ALBA, Nicaragua and the end of Liberalism

The economic and political power of Western Bloc countries – the USA, Canada, the leading European countries and their Pacific allies – is rooted in the economic and military advantage they seized in the centuries of colonial expansion. They have defended that advantage and propagated it ruthlessly ever since. After the Second World War, they reorganized the colonial system under the leadership of the United States.

That reorganization set out to defend liberal corporate capitalism against perceived threats from communist countries like the Soviet Union and China and from anti-colonialist nationalism in Africa, Asia and Latin America. Economic and political power enabled Western Bloc countries to impose their cultural and moral agenda around the world. That domination, self-evidently based on military, especially nuclear, superiority, was accompanied by a bogus claim to moral and intellectual superiority.

The alleged cultural superiority was based mostly on the arguments of Liberalism, promising progress and prosperity based on electoral democracy, free markets, individual liberty and the rule of law. Like any other ideology, Liberalism is as amorphous as the people who promote it, with many currents. By the 1970s even Conservative politicians – people like Ronald Reagan or Margaret Thatcher - subscribed to the main tenets of Liberalism, both in politics and in economics.

In politics, all versions of Liberalism prioritize change - usually construed as progress - generated by communities of opinion freely arguing their respective cases. Liberals expect those communities to reach consensus through processes based on the free exchange of ideas, democratic elections and the arbitration of an independent judiciary. In economics, Liberalism advocates supposedly free markets based on contracts freely entered into by individuals and businesses, typically corporations.

So-called free trade agreements, or in the case of the European Union, the mis-named Economic Partnership Agreements, embody economic liberalism's dominant influence on international trade relations. Against overwhelming evidence, proponents of Liberalism pretend that, on the whole, markets, left more or less to themselves, will ensure optimal and generally just outcomes for everyone. The most aggressive expression of those Liberal economic principles over the last forty years has been neoliberalism.

But neoliberalism is not just influential in economics, it has pushed important aspects of Liberal thought back to the extremes that characterized global economic and political life prior to World War Two. In some aspects, thanks to the communications revolution, they have gone even further, typically breaking down economies and markets via accelerated hyper-connectivity into an infinite proliferation of contractual transactions. Leading political neoliberal, Margaret Thatcher, once said, notoriously, “There is no such thing as society.”

In the United States, Liberalism was strengthened by the persuasive legacy of Pragmatist philosophers, most cogently John Dewey, whose views greatly strengthened the influential anti-communism developed by thinkers like Sidney Hook. That variety of anti-communism influenced both conservative ex-Trotskyists who eventually aggressively promoted Reaganite neoliberalism and also more affable, humanitarian varieties of Liberalism like that expounded, for example, by the philosopher Richard Rorty. Economic and political variations on the main tenets of Liberalism abound.

Both affinities and differences characterize the ideas of US varieties of Liberal thinkers when compared to others like the Austrian Friedrich von Hayek, author of “the Road to Serfdom”, Raymond Aron, the French writer of “The Opium of the Intellectuals” or Karl Popper, who wrote “The Open Society and its Enemies” in New Zealand. However, until the recent economic crisis, regardless of occasional points of coincidence and divergence, a broad swathe of dominant global Liberal political opinion tended to promote the utterly tendentious equation “free markets = democracy”. That phony equation's ideological corollary, particularly relevant to the Western Bloc's cultural war against Islam, was “free market democracy = progress/modernity”.

Domestically, after the Liberal propaganda triumph embodied in the collapse of the Soviet Union, Western Bloc governing elites were still only able to make that propaganda plausible by promoting finance-dominated consumerism fueled by ever more frequent asset bubbles and unsustainable debt. They exploited their economic dominance of international financial institutions to force poorer countries into increasingly deeper dependency. By combining frenetic corporate globalization with the ruthless deployment of military power around the world, they secured their economic advantage despite a decline in their productive capacity relative to important rivals like China.

Morally and intellectually, Liberalism has exhausted its role as a cultural alibi for Western Bloc countries' historical crimes of genocide, slavery and insatiable exploitation. Politically , economically, and environmentally, Liberalism has been exposed as shamelessly fraudulent. Its political system has degenerated to an endless marketing exercise selling rapacious plutocracy as democracy via the public relations skills of star players like, until recently, Tony Blair and, now, Barack Obama.

