Neoliberalism and the Subjugation of Latin America

From the late 1940s to the early 1970s, Latin America proved to the world that it was poised to grow. Its collective determination for social equality and economic reform promised many viable alternatives to alignment with Washington. Despite the fact that the region was by no means a fabric of interwoven utopias, Latin America was still able to distribute wealth and to sustainably grow sans the flavor of capitalism espoused by the US. The effects of this period in Latin American history had a global reach, inspiring countless other developing nations around the world to explore their economic options. For this reason, Latin America’s economic sovereignty was perceived as a threat to US hegemony everywhere. In order to maintain its hemispheric supremacy, and to send the world a message vis-à-vis nonalignment, the US intruded, subverted, usurped, couped, warred and assassinated in perhaps every way imaginable. In fact, the precedent America set in its own back yard during this epoch would become the general norm for managing future decades of global dominance. No place on Earth since has gone unaffected by US international, political and economic caprice; the current status of locales such as Eurasia or the Middle East shows this to be true. As for US interference with Latin America’s moment of heightened growth and trending social equality, it had only one true raison d’être: The US sought to economically indenture an impoverished albeit resource rich Latin America ad infinitum.

After so many coups, bombings and puppet regime installations, America became increasingly more aggressive with its economic weapons. Neoliberalism midwifed many policies that helped the US reach its financial ends in Latin America with new inroads. ‘Free trade’, one of the biggest hallmarks of neoliberalism, received much bipartisan political support under Reagan. After Reagan, Bill Clinton took neoliberal efforts, and especially free trade, to unprecedented extremes. Globalization took on new dimensions, becoming a veritable vertebra in the backbone of Clinton’s foreign policy. Two economically indelible outcomes thus manifested during his presidency: the infamous North American Free Trade Agreement (NAFTA), and the World Trade Organization (WTO). They have affected Latin America from the moment of their inception. The ensuing consequences for Latin America, its sovereignty and its economic freedoms were unparalleled in their destructivity; there was to be no recalibration or balancing of development and private enterprise in Latin America ever again. After both Reagan and Clinton, only corporate and property rights were to be protected. Every president since has in some way or other upheld this agenda.

Ratifying free trade and establishing a more rapacious species of international commercial law left Latin America pigeonholed. The region experienced some of the greatest cases of dispossession in its history for the sake of profiting foreign interest and contrived politics. Countries, whose state industries lacked sufficient capital, green-lighted disadvantageous laissez-faire policies through legislation; new policy and laws left them desperate to attract foreign investment and other forms of capital. The region also assumed that the US would make good on its promises of investment, thinking that America might comply with its vocalized desire to help. Even though the US pledged assistance with badly needed technology and capital, nothing materialized. Instead, many nationalists and socialists suffered a great deal of retribution for their political activity. The violence that many proponents of heterodox economics suffered during this period was largely symptomatic of the alterations made to the international legal landscape that affected Latin American nations. Ultimately, the costs of challenging Washington’s economic yoke became bloodier with the passage of time.

How did some of Latin America’s countries grow so poor from the forced adoption of laissez-faire neoliberal policies, especially after such an incredible twenty-year economic upturn? The answer begins in part with Reagan’s acting job at the 1981 International Meeting on Cooperation and Development in México. At the meeting, Reagan delivered the system that America envisioned for its neighbors and itself. Latin America was to ultimately become an experimental cadaver for the untested free market debauchery. As a result, the region largely became the economic Frankenstein that it is today. Moreover, much of the strife that Latin America experienced after Reagan’s presentation, whether economic, political or otherwise, predestined the region to be a financial stepping-stone for the US as globalization metastasized in other spheres.

The story of American presence throughout the hemisphere was perhaps no less bloody before widespread neoliberalism, but it was nonetheless different afterwards. Latin America experienced a 70% rise in real wages per capita from 1947 to 1973. Yet from Reagan to Clinton—1980 to 1998—the average income per capita languished at a dismal 0%. Crises arose throughout Latin America in the 1970s as a result of misshapen political leadership coupled with Yankee intrusion. Nor were these two components mutually exclusive of one another. As spendthrift governments cut social spending and increased taxes on the poor, Washington grew more and more pleased. By the close of the 1960s—the middle of Latin America’s promising growth period—some 10% of Latin Americans were destitute by today’s subsistence standard (two dollars or less per day). By 1996, a third of Latin Americans were impoverished. Latin America’s new poor totaled at least 165 million people under Clinton.

