The Perverse  Effects of Globalization in Bolivia


Áreas Temáticas: 



The discourse of neoliberalism presents globalization as the highest stage in the development  of human society, a consequence  of overcoming the barri- ers imposed by the technical limitations of the past and by the nation-state. Among its bolder exponents,  it is seen as the arrival of a new postcapital- ist phase, in which previous contradictions—­indeed, the existence of social classes—­are superceded  and in which the means of production are neither capital nor labor but are “and will be knowledge.” The free market will per- sist over the long term “as the only proven means of economic integration” (Drucker 1993, 7).

This growing integration  of national societies, especially in the financial sphere, also involves “wider cultural, political and environmental aspects.” But underscoring  the supposedly objective nature  of this process, it is ar- gued that this integration  of financial markets “has been possible thanks to modern  electronic communications” (IMF 2000). Technical innovation, es- pecially in computing,  enables a “knowledge society” to be built that leads to more-flexible productive systems and helps firms to move across national frontiers. At the same time, it facilititates the extraordinary  growth of trade, even more than that of production.  The liberalization of capital flows thus becomes a factor in making production more agile.

With an orientation that is normative rather than explanatory, neoliberal- ism emphasises the supposedly unavoidable nature of globalization, repeat- ing the suppositions of sociological and economic theories that see develop- ment as a historical process leading to the unchallenged rule of market forces. Thus, it is “the extension of market forces beyond national frontiers which for centuries  has operated  at every level of human  economic  activity: in rural markets, urban industries or financial centres” (IMF 2000). This capacity to do away with social contradictions and differences between countries stems from the fact that the increased liberalization of flows of goods, capital, tech- nology, and labor brings convergence  in key mercantile  variables, such as prices and wages, leading to the elimination of the gap between rich and poor countries and between developed and backward economies (IMF 2000).

In spite of globalization’s supposedly objective, nonintentional nature, huge efforts are made to justify its virtues, and political pressure is applied to align all states behind it; these affairs reveal its ideological nature.1 This ideology is what is known as neoliberalism. In our view, globalization is sim- ply a euphemism designed to conceal the capitalist nature  of the economic integration  of our times. Not wishing to deny the scale or specific attributes of this integration, particularly those derived from technological innovation, we would argue that  it is nothing  more than  an expression  of a recurrent trait of capitalism. It is therefore a concept that refers to the diffusion of the capitalist system in the world as a whole.2

Although  globalization  has reached  new heights, largely because of its ability to impose itself in large parts of the planet in the wake of the collapse of true socialism, it has not overcome the main traits of monopoly capitalism. This phase, also referred to as imperialism, is identified by the preeminence of financial over productive  capital, and its main actors are corporations—­ whether trusts or cartels—­that exert hegemony by creating a global division of labor and splitting up the international market between the main powers. Globalization can thus be considered as a phase within imperialism, whose characteristics  are revealed by the importance  of technological  innovation and financial capital to the process of capitalist accumulation.

The emergence and consolidation  of this phase of capitalist globalization dates from the crisis of the 1970s, when the world economy experienced  a downturn following the expansion of the postwar years (Sotelo 2001; Arrighi 1999). As in all such crises, difficulties in capital accumulation  occurred due to such economic factors as a decline in profit rates and such political factors as increased class conflict. This gave rise to increased competition,  capital concentration, and financial expansion, leading, in turn,  to shifts in hege- mony between different capitalist sectors and the emergence of new political leaderships.

Thus, the globalization that ensued from the 1980s onward is an inten- tional  process,  driven  by certain  dominant  capitalist  sectors  and  geared toward  restoring  conditions  propitious  for accumulation.  As Samir Amin (2001) has argued, “It means the return  of hegemonic  blocks that are anti- labor and anti-popular.  This logic works to the exclusive benefit of dominant capital, and particularly to its more powerful segments—­which are also the most globalized—­financial capital. ‘Financialization’ thus constitutes  one of the principal characteristics of the present system, both in its national and its global dimension.”3

