Development or Subjugation? The Rise and Demise of Jamaica’s Battle with Neoliberalism

Abstract

The case study examines Jamaica’s battle with neoliberalism, tracing its rise and subsequent demise. It gives an account of how Jamaica had come to adopt IMF-prescribed policies and yielded to external pressures, a decision which resulted in decades of poverty, escalating debt, and socioeconomic inequalities. The study explores the complex dynamics of political rivalries, covert operations, and external influences that shaped the country’s struggle, perpetuating social unrest and political patronage. By analysing Jamaica’s experience, this study provides insights into the limitations and pitfalls of neoliberalism for “Third World” countries. It underscores the need for alternative approaches and greater autonomy in shaping economic and political futures, emphasising inclusive, locally driven development that prioritises social justice and addresses systemic issues. 

Introduction

In the aftermath of World War II, the United States, as the leading economic and military superpower, made significant efforts to assist in the reconstruction of the Western system. This endeavour required sustained access to the raw materials of the colonies. However, the emergence of heightened nationalism and independence movements within the colonies rendered decolonisation inevitable. Later, against the backdrop of the Cold War, the imperative to counter communism and promote democratic capitalist systems prompted the United States to seek dominance over the countries of the so-called Third World. This pursuit was particularly evident through the introduction of development discourse, closely accompanied by interventionist neoliberal economic policies (Escobar 31-34). According to Frantz Fanon, even after attaining independence, former colonies continued to suffer from what he termed “the curse of independence”, an enduring coercion into economic dependence on former colonial powers (53-55). This was the unfortunate reality faced by Jamaica. The island nation became a target of covert destabilising operations by the United States and was ultimately compelled to adopt neoliberal policies prescribed by the International Monetary Fund (IMF) as a last resort. Regrettably, these policies further encroached upon Jamaica’s domestic economy and sovereignty. In this case study, the rise and subsequent decline of Jamaica’s struggle against the imposition of neoliberal policies will be analysed.

Garrison Communities 

The political rivalry in post-colonial Jamaica became intertwined with the proliferation of politically motivated vigilante gun groups known as “garrison communities,” which engaged in political turf wars, primarily between the pro-U.S. Jamaica Labour Party (JLP) and the People’s National Party (PNP) which was espousing “democratic socialism”. According to Kevin Edmonds, the rise and growing influence of such vigilante groups can be attributed to the system of “clientelism” or “tribalism”, whereby political parties granted favours in exchange for loyalty from constituents. Despite deep-rooted inequalities, potential radicalism aimed at societal transformation was contained by the allure of short-term benefits that preserved the existing socio-economic order rather than addressing systemic issues. For many Jamaicans, daily life became entangled in a web of crime, violence, and political patronage (57-60). Edmonds also highlights the close connections between the pro-U.S. JLP and the U.S. Central Intelligence Agency (CIA), arguing that the JLP and its affiliated gangsters received support from the CIA as part of U.S. covert establishing operations against the 1970s “democratic socialist” government led by Michael Manley’s PNP (61-63). Thus, the intertwining of political rivalries, the rise of politically motivated gun groups, and the presence of clientelism in post-colonial Jamaica underscore the complex dynamics that shaped the country’s socio-political landscape.

Jamaica’s Flirtation with Democratic Socialism

The electoral victory of the PNP led by Michael Manley in 1972 marked a significant shift in political power away from the JLP. The transition was met with apprehension from the United States, as Manley’s advocacy of “democratic socialism” and his close ties with Fidel Castro of Cuba raised concerns. Manley’s government embarked on a series of progressive reforms, including the implementation of public wage programs, literacy initiatives, maternity leave, healthcare services, and youth employment programs. The ban on Marxist and Black Power literature was lifted, secondary education was made accessible and free, and steps were taken towards partial land reform. Additionally, strategic nationalisations were carried out as part of their policy agenda. However, the Jamaican economy was severely impacted by the 1973 OPEC oil crisis, which exposed the country’s heavy reliance on imported oil and exacerbated trade imbalances and payment shortfalls (Edmonds 61). The PNP government faced significant challenges in finding immediate solutions to address these issues.

