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The Long Struggle Against Dependency

The Pink Tide governments’ efforts to break from the tyrannies of world market dependence are not new. Neither are their failures to do so.

Pink Tide

Illustration by Atolón de Mororoa

The Latin American “Pink Tide” governments rose to power demanding a rupture from the neoliberal order. Their victory sent shockwaves throughout the Left. For the first time in decades another world seemed possible, and scholars, policymakers, and activists vigorously debated what alternatives could look like.

One idea that gained salience was a return to the national developmentalist models of the twentieth century. The notion has particular resonance in Mexico, Brazil, Chile, and Argentina, where rapid economic growth in the 1940s and ’50s was accompanied by substantial improvements in social welfare.

Given the achievements of that era, a desire to return to the past is understandable. But as the current turbulence in the Pink Tide project shows, nostalgia for this “Golden Age” of capitalist development risks repeating prior mistakes. Indeed, a closer examination of twentieth-century Latin American developmentalism reveals the limitations and structural contradictions inherent in these reformist projects. The tensions led to an impasse that was eventually overcome through the imposition of neoliberal economic policies — a process that also holds important insights for understanding the present unraveling.

The real lessons from Latin America are not to be found in alternative varieties of capitalism, but alternatives to capitalism — projects that seek not only to defend progressive reforms, but also to build popular political agents capable of instigating a deeper process of social transformation.

The Developmental Alliance

The Pink Tide governments’ efforts to break from the tyrannies of world market dependence are not new. They have antecedents in the Import Substitution Industrialization (ISI) model that emerged in the 1930s in response to the Great Depression and the two world wars, when a sudden contraction of external markets forced governments to turn to quasi-Keynesian expansionary policies for economic recovery. The basic idea behind ISI was that states would intervene in the economy, engineering growth and job creation through the promotion of domestic manufacturing to replace imports.

The ISI strategy was introduced under modernizing “national populist” regimes, notably Getúlio Vargas in Brazil, Juan Perón in Argentina and Lázaro Cárdenas in Mexico. These governments adopted a distinct variety of populism that bore little resemblance to their fascist counterparts emerging in Germany, Spain, and Italy at the time. Rather than destroying the labor movement, they inspired and facilitated it, forging a mass base among the rapidly growing urban workforce through the battle for workers’ rights, education, housing, and the nationalization of key industries.

Latin American populism was often couched in Marxist terminology, but without any of its socialist conclusions. In Argentina, for example, Perón rallied against “the exploitation of man by his fellow man” and the “dehumanization of capital,” yet his fears of “foreign intervention” were targeted against both US imperialism and “outside subversion” from communists in equal measure.

The strategy of Peronismo was twofold: to secure the allegiance of national urban business elites by warning that the most dangerous working class is an unorganized, miserable, and dissatisfied one, while also channeling workers’ political loyalties away from radical socialist influences towards a cult of personality centered on himself and his wife, Eva.

The particular brand of Bonapartism adopted in post-revolutionary Mexico inspired author Octavio Paz’s characterization of the Institutional Revolutionary Party (PRI) as a “Philanthropic Ogre.” During its seventy-year reign, the PRI managed the state as if it were family property, breeding not only endemic corruption but also corporatist control over virtually all sectors of civil society, from large industrial trade unions and peasant leagues to business confederations.

For Mexican peasants and workers, the benefits of the PRI’s corporatism were double-edged. On the one hand, they secured unprecedented gains in the form of land reform, welfare, and working conditions (albeit with the notable exclusion of women’s rights). But these achievements came at the cost of organizational autonomy, with peasant and union leaders joining the ranks of the PRI elite in managing top-down, hierarchical organizations aimed at social control.

Mexican trade unions fostered a particularly corrupt form of clientelism known as charrismo. But similar processes of centralization and hierarchical organization, alongside patronage and clientelism, characterized most large labor unions under populist regimes in the region.

The result was to create an ideological consensus across a broad spectrum of urban workers about the capacity of national capitalist development — guaranteed by the powerful Leviathan embodied in the developmentalist state — to deliver all the luxuries of a developed Western consumer society. Struggles for systemic change appeared as quirky utopias or ideological luxuries confined to the margins of a rapidly developing urban civil society.

