The author redefines "harm reduction" so as to include the set of problems and characteristics that prevail at the supply end of the drug war. The core of harm reduction in the coca/cocaine-producing countries of South America is understanding the pervasive power of market relations, where demand leads and supply follows, the futility of crop replacement and eradication policies, and the need to prevent these countries' further militarization. The term "alternative development" refers to a set of infrastructural, credit, and agroindustrial projects undertaken in the coca-growing regions of Bolivia since 1984. The approach was the Bolivian government's response to the demands of peasant producers facing coca eradication in the mid-1980s at the prompting of the Reagan Administration. This paper focuses on the political economy of alternative development. Alternative development policies, and more generally economic assistance, have been contingent on Bolivia's liberalization of the economy, its integration into the world market as an exporter of primary products, and the expansion of military involvement in counternarcotics policy enforcement. The centerpiece of liberalization, the New Economic Policy (NEP), has been dependent on "progress" on the drug front. This paper proposes dropping the NEP and replacing alternative development with a national development plan, one element of which would be the industrial use of coca for medicinal products and another a policy of food self-sufficiency that would facilitate the voluntary substitution of crops. Also recommended are the incorporation of peasant participation and management into crop substitution efforts, the separation of counternarcotics from counterinsurgency, the cancellation of U.S. counternarcotics aid that promotes U.S. economic and geopolitical interests, and the encouragement of the U.S. government to abide by international law and the laws of host countries. 18 notes and 21 references