Hannah Derwey

Professor Rodriguez

Topic Essay 3

Neoliberal restructuring spread across the Latin American region as a direct consequence
of hyperinflation and the debt crisis, as policy makers needed to find ways to rebuild their
economies by cutting government spending and cooperating with the terms of the International
Financial Institutions in order to receive debt relief. Neoliberalism and its objective of producing
more competitive states meant that government funded welfare programs came under criticism
for creating a “fiscal burden and for offering ‘wrong’ incentives to avoid social obligations and
depend on benefits'' (Riggirozzi, P. 510). Policy changes to reduce spending on welfare programs
and privitize social services through austerity measures led to a regional poverty crisis, a
multitude of devastating social impacts, and increased debt as many Latin American countries
became dependent on the IMF to bail them out of the economic crisis in exchange for
cooperation in various structural adjustment programs. This crisis prompted the ‘post-
neoliberalism project,’ which aimed to reform the government to prioritize the poorest and
ensure that basic needs were being met. However, despite a wide range of “cash transfers,
subsidies and the introduction of other social policies,” the ‘post-neoliberal’ model of welfare
failed to redress both the political and relational rights of citizens “in the ways necessary to mend
the structural determinants of poverty and inequality across the region” (Riggirozzi, P. 507).

The social impacts of the shortcomings of the neoliberal model were the deprivation of
welfare services, widespread unemployment and the privitzation of resources which led to a
series of social issues, most notably a poverty crisis. In response to this crisis, governments were
forced to listen to the grievances of those who suffered the worst impacts of neoliberal policies
and attempt to reform the failed system. However, Riggirozzi argues that the targeted and
insecurely funded welfare regimes adopted during the implementation of the post-neoliberal
model have “created tensions between the socio-economic and ecological spheres that undermine
inclusive citizenship and democracy” as policy makers struggle to effectively address the
grievances of those who were most impacted by the structural adjustment policies (Riggirozzi, P.
507). While there have been notable improvements associated with social development, the
application of ‘post-neoliberal’ welfare strategies are increasingly reliant on “revenue generated
by intensive exploitation of natural resources,” which has led to significant social pushback
against the “violent displays of dispossession and repressive legislation undermining rural and
indigenous communities’ demands for land reform and environmental justice” (Riggirozzi, P.
508). Ultimately, the political and relational adjustments required to “empower vulnerable
citizens and communities through rights-based policies, and reform the structural causes of
poverty and inequality” failed to be implemented in this alternative welfare system across Latin
America (Riggirozzi, P. 508). The welfare system transitioned to a model of inclusion which was
determined by one's ‘eligibility’ to basic, publicly provided, welfare benefits dependent upon the
individual’s agreement to comply with specific social duties or behaviour. Additionally, states
increasingly targeted subsidies, cash transfers and public employment opportunities towards
communities “who did not reach a basic needs threshold, or who were affected by economic and
social dislocations resulting from structural adjustment policies, financial reforms and austerity
measures” (Riggirozzi, P. 510).

The economic downfall born during the neoliberal era worsened the already unstable
economy of Latin America as it was inserted into the global market, free trade was liberalized
and the states took on a ‘laissez faire’ approach to their economic systems. Between 1980 and
1999, the amount of people in Latin America living in poverty grew from just under “136 million
to over 211 million” and the region experienced more than “40 episodes of currency crisis,
during which the GDP fell by 4 per cent or more and casualization of labour and unemployment
increased dramatically” (Riggirozzi, P. 511). Additionally, six out of 10 jobs created in the 1990s
in Latin America were considered informal, and, despite significant development since the mid-
2000s, by 2016 informal employment affected over 140 million workers in Latin America, which
makes up 53.8 percent of total agricultural and non-agricultural employment (Riggirozzi, P.
511). Because of this, many governments in Latin America determined that the neoliberal project
of economic restructuring, opening of markets, free trade and minimization of the state needed to
reasses the social implications, “particularly the impact of reforms on social protection and the
relief of poverty; or what Molyneux” (Riggirozzi, P. 512).

