- Introduction
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- Over the better part of the present decade, Latin American
stock markets have boomed. Overseas investors have reaped and repatriated
billions in dividends, profits and interest payments. Multi-national corporations
have piled into mining, agro-business and related sectors, unimpeded and
with virtually no demands by local regions for 'technological transfers'
and environmental constraints. Latin American regimes, have accumulated
unprecedented foreign currency reserves to ensure that foreign investors
have unlimited access to hard currencies to remit profits. The decade
has witnessed unprecedented political and social demobilization of radical
social movements. Regimes have provided political and social protection
for foreign and national investors as well as long term guarantees of private
property rights.
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- Nary a single regime in the region, with the unique
exception of Venezuela, has reverted the large scale privatizations of
strategic economic sectors implemented by previous neo-liberal regimes
in the 1990's. In fact the concentration and centralization of fertile
lands has continued with no pretense of land or income redistribution on
the policy agenda. While bankers, and investors, overseas and nationals,
celebrate the economic boom and more importantly express their positive
appreciation by investing billions in the region, leftist pundits claim
to find a "resurgent left" and write of one or another version
of 21st century socialism. In particular many prominent and widely published
Euro-American progressives and leftists intellectuals and pundits have
badly served their followers and readers. Commentaries based on jet flyovers
provide glowing reports of Latin America's march to the left and national
independence. Such accounts lack any empirical, historical, analytical
or statistical foundation.
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- Writers as diverse as Chomsky, Tariq Ali, Wallerstein,
who have never conducted any field research below the Rio Grande at any
time or for that matter consulted major investors reaping billions in today's
Latin America have become instant experts on the social and political nature
of the regimes, the state of the social movements and current economic
policies. It seems as if Latin America is fair game for any and all Western
leftist writers who can echo the political rhetoric of the incumbent regimes.
No doubt this secures an occasional official invite but it hardly serves
to clarify the most striking socio-economic features of the current crop
of regimes in Latin America and their sharply defined development strategies.
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- A wealth of data based on extensive field interviews,
statistical studies published by international development agencies, reports
by economic consultancies and business and investment houses, as well as
discussions with independent social movement leaders provides ample documentation
to argue that Latin America has taken multiple roads to 21st century capitalism,
not socialism or anything akin to it.
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- In fact one of the great success stories celebrated
by the business press, is the marginalization of socialist politics, the
general acceptance of "globalization" by the leaders of the political
class (from the center-left rightward) and the de-radicalization of the
intellectual/academic elite who wage battle against neo-liberal phantoms
while providing populist legitimization for the politicians of 21st century
capitalism.
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- Twenty-First Century Capitalism: Continuities and Changes
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- Investors, speculators, multinational corporations and
trading companies from Asia, Europe, North America and the Middle East
have, in recent years found virtue and value in the economic development
policies pursued by recent Latin American leaders. In particular, they
applaud the new found political stability and economic opportunities for
long term, high rates of profits. In fact Latin America is looked at as
an outlet for profitable investments surpassing those found in the unstable
and volatile markets of the US and EU.
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- Twenty-first century capitalism (21C) as we know its
operations in Latin America overlaps in some of its major features with
the multiple variants of 20th century capitalism. 21C has embraced the
"open market" policies of the late 20th century neo-liberal model;
it has, promoted agro-mineral exports and importation of finished goods
similar to the early 20th century colonial division of labor. It has borrowed
from the nationalist developmental strategy, policies of state intervention
to ameliorate poverty, bailout banks, promote exporters and foreign investors.
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- As in most 'late and 'later' developing capitalist countries,
the state plays an important role in mediating between agro-mineral exporters
and industrial capitalists (national and foreign) in some of the larger
countries like Brazil and Argentina.
