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Julia Soul: Between Confrontation and Silent Discipline: Working-Class Dilemmas under Javier Milei’s Far-Right Government in Argentina

With the triumph of Javier Milei in Argentina’s November 2023 national election, the country has followed the contemporary global trend of electing far-right governments. Through his frequent television appearances as an “economic expert”, Milei successfully mobilized voters against the country’s dominant political elites, which he denigrated as “la casta” (“the caste”). Ordinary Argentines, in this narrative, were being cheated and disserved by an elite class who benefited from a wasteful and inefficient state. Milei’s rhetoric, which solicited votes from workers and the poor, invoked a utopian vision of society driven by free competition between agents whose performance in markets is the only cause of their success or failure. In this vision, the capitalist market naturally rewards the best, while the “State” and other “collectivist” forms of what Milei deems to be “autocracy” corrupt the market and nourish what Milei labels “parasites”.

Through a virulent and aggressive discourse, the newly elected government and its followers have recoded social cleavages to divide and cast in opposition different sections of labor. Those employed by the State and by cooperatives, whose incomes come from social assistance, are deemed “lazy,” “useless,” and “unproductive” and are accused of taking advantage of “good people” who are oppressed by excessive taxes and regulations. Thus, cooperative “Popular Economy” organizations (known as piqueteros) and public sector workers (including teachers, scientists, and medical doctors) are both deemed responsible for State waste. Social leaders and union representatives, in particular, have been designated as part of “the caste” and accused of defending their personal interests over those of workers. Arguing in this way, libertarians, like Milei, have denied that individual interests can be advanced by collective organization.

This Manichean vision of evil collectivists and angelic individualists underpins Milei’s idea of crisis. In arguing that the nation was in a “terminal crisis” because of the political and economic order of “la casta”, Milei has promised respite for suffering Argentines by radically reshaping the relationship between the “economy”, “society”, and “politics”. In presenting himself as an outsider, he capitalized on the widespread social discontent, frustrations, and disappointments of ordinary Argentines. Milei sought consent for radical liberalization schemes, and his November 2023 electoral victory appears to have validated his agenda. Judging by the electoral results, consent to these policies seems firmly rooted in working people. According to survey data, Milei gained the vote of over half of informal and formal workers and almost 64% of the self-employed. However, only 45 days after Milei took office, 1.5 million people mobilized across the country in a general strike against the liberalisation program, preceded and followed by a series of local and sectoral protests and strikes.

Image 1: Screenshot from Indymedia report on the 24 January 2024 protests against Milei’s attack on the Argentinian populace; featuring a placard portraying Milei defecating on the nation. (source: https://periodicoelroble.wordpress.com/2024/01/26/24-de-enero-huelga-general-en-argentina/; accessed Feb 22, 2024)

This scenario raises some questions: Do voting patterns in the election indicate that Argentine workers have taken a profound “right turn”? Alternatively, is Milei’s victory only a contingent rejection of the prior government at a critical conjuncture? Are post-election protests an expression of fear by “the caste” (as the government claims)? Or have workers broken with the assumption that radical marketization is the answer to their individual problems? And what lessons can we draw about working-class dynamics from prior moments of popular consent to liberalisation? In this post, I attempt to answer these questions by revisiting an earlier moment in Argentina’s history, when President Carlos Menem took office and implemented sweeping liberalisation measures.

Memories of Yesterdays: The 90s reloaded?

In many respects, the current sociopolitical scenario resembles the early 1990s, when Menem began his first term in office amid a hyperinflation crisis and launched an aggressive program of economic liberalisation. It was a time of “globalization” when the pro-market “Washington Consensus” was globally ascendent. The neoliberal road that Argentina took was part of a global attempt to stabilize a shaky geopolitical order. The program was broadly supported by Argentina’s main corporations and the entire capitalist class, which launched a broad offensive against labor rights and working conditions, backed by a narrative of “cultural change”, which mirrored official discourses about “modernization” and “being integrated into the world”. During two terms in office, Menem’s government reshaped the conditions of reproduction of Argentina’s working people, deepening their monetization and privatization, while reconfiguring the country’s labor markets.

There are significant commonalities in working people’s experience between the moment of contested “restructuring” of global capitalism in the 1980s-1990s and now. Revisiting that earlier moment can therefore help us better understand popular consent to Milei’s pro-market, right-wing policies in the present. Below, I outline these commonalities, drawing on data from fieldwork conducted in 2000-2002, 2005-2007, 2010-2012 and 2014-2018 with steelworkers (Soul 2015), their communities and their unions, as well as data from ongoing fieldwork with workers and communities linked to the agro-industrial sector.

The politics of Argentina’s neoliberal (Menem) and libertarian (Milei) governments are distinguished by their sweeping attempts to eliminate all state-backed and collectively shaped conditions that support the reproduction of working people. Upon taking power in 1989, Menem sent to Congress two bills that deregulated state education, health, and security institutions, and enabled labor flexibilization. Similarly, President Milei issued a “Decree of Necessity and Urgency” (DNU) and has sent to Congress an ambitious bill entitled “Bases and Starting Points for the Freedom of Argentines”. Together, these measures aim to enact a massive social-political reset by removing all “collectivist” and “regulationist” mechanisms, while de-regulating the economy, privatizing social provisions, and dismantling institutions that mediate market competition in areas like health services, education, sports, and cultural production. Both the Menem and Milei governments promoted far-reaching labor reforms aimed at facilitating dismissals, extending probation periods, making working hours more flexible, and expanding informal labor relations. They also intended to restrict the right to strike and union activity in the workplace, to impose individual bargaining over collective bargaining, and to cut unions’ financial resources.

In the “private” sphere, enterprises and companies during both periods entered a dynamic characterised by workplace closures, employee lay-offs and mass dismissals, new managerial strategies and technological innovations, and prominent claims about “cultural change” by managers and businessmen. Both then and now, corporate spokespersons asserted a need for radical changes. Recently, Paolo Rocca, the CEO of Techint Group, one of Argentina’s major industrial corporations, expressed support for the government’s plans for “resetting” Argentina’s economic structure, and asked other businessmen to commitment to “sacrifices” that would be needed to enhance national performance in a competitive world market. In workplaces, employers are already enforcing the bill’s provisions, overruling those stated in existing collective agreements, and thereby undermining the working conditions of new employees.

These measures, implemented amid a post-pandemic employer offensive and rising inflation, have been justified on the basis of three ideological claims, which I have also identified among steelworkers and will examine below. However, the outcome has not been unambiguous consent to these measures by ordinary workers. This is because the threats posed to their material conditions of reproduction have also motivated workers, even individuals who voted for Milei, to struggles against these measures.

Changes are “necessary and unavoidable.”

When I discussed the Menem years with anyone employed in the state-owned steel plant where I conducted my research in the 2000s and 2010s or in the surrounding community, it was surprising how persuaded they were about the necessity of restructuring. A common refrain was: “We knew it was this or nothing. Things could not continue as they were. There were no other solutions.”

In 1989, when Menem took office, annual inflation was over 3000%. In 1990, it was over 2000%. As a result, it was impossible to schedule industrial production. But it was also impossible to budget for family expenses, like food, schooling, holidays, or the purchase of household appliances. A Thatcherist belief that “there is no alternative,” which working families immersed in chaotic hyperinflation adopted, paved the way for consent to Menem’s reforms. Workers knew the offensive was coming. But they felt it was pointless to resist.

After COVID-19 restrictions ended in 2021, Argentina’s economic situation worsened. The government’s financial difficulties and escalating inflation became topics of everyday discussions. In 2023, when Milei won the election, formal employment and incomes for ordinary workers were decreasing. Most new jobs created in recent years have been informal, self-employed, or based on individual, unprotected contracts (monotributistas). The increased precariousness of ordinary Argentines has fed into a sense of suspension, instability, and “dislocation” (Polanyi 1947; Harvey and Krohn-Hansen 2018).

As in the 1990s, the popular assumption is that regressive restructuring is necessary to restore stable conditions of reproduction. Milei has turned this assumption into a government program, while endeavouring to transform the silent resignation of ordinary Argentines into active consent.

Sacrifice is necessary to recalibrate the effort-reward equation.

Both, Milei’s and Menem’s governments asked the population to “sacrifice” for the nation in order to remedy a terminal national crisis. When he took office, Milei asserted that it would take two years of sacrifice to abandon decadence and to embark on the road to prosperity. On Christmas Day 2023, the Minister of Economy posted on X a message to the population, thanking them for their sacrifice and support for austerity measures. By “sacrifice” he meant enduring the negative impact of a 118% devaluation of the Peso Argentino, the deregulation of prices for basic goods, and the cutting of food assistance to community organizations.

