Moving to a Post-neoliberal Democracy

Is there an alternative to the neoliberal political economy model that is so dominant in all the advanced industrialized countries? There used to be an alternative – one which was committed to the expansion of democracy and the creation of a universal welfare state. This was the role of the social democratic and labour parties. In the USA this progressive element was found in the Democratic Party and in Canada in the Liberal Party.

The big change came in the 1990s, when the social democratic and liberal parties shifted to the political right. The key here was their decision to give strong support to the various free trade agreements promoted by the organizations representing big business. The treaties were designed to prevent governments from returning to the activist Keynesian policies that had been the norm from the end of World War II to 1975. We know this only too well in Canada.

With the free trade agreements came the package of neoliberal policies, often referred to as The Washington Consensus:  privatization of state assets, the deregulation of the economy and finance, the contracting out of government services, the introduction of regressive taxation systems, the cuts to social programs, and the broad attack on trade unions. Transnational corporations won the right to produce anywhere in the world, sell their products and services anywhere, repatriate their profits without any government interference, and to hide their capital in the numerous off-shore tax havens.

Latin America has been the testing ground
The struggle to create an alternative to the politics of neoliberalism in Latin America is recounted by Emir Sader in his recent  book: The New Mole: Paths of the Latin American Left. (London: Verso, 2011). Sader is Emeritus Professor of Political Science at the University of Sao Paolo and author of a well known book on Lula and the Workers Party in Brazil. As he points out, Latin America was where the neoliberal model was first applied. But it is also the region where political movements and parties are creating the first post-neoliberal political parties and governments.

Sader stresses the need for political movements and political theorists to carefully ground their analysis in concrete reality. The models that were first tried in Latin America were from outside the area, where conditions were quite different. The Communist Parties, which were very important in building the trade union movement, had a model that was based on the experience of the Soviet Union. The Maoist peasant revolution in China, supported by some elements on the left, could not be repeated in Latin America. The Trotskyst analysis did not fit a region where the large majority of the people were in the informal economy and not employed by anyone. The guerrilla strategy worked in Cuba in 1959, but in the era of large armies with virtually unlimited support from the USA, it quickly failed to be a viable alternative.

The key is understanding the fundamental characteristics of the Latin American region. It was a colonized less developed area. After independence, the local bourgeois class was based in resource extraction and large scale agribusiness production, both for export to the offshore industrial centres. Politically, these interests were based in the Liberal parties with close ties to the U.S. government and transnational corporations.

The dominant political reality for the Latin American left has for a long time been the hegemony of the United States, seen most directly in its support for ugly dictatorships. Today the unipolar world of the US domination is based on its unchallenged military power, the economic and political power of finance capital and its support system, and the control of the international mass media with its portrayal of the “North American Way of Life,”middle class affluence.

Creating a new alternative
In the 1990s there was an attempt to revive the social democratic parties in Latin America.. Sader argues that they made a comeback “as the standard-bearer of globalization,” especially in their support for free trade agreements. However, the social democrats have not had a significant political impact because they lack the class base found in the advanced industrialized countries.

The World Social Forum had its start in Latin America as defenders and promoters of local resistance movements. But this attempt at change was doomed to fail. As Sader argues, “as long as the social movements limited themselves to the social sphere, they remained on the defensive, unable to create the instruments needed to fight for political hegemony.” Only new structures of power could possibly create “the other possible world.”

The shift against the dominant neoliberal agenda began in 1998 with the election of Hugo Chavez as President in Venezuela. Most important was the defeat of the Free Trade Area of the Americas, pushed by the U.S. government and big business. Instead, Chavez and other progressive governments undertook the development of an important alternative: Latin American economic co-operation. This began with Mercosur and moved to the Alianza Bolivariana para los Pueblos de Nuestra America (ALBA), the Bank of the South, the continental gas pipeline, and the Union of South American Nations. Venezuela’s oil, shared on a socialist basis, has been important to this development.

Working together despite political differences
The success of the movement to create an alternative to the hegemonic neoliberal model is based on compromise, understanding and solidarity. The most advanced democratic developments have been in Venezuela, Bolivia and Ecuador. But other governments, resisting neoliberal hegemony, have been elected in Uruguay, Argentina, Brazil, Paraguay, Nicaragua, and El Salvador.

Under Lula the Workers Party (PT) government in Brazil did not produce a radical democratic alternative. But the introduction of traditional Keynesian social democratic policies greatly reduced poverty, and the PT governments have strongly supported the move toward a Latin American integration.

The shift to building a post-neoliberal Latin America has been aided by the decline in the hegemony of the United States. In 2003 there was massive opposition across Latin America, even in Mexico, to the U.S. war on Iraq. The preoccupation with the wars in Afghanistan and Iraq has given the Latin American governments some room to operate. Furthermore, U.S. economic hegemony has been undermined by the expansion of economic and political alliances with China, India, South Africa, Russia and Iran. There are cracks developing in the Monroe Doctrine.

Unfortunately, the Canadian government has been steadfast in its support of U.S. policy in Latin America. Most recently, the U.S. government, along with Stephen Harper’s government, supported the military coup in Honduras in 2009 which removed Manuel Zelaya from his position as elected President. All the Latin American organizations opposed the coup and refused to recognize the new government. When a compromise settlement was negotiated, it was facilitated by the Latin American states, and the USA and Canada were excluded.