Seymour Melman and the New American Revolution: A Reconstructionist Alternative

By Jonathan Feldman


On December 30, 1917 Seymour Melman was born in New York City. The 100th anniversary of his birth helps bring his intellectual legacy into focus. Melman was the most significant reconstructionist thinker of the 20th Century, championing alternatives to militarism, capitalism, and social decay by advancing a systematic counter-planning program for disarmament and economic democracy. His legacy remains of critical importance because today the United States is currently a society in which the economic, political and cultural systems are spiraling into an abyss. Economic and social reconstruction is the idea that planned alternatives to the incumbent mechanisms for organizing economic, political and cultural power exist in alternative institutional designs and matching systems to extend these designs.

The economic realities are well-known, defined by an economic system in which the richest 1% of the population controlled 38.6% of the nation’s wealth in 2016 according to the Federal Reserve. The bottom 90% controlled only 22.8% of the wealth. This wealth concentration is well-known and is linked to financialization of the U.S. economy which is matched by deindustrialization and the decline of the “real economy.” Melman analyzed this problem tied to Wall Street hegemony and managerial attacks on worker’s power in his classic 1983 study Profits without Production. Here Melman illustrated how profits –and thus power—could be accumulated despite the decline of industrial work and manufacturing. In fact, the rise in administrative overheads associated with the over-extension of managerial power actually helped reduce both the competiveness and competence of U.S. firms.

In politics, the Republican Party has emerged as a Trojan Horse society, helping to defund the welfare state and advancing the aims of the predatory warfare state. The 2018 defense bill signed by President Trump allotted about $634 billion for core Pentagon operations and allotted an addition $66 billion for military operations in Afghanistan, Iraq, Syria and elsewhere. More money was available for troops, jet fighters, ships and other weapons, even though there are millions of U.S. citizens living in poverty (40.6 million in 2016). Melman addressed the problem of the enduring post-war militarism of the U.S. in perhaps his most famous book, The Permanent War Economy, first published in 1974. The subheading of that book was “American Capitalism in Decline.” This economy emerged as way to consolidate the military largess bestowed on aerospace, communications, electronics and other war-serving industries, not to mention universities, military bases and associated institutions serving the military economy. This corporatist system, linking the state, corporations, trade unions and other actors was described by Melman in Pentagon Capitalism: The Political Economy of War, a 1971 book which showed how the state was the top manager who used its procurement and managerial power to direct these various “sub-managements.”

In culture, we see the reign of post-truth politics, in which politicians knowingly lie in order to advance political objectives and ideology makes facts irrelevant. A report by David Leonhardt and colleagues in The New York Times found that “in his first 10 months, Trump told nearly six times as many falsehoods as Obama did during his entire presidency.” The problem, however, is that the underlying system of U.S. governance has been based on many bipartisan myths. Melman’s career was based on trying to uncover such myths.

One such myth embraced by both the Republican and Democratic Parties was the idea that military power can be used without any limits. In Vietnam, Iraq and Afghanistan, the U.S. tried to defeat guerilla operations in which the opposing military was embedded in civilian zones. Attacking such areas deflated the U.S. military’s legitimacy with the projection of military power undermining U.S. political power in the region being attacked. In Vietnam, the U.S. lost politically and a backlash against that war triggered a domestic revolt. In Iraq, the toppling of Hussein pushed Iraq into the Iranian orbit, a country which is nominally a principal adversary of U.S. elites. In Afghanistan, the U.S. continues to fight its longest war with thousands dead and “no end in sight.” When it comes to terrorism, Melman saw terrorist actions as tied to alienation, individuals cut off and remote from social integration. Clearly social inclusion could remedy such a situation, but economic decline and an absence of solidarity simply compounded terrorist threats (whatever the diverse origins).

Another key myth was the ability to organize and sustain a “post-industrial society.” A report in Industry Week (August 21, 2014) noted that between 2001 and 2010, the U.S. economy shed 33% of its manufacturing jobs (about 5.8 million), which represented a 42% decline when controlling for the increase in the workforce. After controlling for increased in the working-age population during this period, Germany lost only 11% of its manufacturing jobs. While scholars debate whether trade or automation and productivity is more significant in causing such job loss, automation in a nation state serving to protect the domestic organization of work will clearly preserve more manufacturing jobs than others. In fact, the integration of automation and cooperative workforces can preserve jobs, a point made by Melman in his last great work, After Capitalism: From Managerialism to Workplace Democracy. Melman’s support for the domestic anchoring of jobs through proactive investments in civilian infrastructure including sustainable forms of alternative energy and mass transportation also belied the associated myths of globalization and free markets—both of which failed to automatically yield a proactive welfare state responsive to maintaining full and sustainable employment.

Alternatives to a Society Spiraling into Abyss


Melman believe in a revolution in thinking and acting centered on the reorganization of economic life and the nation’s security system. He believed the core alternative to economic decline was the democratic organization of workplaces. He favored the Mondragon Industrial Cooperatives in the Basque region of Spain as the exemplary model for such an alternative. These cooperatives went beyond the small scale, and potentially vulnerable, stand-alone “socialism in one firm” model of local cooperative enterprise. Mondragon has networks diversified lines of businesses, not only creating a more resilient system in the face of reduced demand in particular sectors, but also promoting the potential for job ladders such that workers could be more easily transferred from one job to another when job loss struck. Mondragon combines a technical university, development bank and cooperatives in one integrated system.

