occupying a prominent place
on the list ignored by SCM political scientists is the foreign acquisition of entire sectors
of the economy, formerly nurturedor overnurturedby the state. Political parties
can no longer (some say they never could) be viewed as bridges between the state
and progressive national capitalism; thus, they have lost legitimacy. In Venezuela
the process of foreign takeover of the economy has prompted a nationalistic reaction
among military officers, some of whom have lost faith in, not to say respect for,
politicians of all stripes.
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Neoliberalism and Latin America 89
While Alexander and others who defended party-based democracies and import
substitution policies were left of center on the political spectrum, SCM political sci-
entists are largely absent from that space. True, some of them are critical of the shock
treatment approach of neoliberalism. But there is just one short step between the
primacy they assign to reducing centralized state power and neoliberalisms shrill
calls for immediate, all-encompassing privatization and decentralization. (This sense
of urgency rules out careful consideration of distinct options which favor national
and popular interests.) There is another key area of convergence between SCM writ-
ers and neoliberalism. Like neoliberal discourse, SCM writers are as critical of the
nations existing political parties as they are of centralism. Thus some of them ex-
plain (if not justify) hyperpresidentialism in Latin America as a logical response to
political party obstruction of badly needed market reforms. They single out for spe-
cial censure the veto power wielded by interest groups (read: labor unions, inef-
ficient businesses, and other party clients) to which the parties are allegedly beholden
(Haggard and Kaufman 1995, 227; Nam 1993; Mettenheim and Malloy 1998).
Similarly, those political and social actors who are the staunchest opponents of
centralism are also harsh critics of all existing parties and tend to embrace an antiparty
discourse. They thus coincide with neoliberal discourse even though they do not
necessarily accept neoliberal dogma. Some belong to loosely structured electoral
groups rather than conventional parties while others form part of civil society, which
they consider the best corrective for centralism. The radicals among these antiparty
activists insist that social movements stay out of the electoral arena altogether. Elas
Santana, long a leading spokesman of the Venezuelan neighborhood movement who
in 1993 dissolved its national organization out of fear that political parties were about
to take it over, articulated this position. Santana warned fellow social activists against
emulating Germanys Green party, arguing: The moment the Greens started run-
ning candidates, their activism around environmental issues lost credibility. It was
their undoing as a social movement (Santana 1994; cf. Ellner 1999).
Pro-neoliberal explanations for the sorry state of democratic institutions due to
centralism confront one stubborn, empirical problem. The party-based centralism long
characteristic of political institutions in Latin America has lost ground in the recent
past, and thus can hardly be held responsible for democracys deterioration. In other
words, democracys problems cannot be attributed to the selfishness and lack of
willpower of political party leaders at the national level who hang on to privileges
and resist state reorganization, as the neoliberals claim. Although the neoliberals
deplore the lack of substantive state and party reform, considerable progress was
made in the 1990s during the height of the neoliberal vogue. Indeed, until the elec-
tion of Venezuelas Hugo Chvez in 1998, no Latin American president seriously
challenged neoliberalismnot even its discourse. The neoliberals themselves have
implemented radical reforms on the economic front, such as massive privatization,
which have wrested power from the central government and undermined the posi-
tion of clientelistic political parties. Furthermore, consider outstanding cases of po-
litical reformsacclaimed by nearly everyonedesigned to diffuse decisionmaking
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90 Ellner
power: widespread decentralization of services such as health, port facilities, the police
force, the highway system, public transportation, airports and other sectors; electoral
reform such as the election of Mexicos Federal District governor, formerly appointed
by the nations president, a contest which Cuauhtmoc Crdenas won in 1997; and
even political party reform, such as the primaries which chose Ricardo Lagos (Chile),
Fernando de la Rua (Argentina), Francisco Labastida (Mexico), and Claudio Fermn
(Venezuela) as presidential candidates. Thus, the reforms embraced by neoliberal
idealists (among others) for reducing the size of the central government have not led
to the lofty political changes they envisioned, particularly the invigoration of civil
society. While political parties and the party-dominated labor movement have de-
clined both in membership and prestige, an autonomous, dynamic civil society has
not emerged to replace themthus the institutional vacuum that plagues democracy
in Latin America.
Concluding Remarks: Where to Look forAlternative Explanations
Political scientists have adhered to two broad approaches in explaining the current
failure of Latin American democracy to consolidate itself in spite of its record-break-
ing duration. One group attributes democratic shortcomings on the continent to exces-
sive centralism and, specifically, the concentration of power in the hands of a coterie
of political leaders. Previously, the same institutionalist school was uncritical of
centralism and viewed well-structured parties with collective leadership as instrumen-
tal in linking large numbers of people to decisionmakers, thus guaranteeing democracys
survival and legitimacy. Now the institutionalists view the national leaders of some
of these same parties as embodying centralism and blame them for resisting state and
economic reforms and, in general, obstructing democracys renewal.
