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RIPE 4/1 01-03-C 25/4/97 8:51 am Page 87 Review of International Political Economy 4:1 Spring 1997: 87–126 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 Folio Market structures, political institutions, and democratization: the Latin American and East European experiences David Bartlett and Wendy Hunter Department of Political Science, Vanderbilt University A B S TRA CT This article develops a structural and institutional framework for exploring the prospects for stable democracy in Latin America and Eastern Europe. Its guiding premise is that democratic consolidation hinges on the willingness of societal actors to use the party system as their primary medium of interest articulation. The structural analysis examines how the resources of agents in different socioeconomic systems influence their affinity for party or non-party strategies. The institutional component assesses how party and state institutions reshape actors’ strategic incentives. Integrating the two logics leads to the following argument: market structures in the developing capitalist countries of Latin America encourage economic elites to circumvent the democratic process. Structural conditions in Eastern Europe’s transitional socialist countries induce a wider range of actors to employ party strategies, but place anti-democratic elements in a favored position within the electoral arena. Democratic consolidation in the two regions necessitates the building of party and state institutions capable of overcoming these structural impediments. K E YW O RD S Eastern Europe; Latin America; democratic transitions; political institutions; social structures; economic reform. Comparing transitions from authoritarian rule in Latin America and Eastern Europe has become a prominent theme of the contemporary literature in political economy. What can we learn from comparisons of two regions possessing such dissimilar political, economic and social structures? Our objective in this article is to analyze the factors shaping prospects for stable democracy in Latin America and Eastern Europe. Our guiding premise is that the central problem of democratic consolidation in postauthoritarian countries is inducing societal actors to choose ‘voice’ in the electoral arena over ‘exit’ to non-party media of interest articulation and © 1997 Routledge 0969–2290 RIPE 4/1 01-03-C 25/4/97 8:51 am Page 88 ARTICLES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 Folio to secure their long-term ‘loyalty’ to democratic principles (Hirschman, 1970). The historical experiences of the western countries illustrate the difficulties of attaining these goals. Establishment of stable participatory democracies required two hundred years in the West, where highly developed markets provided actors with a range of alternatives to democratic contestation (Moore, 1966; Rueschemeyer et al., 1992; Rustow, 1970). The challenges confronting the fledgling democracies of the South and East are even more daunting. We argue that the structural features of Latin America’s market economies give owners of capital and land incentives and opportunities to pursue non-party political strategies. Conversely, the very same resources that allow economic elites in capitalist systems to exit from the electoral arena are missing or poorly developed in the transitional economies of the East. Paradoxically, this creates a broader social base for party contestation in Eastern Europe than in the capitalist South. But because the agents least endowed with market skills are also the ones most likely to choose party strategies, the electoral system tends to favor the most reactionary elements of postcommunist society. Our analysis of the socioeconomic determinants of political strategies therefore suggests two different kinds of structural obstacles to stable democracy in the two regions. The fundamental dilemma facing the postauthoritarian countries of Latin America is overcoming the reluctance of economic elites to support mass participatory democracy, which they have often perceived as a threat to their proprietary interests. The main predicament in Eastern Europe is transforming the behavior of actors who already view parties as their principal mode of interest representation but whose activities do not advance the goal of creating liberal democracies and market economies. We go on to argue that whether the Latin American and East European countries surmount these structural barriers to democratic consolidation hinges on the nature of party and state institutions. Certain institutional configurations reinforce structural tendencies, while others may override socioeconomic constraints by altering the incentives and policy preferences of societal actors. We thus maintain that a clear picture of post-authoritarian trajectories in the two regions demands careful analysis of the relationship between social structures and political institutions, heretofore treated independently in much of the literature on transitions to democracy. We begin by critically analyzing extant approaches to post-authoritarian outcomes in Latin America and Eastern Europe, assessing their explanatory power with respect to both inter- and intra-regional patterns. We then develop an alternative model of democratic transitions, suggesting a way of integrating structural and institutional analyses to illuminate the factors that promote or impede democratic consolidation 88 RIPE 4/1 01-03-C 25/4/97 8:51 am Page 89 DEMOCRATIZATION: LATIN AMERICA AND EAST EUROPE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 Folio in the South and East. While we refer selectively to empirical cases to demonstrate the capabilities and limitations of this integrative framework, our approach is heuristic and polemical: we believe that the interaction of market structures and political institutions constitutes the most promising sphere of research on transitions to democracy, and offer a set of hypotheses about that relationship with the hope of spurring further theoretical refinements and empirical testing. T HE ORE T I CAL A P P RO A CH E S TO P OS T - AU T HORITA RIA N O U TCO M E S The literature on post-authoritarian outcomes is organized into three general schools (Kitschelt, 1992a). One emphasizes the role of political processes in transitions to democracy. Examples include ‘path dependency’ approaches (Bruszt and Stark, 1990, 1991; Fishman, 1990; Karl and Schmitter, 1991; Linz, 1990a; Stepan, 1986) and models of the strategic interactions of key actors engaged in the transition (Collier and Norden, 1992; Kitschelt, 1992b; Przeworski, 1991). Process-type explanations assume that the modes of transition (e.g. ‘reforma’, ‘ruptura’, ‘pactada’) and actors’ choices of electoral rules and constitutional designs exert an independent impact on the prospects of democratic consolidation. Such approaches are useful for explaining political patterns in the immediate post-authoritarian period. For example, the ability of the military to extract guarantees of political autonomy made for relatively smooth transitions to civilian rule in Brazil and Chile, while the failure of the Argentine junta to do so created serious problems for the successor government of Raul Alfonsín. However, modes of transition models are poorly suited to explaining long-term trajectories, which depend largely on the broader socioeconomic structures in which negotiated pacts and other strategies are embedded. Nor can they account for changes in the distribution of power that invalidate predictions of actors’ choices and strategies based on the initial configuration of forces. Finally, neither the modes of transition nor strategic choice variants of the process school can anticipate shifts in actors’ interests as the institutional environment evolves and previously unforeseen opportunities and inducements arise. A second school focuses on the ways in which social and economic structures inherited from the authoritarian period impinge on the political behavior of agents now engaged in democratic contestation. For instance, Claus Offe (1991) argues that the legacies of Marxism-Leninism, central economic planning, and ethnic-national conflicts make the challenges confronting post-communist Eastern Europe more formidable than those facing Latin America. Herbert Kitschelt (1992c) develops a structural model of party cleavages in Eastern Europe, positing that economic system type and level of industrial development determine the 89 RIPE 4/1 01-03-C 25/4/97 8:51 am Page 90 ARTICLES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 Folio axes of electoral competition as well as the relative strength of liberal and conservative parties. Iván Szelényi and Szonja Szelény (1992) utilize a class-based approach to explain the underrepresentation of social democratic constituencies in Eastern Europe’s first post-communist elections. The chief virtue of structural approaches is their ability to illuminate the broad socioeconomic differences between Eastern Europe and Latin America, thereby supplying an indispensable theoretical foundation for any interregional comparison. By showing how preexisting social structures shape the preferences and strategies of political agents during the consolidation phase, such approaches advance on modes of transition and other process-type explanations that emphasize short-term patterns. The main drawback of structural theory is its inability to explain the widely divergent political trends among countries possessing similar socioeconomic attributes. Why do some Latin American countries show strong signs of achieving stable democracy (e.g. Chile) while others (Brazil) do not? By the same token, why do certain East European countries (e.g. Czech Republic) display favorable prospects for democratic consolidation, while others (Romania) remain mired in social conflict and stagnation? Such disparities highlight the importance of the institutional context in which democratization in the two regions takes place. Exemplary of the institutional approach to transitions is the growing body of scholarly research on the sources and consequences of alternative constitutional designs in new democracies (Elster, 1993; Geddes, 1993; Lijphart, 1992; Merkel, 1992; Shugart and Carey, 1992). Other contributors to the institutional school include Scott Mainwaring and Timothy Scully (1995), who argue that the degree of institutionalization of Latin American party systems helps determine levels of stability in democratic countries of the region. Guillermo O’Donnell (1994) similarly emphasizes party institutions in his comparison of ‘delegative’ and ‘representative’ democracies. He contends that the former’s lack of a ‘network of institutionalized powers that gives texture to the policymaking process’ prevents political parties from engendering the social consensus necessary for democratic consolidation. Regrettably, state institutions and their role in democratization have received somewhat less attention in the transitions literature. Exceptions include O’Donnell (1993), who examines the juridical dimensions of the state’s authority structure in new democracies. M. Stephen Fish (1991) argues that a robust civil society requires a well-constituted state. For societal groups effectively to press their claims on the state, they must have something to ‘push up against’. Kurt Weyland (1996a) maintains that redemocratization in Brazil had the unintended consequence of splintering an already highly fragmented state and thereby heightening actors’ incentives to bypass the party system and establish privileged relationships with specific state agencies. This form of post-authoritarian 90 RIPE 4/1 01-03-C 25/4/97 8:51 am Page 91 DEMOCRATIZATION: LATIN AMERICA AND EAST EUROPE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 Folio clientelism benefits elites at the expense of the poor and unorganized, thwarting implementation of equity-enhancing reforms in a country whose tremendous socioeconomic inequalities pose a threat to democratic consolidation. In our view, the institutional school has three important limitations. First, while the literature arguing the superiority of certain constitutional designs over others (e.g. parliamentarianism over presidentialism) is compelling (Linz, 1990b; Linz and Valenzuela, 1994; Stepan and Skach, 1993), this variant of the ‘new institutionalism’ cannot explain divergent outcomes among countries possessing similar institutional frameworks (e.g. Argentina and Peru). Second, the institutional literature generally views party and state organizations independently of each other. But whether parties promote stable democracy rests in no small part on their relationship to the state, underscoring the need for a theoretical approach that explicitly incorporates the interaction between the two spheres. Finally, the institutional school offers little insight into what shapes actors’ views about party and state institutions. Whether political agents perceive these organizations as effective mechanisms of interest articulation largely depends on their structural position in society. MARK E T S T RUCT U RE S , P O L ITICA L IN S TITU TIO N S A ND S T A B L E D E M O CRA CY The broad meaning of ‘democracy’ and the generalizability of western liberal norms to other regions of the world remain a source of dispute among political scientists. For our purposes, we embrace Adam Przeworski’s conception of democracy as ‘organized uncertainty’. Here, ‘consolidated democracy’ describes a political system in which a critical mass of actors exhibits: (1) an ex ante commitment to the rules of democratic contestation, the results of which are a priori unknown to participants; and (2) an ex post compliance with those outcomes, whereby the losers bide their time for the next round of competition and the winners resist the impulse to exploit their newly won power and harass the losers (1991: 10–50). In our view, this conception is far better suited to addressing the problems of new democracies than modernization theory (e.g. Lipset, 1981), which stresses the affinity between stable democracy and advanced industrial capitalism in the west. It also advances on traditional liberal theories of democracy (e.g. Dahl, 1971), which emphasize the formal attributes of stable democracies (freedom of expression, the right to vote, free and fair elections, etc.). Post-authoritarian countries face the task not merely of erecting the legal apparatus of democracy, but of inducing political elites to enter the democratic game even at the risk of losing and persuading ordinary citizens that they can protect their interests without resort to extra-democratic means. 