Last week, CIPE partners from across Latin America gathered in Lima, Peru, to ponder the implications for reform of a recent political shift to the left, which has been most pronounced in Venezuela but evident across the continent. United in their commitment to the development of market economies and the preservation of democracy, the partners exchanged perspectives on scenarios for change.
Hernando De Soto, President of the Institute for Liberty and Democracy, attributed the recent leftward shift in Latin American politics not to the appeal of socialist principles but to dissatisfaction with the capitalist system. “If for most people the market economy is inaccessible, it will mean nothing to them,” he remarked. However, if free enterprise can be made to work for the majority—if they can get access—”the market economy is not only conducive to benefits for elites but also the fight against poverty and to democracy.”
Many participants in the Lima conference noted a crucial distinction between the moderate left, typified by Brazilian President Lula, and the extreme, populist left, typified by Venezuelan President Hugo Chávez. In fact, left-leaning governments such as the governments of Brazil and Chile have acted to maintain macroeconomic stability and even promote market-oriented reforms. These governments recognize the need to develop the economy to achieve their social goals, especially the reduction of poverty. In Nicaragua, the government has responded favorably to overtures from the private sector. President Ortega’s government adopted key measures of a national development plan initiated by the Superior Council of Private Enterprise (COSEP), which will promote tourism, infrastructure, capital markets, and technical education.
President Ortega listens to Erwin Kruger present COSEP’s national business agenda in 2006.
By contrast, moves by President Chávez to nationalize industry (to replace private ownership with state ownership) and stifle the private sector bode poorly for the economic future of Venezuela. These moves also constrain possibilities for independent political action. The real difference between the populist left and the moderate left is that in its desire for social change (or power) it disregards the rules of the game, namely democratic institutions, property rights, and fundamental freedoms.
One can equally distinguish between two rights on the other side of the political spectrum, as President Erwin Krüger of COSEP observed. There is the democratic right and the corrupt right, and the latter must be opposed for the sake of democracy and progress. The moderate right, like the moderate left, respects the rules of the game and seeks to reduce poverty. “The only way to fight poverty is by creating wealth,” said Krüger. “By being competitive we will be able to grow economically. This is the only way we can benefit the lives of the population. We need to imitate the success of countries like Chile, Ireland, and Costa Rica.”
How are indigenous populations affected by all this? The National Economic Research Center (CIEN) in Guatemala has been talking to indigenous people and researching their needs. According to Hugo Maúl of CIEN, indigenous populations do not clearly identify with the left. He found that the principal form of exclusion is political, not ethnic—people lack access to the essential institutions of justice, security, and commerce. Because the right has not enabled this access, the left can have impact by selling hope. Based on other research by the World Bank, Daniel Kaufmann, Director of Global Programs and Governance also emphasized that we have to look not only at economic inequality but lack of voice and corruption.
Hugo Maul of CIEN discusses informality and indigenous culture at the CIPE conference in Lima.
Summing up the mood of the conference, Paul J. Bonicelli, Assistant Administrator for Latin America and the
Caribbean, USAID, called attention to the importance of “making democracies deliver for all of the region’s citizens, especially those who have been left behind.” “Reforms must go further,” said Bonicelli, “in order for the benefits of democracy and free markets to reach into people’s everyday lives. That is the only way to increase popular support and trust in democracy.”
Published Date: September 24, 2007