8
Why Not Corporatism?
Redemocratization and Regime Formation in Uruguay

Fernando Lopez-Alves

In examining Uruguay, the smallest country in South America, I shall focus on the period between the late 1930s and the mid-1950s: the Baldomir and Amezaga governments of 1938–1946 and the first stage of the era of "neo-batllismo " from 1946.^[1] The analysis suggests that political conditions, rather than structural variables or economic forces, fostered the transformations of this period. Economic trends and World War II had a major impact on Uruguay, but the previously established alliances within the two major political parties, and between these parties and labor, shaped responses to these external pressures. Thus the consensus among the elites in favor of industrial development was the result of prior political reaccommodations among these elites. In the 1940s transformations in the polity led to transformations in the economy.

Party politics had long played a major role in the country's development. For most of Uruguay's history its economy had lagged behind that of countries with similar resources, such as Australia, New Zealand, and Argentina, but more as a result of domestic conflict and civil war than as a reflection of changing trade conditions, for example, fluctuations in the prices of beef and wool. Some decades before the 1940s Uruguay had succeeded in creating a strong party system under the control of political elites who often possessed a quite separate identity from those which controlled the economy. On numerous occasions the state enacted policies that ran directly counter to the interests of landowners, merchants, or manufac-

turers. Indeed, for much of the nineteenth and early twentieth centuries the economic elites had little direct political power and relatively little influence over economic policy.^[2] Unlike those in most of Latin America the Uruguayan political parties did not necessarily channel the interests of agriculture, commerce, or industry.^[3] Instead, frequent revolts and long civil wars led to control over the parties and the state by an autonomous body of urban politicians and rural caudillos. The economic elites created institutions other than political parties to represent their interests, among them the Asociación Rural, the Cámara de Industria y Comercio, and the Federación Rural, entities founded in 1871, 1914, and 1916, respectively, but they often exerted moderate political influence.

The 1940s provide an example of a contrasting situation in which newly formed economic interests tied to commerce and small-scale domestic manufacturing were able both to create successful lobbying groups and to establish strong influence over the political parties, particularly the Colorado party. At the end of the decade urban-based economic interests became dominant among the Colorados. Similarly, the traditionally rural Blanco party began to respond more directly to the needs of large landowners and rural entrepreneurs. This process began during the Great Depression—particularly in the Blanco party—but gained strength during the 1940s. For almost the first time business groups found themselves able to influence Congress and to participate in the making of economic and social policy.

To some authors these trends suggested the growth of "democratic corporatism" in Uruguay, and along with the changing political role of the economic elites they have pointed to other changes of a similar tenor to support this thesis: the growth of labor union activity, the strong consensus among the economic and political elites in favor of industrial development, the absence of competitive capitalism, and the spread of the state into the private sector.^[4] The argument presented here, however, is that rather than marking an upsurge of corporatism this period witnessed a liberal-democratic reconstruction.

In the late 1940s Uruguay was far from developing the corporatist institutions that emerged in Scandinavia. In this period Norway and Sweden introduced centralized systems of collective bargaining and converted the labor unions into active coparticipants in economic policy-making. Year-round negotiations between capital, labor, and government established a firm consensus on industrial policy and made corporate mediation one of the

main activities of government. The labor codes in these two countries guaranteed the right of the labor unions not only to exist but also to participate in the running of business firms and to negotiate workers' fringe benefits. Similarly, the labor unions of both Norway and Sweden became closely tied to the ruling Social Democratic parties.^[5] None of these basic features of "democratic corporatism" appeared in Uruguay.

Instead during the 1940s Uruguay adopted a loose system of collective bargaining with certain limited corporatist features. However, collective bargaining remained entirely separate from the political arena and the activities of the political parties and was, moreover, restricted exclusively to negotiations over wages. Thus in Uruguay, as distinct from Scandinavia and other formally democratic nations in Latin America such as Colombia, there was a total separation between the labor movement on one hand and the state and political parties on the other. Thus the Uruguayan practice differed from democratic corporatism, in which the state instituted closely prescribed and defined mechanisms of cooperation between capital and labor. Equally, in Uruguay the co-optation of labor by the government or by the political parties was entirely absent.

