The Turning Tide
Welfare Policy and the State in Contemporary Latin America
November 3, 2025
SOMETHING unexpected happened in Latin America at the beginning of the twenty-first century: as the world saw income inequalities increase unabatedly, the continent saw them fall. After decades of yawning inequalities, persistent poverty, and exclusion in the infamously “most unequal region in the world,” things began to move in the right direction. Many attributed these changes to the wave of center-left governments that took office in many of these countries, the Pink Tide: Hugo Chávez in Venezuela, Néstor Kirchner in Argentina, Lula Da Silva in Brazil, Evo Morales in Bolivia, and more.
Most of these governments did, in fact, put in place social policy reforms that provided a modest but much needed income for the poor, the unemployed, and retirees. Academics, left organizers, and many social and left organizations celebrated this shift in politics away from crude neoliberalism. They saw in these projects an attempt to break with the past, a step toward some form of emancipation.
As left intellectuals, activists, and political organizations joined these projects and took up positions in their administrations, the universe of working-class, critical voices organizing independently of the state rapidly dwindled. Pink tide governments were able to coopt much of the Left and social movements, with notable and noteworthy exceptions. Yet a careful examination of the welfare policies implemented by these regimes yields a sobering picture.
Pink tide governments were able to coopt much of the Left and social movements, with notable and noteworthy exceptions.
Far from making progress toward universalist social policy—or, in other words, toward universal access to health, education, and income replacement programs as a social right—these political forces chose the path of least resistance from capital by creating new layers of programs that operated like patches, secondary safety nets, for those previously excluded from social insurance benefits. The result was the disillusionment with the center-left perspective and further fragmentation of the working class.
This essay discusses the actual modest changes these regimes made in Latin American social welfare policies. The roots of these limits are ultimately strategic—using the existing capitalist state institutions to redress class inequality—and have important implications for the Left internationally.
Welfare in Latin America at the End of the Twentieth Century
Some Latin American countries developed relatively advanced welfare structures in the mid-twentieth century. They did so through a Bismarckian model of occupation-based social insurance schemes, an effort usually spearheaded by populist leaders like Argentina’s Juan Perón or Brazil’s Getúlio Vargas as an attempt to coopt key sectors of the working class in a top-down fashion. Consequently, social policy in Latin America was heavily stratified in most cases with only formally employed workers qualifying for benefits.
It is worth noting that the development of welfare policy coincided with a period of rapid industrial development and protectionist economic policy known as Import Substitution Industrialization (ISI). The fact that domestic firms were largely shielded from competition with foreign producers made it easier for the national bourgeoisie to acquiesce to this social policy expansion: business owners could pass on the increased costs of payroll taxes for health insurance and pension contributions directly to consumers.
An inevitable problem of this type of regime as applied in Latin America is that the high levels of informal labor, endemic to the region, left a large sector of the working class excluded from social rights. Informal workers by and large have no access to health insurance or contributory pensions.
Nevertheless, by the end of the ISI period (in the 1970s), a handful of countries had relatively generous welfare regimes in place: Argentina, Brazil, Chile, Costa Rica, and Uruguay.1Gibrán Cruz-Martínez, “Welfare State Development in Latin America and the Caribbean (1970s–2000s): Multidimensional Welfare Index, Its Methodology and Results,” Social Indicators Research 119, no.3, 1295–317; Evelyne Huber and John D. Stephens, Democracy and the Left: Social Policy and Inequality in Latin America (Chicago, London: University of Chicago Press, 2012), 77–79; Alex Segura-Ubiergo, The Political Economy of the Welfare State in Latin America: Globalization, Democracy, and Development (Cambridge: Cambridge University Press, 2007), 28–31. In most other countries, state benefits remained limited to a fraction of the urban working class.2Fernando Filgueira, “Welfare and Democracy in Latin America: The Development, Crises and Aftermath of Universal, Dual and Exclusionary Social States,” United Nations Research Institute for Social Development, May 2005. The rise of global neoliberalism in the 1990s represented a shift in the pattern of capitalist accumulation, transforming the class structure and sapping the strength of the working class.
Pro-market social policies eroded the conservative/corporatist welfare regimes, adding features typical of a liberal model.3Gøsta Esping-Andersen, The Three Worlds of Welfare Capitalism (Cambridge: Polity Press, 1990). Following the recommendations of International Financial Institutions, the reforms followed a distinct model: federal governments defunded public services, boosted privatization of entire sectors, and unloaded health and education systems onto regional governments without the necessary transfer of funding, causing financial shortfalls for local departments trying to meet the education and healthcare needs of their population.
Alongside these changes, “means-tested” social assistance programs targeted to the poor became a new focus of social policy. These kinds of programs are preferred by liberal economists and business actors because they interfere minimally with the market: they provide a service to sections of the working class that are otherwise unable to afford it, that is, they already are outside the market. This is why liberal models of welfare typically include targeted programs for the poor alongside a strong private sector.
The changes were uneven throughout the region. Following the military coup against Allende, Chile was the first country to implement these policies and the one where the transformation was deepest. Engineered by a group of University of Chicago-trained economists, the Chilean case offered a blueprint for neoliberal policies that would be later exported, with the official support of the IMF, to other countries in the region and the world (notably, though by no means exclusively, to Eastern Europe after the fall of the Soviet Union).
The role played by the military government in Chile was not an exception: across South America, military coups toppled democratically elected governments with the purpose of stemming left insurgent movements, repressing militant labor activists, and imposing market discipline. These coups, together known as Operation Condor, were supported by the CIA.
Deindustrialization, austerity, and the dismantling of labor rights led to a decline in the size and strength of organized labor.4Viviana Patroni, “Uncertain Transitions: Labor and the Politics of Reform in Argentina,” in Labor Politics in Latin America: Democracy and Worker Organization in the Neoliberal Era, edited by Paul Posner, Viviana Patroni and Jean François Mayer (Gainesville: University Press of Florida, 2018), 102–34. State repression and high unemployment further undermined the structural and organizational power of unions. Now facing a weakened, disorganized labor movement and an all-but-eradicated radical left, neoliberal governments found a clear path to deepening market-friendly policies.
