The Carnivorous and Vegetarian Lefts

Carlos Alberto Montaner
Opening Plenary Session
The Whitherspoon Institute
Princeton University, Dec. 6, 2007

The greatest paradox presented by the modern ideological debate in Latin America is its antiquity. It began 200 years ago. The dispute has few new factors. Mostly, it's variations on the same theme. In 1810, when the confrontation between Spain and its colonies began, the list of complaints wielded by the criollos [American-born Spaniards] included the absence of free international trade, the presence of protectionism, the administrative centralism imposed by the Bourbons in Madrid, an excessive and arbitrary fiscal pressure, and a type of state structure where the public powers depended fully on the Crown. The Crown made up the laws, appointed judges, exercised authority in unlimited fashion, and used its resources to enrich its favorite courtiers.

 As happened in the United States, the criollos rebelled against that form of relationship between Madrid and the colonies. The Crown and the royalists who supported it defended the mercantilist model of the old regime, while the independentists postulated the liberal and republican ideas in vogue at the time. For example, in Uruguay, José Gervasio Artigas used to carry with him a small copy of the United States Constitution of 1787. In Colombia, Antonio Nariño translated and published the Declaration of the Rights of Man and the Citizen issued by the French in 1789 -- and went to jail for doing so. Meanwhile, Simón Bolívar, without much success, tried to convince his admired Benjamin Constant to recognize Bolívar's condition as a liberal.

We are, then, looking at a curious change in roles and identities. If at the time the two major political sectors confronting each other had called themselves "right" and "left," the royalists would have been the reactionary right, and the independentists would have been known as the progressive left. Two centuries later, the appellations have changed and those who call themselves the progressive left are the protectionists, the enemies of international free trade and supporters of a state-run, centralized economy nourished through an intense fiscal pressure, controlled by the government, while those who hold the liberal ideas -- the market, property rights, commercial opening, primacy of the individual, limitation of authority, division of powers according to the republican tradition -- are called the conservative right. In other words, the reviled neoliberals.

The signs of identity

Naturally, there is no single left; there are several, and some of them are much closer to the liberal right than they're willing to admit. In a recent book, “The Idiot's Return,” -- which like a previous book titled “The Manual of the Perfect Latin American Idiot,” I co-wrote with Plinio Apuleyo Mendoza and Álvaro Vargas Llosa in the jocular vein we use for these controversial topics -- we classified the left into “vegetarian” and “carnivorous.”

 Roughly speaking, the vegetarian left is the one that moves within the framework of Western democracy, close to the European social-democratic model of today, while the carnivorous left races at the speed allowed by its twisted political reality toward the authoritarian collectivism inspired by Cuba. As Hugo Chávez put it, in a nautical metaphor: “We are sailing toward the Cuban sea of happiness.” Through the stormy Straits of Florida, no doubt, which Cubans (when they can) traverse northward in rafts that are not at all metaphoric.

The best way to understand the differences between the two lefts is to turn to the specific cases. The vast and very diverse family is apparently composed of Argentina, Brazil, Uruguay, Venezuela, Bolivia, Ecuador, Nicaragua and, of course, at the most radical extreme, Cuba, that relic of Soviet design that emerged from the Cold War. Chile is usually placed into the same bag because the socialists have been governing the country for the past two terms, in concert with the Christian democrats, but in reality Mrs. Bachelet -- like Lagos before her -- little resembles what people call “the Latin American left.”

In effect, what do their governments have in common? Basically, four aspects.

• First, the political discourse. From the paranoid point of view, always receptive to conspiratorial theories, comes a permanent attack on what leftists call neoliberalism. They attribute almost all the current economic ills to the privatizations of the 1990s and the recommendations of the International Monetary Fund and the World Bank encapsulated in the Washington Consensus, totally forgetting the awful situation in the continent prior to today.

