Ecuador: between "The Matrix" and "Utopia"

Diego Bastidas

“The Matrix is a prison for your mind”

(Morpheus, The Matrix I)

“[…]From Cairo to Quito a new world is forming[…]”

(“Multiviral”, Calle 13)

“Utopia lies at the horizon.

When I draw nearer by two steps,

it retreats two steps.

If I proceed ten steps forward, it

swiftly slips ten steps ahead.

No matter how far I go, I can never reach it.

What, then, is the purpose of utopia?

It is to cause us to advance.”

(About Utopia, Eduardo Galeano)

Over the last two weeks we have been observing how the political situation in Ecuador has been changing as a consequence of the proposal of two Acts (click here for an accurate brief overview). The first Act is called the “Act for the Distribution of Wealth”, which aims to widen wealth distribution through a progressive tax aimed at the biggest fortunes in the country. Serious analysis shows that this is Act only going to affect  2% percent of the population, in other words, those with net worths over 2 million dollars. The working class will not be affected. The second Act aims to stop speculation on land prices, especially when the increase in price is caused by any kind of state action. For example, if the government builds a highway the owners of the land cannot obtain any profit from this decision, because that would be an unjustified enrichment at the public’s expense. The leaders of the opposition have kicked off a strong campaign against these two government initiatives, which have combined protest on the street, a  mass media strategy, threats from  corporations to divest and leave the country, violent acts against supporters of President Correa’s government, blockades of airports on Galapagos Island, and finally, the intention to  blockade Quito´s airport when President Correa arrived home from Europe last month.

Why did the Correa Government propose these two bills? Why did the opposition launch this aggressive and violent campaign? What is the nature of the Ecuadorian political opposition? As the professor Bob Jessop (a Marxist analyst of the State and its institutions) reminds us, the problems of the present are the unsolved problems of the past. So the key question will be: what was Ecuador before the Rafael Correa government? Finally, we need to review the big challenges that this current situation produces in terms of building a deepening democracy in Ecuador.

When Ecuador was a banana republic

As Nicholo Machiavelli wrote in “The Prince”, the three main issues in order to understand any sociopolitical construction are 1) the analysis of social structures, 2) the analysis of the political actors, and 3) the necessity of popular consciousness (which could be thought of in terms of Gramsci’s concept of “cultural hegemony”). I will try to analyze, briefly, the current situation following this analytical framework.

Still fresh for most Ecuadorians is the news received in 1999 that the financial system had collapsed as a clear consequence of the failure of 30 years of neoliberal policies that were applied according to the thesis that markets are strong and can self-regulate. Following this premise, the right-wing parties (the Partido Social Cristiano and the Partido Democrata Cristiano) passed a series of bills in 1993 in order to accelerate the deregulation of financial activities. The Banks started to play “Wolf of Wall Street”, using many dangerous financial instruments, mainly “vinculados” loans, which are loans that bankers provide themselves through phantom corporations. The result of this political management was the destruction of the economy, increasing hyperinflation, the forced migration of around three million people to countries in the global North, and an exacerbation of the political crisis. The most pathetic result of this tragic situation was the loss of monetary sovereignty when the political elites  and  ruling class decided to adopt the US dollar as the  national currency in 2000.

The political crisis caused by this disaster capitalism (Klein) is reflected in the fact that Ecuador had 7 different presidents between 1997 and 2006, before President Correa came to power. In terms of social issues, Ecuador was the second poorest and most unequal country in the region, only overtaken by Haiti. Before 2005 the poverty rate (under an “Unsatisfied Basic Needs” approach) had reached 51% of the population, and  extreme poverty had reached  25.9% of the population. 

The people also remember how each neoliberal government signed infamous agreements with the IMF, with the last deal signed during the Lucio Gutierrez government (2003-2005) being the most egregious. In this deal, the State agreed to increase the prices of basic goods (“Canasta básica”), reduce pension funds, and  increase the price of gas and public transportation.  (For an overview of the IMF’s control over the Ecuadorian economy during the Gutierrez government see: https://www.imf.org/external/pubs/ft/scr/2003/cr0390.pdf

In the banana republic, the worker struggled the most. The neoliberal model destroyed any legal framework of workers’ rights through the implementation of “flexibilization” of work contracts.  According to this model, in order to improve the economy the country needed to move away from stable contracts between workers and capital towards the “contract per hour”, which brutally exploited workers. Under this contract the corporation doesn´t have any kind of legal obligations to its workers who can be fired at any time without compensation, with a maximum wage per hour of around $1.50. A symbolic example of this situation was the case of the British corporation Sab Miller (which  operates in Ecuador under the name “Cervecería Nacional”). Despite being one of the 5 biggest corporations in  the country, employing  thousands of workers, they reported to the state that they had zero workers, because the entire work force was contracted via third party companies called “tercerizadoras”, which was a perfect mechanism to hide the facts of true labor relations. 

