FALL 2001


Int. Journal of Political Economy, vol. 31, no. 3, Fall 2001, pp. 67–88. © 2004 M.E. Sharpe, Inc. All rights reserved. ISSN 0891–1916 / 2004 $9.50 + 0.00.


Argentina, or the Political Economy of Collapse
Toward the end of 2001, Argentina entered a paroxysm of economic, social, and political collapse that was practically unprecedented. The largest debt default in history (US$155 billion) followed, but this seemed to be only a symptom of the broader crisis that was unfolding. At the start of the twentieth century, by contrast, Argentina was on a markedly upward swing, with the economy ranked in the global top ten. Waves of migrants came from Europe to make their fortunes in this golden land. What happened in Argentina in 2001 to precipitate such a dénouement? Was the International Monetary Fund (IMF) mainly responsible since, in the previous decade, Argentina had followed IMF strategy to the letter? What are the implications of this virtual collapse of a major economy for the future of neoliberalism? What is to be done? Antecedents There is much at stake in the Argentine crisis: on the one hand, the continued credibility of the IMF as guiding hand of neoliberal globalization and, on the other hand, quite simply the viability of Argentina as a going concern as a nation-state. Diane Abbott, a rare socialist Labor Member of Parliament in Britain declares that: “Argentina is an extreme example of what happens when a country is run for foreign investors and not for local people. . . . Globalization does not solve poverty. It creates poverty and social chaos. . . . More globalization will mean more
Ronaldo Munck is professor of political sociology, University of Liverpool, United Kingdom.



Argentinas” (Abbott 2001, 1). If in global terms Argentina is a signifier for all that is wrong with neoliberal globalization, at a local level the concerns are more direct. There is widespread talk of anarchy in terms of the economic rules that govern most societies. This “survival of the fittest” mood is also dominant in the political arena where widespread disenchantment with politics generally is reminiscent of nothing so much as Weimar Germany in the 1920s. The crisis in Argentina broke out towards the end of December 2001. Since the beginning of that year, it was clear that a massive currency devaluation was on its way. Popular mobilization had also been mounting steadily with road blockages and sporadic local uprisings. The political class as a whole was losing credibility as leftist Vice President “Chacho” Alvarez resigned and the two main political parties became mired in corruption. The pressure of foreign creditors was becoming ever greater, and some banks began moving out their dollar reserves in anticipation of an end to convertibility between the dollar and the peso. Then on December 19 and 20, the citizens of Buenos Aires rose in total opposition to the government of Fernando de la Rúa. While workers mobilized, it was mainly the middle classes out in the streets, as they saw their savings evaporate through devaluation. The government responded with repression, killing 30 people and injuring hundreds more. By the end of these two memorable days, President de la Rúa was fleeing Government House in a helicopter in order to avoid the hostile crowds outside. Just over 100 years earlier, another economic crisis had rocked Argentina. In 1890, the London financial house Baring Brothers collapsed when United Kingdom interest rates rose and its massive investment in Argentina proved unsustainable. A collapse of Argentina’s economy followed, as did a devaluation of the peso and a moratorium on foreign debt. What the Baring Crisis of 1889–90 revealed were deep flaws in Argentina’s development model based on foreign borrowing. It also made plain the extent to which corruption oiled the wheels of Argentina’s political economy. Then, as now, confidence in the basis of the development model evaporated very quickly. However, as David Rock notes, “If the similarities to the crisis of 2002 are striking, the differences are perhaps more instructive” (Rock 2002, 59). Buoyant foreign demand then revived export-led growth in Argentina, and British creditors were much more understanding than the IMF is today. The current crisis hardly provoked the same type of panic that the Baring Crisis caused in the city of London.

aggregate output in Argentina grew at an annual average of 3. From 1890 to the crash of 1929. Thus. the 1929 crisis severely shook Argentina’s agro-export economy and its political governance. facing a crisis similar to. at the start of the twenty-first century. the Peronist period (1945–55) led to a fundamental reorientation based on state-led industrialization. In 1983. continued to rule. democracy returned but led to the post-1989 Menem government that completed the neoliberal agenda in Argentina. After the 1955 military coup.” based on an agro-export economy. and the 1930s became known as the “Infamous Decade. The turn to neoliberal globalization occurred under the 1976 military dictatorship that was singularly repressive. as with the rest of the world. heading for a secure place in the international system based on sustained growth and political democratization. and World War I created the need for greater industrialization. but even graver than the one it had faced towards the end of the nineteenth century? While I believe the present crisis is conjunctural and specific. Urbanization and a subsidiary industrialization process advanced swiftly as the social transformation in Argentina accelerated in the 1880s. Argentina was seen to be in the same category as other “settler” economies such as Australia and Canada. based on protectionist measures and widespread public investment in infrastructure. there were a succession of weak civilian governments and illegitimate military regimes. Integration with the world economy—based on the differential rent generated by the fertile Pampas plains—generated a visible degree of modernization and attracted thousands of overseas migrants. 88). The Baring Crisis was successfully overcome. however. The international prices of agrarian products slumped and thus industrialization was promoted to make the economy less reliant on international fluctuations. It also sets the structural parameters that determine which options are now possible and which are not. The agrarian oligarchy. After the Depression of the 1930s. However.” due to the level of .7 percent (Lewis 2002. From 1875 to 1896. This section sketches some of the main phases of Argentina’s political economy from 1890 to 1990. the historical background does set the context in which it occurred.FALL 2001 69 Why was Argentina. Argentina lived through what was known as the “golden era. With the establishment of a strong and stable national government in 1862—following a period of federalism and conflict—Argentina entered a period of sustained growth based on agrarian exports.