• They also agree on massive aid. They recruit much of their political clientele with various forms of what they call “the social expenditure.” Those resources sometimes serve to feed the neediest -- which is justifiable -- but are also used to tame, bribe or utilize the most dangerous and aggressive sectors, as exemplified by the Argentine piqueteros [picketeers].

• In general, anti-Americanism, in varying degrees of virulence, is another common feature. As the original Sandinista anthem used to say, the Yankees are “the enemies of mankind.”

• The fourth element is the attitude against the system and the contempt for the traditional institutions and political parties. The leader of the new left is, generally speaking, an outsider.

A bit of history

How was this matrix of opinion created? It originates in a huge mistake related to the way in which wealth is created, but, before we reach that point, we should engage in a brief historical recap.

By the second half of the 1980s, it was totally obvious that the proposals made by CEPAL [the United Nations' Economic Commission for Latin America] -- which included the substitution of imports and the creation of protectionist states that were strongly interventionist, plan-oriented and often entrepreneurial -- had failed. Down that road, Latin America did not develop; it either stagnated, retreated or suffered sky-high indices of corruption and ferocious inflation, such as happened in Peru, Argentina, Ecuador, Bolivia and Nicaragua. Meanwhile, other countries, such as the Asian tigers, lifted off like rockets. That phenomenon was also observed in Pinochet's Chile, where the reform was very successful on the economic level and continuously generated growth rates close to 8 percent, at least in the final years of the dictatorship, although on the political plane the reform was a cruel experiment that ended in thousands of people dead, disappeared or tortured.

At that point in the 1980s, some politicians (usually from the social-democratic camp) began to reform the relationship between society and the state by introducing methods of aperture from the liberal prescription book. Oscar Arias in Costa Rica, César Gaviria in Colombia, Víctor Paz Estenssoro in Bolivia, Carlos Andrés Pérez in Venezuela (in his second term), Carlos Menem in Argentina, Sixto Durán in Ecuador and Carlos Salinas de Gortari in Mexico were good examples of that type of leader. In one way or another, they all were responding to a call for a return to economic orthodoxy and the defense of the market and individual responsibility, policies championed by Mrs. Thatcher in Britain and Ronald Reagan in the United States.

Significantly, a few years earlier, Friedrich Hayek (in 1974) and Milton Friedman (in 1976) had received the Nobel Prize for Economics. Simply put, that was the hour of classical liberalism, as the word is understood in Europe, a liberalism that returned triumphant to the collective political imagination after the partial failure of the Keynesian proposals. And so, that influence reached Latin America.

However, the results of the reformation were unsatisfactory in Latin America. Why? For two reasons. First, except in the case of Chile, the reforms were made grudgingly, without the prior consent of society, in a limited manner and with many contradictory elements. An example of the latter was the lack of control over public expenditure, such as happened in Menem's Argentina, where an exponential increase in public expenditure made it impossible to maintain parity between the peso and the dollar. Then came the financial meltdown, with the shameful confiscation of the citizens' savings and the jubilant yet irresponsible default in the public debt.

On the other hand, the process of privatization of state-owned enterprises was often very shady. In some cases there was illicit enrichment, and in almost all cases the new propietors, although they notably improved the services they offered, raised the fees in order to recover their investments, something that irritated a society that for decades had been accustomed to the opposite scheme -- services that were either awful or terribly insufficient but that were heavily subsidized.

The huge mistake

In addition, there was another factor that few people noticed: the reform introduced an element of efficiency in the handling of public finances but did not necessarily increase the existing wealth. What did the reform consist of? In essence, in ten recommendations packaged in the Washington Consensus by economist John Williamson. Some of the proposals were far from strictly liberal, such as concealing the lack of competition by manipulating the rates of exchange. Let us recall those 10 recommendations, in summarized form:

1. The establishment of fiscal discipline. Expenses had to be limited to the revenues or to a reasonable capacity for indebtedness but not beyond.

2. The control and reordering of public expenditures, so as to privilege health care, education and infrastructures, to the detriment of purely humanitarian aid, which is almost always nonproductive and patronage-driven.

