Re: FW: Argentine Economists' Alternative Proposal

[Chris Burford <cburford@xxxxxxxxxx>]

At 05/04/02 18:20 -0600, Mathew Forstater
 wrote:
> Re: Louis' Argentina piece:
>
> Regarding the January 24, 2002 proposal of Argentine economists of the
> University of Buenos Aires, setting out an alternative,
> non-freemarketneoliberal, program --  An english translation of this
> program is now up on the Monthly Review website at
>
> http://www.monthlyreview.org/0402becerra.htm


The program has the advantage and disadvantage of being written by people
intimately bound up with the internal struggles that accompanied the
Argentinan crisis of international exchange. It is an intervention in the
fight about who within Argentina should the burden of the crisis.


I take the liberty of commenting on this document critically, with many
reservations. The argument in favour of doing so are these

1) without a debate it is impossible to get our teeth into these issues

2) debate may have to take the form at first of seeing difficulties and
weaknesses

3) others may hesitate to appear to be critical of an effort made by a
group of people struggling in the most difficult circumstances to do the
best for their people and their country

4) established economists may hesitate to step in on questions each one of
which is complex, without knowing more about the context and the
counter-arguments. I have no economic reputation to defend although I
closely followed the vain struggles of South Africa to establish a
progressive economy after the fall of apartheid.

5) Britain is just coming out of the global recession with very little loss
of momentum at all. At the price of making myself the fall guy and inviting
people to criticise what is wrong in my criticisms of this article, I hope
at least to contribute to some debate on a theme which should be central to
the goals of this list.

> It raises initiatives that are based on the principle that the
> extraordinary weight of the disaster has to be placed upon those who have
> bankrupted the country, and not on workers, the unemployed, professionals
> and small producers, traders, and depositors.

That is a moral stance. It has further to be demonstrated that it is also
an economically relevant stance.

The following sentence obscures the key question of whether the vanishing
resources of the people are the result of class struggle within Argentina,
or unequal exchange between Argentina and the imperialist world.

> We believe that protests must confront and change the trend of ever
> further thefts from the vanishing resources of the majority of the people.




> Capitalists must bear the cost of their own disaster.

Morally correct but the laissez faire capitalist world system is an amoral
one. The sentence obscures the need to make a democratic but national
alliance (on a just basis and led by the popular forces) for resisting the
effects of the unfair capitalist world order on the Argentinan people as a
whole. Although the article refers to the need for an alliance to include
the "middle class" and small business, it is most unlikely that the
Argentinian economy could stabilise without an alliance that includes at
least moderately large Argentinian capitalists. (If however some of the
authors believe that the way out is to go directly to what is in effect a
socialist revolution, it would be better to argue so clearly.)

> We propose three distinct means of funding this proposal: the total
> suspension of foreign debt payment;


That is fine so long as Argentina does not require incoming funds for a
significant period of time, and the devaluation can be big enough for it to
start accumulating surplus through trade (as happened with Russia in the
last few years).

> an immediate introduction of levies on big fortunes


fine if that helps fund the renewed internal circulation of commodities.

> and the reinstatement of a single public social security system.


That will not help if it gives money to people who are not producing
commodities which can generate new profits.

> The same financial institutions that, during 2001 alone, channeled abroad
> over $20 billion in capital flight, must be compelled to restore the
> deposits in full. This could be achieved through the collection of credits
> outstanding to big firms (the total debts big companies owe to banks
> easily cover the value of small and medium deposits), and through
> recapitalization by the banks' own head offices. The net equity of foreign
> banks alone has been declared to be in excess of 6,200 million pesos. It
> has been argued that if any firmness is shown, foreign banks could leave
> the country and national ones could go bankrupt. If these institutions
> were to opt for this course of action, all local assets of these
> institutions should be confiscated. Those who go away should leave their
> assets, including direct, associated, and hidden ones.


