The dominance of free-market economics in the West is finally showing its cracks after a quarter-century on the rise. Syriza’s victory in Greece on an anti-austerity platform, the strong showings for Podemos in Spain, Jeremy Corbyn’s election as U.K. Labour leader and the popularity in the U.S. of Bernie Sanders all highlight popular political challenges to the neoliberal orthodoxy.
There can be no understanding of this weakening of the free-market consensus in the West without first giving attention to the region that was the precursor in the fight for a fairer, more humane world order.
It was Latin America that set the tone in questioning what became known as the Washington Consensus — reached in 1989 by the International Monetary Fund, the World Bank and the U.S. Treasury, without participation by any Latin American country.
At the turn of the century a wave of leftist governments came to power in Venezuela, Brazil, Argentina, Uruguay, Bolivia and Ecuador, among others, winning election after election in Latin America.
These processes were not homogeneous, given the different histories of each nation and variations in their party politics, social movements and leadership. But their common focus was the construction of independent, sovereign nations in the context of what the United States treated as its backyard as well as tackling poverty and inequality, addressing long-standing social ills and espousing an unwavering democratic path to societal transformation.
Today, Latin America has become a global reference point for those struggling for social justice and the building of truly representative democratic societies that serve the interests of the majority. This effort is best served not only by expanding representative democracy but also by using direct or participative and plebiscitary mechanisms. A reversal of the region’s political progress would be a setback for social progress everywhere.
Yet there are growing claims that the tide seems to be turning. “Frustration with Latin America’s left on the rise,” the Associated Press reports; “‘Pink tide’ on turn as Latin American revolutions fade,” The Financial Times says. Latin America’s left is allegedly in trouble, and a new dawn for the conservative parties that long governed the continent is on the horizon.
Driving this idea is economic troubles from the global fall in commodity prices — still the core of Latin America’s economy — and the impact on exports of slower Chinese growth, down from its 30-year average of 10 percent per year, even if remains an impressive 7 percent.
This prognosis is simplistic. The current wave of progressive governments owes its successes to much more than a commodities boom. Export price spikes occurred in the past without the impressive reductions in poverty and inequality underway in Latin America. Rather, a wide array of anti-austerity measures have been behind the economic success of the last decade, and the hope instilled in long-excluded communities, through an emphasis on social justice, has delivered repeated electoral victories for the new left.
What is true is that a right-wing backlash is using the weaker economic situation to try to restore Latin America’s conservative parties. Street protests in Brazil openly demand President Dilma Rouseff’s ouster, and some have even called for military intervention, with right-wing newspapers and politicians seeking to exploit corruption allegations to demand her impeachment. In Argentina, which is to hold a presidential vote in October, opposition protesters recently turned violent after the primary election victory of a governor allied with the nation’s leftist government. Venezuela has long been in the throes of a concerted oligarchic effort to sabotage the economy, security and stability of the country.
Ecuador, too, has experienced a hot summer of protests. Though some social movements tried to pose these as a popular uprising, they were sparked by opposition from the rich and powerful to President Rafael Correa’s tax proposals targeting land speculation and large inheritances. Media companies, closely aligned with local oligarchs, regurgitated false claims that the taxes would hit the wider population. Initial opposition to higher taxes turned into calls for Correa to go, despite his winning re-election two years ago with 57 percent of the vote.
This right-wing backlash has spurred the Latin American left to unite in defense of democracy and think of strategies to fend off this offensive. Intellectuals, politicians, social movements and human rights activists converged in Ecuador Sept. 28 through 30 to discuss this point at the Meeting of Latin American Progressives.
Ecuador has lessons to contribute, as well as to learn, from this discussion. Eight years into his presidency, Rafael Correa’s approval ratings, at 65 percent, remain high.
While Latin America continues to be the most unequal region in the world, Ecuador has seen a great drop in inequality that has clearly contributed to the government’s popularity. Redistribution, low unemployment (4.7 percent) and the reduction of poverty are, in part, the consequence of high levels of public investment. In clear contrast to the neoliberal orthodoxy that government should be rolled back, the state has built nurseries, schools, hospitals, universities, roads and wider infrastructure. As a result, Ecuador’s growth averaged 4.3 percent over the last eight years.
Progressive policies provided the resources for this much needed investment. Multinational control over Ecuador’s oil resources was ended, and illegitimate debts with international creditors were repudiated. Ambitious tax reform, tackling evasion without raising taxes, tripled annual tax revenues.
Social progress has gone hand in hand with a deepening of democracy. Correa and his allies have won 10 successive elections. This is even more impressive in the context of a state that until recently suffered from dramatic political instability. Seven presidents alternated in power in the decade prior to Correa’s first election, and none of them completed their first term.
More than ever, these principles of social justice and radical democracy are key to repelling the backlash of a small elite desperate to reinstate its privileges. It is not just the future of Ecuador and Latin America that is at stake. This is a struggle about the kind of world we wish to live in.