91 RIPE 4/1 01-03-C 25/4/97 8:51 am Page 92 ARTICLES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 Folio Following Przeworski, we presume that democratic consolidation so conceived is especially problematic in Latin America (which had a long history of civilian government before the recent wave of democratization, but where popular participation was often limited and the results of democratic elections were periodically overturned by military officials) and Eastern Europe (whose communist regimes made no effort even to fulfill the legal prerequisites of competitive democracy). The heuristic model developed below integrates the logics of structural and institutional analyses: how do socioeconomic structures and political institutions shape actors’ willingness to enter the democratic game and abide by the rules of democracy after they have entered? The core assumption underpinning the model is that the long-term democratic consolidation in the South and East hinges on the formation of broad-based party systems. Political parties perform a variety of functions vital to the prospects of stable democracy in the two regions. An effective party system engenders confidence in the democratic process, moderates and channels societal demands into institutionalized media of conflict resolution, lengthens the time horizon of actors by providing electoral losers with the means to mobilize their resources for subsequent rounds of competition, and prevents the grievances of disenchanted groups from spilling over into the sort of mass mobilization that antagonizes elites and invites reimposition of authoritarian rule. Political parties also help democratically elected officials to govern. Effective governance through parties is especially critical in countries facing serious economic adjustment problems, as is the case in most of Latin America and Eastern Europe. Adjustment policies that require consent by a duly elected legislature are apt to be more modest than those initiated by executive decree, but also more likely to gain the broad social consensus necessary for successful implementation (O’Donnell, 1994: 63–4). We do not assign a central role to corporatist intermediation and other non-party modes of interest representation. While corporatism has promoted stability in many Western democracies (Katzenstein, 1985a, 1985b; Offe, 1981; Schmitter, 1979), it is not likely to foster democratic consolidation in post-authoritarian Latin America and Eastern Europe. While intermediary interest organizations may be decisive in forcing authoritarian regimes from power, once the founding elections have been scheduled they are usually displaced by political parties, whose territorial constituencies are better suited for mobilizing broad-based support. Free riding further hinders functionally based interest associations in new democracies, as popular enthusiasm for mass mobilization attending the ancien régime’s ouster wanes and local agents embrace the principle of voluntary participation (Schmitter, 1992: 430–3). Developments in Latin America and Eastern Europe substantiate this pessimistic 92 RIPE 4/1 01-03-C 25/4/97 8:51 am Page 93 DEMOCRATIZATION: LATIN AMERICA AND EAST EUROPE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 Folio appraisal of the possibilities of interest representation via non-party mechanisms. Historically, state corporatism in the Southern Cone excluded major sectors of labor, while interest group lobbying promoted clientelism and rent seeking among economic elites. More inclusive forms of corporatism might bolster Latin America’s new democracies. But owing to the region’s gross socioeconomic inequalities, inclusionary corporatism would require complementary party organizations to ensure adequate representation of marginalized groups and to give organized labor added leverage in tripartite bargaining with the state and business (Lehmbruch and Schmitter, 1977). National social pacts have not proven very durable in the South since the return to democracy, as ineffectual peak associations and slack labor demand induced workers to accept wage concessions in plant-level negotiations (Blake, 1994; McGuire, 1994). Meanwhile, postcommunist Eastern Europe lacks the robust, independent civil associations underlying Western European-style societal corporatism. Inchoate forms of tripartite bargaining have emerged in Poland, the Czech Republic and Hungary (Charap et al., 1992: 12–13; Patkai, 1993; Slay, 1994: 117–18, 186–7). But corporatist intermediation remains limited, as associations of workers and enterprise managers are hampered by organizational fragmentation, poor financing and adverse economic conditions (Bresser Pereira et al., 1993: 211). We therefore focus on the role of party systems in new democracies. How do socioeconomic structures and political institutions affect actors’ perceptions of the utility of parties as media of interest representation? The structural component of our theoretical framework examines the impact of markets on actors’ affinity for party-type strategies. We argue that the higher the degree of marketization, the greater the opportunities for disinvestment, patronage and other non-party strategies detrimental to stability in young democracies. This leads us to surmise that broadbased participation in electoral politics is most likely in non-market environments, where actors enjoy fewer exit options. But because parties tend to favor reactionary groups in non-market economies, such systems do not promote democratic consolidation. The institutional component of the model examines how the specific features of party and state organizations mold post-authoritarian outcomes. We argue that whether party systems promote stable democracy depends on their ability to balance ‘representation’ and ‘control’. Similarly, a strong social consensus for democracy requires state institutions that balance ‘embeddedness’ and ‘coherence’. Representation and embeddedness make political leaders accountable to their constituencies, thereby encouraging actors to exercise voice through the electoral system and discouraging losers from exiting the democratic arena. Institutional arrangements that meld the representative and embedded dimensions of parties and states thus provide new democracies with the legitimacy 93 RIPE 4/1 01-03-C 25/4/97 8:51 am Page 94 ARTICLES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 Folio essential for long-term stability. Meanwhile, control and coherence insulate party and state institutions from the immediate demands of mass societal groups while shielding those agencies from capture by individual sectors advancing particularistic agendas. The controlling and cohering elements of institutions promote democratic consolidation in two ways. First, they give economic elites confidence that their property rights will be adequately protected under mass democracy, thus inducing those actors to stay in the electoral arena. Second, they allow state agencies to provide universal welfare and other collective goods necessary to keep underprivileged groups loyal to the democratic order. In short, party and state institutions help foster participation among actors whose structural position in the post-authoritarian environment would otherwise suggest a proclivity for non-democratic political strategies. Our decision to approach democratic transitions from an avowedly political economy perspective is not intended to diminish the importance of non-economic factors. Clearly, the political strategies of actors are shaped by a variety of considerations (ethnic, national, cultural, religious, etc.) in addition to economic interests. But our focus on the economic dimensions of democratization allows us to situate Latin America and Eastern Europe (whose key differences emanate precisely from their structural attributes at the time of transition) in an analytically useful comparative framework. Moreover, this approach permits us to build on current scholarly research on democratic transitions that stresses the interplay between the economic and political components of democratization (e.g. Haggard and Kaufman, 1995). Structural determinants of political strategies We start with a simple, stylized model consisting of three factors of production (capital, labor and land) and three economic system types (market, partial market and non-market). This provides an essential theoretical foundation for comparing the ways in which socioeconomic structures inherited from the authoritarian period shape the resources and incentives of actors in Latin America and Eastern Europe. These economic system types differ markedly across the two regions. The following are the decisive features of the ‘market’ systems of the south. Private property is the predominant form of ownership. Income streams deriving from private ownership of capital are legally protected and ideologically legitimized. While state regulations strongly influence the strategies of workers, producers and consumers, the market determines the main patterns of resource allocation in the economy. Functioning markets for labor, capital and commodities subject economic agents to effective competition and enable those actors to forge horizontal connections independently of the state. In the ‘non-market’ systems of 94 RIPE 4/1 01-03-C 25/4/97 8:51 am Page 95 DEMOCRATIZATION: LATIN AMERICA AND EAST EUROPE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 Folio the former Soviet Union and the Balkan peninsula, collectivization has obliterated the landowning elite while marginalization of small-scale enterprises has eradicated most vestiges of the entrepreneurial class. Decades of central planning and isolation from the world economy have depleted the physical capital of large-scale industry, eroded the skills of enterprise management, and undermined the work ethic of labor. Elimination of commercial banks and other financial intermediaries has deprived producers and households of the means to raise capital, accumulate savings, and diversify income portfolios. The ‘partial market’ systems of East Central Europe differ from non-markets to the degree that the transition from central planning has progressed considerably farther and a politically consequential entrepreneurial class has emerged. But such systems remain distinct even from market economies, like those of many Latin American countries, that possess sizeable state sectors and a dirigiste tradition.1 The structural features of these economic systems allow us to deduce the probable political strategies of the three types of asset holders. We hypothesize that the extent of marketization shapes the economic resources and hence the political strategies of holders of these assets. Table 1 shows the relative intensity of societal support for party-type modes of interest representation in each system. The model suggests that economic elites in Latin America tend to look to non-party strategies, as the availability of markets enlarges their opportunities to circumvent political parties. While well-developed markets do not preclude elite participation in electoral politics, they do increase the diversity of actors’ incomes and heighten factor mobility. The model indicates a higher dependence on party strategies in non-market systems of the East, where socialism removed many of the exit options available to agents in the capitalist South. Finally, we expect actors in partial market economies to adopt mixed political strategies.2 