Argentina’s Economic Crisis:

From Neoliberal Debacle to Grassroots Movement

Tuesday 4 June 2002, by Emilio TADDEI

The spectacular economic collapse of a country that was the "star pupil" of international organisations has shown the world how deeply regressive neoliberal policies are. And how they cause and foster the "social genocide" currently suffered by Argentina’s workers and poor.

The mass repudiation across social sectors exposed the complete failure of neoliberal policies, and of the entire political and business system involved in promoting and implementing those policies for the last two decades. Increases in the price index unleashed by inflation were absorbed by workers via another 40 % drop in net salary. Because of skyrocketing food prices, increased unemployment and depreciated salaries, half of the Argentine population - 18 million people - live below the poverty line.

The direct beneficiaries of this new devaluation, after ten years of currency "convertibility" pegging the peso to the dollar, are the concentrated sectors of the economy, fundamentally the agro-export sector. The mostly multinational banking sector engages in daily blackmail to get the government to accept responsibility for returning deposited savings in dollars, drained from the country by the banks themselves. Privatized public service companies do not want to absorb the loss in profit rate, and demand a price adjustment by the government, which could end up excluding the majority of the population from access to basic public services.

Profiting from Disaster

The crisis and default of an economy that is increasingly dependent on international financial capital is seen by foreign capital as a juicy new opportunity for business. That is the way the International Monetary Fund (IMF) and most industrialized countries see it. Not only are they making further adjustment measures a condition for freeing up loans that will only worsen the debt/austerity cycle, they also want a reform of the Bankruptcy Act and the Economic Subversion Act to facilitate, in the first case, the acquisition of bankrupt companies by foreign capital, and in the second place, whitewashing of the economic crimes committed by the banks that have robbed people’s savings and funneled them outside of the country.

The striking intransigence that international organizations and key governments are currently showing toward Argentina contrasts with the "easy credit" policy practiced during the nineties.

But this attitude and the blackmail on the part of the IMF, the World Bank and industrialized countries hides a political rationale that goes beyond economic strategies. The Argentine revolt - and its challenge of the "neoliberal regime" - is an unacceptable insult for dominant sectors, both at home and abroad. That is why they are trying to make an example of the grassroots movement, which during all of last year - culminating in the mass uprising of December 2001 - grew and bonded in its battles against neoliberal policies.

More than an Unprising

The coming together of "picketers" (unemployed) and middle-class sectors in the struggle, the experience of direct democracy represented by popular assemblies, the spread of social solidarity and examples of self-management among workers, the consolidation of an anti-neoliberal union movement, "escarches" against banks, politicians and the Supreme Court are some examples of major progress made by the grassroots movement in everyday life.

These phenomena of social protest - despite obstacles and difficulties along the way - are a sample of general discontent with the market-driven social order under "capitalism as it actually exists" and of the profound crisis of liberal democracy as the mechanism for hegemonic representation of said social order. The Argentine protest movement’s determined confrontation with the effects of neoliberalism constitutes a new search - which respects diversity and heterogeneity - for social autonomy, radical democracy and a new horizon of freedom.

The tragic social situation in Argentina shines an international spotlight on the devastating effects of capitalist globalization and the liberal model of civilization. The Argentina of today is a telling example of the devastating effects that the FTAA’s proposed free trade initiative would have on the lives of millions of workers on the continent. The international dimension of the Argentine crisis represents an enormous challenge and opportunity for the international movement. Exposing the extortionist attitude of international organisations, banks, large multinational companies and local economic groups in our countries is a basic duty of solidarity with the Argentine grassroots movement. The grassroots participation and democratization experiences developed by Argentina’s social movement are part of the widespread search for civilization alternatives to the capital model, and part of the international joining of hands in the movement for another type of globalization.

* The author is also a member of the Latin-American Social Sciences Council (CLACSO), and the Social Observatory of Latin America (OSAL-CLACSO)

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