In many instances, labor-based political parties were the ones passing antilabor policies, such as the case of Peronist leader Carlos Menem in Argentina.5Maria Victoria Murillo, Labor Unions, Partisan Coalitions, and Market Reforms in Latin America (Cambridge: Cambridge University Press, 2001). The 1980s and ’90s saw a particular trend in Latin American countries: the return of liberal democracy was not accompanied by an expansion of social rights. In fact, inequalities continued to increase in this period. As a result, growing inequalities and social exclusion generated a volatile political environment punctuated by outbursts of mass protests.
Toward the end of the twentieth century and in the wake of the new millennium, a wave of uprisings swept the region, toppling governments in some countries—for example, in Argentina, Bolivia, and Ecuador—and causing unprecedented disruption in many others. This was an expression of profound discontent with neoliberal policies and a strong popular demand for social policy expansion.
The Pink Tide Welfare Expansion, 2000 to 2020
The arrival of left-of-center parties to government in many countries after the year 2000—the so-called Pink Tide—was received with widespread enthusiasm and interpreted by many scholars as the best chance to overturn neoliberalism and deliver universal welfare policies. The social policy expansion, however, was not exclusive to left-leaning governments. Most countries in Latin America increased coverage in social protection, regardless of the political ideology of the incumbent party.6Tasha Fairfield and Candelaria Garay, “Redistribution Under the Right in Latin America: Electoral Competition and Organized Actors in Policymaking,” Comparative Political Studies 50, no. 14 (2017): 1871–906.
Conditional cash transfers (CCTs) were one of the preferred policy tools to provide economic relief to the poor, while noncontributory pensions (NCPs) provided, in several countries, a modest yet steady income to increasing numbers of people over retirement age without access to contributory pensions.7“Contributory” pensions are financed by employed workers and their employers and generally provide more generous pensions than “non-contributory” pensions, provided by the state to “informal workers.” The number of CCT beneficiaries for the seventeen non-Caribbean Latin American countries, for instance, peaked at 160 million in 2014. Similarly, by the mid-2010s, NCPs covered close to 30 percent of the elderly in the region.8Juan Cruz Ferre, “Social Policy Expansion and Segmentation in the First Two Decades of the 21st Century in Latin America,” International Journal of Social Welfare 32, no. 4 (2023), 486–505.
These changes led many left organizations and activists to lend support to Pink Tide governments, and it led many scholars to extoll these policy transformations, labeling them as “universalist” reforms, or social policy based on “human rights.”9See, for example, Jean Grugel and Pia Riggirozzi, “New Directions in Welfare: Rights-Based Social Policies in Post-Neoliberal Latin America,” Third World Quarterly 39, no. 3 (2018): 527–43; José Antonio Ocampo and Natalie Gómez-Arteaga, “Social Protection Systems in Latin America : An Assessment,” International Labor Organization, ILO Working Papers, 2016; Jennifer Pribble, Welfare and Party Politics in Latin America (New York: Cambridge University Press, 2013), 26. What these assessments missed, or obfuscated, is that new welfare benefits were not given as universal social rights, but as means-tested efforts targeted to assist the most economically marginalized.
The expansion of coverage, thus, did not bring in new beneficiaries to the already existing social policy schemes. The informal working class and poor were incorporated into a separate social protection network. In most countries, two- or three-tier pension systems emerged, where NPCs were layered onto already existing pension schemes: both pay as you go publicly run pensions and private individual capitalization accounts.
At the same time, the fragmentation of social policy in healthcare and pensions, characteristic of corporatist welfare models and widespread in Latin America at the beginning of the century, remained untouched. The addition of a social assistance tier for pensions and as income replacement for the poor and unemployed only added another layer of segmentation to welfare regimes.
Importantly, this fragmentation not only precludes, or severely undermines, the possibility of delivering equitable social benefits in the present, but it also blocks the path toward universalism in the long run. Once different constituencies are created, one with “contributory” (read, deserving) benefits, the other with targeted social assistance programs, divisions within the working class are deepened, and the defense of their benefits run through parallel courses.
In other words, the creation of separate welfare schemes for different groups of the population drives a wedge within the working class and represents an obstacle for the equalization of benefits in the future. Finally, the widespread implementation of NCPs and CCTs marks a shift in the region toward a heavier reliance on means-tested programs, a feature of liberal welfare policy, as discussed above.
This increased fragmentation in the area of transfers was accompanied by a growing weight of private providers in health, education, and pensions. This is also a typical feature of a liberal welfare regime. A greater dominance of market options means greater inequities, because the market allocation of services necessarily implies differences in quality according to ability to pay.
It creates a “dual” welfare regime, in which higher income families shop for high quality education and health services in the market, whereas a public, typically low quality service is offered to lower income populations. As in the case of other sources of fragmentation, this dualism represents an important obstacle for equalizing social services in the future: if middle-income families rely on private services, they are not invested in defending or fighting for appropriate funding for high quality public education or healthcare.
This is a puzzle for those who have interpreted these political projects as an effort to tame the markets and deliver equitable social benefits.
The fact that private provision steadily increased in countries governed by center-left (Pink Tide) governments represents a puzzle for those who have interpreted these political projects as an effort to tame the markets and deliver equitable social benefits. It is important to highlight this source of inequity in social policy, as numerous policy experts—including some affiliated with CEPAL—have, intentionally or not, supported reforms that reinforce this dualization.10Founded in 1948, CEPAL is the United Nation’s Economic Commission for Latin America and the Caribbean (in English, ECLAC). It is one of the main sources of data for Latin America and a powerful thinktank for progressive economic and social policy.
A clear example is the group of scholars promoting the idea of “basic universalism” or advocating for a minimal “social protection floor.”11See, for example, Fernando Filgueira et al, “Universalismo básico: una alternativa posible y necesaria para mejorar las condiciones de vida,” in Universalismo básico: una nueva política social para América Latina, edited by Carlos Gerardo Molina (Washington: Editorial Planeta Mexicana, 2006), 19–58; or Evelyne Huber and John D. Stephens, Democracy and the Left: Social Policy and Inequality in Latin America (Chicago: University of Chicago Press, 2012), 257–66, advocating for basic universalism; or International Labor Organization, “Recommendation R202—Social Protection Floors Recommendation” (Geneva: International Labor Organization, 2012), advocating for a social protection floor. Although these proposals emphasize the state’s duty to guarantee a basic level of social rights for all, their limited scope often translates into underfunded, low quality public services and minimal cash transfers, while at the same time higher quality alternatives remain accessible to those who can afford them.
