Welfare States and Models of Capitalism in Latin America: Explaining Divergences within the Region

• In Event: Industrialización, desarrollo y bienestar

Abstract

This paper takes issue with the theoretical assumptions of the Varieties of Capitalism literature that are unsuitable for understanding Latin American cases. It is argued that for understanding the different modes of capitalism in the region and for giving account of its changes along history is necessary to uncover the variables that define the complementarities between the economic model and the structures of the welfare state.
This paper contends that the dynamics between the political regime, the strength of the union labours, and the strength of the economic elites give shape to the institutions that regulate the relationship between capital and labor, which have as its primary function, to define the level of demercantilization of the welfare states, and the orientation of the economic model.
By analyzing the dynamics between these three variables during the implementation of the ISI model and the implementation of the neoliberal model, this paper explains two phenomena: 1) Why countries such as Chile, Argentina, and Uruguay created universal structures of welfare systems during the ISI, and 2) Why systems that in the 30’s had the similar structures of welfare state diverged during the 80’s, such as Chile, while others managed to move towards universalization, such as Brazil.For both phenomena the institutional complementarities between the economic model and the welfare are explained.

Author

• Dominique Rumeau, The University of British Columbia, Universidad de la Republica (Uruguay)