The present paper aims to analyze the consequences of neo-liberalism on the prospect of democratization in Latin America, by concentrating on two case-studies, Brazil and Chile. The analysis is done on a double level. In a first part it considers the consequences of neo-liberalism on the first dimension of the infra-State level, the State itself and the government. In a second part it moves to the analysis of the second dimension of the infra-State level, the society. This double level of evaluation highlights the deficiency of an efficacious political democratization at the level of the State and the lack of the application of civil rights at the level of society. The neo-liberal context has accentuated democratic lacunas, because it has been ineffective in providing monitoring capacities in the field of democratic norms and institutional implementation.Neo-liberalism; Latin America; Democratization; Democratic deconsolidation; Depolitization; Public sphere

Dobra, Alexandra

English

Research Papers in Economics

 
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28 
Neo-liberalism, consequences on the prospect of democratization in Latin 
America
Alexandra Dobra  
Abstract. The present paper aims to analyze the consequences of neo-liberalism on 
the  prospect  of  democratization  in  Latin  America,  by  concentrating  on  two  case-
studies, Brazil and Chile. The analysis is done on a double level. In a first part it 
considers the consequences of neo-liberalism on the first dimension of the infra-State 
level, the State itself and the government. In a second part it moves to the analysis of 
the  second  dimension  of  the  infra-State  level,  the  society.  This  double  level  of 
evaluation highlights the deficiency of an efficacious political democratization at the 
level of the State and the lack of the application of civil rights at the level of society.  
The  neo-liberal  context  has  accentuated  democratic  lacunas,  because  it  has  been 
ineffective in providing monitoring capacities in the field of democratic norms and 
institutional implementation.
Keywords: Neo-liberalism;  Latin  America;  Democratization;  Democratic 
deconsolidation; Depolitization; Public sphere.  
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29 
Introduction
“Reality is determined not by what scientists or anyone else says or believes but by 
what the evidence reveals to us” (Hale, 1987)
In  2009,  poverty reached 9,7  points  in  Brazil. Furthermore,  Brazil  did  not 
adopt  a  political  resolution  for  managing  distributive  conflicts.  A  main  corollary 
follows, social and civil democratization is still relatively absent from the Brazilian 
landscape.
The implementation of neoliberal reforms in Latin America, in respectively 
the 80s and 90s, has been the result of economic crisis and the absence of democratic 
regimes.  In  the  context  of  States  facing  irrecoverable  debt  amounts,  neo-liberal 
reforms - cut governmental spending and subsidies, institution of market economy –
seemed the most appropriate way to resolve the crisis. However, to what extend are 
neo-liberalism and democratization compatible ? How did neo-liberalism influence 
democratization  ?  Optimists  argue  that  free-market  economy  ensures  a  durable 
democracy by restraining State power, improving resources allocation and securing 
the survival and sustainability of democracy (Weyland 2004, Hayek 1982). Hence, 
democratic norms, institutions and practices are disseminated. However, this scenario 
is more a semantic construction than a concrete reality. Neo-liberalism provoked side 
effects. This paper argues that where the shoe pinches resides in the fact that neo-
liberalism has accentuated democratic lacunas, because it did not provide monitoring 
capacities  in  the  field  of  democratic  norms  and  institutional  implementation. 
Therefore democratic quality has been weakened and limited (Weyland, 2004). Neo-
liberalism  did  not  consolidate  the  Marshallian  sequence  of  democracy  – civil, 
political, social rights – and on this basis it occasioned a democratic deconsolidation. 
In  other  words,  there  is  a  “democratic  promise  unfulfilled”  in  Bresnahan’s 
terminology, reverberated via the gap between the image and the reality.  
