 Thesis Appendices |
While the driving force behind the privatization process as a whole certainly can not be reduced simply to an interest group explanation, interest groups do help account for a good part of the variation and pattern in the Mexican and Argentine privatization records. Robert Dahl in the early 1950’s introduced a framework for evaluating this interest group theory argument in his A Preface to Democratic Theory. This initial work brought a flurry of critiques of pluralist idealism by John Gaventa (1980), Charles Lindblom (1982), and E. E. Schattschneider (1960) on the inherent advantage of some interests over others, and Mancur Olson (1982) and Russell Hardin (1982) on the difficulties inherent in collective action. These theorists provide a valuable framework on which to analyze the broad spectrum of societal forces the Mexican and Argentine governments had to deal with in making their privatization decisions. Within purely domestic politics Ramamurti (1996), Middlebrook (1991) and Teichman (1995) argue for a predominantly labor-led interest group role in determining government privatization decisions. This argument places the role of labor unions as interest groups politics first within a framework of pluralist theory, then into a broader view of Latin American political arrangements of the state and societal corporatism using Ruth and David Collier’s 1979 work on corporatism. Though Mexico and Argentina have considerably different backgrounds regarding regime stability, changes surrounding Carlos Menem’s ruling coalition in Argentina and the move away from charrissmo in Mexico have brought the two nations closer together in the problems faced with labor unions vis-à-vis privatization policy. After introducing and evaluating various indicators of union strength and an overview of privatization politics, this chapter will establish a comparative viewpoint within which to compare Mexican and Argentine politics and privatization policies in relation to interest group strength. Evaluating Pluralism and Corporatism Robert Dahl’s early work on pluralism begins with five major assumptions about the interaction between private interest and government representation of those interests. (Dahl 28) Pluralism assumes that 1) people know their interests, 2) people collectively organize to further their interests, 3) equal access to political institutions exists across groups, 4) the government represents those interests, and 5) the outcome of government action reflects the inputs of interests. Even were all these assumptions true in the Mexican and Argentine scenarios, government action would be greatly complicated by the divergence of interests among domestic actors and primarily international credit organizations. The very programs and state enterprises which provided employment and broad social subsidies to domestic groups were also the source of the huge budget deficits upon which lenders frowned. Beginning with an attack on the assumptions of pluralism, it is possible to envision the difficulties facing labor unions in opposing domestic reforms. First and foremost, an attack on Dahl’s assumption that groups truly know their own best interests helps to evaluate union reaction to reform. For example, labor leaders certainly had cause for opposing privatization of state owned industry. Chile’s privatization program brought about massive layoffs that by 1982 had trimmed the labor force of public enterprises significantly. (Petrazzini 1995: 349) When coupled with the economic crisis facing both Mexico and Argentina after 1982, labor opposition can easily be traced to a fear of losing the important benefits and public sector privileges that had been "gained from years of state welfare policies and clientelistic relations" with high-level political actors. (Petrazzini 1996: 353) Yet in the context of long-term welfare, many¾ including the Mexican president himself¾ would and did argue that privatization furthered the interests of labor through improving the health of the industry and aiding in economic growth. Though for many unions long-term welfare was not an important consideration, in some of the firms with stronger union concentration—including Telmex and ENTel—the primary unions were offered and accepted a long-term deal in exchange for an agreement for the privatization process. Dahl’s second assumption that people collectively organize to further their interests is best countered through the work of Mancur Olson. (Olson 24) In Olson’s critique, rational self-interested individuals will not act to achieve their common or group interests without the help of coercion some device to increase the overlap between individual and collective interest. E. E. Schattschneider agrees with this point but instead predicts its effects on a larger scale; the net outcome of this problem in collective organization is that poor and broad publics will remain unorganized and that latent interests will often not be represented. (Schattschneider 23) Collier and Collier’s 1979 analysis of Mexican and Argentine labor law demonstrates the role that mandatory membership in a given union played in helping labor