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Adjustment and democracy in Latin America.

The U.N. Economic Commission for Latin America (CEPAL) has coined the phrase "lost decade" to capture the magnitude of the socioeconomic retreats suffered by the region during the 1980s. The significance of the setbacks becomes clear when comparisons are made both to the rates of growth, income, trade, and other indicators experienced by Caribbean and Latin American countries between 1960 and 1980, and to the performance of the economies of the industrialized nations of the Organization of Economic Cooperation and Development (OECD). The causes of the economic crisis -- identified by CEPAL as the "foreign debt crisis" -- are multiple and reflect external conditions as much as internal and structural factors.

With regard to the international arena, it is first worth noting that the recession in the industrialized economies in the early 1980s had a severe impact on the developing nations as of 1982. Subsequently, the gradual recovery of the core economies after 1983, together with the process of reordering the world economy, substantially altered the international context of the Latin American and Caribbean economies. Based on the scientific-technological revolution, a global productive restructuring has taken place in the past few years and has affirmed the supremacy of high-technology, "scientifically advanced," industries in production. The economic paradigm emerging from the so-called Third Industrial Revolution implies drastic changes in the productive process: new ways of organizing production, the deployment of trendy and original processes (such as robotics and automation, or the emergence of new species linked to advances in genetic engineering and biotechnology, etc.), the development and use of new inputs (basic products) in the elaboration of modem industrial designs, and the increasing shift from labor- and material-intensive production to knowledge (skilled intelligence)-intensive production.

The productive reorganization is connected in turn with a new international division of labor that corresponds to the requirements for production and circulation of goods and services generated in the industrialized economies based on technological modernization and innovation. Today, research and development for cutting-edge industries -- most notably, microelectronics, biotechnology, and the production of new materials -- are widely dispersed throughout the advanced countries. As a result, developing countries are faced with the challenge presented by such technological and productive changes to their internal processes of accumulation and reproduction.

In the context of these accelerated changes, the economies of Latin America and the Caribbean have experienced a significant decline in their international productive competitiveness. Likewise, considering the development of new materials and inputs, the region has also suffered a relative devaluation of its traditional exports -- agricultural products and primary materials. Historically, our countries specialized in the export of goods which today, in the framework of world productive restructuring, are the least dynamic in international trade. CEPAL notes that, according to the medium- and long-term projections made by multilateral organizations, it is impossible to expect a significant rise in the prices of the majority of primary products, except for fuels. Between 1980 and 1989, for example, the real prices of the area's 27 basic export products -- fuels included -- declined by 25% (CEPAL, 1990: 24).

Although the volume of primary exports from the region actually increased substantially in the 1980s, such increases did not compensate for the general decline in the value of exports. This problem was exacerbated by changes in consumption patterns in the industrialized nations and by the replacement of some traditional tropical food products by new products (such as the replacement of cane sugar by fructose extracted from corn and yucca). It is also worth noting that the increased volume of exports, which was intended to compensate for the decline in value of sales abroad, in fact helped to further depress the prices of primary products, which have flooded the international market in recent years.

Overall, beginning in the 1970s, the region experienced a gradual erosion of its relative position in international trade. Though the value of total exports from Latin America and the Caribbean represented 7.7% of world exports in 1960, this figure decreased to 5.5% by 1980 and to only 3.9% in 1988 (Ibid.). This situation is not likely to improve in the short or medium run, given the regional crisis and the changing patterns of global technology, production, and trade.

Finally, we must add the impact on the regional productive structure of the processes of decapitalization and deindustrialization, which have occurred in the past decade because of the crisis and the recession. On the one hand, during the 1980s, the region witnessed a decline in its share of foreign investment, capital necessary to energize the accumulation process. The participation of Latin American and Caribbean countries in direct investment worldwide dropped from an average of 12% to 13% in the period 1977-1981 to 5.3% in 1986-1987 (Ibid.: 47). On the other hand, the region was actually converted into a capital exporter through the net transfer of financial resources -- $204 billion between 1983 and 1990 -- in the form of service payments on a foreign debt that, as of December 1990, totaled $423 billion.

