In the course of the last three decades, tectonic changes have occurred in much of Latin America: Many authoritarian governments have been replaced by democracies, and ‘free-market’ principles have supplanted many of the policies of the past. But the redevelopment of many of those states has not gone quite as politicians, policymakers, and economists might have anticipated.
Ben Ross Schneider (MIT) asserts in his book Hierarchical Capitalism in Latin America: Business, Labor, and the Challenges of Equitable Development. that Latin America in general has a distinctive, enduring form of hierarchical capitalism characterized by multinational corporations, diversified business groups, low skills, and segmented labor markets.
Many industries in the region lack dynamism, since they are controlled by entrenched multinational firms or agglomerations of business groups. Over time, institutional complementarities knit features of corporate governance and labor markets together and thus contributed to institutional resiliency. Political systems generally favored elites and insiders who further reinforced existing institutions and complementarities. Hierarchical capitalism has not promoted rising productivity, good jobs, or equitable development, and the efficacy of development strategies to promote these outcomes depends on tackling negative institutional complementarities. As a result, Schneider thinks, economic inequality remains higher than it should be.
Developing political analysis in theorizing on comparative capitalism and examining the neglected business side of political economy in Latin America, this interesting study presents a stark challenge, and alternative, to those who advocate simple solutions such as continued liberalization. This also a striking empirical and theoretical demonstration of state-economy-society mutual embeddedness. The book is an important contribution to economic sociology and political economy scholarship.