Latin America in the Face of Global Transformations

/ FHC Foundation auditorium

In the face of a world full of political, social, and economic uncertainties, Latin American countries must be able to see beyond ingrained social structures and conditions and define medium- and long-term development strategies, aiming to take greater control over their present and future, both nationally and regionally. This was the message conveyed by the majority of participants in the "Latin America in the face of global transformations: how to navigate in turbulent waters?” Conference, held by the FHC Foundation and the Corporation for Latin American Studies (CIEPLAN), two of the main think tanks in America Latin.

“Politics is about having a hypothesis for the future and knowing how to act according to that hypothesis. One must have a strategy. What is ours (Brazil's and Latin America's)? Latin American countries, in general, have no clear strategy. Europe does not have one either and is suffering because of it. Nowadays, the Chinese are the ones who have a strategy.”
Fernando Henrique Cardoso, sociologist, professor, researcher, and former president of Brazil for two terms (1995-2002)

“If economist Albert Hirschman (1915-2012) were with us today, he would resist the temptation to exaggerate pessimistic conclusions about the present. Nor would he be in favor of irrational optimism. He would probably say that we must be 'possibilists' and think non-automatically in order to better understand the relationships between globalization, social formations, and political conditions.”
Mr. Jeremy Adelman is a historian, professor at Princeton University (USA), and author of the biography “Worldly Philosopher: The Odyssey of Albert O. Hirschman” (2013)

The conference – which brought together public intellectuals (economists, sociologists, and political scientists) from Brazil, Chile, Argentina, and the USA, among other countries, for two days – also commemorated the 50th anniversary of the book “Dependency and Development in Latin America,” written by Fernando Henrique Cardoso and Enzo Faletto (Chile, 1935-2003) in 1965/67 and published two years later. At that time, the two young sociologists worked at the Latin American Institute of Economic and Social Planning, a United Nations organization linked to ECLAC (CEPAL in Portuguese and Spanish), in Santiago de Chile.

In his opening speech, former President Fernando Henrique Cardoso (FHC) recalled the historical and personal circumstances that led to the writing of the book, considered a classic in Latin American sociology: “The prevailing idea (in Latin American intellectual circles in the 1960s) was that Latin America was experiencing a chronic dependence on US imperialism (which could only be broken through a revolutionary process). We proposed to show that there were different ways of connecting the lesser developed countries with the center of capitalism, depending on the degree of development of each domestic market and that these different forms opened spaces for greater or lesser autonomy.”

For FHC, “the disjunctive was not submission or revolution; we had neither a mechanistic view (in the sense that socioeconomic structures determine politics and the international system define the destiny of countries) nor a voluntarist view (in the sense that socioeconomic structures do not matter). We recognized the weight of the structures (the international division of labor, its reflexes on the formation of social classes in lesser-developed countries, etc.), but we pointed to the potential creator of politics.” 

    FHC: 'Politics depend on vision and leadership.' 

“Dependency and Development” sought to combine the analysis of the structural imbalances of Latin American economies with the connections and clashes of social groups and, therefore, to talk about the politics that could result in some predominating over others. “In Brazil, there was already a strong industry in the 1960s – as well as in Argentina and Mexico – and something new was happening: the association between the national business community and foreign capital was growing. We did not realize it at the time, but in that book we were already describing the beginning of globalization. A quarter of a century had passed and, in 1994, I was elected president, at a time when globalization was already an unquestionable fact. The entire Brazilian-left spared no effort to dismiss my government as neoliberal when our view was that Brazil would either integrate into the global economy or be excluded from the international trade game. There was no point in defending the national interest based on outdated premises,” said FHC.

“Now we are witnessing other movements, with an emphasis on the emergence of China, which in a few decades has become a fundamental part of the international game and is beginning to compete for global hegemony with the United States. Who will win the battle for the technology of the future? How will Latin America position itself in this contention of giants? For now, we are playing the game childishly, clinging to old or new ideas without assessing their current validity or their future consequences,” he continued.

