It is well known that most Latin American nations have experienced an economic sea change over the past two decades, shifting from statist, inward-oriented development models to a free market model that promotes regional and international economic integration (Edwards 1995). This economic transition began in Chile in the mid-1970's and then spread rapidly across the region in the 1980's, when the debt crisis wreaked havoc with the import substitution industrialization model that had been in vogue since the Great Depression of the 1930's. The shift in development models was strongly reinforced by international influences, including the political and economic leverage of the United States, multilateral financial institutions, and the globalization of capital and product markets. Nevertheless, the domestic political and institutional bases of this new development model remain highly fluid and contingent. Economic reforms have often been implemented by default rather than conviction, and their institutional foundations in much of the region are shallow and insecure. Consequently, the aura of inevitability that envelopes the new development model is periodically punctured by political events in individual nations. Although alternatives remain opaque, there is no shortage of actors who dissent from the so-called "Washington Consensus" (Williams 1990).

This paper explores the domestic political foundations of economic integration and the broader neoliberal development model to which it belongs. It argues that despite the reconciliation between democracy and neoliberalism over the past two decades, numerous tensions continue to plague the relationship between political and economic liberalism. These tensions are rooted primarily in the institutional fragilities of democratic representation in contemporary Latin America and the social polarization that has accompanied the new development model. The interaction between these two variables casts a long shadow over the democratic reproduction of the neoliberal project, and thus provides an enduring source of political instability and uncertainty.

Democracy and the Neoliberal Project in Latin America

The orthodox, neoliberal economic era was ushered into Latin America by the military dictatorships of the Southern Cone, and it was widely perceived at the outset as being incompatible with democratic governance (Foxley 1983; Garreton 1989). The coincidence of democratic transitions and economic crises in the 1980's, however, quickly led to the imposition of market-oriented structural adjustment programs by elected leaders in many nations. Furthermore, democratization sparked a new ethos of international cooperation as elected leaders took steps to resolve regional conflicts and develop collective mechanisms to safeguard democratic institutions. An economic model that bound nations together through trade and capital flows fit naturally with this new regional ethos, providing an economic counterpart to cooperative political ventures.

Indeed, the new economic model often seemed to provide electoral payoffs for democratic leaders. Governments in Bolivia, Argentina, Brazil, Peru, and Nicaragua that sought to evade politically costly austerity measures by adopting heterodox stabilization programs in th1980's were punished at the ballot box when they proved incapable of containing hyperinflationary pressures. Clearly, economic heterodoxy and the defiant nationalism of Peru's ill-fated Garcia administration were politically disastrous when they produced hyperinflation. On the other hand, leaders like Menem, Fujimori, and Cardoso were able to parlay successful orthodox stabilization into electoral dividends, winning new electoral mandates for neoliberal policies and economic integration. Furthermore, public opinion surveys indicate that sizable majorities support trade liberalization across the region. (See Table I). Although trade liberalization can threaten non-competitive industries and their workers, it offers the promise of cheaper and higher quality goods for everyone. There is thus no intrinsic reason why it cannot be electorally viable.

Clearly, surveys of this sort must be used with caution, as their results are highly sensitive to question construction. Perceptions of consumer benefits flowing from free trade may quickly shift if trade comes to be seen as a threat to a nation's productive sector and employment base; after all, individuals lacking income sources cease to be consumers in the marketplace. Furthermore, trade liberalization is only one component of a much broader neoliberal project. Other components such as the privatization of public enterprises or public services, the "flexibilization" of labor markets, and the deregulation of consumer and financial markets are often less popular, as they may be associated in the public mind with foreign buyouts, layoffs, wage cuts, precarious employment, higher prices, and potentially destabilizing capital flows. Consequently, although the neoliberal project has generally been able to advance in Latin America by means of electoral procedures (Venezuela is an important exception), this advance has not always been a smooth one, and it has been fraught with pitfalls and detours.

Perhaps the most obvious pitfall is direct political opposition to the neoliberal model. Opposition has been most pronounced and consistent in Venezuela, where the electorate has chosen the presidential candidate perceived as the least neoliberal of the viable contenders in five consecutive national elections since the debt crisis erupted at the beginning of the 1980's. The most serious attempt at free market reform, begun by Carlos Andres Perez in 1989, triggered deadly riots and military repression, severely compromising the legitimacy of both the Perez administration and his neoliberal project. Venezuela's most recent president, Hugo Chavez, is clearly the most virulent opponent of neoliberalism and U.S.-led economic integration that the region has seen outside Cuba since the dawning of the neoliberal era. Although Chavez has been cautious in his economic management as president, he is a forceful advocate of a region-wide "Bolivarian" nationalism that supports Latin American integration but does not define it in terms of free markets or conformity with U.S. political and economic hegemony.

