Latin America & Extractivism Debate: The new Left’s extractive model isn’t leading to development

The governments of Latin America’s new “Left,” motivated by erroneous traditional development ideas, are committed to an accelerated, intense extractive model, offering mining and oil concessions to plundering transnationals. Any ideas based on an alternative to that development concept are rejected as ingenuous, dangerous and even impossible. But there is another development path: post-extractivism, which doesn’t mean prohibiting all extractive projects or defending the utopia of untouched Nature. A transition to post-extractivism is possible, although there will surely be resistance.

Any contemporary discussion about development is intimately bound to environmental issues. This linkage is particularly intense in South America, particularly in the debate about the role played by extractive sectors such as mining or hydrocarbons.

 Latin America is taking diverse paths

The prevailing development styles in South America have different emphases. In some cases the paths followed prioritize the market and private initiative, with a foot-dragging role for the State. The path followed by Peru and Colombia and in part by Chile was the maintenance or expansion of the privatization of state companies, supported by unilateral trade liberalizations expressed in free trade agreements signed with industrialized countries and accompanied by high levels of outsourcing of the social and environmental impacts. In other cases, the paths led in other directions due to a substantial political shift among governments defining themselves as new Left or progressive. This heterogeneous grouping includes the administrations of Néstor Kirchner and later his widow Cristina Fernández in Argentina, Lula da Silva in Brazil, Evo Morales in Bolivia, Rafael Correa in Ecuador, Tabaré Vázquez and José Mujica in Uruguay and, with some reservations, Fernando Lugo in Paraguay and Michelle Bachelet in Chile. Different levels of state presence were reinstated in all these countries, with more rigorous control over certain resources and even the return of some companies to state hands. These governments voiced greater reservations regarding the signing of free trade agreements, prioritized regional integration schemes and strengthened and expanded social assistance programs, substantially reducing poverty in some countries.

The array of new Left governments is very diverse. In some cases the State’s interventions in the market are reserved and careful, as in Brazil, Uruguay and especially Chile. In others, the measures are more energetic, following the pace of the internal political debates, as in Argentina and Ecuador. And finally, there are governments with a desire for even greater state intervention and presence, as in Bolivia and Venezuela.

There are evidently many differences among all these countries. One only has to bear in mind the cases of Peru and Bolivia, which at first glance would seem to be following two different development strategies. There is also an expressive heterogeneity within the progressive group, which can be revealed by comparing Venezuela with Brazil. Venezuela has a greater presence of state enterprises, which are expanding through nationalization into new industries as distinct as food and iron/steel, accompanied by intense anti-capitalist rhetoric. In Brazil, in contrast, capitalism is celebrated and the State has become a “partner” in a group of large companies, financing them both inside and outside of its borders, as in the case of Vale mining or the Odebrecht and Camargo Correa construction firms, which are supported by the National Social Economic Development Bank (BANDES). In other words, Venezuela is moving toward state nationalism while Brazil is progressing along its own path of novo desenvolvimento (new development) based on an association among the government, some major companies and key unions.

 When protecting the environment means halting development...

Although this diversity is important, we also need to pay attention to the coincidences among all these governments’ perceptions and appraisals of nature and the role they assign to the national resources and to nature as key ingredients in a given idea of development. They all conceive of development essentially as economic growth and understand that it must be fed by an intense appropriation of the natural resources.

Whether it is Peru’s opening up of trade, Bolivia’s indigenous community invocation or Lula’s new develop¬mentalism, the need to increase exports and attract more foreign investment is repeated again and again. Growth of the gross domestic product (GDP) is celebrated and macroeconomic balances are anxiously sought. The active promotion of exports has become one of the main pressure factors on the environment. According to 2008 data, the proportion of raw materials in the total export package in South America ranges from 55.4% in Brazil to 92.7% in Venezuela. The Andean countries have particularly high values: 92.8% in Bolivia, 91.7% in Ecuador, 88% in Chile, 86.6% in Peru and 68.5% in Colombia.

The extractive sector is playing a key role in this export of natural resources. Exports from the “mines and quarries” category have grown in all South America countries except Paraguay since 2000. Brazil was the largest exporter in this area in 2008 with more than US$33 billion, thus turning itself into a mining country. The production and commercialization of hydrocarbons is following a similar pattern, taking advantage of the high prices in recent years. In addition, an agricultural strategy has proliferated that aims to turn this sector into a provider of commodities (read raw materials) for the global market. The main example is the vast extensions of land dedicated to the mono-cropping of soybeans.

This and other evidence indicates that, while the current development strategies are achieving export successes, they are all very actively putting pressure on natural resources by differing means, and hence are inevitably triggering all manner of impacts. It is true that there are style differences among the progressive governments, since in some cases they are resigned to be raw material providers and in others they are attempting to strengthen industrialization. But a political ecology analysis reveals the continuity of a pattern severely anchored to the primary sector, with nature relegated to a subsidiary role as resource provider.

