ECUADOR, BRAZIL and the LIMITS OF LEFT POPULISM
by Paul Davidson – Oct 18 2019
“When you come to a fork in the road, take it.” Yogi Berra
Following the formal end of the 21-year military dictatorship in March 1985, Brazil had a succession of bourgeois governments that, due to enormous pressures from the mass movement, brought in reforms such as a national health service (SUS). But despite this, these governments either pandered to or else slavishly followed the US neo-liberal dictate, which led to both economic and social stagnation amid rates of high debt, interest and inflation.
This changed in January 2003 when the Workers Party (PT) of Luiz Inácio ‘Lula’ da Silva took the presidency and was able to govern Congress in coalition with bourgeois parties. PT initiated a program of agrarian, social and nation-building reforms under a political agenda put to the people in his June 2002 “Letter To The Brazilian People,” promising change, growth, inclusion, justice and peace. Lula promised security, anti-corruption, renewed sovereignty and social hope.
In his ‘carta’ Lula wrote: “The prevailing feeling in all classes and in all regions is that the current model has run out. The country cannot continue on this path, otherwise it will be in chronic stagnation or . . . economic, social and moral collapse.” And he promised: “an alternative national project that will make Brazil grow again, generating jobs, reducing crime, rescuing our sovereign and respected presence in the world.”
The invitation was therefore to unite “all classes” in a “national project” to “make Brazil grow again,” through “courageous and careful changes . . . in defense of Brazil.” He further declared: “Significant portions of the business community are added to our project. It is a vast, in many respects, nonpartisan coalition that seeks to open new horizons for the country . . . a broad national negotiation, which must lead to a genuine alliance for the country, a new social contract, capable of ensuring growth with stability.”
He also promised to “respect” the huge foreign debt, in the light of which, he said, the leeway for independent economic policy was small and would have to be channelled, along with foreign policy and in alliance with “all segments of society,” towards generating foreign exchange. “A return to growth” was therefore the overall priority he outlined in a linear projection, “production, employment and social justice.”
This ‘carta’ was a break from PT’s more radical past. For example, at the Brazilian Constituent Assembly of 1988 it had advocated repudiation of Brazil’s external debt, nationalization of the country’s banks and mineral wealth and a radical land reform. In addition, as a form of protest, PT’s delegates refused to sign the draft constitution.
Following the ‘carta,’ some segments of the left split from PT leaving a majority committed to a growth-led program promising social reform, once foreign revenue allowed. It was with this majority that Lula led his party to victory. The coalition he knitted with the opportunist bourgeois party, PMDB, was to finally come undone 14 years later when in 2016 Vice-President Temer led the charge with his social-democratic allies to impeach PT President Dilma Rousseff on a technical charge of permitting budget irregularities.
The fork in the road that was reached in 2002 had not been taken. That is to say, the effort had been to ignore that there was a fork and instead to proceed along two divergent paths at the same time. The nation-building project was predicated on a class alliance between national capitalist producers and their workers to jointly work for increased production, efficiency and exports, part of the value of which would subsequently be channeled back through the government to the workers and the poor through enhanced rights and social programs. What happened?
PT was certainly able to make valuable reforms, eradicating hunger and illiteracy, building homes, enhancing workers rights, pushing agrarian and educational reform, increasing environmental protection, nurturing and expanding SUS and bringing basic services to the poor. On the economic front, it also presided over ten years of economic growth, including lower inflation and interest rates and reduced deficits. PT built up the armed forces and put money into infrastructure, including hydro-electric power, roads and water. But it did not curtail corruption nor markedly decrease crime and insecurity.
The generation and expansion of social programs, some of which were already in place from previous administrations, were almost entirely down to PT but the economic growth cannot be shown to be so determined. Brazil, along with much of Latin America, went through a significant growth cycle during the first decade of this century due to two significant factors:
Firstly, the sustained growth in global production and trade since the 1990’s corresponded to the adage, ‘a rising tide lifts all boats.’ This rising tide was due to measures taken in the US and copied elsewhere, to deregulate the financial markets (financialization), introduce new technology (informatics) and transfer wealth from the poor to the rich (monetarism and austerity). This led to two decades of recession-free growth.