There were certainly exceptions to this pattern, notably among workers in the primary commodity export sector such as Chilean copper miners, Bolivian tin miners, and Colombian oil workers. Here, a combination of geographic isolation, foreign ownership, bouts of unemployment caused by boom-bust cycles in commodity prices, and government repression left a space for working-class cultural and organizational autonomy. This freedom allowed them to resist the hegemony normally exercised by the urban elites, develop traditions of militancy, and form independent and combative trade union movements.

The centripetal force driving industrial development in Latin America during this period was presumed to be a political alliance between the professional urban middle class and the waged working class together with “progressive” elements of the national bourgeoisie. Under the direction of a team of structuralist economists in the Economic Commission for Latin America and the Caribbean (ECLAC) led by Raul Prebisch, the goal was to break from the power of landlords, US hegemony, and dependence on primary export-led growth toward an internally-oriented, urban-industrial form of development.

For a brief period, the developmentalist model produced impressive results. The “Golden Age” of Latin American development saw extraordinary growth rates of 5.8 percent between 1945 and 1954, accompanied by a steady increase in workers’ share of national income, which reached 50 percent in Perón’s Argentina.

This path of industrial development stood in contrast to the enclave economies of Central America and the Caribbean. In these regions, the United States consolidated its hegemony at first through explicitly imperialist measures (“gunboat diplomacy”) and later through informal “Good Neighbor” tactics in conjunction with interventions to topple populist governments. Under the stranglehold of landlords, compradores, and transnational corporations, the economic development of these “banana republics” remained dependent on primary commodity exports.

Tensions in the Model

The heyday of developmentalism, however, was brief. By the 1960s, the rapid growth experienced by ISI countries was proving increasingly unsustainable. Industry had grown swiftly during the initial “easy” phase by moving into production of light consumer goods with the assistance of protections and supportive government measures, such as credits and public investments in infrastructure. But within two decades, domestic markets for these goods became saturated, and the industrial sector had difficulty “completing” the ISI process by moving into production of technologically advanced products requiring more capital and foreign exchange.

The 1960s slowdown in economic growth exposed the model’s inherent weaknesses. Despite populist rhetoric, landlords and agro-mineral elites had never lost their power. In fact, the success of ISI depended on primary exports such as sugar, coffee, rubber, and copper, and the state was compelled to provide landlords generous subsidies and other economic benefits. This perpetuated the inefficient and highly unequal agrarian structures that had stifled development in the countryside since the colonial era.

But even more questionable was the notion of a progressive “national bourgeoisie” — the mythological hero of developmentalist lore. Far from fostering a local class of modernizing capitalists investing in strategic manufacturing sectors, ISI protections ended up discouraging industrialists from moving to higher-value manufactures by shielding them from international competition, which removed the compulsion to upgrade their operations.

The problem lay in trying to align the capitalist logic of profit with the developmentalist logic of state planning for long-term growth. Put simply, the national bourgeoisie preferred to keep making their profits in the safe, protected domestic markets for light consumer goods rather than move into risky, competitive markets for high-value goods as required by developmental objectives.

For capitalists, ISI became a policy of “heads I win, tails you lose,” allowing them to benefit from state subsidies while socializing their losses. This meant that the model’s limited successes came at great expense to the public purse, accompanied by rising inflation and foreign exchange deficits.

Hegemony Struggles

The exhaustion of ISI precipitated an organic crisis, with myriad social forces vying to determine the course of events to come. Foreign capital was creeping into the manufacturing sector, fueling its continued growth, but also demanding greater labor discipline. Meanwhile, as the populist regimes in Argentina and Brazil folded in the face of political instability, a new form of bureaucratic-authoritarian regime emerged, seeking to lead the next phase of renewed capital accumulation without class compromise.

For their part, structuralists in the ECLAC presented a limited critique of previous ISI policies and proposed further reforms. Besides the problems already identified, they argued that unequal agrarian structures had suppressed rural incomes, excluding the majority of the rural population from domestic consumer markets and preventing further economic growth. Their proposals sought to expand, deepen, and diversify the industrial development process through land reform, regional economic integration, and targeted subsidies for manufacturing exports.

