Latin America's Political Economy of the Possible: Beyond Good Revolutionaries and Free-Marketeers (review)

Javier Santiso's exceedingly well written and well translated analysis of Latin America's new market economies is the rare book that is both interesting to specialists and accessible to a broader audience beyond academia. This feat is especially remarkable because the author examines complicated economic topics that are too often discussed with virtually impenetrable technical jargon. By contrast, Santiso uses clear, elegant language and spices it up with many beautiful formulations (but perhaps he tries a bit too hard to move into the realm of "poetry"). Together with Santiso's profound theoretical and substantive command, this gift of presentation turns the book into a great introduction to the contemporary political economy of the region.

Placing the recent wave of market reforms in historical perspective, Santiso develops a message of great theoretical and practical relevance. He sees Latin America's development as a series of quests for utopian solutions to the region's severe and longstanding problems. In his view, this search for perfection, undertaken both by "good revolutionaries" from the left and "free-marketeers" from the right, has been a recipe for failure. The imposition of rigid, dogmatic blueprints on a complex, messy reality has been unsuccessful time and time again. The attempt to maximize some goals inevitably entails the neglect of others, and the resulting imbalances and tensions make these radical experiments unsustainable. Utopian efforts can destroy existing structures but fail at the patient rebuilding of a solid institutional framework, which is indispensable for guaranteeing the credibility and long-term horizon required for successful development.

Therefore, Santiso highlights and celebrates the effort of a number of Latin American countries, especially Chile and Brazil, to enact and administer the new market model in a pragmatic, prudent fashion. In his interpretation, the Concertación governments in Chile and the Cardoso and Lula da Silva administrations in Brazil have pursued an eclectic approach, combining macroeconomic stability with equity-enhancing social programs. They have usefully unleashed market forces in productive sectors by privatizing public enterprises, but have guided the newly empowered business sector with stable institutional rules and prudent regulations. By reconstructing consensual institutions, they have created a firm domestic foundation for their development efforts.

In Santiso's view, this pragmatic approach holds the greatest promise for Latin America's development. By stopping the pendulum swing between radical proposals from the left and right, the region attains the stability required for balanced economic and social progress. As Mexico, Colombia, and several other countries move in the direction traced by Chile and Brazil, the author sees the prospects as fairly good. But resurgent neopopulism in Argentina and especially Venezuela poses a threat. Attacking "neoliberalism," at least rhetorically, it seeks to revive elements of the state-interventionist economic nationalism that predated the market reform wave. Santiso condemns such a return to the past as unpromising, and his book serves as a warning against these siren calls, which have found considerable resonance in the region and among its academic observers.

The book makes a number of significant contributions. First of all, it offers a wide-ranging and well-informed overview of the economic changes implemented during the last two decades. For anybody who wants to get a basic understanding of this monumental process, the volume is a great starting point (despite several striking mistakes on specific facts). In theoretical terms, Santiso usefully emphasizes the internal differences in what Latin Americanists often subsume under the label of neoliberalism. In particular, he draws a stark contrast between ideologically driven free market enthusiasts and pragmatists of different partisan extraction, who have learned that maintaining economic equilibrium is indispensable for attaining their own variegated economic and social goals. While this distinction is far from new, Santiso substantiates it through succinct analyses of several country experiences.

As his "best cases," Chile and Brazil, suggest, it is, ironically, the center-left that is making Latin America's new...