Coping with Collapse; Examples from Argentina

Coping with Collapse; Examples from Argentina

by PD Allen

Murderer’s Sky; Book 1 of Under Shattered Skies ~ kindle ~ paperback

download a pdf of this article (black print on a white background)

Introduction

The past fifteen years have seen the collapse of four industrialized countries from which those of us who are aware of energy depletion and the collapse of complex systems can draw useful knowledge. Dmitri Orlov has presented us with examples of how the Russian people survived the collapse of the Soviet Union. (Post-Soviet Lessons for a Post-American Century & Our Village, GRITS; Grassroots Ideas to Survive, Edited by Dale Allen Pfeiffer, Lulu Press, Nov. 2005, out of print.) And this author has examined what happened in Cuba and North Korea. (Drawing Lessons from Experience: North Korea & Drawing Lessons from Experience: Cuba, The End of the Oil Age, by Dale Allen Pfeiffer, Lulu Press, March 2004, out of print. Eating Fossil Fuels, October 2006, New Society Publishers.) Here we will examine a fourth industrialized country that has collapsed recently: Argentina.

The story of what happened to Argentina and how the population is coping with it holds many valuable lessons. It is a story that offers hope, and that holds warnings, particularly for those of us living in the United States. But, before we begin our examination, let us keep in mind that these are human beings we are talking about. Humans who have suffered the loss of their livelihood and their savings, people who have had to endure starvation, torture, and the disappearance and murder of loved ones. While we seek to draw lessons from what has happened in Argentina, let us not forget the sufferings and deprivations that the Argentine people have had to endure.

The crisis in Argentina was in the nature of an economic meltdown. It was a manufactured crisis, entirely due to neoliberal policies and globalization. The collapse of Argentina was engineered by the IMF, the World Bank, international financial players and the corrupt elite of Argentina. It was a crisis that did not have to happen. At one time, Argentina had the most robust economy in South America. It was an economic power on par with France. Argentina is a country rich in resources. It was once a world provider of quality meats and grains. It was the industrial powerhouse of Latin America.

The story of what happened to this wealthy country is the story of the ultimate result of fascism and neoliberal economics. It is the story of how privatization, a thoroughly exploited working class, and an economy unprotected from foreign speculators led to unprecedented disaster.

The Making of an Economic Crisis

To understand what happened in Argentina, we must first hearken back to the military coup of the 1970s, and the military dictatorship that initiated the process of running a proud country into the ground. The early 1970s saw a rise of populist and activist politics in Argentina. These progressives and radicals were used by ousted President Juan Domingo Peron—deposed by a coup in 1955—to stage his return to Argentina and his return to the presidency in 1973. Peron died a year later and was succeeded in office by his second wife, Isabel. Death squads began to assassinate leftists and progressives. Many of the officers in the death squads and the military received training at the infamous School of the Americas (also known as the School of the Assassins, http://www.soaw.org), in Fort Benning, Georgia.

In 1976, a military junta staged a coup. The generals took over the country, declaring a state of siege. This period is known as the “Dirty War”. Over the next six years, the military junta disappeared over 30,000 Argentines. It was a siege of terror intimately connected to the economic looting of the country. The mass disappearances left the public shocked, frightened and atomized. They dared not speak up or help each other for fear that they or their loved ones would be next. They learned to keep to themselves, and not to see what was happening. This atomization and denial allowed the junta the freedom to carry out their economic plans, and left a populous in a continued state of fearful denial once the junta gave way to democratic elections.

The disappeared were almost all leftists, students and labor organizers. The generals claimed they were waging a war on terror. They pointed to radicals bred of the populist policies of President Peron and his first wife Evita, and the guerrilla tactics of Che Guevera. However, the left was largely ineffectual, and the country was in no danger of a Marxist takeover. The “war on terror” was actually a cover for the removal of anyone who stood opposed to the pillaging of the country by foreign investors and their local beneficiaries. The junta made public assemblies illegal, even for sporting events. This act alone made it quite clear that they wished to atomize the public, leaving everyone isolated and unable to protest.

The “Dirty War” was funded by foreign investors, and the generals worked very closely with major foreign corporations. It has been established that major corporations with factories in Argentina, such as Ford and Mercedes-Benz, provided the military with lists of unionists to be disappeared. It is alleged that Ford even hosted a detention center in one of its factories, where union leaders were taken for interrogation before being disappeared.

