Mechanisms of institutional continuity in neoliberal "success stories" : developmental regimes in Chile and Estonia

How do neoliberal political economies threatened with declining competitiveness and social cohesion manage to remain neoliberal over time? This paper explores mechanisms of neoliberal continuity in Chile and Estonia by extending gradualist approaches to institutional change with the notion of institutional hierarchy. Neoliberal continuity, it is argued, depends on the ability of dominant groups to defend those institutions that are more favorable to their interests while altering those that are not in order to obtain political support from other social groups. The question is explored in relation to the parallel trajectory of two policy domains: monetary policy (exchange rates) and industrial policy. Dominant groups try to retain a conservative monetary policy and a neutral industrial policy by altering their parameters (marginal adjustment), narrowing their interpretation (solidification), or negotiating minor/larger concessions (accommodation/ compromise). While these mechanisms have allowed dominant groups in Chile and Estonia to retain neoliberalism, the timing and combination of different mechanisms over time have generated different trajectories of continuity. Estonia remains closer to a neoliberal orthodoxy whereas Chile has a more pragmatic trajectory.Auf welche Weise gelingt es neoliberalen Ländern, deren Wettbewerbsfähigkeit und sozialer Zusammenhalt bedroht sind, neoliberal zu bleiben? Das Papier untersucht Mechanismen neoliberaler Kontinuität in Chile und Estland, indem es ein Modell institutioneller Hierarchien mit gradualistischen Ansätzen des institutionellen Wandels verbindet. Die neoliberale Kontinuität eines Landes, so das Argument, hängt davon ab, wie erfolgreich einflussreiche gesellschaftliche Gruppen Institutionen unterstützen, die ihren Interessen zuträglich sind, und jene umgestalten, bei denen das nicht so ist, damit sie politische Unterstützung von anderen gesellschaftlichen Gruppen erhalten. Die Frage wird im Verhältnis zu parallel verlaufenden Trajektorien zweier politischer Domänen untersucht: Geldpolitik (Wechselkurse) und Industriepolitik. Vier Mechanismen werden beschrieben, die von einflussreichen Gruppen genutzt werden, um konservative Geld- und neutrale Industriepolitik aufrechtzuerhalten: marginale Korrektur (Änderung der Parameter); Verfestigung (konkrete Deutung); Kulanz/Kompromiss (Einigung auf mehr oder weniger große Zugeständnisse). Anhand dieser Mechanismen konnte der Neoliberalismus in Chile und Estland gewahrt werden. Durch die zeitliche Abfolge der Ereignisse und die Kombination verschiedener Mechanismen sind unterschiedliche Kontinuitätstrajektorien entstanden. So bleibt Estland näher an einer neoliberalen Rechtgläubigkeit, während Chile sich auf einem pragmatischen Entwicklungspfad befindet.1 Introduction 2 Continuity and change in contemporary capitalism The notion of institutional hierarchy Institutional hierarchy and gradual institutional change 3 Chile: A neoliberal ecology with increasing incompatibility Critical juncture: Politics, business, and military (1973–1975) The neoliberal experiment (1975–1982) Dynamics of change: Turning points and the stabilization of a neoliberal ecology (1983–2005) 4 Estonia: Positive feedback for a tight neoliberal path Critical juncture: From Soviet rule to an ethnic democracy (1987–1992) Neoliberal orthodoxy and restricted citizenship (1992–1994) Dynamics of change: Turning points and reactive sequences (1992–2004) 5 Comparative perspectives: The political economy of neoliberal continuity Common processes of neoliberal continuity … … and yet divergence: Timing, sequences and contingent constraints 6 Conclusion

La protección social como problema de coordinación

This article aims to provide new insights to the debate about how to analyze the performance of social protection policies, with special interest in Chile. The article develops the concept of coordination and its reach in the field of social protection, generating an analytical framework that draws attention to three critical aspects: the generation of expectations and motivations between beneficiaries; the articulation of the agencies related with the production of social protection benefits, and the linkage of the systemic resources necessary to produce those benefits. These elements are translated into a matrix which helps ordinating the analysis and observing the performance of policies and programmes in different aspects of its functioning.El objetivo de este artículo es aportar nuevos elementos al debate sobre cómo analizar el desempeño de las políticas de protección social, con especial atención al caso chileno. Se desarrolla el concepto coordinación y sus alcances en el ámbito de la protección social, generando un marco analítico que permite poner atención en tres aspectos críticos: la generación de expectativas y motivaciones entre los beneficiarios; la articulación de las agencias relacionadas con la producción de las prestaciones de protección social y la vinculación de los recursos sistémicos necesarios para producir dichas prestaciones. Estos elementos son operacionalizados en una matriz mediante la cual se ordena el análisis y observación del desempeño de las políticas y programas en distintos aspectos de su funcionamiento