or a combination of both. After the fall of Perón. which led to the return of . began to attract a labor following for his nationalist project. Industrialization advanced in the 1930s—a 1940 census showed that 40 percent of industrial establishments had been formed since 1930—but the links with imperialism remained intact. and even more to counter-organizing by traditional social forces in Argentina. it was an attempt to resolve in its favor the situation of organic crisis and transform its economic predominance into political hegemony. The regimes promoted the expansion of monopoly capitalism. Juan Perón. above social classes to some extent and quite authoritarian. albeit subordinate to the agro-export orientation and reluctantly pursued. A decisive turn to the international capitalist market ensued. industrialization. civilian interludes. Under Perón. However. This Bonapartist regime. Partly due to Perón’s own weakness. In Gramscian terms. The massively unionized working class received steadily rising wages and helped create a sizeable internal market. Space for this strategy was created by the virtual collapse of Britain’s empire after World War II.70 INTERNATIONAL JOURNAL OF POLITICAL ECONOMY political corruption. and the economic consolidation of an “internationalized” fragment of the bourgeoisie integrated into the international circuit of capital accumulation. starting in 1969 with the Cordobazo. and he became president in 1946 at the head of a mass movement. The Peronist decade (1945–55) completely transformed the political economy of Argentina and is a crucial reference point. An obscure army colonel. Thus Peronism came to power at a unique historical juncture that allowed it to be nonaligned and to promote state-led industrialization. did produce a sizeable industrial proletariat. The military dictatorship that came to power in 1966 represented the most coherent attempt by this sector to break the particular stalemate that had characterized Argentina since 1955. However. a period of chronic political instability opened up with a succession of military regimes. the “new” working class entered a very active phase. Social transformation and political organization led to a need to break away from the corrupt stagnation of the 1930s. The Roca-Runciman Pact of 1933 effectively made Argentina part of Britain’s informal empire. an industrialist alliance prevailed over the agrarian oligarchy and the industrial working class became a powerful social agent. forged a project for independent capitalist development in Argentina. a military coup in 1955 put an end to the Peronist decade. and the United States drive to global domination was just beginning.

The so-called patria financiera (financial fatherland. the military regime decided to launch an adventure in the South Atlantic to recover the Falklands/Malvinas Islands. Politics was. However. that had benefited from a speculative boom under the military regime. and his widow’s regime rapidly decomposed into fighting factions that led to the military coup of 1976 that. tax revenues were collapsing. for the role of labor). National industry was discouraged. Perón died in 1974. It appeared at first that the dictatorship was simply seeking to put the clock back to the pre-1930 period to recapture the “golden era. and. and privatization of the state sector all helped pave the way for this new era. Much of the left went over to the Alfonsín government as it sought a revalorization of democracy and a rational economic strategy. But an unprecedented level of repression was unleashed on the population. from then on. Their defeat by Britain’s armed forces sealed their fate on the home front and democracy was reclaimed by the people. in a bid to increase its waning legitimacy at home. This represented an ethical choice for democracy over the authoritarianism and corruption of the past. and the internationalized sector was fomented. reaching hyperinflationary levels by 1989. his economic policy.” as it were. Raúl Alfonsín put the military leaders on trial and dealt effectively with some further military revolts. .FALL 2001 71 Perón in 1973 in an attempt to “tame” this movement (see Munck 1987. Financial deregulation. most disturbing to the political economy of Argentina. A new period of military rule began in 1976 with the objective of decisively defeating the labor movement and breaking the pendulum pattern of politics which had prevailed in Argentina since 1955. had considerable tolerance if not support from the population. at first. The 1983 elections saw the victory of the largely middle-class Radical Party over the trade union-based Peronists. The Austral Plan failed. inflation rates began to accelerate. and the trade unions were prevented from carrying out their normal functions. However. if not 1930. If there was no going back to the pre1930 world order. led eventually to a hyperinflationary outburst. following some early successes. the Central Bank was practically bankrupt. primarily about the economy. had never been brought under control. opening up of trade. what was happening was the beginning of the new era of globalization. By 1985 a “war economy” was in place as prices and wages were frozen and a new currency (the austral) was issued.

Canitrot. and he cultivated all the mannerisms of the provincial caudillo (party boss).72 INTERNATIONAL JOURNAL OF POLITICAL ECONOMY Stability President Carlos Menem was a Peronist of a very special type.” Once in office. U. The traditional Peronist banners of “social justice” (hence the name Justicialismo given to Peronism) were unfurled. The gap between the reformist rhetoric and the reality of a free-for-all grew. Bypassing Congress in many cases. Menem’s term in office marked a distinct deterioration of democracy compared to Alfonsín’s period. as Canitrot puts it. involved in implementing the plan. He appealed to the poor with vague. Although corruption had existed before in Argentina. In political terms. The Austral Plan was formulated to cut the inflationary spiral through a price and wage freeze and to launch a new currency. but its constraints were soon felt. it became clear what this meant. it reached new levels of openness and persistence under Menem. was that “the Latin American economies were destroyed and the governments which emerged from democracy were completely weakened (and the debt was not paid)” (Canitrot 1991. some slack was granted to the new democratic government. that it “had the negative of weakening [government’s] political capabilities and of deteriorating public confidence in the efficiency of the institutions of representative democracy” (Canitrot 1991. Menem’s rise to power can only be understood in the context of the Alfonsín government’s failure to achieve economic stabilization. populist promises but also made alliances with powerful economic interests. 129). policy on the debt issue assumed political and economic capabilities that were simply not there. however. and by 1989 the inflation rate had reached a staggering 3. and the result. Menem’s election marked a consolidation of democracy in Argentina in terms of an orderly succession of freely elected governments. Menem was the governor of the poor province of La Rioja. Close relatives of his were involved in various scandals. 130).S.000 percent per year. but so also was the banner of “modernization. On the question of foreign debt generated by the military regimes. in- . Menem began to pass controversial measures through executive decree. admitted. However. it led to a marked deterioration of democratic norms as authoritarian practices were used to impose market-friendly stability on the country and to foreclose any alternative political economy paths of development. as Menem carried out a full-scale conversion from economic nationalism to a total endorsement of neoliberalism.

