Political Fallout in Latin America : UTOPIA UNARMED: The Latin American Left After the Cold War, <i> By Jorge G. Castaneda (Alfred A. Knopf; $27.50; 498 pp.)</i>

Latin American politics has always swayed with the winds from abroad, but in the late 1980s, these winds took on hurricane force. The spread of the free-market gospel and the fall of Communism have brought to Latin America the discrediting of most Leninist groups, the widespread institution of austerity plans and the election of presidents--Alberto Fujimori in Peru, Carlos Andres Perez in Venezuela, Carlos Menem in Argentina--who ran on the left but governed from the right. As the wind calms it is the bodies of the political left that strew the landscape. The Latin left has always fought among itself about strategy and tactics, but now its very goals are in doubt. The old role models are gone. If the left is not dead, it is picking itself out of the rubble, tottering and unsure.

That is the view on the grand scale. Yet from the eye of the storm, it is not the left but the right that is failing. Ask the people there--a mother of six in a Quito slum, a man repairing shoes on a Lima sidewalk--what has changed in their lives in the last 10 years. In Quito and Lima and Managua and Rio and almost everywhere else, you will get the same answer: Today, we are poorer. Most Latin Americans have not yet heard about the fall of Leninism, but they are experts on their own misery.

“During the 1980s and through the beginning of the 1990s, (Latin America) suffered its worst economic and social crisis since the Depression,” Jorge Castaneda writes in “Utopia Unarmed.” The number of people living in poverty doubled to perhaps 270 million, and as a percent of population, rose from 40% to 60%. The rich became richer while the poor foundered. Castaneda is too thoughtful to blame this crisis on the right alone, or to claim that the left can make it disappear. This is not a time of fantasies; the end of the Cold War ensures that the left must confine its dreams to the parameters of Latin American reality. But the most urgent reminder of Castaneda’s extraordinary new book is that the dispossessed have grown to numbers never before seen in Latin America, and their voice--the Latin left--is more important than ever.

Castaneda is one of Mexico’s most distinguished political scientists. He has written frequently about U.S.-Mexico relations, and taught at Princeton and Berkeley. His book, written in a dexterous English, attempts to do nothing less than restore direction to the Latin American left. He meets the challenge as well as anyone could. The first half of the book traces the left’s conversion from advocacy of armed guerrillas to democratic, market-oriented political parties. He devotes careful attention to the role of Cuba, separating myth from fact about Cuba’s considerable involvement with guerrilla movements. He shows the metamorphosis from Leninism to social democracy. He tracks the changing role of intellectuals and grass-roots groups, and the shift to a more subtle relationship with the United States. In the second half, he sets forth a program for the future.

I admire the book most of all for its honesty. It contains not a single dogmatic or facile phrase. Castaneda is a man of the left and he treats all but the most radical movements seriously and with empathy. He is, however, far from blind to the left’s faults. He finds the left too eager to create the conditions for its own downfall, citing as two examples the Sandinista’s taunting of the United States, and Salvador Allende’s provocation of Chile’s wealthy and then fury at their capital flight. He criticizes leftist economists, who have not always recognized that there is no more than 100%. He scolds the left for corruption. Most serious to Castaneda, leftist groups have never been fully committed to democracy, neither in their own structures nor as the ideal for their countries.

Castaneda devotes thoughtful chapters to economic realities the left has been unwilling to face: How can equity be increased without hindering growth? How the rich be coaxed to pay their fair share of taxes when they can move their families to Miami or their money to the Caymans?

The left must embrace the market, he concludes, but not with the blind obeisance advocated by the multilateral banks and the United States. He quotes Brazilian sociologist Francisco Weffort: “Socialists should marry democracy out of love, but their union with the market need be no more than a marriage of convenience.” Castaneda’s preferred economic model is what he calls “Rhineland Capitalism”--the welfare state, strong unions, high tax burden and high level of state ownership found in Germany, and the state direction of Japan.

In this time of near-global consensus on the unfettered market, it is surprising and refreshing to hear the case for the other side--including the case against the North American Free Trade Agreement. He argues that privatization makes already broke governments poorer still. They do not collect taxes. They pay more money to the North than the North pays them. They have no source of income to fund the schools, roads and courts necessary to a modern society. One of his most striking points is that Chile and Mexico, the countries most successful with austerity, owe their success to their income from copper and oil. These center-right experiments are staying afloat precisely because past left-wing governments had the courtesy to nationalize these commodities. Neither government has ever seriously considered privatizing them.

“There must be a fundamental shift in resources and policy emphasis from the rich to the poor in order to solve the region’s problems,” he writes. “This is not tantamount to eliminating the rich or impoverishing them, to equalizing incomes downward, or carrying out any of the terrible things the rich have traditionally been terrorized by in any suggestion of reform. But it does mean limiting their wealth and asking for sacrifices on their part.”

In return for good citizenship, the left must offer the wealthy help with exports, an economy conducive to growth and a modern, stable welfare state. This means, first of all, a well-administered state. “The rich and middle classes in Latin America fiercely refuse to pay taxes for many reasons, most of them selfish and unacceptable, but also for a very good one: they believe that their tax pesos or cruzeiros will be misspent, stolen or wasted by undemocratic, unresponsive, or unaccountable governments,” Castaneda writes. To achieve a modern state, Castaneda calls for democratizing democracy--giving power to city governments and neighborhood groups, fighting corruption, destroying the centuries-old symbiosis between wealth and government office. He is betting that the rich will eventually realize that the price of intransigence is the disintegration of society; not everyone can move to Miami, says Castaneda.

I wouldn’t take the bet. Most of the rich in Latin America deal with worsening misery by retreating behind concrete walls, barbed wire and bulletproof glass. Fighting corruption and empowering the organizations of the poor is a platform that holds no charm for the rich, at least not in the short term. Part of Castaneda’s program rests on convincing Northern nations to provide such worthy but remote goals as debt forgiveness and an international agreement to tax foreign assets and return the money to the citizen’s country of residence. His prescriptions suffer the same problem as all political platforms: unreality. Lima is not going to become Bonn in his lifetime, or anyone’s.

But Latin America has always imported its ideologies, whether from Marx or Reagan, and Rhineland Capitalism is more flexible than most--as left-wing utopias go, it is a very model of practicality and reason and one that, unlike revolution, is useful even if Latin America can get only halfway there. And perhaps with a left that no longer threatens to take everything they own, the rich will now make compromises as well. The fall of Communism might replace winner-take-all politics with a set of common rules acceptable to all: capitalism with a human face. Still, it is hard to picture Helmut Kohl setting the Latin imagination on fire as Che Guevara’s successor. Castaneda is wishing for his continent the only problem it has never encountered: that the Latins be bored to tears. One can only hope.