Aldo Madariaga on Neoliberalism, Democratic Deficits, and Chile

Aldo Madariaga
Aldo Madariaga

Aldo Madariaga joins the podcast to discuss how neoliberalism can undermine democracy. He is a Professor of Political Science at Universidad Diego Portales, and Associate Researcher at Center for Social Conflict and Cohesion Studies (COES). He is also the author of Neoliberal Resilience: Lessons in Democracy and Development from Latin America and Eastern Europe.

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It’s not just inequality of wealth. It is not just inequality of income, which is big. It’s also inequality in terms of the geographical clustering of different strata of the population, of different people. It’s inequality in life experiences. It’s inequality in treatment. People felt mistreated by those in the upper echelons of society. So, it’s not just money. It’s also access to public goods, to certain spaces in the city, to education, unemployment benefits, and all sorts of things. But also, treatment.

Aldo Madariaga

Key Highlights Include

  • An Account of the Chilean Protests in 2019
  • Description of Neoliberalism as a Political Project
  • The Role of the State in Neoliberalism
  • How does Neoliberalism Shield its Policies from Democracy
  • Are Neoliberal Policies Fundamentally Undemocratic?

Podcast Transcript

The first step populist leaders in Venezuela, Hungary, and Turkey took to dismantle their democracy was to rewrite their constitutions. They centralized authority in the executive and weakened institutions like the courts and the legislature. So, anytime leaders in a democracy propose a new constitution, skepticism is not only natural but also healthy. 

Despite all this many democracy advocates and scholars view the upcoming constitutional convention in Chile as a positive step. I wanted to understand why Chile was different so I reached out to Aldo Madariaga. Aldo is a Professor of Political Science at Universidad Diego Portales, and Associate Researcher at Center for Social Conflict and Cohesion Studies (COES). He is also the author of Neoliberal Resilience: Lessons in Democracy and Development from Latin America and Eastern Europe.

Many of my conversations tackle the challenges democracy faces from populism. But neoliberalism is an obstacle many democracies must also overcome. Some view neoliberalism as the antithesis of populism, but this does not mean it is democratic. Aldo explains how neoliberalism goes beyond economics to become a political project hostile to democracy. 

Now before we start I want to be clear. The left does not have a monopoly on democracy. People can believe in both free markets and democracy, but Aldo shows how neoliberalism in Chile and many other countries went beyond economic policies to define its politics. But whether you agree or disagree, I want you to share your thoughts. So leave a comment at www.democracyparadox.com where you will find a full transcript of the episode. I also want to share appreciation and thanks to Mills Jordan who is helping me design a page for the podcast on Instagram. If you’d like to help the podcast, please email me at jkempf@democracyparadox.com. But for now… this is my conversation with Aldo Madariaga…

jmk

Aldo Madariaga, welcome to the Democracy Paradox.

Aldo Madariaga

Thanks to you Justin for inviting me.

jmk

Well, Aldo your book, Neoliberal Resilience, makes such a sophisticated theoretical argument. It explains how neoliberalism leaves significant democratic deficits.  Perhaps the strongest example for me though is Chile where protests in 2019 broke out over a modest fair increase. So, let’s start there, because this example gives life to many of the ideas in your book. Why did Chilean protests over a fair increase of just 30 pesos lead to demands for an entirely new constitution?

Aldo Madariaga

So, it’s one of those small events that then lead up to major changes. It’s unpredictable. It’s completely a game changer. And perhaps the best way of summarizing that is the motto that, emerged from that. Because people were wondering why 30 pesos, which is really, I mean, the exchange rate is 700 pesos is $1. So, 30 pesos is really small. I mean, it means nothing, literally nothing. You cannot buy a candy with 30 pesos. But the motto that emerged from that – because people were wondering what’s going on. You know, everyone’s crazy. There’re riots because of 30 pesos. And the motto is no. It’s not about 30 pesos. It’s about 30 years.

