This paper will attempt to identify why the crisis occurred when it did, but also to understand how the underlying shifts in the political economy of Argentina over more than two decades led to the possibility of such a crisis. Despite mainstream economists being in denial, the drive toward a neoliberal economic model, as advocated by both the Argentinian elite and the IMF, has had a clear class bias and thus led to a marked decline in the standard of living for the majority of Argentinians.
The particular type of neoliberalism, which Argentina pursued, promoted agro-industry and finance at the expense of manufacturing, and thus produced two waves of deindustrialization and therefore a greater vulnerability of the Argentinian economy to globalization in the s. This paper will first evaluate the period of the dictatorship from and the drive by the IMF and the military junta for the implementation of neoliberal policies. The latter led to the support for Menem and the eventual "Convertibility Plan", pegging the peso to the us dollar.
The paper then presents the overall impact of a quarter century of neoliberal policies on Argentinian workers. This is followed by a detailed look at the period preceding the outbreak of the crisis at the end of December The next to last section assesses the role of the Argentinian elite and the IMF over the last quarter century, and in particular the latter, given the track record of recent years with the string of financial crises worldwide, not just in Argentina.
Lastly, the paper summarizes the failed neoliberal experiment of the last quarter century and presents an overview of recent economic and political developments as Argentina emerged out of the depression of There were serious divisions within Peronism: the neo-fascist AAA on the right and the Montoneros guerilla movement on the left.
Some degree of class peace was achieved between the Peronist labor unions and the national bourgeoisie, but only temporarily. The IMF would not come through with a previously arranged tranche despite efforts and several trips by her economic team to Washington.
It is evident that at the height of the crisis period, the IMF should have helped to provide some stability and pushed Argentina to have new elections, as opposed to supporting a military coup. During the period between and , Argentina, as well as a number of other countries, pursued the economic policies known as import substitution industrialization ISI.
This approach is associated with policies designed to protect nascent industry through tariffs and other trade or investment regulations, and to promote diversification into both light and heavy manufacturing, as opposed to just exporting agricultural products. In fact, they had reached over two thirds of all exports in Kosacoff and Azpiazu, However, when the military junta came to power in March , the new government had a change of plans, and the importance of Argentinian industry would never be the same.
This was evident in the economic policies implemented by the junta with its new Economics Minister, Martinez de Hoz. These neoliberal policies reflected a shift toward a laisseiz-faire approach, and were strongly associated with economists from the University of Chicago, such as Milton Friedman and Robert Lucas. The junta intended to shift support away from manufacturing industry and towards agro-industry.
They argued that the rent from agriculture, primarily beef and grains, was no longer going to be used as a subsidy for industry, but rather for the development of other value-added agro-industry.
There are three key factors which explain this approach by the junta. One represented a shift toward agro-industry as opposed to industrial manufacturing. The junta was being more supportive of the landowning oligarchy as opposed to the manufacturing industry. Most notably was the memory of strikes in Rosario and Cordoba in the late s and early s, and especially the Cordobazo in The Cordobazo was a weeklong working class-led rebellion in the major city of Cordoba.
The junta was committed to eliminating the industrial park in Argentina because it was seen as facilitating labor unrest. The third factor is accommodating multinational capital, since transnational corporations TNCs would benefit if Argentina concentrated on producing primary products and agro-industry, thus leaving automobile, steel and heavy manufacturing to imports or to local production by the TNCs.
The economic and social policies pursued by the military government had a very negative impact on Argentinian industry, especially manufacturing. The result of the neoliberal policies of the junta began the first wave of deindustrialization in Argentina, which would not seem to be in the best interests of the Argentinian bourgeoisie.
However, that is based on the idea that the interests of the Argentinian bourgeoisie are strictly tied to the expansion of Argentinian industrial capital. The reality of Argentina is that many individuals of the Argentinian bourgeoisie have more and more of their investment portfolio in finance and agro-industry.
For example, Martinez de Hoz was a member of more than 10 directorates of agrobusiness and industry, and he put into place the plan which had been devised by major companies months before, in planning for the coup Sevares, One of the most important neoliberal policies that Martinez de Hoz implemented was the Financial Reform of Reforma Financiera de , which abolished control of interest rates and removed many financial regulations regarding credit and investment.
Patria financiera literally translated as financial fatherland represents the significant links between the grain giants and financial interests. This financial reform greatly facilitated the shift from industry to finance, promoted financial speculation, and created an atmosphere conducive to lax financial controls and capital flight.
During the mid to late s, the IMF and other international financial institutions were promoting countries to take on debt due to excess petrodollars on the world market. Although both Brazil and Mexico, like Argentina, saw their foreign debt jump up, increasing by 3. Though all three countries had crises in the early s, Brazil and Mexico had crises of growth and expansion, while Argentina had a crisis of shrinkage.
