Continent of the Pendulum: How Latin America Swung Between Revolution and Collapse

In the first half of the century Bolivia was among South America's poorest states: its economic lifeblood was held by three tin barons (known as "La Rosca"), while the indigenous majority had neither land nor a vote. The crushing defeat in the Chaco War (1932–35) against Paraguay shattered the old order's legitimacy. The Nationalist Revolutionary Movement (MNR), founded in 1941 and led by Víctor Paz Estenssoro, won the 1951 election only to have the military annul it.

On April 9, 1952, armed miners and workers rose in La Paz and routed the regular army in three days. Paz became president and swung three hammers: nationalizing the three great tin mines under the state company COMIBOL; enacting universal suffrage by abolishing the literacy requirement, expanding the electorate roughly fivefold and letting indigenous people vote for the first time; and breaking up the great estates in the 1953 land reform. This was one of the three great social revolutions of twentieth-century Latin America (alongside Mexico and Cuba).

Expanding the vote fivefold was a violent redefinition of "who counts." Today's arguments over how marginalized groups enter decision-making systems are the same question: whose voices an institution recognizes shapes whose interests get seen.

1950s Cuba was America's backyard: the corrupt regime of the dictator Batista, Havana a pleasure city of casinos, sugar profits flowing north. The "26th of July Movement" led by Fidel Castro and Che Guevara landed from the yacht Granma in 1956 and waged two years of guerrilla war in the Sierra Maestra.

On January 1, 1959, Batista abandoned the country and Castro entered Havana. Early on the revolution flew no openly communist banner; but land reform and the seizure of US assets swiftly enraged Washington. In April 1961 the US-backed Bay of Pigs invasion failed disastrously — which pushed Castro to declare openly for socialism and lean toward the USSR. The next year Soviet missiles arrived, igniting the 1962 Cuban Missile Crisis, the Cold War's closest brush with nuclear war.

Hostility is often self-fulfilling: treat a fence-sitter as an inevitable enemy and you often make him one. The posture of "assuming an adversary" itself breeds the adversary — true from great-power rivalry to corporate competition.

In 1970 Salvador Allende, candidate of the Popular Unity coalition, was elected — the Western Hemisphere's first democratically elected Marxist president. He meant to travel a "constitutional road to socialism": nationalizing the US-controlled copper mines and expanding welfare. But runaway inflation and shortages followed one after another; the Nixon administration ordered the economy "made to scream" and secretly funded the opposition.

On September 11, 1973, army commander Augusto Pinochet launched a coup; jets bombed the presidential palace, La Moneda, and Allende died inside (most historians judge it a suicide). The junta unleashed repression at once — thousands killed or "disappeared." Pinochet's dictatorship ran seventeen years, during which a cohort of University of Chicago–trained economists (the "Chicago Boys") imposed a radical neoliberal experiment at gunpoint.

When a society polarizes to the point where one side sees "the other in office" as catastrophe, the rules themselves begin to loosen. Democracy is most fragile the moment no side is willing to lose an election.

In 1991, to end hyperinflation, economy minister Domingo Cavallo launched the "Convertibility Plan": pegging the peso to the dollar 1:1 by law. The short-term effect was miraculous — inflation tamed, foreign capital pouring in. But the price was lost monetary sovereignty: the currency grew overvalued, exports lost competitiveness, and the government could sustain the peg only by borrowing abroad without end. From 1998 the economy sank into prolonged recession.

In December 2001 a panic bank run erupted. The government froze deposits (the "corralito"), citizens could not withdraw their own money, fury spilled into the streets, and the din of banged pots and pans echoed across the city. President De la Rúa fled the palace by helicopter; five presidents came and went in two weeks. Argentina defaulted on roughly $100 billion of foreign debt — then the largest sovereign default in history; once unpegged, the peso collapsed and the poverty rate briefly topped half the population.

Surrendering the flexibility to adjust in exchange for short-term stability is a universal temptation. Welding the anchor shut can hold off small waves, but drags the ship under when the big one comes — as true for individuals as for national policy.