President Kennedy briefly flirted with these ideas in the 1961 “Alliance for Progress.” Motivated by the rise in social unrest throughout the region, these reforms sought to secure the political allegiance of peasants and workers to the US-led capitalist road to progress, evading the path of social revolution.

Finally, peasant guerrillas, alongside mobilized urban and rural labor movements, had their own agenda for change — revolution. These struggles were not so much the awakening of a new proletariat at its anointed time, but instead reflected a longstanding tradition of collective insurgency throughout rural Latin America characterized by what Colombian sociologist Orlando Fals Borda called an “ethos of resistance”: a distrust of institutional politics, a longing to preserve the bonds of solidarity and reciprocity in collective rural life, and a belief in the need to take up arms to achieve popular liberation and sovereignty. The 1959 Cuban Revolution was just one in a long line of such struggles.

By the early 1960s, catastrophist images of capitalist crisis and the instability of the previous order had given rise to a host of cultural, theoretical, and political visions for imminent revolution. Regis Debray attempted to codify the lessons of Cuba into a blueprint for Latin American revolution based on the foco strategy of small groups of peasant guerrillas. Foquismo celebrated the revolutionary capacity of peasants over the proletariat, rural struggle over urban, and bold action over patient organizing.

Inspired by the Cuban Revolution, a wave of rural guerrilla insurgencies swept the region in the early 1960s, followed by urban guerrillas in the late 1960s. These were largely formed by intellectuals and students frustrated by foreign domination, capitalist stagnation, and the perceived impotence of urban labor movements. They armed themselves and took to the hills under the slogan Patria o Muerte (homeland or death).

This was also a time of intense cultural activity. Artists, folk singers, and filmmakers sought to carve out a tradition of Latin American popular culture beyond the tentacles of US cultural imperialism. Artists like Victor Jara and Mercedes Sosa of the Nueva Canción movement saw their work as a catalyst for political activity, providing both a vision for an alternative socialist society based on Amerindian values and the drumbeat for guerrilla marches.

Dependency Theory

A new generation of radical scholars quickly developed new theoretical frameworks for grappling with the urgencies of the political moment. Chief among these was Latin American Dependency theory, which took inspiration from a fusion of the “monopoly capital” school of Paul Baran and Paul Sweezy, Rosa Luxemburg’s The Accumulation of Capital, and Latin American structuralism. Dependentistas such as Vania Bambirra, Gunder Frank, Ruy Mauro Marini, and Theotonio Dos Santos argued that the penetration of capital into the periphery would not bring development but perpetual primitive accumulation, characterized by surplus transfer, unequal exchange, and super-exploitation.

The limitations of dependency theory are easily recognized today. Its reliance on a notion of capitalism as a system of exchange rather than production tended to understate internal class divisions, and its attempt to provide a general theory of underdevelopment meant that theorists failed to account for processes of historical change, diversity, agency, and class struggle.

Nonetheless, the importance of dependency lay in its search for a Marxist theory relevant to the debates and political forces mobilizing Latin American populations at the time. It emerged as a response to official Communist dogmas, frustrations with a restrained urban labor movement, the flaws of structuralism, and the crisis of national populism.

Against the notion emanating from Moscow that the economic backwardness of Latin America was a product of continued “feudal” relations, with its implications of the need for Communists to align with the national bourgeoisie to complete the transition to capitalist democracy, dependency scholars argued that underdevelopment at the periphery was actually perpetuated by capital accumulation at the core.

It was also an appeal to national-populist sentiment, which blamed foreign capital for the state of underdevelopment. In a way their goal was to re-appropriate populism and give it a socialist bent, making connections between the problems of economic stagnation and depressed incomes in the periphery and the nature of the world capitalist system — in particular the profit-making strategies of US monopoly capital.

Against the reformism of the ECLAC structuralists and in line with the revolutionary ideas of Che Guevara, dependentistas argued that national sovereignty and development were only possible under socialism, and looked to Cuba as the model for breaking from the capitalist world-system.

