Michael Lebowitz: Latin America's struggle against neoliberalism hits limits, poses more radical changes

May 27, 2016

A community assembly as part of a communal council in Caracas. Photo by Rachael Boothroyd Rojas/Venezuela Analysis.

Leading Marxist author Michael Lebowitz spent six years (2004-2010) in Venezuela working as a director of the program for Transformative Practice and Human Development at the Miranda International Centre (CIM) in Caracas. There, he had the chance to take part in the building of socialism for the 21st century.

Lebowitz was recently in Australia for the Socialism in the 21st Century conference, which was co-hosted by Green Left Weekly. In the interview below, Lebowitz covers some of the topics he discussed during his visit regarding the opposition to neoliberalism and the prospects for a socialist alternative in Latin America today. It is abridged from Links International Journal of Socialist Renewal.


Since the election of Hugo Chavez in Venezuela in 1998, there has been a reaction against neoliberalism in Latin America that is often called the “pink tide”. Why did neoliberalism flourish across the continent?

I think it is essential to understand that neoliberalism is not simply a set of policies that support capitalism and remove obstacles to the growth of capital; significantly, it is also ideology.

At the core of this ideological perspective is the starting point of the isolated, atomistic individual. And the logic is that the individual gains when “free to choose”.

So, for example, cut taxes and leave more money with the individual to make her own choice; the assumption is that the individual will make more efficient choices. Accordingly, end social programs and let people decide what they want to spend their money on.

Cut public school support and provide vouchers for families to make their own choices; let people freely decide as individuals the terms on which they will sell their ability to work. In other words, let them function as independent contractors — and thus remove laws supporting collective bargaining.

“Free to choose” is the mantra that provides the ideological support for neoliberal policies. Under the appropriate circumstances, this ideology makes neoliberalism appear as common sense. We all know the list: privatisation, deregulation, free trade — indeed, remove all state intrusion into the economy and let capital be free to grow. In short, let capital be free to choose.

This is not actually an argument to reduce the role of the state in the economy. The state must be used (in the words of classical liberal economist Adam Smith's words) to remedy the “bad effects of the folly and injustice of man”.

Chile was the laboratory for this use of the state under the dictatorship of General Pinochet [from 1973-1990]. As [neoliberal theorist] Friedrich von Hayek explained in an interview for Chile's El Mercurio [in 1981], dictatorship “may be a necessary system for a transition period”.

During the '80s and '90s, neoliberal solutions flourished and nowhere more than in Latin America. There were particular reasons for the triumph of neoliberalism in Latin America.

For one, the structuralist development model based on import substitution for consumer goods had clearly failed. The maintenance of highly unequal societies (in particular, the absence of land reform) meant that there was inadequate consumer demand in the national markets for the branch plants of international capital to function efficiently.

Also, the global strategies of international capital changed to focus on world production in the context of growing international competition. Further, in the context of the slump, state debts incurred in the attempt to develop, and serious balance of trade and payments problems, led to cutbacks in government budgets.

There were also, as elsewhere, efforts dedicated to making particular countries attractive places for international capital to invest. Thus, lower taxes, driving down wages, reduced health and safety and environmental controls.

The two sides of neoliberalism [strengthening capital, weakening workers] triumphed in Latin America in this period with a vengeance. But it is essential to understand that, contrary to the neoliberal slogan that “there is no alternative”, there always was (hypothetically, at least) an alternative.

After all, when capital runs into problems, when wages are being driven down, when unemployment rises, isn't that a time when capital, the rule of capital, the reign of capital, the logic of capital, can be challenged?

What was the response in Latin America to neoliberalism?

When popular discontent about the effects of neoliberalism grows, the default position of capitalist governments is to reverse the worst effects of neoliberalism. The call is to end privatisation, end cutbacks of social programs, end policies which generate insecurity and precariousness.

But that is not an attack on capitalism. The identified enemy is not capitalism but bad capitalists, not capitalist governments but bad policies.

The essential perspective is a non-neoliberal capitalism or a post-neoliberal capitalism — what Chavez called “the third way”.

