Varieties of Liberalism in Central America

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Varieties of Liberalism in Central America

Nation-States as Works in Progress

By Forrest D. Colburn and Arturo Cruz S.

A groundbreaking approach to the study of national development, using the five emerging nations of Central America as a prism.



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5.5 x 8.5 | 136 pp.

ISBN: 978-0-292-71721-3

Why do some countries progress while others stagnate? Why does adversity strengthen some countries and weaken others? Indeed, in this era of unprecedented movement of people, goods, and ideas, just what constitutes a nation-state? Forrest Colburn and Arturo Cruz suggest how fundamental these questions are through an exploration of the evolution of Guatemala, El Salvador, Honduras, Nicaragua, and Costa Rica over the last quarter of a century, a period of intriguing, often confounding, paradoxes in Central America's development.

Offering an elegant defense of empiricism, Colburn and Cruz explore the roles of geography and political choice in constructing nations and states. Countries are shown to be unique: there are a daunting number of variables. There is causality, but not the kind that can be revealed in the laboratory or on the blackboard. Liberalism—today defined as democracy and unfettered markets—may be in vogue, but it has no inherent determinants. Democracy and market economies, when welded to the messy realities of individual countries, are compatible with many different outcomes. The world is more pluralistic in both causes and effects than either academic theories or political rhetoric suggest.

  • Acknowledgments
  • Introduction
  • Enigmatic Nation-States and Conceptual Nihilism
  • Geography and Myth
  • Liberalism and Democracy
  • Unfettered Markets
  • What Went Right?
  • What Went Wrong?
  • Choices, Constraints, Idiosyncrasies, and Fortune
  • Photography
  • Note and Bibliography
  • About the Authors

Why do some countries progress while others seemingly so similar stagnate? What explains abrupt changes in the tack of countries? Why does adversity strengthen some countries and weaken other countries? Probing deeper, in this era of unprecedented movement of people, goods, and ideas, just what constitutes a country, a state, a nation?

These sweeping questions have been suggested to us by watching the evolution of the five countries of the Central American isthmus. In the 1980s, Nicaragua, El Salvador, and Guatemala were wrecked by civil war, unnerving Honduras and Costa Rica. The violence was deemed by many to be an inevitable consequence of stark class divisions and a subordinate position in the international economy. The United States was blamed, too, for contributing to the permanence of an ill-suited status quo. These determinants of political fate were widely viewed as so immutable, so ponderous, that there was judged to be no middle ground between bloody revolution and bloody repression.

A quarter of a century later—a long period in the life of an individual, but a short period in the life of a country—the region looks different, and it is different. The salience of class has receded, remarkably so, and political violence is rare. Insurgents have vanished, and so—even—have many organizations of the poor and the dispossessed. The military, long such a force in Guatemala, Honduras, El Salvador, and Nicaragua, has receded from political life. In all five countries of the region, governors are chosen in free, competitive elections. And in these elections, Central Americans have embraced political moderation and continuity. The results of these elections have been accepted as sacrosanct by all political actors.

Another sea change is in the perception of the international economy, formerly feared; it is now seen as a neutral arena to be entered valiantly. And the behemoth, the United States, has come to be home to many Central Americans, a cultural beacon, and a commercial partner actively courted by governors of the region's countries.

How did the five Central American countries alter course so quickly and so uniformly? Why the ascendancy of liberalism, of democracy and unfettered markets? There are, to be sure, rough edges—inconsistencies, some of them glaring—in this change of tack. But the change is nonetheless remarkable. Where is this new paradigm, interpreted as it is within the confines of individual nation-states, taking Central Americans?

Within the puzzle of how Central Americans have changed course lies an enigma, one that bedevils efforts to explain economic—and so, social—development. While all of the five countries of the isthmus have remade themselves since the 1980s, one country has truly prospered—moved forward. Another country, unfortunately, has stumbled backwards. In the 1960s, neighboring Nicaragua and Costa Rica had comparable per capita incomes. The World Bank's World Development Report 2005 suggested Costa Rica had reached an awkward milestone: its per capita income was reported to be six times that of Nicaragua. What went right? What went wrong? How can such dissimilar outcomes within such a compressed period of time be explained?

