Social Democracy in the Global Periphery: Origins, Challenges, Prospects

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Overview

Social Democracy in the Global Periphery focuses on social-democratic regimes in the developing world that have, to varying degrees, reconciled the needs of achieving growth through globalized markets with extensions of political, social and economic rights. The authors show that opportunities exist to achieve significant social progress, despite a global economic order that favours core industrial countries. Their findings derive from a comparative analysis of four exemplary cases: Kerala (India), Costa Rica, Mauritius and Chile (since 1990). Though unusual, the social and political conditions from which these developing-world social democracies arose are not unique; indeed, pragmatic and proactive social-democratic movements helped create these favourable conditions. The four exemplars have preserved or even improved their social achievements since neoliberalism emerged hegemonic in the 1980s. This demonstrates that certain social-democratic policies and practices - guided by a democratic developmental state - can enhance a national economy's global competitiveness.

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Editorial Reviews

From the Publisher
"This impressive collaborative effort crosses disciplinary and regional boundaries to knock the conventional wisdom that globalization has made social democracy impossible on the periphery back on its heels. Grounding their analysis on four fascinating cases that span the globe, the four authors make a compelling case for the possibility of peripheral social democracy. Their book should be required reading for policy-makers and scholars alike."
Peter Evans, University of California, Berkeley

"This is an outstanding book. It is theoretically sophisticated and empirically rich. In a field dominated by pessimistic books, the message of this book is even inspirational: redistributive efforts in the developing world can work and not at the expense of economic growth. The book makes us understand the political and social preconditions for such benign developmental outcomes. A must read for all students of the developing world."
Atul Kohli, Princeton University

"Social Democracy in the Global Periphery accomplishes what the best comparative research aims for. Informed by a full grasp of past work on development, democracy, and social welfare policies as well as thorough local knowledge, the authors scan the range of what is possible and identify in four exceptional cases the causal patterns that allowed equitable social and economic policies to emerge. Remarkably, these include not only favorable conditions for the mobilization of subordinate interests but also early and sustained integration into the international economy. This is a volume of outstanding importance."
Dietrich Rueschemeyer, Brown University

"This is a book that restores one's sense of political hope. Against the economic determinism of the 'free market,' these authors argue that it is possible, even in the Third World, to promote economic growth and, at the same time, to advance the cause of justice and solidarity."
Michael Walzer, Institute for Advanced Study, Princeton, NJ

"Richard Sandbook and his colleagues have written an excellent book on social democracy...conveys an unusual but extremely helpful understanding of social democracy...raises almost as many interesting questions as it answers." —Sheri Berman, Barnard College: Book Reviews, Comparative Politics

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Product Details

  • ISBN-13: 9780521867030
  • Publisher: Cambridge University Press
  • Publication date: 1/15/2007
  • Pages: 300
  • Product dimensions: 5.98 (w) x 8.98 (h) x 0.91 (d)

Meet the Author

Richard Sandbrook is Professor of Political Science at the University of Toronto.

Marc Edelman is Professor of Anthropology at Hunter College and the Graduate Center, City University of New York.

Patrick Heller is Professor of Sociology at Brown University.

Judith Teichman is Professor of Political Science at the University of Toronto.

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Read an Excerpt


Cambridge University Press
978-0-521-86703-0 - Social Democracy in the Global Periphery - Origins, Challenges, Prospects - by Richard Sandbrook, Marc Edelman, Patrick Heller, and Judith Teichman
Index

1    Social democracy in the periphery

   In A Bias for Hope (1971, 28), Albert O. Hirschman enjoined social scientists to embrace “a passion for the possible.” Our primary task, he noted, is to understand probabilities, in the sense of uncovering regularities and uniform sequences. If we limit ourselves to this task, however, we risk fortifying a paralysis of the will by casting situations of backwardness, injustice, or oppression as the inevitable outcome of universal laws. Hopeful cases of social progress will then be dismissed as merely exceptions to the general rule. To avoid this negative tendency, social scientists should also search for possibilities – the often hidden opportunities for valued change that lurk in a particular situation. Hirschman’s own work sought to widen the limits of what is, or is perceived to be, possible.

   This book seeks to do the same thing. It focuses on social-democratic regimes that have, to varying degrees, reconciled the exigencies of achieving growth through globalized markets with extensions of political, social, and economic rights. We show that opportunities exist to achieve significant social progress in the periphery, despite a global economic order thatfavors the core industrial countries.1 We explore what has been attained in certain countries, and how and why social-democratic experiments have succeeded, in the hope that this exploration will suggest possibilities for similar achievements elsewhere. Our findings derive primarily from a comparative analysis of four exemplary cases: Kerala (India), Costa Rica, Mauritius, and Chile since 1990. In the global south, where poverty, inequality, illiteracy, hunger, and authoritarian and corrupt governance are widespread, these four cases stand out in contrast.