The IMF provided the military junta with millions of dollars in loans. In return the junta opened the country to foreign investment, and continued their campaign of softening up the population. The generals sought to expunge all subversive thought from the country, down to the last school, workplace and neighborhood. The “war on terror” was very lucrative for the generals, as they stole property and possessions from those they disappeared. They even had a lucrative market selling the children of the disappeared.

After an humiliating military defeat by the British in 1983, when the junta tried to take over the Falkland Islands, the generals eventually fell from power. The junta gradually gave way to democratic rule. But the new democracy found itself saddled by a $45 billion debt—more than five times what the national debt had been when the junta came to power in 1976. Though Argentina was a titular democracy, it had to bow to the demands of the IMF.

For the remainder of the century, Argentina privatized its national assets, deregulated its currency markets, and pegged the Argentine peso to the dollar. While the GDP doubled, the unemployment rate climbed into the double digits due to downsizing. Each round of austerity measures required by the IMF led to increasing poverty among the working class and a burgeoning public debt. Yet the IMF and the World Bank continued to hand out tens of billions of dollars in loans.

By the turn of the century, the economy was in a crisis. The debt had risen to $132 billion, owed to the IMF or directly to the international bond markets. In the late 1990s, Argentina’s financial well began to dry up. Foreign investors started shutting down what were once very healthy Venezuelan businesses. With the peso pegged to the dollar, Argentina was unable to set its own monetary policies to deal with the recession.

The IMF would allow Argentina no way out of its recession. They insisted that Argentina maintain the monetary peg and avoid devaluation, keep paying the debt owed to foreign bondholders and, to fund this, balance the budget by implementing more austerity measures. The overvalued currency meant that Argentina could not export its way out of crisis. Having its monetary policy dictated by the US Federal Reserve, the Argentine central bank could not lower interest rates to spur investment. And the austerity measures deepened the public hardship, dampening domestic demand.

Finally, the public could take no more of the austerity measures. Millions were out of work, and those who did work could not even afford food. Hunger was becoming common in the once wealthy country. Over 50% of the population fell below the poverty level. By 2001, the public that had once been terrorized into submission could no longer take any more. Unemployed workers began blockading key roads and making demands of the government. People began to come out of their houses and meet on street corners to discuss their situation. And abandoned businesses were occupied by their former workers.

The rich were moving their wealth out of the country. In early December of 2001, the government declared a freeze on all bank accounts. By this time, the elite had moved most of their riches out of the country. This freeze allowed the banks to swallow the savings of millions of middle class families. While the freeze was in effect, succeeding governments unpegged the peso from the dollar and the currency went into freefall. By the time the banking freeze was partially lifted a year later, customers found that their savings had lost two-thirds of their value.

Following the banking freeze, the country erupted. Food riots broke out as people looted groceries in an effort to feed their families. Middle class neighborhoods came out to protest, banging pots together to demonstrate that they had no food to put in them. Protestors, many of them in business suits, vandalized banks, breaking windows, setting fires and spray painting protests on the bank walls.

On December 19th, President De la Rua declared a curfew and a state of siege. Millions disobeyed to protest in the streets. In the capital, the Plaza de Mayo and the Congress were packed with irate citizens, all chanting “¡Que se vayan todos!” (All of them out!). Twenty-five people were killed throughout the country, by the police and the military.

President De la Rua resigned the very next day. Over the following three weeks, Argentina went through five presidents. Argentina defaulted on its debt and the currency was devalued. For the next two years, Argentina existed in a sort of limbo, with no clear direction. The public was forced to look to their own survival.

Perhaps the best account of the background behind the Argentine crisis is given by Naomi Klein, in an article titled Out of the Ordinary, published by The Guardian on January 25th of 2003. You can find that article at the following URLs; it is well worth reading. http://www.guardian.co.uk/weekend/story/0,,880651,00.html or http://www.nologo.org/newsite/detail.php?ID=130

Grassroots Action

Neighborhood Assemblies

There were no clear leaders in the blowout of December 2001. All of the political parties and major politicians, and the government approved labor unions, had been discredited. There was no one with a clear analysis of what had happened, or a commendable strategy for how to get the nation back on its feet again. In the absence of any charismatic leaders, the people began to come out of their houses and apartments to talk to each other and try to make sense of what had happened. Neighborhoods came together to seek a way for all of the residents to survive. Just two weeks after the resignation of President De la Rua, there were some 250 neighborhood assemblies recognized in downtown Buenos Aires alone. Everywhere, people were beginning to meet, to communicate, and to discuss their common problems.