The ideological underpinning of this recomposition of capitalism under the aegis of financial capital is provided by the monetarist  and neoclassical theories that give pride of place to questioning state capitalism and any hint of state economic intervention,  in this manner reviving liberal concepts that originated  in the stage of competitive  capitalism.4 Neoliberalism promotes the notion that development will be achieved inasmuch as all countries inte- grate into a single, global market. Therefore, any action by nation-states that counters  this or seeks to reject it will condemn  them to backwardness and economic marginality.5 Consequently, the main multilateral institutions  ad- vocate a series of propositions or economic policy recommendations—­based on evidence that purports  to be scientific—­that systematize the views of the Washington  Consensus.6 In essence, the policies advocated  under  neolib- eralism seek to establish conditions  that  favor the revival of profits in the dominant  sectors—­transnational corporations—­by undermining the sover- eignty of developing nation-states. This is made possible by the resoration of hegemony on the part of those local capitalists who are most closely linked to these interests.

Neoliberalism in Bolivia

We have seen, therefore, that the integration brought about by transnational corporations and driven by multilateral institutions  through  the imposition of neoliberal policies transcended national boundaries  in developing coun- tries and was accomplished through  the presence of specific groups or frac- tions within local elites linked economically to those foreign interests  and who supported  the prevailing neoliberal discourse.

However, contrary to the idea that globalization would render the nation- state irrelevant, the state continued  to fulfill its basic function of guarantee- ing the reproduction of capital accumulation  within a specific geographical unit.7 The expiry of the state has not come about; rather, we have witnessed a change in some of its roles which favor (or not, as the case may be) the concentration of capital. One model of peripheral  accumulation  has been replaced by another, and one fraction of the dominant class running the state by a different one.8

The crisis of the early 1980s, which brought an end to the import-substitu- tive regime introduced  in 1952, opened the way to a new sort of government which sought to restructure the way in which capitalism operated  in order to revive a state that had been threatened by enormous social conflict. Those capitalist sectors which had been nurtured during the nationalist phase and had been supported  by state policies designed to generate a national bour- geoise were the ones who led the attack that would impose the new neoliberal model. The coalition of these sectors, composed basically of businesspeople with interests  in mining and commerce,  as well as large-scale landowners and represented by the Movimiento Nacionalista Revolucionaria (MNR) and Acción Democratica Nacionalista (ADN), gave rise to what Lorgio Orellana (2006) has called “a regime of neoliberal accumulation.” This New Economic Policy was initiated during “a cycle when class struggle was in decline, begin- ning with the conjunctural defeat of the working class in 1986” and entailed “a new correlation  of forces which the financial oligarchy in power would support both ideologically and institutionally” (p. 17).

This new accumulation  regime pursued policies to enable these fractions of capital to consolidate  their  hegemony. To this end, it was necessary to channel social contradictions within the legal order; this meant legitimizing the power of specific groups by a combination  of incentives and coercion. Beginning in 1985, an attempt  was made to impress on society as a whole the notion  that economic freedom and political freedom were one and the same. The strengthening of the political system would legitimize economic power wielded by foreign capital and groups within the national bourgeoisie, thereby eliminating restrictions on market freedom. Political reforms sought to modify the juridical system and the institutionality  of the state, removing the last vestiges of state capitalism.9

The relative stability of the political system, which some liberal analysts saw as a virtue of Bolivian democracy and a sign of strength,  was achieved thanks to a series of governability pacts between the three main parties: the MNR, ADN, and  the  Movimiento  de la Izquierda  Revolucionaria  (MIR). Built on the distribution of jobs in the public administration and acquies- cence in acts of corruption among the parties involved, such pacts led to the formation  of five successive governments  between 1985 and 2002. However, in the longer run, they had the effect of bringing the political system into disrepute.

The neoliberal  creed, written  into  structural  adjustment  programs, at- tacked state capitalism from all sides, seeking to create in its place the con- ditions that would enable the free-market  economy to prosper  and foreign investment  to become dominant. For transnational capital to assume such dominance,  neoliberal policies sought to get rid of the preexisting institu- tionality. They modified the way in which macroeconomic policies were de- signed and implemented and reformed the legal norms that governed differ- ent productive sectors.

