Lessons from Latin America: The Rise of Rentier Populism

Abstract

The price boom of natural resources in the first decade of the twenty-first century has been a blessing for all South American economies. For some political regimes, however, it was an institutional curse. In Venezuela, Ecuador, Bolivia, and to a lesser extent Argentina, the commodity boom made possible the emergence of “rentier populism,” a new type of political coalition, based on the economic incorporation of the informal sector and funded by windfall gains from exports of natural resources. Based on a new fiscal structure, rentier populism in turn fostered the intensification of plebiscitarian mechanisms of vertical accountability and neutralized constraints of horizontal accountability. The chapter explores the conditions under which a common exogenous shock, the commodity boom, spread across the region with differential coalitional effects. It also delineates the mechanisms that link the rentier populism coalition to the emergence of plebiscitarian and hegemonic forms of accountability. In order to highlight old and new in rentier populism, the chapter places the coalition in historical perspective, using Guillermo O’Donnell’s earlier work on political economy as a source of contrasts and similarities. Likewise, “plebiscitarian hegemonies” are compared with delegative democracies, the key concept in O’Donnell’s later work on institutions.

A Review on the Resource Curse

“…The institutional environment interacts with resource endowment and the outcome depends on both the physical properties of the resource and the quality of institutions. Windfalls gave rise to rentier populism and caused several growth collapses in Venezuela (Mazzuca, 2013), whereas Norway remained a stable democracy. The latter demonstrates that strong institutions lead to sound revenue management policies (Mehrara, 2008;Holden, 2013) which promote diversification and help to prevent the Dutch disease.…”

State and Faith: Right-wing Populism and Nationalized Religion in Hungary

“…Leaders in both camps tend to dismantle checks and balances, intimidate the opposition, attacking the privately owned media, co-opting civil society organizations and trying to build new 'civic' organizations from the top down (Cf. Mazzuca, 2013;Weyland, 2013 'videocratic forms of popular identification, simplified polarization of public opinion into niches of self-referential creeds, dogmatic radicalization of political ideologies, and the search for a winning leader in the age of the public' (Urbinati, 2014: 133 In 2010, shortly after these survey results were published, Orbán's nationalist Fidesz party won the elections with an absolute majority, which was translated, due to the disproportionate electoral rules, into a two-thirds parliamentary supermajority. Not insignificantly, Jobbik took 17 per cent of the vote in addition to Fidesz's 53 per cent, representing a noteworthy increase in radical right wing representation in Hungarian elections.…”

Populism in General Equilibrium: Indirect Effects on Political Support

“…The main inspiration for this paper is the political science work of Mazzuca (2013). The author analyses the "left turn" that has been the major political trend in many Latin American countries since the beginning of the century.…”

“…The author analyses the "left turn" that has been the major political trend in many Latin American countries since the beginning of the century. As Mazzuca (2013) called, the "rentier populism" that emerged on these countries were characterized by a coalition between the incumbent government, that redistributes natural resources earnings (experiencing often a boom in international prices) to informal workers, and the informal sectors that benet from these policies and legitimizes them through plebiscitarianism. On the other hand, the constant expropriation of privately owned rms generates a latent ineciency and a troubling foreign investment getaway.…”

“…On the other hand, the constant expropriation of privately owned rms generates a latent ineciency and a troubling foreign investment getaway. Mazzuca (2013) highlights the fact that this coalition was only possible due to the boom in commodities prices, launched mainly by the accelerated growth of India and China, improving the terms of trade of these products exporting countries. The idea is that this boom elevated the incentives to expropriate and made it possible to do so despite the distortions derived by it.…”