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Revista de ciencia política (Santiago)

versión On-line ISSN 0718-090X

Rev. cienc. polít. (Santiago) v.23 n.1 Santiago  2003 

Revista de Ciencia Política / Volumen XXIII / N 3/ 2003/ 174-178




Huber, Evelyne (Ed.). 2002. Models of Capitalism. (University Park: The Pennsylvania State University Press)


Even a novice political onlooker in Latin America notes that economic policy during the past 50 years has appeared incoherent and unstable. Indeed, the welfare state, labor markets, and production regimes of Latin American states have varied dramatically, following the dominant paradigms of development theory. After the Second World War, policy regimes built around Import Substitution Industrialization (ISI) sprung up throughout the region. However, debt crises and fiscal limitations that took root during the late 1970s and early 1980s reversed the ISI wave and ushered in neo-liberal reforms, which in many cases were required by international financial institutions in return for debt bailout packages. In other instances, such as Chile, national technocrats colluded with authoritarian regimes to enact neo-liberal agendas. Put simply, economic policy change in Latin America during the past 50 years has been swift, extreme, and the decision making process has often appeared disconnected from long-term economic planning. This lack of coherence has been accompanied by a sense of inevitability. Theories such as modernization, world systems, dependency, and now neo-liberalism have been perceived as “absolute'' by policy makers and scholars. The notion that variations of the predominant capitalist development model exist, or that there are multiple paths to successful economic growth and distribution, has been notably absent in scholarship on Latin America.


Evelyne Huber's (ed.) (2002) Models of Capitalism: Lessons for Latin America (MOC) moves past conceptualizations of a unique style capitalism and “absolute'' policy regimes by considering alternatives and analyzing the compatibility of such models in Latin America's regional context. The book offers two significant contributions to research on Latin America's political economy. First, it presents capitalism in a heterogeneous light, analyzing variations across systems and assessing the different systems' viability in the specific Latin American context. The book, therefore, opens new avenues for research and policy innovation in the region. Second, MOC provides a new framework for analyzing economic models and their compatibility across regions, stressing not only economic interests and constraints, but also how the power distribution among actors shapes policy outcomes. MOC's contributing authors consider capitalist models as both the product of holistic historical development and a conscious process of policy-making. Therefore, the book brings politics back into the analysis of Latin American capitalist development. The focus on power relations provides a useful approach for assessing model compatibility across regions.


The book is divided into three parts. The first section investigates investment promotion, trade policy, industrial policy, labor market regulation, and social policy in contemporary Latin America. The second section investigates the same policy areas in the context of East Asia, revealing similarities between the regions (resource endowments, land ownership patterns, labor skill-levels in the post-war era), and differences (what policy options were pursued, what level of growth was achieved, and what distribution mechanisms exist). Additionally, authors in this section address the ways in which the East Asian models of capitalism diverged from the neo-liberal model prescribed by international financial institutions. Finally, the third section provides an analysis of welfare states and labor market regulation in industrialized countries, focusing primarily on Europe, Canada, and the U.S. The comparison with industrialized countries offers insight into me importance of coherent policy-making; or better put, it explores how certain social policy regimes are more easily enacted in the presence of particular labor market policies.


John Sheahan opens the book's first section with a helpful typology of contemporary models of capitalism in Latin America, placing states into the categories: traditional liberal, neo-liberal, mixed liberal with selective activism, activist developmental, activist inclusive, and populist. The framework offers a useful tool for distinguishing between regimes and highlights differences that might otherwise go unnoticed. Perhaps the most insightful element of the categorization is the “mixed liberal with selective activism” type, which marks a strand of Latin American capitalism that has not been addressed in previous literatures. Countries in this category include Chile and Brazil, and Sheahan notes optimistically that this model may prove to be an alternative to neo-liberalism. The typology, therefore, dispels the perception of Latin American capitalism as a homogenous model and sets the stage for an analysis of alternative capitalist regimes.


