INTRODUCTION
It is argued that the first neoliberal experiment was practiced in Chile, after the coup led by
Augusto Pinochet in 1973: after that, Latin America has been an open field for many neoliberal
attempts in the '80 and in the 90's dictated by international institutions such as the IMF. This has
been due mainly to public debt problems, given the dependency of these countries on foreign
capital (FDIC, 1997).
In this work, we focus in particular on the Bolivian case. Neoliberal policies here have been applied
under the Paz Estensorro and Sanchez de Lozada governments to tackle inflation and public debt
problems (Morales and Sachs, 1989; Sachs, 1997 and 2005) and were vigorously opposed by many
social movements as poverty and inequality were rising. This situation reached its climax in the
first 2000s, with the disputes on natural resources such as water and gas (Webber, 2011) and
encountered a turning point with the election, in 2005, of the first President with indigenous
origins: the former coca grower and unionist Evo Morales.
Morales and his party, Movement Towards Socialism (Movimiento al Socialismo, MAS), which he
leads to this day, declared the end of the neoliberal era and started what some consider is a deep
socioeconomic change in the country (Garcìa Linera, 2011; Fuentes, 2012), with strong
repercussions in external relations (particularly with the USA), and others just a continuation of
neoliberal policies with just some adjustments towards more sovereignty (Webber, 2016; Petras,
2013).
The question to which we will try to provide an answer is the following: is Bolivia exiting from
neoliberalism?
After a presentation of what neoliberalism is and what has signified in Latin America, we will
proceed with an historical account for Bolivia: its pre-neoliberal period, its neoliberal era and
finally the Morales governments and its policies. After all this, we will assess whether Morales'
Bolivia represents or not one example of post-neoliberalism, basing ourselves on the different
views existing on this point.
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CHAPTER 1: NEOLIBERALISM AND LATIN AMERICA
1.1 The origins of the term neoliberalism
It's not easy to determine the precise origin of the term neoliberalism. Boas and Gans-Morse
(2009) believe it can be found in Burns (1930), reviewing a book on competition by "a member of
the neoliberal school of Munich". Others such as Mirowski and Van Horn (2009) believe that the
term has been coined at the Colloque Walter Lippman, a meeting composed mainly by Austrian
neoliberals (such as Friedrich Von Hayek and Ludwig von Mises) and German ordoliberals (such as
Wilhelm Ropke and Alexander Rustow) which had the aim of renewing classical liberalism with
new insights.
What is particularly interesting about the work of Boas and Gans-Morse (2009) is the recognition
of the change that the term neoliberalism had in the second half of the 20th century from its
original meaning. While in the first half of the century for neoliberalism it meant a precise way in
which free market should be constructed and regulated, in the second half the term acquired only
a negative connotation, to the point that defenders of free market stopped using the term. The
cause of this change, according to Boas and Gans-Morse, has to be found in the dictatorial
introductions of neoliberal reforms in Chile and in the social struggles that followed the further
applications of neoliberal policies in Latin America during the 1980s and 1990s, out of which
Bolivia represents a remarkable example; scholars and politicians who disapproved these reforms
started to use the term pejoratively.
Accepting Boas and Gans-Morse's challenge to let "neoliberalism" be an analytical rather than a
pejorative term, using the work of Foucault (2005) we will now provide a definition of
neoliberalism as intended in its original form: for the rest of this work, we will use the term in
accordance to the description provided in the following paragraph.
1.2 The encounter between German ordoliberalism and American neoliberalism:
The Mont Pelerin Society
Michel Foucault's Birth of Biopolitics (2005) offers a deep epistemological analysis of neoliberalism
as originally intended.
