By the early 1950s many of the preconditions had been met in Central America for capitalist modernisation; the latter in turn generated rapid economic growth, which lasted with only minor interruptions until the end of the 1970s. This high long-run rate of growth was unprecedented in Central America, but like all such secular booms it left unresolved the question of how the benefits would be distributed. Capitalist modernisation could be achieved without necessarily changing the structure of the labour market. Labour's traditionally weak position was therefore not likely to be altered through the operation of market forces; on the contrary, an improvement in the conditions facing labour after the Second World War required either a resurgence in the organised workers' movement (virtually destroyed after the 1920s) and/or a shift towards a more democratic style of government so that labour's interests could carry some electoral weight.

By 1944, the omens for both had become reasonably favourable. Caudillismo was on the defensive, under attack in the four northern republics from a broad-based alliance which included the fragmentary workers' movement; only in Costa Rica was the picture complicated (as we shall see) by the alliance of Calderonismo with the Communist wing of the labour movement. Throughout the isthmus, ‘democracy’ was a catchword with which all but the most recalcitrant identified. Within a year, however, the situation did not look so favourable. Caudillismo had crumbled in Guatemala, but elsewhere it had survived through a combination of electoral fraud (Costa Rica), repression (Honduras), external intervention (El Salvador) and opposition factionalism (Nicaragua).