The Crisis of Argentine Capitalism

The Crisis of Argentine Capitalism

The Crisis of Argentine Capitalism

The Crisis of Argentine Capitalism


At the end of World War II, Argentina was the most industrialized nation in Latin America, with a highly urbanized, literate, and pluralistic society. But over the past four decades, the country has suffered political and economic crises of increasing intensity that have stalled industrial growth, sharpened class conflict, and led to long periods of military rule. In this book, Paul Lewis attempts to explain how that happened.

Lewis begins by describing the early development of Argentine industry, from just before the turn of the century to the eve of Juan Peron's rise to power after World War II. He discusses the emergence of the new industrialists and urban workers and delineates the relationships between those classes and the traditional agrarian elites who controlled the state.

Under Peron, the country shifted from an essentially liberal strategy of development to a more corporatist approach. Whereas most writers view Peron as a pragmatist, if not opportunist, Lewis treats him as an ideologue whose views remained consistent throughout his career, and he holds Peron, along with his military colleagues, chiefly responsible for ending the evolution of Argentina's economy toward dynamic capitalism.

Lewis describes the political stalemate between Peronists and anti-Peronists from 1955 to 1987 and shows how the failure of post-Peron governments to incorporate the trade union movement into the political and economic mainstream resulted in political polarization, economic stagnation, and a growing level of violence. He then recounts Peron's triumphal return to power and the subsequent inability of his government to restore order and economic vigor through a return to corporatist measures. Finally, Lewis examines the equally disappointing failures of the succeeding military regime under General Videla and the restoration of democracy under President Raul Alfonsin to revive the free market.

By focusing on the organization, development, and political activities of pressure groups rather than on parties or governmental institutions, Lewis gets to the root causes of Argentina's instability and decline--what he calls "the politics of political stagnation." At the same time, he provides important information about Argentina's entrepreneurial classes and their relation to labor, government, the military, and foreign capital. The book is unique in the wealth of its detail and the depth of its analysis.


Since the appearance of The Crisis of Argentine Capitalism in the spring of 1990, people have asked me whether I would revise my pessimistic conclusions in light of President Carlos Menem's progress in attacking many of Argentina's deep-rooted economic problems. Like most other Argentina-watchers, I am impressed by President Menem's boldness in breaking with the past and his courage in supporting his economics ministers as they struggle for reform in the face of relentless political pressure. If ever a governing team deserved success, it is this one; and at this writing Menem's Justicialist party has just won a resounding victory in the September 1991 congressional and gubernatorial elections. The triumph coincided with a tremendous boom on the Buenos Aires stock exchange, which many believe to be an expression of public confidence in Domingo Cavallo, the economics minister. Political commentators are calling Cavallo a genius, although Menem also comes in for his share of the praise for allowing the economic program to proceed despite the approaching elections and the hysterical calls from Justicialist politicians and labor leaders for a respite. Though behind in the polls as late as July, Menem gambled, and the public repaid him with their confidence.

Elected in May 1989, Menem took office under very inauspicious circumstances. His inauguration was moved forward from December to July after rioting, looting, and bombing in Argentina's main cities convinced lame-duck president Raúl Alfonsín to surrender power early. Runaway inflation, falling production, and high unemployment combined to make Alfonsín so unpopular that when he announced a set of emergency measures at the end of May he found the country to be ungovernable. A brief postmortem on Alfonsín's administration may illustrate the lessons Menem had to learn if he was to avoid a similar fate.

When Alfonsín became president in late 1983 he faced two fundamental tasks. The first was to institutionalize democracy by making the military subordinate itself to civilian rule. Humiliated . . .

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