The Terms of the Comparison Between Latin America and the United States
To talk of oligarchy in the Americas is to talk of oligarchy in both Latin America and the United States of America. To talk of oligarchy at all is to recognize its presence in the politics of today. Thus, the idea of an American oligarchy entails a significant shift in perspective, in at least two respects, and requires two bold assumptions. First, it assumes that Latin America and the United States can be addressed and compared in the same terms. Second, it assumes that elements of oligarchic rule continue even as democracy advances. These assumptions tend to run against received wisdom and practice. On the one hand, there is the largely uncontested claim that the democracy of the United States is not only exceptional but also superior to others, especially in sharp contrast to those of Latin America; with the corollary that its modern political development has been entirely distinct from that of Latin America. If proof is needed, it lies in the dearth of a comparative politics of Latin America and the United States. On the other hand, democracy and oligarchy are thought to be politically incompatible, so that the advance of the one necessarily implies the retreat and eventual defeat of the other. Here it will be argued, to the contrary, that the political development of Latin America and the United States are far more similar than commonly supposed and that much of the similarity can be found in the continuity of oligarchic rule and the variable compatibility of oligarchic rule and democracy.
In the original political theory of Aristotle, the notion of oligarchy may denote either the wealthy few or a system of rule, while democracy is the rule of the demos but not the demos itself. The simple presence of an oligarchy may therefore be thought to be compatible with democracy, where formal political equality sits alongside social and economic inequality. In contrast, there is a logical coherence to the claim that oligarchic rule and democracy are incompatible, insofar as democratic rule is designed to be inclusionary, while oligarchic rule is routinely exclusionary. There is little doubt therefore that their principles are contradictory, though it appears that their practice can be much less so; and Aristotle saw no impediment to ‘mixed’ systems and tended to favour the mix of oligarchy and democracy that he named ‘polity’ as constituting the best hope for ‘good government’ in conditions of inequality (Foweraker 2018, Chapter 5). Oligarchies change according to historical context and circumstance, but the focus here is on oligarchic rule and the conditions for its continuity and eventual compatibility with democracy. This compatibility is never complete and never goes uncontested, with processes of democratization often imagined as ongoing claims to the citizenship rights that together achieve both voice and recognition. It may be necessary to add that nothing in this study of oligarchic rule should be taken either to disparage democratic values and struggles or to demonize the presence of oligarchy. Indeed, it is a fully Aristotelian thought to ask whether a measure of oligarchic rule may be required for democracy in its modern manifestation to work at all.
The notion of South to North indicates that the argument will be driven from Latin America to the United States, and so the terms of the eventual comparison of the two will be set in the South. Far from being a random, still less quixotic choice, there is a clear analytical advantage to proceeding in this direction because the presence of oligarchic rule is common political currency in Latin America, whereas it is relatively unfamiliar in the United States, and deriving the analytical terms of the inquiry from the study of Latin America will open up a new perspective on the politics of the United States. But the argument also travels South to North within Latin America, focussing on Argentina in the Southern Cone as the most appropriate context to demonstrate the importance of oligarchic alliances to the reproduction of oligarchic rule; and within the United States, where the states of the Confederacy have had such a huge influence both on the process of State formation and on the composition of the core oligarchic alliance of modern American politics. The process of State formation is central to the inquiry and will supply the key terms of the comparison between Latin America and the United States, as well as unlocking the puzzle of the eventual compatibility of oligarchic and democratic rule; while the reference to the American State simply adopts the native convention of referring to the United States as America, and its politics and much else as American. This is a convention that is adopted pari passu when talking about the United States.
The strong claims for American exceptionalism and the superiority of American democracy, especially in relation to Latin America, are exemplified in Acemoglu and Robinson’s extensive survey of Why Nations Fail (Acemoglu and Robinson 2012), where the very first chapter—‘So Close and Yet So Different’—highlights the differences between them to demonstrate the key analytical distinction between inclusive and extractive political institutions. In the nineteenth century, the United States was ‘more democratic politically than almost any other nation in the world’ and this also made it the most economically innovative nation in the world (Acemoglu and Robinson 2012, 33). This superior pattern of development depended on an effective rule of law, especially a secure regime of property rights, and inclusive political institutions that limited and distributed political power to prevent any particular interest in society from pushing government in an economically disastrous direction (Acemoglu and Robinson 2012, 43). Extractive political institutions on the other hand—and here the authors look to Latin America—place power in the hands of a narrow elite that promotes extractive economic institutions that concentrate wealth; and political conflict ensues to control the State in order to protect this wealth. This is a vicious circle that together with the ‘iron law of oligarchy’ creates a powerful tendency for extractive institutions to persist (Acemoglu and Robinson 2012, 123), and this explains why nations fail (Acemoglu and Robinson 2012, 372).