Secondly, the opening up of China in the context of global growth and financial globalization enhanced demand for commodities (minerals and agricultural) and commodity prices. Economies based on extraction experienced a tremendous rise in foreign earnings, disproportionate to the growth of their overall economies. The differential rents (earnings that accrue from having a monopoly in commodities that other markets require) allowed such governments to take part of that rent and plough it back into social programs, which is largely what happened in Brazil and many other countries of the sub-continent.
At the same time, the increasing power of the WTO along with the signing of free-trade deals led to the more powerful economies undercutting domestic producers in the less powerful and replacing their domestic products with imports. During the first decade of this century a tremendous shift took place in throughout Latin America. While fantastic returns were made on extraction, domestic production stalled and fell back. With regard Brazil, PT followed through on its deal to promote national capital and used the national banking sector to favor large construction firms such as Odebrecht and agribusinesses.
Interest rates were kept low to keep cheap money available for big companies. But, seeing their domestic markets being undercut by imports, capitalists chose not to borrow and invest. Instead they put their profits into the banks or sent it abroad or into real estate or simply spent it on imported luxury goods. Low interest rates, intended to stimulate the capitalists, became a burden to them, bringing low returns to their savings and fueling an anti-PT spirit.
The national accord was falling apart even when the economy was still growing but as the global slowdown hit Brazil from 2012 onward and commodity prices and revenues fell, it collapsed entirely. Discontent was further fueled by the ‘Lava Jato’ anti-corruption process and its particular aim at PT. As the economy faltered under the PT presidency of Dilma Rousseff, she reigned in public spending, public fares went up and discontent mounted within the urban poor.
Eventually, a combined campaign by mass media, right-wing political forces, military leaders, the judiciary and evangelicals brought the middle class out onto the streets demanding the ouster of PT, which was effected with the impeachment of Dilma in 2016 and the illegal imprisonment of Lula for crimes that had never taken place. Brazil today is facing the exact same scenario Lula had warned against, chronic stagnation or economic, social and moral collapse.
Despite a valiant attempt, PT’s cross-class, economic program had come to an inglorious end before the party’s ouster from power. The social and moral collapse followed, as evidenced with the election of the fascist Jair Bolsonaro.
The 2002 fork in the road had been a clear choice: Either forge a revolutionary party with a sustained working class base, strong enough to push through radical structural reforms in order to finish with capitalist stagnation for good or take the same old path but disguise if simply by changing step. PT’s nation-building project lasted only as long as commodity prices held and could sustain a reform program. It was entirely dependent on the global capitalist market and prolonged global growth. PT proved ineffective in building an integrated economy whilst simultaneously opening Brazil up to free-trade globalization.
Additionally, having worked so hard in the early years to build a large popular base among the working class and landless of Brazil, that work was squandered by PT-in-government on its new line of ‘respecting’ the institutions of state, the national military, the private ownership of production, the financial sector and the supposed long-term health of international capital. PT, as a party, became an administrative organ of the state and its leading cadre were reduced to functionaries of government. The organs of popular power became orphans of the same and the gulf between leadership and class became unbridgeable.
From the 1990’s on, the presidencies of Bucaram, Alarcón, Arteaga, Mahuad, Noboa, Gutiérrez and Palacio followed in quick succession. Each had promised an end to corruption, an era of growth, prosperity, equality and liberty, but each had perished under the combination of broken promises and mass discontent, which had sometimes led to virtual insurrection, especially from the indigenous peoples. (Since 2000 the Ecuadoran economy has been 100% dollarized.)
Then came Raphael Correa, an avowed socialist; An October 15 article in RT stated as follows:
“After a period of 10 years in which they had seven presidents, Ecuador finally achieved political stability in 2007 under the leadership of President Rafael Correa, a fierce critic of the IMF and the US government. A charismatic leader and a doctor in economics, Correa was able to unite social movements in a racially and ethnically diverse –and divided– country through what he and his followers called “The Citizen’s Revolution.” With Correa as President, Ecuador experienced strong, sustainable economic growth, while drastically reducing poverty and inequality.”
RT claims this was a “revolution,” but was it? RT continues:
“The revolution achieved great success, undergoing a transition from a neo-liberal political economy dependent on the United States to one that emphasized social investment and regional integration. Ecuador virtually abandoned the IMF, and singled that entity out as a major foe to Ecuador’s development. Ecuador also joined the Bolivarian Alliance for the Peoples of Our America (ALBA) in 2007, alongside the socialist bloc of Latin America – Cuba, Bolivia, Nicaragua, and Venezuela.”
