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Business and the “Boys”: The Politics of Neoliberalism in the Central Andes

Published online by Cambridge University Press:  12 October 2022

Catherine M. Conaghan ,
James M. Malloy  and
Luis A. Abugattas
Catherine M. Conaghan
Affiliation:
Queen's University
James M. Malloy
Affiliation:
University of Pittsburgh
Luis A. Abugattas
Affiliation:
Universidad del Pacífico
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Although the 1970s witnessed a convergence of neoliberal economic policies and authoritarianism in the Southern Cone countries of Latin America, the 1980s gave way to a new combination of economic orthodoxy and democracy in Bolivia, Ecuador, and Peru. Neoliberal economic projects emerged in these central Andean countries as they confronted broadly similar economic problems. Plummeting prices in the international market for key exports, decreased investment, and growing financial burdens imposed by the international debt created the parameters of la crisis—the topic that became a central focus of political discourse in these new democracies. At different points in time, each of the three countries responded to the crisis with neoliberal economic experiments. In Peru a turn toward neoliberalism occurred under the administration of Fernando Belaúnde Terry (1980-1985), only to be completely reversed by the heterodox policies of Alan García (1985–). In Ecuador basic stabilization measures had already been undertaken by the government of Osvaldo Hurtado (1981-1984). León Febres Cordero (1984-1988) then committed the country to a monetarist and antistatist model. In Bolivia following the enormous instability and hyperinflation during the government of Hernán Siles Zuazo (1982-1985), the country adopted a neoliberal approach under the presidency of Víctor Paz Estenssoro (1985-1988).

Type
Research Article
Information
Latin American Research Review , Volume 25 , Issue 2 , 1990 , pp. 3 - 30
Copyright
Copyright © 1990 by the University of Texas Press

References

Notes

To assure the anonymity or our business informants, material taken from the personal interviews conducted by the authors is cited only by date, location, and institutional affiliation. Names of informants have been included in the citations only in cases where they are public figures whose views are already a matter of public record.

1. We are using the term neoliberal to denote economic policies that combine orthodox stabilization measures with a long-term commitment to restructuring the economy by reducing the role of the state and subjecting economic activity to market forces. This is the definition developed by Alejandro Foxley in Latin American Experiments in Neoconservative Economics (Berkeley and Los Angeles: University of California Press, 1983), 15–17. Foxley himself preferred to use neoconservative rather than the Spanish neoliberal for his English-speaking readers. For more discussion of these policies, see Joseph Ramos, Neoconservative Economics in the Southern Cone of Latin America (Baltimore, Md.: Johns Hopkins University Press, 1986).

2. For policy-making studies that focus on the role of domestic coalitions in Western Europe, see Peter Gourevitch, Politics in Hard Times: Comparative Responses to International Economic Crises (Ithaca, N.Y.: Cornell University Press, 1986); Kerry Schodt, “The Rise of Keynesian Economics: Britain 1940–1964,” in States and Societies, edited by David Held (New York: New York University Press, 1983); and Peter Katzenstein, Corporatism and Change: Austria, Switzerland, and the Politics of Industry (Ithaca, N.Y.: Cornell University Press, 1984). See also Katzenstein's Small States in World Markets: Industrial Policy in Europe (Ithaca, N.Y.: Cornell University Press, 1985).

3. The name “Chicago boys” was first used widely to describe the members of the orthodox economic team of the early years of the Pinochet regime in Chile, technocrats who were influenced by the monetarist doctrines advocated by faculty in the Department of Economics of the University of Chicago. Ironically, although the neoliberal technocrats of the central Andean countries were often referred to as “Chicago boys” by their critics, none of them trained at or associated with the University of Chicago economics department. The Bolivian Minister of Planning, Gonzalo Sánchez de Lozada, did attend Chicago as an undergraduate, but he studied philosophy and literature.

4. For a discussion of business anxiety in the case of the United States, see David Vogel, “Why Businessmen Distrust Their State: The Political Consciousness of American Corporate Executives,” British Journal of Political Sciences 8, no. 1 (Jan. 1978):169-73.

5. Differences in the collection of national accounts statistics create difficulties in making quantitative assessments of the size of the state across the three countries. For one discussion, see Carlos Parodi, “State Growth in Bolivia, Ecuador, and Peru, 1970–78,” unpublished research note, Department of Political Science, University of Pittsburgh, 1988. Country case studies, however, confirm that the relative size of the state increased in all three countries during the 1970s. See E. V. K. Fitzgerald, The Political Economy of Peru, 1956-1978 (London: Cambridge University Press, 1979), 142–216; David Schodt, “The Ecuadorian Public Sector during the Petroleum Period: 1972–1983,” Technical Papers Series, no. 52 (Austin: University of Texas, Office for Public Sector Studies and Institute of Latin American Studies, 1986); L. Enrique García-Rodríguez, “Structural Change and Development Policy in Bolivia,” in Modern-Day Bolivia: Legacy of Revolution and Prospects for the Future, edited by Jerry R. Ladman (Tempe: Center for Latin American Studies, Arizona State University, 1982), 165–92; and Jerry R. Ladman, “The Political Economy of the ‘Economic Miracle’ of the Banzer Regime,” in Modern-Day Bolivia, 321–44.