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- Unlike earlier versions of liberal and neo-liberal capitalists
which, in the first instance dissolved pre-capitalist constraints on capital
flows and later labor and welfare demands constraining capitalist exploitation,
current heterodox liberal (or "post-neo-liberal") regimes attempt
to harness and co-opt labor and the poor to the new export strategy. In
part, 21st capitalism, can pursue "free market" and welfare/poverty
policies because of the favorable world market conjuncture of high commodity
prices and expanding markets in Asia.
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- Increased activity by the state in regulating capital
flows and "picking winners and losers", promoting agro business
over small farmers, exporters and large retail importers over small and
medium producers and retailers highlights the compatibility, indeed
the importance, of state interventionism in sustaining the "free market"
agro-mineral export model. While some sectors of capital complained about
potential deficits and rising public debts resulting from increased state
spending on poverty programs and in raising the minimum wage, in general
most capitalist view the current version of "statism" as complementary
and not in conflict with the larger goals of expanding investment opportunities
and capital accumulation.
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- The ideologues of 21C have played a significant role
in securing the legitimacy of the system, especially in its initial period,
by projecting images and narratives of "anti-imperialism", "twenty-first
century socialism" and in the Andean countries a new "indigenous"
variant of a "democratic and cultural revolution" (Bolivia).
Given the heavy reliance on the extractive development strategies and
the strong presence of foreign corporations in strategic economic sectors
and on lands, in or proximate Indian territorial claims,traditional Indian
rituals and symbolic representations, anti-imperialist rhetoric and charisma
plays a key role in greasing the wheels of 21C, in the face of rebellious
popular constituencies (especially in Peru, Ecuador and Bolivia).
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- The paradox of putative "center left" regimes
embracing the liberal 'colonial division of labor' in relation to the world
market is to some degree obfuscated by the greater diversification of markets.
"Coloniality" is identified with economic relations with the
US while the new economic ties with Asia are presented as expressions of
south-south solidarity and other such euphemisms, even as the latter mirrors
the former in economic essentials. Nevertheless there are important political
differences between the US and China, insofar as the latter does not engage
in coups and clandestine operations and military interventions (at least
in Latin America).
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- Key to the 21C model is social stability, preservation
of the liberal democratic political framework and civil supremacy
all of which pits these governments against the US backed coups in the
continent, including failed coups in Venezuela(2002) and Bolivia(2008)
and a successful coup in Honduras (2009).
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- If US style militarism is a potential external destabilizing
factor, the growth of narco-capitalism in the economy and state is a major
domestic threat, now mostly concentrated in North America (Mexico), Central
America, the Andean countries (Colombia). The dilemmas of 21C is how to
balance between the destabilizing role of US drug agencies and the need
to ensure "good relations" with all major trading partners-including
the US.
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- The State of the State in 21C Latin America
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- Coming out of the crises and breakdown of neo-liberalism
at the turn of the century, the state emerged with a stronger and more
active role in the economy, particularly with regard to regulating overseas
financial flows. Several regimes, increased the state's role in revenue
sharing with foreign MNC (Brazil, Bolivia, and Venezuela). Others partially
or wholly nationalized a few troubled enterprises (Venezuela, Bolivia,
and Argentina). Still others paid off their debt to the IMF, in order
to end its "supervision" over fiscal and macro-economic policy
(Brazil, Argentina). Most states adopted economic stimulus policies to
reactivate the economy, reduce unemployment and accommodate some of the
social demands of labor. All governments adopted policies designed to
maximize income and revenues from the rising prices of commodities, by
investing in and promoting the exploitation of agro-mineral production.
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- To cushion against future external economic shocks,
the states adopted conservative fiscal policies, accumulating budget surpluses
and increasing foreign reserves.
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- Not withstanding the expansion of the state's role and
its timely intervention to maximize benefits from world demand, it remains
a subordinate partner to private capital. Even in Venezuela where several
important industries were nationalized, state enterprises accounts for
less than 10% of the GNP. Equally important the state and economy, public
and private, is subordinate to a global "colonial division of labor"
in which Latin America, exports agro-mineral products and imports finished
goods. The emphasis on extractive industries, encourages large scale foreign
investments, while stable, orderly, fiscal balance sheets, large scale
foreign reserves and relatively high interest rates attracts financial
capital.