During the 1940s a system developed that was pluralist in the political arena and quasi-corporatist in the labor market. Throughout Uruguay pluralism became the means to achieve political conciliation. Yet negotiations between capital and labor had a corporatist flavor in that the two sides interacted on the basis of prearranged mechanisms of cooperation designed to promote agreement and to avoid conflict. Using Philippe Schmitter's definition, a system "licensed by the state [allowing] a monopoly of representation in their sphere" became the instrument to reconcile the interests of capital and labor.^[6] But such institutionalized cooperation was again limited to wage bargaining, and it differed entirely from state corporatism, in which the state directly controlled the labor unions. Thus Uruguay followed a very different path from neighboring Argentina and Brazil. In sum in Uruguay the system that developed failed to achieve the conventional Latin American populist marriage between the labor movement and the state (as in Argentina and Brazil), or the European social democratic pattern of representing the labor movement in government through the political parties (as in Norway and Sweden).

The avoidance of corporatism in Uruguay suggested that there was no natural or automatic link between corporatism and industrial development and that the pursuit of industrial development in Latin America was possible

under a pluralistic political system. In Uruguay too, again unlike in Argentina and Brazil, the military had little influence on the decision to attempt industrial development. The military establishment made no attempt to gain a broader constituency in civil society or to challenge the political parties. In contrast, the parties penetrated the military; the generals and the colonels were loyal to their respective services but even more loyal to the parties in which they became members. Thus members of the military played a role in politics but more often than not through the parties to which they belonged. In the 1940s this unusual arrangement prompted what I call "redemocratization by coup d'état."

Redemocratization by Coup d'État: Politics, Parties, and Alliances

During the government of Gabriel Terra between 1933 and 1938 the Blanco party achieved dominance. The succeeding period during the 1940s marked the resurgence of the Colorado party and the rise of a strong reform movement linked to the return to democracy that played a major part in the development of the Uruguayan political system for many years to come. The 1940s thus witnessed a transition from a relatively mild authoritarian system to democracy. The democratic system created during this period was similar to that of previous democratic eras, particularly the two Colorado administrations of José Batlle y Ordoñez in 1902–1907 and 1911–1915. Thus, it can be better described as redemocratization than as plain democratization. Batlle organized a reform faction in the Colorado party, and as president he pursued a number of progressive, populist policies. Under his rule elections were held at regular intervals, and urban interests increasingly dominated Uruguayan politics. The labor unions were allowed to engage in collective bargaining, and Uruguay became one of the world's first welfare states. Batlle died in 1929, but his legacy survived. In the words of M. H. J. Finch, batllismo defines the "national style or ideology of development within which Uruguayan public life [has been] conducted from early this century to the end of the 1960s."^[7] Most of the features of this system were reproduced in the 1940s.

Thus the basic patterns of Uruguayan politics continually adhered to the mold established by Batlle that placed strong emphasis on the political parties. There were three periods in the twentieth century in which democratic party rule broke down: the Terra presidency of the 1930s, a brief authoritarian period under Alfredo Baldomir during the early 1940s, and the

military dictatorship of 1973–1984. But only in the last of these periods, in which all political activities were banned and all individual rights eliminated, was the functioning of the political system drastically altered.

The military coups of 1933 and 1942 were led by generals who were also party members. On 31 March 1933 Uruguay suffered its first military coup of the twentieth century when Terra, a renegade batllista , established a de facto regime backed by the mostly rural Blancos and conservative sectors of the Colorados. Although Terra himself had earlier been a Colorado, as president he favored the Blancos and gave them the opportunity to dominate policy.

The origins of the 1933 coup lay in mounting dissatisfaction with the incumbent Colorado regime and in particular in the fear among the economic elites, led by the cattle interests, that the Colorados were about to introduce a radical reform program. The events of March 1933 bore some resemblance to those of 1916, when the cattle interests had succeeded in forcing President Feliciano Viera into vetoing batllista reform legislation in Congress. Similarly in 1933 the Terra administration stepped in to prevent a series of new reform initiatives. Under Terra, however, the political parties continued to function and were allowed to participate in the plebiscite of 1933 and in the national elections of 1934 and 1938. Although some political groups were banned from elections during the 1930s, or chose the path of electoral abstention, the regime failed to prevent both the parties and the popular vote from surviving as the primary sources of political legitimacy. Indeed Terra himself finally left office without protest in 1938 following his election defeat.

The elections of 1938 brought the reform party back into office under the leadership of Alfredo Baldomir, another Colorado-batllista general. But for a time the reform factions remained under the shadow of the Terra era and were unable to reassert their supremacy. Terra's followers remained dominant in Congress, and the Senate was divided into two groups, "los quince terristas y los quince herreristas ." These "fifteen terristas " were survivors from the Terra regime, while the "fifteen herreristas " were the followers of Luis Alberto de Herrera, leader of the conservative wing of the Blanco party and for many years the most prominent opponent of the batllistas . The power-sharing formula between the two factions allowed each side to propose an equal number of legislative measures and divided government ministries and state appointments equally between them. Under this system Baldomir possessed relatively little room for maneuver. In February 1942, however, Bal-

domir led a revolt against the terristas and herreristas to increase his own power. The other objectives of this autogolpe (seizing of additional or dictatorial powers; literally, "self-coup") were to eliminate Blanco opposition in Congress, to restore the predominance of the Colorados, and to "reopen the doors," as Baldomir put it, to the batllistas .