So, in a way, that’s the final drop in a series of events of phenomena, of trends, of happenings that in a way, people said enough. Enough is enough. We don’t care if it’s 30 pesos. It’s just the accumulation of things for over 30 years. We’re talking about 30 years of democratic life after the Pinochet dictatorship. But neoliberalism was implemented at the beginning of Pinochet dictatorship which lasted 17 years. So, in a way it’s 50 years old. With 30 comprising democratic governments following those premises established by Pinochet under his dictatorship.

And it’s in a way, a reaction to the sensation that this was a successful country. That everything was perfect. That the statistics when you look at them and compare them to other neighboring countries, they just show a successful country in many different areas. A type of success that has been slowing down in the last couple of years, but nevertheless, extremely successful by all means you want to measure. And an elite that was too complacent with those estimates, with those numbers that was not able to hear nor experience everyday life as ordinary citizens did. There were scattered voices that said, ‘Look, it’s different in the ordinary lives of ordinary people. They feel it differently. They don’t get those numbers in their real lives.’ And the leader was saying , ‘No, that’s not possible, because numbers say otherwise.’

The common interpretation was it’s the discontent with abundance. I mean, when you have abundance, you have rapid growth periods and then growth slows down. Then people get used to having money, having higher incomes and then once it’s not growing as fast   they’re discontent. And so, all sorts of explanations related to the success of the country, instead of really hearing what the people were saying. So, it’s 30 years, not 30 pesos is really establishing, ‘Look, we’ve been saying this all this time and you don’t want to hear it.’ And the extent, the violence, and the reach of this throughout all the country of the riots that followed the 30 peso increase was just unheard of in the 30 years of democracy.

They produced the largest demonstrations in decades. I was born during the dictatorship in a year where there were huge demonstrations against the dictatorship and this protest brought more people to the streets than the protesters that were trying to topple the dictator. So, in a way, this was really a watershed moment for Chilean politics.

jmk

So, when you say the economic figures did not tell the whole story. They didn’t explain the way life was like for the average Chilean. Can you help us understand? Give us a portrait of what life is like for the average Chilean or for most Chileans who feel that the neoliberal policies have not worked for them.

Aldo Madariaga

The main thing here is inequality. And this is a topic that had been, as a social problem, growing for some time. It’s not just inequality of wealth. It is not just inequality of income, which is big. It’s also inequality in terms of the geographical clustering of different strata of the population, of different people. It’s inequality in life experiences. It’s inequality in treatment. People felt mistreated by those in the upper echelons of society. So, it’s not just money. It’s also access to public goods, to certain spaces in the city, to education, unemployment benefits, and all sorts of things. But also, treatment. Treating each other as equals. Feeling privileged, not just because of the socioeconomic things, but also feeling superior in social relations in everyday life.

So, these people claiming they want another situation, another country, a different treatment. It’s basically having to work very hard for what they want. And this is closely related to our story about neoliberalism, because when labor markets are extremely fluid and you fall into unemployment over and over. When you have lower life chances because your education is an education for the poor, because it’s so segregated and so unequal access to good education partly because of the liberalization and privatization of it. So, the life chances are marked by systematically unequal access to quality benefits, services, et cetera.

jmk

So, Aldo, I like how you have already introduced an idea that I found fascinating within your book. The fact that neoliberalism is not just about economic policies. It encapsulates many different facets that are both political and social within people’s lives. And there’s a quote in your book where you write, “Neoliberalism survived in its purest form in those countries where it was protected from democracy.” It’s this idea that neoliberalism is not just an economic philosophy about limited government and free trade, but it goes beyond that. So, can you help explain, how is neoliberalism more than just a philosophy of economic policy?

Aldo Madariaga

I think, neoliberals understood that the implementation of markets everywhere, of competition would undermine basic economic securities. This was expected. The implementation of markets where there were protected firms would lead to widespread bankruptcy. The privatization of social services, the reduction of social benefits like unemployment benefits, for example, or pension benefits, et cetera, would lead to differences in access. Would lead to people unemployed for longer times or falling incomes. So, they understood that this would have political effects. In my book, I deal with countries in Eastern Europe and when these countries were transitioning to a market economy, to capitalism. When they were transitioning it was very clear when you read all the books about the people, they were thinking about this process. It was very clear that everyone was completely clear that this would bring major dislocations for firms for people in general.

