Mexico and the World
Vol. 7, No 2 (Spring 2002)
http://www.profmex.org/mexicoandtheworld/volume7/2spring02/crisis_reform.html

 Crisis and Reform of the State in Latin America
 
Marcos Kaplan1

 
     The central role of the State, with its intervention and growing autonomy in respect to the economy and society, has been a historical constant of Latin America.  The State is embodied by public sector elites and political and administrative bureaucracies; it constitutes at the same time a social group or layer, an apparatus, and an institution.  The existence of the State precedes the Nation and, as a result, has provided the principal conditions for the structure and function of the economy, society, and political regime; the development policies; and international integration.  The State is more a producer than a product of socioeconomic phenomena, since it develops and reforms itself in response to the changes and conflicts it faces.  It tends to expand its functions, powers, resources, and spheres of action; and it modifies its level of independence in respect to the economy, society, and principal groups and institutions2.

     Crises and reforms of the Latin American State have occurred in three broad phases: during national independence and nation formation; during the period of transition between the end of the 19th century and the first decades of the 20th; and from 1930 or 1945 to the present, first with a protectionist-welfare style of interventionism, and then with a neoliberal interventionism.
 
I. An Interventionist-Protectionist-Welfare State
     One the one hand, the last half-century’s interventionism responds to requirements of insertion into a changing international order, with its consequent conflicts and crises, as well as its internal repercussions.  The emerging order is restructured in accordance with the conditions imposed by the global concentration of power, by transnationalization, the New World Division of Labor, and the Third Industrial and Scientific-Technological Revolution3.  With the onset of this new order, various centers of interests, power, and decision from outside the region reinforce and exert a predominant influence in the development strategies and policies of the Latin American states.  Large-scale redistribution and reasignation operations modify the roles, status, and range of economies, societies, and national states in the new international order by means of a world market of labor and production4.  Thus we can construct the image of a transnationalizing integration (seen within the horizon of a globalization that is possible but still unrealized)5.

     State interventionism also increases as part of a set of responses to challenges and readjustments brought on by economic growth, agricultural restructuring, Import Substitution Industrialization, hyper-urbanization, changes in class structure, social movements, ideological and political conflicts, and cycles of authoritarianism and democratization.

     State interventionism is especially related to Import Substitution Industrialization (hereforward called I.S.I.) as an attempt to achieve industrialization without an industrial revolution.  Foreign and domestic private businesses together with the State and its public sector, participate in the New Global Division of Labor through specialized production for the internal market and then increasingly for exportation.  The I.S.I., lacking both an autonomous process of internal savings and investment, as well as an endogenous technology, is financed by export earnings, foreign debt, and private investment.  It enjoys comparative advantages such as the abundance of low-cost labor, energy, food products, raw materials, and State protectionism6.

     Growth sought through the I.S.I. is not associated with a process of integrated development; it is an insufficient economic expansion vis-a-vis the growth of the population, unequal in the distribution of its results, always threatened by stagnation and recession.  It favors the monopolization of its benefits, the concentration of wealth and power, social and economic polarization.  The needs and demands of significant or even majority groups remain frustrated with respect to improvements in employment, income, consumption, satisfaction of basic needs, social welfare, increased public participation and democratization.  The resulting multiplication of tensions and social conflicts poses the almost permanent dilemma of whether growth should be headed by democratic or authoritarian regimes.

     The new set of needs, demands, and conflicts are not sufficiently satisfied by either competition between private enterprises or a supposedly free market.  The public bailout operations of private companies threatened by bankruptcy are a significant example.  The State first and foremost assumes a supplementary role for the private sector, embarking upon a sustained process of accumulating functions, assignments, and powers.  This is shown by data of its growing participation in: a) the Gross Domestic Product, as well as in the national figures for savings, expenditure, and investment; b) direct public investment and subsidies of private investment; c) production and commercialization of goods and services; d) social and economic infrastructure and basic and strategic industries or activities; e) state-owned or managed companies; and f) labor and domestic-market subsidies by means of bureaucratic employment, transfer payments, and social security in general.

     The State also increases and diversifies its functions of repression; its means of social and political control; its capacities for mediation and solution of conflicts between classes and groups; it strongly pursues the preservation of governability; and of culture, science, technology, and education.  The State reinforces its autonomy and role as regulator and mediator of international relations, (bilateral and multilateral), the flow of commerce and finance, foreign investment, Latin American integration, and in one instance, the North American Free Trade Agreement between Mexico, the United States, and Canada7.  Finally, the State updates its institutionalization, legitimacy, and legality, making adjustments to the constitutional and judicial regimen in order to integrate new functions and modalities with traditional government and administrative apparatus.  Mexico gives us an outstanding example of this process with the Constitution of 1917 and its subsequent reforms, including those sanctioned in the neoliberal period with respect to Articles 25 and 288.

