From Interventionism to Neo-Liberalism

Abstract

It is incontestable that the Nicaraguan economy was in a severe crisis on the eve of the 1988–90 stabilization and adjustment programme. The extent of this crisis and the impact of market intervention in a war economy have been clearly shown. Market intervention caused the emergence of parallel circuits, increasing accumulation of private commercial capital, the subsidization of inefficiency and, moreover, limited access of poor consumers and producers to markets. There was also severe fragmentation of the economy with a continuous confrontation of urban consumer interests and capital-intensive producer interests which was symbolic for a relatively urban-biased and sometimes even anti-peasant strategy that was largely unintended. Most strikingly, by the end of 1987 the state, in spite of or perhaps because of the nature of its market intervention, had lost its grip over the economy. The unintended and ‘perverse’ results of Sandinista market intervention had become dominant.