red october

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By José Luís Fiori*

"Why protest? It's because of economic inequality.

Y los bajos salarios. Also for low or zero social mobility

and the lack of a better future for young people.

It's for the infamous public services.

And for globalization and the loss of jobs…”

Moses Nain, El País, October 27, 2019.

This time everything went very fast. As if, in just one night, Latin America had slept on the right and woke up on the left. After the overwhelming victory of López Obrador in Mexico in 2018, in just one month, October 2019, progressive forces won the presidential elections in Bolivia, Uruguay and Argentina, elected a young left-wing economist to the government of Buenos Aires and won in Colombia mayoral elections in its main cities, such as Bogotá and Medellín. And almost simultaneously, a succession of popular uprisings overthrew or brought to their knees the right-wing governments of Haiti and Honduras, inflicting heavy defeats on the right-wing presidents of Ecuador and Chile.

Many analysts were surprised by this sequence of defeats by the right, as if it were unexpected, a lightning bolt from a blue sky. But that is not true, above all, in the imminent cases of the rebellion of the Chilean people and the defeat of Mauricio Macri in Argentina. In the case of Chile, there had already been a gigantic demonstration of more than a million people, in 1988, for the end of the dictatorship of General Pinochet, harassed by the failure of an economy that had grown only 1,6%, on average, during the 15 years of the military dictatorship, leaving behind unemployment of 18%, and 45% of the population below the poverty line.

Soon after the country's re-democratization, starting in 2006, there were large student mobilizations against privatization and the high costs of education, health, water and basic sanitation, which had been privatized during the dictatorship and remained private after the redemocratization. In an almost continuous mobilization, which achieved an extraordinary victory in January 2018, with the approval by the Chilean National Congress of a new system of university education, universal and free, both public and private.

It was in the wake of these demonstrations that the Chilean population returned to the streets this October, protesting against a society that, despite its “macroeconomic balance”, remains the most unequal among all OECD countries, with a concentration of 33% of wealth country in the hands of just 1% of the population. They took a stand against the health, water and basic services systems that remain privatized and at exorbitant costs; against the private pension system that pays retirees only 33% of their active salary. This is a picture of discontent that foreshadows the likely defeat of right-wing forces in the 2021 presidential elections.

In the case of Argentina, the Peronist victory was an immediate and explicit response to the failure of President Mauricio Macri's neoliberal economic program, which managed to destroy and indebt the Argentine economy, leaving a legacy of negative GDP growth, an inflation rate of 50% , 10% unemployment and still 32% of the population below the poverty line. It is known that Argentina was, until recently, the richest society with the best quality of life and educational level in Latin America. In other words, summarizing the argument, the Chilean rebellion and the Peronist victory in Argentina are not surprising, which also applies to the chain succession of the other defeats of the Latin American right.

What immediate consequences are to be expected, and what lessons can be drawn from this “Red October”?

The first and most striking is that Latin Americans no longer support or accept living in societies with levels of extreme and shameful inequality. The second is that the same neoliberal program that failed in the 1990s has failed again, precisely because it does not produce sustained economic growth and violently accentuates the precariousness, misery and inequality that already exist throughout Latin America.

On the other hand, from a strictly Brazilian point of view, this failure of neoliberal policy, above all the failure of Chile and Argentina, falls like bombs on Mr Guedes' program of ultraliberal promises and bluffs, whose insistence on the same key, after everything that happened suggests that he is a financier who, in addition to being a fanatic, seems to be blind or stupid.

Thus, two important questions remain in the air: Why was this new neoliberal cycle so short? What can be expected for the future?

To reflect on these questions, however, it is necessary to step back from the conjuncture, and its most heated debates, and resort to a long-term hypothesis about the contradictory nature of capitalist development, formulated by the economist and historian Karl Polanyi, in the great transformation (1944)

Polanyi proposed an explanation for the end of the “liberal order of the nineteenth century” – which reached its peak and began its crisis and transformation, at the same time, from 1870 onwards. According to the Austrian economist, this simultaneity is due to the existence of a double principle that commands capitalist expansion: “the principle of economic liberalism, which aims to establish a self-regulated market, and the principle of social protection, whose purpose is to preserve man and nature, in addition to the productive organization” [1].

That would have been exactly why the most advanced capitalist States and societies and their populations would have begun to defend themselves against the advance of unbridled liberalism, at the exact moment that such advance reached its apogee. As a consequence, according to Polanyi, from 1870 onwards, “the world continued to believe in internationalism and interdependence, but increasingly acted under the impulses of nationalism and self-sufficiency” [2].

Thus, in the same era of the gold standard, the deregulation of financial markets and imperialist expansion at the end of the XNUMXth century, European states began to practice protectionism and develop embryonic forms of social protection systems, which reached their apex with the creation of of the Welfare State after the Second World War.