The notion and logic of sacrifice is at the core of many workers’ effort-reward equation: the renunciation of immediate pleasure, wellbeing, and fun will allow for future material, social and affective achievements. The concrete contents of “sacrifice” change from generation to generation, and between different labor situations. However, “rewards” remains quite the same: better living conditions, understood as owning a house, getting a car, and raising children without privations. The relationship between efforts and rewards mediated by “sacrifice” is intimately connected to a valuation logic: getting valuable things requires effort. Therefore, working people’s well-being is always related to “sacrifice”, and sacrifice is linked to hard work.

As increasing aspects of workers’ daily reproduction are monetized and privatized, neoliberal hegemony has restructured the effort-reward equation. This reinforces individualistic assessments of the effort-reward equation and devalues remaining collective practices and institutions involved in daily reproduction. Over the last years, the neoliberal effort-reward equation has been cracking due to increasing inflation, decreasing power purchase, and worsening working conditions. Therefore, many workers have experienced a sense of their own effort being under-valued, while that of “lazy and useless” people is overvalued (Kalb 2022).

Milei promised to restore the effort-reward equation after a period of “sacrifice” marked by austerity policies. Far from rejecting Milei’s appeal as unfair and manipulative, working people in Argentina see it as a call for collective sacrifice necessary to restore the real value of things and of effort. The assumption that public workers or popular economy cooperatives “steal” a share of the social product that they do not contribute to producing underpins the moral vindication of personal deprivation: “I pay what I can afford; nobody gives me anything.” The perceived need for a temporary sacrifice thus informs social acceptance of Milei’s agenda.

Order must be restored to market relations.

Menem and Milei both advocated radical social marketization as the path to a social order that promised individual fulfilment, well-being, and happiness. To this end, private property is key. The logical chain of private property – market relations – freedom was established by classic liberalism. Neoliberal and libertarian discourses have intensified this claim and its relevance for establishing social order. Consequently, Milei’s government has attempted to remove regulations on prices and on public service fees that have been crucial to working people’s reproduction. In claiming that these regulations create a social fiction that devalues peoples’ efforts, Milei argues that their removal is necessary to the restore the “natural” market order of things—that is, to restore the “true” value of individual effort.

Managerial policies have similarly promoted individualization as a way to erode collective practices that support the power of unions in workplaces. An assumption shared by workers in the 1990s and now is that their effort is devalued because of conditions that trade unions have created to protect lazy people. For example, subcontracted workers see the devaluation of their own effort as correlated to the “privileges” enjoyed by permanent workers. Consequently, in times of crisis, competition among workers (for a job, promotion, or bonus) intensifies.

The power of this logic lies in its general character: the “people” are abstract market actors who can become rich through their independent effort. The centrality given to individual initiative partly counteracts the daily sense of powerlessness and failure that working people feel when trying to achieve their goals and obtain “rewards”. The promise of success through individual effort is thus attractive not just for informal precarious workers, but also for formal workers suffering deteriorating working conditions, unfair taxes, and the devaluation of their wages.

The persuasiveness of this logic is based on the material aspects of social reproduction under capitalism. Currency devaluation and inflation not only de-structure everyday lives but are powerful mechanisms for increasing the appropriation of surplus value from working people to corporations, managers, and business owners. By presenting “free market” relations as objective and natural, neoliberals before and libertarians today can present the full deployment of “the market” as a condition for resetting conditions of reproduction, and for re-situating individuals in their appropriate social location. This entails a fabulous recoding of relations of exploitation, dispossession, and violence, and the de-legitimization of collective solutions to common problems.

Silent consent and popular unrest

In sum, I argue that recent dislocations in Argentina underpin consent for pro-market policies. On the threshold of neoliberal and libertarian governments, Argentinian working people experienced dislocations rooted in the “impersonal” and “abstract” mechanisms of inflation, stagnation, and devaluation. Hyperinflation, conceived as “monetary violence” (Bonnet 2008), paved the way for neoliberal consent, while steady stagnation, deepened by the pandemic, eroded the “market” capacities of ordinary people. Since capitalist market relations are the background of social reproduction, the crisis created serious obstacles to ordinary people’s everyday reproduction. That is why the “normalisation” of market relations – even if it entails “sacrifice” – appears to be a viable route to a fair equation of effort and reward. The individualisation that this logic promotes is understood by people as increasing their control over their lives. This logic seems to be especially persuasive for young informal workers. However, in promoting marketization, competition, and individualization as the driving forces of working people’s reproduction, the government must destroy the dense network of cooperative and collective links that underlie working people’s everyday lives.

The general strike on 24 January 2024 was the highest point of post-election popular mobilization. Since then, a series of collective actions have raised a broad array of demands over, for example, public education, social assistance, protection for community organizations, and public transport tariffs. These demands go beyond labor conditions and wage claims. They highlight working people’s desire to preserve a non-commodified sphere of reproduction, and for core democratic rights. For the time being, resistance to Milei’s policies lacks a more expansive political agenda to contest “market relations” as the core of everyday reproduction. Nonetheless, Milei cannot easily discredit the social unrest as just “the caste” defending its “privileges”. It is too soon to assume that consent for market liberalization has been eroded and that those who voted for Milei are now mostly in the streets. But at the very least, the general strike has shown that complete marketization is a contested project. Hopefully, in the days ahead, in the struggle over capitalist restructuring, working people will manage to forge their own “resetting”—one that goes beyond the market as “the natural order of things”.

Julia Soul is a researcher at CEIL – CONICET Argentina. Her current research is about crisis and transformation of the working class in Argentina and Latin America since neoliberalism. She has conducted fieldwork with steelworkers in Argentina, and México and in international unions for more than 15 years, and with agribusiness workers since 2022. She has been a member of Taller de Estudios Laborales since 2002.

References

Alberto, Bonnet (2008) La hegemonía menemista. El neoconservadurismo en la Argentina. Editorial Prometeo. CABA

Kalb, Don (2023) “Double devaluations: Class, value and the rise of the right in the Global North.” Journal of Agrarian Change, 23(1), 204–219. https://doi.org/10.1111/joac.12484

Soul, Julia (2015) SOMISEROS. Configuración y devenir de un colectivo obrero. Editorial Prohistoria. Rosario

Cite as: Soul, Julia. 2024. “Between Confrontation and Silent Discipline: Working-Class Dilemmas under Javier Milei’s Far-Right Government in Argentina” Focaalblog 8 March. https://www.focaalblog.com/2024/03/08/julia-soul-between-confrontation-and-silent-discipline-working-class-dilemmas-under-javier-mileis-far-right-government-in-argentina/

Blog, Right-wing Populism

Menara Guizardi: Notes on the Political Capitalization of Anguish and Hope in Argentina (and the American Southern-Cone)

In recent work, several authors in anthropology have analyzed how the extreme right is being configured and acquiring a considerable pull on the mainstream (see: Kalb, 2023a; Semán & Wilkis, 2023, https://www.focaalblog.com/2023/05/11/pablo-seman-and-ariel-wilkis-rebellion-of-the-bastards-the-rise-of-the-extreme-right-in-argentina/). I want to take their reflections further and focus on the uncomfortable question about the role of “traditional” political forces in paving the way for the emergence of this neofascism. I do this from a particular vantage point in Argentina and the Southern-Cone of the Americas.

This is not about denying the existence of geopolitical interests and (transnational) capital that provide funding and platforms for the extreme right. However, the situational configuration of their advance in each country cannot be explained without considering the failure of established political representations. Not only have they failed to generate new consensual programmatic agreements, but they are also disconnected – almost pathologically – from the political needs and sensitivities of people in life contexts of overwhelming precariousness and insecurity. Engaged in palace disputes for a little place in the sun, political coalitions of several South American countries have been speaking their own language, increasingly alien to the people on the street who are trying to get by with putting food on the table, for a start.

In 2018, anthropologist Silvina Merenson and I were carrying out fieldwork in two southern Brazilian states during the elections that brought Jair Bolsonaro to the presidency. Merenson dialogued with higher-income families while I interviewed female domestic workers, shopkeepers, smugglers, and trans-border farmers. To our surprise, these interviews with such different groups turned out to have common political denominators. Time and again, they expressed that living conditions had worsened, that expectations for the future were being destroyed, and that more and more sacrifices were demanded of them in aspects of life considered fundamental. They also expressed a loss of confidence in the political representatives of the Workers’ Party (PT) and the center-right parties due to the corruption scandals insistently reported by the media. Their narratives conveyed an ingrained weariness with representations from across the political spectrum’s inability to provide solutions to social anxieties.

