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Neoliberal and neostructuralistperspectives on labour flexibility,poverty and inequality: A criticalappraisalFernando Ignacio Leiva aa Department of Latin American, Caribbean and US LatinoStudies , University at Albany State University of New York ,1400 Washington Avenue, Albany, NY, 12222, USAPublished online: 23 Jan 2007.

To cite this article: Fernando Ignacio Leiva (2006) Neoliberal and neostructuralist perspectiveson labour flexibility, poverty and inequality: A critical appraisal, New Political Economy, 11:3,337-359, DOI: 10.1080/13563460600840175

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Neoliberal and NeostructuralistPerspectives on Labour Flexibility,Poverty and Inequality: A CriticalAppraisal

FERNANDO IGNACIO LEIVA

Over the past three decades, neoliberal and Latin American neostructuralist ideashave contributed to the restructuring of Latin American capitalism from importsubstituting industrialisation (ISI) to an export oriented pattern of accumulation.While neoliberalism played the leading role in the 1970s and 1980s, LatinAmerican neostructuralism has emerged more recently as the preferred approachfor ensuring the continuity of this transformation.1 Launched in 1990 with thepublication by the United Nations Economic Commission for Latin Americaand the Caribbean (ECLAC) of Changing Production Patterns with Equity,neostructuralist ideas have steadily gained influence, contributing to a reformula-tion of the development discourse of governments, progressive political partiesand international development institutions. Neoliberal market fundamentalismhas thus given way to renewed concern within international development agenciesfor the role of institutions, politics, culture and the indispensable supportive role ofthe state.2

Notwithstanding their eminent success in formulating guidelines and policypackages supporting far reaching economic, social and political reforms in theregion, both neoliberal and neostructuralist schools also display flagrant incoher-encies. These are nowhere illustrated more clearly than in the outcomes of labourreform policies. It is precisely in the domain of labour policies and labour/capitalrelations that neoliberal and neostructuralist policies have foundered most visibly.Despite their notable differences, both neoliberalism and neostructuralism havepromoted labour flexibility and the restructuring of labour market institutions ascrucial components of the economic reform process and the quest for greaterinternational competitiveness. Assurances that labour reforms and increasedlabour flexibility would bring about substantial reductions in unemployment,poverty, inequality and social conflict in Latin America, however, have notbeen borne out.

New Political Economy, Vol. 11, No. 3, September 2006

Fernando Leiva, Department of Latin American, Caribbean and US Latino Studies, University at

Albany State University of New York, 1400 Washington Avenue, Albany, NY 12222, USA.

ISSN 1356-3467 print; ISSN 1469-9923 online=06=030337-23# 2006 Taylor & FrancisDOI: 10.1080=13563460600840175

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Though such incoherencies and policy failures can be re-interpreted anddiscarded as successes because they strengthen the class processes fundamentalto capitalist accumulation,3 neoliberal and neostructuralist labour policies meritfurther examination. Such analysis can throw light not only on the resilience ofthe dominant paradigms in maintaining a semblance of coherence in light ofmounting analytical inconsistencies, but also on the relevance of radical politicaleconomy for explaining some of the unexpected labour market outcomes thathave confounded mainstream economists.4

After decades promoting the legalisation of fixed-term contracts, sub-contracting,facilitating employers dismissal of workers, reducing employers social securitycontributions, and designing policies to make labour and labour markets moreflexible, neoliberal and neostructuralist predictions simply have not come topass. In light of such failures, economists affiliated with the neoliberal and neos-tructuralist camp have expressed surprise and perplexity. Joseph Stiglitz, Nobellaureate and the World Banks former Chief Economist and senior Vice Presidentfor Development, forthrightly acknowledged that:

As part of the doctrine of liberalization, the Washington Consensussaid make labour markets more flexible. That greater flexibilitywas supposed to lead to lower unemployment . . . lower wageswould generate more investment, more demand for labour. Sothere would be two beneficial effects: the unemployment ratewould go down and job creation would go up because wageswere lower. The evidence in Latin America is not supportive ofthese conclusions. Wage flexibility has not been associated withlower unemployment. Nor has there been more job creation ingeneral.5

ECLAC underscores that changes in job markets over the 1990s contributed tothe creation of a new kind of employment stratification that does not favorsocial mobility, nor does it improve income distribution. Precarious employmentis now more generalized. A growing sense of social vulnerability affects most ofthe population . . . .6 More recently, the Inter-American Development Bank(IADB) in Good Jobs Wanted: Labour Markets in Latin America, one of itsmost in-depth studies of recent years, concedes that reformers have been startledby the dismal dynamics of labour markets and the bleak situation faced by many ofthe regions workers. The authors admit that structural reforms did not alterlabour markets in the expected ways.7 After an exhaustive review of this diver-gence, IADB staff conclude that (t)he lesson from this series of surprises is oneof modesty for economists and moderation for critics.8

Arguably modesty has been indeed a scarce commodity among the econo-mists who have been behind the vast process of economic reforms experiencedby the countries and peoples of the region. Yet the scale and scope of the inadequacydisplayed by these two dominant paradigms call for a considerablymore substantialremedy than just a dash of modesty here and a pinch of caution there. Rather,what seem to be required are mega-doses of theoretical self-awareness, undoubt-edly still the scarcest of all intellectual commodities within the discipline of

Fernando Ignacio Leiva

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economics. By drawing attention to the gaping discrepancy between rhetoric andreality, and by examining how neoliberalism and neostructuralism conceptualisedthe linkages between increased labour flexibility on the one hand and, on the other,decreasing unemployment, inequality and poverty, this article contributes to animportant and necessary discussion. Rather than presenting formal models or re-examining the historical experience of Latin American labour markets, whichhas been already well covered in the literature,9 this article highlights the mannerin which neoliberal and neostructuralist economists theorise labour and labourflexibility and link it to reduction of poverty and inequality. In brief, I argue thatin order to decipher the current dynamics of Latin American labour markets, animportant first step is critically to reevaluate the basic assumptions of neoliberalismand neostructuralism. A growing body of evidence suggests that some of thecore operative notions of neoliberalism and neostructuralism namely thecauseeffect relationship between labour flexibility and reduced unemployment,poverty and inequality must be revised thoroughly, if not altogether discarded.The root cause of these shortcomings is to be found in the following paradox: thetwo paradigms that have guided the transition from ISI to an export-orientedpattern of accumulation in Latin America promote societal transformation at thesame time that they actively marginalise key power dimensions of economicrelations from theorisation. Neoliberalism and neostructuralism thus fail toaddress the centrality of labourcapital relations in the restructuring process, aswell as in the consolidation and profitable performance of current export-orientedmodels of capital accumulation that prevail in the region. Promoting societalrestructuring while excluding power relations from analysis creates a crevice inthe discourse of neoliberalism and neostructuralism that provides a useful pointof entry for probing the internal coherence of both schools of thought.

In the next section, I provide an overview of neoliberal and neostructuralistperspectives, going from the very general concepts about economic developmentto those regarding labour. I begin by reviewing the contending notions of com-petitiveness, the role of the state and the mechanisms for managing social con-flict, proceeding then to examine the contrasting labour policies endorsed. Thisfirst section concludes by tracing how neoliberalism and neostructuralism con-struct the causal linkages between labour flexibility, poverty and inequality.The second section probes the paradox of neoliberal and neostructuralist formu-lations by contrasting them with a radical political economy (RPE) perspectivethat does not eschew the analysis of power in economic analysis and locateslabourcapital relations at the centre of analysis. The third section contrasts neo-liberal predictions with the outcomes observed in Latin American labour markets.I then provide a brief discussion of labour outcomes in Chile, because Chile ispresented as the successful model of capitalist restructuring and has had morethan a decade and half of experience with neostructuralist-inspired policiesunder the centre-left Concertacion governments. Finally, the concludingsection offers some reflections about how to move forward in this critical reas-sessment of neoliberal and neostructuralist conceptions of labour reform andlabour flexibility.

