Académique Documents
Professionnel Documents
Culture Documents
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.
RONALDO MUNCK
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 global-
ization 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
Stability
Crisis
When the crisis finally erupted towards the end of 2001 and the historic
default and devaluation occurred, this was an event long in the making.
Since mid-2000, the world economy had moved into a generally reces-
sive phase. After 1998, the Argentine economy was in recession. Capital
fled the country as investors withdrew $1 billion per day by early De-
cember 2001. Default on foreign loans had also been inevitable for some
time. Trying to meet IMF conditions for further loans during this period
only deepened the recession. So, when Finance Minister Cavallo insti-
tuted the corralito (corral) in November 2001, severely curtailing ac-
cess to savings, the social revolt that ensued was entirely predictable.
Since 1983, nine IMF stabilization programs had come and gone. In
addition, the economic collapse at the end of 2001 represented a closing
of the political cycle that had started with the democratic elections of
1983. The political economy of democracy in Argentina was now at
stake.
As people lined up outside cash points or inside banks, desperately
trying to withdraw their savings, the social depth of the crisis became
clear. The corralito was, effectively, a state-imposed freeze on bank ac-
counts, and the devaluation that would inevitably follow represented an
unloading onto the population of the failure of an economic model. Presi-
dent Eduardo Duhalde, the Peronist caretaker president who took office
in January 2002, was at first adamant that the people would not bail out
the foreign banks. Eventually, the financial sector was able to lobby
strongly and as the gap between the peso and the dollar opened up, it
became clear that ordinary citizens would probably lose three-quarters
of their savings. 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. The working class and un-
employed protestors now had a new ally in the struggle against
neoliberalism. This popular revolt thought of itself as apolitical: “We
are not Peronists, nor Radicals, nor socialists. We are just the people
who for the first time have organized themselves and know their own
FALL 2001 77
strength,” as one resident put it or, as another said, “We want a fair
government of the people.”
While the people protested and organized, the main story was the rise
of the dollar against the peso after the end of convertibility. The dollar,
once “freed,” rapidly went up to 1.70 pesos, and by 2002 the dollar was
being valued at 3.5 pesos and more. 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, up 62 percent from the same period in 2000 (Página 12, February
18, 2002). That is to say, the big foreign banks were probably fore-
warned of the restrictions to be imposed by the corralito and were able
to remit much of their funds abroad. Then, 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. Central to this speculative maneuver were the oil companies
( one time state monopoly YPF now owned by Repsol, and the subsid-
iaries of Amoco, Occidental, Exxon and Shell) and the grain merchants
(Dreyfus, Bunge, Cargill etc.), along with the big steel companies (Siderca
and Siderar). The notorious U.S. company Enron also played a role
through its role in the gas sector.
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. 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. Among the “new poor” emerg-
ing in 2002 were many households previously classified as middle class.
Unemployment soon rose to 25 percent with a further 20 percent (at
least) classified as underemployed. Clearly, this sharpening of inequal-
ity and exclusion levels resulted from the new economic model launched
in 1990–91. A remarkable World Bank study, “Poor People in a Rich
Country. A Poverty Report for Argentina” found that: “While growth
resumed in the 1990s, the poor benefited relatively little in terms of
income gains from this resumption of growth. . . . In other words, as per
capita average income rose, the distribution of income worsened and
the incomes of the poorest 20 per cent actually declined” (World Bank
2001, 5). While the 10 percent richest group saw their income rise from
34 percent to 38 percent in the 1990s, the lowest 20 percent saw their
income decline 4.5 percent to only 3.8 percent.