But they believed that in the longer-term markets would bring overall benefits. And the key question was that if markets bring business dislocations in the short term, how do we shield politics from those that are left behind because, of course, if they feel worse off, if they feel that these policies are affecting them then they will react politically. How do we shield politics from this expected reaction?  Now in that context, it was expected that the sort of counter reaction of those left behind of those affected would be short.  And in the end market economies or neoliberal economies would end up bringing more benefits than problems. So, the political shielding had to be short lived because eventually economics will do the rest.

But in the end, what you see is that the shielding of democracy continued over time, because over and over people were subject to different types of dislocations, constant economic crisis both nationally speaking, but also in their own lives, long periods of unemployment going in and out of the labor market, having somebody ill in your family. If the health system is privatized and you cannot afford it, having somebody ill in your family means you fall into poverty. You’re not insured against those things that happen often. So, in the end that shielding from the political consequences of the dislocations of neoliberalism had to be there for a longer time.

And when you go back to the writings of some of the people in the circles as this new doctrine started to gain more prominence in the post-war period, a group of them was very interested and developed specific thoughts about precisely how to shield market reforms from the possibility that those affected by them, and they thought that there would be many affected, from the possibility that those will use basic democratic mechanisms to overrun, to change neoliberalism in the way  they would want to.

jmk

So, I always find it interesting when I read some of the literature of neoliberalism because it makes a case that in order to have democracy, we need to have these types of freedoms. These basic economic liberties need to be in place in order for democracy to be able to function. And you give a great account of the history of neoliberal thought where you walk through some of those ideas. But I went back to, a piece by Frederick Hayek, his most famous The Road to Serfdom and I found a quote where he wrote, “We have no intention, however of making a fetish of democracy. It may well be true that our generation talks and thinks too much of democracy and too little of the values which it serves.”

And I think this really gets at the point that the whole neoliberal project isn’t really about democracy in the end.  It’s doing exactly like you just mentioned. It’s always been concerned more about shielding their economic ideas from democracy rather than ever actually bringing democracy about.

Aldo Madariaga

Absolutely. That’s completely right. I mean, if you go back to those texts  by Hayek, by James Buchanan, which is another key figure, I mean, one of the key things that they were struggling against was precisely the type of post war compromise between capitalism and democracy, which meant basically that capitalism was embedded, was surrounded by a series of institutions reducing the possibilities of companies for seeking profits in the way they wanted. There were labor unions establishing limits for that, regulations for redistribution, for taxation. More generally, there was a political system in which the voices of the many were heard. Capitol was taxed and this was used for redistribution over the board in different ways. It was a compromise in which the idea was that for the survival of capitalism, you need to limit it now because unfettered competition, unfettered profit seeking is bad for society.

What neoliberals want is to undo those tethers, to have precisely the type of unlimited competition, unlimited profits. And they were targeting specifically the type of post-war compromise and the democratic mechanisms ingrained in that: redistribution, taxation, labor power, and the capacity of democratic governments to represent the masses. So, neoliberals were thinking how to shield capitalism in a way that democracy did not interfere with the profit motives of the company.

jmk

So, there’s an assumption among most people that neoliberalism reduces the role of the state. That it allows a broad sense of economic freedom, because the state is shrunk to something that’s very small and has a very minimal role for the state. But you dispel that myth in your book. You write, “Neoliberalism does not preclude state intervention and often requires it.” So, Aldo, what do neoliberals expect from the state?

