Sociological Forum, Vol. 4, No. 3, 1989

R e v i e w Essays

Debts, Doubts, and Disciplines Diane E. Davis ~ Lost Promises: Debt, Austerity, and Development in Latin America. William L. Canak, ed. Boulder, CO: Westview Press, 1989. 235 pp. Debt and Democracy in Latin America. Robert Kaufman and Barbara Stallings, eds. Boulder, CO: Westview Press, 1989. 223 pp.

Latin American governments' catastrophic accumulation of foreign debt is still their most pressing concern-not so much because it continues to limit external financial resources and to bring internal economic growth to a standstill, but because macroeconomic remedies for the crisis are so politically charged. With financial resources scarce, governments are forced to make difficult decisions about which social classes will bear the brunt of austerity and which will receive the nation's limited resources. Predictably, these decisions are never benign. They generate serious social conflicts, in turn challenging the capacity of national governments to implement these policies. While macroeconomic policies have always generated debate and dissatisfaction in Latin American countries, there is evidence that the current conflicts are somewhat different. For one thing, debt crisis has brought widespread dissatisfaction, not only among the working class and the urban poor, but also among the middle classes and some sectors of the business community. All of them suffer from the inflation, scarce credit, unemployment, reduced public spending, and the growing power of internationally linked firms that accompany debt crisis and its attendant stabilization policies. Because these disparate class forces all have a reason to reject stabilization policies-although often for slightly different reasons-they often join together to oppose regimes that impose these policies. When placing court-

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terpressure on their governments to impose such stabilization policies, however, internationally linked business and banking forces in these countries have a powerful ally in the International Monetary Fund and the United States. Governments are generally caught in the middle of these conflicts, and they are faced with limited options. They are often incapable of responding as authoritatively (and repressively) as they used t o - i n large part because there is little consensus among state actors about which strategy to follow. Moreover, concerns about opposition both from within and without national borders generally prevent these governments from fully ignoring either alliance of forces and their preferred policy options. The result is either rapid regime change and/or inconsistent macroeconomic policy responses, the latter generally seen in a vacillation between orthodox and heterodox stabilization polices. The greatest impact of debt crisis, then, may be its potential to bring new conflicts or alliances within and between classes and the state, and by so doing, to fundamentally alter trajectories of social, political, and economic development in rapid and unexpected ways. Given this, I had hoped that two new edited volumes, Lost Promises: Debt, Austerity, and Development in Latin American and Debt and Democracy in Latin America, would shed more light on this crucial problem, using debt crisis and austerity or stabilization policies as a medium for understanding the nature of state-class relations, how they result from and produce political and economic development trajectories, and how they reflect a fundamentally new state of affairs in contemporary Latin America. I am disappointed. It is not that Lost Promises and Debt and Democracy in Latin America fail to provide empirically grounded materials or the disciplinary expertise necessary for such an enterprise. Both volumes consider the social and political implications of massive foreign indebtedness, and each contains pieces written by sociologists, political scientists, and economists that address the social and class conflicts underlying the current crisis or the regime change and macroeconomic policy vacillation accompanying the crisis. The problem is that the editors of the two volumes shun any attempt to endow these articles with a conceptual framework that encompasses both state and society, and that charts their interactive relationship over time. Instead, each utilizes an analytic framework emphasizing only segments of this complex whole; that choice forces readers to wade through the numerous case studies and to put the components together for themselves. Discipline helps explain this. Debt and Democracy in Latin America, as edited by the political scientists Robert Kaufman and Barbara Stallings, falls into the classical political science tradition. Its editors are more preoccupied with formal and easily categorizable state structures than with the messy and problematic social relationships that underlie them. In fact, Kauf-