78 INTERNATIONAL JOURNAL OF POLITICAL ECONOMY
One response to the collapse of the peso in early 2002 and the subse-
quent social dislocation was the emergence of a number of local curren-
cies, or parallel monetary systems. 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. Here, a community currency system emerged which
tended to promote an “alternativist” community consciousness among
residents in relation to the regime. Arguably, the barter economy and the
social currency scheme represented more than a means of survival, as
one Buenos Aires resident explained: “We are gathered in this place in
order to find a new way out, for survival, because of the political crisis
we have to seek each other out, to overcome the situation which our
families are facing. Necessity forces us to do things, to invent new situ-
ations” (cited in Pearson 2003, 224). Beyond the collapse of the great
neoliberal experiment in Argentina, there had to be something.
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, in the shape of neighborhood assemblies
(asambleas barriales). In the asambleas, people from a neighborhood
would gather in a form of direct democracy to organize mass buying,
distribute food, and discuss the way forward. They would usually meet
on a weekly basis, and gradually they became more organized. In the
course of 2002, many of the asambleas began to publish journals, many
set up Web sites, and others organized workshops and cultural activities.
The asambleas were heavily concentrated in Greater Buenos Aires; of
the 272 asambleas registered in May 2002, 112 were in Buenos Aires
city and 105 in Buenos Aires province, reflecting to some extent the
greater involvement of the middle classes in this form of organization.
In the poorer provinces, other forms of organization evolved, but they
were perhaps less structured and certainly less visible than the Buenos
Aires asambleas.
Are the asambleas the germs of an alternative power or weak defen-
sive organizations bound to fade away if the economic crisis is over-
come? Most observers agree that they are not Argentina’s soviets,
although various leftist groups are acting as though they might be. How-
ever, they are widely seen as marking the emergence of a new radical
generation. One of the most remarkable facets of the December 19–20
mobilization was the youth of the participants. The Duhalde govern-
ment began in 2002 with praise for the asambleas, but by the middle of
FALL 2001 79
the year, the interim president was heavily criticising them, and repres-
sion was even felt in many cases. Perhaps the best way to capture the
asambleas is in the words of Stella Calloni, for whom: “The asambleas
are memory, discussion, debate, transparency and future. . . . Each day
the imagination bears new fruit there and in the asambleas lies the best
revindication of the thousands and thousands of desaparecidos [disap-
peared] of another epoch” (Calloni 2002, 21).
In the front line, dealing with the consequences of the collapse of the
Argentine economy, was, inevitably, the IMF. What is perhaps most in-
teresting is the way the IMF strategy in relation to Argentina has been
questioned by once-stalwart supporters of that organization. As many
pointed out early in 2002, “Argentina’s crisis was obvious to everyone,
it appeared, except to the IMF” (Guardian, January 19, 2002, leader).
The call to radically reform the IMF spread rapidly and even affected
the incoming managing director of the IMF in 2002, Horst Köhler. For
Köhler, Argentina was clearly a test-bed for a new approach where lend-
ing decisions would be based on a more general and ultimately political
assessment than in the past. Köhler called for prevention rather than
cure after the crisis in Argentina. As a Brookings Institution briefing
paper put it, “Argentina poses a major problem for the IMF’s economic
advice because it exposes the fragility of the IMF’s economic advice,
and the absence of a technocratic solution to what is essentially . . . a
political problem” (Graham and Masson 2002, 2).
If international capitalism had to deal with a major credibility crisis,
capitalists in Argentina itself found themselves in deep difficulties in
2002. In the first two months of 2002, the textile sector lost over 50
percent of its sales and domestic demand plummeted (Página 12, March
19, 2002). There was a similar collapse of the auto industry and the
metal-mechanical sector. With internal demand collapsing, the credit
system decimated, and imported goods rising rapidly in price, there was
little expectation that the production sector would recover easily. Some
export sectors did benefit from devaluation of the peso, but this only
accentuated uneven development. As one analyst put it, “There is a need
to reconstruct the web of inter-industry relations and thus necessarily a
degree of predictability” (Página 12, March 19, 2002). With the chain
of payments broken by the crisis, there was very little of the predictabil-
ity and trust that capitalism needs if it is to be successfully embedded in
society. Therefore, no dynamic bourgeois leadership is likely to emerge
from this crisis.