Melman believed that both political and economic decline could be reversed by vastly scaling back the U.S. military budget which represented a gigantic opportunity cost to the national economy. The other side of the $1 trillion military budget was a vast development fund which Melman believed could be used to modernize the U.S.’s energy and transportation infrastructure and reinvest in other areas of economic decay self-evident in collapsing bridges, polluted waterways, and congested transit systems. He linked urban under-development and deficits in ecological remediation to wasteful military budgets.

The program for demilitarization required four key elements, outlined by Melman in The Demilitarized Society: Disarmament and Conversion. First, he championed a comprehensive program for general and complete disarmament (GCD) in multi-lateral disarmament treaties of the sort favored by President John F. Kennedy and described in his famous June 10, 1963 American University address. Rather than have so-called “rogue states” disarm, all nations would coordinate their military budget and military power projection systems. In contrast to proliferation reduction strategies which beg the question as to why countries like North Korea would pursue nuclear weapons (to defend against a U.S. military attack). This was a program for not only nuclear but also conventional weapons reductions.

Second, disarmament treaties would be linked to a program of military budget reductions and alternative civilian investments. These reductions could pay for needed infrastructure improvements, including the need to rebuild mass transit and energy systems, a theme taken up by Brian D’Agostino and Jon Rynn in a series of studies. Alternative government investments in needed civilian areas could provide the alternative markets needed to help transition military-serving investments into more useful civilian activity.

Third, the conversion of military factories, bases, laboratories and affiliated institutions like universities could provide a way to recoup wasted resources and provide a security system for those threatened by military budget reductions. Conversion involved advanced planning and reorganizing workers, engineers, managers and technology. For example, at one point in the post-Vietnam War era, the Boeing-Vertol company (which made helicopters used in the Vietnam War) successfully produced subway cars used by the Chicago Transit Authority (CTA).

Finally, disarmament would also have to provide for an alternative security system which would maintain security even during a period of declining global military spending. Melman supported a kind of international police force useful in peacekeeping and related missions. He recognized that the multi-year disarmament process would still leave in place defensive systems as more offensive systems were initially scaled back. Melman recognized that Britain’s unilateral disarmament campaigns were political fiascos which made the left an easy political prey to the political right. In contrast, the GCD approach still left room for comprehensive cutbacks without the political fallout associated with claims that states were left vulnerable to attack. Verification and inspection systems would insure that cuts could be made safety and any cheating could be detecting by states attempting to conceal weapons systems.

Ideology and the Power to Plan


Where did the power come from to demilitarize the economy and change the degenerate state? Melman believed that workers’ own self-organization through cooperatives provided an essential mechanism to create the primitive accumulation of economic power which would have a significant political spin-off effect. He believed that once cooperatives reached a certain scale they would act as a kind of lobbying system to redirect the political culture to more productive and sustainable pursuits as opposed to predatory, militaristic and ecocidal ones.

The biggest obstacle to economic and political democracy lay not in technical or economic barriers, however. In a series of studies published in the 1950s, like Dynamic Factors in Industrial Productivity and Decision-Making and Productivity, Melman showed how cooperative firms could actually be more productive and efficient than normal capitalist enterprises. One reason was that workers’ self-management lessened the need for costly managerial supervision. Another reason was that workers’ had direct knowledge of how to marshal and organize the shop floor, whereas managers’ knowledge was more remote and hence less operational. Workers learned by doing and had the knowledge to organize work, but an alienating system blocked such knowledge as workers were blocked from decision-making power even though workers was “responsible” for their work.

If workers could organize economic power on a grassroots level, so too could communities directly organize political power on a local level. Thus, Melman convened “The U.S. After the Cold War: Claiming the Peace Dividend,” a May 2, 1990 national town meeting in which dozens of cities rallied in face-to-face meetings to cut the military budget and invest in needed urban and ecological investments in a peace economy. Political democracy in this case was extended by a radio network broadcast over Pacifica and dozens of affiliated stations.

The key barrier to extending democracy lay in the educational system and social movements which had failed to embrace the legacy of self-management and economic democracy. Trade unions, while necessary for advancing workers’ interests, had become focused on narrow pay or social benefits schemes. They often divorced themselves from questions regarding how work was actually organized. Melman believed that peace movements, while opposing senseless wars, had “become safe for the Pentagon.” By being remote from the culture of production, they did not realize the simple fact that producing and selling weapons generates capital and power, thereby requiring more than a reactive protest system to Pentagon capital accumulation. In contrast, the founder of Mondragon, José María Arizmendiarrieta Madariaga, realized in the Nazi bombing campaign of the Spanish Republic that technology had become the source of ultimate power. The other side of Picasso’s Guernica was a system in which workers themselves could control technology for their own use, providing an alternative to capitalists and militarists monopoly over technological power.