     These adjustments attempt to respond to a set of dilemmas and challenges.  National sovereignty, for example, may be undermined by opening up to the outside; the tradition of state intervention and the public sector may be compromised by free initiative and competition in a semi-regulated market.  The free initiative of a limited group of businessmen, especially in a developing nation, can lead to monopolization.  The demands and policies of employment, income distribution, social security and welfare, can be incompatible with the requirements of profitability, the accumulation of capital, economic growth, and the lowering of external barriers.  The social and political costs of growth and commercial opening multiply tensions and conflicts which affect political and social stability.  The end result is a perpetual reenactment of the following dilemmas: authoritarianism or democratization, and validity or non-validity of the State of Law.

II. The Neoliberal Interventionism

     In the 1960s and 70s, interventionism by the Latin American State began to display shortcomings and limits that, submitted to both internal and external forces or pressures, caused the emergence of an apparant paradox: a neoliberal interventionism or statism.

     The crisis of the State is generated, or reinforced and amplified, by the presence of untouched structural-historical roots and by social and economic fluctuations resulting from the subordinate insertion into a world order in the process of transnationalization.  This is accompanied by the interpenetration of national and international crises and the exhaustion of the internal development model as represented by the I.S.I..

     The issue of external debt explodes in 1982 as a debt crisis which later becomes a debt burden.  A subsequent chain of events gives rise to the Baker and Brady bailout plans, the first and second generation policies of stabilization and adjustment, the attempts to realize a new growth model, and to diverse varieties of State reform9.

     The reform plans seek first and foremost the stabilization of various macroeconomic indicators and the guarantees of payment and renegotiation of the external debt.  To this are added attempts to overcome the crisis, recover growth, and insert the nation into available niches in the New Global Division of Labor.  These attempts have critical and recessive effects which, at the same time, are not accompanied by resources and instruments that might contribute to bearing the real costs of the reforms and make possible the alleged benefits.  The incapacity to reassume economic growth combines with limits on state intervention that together increase and diversify social and political conflicts.

     All this exhibits the characteristics and negative consequences of bureaucratization; the hypertrophy of public personnel and the state apparatus; excessive rules and regulations; inefficiency and corruption; bloated public expenditures and their contribution to the budget deficit; tiresome fiscalization; internal and external debt; financial, monetary, and exchange rate instability; in sum, a multidimensional irrationality.

     The State’s shrinking capacity to intervene with honesty, legality, effectiveness and efficiency, the deficiencies and frustrations of its policies, the negative results, all of these elements undermine and delegitimize the authority of the State and make it lose internal consensus.

     Reform policies and plans are inspired or promoted by governments and transnational companies of the developed countries, by international financial institutions (such as the International Monetary Fund, the World Bank, the Inter-American Development Bank), and by internal forces and institutions in accordance with their particular interests and diagnoses.  The search for stabilization proceeds according to a limited group of macroeconomic indicators with the goal of assuring payment guarantees and renegotiating the external debt.  To this are added many efforts to overcome the crisis, achieve extroverted growth, and reform the State.

     There is the attempt to replace import subsititution industrialization and strong state protectionism by an export-oriented industrialization and massive foreign investment, a wide commercial opening, and an economy increasingly transnationalized and restructured by the New World Division of Labor.  In Mexico, the changes have been realized through sustained commercial and financial liberalization, its entrance to GATT, and passage of the North American Free Trade Agreement (NAFTA).

     The State Reform is placed within the context of economic liberalization, being reduced to the precondition and the instrument for fulfilling debt obligations, financial stabilization, overcoming the crisis, and achieving growth.  The reform tends to restrict the State’s role both inside and outside the country, making it supplementary and secondary to the domain of the economic and financial, and “refunctionalizing” its activities vis-a-vis the liberalization process.  The social and political dimensions are conceived as subordinate to the economic and financial.  The main goals and dimensions of the State reform have been the following:

A. To stabilize and mend public finances by reducing the budget deficit, diminishing public expenditures, and in general attempting to trim or dismantel the State.
B. Control inflation with a stable exchange rate as an anchor for other macroeconomic variables.
C. Strict monetary, credit, and fiscal policies.
D. Renegotiation of foreign debt.
E. Fiscal reform, done by broadening the tax base, reducing taxes on profit, eliminating taxes on capital, favoring high income groups, and reinforcing the indirect imposition of taxes (value-added tax).
F. Liberalization of the economy by deregulating private business, promoting market competition, and by financial and commercial opening to the outside.
G. Trimming or dismanteling the State, its apparatus, personnel, and resources, as well as its orientation, objectives, and modus operandi.  Public expenditure is reduced along with bureaucratic personnel, government investment, social security, participation in production, and its ruling and promoting functions.
H. The privatization of state industries, which trims the governmental apparatus and bureaucracy, contributing to the withdrawal of central government and the public sector10.