In large degree this argument relies on the malleability of the two broad categories of inclusive and extractive institutions that are put to work in very diverse historical contexts and circumstances. But the take-home message is clear. No oligarchy can emerge or survive in the presence of inclusive institutions, but oligarchy will survive and flourish under extractive institutions; and this it is that differentiates the political and economic development of Latin America and the United States. But, as it is often said, the devil lies in the detail. Democracy in the United States was narrowly based, closely constrained and deeply imperfect in every respect in the nineteenth century (see Chapter 4); and though the regime of property rights was certainly more secure than in Latin America at the time (see Chapter 3), most of the capital value in property was held in the slave population. In this respect the Civil War could be interpreted as a massive assault on property rights, and this is precisely how Southern slaveowners understood it. Acemoglu and Robinson recognize that after the Civil War, southern landowning elites had managed to re-create the extractive and political institutions that had dominated the South before the Civil War (Acemoglu and Robinson 2012, 415), but confine the consequences to the negative impact on growth and prosperity in the South in the following years. What they fail to recognize is that the survival of oligarchic rule in the South had a huge influence on the subsequent process of State formation and on the oligarchic alliances that continued to constrain democratic advance (see Chapter 5).
The State and variants of State formation have no place in their argument, which is why the distinction between extractive and inclusive institutions—vague as it often is—must do so much work. When the argument turns to Latin America it tends to focus above all on the persistence of extractive institutions and the failure to protect property rights, but the discussion of Argentina does contain the lineaments of a process of State formation in the description of how the preferences and the politics of the interior got embedded into Argentine institutions and ‘how the interior provinces, such as La Rioja, reached agreements with Buenos Aires’ (Acemoglu and Robinson 2012, 386). The story is a rudimentary sketch of what will be characterized as patrimonial State formation (see Chapter 2), where oligarchic interests and preferences are built into central State formation from the very beginning—as a condition of that process. The story clearly has a regional dimension and Argentina became a federal State, but, despite the cues, there is no recognition that the process of State formation in the United States of the nineteenth century is similar or at least analogous in important respects (see Chapter 4). Moreover, as the story moves to address the democratization of Latin American politics in recent decades it returns to the extractive regimes and the inequities they generate to explain why voters vote for politicians with extreme policies and why the newly democratic politics favours strongmen such as Perón and Chávez ‘who are just another facet of the iron law of oligarchy’ (Acemoglu and Robinson 2012, 387). This conclusion appears to underestimate the importance of democratic institutions to oligarchic rule in Latin America, just as the insistence on inclusive institutions ignores the role of oligarchic rule in the democratic politics of the United States.
Acemoglu and Robinson drive their argument North to South, departing from a set of assumptions about the politics and institutions of the United States that appear anodyne but are in fact deeply contentious. Even as late as the 1990s the perception held that ‘oligarchies are a problem that other countries have’ (Johnson and Kwak 2011, 10), as an explosion of financial and economic crises on the periphery of the global economy—from Latin America to Russia to Southeast Asia—was seen to concentrate wealth and power in the hands of the favoured few. But the ‘otherness’ of those financial meltdowns was revealed to be pure illusion with the onset of the financial crisis of 2008: as the State moved to rescue the major banks, while letting the smaller banks fail by the dozens, it became only too obvious that this was a bailout of a ‘uniquely American oligarchy’ (Johnson and Kwak 2011, 28). It is true that the emergence of a powerful financial oligarchy has played a special role over the past one hundred years or more of oligarchic rule in the United States, but only in recent decades has this oligarchy risen to pre-eminence (see Chapter 6). Acerbic political debates about the banking system began in the early years of the republic (see Chapter 4), and political resistance to big money and State-chartered banks resulted in the huge growth of competitive banking in the United States of the nineteenth century, as described by Acemoglu and Robinson in contrast to the highly monopolistic system in Mexico at that time (Acemoglu and Robinson 2012, 33). The long historical arc from that golden age of competition to the bailout of a handful of banks that were deemed ‘too big to fail’ provides a metaphor for the survival and transformation of oligarchic rule in the United States of the modern era.
These introductory remarks and the critical engagement with the argument of Why Nations Fail serve to identify the principal terms of the comparison between Latin America and the United States. These begin with oligarchy, oligarchic competition and a...