The Political Economy of Progressive Uruguay,2005

Abstract

The 2005 election of the Frente Amplio (Broad Front) to the national government initiated a new stage in Uruguay’s recent history characterized by capital accumulation, increase of income for the working class, and the development of social policies. An analysis of the particularities of this historical period challenges official and liberal positions that attribute them exclusively to the capacities of government authorities. Progressiveness expresses a particular way of valorizing capital emerging from the crisis of neoliberalism that is characterized by the linking of capital accumulation with wage increases and social policies made possible by external conditions including the increase of ground rent and flows of foreign capital.

La llegada del Frente Amplio al gobierno nacional en 2005 inició una nueva etapa en la historia reciente del Uruguay en el marco del cual se producirá un período virtuoso de acumulación de capital, mejora de los ingresos de la clase trabajadora y despliegue de políticas sociales. Discutiendo con las posturas oficialistas y liberales que atribuyen los resultados exclusivamente a las capacidades/incapacidades de los gobernantes, este artículo analiza las particularidades de este período histórico con foco en su economía política. Se propone que el progresismo expresa una forma particular de valorizar capital que nace de la crisis del neoliberalismo, y cuyo rasgo distintivo es que articula acumulación de capital con incremento salarial y políticas sociales gracias a condiciones externas ligadas al incremento de la renta de la tierra y al flujo de capital extranjero.

Keywords

Progressiveness Uruguay Frente Amplio Ground rent Capital accumulation

In 2005, in the context of the wave of so-called progressive governments in Latin America, a novel stage in recent Uruguayan history began. Two key aspects characterize this period. First, for the first time the Frente Amplio (Broad Front), a political force forged at the peak of the social struggles of the 1960s and early 1970s that united practically all of the Marxist left and the reforming sectors of the traditional parties (Colorado and Nacional), was elected to the presidency. This multiclass political coalition, with strong working-class leadership, eventually adjusted its strategy so as to attain the presidency in the 2004, 2009, and 2014 elections with absolute majorities in both houses of the legislature (Luna, 2007; Yaffe, 2013). The second determining aspect of the period was the unprecedented growth of the gross domestic product (GDP) due to the economic boom resulting from high commodity prices and the increasing flow of foreign direct investment. This scenario made possible an increase in real wages and access to public services for the most impoverished of the working class.

Beyond the Uruguayan case, the debate about the characterization of this wave of progressive governments has involved a varied set of theoretical and political perspectives. From liberal or right-wing positions the notion of “populism,” in its origins applied to characterize nationalist governments such as Perón’s in Argentina (1945–1955) and Vargas’s in Brazil (1930–1945, 1951–1954), was used to condemn supposedly “demagogic” and “clientelistic” policies that “misspent” public resources to obtain popular support and to dilute the liberal principle of a separation between civil society and political society (Ellner, 2016). However, despite this general characterization,there have been nuances. For example, one of its main media spokespeople, Mario Vargas Llosa (cited in Mendoza, Montaner, and Vargas, 2007), introduced the idea of a difference between a “vegetarian left” (Brazil, Uruguay, Chile) and a “carnivorous left” (Venezuela, Bolivia, Ecuador), the former being more “modern,” “democratic,” and pragmatic in fomenting capitalist development.

On the left end of the political spectrum, positions have also been diverse, in general marked by a continuum of degrees of difference or similarity between governments. Intellectuals closely or directly involved with the so-called left-wing or radical governments made up one group. Atilio Borón (2014) and Álvaro García Linera (2009), for example, have defended policies for the reduction of poverty and indigence, the expansion of public services (education, health), the renationalization of public companies (water, hydrocarbons), democratic legitimacy conferred by electoral victories and, especially, foreign policies autonomous from U.S. hegemony, “historical reparations” policies linked to the construction of plurinational states, and the promotion of the so-called twenty-first-century socialism. A second group may be identified with perspectives close to the “reformist governments” (Chile, Brazil, Uruguay), in general linked to theoretical positions like those of the Economic Commission for Latin America and the Caribbean (ECLAC). They emphasize the need of state intervention and private initiatives to achieve virtuous inclusion (“growth with equity”) of the Latin American economies in the global process of capital accumulation (for example, Bresser-Pereira, 2010). While the first group understood the administration of progressive governments as a transition to socialism, for the second the goal has been an inclusive and democratic capitalism like that of the Scandinavian countries.

