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From: The Socialist issue 235, 4 January 2002: Build The Socialist Alternative

Search site for keywords: Argentina - capitalist crisis - Capitalist - Debt - Economy

Argentina: Capitalist Crisis Intensifies

"WE ARE hungry; we want food!" chanted the demonstrators who braved police tear-gas and rubber bullets as they marched on the Argentinian congress building.

Disgusted by the corruption of the ruling class and desperate to end their economic misery Argentina's workers, unemployed and middle classes of this once prosperous country have taken to the streets, gone on strike and broken into supermarkets.

As the crisis deepens Argentina's rulers are changing presidents faster than the Peso is devaluing on the black market. The latest, Eduardo Duhalde, admitted the failure of the capitalist profit system. "Argentina is worn out, the country is broke. The current economic model destroyed our middle class, destroyed our industries and pulverised our workforce."

Hours after his inauguration a demonstration of thousands showed their contempt by jeering the new president.

Capitalism in South America's richest economy is on its knees: a three-year recession, an unrepayable $132 billion debt, 20% unemployment, cuts in salaries, pensions and social services. Some 2,000 Argentinians are swelling the ranks of the poor each day.

Three finance ministers (and now four Presidents!) have tried and failed to solve the crisis. The previous President, Rodriguez Saa, resigned after serving just one week, citing the impossibility of reforming the country's bankrupt economy.

Political vacuum

The previous finance minister, Cavallo, had imposed savage spending cuts including a "zero deficit" law (i.e. government spending cannot exceed tax revenues) in a desperate attempt to maintain payments on the foreign debt which makes up 45% of gross domestic product, and to demonstrate to the International Monetary Fund that his monetary discipline be rewarded with a fresh $1.6 billion loan.

As the crisis worsens, a political vacuum has opened up. If a party existed with a clear revolutionary programme and strategy, Argentina's working class, pulling behind it the middle classes, could now have been in power.

A socialist government that repudiated the foreign debt, nationalised major industries and ended the power of the ruling class would have not only begun the process of improving living standards but also acted as a beacon of hope throughout the capitalist blighted continent.

Before resigning, Saa put forward a 'rescue' package for the economy. He suspended (but didn't repudiate) payments on the foreign debt and said he would use the money to create one million new jobs.

Duhalde has also promised to create one million jobs and a social 'safety net' for the unemployed. Whether such populist reforms will be implemented is highly questionable given the pressure of international capitalism. (Although the US dominated IMF appears not to want to provoke more social unrest by insisting on a immediate resumption of payments.)

Saa had also announced a new currency - the Argentino - to exist alongside the dollar-pegged peso.

This measure would enable the payment of public salaries through tax revenues but delays the thorny question of whether to uncouple and devalue the peso from the dollar. As most savings and private debts are in dollars then this could financially ruin millions more Argentinians overnight.

Next week, eyewitness report from Buenos Aires

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