Costa Rica's success and Nicaragua's misfortune is more than an enigma. Most Costa Ricans live reasonably well, and the percentage of Costa Ricans mired in poverty has declined significantly since the 1980s. In contrast, most Nicaraguans are overwhelmed with poverty and hardship; life has gotten "harder." Why should "citizenship" matter so much? What does it mean, anyway, to be "Costa Rican," "Nicaraguan," or, for that matter, "Salvadoran," "Honduran," or "Guatemalan"?

We have so many expansive, searching questions. And the academy today does not encourage—or welcome—asking big questions, believing they cannot be answered with certainty. It is true; we can offer only searching, tentative answers. Indeed, a leitmotiv of the study is the indeterminacy of the fate—the politics—of countries. There is causality, but not the kind that can be revealed in the laboratory or on the blackboard. There are simply too many "variables," and they cannot be isolated or measured, and, moreover, they interact in a dizzy, obfuscating way. Countries are enigmatic.

Still, the nation-state is the most important political entity. Furthermore, the differences among nation-states, even those that are neighbors, can be striking. Such is the case in Central America. In looking for answers to questions about the evolution of countries and the differences among them, attention can be drawn to the constraints nation-states face and the quirks of fortune. More intriguing are the more malleable national idiosyncrasies—buried in culture—and the choices of local political actors.

Combing through the recent history of the five Central American republics offers a reminder of the many constraints nation-states confront, including those of economic trends emanating from far afield. There is also fortune, good and bad. A paired comparison of Nicaragua and Costa Rica, though, underscores the considerable weight of local decisions, in particular of the kinds and quality of public institutions built, and of the investments made (or not made) in social services. These decisions, in turn, shape the ability of state and society to respond to the exigencies of the international economy, fashions in ideology, and the quirks of fortune. Furthermore, good decisions lead to opportunities: there is momentum in economic development. (But likewise poor decisions have opportunity costs.)

While local choices matter, it is not always clear who makes them—or when and how they are made. It is easy, but often facile, to point to towering political figures who make what appear to be transcendental decisions at moments of crisis, at what may appear to be critical junctures. Maybe leaders are hemmed into making decisions. Maybe they make calculations of personal gain. Alternatively, maybe their decisions reflect deeply ingrained, idiosyncratic cultural norms. For example, the differences between investments made in public education in Nicaragua and Costa Rica are striking and appear, over the course of decades, to have contributed to the divergence in welfare between the two countries. An anecdote about Anastasio Somoza, the Nicaraguan dictator, recounts how in the 1960s he responded to the suggestion of a foreign aid official that Nicaragua spend more on education by asking, "If everyone goes to school, who will pick the coffee?" Was Somoza speaking, or was he simply a mouthpiece for the upper echelon of a society divided by class? It is unclear. Was there ever one—identifiable—decision made in Nicaragua to limit spending on public education in Nicaragua? No. Tracing the trajectory of political decisions in Costa Rica—and of the other countries of the region—is likewise elusive.

The deeper one probes into individual nation-states, the more cautious one is about generalizing and the less faith one has in theories about politics. Instead, questions spew forth. In our efforts to answer, cautiously and honestly, some of the more pertinent questions, we hope to sketch a fair portrait of Central America in its present incarnation. Good questions can narrate descriptive detail just as well as can a single-minded hypothesis.

A sobering conclusion that emerges from the study is that liberalism has no inherent determinants. Liberalism is in vogue: since the turmoil of the 1980s all of the countries of Central America have embraced democracy and unfettered markets. But, again, there are no inherent determinants for what liberalism offers a polity. Democracy and unfettered markets, when welded to the messy realities of individual countries, are compatible with many different outcomes. There are thus many varieties of liberalism. The world is more pluralistic in both cause and effects than either academic theories or political rhetoric suggest.

While delineating trends in Central America, we also hope to contribute, if only modestly, to a renewed appreciation for the study of countries. The influence of the nation-state always needs to be acknowledged. In politics, context is important and so geography matters.

In William Shakespeare's play Twelfth Night or What You Will, Viola survives a shipwreck—"our ship did split." Once washed ashore she asks, "What country, friends, is this? . . . Who governs here?" These two questions are timeless. The nation-state—the country—remains the locus of most important political decisions. And these decisions are made by governors, exercising control over the state.

The nation-state is the most consequential unit of analysis in politics. Politicians know this; readers of newspapers know it. Surprising, then, is the limp interest in individual nation-states by students of politics. Those in the academy who study politics have long been drawn to theory. And the generation of theory comes from studying recurring political behavior. In the most extreme conceptualization, nothing in politics is held to be unique; thus, it is ignoble (or at least risky) to study subjects that lead to this theoretical dead-end, to what can only be description of a particular case. However, there is a high cost to ignoring the specific context of politics, including prominently the individual nation-state that provides the arena for much give-and-take. Theory can never be that useful, that relevant, if it skirts the messy, idiosyncratic settings in which it is conducted.

