Creative Destruction?: Economic Crises and Democracy in Latin America

3. Institutions: Polarized Domestic Conflicts and Weak International Capacity

When the 1929 financial crisis struck, Chile was ruled by an authoritarian regime under Colonel/General Carlos Ibáñez (1927–31),1 while Argentina and Uruguay were ruled by democratic regimes since 1916 and 1918, respectively. The inability of these governments to cope with the severity of the socioeconomicdislocationsandpoliticalcon flictsproducedbytheGreatDepressionled tothefalloftheincumbentpoliticalregimesinallthreecountries—irrespective of their democratic or non-democratic form. Chile shed an authoritarian regime and was able to build a democracy during the Great Depression, while Argentina and Uruguay experienced the death of their democracies, which were replaced by authoritarian regimes. Accounting for a common historical sequence of events in different countries is intellectually relevant, because it sheds light on the thorny issue of the direction of causality, which remains one of the central fault lines of debate between the social science scholars who use quantitative methods of inquiry and those who use qualitative ones. In the context of the Great Depression, the commonality for the Southern Cone countries—the shift in regime types—in no way ensures causation, but it raises its likelihood by showing that this sequence of events happened in three countries that, despite their common traits (early industrialization and democratization, in a Latin American context), were also quite different in terms of their size, material endowments, production structures, political institutions, and historical experience. The main weakness of this explanation, however, is that it cannot account for either the variations in the pressures for and against democracy unleashed by the economic shock and crises of the 1930s or for the extent to which such variations contributed to the regime changes. It must be qualified and refined Institutions Polarized Domestic Conflicts and Weak International Capacity chapter three toyieldamorenuancedunderstandingoftheimpactthatspecificdomesticand international pressures for and against democracy had in shaping the breakdownofdemocracyandtheconstructionofauthoritarianregimesinArgentina and Uruguay and the breakdown of authoritarianism and the transition to democracy in Chile between 1930 and 1933. domestic institutions-as-rules The three countries had presidential forms of government on the eve of the Great Depression, but their constitutions contained very different rules about thewaygovernmentshouldbeorganized,howitshouldoperate,thewaypower should be contested electorally, and the territorial division of power. Argentina The largest country in the Southern Cone had an electoral system that favored the creation of artificial majorities through the use of first-past-the post, similar to that in Great Britain and the United States, but with the added rule that it assigned two-thirds of the lower house seats to the winning party and the remaining one-third of the seats to the runner-up. A president whose party had a majority in the lower chamber was potentially a force to be reckoned with. The provincial oligarchies retained substantial autonomy from the central government, thanks to Argentina’s federalism, a system enshrined in the country ’s 1853 constitution and its successive revisions. Provincial governors retained ample legal powers that, combined with the historical tradition of caudillismo (rule by strongmen) that developed since the wars of independence against Spain in the 1810s, allowed provincial elites to preserve and advance their privileges and power, because more often than not governors were members of the tightly knit politicoeconomic families that dominated life in the peripheral regions, away from the capitol. The degree of provincial autonomy was somewhat curtailed, because Argentine presidents tended to be influential in pickinggovernorsinmanyprovinces.2 Still,controloftheSenatewasanimportantinstitutionalconcessionthatenhancedthepowerthatregionalelitescould exerciseatthefederallevel,giventheconstitution’sprescriptionwherebysenators were elected by the provincial legislatures (dominated by the governors’ henchmen). Thus the upper chamber remained a bastion of conservatism and a defender of the different provincial elites’ interests. These interests were not 56 g r e at d e p r e s s i o n , 19 2 9 – 3 4 i n s t i t u t io n s : p o l a r i z e d a n d w e a k 57 necessarily similar, which meant that the Senate did not find it easy to bring its disparate members together to work proactively. Nonetheless, it was a powerfulreactiveforce ,becauseaslongasathirdofitsmembersopposedanygiven law coming from the lower chamber or the president’s office, it could stop it dead in its tracks. The constitution did grant the federal executive a direct tool to check the power of provincial governments, as it allowed the president of the republic to issue an intervención, or intervention, (a clause copied from the US Constitution where, however, it was hardly used3 ) against a provincial...