In sum, despite improvements in inclusion (in the number of beneficiaries among the eligible population), inequities in social policy increased across the board in the period spanning from 2002 to 2017. Part of this increase was a result of growing privatization, but the persistent gap in social benefits between formal and informal workers, and the creation of a separate layer of social programs for them, is another major source of inequalities in the region.12Juan Cruz Ferre, Political Economy of Welfare in Latin America: Universalism Deferred (Cheltenham: Edward Elgar Publishing, forthcoming).
The Exceptions: Argentina’s Pension Reform, Uruguay’s Healthcare Reform
Most countries did not make significant strides toward universal welfare regimes in early twenty-first century Latin America. The trend, as explained above, is one of growing segmentation in social policy. There are a few notable exceptions to this increase in inequities. Even though no country improved this measure overall, some countries significantly curbed inequities in specific policy areas.
One example is Argentina’s 2008 pension reform. Another one is Uruguay’s healthcare reform of 2006. While in both cases the reform did not bring about universalism, they stand out in that they reduced inequities. The two cases have in common the fact that the countries had recently undergone a crisis of legitimacy, and their working classes enjoyed a relatively high level of organization and strength outside the existing state institutions. Let us look at these cases more closely.
Argentina has historically had one of the strongest labor movements in Latin America. A product of the country’s rapid industrialization and heavily influenced by communist and anarchist labor militants who immigrated from southern and eastern Europe, Argentina’s workers movement has boasted extraordinary militancy since the early twentieth century.
At the beginning of the twenty-first century, Argentina suffered one of the deepest economic and political crises of its history. Against the backdrop of a protracted economic recession, a popular revolt spread across the country beginning on December 19, 2001. Lootings, roadblocks, and clashes with the police multiplied, and the most popular chant on the streets was a sweeping indictment of all political parties: “Que se vayan todos” (“Everyone must go”). That year alone, there were six general strikes.
This is not a minor detail: organized labor remained a powerful actor in national politics, even if the national leadership would typically do everything in its power to ensure the passivity and demobilization of the rank-and-file. Following the revolt, popular assemblies sprang up in Buenos Aires and other major cities.
The resulting crisis of legitimacy of the state would condition the political life of the country over the following years. The interim presidency of Eduardo Duhalde launched massive relief programs for the poor and partially stabilized the economy. But the underlying weakness of the regime soon resurfaced after police repression took the lives of two young social activists, forcing Duhalde to call elections.
It was in this context that Néstor Kirchner became president in 2003. Confronted by a mobilized people that vociferously rejected the neoliberal status quo, Kirchner, and later his wife Cristina Fernández de Kirchner, were tasked with the duty of relegitimizing the state and striking a new social contract with vast swaths of socially and economically disenfranchised people. The Kirchners engaged in expansive social policy, granting relief to the unemployed through conditional cash transfers (CCTs) and a special plan for retirees without access to pensions, among a host of other popular economic policies.
Toward the late 2000s, however, their governing coalition lost steam. Then, in October 2008, President Cristina Fernández de Kirchner took the country by surprise when she announced the nationalization of private pension funds. The funds, which amounted to $7 billion, would be transferred to the publicly run social security system. To understand this decision, however, we need to grasp the historic and political context.
The region was reeling after the 2007 global financial crisis, and the Argentinian economy was starting to falter, with rising poverty and unemployment. In addition, there was increasing discontent with certain antidemocratic measures the Kirchner administrations had taken; chief among them was the intervention of the national institute of statistics and census in an attempt to manufacture figures on inflation and other economic indicators.
In this context, the government tried to increase taxes on agricultural exports in early 2008, but a coalition of agribusiness corporations, large landowners, and small farmers formed a formidable resistance and ultimately forced the government to backtrack. This resulted in a major political defeat for the ruling coalition and a significant loss of government revenue.
According to a number of journalists and scholars, the government was attempting to tap into the pension funds to meet foreign debt payments.13See, for example, Martín Kanenguiser, “Usarán el dinero para pagar la deuda,” La Nación, October 21, 2008; Helen Popper, “Argentine Senate Approves Pensions Takeover Law,” Reuters, November 21, 2008; or “Cómo el Gobierno provocó la caída de las AFJP,” LaPolíticaOnline, October 21, 2008. In fact, in a public speech during the conflict with agricultural producers, Néstor Kirchner asked rhetorically: “If taxes on exports are suspended, how are we going to pay for health, hospitals, and the Argentinians’ foreign obligations?”14“Sin retenciones, ¿cómo vamos a pagar las obligaciones externas,” La Nación, July 4, 2008.
However, this may be too narrow of an interpretation. There is no doubt that the need for fresh funds was an incentive for the Kirchners, and not only to pay the foreign debt. The government took money from the replenished social security funds for diverse purposes, including paying for CCTs, a central piece in the efforts to demobilize and coopt the piquetero organizations of the unemployed and other working-class movements.15Alberto Bonnet, La Insurrección Como Restauración: El Kirchnerismo 2002–2015 (Buenos Aires: Prometeo Libros, 2015), 101; Pablo Gerchunoff and Lucas Llach, El Ciclo de La Ilusión y El Desencanto: Políticas Económicas Argentinas de 1880 a Nuestros Días (Buenos Aires: Crítica, 2018), ch. 11.
The nationalization of pensions was not an isolated policy. In the context of a dwindling economy, rising poverty, and unemployment, growing discontent with some antidemocratic measures by the government, and after the high-pitched conflict with agricultural producers, prospects for the incumbent party in the 2009 legislative elections were grim. The Kirchners made a concerted, multipronged effort to rebuild support for their coalition, including the nationalization of flagship airlines, Aerolíneas Argentinas and Austral Líneas Aéreas, the rollout of their signature CCT programs (the Asignación Universal por Hijo), a bill to “democratize” mass media, the legalization of same-sex marriage, and more.