Ultimately, through his prolific publishing career, activism with trade unions and the peace movement, and continuing dialogue with scholars and assorted intellectuals, Melman held out hope that critically informed knowledge could promote an alternative system for organizing power. Although he recognized how universities had become servants to both the Pentagon and Wall Street (and indulged in growing administrative overheads and extensions to their managerial control), Melman still clung to the belief in the power of the idea and alternative formulation to established wisdom. The Trump presidency has falsely marshalled the lessons of the U.S.’s economic and political decline. Today’s activists would be wise to embrace Melman’s ideas to fill the power vacuum in the wake of the administration’s legitimacy crisis and movement reactive malaise. “Resistance,” the movement’s hegemonic meme, is not reconstruction.


Jonathan Michael Feldman studied under Seymour Melman at Columbia University and worked with him to establish the National Commission for Economic Conversion and Disarmament in Washington, D.C. Feldman can be reached on Twitter @globalteachin.


Economic, Social and Political Dimensions of Bolivia under the Morales-Administration (2006-2016) and Key Challenges Ahead

Evo Morales in 2008, two years into the presidency. Photo by Joel Alvarez.*

This year marks the tenth in office for President Evo Morales, the MAS-party (Movimiento Hacia el Socialismo, or in English: Movement Towards Socialism) and the administrations self-ascribed socialist revolution. The aim of this essay is to describe and reflect upon some key economic, social and political dimensions of Bolivia under the Morales-administration. The essay also looks towards the future and some key challenges facing the country.

By Salvador Perez


The Economic Dimension: Re-nationalization, Economic Growth and Increased Policy Space 


Starting with the economy, the country has experienced a sharp turn-around. At an average growth rate of 3 percent under the Morales-administration, the performance of the economy differs significantly from the interchanging periods of stagnation, poor growth or general instability during the 80s, 90s and early 2000s. In a more recent context, the economy has fared well despite ongoing economic instability in the region. Present recessions in both Brazil and Argentina – two major trade partners – are yet to affect Bolivia. In fact, the World Bank predicts that Bolivia, unlike other countries, is not going to be seriously affected by turndown in the region – although growth is expected to slow down a bit (see Table 2). As a result, Bolivia is now among the fastest growing and most stable economies in the region, which is by all means a true achievement considering the country’s turbulent history.

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Against this background a justified follow-up question is: how did the change in economic fortune come about? First of all the Morales-administration has pursued a development agenda that involves significant state involvement in the economy. The key policy in this agenda has been re-nationalization of the country’s vast petro-industries, industries that previously were in the hands of the usual Western multinationals. As a result of poor governance, the industries, which were highly profitable, filled the pockets of foreign owners and domestic elites instead of contributing to overall development in Bolivia.

Although pressure to do something about these industries existed well before Morales came into power, he quickly seized the opportunity to translate words into action. Indeed one of the first moves made by Morales was to take control over the industries. Morales conducted the take-overs by decree but the policies had, nevertheless, overwhelming public support. A referendum in 2004, one year before Morales was elected to the presidency and roughly two years before take-overs began, revealed overwhelming support (80 percent) for increased state control over the industries. This means that the ball was set in motion before Morales came into power but his administration, let’s not forget, translated momentum into actual policies. Needless to say the re-nationalization infuriated the Western multinationals and, of course, their home governments – including the United States, with whom relations have been, so say the least, frosty.

As a result of the re-nationalization and two other crucial factors: (1) a new policy framework guiding the use and redistribution of the rents and (2) favorable market conditions (meaning being able to charge high prices on oil and gas exports) the administration has been able to fill the state coffers. The increased revenues from the petroleum industry have been a game changer. Revenues have increased macroeconomic policy space, and thus allowing reforms. These include social reforms, investments in much needed infrastructure and, more recently, efforts towards strengthening the basis of the economy through industrialization (however the scale and nature of the later types of investments are contested). Revenues from the petro-industries have also, once again spurred by favorable market conditions, helped build up international reserves. Impressive reserves have been built up to the point of Bolivia having the largest reserves in the region, in relation to the size of the economy. What this means should not be underestimated. Previously always at risk of external shocks, or in the violence of Western financial institutions, the reserves now provide a buffer and, at least in theory, increased foreign policy space.

The Social Dimension: Declining Poverty, Engineering Social Reforms and the Politics of Inclusion and Diversity


As mentioned before, revenues from the petro-industry have created space for social reforms. A number of measures have been undertaken to deal with social problems that have haunted Bolivian society. One such problem is widespread poverty. Various types of welfare programs now assist those in need. Social safety nets, consisting of various types of insurances, most importantly tied to health-care, are now present and facilitate the lives of many people, including children and the elderly. Although these insurances are far from as well functioning, far-reaching and general in their reach as Western equivalents, the achievements are still significant.

To be clear, Bolivia remains one of the very poorest countries in the region, but it is no longer the poorest – which has been the case during most parts of its history. In fact, some aspects of the social progress have been so remarkable, given the preconditions, that international analysts have paid attention and singled out Bolivia as an example of inclusive development. According to official statistics poverty has declined by 25 percent and extreme poverty by 45 percent under the Morales-administration. Economic inequality has also (remember economic inequality is often considered a hallmark of Latin American countries) decreased as low income sectors have fared better than high income ones. This historical shift can, to a large extent, be explained by a rapid increase in real (inflation-adjusted) minimum wage. All in all the minimum wage, set by policymakers, has increased by 87 percent from year 2005 to 2014. Moreover, Morales has announced further increases are planned, provided that economy growth continues. Although the opposition and others opposed to the new policies do their best to argue that statistics are manipulated, as they have been in Venezuela and elsewhere, there is little actual proof to substantiate such claims. Instead economic growth and poverty reduction are so visible that no one with knowledge about the past can question the progress.