80 INTERNATIONAL JOURNAL OF POLITICAL ECONOMY
Prospects
After any crisis come the recriminations. First in the firing line, predict-
ably, was the International Monetary Fund. The left blamed the policies
of the IMF for the crisis, as one would expect, given the long-running
critique of its austerity programs. This time, however, the critique was
much broader from within establishment circles. Thus, Paul Krugman
viewed Argentina’s crisis as a U.S. failure and referred angrily to how
“IMF officials—like medieval doctors who insisted on bleeding their
patients, and repeated the procedure when the bleeding made them
sicker—prescribed austerity and still more austerity, right to the end”
(Krugman 2002). Likewise, Jeffrey Sachs declared in despair that “The
IMF lacks a clear idea about what to do in Argentina,” and, instead of
addressing the real causes of the crisis, “recommends antiquated and
phony solutions” (Sachs 2002). From the perspective of capital’s or-
ganic intellectuals, the crisis in Argentina compromised the credibility
and viability of the IMF as key international capitalist institution.
The IMF itself has mounted a fairly weak and inconsistent defense of
its record in Argentina. Thus, Anne Krueger, first deputy managing di-
rector of the IMF, 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-
FALL 2001 81
to some extent fed into the causes of the current crisis. Ironically, there
is now a much more reflexive and self-critical tone in debates within
Argentina where it is dramatically recognized that things cannot con-
tinue as in the past.
Alain Touraine, critical international sociologist who is very know-
ledgeable about Argentina, was self-admittedly “brutal” in his analysis
of the 2001–2002 collapse of the country. For Touraine, the biggest prob-
lem today is “the decomposition of the political class and the decompo-
sition of the will to be” (Touraine 2002, 1). In fact, for Touraine, Argentina
was sheltered by the IMF from a full recognition of the decomposition
that was occurring. The “easy money” of the 1990s, the failure to pay
taxes, corruption rather than competitiveness, all led inexorably to a
collapse. The IMF loans only staved off the inevitable. For cultural critic
Beatriz Sarlo, the “sweet money” (plata dulce) of the 1990s was based
on a denial of the dictatorship’s horrors, a “moral defeat” that has had a
huge and lasting impact on the country’s psyche (Sarlo 2001). Alfonsín’s
symbolic trials of military leaders (later pardoned by Menem) were seen
as sufficient acts of contrition for the past, and the country then launched
itself into the moral vacuum of the neoliberal era.
If a solution from above is not visible on the horizon, what about a
solution from below—that is, from the growing, if amorphous, social
movement organizing against the impact of the crisis and those it holds
politically responsible for it? Through the 1990s, popular protest against
neoliberalism built up across the country. Particularly during the hyper-
inflationary periods of 1989 and 1990, there were widespread lootings
of supermarkets in working class areas. The typical ollas populares (com-
munal kitchens) reappeared in these areas, as the level of unemploy-
ment began to rise dramatically once again. There were genuine popular
uprisings in the poorer provinces, such as the Santiagazo (in Santiago
and Estero, a poor northern province), that showed, in retrospect, how
the national revolt of December 2001 would manifest itself. 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). These roadblocks,
and the piqueteros (picketers) who organized them, represented an em-
bryonic popular power that was contesting the legitimacy of the domi-
nant political economy. Until the end of the decade, though, they appeared
to be rather isolated.
With the deepening of the social and economic crisis at the end of
FALL 2001 83
2001, a very different social actor came onto the scene, namely the
country’s once sizeable and prosperous middle class. Small-scale sav-
ers had been hit hardest by the collapse of the currency and the freezing
of bank accounts (the famous corralito). “Pots and pans” demonstra-
tions became the protest mode of the Chilean right against Salvatore
Allende in 1972–73, but they had also been used across the southern
cone of Latin America during protests against the military dictatorships.
The middle class was now clearly at the center of the protest, but it also
willingly united with an already mobilized working class. This led to
the spontaneous insurrection against the government on December 19,
2001. Characteristically, 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), which represented a small
section of the working class, one that had been somewhat sheltered from
the worst effects of the recession to date.