This is all worthy of respect and support, but it’s not yet a revolution. Let us go a step further and see where the RT analysis leads:
“Things were going well in Ecuador; one could argue, for the first time since the conquest. So well, in fact, that once Correa’s second term in office was up, his hand-chosen successor, Vice-President Lenin Moreno, easily won the election. Moreno promised to continue the Citizen’s Revolution . . . But then something changed. Moreno flipped . . . he joined the country’s elites in a witch hunt against supposed corruption within the Correa government. He began cozying up to Washington and pulling away from ALBA. Moreno then signed the deal with the IMF.”
The US$4.2 billion, weaponized IMF loan (which had actually began its negotiated life under Correa) was conditioned on a neo-liberal structural adjustment aimed at the poor, something designed to greatly benefit interests in the US but that would leave Ecuador in debtor’s prison for generations to come.
The deal led immediately to huge hikes in fuel process and a massive rebellion that left seven dead, 1,100 arrested and 1,300 injured. Eventually, the fuel hike was cancelled but the IMF deal remains in place, along with the presidency of Lenin Moreno and the undiminished power of the repressive state apparatus that ensures the IMF deal will persist against all protests. And it is the continuation of this repressive machine that signals the improbability of the claim that a revolution, under Correa, had taken place.
Like Brazil and Venezuela, Ecuador has a mainly extractive economy and oil is its major export by far. It benefited greatly from high oil prices during the Correa government but came under increasing economic and financial strain post 2012.
Correa handed power to his former Vice President, Lenin Moreno in a US-CIA soft-coup that, unlike Dilma Rousseff of Brazil, he did not publicly fight but succumbed to, under pressure. They had him step down and endorse Moreno rather than fight for a constitutional change to allow him to run for a third term, which would likely have been passed had he fought for it.
Moreno, once in the driving seat, passed a ruthless neo-liberal act called, “The Organic Law to Foster Productivity, Attract Investment, and Create Jobs, Stability, and a Balanced Budget,” an act that the $4.2bn IMF loan enhanced. While accepting the IMF loan Moreno cancelled some $4.3bn in fiscal obligations (tax debts)owed by large capitalist enterprises and corporations, including fossil fuel corporations, offshore phone companies, private banks, and . . . Odebrecht.
It should be noted that the Ecuadoran legislature passed this law without requesting even the basic information about the tax debt. It did so with the votes of Alianza País, the same movement started by former President Rafael Correa.
Consequent to this neo-liberal turn, an October 14 article in NACLA reports, “The policies the government has implemented under the IMF agreement have brought the economy to a standstill. The IMF itself predicts a 0.5 percent reduction in GDP this year. Unemployment has continued to rise, with only 37.9% of the economically active population having adequate employment. The poverty rate has risen from 35.3 per cent of the population in December 2014 to 43.8 per cent in June 2019, meaning two million more people have fallen into poverty, for a total of 7.6 million Ecuadorans living in poverty out of a total population of 17.3 million people. Meanwhile, the IMF policies are still geared toward serving the interests of creditor countries and the national debt.”
In another article in the same journal on Sept 23, political theorist Mabel Thwaites Rey argued we should see this turnaround as the end of a cycle (elsewhere referred to as the ‘Pink Tide’) of left-progressive governments throughout Latin America. The leftist wave resulted from a reaction to the structural adjustment policies of the 1990’s when mass movements challenged the neo-liberal regimes of that period which was consequently translated into the rise of new progressive governments.
Key to this was the 1999 election of Chavez in Venezuela whose further radicalization following the attempted coup of 2002 led to a “regional breakthrough.” Then came the rise in commodity prices which allowed the role of the state to change.
“In the new period, what national states began to recover was the capacity to arbitrate between bourgeois fractions, and the capacity of redistribution and mediation between dominant and popular classes, or between capital and labour.”
But this ‘pink tide’ had significant, defining variations:
In the case of Venezuela, the population became increasingly radicalized after the leftist government came to power and the Bolivarian socialist revolution was declared. “It is from the leadership of the state that Chávez began to promote popular participation . . . there was an attempt at activation.”
And Bolivia was, “The clearest case of a consistent popular mobilization that flows into the government of Evo Morales.”
But in most other cases, the popular insurrectionary trend had already peaked by the time progressive governments came into office and, in the downward phase of mass militancy, these governments ‘captured’ the movements and ‘pacified’ them. In Argentina, for example, the popular movement was channeled by a Peronist fraction, Kirchnerism.
