Isabel GabardiLatin American Studies IFall, 2017Globalisation and New Strategies for Economic Development in Latin AmericaIntroductionThe current Neoliberalist model that has dominated not only the Latin American market, but the world market has been in place since the late 1970’s.
This model has formed a ‘new elite’ which comprise of powerful transnational actors rather than the traditional state actors. These transnational elites have become so rich and powerful that according to a recent study by Credit Suisse, “the wealthiest 1 percent of the world’s population now owns more than half of the world’s wealth” (Frank, 2017). This extreme differentiation in wealth is maintained by a lack of regulation of this newly liberated trade and labor market. On the international level, the countries holding the most wealth are the countries promoting and benefiting most from Neoliberalist policies such as the United States, Western European countries, and Japan.
The current globalization and economic process in Latin America prompts us to consider what lies beyond Neoliberalism and whether or not post-Neoliberalist era is underway. Neoliberalism is vulnerable to the increasingly powerful movements that challenge its dominance and while it may be hegemonic, it is a fragile hegemony, one that must constantly be remade, but one that is also possible to undo. The focus of this essay will be to assess the contemporary globalization process in addition to the economic strategies followed by the Latin American governments. It should be noted that the accounts of Latin American and Caribbean countries are hardly all-inclusive. While semblances may occur, it is unjust to generalize the region into one.
Currently, topics including the dynamics of international capital markets, consumption patterns, global sustainability, decision-making on the international level and political transformations have developed into legitimate and necessary questions to contemplate when it comes to globalization, development and economic strategies. Individual countries throughout Latin American and the Caribbean have had contradicting reactions to globalization and Neoliberal policies and therefore responses have differed. These responses include a growth in civil society that work with and through state institutional channels which has potential to pave the way toward a post-Neoliberal era that offers the commitment of changing the model to include the central role of citizenship as agency. These responses are accomplished by new actors mobilizing in unique and modern ways and therefore are propitiously beginning to establish the spaces opened up through political democracy.
One challenge of the Neoliberal model is the ways in which it divides societies. Instead of building a modern, inclusionary democratic government out of the current Neoliberal entanglement, it is creating societal gaps within countries and regions with the risk of development remaining in a gridlock. The duration of this essay will assess four accounts of the contemporary globalization process in addition to new economic strategies followed by the Latin American governments. These accounts include, The Mystery of Capital, Social Movements in Latin America, Neostructuralism and Beyond Neoliberalism.AnalysisThe Mystery of Capital This book sought to provide examples of how the implementation of property rights systems would benefit Third World countries. This book exposed a multi-country study of how burdensome it is for impoverished people to get legal title to property in Third World countries.
This comprised of the complications that arise which include development stagnation and an undercapitalised sector. According to the author, the undercapitalised sector “is not just a story of the poor serving the poor. These new entrepreneurs are filling the gaps in the legal economy as well” (Soto 2006, 28). The fact that extra-legality has become the norm gives governments in these nations the choice of “whether they are going to integrate resources into an orderly and coherent legal framework or continue to live in anarchy” (Soto 2006, 30). The author neglects the connections between extra-legality and poverty which are distinguishable in emerging as well as post-Communist economies.
These connections lead to a huge disincentive to investment prospects, and thus, all business prospects are forced to shade off into illegality which turns into a problem of low productivity both locally and nationally. The solution requires an interconnected complex of changes, including technology and education. It is unjust to say that the extralegal sector cannot generate capital as fortunes are continually erected in the so-called ‘black’ part of the economy and have potential to be sufficiently cleaned up in order to enable their owners to establish legitimate businesses. Additionally, the author ignores the fact that profits in the extralegal sector can be much higher than in the legal sector precisely because there are no legal barriers to the exploitation of workers. The author fails to balance the costs of extra-legality with its benefits in the book and he hardly considers the greatest obstacle of all which is the land itself. This land is usually owned by someone else, whether government or private landlords.2. Social Movements in Latin America In this text, the authors Petras and Veltmeyer take a critical stance against US imperialism The authors refer to Washington-based foundations and financial institutions encouraging NGOs to undermine the welfare-development state by providing social services to compensate victims, and even divulge that NGOs are a direct agent of US imperialism.
The politics of NGOs is to link foreign funders with local labor in order to promote economic development and therefore the presence and influence of NGOs is being implemented from above and below. The authors state, “the formation of Neoliberal regimes and the implementation of Neoliberal policies in Latin America resulted from sustained political and military intervention, at times directed but always backed by United States imperial policymakers and their Latin American collaborators” (Petras and Veltmeyer 2011, 221). Class warfare, which was implemented and supported by the state from international financial institutions such as the IMF and the World Bank have weakened and destroyed potential for successful social movements which have further allowed the ruling class to impose the world order of Neoliberal globalization.In their research, the authors concluded that, “at each stage of the deepening and extension of the Neoliberal order, new forms of class struggle and popular resistance emerged with overlapping and different sets of protagonists. In the earlier period, trade unions and urban industrial workers took the lead and later, peasants and landless rural workers played the leading role in the partial collapse of the Neoliberal model at the end of the 1990’s” (Petras and Veltmeyer 2011, 222-223). This notion also moves toward the view that these social movements did not and could not topple the existing economic order, rather set the stage for the emergence and election of new center-left regimes.