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man and Stallings offer as their main contribution the proposition that recent social and economic changes in Latin America, including the types of stabilization policies employed, vary with regime type, and thus give the impression that such formal political structures are the principal determinants of social and economic trajectories in Latin America today (Debt: 201-221). Yet this conclusion flies in the face of many of the empirical contributions contained within. Paul Drake's historical discussion of debt crisis in the 1920s and 1980s shows that debt crisis has brought the demise of both authoritarian and democratic regimes, suggesting that something besides regime type itself mediates the development impact of debt crisis. Moreover, articles by Eul-Soo Pang on Brazil, Joan Nelson on Costa Rica, and Carol Wise on Peru all suggest that vacillation between orthodox and heterodox stabilization policies is as characteristic of "new" democracies as of "established" democracies- distinct regime types in Kaufman and Stallings's schema. Only the characterization of Mexico and Chile as authoritarian regimes allows the editors to claim that regime type influences type of stabilization policy introduced, since they claim both countries introduced only orthodox sfabilization policies. The authors are on shaky ground lumping Mexico and Chile together in this manner, and by looking only at formal regime type they have ignored the possibility that Chile and Mexico may share other common characteristics that do not reduce to regime type but nonetheless explain their common implementation of orthodox stabilization policies. Pressure from the United States and the ways such pressure can influence internal state-class relationships stand out as possible alternatives. Lost Promises: Debt, Austerity, and Development in Latin America, as edited by sociologist William L. Canak, does underscore the important role played by the international context, but it is no less open to criticism for its partiality and disciplinary bias. Canak's introductory comments and overview article remind us (as if we have forgotten) that the subfield of development sociology is boring itself and almost everyone else to death by paying homage to the presence of a world system. Indeed, Canak opens this volume by characterizing "debt and austerity [as] two compelling features of the new international division of labor"; his discussion fails to recognize the overwhelming importance of national politics and state structures in mediating the world system's impact on class and social relationships, and even to see austerity policies as a product-and not just a producer--of nationallevel social and class relationships (Lost Promises: 1, 9-24). With this type of world-system framework, how do we explain why some countries introduce heterodox rather than orthodox stabilization policies, or have rapid regime changes, while others do not? Moreover, can causality become any vaguer than identifying debt and austerity as "features" of the new international division of labor? Lost Promises, like the companion volume Debt and Democracy in Latin America, is misguided, but it errs in the opposite direc-

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tion. It plays down the role of state actors and institutions in influencing social and class relationships and development trajectories, suggesting, instead, that the world system is the critical analytical point of departure. But what is the problem, aside from the fact that neither of the editors' distinct perspectives can alone do justice to the complex and fascinating case studies presented by most of the contributing authors? Can't we just read both volumes together-as one suspects any press that publishes two books on the same subject simultaneously is h o p i n g - a n d come up with our own complete picture of the complex interrelationships between debt, state, classes, and development in the modern world system? In short, would we be wrong in suggesting the old "Jack Sprat" approach-using these two distinct disciplinary perspectives and levels of analysis to wipe the development platter clean, so to speak? I think so. Just as I always felt Jack Sprat and his wife would go hungry if served a breakfast of bacon and buttered toast, our intellectual appetites are left unsatiated by such an approach. Rather than hiding behind rather arbitrary disciplinary boundaries, partialing phenomena into separate spheres and levels of analyses, then aggregating the findings from each, we need one good analytic framework to make sense of the ways that economic development trajectories and political changes interact in highly indebted countries of Latin America. The publishing world and competing academic markets in development studies notwithstanding, such a framework could and should be provided in one book. This would prevent redundancy, since at times we get almost identical articles in the two books. It would also expedite analytic precision and help guide the reader through the detailed morass of orthodox vs. heterodox economic policy changes, labor strikes, political crises and transitions, capital flight, and inflationary spirals that appear in most every article. Indeed, without one synthetic framework it is difficult to determine how and why the policy changes, protests, political crises, and economic dilemmas discussed in both books sometimes bring common and other times distinct political and economic consequences to Latin American countries. An analytic focus on stateclass relationships is a stunningly simple yet comprehensive way of making sense of all these details. Such a focus, in fact, is implicit in several of the articles in both volumes, particularly those by Paul Singer and William Smith in Lost Promises and by Jeffry Frieden in Debt and Democracy in Latin America, all of which explore the interrelationship between state actors, class actors, and debt crisis. These contributions suggest that the state-class focus deserves much greater attention. Paul Singer's piece, "Democracy and Inflation in the Light of the Brazilian Experience," is a good place to start. By directly recognizing the centrality of state-class relationships, Singer clearly and concisely lays out the problematic connection between politics and economics in conditions of debt crisis. His discussion suggests that neither regime type nor world-system

