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J. Lat. Amer. Stud. 32, 737--763 Printed in the United Kingdom C zooo Cambridge University Press 737

Beyond 'Delegative Democracy': 'OldPolitics' and 'New Economics' inLatin America*FRANCISCO PANIZZAAbstract. For around I5 years Latin America has been undergoing anunprecedented conjunction of political and economic change, fromauthoritarianism to democracy and from a state-centred matrix of economicdevelopment towards free-market economies. This article takes up the theme ofthe links between politics and economic change in contemporary Latin America.More specifically, it examines the relation between 'old politics' and 'neweconomics'. It has two main purposes: The first is to re-examine some ofmodernisation theory's assumptions about the relations between political andeconomic modernisation. The second, more specific to the Latin Americandebate, is to question some of the dominant views about the nature of democracyin the region, particularly Guillermo O'Donnell's influential 'delegativedemocracy' model.

Modernization theory and its criticsSuccinctly (if simply) put, the first tenet to be questioned is the idea thatas economic modernization erodes 'traditional' social institutions it willalso undermine 'traditional' politics, that is, particularist relations basedon patrimonialism, clientelism, patronage and corruption. Havingundermined this status quo, it is posited, economic modernization willbring about the culture and institutions of modern Western liberaldemocracy, ushering in an autonomous state capable of enforcing theuniversal rule of law, representative political institutions, a strong civilsociety and a political culture of rights and accountability.' Contrary to

FranciscoPanizzais Lecturerin Latin American Politics at the London School ofEconomics and Political Science.* I wish to thank Alexandra Barahona de Brito, Lynda Dexheimer, Marcos Novaro,Vicente Palermo, Juliana Bambaci and Paolo Benedetti for their many helpfulcomments. I am grateful to Lynda Dexheimer for her assistance with the editing of

this article.Classical modernisation theory held that Western liberal democracy and economicliberalism went hand in hand and that liberal democracy is the outcome of economicdevelopment. The classic formulation of modernisation theory is still S. M. Lipset,Political Man (London, i960). See also W. W. Rostow, The Stages of Economic Growth(Cambridge, 1960). A more recent, modified version of modernization theory isimplicit in the World Bank 'good governance' approach. See The World Bank,Governance nd Development Washington, DC, i992). For a critique see A. Leftwich,'Governance, Democracy and Development in the Third World', Third WorldQuarterly, ol. 14, no. 3 (I993).


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738 FranciscoPanigZamodernization theory, this article will argue that in Latin America the newfree market economics has not brought an end to the 'old politics' ofclientelism, patronage and corruption and is unlikely to do so in theforeseeable future. Far from being an obstacle to economic modernization,'old politics' has been instrumental, under certain circumstances andwithin certain limits, in securing economic reform. The 'new economics'of free trade, privatization and structural reform has been moulded by theold politics while the old politics has, in turn, adapted to the neweconomic environment.

The second question concerns the debate about the nature of democracyin contemporary Latin America. Guillermo O'Donnell, probably LatinAmerica's most distinguished political scientist, is also one of the region'sforemost skeptics as regards modernization theory's optimism about thebeneficial political impact of economic modernization. He first questionedsuch assumptions in his analysis of the bureaucratic authoritarian states ofthe 1970s. More recently, O'Donnell has expressed serious reservationsabout the nature of contemporary Latin American democracies. In aseminal article he argued that Latin America's fledging democracies haveevolved into a new type of democracy, far removed from the Westernmodel. These he labels 'delegative democracies' (DD), characterized as 'atype of democracy which rests on the premise that whoever wins theelection for the presidency is entitled to govern as he or she sees fit,constrained only by the hard facts of existing power relations and by aconstitutionally limited term of office'. 2

Five years after the publication of O'Donnell's 'Delegative Democ-racy', Latin American democracies show much more complexity andvariety than the article originally envisaged.3 Here I will argue that theclaim that presidents govern as they seefit does not take fully into accountthe political context under which presidential power operates, theimportance of coalition building and the informal and institutionalconstraints on that power. O'Donnell's model fails to explain why somepresidents have been more successful than others in promoting economicreform, and it underestimates the importance of the politico-institutionalsettings in which these reforms take place. A comparison between the

2 G. O'Donnell, 'Delegative Democracy', Journalof Democracy,ol. 5, no. I (I994),p. 59.O'Donnell's pessimism is restated in an interview published in i995. Questioned aboutchanges in the quality of Argentine democracy since i983, O'Donnell answered: 'Yes,I think it has changed and, in some aspects, clearly for the worse.' And he added: 'Inthe politico-institutional dimension I think that the situation has gone backwardsrather than forwards.' G. O'Donnell, 'Democracias XT exclusion', Agora vol. i, no. 2(i995), pp. i65 ---72.


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Beyond Delegative Democracy' 739politics of economic reform in Brazil and Argentina will be used toillustrate my arguments. In concluding I will propose three ways ofunderstanding the relation between 'old politics' and 'new economics',and explore the extent to which they concur, diverge or modify the corearguments of modernization theory.

Economic reform and political orderEconomic reform in Latin America can only be properly understood as anintegral part of the broader process of reconstitution of the political orderthat took place in most countries of the region during the late i98os andearly i990s. Here I allude not so much to the democratic transitions of theearly i98os but to the reconstitution of the state's ability to governsociety, which, in many countries, had nearly collapsed as a result ofeconomic recession and the hyperinflationary crises of the mid- and latei980s. In addition to the obvious economic effects, hyperinflation also hadthe political effect of destroying the predictability and rational expectationsupon which citizens depend for their everyday lives; that is, thefoundation of the social order itself. Not only the state but other politicalinstitutions such as the new democratic governments, provincialauthorities, political parties and parliaments saw their legitimacy andpublic support sink dramatically as the crisis rapidly undermined thepolitical order. With existing institutions plunged into crisis, resistance tochange was eliminated and the holders of executive office were afforded aconsiderable degree of autonomy to redefine the parameters of the neworder. However, crises do not suddenly turn the presidents of weakenedstates into all-powerful rulers or allow them to operate in a politicalvacuum. Neither do economic crises or, indeed, electoral mandates,ensure the success of reforms.4 Reforming presidents still have to drawstrength from existing political resources and adapt them to promotereform. I will argue that the ability of Latin American governments toovercome the crisis by restructuring state-society relations and promotingeconomic reforms had less to do with allegedly all-powerful andunaccountable presidents than with two separate but interrelated factors:(a) The way in which past political traditions shaped the new democraticpolities; and(b) the ability of the leaders promoting economic modernization to usetraditional politics and democratic legitimacy to forge a politicalalliance to support their programmes of reform.' For a discussion of the importance of economic crises and political mandates oneconomic reform see J. Williamson, 'In Search of a Manual for Technopols', in J.Williamson (ed.), The Political Economiy f Policy Reform (Washington, DC, 1994).


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740 FranciscoPani.Z.aBeyonddelegativedemocracy:he limits of neopopulism

In the first half of the i990S the path and pace of economic reform wasquite different in Argentina and Brazil. While Argentina was widelyregarded as one of Latin America's economic success stories, Brazil wasperceived as a late and reluctant convert to free market economics. InArgentina, President Carlos Menem conducted the initial and decisivestage of economic reform in a swift and unequivocal manner between1990 and 1993, during the initial part of his first presidential term(I989-I995).5 By contrast, in Brazil the process of reform initiated byPresident Fernando Collor de Mello in i990 dragged on for years. Andwhile it has since made considerable progress during President FernandoHenrique Cardoso's first term in office (I995-i998), it has been analtogether slower, more protracted and incomplete affair.6

Economically, both countries started the process of reform with manycharacteristics in common. By the end of the i98os both Argentina andBrazil were suffering from low or negative growth and very high inflationrates. The economic crisis peaked in Argentina in i989, coinciding withthe abrupt end of the first post-authoritarian government of PresidentRauilAlfonsin, and the electoral victory of the Justicialista (Peronist) partyof President Carlos Menem. In that year GDP fell by 6.z per cent andinflation averaged over 3,000 per cent. The situation in Brazil was notmuch better. A year later, in i990, GDP dropped by 4.4 per cent andconsumer prices rose by an average of over 2,goo per cent.7 In bothcountries the first civilian administrations after the long years of militaryrule were conspicuously unsuccessful in dealing with the economicbacklash from the 1982 debt crisis and the exhaustion of the state-centredeconomic model. Moreover, the initial success and subsequent failure ofsuccessive stabilisation plans, most notably the PlanoCruzado n Brazil andthe Plan Austral in Argentina, left the administrations of presidents JoseSarney and Alfonsfn discredited and incapable of generating politicalsupport for new economic reforms.It has been argued that major crises open the door to policy reform.8

For the politics of economic liberalization in Argentina see, among others, P.Gerchunoff and J. Carlos Torre, 'La political de liberalizaci6n econ6mica en laadministration de Menem', Desarrollo Econdmico,vol. 36, no. 143 (I996), and V.Palermo, 'Reformas estructurales y regimen politico Argentina i989-I993', Agora,vol. 3 (I995)-

6 For an overview of the reforms during Cardoso's first presidency see F. Panizza,'Brazil', in J. Buxton and N. Phillips (eds.), Case Studies in Latin American PoliticalEconomyManchester and New York, i999).Inter-American Development Bank, Economicand Social Progress n Latin America. 199JReport Washington,DC, 1995).8 M. Olson, The Rise and Decline of Nations: Economic Grow'th,Stagnation and Social

Rigidities (New Haven, CT, i982).