Economically, the Liberal global financial system is built on neocolonial extortion and systemic fraud, especially via secretive offshore activities, with occasional show trials to give an impression of control and accountability. At the end of the 1980s it was Drexel Burnham Lambert, Michael Milken and Ivan Boesky. In 2002 it was Enron and WorldCom, Ken Lay and Bernie Ebbers. Now it is Goldman Sachs and Bernie Madoff. Only the names change, the rotten systemic fraud backed up internationally by terrifying imperial military muscle remains the same.

Systemic financial fraud is matched by systemic media dishonesty. Liberal ideological dominance since World War 2 has seen a monopolistic concentration of powerful media beyond the dreams of any despot in history. The mass global propaganda potential of these multi-sector corporate media monsters has generated infinite feedback loops that render traditional fact-based reporting almost completely anachronistic.

Among many examples of the power of global corporate media are the erasure of Israel's decades-long genocide of the Palestinian people and support for criminal aggression against Iraq and Afghanistan. Military aggression against Iran seems to be only a matter of time. In Latin America, Western Bloc media demonize the governments of Cuba and Venezuela whose socialist policies work demonstrably better for the majority than those of Liberal capitalism in neighbouring countries.

Incessant hysterical attacks on political figures like Presidents Mahmud Ahmadinejad of Iran and Hugo Chavez of Venezuela indicate an underlying geopolitical reality. Western Bloc governments are reluctant to confront outright nuclear armed rivals like Russia and China. But they are ready and willing to openly threaten those global rival's regional allies like Iran and Venezuela.

Latin America

Historically, in Latin America as elsewhere, Liberalism represented the advance of excluded sectors towards political power against Conservative landowning elites and their allies in the Roman Catholic Church. But over the last forty years, most Liberal parties in Latin America have generally succumbed to aggressive neoliberalism and clearly identify with repressive, avaricious local oligarchies. The emblematic instance of that reality in recent months has been the support of the leadership of the Liberal International – representing hundreds of Liberal Parties around the world - for the fascist coup regime in Honduras.

In Latin America, neoliberalism blurs into its Liberal origins more readily perhaps than in North America or in Europe. The neoliberal economic formula as experienced by Latin America's impoverished majorities has been persistently and uniformly extremist. Over decades, the formula hardly ever varied : privatization of public resources, deregulation of commercial and financial markets, reduction in government expenditure, free flow of foreign capital and investment.

The end result consistently was increased environmental degradation, inequality and poverty, rural depopulation and migration of labour abroad. Haiti's catastrophic condition even before this year's earthquake is only the most extreme example. The situation of impoverished majorities throughout Latin America and the Caribbean is often equally dramatic, though perhaps less obvious and certainly less reported.

Long before the recent economic collapse of the Western Bloc countries, their economic model had demonstrably failed in Latin America, as it had in the rest of the world. That failure was both theoretical - an inability to predict outcomes - and practical – a pathetic failure to deliver prosperity. The theoretical and practical failure became clearer than ever when its environmental dimension was exposed at the global summit in Copenhagen earlier this year.

The financial and economic crisis that began in July 2007 has forced neoliberal ideologues to retreat and make accommodations with less extreme economic Liberalism, especially with the interventionist policies most famously advocated by John Maynard Keynes. Even former bastions of neoliberal dogma like the World Bank and the International Monetary Fund are now reassessing the dismal results of their ideological faith-based policy failures over the last forty years. This ideological revaluation represents a dramatic historic reversal of capitalism's neoliberal remaking of itself following widespread abandonment of Keynes' ideas in the late 1970s.

As the economic writer Henry C.K.Liu wrote in an article on Keynes and Hayek, by the mid 1970s,“Conservative politicians began to demonize Keynesianism domestically and rational socialist economic planning internationally. Third World socialism, burdened with endemic poverty from imperialism, was never given a chance economically by the new financial imperialism and politically by Cold War containment.”

Liu perhaps underestimates the extent to which Liberal-minded social-democrat chameleons like Bill Clinton, François Mitterand, Felipe Gonzalez and Tony Blair embraced neoliberalism. They did so because they totally subscribed to the fundamental tenets of dominant Liberal ideology. But Liu's remarks hint at the deeper reality of Liberalism's ideological breakdown.

That breakdown happened because Western Bloc political, economic and intellectual leaders were unable to manage their domestic policy failures. Internationally, those domestic failures were paralleled by genocidal military intervention and wholesale abuses in flagrant violation of agreed humanitarian and human rights standards. Liberal societies' fundamental contradiction is that their governments depend on inhuman State violence to enforce compliance and submission to the dominance accorded, domestically, to inhuman corporate business and finance interests and, overseas, to predatory national interests.