   We arrive at two significant findings. First, the four exemplars cannot be dismissed as inexplicable, historical accidents. Though unusual, the social and political conditions from which these developing-world social democracies arise are not unique; indeed, pragmatic and proactive social-democratic movements help create these favorable conditions. Second, these cases have accommodated, but avoided capitulating to, global neoliberalism (construed as pressures to liberalize markets, reform states, and open economies to cross-border flows of goods, services, and capital). The four exemplars have preserved or even improved their social achievements since neoliberalism emerged hegemonic in the 1980s. Certain social-democratic policies and practices – including the actions of a democratic developmental state – can enhance an economy’s global competitiveness.

Context of the study


Both the shortcomings of neoliberal reform and the renewed search for a more desirable alternative warrant a rethinking of the nature and viability of social-democratic models. On the one hand, market-oriented reforms have produced disappointing, and sometimes destructive, results in the global south. On the other hand, the last decade has witnessed a resurgence of interest in more egalitarian and dynamic alternatives to the Washington, or more comprehensive “Post-Washington,” Consensus.2 Implicitly or explicitly, social-democratic principles are central to certain of these alternative visions.

   The shortcomings of market reform are widely acknowledged. That neoliberalism’s triumph would usher in a more peaceful and prosperous world – an “end of history” – was a popular post-Cold War view. According to this position, the collapse of state socialism in the 1980s allowed all countries to adopt a market orientation and open economies. Free global markets, it was believed, facilitated the free movement of ideas as well as products, thereby opening closed states to the outside world. Free trade and investment, furthermore, could foster the prosperity necessary to defeat poverty and defuse conflicts. Democratization and the development of civil societies would, in time, accompany economic liberalism. All these changes would facilitate a more peaceful world. This optimistic scenario is not being realized, however.

   First, even World Bank economists have recently conceded that market reform has not yet delivered on its economic promise. William Easterly, in an article tellingly entitled “The Lost Decades,” shows that many developing countries have stagnated despite their adoption of market-friendly reforms. He cites one statistic that dramatically illustrates the lack of success: whereas the median per capita income growth in developing countries in the era of state interventionism (1960–1979) reached 2.5 percent, it was a disastrous 0.0 percent in 1980–1999 (Easterly 2001, 135). Branko Milanovic (2003) similarly accepts that the development record of 1960–1978 is superior on all measures to that of 1978–1998, noting that the best performers in the second period – for example China and India – did not follow mainstream free-market policies. Disillusionment with the Washington Consensus is especially widespread in Latin America, where “the initial enthusiasm . . . was not matched by results” (Ortiz 2003, 14). Finally, former World Bank Chief Economist Joseph Stiglitz’s jeremiads (2002) against “market fundamentalism” in the 1990s are well known. As Milanovic concludes, “something is clearly wrong” (2003, 679).

   Second, scholars studying neoliberal reform have identified several destructive trends associated with reform policies:

•   High and growing inequalities have accompanied market liberalization.3 World income inequality has likely been rising, a trend that is incontrovertible if China is removed from the calculation. Within countries, neoliberal policies have also been associated with growing inequality and poverty in most cases. Does growing inequality matter, if the proportion of the global population living in destitution falls? Yes, responds Robert Wade: “Inequality above a moderate level creates a kind of society that even crusty conservatives hate to live in, unsafe and unpleasant,” with higher crime and violence and lower levels of interpersonal trust (Wade 2004a, 582).

•   Democracy itself is diluted and hollowed out. The scope of democratic decision making shrivels when national governments, through international agreements, surrender their power to regulate in the public interest in such areas as trade, financial flows, investment, and health and environmental standards, and when global financial markets effectively punish governments that deviate from conservative monetary, fiscal, and even social policies. In addition, growing social inequality and atomization lead to lower and less-effective popular participation, as cynicism regarding democratic institutions grows (see chapter 2).

•   Market liberalization generates conditions in developing countries that are conducive to instability and conflict. Virtually the entire human population has been drawn into a growing dependence on markets. Where these markets are only lightly regulated, they subject people to rapid and sometimes devastating changes in fortune. Distributional shifts, new forms of economic insecurity, and external shocks demand strong, coherent states to devise adaptive economic strategies, mediate domestic distributional disputes, and mount social protection. Yet these new tensions, combined with externally influenced austerity programs and anti-state ideologies, challenge the legitimacy and coherence of already weak states. The rise in grievances, coupled with increasingly ineffective and unpopular regimes, provides an opening for violent protest movements drawing on religious fundamentalism, ethnic chauvinism, or charismatic populism.4



   Social-democratic regimes, in principle, provide an antidote to these destructive tendencies. Not only can their inclusive and well-organized democratic institutions mediate distributional conflicts, but economic security, social cohesion, and equality are also enhanced through such redistributive mechanisms as land reform, job creation, progressive taxation, labor-market regulation, social insurance, and welfare provision. The efficacy of social-democratic regimes, in Europe and elsewhere, explains their resurgent popularity in current debates about development alternatives to neoliberal orthodoxy.