In conversations with academic colleagues and militants of the then-PT candidate, we made clear our concern that the speeches on the good deeds of the PT governments were a mistake. People had reached a point of saturation: they needed to believe that something radically different was coming. This wish took on an almost messianic character in Brazil: the evangelical churches supported the extreme-right candidate and were key in constructing a collective “faith” in his smoothness and capabilities. In short, we had ethnographically identified a political “crossing point” for the sacrifice of people’s future horizons and their basic minimum needs. Once this limit is crossed, the weariness becomes multi-dimensional (social, psychological, physical), and society can no longer be asked to give more of itself. Exhaustion, anger, tiredness, faith, and hope: this is the combo of collective sensitivities provoked by crossing this limit, and the extreme right in Brazil knew how to capitalize on it by putting up a new messiah.

This July, I conducted fieldwork in cities in northern, central, and southern Chile, interviewing 50 female social science researchers in the country’s universities. These conversations revealed a state of fear on the part of the female colleagues on two fronts. First, regarding the stalking done by the extreme right and its slow and planned victory in the fight for Gramsci’s common sense, and second, the fact that the government was facilitating this process with “errors” (forced or not) that they found “inexplicable”.

In 2021, Gabriel Boric represented a left-wing coalition Apruebo Dignidad [Approve Dignity] made up of non-traditional political parties, organized by the student movements. His discourse was based on the criticism of the coalitions (center-left and right-wing) that had led the democratic transition since 1990 while ensuring the persistence of Pinochet’s neoliberalism. Boric won the presidential ballot in December 2021 (55.9% of the votes), beating the extreme-right candidate José Antonio Kast (44.1%). However, from the start of his government (in March 2022), strategic errors have caused widespread surprise. The first was the trip by the then Minister of Interior and Security, Izkia Siches, to mediate the Mapuche conflict in southern Chile with no prior agreements with Indigenous leaders or security planning. A female sociologist with extensive experience advising presidential administrations recounted her astonishment on seeing on television the minister being driven out of the area under gunfire: “They have a misplaced voluntarist vision. They assumed that they could discuss a territorial conflict that dates back 300 years, talk to a family whose son had been shot by state security forces, and say ‘you can trust me, I am a new type of State’”.

The director of a Chilean alternative media organization reported that he lost his best professionals in writing, audiovisual editing, and formulation of web content in the days of the convention for the proposed constitution in 2021. A network of organized businesspeople offered these professionals huge salaries to produce multimedia materials defaming the constituent process. This campaign was effective in the context of the post-pandemic crisis, inflation, rising food prices, and increased violence from drug-trafficking networks. With communicative astuteness, they managed to associate all of this with the new government and the new constitution (which was rejected in a plebiscite in September 2022).

Since then, the government has been involved in absurd corruption scandals. Allegations of several cases of fraud involved the Ministry of Social Development, headed by Giorgio Jackson, a preeminent figure of the government’s alliance. One of them concerns fraudulent agreements with NGOs led by political representatives of Jackson’s party in northern Chile. Another is about small funds for social works being used to purchase branded lingerie for a female political representative from the south of the country. On July 19, a man claiming to be the minister called a security guard of the Ministry of Social Development and ordered him to gather up 50 computers. The guard handed over 23 computers to three hooded subjects, who later returned and took away a safe. With all major media outlets aligned with the right or the extreme right, these events caused a media tsunami. Officially, the government sought to characterize this as part of a destabilization coup orchestrated by the right. This did not even convince the allied rank and file: Jackson resigned on August 11. Our female interviewees are now taking a Kast victory in the next presidential elections (in 2025) for granted. A female political scientist and militant in Boric’s front, now disillusioned, concluded: “The only way Kast will not win is if he doesn’t run”.

For a quick summary of the Chilean democratic mess: Three decades after the democratic transition, reigning political coalitions had sustained and deepened the neo-liberal model, blatantly failing to fulfill egalitarian promises of social ascent through personal effort. The social explosion of 2019 signified the outburst of dissatisfaction with these unfulfilled promises. Popular dissatisfaction was aggravated by the pandemic crisis and was capitalized on by young leaders who proposed a “new way of doing politics” and granting “dignity” to the people. This promise provided a representational outlet for popular anguish, but once in power, the new governing class was caught up by its promises and vulnerable for renewed accusations of corruption. The level of dissatisfaction with democracy grew, and people, desperate to get ahead after years of crushing and cyclical crises, turned to quick solutions that were easy to execute. Faced with adversity, complexity, and disappointment, people prefer to rely on the sense of predictability of the conservative social hierarchy that the far-right offers (see Kalb, 2023a). Talking with taxi drivers, concierges, domestic workers, and small shopkeepers in the Chilean cities I passed through during this spring, I heard again the same phrases that we recorded with Merenson in Brazil in 2018.

I returned to Argentina days before the August 13 “Simultaneous and Mandatory Open and Primary elections” (PASO). The country I returned to was even more distressed than when I had left. Argentina is going through dizzying political times, plunged into a swirl of agonistic conflicts. Institutional, economic, and political instability is linked to what they call here (borrowing from Gramsci) the “hegemonic standoff”. Between 2008 and 2022, the country was deeply divided between political forces with opposing visions. It was common to note a “grieta” [rift] between the picture of the country represented by these two blocs. This expression is not the result of poetic license. Its linguistic use has been consolidated in Argentina: it deals with the bellicose configuration of two sides in a latent state of permanent aggression. Since 2022, this latency has given way to episodes of de facto mutual violence.  

Until 2022, we had the Peronist coalition on one side of the grieta, based in a myriad of heterogeneous parties and forces, ranging from the left to the right, and whose pacts and configurations vary in different cities and provinces. In recent years, this coalition has been called Frente para la Victoria [Front for Victory], Frente de Todos [Front for Everyone], and the current Unión por la Patria [Union for the Homeland]. The most important political force within the front was, until 2022, Cristina Kirchner and the faction that bears the surname of her late husband (Néstor Kirchner), namely Kirchnerismo. Despite the heterogeneity, a transcendent Peronist identity allows transversal alliances in certain historical moments. Defining this identity is not easy, but it is generally associated with a redistributive perspective on the State, an anti-neoliberal discourse (although policies do not always reflect this), the continued expansion of social rights, development policies, financial sovereignty, and the idea that the popular sectors (=lower-income) are the identity core of the country.

On the other side of the “grieta”, again until 2022, there was Juntos por el Cambio [Together for Change], the coalition with a neoliberal perspective, also composed of heterogeneous national and provincial forces. The best known are the Propuesta Republicana [Republican Proposal] (PRO) of former President Mauricio Macri and the Unión Cívica Radical [Radical Civil Union]. Macri led this coalition and won the 2015 presidential elections initiating a government that brutally deteriorated living conditions. In his term, the Gross Domestic Product (GDP) receded on average 4.3% annually; the annual inflation rate went from 30.5% to 60%. The dollar increased its value by 548% (sic!). In December 2019, 40.8% of people were living below the poverty line. Seeking his reelection, Macri signed the most important bailout in the history of Argentina and the International Monetary Fund (IMF) for the sum of 57 billion dollars (45 of which were delivered to the country). The IMF and the government agreed a policy of austerity which drastically worsened living conditions. The loan resources were basically siphoned off in unregulated financial speculation schemes.

In this context, the Peronist coalition closed ranks around a single candidate for the 2019 elections. Cristina Kirchner, with her unique political-electoral capital, appointed Alberto Fernández for this role. Peronism’s victory was a moment of hope, of relief: the promise that better days were coming, that the sacrifice and suffering of the four years of Macrismo would loosen their grip. On December 10, 2019, millions of people flocked to the Casa Rosada (the governmental palace in Buenos Aires) to celebrate what felt like the “end of being crushed” (Fig. 01 and 02).

Fig. 01. Massive popular celebration of the victory of Alberto Fernández in the surroundings of the Casa Rosada onDecember 10, 2019. Buenos Aires, Argentina. Photographer: Menara Guizardi.
Fig. 02. People on the walls around the crowded Plaza de Mayo. December 10, 2019. Buenos Aires, Argentina. Photographer: Menara Guizardi.