A third group has included writers who highlight elements of continuity in progressivism with respect to neoliberal governments. Some of these conceptualize this process as a “progressive neoextractivism,” heir to the ideas of the progress of modernity, that is based on a productive structure that depends on the exploitation of natural resources to finance the social policies that legitimate it (Gudynas, 2009; Petras and Veltmeyer, 2015). For them, all of the region’s governments, whatever their differences in policy, type of party, and institutional structure, maintain and promote extractivist practices that externalize social and environmental impacts and are distinguished from neoliberal governments by state intervention in the appropriation of surpluses.

Others writers distinguish between a nationalist left and a reformist left. While the nationalist has managed to limit the power of the dominant classes, directly affecting the interests of different capitalist groups, in the framework of the formation of “anti-imperialist” regional blocs such as the Alianza Bolivariana para los Pueblos de Nuestra América (Bolivarian Alliance for the Peoples of Our America—ALBA), the reformist has a neodevelopmentalist project involving capitalist development complemented by social and redistributive policies that has no interest in confronting hegemonic powers (Stolowicz, 2012; Féliz, 2012; Katz, 2015). Ellner (2015), studying the Venezuelan case, says that progressive governments there deploy both “populist” initiatives that more or less directly address the needs of the popular sectors and “pragmatic” initiatives that express the interests of dominant sectors seeking to deactivate them and/or incorporate them into the government. For Modonesi (2013), drawing on Gramsci’s contributions, progressive governments in Latin America can be characterized as “passive revolutions” because they articulate processes of change and continuity but essentially demobilize and domesticate subaltern subjects “from above” while incorporating some of their demands. This focus updates the Gramscian notion of Caesarism to examine the emergence of charismatic figures who fulfill the political function of resolving the catastrophic impasses between social classes and adversarially articulate progressive and regressive elements.

Finally, Kornblihtt, Seiffer, and Mussi (2016), drawing on the contributions of Iñigo Carrera (Charnock and Starosta, 2016), propose going beyond the separation between economy and state that they identify in most of the perspectives reviewed here to focus on the particularities of capital accumulation in the region. In their view, the “alternatives to neoliberalism” developed in the past decade and a half are an expression of the place occupied by these economies in the global process of capital accumulation as suppliers of ground-rent-bearing commodities to the world market. Ground rent allows at least partial compensation for the lower productivity of local capitals and the support of increasing numbers of surplus workers. Thus, while neoliberalism is the dominant political form in a cycle of retraction of ground rent that leads to indebtedness and declining salaries, its “alternatives” (neodevelopmentalism, post-neoliberalism, twenty-first-century socialism) involve a cycle of increasing ground rent that allows direct increase in wages and in social spending.

The literature on the progressive phase in Uruguay can be divided into three main groups. First there are the official perspectives, generally produced by intellectuals in government, that explain the “progressive success” as the result of the government’s efficient administration. Among their expressions are the “growth with inclusion” thesis and the “proto-socialism” of Olesker (2009; 2012). Second, also strongly charged with ideology but from the opposite end of the political spectrum, are the liberal positions of the right, especially those of the traditional political parties (Colorado and Nacional), the new “Party of the People,” and the mass media, especially the national dailies El Pais and El Observador and the weekly Búsqueda. This literature emphasizes the “populism” and “demagoguery” of the Frente Amplio’s policies, particularly condemning those that regulate capital’s margin for action and involve monetary transfers to the most impoverished sectors. Even though the right wing’s spokespeople tend to position Frente Amplio on the “vegetarian left,” they often speak of “Oriental-style populism” (Gasparré, 2015) or, with the former presidents Sanguinetti (1985–1989 and 1994–1999) and Batlle (2000–2005), use stronger epithets such as “labor union pseudo-dictatorship” (Sanguinetti, 2016) or “fascist” and “authoritarian and dictatorial” (Batlle, 2013).