Nonetheless the economic development, especially considering the boom and the country’s lack of experience with actually growing for such a long period of time, has created problems. As in other developing countries, development has been messy and, to give one example, the increased number of motorized vehicles, often second-hand ones imported from more developed countries in the region, namely Chile, Brazil and Argentina, has resulted in urban areas being crowded with air-polluting cars and motorbikes. Although this does not deviate from trajectories in other developing countries, and although decision makers and other authorities are becoming increasingly aware of the problems and try to clear things up, it is still a legitimate concern and a symptom of a type of more or less unfettered development.

Most importantly, from an economic point of view, the Morales-administration has engineered social reforms to also advance economic ends. For example, the increases in minimum wage previously mentioned have not only affected vulnerable households positively in terms of quality of life and more, but have also meant that these households have more means to consume – which they do. In fact much of the increase in domestic consumption under the Morales-administration is explained by social policies such as the minimum wage one. Furthermore, and this is also important from an economic point of view, the Morales-administration has advanced policies to favor products made in Bolivia. Some policies are even designed to benefit domestic industries. These industries are often, but exclusively, tied to the state. One concrete example of such a policy involves support for pregnant and breastfeeding women. Every woman either pregnant or breastfeeding is entitled to a variety of free and healthy foodstuffs of a combined value of a minimum of 20 to as much as 100 euros each month until the child turns 1 years old. The products they are entitled to are made by state industries, which gives the industries a stable domestic market while some of them also pursuit export strategies.

The by far greatest social progress during the Morales-administration concerns the status of the large indigenous populations. Bolivia holds the largest indigenous populations in the region (second is Peru, which also happens to be one of the historically poorest countries in the region). According to censuses around 60 percent (thus a majority) of the population in Bolivia, meaning 6 out of a total of 11 million, self-identify as belonging to an indigenous people.

Previously kept at a safe distance from political power by a mix of poverty, inequality and blatant racism, first and foremost by the elites but also by the well-off non-indigenous sectors, the Morales-administration has been a true game changer. Carried to the presidency by the “repressed majority”, which includes the indigenous populations but also, importantly, non-indigenous urban and rural poor, Morales (he himself of indigenous decent) has returned the favor. Now many of society’s institutions, including those of power, are – for the first time – open and at least more than ever before: accessible for the indigenous. As a result, parliamentary sessions now feature more than the usual “white men in suits.” Now men and women of indigenous decent, in large numbers, attend sessions as elected members of parliament. They attend the sessions proudly wearing traditional clothing. Miners also, from the important mining sector, attend sessions wearing their helmets. Coca-farmers also, another important sector, attend sessions. Of these newcomers to the highest political scene many are on the MAS-ticket, but not all.

The indigenous have also been granted some autonomy to pursuit practices according to their cultures, including “tribal” courts. The Morales-administration also, early on, promised to protect the indigenous traditional lands, making concern for “mother earth” and cultural diversity a key concern. Indeed in 2009 Bolivia changed its official name from “Republic of Bolivar”, originating from regional independence hero Simon Bolivar, to the “Plurinational State of Bolivia.” Under the new constitution, enacted in 2009, the state recognizes 36 cultures, each with their own language. These developments have been opposed with the argument that Morales is polarizing the country along ethnic lines. This makes some sense. The alternative however – to keep what in fact is the majority of the population banished to the margins – is daunting.

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Indigenous “cholitas” in traditional clothing, a very common sight. Photo: Wikipedia Commons.

This leads to another important point concerning political engagement. As some scholars have pointed out, the Morales-administration, through policies of inclusion and diversity, reactivated sectors of the population, not only the indigenous, that previously were far removed or alienated from politics. These new sectors, which before could be manipulated by elites to facilitate non-progressive ends that fundamentally opposed their class-interest, have now reached a significant degree of political confidence. As a result portions of these sectors have come to actively oppose government policies when these policies are perceived to act against them. The new sectors increasingly try to hold the government and other authorities accountable when they are perceived as corrupt or simply fail to follow laws. One key example involves the indigenous peoples and the above-mentioned autonomy and “right” and/or “protection” of their lands. As it happens many of these lands hold valuable underground natural gas fields. This means trouble. As the current fields deplete and exporting conditions have worsened (more on this later) the government has pursued efforts to find new fields, plan ahead and ultimately keep the petro-based economic development model on track. The results of these policies can be quite tragic. As human rights organizations and parts of the domestic press have observed the indigenous are sometimes driven from their lands in order for the authorities to lay their hands on existing, or possible, natural gas fields. It should be emphasized that these abuses are deeply at odds with the laws passed by the administration. The indigenous have the legal right to their lands. As of now it is somewhat unclear how large this phenomenon is, but it does occur and is deeply troubling. Also concerning is that the authorities go to great lengths to avoid documentation of repression. Activities are now conducted at night, thus allowing the acts to be filmed with cellphones and other devices. This example of repression can be seen as side effects of the country’s development model and the pressure it creates to continue to deliver the “goods” that other, non-affected, sectors of the population have grown accustomed to. Nonetheless, some evidence suggests that instances, like the above, can or already have, come to affect the political legitimacy of the Morales-administration, not only among those affected or those who feel strong solidarity with them but also, more importantly, among broader sectors of the population that dislike and understand the dangers associated with authorities abuse of power.

