Latin American capitalism: multinational corporations, business groups, low skills and segmented labor markets

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of the last three decades, tectonic changes have occurred in much of Latin America: Many authoritarian governments have been replaced by democracies, and ‘free-market’ principles have supplanted many of the policies of the past.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. 

Hierarchical Capitalism in Latin AmericaBen 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.

Open access to the 1st chapter – here and to preface – here

One comment

  1. Hierarchical capitalism in Latin America, a sugestive title for a study of the economic crisis in Latin America, created by endogenous and exogenous factor of the 20th century, specially after the
    1970 decades, when in my view Latin America’s capitalism was completed dominated by the
    giant multinationals, using a magic tool, which was the imposition of totalitarian regimens in Brazil.
    Argentina, Chile, Uruguay, Central America, Bolivia, etc.

    The new new form of hierarchical capitalism in Latin America in this period, in my opinion, was well planned and it was coincident with the collapses of the Soviet bloc economy and the end of the Cold War period. What is more the capitalism in Latin America, was completed absorbed by the new re-organisation of the world economy. In addition the international capital leading by financial -capital invaded and took over the local economies with the help of totalitarian regimens changing the historical course of the Latin American native economic development represented by the direct involve of the State in the countries’s economies, i.e. in Mexico the banks were part of the State system of capital management, similar caes were Argentina, Chile, Colombia, Uruguay, etc.

    The 1970’s decade was crucial for the imposition of the foreign capital and the transformation of the Latin American economy in a total dependency of multinationals. Sadly in my view exogenous elements such as the collapses of the Soviet economic bloc, the decline of the European economy, and the non-existence of China as a world competitor, favoured the penetration of multinational in the local economies, finally, ending its own process of development with industrialisation and accumulation of capitals to compite in internationally trade, business, science, technology and education. I.e. Brazil was a leading country building its economic independence, similar historical experiences were Chile, Argentina, Venezuela and Mexico, etc.. During 1960’s and part of the 1970’s the LA economy moved to created an integrated market with various agreements and
    commercial pacts, Andean Pact, Mercosur, Central America Common Market, etc.

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