   Prominent among these alternatives is neostructuralism. In Latin America, with its long tradition of social-democratic movements (Vellinga 1993), the 1990s saw the elaboration of this policy model by economists associated with the Economic Commission for Latin America and the Caribbean (ECLAC). Neostructuralism, the successor to a structuralist approach whose origins lie in the 1950s, is essentially a technocratic version of social democracy.5Neostructuralists claim that their approach can avoid the pitfalls of both protectionist import-substituting industrial strategy and the current free-market doctrine. Neostructuralism, like its predecessor, stresses the historical specificity of the situation of developing countries, in particular the historically derived structural constraints on economic decision making and development. While neostructuralists agree with neoliberals on the centrality of markets and the maintenance of macroeconomic stability, they differ in including equity, as well as growth, as the goals of economic policy. These dual goals require a strong role for the state in economic life as service-provider, manager, and regulator ( but not owner). Governments should intervene to promote land redistribution (where warranted), progressive tax reform, technological development, accessible education and health care, a skilled labor force, export markets, and social insurance (Green 1996, 109–22).

   Neostructuralism, however, lacks a political analysis. Its economistic focus ignores the empowerment of subordinate classes that is the means (and also an end) of equitable development. It is unclear how a growth-with-equity strategy can prevail in the face of entrenched and intransigent power elites. This volume, in contrast, emphasizes the politics of experiments in equitable and democratic development.

   The recent rise to power of the democratic left in Latin America has further stimulated debates about the viability of egalitarian alternatives. Popular antipathy towards neoliberal policies brought left-of-center governments to office in seven countries that together account for more than three-quarters of the region’s population: Brazil (Luiz Inácio “Lula” da Silva), Argentina (Néstor Kirchner), Uruguay (Tabaré Vásquez and the Frente Amplio), Ecuador (Lucio Gutiérrez in the early years of his presidency, 2002–2004), Chile (Ricardo Lagos and Michelle Bachelet), Bolivia (Evo Morales), and, less democratically, Venezuela (Hugo Chávez). What united these leaders was not socialist doctrine but a common, if vague, view that neoliberal reform had failed and should be replaced with a development model emphasizing egalitarian policies, social welfare, and a more central role for the state in economic life. With the exception of the radical populist Chávez, all the new leaders might be described as pragmatic social democrats.

   The ascent of “Lula” to the Brazilian presidency in October 2002 (with more than 60 percent of the vote) has particularly excited interest in social-democratic approaches. Lula, in his fourth run for president, succeeded the two-time president and professed social democrat, Fernando Henrique Cardoso. The latter’s efforts to implement social reforms had been heavily constrained both by domestic power structures – clientelistic politics and the powerful business elite – and by the country’s dependence on international financial markets as a result of its huge debt (Smith and Messari 1998). Lula, whose Workers Party (PT) was the largest party in the legislature in 2002, promised a deepening of democracy and redistribution (including land reform) together with renewed growth within a market economy. The PT-led coalition assumed power with impressive credentials for egalitarian reform: it had, after all, already instituted measures to involve ordinary citizens in governmental decision making in the Brazilian states and municipalities it controlled, most famously in the form of participatory budgeting.

   Yet Lula, like Cardoso, was constrained in achieving redistributive measures at the national level, especially by a recession in 2003, which reinforced the imperative of attracting private investment and retaining the International Monetary Fund’s (IMF) support. Hence, his early response was to combine an orthodox monetary and fiscal policy with limited improvements in pensions and welfare payments and little in the way of land reform. Achieving social reform in a country that is both highly dependent on foreign investment and immensely inegalitarian6 is fraught with difficulties; nonetheless, we shall contend later that the Workers Party is changing the face of Brazilian politics.

