Free Competition and Conditionality in Latin America s liberal modernity crisis

Transcription

1 Free Competition and Conditionality in Latin America s liberal modernity crisis Gustavo Morales At the end of the twentieth century, Latin America found in western liberalism a macro narrative that promised to achieve the elusive goal of modernity. Economic, political and cultural modernization became the natural corollary of this path that searched for the transformation of society as a whole. This paper explains the course of the liberal project in the region; its origins, development and crisis through two practices that despite being contradictory are inherent to the liberal project: free competition and conditionality. The first part explains the official version of the liberal modernity in which free competition becomes the central practice of a society arranged around individual lines and a market rationality that promises material progress as its logic consequence. The second part explores the disruptive effects that conditionality, as a liberal non official practice has for the liberal project itself, once the free competition has proved its incapacity to create material wealth. The work is addressed to understand the different cleavages and their variation in the current Latin America as consequence of the liberal modernity crisis 1. The official version of the liberal modernity and Its widely accepted practice In his seminal work of social constructivism, Wendt reminds us that people act toward objects, including other actors, on the basis of meanings that the objects have for them. It is a suggestive way to say that the practices of people are closely related to the discourses that conform the collective meaning of social groups and societies. People turn nature -and even other people- into commodities because they conceive progress as material progress, they also compete because they believe in the value that private accumulation has in itself. Hence, the relation between the discourse and the practice is necessary rather than contingent. Without a discourse the agent cannot give order and sense to its practices, but without the agent s practices the discourse cannot exist. Indeed, modernity is presented as a historical process of disenchantment and rationalization of the world. The liberal discourse, stresses the view of modernity as a process, this is one that responds to sheer rationality and is based on means-end rational calculation with reference to universally applied rules, laws and regulations (formal rationality). The free competition as a practice is imbedded in a process underpinned by market laws in the economy and a written constitution in politics that are presented as universally applied rules that frame the competition and set the terms for the actors calculations. 1

2 What makes that modernity a liberal one is an array of ultimate values proper of liberalism, such as individual freedom, in addition to others shared by all modernity projects such as the belief in reason, and in progress. Rather than opting for a centralized and planned practice inspired by collectivism as done by socialism in order to achieve progress, liberalism opts for competition inspired by individual freedom. However, this choice is oriented not by technical reasons but by values and ethical norms. In consequence what remains specific of liberal modernity is that it establishes a set of ultimate values -not only centred in the idea of progress and faith in science and reason, but also in individual freedom that prescribe a formal rationality as the legitimate mean to achieve them Therefore, what defines liberal modernity is not only, as people often say, the material wealth it produces but mainly the new distribution of liberal ideas and the process of rationalization behind those ideas that create new ways of thinking and behaving in the world. The core of modernity is not the complex industrial machinery but the market rationality, that combining the ultimate values and the means-end calculation proper of the liberal modernity, orient change in such a way. However, materiality defines the necessary limits of possibility of an idea. No society could be claimed to be modern in a context apart from technological development or being incapable to create material wealth. When liberalism cannot keep the material promise that modernity involves, other discourses become attractive The liberal economic modernization and the free economic competition Despite differences between countries regarding the extent and depth of neoliberal reforms, these were experienced in Latin America with a peculiar tinge of shock. And it is not surprising at all. This economic doctrine inspired in the work of Friedman and Hayek searched to organize the economy on individualistic lines as an ultimate value, switching the previous developmentalist experience of the region arranged around the idea of a national and strong state. Hereinafter, the economic decisions were in the hands of private enterprises, national and international, rather than the national state. In addition, neoliberalism proposed a process of modernization led by an efficient market economy; this was one focused in the right interpretation of the laws of the market regardless their social costs. As Williamson, who in 1989 coined the term Washington Consensus, stated: [Fiscal deficit] results not for any rational calculation of expected economic benefits, but from a lack of the political courage or honesty to match public expenditures and the resources available to finance them. This call for an efficient market economy implied, as in the previous case, to break with the preceding developmentalism in which government regulation, through its planning agency, adjusted the laws of the market to the state s development programs. Before, rationalization was measured by the state s capacity to design and execute coherent development programs. In contrast, neoliberalism considered the state s intervention as non- 2