     The policies and measures of economic liberalization have inevitable political and social implications.  Above all, it does not give rise to an integrated reform in a strict sense, but instead to a sum of piecemeal economic, political, administrative, social, and judicial reforms.  The State reforms focus on economic liberalization and a restrictive redefinition of the role of State and Law in the economy.

     These partial reforms are criteria fixed by the world order11.  This has introduced governability to the reform agenda, and with it, concern for the State and legal system.  Intervention in the economy is ideally seen as that of a friendly State that complements and facilitates market transactions.

     The legal framework should foster productive investment, a stable environment for the efficient use of resources, and swift transactions among economic players without arbitrary political interference12.  According to the neoliberal model, the legal framework should meet five requirements: a) existence of a well-known set of rules;  b) effective vigilance of the rules; c) mechanisms which assure their application; d) conflict resolution through the compulsory decisions of an independent body; and e) procedures for amending the rules which no longer serve their purpose13.

     “These five requirements, though apparently formal, presuppose the existence of a complex institutional framework, one which is generally associated with modern states.  The enactment of abstract rules of behaviour presupposes the existence of a body of legal experts who elaborate the rules.  The effective enforcement of these rules requires an effective administrative apparatus made up of professional civil servants and backed by a professional police force.  Conflict resolution by an independent body- independent of the government and of the parties to the dispute- presupposes the existence of a state within which its different organs perform clearly defined functions within a stable constitutional framework.  Finally, the requirement that procedures should be in place to amend laws when they no longer serve their purpose also presupposes a special branch of the state, generally a legislature which is distinct and independent from the organ in charge of administration.14”

     This criteria for the intervention of the State and its legal system neither avoids nor resolves sociopolitical problems.  Rather, it incorporates and aggravates them, planting some crucial questions.  “Is a formal legal system indispensable for the development of a market economy?  Does law promote economic activity by providing essential legal concepts and techniques?  Are these concepts and techniques always consistent with the needs of business?  How does law relate to the political process in a market economy?  What impact does the decentralization of economic activity have on governments in developing countries?  Does the establishment of a market economy in developing countries require strong authoritarian executives to steer the process?  Will the market economy contribute to the transformation of strong authoritarian governments into strong democratic governments?”

     However, in an apparently paradoxical fashion, neoliberal reforms have been designed with a strong component of state intervention and authoritarianism (for example, the dictatorship of Pinochet in Chile, the “emergency regime” installed by Alberto Fujimori in Peru, or the practices of Carlos Salinas in Mexico and Carlos Menem in Argentina).  There has been an even more marked use of presidential powers; states of emergency; populist, corporativist, and clientelist mechanisms; and of control and repression.  They have thus imposed rigid monetary, financial, and fiscal policies, as well as price and salary control, even though they have had strong redistributive and concentrating effects on income and power.  Interventionism is especially evident in the procedures and styles of privatization; the protectionism in favor of large companies; and the authoritarian and repressive methods of managing and solving dilemmas and conflicts.

     The need for state intervention is strengthened by the high economic and social costs that the reforms have brought and imposed on many groups and on the nation.  Liberalization does not bring hoped-for benefits, but serious tensions and conflicts.  As a result, the State reimposes itself as a regulator in partial replacement of a market that, by itself, is incapable of carrying out this function (for example, the bailout operations and de facto renationalizations of the Bank in Brazil, Venezuela, and Mexico).  Governments promise and outline necessary social and political reforms that complement the economic-financial reforms and make them more viable, attenuating their impact and increasing governability.

     The Interventionist-Semi-Welfare State evolves into a Gendarme-Developmentalist State, partially displaced by the market’s role in regulating and energizing the system.  State intervention is not reduced, but rather modified in its objectives and frame of reference, its form and content.  The new reforms create or reinforce a kind of hybridization and dualism: statism combined with free market and private business; and deregulation and economic liberation combined with neopopulist politics.  The opening to the outside, the trimming of government, the deregulation and liberation of the economy through privatization and the free market, all coexist with policies and actions that attempt to attend to the pressures and demands of opposing forces, unsatisfied groups, and persistent conflicts.  In such a situation, it appears difficult, if not impossible, to avoid State interventionism, its initiative, control, arbitership, regulation, and promotion.

