What Latin America can teach us about tackling inequality
Diego Sánchez-Ancochea, Professor of the Political Economy of Development and Head of Department at the Oxford Department of International Development.
Inequality “defines our time (…) while we are all floating on the same sea, it’s clear that some are in superyachts, while others are clinging to the drifting debris”, warned António Guterres, UN Secretary General, in July last year. The income gap between the wealthy and the rest of society has increased across the world in recent decades, from the United States to China, the United Kingdom to India. The COVID-19 pandemic has obviously made things worse, while simultaneously making visible the problems that inequality creates on a daily basis.
In Latin America, this is not a new problem: for a century — if not more — wealthy Latin Americans have controlled a larger share of income than anywhere else in the world. According to some estimations, the wealthiest 1% receives around 30% of total income in Brazil and Mexico — the largest Latin American countries.
Inequality in Latin America has resulted in significant economic, social and political costs. In most countries, it has contributed to low-quality education, insufficient investment in research and development and low income taxes. It partly explains the region’s struggles with political instability and weak institutions as well as the popularity of populist leaders. And it has been linked historically to violence, racism and lack of trust in neighbours and institutions.
Latin America is thus often held up as a negative example of where income concentration leads in the long run. But could the continent also provide us with useful lessons on how to confront and understand inequality as we look to a post-pandemic future? In a recent book, The Costs of Inequality in Latin America: Lessons and Warnings for the Rest of the World, I suggest that it can.
Joining forces across divides
Firstly, we can learn a lot from Latin America’s social movements. From the student movement in Chile to the Movement for Socialism in Bolivia or the Landless Movement in Brazil, Latin Americans have joined forces to fight poverty and promote a better distribution of opportunities, income and wealth. Although there are significant differences between the movements — some focused on land, others on education; some benefited the poor, others created broader coalitions — they offer some common lessons.
Successful social movements focused on concrete needs, but linked them to broader social demands. In Chile, students initially asked for lower bus fares, while in Brazil the Landless Movement occupied unused lands. Yet they soon learned how to place these demands within a broader agenda of development.
Success has also required linking local and national spaces. Most protests start locally: they are organised in a large company or in a city or in a group of neighbouring schools. These protests become most meaningful when they scale up and influence national debates. Moving from the local to the national can happen in a variety of ways: in Chile, students in other regions just followed the examples of those in the capital Santiago; in Brazil, the Landless Movement organised marches to the capital; in Mexico, the Zapatistas called for solidarity from groups in other parts of the country.
Some of the most successful movements in Latin America have also been able to build a cross-class alliance. The Chilean students, who received support from both the poor and large segments of the middle classes, constitute one the clearest cases. This kind of cross-class collaboration is particularly important in the fight against inequality and facilitates, for example, the adoption of universal social policies.
The contribution of social movements has gone beyond advancing political demands. At its best, indigenous groups, students, landless peasants, and trade unions have created new narratives and new perspectives. “By… recognising common grievances, puncturing neoliberal orthodoxy, celebrating hitherto marginalised identities and seeing widespread resistance to the status quo, many Latin Americans gained confidence in the possibility of social change” — explains professor Alice Evans in her discussion of the region in the 2000s. The impact of social movements will also be most significant when they are able to remain independent from political parties but also work with them — something some Latin American movements have done better than others.
New ways of thinking about inequality
Latin America has also been a cradle of progressive ideas about inequality in a number of disciplines. Going beyond mainstream theories from the West, Latin American academics have focused on the unique characteristics of the global South, including their colonial past and dependence on external actors. In economics, the Argentinean Raul Prebisch and a number of collaborators working at the Economic Commission of Latin America founded the structuralist school in the 1940s.
Structuralism developed a new way of thinking about the economy: more historical and more rooted in space than mainstream economics. According to this school of thought, the lack of development in the global South results from its dependence on commodities and from the excessive power of countries like the United Kingdom and the United States. Exporting mining and agricultural products, as the Latin American countries have traditionally done, has always been less advantageous than selling manufactures, and led to less technological development.
Structuralism provided a new interpretation of inequality, which remains influential today. According to this view, differences in productivity between various sectors lead to large income gaps. At the top, the owners of the largest firms in leading sectors make substantial profits, while at the bottom of the economic hierarchy, low-educated workers in subsistence agriculture and urban informal activities like street vending struggle to make ends meet. Unless countries diversify their economies, reduce the differences in productivity between sectors and create more formal jobs, inequality will persist. Structuralist economists have also linked this uneven economic structure to political power. As Prebisch himself explained decades ago (well before political explanations became popular in mainstream economics), capitalism in the periphery “promotes the concentration of economic power and inequity. And the concentration of economic power leads to concentration of political power in the most favoured strata.” The largest business groups use their influence to set prices, hire and fire workers and influence politicians. The minority of workers who are part of a trade union also have some power to secure high wages. In contrast, informal workers have no bargaining capacity.
The role of religion and education
In the book, I discuss two interesting examples from other disciplines. Within religious studies, Liberation Theology has always highlighted the need to place poverty and the poor at the centre of Christianity (and religion more generally). Liberation theologians denounced political, economic and social injustice and inspired social movements across the region — and in other countries like the United States. In education, Paulo Freire’s Pedagogy of the Oppressed remains one of the most influential books on education and shows the richness and interest of work coming from the global South. Freire’s progressive thinking has influenced teachers and shaped curriculums across the world, effectively linking the role of education with the fight against inequality and the need for critical thinking.
The creativity of many Latin Americans and their commitment to a more just and equal society explains the region’s success in developing progressive ideas and dynamic social movements – and their experience should inspire efforts to reduce inequality in many other parts of the world. Yet the fact that Latin America remains highly unequal despite all these efforts reminds us that reducing inequality will always be a challenging task, and one that will require concerted political effort and policy innovations.
What next?
Follow us here on Medium where we’ll be publishing more articles soon.
Want to read more? Try our articles on:
Are you a member of the University who wants to write for us on Medium? Get in touch with us here with your ideas: digicomms@admin.ox.ac.uk.