Three months after Fernández assumed power, the pandemic worsened an already extreme situation in Argentina. The government had to negotiate debt repayment with the IMF at the same time as it had to make social investments to face the pandemic. A key presidential document was written: the “present and caring State” of Peronism was going to be opposed to the “neoliberal State”. Initially, national support was massive (the President had 80% approval ratings when he announced the lockdown). However, the amount of social investment the country could afford turned out to be disappointing and insufficient. The Argentinian lockdown was extremely long. The State was present with measures to prevent layoffs by subsidizing private sector salaries. The health system was strengthened. Argentina performed better than her neighbors. However, all of this was done with a lack of hard financing, with ‘printing money’ like everyone else (‘quantitative easing’; See Kalb 2023b), and at the cost of higher private indebtedness. The agreement with the IMF was finally signed off when the pandemic was waning.

Between 2019 and 2021, Merenson and I carried out fieldwork in working-class neighborhoods in the north of the Buenos Aires conurbation and in the south of the city proper. Both areas have a political history of affiliation with Peronism. In one of them, a former enclave of railway workers, they told us that the joy felt at the return of Peronism in 2019 had turned to sadness (Merenson et al., 2022). There was disappointment, anger, uneasiness, lack of hope, and lack of belief in political leadership. Our interviews registered two clear political sensitivities. First, the expression of fear of a repetition of the 2001 Corralito disaster: The restriction of cash withdrawal from banks to USD 250 per week imposed by the government of Fernando de la Rúa on December 1, 2001 in Argentina. The measure triggered the so-called 2001 crisis that led to the resignation of the president, and a situation of macroeconomic destruction and serious sociopolitical instability. Second, the transition of disappointment and weariness into an incipient rejection of all existing political representations. The narratives showed the resurgence of the desire “for all [politicians] to go away”, a key slogan of the 2001 demonstrations. These sentiments heightened when photos of a birthday party at the Fernández’s residence were disseminated while he was asking the nation on TV to sustain the lockdown effort. Perhaps this was the final straw that broke the camel’s back. As we also observed in Brazil and Chile, social sacrifice can only be sustained under a symmetrical exchange pact: parties agree on ways to give, receive, and reciprocate. It is not possible to ask people for so much sacrifice without reciprocity.

While all this was happening, internal conflicts in the Peronist front surfaced and escalated. The vice-president, Cristina Kirchner, and the president, Alberto Fernández, began a two-year-long battle of mutual attacks. Public opinion began to sense that there was no basic consensus on how to govern. The campaign to take office had not included serious negotiations on the directions, perspectives, and visions to be adopted. The third most important figure of the coalition, Sergio Massa (at that time in charge of the Congress of Representatives), began negotiating the conflict between the President and the Vice President, in exchange for being the Peronist front candidate in 2023.  

While Cristina and Alberto were publicly airing their mutual grievances, the ministries and state agencies showed increasing difficulties to move forward in any direction. This was, partly because of a lack of consensus and partly because ministerial departments were distributed according to what has been called a “vertical lottery”. Each sector was handed over to different political forces in the coalition, which occupied (almost literally) different floors of each ministry building. There were bitter struggles for the appropriation of resources for different areas and competition for control of the other sectors. What one sector did, the other sector hindered. The government insisted with its publicity on the constant presence of a Caring State, but the daily experience of citizens was that anything that depended on the state was increasingly difficult to solve. It did not take long for the people to express this sentiment: “A present State, yes, but not this one”.

Signing the deal with the IMF (January 2022) caused dissatisfaction within Kirchnerismo and months of attack against the measure (by several representatives of this group) led to the resignation of the Minister of Economy, Martín Guzmán (a man of Alberto’s trust) in July of the same year. Immediately after, an exchange-rate race ensued, with the devaluation of the peso and an inflationary shock. The dollar’s rise provokes a multi-scale economic disaster in a country with no reserves or capacity to take out international credit and which depends on so many imported inputs, paid in dollars, to sustain the productive chains.

After comings and goings of ministers, Sergio Massa took over as Minister of Economy in July 2022, concentrating powers from several ministries and, in practice, displacing Alberto as de facto president. In his inaugurating statement, he promised what he could not deliver: to stabilize the macroeconomy, slow down the exchange rate slide, halt inflation, and accumulate reserves. Between July 2022 and June 2023, inflation went from 71% to 120% annually; the Central Bank’s net reserves went from 5 billion positive to 2 billion in the negative; and official poverty reached 43% of the population. The year-on-year Gross Domestic Product (GDP) growth projections went from 5.2% to minus 3%.

To ensure imports of minimum inputs, the government supports the value of the peso against the dollar with an official exchange rate that is substantially higher than the informal one. Due to the lack of reserves, there are increasing restrictions to access these “official dollars” (as they are called). When Massa took office, the “official dollar” was worth $285 pesos; currently it is worth $365.5. But the dollar circulating in the informal markets (called “blue”) trades at $720 pesos, twice the official value. Faced with this exchange rate gap, the government had to implement other “official” dollar rates to guarantee the flow of different economic activities. Thus, we have the “card dollar” ($639.2 pesos), “tourist dollar” ($721), “MEP dollar” ($657,48), “CCL dollar” ($746,53), and a “wholesale dollar” ($349,98). This monetary situation creates an almost unmanageable complexity for the basic daily activities of all sectors. Recently the Central Bank’s net reserves reached their historical negative record of minus 5 billion USD. A credit from China was agreed to avoid a sharp devaluation of the peso until August’s vote. The loan has been used to curb speculation on the peso, selling cheaper dollars to speculators and trying to bring the various exchange rates down. These constant financial maneuvers and their technocratic explanations do not elicit much trust among the wider population in Sergio Massa, who has overseen them.  

The right-wing coalition, Juntos por el Cambio, did no better. Confident that the government’s disaster would ensure a wide-margin victory, the presidential candidates began their own debacle for the position of consensus candidate. Mauricio Macri announced that he would not be running: a reasonable decision given his high rejection rates among voters (Fig.03).

Fig. 03. In the celebration of the victory of Alberto Fernández, a man holds the poster: “Damn Macri. Your surname will be cursed and disowned for all eternity. The people will judge you”. December 10, 2019. Buenos Aires, Argentina. Photographer: Menara Guizardi.

However, Macri started an erratic negotiation with possible successors; Patricia Bullrich, representative of the extreme right, and Horacio Rodríguez Larreta, current head of government of the city of Buenos Aires and representative of a “moderate” right. The fights, cross-accusations, and scandals, were widely reported in the press and led to voter exhaustion for this bloc too.  

In the last three months, social suffering has reached new heights. The country is on the verge of a new hyperinflationary shock: it is a train at high speed with no brakes and on a collision course. Pre-electoral polls and focus groups began to point out (especially since June) that Javier Milei (see Focaalblog, https://www.focaalblog.com/2023/05/11/pablo-seman-and-ariel-wilkis-rebellion-of-the-bastards-the-rise-of-the-extreme-right-in-argentina/), an extreme-right candidate running outside the two coalitions that flank the “grieta”, was going to win the most votes in the preliminaries (with obligatory public participation). It is not just an “angry” vote: its thrust is multi-dimensional in terms of political sensitivities. As in Brazil and Chile, people want to believe something different can be possible. There is faith, hope, and the desire to believe in the irrational or improbable. Because everything probable and expected turns out to be too painful, unbearable, and unfair. 

On Sunday, August 13, the announcement of the results revealed that La Libertad Avanza [Liberty Advances], Milei’s party, won the most votes (30.1% of the votes), followed by Juntos por el Cambio (28.25%) and Unión por la Patria (27.15%). Milei won by a large margin in districts such as Córdoba, Santa Fe, and Mendoza and a comfortable margin in 16 provinces (Tucumán, Chubut, Jujuy, La Pampa, La Rioja, Misiones, Neuquén, Río Negro, Salta, San Juan, San Luis, Santa Cruz, and Tierra del Fuego). Recent polls for the first round put him in the lead in October’s elections. A victory for Milei would mean a much more serious social and institutional destruction of Argentina than the one Bolsonaro imposed on Brazil. Argentina starts from a much weaker position and Milei’s ultra-neoliberal proposals are much more virulent and aggressive than those of Bolsonaro.

After the PASO results on Monday August 14 Argentina plunged into another exchange rate slide. The government signed an update of the IMF agreement and further devalued the currency. In the working-class neighborhoods of southern Buenos Aires, businesses kept their doors shut until noon. It was impossible to foresee how prices would evolve. At the door of a closed supermarket, a retired woman, unable to buy bread, said in tears, “they all need to go away…”

Menara Guizardi is Adjunct Researcher at the National Council for Scientific and Technical Research of Argentina (CONICET) and an External Researcher at the University of Tarapacá, Chile.

References

Kalb, D. (2023a). Double devaluations: Class, value and the rise of the right in the Global North. Journal of Agrarian Change, 23(1), 204-219.

