The Morales Government: Neoliberalism in Disguise?

International Socialism

27 March 12

Federico Fuentes

For more than a decade Bolivia has been rocked by mass upsurges and mobilisations that have posed the necessity and possibility of fundamental political and social transformation.¹ In 2005 the social movements that led the country’s water and gas wars managed to elect a government that since then has presided over a process of change that has brought major advances.

Among these are: the adoption of a plurinational state structure that for the first time recognises the country’s indigenous majority; regaining sovereign control over vital natural resources and initial steps towards endogenous industrialisation; an ongoing agrarian reform; and the development of social programmes that have substantially improved the lives of ordinary Bolivians. Democratic rights have been reinforced; forms of self-government by indigenous communities established; and electoral processes expanded to include popular election even of the judiciary. Not least in importance, Bolivia has also become a prime participant in the movement for Latin American anti-imperialist unification and sovereignty and emerged as a major leader in the international fight against capitalist-induced climate change.

In his recent article in this journal, “Revolution against ‘Progress’”,² Jeffery Webber offers a harsh critique of the MAS government, illustrating it by reference to recent conflicts between the government and some indigenous groups involving environmental and development issues. His conclusion: the government remains committed to a neoliberal programme based on “fiscal austerity”, “low inflationary growth”, “inconsequential agrarian reform”, “low social spending” and “alliances with transnational capital”, among other policies. As such, it shares “more continuity than change with the inherited neoliberal model”.

These are sweeping assertions, and many are questionable. Webber criticises the government’s supposed “fiscal austerity”, yet omits the fact that budget spending has increased almost fourfold between 2004 and 2012. He attacks the government for seeking “low inflation” and “macroeconomic stability”, but what is his alternative: high inflation and macroeconomic instability? These were certainly traits of previous neoliberal governments. Furthermore, is it “inconsequential” that in its first five years the Morales government presided over the redistribution or titling of 41 million hectares of land to over 900,000 members of indigenous peasant communities?³ And if the government’s policy can be simply defined as one of forming alliances to benefit foreign transnationals, why is the Bolivian state currently facing 12 legal challenges in international courts initiated by these same companies?

Profile of neoliberalism

Simply put, Webber ignores the real progress made by the Morales government in rolling back the neoliberal project in Bolivia. Neoliberalism is best understood as a class project that sought to reassert capital’s dominance internationally in the wake of the 1970s economic crisis. Neoliberalism, as Webber himself previously noted, was “set in motion on an international scale largely under the tutelage of the US imperial state” and had as its fundamental strategy not only the “privatisation of formerly state or public resources but their acquisition by transnational capital in the US and other core economies”.⁴

Furthermore, current Bolivian vice-president Álvaro García Linera has noted that neoliberalism rested on three additional “pillars”: “the fragmentation of the labouring sectors and worker organisations…the diminished state, and impediments to people’s decision making”.⁵

The impact of neoliberalism in Bolivia includes:⁶

l The sell-off or dismantling of Bolivia’s largest state-owned companies. In the hydrocarbon sector, which accounted for 50 percent of government revenue, privatisation was accompanied by a drop in royalties companies had to pay from 50 percent to 18 percent. The workforce of YPBF (Yacimientos Petrolíferos Fiscales Bolivianos) was reduced from more than 9,000 in 1985 to 600 by 2002.

l The state’s dependency on foreign imperialist governments, transnational corporations and their institutions was deepened. International loans and aid covered “roughly half of Bolivia’s public investment”, with each budget deficit bringing further IMF-imposed structural adjustment programmes.

l The removal of state subsidies sent Bolivia’s small industrial sector into crisis. Some 35,000 jobs disappeared in the manufacturing sector alone.

l By 1988 the informal sector had ballooned to 70 percent of Bolivia’s urban workforce, and the few jobs created in the formal sector were subject to labour flexibilisation practices.

l The establishment of power-sharing pacts among traditional parties and restrictions on electoral registration for alternative parties consolidated the grip that neoliberal politicians had on political decision making.

Compare this disastrous record with that of the Morales government. While Bolivia’s state continues to be capitalist, “and the government functions within the framework of deeply entrenched capitalist culture and social relations”, it is equally true that through a combination of successful electoral and insurrectional battles, indigenous-popular forces today are in control of important positions of power within the state.⁷ From these positions, they have used the increased state revenue, generated through nationalisations undertaken across various strategic sectors, to begin breaking its dependency on foreign governments. This strong economic position has allowed those running the Bolivian state to dictate their own domestic and foreign policy, free from any impositions placed by imperialist governments and international financial institutions in return for loans. Ties of the US military to the Bolivian army have been cut.

A constituent assembly wrote a new constitution that for the first time recognises the previously excluded indigenous majority and has recuperated
state control over natural resources. Since the referendum ratifying the new constitution the process of “decolonising” the state has continued, most recently in October 2010, with the holding of Bolivia’s first popular elections to elect judicial authorities. The result was a record number of women and indigenous people flooding into the judicial branch of the state.

The Morales government also initiated a significant shift in Bolivia’s foreign policy, leaving behind the traditional subservient stance towards the US. Instead Bolivia has spearheaded initiatives in the direction of seeking unity with anti-imperialist forces—both at the level of governments and social movements—within the context of the Bolivarian Alliance of the Peoples of Our America (Alba), and increasing regional collaboration, through institutions such as the Union of South American Nations (UNASUR). Another key focus has been the construction of an international alliance to fight for real solutions to the climate crisis, as evidenced by the World Peoples’ Summit on Climate Change held in Cochabamba in April 2010.

An alternative model

Webber ignores most of these achievements and instead focuses on the MAS industrial strategy and the social tensions that have been expressed around this. But he misrepresents the strategy. Let us look first, then, at what this strategy comprises, as it is a central component in the government’s economic vision. A succinct presentation may be found in a recent article on Bolivia’s economic model by Luis Alberto Arce Catacora, the minister of economy and public finance.

For Arce, “the New Economic, Social, Communitarian and Productive Model” that the government is implementing “does not pretend to immediately change the capitalist mode of production, but instead to lay the foundations for the transition towards a new socialist mode of production”.⁸

Unlike neoliberalism, in which surplus value and rents are appropriated by transnational capital, this new model, as the introduction to his article notes, has taken steps towards:

stimulating the internal market and reducing dependency on the external markets. Similarly, it has given the state a watching brief, endowing it with functions such as planning the economy, administering public enterprises, investing in the productive sector, taking on the role of a banker and regulator and, among other things, redistributing the surplus, with preference to those sectors that were not beneficiaries under previous governments.

The priority, Arce says, is promoting communitarian, cooperative and family-based enterprises (together with increasing social spending). Such a strategy is vital to rebuilding the strength of the working class and communitarian forces, pulverised by two decades of neoliberalism.

In summary: reassert state sovereignty in the economy and over natural resources; break out of Bolivia’s traditional position of primary materials exporter through industrialisation and promoting other productive sectors such as manufacturing and agriculture; redistribute the nation’s wealth in order to tackle poverty; and strengthen the organisational capacity of proletarian and communitarian forces as the two vital pillars of any possible transition to socialism in Bolivia today. Such a perspective, which seeks to advance the interest of Bolivia’s labouring classes at the expense of transnational capital, may be decried by some as mere reforms, but it is certainly not neoliberalism. →