Sorting Out the Mixed Economy: The Rise and Fall of Welfare and Developmental States in the Americas

Abstract

This extensively researched and sophisticated study breaks through conventional origin stories of neoliberalism. Before the Washington Consensus of the late 1980s and 1990s, which laid out the terms through which poor countries might receive international relief, there was Colombia's Cauca Valley Corporation and its adviser, David Lilienthal, the New Dealer turned businessman, who championed democracy through decentralization of investment and state authority. Before the Chicago Boys, a group of University of Chicago free-market economists, flocked to Pinochet's Chile as advisers in the 1970s and 1980s, there was a generation of Latin American economists trained in the United States, and there was Lauchlin Currie, the Keynesian internationalist fleeing McCarthyism who joined Colombia's National Planning Council and sought to differentiate the field of economics from that of management. As a regional study, Sorting Out the Mixed Economy undermines both triumphalist accounts and left critiques of privatization to complicate circuits of influence within the Americas. It joins intellectual history to political economy to emphasize that features of neoliberalism, like deregulation, austerity, and decentralization, were present in the mixture of public funding and private profits that characterized midcentury “free enterprise.”But it isn't just that ideas matter. So do memory, genealogies, and stories told—as witnessed by the protagonists of this history and the historian herself. In generating a new narrative by casting a wider geographical lens, Amy Offner punctures the self-congratulatory analysis of the architects of a new world order—a cast of characters including Colombian elites no less than old New Dealers, business school professors, foundations, international organizations, and corporate leaders. Notably, she deflates the self-serving claims of Lilienthal and Eduardo Wiesner, the Colombian economist whose reinterpretation of the midcentury mixed economy sought structural adjustment and public sector reorganization in order “to make collective action futile or impossible,” just like his North American counterparts (174).From the 1950s, state delegation of economic growth to private entities, run by businessmen, shaped the welfare, no less than the developmental, state. These actions forecasted later hollowing out of public services through for-profit prisons, schools, and social assistance. Offner deploys the term developmental state to underscore the role of industrial policy and state-supported macroeconomic intervention through autonomous regulatory and regional agencies. She convincingly shows how “social entrepreneurs,” like David Rockefeller and the Council for Latin America but also progressive self-help housing advocates, burrowed into the Great Society. They transferred lessons learned in places like the Cauca Valley to the continental US. The cost-plus system of defense contracting became a feature of job training and educational testing. In contrast to New Deal funding of public housing on the mainland, home ownership financing—previously applied to Puerto Rico—emerged in sweat equity projects under the War on Poverty. Indeed, experiments in colonized regions, including Native peoples’ reservations, provided the template for manpower projects. More successfully than in the United States, Indigenous and Afro-Colombians would come to embrace the logics of development to claim “economic resources and political autonomy as inalienable rights of ethnicity” (265).This is regional history at its best. Offner shows a command of the institutions, politics, landscapes, and social structure of Colombia, no less than the US. Through research in local as well as national sources, she moves outward from decentralization in Cauca Valley, an alluvial region far from Bogotá, where the wealthy sought protection from the poor and eventually displaced campesinos through minimal labor reform in the name of productivity and efficiency. Businessmen sought to turn holders of minifundistas into wage laborers as a solution to poverty that would maintain the class structure, even as they also contained the protests of ranchers from developmental encroachment. Gaining the power of taxation for hydroelectricity, other infrastructure, and soil reclamation, networked families won targeted legislation as well as funding from a dizzyingly array of international entities, including the World Bank, Rockefeller, and US foreign aid programs. Against continued political violence, amid Cold War anti-communism, Cauca Valley elites grabbed power where they could and, in the process, made the autonomous regional authority a state-building engine for private riches.In Colombia, social welfare policy “operated within the logic of austerity” that easily functioned amid “financial retrenchment” (91). Housing serves as a case study. Offner underscores the contradictions of whether or not to bolster private possession or expand public resources. With the laying out of Ciudad Kennedy project, planners brought the dream of the single-family, owner-occupied home to those with connections and steady incomes, leaving the poor behind. Its location encouraged sprawl, generating counter plans for urban gentrification. In a book that focuses on elites, interviews with early residents of such housing stands out as a social history gem that illuminates the gap between visions and practice. As Offner notes, “Residents . . . communicated a naturalized sense of the private home as a source of income and autonomy, a site of labor and leisure, a link between formal and informal sectors, a foundation of political citizenship and class belonging, and a place where nonnuclear households could deliver security for parents and children” (100). Such an insight aside, there is little analysis of social reproduction as a component of the mixed economy or the ways that privatization embedded gendered as well as racialized and class structures necessary for the reconstitution as well as maintenance of the resulting order.This focus on production derives from Offner's centering of the emergence of economics and management as two vying forms of knowledge whose adherents did so much to shape resulting programs. Nonetheless, by the late 1960s, economics and business consulting had become “indistinguishable” (142). Part II offers a fascinating analysis of another form of development: the creation and staffing of private and public universities. Economics and then business emerged as fields that conflated “broader business interests with the public interest,” conferring intellectual legitimacy (127). Business elites there and in the US anticipated the way the Koch brothers built research centers within universities, underscoring the book's general disruption of timelines and influencers. At the end, however, Offner refuses her own grim assessments, pointing to futurists like Arturo Escobar, who find in the present the seeds for moving beyond the marketization and privatization whose origins this innovative history so ably contests.