• Social and political instability persist, although inflation has considerably lessened and, in 1991, the majority of countries have experienced positive real growth rates.
• The foreign debt, even if it is no longer front page news, remains a problem that it is essential to resolve.
• The form of bourgeois domination that has existed since the 1940s has been in crisis for a long time, and, for the moment at least, no long term alternative project has been consolidated.
• Capitalist restructuring has produced a profound reorganization of the situation of labour. The workers are confronted by an offensive strategy of destructuring and deregulation. All their historic, social and economic gains are being challenged, starting with their forms of organization.
This restructuring is affecting the whole of society.
The process of globalization of the world capitalist economy and the formation of new regional economic blocs is also affecting Latin America. The Initiative for the Americas is an illustration of the new politico-economic schema for the region on the eve of the year 2000.
The paradise promised by Bush, where free exchange will occur without obstacles, is beginning to take shape.
Bilateral and multilateral agreements between governments are being signed at a frenetic pace: in 1992 the Free Trade
Treaty is to be signed between Canada, the USA and Mexico; similar agreements are to be signed to bring into being the Mercosur in the Southern Cone, a free trade zone of the Andes, a Central American Common Market and another in the Caribbean and so on.?
The US president himself told the press after his visit to the Far East: "I took our enthusiasm for the Free Trade Treaty to the other side of the Pacific and I showed how it could contribute to the prosperity of all by removing trade barriers."
### Opposition to trade agreement The FTA needs solid political support, given that it faces opposition from certain lobbies in the US Congress, that the recession is continuing, that this is an election year for Bush and that, in Canada, a country in a deep crisis, more than half the population expressed its opposition to the trilateral agreement in a recent poll.4 The FTA, like the other trade agreements under discussion, will bring diverse advantages to the capitalist sector oriented to the external market and to those layers of the population in various countries who, thanks to their high purchasing power, can enjoy a high level of consumption, but the impoverishment of the great majority of people in these countries will continue.
In reality, these agreements will have effects similar to those produced by the Brady Plan: only a happy few will be chosen. Thus, Lawrence Summers, director of the World Bank's economists, has cynically indicated, in assessing the Brady Plan introduced in March 1989: "Those invited to the party have done well out of it; but the party was not a
LATIN AMERICA very big one." Until now, only five countries on the sub-continent and three outside it have obtained real benefits from this plan, which has allowed them to reduce their debt by $26bn. But even this figure is small compared to the total debt.
The main problem for the
Initiative for the Americas is the following: can the governments continue to apply their present economic policies and at the same time maintain social stability without a massive and permanent influx of capital intended for long term investment in the productive sectors of the region's countries? This has not been the case until now.
official
Thus,
Japanese economists have pointed out that, for 1992, the shortage of capital at the international level has risen to the tidy sun of $100bn.? And, a Bank of Mexico report (Mexico is a country held up as an example to the rest of Latin America notes that: "while in 1990 41.8% of foreign resources were directed into direct investment, in the first six months of
1991 this proportion had fallen to only
19.1%." The same source has indicated that "for every $10 of foreign investment that has gone into Mexico in the last half of 1991, eight has gone to buy shares and only 2 on productive projects" 8
Drastic reduction in role of state
After the eruption of the debt crisis in
1982 the Latin American goverments embarked on a project of structural reform aimed at drastically reducing the role of the state. Since then an economic policy has been applied tending to a reduction in the weight of the state in the economy through the sell-off of all kinds of enterprises, including in strategic sectors.
Today, it is private capital that is responsible for the rate of growth in most of these countries. However it is not the national capital that existed in the epoch of import substitution but above all the capital of multinationals or joint companies that now holds the reins.
The "reform of the state" means that in countries that have experienced revolu-
1. See Excelsior, December 19, 1991.
2. Mercosur brings together Brazil, Uruguay, Argentina and Paraguay. See Excelsior, January 2, 1992, Libération, January 11, 1992 and Latin American
Newsletters.
