A Sea Change in Latin American Politics Challenges the “Washington Consensus”
As the Soviet Bloc began to stagnate economically in the 1980s, the industrial capitalist giants led by the United States increased pressure on poor countries to shift from state-directed to so-called “market economies.” The G7 countries, the United States, Japan, Britain, France, Italy, West Germany, and Canada, launched a campaign to demand that countries downsize their governments, deregulate and privatize their economies, and shift from producing goods and services for domestic consumers to exports. These policies, known as the “neo-liberal policy agenda” or the “Washington consensus” were promoted by the International Monetary Fund, the World Bank, the World Trade Organization., and international bankers and CEOs of the major multinational corporations.
The theory behind the neo-liberal policies was that by opening their economies to foreign investors and stimulating exports, developing and former Socialist countries would receive scarce dollars, yen, marks and other international currencies to stimulate their own development. Unfortunately for these countries the reality became radically different from the theory. For example, in Latin America, there was over 80 percent economic growth between 1960 and 1980, before the neo-liberal policies went into effect and only 9 percent growth from 1980 to 2000. For almost all countries of the Western Hemisphere economic inequality dramatically increased and the percentages of the people living in poverty rose.
By the dawn of the new century about 1/4 of Latin Americans lived in poverty (less than $2 a day). Surprisingly, statistics indicated a direct relationship between productivity growth and the percentage of the population living in poverty; productivity and poverty increased at the same time. In addition, the work that most Latin Americans did has significantly changed. From 1950 to 1990 there was a 29 percent decline of those who worked in agriculture, a modest 5 percent increase in industrial work, and a 23 percent increase in service sector employment. In the 1990s, it was estimated that almost all job creation was in the so-called “informal sector.” That is, most new job seekers were engaged in street markets, drug dealing, prostitution, unregulated sweatshops in small facilities or people’s homes, or other low-paying, unregulated work.
Despite the dramatic decline in the quality of life experienced throughout Latin America, since the 1980s, the G7 countries, the international economic organizations, and the private banks and corporations continued to promote neo-liberalism through strident rules involving borrowing and inequitable trade agreements. However, over the last decade, resistance to neo-liberalism has generated a massive anti-globalization movement.
During its early stages, grassroots groups began to protest when their governments accepted loans with conditions attached from the IMF. Indigenous people mobilized to protest international energy and other corporations clear-cutting their land to extract natural resources and at the same time destroying communities.
Then, in 1994, the Zapatistas, a largely indigenous movement in the Mexican state of Chiapas, rose-up against their government’s participation in the NAFTA trade treaty with the United States and Canada. It gained international recognition and support from opponents of neo-liberal globalization everywhere.
In 1999, a coalition of environmentalists, workers, indigenous people, and others shut down the World Trade Organization in Seattle to protest so-called “free trade” which they saw as benefiting corporations and banks, rather than people. The so-called “battle of Seattle” made it clear that a new world movement was in formation. Since then, anti-globalization activists of all sorts have met in World Social Forum meetings in Brazil, India, Kenya, Venezuela and spread to Africa, Europe, and North America. This week the latest World Social Forum is meeting again in Brazil.
The latest stage of protest against neo-liberalism is reflected in a massive transformation of politics in Latin America. In a series of elections throughout the region candidates and parties have been elected to office opposing neo-liberalism and “the Washington Consensus.” These include anti-neo-liberal governments elected in Brazil, Argentina, Uruguay, Chile, Bolivia, Ecuador, Paraguay, Nicaragua, and, the most recent U.S. target, Venezuela. While these regimes vary in their opposition to neo-liberalism, they threaten economic “business as usual” U.S. interests.
Venezuela now is transforming its own internal economic and political life while building a coalition of states to stand up to U.S. regional dominance. The Venezuelan story began when its citizens elected a former army officer Hugo Chavez to the presidency in 1998. Chavez launched a so-called “Bolivarian Revolution.” At home it included a new constitution recognizing the rights of all citizens to a job, education, health care, and basic nutrition. Since then literacy and medical campaigns have dramatically transformed the quality of life of the 80 per cent of the population that were poor. Local planning councils and Bolivarian Circles have empowered the vast majority of Venezuelans to participate in political decision-making. The government has encouraged worker managed and owned factories and has redistributed 2.2 million hectares of state-owned land to 130,000 peasant families and cooperatives to revitalize agriculture.
Finally, Venezuela has made agreements with her neighbors, to trade oil for products that they produce. For example, thousands of Cuban doctors have been working in Venezuela in exchange for valuable oil. In addition, it has worked to build a South American common market, and with others, is constructing a regional development bank. It has initiated similar ties with countries in the Caribbean and Central America.
No doubt, Venezuela’s vast oil resource has underwritten its domestic reforms and community building in the region. But the country is historically among the few which have used profits from their scarce resource to redistribute wealth, income, and power to an underclass.
The Bush administration worked to undermine and overthrow the Chavez regime, including supporting an abortive military coup against him in 2002. It tried to threaten and isolate the regime in the region the way the U.S. has tried to do to Cuba since 1960.
Given the sea change in the politics of the entire region, a wiser policy for the new Obama administration would be to support Latin American regimes that promote and guarantee their citizens economic rights. It is time to give up old and discredited foreign policies based on market fundamentalism and covert interventionism. In an article describing a letter 200 Latin American scholars wrote to President Obama urging a new US policy for the region Cynthia McClintock, Professor of Political Science and International Affairs at George Washington University wrote: that “… the key goal of our letter was to encourage President-elect Obama to consider the ‘new left’ in Latin America as part and parcel of the movement for change in the United States.”