Some might question the characterisation of Chile during the 19902005period as an example of neostructuralist policies, arguing that only under the

Labour Flexibility, Poverty and Inequality

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Ricardo Lagos administration (20002005) did such policies gain predominanceand that, even then, such influence was more at the rhetorical than the practicallevel.10 Although space limitations prevent me from fully addressing this issuehere, I argue that neoliberalism and neostructuralism are not wholly conflictingparadigms but rather, thanks to their differences, play complementary roles atdifferent stages of the restructuring process.

The analysis presented below adopts a specific and restricted definition of neo-liberalism. The term has been used in the literature with different meanings, leadingto great confusion: as a set of economic ideas; as a particular economic model;and as the all-encompassing mode of experiencing the economic, political and cul-tural existence under contemporary capitalism. In this essay, I use neoliberalism(and Latin American neostructuralism) in the restricted sense of a set of economicideas, and use the term of export-oriented regime of accumulation when referringto the new economic model that replaced ISI in most countries in the region. Sucha clarification has important consequences for current debates, the analysis of Chileafter the dictatorship of Augusto Pinochet and discussions of the patterns of changeand continuity observed in the performance of centre-left governments that havecome to office since 2000 in Latin America. Without making the clear distinctionI suggest, such assessments can veer off track towards two equally unrealisticclaims, as has been the case in discussions of Chiles Concertacion governments.Either Latin American socialists and progressives, unwittingly, have ideologicallyconverted to neoliberal ideas and it is this conversion which explains their con-tinued support for the neoliberal model, or, alternatively, they have remainedtrue to the convictions but, deploying a wider set of equity-enhancing social andproductive modernisation policies, have been able to reform radically and signifi-cantly the neoliberal model, infusing it with new levels of equity and transform-ing into a different, as yet unnamed, economic model.

The separation that I propose between neoliberalism understood as a set ofeconomic ideas and the export-oriented regime of accumulation, in the establish-ment and consolidation of which both neoliberal and neostructuralist ideas playcritical but different role allows for a more grounded assessment and cutsthrough such confusion. Armed with the concept of comparative advantageand a zealous defence of the free market, neoliberals contributed to the elimin-ation of those mechanisms that under ISI provided individuals and social groupswith important levels of autonomy from the iron laws of the market. However,neostructuralists, wielding the concept of systemic competitiveness, emphasis-ing social harmony and political interventions to generate consensus and parti-cipatory governance around the export drive, contribute to the consolidation ofthe new order, subordinating politics and political space to the logic of transna-tional capital and the export-oriented economic model. Instead of protecting indi-viduals, communities and firms from the market, neostructuralists deploy a vastpalette of policies aimed at ensuring their adaptability to the laws of an increas-ingly asymmetric, concentrated and transnationalised system of capital. Seen asa tag team rather than as antagonists, neoliberals and neostructuralists deploy pol-icies that radically transform the class and gender constellation of forces insociety, making it possible to complete the transition from ISI to an export-oriented regime of capital accumulation. It is this historical role, along with the


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analytical limitations analysed below, that call for the revitalisation of an RPEapproach.

Neoliberal and neostructuralist perspectives

In the 1970s and 1980s, wielding the concept of comparative advantage, neo-liberals formulated policies that sought to make markets and competition at thelocal and international levels the only accepted form of economic and socialinteraction. During this period, liberalisation, deregulation and privatisation poli-cies sanctioned by the International Monetary Fund (IMF) and the World Bankwere instrumental in promoting the neoliberal agenda across Latin America andthe Caribbean. Under General Augusto Pinochet (19731989), Chile became thetest-site and, later on, the showcase for the purported success of the neoliberaleconomic project. In the 1990s, in the context of a return to civilian electedregimes in the region, a new conception of international insertion emerged inthe form of Latin American neostructuralisms systemic competitiveness.11

Through this formulation and their support for productive transformation withsocial equity, neostructuralists asserted that changes in productivity and theabsorption of technical progress were overwhelmingly determined by insti-tutional and political factors. In their view, an economys technological perform-ance and degree of international competitiveness depended to a much greaterdegree on the presence of whole series of differing types of synergy and extern-alities than it does on the optimization efforts of individuals (sic) firms inresponse to changes in the price system.12 The election in 1989 of PatricioAylwin, as Chiles first civilian president since 1973, gave the emergingparadigm its first opportunity to influence public policy. By the mid 1990s,the neoliberal imprint on economic policy in the region began to give way toa more neostructuralist orientation. By the end of the decade, internationaldevelopment agencies were talking about the emergence of a post-WashingtonConsensus, emphasising the synergy, and not the trade-off, between increasingequity and economic growth.13

Such a shift did not imply a rupture with the previous export-oriented modelimposed by neoliberals, but rather acknowledged the need to use a wider set ofpolicies to achieve international competitiveness. Succinctly stated: whereas neo-liberals insisted that market and price signals remained the fundamental tools forachieving international competitiveness, neostructuralists argued that, althoughmarket forces remained essential, government intervention in economic and pol-itical processes was critical in fostering the necessary coordination for gainingentry to and successfully competing in world markets.

Whereas neoliberals see markets and undistorted prices as the prime levers forensuring efficient resource allocation and international competitiveness, neostruc-turalists contend that getting the prices right is not enough. They strive for asmooth and synergetic interface between political and social institutions and themarket. In their view, this systemic approach is a fundamental prerequisite forensuring that economic restructuring takes place with the required speedimposed by global markets. Only such a systemic approach can succeed inmoving Latin American economies beyond a model competitiveness based


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on low costs and cheap labour, which traps countries in the slowest growing nichesof the international economy (raw materials with low levels of processing). Avoid-ing this form of spurious competitiveness and accessing the high road to glo-balisation demands highly coordinated trade, financial, productive developmentand exchange rate policies. Only through such coordination, neostructuralistsargue, can linkage with international markets beget a process of technicalchange that spreads from the export sector to the rest of the economy.

Neoliberal and neostructuralist views on labour flexibility

Underlying these contrasting paths to achieve the commonly sought objective ofinternational competitiveness one finds different modalities of conceivinglabour, labour flexibility and the role of labour reform. Neoliberals argued that,by removing rigidities, labour market deregulation would lead to increasedemployment, reduced wage inequality and a decline in poverty levels. Neostruc-turalists countered that only a proactive labour flexibility that enhanced the adap-tability of workers to global markets through improved training and investmentin human capital, rather than relying on cost reduction via lower real wages orexchange rate devaluation, would create conditions for competing internation-ally through productivity-led export growth. Rising exports would expandquality jobs, achieving growth with equity and greater social integration.Both of these notions were based on particular conceptions of labour as wellas to how greater flexibility in labour markets and labour institutions wouldcontribute to overcome the problems sluggish economic growth, poverty andinequality.

