LIBERALISM, CRISES, AND STRUCTURAL ADJUSTMENTIN ARGENTINA

3/17/2010l

How much is a dollar worth?

Argentina: 1983 – 1994Democracy and NeoliberalismWashington Consensus

(Williamson, 1990)1. Reduce fiscal deficits2. Realign public

expenditure priorities3. Encourage broad but

moderate taxation4. Let the market

determine interest rates

5. Achieve a competitive, export-oriented exchange rate

IMF in Argentina1. IMF helps set overall fiscal

targets: balanced budgets or surplus

2. Limited, targeted spending3. Revenue-neutral (or –

enhancing) tax reform Eliminates 21

“distortionary” federal taxes Reduce payroll taxes Broadens VAT, corporate,

and personal income tax bases

Increase tax compliance – computerization, audits,etc.

5. Control inflation: Currency peg

Argentina: 1983 – 1994Democracy and NeoliberalismWashington Consensus

(Williamson, 1990)6. Implement free trade

policies7. Encourage FDI8. Privatize enterprises9. Deregulate industry10. Stabilize and enforce

property rights

Some Names to Remember Alfonsín, President 1983-1989 Menem, President 1989-

1999 Cavallo, Economy Minister

1991-1996

IMF in Argentina7. Financial sector reform to

encourage investment Banking supervision,

transparency, and autonomy

8. Privatization where possible, esp. banking and public service corporations; replace the state-run Pay-As-You-Go system with private pension funds

9. Labor market reform to improve flexibility decentralize collective

bargaining agreements liberalize conditions for

temporary employment allow more flexible

working hours.

Argentina 1995 – 1999Argentina in the Global Economy Global financial crises

1995: Mexican economic collapse 1997: East Asian financial crisis 1999: Brazilian peso devaluation

"The income gap between the poorest 10 per cent and the richest 10 per cent grew 57 per cent between 1990 and 1999." (Carrera and Cotarelo, 2003)

Throughout the 1990s new forms of social organization begin to form centered around the former middle class.

Argentina 2000-2003The Crisis Years 2000-2001, the de la Rua years: Renegotiation with the

IMF IMF agrees to 3 year $7.2 billion loan, with conditionality IMF negotiates a $40 billion loan package; in December

2001 the IMF withholds payments and Argentina defaults 2002-2003, the Duhalde years: Moving away from the IMF

Argentina lets its currency float; declines 70% against the dollar

Debts above $100,000 are converted to pesos Checking (above $10,000) and savings ($3,000) accounts

are "guaranteed" but frozen; small accounts are given the option to convert to non-frozen peso accounts. Later all accounts would be converted to pesos at an artificial rate of 1d = 1.4p.

"But the crisis brought the state back in—as a critical protagonist and as the only actor with the extraordinary capacity to write new rules of the game and recover the command instruments of political economy." (Grugel and Riggirozzi, 2007)

2001-2003: Popular ResponseSpontaneous Insurrection Marches, Meetings, and Public demonstrations

Unemployed workers movements, neighborhood assemblies, barter networks, etc. Ollas Populares: food kitchens that often turned into political meetings Escrache: gathering in front of a private house in order to denounce the

inhabitant/s “Cacerolazos,” Food Riots

Banging pots and pans together in the streets to emphasize that the people are hungry

Usually women; usually middle class, usually urban Riots

Looting of supermarkets and shops Attacks on public buildings, banks, and residences of political leaders Street struggles against the police

Strikes High levels of unionization 9 strikes in the 1990s, 8 in 2000-2000

Roadblocks To seize/defend and occupy a position in order to make specific demands Picketing, esp. by unemployed workers demanding greater social support – food

and jobs

Argentina 2003 – 2007“giving the Fund the kiss off”Nestor Kirchner (President, 2003 – 2007) 2004: Arg suspends its agreement with the

IMF; brokers new deal with fewer conditions 2005: Debt restructuring cuts 70% of

privately held debt (v. IMF) 2006: 3 Jan - Arg repays the remaining

$9.81 billion in IMF debt 2006 Economic problems return

Inflation grows GDP growth slows Current account balance declines

Argentina: 2008 – todayThe new global economic declineCristina Fernández de Kirchner (President

2007 – present) 2008 US housing crisis 2009 Argentina begins a new debt swap

program

Questions

What is the proper role of the state in the economy?

Is "money" ever national? Chasteen: "Neoliberals had few new ideas.

Everything they recommended had already been tried in Latin America before 1930. So where did they get their impressive momentum?"

What is the relationship between neoliberal structural adjustment and political regime type?

Is the IMF - or a similar major international lending institution - a necessary feature in today's global economy?