Kalb, D. (2023b). Two theories of money: on the historical anthropology of the state-finance nexus. Focaal – Journal of Global and Historical Anthropology, no. 95: 92-112

Merenson, S., Sánchez, L., & Guizardi, G. (2022). Imágenes paganas: Recurrencias, emergencias y autoidentificaciones de clase en un barrio ferroviario del conurbano bonaerense (2019-2021). Etnografías Contemporáneas, 8(15).

Semán, P. & Wilkis, A. (May 11, 2023). Rebellion of the bastards: the rise of the extreme right in Argentina. Focaal Blog. Retrieved from: https://www.focaalblog.com/2023/05/11/pablo-seman-and-ariel-wilkis-rebellion-of-the-bastards-the-rise-of-the-extreme-right-in-argentina/ (Accessed: August 20, 2023).

Cite as: Guizardi, Menara 2023 “Notes on the Political Capitalization of Anguish and Hope in Argentina (and the American Southern-Cone)” Focaalblog 24 August. https://www.focaalblog.com/2023/08/24/menara-guizardi-notes-on-the-political-capitalization-of-anguish-and-hope-in-argentina-and-the-american-southern-cone

Blog, Right-wing Populism

Pablo Semán and Ariel Wilkis: Rebellion of the bastards: the rise of the extreme right in Argentina

The growth of extreme right-wing forces in the Argentine political process expresses the combination of global trends and specific trends associated with local political history. It also expresses the need to understand the embeddedness of these political preferences in the social experiences shaped by the generalized decline of the middle and popular classes, sedimented in a long cycle of forty years and currently intensified by the derivations of the pandemic and the leaps in annual inflation in 2017 and 2021 (in which it passed, respectively, from 25% to 50% per annum and from 50% to 100% per annum).


It is impossible to deny the correspondence with those right wing processes taking place in different world regions and countries (see Engelen, 2023; Henkel et al., 2019; Kalb, 2020; Pasieka, 2018). The longer-term trend that explains these triumphs is the complex and contradictory reconfiguration of economics and politics since the fall of the Berlin Wall, if we need an iconic date. The global dynamics of capitalism no longer just erode national democracy but have started to generate alternative proposals to re-establish social order on a national scale, underwritten by the cultural fragmentation and economic discontent produced by economic (neo)liberalization.

Image 1: A 2002 demonstration against the financial “Corralito” in La Plata, Argentina, photo by Barcex

The expressions of the extreme right represent a form of illiberalism claiming political institutions at the limits of democracy that would overcome the fragmentation of national units suffering from the international mobility of capital. The accumulation of unresolved problems is changing the social structure and the political process: the rising vulnerability of working classes leads to the abandonment of traditional parties. The result is radicalizing tendencies within the elites as well as the replacement of incumbent political elites with new ‘populist’ ones.

Capitalism and democracy have become divorced from each other. Now, the crisis of the national states and their political systems has finally become politically visible, in a deep and organic sense.

What happens in Argentina or Brazil, in this context, involves patterns that are different from  the dynamics of the northern hemisphere.  In the region there are no transnational institutional aggregations such as the European Union. In Europe, the EU is both a target and a moderator of the illiberal turns in Poland, Italy or Hungary. The supranational powers, without being totally determinant, tend to moderate the character and pace of political and economic reforms. A coup d’état like those that occurred in Honduras (2009), Paraguay (2012) Bolivia (2019), or Brazil (2023) is highly improbable in Europe today.

This is due not only to a difference in the political regimes, but also to a socio-economic process that has been producing especially in South America a deep discontent among a very volatile electorate. In countries such as Brazil and Argentina, the transitions to democracy in the 1980s were accompanied by hyperinflation and external debt crises, followed by monetarist stabilization and exclusionary ‘modernization policies’ in the 1990s, followed by new compensatory policies in the 2000s. The overall result of these processes was transformation of social structures marked by the growth of inequality, the growth of economically fragile popular classes, and the polarization of the middle classes. The long cycle of social transformations in these countries has coexisted with short cycles such as the 2000s where an emerging “new” middle class experienced a social mobility. As a result, in countries such as Argentina and Brazil the states have less capacity to respond to growing popular demands, which themselves tend to be more urgent than in the global North.

Analysts have noted a rightward lurch in the political options available to Argentine voters in recent years. In the analysis, however, insufficient attention is given to the impact of the popular experience of high inflation: the constant tightening of belts, growing household debt, an inability to budget, a political tunnel vision focused exclusively on inflation, with great impact on the expectations for the future, which are  increasingly negative and desperate.

The pandemic triggered inflation in countries around the world that had experienced price stability for decades. In 2022, the war in Ukraine drove inflation even higher. The case of Argentina was exception: the country had been suffering from spiraling inflation for over a decade. After a relative drop in inflation in 2020, in which annual inflation reached 36.1%, Argentina suffered another year of high inflation (50.9%) in 2021 (INDEC, 2021). In 2022, it reached 94.8% for the year, leaving Argentina fifth on the ranking of countries with the highest inflation worldwide behind Venezuela (305.7%), Zimbabwe (244%), Lebanon (142%), and Sudan (102%) (Infobae, 2023). Local factors exacerbated the situation: a shortage of dollars (a historical problem magnified by the pandemic), the pressure from the IMF to address the fiscal deficit eliminating subsidies to public services and a monetary culture shaped by inflationary inertia contributed as well.

This inflationary dynamic intensifies the erosion of politics by multiplying the mismatch between social demands and state capacities. At this point it is necessary to underline the socio-political element that is part of the inflationary dynamics. The trade unions in the first Peronism (1946-1956), and the trade unions and social organizations in the later Peronism that was part of the “progressive wave” of the 2000s, have been the political agency of social and economic protections that guaranteed welfare levels for the working class. The flip side of these arrangements has been a lack of foreign exchange earnings (external restriction is the constant of the Argentine economy since the middle of the last century) to sustain them. Nor did the unions and social organizations have the necessary political strength to transform the performance of the economy. The scarcity of foreign exchange has turned the dollar price over time into the anchor of all prices in the economy without it being a dollarized economy in the strict sense of the term (Luzzi and Wilkis, 2023). The chronic devaluations of the Argentine peso – and the concomitant inflation – are the short term escape from the structural contradiction between strong working class forces on the one hand and an economic organization that hollows out their effective power at the same time.  

At the time of writing these notes and six months before the presidential elections, the libertarian candidate Javier Milei has a vote intention of around 20-25%. He is the main promoter of the dollarization of the Argentine economy. It is in this context that the rise of candidate Milei can be understood.  His position implies the rejection of “everything that is there” and its replacement by a utopian free competition that rewards the best without the parasitic intervention of the state. This program of denunciation channels towards the Right the multiple contemporary dissatisfactions. On the one hand, it is not clear at this stage of the electoral process that Milei will either triumph or just survive as a candidate. On the other hand, it is clear that he has extended the possibilities of political articulation so that other candidates, who perhaps have more potential, can follow his path. It reflects the popular exhaustion with inflation, relegating to a second place demands that used to occupy a central place in the public agenda, such as unemployment or insecurity. Dollarization continues and completes the exclusionary and polarizing dynamics of the neoliberal reforms of the 1990s. The promise of a stable currency is going to have a very high social cost.

The neo-liberal demands that after the 2001 crisis in Argentina had been left almost without an audience, are returning with a vengeance: dollarization is inevitably accompanied by demands for the privatization of institutions such as education and health care. They celebrate individual initiative and denounce the crisis of public services as of their own making. The mood of society towards the performance of the state – increasingly questioned before the pandemic, much more so by the end of it, and even more intensely after – is very favorable to the right wing libertarian privatizers: “si no me vas ayudar por lo menos no me molestes” (“if you are not going to help me, at least don’t bother me”). The promise of dollarization suits these sentiments. The U.S. dollar is a currency devoid of the arbitrariness of the Argentine state (and the governmental elite that commands it), a state that is perceived as guilty of disorganizing and worsening daily life through its inability to provide stability to the national peso. In a society in which people did the impossible to get through the long months of lockdown while weathering inflation, the pandemic left people with the distinct feeling that the state was coming up dramatically short. The controversial dynamics of an unknown virus affected the state and rendered it increasingly illegitimate. The pandemic, by damaging the civic bond of trust with the state, strengthened the anarcho-libertarian thesis.

