This book argues that Latin America has a distinctive, enduring form of hierarchical capitalism characterized by multinational corporations, diversified business groups, low skills and segmented labor markets. Over time, institutional complementarities knit features of corporate governance and labor markets together and thus contribute to institutional resiliency. Political systems generally favored elites and insiders who further reinforced existing institutions and complementarities. Hierarchical capitalism has not promoted rising productivity, good jobs or equitable development, and the efficacy of development strategies to promote these outcomes depends on tackling negative institutional complementarities. This book is intended to open a new debate on the nature of capitalism in Latin America and link that discussion to related research on comparative capitalism in other parts of the world.

“In this rich and agenda-setting study, Ben Ross Schneider shows how perverse economic and political complementarities undermine equitable development in Latin America. While a fountain of wealth and opportunity in other parts of the world, in the hierarchical Latin American variety of capitalism institutional complementarities reinforce inequality and political domination by business elites and insiders. The study presents a stark challenge, and alternative, to those who advocate simple solutions such as continued liberalization or renewed state intervention.” – Torben Iversen, Harold Hitchings Burbank Professor of Political Economy, Harvard University

“An ago-old conundrum lies at the heart of Ben Ross Schneider’s superb reflection on the political economy of Latin America: how to explain the tenacity of dysfunctional institutions. An unholy alliance of large multinational corporations, rent-seeking political elites, and family-owned diversified business groups have created ‘hierarchical capitalism,’ which relies on low-skilled workers, has a dismal record of productivity growth, and does little to alleviate social suffering. Schneider wonders why this system continues, whereas economies in other late developing regions have bounded into the twenty-first century, and gives us a fascinating tale of business managers hamstrung by their own organizational incapacities and feeble working-class movements unable to cross company lines. Hierarchical Capitalism in Latin America makes a number of absolutely crucial theoretical contributions in positioning this sorely neglected region within the study of varieties of capitalism, explaining how institutional complementarities reinforce dysfunctional outcomes and giving us a glimpse into what employers really want. This is a book for the ages, a fascinating must-read for students of comparative political economy and Latin American politics.” – Cathie Jo Martin, Professor of Political Science, Boston University