16: The “Solidarity Economy” Model and Local Finance: Lessons from New Left Experiments in Latin America?
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279 Chapter Sixteen The “Solidarity Economy” Model and Local Finance Lessons from New Left Experiments in Latin America? Milford Bateman and Kate Maclean Introduction Since the 1990s, many countries in Latin America have been gradually extricating themselves from the nearly continent-­ wide experiment with neoliberal policies, an experiment that many independent analysts now view as having precipitated nothing short of an economic and social calamity (Hershberg and Rosen 2006; Weisbrot 2006; Weisbrot et al. 2006; Navarro 2007).1 With signs of economic progress and social reconciliation beginning to appear by the midpoint of the 2000s, especially in terms of poverty reduction, Latin America’s disengagement from the Washington Consensus began to accelerate (Panizza 2009). In 2006 as many as twelve governments across this remarkably diverse continent had made a decisive turn to the left.2 The so-­ called pink tide had hit Latin America. Although business elites and right-­ wing political groups and parties have fought determinedly to reverse this popular leftward trajectory, recently achieving power thanks to electoral success in Argentina and after a judicial coup in Brazil, the important lessons learned during the recent period of history remain valid. Of course, the various leftist governments that emerged in the first decade of the new millennium had significant differences, ranging from the moderate , business-­ friendly socialism of Brazil and Chile to the radical community-­ driven model espoused by Bolivia’s Evo Morales. Nonetheless, in all of these countries the commitment to find an alternative to neoliberalism was shared by politicians, local communities, and activists right across the political spectrum, albeit for different reasons. Venezuela, Ecuador, and Bolivia have been all too eagerly painted as “populist” by the likes of the Houston Chronicle and many mainstream, US-­ based academics (Council on Hemispheric Affairs 2007). But 280 Milford Bateman and Kate Maclean this portrait is misleading, one that has been deliberately created in order to obscure the strong popular-­ democratic foundations of all three governments, as well as the influence of social movements, most notably indigenous movements , that are engaged in the search for development alternatives based on sustainable and social justice. Even under President Barack Obama, the US government has not let up in its long-­ standing covert efforts to destroy the legitimacy and functioning of all leftist governments in Latin America, most notably those of Venezuela and Bolivia, in order to bring back US-­ friendly right-­ wing governments (Wikileaks 2015).What is more, contrary perhaps to the outsider’s view of the continent, alternative visions of development are coming from many local communities in traditionally conservative countries, notably Colombia. Because Latin America’s neoliberalism was largely imposed upon the region by the three most powerful Washington institutions—the US government and the Washington-­ based World Bank and International Monetary Fund (IMF)— the Washington Consensus never had any meaningful roots in Latin America’s cities and communities, and especially its poorest ones.This opened up a political space for numerous anti-­ neoliberal interventions and programs to emerge from below, the majority of which also shared the wider goal of developing a more solidarity-­ based (local) economy as the primary stepping-­ stone to sustainable economic and social advancement. In tandem with important changes to macroeconomic policy since the early 2000s, Latin America’s view of its most high-­ profile and internationally well-­ funded microeconomic policy—microfinance—has also been changing. As the evidence began to emerge of deleterious impacts, including serious sub-­ prime-­ style problems (notably endemic overindebtedness in the poorest communities , most recently exposed in Mexico; see Rozas 2014b), automatic support for microfinance by national governments could no longer be counted upon. A 2010 IDB publication entitled The Age of Productivity then offered up a very powerful, though largely indirect, critique of microfinance, arguing that Latin America’s endemic poverty was a result of its financial system channeling far too manyof its scarce resources into informal microenterprise and self-­employment ventures (see the discussion in Bateman 2013b). Coming from an institution that is effectively mandated to follow the lead of the neoliberal-­ oriented World Bank, this publication represented an unexpected (and possibly unplanned)3 development. A further indication of the change under way is that the government of the country widely celebrated for the immense impact microfinance was supposed to be having on the local economy—Bolivia—began to register The “Solidarity Economy” Model and Local Finance 281 serious unease at the dominance of the microfinance model and suggested that it might be having a negative long-­term impact on...

Subject Headings

  • Rural development -- Developing countries.
  • Microfinance -- Developing countries.
  • Small business -- Developing countries -- Finance.
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