The globalization process pertains to three phases from 1982 to 1989 with the debt crisis and legacy of military dictatorships as the first phase. The second phase was from 1990 to 1999 with Neoliberal globalization creating objective conditions that in time gave rise to subjective conditions of widespread resistance which included rural social movements, the most dynamic forces in the resistance to Neoliberal globalization. The third phase was from 2000 to 2010 in which one crisis lead to the next in which 40% of Latin America’s financial wealth was lost. Currently, winds of rebellion in the Latin American region are once again brewing. “What is new, however, and more specific to Neoliberalism over the past decade (under changing conditions of crisis, recovery, and crisis), is a growing trend toward linkages and alliances formed among these localized struggles” (Petras and Veltmeyer 2011, 215). This is in response to the decline of power the US holds in Latin America after a rise in popular nationalist anti-imperialist governments led by Hugo Chavez in his project of Bolivarian Revolution. The forces of resistance in the rebellion are being mobilized by a broad range of class and community based social movements, with the support of some progressive NGOs and the state of Venezuela.
Therefore, the forces of resistance are resilient, but the obstacles are formidable, demanding of the left a response for which it has not yet demonstrated a capacity.3. Neo-structuralismNeo-structuralism constitutes an effort to confront the modern development problems faced by Latin America including how to deal with the consequences of greater liberalization in trade and finance, how to overcome productive heterogeneity, and how to improve income distribution.
Neo-structuralism sustains that there is no theoretical or empirical foundation to argue that markets can allocate goods and services in order to optimize economic and social welfare. Neo-structuralist thought argues that a strong state and government is essential to improve the capabilities and well being of a society and that Neo-structuralism is the only alternative to Neoliberalism. Developing countries need to overcome some of the major endogenous obstacles to their development including low and volatile growth, insignificant productivity, and unequal distribution of income through active government efforts in education, health, redistributive policies and industrial policy among others.The modern Neo-structuralist model still maintains that economic growth is vital, along with flexible labor markets in which the market forces are supported by the political system in order to adapt and succeed.
However, Leiva states, “the future trajectory of Latin American Neostructuralism will increasingly fee1 the gravitational pull of two emerging powerful forces. The first of these is the rising pressure from social and political movements that have recently attained national level political expression and positions within the state apparatus in Venezuela with president Hugo Cha?vez, in Bolivia with president Evo Morales, and even in Ecuador with president Rafael Correa. The second of these is the mounting evidence of the failure of corporate-led globalization and the unraveling of U.S. hegemony over the international system” (Leiva 2008; pg. 242). As a response to Neoliberalism, Neo-structuralism will be forced into opposite directions in the coming years within Latin America. With the rise of popular discontent, social movements and a growing evidence of current policy shortcomings, a shift to the political Left is probable.
“At present, it is the only paradigm that offers a viable route for both ensuring capitalist profitability and creating the institutions, policies, mindset, and behaviors that can legitimize and regulate the transnationalized regime of accumulation that has emerged in Latin America and the Caribbean” (Leiva 2008; pg. 240). 4. Beyond Neoliberalism Latin America has been a real world laboratory for experimenting with what can loosely be described as “Neoliberalism” for over thirty years. Since the rise of Neoliberalism, Latin America has experienced two positive advances which include economic and political developments. “The fiscal austerity linked to Neoliberal reforms has allowed the region to tame its notorious inflationary tendencies for the first time in the region’s modern history and Latin America is more democratic today than at any time in the region’s history” (Burdick, Oxhorn and Roberts 2009, 217). Neoliberal structural adjustment policies have helped to restore economic stability in the aftermath of the debt crisis.
One successful Latin American country has been Chile, being the only country that has maintained a leftist commitment to Neoliberalism. The Presidential election of Michelle Bachelet in early 2006 and the overwhelming electoral victory for the Concertacio?n party in the legislative elections showed that when Neoliberalism is complemented by policies that promote social and economic inclusion, popular responses against Neoliberalism lose appeal. Chile is a special case in Latin America. “The absence of large, stable, professional leftist parties in other Latin American countries makes it difficult for leftist presidents to build personal support without falling into the trap of being labeled as populists” (Burdick, Oxhorn and Roberts 2009, 40). Latin America entered the newest phase of globalization barren of the mass social and party organizations that dominated the region during the populist and ISI era. The changes in labor markets (in particular a growing informal market), a greater reliance on subcontracting and temporary labor, and flexible rules for hiring and firing made collective action in the workplace increasingly difficult to sustain, leading to a sharp decline in trade union density in most of the region.