The Political Dimension: Regional Tensions, Press Freedom and Concerns on Power 


The political side has been, and continues to be, a mixed bag. Although the Morales-administration has managed to govern and maintain stability in a notoriously unstable country, there have been occasions that nonetheless have challenged the administration. An ongoing and significant issue involves the tensions between different regions, in particular the central government and the region of Santa Cruz. Santa Cruz is by far the richest region in the country. It ranks second in total population, produces nearly 35 percent of GDP and receives about 40 percent of foreign direct investment. In 2008, a regional referendum to increase the region’s autonomy was held. The result showed overwhelming support (85 versus 15 percent) for efforts to distance the region from the central government. Although the tendency of Santa Cruz to pull away from the poorer regions has a long history, the tensions between the region and the central government have reached new highs under the Morales-administration. Policy-makers, business elites as well as the more affluent sectors in Santa Cruz are generally very skeptical or outright hostile to Morales socialist-inspired policies. A key part of the criticism lies in the strong policy framework for economic redistribution between regions. Concretely this framework means that Santa Cruz, being the “economic engine” of the country, has to share its wealth with other less “successful” regions – which is hard to accept among the above-mentioned sectors in Santa Cruz. The 2008 referendum resulted in that tension reached unprecedented levels. The National Electoral Court rapidly declared the referendum illegal and unconstitutional but the struggle continues, flares up at times and then settles down. Nonetheless the region, and in particular the city of Santa Cruz, remains the center of organized opposition, although recent events, like the latest referendum, suggest that opposition, or at least criticism, is more wide-spread among regions than before. Yet Anti-Morales and anti-MAS sentiments are generally stronger in Santa Cruz than anywhere else. As a result, all major dealings with Santa Cruz by the central government are very sensitive and subject to deep scrutiny.

Press freedom is another concern. Although Bolivia is on par with much of the region on this matter, at least according to authoritative sources as Freedom House and Reporters Without Borders, overall development is to the worse. Without going into how press freedom was under right-wing governments, who were more or less repressive in nature, the situation in Bolivia is worsening. The country has fallen in rankings. Although these rankings have limits they are still indicative enough to raise concerns about developments. In year 2006, when the Morales-administration started its work, Bolivia was best placed among the category of “less-developed countries.” In fact Bolivia ranked 16th in the world, above countries as Canada, Denmark, Germany and the UK. Yet, in all fairness rankings can vary considerably from one year to another, which should be considered. For example in year 2005 Bolivia was ranked 45th but one year before, in 2004 it was ranked 76th. Nevertheless the trend is clearly negative with rankings around the 100th since year 2008. As mentioned before, much of the region is the same. This means that there are countries that perform better, say Chile and Uruguay, and countries that do worse, say Brazil, Venezuela, Ecuador, Colombia, Paraguay and so on.

A few factors can help explain the negative developments in Bolivia. To be clear the legal environment for the press resembles that of practically any well-functioning democracy that can come to mind. The laws themselves, as observers state, guarantee press freedom that mirror the most free countries. The problem however is not the laws, but the realities that shape day to day work as a journalist. One such reality is the polarized political environment. As there are, to quote Freedom House latest report on press freedom in Bolivia, “strong rivalries between pro-and anti-government media outlets”, journalists tend to be the frontline victims. More and more journalists, predominantly in the anti-government camp feel threatened, and there have been clear cases of violence and intimidations, even killings during the last ten years. The 2015 report states “attacks where fewer than in recent years” but press freedom, however, has to be monitored closely in coming years as stakes gets higher.

There are more recent events that tie into some of the above. Despite increasing controversy Morales has search for ways to extend his powers. One argument the administration uses to legitimize the attempts is the need to speed up the “social revolution.” Another one is to make reforms more permanent so that changes cannot be “unraveled” by political forces to the right or/and the “servants of empire.” Early this year, 2016, Morales lost an important constitutional referendum. The referendum was aimed at allowing him to run for office for another fourth straight term, something currently hindered by the constitution. Although the proposal was voted down, albeit with a small margin of 51 to 49 percent, Morales was hesitant to fully accept the defeat, calling for a tie or even a re-referendum. The uncertainty clearly resulted in fueling the opposition’s suspicion that Morales is seeking to hold on to power despite legal constraints. A common fear is that Morales’ intention is to steer the country in a more authoritarian direction, modeling the “revolutionary” left regimes in Venezuela and Cuba – regimes that happen to be at least ideological and in some senses political allies of Morales (although the links between these countries are not as deep as one would or could think). However, what is certain is that the polarization caused by run-up towards the referendum and the aftermath, briefly described above, further increased tensions along the usual line of class, ethnicity and regional rivalry, to mention a few. As a result the coming 2019 general election might be a risky one.

