Friday, August 28, 2015

‘Buen vivir’ and the dilemmas of the left governments in Latin America - III

A new development model?

Let us return now to a theme that we left earlier in a very rudimentary form: the question of extractivism and neo-developmentalism. There are many writers who have adopted this critical perspective, and in view of the space restrictions confronting us, we will simply present in what follows a very schematic version of their principal arguments.

The author Atilio Boron with Hugo Chávez

According to this perspective, extractivism appears as the reintroduction, adapted to the new circumstances, of an old strategy of development based on the intensive exploitation of certain common goods, mainly in mining and agriculture. This process occurs in the context of the global reorganization of capitalism since the last two decades of the last century, in which the relaunching of the old international division of labour has led to a growing polarization between the developed and underdeveloped worlds, forcing those who are part of the latter to maximize their efforts in the production and export of commodities, and postponing the old industrializing projects to an uncertain future. This can be seen not only in the countries with a typical emphasis on agricultural and mineral production for export but also in the de-industrializing processes suffered by Argentina, Brazil and Mexico over the last thirty years. The outbreak of the present general crisis of capitalism has simply reinforced this pre-existing tendency, now justified by the pressing need to rely on favourable trade balances to neutralize the impact of the crisis, as it was previously in order to pay the foreign debt. In one of the most important documents of this theoretical and political tendency, Eduardo Gudynas explains that

“It is postulated that there exists a progressive neo-extractivism, which has differences, in some cases substantial ones, with practices in traditional extractivism practiced in other countries and formerly in currently progressive Latin American countries. While in certain cases the differences are substantial, this new extractivism maintains a style of development based on the appropriation of Nature. This new extractivism feeds a hardly diversified framework, and as a provider of primary materials, it is very dependent on international involvement. If indeed the state plays a more active role, and gives extractivism a greater legitimacy because it redistributes some of the surplus to the population, it still repeats the negative environmental and social impacts of the old extractivism. In this paper, the term extractivism is used in the broad sense to describe activities which remove great quantities of natural resources that are not then processed (or are done so in a limited fashion) and that leave a country as exports.”[1]

Gudynas argues that some of the undesirable effects of these policies are deforestation, forest fires, the fragmentation of natural environments, the loss of biodiversity, the contamination of soils and water, droughts, floods and other catastrophes erroneously labelled as “natural,” when in reality they are created by men or, more accurately, by economic systems.[2]

According to the theoreticians of this current, neo-extractivism is a plague that has also wreaked havoc among the left and progressive governments of the region. Hugo Chávez is intensifying petroleum exploration; Evo Morales is following suit in Bolivia with iron, lithium, oil, gas and mercury; Rafael Correa in Ecuador is going ahead with the exploitation of petroleum and promoting open-pit mining; the Frente Amplio government in Uruguay is endorsing a huge program for the exploitation of iron ore, investing more than it did in the Botnia pulp mill; Argentina is protecting open-pit mining, allowing the destruction of glaciers and encouraging greater soy production in its agriculture, while Brasilia is allowing the deforestation of the Amazon and promoting the construction of huge dams that will end up destroying the vital oxygen-producing lungs of planet Earth.

For these authors, the growth in extractivism and the drive to a neo-developmentalist strategy are stimulated by the need to stabilize or achieve a surplus in the trade balance, a fundamental statistic for highly vulnerable countries faced with — if not overtly dependent upon — the ups and downs of the world economy. But also contributing to this are the weak, ineffective or non-existent environmental controls; the need to attract foreign investments by relaxing labour and environmental regulations; the manipulation of governments that publicize the benefits of these policies but never quantify the immense costs of deforestation, pollution, and the degradation of arable lands, among other calamities. Furthermore, these losses do not enter the national accounts but end up in the balance sheets of the governments of the provinces or localities in which these activities are concentrated, far from the spotlights of the national media. And the immediate victims of these calamities tend to be the marginalized social sectors lacking in organization and with few possibilities of getting a hearing for their protests. A central aspect of this new extractivism — and the progressive governments of the region have fallen for it — is the use of a part of the rents generated by the exploitation of nature to finance ambitious social programs such as Brazil’s Bolsa Familia or the various social programs sponsored by the above-mentioned governments.[3]