Varieties of skills profiles in Latin America: a reassess

Research on the politics of skills formation in Latin America is severely underdeveloped. This article offers a novel characterisation of the supply of skills in the region or ‘skills supply profiles’, taking inspiration from the comparative capitalisms literature. We identify four configurations of skills supply profiles – universalising, dual academic-oriented, dual VET-oriented and exclusionary – and analyse their historical dynamics. By doing this, we challenge general assessments of Latin America's skills formation systems as pertaining to one overarching type. This sets the stage for a deeper understanding of the politics of skills in the region and their connection with different development alternatives

State capacity and social investment: explaining variation in skills creation reforms in Latin America

Latin America has been historically characterized by a focus on compensatory social policies, state capacity problems and unstable political coalitions impairing political and policy sustainability. In the 1980s-90s socioeconomic transformations and a new international policy agenda put emphasis on skills creation. Considering skills creation as a key component of a social investment agenda, this chapter sheds light on how Latin American countries have engaged with this agenda and a legacy of low demand for skilled labor and chronic educational coverage and quality problems. We analyze one crucial scope condition for social investment expansion: state capacity. Looking at four countries with different state capacity levels and diverse reform outcomes –Bolivia, Guatemala, Chile and Uruguay–, we argue that state capacity is a necessary but not a sufficient condition for skills creation social investment. State capacity matters at two crucial moments of the policy-making process: first, as a background variable that affects reform efforts, and second, during the policy implementation period. A second necessary but insufficient condition is how partisan coalitions interact with policy legacies. Rather, we show that only the two conditions together allow Latin American countries to advance social investment reforms in a sustainable fashion

El resurgimiento de la economía política en la ciencia política actual

Este artículo describe el desarrollo histórico de las interpretaciones de la economía política, critica la pretensión hegemónica de la economía neoclásica y rescata la “nueva economía política”: el estudio de la constitución social, política y moral de la economía. Muestra como se la concibe en la ciencia política actual y ofrece dos claves de análisis para orientar futuras investigaciones. Por último hace un recorrido por trabajos recientes en América Latina que recogen esta interpretación, en especial las revisiones de la literatura sobre ‘economía política de la política económica’, y algunos estudios sobre las variedades del capitalismo

Calculando la vejez: Gestión previsional en trabajadores/as de bajos ingresos

The Chilean pension system is a milestone regarding the institutionalization of individual responsibility and individual decisions as determinant of the pension performance. Few assessments have been made, however, to how people make decisions in this system. From a qualitative study, the following article explores how low-income workers living in Santiago make their pension decisions. Using recent perspectives in economic sociology, the article provides a dynamic interpretation of the possibilities of social agency in a complex and novel scenario, focusing on the construction of calculability frameworks that permit to make decisions and the structural and institutional elements that condition them. The last ones overflow the constructed frameworks and make necessary reframing processes through which the pension management intermingles with strategies for the generation of current incomes.El sistema de pensiones chileno constituye un hito en cuanto a la institucionalización de la responsabilidad individual y las decisiones individuales como determinante del desempeño previsional. Pocas evaluaciones se han realizado, sin embargo, a la manera como las personas toman sus decisiones en este sistema. a partir de un estudio cualitativo, el siguiente artículo explora cómo trabajadores/as de bajos ingresos de la ciudad de Santiago toman sus decisiones previsionales. Utilizando perspectivas recientes dentro de la sociología económica, el artículo ofrece una interpretación dinámica de las posibilidades de agencia en un escenario social complejo y novedoso, con foco en la construcción de marcos de calculabilidad que permiten tomar decisiones, y los elementos estructurales e institucionales que los condicionan. Estos últimos desbordan los marcos construidos y hacen necesarios procesos de re-encuadre por medio de los cuales la gestión previsional se entremezcla con estrategias para la generación de ingresos actuales

O ressurgimento da economia política na ciência política atual

In this article, we show the historical development of different conceptions of political economy, criticizing the hegemonic pretention of neoclassical economics, and rescue the “new political economy”: the study of the social, political and moral constitution of the economy in history. We describe this interpretation’s current disciplinary insertion in political science, and offer two analytical keys to orient future investigations. Finally, we survey recent works in Latin America that echo this interpretation, especially the revisions of the ‘political economy of policy reform’ literature and the widening of studies on varieties of capitalism.Este artículo describe el desarrollo histórico de las interpretaciones de la economía política, critica la pretensión hegemónica de la economía neoclásica y rescata la “nueva economía política”: el estudio de la constitución social, política y moral de la economía. Muestra como se la concibe en la ciencia política actual y ofrece dos claves de análisis para orientar futuras investigaciones. Por último hace un recorrido por trabajos recientes en América Latina que recogen esta interpretación, en especial las revisiones de la literatura sobre ‘economía política de la política económica’, y algunos estudios sobre las variedades del capitalismo.Este artigo descreve o desenvolvimento histórico das interpretações da economia política, critica a pretensão hegemônica da economia neoclássica e resgata a “nova economia política”: o estudo da constituição social, política e moral da economia. Ele mostra como é concebida na ciência política atual e oferece duas chaves de análise para orientar pesquisas futuras. Por fim, ele faz um percorrido por obras recentes na América Latina que incluem essa interpretação, especialmente, as revisões da literatura sobre a “economia política da política econômica” e alguns estudos sobre as variedades do capitalism

