South America on the 21st Century: 20 years on a roller coaster - Ramon Garcia Fernandez (UFABC - Brazil)

South America on the 21st Century:
   20 years on a roller coaster.
                  Ramon Garcia Fernandez (UFABC – Brazil)

                                  AFEE @ ASSA 2021
                                       Session 6
                   On Neoliberalism's Appearances and Machinations
                                   January 4th - 2021

Outline of the presentation
1. South America – Neoliberalism and the Pink Tide
2. Building the Roller Coaster
3. Polanyi’s double movement and the rollercoaster
4. Fictitious commodities
5. Double movement, the state and the Pink Tide
6. Some features of the Pink Tide governments
7. Into the next decade: some vignettes

South America – Neoliberalism and the Pink Tide
The Rollercoaster:
• In the beginning of the 1990´s, South American countries
  embraced neoliberalism and the Washington Consensus.
• After a period of enthusiasm, the region was hit by a severe
  recessions and a series of crises.
• Reversal and period of optimism: the progressive Pink Tide.
   •   Governments with popular support all over the subcontinent
   •   Steady growth
   •   Reduction of inequalities
   •   Social policies
   •   Environmental concerns.
• Exhaustion of the Pink Tide and political reversals.
• Hard times for South America on the current days.

The Pink Tide in time and space
Argentina: 2003-2015
Bolivia: 2006-2019                   Pink Tide proper
Brazil: 2003-2015
Chile: 1990 – 2009 and 2014-2018     Weak Pink Tide
Colombia: 2011-2018
Ecuador: 2007 - 2016
Paraguay: 2008- 2012
                                     Perhaps Pink Tide
Peru: 2011-2016
                                     is not the best
Uruguay: 2005-2019
                                     name, but it is
Venezuela: 1998 - 2019
                                     convenient.
(Analysis stops in 2019)

Building the Roller Coaster - I
• South America´s traditional place in the international division
  of labor since independence as a producer of primary goods.
• The change of perspective: industrialization promoted since
  mid 20th Century.
  • The role of ECLAC and Latin-American structuralism.
• Different levels of success.
• Political opposition to industrialization (empowerment of
  unions, Cold War, military dictatorships).
• The debt crisis of the 1980s (the “lost decade”).
• Enters Neoliberalism: the Washington Consensus.

Building the Roller Coaster - II
The Neoliberal “truths” that came to be almost universally
accepted in the 1990s.
1. The only solution for the South American countries is to adopt
   wholeheartedly neoliberal policies, because “there is no alternative”.
2. All the problems of the South American countries are the
   consequence of erroneous anti-market policies adopted in the
   former decades, many of them populist, others designed to warrant
   rents to elite groups, but all of them creating severe distortions for
   the functioning of the markets.
• Failure of the model: in 1999, per capita GDP diminished in
  the ten countries of the region.
• Political crises in many countries sum up with the recession.

Polanyi’s double movement and the rollercoaster - I
• To understand this process, we draw upon Karl Polanyi’s “double
  movement”.
• The double movement is produced by the tension caused by an aim
  of the markets to expand, and a reaction of the society to defend
  itself against the potentially unbearable consequences of that same
  expansion.
• Society´s answer leads to a series of movements and counter-
  movements that constitute the double movement.
• For Polanyi, markets are the institutional pattern existing to channel
  the principle of exchange (a principle of behavior).
• The market serves no other purpose than the operation of this
  principle, creating a sphere of its own, an economic system that can
  disembed itself from the rest of society.

Polanyi’s double movement and the rollercoaster - II
• All along human history up to the Industrial Revolution,
  markets were strictly controlled.
• A long political fight led to the release of the markets and the
  creation of the market society.
• Decades later, however, the same triumph of the market
  system led to its failure: “Nineteenth century civilization has
  collapsed”.
• Recovery of the market system after Polanyi wrote the GT:
  markets got disembedded again.
• New period of countermovement from the end of the 1990s
  onwards.

Fictitious commodities
• What are the markets useful for? To allocate things that were made to
  be sold (economic goods).
• The problem with the markets: creation of fictitious commodities
  (raising a market for them).
• Polanyi mentioned three fictitious commodities: land, labor and
  money.
• We believe that this list can be increased with other “things” that are
  not “made to be sold”: education, health and the right to retire.
• The Welfare States managed to offer access to these rights outside of
  the markets, although neoliberalism later pushed strongly in the
  direction of their marketization.

Double movement, the state and the Pink Tide - I
• On the role of the democratic state in the double movement:
 “…the state was radically transformed from what Marx characterized as
 ‘the executive committee of the ruling class’, to an executive instrument
   of the masses to limit the elites’ capacity to capture disproportionate
       shares of income, wealth and privilege” ( Jon Wisman, 2013).
• Since the 1910s some legislation (concerning, for example, the eight-
    hours workday) was introduced in the Latin American countries.
• Neoliberalism told the people that they could not expect the state to
    provide the yet unfulfilled promise of their social rights.
• Public expenses in Education, Health and Social Security in general
    came to be seen more on the dimension of spending than as society’s
    duty to promote fairness.