organizations achieve greater organizational ability and collective action. The final three claims of pluralism¾ equal access to political institutions, government representation of those interests, and a government outcome that reflects interest inputs¾ can best be analyzed within the Latin American definition of corporatism. Collier and Collier (1979) disaggregate corporatism in an attempt to better understand the component parts of state-labor relations. Much of the earlier literature comes to define a corporatist relationship as one that includes: "1) state structuring of groups that produces a system of officially sanctioned, non-competitive, compulsory interest associations; 2) state subsidy of these groups; and 3) state-imposed constraints on demand-making, leadership, and internal governance." Corporatism is thus traditionally represented as a "non-pluralist system of group representation." (Collier and Collier 1979: 983) Collier and Collier take issue with the narrowness of this traditional representation, referring to the "striking diversity of power relationships and policy goals" that include many corporative patterns of state intervention. (968) These arrangements have been used in the past by political parties to win workers support nearly as often as to insulate labor associations from involvement as a means of restricting their political power. This is accomplished by considering both state and societal forms of corporatism as continuous rather than discrete variables. Collier and Collier’s model helps to establish the interplay between inducements and constraints¾ both are mechanisms that serve to influence behavior. Constraints are more formally thought of institutional factors that directly control labor organizations and labor leaders. Inducements are means by which elites "attempt to motivate organized labor to support the state, to cooperate with its goals, and to accept the constraints it imposes." (Collier and Collier 1979: 969) For instance, Gamson (1968) demonstrates how inducements involve the "application of advantages" to certain groups, yet by default these advantages equally serve as disadvantages, or ‘negative sanctions’ to other groups not receiving these benefits. In effect, even positive benefits have the net result of disadvantaging others while causing the group receiving the benefit to come to depend upon those benefits. In Mexico and Argentina this effect has been quite clear, often leading to state penetration of labor organizations. Mexico’s use of ‘official’ labor organizations such as the CTM has often forced smaller unions to meet certain formal requirements to maintain their positions of status. The net effect of rewards such as official recognition, compulsory membership, or state subsidy result in a union leadership more dependent upon the state than rank and file members for legitimacy and viability. (Collier and Collier 1979: 970) Collier and Collier shape their analysis of this system by analyzing labor law and its periods of change to predict the level of corporatism that exists in Mexico and Argentina. (Collier and Collier 1979: 971) Though this analysis comprises a vital portion of the labor strength argument across different union-state relations, the relevance of this study is weakened considerably by the fact that it was written in 1979—before much of the very change in state-labor relations which this thesis covers. However, it does provide a baseline from which the labor strength theory helps to provide a new estimate of corporatism in Mexico and Argentina. In Mexico, the first major labor law in 1931 placed considerable emphasis on inducements, allowing labor to become an important yet co-opted actor at many levels within the government. Collier and Collier document the relative stability of this dominant political coalition, reflected largely through the relatively minor changes in labor law over this time frame. The Argentine case is considerably more volatile, with frequent shifts "in the coalitional position of organized labor in Argentine politics." 1945 marked an important change in this pattern, with a shift to an extremely high level of inducements versus constraints as Perón worked to gain the support of the well-established and very autonomous labor movement. Since then, Collier and Collier document a circular pattern of change in law, as different governments followed and rejected provisions for constraints and inducements. (972) Looking across countries, Collier and Collier graphically analyze inducements plus constraints as an ‘over-all level of corporatism,’ while also differentiating countries by the relative balance of each input. (975) Appendix Tables 2.1 and 2.2 demonstrate how 1931 Mexico and 1945 Argentina¾ both years when major changes in labor law were enacted¾ match very closely in both overall levels of corporatism and in relative balance of constraints versus inducements. Of Argentina, Brazil, Chile, Colombia, Mexico, and Venezuela, Collier and Collier find that Argentina and Mexico are the most inducement-oriented group. For both, at the time of enactment of their labor laws, the task was to gain the support of an ‘already existing and relatively powerful labor movement.’ (976) Transfiguring this debate to the 1980’s and early 1990’s, the combination of inducements and constraints offered to labor unions is telling about the power relationship between state and labor union. Given this high inducement level in Mexico and Argentina, it is possible to estimate the level of compromises that were necessary in dealing with strong labor organizations at the time.. O’Donnell (1978) classifies Mexico¾ along with Brazil, Chile, and Uruguay, but not Argentina¾ as a ‘bureaucratic-authoritarian’ state, notwithstanding the unique pattern of ‘over-all corporatism’ documented by Collier and Collier. (O’Donnell 28) This ‘bureaucratic-authoritarian’ state according to most theorists includes the ‘political and economic exclusion of organized labor’ through the exercise of strong control over both the organizations and income of this sector. This thesis argues exactly the opposite; despite the politics of austerity and reform after 1982, organized labor in Mexico has maintained its unique position more so than in Argentina following the election of Carlos Menem in 1989. Collier and Collier place both Mexico and Argentina close to the middle of this state-societal corporatism continuum, yet along lines of well-institutionalized systems of control consider Mexico and Brazil more powerful and Argentina and Chile relatively weak. (Collier and Collier 1979: 980) Tentatively extending this argument into the late 1980’s and early 1990’s pushes both Mexico and Argentina toward more constraints and fewer inducements to labor organizations, but this thesis argues extends post-1989 Argentina somewhat beyond that of Mexico in this category. Appendix chart 2.1 shows this combination of inducements and constraints in each country, as well as the 1990 estimate of state corporatism in Mexico and Argentina. These differences in corporatism level will play an important role in the impact of the labor-strength theory on government privatization policy. Means and Methods of Measuring Labor Union Strength A ‘strong’ labor union would best be able to resist government demands to privatize and/or modernize its industry, and an analysis of this apparent strength comprises a significant portion of the argument in this thesis. Yet the measurement of strength in itself is open to considerable controversy, and the choice of indicators used greatly impact the direction and divergence of the trends regarding union strength over the period of the 1980’s and 1990’s and across industries in Mexico and Argentina. At first glance, it would appear that the economic crises of the 1980’s had more or less debilitated labor unions’ long-term bargaining strength. Visser’s 1992 work documenting the strength of union movements in capitalist democracies does note a world-wide trend of declining membership, often leaving firms "on the defensive in the face of sustained attacks by firms [and the government] on their bargaining rights. (Visser 1992: 132) Beyond just membership levels, centralization of wage bargaining and the level of unity across industries plays an enormous role in exerting a practical demonstration of this strength. On both these issues, central organizations have lost bargaining authority as a result of greater decentralization through the privatization process. (Katz 1993). The most obvious and widely used measure of union strength is that of union density—defined by Golden and Wallerstein (1995) as the "proportion of eligible employees who become union members." Union density is vital for labor to attract support from its constituents and makes it possible to better mobilize the labor force for strikes or other industrial action. One of the techniques that Golden and Wallerstein use to improve upon the union density estimation of strength is by combining it with an assumption of union bargaining coverage. Using work by Franz Traxler (1994) in analyzing collective bargaining coverage rates among OECD countries (but not Mexico or Argentina), union coverage is used to refer to the "proportion of employees who are covered by collectively-bargained contracts." (Traxler 4)It is important to realize that union coverage alone means little in this argument; other than measuring the extent to which unions affect wage levels across industries, it only weakly predicts other aspects of labor mobilizational ability. Yet taken with density, Golden and Wallerstein argue that it represents the best reflection of labor movement strength. (Golden and Wallerstein 1995: 6) However, information on union bargaining coverage is not readily available for the cases considered in this thesis. Union concentration, which refers to internal unity and the degree by which single organizations of workers organize potential constituents, does serve as a good approximation of Golden Wallerstein’s coverage model. (7) Union concentration entails internal cohesion as well as the number of union confederations, the national affiliates associated with each, the percentage of all union members belonging to the national confederation, and the share of each confederation’s membership