It is within this wide-ranging endeavor for recovering hegemony that we should understand the nationalization of private pensions. This policy provided the funds to bankroll inclusionary social policies while at the same time, it offered Kirchnerism a radical veneer that was instrumental in reconnecting with its constituency. It is impossible to understand this radical measure without taking into account the commitments for progressive reform the coalition made in the early 2000s. As Fernando Rosso asserts, “Kirchnerism worked ‘its whole life’ to avoid a new [crisis like the one in] 2001.”16Fernando Rosso, La hegemonía imposible: Veinte años de disputas políticas en el país del empate. Del 2001 a Alberto Fernández (Buenos Aires: Capital Intelectual, 2022).
Uruguay’s 2007 healthcare reform is another extraordinary example of a reform that curbed inequities. The context is again, a deep economic crisis from 1999 to 2002, leading in August 2002 to mass mobilizations, several general strikes, and episodes of looting in Montevideo. A crisis of legitimacy of the state set in with one of the traditional parties (Partido Colorado) collapsing and setting the stage for a fifteen-year streak of Frente Amplio, a coalition of working- and middle-class “left” parties in government.
Like Argentina, Uruguay had a long track record of strong working-class organizations. This strength was reflected in Uruguay’s relatively powerful labor unions and its labor federation, PIT–CNT. The history of militant activism—including, for example, a fifteen-day-long general strike in response to the 1973 military coup—cemented the labor federation’s militant reputation and social and institutional recognition.
The healthcare system was in deep crisis in the early 2000s, and large sectors of the population were without access or had only poor service. The crisis of legitimacy in 2002 and its political reverberations gave the Frente Amplio a strong mandate for radical social reforms when it took office in 2005. The government sponsored a dialogue with representatives of labor, users, and the private, nonprofit sector.
This, on the one hand, gave working-class organizations a voice, whereas, on the other, it limited the breadth of the reform because it included private sector representatives invested in the status quo. The structural reform toned down the inequities between the public and private sectors but reinforced the dual character of the healthcare system. Yet, a balance of forces in favor of the working class impressed a progressive character to the healthcare overhaul, resulting in expanded eligibility, a reduction in out-of-pocket costs, and an overall reduction in the gap in per capita spending between the private and public sectors.
Explaining the Limits of the Pink Tide Welfare Policies
Most analyses of social policy in Latin America are non-Marxist, explicitly or implicitly accepting a pluralist theory of democracy and the state.17See, for example, María Candelaria Garay, Social Policy Expansion in Latin America (Cambridge: Cambridge University Press, 2016), 45–46; Christina Ewig, “Reform and Electoral Competition: Convergence Toward Equity in Latin American Health Sectors,” Comparative Political Studies 49, no. 2 (2016): 184–218; and Pribble, Welfare and Party Politics. These contributions play down or simply ignore the role of class struggle and emphasize institutional factors, such as policy legacies and electoral competition to determine why social policy is expanded in some cases and not in others. This is an important question, and a comparative analysis across time and place supports some of their conclusions: for example, when there is electoral competition, politicians tend to offer (and deliver) social benefits to a larger constituency, in an attempt to win votes.
However, they cannot provide an explanation for why the default position of elected officials is not to expand social policy. Even so, electoral competition is at best a very weak explanatory variable, especially if we are interested not only in whether there was a policy reform but also the character of the reform. Chile is a case in point: electoral competition was very high throughout the 2000s and 2010s, and all the reforms implemented during this period were nevertheless decidedly moderate and business friendly.
In addition, when looking at the general trends in Latin America over the past twenty to twenty-five years, there is a clear increase, or at the very least, a persistence of inequities in welfare policy—what the specialized literature calls “segmentation.” These frameworks are unable to analyze the underlying dynamics, the economic and political incentives, behind this trend.
Another variable this literature emphasizes is “policy legacies,” the path dependency effect of a policy. In other words, social policies, once implemented, create distinct constituencies and stakeholders that will later make it easier or (usually) harder for those programs to be reformed or dismantled. Think about, for example, Social Security in the US. After its passage in 1935, Social Security created a universe of beneficiaries over time that would be ready to defend it tooth-and-nail and punish any elected official who threatened to take it away, to the point that it became the epitome of “third rail” politics.
These institutional mechanisms certainly have an important influence on the likelihood and direction of social policy reforms. At the same time, social policy scholars sometimes exaggerate their impact or stretch their meaning beyond recognition. For example, Ewig and Kay include the weakness of labor unions in Chile under the rubric of policy legacies.18See Christina Ewig and Stephen J. Kay, “Postretrenchment Politics: Policy Feedback in Chile’s Health and Pension Reforms,” Latin American Politics and Society 53, no. 4 (2011): 67–99.
Although this is an extreme example, it is indicative of a tendency among scholars in the field to ignore class conflict and the existence of antagonistic class interests. In fact, much of what is understood as policy legacies can be interpreted as the crystallization of a specific relation of forces between classes in a past historical moment.
In studies about western industrialized countries, the ideology of the incumbent party has shown to have a large influence on the design of welfare policy and therefore, on its generosity and equity.19Esping-Andersen, The Three Worlds; Evelyne Huber and John D. Stephens, Development and Crisis of the Welfare State: Parties and Policies in Global Markets (Chicago: University of Chicago Press, 2001). Although the relationship between a left incumbent party and more progressive social policy still holds for Latin America, despite some scholars arguing the opposite, this theory must be adapted to account for some important differences between western industrialized countries in the mid-twentieth and twenty-first century Latin America.20Some of the main differences are that Pink Tide governments were not even programmatically socialist (much less in practice), and by and large they did not have the formal institutional link to unions, as their European counterpart did. In addition, Latin American countries have presidential systems, and therefore the number of seats in Congress or in a government cabinet does not offer an accurate measure of the strength of the Left.