Opposition has also been widespread in Ecuador, which has departed from the regional pattern in a very different way from Venezuela: presidents supporting the neoliberal project have repeatedly won at the ballot box, only to see their reforms neutralized by resistance in the streets. In Ecuador's fragmented and poorly institutionalized party system, candidates supporting neoliberal reform have repeatedly been elected to the presidency, but their reforms have been stifled by vigorous opposition protests in civil society, primarily within the powerful indigenous movement and a weaker (but sometimes allied) labor movement (Zamosc 1994). The Ecuadorean case thus presents the paradox of a strong civil society that is highly detached from the party system and national governing institutions. Social demands are poorly articulated in the electoral process and other formal institutional arenas, allowing presidents to be elected without any significant policy mandate, but making it extremely difficult for them to govern in the face of widespread societal opposition. The end result is political gridlock, with governments that cannot make policy, parties that do not represent society, and social movements that veto government action and even depose governments, yet lack the institutional channels required to formulate policies or compose governments.

More ominous, perhaps, is the case of Argentina, which until the late 1990's was held out as one of the biggest success stories of the neoliberal model. Menem's neoliberal reforms finally brought endemic hyperinflation under control, provided a major stimulus for economic integration in the Southern Cone, and temporarily seemed to pull Argentina out of a half-century of relative economic stagnation. These achievements were critical to Menem's comfortable reelection in 1994. Ultimately, however, the fixed-rate currency board that stopped inflation clashed with Argentina's participation in Mercosur; when the Asian financial crisis and dwindling national reserves forced Brazil to devalue, Argentina's currency was left seriously overvalued, resulting in a worsening trade deficit, four years of recession, and record high unemployment. Massive social protests toppled consecutive governments from the Radical and Peronist parties at the end of 2001, calling into question the viability of both the neoliberal model and the party system that sustained it. Indeed, the Argentine debacle cast a pall over Mercosur, as it demonstrated that serious conflicts of interest could continue to exist even under relatively high levels of economic integration. The Argentine case showed that economic integration left national political and economic systems highly vulnerable to the policies and performance of their trade partners, not to mention the volatile swings of global financial markets.

Elsewhere in the region the democratic inauguration and/or reproduction of neoliberal reforms have been less directly challenged by domestic political and economic forces, yet the sustainability of the neoliberal project is cast into doubt by its institutional fragilities. This fragility is manifested in a number of different areas. For example, conservative, pro-market parties have rarely been at the forefront of market reforms in Latin America. Major reforms have been adopted by a diverse array of military dictators, independent technocrats, civilian autocrats, and erstwhile populist parties, but they are not often the work of established conservative parties. These modes of implementation are highly problematic. Military dictators, independent technocrats, and civilian autocrats have little or no representative institutions behind them; indeed, they tend to be highly detached from organized social forces. They often make policy by executive fiat, and while their autonomy, insulation, and discretionary authority can be assets in contexts of short-term crisis management, they are hardly suitable for constructing more secure, long-term institutional foundations for the neoliberal model (Haggard and Kaufman 1995). Technocratic decision-making too often results in policy implementation that conforms with the narrow requisites of market efficiency while ignoring their social and political consequences. It is frequently averse to political compromise and societal input, and thus finds it difficult to construct broad sociopolitical coalitions in support of reformist initiatives. These problems were readily apparent in the Venezuelan case, where the technocratic market reforms of Carlos Andrés Pérez helped to restore economic growth, but still met with widespread political opposition both inside and out of the governing party (Corrales 2000).

In a number of cases, ambitious market reforms have been unexpectedly coupled with populist leadership styles and political coalitions (Roberts 1995; Weyland 1996). Populist figures who appeal directly to the masses while bypassing parties and other forms of institutional intermediation, however, are unlikely to provide a secure foundation for the new economic model. Leaders like Collor in Brazil and Bucaram in Ecuador who supported market reforms were quickly booted from office when their popular appeal faded. Although Fujimori in Peru was able to serve two full terms in office, his dearth of organized support in society made his regime highly dependent on military and intelligence institutions. The autocratic leadership style and gross manipulation of democratic institutions that followed eventually trapped his regime in a web of scandals that led to its demise after ten years in office. Clearly, although populist leadership may help to neutralize opposition to market reforms in the short term, its antipathy for organization makes it a weak substitute for viable conservative parties in sustaining a reformist project.