belonging to the largest number of affiliates. This thesis will define union concentration as the percentage of unionized workers in the largest cohesive labor union in a given industry. Together with union density, this model will attempt to closely approximate the strength measurements Golden and Wallerstein’s density/coverage model. A Practical Application of Corporatist Theory Perhaps the most distinguishing feature of the Mexican state is its corporatist arrangement and powerful patron-client networks that use the PRI to organize and absorb social demands. The PRI (Partido Revolucionario Institucional) is much less a party in its own right than an appendage of the state itself, whose main function is to "channel and organize the complex network of clientelistic relations that dominates Mexican politics." (Petrazzini 1995: 105) Cornelius and Craig (1991) point out that this system gives the PRI the role as buffer "between civil society and the central administration, granting little or no room for popular participation in the decision making process." (Cornelius 1989: 27) Despite all these arguments against pluralism in the Mexican corporatist network, this thesis argues that a corporatist network is in practice a two-way bargain—the state takes control of ‘legitimate’ social channels which organize but equally represent the different sectors of society. This tacit agreement of representation entails a responsibility toward domestic interest groups—and specifically labor unions. While the Mexican government may have had greater control over its public enterprise unions than Argentina, this control likewise translated into a greater role for the union strength argument in the Mexican privatization process. Yet as the austerity and privatization programs following the 1982 debt crisis were implemented, Mexico’s traditional corporatist relationship began to collapse. One of Carlos Salinas de Gortari’s first moves before privatizing any of the large state-owned enterprises was a very carefully planned mobilization of this PRI-based buffer against domestic opposition. Labor, more than any other domestic interest group, was both the most mobilized and the most affected by the privatization process. Salinas took these considerations into account early in his term, when he arrested Joaquín Hernández Galicia—the head of the powerful Mexican Petroleum Workers’ Union (STPRM)—and effectively broke its considerable autonomy. The government’s post-1982 strategy was careful to avoid the creation of linkages of union organizations across state owned enterprises, keeping attempts to defy wage and privatization policy as isolated as possible and using the CTM as an intermediary for this goal. (Alvarez Béjar 46) Unlike Mexico’s PRI dominated state, the historical absence of a dominant coalition in Argentina has produced a somewhat different set of state-society relations. Despite the Collier’s analysis of corporatism which argues for a convergence between Mexico and Argentina, even under Menem the same levels of ‘orderly hierarchical relations’ which exist in Mexico were not present in the Argentine state. (Petrazzini 1995: 51) A strong-arm approach with Congress and a huge electoral majority gave Menem control over the Peronist coalition and the ability to bypass labor opposition in much the same way that the PRI and the CTM afforded the Mexican government, yet by a somewhat different process. (Middlebrook 1991: 85) Table 2.1 in the appendix shows Collier and Collier’s 1979 estimate of Mexican and Argentine state corporatism. Added to the chart is an estimate by this author about the role of corporatism in 1990; for Argentina it involves a considerably higher level of constraints and fewer inducements than in Mexico. Accordingly, as the main resistance to the privatization program in both states were labor unions, the labor-strength variation argument played a smaller role in Argentina exactly because it had little control over the labor unions to begin with—regardless of union concentration. Conclusion Labor unions, as interest groups within the plural and corporatist constraints of the Mexican and Argentine states, played an important role in affecting privatization policy and variation in the divestiture process. Though some industries were likely more influenced by the labor union strength theory than others, on the whole labor unions help to account for a key variable missing from conventional privatization explanations emphasizing solely the debt imperative or modernization imperative arguments. The model of state corporatism in Mexico and Argentina after a decade of austerity and privatization policies is important to evaluate the role of labor strength—both within a given corporatist network using union concentration as the independent variable, and across different corporatist systems (Mexico and Argentina) holding the union concentration variable basically constant. Both tests provide an important contribution toward better understanding the role of labor union strength as explaining variation behind the privatization decision of Teléfonos de México and for industries within Mexico and Argentina. |