Neoliberalism According to Benjamin Keen,

Neoliberalism According to Benjamin Keen, author of A History of Latin America," neoliberalism is the "policies of privatization, austerity, and trade liberalization dictated to dependent countries by the International Monetary Fund and the World Bank as a condition for approval of investment, loans, and debt relief (1996, xi). Neoliberalism stands in opposition to Keynesian economics; one goal is to shrink the size of government and encourage direct investment from foreign countries.

This political and economic philosophy has taken hold in many Latin American countries over the past few decades, with mixed results. In his article, "Neoliberalism and Democracy in Latin America: A Mixed Record," author Kurt Weyland explores in detail how neoliberalism took root in Latin America and the positives and negatives for democracy in those nations. He argues that neoliberalism has had a paradoxical effect. On the one hand it has made democracy more sustainable; on the other, it has limited the quality of democracy.

Neoliberalism opened up Latin America to participation in the world economy, but this comes with its own pitfalls, including the political pressure that comes along with economic investment. When foreign countries make investments in Latin American countries -- often very large investments -- they also exert tremendous influence over the administrations that benefit from the influx of money.

As Weylan writes, "tighter economic constraints limit governments' latitude and thereby restrict the effective range of democratic choice; and the weakening of parties and interest associations has depressed political participation and eroded government accountability" (p. 135). The end result of neoliberal reform is a free-market system. While this model may seem like the ideal to those in the United States and other first-world nations, in Latin America the changeover required dismantling the established model and is dependent upon a strong leader with a concentrated core of power surrounding him.

One of the earliest countries to make the difficult transition was Chile under dictator Augusto Pinochet, who made the transition with brutal force. The lesson learned seemed to be that democracy and neoliberalism didn't mix well, but, as Weylan points out, a "large number of Latin American democracies did enact drastic, painful market reforms from the late 1980s on" (p. 136).

In an effort to put a stop to hyperinflation and gain economic stability, these leaders imposed strict budget austerity, cut the government workforce, gave over public entities to privatization and invited investors from around the world to participate in their economies. They also rolled back significant regulations and government controls. These "draconian" measures, as Weylan defines them, led to incredible short-term costs for many sectors of labor and business. As mentioned earlier, the implementation of neoliberalism produced mixed results in Latin America.

Weylan focuses on neoliberalism's effect on democracy in Latin America, pointing out that it has added to the survival of democracy but has eroded its quality, although he admits that his essay doesn't solve the discussion but rather provokes it. Despite what occurred in Chile, the lesson taken from Pinochet's actions -- that democracy would be destroyed by neoliberalism -- no such thing occurred. Much of this is related to when leaders decided to enact neoliberalism.

Most often it was in the midst of an economic crisis, such as hyperinflation, and was a corrective measure to stop an economy's downward spiral Notwithstanding the harsh effects of economic stabilization, the population was willing to accept the reforms for the sake of their own survival. The short-term harshness of the changeover was seen as a worthwhile trade-off for the promised stabilization. The results of these drastic reforms have had many positive effects.

They have increased the international community's interest in protecting these fledgling democracies, and the improvements in the economy have helped prevent internal challenges to the democratic leadership. These Latin American countries are now, more than ever, part of the world economy, which has made other nations more interested in bolstering democracy in the region -- they now have investments to protect. The United States, for example, exert significant pressure on these Latin American democracies. The U.S.

has stepped in to prevent military coups, and if it can't prevent the overthrow of democracy, it immediately punishes the new regime with economic sanctions. Before neoliberalism, few international countries had any sort of leverage over Latin American rulers and their insular economies. One salient example happened in Peru in 1992 when President Fujimori tried to dismiss the congress of Peru and install himself as a dictator.

Fujimori had instituted neoliberal reforms and felt the need to concentrate power, but the United States warned him that going through with his autocratic plan meant severe consequences. The International Monetary Fund (IMF) and other nations would divest from Peru. He wasn't happy about it, but Fujimori caved to U.S. And international pressure and restored the basic outlines of democracy in Peru. A similar threat also worked in Guatemala, when President Jimmy Carter threatened to cut of all aid unless the country's leaders cleaned up their human rights record.

This time, however, the threat failed. Neoliberalism had not taken a firm hold in Guatemala and the government had no reason to bow to the pressure. Had the country been more integrated into the world economy at the time of President Carter's demands, they likely would have responded positively. In the late 1980s this actually became the case. Guatemala enacted reforms that opened its economy to international investment and trade. So when President Clinton made the same demands in 1993, the leaders eventually backed down.

President Clinton's economic sanctions carried a real threat. As more Latin American countries have turned to neoliberal policies, the pressure to behave doesn't just come from outside of the region; it comes from within as well. The countries of Latin America are more intertwined than ever. While.