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30 
Neo-liberalism’s consequences on the first dimension of the infra-State sphere: 
anemic, inefficient and discriminatory State
“State is the name of the coldest of all cold monsters. Coldly it tells lies, too; and this 
lie crawls out of its mouth: ‘I, the state, am the people.’” (Nietzsche, 1985)
Neo-liberalism  implemented  under  the  Washington  Consensus  reduced  the 
State  role  because  of  the  belief  that  the  solution  against  economic  crisis  in  Latin 
America relied on the confidence in the market. This confidence was made to the 
detriment of the enforcement of the State’s infrastructural powers (Mann, 1986). The 
process of market reform created a model of State action according to which personal 
enriching and prerogatives excel on the defense of the public good. The freeing of 
markets has withdrawn the government from many of its adjucatory functions in the 
economy, thereby simultaneously removing conflicts from the political arena. This 
has inherently increased the autonomy of political actors from the State (Dominguez, 
1997). The implementation of neo-liberal reforms has also brought with it a principle 
of  neo-conservative  governability  of  societies  (Huntington,  1975),  aiming  the 
contention of the State’s power and the consequent “reversal of politics”. Thereby, 
politics is reduced to the defense and promotion of private property and initiative. 
Hence, the instituted liberal democracy is contracted to the domain of procedure and 
democratization has been limited by the liberalization of the political regime. The 
subsequent incapacity of political parties and parliamentary mechanisms to articulate 
social demands encouraged free-riding behaviors and ascended corporate interests, 
making them become “a hegemonic business class stronger than the State itself” (Nef, 
2003).  Capitalists,  leaders,  etc…  attempted  to  shift  the  costs  of  stabilization  and 
structural adjustment onto one another, onto unorganized groups, or onto the State 
itself  (Smith,  1992).  Furthermore,  the  strategic  conflict  among  collective  actors 
strengthened the private capital and weakened the State’s capacity to regulate and to 
mediate class and sectoral conflicts. One example of this strengthening of private 
capital is the Ambito Finaciero of Buneos Aires in Venezuela. It corresponds to a 
market  coup,  a  new  mode  of  political  destabilization  leading  to  changes  in  the 
government’s economic team, thereby forcing major policy shifts.  
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Neo-liberalism  did  not  operate  to  a  tabula  rasa of  the  traditional  political 
features  and  therefore  has  indirectly  nurtured  the  traditional  political  endemic 
features. The persistence of perverse institution and non-transparent practices did not 
disappear  under  neo-liberal  reforms.  The  Concertation coalition  in  Chile  and  its 
instituted  representative  democracy,  continued  to  be  conditioned  by  politico-
institutional arrangements granting the military significant prerogatives and tutelary 
powers  over  the  civilian  authority  (Loveman,  1991).  Similarly,  Brazil’s  political 
culture and constitutive institutional features - corporativist and clientelistic practices 
- have been fuelled by neo-liberal reforms. For instance, vote buying - particularized 
form of clientelism involving the exchange of goods for votes at the individual level 
(Stokes 2007) - has been high in the 90s. Thus, democratization faced limits coming 
from the state of statuses and privileges inscribed within the political power structure 
at the level of its “central instances of nomination” in the Bourdieusian terminology, 
indirectly sustained by neo-liberalism. In Brazil, one major obstacle for economic and 
political  change  resided  in  the  peculiar  electoral  system,  encouraging  alliances  of 
transitory  electoral  convenience  and  minimizing  responsibility  of  representatives 
(Schneider,  1991).  Lastly,  the  prerogatives-preservation  concern  of  governmental 
elites hindered the democratization process. Governmental institutions charged with 
macroeconomic reforms have been reluctant to cede decisional authority to business 
and labor representatives. For example in the late 80s, Argentina’s president Raul 
Alfonsin,  and  Brazil’s  president  Jose  Sarney,  efforts  of  achieving  macroeconomic 
policy concertation failed.