3 rational because it introduced distortions to the market information ruled by supply and demand, what prevented doing a proper calculation for economic decisions. For neoliberalism, rationalization means market rationality 1.2. The liberal political modernization and the free competition Perhaps one of the distinctive features of the democratic transition of Latin America during the 80 s and 90 s was the interest for democratic practices and the procedures that regulated them. Elections and written constitutions were tantamount of democracy. Competitive elections marked the end of ten dictatorships. In two other countries, after bloody civil wars took place, the competing sides left their weapons to go into election campaigns. Countries that did not break their democratic institutional order along the 60 s and 70 s kept celebrating elections as usual. At the same time, new constitutions were issued in ten of the nineteen Latin American countries and at least four others introduced deep reforms in their previous constitutions. In general, the new constitutions and reforms were oriented to create a general framework capable of guarantying access to political power through free and fair competition and subjecting the civilian governments to separation of powers. During those years, as clearly put by Huntington, the definition of democracy in terms of the will of the people and the common good, the former defining democracy in terms of sources of authority and the latter in terms of purposes served by the government, were discarded giving way to a conception of democracy in terms of process. Establishing a set of stable universal rules - contestation and participation in competitive elections and check and balance for the government s exercise - the liberal modern project aimed to incentivize the means-end calculation of the agents in the political struggle but within precise laws and norms. However, the practice of free competition cannot be understood only as a behavioral one but mainly as a cognitive process capable of demystifying what was considered a traditional political field while going further in its process of rationalization. For a traditional continent ruled along its history by enlightened oligarchies, savior dictators, and charismatic leaders; pluralism and the free competition of agents meant the possibility of rationalizing politics by the demystification of those previous authorities and its replacement with secular utility. In addition, the free competition goes further in the process of rationalization by switching the previous divine right for market principles as the base of political authority. In fact, the liberal modernity project seeks to construct an arena in which public office is auctioned off to the highest bidder. In that sense, a popular democracy is popular as far as the rules of the game let all people be part of the auction and participate as bidders equally and freely. In this system of reciprocity, in which chiefs can rule only if they satisfy the expectations on the parts of their subordinates, the utilitarian worldliness becomes the main criterion of legitimacy. 3

4 1.3. The liberal cultural modernization and the free competition The core of the new global liberalism was not only a moderate citizen but also the so-called broker parties, which generally tried to appeal to a wide range of interests of society in order to win elections and form a government based on a wide electorate and coalition groups, but in the process relinquished any claim to a focused ideological approach. The triumph of the Radical Party with Alfonsin in Argentina, the National Reconstruction Party with Collor de Mello in Brazil, the Christian Democratic Party with Alwin in Chile, the Colorado Party with Sanguinetti and the National Opposition Union with Barrios de Chamorro in Nicaragua, among others, were a clear sign that Latin America was taking the moderate way to create consensus Disruptive effects of the free competition in Latin America Despite the fact that the function of free competition as a practice was the expansion and consolidation of the liberal modernity from centric western societies to peripheral regions of the world, in Latin America its application had at least two disruptive effects for the future of the project itself not previously foreseen. The neoliberal proposal can be summed up by the following formula: Washington Consensus + free economic competition practices = economic progress. The disruptive effect of the formula was precisely that the two factors being added sought to constitute a society where the utilitarian worldliness became the main legitimacy criterion, yet, material utility never appeared as a result of the reform processes, at least not for the wide population and not in the middle term. Without material progress, neoliberalism seriously undermined its main criterion of legitimacy. The second disruptive effect of free competition is linked to the inconsistence of the West in the fully application of this liberal principle in the region. On one hand, western societies promoted the self-regulating market as the way to construct an efficient economy in Latin America but, on the other hand, their national security policies or even moral conceptions often prevented people from freely turning nature into commodities as is required in a free market economy. The western prohibitionism is a paradigmatic case with profound negative impacts in Latin America. The U.S. and European proscription of products such as marijuana, cocaine, and heroin, relating their consumption with moral decay and international threats, prevented groups from the region s population from taking part in such business legally, paying taxes and being regulated by the rule of law. What is worse, the distortion of the international market produced by the stiff prohibitionism advocated by the western states created powerful economic incentives for the consolidation of a parallel illegal drug market in some countries of Latin America. As result of the huge gains allowed by prohibitionism, drug traffickers were able 4

