Aldo Madariaga: Neoliberalism – more freedom for property owners, less democracy [VIDEO]

Chilean political scientist and author of the book entitled Neoliberal Resilience joins Cross-Border Talks to discuss neoliberalism and its impact on politics in different countries. Neoliberalism’s death has been proclaimed many times, both globally and in the national contexts, but the truth is that system created to protect property owners in the first place has so far managed to survive and adapt. Freezing the political system to disarm democratic majorities from challenging the business class, as Aldo Madariaga explains, has long-term consequences also when the people actually try to break with neoliberalism. He analyses both the example of his homeland, the cradle of neoliberalism, and countries in Eastern Europe that he studied in the book.

Full transcription is available below the video.

Hello, everybody. Welcome to the next episode of Cross-border Talks. My name is Veronica Susova-Salminen and today we have, I think, a very interesting and very current topic. We are going to speak about neoliberalism and about neoliberal resilience. 

For many, neoliberalism became a kind of bastard without real meaning. It is often repeated in the media. However, I think it is a very important term which we should be able to understand. It has a particular meaning. We should see it not only as an ideology – we can see it as a particular political economic regime, a government system or systems of governing. In the center of neoliberal idea there is most probably, the belief in the free market and economic forces as a key organization principle for the societies, If you put it in a nutshell. 

Today we are going to speak with our special guest, political scientist Aldo Madariaga, who is joining us today from Chile directly and who wrote a very interesting book about neoliberal resilience. Neoliberalism is not dead and remains important for shaping our lives, our societies and our politics. Aldo, however, in his book tries to compare, not so often compared regions: Latin America and Eastern Europe. His book, Neoliberal resilience will introduce four different examples from these regions. He is comparing Chile and Argentina from the Latin-American part, and Poland and Estonia from the Eastern European part. Today we will have a look at this topic, and I am glad that I can welcome my today’s co-host, Malgorzata Kulbaczewska-Figat, who is here with us too.

Hello, Veronika, Hello, Malgorzata!

I would start with the first question, which usually is the more general question. What is the neoliberal resilience, why it is an important topic to be studied and why it helps to explain the dynamics of neoliberalism in different contexts of your study?

Thank you very much, first of all for the invitation. I’m really glad to be here and to be able to talk about this which, as you say, has become some sort of a buzz word that many claim doesn’t have any meaning anymore, and I believe it’s really important. In fact, it has a meaning, and the term neoliberalism tries to catch what happened in a particular moment in history, more or less from the 1970s-80s onwards. Of course the history goes a bit back, because the thoughts and the work by those that were behind this project started much earlier. I think it’s important because it has shaped the economic and political history of the world, and particularly in these two regions, Latin America and Eastern Europe. Even though today we often hear that neoliberalism is dead and we have different types of economic policy proposals, I think we really need to understand what liberalism actually was and that it’s pretty much alive today, in very good shape and changing, changing over time. 

Often people equate neoliberalism with some sort of market-oriented policies, liberalization, privatization, deregulation, the set of policies that were supposed to improve the economy, to bring countries in the developing regions like Latin America and Eastern Europe to be developed. It entailed a certain promise: leaving behind the state, corruption, poverty. But neoliberalism is also a political project and, as you said, Veronika, it’s a project of thinking how to shape society, how to shape the polity that says the political order in a certain way is right. So it’s not just more markets or less markets, more state, less state, because then you can say: if you increase state intervention, then we don’t have neoliberalism any more. If you increase the welfare state, we don’t have any liberalism anymore.It is a more complex project and the project is intended to shield the decisions of individuals, or rather companies, enterprises,  from the power of majorities.

This is a very old project that was alive in conservative elites. You know that they were fearful, even in the 19th century,of the power that democracies would give to the majority of people that were deprived of property. They were fearful of the workers and feared that democracy would actually imply some sort of forced distribution from the rich, from the property owners to the working class. So this project started actually as a political and economic order in which the workers and the majorities cannot deprive the rich from the means of production, from property. This is at the core of the neoliberal project. 

That’s why it’s not just about more markets and more liberalizing policies. That has some role, but also there’s an important part in every neoliberal project: thinking about how to shape democracy, the institutions of democracy, so that different parts of the system wouldn’t actually go against this basic premise that property owners are shielded from the power of the majority.

