RIGHTING FINANCE: Democratizing development takes more than political rights: Assessing Bolivia’s experiencewebmaster
For Bolivia – and generally the rest of Latin America—the demands for economic and social inclusion during the 1960s and 70s were associated to the struggle for greater political participation and the transition to democratic government. Therefore, social organizations devoted their energy to fighting dictatorships, considering that political rights and democratic openness would bring as a consequence the much-awaited economic democratization and the improvements in life standards for the whole population.
But political participation in democracy through voting (but delegated in terms of representation to the monopoly of the political parties) and progress in respect for individual political rights (recognition to ethnical, gender and other differences) came together with a liberal economic model based on deeply despotic premises. These were the obsession to maintain stable macroeconomic variables, reducing the State’s role to a minimum of regulation and welfare provision with goals according to those imposed by our main advisors, the World Bank and the International Monetary Fund, in the application of the new recipe. These latter, in turn, would spare no resources in loans to support such changes.
Bolivia’s promotion of the neoliberal model began in 1985. Promotion of the neoliberal model in Bolivia came about against a historical backdrop of failure of the welfare State project in improving the living conditions of people through “top down” distribution, policies of industrialization, State ownership and import substitution. The neoliberal model implied a continuous and sustained process of dismantling the State through a series of reforms whose central axis was the substitution of State intervention in the economy with “market forces.”
The results of the economic model
If anything characterized the new model of State and economy was its discursive hegemony. Starting with the virtual demonization of an inefficient, corrupt and cumbersome State, under the premise of its reform and modernization, a hegemonic discourse of neoliberal ideology had as central premise one that was simple, but because of that, effective. Breaking with the statist populism (inaugurated with the revolution of 1952) a reform of the State and a process of privatization would be undertaken to place the whole productive apparatus in private hands (efficient, rationale, efficacious) to achieve welfare for all Bolivians. The two central pillars that would sustain this process towards modern development would be attraction of foreign investment and promotion of exports of national production. For the former, no legislative reform to protect foreign interests and facilitate trade openness would be too big. The latter assumed the existence in Bolivia of a developed and efficient industrial fabric, capable of taking advantage of external markets.
Few voices were capable to stay alert and foresee the adverse consequences that these policies would generate in the population.
After two decades of neoliberalism, it is possible to assert that the model failed, even at its most basic premise of solving the economic growth problem. Thus, policies to improve competitiveness and exports not only did not solve problems of growth, employment and income among the poorest, but weakened the productive fabric further.
The sociopolitical and economic dynamic was accompanied by imposition of the discourse that the neoliberal path was the only one and, therefore, the opposition by social organizations only implied a useless delay in its implementation. This process happened together with a systematic weakening of traditional social organizations (tied to the statist productive model) and a generalized feeling of defeat and powerlessness by grassroots organizations to reverse declining living standards.
Also the growth in the gap between poor and rich as a consequence of the excessive increase in social exclusion and poverty produced a systematic weakening of the democratic momentum that so many hopes had raised in the 1980s. The bases of the political system were weakened and a profound questioning emerged towards the authoritarian form that government decisions were taking.
The social demand for change
Weakening the State and giving responsibility for economic development to private initiative unleashed a process that curtailed old citizen rights, drastically reduced social benefits, freed the labor market and contacted employment, consolidating a more unfair and unequal society than the one present at the beginning of the “reforms.”
The failure of the policies embedded in this model in everyday life for average people are concrete: 1) they never promoted stable economic growth, 2) they did not improve labor and income conditions for workers, 3) instead of strengthening the incipient industrialization process, they dismantled the productive fabric, 4) poverty and social exclusion not only did not go down, but new forms of work and income generation contributed to increasing it, 5) lastly, far from strengthening State institutions and promoting a widening democracy, the economic model contributed to weaken and diminish the credibility of the political system and the form of government in the eyes of the low income sectors.
In that scenario, social actors began to identify neoliberal reform with active capitalist restructuring that led to losses and winnings by the different economic actors. It became clear to them that the State had not really abandoned its role in economic policy, but had just reoriented its intervention towards the promotion of industries linked to exports, with which it was fostering the transfer of internally generated surpluses towards transnational interests.
People’s discomfort was first expressed with a diversity of regional and sectoral conflicts. Though these started in a scattered way, they began to accumulate discomfort at the same time as they rehearsed the re-articulation of traditional forms of organization. This process, whose contours were blurred and ambiguous at the beginning, ended up in the so-called “war of gas” in October of 2002, with the mobilization of majorities of grassroots popular groups.
The unifying demand to reverse the process of “capitalization” to recover hydrocarbons, after more than 77 deaths and 300 hundreds wounded, was substituted by the demand for the resignation of then-president Gonzalo Sanchez de Lozada. This demand crystallized a generalized feeling of opposition to the expropriation of natural resources.
It further illustrated that democracy cannot be called such if it coexists with people’s loss of their right to participate in decision-making that affects their present material conditions and mortgages future development possibilities.
Javier Gomez is the Executive Director of Center of Studies for Labor and Agrarian Development –CEDLA (Bolivia).