The end of post-neoliberalism

In response to the crisis, "progressive" governments adopted increasingly market-friendly measures. The "conservative restoration" that they regularly denounce was in fact surreptitiously introduced from within. Español

François Houtart
7 July 2016

The time when dictatorships and neoliberal governments in Latin America were replaced by several progressive governments which benefited the poor without seriously affecting the income of the rich is coming to an end. Governments are back on the Right track. This signals a new time when unity of the popular sectors is once again the only way forward.

Latin America was the only continent where neoliberal options were adopted in several countries. After a series of US supported military dictatorships carrying the neoliberal project, reactions were swift. They culminated in the rejection, in 2005, of the Free Trade Agreement with the United States and Canada, which came as a result of a joint effort by social movements, leftist political parties, non-governmental organizations and Christian churches.

The new governments of Brazil, Argentina, Uruguay, Nicaragua, Venezuela, Ecuador, Paraguay and Bolivia put into effect policies which reestablished the role of the state in redistributing wealth, reorganizing public services, particularly access to healthcare and education and investment in public works. A more suitable share of the revenue from the exploitation of natural resources (oil, gas, minerals, agricultural produce) was negotiated between multinational corporations and the state, and the decade-long favourable international market situation allowed a significant increase in national income for these countries.

To talk about the end of a cycle conveys the idea of some sort of historical determinism that suggests the inevitability of the alternation of power between the Left and the Right - an inadequate concept if the goal is to replace an oligarchy’s hegemony by popular democratic regimes. On the assumption that the new governments were post-neoliberal but not post-capitalist, a number of factors allow us to suggest, however, that we are witnessing an exhaustion of the post-neoliberal experiences.

Obviously, it would be delusory to think that “instant” socialism is at all possible in a capitalist world during a systemic and therefore particularly aggressive crisis. The question of a necessary transition arises.

A post-neoliberal project

The project of the Latin American "progressive" governments to rebuild an economic and political system capable of repairing the disastrous social effects of neoliberalism was no easy task. The restoration of the social functions of the state, which has always been controlled by a conservative administration quite unable to be an instrument of change, led to its reorganization. In the case of Venezuela, a parallel state (the so-called missions) was established thanks to the oil revenues. In other cases, new ministries were created and high-ranking civil servants were gradually substituted. The process was guided on the whole by a centralized and hierarchical conception of the state (the importance of a charismatic leader), and showed a tendency to use social movements as instruments, to develop an often paralyzing bureaucracy, and to coexist with corruption (in some cases, large scale).

The political will to leave neoliberalism behind had positive results: an effective fight against poverty for millions of people, better access to healthcare and education, and public investment in infrastructures - in short, a redistribution of at least a part of the domestic product, which had grown considerably as a result of the rise in the world commodity prices.

This benefited the poor without seriously affecting the income of the rich.

To this should be added the important efforts made towards Latin American integration, through the creation or the strengthening of organizations such as Mercosur, which groups ten South American countries; UNASUR, which integrates the continent’s South; CELAC, which does the same for the whole Latin world plus the Caribbean; and finally, ALBA, a Venezuelan initiative involving ten countries, which offers a new perspective in cooperation, based not on competition but on complementarity and solidarity.

But the domestic economies of the “progressive” countries remained, in fact, dominated by private capital, its accumulation logic - particularly in the mining and oil sectors, in finance, telecoms and large-scale trade -, and its disregard for "externalities" – that is, environmental and social damage. This gave rise to escalating reactions from several social movements. The media (press, radio, television) remained largely in the hands of large national and international conglomerates, despite the efforts made to redress a situation of conspicuous communicational imbalance (Telesur and the national communication laws).

What kind of development?

The development model of the “progressive” governments was inspired by the 1960s’ "developmentalism", when the United Nations’ Economic Commission for Latin America and the Caribbean (ECLAC) was proposing import substitution through increased domestic production. Its implementation in the 21st century, in a favourable commodity price context, combined with an economic vision focused on increasing production and a conception of redistribution of the national rent without fundamentally altering social structures (no agrarian reform, for example) led to the "re-primarising" of the Latin American economies and an increasing dependence on monopoly capitalism, and thus even to a relative de-industrialization of the continent.

The project gradually morphed into an uncritical modernization of the societies concerned, with some nuances depending on the country - some, like Venezuela, emphasizing community participation. This resulted in an increase in middle-class consumers of goods from abroad. Megaprojects were encouraged and traditional agriculture was left abandoned to its fate to promote export-oriented, ecosystem- and biodiversity-destroying agriculture, to the point of endangering food sovereignty. True agrarian reforms were nowhere to be seen. And reducing poverty mainly through relief measures (as in neoliberal countries) did little to shorten the social gap, which kept on being the widest in the world.

Could it have been done differently?

One may wonder, of course, if things could have been done differently. A radical revolution would have triggered armed interventions and the US has all the necessary equipment and tools for it.

On the other hand, the strength of monopoly capital is such that the agreements reached in the fields of oil, mining, and agriculture quickly turn into new dependences. To this must be added the difficulty of carrying out autonomous monetary policies, and the pressures from international financial institutions, not to mention capital flight to tax havens, as evidenced by the Panama Papers.

Moreover, the education of the leaders of the "progressive" governments and their advisers was clearly designed for the task of modernizing society, irrespective of other contemporary achievements such as the importance of respecting the environment and ensuring the regeneration of nature, the critique of market-absorbed modernity based on a holistic view of reality, and the importance of the cultural factor. Interestingly, their policies contradicted some pretty innovative constitutional provisions in these areas (the right of nature, buen vivir).

The new contradictions

This explains the rapid evolution of both internal and external contradictions. The most dramatic factor was, obviously, the consequences of the crisis of world capitalism and, particularly, the partly-planned fall in commodity prices, especially oil. Brazil and Argentina were the first countries to suffer its effects, followed swiftly by Venezuela and Ecuador. Bolivia fared better, thanks to its significant foreign exchange reserves. This situation immediately affected employment and the consumption possibilities of the middle class. Dormant conflicts with some social movements and leftist intellectuals came into view. Government failures, which people until then had put up with as the price for change and, especially in some countries, the corruption embedded in their political culture, triggered popular reactions.

Obviously the Right jumped on the opportunity offered by the situation to start a process of recovery of its power and hegemony. Appealing to the democratic values that it never respected before, the Right managed to recover part of the electorate: it took power in Argentina, won Congress in Venezuela, questioned the democratic system in Brazil, and ensured a majority in the main cities of Ecuador and Bolivia. It tried to take advantage of the disappointment of some sectors, particularly the indigenous peoples and the middle classes. And it also tried to overcome its own contradictions, especially between the traditional oligarchies and the modern sectors, with the support of many US agencies and the media it controls.

In response to the crisis, "progressive" governments adopted increasingly market-friendly measures, so that the "conservative restoration" they regularly denounce was in fact surreptitiously introduced from within. The transitions then simply became adaptations of capitalism to the new ecological and social demands (modern capitalism) rather than steps towards a new post-capitalist paradigm.

All this does not mean the end of social struggles, on the contrary.

The solution lies, on the one hand, in the grouping of the forces for change, inside and outside government, to redefine the project and the transition forms and, on the other hand, in the reconstruction of autonomous social movements focused on medium and long term goals.

This article was previously published by lalineadefuego.

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