According to the critics of neo-extractivism, the economic balance sheet is as disastrous as the ecological one: our countries are being turned into “exporters of nature” as commodities with little or no value added. The companies that produce them enjoy huge tax benefits and extremely generous subsidies that are unattainable, for example, by nationally-based companies of small or medium sized enterprises. In Argentina, under the legal umbrella offered by the Argentine-Chilean Mining Treaty (signed in 1997 by two of the biggest champions of Latin American neoliberalism, Eduardo Frei of Chile and Carlos Saúl Menem of Argentina), the government of Néstor Kirchner maintained

“the most favorable mining regulations from previous years including royalties that barely reach 3% and guarantees of tax stability for 30 years along with very generous deductions (up to 100% of the investment, including in infrastructures and marketing costs even if these are incurred in other countries), exemptions from tariffs and customs duties, and other advantageous guarantees, and free transfer of profits…. The companies themselves compute the value of the mineral extracted, and the state does not exercise adequate inspection (a situation that has been denounced in Brazil), and accordingly these corporations end up making payments that are almost voluntary. Gutman cites as an example the operations of Barrick Gold in the Veladero mine (province of San Juan, Argentina), where the estimated value of the mineral extracted and processed was $12 billion while the royalties received by the provincial government amounted to only $70 million, to be paid over 20 years.”[4]

It is no accident, therefore, that these multinationals are becoming exporters of fabulous profits which, in other conditions, would remain in our countries. In Chile, “the profits sent outside the country by foreign businesses passed from $4,438,000,000 at the beginning of Ricardo Lagos’s government to more than 13 billion dollars at the end of his term, and from there it continued to grow under Michelle Bachelet to more than 25 billion dollars.”[5]

However, it is worth noting that in general the most convincing evidence of the failings of neo-extractivism occurs in countries characterized by the very moderate “center-left” governments like Argentina, Brazil, Uruguay and Chile prior to Sebastián Piñera’s victory. These are governments which, unlike Ecuador, Bolivia and Venezuela, have not manifested the least intention to move toward a post-capitalist horizon. While these governments think the solution to the injustices and anomalies of today’s world lies within the limits fixed by capitalist society, Quito, Caracas and La Paz consider that this is impossible within capitalism and are trying to escape the “iron yoke” of the system, advancing toward a socialism of a new type. For the critics of these governments the nationalization of petroleum resources as carried out by the administrations of Hugo Chávez and Evo Morales is apparently of little or no significance.

And in the case of Ecuador they underestimate the importance of the Yasuní-ITT initiative, a very clear example of an anti-extractivist policy despite the incomprehension or wretchedness of the leadership of the developed countries. That deposit contains one fifth of Ecuador’s known oil reserves. A government that corresponded to the characteristics listed by the critics of neo-extractivism would not have hesitated one minute to favour its exploitation — but this has not happened.[6] This gesture by the government of Ecuador, which is still without a response, is not only a sacrifice by this country, honouring the mandate of the 2008 constitution and the precepts of sumak kawsay, but is an important contribution to the fight against pollution, because maintaining this petroleum without exploiting it means avoiding emitting into the atmosphere some 407 million tons of carbon dioxide. We should also note that, consistent with this, the Ecuadorian government has recovered on behalf of the country the exploitation that was previously in the hands of transnational companies and will thereby receive in return some $830 million in receipts.

Something similar could be said in relation to the government of Evo Morales, sharply criticized for resuming the development of the large iron reserves of El Mutún. The critics say it should have renounced the exploitation of this resource, and certainly not have transferred it from a Brazilian transnational to an Indian one, “even awarding a variety of advantages, including an energy subsidy.”[7] What are these critics arguing? That the governments of Bolivia and Ecuador should wait for manna to fall from heaven, bringing them all the necessary resources for the construction of a good society, based on the orientations of “buen vivir”? Where are they to obtain the money required for any program of social reform? The critics rent their garments when they quote that expression of President Rafael Correa: “We can’t sit like beggars on a sack of gold.” The problem is that none of them say where the resources are to come from to finance the construction of a new society, as if this could be undertaken at zero cost, and this detracts from the seriousness of their arguments.

