The new century is off to a surprising start in Latin America. The continent that had been a privileged territory for neoliberalism, where it was first applied—in Chile and Bolivia—rapidly turned into the leading arena not only for resistance but for construction of alternatives to neoliberalism. Two faces of the same coin: precisely by having been the laboratory for neoliberal experiments, Latin America is now having to deal with their consequences. The 1990s and the 2000s have been two radically opposite decades. During the 90s, the neoliberal model was imposed to varying degrees in virtually every country on the continent—with the exception of Cuba. Clinton, who did not even cross the Rio Grande to sign the first North American Free Trade Agreement (nafta), was forced not long after to approve a super-loan from Washington when the first crisis of the new model broke out in Mexico. The us went on to press for a hemisphere-wide Free Trade Area of the Americas (ftaa), presenting this as the natural outcome of the seamless extension of free-trade policies.
At an Americas summit meeting in Canada in 2000, Venezuela’s Hugo Chávez was the only leader to vote against Clinton’s proposal for an ftaa, while Cardoso, Menem, Fujimori and their colleagues fell meekly into line. On the occasion of his first Ibero-American Summit, Chávez reported, Castro passed him a piece of paper on which he had written: ‘At last I’m not the only devil around here.’ It was thus with some relief, too, that Chávez—himself elected president of Venezuela in 1998—attended the investiture of Lula in Brasilia and Néstor Kirchner in Buenos Aires in 2003, before moving on to that of Tabaré Vázquez in Montevideo in 2004, that of Evo Morales in La Paz in 2006, and in 2007 those of Daniel Ortega in Managua and Rafael Correa in Quito; followed in 2008 by Fernando Lugo in Asunción. Meanwhile the us free-trade proposal that had been almost unanimously approved in 2000 was dead and buried by 2004. Since that date, Chávez himself has been re-elected, as was Lula in 2006; in April of this year, Kirchner was succeeded by his wife, Cristina Fernández, and Lugo triumphed in Paraguay, putting an end to more than sixty years of rule by the Colorado Party.
What is the meaning of this radical reversal, faster than any the continent has experienced before, to give the largest number of progressive governments, whether left or centre-left, that it has seen in its entire history? It is true that the continent displays the highest levels of inequality in the world, an income gap aggravated by the neoliberal decade; and yet the hard blows that punished past popular struggles, along with the solidity of the neoliberal establishment, made such a rapid turn quite unexpected. In what follows we shall attempt to understand the conditions that transformed Latin America into the weakest link in the neoliberal chain.
A precondition for the privatization programmes imposed across successive Latin American countries in the 1980s and 90s was the defeat and disarming of earlier movements of the left and organized labour. During the decades of development the emphasis was on import-substitute industrialization—in particular in Mexico, Argentina and Brazil, but also to a lesser extent in Colombia, Peru, Chile, Uruguay and Costa Rica. These developments were underwritten by broad politico-ideological projects that encouraged the strengthening of the working class and its trade unions, backed by local party formations and democratic-national blocs, in a context of nationalistic ideologies and identities. The potential this built up burst onto the political scene in the 1960s as a radical force, when the long cycle of growth petered out in conflicts over workers’ rights, at a time when the Cuban example was pointing towards alternatives that transcended the limits of capitalism and us imperial domination. The response to these struggles was an era of military coups, first in Brazil and Bolivia in 1964, in Argentina in 1966 and 1976, and finally in Uruguay and Chile in 1973.
The combined and closely related processes of military dictatorship and the application of neoliberal models acted together to yield an extreme regression in the balance of power between social classes. It would have been impossible to implement the wholesale sell-offs of national industrial resources that unfolded most drastically in Chile, Uruguay and Argentina without first crushing the people’s ability to defend their interests. These three countries had been remarkable for their achievements, possessing advanced systems of social protection under states that assumed a regulatory capacity and a role in expanding the domestic market, guaranteeing the social welfare of the population, and providing public services. The most brutal repression they had ever known was needed to clear the way for neoliberal policies that privatized state functions—in the case of Argentina, transferring virtually all public resources into the hands of private capital—and abolished hard-won social rights. In short, three of the most enlightened states on the continent found themselves completely dismantled.
In the course of the 1990s, neoliberalism penetrated Latin America right across the political spectrum. The programme was originally implemented by the far right, in Pinochet’s Chile. It found other right-wing adepts—such as Alberto Fujimori in Peru—but also absorbed forces that had historically been associated with nationalism: the pri in Mexico; Peronism in Argentina under Carlos Menem; in Bolivia, the Nationalist Revolutionary Movement—the party that had headed the nationalist revolution of 1952 under Víctor Paz Estenssoro. After this, neoliberalism moved on to social democracy, gaining the adherence of the Chilean Socialist Party, Venezuela’s Acción Democrática, and the Brazilian Social-Democratic Party. It became a hegemonic system across almost the entire territory of Latin America.
Nevertheless, the neoliberal model failed to consolidate the social forces necessary for its stabilization, resulting in the early onset of crises that would check its course. The three largest Latin American economies were the theatre for the most dramatic crises: Mexico in 1994, Brazil in 1999 and Argentina in 2002; the programme crumbled without delivering on its promises. The ravages of hyper-inflation were checked, but this was only achieved at tremendous cost. For a decade or more, economic development was paralysed, the concentration of wealth grew greater than ever before, public deficits spiralled and the mass of the population had their rights expropriated, most notably in the domain of employment and labour relations. On top of this, national debt expanded exponentially and regional economies became highly vulnerable, helplessly exposed to attack from speculators, as these three countries each discovered to their cost.