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Latin America is locked in a struggle between those leaders seeking economic alternatives to the Washington Consensus and others who resist change. This tension is not only responsible for the region's instability; its outcome could also define a postneoliberal order. By Emir Sader.

24th April 09 - Emir Sader, Dag Hammarskjöld Foundation

Latin America has been a laboratory for neoliberal experiments par excellence. It is no accident that it has become the weakest link in the world’s neoliberal chain.

It was the privileged birthplace of neoliberalism (in Pinochet’s Chile and Paz Estensoro’s Bolivia) for very specific reasons. In Chile, it was touted as an antidote – prescribed by the Chicago School – to the ‘statisation’ of the economy by Salvador Allende’s government. In Bolivia, it was treated as a remedy for hyperinflation – prescribed by Jeffrey Sachs – in such large doses that it killed the patient, exterminating Bolivia’s mining economy.

In both cases, the diagnosis had a target: the state and its regulations, expressed in restrictions on the unlimited circulation of capital, in state-owned companies, in the protection of domestic markets, and in workers’ rights. Its aim was to deregulate in order to allow the unlimited circulation of capital, which would supposedly promote a return to economic development, technological renewal, distribution of income and a new wave of economic modernisation.

This new model depended on the prior weakening of the populist movements’ ability to resist and to defend their rights through political parties, social movements and all democratic forms of expression and organisation.

It was, thus, dictatorial processes that made it possible to create a new neoliberal consensus. This established a new political playing field, based on the polarisation of state and market (economically-speaking) and state and civil society (socially-speaking).

A number of displacements took place in the passage from one model to the next: the state was displaced by the market, workers and citizens by consumers, rights by competition, work and electoral documents by credit cards, public squares by shopping centres, human companionship by television, social policies by private corporate welfare, the national by the global, social integration by social exclusion, equality by discrimination, justice by inequality, solidarity by selfi shness, humanism by consumerism, social parties and movements by NGOs and volunteer organisations.

Initiated by a military dictatorship and a party that had led a nationalist revolution (the Bolivian revolution of 1952, whose main leader was the very same Paz Estensoro), the neoliberal model revealed its potential for organising a new hegemony. It spread quickly from the far right to other essentially nationalist movements (such as Peronism and the Mexican PRI) and social-democratic forces (Chile, Venezuela, Brazil), such that Latin America became the region of the world in which it was most prevalent and where it took its most radical forms.

Using as a pretext the risk of inflation and state debt, accentuated by the debt crisis of the late 1980s and early 1990s, the countries successively applied the same model of fiscal adjustment prescribed by the IMF, successively signing letters of intent that committed their governments to minimal state intervention, privatisation, open economies and weakened labour relations. Never had the continent been so forcefully homogenised by an artificially imported and applied model; never had national governments been so weakened; never had inequality and poverty deepened so much in such a short period of time.

These same characteristics made the new model reveal its limits and contradictions with the same speed with which it had been implanted. The first neoliberal crisis exploded in Mexico in 1994, followed by the Brazilian crisis in 1999, and the Argentinean crisis in 2001-2002, affecting the three biggest economies in the region. While the model was still being implanted in Brazil, it was already showing signs of fragility in the Mexican crisis.

The Chiapas revolution of 1994 in Mexico was the fi rst big expression of popular resistance, followed by the struggles and protests of Brazil’s Landless Workers’ Movement, indigenous movements, especially in Bolivia and Ecuador, and the unemployed picketers’ movement in Argentina.

The election of Hugo Chavez (contemporary with crises in the continent’s three biggest economies) heralded a new period, moving from a phase of resistance to one of hegemonic dispute, which saw the successive election of new governments in Brazil, Argentina, Uruguay, Bolivia, Ecuador, Nicaragua and Paraguay – and new perspectives in El Salvador.

These governments, to differing degrees, were elected as a reaction to orthodox neoliberal governments, and on the strength of their promises to reinstate social rights, reduce market power and restore the role of the state.

Lula spoke of social priorities. Hugo Chavez emerged in political life in opposition to Carlos Andrés Perez’s neoliberal package. Kirchner was elected in Argentina after an attempted return by Menem, who had personified one of the most radical forms of neoliberalism on the continent.

The neoliberal model spread quickly from the far right to other essentially nationalist movements and socialdemocratic forces, such that Latin America became the region of the world in which it was most prevalent and where it took its most radical form.

The new governments worked to restore social policies, to end privatisation processes and others that weakened the state, and were even strengthened to a degree. Processes of integration were a new dimension and gained importance with time.