In summary, Ecuador was a typical case of what professor Karl Polanyi described in his fantastic book “The Great  Transformation”; an example of a country where the society was entirely dominated by the market.                   

When the Ecuadorian people said “enough”

A pre-Correa demonstration in the early 2000s

In 2006, as a consequence of the “Indignados” who overthrew the Gutierrez government and thanks to a century of Indigenous social movements and leftist struggles, Rafael Correa, a young academic and the first economist to become president, arrived in power. His political base was a spontaneous and broad citizens’coalition of Indigenous people, socialists, communists, feminists, ecologists, students, academics, and common people. 

Reflecting on the past 8 years there are many things to stress about the Correa government. Coming back to Machiavelli’s framework, one reasonable way is to analyze the reality are through the facts that reflect the actual sociopolitical structure.

In terms of access to education, illiteracy fell from 8.6% in 2006 to only 5.8% of the population. In general, the right to education has been a key issue during this political process, as a result of the granting of free public education at all levels from elementary school to university in the new Ecuadorian Constitution (2008). The government introduced scholarships for young students to study at the best universities in the world and there are 10 000 young Ecuadorians training around the world at this moment. The most important thing is that university enrollment rates have improved, especially among the poorest people in society.

In terms of indicators of access to healthcare, the infant mortality rate fell from 18% in 2006 to 12.3% in 2013. There is a strong political commitment to rebuilding the national public healthcare system and health services are free as a result of the conception of health as a human right.

In relation to the labour system, the national unemployment rate has been reduced from 5% in 2007 to 3.8% in 2014. In fact, this is the lowest unemployment rate in all of the Andean region, despite no move towards the flexibilization of labour. At the same time we have the highest minimum wage in the region. This shows that the neoliberal and the  neoclassical  capitalist  thesis, that unemployment can only be reduced through attacks on worker’s rights and reductions in salary, has been defeated.  On the other hand, the sub unemployment (informal economy) has been reduced from 18.24% in 2007 to 12.87% in 2014.

In terms of the reduction of  poverty and inequality, from the comprehensive perspective of the “Unsatisfied Basic Needs” (beyond the capitalist perspective that measures “Poverty per Income”), poverty was reduced from 51.6% in 2005 to 35.4% in 2014, and extreme poverty was reduced from 25.9% in 2005 to 12.7% in 2014. The reduction of inequality is reflected in the GINI indicator, which shows that inequality has moved from 0.54% in 2006 to 0.467% in 2014, which indicates that the Ecuadorian economic model is based on the distribution of wealth, especially to the working class and poorest people.              

               

In the 2006, the percentage of the GDP designated for the social sector (meaning public investment in education, healthcare, housing, social protection, environment, recreational activities and culture) only reached 4.3%, while in 2014 the total amount was around 9.9%. Also, child labour rates have been reduced from 12.1% in 2006 to 3% in 2014.  Additionally, it is important to stress that the Ecuadorian Government supports the most vulnerable groups with many measures. For example, in 2014 there were 444 562 low-income single mothers that received a Direct Cash Transfer (DCT), as well as 546 819 low-income pensioners and 128 477 people with disabilities.

               

Macroeconomic indicators show that inflation has been stable over the past 8 years and that the economy has been growing on average around 4.5%, and in 2011 it grew at 7.5%.

As the data shows, Ecuador has changed from a banana republic to a society that is trying to build a strong and inclusive democracy under the ideology of “Socialism of the 21st Century”. It´s important to stress that even imperialist organizations like the World Bank could not deny this huge social transformation.  