Baldomir proved successful. When elections were held in November 1942, Baldomir's close associate, Juan Amézaga, won the presidency (see table 18). During subsequent years the Colorado party consolidated its dominance. In the next national elections of 1946 the batllistas gained an overwhelming victory, and they remained in power until 1958.

Amézaga, and the reform currents he represented, won the election by a large majority. Electoral abstention, a common practice during the previous decade, almost entirely disappeared, since 92 percent of voters opted either for the Colorados or the Blancos. The Communist and Socialist parties received only 4.1 percent of the vote, and the Communist share was significantly greater than the Socialist.

The autogolpe of 1942 strengthened the new political alliances that had

formed during previous years. The Colorados saw democracy as a way of reducing the power of the livestock interests in Congress and the government. Following this transition Baldomir and his group were able to carry out the programs their opponents had earlier blocked. Their basic objectives were to ensure the predominance of urban interests and to pursue an industrial policy at the expense of the export interests.

This program, however, had been taking shape for several years. In 1939, for example, under pressure from the Colorado government elected a year earlier, Congress enacted two laws that imposed new taxes on the livestock sector. The first increased taxes on cattle and meat, and the second imposed a levy on the excess profits, or ganancias extraordinarias , cattle ranchers were earning as meat prices climbed at the beginning of World War II. Both these measures were designed to divert export revenues away from the rural sector toward the cities and the state.^[8]

In 1939 the Federación Rural, as the chief organ of rural interests, strongly opposed the new taxes, attacking what it called the "privileges" of the "artificial" manufacturing sector supported by the Colorado administration. Seeking to escape the dependence of the ranchers on foreign meat-packing plants, in 1940 the Federación insisted on being given control over the single state-owned meat-packing plant, the Frigorífico Nacional. But for the most part these demands were ignored, and relations between the federation and the government became increasingly strained. After 1940, for example, members of the government rarely attended the federation's official functions, such as the annual show at which the great ranchers paraded their champion bulls.

A second indicator of the resurgence of the Colorado party during the early 1940s, and of its turning away from the landed and rural interests, was its use of the two-party system to strengthen its own position to an even greater extent than in the past. In earlier periods the Colorados were often weak in Congress. Throughout 1925–1942, for example, they failed to muster a majority in the Chamber of Representatives, while in the Senate between 1925 and 1933 their maximum representation totaled only 38 percent. From 1942 onward the picture was very different. Except in the Chamber between 1946 and 1948 they commanded large majorities in both houses, so that the two-party system in reality marked the strong predominance of only one party.

The Colorados benefited by alterations in the electoral law under Bal-

domir, who in May 1939 supported legislation to "strengthen the structure" of the political parties and to limit the scope for interparty alliances. Three years later, in 1942, these measures were followed by the ley de lemas , the "law of the [party] labels," which established a system broadly similar to the party primaries in the United States. Henceforward, the parties were permitted to register their candidates under party subgroups called "lemas ," which enabled each party to represent a large variety of different factions and programs without the parties themselves suffering formal splits. The voters supported candidates (known as sublemas ) in one of the lemas , and each party's candidate for the presidency was the person who among the sublemas won the most votes in the most strongly supported lema .

Baldomir used the lema system to overcome factionalism, to strengthen the local organizational party structures that had weakened under Terra, and to unite the Colorados. Both parties sought to gain from these changes, but the Colorados benefited the most since the more deeply divided Blancos found it more difficult to unify the lemas after the elections. By the end of the 1940s the Colorados had successfully overcome their internal divisions while the Blancos remained split. The lema system allowed vertical alliances within the Colorado party and prevented horizontal alliances between dissident Colorados and the Blancos of the type that were common during the 1930s. Neither party could adopt candidates who belonged to the other party, and the lema law banned the practice of creating new parties that used "names or labels similar to those employed by the two major parties."^[9] Thus a dissident Colorado group that styled itself, for example, Renovación Batllista, could no longer function as a party, only as one of the groups within the lemas .