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- The appearance of a strong state, however, is belied
by several historical and structural factors. While some regimes purged
a few of the top military and police officials from the previous dictatorships,
there was not institutional transformation, including the process of recruitment,
training and political reorientation.Moreover all governments continue
to collaborate with and join in military exercises and training missions
with US military advisory programs, with a notorious history of being the
"schools of the coup-makers". Equally dangerous to state stability,
the new development strategy depends on and promotes business elites, who
in the past sought out military officials and fomented coups, when and
if they felt their profits or interests, were threatened.
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- The current stability of the Latin American states rests
in part on potentially volatile commodity prices and demand, military institutions
with many carryovers from the past and too many links to Washington coup-masters
and a private sector willing to abide by the rules of democratic capitalism,
as long as they continue to exercise hegemony over the society and economy.
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- Comparing the 'Orthodox' and 'Heterodox' Roads to 21st
Capitalism
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- Considering the fact that, for now and the foreseeable
future, none of the Latin American countries have any plans or projects
to socialize the economy with the possible exception of Venezuela
the key theoretical and practical issue is identifying the divergent
roads to capitalist development. By origin, trajectory and social alliances
we can identify 'heterodox' and 'orthodox' strategies, with some overlap
at the margins.
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- The heterodox approach to 21C is sometimes dubbed "21
Century Socialism" by some of its local publicists, primarily by overlooking
such commonplace considerations as the private ownership of the principle
means of finance and production (banks, industries, mines, trade, plantations),
the large scale influx of "hot money" in pursuit of bonds bearing
high interest rates and low rates of royalty payments on the extraction
of minerals and energy resources.
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- One of the keys to understanding the emergence of 21C
is in its origins in the popular political upheavals and the ideological
"rupture" with the previous "neo-liberal" epoch. The
radical origins left an imprint in concrete measures adopted by the emergent
regimes, the style of politics and the search for new sources of ideological
legitimation.
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- By force of circumstances, namely the economic crises
of neo-liberalism, the new "post neo-liberal" regimes adopted
a series of populist measures to ameliorate poverty, reduce unemployment
and reactivate the economy. All of these changes meant active state intervention
to rectify the failures of the 'market', while seeking to secure the interests
of the capitalist class. These measures were accompanied by a strong dosage
of anti-neo-liberal rhetoric to accommodate popular rage against the inequities
of the system. In some cases these changes were accompanied by a vague
reference to "socialism" without central planning, public ownership
or worker management. The trajectory of regimes pursuing the heterodox
road began with populist welfare measures, which were gradually diluted
over time as social pressures and unemployment diminished and re-activization
took hold.
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- By the end of the decade (2010), the post neo-liberal
regimes turned more and more toward "developmental modernization".
The latter approach was driven by a high powered campaign to maximize
private, especially foreign investment, especially in the high growth export
sectors. The reordering of the post-neo-liberal state stopped well short
of anything beyond replacing "neo-liberal" technocrats with others
more attuned to the new heterodox leadership. For the most part, efforts
were made for greater flexible accommodation of domestic and foreign social
partners via conciliation of 'moderate' trade union and social movement
leaders and the business elite.
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- The heterodox road to 21C has the good fortune to coincide
with the world commodity boom and the good sense to put in place financial
controls which softened and shorted the duration of the US-EU induced financial
crash (2008-2010) and economic recession.