Due to the weakness of social actors, often charismatic leaders (instead of 
elected assemblies, e.g.: Pinochet in Chile) assumed economic reform by imposing 
policies in a technocratic and authoritarian manner. This contributed to the rise of 
clientelism  - hindering  efforts  to  professionalize  the  public  bureaucracy - and  the 
absence of the realization of social representation, meant to be incompatible with neo-
liberal reforms. For instance, Menem in Argentina, Collor de Mello in Brazil, and 
Fujimori  in  Peru  adapted populism  to  the  severe  economic  constraints they,  used 
political populism to impose economic liberalism, and used this latter to strengthen 
their populist leadership (Smith, 1991). This adoption of a development model turned 
towards the external side axed on the market was made via a “revolution from the 
top” and reinforced the traditional weakness of the public sphere. The low level of  
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32 
political institutionalization, the party systems and the parliamentary mechanisms of 
interest  articulation  and  aggregation  led  to  institutional  failures.  In  addition,  the 
adoption  of  economic  measures  and  the  subsequent  social  and  political  effects 
contributed to problems of democratic governability (Smith, 1990). Under the impetus 
of the U.S. government and international creditors Perez’s government in Venezuela 
adopted a series of neo-liberal reforms. Although the restoration of rapid economic 
growth (9,2% in 1991), these reforms also contributed to the widespread corruption 
and the deepening of social cleavages. To conclude, the ut supra arguments converge 
towards  the  idea of a democratic deconsolidation – absence  of  real renovation  of 
leadership, absence of real accountability, presence of perverse institutions (tutelary 
powers). 
Neo-liberalism’s consequences on the second dimension of the infra-State sphere: 
fragmentation, embryonic public sphere and depoliticization
“A vibrant civil society is probably more essential for consolidating and maintaining 
democracy than for initiating it.” (Diamond, 1994)
Under neoliberal conditions there is mainly a failure of representation born of 
atomization and a consequent inability to articulate interests. In most Latin American 
countries an increase in economic dualism and social exclusion has been noted. In the 
90s, 45,5% of the population in Latin America was employed in the informal sector 
and  19%  of  the  population  employed  in  the  formal  sector  had  no  social  security 
coverage  (ILO,  2004).  Moreover,  the  Gini  coefficient  highlights  the  endemic 
character of inequalities in this region. In 1990, the Gini coefficient was 0,625 in 
Brazil (which signifies an increase in inequalities) and was 0,550 in Chile (ECLAC, 
2004). The persistently high levels of inequality in the distribution of income and 
assets  make  social  contrasts  more  dramatic  and  produce  greater  vertical 
fragmentation. The “new economic model” imposed by neo-liberalism did not reduce 
poverty but increased inequalities (Bulmer-Thomas, 1996). The exercise of civil and 
political rights, required in a democratic regime, seems incompatible on the long-term 
with the chronic presence of social inequalities and the stagnation of employment 
levels, provoked by the politics of structural adjustment. In the case of an absence of 
access to minimum of resources, the agent’s capacity to make autonomous choices is  
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33 
hindered and his degree of conversion capacity of formal rights into capabilities is 
very low. 
The subordination of social issues to the market in order to eliminate conflicts 
of interests rests on Hayek’s idea that politics are too expensive and constitute a factor 
of destabilization (Hayek, 1981). As such, in Chile the privatization process included 
the  traditional  boundaries  of  productive  enterprises  and  the  welfare  privatization: 
pensions and health. Strategies for ensuring the governability of the system consisted 
in depoliticizing social problems and in transferring them to the market. This was 
translated  in  a  limitation  of  the  liberal  democracy  and  a  limited  action  power  of 
citizens via political participation. However, neo-liberal reforms conserved intact the 
institutions  and  the  traditional  political  relations,  reinforcing  political  power 
concentration and depoliticizing society by disarticulating forces. Hence, the space of 
participation  has  been  abridged  and  the  nature  of  political  decisions  emerged  as 
technified. Chile illustrates very well the concept of citizenship of low intensity and 
the instrumental nature of group relation. In 2000, 84,3%  of the youth considered that 
parties do not represent their interests and 88,7% of the population stressed not to be 
interested in participating in a political party (Sylva, 2004). In another way, Brazil’s 
failure of the economic plans Collor I and Collor II by eroding the government’s 
initial  popularity  and  the  subsequent  pervasive  “civic  fatigue”  (Power,  1991), 
provides also an example of apathy and democratic deconsolidation.