Cast from the neoclassical mould, neoliberals see labour as one more commod-ity, the labour market being no different from the market for potatoes or marma-lade. Faced with the tasks of implementing economic reforms, neoliberalsbelatedly acknowledged the pivotal role of labour market deregulation in a suc-cessful structural adjustment program. Labour deregulation becomes essential ifthe labour market is to act as an efficient mechanism for reallocating labourfrom inefficient sectors to those that are expanding. In the sequencing ofreforms, labour market deregulation should not be left out, . . . because undermost circumstances an early reform of the labour market is highly beneficial,helping reduce the transitional costs of adjustment. If labour markets are notderegulated, there is a danger that the effects of other reforms will be minimal even negative.14

Neoliberals identified many of the institutional arrangements undergirdinglabour markets during the previous ISI regime as the roots of inefficient and dis-torted market allocation. Consequently, during the neoliberal period, labourreform and labour flexibility to overcome the rigidities of ISI labour institutionsbecame a key component of neoliberal discourse and policy formulation. A crucialclaim is that the set of benefits provided by the welfare state constitutes a disin-centive to work, to search for employment, and consequently the welfare statetends to perpetuate the very things it seeks to remedy, namely, unemploymentand poverty.15


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Neostructuralist conceptions of labour, labour markets and labour institutionsdiffer to an important degree from neoliberals, given that they are the productof a complex intellectual trajectory that transformed Latin American structuralistsinto neostructuralists.16 The conceptual itinerary from structuralists into neo-structuralists was punctuated by deferral to neoliberal criticisms and public meaculpa for mistaken policies, leading finally to the reformulation of theirdevelopment strategy unveiled in 1990 as productive transformation withsocial equity.17

One important self-criticism by erstwhile structuralists was the recognition thatISI created a great number of new jobs with relatively high productivity in manu-facturing, but that it had also pushed a large share of the labour force into urbancenters plagued by underemployment and into jobs with very low productivity,thus generating the phenomenon of marginalism or, as it is now known, the infor-mal sector.18 Accepting blame for the informal sector ushered in the neostructur-alist conviction that, for successful transformation of productive structures,specific labour policies were necessary. According to ECLAC, in order to generateproductive employment it would be necessary to introduce major changes inlabour relations, one of which had to be greater flexibility. However, the justifica-tion for labour flexibility was constructed very differently from that in neoliberalthinking.

The core neostructuralist concept of systemic competitiveness, calling uponthe state to generate a consensus behind the export drive and actively improvethe interface between societys different sub-systems (education, infrastructure,public administration, and so on) and private exporters efforts to penetrateinternational markets, also had an important consequence for labour. Systemiccompetitiveness had to promote worker involvement in production. Success inchanging Latin Americas export profile towards manufactured goods withgreater value-added would be achieved to the extent that worker consent andactive worker involvement in the struggle for competitiveness were forth-coming. Moving towards differentiated and better quality products, therefore,called for replacing vertical and hierarchical labour relations with more horizon-tal and flexible ones, characterized by an intensive exchange of information,so that the initiative, creativity and responsibility of the labour force can be[harnessed].19

In addition to generating consensus behind the export drive, neostructuralistsadvocated at least three interrelated directions for state action: the need forencouraging a new type of labour movement; reliance on a new type of wagesystem that emphasised increases in productivity; and a new type of proactivelabour flexibility.

The need for a new type of labour movement. State and political initiatives hadto be undertaken to create a labour movement supportive of systemic competitive-ness. This assumed the existence of a technically-prepared labour movement,conscious that its adversary was not the employer as such, but competition,and, therefore, that the movements objectives should also include improving pro-ductivity.20 In many countries, this explicitly meant having to renounce class-based traditions that in previous decades had oriented the leadership of thelabour movement.


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Variable wages linking payment to performance. Such a shift away from con-frontation towards cooperation should also be facilitated by a wage system thatmakes use of participatory wages, the neostructuralist bon mot for variablewage system:

Paying a portion of wages in variable form (as a function of profits,sales or analogous arrangements), not only fosters improvements inproductivity, but what is even more important, it tends to stabilizeand even increase the level of employment. Therefore, even thoughits application is just beginning in the region, this mode of paymentshould be explored further since it has already generated greatinterest.21

Expand and improve labour flexibility. Finally, state action must be oriented toensure the transition from defensive to offensive or proactive policies to achievelabour flexibility. Neoliberal policies had encouraged the former by emphasisingreduction in labour and non-labour costs, and making it easier for employers toadjust the number of workers to fluctuating market and technical conditions. Neo-structuralist policy, it was argued, should go beyond such a limited vision, activelysupporting more proactive forms of flexibility: This offensive or active approach,while not dismissing the need to introduce higher degrees of flexibility into thelabour market, questions many of the rigidity-based assumptions and stressesthe need to provide the workforce with training and new skills in order to facilitatetheir adaptability to changes in the production process.22

At the time neostructuralist policies were initially formulated, most LatinAmerican countries were still caught in the wake of military regimes and neo-liberal Structural Adjustment Programmes (SAPs). Passage from vertical tomore horizontal labour relations, as advocated by neostructuralism, confrontedobstacles at all levels of society. Successful implementation of the above policiesrequired the state to play a crucial political role, building consensus between thepublic and private sector, between worker and employer organisations and amongenterprises from the same sector. The need for this type of state involvement wasfurther justified for the sake of guaranteeing flexibility and ability to adapt to anextremely changing dynamic of technological change.23 An impression of thechanging role of the state in terms of ensuring labour flexibility can be gleanedfrom the Chilean case. As one analyst pointed out,

If the key element to labour flexibility during the 1980s was wagecost flexibility, given the competitive requirements faced by theeconomy, other components of flexibility should become moreprevalent in the decade of the 1990s. Flexibility of employmentvia increases in labour supply confronts the limitation of havingto rest upon the incorporation of female labour, which is limitedby legislation, costs and traditional practices within enterprises.Thus, once again, functional flexibility, linked to training andmanagement systems, becomes potentially more fruitful.24


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Implicit in such formulation is the belief that, just as spurious forms of com-petitiveness would have to give way to more genuine forms, a similar tran-sition would also take place in the realm of labour relations. The moreharmful forms of labour flexibility wage flexibility, external numerical flexi-bility, internal numerical flexibility and sub-contracting had to give way tosuperior forms namely, functional flexibility purported to be less deleter-ious to workers.

The labour flexibility-employment-poverty-inequality nexus

With the above background, we can now explore how neoliberals and neostructu-ralists have conceptualised the linkages between labour flexibility, employment,poverty and inequality. As we shall see below, both theorisations have provedto be seriously flawed.

Neoliberals see labour flexibility as a key component of both successful struc-tural reform of the macro-economy and of enhanced efficiency and competitive-ness at the level of each individual enterprise. At a macro level, during the1990s, labour market flexibility was touted as the often overlooked preconditionfor successful structural reform.

A dynamic and flexible labour market is an important part ofmarket-oriented policies. It helps reallocate resources and allowsthe economy to respond rapidly to new challenges from increasedforeign competition.25

A flexible labour market is not only important for ensuring the success of thereform program, but also critical in the long run so that the beneficial effects ofcomparative advantage can kick in. Moreover, freeing the labour market of dis-tortions improves the distribution of income because it encourages employmentexpansion and wage increases in the poorest segments of society.26

Labour flexibility is conceived primarily as putting an end to limitations ontemporary hiring and flexible contracts. Such measures are a critical objectivebecause restricting temporary hires increases labour costs, discourages employ-ment and introduces rigidities, slowing responses to changes in the internationalcompetitive scene.27 In the neoliberal view, legislation relating to minimumwages distorts factor allocation and punishes informal sector workers, highunemployment benefits reduce work incentives, job protection provisions andthe high costs of dismissal make restructuring difficult and slow, and highnon-wage labour costs and payroll taxes act as tax reducing incentives toexpand employment and the international competitiveness of local firms.28 Byeliminating rigidities, labour deregulation/flexibility will tend to increaseemployment. Freed from artificial non-wage labour costs, flexible labourmarkets will promote the hiring of unskilled workers, thereby reducingpoverty and income inequality.

The neoliberal outlook on labour flexibility manages to perform two importantdiscursive manoeuvres. First, it equates flexibility with deregulation. Second, itshifts the blame for economic sluggishness and poverty to organised labour and


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legal norms protecting formal sector workers. Both arrangements are seen asdetrimental to increasing the employment and income of unskilled and informalsector workers and the poor. Poverty and inequality, then, are not structuralphenomena rooted in the capitalist accumulation process, neoliberal reforms oreven the investment decisions of employers; rather, they exist and persist as aresult of the excessive power of unions and the selfish, self-interested behaviorof formal sector workers.