In late 1974, Manley’s government declared its commitment to democratic socialism, which involved establishing the International Bauxite Association (IBA) and revising the tax breaks offered to U.S. and Canadian bauxite companies operating in Jamaica. These measures, particularly the increased production levy on bauxite mines, caused unrest among U.S. investors and local ruling classes, resulting in the relocation of foreign and domestic investments (Keith and Girling 27). In light of the PNP government’s measures and concerns over the potential alignment between Jamaica and Cuba, the United States initiated a covert campaign to destabilise the country, pushing Jamaica to seek assistance from the International Monetary Fund (IMF) as a last resort. Local elites and businesses, who were frustrated by Manley’s economic policies and nationalisations, also aligned with their international counterparts and engaged in actions such as capital flight and withdrawal of essential goods, further exacerbating Jamaica’s borrowing needs. Consequently, widespread layoffs, price hikes, a drastic decline in capital flows, and a significant reduction in tourism revenues ensued, attributable to the substantial influence of U.S-orchestrated propaganda efforts (Weis 119). 

The Central Intelligence Agency (CIA) became involved in local political rivalries, particularly between the JLP led by Edward Seaga and the PNP government. The JLP and its associated armed groups received covert shipments of arms from the CIA and benefited from financial support (Blum 263). The revelation by a former CIA agent confirms the agency’s involvement in supporting the JLP against the Michael Manley government, with the majority of violence attributed to the JLP and the CIA’s role in facilitating the provisions of weapons and funding (Bays et al. 147).

Manley’s Surrender

Following his resounding re-election victory in December 1976, the radical Prime Minister Michael Manley, still resisting an IMF offer for a balance-of-payment and reform package, found his government grappling with a deteriorating economy amidst escalating sanctions and severe shortages. The effects were widespread, with increased layoffs, soaring interest rates, and a media campaign discouraging potential tourists from visiting the country. 

Eventually, Manley’s government was left with no choice but to initiate negotiations with the IMF for payment support in April 1977. Despite the government’s initial confidence in securing favourable terms, it fell into what can be described as a trap, characterised by unrealistic conditionality and stringent adjustment measures imposed in 1978. Under the Extended Fund Facility, Jamaica was compelled to undertake price liberalisation, interest-rate adjustments, currency devaluation, and cuts to social spending, severely impacting the standard of living, particularly for the most vulnerable segments of society (Weis 119-120).

Although the IMF played a significant role in the global economy, its operations were often perceived as reflecting the interests of the United States and its allies, raising questions about its status as a genuinely multilateral international institution (Dreher and Jensen 121). Jamaica’s repeated failures to meet the imposed conditionalities resulted in increasingly stringent demands and further encroachments on its domestic economy by external forces. Despite Manley’s attempt to realign his government towards the left before the 1980 elections, the JLP under the leadership of Edward Seaga returned to power with the largest margin of victory in its history (Weis 120; Nohlen 430).

Neoliberalism in Full Swing

Edward Seaga and his JLP party implemented a neoliberal economic strategy and strengthened the country’s relationship with the IMF, which had been reluctantly initiated by Manley in 1977 (Payne 464). Between 1982 and 1984, Jamaica signed three additional World Bank Structural Adjustment Loans (SALs) and obtained further IMF stabilisation loans. Weis states that these measures were purported to address various economic challenges faced by the country, including issues related to export competitiveness, trade imbalances, capital flight, and payment shortfalls. The adopted so-called stabilisation policies encompassed actions such as currency devaluation, austerity measures, restructuring of foreign debts, implementation of monetary policies, elimination of subsidies, and raising the prices of public services. Additionally, long-term adjustment policies were introduced, including deregulation, liberalisation, privatisation, integration into the concept of “Free Trade,” export orientation, resource extraction, and reduction of government expenditures. These policies were pursued at the expense of the general population, except for the elite class. Furthermore, Export Processing Zones (EPZs) or “Free Zones” were established in Kingson and Montego Bay, leading Jamaica to be characterised as a source of cheap, low-skilled labour (121).