so that the implementation of the stabilization program based on dollar-peso parity depended on privatization and further borrowing” (Helevi 2002. domestic money creation would have to match the available amount of U.S. Argentina moved swiftly to break all links with the Non-Aligned Movement. the Menem period was also marked by change. as Halevi notes. and there was a scandal in the milk industry (Milkgate) involving the president’s private secretary. in order to avoid the money-printing syndrome of the inflationary past. or wherever Argentina’s subordination to the United States could best be demonstrated. especially foreign ones that were just waiting for the . the Convertibility Law of 1991. 5). led by controversial Finance Minister Domingo Cavallo. Now it was to be “task forces” sent to the Gulf War. Under Menem. dollars. In terms of Argentina’s role in the global system. however.” As what we now know as “globalization” was taking shape in the early 1990s. which he aspired to join. From then on. the U. Indeed.FALL 2001 73 cluding one involving “narco-dollars”. Ambassador complained of bribe demands from senior officials (Swiftgate). and Foreign Minister Guido Di Tella rather crudely called for “carnal relations” with the United States. Menem was poised to shake off his earlier Tercermundista (third worldist) image and become a propagandist for the “Free World’s” new order. There was no pretense that Argentina was anything other than totally subordinate to the dictates of U. there was little reaction from the population over what was openly known as Menem’s “kleptocracy. The Menem regime even cancelled the Cóndor missile program. much to the annoyance of nationalists in the military who muttered darkly about “banana republics. Due to the overwhelming desire for economic stability after the hyperinflation of 1988–89. “the fixed parity between the dollar and the peso reduced the attractiveness of the country as an export platform. to Central America. in others. foreign policy—no more independent forays into the world such as that of Malvinas in 1981. The cornerstone of the political economy of Menemism was.S. dollar legally on a one-to-one basis. The struggle against hyperinflation was used as a pretext to tie the peso to the U.S. the privatization of the stateowned companies was a major component of Menem’s strategy and provided him with considerable leverage in terms of dealing with the large corporations. the simple fact is that for a whole decade there was simply no alternative being offered to his authoritarian neoliberal turn.” While Menem created a feeble basis for democratic consolidation. However.S.

74 INTERNATIONAL JOURNAL OF POLITICAL ECONOMY bargain basement sale to begin. Also. 188) Indeed. we need to spotlight the particular nature of Argentina’s capitalist class. . As Tedesco shows. which was in fact a new form of expression of capitalist violence.. The state had taken over the burden of the private external debt while the private sector carried on contracting more debts. (Dinerstein 2003. In this way. . as Halevi explains: “the state sells out its public activities through privatization policies thus generating financial profits (rents) for the private corporation. To understand this negative regime of stability. The state then unloads the burden of debt onto the whole economy. From the 1991 Convertibility Law to 2001. not surprisingly. 5) through cutbacks of social services and the whole panoply of IMF austerity measures. especially the working population” (Halevi 2002. It was not until 1999 that the electorate thought stability had been achieved and they could get rid of the erratic and authoritarian figure of Menem— to be replaced by the sober (“boring” in his own words) figure of de la Rúa from the Radical Party in coalition with leftist front FREPASO (Frente del País Solidario: National Solidarity). while under Alfonsín politics had been “revalorized.” under Menem politics were completely subsumed under the “economic question. with an ample majority. it continually increased.e. on the basis of interviews. the control of the future. the private debt increased eleven-fold. the long-standing short-termism of the country’s capitalism was restructured and modernized. during the 1990s Argentina was favored by financial and “hot money” players eager to make a quick profit. the Convertibility Plan did signify stability for a population that had gone through the terrifying experience of hyperinflation with its lose-lose effects on nearly everyone. .” The achievement of this stability of a special type allowed Menem to secure a second period in office in 1995. As for the foreign debt. Despite its obvious and glaring drawbacks. Under Menem. For Ana María Dinerstein: Stability emerged as a new paradigm which organized capitalist anarchy and the relationship between politics and economics in a particular way. It also emerged as a means of achieving certainty and economic growth. i. At the same time. as did the burden it imposed on society. . privatization and the foreign debt can be seen as linked to the opening of the economy to the world market that has allowed transnational corporations to take over the commanding heights of the economy.