Many writers have suggested that the lema law tended to intensify divisions within the parties rather than help them to unite. Indeed the number of factions within the parties multiplied with the passing of time. Nevertheless, the Colorado party remained the broad coalition of forces that the 1942 legislation had intended. Equally, under this system Uruguay managed to uphold the two-party system. Without the ley de lemas the country might well have found itself with no less than six parties constituting the breakaway factions from the two original groupings plus the small leftist parties: the Partido Nacional Independiente, the Partido Nacional, the Partido Colorado, the batllista faction Avanzar, the Unión Cívica, and the Communists and Socialists.

In 1942 Baldomir carried out his autogolpe to prevent any possible challenge to his reforms by the Blancos, who possessed a potential veto power in Congress under the power-sharing formulas established under Terra. The Colorados were now determined to dominate Congress, to abolish the remnants of power sharing, and to put an end to what remained of the horizontal alliances between the parties. Subsequently, vertical alliances were encouraged.^[10] The result was the progressive weakening of the herreristas and the disappearance of the last remnants of the Terra regime.

To what extent were external conditions responsible for the growing strength of the Colorados and the increasing weakness and division of the Blancos? In World War II the debate over foreign markets became one of the issues that destroyed the prewar party coalitions. From 1940, as the European markets disintegrated, Baldomir's Movimiento de Marzo (March Movement) began to seek closer relations with the United States. The Blancos, led by the herreristas , opposed this strategy on the grounds that the United States would continue to exclude Uruguayan goods by protection. To allow the traditional European connection to weaken, the Blancos argued, was suicidal.

This position reflected the historic ties between the livestock interests and the British beef market, and their long resentments toward the United States for having excluded imports of Uruguayan beef and wool. During this period the marzistas became strong supporters of Pan-Americanism, but the Blancos favored nonalignment and neutrality: closer connections with the United States, they argued, threatened the national interest.^[11]

This issue provoked increasing divisions and became tied up with relations with neighboring Argentina as the Blancos became open supporters first of the Argentine right-wing nationalists who took power in 1943 and later of Juan Perón. In the eyes of the Colorados, however, Perón's Argentina came to be seen as "what happily Uruguay [was] not," and members of the Uruguayan government joined the chorus that denounced Perón for "leaning toward Nazism and Stalinism."^[12] As 1945 approached, this posture helped the Colorados to increase their popularity.

There were thus some grounds for relating the growing dominance of the Colorados to the impact of World War II and for linking changing internal alliances with external forces. But important as they were, external conditions were insufficient to explain the new coalitions in Uruguayan politics.

In the 1940s Argentina and Uruguay had similar export economies and

exported to the same markets, but politics in the two countries evolved in diametrically opposite directions: while Uruguay restored democracy and took a pro-United States position, Argentina opted for state corporatism and anti-Americanism. How can we explain these differences? The divergences sprang from party politics and the prior features of the political systems of both countries that World War II and its economic impact influenced but failed to change in any fundamental way. Relations among internal political forces, and the growing salience of urban politics in Uruguay, underlay the rise of Baldomir, Amezaga, and the increasing strength of neo-batllismo . The decreasing weight of the rural sector in Uruguay became a more important factor in Uruguayan politics than the influence of the Allies and explained, for example, why Herrera's group found itself unable to impose its own position on the issue of markets and international relations. In Uruguay the strong party system, and the weakness of the agrarian elites, brought about the decision to restore pluralism rather than take the same road as Argentina toward corporatism. In Argentina the political structure was quite different: the landed interests were much stronger, the urban political parties were much weaker, and both the church and the military commanded much greater influence than in Uruguay. As a result the closure of the European markets and the expanding influence of the United States provoked quite different responses in the two countries.

The party system and the relative weakness of the rural elites also explain the strength of the proindustry coalition in Uruguay during this period, the way the state promoted the formation of an industrial bourgeoisie, and how industry eventually became another instrument of democratic reconstruction. During the early twentieth century the batllistas did not regard the creation of an industrial economy as the essential route toward democracy, offering some sharp contrasts between the democracy of Batlle's day and that of the 1940s. In the early twentieth century an enlightened political elite imposed democracy from above; its methods were to confer voting rights on both men and women and establish a welfare state and a high-quality system of secular education. In the 1940s, in contrast, industrial development came to be seen as the magical formula to achieve democratization. The reformers of the 1940s believed that industry would sweep aside poverty and destroy the constraints of traditional society: modern industry would lead to modern man.

Industry and Democracy

In Uruguay the commitment to industrial development did not emerge in conjunction with corporatism and the co-optation of the working class by the state but from a perception that industry represented the material or structural foundation of democracy. Support for industrial development, however, did not imply any parallel faith in the invisible power of market forces. Instead, in keeping with a pattern established during earlier decades in Uruguay, the state had a crucial part in hastening and shaping the transformation to an industrial society. The 1940s marked the growth of a huge state bureaucracy that remains to this day a crucial element in the country's politics. In the political sphere the expansion of the state once more helped to strengthen the party system; in the economic sphere the growth of the state favored manufacturing.