New Foreign Policy Alliances, The Left Decade, Regional Cooperation and Necessary Critical Remarks


Although some foreign policy moves by the Morales-administration have been relatively well covered by Western media outlets, others are not. Business deals and closer alliances with states such as China and Russia, as well as dealings with Venezuela or Cuba, get a reasonable amount of coverage and analysis, for various reasons. These interactions are real and interesting, in particular what goes on with the regimes in China and Russia, as these countries constitute new partners. To be brief, both are making investments in Bolivia. The Chinese are present throughout the economy, but the largest investments revolve around infrastructure and, as usual, extraction of raw materials, most notably lithium (more later). The Chinese were also given the task of building, launching and providing credit for Bolivia’s first satellite, which according to government sources will “serve telecommunications in Bolivia” and allow it to “sell services to the private sector as well as neighboring countries” and thereby “bring incomes of up to 40 million dollars a year to the state.” The Russians are, through the state-owned company Rosatom, involved in setting up Bolivia’s first nuclear power program, which include, as of this date, one commercial and one research reactor for medial use. The cost of this project is stated to be 300 million dollars and is very controversial.

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President Vladmir Putin and president Evo Morales in Kremlin, 2013. Photo: Wikipedia Commons.

As stated some things get less coverage. The same goes for in depth analysis. One key issue that is often omitted and deserves a mention is Bolivia’s relation to the surrounding region. It is also crucial to reflect upon how the relations to the region have developed during the Morales-administration, in particular how relations developed under the Morales-administration and under what is sometimes called Latin Americas “left decade” or “second independence.” One should state that there are different points of views, however, the critical one deserves some attention – especially considering it gets far less attention and, also, deviates from common perception. On the critical side, some scholars argue, quite convincingly, that regional cooperation has either declined or not evolved as much as expected considering that a major part of the countries in the region, at one point or another during the past decade, were governed by administrations to the political left who stated the value of “regional cooperation” and “mutual interests.” The key is that for a significant number of years, nearly 300 million of the regions total of a little more than 400 million people were governed by administrations to the left.

Considering this historical “awakening” and “liberation” of Latin America from the North American overcoat (the United States was either bogged down in the Middle East or more interested in, for many reasons, East Asia or the “Pacific”), these scholars argue that one could have expected that governments who confessed to “regional unity” and “cooperation” would have taken more concrete steps to make these things real. The critical scholars argue that the successful, yet resource based development models, have because of resource based patterns, undermined any deeper cooperation. The key thing to understand is that these countries in the region, be it Brazil, Argentina, Bolivia, Chile or any else, are still to a substantial degree, suppliers of raw-materials in the larger context of the world economy. Many of these countries also sell more or less the same raw-materials, with slight variations. What this means is essentially that the countries in the region compete with one another, sometimes less and sometimes more. Yet on a fundamental level they are locked in the mode of competition rather than cooperation. According to critical scholars the region cannot advance any form of more meaningful cooperation as long as these resource-dependent patters dominate the economies in the region, which they have done historically. One should note, once again, that the left administrations have founded their development projects on these patterns and many of these administrations have been more or less unsuccessful or reluctant to diversifying their economies as long as they could transfer export earnings to the social programs that have legitimized their rule. Problems with these development models, and the deep vested interests in the political economies of the countries might become ever more apparent, but these are, nonetheless, problems many countries in the region have dealt with historically and, one could argue, have learned very little from, in particular the political elites – which, generally, have benefited from the status-quo.

According to critical scholars, what is outlined above is somewhat of a “lost opportunity” and somewhat “tragic”. One should not understate the social advancements, which are, on a regional level stunning, but one could and should, also ask critical questions about the long-term foundations for those advancements and if advancements can continue in less beneficial conditions and – meaning administrations cannot longer benefit from export booms. One could also, as a larger perhaps overarching reflection, think about the role of Latin America in the world economy. As of now, one could very well draw the conclusion that Latin America, under administrations to the left, has accentuated its role as a more or less subordinate supplier of raw materials to the wonders of others in the world economy. This is not to take away the advancements but the, albeit gloomy, take on the fundamentals of the “left decade” and its limits, does deserve contemplation.

Corruption: Part of Life and Source of Tension


Before diving into more depth about the challenges of the future, it is essential to deal with corruption, a key source of tension. Although it is somewhat unclear if the Morales-administration stands out vis-à-vis previous administrations on issues of corruption, there are a few things that might influence expectations and therefore popular reactions to the, undeniable corruption that exists. First of all, Morales made early promises to crack-down on corrupt officials. This was a cornerstone of his campaign. Second, it is also reasonable for people to expect that an administration that claims to be “one of the people and for the people,” is scrutinized accordingly. Third, the last ten years of growing public funds, much because of petro-industry revenues, have created a pool of resources that many would like to have a piece of, legally or illegally. To be clear: everyday corruption has always been a part of life in Bolivia and Latin America in general. In fact everyday type of corruption might cause occasional irritation but is, nonetheless accepted within certain boundaries (for example it is a common practice to drive to a party, enjoy alcoholic beverages and then drive home intoxicated – if the police happens to stop you a small bribe will solve the problem – problems only arise if you happen to hurt someone severely). Still, high-level corruption within the political and legal apparatus is, unlike everyday corruption, a constant source of anger. As a result, there is a widespread and reasonably grounded belief that corruption with high-level sectors is close to endemic, especially as officials (many of them at the local levels) try to make the best of their, often limited, time in power. Media outlets, almost exclusively the ones tied to the opposition, also spend a considerable amount of resources to uncover stories of corruption or other illegal practices by officials. This is typically where journalists put themselves in danger.