But the failure of Cuban-inspired guerrilla movements in Guatemala, Peru, Bolivia, and Venezuela demonstrated the Cuban case to be an exception rather than the general model for Latin American socialist revolution. The death of Che Guevara in 1967 marked a turning point in the radical upsurge, and the Cuban Revolution entered a “defensive” phase.

The downturn also highlighted the problematic assumptions underlying both dependency and foco theory. Debray’s foquismo was not only a crude vanguardism, but it also failed to recognize that Latin American countries were rapidly developing into complex modern societies. Foquismo offered little in the way of strategy for maneuvering within this new form of political society.

Rising social, political, and economic tensions were eventually “resolved” when US-sponsored authoritarian military regimes seized power across the region in the 1970s and ’80s. This major shift in the balance of forces allowed the Right to reverse the advances of the popular movements and take the reigns in the next phase of capitalist development.

Establishing the New Order

The tensions in ISI came to a head when the region erupted in crisis in the early 1980s. With popular movements defeated, right-wing regimes responded to the crises with the imposition of neoliberal economic policies under the auspices of the IMF and the World Bank.

This period is commonly known as the “Golden Age” of US imperialism in Latin America. But it’s worth emphasizing that the US could only impose the neoliberal order because the internal conditions within these countries had already been established.

The Latin American elite had lost interest in nationally oriented accumulation and no longer required the protections of the developmental state. Rather than domestic market production, they increasingly sought to make their profits from production for export of industrial raw materials and fossil fuels, integration with global finance, and privatization. By entering into partnerships with international capital, they hoped to diversify their investment portfolios, reduce risk, and gain access to advanced technologies and production techniques.

Meanwhile, the demands made by international capital for a cheaper and more flexible workforce required new forms of labor discipline. In Mexico, the authoritarian corporatism and hierarchical leadership that had characterized unions under developmentalism made them the perfect vehicle for imposing new forms of social discipline.

In cases where the labor movement mounted more radical opposition to neoliberal reforms, including Chile, Argentina, Bolivia, Uruguay, Peru, and Brazil, resistance was overcome through violent repression. Tortures, exiles, and assassinations sent organized labor into disarray.

The trajectory of Perón is indicative of the fate of early twentieth-century populism. After his fall in 1955, the persistence of some degree of militancy and autonomy within unions allowed them to survive and confront the subsequent military and civilian regimes. From exile, Perón gathered a mass base of popular support among students, urban professionals, and workers mobilizing in defense of national sovereignty against foreign domination.

However, his restoration to power in 1973 revealed the inability of Peronist reformism to deal with the new economic climate. The grounds for the previous alliance between the domestic capitalist class and workers had been undermined by the growing dominance of foreign capital in the economy: local elites sought profits in externally oriented accumulation and supported greater worker suppression.

The modest reforms implemented by Perón and his successors failed to revitalize the economy, and they soon caved to the same liberal economic orthodoxies of the previous regimes. Meanwhile, Perón diffused labor opposition by coopting key union leaders, while isolating and repressing radical left elements. A defeated, demoralized, and divided labor movement paved the way for a new phase of rapid industrial growth on the back of frozen wages.

Lessons for Anti-Neoliberal Populism

The imposition of neoliberal reforms had a devastating impact in Latin America, including a decade “lost to development” characterized by negative per capita growth in the 1980s and a massive deterioration in social conditions.

The Pink Tide rose to power on the back of an upsurge in popular discontent against these policies, and promised to mitigate their worst effects. The aim was to break with US hegemony, halt shameless plunder by elites, and provide a safety net for those left behind by globalization.

In some ways the Pink Tide’s economic strategy resembles the old national-populist regimes. But in the current era national-populism has also acquired a new meaning, defined primarily by its opposition to the worst aspects of neoliberalism. Against the dogmas of the Washington Consensus, governments sought to “bring the state back in” to the development process with economic planning, regulation, (re)nationalization of key industries, social programs, and growth based on production rather than speculation.