Another key feature of this period was the emergence of a political alliance supporting both the expansion of the state and the development of industry, an alliance that coupled political pluralism with economic protectionism. Protectionism became an article of faith among the dominant Colorados, and it secured their success in enlisting the support of the bulk of the urban upper and middle classes: manufacturers and financiers, merchants and shopkeepers. During the late 1940s (and in contrast with the 1970s and 1980s) the two leading parties remained supreme, while the left continued to be small and isolated.

The Blancos and the Colorados alike reaped handsome profits from the growth of the state, receiving quotas of state jobs in large numbers, as state employment rose rapidly to around 15 percent in the late 1940s, and to more than 20 percent of the total labor force by the early 1950s. The highest rates of growth occurred among the employees of the central government as opposed to local government and the state enterprises.^[13] In this period the growth of public sector employment not only exceeded that of all previous periods but probably occurred at a faster rate than anywhere else in Latin America. Although 90 percent of the economy remained private, the government nationalized a number of basic services and created several large state monopolies. Among these conglomerates were the UTE (Usinas y Teléfonos del Estado: State Electricity and Telephone Company), the SOYP (Servicios Oceanográficos y Pesca: Maritime and Fishing Services), and the ANCAP (Asociación Nacional de Alcohol y Portland, an alcohol, petroleum, and

cement refinery). A large proportion of the railroad system was nationalized, along with many sectors of transportation in general. The government gained large shares in several foreign-owned meat-packing plants and established a state-owned plant.

Since the political party clubs handed out the state jobs, party members constituted the great majority of white-collar state workers. The distribution of the spoils typically followed the elections with the two parties determining the quotas by negotiation. Not surprisingly, the state employees quickly emerged as a new social class. Meanwhile, protectionism became the instrument to construct another, although much smaller, class of urban industrialists.^[14] During the 1940s the industrialists became prominent in policy-making, and their organizations, led by the Unión Industrial Uruguaya (Uruguayan Industrial Union) and the Cámara de Industrias (Chamber of Industries), grew stronger.^[15]

The expansion of manufacturing fed the growth of the urban working class. Despite the small size of most factories the workers achieved a high level of unionization in powerful national federations. Subsequently labor became one of the main partners in the protectionist alliance of the late 1940s along with the state, the industrialists, and some sectors of the agrarian elites linked with the processing of raw materials. In this period the associations representing the agrarian interests, led by the Rural Association and the Rural Federation, constantly criticized government policies in such areas as social reform, education, labor relations, and industrial development, but their complaints had little impact. For a large majority of Uruguayans the construction of democracy became virtually synonymous with the defense of industry, while the protectionist alliance developed as the main pillar of the neo-batllista movement that took power in 1946 on the election of Luis Batlle Berres, a nephew of José Batlle y Ordoñez, to the presidency.

Although labor formed part of this coalition, supported its agenda, and pledged to maintain industrial peace, the unions were neither tied to the government by any institutional mechanisms nor did they renounce the right to strike. In the 1940s the long-established right to strike remained sacrosanct, although strikes, in particular general strikes, remained far fewer in number than in earlier and later periods.^[16] The link between labor, industry, and state was based exclusively on the support of the unions for the economic strategy of batllismo , which the unions perceived as a way to increase employment and their own memberships.

Many have argued that this period represented the golden era of the

Uruguayan economy. Rapidly rising export earnings during the war, along with the new tax on exporters' excess profits, bred a new sense of optimism among the urban sectors. Protectionism came to be seen as a way of resolving uncertainties over the future of traditional export markets. The optimists were encouraged by the early success of industry, which despite limited resources and restricted economies of scale, achieved an overall growth rate of 8.5 percent between 1945 and 1954. In this period some of the so-called dynamic industries grew at annual rates of up to 16 percent; between 1945 and 1954 the production of consumer goods increased 82 percent. In proportional terms Uruguay for a time possessed one of the largest industrial economies in Latin America.^[17]

But the overall picture was more mixed. During this period the livestock sector did not enjoy the level of prosperity contemporaries imagined; other sectors prospered but only for relatively brief periods.