Sadly, the slighting of individual cases easily leads to a reification of politics. A colleague at Princeton University, Atul Kohli, deadpans: "I work on India, a country with a population of one billion, and I am always asked about 'the larger significance' of my work." The quip is uttered in frustration as well as irony. The larger significance is theory. Indians, their cares and needs, are just data.

Kohli nonetheless presses forward, writing with verve about India. Others, too, risk—or accept—intellectual marginalization by studying individual countries (or regions of the world). There is a variety of country studies. Some make an effort to apply a theoretical concept to an individual case. Other works try to unravel a sticky political problem, such as, perhaps, communal conflict. Still other works are histories of individual polities. There are, however, not well-established precepts or conceptual models for dissecting nation-states, for taking their measure. And, again, there is not much in the way of encouragement either for making an effort to understand the workings and the paths of specific countries.

Successive schools of political analysis do suggest some useful places to begin an inquiry into individual nation-states: history, social relations (including prominently class cleavages), the formation and behavior of political institutions, regime type, economic activity and linkages to international markets, elite behavior, political learning, and political culture. But this list is long, and there is no consensus on how to aggregate these variables or how to assign to them explanatory weights in the assessments of individual countries. Likewise, while there are long-standing definitions of "country," "nation," and "state," these tend to be at a high level of generality and so need to be cautiously refined when applied to specific cases.

Schools of political analysis come and go. There are fashions in political analysis in which one particular kind of explanation—or variable—is favored. But these fleeting schools of analysis are not cumulative—they do not build on one another. Instead, fashions of political analysis follow the political events—and political tenor—of their era.

An illuminating example is the life-cycle of "bureaucratic-authoritarianism." In 1964, Brazil had a military coup. Two years later, the military also seized power in neighboring Argentina. In 1973, democratic regimes collapsed in other economically advanced Latin American nations: Chile and Uruguay. That same year, an Argentine, Guillermo O'Donnell, published a monograph at the Institute of International Studies of the University of California, Berkeley. The work was titled Modernization and Bureaucratic-Authoritarianism: Studies in South American Politics. The title suggested something new was afoot in the four most prosperous countries of South America. Instead of rule by individual and so personalistic military leaders, the military ruled as an institution. Correspondingly, the military adopted a technocratic, bureaucratic approach to making and implementing public policies. By joining the adjective bureaucratic with authoritarian, a new addition was made to the many typologies of national political regimes.

O'Donnell was not just adding a typology or describing a consequential series of political events in South America. He was more ambitious. He proposed an explanation, a theory, of why bureaucratic-authoritarianism emerged. O'Donnell posited an economic explanation for the rise of authoritarianism. He focused on Latin America's relatively "late industrialization" and the region's dependence on foreign capital, technology, and managerial expertise to promote industrialization. While Argentina and other similarly situated countries attained some initial success in producing consumer goods, the "deepening" of industrialization to include production of intermediate and capital goods ran afoul of the strictures of international capitalism. The inevitable economic crisis generated political tensions, including, for example, strikes, that were necessarily smothered by bureaucratic-authoritarianism.

Bureaucratic-authoritarianism gained intellectual popularity. The model was used to discuss Mexico, authoritarian though not under military tutelage, and the reformist military regimes of Peru and Ecuador. The concept of bureaucratic-authoritarianism was extended by some—at least for the purpose of contrast—to the more personalistic military rule common at the time in other, usually poorer countries of Latin America: Paraguay, Bolivia, Panama, Nicaragua, El Salvador, Honduras, and Guatemala. The model was even used for countries outside the region, including, for example, Egypt.

O'Donnell's conceptualization of bureaucratic-authoritarianism, based on the economically advanced countries of South America, was the most sophisticated of the many analyses of authoritarianism in Latin America. But O'Donnell was decidedly in step with intellectual fashion, which was to offer economic explanations—blaming international and domestic capitalism—for undesired political outcomes. A representative book from Central America from the era is Jaime Wheelock's Nicaragua: Imperialismo y dictadura, published in 1979 in Mexico City and reprinted the following year in Havana. Wheelock, one of the nine Sandinista Comandantes de la Revolución, argued forcefully that Nicaragua's dictatorship was the result of the machinations of international capitalism rolling over the supine local business elite. Perhaps ironically, Wheelock relied heavily for information on a dissertation submitted to the Harvard Business School in 1972 by Harry Strachan titled The Role of Business Groups in Economic Development: The Case of Nicaragua.