3. Excelsior, January 11, 1992.
4. Le Monde, Bilan économique et sociale, 1991.
5. Informe Latinoamericano, no. 5, February 6, 1992.
6. Excelsior, December 17, 1991.
11
7. Excelsior, December 27, 1991.
8. Expansion, no. 57, Mexico, December 11, 1991.
LATIN AMERICA governments (Peru, Argentina) the social bases that sustained the relations between the state and the masses are being dismantled, at the same time as the state is withdrawing from the economy.
This implies a significant reduction in social investment (infrastructure, education, health, housing and so on), leads to a generalized pauperization of the population and deepens the insertion of these dependent economies in the world economy.
George Landau, president of the Society of the Americas, sees this phenomenon clearly: "while previously state enterprises were considered national symbols, today a national symbol is to deal in shares on the New York stock exchange."9
The "reform of the state" does not in any way lead to democratization; on the contrary, we are seeing a reinforcement of the most anti-democratic features.
Whether in Mexico, Panama, Argentina, Brazil, Venezuela or Peru, authoritarianism, rule by decree and the denial of "civil society" are more powerful than ever. The neo-liberal economic approach goes hand-in-hand with dictatorial political practices.
The "adjustment programmes" imposed on the region in the past ten years all take the form of an austerity policy, which, unlike in Europe, means a downward plunge in the standard of living of the majority of the population; a loss of real purchasing power of wages, unemployment, a lowering of domestic consumption and a speeded up development of poverty.
The 1980s: Decade of declining growth
Between 1981 and 1990, the growth of the Gross Domestic Product (GDP) by inhabitant in Latin America declined by -9.6%; the slight upward growth of 0.9% in 1991 is nowhere near enough to compensate for the fall in living standards.
Austerity in the Third World means that a minority of the population can meet its needs while the majority founders in poverty, as is shown by these statements:
"Our main problem remains poverty, which affects almost 40% of the population" according to Chile's President Aylwin; 10
Or from Venezuela: *72% of the population is still extremely poor and spends 70% of its income on food."1
Or Peru: "More than half of the 13 million inhabitants live in poverty" 12
And Mexico, where the wage earners "have registered the lowest level in their history" and unemployment affects some 13.5% of the active population" and it is estimated that "17 million of the 86 million Mexicans live in extreme pov12 erty".! And finally Panama where "in a mere International Viewpoint #223 • March 2, 1992 two years [1989-1990]" according to official figures "the index of poverty has gone from 44 to 54%, of which 27% are in the category of 'extreme poverty" 14
This list could be extended for all the region's countries.
For as long as the IMF and WB continue to insist on their "adjustment programmes" the majority of the population cannot hope to see an improvement in their standard of living in the short or medium term. Furthermore, since the project for continental integration is based on the development of exports rather than the expansion of domestic markets, the tendency will be for social and economic inequality to get worse.
Economic adjustment, which implies an abandonment of state protectionism, is a long-term policy. Capital is not only interested in reducing wages; above all it wants guarantees that the present changes are irreversible. This is also the reason why the bourgeoisies and their governments have extended their offensive to areas considered taboo even up until a few years ago, as for example, with the "land counter-reform" of the Salinas government in Mexico or the attempt at total privatization of the mines in Bolivia.
While it is clear that neo-liberal policies are on the advance everywhere in the region, this is accompanied by the spectre of instability.
Apart from Mexico, Chile and Bolivia, where, thanks to different methods, the governments have succeeded in applying the adjustment plans with overall positive results for capital, in the remainder of the sub-continent, political, economic and social instability are a permanent feature reflected in the permanent search for economic measures that would permit a real social stabilization.