Aldo Madariaga

The only way to implement these market societies, this unfettered competition, this unfettered profit seeking, was to use the state to implement that and to enforce that over time. And you see it in practice everywhere where neoliberalism was established in its most thorough forms as in South America, as in Chile, for example. I mean, bloody dictatorships. It’s implementing markets and freedom by repressing those that are against it. If you see in Eastern Europe, you see a period of complete confusion when communism crumbles and political leaders that use all sorts of ways to shield themselves from popular pressures to rapidly pass many reforms that will have a long-term effect on those countries. In that period of confusion in that period of extreme sort of fluidity.

But even, you know, making this explicit, shielding the reformers from the pressures from below, from the pressures of those suffering the changes of this transition from communism to capitalism. But more generally when you see everywhere where neoliberalism is established and takes hold, usually strong executives against more representative parliaments, special orders or special decrees and this type of thing. So, in a way, the state is crucial for establishing, let alone maintaining neoliberal policies or even principles over time. If you think more specifically about markets, markets don’t regulate themselves. Everywhere in the world where you have good functioning markets, you need the state to regulate. So, in a way, states are crucial in different ways for neoliberalism to function.

jmk

So, Aldo, I’m in the United States and there’s a lot of conversations about the effects of neoliberalism, the role of the United States with neoliberalism in my country. But as a Chilean, you see neoliberalism very differently and you write about it in the book. How there’s a difference between how neoliberalism is approached in the west versus Latin America or Eastern Europe. Can you help explain how neoliberalism was implemented differently in a country like Chile or a country, like Estonia like you write in the book, as opposed to more developed countries within the west?

Aldo Madariaga

In certain countries in the developing world there was a moment in which politics were extremely fluid and this meant that this type of very grand design project or grand project for society as neoliberalism could be established in a more thorough way. So, in Latin America, the seventies and eighties are particularly tumultuous, very rapid change. The previous political regimes were in extreme dire problems. It was mostly economic problems, but this implied a very complicated political situation as well. And in some countries, there were outright military dictatorships. So, this specific juncture where politics and economics when the economy was in flux was propitious for establishing this very thorough social project.

The same happened in Eastern Europe. There were countries that did not make this sort of leap from communism to capitalism right away in the early 1990s. But for those that did, this was an opening window into the unknown. So, the economy was changing fast. Politics was changing fast. The old regime was crumbling. And a famous Polish finance minister in 89, who passed all the neoliberal reforms, thought of this as a window of opportunity. We have to use this window of opportunity to pass all these reforms quickly. Otherwise there will be normal politics. Normal times will come back and then it will be much more difficult because we know that these are difficult things to solve, because they produce complicated bad effects on many people.

And so, many countries in the west did not have this type of window of opportunity. So, there are many, many people that have studied this and I concentrate on developing countries, but they study this small gradual introduction of neoliberal policies in different realms, different policy domains, you know, with more success here with less success there. But basically, in a period of normal politics of normal times when you don’t have this window of opportunity. And so, those affected by it have the chance to say something about it, to oppose it and therefore the politics of those reforms are qualitatively different than when you have a situation where both economic and political reforms associated with neoliberalism are passed in one or a few strokes.

jmk

Well, let’s get a little bit specific. I’m familiar with how Chile privatized social security early on. It was oftentimes used as a template for think tanks like the Cato Institute or the Heritage Foundation to be able to look to ways to be able to privatize Social Security within the United States. Can you introduce some other reforms and how they were protected from democratic reform?

Aldo Madariaga

This was a dictatorship with extreme levels of repression of opponents. I mean, all sorts of opponents. So, basically you didn’t have to worry about that backlash.

jmk

But how are they locked in today? Because it’s one thing to implement a neoliberal reform during the Pinochet regime, but we’re looking at 30 years later where these policies still exist today. And not only do they exist, but rather than just electing new leaders, rather than just passing new laws and policies, they found it necessary to write an entirely new constitution to be able to change the economic structure of their country, even slightly change the economic structure of their country.

Aldo Madariaga

Precisely because this period was so extraordinary in terms of the conditions it gave to these people wanting to produce a change, they were able to sort of pursue in its more radical reach this idea of shielding neoliberalism from democratic politics. So, they thought, okay, once we go back to democracy, and eventually they thought this could happen, you know, with great probability, those that have opposed this, and we have been able to repress them, will come back and say, ‘Hey, we don’t want this.’ Eventually they will look for votes, they will get elected and they will reverse it. What can we do to prevent that?