leading to the resignation of the FREPASO vice-president “Chacho” Alvarez in 2000. However. a devaluation of the peso was understood to be in the cards. Disenchantment with actually existing democracy was becoming a major social phenomenon. businessmen exercised a logic of individual action—a rapacious and predatory dynamic” (Tedesco 2001. The inevitable zero-sum game that ensued was not conducive to long-term strategic thinking in the general capitalist interest. Stability seemed to now become paralysis as the crisis ahead loomed ever closer with no decisive action being taken. Adjustments demanded by the IMF focused on reducing public sector wages and employment along with already meager pension entitlements. and these divisions allowed the rather lackluster Radical Party candidate to win in the 1999 elections. but. The contradictions of Menem’s political economy led inevitably to another burst of inflation in 1998–99. One can contrast this with the entrepreneurial. Economic management seemed to be singularly ineffective as the country slipped deeper into recession. the number of blank votes rose to an unprecedented––a legal offense—level of 25 percent. The coalition which took de la Rúa to power was also totally divided. not least of which was the Peronist parliamentary and provincial superiority. Lack of international confidence . but convertibility remained inviolate. and de la Rúa was at least able to project a clean image. As the economic recession that had begun in 1999 deepened. 9). Rather. as local industry began to lose competitiveness and the foreign debt noose began to tighten. capitalists took a personalized view of their relations with the Menem reforms and disengaged themselves from the broader picture of Argentina’s political economy. When mid-term elections were held in October 2001. and cooperative (within competition) nature of Brazilian or Chilean capitalism. de la Rúa’s government suffered from serious weaknesses. the Peronists made significant gains. nationalist. even more disturbing in terms of the regime’s credibility. His ambition to run for a third term of office was thwarted by his own internal opposition. For most of 2001. which meant that all economic measures had to be negotiated. the left also made significant advances. Domingo Cavallo to implement yet another orthodox austerity policy.FALL 2001 75 “Argentine businessmen tried to transfer the transitional costs of the reforms to other companies. de la Rúa felt compelled to call back Menem’s finance minister. Corruption was now a major issue. Rather than sharing the costs and the benefits of the 1990s reforms.

severely curtailing access to savings. effectively. Since 1983. the economic collapse at the end of 2001 represented a closing of the political cycle that had started with the democratic elections of 1983. Capital fled the country with devaluation of the peso now an almost total certainty. a state-imposed freeze on bank accounts. As people lined up outside cash points or inside banks. was at first adamant that the people would not bail out the foreign banks. President Eduardo Duhalde. nor Radicals. The working class and unemployed protestors now had a new ally in the struggle against neoliberalism. Capital fled the country as investors withdrew $1 billion per day by early December 2001. the social depth of the crisis became clear. when Finance Minister Cavallo instituted the corralito (corral) in November 2001. the Argentine economy was in recession. This popular revolt thought of itself as apolitical: “We are not Peronists. So. Emergency economic measures in November 2001 could not halt the slide. as much financial investment fled the country and interest rates on the foreign debt rose to 12 percent. The corralito was. this was an event long in the making.76 INTERNATIONAL JOURNAL OF POLITICAL ECONOMY had a debilitating effect. the financial sector was able to lobby strongly and as the gap between the peso and the dollar opened up. We are just the people who for the first time have organized themselves and know their own . Since mid-2000. the Peronist caretaker president who took office in January 2002. nine IMF stabilization programs had come and gone. After 1998. desperately trying to withdraw their savings. Default on foreign loans had also been inevitable for some time. and the devaluation that would inevitably follow represented an unloading onto the population of the failure of an economic model. In addition. nor socialists. the social revolt that ensued was entirely predictable. The political economy of democracy in Argentina was now at stake. Even a cursory acquaintance with events in Germany in the 1930s indicates the social explosiveness of a situation where the middle classes see their savings evaporate. it became clear that ordinary citizens would probably lose three-quarters of their savings. the world economy had moved into a generally recessive phase. Crisis When the crisis finally erupted towards the end of 2001 and the historic default and devaluation occurred. Trying to meet IMF conditions for further loans during this period only deepened the recession. Eventually.

February 18. Over half the population of 37 million fell below the official poverty line. and the proportion of indigent poor (who cannot buy basic food) rose to 18 percent of the population. the main story was the rise of the dollar against the peso after the end of convertibility. as per capita average income rose. the poor benefited relatively little in terms of income gains from this resumption of growth.). the lowest 20 percent saw their income decline 4. Central to this speculative maneuver were the oil companies ( one time state monopoly YPF now owned by Repsol. . . and the subsidiaries of Amoco. 5). In other words. Cargill etc. Remarkable in terms of the political economy of collapse is that in 2001 the foreign-owned banks remitted a record level of profits: $284 million between January and September 2001. A Poverty Report for Argentina” found that: “While growth resumed in the 1990s. The collapse of the Argentine economy in 2002 inevitably led to an aggravation of a social crisis that had already begun to sharpen in the mid-1990s. as another said. “We want a fair government of the people. “Poor People in a Rich Country. up 62 percent from the same period in 2000 (Página 12. The notorious U.70 pesos. the distribution of income worsened and the incomes of the poorest 20 per cent actually declined” (World Bank 2001. at the height of the crisis— December 2001 to January 2002—the large national and foreign-owned export companies retained some $200 million (about 95 percent of total earnings) abroad in the expectation that the dollar would rise in price in Argentina. . Occidental. Among the “new poor” emerging in 2002 were many households previously classified as middle class. .5 pesos and more. and by 2002 the dollar was being valued at 3. Exxon and Shell) and the grain merchants (Dreyfus. A remarkable World Bank study. Then. the big foreign banks were probably forewarned of the restrictions to be imposed by the corralito and were able to remit much of their funds abroad.” as one resident put it or. Clearly.FALL 2001 77 strength. along with the big steel companies (Siderca and Siderar). once “freed. While the 10 percent richest group saw their income rise from 34 percent to 38 percent in the 1990s.5 percent to only 3. That is to say. company Enron also played a role through its role in the gas sector. 2002). Bunge. The dollar.” While the people protested and organized. Unemployment soon rose to 25 percent with a further 20 percent (at least) classified as underemployed.8 percent.” rapidly went up to 1.S. this sharpening of inequality and exclusion levels resulted from the new economic model launched in 1990–91.