A corollary to this manoeuvre is the view that, by allowing temporary contracts,easier dismissal rules, a reduction of payroll taxes and social security contri-butions, the demand for temporary workers would increase. Consequently, dereg-ulation of the labour market and implementation of policies aimed at creatinglabour flexibility would tend to decrease the number of workers in the informalsector or the number of workers involved in non-registered work. As a result, wagedifferentials would fall and employment levels would rise; labour flexibility wouldlead to a decline in levels of unemployment, poverty and income inequality (seeTable 1).

Without rejecting the need for labour flexibility strategies that reduce costs,neostructuralists place emphasis on the need to move onto a second stage, onewhere systemic and not spurious competitiveness can take root. In theirview, the opening of the economy eventually forces not only firms but alsoentire societies to compete on the basis of increases in productivity, not merelyan initial reduction of labour costs brought about by labour repression or devalua-tion of the exchange rate. In the medium and long terms, if firms are to increaseproductivity they must rely on technological innovation. The complex processof introducing new technologies at the level of the firm can be more successfullyimplemented on the basis of better labour relations. As more and more firms takethe high road to globalisation (competitiveness via increases in productivity),opting out of the neoliberal low road (competitiveness via reduction of costs),each individual firm itself can become the preferred site for social dialogue andconsensus building between management and labour. Thus a virtuous circle isestablished: better labourcapital relations allow firms to become more competi-tive internationally. In turn, as the firm becomes more competitive, wages canincrease so that workers become more willing to engage in the struggle for pro-ductivity, and the process reproduces itself in an ever-expanding spiral thatassuages class and distributional conflicts. Thus, neostructuralist policies forlabour flexibility are able to achieve not only reductions in unemployment,poverty and inequality, but also a growing consensus between capital andlabour. Greater equity leads to faster economic growth, which, in turn, leads togreater equity.

However, for an economy to make successful passage from the low road toglobalisation, based on passive labour flexibility and spurious competitiveness,to the high road, based on offensive labour flexibility and genuine competitive-ness, there exist both macro-social as well as firm-level imperatives. As inter-national competition fosters a process of technological innovation, increasedincorporation of workers in the struggle for productivity, improvement of wagesand concerted action at the firm level, globalisation with a human face will bethe outcome.


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TABLE 1. Three perspectives on the linkages between labour flexibility, poverty and inequality

Neoliberal Neostructuralist Radical political economy

Labour flexibility, globalisation

and policy imperative

Reduce production costs Increase productivity

and technological innovation

Modify socio-technical

basis of production to ensure

valorisation of capital

Labour flexibility-employment

linkage

Increases employment Increases employment Increases precarious employment

Transmission mechanism Reduction of wage andnon-wage labour costs

permits labour market to

reallocate labour from

declining to expanding sectors

Improved training and adaptabilityof labour force

Labour marketderegulation! Increase in fixed-term and temporary labour

Labour flexibility-poverty linkage Reduces poverty Reduces poverty Increases poverty

Transmission mechanism Elimination ofbloated social welfare

provisions reduces

disincentive to work

Increasedemployability

and adaptability

of labour force

Labour marketreproduces new

type of poverty:

working poor

Deregulation and change inrelative prices increases

demand for unskilled

labour in tradable sector

Privatisation/Eliminationof social services reduces

working class familys

autonomy from dictates

of labour market

Labour flexibility-inequality linkage Reduces inequality Reduces inequality Increases inequality

Transmission mechanism Informal sector workersget access to formal sector jobs

International competitivenessbased on technological

innovation leads to rising

productivity and wages

Two and three-tiered working class

Wages rise for poorest workers Virtuous circles Wage polarisation increases Each firm becomes sitefor labour-capital cooperation

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An alternative perspective: radical political economy

Three decades of neoliberal and neostructuralist labour policies in Latin Americahave failed to deliver the promised results and display a veritable theoreticalparalysis when confronted with the most important trends characterising labourmarkets in the region: the inability of export-led growth to create employment,a steady shift towards tertiary activities, rising informality and increasing precar-iousness of waged employment (low paying fixed-term, temporary or non-contract).29 The inadequacy of neoliberal and neostructuralist conceptualisationsin adequately explaining these trends highlights the need for alternative theoreticalformulations that do not neglect the analysis of capitallabour relations or capital-ist production by conceiving them as a black box. Such a search should lead us tore-evaluate what can be described as an RPE approach. Drawing from the rich heri-tage of the three decades of Marxist, feminist and critical scholarship, such anapproach can contribute to examining the complexity and changing nature ofthe capitalist labour process and the restructuring of the spheres of productionand reproduction fostered by the current process of globalisation.30 It is the RPEapproach, not neoliberalism and/or neostructuralism that can provide fruitfulanalytical tools for understanding capitalist production in general,31 but also,more importantly, for examining what happens to labour-capital relations duringthe restructuring of production from one regime of accumulation to another.Finally, it can offer a much more potent set of tools to examine the nexusbetween state and employer strategies to achieve labour flexibility, on the onehand, and persistent unemployment, poverty and inequality, on the other.

While neoliberals and neostructuralists conceive of opening the economy tointernational competition, deregulated labour markets and labour flexibility asthe fail-safe recipe for eradicating unemployment, poverty and inequality, anRPE approach envisages these measures in a very different light. The valorisationof capital enabled by labour market flexibility is seen as the cause, not the solution,to rising poverty, inequality and unemployment in the Latin American region.Such contrasting views result from the fact that the RPE perspective scrutinisesand does not paper over key characteristics of the labour process under capitalism,both in general and during the process of profound capitalist restructuring experi-enced in Latin America and the world economy over the past three decades. Fivepropositions derived from the RPE approach offer to fill the major shortcomings ofthe dominant neoliberal and neostructuralist approaches: (1) given the nature oflabour power, labour control is a central, unavoidable and defining componentconstituting the very base of the structure and functioning of the capitalisteconomy; (2) the control of labour exercised exercised by capital has a dualdimension encompassing both the workplace and the sphere of reproduction oflabour; (3) the forms under which labour control is exercised changes historicallywith the rise, predominance and decline of different forms of production;32 (4) thecapitalist labour process represents the unity of the valorisation of capital and thesocio-technical organisation of production; and (5) labour control and the labourprocess are gendered processes.33

The importance of these propositions is that the realm of production is under-stood as both a technical and a social process, where capital must exercise its


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control and domination over labour within specific conditions of valorisation andclass struggle.34 The organisation of industry and the labour process are notreduced to the immanent requirements of technical change, but rather are seenas the outcome of the need to control labour as well as organise it throughdiverse labour control and monitoring systems. This need is exercised in thecontext of increased capitalist competition and the accumulation of capital takesplace under certain specific social and political conditions. The precise formassumed by labour control depends on these conditions.35

An RPE approach is attentive to the process through which the valorisation ofcapital takes place extension of the workday, lowering of the value of labourpower and intensification of the labour process as well as some more recentforms utilised in flexible accumulation strategies that have become generalisedin the era of capitalist gobalisation, namely, transferring the costs of productionand reproduction onto workers and their families through the informalisation oflabourcapital relations. These elements alert us to the fact that beneath theneoliberal and neostructuralist rhetoric on labour flexibility and economicreforms lies a far-reaching process that entails the redrawing of power relationsin society so as to enable the reorganisation and relaunching of a new process ofvalorisation of capital. The strategies observed in Latin America during the pastdecade and a half combine some old as well as relatively new strategies forachieving this goal.

Labour outcomes 19902005: selected indicators

Contrary to the optimistic projections of neoliberals and neostructuralists, at leastin terms of improving the well-being of workers, the deregulation and flexibilisa-tion of labour markets did not yield the promised results. Data from Latin Americaattest to the failure of labour reforms in reducing unemployment, inequality andpoverty. Below, I sketch how the outcomes in Latin American labour marketsreflect the crash of neoliberal promises and how the case of Chile illustrates theshortcomings of neostructuralist intentions.