Looking into the future there are fundamental questions to be asked about the economy and the long term basis for it. As stated before growth and social programs, and thus also poverty reduction, have been facilitated by revenues from a few key sources, mainly the petro-industry. To be clear about how important the petro-industry is one should consider the following: it accounts for about a third of government revenues, 80 percent of exports, and 18 percent of GDP. This is, as countless amounts of evidence suggest, a very vulnerable position for any economy. Consider also the following: Bolivia has, during the last decade, been selling vast quantities of natural gas to Brazil and Argentina. These sales have financed the “socialist revolution.” The problem however is that market conditions have changed drastically. Sure natural gas (Bolivia’s main export) has not taken the same deep plunge as crude oil but prices have nevertheless dropped enough to cause concern. At the moment, deals with Brazil and Argentina are regulated by long term agreements, ending in 2019 (yet another reason besides the general election for 2019 being a key year). In line with the current agreements, which were signed when market conditions were much more favorable (and both Brazil and Argentina had governments to the left), Bolivia is currently selling natural gas at inflated prices, roughly twice market prices (although minor adjustments are made continuously). Meanwhile both Brazil and Argentina have made efforts to be less dependent on Bolivia in the future. Although the policies by trade partners can change (for better or worse) due to many factors (the state of the economy in these countries, resource depletion, geopolitics and so on) the future of any country should, ideally, not be so dependent on a few resources or political developments elsewhere, as Bolivia currently is. Furthermore, as elaborated above, other countries in region basically compete with the same raw materials.

Of course the political leadership is well aware of that the economy should be less resource dependent. As a result there are ambitious investments to industrialize and diversify the economy. However, as more critically inclined scholars have pointed out the vast majority of these investments, particularly in terms of size, are in one way or another tied to keeping the petro-industry going. Investments of such a nature can be infrastructure (pipelines and so on), investments to further increase production (tied to productivity) or to make more sellable products out of the petroleum itself (example: chemicals or plastics). Fundamentally this means revenues from the petro-industry are, to a very high extent, being re-invested in the industry itself or in investments highly related to it. To be fair, some of these investments make sense. Reasonable investments tied to the petro-industry are ones that add value, which in the case of the petro-industry means creating more refined products that can be exported at a higher price. One such refined product is standardized LPG (liquefied natural gas). Following this logic, among the major investments of the Morales-administration are in so called liquid separation plants. These plants, explained very briefly, are used to produce LPG as well as other high value liquids that are used in various industrial processes. If once considers that Bolivia should try to make the best of the raw materials it is already committed to extracting, these investments make sense. However, one could easily, by looking at the size of other investments into “new” industries not tied to the petro one, conclude that not enough has been done, especially considering the administration has had ten years at its disposal. Despite that some of the “new industries” serve important domestic needs, particularly the ones tied to food industry, it remains unclear if these industries are competitive enough to expand on regional or international markets.

In this context one should also mention that the country is in the final steps of making use of its vast lithium resources, a step that has been awaited for some time. Lithium is essential when producing high capacity batteries used to power a variety of modern products, including smartphones and – herein lie the expectations for Bolivia – electric cars and, equally important, battery based energy storage systems. Given that Bolivia has up to 70 percent of the world’s lithium resources, the Morales-administration is confident that the country holds the key to its own future. Morales has even stated that Bolivian lithium is “the hope of humanity.” Extraction, however, is tricky. First of all, Bolivia is not even close to having the technology needed to extract these resources without foreign involvement. Thus, a foreign partner is inevitable. Up to recently, only Western companies, which Morales has a hard time with and vice-versa, had the necessary technology. Now the Chinese are involved, which Morales finds is a better alternative. Consequently the first shipments, no large quantities but still significant, went to China. Second, environmental concerns have been raised about extraction of lithium. These concerns are serious and evidence suggests extraction might be very harmful if not conducted properly. Third, the site where the resource is concentrated, the salt lake of Uyuni, is a major tourist attraction and is widely considered a national treasure. This makes extraction an even more sensitive matter. Nonetheless extraction has begun. What the future holds, and to what extent extraction adds up to the “raw-material”-export dependency pattern, remains to be seen. At the very least efforts must be made, by the Morales-administration and future administrations, to make something else that can sustain the country beyond or along side current raw materials.

Demography: Putting the Young to Work


Another, often overseen, but nevertheless key issue concerning the future is demography. As many developing countries, Bolivia has a favorable demographic profile. This means a large portion of the population has either just entered the workforce or is about to. It also means a relatively small portion of the population is elderly (or rather “not in the workforce”). As a result, a small portion of the population is in need of often costly support systems and the like. Of course turning “favorable demographic profile” into something substantial, like economic growth, depends on policies but the profile does indicate one thing: potential.

