Even by Latin American standards, this Andean nation of 5 million people, named after South America's great liberator, Simon Bolivar, has unrivaled history of political instability.

The military coup that overthrew president Walter Guevara Arze Nov. 1, tearing the country apart and provoking a popular reaction that has left at least 70 dead and hundreds more wounded, was the third in the past 16 months.

Col. Alberto Natusch Busch, who now tenuously occupies the presidential palace, is the fifth president Bolivia has had since June 1978.

For the Carter administration, which has tried to promote democratic governments in Latin America, the "loss" of Bolivia was, if not a defeat, certainly a disappointment. The United States has yet to recognize the Natusch government and has indicated its displeasure with events here by cutting $50 million in economic and military assistance.

But U.S. diplomats in La Paz, as well as many influential Bolivians, recognize that democracy as it is practiced in the United States and Western Europe is not transplanted easily to Latin America in general, or Bolivia in particular.

Democracy has been an almost eternal dream, beginning with Bolivar, that has almost always been defeated by social economic and political factors promoting instability rather than peaceful change and authoritarian governments rather than pluralistic ones.

Yet, in the view of U.S. diplomats here, the violent and largely spontaneous reaction to Bolivia's recent military coup by La Paz's 700,000 residents indicates that elected, civilian governments are "the wave of the future," which the masses are willing to fight for and defend.

These diplomats believe that the United States has positioned itself on the side of this future, even if the conditions for democracy do not yet exist in most Spanish-speaking Latin countries.

At present only Mexico, Costa Rica, Columbia, Venezuela, the Dominican Republic and Ecuador among Latin American countries have popularly elected civilian governments. Few of these countries have established systems for the transfer of power that are secure.

Columbia faces almost insuperable ecomonic and social problems, as well as widespread guerrilla activity and corruption. Many observers believe conditions there could lead to a military takeover at any time. Venezuela, although its elected government is far less threatened, has in recent weeks been so rife with rumors of a military coup that President Luis Herrera Campins went on television last month to deny that a coup was imminent.

On the other hand, of the military governments in power in Latin America, only those in Brazil, Chile and Paraguay could be considered relatively secure and likely to last another four to five years.

Why?

Although each Latin country has its own set of problems and political dynamics, its own particular economic factors that contribute to instability and its own political culture, certain threads help explain inability of most Latin countries to transfer power smoothly.

Violent change, or change accompanied by violence, is far more the norm in Latin America. In this decade alone, Chile, Argentina, Uruguay, Peru, Ecuador, Panama, Nicaragua, El Salvador, Honduras, the Dominican Republic, Guatemala and, of course, Bolivia all have experienced coups or severe political violence.

These countries share weak political institutions, an unwillingness to engage in political compromise, civilian political leaders and parties often incapable of governing responsibly, and military institutions that traditionally have viewed their role as maintaining internal security or which have intervened at the service of economic interests threatened by usually leftist, civilian or military governments.

All to these factors are evident in the extreme in Bolivia, the poorest, least unified and politically most underdeveloped country in South America.

The coup here was neither unexpected nor inexplicable. Nor was it simply the result of the greed for power of one colonel and a few civilian politicians who urged him on.

"Part of it is the low content of pragmatism on the part of Latin politicians," one Western ambassador said last week, explaining his view of why Bolivia seems perpetually doomed to instability.

"You've got too many huge egos going for broke every day," he said.

But a few men with big egos could not have openly plotted and then overthrown the popular, if weak, Guevara government if Bolivia's political structures had been stronger, if its "democratic" political leaders had been more committed to democracy, if its regional differences had not been so pronounced and if its civilian and military leaders had been better able to keep their troops in line.

When asked why the Nov. 1 coup occurred, Sen. Jose Luis Coca's first response was "military arrogance." After so many years in power, he said, the military could not get used to the fact that they had to obey orders rather than give them and that their chief sources of corruption -- government contracts, control of government ministries, smuggling and bribes -- were largely cut off.

Then, too, according to Walter Guevara Anaya, the son of the deposed president, there was a generational conflict between colonels such as Natusch, who wanted to be promoted, and generals like David Padilla, Bolivia's last military president before Natusch, who refused to retire.

Added to this, according to one ambassador here, was the newly elected Congress' investigation into past military governments, which was almost the first step undertaken by the Congress after it was sworn in Aug. 10. The Congress was about to approve an indictment of former president Hugo Banzer, a general who ruled from 1971 until last year, for corruption and human rights abuses.

"Natusch played on this," the ambassador said, to rally support among the military for his coup.

But there were other factors. The military may act like spoiled children, and may have the force in most Latin countries to overturn governments it does not like, but the civilian politicians are not always much better.

Guillermo Bedregal Gutierrez, now Bolivia's foreign minister and one of the chief civilian plotters of the Natusch coup, said Bolivian political life has been dominated since the 1950s by two men, Victor Paz Estenssoro and Hernan Siles Zuazo, who refused to allow a younger generation of aspiring politicians, like Bedregal, to rise.

Bedregal called Paz and Siles, who both had their chance to be president of Bolivia between 1952 and 1964, leaders who, when "the openings came after 15 years of military governments, behaved selfishly. They avoided the promotion of new leadership."

Both Siles and Paz were the leading candidates in Bolivia's last two elections, in 1978 and this year. Neither of them received a majority, throwing the presidential election into the Congress this year, which finally elected Guevara as a compromise.

Yet, both Paz and Siles, whose parties refused to cooperate with Guevara, purposely kept Guevara weak, giving Natusch and Bedregal the slim excuse they needed to proceed with the coup.

Both the current foreign minister and Roca, who are now bitter enemies, agreed that Bolivia's political institutions, especially its constitution, do not reflect the realities of power in Bolivia for a civilian government with an elected Congress to succeed. Both agree that the military, which theoretically is prohibited by the constitution from participating in government, must be institutionally included in civilian governments if they are to have any hope of succeeding.

Beyond these factors, there are regional differences in Bolivia between the western Andes area, where most of the population lives, and the eastern lowlands, where the country's oil and natural gas are located.

Many of Bolivia's recent coups have begun in the eastern area around the city of Santa Cruz, largely because the conservative business interests there reinforce the military.

Nonetheless, most observers here believe that there has been one significant development in Bolivia this month that no one here can ignore. The violence and killing that accompanied the Natusch coup have changed the political atmosphere. The military, heretofore tolerated, is now hated by the mass of people who saw their relatives killed last week.

This has not canceled out the military power. But it has caused everyone from the generals to the politicians, to stop and reconsider.

Over the weekend, the Congress, the Workers' Central of Bolivia, the country's largest labor federation, and the military high command agreed to begin negotiations aimed at finding a political solution to Bolivia's current crisis.

There were indications that Natusch would be removed as president, either by "voluntarily" resigning or by anothercoup, and that a new government would be put in place that would represent the country's three principal power centers: the elected politicians, organized labor and the military.

As Bedregal said in an interview Saturday, "Just the formality of democracy is not enough. We must incorporate our historical background and the realities of today if we are ever to have a democratic kind of government that will endure."