Trends in Latin American labour markets

The International Labour Organization (ILO)s Regional Office for Latin Americaand the Caribbean, with headquarters in Lima, publishes annually the LabourOverview informing on the condition of workers and the evolution of labourmarkets in the region. Along with the IADBs report Good Jobs Wanted, notedearlier, they offer more than enough information to draw a composite picture ofthe major trends over the last decade and a half and how these counter each oneof neoliberalisms predictions.36

Rising unemployment despite growing economies. Despite a recuperation ofgross domestic product (GDP) growth rates during the 1990s, unemployment inthe region has tended to increase (see Table 2). The fact that GDP and exportgrowth rates have recovered in comparison to the 1980s and the 19982002 slow-down has not implied an equivalent capacity to create jobs in sufficient numbers orreduce unemployment levels. Researchers affiliated with the IADB found that the


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rise in unemployment over the 1990s is not driven by a higher proportion ofwomen, adults or urban workers in the labour force, nor can it be attributed toan increasing demand for skilled workers.37 The current pattern of export-oriented growth has proved incapable of generating jobs in sufficient volume.

Growing informality. Instead of declining, the informal sector grew signifi-cantly during the 19902003 period from 42.8 per cent of urban employment in1990 to 47.4 per cent in 2003. At the same time, most job creation took placein the informal sector: six out of ten jobs created in the 19902003 period werein the informal sector.38 The unexpected persistence and expansion of the informalsector has led World Bank economists to re-paint the phenomenon of informalityrather than re-examine their basic assumptions. Michael Maloney, Lead Econo-mist in the World Banks Office of the Chief Economist of the Latin Americaand Caribbean region (LCRCE), has proposed that we should think of theinformal sector as the unregulated, developing country analogue of the voluntaryentrepreneurial small firm sector found in advanced countries.39

Falling wages. ILO data on the real wage index shows that real wages rose at anaverage yearly rate of 3 per cent during the 199094 period, 0.7 per cent during199599, to decline at 21.2 per cent during the 20002003 period. Measured inpurchasing power parity (PPP)-adjusted US dollars, other studies show thataverage wages remained constant or declined throughout the decade both inthe Mexico and Central America region and in the Andean region. . . . Wages indollars increased in the Southern Cone, in particular in Chile and Brazil, relativeto their values in the early 1990s despite the sharp increase in unemploymentregistered in this group of countries. Nonetheless, wages did decline somewhattowards the end of the decade in Brazil and Chile.40

Increasing wage polarisation. Neoliberals predicted that wage inequalitybetween skilled and unskilled workers would be reduced as demand for the

TABLE 2. Latin America: labour market indicators, selected years

(1) (2) (3) (4) (5)

Year

GDP

(%)

Urban

unemployment

(%)

Real wages

(Index

1990 100)

Informal

sector

(%)

Workers contributing

to social security

(%)

1990 20.6 8.0 100.0 42.8 66.61995 1.1 9.1 111.4 46.1 65.2

2000 4.0 10.5 118.8 46.9 65.7

2002 20.8 11.7 121.0 46.5 63.72003 2.0 11.5 114.9 47.4 63.6

2004 5.9 10.9

19901994 average 2.8 8.5 3.019951999 average 2.56 9.6 0.7

20002004 average 2.28 11.8 20.2

Source: Compiled by author on basis of the ILOs 2004 Labour Overview and Panorama Laboral2005: America Latina y el Caribe: Primer Avance (ILO, 2005).GDP Data for 1990 and 19901994 averages from ECLAC, 2004 Statistical Yearbook for LatinAmerica and the Caribbean, in 1995 constant prices.


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more abundant unskilled workers increased and the barriers that preventedunskilled workers from entering the formal sector were removed through labourmarket deregulation. Data collected by the IADBs 2004 study shows the oppositetrend: wage differentials increased substantially in most countries.41

Growing precariousness of jobs. One dominant and unexpected trend hasbeen the growing instability and precariousness of employment as measuredby the high rates of turnover and the growth of jobs that do not enableworkers to climb above the arbitrarily defined official poverty lines, muchless adequately reproduce their labour power. In a study of twelve LatinAmerican countries, the IADB found that job turnover ranges from 16 to 35per cent. In the case of Brazil, for instance, a change of 1.1 per cent in theunemployment rate hides an impressive amount of activity in the labourmarket; gross flows indicate that each year one out of three jobs is eithercreated or destroyed, meaning total job turnover is 31 per cent.42 Data fromthe ILOs 2004 Labour Overview provide another indicator of the growing inse-curity that workers face: the proportion of workers contributing to a socialsecurity has declined from 66.6 per cent in 1990 to 63.6 per cent in 2003,and these figures, as the case of Chile illustrates, significantly overestimatethe percentage of the labour force that has effective social security coverage.43

Persistently high number of working poor. At the same time, the number ofworkers earning poverty wages remains extremely high in the region (seeTable 3). Using as a measure the number of workers employed in jobs earningone PPP-adjusted US dollar per hour or less, IADB researchers find that the per-centage of workers earning poverty wages ranges from under 40 per cent inChile, Panama, Costa Rica, Mexico and Uruguay to over 70 per cent in ElSalvador, Bolivia, Nicaragua and Honduras.44 They finally acknowledged whathas been obvious to critics in the region for many years: that entry into thelabour market does not ensure exit from poverty, given the nature of theregions flexible labour markets.45

Fracture lines in Chiles growth with equity

Chile has been the first Latin American country to undergo the neoliberal reformprocess, and the first to successfully complete the basic three-stage restructuringprocess prescribed by the World Bank of shock therapy (19751978), structuraltransformations (19791989) and consolidation and restoration of investmentlevels (19902005).46 After a 13 year economic boom driven by exports(19861998) and a recession and slowdown (19992002) in the wake of theAsian crisis, the Chilean economy is showing signs that it will once againrecover relatively high growth rates (see Table 4).Most macroeconomic and devel-opment indicators present Chile as a model of success: high rates of export growth,rising foreign direct investment, higher than average (for Latin America) pro-ductivity growth and fixed capital investment rates, along with a high level of con-sensus among business and political elites in addition to pro-capital legislation andinstitutions, have transformed Chile into an investors dream. The centre-leftcoalition in power since 1990 can also display significant reductionsin official poverty rates from 38.6 per cent in to 1990 to 20.6 per cent


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in 2000 and 18.8 per cent in 2003.47 Chile seems to be an all-round success story.On the one hand, the Davos-based World Economic Forum lists Chile as the topLatin American country in terms of its Global Competitiveness Index (GCI),ranking it in 23rd place above Malaysia, Luxembourg, Ireland and Israel.48 Atthe same time, in terms of its Human Development Index (HDI), the UNDPs2005 Human Development Report ranks Chile in 37th place, second in LatinAmerica only to Argentina (34th). An analysis of selected indicators shows thatGDP has recovered from the 19981999 recession, although this did not signifi-cantly reduce unemployment levels as firms increased output with the recession-level number of employees,49 real wages for manufacturing continued risingalthough at decreasing rates, the size of the informal sector declined, at the sametime that the number of workers contributing to a social security system rose(see Table 4).