This position is intimately linked to the vision of enormous ecological wealth available on the continent that must be exploited, and to the idea that there are no imminent ecological limits. A vision of nature as a basket of resources that must be exploited is repeated again and again. Calls to protect the environment and social conflicts growing out of different environmental and social externalities triggered by this model are frequently ignored, almost always minimized or rejected and resisted as “hobbles” to development.

 Rapid environmental deterioration

All regional environmental assessments point out that environmental deterioration hasn’t been halted in Latin America and in some cases has even speeded up in recent years. With the first decade of the 21st century now behind us, the environmental balance sheet is in the red. A 2010 evaluation of the world environmental situation shows that Brazil is the country with the greatest absolute environmental deterioration. If environmental impact is considered relative to the stock of available natural resources, the first South American country to appear in the global ranking is Ecuador, in 22nd place.

Latin America’s “ecological footprint”—a spatial measurement of the appropriation of natural resources—has increased 133% since 1961. The current average for the region is 2.6 global hectares per person. Uruguay has a very high footprint, followed by Paraguay and Chile. This “footprint” level is still far below the values in the industrialized countries; in the United States it has been estimated at 7.9 global hectares per person and that growth trend is not slowing.

There’s no indication that this is improving with the progressive governments. All Latin American countries are net bio-capacity exporters, while other regions of the world take advantage of their own local resources. In 2010 Latin America had a net export balance to the rest of the world of 164 million global hectares, supplied particularly by Argentina and Brazil.

 Some good news but more bad news

Although the deforestation of Brazil’s Amazon region slowed in the last years of the Lula administration from a peak of 27,000 square kilometers per year in 2004 to 7,000 per year in 2009 and 2010, the situation is very worrisome in other countries of the Amazon basin, such as Peru. And even in Brazil, despite the improvement in the Amazon, other regions are suffering enormous impacts: the tropical savannah of El Cerrado lost nearly half of its original vegetation and the deforestation rate there between 2002 and 2008 was triple that observed in the Amazon rainforest.

This large-scale, high-intensity deterioration is directly linked to development strategies. In some cases it could be argued that there are “inertia” effects from the dismantling suffered when previous governments applied harsh market reforms. Nonetheless, the progressive governments have also maintained, and in some cases accentuated, the pressure on the environment, seeking to increase exports and take advantage of a cycle of very high raw material prices.

There have been some important environmental measures, such as the increase in the coverage of protected areas or adaptations to climate change, but they aren’t enough to reverse or even compensate for the environmental deterioration, so it continues to increase.

Some advances have also been made from the regulatory and institutional standpoint. The most important in the leftist camp was the approval of the Rights of Nature in Ecuador’s new Constitution (2008), while a profound reform of Chile’s environmental institutionality hammered out during the Bachelet administration is still relevant. There was backpedaling in Bolivia, when the ministerial responsibilities of previous governments were broken up and ended up in the new Ministry of Environment and Water. following a complex process The environmental institu¬tionality continues to face many limitations in Argentina and Uruguay, while in Brazil it has been split up into new agencies, and strong pressures are being applied to reduce the controls, especially in the forestry sector.

 Mining and oil exploitation explain the environmental deterioration

A key component in Latin America’s environmental deterioration is what are called the “extractive” sectors, which traditionally encompass mining and hydrocarbons, with their associated chemical sectors. These sectors extract enormous volumes of natural resources without any additional processing or at best with limited processing in the country before exporting them to the global markets.

They are known as enclave economies, with little in the way of local or national production chains, very dependent on sizable—usually foreign—investments and linked to worldwide commercialization chains. Transnational corporations have a notable presence in Latin America’s extractivism.

The contemporary concept of extractivism has to be expanded to include some agricultural categories that follow the same strategy, such as the mono-crops that cover huge areas and are essentially for exportation. These crops are also exported with little or no processing, operating under the same productive and international commercialization logic observed in mining or hydrocarbons. This new skew is very evident in the soy mono-crops of Argentina, Bolivia, Brazil, Paraguay and Uruguay.

These extractive sectors have a powerful relevance in the environmental field. In all cases, the extraction practices have important environmental impacts, ranging from the contamination associated with open-pit mining to oil spills in tropical zones. To this are added the equally negative effects of infrastructure, transport and communication works for these projects: highways and gas or oil pipelines that cross through wooded areas opening remote regions to colonization. They also generate territorial fragmentation, with oil or mining concession areas directly linked to globalization imposed on preexisting areas and on peasant or indigenous communities surrounded by extensive zones with little or no state presence.

While some insist on the benefits of these projects for international trade, their financial contribution and their response to the demand for jobs, others remind us that they continue to be enclave economies and thus have limited economic chains, a minimal tax burden and do not generate many jobs.

The real economic bottom line of extractivism is still more uncertain given that it systematically offloads its impacts to the local communities and the local or national government in the country of extraction. A vivid example can be seen in Peru, where mines have been abandoned, leaving environmental “liabilities” the government is forced to assume. The extractive sectors are also at the center of many social conflicts: the displacing of local, especially indigenous communities, and violence and crime in rural areas. As if that weren’t enough, these sectors are also tainted with many charges of corruption.

