Beruflich Dokumente
Kultur Dokumente
Menno Vellinga*
Abstract. In the 1980s Latin America made a radical break the relation to problems of national development. We will
with the model of development that had been pursued by do so in a comparative perspective, including experiences
most countries on the continent for the last fifty years and from South East Asia. The debate about the relationship
implemented a new development strategy, defined along between state, market and civil society has received a new
neo-liberal lines. These changes have taken place under impetus from the 2008 crisis of the international financial
conditions of increasing globalization, e.g. they had to be system and the widely spread criticism of the workings
realized increasingly within globally defined parameters and of the market capitalism that it has generated. For Latin
structures. The relationship between the state, the market American development the conclusions of this debate and
and civil society was redefined. The traditional structures their possible translation into concrete policies are of the
of interest representation of groups and classes, their legi- utmost importance.
timacy and effectiveness underwent significant changes in
many countries. In this article we will explore the nature of Key words: State, market, civil society.
these changes and their consequences for state reform and
*Utrecht University, Faculty of Geographical Sciences/University of Florida; Utrecht University, P.O Box 80125, 3508,
TC Utrecht, The Netherlands. E-mail: m.vellinga@geog.uu.nl
Menno Vellinga
of 5.3 percent. Labour productivity increased at an extensive state control over those institutions con-
annual rate of three percent. These are impressive sidered economically and politically strategic. The
results. However, in the course of the 1960s import- objective was to continue the process of capitalist
substituting industrialization encountered more industrialization under control of a technocracy
and more difficulties. It appeared to defeat its own that would operate with a greater autonomy toward
objectives when it produced a growing dependen- civil society and would put an end to the growing
ce on imports in other sectors. The development politicisation of economic decision making in the
model of which it was such a central part, failed previous period (O´Donnell, 1973).
to produce more pluralistic power structures, As part of the 'package', economic adjustments
and to promote a genuine democratization and a and measures of inflation control were implemen-
redistribution of income and wealth, as originally ted that, in practice, affected strongly the income si-
was thought it would. Populism appeared to be a tuation of the working masses. Their organizations
political formula that depended on continuing eco- and actions were military-controlled and repressed
nomic growth. With the decline of Latin America´s in an attempt to neutralize the labour movement
traditional exports on the world market, its political and eventually eliminate the popular masses as a
basis disintegrated. The growing economic pro- power-factor in the national political area. Howe-
blems resulted in hyperinflation, capital flight, de- ver, the military´s efforts to radically change the
investment, balance of payments problems, massive relations between the state and civil society were
unemployment and negative growth, creating a unsuccessful and the military control of the state
political crisis (Thorpe, 1998). apparatus was undone in subsequent years.
The class alliance identified with the economic From the mid 1980s on, and under a different
growth model of import-substituting industria- regime, state-civil society relations have experien-
lization and that had supported the populist ced substantial changes. This time, however, the
regimes, had been dominated by urban middle changes have taken place in response to a totally
and upper-middle class groups in addition to im- different economic and political conjuncture. In
portant sectors of the urban working class, together the 1970s, many countries in Latin America expe-
forming a mass electoral base. In the course of the rienced moments of substantial economic growth.
growth process, the differentiation of the economic However, this growth was to an important extent
structure it induced, and the expansion of the state artificial and had become dependent upon external
apparatus it entailed, this alliance came to include a financing. The foreign debt grew spectacularly and
new social segment of managers, bureaucrats, pro- its servicing consumed the greater part of export
fessionals and technocrats who developed their own income.
relationship with the national and international In most Latin American countries the state had
business communities. Together with sectors of the expanded greatly its size and scope of operations.
middle classes and the bourgeoisie −and explicitly Deficits in the public budget were increasingly
excluding the popular classes− they formed an financed through inflationary means, a policy that
important new alliance that along with the military eventually derailed toward hyperinflation. Failing
opted for a bureaucratic-authoritarian solution macro-economic policies, a bad tax system, insu-
to the crisis of the model of import substitution, fficient domestic savings, massive capital flight, the
the collapse of populist rule and the failure of the lack of international competitiveness of the −highly
brief democratic interlude that some countries had protected− national industry, heavily politicized
experienced (O´Donnell, 1973; Collier, 1979). state enterprises operating at a substantial loss, a
Several countries suffered military coups. Brazil, neglected agricultural sector, a badly functioning
Argentina and Chile were the more spectacular state apparatus, these were all symptoms of an eco-
cases, but also in the Andean countries and in nomic crisis that would last for over a decade and
Central America military-controlled regimes were would be the worst the region had ever known.