However, beneath this surface success, in which both the desires of transnationalcapitalists and objectives of human development appear to have been met, liesanother, often neglected but equally important component of present Chileanreality: that of one of the highest levels of inequality in Latin America, alreadythe most unequal region in the world.50 Equally, not captured by these classifi-cations is the fact that Chiles working class is one of themost exploited in the hemi-sphere. This situation, initially structured by neoliberalism and state terrorismunder Pinochet, has been maintained by the centre-left, neostructuralist-inspiredcivilian coalition that has held office since 1990. Flexible labour markets the

TABLE 3. Latin America: percentage of workers in urban areas earning poverty wages

Country (period) Early 1990s Mid 1990s Late 1990s

Argentina (1993, 1996, 1999) 17.8 15.2 19.0

Bolivia (1993, 1996, 1999) 73.3 65.5 65.9

Brazil (1993, 1996, 1999) 72.8 54.6 55.4

Chile (1992, 1996, 1998) 44.6 40.4 40.3

Colombia (1993, 1995, 1999) 49.4 61.0 49.6

Costa Rica (1993, 1995, 1998) 31.7 34.5 42.3

Dominican Rep. (1996) na na 48.5

Ecuador (1998) na na 51.8

El Salvador (1998) na na 73.7

Guatemala (1998) na na 57.6

Honduras (1992, 1996, 1999) 71.8 73.2 78.9

Mexico (1992, 1996, 1998) 29.0 44.3 40.8

Nicaragua (1998) na na 78.5

Panama (1991, 1995, 1999) 43.8 55.9 40.1

Paraguay (1998) na na 75.5

Peru (1991, 1994, 2000) 64.6 60.8 63.9

Uruguay (1992, 1995, 1998) 51.0 57.5 41.7

Venezuela (1993, 1995, 1999) 9.5 21.6 21.1

Source: Table 83, Inter American Development Bank, Good Jobs Wanted: Labour Markets in LatinAmerica (IADB and Johns Hopkins University Press, 2004).Includes males and females aged 1564. Poverty wages as defined as less than US$1 PPP per hour.


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cornerstone of the economic models success have steadily increased the level ofprecarious employment, heightening the lack of protection and vulnerability for agrowing number of male and female workers.

Numerous indicators suggest that economic growth has not generated high-quality jobs and, to the contrary, has tended to transform existing jobs into preca-rious ones. Data for Chile strongly indicates that, during the 1990s, economicgrowth expanded the number of unstable jobs, additionally characterised by lowlevels of benefits and remuneration. One indicator of the quality of employmentis whether or not a worker has a labour contract. Social security, health, vacationand other benefits are directly associated with the existence of a written contractbetween a worker and an employer, and additionally with the type of contract (per-manent or temporary). Using a broader definition of precarious employment that which is unstable, can be interrupted at any time, is not for a single, identifi-able employer, does not necessarily take place in the establishment of theemployer, has low or no access to social security and is performed with scant pro-tection for the physical and psychological integrity of workers51 we can gaugethe significant role of such jobs in the Chilean economy. Based on the 1994National Socioeconomic Survey (CASEN), Chiles Labour Bureau concludedthat 33 per cent of all salaried workers and 56.6 per cent of all unskilledworkers suffered precarious employment.52 According to Labour Bureau stat-istics, the percentage of workers with precarious jobs represented in 1996 a sig-nificant portion of export sector workers 55 per cent of agricultural workers,52.1 per cent of workers in forestry, 50.7 per cent of workers in lumber extractionand 36 per cent of workers in the fishing sector precisely the most dynamicsectors constituting the main pillars of Chiles export model.

TABLE 4. Chile: labour market indicators, selected years

(1) (2) (3) (4) (5)

Year

GDP

(%)

Urban

unemployment

(%)

Real wages

manufacturing

sector (Index

1990 100)

Informal

sector

(%)

Workers

contributing

to social security

(%)

1990 3.3 7.4 100 37.9 79.01995 10.8 6.6 128.5 38.8 67.0

2000 4.5 9.2 144.2 38.0 62.8

2001 3.4 9.1 144.8

2002 2.2 9.0 146.8

2003 3.7 8.5 148.1 76.4

2004 6.1 8.8 150.0 35.8

19901994 average 6.7 7.0 5.419951999 Average 5.36 6.7 4.4

20002004 average 3.98 8.7 1.3

Source: Data from Statistical Annex of ILO, Panorama Laboral 2005. Averages calculated by authorfrom time series.GDP Data for 1990 and calculation of 19901994 GDP average from ECLAC, 2004 StatisticalYearbook for Latin America and the Caribbean (in 1995 constant prices)


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Chiles flexible labour market and labour legislation continues to provide firmsand employers with an incentive structure that encourages transferring the costs ofsocial reproduction as well as the risks of production onto workers and theirfamilies. The institutional matrix underpinning Chiles flexible labour marketshas been an important factor stimulating the adoption of productive strategiesbased on cost-reduction and cost-externalisation through the hiring of fixed-term, short-term workers and the use of sub-contracting,53 instead of technologicalinnovation and investment in capital and equipment. At best, data for Chile showsthat employers have combined spurious neoliberal strategies with very limitedgenuine neostructuralist forms of competitiveness. No indications exist that, atthe level of the firm, the clear dichotomy posited by neostructuralists leads to atransition from the savage authoritarian neoliberal phase to a more consensualneostructuralist phase. Processes of greater economic globalisation economicconcentration and financialisation have all intensified over the past decade,increasing the volatility, precariousness and uncertainty faced by Chilean maleand female workers.

Recent studies carried out by the Research Department of Chiles LabourBureau indicate that all of the above traits already present during the mid1990s have reached alarming levels. Using an innovative approach of conduct-ing longitudinal studies of employment trajectories, rather than just examiningthe cross-sectional data offered by periodic employment and householdsurveys, the head of the Bureaus Research Department, Helia Henrquez, andher collaborators have produced a valuable set of quantitative and qualitativedata depicting the volatility and insecurity faced by Chilean workers.54 By fol-lowing employment trajectories during an 18-month period in 19982000through a special processing of the National Employment Survey (ENE), theyprovide a picture of the magnitude and gendered nature of high turnoverrates, structural volatility and uncertainty experienced by the majority ofChilean workers. If those that never reported themselves as belonging to thelabour force are excluded from the data, and the remainder is classified accord-ing to shifts in their employment status (employed, unemployed, inactive) aswell as by class of workers (waged/salaried, self-employed), a more accuratepicture of the insecurity and volatility emerges (see Table 5). They find that78 per cent of the labour force changed job location at least once in terms ofone or both of the variables studied (employment status and class of worker).Only 42 per cent of the labour force remained employed throughout the 18-month period, reflecting the high level of instability present in the labourmarket. Fifty seven per cent of those in the labour force remained as wagedand salaried workers and 16 per cent possessed only self-employed jobs.More than a quarter of the labour force moved back and forth between the cat-egories of dependent and autonomous workers. A relatively small minority (31.8per cent) of the labour force remained employed throughout the period and didnot change their occupational category.

The precariousness and instability experienced by the majority of workers inthe 19902005 period, portrayed briefly above, illustrates the emerging patternsin a country that has been successful in completing a wrenching process of capi-talist restructuring. These also illustrate how Chiles neostructuralist-inspired


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policy makers have failed in achieving three promised goals: the creation ofquality productive jobs, the basis for an expanding process of social integration;the promotion of growth with equity so as to significantly improve income dis-tribution; and the establishment of the microeconomic foundations within eachproductive establishment for a self-propelling process of equity and concertacionsocial. Despite some positive trends in the 19902005 period a decline inpoverty and rising real wages (though at decreasing rates and below the rate atwhich productivity increased) there is another reality of precariousness, vola-tility and turnover rates that has been less captured by existing indicators. Thefact that neoliberal and neostructuralist labour flexibility policies exhibit profoundshortcomings even in a country like Chile should be a call to rethink the originalassumptions. Moreover, the deep transformations experienced in labourcapitalrelations, the organisation of production, the conditions of existence and reproduc-tion of the working class, the functional distribution of income and the productivestrategies adopted by private firms can best be interpreted through the analyticallens provided by an RPE approach. Neoliberal policies destroyed the foundationsof the ISI regime of accumulation and, by relying on state terrorism, radically rea-ligned class forces in Chilean society. Neostructuralist rhetoric and policy inter-vention during the 19902005 period complete the historical task initiated byneoliberalism: the consolidation and legitimisation of a new export-orientedregime of accumulation, by constructing a new set of mediations which ensure

TABLE 5. Instability and volatility of Chilean workers: patterns of employment trajectories according

to employment status and dependency, 19982000

Types of trajectory according to employment

status and class of workers

Population at least once holding a job

Frequency Percentage

Only wage and salaried jobs

Always employed 1,100,490 24.6

From employed to inactive 751,744 16.8

From employed to unemployed 714,457 15.9

Total 2,566,691 57.3

Wage and self-employed jobs

Always employed 541,333 12.1



Total 1,179,905 26.3

Only self-employed jobs

Always employed 324,221 7.2



Total 733,321 16.4

Total 4,479,917 100.0

Source: Helia Henrquez & Veronica Uribe-Echevarra, Trayectorias Laborales: La Certeza De LaIncertidumbre, in Cuadernos de Investigacion, No. 18 (Direccion del Trabajo, 2004), Table 15,p. 53.