In terms of the internal structural factors that shaped the region's economic crisis, one need only point out that the 1980s witnessed the definitive exhaustion of the dependent capitalist pattern of reproduction that had spread dynamically throughout the region after World War II and had begun to show the first symptoms of crisis in the mid-1960s. At the beginning of the postwar period -- and earlier in countries such as Brazil, Argentina, and Mexico -- certain social sectors in the area, the "national bourgeoisies" and institutions such as CEPAL (founded in 1948), proposed the promotion of an accumulation model based on diversification of production and import substitution as a transition toward industrial modernization and economic progress. With this model, Latin America was to revamp the traditional pattern of reproduction based on primary-sector exports.

It was also assumed that industrialization and productive diversification would help resolve the problems of social development, serve as the basis for the organization of democratic political models, and permit a closing of the gap between our countries and the advanced economies. According to this proposal, import-substituting industrialization would also generate conditions that would guarantee autonomous national development and assure the sovereignty of the Latin American and Caribbean nations vis a vis, above all, the United States.

Following the predominant tendencies in capitalism worldwide at the time, the state was to play a strategic role in this model. It was to constitute itself as the promoter of economic and social processes through implementation of policies (protectionist, fiscal, public spending, trade, labor, social, etc.) directed at stimulating savings and private capital accumulation. In some countries, such actions by the state, in combination with high rates of growth and income distribution among the growing urban middle sectors, encouraged the generation of a social consensus that legitimated state management and guaranteed relative sociopolitical stability favorable to private enterprise.

The 1960s, however, showed that despite the high average rates of growth recorded in the region as a whole -- approximately six percent annually -- the fruits of this dynamic expansion were not distributed equally. The economic model did not contribute to satisfying the basic needs of most of the population. Rather, it accelerated a process of concentration and monopolization of wealth that developed in tandem with the transnationalization of the region's economies -- a development in which U.S. interests indisputably predominated -- and the marginalization of growing social sectors.

Hopes for the construction of democracy were also frustrated in this period as a wave of military coups swept through practically all of the countries of the region -- with the exceptions of Mexico, Costa Rica, Venezuela, and the particularities of Colombia, which has been under a state of siege since the 1950s. The ultimate result was the disarticulation of democratic social movements, which had opposed the inequalities generated by dependent capitalism and proposed the construction of democracy upward from the base of civil society toward the state.

The economic-social crisis of the 1980s -- easily the most difficult crisis experienced by Latin America and the Caribbean since the beginnings of national independence -- made clear the limits of the pattern of accumulation promoted during the past decades. It also exposed the nonviability of the projects of national affirmation and integration that were formulated on the basis of so-called developmentalist theses. The crisis reaffirmed with crude ferocity what diverse social and political sectors had been saying for some 20 years: dependent capitalism in Latin America and the Caribbean has been incapable of satisfying the most elemental needs of the majorities. Together with the recession and the worldwide productive restructuring, the crisis of the old model of accumulation also widened the existing gap between the industrialized economies and the underdeveloped capitalist societies. Furthermore, with the formation of a new global economic paradigm, Latin America and the Caribbean are increasingly left aside, and they run the risk of structural marginalization if recent tendencies toward economic deterioration and loss of competitiveness are not reversed.

Throughout the 1980s, and independent of the political conceptions that guided the successive governments of these years -- social democratic, liberal, Christian-democratic, and even popular-democratic, as in the case of Sandinismo in Nicaragua -- economic neoliberalism, which was inaugurated in Chile, Argentina, and Brazil by the military regimes installed in the 1970s, has become the dominant response throughout Latin America and the Caribbean to the productive crisis and the foreign-debt crisis, and to the necessary and unpostponeable reconversion of economic structures. The ideologues of neoliberalsm include international financial institutions, transnational capital, and, on a local level, modernizing fractions of the bourgeoisie (among whom predominate financial and export groups). These ideologues are promoting severe stabilization and adjustment policies as short-term measures to clean up deficits and public finances. In a medium- to long-term perspective, these forces propose an economic reordering (or reconversion) as a means of consolidating productive specialization and efficiency -- in contrast to the industrial diversification promoted in the past -- and of permitting the economies of the region a more competitive insertion in the world market.