Following his work, we can state that what characterizes German ordoliberalism and American
neoliberalism in respect to classical liberalism is that, while in the latter the problem was to limit
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government interventions given market supremacy, in the first two the point is to construct the
conditions in which free market and free competition can function properly, without the
distortions of communism and Keynesianism, which in the ultimate case, they argue, with their
excessive pretensions to regulate society, would bring to Nazism and Fascism. Thus, the difference
was that while the classical liberal motto was "laissez-faire", so that the market is a sort of natural
mechanism not to be disturbed by the State, in neoliberal practice the State is ‘performative’, in
Foucauldian terms, because it is actively involved in constructing the free market; the instrument
to build it is the rule of law.
American neoliberalism added to this the project to include in the economic analysis aspects
previously in the domain of other sciences: its concept of human capital is, to Foucault, an attempt
to conceive the individual worker as having full self-responsibility on his/her life to sell his/her
abilities to the market; more in general, any humane choice is analyzed in purely economic terms,
which constituted a novelty in the sciences, even in the economic field.
In neoliberal doctrine, the tendency of the market to produce monopolies is not denied, but while
Marxian analysis identified the centralization of capital as inherently part of capitalist competition,
for neoliberals blame should be attributed to the privilege conceded by the State to some
corporations, families, individuals; so now the role of the State has to be changed and directed to
the aim of establishing fair competition that has to be constantly monitored, and existing
monopolies have to be removed. This is the way in which the State and the rule of law have to
intervene in the market: but economic interventions per se, such as public investments or
regulations on labor should be restricted to the minimum possible to let competition work fairly
and wages set by firms in accordance with productivity and not to legal binds; antitrust policies
against monopolies shouldn't be in charge of the government but of a politically independent civil
authority
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; price stability should be reached only through manipulation of the interest rate by an
independent central bank and not by setting it through specific regulations; production of goods
and welfare systems should be fully privatized. Policies on full employment and wealth
redistribution, which are socialist objectives, are not part of the neoliberal doctrine; moreover,
inequality is seen as a natural and positive outcome of the economic process which will foster
individual entrepreneurship, and shouldn't be addressed by economic policy, except for extreme
cases when people can't provide by themselves basic living standard.
The key centre of intellectual exchange between these schools of new liberalism has been the
Mont Pelerin Society (MPS), born under the direction of Friedrich Hayek in which key figures of
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American neoliberals had a less severe attitude towards antitrust policies; they believed that there was no too much
need of expensive courts in charge of preventing and dissolve monopolies apart from a few cases, because most
monopolies would dissolve by themselves thanks to the laws of economics that would let them become
unsustainable. For many of them, this also implied a departure from the rule of law towards a rule of reason when
dealing with monopolies (Van Horn, 2009).
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German ordoliberalism and American neoliberalism, such as Milton Friedman, Wilhelm Ropke,
Gary Becker and Alexander Rustow participated. A very strong partnership between all members,
prominent scholars, intellectuals and professionals coming from many disciplines (economists,
journalists, philosophers and so on) was established in order to diffuse neoliberal ideas: an
organization very well planned, in which one of the fundamental instruments to diffuse neoliberal
knowledge and ideas became the think-tank, such as the Heritage Foundation, the Atlas Economic
Research Foundation and the Institute of Economic Affairs, and which ended up changing the
leading views in the academic and political fields (Harvey, 2005; Plewhe, 2009a). This organization
was an evolution of both Colloque Walter Lippmann and Chicago School led by neoliberal
economists that had been born in these years: in both, Friedrich Hayek had a main role (Mirowski
and Van Horn, 2009).
As Hopenhayn (1993) argued, neoliberalism also succeeded through using the discourse of the
philosophical current of postmodernism
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, which claimed the failure of the "great narratives" about
universal emancipation such as Christianity, classic liberalism and socialism, and was used to
legitimate neoliberal practices: so that neoliberals in their discourses substitute maximization of
profits with desire; conflict with play; private appropriation of economic surpluses with personal
creativity; strategies of transnational corporations with global communication and interaction. In
general, the substitution of the ethical concern with development with an aesthetic fascination
with chaos. According to Hopenhayn, this operation has been particularly successful in Latin
America
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, though he didn't consider neoliberalism as a fatal consequence of postmodernism and
saw social movements as a possible alternative to challenge neoliberalism with a different view on
modernity
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.