It fell to the United States and Brazil to finish negotiating the FTAA (Free Trade Area of the Americas); however, the change of government in Brazil brought these negotiations to a halt and they were shelved due to mobilisations against the FTAA.

The United States started to seek bilateral free trade treaties. Mercosur, on the other hand, was strengthened, as were other forms of regional integration, among which ALBA (Bolivarian Alternative for the Americas) and USAN (Union of South American Nations).

Postneoliberalism

What is postneoliberalism and why use this expression? Capitalism has gone through various stages in the course of its history. After the initial process of accumulation, which included the so-called ‘commercial revolution’ and the whole process of colonising the periphery of the system (including slavery), the building of nation states was marked by systems of political transition – constitutional monarchies, hybrid regimes between absolutism and the emergence of parliamentary forms of political representation for the new emerging classes.

This period saw a succession of distinct hegemonies: from the cities of northern Italy and Holland, always related to their ability to control maritime traffic, to the rise of the English hegemony.

This brought about a transition from the commercial to the industrial revolution, establishing a hegemony of capitalist relations of production and circulation. The historical period of English hegemony corresponded to the promotion of liberalism as a dominant ideology, which appeared to be the fi nal stage of capitalist development – when there was greater consensus regarding its ideology.

The 1929 crisis, however, laid the groundwork for the depletion of this model. All diagnoses of the crisis blame liberal policies, which receded in the following decades. After the confl icts exacerbated by World War II, the Keynesian model (of regulation and social welfare) became the hegemony, such that Richard Nixon, at the end of his time in office, once said: ‘We are all Keynesians.’

After the long post-World War II economic boom, capitalism returned to a more liberal model based on deregulation and ‘free trade’. This didn’t mean returning to a path natural to capitalism; it was simply a different kind of hegemony ushered in by the depletion of the last, in the historical conditions of late 20th century capitalism.

Through deregulation, it represented the promotion of the hegemony of financial capital, both nationally and globally. ‘Free trade’ was not restored and high levels of national protectionism remained, especially in central capitalist powers.

In these circumstances, what might postneoliberalism represent? It was not present in the transition from the historical period of world bipolarity to unipolarity, under the hegemony of the American empire; or the previously mentioned transition from a regular to a neoliberal model.

Postneoliberalism is based on the conditions generated by liberalism, among whose consequences are the inability to return to long cycles of economic growth. This impossibility has its roots in the hegemony of financial capital – in its speculative form – over real capital.

The excess is transferred to the financial arena instead of being channelled into productive spheres, concentrating income even further in each country and on a world scale.

Postneoliberalism represented, among other things, the unprecedented extension of commercial relations, as deregulation removed impediments to the growth of capital in all spheres and territories. This growth accompanied ideologies that preached market centrality.

Commercialisation and its ideologies are widespread in the countries, especially on the periphery, where financialisation is deeply entrenched. Ideologically speaking, this has promoted a polarisation of state and private sector, disqualifying the former and valuing the latter, as well as abolishing the public sphere.

A postneoliberal alternative must begin with anti-neoliberalism, which means:

• opposition to deregulation;

• opposition to financialisation;

• opposition to the weakening of labour relations; and

• opposition to ‘free trade’.

Opposition means both ‘to reject and to move beyond’ – Aufhebung, to use the succinct German expression. It is about discussing what it means to reject or move beyond deregulation, financialisation, weakening, and free trade.

It is not about its opposite, because historical conditions filter out concrete possibilities, preventing a game of abstract logic from being directly transposed into concrete reality. A careful analysis of the Bolivian, Ecuadorian and Venezuelan models enables us to see the extent to which neoliberal policies in these countries (in addition to Cuba) represent a postneoliberal model or contain elements of one.

This hypothesis requires a detailed analysis of these countries and any others that adopt a postneoliberal logic. It requires an analysis of the social nature of postneoliberal models, their limitations, contradictions, potentialities and concrete perspectives.

Postneoliberalism and Anti-Capitalism

The left was born, in modern times, in the anti-capitalist struggle, rejecting it and seeking to move beyond it with socialism. Bringing progress and emancipation to labour relations and the working class, it became the standard-bearer for a classless, stateless society.

Long-lasting internal schisms in the labour movement and the left gave rise to two schools of thought (social democracy and communism), in which the former went from anti-capitalism to the democratisation of capitalism, and the latter stayed true to the economic base of the Soviet model, but proposed prior transitional stages to the anti-capitalist struggle in other countries. This struggle was increasingly tempered by other historical moments.

