Creative Destruction?: Economic Crises and Democracy in Latin America

Notes

introduction 1. The concept “creative destruction” is most closely associated with Schumpeter, Capitalism , Socialism, and Democracy. The author argued that capitalism is “a form or method of economic change [that] never can be stationary.” The essential fact of capitalism is the creative destruction “that incessantly revolutionizes the economic structure from within [author ’s emphasis], incessantly destroying the old one, incessantly creating a new one” (82–3). Before Schumpeter, Karl Marx and Werner Sombart also thought about capitalism as an incessant process of the destruction and creation of wealth. Note that whereas Schumpeter’s emphasis was on the economic consequences (innovation and progress) of creative destruction , I focus on some of its political consequences (democratic survival or transition). 2. Financial shocks are only one among many other triggers of harsh economic crises, but they are the common starting point for my analysis of the historical cases compared in this work. 3. The three-type classification of political regimes (democratic, totalitarian, and authoritarian ) that has dominated political science since the 1970s was pioneered by Juan J. Linz and his reflections regarding the distinctiveness of Franco’s political regime in Spain. The original articles are referenced in Linz and Stepan, Problems of Democratic Transition, 38–39. 4. See Gourevitch, Politics in Hard Times. An indicator of the major revival of interest in politicsinhardtimesasageneralsubjectofstudyinmainstreamAnglo-Americanpoliticalscience was the choice of a title and general themes to explore for the American Political Science Association’s (APSA) 2010 annual meeting in Washington, DC, on September 2–5: “The PoliticsofHardTimes :Citizens,Nations,andtheInternationalSystemunderEconomicStress.” 5. See the regime-change database in Przeworski et al., Democracy and Development, 59–69. 6. On the long-term incidence of international economic shocks and the way they affected Latin American economies, see Elliott, Empires, chapters 4–6; Fukuyama, Falling Behind, chapters 4–7; Maddison, Contours, chapter 2; North, Summerhill, and Weingast, “Order, Disorder.” 7. The author is grateful to an anonymous reviewer for highlighting the importance of significant pendulum swings in economic thinking and economic policymaking since the early decades of the twentieth century to Latin American politics and political economy. Notes 242 n o t e s t o pag e s 3 – 1 4 8. Przeworski et al., Democracy and Development, 40–43. 9. See Hagopian and Mainwaring, introduction to Third Wave of Democratization. See also P. H. Smith, Democracy in Latin America, part 1, chapters 1–4. 10. See Dahl, Polyarchy; Acemoglu and Robinson, Economic Origins. I am grateful to JonathanHartlynandCynthiaMcClintockforremindingme ,duringapanelpresentationatthe APSA’s 2010 meeting to emphasize Dahl’s thinking in my analysis regarding the relative costs that political adversaries face when fighting over the fundamental rules of the game (types of political regimes). 11. Przeworski et al., Democracy and Development. 12. Acemoglu and Robinson, Economic Origins. 13. See, for example, Mahoney and Rueschemeyer, Comparative Historical Analysis; Pierson , Politics in Time; Thelen, “Historical Institutionalism”; King, Lieberman, Ritter, and Whitehead, Democratization in America. 14. George and Bennett, Case Studies, 206. 15. Rueschemeyer, Huber Stephens, and Stephens, Capitalist Development and Democracy , 5. 16. There is a vast amount of literature on the three pillars—interests, institutions, and ideas—in comparative politics and political economy. This covers a wide range of topics, including methodology; changes in economic ideas that help create new, long-term economic policy orientations; transitions from communism and command economies; changes from protectionism to free trade; the creation of foreign policy systems; the construction of welfare states; and the shaping of global institutions and international development policy. For good overviews of this literature, see Lichbach and Zuckerman, Comparative Politics; Hay, “Review: Ideas, Interests, and Institutions.” 17. North, Institutions, 4. North and colleagues continue to highlight this distinction in their most recent work. See North, Wallis, and Weingast, Violence and Social Orders, 15–18. 18. See Conniff, foreword to Populism in Latin America. I follow this perspective, which emphasizes the mass communications and organizational aspects of populism, alongside the personality and leadership traits of individual populist leaders. 19. The author is grateful to an anonymous reviewer for suggesting that I consider populism not simply as a series of instances of nationalist populist experiments—be they in the 1930s, 1970s, or since the early 2000s—but more fundamentally, as a building block for the ideas component of my analysis. 20. Wikipedia, “Whig History,” http://en.wikipedia.org/wiki/Whig_history [accessed July 29, 2010]. The original identification of this type of historiography was the influential text by Butterfield, Whig Interpretation of History. chapter 1: Financial...