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- The 'orthodox' road to capitalist development was able
to sustain the neo-liberal policies, through a harsh regime of repression,
electoral chicanery and in some cases by outright terror, closing political
space and precluding popular upheavals which might have led to heterodox
policies. Prominent to the orthodox road was the rise and consolidation
of a lumpen-bourgeoisie which brought in tens of billions of dollars in
revenues from drug and other illicit activities which were laundered in
the formal economy and provided a modicum of economic growth in certain
sectors. While the heterodox model diversified trade and markets, with
dynamic partners in Asia, the orthodox model remained wedded to stagnant
US markets. Bilateral ties with US imperialism weakened domestic economic
priorities and heightened public expenditures in non-productive (military)
sectors.
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- The Divergent Outcomes of Hetero and Orthodox Models
of 21C
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- The most striking differences between heterodox and
orthodox economic performances is found in the striking growth, poverty
reduction, and political democratization in Brazil, Bolivia and Argentina
and until 2009 Venezuela and the social regression, economic stagnation,
gross violation of human and democratic freedoms found in 'orthodox' Mexico
and Colombia. Extreme violence characterizes rule by the political elites
in the countries pursuing orthodox neo-liberal policies. In contrast there
is a process of state consolidation based on relative open politics among
the countries pursuing heterodox policies. There seems to be a strong
correlation between economic growth, political legitimation, poverty reduction
and the decline of state repression as a mechanism of political rule.
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- On the other hand there is a strong correlation between
the growth and incorporation of large scale drug trafficking into the economy
and polity, the reliance on violence and free markets to forcibly dispossess
small holders and the increase reliance on corruption and force in the
formation and maintenance of governing elites.
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- Heterodox models imply and practice the politics of
social incorporation via capitalist welfarism, (non exempt from corruption
and patronage) and tripartite consultation. Orthodox regimes operate through
unregulated capital markets and its ruinonous effects on small producers,
public sector employees and wage workers.
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- The heterodox models, though drawing heavily on foreign
capital, retain, cultivate and promote national capitalists linked to the
domestic market and dependant on mass consumption. These sectors are not
always opposed to periodic increases in wages.
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- The regimes pursuing orthodox strategy, heavily dependant
on declining US markets and on large scale military and police expenditures,
have lost out on the lucrative markets of Asia, the Middle East and other
regions. Moreover, in the case of Mexico its structural dependence on
an unstable tourist economy, declining immigrant remittances from an increasingly
anti-immigrant US and petrol exports in decline due to negligent management,
is a result of its early embrace of "free trade' (NAFTA). The latter
destroyed its diversified productive base and encouraged the turn to narco
trafficking.
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- The result of the orthodox strategy of unregulated capital
flows has two major negative consequences: it has led to the massive outflow
of Mexican capital licit and illicit - into the US, especially in
real estate, bonds and stocks, depriving Mexico of investment capital.
Secondly, the close links between Mexican and US finance, led to the transmission
of the Wall Street financial crises impacting on Mexico's financial and
credit markets as well as its "real economy". In contrast, in
most of the heterodox economies, which had earlier suffered from close
links to Wall Street, their tighter financial controls diluted the impact
of the US crises on their economies.
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- Peru: A Hybrid Version of Hetero-Orthodox Strategies
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- Peru has experienced the high growth characteristic
of the heterodox economies, while relying on 'orthodox' neo-liberal policies.
It combines the extractive export model without the compensatory social
welfarism and tripartite polices of the heterodox capitalist models. Peru
has diversified its overseas markets Asia is its principle export
market while embracing bilateralism and military ties with the US.
It is a major drug producing and trafficking venue, but the drugs do not
dominate the economy and political system to the same degree as Mexico
and Colombia. While poverty reduction has not been pursued with the same
vigor as Venezuela, Brazil, Argentina, it has increased the consumer power
of the urban middle classes, especially of Lima. While Bolivia pursues
policies of symbolic representation, legal protections and political patronage
to the Indian movements, Peru under Garcia, like Ecuador under Correa are
more concerned about promoting investments from foreign owned mining companies
as the vehicles for what they call "economic modernization" than
respecting the claims of indigenous peoples.
