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A Theory of Global Capitalism: Production, Class, and State in a Transnational World

tions of politicians and policymakers for their change in attitude. Amidst an already crowded field, Kurt Weyland offers an intriguing account based not upon the underlying assumptions of political science, but instead upon experimental economics. His cognitive psychology-based prospect theory rests upon the willingness of actors to take risks depending upon the conditions of the status quo. Weyland starts by carefully defining all competing explanatory approaches—rational choice, economic structuralism, and political institutionalism—as a prelude to their dismissal. Rational choice models, for example, come closest to challenging prospect theory; yet, while based on similar psychological microfoundations, Weyland contends that these differ from prospect theory in that the former method posits that decisions are made according to that option which carries the highest expected value. Prospect theory, in contrast, acknowledges that decision makers do not always choose on these grounds alone. As background, Weyland references the 1984 work of experimental economists Kahneman and Tversky, who constructed an S-shaped value curve that weighted expected value according to whether a respondent is experiencing gains or losses from the status quo. Their conclusion: decision makers facing dire circumstances are more likely to take risks and make decisions that have lower expected values. For instance, if today is worse than yesterday, then respondents are more likely to take risks that could facilitate a return to “normalcy.” Conversely, if today is better than yesterday, respondents are less prone to accept change. Thus, Weyland argues that rational choice assertions based upon expected utility fall short of a full explanation. In conjunction with prospect theory, Weyland discusses the somewhat fuzzier notion of prior option bias. This holds that once an actor has made a decision, s/he is more likely to stay the course even if conditions have worsened as a result of it. New actors, on the other hand, are more predisposed to taking risks. After establishing prospect theory’s virtues, Weyland applies it to four Latin American cases— Argentina, Brazil, Peru, and Venezuela—and argues that this regional focus helps to reduce the range of explanatory variables. First, all of these countries have deep cultural and historical similarities which simplify their comparison. Second, each was plagued by debt and hyperinflation to different degrees in the 1980s, but the threat of further economic deterioration was visible in each case. Using hyperinflation as a gauge of gains or losses, Weyland shows that in the countries where politicians and the electorate perceived hardship, all were willing to take risks. Citizens took risks by withdrawing their support from established parties and throwing it behind little-known candidates. Politicians took risks by implementing sweeping market reforms. Politicians in all four countries used neopopulist rhetoric to convince their citizens of the need of such drastic reforms for “the good of the common man,” as well as to distance themselves from entrenched political forces. In Argentina and Peru, reforms brought enough people into the domain of gains that the presidents who enacted the plans were reelected. However, once politicians and voters returned to a comfortable state, both were less willing to gamble on further reforms— even if economic policymakers declared deeper measures to be a necessary condition for future growth. In Brazil, the results of the reform package were not sufficient to bring large numbers of voters into the domain of gains, and President Collor was unable to garner support for additional reforms. Venezuela was unique in that the public’s perception of economic strength was high to begin with. Thus, when President Andres Perez adopted the same draconian measures as his contemporaries, his plan was very unpopular. In each case, support was lacking for a continuation of reforms. Corruption, inefficiency, and trade barriers remained in place and hindered further economic development, but according to Weyland prospect theory can account for this by taking stock of the economic winners and losers. In search of further validation of prospect theory, Weyland uses it to explain such historical phenomena as the rise of Nazism and Roosevelt’s implementation of the New Deal. Although prospect theory seems relevant to the cases analyzed in the book, the difficulty of measuring a populace’s perception of crisis limits its ability to forecast change. Nevertheless, Weyland does a masterful job of merging this well-established economic approach with comparative political economy and backing up his argument with a host of rich empirical evidence and historical examples.