Extreme deterioration in
Central America
Throughout Central America, despite the vast sums invested by the US in the recent past with the aim of weakening the social base of the revolutionary movements, the situation has undergone an extreme deterioration. In the Southern Cone, the situation is not qualitatively different. The governments of Chamorro, Fujimori, Collor de Melo, Menem and so on have been obliged to replace the ruling teams and promise a policy of economic stability and social peace. Even in Venezuela, where the social democratic government of Democratic Action, led by Carlos Andres Perez, has tried to present itself as stable and democratic, the noise of jackboots has been heard.
Such instability is not the same thing as a pre-revolutionary situation, but it does mean that the conditions do not exist for carrying out capitalist restructuring without major social turmoil. In most cases the restructuring programmes are being applied by governments with a narrow social base. In all cases the measures of stabilization adopted by a number of Latin American countries need more time to be consolidated, which does not depend exclusively on the economic dynamic in each country.
The key objective both for the Latin American and international bourgeoisie is to attain overall stability. If progress is made only on trade agreements while the political and social flank remains unguarded, then the integration of the US-promoted geopolitical bloc will be carried out on top of a powder barrel.
People who have an optimistic vision of the economic development of Latin America must, if they wish to be consistent, also be optimistic about the debt crisis. In 1991, nine countries were obliged to pass restructuring agreements and/or renegotiate their debts with the IMF. This will involve (or has already involved) a reduction in capital or in interest or the two at the same time, while 12 other countries are behind with their payments of services on the debt to a total of $26bn.
An end to the export of capital
One can ask whether, after ten years of net transfers of capital abroad, this problem has been resolved or, at least, if the situation has basically changed. The CEPAL report for 1991 shows that in that year the region recorded income derived from borrowing and/or investments higher than its spending. Latin America is no longer exporting capital and its debt has reached $426bn. It seems that formulae for reducing the debt (purchases, restructuring and so on put on the agenda by the Brady Plan, have had some results.
However, according to the last World Bank report, which deals with 1990, these remedies have not produced the intended results. In fact the Bank's figures show that of the 26 countries studied "only six now owe less than five years ago", , while the total debt is 78% higher than in 1980.15 This institution estimates that, in 1992, Latin America must spend more than $24bn for depreciation of capital and another $23bn on interest payments. Such a haemorrhage does not leave much room for optimism, even if 9. The Society of the Americas is an organization 9. The Society of the or is in an ons in ain America. See El Financiero, Mexico, December 30, 1991. 10. Excelsior, January 1, 1992. 11. Excelsior, January 2, 1992. 12. Frankfurter Rundschau, quoted in Excelsior, Januагу 11, 1992. 13. From a seminar organized by the Autonomous University of Mexico (UNAM) published in La Jornada, Mexico, December 26, 1991 and Le Monde, Bilan économique et sociale 1991. 14. Excelsior, December 27, 1991. 15. CEPAL report, 1991.
leave much room for optimism, even if governments have benefited from the worldwide reduction in interest rates in 1991.
Even if external borrowing has begun to grow again and if some countries such as Mexico have gained renewed access to international financial markets, the fuse that could explode the debt bomb is still fizzing. International conditions are not the same as they were at the time of the first discovery of the debt crisis in 1982. At the time, the international capitalist economy was coming out of generalized recession. Countries such as Mexico, Venezuela, Colombia or Peru could then benefit from the world oil price (which was already falling); there was an accumulation effect derived from the growth in the region at the start of the 1980s; private banks providing loans were not protected against a debt crisis and so on.
Today the situation is quite different: there is reduced growth — or even recession - in the imperialist countries, and a shortage of capital; there is the globalization of the world economy; an intensification of inter-imperialist competition to attract capital; and raw material prices are low. And this is against the background of a sub-continent that has had to make a violent transfer of capital to the imperialist countries in the past decade, permitting the latter to restructure their economies.
IMF urges new round of belt tightening
The creditor imperialist countries and the IMF are insisting on the need to further "tighten the belt", which in fact means reductions in public spending, devaluation, and a speed up in tax and monetary reforms to provide the money needed to pay the debt. In this domain, and owing to the weight of the debt, the situation in Brazil will be crucial: its government has just negotiated a credit of $2bn with the IMF - which will increase tension among the workers and the people.