In summary, what is important to indicate is that any political support or criticism of Correa´s government and the “Revolución Ciudadana” (Citizens' Revolution), has to take into account this new social/economic/political reality. To be sure, there are many pending challenges that Correa’s government has to address in order to deepen democracy and move towards socialism. For example, there is a need to engage in a more deliberative and progressive form of “popular power” as it is established in the Ecuadorian Constitution. 

Maybe, Ecuador is living a political reality where the “Old Regime” is not totally gone, and the “New Regime” has not arrived totally. This is what Antonio Gramsci referred to as a “Crisis”.

The Anatomy of the Ecuadorian political opposition: The Empire strikes back?

Anti-government demonstrations in June of 2014 were largely
comprised wealthy Ecuadorians

Despite having emerged from a social hell that was the result of 30 years of  neoliberal  policies, and around 200 years of capitalist  and neocolonial policies, the situation in Ecuador is still complex. The consciousness of the working class and common people is still being colonized by the “Cultural Hegemony” (Gramsci) of the elites through a variety of devices: schools and universities, mass media, corporations, etc. The opposition itself is composed of extreme and right-wing parties, the capitalist mass media, and a right-wing sector of Indigenous peoples and ecological groups.

Firstly, the extreme right is composed of political parties and think tanks which seek a return to the neoliberal age.  In their discourse they claim “the absence of freedoms”, saying that “the State is so huge, we need to reduce it”, that there is “too much public investment”, that “the economy needs more foreign investment”, and the cherry on the cake: “no more TAX!”

One of the prominent leaders of thisbroad, informal, right-wing coalition is Guillermo Lasso, a banker and owner of the “Banco de Guayaquil” - the second largest bank in Ecuador - who in 1999, the year of the financial breakdown, was one of the masterminds of the  neoliberal policies and the Secretary of Economy in the Mahuad government. Lasso proposed the introduction of the dollar as the national currency and also argued in favour of strict payment of the external debt, and for the radical increase in the price of basic goods. Also, he was identified by WikiLeaks as a strong informant of the US Embassy in Quito. In this quick portrayal it´s important to note that last year Lasso declared 15 million USD as his personal income for the year.

Lasso, during the last two weeks, has been the visible leader of the violent protests under the slogan “Get Out Correa”, saying that they are demonstrating on behalf of the Ecuadorian family and its freedoms. In his philosophical approach, freedom is reduced to an 18th century liberal paradigm, where Liberty is understood only in its negative sense, that an individual is free if no one intervenes in their life (Locke). In this sense, his approach to the State’s role in the economy is a mix of the postulates of the Austrian Liberal school (Hayek, Von Mises) and the Neoliberal thesis (Friedman): that if the State grows in order to attend to the basic needs of the people it is because Ecuador is on the “Road to Serfdom”, as Hayek used to say.

Lasso shows that one of the main problems in the current political situation is the “Battle of Ideas”, meaning what conceptions of liberty and human rights do we support? What conceptions of the State and economy? For example, if we look at the principles of Lasso’s Party we can find his insight in his sixth programmatic point: “[...]We believe in a free economy, entrepreneurship, and opportunities for all. We consider that the material and cultural development is thanks to the creativity and initiative of individuals. [...]” This is a summary of his neoliberal and capitalist approach to social construction.

Jaime Nebot, right-wing mayor of Guyaquil

Another strong political character of the Ecuadorian opposition is Guayaquil Mayor Jaime Nebot, an old political leader of the right-wing political party “Partido Social Cristiano”, which has played a decisive role over the last 30 year.  His ideology is a mix of the neoliberal approach, elite nationalism, state capitalism, and  conservative  authoritarianism. During the Leon Febres-Cordero extreme right-wing government (1984-1988), Nebot was the Governor of Guayas province and his administration used authoritarian political management to quash dissent. Nebot conducted a “zero tolerance” policy against leftist and social movement opposition to the neoliberal program, and in many well documented cases he conducted a strategy of torture and forced disappearances, as established by the Ecuadorian Truth Commission. Nebot has been relying on his personal political character during his terms as a Guayaquil Mayor since 2000. He has been responsible for the privatization of public spaces and the criminalization of the informal workers and poorest people, as can be seen in this documentary.

