Caesarism, Fujimori and the Transformation of Peru into a Neoliberal Order By Peter McKenzie Atack B.A. M.A. A thesis submitted to the Faculty of Graduate Studies and Research in partial fulfillment of the requirements for the degree of Doctorate of Philosophy Department of Political Science Carleton University Ottawa, Ontario Canada ©Peter McKenzie Atack 2006 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 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Abstract: Caesarism, Fujimori and the Transformation of Peru into a Neoliberal Social Formation. During the government of President Alberto Fujimori (1990-2000), Peru undertook a radical shift in its economic policies from state-led industrialization toward neoliberalism. The research question of this thesis is: what was the effect of imposing neoliberal economic policies on Peru? How was it that a political outsider like President Fujimori succeeded in imposing structural adjustment when previous attempts had failed? This thesis utilizes Gramsci’s theory of Caesarism to understand how an outsider like Fujimori was able to dismantle the previous order based on state- led industrialization. The campaign of Sendero Luminoso had created a security crisis that undermined the political elite and decimated grass roots organizations Peru had imploded in hyperinflation, corruption and economic disaster. This led to a crisis in representation that destroyed support for all of the political parties and disarticulated civil society organizations like unions. Fujimori was thus able to dissolve the old while imposing new neoliberal relations of production. These relations were articulated through labour code reforms that made labour subject to market forces by making unions ineffective. Instead of looking for the genesis of a transformation in relations of production or structures of the state or the ideologies that legitimate them, this thesis explores and utilizes the theory of structural affinity to explore the interdependence of all three. Orders are not the outcome of dialectical progress or economic effectiveness or moral superiority, instead they are only a reflection Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. of a moment of stability when the state reproduces its characteristic social relations of production and both are legitimated by an ideology. Therefore this thesis examines how neoliberal changes to the state reinforce changes in the economy and how these changes then prove to be politically useful by dismantling sites of resistance. Neoliberal theory also plays a role by providing arguments that invert the moral case for collective action, arguments that are articulated and used by neoliberal technocrats as they impose market reforms. Transformation involves more than slight changes in government policies, it requires an entirely new ethos for state-society relations and state that reproduces the new neoliberal relations of production. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Table of Contents Introduction---------------------------------------------------------------------------------------- 1 Chapter One: Crisis and the Context of Change--------------------------------65 Chapter Two: The Political Consequences of Neoliberal Ideology---------------------------------------------------------------------------------125 Chapter Three: Fujimori and the Technocrats---------------------------------- 169 Chapter Four: Hegemony and Enforcement------------------------------------ 215 Chapter Five: Washington Consensus: A New Ideology, A New Global Economic Order and a New State--------------------245 Chapter Six: The Disarticulation of Labour---------------------------------------281 Conclusions------------------------------------------------------------------------------------343 Appendix A------------------------------------------------------------------------------------- 367 Bibliography------------------------------------------------------------------------------------368 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Introduction From the 1980's onwards, nations adopted structural adjustment programs to reform their economies in the hope that they could resolve their debt crises and escape hyperinflation and economic collapse. These reforms required more than a simple change in government policy. They required a fundamental alteration to the institutions of the state, in the relationship between state and society to support a new dominant form of the social relations of production, plus a new ideology to legitimate these new relations. What was involved in structural adjustment, then, was the creation of a new order. This thesis utilizes the term order to denote the overarching combination of political, economic and ideological spheres that together define a society. An order is organized through the articulation of ideas that legitimate a specific kind of state structure whose institutions reproduce certain relations of production in the economy. State institutions reproduce both the ideology that legitimates and validates this order as well as it enforces and regulates its characteristic relations of production. Each order’s economy produces the resources that are utilized to reproduce its characteristic form of the state and the institutions in civil society that articulate the ideology that validates the specific class relations characteristic of this order. Every order can be characterized and described by its own set of state institutions, dominant mode of the social relations of production and ideology. An order is defined by its particular combination between these areas or spheres. Thus, change to one area of an order will then result in 1 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 2 changes to the other areas. However, while the changes involved under structural adjustment did involve transforming state institutions, the economy and ideology, this was not the epoch shattering transition from feudalism to capitalism. Instead we are examining a switch between types of capitalism, between an order that was organized around state-led industrialization and the capitalism of neoliberalism. The question is: how much was changed in the transformation from one order to another? The case selected for this study was the structural adjustment undertaken during the government of President Alberto Fujimori (1990-2000). Fujimori was a political outsider who had neither previous political experience nor the support of pre-existing political parties nor a system of beliefs nor even any clear program for reform. At this conjuncture Peru was faced by a triple crisis: a security crisis caused by Sendero Luminoso (a brutal and destructive guerrilla movement), and an economic crisis marked by both hyperinflation and collapse, which in turn sparked a political crisis, specifically a crisis of representation (see Chapter One for details). The previous President, Alan Garcia (1985-1990), had attempted to reflate the economy by limiting payments to international creditors and boosting domestic demand. These measures resulted in hyperinflation and an economic collapse which exacerbated the crisis caused by Sendero. Alberto Fujimori was elected on a vague platform that ruled out shock policies to end hyperinflation, shock policies