A Lesson from Argentina

Either the Revolutionary Party and Socialism or Generalised Poverty and War

Argentina, pummelled by an economic, financial and political crisis which has no precedent in this post second world war period, has been torn apart and the vast majority of its population reduced to hunger. When the media and the institutions that govern the world economy, like the World Bank and the International Monetary Fund, break the wall of silence that they have imposed on themselves, they will attribute guilt for this disaster entirely to the local political class and its entrenched corruption. But in truth the root of Argentina's situation is the long-running crisis in which the entire world capitalist system is thrashing about. It is the product of this crisis and at the same time it marks a decisive turn in that crisis, a testimony to the fact that from now on any country in the world could be the next Argentina.

The Origins of the Crisis

From the early 70s, with the maturation of the contradictions in the process of accumulation of capital, the average rate of profit derived from productive activity in the narrow sense showed a constant tendency to fall, particularly in the highly industrialised countries and commencing with the USA. Since then, the search for extra profit has become obsessive and is being pursued by all possible means with the aim of compensating for low profitability.

The US in particular, protected by the dollar's monopoly as a means of international payment, has led a process of restructuring of the world economy centred round the deregulation and liberalisation of financial and currency markets the consequences of which have been amongst the most dramatic aspects of the much-sung "globalisation". Even more important, however, has been the freeing-up of the generation of every form of financial capital (fictitious capital) - once closely linked to the development of productive activities but now allowed full freedom to engage in the most unscrupulous forms of speculative activity which thus entails a gigantic process of parasitic appropriation of surplus value. This means, on the one hand, the concentration of global wealth into an increasingly small number of hands and, on the other, the constant worsening of the conditions of life of the international proletariat, the growth of poverty and of the economic and social marginalisation of an increasing part of humanity.

The Argentinian crisis is the product of the development of this system and of its contradictions. Throughout the 90s the IMF and the World Bank were signalling the way for Argentina, praising it for having faithfully applied its economic recipes - which were supposed to carry it out of the crisis - commonly held bourgeois recipes about the theoretical models to apply in order to assure the perfect functioning of the capitalist system.


And thus, with the election of Carlos Menem to the presidency of the republic, the entire political economy of Argentina was subordinated to the demands of international financial capital and locked into the processes of "structural adjustment" imposed by the IMF to defeat inflation and give stability to the system. To this end, so-called dollarisation was imposed, that is the parity and convertibility of the peso with the dollar (currency board), guaranteed by the obligation of the Central Bank of Argentina to create dollar reserves equivalent to its issue of pesos.

The financing of the system was assured by raising interest rates, the granting of loans on the part of the IMF, by the drastic reduction of public spending, privatisation of the biggest firms and the transfer of the workers' pension funds, until then managed by the State, to private pension funds - for the most part American - in exchange not even for dollars, but for shares in the American public debt and junk bonds denominated in dollars.

Apart from his own personal enrichment and that of Menem and of all their gang, it was the intention of minister Cavallo, the architect of this system, that dollarisation would bring in a constant influx of capital from abroad. This was supposed to finance the restructuring of the productive apparatus and make it more competitive on the international market, thus increasing exports and the inflow of capital in the necessary amount of dollars to maintain the issue of pesos at the preset parity.

In the short term, the system seemed to work and in fact inflation contracted sharply. Nevertheless, these measures were accompanied by a fierce block on salaries and wages, a huge reduction in jobs and the dismantlement of every form of welfare measure, so that in the long term the contradictions from which the crisis drew its origins not only were not overcome, but they sharpened to the point of explosion.

However, the goose that doesn't lay the golden eggs in New York can't do so in Buenos Aires either. Thus it happened that even though plentiful capital arrived from abroad, instead of it being channelled into the restructuring of the productive apparatus it was, predictably, directed into the far more lucrative area of financial and speculative investment.

In order to maintain parity of the peso and dollar, a parity that in the meantime was being sharply re-valued, a further push on the pedal of privatisation was required. Thus for a handful of dollars flagship companies such as telephones, the postal service, railways, have been undersold and the public health service, state pensions and the state schooling system have been completely dismantled. But instead of increasing, the competitiveness of the system gradually diminished. Exports collapsed and the flow of capital in dollars slowed to a trickle. Once it was obvious that failure was inevitable, the big financial investors withdrew their capital. Thus an explosive mix was formed, leading first to paralysis and then to collapse.

When the spoliation was complete a freeze on bank deposits was decreed - something which hit small savers above all - and a freeze on current bank accounts, which was also a way of freezing the payment of salaries, pensions and wages. Thus a large proportion of small and medium capitalists ended up in the same abyss as the great majority of the working class had already been thrown. And now, while the big financial companies, the big industrial groups, the transnational corporations, the majority of ministers and politicians and even the international mafia, enjoy enormous profits, a whole people have been reduced to poverty and desperation.