The third group includes more academic approaches that Notaro (2015) divides into two subgroups. More critical views have emphasized the deepening of dependency with respect to centers of global power, whether through unequal interrelations (Garofali, 2014), a focus on finance (Dufrechou, 2015), or greater economic dependence on raw materials (Galván and Giometti, 2013). Along these lines, Santos et al. (2013) conceptualize Uruguayan progressivism as a national version of a regional neodevelopmental project that reconciles the interests of capital and labor, while Mañán (2013) points out that progressivism is a variant of neoextractivism that assumes a new form of gatopardismo to legitimate capital accumulation. For its part, views closer to those of the ECLAC note the successes in economic growth and the reduction of poverty and inequality but confirm the difficulties in moving forward with structural reforms that stimulate innovation and modify the mode of incorporation into the world market (Bértola, Isabella, and Saavedra, 2014). Lanzaro (2011) offers a political science variant of this interpretation that distinguishes between “populist governments” and “creole social democracy,” including Brazil, Chile, and Uruguay in the latter, whose distinctive feature is the democracy expressed in more stable, balanced, and competitive institutions and political systems. In the Uruguayan case, he points to a “moderate but effective reformism” that has produced advances in human rights, poverty reduction, and social protection.

This article seeks to contribute to the understanding of this historical period in Uruguay with an analysis of the determining factors that made possible an era characterized by capital accumulation with increasing income for the working class that led to the Frente Amplio’s overwhelming hegemony for more than a decade. Similarly, in line with one of the themes of this collection, I analyze the Frente Amplio’s policies in terms of how “populist” or “pragmatic” they were (Ellner, 2015) and consider whether it is possible to conceptualize this experience as what Modonesi (2013) calls a passive revolution.

The main hypothesis guiding this article is that it was extraordinary external conditions, in addition to the gradual loss of hegemony of right-wing parties due to the neoliberal crisis, that facilitated the progressive era in Uruguay, in which the Frente Amplio has been the political expression of a new distributive pact between social classes. In addition to this introduction, the article has three sections. The first presents the main characteristics of the neoliberal phase in Uruguay (1973–2004), the second analyzes the key features of the progressive period (2005–2016), and the third presents a general assessment of the period and discusses elements of perspective.

Neoliberalism in Uruguay (1973–2004)

The period known as import-substitution industrialization in Uruguay (1943–1959) was based on high prices of raw materials and exported basic goods that allowed an extraordinary appropriation of surplus profits in the form of ground rent. The ground rent drove the reproduction of manufacturing capital, which was less productive than that in the central countries, developing an industrial sector that replaced some of the goods formerly imported from the rest of the world. The state’s mediation in appropriating and redistributing these extraordinary profits led to the growth of the industrial working class and direct and indirect wage increases. Nevertheless, toward 1955, the material conditions that had facilitated the Uruguayan bonanza faded, initiating a crisis marked by declining exports (in price and volume), a deficit in the balance of payments, diminishing international reserves, and increasing foreign debt (Finch, 2005: 243–268). This context exacerbated class struggle that was resolved only by the 1973 military coup. The program to relaunch capital accumulation began to be implemented in 1968 with price and wage freezes during the government of Jorge Pacheco Areco (1968–1971). However, the strength of the workers’ organizations made it impossible to apply the adjustment, and a military dictatorship was the only way the propertied classes could implement their program.

Beginning in 1973, the “military party,” supported by the most dynamic sectors of the bourgeoisie (agro-export and finance), deregulated the financial sector and dismantled the mechanisms for social protection (indirect wages and collective bargaining) that had characterized the previous period. At the same time, workers’ organizations were repressed, with the imprisonment, torture, murder, and disappearance of activists (Finch, 2005: 271–299; Notaro, 2010). The new mode of accumulation since 1973 may be summarized in terms of three main factors: devaluing the workforce, opening up capital markets (direct or indirect investment), and export promotion.