Image 2: Javier Milei in 2014 at the World Economic Forum on Latina America in Panama City, photo by World Economic Forum

The pandemic and spiraling inflation are in Argentina intertwined processes in which sacrifice became a common currency. Argentine society emerged from the pandemic with an ideology that was family-oriented, anti-state, and anti-politics. More people had been convinced that government spending was the primary source of inflation, demanding in some cases extreme state cutbacks. The rise of right-leaning or extreme right options, the declining interest in politics, and a growing dissatisfaction with the political class all predate the pandemic and the high inflation, but the latter have profoundly accelerated existing trends.

The Right has renewed and sharpened its own repertoire of actions. During the last 12 years, a political consensus that established certain prohibitions began to be explicitly challenged: notes of racism, of vindication of the last military dictatorship, of macho vindictiveness in the face of gender agendas that many had believed to be in retreat are reborn with force in the public space. However, the growth of the Right is not only due to the ideological radicalism of some of its promoters, who have accumulated significant political capital to establish themselves as an autonomous force in relation to the mainstream right wing that governed in the period 2015-2019. That growth is also predicated on the weariness of the voters of the traditional parties (Left and Right).

Despite its cultural predominance, Peronism today in government has been losing since at least 2008 the battle for the interpretation of economic life in growing sectors of the population. A social majority, which includes part of the popular classes, identifies with its antipode in a dialectic in which the libertarian Right takes on a specific local meaning.

A great part of this electorate cannot be described as furious, pragmatic or reactive to all political positions equally. They want to improve economically, they believe in their own efforts, they demand order and market. And they do so less because of agreement with right-wing intellectuals and publicists than because of a long experience in which those right-wing ideas seem to become preferable.  There is an authoritarian liberalism which, following Richard Hoggart (1957), must be seen as a contemporary development of the subaltern classes. These, contrary to what the political elites expect, especially those of the left, embrace the Right. This is also a  reaction against the deference that the progressive forces have tried to impose on it, presuming moral superiority and capacity for leadership beyond the prosaic issues of everyday life.  Thus, the process in which inclusive consensus is dissolved clearly contains a popular reaction against the Left progressivism of the traditional Peronist leadership.

Politics in Argentina has a specific intensity that makes it more than a simple reflection of what is happening in the world. In the 1970s, few countries in the world took state terrorism as far as Argentina. In the 1980s, the trial of the defeated dictators became an exemplary case for human rights. In the 1990s, the intensity of the neoliberal experiment in the country was exceptional when compared to Brazil and Mexico in terms of the scope of privatizations and economic and financial openness. It is worth asking whether this right-wing emergence will not have the same exceptional intensity as its precedents. The antecedents are already in place.

Pablo Semán  is Professor at Universidad Nacional de San Martín and principal researcher at CONICET.

Ariel Wilkis is Professor and Dean at Escuela IDAES, Universidad de San Martín and  researcher at CONICET.

References

Engelen, Ewald 2023. “Another ‘populist’ shake-up in the Netherlands: the BBB revolt” Focaalblog 24 April. https://www.focaalblog.com/2023/04/24/ewald-engelen-another-populist-shake-up-in-the-netherlands-the-bbb-revolt/

Henkel, Heiko, Sindre Bangstad, and Bjørn Enge Bertelsen. 2019. “The politics of affect: Anthropological perspectives on the rise of far-right and right-wing populism in the West.” FocaalBlog, 14 March. http://www.focaalblog.com/2019/03/14/heiko-henkel-and-sindre-bangstad-the-politics-of-affect-anthropological-perspectives-on-the-rise-of-far-right-and-right-wing-populism-in-the-west/

Hoggart, Richard (1957) The uses of literacy: aspects of working-class life with special references to publications and entertainments. London: Chatto and Windus

INDEC (2021) “Índice Precio al Consumidor”, Vol. 6, No 1, december 2021

Infobae (2023) “La Argentina termino cuarta inflación del mundo”, 23 January 2023. https://www.infobae.com/economia/2023/01/13/la-argentina-termino-con-la-cuarta-inflacion-mas-alta-del-mundo-en-2022-detras-de-venezuela-zimbabue-y-libano/

Luzzi, Mariana and Wilkis, Ariel (2023) Dollar: How the U.S. Dollar Became a Popular Currency in Argentina (1930-2019). Alburqueque: New Mexico University Press.

Kalb, Don. 2020. “Covid, Crisis, and the Coming Contestations.” FocaalBlog, 1 June. http://www.focaalblog.com/2020/06/01/don-kalb-covid-crisis-and-the-coming-contestations/

Pasieka, Agnieszka. 2018. “Who is afraid of fascists? The Polish independence march and the rise of the (far?) right.” FocaalBlog, 12 December. www.focaalblog.com/2018/12/12/who-is-afraid-of-fascists-the-polish-independence-march-and-the-rise-of-the-far-right.

Cite as: Semán, Pablo and Wilkis, Ariel 2023. “Rebellion of the bastards: the rise of the extreme right in Argentina” Focaalblog May 11. https://www.focaalblog.com/2023/05/11/pablo-seman-and-ariel-wilkis-rebellion-of-the-bastards-the-rise-of-the-extreme-right-in-argentina

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Lesley Gill: Can the Left Revive the ‘Pink Tide’ amid a Global Pandemic?

As Covid-19 has washed over Latin America like a tsunami and the pillars of shaky economies have shuddered under lockdowns, the priority of profits over public welfare stands out in starker relief, restating the need for effective public policies and demanding government intervention more than ever. Such an unprecedented moment poses strong challenges for the left and Latin America’s social movements. Remobilizing in the wake of Covid and building lasting, independent social movement power are key tasks ahead.

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Charles Dolph: The second time as farce? The IMF returns to Argentina

Argentina’s Mauricio Macri administration unexpectedly announced recently that it had opened negotiations with the International Monetary Fund (IMF) for a Stand-By Arrangement amid intense monetary and financial instability—with the Argentine peso losing roughly 25 percent of its value in a two-week period, the Central Bank of Argentina was forced to sell $10 billion in reserves to contain the volatility. As details began to emerge late last week about the 36-month, $50 billion agreement with the IMF, an institution widely blamed for the country’s devastating crisis and resulting sovereign debt default in 2001, Argentina faces growing financial and political uncertainty.

Pedro Biscay, who served on the Central Bank of Argentina’s board of directors from 2014 to 2017 and currently directs the Centro de Integración Financiera (CINFIN), or Center for Financial Integration, in Buenos Aires,[1] joined me to help make some sense of this situation and discuss the panorama of politics and financial capitalism, social movements, and the state, in Argentina and more broadly.

Macri_y_Lagarde_en_Olivos_02

Figure 1: IMF Managing Director Christine Lagarde talks with Argentine President Mauricio Macri at the presidential residence. The Macri administration recently agreed to a $50 billion bailout package with the IMF (photograph by Casa Rosada via Wikimedia Commons, CC BY 2.5 AR).

Charles Dolph: Since Mauricio Macri assumed the presidency of Argentina in December 2015, his administration and Cambiemos (“Let’s Change”) coalition have shown a clear vocation for indebtedness. With a February 2016 agreement with vulture funds litigating the value of defaulted bonds in New York courts paving the way, the administration issued more public debt than any other “emerging market” from January 2016 to September 2017. According to the Economic Commission for Latin America and the Caribbean (ECLAC), Argentina accounted for 28 percent of all public debt issued region-wide in 2017. But turning to the IMF was not previously part of the Macri administration’s agenda. Nor was such an agreement foreseen by the IMF, as Christine Lagarde denied that the administration had sought any deal with the institution when Argentina hosted the meeting of the G20 Economy Ministers last March. So, why now? What provoked this sudden monetary and financial instability?

Pedro Biscay: Here in Argentina, an attempt was made to weave together an explanation based on the idea that we were going through an adverse international context due to the rise in the interest rate on US Treasury bonds, which for 24 April, the day that the run on the exchange rate peaked, jumped to over 3 percent. This element was combined—always according to the explanations of the specialists in the “city” [the Buenos Aires financial district]—with the fact that a tax on financial income went into effect, which the government itself had promoted a few months earlier, with the purpose of taxing income from Central Bank notes [known as LEBACs] held by foreign investors. So, the official explanation combines these two aspects, to say that we are facing a scenario of transitory financial turbulence.

But to cling to this idea is to miss the forest for the trees. The underlying problem is extremely serious and has to do with the lack of dollars, which the Argentine economy needs to finance capital outflows and interest payments on the external debt, which, as you say, this government quickly took to record levels. If you look at Argentina’s balance of payments, specifically Central Bank liabilities, you will see that at the end of 2017, there had accumulated debts on the order of $6–7 billion. To put this in perspective, this is where nonresident “carry traders” were arbitraging interest rate differentials on notes issued by the Argentine Central Bank since the beginning of the Macri government. You have a segment of investors extremely sensitive to changes in the international interest rate, to changes in Argentina’s country risk assessment, and to two other key elements, which are the current account deficit and the fiscal deficit.