Mr. Fernando Henrique recalled that digital media empowers the representative democracy crisis and social fragmentation: “Descartes said 'I think. Therefore I am.' Today it is 'I'm connected, therefore I am.' What could the strategy possibly be in a world where the course is not defined mainly by political power, as in the past, but more and more by internet tribes? Yes, there is structure, but there are movements as well. They depend on politics, and politics depends on vision and leadership,” he concluded.

    Sorj: 'Engaged intellectual and politician' 

“’Dependence’ was a very important book for an entire generation of Latin American sociologists, as it introduced the idea of the relevance of practice and political choices when my generation was encapsulated in either Marxist theory or modernization theory, which spoke of preestablished phases. History existed, but it was the field where those theories were carried out. In a non-voluntary way, as they recognized the existence of infrastructures that delimit the field of possibilities, FHC and Faletto placed politics at the center of the debate on development in Latin America,” said sociologist Bernardo Sorj, born in Uruguay and naturalized Brazilian, director of the Edelstein Center for Social Research (Rio de Janeiro), in a comment after the former president's speech.

“Fifty years have passed, it seems like a short time, but Brazil, Latin America, and the world are different. The capitalism-communism opposition is over. Other utopias have collapsed and, in advanced countries, authoritarian tendencies are mixed with xenophobic nationalism, misogyny, and religion, putting democracy at risk precisely in the democratic geopolitical nucleus that was an important support for democratic regimes also in our lands,” he recalled.

“Half a century ago, the question in Latin America was how to get there (to the developed world), but the West tightened down the screws and the economic and geopolitical axis quickly transferred to Asia, where the values are different. Where are we headed, amid the social inequalities and cultural conflicts that characterize our region? It is crucial that intellectuals leave their ghettos and contribute to the analysis of the complex moment we are going through. Faletto and FHC have done this throughout their careers,” Sorj added.

“Like Hirschman, Fernando Henrique was and remains an intellectual engaged in the debates of his time. Fortunately, we were also able to count on his achievements in politics, particularly during his tenure as President (1995-2003). FHC uniquely embodies history and biography. It is something we should celebrate,” concluded the sociologist.

    Ricupero: 'A new paradigm calls for a new book.'

“Half a century ago, the assumption in Latin America was that development would occur via industrialization and exporting manufactured goods to the developed world. That wasn’t the wrong path, and proof of it is that the Asians were successful,” said Ambassador Rubens Ricupero, author of “A Diplomacia na Construção do Brasil 1750-2016” (Portuguese for, “Diplomacy in the Construction of Brazil 1750-2016”).

“Between the 1940s and 70s, Brazil had 40 years of real growth of up to 7% per year. We multiplied our GDP by 15, and per capita income by five, while the country's population increased threefold. We were on our way, but since the 1980s we have lost momentum and, except for a few positive years, the average growth rate in recent decades has been less than 1%. This was due to internal contradictions and wrong choices,” continued the former Minister of Finance (Itamar Franco’s administration).

“Today, there is evidence that the industrialization paradigm has run out and the idea that developing countries can industrialize with cheap labor seems outdated. Since 2008 (global financial crisis), international trade has been losing the momentum that it had in previous years. The USA and other countries adopted protectionist measures and new technology, especially robotics and Artificial Intelligence, and have established a new paradigm. FHC and Faletto's work was totally valid at the turn of the 60s and 70s, but now it may be necessary to write another book,” said Ricupero.

    Zovatto: 'Lack of governance'  

“In the first decade of the 21st century, Latin America grew an average of 6% per year (partly explained by the 'commodity boom'), but in recent years we have only plummeted, and we will end 2019 with something around a 0.5% growth average. We are growing four times less than the world and ten times less than Asia. The biggest problem continues to be low productivity,” recalled Argentine Daniel Zovatto, regional director of IDEA International. 

“As we celebrate 40 years of the third democratic wave, the region faces a crisis of leaders and institutions and political fatigue. Our governments are not very transparent, they have not modernized management instruments, and they have not incorporated the advances of the 4.0 revolution. Democracy is not enough. We need good governance,” he said.