From this perspective, the external sectors of the Latin American and Caribbean economies will be the axis of the new model of accumulation, in contraposition to the role played by the internal market in past decades. The neoliberal strategy also involves settling accounts with protectionist policies, as well as a redefinition of the role of the state in the promotion of economic and social processes.

Under such circumstances, new forms of dependency generated by the foreign-debt crisis in the 1980s are added to the old structures of dependency analyzed by Latin American critical sociology in the 1960s. The stabilization and adjustment programs formulated by the international financial institutions, the transfer of financial resources, and the decline of the commercial position of Latin American and Caribbean countries in the world market, are only some of the expressions of the new and more complex face dependency has assumed in the region in recent years.

Both the crisis of the postwar pattern of accumulation and neoliberal policies have exacerbated socioeconomic contradictions. "Today," asserts Argentine political scientist Atilio Boron (1988), "our societies are more unequal than before, more heterogeneous than before, and more concentrated and exclusionary than before." He adds that extreme poverty no longer appears as a consequence of subsistence activities in the backward poles of rural zones or as a fatal result of the insufficient development of capitalism.(1) Rather, extreme poverty today appears as:

an aberrant manifestation of modernity and development. Extreme

misery is now also found in the great cities, in the heart of the capitalist

and developed pole of our societies; that is where indigents, illiteracy,

infant mortality, in sum, all of the plagues of underdevelopment, increase

(Ibid.: 47).

From what we have described above, it follows that the solution to the current crisis and the possibilities for future recovered growth, guaranteed social development, and national sovereignty involve more than the complementary integration of our economies. As Brazilian sociologist Ruy Mauro Marini (1990) points out in a provocative essay, a solution to the crisis also requires that economic reconversion take place in a broadly inclusive social and democratic context. Thus far, the process of economic reconversion, which has been underway in the region for several years now under the dominant guidelines of neoliberalism, has been defined by its exclusionary and marginalizing character and by its perverse aggravation of underdevelopment and misery in Latin America.

The countries of Latin America cannot and should not exclude themselves from the changes and transformations posed by the restructuring of the international economy. The dilemma, however, lies in the manner in which regional economic reconversion is to be carried out. Who will benefit from it? Which forces and interests will lead it? In what manner -- subordinated or otherwise -- will our societies be integrated into the new world economic system and into the new international division of labor that has been emerging in recent years?

II. Democratic Transitions and Democratization in Latin America

In contrast with what more than a few analysts have called the "lost decade" for the economies of Latin America and the Caribbean, the 1980s have also been characterized as a decade "won" for the cause of democracy. Processes of formal democratization have been underway in a group of countries that were under the domination of military regimes during the previous two decades (and in the cases of Haiti, Paraguay, and Guatemala, dating from the 1950s). Imposed with the open support of the United States, these military regimes were nourished by the national-security doctrine, which was developed in the postwar period by the United States to confront real or supposed threats of Soviet expansionism in the so-called Third World. The national-security doctrine, promoted since the 1960s with the goal of protecting U.S. interests and confronting the advance of communism in the hemisphere, became the dominant ideology within the armed forces of the region. Application of this doctrine contributed not only to the containment and/or repression of discontent and social mobilizations, which were expanding during the 1960s. It also helped to neutralize the political influence of the Cuban Revolution, whose triumph in 1959 initiated a revolutionary cycle that would last through the end of the 1980s (Central America being the main site during the past decade).

With respect to the democratic transitions that unfolded in the region during the 1980s, it is important to differentiate between the political processes that developed in the countries of Central America and those in South America. The changes operative in the majority of the countries of South America could be defined in terms of processes of "redemocratization" (and a return to models of political democracy that were suppressed by the coming to power of the armed forces). In Central America, by contrast, what has taken place since the end of the 1970s is the search for the construction of a form of organization and democratic-political coexistence, which was traditionally absent -- or usually scarce -- in the life of these societies.

Unlike the processes of returning to democracy in South America, which were structured on the basis of transitions negotiated between emerging civil governments and the armed forces, the democratic search in the Central American isthmus during the 1980s was led by social movements that adopted armed struggle as a legitimate strategy for carrying out radical structural changes that went beyond the formal democratization of society. Thus, while in Central America the democratic transition takes place through a rupture -- armed insurrection in Nicaragua or civil war in El Salvador -- in South America the return to democracy comes about through negotiated pacts.