established. Several of these regimes consolidated
Table 1. The formal objectives: methods and actors of development and state reform
Objective Strategy Methods Actors Implementation
Improving socio- Restructuring Reform of the The president and the Institutional reforms
economic conditions institutions in the structure and cabinet. with participation of
of the poor sectors of socioeconomic sector. functioning of the all interested parties.
the population. state bureaucracy. Parliament
Reforming the system Active involvement
Improving the of social services, Reformulation of State bureaucracy. of the medium levels
national economy´s their provision and responsibilities and in the government
capacity to compete financing. participation in the Regional and local influenced by
on an international national budget of government. institutional reforms.
level. Increasing central, regional, and
productivity in the local government. Judicial powers. National policy
Consolidation private sector. directed toward the
policies directed Reform of the Labour unions. creation of consensus
toward macro- Organizing the judiciary and the and broad support in
economic stability. economic institutions system of law Popular civil society for the
of capitalism enforcement. organizations. program of reform;
(regulation of amplification and
competition Tax reform: Political parties. intensification of
consumer protection organization of a the democratisation
patent registration, more progressive Private enterprise, process.
etc.). revenue-raising national and
structure and international.
Integration into reorganization of
the world economy the system of tax The media.
on the basis of the collection.
competitiveness of
the national business Improvement
sector. of the quality of
management of the
civil service.
Improvement of
the functioning of
parliament.
Privatization of the
more important
state enterprises
(the ‘difficult’
privatization).
Modernization
production
apparatus and
integration into
the international
economy.
lower- and middle income families. The recent tax except in those countries that have protected the-
reforms initiated by many countries have not been mselves against short-term dependencies of foreign
able to correct this trend. The emphasis on indirect capital like Chile and Colombia.
taxes (linked to the consumption of goods and The way Latin America has been integrated into
services with a low income-elasticity of demand) the international economy, and the ensuing depen-
must shift to taxation based primarily on income dencies −especially those resulting from its role as a
and property. The reorganization of the revenue primary products exporter− explain a considerable
service −a priority objective of state reform− is part of the problem. Equally important, however,
only in its beginning stages, and the traditional are domestic factors, such as: the strong dualisms
regressive state revenue-raising structure is largely in society, the general socio-economic inequalities,
intact. Thus the lower- and middle income strata the weakness of core institutions, the lack of a social
are forced to contribute comparatively more to and political consensus regarding the long-term
a state that has reduced its support of the public objectives and means of national development.
services that primarily serve their needs (Valderra- Such consensus is dependent upon a broadening
ma, 1995). and deepening of the process of democratization
After 'the lost decade' of the 1980s, the real which, at the same time is a precondition for a
growth rate of Latin American countries turned successful consolidation of reform in many other
positive again in the beginning of the 1990s. This areas. The recent downturn resulting from the
trend was interrupted in 1995 as a result of the fi- international 2008 credit crisis, after half a deca-
nancial crisis affecting Mexico, and the recession in de of strong economic growth, has demonstrated
Argentina, but gradually stabilized in the following again the vulnerability of such a reform agenda
years. In the present decade, growth has remained (Economist, 2008).
unstable and continued to depend heavily on pri- The globalization of the Latin American eco-
mary exports. In several cases, significant growth nomies has proceeded at a rapid pace. Neo-liberal
rates has been registered, although their effects on policies has been instrumental in this process. The
more equitable distributions of income have been shift toward neo-liberalism has been intimately
minimal. linked with globalizing trends and with the Latin
These macroeconomic developments have American economies becoming more fully inserted
brought home the message that in order to attract into the world economy through trade, investment
capital towards productive endeavours, long-term and technology flows. In the 1980s, the neo-
economic and monetary stability will have to be liberal paradigm provided the ground rules that
guaranteed. The policies directed toward this objec- were applied in order to extricate the Latin Ame-
tive will need broad support in society and should rican economies from the severe crisis caused by
contribute toward political stability. Further, the hyperinflation and external debt. It also dictated
existing supporting institutional structure will the policies that ended the inward orientation
have to be redesigned. In many Latin American of the paradigm that had directed Latin America´s
countries, the growth model has been operating development in previous decades. However, the
with a brand of capitalism based on a 'production- opening up of the Latin American economies has
speculation' orientation. It realized little invest- left them often even more vulnerable to the impact
ment in long-term capital equipment, shared a of international economic cycles than before and
focus on commerce, quick turnover and high short- has made clear their many and manifold dependen-
term profits, and has proven to be very unstable. cies in the international economy (Gwynne, 2000).