Renato Baumann’s chapter on trade policy considers the question of whether trade liberalization has had a positive impact on economic growth and equity. While much of the material presented by Baumann is unsurprising, he does offer a new angle on the importance of how trade policy is made. He notes that policy content is not the only determining factor of trade's impact on equity, but that the policy process plays a key role in shaping equity outcomes. This distinction highlights one of the central themes of the book and builds toward the previously mentioned contribution: the development of a framework that analyzes how the power distribution between actors (the state, labor, and capital) shapes a country’s model of capitalism. Bauman maintains that in many Latin American states the power constellation that is associated with trade policy formation has disfavored equality in income distribution by focusing on export industries that employ low-skill labor rather than using trade to boost specialized industry. In a chapter on industrial policy, Wilson Peres also

focuses on policy process rather than content, noting how process shapes economic outcomes. He maintains that many Latin American states have industrial competitiveness policies, but fail to enforce them and therefore lose an important development tool. These three chapters shed light on research paths that have previously been ignored, providing a new conceptualization of economic policy-making in the region.


Authors in the second and third sections of the book also highlight the importance of power distributions and political coalitions in shaping models of capitalism. Bridget Welsh maintains that in Asia, “the bureaucracy has been fairly well insulated from political pressures, thus assuring policy continuity'' (254). She also notes, “Northeast Asian regimes took steps to minimize the political power of labor'' (253) and that, "labor's limited influence was further accentuated by the weakness if the left vis-à-vis the state [in Southeast Asia]” (254). Indeed, analyses of me Asian model suggest that cooperation between the state and capitalists provided a power balance that ensured economic growth and promoted some degree of equality. While these analyses imply that labor exclusion was helpful in the context of Asia, John Stephens, Thomas Janoski, and Antonio Alas demonstrate that the opposite was the case in Europe, where power constellations included labor and Leftist parties as key actors.


Stephens analyzes the link between welfare states and production regimes. He maintains that an uncoordinated production regime does not eliminate the possibility for re-distributive social policy, but that it does complicate the process (335). “Thus, in the long run, a successful strategy is more likely to be one that includes reforms in both the production and welfare state regimes'' (335). In essence, the distribution of power among actors in both Social Democratic and Christian Welfare States creates a unique political context, which provides a base for policies that might otherwise be difficult to employ (in contexts where a similar power distribution is not present). The analysis, therefore, contributes to the book’s overall argument that to analyze divergent models of  capitalism and assess their applicability in different contexts, interactions between actors, institutions, and policy must be considered because the distribution of power in a given society will affect which policy options are viable and which are not.


There is one aspect of the book that I believe loses touch with the Lain American context. Although Sheahan and other contributing authors refer to the unique nature of Latin America's informal sector and note the challenge that it poses for social policy and labor regulation, this element is ignored in the power relations analyses put forward by other authors. Therefore, my question to the contributors is: if model compatibility is assessed by considering how power relations differ (or are similar) across countries, then isn't it imperative to consider the informal sector, which in many Latin American states is the fastest-growing segment of the economy and which I believe exists separately from traditional labor because of its non-institutionalized status. In short, if we only consider the power distribution between the three sectors (state, labor, and capital) and leave out me informal sector, aren't we missing a major slice of society and perhaps miscalculating the compatibility of some models in the context of Latin America (because we have not adequately addressed Latin American power distributions)? For instance, the overwhelming number of informal workers has implications for the creation of welfare policies that are tied to the workplace.


Another important contribution of the book is its focus on the importance of coherency in economic policymaking. Carlos and Fernando Filgueira stress the haphazard nature of Latin American social policy. “The objective of reform [in social policy] has not always been clear. Beyond the generic goals of ‘social improvement’ or ‘compensatory measures'... discussions of the aims of social policy lack complexity” (Filgueira and Filgueira, 128). This contribution is especially significant because the book not only analyzes the problem, but it also provides a series of alternatives and examples of coherent policy making in Asia, Europe, Canada, and the United States. The result of this theoretical exercise is the creation of a whole new area of research for scholars of Latin American political economy. New questions that arise from the work include, how unions and party systems in the region of Latin America might be strengthened to be included in the economic policy-making process, which would in turn shift power distributions and open up possibilities for applying new “models” of capitalism, or how certain political systems may inhibit particular policies due to the presence of excessive veto points.


In summary, this book advances the study of Latin American political economy. In stressing the importance of continuity and coherence, it aims to avoid short-sited decision making and scholarship about Latin American economic policy. Additionally, the book provides a helpful framework for assessing the compatibility of various capitalist models between regions by grounding the analysis in power relations between the state, labor, and capital, thereby providing the base for future cross-regional comparative studies.


Jennifer E. Pribble

University of North Carolina

Chapell Hill.

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