5 not only to challenge the state but also to jeopardize the social stability that any self-regulated market demands. 2. The liberal modernity behind the scenes : The non-official version As practice, conditionality is addressed not only to introduce and consolidate the free competition in the region but to perpetuate the subordinate role of Latin America within the hegemonic western social order. The Washington Consensus and the War on Drugs are eloquent in that sense; they were drawn in the U.S. but implemented in Latin America without participation of the region in the design. Conditionality began to be applied by multilateral organizations such as the IMF and the World Bank at the 80 s. However it was quickly adopted in the next decades by others multilateral organization and extended to others fields aside from the economy such as human rights, democracy, governance, but also free trade agreements and the war against drugs. In a broad sense, conditionality could be defined as the practice of giving economic, political or even diplomatic assistance and support contingent to the implementation of specific policies. It involves at least two actors within an asymmetric relation: the needy government (usually a Latin American one) and the external providing agent (the U.S, the European Union or a multilateral organization). Nevertheless the act of giving is not an accidental action; on one hand, it has the function of signaling the western provider as the privileged agent of history: someone placed in the peak of the consciousness evolution, living in the now and as such authorized to trace the path to those others dwelling in a certain point of the western past. The U.S and by extension European countries became economic and political models in Latin America. The IMF, the OECD, and The World Bank became reputed external centers with privileged information and the knowledge to do objective recommendations to the region. On the other hand, this act is also addressed to mark the recipient Latin American country with the infamy of being mired in history. And conditionality itself gives the hints to establish the gap that separates the recipient of its provider. The negotiation of an (...) arrangement may be an indication of the failure, with the degree of conditionality providing evidence of the extent of the failure. Nevertheless, while conditionality let to set the distance between the West as the privileged agent of history from a Latin America mired in it, it is also true that this same conditionality allows to separate the good from the bad government recipients. To accept the conditionality of the Western states and institutions provides the recipient with a seal of approval in the eyes of the international community, which would prefer to interact with this good government rather than with a bad one. Argentina, for example, went from being considered an economy in problems with an out of control inflation in 1989 to be presented along the 90 s as a successful 5

6 showcase by the IMF, once the appointed Ministry of Economics followed the Fund s conditions. The IMF s seal of approval let Argentina to be one of the main destinies of foreign direct investment in the region, situation only altered when the country s financial crisis surprised the markets again in The good recipients are those governments that have the willingness to implement the conditions and the ability to do so. The bad ones are, on the contrary, those that reject the help and conditions of the western external centers or even those which, accepting the conditionality, reverse or abandon the reforms once the support program ends. By and large, there is a wide consensus among the institutions that applied conditionality and the scholars who study this practice on the fact that the sustainability of the reforms depends on the recipient government s commitment. In that sense, conditionality cannot be understood as a shallow process addressed exclusively to affect the recipient s behavior but to constitute its new subjectivity. The new subjectivity that emerges recognizes the universal value of the liberal modernity and naturalizes the western hegemony thereby aligning Latin America s identity and interests with the West. Latin America, recognized as the other West, conscious of its delay, would have to follow and to try to catch up with the original one. 2.1 Between free competition and conditionality as practices The crisis of the liberal cultural modernization The questionable material achievements of the liberal modern project stripped the West s domination over Latin America exercised through conditionality. The we constructed between the western society and Latin America by extending the practice of free competition came to be questioned in its universality. The bad material results in the region attached to the conditions imposed by the external centers opened room for an identification of we and a demarcation of they within an asymmetric scenery of conditionality characterized by the antagonism between a subordinate Latin America and a hegemonic West. The external providing agent came to be identified by the needy governments as the adversary, the constitutive outside mentioned by Mouffe that allows recognizing the we through the ineradicable antagonism that separates it from they The crisis of the liberal economic modernization Perhaps, an interesting indicator of the growing dissatisfaction with the liberal economic modernization was the loss of the agents prestige, which had driven the process of the economic reforms in the region. The IMF, the World Bank, and the WTO were spotted as mere institutions that served the international financial capital and the U.S. imperialism in the region. The critics of neoliberalism found the practice of giving financial assistance contingent to the 6

