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Democracy vs Globalized Capitalism

By Noah Carpenter. December 2007.

Latin America saw a resurgence in Centre-Left candidates in the democratic elections of 2006. In Ecuador Rafael Correa took office, Nicaragua saw Daniel Ortega regain the presidency, in 2005 Evo Morales became the first indigenous president of his country, Hugo Chavez was re-elected to the chagrin of the Bush administration, Chile elected Michelle Bachelet, Peru elected Alan Garcia, in Uruguay Tabare Ramon Vazquez Rosas took office, and in Brazil Luiz Ignacio Lula de Silva one in the second round of votes. Even though all of the candidates are left leaning they all have somewhat varied approaches to what they promise to bring to the table during their presidency. Chavez and Morales being the most socialistic and radical of the group, and others such as Bachelet, Lula de Silva, and Garcia favoring more socially democratic views when it comes to the market place (ODI). The common threads that do hold these Presidents and their voters together is their severe dissatisfaction with neoliberal free market economic policies that have been implemented under the "Washington Consensus" during the 1980s and 90s. People in Latin America have watched as the divide between rich and poor has grown tremendously over the years, some statistics labeling South America as the most unequal in the world. With trickle down economics failing to provide better lives and more jobs it seems that the people of the Southern Hemisphere are ready to try something new. Coupled with the Bush administration's priorities, or some would say distractions, in the Middle East and the rising discontent among the marginalized, the 2006 elections became the time for change. What are some of the mechanisms for change that the people of Latin America have used to wrestle power away from the economic elites?

From 1965 to 1980 Latin America experienced above average growth, the growth was largely due to external financing which resulted in the countries moving from 28 billion dollars in debt from the 70s to 239 billion dollars in 1982. When Mexico announced that it would not be able to repay its debt the international banking system became frightened, resulting in the World Bank and IMF developing their neoliberal models in to forms of stabilization and adjustment programs in order to spread out payments and to ensure that the countries would not be able to outright default. Certain Elements of structural adjustment had already been implemented under military regimes in Chile, Argentina, and Uruguay in the 70s but the experiments of structural adjustment blossomed with the debt crisis of the early 80s, leaving only four countries on the continent not being subjected by the end of the decade (Dynamics). The 80s also saw neoliberal economic policy being implemented in Britain under Margaret Thatcher and Ronald Reagan in the United States. Reagan is credited with the greatest rise in economic inequality in American twentieth century history (Wikipedia).

Neoliberal economic policy believes in the private sector over the public and that the invisible hand of the market will efficiently (not equitably) allocate societies productive resources and the ensuing economic benefits. John Williamson's list of proposals, which came to be known as the "Washington Consensus" lays out the basic tenets of this policy and are as follows, fiscal rectitude (cut expenditures and or raise taxes for budget surplus), competitive exchange rates (accepting market determined exchange rates), free trade, privatization, undistorted market prices (no gov. policies regulating prices), limited intervention, reduced capital controls (removing gov. control of cross border flow of finance), deregulation, union busting, and export led development.(Wikipedia)

The Capitalist class welcomed saps and this new economic outlook allowing them in 1988 alone to fuse some of the largest capitals resulting in what the UN center for the Study of Transnational Corporations dubbed the billionaire club which consisted of 300 of the largest transnational which by themselves were responsible for 25% of the worlds production (Dynamics pg 24.) The working class up to this point had worked hard organizing themselves and making their voices heard on the political field. This changed in the 80s due to plans launched by the capitalist class. By the 90s the working class had changed radically and their traditional sector (construction and manufacturing) had been all but decimated creating the base for another social class, one relegated to street life rather than in factories or offices. They were now "located in the informal sector of the urban economies, subject to conditions of economic insecurity, disorganization, and low pay, with labor remunerated at levels well below its value; subject to precarious and irregular occupational conditions and forms of employment- short contract and temporary work; and characterized by the formation of a huge reserve army of surplus labor, under conditions of unemployment and under employment." (Dynamics PG 25) Coupled with the marginalization is also the slap in the face that the promised trickle down effects of the fast growing capitalist machine had not occurred. According to the World Bank in 1994 the average per capita income was 4,470, which is more than 1980 but does not really paint the picture of the disparities of this wealth. In actuality 20% of the worlds richest population account for 78.7% of the total income while the poorest 20% account for only 1.4%. Another way to drive the point home is that according to the Forbes 400, just 385 individuals total combined income equal that of the poorest 40%(Dynamics pg 26.) This highly unequal distribution of wealth can be connected with the depression of wages and the shift in national income from labor to capital, under the neoliberal policies of the 80s and 90s. So the real effects of SAPs and economic policies are the splitting of society, allowing the winners to accumulate wealth and relegating the losers into lives of exploitation and social exclusion (Dynamics pg 27.)

