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  • Contemporary Latin America: Development and Democracy Beyond the Washington Consensus
  • James W. Russell
Francisco Panizza , Contemporary Latin America: Development and Democracy Beyond the Washington Consensus (London and New York: Zed Books 2009)

The turbulent history of Latin America since the 1970s has included revolutions, civil wars, military dictatorships, United States invasions, and now the rise of left and center-left elected governments. At the same time there have been fierce policy debates over how the region should progress to overcome enormous problems of poverty and economic underdevelopment, debates which have mostly centred on the contention between neo-liberal and socialist prescriptions. History and policy debates were related since much of the former reflected fights over the latter.

Francisco Panizza, a senior lecturer in politics at the London School of Economics and Political Science of Uruguayan background, has written a nuanced description of the evolution of development policy beginning in the late 1980s, when it seemed like socialist prescriptions were no longer a threat to what he calls the economic orthodoxy.

He begins with the origins of the expression "Washington Consensus." John Williamson coined the term in a 1990 edited book, Latin American Economic Adjustment? How Much has Happened? (Washington, DC: Institute for International Economics). Williamson listed as "the common core of wisdom embraced by all serious economists of the time" a series of policy recommendations, including liberalization of interest rates, trade, and foreign direct investment flows; privatization; and deregulation. These prescriptions were in line with laissez-faire neo-liberalism. Other prescriptions, though, including directing public investment toward social programs, were not. Williamson was agnostic on the question of which model of capitalism — Anglo-Saxon (closest to neo-liberalism), European social market, or Japanese-style — provided the best guidance for developing societies. At the very least, in Panizza's judgment, the main thrust of the Washington Consensus was consistent — if not totally identical with — the main thrust of neo-liberalism.

From the late 1980s to the late 1990s the Washington Consensus achieved clear hegemony among policy makers. But then it began to unravel as economic crises in Mexico, Argentina, and elsewhere broke out. Privatization and free market reforms, while initially promising to their proponents, did not usher in a new epoch of clear sailing economic growth.

As a result of those crises, policy makers began to rethink the Washington Consensus, resulting in the development of what Panizza calls the Post Washington Consensus, a development that he sees as more of a refinement than rejection of the original paradigm. There is now a more serious focus on poverty alleviation through state action, and on the need for some steps toward developing equality of opportunity, though not of outcomes.

Policy, though, is one thing, politics another. In the latter there was a significant Latin American backlash against neo-liberalism and the Washington Consensus, which were blamed for causing the crises and aggravating the traditional problems of poverty and inequality as well as allowing an explosion of crime, drugs, and other social problems. Many politicians ran on anti-neo-liberal platforms. Panizza accurately notes that a number of these, including Carlos Andrés Pérez in Venezuela and Lucio Gutiérrez in Ecuador, used bait and switch tactics: they ran against neo-liberalism but then, once in office, adopted economic shock programs. Pérez and Gutiérrez were subsequently forced out of office for those reasons.

In large part because of failures of Washington Consensus policies, the late [End Page 284] 1990s and the 2000s saw a resurgence of left-wing governments. These broadly divided into two camps. Venezuela, Bolivia, and Ecuador sought to completely break with neo-liberalism and the Washington Consensus and, in the case of Venezuela, adopted the goal of creating socialism for the twenty-first century. Brazil, Chile, and Uruguay, by contrast, continued many free market policies while attempting to more aggressively reduce poverty than had previous regimes.

Panizza devotes considerable time to comparing the opposite trajectories of Venezuela and Brazil. Luiz Ignácio da Silva (Lula) and the Workers Party in Brazil began with a platform of complete opposition to neo-liberalism. But once in office, Lula accommodated to many neo-liberal prescriptions to the consternation of...

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