The administration of Ronald Reagan (1981-1989) eliminated the Keynesian policies that were established during the administration of Franklin D. Roosevelt. Faustino Cobarrubia of the Center for the Study of the World Economy in Cuba has identified three pillars of Reaganomics: simultaneous cuts in taxes and government spending (except for military expenditures); reduction of government regulation and reduction of the state bureaucracy; and reduction of inflation through control of the monetary supply. Cobarrubia believes that the second and third pillars had long been proposed by the conservative movement in the United States, and thus Reaganomics can be understood as the end of a long road rather than a rupture with tradition. However, he notes that the combination of reducing taxes and increasing military expenditures broke with the long-standing calls for fiscal responsibility of the conservative movement (2006:190).
Although Reaganomics controlled inflation, it led to an enormous increase in government debt, principally as a result of the combination of tax reductions and increased military spending. US citizens had excessive debt and insufficient savings, so the debt was financed through loans from: Arab countries that were oil-exporting countries, principally Saudi Arabia; West Germany; and most importantly, Japan. Cobarrubia observes: “Japan supplanted the United States as the dominant creditor nation and financial power. While the Japanese economy became the principal exporter of capital in the world, the US economy became in 1985 a net debtor for the first time since 1914. Never before in the history of international finances has there been such a decisive change in a so short a period of time. In less than five years, the richest country in the world had reversed a tendency of a century, becoming the most indebted nation in the world” (2006:191).
The Reagan Administration disdained international organizations, and accordingly, it ignored the Organization of American States, established in 1948 with the intention of institutionalizing the cooperation of Latin American and Caribbean states with the structures of neocolonial domination (see “Pan-Americanism and OAS” 10-2-2013). The Reagan Administration violated an important principle of neocolonial domination, namely, the satisfaction of the interests of the figurehead bourgeoisie (see “Neocolonialism in Cuba and Latin America” 9/12/2013).
The unilateralism of US foreign policy after 1980 is illustrated by the US response to the triumph of the Sandinista Revolution in Nicaragua in 1979. The measures adopted by the Sandinista government were not radical: it confined nationalization to those properties of owners who had fled the country after 1979; it did not join the socialist bloc, but merely diversified its economic and diplomatic relations to include the West, the socialist bloc, and the Third World; and its 1984 Constitution established structures of representative democracy, and not structures of popular democracy, as had been developed in Cuba. Nevertheless, the United States in the 1980s embarked on a campaign to destabilize the Sandinista government. In 1981, it ended economic relations with the government of Nicaragua and began to provide economic and military assistance to a counterrevolutionary guerrilla army, most of which were stationed in Honduras along the Nicaraguan border (Booth and Walker 1993:140-46).
In El Salvador, the United States government gave $6 billion in economic and military assistance to the government during the civil war. The government represented the interests of the coffee oligarchy, and it was seeking to maintain itself before the onslaught of the Frente Farabundo Martí para la Liberación Nacional. Established in 1980, the FMLN was formed by five groups that had taken to armed struggle in the aftermath of government repression of popular protest, and it was allied with a federation of progressive and leftist political and social organizations, the Frente Democrático Revolucionario (FDR). During the 1980s, the FMLN constituted the de facto government in many rural communities in the eastern region of the country, and it operated clandestinely in the cities. Ultimately, a peace accord was signed in 1992, recognizing the FMLN as a legal political party. Some 70,000 Salvadorans had died in the conflict, and one in six had fled the country (Harnecker 1998:32-33, 42-43; Prieto 2009:36-43; Regalado 2008:143-44, 56-57).
The 1980s was a period in which politics was driven by uncertainty and fear. The United States had begun its fall from hegemony, the world-system was beginning to experience the first signs of deep structural crisis, and the peoples of the Third World were in movement in opposition to the neocolonial world-system. And none of these dynamics were understood by the people of the United States. Ronald Reagan was able to tap into the popular insecurity and fear and lead the nation toward what Jesse Jackson would call a “dark night of reaction.” It is a path that we still follow.
Booth, John A. and Thomas W. Walker. 1993. Understanding Central America, Second Edition. Boulder: Westview Press.
Cobarrubia, Gómez, Faustino. 2006. “Economía de los Estados Unidos: Una retrospectiva de las últimas cuatro décadas” in Libre Comercio y subdesarrollo. La Habana: Editorial de Ciencias Sociales.
Harnecker, Marta. 1998. Haciendo posible lo imposible: La Izquierda en el Umbral del Siglo XXI. La Habana: Centro de Investigaciones, Memoria Popular Latinoamericana.
Prieto Rozos, Alberto. 2009. Evolución de América Latina Contemporánea: De la Revolución Cubana a la actualidad. La Habana: Editorial de Ciencias Sociales.
Regalado, Roberto. 2008. Encuentros y desencuentros de la izquierda latinoamericana: Una mirada desde el Foro de São Paulo. México D.F.: Ocean Sur.
Key words: Third World, revolution, colonialism, neocolonialism, imperialism, democracy, national liberation, sovereignty, self-determination, socialism, Marxism, Leninism, Cuba, Latin America, world-system, world-economy, development, underdevelopment, colonial, neocolonial, blog Third World perspective, Ronald Reagan, Nicaragua, Sandinista, FSLN, El Salvador, FMLN