Bras. Political Sci. Rev.2016;10(3):e0012.

The Politics of Market Discipline in Latin America: Globalization and Democracy

Flávio Pinheiro

DOI: 10.1590/1981-382120160003000012

Two phenomena have been especially prevalent in Latin America during the decades of the 1980s and 1990s: re-democratization and economic liberalization. In this context, it is legitimate to wonder if it is possible for democracy itself to become a hostage to investors. A vast literature argues that in emerging economies such as those of Latin America, the market has greater capacity to influence political outcomes and also has preference for candidates based on their position on the party-political spectrum. That is, it rejects left-wing agendas, which in turn promotes a convergence toward orthodox politics. However, how do we then explain the emergence of the left in Latin America over the last decade? Do these governments really find their political agenda constrained? Did the market treat all of these governments similarly and was it capable of constraining them with the same efficiency? These are questions that
The Politics of Market Discipline in Latin America: Globalization and Democracy
, a new book by Daniela Campello, seeks to answer, indeed, not only to answer, but also to go beyond that. The result is an engaging work, full of notable and robust empirical findings, and which is an important contribution to the area of Comparative Politics and International Political Economy.

Campello starts by describing the Brazilian presidential elections of 2002, when Luiz Inácio Lula da Silva and the Workers’ Party (PT) were elected into government for the first time. What is highlighted at this moment, on the one hand, is the action of the market. On the verge of the impending victory of a party of the left in the country, the first signs of investor dissatisfaction with these imminent facts were: capital flight and consequently a devaluation of the currency, clear and classic case of a confidence crisis. On the other hand, the author calls attention to the reaction of Lula and the PT to the approaching crisis. Already on the eve of the elections, but especially during the term of the administration, the new government put to one side its traditional and historic political agenda, characterized by steadfast opposition to neoliberal policies, in order to allow the continuity of a market-oriented economic policy. The most notable example of the change in course was the nomination of Henrique Meireles for the position of President of the Central Bank. The case of Brazil, however, was not the rule. For example, in Ecuador, the election of the former Finance Minister Rafael Correa in 2006 points to a very different outcome. From the beginning of his presidential campaign, Correa showed himself to be a candidate of strong anti-neoliberal rhetoric, who was against the dollarization of the economy and whatever movement toward free trade with the US. A distrust took hold of the market, creating similar effects to those that occurred in Brazil. But the president elect did not seek to moderate his message or implement a policy switch. On the contrary.


The Politics of Market Discipline in Latin America: Globalization and Democracy