So, let’s break it down in steps. That segment of investors unloaded their positions in Central Bank securities, converted the profit into dollars, and moved it to other financial markets in the first days of the run on the exchange rate. Pure, hot money. It entered, speculated, and left. That financial mass represents the heart of the investments that the Cambiemos government attracted—all short term, none of it destined for production and development. Once that segment of investors pulled out, the run on the exchange rate first mobilized local holders of Central Bank notes (I would clarify here that this means the government gradually transformed an instrument of sterilization designed to mitigate the effects of speculative financial flows into another instrument of financial speculation) and then to small savers in the country with dollar deposits, who went to the banks to withdraw part of their money in foreign currency. This last aspect did not deepen to the extent of turning the run on exchange rate into a serious withdrawal of deposits from the system. Luckily, it was contained.

CD: Can you put this in the wider context of how the administration’s policies have brought them to this point, and perhaps shed some light on why it has turned, rather desperately, to the IMF? The IMF is clearly rejected by a wide swath of Argentines who place much of the blame on it for the profound political and economic crisis that erupted in late 2001. It would seem that the administration is well aware of this and sought to avoid such a measure. Bloomberg reported that when Wall Street investors rebuffed Minister of Finance Luis Caputo on a further bond issue in March, suggesting that he instead seek a “Flexible Credit Line” with the IMF, he responded that this would not be politically viable.

PB: All this is just the external face of a very serious process of commercial, financial, and fiscal imbalance that the government generated via the indiscriminate application of financial liberalization policies. At the commercial level, this has meant opening the country to imports combined with the elimination of legally established deadlines to repatriate profits on the export commodities that generate foreign currency. This combination caused an accelerated growth of the import sector and a fall in the foreign currency generated by exports, mainly by the agricultural sector that stores part of its wealth outside the country. Thus, after a year and a half of the Macri government, the Argentine economy begins to show record trade deficits, with negative balances for the first five months of the year already above $3.5 billion.

On the financial side, there was also a wave of acute imbalances, mainly due to the deregulation of the capital account, which allowed the free entry of speculative funds into the country and the uncontrolled exit of dollars. This sum is already close to $40 billion, not counting the departures for tourism. Parallel to this, the financing needs of the country require an investment on the order of $30 billion which, if it doesn’t come from the export sector, must be sought by the minister of finance in debt markets. That was the turning point, when in a meeting with Wall Street investors they said “kaput” to Caputo, based on the worrying levels of external debt. Foreign investors said “enough” to funding capital flight from Argentina, because the risk and financial fragility begins to be worrisome. When the international market closed the faucet on dollars, it unleashed the crisis, and the government was forced to go to the IMF in search of some salvage operation.

This point was reached because the government, and in particular the Central Bank, eliminated all the exchange controls that had been designed to monitor capital flows and at the same time sponsored the flight of foreign currency under the pretense of giving greater confidence to investors. What arrived was not the promised wave of investments but the external restriction of a lack of dollars. At the same time, the liberalization of the interest rate led to a greater appreciation of the exchange rate, supported by short-term funds that speculated against nothing less than the central bank itself, leaving little room for maneuver to intervene countercyclically. Notice that, paradoxically, unlike what all other central banks do, they used the Central Bank’s balance sheet to provoke a scenario of financial vulnerability, to the point that the IMF now asks them to clean up this situation.

It’s in this context that they go to the IMF, that they renegotiate the swap of reserves with China, so criticized during our management of the Central Bank [during the previous administration of Cristina Fernández de Kirchner], as well as return to operating in currency futures, which was foreseeable despite the fact that they contrived to prosecute the use of this policy tool,[2] costing no less than $10 billion of reserves sacrificed to contain a run on the exchange rate.

CD: So, what is the nature of the agreement with the IMF, and what exactly is its purpose?

PB: This $50 billion agreement with the IMF will do nothing but deepen the austerity that the government is already imposing: reduce salaries, eliminate acquired social rights, privatize retirements, privatize the Banco de la Nación—which is the main asset of the Argentine financial system—cut funds to the provinces, reform the Organic Charter of the Central Bank, that is, a classic program of shrinking the state and reducing the fiscal deficit, combined with measures that deepen the dollarization of the system and reduce the monetary and financial sovereignty of the country. It will be necessary to see which of these measures can be applied and which ones remain pending, because Argentina’s experience is hostile to this type of agreement, and, on the other hand, the experience of countries such as Greece and Jordan reflect that these recipes do not solve any of the financial problems of dependent economies. Rather they facilitate a smooth exit for big economic players, while leaving the economies in a state of terminal recession.

CD: What are some of the potential political implications of all this? At least in electoral terms, Macri and Cambiemos appeared insulated from the backlash that their debt and austerity measures have sparked, further consolidating themselves with important victories in last year’s midterm elections. But how are Argentines reacting to the negotiations thus far? What does all this potentially mean for macrismo as a governing project?

PB: In principle, the population is showing dissatisfaction with the course that the economy has been taking since the government took office. Of course, you have sectors that support its measures, but these are a minority linked to the external sector, and to energy and finance. The rest of the population, above all small and medium enterprises and a large part of the middle class, are dissatisfied with the direction of the economy. The benchmark interest rate set at 40 percent is disrupting the payment chain in productive sectors; companies are facing bankruptcy scenarios that cause greater risks to the financial system. Workers’ salaries gradually erode, causing losses in the purchasing power of the population. The agreement with the IMF is, in this sense, a sign of failure of the government’s economic policies, because it’s not lost on anyone that they come to the Fund in search of a financial bailout, which in the memory of Argentines quickly brings to mind the crisis of 2001. The same day the government announced that it would go to the IMF, people began to wonder about the risk of a financial corralito.[3] Our people are very sensitive to the recipes of the IMF and external debt crises, which we have lived in the past. All this represents a huge political cost for the government, the impact of which is measured in the loss of a positive image of the president. The recent veto to a law that established limits to the increase in utilities prices is also part of the process of the population’s loss of confidence in the figure of the president.

The next scenario of acute conflict will be the approval of the national budget, because the variables established there will undermine the magnitude of the austerity and the conditions established by the IMF in terms of the exchange rate, investment, social spending, and public cuts. In the face of this process, the government sets up scenarios that are increasingly less credible, for example, when the finance minister comes out and says that we are going to charge less but without a loss of purchasing power, or that inflation at the end of the year will be around 20 percent when we know that it already has a floor of 27 percent for the end of the year.

All this implies a process of growing disbelief in the government, which could not solve the problem of inflation either. Since they took office, they have not been able to lower the inherited levels, which were falling sharply as a result of measures to stimulate the development of the domestic market and domestic production. The Central Bank launched an inflation-targeting plan, which was of little use in this sense, because by leaving the exchange rate free, it generated feedback processes by putting upward pressure on prices whenever the dollar appreciated against the national currency. Now the president of the Central Bank, one of the main figures responsible for the financial crisis, comes out and says that for 2018 there is no inflation target, after having modified it at the end of last year. They are not there to govern: they are filibusters.

CD: It was recently reported that the IMF asked the administration to increase taxes on agricultural exports as part of the agreement. This is rather ironic, as exactly 10 years ago the Kirchner administration and powerful landholding interests were locked in a paralyzing standoff over a proposed reform to the system of export taxes on agricultural goods, which were the key source of public revenue during Kirchnerism. That conflict altered the tone and subsequent trajectory of politics in Argentina through the end of CFK’s second term seven years later. Meanwhile, the Macri administration quickly reduced or eliminated these export taxes altogether, thereby slashing state revenues and adding to the question of how any of the debt it was issuing would ever be repaid. What do we know about this aspect of the agreement? Could the Macri administration actually pull such an about-face and raise export taxes without completely antagonizing its political base among Argentina’s powerful landholding interests? And if not through such means, what kind of further austerity measures could the administration impose on society to meet the conditionalities imposed by the IMF, especially that of reducing the fiscal deficit to 1.3 percent of the GDP for 2019?

PB: The government kept the negotiations secret, even violating constitutional rules that require that the National Congress take direct intervention in the handling of foreign debt matters. Within the Congress, there is a Bicameral Commission that works to monitor the debt and has asked the executive for information on these issues, but has not achieved positive results. Basically, the government exercises political power in the form of the presidential veto, oriented toward financial markets with which it openly dialogues and grants much of their demands. But it governs with its back to the Congress and the Argentine people. Therefore, little is known about the specifics of the negotiations. Reestablishing export taxes, setting differential exchange rates—these are possible measures that could help alleviate the core issues that I mentioned at the beginning.