Argentina is Not an Exception

Before Argentina there have been similar breakdowns: 1994 in Mexico; 1997 the so-called Asian Tigers and then Russia, Brazil. Today beyond Argentina, albeit in a less dramatic way, Ecuador, Brazil yet again, Bolivia, Colombia and practically the whole of Latin America are on the edge of collapse. And things aren't any better across the Atlantic, where Turkey is hanging on by a thread and even rich oil countries like Saudi Arabia are struggling with unemployment rates of two figures and a constantly increasing foreign debt, so much so that in some cases the whole GDP is absorbed by the interest payments on it. Moreover, the crisis is making itself felt in the USA itself while Europe doesn't sail in any better waters, not to mention Japan. To think that only a year ago bourgeois economists were writing books demonstrating that capitalism, thanks to the so-called New Economy and "globalisation", had definitely defeated the cyclical course of the economy and were predicting a world in which prosperity and freedom would shortly reign.

Things haven't turned out like that. Today the reality that is hitting everyone in the eye tells us that the long period of imperialistic management of the crisis, based on the parasitic appropriation of surplus value by means of a constant growth in financial income, is being exhausted and that for the proletariat the doors are opening wide to even more dramatic and devastating scenes.


There are those who believe that other political-economic options are possible while capitalist production relations remain firmly in place. They argue that if the expansion of financial income were restricted this could reopen a new phase of development of the world economy. To such purpose they propose the introduction of a tax on international financial transactions (Tobin Tax), the so-called "participatory budget" and other conjuring tricks of the same type - simply by more radical trade union activity they will be able to "re-conquer" the so-called "social state", that is restore economic policies linked exclusively to the expansive phase of the capitalist cycle. In other words they are arguing that the world economic crisis is the child of mistaken policies; they maintain that different "capitalisms" exist and that some are better than others, but it is reality which gives the lie to such day dreams.

The predominance of the financial sphere over the productive one is not the consequence of a choice between a number of other possibilities, but the logical development of the inherent contradictions in the process of accumulation of capital and generally of capitalist productive relations which have pushed a substantial part of capital to seek for remuneration outside of the production of goods. The idea that it can be made to work by virtue of this or that reform means to deny the very nature of capitalism and the fact that its goal is profit, that is capital itself, and not the workers and their needs.

The imperative of assuring the permanent integration of industrial profit rates with increasing quotas of extra profit - which by definition is the fruit of parasitic appropriation of surplus value - can therefore in no way be diminished and the policies which have been followed until now not only will not be abandoned, but will become even more ferocious as inter-imperialist rivalry itself becomes more severe.

The euro, the common currency of the EU, was born above all to satisfy this need; in fact it was one of the presuppositions because the successful parasitic appropriation of surplus value requires a currency which has at least continental-wide dimensions and which also comes to be accepted as a means of international payment. In the wake of the EU some oil producing countries, amongst them Saudi Arabia and Kuwait, have also agreed to adopt a common currency with the evident objective of gaining as much advantage as possible from the competition between the newborn European currency and the dollar.

For its part, the USA has responded by throwing all the weight of its military superiority onto the scales and in this context the attack on the Twin Towers marks a turning point of historical import. In fact it has provided the pretext for opening the way to a kind of preventive imperialist war that could be unleashed against anyone and at any moment according to the economic, political and financial imperatives of the American superpower. Thus, in the name of the struggle against terrorism and in view of an accentuation of the crisis, the international bourgeoisie is preparing its alibi in advance, an alibi for sharpening the repression against the proletariat.

In short, we are witnessing what has been the ineluctable outcome of all crises in the cycle of capitalist accumulation and that is, on one side, the transformation of economic-financial competition into generalised military confrontation and, on the other, the attempt to suffocate any class opposition with the aim of facilitating the economic, political and ideological submission of the proletariat and of the weakest strata of society to capitalism's logic of mounting starvation and war. It is useless deluding oneself: at this stage of the crisis capitalism doesn't have anything else to offer beyond generalised poverty and war. Only the proletariat can halt this tragic course. And the Argentinian proletariat is showing that that is possible. It is dramatically proving wrong all those people and their supposed theories which - after idealistically overestimating spontaneous rebellion - have given way to the notion that the proletariat has disappeared from the scene of history to be replaced with illusory "new social subjects".

Spontaneously proletarians went out onto the streets, drawing with them young people, students and substantial sections of the proletarianised petty bourgeoisie who are pauperised like themselves. Together they directed their anger against capitalist sanctuaries: banks, offices, but above all the supermarkets and shops in general, which were attacked like the bakeries in medieval bread riots. The government, hoping to intimidate the rebels, couldn't find any better response than to instigate a savage repression, resulting in dozens of deaths and thousands wounded. The revolt wasn't extinguished but instead spread to the rest of the country and increasingly began to assume a class character. Even the government buildings, symbolic monument to exploitation and financial robbery, were attacked.