Double movement, the state and the Pink Tide - II
• 1990´s in South America (years of the Washington Consensus), with
  reasonable growth in the first half of the decade, decreasing on the
  second.
• Country that grew most (Chile) was the only one with a rather leftist
  government, although with Pinochet´s institutional legacy.
• Riots and demonstrations in many countries by the end of the 1990s.
• Pink Tide Landmarks:
   •   Chavez election in Venezuela (1998), Lula in Brazil (2003), Kirchner in
       Argentina (2003), Tabaré Vázquez in Uruguay (2005), Evo Morales in Bolivia
       (2006), Correa in Ecuador (2007).
   •   Defeat of the FTAA in the Mar del Plata Summit (2005).
   •   Creation of ALBA, USAN and CELAC.

Some features of the Pink Tide governments - I
• Increasing confidence in the role of the state as provider of services and income.
• Bigger faith on domestic markets as the leading engine of the economies, after a decade
  in which the former governments had made a bet on export markets to grow.
• Industrial policies reappeared after a period of skepticism.
• State-owned enterprises gained momentum, and some services that had been privatized
  were nationalized back.
    •   A remarkable case was the end of the privatized pension funds in Argentina, which were created in
        1994 and nationalized in 2008.
• Income policies were also introduced.
    •   Brazilian bolsa-familia as an international leading case.
• The concentration of income fell in most countries.
• Environmental concerns found greater attention, and in many cases the policies adopted
  diminished the rhythm of the losses, although not being able to reverse them
• Bolivia and Ecuador introduced the concept of “Good Living” in their legislation.

Some features of the Pink Tide governments - II
          Annual rate of growth (%), South American countries, 1990-2019, Pink Tide vs Others (On Average)
Source: CEPALSTAT
             Country                    Pink Tide years                    Pink Tide            Others
             Argentina                     2003-2015                          4,47               1,28

               Bolivia                     2006-2019                          4,66               3,54

               Brazil                      2003-2015                          2,92               1,97

                Chile                 1990-2009 & 2014-2018                   4,94               3,65

             Colombia                      2011-2018                          3,66               3,37

              Ecuador                      2007-2016                          3,34               2,76

             Paraguay                      2008-2012                          3,54               3,11

                Peru                       2011-2016                          4,31               4,60

              Uruguay                      2005-2019                          4,00               1,72

             Venezuela                     1998-2019                         -2,53               2,94

       Observation: Venezuela, 1998-2013: 2,64%.

Some features of the Pink Tide governments - III
• The double movement certainly helps to understand why the
  neoliberal years led to the emergence of the Pink Tide.
• It is impossible to ignore the international situation in any analysis of
  the economies of the periphery. But we consider that the leading force
  of any analysis must rest on the answers given by the different
  governments to those external forces.
• For example, in 2009 the rate of growth fell in all the ten countries
  (five of them had recessions), related to the 2007-8 crisis added up to
  the swine flu pandemic.

Some features of the Pink Tide governments - IV
• However, the degrees of freedom of the national governments do
  exist; the spectacular recovery of Argentina and Brazil in 2010
  reinforces our point.
• To solidify these changes, these governments should have provoked a
  deeper structural change in their societies.
• At the same time, it is doubtful whether they had the political force
  and even the political will and strength to modify them.
• So, the changes made by the Pink Tide governments revealed to be
  unsustainable, and many were easily reversed.

Into the next decade: some vignettes - I
1) The effective political support of the Pink Tide governments was
weaker than they imagined:
• Wide alliances led by leftist parties allow Parliamentary coups.
• Political turncoats (e.g., Lenin Moreno).
• Armed Forces playing their traditional role as in Bolivia (2019),
    Venezuela as an exception (2002).
2) The control of the Executive and even of the Congress may not be
enough to promote changes.
• Lawfare: joint pressures of the judiciary and the mass media destroy
  reputations and political support, sending popular politicians to jail,
  preventing their presentation in elections and even dissolving whole
  parties.

Into the next decade: some vignettes - II
3) All along the Pink Tide there was an implicit hope that social
reforms could be implemented without messing around with
the economic structure (limits of the social-democracy), but
this has failed.
• Paradoxical consequence: neoliberals have assimilated social
   aspects of the social-democratic agenda.
• So, neoliberals and social-democrats converged (and both
   failed).
• Palma: a “Gramscian Moment”, a situation in which the old is
   dying, but the new does not find a way to get born.

Into the next decade: some vignettes - III
4) Three dimensions of the double movement as process of
decommodification of the fictitious commodities.
a) Intervening in the markets (e.g., establishing a minimum wage).
b) Limiting the markets (e.g., social security).
c) Preventing or reversing commodification (e.g., creation of communal
   lands).
• It can be suggested that the Pink Tide governments were generous in
    their interventions, discrete in their limiting and way too shy in their
    prevention and reversion, especially in the cases of Argentina and
    Brazil (Ecuador, Bolivia and Venezuela were far more emphatical in
    their support).
• A Gramscian-Polanyian moment?

Thanks for your attention!