1.3 Public debt crises and neoliberal restructuring in Latin America
Developmental economics for neoliberals was a totally unexplored field, having been dominated
by socialist theories, which included a state-led economic growth based on import substitution
industrialization (ISI). Starting from a colonialist view according to which not much could be done
for developing countries, in a series of meetings the MPS developed a series of suggestions based
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Current to which the same Foucault has been linked to.
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For a discussion on the debate about postmodernism in Latin America, see also Garcia-Moreno (1995), where one
can understand how the relationship between the continent and the cultural phenomenon is complex: for instance,
some scholars think that it's uneasy to apply postmodernism thought in a continent where the modern has not fully
developed itself as in Europe and debate on how much such an attempt suffers of Eurocentrism; others looks at
postmodernism as an opportunity to re-read Latin American reality.
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As we shall see in Chapter 2 and 3, this prediction on social movements proved correct , particularly for Bolivia.
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on their general free-market views oriented to an export-led growth based on competitive
advantages (Plehwe, 2009b). Eventually, the views of the ONU, which was previously influenced by
Raul Prebisch's structuralism and (ISI), which prescribed the involvement of the State in an effort
of industrialize developing countries and improving domestic market, moved towards neoliberal
policies as described above thanks to the lobbying of neoliberals and the worsening developments
of world economy which suggested a new approach in policies (Bair, 2009).
The crucial place for the diffusion of this approach to the government of economics in Latin
America has been Chile. Starting from the 1950s, the country has been targeted by the US aid
program Point Four, which involved technical assistance and economic aid to underdeveloped
country by a special scheme called Project Chile, through which many scholarships were granted
to Chilean students to study in the US, including at Chicago Economics Department. This is how
neoliberal ideas started circulating in the country (Fischer, 2009; Neubauer, 2012).
Boas and Gans-Morse (2008, pp.150-152) claim that the first publications of ordo- and neoliberal
ideas in Latin America were the ones by Ropke (1960) and Chirinos Soto (1964) in the Chilean
economic review PEC, and that then others followed; Fischer (2009) accounts for the neoliberal
think-tanks which included two MPS members founded shortly after those publications and
operating under Allende's government. So we can see that when Salvador Allende's socialist
government was overthrown by the military junta led by Augusto Pinochet in 1973, the
intellectual road for the application of neoliberal policies which the junta applied had already been
opened earlier
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.
The crucial moment in which neoliberalism had the chance to massively invade the continent was
when a series of public debt crises blew up in the 80s. The crises happened in many developing
countries, 16 of which were Latin American, including the 4 bigger economies (Mexico, Argentina,
Brazil, Venezuela). It all started in Mexico, when its finance minister declared default to the IMF on
the 80$ million due to the institution. All these countries were relying on a very heavy borrowing,
particularly from the US. Many observers advised that U.S. banks were going to face troubles
regarding the reliance of these loans; nevertheless, banks continued lending money to less
developed countries. The strategy to address the problem has relied partly on debt restructuring
and partly on the application of neoliberal policies, such as trade liberalization, privatization,
deregulation and tax reform, suggested by the IMF. Then, with the Brady Plan, there was even
debt relief, conditioned to the appliance of structural adjustments (FDIC, 1997).
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It's interesting to note that Hayek, while being notoriously against fascist and communist dictatorships because of his
free market preferences, approved the Pinochet junta. In an interview reported in Fischer (2009), he made a
distinction between Pinochet’s authoritarianism, a dictatorship which was restricting its interventions in the market
and making a “economic miracle” out of Chile, and Allende’s totalitarianism, which, according to Hayek, even if
democratically elected had the pretension to control the economy. According to Fischer, no concern has been publicly
expressed by Hayek over the lack of democracy under Pinochet.
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