Capital We hypothesize that the higher the level of marketization, the greater the incentives and capacities for holders of capital assets to pursue nonparty political strategies. Access to export markets enables producers to divert supplies from the domestic market. Highly diversified portfolios Table 1 Societal preferences for party strategy Capital Land Labor Market Partial market Non-market LOW LOW HIGH MEDIUM MEDIUM HIGH HIGH HIGH HIGH 95 RIPE 4/1 01-03-C 25/4/97 8:51 am Page 96 ARTICLES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 Folio facilitate tax evasion and concealment of income and permit producers to tolerate the revenue losses stemming from production shutdowns. Markets give owners of capital the financial resources to establish particularistic ties to state agencies, enabling them to exchange economic concessions for political favors. Finally, highly mobile or fungible assets allow industrial and financial capital to influence state policy via disinvestment. While not costless, these instruments enjoy one important advantage over party-type strategies. Mobilization through political parties requires higher levels of collective action, and hence creates greater problems of free riding and dispersion of benefits. Holders of capital in partial market systems like the Czech Republic, Hungary and Poland enjoy fewer opportunities for exit from the party system. The relatively advanced state of marketization and privatization gives nascent entrepreneurial groups greater flexibility than their counterparts in non-markets. But due to the low level of accumulation under central planning, capital owners in these systems lack the structural advantages enjoyed by elites in full-fledged market economies. Enterprise managers can draw on their long-standing connections to the state to lobby for regulatory exceptions, tax breaks and other favors. But lacking large amounts of liquid resources, their ability to forge particularistic links to the state is limited.3 Poorly developed capital markets and an inconvertible currency prevent business groups from using the threat of disinvestment for political gain. Nor is limiting production an effective instrument: lockouts and withholding supplies from the local market are not credible threats when most of the state sector is undergoing capacity reductions and few enterprises possess large export markets to which they can divert production. Owing to these constraints on non-party mechanisms, party strategies will prove a more attractive option for capital than in the market cases. But to the extent that capital in partial markets resorts to party modes of interest representation, it will not function as a cohesive bloc. The progression of markets creates divisions within the ranks of producers, with pro-reform entrepreneurs pitted against the managers of smokestack industries likely to suffer under increasing competition. A different dynamic obtains in non-market cases like Romania, Bulgaria, Ukraine and Russia. In the East Central European countries, marketization weakens the electoral potential of anti-reform industrial groups by inducing putative entrepreneurs to defect. The possibility that industrial groups will splinter in this fashion is diminished in nonmarket environments. State enterprises in such countries cannot readily convert their capital assets in ways that would allow them to enter competitive markets. Because the costs of exit are higher than in partial markets, conservative blocs of old guard enterprise managers are more easily maintained, politically powerful and inclined to look to parties as 96 RIPE 4/1 01-03-C 25/4/97 8:51 am Page 97 DEMOCRATIZATION: LATIN AMERICA AND EAST EUROPE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 Folio their primary mode of interest representation. At the same time, proreform elements of industry will remain numerically small and thus handicapped within the party system. Land Landowners operate under greater constraints than owners of capital. The inherent nature of land circumscribes possibilities for disinvestment, as asset immobility hinders physical transfers of production to alternative sites. Limits on the productive life of farmland compel owners periodically to remove portions of it from production, thereby reducing income streams. Endemic oversupply in world agricultural markets generates downward pressure on prices and profits. Finally, a variety of factors (short production windows, seasonal fluctuations in demand, vagaries of weather and environment, vulnerability to shifts in world markets) expose agricultural producers to high uncertainty. The degree of marketization of agricultural sectors strongly affects how holders of land respond to these constraints. Our model suggests that the more marketized the agrarian sector, the greater the affinity of land holders for individualistic economic strategies. The less marketized, the greater their dependence on party mobilization and direct state assistance to compensate for these structural liabilities. Highly mechanized, capital-intensive, modernized agrarian producers enjoy a number of economic means of reducing uncertainty unavailable to landowners in less marketized systems. They can widen their investment portfolios by diversifying into food processing or agro-industry, transform their production lines by developing specialized, high-value commodities, liquidate poorly performing assets, and tap export markets. These strategies simultaneously reduce producers’ reliance on price supports and other forms of state protection and afford them considerable leverage over the state. The state’s dependence on cash crops for foreign exchange enables producers to extract economic concessions. Moreover, producers who enjoy access to external markets can acquire political leverage by threatening to divert supplies from important domestic constituencies (Bates, 1981). The model suggests that agricultural producers in partial market economies will pursue a mixture of party and non-party strategies. Their relatively poorly diversified income portfolios render them vulnerable to adverse shifts in world markets and hence more dependent on the state for subsidies, price supports and other insurance mechanisms. But the patterns of agrarian responses within partial markets will be bifurcated. Efficient producers will avail themselves of the limited yet growing number of marketing outlets to divert production away from state-controlled distributional networks. This imparts to modern sectors a bias towards non-party strategies comparable to those employed by producers in 97 RIPE 4/1 01-03-C 25/4/97 8:51 am Page 98 ARTICLES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 Folio highly marketized contexts. But traditional producers lack the skills, fungible assets and market experience effectively to employ non-party strategies. For this reason, the most backward elements of the agrarian sectors in East Central Europe are highly amenable to electoral mobilization by rural-based parties. The policy platforms of those parties typically appeal to fears of encroaching market competition, rapid integration into the world economy, and increasing penetration of foreign capital. The pull of electoral strategies will be stronger in non-market systems like Russia, where opportunities for exit to the market are even more restricted. This makes economically backward producers highly susceptible to mobilization by agrarian parties, whose anti-market orientation is amplified by populist appeals to national, cultural and religious sentiments. Alternatively, agrarian producers will resort to a political strategy emphasizing physical coercion of the peasantry. Their inability to diversify into non-land income sources makes them extremely dependent on the maintenance of a low-cost and servile rural labor force.4 And so in addition to mobilization by right-wing parties, landed elites may well be compelled to seek state protection via direct repression of local labor. Thus, in contrast to the opportunistic non-party strategies favored by producers in highly marketized systems, the nonparty tactics employed by their counterparts in poorly developed markets are defensive in nature. Labor The structural model suggests that party mobilization will be the preferred strategy of labor in all three economic systems. In each case, workers face major obstacles to the use of economic strategies. In particular, the free rider problem constrains their capacity to utilize strikes, organized labor’s principal economic weapon. Whereas holders of capital and land can effectively employ their main instruments of economic leverage in ways that do not require high levels of collective action, the efficacy of labor strikes hinges on the mobilization of large numbers of workers (Offe, 1981: 146–50). For the former, disinvestment and production shutdowns generate losses that are dispersed throughout the enterprise, but need not impose onerous burdens on individual capitalists and landowners. By contrast, labor strikes entail severe personal hardships and high risks for participating workers and their families. Management may induce defections through selective payoffs, sustain production by hiring replacements, or eliminate strikers’ jobs altogether. But while the collective action problem circumscribes the effectiveness of strikes in all economic systems, the level of marketization strongly influences the range of alternative economic and political instruments available to workers. In regions where markets are more developed, like Latin America, skilled workers in dynamic sectors and industries vital 98 RIPE 4/1 01-03-C 25/4/97 8:51 am Page 99 DEMOCRATIZATION: LATIN AMERICA AND EAST EUROPE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 Folio to foreign exchange are well positioned to adopt a strategy of corporatist bargaining with business and the state. But while corporatism in the capitalist South has periodically advanced the position of individual sectors of labor, it has not improved the economic lot of labor as a whole. Moreover, the exclusionary nature of corporatist intermediation undermines the goal of establishing participatory democracy. Ad hoc concertation and other non-institutionalized variants of extra-party representation also tend to exclude lower strata of labor. Because lowskilled workers do not perceive negotiated pacts as an effective means of representing their interests, they look to party mobilization as their primary political strategy. In the partial market economies of Eastern Europe, highly skilled workers possessing transferable assets are likely to choose individualistic economic strategies over direct bargaining with the state. The disintegration of the state sector has created multiple opportunities for new competitors, whose entry costs remain low relative to those facing entrepreneurs in the more established markets of Latin America. Defections of the most entrepreneurial members of the labor force from state enterprises to small-scale business undercut the collective bargaining power of organized labor. Low-skilled workers remaining in the state sector will therefore look to the electoral arena as their chief medium of interest representation. The fact that the principal asset of blue-collar labor in the former socialist countries resides in its large numbers reinforces its affinity for party-type strategies. The structural features of non-market systems impart to labor a strong bias towards party strategies. The virtual absence of market opportunities limits possibilities for entrepreneurship and other economic strategies. Moreover, the paucity of autonomous civil associations in Eastern Europe eliminates an essential precondition for institutionalized corporatism. These factors leave labor almost completely dependent on electoral mobilization. Yet the collective action problem also impairs party-type strategies. Voter apathy induces many blue-collar workers to stay home during elections, while upward socioeconomic mobility leads others to defect to bourgeois parties. Labor thus finds itself in a paradoxical position: its structural position renders it highly dependent on electoral strategies, but the collective action problems distinctive to labor parties sap their cohesion and create strong incentives for workers to resort to politically destabilizing non-party strategies. Structural preferences and political trajectories To sum up, the model outlined above links the features of three general types of economic systems to sectoral perceptions of the efficacy of political parties. In market economies, holders of capital and land have 99 RIPE 4/1 01-03-C 25/4/97 8:51 am Page 100 ARTICLES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 Folio Table 2 Structurally determined trajectories Market Partial market Non-market Broad-based party system UNLIKELY STABLE POSSIBLE STABLE LIKELY UNSTABLE Labor-based system POSSIBLE UNSTABLE POSSIBLE UNSTABLE POSSIBLE UNSTABLE Capital–labor coalition UNLIKELY UNSTABLE POSSIBLE UNSTABLE LIKELY UNSTABLE Worker–farmer coalition UNLIKELY UNSTABLE