The New Latin Socialism

While I have been in Costa Rica, I have been analyzing the recent spate of political victories for left-wing candidates throughout the region. Below is a piece that I wrote about the broader meaning of this trend.

The New Latin Socialism
The recent ascension of left-wing leaders in a number of Latin American countries represents a broader trend in the region that embodies the rejection of neo-liberal economic policies and the Washington consensus. This trend is not truly new, but rather the latest in a historic tug-of-war between preferences among political leaders and the people of these nations for an alternative to the dogma dominating public policy at any given moment. This trend, therefore, is the natural response to the failure of neo-liberalism to narrow income and social disparities within Latin America just as neo-liberalism represented the response to the failure of ISI (Import Substitution Industrialization) to achieve social and economic harmony among the previous generation.

A History of Failure
As a prelude to any serious discussion of these issues, it is necessary to define key terms around which this analysis hinges. I have coined the term Pan-Latin Socialism (PLS) to specifically refer to the recent and current trend within the region that has seen the ascension of a number of leaders that can rightly be defined as left-of-center within the political sphere. There are, however, important distinctions within that group of leaders with Costa Rica’s Oscar Arias and Brazil’s Lula de Silva being far more pragmatic and moderate in their approach to public policies then Venezuela’s Hugo Chavez or Bolivia’s Evo Morales, both of whom have identified themselves with dictatorial and communist regimes and represent a far more ideological and rigid approach to public policy formulation.
There are also two period of policy preference prior to the rise of PLS that relate directly and inversely to the shift to PLS that we now see underway. The first is the era of Import Substitution Industrialization (ISI) and the second is the more recent period, now waning, that is known as Neo-Liberalism or Washington Consensus.
ISI first appeared in the 1930’s and 1940’s as a response to the great depression, but became broadly accepted in the 1950’s due to the work of Argentine economist Raul Prebisch. “Prebisch believed that developing countries needed to create forward linkages domestically, and could only succeed by creating the industries that used the primary products already being produced by these countries. Tariffs were designed to allow domestic infant industries to prosper.” (Wikipedia) ISI was initially successful and created growth in Latin America, however, over the course of time, inefficiencies created by ISI’s protectionist policies and the patronage that inevitably came with these policies began to undermine the system as more and more state resources were siphoned off to maintain uncompetitive firms. This, in turn, required states to print more and more money and rampant inflation undermined the economic progress that had been made, fermenting dissent among the urban popular classes. By the early 1980’s, ISI had been largely discredited in Latin America.
The failure of ISI gave rise to the Washington Consensus. “The Washington Consensus is a set of policies promulgated by many neo-liberal economists as a formula for promoting economic growth in many parts of Latin America by introducing various market-oriented economic reforms which are designed to make the target economy more like that of First World countries such as the United States.” (Wikipedia) The Washington Consensus hinged on the need for protected firms to become more efficient by exposing them to direct competition. It was typified by the lowering or elimination of trade barriers, regulations and government support and called for privatizing state assets and making the regions governments smaller and less invasive in the economy. Many leaders came to power during this time promoting these ideas including Vincente Fox in Mexico and Carlos Menem in Argentina. While some nations, such as Chile, El Salvador, and Uruguay, have shown progress under the Washington Consensus, it has failed to be the economic and social panacea that many of its advocates had hoped that would be. The region continues to suffer from high unemployment, the world’s largest gap between rich and poor and anemic economic growth.
In many places, and in many ways, the Washington Consensus has exacerbated already existing social ills. Such is the case in Mexico where NAFTA, a trade liberalization agreement between the US, Canada and Mexico based on neo-liberal policy formulations, was supposed to increase prosperity, but has led to the virtual decimation of peasant agriculture in Mexico forcing the rural poor into cities or across the US border seeking work; stretching social services to the brink and further aggravating existing social tensions.
It is therefore predictable and logical that a new set of ideas, counter to the Washington Consensus, would come to prominence in this environment. It is these ideas, activists, leaders, and movements that first coalesced around opposition to the Washington Consensus that have become the backbone of what I am today calling the new Pan-Latin Socialism.