III. Constraints and Limits

III.1. The External Boundaries

     What remains of State interventionism is a result of external and internal restrictions that impose “boundaries on the system” in the form of structural and operational patterns.

     As external restrictions, foreign States, transnational businesses, speculative financiers, and international financial institutions are increasingly centers of power outside Latin America.  They make fundamental decisions about commercial activity, trade terms, capital flows, monetary reserves, technology, debt, import capacity, and control of vital resources.  This reduces capital accumulation and lessens productivity in Latin America economies, as well as weakens the capacity of the State and society to develop autonomously and cooperate internationally.  This constant of Latin American history has been even more important in the present, due to the nature of changes on the international level.

     1. The international system is more and more characterized by uncertainty about world hegemony and the global economy, which could be approaching a phase of stagnation and recession.  The competition and conflict over markets, resources, benefits, and military and political power; the divergence of interests and economic policies which frustrate negotiations to achieve a world order based on full economic liberalism: all maintain or reinforce protectionist tendencies and the formation of rival economic blocs.

     2. The resources and capacities of developed countries are globally insufficient to satisfy the unlimited needs and demands of the former Eastern bloc, Latin American, Asia, and Africa.  The developed nations can neither provide adequate niches and markets for the exports of these countries, nor enough aid and assistance.

     3. The contradiction between population growth and chronic development crisis in the Third World (and ex-Second World) is reinforced by policies which promote an extroverted development, with the negative effects of a deforming specialization, neocolonial subordination, outflow of capital, and marginalization.  The global restructuring promoted by the foreign centers of power does not guarantee the availability of the conditions or means needed for its realization.  On the contrary, it has counterproductive features and effects, such as destruction of the social fabric, virtual elimination of some social actors, negative reactions of groups and nation-states, and various kinds of conflict, destabilization, and disintegration.
     4. Transnationalization deals a new set of cards concerning the pyramid of world power by redefining national roles in production, rank, status, economic sectors, groups, instutions, regions, nations, and States.  A “triple rupture” is produced between: the primary economy and the industrial economy, between both of them and employment, and between the real economy and the symbolic economy15.

     The comparative advantages of countries now resides, above all, in the capacity for the use of information, and less and less in the abundance and cheapness of raw materials, foodstuffs, energy products, and labor.  Countries distinguish themselves more and more according to whether or not they have comparative advantages that result in low costs.  The economy of primary products and the industrial economy become disjointed and develop along divergent lines.  The industrial economy dissociates from production and employment, creating (through downsizing and reengineering) a world tendency toward structural unemployment16.

     Most nations experiencing recent or incipient industrialization implement traditional development projects based on the production of raw materials, foodstuffs, energy products, and semifinished goods for export, attempting to take advantage of low labor costs and inputs, and reduced educational and technological components.

     However, the “real economy” of production and commerce has been displaced, in a relative sense, by a symbolic economy that is structured by movements of capital, exchange rates, interest rates, and credit flows. The two economies become independent of each other and follow divergent paths.  The symbolic economy grows quicker than the real.  It is dominated by “spectronics”, the international financial capital that takes advantage of telematic operations to speculate and manipulate the high degree of volatility in the markets.  A new global financial market, highly technical and united through an electronically-integrated world network, ignores borders.  It exercises more and more influence over economic actors and forces, societies and national politics.  It poses a governability problem for the State by limiting or distorting its decisions and actions, especially in the formulation and application of a national economic policy.

     This globalizing mutation reclassifies, concentrates, marginalizes; it benefits sectors, groups, nations, and regions, generally a world minority, at the expense of others that gradually are converted into superfluous or redundant majorities.  International crises are unloaded onto Latin America and the Third World, as well as the Fourth World both outside and inside developed zones; these crises from abroad are interwoven with internal crises.

     In an unfavorable international economic atmosphere, the growth of world commerce declines in relation to the growth of world production.  The economies of the developed nations, together with their productive-commercial blocs, concentrate a large part of their commerce and investment within themselves, at the same time that they intensify their competition and increase their protectionism with respect to Latin America and the South.  The former require an economic opening from the latter in favor of their own exports and investments; they impose unfavorable conditions on foreign commerce and finance; they increase their exports in that direction and diminish their imports from the same.  The decrease in quantity and prices of exports from the Latin American nations, and the corresponding increase in quantity and price of imports to them, reinforce the tendency toward deterioration in terms of trade, in terms of unfavorable commercial and payment balances.  The gaps which result are widened with the foreign repatriation of investments and benefits, interest payments at high rates, the flight of speculative capital, and the cost of technology.  Inversely, the aid funds, loans from multilateral development agencies, and foreign investment prove to be insufficient.  The drain of capital toward the great centers and institutions of the developed world increases.  This accentuates the scarcity of foreign currency for the payment of debt and indispensable technology, the low capacity of internal savings, and the near inevitability of debtorship.  Inflation persists and permanently threatens to become hyperinflation.  Budget deficits increase, contributing to the breakout of financial crises.  Under the burden of external obligations, economic growth becomes difficult or nearly impossible.

