The Politics of Change
If the 1980s were the era of economic policy reform in Latin America, the 1990s have become the era of social sector reform. Indeed, a consensus is now forming that delivery of health care, education, and other welfare-enhancing programs in the region must be improved. A very large number of citizens, politicians, policy and management specialists, development professionals, and academics see that increased poverty and inequality can threaten the viability of market-oriented development strategies and the consolidation of new democracies.
The 1980s witnessed an extraordinary revitalization of civil society in Latin America, as well as pushing economic policy reform to the top of government agendas. Unions, political parties, neighborhood and identity-based movements, and church-affiliated organizations became actively engaged in civic life and public issues. Print and broadcast media became increasingly pluralist and inquisitive at the same time, often placing public officials under harsh lights. The reform agendas championed by democracy advocates were broad, multifaceted, and at times conflictful. Among the issues that brought them together, however, was a deep questioning of the “rightness” and efficacy of structural adjustment. There was an equally emphatic insistence that the state had clear and unavoidable responsibilities to citizens–decent social services, protection from the worst effects of unbridled capitalism, maintenance of law and order, and monitoring of corruption in both public and private sectors. Indeed, while economic reformers continued to be wary of states that assumed much responsibility for the quality of life or social welfare, citizens and their organizations were demanding that the state do more and do it better.
Despite worsening conditions in the 1980s and part of the 1990s, most of the problems of poverty and equality in Latin America have long histories and share a common plight–they are more often off public agendas than on them. However, a variety of policy, intellectual, political, and social trends have come together in the current period to move these problems onto a prominent place on government agendas.
By the late 1980s, some advocates of reform were beginning to become aware the market economies need public sectors that are to manage macroeconomic stability. In order to effectively implement stabilization and structural adjustment measures, public sectors need to design and implement effective regulatory policies, ensure basic physical and social infrastructure, maintain public order and the rule of law, and to respond effectively to changing international and domestic conditions. Gradually, references to the reform of the state began to mean more than downsizing and eliminating state intervention in response to fiscal deficits and inefficiencies; it began to be identified with the creation of institutions to buttress the market and to ensure an “enabling environment” for market-oriented development.
Economic reformers became increasingly convinced of the importance of factors such as legal codes affecting private property and the sanctity of contracts–the experience of developing market economies in Russia and other post-communist states loomed large in this growing conviction–and the role of autonomous central banks to both microeconomic behavior and macroeconomic performance. Scholarship on East Asian development successes also helped shape this view. Theoretical advances in institutional economics and economic history also raised new questions about paths toward sustained development. The “neoliberals” who dominated 1980s academic and policy debates were challenged by “new institutionalists” identified with Douglass North and others who argued that the evolution of the rules of the game for economic transactions–institutions–was a normal and necessary concomitant of successful economic development.
These demands were not lost on the first generation of democratic politicians, even those who were firmly committed to the economic reform agenda. Initially, the response to such demands tended to come in the guise of short term actions to meet strong political opposition to stabilization and economic adjustment. Social adjustment funds intended to cushion the blow of economic reform through emergency public works programs, as well as community-based social assistance programs, were enthusiastically supported by reform politicians. In time, however, it became evident that more than quick political palliatives were needed to offset more than a decade of cutbacks in social sector cutbacks. The burgeoning of interest in innovative solutions to social sector delivery problems and the persistent demands of citizen groups encouraged greater attention to more basic questions of social sector provisioning and the role of government in assuring such services.
As with the economic reform agenda, intellectual trends also supported greater attention to the importance of the social sectors to the particular ends of economic and political development. Economists began to reconsider the role of human capital in economic development, a theoretical orientation that had decreased in importance since its apogee in the 1960s. Increasing evidence of rapid globalization of trade, technology development, and labor markets added impetus to analyses of the determinants of successful national development within a rapidly changing international context. Human capital in terms of an educated and skilled workforce emerged on many computer screens as an important underpinning of the “competitiveness of nations.”