Either the Revolutionary Party and Socialism ... ==

However, with the passage of time, it is becoming more and more clear that all this is not enough, not even the committees of struggle and coordination which were born spontaneously in the heart of the struggles themselves, particularly the committees of the Piqueteros [unemployed] and the internal commissions [Comisiones internas]. In fact the movement, in so for as it is working class, is destined to defeat if it isn't able to satisfy two fundamental conditions.

In the first place it must become aware of the antagonism between classes and in so doing recognise the conservative function of the trades unions and leftwing political bodies and thence the need for the violent overthrow of the capitalist economic and political framework.

The second condition is the living presence of the revolutionary party, well rooted inside the proletarian masses, which alone is able to transform the anger, the determination to struggle, the spontaneous spirit of rebellion, into social revolution.

That party...

  • will have settled the account with the history, above all with the Stalinism - which allowed the pretence of socialism to be given to a reality of state capitalism - but also with those anti-Stalinist currents which led to new forms of camouflaged idealism (Bordigism) or else have remained buried in the rubble of the October Revolution (Trotskyism);
  • it must be clear what the revolutionary programme is and the strategy that follows from it. In the first instance so as to identify the class enemy and its leftwing accomplices in order to prepare politically for insurrection;
  • it must be clear what constitutes the new proletarian power and what should be the content of its economic programme;
  • finally, any party which articulates the international dimension of the struggle, so long as it remained confined to only one national situation, would equally suffer an inevitable defeat.

In Argentina the devastation of the economic crisis has activated a strong proletariat which is determined to struggle and organise itself, which is capable of expressing the sense of split between classes and of identifying its own political enemy. The second condition, the one relating to the presence of a revolutionary party, hasn't been fulfilled, for the simple reason that the vanguard of the revolution is not invented from one day to the next, it is not the fruit of contingent events. Either the work of forming the party and putting down roots inside the proletarian masses has already gone on for some time, or the waves of insurrection are destined to disappear and give way to defeat and a sense of impotence. The imperative for today's meagre revolutionary vanguards who are active internationally, if only in restricted circles, is to grow, to connect up, to accelerate the process of clarification of events in terms of the class struggle and of political perspectives, even if these are not immediate.

... Or Generalised Poverty and War ==

The international crisis of capitalism can only march against the world proletariat. It does so daily in every latitude, with the help of the capitalist left, with the collaboration of the unions, with the political strength of the state, but also with repression every time that the class struggle lifts its head. The stronger imperialisms crush the weakest, the centre of capitalism offloads the weight of its own contradictions onto the periphery, the war of plunder and appropriation by the international trade and financial markets, succeed one another according to the rhythms imposed by the increasing difficulty of valorising capital. The uprooting and pauperisation of millions of human beings, the progressive acceleration of unemployment, underemployment and casualisation of work, all these are the sign of how modern capitalism, despite its enormous productive potential, can only give birth to social monsters where the poverty and increasing exploitation of the many is the condition for the concentration of wealth into the hands of the few. Wars, which appear to be an exercise in the armed arrogance of the strongest towards the weakest, are really the only way capitalism has of surviving it crisis of profitability. In every case it is the proletariat who pays the price for all, whether in periods of social and economic peace, during local or international crises, in the wars put in train by the respective bourgeoisies - no matter whether these are aggressive or defensive, conducted in isolation or as part of an imperialist front.

The wars in the Gulf, Bosnia, Kosovo and Afghanistan represent one side of the coin, events in Argentina the other. Wars, death and social desperation, disguised by the lying veil of bourgeois ideology - in secular or religious version - are the distinctive character of this phase of capitalist contradictions which is from time to time jolted by episodes of desperate revolts. The historical drama we are witnessing is characterised by the absence of a class response to the fierce attacks of capital against the international proletariat. Just as this historical period makes it necessary for capitalism to use force to preserve its political power and to be able to continue its economic cycle, for the same reason it imposes the struggles of today on the proletariat and tomorrow, the obligation to create its own party.

Now is the time for maximum effort to create the political vanguard for future proletarian struggles. Exploitation and oppression are universal. In Europe as in Argentina, the USA as in the countries of the ex Soviet bloc, everywhere the cry of alarm that revolutionaries must launch is for the construction of the international party of the proletariat. This is the only condition which will ensure that from out of the crisis the revolutionary process will mature and lead to the creation of a new society without classes, without exploitation, that has for its objective the satisfaction of human needs and not their denial in the name of profit.

IBRP, February 2002