 Two types of extractivism: Conventional and “progressive”

Two types of extractivism can now be distinguished. In the conventional one the dominant role is played by private, almost always transnational companies, with a subsidiary role for the State. In this old model, the State ensures certain rules to protect those companies—the free flow of capital, the granting of favorable labor, environmental and site concessions for exploitation areas and security in obtaining permits—or the simple omission of any controls or regulations. In many cases, the State also provides police security if they face union or worker protests.

The logic of traditional extractivism holds that those private projects will generate economic growth and certain employment levels, producing “trickle-down” effects that will aid in the fight against poverty. The underlying idea of development repeats the need to grow economically and assumes that this will be enough to achieve social benefits. This classic perspective contains other components, ranging from a certain admiration of the local elites because they represent international corporations to simple influence peddling or corruption in granting the permits. In many cases the traditional extractive enclaves have turned into focal points of violence, with persecution of union, social or environmental leaders. Many of these problems are currently present in Peru and Colombia.

In recent years another type of extractivism has been generated by the progressive governments, which we will call “progressive neo-extractivism.” This model repeats the massive appropriation of natural resources for export from productive enclaves with a concomitant repetition of the social and environmental impacts. But the State’s leadership role is greater and in some cases takes the form of more rigorous controls, higher tax rates or royalties or the return of state companies to take charge of different projects. In some cases the state companies are strengthened. The best known examples are PDVSA, Venezuela’s oil company, Bolivia’s YPFB, Uruguay’s ANCAP and Ecuador’s Petro¬Ecuador. In other cases what is strengthened is state control, as is happening with the mixed company Petrobrás in Brazil.

The State is also promoting extractivist expansion into new sectors: the exploitation of lithium in Bolivia, open-pit mega-mining of iron in Uruguay or state companies with new projects, such as the Bolivian Gold Company (EBO).

Despite these efforts with their accompanying nationalist rhetoric, the State still depends on various types of linkages with private corporations, including association agreements, joint exploitation agreements, leasing, etc., given the limitations to investing in this type of projects and the problems related to commercialization, in which brokers and other middlemen continue controlling world trade. In Bolivia, for example, mining transnation¬alization was accentuated and COMIBOL, the state company, was relegated to a secondary role.

One very important change with progressive neo-extractivism is that there’s a greeter appropriation of the earnings by the State in some countries, upping the royalties, taxes or other obligations. This change was very evident in the governments of Venezuela, Bolivia and Ecuador, which substantially increased the taxes on the oil companies, although the tax burden is still very low, especially in mining. Argentina is the only country with a leftist government taxing agricultural exports, while encouraging mining. Brazil and Uruguay, on the other hand, are applying moderate or low financial obligations to almost all these sectors and are competing in attracting foreign investment. To make this a bit more complex, the progressive governments grant certain tax benefits at the same time as they are raising some taxes. The tax incentives for foreign mining in Bolivia are a good example. Other measures, such as making social and environmental controls more “flexible” or providing infrastructure support or cheap energy, are designed to work along the same lines.

If extractivism intensifies the export of raw materials, that path reinforces a subordinate role for our countries in globalization. Prices continue to be controlled by other, extra-continental actors and the trade institutionality that regulates them—particularly the World Trade Organization—is accepted, resulting in practical obstacles to Latin America’s genuine integration.

 “These projects are needed to fight poverty”

While classic extractivism was defended as a way to make the economy grow, the justifications in neo-extractivism appeal much more frequently to a specific link with social projects.

The progressive governments argue that the State must intervene to maintain and expand extractivism as an indispensable means for obtaining financial resources to maintain their anti-poverty plans and programs. These include compensation and financial assistance mechanisms targeted to the poorest sectors, such as Family Bag in Brazil, the Juancito Pinto, Juana Azurduy and Dignity Income vouchers in Bolivia, the Human Development voucher in Ecuador, Families for Social Inclusion in Argentina, the benefits provided through Uruguay’s Equity Plan...

Similar programs can be found in 17 Latin American countries, covering over 100 million people in all, with a clear impact on poverty reduction despite the fact they only represent 2.8% of public social spending. While the income obtained from the extractive sectors actually has very diverse destinations, the legitimizing discourse commonly centers on the part dedicated to programs such as these.

For now at least, neo-extractivism is not offering practical social or environmental solutions. And as these impacts continue, the citizenry’s reactions are repeated and in many cases escalate into large-scale protests. The leftist governments respond by denying or minimizing the impacts or change tack when forced to admit them, invoking the need to accept them as indispensable to national development. In some cases the population is expected to view them as necessary “local” sacrifices for the “general” social wellbeing. In other cases the amount of the vouchers or the validity of other economic benefits are discussed, but without ever debating the essence of development.

The consequences of extracting natural resources to feed economic development has been central to the debate about development and the environment ever since the early warnings about the ecological limits to growth were first raised in the world in the seventies. The issue hasn’t been resolved and is returning to center stage as a result of the current intensification of extractivism. Again and again there are appeals to the classic images of a Latin America with enormous stocks of natural resources that must be taken advantage of as soon as possible and of ecosystems capable of cushioning the environmental impacts.

