The first steps toward the neoliberal project had been taken by the Reagan administration, with the rejection of Keynesian policies, cutbacks in domestic programs, and the first steps toward international financial deregulation. More systematic application of neoliberal policies on a global level was adopted by the administration of George H. W. Bush (1989-93), which sought to restructure the Inter-American system of domination on a foundation of three pillars. The first is support for representative and parliamentary democracy in Latin America and the Caribbean, replacing the military dictatorships of national security. This so-called “transition to democracy” was necessary, given the popular struggles against the military dictatorships and their total lack of legitimacy. And the transition was possible, given the increasing concentration of capital, greater dependency of the Latin American elite, declining autonomy of Latin American governments as a result of external debt, and the limited organizational capacity of the popular movements as a result of repression by military dictatorships. The second pillar is the economic, characterized by the imposition of neoliberal polices, efforts to impose a Free Trade Area of the Americas, and the signing of Free Trade Agreements with various nations. The third is the military pillar, in which the United States seeks to establish a greater military presence in the region, using the “war against drugs” and the“war against terrorism” as pretexts (Regalado 2010).
Neoliberal economic theory is a recasting of classical liberal economic theory formulated by Adam Smith in the Wealth of Nations in 1776. Smith had maintained that in order to maximize the possibilities for economic development, rather than protecting the markets and industries of the colonial powers, it would be better to follow a principle of international free trade. Although liberalism or free trade was the dominant economic theory from 1776 to 1929, it was not followed in practice by the global powers. Throughout the nineteenth century, Britain, Germany and other European nations as well as the United States for the most part practiced protection of their industries. The notion that the period prior to the Great Depression of the 1930s was an era of free trade is a myth, even though it is a myth perpetuated by most economists (Bairoch 1993:1-55; Raffer 1987:1-3; Hayami 233, 238-39).
The neoliberal project of the 1980s and 1990s was developed on the basis of the economic theory proposed by Milton Freidman and others at the School of Economics of the University of Chicago. Its premises are: (1) the state should not distort the natural and spontaneous economic order; (2) governmental policy should be based on the principle of the unlimited supremacy of the market; (3) states should not interfere with the free play of supply and demand; and (4) governmental interference in the economy ought to be eliminated. Specific neoliberal policies include: the elimination of government protection of national currency and the trading of currency at a free market rate; privatization of government-owned enterprises; reduction of protection for national industry, reducing or eliminating tariffs and taxes on imported goods; facilitation of the free flow of capital into and out of the country; and the elimination of union restrictions on the free play of supply and demand (Prieto 2009:108-11).
The administration of Bill Clinton (1993-2001) continued to develop the three pillars of the restructured Inter-American system of domination that had been established by the Bush administration. However, the Clinton administration encountered opposition. On the domestic front, labor organizations were opposed to free trade agreements, concerned with their implications for the job security of US workers. At the same time, there emerged in Latin America during the period of 1994 to 1998 popular mass demonstrations in opposition to free trade agreements and the neoliberal project. This stage of the Latin American popular struggle was inaugurated with the Zapatista rebellion in Mexico in 1994, launched on the day that the North American Free Trade Agreement went into effect. After 1998, beginning with the election of Hugo Chávez as president of Venezuela, the popular struggle would pass to a more advanced stage, a phenomenon that we will discuss in future posts (Regalado 2010).
Osvaldo Martínez, Director of the Center for the Study of the World Economy in Cuba, sees neoliberalism as a strategy of imperialist domination. He maintains that “free trade” is a rhetorical phrase that is an integral part of a coherent package that expresses the interests of the transnational corporations and the governments that represent them. He maintains that neoliberalism is full of contradictions, inconsistencies and myths, and as a result, it is in crisis (Martínez 1999; 2005; 2006).
Bairoch, Paul. 1993. Economics and World History: Myths and Paradoxes. Chicago: University of Chicago Press.
Hayami, Yujiro. 2001. Development Economics: From the Poverty to the Wealth of Nations, 2ndedition. NY: Oxford University Press.
Martínez Martínez, Osvaldo. 1999. Neoliberalismo en Crisis. La Habana: Editorial de Ciencias Sociales.
__________. 2005. Neoliberalismo, ALCA y libre comercio. La Habana: Editorial de Ciencias Sociales.
__________. 2006. “El libre comercio: zorro libre entre gallinas libres,” in Libre Comercio y subdesarrollo. La Habana: Editorial de Ciencias Sociales.
Prieto Rozos, Alberto. 2009. Evolución de América Latina Contemporánea: De la Revolución Cubana a la actualidad. La Habana: Editorial de Ciencias Sociales.
Raffer, Kunibert. 1987. Unequal Exchange and the Evolution of the World System: Reconsidering the Impact of trade on North-South Relations. NY: St. Martin’s Press.
Regalado, Roberto. 2010. “Gobierno y poder en América Latina hoy,” Curso de actualización: América Latina: entre el cambio y la restauración conservadora, Centro de Investigaciones de Política Internacional, La Habana, Cuba, 22 de noviembre de 2010.
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, neoliberal, George H. W. Bush, Bill Clinton, FTAA