During the late 1970s and the 1980s, though, there was an unanticipated "wave" of democracy that washed away authoritarian regimes throughout Latin America. In country after country, authoritarian governments—usually military—gave way to constitutional rule, competitive party politics, elections, and civilian supremacy. The first Latin American country to make the transition to democracy was Ecuador in 1979, followed by its neighbor Peru in 1980. Argentina followed suit in 1983, as did Uruguay in 1984. In Central America, the military returned to the barracks in El Salvador in 1984; the military in neighboring Guatemala did the same in 1986. Dating the transition in Bolivia and Honduras is difficult, but in both countries, 1985 seems to have been a pivotal year. In 1989 Brazil finally jettisoned its military rule. Chile and Nicaragua changed regimes—embracing democracy—in 1990. Paraguay had open and competitive elections in 1993. Finally, Mexico, governed by the Institutionalized Revolutionary Party (the PRI) since 1929, began to "open" politically during this period, breaking the hegemony of this mild but hardly benign authoritarian regime. Latin America, which had only three well-established democracies during the dark years of the 1970s—Costa Rica, Venezuela, and Colombia—suddenly looked very different: the region was overwhelmingly committed to democracy.

Further confounding prevailing explanations of politics in the region, this transition took place during the most trenchant economic recession since the world depression of the 1930s. Perhaps most confusing, Mexico's lengthy transition to democracy took place as it opened itself economically to increased trade with the United States and Canada, through the North American Free Trade Agreement (NAFTA). The assertion that participation in the international economy was politically pernicious appeared unsustainable, as did, in fact, any assertion of a causal link between economic activity—or structure—and politics.

Indeed, the transition to democracy in Latin America was accompanied by another sweeping—and unexpected—change: the widespread adoption of market-based economic policies. Protective tariffs came tumbling down, as did barriers to foreign investment. Many state enterprises were sold; government subsidies and other market distortions were eliminated. Governments committed themselves to providing a stable macro-economic environment—prominently through the control of inflation—and left the rest up to the private sector. So, unexpectedly, liberal doctrine and practice came to reign in both government and in the economy: it was to be democracy and unfettered markets.

In the early 1990s, Guillermo O'Donnell, who achieved fame in academic circles through the diffusion of his work on bureaucratic-authoritarianism, began to report in public forums that he no longer believed in it. He disavowed it swiftly and completely. At one such gathering, at the Institute for Advanced Study in Princeton, he added that in his native Argentina he was taken with how people drive their cars, how quick they are to cut into lines at movie theaters, and how they treat their hired help. It is culture! The key question, he concluded, was "How do cultural practices become embedded in political institutions?"

Legions of scholars halted their explorations of why Latin America was destined to authoritarianism and began speaking and writing about the "transition to democracy." They worked hard, not to explain the fate of individual countries, but instead to develop theories that would hold across cases, even span geographical and cultural regions: Latin America, Southern Europe (in particular Portugal, Spain, and Greece), and later, after 1989, Eastern Europe. What was quickly buried in the bowels of libraries was not so much the typology of bureaucratic-authoritarianism, but instead the explanatory baggage that had accompanied its presentation and embellishment: the link between economic development—"late industrialization," "formation of the urban proletariat," "foreign multinationals," "declining terms of trade," and the like—with political outcomes. Sure, economic structures and activity influence politics, but it was suddenly untenable to argue that there was an ironclad relationship between the two spheres.

The many articles and books about the transition to democracy in Latin America and elsewhere are thoughtful. They offer numerous insights and a few plausible generalizations—though despite the pretensions of theory, the literature has never managed to attain any predictive utility. However, with the passage of years, and not very many at that, it has become increasingly evident that there is no universal paradigm of transition to democracy. The importance and influence of "underlying conditions"—the characteristics of the nation-state—vary erratically from case to case; there are no set stages in the transition to democracy, and—most problematic—there is no assurance that the pot at the end of the rainbow is, in fact, a democracy in any recognizable form. There is not only the chance of a circuitous return to authoritarianism, though perhaps disguised as something more appealing, but also the possibility of innumerable permutations of democracy, or simply of democracies that perform so poorly or are so reckless that their admittance into the pantheon can only be grudgingly granted.