POSSIBLE UNSTABLE POSSIBLE UNSTABLE Agro-industrial coalition POSSIBLE UNSTABLE POSSIBLE UNSTABLE POSSIBLE UNSTABLE a relatively low affinity for electoral strategies. In countries where opportunities for exit to the market are limited, these actors look to the party system as their principal mode of interest representation. In all three systems, collective action problems constrain labor’s ability to use economic instruments. Workers therefore look to the electoral arena, where they can most easily bring to bear their numerical advantages. Table 2 connects these structurally determined societal preferences to broader political tendencies in Latin America and Eastern Europe. The horizontal axis shows the same three economic system types displayed in Table 1. The vertical axis presents five possible configurations reflecting different levels of sectoral participation in electoral politics. In a ‘broad-based party system’, holders of capital, land and labor all view the electoral arena as their primary medium of political action. In ‘laborbased’ systems, the interests of organized labor prevail over those of capital and landowners, who consequently turn to non-party strategies. The remaining three ideal types – ‘capital–labor’, ‘worker–farmer’ and ‘agro-industrial’ – designate party systems dominated by two-sector coalitions.5 For each party configuration, we pose two questions. First, what is the likelihood of its emergence in different economic systems? Second, what are the prospects for stable democracy in the various combinations of party and economic system type? Broad-based systems are most conducive to stable democracy. All three asset holders view the party system as fair and effective, reducing incentives to resort to politically destabilizing non-party mechanisms. The fact that the party system is socially balanced encourages conciliation and compromise, promotes moderation, and discourages dissatisfied groups from taking their grievances to the streets in ways threatening to economic and political elites. But given capital and land’s affinity for 100 RIPE 4/1 01-03-C 25/4/97 8:51 am Page 101 DEMOCRATIZATION: LATIN AMERICA AND EAST EUROPE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 Folio non-party strategies, such systems are unlikely to emerge in market economies. Ironically, broad-based party systems are most apt to appear in non-market economies, whose structure limits the opportunities for all three sectors to pursue non-market strategies. However, such systems are also unstable insofar as the most reactionary groups in society tend to dominate party institutions. For example, the strong performance of ultranationalists and former communists in the December 1993 parliamentary elections in Russia enlarged the anti-reform and anti-democratic bloc within the Parliament. Broad-based systems are also possible in partial market economies, but show greater inclination towards westerntype liberalism as the expansion of markets and private property opens up political space for entrepreneurs and other progressive elements. Labor-based systems are possible in Latin America and Eastern Europe. In both cases, postwar industrialization created a large, physically concentrated and highly mobilizable working class. Labor-based populism is also politically unstable in the two regions, but for quite different reasons. Historically, labor party domination of Latin American governments has produced wage–price spirals that spur capital flight and induce economic elites to appeal for restoration of authoritarian rule. By contrast, the partial and non-market systems of Eastern Europe possess no sizeable propertied class whose interests are threatened by organized labor. Indeed, far from perceiving organized labor as a threat, managers of smokestack industry and landed elites in the region are likely to share many of the economic policy preferences of blue-collar workers. Thus, the main danger of labor-dominated party systems in Eastern Europe stems from the anti-reform orientation of labor and its possible allies from the ranks of capital and land. Capital–labor coalitions are highly improbable in market economies given the endemic economic conflicts between workers and capitalists.6 Yet they are quite possible in partial and non-market systems, where managers of steel, mining and other backward industries threatened by economic transformation ally with blue-collar workers lacking the skills to exit to emerging markets. Defections to the market by entrepreneurial workers and managers may undercut such coalitions in partial markets. These alliances will be most durable in non-market economies, where the cleaving effects of emerging markets are weakest. Should capital– labor parties acquire control of the legislature, it may not be possible to proceed with economic reform within the framework of democracy. This describes the dilemma facing Russian President Boris Yeltsin, who has employed emergency executive powers in an attempt to circumvent opposition to his economic reform program by the conservative bloc in the Parliament. Worker–farmer coalitions are also improbable in market economies, where urban and rural groups often clash over food prices, wages, social 101 RIPE 4/1 01-03-C 25/4/97 8:51 am Page 102 ARTICLES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 Folio welfare and other distributional issues. The one exception is the red–green coalitions of northern Europe, where region-specific factors enabled social democratic parties to maintain political hegemony for much of the twentieth century (Esping-Anderson, 1985). The structural model does envision a variant of the worker–farmer coalition in partial and non-markets. But the socioeconomic conditions underpinning stable social democracy in Scandinavia are absent in Eastern Europe. Because the Scandinavian countries already possessed high levels of capital accumulation and consolidated liberal states when they established their social welfare systems, redistribution could take place without provoking urban–rural conflicts or antagonizing business elites. By contrast, worker–farmer coalitions in Eastern Europe face poorly developed markets and a recent history of authoritarianism, circumstances rendering heavy redistribution incompatible with liberal democracy. Agro-industrial coalitions are possible in all three economic systems, but are likely to employ different political strategies. While the agroindustrial alliances in early postwar Latin America were sometimes organized through political parties,7 such coalitions typically rely on non-party mechanisms. In the l960s and 1970s, industrial and agrarian elites, anxious to protect their economic interests against the Left and organized labor, colluded in support of military coups. In addition to supporting political repression, the most advanced sectors of capital and agriculture undertook portfolio diversification, export expansion and other market strategies. The strategies used by agro-industrial coalitions in market economies are deleterious to participatory democracy to the degree that they exclude labor and the underprivileged. The absence of opportunities for exit leaves agro-industrial groups in non-market economies far more dependent on electoral strategies. Because the most backward elements of industry and agriculture are also those most inclined to utilize the party system, such coalitions are highly destabilizing. While the tactics employed by such actors may be formally ‘democratic’, the result of their ascent in the electoral arena is to diminish prospects for stable democracy. On the one hand, their antimarket platforms are often accompanied by appeals to ethnic/national sentiments that undermine democratic consolidation. On the other, if they succeed in using their voting power in the legislature to block reform policy, political executives will face strong pressures to issue decrees to overcome the stalemate. For this reason, it is precisely in nonmarket cases like Russia that the tension between economic reform and political democracy is sharpest. Implications and limitations of structural theory What does structural analysis tell us about the prospects for stable democracy in Latin America and Eastern Europe? The central implication of 102 RIPE 4/1 01-03-C 25/4/97 8:51 am Page 103 DEMOCRATIZATION: LATIN AMERICA AND EAST EUROPE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 Folio the model developed above is that post-authoritarian trajectories in the two regions do not bode well for long-term democratic consolidation. The social configuration most conducive to that outcome (broad-based party systems in market economies) is not likely to emerge. The party systems most apt to appear in the universe of cases under consideration (broad-based and capital–labor coalitions in non-markets) are the ones least propitious for democracy. Other configurations coded as ‘possible’ (agro-industrial, worker–farmer) are also unfavorable for democratic consolidation. The cases where broad-based party systems are both possible and politically auspicious are limited to partial market economies like the Czech Republic and Hungary. Here, advanced economic reforms create cleavages in the ranks of blue-collar workers and industrial managers and open political space for pro-market parties. In contrast to the non-market cases, where the favored position of reactionary groups in the party system raises the danger of a restoration of authoritarianism, the presence of strong liberal parties in the partial market countries makes it possible for successor governments to enact market reforms within a democratic framework. The experience of the industrialized west, where broad-based party systems emerged in market economies, appears to contradict one of the key predictions of the structural model. However, one should note that the evolution of stable capitalist democracies in the west took many decades to achieve. The long gestation and periodic breakdown of democracy in the west reflects the ambivalence of economic elites towards mass enfranchisement (Luebbert, 1987; Rueschemeyer et al., 1992). The hesitancy of these actors fully to embrace participatory democracy demonstrates that broad sectoral support of party systems is in fact problematic. This underscores the need for a structural approach to democratic transitions capable of theorizing about the socioeconomic determinants of political preferences. What structural reasoning cannot explain is why actors whose socioeconomic position militates against their entry into the electoral system would eventually accept it as the main arena of political contestation. To understand how otherwise reluctant actors are induced to abide by the rules of democratic competition, we must examine how party and state institutions overcome structural proclivities and transform actors’ incentives and strategies. P ART I E S , S T A T E IN S TITU TIO N S A N D DE MOCRAT I C CO N S O L ID A TIO N The structural model suggests that the main task confronting the new democracies of Latin America is persuading economic elites wary of mass democracy to exercise voice through the electoral system. The central problem in Eastern Europe is to engender commitment to democratic 103 RIPE 4/1 01-03-C 25/4/97 8:51 am Page 104 ARTICLES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 Folio ideals and practices among actors who have already entered the party system but who exhibit reactionary tendencies. In this section, we use institutional analysis to address the following questions: what types of party and state institutions overcome the hesitancy of holders of capital and land to enter the electoral arena and sustain loyalty to participatory democracy? What institutional configurations are most liable to inculcate democratic principles in actors strongly inclined to use the party system in ways pernicious to stable democracy? We argue the following. Party institutions that strike a balance between representation and control promote stable democracy by simultaneously holding political leaders accountable to the electorate and insulating them from the immediate demands of rank-and-file members. State institutions that combine embeddedness and coherence provide the collective goods needed to elicit support from mass constituencies and reassure economic elites that their interests will be adequately safeguarded under democratic contestation. Mature democracies require such goods to remain economically and politically robust. Countries undergoing transitions from authoritarian rule, where societal actors retain the means and incentives to employ non-democratic political strategies, demand them for the sake of democratic consolidation itself. Party institutions Scholarly research on parties has generated a wealth of hypotheses and empirical findings concerning the political consequences of various institutional arrangements. These configurations strongly influence the relative weight of the controlling and representative dimensions of party systems. ‘Control’ refers to the capacity of party leaders to moderate