7 implementation of specific policies an immoral behavior engaged with wild capitalism that let the international capital exploit and loot the region. The governments elites that introduced the package of reforms were accused of being allied of the imperial forces and insensible to the demand of the people, traitors of their own nations. In that sense, the broken promise of economic progress paved the way for a higher level of polarization given that what was called into question was the basic moral assumption of organizing the economy on individualistic line. Parallel to those critiques that usually came from social movements, other emerging alternatives such as neo-structuralism began to appear which aspire not just to resist but to present a potential substitute of neoliberalism. The latter alternative moved away from the former opposition (which could be defined as anti ) not only because it was moderate rather than radical but it also was oriented by formal rather than substantive rationality The crisis of the liberal political modernization The dissatisfaction of the common citizen with liberal democracy was more related with the fact that independently of whoever was in office, they led the country similarly. Indeed, the liberal democracy exclusion is not to be searched for in the participation of citizens or the contestation, but in the exclusion of economic, political, and social subjects that external conditionality imposes on the internal democratic debate. Market rationality extrapolated to politics allowed people to be part of the auction and participate as bidders under the restriction of not introducing in the bid the conditions agreed with the external centers so they would not be challenged, since these, in the name of their technical necessity, are self - imposed. The pretended superiority of the objective rationality of the western external centers authorized maintaining crucial topics for Latin American countries, such as the neoliberal model and the war on drugs, far from the electoral debate and the democratic modifications in name of the own country s benefit. Therefore, what led to the crisis of the liberal political modernization in the region was the subordination of the will of the people to the imperative of the universal rational demands of the modern project itself and the western society. With the depolitization of the crucial topics that affect the national societies, democracy becomes an innocuous game in which different [elites] compete [just] to occupy the positions of power, their objectives being to dislodge others in order to occupy their place, without putting into question the dominant hegemony. 3. Social cleavages and political issues in the new years of the twenty-first century At the early twentieth first century, it was clear by the profound instability that the liberal project had not been enough to consolidate a new order in Latin America. The causes of that situation can be found in the stiff conditionality through which the universal western truth attempted to be extended to the region, the failure of the formula Washington Consensus + 7

8 free economic competition = economic progress, and the inconsistence of the West in the fully application of the liberal principles in its war on drugs which exported the high costs of the traffic to the region. Nevertheless, it is possible to see behind all the instability, at least three different political dynamics emerging that would mark the recent future of the countries of Latin America. Two of them are bottom-up forces, this is, movements that emerge on the basis of identification with groups placed along social cleavages. Both heighten the sense of social exclusion and struggle to subvert the liberal order. Nevertheless, one trend stresses cultural demands articulating an identity politics that looks to enhance the differentiation between we and they, expressed in terms of anticolonialism. This trend includes for example the Movement of Coca Growers in Bolivia, and CONAIE in Ecuador. The other trend emphasizes the situation of structural poverty and social inequality directed to articulate demands related with the problem of social reproduction. Here it is possible to mention the Landless in Brazil and the Route Cutters Movement in Argentina, among others. On the contrary, the third trend responds more to a politics of issues in which people imbedded in demonstrations came from different social groups driven by what they consider affects all members of society as a whole. Those mobilizations demand higher efficiency and legitimacy of state institutions rather than attempting to subvert the liberal modern order. The heighten sense of citizen insecurity prompted by the actions of organized crime, drug trafficking and the violence of guerilla groups has motivate those kind of politics. Organizations like Free Country and Azfamipaz in Colombia, and the Movement for Peace with Justice and Dignity in Mexico belong to this group. 8

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