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Beyond Delegative Democracy' 74IThere are good arguments and some empirical evidence to support theseclaims, but crises merely open the door to reform; they neither determineits content nor guarantee its success. The newly-elected democraticgovernmentsof PresidentCarlosMenem in Argentina (i989-i995) andFernandoCollor de Mello in Brazil i990-I992) sought to takeadvantageof the opportunity opened by both the crisis and the political legitimacyassociated with their democratic mandates to introduce radical economicreforms, albeit with very different results. After a difficult first year inoffice, Menem was highly successful not only in restoring economic orderbut also in radically restructuring the Argentine economy. In Brazil, afterthe initial almost instant success of his shock stabilization plan, Collor deMello's attempt at heterodox stabilization unravelled and in its aftermaththe Brazilian president, who had by then lost all political support, wasimpeached for corruption.9 This outcome signalled a reversal of bothcountries' post-war economic records. Throughout the post-war periodBrazil had the region's fastest growing economy while Argentina wentthrough a long period of relative, if not absolute, economic decline andpoliticaldisintegration.For most of the i990S until i998 Argentinanotonly grew faster than Brazil, with much lower rates of inflation, but wasregarded as a more attractive and stable host for direct foreign investmentthan its larger and more industrialized neighbour.10To account for this remarkable reversal of fortunes much has beenmade of the role of neo-populist leaders like President Menem inpromoting the radical turn toward free market economics.11 Allegedly,neo-populist leaders overcome resistance to reform by bypassingentrenched interests and appealing directly to the people. Such leaders aresaid to operate in a highly personalistic way and, according to O'Donnell'sdelegative democracy argument, 'to governas they seefit'. However, neo-populist reforms do not always work. Neo-populist economic reform didsucceed, on its own terms, in Menem's Argentina and Alberto Fujimori'sPeru, but failed in Brazil under Collor de Mello, in Ecuador under AbdalaBucaram and elsewhere in Latin America. Moreover, the process of9 For general reading on Collor's government and the events leading to his impeachmentsee K. Weyland, 'The Rise and Fall of President Collor and its Impact on BrazilianDemocracy', Journal of Interamerican tudies and World Affairs, vol. 3 5, no. I ( 993), pp.

I-37.10 Argentina's gross domestic product grew by an average 2.5% between 197i-80;

- 0.9 % between i98 i-90; and 5.5 % between 1991-97. The corresponding iguresforBrazil's GDP are respectively 9.5 %; 1.4%; and 2.8 %. Sources: Inter-AmericanDevelopment Bank, Economic and Social Progress in Latin America. 199J Report(Washington, DC, 1995) and Economic Commission for Latin American and theCaribbean, PreliminaryOverviewof the Economyof Latin America and the Caribbean-177(Internet version: http://www.eclac.cl/).For a discussion of the relation between neo-populism and neo-liberalism see K.Weyland, 'Neo-populism and Neo-liberalism in Latin America: Unexpected Affinities',Studiesn Comparativenternationalevelopment,ol. 32 (Fall i996), pp. 1-3 I.


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742 FranciscoPanizgZareform in Brazil made some significant inroads under the first presidencyof Fernando Henrique Cardoso, whose politics were, in many ways, thepolitical antithesis of neo-populism."2

To understand the reasons for the success or failure of economic reformit is necessary to move beyond a narrow focus on charismatic neo-populistleaders and consider also the nature of the crises, the broader politicalsetting in which the political leaders operate, and the political strategies bywhich they have sought to advance economic reform. It can be arguedthat differences in the pace and depth of economic reform in the twocountries are due to the fact that while the economic crisis of the late I98oswas more severe in Argentina, the political crisis of the post-authoritarianpolitical order was deeper and more intractable in Brazil.

The political conditions f economic eform n Brazil and ArgentinaEconomic crises cannot be gauged from economic indicators alone; theyare also defined by public perceptions about their causes, depth andpossible alternatives."3 While there are no reliable comparative studies onpublic opinion perceptions of the crises in Brazil and Argentina, it can besuggested that public opinion perceptions about the extent of theeconomic crisis in Argentina were exacerbated by the near collapse of thestate in the last months of the Alfonsin government, by the resignation ofthe first democratically elected president after the years of military ruleand by the public order disturbances that afflicted several provincial citiesthroughout i989. None of these extreme situations was replicated inBrazil in spite of the deep unpopularity of the Sarney administrationtowards the end of its mandate."4

Moreover, while citizens' perceptions of the depth of the crisis affectpopular support for radical and often painful policies for overcoming it,it is elite perceptions about the crisis that influence the nature of theproposed reforms. Thus, more than three decades of failure by the12 From an overview of Cardoso's first presidency see: F. Panizza, 'Brazil', in J. Buxtonand N. Phillips (eds.), Case Studies in Latin American Political Economy (Manchester,

i999) and S. Kaufman Purcell and R. Roett (eds.), Brazil Under Cardoso(Boulder andLondon, 1997).13 P. Benedetti, 'On Major Crises, Decisive Governments and Radical EconomicReform: Going Beyond the Conventional Wisdom', unpubl. MSc diss., LondonSchool of Economics, I998.14 As Vicente Palermo points out, in Argentina the crisis of the state was both a fiscalcrisis and a crisis of public authority. In Brazil extensive indexation mechanisms anda less severe fiscal crisis protected the population from some of the worst effects of theeconomic collapse of the last weeks of the Alfonsin government. See V. Palermo,'Mares Agitados: Interpretaciones sobre procesos politicos latinoamericanos. Brasil yArgentina en perspective comparada', Revista de CienciasPolzticas de la Universidadde laReptiblica (forthcoming).


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Beyond Delegative Democracy' 743developmental state to promote adequate economic growth and thedemise of the Alfonsfn administration's heterodox economic policies speltthe end of the old economic order in Argentina, leaving its defendersshort of both the resources and the political legitimacy to oppose a radicalchange in the economic model."5 In contrast, the considerable success ofthe post-war developmental state in Brazil in promoting economic growthuntil the late 1970S made the critique of the 'old model' much lessradical."6 The economic and social chapters in Brazil's i988 Constitutionillustrate the enduring influence of developmentalist ideas. Even whennew economic thinking gained political and intellectual ascendancy,resistance to reform was continually expressed by developmentalist-minded forces within the Itamar Franco and Fernando Henrique Cardosoadministrations and the SAo Paulo industrial elite.17

Politically, the key difference between Argentina and Brazil was thatafter both countries' return to democracy in the mid-ig8os, power inBrazil drifted away from the executive toward a plurality of alternativepolitical actors, while in Argentina the executive was quite successful inreclaiming power from competing actors. In both countries the status ofthe executive after the return to democracy represented a reversal of thepost-war trend. In Brazil, during that period, the executive had been thenodal point of a state-dominated political system. Meanwhile, in Argentinathe executive was much weaker due to the lack of political legitimacy andinstitutional resources of the civilian governments and authoritarianmilitary regimes, which were unable to implement any long-term coherenteconomic policies. Three factors can be identified which account for thecontrasting changes in the executive's position within the power structuresof post-authoritarian Argentina and Brazil. The first, in relation to thecountries' political institutions, is the different ways in which the legacyof past forms of political representation shaped the new democratic15 For an analysis of the failure of Argentina's post-war economy see C. Waisman, TheReversal of Development in Argentina: Post-War Counterrevolutionary olicies and theirStructuralConsequencesPrinceton, 1987) and G. Di Tella and R. Dornsbusch (eds.), ThePoliticalEconomyf Argentina, 946-I983 (Pittsburgh, i989).16 After the fall of the military regime, critique of its 'old model' was centred not on therole of the state in economic affairs or on protectionism, but on gross economic

inequality, high unemployment and on the military governments' inability, particularlysince the late 1970s, to control inflation without affecting economic growth. See P.Malan and R. Bonelli, 'The Success of Growth Policies in Brazil', in S. Teitel (ed.),Toward a New Development Strategyfor Latin America (Washington, DC, i992) andLourdes Sola, 'Heteredox Shock in Brazil: Tecnicos, Politicians and Democracy',Journal of Latin American Studies, vol. 2 3 (199O).17 For the views of one of the leading developmentalists in the Cardoso administration,closely linked to the 'Paulista' industrial elite, see the interview with J. Serra in G.Mantega and J. M. Rego (eds.), Conversas omeconomistas rasileirosII (Sdo Paulo, 1999),

pp. 119-53.