This is written in political programmatic terms, and politically this
proposal would be just. However I would like to see more argument and the
authors respond to criticisms that must have been made of their programme.
The urgent task is on the boundary between economic exchange within
Argentina and exchange between Argentina and the rest of the capitalist
world. Transfering capital from foreign banks to their domestic debtors
might, but might not get economic activity moving again within Argentina.

And politically what is more important is not the way this move would play
out internally, but how it would play out globally: should the burden of
exchange rate crises fall on the lenders? Can countries declare bankruptcy?
Should there be a regular annual massive transfers of funds from the
developed world to the developing world, accessible through commercial
bids, to keep the circulation of economic activity continuing on a world
wide basis? In other words should the expropriation of old capital be
coordinated by globally efficient transfer mechanisms?  Why discuss
reformism within Argentina and refuse to discuss reformism globally?

> As with the banks, the government is preparing the way to make the people
> pay these burdens.

Argentina as a whole is being clobbered by the world capitalist system,
which is set up so that countries like the USA and Britain get
international support for their credit-worthiness during a capitalist
recession whereas other countries are expected to carry the burden.

Argentinan governments are not primarily responsible for the burdens. It is
inevitable however there will be class and technical struggles within
Argentina about who bears the main burden.

While I sympathise with the radical stance of these authors, they miss
sight of the main feature: Argentinan labour power has been waiting to bear
the full effects of a massive moral devaluation. If it is not competitive,
and cannot get the capital to become competitive, it must suffer the
consequences in one of several ways. Its price must fall to its global
value either by massive currency depreciation, or by massive unemployment
throwing millions of workers out of work, and lowering the price of labour
power in an economy that keeps the same rate of exchange globally.

> Many serious investigations have demonstrated that the largest part of the
> debt has its origin in fraud


No doubt, but misleading to imply that the greatest part of this crisis is
due to fraud, corruption, and conspiracy. This crisis is due to the *fair*
workings of the capitalist system on a global basis! Just as the extraction
of surplus value from workers occurs through the fair exchange of
commodities, as Marx pointed out.

There is no mention of regional solidarity, which is an essential step in
resisting neo-liberal domination by the USA and IMF.

> To prevent the prior experience in public firms of bureaucratization,
> corruption, and enrichment of associated private groups, we propose the
> introduction of new forms of democratic management and administration
> based on the direct participation of workers and users.


Good to have more democratic accountability and a sense of social ownership
of economic enterprises, but there is no hint here that the enterprise must
be able to sell the products of the labour of the workers at a competitive
rate and raise appropriate surplus for reinvestment.

> an emergency program should assure a centralized administration of foreign
> trade and exchange controls


No elaboration about how this is to be done, before the article moves onto
another point. This is the crucial issue and an alternative to a dollar peg
and devaluation. IT is essential if the programme is to be used by a more
democratic administration.

> All the proposals included in this document must be considered just a
> starting point set out by a group of economists


It is too late for Argentina to present ideas as a starting point.

> We hope this document will encourage contributions, debates, and concrete
> plans on specific topics.


It might just however help a process of democratic global debate to allow
other countries, or regional blocs to consider options for resisting the
cruel workings of global capitalism.

The USA and Britain seem to have come out of the recent recession virtually
unscathed, thanks among other things to the markets, faute de mieux, giving
them discretion to tear up 15 years of neo-liberal dogma and indulge in
deficit government spending to tide domestic circulation over.

My criticisms, even where they are unfair, do not stem in the least from a
desire to adopt a paternalistic colonialist attitude to the people of
Argentina. [In case this post gets forwarded to any Argentinan who feels
strongly about past British colonial attitudes - And for the record I also
opposed Mrs Thatcher's Falklands war.] But we need absolute frankness about
the unfavourable balance of forces in the world, if we are to get to a
situation where by joint efforts in a number of countries the world
capitalist system can be broken, rather than at present country after
country, people after people, being broken on the wheel of its internal
revolutions.

Chris Burford

London