home Economy, Europe, Politics, South America What Argentina’s economic crisis could teach the West

What Argentina’s economic crisis could teach the West

In 2001, Argentina was in the middle of a very serious social and economic turmoil. The population had seen their pensions taken away or reduced to amounts that could barely cover basic living expenses, unemployment was at a historical high, inflation had jumped and devalued whatever meager savings the population had at that point, local industries were decimated. However, unlike other moments of social unrest in the South American nation, this one was distinctly democratic in nature. There was no clamor for a return of a military rule, nor a demand for police repression of working class protests. It was the first time in modern history that the middle classes had joined the working class and the poor to take on the streets to demand change. The incessant impositions of the IMF to further liberalize markets, to adjust currency exchange rates and to lower the quality of government provided public services in detriment of the population had finally reached a critical mass of public protest. The unrest reached its peak on December 20th of 2001, when crowds took to the streets to demand immediate change. The protests resulted in more than 20 dead people and the birth of a grassroots rebellion that ended in the slogan “Throw them all out”.

As Roger Burbach, director of Global Alternatives at the Center for the Study of the Americas (Censa) in Berekely, USA, explains:

A grassroots rebellion is taking place in Argentina with the common refrain “que se vayan todos”, or “throw them all out”. It is directed against the entire political leadership of the country as well as the International Monetary Fund (IMF) and transnational companies doing business in the country.

One sticker slapped on banks around Buenos Aires reads: “No More Extortion by Foreign Banks and the International Monetary Fund.” José Luis Coraggio, an economist and the rector of General Sarmiento National University in Buenos Aires, angrily declares:

The leadership in Washington that dominates IMF policy is responsible for this economic catastrophe. We are to be made an example of because Argentina has no strategic importance, no major oil reserves, no illegal drugs, and we do not flood the US with immigrants. Our political class bankrupted the country in the 1990s by implementing Washington’s neo-liberal economic prescriptions. Now we are told that the only solution is to turn over the bits and pieces that remain of our national economy to foreign lenders and to slash government social spending even further to get ‘rescue financing’ from the IMF.”

A new form of social and political organization was born, popular assemblies. These gatherings were autonomous centers of community participation that included a wide variety of groups and individuals, ranging from the unemployed and independent trade unionists, to housewives, human rights activists and members of non-mainstream left political parties.

Any similarities to the movements currently sweeping Southern Europe, popularly known as “The Indignant Ones” are no mere coincidence. Both movements came to be out of a deep sense of dissatisfaction with government, with economic measures considered to be external impositions and by what the local populations perceived as a loss of sovereignty at the hands of the financial industry.

The only difference, so far, is that Argentina defaulted its international debt as a result of popular pressure. The dreaded default that was all over the news a mere week ago as a threatening fate due to the halt in negotiations between American political parties. The truth is, as dramatic as it may seem from the outside, the default was the best possible decision for Argentina.

During the aftermath of the default, capital flew overseas. As a result, many small and medium enterprises closed due to lack of funds, thereby exacerbating unemployment. Many workers at these enterprises, faced with a sudden loss of employment and no source of income, decided to reopen businesses on their own, without the presence of the owners and their capital, as self-managed cooperatives.

This past week, IPS News reported on the phenomenon and the long term effects of these cooperatives:

During the social and economic collapse of 2002-2003, the Argentine state encouraged the formation of workers’ cooperatives, which helped mitigate the worst effects of the crisis, reduced hard-core unemployment, and now as independent, democratic, worker-controlled organizations are providing services to the public and private sectors.[…] In 2009, the ministry of social development launched the “Argentina Trabaja” (Argentina Works) program with the goal of creating 100,000 jobs for highly vulnerable people who are unemployed, lack training and have no other income.

Worker managed cooperative businesses range from ceramics factory Zanon, to the four-star Hotel Bauen, to suit factory Brukman, to printing press Chilavert, and many others. The best known of these cooperatives is perhaps La Alameda, created by workers who had been subjected to slave like conditions at local sweatshops. These workers, faced with no income and plenty of experience in the garment industry, opened their own facility, with the help of the Ministry of Labor, who initially allowed them to take control of the machinery and facilities that were previously owned by the sweatshops that exploited them. Nowadays, La Alameda runs a full social program that includes training and employment for women who had been victims of sex traffic and awareness campaigns for different forms of slave like labor practices. They gained international attention when they associated in the No Chains venture with a similar initiative in Bangkok, Thailand.

Marie Trigona recounted the birth of La Alameda for Radio Netherlands:

In the midst of Argentina’s 2001 economic crisis, local assemblies sprouted throughout Buenos Aires. One assembly in particular dedicated its efforts to fighting slave-like conditions for undocumented immigrants. In the working class neighborhood of Parque Avelleneda, Bolivian workers began to meet on Sunday’s at The Alameda Assembly.[…] The men and women who work at this co-op have equal wages and work a maximum of 8 hours a day. They make decisions in a collective assembly. For Olga Cruz, working in a cooperative means that there’s not a foreman or boss who takes away the profits and pays workers pennies.

In May 2001, 11.6% of the population was living in extreme poverty and 35.9% were under the poverty line. Ten years later, the figure for extreme poverty is at 4.4% of the population and those under the poverty line at 15.3%. Argentina renegotiated its debt and balanced their international trade. The country abandoned its dependency on financial institutions and global capital. A stream of left leaning (considered populist by some) governments followed, giving preponderance to internal development and investment schemes. International media still portrays Argentina as an unreliable country (“not serious” according to a fairly recent article at The New York Times). However, the country has avoided further liberalization of its markets and impositions from the IMF, which always come with demands of budget cuts from public services and social programs. Every IMF loan includes a set of mandatory “recommendations” that deplete benefits and welfare schemes for the working class and poor and demands of compliance with Free Trade principles that hurt local economies.

Western economies currently battling the effects of a long term recession and pressures from the International Financial industry might benefit from adopting a few of the measures that Argentina put in place in the aftermath of the 2001 crisis. The US currently struggles with high long-term unemployment and a USD 400bn trade deficit. If the government implemented a strong program of workers run cooperatives that gave prevalence to training opportunities, full ownership of tools and facilities and fomented local manufacturing, the long term effects would most likely be unprecedented. Self-sustaining communities would shift to a model of “Buy Local”, not only for regionally produced food but also for consumer goods and services, with a focus on development and individual participation.

Countries like Spain, Italy or Greece, with increasing social unrest, strikes and street protests could re-focus their economies, heavily dependant on the travel industry into models of boutique tourism, instead of the current corporate owned system. The Eurozone might prove a difficult partner in this shift, but it need not be chaotic or devastating. After all, each individual country within the EU retains a high degree of autonomy to decide on best practices for local administration. These countries could center their efforts on long-term sustainability, eco practices and the promotion of local cultures in line with workers owned facilities and operators. Their farming industry could be repurposed following this framework to give control to the people who already work the land, allowing them a participation in the profits and re-investment opportunities. A new model of horizontal participation and mutual agreements could possibly flourish opening doors to more development and cooperation that could eventually spread across the entire continent.

If Western governments were willing to promote change, the current crisis could very well be a unique opportunity to think of and design alternative ways of economic and social organization.

Front page photo: El Sembrador (The Sower), a bass-relief in Rosario, Argentina, taken by Pablo Flores.  Licensed under the Creative Commons Attribution-Share Alike 2.5 Generic license.

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