First, the military period was characterized by expropriation of the working class’s capacity for consumption, which at minimum combined extending the family work day by incorporating women into the labor market and reducing the purchasing power of the workforce by 60 percent between 1971 and 1984. This aggressive reduction of real wages could be conceived, hypothetically, as articulating the following characteristics: payment of the workforce below its value, reducing the skills of the workforce through the dismantling of the industrial fabric, and trade liberalization that somewhat reduced the cost of labor’s consumption of basic goods. Wage deterioration mobilized the industrial reserve army through the absolute and relative expansion of the female workforce and the proletarianization of petty commodity producers.

A second factor was the generation of attractive conditions for investment of internally and externally accumulated surplus value in a context of high capital liquidity at the international level. A law passed in 1974 stimulated foreign direct investment, and the foreign debt (both public and private) grew exponentially.

The third factor was export promotion. It was not that exports were not important during the import-substitution industrialization stage but that the exhaustion of the industrial phase and the sharp contraction of the domestic market caused by the devaluing of the workforce turned the economy toward the production of exportable goods, taking advantage of high international prices and low wages that increased capital’s profit and led to an expansion based on exports between 1973 and 1981. This orientation combined the momentum of livestock and the development of new export sectors that took advantage of extraordinary natural conditions (fishing, dairy products, rice).

Despite the initial “success” of the capitalist restructuring, during the 1980s accumulation encountered various obstacles that led to the end of the military dictatorship in 1985. There was a long economic crisis (“the lost decade”) that peaked in 1982 with the severe devaluation of the peso in a context of declining exports and high relative indebtedness. The year 1980 marked the beginning of a new period of resistance to the dictatorship in the political arena with the defeat of the military’s constitutional reform. In addition, there was growing international pressure for the end of the region’s dictatorships, which, for U.S. strategy, had already accomplished their task of dismantling working-class organizations.

For the following two decades, the four postdictatorship governments (1985–2004) only deepened the programmatic agenda of the military period. This offensive implied not holding wage councils between 1990 and 2005, greater trade liberalization under the Mercosur accord, the reform and partial privatization of social security, and fiscal adjustments in 1990, 1995, and 2000–2002 that raised consumer and income taxes. They attempted to privatize public companies and eliminate state monopolies (electricity, water, oil refining, telephone), initiatives that had been stopped by workers’ resistance through plebiscites. The national airline was partially privatized, and the postal service and insurance were deregulated (Olesker, 2001). These policies maintained conditions for capital accumulation until 1998, and with the crisis of 1999–2002 the main impact of the adjustment fell on workers.

This period was characterized by the primacy of indirect foreign investment linked to significant speculative capital flows into the financial sector and, to a lesser degree, direct investment focused on sectors such as forestry and transport. In contrast, private domestic investment was affected by trade liberalization and deregulation that, together with exchange rate lag (peso devaluation rates lower than inflation rates), reduced the profitability of capital linked to the domestic market. An influx of speculative capital was favored by public policies such as bank secrecy and rising interest rates and an influx of productive capital by a series of laws (Santos et al., 2013).

In a context of GDP growth until 1998 with important transformations in the economic structure, agro-export specialization increased. Nontraditional export sectors were consolidated, livestock overcame an almost 80-year stalemate in productivity, and the forestry sector expanded in the hands of foreign capital. In contrast, sectors aimed at the domestic or regional market such as textiles suffered a sharp retraction, deepening the dismantling of the industrial framework that was not part of agro-export chains (Olesker, 2001).

The democratic recovery slowed the decline of real wages recorded during the dictatorship but maintained the degree of devaluation of the workforce. Despite a slight increase in real wages between 1985 and 1989 that recovered the losses from the 1982 crisis, during the 1990s deregulation of the labor market and the destruction of part of the productive apparatus generated extremely adverse conditions for workers. The period 1990–2003 was characterized by increasing labor precariousness and informality, deploying the reserve industrial army to maintain low wages and reducing union membership to minimal levels (almost 10 percent). These phenomena resulted in a significant flow of economic outmigration (mainly toward Spain and the United States), estimated at 207,000 persons for 1985–2004 (Pellegrino and Vigorito, 2005) as well as higher levels of poverty (39.4 percent) and unemployment (17 percent), equivalent to 211,300 persons, in 2002 (INE, 2016).