6. For further discussion of the character of these military regimes, see The Peruvian Experiment Revisited, edited by Abraham Lowenthal and Cynthia McClintock (Princeton, N.J.: Princeton University Press, 1983); David Booth and Bernardo Sorj, Military Reformism and Social Classes: The Peruvian Experiment, 1968-1980 (New York: St. Martin's Press, 1983); James Malloy and Eduardo Gamarra, Revolution and Reaction: Bolivia, 1964-1985 (New Brunswick, N.J.: Transaction, 1988); and Catherine M. Conaghan, Restructuring Domination: Industrialists and the State in Ecuador (Pittsburgh, Pa.: University of Pittsburgh Press, 1988).

7. Interview with an official of the Cámara de Industriales de Pichincha, 30 Jan. 1987, Quito.

8. The notion of a “stealthy policy style” is taken from Cynthia McClintock, “Velasco, Officers, and Citizens,” in The Peruvian Experiment Reconsidered, 275–308.

9. For a discussion of the Peruvian private sector and the formation of CONFIEP, see Francisco Durand, Los empresarios y la concertación (Lima: Fundación Friedrich Ebert, 1987). Further discussion of the character of the industrial class can be found in Anthony Ferner, La burguesía industrial en el desarrollo peruano (Lima: Editorial Esan, 1982).

10. For examples of the surge in antistatist discourse in the case of Bolivia, see Cámara de Industrias y Comercio de Santa Cruz, El estado empresario: fracaso de un modelo, a pamphlet published in Santa Cruz in July 1982. On Ecuador, see the speeches by business leaders in Guayaquil frente al futuro (Guayaquil: Banco de Guayaquil, 1973).

11. Interview with an official of the Confederación de Empresarios Privados, 20 Feb. 1986, La Paz.

12. For the original work on the disjunction between ideology and policy preferences, see James Prothro and Charles Griggs, “Fundamental Principles of Democracy: Bases of Agreement and Disagreement,” Journal of Politics, no. 2 (May 1960):276-94; and Herbert McClosky, “Consensus and Ideology in American Politics,” American Political Science Review 58, no. 2 (June 1964):361-82.

13. For a discussion of how the “judicious retreat” of the state was part of the process of state-building in the nineteenth century, see Raymond Grew, “The Nineteenth-Century European State,” in Statemaking and Social Movements, edited by Charles Bright and Susan Harding (Ann Arbor: University of Michigan Press, 1984), 83–120.

14. Eduardo Gamarra, “Between Constitutional and Traditional Coups: The Bolivian Elections of 1985,” mimeo, Florida International University, 1985.

15. Febres Cordero's economic program was presented in a public forum organized by the Cámara de Industrias de Pichincha. The event was described in “Fortalecer el mercado: Febres Cordero,” Hoy, 19 Apr. 1984, p. 2-A.

16. For a discussion of the lack of ideological shift and the Reagan victories, see Thomas Ferguson and Joel Rogers, Right Turn: The Decline of the Democrats and the Future of American Politics (New York: Hill and Wang, 1986). Also see Morris Fiorina, “The Reagan Years: Turning to the Right or Groping toward the Middle,” in The Resurgence of Conservatism in Anglo-American Democracies, edited by Barry Cooper, Allan Kornberg, and William Mishler (Durham, N.C.: Duke University Press, 1988), 430–60.

17. This discussion of the development of the neoliberal cadre in Ecuador draws on personal interviews with Alberto Dahik, Francisco Swett, and Carlos Julio Emanuel. The interviews took place in February 1987 in Quito and Guayaquil. The platform that Swett authored is entitled “Sinopsis de los lincamientos y principios del Plan de Gobierno de Ing. León Febres Cordero,” mimeo, Guayaquil.

18. See “Cámaras confiar en el nuevo gobierno,” Hoy, 8 May 1984.

19. Interview with an official of the Cámara de Industriales de Pichincha, 20 Jan. 1987, Quito.

20. While ADN leaders took to characterizing Paz's program as a “transfer of technology” from the ADN to the MNR, the government never had access to the ADN's actual plans. From an interview with Ronald Maclean, 17 Feb. 1986, La Paz. Although Cariaga participated in the Harvard seminar, he was excluded from later meetings with Sachs that drew up specific proposals. The ADN's “model” was never made public, and Sánchez de Lozada states that he was never given access to it. Interviews with Gonzalo Sánchez de Lozada, 22 Feb. 1986 and 29 May 1988, La Paz.

21. Daniel Schydowlsky, “The Tragedy of Lost Opportunity in Peru,” in Latin American Political Economy: Financial Crisis and Political Change, edited by Jonathan Hartlyn and Samuel A. Morley (Boulder. Colo.: Westview, 1986), 229.