the claims of rank-and-file members, negotiate with the state and leaders of other parties, and enforce consequent agreements on their own followers. ‘Representation’ designates the extent to which the party system as a whole includes broad societal interests as well as the degree to which party leaders are responsive to rank-and-file demands. We hypothesize that the controlling element of party systems is enhanced under parliamentary governments, electoral systems based on the winner-take-all rule, low levels of party fragmentation, and candidate selection via closed lists. Representation is favored under presidential governments, electoral systems based on proportional representation, high party fragmentation, and open-list selection procedures. The choice of constitutional design in new democracies helps determine the balance between accountability and party discipline. Because they fuse executive and legislative power, parliamentary systems create incentives for party leaders to assemble and maintain stable coalitions. The availability of sanctions for poor governmental performance, notably 104 RIPE 4/1 01-03-C 25/4/97 8:51 am Page 105 DEMOCRATIZATION: LATIN AMERICA AND EAST EUROPE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 Folio the no-confidence vote, deepens the political interdependence of prime ministers and members of parliament. This increases inducements for party leaders to implement coherent policy programs and adhere to agreements struck with coalition partners. By contrast, presidential systems are often associated with weak parties oriented towards appeals to short-term constituent interests. The separate power bases and electoral mandates of the executive and legislature encourage party leaders to pursue individualistic strategies aimed at delivering specific benefits to local constituencies at the expense of party unity and national-level governance. They also weaken incentives for cooperation between the two branches and frustrate coalition building, creating a tendency for political deadlock and inviting accretion of executive power via rule by decree (Shugart and Carey, 1992: 1–54, 176–85; Stepan and Skach, 1993: 16–22). Electoral procedures also shape the representative and controlling elements of party systems. Proportional representation augments representation by widening inclusion of minority parties, which need only garner a small percentage of the vote to secure seats in the legislature. PR systems undermine control to the extent that they create incentives for party leaders to provide specific benefits to narrow constituencies organized along geographic, partisan or ethnic lines. By contrast, winnertake-all schemes are more exclusive of minority interests. Because losers receive no compensation in the legislature, political influence depends largely on the ability of parties to win elections. Winner-take-all systems therefore favor large national parties capable of formulating broad, programmatic policy platforms and mounting electoral campaigns designed to maximize aggregate vote shares. Fragmented party systems strengthen representation at the expense of control. Large numbers of parliamentary parties frustrate coalition building, multiply opportunities for defection, and generate incentives for party elites to cultivate specific constituencies through ideological appeals or pork-barrel politics. Systems comprised of small numbers of parties are more conducive to the construction of stable winning coalitions and effective national-level governance, factors that reinforce the need for strong party discipline and enforcement of agreements. The selection of candidates via closed lists determined by the party leadership also bolsters the controlling dimension. This institutional configuration enables party professionals to dominate the electoral arena by giving them instruments to screen prospective candidates for ideological conformity and tailor district-level activities to national campaign strategies. It also enhances their control of the legislative process by making individual members of parliament dependent on central party organizations for financing and logistical support. Open lists weaken the capacity of party elites to control candidate recruitment and broaden 105 RIPE 4/1 01-03-C 25/4/97 8:51 am Page 106 ARTICLES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 Folio opportunities for outsiders to challenge established politicians by building independent local constituencies. Typology of party institutions Various mixtures of these institutional features yield four general types of party systems, each reflecting different weights of representation and control. Effective party systems are distinguished by high levels of both control and representation. Here, rank-and-file members perceive that the party leadership is sufficiently attuned to their interests and policy preferences to obviate resort to alternative mechanisms. At the same time, party elites are able to channel and moderate the demands of the mass membership, assuaging the fears of propertied groups and enabling the leadership to fashion bargains palatable to rival parties and the state. High control also enhances the durability of such agreements by giving interlocutors confidence that the party leadership will be able to extract compliance from the rank-and-file. The polar opposite is the minimal party system, distinguished by low representation and control. This combination prevents party systems from performing the basic functions usually associated with modern democracies: aggregation and representation of societal interests, preparation of coherent policy platforms, formation of effective electoral strategies, and competent governance. Such systems stand at high risk of widespread social unrest and mass mobilization outside of party channels. The combination of low control and high representation describes mass-dominated party systems. Here, most voters regard parties as responsive to their interests. But the inability of party leaders to restrain the demands of the rank-and-file prevents them from cutting deals likely to be viewed as credible and binding by the state and other parties. Party leaders find themselves repeatedly yielding to the immediate demands of the membership, constantly shifting in the face of changes in public opinion. While the participatory dimension of mass-dominated systems might provide new democracies with some measure of short-term stability, the absence of institutionalized mechanisms capable of moderating demands from below is likely to imperil long-term governability. In elite-dominated party systems, where control is high but representation low, leaders are able to negotiate effectively with other political agents. This encourages elite participation in electoral politics by reassuring holders of capital and land that support of the party system will not imperil their proprietary interests. But because the resultant agreements are not underpinned by broad social support, rank-and-file members lack a sense of efficacy within party organizations. This endangers both governance and long-term stability: because large numbers of societal actors view the party system as an exclusive arena for political notables, they will face 106 RIPE 4/1 01-03-C 25/4/97 8:51 am Page 107 DEMOCRATIZATION: LATIN AMERICA AND EAST EUROPE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 Folio strong inducements to withhold support of current policies and employ non-party mechanisms of interest representation. State institutions While an examination of parties is an indispensable complement to structural analysis, a clear understanding of the impact of political institutions only emerges when parties are considered in relation to state organizations. Democratic consolidation requires state institutions that are simultaneously responsive to the needs of individual agents and capable of providing collective goods to society, such as universal law, national defense, fiscal and monetary control, and social welfare. Universal law guarantees the civil liberties of citizens, protects economic elites from arbitrary seizures of property, and provides a medium through which aggrieved actors can seek redress. National defense protects citizens from the internal and external threats to personal security that might otherwise dissuade them from engaging in democratic contestation. Fiscal and monetary regulation enables fledgling democracies to lay a foundation for the economic growth needed to support social welfare systems. Without an adequate social safety net, large numbers of lowincome citizens may fall below the subsistence level and turn to non-democratic methods of defending their interests. In the absence of robust economic growth, equity-enhancing reforms will require heavy redistribution of resources, which is likely to provoke the ire of economic elites and ignite inter-class and inter-ethnic conflicts. The ability of the state to supply these goods depends on its internal coherence. The concept of state ‘coherence’ derives from Max Weber’s (1947) ideal type. It refers to the organizational characteristics of the state that foster internal agreement and a common sense of purpose among ministries and bureaucrats: a skilled technocracy assembled through meritocratic recruiting procedures, clearly demarcated spheres of legal jurisdiction, and insulation from partisan political pressures. While coherence so conceived is often associated with authoritarian regimes, we argue that it is a critical precondition of democratic consolidation. States lacking a corporate identity and political autonomy will be unable to provide the collective goods underpinning stable democracy, as rival elites and sectoral groups exploit divisions within the state administration and advance their particularistic agendas. The institutional arrangements conducive to the provision of collective goods are well known. Universal law hinges on the existence of an independent judiciary capable of checking abuses by elected politicians and appointed officials as well as circumscribing the legal spheres of jurisdiction of state agencies. Fulfilling national defense requirements while sustaining civilian control of the military necessitates a routinized 107 RIPE 4/1 01-03-C 25/4/97 8:51 am Page 108 ARTICLES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 Folio chain of command that prevents actors from employing force to resolve domestic political conflict. This is particularly important in postauthoritarian countries, where the consolidation of democracy requires checks on the deployment of military power for purposes not approved by civilian decision makers. Effective macroeconomic regulation demands an institutional framework that shields central banks and finance ministries from attempts by politicians and societal groups to skew budgetary and monetary policy toward narrow interests. Moreover, fiscal and monetary control requires the separation of these agencies to prevent the monetization of budget deficits, which fuels inflation and incites capital flight.8 Finally, delivery of the universal social welfare services needed to inculcate broad societal support for democracy necessitates insulation of the providing agencies from interest group penetration. Partisan manipulation of social welfare policy impairs the state’s ability to supply a safety net for vulnerable groups, which is especially crucial for new democracies undergoing economic restructuring. But the internal coherence that enables the state to provide these goods must be balanced by embeddedness, especially in new democracies. The notion of embeddedness describes the network of informal and institutionalized linkages connecting state agencies and private actors. Several scholars have employed this concept to explain the economic successes of the East Asian ‘developmental states’ (Evans, 1992). We posit that embeddedness is equally vital to democratic consolidation in the post-authoritarian countries of Latin America and Eastern Europe. The provision of social welfare and other collective goods essential to stable democracy requires state actors to forge close links to private agents, whose cooperation is essential for implementation of stabilization policies and restoration of growth. Such privileged connections between the state and private actors do correspond to non-party strategies as we earlier defined them. But to the extent that these links promote growth of the national economy, they foster democratic consolidation by enabling the state to supply universal goods to society and transform democratic politics into a positive-sum game. The main danger of high levels of embeddedness is that elites may capture a disproportionate share of national income, leading ordinary citizens to perceive the state as a vassal to a narrow stratum of society. In short, stable democracy in the South and East requires a delicate balance between the state coherence that underpins social equity and the embeddedness that affords economic elites privileged access to state institutions. When coherence overrides embeddedness, democracy stands at risk of deteriorating into authoritarianism. When embeddedness supersedes coherence, rent-seeking alliances between state agencies and private actors may compromise the provision of essential collective goods. 