Friday, April 27, 2012

Neo-liberalism to neo-extractivism

Dani Rodrik in Ideas over Interests:

"The most widely held theory of politics is also the simplest: the powerful get what they want. Financial regulation is driven by the interests of banks, health policy by the interests of insurance companies, and tax policy by the interests of the rich. Those who can influence government the most – through their control of resources, information, access, or sheer threat of violence – eventually get their way.

It’s the same globally. Foreign policy is determined, it is said, first and foremost by national interests – not affinities with other nations or concern for the global community. International agreements are impossible unless they are aligned with the interests of the United States and, increasingly, other rising major powers. In authoritarian regimes, policies are the direct expression of the interests of the ruler and his cronies.

It is a compelling narrative, one with which we can readily explain how politics so often generates perverse outcomes. Whether in democracies, dictatorships, or in the international arena, those outcomes reflect the ability of narrow, special interests to achieve results that harm the majority."

Dani Rodrik finds this in complete and misleading and suggests that
"It was economists and their ideas that made it respectable for policymakers and regulators to believe that what is good for Wall Street is good for Main Street.
Economists love theories that place organized special interests at the root of all political evil. In the real world, they cannot wriggle so easily out of responsibility for the bad ideas that they have so often spawned. With influence must come accountability."

There is a discussion of this article in Economist's View with some disagreement on the role of economists. There are countries in Latin America where people's movements are not that influenced by ecoomists and governments have been brought down by these movements several times and sometimes constitutions reframed to reflect their will; see for example the case of Ecuador in Correa, Indigenous Movements, and the Writing of a New Constitution in Ecuador" by Marc Becker and more fully discussed in his book Pachakutik: Indigenous Movements and Electoral Politics in Ecuador. But this seems to be leading from neo-liberalism to 'neo-extractivism" Latin America: On the Eve of Neo-Extractivism?:

"Neoliberalism failed to deliver healthy economic change and a series of crises allowed for a dramatic political changes. First came Venezuela, where Hugo Chávez won the presidential elections in 1999. This was followed by the electoral victories of Néstor Kirchner and Lula in 2003, Evo Morales in Bolivia (2006) and Rafael Correa in Ecuador (2007). It is important to remember they were all voted into power through free elections.

Control over natural resources became a matter of high priority because they were the source of fiscal revenues. Although regaining control over natural resources was frequently presented as part of a nationalistic project, it was more the pragmatic response to a situation in which the exploitation of natural resource projects provided both a way to close the currency gap and to supply badly needed fiscal resources. It is not surprising that these new governments engaged in promoting what soon became known as neo-extractivism.

The thrust towards extractivism is marked by important contradictions. Following the wave of privatizations and deregulation of the mining sectors under neoliberalism, the new governments did not proceed to recover control through abrupt nationalizations. In most cases they renegotiated the terms of contracts and concessions with the multinational firms in order to raise fiscal revenues. This adaptive strategy maintained marketing channels and avoided a direct clash with the home countries of these companies.

Nationalist rhetoric notwithstanding, neo-extractivism has not changed the particular insertion of these countries in the global economy."

More in the above article by Alejandro Nadal. Thus there seems to be some evidence for the compelling narrative described by Dani Rodrik.

P.S. David Brin points a way out Space Resources: Re-igniting a can-do spirit of ambition .

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