Macroeconomic Management

Neoliberal  macroeconomic policy sought  to reduce  state  participation  in the productive  sphere,  limiting its role to one of supervising and regulat- ing private activity within the free-market  economy. Structural  adjustment involved the liberalization of different markets, although certain economic sectors  continued  to enjoy special treatment designed to promote  foreign investment and export activities.

In the foreign-exchange market, a system of administered  exchange rates was instituted  by the central bank based on the availability of foreign cur- rency. This sought to encourage competition between export sectors and to end distortions  to internal prices by aligning these with international ones.

By the same token, restrictions  on foreign trade were removed, with tar- iffs reduced drastically and nontariff barriers removed altogether. The argu- ment  here was that  such policies would help modernize  the capital stock and improve access to productive  inputs. However, some sectors linked to agribusiness—­with good political connections—­obtained special treatment that protected  them for a while from more competitive imports. Under the supposition  that foreign investment  would impact positively on innovation and technological  modernization, management capacities, and marketing, measures  were taken to encourage  these through  taxation, profit repatria- tion, and the lifting of tax restrictions  on exploiting natural resources (Agu- irre 1992).

The adjustment program imposed orthodoxy in fiscal and monetary man- agement, under  the argument  that inflation was derived essentially from a lack of control over the money supply, itself a consequence  of uncontrolled public  spending  and  rising  wages. New criteria  for fiscal efficiency were therefore introduced  that meshed with the monetary program administered by a fully autonomous central bank. This eliminated any possibility of pro- viding credit to the treasury, the argument  being that state intervention in the money markets reduced private-sector access to these resources, thereby reducing the efficiency of the system. Fiscal policy therefore  made achieve- ment of a balanced budget a priority. To this end, reforms were introduced to cut public spending drastically, primarily by liquidating and privatizing public companies, and generating “real” increases in income through higher taxes and a wider tax net.

However, the loss of sources of public-sector  income  as a result  of the privatization of state industries, and the high costs this policy incurred, led to permanent problems of insolvency, further fuelling government concerns over how to finance the fiscal deficit. Current  spending was thus cut back (and with it a tendency slowly to privatize public services) and tough tax re- forms instituted that prioritized raising taxes on consumption. Whereas pri- or to the adjustment  direct taxation (taxes on income and corporate  profits) accounted for 69 percent of average tax revenues, from the late 1980s to date 75 percent of fiscal income has derived from taxes on consumption—­which fall hardest on those living from labor income. Successive governments over this period reduced taxation on business profits, frequently providing com- panies with tax exonerations and amnesties.

The privatization  of public companies—­which took the form of “capital- ization”—­involved the transfer of state assets and control over the country’s economic  surplus to foreign capital. Furthermore, it brought  no new fiscal income  to the state, since it involved a sui generis type of association  be- tween the state and foreign companies. An amount similar to the value of the original capital was invested by foreign investors in exchange for a 51 percent share of the industries and control over their management.  The value of the initial capital, in the form of shares, passed to pension fund administrators (Administradoras de Fondos de Pensiones, AFPs) as representatives  of the Bolivian citizenry.10

Privatization further accentuated the duality of the national economy. On the one hand, there was an economy based on the domestic market in which Bolivian producers  were in the majority. These were medium-sized  and in- formal businesses, with low levels of productivity, unsophisticated technol- ogy, and large labor inputs who produced  low-cost products  for poor con- sumers. On the other hand, there was an economy composed of large firms who enjoyed monopolistic regimes protected by the state, who operated with high levels of productivity using the latest technology in order to supply for- eign markets; these had with few linkages to the rest of the economy and a low demand  for labor. This duality is made clear in the huge differences of productivity between the two sectors. Productivity in agriculture, manu- facturing, and construction was, at the most, less than one quarter  of that of mining, electrical energy, and banking (Arze 2001). It is here, of course, that hydrocarbons  take on a special significance as an extreme example of enclaves in an otherwise backward economy.