The New Latin Left
I have identified three distinct periods in the shift towards PLS. The first began in 1998 with the popular election of Hugo Chavez in Venezuela and continued until 2002 when former labor leader Luiz Inácio Lula da Silva took power democratically in Brazil, giving power to left-wing, anti-Washington Consensus leaders in South America’s two most important economies. The second period
runs from 2002 until the end of 2005 and is best represented by Chavez’s consolidation of power in Venezuela, the electoral victories of Evo Morales in Bolivia, Michelle Bachelet in Chile and Tabaré Vázquez and the Frente Amplio in Uruguay. The third period, which we have now entered, has seen the election of Oscar Arias in Costa Rica over another center-left candidate, Otton Solis, the election of Rene Preval in Haiti and the likely rise to power of leftist leaders in Mexico, Ecuador, Peru, and Nicaragua in the coming year.

Domestic Policies and Strategies of PLS
There are a number of policies being pursued, to one degree or another, by these new leftist leaders that focuses on providing social and economic services to their people in an effort to alleviate the historic suffering of the popular classes, promote economic self-sufficiency and establish a new economic and political order that is just, nationalistic, and pan-nationalistic (Latin identity) and endeavors to hedge out the traditional role of the United States as a power player in the region.
However, these policies are neither original nor new. Appeals to nationalism are as old as the nation-state and policies that give greater control to government to oversee economic activity and redistribute wealth have been a hallmark of socialism for as long as politicians have sought to curry favor, curb domestic dissent, or earnestly mitigate the suffering of their people.
Venezuela, with Chavez now in a position of virtual dictatorial control and record high world oil prices, has gone farther then any other to implement the very policies that the Washington consensus sought to undo. According to Power and Interest News, “Chavez has sensed an opportunity to implement his vision of a united South America that acts in accordance with its own interests, independent of Washington, and a "new socialist society" based on cooperatives that would eliminate poverty and subordinate private business to broader social aims.” This vision of an independent and socialist South America has been called Bolivarianism by Chavez and represents perhaps the most virulent and populist form of PLS.
Bolivarianism, as implemented by Chavez, is a mix of Castro-like state control, but with a tolerance for private enterprise so long as its fruits serve the broader interests of the popular classes. He has nationalized some industry in key sectors and undertaken a modest program of land redistribution. Additionally, he has implemented programs focused on alleviating hunger and improving social indicators such as literacy and infant mortality. In an environment of record high world oil prices, Chavez’s efforts appear to be bearing fruit; however his domestic policies are underpinned by an unstable economic foundation, high-interest loans and oil revenue. In spite of this, Chavez survived a recall effort in 2004 with 59% support and his rhetoric and policies have given him broad popular support across the region. Other leaders, such as Evo Morales and Lula da Silva, have been quick to befriend Chavez and identify themselves with his social goals, if not his means. For his part, Morales has promised to nationalize Bolivia’s vast natural gas resources.

Bolivarianism and its Foreign Friends
The stated aim of Bolivarianism to break with Washington necessitates forging alliances with other nations. In many cases, these have been countries that are either adversaries or strategic competitors to the United States. Recently, Venezuela has signed a housing deal with Iran, as well as deals on cement, oil, tractors, auto parts and ships. They have also signed security, military, and economic agreements with Cuba, China and Russia. (Wikipedia) Furthermore, Chavez has sought to embarrass the United States through a program to provide low priced natural gas to poor residents in nine northern US states and with offers of assistance to Gulf residents “abandoned” by the US government after Hurricane Katrina. He has also made promises to provide free or reduced price natural gas to a number of Latin American and Caribbean countries in an effort to use petro-diplomacy to broaden his popularity. Because oil is the key to Chavez’s power, he has been an active member of OPEC and is currently lobbying other OPEC nations to cut production in order to keep prices high.
In Bolivia, Evo Morales has said publicly that cocaine is an American problem, not a Bolivian problem, and that he will end his nation’s support of US anti-narcotics efforts, although he has recently stepped back from this position amid mounting pressure from domestic groups and international investors. Upon winning the presidency, Morales made his first foreign trip to Brazil, Cuba, China, South Africa and France, but snubbed the US.
While Venezuela and Bolivia are the most strident opponents of the US, opposition to US involvement in the affairs and economies of Latin America are wide-spread as reflected in the popularity of these leaders throughout the region. Recent polls in Bolivia gave Morales a 79% approval rating and found that 66% of Venezuelans would vote to re-elect Chavez.