The Progressive Phase (2005–2016)

Uruguay’s progressive phase was the product of two linked processes. The first was the severe economic crisis of 1998–2002, which reconfigured the political map with which the country had entered the twentieth century. During these years GDP fell 15 percent, exports declined 33 percent in current dollars, and real wages declined 22 percent between 1998 and 2004, reaching their second-lowest level of the period 1973–2015. This socioeconomic disaster contributed to the Frente Amplio’s electoral victory in October 2004 with 50.5 percent of the votes and an absolute majority in both houses of the legislature. Simultaneously, the Colorado Party, the party that had governed with few interruptions since Uruguay’s independence in 1830, sank, and the entire political right was profoundly discredited. The second process was the extraordinary economic scenario at the international level, which, with high commodity prices that increased the mass of ground rent nationally appropriated and high international capital liquidity, allowed an economic growth cycle with rising real wages and the decline of poverty and unemployment.

In this sense it is possible to say that the Frente Amplio expressed a new distributive pact between social classes that partially changed the distribution of value between capital and labor, generating the conditions for capital accumulation and improving wages. Progressivism thus combined continuity and change: continuity of the “hard core” in the form of valorizing capital characterized by incorporation into the international division of labor as providers of commodities under the exclusive ownership of private capital and reversal of the long trend of devaluing the workforce registered in earlier decades.

The economic bonanza was expressed in GDP growth rates averaging 5 percent annually, in contrast with 2.1 percent in the period 1973–2004. This growth was associated with an increase in annual investment rates, nationally appropriated ground rent and absolute public debt. Foreign direct investment accumulated to US$22.1 billion between 2005 and 2016,¹ 61.4 percent of which was capital contribution (revealing the significance of surplus value accumulated outside of Uruguay) (BCU, 2016). Agrarian ground rent between 2005 and 2016, combining that received by landowners with that received by social subjects other than landowners mainly through exchange rate overvaluation, increased tenfold, accumulating US$37.2 billion (Oyhantçabal, 2018). In the same period the gross public sector debt increased from US$14.8 to US$33.3 billion, but its relative proportion of GDP was reduced by the GDP’s growth. The debt profile changed to some extent, with debt in the national currency exceeding debt in dollars, an increase in average debt maturity, and private creditors replacing international ones (International Monetary Fund, the World Bank). The increase in indebtedness was mainly used to pay interest and amortize past debt (Alonso, 2014).

This economic dynamism took the form of a set of policies that stimulated capital accumulation. In particular, what stands out is the general orientation of macroeconomic policies and the construction of a legislative framework partly inherited from 1985–2005 and partly promoted by the Frente Amplio. In the first group we find policies focused on containing inflation, the management of a flexible exchange rate, the reduction of the fiscal deficit by simplifying the tax system, the reduction of tax evasion and the raising of revenue in a context of economic growth, and debt management guided by the aforementioned guidelines that allowed almost unrestricted access to foreign and domestic debt.

For its part, the Frente Amplio did not eliminate the laws of the neoliberal period from its legislative agenda; rather, these laws served as leverage for the capital accumulation recorded during this period (Santos et al., 2013). Likewise, during its first two administrations it passed laws aimed at attracting local and international private investment. Taxes on corporate profits were reduced from 30 percent to 25 percent in 2007, the 2011 Law of Public-Private Partnership promoted contracts between the private sector and the state for public works and service provision, and the 2013 Large-Scale Mining Law regulated and guided open-cast metal mega-mining endeavors.

This cycle of accumulation in hands of private capital deepened “foreignization” and centralization of the principal means of production, fundamentally in the agro-industrial sector, increasing the remittance of profits abroad that, along with debt service obligations, continued to function as surplus value transfer mechanisms. In the case of land, the national economy’s means of production par excellence, between 2000 and 2011 legal entities (mostly corporations) gained control of 43 percent of the arable area. Denationalization of agro-industrial sectors such as unirrigated agriculture, forestry, livestock, rice and barley (Santos et al., 2013) was apparent in the strong foreign presence in the export structure. Additionally, all private banks are foreign (Dufrechou, 2015), and in 2010 they owned 54 percent of the assets of industry (ECLAC, 2012: 16).

