Your Money or Your Life!

THE TWO PHASES OF STRUCTURAL ADJUSTMENT/153

Nevertheless, in many cases governments manage to carry out

restructuring programmes which would be spurned in developed

countries. In 1987, for example, Bolivian president Paz took a

number of Draconian measures: two thirds of the state-owned tin-

mining company's work force was dismissed, given that the

company caused one third of the total annual public deficit. This

led to a series of strikes and demonstrations, but the government

stood its ground against the miners and remained in power for

another three years.

Use the IMF Threat

Let us recall that any adjustment is a politically risky affair. On the

one hand, the opposition will blame all the costs of an adjustment

on the government. On the other, if- fearing the opposition - the

government holds off on adj ustment until there is a financial crisis,

it will have much less margin for manoeuvre to confront a political

crisis. However, since no concessions are possible once a

commitment has been made to the IMF, the government can reply

to the opposition that it is duty bound to respect the IMF

agreement, whether it wants to or not.

A government can explain that, since the IMF has imposed, for

example, a 20 per cent reduction in the total wage bill, it has to

choose between massive dismissals and cuts in salary. It can say

that - in the interests of all concerned - it prefers the latter solution.

North and South: How to Undermine Trade Unionism

If state sector employees are well organised, they can put up

effective opposition to government decisions [to dismiss thousands

of workers or to privatise]. Any policy aimed at weakening these

forms of corporatism [NB Morrison uses the term 'corporatism' in

reference to the trade union movement] is a desirable one. From an

economic point of view, it means eliminating obstacles to growth;

politically, the government attains the sort of margin for

manoeuvre that can be precious in a period of adjustment. Some

will object that such a policy would encounter resistance; but it is

better for a government to wage this battle during a phase of

economic buoyancy than when it is weakened in times of crisis.

Such a policy can take several forms: minimum-service