Neoliberal Populism in Latin America and Eastern Europe

Abstract

How do democracies enact drastic market reforms that impose considerable shortterm costs on large sectors of the population? What tactics do political leaders use to make such painful measures, which could trigger unrest and endanger democratic stability, politically viable? In addressing these important questions, some authors have resorted to the concept of populism. Roberts and Weyland have claimed an unexpected compatibility of populist politics and neoliberal economics in contemporary Latin America.' Presidents Alberto Fujimori in Peru, Carlos Menem in Argentina, and Fernando Collor in Brazil won elections through populist tactics, enacted drastic market reforms upon taking office, and often managed to maintain popular support. Despite the great hardships of structural adjustment, neoliberal populists Fujimori and Menem won democratic reelection. This combination of political populism and economic liberalism challenges established theories of populism. Scholars used to associate populism with nationalist, inward-looking economic policies, which flourished during the easy stage of import-substitution industrialization from the 1930s to 1950s. Yet the resurgence of populism in the 1980s contradicted this argument, and the recent coincidence of political populism and economic liberalism has discredited it further. Also applying a substantive, policy-oriented notion of populism, liberal economists drew a stark contrast to economic populism, which they identified with excessive government spending and other irresponsible, inflationary policies.2 The adoption of market reforms by populist leaders casts doubt on these arguments as well. The recent connection of populism and neoliberalism thus calls for a theoretical reconsideration. The hypothesized compatibility of political populism and economic liberalismthe possibility, but not necessity, of their coexistence-is also of great practical relevance. The political success of Fujimori and Menem suggests that populist leaders can enact drastic adjustment without provoking massive unrest. Thus, authoritarian rule is not required for imposing painful reforms.3 Contrary to previous pessimistic arguments, democracy and market-oriented change are compatible. Yet, while populists can enact neoliberal reforms under democracy, it is doubtful whether they will institutionalize the new market model. Populist leaders are reluctant to limit their personal latitude by creating firm institutions. They may refuse to