108 RIPE 4/1 01-03-C 25/4/97 8:51 am Page 109 DEMOCRATIZATION: LATIN AMERICA AND EAST EUROPE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 Folio Typology of state institutions The coding of state institutions along these dimensions yields four possible combinations. An effective state possesses high levels of both coherence and embeddedness. The internal cohesion of the state allows it to initiate policies aimed at promoting the collective welfare of the nation and shelters it from capture by political elites and sectoral actors. At the same time, the state’s extensive connections to society enable it to gather the information needed to formulate well-designed policies, monitor their implementation, and elicit favorable responses by private capital. State autonomy is thus balanced by accountability; rationaltechnical decision making is bolstered by political support. These qualities enhance stable democracy. The state’s capacity to supply universal law, social welfare and other collective goods lowers the cost of maintaining internal order by obviating resort to physical coercion and interference in the personal affairs of citizens. At the same time, its embeddedness in society imparts to the citizenry a sense of political efficacy that induces actors voluntarily to play by the rules of democratic contestation. At the opposite pole lies the minimal state, which possesses neither the internal cohesion requisite to governance nor the immersion in society that allows citizens to check the arbitrary exercise of political power. Such polities are apt to degenerate either into anarchy, where state authority breaks down entirely, or predation, where individual cliques appropriate state agencies for their own aggrandizement and extract rents from citizens in exchange for access to state services. The activities of the minimal state thus become completely personalized, deregularized and arbitrary. In contrast to the minimal state, which becomes the vassal of ruling elites, the penetrated state is liable to capture by societal actors. Here, low coherence is combined with high embeddedness, rendering the state vulnerable to the specific demands of groups organized along sectoral, regional or ethnic lines. Such an institutional configuration impedes democratic consolidation, as the penetration of the state by favored actors generates resentment among excluded groups and heightens the latter’s incentives to resort to mass mobilization and other destabilizing activities. The penetrating state is characterized by high coherence and low embeddedness. Where the penetrated state is beholden to powerful societal actors, the penetrating state is insufficiently responsive to the claims of citizens. While the high autonomy of the state enables the technocracy to formulate coherent programs, its low embeddedness deprives private agents of a strong stake in their execution. Carefully elaborated policies aimed at advancing broad national goals are therefore at risk of being sabotaged in the implementation phase. And so while the state does not succumb to pressures exerted by privileged groups as in penetrated 109 RIPE 4/1 01-03-C 25/4/97 8:51 am Page 110 ARTICLES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 Folio Table 3 Institutionally determined trajectories Configuration Trajectory Examples EFFECTIVE PARTY EFFECTIVE STATE STABLE DEMOCRACY CHILE URUGUAY CZECH REPUBLIC MINIMAL PARTY MINIMAL STATE PRAETORIANISM PERU GEORGIA AZERBAIJAN MASS-DOMINATED PARTY PENETRATED STATE FRAGMENTED DEMOCRACY ARGENTINA BRAZIL POLAND ELITE-DOMINATED PARTY PENETRATED STATE OLIGARCHY ROMANIA PARAGUAY ELITE-DOMINATED PARTY PENETRATING STATE LIMITED DEMOCRACY MEXICO HUNGARY states, the absence of a sense of efficacy among the citizenry undermines long-term support for democracy. Links between party and state institutions Table 3 shows five possible combinations of party and state institutions, each of which suggests different political trajectories for new democracies.9 Effective party system, effective state: stable democracy This configuration favors stable democracy by providing both the mass citizenry and elite groups with well-institutionalized mechanisms of interest representation. The fusion of representativeness and embeddedness simultaneously gives ordinary citizens effective voice via the party system and affords economic elites access to the state. Meanwhile, the combination of control and coherence protects political parties and state agencies from complete capture by labor, capital or landowners. Party institutions address the short-term needs of the rank-and-file while giving leaders the political space needed to negotiate credible agreements and assemble durable governing coalitions. Similarly, state institutions secure the confidence of the sectors vital to national economic performance while reducing opportunities for bureaucrats to forge clientelistic links to individual enterprises. 110 RIPE 4/1 01-03-C 25/4/97 8:51 am Page 111 DEMOCRATIZATION: LATIN AMERICA AND EAST EUROPE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 Folio Among the Latin American cases, post-authoritarian Chile most closely resembles stable democracy so conceived: a party system dominated by a small number of disciplined, programmatic parties coupled with an efficient state administration. This institutional framework enabled the major political parties and key state agencies to continue the main elements of the neoliberal programs initiated by the Pinochet regime and respond to popular demands for progressive social legislation. In addition to creating an economic foundation for equityenhancing reforms, their promotion of pro-growth policies has reassured business elites still uneasy about a return to the chaos of the Allende years (Roberts, 1994; Silva, 1996; Weyland, 1997). Uruguay also exhibits some of the institutional features of stable democracy. That country’s intricate political system combines strong centripetal features (a presidency endowed with broad executive authority over fiscal policy and other issue areas) with institutionalized mechanisms for popular inclusion (notably direct popular referenda on legislation and a ‘double simultaneous’ electoral scheme that permits voters to choose both between political parties and among competing lists within parties). The result is an institutional bias towards moderate, incremental economic policies that have enjoyed higher levels of public support than those undertaken in Brazil, Argentina and Peru, where stabilization has proceeded largely through executive decree (Haggard and Kaufman, 1995: 212–18; O’Donnell, 1994: 63–4). Among the post-communist countries of Eastern Europe, the Czech Republic comes closest to the ideal type of stable democracy. The orderly separation of Czechoslovakia in 1992 reinforced the liberal orientation of the Czech Republic and enhanced governability by transforming the previous tricameral federal structure into a unified state. Subsequently, the institutional structure of the Czech party system reduced fragmentation by prescribing a threshold for admission to the legislature and enhanced discipline by empowering party leaders to assemble closed candidate lists. These factors that promoted the controlling element of the party system were balanced by proportional representation, which served to broaden inclusion of minority groups. The Czech Republic’s strong state administration and balanced party system enabled the center-right government of Václav Klaus to implement a highly successful stabilization program and launch an ambitious privatization scheme based on mass distribution of vouchers to Czech citizens. Strains within the government led to unanticipated setbacks in the spring 1996 elections, in which communist and nationalist parties gained parliamentary seats at the governing coalition’s expense. But the centrist, moderate tendencies of the Czech party system persisted despite the loss of Klaus’ majority in the Parliament. Three weeks after the elections, Klaus formed a new government composed of the original members of 111 RIPE 4/1 01-03-C 25/4/97 8:51 am Page 112 ARTICLES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 Folio his center-right coalition along with the center-left social democrats – a political alignment that virtually ensured the country’s continued movement toward a market economy and integration into the west (Judt, 1992; Olson, 1993; McGregor, 1993; Central European Report, 9 July 1996). Minimal party system, minimal state: praetorianism This is the institutional configuration least propitious for democratic consolidation. The party system cannot mediate social demands; the state cannot supply collective goods. The probable result is a political freefor-all, unrestrained popular mobilization outside of institutionalized channels. This condition of extreme polarization is akin to what Samuel Huntington (1968) calls ‘praetorianism’. Here, the restoration of order may require the imposition of martial law or full-fledged military rule. Among the Latin American countries, Peru exhibits the strongest tendencies towards praetorianism. In the 1980s, the combination of eroding state capacity and a debilitated party system produced a wave of social mobilization that culminated with the rise of Sendero Luminoso (Shining Path). The failure of party and state institutions to meet the simultaneous challenges of guerrilla insurgency and economic crisis led to the victory of the political outsider Alberto Fujimori in the 1990 presidential election. Continued disintegration of social order soon prompted Fujimori to call in the military (Degregori and Grompone, 1991: 23–36; Mauceri, 1995). The imposition of martial law did enable the government to quell the insurgency and implement an effective stabilization program. However, it did not create a firm institutional foundation for Peru’s return to competitive democracy. While Fujimori’s decisive reelection in April 1995 indicated substantial popular support for his strong-armed measures, it also demonstrated further erosion of an already fragile party system. The successor states of the former Soviet Union likewise show disturbing signs of descent into praetorianism. The collapse of unified military command and the emergence of local militias have fueled armed conflict in Azerbaijan, Georgia, Tajikistan and Moldova. In the Baltic republics and other countries, the absence of constitutionally guaranteed minority rights has exacerbated long-standing ethnic/national tensions. Elsewhere, the breakdown of monetary and budgetary control has ignited hyperinflation and disrupted trade and commerce. Russia and Ukraine have not yet deteriorated into praetorianism so defined. However, in both cases the failure of party systems to moderate socioeconomic tensions and the inability of state agencies to provide social safety nets have contributed to the rise of nationalist and communist parties that threaten the position of democratic governments. Boris Yeltsin’s triumph in the June 1996 presidential election induced a collective sigh of relief from Western governments alarmed at recent 112 RIPE 4/1 01-03-C 25/4/97 8:51 am Page 113 DEMOCRATIZATION: LATIN AMERICA AND EAST EUROPE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 Folio communist gains in the Russian Parliament and fearful of the global repercussions of a victory by the communist Gennady Zyuganov (Parish, 1996). But neither the conduct of that election nor its aftermath provided much confidence about the prospects for democratic consolidation in the Russian Federation. Government interference in state-controlled television resulted in a heavy media bias toward Yeltsin and against opposition candidates (with the notable exception of Aleksander Lebed, soon anointed as Yeltsin’s national security chief to ensure the President’s victory in the runoff election). Indeed, partisan manipulation of the Russian media in 1996 even surpassed that in the 1991 presidential election and 1993 and 1995 parliamentary elections (Berlin, 1996; Rutland, 1996a). Yeltsin meanwhile prevailed on the Russian Central Bank to release funds for political payoffs to teachers, miners, defense contractors and other constituencies – a development that underscored the continued institutional weakness of Russian state institutions and deepened skepticism about the government’s capacity to implement a credible stabilization program (Morvant, 1996). Equally ominous, the 1996 election demonstrated the immaturity of the Russian party system, which deepened the polarization of society between the ‘winners’ and ‘losers’ of the post-communist transition and undermined the institutional moorings of market reform and democratization. With no robust centrist or center-left parties available to mediate their interests, pensioners and other