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The proliferation of corporate globalization has commonly led many to assume the overall weakening of national sovereignty. The state is sidelined in its power in favor of trans-national actors and international financiers. Yet in practice governments remain responsible for their country’s economic well-being. More precisely, they have the “responsibility” to make sure that the nation maintains its commitment to neoliberal reforms, if necessary through quite coercive measures. Arising is the politically authoritarian “self-disciplined” modern capitalist state.

A History of the Responsible Market State

There is long precedent of international capitalist actors justifying political authoritarianism nationally in the name of sustaining a “responsible” economic agenda. Indeed, a vital issue that confronted the IMF and World Bank in the postwar era, at least from the mid 1970s onward, was how to deal with popular resistance to its proposed capitalist reforms. While modernization narratives painted a theoretical picture of capitalism being the exclusive pathway to democracy, in practice marketization often had profoundly authoritarian consequences. The expectation of governments to effectively deal with domestic threats to capitalist changes served as a precedent for the present self-disciplining neoliberal state.

The 1980s ushered in resurgent demands by donor countries and international financial organizations for developing countries to adopt widespread market reforms. Central to these strategies was increased privatization, a more competitive labor market and the sharp reduction in public spending on social welfare. The freeing up of “market forces” was aimed, rhetorically at least, at encouraging economic growth. More than suggestions, these reforms were conditions for countries to receive IMF loans and as such remain financially solvent. By the latter part of the decade though these loan conditions were increasingly subject to the “distribution critique” as across the developing world these changes resulted in a substantially lesser share of labor income and rapidly increasing inequality (Pastor, 1987).

Not surprisingly, these measures catalyzed quite strong public dissent. The erosion of social safety nets alongside a lessening stake in the economy created widespread dissatisfaction with these reforms and the governments who supported them. Politically this meant that states had to progressively turn to authoritarian measures to protect these capitalist policies from democratic challenges. Within the Latin American context, for instance, it was observed that:

[Governmental elites, if they are to remain in power, must also answer to (or repress) their own populations. And the price to be paid for external help with “liquidity problems” has typically involved politically dangerous stabilization measures (devaluations, wage and credit restrictions, and fiscal deficit reductions) - measures that often arouse the strong opposition of major social forces. (Kaufman, 1985: 473)

Pastor (1989) notes, in this respect, that governments had to navigate between external pressure of neoliberal reforms to deal with debt and internal pressure of dealing with populations upset at these reforms and the international actors who imposed them. This tension gave birth to a broader global discourse on the need for “political stability,” an idea that justified either outright authoritarianism or democratic illiberalism within developing countries being forced to accept these structural readjustment policies (see Frenkel and O’Donnell, 1979; Sheahan, 1980; Foxley, 1983). Trans-national capitalist organizations (both in their structure and influence) similarly created conditions for authoritarian politics in Africa (Bangura, 1991).

This was true even in countries that had recently experienced democratic transformations. “Southern cone countries such as Argentina and hopefully Uruguay and Brazil, are now returning to civil democracy after years of military rule ... But they are faced with enormous debt problems, which seriously endanger the process of democratic transition” wrote former president of the Latin American Studies Association Helen Safa (1985). She continued that:

[T]he policies of the International Monetary Fund are hindering the democratic process in these countries, not only by forcing the new civilian governments to institute harsh unpopular measures regarding wages, inflation, and investment policies, but by seriously weakening the strength of labor unions.

Underpinning this emerging reality of capitalist authoritarianism was the idea that without these coercive state measures countries would face not only economic ruin but also political anarchy. The successful implementation of these reforms was thus directly linked to the ability to portray the situation as one of “crisis” requiring immediate and drastic change (Remmer, 1986). As one scholar emphasized, “the only alternative to planned and guided adjustment is chaotic adjustment, entailing higher costs in terms of controls, scarcities, inflation, unemployment, and atrophied output and growth” (Nelson 1984: 81).

This early legitimization of an empowered state tasked with policing the successful maintenance of marketization, set the foundations for present forms of national self-disciplining. Tellingly, the economic justification for this authoritarianism is based on quite limited historical evidence. Andrews (2008: 380) notes that prevailing models of government effectiveness are “like telling developing countries that the way to develop is to become developed” and that the “‘one-way-best model’ of governance ignores institutional variation across well-governed states” (also see Pritchett and Woolcock, 2004). Instead, it is based on a new capitalist fantasy of development that combines “responsible” policies of economic marketization with political authoritarianism.

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