Going into the 90s the international financiers and regimes who had implemented the first round of structural adjustment began to worry that the social inequalities which their models had produced were also giving way to a level of discontent that threatened the respective political regimes. The discontent tied with re-democratization of the continent pushed the IMF and the World Bank to overhaul the SAPs with a "human face"(Dynamics pg 65) The five basic premises of the SAPs with a human face are participation, decentralization, targeting the poor, specific policies focused on health, education, and productive employment, and lastly structural reforms, which included the privatization of social services (Dynamics pg 65.) Focusing on decentralization we see a number of effects that coupled with participation may have ultimately backfired in the IMF and World Bank faces. The marginalization of large parts of society forced the citizens to band together and create what is known as the informal sector, which neither relied on the markets or the state to care for them. These individuals created highly participatory strategies such as "self help projects, independence and reciprocity in production and exchange of products between the urban poor, as well as the organization of communal soup kitchens and dining halls, and the provision of community housing services."(Dynamics PG 66) As these groups grew in strength they demanded more autonomy and power in their local municipalities, which the governments were happy to give them, minus financial resources, due to the decentralization process. At first the decentralization and the fact that these local municipalities were not able to effect much change outside of their regions created the drive in these social movements to continue to bond together and organize their selves in a way that would might one day allow them to force social change.

In response to the new human face and the participatory element of the program, has been the development and organization of NGO's throughout the southern hemisphere. These organizations act as intermediaries between the grass-root social organizations and the government institutions. The NGOs primarily are there to provide assistance to the marginalized population and to formulate issues that have stemmed from structural adjustment. The problem lies that even though the NGOs have the needs of the marginalized people in mind they are there to primarily work with the system and have been unable to form any comprehensive plans to form any sort of new system (Dynamics pg 131.) On the other hand they have allowed the people to realize their democratic voice in the local level, being a catalyst for the people movements to strengthen and grow demanding national recognition.

The most significant mechanism of social change has been the formation of well organized and focused peasant movements, most notably the indigenous peoples of Mexico, Bolivia, Peru, and Ecuador. These new movements have been formed with severe distrust in the political system and have developed with out specific ties to any political party. A major difference in the new peasant movements and movements of old are their understanding of the global empire, the importance of mass coordination of forces, and a national agenda. The new movements also understand the importance of alliances with the marginalized urban poor, the necessity of land reform policies, credit, and technical assistance (Petras.) As groups have formed they have also recognized the power in regional alliances such as Via Compesina who according to their websites main objective is to "develop solidarity and unity among small farmer organizations in order to promote gender parity and social justice in fair economic relations; the preservation of land, water, seeds, and other natural resources."(La Via Compesina)

The globe began to realize the power of the indigenous peoples in January of 1994 when the Zapatista's uprising in the province of Chiapas Mexico shook the neoliberal facade of peace and stability that had been portrayed for years. The fact that the indigenous peoples could band together and form a new sort of social movement that did not align or hope to align itself with any particular political party, perfectly timed with the use of force no longer allowed the ethnic factor to be ignored (dynamics pg 134.) This provided a new perspective to social movements throughout the southern hemisphere, and since we have seen the Indian movements in Ecuador force resignation of president Bucaram for corruption and trying to impose the IMF's agenda. In Brazil the MST(Brazil's Landless Workers) has been able to settle over 350,000 land disputes through land occupation movements and forcing land reform into the center of the political debate. On its settlements the MST educate 160,000 children from 1st to 4th grade, and have 96 small and medium sized farms that provide fruit, vegetables, dairy products, grain, coffee, meat, and sweets."(MST) In Bolivia the movement MAS (movement towards socialism) was successful in 2005 of getting the first ever-indigenous president, Evo Morales, elected. MAS are made up of indigenous peoples, ex-miners whose labor unions have been destroyed, cocoa farmers, and labor unions from the cities. Morales is now being confronted heavily with the right wing opposition which stems mainly from the area of Santa Cruz where the business elites have economic and political control (Berkeley Daily.) The powers that be and have been for the last five hundred years are having a difficult time watching as the indigenous majority gains a voice and will do all that's possible to disrupt the process.

We can see that there are a multitude of mechanisms that the people of Latin America are using to produce change and to fight the neoliberal economic policy and imperialism. They are rooted in the organized voice of the masses on the grass root level attempting at first to just survive day to day. As these groups grow and join together developing a national agenda, using true democracy, they will hopefully continue to see the fruits of their efforts materialize. It will be a long and most likely bloody fight, but for people who have been relegated to almost nothing the question should be raised as to what it is they have to lose?







Veltmeyer, Henry. Dyanamics of Social Cahnge in Latin America.

New York, NY: Palgrave Publishers, 1998