Silent Revolution: The rise of market economics in Latin America

ISBN 0-304-33455-3 (hbk) L40.00 ISBN 0-304-33456-1 (pbk) L12.99 Reviewed by Colin Stoneman

Medieval society was ruled by God. God, of course, was not elected, and he was not accountable. His policies, were, however, imposed on the populace through a hierarchy of priests, to whom alone they were revealed. To question these policies, let alone the beliefs behind them, was at worst dangerous and at best liable to marginalise any influence you might have.

As Susan George and Fabrizio Sabelli have shown in Faith and Credit (1994), the World Bank functions in the modern world in much the same way as the medieval Church. Along with the IMF it determines the conditions of life for most of the people in the world, yet no-one elected it or its personnel, and its doctrines of the free market are largely unquestioned and propagated in a quasireligious manner.

Duncan Green's excellent book shows how the new priesthood conquered Latin America, beginning with a graphic description of Juan Carlos Aguilar, a Bolivian `techo-yuppie' safe on the ninth floor of the World Bank building in La Paz, looking down on the non-believers demonstrating below, demanding food, work and education. For him, the demonstrators are relics of Bolivia's past, ignorant of the truths he has learned while doing his US-funded doctorate in Princeton or Cambridge, Mass, much as a medieval predecessor might have learned how to run England while taking orders at Oxford or Cambridge. Thanks to US beneficence there are Juan Carlos clones throughout Latin America, and one might add, Africa and much of Asia. All have an almost unquestioning faith in neoliberalism and the mystical power of the market to solve all human problems, much as their forebears had faith in the power of God. Should the contradiction between the stark facts of material reality and the supposed power of the market or the love of God ever raise doubts in the minds of some members of either priesthood, the rigours of being an intellectual heretic are reinforced by an immediate threat to privileged career prospects, although less often these days to life itself.

The 'silent revolution' which has placed such people in positions of influence throughout Latin America has taken place over the last two decades against a background of two oil-price hikes, the debt crisis, world depression, Reaganism and Thatcherism, and the fall of the Soviet Union. Duncan Green sees the success of neo-liberalism in Latin America in part as a consequence of the failure of the earlier strategy of importsubstituting industrialisation (ISI). His book gives short summaries of the antecedents of ISI and the reasons for its ultimate failure, before moving on to describe in an even-handed way the benefits of neo-liberalism, and in turn its failure, actual or impending. Perhaps the most valuable, certainly the most original part of the book, comes towards the end where he considers alternatives, including the `neo-structuralism' of CEPAL in Chile.

But reality is too complex to be contained in so short a summary: Green admits that ISI had many successes in its day, indeed laying the basis for the export-led strategies that have followed, which would have been impossible without it. But his main aim seems to be to prevent any nostalgia for earlier strategies-whether of ISI, central planning, state enterprise, self-reliance, or old-style socialism. The world has changed, partly through the (temporary) victory of neo-liberalism, and we must find a way forward, not a way back. I sympathise with this approach, but on purely academic grounds find his attack on ISI over-stated, and akin to attacks on planning or state intervention by neoliberals: `because planning has sometimes been bad, therefore planning is bad' illustrates the false logic behind the approach. Green does, however, towards the end of the book, briefly discuss the experience of the Asian newly industrialised countries (NICs), admitting that they too indulged in ISI, although they got it right, laying a secure base for export-oriented industrialisation (EOI). In the end, the rigorous conclusion is far from `ISI bad, EOI good' but is well summarised in a diagram quoted from Gereffi and Wyman (1990) which shows the NICs following primary ISI with primary EOI before embarking on secondary ISI and then secondary EOI, whereas Latin America swapped the second and third. Such relatively nuanced insights do not, however, impact on the completely un-nuanced attacks on ISI earlier in the book.

This, however, is a minor criticism, for Green's balanced analysis of the impact of neo-liberalism on Latin America in the areas of human and environmental costs, politics, industry and trade, will make this a valuable text for students seeking to understand many contemporary problems of development. I will be recommending it to my African students, in the hope that its lessons will help to reduce the likelihood of a similar intellectual dominance in future African 6lites. Of course, as Green says, the lessons from the NICs cannot simply be lifted into Latin America, not least because the world has changed since the NIC take-off, and Latin America in its turn has many differences from Africa. For instance Green emphasises the benefit to the poor that neo-liberalism brought through its successful attack on hyper-inflation, yet the more common experience in Africa has been of a rise in inflation following economic reform. Likewise, as few African countries had progressed as far as Latin America or Asia with ISI, economic reform has resulted in most cases in a fall in exports in the early stages of their supposed new export-oriented phases.

Finally, Green argues that the success or otherwise of neoliberalism must be judged in terms of success for whom? 'A minority of the population in each country, comprising the economic and social elite, has benefited from being drawn into the global economy through the structural adjustment process... .' He quotes Susan George: `Some critics make the mistake of proclaiming that development has failed. It hasn't. ... It sought to integrate the upper echelons ... of a given third world population into the international, Westernised, consuming classes and the global market economy. This it has accomplished brilliantly.'

In the end we are left with a clear understanding that a capital-led development process may well maximise efficiency and well-being, but only for those inside the market. But the familiar next step of asking `but what about distribution?' may be in the process of being replaced by `what about the majority excluded from the market altogether?' A people-led development will, at least in the medium run, reduce profitability, so the market has no mechanism to incorporate the people it does not need, just as it has no need to exploit poor ores when rich ones are still available. The 'underclass' is growing even inside the richest countries, may soon constitute two-thirds of the people of Latin America, and possibly the entire African continent. How long will neoliberalism be able to survive behind high-security fences?

Bibliography for "Silent Revolution: The rise of market economics in Latin America"

Stoneman, Colin "Silent Revolution: The rise of market economics in Latin America". Capital & Class. Summer