 The same vision of development

Important differences do exist between conventional extractivism and today’s progressive neo-extractivism. The conventional version is openly transnationalized while the progressive version appeals to a pragmatic posture, presenting it as inevitable to underpin the State, assure economic growth and finance diverse programs, especially anti-poverty ones. The poverty component bestows important political and electoral legitimacy lacking in conventional extractivism. That explains why unions and social organizations defend it. Thus, the conventional idea of development based on the intensive appropriation of nature’s resources is reinforced in different ways that go beyond the differences.

This repeats the pretension of ongoing materially-based economic growth that will bring social wellbeing, understanding it above all as access to consumption. In that vision, the social and environmental impacts are minimized and even denied, and the notion of ecological limits disappears from the contemplation of problems, despite such clear warnings as the exhaustion of some resources such as natural gas, increasing soil deterioration or the continuing loss of natural areas. The environmental impacts are either rejected or denied by appealing to the image of the enormous ecological wealth available on our continent or minimized based on optimism that Western technology and science will find solutions to the contamination or the resource exhaustion.

Little by little, the leftist governments are moving toward a “benevolent capitalism.” They accept the current capitalism either willingly or with clenched teeth, while insisting that many of its limitations can be rectified by the State. The idea of radically transforming the styles of development hasn’t crystalized either in the governing groups or in vast academic sectors despite the crisis affecting capitalism in the industrialized countries. As a consequence, the conceptual bases of development based on appropriating nature aren’t discussed in any depth and in practice the same pattern of development based on raw materials is maintained. The recovery of international raw material prices seems to be having an anesthetizing effect and few dare to envision other alternative forms of development.

 The Left has ceased imagining

Discussions about development and extractivism are intimately linked. As a starting point in this discussion we need to be clear that the extractivist path is not acceptable, whether in its traditional or progressive, classical or renovated versions. And that is the case not only because of its social and environmental impacts but because there is no convincing evidence that its productive economic bottom line will finally favor our countries. The veiled blackmail of accepting it to finance social programs is also inacceptable, as it doesn’t resolve the citizenry’s growing protests or adequately address the issues of social justice. Extractivism also needs to be thrown out in order to break with the long history of economic strategies that persist with Latin America’s global insertion based on selling raw materials, a path by which we have never been able to generate productive national or continental linkages.

A first obstacle to the discussion is the difficulties in imagining alternatives to the current developmentalist order. A broad group of actors reject the need for alternatives because they are immersed in the everyday activities of contemporary capitalism. Their agendas are filled with daily urgencies and they either see no need or find it impossible to have a social militancy dedicated to exploring something other than what they know and for which no precise maps exist. Other actors, who are still very powerful in almost all our countries, believe and reproduce those ideas from business, academic or journalistic arenas with simplistic and conforming discourses. It’s also true that for many social actors the alternatives niche is already occupied by today’s progressive governments. They view them as “the” alternative and thus think there’s no need to seek anything new beyond them. Still others don’t delve deeper into alternatives due to different degrees of tiredness, disillusionment or distrust from the experiences of the new Left.

The long list of economic side benefits of mining or hydrocarbons is repeated over and over by the business, political and academic circles. Any ideas of development alternatives beyond mining or hydrocarbons are rejected as ingenuous, infantile, dangerous or impossible. This brings about a strange paradox: the Left, which always dreamed of and nursed alternatives to conventional development, conceiving of itself as an agent of change, is now freezing up, refusing to think about transformations, terrified of them and erecting conservative defenses.

 Depredator, prudent and indispensable extractivism

Businesses, many governments and even a few academics have commonly stated that what the denunciations and demands for alternatives are really expressing is an intention to prohibit any type of extractivism. They haul out the ghost of prohibitions on using minerals or images of a retreat into simplistic primitivism.

Options in response to extractivism have to be displayed. We recognize three phrases on that path toward alternatives:

1.Depredator extractivism:
This orresponds to the current situation, in which the activity is done on a huge scale and the value of the products obtained doesn’t include the social and environmental costs, which are externalized.

2. Prudent extractivism:
This applies to extractive projects that genuinely comply with each country’s social and environmental regulations, under effective and rigorous controls that assume the impacts. This involves appealing to the statements on social responsibility to transcend declaration and turn into reality and using the best techniques available, particularly the closed-cycle systems with adequate measures applied when the projects are abandoned. This is an intermediate phase in the alternatives, understood as an emergency measure for moving out of the current depredator extractivism. In this phase, the global export orientation is drastically reduced.

3. Indispensable extractivism:
This is the final stage, in which the really necessary extractive projects will remain, but under another type of development.

The alternatives we are defending do not aim to prohibit all extractive activities, but to downsize them, keeping those that are genuinely necessary, meet social and environmental conditions and are directly linked to national and regional economic chains. In such cases, the global export orientation is reduced to a minimum and the trading of these products is directed above all to continental markets.

 There is an alternative to this idea of development

Given the intimate relationship between extractivism and ideas about development, the alternatives must also be alternatives to the current development scheme.