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744 FranciscoPanizzapolities. Second, in terms of the politics of transition to democracy, therelatively greater legitimacy of the Argentine presidency after thecountry's return to democracy as compared to its Brazilian counterpart.Finally, with regard to strategies of economic reform, an essential elementwas the particular ability of Argentina's President Menem to forge areforming alliance between traditional politicians and economic reformers,in other words, his skill at putting 'old politics ' and democratic legitimacyat the service of 'new economics'. This alliance was only achieved muchlater in Brazil, under Cardoso.

It may seem incongruous to claim that the dominance of the Brazilianexecutive within the institutional structure of the post-war era laterundermined the President's ability to govern in post-authoritarian Brazil.But this apparent paradox becomes clear once the roles of otherinstitutions are considered. In Brazil, the counterpart to the post-warcentrality of the executive was a weak party system, highly dependent onthe state and with a limited capacity to represent the interests of citizens.'8Interest representation was instead centralized in corporatist-styleemployers and workers' organizations vertically linked to the state.19Furthermore, policy making in post-war Brazil was concentrated in thecore economic ministries and state financial institutions staffed by apowerful and highly influential techno-bureaucracy identified with thegoals and policies of the developmental state.20

When the country returned to democracy in i985 the executive's pastsources of institutional strength became sources of political weakness. Inthe new democratic polity, particularly after the constitutional reform ofi988, the power of parliament was considerably strengthened, but noparallel political reform was undertaken to promote a more stable partysystem.2" Without political reform, parties remained highly fragmented,18 For an analysis of the weaknesses of the party system in Brazil see S. Mainwaring,'Brazil: Weak Parties, Feckless Democracy', in S. Mainwaring and T. Scully (eds.),Building Democratic Institutions. Party Systemsin Latin America (Stanford, 1995).19 For an account of Brazil's corporatist forms of political representation see P. Schmitter,Interest Conflict and Political Change n Bra-


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Beyond Delegative Democrag' 745regionally divided and vulnerable to the influence of organised interestgroups.22 In practice, this made it extremely difficult for the executive toform stable parliamentary majorities even if the government enjoyedmajority support on paper. In addition, corporatist links between unions,employers and the executive were effectively severed as part of the processof democratic renewal. Particularly in the first years of democracy, thenew trade unionism, which had played a significant role in the downfallof the military regime, became, together with other organizations of civilsociety, an influential actor in the so-called New Republic, curtailing thestate's ability to impose top down reforms.23 Thus, the factors that hadunderpinned the executive's political domination in the past now deprivedthe executive of the political, administrative and social bases of supportnecessary to implement policy change.In the case of Argentina the personalist rule of Juan Domingo Per6n(1946-i95 5) and the succession of military governments in the i960s and1970S tended to overshadow the political endurance of the country's mainpolitical parties, the Justicialista (Peronist) and the Radical parties.Although very different in their ideology, political complexion and socialbases of support, both Peronists and Radicals were strongly rooted inArgentina's history and society. However, until the country's return todemocracy in the i98os, the fierce dividing line between Peronism andanti-Peronism meant that neither political force would concede anypolitical legitimacy to the other.24 Moreover, the proscription of Peronismduring most of the i96os and 1970s, together with the movement's ownpopulist political culture, made it difficult for the Peronists to play theliberal democratic game. The Peronist movement operated more as anextra-institutional opposition than as a typical political party. With thereturn to democracy, however, political parties assumed a new centrality.Both Peronists and Radicals gained democratic legitimacy from freeelections. Together, the parties represented the majority of Argentines22 For an analysis of the working of Congress in Brazil see M. D'Alva Kinzo, 'TheCongress in Brazil's Democracy', in M. D. Kinzo and V. Bulmer-Thomas (eds.),Growth and Development in Bra il: Cardoso's Real Challenge (London, i995) and S.Mainwaring, 'Brazil: Weak Parties, Feckless Democracy', in S. Mainwaring and T.Scully (eds.), Building DemocraticInstitutions.23 For the role of the trade union movement in the processes of transition to democracyin Latin America see R. Berins Collier and J. Mahoney, 'Adding Collective Actors toCollective Outcomes: Labor and Recent Democratization in South America andSouthern Europe', ComparativePolitics, vol. 29, no. 3 (April 1997), pp. 285-303. Forthe role of civil society in the process of democratization in Brazil see A. Stepan,

DemocratiZingBra if. Problemsof Transitionand Consolidation Oxford, i989).24 For an analysis of the party system in Argentina see M. Cavarozzi, 'El esquemapartidario argentino: partidos viejos y sistema debil', in M. Cavarozzi and M. A.Garret6n (eds.), Muerte y resurreccidn.Los partidos politicos en el autoritarismoy lastransiciones n el ConoSur (Santiago de Chile, I988).


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746 FranciscoPanitZaand gained a majority share of seats in congressional elections. Between1984 and i995 Radicals and Peronists provided their respective presidentswith a more cohesive parliamentary base than the ruling party coalitionsin Brazil, although, in the case of the Radical government of PresidentRatil Alfonsin (i984-1989), not with an outright parliamentary majority.

The second factor related to the differences in the role of the executiverefers to the politics of democratic transition and the relatively higherlevel of legitimacy of the Argentine Presidency as compared to itsBrazilian counterpart. Brazilian history can be read as the unfolding of acontinuous struggle for hegemony between the Federal State (headed bythe executive) and the individual state governments and local oligarchies.25The balance of power between the Union and the states has shiftedsignificantly in different historical periods. The centralization of power inthe Federal State and the executive peaked during the years of military rule(i964-1985), making the struggle for democracy in Brazil not just a fightfor free and fair elections, but also for the decentralization of power to thestates and municipalities. For this reason, i982's free elections for stategovernors were regarded as a milestone in the country's transition todemocracy, preceding as they did the first direct democratic election forthe presidency by seven years. Additionally, fate played a role thatweakened the position of the first civilian president of newly democraticBrazil with the sudden death of highly respected President-elect TancredoNeves on the eve of his inauguration. The presidency was thus bestowedon his vice president, Jose Sarney, a man without Neves' democraticcredentials or political authority, who subsequently became highlydependent on Congress and its majority party, the Partido do MovimentoDemocritico Brasileiro (PMIDB).26In contrast to the Brazilian case, in Argentina the return to democracywas never marked by devolutionist demands, and the provincial questionbarely registered on the democratic agenda. In the first presidentialelection the exercise of democracy centred on the contest between thePeronist Italo Luder and the Radical Radl Alfonsin.27 Alfonsin's victoryinitially gave him a democratic legitimacy almost unprecedented inArgentine history and a commanding position within the country's25 See F. Hagopian, Traditional Politics and Regime Change in Bragil (New York andCambridge, i996). See also the highly influential analysis of the Brazilian state as apatrimonial state in R. Faoro, Os donorsopoder:jormalao do patronatopolitico brasileiro(Porto Alegre, i958) and R. Roett, Bragil: Politics in a Patrimonial Society(New York,

1984).26 For an account of Brazil's transition to democracy and the Sarney administration seeB. Lamounier (ed.), De Geisel a Collor: 0 balancoda transifao (Sdo Paulo, I990).27 See D. Rock, Argentina yI(6-I987. From Spanish Colonigationto the Falklands War andAlfonsz'n(London, I987).