Because one thing is clear, and it is that in this country, dollars are needed to pay the external debt that the government contracted for. The amount agreed to with the IMF is enough to pay the outstanding Central Bank notes; then the government needs to get the rest of the money. How will it do so? Doing this is equivalent to mortgaging the autonomy of the country and its monetary sovereignty, because a project of economic independence is unthinkable if the dollars generated by your economy are deposited offshore and do not return to the country as investments and to finance imports.

That’s why the government is at a crossroads. If it maintains the current scenario of liberalizing policies, it knows that it does not have the necessary capital to finance the rest of the mandate. If it applies measures aimed at intervening in the market, such as export taxes, it opens a scenario of conflicts with a very important sector of power, which until now was a direct ally. This type of scenario occurs as a consequence of a government that is nothing more than a business model for financial capital.

And Congress has a key role in that, because it has to demand that the agreement be debated there. What legitimacy does a democracy have that allows a president, a minister, and a central banker to compromise the fate of future generations, mortgage companies, eliminate the pension system, destroy salaries, and lead us along the same path of default, such that vulture funds come along later to buy our debt at the price of misery? What kind of democracy admits such a level of autocracy?

CD: I want to also situate these developments around the IMF and indebtedness in relation to wider questions about politics, finance, social movements, and the state in Argentina and perhaps more broadly. In their recent book, Assembly, Michael Hardt and Antonio Negri (2017: 224) quote a text of yours to the effect that social struggles need to build “a capacity of political invention able to transform the financial dynamic in the field of battle against capital.” Yet, in arguing for a transformation of the social relations institutionalized through money, they sidestep the question of the state. Making clear that they do not envision such transformation in terms of taking control of central banks, in a kind of contemporary “storming of the Winter Palace” (referring to the mass action of taking over the czar’s palace during the Bolshevik Revolution in 1917), they instead elaborate on their version of an antistatist politics of the multitude that, as John Holloway (2002) has put it, seeks to “change the world without taking power.”

However, the rise of left-of-center governments across much of Latin America in the early twenty-first century has entailed more complex relationships between states and social movements. From your own perspective of struggling within and outside the state apparatus and its financial institutions in Argentina, how do you see the relationship between these positions in terms of inventing the political capacities necessary to alter the financial dynamics of capital? What is the importance of central banks in particular?

PB: I believe there are two broad levels of analysis, intervention, and political action that make up the core of strategies of articulation of defenses and proposals against the government of finance. We are currently seeing that for global corporations, the state becomes an increasingly secondary mediation, that is, an actor that suffers a deep crisis in the dimensions of political, legal, and economic sovereignty, but that in turn attempts to establish regulations on the formation of the rate of profit on capital. The role of central banks, which are key to enacting policies aimed at mitigating the destabilizing effects inherent in the dynamics of financial capital, is inscribed on this level. Central banks have this function through the development of instruments to regulate liquidity: they generate liquidity when there is a shortage and restrict it otherwise. They intervene in the exchange rate to avoid distortions in financial stability and not much more than that. In the face of global financial capital, every day it becomes more difficult to formulate plans in which central banks promote full employment in the classical sense. This task faces great political resistance on the part of capital, as, for example, in the Brazilian process against Dilma Roussef and later Lula da Silva. But we must return to that path, the path of full employment. Global corporations, on the other hand, face ever more complex scenarios against the new financial technologies that tend to displace them in controlling market share. The case of Amazon is an example that strongly threatens the main global companies. Financial capital tends to run in hybrid forms and through areas of difficult localization. In this scenario, it is necessary to build forces of social power linked to trade unions, to social movements and the workers of the popular economy, the excluded workers who should have representation on the board of central banks, because that is where the dynamics of financial profit are defined.

It is necessary to represent from this place areas of formulation of the experiences of finance for the community, of new forms of monetary exchange, alternative systems of payment, and, above all, rules to reduce the speculative aspect of finance. In these terms, the world is seeing a process of a deepening schism of inequality and violence around financial exploitation, which recognizes neither ethical justifications nor historical antecedents. The challenge presented by the offshore world is part of that process. The challenge for the next generations is to deepen the role of social movements, their autonomy vis-à-vis the state and the corporations of financial capital. The inequality generated by finance today can only be reversed by a movement that puts an end to forms of speculation by capital.

CD: Expanding a bit on the previous question, there appears to be a flourishing of movements around a heterogeneous set of issues in Argentina. While those around gender violence and reproductive rights such as Ni Una Menos appear especially vibrant, what kinds of articulations are emerging between these and other movements, for example, over extractivism and indigenous rights, Argentina’s historically strong labor unions and human rights movement, and now perhaps mobilization against the IMF? How are the relations between the state and social movements being thought and discussed in Argentina today, and what are some of the political and intellectual inspirations for these discussions and articulations?

PB: The women’s movement marks a renewed course in the debates and experiences of political articulations between social movements and the state. There is a truly revolutionary direction there. The experience of groups such as Las Insumisas de las Finanzas and the slogans of Ni Una Menos—linked to the flags of feminism, crossed with the challenge to external indebtedness as part of a common process against patriarchy, for example—are concrete examples that indicate a little to everyone how to move forward, how to draw up new agendas in view of a collective construction of new forms of revindication, against revitalized forms of colonial subjection. Likewise, there is still a need to link the rest of the demands and alternative projects necessary for the construction of more plural societies that know how to live in full respect with the environment. Extractivism is not yet a core point in the agenda of trade union movements, and we have not been able to concretely synthesize solutions to the problems of energy and sovereignty at the same time. In the case of indigenous peoples and peasant movements, their rights to land and territory are also not guaranteed. The model of a financialized society in which we live demands that we rethink broader and more complex agendas in the face of these manifestations of economic power.

Charles Dolph is a PhD Candidate in Anthropology at the Graduate Center of the City University of New York (CUNY). With support from the Wenner-Gren Foundation and CUNY, he conducted research in Buenos Aires from 2014 to 2016 for his dissertation, which analyzes the dynamics of monetary hoarding and state formation in Argentina.

Notes

[1] CINFIN is a project for elaborating policies for financial reform within the Center for Public Policies for Socialism (Centro de Políticas Públicas para el Socialismo, CEPPAS), located in Buenos Aires.

[2] More than a dozen high-ranking officials from the former Kirchner administration, including the president, have been indicted on dubious charges of “unfaithful administration” over the Central Bank’s sale of dollar derivative contracts, known as “future dollars,” during her tenure.

[3] The corralito was a measure taken in late 2001 that contributed to wiping out much of the wealth held by Argentines in the country’s financial system by severely limiting the amount of dollars that they could withdraw from their bank accounts, which were subsequently converted into pesos and devalued from their one-to-one exchange rate with the US dollar.

References

Hardt, Michael, and Antonio Negri. 2017. Assembly. New York: Oxford University Press.

Holloway, John. 2002. Change the World without Taking Power: The Meaning of Revolution Today. London: Pluto Press.

Cite as: Dolph, Charles. 2018. “The second time as farce? The IMF returns to Argentina.” FocaalBlog, 20 June. www.focaalblog.com/2018/06/20/charles-dolph-the-second-time-as-farce-the-imf-returns-to-argentina.

Features, The Latin American Pink Tide

Sian Lazar: “The happiness revolution”: Argentina and the end of post-neoliberalism?

This post is part of a series on the Latin American pink tide, moderated and edited by Massimiliano Mollona (Goldsmiths, University of London). 

In mid-October 2015, it appeared as though Daniel Scioli, candidate for the Frente para la Victoria (Front for Victory, FPV) would win the Argentine presidential elections relatively easily.[1] He was comfortably ahead in the opinion polls and had won the open primary elections of the previous August by a margin of 8 percentage points. Some of my friends thought he might even scrape through in the first round alone, for which he needed to gain a lead of more than 10 percentage points over his nearest rival, Mauricio Macri, businessman and governor of the city of Buenos Aires. In the event, in a result that shocked many if not most observers, Scioli won the first round with a lead of only 2.9 percent, meaning he would face Macri in a second round runoff vote, the first in Argentina’s democratic history. In response to this news of the run-off, Macri tweeted that “the happiness revolution” had begun (Macri 2015), and despite considerable anti-Macri mobilization in the weeks between the first and second round votes, Macri had clearly gained momentum and eventually won by 51 percent to 49 percent.
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