So far, the only “alternative development schemes” are simply changes and adjustments to reduce and minimize their social and environmental costs and improve their economic contribution. They are mainly instrumental modifications that for the most part stay within the conventional ideas of development. The “alternatives to development,” on the other hand, involve a discussion of the entire conceptual basis of development, the ways it understands nature and society, its institutions and its discursive defense. Alternatives to development aim to break through the current fence of rationality to move toward strategies that are radically different in both their instrumentalization and their ideological foundations. From this perspective, sensible extractivism corresponds to the “alternative development schemes,” while indispensable extractivism is only possible under the construction of an “alternative to development.”

In a post-extractivist transition and in an “alternative to development” the classic defense of economic growth as a goal and requirement of development will have to be jettisoned to focus on people’s quality of life and environmental conservation.

 We need to wake up from the dream of unending economic growth

The dream of perpetual economic growth is impossible for a number of reasons, ranging from limitations in the endowment of natural resources and the capacity of the ecosystems to absorb the environmental impacts to the social costs of continued expansion based on material consumption. The goals closely linked to permanent economic growth must also be abandoned: the obsession with profitability and earnings, the confusion between quality of life and material appropriation and possession and the commercialization of nature into environmental goods and services. The objectives must again focus on people, the quality of their lives, their wellbeing, satisfying their real needs and protecting nature. These objectives must also be in line with social and environmental sustainability.

Productive strategies with a low demand for materials from extractivism are possible via a “de-materializing” of the economy: productive processes that use less material and energy, use raw materials and energy more efficiently, reduce the “carbon footprint,” employ intense recycling and reuse programs, etc. When this is done, various changes appear in consumption, including using consumer goods longer before discarding them and prioritizing functionality over possession and durability over constant replacement.

This type of development looks to increase the quality of life, but it will also be more austere. The current levels of overconsumption, especially superfluous and banal consumption, must be abandoned. This would allow quality of life to stop being understood as a simple accumulation of material goods, expanding into its cultural, affective and spiritual dimensions. As a result, opulence would cease being something to celebrate.

Once at this point, the meeting points between many of these ideas and the recent South American contributions to the concept of “good living” or wellbeing become clear. In several aspects they are going in the same direction, since the economic goals are redirected back to people and nature. Some of the versions of “good living” offer a cultural and political underpinning for exploring transitions toward “other development schemes.”

 We aren’t proposing “de-growth”

It’s worth distinguishing this perspective from the calls for “de-growth” that originated in Europe and have started to catch on in Latin America after being transplanted here. Based on these calls, some are arguing that the transitions must be about this concept.

Which ideas are included under the de-growth heading need to be clarified. On the one hand, it includes many of the original ideas of French economist Serge Latouche, which are actually a critique of contemporary conventional development, and a good part of them are totally sharable. A more recent version of de-growth, such as that proposed by Joan Martínez Alier, for example, focuses on reducing the economies in a “socially sustainable manner.”

That path is very risky for Latin America and doesn’t necessarily correspond to the ideas of transitions or development alternatives we’re defending. It can’t be proposed to shrink an entire Latin American economy because doing so would neither attack the underlying problems nor involve modifying inequalities. “De-growth” would simply mean conning many popular sectors out of the few resources they manage to get their hands on. De-growth as economic contraction makes sense in economies with high consumption and opulence, the industrialized economies, but the idea can’t be rashly transplanted in Latin America.

De-growth is valid in Latouche’s original sense of a “political slogan with theoretical implications” aimed at breaking with the productivism addicts’ stereotypical language. It expresses a renunciation of the objective of growth in that it’s aimed at changing the very logic of development rather than negative growth.

Likewise, post-extractivism doesn’t mean prohibiting all forms of extraction or pining for a world of untouched nature. But it does involve radical changes in the conventional ideas of development, as the productive processes must be geared to ensuring people’s real needs and conserving nature, rather than guaranteeing the earning or profit rates of the extractive projects.

 Post-extractivism is possible…

For various reasons it’s impossible to institute a post-extractivist development model right away. It requires political and social backing and this takes time to build. Different actors have different levels of resistance or openness to those changes and options differ among countries as well. It must also be recognized that the proposals for change still require greater elaboration and questions persist, so transitions always offer opportunities for testing and adjustments. It’s enormously important to offer examples of components for alternatives that are viable and truly work, encouraging other social stakeholders to climb on the bandwagon.

It’s also important to determine how to link together what remains and what changes and rate of progress can be achieved in a program of transitions. It’s also necessary for the contributions to transformation and change to have qualities and open the doors to conditions that generate new changes, avoiding stagnation and imprinting a rhythm of successive steps on the process with a clearly defined direction.

The possible paths away from conventional extractivism are paved with precedents. South America has a wealth of of experiences in resistance and efforts by diverse social movements in areas such as agro-ecology, social and joint liability economies or the defense of more participatory and communal politics. There is a vigorous debate, especially in Ecuador, about post-extractivism, taking advantage of the ecological contents of the new Constitution and contributions from some governmental actors in favor of “good living.”