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position is the principal determinant of economic policy trajectories-but rather, it is the state's responsiveness to classes that is critical. According to Singer, "the macro-regulation of the [highly indebted] economy is far from being a purely technical task. It is in fact a battlefield of opposed interests." Thus, "in a high-inflation, indexed economy, like that of Brazil and many other Latin American nations, distributional struggles cease to be fought among classes or class fractions and become increasingly directed towards the state. Each class fraction (landlords, exporters, financiers, manufacturers, organized workers) struggles for more favorable indexation rules. This leads to faster and larger readjustments of prices, wages, and rents; [and] if the government yields to such demands, the result is still higher inflation" (Lost Promises: 31, 34). Thus the vicious circle starts again, with inflation bringing reduced foreign investment and declining economic growth, even as the nation is still unable to repay its foreign debt. Stricter stabilization policies are formulated, political opposition emerges, and we return to the beginning. Through this nuanced discussion of the dialectics of change, Singer is making the claim that economic development trajectories depend directly on the extent of state responsiveness to pressures from social classes, with selection of orthodox vs. heterodox stabilization policies reflecting this responsiveness. William Smith's "Heterodox Shocks and the Political Economy of Democratic Transition in Argentina and Brazil," also in the Lost Promises collection, fine tunes this argument about state-class relationships and political and economic change with comparative evidence. By analyzing how and why the selection of orthodox vs. heterodox stabilization polices depends on internal political conditions (i.e., installation of new civilian governments), and on the organization and relative power of capital and/or labor sectors, Smith paints a fascinating picture of the complex relationships between economic policy-making, political legitimacy, and class harmony/conflict. Smith suggests that the relative "success" of certain macroeconomic policies derives from the state's ability "to incorporate the business community into an institutionalized social pact" with the state and labor, something itself determined by the extent of "capital's own political and organizational fragmentation" (Lost Promises: 153). Thus Smith also finds the nature of state-class relationships to be central. In Debt and Democracy in Latin America, Jeffry Frieden's "Winners and Losers in the Latin American Debt Crisis" further underscores the importance of this focus. His approach "explores how socio-economic actors, in pursuit of their material interests [read class actors], interact with existing institutions. The result is not a constant assertion that economic growth leads towards or away from democracy, but rather a mode of analysis that allows us to understand the relationships among economic interests, political behavior, and social outcomes" (Debt and Democracy in Latin America: 23).

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In addition to challenging the static relationship between regime type and economic policy postulated by his own editors, Kaufman and Stallings, Frieden recognizes that political structures and practices themselves influence the relationship between classes and the state. While Singer and Smith focus almost exclusively on class dynamics as influencing state-class relationships, Frieden notes that such relationships are not only determined by the group's economic importance, but also "its ability to unite with other forces, its ties to the government, and the availability of an opposition attractive to the group in question" (35). Thus, had all three of these articles appeared in one volume, they would have nicely complemented each other, giving the reader a more accurate and illuminating understanding of the dialectics of state-class relationships in Latin America and how that produces certain trajectories of political and economic change in conditions of debt. One nagging question remains. If the focus on state-class relationships illuminates so many of the problematic issues related to debt, democracy, and development, if this analytic framework is so obviously a perfect way of synthesizing economic, political, and sociological contributions of the authors, and if this approach is already implicit in several of the articles, why do the volumes' editors ignore it in their overviews and as a general organizing strategy? Our concern is even more pressing since Debt and Democracy in Latin America coeditor Robert Kaufman indeed offers an insightful discussion of state-class relationships in his thorough and welldocumented case study of economic policy in Mexico. How can we explain this apparent inconsistency? Discipline again matters, as do the theoretical assumptions governing the predominant paradigms in sociology and political science. Most political scientists and sociologists tend to see state-class relationships as a broadly conceived-not to mention abstract-characteristic of society, one that tells you much about overall power structures but very little about the implementation of specific policies. Many sociologists, moreover, accept as given the dominant class power of capitalist societies, which spurs them to identify changes in state-class relationships only in the context of revolutionary transformations. Other sociologists assume a certain autonomy of the state, thereby ignoring the problematic character of state-class relations almost completely. Political scientists, in addition to accepting the notion of state autonomy, tend to see certain regime types as determining the balance of state and class power; thus they see changes in state-class relations as resulting only from major regime transitions. Further discouraging any focus on state-class relationships, in both disciplines state and class categories tend to be formulated in rigid and timeworn ways that cannot begin to capture Latin America's complexity: states are seen as homogeneous structures with a "state" interest that governs their actions, and classes are seen as structural-