Yes, in your book you are very nicely showing how neoliberalism is, as you said, now kept still alive and how it was actually introduced in both contexts, in the countries of Latin America and Eastern Europe you have chosen. So you are actually showing very nicely, I think, several mechanisms how this neoliberal resilience is working. Could you tell us more now about these basic mechanisms which your research is showing?

Right, thanks for the question. First of all, I don’t think these are the only mechanisms. There can be more mechanisms, but these are basic ones that I found and I think they are quite important for understanding how neoliberalism is still alive today. 

The basic premise is that liberalism, as we saw in Eastern Europe and Latin America, wreck society. It produces liberalisation and regulation. People lose their jobs, there are more financial crises and economic crisis, people are subject to the vagaries of markets, ups and downs, and so eventually, and we saw this as well, people start protesting against it and try to implement different policies to shield them from precisely this type of policies and this type of processes. What I saw in those countries that stayed longer, and even until today with the neo-liberal project, is that there are more resilient liberal trajectories. 

There are basically three mechanisms. One of them is related to business class.Historically, capitalism was supported by a specific set of business owners. It was more the industrialists that needed protection from world trade. In the case of land in America, for example, we had to substitute industrialization, and the domestic industrialists were often in favor or actually supporting different types of capitalism, less liberal, more protectionist, more oriented towards protecting the working class. There were different types of interests within the capitalist class. So the first set of mechanisms that I explore, that I call support creation, has to deal with how to create a unified business class, in support for neoliberalism, so basically to bring together the business class that is often divided into lines: industry versus finance or agriculture versus industry or different types of industry. There are different ways of bringing them together, through regulation and creating new market niches, but they did this mostly through privatization, privatizing state companies and bringing them into the hands of business owners. 

These regimes knew that they were going to defend neoliberalism in the future.They created in different ways the privatization to people, that they knew that they were related to finance, for example, and sectors that usually support liberalization and regulation in this policy. One mechanism clearly is to unify the business class. So there wouldn’t be any alternative sort of business sector supporting a more protectionist and more welfare-related type of capitalism, like the one we saw in the postwar era and the one that many governments were trying to produce in the aftermath of 1989-1991. So that’s one mechanism. The second one I called blocking opposition. Democracy creates spaces for the manifestation of different political views. If people want to introduce different policies and shield themselves from the effects of neoliberalism, they vote for those parties that promise that they will enact different policies. They choose people who promise more welfare, reduce regulation, and reregulate. 

What happened is that people that introduced neoliberalism in these regions, what they tried to do is actually to engineer democratic institutions, including party systems, electoral rules et cetera, so that they would, on the one hand, boost the support of the representation of the right (usually was more supportive of neoliberalism) and reduce the representation of the left. Often, as I said, they preferred introducing, for example, non majoritarian institutions to block what was happening in Congress or directly reducing the capacity or the chances of certain left parties to get into Congress. 

And the third one was a sort of safeguard, ultimate safeguard. You know, even if the left could get into power, even in case that there could be a business sector supporting a more left-oriented project, then they established a series of barriers for changing key policies, even in the constitution. They inscribed, for instance, monetary policies into the constitution, so that nobody could change them, even if in power. 

So those three mechanisms reduce the capacity to represent alternative political projects, political economic projects, and increase the chances that neoliberalism survives in time.

Nevertheless, many opponents of neoliberalism claim that neoliberalism, that free market equals freedom. What you say is that neoliberalism is in principle undemocratic and limits the scope of a democratic exchange of views. Do you tell us more about this, basing on the examples you evoke in your book, how did no liberal resilience and the quality of democracy were intertwined in the countries you studied? How did neoliberalism, in other words, spoiled the Southern American democracies?

Yeah, that’s an interesting question. In principle, I would agree that liberalism is some kind of freedom. I would say you have to ask yourself: freedom for whom and freedom for what. So, yes, it is more freedom – for property owners. From the beginning this was the type of freedom that they were trying to shield and they were trying to protect. 

Collective actors or majorities would impair the sovereign liberties decisions of individual companies – making them pay higher wages or respect labour legislation or environmental legislation. Neoliberalism goes against this, so that freedom of property owners is shielded. But by doing that you often – not necessarily, but often – go against other freedoms, political freedoms or even know democracy in itself. One thing is neoliberal policies and the other thing are all those mechanisms that allow these policies.