The embarrassing inability to foresee recent sweeping political sea changes, including prominently the demise of the Soviet Union, as well as the crumbling of authoritarian regimes throughout Latin America, has led to a call by some scholars for an intellectual retreat. Many scholars of politics have, in fact, retreated to "mid-level" theorizing (more appealing than labeling it "small-level") to avoid what has been called "the problem of indeterminacy" (more appealing than calling it "being wrong").

Narrow political questions are explored, sometimes with quantitative analysis and formal modeling. Increasingly, praise is reserved for those who can isolate independent variables and express their explanatory weight in the most parsimonious analysis, even if what is explained is only a hypothetical case with stringent assumptions or a very small piece of a complex political puzzle. Adhering to this fashionable methodology, in turn, reinforces intellectual pointillism since unwieldy political puzzles overwhelm or just bog down in scientific methodologies.

Scholars who engage in Herculean efforts to prove with temerity a relationship between two or more specific political variables must believe that the ultimate usefulness of their work will be in constructing an accurate "big picture" of politics. However, efforts at synthesis cannot wait until "everything has been learned." Instead, continuous, constant exercises are needed, incomplete but helpful efforts to understand the world. An ontological-epistemological reorientation is necessary, superseding the study of uniformity and the search for universal political patterns. All too often, scholarship on important topics at the level of the nation-state leads to the unique—so there can be no discovery of replicable behavior or outcomes. Efforts at generating theories—laws—about politics are misdirected and, given the record to date, likely to be futile, too.

The self-congratulatory pursuit of theory should be recast as a humble quest for better understanding of society. Whatever contributes to such understanding is welcome, including empirical detail, the untangling of complexity, the tracing of political processes, and the identification and measurements of relationships and probabilities. Description deserves to be rehabilitated. Different areas of the world—specific places and the people who inhabit them—warrant as much interest as the abstract processes of politics in which the conduct of politics is stripped of its context. In the end, the purpose of scholarship is to better understand the world, with all its richness and diversity.

In setting out to explore analytically a corner of the world, such as the countries of Central America, there is thus not much in the way of conceptual guidance or even encouragement. There seemingly is not much more to frame examination than the basic definitions that exist for the political entities of the region: country, nation, government, and state. And even with such a modest beginning, it is best to proceed with patience and caution.

The word "country" is loosely used. It is defined as the territory of a nation. What is a nation? A nation is a large number of people of mainly common descent, language, and history usually inhabiting a territory bounded by defined limits and forming a society under one government. What is government? Government is a form of organization of the state. What is the state? The state is the organized political community of a nation. Such definitions are circular and so imprecise. And so, not surprisingly, the terms are used interchangeably, especially country and the combination nation-state. Still, these concepts, when disaggregated, can help an inquiry into the tack of a particular geographic region.

There are some more extensive definitions—and thoughtful discussions—of nation and state. The early-twentieth-century German sociologist Max Weber, who continues to cast a long intellectual shadow, defined the state as an organization that successfully claims and upholds a monopoly on the legitimate use of physical force within a given territory. Through its right to use force, the state permits some to prevail over others, but dominance is only achieved through successful competition to gain control over the seats and instruments of authority. Weber identified three legitimate routes to power: traditional domination by the patriarch or prince; charismatic domination by the prophet, warlord, or party leader; and legal domination by the bureaucrat or state servant. Of these three ideal types, Weber preferred legal domination, with its "routinization," order, harmony, and efficiency in the bureaucratic organization of the state.

A more contemporary definition of the state by a colleague at Harvard University, Merilee Grindle, provides a reassuring continuity. She sees the state as a set of ongoing institutions for social control and authoritative decision-making and implementation. The state, she asserts, desires to establish and maintain internal and external security, to generate revenue, and to achieve hegemony over alternative forms of social organization. The state's abilities, she cautions, however, are influenced by economic conditions and degrees of social mobilization as well as by the legitimacy and internal cohesion of the state itself. Grindle's definition draws attention to what many find notable about states in Latin America: their combination of power and fragility. States may exercise considerable power; however, competition for authority can sap and subvert the state. Moreover, the power to control does not equate with the ability to transform, to develop the economy, or even to provide valued social services. States are often Janus-faced: simultaneously strong and weak.

