Role of Concertación in implementation of Washingotn Consensus in Brazil and Mexico

Ben Schneider’s article (Confidence and Concertation in Brazil and Mexico, 1997) attempts to explain why Brazil and Mexico, both pursuing similar ISI development strategies at the beginning of the 1980’s, took different approaches to neoliberal economic reform, with Mexico enacting deep and rapid reforms and Brazil taking a slow and less drastic approach. 

While he attributes the depth of reform to the severity of the economic crises that preceded them, Schneider seeks to explain the pacing and success of stabilization and liberalization policies, arguing that this depended heavily on the nature of government business relations.

In government-business relations, he downplays the importance of high-level officials relationships with business leaders and the process of policy hold-up by business interests earning rent from the status quo.  He also faults institutionalist explanations for failing to explain the timing of reforms.  Instead, he asserts the importance of concertación (or in Brazil pacto social) a process of regular meetings between representatives of business associations, the government and sometimes labor unions to negotiate the details of policy implementation.  He argues that neoliberal reforms  (such as policies to combat hyper-inflation)  must be both credible and flexible to succeed but that flexibility undermines credibility.  Concertación is one of the few ways to enhance both.

He points to high levels of concertación in Mexico as having reduced the costs of reform and led to more rapid stabilization than in Brazil where concertación was weak and restructuring programs where “stabilization came and the implementation of structural reforms such as trade liberalization was slow and uneven”. 

So one is apt to ask, why was concertación weak and not fomalized in Brazil as it was in Mexico?  Schneider argues that the difference was political stability, strong business associations, and shared perceptions of vulnerability.  Brazil was a fledgling democracy with many parties attempting to lead the country in different directions, while Mexico was firmly under PRI control.  With respect to business associations, Mexico had a formal peak organization (the Consejo Coordenador Empresarial or CCE) representing sectoral associations, so that officials could effectively communicate with business as a whole.  Brazil lacked such a business umbrella organization.   

Although he successfully motivates the role that Concertación plays in the policy making and implementation process, he fails to meaningfully explain why concertación differed in Mexico and Brazil, without relying on the very explanations for reform that he bgins the article by downplaying.  The first difference that he argues led to differences in concertación was “political stability”.  Its hard to see how this departs from institutionalist arguments.  If political stability is not driven by institutions  and exogenous shocks, then where does this variation on “political stability”come from?  Secondly, the existence of peak associations in business as a “cause” of differences in concertacíon seems plausible but is of little value without going deeper.  What caused business in Mexico to organize in representing its preferences to government while business in Brazil did not?  Again, it would be hard to answer this without making institutional arguments or relying on the incentives of rent-seeking coalitions to apply pressure through political means.  Schneiders third difference contributing to variance in concertación, “shared perceptions of vulnerability” is not really developed. 

The argument is interesting and the article offers good insight into business government relations, the processes by which business preferences are organized and represented to government, and he drivers of successful stabilization programs.  But the conclusions offered overreach or leave important questions like why Brazil lacked a peak business organization or formalized concertación procedures unexplained.   It would be fascinating to find a source of difference between Brazil and Mexico separate from institutional factors or rent-seeking behavior that led to differential neoliberal reforms.  But concertación does not seem to meet this criteria.   It appears to be essentially the result of both of these.

Ecuador’s (proposed) 20th Constitution

Ecuadorian President Rafael Correa took office in 2006, vowing to write a new constitution. If a new constitution were to be ratified, it would be the 20^th time the country has adopted a new constitution since its independence in 1830. Constitutional change is commonplace – in fact, former President José María Velasco Ibarra went so far as to completely abolish the constitutions of 1935, 1946, and 1970, claiming that they “limited the general will of the people.” While President Correa has not made identical claims, he does appear to be echoing Velasco Ibarra’s populist rhetoric in regards to the new constitution.

 

One example of Correa’s populist underpinnings is his claim that the Constitutional Assembly currently drafting the new constitution will “wrest power” from the “corrupt elite.” Populism in Ecuador has been characterized by a significant “demonization” of the opposition, whether they are specific political rivals or “the oligarchy” in general. In proposing yet another constitution, Correa claims to be bettering the situation of “the people,” whose concerns and interests he allegedly to embodies.

 

However, it appears that “the people” have some significant doubts as to whether Correa is actually representing them. In April 2006, when citizens voted on the referendum to create a Constitutional Assembly, the proposal for a new constitution was supported by 82% of all voters. By November 30, approval ratings for the new constitution had fallen to 62%, and continued to fall through the new year. Current polls show that only 38% of individuals favor the writing of a new assembly by the Constitutional Assembly.  

 

This decrease in support from “the people” may be due to the lack of actual representation present in the creation of the new constitution. In the 2006 election, no representatives from President Correa’s party won seats in the (now disbanded) legislature. However, on the September 30 election for the 130 assembly members, Correa’s supporters won 80 seats, and 69% of the vote. With more than a simple majority holding power in the Assembly, Correa has little interest or incentive to cooperate or reach a consensus with opponents.

 

Still, the referendum to ratify the new constitution must be held in a nation-wide vote, and the decreasing approval ratings seem to foreshadow a similar fate for Correa’s constitution as that experienced by Chavez’s recently failed referendum. In order to enact significant, representative change, Correa must drop his populist rhetoric, and embrace the necessity of dialogue and compromise with the opposition. Otherwise he may be the 9^th president in the past 11 years to fail to complete a full four-year term.

Quarrelsome Chileans acting out

In the last couple years, two major issues have persisted in Chile: inequality and windfall copper profit – which is Chile’s main export. Inequality is a contentious issue that continually generates criticism today of Chile’s problems in everything from labor standards to education. The effect of inequality has found its way into politics outside of elected institutions (as can be seen in the articles below). Additionally, the price of copper, of which Chile is the world’s greatest supplier, has reached historically high levels. This seemingly unforeseen government revenue has been generally beneficial to the country; nevertheless, citizenry’s demand for action against inequality has only grown more vocal in the face of this financial accumulation. Although Chile’s unions and other non-elected actors are not as strong as in other Latin American countries, such as Mexico’s teachers union, comfort in confronting the government and the incentives to demand certain responses are correspondingly increasing.

“A worrying precedent“

“Chile labor union protest draws nationwide support“

“Schools out“

Organized Interests in Nicaragua

Monday’s readings deal with how interest groups like Argentine unions are able to organize themselves and bring about change.  Likewise, Venezeuela’s commission system allows those who were not elected to office to have a voice in governmental policy.  While these readings show how people who are not elected into office have the power to change the system, the situation in Nicaragua is quite different.  Groups have not had success in organizing to get their preferences heard by the government.           

 More specifically, in Revista Envío (a publication based in Managua), Sofía Montenegro discusses the lack of organization among interest groups in Nicaraguan society.  First and foremost, she discusses the rise of actors during the 1990s like women, indigenous people, young people, human rights activists and others.  However, at the same time, Nicaragua has very few special interest groups whose purpose is get policy that benefits them.  Groups, like the Catholic Church, prefer no change at all in society, and Nicaraguan unions are hardly in existence anymore.  Additionally, youth and student groups face major organizational problems and peasant groups are consumed by other issues.  At the end of her article, Montenegro discusses the need for change.  She wants women and young people (who constitute a significant portion of the population) to organize and make sure their interests are heard by the government. 

Although this article was written in 2002, Montenegro still highlights that the Nicaraguan people do face significant obstacles in organizing themselves.  However, only through successful organization can these groups bring about policies that favor their interests.  However, from Montenegro’s article, it is quite clear the Nicaraguan people have not experienced success in this area.