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Beyond Delegative Democracy' 747political system. But Alfonsin's fleeting position of power was subse-quently eroded by ill-conceived economic policies, his lack of control ofthe upper house of Congress, the opposition from the Peronist-dominatedunion movement and military unrest.28 His government's economicfailure, however, did not lead to a power drift away from the Presidencyto other political institutions, but rather favoured his successor, CarlosMenem. Menem, unlike Alfonsin, had control over both houses ofCongress and over the Peronist trade union movement, and he enjoyedthe support of the majority of state governors. In contrast to developmentsin Brazil, the deep crisis of the state in Argentina facilitated theconcentration of power in the executive and gave a much greater sense ofurgency to the promotion of reforms at any cost.The third factor which helps explain differences in the executive officesof post-authoritarian Brazil and Argentina refers to the way in which oldpolitics interacted with the new democratic environment in the crucialmatter of the promotion of economic reform in both countries. In Brazilthe military government's ultimately self-defeating strategy of allowingsemi-competitive elections for state authorities and local assemblies, whilebanning electoral competition for the Federal presidency, had theunintended consequence of strengthening the hand of political oligarchies.These oligarchies operated at the local level, providing political supportfor the official party in exchange for the clientelistic allocation of statefunds.29 The military regime's decision to exclude parties from anyinfluence in policy making and to deny them their representative role,while at the same time maintaining limited local electoral competition,made patronage and clientelism the stock in trade of the politics ofauthoritarianism. Paradoxically, a political regime that had come to powerwith the mission of modernising Brazilian politics and society ended upby reinforcing some of the most entrenched characteristics of the 'oldpolitics '.30 Later, the country's mode of transition to democracy allowedthe conservative political elite to maintain a prominent role at all levels ofgovernment, which meant that the traditional practices of clientelism,personalism and patronage also remained an integral part of the politicsof democracy. Thus, in the new polity two contradictory elements co-existed uneasily: the new democratic culture and an active civil society(evident in the struggle for democracy in the last years of military rule andin the mass mobilisation for the impeachment of President Collor); and28 For an analysis of trade union activity in Argentina under democracy see J. WT.McGuire, 'Strikes in Argentina. Data Sources and Recent Trends', Latin AmericanResearchReview, vol. 3I, no. 3 (I996), pp. 127-49.29 F. Hagopian, Traditional Politics and RegimeChange n Brazil.30 K. WXeNTland, emocracyWithoutEquity. Failures of Reform in Brazil (Pittsburgh, i996),

P. 58.


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748 FranciscoPanizzathe old politics of patronage (or fisiologismo) that had survived the demiseof the military.3"

In Argentina the total ban on political activity during the years ofmilitary rule precluded such a political scenario, even though Argentina'spolitical traditions undoubtedly influenced its new democratic context.Argentinal's main political parties, the Justicialistas (Peronists) and theRadicals, managed to survive the long political winter of military rule.Although both moved rapidly to revitalise their old clientelistic networksafter the return to democracy, the environment in which this type ofpolitics had operated was significantly transformed from the past and wasalso very different from Brazil's post-military context.32 The i983 electionappeared to have further undermined 'old politics', particularly thePeronists' populist heritage. Alfonsin's victory, based on preaching thegospel of democracy and denouncing the so-called 'military-union pact',was widely seen as the dawn of a new modern democratic culture.33Conversely, the defeat of Peronism was regarded as a failure of the party'straditional political guard (the so-called 'marshals of defeat') andespecially the Peronist union bosses, many of whom were associated withextreme right-wing forces and the corrupt trade union machinery. Manyobservers read Alfonsin's comprehensive electoral victory as a sign thatPeronism was a political anachronism, unable to compete in the newdemocratic environment. Now we know, of course, that the Peronistparty and the populist tradition it represents is much more resilient thanwas thought at the time. The political base of Peronism among theworking class of Buenos Aires Province and the poor sectors of the in-terior remained loyal to the memory of its founder and provided theparty with a hard core of support. As the economy deteriorated,the Peronist-led unions, which were isolated and politically discreditedat the beginning of the new democratic government because of their linkswith the authoritarianpast, became the main opposition to the government.31 The Portuguese term 'fisiologismo' denotes the practice, common in Brazilian politics,of the distribution of patronage by the executive in exchange for political support byCongress. For a discussion of patronage politics in historical perspective in Brazil seeJ. M. de Carvalho, 'Mandonismo, coronelismo, clientelismo: uma discussed

conceitual', Dados,vol. 40, no. 2 (1997), pp. 229-59.32 For an analysis of Radical and Peronist political machines in contemporary Argentinasee D. P. Miguez, 'Democracy, Political Machines and Participation in theSurroundings of Buenos Aires', EuropeanRerien'of Latin Americanand CaribbeanStudies,vol. 58, (i995), pp. 9i-i06. For a study of the crisis of 'old politics' in Argentina seeM. Novaro, Pilotos de tormentas.Crisis de representacidn persona/ ion de Ia po//tica enArgentina (i989-i99g) (Buenos Aires, 1994).The 'military-union pact' refers to allegations made by Alfonsin regarding a secretagreement between certain Peronist union leaders and the military to ensure that thelatter would not be prosecuted for human rights crimes.


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Beyond Delegative Democrac' 749At the same time, the Peronist party started a process of internal renewalthat would allow it to adapt to the new democratic environment withoutreneging on its populist appeal. Thanks to Alfonsin's failure to deal withthe country's mounting economic problems, the Peronist party re-emerged from its i983 electoral low to become a dominant political actorin the new democratic environment of the i99os.

Democracj,'oldpolitics' and 'new economics'To see how 'old politics' influences economic reform we can examine thevery different political strategies of presidents Collor de Mello andFernando Henrique Cardoso of Brazil and Carlos Menem of Argentina intheir drives for economic modernisation. President Collor enjoyed a highdegree of political autonomy derived from an electoral victory based onhis denunciation of the political establishment and his direct appeal to thepeople, circumventing existing political parties. In office, he was quick tocapitalismon his electoral triumph by passing highly contentious measuresby presidential decree, such as the freezing of financial assets.34 This shock(and sometimes shocking) strategy was summarised in his claim of 'tryingto kill the tiger with a single bullet'. Strong popular support resultingfrom the initial success of his stabilisation plan gave him furtherascendancy over Congress. But with no congressional majority of his ownand no organised support in the country, Collor's political capitalremained volatile and dependent on his public opinion standing. Heattempted to cut out those intermediaries - business groups, unions,parties and other organisations - which he viewed as having vestedinterests in their opposition to reform. However, he failed to master theart of securing the political support necessary to push forward hisambitious plan of economic modernisation by mass mobilisation, partyalliances or elite pacts. As Ben Ross Schneider notes, Collor's failurerevealed how shallow his political support really was, especially amongthe political and economic elite.35 In the end, Collor's ill-fated attempt ateconomic modernisation can be understood partly in light of the fact thathis brand of politics fell between two stools: he was neither trusted by themodernisers who regarded him as an unpredictable outsider, nor by thetraditional regional elites who considered him a threat to their politicalsurvival.363 W. Baer, The BraZilianEconomy: Growthand Development Westport, '995).3 B. R. Schneider, 'Brazil Under Collor: Anatomy of a Crisis', WorldPolicyJournal, vol.

8, no. 2 (I993), pp. 32-1-47.36 Collor rose to prominence as a political outsider with little organised support. Lackinga firm political base, he tried to maintain autonomy and centralise power once in office.However, as Kurt Weyland argues, the political insulation he succeeded in achieving


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7 5o Francisco PaniZZaFor his part, President Cardoso's gradualist strategy proved relatively

successful in terms of advancing economic reform during his first term inoffice (1995-1998) compared to Collor's shock strategy. The former'sstrategy was based on working within rather than outside the system andblending old politics and new economics together with his democraticmandate. In contrast to other Latin American economic reformers whocame to office either without a policy mandate or who reversed theirelectoral pledges, Cardoso assumed office with strong electoral en-dorsement of his key economic policy: the Real Stabilisation Plan.However, even strong electoral mandates need to be implemented andsustained politically. Rather than acting in an autonomous fashion,Cardoso used the office of the presidency as a keystone from which toconstruct a broad political coalition. At the heart of his ruling multi-partycoalition was the alliance between his party, the Partido da SocialDemocracia Brasileira (PSDB), and the Partido da Frente Liberal (PFL).On paper this was an awkward alliance. The PSDB emerged in the latei980s as a modernising left-of-centre party, highly critical of the country'straditional politics. Its main base of electoral support was in the moredeveloped southeast region of the country, particularly in the highlyindustrialized state of SAo Paulo. In contrast, the PFL was a conservativeparty, dominated by traditional political bosses from the more rural andunderdeveloped northeast. However, by cutting across the country'sregional and political dividing lines the alliance assured Cardoso's victory.