The recent US Supreme Court decision to allow corporations to provide unlimited funding to political election campaigns demonstrates that leading Western Bloc countries have learned nothing from the failures of their financial and economic system. Now they are extending it even deeper into their own political system too. The trillion dollar bailout of the US corporate finance sector in effect means that US taxpayers have bankrolled multinational corporate gamblers who will use their winnings to buy legislators wholesale, as well as the next US President, over and over again.

In foreign affairs, Liberal political and economic contradictions merge into moral criminality on a global scale. Ever since 1948, Western Bloc countries have deliberately sought to exclude the global majority from any meaningful process to generate equitable global peace and justice. Imperialist aggression in Korea, through Vietnam and up to the present in Iraq and Afghanistan was paralleled by murderous colonialist aggression, for example in Cheju, Madagascar and Algeria, followed later by a multitude of neocolonial interventions, by the Liberal West's long covert defense of South African apartheid and its brazen support for Israel's slow genocide of the Palestinian people.

Since the collapse of the Soviet Union, the United States and its allies have worked rapidly to destroy the foundational consensus embodied in the UN Universal Declaration of Human Rights. The UN, on one reading an aspirational embodiment of Liberalism's highest ideals, has been deliberately wrecked by rich Western Bloc governments determined to defend their countries' power and privilege. Former US Assembly President Miguel d'Escoto has called urgently for a re-invention of the UN. The Western Bloc countries' increasingly reckless international gangsterism is a tacit acknowledgment that their global dominance is over.

In Latin America, the ALBA bloc of countries, committed to their respective paths towards socialism, are equally determined to defend their peoples' rights to the fundamental UN principles of self-determination and freedom from aggression, and to the broadest possible realization of the rights embodied in the UN Universal Declaration. As the ALBA countries seek to progress towards those ends, the Western Bloc response has been one of covert support for domestic anti-democratic opposition forces, regional and international saturation media attack, aid and trade coercion and outright militarism.

Nicaragua – ALBA in Central America

Even more so, following the military coup in Honduras, it is now Nicaragua whose politics dramatically highlight the failure of Liberal ideology at national, regional and international levels. Liberalism has categorically failed both in terms of its theoretical predictive capacity and in terms of practical delivery of prosperity. By contrast, the socialist-inspired government programme of the Frente Sandinista de Liberación Nacional (FSLN) has consistently achieved its broad objectives. That contrast between abject Liberal failure and undeniable Sandinista achievement is the cause of the Liberal opposition's electoral decline since Daniel Ortega became President in 2007.

For the moment, Nicaragua's relative economic and social progress does not reflect too badly on its fellow Central American governments. That is hardly surprising given the extremely low base bequeathed by successive neoliberal governments from which the FSLN government began just three years ago in January 2007. The real test for both Nicaragua and ALBA is likely to be whether or not the FSLN can successfully win re-election in 2011 and what the resulting FSLN government will then be able to achieve in the developing regional context between 2012 and 2018.

Conversely, the national and regional centre-right and right-wing parties – still obsessed with discredited Liberal political ideology and neoliberal economic ideas – are desperate to prevent a Sandinista electoral win in the 2011 presidential elections. With no plausible coherent political programme, the Nicaraguan opposition parties represent in microcosm the failure of their Western Bloc patrons. At a global level, Western Bloc governments threaten militarist chaos to defend their countries' power and privilege. In Nicaragua, the local Liberal opposition sabotage normal institutional life whenever they can.

Nicaragua's politics also reflect the gravitational pull of global Liberalism as it implodes upon itself like a dwarf star, sucking orbiting political debris into its collapse. In Nicaragua, that debris includes the motley remnants of the libertarian socialists, anarchists and social democrats that make up the Movimiento Renovador Sandinista party and its Rescate appendage. It is no surprise that MRS allies on the self-regarding, neocolonial Left in North America and Europe have faithfully repeated US State Department propaganda attacking the FSLN government led by Daniel Ortega.

The FSLN revolutionary government in Nicaragua represents a nemesis for US regional policy in Central America. It does so because it presents an even stronger ideological challenge than it did during the Sandinista Revolution of the 1980s. It is stronger partly because the US cannot readily deploy State terrorism to blow up schools and clinics, or murder engineers, teachers and nurses as it did during the Cold War. The current Sandinista government also represents a stronger challenge ideologically because, as part of ALBA, it is delivering economic and social progress that 16 years of neoliberal governments did not.

