After the Washington Consensus: The Limits to Democratization and Development in Latin America

After The Consensus: Restarting Growth and Reform in Latin America. Edited by Pedro-Pablo Kuczynski and John Williamson. (Washington, DC: Institute for International Economics, 2003. Pp. 373.)

The Political Economy of Emerging Markets: Actors, Institutions and Financial Crises In Latin America. By Javier Santiso. (New York: Palgrave, 2003. Pp. 255. $59.95 cloth.)

Silent Revolution: The Rise and Crisis of Market Economics in Latin America. By Duncan Green. (New York: Monthly Review Press, 2003. Pp. 299. $22.00 paper.)

Economic Performance Under Democratic Regimes in Latin America in the Twenty-First Century. By Lowell S. Gustafson and Satya R. Pattnayak. (Lewiston, NY: Edwin Mellen Press, 2003. Pp. 229. $109.95 cloth.)

Roughly two decades into the "dual-transition" of democratization and neoliberal economic reforms, neither process looks particularly robust. A large number of Latin American regimes appear stuck in a limbo of neither really regressing nor really progressing from the status of relatively limited, disappointing democracies (with a small number clearly regressing). The economic reform process has also yielded disappointing results, performing well below the promises and expectations of its early advocates. Although economic reforms made some important contributions, particularly the virtual elimination of inflation throughout the region, economic performance has weakened dramatically in recent years. Perhaps not surprisingly, the political base for continued economic reforms also appears to be shrinking in a number of countries in the region.

In many respects, this disappointing set of results does not come as a shock. While many were optimistic about democratization and economic reforms early on, skeptics and cautionary analyses abounded regarding both processes. Poverty, inequality, corruption, weak rule of law, weak institutions, clientelism, risk aversion among domestic capitalists, inadequate financial markets (especially for small business), external constraints, as well as undemocratic attitudes and behaviors all figure among the underlying problems that undermine efforts to promote democracy or economic development. These problems are well known and have been thoroughly discussed. As a result, the literature on Latin America abounds with excellent studies and diagnoses of a wide array of aspects of the democratization and economic development process. But, we still do not seem to have a strong explanation for why this complex of problems persists—and has persisted for so long—in Latin America. We don't have a consensus on what has gone wrong in recent years (or even agreement on the extent to which things have gone wrong) and we certainly have little agreement as to where Latin American governments can or should go from here.¹

The four books under review here offer different perspectives on the question of what has happened over the past two decades, whether the issue is too much or not enough neoliberalism, and how neoliberal economics reforms interact with democratic rule. They do not provide conclusive answers, and for the most part do not claim to do so. They do offer four alternative, intriguing insights into the nature of the problems confronting the region in recent years. They also highlight in important ways the limitations of our current understanding of the twin challenges of promoting economic development and stabilizing/deepening democracy.

Fifteen years after the elaboration of the Washington Consensus, John Williamson and Pedro-Pablo Kuczynski return in After the Consensus with a reflection on the performance of the neoliberal reform agenda. This new volume grew explicitly out of concern about Latin America's stagnating economic performance (xi) and a desire to both establish the causes of this decline as well as make recommendations for restarting growth. Needless to say, as key intellectual architects of neoliberal reforms, the editors do not conclude that neoliberalism is the source of the problem. In the opening pages, the editors quickly defend the Washington Consensus from the charge of bearing principal responsibility. For one, they note that Chile's performance has remained strong despite poor performance virtually everywhere else...