Draft. Please do not cite or circulate.Varieties of Semi-Articulated Capitalism in Latin AmericaBen Ross [email protected] for the Annual Meeting of the American Political Science Association, Chicago, September 2-5, 2004.Abstract. Four core features of capitalism in Latin America structure business access to essential inputs of capital, technology, and labor: 1) diversified conglomerates, 2) multinational corporations (MNCs), 3) low-skilled labor, and 4) atomistic labor relations. Overall non-market institutions are more important in organizing capital and technology while markets predominate in allocating labor and skills. Important complementarities exist among these features especially the symbiosis between MNCs and diversified conglomerates, as well as mutually reinforcing tendencies between these forms of corporate governance and general underinvestment in skills and in well mediated employment relations. The core features are embedded in, and sustained by, other historical and contextual factors including dependence on commodity exports, shallow capital markets, economic and political volatility, weak and interventionist states, and deep ethnic and class divisions. A comparative institutional approach has several advantages over other theoretical perspectives and helps explain the strong growth performance in the region during import substituting industrialization (ISI) as well as the anemic response to market reforms.I. Introduction1This paper draws on a comparative institutional or ‘varieties of capitalism’ approach to identify core features of capitalism in Latin America.2 The comparative institutional analysis of different kinds of capitalism has been elaborated recently most extensively for OECD countries. Although this approach has a long tradition in Latin America, it has been semi-dormant in recent years. Beyond reviving this tradition, a comparative institutional perspective brings several innovations to the study of contemporary Latin American political economy. Most importantly it incorporates labor relations and worker training into analyses of overall capitalist coordination; it shifts attention from states to firms; and it directs the empirical focus away from recent policy changes toward enduring, underlying institutional features of capitalism in the region.The study of distinctive forms of capitalism in Latin America went through several stages over past decades, before slipping down the list of research priorities. Early analyses began with the assumption that entrepreneurs drove capitalist development, studied the behavior and attitudes of Latin American capitalists, and usually concluded that business people were insufficiently entrepreneurial (see for example Lauterbach 1965). In the 1960s and 1970s this perspective that focused on individuals in a domestic setting was supplanted by an approach that started with structures in the international economy, namely dependency theory. Here the problem with Latin American capitalism was that it was dependent, externally constrained, and lacked internal dynamism (Cardoso 1979; Evans 1979). By the 1970s and 1980s, the analysis of Latin American ------------------------------------1 I am indebted to David Soskice for early conversations on education and training in Latin America. I am grateful to the Searle Foundation for financial support and to Barbara Murphy for research assistance.2 The current broad currency of the ‘varieties of capitalism’ approach owes much to the popularity of the eponymous volume edited by Peter Hall and David Soskice (2001). However, the comparative institutional analysis of capitalism has a long intellectual pedigree that includes, on developed countries, at least Gerschenkron (1962), Shonfield (1965), Katzenstein (1978), Zysman (1983), and Piore and Sabel (1984), and on developing countries Leff (1978), Cardoso and Faletto (1979), Evans (1979; 1995) (1979; 1995), Amsden (1989), Huber (2002), and Guillén (2001).capitalism shifted again mostly toward the analysis of the state and patterns of state intervention (Evans 1995; Schneider 1999; Bresser-Pereira 1996).These successive literatures highlighted major aspects of capitalism in Latin America but also left important gaps. First, they had little to say about distinctive forms of corporate governance in domestic firms. We know a good deal about the political activities of domestic business, and its relations with government and MNCs, but much less about how local capitalists built and organized their firms.3 Second, and similarly, the large literature on organized labor illuminates more of its role in politics than in collective bargaining and firm-level intermediation. Lastly, the study of worker skills, education, and training has been largely left to a small group of policy experts, and the small literature on skills is rarely incorporated into general discussions of the performance of Latin American capitalism overall. The ‘varieties of capitalism’ approach directs attention precisely to these neglected areas.The ‘varieties’ approach starts with the firm, which in some ways seems to hark back to the narrow perspective adopted in research on Latin American business in the 1960s. However, the focus is on the firm and its strategic interactions with its environment, and in Latin America the international economy and the state dominate this environment. Even from a firm’s-eye view the state rarely disappears; states mediate many key relations -- with creditors, unions, and MNCs, for example -- and regulate many markets. Nonetheless, a firm’s-eye view of the world is useful both as a corrective to other perspectives that either deduce firm behavior or treat it as secondary and mechanically reactive to other forces. And, in practice, what has emerged in developing countries in the wake of market-oriented reforms of the 1980s and 1990s is neither state-led nor market-led development but rather business-led development.A main goal in the ‘varieties of capitalism’ perspective is to identify complementarities among institutions. For Hall and Soskice extensive vocational training in “coordinated market - 3 - ------------------------------------3 Nothing like the extensive subdiscipline of business history in developed countries exists in Latin America. What little historical material there is on individual businesses and business people comes almost exclusively from