The Latin American bourgeoisie has embarked on a very risky policy. Following the crisis of the forms of populist and nationalist domination that erupted at the end of the 1970s, it is trying to implement a new social pact corresponding to its current needs - that is to say one which reduces the economic weight of the state while changing the balance of forces against the workers and the population as a whole and pursuing a capitalist restructuring process that will give it new negotiating cards in its dealings with imperialism.
This is a clearly defined project and aims at an alternative model to that in force during the period of import substitution. The only choice that the bourgeoisie has is to accept economic and political integration as proposed by the
LATIN AMERICA
EM
USA.
The risks of this gamble lie in deeper dependence (the only point currently being discussed between Mexico and the United States before the signing of the Free Trade Agreement is over oil) and in the fact that the application of the neoliberal policy will destroy the former social base of these governments without the new project being consolidated. It may be replied that all that is needed is time, which is true, but time can also work against the governments, as it did in the past decade.
For a while now, some penitent analysts and politicians have been promoting the coming to power of social democratic governments, of the type presently in power in France or the Spanish State, in this region. They overlook the fact that countries such as Venezuela, Bolivia, Jamaica or Ecuador have already been governed by social democratic parties and that these same governments have frenziedly applied the austerity programmes and market liberalization. Still worse, they neglect the fact that, at least for the moment, these governments are not the best equipped to attract international or local capital.
In Latin America, capitalism is trying to dance to imperialism's tune. There is a race to make up for lost time; the time of capitalist modernization and restructuring that has taken place in Europe, Japan and the USA from 1982 onwards. The consequences of this choice can also be seen in the frontal attacks against the gains wrested in past decades by the workers and other sectors of the masses. Productivity must be increased to the detriment of working conditions. Faced with this, the supporters of social democracy look to a supposed policy of charity by the state (the "solidarity state").'
The Latin American bourgeoisie and imperialism need a substantial change in the totality of relations which regulate work: this is why we are seeing the shedding of the old-style Latin American trade unionism, which has an essential purpose; the unionism born in the 1930s that was useful until the 1970s no longer serves the needs of capital. The weight of the unions must be reduced on the very terrain which justifies their existence, that is to say as concerns the control of production and the representation of the workers as a whole. The attempt to reduce this role involves quality circles, the "universal worker" and flexibility. Behind the lay-offs of millions of workers in Latin America (more than a million jobs went in 1991) there is a policy that is targeted on the union structures, and which has to some extent succeeded. This has meant a weakening of the political weight of the working class. The majority of those people who sell their labour power increasingly find themselves in the informal sector; they have neither stable incomes nor social benefits.
### Working class wages defensive struggles
There is also a developing phenomenon of reorganization of the working class and other sectors, on which the success of the present gamble depends in the medium term. Even if the mobilizations of 1991 and the start of this year in some countries have not succeeded in blocking the capitalist offensive - which is impossible without the support of workers in the imperialist countries — their importance should not be minimized. These are defensive struggles, but they indicate that there is still life.
The Latin American economy grew again in 1991 but it is doubtful that it will produce an overall positive result in the immediate future. The recession in the imperialist countries, the failure of the world economy to rise out of its long depressive wave as well as the limited room for manoeuvre left by the privatizations worsen the situation. Public enterprises, whether banks, mines, or oil, can only be sold once. Bush's Initiative for 17. Soe the aticle by Jorge Catarieda, "The new dog: 1 3 16. Informe Latinoamericano no. 2, January 16, 1992.
mas in Latin America" in El Pais, January 31, 1992. March 2, 1992 • #223 International Viewpoint
PLAN, MARKET, DEMOCRACY From one dogma to another FOR THE former Soviet Union and the countries of eastern Europe, the 1990s are to be the era of the transition to the market economy. This vocabulary is used nearly everywhere, even in countries like Yugoslavia and Hungary which adopting their methods. Unhappily, the capitalist restoration which it implies will be neither efficient (in relation to the objective of a better life, except for a fortunate minority) nor democratic (because it will be necessary to protect this minority against the growing anger of the others).