Between 1945 and 1949 the volume of cattle slaughtered for export declined by 20 percent, while imports fell as a percentage of total production, particularly after the mid-1950s (see table 19). The heyday of beef exports was the early 1940s, but even then the production of livestock was increasing at only 1 percent annually before permanent decline began. During the 1930s other sectors of the economy had been growing, particularly grains. For example, Uruguay had become the third-largest linseed producer after Argentina and India and had established strong markets for linseed in Belgium and the Netherlands. But the growth of grains and linseed ended following the outbreak of World War II and the closure of the European markets.^[18]

The industrial development of the 1940s failed to create an independent,

innovative, and self-sustaining industrial class. Private industrial investment grew only slowly and with strong support from the state; in this sense Uruguay embodied a typical case of "dependent development." In this period there was no attempt to promote exports of manufactured goods, and planning went little beyond the vague aspiration for industrial self-sufficiency. Uruguay's petite bourgeoisie was mostly made up of state employees, and the industrial bourgeoisie that emerged created only small-scale mixed ventures heavily dependent on state subsidies for their survival. The state came to be seen as a source of unlimited benefits that asked for nothing in return.

These trends provoked increasing opposition from the ranching interests, and from the start the industrial project was accompanied by rising conflict between the state and landowners. In any event, agriculture ended up financing a project over which it had no control.^[19] Unlike in 1933–1944, when agriculture had received many different kinds of state subsidies, industry, along with upper- and middle-class consumers, now became the great beneficiaries of state spending.^[20] By the mid-1950s the heavy costs of this strategy were becoming glaringly apparent, as the economy entered chronic stagnation.

But in the 1940s, among those who supported and benefited from industrial development, Uruguay seemed to enjoy a special, privileged position in Latin America and the world. In his inaugural address in March 1947, President Luis Batlle Berres affirmed what he saw as Uruguay's enviable situation: "Let me urge all our citizens, as they observe the situation that prevails in the Americas, let alone that in Europe, to acknowledge the privileged situation of our Republic." Arguing that Uruguay had the most perfect and advanced democracy in the world, the prominent batllista Efraín González Conzi boasted, "There's nowhere like Uruguay" ("Como el Uruguay, no hay "), a phrase that captured the dominant mood of the time.

In this period Uruguay became the "Switzerland of Latin America," and batllismo came to be seen as a reform movement with unique features. Here was a democracy with its own civic culture that was entirely different from countries like Brazil and Argentina, not to mention the rest of Latin America. The civic culture and industry were perceived as being closely linked, since industry was promoting equality and pulling the country away from the backwardness associated with the old rural economy.

The differing roles of industry and the state in the democratic reconstruc-

tion of the 1940s and that of 1980s offer some striking contrasts. In contrast with the earlier decade, by the 1980s there was strong emphasis on foreign investment, the "rationalization" of the state bureaucracy, and an "outward-looking" strategy for industrial development. In addition, state participation in industry had come to be seen as a barrier to both economic growth and democracy, which by this point were equated with economic liberalization. In the 1980s, unlike in the 1940s, labor provided no support for the strategy for economic development; workers were willing to welcome the return of democracy but feared unemployment and falling incomes. Equally, the state bureaucracy, which became the vanguard of reform in the 1940s, opposed it in the 1980s.

There were also nationalist and statist components in the democratic reconstruction of the 1940s which were entirely absent forty years later in the programs that emphasized private initiative and the avoidance of state intervention. Thus, according to Luis Batlle in the late 1940s, key industries should not remain under the ownership of private capital because "whether they [were] nationals or foreigners, big capitalists [had] no nationality and [were] always dangerous."^[21] In Batlle's era industrial development under state tutelage represented a new instrument to develop public education and the welfare state, to promote the interest of the middle class, and to widen the channels of social mobility.

In this era the idea prevailed that a strong democracy would be forthcoming so long as the masses followed, in John Stuart Mill's words, the "wise and virtuous" middle classes, whose numbers would increase alongside the growth of industry and the state.^[22] Indeed by 1967 Aldo Solari estimated that the Uruguayan middle class, including those in the rural sector, made up 45.5 percent of the population, a slightly higher proportion than in Argentina.^[23] Reviving the tradition established by Batlle y Ordoñiez, the neo-batllistas of the 1940s laid great stress on the power of education in the formation of the middle class. While Juan Perón in Argentina let the church reestablish its grip over public education, Uruguay sought to strengthen and consolidate its tradition of a strong secular educational system. Historically this system had placed strong emphasis on pluralism, individual freedom, and the subordination of corporate groups such as the church and the military to civil society.