Economic growth is another factor associated with expansive or progressive social policy reforms. A growing economy usually implies a fiscal surplus, and therefore larger capacity to bankroll social programs. However, economic growth is a necessary but not sufficient condition. It’s hard to find examples of welfare expansion during shrinking economic periods, but not all countries engage in these types of policies during times of economic growth.
The case of Chile in the early twenty-first century highlights the shortcomings of this mainstream theoretical framework. Theories that associate electoral competition with “universalistic” or “equitable” welfare policy fail to explain the outcomes of Chile’s pension reform; since electoral competition was high during the eight years prior, and the reform was neither universalistic nor equitable.
In fact, it was extraordinarily tepid and pro-business. Although it was announced with great fanfare and celebrated by more than one scholar, the reform left in place a deeply marketized and unequal pension system and didn’t challenge—even minimally—the leading role of the widely hated private pension funds (called AFPs, for Administradoras de Fondos de Pensiones). For this reason, one of the economists on the committee that designed the reform stated, “the main reform of 2008 was to rename, expand, and redesign Pinochet’s Assistance Pension.”21Ewig and Kay, “Postretrenchment Politics.”
Similarly, a theory of political ideology that contends left governments are more prone to engage in progressive welfare reforms does not fit this particular case as the Concertación—a coalition of center-left parties—was in office since 2000. As Tim Dorlach has shown in his extraordinary study, the business community, and AFPs in particular, shaped the reform at every step of the way.22See Tim Dorlach, “Business Interests, Conservative Economists, and the Expansion of Noncontributory Pensions in Latin America,” Politics & Society 49, no. 2 (2020): 269–300. While we cannot explore Chile’s healthcare reform under Lagos in detail, it followed a similar logic.
Despite very high levels of dissatisfaction and a widespread recognition of the need for a structural overhaul, the Concertación government only engaged in a piecemeal reform, a sort of patch to the old system. Although it addressed some of the most glaring problems, inequity between the public and private systems continued to run rampant, and the dual character of healthcare in Chile, initiated in 1982 by the Pinochet reform, was left in place.23For a detailed discussion of Chile’s 2004 healthcare reform, see Ferre, Political Economy; or Guillermo Fuentes, “La Creación Del Sistema Nacional Integrado de Salud En Uruguay (2005–2012): Impulso Reformista Con Freno Desde Los Puntos y Actores de Veto” (PhD diss., Universidad Complutense de Madrid, 2013).
If established theories of welfare in Latin America don’t help us explain the outcomes in the contemporary period, then we need to recast our framework. In the case of Chile, we need a conceptual scaffolding that can help us understand why the reforms were so moderate, especially if we compare to Argentina’s pension reform, or Uruguay’s healthcare reform around the same period.
In other words, we need a framework that can explain why Chile’s elected officials listened almost exclusively to corporate actors and turned their backs on working people—including social movements and trade unions—when crafting the reforms. Ideally, such a framework would also help us understand the relentless growth of welfare inequities in the region, despite all favorable conditions for radical social policy reform: economic growth, social mobilization, electoral competition, and left governments.
Recasting the Theory of Welfare in Latin America
To understand the changes that transpired in the first two decades of the twenty-first century in Latin America, we need to bring class struggle back into our theoretical framework. In the seminal works by Esping-Andersen, Korpi, Palme, and other scholars in the “power resources” theory of welfare, the idea that capitalism is a society under permanent class conflict is central. They propose that welfare regimes reflect the balance of power between classes, including not only the size and strength of the working class and its unions, but also its political representation.
To understand the changes that transpired in the first two decades of the twenty-first century in Latin America, we need to bring class struggle back into our theoretical framework.
Furthermore, many of these scholars, and others in the broader Marxist tradition, such as Claus Offe, did not take the capitalist state for granted; quite the contrary, they problematized it, investigated its nature, its laws of motion, as well as the incentives from elected officials to implement or refuse to pass certain policies. Particularly insightful is the idea advanced by Offe and Jürgen Habermas, among others, that the “accumulation” function of the state—that is, its role in securing conditions for profitability—is constantly in tension with its “legitimation” function.24Simon Clarke, “The State Debate,” in The State Debate, edited by Simon Clarke (London: Palgrave Macmillan, 1991), 7.
In the Marxist perspective, the state is not a neutral entity; it has a class character. In a capitalist social formation, the state is a capitalist state. This does not mean that the state always reflects the immediate economic interests of the capitalist class, or that it is a mere instrument of this class. If this were the case, welfare policy would simply not exist.
For the state to maintain some level of legitimacy toward the vast majority of the population, for government officials to present the state or government institutions as representing all the people, it needs to offer some benefits to the working class. There is, thus, a certain “autonomy” of the state from the capitalist class that allows it to make concessions, to oppose business interests in specific circumstances, if necessary, for the long-term benefit and sustainability of the capitalist system itself.
The concept of “state autonomy” can be a slippery one. In their famous debate in the 1970s, Ralph Miliband and Nicos Poulantzas became mired in this question. They both agreed the capitalist state enjoyed a degree of autonomy from the capitalist class, but what’s the nature of this autonomy? How narrow or wide is it?
Much later, Poulantzas took this idea of state autonomy even further, asserting that the state is the “resultant” or the “condensate” of the relations of power between struggling classes in society. The state, he contended, “should be seen as a relation, as being structurally shot through and constituted by class contradictions.”25Nicos Poulantzas, “The Capitalist State: A Reply to Miliband and Laclau,” New Left Review I, no. 95 (1976): 63–83, 63, 73–74. Although at this point, Poulantzas still formally ascribed to a revolutionary view of the state, we can see here the germ of a later drift toward a reformist notion of “class struggle in the state.”
In State, Power, Socialism, he asserts that the state is a “strategic field” of struggle and that the path to socialism requires both growing working-class power within the state as well as the creation of direct democracy and “self-management” processes: a combination of representative and direct democracy.26Nicos Poulantzas, State, Power, Socialism (London: Verso, 1980), 258–9. However, there are powerful reasons to reject this approach and to assert that, under capitalism, the state is always the ultimate guarantor of capitalist social property relations. Any endeavor to penetrate it and transform it from within into something that supersedes capitalism has consistently failed.