Following Polanyi, we can also formulate the hypothesis that the capitalist system once again experienced a great impulse of internationalization, liberalization and active promotion of deregulated markets from the 1980s onwards, and that this “internationalizing surge” entered a terminal crisis with the wars of the beginning of the 2008st century and the economic-financial collapse of XNUMX.

This terminal crisis triggered or accelerated a new great movement of self-protection on the part of States and national economies, which began in Russia and China at the beginning of the XNUMXst century, spread through the periphery of the European system and ended up reaching the very financial core and Anglo-American of the world capitalist system, at the time of Brexit; and even more, with the election of Donald Trump referenduming the “America first".

From this perspective, we can also conjecture that the neoliberal wave in Latin America in the times of Menem, Fujimori, Fernando H. Cardoso and Salinas was part of the general movement of internationalization, deregulation and globalization of the 1980s/90s, led by the Anglo-Saxon countries . The “turn to the left” of the continent, in the first decade of the XNUMXst century, with its national-developmental bias, was also part of this new and great movement of state, economic and social self-protection that is in full course under the leadership of the four great powers who are expected to lead the world into the XNUMXst century: the US, China, Russia and India.

Looking at the world this way, one can better understand why the neoliberal revival Latin America of the last five years lasted so little: it is strictly against the logic of the world capitalist system. Despite this, this late neoliberal relapse could be part of a dispute for the future of the continent that is still in full swing and that could continue for many years to come, including the possibility of an unresolved impasse. That is, from this point of view, despite the great progressive victory of this Red October, the future of Latin America remains uncertain and will depend greatly on what happens in Argentina, Chile and Brazil in the near future.

In the case of Argentina, the new government of Alberto Fernández will face challenges of great proportion that are almost immediate and that may lead the country to repeat the dilemma of the last decades, prisoner of a “seesaw” that does not take off, now under the command of “liberists” , now under the command of the “nationalists”, without being able to sustain a development strategy that is coherent, consistent and lasting.

The difference between Fernández and Macri was 8% of the votes, and despite the fact that Fernández will have a majority in the Senate, he will not have it in Congress, where he will be forced to negotiate with Macri and the other parties to approve his projects. Furthermore, Fernandez will begin his government in December, with a country broke and indebted, with reserves that are already almost entirely committed to the payment of short-term debts, with high rates of inflation, unemployment and extreme poverty. And with the permanent threat of seeing his government torpedoed by new inflationary explosions and financial crises that are periodically repeated in Argentina.

On the other hand, in the case of Chile, the progressive forces will only be able to recover the government in 2021. Until then, they will have to negotiate with the government of Sebastián Piñera a program of constitutional reforms capable of facing the dilemma of the need to renationalize health services, water and basic sanitation, at least, in addition to the rediscussion of the funded social security system, which was a resounding failure, from the point of view of retirees. This negotiation presupposes joint acceptance of the fact that Chile's macroeconomic performance over the past two decades is insufficient to meet the concrete needs of ordinary citizens who are not interested in figures and just want to survive with a minimum of decency and quality of life.

Finally, the future of Brazil is increasingly difficult to predict after this continental revolt. Even if the country manages to get rid of the group of people who took over the State, avoiding the installation of an authoritarian regime controlled by militiamen and drug traffickers, even so, after what they have already done, they will leave, as a disastrous legacy, a State and a economy in pieces, and a society divided and morally destroyed. What was built by Brazilians in the last 90 years is being systematically demolished and delivered by these gentlemen amidst promises and bluffs devoid of any scientific or historical basis.

Even without going back to talking about the ideological blindness of Mr. Guedes, it is enough to see the damage that the new Brazilian chancellor has already done to the country's international image and its diplomatic history, induced by religious and millenarian delusions and by the decision to "purify" customs " Westerners and Christians”. His promise to invade Venezuela became an international joke, the Lima Group imploded, servility to the North Americans opened the doors to the formation of a new political-diplomatic axis on the continent, articulated around Mexico and Argentina. He himself, if he continues on this path, will end up going down in the history of Brazilian diplomacy as a pathetic character: “Ernesto, the Idiot”.

In conclusion, even after this group of marginals and fanatics is returned to its proper place of origin, Brazil will have to face the extremely complex challenge of rebuilding the State, its institutions and sociability itself, at the same time that it will have to define the new directions for its economy. This will only be possible based on a great civilizing agreement between the democratic political forces, which has as its starting point the decisive rejection of the current project of destruction of the State and submission of the country to the economic leadership and military protectorate of the United States.

*Jose Luis Fiori Professor of International Political Economy at the Institute of Economics at UFRJ

Notes

[1] Karl Polanyi. the great transformation. Rio de Janeiro, Campus, 1980, p. 139.

[2] Idem, p. 142.

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