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that the distortions created by the accumulation of capital are kept within limitswhich are compatible with social cohesion within each nation.55 Constructingan effective mode of regulation, rather than significantly transforming theexport-oriented regime of accumulation, has been the major contribution ofLatin American neostructuralism under Chiles Concertacion governments.

Conclusion

The predicted decline in unemployment, poverty and inequality that would resultfrom deregulating the labour market and creating a flexible labour force failed tomaterialise. Although such neoliberal and neostructuralist failures can also beinterpreted as successes because they have strengthened class processes funda-mental to capital accumulation, it is important to take stock of the incapacity ofneoliberalism and neostructuralism to explain some of the dominant trends inLatin American labour markets.

From a RPE perspective, state and firm-based strategies to achieve labourflexibility have extensive repercussions upon multiple dimensions of economicand social life. In brief, in the era of globalisation greater labour flexibility isgained at the expense of the income, employment, job and skill security, andhealth of workers and their families. The trends characterising Latin Americanlabour markets in the 1990s the fragile basis of poverty reduction, thegrowing precariousness of jobs, rising inequality, and the absence of a self-propel-ling process of concertacion social and the informalisation of labourcapitalrelations can be better explained by insights drawn from an RPE perspectivethan neoliberal or neostructuralist conceptualisations. Consequently, we need toconfront the theoretical and empirical inconsistencies of neoliberal and neostruc-turalist conceptualisations by critically examining the linkage between labourflexibility, poverty and inequality. Neoliberalisms meltdown in Latin Americaand the inherent contradictions of the rising neostructuralist paradigm supportedby ECLAC should reinforce awareness that the contradictions of society cannotbe wished away with paeans to prices, markets and technology, or by invokingthe purported healing powers of new production paradigms and globalisation.The failure of these two mainstream paradigms create both the opportunity andthe challenge of constructing alternative perspectives capable of elucidating thetransformation engendered by the current forms of capitalist development inLatin America. Such an effort should incorporate a revitalisation of the labourprocess approach and the analysis of class, gender and power relations in a trans-national perspective, each one of them core components of a revamped and muchneeded RPE approach.

Notes

1. By neostructuralists or neostructuralism, I am referring specifically to the Latin American variant that

flourished after 1990 under the auspices of the United Nations Economic Commission for Latin America

and the Caribbean (ECLAC), better known by its Spanish acronym of CEPAL. A number of books have

discussed the emergence of Latin American neostructuralism. Patricio Mellers The Latin American

Development Debate: Neostructuralism, Neomonetarism and Adjustment Processes (Westview Press,

1992) and Osvaldo Sunkels Development from Within: Toward a Neostructuralist Approach for Latin


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America (Lynne Rienner, 1993) are outdated and woefully one-sided. More recent works such as Duncan

Greens Silent Revolution (Latin American Bureau/Monthly Review Press, 2003) Robert N. Gwynne &

Cristobal Kays Latin America Transformed: Globalization and Modernity (Arnold, 2004), and Peadar

Kirbys Introduction to Latin America: Twenty-First Century Challenges (Sage, 2003) offer a more

useful description without deeply probing Latin American neostructuralisms conceptual underpinnings

and societal outcomes.

2. The World Banks 1997 World Development Report: The State in a Changing World, and its 2002 World

Development Report: Building Institutions for Markets, both represent a turn away from dogmatic

neoliberalism.

3. David Ruccio, When Failure Becomes Success: Class and the Debate over Stabilization and Adjustment,

World Development, Vol. 19, No. 10 (1991), pp. 131534.

4. I borrow the term Radical Political Economy from James Rebitzers article Radical Political Economy and

the Economics of Labor Markets, Journal of Economic Literature, Vol. 31, No. 3 (1993), pp. 1394494.

Some of its early US proponents have abandoned RPEs original thrust by embracing neoclassical concepts

and methodology. For an account of this process, see David Spencer, The Demise of Radical Political

Economics? An Essay on the Evolution of a Theory of Capitalist Production, Cambridge Journal of

Economics, Vol. 24, No. 5 (2000), pp. 54363. Nonetheless, I believe that the term should be preserved,

along with its original intellectual aim of understanding power relations in capitalist production, expanding

it also to the reproduction of labour, both with a transnational perspective.

5. The Unraveling of the Washington Consensus: An Interview with Joseph Stiglitz, Multinational Monitor,

Vol. 21, No. 4 (2000), pp. 1321, emphasis added.

6. ECLAC, Social Panorama of Latin America 19992000, ECLAC Notes, No. 12 (September 2000), p. 1,

emphasis added.

7. Inter-American Development Bank (IADB), Good Jobs Wanted: Labor Markets in Latin America (IADB &

Johns Hopkins University Press, 2004), p. 2.

8. Ibid., p. 166

9. Among the many studies, the following four are representative: Eduardo Amadeo & Susan Horton, Flexi-

bility and Productivity in Latin America (Macmillan, 1996); Sebastian Edwards & Nora Lustig, Labor

Markets in Latin America: Combining Social Protection with Market Flexibility (Brookings Institution,

1997); Suzanne Duryea, Olga Jaramillo & Carmen Pages, Latin American Labor Markets in the 1990s:

Deciphering the Decade, Inter-American Development Bank Working Paper, No. 486 (IADB, 2003); and

IADB, Good Jobs Wanted.

10. The migration of ECLAC functionaries into key Concertacion ministries and economic posts started in 1990

under the first Concertacion administration led by Patricio Aylwin and continued under the Frei (19941999)

and Lagos (20002005) governments. During the first Concertacion administration, Andres Bianchi, who

had been Director of ECLACs Economic Development Division and ECLAC Deputy Executive Secretary,

was named Central Bank president; Ricardo Ffrench-Davis was named Director of Research at the Central

Bank (19901992); Carlos Massad, who had held numerous posts at ECLAC, was named Minister of Health

in 1993, and then Central Bank governor (19962007). Other prominent ECLAC functionaries that have

served in different Concertacion administrations have been Roberto Zahler (Central Bank), Nicolas

Eyzaguirre (Minister of Finance), Osvaldo Rosales (Director of General of External Economic Relations),

Ernesto Ottone and Eugenio Lahera (both as advisors on public policy and strategic issues to President

Lagos). Of these, Ffrench-Davis, Rosales and Ottone have returned to their posts at ECLAC.

11. The notion of systemic competitiveness was introduced into Latin American neostructuralism through the

work of Fernando Fajnzylber of the Joint ECLAC/UNIDO task force. See his seminal article International

Competitiveness: Agreed Goal, Hard Task, CEPAL Review, No. 36 (1988), pp. 723. It was adopted as

ECLACs discourse in 1990 with the publication of Changing Production Patterns.

12. ECLAC, Changing Production Patterns, p. 71.

13. See, for example, Jose Antonio Ocampo, Rethinking the Development Agenda (ECLAC, 1998); Nancy

Birdsall, Carol Graham & Richard H. Sabot (eds), Beyond Tradeoffs: Market Reform and Equitable

Growth in Latin America (Inter-American Development Bank & The Brookings Institution, 1998); and

Andres Solimano, Augusto Aninat & Nancy Birdsall (eds),Distributive Justice And Economic Development:

The Case of Chile and Developing Countries (University of Michigan Press, 2000).