     5. The Nation-State and its sovereignty suffer a double erosion17.  On the one hand, from the outside, there is the process of transnationalization.  On the other hand, from the inside, there exists economic decomposition, social dissolution, political destabilization, and the segmentation of national states and societies18.  With this erosion of State and sovereignty, the external restrictions of the system converge with the internal.

III.2. The Internal Boundaries

     Internally, the State promotes growth and modernization, the accumulation and profitability of large companies, but always with its own visions and interests.  For that reason, it frequently creates limits and negative constraints on large companies.  These, in turn, accept the intervention of the State in a conditional and transitory way.  They transfer the charges and costs of normal situations, temporary conjuntures, and crises to the State at the same time that they take away or refuse to provide the State with necessary resources.  They do not accept a State which tries to be an independent protagonist of growth and modernization with social change, productive and redistributive, promotor or tolerant of democratic participation.  They use the failures of public power to demand the reduction of State interference and its autonomy, and even propose destatization.

     The State and public elites see their possibilities of action limited.  They encounter difficulties in acting outside or against the logic of private accumulation and profitability, and against power relations that are parameters of the national system.  They do not dominate the social and political game in which they participate; they must adhere to many conditions, only regulating and compensating for the most important disequilibria and conflicts a posteriori.  They are less and less in a condition to guarantee development, and with it their own authority and legitimacy.

     Development proposed for the participation and benefit of all has apparently run out since the “Lost Decade” of the Eighties given the evidence of an insufficient and uncertain process confiscated by privileged groups and generating poverty, privation, and marginalization for the majority.  The development gap has widened, both within and between nations.  The Latin American State suffers from the restrictive and destructive effects of a diabolical economic, social, and political triangle.
     The crisis and decomposition of the economy surge with the lack or irregularity of growth; restrictions on internal saving, capital accumulation, investment, productivity, production, employment, the redistribution of income and the satisfaction of basic needs.

     In conditions of savage capitalism, groups and clases, economic sectors and regions, all compete in an exacerbated fashion for a piece of the shrinking national product.  The monetarization and mercantilization of everything emerges and predominates, along with inflation, corruption, economic success at any price, engaging in unproductive activities of commercial and financial mediation and speculation, as well as taking advantage of opportunities created by crises.  The informal economy, organized crime, and the criminal economy all grow in size and sophistication19.

     The companies with greatest financial strength, access to markets, and privileged relations with the State are those that dominate.  This occurs much to the detriment of productive and innovative activities and businesses which create employment, distribute income, and induce progressive development projects.  The former companies are generally also the ones that engage in uncontrolled exploitation of human and natural resources, thereby deteriorating or destroying them.

     Internal growth and international integration occur mainly as a result of techno-economic and socio-cultural enclaves that contribute to the modification of existing socioeconomic axes, the creation of new ones, the opening of socioeconomic breaches and internal segmentation, and to articulation with external forces and dynamics that bypass national borders.

     Money, wealth, market, mercantilization, are all insufficient and inadequate patterns of social organization and cohesion, of reproduction and growth, of civilized coexistence and human solidarity.

     Social dissolution is manifested in the weakening or disintegration of social groups and fabrics.  It affects, above all, the peasant classes, the marginal urban poor, self-employed workers, and the poorly trained and organized sectors of the labor force.  It also touches, to varying degrees, trained and organized workers, small and medium-sized business owners, and middle-class intellectuals and technical professionals.  Within groups, victimization mostly corresponds to sex and age (women, the elderly, children, adolescents, unemployed youth), and to ethnicity and regions.

     These categories suffer the decline of employment, income, consumption, public services, infrastructure, and of the products which satisfy basic needs.  They experience multiple scarcities, the virtually definitive closure of individual possibilities for maintenance and advancement, and the generalization of poverty and misery.  This brings a fall into powerlessness, apathy, marginalization, insecurity, violence, social disorganization (prostitution, alcoholism, drug addiction), and the search for survival in criminality.

