Why Are Latin American Governments (Comparatively) Better Democrats Than (Neo)liberals?

• In Event: Business, Neoliberalism, and the State

Abstract

This paper argues for a reassessment of the term “neoliberal” as applied to Latin America. Most governments of the region fit the liberal profile better in terms of what the state does not do (e.g., operate major industries, inflate the currency, promote industrialization via trade barriers) than what it does (clarify and protect everyone’s property rights, provide essential public goods efficiently). That is, governments that embrace free trade, welcome foreign investment, or align their foreign policy with Washington quite often also lack independent judiciaries, regulation of monopolies, and the rule of law generally. We see this in international comparisons. Latin American governments perform poorly, compared to the rest of the world, on common measures of the constructive aspects of liberalism, such as freedom to run a business and the reliable protection of property rights. In fact they score more poorly, comparatively, than they do on indicators of democracy. Why? States are modular, with the institutions that support democratic elections operating substantially independently of the day-to-day experience of most citizens with police, public utility services, health care systems, or tax authorities. Hence effective economic liberalism depends more on general state capacity than does electoral democracy. In turn, the failure to advance the positive or constructive agenda of liberalism, which includes items that require a capable state, may have something to do with the political unpopularity of the neoliberal project.

Author

• James E Mahon, Williams College