Its presence has discouraged the development of The neo-liberal reforms and economic libera-
more stable economic activities and has encouraged lizations have impacted deeply in Latin America.
speculation. Foreign direct investment has not been However, they have not realized growth with
able to correct this problem; on the contrary, it has equity. Most Latin American countries have been
contributed to the continuation of these patterns, under great pressure to restructure labour mar-
kets, to keep wage costs at low levels and to make the social debt −society´s debt to the poor and
employment practices more flexible in order to unemployed− has remained high.
create greater competitiveness internationally. Globalizing processes have worsened existing
The power of the trade unions has declined in inequalities and have increased the socioeconomic
almost all countries making labour more vulnera- differences between classes and regions. Large
ble and insecure. Corporatism has lost influence sections of the population have not been enjoying
under neo-liberalism as a mechanism of interest any benefits of economic growth while bearing the
representation. Since the emergence of labour as a brunt of economic down-turns. These conditions
political actor in Latin America in the 1930s, cor- constitute a grave threat to the incipient processes
poratism has served as a system organizing societal of democratization and undermine the stability of
interests along functional lines. The state regulated the 'investment climate'. Social reform agendas that
labour markets through complex legal codes and would draw voters and increase political participa-
institutions. The union movement was co-opted tion have remained largely absent. There is consi-
and controlled by the state. Union autonomy was derable debate on alternatives to the top-down,
exchanged for favourable settlements regarding conditionality-driven, outside-expert led strategy
wages and working conditions, and the prerogative of the Washington consensus and the need to create
to distribute the social welfare benefits granted by room for policies that are focused on equitable,
the state. This system is not working to the extent sustainable and democratic development (Gore,
it used to do. Wages and working conditions area 2000; Kay and Gwynne, 2004). Such change in
more and more settled through collective bargai- policy would have to include a revaluation of the
ning, either at the firm level or with the employers role of the state in the development process.
associations without state intervention. This way,
the labour unions have gained independence and On stateness: the Asian experience
more room to run their own affairs, but they have In the debate about strategies of development,
lost in political representation within the arenas of the role of specific economic sectors, the role of the
the state. This has created a void that has been filled state in relation to the market, the direction of state
increasingly by voluntary associations, political mo- reform, important differences appear between
vements, NGO´s and the like. Political parties are the Latin American countries and other parts
weak everywhere, with the exception of Costa Rica of the world. In Southeast Asia, the development
and Uruguay. A return to corporatist-like structures process was −as in the case of Latin America−
is not at all impossible (Hagopian, 1998; Gwynne characterized by the dominant presence of a ‘deve-
and Kay, 2000). In most countries, community lopmental state’. However, where in Latin America
involvement through the establishment of collec- the lack of state autonomy vis a vis private interests
tive bodies, committees and councils that seek to frustrated the generation of a national consensus
influence −directly or indirectly− the definition of on development objectives, hampering coordi-
government policies, shows a resemblance to the nated state action in this area, we find a totally
traditional corporatist ways. different situation in Asia (Douglass, 1994). The
Wage levels have suffered badly during the first neo-classical theses on the tension between state
phase of neo-liberal reforms, as a result of economic intervention and a macro-economically healthy
restructuring and the pressures to keep real wages process of economic growth, theses that had been
down as domestic companies tried to survive in the dogma´s of the Washington Consensus, do not
face of international competition. However, when appear to apply. A strong role of the state with re-
economic growth returned to the region, these low gard to processes of national development has been
income levels continued. The inflow of foreign ca- combined for a long time with a dynamic growth
pital and the liberalization of trade and investment process carried by export industrialization. How
have produced and increase in wealth among the did this come about? Most explanations point at
top two deciles of the income distribution while the high degree of independent decision making
key role for a labour movement that was integrated they did not experience the invasion by private
in corporatist structures. These were also present in interests to the degree as has happened in Latin
East Asia, but there corporatism served primarily American countries (Glade, 1998). At each level
objectives of security and strict political control. of society in those countries, private interests have
Under these conditions, the labour movement has infiltrated public institutions to such an extent that
not been able to develop organizational strength the issue of privatization as part of the structural
and to become a politically significant force. adjustment process in the 1980s, became rather
A basic difference affecting these social dimen- one of privatization of the private sector (Haggard,
sions of the development path followed by these 1990; Ahuja, 2000).