….with vigorous environmental administration

Depredator extractivism survives thanks to the poor, weak application of environmental measures, whether by omissions, exceptions in the controls or repeated flexibilities that ease up on environmental requirements. The alternatives must thus start with something as simple as seriously applying the environmental impact evaluations, complying with the environmental legislation requirements and monitoring whether the projects consistently respect them. It is clear that with a serious, efficient and adequate application of the evaluations and requisites many projects would either not get those permits or would often end up having them revoked.

The extractive projects that do obtain permits must be subjected to vigorous environmental administration. It must be efficient, cover all the territory of each country and address the entire productive process with requirements about inputs, effluents, emissions, the final disposition of residues, the condition in which the project is terminated, etc. The management plans must also be rigorous, including mitigation measures, accident contingency plans, etc. In that same regard, the complementary measures now common in industrialized countries but barely used in Latin America must be applied in all cases, especially environmental insurance and guarantee funds for mine, shaft or well abandonment plans. This will force important changes in those companies currently taking advantage of the weak controls while various projects will surely cease to be viable.

…and with price corrections

Mineral and hydrocarbon prices must be corrected by incorporating their social and environmental externalities. At the present time, prices such as those of copper or petroleum don’t include the costs for local harm such as soil or water contamination. Moreover, many of the “invisible costs,” a broad array that ranges from the loss of agricultural soils to public health problems, are passed on to the local, departmental or national governments.

A simple and urgent measure is needed to reverse this situation: economic analyses must be brought into line by including all the externalities of these products in their prices. The accounting must be done seriously with corrected prices, including considering the extraction of nonrenewable resources as a loss. Obviously this will result in a substantial increase in the extractivism costs and in the final price of many raw materials. Correction of the prices will substantially change the results of the conventional cost-benefit analyses. Many extractive projects have been presented as a phenomenal economic success simply because the costs of the social and environmental impacts haven’t been calculated and are therefore invisible in the accounting. Once the prices are socially and environmentally corrected, these losses and negative effects will be accounted for, and surely the damage will exceed the benefits in many projects.

This price correction will surely also unleash changes and shifts in international trade. These raw materials will become more expensive and potential buyers will seek other cheaper providers or make do with alternative resources. But if this type of price correction is only done unilaterally, in a single country, the extractive projects will simply move to a neighboring nation.

It is thus essential for a measure of this nature be coordinated regionally, harmonizing the social and environmental adjustment in prices among various countries. So far integration schemes such as Mercosur or the Andean Community haven’t contemplated coordinating their export commodity prices. On the contrary, they are competing against each other, offering investors either lower prices or better advantages.

 Would this mean fewer resources and fewer jobs?

Rhetoric won’t be enough in the regional trade coordination. The price correction measures will need to be applied seriously. And it is very probable that a regionally coordinated correction will mean a drop in exports. The only exports that will be maintained are those that can’t be satisfied by other continents or replaced by the importing country’s own resources. Rigorous application of the social and environmental requirements is also aimed at that export restriction.

By whatever path, the reduction of exports generates many fears and criticisms of transition programs and the sounding of alarms over the loss of economic resources and jobs. Abandoning extractivism is rejected, invoking the defense of job posts and the resources that enter the country through exports.

There are various responses. First, although the volume of exports will drop and the financial impact will be more limited, the unitary value will be much higher. For example, fewer barrels of oil will be exported, but those exported will be much more expensive.

Second, the State will achieve genuine savings by not subsidizing more extractive projects, since it will cease spending millions to deal with the environmental and social damage caused by depredator extractivism.

And third, the extractivist sectors generate scant employment, while productive diversification into other sectors could easily compensate for those losses. Agro-ecology, for example, generates more employment than the mono-cropping of African palm.

 Reconciling public spending...

One of the most common critiques of post-extractivism claims that the fall of those exports would mean a loss of millions in income which would in turn reduce the State’s capacity to act, especially in social policies. But that financial reduction could be compensated by the higher prices for those products and the fewer transfers required to palliate the negative impacts.

The State is currently subsidizing extractivism with tax exonerations, the building of highways and access roads, subsidized energy rates, transaction costs and the like. A drop in conventional extractivism would allow genuine savings, whether by abandoning such explicit or hidden subsidies or no longer having to absorb the costs of its impacts. These savings would offset the loss of income from reduced exports.

Naturally this line of thinking indicates that the structure and objectives of state spending need to be discussed. The validity of financing the new mining or oil exploitation, tax reductions to attract investments or covert subsidies through the provision of cheap energy or road networks must be called into question. Post-extractivist transitions necessarily involve a reform of the State, whether through reconciling state spending or genuinely directing it toward reducing inequality and attending to the population’s basic needs with adequate public policies.

…by revising rural policies

The extractive activities that continue operating—some mines or hydrocarbon deposits—must generate genuine resources that are used more efficiently by the State at a national level. Reducing the participation of the national economies’ extractive sectors’ must be accompanied by an increase in the contribution of the manufacturing sector and especially the service sector.