So, what did they do in practice?  For example, for congressional elections you usually have districts that elect a certain amount of representatives and then according to a formula, whether it’s majoritarian or more proportional, they go to parliament and usually parliaments more or less represent the votes in the population. So, what they did here is they sort of designed a way so that the expression of that, of votes would lead to a tie in parliament or a majority of rightwing politicians in parliament. Basically, the right had one third of the vote historically and they made it so as to get 50% of the representation in parliament therefore, even though the right was still having 30% of the votes, they were having 50% of Congress.

The other thing they say with certain laws, certain key aspects of this architecture we will say, no, you need more than 50%, at least two thirds for changing. So, it’s absolutely impossible to reach with these rules, but even then, I mean, if they managed to do more than 50% and maybe reach those thresholds. In addition, we will nominate around a fifth or 20% of the Senate of unelected senators. Who will elect those senators? Well, the armed forces. And then they put their allies in the Supreme Court, so basically they reduced the expression of the popular vote in parliament. So, it was absolutely impossible to change the economic model.

jmk

So, what you’re saying is in terms of the electoral system, they devised a model that would favor their supporters so that they would receive more seats than the actual number of votes that they actually got to start with. So, they’re playing with rigged system right off the bat. Then after that they locked in policies with the constitution so that you needed supermajorities that would make it even more difficult to overcome, to be able to have the votes, because they’d almost have a veto within Congress. And then finally, within the second chamber, they included nonelected members that were likely to favor their policies that would then be an additional group that would be added to the support that they already received so that they could likely defeat any policy proposal within the Senate, if it happened to pass the other chamber.

So, they’ve got at least three different levels of manipulation that they stack the deck with to be able to make sure that if any reforms come to the table that they at least have a way to influence it, if not outright veto it.

Aldo Madariaga

Yeah. Precisely how you say it and you say it very well. The funny thing is that this all could sort of be justified, because this isn’t completely outrageous. In comparative terms, there are constitutions, there are electoral systems that do this. They do this to boost the representation of minorities. Minorities that have been historically excluded from the political system and that will never reach the type of influence in politics. They use some of this mechanism to increase their voice, recognize their status as minorities and include them in the political system. This is completely different from having a propertied class, powerful, wealthy redoing, reshaping, rewriting all the rules of the country under a dictatorship and then giving themselves extraordinary powers to veto any attempt to changing those rules that they have written. It’s completely different.

And you can see in different experiences of thorough systematic neoliberal experiments, different examples of this type of thinking, of this type of manipulation to favor those that want neoliberalism to stay over time, to favor the representation of those and limit the representation of those that will most likely want to change it.

jmk

And we’re talking about Chile specifically right now, but I do want to emphasize that this is not exclusive to Chile. And your book obviously talks about Latin America and compares it against Eastern Europe. But this is something that we see in lots of places around the world. James Loxton noted in an article called, “Authoritarians Vestiges in Democracies.” He wrote, “Authoritarian era constitutions are the rule, not the exception.” So, when we’re looking at Chile having a constitution that was written for them to govern as a democracy, but written by the former regime that was a military dictatorship. Other countries are facing similar issues like this. And it’s one of the reasons why we see neoliberalism not just in Latin America and Eastern Europe, but in different pockets around the globe.

Aldo Madariaga

That’s right. That’s right. I think one of the things that the book shows that this is not an idiosyncratic thing associated with Pinochet and its figures and some specific characteristics. Which it has, I mean, that process has specific characteristics, but what I try to connect with the original thinking of these people, of neoliberals, of the great thinkers of neoliberalism that they were concerned and they were trying to develop precisely this type of things this mechanism that you can start looking at in different contexts.

jmk

So, Aldo, some people would accept your premise that neoliberalism does have democratic deficits, but they would counter by saying that it’s a trade-off. You can either have greater amounts of democracy or you can have greater economic performance. So, I want to just ask you the question point blank. Has neoliberalism delivered strong economic performance?

