Since the dawning of the new millennium there has been a growing tide of optimism that Latin America's glaring economic and social disparities might be less intractable than previously thought. Certainly, national statistics consistently indicate a gradual lessening of income poverty and inequality, albeit on a modest scale to date. It is generally recognised that more redistributive social policies have contributed significantly towards this process. In this very welcome and illuminating volume, Huber and Stephens show how changing political forces and growing democratisation in Latin America have created the conditions for social policy reforms that are gradually helping to reduce poverty and inequality across the continent.
Focusing on Argentina, Brazil, Chile, Costa Rica and Uruguay, as well as making comparisons with Spain and Portugal, the authors apply ‘power constellation theory’ to link the development of political forces in these countries to the evolution of welfare states. They identify three key sets of conditioning factors; the balance between social class and party political power, the structure of the state and state–society relations, and the influence of transnational power structures and the international economy, especially international financial institutions such as the World Bank. Broadly speaking, it is argued that the advance of leftist parties and their role in government, together with increased political competition and democratisation across the spectrum, has led to a growth in demand for more egalitarian social policy, whose implementation has resulted in less inequality. This has been achieved, it is claimed, via two channels, both of which aim to strengthen human capital and incomes as part of citizens' basic rights: first, through enhanced levels of investment in health and education; and second, via income redistribution through targeted, means-tested conditional cash transfers to the poorest groups in order to reach those informal workers who fall outside the restricted net of contributory social insurance programmes.
Countering fatalistic perspectives on the immutability of inequality in Latin America, the authors aim to demonstrate that ‘politics can make a big difference for the distribution of life chances’ (p. 240). Huber and Stephens make a (some might say over-optimistic) case for this vision of the continent's present and future development. Following an introduction and presentation of the theoretical and methodological approach adopted, the book outlines elements of an emerging strategy for redistribution and poverty reduction on the continent. This would guarantee minimum levels of income while providing fundamental health and education facilities along with labour market training. Income redistribution could be underpinned by proportional taxation together with flat-rate benefits that, it is maintained, would be supported politically by two-thirds of Latin American households. ‘Basic universalism’ as a citizenship right would underpin social policy reform, in which social assistance for the informally employed would complement mainstream social insurance to provide more universal protection.
This emerging trend is examined historically over three chapters for the five early ‘welfare state leaders’ in Latin America. These are divided into two major pathways: those supported by ‘democratic/left’ politics (Chile, Costa Rica and Uruguay), and those typified by ‘authoritarian elite co-optation’ of the urban working class (Argentina and Brazil). Chapter 5 usefully brings together and examines statistical evidence from 1970–2005 to substantiate the claimed relationship between political regimes and the evolution of social spending, inequality and poverty reduction, including for Portugal and Spain. The basic message is, again, that democracy and the growth of left-wing politics leads to increased social welfare spending, while repressive authoritarianism has a negative effect.
The following chapter focuses on the development of social policy, poverty and inequality since 1980. The neoliberal or ‘Washington Consensus’ period to 2000 was superseded in Latin America by the rise of leftist political power and the introduction of new, revised and expanded social protection policies. Spearheaded by Mexico, Brazil and Chile, a combination of cash transfers, pension reforms and social investments has made an impact on inequality. As the authors note, however, we should not lose sight of the fact that many of these gains owe as much to increased minimum wages in the context of faster economic growth and employment generation. In Brazil, for example, it is estimated that cash transfers have accounted for around one-third of poverty reduction over the past decade. In addition to the core cases examined in the book, mention is also made of other countries in which social reforms have been more sweeping rather than incrementalist, notably Bolivia, Venezuela and Ecuador.
The authors conclude what other observers have maintained for years; that attacking poverty and inequality is not only socially and morally desirable, but is also good for economic growth. Yet focusing so heavily on quantitative economic indicators may create the illusion that inequality is diminishing faster (on paper) than it is in reality. It remains to be seen to what extent the entrenched barriers of social and cultural exclusion, deprivation and discrimination are seriously challenged as a consequence of this growing material prosperity. With any luck, however, the political gains accruing to governing elites of various persuasions may well create a path dependence on progressive social policy reform that cuts across all ideologies and leads to comprehensive progress on all fronts. We can but hope.