     With the fragments or offcasts that result from the disintegration of the middle and lower classes, there is the emergence of a subclass or “non-class” of pariahs, a redundant population.  Its members are displaced from the legal economy and formal society, towards the informal or criminal economy, the peripheral social sphere, and international migration.

     Economic decomposition and social dissolution imply the pillage, poor utilization, and loss of potential of many groups of people together with their relations, social structures, and interactions.   This eliminates from the scene many protagonists, resources, and bases for alliances which are indispensable for economic growth, social solidarity, national integration, continuity and progressive change, social and political democratization, and the State of Law.

     The production chains deteriorate or are destroyed, reducing the complexity, breadth, and potential of the social division of labor.  Individual, social, and collective identities weaken or disappear along with their frames of reference.  It becomes difficult for one to perceive and take advantage of his or her full range of possibilities and opportunites.  The gaps and fractures which divide and polarize Latin American nations widen, or new ones appear.

     In reaction to the uncertainty and insecurity, an exasperated individualism searches for survival at whatever cost, as well as the gratification of needs and personal realization in the bosom of the private, the family, the elementary solidarities.  Escape to privacy is favored by mass media and the entertainment industry, becoming an apparatus of manipulation, disinformation, a kind of “dream factory” on behalf of compulsive consumerism and addictions such as drugs and alcohol.
 
     Adaptation to the existent and unchangeable carries with it the renunciation of social and political participation through institutions, movements, and parties.  Protection is sought by means of connections and forms of patronage, clientelism, and corporativism.  The promise of achievement and satisfaction is always postponed.  Victimized groups and individuals are differentiated and graded according to their expectations and achievements.  It becomes possible, and even probable, the fall into indifference, passivity, apathy, conformity, depolitization, and with it, an acceptance of social and political discipline.

     Economic decomposition and social dissolution mix and interact with political conflictiveness, instability, and anarchization.

  Social mobilization and turbulence and the demands for greater participation find restricted and repressive responses.  The population is submitted to a pyramidal structure of domination that subordinates majority groups to the State and to private powers.  The “subject” prevails over the “citizen”.

     Within the pyramid of domination operates a constellation of powers constituted by: a) those who govern and administer; b) the military/police establishment (both formal-legal and clandestine); c) technobureaucrats, experts in information and communication; d) politicians and public managers; e) representatives of large private interests; f) organized crime in politico-economic mafias; and g) local and regional powers, with its apparatus, appendages, and spheres of influence.

     The State, public elites, institutional orders, oligarchical groups, and the majority of political parties promote the declining role of middle and lower-class sectors in politics, and of their marginalization and depoliticization.  Regimes and their repressive techniques increase centralization and the propensity for state coercion, imposing authority, organic unity, passive consensus.  Legislative and administrative practices that work against majority groups are part of a general process of intimidation, manipulation, and corruption by private and public groups.

     The weight of dominant groups, both within the State and as external influences and controls, is neither annulled nor counterbalanced by the weight of majority groups.  Instead, these suffer the effects of marginalization and both legal and de facto participatory restrictions.  They are unable to formulate and realize their projects, strategies, and policies.  The prevailing power structure acts to weaken or dismantel all forms of power and authority of the population, its representative organizations, and its intermediary groups.

     Classes and groups, organizations and institutions, all lack united cohesion, conscience, and will.  They lack effective representation, aptitude for formulating and carrying out their interests and projects, and ability to build broad coalitions.  The obstacles multiply for creating and using rational forms of political action, and for achieving a wide consensus about national goals and issues.  Irreconcilible differences erupt and are maintained, as well as incoherent situations, paralyzing balances of forces, catastrophic stagnation.

     At the highest levels of the system, there is a tendency toward the restriction and abandonment of liberal democratic institutions; their replacement by more or less pragmatic and opportunistic regimes, which are also more or less elitist, oligarchical, or dictatorial.  There are also tendencies toward the concentration and personalization of power and the monocratic management of the State.

     The policies of autocentralization and amplification of state powers, support of privileged minorities, and marginalization and depolitization of the majority multiply contradictions and conflicts of all kinds that in turn, fall back upon the State.  As a result, the State weakens and is incapacitated as an agent of growth or maintainance, not to mention of integrated development.  It becomes uninterested in an autonomous role as mediator, representative, or innovator.  It does not unify the principal actors and interests of society or of the political system.  It becomes both repressive and regressive, “deauthorized” and deligitimized, avoiding submission to Law and the controls of legality and responsibility.

     States and governments that are hardly representative, unsupported as they are by an array of innovative, productive forces and a strong civil society, find themselves pressured or controlled by regressive or conservative public-private minorities.  They are absorbed by immediate survival, threatened by a succession of national and global crises of an extent and velocity without precedent.