The political aspects of neoliberalism caused devastating impacts for poor communities
in Latin America, as austerity measures and structural adjustment programs were implemented in
order to receive debt relief from the IMF. Not long after these measures were introduced,
politicians were heavily critisized by these communities, which made up a majority of the
workforce, due to the negative impacts they were having on employment, access to social
services and the costs of necessary resources due to privitization policies. However, when the
governments decided to rely on profits from the extraction of natural resource exports as a means
to reimplement these welfare programs, it led directly to political turbulance. This prompted the
rise of the ‘new Left’ governments in countries like “Venezuela (1998), Brazil (2002), Argentina
(2003), Uruguay (2004), Bolivia (2005), Ecuador (2006), Nicaragua (2007) and, for shorter
periods, in Paraguay (2008), El Salvador (2009) and Peru (2011)” (Riggirozzi, P. 515), which
appeared to be the beginning of the end for neoliberalism. The various coalitions that made up
the Left were rooted in “anti-austerity protests and the promise to deconstruct neoliberal political
economies while upholding the dignity and rights of all citizens” (Riggirozzi, P. 516). As a
political project, the Left proposed a ‘post-neoliberal’ program that vowed to redefine the role of
the state with regards to the market, promoting progressive policies for social inclusion. The new
Left made a remarkable effort to refocus the economy in order to stimulate growth, fiscal
stability and income redistribution within the realm of capitalist economies.

With regard to social policy, the new Left made the practical decision to expand and
restructure the CCT programs of the neoliberal era as the central method of income redistribution
(Riggirozzi, P. 517). New perspectives and commitments to improve inclusion and recognition
of human rights transformed the discussion around how the responsibilities of the state itself
were understood, transferring welfare obligations from the individual to the state. Since being
established in countries like Brazil and Mexico in 1997, CCT programs have gained unforseen
“significance in public policies to overcome poverty in the region, extending today to as many as
30 such programs across Latin American nations” (Riggirozzi, P. 517). However, many of these
new forms of political economic governance aim to justify not only market-led practices above
the needs of certain communities (particularly poor communities), but also “poverty alleviation
programs at the expense of environmental and identity-based justice” (Riggirozzi, P. 517).

Some new elements of governance that have emerged from the neoliberal crisis in Latin
America are the recognition of the centrality of the state in economic processes, the quest for
economic development, expansion of welfare programs to impoverished communities and the
introduction of new political parties. Governments are now considering the state to be the main
and most necessary agent for development, in contrast to previous policies which pursued a
removal of the state from the economic sphere. The state has become the central agent in
“mediating the deepened relationship between nature and the economy, leading to an increased
dependence of the state’s economy on extraction [of resources] to secure surplus for
redistribution, often referred to as neo-extractivism” (Ruckert, P. 4). One of the new political
ideologies that has emerged from the neoliberal crisis is a rise in populism, which was a direct
response to the social devastation caused by the austerity measures and structural adjustment
policies. The populist model offers “differences in approaches to citizen participation,
democratic reform, and nationalisation of key sectors and industries” (Ruckert, P. 13). According
to De La Torre, populism “re-emerged as a protest against neoliberal exclusions, the
surrendering of national sovereignty and the rule of corrupt politicians” (De La Torre, P. 16).
Traditional political parties and the institutional framework of democracy were in crisis. Parties
that were involved in the implementation of neoliberal policies were perceived as instruments of
local and foreign elites that contributed to the increased social inequality. These parties collapsed
as “political outsiders rose to power with platforms that promised to wipe out corrupt politicians,
experiment with participatory forms of democracy, implement policies to redistribute income,
bring back the interest of the nation state, and to build a multipolar world” (De La Torre, P. 6-7),
with anti-globalization and anti–United States sentiments at the core of their foreign policy
agenda and strategies.

Riggirozzi, Pia. “Social Policy, Inequalities and the Battle of Rights in Latin America.”
Development & Change, vol. 51, no. 2, Mar. 2020, pp. 506–522.

de la Torre, Carlos. “Populism and the Politics of the Extraordinary in Latin America.” Journal
of Political Ideologies, vol. 21, no. 2, June 2016, pp. 121–139.

Ruckert, Arne, et al. “Post-Neoliberalism in Latin America: A Conceptual Review.” Third World
Quarterly, vol. 38, no. 7, July 2017, pp. 1583–1602.