3. Fiscal reform and simplification, so as to collect more revenue by eliminating exceptions and privileges.

4. The liberalization of interest rates.

5. The use of the type of exchange to sustain competitiveness.

6. The gradual decrease of tariff-based protectionism.

7. The stimulation of openings to other countries, so as to attract foreign investment.

8. The privatization of enterprises owned by the State.

9. Easier access to the market for national and international agents, so as to speed up commercial transactions and stimulate competition, to lower prices and improve the quality of goods and services.

10. The strengthening of property rights.

Doubtlessly, all that was important and helped create a more propitious climate for the generation of wealth, but it all belonged to the world of macroeconomics, the world of the notorious “adjustments,” while (as we know) mortals live in the world of microeconomics, where companies provide jobs, pay wages, save, make profits, invest and -- through luck and prolonged cycles -- grow ceaselessly, absorbing whatever fresh manual labor comes into the labor market.

In the countries that had leaped on the modernity and progress wagons, in addition to resorting to the liberal prescription book, government and civilian society had made a major effort to improve the entrepreneurial fabric by inviting and fostering the installation of international companies that would add a high value to the production of goods and services, encouraging domestic savings and attracting foreign money, or by variously strengthening the native entrepreneurs so they could develop strong sources of employment while generating products with enough quality and competitiveness to assume a presence in the international markets.

To the Koreans and the Taiwanese, it was obvious that they could not develop their countries just by exporting rice, something that cast doubt on the mythical agrarian reform as a permanent solution to the problems of poor peasants. The people in Singapore and Hong Kong knew that a substantial rise in the standard of living in their small territories depended on technology and science, and that required a close association with the great international capital. Dependence on cheap manual labor as a comparative advantage could serve them only temporarily, while they learned the methods of production of First World countries and saved and invested a large percentage of the revenue derived from that association. But the sequence of objectives was clear -- they had to associate with efficient producers, copy, innovate, improve and compete in both price and quality. That experience was not new in that part of the world: the Japanese had accomplished it after World War II and even earlier, after the Meiji Revolution in 1867.

In Southeast Asia, no sensible person in circles of power had any doubt: development and prosperity depended on the existence of a dense and diversified entrepreneurial fabric that was globalized and characterized by a high added value. That required high volumes of savings and investment, research, labor discipline, an end to the war of classes and Marxist superstitions, rigor, juridical security and a first-rate human capital formed in good universities and other educational institutions.

 The macroeconomic framework was important, yes, along with the existence of a rule of law that welcomed the creation of wealth, but only to the degree that these elements were facilitators and served as launching pads for what some economists called entrepreneurism or “entrepreneurial capitalism.” That's what failed in Latin America. People stressed some aspects of macroeconomics -- as if the whole problem involved accounting or management -- and ignored the rest of the equation, which explains the poor overall results shown by the region.

The resurgence of the lefts

It was at this point when the lefts, fueled by the widespread frustration, reemerged from the debacle of the collapse of the Berlin Wall and the disaster of the 1980s, the so-called “lost decade.” They revitalized the old interventionist tendencies that existed throughout almost the entire 20th Century, especially after the Mexican Constitution of 1917 -- in the aftermath of a bloody revolution legitimized as a struggle for the possession of land -- entrusted to the State the task of achieving the equitable development of society as a whole.

The first symptom of this return to the old days was the rise to power of Lieut. Col. Hugo Chávez early in 1999. He carried with him an anti-system discourse that was deeply hostile toward capitalism, that included antiquated collectivist ideas, and he did not conceal his decision to build a socialist Venezuela patterned very closely to the model forged in Cuba by his friend, Fidel Castro, 40 years earlier. Later in this period, Lula da Silva won the presidential election in Brazil in 2002, Néstor Kirchner in Argentina in 2003, and Tabaré Vázquez in Uruguay in 2004. Evo Morales assumed the presidency of Bolivia in January 2006. Exactly one year later, Daniel in Nicaragua and Rafael Correa in Ecuador would begin their presidential terms.