     In these conditions, the State intervenes as a result of improvisation, conjunctural pressures, and emergencies.  The results of its interventions are disjointed and contradictory, reinforcing their irrationality and anarchy.  The State utilizes the instruments at its disposal only rarely and poorly.  It abdicates its possibilities and powers.  It fails to give sufficient attention to the values, norms, options, and programs that a democratic strategy of planning and development would require.  The State limits its own scope, restricting itself to a minimal role as regulator and gap-filler relative to the enormous problems, needs, and interests of society and its components.  Its policies oscillate between a kind of “national-statist-populism” and a “neocolonialist-individualist-elitism”, or combines them to varying degrees.  Much is let loose to the dynamic of the market and dominant private interests, on the one hand, and to the arbitrary actions of the elite and governmental apparatus on the other.  Coexistence between the public and private sectors is riddled with difficulty and exhibits a tendency toward the strengthening of the second, much to the detriment of the State’s autonomy, moral weight, and efficiency.

     The State, as occasional interventionist and planner, is obliged to seek a path of continuous meddling vis-a-vis irreconciliable interests, arduous problems, unsolvable conflicts, and divergent ends.  It does this with inadequate and insufficient resources, by means of actions, instruments, and methods that turn out to be mutually contradictory.  At the same time, the State lacks sure criteria and effective capabilities for proper perception, evaluation, and decision-making concerning the principal problems and conflicts.  The characteristics of the social actors that act as “emissors” converge here with those of the State as “receptor”.

     Information about the needs and demands, the problems and conflicts, of classes and groups, of institutions and subsystems, is emitted in a foggy and deformed manner by a society that is not at all transparent.  Given the conflicts, changes, and crises that are present and the lack of a lasting solution to the question of hegemony, no class, group, organization or institution can totally or exclusively dominate the State, nor use it in an unrestricted way for its own interests and projects.  A diversity of forces operate upon the State and from within it at the same time; they take it apart and paralyze it; they are interwoven with interest groups, clans, and governmental bodies, reinforcing their competition, rivalry, factional struggles, lack of coordination, anarchy, and inefficiency.

     The apparatus and personnel of the State suffer a dialectic of centralization and dispersion.  The overaccumulation of power and authority in central government, in the executive nucleus and high levels of technobureaucracy, hinders the legislative and judicial powers.  The political-administrative groups which proliferate in the state apparatus exercise a kind of feudalizing control on its branches, organs, and state-owned companies.  These groups blend with others from civil society through a network  of contacts, services, and mutual supports, and through political bosses, clientelism, and corporatization.  Authoritarian supercentralization and feudal dispersion contribute to the unsystematic aggregation of entities, mechanisms, and responsibilities within the state apparatus.  They contribute to the erratic search for momentary solutions and isolated reforms, without adequate rules or adjustment mechanisms.

     The State becomes more and more heterogenous and contradictory.  It makes decisions almost blindly, by trial and error.  Its politics and activities alternate and interweave insufficient solutions, ambiguous results, failures, and crisis.  In a second degree, they reinforce the sources of that which restricts and frustrates its intervention and autonomy.

     The “Creole Leviathan” reaches its height nearly at the same moment it enters into crisis.  Various forces and processes from within and without coerce and exhaust it, threaten its autonomy, supremacy, reach, and efficiency of it actions.  At the same time, the same or similar causes and dynamics reinforce or create counter-tendencies for its strengthenng or maintenance.

     The international crisis, combined with the unsatisfactory results of economic growth, multiply problems and conflicts for which there still appear to be no solutions or even actors which might promote and implement them.  After all, the states and corporations of developed nations, international institutions, and dominant groups, are unable or reluctant to assume direct control and exercise of government and administration in Latin American countries.

     This increases the need for a strong State to mediate and rule, in order to guarantee the conditions required for coherence, equilibrium, continuity, and growth of the national system.  Currently, situations and tendencies are being maintained which are favorable for the autonomization and accumulation of power and resources, for the ample range of action and privilege for public elites, with support from their peripheral agents, clientele, and sociopolitical alliances.

     The resurrection of a kind of neo-statism is possible, depending upon the alignment of several variables: a) outcomes of conflicts and crises; b) alliances of elites, classes, groups, and institutions; c) the degree of internal incidence of external factors; d) redefinitions of the strategies and politics of development; e) renewed rapport between State and Market, between State and Civil Society, and between public, private, and social sectors; and f) authoritarianism or democratization.

