Considering the diversity of historical and political contexts, economic discussion can be summarized in two ways, the one practiced by neoliberal governments and, on the other hand, the one adopted by popular base governments.
Conventional economic knowledge has been successful in ordering socioeconomic analysis behind the notions of model and adjustment. These are expressions that emerge from categorizing economy as an exact science and, thus, with the exigence of achieving equilibrium among variables.
In this way, interpretative models have been built with a succession of mathematical equations and identities regarding the functioning of the economy. In presence of a deviation, the need for adjustment appears to reestablish the equilibrium.
In this perspective, then, there is a natural order determined by the market. It is very similar to a religious dogma. This is motive of the obsession for using the word adjustment.
The fragility of this current of economic thought—dominant in the academic word and daily analysis—lies in the fact that the object of study is not an inanimate matter or deity but rather constructions made by social subjects with diverse and contraposed interests.
The pretention of encapsulating this struggle in the static concept of model and adjustment in search for such mythical general equilibria of variables impoverishes comprehension of economic phenomena. Instead, it is enriched when those notions are displaced in favor of treating economy as a social science and the definition of political economy is incorporated.
Therefore, the idea of model is set aside by the political project with economic objectives and the notion of adjustment by political intervention under certain events that tense those goals. In the course of diverse events, either unexpected or foreseeable, governments apply tools from economic policy whose orientation must be judged by which economic objective it pretends to accomplish, instead of qualifying them schematically.
What cannot be ignored is that, in almost every situation, economies face a diversity of restrictions. Thus, it is necessary to evaluate not only technically but also politically each situation.
Two cases that tend to occur in non-central countries
One case refers to whether economy grows a lot through consumption; imports tend to increase due to the type of prevailing economic structure and, therefore, these advancement collisions with the external restriction, which is the relative scarcity of foreign currency. There is a shortfall of dollars to finance necessary imports to feed the expansion of the productive circuit and part of the domestic consumption. This limits growth as it affects, and maybe even interrupts, the industrialization process.
Another case refers to the fact that by issuing much money to stimulate demand, this greater liquidity can initially impulse growth recovery but, if certain limits are crossed, it can generate surpluses that can be converted into dollars or, if productive offer did not accompany the increase in demand, inflationary tensions would increase.
These and other restrictions must be considered by those responsible of economic management to choose wisely the most adequate tools to manage them.
That said, those who have dealt in the worst way with these restrictions have been the neoliberal economic programs, as they have only worsen the problems without contributing advances whatsoever to overcome them.
Instead, heterodox programs were expansive with the objective of building an economy for national development, though they stumble upon such restrictions. However, in this task, they have not destroyed everything on their way, but rather they have tried to deal with such limitations trying to enhance general conditions.
In this instance, popular base governments currently stand, with the limitations inherent to their conformation as coalitions of a diversity of political forces and, especially, by an unequal relation with the economic power and media mechanism possessed by groups that concentrate wealth and decisional power.
Selected paragraphs from the article La mentira del ajuste (The lie behind adjustment) published in November 15, 2020, in Pagina12
If you like this text, by filling out the form that appears in this page you can subscribe to receive once a month a brief summary of Opinion Sur English Edition.