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ABSTRACT
This essay argues that neoliberalism has strengthened the sustainability of democracy in Latin America but limited its quality. Drastic market reform seems to have abetted the survival of competitive civilian rule through its external and internal repercussions. By opening up Latin American countries to the world economy, neoliberalism has exposed them to more of the international pressures for preserving democracy that intensified with the end of the Cold War. At the same time, the move to market economics has weakened leftist parties, trade unions, and other proponents of radical socioeconomic reform, reassuring elites and preventing them from undermining democracy. But tighter external economic constraints limit governments' latitude and thereby restrict the effective range of democratic choice; and the weakening of parties and interest associations has depressed political participation and eroded government accountability. The available evidence therefore suggests that neoliberalism has been a mixed blessing for Latin American democracies.
How compatible are neoliberalism and democracy in Latin America? How do economic adjustment and market reform affect political liberty and competitive civilian rule? This question is highly relevant for the future of the region. The experience of First World countries might suggest that democracy and the market system tend to go together; after all, no democracy has existed in nations that did not have the basic contours of capitalism; namely, a large extent of private ownership and competition as the main mechanism of economic coordination (Lindblom 1977, 161-69). Latin America's experience, however, used to differ from this happy convergence. Given the severe social inequality plaguing the region, political liberalism historically tended to trigger calls for social redistribution and state interventionism; that is, for significant deviations from economic liberalism. The free-market system, by contrast, used to be an elitist project that was often associated with support for or acquiescence to authoritarian political rule. During long stretches of Latin American history, therefore, a clear tension existed between political democracy and economic liberalism (Sheahan 1987, chap. 12; Gibson 1992, 168-71).
Furthermore, even if the free-market system-that is, the end product of neoliberal reform-is compatible with democracy, the process of neoliberal reform might not be; after all, it involves the forceful dismantling of the established development model, and may therefore require a significant concentration of political power. Indeed, Latin...