ALBA – the Liberal nemesis

When Arturo Valenzuela appeared before the US House Foreign Affairs Sub-Committeee on the Western Hemisphere earlier this year, Senator Dan Burton remarked, complaining about a matter involving Honduras “This is our front yard!” Comically, Burton blurted out an unconscious recognition that Central America is no longer as dependent on the US as it used to be. If Central America is no longer the US backyard that is mainly thanks to the Venezuelan and Cuban led ALBA economic programme and its less ambitious subsidiary programme, Petrocaribe.

ALBA contradicts Liberal economic thinking in various ways. It promotes solidarity and complementarity between sovereign nations. Liberal economic thinking prescribes vigorous competition and the dissolution of national sovereignty under multilateral global institutions – dominated by the United States and its allies.

ALBA's policy makers attempt to plan rationally and cooperatively, removing that role from basket case outfits like the World Bank, the International Monetary Fund and their various adjuncts. Liberal economists tinker faithlessly with ineffectual regulation, hoping some invisible capitalist hand will make for optimal outcomes that never ever come about.

ALBA deliberately proposes sustainable economic equity for the peoples of Latin America and the Caribbean. Neoliberals demand a mechanical, exponential increase in transactional connectivity to the greater glory of an ineffable market. Western Bloc governments publicly preach Liberal economic non-intervention at the same time as they covertly collude as junior partners with their Central banks and major financial institutions to defend their countries global predominance by fixing currency, commodity and bond markets.

A crucial development in ALBA's planning towards its objectives has been the introduction of a unified regional compensation system built around a currency accounting unit – the Sucre. In effect this compensation system means that intra-ALBA trade will increasingly and rapidly abandon the dollar. That effect will amplify the existing use of barter between the ALBA countries that has already reduced their need to participate in foreign exchange transactions involving the US dollar.

The establishment of the Sucre is another small blow to US dollar hegemony. It follows agreements reached in 2009 between Argentina and Brazil and between Argentina and China to manage most of their bilateral trade by means of currency swaps which also dramatically reduce those countries' need to engage in US dollar-based foreign exchange transactions. These moves amount to a steady strengthening of sovereign control over Latin America's most important economies and a corresponding decline in the importance of the US dollar as an international reserve currency.

The introduction of the Sucre follows a similar logic to that of progressive Liberal economists in the US who argue that the US can run deficits as high as the economy needs to because its debt is denominated in its own sovereign currency. But whereas the ALBA countries are using the Sucre to stabilize and promote intra-regional trade and productivity, it is far from clear that deficit spending by the US government will achieve better results than those achieved in Japan over the last two decades, for example. Nor is it clear how the US economy might adjust to wholesale abandonment by global purchasers of US government debt faced with a marked fall in the value of the US dollar in relation to other leading currencies.

ALBA's principal members - Bolivia, Cuba, Ecuador, Nicaragua and Venezuela - represent the future of Latin America – a socialist future. Politically, most of the ALBA countries tend to promote socialist, direct participatory democracy and grass roots organization. Globally and regionally, it may be possible for Western Bloc governments and their local allies to keep up the hollow facade of the Liberal capitalist system. But its basis in militarist gangsterism, elite corruption, inhuman inequality and rapacious environmental destruction are now clearer than ever for all to see.

ALBA's very success and that of its sister energy and food security framework Petrocaribe, has provoked a very precarious moment now for its member countries, under menacing threat from the United States and its allies. It is a moment when one could legitimately expect global progressive forces to coalesce in active defense of all the ALBA governments. But it is not uncommon to find influential figures who claim to be anti-capitalist or anti-imperialist and yet refuse to defend explicitly and vigorously the governments of Cuba, Venezuela or Nicaragua against US and allied aggression in its various forms.

The Western Bloc countries and their local allies are maneuvering fiercely to try and destabilize Nicaragua, perhaps even to make it impossible to hold elections in 2011. For the foreseeable future, the US economy will certainly tend to stagnate with unrelenting high unemployment. The sovereign debt problems of important European Union countries will also probably deteriorate, deepening economic failure there too.

As those countries fail to resolve their economic and financial crisis, their menacing pressure on relatively successful ALBA countries will increase. The socialist oriented ALBA governments face a protracted attritional confrontation with the failing Western Bloc ancien regime. In that confrontation, 2011 is likely to prove a decisive year for ALBA's defense of solidarity and humanity against its enemies.

Toni writes for Tortilla con Sal

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