The Argentine Paradox

In July 1989 the new Argentine democracy passed a crucial test: Carlos Menem of the Peronist party succeeded to the office of president, replacing Raúl Alfonsín of the Radical party. This presidential transition, the first since the restoration of democracy in 1983, marked the first transfer of power since 1916 between elected presidents of different political parties. Moreover, it was the first time in Argentine history that both the incoming and outgoing president were elected on the basis of universal suffrage.

But even as Argentina's fledgling democracy was recording this notable achievement, its economy was undergoing a deep crisis. Argentina is a land of paradoxes, not the least of which is this: even as its polity becomes more like that of an advanced capitalist nation, its economy and society increasingly resemble those of a typical underdeveloped country. The question is whether this new democracy, in a society where democratic traditions are weak, can be sustained amidst economic stagnation (or outright retrogression), triple-digit inflation (even higher for part of 1989), and massive foreign debt. I will argue that the effects of the economic crisis on democratic stability are complex: negative in the short term, for democracy will be strained by the discontent of those whose lot has worsened; but perhaps positive in the long term, for the crisis may break the stalemate that produced stagnation in Argentine society. Thus economic impoverishment may paradoxically end up facilitating the consolidation of democracy.

The wave of democratization sweeping most of Latin America and much of Eastern Europe provides students of democratic legitimation with a unique laboratory. High levels of both popular participation and competitive politics are being instituted in countries with widely different economic systems, social structures, ethnic compositions, and political cultures. Thus we can observe the conditions under which a new political regime becomes accepted "naturally, without questioning" (to use Jean Blondel's words) by the large majority of the population.

Social scientists have been particularly concerned with the economic conditions of democratic legitimation. The proposition that capitalism has an elective affinity with liberal democracy—a proposition shared by liberal theorists and Marx alike—is based in part on the notion that a dynamic, capitalist economy can satisfy the demands of ail social groups, the lower classes included. And contemporary social scientists have argued that a regime's "efficacy" (an aspect of which is economic growth) is one of the determinants in its legitimation.

Economic growth may not be a necessary condition for the legitimation of a new democracy, but it is clearly a powerful contributing factor in both the short and long terms. The explosion of group demands is characteristic of new democracies that succeed authoritarian regimes. This is usually a consequence of two factors: the forcible suppression of these demands (particularly those of labor and the lower classes) by the old regime, and the strong incentives and lowered costs for group organization and mobilization under democratic conditions. Economic growth allows for the satisfaction of at least some of these demands and thus prevents the development of zero-sum conflicts. In the long run, economic growth fuels legitimacy by permitting individual and collective upward mobility and by providing a safety net to contain downward mobility.

Economic stagnation—or even retrogression—does not necessarily block legitimation, at least in the short run. It can be offset by favorable noneconomic factors such as strong democratic traditions, the formation of a democratic political culture, the commitment to democracy of economic or political elites, and strong political leadership. In the long run, however, the survival of democracy is doubtful under such conditions. Stagnation or retrogression is likely to lead to high levels of political polarization, especially in societies having large and mobilized working and middle classes.

In the case of Argentina, democracy has been restored in a period of outright economic retrogression. For most of the past three decades, the economy has experienced sharp fluctuations but little or no net long-term growth. From 1970 to 1979, the gross domestic product (GDP) per capita grew by an average of 0.3 percent a year. From 1980 to 1988, however, the GDP declined...