14. World Bank, Latin America and the Caribbean: A Decade After the Debt Crisis (World Bank, 1993), p. 4.

15. Keith Griffin, Alternative Strategies For Economic Development (Macmillan/OECD Development Centre,

1989), p. 39.


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16. For an analysis of the passage from structuralism to neostructuralism see James Petras & Fernando Ignacio

Leiva, Democracy and Poverty in Chile: The Limits to Electoral Politics (Westview Press, 1994), ch. 4.

17. ECLAC, Changing Production Patterns.

18. Osvaldo Sunkel & Gustavo Zuleta, Neostructuralism versus Neoliberalism in the 1990s, CEPAL Review,

No. 42 (1990), p. 38

19. CEPAL, Equidad y Transformacion Productiva: Un enfoque integrado (Naciones Unidas, 1992), p. 23, my

translation.

20. Ibid.

21. Ibid., emphasis added

22. Ricardo A. Lagos, Labour Market Flexibility: What does it Really Mean?, ECLAC Review, No. 54

(1994), p. 93.

23. Gustavo Zuleta, El Desarrollo Desde Dentro: Un Enfoque Neostructuralista Para America Latina,

Pensamiento Iberoamericano, No. 21 (1992), p. 311, my translation.

24. Pilar Romaguera, Flexibilidad laboral y mercado de trabajo en Chile, Coleccion de Estudios CIEPLAN,

No. 43 (1996), p. 12, my translation, emphasis added.

25. World Bank, Latin America and the Caribbean, p. 92.

26. Ibid.

27. Ibid., p. 92.

28. Alejandra Cox-Edwards, Labor and Economic Reforms in Latin America and the Caribbean (World Bank,

1995).

29. International Labour Organisation, Regional Office for Latin American and the Caribbean, 2000 Labour

Overview of Latin America and the Caribbean (ILO, 2000).

30. See Chris Smith & Paul Thompson, Reevaluating the Labor Process Debate, in Mark Wardell, Thomas

L. Singer & Peter Meiksins (eds), Rethinking the Labor Process (State University of New York Press,

1999), pp. 20531; Berch Berberoglu (ed.), Labor and Capital in the Age of Globalization: The Labor

Process and the Changing Nature of Work in the Global Economy (Rowman & Littlefield, 2002).

31. Classic works on this topic are Harry Braverman, Labor and Monopoly Capital: The Degradation of Work in

the Twentieth Century (Monthly Review Press, 1974); The Brighton Labour Process Group, The Capitalist

Labour Process, Capital and Class, No. 1 (1977), pp. 326; and Michael Buroway,Manufacturing Consent

(University of Chicago Press, 1979).

32. The historical evolution of labour control systems has been studied, extensively. Two studies of its evolution

in the US economy are Richard Edwards, The Contested Terrain (Basic Books, 1977) and Christopher Gunn,

Workers Participation in Management: Capitals Flexible System of Control, Review of Radical Political

Economics, Vol. 26, No. 2 (1994), pp 11926.

33. John Humphrey, Gender and Work in the Third World: Sexual Divisions in Brazilian Industry (Tavistock

Publishers, 1987). See also Leslie Salzinger, Genders in Production: Making Workers in Mexicos Global

Factories (University of California Press, 2003).

34. John Humphrey, Labour Use and Labour Control in the Brazilian Automobile Industry, Capital and Class,

No. 12 (1980), pp. 4358.

35. Ibid.

36. These shortcomings have been analysed by Latin Americanists using a multi-disciplinary perspective.

Insightful critiques can be found in Viviana Patroni & Manuel Poitras, Labour in Neoliberal Latin

America: An Introduction, Labour, Capital and Society, Vol. 35, No. 2 (2002), pp. 20720. See also

Ronaldo Munck, Introduction, Latin American Perspectives, Vol. 31, No. 4 (2004), pp. 320. These

two essays introduce very useful special editions of these two journals dedicated to the topic of labour flexi-

bility and its impact on workers and labour markets in Latin America.

37. Duryea et al., Latin American Labor Markets in the 1990s, p. 2.

38. International Labour Office, 2004 Labour Overview of Latin America and the Caribbean (ILO/Regional

Office for Latin America and the Caribbean, 2004).

39. William F. Maloney, Informality Revisited, World Development, Vol. 32, No. 7 (2004), p. 1159, emphasis

added.

40. Duryea et al., Latin American Labor Markets in the 1990s, p. 20.

41. See Table 82 in IADB, Good Jobs Wanted. It compares the hourly wages between workers in the 9th decile

(D9) to those of the first decile (D1). For example the D9/D1 ratio in Argentina went from 6 in 1993 to 8.4 in

2001; for Mexico it went from 4.95 in 1990 to 6.96 in 2001. For Bolivia it went from 12.60 in 1990 to 39.07

in 2001.


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42. IADB, Good Jobs Wanted, p. 6.

43. The fact that a worker contributes or is affiliated to a social security system does not imply that he or she has

effective coverage. Chile, the paragon of a privatised social security system, provides a good example. See

Fernando Leiva, Chiles Privatized Social Security System: Behind the Free-Market Hype, Network Con-

nection, MayJune 2005 (http://www.networklobby.org/connection/index.html).44. Duryea et al., Latin American Labor Markets in the 1990s, p. 22.

45. Fernando I. Leiva & Rafael Agacino,Mercado de trabajo flexible, pobreza y desintegracion social en Chile,

19901994 (Universidad ARCIS, 1994); Marcus Taylor, Interrogating the Paradigm of Labour Flexibili-

zation: Neoclassical Prescriptions and the Chilean Experience, Labour, Capital and Society, Vol. 35, No. 2

(2002), pp. 22251; Patricio Escobar, The New Labour Market: The Effects of the Neoliberal Experiment in

Chile, Latin American Perspectives, Vol. 30, No. 5 (2003), pp. 708.

46. Marcelo Selowsky, Stages in the Recovery of Latin Americas growth, Finance and Development (June

1990), pp. 2831.

47. Paula Giovagnoli, Georgina Pizzolitto & Julieta Tras, Chile: Monitoring Socio-Economic Conditions in

Argentina, Chile, Paraguay and Uruguay, Documento de Trabajo No. 19, Centro de Estudios Distributivos,

Laborales y Sociales, Universidad de la Plata, 2005.

48. World Economic Forum, The Global Competitiveness Report 20052006 (Palgrave, 2005), p. xiv.

49. Escobar, The New Labor Market.

50. David de Ferranti, Inequality in Latin America: Breaking with History? (World Bank, 2004).

51. Magdalena Echeverra, Mejores Condiciones De Trabajo: Un Desafo Actual, Temas Laborales, No. 2

(Departamento de Estudios Direccion del Trabajo, 1996), p. 5.

52. Malva Espinosa, Sindicalismo en la empresa moderna: Ni ocaso, ni crisis terminal. Analisis de encuesta de

empleadores y trabajadores, 1996 Cuadernos de Investigacion, No. 2 (Departamento de Estudios, Direccion

del Trabajo, 1997), p. 10.

53. Magdalena Echeverra & Diego Lopez, Flexibilidad laboral en Chile: las empresas y las personas (Depar-

tamento de Estudios, Direccion del Trabajo, 2004).

54. Helia Henrquez & Veronica Uribe-Echeverra, Trayectorias laborales: La certeza de la incertidumbre,

Cuadernos de Investigacion, No. 18 (Direccion del Trabajo, 2004); Eduardo Acuna & Ernesto Perez,

Trayectorias laborales: el transito entre el trabajo asalariado y el empleo independiente, Cuadernos de

Investigacion, No. 23 (Departamento de Estudios, Direccion del Trabajo, 2005).

55. Michel Aglietta, A Theory of Capitalist Regulation: The U.S. Experience (Verso, 2000), p. 391.


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