Back-tracking on electoral promises, rule by decrees, state of siege, suspension of civil rights, decline of political parties, corporate funding of expensive electoral campaigns, and media build-up of candidates as ‘saviours’ are the problems faced by an electorate that is reeling under the harsh austerity measures.
The success of structural adjustment depends on how much power the state has over its civil society. In most countries, market-oriented restructuring has allowed an institutionalised interfacing between the government and the corporate sector to facilitate adjustment of the domestic economy and its integration with the global market forces.
An interface between state and popular classes however is not taking place, notwithstanding the formal democratic character of regimes. This has serious repercussions for the survival of democracy and the society at large.
While the state is pushing for market reforms, markets by themselves remain indifferent to social needs. The frequent eruption of economic crises has consequences that reverberate in the social and economic spheres, the very legitimacy of the state is at stake, and a hard-earned space for crucial social compromise is being jeopardised.
Economic liberalisation is not able to integrate 30 to 40 per cent of the regional workforce; neither it is in the nature of the market ethics. At the same time, however, popular expectations cannot wait the estimated 15-20 years of adjustment for some distributive policies to take effect.
This speaks of the limitations, even of the well-intentioned policies. That this does not augur well either for democracy or for economic liberalism is evident from the growing political apathy of the electorate and the predatory nature of the market operations.
As societies are getting unarticulated, integrated economies have also become more sensitive to the cycles in the industrialised countries. Not inexplicably, income disparities have only sharpened during periods of financial crises; for instance, 1994-95 in Mexico, 1997-98 in Brazil, and 2001-02 in Argentina. For the period 1945-1980, regional economic growth had averaged 5.5 percent.
If this is taken as a benchmark, the 3.2 percent average annual growth during the 1990s does not speak highly of the efficacy of market economies, or justify the high cost Latin America is paying in terms of social well-being and democratic freedom.
After the modest economic recovery between 1997 and 2000, regional GDP has grown only by about two percent in 2001; and with global economic recession since 2001, export volumes have fallen and terms of trade have deteriorated for all, especially the commodity-exporting countries.
At the beginning of 2002, Latin America was facing its highest unemployment rates in two decades, its third recession in the past six years and a near extinction of its manufacturing sector. IMF packages are no more able to ‘bail-out’ the liquidity-scarce, indebted, and recession-prone economies.
Financial liberalisation and capital markets have allowed the region to attract foreign investment and expand its capacity for financing investment projects but, at the same time, they have facilitated the spread of financial crises originating within or outside of Latin America. Financial crises have become more frequent, more intense and more cyclical.
Liberalised investment regimes and capital markets have attracted sizeable speculative capital. Financial crises are affecting domestic interest rates, expectation for devaluation or revaluation of the exchange rate, inflationary pressures, and expenditures.
The liberalised inflow and outflow of capital has encouraged only further indebtedness, more speculative and less productive economic activities, liquidation of smaller firms, superfluous consumption, unemployment and precarious employment, soaring levels of poverty, low savings, and flight of capital.
The state of crisis has become permanent in the region; for, neo-liberalism has opened doors for the venality and aggrandisement. Argentina and Peru are an example of this; their former presidents are sought for corruption and embezzlement. Two more aspects are noteworthy here: first, globalisation of economy is producing in a perverse sense globalisation of workforce too.
Millions of migrants, increasingly illegal and drawn from hitherto unaffected communities such as the indigenous from as far as southern Mexico and Guatemala, are drawn towards the US.
‘Maquilisation’ of hundreds of thousands of workers who are deprived of standard labour rig jets, sucking of informal sector into a restructured globalised system of production through ‘sub-contracting’, feminisation of labour force, etc are aspects of neo-liberal economies of Latin America.
To this should be added the dissolution of traditional productive systems and social relations. The result is the movement of a large, floating population across national and occupational boundaries. To the ‘structural marginalisation’ should be added the ‘coerced marginalisation’ that liberalisation and democratisation together are effecting in Latin America.
Secondly, large populations have already been pushed below the threshold, which is necessary for any meaningful participation in the democratic process. Admittedly, democratisation is producing ‘low intensity citizenship’ where values of negotiation, consensus and pluralism, respect for the institutions of governance, and rule of law cannot be sustained given the socio-economic situation.
Democratic theorists and neo-liberals do admit that people be allowed not to fall below a certain minimum level of socio-economic well-being where their participation in the democratic process becomes impossible or meaningless. But the market-based economic policies are perforce leaving 40 per cent or so, of the regional population far and behind.
Electoral democracy is not producing the kind of demands and pressures expected in a democratic polity. The successive bouts of economic failure have produced what O’Donnell has described as the ‘Prisoner’s Dilemma’. Every round of economic failures means further undercutting of state capacities and promotion of narrow private interests at the cost of rest of the society.
As state capacity and structures are getting unarticulated, there is a corresponding rise in the influence and power of the new class of entrepreneurs. This new upper class is increasingly autonomous of the state and its social prestige and power have also grown in the wake of domestic economic restructuring and integration with the global market.
The corporate business is no longer seen only as a power figure but also as a symbol of modernity. “He/ She and the profit motive the market, competition, and possessive individualism has acquired great legitimacy in Latin American society”.