In Liberty for Latin America: Undoing Five Hundred Years of State Oppressaion, Alvaro Vargas Llosa maintains that, despite conventional wisdom, no “free market” reform has taken place in Latin America over the last decades. According to Vargas Llosa, the latest and far-reaching attempt to foster an open society in the region has run up against what he calls the “five principles of oppression”: corporatism, State mercantilism, privilege, bottom-up wealth redistribution and political law. These same principles of political, social and economic organization have been present in Latin America since time immemorial. They have been sustained, over time, by both the Left and the Right. Unless they are removed once and for all, genuine progress will not be possible.

Three major attempts at market reforms took place in Latin America before the 1990s (one in the mid-19th century, another at the turn of the 20th century and the third under military dictatorships in the 1970s). Except in Chile for special reasons that the book discusses, all of them ended up concentrating power in an elite and keeping the masses poor. By repeating many of the mistakes made in previous attempts, Latin America missed a great opportunity in the last couple of decades.

Contrary to conventional wisdom, so-called free-market reform did not reduce the size of government in Latin America. Argentina’s GDP grew by 40 percent in the 1990s, but public spending grew by 100 percent. Between 1996 and 2001, Brazil doubled the size of its foreign debt. Except for Chile, where the privatization of old-age pensions has boosted savings and created an important pool of capital (more than $50 billion), privatization was a missed opportunity to vest people with capital across Latin America. In order to engage in real reform, the “five principles of oppression” must be confronted. The entire body of laws should be subjected to a painstaking scrutiny that judges each law by the same standard. The standard is set by five questions: Does it relate to individuals in general or to corporations? Does it make success or failure dependent on state interference? Does it favor particular groups of people and does it therefore discriminate against the rest? Does it transfer wealth from one group of citizens to another? Does its coercive power, either to make something happen or to forbid, derive from political law, that is, from the authority of the politicians and bureaucrats who passed the norms, or, rather, from a higher principle of which those politicians were careful guardians?

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