The Political Economy of Neoliberal Resilience. Developmental Regimes in Latin America and Eastern Europe

In the last decades of the twentieth century, Latin American and Eastern European countries experienced thorough processes of economic liberalization and became the hallmark of the neoliberal development model. After severe economic crises, increased social inequality and the associated political turmoil, many countries experienced reform backlashes or built alternative development models. A handful of countries, however, retained their neoliberal development models over time. What explains the resilience of neoliberalism in these countries? I provide a twofold answer: first, specific actors formed coalitions that pursued and defended neoliberal policy alternatives over time; second, specific institutional mechanisms allowed these actors to remain powerful in order to veto changes. To arrive to this answer I conducted a small-n research, focusing on four countries with substantive market reform experiences, two representing resilience (Chile and Estonia) and two representing discontinuity (Argentina and Poland). I combined within-case methods (process tracing) and comparative methods to determine causal links between the explanatory factors (coalitions and institutions) and the outcome to explain (neoliberal resilience). To assess neoliberal resilience, I analyzed the trajectory of two policy domains: exchange rate regimes and industrial policy. The study covers the period from the introduction of market reforms (ca. 1970-1990) until the 2007-8 crisis. Theoretically, I combined insights from the literature on the political economy of policy reforms, international political economy theories of policy preferences, and institutional change theories from political science. In the first part, I analyzed the formation of coalitions supporting and opposing neoliberalism. I focused on three actors: capital, divided into four sectors (financial, public utilities, competitive and non-competitive); political parties, divided on the right-left spectrum; and labor unions. I assessed their strength using quantitative data (sectorial national accounts, electoral data, unionization and collective bargaining levels), traced their preferences for exchange rate regimes and industrial policy using interviews and newspaper articles, and compared the dynamics of coalition formation and support across cases. In the second part I analyzed the political and institutional mechanisms that allowed neoliberal actor constellations to remain powerful over time and veto changes to established policies. I used specialized literature, interviews and newspaper articles to identify and test the relevant mechanisms. The main findings of my dissertation are: 1) neoliberal development projects have been pursued and defended by coalitions between the financial and competitive economic sectors, and right-wing parties; 2) non-competitive economic sectors, labor unions and left-wing parties have opposed neoliberalism (successfully in the cases of discontinuity, unsuccessfully in the cases of resilience); 3) neoliberal coalitions used three mechanisms to maintain their power resources over time: creating business supporters through privatization, blocking opposition using restrictive electoral rules and labor market institutions, and institutionalizing central bank independence and fiscal spending rules. These mechanisms have been used in different combinations in Chile and Estonia to empower actors defending neoliberalism, weaken actors opposing neoliberalism, and prevent significant changes in exchange rate regimes and industrial policy. Conversely, these mechanisms have been either absent or worked in opposite directions in Argentina and Poland

The resurgence of political economy in today’s political science

Este artículo describe el desarrollo histórico de las interpretaciones de la economía política, critica la pretensión hegemónica de la economía neoclásica y rescata la “nueva economía política”: el estudio de la constitución social, política y moral de la economía. Muestra como se la concibe en la ciencia política actual y ofrece dos claves de análisis para orientar futuras investigaciones. Por último hace un recorrido por trabajos recientes en América Latina que recogen esta interpretación, en especial las revisiones de la literatura sobre ‘economía política de la política económica’, y algunos estudios sobre las variedades del capitalismo.In this article, we show the historical development of different conceptions of political economy, criticizing the hegemonic pretention of neoclassical economics, and rescue the “new political economy”: the study of the social, political and moral constitution of the economy in history. We describe this interpretation’s current disciplinary insertion in political science, and offer two analytical keys to orient future investigations. Finally, we survey recent works in Latin America that echo this interpretation, especially the revisions of the ‘political economy of policy reform’ literature and the widening of studies on varieties of capitalism

La Continuidad del Neoliberalismo en Chile

Desde la aplicación de la terapia de shock dirigida por Augusto Pinochet y sus Chicago Boys, Chile se transformó en un caso ejemplar para el estudio del neoliberalismo. A pesar de las correcciones introducidas a partir del regreso a la democracia, y contrario a una retórica que enfatiza el carácter reformista de los gobiernos democráticos de centroizquierda, Chile ha mantenido en lo fundamental su modelo económico basado en la herencia neoliberal de la dictadura militar. En este artículo, reviso los factores político-económicos que ayudan a explicar la experiencia de continuidad neoliberal en Chile desde los gobiernos de la Concertación, y poniendo particular énfasis en los gobiernos del "giro a la izquierda" de Ricardo Lagos y Michelle Bachelet. Para analizar la experiencia chilena, en este artículo construyo una explicación holística basada en los tres factores típicos que se utilizan en la economía comparada, ideas, instituciones e intereses, como los tres pilares de una explicación del neoliberalismo y su continuidad, y ofrezco una propuesta teórico-metodológica para observar empíricamente la operación de cada pilar