| Reviews / Comptes Rendus | Labour/Le Travail, 61

REVIEWS / COMPTES RENDUS

Kurt Weyland, Bounded Rationality and Policy Diffusion: Social Sector Reform in Latin America (Princeton: Princeton University Press 2006)

SOMETIMES AN omission can distort a narrative as much as outright lies. Kurt Weyland is guilty of many omissions in this account of social policy formation in Latin America but none so striking as the failure to note, never mind analyze, the importance of the fact that the regime of Augusto Pinochet in Chile was an American- backed military dictatorship representing the foulest comprador capitalist elements in that country. Yet this state-centred account of social policy change makes heavy weather of the impact of the Chilean example on policy diffusion in South America, particularly in the area of pension 'reform.'

Weyland's interest is in finding the sources of ideas that resulted in changes in pension and medical care policies in Latin American countries in the last three decades, roughly the international era of neo-liberalism, though one must caution here that attempting to find a contrasting "post-war compromise" era in the history of many Latin American countries is futile. His focus is on Brazil, Costa Rica, Peru, Bolivia, and El Salvador. Weyland is particularly at pains to counter notions that international financial organizations (IFIS), such as the World Bank and the International Monetary Fund, pull the strings of Latin American governments though he admits that they try to do so. He suggests, for example, in the area of pensions that extensive privatization occurred mainly in countries where World Bank pressure for change was least intense whereas results in obtaining privatized pensions were largely unsuccessful in countries where the IFIS exerted the most pressure for changes. From Weyland's point of view, this is because the impact of IFIS on national economic policy-making has been exaggerated and the real drivers of decision-making are "cognitive heuristics" which seem to largely involve the happenstance contacts between state officials in different countries. While he does not deny that popular political forces play a role as well, he largely understates that role.

The argument barely hangs together when one places Weyland's selective evidence in a larger context. In the first place, it seems rather obvious that the World Bank would not waste much of its time and considerable resources putting pressure on countries to get rid of expensive social programs if they follow suit without such pressures being necessary. In the cases of El Salvador, Bolivia, and Peru, the countries that followed the "Chilean model" for "pension reform" (the neo-liberal discursive practice of labeling every change that benefits capital at the expense of workers as a "reform" is worth noting) most closely, and Chile itself, Weyland finds scant evidence of World Bank prodding. In the Chilean case, such prodding was made rather unnecessary by the imposition on the country of a government that enthusiastically embraced policies that created greater opportunities for capital while immiserating the workers and brutally suppressing any efforts at resistance. The World Bank is an agent of us imperialism but its urgings and economic threats do not have to be used when military aggression has more directly achieved the same ends. Chile got rid of its public, defined-benefit pensions in 1981 and replaced them with private, defined-contribution pensions. Every worker was required to pay 10 percent of earnings into a private pension scheme, with part of their contribution paying the salespeople and insurance managers, and with no guarantee of the size of their ultimate pension: that would be determined by the market performance of the funds invested by the private insurers.

According to Weyland, Bolivia adopted the Chilean model because the peak business association in Bolivia happened to invite one of the architects of Chilean pension privatization to speak to its members. That fellow was "widely credited with great persuasive powers" and "captivated" (101) the Bolivian Finance Ministry's budget director, who then spearheaded a Bolivian version of the Chilean pension scheme with help from Chilean consultants. That's it? Is it of no relevance that Bolivia is a country whose social policies were already negligible? With well less than 30 percent of Bolivians covered by any social program and a history of authoritarian regimes, Bolivia was a country where the peak business association, the military, and intellectual elites were closely intertwined. Much has changed since that time, particularly since the election of socialist Evo Morales as president in 2005. Would a budget director in Morales's government likely adopt the far right social policies of a dynamic guest speaker at a convention of the haute bourgeoisie? Not very likely. Yet, Weyland sees no need to place any context around his little story of the captivated budget director.