It has been argued that the Brazilian presidency's accumulation ofinstitutional and political resources allows the executive effectively tocontrol Congress.37 However, while the executive does indeed exert asignificant influence over Congress, the notion of an all-dominantpresidency is highly misleading, overlooking significant constraints onpresidential power, most notably the process of constitutional reform thatwas crucial to Cardoso's reform agenda.38 Once in power, Cardosoformed his government following the logic of multi-party coalitionpresidentialism characteristic of Brazilian politics.39 Various parties were

opened up the opportunity for corruption and ultimately led to his downfall. See K.Weyland, 'The Rise and Fall of President Collor and its Impact on BrazilianDemocracy', Journalof Interamerican tudiesand WorldAffairs, vol. 35, no. ( I 99 3), pp.1-37.

3 A. C. Figueiredo and F. Limongi, 'Mudan~a constitucional, desempenho doLegislative e consolidacAo insitutcional', RevistadeCincias Sociais,vol. 29, no. o0 99 5),pp- 175-200. 38 I develop this argument n F. Panizza,'Brazil', pp. X1-14.

3 Political fragmentation means that no party in Brazil is likely to win much more than20 % of seats in Congress. This is due to the structural heterogeneity of Braziliansociety on the one hand, and to the influence of proportional representation and


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Beyond Delegative Democrag' 751incorporated in the ruling alliance, notably the catch-all PMDB and theconservative Partido Progressista Brasileiro (PPB). This assured thegovernment a large majority in Congress yet, given the fragmented natureof Brazil's political parties, did not ensure congressional support on everyissue.

Although his administration had a large congressional majority onpaper, party fragmentation and lack of internal party discipline meant thatmajorities needed to be negotiated for each legislative proposal. AsCardoso put it, his was 'a disorganised majority'. The Government'spredicament was especially difficult in the case of constitutional reformthat required a qualified majority of 308 out of 513 votes in the LowerChamber and a protracted and complex parliamentary procedure. Onpaper the government had a large parliamentary base of 405 deputies,enough to secure the passage of the reforms. However, a study of thegovernment's eight-party congressional coalition in the Chamber, basedon 5o key roll call votes, showed that only 13 deputies had voted in linewith the government's position in all cases. Overall, the study found thatonly 3oo deputies could be regarded as supporting the government - eightshort of the crucial 308 (two-thirds) majority - while a further 59 wereconsidered 'waverers' (indefinidos)nd 46 were regarded as 'opponents', asthey had voted against the government in all or in most key issues.40In order to secure support for its reforms, the government argued thatthey were crucial for the long-term success of the stabilisation of the real.Appeals to the common good, however, did not ensure support forspecific reforms, particularly when confronted with the opposition ofwell-entrenched congressional special interests. Painful negotiationscharacterized the slow march of reform, accelerating only in moments ofcrisis.41 In order to gain parliamentary approval for key constitutionalamendments related to administration and social security, Cardoso choseto use both the democratic tools of persuasion and negotiation and the'traditional' practices of state patronage, selective allocation of funds andpolitically-motivated public appointments. The latter practices can all beseen as the antithesis of the politics of state modernization.

Federalism upon the political system on the other. To form a working majority, thegovernment needs to set up an alliance of at least three or four parties. See S. H.Abranches, 'Strangers in a Common Land: Executive/Legislative Relations in Brazil',in S. Marks (ed.), Political Constraintson BraZi/'sEconomicGrowtlh New Brunswick andLondon, 1993), pp. 105-29-'Estudo mostra fragilidade da base de FHC', Folha de SVoPailo, 26 May 1997.Moreover, during the second half of Cardoso's first presidency, consensus about thebenefits of economic stabilization was increasingly overshadowed by the view that anovervalued exchange rate was stunting economic growth.


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7 5 Francisco PanqzzcaIn spite of his electoral mandate and some important initial successes in

the first year of his first administration, Cardoso faced an uphill politicalstruggle to deepen economic reform in the years ahead.42 The saga of thegovernment's agenda of administrative, social security, tax and politicalreform - set out at the beginning of Cardoso's first administration in 1995and still unfinished five years later at the end of the first year of his secondmandate - illustrates the difficulties his government faced in his relationswith Congress.43 The administration's attempts to pass the fiscally crucialconstitutional amendment on social security reform was typical of theobstacles faced by the overall process of reform that dominatedparliamentary life between 1996 and i998. In March 1996, in order toreverse an earlier defeat and win a first round vote for the constitutionalamendment, the government resorted to a barrage of micro and macropatronage. At a 'micro' level the patronage vote-gathering offensiveincluded, for example, the appointment of a political protege of twodeputies from Minas Gerais as superintendent of the Federal Railways. Ata 'macro' level it entailed, among other concessions, the release of R$3Omin federal funds for the construction of a highway in Rondonia to win afurther eight votes and the federalization of the R$3,3 3bn debt of the cityof Sdo Paulo, then ruled by the influential PPB leader Paulo Maluf, inorder to secure the support of his party's deputies.44

The government's patronage secured its victory in that particular vote.But the complex process of constitutional amendment that requires twoseparate votes in the two chambers of Congress for its approval meantthat two years later, in March I998, the social security reform bill was stillstuck in the Lower House of Congress. The proximity of the OctoberI998 general election made representatives in the legislative even more42 A number of reforms approved in I99 5 allowed greater opportunities for direct foreigninvestment in the soon-to-be-privatised public utilities, and lifted barriers to privatecapital participation in the areas of petroleum exploration, coastal navigation, naturalgas distribution and telecommunications.41 Only the administrative reform was passed largely unchanged during Cardoso's firstadministration. A strongly watered down version of the social security reform waspassed in late I998. An important constitutional amendment that allowed Cardoso tostand for reelection was also passed in 1997. The tax and political reforms had not beenconsidered by the plenary of the Chamber of Deputies by January 2ooo. The

administrative reforms still need considerable enabling legislation in order to becomefully operative.44 This bargain was especially costly for the government because, in addition to seekingsupport for the social security constitutional amendment, it was also attempting toblock the setting up of a parliamentary commission of inquiry on the banking sectorthat was regarded as politically damaging. See: 'Governo investe tudo para mudarvotos no Congresso', Fol/a deSdo Paulo, 22 March 1996. See also: 'Planalto supera crisecorn favorecimentos a aliados', Folha de,So Paulo, 2 I March I996; 'Uso politico do BBprovoca rombo', Folha de SaloPaulo, 24 March i996; 'FHC cede cargos e verbas parabarrar CPI e aprovar emenda', Folha de Sdo Paulo, 22 March i996.


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Beyond Delegative Democragi' 753determined to exact material and political concessions from theadministration in exchange for their support. As one legislator put it, 'Wevote here [in Congress] in favour of the Government's unpopularmeasures but we want to take something back to [our] states.' As in I996,the Government had little alternative but to agree to the politicalallocation of state funds in order to achieve its goal. Enticements includedthe release of R$6oom from the state-owned Caixa Economica Federal forpublic works in a number of deputies' strongholds to increase theirelectoral chances, as well as measures that allegedly benefited private firmslinked to certain congressmen.45 But in spite of the government's bestendeavours it was once again defeated in key aspects of the reform whenit was submitted to a vote in May. Eventually, Congress passed asignificantly watered down reform bill on i5 December 1998.The use of material inducements to secure the legislators ' acquiescencebecame a political scandal in the case of the constitutional amendment thatallowed President Cardoso to stand for re-election and thus to carry on hisproject of economic modernization for a second term. A secret recordingof a private conversation between two deputies and an unidentified thirdperson published by the newspaper Folha de SdioPaulo revealed that at leasttwo deputies and allegedly at least three others were bribed to vote for theamendment. After a brief and superficial parliamentary inquiry the twodeputies whose voices appeared in the recording were stripped of theirmandates (cassados)but no measures were taken against the minister whoallegedly paid the bribe or to the other deputies that had also allegedlytaken bribes.46

Within certain limits, political appointments and the allocation of statefunds in exchange for political support is part of the democratic politicalbargain in many political systems. It is the scale and the systematic way inwhich it is employed in Brazil that made it so central to the programmeof reforms. It would be misguided, however, to understand the wholeprocess of reform just in terms of a cynical 'old politics' game ofpatronage or even outright corruption. Debate, persuasion and thebuilding up of a reform coalition were also part of the process of reformand influenced the pace and success of the different reforms. In his accountof the administrative reform amendment, former minister of FederalAdministration and State Reform, Luiz Carlos Bresser Pereira, describes45 See 'Vota~do e ultima chance para negocia~o', Folha de Sao Paulo I9 March I998,'Barganha na Previd&ncia envolve R$ 600 mi da CEF', Folha de SaioPaulo, I9 March

I998; 'Ate selo de transito entra na negociado', Folha de StioPaulo, i i February I998.46 See: 'Deputado diz que vendeu seu voto a favor da reelei~do por R$2oo mil', Folha deSdo Paulo, I3 May '997; 'Oposiqdo defende CPI da reeleido', Jornal do Brasil, I4 May

I997. See also: 'Apoio de PMDB-SC a FHC custa R$ i5o mi', Folha de Sao Paulo, 4March I998.