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On that note we should consider the following. Although Bolivia now enjoys one of the lowest unemployment rates in the region (numbers vary from slightly under 3 percent to 7 percent depending on source and measure), this does not take into account underemployment. As larger portions of the youth go through the education system, in particular higher education (thanks to social reforms), they then have expectations and skills which have to be accommodated within the economy in order for them to contribute and be of use. In a growing economy, such as the current one, they might find a way to accommodate themselves. However, any change in economic fortune (as outlined before), carries great risk for both the individuals and the society as a whole. Sure the performance of the economy has led to an increase of business units by a factor of four (or more) the last ten years, which in theory could accommodate new additions to the workforce. Yet, it is highly unclear what these new businesses are exactly and what kinds of skills work in them require. As hinted before it is difficult to know how solid and successful programs of industrialization and diversification really are until the economic tide has turned.

Final notes: Globalization, Development and the Role of the State


Despite these uncertainties (and they should be taken seriously) there are perhaps more general implications or say lessons from the Bolivian “turn-around.” First of all, it goes to show that resources can, if properly managed, be used to advance social goods. Moreover, the active state policies undertaken by the Morales-administration have proved successful in combating the often disruptive and dystopian forces of neoliberal globalization of which Bolivia has had its fair share. All in all what has taken place in Bolivia, despite its limitations, provides ammunition for an updated discourse on globalization, development and the role of the state.

The author is interested in different interpretations of the developments in Bolivia. He can be reached at:

*Joel Alvarez, who was kind enough to let me use the first photo without charge, is a Swedish photojournalist and university lecturer based in Mexico City. His work can be found at:

Economics for Humans by Julie A. Nelson

Economics for Humans was published in 2006 and written by Julie A. Nelson, a prominent feminist economist and Professor of Economics at the University of Massachusetts Boston. In Economics for Humans, Nelson seeks to answer how we could create and structure an economy not for imaginary “rational men” but for actual human beings. Nelson criticizes both neoclassical economists for their models that hold little or no relevance for how people actually behave in an economy and Left leaning economists that tend to overestimate the inherent goodness of governments and non-profit organizations and the greediness of private companies. Nelson writes, “in an era of suspicious elections, campaign finance fiascos, and powerful lobbyists, one has to be naïve in the extreme to believe that governments can be trusted to automatically or naturally work for the common good.” (39)

Under the influence of neoclassical economics, we have grown accustomed to the idea of separating economics and ethics but Nelson argues that treating the market-driven economy as a machine dictated solely by “the laws of nature” is not only a false notion but is also to the detriment of human welfare needs.


Nowadays, the core curriculum for economics at most American and European (and many other) universities is based on this neoclassical model. Undergraduates study neoclassical theory, usually not realizing that what they see presented as economic knowledge is not based on economists’ years of intensive study of actual businesses and households. Rather, the base is actually a set of mathematically convenient assumptions and Smith’s image of mechanically driven economy. page 21

Most people would probably assume that the criteria for social welfare should include such things as meeting people’s basic survival needs and not destroying the life-supporting ecological processes of the planet. Not so in the world of neoclassical economics. Because of the desire to keep economics as “objective” and “value-free” as possible, economists have adopted a rather bizarre notion of social well-being or welfare. They have gone out of their way to avoid any criteria that could possibly be thought of as “subjective,” fearing that their “science” would be tainted if they made “value judgments”. “Needs,” this school has claimed, for example, cannot be scientifically distinguished from “wants.” Who is to say, for example, that dental care is a “need,” if so many people around the world get along without it? With no clear, scientific way to draw the line between needs and wants, neoclassical economics has dispensed with the concept of “need” entirely. page 23

Perhaps the most dramatic episode in recent history concerns what happened in Russia after the fall of Communism. Many economists expected that free markets would simply blossom once the “encumbrances” of state control were lifted from Russian society. They thought that the “natural forces” and “economic laws” of capitalism, now unleashed, would more or less automatically create the grand system first describes by Adam Smith. What developed instead, as we know, was chaos, corruption, fraud, murder, and an economy that has had more in common with organized crime than with organized markets. Rates of poverty and alcoholism climbed, while Russian male life expectancy dropped to 58 years. page 25

The idea that the world of morals and care is distinct from the world of business has also had an interesting gender dimension in both popular life and scholarly thought. During the Victorian era, middle-class women were thought to be the guardians of moral and care, which were assumed to rule in the home. Meanwhile, men were thought to be morally less pure by nature and hence appropriately assigned to the rough-and-tumble world of competitive business. page 36

Producing goods without thinking about moral implications can easily lead to the marketing of harmful products. Creating jobs without respecting the humanity of the employees can easily lead to the creation of inhumane working conditions. A belief that everyone should be responsible for themselves without acknowledging the realities of human childhood, illness, and old age leads to an attitude of hard-heartedness. Producing or consuming products without paying attention to ecological impacts puts the earth’s future in hock to the short-sighted impulses of the current generation. It isn’t bad to want to create goods and jobs. But if you do so assuming that the ethical implications will “take care of themselves,” you can do real harm. page 56

While the policies created by the old Progressives are no longer entirely adequate for today’s society and economy, I think we can a great deal from their methods. “What are the greatest causes of harm in today’s society?” and “How can we work together to correct them?” are the right questions to ask. page 126


☞ Julie A. Nelson, Economics for Humans, University of Chicago Press (2006)