How Neoliberalism in Latin America is in “Default” (and What it Does to Avoid Extinction)

By Alfredo Serrano Mancilla – Aug 31, 2020

The worst thing about the present times is when we can’t even imagine the future. This is precisely what is happening to neoliberalism. It lives an extremely complicated present, which is further aggravated by its inability to describe new horizons going forward.

After half a century of existence, neoliberalism faces a great crisis of ideas. Its manual is outdated.

Decay is always a slow process and, on many occasions, also unacceptable for those who suffer from it. Neoliberalism is going through its most complex months in Latin America. The Covid-19 pandemic has exposed many of its weaknesses, which until now had been “covered up” by large communication campaigns with a high dose of post-truth (to avoid calling them lies). See, for example, what happened in 2008: the last great neoliberal crisis in the economic sphere was rewritten as a real estate bubble problem, and the citizens were blamed for all the ills, due to excessive indebtedness. However, this time, given the current Great Recession we are experiencing in the world, it is practically impossible that they can again blame us for everything, despite their attempts. At this moment there is a great consensus that the fault does not lie with the people, but that the real problem lies in an economic and social model that is very poorly prepared to face adversity.

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All the neoliberal myths were blown up at the very moment when people need to face a dramatic situation. Neoliberalism fails to get any of its usual answers right. On the one hand, it forgets about the real economy in pursuit of an enthronement of financialization and, on the other hand, it continues to defend the absence of the State despite the fact that Latin American citizens demand the opposite. According to data from the CELAG surveys in the last quarter, in Argentina 90% are in favor of a much more present and active State; this value is 70% in Chile, 60% in Mexico and 75% in Bolivia.

Common sense in the region rides in a direction completely opposite to what the neoliberal script advocates. The tax on large fortunes has great support in many Latin American countries (76% in Argentina, 73% in Chile, 67% in Mexico, 64% in Bolivia and 75% in Ecuador); and the same happens with a minimum income, publicly guarantee health and education as rights, to stop privatizations, suspend and renegotiate debt payments, etc. Furthermore, in most of the countries in the region, the banking system, the mass media and the Judiciary have a very negative image.

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This alienation of neoliberal politicians (and their respective power plants) in relation to what people think is reflected in many of the photographs that we are seeing in the region in recent times. Piñera not knowing what to do before a majority that has already begun the constituent process to change Chile. Lenín Moreno ends his term in Ecuador with hardly any approval (11%) for implementating a neoliberal project. Áñez continues to impoverish Bolivia and, facing the next electoral appointment, enjoys very little support (11%). In Colombia, Uribism is in its lowest hours with its maximum proponent under an arrest warrant and without the capacity to face the pandemic. Macri, now on vacation in Europe, could never build neoliberal hegemony in Argentina and left an economy in pieces. Bolsonaro, with more than 100,000 deaths from Covid behind him and with great difficulty in guaranteeing governance and political, economic and social stability. And in this panorama, of neoliberal crisis, we must also consider what happens in Peru, where Congress was closed last year — and has all its former presidents convicted of corruption — and Paraguay, where President Abdo avoided impeachment in extremis, after having sold energy to Brazil at a “free price”.

Neoliberalism is in default, but it refuses to disappear. It tries to recycle and oxygenate. In other words: it is renegotiating its future, but with great difficulty in generating horizons that convince and excite. However, it would be a serious mistake to underestimate it or consider it dead, because it has great structural power that will surely be willing to camouflage itself behind progressive ideas. The best example is the IMF, which without having changed its “business” composition now has a more conciliatory tone in terms of external debt; or the World Bank defending minimum income programs; or the billionaires advocating for more taxes. They are unequivocal signs that there is an attempt to appropriate progressive ideas, inappropriate for neoliberalism. Surely to make them its own and reformulate, qualify, redefine them . . . This has already happened many times in history: when capitalism was in trouble, it yielded enough not to lose its dominance.

We are in a political time of dispute in the region, in which neoliberalism is in default but tries to escape from its own bankruptcy. The result of this dilemma will depend both on the capacity of the neoliberal matrix to reinvent itself, but fundamentally on how progressivism advances, implements accurate and daily solutions to citizens, and generates horizons in accordance with the new times.

Featured image: File photo.

(Actualidad RT)

Translation: OT/JRE/EF

Alberto Serrano Mancillas

Alfredo Serrano Mancilla, doctor of economics from the Univ. Aut. Of Barcelona. Executive Director of the Latin American Geopolitical Strategic Center (CELAG).

Alberto Serrano Mancillas

Alfredo Serrano Mancilla, doctor of economics from the Univ. Aut. Of Barcelona. Executive Director of the Latin American Geopolitical Strategic Center (CELAG).