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754 FranciscoPani.Zjahow he created a successful strategy for building up a reforming coalitioninside and outside Congress, as well as how he actively sought to persuadean initially hostile civil service and public opinion of the benefits of thereform.47 Ideology also played a role in promoting economic reform. Asurvey of parliamentary attitudes conducted by T. J. Power shows someevidence of an ideological shift towards neoliberalism in Congress,suggesting that 'old politics' and 'new economics' can accommodate eachother within the Brazilian political elite.48If Collor was a political outsider and Cardoso a modernising insider, inArgentina Carlos Menem blurred the dividing line between the inside andthe outside of his country's polity. Menem, like Collor, was a politicianfrom a small and poor northern province. In Argentina these provincesare the traditional bastions of 'old politics', with provincial governmentsoften dominated by politically dynastic and economically oligarchicfamilies such as the Saadi in Catamarca,the Rodriguez Saa in San Luis andthe Juarez in Santiago del Estero. Menem's provincial origins made himan outsider in national politics at a time in which the political establishmentwas becoming increasingly discredited but, in contrast to Collor, hebelonged to an established party which strongly supported him andrecognised him as 'one of them'.Menem was an ambiguous figure in Argentina's politics and he playedthis ambiguity to his political advantage. He exploited his party's populisttradition but was never a prisoner of it. On the contrary, he used it toredraw the dividing lines of Argentina's politics and society. After itselectoral defeat in i984, the Peronist party started a process of politicalrenewal, promoted by a new internal current, the 'Renovaci6nPeronista'.49 This movement denounced the party's old authoritarianpolitical guard and sought to promote the values and practices ofdemocracy both within and outside the party while simultaneouslyvindicating the party's tradition of social justice. Although Menem wasone of the founders of the new democratic current, he refused to alignhimself with the new faction against the old guard, stressing instead hisdemocratic credentials as shown by his years in jail under the military and

The administrative reform was the most successful of the second wave reform package.It was sent to Congress in i995 and passed largely unchanged in 1997. See Luiz CarlosBresser Pereira, 'Reflections of a Reformer: Amending the Constitution in DemocraticBrazil', paper presented to the conference on The Politics of Administrative Reformin Developing and Transition Countries, Washington, DC, i5 June i999.Timothy J. Power, 'Brazilian Politicians and Neoliberalism: Mapping Support for theCardoso Reforms, 199 5-I 997', Journalof Interagterican tudiesand WorldAffairs, vol. 40,no. 4 (Winter I998), pp. 51-7I.

49 For an analysis of the re-emergence of Peronism and the role of the 'Renovaci6nPeronista' see S. Barros, 'Order, Democracy and Stability. The Politics of Argentinabetween 1976-I992', unpubl. PhD. diss., Universityof Essex, i999.


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Beyond DelegatiVeDemocragc' 7sshis good relations with Alfonsin.50 Invoking Peronism's traditionaldoctrine of internal unity and inclusiveness he rejected Renovaci6n'sattempts to isolate the 'old guard', and defeated the 'renovadores' in theparty's internal elections with the support of the union hierarchy.51Thisgave Menem total control over the party and left the old guard indebtedto him and without the strength or the political legitimacy to challenge hisauthority.

Menem's presidential campaign did not request public support for aspecific set of policies but rather asked for the traditional Peronist trust ina strong leader with the campaign slogan: 'Follow me, I will not let youdown.' ('Siganme, no los voy a defrauder'). Once elected, the depth of thecrisis gave Menem a high degree of autonomy to impose top-downreforms. But, in striking contrast to Collor, Menem used his position ofauthority to construct a strong political alliance both within and outsideCongress to provide support for economic reform. The heart of hisstrategy was based on an unlikely alliance that cut across the country'straditional political and class battle lines. It was an alliance whichcombined traditional Peronist machine politics (its heartland in thesprawling working-class suburbs of the province of Buenos Aires and inthe political machines of the poorest provinces) with new provincialleaders from outside 'old politics', pro-business national figures andeconomic reformers both from within and outside his party.Ideologically, Menem sought to legitimise his reforms by presentingthem simultaneously as a radical break with the past and as consistent withPeron's legacy. During the electoral campaign, he presented himself, andwas perceived by the Peronist voters, as the embodiment of theJusticialista tradition.52 His campaign touched the Peronist issues ofnationalism, social justice and support for the poor.53 Once in office,Menem rejected traditional Peronist economic policies but he did notrepudiate his party's political legacy. He drew up a discursive dividing line50 Menem built up good relations with Alfonsin when the latter was at the peak of hisdemocratic legitimacy. He was one of the few Peronist leaders who supported theAlfonsfn government's peace treaty with Chile, which was opposed by the oldleadership.51 Menem's presidential candidacy was backed by, among others, Herminio Iglesias, aunion leader linked to Peronism's violent and authoritarian past.52 A. Born, 'El experiment neoliberal de Carlos Saul Menem', in A. Born et al. (eds.),Peronismoy menemismo.Aeatares delpopulismoen la Argentina (Buenos Aires, I995).5 Typical of Menem's discursive appeal to the national-popular Peronist tradition is thefollowing excerpt in which he replied to the claim that he was a small-town politician:'It does not bother me if they sav that I am a caudillejo rom the interior of the country.It would bother me if they compare me to an IMF or Social Democracy little doctor(doctorcitode la social de ;ocracia o del FAMl), traitor to the motherland.' Interviewpublished in El Birnestre s cited in S. Barros, 'Order, Democracy, and Stability', p. I 22.


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756 FranciscoPani.Zja- a before and after - between the chaos of i989 and the new stabilityachieved by his government. He argued that after years of chaos anddecline his government represented a rupture with the past, both with theeconomic policies of previous Peronist governments and the failedpolicies of the Alfonsin administration. Yet at the same time he stressedhis government's political continuity with the ideals and practices ofPer6n. He reminded his followers of Per6n's political pragmatism,evident in Per6n's frequent changes in economic policy and summarisedin his famous slogan 'la tinicaverdad s la realidad'.54Above all, he stressedthat 'if Per6n had been alive, he would have done what he [Menem] wasdoing now 55Menem's control over his party and the support he received from itscongressional deputies was crucial for the rapid progress of his programmeof reform. Initially he enforced the reforms with a high degree ofindependence from both party and Congress by stretching the limits of hispresidential powers.56 However, the overuse of presidential decrees andthe concentration of power in the Executive neither rendered the Peronistparty irrelevant nor led to the consolidation of a delegative democracy.Rather, the president used the so-called 'decretos de necesidad y urgencia(DNU)' with different purposes in accordance with the changing relationsbetween the Executive and Congress. In the early stages of the reformprocess the Justicialista-dominated Congress effectively marginalised itselffrom the political decision making process by consenting to a significantdelegation of legislative power to the Executive and by its mostly passiveendorsement of the extensive use of presidential decrees.57But contrary towhat O'Donnell argues, delegation constituted just a relatively shortphase of Menem's two periods in office rather than becoming a permanentcharacteristic of Argentinean democracy.58 In the second half of Menem's54 According to Menem, the challenge of Peronism was 'to be flexible in the means andinstruments but also loyal until death to its doctrine and essence.' C. Menem, Laesperan.a y la accidn (Buenos Aires, 1992), p. 291; quoted in S. Barros, 'Order,Democracy, and Stability', p. 148.55 S. Barros, 'Order, Democracy and Stability, p. I 5I.56 The main institutional powers of the presidency were the delegation of legislativepowers by Congress, the use of emergency decrees (decretos e necesidadyurgencia)n lieu

of legislation, and the president's power of partial veto of legislation. G. Molinelli, 'Lasrelaciones Presidente-Congreso en Argentina 83-95', Post Data, vol. 2 (i996), pp.5 990.

5 Between July i989 and August 1994 Menem issued 336 'necessity and urgency decrees'as opposed to 35 issued by all constitutional presidents between 1853 and I989. M.Llanos, 'El Presidente, el Congreso y la Politica de Privatizaciones en la Argentina(I989-1997)', Desarrollo Econudicovol. 38, no. 151 (1998), pp. 743-70.