Capitalism’s passage to its neoliberal era extended commercial relations to an unprecedented degree, as if realising capitalism’s original promises. In the process, however, power relations between social classes were radically transformed, for the worst as far as anti-capitalist forces were concerned.

A gulf grew between the conditions for the depletion of capitalism and those required in order to move beyond it – which sums up the greatest historical drama of our day.

One response to the crisis of depletion of the neoliberal model privileges the first element of this equation and points to the identification between anti-neoliberalism and anti-capitalism, causing this struggle to lead to socialism or to only find direct resolution in socialism.

This conception is based on the understanding that the neoliberal era would be the last stage of capitalism – according to Giovanni Arrighi’s analyses of the final stages of each cycle of hegemony on a historical scale. He predicted that they would end precisely with moments of hegemony of financial capital, revealing the depletion of the model’s capacity for production and redistribution.

That was what happened at the end of the Dutch and British hegemonies and Arrighi believed it would be repeated with the decline of the US hegemony. On the other hand, the deregulation fostered by neoliberal policies favoured the hegemony of fi nancial capital in its speculative mode.

In order to instate a diff erent model, it would be necessary to introduce new forms of economic regulation, which would be very difficult, even in the current crisis, once deregulation had a foothold. It could not come from a single country, no matter what its importance, because others would benefit from the flow of capital rejected in this country.

At the same time, it would be hard to come to a large-scale international agreement, due to the different interests of the biggest powers and international corporations.

The end of international bipolarity, however, has shrunk the international horizon (previously restricted to the capitalist arena), with China reconverting its economy to market relations and Cuba having a hard time moving beyond the end of its socialist arena.

Arrighi saw the axes for overcoming the US hegemony in the rise of Asia. First, in Japan, whose prolonged recession stopped it from playing a greater role in the hegemonic crisis; then in the ‘Asian tigers’, which were hit by one of the biggest international fi nancial crises in the late 1990s;  nd, finally, China, which is rapidly transitioning to a market economy.

As such, the possibilities for revealing the decline of the United States are all located in capitalist economies and do not lend themselves to a process of postcapitalist transition.

The same dilemma occurs at a national level: while neoliberalism has pointed to the limits of capitalism (whether to promote economic development or distribution of wealth), it has simultaneously undermined solutions for moving beyond it, whether these be neoliberal or, even more so, capitalist.

It has corroded social bases by forcing most workers out of formal work relations, leaving them in a precarious situation in which it is very difficult for them to organise themselves, to obtain political and legal representation, to assume a social identity, to build a collective culture and to fight for their rights.

It has also been corrosive by consolidating the hegemony of liberal ideologies, especially through the spreading infl uence of the ‘American way of life’ – from the proliferation of shopping centres to publicity and the commercial nature of the media.

This combination of factors has made the essential drama of today’s world, as stated earlier, the abyss between the depletion of capitalism – now in its neoliberal phase – and a delay in the subjective conditions for generating possibilities for moving beyond it. This gulf explains, in short, the contemporary world’s crisis of hegemony and the dilemmas of postneoliberalism. 

Latin America was the first region to adopt neoliberalism as its hegemonic model, as well as the earliest to try to implant alternatives. It went from being a region in which the model was dominant to a territory of hegemonic instability in which alternatives were sought. Resistance to neoliberalism in countries like Brazil, Uruguay and Mexico, among others, has fostered the constitution of a significant opposing force, which in many cases has halted the full realisation of neoliberal projects.

However, while some political powers with their roots in these movements have begun to express resistance to neoliberalism in the political arena, they have not put postneoliberal policies into practice. They have remained within the model, tempering it with compensatory social policies.

Four governments seek to locate themselves outside of this model: Cuba, Venezuela, Bolivia and Ecuador. They are developing different political models with distinct socio-economic structures, but they share a tendency not to make economic-financial objectives central and favour policies with social objectives.

They seek a strategy in which economic concerns are subordinate to social concerns, breaking the hegemony of financial capital and market mechanisms.

The Anti-Neoliberal Struggle: from Resistance to Hegemony

As mentioned earlier, in forging a new path the Latin American left has gone from a defensive phase, when the hegemony of neoliberalism was almost unquestionable during the 1990s, to hegemonic dispute. As such, social movements, which had been fundamental protagonists in the phase of resistance, have had to face some difficult dilemmas.

During the phase of resistance the left was harshly critical of political parties, governments, the state, and the political sphere itself, developing the expression ‘autonomy of social movements’ as a sphere of ‘civil society,’ important in the struggle against neoliberalism. This allowed them to regroup for resistance in the social arena.