However, since development and developmentalism have become bad words, what is it that these critics are proposing? Some other development? No. What they want is not “alternative development,” but something much broader and at the same time more diffuse: an “alternative to development,” going beyond the rationality established by Modernity with respect to progress, the exploitation of nature and the relations between people. To emerge from the straitjacket of progress conceived in traditional terms presupposes a progressive dematerialization of economies, that is, promoting an economic functioning in which fewer quantities of material and energy are used; promoting new forms of sociability, more generous, altruistic, and solidarity; and placing less emphasis on economic “growth” and much more on the quality of life. But all of this presupposes discussing how the passage to the new strategy as an alternative to development will occur. The theoreticians of this model say it will occur not through a revolutionary rupture but through transitions that gradually come to impose this new common feeling as an alternative to progress and development.[8] Few could disagree with such noble propositions. The question, however, is how to advance in these peaceful transitions in societies like the present capitalism, dominated completely by the profit motive and “armoured,” to use the Gramscian expression, by a coercive and media apparatus that is erected as a formidable obstacle to any attempt at change?[9]

Consequently, there are various problems associated with the critics of “development.” While the objective is to generate an alternative to development, one nevertheless gets the impression that those who counsel this are trapped in the two false alternatives identified in the “Plan Nacional para el Buen Vivir”: (a) conservation vs. satisfaction of needs, and (b) efficiency vs. distribution. If the environment is to be preserved, the needs of the population cannot be met; and if an efficient economic system is established it will necessarily become a brake on any redistributionist policy.[10]

But in addition to these there are other problems. An abstract criticism of development leaves unexplained what in concrete terms would be the meaning of the “alternative to development.” Whatever that alternative, is it reasonable to think of it independently of the serious challenges posed by economic growth under both capitalism and socialism? Or is the “alternative to development” simply another name for a policy of “zero growth” that would definitively sentence the countries of the global south to backwardness and poverty? Is it possible in those conditions to establish a project of “buen vivir”? Inspired by the confused and mistaken (when not just confused) thoughts of Amartya Sen concerning economic growth, one of the proponents of this policy, Alberto Acosta, has written recently that “this could include the retrieval of those proposals for degrowth or stationary growth of Enrique Leff, Serge Latouche and others. Particularly instructive are the comments of an early advocate of ‘zero’ growth like John Stuart Mill.”[11]

However, what would be the medium-term consequences of “zero growth” in the economy if a country like Ecuador were to register 2% annual growth in its population? Perhaps this is the kind of question that would be asked by a “pastelero” [pastry cook], to use an expression that Acosta reserves for his opponents, but you can be sure that for the social movements, popular forces and progressive governments the issue is no piece of cake. As many statistical projections indicate, if Ecuador’s annual increase in population were to be maintained at 2.1% the country’s population would double in 25 years to about 28 million inhabitants.

From the standpoint of distribution of wealth, that would of course pose two possibilities: (a) that everyone without exception would accept being 50% poorer, because they would have the same quantity of goods to distribute among themselves… or, more probably, (b) that the rich would more effectively defend their wealth and ensure that the poor were impoverished by more than 50%.... And that is with a moderate demographic growth rate over a period of 25 years. And if we were to project this experiment over a period of 50 years, we would arrive at a scenario in which the fight over distribution of resources would evoke the brutal ferocity of the Hobbesian state of nature or the sinister images of Blade Runner. Consequently, and at the risk of shortening a discussion that we cannot sidestep but that is not our sole concern to develop here, the “zero growth” proposal of these theoreticians will only be rational if at the same time they propose zero population growth, which would mean introducing draconian birth control measures that not even China, with its omnipotent state, could guarantee. Or, if it is admitted that economic growth must be equal to demographic growth, another set of problems arises.

Since this “zero population growth” is completely unviable, in practical terms, the theoreticians of the “alternative to development” have no choice but to confront the difficult problem of the distribution of a stock of goods that remains unaltered. Albert Acosta poses this in the following terms:

“The substantive reduction in poverty and inequality, the achievement of increasing degrees of freedom and the operation of citizens’ rights means, therefore, a redistribution in favour of the poor and marginalized, to the detriment of the excessive concentration of wealth and power in a few hands. An option that does not mean favouring the search for growing levels of opulence, which would then provoke redistribution. On the contrary, it is necessary to eradicate poverty and opulence, since the latter is only explained by the existence of massive poverty.”[12]

Acosta cites in support of his reasoning an eloquent passage from The Wealth of Nations, by Adam Smith. However, to bring about this apparently innocent and painless redistribution of wealth requires something that is not insinuated, even marginally, in his text, nor does it appear in the ample theoretical production of those who share his point of view: nothing less than a socialist revolution and the destruction of the bourgeois state, matters avoided by the critics of extractivism. The formidable coalition of the imperial bourgeoisie with the local ruling classes cannot be defeated with anything less. Given that the distinct variants of bourgeois reformism — including its most radical version, Keynesianism — were unable to fully implement redistributive policies and resolve the problem of poverty, including in the developed capitalist countries, the sole alternative that appears on the horizon is an anticapitalist revolution. But that is something that transcends the limits of the theoretical model of the critics of neoextractivism. Sidestepping this knotty question, their arguments come down to a rhetoric that is attractive but devoid of real capacity for social transformation.