Endnotes

[1] Researcher at the Insituto de Investigaciones of the Universidad Autonoma de México.  Professor at the School of Philosophy and Letters and the School of Social and Political Sciences.  Translation services provided by André C. Leroux.
2 See Marcos Kaplan, Formación del Estado Nacional en América Latina, Santiago de Chile, Editorial Universitaria, 1969 (first edition); Buenos Aires, Amorrortu Editores, 1983 (third edition).
3 See Marcos Kaplan, Ciencia, Estado y Derecho en la Tercera Revolución, volume IV of Kaplan, M. (coordinator), Revolución Tecnológica, Estado y Derecho, México, UNAM/PEMEX, 1993; also Hugo Nochteef, “El Nuevo Paradigma Tecnológico y la Simetría Norte-Sur”, Revista del Derecho Industrial, Buenos Aires, Depalma, vol. 11, no. 33.
4 See Pierre Judet, Les Nouveux Pays Industriels, Paris, Editions Économie et Humanisme/Les Éditions Ouvrieres, 1981; Nigel Harris, The End of the Third World. Newly Industrializing Countries and the Decline of an Ideology, Penguin Books, 1987.
5 For more on the current debate about globalization, see: Richard Stubbs and Geoffrey R.D. Underhill (editors), Political Economy and the Changing Global Order, Toronto, M&S, 1994; Jeffrey A. Frieden and David A. Lake, International Political Economy. Perspectives on Global Power and Wealth, New York, St. Martin Press, 1995; Barbara Stallings (editor), Global Change, Regional Response. The New International Context of Development, Cambridge University Press, 1995.
6 For a more extensive treatment of this phase, see Marcos Kaplan, El Estado Latinoamericano, México, UNAM, 1996; Víctor Bulmer-Thomas, The Economic History of Latin America since Independence, Cambridge University Press, 1994.
7 See Marcos Kaplan, Democratización, Desarrollo Nacional e Integración Regional de América Latina, San José de Costa Rica, CAPEL/Instituto Interamericano de Derechos Humanos, 1987.
8 Diario Oficial, February 3, 1983.
9 For more about the implications of the debt burden, see Víctor Bulmer-Thomas, The Economic History..., op cit.
10 See William Glade (editor), Privatization of Public Enterprises in Latin America, San Francisco, ICS Press, 1991; Hafeez Shaikh, et al., Argentina’s Privatization Program. A Review of Five Cases, Washington, D.C., World Bank, 1996.
11 World Bank, Governance and Development, Washington, D.C., 1992.
12 Julio Faundez, “Introduction. Legal Technical Assistance”, in Julio Faundez (editor), Good Government and Law. Legal and Institutional Reform in Developing Countries, New York, St. Martin’s Press, 1997.
13 World Bank, Governance and Development, p. 30.
14 Faundez, op. cit.
15 See Peter Drucker, “The Changed World Economy”, Foreign Affairs, New York, Council on Foreign Relations, Spring 1986; M. Michael Blumenthal, “The World Economy and Technological Change”, Foreign Affairs, vol. 66, 1988; and Walter B. Wriston, “Technological Change”, Foreign Affairs, vol. 67, no. 2, 1988.
16 See Jeremy Rifkin, The End of Work. The Decline of the Labor Force and the Dawn of the Post-Market Era, New York, G.P. Putnam’s Sons, 1995.
17 For more about the evolution of the role of the State and the erosion of sovereignty in globalizing processes, see: Matthew Horsman and Andrew Marshall, After the Nation-State. Citizens, Tribalism and the New World Disorder, London, HarperCollins, 1994; Kenichi Ohmae, The End of the Nation-State. The Rise of Regional Economies, New York, The Free Press, 1995; Robert Boyer and Daniel Drache, State Against Markets. The Limits of Globalization, London and New York, Routledge, 1996; Marcos Kaplan, “La Empresa Pública en los Paises Capitalistas Avanzados”, pp. 9-198, in Marcos Kaplan (coordinator), Crisis y Futuro de la Empresa Pública, México, UNAM/PEMEX, 1994; Susan Strange, World Economy, Cambridge University Press, 1996; David Held, Democracy and the Global Order. From the Modern State to Cosmopolitan Governance, Palo Alto, CA, Stanford University Press.  For more of the same in relation to Latin America, see Marcos Kaplan, “El Estado Latinoamericano”, op.cit., Víctor Bulmer-Thomas, The Economic History of Latin America..., op.cit.
18 See Jessica T. Matthews, “Power Shift”, Foreign Affairs, New York, vol. 76, no. 1, January/February 1997.
19 See Marcos Kaplan, El Narcotráfico Latinoamericano y los Derechos Humanos, México, Comisión Nacional de Derechos Humanos, 1993.

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