22. The World Bank reportedly provided significant assistance in formulating the new economic project. See Jürgen Schuldt and Luis Abugattas, “Neoliberalismo y democracia en el Perú, 1980–85,” in Neoliberalismo y políticas económicas alternativas, (Quito: Corporación de Estudios para el Desarrollo, 1987), 79–82. For further discussion of the economic team, see Francisco Durand, Los industriales, el liberalismo y la democracia (Lima: Fundación Friedrich Ebert, DESCO, 1984).

23. Schydlowsky, “Tragedy of Lost Opportunity,” 229.

24. For a description of how these same priorities dominated Belaúnde's first presidency, see Pedro Pablo Kuczynski, Peruvian Democracy under Economic Stress: An Account of the Belaúnde Administration, 1963-1968 (Princeton, N.J.: Princeton University Press, 1977). For a discussion of public expenditures under Belaúnde, see Patricia Wilson and Carol Wise, “The Regional Implications of Public Investment in Peru, 1968–1983,” LAR 21, no. 2 (1986):93-116.

25. Carlos Julio Emanuel, Current Economic Policy in Ecuador (Quito: Banco Central del Ecuador, 1985), 12.

26. For further discussion of the problems of economic management during the Siles Zuazo period, see Juan Antonio Morales, Precios, salarios y política económica durante la alta inflación boliviana de 1982 a 1985 (La Paz: Instituto Latinoamericano de Investigaciones Sociales, n.d.); and Arturo Núñez del Prado, “Bolivia: inflación y democracia,” Pensamiento Iberoamericano, no. 9 (1986):249-75. For a discussion of the labor difficulties, see María Isabel Arauco, “Los trabajadores del estado y del Banco Central de Bolivia,” in Crisis del sindicalismo en Bolivia (La Paz: FLACSO-ILDIS, 1987), 175–200.

27. See O'Donnell's discussion in Bureaucratic-Authoritarianism: Argentina, 1966–1976, in Comparative Perspective, translated by James McGuire (Berkeley and Los Angeles: University of California Press), 24–30.

28. Gonzalo Sánchez de Lozada, “La nueva política económica,” Foro Económico 5 (Sept. 1985):6.

29. Interview with Sánchez de Lozada, Feb. 1986.

30. The classic discussion of different “arenas” of public policy is found in Theodore Lowi, “American Business, Public Policy, Case-Studies, and Political Theory,” World Politics 16 (1964): 677–775.

31. For a discussion of the use of economic emergency decrees in Ecuador, see León Roldós Aguilera, El abuso del poder (Quito: Editorial El Conejo, 1986).

32. Enrique Bernales, El parlamento por dentro (Lima: DESCO, 1984), 81, 85.

33. Interview with Carlos Julio Emanuel, 5 Feb. 1987, Quito.

34. Interview with an official of the Cámara Nacional de Industrias, 12 Feb. 1987, La Paz.

35. Susan Eckstein and Frances Hagopian, “The Limits of Industrialization in the Less Developed World: Bolivia,” Economic Development and Cultural Change 32, no. 1 (Oct. 1983):81-86.

36. Statistical Abstract of Latin America, vol. 22, edited by James W. Wilkie and Stephen Haber (Los Angeles: Latin American Center Publication, University of California, 1983), 175.

37. Banco Central del Ecuador, Memoria 1985, 33.

38. Interview with officials representing the Cámara Nacional de Industrias, 12 Feb. 1987, La Paz; the Asociación de Productores de Maíz y Sorgo, 18 Feb. 1987, Santa Cruz; and the Federación de Empresarios de Santa Cruz, 17 Feb. 1987, Santa Cruz.

39. Alejandro Portes, “Latin American Class Structures,” LAR 20, no. 3 (1985):23; and José Luis Ortiz, “El sector informal urbano,” in Daniel Carbonetto et al., El sector informal urbano en los países andinos (Quito: ILDIS/CEPESIU, 1985), 108.

40. Jorge Parodi, Ser obrero es algo relativo (Lima: DESCO, 1986).

41. Jorge Parodi, “La desmovilización del sindicalismo industrial peruano en el segundo Belaúndismo,” in Movimientos sociales y crisis: el caso peruano, edited by Eduardo Bailón (Lima: DESCO, 1986).

42. The only instance of a combined business and popular mobilization occurred in Bolivia, where the powerful regional civic committee of Santa Cruz rallied local organizations in a civic strike in December 1986. The strike was called to protest the neoliberal team's plan to exert greater control over the finances of the state enterprise, Yacimientos Petrolíferos Fiscales Bolivianos (YPFB). A percentage of profits from YPFB had been traditionally earmarked for the use of the department. The government ended the conflict with a compromise in March 1987. It is important to note that this cross-class resistance to the government's policy was highly specific and played on regionalism. It did not constitute a rejection of the neoliberal model as a whole.

43. For a discussion of the distinctive style and culture that developed inside the neoliberal team headed by José Martínez de Hoz in Argentina, see Julie M. Taylor, “Technocracy and National Identity: Attitudes toward Economic Policy,” in From Military Rule to Liberal Democracy in Argentina, edited by Monica Peralta-Ramos and Carlos H. Waisman (Boulder, Colo.: Westview, 1987), 131–46.