The experience of Pink Tide governments in Latin America, and the wholehearted support many leftist organizations lent to them, must be understood as yet another failure of this reformist strategy—not by Pink Tide coalitions themselves, which never intended to end capitalism, but by left organizations that supported them. However, like Poulantzas’s earlier theorization of the state as the “crystallization of class struggle,” the power resources theory emphasizes that welfare policy reflects the relation of forces between contending classes at the moment of social policy expansion or consolidation. This is an important insight that allows us to explain both the development and limits of welfare policy in Western industrialized countries and in twenty-first century Latin America.
A useful point of departure to think about state autonomy and welfare policy is a Marxist structuralist framework developed by Fred Block. Block proposed that elected officials are constantly under pressure to generate and maintain business confidence, opportunities for profit, and incentives for investment. This investment is crucial because a healthy economic activity brings about job creation, it helps small businesses thrive, and it even generates the tax revenue for the state to function. A sustained lack of investment or an outright capital flight, conversely, can usher in an economic downturn, causing a rise in poverty and unemployment, a development that would inevitably hurt the popularity of the party in government.27Fred Block, “The Ruling Class Does Not Rule: Notes on the Marxist Theory of the State,” in Revising State Theory: Essays in Politics and Postindustrialism (Philadelphia: Temple University Press, 1987).
It follows from this that state managers are structurally bound to implement policies that promote business interests, open opportunities for profits, and facilitate investment, in order to maintain a “healthy” economic growth. By doing so, state managers seek to preserve their own interests as elected officials—whether they are bidding for reelection or trying to grow support for their political coalition—as well as working for the benefit of the capitalist class. Importantly, these constraints apply to every elected official, no matter how left-leaning they might be, insofar as they are part of a political project that aims to take control of the capitalist state to deliver (progressive) reforms.
Block’s analysis allows us to grasp the limits of capitalist social welfare—why capitalist states across the world, and in particular, center-left governments in twenty-first century Latin America privatized social services, sharpening social inequalities. Within these limits, class struggle plays a crucial role. Social unrest is key to compelling the state to make major concessions to the working class, and this is especially the case when the level of unrest brings into question the legitimacy of the state itself.
Different forms of collective action, such as strikes, mobilizations, or roadblocks can disrupt the economy, threaten businesses or block the circulation of goods and people. Occasionally, if the state of affairs fuels a widespread sense of injustice and discontent with the status quo, mobilizations can lead to illegal actions, such as lootings and widespread confrontations with the police.
In these circumstances, the legitimacy of the whole state apparatus is brought into question. It is in these situations that state managers, elected officials, are compelled to grant generous concessions to working-class and subaltern groups, even if it goes against capital’s immediate economic interests.
By doing so, they aim to not only shore up support for the ruling coalition but also to reestablish order and restore the legitimacy of the state and its institutions. It is not unusual for the capitalist class, or at least a significant faction within it, to acquiesce to, or even support, these reforms once it becomes evident that they are the only path to recovering stability and social peace.
Explaining Recent Welfare Reforms in Latin America
The structuralist Marxist theory of the state, incorporating an assessment of the relation of forces between classes and the presence or not of a crisis of legitimacy, helps explain the dynamics and limits of the Pink Tide’s welfare reforms. The conceptualization of state managers as actors who are structurally pressured to foster a business-friendly environment offers a useful starting point: it provides a hypothesis of why even left governments oversaw a relentless growth of private health, education, and pensions, which in turn deepened inequalities in social policy.
There is enough evidence of elected officials making policy decisions to encourage the private sector, whether this be in pensions, healthcare, or other sectors. For example, a number of healthcare functionaries and advisors who served for the Kirchner administrations have been explicit in their writings and in conference speeches about how they understand healthcare not only as a sector for state policy but also as an industry that can stimulate the economy.28“Jornadas AES: La inversión en salud puede dinamizar la économía,” ISalud 4, no. 17 (2009): 16–18.
Chilean officials candidly shared how they feared the negative effects on the economy of an eventual nationalization of private pension funds.29Pribble, Welfare and Party Politics, 80. Finally, during congressional hearings in Uruguay when the healthcare reform was being debated, the health ministry was blunt: “With this [reform], we are trying to allow health institutions, particularly IAMCs (private, nonprofit health organizations), to recover their financial balance.”30Ferre, Political Economy.
The different outcomes in welfare policy in Uruguay, Argentina, and Chile are the results of divergent class power relations and state legitimacy. The crisis of legitimacy in Argentina and Uruguay set the stage for radical reforms. The center-left governments in these countries came to power after a historic period of instability and social mobilization. Therefore, restoring trust in state institutions and building support for their political projects through progressive reforms became their main tasks.
Strong and militant labor movements, and a relatively less coordinated capitalist class, helped clear the way for a progressive structural reform. In Chile, the pension and healthcare systems were reviled by a majority of the population, and the need for structural reform was even more pressing than in the neighboring countries. Yet the reforms implemented by center-left governments in Chile were tepid and thoroughly influenced by the business community.
Even though, just like in Argentina and Uruguay, a left coalition was in government for nearly fifteen years between 2000 and 2020, and although electoral competition was high, the reforms in this period were characterized by their incrementalism. In contrast with Uruguay’s and Argentina’s convulsive days in the early 2000s, Chile’s transition into the twenty-first century was smooth and uneventful.
The political regime was not challenged until 2019, when a true social explosion rocked the streets of Santiago and other major cities. It is indicative of the moderate character of the previous years’ reforms that Chile’s 2019 uprising demanded, above all, radical reforms in the areas of retirement pensions, education, and healthcare. Why did a left government waste an unparallel opportunity to undo Pinochet’s neoliberal welfare schemes and create new ones from the ground up, on a more equitable base?
The answer is a combination of continuity and stability of the political regime with a relation of class forces stacked in favor of the capitalist class. The absence of a crisis of legitimacy at the beginning of the period explains why the Concertación and later, the Nueva Mayoría governments decided they could ignore demands from social organizations and labor, and only heed to business interests.