 This regime is the set of ideas of how to shape society, the mechanisms that allow it to stay over time, and I think this latter part is what is essentially undemocratic. Even if in the writings of the people that were part of this project, and they were writing in the postwar era, the era of keynesianism not just in the society, but also in companies, labor unions, collective bargaining and all of these – they were thinking how to reduce democracy so that it wouldn’t give all the power to the people, to the working class. This was one essential idea of them, and there were many writings even saying this, conceptualizing this very explicitly: We need to reduce the scope of democracy. There are claims that a bigger number of people involved in decisions and the number of issues in which greater democratization happens is not always a good idea. Democracy ends up impairing the freedom of companies doing what they want. So an essential part of this project was precisely to be undemocratic or the idea of a limited democracy. They get away with saying that they’re protecting minorities from the power of majorities, which sounds good, but which minorities are that and which liberties are they protecting? The property owning minorities and their economic freedoms.

In Central and Eastern Europe, we see that it’s very difficult in these societies to create an alternative development project which would be not neoliberal, which would be even clearly anti-liberal. Of course, as your book is showing, there are varieties of neoliberalism. There is no pure neoliberalism in any of the analysed countries. You are showing it in Poland and Estonia, or if you take the Czech Republic, my homeland country, there are different varieties. But still it’s very difficult to really put in the political mainstream the alternative visions to create a coalition or social bloc which would be able to put in the mainstream a clear and serious alternative. Could you tell us what are the key mechanisms behin this? We all know the modus operandi of new liberalism, the Thatcherian slogan, there is no alternative. It seems that to many people in Central-Eastern Europe indeed there is no alternative to neoliberalism. Why is this so?

The result of the mechanisms I had been talking about is actually to reduce the possibility that alternatives are expressed in public debate. Just to give you an example from my own country, Chile, which is one of the cases that I study. We don’t have alternative business sectors, wishing to change existing policies, wanting to change existing regime, funding different parties, funding think-tanks and studies to support different ideas. If you don’t have that, you only have one side. 

The business class was actually funding think tanks that produced studies supporting all of the policies that were implemented and that said that was the way to go. They were funding the parties and candidates that were supporting those policies. In the end, when it comes to moments in which people are dissatisfied, they go to the polls to vote and… What happens is that they don’t have alternatives, they cannot vote for different projects. Right, you may have different parties, different candidates, but since we have only one way of seeing things and since we have only one set of funders for those parties, then the political space is really reduced.

For a long time, the political space in Chile seemed frozen. We  had ‘left’, we had ‘right’, but actually their proposals were not that different from each other. They were just giving power to each other, sometimes more on the left, sometimes on the right. People went to vote one time, a second time, another time, and there weren’t many changes. You could see that even in the political system it was very difficult to think about different ways of doing things.Even though we have globalization, it is difficult to connect with alternative experiences elsewhere. The political system, in a certain way, keeps filtering what’s happening in the world.

What is presented to the public debate as alternatives is actually more about continuing on the old path. This situation generates lots of frustration. However, in some countries, for example as in Poland, where neoliberalism was more limited, some of these mechanisms, like the one related to politics, were a bit more open. What happens is that you have new groups, new parties, presenting alternatives (or apparent alternatives). Some of those alternatives may even go against the very democratic system, so it ends up creating further problems. On one hand, there are the countries that remain very neoliberal and that have their political systems very much frozen. On the other, there are those that create alternatives outside the frozen political system – and no one controls any more what happens outside the system. You have all sorts of maverick new political groups that present people with alternatives that may be even against democracy or even against the people. But people will go for them, and this creates all sorts of new problems, as we are seeing in some parts of it.

Chile is often described as a laboratory of liberalism, and you have just said how frozen your political system was. Yet in 2019 it was Chile who suddenly became the epicenter of  contestation, and all the world was watching mass demonstrations in Santiago and other cities, with people saying explicitly: we don’t want this kind of system, we want a systemic change and we stand-up against neoliberalism. Could you tell us more which dynamic brought Chile to this moment? Why, at that point, Chilean society stood up to neoliberalism? Could this experience be repeated in other places you studied, including Eastern Europe?