The constitution of a popular democracy in Nicaragua was testimony to the rich potential of the peoples of the region to take up the challenge of carrying out social changes. (The Sandinista model, which was both novel and plagued with contradictions, combined political pluralism, a mixed economy, and a nonaligned foreign policy.) Yet the Nicaraguan experience also demonstrated the limits imposed by the dominant presence of the United States on any project of global transformation in the hemisphere, regardless of its political or ideological stripe.

Although the transition from military regimes to political democracies is marked by the specific particularities of each historical situation, the general process of democratization shares certain common features:

1. In the vast majority of cases, electoral processes have constituted a "bridge" toward formal democratization.

2. The recently installed civil governments and the armed forces that gave up direct rule have signed pacts and agreements allowing the latter to conserve an important and strategic share of power, as well as to benefit from amnesties exempting them from responsibility for crimes and human-rights violations committed under their rule. (Several of these agreements, such as the Law of Forget and Forgive in Argentina, were even formalized at the constitutional level.)

3. The crisis and the orthodox economic programs of stabilization and adjustment have aggravated existing social conditions, causing the indices of extreme poverty and misery to soar. This situation fosters social and political disorganization, converting democratization into a fragile, vulnerable process that is permanently threatened by the phantom of ungovernability.

4. The democratic transitions have taken place in an adverse and changing international context, characterized by productive transformations, world-economic reorganization, and, as of 1989, the disintegration of the post-World War II international order, which was marked by bipolarity and the Cold War. The combination of these changes has fostered a profound restructuring of international relations. On the economic level, this situation is bringing about the formation of a new division of labor that is in contradiction to the model of economic growth and accumulation developed by the countries of Latin American over the last 50 years. Furthermore, the democratic transitions are not taking place in an expansive world-economic panorama. If an expanding world economy in the immediate postwar period allowed for high rates of growth and increases in employment and salaries within the national economies, such is not the case today. In terms of the international system, the process of restructuring international relations in the framework of the end of the Cold War -- and particularly after the Persian Gulf War -- has not yet produced a new, complete global order. Consequently, uncertainty and instability will be the predominant features of the current international moment. Within this vortex of changes, and in contrast to the dynamic role played by Third World countries in the 1970s through organizations such as the Nonaligned Movement, the countries of the South today play an ever more marginal role in international affairs and in world-economic decisions.

5. Democratization has been promoted basically and fundamentally on the formal terrain, establishing institutional conditions that guarantee the transitions from one government to another through electoral processes. Within this logic, and in the train of the persistent crisis and neoliberal economic policies, political democracy is developing in contradiction to the socioeconomic reality of deepening social exclusion and marginalization.

As the decade of the 1990s begins, the existence of democratic regimes in the region has been reaffirmed. Democracy apparently has survived the onslaught of economic crisis and neoconservative structural adjustment carried out in the 1980s -- although not without certain disasters and a very high social cost. In contrast to the political dynamic of the 1970s, when the first neoliberal-type measures were taken under the umbrella of military regimes, neoliberalism today has not only constituted itself as the dominant economic approach, it has also developed the flexibility to incorporate political democracy into its modernizing strategy. In the past, such a move would have been perceived by the United States and large capitalists as risky and a threat to social stability and security interests.

Today, depending upon the interests of the forces promoting democratic transitions, their efforts may reflect quite distinct and opposing goals. On the one hand, formal democracy is used as a means of neutralizing social discontent and orienting the crisis toward a socially ordered resolution, which neither dislocates the interests of large local capitalists and transnational capital nor affects the authoritarian forces' share of power. The main interests promoting this solution are big capital and the "New Right," the big modernizing bourgeoisie of the region, with its neoconservative politics (avoiding the extremes of authoritarianism of the 1960s and 1970s) and its neoliberal economics. Alternatively, as promoted by democratic and popular forces, democratization of regimes and political relations are considered a means "to initiate economic development with social justice and national independence, banishing the logic of marginalization and subordination upon which authoritarianism depended" (Arrendondo, 1990: 9).