National  industry,  already very weak and  propped  up by protectionist policies, after 1985 was faced with overwhelming competition from abroad, the supposition being that the trade opening would engender its transforma- tion through  the introduction of capital and technology. Twenty years later, Bolivian industry had not matched  up to these expectations.  Not only was its backwardness still in evidence, but it was more pronounced than before. Bolivian industry contributed barely 17 percent of GDP, and its share in ex- ports  was barely 15 percent,  concentrated in the production of consumer goods (60 percent manufactured value-added goods, 37 percent intermediate goods, and 2 percent  capital goods). Moreover, this low level of productiv- ity was related to a growing participation  by small businesses (less than ten employees) and microbusinesses, which made up 95 percent of the business universe and accounted for 49.5 percent of employment. On top of this, state companies, which amounted  to 3 percent of total employment  at the end of the 1980s, had disappeared; private businesses, which represented 36 percent of the total, were reduced to 26 percent by the end of the 1990s, and informal businesses had increased as a proportion from 61 percent  at the end of the

1980s to 73 percent at the end of the 1990s (Escóbar and Montero 2003).

Faced by this declining competitiveness,  the main option  for a range of Bolivian manufacturing firms was to reduce their labor costs. This provided a spurious kind of competitiveness  that brought huge social costs but which failed to bring technological modernization due to the lack of available in- vestments. In the case of agriculture, the main source of supply for the do- mestic market  and a source of employment  for a significant portion  of the population,  trade liberalization brought  virtual collapse in various types of production (for example, chile pepper,  corn, and potatoes).  This was mir- rored by reduced local supply and substitution by imports (Pérez 2003). On top  of this, Bolivia suffered constant  pressure  from  the  United  States to eradicate coca cultivation, bringing major losses in economic resources and the elimination  of jobs.11 This gradual but sustained erosion in the produc- tive capacities of peasant agriculture has led to the displacement  of popula- tion (particularly  in the Altiplano) through  migration  to urban  areas and abroad.12 According to the census data, the rural population shrank from 58 percent of the population in 1976 to 42 percent in 1992 and just 37 percent in 2001. This reflects the explosive rate of urbanization  that has taken place in Bolivia.

Sectoral Reform

The sectoral reforms that have taken place, related mainly to the exploitation of natural resources, have facilitated the incursion of transnational compa- nies in conditions conducive to high levels of profitability. A system for man- aging natural resources was construed that raised the capital values of trans- national corporations.  This led to the state being excluded from productive activities and to a weakening of its oversight functions. It also led to a fall in state income and negative effects on working conditions and living standards among important sectors of the population.  Policy gave priority instead to foreign investment  to develop extractive industries  and transfer ownership of natural resources to these through  contracts  and concessions, with com- panies provided with guarantees and the means to generate large profits.

In 1990, an investment  law was approved that favored foreign capital and removed privileges previously enjoyed by the public sector and local private firms. It provided for the free repatriation of proft and subordinated state sovereignty by transferring  all negotiation  of disputes  to international fo- rums. During the first half of the 1990s, new normative  rules were intro- duced that privileged private capital investment  (both national and foreign) in strategic areas such as forestry, mining, and hydrocarbons.  The priority for the state was to attract  and protect  private investment  in the exploita- tion and marketing of natural resources through the 1995 Forestry Law (Law  1700), the 1996 General Hydrocarbons  Law (Ley General de Hidrocarburos), and the 1997 Mining Code (Código Minero).

In forestry, the passage of Law 1700 brought important changes. The pe- riod of concessions was extended from twenty to forty years, and the legisla- tion included the possibility of the transfer  of such rights to third  parties, thereby speeding up the effective privatization of forestry resources. Similar- ly, it introduced  a patent (a tax that serves as a means to control the exploita- tion of natural resources) of US$1 per hectare in lieu of payment for the right to clear forest on the basis of the volume of timber and secondary products removed (Pavez and Bojanic 1998).

