Latin America and the Global Crisis

15 July 2009 by Claudio Katz


The economic impact of the crisis is visible throughout the region. The
expectations of a disconnection with it have been diluted, while the monetary and tax shields are inadequate to curb the effect of the financial earthquake.

It is true that the leverage Leverage This is the ratio between funds borrowed for investment and the personal funds or equity that backs them up. A company may have borrowed much more than its capitalized value, in which case it is said to be ’highly leveraged’. The more highly a company is leveraged, the higher the risk associated with lending to the company; but higher also are the possible profits that it may realise as compared with its own value. of banks is smaller, but capital out-flights are more intensive. Overproduction hits the internationalized industry and cheaper commodities Commodities The goods exchanged on the commodities market, traditionally raw materials such as metals and fuels, and cereals. reverts growth. Moreover, attempts to re-launch collide with the availability of fewer resources than in the central economies.

The expectation of further geopolitical benefits forgets that the initial impact of 30s was devastating and that the crisis of the 70s curtailed trials of autonomy in the periphery. This margin of independence now faces a higher level of internationalization in the economy and depends on unpredictable political events.

There is a crisis of U.S. domination, but a looming counteroffensive. The limited or enduring nature of the American decline is not defined as the first power preserves military leadership accepted by its competitors.

The ruling classes of the region operate with their own strategies, especially in the south of the continent and is not verified the type of neocolonial subject which prevails in Africa. A possible multi-polar scenario would have oppressive features and enhance the association of local elites with the hegemonic powers.

Brazil already commands that option through multinational corporations, which led to conflicts with neighboring countries. With rearmament, the occupation of Haiti and the geopolitics of UNASUR, Itamaraty seeks to occupy the open space by the U.S. crisis, without colliding with the giant North.

This sub-imperialist policy consolidates the disappearance of the old national
bourgeoisie. Moreover, it illustrates how the dominant sectors invest surplus capital
overseas that was generated by an internal constrained accumulation. It is also important
to recognize the existence of semi-peripheral formations to overcome the simplifications
of the center-periphery scheme.

The capitalists of Mexico, Brazil and Argentina receive the relief that should be allocated for the homeless. The socio-liberal and neo-developmentalist governments converge into a powerful pro-statism and do not coordinate their anti-crisis programs. It is clear that the people will suffer hard blows if we do not hold resistance to the attacks to come. We must prepare to face unemployment and poverty with measures of
expropriation of the bankers, the suspension of debt payments and nationalization of natural resources.

The political conditions for implementing this policy shift are given in several countries. Although the right tries to recover terrain, it has lost major battles. Radical nationalist governments could take robust agenda, reinforcing the alliance with Cuba and revitalizing the ALBA. The fight against neo-liberalism calls for action against capitalism, a socialist perspective that goes beyond the mere regulation of the current

Read the full text in pdf
Claudio Katz

is a professor of economics at the University of Buenos Aires, Argentina. He blogs at

Other articles in English by Claudio Katz (7)




35 rue Fabry
4000 - Liège- Belgique

00324 226 62 85