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- High commodity prices, especially for industrial and
precious metals, rising demand and large scale investments under conditions
of limited nationalist opposition, allows Peru to sustain high growth,
even as it neglects the welfare component of the heterodox model. There
are indications of change. In the recent (2010) mayoralty election in
Lima, a mildly center-left candidate defeated an orthodox neo-liberal,
raising the possibility that the next regime may 'modify' the orthodox
model toward greater "welfarism".
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- Crises, Upheavals and the 21st Century Road to Capitalism
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- The crises of neo-liberalism generated a variety of
political outcomes; with the possible exception of Venezuela, the popular
revolts which took place in the immediate aftermath of the crises all led
to capitalist outcomes, albeit sharply divergent ones. For the majority
of Latin American states it meant a sharp increase in state intervention,
even temporary takeovers of bankrupt or near bankrupt banks to save depositors
and investors: a kind of "statism" by capitalist invitation (or
obligation). The new statism became the bases for the emergence of 21st
century capitalism. The "anti-neo-liberal ideology" articulated
by its practioners befuddled impressionistic western intellectuals who
saw it as a "new variety" of socialism or at least a "stepping
stone" in that direction.
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- In historical perspective, statism, was from the beginning,
a necessary first step toward the reactivation of capitalism. The apparently
radical "first steps" were in fact the end game of the popular
rebellions of the turn of the decade. Over time, especially with the economic
recovery and the commodity boom, capitalism experienced a take off by the
middle of the decade. Heterodox capitalism began to shed some of its distinctively
several welfarist features in favor of a straight developmentalist perspective.
Technocrats emphasized large scale long term foreign investments and "economic
modernization". This meant public-private investments in infrastructure,
to accelerate the movement of commodities to world markets.
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- The sustained growth of the heterodox model put an end
to the radical debate on globalization, by adopting it with a vengeance.
The new argument between the heterodox and orthodox focused on how "globalization"
could be harnessed to national growth and made to work for all classes
via appropriate distributive mechanisms. In other words, the heterodox
capitalists argued that greater global integration would deepen and increase
the wealth available for social welfare. With the advent of adverse global
conditions during the crises of 2009, intensified competition and a temporary
decline in prices, the heterodox policymakers argued that global conditions
prohibited increased social spending and wage and salary increases. With
rapid economic recovery and the rapid rise in commodity prices by mid 2010,
wage and salary tensions increased.
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- If the impetus for the onset of the new heterodox regimes
was the crises of neo-liberalism, the subsequent economic success of the
heterodox regimes set in motion the dynamic growth of powerful business
interests seeking to refashion a more conservative rightist political configuration.
The latter would reduce the wage and social welfare cost of the export
sector. In effect the success of capitalist heterodoxy and its trajectory
toward high growth based on large scale capital inflows has set in motion
a shift to the right, including right wing political alternatives.
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- While important differences still persist between heterodox
and orthodox roads to capitalism, the tendency is for these to diminish.
The orthodox faced by the world recession resorted to greater state intervention
to prop up the economy while the heterodox increased their pursuit of greater
market shares by broadening their appeals to international investors.
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- As the Latin American countries move beyond the crises
of 2008-2009, the improved economic performances, does not appear to correlate
along the orthodox-heterodox axis. Slow recovery is most evident in Venezuela
(heterodox) and Mexico (orthodox); while rapid recovery is evident in Brazil
(heterodox) and Peru (orthodox). While one might cite Venezuela and Mexico's
dependence on the US market and Brazil and Peru's links to dynamic Asian
markets, we need also to analyze the internal class composition of each
set of countries. The predominance of "rentier" elites in Venezuela
and Mexico in contrast to dynamic domestic and foreign capitalists in Brazil
and Peru may account for some of the differences in performances.
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- Clearly identifying the 'dynamic' road to 21st century
capitalist development is problematic and the outcome uncertain. The question
of whether the commodity boom is part of a long or short cycle may be a
determining factor in shaping the possibilities for the reappearance of
authentic 21st century socialism.
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