Recently in Quito, Mayor Mauricio Rodas was elected. He is a former director of the Partido Social Cristiano youth, has a political science degree from Pennsylvania University, and defines himself as belonging to the political “center”. In many articles for the Mexican magazine “Letras Libres” he reflects that Ecuadorian politics has to replace the “old” left-right axis for a new paradigm called the “Responsible Government Model”. He argues for a humane capitalism as an economic model, and that this is the best way to define the policy of the “center”. During his campaign for Mayor in 2014, Rodas argued for reducing taxes and the size of the State. Also, Rodas maintains a close relation with the Venezuelan political opposition.

The traditional mass media has played a critical role during the 8 years of the “Revolución Ciudadana” process. Most of the TV channels and radio in Ecuador still belong to the ruling class, a few rich families, and they have a clear right-wing ideological agenda. There is strong evidence that shows that, paradoxically, in the absence of a traditional political party as a clear electoral opposition, that the mass media has been filling that gap. In a referendum (“Consulta Popular”) in 2011, the Ecuadorian people voted to enact a new Communications Act which required the media to reorganize as 33% public media, 33% community media, and 33% private media. However, this law is still pending execution.

There is also a part of the opposition composed of radical actors such as segments of the Indigenous movements, student organizations, environmental organizations, Human Rights organizations, feminist organizations, labour unions, and extreme left organizations, which have many complaints in terms of the need for the radicalization of the process.

Finally, for an accurate analysis of the Ecuadorian political situation, we must consider the role of the United States government in trying to stop any process of social transformation. According to the released WikiLeaks cables related to Ecuador, during the last 8 years all the right-wing political actors, and a few from the leftist opposition as well, have been reporting to the US Embassy in Quito or the US Consulate in Guayaquil. US officials have expressed their concerns about divisions among the opposition in many of their private comments.

The challenges of the “Utopia”

In the last section we should examine some ideas around the challenges facing the Correa government, in terms of strengthening the democratic process, building the EcoSocialist economic model (derived from the Indigenous concept of “Sumak Kawsay” or “Living Well”), and supporting the construction of a different political sociocultural dynamic (“The Utopia”). [RY Ed: For an understanding of the author’s use of the term Utopia, please revisit the Galeano’s poem above]. Despite all the social and economic achievements of the Correa government’s policies there are many concerns expressed by the great socialist family. A particular problem is how to build the “Utopia” without to being defeated by powerful reactionary adversaries and enemies.

Alberto Acosta, a historical leader of the Ecuadorian left, a former Minister in the Correa government, and one of the strongest Ecuadorian intellectuals, has claimed “we always need more democracy, never less”. In this sense, maybe one of the particular constructive critiques that we must give the Correa government is about the establishment of a “hyperleadership”, where the personal charisma and leadership of Rafael Correa is used to patch holes in the collective discussion process. Sometimes political discussion is limited to what president Correa says about particular topics (e.g.: this was the case in debates about reproductive rights for women, LGBTIQ rights, and the Yasuni ITT historic ecological initiative). As the Argentinean thinker Ernesto Laclau (Essex University) stressed, there is always tension between the Leadership and the necessity to build Social Institutions in populist social construction.

The Ecuadorian Constitution established that as a society we need to build “popular power”, through citizen deliberation and participation in all the levels of government, but sometimes the bureaucracy and technocrats forget this necessity and don’t provide adequate channels for the strengthening of this new paradigm. Here we find a huge problem between administrative efficiency and the deliberative process, or in other words a tension between the necessity for faster social transformation from the State, and the necessity of engaging popular actors in the building of their own social destiny. This problem is very complex, but not impossible to solve, especially if the government is more cognizant of the Constitution (and again, we have to take into account international and national political forces).

Another huge challenge that the Ecuadorian Utopia faces is how to build a new economic model, beyond Keynesian Capitalism or the “Popular Capitalism” approach. There is a conception of this Ecuadorian form of socialism in the Constitution, defining it as the “Sumak Kawsay”, a sort of EcoSocialism based on the Andean First Nations’ beliefs that production must respect and be in harmony with the environment, basic human needs, and animal life. Here, popular power to support social transformations is important.

In summary, it is within this broad picture that the Ecuadorian people are demanding the need to build a more egalitarian society through major changes in the distribution of the wealth. Sometimes the construction of the Utopia takes a long of time. In the meantime, it is important to remember the slogan painted in the streets of Buenos Aires: “She thought that it was impossible, but went and did it”.