It is also important to note the shift that took place after with regards to the availability of foreign credit. In the graph above, this can be seen by the leveling off between and This interest rate "shock" was associated with the degree turn which the IMF took with respect to lending to Third World countries, and was clearly linked to the debt crisis which began with Mexico in In addition to the process of deindustrialization and the negative impact on manufacturing, the financial reform and other neoliberal economic policies of the dictatorship led to a much greater economic instability and three-digit inflation in At a more concrete level, Argentina was experiencing a fiscal crisis of the state, but from a long-term view, this crisis reflected the problems associated with a shift from ISI to a neoliberal accumulation strategy, an economy more dependent on finance and agro-industry than on the manufacturing base of the past.
In addition, the working class of Argentina anticipated a clear improvement economically, regaining some of the ground lost during the repressive military regime; however, the capitalist class and the patria financiera had no intention of relinquishing their gains of recent years. A major problem was the different expectations by competing social classes regarding the future of the economy.
After years of social exclusion, the working class was demanding an improvement of real wages, having experienced a major decline in their purchasing power, such that it was below that of the decade of the s.
Ironically, much of this was due to the neoliberal model, which many capitalists had advocated. The battle of economic policy with the IMF continued through the year, but given the balance of payments crisis, the new government was forced to shift from brinkmanship to conciliation and sign a traditional orthodox adjustment plan with the IMF in September The resulting IMF austerity plan proscribed real wage increases, eliminated price controls and forced Argentina to liberalize trade restrictions.
Nevertheless, over the next couple of years, inflation continued to be a growing problem and eventually escalated into the crisis of hyperinflation of Although Argentina often did not follow these plans to the letter, the net result was more a set of orthodox policies than heterodox ones, as the government originally advocated. This resulted in a continuity of neoliberal economic policies as pursued by the dictatorship and Menem.
However, through the course of the s, due to pressure from both the local elites, as well as the IMF, they came to pursue "anti-inflationary" policies that prevented increases in real wages, not just nominal wages.
Dinerstein presents an analysis of how economic policies even under a democratic government can constitute a weapon of repression against the working classes of a country. She argues that. The transition to democracy was only the political expression of the other transition: from economic instability to the legitimisation of the terrorism of money in the form of stability in the s.
The struggle for and against the legitimization of the terrorism of money over the political took the form of hyperinflation. Hyperinflation became the means of both the valorization of capital and the repression of labour. Dinerstein, a: The result was a period of chaos, with looting, police repression, and fear of a social rebellion. The climate of economic instability and particularly hyperinflation produced an atmosphere that allowed Menem to gain the support to further and deepen the neoliberal process of economic transformation begun in Graham-Yooll, Andrew.
London: Eland, His book records the terrifying experience of daily life in Argentina before he was forced to flee, as well as the difficulty of reporting in a country with repressive censorship.
The book also traces his return to Buenos Aires in , and the difficulty of coming to terms with haunting memories. Partnoy, Alicia. San Francisco, Calif. The book reveals the way in which Partnoy held on to humanity and created solidarity with the other captives. It also implicitly defines torture as acts committed by those who physically impose pain on others.
Partnoy focuses on the small details of her experience that kept her from losing her sanity, such as repeating her name to herself each time she wakes up, being thankful that her large nose allows her to peek below the blindfold she is forced to wear at all times, and making twenty-five little bread balls so that she can play with them.
In this way, Partnoy creates an extremely powerful narrative that exposes the atrocities of one of the most far reaching acts of genocide. They found a powerful ally in Mary-Claire King, an American geneticist who began working with them in The technique has led to controversies, as when it was used on the reluctant adoptees of a powerful media magnate who were forced to give over their blood for testing.
But it has also led to the creation of a national genetic database. To date, the organization has confirmed the identities of stolen children, largely using the database and DNA identification techniques.
The Dirty War has been over since the military junta gave up power and agreed to democratic elections in Since then, nearly former members of the junta have been tried and convicted of crimes, many involving human rights abuses. But if you see something that doesn't look right, click here to contact us!
Twice a week we compile our most fascinating features and deliver them straight to you. For over a year prior to the March coup, U. Crime and terrorism disrupted daily life in Argentina, and due to Cold War foreign policy priorities, U. Leftist guerrilla groups operating in both the cities and the countryside—the Montoneros and ERP—seemed to be gaining followers and control over certain geographic areas, successfully financed their operations through kidnapping and extortion, sometimes targeted U.
At the same time, right-wing death squads with links to the Peron government and the security forces, notably the Argentine Anti-Communist Alliance Triple A , increasingly targeted labor leaders and left-wing Peronist political leaders as well as leftist guerrillas. Throughout and into early , U. The coup came on March 24, when an Argentine military junta removed Peron from power.
The U. In July, the U. Ambassador to Argentina Robert C.
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