This article analyzes the failure of the Peruvian stabilization and development program, 1985–1990. It critically assesses major contributions during the 1980s to a theory of heterodox stabilization strategies for Latin American countries, and articulates a more comprehensive approach to the conceptualization and study of heterodox programs. This approach revolves around three key elements: the need to break inflationary inertia, the necessity of reconciling short- and long-term policies, and the importance of evaluating et ante the plan's political-economic feasibility. Serious misconceptualization with respect to all three elements are found to explain the disastrous outcome of Peru's heterodox program. Lessons for future heterodox programs are discussed.