vulnerable groups turned in large numbers to Zyuganov – who managed a respectable showing in both the first and second rounds (32 and 40 percent respectively) despite Yeltsin’s appropriation of state resources for electoral patronage. Pro-market elements, who lacked a strong liberal party and who cast their lot with the maverick Grigorii Yavlinksy in the first voting round, had no place else to go in the runoff besides Boris Yeltsin – whose ability to proceed with economic reform depended less on party institutions than on executive decrees and elite machinations (Orttung, 1996a, 1996b; Rutland, 1996b). Mass-dominated party system, penetrated state: fragmented democracy Provision of the collective goods essential to democratic consolidation presupposes a state that is not bombarded by unbridled societal demands. Fragmented democracy describes a system where party leaders cannot mediate claims of their followers and the state itself is heavily embedded in society but internally divided. Because state and party elites are beholden to particularistic sectoral interests, policy making degenerates into patronage and political payoffs. Unable to formulate coherent policy strategies, governments attempt one ad hoc program after another, careening from crisis to crisis until draconian measures become necessary to restore economic and political stability. This opens the way for the emergence of neo-populist leaders with 113 RIPE 4/1 01-03-C 25/4/97 8:51 am Page 114 ARTICLES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 Folio authoritarian tendencies who promise to ‘save the day’ through rule by decree. The particularism emanating from this institutional configuration does not necessarily threaten democracy in advanced market economies, where high levels of development allow the state to supply an adequate level of social welfare services. But when democratization takes place in regions residing at lower levels of economic development (Latin America) or undergoing systemic transformations (Eastern Europe), the margin for error is much narrower, the bottom of the social safety net much closer to the subsistence level. If interest group penetration prevents the state from providing universal coverage, large numbers of citizens may fall below the poverty line, breeding resentment among excluded sectors. Among the Latin American cases, Argentina is a prototypical example of a fragmented democracy. Urban labor mobilized under Peronism formed the core of the populist coalition that dominated Argentine politics in the early postwar period. Yet Peronism more closely resembled a movement than a party. The fact that large landowners, another strategically vital class, lacked connections to well-institutionalized parties further destabilized the Argentine polity. The ISI strategies initiated by the Peronists begot inefficient state industries, a stagnant agrarian sector, hyperinflation and rising labor militancy that ultimately led to military rule (Waisman, 1987). The current government of Carlos Menem has sought to reverse the excesses of the previous Peronist regimes by pursuing a neoliberal stabilization and adjustment program. This program – implemented mainly through executive decree – curtailed inflation, accelerated privatization of state-owned enterprises, and spurred a degree of economic growth that resulted in Menem’s reelection in May 1995. But these short-term successes concealed the fact that the Argentine state and party system remain poorly institutionalized (McGuire, 1994, 1995). Because Menem has relied on a strategy of circumventing democratic channels via executive decree, the long-term prospects for economic and political stability in Argentina are suspect. The dangers of this strategy became clear in 1995, when the fallout of Mexico’s financial crisis triggered rising unemployment and imperiled Argentina’s convertibility plan. As in Mexico, Argentina’s economic recovery has been slow, placing Menem at risk of a steady dissipation of his political support. Brazil represents another variant of fragmented democracy. In contrast to Argentina, where a mass-based labor movement dominated the political arena, an assortment of particularistic groups (notably agroindustrial elites, public sector groups and regional cliques) penetrate Brazilian party and state institutions. Open-list candidate selection, weak voter loyalty, and high party fragmentation reinforce the tendency of 114 RIPE 4/1 01-03-C 25/4/97 8:51 am Page 115 DEMOCRATIZATION: LATIN AMERICA AND EAST EUROPE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 Folio party leaders to focus on short-term electoral exigencies (Mainwaring, 1992; Power, 1991). Meanwhile, the growing incoherence of an enormous state bureaucracy emboldens powerful sectors to capture individual agencies. State and party elites yield to political pressure to fund local pork-barrel projects while shortchanging more cost-effective federal programs. Brazilian politicians thus focus their efforts on securing specific benefits for their constituencies rather than social security, national education and policies aimed at raising aggregate economic growth. The result has been to promote a culture of corruption and keep millions of Brazilians in abject poverty. On the surface, the success of the Plano Real stabilization program and the electoral triumph of its principal architect, Fernando Henrique Cardoso, suggest that Brazil has begun to alleviate these problems. But a number of the deficiencies of fragmented democracies persist under the new presidency, including corruption and clientelistic pressures in the Congress which have impeded Cardoso’s attempts to reform taxation, public administration and social security (Weyland, 1996b). Among the former communist countries, Poland most vividly exemplifies fragmented democracy. This is chiefly attributable to specific institutional features of the successor state and party system. Poland’s unique position as the first East European country to throw off the communist yoke complicated its negotiated transition to democracy. Uncertainty over the Soviet Union’s response, overestimation of the Communist Party’s political power, and underestimation of their own electoral potential induced Solidarity leaders to accept a deal incommensurate with the actual balance of forces. Two of their concessions – the decision to reserve 65 percent of the seats in the Sejm for the communists and to elect General Wojciech Jaruzelski as president – were subsequently corrected. But the third – Solidarity’s decision to defer key constitutional questions until after the founding elections – had lasting consequences. By the time the Polish authorities got around to writing a new constitution, Solidarity had split apart, Lech Walesa had been elected president, and members of Parliament were embroiled in conflicts over the balance of executive and legislative power and the institutional prerogatives of the two houses of Parliament itself. Poland’s ‘Little Constitution’, finally approved in 1992, demonstrated the effects of legislative logrolling and bureaucratic turf protection (Elster, 1993: 200–13; Holmes, 1993). The failure of Polish interlocutors to establish a parliamentary threshold deepened institutional fragmentation in the post-communist period. The 1991 parliamentary elections installed some twenty-nine parties in the Sejm, none of which proved able to assemble durable governing coalitions. A succession of weak governments grappled with a fractious legislature over economic reform, privatization, abortion and other issues. 115 RIPE 4/1 01-03-C 25/4/97 8:51 am Page 116 ARTICLES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 Folio In spring l993, Poland’s fifth post-communist government fell by a single vote of no-confidence. A general election later that year resulted in the formation of a new government headed by a coalition of socialist and agrarian parties. The Sejm meanwhile agreed to create a parliamentary threshold and enact other electoral reforms aimed at reducing party fragmentation. However, it left unresolved the relationship between the offices of president and prime minister, which was crucial insofar as effective governance required both stable parliamentary majorities and prime ministerial independence from the head of state. In the fall 1995 presidential election, Walesa was defeated by the former communist Aleksander Kwasniewski – who quickly announced his intention to convene a special constitutional assembly, composed of delegates elected separately from the legislature, if the Sejm failed to approve a permanent constitution before the 1997 parliamentary elections. While Kwasniewski’s election presented little danger of a return to authoritarian rule, the inability of Polish authorities to settle basic constitutional questions raised the specter of continued institutional fragmentation and policy stalemate (Gross, 1992; McGregor, 1993; Sabbat-Swidlicka, 1992; Vinton, 1994; Central European Report, 13 February 1996). Elite-dominated party system, penetrated state: oligarchy In contrast to fragmented democracies, where the state is penetrated by powerful societal groups unconstrained by effective party mechanisms, here the state is captured by small numbers of political elites operating through highly controlled parties. As a result, there is no meaningful separation of party and state. State institutions are geared towards the valorization of individual party politicos rather than broad collective goals. The fact that Romania comes closest to oligarchy so defined reflects the legacies of the neo-Stalinist regime of Nicolae Ceausescu. The extreme concentration of authority and atomization of society under Ceausescu enabled former Communist Party elites to restore themselves to power under the auspices of the National Salvation Front. The leader of the Front was elected president in May 1990 in a campaign marked by widespread fraud, press propaganda, voter intimidation and restrictions on the activities of rival parties. The coercive apparatus of the Securitate, which emerged basically intact from the 1989 revolution, bolstered the Front’s putative electoral mandate. The new regime quickly suppressed the anti-government demonstrations organized by university students in June 1990, post-communist Romania’s first significant display of an emergent civil society. With the apparent assent of the government, Securitate forces transported thousands of miners to Bucharest to beat up the demonstrators and ransack the offices of opposition parties (Stokes, 1993: 172–5; Verdery and Klingman, 1992). 116 RIPE 4/1 01-03-C 25/4/97 8:51 am Page 117 DEMOCRATIZATION: LATIN AMERICA AND EAST EUROPE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 Folio Meanwhile, Romanian political elites showed few signs of easing longstanding tensions with the country’s ethnic Hungarian minority. The National Salvation Front’s decision unilaterally to impose conditions for the election of a constitutional assembly gave minority groups little confidence that their civil rights would be adequately protected under a post-communist constitution (Elster, 1993: 188–91). Among the Latin American countries, Paraguay most closely fits this conception of political oligarchy. The regime of Alfrédo Stroessner was something of a modern-day throwback to nineteenth-century-style caudillo systems. The ruling Colorado Party, the military and the state administration became the personal instruments of Stroessner and his clan. Elite-dominated party system, penetrating state: limited democracy Like oligarchies, limited democracies are distinguished by highly centralized party organizations. But here, the political power of the dominant parties is partially balanced by a state bureaucracy possessing a strong corporate identity. While the ideology and overarching vision of party elites animate the penetrative activities of the state, the internal cohesion of the bureaucracy shields the state from complete capture. Mexico is the archetype of limited democracy so defined. While the PRI (Partido Revolucionario Institucional) dominates the electoral system and the policy-making process, the bureaucracy possesses the cohesion and technocratic capability that allow the Mexican state to provide collective goods to society and pursue long-range objectives. These institutional characteristics created a foundation for steady economic growth and low inflation for most of the postwar period, enabling the PRI to supply benefits to rural and urban constituencies that solidified its political hegemony. More recently, state technocrats served as the driving force behind the North American Free Trade Agreement and other neoliberal measures that threatened the patronage resources of traditional elements of the party. While Hungary’s multi-party system generates more effective electoral competition than Mexico’s, that country’s post-communist political institutions exhibit several important features of limited democracy. Unlike Poland’s Solidarity, which functioned as a mass societal movement prior to 1989, the Hungarian