28.1.06

Neoliberalism as culprit of Latin America's failure

London 28.01.06 | In doing research for a paper I have to present in a conference later on this year, I have come across, too often, with the notion that neoliberalism is the main culprit for the democratic deficit and economic failure in much of Latin America. Such premise denotes, firstly, a profound ignorance of what neoliberalism is meant to be; secondly, it proves Goebbels' principle that a lie repeated a thousand times becomes the truth; and thirdly, demonstrates that placing blame on other factors, instead of admitting own responsibilities, continues to characterize the class of "the perfect Latin American idiots."

I set out in my little quest for information. After a bit of internet browsing my first stop was Foyles, in Charing Cross Road. I was amazed by the dominant presence of leftist 'thinkers' in the shelves, that form the legion of detractors of the discipline. And just to gain a glimpse into their thinking, as if I didn't know already what to expect from that lot, I purchased "A Brief History of Neoliberalism" by David Harvey, which includes 'reviews' from elements such as Leo Panitch. Readers may imagine the content of Harvey's 'history.'

Definition of Neoliberalism

It is rather hard to pin down a single definition of the term. Supporters describe it, generally, as a method by which goods, capital, services and individuals should be able to move freely across the board, whilst intervention and the role of the state ought to be diminished to a bare minimum and state-owned enterprises should be privatised. The respect for private property is at the core of the doctrine. Market forces are, in this view, the best mechanism to allocate resources. Critics, on the other hand, see it as the result of nefarious economic policies put in place by elites or upper clases to maintain and expand their parcels, in detriment of the welfare state, the people, society and labour actors, read unions.

There seems to be agreement upon the correlation between neoliberalism and the "Washington Consensus." This term in turn was coined by John Williamson around 1990 and it's resumed in ten points:

* Fiscal discipline
* A redirection of public expenditure priorities toward fields offering both high economic returns and the potential to improve income distribution, such as primary health care, primary education, and infrastructure
* Tax reform (to lower marginal rates and broaden the tax base)
* Interest rate liberalization
* A competitive exchange rate
* Trade liberalization
* Liberalization of inflows of foreign direct investment
* Privatization
* Deregulation (to abolish barriers to entry and exit)
* Secure property rights

Latin America's utter failure

Probably with the exception of Chile, that under Pinochet implemented, for real, policies associated to the neoliberal doctrine -the results are there for everyone caring to pay attention and for all Chileans to enjoy, almost all Latin American countries have failed to comply with the much maligned "Washington Consensus" or neoliberalism. First world leftists and irresponsible LatAm politicians continue to put the blame of their utter failure on neoliberalism, without even realising how weak their argument truly is. It is like a doctor prescribing ten different pills to a cancer patient, but the latter, out of his own volition, deciding to take only three or four of them; not everyday as instructed, but with the six-pack of beers that his compadre manages to bring surreptitiously twice a week. How can then the relatives even claim that the doctor is responsible for the death, when in fact, the dying patient never bothered to follow the set of instructions and medicine given? Very simple, for neither the dead patient, nor his compadre, informed them that the doctor's advice had never been properly followed.

Ergo have property rights been secured in LatAm? Which Latin American country can boast about its fiscal discipline? LOL!! How about redirecting expenditure to infrastructure, health care and education? Tax reform anyone? Deregulation? Sigh...

What none of the books on the topic will ever include is an analysis of the consequences of corruption, nepotism and the sheer irresponsibility of those in positions of power to bring about necessary change. Nor will they conclude that wealth creation must be the foremost premise of any country willing to abandon subdevelopment and pauper status.

The medicine exists; it's called neoliberalism, or the "Washington Consensus," or in fact, any system that promotes individual freedoms, upholds the supremacy of the principle of private property over collectivism and bases itself upon democratic premises. Further the patients that have taken it have indeed survived, their health has improved dramatically. Regardless of the amount of literature to the contrary, the fact of the matter is that, given the choice, most individuals will rather live in a system where they can fully enjoy the product of their work, without arbitrary state restrictions. The intellectual dishonesty that underpins leftist critique and thought shines through with respect to neoliberalism.