Where parties have played a more important role in the implementation of structural adjustment policies, they have rarely done so out of an ideological commitment to free markets. Paradoxically, some of the most aggressive structural adjustment programs in Latin America have been implemented by traditional labor-backed populist or leftist parties rather than conservative ones (Gibson 1998; Burgess 2000; Murrillo 2000). The PRI in Mexico, the Peronists in Argentina, the MNR in Bolivia, AD in Venezuela, the PLN in Costa Rica, and even the Sandinistas in Nicaragua all found themselves saddled with the need to implement austerity programs or market reforms that clashed with their traditional statist and nationalist policy platforms, as well as their union and other popular constituencies. These policy reversals were highly contentious within the ranks of the respective parties, and while they sometimes enabled these parties to garner new support in the middle and upper classes, they invariably strained relations with their traditional constituencies. As such, the neoliberal era has produced major, and often destabilizing shifts in the social bases of political representation, exacerbating the fluidity of poorly institutionalized party systems.

This problem has been compounded by the fact that many of these reforms constituted a post-election abandonment of the parties' electoral platforms. Even where these reforms were induced by the limited options made available by severe economic crises, such "bait-and-switch" tactics have undermined democratic accountability by divorcing the electoral process from meaningful policy mandates. Neoliberalism by default rather than conviction attests to the narrowing of programmatic alternatives in contemporary Latin American democracies, a trend that contributes to depoliticization and potential alienation by undermining democracy's claim to offer citizens a meaningful choice. Even in Chile, where parties retain a hold on citizens' collective political and cultural identities, the economic proposals of the Socialist Ricardo Lagos and the Pinochetista technocrat Joaquín Lavín were largely indistinguishable in the 1999 presidential election. This convergence surely indicates that macroeconomic alternatives to neoliberalism have fallen off the political agenda in Latin America's showcase market economy, but such a truncated agenda deprives parties of the programmatic functions that historically served to mobilize adherents. It is little wonder, then, that Chileans express concern over signs of a growing detachment from democratic institutions in general, and from political parties in particular.

In short, the democratic reproduction of the neoliberal model suffers from a serious institutional deficit in the sphere of political representation. Architects of neoliberal reform have relatively well-defined models at hand for restructuring the economy, society, and the state, but there is no corresponding model for institutional transformation in political society, where parties seek to translate societal interests and preferences into reasonably coherent policy packages. Indeed, to the extent that the neoliberal model has been driven by technocratic designs and seemingly inexorable global market imperatives, it is difficult to reconcile with the very notion of political representation, which is predicated on societal input and a plurality of choices. Therefore, in contrast to the dawning of the ISI era, which spawned the rise of mass party and secondary associations to articulate societal demands and diversify political alternatives, the neoliberal era has been associated with widespread deinstitutionalization of political representation and a narrowing of policy alternatives.

Deinstitutionalization and Popular Representation in Latin American Democracies

It is important to recognize that this deinstitutionalization is not politically neutral. Although all manner of interests can potentially organize, elite and popular sectors are not equally dependent on organizations. Elite interests can typically translate money, access, and market leverage into policymaking influence even in the absence of collective action or organization. In contrast, collective action and political organization are the primary "weapons of the weak," the instruments by which subaltern sectors can translate their latent strength in numbers into political influence despite their relative lack of material resources. In the absence of organization, the poor compete against each other in the marketplace, and "de facto" powers- including the military and domestic and foreign business interests- exercise inordinate influence through informal channels. Therefore, the deinstitutionalization of political representation is highly correlated with elitist politics ¹, as it deprives popular sectors of the levers they need to exercise countervailing power.

The elitist character of deinstitutionalized politics can readily be seen when looking at the social correlates of the new economic model in Latin America. For example, economic crisis and reform have produced dramatic declines in trade unionization in most of the region over the past two decades (Roberts 2002), while business associations have generally strengthened in an effort to shape the contours of the new economic model (Durand and Silva 1998). During the ISI era labor unions were central actors in popular sector political representation, and they often built strong corporatist linkages to reformist states and/or political parties. These political relationships provided labor movements with new material and organizational relationships, and they allowed populist parties to encapsulate large blocs of voters with fixed political identities. Today, however, labor unions are a shadow of their former selves. Largely relegated to a shrinking formal sector of the economy, unions have found it very difficult to organize the burgeoning informal and temporary contract sectors of the workforce. As their organizational power diminishes, unions become less attractive as allies for political parties, which helps to explain why so many historic populist parties have abandoned them in order to pursue market reforms and attract new middle class constituencies (Gibson 1998).