They all proclaimed they were leftists, but profound differences separated them. The most notable differences were between Chávez and the Southern Cone presidents, even though on a personal level they maintained close ties. After coming to power, Lula da Silva, who had founded a labor party with his tough revolutionary discourse, picked up the moderate line set down by his predecessor, Fernando Henrique Cardoso, a reformist who had taken the liberal prescription book of the Washington Consensus very seriously, limiting his leftist activism to providing food for the neediest and engaging in a kind of crusade against hunger.

In contrast, Néstor Kirchner began by again nationalizing some companies previously privatized by Carlos S. Menem and reprised the old Peronist passion for raising taxes and controlling the prices of certain basic products. However, he did not attempt to destroy the system of a market economy and had not the slightest vocation for being a continental figure. For his part, Uruguayan Tabaré Vázquez was able to control the more radical elements in his government and discovered that his best economic ally was the government of the United States, not his partners in the Mercosur.

Somehow, then, the vegetarian left installed itself in the Southern Cone. Its principal features were protectionism and statism, but it did not wish to demolish the rule of law or create an egalitarian, collectivist society. That intention seemed to be incarnated only by Cuba, Venezuela and Bolivia. Rafael Correa's Ecuador remains an enigma, while Daniel Ortega, whose political heart beats close to Havana, is the prisoner of a Parliament where Sandinism is a minority and of a society that does not wish to return to the grim panorama of the Cold War.

What will be the fate of this political trend? In the wake of Hugo Chávez's defeat in the Dec. 2 referendum that was intended to legitimize a Constitutional reform that would have accelerated the country's conversion to “21st-Century socialism” and brought together the Cuban and Venezuelan systems, the general opinion is that hyperactive leftism is an experiment on its road to oblivion. Heinz Dieterich, a German politologist living in Mexico and one of the trend's most vocal theoreticians and defenders, expressed his pessimism in Aporrea, one of the Web sites most widely read by the carnivorous left.

“President Chávez has suffered a strategic defeat over the Constitutional referendum,” Dieterich said, “which, along with the strategic defeat of Evo's government in Bolivia and the increasingly precarious situation in Bolivia, constitute an extremely grave panorama for the progressive forces of Latin America. It is possible that the governments of Hugo Chávez and Evo Morales will not survive the assaults of the reactionary forces in 2008 and that the Cuban model will become exhausted in 2009-2010, unless realistic measures are taken at once.”

What's puzzling, however, -- as puzzling as calling “progressive” the societies that least progress in the planet -- is not the fact that this left might disappear but the fact that it reappeared after the generalized failure of real socialism and that Latin America (perhaps with the exception of Chile) is unable to find the road to development, political stability and the conformity of society with its legal order, institutional design and economic model, as happened in countries like Spain or the former European satellites of the USSR.

And what will happen to the other left, the vegetarian left? Most likely, as it happened with socialism in India, the ruling classes will gradually abandon statist practices because of their failure and will reconcile with the market, economic freedoms and the way to organize society that is practiced by capitalist and democratic nations of the First World. Chile has done so already and there is no reason why all Latin American nations can't follow the same road.

Whenever we present our book “The Idiot's Return,” -- and as it used to happen whenever we presented our “Manual of the Perfect Latin American Idiot,” -- someone in the audience invariably asks us who do we call an idiot. The most convincing answer seems to be this: “An idiot is anyone who conducts the same experiment 20 times, in the hope that, at some moment, he will obtain a different result.” During all of the 20th Century, Latin America played on innumerable occasions with diverse variants of socialism, some times authoritarian, others democratic, always with the same result: poverty and relative backwardness. Let us hope that in the 21st Century we shall learn the lesson and stop tripping repeatedly over the same stone.

December 12, 2007

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