The view in Uruguay, again strongly represented by Luis Batlle, for example, was that state corporatism was to be avoided at all costs: corporatism would undermine the natural propensity of industry to foster democ-

racy, and it was a recipe for military intervention and civic strife. Revolutions, Batlle maintained, originated in the aspirations of the masses for freedom, but freedom should be understood as embodying a strong economic component. "A plea for economic safety has replaced the plea of the masses for political freedom," he declared. "The political process must be directed at gaining the support of the masses for democracy [by demonstrating] that democracy provides both freedom and economic security."^[24] There were strong populist overtones in the political discourse of this period, but they sprang from a commitment to pluralism rather than to corporatism, as the relationship between the state and organized labor once more demonstrates.

The Tacit Alliance between Labor and Neo-batllismo

Redemocratization combined with industrial expansion required the reconstruction of the system of labor relations. The scheme that now emerged in Uruguay was unusual in Latin America, since although labor remained autonomous from the state and the parties, it cooperated with them and with capital in a corporatist fashion. The system was based on a pact between labor and the state, but one with an entirely different nature from labor agreements in Argentina and Brazil under Perón and Vargas. The system differed too from that in Chile in that none of the Uruguayan parties attempted to create their own unions or to enlist the unions under party banners.

The autonomy of the Uruguayan unions was not entirely due to the activities and political skills of the left or to the existence of a strong anarchist or Communist tradition in the unions as is often argued.^[25] These conditions helped to keep the unions autonomous, but the stances of the two major parties and the state toward organized labor offer a more convincing explanation. It became easier for labor to remain autonomous in a situation in which no group, apart from the left, was attempting to take it over. Even when industrial development and the expansion of the state bred a powerful working class, neither the state nor the Colorados and the Blancos made any attempt to establish their own unions. It was not that the state and the parties were ignoring labor; indeed it was their awareness of its presence that led them to support the tacit alliance between labor, the state, and capital.

The determination to avoid both state corporatism and party or state linkages with labor had a precedent in the early batllista movement. Earlier,

Batlle y Ordoñez had succeeded in converting labor into an ally without having to establish Colorado- or state-sponsored unions. Anarchist-led unions often supported batllista reforms by taking to the streets to back Batlle against his opponents and by agreeing to certain restraints on the use of strikes. Except for some of the Anarchist unions, which continued to urge abstention in national elections, by Batlle's second term as president in the late 1920s a large proportion of the working class was voting for the Colorados. Thus the batllistas managed to win labor support without resorting to organizing unions, competing with the left, or having to side with the working class on every single issue.

A generation later, the approach toward labor adopted by Batlle y Ordoñez still seemed the best one. At this point the unions were growing at a remarkable rate, while the Communist party, which now controlled the dominant labor central, the General Confederation of Workers (Confederación General del Trabajo [CGT]), was becoming the most powerful force in the Uruguayan labor movement. The CGT itself had begun as an alliance of Communist and Anarchist unions, although by the 1940s the Anarchists had disappeared. The top priorities of the CGT were to group unions by industry, to encourage the formation of federations in all trades, and to organize a national system of collective bargaining. By the middle of the decade the Communists controlled around two-thirds of all labor unions through the CGT. The transition to Communist dominance altered the political behavior of workers, because, unlike the old Anarchist leaders, the Communists encouraged union members to vote rather than to abstain: revolutionary change was to be achieved within the legal framework of bourgeois society.

The increasing centralization of the labor movement, and the position taken by the Communists on the vote, persuaded the batllistas that an extensive system of collective bargaining combined with a strong grass-roots Colorado party machine, would limit the unions to wage issues alone but still induce workers to vote for them rather than for the Communists. The batllistas therefore introduced changes in the labor code but proclaimed that the state alone would decide matters of social policy and legislation.

Law 10,449 of 1943 established tripartite commissions to set minimum wages in the private sector and issued some general statements in favor of collective bargaining between labor and capital. Subsequently the so-called wage councils appeared, but they were loose negotiating commissions that operated without written agreements and mostly on an informal and ad hoc

basis. The labor legislation did not specify when agreements were to be concluded, the length of time they were to remain valid, or that collective bargaining was compulsory.^[26] In practice the councils possessed certain corporatist features. The tripartite commissions, composed of three government, two union, and two employers' delegates, usually discussed proposals made by the government that were based on prior consultations with the unions. In practice, therefore, the deals were struck before the councils actually met.^[27] Before submitting their requests to the councils, the unions customarily met with the employers as well, so that any conflicts in the councils usually reflected the refusal of one side or another to honor prior informal agreements. The agreements then became official once they were "approved" by the government.