This is very interesting and has many angles. It is a complex story, but if you follow what I’m just saying, there are two things. For a long time, his frozen political system seemed to work. It was sort of a model democracy in which people would go to vote. Civil liberties were respected. There was seeming political competition, but actually no meaningful alternatives. What happened is that for a long time people chose the exit from that situation. They withdrew to the private realm, they wouldn’t go to vote. Voting rates were going down and down for a long, long time. Participation in elections was less than 50%. Respect for the political system was the worst in the whole of America, even if Chile was the country with the best official figures in terms of how good the political system is, how stable it is, how good our institutions and how well they are functioning. Actually, our citizens were the ones who disliked most all political institutions and the way democracy was functioning in the whole Latin America.This really created this antagonism and this detachment between the people and the political system. 

At some point politicians realized this and they started undoing some of those mechanisms, trying to bring new political alternatives so that they would represent all this disenchantment sentiment. This created a sort of voice response from the people. They started voting for those new alternatives. But that wasn’t enough, because people had accumulated so many frustrations in time, they went to the street and this erupted, as we saw, in the social outburst of 2019, with many different demands. All of them wanted changes to specific public policies and they were driven by an overall feeling that politicians were not caring for society. There was also an overall feeling that there were a lot of inequalities that were entrenched and no possibility to change that. 

The constitution became sort of a focal point, partly because of the reasons that I was just saying – that many of the neoliberal solutions were entrenched in the constitution. This encouraged thinking: if we change the constitution, we can actually have a turn. But that was a different and very complex process. The final result – and we can talk a bit more about that if you want – shows that these mechanisms are quite entrenched. Business community, for example, fought very hard to maintain their privileges. 

I also think that the population arrived into a state of extreme distrust of political institutions. After all this time of having a frozen political system they were told they would have a new constitution written by a certain group of elected people. They started saying: well, we have a new congress now, writing the new constitution – we don’t like this. Political institutions are not trusted. All these years created a huge gap between what can be done at the political level, what people actually want and how to satisfy that. And we haven’t really come together to think about how to close that gap.

Then I would like to ask you: what have we learned from this Chile experiment-experience, and what is the future of the Chile experience? If neoliberalism inflicted such huge losses on people’s self-conscience, people’s trust towards institutions, even if the institutions are not the same as before 2019, then what is the way forward and is it possible to fight this legacy of neoliberalism?

I think it’s really difficult. I think it’s a very complex situation in which you need new institutions, new constitution that allow new political games – but people don’t trust that. 

It’s really difficult to try to freeze both the political system and the economic model in one way or the other, and it’s important to understand both the side of those who are in favour of neoliberalism but also those who are against neoliberalism. This is both a strength and a drawback of democracy, but we should see it as strength: this system creates competition for different alternatives, and I think these alternatives should be up for grabs and should be allowed to manifest themselves in a political system. If you don’t have that, then you come to a situation in which you have a frozen political system, a political order that creates representation gaps. 

At the same time, the problem with democracy is that you need to make sure that those alternatives don’t go to the extremes that want to erode the very basis of democracy. This is what we’re seeing in certain parts of Eastern Europe, for example, and also now in certain parts of Latin America, with the rise of the radical right that is not very fond of democracy from the start. It is a challenge, and we need to be very humble about what we can have in a democratic system. We need to understand also that, as people that may be against this liberal radicalness which froze the alternatives, we need to be very careful about allowing this political game to hit, in the end, what democracy is about. And it is about changing governments, allowing different options to manifest themselves and trying not to freeze the capacity of people to feel represented by different alternatives.

I think we are coming to the conclusion of this interview and I think everybody is able to find the book and read the book itself. The book is of course very detailed in explaining what is neoliberalism, what is resilience, what is the contestation of neoliberalism? I think it is very informative and very, very important for everybody based in Central and Eastern Europe and in Latin America to have this comparison. As to said, we often are self-involved with our own issues and with national policies and politics, but we actually share with Latin America, I think, much more than we are realizing and admitting. 

So thank you, Aldo Madariaga, for coming to our talk and sharing with us his knowledge and his ideas. And I will remind everybody that Cross-Border Talks are available on several different platforms. There is the YouTube channel, you can listen to us on SoundCloud and Spotify, you can see, you can listen, you can also see subtitles on Youtube in several different national languages according to the situation, and of course we are also on social media. Last but not least, we also have our own page on which you can see the newest articles about all issues around the world. So thank you very much for your time, Aldo, and thank everybody who was with us today had a nice day or evening, whatever time it was. Thank you.

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