other forms of organization evolved. and discuss the way forward. or parallel monetary systems. Here. in the shape of neighborhood assemblies (asambleas barriales). they are widely seen as marking the emergence of a new radical generation. However. to overcome the situation which our families are facing. Arguably. for survival. There was also remarkable growth of a barter economy where local residents traded goods and services as a way of making ends meet when the financial crisis hit the middle classes in particular. but they were perhaps less structured and certainly less visible than the Buenos Aires asambleas. as one Buenos Aires resident explained: “We are gathered in this place in order to find a new way out. a community currency system emerged which tended to promote an “alternativist” community consciousness among residents in relation to the regime. but by the middle of . because of the political crisis we have to seek each other out. the barter economy and the social currency scheme represented more than a means of survival. One of the most remarkable facets of the December 19–20 mobilization was the youth of the participants.78 INTERNATIONAL JOURNAL OF POLITICAL ECONOMY One response to the collapse of the peso in early 2002 and the subsequent social dislocation was the emergence of a number of local currencies. Necessity forces us to do things. and others organized workshops and cultural activities. In the course of 2002. distribute food. The asambleas were heavily concentrated in Greater Buenos Aires. They would usually meet on a weekly basis. there had to be something. In the asambleas. to invent new situations” (cited in Pearson 2003. although various leftist groups are acting as though they might be. 224). reflecting to some extent the greater involvement of the middle classes in this form of organization. Beyond the collapse of the great neoliberal experiment in Argentina. people from a neighborhood would gather in a form of direct democracy to organize mass buying. and gradually they became more organized. In the poorer provinces. many of the asambleas began to publish journals. From the social protests in the streets in December 2001 and early in 2002 and the experiments with a barter economy sprung a more durable form of social organization. The Duhalde government began in 2002 with praise for the asambleas. of the 272 asambleas registered in May 2002. 112 were in Buenos Aires city and 105 in Buenos Aires province. Are the asambleas the germs of an alternative power or weak defensive organizations bound to fade away if the economic crisis is overcome? Most observers agree that they are not Argentina’s soviets. many set up Web sites.

There was a similar collapse of the auto industry and the metal-mechanical sector. “Argentina poses a major problem for the IMF’s economic advice because it exposes the fragility of the IMF’s economic advice. the IMF. debate. In the front line. January 19. If international capitalism had to deal with a major credibility crisis. Therefore. “Argentina’s crisis was obvious to everyone. and the absence of a technocratic solution to what is essentially . March 19. there was little expectation that the production sector would recover easily. except to the IMF” (Guardian. In the first two months of 2002. For Köhler. Horst Köhler. and repression was even felt in many cases. . Perhaps the best way to capture the asambleas is in the words of Stella Calloni. dealing with the consequences of the collapse of the Argentine economy. there was very little of the predictability and trust that capitalism needs if it is to be successfully embedded in society. 21). Some export sectors did benefit from devaluation of the peso. . inevitably. . . the textile sector lost over 50 percent of its sales and domestic demand plummeted (Página 12. What is perhaps most interesting is the way the IMF strategy in relation to Argentina has been questioned by once-stalwart supporters of that organization. Argentina was clearly a test-bed for a new approach where lending decisions would be based on a more general and ultimately political assessment than in the past. and imported goods rising rapidly in price. the credit system decimated. With internal demand collapsing. transparency and future. The call to radically reform the IMF spread rapidly and even affected the incoming managing director of the IMF in 2002. 2002). . As one analyst put it. it appeared. discussion. for whom: “The asambleas are memory. Each day the imagination bears new fruit there and in the asambleas lies the best revindication of the thousands and thousands of desaparecidos [disappeared] of another epoch” (Calloni 2002. Köhler called for prevention rather than cure after the crisis in Argentina. a political problem” (Graham and Masson 2002. 2). As a Brookings Institution briefing paper put it. capitalists in Argentina itself found themselves in deep difficulties in 2002. “There is a need to reconstruct the web of inter-industry relations and thus necessarily a degree of predictability” (Página 12. leader). 2002). but this only accentuated uneven development. the interim president was heavily criticising them. March 19. . As many pointed out early in 2002.FALL 2001 79 the year. With the chain of payments broken by the crisis. 2002. no dynamic bourgeois leadership is likely to emerge from this crisis. was.