The first meetings began with apologies, confessions, forgiveness and commiseration. The public came out of their long held denial and exculpated for allowing the disappearances and other injustices to go on around them while they looked the other way. There was grief, healing and relief. The people realized how isolated and how lonely they had been, and they began to form communities. They began to discuss issues, vote and work together.

Left with the debris of their imploded nation, neighborhoods worked together to find their own way out of their common misery. In some cases, taxes were withheld from the government and paid directly to hospitals, fire departments and other vital community services. They established soup kitchens, job banks, trading clubs and barter fairs. They formed associations to trade for food with farmers and ranchers. And along the way, they began to build an alternative grassroots economy based on solidarity and mutual aid.

A Barter Economy

At its height, more than two and a half million Argentines took part in local barter exchanges, called “nodos.” At the nodos, people with products to exchange would receive credit slips based on the value of those products. They could then shop within the nodos, using the credit slips to purchase food, clothing or whatever else was available.

Skilled workers such as plumbers and handymen were allowed to advertise their services in the nodos. They offered work in exchange for goods or credit slips. There are stories of insolvent businesses paying their employees with the very products they were manufacturing, which they could then take to the nodos and trade for other goods.

The nodos offered modern proof that a market could function without a formal currency. Instead of printed currency backed by gold or abstract assurances of value, the credit slips were backed by physical goods that existed on the premises. They were stable, and for the participants they held a higher value than money.

Most of the nodos were organized by the people of the barrios, and they were operated by volunteers. Neighborhood volunteers greeted people at the door, signed them in and issued credits for goods. Though a nodos might be crowded, there was no bickering and no vying for goods. There was a festive atmosphere and solidarity.

Worker Self-Managed Businesses

As viable businesses began shutting their doors because they could not compete with cheap imports or because foreign owners could not generate sufficient profits, a new phenomenon began to spread through Argentina: worker reoccupation. Former employees, some of them owed over a year’s worth of back wages, began taking over the former businesses, opening them under worker management. The first reoccupations took place before December of 2001, but they accelerated after that eventful month, as the Argentine economy collapsed. Today there are around 200 reoccupied businesses in Argentina.

While Argentine law gives employees precedent over other creditors, there are a number of loopholes and hurdles to employee reoccupation. The Argentine federal government and the national and international business communities are also hostile to these endeavors. A number of reoccupations were met with attempted evictions, but few evictions actually succeeded. In many cases, the police and the military were faced down not just by the workers, but by the surrounding community, which sympathized with the plight of the workers and benefited from the presence of the viable business in their community. To avoid eviction, these cooperatives have to work their way through the court system to gain legal recognition. Much of the time, this involves assuming at least a portion of the former company’s debts.

The reoccupied companies are almost all run democratically, with all of the workers voting to make major decisions. And in most cases, all of the workers receive the same amount of pay, no matter what work they perform. There is generally a committee set up to oversee the day to day matters, keep the books, and otherwise manage the business. There is a division of labor, though there is no difference in pay. Most of the workers return to their former jobs, no matter how onerous those jobs may have been. A few have to take on new duties of bookkeeping and management, though they view themselves as no different from their fellow workers.

Without exception, worker pay has increased in the reoccupied businesses, though it is capped by the necessity of holding down the price of their products in a competitive market, and by assumed debt. The main benefit seems to be the freedom from bosses, managers and executives. Across the board, employees of reoccupied democratically run businesses say they would never return to a traditional business, even for higher pay.

For more details on the worker-run reoccupation movement, please visit the following websites.

http://www.theworkingworld.org/ (English)

http://nexos.unq.edu.ar/ (Spanish)

http://www.autonomista.org/ (English & Spanish)

http://www.sombrilla.ca/ (English)

http://www.americas.org/ (English)

For an excellent Canadian documentary on the reoccupation movement, titled The Take, please visit http://www.thetake.org/

Weaknesses of the Grassroots Economy

The reoccupied businesses, the nodos, and the neighborhood assemblies, while born of necessity, also suffer from being products of necessity. Time and again, they fail to see beyond their current necessity, and so fail to take the steps that would allow them to build something bigger and more permanent. Yet there are some who see their weaknesses, and who work very hard to overcome them.