Aldo Madariaga

That’s a good question. I think if you see, for example, overall, if you see the world economy there has been an overall process of liberalization. Growth rates have been diminished constantly since the 1960s, 1970s onwards. Today, the, great problem in all the world is growth, especially in the advanced capitalist countries, in the developed countries is growth. They’re not growing and growth is dynamic. There are several books written about this and the huge package of monetary and fiscal policy in the U.S. is because of this, not just because of COVID. But it comes from before this. The U.S. is not growing and Japan isn’t and Germany isn’t. And many people relate these to the liberalization of the economy.

So, this one thing in this specific case of Chile, for example, or Estonia in Eastern Europe, there has been a very rapid period of growth, periods of growth, followed by periods of more stagnation. And when, people sympathetic to neoliberalism say, look, the problem in Chile is actually that we lost track of growth, but it’s not that we have to change everything altogether. It’s just go back to that gold period of growth under neoliberalism. That’s the way to go. What you can say to that is if you liberalize everything and allow firms to make profits the way they want without regulations, there must probably be a period of rapid growth, but this will hit a ceiling and it’s not just an economic ceiling. It is a social ceiling. It is an environmental ceiling.

It’s precisely the type of limit that you get at when you have unfettered competition and unfettered profit seeking. And this is precisely what is been expressing in Chile for a long time. And that sort of exploded with this massive protest in 2019 is precisely the fact that look, we cannot keep going with this model because essentially, it’s not good for the people. It’s not good for nature. I mean, this is the model that is extremely polluting when you have no rules and no regulations to start affecting not just the social, but also the environment. And so, the answer to that is there have been periods in which in specific countries have grown a lot. But this has a structural limit into how much you can grow without caring for the social consequences or environmental consequences of that growth.

jmk

So, what I liked about your book was it didn’t just argue that neoliberalism locks in its policies because of structural features like a constitution. You actually argue that it reshapes the political landscape itself. How does the influence of different political interests change as neoliberal policies become enacted?

Aldo Madariaga

That’s a very interesting question. When you are used to playing a game in which you have different rules and you know how you can kick the ball, you can make goals, what counts as a goal or not, you get used to that. When the rules change and you have, let’s say the field is reduced, you have different shapes of the goals and they’re not square now, they’re round or whatever. And now you can play with the hand. When the rules change, the players also change their behavior, because they have to play it differently. Maybe they don’t like the rules, but eventually they learn how to play.

Once you liberalize, privatize, for example, social security, once you have the chance to choose the school you send your children to you may want changes knowing that this is basically a very unequal system and you don’t have the chance to send your child to a good school, because you don’t have the money. But you get used to choosing the school. And this is very difficult to change in people’s minds because after 30 years of knowing that it is your right to select the school you send your children to even if they tell you, ‘Look, I will give you a better school, but this will be by default. You cannot choose.’ People feel that they want to keep their freedom to choose. That they want both things, basically.

So, if they tell you, look, this will be a school without religious education for some, but it will be a good school. Well, they know, I want a good school, but I want to choose whether it has religious education or not. Well, these type of things after 30 or more years of telling people you have the chance to choose. If you have bad conditions, if economically you don’t do well, that’s because of you. That’s your fault. You have all sorts of different decisions at your disposition. If you don’t make the right decisions, because the system works like this, then it’s your fault. Then you get this ingrained and you learn how to play in the system. And this is very difficult to change eventually.

And there is a limit to what you can change after so many years of neoliberalism. A clear example, if that, of the schools. I would put another example, which is a bit clearer in terms of social securities. Pension funds were privatized in Chile. So, we don’t have a sort of public system giving pensions once you get retired. You save in your own individual account. This is a model that was exported to everywhere in the world. You have your individual account and basically after your working age, you get a pension from whatever you collected in your individual pension. If this gives you a pension of $100 a month, that’s your responsibility. If you had a low salary, well, you should have saved more.