The mining sector was the first to undergo neoliberal reforms. In order to change the legal norms (included the constitution) which prevented mining reserves being given over as property to private companies, in 1985, through Supreme Decree 21298, restrictions  were lifted on 80 percent of the reserves that belonged to the Corporación Minera de Bolivia (Comibol), the state min- ing corporation, opening these up the private sector. Constitutional controls were further  eased by means of shared-risk  contracts,  which removed, for example, the prohibition  against foreigners owning properties  lying within 50 kilometers of the frontier. The restrictions  that previously obliged min- ing companies to sell to state-owned  smelters were also eased. Subsequent changes ended up transferring  all state assets to private ownership. Comi- bol ended  up just signing contracts,  effectively excluded  from productive activities.

Reforms to mining taxation also brought  changes that benefited private companies. The Complemetary  Mining Tax (Impuesto Complementario Minero, ICM) was established as the only tax, with a variable rate of between 1 percent and 7 percent depending on the type of metal, which could be set off against Corporate  Profits Tax (Impuesto  a las Utilidades de las Empre- sas, IUE). Additionally, export products  were made exempt from the Trans- actions Tax (Impuesto  a las Transacciones,  IT). This effectively ended the system of royalties payable on state property, while quicker monetization of reserves was promoted  with the devolution  of taxes on exports. The main result of this was that tax paid to the national  state by mining companies became insignificant—­some 4 percent  of the value of sales—­as well as the contributions payable to the departments where production took place.13

But it was in the hydrocarbons  sector that  the changes became a para- digm of neoliberal reform in extractive industries. The 1996 Hydrocarbons Law and other legal norms were geared toward granting transnational cor- porations  the power to define their usage of resources  and to set the rules of the game in the sector, depriving the state of sovereignty thereby. Law 1689 transferred to the oil and gas companies the right of free disposal of hy- drocarbons  under their own conditions—­not necessarily those which were of benefit to the state or the country. The role of the state was reduced  to a bare minimum,  with Yacimientos Petrolíferos Fiscales Bolivianos (YPFB) becoming little more than an office that signed contracts  and undertook  to provide free services under the new export contracts. Regulation was put in the hands of the Superintendency of Hydrocarbons,  with no authority  over the firms and its functions limited to simply setting prices and tariffs within a free market.

To attract foreign capital, the new rules involved major changes in taxa- tion. Although firms were subject to the payment of a Value-Added Tax (Im- puesto al Valor Agregado, IVA), the IT, and the IUE, they did receive special tax concessions. These included exemption from IVA on all exports, exemp- tion from IT on domestic sales of oil and natural gas, and the ability to set the IUE off against the Complementary National Royalty (Regalía Nacional Complementaria). More important, the rules introduced  a new definition of hydrocarbons: hydrocarbons  in existence on the date of the promulgation of the new law and “new” hydrocarbons  from reserves where production began after that  date. Subsequently, Law 1731 converted  much  of what had been considered existing hydrocarbons  into new hydrocarbons.14

Thus, the payment of tax under  the new regime was less, in unit terms, than  it had been under  the old one. Between 1990 and 1996, the state re- ceived US$7.77 per barrel of oil equivalent (BOE), compared with US$6.63 in the 1997–2001 period (Medinaceli 2004). This supports  the contention that the main aim of the reform  was to guarantee  the quicker monetization of reserves through  exports. The benefits to the state and domestic consumers from the increase in gas and oil output  were effectively ignored as an objec- tive of national policy by successive governments.

In September 1996, a contract was signed with Brazil to export 7.9 trillion cubic feet of gas over a twenty-year  period and to build a pipeline linking Rio Grande, Corumbá, São Paulo, and Porto Alegre with a capacity to pump 30 million cubic meters  a day. The volumes contemplated in the contract exceeded Bolivia’s proven reserves, which were less than 5 trillion cubic feet at the time. The obligation to comply with the contract—­which carried with it fines and penalties for noncompliance—­therefore involved investment  in exploration  and development.  This was subsequently  presented  by officials of the Sánchez de Lozada government  (1993–1997) as the reason why such advantageous terms were offered to foreign investors (Miranda 2003).