Questions have been raised by several analysts and social scientists about the limits and achievements of democratization and/or redemocratization. To what extent, asks James Petras (1990, n.d.), for example, have the recent transitions in the region signified a real rupture with the structures of power of the old authoritarian regimes, i.e., the armed forces, judicial power, the police, security apparatuses, and the central bank (as a regulator of economic activity), etc.? Or do these transitions more accurately represent continuity -- albeit with a democratic facade -- of the neoliberal project inaugurated by the dictatorships? Further, do they therefore maintain the latent danger of a resurgence of authoritarianism vis a vis political and social instability? Petras responds that the democratic transitions have modified the authoritarian political regime headed by the military, but that they by no means represent modifications at the level of the basic and permanent structures of the state.

Without a doubt, the so-called democratic transitions in the region have represented important advances in the formal political terrain. Thus far, they have managed to guarantee that governmental changes take place within the framework of elections -- leaving aside any judgment about these elections -- rather than through coups d'etat or military uprisings. They have broadened the spaces for the existence and action of political parties, associations, and labor unions. The media have been allowed a greater role, and autonomous social movements and actors have emerged from within civil society. These movements have developed a significant level of mobilization, which has curbed, on more than a few occasions, the restorative impulses of authoritarian forces. They also have contributed to the construction and deepening of democracy from the base of society.

Within the authoritarianism versus democracy framework that was so important in the past and still generates so many questions, the advance of democracy deep within the new social movements, which have developed prolifically at the level of civil society, represents one of the most significant changes -- and achievements -- in the political life of the region. Likewise, the practice of democracy has favored the development of a new political culture that incorporates the recognition of conflict and formulates solutions using institutional and legal mechanisms rather than ruptures and confrontations.

The democratic transitions and inaugurations, notes Manuel Antonio Garreton (1991: 27), as well as the overcoming of authoritarian enclaves and residual elements, "the reform or extension of democratic institutions and mechanisms, or the recomposition of the political system in its integrity" all reflect "processes of democratic construction, but they do not exhaust the problematic of such." The theme of democracy and its consolidation presents a double risk:

1. One can fall into the fascination or charm of democratic formalism,

which leads to reducing democracy to its forms of representation, action,

and political participation; or

2. One can forget that in the context of economic crisis and neoliberal

economic policies, with their extremely high social cost (the cruel

increase in exploitation, according to diverse analysts), social reforms

the social content of democracy -- cannot be left aside.

As recently as the past decade, diverse sectors maintained -- and some of them still do -- that political democratization (democracy as the form of organization of a political regime) would resolve the problems of poverty and backwardness. Today, after several years of "savage economic adjustment" and in the face of a persistent crisis in the majority of countries in the region, the increase of misery, malnutrition, and underdevelopment is an irrefutable reality. Moreover, during these years our peoples have been ever more alienated from sovereign control over strategic economic-social decisions. The structural adjustment has shown itself at every turn to be incompatible with social equity.

In reality, we find ourselves today facing the paradox that, for the first time in many decades, the generalized existence of an integrative political model -- formal democracy -- is a reality in the area. Nevertheless, that model has not been able to promote the formation of more just and fair societies. In light of such a state of affairs, it is valid to ask whether it is possible to found and consolidate democracy in societies dominated by misery, marginality, and social and economic exclusion. This is cogent because, if the current social processes in the region are characterized by anything, it is, in a perverse synthesis, by their political inclusion and their social exclusion. Or in Atilio Boron's terms, by "political citizenization" [formation of citizenry -- Eds.] and "economic and social decitizenization" (Boron, 1988).

In Latin America, the idea of democracy historically has been tied to an "ethical principle of integration or social democratization, that is, the elimination of inequalities and the participation of the people in the decisions that concern them" (Garreton, 1991: 29). The neoliberal experience in the 1980s, however, has led to social disintegration that favors the development of situations of ungovernability; it fosters latent crises and spurs political instability, standing in the way of the consolidation and reproduction of democracy and making it ever more fragile and vulnerable.