Social and environmental regulation as a reaction to extractivism involves beefing back up various public policies, some of which have now disappeared or been reduced to a minimum expression. One example is in the abandoned rural public policies. In other cases public policies have been weakened, as in the case of the public health or education policies inherited from previous privatizing processes.

A number of relevant public policies need to be buttressed. This includes the need to generate a real public policy that ends the perverse insistence on achieving conservation through the commercialization of environmental services, ecotourism or other forms of commercialization.

The rural development policies must be redesigned and strengthened. The changes produced by deforestation are the main cause of greenhouse effect gas emissions in the South American countries, so the climate change problem requires profound changes in the agricultural and land tenure strategies. In turn, that is a key sector in providing food for regional and national consumption and that role must be strengthened, replacing the current emphasis on converting our countries into global exporters of agro-food “merchandise.”

…controlling the State and diversifying the markets

Another relevant aspect has to do with territorial policies. Territorial fragmentation and other deterritorializing processes can currently be observed in several countries, leaving the State with vast unattended areas and concentrating on only a few that are almost always linked to extractivist enclaves and their associated works, from highways to dams. One of the objectives of the move toward post-extractivism is to unite the whole national territory, ensuring full coverage of the rule of law in all its corners.

Transitions to post-extractivism don’t imply annulling the market, but rather another type of balance between the market, the State and the social actors. They require social regulation of both the market and the State.

More progress has been made recently regarding the need to improve regulations governing the market, many of which have been left in state hands, although without adequate follow-up. As a result, the State itself has repeated social and environmental problems. Moreover the State has been a key actor in promoting different types of extractivism. The poor social and environmental performance of many state-run extractive businesses—particularly the oil ones—fully justify the need for social control.

At the same time there’s a need to deploy the concept of “market” in its varied manifestations. In general, the accent is put on competitive capitalist markets, leaving to one side, marginalizing or hiding other markets that are equally important in Latin America. Such is the case of the markets based on a social solidarity economy and peasant or indigenous community markets, which include barter and reciprocity.
The transitions need to be used to highlight that diversity of markets and strengthen those that represent substantive contributions to another model of development.

 Nature isn’t capital, it’s patrimony

In post-extractivism nature ceases being merchandisable or expressible as capital and must start being viewed as patrimony. That doesn’t mean prices are abandoned, as they will continue being present, but adjusted to what they really express through their ecological and social correction. This also requires using national accounts that are similarly corrected and incorporate social and environmental aspects. This will need to be complemented with a socially fair tax reform that also applies rates and charges for use of the natural resources.

Nor can the post-extractivist transitions imply dismantling investments. On the contrary, ecological investments have an important role to play, but they must be made with other time scales and focused on priority sectors such as low carbon production, preservation of the natural patrimony and productive restructuring.

We also need to clarify that the transitions we’re proposing are different than those of the United Nations Environment Programme’s “new green economy,”which has very different conceptual approaches. The UNEP proposal maintains the goals of development while emphasizing sectoral or instrumental adjustments, and while it could be called a “transition” it would move no further than prudent extractivism.

 Through a shift in international trade

Post-extractivist transitions will have diverse consequences on both international trade and regional integration. The current pattern of international trade, dominated by the export of Latin America’s raw materials to destinations in the industrialized North or Southeast Asia and by the import of manufactured goods from those regions will be gradually abandoned. The idea is to break with objectives such as sending minerals to China and buying their textiles and cheap products.

The goals of “other development” referring to the quality of life make it indispensable to ensure access to food. This will be an important stimulus for continental trade in agro-food products. Instead of planting soy and exporting it to feed pigs and chickens in Southeast Asia, food will have to be provided to our own continent’s malnourished human beings. Best agricultural practices will have to be identified for each eco-region based on their environmental aspects and mono-crops for export will have to be avoided. In these transitions, exports will be uncoupled from economic growth as its privileged motor and international trade will end up regulated by national social and environmental requirements. These transitions are aimed at diversifying the composition of international trade with the priorities centering on complementing our own countries’ needs. The social and environmental goals will be achieved both with our own resources and those shared with neighboring countries.

Extractivism won’t disappear; it will be downsized, adjusted to what is really indispensable. Some projects will remain, especially those needed for regional consumption and commercialization.

The social and environmental regulations will affect not only raw materials exports, but also the import of extra-regional goods, especially those that amount to luxury consumption, high-energy consumption, contaminants and the like.

 Through a different regional integration

Various factors will come together to reorient trade in Latin America, reducing dependence on the world markets, at the same time making substantial changes in the ways in which we need to understand regional integration. Supranational policies agreed to among our countries will be needed in various sectors.

In recent decades complementary measures in industrial chains have been announced several times to replace manufactured goods from other continents with those produced in the continent. This can’t be approached simplistically, for example replacing Japanese cars with Brazilian ones, or ending up with regional asymmetries, as could happen with Bolivia selling natural resources to Brazil in exchange for manufactured goods produced in Sao Paulo.

The reorientation of regional integration must be based on productive chains shared by different countries, with companies from say Bolivia, Paraguay or Argentina participating with the Brazilian ones in the manufacturing. This is a concrete way to assure diversification of the productive base.