One of the main problems is a lack of federation. The reoccupied businesses and the local grassroots organizations are isolated. They are unable to benefit from confederation with other organizations and businesses throughout the country. In the case of the reoccupied businesses, this means they must survive in a sea of competitive, market-based capitalism. While they are trying to meet and form larger supportive networks, their efforts so far have been extremely tentative and largely undirected.

The “Dirty War” and the IMF austerity measures of subsequent years led to a lack of experienced organizers in the country. There are people who are trying to fill these shoes, and there are organizations trying to build networks of grassroots initiatives. But these organizations are still newly formed themselves, and the organizers must learn their trade as they practice it. And all of these efforts are met by government antipathy, and a very powerful and hostile international business community.

The workers of the reoccupied businesses have barely begun to think of the internal threat to workplace democracy posed by the division of labor. For now, all of the managers and bookkeepers are still close enough to the floor from which they came to be in full solidarity with their fellow workers. However, in time the division of labor will breed power disparities unless measures are taken soon to insure that the work is shared equitably. Consideration needs to be given to sharing and rotating duties in order to reinforce their democratic efforts. This is a new or unheard of concept to most of these workers, but it is beginning to receive some attention.

Unfortunately, many of the barter exchanges have vanished in the last couple years, as the traditional economy has regained some of its wind, and people once again have money in their pockets. And many have stopped attending the neighborhood assemblies as their lives have returned to normal. There is a desire on the part of government and other powers to ensure that these grassroots initiatives were only temporary, and to ensure that the country returns to the sort of economy from which those in power derive the most benefit. The movements are being co-opted by powerful players.

An Exception: Rosario

The grassroots initiatives suffer largely because they are not promoted by the government and there is no resourceful non-governmental organization to help sponsor them. But this is not the case in Rosario, Argentina’s third largest city. There a socially responsible municipal government established an Office of the Solidarity Economy to create and promote a city economy based on solidarity and equity.

The Office of Solidarity Economy is working toward this goal by pursuing five activities:

Teaching the unemployed how to develop and maintain democratically run cooperatives, and giving them the support they need to establish these enterprises.
Establishing new means of production and financing for these enterprises, such as communal warehouses for supplies and exclusive, discounted loans.
Helping to advertise these enterprises and develop a consumer preference based on solidarity.
Rewriting municipal laws to make it easier for these new enterprises to succeed.
Validating this new solidarity economy by developing and evaluating indicators to measure progress.

The Office of Solidarity Economy pursues these activities through the Office of Cooperatives and Mutual Action and the Program for Food Production.

The Office of Cooperatives and Mutual Action facilitates the development of new cooperatives and acts as a liaison between these cooperatives and the municipality. The Office provides training on what a cooperative is and how to run one. And they provide forming cooperatives with help in filing the required paperwork for national and provincial registration. The Office also helps to put cooperatives in contact with municipal departments that need their services. Rosario has a local ordinance requiring municipal offices to award contracts to cooperatives if the local cooperatives can supply their need.

The Program for Food Production offers training in producing and selling food. It also acts to discourage competition among the resulting cooperatives. The Program sets equal prices for like products and helps cooperatives combine orders to purchase supplies in bulk. The program also provides small subsidies to newly forming enterprises. Because the national food inspection program is inaccessible to these small cooperatives, the Program of Food Production has its own food certification program and sends out its own inspectors to monitor participants.

The municipality maintains several weekly fairs at public squares in key locations. Here, all of the cooperatives are encouraged to market their wares. The municipality even offers to help transport wares to the fairs. At the fairs, participants also offer produce grown in Rosario’s urban agriculture program.

The Office of Solidarity Economy has been very successful at achieving its goals. Many formerly unemployed citizens are now supporting themselves and their families through cooperative enterprises. In 2004, the municipality made 412 contracts with around 45 different cooperatives, for a total value of 2,060,000 pesos. And the city is now beginning to promote cooperatives to the private sector.