The road these countries are following will not lead towards the Sweden of the 1970s, but to a reduction to Third World status where the eventual growth will benefit a small portion of the population and will be dominated by the logic of the multinationals. It is a road which is all the more dangerous in that it will come up their own thirst for profit and certain needs for which a demand is expressed on the market.
All this has been harped on and credited to the "invisible hand" of the market. And it is absurd to reject in its totality an argument in part founded on reality. But in part only; the limits of the pseudosovereignty of the consumer and the capacity of the market to respond to needs have been known for a long time. It is necessary, firstly, to consider all the ways in which the producers shape the market
(in their technical choices, in their pressures on the models of consumption, and so on).
There is, secondly, the type of needs which are taken into account: it is necessary to be able to pay a sufficient amount to be able to attract the investor. The agricultural overproduction that the GATT
(General Agreement on Tariffs and
Trade) negotiations are attempting to limit takes place alongside famines and growing poverty in the world. What democracy of choice is there for the excluded and the marginalized, and for all cacuu and te marginalzed, and for all those who, among the equals, are a little less equal than the others?
### Radical needs
But above all, in a world which wishes to be more humane and more respectful of the environment, how is it possible to ignore the breadth of the needs which cannot be adequately expressed by money (ethical, ecological, collective, and cultural needs, the need to live and to produce in new ways, the need for security and the full development of capabilities)?
But, it might be argued, if the market is rejected as an overall response, the only alternative is bureaucracy and centralism which, as we have seen, leads to worst catastrophes. This is indeed possible, but not inevitable. Planning does not necessarily entail control by a bureaucratic centre over every detail. The technological and informational means exist today to make very wide decentralization compatible with some strategic central choices.
The need to ensure democracy as much as the efficiency of these choices means that they should be limited to the most important priorities. Beyond this, decentralization does not necessarily imply the market, any more than the market necessarily means less state bureaucracy. The withering away of the state and the strug gle against bureaucracy mean first and foremost the democratization of institutions, their transparency and their control by those affected by their decisions; it means therefore the extension of direct relations of a non-market nature between consumers and producers which can ensure qualitative judgements about what is produced, the search for forms of local and regional participative democracy, and so on. It has by no means been proved that this is utopian, whereas one can find introduced reforms rellant on
1960s.
CATCHING VERLA CATHERINE VERLA T HE pace of change is being forced by the International Monetary Fund (IMF), the western creditors and the most radical ideologues of market liberalism, supported by a substantial section of the former and new ruling elites. The precepts of Jeffrey Sachs in Poland are the same as those which have already ravaged Bolivia: privatization and opening to world competition are supposed to rationally direct future investments in the new world without frontiers of the multinationals.
The goal is no longer understanding the use of the market in a system which remains non-capitalist, but rather a return to what is presented as the model of a "normal economy", de facto "capitalist", based on a market in labour and capital whose logic is subordinated to the criteria of profit.
For the peoples of the countries concerned, such were not the goals of those "revolutions against" of which the "for" remained vague: against the former so-called socialist system, to live better and more freely; that, in broad outline, substituted for a programme. The movements and broad fronts, previously united around in opposition very quickly broke up (and continue to divide and marginalize themselves) from the moment when it was necessary to speak of "how to construct another society"
The popular model extolled by the ideologues of market liberalism also takes it as self-evident that the current process amounts to "returning to the normal 14 course of history", ", falling in line with the * "normal" and "efficient" countries by International Viewpoint #223 • March 2, 1992 against the cultural and socioeconomic aspirations of developed countries and egalitarian values deeply rooted in their societies. Unhappily, this is now being practically demonstrated. But it is also important to discuss the arguments which have been advanced, associating market, privatization and democracy.