A number of key sectors urgently need regional policies: the environmental sector (especially for managing shared watersheds and resources in border zones), the agricultural sector (for the regional provision of foods, protection of peasant economies and reduction of the environmental impacts in rural areas), the energy sector (sharing energy resources), the industrial sector and the commercial sector (to stop competition among different countries providing more or less the same products).

A sustainable transition program requires abandoning the current integrationist rhetoric, whether that of the Andean Community, Mercosur or UNASUR, and moving on to the design and implementation of supra-national policies. A substantial change is also necessary in the current pro-globalization postures, including those that defend unilateral trade liberalization and free trade agreements and those that insist on the “open regionalism” of the Economic Commission of Latin America and the Caribbean. An alternative path is “autonomous regionalism,” defined as a form of regionalism that defends the reconquering of autonomy from globalization, not to isolate itself, but to have the capacity to choose its own development strategies not imposed from outside.

In such a project foreign trade stops being an end in itself and becomes a mediation that responds to demands for quality of life. In such a project extractive exports lose their priority while others, such as productive complementing in foods, become much more important.

Autonomy will also be achieved through a redefinition of “sovereignties.” In this way it’s possible to defend autonomies to decide in which aspects of globalization a link will be maintained, in which ones it will not and what those relations will be like.

…with civic participation

The transitions to post-extractivism will face enormous challenges in the social area, particularly its cultural and partisan political flanks. Abandoning depredator extractivism will generate strong negative reactions among many stakeholders, especially corporate ones, while reversing consumerism will also produce resistance among the grassroots sectors.

Intense and consistent programs will be needed to reform the consumption patterns, combating opulence, favoring much longer-lasting goods and products with better energy use and materials, intensifying reuse, recycling, sharing uses, etc. Progress must be made in this terrain by appealing to diverse education and dissemination measures, together with economic instruments that discourage consumerism and strict social and environmental control and regulation mechanisms.

In the political field, the transitions will require buttressing the democratic structure, assuring adequate social participation and extending social regulations over both the market and the State. In this respect, it will be indispensable to reverse the disrepute of the current democratic policy and delegation under which formal electoral democracies are maintained, with their many limitations on citizen participation and social regulation at the cost of exaggerated presidential powers.

It would appear that in several countries the arrival of progressive governments have frozen the debate about the possibility of new changes and many seem satisfied with the changes already undertaken. The quota of political leadership of a few years ago needs to be recovered and the post-extractivist solutions need to start being debated from a much broader social framework.

It’s very important to strengthen the citizenry, understood as actors who can influence public debate, demand and must enjoy full coverage of their rights and genuinely participate in the decision-making processes.

 These transitions are possible

Extractivism has returned to the development scene again and again in Latin America. It is deeply rooted in our politics and our culture. These roots explain the adherence to economic growth and the tendency to see nature as a basket of resources that must be intensively exploited. Extractivism is one of the purest manifestations of the conventional ideas of Latin American developmentalism.

The alternative ways out of depredator extractivism necessarily require a radical critique of the contemporaneous ideas of development. Leaving that extractivist path will unquestionably be hard, as resistance always proliferates in reaction to any change because, beyond the partisan political plane, the roots of that resistance are cultural and express ideological constructions deeply rooted in our societies. That explains why the Left repeats those ideas and also why the debate about extractivism can’t be resolved in the partisan political dimension alone. Changes are necessary on a broad spectrum of dimensions, from the cultural underpinnings about development to questions such as the political economy under which the productive processes are organized, the role of the citizenry and ethics in relation to nature.

Rectification measures aren’t enough; profound transformations will be needed. Even if the instrumental measures are useful, they must only be steps in a process that promotes and intensifies changes at the most profound levels.

There will be strong resistance, but given the imminent environmental collapse on various fronts, it is important to advance with a process of socially and environmentally sustainable “transitions.” Such transitions are possible. They aren’t simply a diffuse call, such as the classic invoking of a happy world without poverty. In reality, the accumulated reflection from the spheres of research and action, and the experiences of many civic organizations have given us more detailed descriptions of the steps that must be taken in various fields. There are already consistent, mutually linked proposals in different dimensions that cover the local, national, continental and global scales.

The post-extractionist transitions reject faith in perpetual progress, abandon the anthropocentrism that permits the destruction of nature, admit that the future will necessarily be one of scarcity and are multi-cultural in the deepest sense. All these possible transitions share the challenge of thinking about other forms of development that look to the future in order to resolve the persistent social and environmental problems our continent is suffering from.

Eduardo Gudynas


P.S.

* http://www.envio.org.ni/articulo/4801

* Ecuadoran anthropologist Eduardo Gudynas is a leading scholar on buen vivir (good living). This text appeared as a chapter of the publication “El desarrollo en cuestión, reflexiones desde América Latina” (Development in question, reflections from Latin America) from a graduate program in development sciences (CIDES) titled “Beyond the new extractivism: Sustainable and alternative transitions to development” sponsored by Oxfam and the Universidad Mayor, San Andrés, Bolivia (UMSA). Synthesized and edited by envío.

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