    Marfan: 'I don't know of any authoritarian middle-class countries'

“The Real Plan (1994), whose conception and implementation counted on the essential collaborations of FHC and Ricupero, stabilized the Brazilian economy, had a redistributive impact, and defined medium-term fiscal rules. In doing so, it put Brazil in a good position to take advantage of the opportunities of the 21st Century. However, for some years now, the Brazilian economy has faced problems and, to a large extent, this is due to politics. Why? Brazil and other countries in the region need to overcome the bad habit of thinking only about the party dispute and the length of presidential terms and start working on strategies with longer terms,” said Chilean economist Manuel Marfan Lewis, Chile's former Minister of Finance.

According to the executive director of the Chilean think tank CIEPLAN, since the re-democratization of Chile (1990), a reflection on historical errors that the Andean country should no longer commit has prevailed: “Countries never start from scratch. The Allende administration (1970-73) did not start from scratch, the Pinochet dictatorship (1973-1990) did not start from scratch, and neither did the post-redemocratization governments. So, what should continue and what should change?”.

“Much of the Chilean economic success in recent decades is explained because we were able to preserve past achievements and create broad majorities in society and in Congress, which have resulted in political and economic stability. Indeed, there is still poverty in Chile, which, according to new very demanding criteria, affects about 15% of the population. However, a middle class has emerged (still precarious) that worries about the risk of unemployment, demands better salaries, and has demands related to health, the education of their children, and dignified retirement,” he continued.

“The Chilean political class has not been able to establish a new paradigm for a country that is becoming middle class. Hence its current disrepute. I don't know where this 'empowered society' will take us, but I believe that the answer to the people's wishes lies in more democracy. 'I don't know of any middle-class countries that are authoritarian. How will a middle-class China deal with the lack of democracy in the new Asian power?”, asked Mr. Marfan. The debate took place a few days before the current wave of protests in Chile.

    Gerchunoff: Praise for 'self-subversion.'

Argentine economic historian Pablo Gerchunoff, honorary professor at the University of Buenos Aires, compared the economic performances of Latin American countries and defended the importance of an organized macroeconomy as the basis for development: "Countercyclical fiscal policy is for those who can because they have built the foundation for such.” For Gerchunoff, Argentina, which started the 20th century as the most promising country in Latin America, has lost its momentum. Brazil, on the other hand, which has made important progress since redemocratization, needs to find its way again quickly. 

“Faced with so many uncertainties in recent times, there is only one possible recommendation, and it comes once again from Albert Hirschman: Let us be constantly on the lookout to reassess our values and standards. Let us practice self-subversion by criticizing today what we did yesterday and tomorrow what we think today,” he proposed.

    Adelman: 'Bias for hope'

"Why should a young man read Hirschman today?", asked American historian Jeremy Adelman, a Henry Charles Lea Professor of History and director of the Global History Lab (Princeton University). “Hirschman was an intellectual who lived the universe of ideas intensely, but who committed himself to the notion that ideas belong to the world and that there is a close relationship between observation, analysis, and action. He could find hope even in the most unlikely places and moments and value what is possible,” said the biographer of the economist born in Berlin during the World War I. 

Hirschman lived in several countries, including France, Italy, the USA, and Colombia (between 1952 and 1956 he lived and worked in Bogotá and carried out field research in the nation's countryside). He visited several Latin American countries, where he collaborated with renowned intellectuals. He died on December 11, 2012, at the age of 97, in New Jersey (USA). “He imagined himself as a “possibilist,” not only in the sense of being aware of opportunities but also of creating new opportunities. He defended what I used to call bias for hope,” he explained. 

At the end of his speech, illustrated by several images from Hirschman´s life, Adelman showed a photo of the economist next to the newly sworn-in president FHC, on January 1, 1995, in Brasilia. "The arrival of Fernando Henrique to the Presidency of Brazil represented the fusion of academic knowledge with political action to promote relevant social and economic changes," Adelman concluded.