These policies achieved significant results. Thanks to social programs, many people gained access to basic goods, housing, higher education, and health care for the first time. This success vindicated one of ISI’s basic premises, which emphasized the central role of state intervention in implementing an agenda of growth with redistribution.

But previous experience of similar reforms under ISI should warn against taking this type of social improvement as the only benchmark of success. The achievements of the Pink Tide were made possible by a particular moment in the world economy — a boom in commodity prices generated by the growth of China. The resulting primary export growth provided rents to fund social programs. 

This meant the Pink Tide could assist the poor, but without need for the type of structural transformation that would compromise the rich by fundamentally changing the balance of power in society. The favorable economic climate covered up the persistence of structural inequalities, and also left the social gains of the project vulnerable to fluctuations in the world market.

Certainly, Pink Tide governments did make significant efforts at productive diversification. As with ISI, they used rents to provide subsidies to business to promote job-creating investments and economic diversification. They increased social spending on the basis of the Keynesian idea that a boost in internal consumption could incentivize domestic investments and productive growth.

But the guiding principle of these efforts was the progressive agency of the national bourgeoisie, which once again proved unequal to its alleged historic mission. Business owners entrusted with subsidies found it far easier to make their profits from speculation rather than productive investment in the domestic market. What’s more, the spike in commodity prices not only allowed local mining and agribusiness elites to consolidate their power, but also increased the dominance of foreign capital in the economy. Local elites linked to multinational extractive corporations reaped substantial profits from exports of metals and industrial minerals, fossil fuels, biofuels, and agro-food products, with devastating social and environmental impacts.

There is significant diversity within this general pattern, which does not exclude examples of anti-capitalist transformative projects. The agenda of Bolivia, Ecuador, and Venezuela, which adopted certain radical strategies including social control of production in some spheres, radical democracy, and a role for communitarian indigenous practices, contrasts with the neo-developmentalist agenda adopted by Argentina, Brazil, Chile, and Uruguay, which emphasized social redistribution without significantly breaking from neoliberal policies.

But whatever the successes of their social programs, the greatest danger for all Pink Tide countries is the type of organizational inertia and ideological confusion that tends to flow from social reforms within capitalism. Under ISI, the Argentinian Peronists and the Mexican PRI-ists delivered social gains at the cost of stifling independent organization. They undermined the capacity of their social bases to independently develop forms of popular education, political formation, or the sorts of democratic capacities needed to challenge the system and build a collective form of self-government capable of moving beyond capitalism.

The lack of independent political organization on a mass scale left popular forces unprepared for the exhaustion of ISI. As the crisis unfolded, they did not understand what was happening, and failed to mobilize for anything more than a return to capitalist developmentalism. As Perón and the PRI gravitated towards the center, adopting a form of “tropical Blairism,” their social bases were left paralyzed.

The task of radical mobilization was instead assumed by guerrilla insurgents, who lacked the patience for long-term organizational maneuvering.

Adopting principles comparable to ISI, the Pink Tide attempted to mitigate the worst impacts of neoliberalism and re-humanize capitalism. But the recent slump in commodity prices has exposed the tensions in the model. Starved of primary commodity rents, growth with redistribution is no longer an option, and governments have been unable to fulfill their dual role as both facilitators of higher profits for capital and benefactors for the poor.

The risk is that, in the absence of a more radical vision for rupturing with capitalism, governments will resolve the downturn by retreating to the right. This was the case for the Workers’ Party in Brazil, which responded to economic stagnation by implementing pro-market reforms and making alliances with sectors of the international and banking elite. Together with massive corruption scandals, this caused confusion and disorientation among the party’s base.

A similar process of weakening and undermining the Left’s organizational capacity took place in Argentina under the Kirchners. In both Argentina and Brazil, deactivated and disoriented social forces were unable to halt the right-wing offensive.

The risk facing all Pink Tide countries today is that, in the face of economic crisis, popular forces may lack the capacity to interpret what is happening and organize for an alternative. Movements must not only mobilize to defend the gains made under these governments against attacks from the Right, but also build popular political capacity through education, organization, and unification to pave the way for deeper transformative change.