   Another locus of social-democratic rethinking is the groups opposed to what they term neoliberal globalization. Actually, the “anti-globalization movement” (as branded by the media) juggles two conflicting visions or development alternatives to neoliberalism. A radical tendency envisages the transformation of global capitalism. One prominent version of this tendency advocates the formation of decentralized, participatory, and ecologically sustainable communities that trade mainly within the community or the region. The limited scale and self-reliance of such a model is thought to enhance solidarity and participatory democracy, as well as environmental sustainability. However, its proponents’ reluctance to sketch a plausible strategy of transformation renders this approach utopian.7

   The alternative, reformist tendency is congruent with social-democratic pragmatism, though its advocates in the global justice movement rarely employ that term. The reformists propose remedies to the destructive tendencies of global capitalism at the national and international level. That the strategy is implicitly social-democratic is clear from its advocates’ brief statements of principle. For example, Walden Bello, a prominent figure in the global justice movement and head of the Third World Network, describes the essence of his approach as “a strategy that consciously subordinates the logic of the market and the pursuit of cost efficiency to the values of security, equity, and social solidarity” (Bello 2003, 286). Proposed reforms of the rules governing the global economy, international governance, and new forms of global taxation add up to what may be termed a “social-democratic globalization” (Sandbrook 2003).

   However, the dominance of such global institutions as the IMF, World Bank, and WTO (World Trade Organization) by proponents of neoliberal globalization has led globalistreformers to defend national sovereignty as a vehicle for attaining social justice. Not only will effective social democracy at the national level yield security and equity for working people domestically, but such nationally based governments will demand that human rights and social justice apply to global markets as well. As one observer concludes, “the global opposition must pursue a common global program for working people that reinforces their national struggles for economic and social equity. Such a program would support national democratic movements and leaders who understand that national social contracts cannot be maintained in a global market that lacks one of its own” (Faux 2004, 49).

   Hence, this volume’s rethinking of the sustainability and promise of social-democratic approaches derives its significance from both the disappointing record of neoliberalism and a resurgence of interest in egalitarian, democratic, and nationally based alternatives. In principle, social-democratic models are more deeply democratic, proactive, security-enhancing, and inclusive than the orthodox market-oriented model. A brief review of our social-democratic cases indicates that practice is not too distant from principle.

Records of achievement

We selected our cases – Kerala, Costa Rica, Mauritius, and Chile since 1990 – on the grounds of both their celebrated status as social-democratic pioneers and the diversity of their approaches. Many other relevant cases in the global periphery saw their social-democratic path interrupted as a result of ethnically based civil strife (Sri Lanka after 1977), coup d’état (Uruguay in 1973), economic decline (Michael Manley’s Jamaica), and/or degeneration into populism and corruption ( Venezuela in the 1970s and 1980s). Some of these earlier failed cases, such as Uruguay, have recently resumed their social-democratic path; meanwhile, in other countries, prominently Taiwan and South Korea, democratization has forged some social-democratic features such as redistributive welfare states. Few countries, however, have experienced as lengthy a history of social democracy as the four on which we concentrate.

   Although these cases diverge in their circumstances and historical trajectories, they resemble each other in their exemplary socioeconomic development. Each has achieved an exceptional record in comparison to others in its region or country: Kerala in relation to other Indian states, Costa Rica in Central America, Chile in Latin America, and Mauritius in Africa. Chapters 3 to 6 specify these individual achievements. For now, this summary of some of their common successes will suffice:

•   They all provide primary health care, including clean drinking water, adequate sanitation, nutrition programs, comprehensive immunization, and access to basic medical services. Not surprisingly, the life expectancy in all cases is over seventy years (compared to an average of sixty-four years for all middle- and low-income countries).

•   They have all made considerable progress in education, with (at a minimum) nearly universal access to primary schools and an adult literacy

Profiles of the selected cases





GDI per capita 2001 ($US) GDP growth (% per annum) Economic structure, 2001 (value added as % of GDP)



population (millions) 2001 urban population (%) 1999 nominal PPP 1980–1990 1990–1999 agriculture industry services

Chile 15 85 4590 8840 4.2 7.2 8 34 57
Costa Rica 4 48 4060 9260 3.0 4.1 11 37 53
Mauritius 1.2 41 3830 9860 6.0 5.2 6 31 63
Kerala 32 26 304 2.2 4.4 29 12 59

Sources: World Bank, World Development Report, 2003, 2001; World Bank, World Development Indicators Databank, August 2003; India, Census Bureau, National Sample Survey 2002; http://www.indiabudget.nic/es2002–03/esmain.htm.

rate of over 90 percent (compared to an average 75 percent for all middle- and low-income countries).





© Cambridge University Press
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Table of Contents

Part I. Introduction: 1. Social democracy in the periphery; 2. Burdens of history; Part II. Case Studies: 3. Kerala: radical social democracy as democratic deepening; 4. Costa Rica: resilience of a classic social democracy; 5. Mauritius: evolution of a classic social democracy; 6. Chile: the tumultuous path to the third way; Part III. Patterns and Prospects: 7. Social and political origins; 8. Challenges of globalization; 9. Prospects.

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