The goal of the project is to conceptualize and explain alternative modes of capitalist reorganization in middle­income countries that pursue effective neoliberal reform. I will study how the sweeping process of market liberalization carried out by labor-based parties in Spain (1982-95) and Argentina (1989-99) involved different models of industrial and labor adjustment. This project proposes that in Argentina and Spain a crucial component of the effort to construct reform coalitions consisted in the politics of designing compensations for the losers in sectors of manufacturing business and labor. The study identifies two quite different patterns of capitalist reorganization: Statist (Spain) and Corporatist (Argentina). I will explore how the specific types of industrial adjustment were shaped by the interplay of external and domestic factors: (1) fiscal resources of the state which were directly influenced by external constraints, (2) the strength of the private industrial sector vis­a-vis the state and, (3) the degree of centralization of the union movement. This hypothesis will by tested by a comparative study of the politics of compensations in the following policy areas: industrial restructuring in three manufacturing sectors --steel, petroleum, and autos--, and in the deregulation of labor legislation. The project focuses on Spain and Argentina as essentially non-market paths to industrial adjustment, but will include a comparison with Chile in the 1973-89 period as the embodiment of a third and Market-Oriented type of industrial reorganization under neoliberalism.