58 In her analysis of privatization policy in Argentina Mariana Llanos distinguishes threestages in Executive-Legislative relations in Argentina under Menem. The first one,I989-90, was characterized by the delegation of powers from Congress to the


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Beyond De/egative Democracy' 757first administration and during his second presidency, the President's useof DNUs was not indicative of his political strength but rather of hisrelative weakness. Decrees were used in this period to overcomelegislative resistance to the President's initiatives, such as the privatisationof the Post Office and the airports, rather than to implement reformsalready authorised by the framework laws on state reform and economicemergency, as was the case in the first phase.59

The interaction between 'old politics' and 'new economics' shaped theagenda and the timing of the reforms. Characteristically, the areas inwhich reform was slower and less thorough was in the provincialadministrations and in the labour market, as Menem partly depended onthe political support of the governors of the peripheral provinces and onunion bosses to control Congress and the Justicialista party. According tothe Argentine Minister of Labour, by i995 only 30 per cent of labourmarket reform had been completed, provincial government reform wasnot even on the agenda until the 1993 fiscal pact, and not much had beenachieved by the end of the Menem era.60

Not only were the timing and the agenda of the reforms affected by theneed to secure the support of the representatives of the old order(provincial caudillos and union bosses) but the design and content of thereforms were also marked by similar considerations. This resulted in thesurvival of 'illiberal enclaves' and in the sub-optimal implementation ofthe reforms. The privatisation process was characterized in many cases bythe awarding of badly regulated monopolist or quasi monopolist utilitiesto the same economic elite that had profited in the 'bad old days' frompublic works concessions and other state contracts, thus facilitating thetransition from the 'patria contratista' to the 'patria privatista'. Equally,

Executive. Delegation was sanctioned by the framework of the State Reform Law andthe Economic Emergency Law approved by Congress in i989, at the height of theeconomic crisis. The second stage, from I 99o to 1994, was marked by negotiation andco-operation between Menem and Congress. The third stage, that dominated most ofMenem's second presidency, was characterised by the weakening of presidential powerand increasing conflict between Congress and the Executive. M. Llanos, 'El Presidente,El Congreso y la Politica de Privatizaciones en la Argentina (i989-i997)'.5 The Government sought to privatise the National Post Office and the airports ini996-97. In both cases Menem appealed to the use of DNUs in order to overcomelegislative impasses. In the case of the airports the use of a DNU was clearly illegal asthe privatisation was not included in the state reform law but the legality of the DNUwas nonetheless confirmed by the government-dominated Supreme Court. M. Llanos,ibid.,pp. 763-5.60 For labour reform see S. Etchemendy and V. Palermo (I 997) 'Conflicto y concertaci6n.Gobierno, Congreso y organizaciones de interns en la reforma laboral del primergobierno de Menem', Universidad Torcuato Di Tella, Working Paper No. 41, BuenosAires.


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7 58 FranciscoPaniZjatrade liberalization contained a number of exceptions, most notably in thecar and paper industries. As these exemptions were awarded at thediscretion of the Minister of the Economy they suggest the enduringinfluence of some domestic industrial lobbies.61To sum up and conclude this brief comparative analysis, economiccrises (Collor de Mello and Menem) and political mandates (Cardoso) maygreatly increase the opportunities for radical reform, but neither crises normandates determine the path of reform nor do they secure its success.Politics is always the crucial factor in any process of reform. In BrazilCollor De Mello failed because he was too close to being a 'true' neo-populist, that is, a 'modernising outsider', who sought, and ultimatelyfailed, to promote economic modernization without a solid parliamentarybase of support. Cardoso, in contrast was a 'modernising insider'. Hispower was rooted in a broad multi-party alliance that incorporatedtraditional local political bosses together with modern-minded politiciansand technocrats in a delicate balance. The alliance was held together byCardoso's own democratic mandate and by the success of the RealStabilisation Plan, but also by the President's readiness to operate withinthe system and allocate state resources in exchange for political support,in other words by the politics of 'Jisiologismo'.In Argentina, Menem's personalist political style paralleled Collor'sneo-populism, but Menem was never an outsider in the sense that Collorwas. He appealed to the Peronist populist tradition to secure his party'ssupport and although he initially ruled in a highly personalist manner, hedid so from inside the political system rather than from outside. Thejoining of old-style Peronist politics and new economics was facilitated bythe depth of the country's economic crisis, by strong popular support forthe government's economic policies, and by the limits on the developmentof any alternative policies set by the iron laws of global market economics.Menem's economic policies may have been the opposite of those of Per6n.But his political pragmatism, his disregard for the norms of due process,his lack of concern for financial transparency, his style of leadership andhis ruthless determination to neutralismalternative sources of power, suchas the unions and judiciary, were vintage Peronist politics.62 There were61 For the persistence of illiberal enclaves and an analysis of the beneficiaries of theprivatisation process see J. Bambaci, T. Saront and M. Tommasi, 'The PoliticalEconomy of Economic Reforms in Argentina', unpubl., Centro de Estudios Para elDesarrollo Institucional - Fundaci6n Gobierno y Sociedad, and V. Palermo 'Mejorarpara empeorar? La dinaimica politica de las reformas estructurales en Argentina' in M.

Novaro (ed.), La dintil/iCa political ue las reforvias estructirales en la Argentina de los 90(Buenos Aires, I999).62 For a discussion of the relation between 'niene iismo' and peronismosee M. Novaro,'Menemismo y peronismo: viejo y nuevo populismo', Cnadernos el CLAEH, vol. 7I,no. 19 (I994), 3, pp. 55 78,


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Beyond Delegative Democracy' 759clear limits, however, to Menem's 'old politics', as shown by theprogressive reassertion of his party, and the Radical oppositionindependence from the executive after the initial stage of the reformprocess, and the democratic changes introduced by the 1994 Constitution.

Conclusion'Old politics' facilitated economic reform in Argentina and Brazil bylegitimising Menem's personalist leadership within the peronista traditionand by providing both Menem and Cardoso with passive and activelegislative support for their programmes of reform. But 'old politics'operated within certain limits, in certain areas and at a certain cost.Both Argentina and Brazil experienced significant transformations intheir economic relations and economic culture during this period.However, the political environment moulded economic reforms, both interms of the way in which they were advanced and in limiting their scope.As such, '4new economics' bears the imprint of 'old politics'. Theinfluence of 'old politics ' in the programme of reform has been manifold.First, it delayed or prevented certain reforms, as was the case of theadministrative, tax, political and social security reforms in Brazil and oflabour and provincial government reforms in Argentina. Second, itdirectly and indirectly increased the costs of reform. Costs were directlyincreased in the case of Brazil by the selective use of public expenditurefor patronage, by politically motivated loans from state banks and by therescheduling of debts from state governments and politically powerfulprivate interests in exchange for congressional votes.63 Indirectly, costswere increased by the delays in the process of reform used by congressmenas a strategy to extract further benefits from the executive. Delays cost theBrazilian state dearly; social security is the largest component of thefederal government's primary deficit and, more substantially, delays andprocrastination played a crucial role in the markets' loss of confidence inthe reform process that led to the January i999 devaluation of the real. Inthe case of Argentina, direct costs were incurred by the selective allocationof federal government funds to the politically crucial Buenos Airesprovince and other peripheral provinces and by the continuousdependence of clientelist-ridden provincial administrations on federalgovernment transfers. Indirect costs resulted from loss of productivity63 The latter was the case for instance of the so-called 'bancadaruralista', a cross-partygroup of legislators that defended the interests of the landowners. On several occasionsthese legislators provided their support for the government in exchange for measuressuch as the rescheduling of the landowners' debt with state-owned banks. See: 'Usopolitico do BB provoca rombo', Folha de Sdo Paulo, 24 March I996.


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760 FranciscoPaniZadue to the lack of labour reform and the high costs of the newly privatisedpublic utilities and other 'illiberal enclaves'.There was also a broader, more general cost to both programmes ofreform. In both countries economic reform was underpinned by publicopinion support for Argentina's convertibility plan and for Brazil's RealPlan. Both plans may have represented a welcome break with the previousculture of inflation, but they also contained a significant element ofeconomic populism. The plans' popularity was partly based onunsustainable growth in internal consumption that was fuelled by thecombination of an overvalued exchange rate, a rapid fall in inflation andan expansive fiscal policy (particularly in Brazil). The high price of thiseconomic populism became all too apparent in the slump that affectedboth countries in 1999.64The process of reform also shows the limits of presidential decisioni'smo.The president is indeed a very powerful actor in both Argentina andBrazil, but presidential power falls short of the 'delegative democracy'model. In both countries, the power of the president is rooted in a densenetwork of formal and informal political institutions without which thepresident cannot properly govern. Presidents choose different politicalstrategies in order to achieve their goals, and economic crises increasetheir autonomy both as articulators of political coalitions and as politicaleducators. However, as Marsh and Olsen argue, political institutionsaffect the distribution of resources, which in turn affects the power ofpolitical actors, which then circle back to affect political institutions.65Cardoso's gradualism and Menem's shock reform strategies reflected thedifferent conditions of the political systems in which they operated.66Bothcombined the specific forms of 'old politics' that characterised theirrespective political systems with the legitimacy bestowed on them aspresidents to promote their programme of reforms. However, neitherCardoso nor Menem was simply a prisoner of 'old politics', nor can theirreform strategies be divorced from the democratic context in which theyoperated. They exercised their power as democratically-elected leaders bycreating reforming political coalitions that changed traditional politicalalignments. The economic reforms were as much aimed at changing theprevious economic model as at redefining the parameters of the politicalorder. They achieved some success, both politically and economically,particularly in defeating 'inflationary fatalism' and in making a return to64 For an analysis of the populist elements in stabilization plans see V. Palermo 'Mejorarpara empeorar? La dinimica political de las reformas en Argentina'.6 J. Marsh and J. P. Olsen, 'The New Institutionalism: Organizational Factors inPolitical Life', American Political Science Review,vol. 78, no. 2 (1984), pp. 735-49.66 V. Palermo, 'Mares agitados'.