seeks the reasons for Argentina’s “sad decline” as though the IMF had never been involved in the country’s decade-long religious observation of its rules. Krueger finds that the “external envi- . an independent Radical who has pushed the issue of corruption and the need for a “moral renewal” into the foreground. given the long-running critique of its austerity programs. the crisis in Argentina compromised the credibility and viability of the IMF as key international capitalist institution. as in many other parts of Latin America. At present.S. Likewise. and repeated the procedure when the bleeding made them sicker—prescribed austerity and still more austerity. Outside of parliament. seems the most likely outcome. and a return to a 1976-style dictatorship seems unlikely. the usual array of small parties vie for popular support. however. “recommends antiquated and phony solutions” (Sachs 2002). The left blamed the policies of the IMF for the crisis. quiet. Paul Krugman viewed Argentina’s crisis as a U.” and. The most promising and popular political figure around is Elisa Carrió. The parliamentary left is also tarnished by that collapse and is not cohering as an alternative pole of attraction. Thus. The middle-class Radical Party is in total disarray following the collapse of the de la Rúa government. The IMF itself has mounted a fairly weak and inconsistent defense of its record in Argentina. The Peronists are still the largest political force. Anne Krueger. for the time being. Jeffrey Sachs declared in despair that “The IMF lacks a clear idea about what to do in Argentina. the critique was much broader from within establishment circles. First in the firing line. The military are. was the International Monetary Fund. first deputy managing director of the IMF. Thus. as one would expect. predictably. Prospects After any crisis come the recriminations. failure and referred angrily to how “IMF officials—like medieval doctors who insisted on bleeding their patients. the turn towards a leftist populism. From the perspective of capital’s organic intellectuals. but they are divided and riddled with corruption.80 INTERNATIONAL JOURNAL OF POLITICAL ECONOMY A socioeconomic crisis usually requires a political solution and here too the prospects of a fundamental restructuring to deal with what is effectively the collapse of an apolitical economic model seems not to be materializing. but no real connection with the populist movements is in sight. instead of addressing the real causes of the crisis. right to the end” (Krugman 2002). This time.

One element would necessarily focus around the growing international campaign to see an orderly and transparent restructuring of Argentina’s debt that could be overseen by global civilsociety bodies (see Jubilee Plus 2002). While clearly the international financial agencies—and the very regime of free global financial markets—can be seen as the main agents of Argentina’s collapse. Both are true statements but are not unconnected with IMF policies. The social economy— which has developed as a response to the crisis—may well expand and consolidate its role in the years to come. Exchange controls will probably have to be introduced and the state will undoubtedly regain a more active role in production. To make the market socially accountable is probably necessary just to resolve the current crisis in Argentina. they also insist that more austerity must be practiced by the people. Krueger argues in terms of the central convertibility strategy that “with hindsight. While Krueger notes sadly that “[t]ime is not on Argentina’s side. There is a local expression to characterize this negative Weltanschauung that refers to the ethics of viveza (translated roughly as smart aleck rather than clever). this should not distract us from a class analysis of what is happening in Argentina today. It is widely accepted in Argentina that the privatization program of the 1990s will have to be reviewed. signally absent in Argentina) to provide fiscal balance (see McEwan 2002).” IMF officials in Argentina continue to practice what they call “tough love” and insist on a “colonial governor” style which has angered even conservative politicians.FALL 2001 81 ronment and shocks were unfavorable” and that “unsustainable debt dynamics were left unaddressed” (Krueger 2002). Again true. For a start. An alternative strategy would also strive for macroeconomic stability but base it on the expansion of government revenues (through a proper taxation system. Perhaps one of the most important lessons to be derived in relation to the role of the IMF is the need to go beyond denunciation to articulate a viable alternative strategy. The free-rider ethic has prevailed and . an earlier exit to a more flexible exchange rate would clearly have been preferable” (Krueger 2002). corruption became endemic during the Menem decade to such an extent that internal Peronist politics are now almost entirely based on patronage and accessing the spoils of office. but hardly IMF policy at the time. Furthermore. Short-term thinking is also characteristic of the political and business worlds to such an extent that any long-term strategizing is almost impossible. especially in the provinces which are already on the brink of economic and social collapse.

represented an embryonic popular power that was contesting the legitimacy of the dominant political economy. For Touraine. if amorphous. as the level of unemployment began to rise dramatically once again. The “easy money” of the 1990s. the “sweet money” (plata dulce) of the 1990s was based on a denial of the dictatorship’s horrors. critical international sociologist who is very knowledgeable about Argentina. These roadblocks. was self-admittedly “brutal” in his analysis of the 2001–2002 collapse of the country. Alfonsín’s symbolic trials of military leaders (later pardoned by Menem) were seen as sufficient acts of contrition for the past. a “moral defeat” that has had a huge and lasting impact on the country’s psyche (Sarlo 2001). If a solution from above is not visible on the horizon. they appeared to be rather isolated. there is now a much more reflexive and self-critical tone in debates within Argentina where it is dramatically recognized that things cannot continue as in the past. there were widespread lootings of supermarkets in working class areas. social movement organizing against the impact of the crisis and those it holds politically responsible for it? Through the 1990s. Alain Touraine. the failure to pay taxes. that showed. a poor northern province). Particularly during the hyperinflationary periods of 1989 and 1990. the biggest problem today is “the decomposition of the political class and the decomposition of the will to be” (Touraine 2002. With the deepening of the social and economic crisis at the end of . There were genuine popular uprisings in the poorer provinces. The typical ollas populares (communal kitchens) reappeared in these areas. how the national revolt of December 2001 would manifest itself. In fact. and the piqueteros (picketers) who organized them. Ironically. and the country then launched itself into the moral vacuum of the neoliberal era. The IMF loans only staved off the inevitable. popular protest against neoliberalism built up across the country. The most widespread working-class (unemployed on the whole) forms of protest were the roadblocks across major highways up and down the country from the mid-1990s onwards (see Dinerstein 2001). from the growing. such as the Santiagazo (in Santiago and Estero. in retrospect.82 INTERNATIONAL JOURNAL OF POLITICAL ECONOMY to some extent fed into the causes of the current crisis. all led inexorably to a collapse. 1). though. what about a solution from below—that is. for Touraine. Argentina was sheltered by the IMF from a full recognition of the decomposition that was occurring. For cultural critic Beatriz Sarlo. corruption rather than competitiveness. Until the end of the decade.

