Silent Revolution: The Rise of Market Economics in Latin America

Journal article by Ilene Grabel; Journal of Economic Issues, Vol. 31, 1997

Journal Article Excerpt

Silent Revolution: The Rise of Market Economics in Latin America

by Ilene Grabel

Duncan Green's Silent Revolution: The Rise of Market Economics in Latin America is an extremely useful and nuanced account of the creation of market-driven "neoliberal" economies throughout Latin America. The book is very much in the spirit of Karl Polanyi's The Great Transformation [1944]. Following in Polanyi's footsteps, Green's principal argument is that the most lasting - and in his view, over-looked - legacy of the Latin American debt crisis is the opportunity it provided for the restructuring of economic life around market relations. Uncovering the factors that led to this economic and social revolution is the single-most important contribution of the book.

Green argues persuasively that the creation of market systems in the 1980s was the result of a complex interplay of economic, political, and intellectual developments at the national and global levels. He focuses our attention on the economic pressures that gave rise to calls for reform in the 1980s. These economic pressures include the global recession of the 1970s, the problems encountered by import-substituting regimes in developing countries during the 1970s, and the debt crisis and the rise of International Monetary Fund/World Bank (IMF/WB) structural adjustment programs in the 1980s. On the political level, Green emphasizes the way in which general and heterogeneous calls for reform became condensed into demands for a specific type of economic transformation - namely, neoliberalism. These political pressures emanated from a powerful coalition of the IMF/WB, the United States, and Latin American governments (which were authoritarian in some cases and "modernizing technocratic" regimes in others). Green's discussion of the role of intellectual and ideological pressures for market-oriented reform adds a final dimension to his account of why general calls for economic reform took the particular form they did. Here he focuses attention on the way in which the ascendant neoclassical orthodoxy of the academic economics profession helped to create the intellectual conditions for a market revolution in Latin America.

But this is no mere listing of diverse causal factors. Instead, having analyzed carefully the individual forces that contributed to this "great transformation," Green proceeds to weave a compelling and rich empirical analysis of their complicated interaction. Social change is inherently complex, and it is to Green's credit that he presents a layered and nuanced analysis. This approach allows him to contextualize the significance of these forces across countries. On this basis, Green is able to account for the heterogeneity of the forms of actually existing neoliberalism across Latin America.

The second major goal of the book is to drive home the point that the market transformation of Latin America has failed to live up to the promises of its proponents. The market transformation has wrought hardship and dislocation for the vast majority of Latin Americans. By documenting the depth of the economic, social, and environmental devastation associated with this transformation, Green ably counters the all-too-common argument that these costs are unfortunate, albeit temporary adjustment phenomena. Green does note that neoliberalism has been successful in one important sense - by inducing severe recessions, it has curbed inflation. Although Green's thrashing of neoliberalism does not distinguish his book from many other excellent studies that are guided by the same effort [e.g., Altvater et al. 1991; George 1990], his rich empirical presentation makes his work more useful and, I think, potentially convincing than these other works (especially for use in the classroom).

The book is organized as follows. The introduction describes the nature of the transformation of Latin American economies and explains what is meant by the term neoliberalism. Chapter 1 discusses the rise and fall of import-substituting industrialization and links this to the broader debate over states versus markets. Chapter 2 describes the formation and operation of the IMF/WB and other multilaterals. This chapter also discusses the logic of conditionality and structural adjustment. Chapter 3 describes the institutional aspects of Latin America's market transformation and presents the first of many scorecards on the successes and failures of neoliberalism. Due attention is paid here to privatization and stock market creation. Given the date of the book's publication, it is impressive that Green manages to link the latter to the 1994-95 Mexican financial crisis. Chapters 4-6 continue the scorecard on neoliberalism, with Chapter 4 focusing on its human and environmental costs, and Chapters 5 and 6 focusing on its effects on international and interregional trade. The trade chapters present non-technical analyses of the problems of export-led development (Chapter 6), the Southern critiques of GATT (Chapter 5), and NAFTA (Chapter 6), and they provide a list of all existent regional trade agreements (Chapter 6). Chapter 7 examines the politics of neoliberalism under authoritarian and elected regimes. This chapter also presents a country-by-country compendium of popular protests against neoliberalism. Chapter 8 discusses the search for alternatives to neoliberalism. Here, Green discusses the national varieties of neoliberalism, the structuralist and neostructuralist alternatives, the work of the Sao Paulo forum, and the lessons for Latin America of East Asian development strategies. The book concludes with brief (and somewhat uninspiring) speculation as to what can be done.

The book has two appendices that are excellent sources of material for student research papers. Appendix A is a country-by-country statistical guide and thumbnail political and social history of the Latin American economy from 1982 to 1994. Appendix B contrasts the views of the three existing paradigms in Latin American economic development debates - neoliberalism, neostructuralism, and a rather awkwardly termed "import-substitution" paradigm - on a variety of key issues (e.g., the role of foreign capital and international trade). The book also has a useful glossary, index, and suggestions for further reading.

I highly recommend this book to anyone interested in understanding the market revolution in Latin America and to anyone seeking to explore the record of this revolution. This book would be suitable for both undergraduate and graduate courses in economic development and Latin American studies. No familiarity with economics is necessary.

ILENE GRABEL University of Denver


Altvater, Elmar, Kurt Hubner, Jochen Lorentzen, and Raul Rojas, eds. The Poverty of Nations: A Guide to the Debt Crisis from Argentina to Zaire. London: Zed, 1991.

George, Susan. A Fate Worse than Debt. San Francisco: Food First Books, 1990.

Polanyi, Karl. The Great Transformation. New York: Rhinehart, 1944.