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Beyond Delegative Democragi' 761the 'old model' unthinkable.67 But the fact that during their second termsboth presidents have faced severe obstacles to the continuation of theirreform programmes, to the preservation of their presidential power andto the maintenance of their reform coalitions is testament to the precariousand contradictory nature of such strategies and to the ultimatelyambiguous role of 'old politics' in economic reform.

Finally, the case study of the blend between 'old politics' and 'neweconomics' outlined above brings this paper back to where it started; therelationship between political and economic modernisation. I wish toconclude by suggesting that there are three plausible hypotheses toexplain the persistence of this hybrid model that mixes 'old politics' andnew economicsThe first is the time-lag hypothesis.This hypothesis is closest to the

assumptions made by orthodox modernisation theory. It argues that whilethe old politics of personalism and patronage may still be alive in LatinAmerica, it will only be a matter of time before economic modernisationbrings about modern politics, as the weight of public opinion and thelogic of market relations impose themselves on the politics of statepatronage, personalism and corruption.The second is the political culturehypothesis.68Cultural explanations ofLatin American politics dig deep into the region's history, as far back asthe legacy of the Iberian colonial heritage and the stratified, authoritariansystem the colonial powers set into place. It is argued that under theinfluence of the Iberian hierarchical political tradition and the CatholicChurch's corporatism, Latin American countries have developed sets ofinstitutions that are far removed from the model of a rights-based modernpluralist democracy. It is argued that, due to the weakness of intermediategroups and the low legitimacy of institutions (such as political parties,Congress, the public administration and the judiciary), an institutionallyweak majoritarian democracy based on populism, neo-populism and non-institutional notions of the 'popular will', not the rule of law, prevails inthe region.The third is the neo-dualisthypothesis.This hypothesis also has echoes ofmodernisation theory. In the 195os, a fashionable approach to LatinAmerican societies was to divide them into a modern urban sector and atraditional rural one. The discussion was then centred on the extent to67 See R. Campos, 'Mudansas de paradigma, Folha de StdoPaulo, 30 May i999.68 For a discussion of Latin America's political culture as a non-liberal culture see J.Wiarda and H. F. Kline, Latin American Politics and Development (Boulder, SanFrancisco and Oxford, i990) and G. Philip, 'The New Populism in Spanish SouthAmerica', p. 95. See also G. Alberti, 'Democracy and Institution Building: Why is itso Difficult in Latin America?', prepared for delivery at the meeting of the LatinAmericanStudiesAssociation,Guadalajara,Mexico, 17--19 April 1997.


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762 FranciscoPaniqawhich the politics of import substitution industrialisation would generateenough economic dynamism to absorb the surplus labour of the traditionalsector. In the I990s most Latin American societies have becomeoverwhelmingly urban and the rural-urban divide, although still wide, isless relevant for understanding the region's politics and economy.However, a new divide between the formal and informal sectors of theeconomy (both largely urban) seems to be emerging; it has been estimatedthat in recent years four out of every five jobs created have been in theinformal sector.69 The rapid expansion of the informal sector raises theprospect of societies becoming increasingly divided between a modernsector, economically integrated with the global economy and politicallyoperating in a way not unlike mature liberal democracies, and an informalsector, in which people are living off peripheral economic activities and onthe fringes of legality.70 It is within this sector that the old politics ofpatronage, paralegality and personalism, adapted to the social mores ofthe late twentieth century, still find a fertile ground among the informaleswho have, by definition, few legal entitlements and who exist mostlyoutside the realm of civil society.

Which of these hypotheses is the most plausible? At the risk of beingberated for concluding with a catch-all answer, I suggest that the threehypotheses are not incompatible. There is an element of truth as well asof hope in the time-lag argument. More than a decade of uninterrupteddemocratic rule is progressively changing Latin American politics andculture. Civil society is now stronger in the region than ever before. Thespread of communications and a largely free press have allowed the voiceof public opinion to make an impact on governmental decision-making.Both in Argentina and in Brazil, democratic institutions, includingpolitical parties, have shown much deeper roots than O'Donnell'sdelegative democracy allowed us to believe. If anything, democracy hasbecome institutionalized in both countries in recent years. But the casestudies of Brazil and Argentina show that free market economics andtraditional politics are not necessarily incompatible and can, in manyrespects andwithin certain imits, support each other. Furthermore, some ofthe economic changes of the last decade have generated their own formsof 'old politics'. Private monopolies, new forms of patrimonialism and69 Most of the employment created during the i990s in Latin America has been in theinformal sector. According to International Labour Organisation (ILO) estimates, outof every ioo new jobscreatedbetween i990 and I995, 84 were in the informalsector,and it is in this sector that 56 % of all employed people in the region work. EconomicCommission For Latin America and the Caribbean, 'Summary and Conclusions', SocialProgressReport i977 (Internet version: http://www.eclac.cl/Gab.htmjres), p. 7.70 For a discussion of the informal sector in Latin America see C. Rakowski, Contrapunto:The Informal Sector Debate in Latin America (New York, 1994).


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Beyond Delegative Democracy' 763targeted social programmes have been used to recolonise the state andcreate neo-clientelist political links. In some cases, political decen-tralisation may have strengthened the position of traditional local elites.71

The political culture hypothesis rightly focuses our attention on theinadequacies of political institutions and can account for the different pathand pace of reforms in Brazil and Argentina. While the turn towards freemarket economics has not done away with political institutions, it hasweakened the representative ability of political parties and party systems,and has favoured the emergence of alternative power holders outsidedemocratic control.And finally, as the neo-dualist hypothesis suggests, the growth of the

informal sector and the persistence of very high levels of poverty andinequality (which are partly a historical legacy but also the product of theshortcomings of liberal economic reform) are hardly compatible with theworkings of fully fledged modern liberal democracy.72 On the contrary,economic exclusion provides a fertile ground for the organic growth ofthe old politics of patronage, corruption and general disregard for the ruleof law.73 However, Jisiologismo, clientelism and populism coexist todaywith a democratic culture much stronger than that of the past. The verydifferent levels of political institutionalisation in countries such as Peruand Venezuela on the one hand and Argentina and Brazil on the othershows that the relation between politics and economic reform are muchmore open for debate than either modernisation theory or delegativedemocracy led us to believe.71 E. Huber, D. Rueschemeyer and J. D. Stephens, 'The Paradoxes of ContemporaryDemocracy. Formal, Participatory, and Social Dimensions', ComparativePolitics, vol.

29, no. 3 (1997), pp. 323-41. Huberet al. arguethat the politicalspaceleft empty byweak popular organisations and the failure of political parties to establish organizationalties to subordinate classes has been filled by clientelistic networks. See especially p. 334.72 For an analysis of the impact of free market economics on poverty and inequality inLatin America see: V. Bulmer-Thomas (ed.), The New EconomicModel in Latin Americaand its Impact on IncomeDistribution and Poverty (London, i996). For a discussion of theeffects of social expenditure on poverty and income distribution in the region see J.A. Ocampo, 'Income Distribution, Poverty and Social Expenditure in Latin America',paper prepared for the first Conference of the Americas convened by the Organizationof American States, Washington, DC, 6 March I998.7 For an analysis of informality, paralegality and 'old politics' see F. Panizza and A.

Barahona de Brito, 'The Politics of Human Rights in Democratic Brazil: A lei naopega', Democratihation,vol. 5, no. 4 (Winter I998), pp. 20-5 i.

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Panizza - 2000 - Beyond 'Delegative Democracy' 'Old Politics' and