AVANT GARDE POLITICS Who is Utopian? Who is Practical?

Author: Ben Gore

"The urge to destruction is also a creative urge." — Mikhail Bakunin

"Argentina is on the brink of anarchy." — Argentine President Eduardo Duhalde



Argentina is currently in the midst of a complete political and financial breakdown. The middle class have lost their savings, the economy is stagnated and the government holds onto its power by the thinnest of margins. This vacuum has the potential to be a laboratory to test the power and pragmatism of new ideas, ideas that could stand Latin America and much of the world on their heads.

The Financial Crisis

Since 1989, the government of Argentina has implemented a neoliberal economic model: opening up trade and finance, deregulating the economy and selling off state run enterprises. These policies were implemented at the 'suggestion' of the International Monetary Fund (IMF) and with the collusion of economic and political elites. In 1991, the government pegged the peso to the dollar by an act of Congress. The GDP of Argentina grew quickly during most of the '90s with an influx of direct investment, portfolio investment and cash from the sell off of state industries.

The miracle began to run out in 1997 as Brazil and much of Southeast Asia slid towards financial crisis. The sell off of industry finished and investment slacked off on fears that the crisis would spread to Argentina. Since 1995, the government of Argentina had been borrowing some $7.4 billion a year to prop up the peso/dollar peg. By 2001 capital flows were negative as they had been in the '80s, and foreign investors worried about the country's ability to pay its debts. This worry led to extremely high interest rates, worsening the recession. The IMF stepped in with a large package that did nothing to help (not surprisingly, the IMF is more often encountered with riots than success). In August, foreign exchanges stopped accepting Argentine debt vehicles. There was a run on the banks, and nearly 20 percent of all deposits were withdrawn.

A central myth of the crisis is that it was due to profligate spending by the government. This is simply untrue. During the period of escalating crisis the government never ran a deficit of 2.5 percent. Meanwhile, Brazil, a healthy economy, ran deficits of 8-10 percent.

The Political Crisis

This fall, President Fernando de la Rua and his economy minister Domingo Cavillo decided, at the request of the IMF, to run the government with no deficit. To do this, they proposed to cut deeply into social services and eliminate thousands of jobs. It was at this point that all sectors of Argentine society joined together and toppled the government. Thirty people died in the rioting. A period of turmoil ensued, and the government went through a number of presidents before the current one, Eduardo Duhalde, came to power.

Argentina has a two party system similar to the United States, though even more corrupt. The parties are run much like political machines. Many Argentines understand this and view the entire political class as illegitimate. This is not helped by the banking freeze or the government's current flirtation with the IMF backed idea of cutting 350,000 government jobs. Duhalde is holding on to power with one finger.

Popular Responses and Hope

In response to the illegitimacy of the political class and the impotence of their economic ideas, the people of Argentina have done a number of things. There have been raucous demonstrations almost daily, many of which end with the destruction of banks to protest the freeze on withdrawals. Two tactics stand out amid the seeming chaos.

The first tactic is factory occupations. In many cases owners and managers have simply abandoned their factories. In a number of cases, especially in the provinces, the workers have occupied the factories and continue to produce and sell their goods as best they can. Profits are distributed equally. The unions in Argentina have no part in the occupation movement. Occupations are not yet widespread, but as the financial crisis deepens, they may become more prevalent.

The second tactic is the neighborhood council. There are over 200 neighborhood councils in Buenos Aires and many more in the provinces. These are people's assemblies that meet to decide the business of the neighborhood, to plan demonstrations and arrange for the implementation of basic services. Every week there is an inter-council meeting. These non-hierarchal institutions represent an organizational structure with the potential to utterly change the political landscape. They function not from an ideological perspective, many expel left-wing party activists who try to meddle, but from necessity. Everyone is allowed to participate because there are no other options left for ordinary people.

Who is Utopian? What is Practical?

Pundits in the United States worry that "Argentina will turn away from democracy." What they mean when they say this is that Argentina will turn away from corporate capitalism and its political partner representative democracy. They invoke the image of the caudillo to frighten us. But what is happening in Argentina, no matter on how small a scale, is the birth of something new, something the pundits don't understand.

Corporate capitalism, representative democracy and their collective philosophy, called neoliberalism, are about abstraction and alienation. Production is separated from place. Power is separated from the people. An abstract idea, 'the market', governs most interactions. Macroeconomists mask the misery of people and the destruction of the environment with fancy theories and statistics.

Free market ideologues claim that they are only being practical with their suggestions; that the real problem is that Argentina hasn't gone far enough. They never stop to consider that it may be impossible to implement their plans. Argentina went as far down that road as was politically possible, and then its people said "Enough." If a blueprint for society works beautifully in theory but can never be implemented in the real world, what is it? Utopian.

The global counter-movement, which is growing strong in Argentina, is an inversion of neoliberal values. It says that people and their environment come first. Global markets are ignored to produce for local needs. Power is spread at the lowest level possible so that everyone may have a say in running their own lives. Worker control of the factories and the direct democracy of the neighborhood councils are only the tip of the iceberg. These trends are weak now, but neoliberalism, the path Argentina's so-called leaders continue to follow cannot solve the problems it created. As the crisis deepens the counter-movement will strengthen.

The unimaginative and ideologically stiff will shout "Utopian!" at the countermovement until they are red in the face. But who is utopian when those who lay claim to pragmatism have brought nothing but hunger, poverty and political collapse?