Is there a common form of capitalism that is applicable to all Latin American countries and able to explain the various crises in these economies? Ilán Bizberg gives a negative answer in his newly published book Diversity of Capitalisms in Latin America. The author makes decisive arguments against the economic determinism via a political economy approach by formulating the theoretical framework with the historical and empirical account of transformations observed in Latin American countries. In this way, the book provides original and insightful analysis of the crises that have troubled almost all countries in this region in the 2010s.
The author analyses the heterogeneous development of capitalism in Latin America in the regulation approach, emphasising the need for the interpretation of stable socioeconomic regimes and their structural crises, and at the same time rejecting the idea of a canonical form of capitalism. One of the merits of the book is the effort to investigate the originality of capitalism categories that are unique in Latin America, especially that observed in rentier regimes. Specifically, the author discusses how both social movements and political intermediation impact on institutional creation and maturation, in order to understand the historical trajectories of Latin American societies. According to his observation, the trajectory is the joint result of structural impact and the deployment of social and political movements.
The methodology employed by the book is integrational. By refuting the functional perspective that emphasises complementarity, defined simply as increasing the efficiency of one institution through the existence of the other, the author points out that ‘not all institutions cooperate in order to constitute pure or stable forms of capitalism’ (p. 23). As a matter of fact, most capitalisms in Latin America are hybrids of pure types and not stable. Although institutions play a vital role in development, they can hardly determine social development single-handedly, since social dynamics are so complex that they can never be guided by any single law. Different actors from economic, societal, political and ideological fields jointly contribute to a nation's development.
In the book, much emphasis is given to coherence, which is used to define the correlation of institution and capitalism. When discussing how capitalisms are often hybrids of different types, the author points out that various institutions function with each other in a multi-directional way, and there is no guarantee that they will ‘cooperate’ only to build a pure or stable form of capitalism, because in Latin America the less complementary institutions create the less coherent capitalisms. Under this logic, the author brings forward his main argument that it is necessary and possible to formulate an alternative typology grounded in the relationship between social actors, the action of the State, and insertion in the international market. What is more, via observing the interactive dynamics between structures and institutions, the book displays a series of perspectives that proceed in an increasingly profound manner: first as actionalist, then as institutionalist, and finally as structuralist.
The book classifies capitalism in Latin America into four types: international outsourcing capitalism (a disarticulated form of capitalism emphasising the assembly of imported parts that come from parent countries located in the United States or other central countries), neo- or socio-developmentalist (producing commodities for external and internal markets), liberal rentier capitalism (showing a high degree of dependence on the export of commodities with the State intervening very little in the economy), and redistributive rentier capitalism (depending on foreign markets and investment, but with much intervention from the State).
The author then analyses the four types of capitalism in nine Latin American countries across six dimensions: mode of accumulation, international insertion, intervention of the State, dominant social coalition, form of the State and type of political system, and social pact and wage relations.
The outsourcing model, typified by Mexico, is highly dependent on the external market. For example, as the Mexican and US economies are intertwined and synchronised, when US growth and demand for commodities slow down, the strains on the Mexican economy increase considerably. The possibility of rebuilding their economic ties depends on a determined shift to growth in Mexico's internal market. But it comes with real difficulties in that productive chains are very hard to reconstruct once they have been broken.
The socio-developmentalist model, represented by Brazil, is very dependent on the financial expansion and low-interest policies of other giant powers, such as the United States and China. In the case of Argentina, the economy oscillates diachronically between a dependence on foreign markets, as with Mexico, and structuralist development, as with Brazil.
Liberal rentier capitalism focuses on the fact that the State abandons nearly its whole economy intervention toolkit. It has great difficulty in implementing Keynesian measures for balanced economic growth and risk prevention. In addition, social security systems in Latin American countries are usually underdeveloped, which aggravates the socioeconomic weakness of this type of capitalism. The liberal State lacks national as well as redistributive policies. For example, in Peru, the main tax that is allocated to localities, which represents 50 per cent of the income tax that the State collects from mining concerns, goes to the local governments where the mines are situated (pp. 304–5).
Redistributive rentier capitalism, according to the author, is both unstable and resilient. This type of capitalism, at the mercy of the pressure of organised civil society, allows for stronger social and political reactions once resources decline as a result of the fall of commodity exports. External shocks can lead to an increased pressure from both the popular and entrepreneurial classes, which may then be translated into social pressure, thus decreasing the stability of the regime. Yet there is another possibility: that redistributive rentier capitalism can avert a crisis arising from external shock. The decline of resources results in a decline in the State's capacity and legitimacy. The government has to apply austerity measures that can alienate its social support, which is consequently exploited by social actors to challenge the economic model. The outcome is determined by the legitimacy of the governing elites and the force of the opponents. For example, in Venezuela, a purely redistributive rentier capitalism, with no compromise with the economic elites, resulted in economic war and the collapse of the economy. In contrast, the government of Evo Morales in Bolivia, supported by organisations and social movements unified in the Movement towards Socialism (MAS), secured interim measures with agro-exporters.
It is worth mentioning is that no Latin American country coincides with any of the four ideal types of capitalism. Each is rather a hybrid of two or more types, with one type featuring more conspicuously than the others.
As a recent contribution to the literature on Latin American capitalism, this book emphasises that although each type of capitalism described above has frailties, it does not necessarily lead to open crises. Other factors, such as wage relations, political system and social coalition matter in the process. Also, all the countries that can be categorised as being close to one particular type of capitalism do not necessarily develop in the same direction or undergo the same destiny. Prediction of the crises confronting any specific country is usually unfeasible.
Despite the many contributions and highlights of the book, some parts need to be further clarified. First, the concluding remarks that centre on the analysis of the performance and frailties of Latin American capitalism: the author focuses on the frailties after a brief scan of the performance, but it would be preferable if both strengths and frailties were elaborated upon in order to give readers a more balanced and objective view of Latin American capitalisms. The second point for clarification is regarding the future evolution of different types of capitalism. The book is wrapped up in an abrupt manner, without offering insights into the future dynamics of capitalisms. Thus, some questions readers will have remain unanswered: will various types of capitalism remain unaffected or undergo transitions in the future? If they remain unaffected, what is the stabilising force? If they undergo transitions, will they be minor modifications or drastic changes?
Nevertheless, this book is highly recommended reading for any students, researchers and practitioners who seek to understand and research capitalism in Latin America.
