Progressive movements divide into two types. On the one hand, there are leftist parties with a moderate strategy that aim, or at least resign themselves, to implement redistributive programs with the acquiescence of the elites. On the other hand, we find parties that believe that only unrelenting confrontation of existing power structures and inherited privilege will bring the desired results. The division between class compromise and class struggle is fundamental.

The moderate social-democratic route is the preponderant path, especially in contemporary Latin America. Prominent cases include Brazil since 2006, Chile since 2000, Uruguay since 2004, CostaRica from the 1950s until its slide into social liberalism in the 1990s, Mauritius since the early 1970s, and two states of India – Kerala and West Bengal – that had initially pursued a radical strategy led by the Communist Party of India (Marxist) but in the late 1980s subsided into a moderate phase to garner middle-class votes.

The moderate strategy is progressive in that it avoids populism and the full commodification of labor, land and money, while dealing somewhat effectively with the challenges of poverty and inequality in the context of restrictive neoliberal globalization. Proponents have found a way, though only provisionally, to balance the imperatives of redistribution/equity and accumulation/efficiency in a capitalist economy.

They achieve this feat by marrying elements of macroeconomic orthodoxy to a pro-active state, incremental social citizenship and modest participatory institutions. On the one hand, the government attunes monetary and fiscal policy to keeping inflation low and the external debt minimal, and pursues a fairly open economy through trade liberalization and acceptance of foreign investment. To this extent the strategy accords with the Washington Consensus. On the other hand, and contrary to the Washington Consensus, governments promote redistribution from growth via a directive neo-developmentalism, with the aim of augmenting state revenues, “good” jobs and significantly higher minimum wages. Expanded public revenues and new taxes are used, among other things, to extend social citizenship by means of (usually phased in) universal social protection, targeted cash transfers (such as the famous Bolsa Família in Brazil) and good public services, especially education and health care. Proponents, in addition, promise to bolster democratic participation, both as an end in itself and as a means of buttressing the state’s focus on reducing poverty and inequality. Anxious, however, to allay populist pressures that would undercut their delicate class compromises and pragmatic alliances in the legislature, leftist governments generally expand only consultations at the national level and consign participatory decision-making to the local level. Hence, moderate social democrats undertake a hybrid approach, one that is neither fully neoliberal nor consistent with traditional notions of progressive politics.

State developmentalism, less apparent than the orthodox policies, deserves further attention. This approach lies between free-market orthodoxy, where the ideal is the self-regulating market, and the developmental state, where the state governs the market even to the extent of picking and promoting “winners.” During the hey-day of import-substitution industrialization from the 1950s to the 1970s, many states played a highly directive role in the economies of the Global South. Governments involved themselves not only in extensive regulation but also in building a large sector of state-owned enterprises in utilities, transport, banking and sometimes manufacturing and agricultural production as well. The debt crisis and the consequent empowerment of the newly neoliberal World Bank and IMF rolled back interventionist states outside East Asia in the name of what became known as the Washington Consensus. However, in the 2000s, “industrial policy” (that is, some degree of state direction) experienced a renaissance spurred by disillusionment with the efficacy of neoliberal remedies in the 1990s and admiration for the achievements of the developmental states of East Asia.

Yet the developmental state requires very unusual conditions. They include political and bureaucratic elites with a developmental mission; an efficient, coherent and skilled bureaucratic apparatus; a robust tax base to support a strong state; a willingness to use force against organized workers; a pliable business class; and, as Peter Evans demonstrates in his classic Embedded Autonomy (1995), a balance between the bureaucracy’s autonomy and its embeddedness in society that imparts coherence and effectiveness to the state’s industrial plan. Very few countries in the Global South exhibit all these conditions. Commonly, states lack bureaucratic effectiveness, or the necessary degree of autonomy, or a strong tax base (owing to widespread tax evasion). Furthermore, no genuine democratic leftist government could adopt the developmental state’s authoritarian and labor-repressive approach. To be true to itself, it would need to construct a democratic developmental state, a requirement introducing further complexity into an already ambitious agenda.

But progressive governments can succeed without this rare species: “good-enough” states can play a developmental role. If social-democratic governments can rarely be effective in leading the market, they can at least prod it to conform to their inclusionary socio-economic agenda. Prodding rarely involves “picking winners.” Neo-developmentalism instead takes advantage of the beneficial legacies of democratic reformism – advanced human capital, good social and physical infrastructure, stable and relatively effective government and industrial relations – to attract foreign investment and encourage local producers to fill lucrative niches in the global economy. By orchestrating tax incentives, providing the requisite infrastructure and channeling credit and other assistance to private firms and joint ventures, developmentally oriented states aim to stimulate innovation and competitiveness in select high value-added exports.

Clearly, the moderate social-democratic strategy is complex, requiring the deft touch of a skilled politician. In my book, I elaborate this view and provide illustrations, especially from contemporary Brazil. Paradoxically, even when, as in Brazil since 2004, the government succeeds in reducing poverty by two-thirds, decreasing income inequality and creating many new jobs , it has faced angry protests since a downturn began in 2013. Brazil achieved, according to an IMF report,  the world’s fastest rate of reduction in unemployment between 2008 and 2012, together with an increase in average real wages of 3.2 percent in the latter year. The country had experienced, “a remarkable social transformation”.  Yet inept responses by President Dilma,Rousseff to the ensuing  recession, together with excessive public expenditures on facilities for the  the World Cup and Olympic Games and resurgent corruption on the part of all parties in Congress, led to a marked decline in popular support for the Workers Party.

The Brazilian protests, together with the earlier ones in Chile, illustrate the limitations of moderate social democracy. Despite its achievements, the party must deal with constituencies that expect more. Yet the progressive government is highly constrained. Private media empires dwell on every supposed deficiency of the Left to stir up popular opposition. The left, broadly defined, usually holds a minority of legislative seats, requiring the government to make seamy concessions to opportunistic minor parties to pass legislation. All parties, including the PT, need campaign funds to fight elections, but that usually means cultivating wealthy individuals and setting up kick-back schemes.

In sum,, moderate social democrats may succeed in balancing conflicting imperatives only as long as growth continues. The commodity boom through much of the period 2003-12 served the left well. But when growth recedes, the leadership loses its ability to promote both accumulation and redistribution (or, rather, redistribution from accumulation). The moderate left’s choices may then become stark: to seize the accumulation imperative in reassuring investors, thus reverting to neoliberalism, or to embrace asset as well as income redistribution, thus effectively moving to class confrontation. Alternatively, leftist governments will just stumble along, as in Brazil, desperately trying to satisfy all major groups, and failing.

by