When social demands are not satisfied and political demands cannot be absorbed, democracy runs the risk of ungovernability. Hence the criticism of those positions that maintain that democracy in the countries of Latin America and the Caribbean should be reduced and confined to the limits of its formal improvement. The improvement of formal democracy is undoubtedly important and necessary for the consolidation of an institutional political life that fosters the participation of an ever more mature and developed citizenry. However, it is clearly insufficient for stopping or reversing the deterioration of the general conditions of life of the immense majority of the region's population.

The social reality of Latin America and the Caribbean cries out for social reforms, without which it will be very difficult to assure the consolidation of democratic reconstruction and its formal advances in a continent that, in recent decades, daily lived the experience of authoritarian political culture.

As a project and a program, reformism was practically absent from the political life of the region in recent times. In fact, until the triumph of the Sandinista Revolution in Nicaragua, for certain sectors of the Left, the mere mention of carrying out social reforms meant taking lame and revisionist positions vis a vis a dominant revolutionary strategy that proposed rupture as the means of bringing about radical social change, opposing the gradual transformation of society. For the authoritarian forces that imposed military rule in the 1960s and 1970s by coup d'etat reformism was seen as the source of anarchy and ungovernability, because it encouraged social mobilization around the growing demands of the population.

The cycle of armed revolutions that began in the region with the triumph of the Cuban Revolution in 1959 came to a close, paradoxically, with the electoral defeat of Sandinismo in Nicaragua in February 1990. In its place has emerged an extensive cycle of electoral processes, which legitimate political and governmental actions, whether they be the application of orthodox neoliberal policies or the democratic mobilizations of civil society.

The economic inequality and social injustice that activated the call for revolutionary struggle in the region 30 years ago persist today, not merely as the same old unresolved problems, but in an even more aggravated form, exacerbated by the social costs of the recession and readjustment. Today, more than ever, social reforms are necessary and urgent, but these must be undertaken in the context of the recently acquired democratic experience of a growing civil society in motion. Moreover, social reforms must involve not only the action of traditional party forces, but also the state itself Far from being assigned a secondary role in this process, the state must be made more participatory and efficient, while strengthening its role in redistribution and the promotion of development.

NOTES

(1.) CEPAL (1990) points out that although the regional economy stopped growing in the 1980s, the population of the area increased from 362 million inhabitants in 1980 to 426 million in 1990. Th recession, as well as the modifications in the system of employment, the deterioration of real wages and the restrictions on public spending led to an increase in extreme poverty, above all in urban zo Thus, while in 1980, 112 million people (35% of all households) lived below the poverty line, by 198 the numbers had increased to 164 million (38%).

REFERENCES

Arrendondo, Estela 1990 "Los Problemas politicos de la democracia." Paper presented to the Encuentro Internacional de Latinoamericanistas." America Latina a fines del Siglo XX," Centro de Estudios Latinoainericanos, Facultad de Ciencias Politicas y Sociales, UNAM, Mexico (September). Boron, Atilio 1988 "Clase y politica en las actuales transiciones latinoamericanas." In Proyectos de cambio, la izquierda democratica en America Latina. Caracas, Venezuela: Ed. Nueva Sociedad. CEPAL 1990 Reestructuracion productiva con equidad. (Mayo) Santiago de Chile: CEPAL. Garreton, Manuel Antonio 1991 "La democracia entre dos epocas. America Latina 1990." Paper presented at the XV World Congress of Political Science, Buenos Aires (July 21-25). Marini, Ruy Mauro 1990 "America Latina en la encrucijada." Paper presented to the Encuentro Internacional de Latinoamericanistas, "America Latina a fines del Siglo XX," Centro de Estudios Latinoamericanos, Facultad de Ciencias Politicas y Sociales, UNAM, Mexico (September). Petras, James 1990 "Sacrificing Dictators to Save the State: Permanent and Transitory Interest in U.S. Foreign Policy." Paper presented to the Encuentro Internacional de Latinoamericanistas, "America Latina a fines del Siglo XX," Centro de Estudios Latinoamericanos, Facultad de Ciencias Politicas y Sociales, UNAM, Mexico (September). n.d. "Global Transformations and the Future of Socialism in Latin America." Unpublished manuscript, 20 pp.
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Title Annotation:Latin America Faces the 21st Century
Author:Lozano, Lucrecia
Publication:Social Justice
Date:Dec 22, 1992
Words:4973
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