While economists were discovering human capital and its instrumental role in economic development, other social scientists were “discovering” social capital. Following the 1993 publication of Robert Putnam’s influential book, Making Democracy Work, the notion of social capital as an underpinning of effective governance gained widespread attention. Social capital, referring to networks of trust and cooperation among citizens, was demonstrated to be the critical ingredient in explaining whether local governments were responsive, efficient, and effective in carrying out their responsibilities.
Good government, accorded to many who were persuaded by the importance of social capital, originates in the quality of civil societies and the demand for it rather than its supply. Social capital could explain why health clinics functioned well and local schools actually delivered quality education, as well as why the post office could be trusted to deliver the mail and how the tax office was able to raise revenue for government programs.
The social capital argument also pointed in the direction of increased attention to the quality of government services and their impact on the capacity of countries to develop both economically and democratically. Likewise, scholarship on emergent or renewed social movements and the mobilization of civil society around a set of concerns about political voice, democratic responsiveness, and local level problem-solving enhanced the importance of the ways in which social sector policies and programs affected the interaction of state and society.
The agendas of economic and political reformers also coincided with renewed interest in decentralization of government. Economists had few new arguments to support decentralizing the functions of government, since allocative efficiency and principal-agent solutions had long been held up as benefits of decentralized and socially responsive government. However, an important change occurred in the political assessments of the benefits of decentralization. During the 1960s and 1970s, Latin America had experienced many initiatives to decentralize governments to more regional and local levels. In the 1990s, however, reformist politicians often emerged as proponents of decentralization, desiring perhaps to shift the fiscal burden of providing social and other services to other levels of government but also to demonstrate the legitimacy and effectiveness of democratic government in responding to citizen demands.
Thus, from a variety of perspectives–growth and human capital, democracy and its consolidation, electoral calculations, social capital and good government, decentralization and legitimacy–many came to identify reform of the social sectors as necessary ingredients for achieving their goals. Reformism is not without its opponents, of course. Public sector unions and public sector bureaucracies may resist reform because they will lose power, access, jobs, and control if reforms in health, education, and pension systems are put into place. Populist politicians may oppose change because new and efficient systems will rob them of vitally important spoils to distribute and make it difficult to garner votes. Organized labor may protest the loss of its protected status. Opposition parties may welcome opportunities for charging government with unresponsiveness and any evidence of inefficiency in putting new programs into place.
Moreover, the future of social sector reforms will be deeply affected by the ability to deliver services that are administratively intense and that require on-going monitoring, supervision, and adjustment, even when contracted out to NGOs or the private sector. Reformers now face the challenge of putting administrative systems in place that will work reasonably well. They must figure out how to design human resource systems that incorporate appropriate initiatives for worker productivity and mechanisms that call forth norms of commitment, service, professionalism, and teamwork. They must invent organizational structures that are routinized, yet flexible enough to respond to a variety of circumstances, and design mechanisms that promote positive community or client participation and orientation. Numerous organizations, actors, and levels of government are generally involved in any reform effort. The kinds of changes required generally emerge piecemeal and over considerable time as learn-by-doing and iterative approaches are often needed to access alternative implementation strategies. Moreover, the benefits of changes in organizational design, human resource training and management, and altered rules of the game in these sectors do not usually produce clear results in the short term.
The challenges to social sector reform appear not only as issues of opposition and resistance from affected interests, not only as issues of design and incentives, but also as opportunities for bureaucratic resistance, sabotage, and leakage, and as the failure to mobilize and sustain political and bureaucratic support for change. Luckily, advocates of change have a growing array of experiences to draw on for insight into how the politics of change can be managed well. The current period has encouraged extraordinary innovation among those committed to the provision of more and better services in the social sectors. There have been both successes and failures among these initiatives. They offer a rich library of experience for those seeking to understand how positive changes in public policies and social services can be sustained over time.
Merilee S. Grindle is the Edward S. Mason Professor of International Development at the Kennedy School of Government and a Faculty Fellow at the Harvard Institute for International Development. She is a member of the DRCLAS Executive Committee and chairs the Center’s Research Committee.
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