As the crisis came to a head, 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, the struggle as one). Whether
this was or is an organic and durable class alliance is hard to tell, but it
did reinvent the “popular” in Argentina in a way not seen since the hey-
day of Peronism. What it led to in the months following the collapse of
the de la Rúa government at the end of 2001 was a remarkable, sponta-
neous emergence of neighborhood assemblies. The asambleas barriales
were often organized around practical issues like the distribution of food,
but they also represent an open public space for deliberation in a mo-
ment of crisis. They are recovering part of the traditional sense of com-
munity lost during the rampant individualism of Menem’s naked
neoliberalism. The asambleas are part of the restructuring of a civil so-
ciety faced with a weak and illegitimate, but still threatening, state, as
the people move from communication to action on a whole range of
fronts.
The most far-reaching demand to emerge in 2002 was a simple, prac-
tically nihilistic “Que se vayan todos” (they should all go), referring to
the country’s politicians. This is a radical slogan expressing a total re-
jection 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. It is also clearly a protest and not a proposal for change, a
negative rejectionist stance that is not designed to produce viable strat-
egies to overcome the crisis. It has, however, served well to capture the
84 INTERNATIONAL JOURNAL OF POLITICAL ECONOMY
It is possible that this article will be dated by the time it appears, but I
somehow doubt that the crisis in Argentina will find a rapid solution.
There is one radical solution being advocated by Rudi Dornbusch (with
Chilean economist R. Caballero) that is reminiscent of nineteenth-cen-
tury imperial customs receiverships, namely that, “Because Argentine
polity has become overburdened, it must temporarily surrender its sov-
ereignty on all financial issues” (Caballero and Dornbusch 2002, 2).
Given that the country is bankrupt and has a “dysfunctional society,”
Dornbusch is calmly advocating that “Argentina now must give up much
of its monetary, fiscal, regulatory and asset management sovereignty for
an extended period, say five years” (Caballero and Dornbusch 2002, 2).
That this suggestion was not immediately and universally seen as bi-
zarre gives some indication of the depth of collapse in Argentina. Ev-
erything has changed since December 2001: the political economy of
collapse is now a prime example. The future of neoliberal globalization
is at stake here as well as the social and economic well-being of the
people of Argentina.
Postscript
tional politics in Argentina. But quite what sort of country was being
(re) built was not quite clear. There were no alternative models nor past
ones to call on. Political realism had become a rather deep pessimism
despite the relative economic upturn and political restabilization. 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.
The elections in Argentina in 2003 were of course followed closely in
neighboring Brazil where President Inacio “Lula” da Silva was com-
pleting his first 100 days in office with a strengthened economy and
record approval rates. While facing considerable criticism from the left
within his own Workers’ Party, “Lula” has managed to calm the “mar-
kets” that were deemed jittery in the lead-up to the elections in 2002.
The IMF, fearful of the international repercussions of debt default in
Brazil following the one in Argentina, had already agreed on a record
loan of US$30 million in 2002. However, the IMF conditions, including
a demand for a strong budget surplus, 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. While this is undoubtedly a competent, and in many ways pro-
gressive, government (especially in its independent foreign policy at a
critical world juncture), its freedom of action is seriously constrained.
None other than Domingo Cavallo, Menem’s and later de la Rúa’s eco-
nomic czar in Argentina, has warned that “Lula will end up like de la Rúa”
(Nudler 2003), given the unsustainable dynamic of the foreign debt and
high interest rates. Cavallo warns, from experience, that political capital
can be exhausted in a vain attempt at continuous fiscal adjustment.
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Newspapers
Clarín (www.clarin.com)
Financial Times (www.news.ft.com/home/uk)
Guardian (www.guardian.co.uk)
Página 12 (www.pagina12.net.ar)
Sindicato Mercosul (www.sindicatomercosul.com.br)