spontaneous emergence of neighborhood assemblies. which represented a small section of the working class. This led to the spontaneous insurrection against the government on December 19. a very different social actor came onto the scene. but it did reinvent the “popular” in Argentina in a way not seen since the heyday of Peronism. The asambleas barriales were often organized around practical issues like the distribution of food. Characteristically. The middle class was now clearly at the center of the protest. state. 2001. It has. but still threatening. served well to capture the .FALL 2001 83 2001. a negative rejectionist stance that is not designed to produce viable strategies to overcome the crisis. the struggle as one). The asambleas are part of the restructuring of a civil society faced with a weak and illegitimate. What it led to in the months following the collapse of the de la Rúa government at the end of 2001 was a remarkable. namely the country’s once sizeable and prosperous middle class. referring to the country’s politicians. Whether this was or is an organic and durable class alliance is hard to tell. This is a radical slogan expressing a total rejection of the partisan opportunist and self-serving political parties (and that includes most of the left) that have led Argentina into the current cul de sac. however. one that had been somewhat sheltered from the worst effects of the recession to date. They are recovering part of the traditional sense of community lost during the rampant individualism of Menem’s naked neoliberalism. but they also represent an open public space for deliberation in a moment of crisis. the struggles of the workers and the middle sectors came together under the slogan “piquete y cacerola: la lucha es una sola” (picket and saucepans. but it also willingly united with an already mobilized working class. Small-scale savers had been hit hardest by the collapse of the currency and the freezing of bank accounts (the famous corralito). practically nihilistic “Que se vayan todos” (they should all go). The most far-reaching demand to emerge in 2002 was a simple. “Pots and pans” demonstrations became the protest mode of the Chilean right against Salvatore Allende in 1972–73. It is also clearly a protest and not a proposal for change. as the people move from communication to action on a whole range of fronts. this mobilization totally obscured a general strike called that day by a fairly tame trade-union movement (except for one radical sector allied with the piqueteros). but they had also been used across the southern cone of Latin America during protests against the military dictatorships. As the crisis came to a head.

2). . no state form . but the global implications of Argentina’s implosion are evident enough. . I see it as stormy and tumultuous. Caballero) that is reminiscent of nineteenth-century imperial customs receiverships. fiscal. A country with no associative relations. as Horacio González writes: It is very difficult to imagine the Argentina to come. (González 2002.” Dornbusch is calmly advocating that “Argentina now must give up much of its monetary. The future can only be uncertain. Postscript The influential London weekly The Economist. 2). There is one radical solution being advocated by Rudi Dornbusch (with Chilean economist R. That this suggestion was not immediately and universally seen as bizarre gives some indication of the depth of collapse in Argentina.” declared that “Argentina’s problems have already dealt a serious blow to the idea that the global triumph of capitalism is inevitable” (The Economist 2002b). I see a disintegrated country with local currencies. namely that. . but of specific macroeconomic failures” (The Economist 2002a). 336) It is possible that this article will be dated by the time it appears. Early in 2003. in a recent bleak survey of “capitalism and its troubles. a political class questioned absolutely but no conditions for replacing it by something we could be more enthusiastic about. say five years” (Caballero and Dornbusch 2002. . Given that the country is bankrupt and has a “dysfunctional society. The future of neoliberal globalization is at stake here as well as the social and economic well-being of the people of Argentina. Argentina’s crisis is bracketed along with the Enron scandal and international terrorism as symptoms of a broader crisis of capitalism and the end of what might be called the easy phase of globalization. but I somehow doubt that the crisis in Argentina will find a rapid solution. “Because Argentine polity has become overburdened.84 INTERNATIONAL JOURNAL OF POLITICAL ECONOMY genuinely cataclysmic moment Argentina is living through. Everything has changed since December 2001: the political economy of collapse is now a prime example. The Economist still declares itself optimistic. . it must temporarily surrender its sovereignty on all financial issues” (Caballero and Dornbusch 2002. after a year’s negotiations with . regulatory and asset management sovereignty for an extended period. labeling Argentina’s collapse as an indictment not “of economic liberalization.

6 billion debt rollover had been agreed upon. however. The left held on to the City of Buenos Aires in a critical electoral struggle for Kirchner later in the year. that an end to the financial crisis and a resumption of growth in Latin America was foreseeable (see IMF Survey 2003). In fact. In Argentina itself the impact of the crisis could not be underestimated as the country moved into national elections in May 2003. many sober analysts were using the case of Argentina to argue persuasively for more sustainable and dynamic economic prospects for Latin America outside the parameters of the IMF and the dominant form of neoliberal globalization (see Ciblis. While Menem had gone into the elections committed to a full “dollarization” of the economy. ex-President Menem. incredible though it seemed. there was considerable political apathy and an unprecedented degree of political fragmentation. Kirchner has surprised many observers with the firm way he has dealt with the IMF and the reactionaries at home. unfortunately. did Carrió and López Murphy was left to carry the conservative Menemista flag. There were three Peronist candidates: Néstor Kirchner (a relatively progressive provincial governor supported by outgoing interim President Duhalde). The mood was one of political realism and Kirchner reflected the general disenchantment with tradi- . The crisis in Argentina will probably be see in retrospect as significant for the future of capitalism and the collapse of the Berlin Wall was for the future of socialism. The two front runners. the IMF finally announced that a US$6.FALL 2001 85 Argentina’s interim government. From the discredited and demoralized Radial Party came Ricardo López Murphy with an openly reactionary agenda to deal with the severity of the crisis. As an outsider but growing in popularity there was Elisa Carrió who focused on the corruption of the ‘mafiosos state’ and most politicians. Quite simply Argentina was not the same country that began the move towards democracy in 1983 amidst widespread optimism that a ‘European’ style political economy could be constructed. Adolfo Sáa (one of the interim presidents in December 2001) and. There was little sign within the IMF. thus reviving the progressive national-popular Peronist tradition of Peronism. So. Kirchner put forward a neostructuralist strategy based on a more industrializing and developmentalist perspective. Weisbrot and Kar 2002). While there was a relative economic upturn with the unfreezing of bank deposits and the end of the corralito. Kirchner and Menem were due to go to a second round but Menem dramatically and decisively refused to go forward and faded from the political scene.