Although "new social movements" articulating gender, environmental, indigenous, and human rights concerns have emerged to contest organized labor's traditional monopoly of popular sector political representation, they rarely reproduce the kinds of close political ties that historically bound unions to parties. The organizational fragmentation and penchant for political autonomy of these new social movements often leave them on the margins of party systems, and thus detached from institutionalized forms of representation in electoral and legislative arenas (Roberts 1998). In short, party systems in contemporary Latin America have exceedingly shallow roots in increasingly complex and pluralistic civil societies, severely compromising the quality of political representation in the region. The weakness of popular representation can also been seen in the ineffectiveness of contemporary democracies in addressing the "social deficits" of poverty and inequality that have been exacerbated by two decades of intermittent economic crisis and adjustment. Despite the economic recovery of the 1990s, the average real industrial wage in Latin America in 1996 was five percent below that of 1980, while the average real minimum wage fell by 30 percent between 1980 and 1997. Thirteen out of 18 Latin American countries suffered a decline in the real minimum wage over this time period (International Labour Organization 1998: 43). Regionwide, the Gini coefficient for inequality increased from just under .50 in 1982 to .56 in 1995; in comparison, the African coefficient was under .50, East and South Asia had coefficients less than .35, and Europe had a coefficient of .25. The income ratio of the richest quintile of the Latin American population to the poorest quintile increased from less than 16:1 in 1982 to greater than 22:1 in 1995 (Inter-American Development Bank 1997: 41). Although the sharp increase in inequality seemed to taper off in the 1990s, the economic recovery that followed the "lost decade" of the 1980s did not yield the expected gains in distribution; indeed, the Inter-American Development Bank acknowledged that "relatively well-off groups of Latin American society appear to have benefitted from the recovery of the 1990s somewhat more than the poorest classes (Inter-American Development Bank 1997: 18)." Wages and job creation remained stubbornly low in most of the region, while poverty levels were stubbornly high; one-third of Latin Americans were below the poverty line in 1995, up from one quarter in 1982 (Inter-American Development Bank 1997: 17). Even in Chile's neoliberal showcase, where the new democratic regime vowed to promote "growth with equity" (Weyland 1996) and succeeded in bringing down the poverty rate inherited from the Pinochet regime, inequality has proven to be a much more intractable problem to resolve.

There is little doubt that the combination of fragile institutions, weak popular representation, and egregious social inequalities is a highly combustible mixture in Latin American democracies. Indeed, history suggests that this combination provides the raw material for populist eruptions in the region. Outside Venezuela, populist eruptions over the last two decades have done little to challenge the core of the neoliberal model; to the contrary, neoliberalism has unexpectedly found ways to accommodate, and even harness, populist leadership in the pursuit of economic restructuring. As mentioned above, however, this serendipitous accommodation is fraught with contradictions and highly unstable. It is overly contingent on the volition and strategic calculations of autocrats and the vagaries of public opinion. It is also contingent on the organizational weakness and fragmentation of popular sectors in civil society. Although the neoliberal model has a profound capacity to disorganize its opponents, it also generates societal cleavages that can potentially be articulated by new social movements, political parties, or enterprising populist figures. The Chavez phenomenon in Venezuela demonstrates that the debt crisis and economic restructuring have not extinguished more traditional forms of populist appeal centered on nationalism, class antagonisms, and statist solutions to chronic social deficits. The spread of such formulas would surely pose a severe challenge to the neoliberal project and its affiliated goal of market-based economic integration.

Conclusion

This paper has argued that the domestic political foundations of neoliberalism and economic integration are shallow and insecure. The new economic project is buttressed by powerful global market and political pressures that have allowed it to diffuse rapidly across the region in a context of economic crisis and the virtual collapse of alternative development models. Over the long term, however, the sustainability of the new economic model will likely require that it resolve its domestic institutional and social deficits. If neoliberalism is to be reproduced democratically, it will require the reconstruction of representative institutions that can incorporate and respond to both elite and popular interests. The latter surely demands that the new economic model find instruments to distribute its potential fruits more broadly by expanding employment opportunities, increasing wages, and providing basic public services to a citizenry that vacillates between apathetic withdrawal and restive protest.

The alternatives are highly unpredictable, but uniformly in tension with a region-wide model of market democracy. Neither technocratic insulation nor populist bait-and-switch tactics provide a secure political foundation for neoliberalism, as both are vulnerable to Argentine or Ecuadorean-type social explosions when apathy turns to indignation. In short, the neoliberal model cannot endure indefinitely by relying on the organizational fragilities and programmatic uncertainties of its opponents. Democratic sustainability requires that it develop modes of political representation that are institutionally grounded in a plurality of societal interests and capable of responding to the region's urgent social demands.

Endnotes

1. This association, of course, is not perfect, as the Venezuelan case under Chavez amply demonstrates. The breakdown of the Venezuelan party system coincided with the rise of a populist figure who explicitly targeted his appeal to the poor and antagonized elite sectors. Chavez' personalistic rule, however, has strengthened the de facto power of the armed forces and failed to institutionalized mass political participation.