The Threat of Redistribution Under Democracy: Explaining Income Redistribution Based on Intersectoral Relationships of the Elites
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The Cases of Honduras and El Salvador Diego Fernando Martínez Vallejo Universitat Autònoma de Barcelona Facultat de Ciències Politiques i de Sociologia PhD Thesis in Political Science THE THREAT OF REDISTRIBUTION UNDER DEMOCRACY: EXPLAINING INCOME REDISTRIBUTION BASED ON INTERSECTORAL RELATIONSHIPS OF THE ELITES. THE CASES OF HONDURAS AND EL SALVADOR By Diego Fernando Martínez Vallejo Directed by Raquel Gallego Barcelona, June 2017 2 The Threat of Redistribution under Democracy: Explaining Income Redistribution based on Intersectoral Relationships of the Elites. The Cases of Honduras and El Salvador Abstract Despite the existence of a sizable body of literature claiming that democracy would tend towards income redistribution, even from a merely procedural perspective, there is evidence that points in the opposite direction: democratic regimes can maintain—even accentuate—inequality, more obviously so in poor or developing countries. This thesis wants to emphasize one important factor which strongly intervenes in the way income is allocated under democracy: the type of relationships the elites establish. This research aims to explore the extent to which elite’s relations affect income redistribution under contexts of democracy and of high income concentration. Three hypotheses guide the development of this thesis. Firstly, if the economic elites establish cohesive relationships with i) the political elites, on the one hand, and ii) the military, on the other hand, the less the likelihood of income redistribution. Moreover, iii) the more conflictive the relations between the landed elites and the bourgeoisie are, the lower the likelihood of redistribution. Taking countries during certain periods of time as units of analysis, this research will use comparative historical analysis (CHA) as its methodological approach. Using the most similar cases design, El Salvador and Honduras were selected as the cases to compare. Three ways to approach the cases were also considered. Firstly, we use process tracing in order to look for causal explanations in history. Secondly, we break each case in three different periods of time, coinciding such periods with critical junctures of the cases, a very frequent use in process tracing. Thirdly, we codify the preferences of the actors towards wide redistributive programs which were either implemented or planned during those junctures. Our hypotheses were confirmed. However, while the two first hypotheses are displayed as potential sufficient conditions, the third one seems to be only condition of a case. Key words: Redistributive Threats under Democracy, Income Redistribution, Intersectoral Elite Cohesion, Intersectoral Elite Conflict; Political Economy. 3 Contents List of Figures, Maps, and Tables ............................................................................................... 8 Figures ..................................................................................................................................... 8 Tables ....................................................................................................................................... 9 Maps ....................................................................................................................................... 11 Abbreviations ............................................................................................................................ 12 Preface ....................................................................................................................................... 16 Extended Abstract...................................................................................................................... 18 Introduction ............................................................................................................................ 18 Research question and hypotheses ......................................................................................... 18 Methodological approach ...................................................................................................... 19 Conclusions ............................................................................................................................ 20 CHAPTER I. .............................................................................................................................. 21 THEORETICAL FRAMEWORK: THEIR LIMITS AND PARADOXES .............................. 21 1.1. Introduction ................................................................................................................. 21 1.2. The current debate ...................................................................................................... 22 1.2.1. The Linear Relationship: democracy as supply and the maintenance of a moderate level of inequality ............................................................................................... 23 1.2.2. The quadratic relationship: democracy as demand and the increase of redistribution ...................................................................................................................... 24 1.2.3. What do the other alternative explanations tell us? ............................................. 25 1.3. Empirical evidence ..................................................................................................... 30 1.3.1. Running some simple models .............................................................................. 31 1.3.2. Responses to evidence ......................................................................................... 37 CHAPTER II: RESEARCH QUESTIONS, HYPOTHESES AND METHODOLOGY .......... 40 2.1. Introduction ..................................................................................................................... 40 2.2. Hypotheses ...................................................................................................................... 41 2.2.1. Hypothesis 1: A cohesive/conflictive relationship between the Bourgeoisie and the Landed Elites ...................................................................................................................... 42 2.2.2. Hypothesis 2: A cohesive/conflictive relationship between the Economic Elites – as a whole – and the Political Elites. ..................................................................................... 44 2.2.3. A cohesive/conflictive relationship between the Economic Elites – as a whole – and the Military. ................................................................................................................. 46 4 2.3. Methodology: The Comparative Historical Analysis ..................................................... 47 2.3.1. Units of analysis and observation .................................................................................... 47 2.3.2. Research design for the selection cases.................................................................... 48 2.3.3. Selection cases.......................................................................................................... 48 2.3.4. CHA’s Research Techniques ................................................................................... 56 2.4. Operationalization ........................................................................................................... 60 2.4.1. Redistribution ........................................................................................................... 60 2.4.2. Democracy ............................................................................................................... 61 2.4.3. Intersectoral relations of the elites ........................................................................... 61 2.5. A note about the concepts ............................................................................................... 63 2.6. Conclusions ..................................................................................................................... 63 CHAPTER III. HONDURAS: ELITE FORMATION, ELITE RELATIONS, DEMOCRACY AND WEALTH DISTRIBUTION (1900-1950) ....................................................................... 65 3.1. Introduction ..................................................................................................................... 65 3.2. Elite Formation ............................................................................................................... 66 3.2.1. The Economic Elites ................................................................................................ 67 3.2.2. The political elites .................................................................................................... 71 3.2.3. A weak Military ......................................................................................................