At the same time, an economic structure based on raw materials and specialized in the production of agro-industrial goods of low aggregate value realized in the world market was consolidated (Galván and Giometti, 2013). Almost 70 percent of exports were commodities of agricultural or agro-industrial origin, led by soy, beef, rice, wheat, dairy products, and cellulose paste. The main novelty of the period was the emergence of China as the principal trading partner since 2013. Meanwhile, imports showed a clear bias toward medium-to-high-technology industrial goods.

However, the Frente Amplio governments also exhibited important changes with respect to their predecessors. The outstanding element of the period was the reversal of the long trend toward devaluation of the workforce. Real wages rose 56.3 percent from 2004 to 2016 and 20 percent compared with 1999, the year that the last crisis began. This increase, together with the increase in the level of activity, raised the proportion of wages in the GDP (in current currency) from 34 percent in 2005 to 43 percent in 2014. Nevertheless, the purchasing power of wages in 2016 was still 29 percent below its 1971 level. Unemployment declined to 6.3 percent in 2011 (in 2002 it had been 17 percent), underemployment from 17 percent to 7 percent, and informal employment from 38 percent to 28 percent. In 2014, these changes led to a reduction of the percentage of the population under the poverty line to 10.1 percent, a 29-point reduction (INE, 2016). Together with wage increases, so-called social public spending (fundamentally indirect wages provided by the state) rose 91 percent in real terms between 2004 and 2012. The distribution of public social spending in 2012 was 50 percent for social security, 24 percent for health, 18 percent for education, 6 percent for housing, and 2 percent for other sectors (MIDES, 2014).

The increase in direct and indirect wages was made possible by high levels of economic growth and a set of policies in which the state increased regulation of capital-labor conflict and raised the incomes of the most impoverished sectors of the working class (unemployed, informal, and low-skilled workers). The wage council, an agency for negotiation among employers, workers, and the state about wages and labor conditions, was convened for the first time since 1990. The government established guidelines aimed at recovering the losses in wages from 1999 to 2002 and improving working conditions and raised the national minimum wage by 141 percent in real terms between 2005 and 2016. Likewise, laws to regulate labor relations among lowest-paid private sector workers (domestic and agricultural employees) were passed, along with freedom-of-association laws that increased union activity protection (in 2005) and laws on collective bargaining (in 2009) and corporate criminal liability (in 2014). All these measures helped to raise the rate of union membership to 40 percent (400,000 workers), four times that of early 2000.

In the area of social protection and income transfers, the Ministry of Social Development, the Social Emergency National Attention Plan, and the Citizen Income Program were created in 2005. Policies focused on poverty reduction included direct money transfer, a nutrition card, the creation of social cooperatives, and the expansion of funding for the Family Allocation program for children and adolescents, which multiplied by 1.8 in constant currency between 2005 and 2014 (BPS, 2016). All these policies contributed to reducing poverty levels and thus guaranteeing better conditions for social reproduction, in particular in those sectors of the surplus working-class population.

Reviewing Ellner’s (2015) discussion of the “populist” and “pragmatic” initiatives that have characterized progressive governments, I suggest that under the Frente Amplio governments these two kinds of policies were an expression of a new mode of capital accumulation. The “populist” policies were aimed at directly or indirectly raising the income of the working class. From this perspective, the increase in social spending, more than a gift or a policy of social containment, was a response to the increase in the number of people who were unable to sell their labor power. Moreover, as Kornblihtt, Seiffer, and Mussi (2016) point out, when this spending comes from extraordinary sources (ground rent, debt), it supposes a transfer to capital, whether by reducing the direct wages of the employed through expansion of indirect wages or by appropriating the increased consumption spending of the unemployed.