That is, capitalism without warts. But is capitalism without warts credible in a period of intense international competition in the global race to the bottom?

The general credibility of undertaking policies designed to reverse the effects of neoliberalism does, though, increase substantially with a favourable change in the economic conjuncture — as occurred with the boom in the international capitalist economy and in particular with the increased demand for natural resources generated by the growth of China.

The third way, the way of capitalism without warts, was the path that some Latin American countries took. This was the “pink tide” — an attempt to create a post-neoliberal capitalism.

The exception was Venezuela, but it started out that way too. [The early Chavez government's] model was to use resource revenues to build up industry through a neo-structuralist model for endogenous [internal] economic development, to gain food sovereignty, to reduce dependence on oil and to reduce the social debt by programs in education and health.

That model aimed to replace bad capitalism with good capitalism. The [failed right-wing] 2002 coup and the 2002-3 bosses' lockout, however, revealed that the Venezuelan oligarchy and US imperialism did not want a good capitalism. They were happy with what existed.

From this point on, Venezuela moved in a new direction. In 2003, it began to build an alternative to capitalism with what it called the social economy. And in 2005 and 2006, it named that alternative “socialism for the 21st century”. This included promoting workers' management and communal councils — what Chavez called cells of a new socialist state.

In contrast to the social democracy and populism characteristic of the pink tide, Venezuela began to create elements of a revolutionary democracy, in which people develop their capacities through their own activity.

Venezuela is a sad story these days — but not because of its moves in the direction of revolutionary democracy (as opposed to the effects of an embedded culture of clientalism and corruption plus incompetent and incomprehensible economic policies).

If there is hope for Venezuela, it is because of those steps toward revolutionary democracy (in particular in the communes).

But what about the “pink tide”? What happens to social democracy and populist policies when the engine dies out?

It is clear the slowdown in the international capitalist economy and, in particular, in demand in China has created a crisis not only for countries that took a social democratic path (like Argentina, Brazil, Ecuador, and to a much lesser extent Bolivia), but also countries like Chile and Mexico, which did not.

We see again the problem of international balances (exacerbated by the growth in popular consumption and imports associated with the reduction of poverty), deficits and debt. So, what will happen? All other things being equal, the same thing that occurred in the '80s and '90s. The message will be TINA (“there is no alternative”), at best TINA with a human face. And that will mark the end of the Pink Tide.

But all other things are not necessarily equal. That result is not inevitable.

What are the prospects for the coming period?

Although the prospects for a return to neoliberal policies (and, likely, new governments unequivocal in pursuing that course) are high, there are alternatives.

A government can win the battle against neoliberalism, but only if it is prepared to break ideologically and politically with capital.

What are the prospects in Latin America of avoiding yet another “defeat without glory”? Although the current trajectory of the “pink tide” and of the Bolivarian Revolution is not promising, I think it is important to keep in mind those choices.

Is it possible in Latin America to take the path of revolutionary democracy? I think we need to recognise that the social democratic path, the path of populism, is not an option in a period of capitalist retrenchment and slump.

So the question becomes one of whether the masses of Latin America are prepared to return to the neoliberal barbarism so fresh in their memory or whether they are receptive to challenging capital with a socialist alternative.

Although the latter path would not at all be easy, there are glimpses of that alternative. In the communes and communal councils of Venezuela, that struggle continues.

And in Argentina, resistance to the return of neoliberalism and the experience of self-management of recovered enterprises point to the possibility of combining the struggle against the existing state with the building of peoples' capacities from below.

Of course there are the governments of Bolivia and Ecuador — governments that could be pressured from below to choose a socialist alternative rather than neoliberalism.

I think that Latin America is entering a period in which there will be revolts, demonstrations and occupations. But spontaneous eruptions are like volcanoes that often leave little behind but cooling lava.

I have argued and continue to argue that you need a party to coordinate, a party that is linked to the movements, rather than superior to them. My mantra is “pessimism of the intellect, optimism of the will”, and optimism of the will refers to struggle. Class struggle changes the equation — it makes all other things no longer equal.

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