6
A second, cul-
turalist school ascribes democracys stagnation to Latin Americas caudillo tradition.
Recent presidents have acted in the style of nineteenth-century military strongmen in
that, once in office, they have proved impervious to popular pressure.
Neither institutionalist nor culturalist explanations are dynamic enough to explain
the recent challenges facing democratic institutions in Latin America. Centralism has
always characterized Latin American institutions; municipal governments have stag-
nated throughout the entire two centuries of independence; and paternalism, authori-
tarianism, and other retrograde cultural strains cannot be considered more pronounced
today than in the past. Thus, none of these factors can explain in themselves the re-
cent political trends described in this article. Specifically, the two approaches fail to
answer the underlying question why parties have gone from being essential pillars
of the democratic system to defenders of entrenched elite interests, and why democ-
racies have lasted so long while resisting popular input in decisionmaking.
6. For a discussion of this flip-flop among political scientists writing on Venezuela, see Ellner (1997,
202).
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Neoliberalism and Latin America 91
This article has pointed in the direction of two alternative avenues of inquiry, both
of which reflect Marxist traditions. One approach shows how economic policies and
economic and class transformations have undermined the vitality of the democratic
system. The article has pointed to concrete ways in which neoliberal policies in Latin
America have provided the national executive with excessive powers, weakened
congress, and discredited the political party system. In addition, structural economic
change has adversely affected democratic legitimacy. Specifically, the reemergence
of democracy in the 1980s coincided with the foreign penetration of the economy
set off by globalization and massive privatization. Whereas the old import substitu-
tion model, which was designed to promote a national bourgeoisie, appealed to
nationalist sentiment and helped legitimize democracy and governing populist par-
ties, the current model based on neoliberalism has had just the opposite effect. In-
deed, those who most championed the new model and seemed to benefit most from
it were closely tied to foreign interests and actors.
7
Class trends consisting of the growth of the informal economy, at the expense of
organized sectors (the industrial working class and the middle class), also militated
against the consolidation and deepening of democracy. Alliances taking in members
of the informal economy, which backed pro-neoliberal delegative democracies such
as that of Fujimori, proved short-lived and untenable. Fujimoris fate in 2000 dem-
onstrated that neoliberalism offered little for the underprivileged sectors.
8
But it also
showed that the members of the informal economy lacked the steadfastness and or-
ganizational discipline of the organized working class (a lesson that Hugo Chvez,
from a different ideological perspective, learned shortly thereafter). In contrast, classic
populist partes that emerged in Latin America in the 1940s strengthened democracy
by forming long-lasting alliances incorporating organized labor (Ellner 2001).
A second, alternative approach which helps reveal the basic deficiencies of Latin
American democracy over the recent past focuses on multiple forms of participation
and problems related to social inequality. This article has rejected Huntingtons asser-
tion that the minimalist definition of democracy based exclusively on elections and
basic liberties is a useful instrument in analyzing the phenomenon of third wave
democracies. Such a simplistic and undemanding criterion plays down glaring
problems assailing Latin American democracy. A broader definition drawing on
Tocqueville, Rousseau, and Marx would be more instructive and would take in three
basic areas: a thriving civil society, popular input in decisionmaking at all levels,
and avoidance of extreme social inequality, which militates against the nonviolent
participation of popular sectors.
Latin American democracy during the last two decades of neoliberal ascendancy
has responded poorly to all three challenges. Social inequality has increased in Latin
7. The extent to which neoliberalism represented a revolutionary change for Latin America, in which
one dominant class coalition replaced another, is open to question (Ruccio 1993).
8. Kurt Weyland (1996) views the support of the members of the informal economy for Fujimori and
other neoliberal presidents (whom he calls neopopulists) as representing a new model. Given the
short duration of this backing, the validity of Weylands thesis is open to question.
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92 Ellner
America over this period after having improved, albeit slightly, over previous de-
cades (Roberts, forthcoming). Hyperpresidentialism has spurned traditional channels
of particpation, such as political parties and organized labor, and has failed to open
new channels for social movements. On the other hand, decentralization has created
a potential for local participation while social organizations representing women,
Indians, the landless, and neighborhood activists have achieved a vitality of their own
even though they lack presence at decisionmaking levels. It remains to be seen what
role social movements as well as the highly debilitated labor movement and political
parties will play in any future reconstruction and deepening of democracy. The rela-
tive weight of each one will largely depend on their ability to incorporate and articu-
late the interests of the members of the informal economy, who have grown the most
in numbers and have been the most victimized by neoliberal policies.
The author is grateful for critical comments from Peter Marcuse (Columbia Univer-
sity), Richard Hillman (St. John Fisher College), and Blair Alpert-Sandler.
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