macro regions concerns the distribution of access The changes in the pattern of relations between
to resources prior to industrial take-off. At that state, market and civil society since the 1980s have
stage, the East-Asian countries had relatively ega- created a “window of opportunity”for those groups
litarian social structures, in particular in the areas and classes identified with the modernization of the
of landownership and the distribution of wealth. economy. Learning to produce on competitive ter-
Latin America´s socioeconomic structures were ms within an international economy, however, has
less egalitarian in these areas and this heritage has been a relatively recent experience in Latin Ame-
remained a significant factor in obstructing the de- rica for many industrial entrepreneurs −including
finition of more equitable growth strategies. Most those in the larger economic of Mexico, Argentina
countries continue to show income distributions and, to a lesser extent, Brazil− and it has not been
that are highly skewed toward the small societal easy to build stable export positions. In East Asia,
elites. The savings resulting from this concentra- experience with international trade has been accu-
tion of income have −through the years− dispro- mulated since the 1960s, when industrialists were
portionately found their way toward speculative first mobilized in support of national development
investment and foreign bank accounts. Long-term, goals. As a result, they show a greater ability to pro-
internationally competitive investments have been duce successfully in a globalizing environment. The
slow in coming. The willingness among the elites to polarizing effects of globalizing processes in combi-
invest in such projects has not been as pronounced nation with neo-liberal policies have sharpened the
as in East Asia where industrialists have responded socioeconomic differences between countries and
with considerable enthusiasm to the possibilities regions that have been able to anticipate globalizing
offered by the expansion of international trade. In trends and those that have not (Vellinga, 2000).
the smaller Latin American countries, it has even These differences will most probably increase as a
been more difficult to develop a production milieu result of the multipliers present within the growth
that will support participation in the international process and −without corrective action− may create
economy on the basis of economic endeavors other an ever increasing rift between the “winners” and
than simple maquiladora-type assembly activities the“losers” within the world economy.
and traditional agro exports.
Under export industrialization, the impact from State and development: final notes
globalizing processes had to be mediated toward The disagreements between economists who favour
domestic society. The state took control in this area a strong developmental role for the state and those
already at an early stage (Evans, 1995; Douglass, who support a weak state with a free and unrestra-
1994). Contrary to Latin America, where these ined working of market forces, have not subsided.
policy terrains were continuously being invaded by However, despite the emotional input on either
private interests, the Asian countries had a bureau- side of the debate, it has become clear that many
cratic and executive elite who from an embedded participants are opting for a middle ground. This
position maintained a certain distance toward civil became abundantly clear during the discussions
society while pursuing long-term development about the way on how to proceed while trying to
goals (Evans, 1995). While managing their strategy, resolve the recent financial crisis. The ideas on the
relationship between state, civil society and the effect. However, in view of the immense needs in
market appear to be shifting toward neo-structura- virtually all sectors of the Latin America economy
list inspired options. The experience with the poli- and society to which the market does not necessarily
cies directed toward rapid across the board opening respond, it is hard to imagine future developments
up of the economy to the impact of world econo- for the continent that would include a permanent
mic forces, has learned that economic growth and contraction of public sector activities. It is time to
structural change is much better served, proceeding make a dispassionate analysis of the accumulated
very carefully and gradually in this area. National global experience with respect to the effectiveness of
enterprises need time to prepare for external com- different forms and strategies of state action and to
petition. Also, their export capability should be integrate this experience in alternative development
supported by special measures. Growth-oriented strategies (Evans, 1997).
macro economic policies should be accompanied The first precondition for a future role of the
by productive development policies directed public sector −including a capacity to plan and
toward domestic technology development, finan- implement policy as part of a course of action
cial development, human resource development, combining stable growth with equity and extensive
physical infrastructure development and toward the institutional reform supporting democratization−
improvement in productivity and competitiveness remains a resolution to the fiscal crisis of the state.
in all production sectors, manufacturing as well The resistance by the privileged sectors against any
as agriculture and natural resource based activities type of tax reform that involves increasing their
(ECLAC, 2005; UNCTAD, 2004). tax burden and improves collection cannot be un-
The implementation of such policies will requi- derestimated; it will be furious. However there are
re extensive cooperation between the public-private no alternatives. Other options −increasing public
sectors, including a special role for the state and debt or printing money, both preferred choices in
(market-friendly) interventionism which seeks to the past− are no longer viable courses of action.