opposition was an elite movement that yielded successor parties characterized by weak links to grassroots members. And unlike Czechoslovakia, which was ruled by a neo-Stalinist regime before the Velvet Revolution, Hungary’s long history of market reforms created a highly skilled cadre of technocrats, many of whom retained key positions in the state administration after the collapse of the one-party system. The specific circumstances of Hungary’s negotiated transition augmented the centralizing tendencies of this institutional 117 RIPE 4/1 01-03-C 25/4/97 8:51 am Page 118 ARTICLES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 Folio combination of an elite-dominated party system and a strong state administration. Soviet acceptance of the results of Poland’s 1989 election encouraged radicals within the Hungarian opposition to reject a compromise between moderates and reform communists to hold popular presidential elections, which the communists expected to win. The radicals staged a national referendum on the presidential question, leading to the creation of a powerful prime ministerial government. Other institutional choices of the Hungarian negotiators reinforced the elitist bent of the party system and enhanced the capacity of postcommunist governments to build durable parliamentary majorities: intricate electoral rules featuring strong majoritarian elements and heavy reliance on closed party lists; a nominating system aimed at winnowing the number of candidates running in single party districts and the number of parties able to formulate lists for PR districts; and a unicameral legislature operating under a 4 percent threshold and the procedure of constructive no-confidence (Bozóki, 1992, 1993; Comisso, 1992; Ilonszki, 1993). Meanwhile, the high technical competence of Hungary’s postcommunist state institutions helped offset the concentration of executive authority in the prime minister’s office. During the early 1990s, the balance of power within the Hungarian state shifted towards the Ministry of Finance and National Bank at the expense of branch ministries, whose institutional power derived largely from the now defunct Communist Party. This enabled agencies responsible for macroeconomic regulation to dominate stabilization policy and parry efforts by party elites to appropriate state resources for partisan ends. The institutional advantages of a centralized prime ministerial government and strong state administration were amply displayed in spring 1995, when the Hungarian authorities surmounted fierce public opposition and implemented a harsh austerity package, the Bokros Program, which achieved substantial improvements to Hungary’s internal deficit and current account (Bartlett, 1996, 1997). Theoretically, limited democracies are more adept at crisis management than fragmented democracies. Because state agencies are well positioned to formulate adjustment programs and party leaders to extract compliance from the rank-and-file, they are not prone to the punctuated crises common in countries like Argentina, Brazil and Poland. Moreover, their insulation from sectoral penetration better enables them to supply universal welfare and avert mass mobilization by low-income groups. But the low levels of embeddedness and representation in limited democracies may eventually deprive them of broad social support, imperiling long-term democratic consolidation. Corruption may also undermine limited democracies. When party elites begin to exploit state 118 RIPE 4/1 01-03-C 25/4/97 8:51 am Page 119 DEMOCRATIZATION: LATIN AMERICA AND EAST EUROPE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 Folio offices for personal or political aggrandizement, such systems are at risk of deteriorating into oligarchic rule. In Mexico, persistent electoral fraud and internal scandals stimulated significant organized opposition, illustrated most dramatically by the 1994 Chiapas rebellion. The spectacular collapse of the economy in December 1994, coupled with internecine conflicts within the PRI’s senior leadership and fraying of the social pacts underpinning the party’s heterodox adjustment strategy, called into question the viability of the Mexican model (Dornbusch and Werner, 1994). In Hungary, attempts by the government of the Magyar Demokrata Fórum (MDF) to load the state administration with political sympathizers compromised the bureaucracy’s cohesion and undermined the delicate balance between party power and state autonomy that separates ‘limited democracy’ from ‘oligarchy’. Subsequently, the exaggerated disproportionality of Hungary’s electoral system allowed the winner of the second post-communist election, the Magyar Szocialista Párt (MSZP) to parley its 33 percent vote into a 54 percent legislative majority – prompting concerns about the dangers of latent authoritarianism (Arato, 1994). CONCL US I ON: I NTE RA CTIO N O F M A RK E T S T RUCT U RE S AND P O L ITICA L IN S TITU TIO N S In this article, we have assessed the prospects for stable democracy in Latin America and Eastern Europe. Structural analysis suggests that the socioeconomic position of elites in the market economies of Latin America creates incentives and opportunities for those agents to pursue non-party political strategies. The paucity of these same resources in the transitional economies of Eastern Europe reduces opportunities for exit from the electoral arena. While this creates a large potential base for party contestation in the former communist countries, it also places the most reactionary elements of society in a favored position in the electoral system. The structural approach thus enables us to deduce the strategic preferences of actors in markedly different socioeconomic systems. However, it cannot explain (1) divergent trajectories in countries possessing similar economic systems, or (2) why agents whose socioeconomic position militates against party strategies choose to enter the democratic arena. The institutional model fills these gaps by exploring how party and state institutions reshape actors’ incentives and transform their political behavior. In our view, future theorizing and research on transitions to democracy should focus on the interaction of market structures and political institutions. A synthesis of the two theoretical approaches points to the following questions: When do structures and institutions converge? When do party and state institutions override structural impediments 119 RIPE 4/1 01-03-C 25/4/97 8:51 am Page 120 ARTICLES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 Folio to democratic consolidation? As a point of departure for this scholarly agenda, we offer the following suppositions. Structural factors are likely to overwhelm even favorable institutional configurations when the economic resources of capital and landed elites give them inordinate political power. In other cases, institutions merely reinforce structural tendencies. Clearly, the combination of minimal state and minimal party institutions is apt to prove destabilizing in all socioeconomic systems. The fusion of penetrated states and elitedominated parties also strengthens anti-democratic trends in most structural environments. High party control assuages economic elites, but low internal coherence prevents state agencies from delivering the collective goods necessary to elicit the citizenry’s long-term commitment to democratic principles. In some circumstances, institutions may override unfavorable structural conditions. An effective party system and an effective state imbue the broad citizenry with a sense of political efficacy. This combination also protects the proprietary claims of elites in market economies while providing low-income sectors with a measure of economic security, giving both groups incentives to enter the electoral arena. It may also transform the behavior of anti-democratic actors in non-market economies. But while this institutional configuration represents the best hope for participatory democracy, the shortage of cases conforming to the pattern (Chile, Czech Republic) suggests that it is not a very probable outcome in either the South or the East. The combination of a penetrating state and an elite-dominated party system may constitute a more realistic, albeit less inclusive, institutional alternative in the two regions. In Latin America, elites would enjoy an advantage in the party system, but the state would remain sufficiently insulated to sustain the provision of goods to society at large. In Eastern Europe, high party control would soften the distributional conflicts arising from economic transformation that might imperil democracy in more balanced party systems. By relieving party leaders of incessant pressure from the rank-and-file, such an institutional arrangement would create political space for conservative parties to endorse urgent economic reforms and tolerate a liberal opposition. If the experience of the West provides any lessons for the countries of the South and East, it is that the survival of democracy requires the protection of elite interests. Economic and political elites are most likely to move from grudging acceptance to full endorsement of democracy when they occupy a privileged position in the party system. Here, they come to view democracy not simply as an expedient alternative to authoritarian rule but as their most preferred political order. This suggests a form of democracy where popular sovereignty is somewhat circumscribed, but where the democratic order is ultimately more stable and hence civil liberties more secure. 120 RIPE 4/1 01-03-C 25/4/97 8:51 am Page 121 DEMOCRATIZATION: LATIN AMERICA AND EAST EUROPE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 Folio NO TE S We would like to thank the following people for their comments and suggestions on earlier drafts of this article: Deborah Avant, Robert Bates, Nancy Bermeo, M. Steven Fish, Erwin Hargrove, Herbert Kitschelt, Jeffrey Kopstein, Kurt Weyland, Deborah Yashar, two anonymous referees and the members of the panel on ‘Transitions from Authoritarian Rule: The Latin American and East European Experiences’ at the Annual Meeting of the American Political Science Association, Washington, DC, September 1993. 1 We treat these as systemic features of the three generic types that cut across variations in levels of economic development. For an interesting analysis of the impact of economic development on the political strategies of actors in transitions to democracy, see Kitschelt (1992c). 2 Other scholars have examined the impact of income portfolio, factor endowment and factor mobility on the political behavior and policy preferences of actors in market economies. See, for example, Frieden (1991), Paige (1975) and Rogowski (1989). Our structural model employs a similar logic to answer a different question: how do the resources of agents situated in different socioeconomic systems affect the relative intensity of their preferences for party and non-party strategies? 3 Bargaining between the state and producers is common in both centrally planned and dirigiste capitalist economies, but is driven by a different dynamic. In the former, state enterprises extract regulatory exceptions in exchange for their acceptance of production goals vital to central planners. In the latter, producers provide political and financial support in exchange for lucrative public contracts, favorable credit lines and other specific economic benefits. 4 For similar reasons, backward agrarian producers in the market economies of Latin America have also periodically mobilized through reactionary parties and resorted to physical coercion of rural labor. See Paige’s discussion of the political strategies of landowners in backward agrarian economies (1975: 18–25). 5 We do not treat two other configurations suggested by the model, agrariandominated and capital-dominated party systems. While theoretically interesting, they are unlikely to appear in the universe of cases under consideration. In neither Latin America nor East Europe are the agrarian and business sectors sufficiently large to dominate the party systems by themselves. Accordingly, we expect that owners of capital or land who choose a party strategy will seek out coalition partners. 6 The coalitions between industrial elites and the urban popular sector that emerged in Latin America in the 1930s constitute an exception to this generalization. These coalitions supported the early import substitution industrialization (ISI) strategies pursued by populist governments in the more advanced countries of the region. But these alliances subsequently split apart as a result of mounting socioeconomic conflicts between capital and labor. See Kaufman (1979: 199–201). 7 An example was the alliance of industrial-financial and agrarian elites in Chile during the presidency of Jorge Alessandri (1958–64). See Stallings (1978: Chapters 3 and 4). 8 Fiscal and monetary institutions are closely integrated in some of the East Asian ‘developmental states’. See Haggard (1990) and Haggard et al. 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