Unions, social movements, and progressive organizations criticized, mobilized, and even went on strike against the healthcare and pension reforms, or some aspects of them. But these actions did not have any influence on the final bill. A weakened labor movement and a party in power that kept labor and other social movements at bay while inviting corporate representatives to give their input on public policies, were key factors leading to such moderate social policy reforms.
Political Conclusions
A careful examination of the cases of Argentina, Uruguay, and Chile, and an accurate analysis of the overarching trends in social policy in twenty-first century Latin America, offers some takeaways for political activists in Latin America and beyond. First, Pink Tide governments tried to walk a thin line between coopting an angry, mobilized people and, at the same time, continuing to please domestic and foreign capital.
Once the “legitimation” function of the state was secured, and whenever it entered into contradiction with the “accumulation” function, they favored the latter. The result was a combination of programs providing immediate relief and expanded access to some social benefits but without eliminating, and in fact consolidating, differences across population groups. Not surprisingly, CCTs and NCPs, two forms of targeted programs, were their favorite policy tools.
These means-tested programs, as explained above, are perfectly compatible with market dynamics, and they are in fact preferred by business actors because they interfere minimally with the market. They were the path of least resistance. The promise or the expectation of achieving generous and equitable social benefits for all through universalist welfare policy was not even nearly accomplished.
The layering of new social programs over already existing ones increased, the fragmentation among working-class people.
Furthermore, the layering of new social programs over already existing ones increased, rather than reduced, the fragmentation among working-class people. This fragmentation not only causes inequities in rights and benefits across groups in the present moment, but most importantly, it represents an additional obstacle in uniting the working class to fight for more. When better-off workers have access to private health insurance, they are less likely to join lower income workers, the unemployed, or informal workers in defense of a public healthcare system they don’t use.
There is an additional aspect of the power resource theory that is worth discussing. Not only are welfare regimes a reflection of the balance of power between classes at a certain moment, but welfare policy can also be a power resource. When workers are atomized and lacking social rights, when they are at risk of losing their jobs and access to healthcare at the whim of their employer, they are less likely to organize and fight: the risk of social benefits, along with their job, is too high.
The more labor is treated as a commodity, deprived of rights and benefits, the weaker the worker will be. When workers have guaranteed access to healthcare and different forms of income replacement (for the poor, the retired, the unemployed), there are fewer deterrents to engage in class struggle in any of its forms. Universal benefits, then, granted as a social right to everyone, can themselves be a power resource, a source of unity and strength for the working class, a solid platform to fight for more.
The legacy of the Pink Tide in Latin America is not of a working-class movement with greater capacity to struggle. Rather, Pink Tide welfare policies have produced more fragmentation and division. Toward the end of the 2010s, when the tailwinds of high commodity prices and strong economic growth were gone, those Pink Tide coalitions that remained in power had to actually cut back spending, keeping only the rhetoric of a progressive project. In the meantime, the private market in healthcare, education, and pensions grew across the board—excluding a few exceptional cases in specific areas, as mentioned above—denoting state managers’ interest in fostering the expansion of business in all areas of the economy.
The dissonance between a rhetoric of an “inclusive state” and the meager results of residual (liberal) welfare programs translated to distrust and the delegitimation of any political project that portends to fight the market and establish social rights. Argentinian political scientist Pablo Semán has called this dissonance the “mimic of the state”: a pretense of a welfare state policy that proves fictitious once we scratch the surface, visit a public hospital or attend a public school.
The increasing popular rejection of an empty rhetoric of inclusion fed into a new neoliberalism, wrapped in a right-wing reactionary populism in Argentina and other countries in the region. The ascent of Javier Milei cannot be understood without taking into account the disillusion of vast sectors of the working population with the center-left project embodied in Kirchnerism.31Juan Cruz Ferre, “The Rise of Javier Milei and the Emergence of Authoritarian Liberalism in Argentina,”Latin American Research Review (April 10, 2025): 1–12.
If an inclusive state gives you poor services, treats you like a second-class citizen, and condemns you to overcrowded hospitals and decaying schools—not to speak of the rapid depreciation of wages due to runaway inflation—then the “social rights” discourse is a farce, and people look for answers elsewhere. The situation was made worse by the fact that much of the Left in these countries surrendered their political independence to join these coalitions, disorienting their membership and depleting their capacity for struggle.
The Left cannot place its hopes in political projects that try to take over the existing capitalist state to bring about radical social reform.
A notable exception is the Frente de Izquierda (Left Front) in Argentina, a coalition of revolutionary left organizations including the Partido de los Trabajadores Socialistas, Partido Obrero, and other minor partners. Formed in 2011, the Left Front has been the main critical voice to the Kirchners’ governments from the left, consistently promoting an anticapitalist program through its members in Congress, and actively organizing for working-class struggles in unions, universities, and social movements.
In sum, the Left cannot place its hopes in political projects that try to take over the existing capitalist state to bring about radical social reform. Most of the times, these radical reforms don’t come to fruition. And even when they do, it is at the service of restoring legitimacy to a state whose main task, in the last instance, is to uphold the system of laws and the material conditions for capitalist accumulation. ×
Notes & References
- Gibrán Cruz-Martínez, “Welfare State Development in Latin America and the Caribbean (1970s–2000s): Multidimensional Welfare Index, Its Methodology and Results,” Social Indicators Research 119, no.3, 1295–317; Evelyne Huber and John D. Stephens, Democracy and the Left: Social Policy and Inequality in Latin America (Chicago, London: University of Chicago Press, 2012), 77–79; Alex Segura-Ubiergo, The Political Economy of the Welfare State in Latin America: Globalization, Democracy, and Development (Cambridge: Cambridge University Press, 2007), 28–31.
- Fernando Filgueira, “Welfare and Democracy in Latin America: The Development, Crises and Aftermath of Universal, Dual and Exclusionary Social States,” United Nations Research Institute for Social Development, May 2005.
- Gøsta Esping-Andersen, The Three Worlds of Welfare Capitalism (Cambridge: Polity Press, 1990).
- Viviana Patroni, “Uncertain Transitions: Labor and the Politics of Reform in Argentina,” in Labor Politics in Latin America: Democracy and Worker Organization in the Neoliberal Era, edited by Paul Posner, Viviana Patroni and Jean François Mayer (Gainesville: University Press of Florida, 2018), 102–34.