Nations are counted and disaggregated with a census. Their attitudes, values, and propensities are gauged with surveys. However, a nation's true complexity—the richness of its culture—is unraveled only with painstakingly slow observation and analysis. Reaching conclusions is tricky; cultural differences are difficult to identify and measure with any precision. Leonard Binder, in an expansive essay published decades ago, suggested what should be obvious but which nonetheless is still often overlooked: culture is neither monolithic nor homogeneous. Nor is it static. Binder added, in a beguiling way, that in any culture—or nation—there are "great traditions" and "little traditions." What might these be? Which kind of tradition weighs more in explaining the tack countries take? A colleague of Binder, Lucian Pye, wrote evocatively of the pressures induced by change, and in particular of the stress on national identity stemming from foreign influences. This issue is enduring, and it has to be especially important in small, poor countries like those of Central America.

"State" and "nation," thus, are heady terms that require care when being used to portray specific countries. Moreover, putting the terms together, linking them with a hyphen, entails a further complexity: unraveling the relationship of one to the other. In all countries, political, economic, and social change is mediated by both national identity and the rules and norms of state institutions. National identity is not exogenous to state institutions; state institutions, in turn, are not exogenous to national identity. There is an obscure but symbiotic relationship between national identity and the state. Put differently, baldly perhaps, politics is forcefully shaped by the living legacy of history. There are always choices to be made in politics, to be sure, just as there are accidents, the diffusion of ideas, intrusions from abroad, and other ways in which politics is rendered unpredictable. But the context of national politics is important, weighty, and frequently less malleable than might be desired.

Countries are replete with values, habits, customs, symbols, traditions, institutions, rituals, ceremony, and myth. They are embedded in the nation and they are embedded in the state. And the nation and the state are jointly set in a corner of the world, in a specific territory, one having a unique endowment. Political identity begins with geography. The enigma of countries lies in their peculiarities and in the ways in which these thousand peculiarities—the accumulation of idiosyncratic endowments and histories—shape the conduct of politics.

Regime changes are rare but consequential. And so they attract attention. But the changing of regimes is not done in a vacuum. Regime changes take place only in specific countries, and so these changes—such as the turn to democracy and unfettered markets—are grafted onto an intricate web of deep, knobby, and dark roots.

The approach taken here is in part to highlight the many forces that shape political and economic outcomes, but also in part to illuminate these same outcomes—shining focused light most prominently on regime type and performance. It is widely recognized that there are many confounding variables which influence the course of a country. Less appreciated are the many varieties of outcomes for countries. In the lexicon of science, there are not only many independent variables, but there is also no grand dependent variables, comparable across cases. Terms bandied about to describe countries, such as "liberalism," "democracy," and "market economy," frequently obscure and confuse more than they clarify. In studying polities, it is best to neither start nor end with labels.

Liberalism is especially problematic as an analytical category. In Central America, liberalism has had widely divergent meanings and political import over the course of the region's history. In the aftermath of the American and French Revolutions, it was associated with freedom from monarchy—and from the Spanish monarchy in particular—and it favored self-government as a protection against tyranny. In the aftermath of independence, especially in the late nineteenth and early twentieth centuries, liberalism was associated with a drive for economic modernization, and it was employed to batter away at the privileges of the church and at other impediments to the expansion of private property and investments in export-generating activities. For much of the twentieth century, the most conspicuous vestige of liberalism was the political party of the Nicaraguan dynasty of the Somozas, incongruously known as the Liberal Party. During their long tenure, liberalism stood for personal liberties and anti-communism.

Liberalism all but disappeared from the political lexicon of the region during the turmoil of the 1970s and 1980s, but it reemerged with force—and with apparent unanimity—after the conflicts ended. In its latest gestation, it is equated with democracy and unfettered markets. Political discourse—rhetoric—and even constitutions, government organization, and public policies can all be misleading. Yes, ideas and ideologies matter. But history gives birth to stubborn political styles capable of transforming—bending and refracting—ideas that are either contagious or convenient for political elites to embrace. Democracy and unfettered markets can be molded into many different outcomes, some strikingly different from others. Such is the case today in Central America.

By Forrest D. Colburn and Arturo Cruz S.

Forrest D. Colburn and Arturo Cruz S. teach at INCAE, the premier graduate school of management in Latin America. Colburn also teaches at the City University of New York. Cruz has been selected by newly elected President Daniel Ortega to serve as Nicaragua's ambassador to the United States.