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 11/04/2021 Tlaxcala, the international network of translators for linguistic diversity Tlaxcala's Manifesto  
ABYA YALA / Tracing the Latin American roots of neoliberalism
Date of publication at Tlaxcala: 16/03/2021
Original: Neoliberalismo: los orígenes latinoamericanos
Translations available: Français 

Tracing the Latin American roots of neoliberalism

Juan José Paz y Miño Cepeda

Translated by  Andy Barton


After the independence processes, Latin American countries remained agrarian economies, dominated by haciendas, vast estates and plantations organised around a type of “pre-capitalist” structure. Upon this, oligarchic republics were built that contradicted the proclamations about democracy, freedom and equality that had been achieved by the various constitutions. During the 19th century and the dominance of the two-party system, liberals represented modernity, while conservatives were the proponents of tradition. Argentina, Brazil and Mexico stand out for their economic growth in this period, as do Chile and Uruguay to a lesser extent. Nevertheless, the remaining South American countries continued to lag behind.

David Alfaro Siqueiros, Porifirio Díaz, Mexico, 1957


 Latin American capitalism took off with the arrival of the 20th century, and for most countries, this was especially the case during the second half. While stimulating a certain degree of capitalist modernisation, regimes such as the classical populists (Lázaro Cárdenas, Getulio Vargas, Juan Domingo Perón), and an assortment of radical or revolutionary governments in Chile, Uruguay or Ecuador (Julianos, 1925), Guatemala (1945) and Bolivia (1952), had to implement reforms to overcome the old oligarchic regimes. This oligarchism was brutal under governments such as those of the Somoza dynasty (Nicaragua), the Duvalier’s (Haiti), Alfredo Stroessner (Paraguay), Rafael Trujillo (Dominican Republic) and the repressive Gustavo Rojas Pinilla (Colombia), Marcos Pérez Jiménez (Venezuela) and Fulgencio Batista (Cuba), each of them sustained in power by the entrepreneurial class, oligarchies, and additionally, by North American capital and interests.


U.S. Marines during the occupation of Nicaragua, 1932

The developmentalism of the ‘60s and ‘70s, which also responded to the extension of the Cold War into Latin America in order to prevent any repeat of the Cuban Revolution, accelerated and consolidated a definitive capitalist modernisation of the region. At that time, there was no room for disagreement with or questioning of the interventionist role of the state in the economy; development plans; agrarian reforms; investment in public services or large infrastructure projects, even with IDB financing; state regulation of the monetary and financial system; business regulations; import-substitution industrialisation, control of foreign trade, selective policies vis-à-vis foreign capital; or direct and redistributive wealth taxes. They were policies derived from the UN Economic Commission for Latin America and the Caribbean (UNECLAC) way of thinking, from the programme of Alianza para el Progreso (The Alliance for Progress), the influence of the welfare states constructed in post-war Europe and in the United States since the New Deal, as well as the theoretical hegemony enjoyed by Keynesian economics. For the backwards oligarchic classes and also the growing entrepreneurial class, it all sounded a bit too much like “communism”. Yet this developmentalism was even pursued by anti-communist military dictatorships, such as in Ecuador (1963) or in Brazil (1964). Under the government of General Juan Velasco Alvarado (1968-1975), “Peruvian socialism” was an exception to the rule in terms of its radical anti-oligarchic stance; similarly exceptional was “Nacionalismo Revolucionario” (Revolutionary Nationalism) with General Guillermo Rodríguez Lara (1972-1976) in Ecuador, as it was with General Juan José Torres in Bolivia (1970-1971), with both being equally anti-oligarchic. There were yet more temporal exceptions with the government of Salvador Allende and his “peaceful transition” to Socialism in Chile (1970-1973) and the Sandinista regime in Nicaragua (1979-1990).


Mario Urteaga Alvarado, La Riña (The Quarrel), Peru, 1923

The “exhaustion” of developmentalism was reached first in Chile by the dictatorship of General August Pinochet (1973-1990), born out of the internal support of the entrepreneurial class, the U.S. intervention through the CIA and the financing of various transnational companies. For more than a year after the coup, Pinochet continued along a certain developmentalist line; yet immediately afterwards, with the participation of the “Chicago boys” (a group of U.S.-educated economists who made the neoliberal theses of the hitherto unknown Milton Freidman their own), he instated a new economic model: liberalising the markets; abandoning state regulations regarding the currency, business interests and the financial sector; guaranteeing private activities; completely opening up the country to foreign capital investment; removing foreign trade barriers, reforming the tax system, flexibilizing employment; privatising companies and public services (except copper); and reducing state expenditure. Together, they constituted a group of unprecedented policies that even predated the “neoliberal revolution” heralded by the Ronald Reagan government in the U.S. (1981-1989), and under their guiding light, the new Chilean economy was promoted, and the dictatorship was openly protected.