- Maria Victoria Murillo, Labor Unions, Partisan Coalitions, and Market Reforms in Latin America (Cambridge: Cambridge University Press, 2001).
- Tasha Fairfield and Candelaria Garay, “Redistribution Under the Right in Latin America: Electoral Competition and Organized Actors in Policymaking,” Comparative Political Studies 50, no. 14 (2017): 1871–906.
- “Contributory” pensions are financed by employed workers and their employers and generally provide more generous pensions than “non-contributory” pensions, provided by the state to “informal workers.”
- Juan Cruz Ferre, “Social Policy Expansion and Segmentation in the First Two Decades of the 21st Century in Latin America,” International Journal of Social Welfare 32, no. 4 (2023), 486–505.
- See, for example, Jean Grugel and Pia Riggirozzi, “New Directions in Welfare: Rights-Based Social Policies in Post-Neoliberal Latin America,” Third World Quarterly 39, no. 3 (2018): 527–43; José Antonio Ocampo and Natalie Gómez-Arteaga, “Social Protection Systems in Latin America : An Assessment,” International Labor Organization, ILO Working Papers, 2016; Jennifer Pribble, Welfare and Party Politics in Latin America (New York: Cambridge University Press, 2013), 26.
- Founded in 1948, CEPAL is the United Nation’s Economic Commission for Latin America and the Caribbean (in English, ECLAC). It is one of the main sources of data for Latin America and a powerful thinktank for progressive economic and social policy.
- See, for example, Fernando Filgueira et al, “Universalismo básico: una alternativa posible y necesaria para mejorar las condiciones de vida,” in Universalismo básico: una nueva política social para América Latina, edited by Carlos Gerardo Molina (Washington: Editorial Planeta Mexicana, 2006), 19–58; or Evelyne Huber and John D. Stephens, Democracy and the Left: Social Policy and Inequality in Latin America (Chicago: University of Chicago Press, 2012), 257–66, advocating for basic universalism; or International Labor Organization, “Recommendation R202—Social Protection Floors Recommendation” (Geneva: International Labor Organization, 2012), advocating for a social protection floor.
- Juan Cruz Ferre, Political Economy of Welfare in Latin America: Universalism Deferred (Cheltenham: Edward Elgar Publishing, forthcoming).
- See, for example, Martín Kanenguiser, “Usarán el dinero para pagar la deuda,” La Nación, October 21, 2008; Helen Popper, “Argentine Senate Approves Pensions Takeover Law,” Reuters, November 21, 2008; or “Cómo el Gobierno provocó la caída de las AFJP,” LaPolíticaOnline, October 21, 2008.
- “Sin retenciones, ¿cómo vamos a pagar las obligaciones externas,” La Nación, July 4, 2008.
- Alberto Bonnet, La Insurrección Como Restauración: El Kirchnerismo 2002–2015 (Buenos Aires: Prometeo Libros, 2015), 101; Pablo Gerchunoff and Lucas Llach, El Ciclo de La Ilusión y El Desencanto: Políticas Económicas Argentinas de 1880 a Nuestros Días (Buenos Aires: Crítica, 2018), ch. 11.
- Fernando Rosso, La hegemonía imposible: Veinte años de disputas políticas en el país del empate. Del 2001 a Alberto Fernández (Buenos Aires: Capital Intelectual, 2022).
- See, for example, María Candelaria Garay, Social Policy Expansion in Latin America (Cambridge: Cambridge University Press, 2016), 45–46; Christina Ewig, “Reform and Electoral Competition: Convergence Toward Equity in Latin American Health Sectors,” Comparative Political Studies 49, no. 2 (2016): 184–218; and Pribble, Welfare and Party Politics.
- See Christina Ewig and Stephen J. Kay, “Postretrenchment Politics: Policy Feedback in Chile’s Health and Pension Reforms,” Latin American Politics and Society 53, no. 4 (2011): 67–99.
- Esping-Andersen, The Three Worlds; Evelyne Huber and John D. Stephens, Development and Crisis of the Welfare State: Parties and Policies in Global Markets (Chicago: University of Chicago Press, 2001).
- Some of the main differences are that Pink Tide governments were not even programmatically socialist (much less in practice), and by and large they did not have the formal institutional link to unions, as their European counterpart did. In addition, Latin American countries have presidential systems, and therefore the number of seats in Congress or in a government cabinet does not offer an accurate measure of the strength of the Left.
- Ewig and Kay, “Postretrenchment Politics.”
- See Tim Dorlach, “Business Interests, Conservative Economists, and the Expansion of Noncontributory Pensions in Latin America,” Politics & Society 49, no. 2 (2020): 269–300.
- For a detailed discussion of Chile’s 2004 healthcare reform, see Ferre, Political Economy; or Guillermo Fuentes, “La Creación Del Sistema Nacional Integrado de Salud En Uruguay (2005–2012): Impulso Reformista Con Freno Desde Los Puntos y Actores de Veto” (PhD diss., Universidad Complutense de Madrid, 2013).
- Simon Clarke, “The State Debate,” in The State Debate, edited by Simon Clarke (London: Palgrave Macmillan, 1991), 7.
- Nicos Poulantzas, “The Capitalist State: A Reply to Miliband and Laclau,” New Left Review I, no. 95 (1976): 63–83, 63, 73–74.
- Nicos Poulantzas, State, Power, Socialism (London: Verso, 1980), 258–9.
- Fred Block, “The Ruling Class Does Not Rule: Notes on the Marxist Theory of the State,” in Revising State Theory: Essays in Politics and Postindustrialism (Philadelphia: Temple University Press, 1987).
- “Jornadas AES: La inversión en salud puede dinamizar la économía,” ISalud 4, no. 17 (2009): 16–18.
- Pribble, Welfare and Party Politics, 80.
- Ferre, Political Economy.
- Juan Cruz Ferre, “The Rise of Javier Milei and the Emergence of Authoritarian Liberalism in Argentina,”Latin American Research Review (April 10, 2025): 1–12.