The aforementioned political scientist Guillermo O’Donnell not only coined the term bureaucratic authoritarian, but also put forth one of the most important economic arguments as to why these regimes appeared. Within his work Modernization and Bureaucratic Authoritarianism, he stated that late industrializing nations were intrinsically different then those that industrialized countries earlier. O’Donnell also attempted to explain why there was a reversal of democracy in Latin America as opposed to the increase in democracy for early developing nations, such as in the United States. His general belief was that balance of budget crisis, fiscal deficit, and inflation were consequences of the various stages of late industrialization. O’Donnell believed that industrialization in late developing dependent countries began at an easy stage, during which they created textiles, clothes, or food. There was not much capital needed for this stage, and countries were be able to industrialize rapidly while maintaining democracy and strong unions. However, once a country “exhausts” this easy stage by fulfilling consumer demand, they will continue to the next stage of producing consumer durables, such as cars, or capital goods. These larger projects need more capital, specifically from foreign investors. Other countries, such as the United States, would not want to invest in a country that was subject to workers approval, ridden with rising wages, powerful unions, and strikes. In order to create a more attractive, stable environment for investment, there was a need to repress workers and reverse previous economic policies. Although political theory typically stated that highly educated people were in favor of democracy, there was perceived support from technocrats in favor of authoritarian regimes. These groups advocated for reversal of democratic practices, such as the “Chicago Boys” who studied at the University of Chicago and returned to run Chilean economy. Many had been trained in different countries such as the United States, where they had learned liberal economic policies. Upon their return, they were frustrated with the inefficiency of Latin American governments, and wanted to stop politicians from making decisions based on the workers. Such decisions were said to be corruption of the government, and that policies should be chosen by economic benefit. As the early stage of industrialization had activated many workers, previously rural populations were now able to move to urban areas to work in factories. They had unionized during the early stage of industrialization, and were reaping the benefits of high wages. No democratic government would then be able to carry out the repressive policies needed to move on to the next stage of industrialization, as they would surely lose their voter base and, consequently, their power. In contrast to this economic explanation, there is a policy centered argument which states that the government’s choice for implementing import substitution industrialization policies to foster industrialization were the reason for economic crisis, and subsequent bureaucratic authoritarian interventions. Policy centered arguments did not support the idea of dependency, or the various stages of industrialization as the cause of bureaucratic authoritarian regimes. The theory of early stage
The aforementioned political scientist Guillermo O’Donnell not only coined the term bureaucratic authoritarian, but also put forth one of the most important economic arguments as to why these regimes appeared. Within his work Modernization and Bureaucratic Authoritarianism, he stated that late industrializing nations were intrinsically different then those that industrialized countries earlier. O’Donnell also attempted to explain why there was a reversal of democracy in Latin America as opposed to the increase in democracy for early developing nations, such as in the United States. His general belief was that balance of budget crisis, fiscal deficit, and inflation were consequences of the various stages of late industrialization. O’Donnell believed that industrialization in late developing dependent countries began at an easy stage, during which they created textiles, clothes, or food. There was not much capital needed for this stage, and countries were be able to industrialize rapidly while maintaining democracy and strong unions. However, once a country “exhausts” this easy stage by fulfilling consumer demand, they will continue to the next stage of producing consumer durables, such as cars, or capital goods. These larger projects need more capital, specifically from foreign investors. Other countries, such as the United States, would not want to invest in a country that was subject to workers approval, ridden with rising wages, powerful unions, and strikes. In order to create a more attractive, stable environment for investment, there was a need to repress workers and reverse previous economic policies. Although political theory typically stated that highly educated people were in favor of democracy, there was perceived support from technocrats in favor of authoritarian regimes. These groups advocated for reversal of democratic practices, such as the “Chicago Boys” who studied at the University of Chicago and returned to run Chilean economy. Many had been trained in different countries such as the United States, where they had learned liberal economic policies. Upon their return, they were frustrated with the inefficiency of Latin American governments, and wanted to stop politicians from making decisions based on the workers. Such decisions were said to be corruption of the government, and that policies should be chosen by economic benefit. As the early stage of industrialization had activated many workers, previously rural populations were now able to move to urban areas to work in factories. They had unionized during the early stage of industrialization, and were reaping the benefits of high wages. No democratic government would then be able to carry out the repressive policies needed to move on to the next stage of industrialization, as they would surely lose their voter base and, consequently, their power. In contrast to this economic explanation, there is a policy centered argument which states that the government’s choice for implementing import substitution industrialization policies to foster industrialization were the reason for economic crisis, and subsequent bureaucratic authoritarian interventions. Policy centered arguments did not support the idea of dependency, or the various stages of industrialization as the cause of bureaucratic authoritarian regimes. The theory of early stage