Before America unfurled the system that would shape Latin America’s collective economic future from 1981 onward, ‘developmentalism’, and the excitement that surrounded it, dominated international and economic deliberations in Latin America. The head of the United Nations Economic Commission on Latin America at the time proposed a radical restructuring of the terms that governed global trade. Many leaders in the region endorsed this philosophy. What is more, Latin American nations were not alone in what they wanted for themselves; even important European powers supported remodeling trade. They, too, indicted the US for not opening its markets to goods from developing nations. International political leadership then demanded that America reconsider crippling debts. Some Canadian and European politicians even invoked doubling development aid to $50 billion a year. Many entreated the stabilization of main commodity pricing. Of course, the international plea that America ought entertain in earnest the long ignored voices from the Third World went unheard.

The wants of Latin American nations were manifold: international governing mechanisms that would manage energy costs; collective representation at the United Nations General Assembly; increased financial assistance for developing countries; access to rich world technologies; and, lowered tariff barriers for manufactured goods coming from the region. Among their most sought-after changes were the highly reasonable and complete retention of sovereignty over both natural resources and economic autonomy. Latin American nations also wanted to legitimize industrial expropriation and nationalization in certain cases, as well as the ability to set prices for some of the most frequently exported commodities. The hope was to co-operate the economy on some level so as to benefit the many—not just the elitist few. It became increasingly apparent that the tidal forces of Latin America’s regional economy ebbed from Washington, and support for this shift was global.

Ultimately, Latin American nations did not get what they wanted from their participation in the 1981 international meeting on development. Latin America did experience, however, a flood of cheap consumer goods, and the many false assurances of rampant liberalization. Alterations made to the legal landscape governing national sovereignty and nations’ rights, as well as the shift in productive forces to rich world production facilities, changed everything for these countries. Higher wages did not necessarily follow as was promised under the false pretenses of neoliberalism, and economic and legal liberalization. Merely a small portion of Latin American workers benefitted, while wealth ceased to be distributed as it had from the late 40s to the early 70s.

As per Reagan’s plan, American multinationals soon dominated the scene. Railroads, energy companies, ports, mines and oil fell to foreign interest. Legal changes and modified trade dynamics funneled corporate expansion into the region as never before. Foreign firms hunted raw materials and preyed on the agricultural sector. Some experts indicate a litany of wrongs that is highly indicative of capitalism and its proclivity to extract wealth, accumulate it and stratify it wherever it can. Their list of victimization includes but is not limited to postal services, infrastructure, factories, telecommunications, education, health care services, incarceration facilities, waste management, water, broadcasting, pensions, television—all of which were sold to US firms for very disadvantageous reasons.

From the mid-1980s and the 1990s, thousands of Latin America’s government industries were sold. US multinationals and the Latin American plutocracy grew richer yet in the process, assuming unprecedented amounts of wealth and property. The International Monetary Fund (IMF) and Brazilian government, for example, spent $50 billion solely to maintain exchange rates in the late 90s. Such monetary investment wended its way to speculators, who grew rich as a side effect of IMF policy. These ‘investors’ and ‘entrepreneurs’ mopped-up whatever money Brazil’s government lost, enriching themselves at the expense of the nation’s poor masses. The IMF did essentially nothing to help the transforming region; it most likely exacerbated the situation with its pathetic half-efforts to ensure better health care, nutrition and education. Nevertheless, Latin America’s wealth was finally secured, resting comfortably—by Washington’s standards—in the right hands.

Nonaligned economic aspirations were all but finally quieted with a debt crisis that was subversively germinated by the American plan and took root throughout Latin America. With its knees bent under the burden of policy-fueled economic indenture, Latin America became especially attractive to predatory foreign investment and capital. Taxes were cut, laws were dissolved, health care funds sublimated, and more. Abandoning regulations left education and other social services to plunge like a foundered ship. As the gears of the new economy and its legislation wound, business enjoyed repatriating all of their profits back to rich world power brokers. Unions were also dealt detrimental blows in the process; democracy was eviscerated. Subsidies once allotted to protect national manufacture disappeared. Interest rates ran amok; state industries and public utilities were privatized. Finally, capitalism’s holy race to the bottom suffocated poor countries that once sought to unify efforts and set commodity prices so as to cooperate a globalizing economy that the US-lead industrializing world set out to pillage.

