The decline in social and economic inequality registered in many Latin American countries since the late 1990s coincided with a shift away from the politics of market-based structural adjustment and towards a political landscape in which the social problems of poverty and inequality play a prominent role. This repoliticization of inequality has manifested itself both in the revival of mass protest movements and in an electoral turn to the left, and it has generated a diverse array of policy tools for tackling inequality, poverty and underemployment.
In the UNU-WIDER working paper 'The Politics of Inequality and Redistribution in Latin America's Post-Adjustment Era,' Kenneth M. Roberts explores how the region's dual transitions to political democracy and market liberalism in the 1980s and 1990s set the scene for this new politics of inequality.
Market reforms and rising inequality: the 1980s and 1990s
Market reforms spread across Latin America when the attempts at import substitution industrialization (ISI) collapsed in the debt crisis of the 1980s. Governments across the region cut back their already limited redistributive measures, introduced during the populist-ISI era, which were viewed as wasteful and undermining market efficiency by market reformers. Governments pursuing market liberalization also slashed tariffs, privatized state-owned industries and public utilities, lifted price controls and subsidies, and deregulated labour, capital, and foreign exchange markets.
These market reforms had three main implications for the politics of inequality. First, the combination of economic crisis and market restructuring altered the regional class structure by shifting employment from the formal to the informal sector of the economy. Second, these changes created impediments to collective action, thereby increasing the political challenges facing unions. Finally, this weakening of class based collective actors helped shield neoliberal technocrats and policy makers, now in the ascent, from societal pressure, thus allowing them to experiment with social policies that were more compatible with free market principles.
Efforts to achieve greater growth and efficiency through market liberalization did not suffice to alleviate the region's chronic problems with underemployment, inequality and poverty. In fact both the proportion of people living below the poverty line and the GINI coefficient, used to measure a county's income inequality levels, rose...