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ly dichotomous or antagonistic groups-generally capital or organized labor, with other class fractions or social actors whose relationship to each other is less clear rarely conceptualized as "class" actors. For these reasons, world-system theorists and more traditional political scientists-who tend to hold the above v i e w s - rarely focus on state-class relationships when analyzing changes within one regime or within dependent capitalist societies. Yet many of the articles in these volumes show that state-class relationships do underlie certain policy and regime changes, and ~ thus the editors have let theoretical considerations blind them to the contributions contained within their own volumes. Once we recognize the utility of a focus on the relationships between state and class, moving beyond orthodox definitions o f each, several of the remaining articles in the volumes take on new m e a n i n g - different from their editor's intentions perhaps, but critical nonetheless. For example, articles in Lost Promises like Portes and Johns's discussion of spatial and class polarization in cities and Walton and Ragin's discussion of austerity protests are not so significant for what they tell us about the world system's impact on Latin A m e r i c a - although that is part of their contribution. They are much more noteworthy for suggesting that new social and class formations are emerging, mobilizing, and challenging the state as a result of the spatial and social consequences of debt crisis - not only in the informal rather than formal sector, but also around urban rather than workplace concerns. To the extent that these new social forces create new state-class alliances or destroy old ones, including those between capital and the state or organized labor and the state, we are given insight into the complex origins of current political and economic development patterns. In Debt and Democracy in Latin America, Sylvia Maxfield's insightful and comprehensive discussion of multiple divisions within the dominant class produced by economic crisis has almost nothing to do with the relationship between regime type and economic trajectories, or even debt and democracy for that matter, despite what one might expect from Kaufman and Stallings's concluding chapter and the volume's title. Yet Maxfield's article is important because it shows how problematic economic policy-making can be when dominant classes are more divided than united (which itself is a product o f the economic crisis). In such instances, new alliances made with other classes or state actors can make all the difference in the world, if the state then introduces new macroeconomic policies as a result. In short, despite the thinly veiled disciplinary chauvinism and paradigmatic biases of their editors, many of the authors in these two volumes launch us in the right direction to study state-class relationships, how they emerge from economic crisis, and how they in turn produce new macroeconomic responses. We cannot help but wonder whether we might have been guided

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even further down this important intellectual path, understanding the complex dialectics of development, had the publisher encouraged the editors to work together rather than to produce two separate volumes. State-class relationships a r e central; yet they are constantly in flux, constantly being negotiated, constantly up for challenge and reformulationjust like the development process itself. As Latin America's social and class structure becomes more complex and fragmented, as economic crisis makes the alliances within and between these new class and state actors both more necessary and more problematic, and as we begin to see that states are not homogeneous structures, but divided over economic policy and riddled by many of the same conflicts that class and social actors struggle over, we will need more rigorous and empirically grounded research on how and why certain state-class relationships emerge or change and with what consequences. The field of development studies is not lacking in its breadth of scholarship or capacity to explore these issues. But it has been slow in embracing the analytic framework necessary to do so. Caught in an allegiance to either world-system theory, state-centered theory, o r class analysis, many scholars have ignored the centrality of state-class relationships. Without this focus, however, we can neither explain recent developments with the complexity and comprehensiveness they deserve, nor chart Latin America's future.