ABSTRACT
This chapter examines the apparently serendipitous affinity between heterodox policies and democracy in Argentina and Brazil. The new civilian governments in Argentina and Brazil rejected the orthodox adjustment policies espoused by the International Monetary Fund (IMF) and, instead, implemented stabilization programs of “heterodox shock.” Since the onset of the debt crisis in 1982, orthodox IMF programs have failed in Mexico, Bolivia, and Peru, as well as in Argentina and Brazil. The heterodoxos do not reject the necessity of external adjustment or the efficacy of tight control over monetary variables in curbing runaway inflation. The heterodoxos interpret the economic debacle of the military-sponsored “Process of National Reorganization” in Argentina as a particularly striking example of the ineffectiveness and perverse social impacts of the orthodox paradigm. Agricultural producers, led by the Sociedad Rural Argentina, complained of low prices and protested against taxes on commodity exports. Brazil’s experience with heterodox policies paralleled Argentina’s.