The fixing of the price of gas exported also revealed the intention  to favor Petrobras.15 The calculations used in the negotiations gave a higher calorific value to the gas, and for this reason Bolivia found itself obliged to include in the flows of gas exported all the accompanying liquids, receiving a lower price for its main component, methane. For this reason, the exceptional quality of Bolivian gas sold as fuel enabled Brazil to obtain additionally between 90 and

100 tons a day of Liquid Petroleum  Gas (LPG) and between 10 and 15 tons a day of gasoline at less-than-commercial prices (Miranda 2003). It is notewor- thy that the prices obtained by the companies bore little relation to the very low costs, lower than  those in many other  countries.  Thus, the estimated costs of Andina and Chaco, foreign oil- and gas-producing companies, were 73 percent and 74 percent less, respectively, than the average of twenty other international firms, exploration  costs 96 percent  and 46 percent  lower, and administrative costs 45 percent and 59 percent lower (DPC 2003).

We therefore  argue that the incursion  of foreign investment  into Bolivia came about because of the unusually favorable conditions in which state as- sets were transferred  (in the case of the five largest companies “capitalized”), to the existence of enormous  reserves (discovered previously by the state company), and (in the case of gas) to an assured market in Brazil previously negotiated by the state. Moreover, the supposed benefits brought by techno- logical modernization, productivity,  and improved  management were only very limited, given the lack of linkages between these sectors and the rest of the economy. The consequence  has been the existence of a modern  sector geared toward  exports  and services alongside a wide range of technologi- cally backward sectors lacking any help whatsoever from the state (see also chapter 11 in this volume). For many of those supplying the domestic market, trade liberalization and free-market  policies have forced them into a spuri- ous competitiveness  based on reducing labor costs and eroding levels of job security.

Exploitation of Labor

Raising profitability involves increasing rates of surplus value by resorting to reducing the portion of value that corresponds  to wage payments. This is achieved by various methods, such as intensifying work, extending the work- ing day, and reducing wages paid (absolute surplus value), or by reducing the value of labor by raising the productive force in those economic sectors that provide goods consumed by the workers (or relative surplus value).

In Bolivia, adjustment  policies were geared toward  directly influencing levels of exploitation of the workforce by eliminating legislation that protect- ed labor. These policies had the effect of increasing the numbers  of people unemployed, making it easier to reduce wages through  competition for em- ployment from the informal sector. The increase in surplus value achieved by raising productivity in sectors that produce wage goods (goods consumed by workers) did not take place, given the scant incorporation of technological innovation. Instead of modernizing, firms adapted new forms of organizing the workforce (such as family workshops) employing traditional and even ob- solete technical conditions. Use was made, for example, of “defensive strate- gies” (Gutierrez 1990) that raised the exploitation of the laborforce by using such organizational devices as involving workers in oversight, outsourcing of some of the costs incurred  in different parts of the productive process, and buying in ancillary services. Similarly, the burden  on the peasant economy was accentuated  by unequal  patterns  of commercial  exchange, with more use being made of informal-type  arrangements within firms to lower labor costs.

Such strategies,  backed  by successive governments,  encountered resis- tance from organized labor, leading, in turn, to coercion. Union leaders were deported, activists imprisoned, and, more generally, social protest was crim- inalized. This shows how economic liberalization, geared toward globaliza- tion, takes place within the framework of class struggle.

To understand the effects of such policies on the exploitation of labor, it is helpful to see how working conditions  became increasingly precarious. The working day became longer over the period of adjustment,  enabling employ- ers to produce  more  surplus  value. Average working hours  increased  by a couple of hours  per day, with blue-collar workers most affected. The aver- age hours worked per week were 49.6 in 1989, rising to 50 in 2000 (Montero 2003). The working day was also affected by the use of double shifts or by other secondary jobs which workers undertook  to make ends meet.