The neoliberal model began to show signs of depletion with the crises in Mexico, Brazil and Argentina, making room for forms of political regrouping in opposition to neoliberalism.

The election of Hugo Chavez in 1998 marked the beginning of this process, which had already been in the making for 10 years, with the multiplication of governments of a new kind, some of which were openly anti-neoliberal, while others sought to make the model more flexible. It is safe to say, however, that the golden age of neoliberalism is over and that this is a new period of disputes over the kind of government that should succeed it.

The movements that fell under the umbrella of the ‘autonomy of social movements’, declined to participate in national political disputes and ended up confined to limited spaces or even disappearing from the national arena.

The former is what happened with the Zapatistas, who were isolated in Chiapas, Mexico, lost their capacity for national presence and found themselves without proposals that allowed them to rally support at a national level and emerge as an alternative for the country as a whole.

The latter is what happened with the picketers in Argentina, who, after the country’s biggest political crisis, which saw the succession of three presidents in one week, when presidential elections were called, did not participate, taking refuge in the motto ‘Everybody out!’ As a result, Nestor Kirchner occupied the space of opposition to the return of Carlos Menem and capitalised on the energy of the popular movements. A few years later, the picketers had practically disappeared, except the sector that had aligned itself with the government.

The Bolivian example, on the other hand, was paradigmatic. The new cycle of popular movements and uprisings that began with the ‘water war’ in 2000 led to the foundation of the Movement for Socialism (MAS) in order to dispute the political direction of the state.

Through a critique of Bolivia’s traditional left (which reduced the indigenous to peasants, small landowners, and supposed secondary allies of working-class miners, erasing all of their secular identities as Aymaras, Quechuas and Guaranis), it was possible to reconstruct a political subject from the original peoples, which led to the first indigenous leader being elected president and the beginning of the building of a new state in the country.

In other ways, this is also the path taken by the Ecuadorian and Venezuelan popular social movements. In Ecuador, indigenous movements have shown great resistance and removed two presidents (the third, Lucio Gutierrez, was ousted more by urban social movements), without, however, assuming direction of the state, delegating it to others, until they felt betrayed, which caused rifts and weakened the movement.

The election of Rafael Correa marked a return to the cycle of mobilisations in the dispute for control of the state and its refoundation. Similarly, the Venezuelan process, where nationalist military men were initially the protagonists, is heading in a similar direction, in this case supporting the emergence of a new movement of the masses, which did not previously exist in the country.

In countries with moderate governments, which have not openly abandoned the model but have given it more fl exibility (in Brazil, for example, financial policies have remained the same, but within a new economic scenario), such as Argentina, Uruguay, Brazil, and probably Paraguay, relations between social movements and political powers are still fairly traditional, although with forms of support that are critical of the governments.

In these countries the dilemmas of the social movements are not easily solved, because there are only two positions in the political arena: those who break with these governments (whom they believe to be following directly in their predecessors’ footsteps and, thus, mere managers of neoliberal models) and who become the main enemies of these movements (a position characteristic of the extreme left in these countries); or those who align themselves with the left-wing sectors of these governments, reflecting their contradictory nature, in the struggle against their conservative sectors.

The Latin American populist arena is made up of these moderate governments and others which have in common not only social policies that restore the rights expropriated by neoliberalism, but also foreign policies that privilege regional integration in detriment to the signing of free trade treaties with the Unites States.

Many fail to understand that this is the fundamental dividing line on the continent today, rather than one between a so-called ‘good left’ and ‘bad left,’ as preached by right-wing theoreticians (such as Jorge Castañeda, among others), who seek to divide the left, co-opting the moderate sector and isolating more radical elements.

After a beginning with relatively fast progress, the new governments began to suffer strong attacks from a relatively recomposed right. That was what happened in the attempted coup in April 2002 in Venezuela, and later in the harsh attacks on Lula, Nestor and Cristina Kirchner, and Evo Morales.

These did not represent a new rightwing platform, but attempts to weaken these governments, undermining their ability to continue to seek alternatives to the model and to make progress in regional integration.

The future of the region in the first half of the new century will be at stake in elections to determine the successors of the current presidents (Lula, Tabaré Vazques, Cristina Kirchner, Hugo Chavez, Evo Morales, Rafael Correa).

It will be decided whether these current governments will be able to continue and advance toward postneoliberalism, or be replaced by governments that, albeit with a different face, will restore the neoliberal model. It is this struggle between the new (which seeks, with difficulty, to forge new paths) and the old (which seeks to resist, with no less difficulty) that marks the current instability on the continent: the expression of a great crisis of hegemony that characterises its present historical moment.

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