Latin America At The Crossroads An: An Introductory Essay

BY ERIC HERSHBERG 1 Not for the first time in its arduous history, Latin America stands poised at a crossroads. Continuing along the present path of deepening indebtedness, never-ending recession, plummeting employment and household impoverishment is simply unsustainable. It would be a mistake to conclude that the dominant economic policy paradigm in the region is exclusively responsible for this sorry performance. Nonetheless, the verdict is now in on the ability of the market-based economic policies associated with the Washington Consensus to generate positive results: The market-driven model has failed miserably, and alternatives need to be put in place sooner rather than later. Historians may look back on the utter collapse of the Argentine economy in 2001 as the critical moment that awakened the world to the extent of the region-wide crisis. The Argentine debacle carried with it the real possibility of analogous breakdowns in neighboring Uruguay and Brazil.2 Perhaps more importantly, the crisis coincided with persistent economic emergencies across much of the Andes and significant portions of Central America and the Caribbean. The full range of neoliberal reforms were not applied in all of the countries that teetered on the brink of social and economic catastrophe at one point or another from the mid-1990s through 2002. Yet even where popular resistance had managed to block domestic implementation of some market-oriented reforms, the crises and their social repercussions could be traced to the impact of a broadly neoliberal international regime on domestic economic stability. Argentina was crucial, not only for the extreme nature of its predicament and the breadth of its reverberations, spanning oceans beyond Latin America, but also because it had for so many years served as the model for the advocates of wholesale privatization, deregulation, trade liberalization and financial integration. Finally, Argentina's ordeal reflected the degree to which today's Latin American economic crisis is of even greater dimensions than that which accompanied the Great Depression or the debt crisis of 1982. Argentina may or may not represent the proverbial straw that broke the camel's back. But there is little doubt that its crisis marked the end of the period during which power-holders in Latin America, and its de facto capital city for economic policymaking, Washington, D.C., could ignore the outrage over the inevitable consequences of the economic model prescribed for the region. However we allocate blame for the economic devastation that has brought ruin to millions of households across Latin America and the Caribbean, it is time to label the experience clearly. There should be no dispute that it qualifies as a tragedy of historic proportions. Protests from the direct victims of this region-wide tragedy have time and again elicited reactions of disinterest, dismissal or suppression from government officials and international financial institutions. Before the Argentine collapse, few were willing to listen to progressive intellectuals or advocacy groups outside the region who condemned, as consciously or inadvertently pernicious, the process of wholesale privatization, institutional dismantling and regressive redistribution that was being foisted upon Latin American countries for roughly two decades. But those raised voices can no longer be ignored. It is not only that the evidence of failure now exceeds the capacity for denial of even the most impervious economists. 3 Rather, what is most significant is that the political pendulum has now swung decidedly against the champions of the market as a one-sizefits-all solution to Latin America's economic woes. In one Latin American country after another, progressive leaders have come to office and are confronting the established paradigm, as Cecilia L6pez Montafio notes in her contribution to this NACLA Report. At times, as in Brazil, they are doing so only