Under structural economic adjustments, Latin America’s corporatism has been 
replaced by neo-pluralism, a form of diminished democracy (Oxhorn, 1998). This 
latter  is  characterized  by  weak  civil  society,  poor  political  representation, 
presidentialism (e.g.: Brazil) and delegative democracy - premise that whoever wins 
elections  to  the  presidency  is  thereby  entitled  to  govern  as  he  or  she  sees  it” 
(O’Donnell, 1994). Liberal policies have had a transformative effect on society and 
social organization which raised significant barriers to collective political action and 
thus induced a decline in the organizational capacity of civil society. In Chile the 
industrial decentralization enfeebled powerful and militant trade union movements 
and compressed the labor movement reverberated via the decline in manufacturing (in 
1996 only 18,9% of GDP). Reforms alongside did also reduce the scope of political 
decision making, decreasing incentives for individuals to engage in political activity. 
The labor reform of 1979 in Chile was designed to depoliticize workers. Reforms can  
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34 
also  exert  depoliticizing  influence  in  the  social  sphere  by  transferring  what  were 
highly consequential policy decisions to the private sphere hence political decisions 
become  less  materially  consequential  for  most  citizens.  Business  associations  and 
syndicates do not constitute an effective united front representing a collective interest 
class (Weyland, 2004), because of the atomized nature of labor markets and society 
by  neo-liberal  reforms.  In  Chile,  trade-unions  attitudes  remained  unchanged  since 
1970s  (Haagh,  2002)  because  of  the  concern  with  bread-and-butter  issues. To 
conclude, the democratic quality has been lowered by limiting popular sovereignty 
and  by  countermining  the  public  sphere,  both  crucial  for  stimulating  popular 
participation and holding the government accountable. 
Conclusion
This paper has constructed an argument highlighting the double scale negative 
impact of neo-liberalism on the prospect of democratization in Latin America. Post 
1990, Latin America has been characterized by a State crisis, reverberated via the 
diminishing of the State’s global action capacity and the reinforcement of democratic 
lacunas.  On  the  State  level,  the  unilateral  conception  of  political  economy  by 
technocratic elites bound to executive power provoked prestige lost and weakened the 
fundamental  democratic  institutions.  While  on  the  societal  level  neo-liberalism 
contributed to depoliticized the public sphere thereby weakening the organizational 
infrastructure of democracy. 
In  the  frame  of  a  future  perspective  for  implementing  durably  and  effectively 
democracy, a central role must be played by the social integration which is at the heart 
of  the  concept  of  citizenship  (Weffort,  1992).  An  effective  democracy  cannot  be 
instituted  without  a  historical  rupture  from  the  exclusionary  and  inegalitarian 
dynamic. As such, there are two urgent targets for Latin American States to achieve 
for avoiding procyclical patterns. First they must operate to a social and political 
inclusion of marginalized segments of population and second, the network of State 
institutions must implement a new agora, for the operational representation of the vox 
populi. 
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35 
A short presentation of the author:
Alexandra Dobra is reading a Bachelor in Politics and International Relations at the 
University of York, UK. She is the author of several articles in international peer-
reviewed  academic  journals.  She  is  an  editor  for  the  academic  journal  Politikon 
(IAPSS) amd redactor for the academic journal ResPublica nova (ENS), as well as 
chapter chairman and founder for the academic journal The Transatlantic (LSE, SIPA 
Columbia).
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Neo-liberalism, consequences on the prospect of democratization in Latin America

Neo-liberalism, consequences on the prospect of democratization in Latin America

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