The UN “Human Development Report” reveals that Bolivia, for example, after centuries of oppression and exploitation aggravated in recent decades by neoliberal policies, is left with 14% of its population without secure access to potable water, 22% without electricity, and that the rate of infant mortality is 46 per one thousand live births. For Ecuador the figures are 6% without access to potable water, 8% without electricity, and an infant mortality of 21 per one thousand live births.[13] What would the “zero growth” advocates do to bring those statistics closer to those of countries like Cuba, Sweden or Norway, for example, without promoting economic growth? This mysterious “alternative to development” seems to work the miracle of multiplying electrical energy sources and potable water pipelines, eliminating sewage, building hospitals and increasing the number of doctors and nurses to meet the health needs of the population without the economy growing. Not to mention that precisely because of poverty in countries like Bolivia and Ecuador a significant proportion of their population have been forced to emigrate; ideally, they should be in a position to return to their countries. Notwithstanding the ample bibliographies of those critics, answers to questions like this go unanswered.

[1] Eduardo Gudynas, “Ten Urgent Theses about Extractivism in Relation to Current South American Progressivism,” [The cited English translation is a truncated version of the original text. – RF] And he has put the same argument in the following terms: “If you are so progressive why do you destroy nature?” [“Si eres tan progresista ¿Por qué Destruyes la Naturaleza? Neoextractivismo, Izquierda y Alternativas.”] Ecuador Debate 79: 61-82, 2010.

[2] A pioneering work in analyzing the “unnatural” character of so-called “national catastrophes” is Nature pleads not guilty, by Rolando V. García, Joseph Smagorinsky and Michael Ellman (Oxford-New York; Pergamon Press, 1981).

[3] Eduard Gudynas, “Ten Urgent Theses…,” op. cit., pp. 209 et seq.

[4] Gudynas refers to the article by N. Gutman, “La conquista del Lejano Oeste,” in Le Monde Diplomatique, El Dipló (Buenos Aires), May 2007, 12-14. It should be explained that under the Argentine legislation only the provincial state is empowered to impose royalties on mining companies.

[5] Eduardo Gudynas, “Diez tesis urgentes…,” op. cit., pp. 199-200.

[6] [In fact, since this was written, Correa has announced that drilling for petroleum will be carried out in the Yasuní-ITT park owing to the poor international response to his offer of a perpetual suspension of oil extraction in part of the park in return for payments of $3.6 billion from the international community (half of what Ecuador would have realized in revenue from exploiting the resources at 2007 prices).– RF]

[7] Gudynas, op. cit. p. 8.

[8] “Caminos para las transiciones post-extractivistas,” by Eduardo Gudynas, in Alejandra Alayza and Eduardo Gudynas (eds.), Transiones. Postextractivismo y alternativas al extractivismo en el Perú (Lima: RedGE/CEPES, 2011: 193.

[9] Concerning Gramsci, it would be advisable to read a passage in his Prison Notebooks in which he makes a distinction between “progress” and “becoming.” He notes, among other things, that “the idea of progress implicitly suggests the possibility of a quantitative and qualitative measurement: more is better.” (Mexico: Era, 1986), vol. 4: 213.

[10] See Plan Nacional de Desarrollo, Republic of Ecuador, 2009.

[11] See his “Sólo imaginando otros mundos, se cambiará éste. Reflexiones sobre el Buen Vivir” in Revista Sustentabilidades, No. 2, 2010. [This article is addressed to the question (as Acosta formulates it) “si será posible y realista intentar un desarrollo diferente dentro del capitalismo” — that is, whether it is possible and realistic to attempt a different development within capitalism. – RF]

[12] Acosta, op. cit., p. 204.

[13] See “Human Development Report” of the United Nations Development Program, UNDP (New York, 2010). The corresponding data for 2008 are in Tables 7, 14 and 16 of the Report.