Now there’s a law to change. The system is very discredited. People don’t want that anymore and the alternative is to have a collective system where everybody chips in, contributes and then that collective fund is used to fund the pensions of those that retired.

But people say no, because I have my own fund. Because I have saved all my life, why should I help those that were not responsible enough and did not save enough. Because many people learn, well, if I will have a bad pension, maybe just say that I have a lower salary and give me the rest instead of contributing to my fund. Give me a higher salary or I will not contribute to my fund. I would just use all of that as a salary and there are people that have been contributing to that and think, well, this is my individual fund. I don’t want it to be used to fund everybody else’s pension.

And that’s a huge problem now because people, even those people who know that it will not be enough in their individual fund to fund a decent pension retirement. But at the same time, they reject the collective sort of alternative because they have this idea of individual freedom and individual sort of assets so ingrained that they don’t trust the collective alternative. So, in a way, coming back to your question, this is the way having neoliberalism for such a long time changes the minds of the people. ? And it’s not that they want neoliberalism and they like neoliberalism.

They are clear what the limits are and they want to change it. It’s just that it is so difficult for them to envisage an alternative, because they are used to work in that way.

jmk

So, as we kind of wrap up. The big idea in your book, at least one of the ideas that is central to your thoughts on neoliberalism is that it’s not just an economic theory. It’s not just a series of economic policies, but it’s a political project. But democracy allows us to make choices, to be able to decide what kind of economic policies that we want to adopt. Can we choose neoliberal policies without the political project? Is it possible to separate out just the policies and adopt those within a democracy or are the policies of neoliberalism fundamentally undemocratic as well?

Aldo Madariaga

Well, that’s a good question. I think, in many countries the adoption of neoliberalism came out of a conscious decision by voters to give a chance to this idea of free markets against what they saw as the perils of a state led sort of growth model or development model or whatever we want to call it. This was there in several instances not just in developed countries, also in developing countries. In Argentina, for example, in the early 1990s, people voted for an alternative that was basically enacting neoliberal policies. And this was a vote against state-led development, hyperinflation, corruption associated with that and there’s new political groups offering you change. Telling you how things can be different.

And people voted for that and eventually they didn’t like it. You know, this led to a series of crises and they brought it back and they voted those from before and for a more statist sort of development. So, in a way, what I think, is neoliberalism can be established by democratic means. It can. It is extremely difficult that it will stay if you don’t constrain those democratic means, because neoliberalism subjects people to such levels of anxiety that eventually they want some type of security. You know, competition is fine for some time, but if you have to compete for your whole life and make decisions for your whole life and you’re not secure, basically what you get is completely stressed people with huge mental health problems.

If you don’t know what will happen to you after you end your work. If you don’t know what will happen to you, if you get ill and don’t have the money to pay for it. If you don’t know any of these things, basically you’re super stressed and you don’t feel good and you’re not happy about them. And eventually you want to change. You want some basic securities. And so, what I think happens is that if you leave the democratic process open, and I think this is what has happened in many countries that implemented neoliberalism through democratic means, is that eventually people end up voting against it. And so, even if you can implement neoliberalism by those democratic means, I don’t think you can maintain it over time without implementing the type of democratic constraints that we talked about.

And I think neoliberals were extremely lucid in understanding this because already in the 1960s, 1970s they thought about this and they were trying to devise diverse ways of protecting neoliberalism from democracy.

jmk

Well, thank you so much for taking the time to talk to me. Your book, Neoliberal Resilience, is just such a fascinating examination of developing countries both in Latin America and Eastern Europe. And you tie everything together in a way that’s very relevant for today. Thank you so much.

Aldo Madariaga

Thanks to you Justin. This has been a great conversation.

Key Links

Neoliberal Resilience: Lessons in Democracy and Development from Latin America and Eastern Europe by Aldo Madariaga

Learn more about Aldo Madariaga

Follow on Twitter @AldoMadariaga

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