His explanation for El Salvador's adoption of the Chilean pensions policy is almost exactly the same: "the privatization plan emerged in a similarly unplanned fashion as the Chilean model suddenly became cognitively available." (101) Strangely, the Cuban model did not suddenly become "cognitively available." Weyland does not mention the kinds of people who were leading El Salvador at the time, that is the thugs whose only response to popular pressures from below, at least until the peace accord with the guerrilla forces opposing them, was murder. These were people rather likely to become "cognitively" familiar with what the ultra-right leadership of Chile were planning on behalf of the interests of capital. In El Salvador, only 12 percent of the population enjoyed any form of state social protection. There would hardly be an intensification of revolutionary pressures if that thin layer of protection was cut even further.

By contrast, Costa Rica, as Weyland acknowledges, was a country with extensive social protection. Democratic competition and decentralized authority meant that World Bank pressures to gut public pension programs would not be met with great enthusiasm. Yet Weyland's own evidence is that Costa Rica DID, however reluctantly, introduce a degree of privatization in its pension schemes. While the World Bank could not claim a total victory, they could claim significant inroads in a country which once mimicked social democracy in Scandinavia in the era before neo-liberalism, after which both Costa Rican and Scandinavian social democracy joined social democracy everywhere in at least a partial embrace of neo-liberalism and welfare state cutbacks.

As for Brazil, Weyland's own evidence does not support the view that Brazilian governments held firmly against the pressures from the World Bank to reduce state pension payouts. Brazil did balk at copying the Chilean privatization because in Chile, as in other countries that followed the "Chilean" and World Bank models, transition costs in moving from public to private insurance were enormous and ate up savings that the "reform" might offer the government. Indeed, the IMF was never fond of insurance privatization as opposed to drastic cuts in state programs. As Weyland observes, Brazil ended up copying the defined-contribution but public plans that Sweden and Poland had implemented. He makes it clear that Brazil learned about these schemes at a World Bank seminar attended by pension specialists from Brazil. Nonetheless, because Brazil had not adopted the initial privatization scheme of the World Bank, he feels justified in concluding that Brazil had largely resisted World Bank intervention. Indeed, even for countries such as Bolivia and Peru that followed WB prescriptions on pensions and health care, Weyland is at pains to show the ways in which they failed to follow all the technical advice that the WB offered. This seems to miss the forest for the trees.

Weyland's emphasis on state officials and their role in frustrating or furthering World Bank goals is not completely without merit. But because of the overwhelming emphasis in his book on individual civil servants in nation x and their contacts with so-and-so in nation y, we never get any real sense of the class character of government bureaucracies and their various factions, much less a sense of the impact of "civil society" forces on the government. Throughout this book, there is an assumption, which is never interrogated, that "reform" of social policy was needed throughout Latin America to open the continent to the forces of globalization, a supposedly uncontestable need. Social justice is simply not an issue for Weyland and indeed was not much of an issue for many of the governments whose "reforms" he lauds. To the extent that social justice issues are raised, it is to note that in many countries, state pensions were only available to a privileged group of workers as opposed to the whole population, and/or they were grossly unequal among recipients. This is certainly true, but it can be argued that the solution was to broaden the base of pension recipients to include everyone over a certain age, and to raise pensions for underprivileged groups to the levels received by those already favoured with good pensions. Instead, Weyland justifies the reduction of decent pensions to create an almost universal lack of social protection for the aged, an approach that smacks of cut off your nose to spite your face but which is really simply a rationalization for cutting state social expenditure budgets. In his view, the Chilean model, " by giving up most [state] responsibility for social security... depoliticized an issue area that had given rise to innumerable demands from special interests." (23–24) Here we have the now classic neo-liberal formulation in which giving power to capital removes issues from politics, a formulation sometimes used to justify the imposition of military and other authoritarian governments when workers and farmers, with their unsophisticated views of politics, begin demanding reinstatement and even expansion of their former "special interest" rights.


ALVIN FINKEL Athabasca University

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