Is South America on the road to serfdom?

The 20th century, as well as the beginning of the 21st century, was a period marked by ideological conflicts worldwide, from the bipolarization carried out in the cold war to the present day. In the history of South America it was no different, there were several governments that leaned towards authoritarian populism and tried to make society follow the path of serfdom. All of these governments shared characteristics that encouraged servitude as described by Hayek. In Bolivia by Evo Morales, ruling the country from 2006 to 2019. Hugo Chávez ruling Venezuela for 14 years, the Kirschner mandates in Argentina, as well as the Workers Party (PT) mandates in Brazil. A strong characteristic shared by the aforementioned governments is precisely the constant flirting with socialist ideologies linked to populist policies. Such characteristics are not always wide open, as they often appear in a sneaky and indirect way, but their existence in the concrete plane of daily reality is unchallenged.

However, such leftist regimes in Latin America have their differences in socialist and populist measures, one of the clearest cases being the statist Chavista and Maduro government in Venezuela, declaring war on multinational companies and other national companies, in which society drew the calamity (more details of this case can be found throughout the text), in Bolivia, Morales during the period from 2005 to 2016 expropriated more than 20 foreign companies, also carried out nationalization of oil and natural gas fields, but they were not the type that transferred total control to the state, but the majority share of the shares.

While the Kirchners ruled Argentina between 2003 and 2015, a period marked by populism, inflationism and interventionism, one of the most impactful cases of institutional degeneration occurred in 2007, a period in which the government used police forces to take control of the Instituto Nacional de Estadística y Censos (INDEC) and carried out the exchange of those responsible for calculating inflation. The result is known today: several manipulations related to inflation in this period were recorded, affecting not only the credibility of its people with the government but also with the world.

In Brazil, there are strong indications of populist measures, such as the policy of freezing fuel prices, which forced Petrobras to sell gasoline and diesel below the price that were imported, causing it to damage state capital, causing a loss around R $ 60 billion. Clearly the measure was intended to deceive the population for clear electoral purposes, as it passed on a false perception of increased purchasing power. At the end of the day, the population itself paid the price for such a measure with constant increases in the price of fuel linked to the leak in public coffers.

It is not new that government control, directly related to the size of the state, is one of the indirect factors that puts us on the path of serfdom. A great example of this is the current Brazilian social security system that allows direct government interference in the sphere of individual freedom. In the current configuration, a kind of “tribute” (jokingly called a contribution) is stipulated as mandatory for everyone who works formally. If there is no contribution to the social security system, the individual is found guilty of the crime of evading social security contributions. Along these lines, according to the report made by ANBIMA (Brazilian Association of Financial and Capital Markets Entities) in 2018, more than half of the Brazilian population (56%) depend only on social security to support old age. Another characteristic and asphyxiating point of the Brazilian government is the diversification of regulatory agencies present in multiple sectors of the economy, which serve as real obstacles to the development of companies.

As F. Hayek states, much of the behavior of individuals is shaped by the harmful measures (perverse incentives) of an economic nature. Such measures can be observed by destroying the foundations of the free market economy, where the creative power of a free civilization is rebuked as the freedom of individuals is stifled and even the character of a people is shaped. That is how the collectivist ideas that surround us today found fertile ground to spread their creed. a fact that contributed to paving the current path of serfdom that is being trodden.

Venezuelan Chavista socialism is one of the most concrete examples of servitude ever experienced in South America, and its most concrete and bitter results have been experienced today by the battered Venezuelan population. The Venezuelan example is a true tutorial on how to undermine the structure of a country through measures such as price control, nationalization of factories and trade and irresponsible printing of money. Such measures provoked a constant suppression of the individual freedom of the majority of Venezuelan citizens. Although the majority suffer the consequences of treading the path of serfdom, it is true that there is still a tiny portion of the population, that is, government allies (socialist elite), for whom the reality is quite different in relation to the vast majority of the population which goes through a vast scarcity and rationing of several items, even dealing with the most basic or and essential ones like water.

Hayek already drew attention to the damaging effects of combining political and economic objectives, as it is true that such items are fundamental to individual freedom, but collectivists tend to attack such a separation, because the more society "gives space" to State taking charge of the responsibilities of the most paved individuals is the path to the totalitarian regime, as this type of regime is the most effective instrument of coercion and imposition of ideas, providing less economic and political freedom. The degradation of freedoms is an inevitable consequence of the attempt at socialist planning.

It is possible to say, unanimously, that large statist governments that present considerable tendencies to carry out interventions in the economy, suffer from an indisputable malfunction: the lack of all knowledge to plan. Hayek masterfully addresses the issue of the problem of knowledge, in which the more complex the whole, the more it is necessary to divide knowledge between individuals, that is, a small group of government officials is not able to take action in order to fully meet the needs needs of the whole. Only individuals know what is best for them, so that the state (central planner) will fail miserably trying to determine what is best for everyone, and what are the most efficient ways to allocate the necessary resources to meet those needs. The more the State tries to regulate the market and coordinate the personal interests of each member of society, assuming for itself the function of defining what is or is not a priority, the more we will continue to follow the path of serfdom.

There is no doubt that South America is on the path of serfdom. However, is it possible to say that we are doomed to follow this path forever?

However foggy the history of South America may be, a movement, mainly in Brazil, for the resurgence of liberal thought began to gain strength in the beginning of the 21st century, bringing with it some hope of change. The resurgence of interest in the ideas and concepts of liberalism is expected to translate into the construction of an alternative path to the path of serfdom. Such construction begins with the emergence of a new generation of students, teachers, public intlectuals who are interested in the values ​​and ideas of freedom. The second step will be to translate these values ​​into civil society and work to make them understood and freely internalized. However, more than ever it is necessary to win the cultural war first, in order to make the "Way of Freedom" the most natural choice for everyone.
Finally, we can generally say that the question asked at the beginning of the text can be easily answered by Hayek himself:

"There is no other alternative: either the order established by the impersonal discipline of the market, or the order commanded by the discretion of some individuals and those who strive to destroy the first are helping, consciously or unconsciously, to create the second". 

Thus, as South American citizens aware of our history and the evils brought about by collectivism, it is necessary to conclude that the decision to continue or not on the path of serfdom is more in our hands than ever.

By: Dérick Lopes Benevides
Economics student at Mackenzie Presbyterian University
Intern at the Mackenzie Center for Economic Freedom

Bibliography

HAYEK, Friedrich August. The road to serfdom: Text and documents: The definitive edition. Routledge, 2014.

Image credits: Eleanor Shakespeare : https://www.economist.com/briefing/2019/05/09/populism-and-polarisation-threaten-latin-america 1