Introduction to Neoliberalism Compared: Transformations in Latin America (and Eastern Europe)

Introduction to Neoliberalism Compared: Transformations in Latin America (and Eastern Europe) Jürgen Buchenau (bio), Jill Massino (bio), and Carmen Soliz (bio) This special issue originated in a conference held at UNC Charlotte on September 8 and 9, 2023, titled "Neoliberalism Compared: Transformations in Latin America and Eastern Europe." The conference commemorated the fiftieth anniversary of the arrival of neoliberal policy in the wake of the military coup against the democratically elected president of Chile, Salvador Allende Gossens, on September 11, 1973.1 Aided by U.S. President Richard M. Nixon and informed by economists who had studied under Milton Friedman at the University of Chicago, the new military junta–and particularly its leader, General Augusto Pinochet–subjected Chile to a shock treatment by drastically cutting public spending and social services and privatizing collectively held sectors of the economy. As a working definition, neoliberalism seeks to benefit free-market capitalism by means of measures such as privatization, fiscal austerity, deregulating capital markets, eliminating price controls, lowering or eliminating trade barriers, and reducing the influence and regulatory power of the state in the economy. The Chilean case demonstrated that neoliberalism–touted as bringing "freedom" to supposedly socialist and tightly regulated societies–often accompanied repressive political systems. As regions near the former superpowers in the Cold War, Latin America and Eastern Europe emerged as test cases of neoliberalism at the end of the twentieth century. As Aldo Madariaga has pointed out in his recent work, neoliberalism was an economic and political project that particularly thrived in places with weak or non-existent democratic structures. In his comparative work on the two regions, Madariaga identified three successive mechanisms ensconcing free-market reforms: the creation of political support for neoliberalism, followed by the blockade of the opposition, and, finally, locking neoliberalism into constitutional structures.2 As the British premier minister, Margaret Thatcher, once proudly said: "There is no alternative." Quinn Slobodian refers to "crack-up capitalism," a system where neoliberals reign over failed states, where democracy cannot stand in the way of the accumulation of capital on a global scale.3 Rather than an imposition from outside, as the word "Washington Consensus" seems to imply, neoliberal economic models in Latin America had homegrown roots along with the influence of the Austrian School, and especially Friedrich Hayek and his disciples.4 They grew out of precursors in the 1960s and 1970s, personified by the work of Peru's End Page 183 Hernando de Soto and, as Amy Offner demonstrated, Colombian economists and policymakers seeking to undo what they viewed as the welfare state created in the previous three decades.5 Certainly, macroeconomic and political trends in the 1970s conspired such as the "oil shock" of 1973 after the Yom Kippur war, high interest rates, and the resultant debt crises of the early 1980s, which ushered in what Latin Americans remember as the década perdida, or lost decade. In Eastern Europe, the radical transformations after the collapse of communism produced opportunities and shocks, affecting societies in diverse and ambiguous ways. While former communist elites and those with business savvy often thrived in the new market economy, laborers experienced declining living standards as a result of deindustrialization and privatization. The initial enthusiasm of the early 1990s soon gave way to disappointment with the new world that global capitalism created. Two narratives of the neoliberal transition gradually emerged: the "J-curve model," characterized by a brief period of rising inflation, high unemployment, and economic uncertainty, followed by a sharp and enduring uptick in GDP and living standards; and the disaster capitalism model, characterized by widespread economic and social shocks that lingered for decades and whose overall impact was akin to Great Depression. More recently, Kristen Ghodsee and Mitchell Orenstein have argued that the outcome of economic and social transition in Eastern Europe fell somewhere between these two models, with variations between and within countries.6 Like their Latin American counterparts, Eastern European economies experienced various shocks after the collapse of state socialism in 1989: recessions in the early 1990s, belt-tightening measures imposed by international monetary bodies and the European Union (as part of the EU accession process) during the 1990s and early 2000s, and austerity measures...