The US Response to PLS
The response of the United States government to this rising tide of anti-Americanism and PLS has, not uncharacteristically, done more to make matters worse then to improve the situation. Following the April 2002 coup attempt against Chavez, the US immediately stepped forward to support the new government despite the fact that the coup quickly fell apart and was utterly undemocratic. The shrill rhetoric of US leaders including evangelist Pat Robertson’s call to assassinate Chavez has further re-enforced the “us versus them” attitude that is pervasive throughout the region. Broad opposition to American trade and Iraq policies has also added fuel to the fire. Most recently, the surprisingly strong showing of DR-CAFTA critic Otton Solis in the Costa Rica elections has revealed the degree of suspicion to which many Latin Americans hold the US and its preferred policies.
That suspicion is not without foundation. Many Latin Americans see the inconsistency of the Bush Administration as indicative of a subversive desire to support the rich and their preferred leaders over the popular classes. After the La Paz massacre in 2003, Bush expressed continuing support for Bolivia’s now deposed conservative leader while condemning similar incidences in countries with leftist leaders. The US has continued coca eradication programs in Mexico, Bolivia, Columbia and Peru despite the health and livelihood costs to the poor subsistence farmers and their families who rely on the crop. The US also continues to push trade pacts such as NAFTA, DR-CAFTA and FTAA (Free Trade Area of the Americas) that are perceived to advantage US consumers and producers at the expense of Latin Americans.
For the US administration’s part, there is an understanding that, although the rhetoric is sometimes harsh and resentment of the US is high, the region’s fortunes continue to be closely tied to the US economy. So while Chavez, Silva, and Morales may talk a good game, they know that without their US economic relations, they would have very short shelf lives in their current positions. In Venezuela, 55% of exports go to the US and 29% of imports are purchased from the States. The same is true across the region. This had led the US to accept a certain amount of leftist populism from the region, because the US government doesn’t feel truly threatened as they did in previous times when the threat of communism in the hemisphere was a major foreign policy concern.

The Future of Neo-Liberalism and PLS
None the less, the Bush Administrations continuing apathy towards the region has had a political cost. On a recent visit to the region, President Bush’s efforts to revive the “Free Trade Zone of the Americas” were met with scorn from regional leaders and massive protests on the streets leading Chavez to declare that the initiative was dead. The success of Solis has further deteriorated support for the already shaky DR-CAFTA initiative within the US and in Latin America. Although the initiative has been approved by all signatory nations except Costa Rica and has already been implemented in El Salvador, the idea that it is a stepping stone towards achieving the FTAA is now cast in doubt as many signatory nations are expressing concern that the deal they signed is not the deal that they are now being told they must implement.
Across the region, the failure of the Washington Consensus to create greater prosperity and narrow income gaps has led to a popular backlash. In an earlier time, when these governments were dominated by US-backed dictators, popular opinion would be muted by the will of the US policy makers and their strong man puppets. However today, the region is more democratic then at any time in its history and the desires of the voters to pursue policies not in line with US interests is a potent motivator for the politicians trusted to do their will. So long as this is the case, I believe that we will continue to see the left make significant gains.
The danger in this is, of course, the tendency over time of governments that assume greater control of economic life to also assume greater control of political and civil life as well. That trend is inconsistent with democratic values and it is democratic values that inevitably suffer, as Hugo Chavez is currently proving. Control and freedom are inherently opposing values and the sad reality is that, more often then not; it is freedom that gives way to the desires of the omnipotent state. This is why, as Friedrich Hayek brilliantly explained more then 60 years ago, democratic socialism is a contradiction in terms.
At some point oil prices will collapse and Venezuela will begin to fail to make payments on its external debts just as it will be unable to continue to fund the robust welfare state that it is now building. The same will be the unmaking of Evo Morales and, to a lesser degree, those leaders who, by the strength of countervailing democratic opposition or their pragmatism choose not to go as far in instituting state-led economic controls. The result will be another sad spiral into chaos for a region and a people who have seen far too much suffering already. Neo-liberalism, or some similar set of policies, will be proposed as the solution to the mess left in the wake of PLS’s meltdown and the cycle will begin anew with a new set of leaders and a new generation ready to give over their future and well being to the hopes that this time, the structural changes being proposed will, in fact, lead to the prosperity that has so often been promised but never delivered upon.
While it remains to be seen the degree to which the region’s leaders will embrace a new socialist worldview and reject neo-liberal dogma, it is clear that the region will remain in flux for the foreseeable future. Furthermore, the current debate fails to address some of the key social, political and structural factors that underpin the continuing underdevelopment of Latin America; racism, corruption and the historical legacy of colonialism that has marginalized whole populations and left land and human resources in a state of disarray and ripe for further exploitation. Despite the rhetoric, history and common sense tell us that PLS is unlikely to change that.