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Argentina: Between Disintegration and Revolution
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Throughout the early and mid-nineties, the international financial institutions (the International Monetary Fund and the World Bank), the regional financial institution (The Inter-American Development Bank) and the G-7 countries (North America and Western Europe) praised Argentina’s liberalization program as an economic model for the Third World.

Then President Menem and his Economic Minister Cavallo promised the Argentine people that they would soon become part of the “First World.”

Today, Argentina is in total disintegration, not only is the economy in its fifth year of recession/depression, but its banking system has collapsed, the unemployment rate has skyrocketed and over half the population live below the poverty line. This paper will examine the neo-liberal policies advocated by the IFI and G-7 and implemented by the Menem regimes (De la Rua and Duhalde) from the 1990s to 2002 and then critically analyze the theoretical claims and practical results leading up to the present time (mid-year 2002). We will argue that these policies and the socio- economic forces that implemented them led directly to the disintegration of the country. In order to measure the depth and scope of national disintegration we will focus on three sets of indicators: (1) collapse of the economy – focusing on industry, finance and services; (2) mass impoverishment, examining employment, income, health and nutrition, (3) the breakdown of political authority and the level of social conflict.

We will then turn to examining the causal linkages between the neo-liberal policies, the structures of state power and international subordination to the disintegration of Argentina. The logic of our inquiry will next turn to analyze the consequences of the disintegration of Argentina in relation to (1) its former patrons in the IFI and G-7, (2) the current demands made by its ex-external benefactors and their implications, (3) the alternatives to disintegration and subordination embodied in two distinct programs, Plan Phoenix and Plan Prometheus.

Our study will be guided by the following hypothesis. (1) The Argentine economy is in the process of irrevocable and continuous regression leading to the disintegration of national sovereignty, mass impoverishment and economic depression. (2) The principle cause for regression is located in the neo-liberal structures of power and policies which facilitated pillage of the economy, massive corruption and rising foreign debt with no commensurate growth in productive forces. (3) The failed neo-liberal policies, economic pillage and spiraling foreign debt, made Argentina unattractive to foreign investors and official lenders who proceeded to demand greater sacrifices while effectively refusing new financing to re- float the regime and economy. (4) Failed neo-liberal states like Argentina confront three alternatives (a) becoming neo-imperial colonial subjects, (b) embarking on a neo-structuralist project, (c) undertaking revolutionary transformations.

These hypothesis guide our research and direct our inquiry into the causes of failed neo-liberal states and the kind of purposeful action which can avoid, reform or revolutionize nations who have become ensnared in the neo-imperial trap.

Economic Collapse and Mass Impoverishment

No country has fallen swifter and further into mass poverty and experienced a prolonged economic collapse as Argentina. Though most Latin American countries have applied neo-liberal policies, none have been as thorough and rapid as is the case of Argentina. Moreover, no Latin American country was as industrially advanced and with as diversified an economy as Argentina. Finally, Argentina had the highest standard of living in the region, the most qualified and skilled labor force and the political leadership most determined to follow the precepts of the IFI and the G-7.

Argentina is a test case of the efficacy or failures of the neo-liberal approach under optimal conditions: a willing government, a well-developed infrastructure, a skilled labor force, long-term links to world markets and a significant middle class with consumption propensities compatible with Euro-American cultural patterns.

The results of 27 years of neo-liberalism provide us with an adequate time frame to evaluate its impact on the economy and society and avoid circumstantial or conjunctural outcomes.

Mass Impoverishment and Widening Inequalities

The number of Argentines living below the poverty line has grown geometrically; ten years ago there were less than 15%, two years ago it was 30%, in June 2002 the percentage exceeded 50%. In Argentine as of June 2002 the Duhalde regime acknowledge that over 18.2 million Argentines, 51.4% were living below the poverty line. Of these 7.777 million are indigents according to Siempro (Sistema de Informacion, Monitoreo y Evaluacion de Programas Sociales ? The System of Information, Monitoring and Evaluation of Social Programs) an official institution under the jurisdiction of the President. Children and adolescences living in poverty are almost half of the poor 8.2 million. Immiseration is growing at an accelerated rate. Between January and May 2002, the number of poor grew by 3.8 million, or 762,000 a month or 25,000 a day. Among the poor, the rate of indigent poor is growing even faster than the overall poverty rate. For example, in 1998 28.9% of the poor were indigent, in June 2002 the rate was 42.6% of the poor. The massification of extreme poverty is manifested in the high rates of malnutrition of children ? over 58% of the kids in Matanzas, a working class suburb of Buenos Aires. In the interior there are numerous reports of children fainting in school for lack of food, over 60% of the new born children in Misiones suffer from anemia – a result of government cutbacks in school meal programs to meet G-7 and IMF demands.


Apart from the top 10% of the population and foreign capitalists, the income of all working sectors of the population and pensioners have experienced an average 67% decline in monthly income. The decline in income has been profound, sudden and continual. In 1997, the United Nations Program for Development (PNUD) calculated Argentine’s per capita annual income as $US $8,950, in March 2002 it was $3,197. The decline affects all geographical regions of the country. If we use as rough indicators of “class” the different regions of the province of Buenos Aires we can approximate the social impact of the crises. The income in the capital city of Buenos Aires which we can take as largely middle class saw average incomes fall from US $909 a month in December 2001 to US $363 in March 2002; in the working class suburbs (conurbano) of the city of Buenos Aires income fell from US $506 to US $202; in the province of Buenos Aires income fell from US $626 to $US $250. If we examine the occupational structure, the largest decline is among workers in the informal sector and among pensioners. In the Capital, income of the “informals” dropped from US $643 to $257; in the working class suburbs from US $334 to $134; in the province from $394 to $158. Among pensioners the decline was similarly devastating: from $437 to $175 in the capital; from $320 to $128 in the working class suburbs and from $360 to $144 in the province.

The situation is far worse in the other provinces, where pay scales are lower, unemployment is higher and where there are frequent 3 to 6 month delays in payment of salaries and pensions.

For the working and middle class the loss of formal employment means a sharp decline in income. With unemployment doubling between 1999-2002 (May) the destitute and poor from the former working class/middle class has grown geometrically. Employed wage earners in the private sector of the Capital who earned US $904 in December 2001, as under-employed were earning US $257 in the informal sector, 3 months later (March 2002). With a 30% rise in prices during the same period, the real purchasing power in December 2001 dollars was reduced even further.

The New Income Structure After the Devaluation*

Capital Buenos Aires
Greater Buenos Aires
Type of Income in US $ Dec. 2001 Mar. 2002 Dec. 2001 Mar. 2002 Dec. 2001 Mar. 2002
Average Overall Income 909 364 506 202 626 251
Self Employed 881 353 392 157 522 209
Bank Worker 1081 432 735 294 848 339
Informal Worker 643 257 334 134 395 158
Public Employee 1144 458 624 250 810 324
Private Employee 904 362 550 220 648 259
(Republished from The James Petras Website by permission of author or representative)
• Category: Economics • Tags: Argentina 
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