Exploring 'market justice' in Bolivia
Bolivia has a long, rich history -- from its time as part of the Inca Empire through its Spanish colonization to its fight for independence. But the landlocked South American country’s last few decades are what really interest Brent Kaup. In that short time, the country went from being a testing ground for free-market ideology to a place pursuing radical alternatives.
Kaup, an assistant professor of sociology at William & Mary, has spent the last 10 years studying the country and recently published a book, Market Justice: Political Economic Struggle in Bolivia, about the country’s shift from neoliberal to counter-neoliberal policies and the groups that have influenced those changes.
“It’s not only a testing ground of free market ideology, it’s a testing ground of people pushing back against it in an attempt to seek out potential alternatives,” said Kaup.
A term somewhat unfamiliar to people in the global north, neoliberalism is an extension and intensification of free market forms of rule, said Kaup.
“It entails the privatization and commodification of goods that were previously insulated from market mechanisms, things like water provision, or things like oil and natural gas,” he said. “So neoliberalism or neoliberalization is the process of turning these things into goods that are more easily bought and sold in the global marketplace.”
Neoliberalism was introduced in Bolivia in the 1980s when the country faced a hyperinflation crisis. Proponents of neoliberal ideology were able to assume power and, in the process of solving the hyperinflation crisis, introduced an array of policies promoting free market ideology, said Kaup. These policies included the elimination of the national minimum wage and the privatization of strategic sectors, including the mineral sector in the 1980s and the oil and natural gas sector in the 1990s.
“How did this affect the people in Bolivia? For most people, it had quite deleterious consequences,” said Kaup.
Many people in the hydrocarbon sector lost their jobs due to downsizing, and people who used to sell their agricultural goods in local markets could no longer compete with the low prices that larger companies were able to offer. As a result, agricultural workers began moving to the cities to seek work, and many miners moved back to agricultural communities where their families lived. Both groups also began to seek income through illegal means, including the growing of coca or cocaine. Now facing common problems and living in close proximity, the two groups of workers began joining together in ways they had not before, coming together as one to face a common enemy: neoliberalism. At the same time, a conflict arose between the mining and agricultural elite, leaving a power vacuum for the masses to fill.
The backlash to neoliberalism reached new heights in the late 1990s and early 2000s with what became known as the “water war.” The International Monetary Fund and World Bank recommended that Bolivia privatize the water supply in its largest cities. The country did, and it led to a substantial increase in the price of water.
“So, what we saw was that some of the most disadvantaged segments of Bolivian society were paying up to 25 percent of their monthly income just to have access to clean water,” said Kaup. “This creates a situation that is ripe for revolt, or that is undesirable for many people, particularly given the high levels of inequality prevalent in Bolivia.”
About five years later, things once again came to a head with the “gas war,” which came about in response to a plan to export Bolivia’s natural gas to the United States through Chile The Bolivian masses discovered that transnational corporations were making millions off of their natural gas while they were getting very little from it. That fact, combined with the Bolivian’s standing distaste for Chile and the United States, propelled the counter-neoliberalism movement forward, said Kaup.
The masses called for the nationalization of the hydrocarbon sector and finally, in 2003, forced the president of Bolivia to resign. His vice president took over for a few years before he, too, was forced out of office. A national election was held, and Evo Morales was elected, becoming the first indigenous Bolivian to hold the post in decades. On May 1, 2006, the new president nationalized Bolivia’s oil and natural gas sector.
“Now, the nationalization takes somewhat of a peculiar form,” said Kaup. “When we think of nationalization, we think okay the state’s going to come in and just take all of these people’s assets and not remunerate them and that’s it. But what the Morales administration does is say that we still want investors to invest here and we have financial constraints that we have to deal with, so all that we want to do is become majority shareholders in the oil and natural gas in our country.”
The Bolivian government also reintroduced royalty fees and increased inflation rates for hydrocarbons. That combined with becoming majority shareholders allowed the Bolivian state to take in a substantial amount of money in a short period, said Kaup. The money was used to reinvest in the industry, but it also funded a number of social programs, including an old-age pension program, a program to keep children in school and a pre- and post-natal care program to reduce infant mortality.
With the Bolivian state and transnational corporations both benefitting from the nationalization of the hydrocarbon sector, a surprising paradox arose. Resistance to neoliberalism did not equal resistance to transnational corporations.
“We usually think that when a nationalization occurs and a self-proclaimed socialist becomes president, all investment would flee and go elsewhere. But what’s happened is there’s been this tacit, unacknowledged sort of alliance between the Morales government – as the representative of the popular classes – and the transnational corporations,” said Kaup. “While the transnational corporations did have their royalties and taxes more than doubled, they still are making money, so now we have both the transnational corporations making money and the Bolivian state making money, and they have been able to mutually benefit.”
Although Bolivia serves as an interesting case study, Kaup said that it should not be seen as a model for other countries.
“I’m always hesitant to say that there’s a Bolivian model, and that’s probably for two reasons: We don’t know the long-term success or failure of Bolivia in this process. … and to say that there is ‘a’ model is not what the Bolivians would want … It may work for them, but it may not work for someone else. There isn’t one model of development; there are many models of development.”
However, people may still learn from the Bolivian case, said Kaup.
“We could say the Bolivians have somewhat shown a way where they have challenged traditionally powerful actors and have rearranged the benefits coming from their resources to benefit the masses,” he said. “So if other people are trying to say that, ‘Oh, could that work for us? Can we somehow glean more from the riches beneath our feet?,’ the Bolivians have shown that yes, you can do that.
“Whether or not they offer a model to do that is debatable, but they do show that it’s possible, and I think that other places can perhaps learn from that, as well.”