Latin America: Growth, Stability and Inequalities: Lessons for the
Introduction: Images of the Past
The image of
In contrast the same opinion makers plus their academic counterparts project images of the United States and the European Union as stable societies, with steady economic growth, incremental expansion of social welfare programs, resolving issues via consensual compromises and practicing sound fiscal policies.
In recent times, the better part of the current decade, these images have taken on the character of ideological dogmas – they no longer correspond to reality. In fact a good argument can be made that the roles have been reversed: the US and EU are in perpetual crises and Latin America, at least most of the major countries, have experienced stability and growth which is the envy (or should be) of
Progressive opinion is equally at fault, focusing on the ‘advances’ of the left regimes but overlooking the underlying dynamics affecting most of the region and thus losing sight of the new points of conflict and contention.
We will proceed to outline the contrasting realities between the crises ridden “North” (US/EU) and the sustained growth of the “South” (
The Lost Decade, US and EU Style
The Latin American countries during the 1980’s experienced a deep and persistent crises, manifested in negative growth, increased poverty levels and heavy indebtedness, which allowed creditors (like the IMF) to impose harsh and regressive austerity measures and “structural adjustment” policies which came to be known as ‘neo-liberalization’. These included the privatization of most strategic, lucrative public enterprises, and the ending of any semblance of state directed industrial strategies. For the peasants and the working and middle class the short-lived neo-liberal “boom” of the 1990’s was a continuation of the ‘lost decade’ of the 1980’s. The neo-liberal policies of the 1990’s were based on fundamentally flawed structural foundations and polarizing income and public expenditures involving huge transfers of income to capital and downward pressures on wages and welfare. The neo-liberal regimes
went into a deep crisis early in 2000 provoking major popular upheavals. The outcome resulted in a new set of political configurations and social power equations, which evolved into new post-neoliberal regimes, at least in most of the major countries in
In contrast and in part thanks to the profitable opportunities opened by the debt crises and neo-liberalization of Latin America in the 1990’s (and in the ex-Soviet Union, Eastern Europe and the Baltic/Balkan states) the US and EU prospered. In Latin America over 5,000 lucrative extractive resource based industries, banks, telecommunications and other industries passed into the hands of foreign private MNC and local capital .High returns on bonds and loans and rents from technology transfers enriched the Northern capitalists even as poverty multiplied in the South. The 1990’s was the “golden age” of Western capital as profits rose and leftist parties and the traditional urban trade unions appeared unable to withstand the ‘wave’ of predatory capitalism capturing the commanding heights of the economy.
The very successes of the
The first decade of the new millennia has been the ‘lost decade’ of the North. Over the course of the past eleven years the North has witnessed stagnation and recessions which have not given way to recoveries. The capitalist states temporarily saved the bankers but were powerless to set in motion economic growth.
The credit rating of the
Signs of the Better Times:
Recently the finance minister of
Except for the Latin countries still under US dominance, especially Mexico and most of Central America, the rest of Latin America has not only avoided the crises afflicting the North but have been growing at a healthy rate, three times that of the US over the decade. The new millennium, especially between 2003-2011 (except for a brief interlude in 2009) has been a period of high growth, general prosperity, booming exports, rising imports, greater inter-regional co-operation, and large scale poverty reduction.
Because of fiscal controls and banking regulations, both results of the lessons learned from the crisis of the lost decades (1980-2000),
With the exception of
The class struggle is still the motor force in the social progress of
While militant class action including land occupations, street demonstrations and strikes are still part of the repertory of working class social weapons, they take place within the political parameters of democratic institutions. In
The limitations and ‘contradictions’ affecting all
This is clearly the case in contemporary
The new and explosive issue confronting rulers and ruled in most of high growth Latin
Growth, stability and democratic class struggles characterize most of the major countries, but not all. In several countries, the authoritarian and violent legacy of the dictatorial regimes continues robust.