guide, not replace, the market. The developmen- Increasing public savings and a reduction of the
tal activities of the state should be the result of a public deficit are equally difficult measures −but
national political consensus regarding priorities equally necessary− to 'bring the state back in'. The
and long-term budget allocations, and should search is for a strategy that would not only restore
receive feedback from the market continuously. general investor´s confidence and revive the credit
State assistance should be made conditional on of the state, but also begins to resolve the problem
performance. This would make a further retreat of 'the social debt' and the need to realize civil,
of the state in any aggregate sense undesirable. It political and social citizenship for Latin Americans.
is true that present state action and public-private To balance these exigencies of democratization with
partnerships are taking place within the constraints the implications of macro-economic policies of a
of a world dense with flows of trade, money and largely neo-liberal persuasion, within a context
regulatory obligations. Even the, however, the state increasingly influenced by globalizing processes and
continues to have considerable power in the area of in the presence of an embedded political culture
economic and social policies. Neither the increa- and persistent traditional political practices, will be
sing globalization of the world economy nor the the challenge Latin American countries are going
projects of regional integration and corporation to be confronted with in the coming decades.
will emasculate the national states. They will con- Our analysis of the nations that have been most
tinue to retain wide discretion over the extent in economically successful over the last three decades,
which the control resources (Hobsbawn, 1996; suggests that high stateness may be a competitive
World Bank, 1997; Vellinga, 2000). Most Latin advantage in a globalizing economy (Evans, 1997).
American countries have experienced substantial The East Asian states, as we have seen, have used
decreases in public spending since the beginning state-centred strategies, effecting dramatic changes
of the 1980s when the neo-liberal offensive took in Asian´s position in the international division
of labour. In view of those experiences, restricting Economist (2008), “Democracy and the downturn:
state involvement in economic affairs conform the Latin Americans are standing up for their rights”,
prescriptions of the Washington Consensus does The Economist, November 15.
Ellison, C. and G. Gereffi (1990), “Explaining strategies
not appear to be a strategy that is suitable for un- and patterns of industrial development”, in Gereffi,
qualified application. In the 1980s and 1990s, re- G. and D. L. Wyman, Manufacturing miracles, paths
adjustment of the state´s role was necessary in most of industrialization in Latin America and East Asia,
of Latin America. However, there is also a comunis Princeton University Press, Princeton, N. J.
opinion that there has been an overzealousness by Evans, P. (1995), Embedded autonomy: states and in-
the parties concerned in reducing the role of the dustrial transformation, Princeton University Press,
Princeton, N. J.
state. Viewing the state as a vehicle for rent seeking
Evans, P. (1997), “The eclipse of the state? Reflections
made it much easier to characterize state interven- on stateness in a era of globalization”, World Politics,
tion as intrinsically pathological and this has in fact no. 50.
been the cornerstone of neo-liberalism. This is a Glade, W. (1998), “El Estado en retirada en la economía”,
highly ideological position, as we have seen, and it in Vellinga, M. (ed.), El cambio del papel del Estado en
is time for a serious reconsideration. The problem América Latina, Siglo XXI Editores, México.
of development and the failure to realize growth Gore, C. (2000), “The rise and fall of the Washington
consensus as a paradigm for developing countries”,
with equity, in addition to the accumulation of World Development, vol. 28, no. 5, pp. 789-804.
issues that can not be resolved by the market, Gwynne, R. (ed.; 2000), The dialectics of globalization:
legitimize an expanded role for the state and its regional responses to world economic processes: Asia,
transformation into an effective instrument for Europe and Latin American in comparative perspective,
the achievement of collective, development orien- Westview Press, Boulder Co.
ted goals. A leaner and state operating with auto- Gwynne, R. and C. Kay (2000), “Views from the pe-
riphery: futures of neoliberalism in Latin America”,
nomy while meeting a rising demand for collective
Third World Quartely, vol. 21, no. 1, pp. 141-156.
goods and social protection may in the end be not Gwynne, R, and C. Kay (eds.; 2004), Latin America
only the sufficient, but −above all− the necessary transformed: globalization and modernity, Arnold,
condition for development. London.
Haggard, S (1990), Pathways from the periphery: the po-
litics of growth in the newly industrializing countries,
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