George W. Bush swore in his 2000 presidential campaign not to cajole Latin American leaders into kneeling before Washington’s interests. He promised instead to listen to Latin American grievances as a basic duty of his presidency. Yet, once Hugo Chávez made his disgust for the IMF model of development in Latin America known, the White House shamelessly supported a coup to stop Chávez in 2002. American political leadership was once again attempting to hoodwink Latin America. Eventually, the coup was disastrous for the White House; it effectively bolstered popular opinion for Chávez and his economic hopes for Latin America.

Chávez was not alone in his ire about foreign inroads made into the region for ill-gotten financial gains. México, easily the biggest victim of NAFTA, was not keen on supporting the invasion and occupation of Iraq. Bush’s White House threatened México in turn. The Caribbean Community (CARICOM) outright objected to America’s unfounded aggression; it, too, was reprimanded with barefaced threats. And as several Latin American countries endorsed the International Criminal Court (ICC), the US haunted them with economic threats lest they support exempting US citizens from certain ICC jurisdiction. Brazil’s opposition to the Free Trade Agreement of the America’s generated trade threats from the White House. Argentina likewise experienced Washington’s pettiness as it started experimenting outside of free trade.

After decades of forced indenture and predation, Obama’s White House now faces serious international opposition. For far too long the US has espoused an economic system that leads to political calamity and economic strife, rather than one that foments development and stability for its neighbors.Many students of Latin America agree that nations ought to fight to avoid electing regimes that promise more neoliberal policies and tactics to induce economic development domestically. But this advice does not suggest that accepting life under the pretext of boundless capital accumulation and economic growth without regard for social, political and ecological consequences was in any way, shape or form a result of something Latin America did to itself or in naïve acquiescence to the US demands. It goes without saying; America engendered and architected much of the last three decades of political and economic tumult in Latin America, maintaining Reagan’s system by most any means necessary. One need only ask a question for verification: Which of Latin America’s nations wanted to spawn the inalienable rights of private property and foreign profitability (and even corporate personhood), rather than secure their own, sovereign prosperity? By 2005 alone, at least 220 million Latin Americans lived in poverty. The new numbers evinced a 20% increase in total regional poverty since Clinton ruled the roost in 1996.

Washington recently protracted its agenda through instability and war in places like Iraq and Afghanistan, echoing decades of oppression in Latin America. Yet the proclivities of imperium continue to further the old agenda with neo-liberal bulwarks: the World Trade Organization, the International Monetary Fund, Wall Street, and the World Bank. Still, many communities comprising the developing world—Latin America—are poised to reject it all. Many want to work under the guise of sovereignty. The desires of today’s Latin America are similar to the old days of advantageous prosperity: democracy, social equality, and economic, political, and cultural justice. Nor is Latin America alone in its determination; there are groups and movements working for reforms and democracy in opposition to Washington’s wants: China, Taiwan, Korea, South Africa, Iran, India, Egypt, Eastern Europe, etc. As these groups continue to fight at the margins, things are changing. China and India, for example, started to change Latin America’s economic trajectory. Raising prices for Latin American commodity exports is but one of Asia’s most important contributions, and one of the tenets Latin America fought for some thirty years ago.

Unfortunately, the US continues to up-sell the idea that financial stability and economic prosperity can only be found under the auspices of neo-liberal, American standards. Tyrannically, those who disagree are yet expected to accept this philosophy. The people of Latin America are thus continually alienated from the fruit of their labor, as well as from their repressed national sovereignties. Ironically, Dick Cheney once quipped that the human impetus for self-determination is great. As Latin America nations continue to find their counterparts that are consigned to the margins of global society by Yankee interest, they will continue to embody Cheney’s truism of self-determination. They remain alike in what they do not yet have, but in what they yet desire.

Mateo Pimentel lives on the Mexican-US border, writing for many alternative political newsletters and Web sites. He can be reached at: mateo.pimentel@gmail.com. Read other articles by Mateo.