The “Chilean miracle” became the model example for other anti-communist dictatorships in Argentina (Jorge Rafael Videla and his successors between 1976 and 1983), Brazil (with dictatorships and pseudo-democratic governments since 1964), Bolivia (Hugo Banzer, 1971-1978, and his successors until 1982) and Uruguay (with “civil” dictatorships between 1973 and 1985). Together with Stroessner’s Paraguay, they characterised the state terrorism of the Latin American Southern Cone. Something similar was taking place in various Central American countries under the pretext of combatting the left-wing guerrillas.


Antonio Ruiz, El nuevo rico (The Nouveau Riche), Mexico 1941

Pinochet’s dictatorship became the object of admiration of the South American bourgeoisie, who had a positive impression of how the “Chilean miracle” served to promote entrepreneurial economies, achieving rapid economic growth, guaranteeing business, and converting private investment and its rents into paradises. In Ecuador (as with everywhere else), big capital, the wealthy, the upper classes and the upper strata of the middle classes hosted private conversations, as well as public engagements, in which they had no qualms in expressing their wistful sighs at a great ideal: “we need a Pinochet here, too” they said. With the collapse of Soviet socialism, the triumph of neoliberalism became the gilded dream of the Latin American bourgeoisie during the ‘80s and the ‘90s.

Naturally, what is forgotten (or is hidden) is that neoliberalism, from the moment it was created, not only required strong, dictatorial and authoritarian states but also the implementation of policies destined to flatten any type of opposition to the model. Pinochet’s Chile inaugurated a refined extermination of the “communists”; both the military there and in the Southern Cone had an extensive history of technical and ideological training in the official centres and academies operated by the U.S. They could rely on a ‘doctrine’ of “national security”, according to which “internal enemies” are those who fight back against the supposedly established democracies, where Marxists of all possible colours are always at the head of this list, followed by social movements (workers, peasants, indigenous populations, feminists, etc.) and the majority of the population, which under the conditions of Latin American rentier capitalism has always had reasons to react, to mobilise, to protest and to take to the streets. For the administrations of these states of national security, it was easy to promote the “terrorist international” designed to annihilate “subversives” in all countries through the Plan Condór.

Human rights violations became state policy. In each of those regimes where neoliberalism had to impose itself, thousands of people were disappeared, including children and adults; thousands more were tortured or assassinated; prisons filled to the brim with the persecuted; while thousands also managed to flee their respective countries to save their lives. The UN reports, alongside those from the principal international organisations for human rights, have documented the horrors of the repression conducted by the terrorist states, although the official figures come up short against the reality of what happened. In the United States, President Jimmy Carter (1977-1981) was forced to promote a continental human rights policy in the face of what was happening in various South American countries. The Ecuadorean President Jaime Roldós Aguilera (1979-1981) was also an internationalist defender of human rights, and his death, in a plane accident just like the one that was responsible for the death of the Panamanian nationalist, General Omar Torrijos (1968-1981), have given sufficient reasons to argue that they were possible linked to the Plan Condór.

The democracies that followed these regimes of terror had to confront this inheritance; nevertheless, establishing responsibility has not been easy, although various military officials were eventually prosecuted in Argentina or Uruguay, as well as a few in Chile. Furthermore, just as the democracies were emerging, so did the era of global neoliberalism. At the end of the 20th century, Latin America found itself in the complete grip of Creole neoliberalism, with its disastrous results: the enrichment of the elite, entrepreneurial control, and the deterioration of the living and working conditions of the majority of the population. It was no longer necessary for this neoliberalism to be installed by terrorist states: “democratic means” were now sufficient. But that is a story for another day.


Antonio Berni, Desocupados (Unemployed), Argentina, 1934

Courtesy of Tlaxcala
Publication date of original article: 08/03/2021
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Tags: Neoliberalism Latin American oligarchies Dictatorial regimesSubordinate capitalismAbya Yala

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