Labor-based parties faced a dual challenge in the 1980s and 1990s. On the one hand, fiscal crisis, increased capital mobility, and the resurgence of free market ideologies limited parties' capacity to implement pro-labor and welfare statist policies. On the other hand, industrial decline and the expansion of tertiary and informal sectors weakened labor movements, limiting their capacity to deliver the votes, resources, and social peace upon which party–union “exchanges” had traditionally been based. These changes created an incentive for labor-based parties to loosen their ties to unions and target new electoral constituencies (Kitschelt 1994; Koelble 1991, 1992). Such coalitional change often faced intense opposition from unions and party activists. However, non-adaptation risked long-term political decline.

This chapter examines the capacity of contemporary Latin American labor-based parties to “simultaneously manage working-class decline and the rise of new strata” (Esping-Anderson 1999: 315). It argues that unlike the advanced industrialized countries, where the primary electoral challenge lay in appealing to emerging “new middle classes,” Latin American labor-based parties face a dualistic scenario: white-collarization was accompanied by the growth of an even larger stratum of urban informal poor. In this environment, clientelistic linkages often proved more successful than the media-based electoral professional strategies adopted by many European parties.

Parties' capacity to make the transition from labor-based populism to machine politics hinged on three factors: (1) access to a politicized state bureaucracy; (2) levels of electoral competition; and (3) the entrenchment of party–union linkages.