Derailing the Grassroots Initiatives

The pacification of the middle class contributed to the default election of President Nestor Kirchner, who posed as a left-centrist, and whose stated goal was to rebuild national capitalism. While many of the Argentine middle class still have not caught on, President Nestor is a poseur, who actually acts in the interest of the multi-national oligopolies. While posing as an anti-imperialist, Kirchner invariable does the bidding of the international credit organizations. He has done nothing to roll back privatization or to institute national protection from foreign speculators. In fact, the legislation he has sponsored has opened the country further to the ravages of the global market.

Kirchner has signed the Free Trade Agreement of the Americas. He proposed a Public Health System that would further privatize health care through the back door. Under his government, the gap between the top earners and the poorest has widened, and unemployment has gone up as well. Instead of looking to the economic well-being of his people, Kirchner has overseen massive efforts to pay off external debt, although the principle on this debt has already been paid off several times over.

Finally, under his watch, the government has begun a massive crackdown on protestors, flooding the streets with police officers to prevent any attempt at protest or unlawful assembly. Thousands have been jailed for attempting to voice their dissent, given extremely harsh penalties and held without the right of habeas corpus. Unemployed citizens have been snatched from their homes for the crime of demanding work. Before being placed in jail, these detainees were piled on top of each other so that the arresting officers could have a photo opportunity reminiscent of Abu Graihb.

This is all a part of the plan of the Argentine elite and their international backers. Once the economic situation became untenable, those who wielded the real economic power moved their wealth out of the country, where it would be safe while the economy collapsed. Now that the dust has settled, they have brought back their wealth and are buying up Argentine assets for pennies on the dollar. To pacify the public, they are giving the middle class just enough income to ease their monetary woes. And they have installed a government that poses as responsive to the people while in reality serving the interests of the multinationals and their Argentine beneficiaries. Meanwhile, they are beginning to crack down on the working class, the radicals and the progressives.

Seven years of terrorism under the junta and twenty-five years of atomization and enforced self-interest did not disappear overnight. The learned behavior is still there, waiting to be triggered by Pavlov’s bell. And there were some in the middle class who never did truly embrace their neighbors, and who thought the jobless and the homeless were nothing more than unclean hordes from which they must be protected. Now that bell has been rung, with the crackdowns on public protests and the house to house operations against the unemployed. These police actions dredge up all the fears of the “Dirty War,” along with all the instilled behavior: look the other way and think only of yourself.

Many of the middle class are content with their limited economic security, and the empty promises of the government. But there are some who refuse to close their eyes again, and there are many more who refuse to give up alternatives they have built themselves. The grassroots initiatives and the alternative economy are not dead, though they are on very shaky footing. They are under siege by the international financial community and their Argentine agents, and they need the support of the international progressive community and experienced organizers. The failure of the grassroots economy in Argentina will make it that much more difficult for the rest of us when our time comes to suffer intentional economic destruction or build our own alternative. And that time will certainly come.

Conclusion

There is a lot we can learn from Argentina. The grassroots efforts of the Argentines give us good reason to hope. If the people of Argentina, terrorized and atomized as they have been, can come together for their mutual aid, then we have every reason to believe that the people of the United States, and other nations, can do the same. People talk of stockpiling gold and goods, of hiding out in the mountains and protecting themselves, and of the infernal hoards that will pour out of the cities to prey upon the countryside. But there are no infernal hoards; there is simply you and me, and our neighbors. It is this mindset of doom and gloom, of people in competition, devouring each other, that is the greatest hindrance to our survival. It is time to stop fearing our neighbors and realize that we have common goals: our continued survival and quality of life.

It is our fear, our ignorance and our greed that robs us of the future, and of our vision. Blinded, we cannot see that the system we are left with is a corruption built of ignorance, greed and fear. We are left defenseless, at the mercy of the true predators, who will not be so kind to us. If we do not learn to work together and develop our own vision of where we want to go, then we are likely to succumb to a system of fascism, plutocracy, terrorism, abuse and exploitation. Do not trust in distant leaders whose first consideration is themselves, and who would rationalize exploiting everyone and everything else to maintain their own privileged position. Do not trust in impersonal corporations that are designed only to grow and prosper, with no regard to external costs and only the barest obligation to the wellbeing of their workforce. Trust only in yourselves and your neighbors to decide in localized, direct democracies what is best for you.

Take up the cry of the Argentines: “¡Que se vayan todos!” All of them out!