The “pragmatic” initiatives, in contrast, included policies aimed at making private capital accumulation dynamic, among them government initiatives that took advantage of or updated the legislative framework inherited from the neoliberal period. These initiatives were mainly directed toward constructing a friendly investment climate for private capital (national or foreign), in which respect for property rights, fiscal terms, and agreements for the protection of investment have been key (U.S. Department of State, 2015). This group of policies, which at first glance may seem contradictory, should be understood not in moral terms (“opportunism,” “conciliation”) but as an expression of the form that capital accumulation in Uruguay took after the neoliberal crisis. The increase of the flow of ground rent and foreign direct investment, as external determinants, made possible the development of a form of capital accumulation that, at least at that conjuncture, allowed increasing both the returns of capital and workers’ incomes.

Analysis of the policies deployed by the Frente Amplio is a useful demarcation with regard to the rest of the actors in the political spectrum. On the one hand, the social (capitalists) and political right tends to criticize “populist” initiatives, especially those related to regulation of capital-labor conflict, claiming that, as former President Julio María Sanguinetti put it, the “labor union corporation” has co-opted the government. For their part, the capitalists’ organizations that have come together in the Confederación de Cámaras Empresariales (2016) denounce high wage costs and the rigidity of the labor market as an obstacle to competitiveness in the country, while the chambers of commerce and industry have complained to the International Labor Organization about the collective bargaining law and the decree that allows occupations of workplaces. To a lesser degree, income transfer policies are also criticized on the argument that they and policies such as the decriminalization of the sale of marijuana for recreational use foster habits that discourage individual effort. A paradigmatic example of this position has been the emergence of a novel political figure on the national scene, the businessman Edgardo Novick (founder of the Partido de la Gente [People’s Party], inspired by the Argentinian party Propuesta Republicana [Republican Proposal] led by Mauricio Macri). Employing a discourse that claims to be “postideological” and concerned only about “management,” he criticizes the Frente Amplio for, among other things, buying votes with public jobs (see Novick, 2016).

At the other end of the political spectrum, the political and social left (the union movement, environmental groups) tends to view the “pragmatic” initiatives as favoring capital, destroying the environment, and/or undermining the country’s sovereignty. Some of these critiques are even expressed within the Frente Amplio, given that it is a multiclass coalition, but these internal differences have not resulted in significant political ruptures since the split-off in 2007 of the 26 de Marzo (March 26) movement, which later, with other smaller organizations, formed the Unidad Popular (Popular Unity). It is the combination of continuity and change expressed in the coexistence of “populist” and “pragmatic” initiatives that suggests, as Modonesi (2013) proposes, that the Frente Amplio can be understood as a kind of passive revolution.

The Frente Amplio governments played a leading role in a series of changes that countered neoliberalism—changes that, without by any means amounting to a revolution, meant significant improvement for much of the working class—and were confronted by the opposition of the political and social right. However, these were changes in the process of accumulation that left the basis of capital valorization intact. Neither the type of goods produced for the world market, the ownership of the majority of the means of production, or the distribution of income among social classes saw significant modifications. As a result, the sectors that had mobilized against structural reforms under neoliberalism and promoted the rise of the Frente Amplio became “passive.” In fact, under these governments social mobilization was allowed provided that it did not challenge the private ownership of the means of production—the real Rubicon of progressivism. Nevertheless, more useful than morally judging progressive governments for having demobilized or pacified the working class is asking what led first to the exacerbation of social conflict that produced the electoral victories of the Frente Amplio and then led to its “passive incorporation” into the progressive regime. Here the political economy of the progressive era contributes key elements to an understanding of cycles of “activation-passivization.”

Assessment and Perspective

From the analysis so far, Uruguayan progressivism can be understood as a sui generis and temporary way of valorizing capital in the periphery that emerged from the crisis of the neoliberal governments and allowed an increase in the labor force’s value but is unstable because of its dependence on conditions external to the national economy. This reading is thus distinct from both the official discourse, which attributes the progressive changes of the period to governments’ “good administration” and even speaks of “proto-socialism,” and the discourse of the political and social right previously reviewed, which charges the Frente Amplio governments with being populist, authoritarian, and demagogic. It places less emphasis on the capacity of political actors than on the conditions that led to this period of capital accumulation. From this perspective, the combination of “populist” and “pragmatic” initiatives was the political form that this period took and was expressed in a new distributive pact between classes.