Labor movements had been downsized and politically marginalized, and they were less capable of representing the diverse interests and identities of a precarious and informalized workforce.For the majority of communities in rural Latin America, foreign-owned natural resource extraction businesses depict the face of Neoliberalism. “Such operations, arriving on the wave of the privatization and investment liberalization that swept the continent beginning in the 1980s, have radically reshaped local political and cultural dynamics while in most cases generating relatively little direct benefit to local communities. They have also generated environmental impacts that will permanently alter the livelihoods of these communities.
Concerns about these impacts and the perceived lack of local benefit from largely foreign-owned resource extraction have sparked growing popular resistance across Latin America. This resistance has contributed both directly and indirectly to the downfall of governments and has put into question the continued viability of extractive sectors in some countries” (Burdick, Oxhorn and Roberts 2009, 117). Mining rarely translates into sustained development and poverty reduction which has lead to enclave economies with very little “spillover” effect. Therefore, the focal point of community concerns was the potential environmental impacts of the proposed projects and the linkage of these impacts to community health and livelihoods. In both cases, the communities lack of confidence in the government’s environmental management capacity led them to seek alternative means to protect their best interests. These concerns provided a rallying call for the communities and thus, the formation of community-based organizations and the establishment of linkages with national and international support networks arose.
Recently, it has been shown that local level governments are taking steps to fight the Neoliberal model. “A key task has been trying to improve public perceptions of the state, such that it is viewed as an ally for citizens, not an enemy. This is especially important for post-authoritarian contexts where the state had repressed popular demands, often violently.
The progressive local governments not only tried to extend formerly neglected urban services, but adopted important new roles that national states were abandoning, particularly in the area of social welfare” (Burdick, Oxhorn and Roberts 2009, 51-52).III. Conclusion For the first time in its history, Latin America can relish in the fact that Brazil is acknowledged internationally as a global actor. Along with Mexico and Chile, Brazil is the nation whose role will be indispensable in proliferating Latin America’s voice globally.
It holds true that much can be accomplished by probing Neoliberalisms failures, along with the social, political and environmental attributes that serve as hurdles to growth and progress of Neoliberalization. For Petras, the expansion of radical peasant movements represent a new and more important wave of leftist struggle. These social movements are motivated not only by Marxism, but in conjunction with claims based on gender, ethnicity and environmental conservation. These movements engage in direct action such as protests and land invasions rather than enrolling in politics, however, local level politics had increased in these social movements. Alternatives to Neoliberal capitalist democracy will thus ostensibly originate from the countryside, as peasant movements generally ally with urban unions. In Petras’s view, this wave represents the best hope for the left in an era of aggressive empire building of the United States.
When approaching globalization and new economic strategies, the authors in Beyond Neoliberalism concur, “in many ways, the real challenge is to ensure that as the movement toward a new post-Neoliberal era advances, it is on a path that offers the promise of something that is more democratic and inclusionary than has been the case in the past. The choice between citizenship as agency or citizenship as co-optation remains a choice between moving forward or repeating many of the same basic mistakes that resulted when political elites sought to take advantage of the majority’s growing sense of frustration, if not despair” (Burdick, Oxhorn and Roberts 2009, 230). Greater regional integration, by means of stimulating the economies and adapting them for a more efficient integration into the global economy should become Latin America’s comeback. Regional integration, which favors the free movement of goods, services, people and capital within the region, would in the momentarily alleviate the disadvantageous effects of the low ebulliences of global trade, which could be provoked if the protectionist promulgations in the West become a reality, including a cut of capital flows into the region. In short, the region would become a more productive and competitive area for its global insertion and what missing is the formulation and installation financial ties and trade deals between the countries of the Southern Cone and those of the North. To conclude, strengthening democracy, ending inequality and ethnic discrimination, and achieving productive transformation together with other strategic tasks such as environmental stewardship and the fight against crime form the universe of challenges that Latin American countries must overcome in order to live better and to assume a greater and more positive leading role in a world that is beginning to design itself.
A wide field of reforms sustained by new technological possibilities and widening democracy to give way to a new phase of globalization in which market and profit have their place but where the public too has weight and space is opened up to a society guided by citizenship values.ReferencesBurdick, J., Oxhorn, P. and Roberts, K. (2009). Beyond Neoliberalism in Latin America? Societies and Politics at the Crossroads. 1st ed.
Basingstoke: Palgrave Macmillan, pp.51-230.Frank, R. (2017). Richest 1% now owns half the world’s wealth. online CNBC. Available at: https://www.cnbc.
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Minneapolis: University of Minnesota Press, pp.240-242.Petras, J. and Veltmeyer, H. (2011). Social Movements in Latin America. 1st ed.
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