According to Edmonds and Weis, Seaga’s foreign policy, which aligned with U.S. interests, included support for the U.S. invasion of Grenada and severing ties with Cuba. Consequently, Jamaica found itself firmly under the dominance of the United States, receiving significant support from the U.S. Agency for International Development (USAID). The importance of Jamaica’s success under neoliberal policies was emphasised by a USAID official who warned that failure in Jamaica could dissuade other developing nations from adopting neoliberal policies or engaging with financial institutions such as the World Bank and the IMF. This sentiment was echoed by Ronald Reagan, who declared that poverty-stricken Central American nations should look to “free enterprise Jamaica” rather than Marxist Cuba as a model for overcoming poverty and moving towards democracy. Seaga secured a second term in office in 1983, during an election boycotted by the PNP (121-122; 63-64).

Despite temporary economic growth resulting from substantial injections of loans, aid, and renewed domestic and foreign investment, the growth trajectory stalled by 1984, and was followed  by rising unemployment. Jamaica’s payments problems worsened, with the trade deficit tripping between 1981 and 1983. The heavy reduction in state support for agriculture, as dictated by Structural Adjustment Programmes (SAPs), had detrimental effects on farmers and the production sector. Many progressive changes implemented during Manley’s government in the 1970s were eroded by austerity measures. The production economy and export sector deteriorated, and excessive imports favoured only the consumption of the elite. Inequalities were exacerbated, with the burden falling disproportionately on the poor (Weis 121-123). Moreover, the failure to meet loan-performance conditions repeatedly resulted in stricter policy requirements attached to subsequent loans from the IMF, World Bank, Inter-American Development Bank (IADB), and USAID. This led to the implementation of a series of World Bank Sector Adjustment Loans (Levitt 214). 

By 1990, Jamaica’s GDP had already declined, along with the deterioration of social and physical infrastructure. The country’s overall economic output was lower than the levels observed in 1972. Furthermore, Jamaica’s total foreign debt had reached a staggering $4.4 billion, representing one of the highest per-capita burdens in the world (Weis 123). It was within this context that Manley returned as prime minister to lead another PNP government in 1989. By this point, the leftist rhetoric had been abandoned, and Jamaica found itself entrenched in a neoliberal framework (Payne 463). By this point, neoliberalism had been entrenched in Jamaica, resulting in a period of poverty and a perpetual cycle of debt, rather than yielding the anticipated economic prosperity.

Conclusion

Jamaica’s battle with neoliberalism exemplifies the detrimental consequences that arise from adopting IMF-prescribed policies and yielding to external pressures. Despite initial aspirations for social and economic transformation, the country’s entrenchment in neoliberalism resulted in decades of poverty, escalating debt, socioeconomic inequalities, and a decline in productive sectors. The intertwining of political rivalries, cover operations, and external influences further complicated Jamaica’s struggle, perpetuating social unrest and political patronage. This case study underscores the need to recognise the limitations and pitfalls of neoliberalism for “Third World” countries. It highlights the imperative for alternative approaches that prioritise greater autonomy in shaping their economic and political trajectories. The experiences of Jamaica demonstrate that embracing neoliberal policies alone does not guarantee prosperity or sustainable development. Instead, it often exacerbates existing inequalities and undermines the autonomy and the pursuit of social justice. The lessons gleaned from Jamaica’s ordeal call for a comprehensive reevaluation of the dominant neoliberal paradigm. They emphasise the importance of fostering inclusive and locally driven development strategies that address systemic issues and prioritise the well-being of all citizens. By championing alternative approaches, countries can assert greater control over their economic and political futures, safeguarding their autonomy and enabling them to navigate a more equitable and sustainable path forward.

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