The reduction of wages came about because of the elimination of elements within the nominal wage that supplemented it with the passage of time and protected its purchasing  power. In August 1985, the whole gamut of labor costs was “reorganized” by reducing certain bonuses awarded for the num- ber of years worked, as well as payments intended  to cover specific items of spending that had been included in the monthly  wage. The way they were calculated also changed. In the case of the bonus for years worked (a way of raising the nominal  wage), the maximum  level (payable after twenty years of employment)  was reduced from 65 percent  to 50 percent  of the nominal monthly wage. For the purposes of calculation, the effective monthly wage was replaced as a base by the (lower) minimum  national wage. Finally, the frequency with which part of the salary was adjusted was moved from yearly to triennieally; in a context of high levels of casual labor, this was a right that became ever more difficult to defend. The consolidation  of bonuses on the basis of the minimum wage meant a substantial reduction in costs to the em- ployer, who from then on was able to negotiate wage contracts  on the basis of a lower amount (Arze 1999). Subsequently, governments adopted a mecha- nism for updating the nominal salary on the basis of an addition related to “expected inflation.” In times of high inflation, this meant  that  real wages fell. This can be appreciated  from the purchasing  power required  to buy a basket of basic food: in mid-1990, the average worker’s wage was equivalent to 87 percent of the value of the basket, with more than 70 percent of workers in manufacturing receiving a wage lower than what it cost to purchase (Arze 2001).

Another  way to reduce wages was to make increased  use of short-term work contracts. These dodged various costs and reduced social benefits tied to the monetary  wage. The spread  of short-term labor contracts  was rap- id when compared  with the period prior to adjustment.  In the mid-1990s, a quarter  of all contracts  were short term, whereas previously labor stabil- ity rules were covered by official protection.  Also, increased use came to be made of part-time  and shorter shifts, affecting all sectors, including the pub- lic sector.

A key indicator  for evaluating working conditions  is the access workers have to some sort of social security, including health care and pensions. Ac- cess to health care underwent  a sharp deterioration over this period. At the end of the 1980s, nearly half of all waged workers had access to health ser- vices, whereas by the mid-1990s this had fallen to less than 30 percent. The old pension system was scrapped, replaced by new system of private, AFP- administered  pensions that excluded large numbers who previously enjoyed pension rights. It also made future pension entitlements much more subject to risk. The pensionable age was raised from 55 to 65, and the number of years that  needed  to be worked to claim a pension  was increased.  The worker’s contribution was also augmented,  while that  of the employer was reduced by two-thirds,  and the contribution previously made by the state was elimi- nated. Net wages were therefore reduced.16

Finally, the reforms made it easier for employers to avoid other labor costs (officially known as “social benefits,” or beneficios sociales), because the over- sight role previously played by the state was reduced. According to the legis- lation in force, wage workers should receive a number  of collateral benefits, such as the aguinaldo (extra months’ pay at certain times of the year), a pre- mium for profits, production bonuses, and so on. At the end of the 1980s, a little more  than  one-third  of wage workers did not  receive any of these benefits, a situation  that worsened in the 1990s, when the rate of those not receiving them reached 50 percent.

The sustained growth in the rate of unemployment has been the main fac- tor containing  wages and reducing their value. This is because competition between workers for jobs has become  more  acute, depressing  wage levels. This is particularly the case for the least-skilled workers. The unemployment rate rose considerably after the stabilization measures, reaching an unprec- edented 10 percent  of the economically active population.  Subsequently, by the mid-1990s, unemployment had fallen to around  3.5 percent,  but it rose again to 10 percent  by the end of the decade. Open  unemployment rates, however, do not reflect the gravity of the problem, concealed as it is by high levels of underemployment in all sectors (where hours worked are more than the norm or income generated lower). Nearly 60 percent of a Bolivian work- ers are underemployed, a consequence of the absence of mechanisms to pro- tect workers against unemployment and the persistence  of very low wages forcing them to sell their labor at below its real value.

As in the rest of Latin America, neoliberal policies have inflated the size of the informal sector.17 This fact is especially important in understanding the ways in which labor is exploited by capital. The linkages between informal units of production and the capitalist business sector, through  such mecha- nisms as subcontracting and microcredit, enable surplus value to be extract- ed from the workforce in the backward sectors of the mercantile economy by financial and industrial capital. A number of studies carried out throughout the neoliberal period show how extensive this has been in different sectors, including  various export  sectors  (Kruse 2000; Escóbar 2000; Poveda and Rossel 2003).