What these three retro-regimes have in common is that they continue to follow the dictates of
The 3 retro-regimes have never experienced the kind of popular rebellions and resultant center-left regimes which have emerged in most of
While most of Latin America has forged ahead, thus far largely avoiding the instability and economic crises of the US and EU, past legacies and present inequities present a new set of structural impediments to the consolidation of long-term growth and political and social stability. The biggest structural contradiction is found in the high growth/increasing inequalities, socio-economic model based on the “3 ½ alliance”: foreign capital-national capital-the developmental state and the co-opted trade union/peasant leaders. The profits and investments of this power configuration has been driven by the growth of agro-mineral exports, rising commodity prices, easy consumer credit and state regulation of financial markets. The economic returns on growth have been disproportionately appropriated by the “big three” with incremental payoffs to a minority of better paid organized workers. The ‘residuals’ are used to “lift the poor” from abject poverty to subsistence. These growing inequalities have been “papered over” by the general rise of income, easy credit and improved public services. But rising incomes have set in motion a new set of class conflicts which will be exacerbated when the prices of commodities decline and the governments can no longer fund incremental improvements. Even today, severe conflicts have emerged between predator mining and timber, multi nationals and Indian/peasants in
The second contradiction is between the “marginalized working poor” and a new class of local middle and business class investors who have invested their “savings” in shares of the foreign and locally owned mining companies. Conservative and closely aligned with the rapacious multi-nationals, these new middle class investors have enriched themselves on the bases of unregulated plunder of natural resources and contamination of the adjoining rural communities. If and when commodity prices nose dive, the regimes will face a bankrupt hysterical middle class looking for a political savior where none exist, at least among the existing civilian parties.
The rightward drift of the center-left regimes and their opportune links to big business especially in
The third contradiction is found between the high level of dependency on commodity exports (which heretofore have been the dynamic element of growth) and the relative and absolute decline of manufacturing exports and production. The growth of income from commodities has led to the appreciation of the currency which has lessened the competitiveness of nationally produced manufactured products, leading to a sharp decline in profits and even bankruptcy.
Asian manufacturer-exporters – especially in
The fourth contradiction is found precisely in the successful economic growth and high returns, which has attracted both speculative and “takeover” capital as well as productive
investments. Speculative capital will flee and destabilize the financial system at the first sign of slowdown. Foreign ownership will lessen the government’s ability to leverage investment decisions in time of crises. Productive investments respond to expanding markets they do not create them.
In summary, Latin America’s decade long dynamic growth has certainly out-performed the
Can the positive lessons of the dynamic Latin American experience provide a ‘model’ for the
Granted there are vast historical, cultural, economic and political differences between the regions yet some lessons from the Latin America’s decade of dynamic growth, provides new ideas to counter the negative, self-defeating economic formulas put forth and practiced by US and EU experts, economists and policymakers.
Let us start from the beginning. The rise of
First, the beginning of a successful response depends on a political transformation. Regime change a complete break with the ‘neo-liberal’ free market, and the political leaders and parties who are totally embedded in failed institutions and policies. Regime change presupposes the eruption of dynamic mass organizations, new, old, improvised and organized, capably of moving from protest and resistance to political power.
The object is to rebalance the
The entire militarist- Zionist-permanent war mentality is entirely vulnerable to change: doing so, will create jobs, the top priority for over two-thirds of the
Of course the Latin American republics had an easier time in rebalancing their economic priorities from failed military rulers and discredited neo-liberal policies. Citizen movements in the US and EU imperial states will have a harder time in closing down hundreds of military bases, ousting militarist politicians backed by powerful domestic and foreign lobbies and converting the empires to productive republics. Yet, Latin American exporters have prospered by avoiding entanglement in overseas imperial wars. They continue to pursue new markets in the Middle East and elsewhere instead of destroying adversaries of
The contrasting performance between Latin republics and Euro-American empire builders is striking. The US and EU should shed their self-centered images of “successful” developed countries and outdated stereotype of Latin America as a collection of “volatile”, coup prone underdeveloped countries. The
Domestic and international failures multiply as the crisis deepens and nothing proposed by the blighted incumbents and besotted opposition offers any programmatic solution.