This system gave a strong impulse to the growth of union federations and to the overall centralization of the unions. Because of the small number of union delegates allowed to participate in the negotiations, the smaller unions were continually forced to merge with others. By the end of the 1940s almost all unions in the private sector in the cities were covered by some collective agreement and belonged to a federation. These trends matched the long-run goals of the Communists, which were to increase the power of unions on the national level and to encourage a process of centralized collective bargaining. The shift toward much stronger labor unions during the 1940s paved the way for the creation of the National Workers' Convention (Convención Nacional de Trabajadores [CNT]) in 1964, which achieved the representation of 70 percent of the Uruguayan work force.

The labor unions possessed a powerful role in wage bargaining but virtually none in the sphere of fringe benefits. The wage councils tended to strengthen the organization of the unions but to weaken the power of their leaders. The labor legislation of 1943 instituted closer contact between rank-and-file workers, employers, and the state but laid down that only delegates elected directly by all workers, regardless of whether they belonged to a union or not, could participate in the wage councils. This measure prevented representatives from being designated by the unions. Similarly, the wage councils allowed the state to bypass the unions on the issue of social reform and the fringe benefits of workers. Thus, while organized labor increased its members, it became increasingly remote from the arena of policy-making.

The net result of the practices introduced by the Colorados was to establish two separate spheres for politics and labor and to encourage a strong

demarcation between the role of the citizen and that of the worker. The parties, not the unions, represented the workers in their second identity as citizens, and none of the union leaders were able to represent their constituencies either to the parties or before Congress. Equally, the union leaders exerted no influence on social policy issues even in areas that closely affected workers' interests such as housing, health, and conditions in the workplace; none of these issues were decided through the system of collective bargaining.

Labor thus became incorporated into the process of redemocratization by relinquishing its political voice in exchange for the right to collective bargaining and the opportunity to grow in number and size. Because the major parties avoided attempting to co-opt labor, there were no alliances between the Colorado reformers and the left through the labor movement. Since it perceived state corporatism as threatening its autonomy, as had happened in Argentina and Brazil, the labor movement strongly supported political pluralism. Finally, the system of wage councils allowed the unions to participate in the benefits of industrial development through the expansion of employment and the growth of their memberships.

Conclusion

The democratic reconstruction of the 1940s differed sharply from that of the 1980s to the point that they became the reverse image of one another. The period of military rule in 1973–1984, followed by the years of renewed democratization after 1984, dismantled the political and economic system formed during the 1940s. In the 1940s protectionism and the growth of manufacturing provided the foundations for alliances between industry, the state, and labor; in the 1980s, in contrast, economic liberalization and privatization separated and divided the state from both the labor movement and most sectors of domestic industry. Policy in the 1940s was directed at exploiting the traditional agrarian export sector to support urban manufacturing; in the 1980s government attempted to develop agricultural exports as part of its effort to consolidate the restored democratic system.

These striking contrasts illustrate that the effort to restore democracy may stem from very different forces and factors and that democratic reconstruction does not result from any specific economic and political formula. In the 1940s redemocratization became part of the populist-reform

movement led by the Colorados; in the 1980s the same goal was pursued under much more conservative guidelines. In the 1940s the neo-batllistas adopted a strongly progressive agenda; in the 1980s they tilted much more toward the right, and in this period the alliances typical of the 1930s between Blancos and conservative Colorados reappeared once more. Starting in the mid-1930s the Blancos underwent a succession of divisions that strengthened the conservative wing of the party. Henceforth this conservative wing set the party agenda, although the Blancos now fell far behind the Colorados in the national elections. Despite continuing splits, in the late 1980s the Blancos, as the more conservative of the two parties, won the presidency. One other difference between the 1940s and the 1980s was that the left now emerged as a significant contender, as the old two-party system gave way to three parties.

Finally, in another contrast with Argentina and Brazil, during the 1940s Uruguay illustrated a situation in which the political parties controlled the military, rather than vice versa, and excluded them from power and policy-making. Political history, particularly the way during the nineteenth century the parties had created and maintained their own armies, underlay this difference. From around 1910 the military became fully committed to civilian rule under the Colorados and Blancos. In the 1940s this particular commitment strengthened, as most military leaders renewed their pledge to civilian rule and deepened their ties with the Colorado party. The leading military figures of the 1930s and 1940s, for example, Baldomir, were reform-minded batllistas ; even Terra called himself a batllista and never entirely abandoned the cause of progressive reform. The capacity of the parties to penetrate and co-opt the military reflected the absence in Uruguay of the strong links between the military and the agrarian elites that prevailed elsewhere in Latin America. Once more, Uruguay's strikingly different political tradition, not its social and economic base, which was very similar to Argentina's, explains why Uruguay opted for pluralism and largely avoided corporatism.