    Sole: The Real Plan and the 'statecraft’ concept  

For political scientist Lourdes Sola, the concept of possibilism applies well to the Real Plan, as it was idealized by a group of economists under the leadership of the then Minister of Finance, Fernando Henrique Cardoso, in 1993 and put it into practice in the last year of the Itamar Franco administration. 

“Challenged to come up with a plan to control inflation, that group of economists created an ingenious innovation, the URV (Real Value Unit), which enabled the progressive deindexation of the economy and the transition from the old Cruzado to the new Real without resorting to sudden measures and price freeze). The role of Fernando Henrique, who is not an economist, but a sociologist and politician, was to explain to the population the step-by-step process of the plan and to negotiate the necessary measures for its implementation with Congress. In that sense, it was a good example of what Hirschman called 'statecraft' (the skill of governing a country, according to the Cambridge Dictionary). Without political leadership, the Real Plan would not have been as successful as it was,” said the University of São Paulo (USP) professor and researcher.

    Amaral: 'The worst of all worlds would be having to choose between the USA and China'

Sérgio Amaral, who was ambassador to Brazil in Washington from 2016 to 2019, highlighted, at the first table of the second day of debates, that Latin America is already the stage of the growing commercial and technological dispute between the USA and China. “Huawei (a Chinese company that dominates 5G, the future generation of mobile technology) is already present in our countries and should become dominant in the coming years. Beijing also wants to extend the One Belt, One Road project (which envisages massive infrastructure investments around the world) here. And it has invested heavily in the cultural areas, through the Confucius Institutes, and academics, with thousands of Brazilians going to study in China. Will the US accept this Chinese offensive? The worst of the worlds would be having to choose one side of this dispute,” said the diplomat.

For Ambassador Rubens Ricupero, the priorities of the US strategic agenda defined by President Donald Trump have no points of contact with the real interests of Latin America. “Rivalry with China for first place in the world economy and mastery of the technologies of the future, sanctions against Iran and Russia, unconditional support for Israel, withdrawal from the Paris Agreement, denial of climate change and combating multilateralism; none of this will benefit the region,” he said. 

For the former Minister for the Environment and the Legal Amazon, Latin America must invest in building global solutions based on multilateralism, including the fight against global warming. “This is the most relevant issue of the present and the future. All the issues that challenge us in the coming years and decades depend on the success of collectively facing the challenge of climate change,” he said. Still, according to Ricupero, our countries need to overcome social inequality, through economic growth, income distribution policies, and equal opportunities so that democracy is definitively consolidated in the region.

    'Authoritarianism (Caudilhismo)' and 'a public democracy'

“In Latin America, the new 'caudilhos’ (authoritarians), who can be on the right as well as on the left, tend to make use of various forms of popular mobilization, such as plebiscites and referendums, to weaken the rule of law and expand their power. To put a brake on populism, the path is to strengthen democratic institutions,” said lawyer and political scientist Ignacio Walker, former Foreign Minister of Chile. 

“We have to get used to the idea that political parties will no longer have the importance they had in the past, as they lost the ability to organize voter preferences and respond to their demands. The reality is that electoral results will be increasingly volatile, as will support for government officials. We are increasingly experiencing a 'public democracy,'” said Professor Maria Hermínia Tavares de Almeida, a senior researcher at the Brazilian Center for Analysis and Planning (CEBRAP).

“There was a lot of talk about Albert Hirschman today. Like him, I also believe that difficulties, however great they may be, cannot paralyze us. We are Latin Americans, we don't like rigid hierarchies, but our societies are strong and find space to defend their interests. It is not just about being optimistic, but it is up to the political leader to listen to society, define possible directions, and progress,” said former President FHC at the end of the conference. 

Otávio Dias is a journalist who specializes in politics and international affairs. A former Folha de S. Paulo correspondent in London and editor of the news website, he is currently the content editor at the Fernando Henrique Cardoso Foundation.

Portuguese to English translation by Melissa Harkin & Todd Harkin (Harkin Translations).

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