2002. make it unlikely that Brazil’s new government will be able to meet its commitments to reactivate the economy and deal with the country’s massive levels of socioeconomic inequality. and in many ways progressive.poptel. The elections in Argentina in 2003 were of course followed closely in neighboring Brazil where President Inacio “Lula” da Silva was completing his first 100 days in office with a strengthened economy and record approval rates. Buenos Aires: Planeta. Caparrós. government (especially in its independent foreign policy at a critical world juncture).” www. Bibliography Abbott. 2002 “Argentina Shows the Reality of Globalisation. What was missing was even a minimal vision equivalent to Lula’s hope that at the end of his mandate every Brazilian would have a meal a day. “Argentina: A Rescue Plan That Works. “Lula” has managed to calm the “markets” that were deemed jittery in the lead-up to the elections in 2002. including a demand for a strong budget surplus. 2002.. Bielsa et al.86 INTERNATIONAL JOURNAL OF POLITICAL ECONOMY tional politics in Argentina. Qué País. Dornbusch. Menem’s and later de la Rúa’s economic czar in Argentina. L. www. given the unsustainable dynamic of the foreign debt and high interest rates. ed. 11. Cavallo warns. 16–21.htm. “Las asambleas populares.org/0402becerra. and R. Canitrot. from experience. While this is undoubtedly a competent. et al.” Desarollo Económico 31. 2002.org.. D. El susurro de la resurección de un pueblo. There were no alternative models nor past ones to call on. has warned that “Lula will end up like de la Rúa” (Nudler 2003). Caballero. “Programas de ajuste y estrategias políticas: Las experiences recientes de la Argentina y Bolivia. R. A. While facing considerable criticism from the left within his own Workers’ Party. “Argentina: An Alternative Proposal to Overcome the Crisis.uk/scgn/articles/0201/page5. pp. However.” Calloni.. Political realism had become a rather deep pessimism despite the relative economic upturn and political restabilization.” In Qué Son las Asambleas Populares. had already agreed on a record loan of US$30 million in 2002. fearful of the international repercussions of debt default in Brazil following the one in Argentina. the IMF conditions.monthlyreview. Buenos Aires: Peña Lillo. its freedom of action is seriously constrained. Informe Urgente Sobre la Argentina Que Viene. that political capital can be exhausted in a vain attempt at continuous fiscal adjustment. S..htm.” Monthly Review 53. The IMF. . None other than Domingo Cavallo. Becerra. 1991. But quite what sort of country was being (re) built was not quite clear. M. no. 2002. ed. R.

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and Circulation is provided in accordance with the requirements contained in 39 USC 3685. 2002a. Touraine. 2002 “La experiencia de la crisis. managed.com.ar) Sindicato Mercosul (www. NY 10504–1715. A Poverty Report for Argentina. The Editor is Paul Mattick and Managing Editor is Patricia Kolb. Sharpe. 0891–1916) appears quarterly and the annual subscription price is $785.net. 235. 400.” The Economist (February 2).ft. The Publisher is M.com) Financial Times (www. “Survey: Capitalism and Its Troubles. Management.E. “Su problema es que no sepusieron a trabajar.ar.” (January 21).sindicatomercosul. the average paid circulation (by mail subscription) was 223. 12.br) The following Statement of Ownership. C.” El sitio de Punto de Vista. www. Teran. A. Sharpe.” Paper presented at Latin American Studies Association conference. http://pagina12. –––––.clarin. total distribution. at the same address.com. Inc. DC. Sharpe. total free distribution. O. 80 Business Park Drive. Armonk. the average number of copies distributed. M.. Westchester County. Inc.pagina12. Poor People in a Rich Country.com/home/uk) Guardian (www. Geneva: World Bank. Filed by Vincent Fuentes. The Economist. and published by M. Newspapers Clarín (www. 247. 235. Corresponding figures for the issue published nearest to the filing date: total number of copies printed. “Between Democracy and Neoliberalism: Conceptualising the State in Argentina. which is located at 80 Business Park Drive. During the preceding twelve months the average number of copies printed for each issue was 400.bazaramericano.E. NY. Senior Vice President. 2001.E. Washington.news. It is owned.88 INTERNATIONAL JOURNAL OF POLITICAL ECONOMY Tedesco.net. World Bank.guardian. Poverty Reduction and Economic Management Programme. total paid circulation (by mail subscription). .co. Armonk. 2002.” The Economist (May 18). 2002.00. 12.feedback. International Journal of Political Economy (Publication no. the average free distribution. “Is It at Risk? Globalisation. 10504.uk) Página 12 (www.

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