Latin America's Political Economy of the Possible: Beyond Good Revolutionaries And Free Marketeers

Neither socialism nor free-market neoliberalism has been a very helpful model forLatin America, writes Javier Santiso in this witty and literate reading of that region's economicand political condition. Latin America must move beyond utopian schemes and rigid ideologiesinvented in other hemispheres and acknowledge its own social realities of inequality and poverty.And today some countries--notably Chile and Brazil, but also Mexico and Colombia--are doing justthat: abandoning the economic "magic realism" that plots miraculous but impossible solutions andforging instead a pragmatic path of gradual reform. Many Latin American leaders are adopting anapproach combining monetary and fiscal orthodoxies with progressive social policies. This, saysSantiso, is "the silent arrival of the political economy of the possible," which offers hope to aregion exhausted by economic reform programs entailing macroeconomic shocks andcountershocks.Santiso describes the creation in Chile and Brazil of institutions and policies thatare connected to social realities rather than to theories found in economics textbooks. Mexico toohas created its own fiscal and monetary policies and institutions, and it has the additional benefitof being a party to NAFTA. Santiso outlines the development strategies unfolding in Latin America,from Chile and Brazil to Colombia and Uruguay, strategies anchored externally by treaties and tradeagreements and internally by strong fiscal and monetary institutions and policies. And he charts theless successful trajectories of Argentina, Venezuela, and Bolivia, which are still in thrall toutopian but impossible miracle cures.Santiso's account of this emerging transformation describesLatin America at a crossroads. Beginning in 2006, elections in Brazil, Mexico, and elsewhere maysignal whether Latin America will decisively choose the political economy of the possible over thepolitical economy of the impossible.