I do not deny the objective improvement in the conditions for reproduction of the working class in the past decade, nor do I argue that a small economy on the periphery of the global order can, simply by willing it, change its mode of incorporation into the world economy and obtain the levels of productivity of a central country. However, I do stress the fact that the change was the product of an extraordinary economic scenario (high levels of ground rent and overaccumulation of capital at the global level), one that has begun to retreat on the continent, undermining the material premises that had made the progressive bonanza possible.

The decline of commodity prices, economic deceleration and recession in Uruguay’s main trading partners (China, Argentina, and Brazil), and the reduction of foreign direct investment are already being felt. In 2015 and 2016 economic growth slowed, as did the increase in real wages; unemployment increased, and for the first time in 10 years the proportion of the population below the poverty line increased slightly. Under these conditions, during 2016 the Frente Amplio government introduced regressive changes aimed at de-indexing wages from inflation rates (the predominant form of devaluing the workforce) and reducing public spending while approving a fiscal adjustment that raised taxes for those earning over US$1,600 per month.

All these elements affected the stability and legitimacy of the progressive distributive pact. On the one hand, pressure both from capitalists’ organizations and from the right-wing parties for devaluing the workforce and freezing public spending increases, taking advantage of the region’s turn to the right (Macri, Temer) to force the government to make these adjustments. The 2016 creation of the Confederación de Cámaras Empresariales and of the Partido de la Gente evidenced the mobilization of the right, as well as a media agenda promoted by capital’s think tanks that focused on the need to reduce wages and public spending and abolish taxes. On the other hand, there was an increase in mobilization among the working class (in particular the unionized working class), the Frente Amplio’s main social and electoral bastion. Emblematic cases were the 2015 mobilization against the presidential decree declaring education an essential service and therefore eliminating the teachers’ union’s right to strike (see Pérez and Piñero, 2016) and the 2016 mobilizations (including a general strike) against wage guidelines and the postponement of certain budget items, which resulted in the withdrawal or moderation of those initiatives.

The beginning of the end of the material conditions that had made the virtuous cycle of progressivism in Uruguay and the region possible exacerbated the contradictions at the heart of these experiences. Uruguay is not yet facing a scenario of political change (as have Argentina and Brazil) or a huge economic and political crisis (as has Venezuela), but the deterioration of economic conditions has created a need for a change in the distributive pact. The tendency in these situations is for capital to recover its rate of profit by cutting wages and public spending and commodifying various spheres of social reproduction. For the Frente Amplio, three options seem possible. The one currently chosen is buying time by resorting to foreign debt and greater flows of foreign direct investment, maintaining the current distributive pact at least until the 2019–2020 elections, and introducing minor modifications in wage policy and public spending. If this option fails because of a worsening international context, the alternatives appear to be finally confronting the capitalists’ power or passing the adjustment along to the workers in accordance with current regional trends.

Supplemental Material

DS_10.1177_0094582X18806587 – Supplemental material for The Political Economy of Progressive Uruguay, 2005–2016

Supplemental material, DS_10.1177_0094582X18806587 for The Political Economy of Progressive Uruguay, 2005–2016 by Gabriel Oyhantçabal in Latin American Perspectives

Footnotes

Notes

Gabriel Oyhantçabal teaches agronomy at the Universidad de la República in Montevideo, Uruguay, and is a Ph.D. candidate in Latin American studies at the Universidad Nacional Autónoma de México. An earlier and briefer Spanish-language version of this article was published as “Economía política del Uruguay progresista (2005–2015),” in Mariano Féliz and María Orlanda Pinassi (eds.), La farsa neodesarrollista y las alternativas populares en América Latina y el Caribe (Buenos Aires: Herramienta, 2017). Margot Olavarria is a translator living in New York City.

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Supplementary Material

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The Political Economy of Progressive Uruguay,2005–2016

Abstract

Keywords

Neoliberalism in Uruguay (1973–2004)

The Progressive Phase (2005–2016)

Assessment and Perspective

Supplemental Material

DS_10.1177_0094582X18806587 – Supplemental material for The Political Economy of Progressive Uruguay, 2005–2016

Footnotes

Notes

References

Supplementary Material