We can see, therefore,  that adjustment  policies have worked against the needs of the domestic economy and have increasingly eroded the living stan- dards of the workforce.18 This is made clear by the failure to increase the efficiency of the system, since the few positive examples of increased produc- tivity stand in contrast  to the enormous  bulk of activities where productiv- ity is very low but which provide most employment.  These transformations resulted in higher rates of poverty and social inequality. Just by way of illus- tration, it is worth mentioning  that 64.3 percent of the total population lives beneath the official poverty line (53.5 percent in urban and 82 percent in rural areas), compared to 62.6 percent in 1999. Similarly, inequality in income dis- tribution  worsened; in 1992 the richest 20 percent accounted for 55.8 percent of total labor income and the poorest 20 percent for 4.15 percent, whereas in 2001 the figures were 57.9 percent and 3.15 percent, respectively (Arze 2004).

The consolidation  of a new regime of accumulation,  led by those factions of the dominant  class most closely linked to the dominant  sector of inter- national capital (transnational corporations) was made possible thanks  to the temporary  prostration of social movements. The country’s rulers raised hopes of improvements in economic conditions  and through  popular mea- sures such as municipalization,  the extension of health services, and subsi- dies like the Bonosol. Also important was the achievement of a consensus in intellectual and academic circles, encouraged by the number of benefits that such sectors received from government.  Their apologetic discourse focused on  macroeconomic indicators—­notably  growth,  inflation,  and  monetary reserves—­as evidence of economic and social development.

However, the methods  used to strengthen the presence of transnational capital not  only failed to modify the dynamic and direction  of economic growth (the behavior of GDP growth rates was irregular and never reached the levels achieved in the 1970s), but also ended up confirming  the orien- tation  in the pattern  of capitalist accumulation  that  had been in force for decades. Strictly speaking, what neoliberalism  achieved was to restore  the domination  of sections of the oligarchy which, economically and ideologi- cally, subscribe to the notion that the country’s only development  option is to align itself to international capital, dedicated  to the exploitation  of raw materials and those industries requiring cheap labor, orienting them toward international markets.

As Orellana has pointed out, “the restoration of the oligarchy is evidence of the historical mode of capitalist development  in Bolivia; in other words, the pattern  of accumulation  did not change substantially. If we start from the supposition  that a pattern  of accumulation  is determined by the forms of subordination of the local economy to monopoly capitalism, the internal articulation between different economic sectors of social production and the specificities of the reproduction of capital which those relations determine, . . . we can conclude that in Bolivia the pattern  based on the production and export of raw materials was in no way transformed” (Orellana 2006).

Throughout its history, Bolivia has had an economy dominated by sectors involved in the extraction of natural resources: silver in the nineteenth cen- tury, rubber in the first half of the twentieth  century, and tin in the second half. This linkage with the international economy has brought  about  only a limited diffusion of capitalist relations  in the rest of the economy. This has given rise to an economy that is unequal and mixed, where automated systems of production in mining and hydrocarbons  coexist with traditional peasant forms of production that use the most decrepit  of technology. The attempt  at capitalist modernization undertaken by the nationalist  regimes that emerged from the 1952 revolution ended up being frustrated  by the in- capacity of these to transcend  that ideology. It was also, basically, because the global situation  was dominated  not  by competitive  capitalism, but by monopoly capitalism—­which focused its pattern of accumulation  not on the development  of production but principally on the export of capital and the capture of rents.

The fate of the country to which the dominant  classes have condemned it was reflected by that  ideologue of the nineteenth-century mine owners, Mariano  Baptista: “Bolivia should be, in the general market, a producer  of raw materials, and minerals in particular. Its main contribution will be, for many years to come, the supply of metals. Its ongoing demand  will be for manufactured goods, and its material progress will depend on this exchange. . . . To look for foreign capital, to knock at the doors of foreign banks, to bring in foreign interests to our main areas of production . . . , this is the key to national wealth: this is the desideratum  of our situation” (quoted in Lora 1967).



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La Paz - Bolivia



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