“In the cases of Brazil and Uruguay, the governments that came to office were constituted by center-left coalitions that had been combative at one time, but which at a certain moment—in the case of the PT it is especially clear—made political alliances and moderated their public discourse in order to win elections. . . . In any case, they can still be reproached for how little they did to activate popular participation from the state in order to deepen changes.”
In the case of Ecuador, the pre-existing decomposition of the state had required constitutional reforms and this later became termed the ‘Citizens’ Revolution.’
In Brazil, President Dilma Rousseff, upon her re-election in 2012, instigated an adjustment program in the context of the drop in state revenues due to falls in commodity prices. Neo-liberal adjustment preceded the impeachment. The trajectory for it had been set by PT.
In Ecuador too the process of adjustment preceded the replacement of Correa by Moreno. The nation-building program of Correa included the promotion of state mining companies on eco-reserves, reproducing and entrenching the extractive model of development, and this led to protests from indigenous groups that were termed ‘infantile environmentalism,’ repressed, criminalized and charged with rebellion. States of emergency were declared to quell the protests and hundreds were arrested. The IMF loan was being negotiated before Correa ceded power.
We saw in the recent protests that the indigenous mass movement was calling for the removal of Lenin Moreno in order to have Correa back. They were calling for an end to the whole program of nation-building based on extraction which characterized both presidents of the Alianza Pais party. And it is difficult to see how, once having repressed the mass mobilizations, you can ever again gain the confidence of the people. The protests against Moreno were not those of the AP base against a usurper. They were of the people against AP.
In a June 2 2017 article, Linda Farthing and Thea N. Riofrancos write:
“Alianza Pais was created as electoral vehicle during Correa’s first presidential campaign to get him elected to office. It has no democratic mechanism for choosing candidates, is run by very small cadre of leadership, and has no accountability to popular organizations . . . In addition, AP has made a number of questionable local alliances that have further diluted programmatic coherence. As a result, AP reproduces its own centralized leadership rather than serving as a political force to forge popular unity.”
- SOME CONCLUSIONS
The ‘pink tide’ theory of 2000-2015 left-populism hides a basic difference with regard say Ecuador and Brazil on the one hand and Bolivia and Venezuela on the other. In both sets of cases the nations suffered from a reliance on an extractive economy and a low industrial base and were at once boosted by the rise in commodity prices and then thrown to the threshing floor by the 2008 crisis.
In the case of Ecuador and Brazil, the progressive governments had spent their base support and could not resist the onslaught of global forces. They succumbed and began adjusting to neoliberalism before falling. They had given priority to raising consumption and ameliorating the clash of classes. They could afford this while revenues were high but then, when the going got tough, they found a gulf had opened up between them and their bases and their prospects died.
With regard Bolivia and Venezuela, there had been continual activism nurtured both from below and above. When the global recession in commodity prices hit and their economies suffered, they mobilized mass resistance and were able to withstand the pain. Though their economic programs may have been verisimilar to that of Brazil and Ecuador, promoting extraction for nation-building and reform, in both cases another key element was present, that of the political struggle.
The political struggle is as it ever was, a struggle for power between the working people and the repressive capitalist state. It is not a matter of getting elected and passing reforms but of confronting the very instrument that permits the opposing class to regain their parliamentary throne at the moment of their choosing. The political struggle of the working masses is the struggle against the capitalist state and this is a struggle to the death. To simply take the throne for a definite period and honour its symbols and play its game and then give it up when requested, is a recipe for disaster.
Nation-building is needed so long as there are nations. But nation-building can only be accomplished once there is a nation. So long as there are two classes, one owning all the wealth and the other producing it, there are two nations. The very word ‘nation’ derives from the Latin for ‘birth’ and implies ‘to be born as one.’ It implies identity as a unitary force, a people. But class society has divided the people between those who have and those who do not. Two peoples and two nations.
“When you come to a fork in the road, take it.”
If you cannot take two bifurcating paths at the same time, neither can one build two nations that oppose each other. One has to choose which path to follow. The choice is posed most sharply at times of crisis. Capitalism is a system bound for crisis and globalized capitalism is one in which, for those nations at the bottom of the global heap, the sharpness is most clearly defined. In the post-2008 world, the condition of bifurcation is more acute than ever and with the upcoming second global crisis of the century the choice is posed as never before in world history, socialism or barbarism. There is the choice. Take it.