Creative Destruction?: Economic Crises and Democracy in Latin America

Throughout the twentieth century, financial shocks toppled democratic and authoritarian regimes across Latin America. But things began to change in the 1980s. This volume explains why this was the case in Argentina, Chile, and Uruguay. Taking a comparative historical approach, Francisco E. González looks at how the Great Depression, Latin America’s 1980s debt crisis, and the emerging markets' meltdowns of the late 1990s and early 2000s affected the governments of these three Southern Cone states. He finds that democratic or not, each nation’s governing regime gained stability in the 1980s from a combination of changes in the structure and functioning of national and international institutions, material interests, political ideologies, and economic paradigms and policies. Underlying these changes was a growing ease in the exchange of ideas. As the world’s balance of power transitioned from trilateral to bipolar to unipolar, international institutions such as the World Bank and the International Monetary Fund increased crisis interventions that backstopped economic freefalls and strengthened incumbents. Urban-based populations with relatively high per capita income grew and exercised their preference for the stability and prosperity they found as a class under democratic rule. These and other factors combined to substantially increase the cost of military takeovers, leading to fewer coups and an atmosphere friendlier toward domestic and foreign capital investment. González argues that this confluence created a pro-democracy bias—which was present even in Augusto Pinochet’s Chile—that not only aided the states’ ability to manage economic and political crises but also lessened the political, social, and monetary barriers to maintaining or even establishing democratic governance. With a concluding chapter on the impact of the Great Recession in other Latin American states, Eastern Europe, and East Asia, Creative Destruction? lends insight into the survival of democratic and authoritarian regimes during times of extreme financial instability. Scholars and students of Latin America, political economy, and democratization studies will find González's arguments engaging and the framework he built for this study especially useful in their own work.

Table of Contents:
Acknowledgments Introduction: Institutions, Interests, and Ideas in Explaining Regime Change 1. Financial Shocks, Economic Crises, and Democracy: Theory and Practice Part I: Great Depression, 1929-34 2. Economic Crisis and Democracy during the Great Depression 3. Institutions: Polarized Domestic Conflicts and Weak International Capacity 4. Interests: Foreign Capital and Domestic Coalitions against Democracy 5. Ideas: Extreme Ideological Conflict and Rise of the State in the Economy Part II: Economic Crises and Democracy in the Late Twentieth Century 6. 1982 Debt Crisis and 1997–2002 Emerging Markets Crises 7. Institutions: Demise of Military-as-Government and Higher Costs for Action 8. Interests: Capital Flight, Pressures from Below, and Democracy 9. Ideas: Cold War Endgame, Unipolar Moment, and Neoliberalism Conclusion: Implications for Democracy after the 2008-9 Financial Meltdown Notes Bibliography Index

About the Author :
Francisco E. González is the Riordan Roett Associate Professor of Latin American Studies at the Johns Hopkins School of Advanced International Studies and author of Dual Transitions from Authoritarian Rule: Institutionalized Regimes in Chile and Mexico, 1970–2000, published by Johns Hopkins.

Review :
González persuasively argues that structural changes to democratic governments have imporved the changes that they will survive hard times. The book raises fascinating questions about the connection between financial crises and innovation, and the possibility that economic turmoil may further strengthen democracy. —Britta and Russell Crandall, Survival