In Search of the Latin American Variety of Capitalism

Abstract

In Search of the Latin American Variety of Capitalism* (SCHNEIDER, Ben Ross. Hierarchical Capitalism in Latin America: Business, Labor, and the Challenges of Equitable Development. Cambridge: Cambridge University Press, 2013)The classical endeavor of comparing national models of capitalism has fortunately returned to the center of political science. Its resurgence can be attributed to the publication of Varieties of Capitalism (HALL and SOSKICE, 2001) and the multiple debates triggered by this book. Almost a decade later, Ben Ross Schneider has published Hierarchical Capitalism in Latin America, the first comprehensive and systematic effort to apply the framework of V°C to Latin America. This inspiring book feeds the growing community of scholars who are calling for a renovation of the traditionally vibrant but recently stagnant field of Latin American political economy (LUNA, MURILLO, and SCHRANK, 2014). The book presents new arguments and empirical evidence to support the critical diagnosis that if we do not strengthen the study of business actors and how politics and markets are mutually shaped, we will continue to miss extremely important political processes and outcomes in this region.Schneider's book utilizes institutional complementarities-V°C's core and most elegant analytical device-to build the novel concept of hierarchical market economy (HME), which, he argues, defines the distinctive nature of capitalism in Latin America. Four elements characterize HMEs: diversified business groups, multinational corporations (MNCs), segmented labor markets, and low levels of education and vocational skills. The book dedicates one chapter to each of the four dimensions of HMEs. These mutually reinforcing attributes result in a tight equilibrium that has proved resilient over time, even through the regional transition from a state-led import substitution industrialization model to a post-neoliberal setting.Among many institutional complementarities, the continued prominence of MNCs in Latin America-and their practice of importing the innovation they generate in their home countries-increases incentives for domestically-owned diversified business groups to specialize in lower-technology sectors, which in turn reduces these grupos' demand for skilled labor. The low level of skills in these economies further strengthens the disincentives of both domestic business groups and MNCs to conduct higher-technology investment. As a result, Latin America's comparative institutional advantage lies in simple manufacturing and commodities, which contrasts with both the radical and incremental types of innovation enabled by the institutions of Liberal Market Economies (LME) and Coordinated Market Economies (CME), respectively.In its extension of the V°C framework to the developing world, Hierarchical Capitalism in Latin America begins to address, within the limits of this region, the shortcomings that characterize the original framework, i.e., its sidelining of the state's role in contrasting types of capitalism, its apolitical character, and its inattention to history. By reflecting on how these three dimensions play out in defining HMEs, Schneider's book has the additional benefit of suggesting to scholars studying industrialized nations how to overcome V°C's limitations in understanding the origins and changes of LMEs and CMEs over time.Probably only those who face the rather lonely challenge of conducting research on the interaction of business and politics in Latin America-within an academic community where other interest groups such as social movements and labor receive significantly higher levels of attention-will be able to fully appreciate the achievements of this book. The breadth of case knowledge shown in a work that presents original research covering six countries (Argentina, Brazil, Chile, Colombia, Mexico, and Peru) is impressive. It is these very same scholars who will need to conduct more fine-tuned readings of Schneider's book in progressing to the next stages of research that this work may motivate. …