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a rough translation...
The debt is not the problem
By Juan Kornblihtt
The fight between the government and the opposition for the so-called
Bi-centennial Fund and whether the money should come from the funds held by the
state or the central bank’s reserves, shows the programmatic coincidence of
interests of the two sides. The distinction is only a tactical one. The
government and the opposition are in agreement as to the return to the
indebtedness cycle of the 90’s. The difference is that that the government
aspires to imitate Menem and Martínez de Hoz but trying to avoid ending up as
Raúl Alfonsín o Celestino Rodrigo. On the other hand, the opposition wants to
be Menem starting 2011, but they also want the government to make the previous
adjustment (i.e. to assume the role of the disgraceful fallen). The two
coincide in becoming indebted once again and favoring foreign lenders and
national capitals on the workers’ backs, upon whom the burden of these policies
will ultimately fall.
>From resolution 125 to the nationalizations of the AFJP (pension funds)
In spite of official rhetoric, the scene of general crisis of capital
accumulation in Argentina is set. After the devaluation, the means of support
for the recovery was the strong increase in agrarian rent, pushed by the rise
in soy prices. This allowed for protectionist scheme based on an undervalued
exchange rate and subsidies which compensated for the low competitiveness of
local industries, whether national or foreign ones. This explains the recovery
of industrial activity and employment after the debacle of 2001. But to protect
means to transfer real resources, and if the great majority of capitals
receives more than they give, it is necessary for them to find new sources.
A part of what was spent in keeping the dollar high and providing subsidies
came from the rent captured through retentions, and the surplus value due to
the increase in the rate of exploitation of workers, captured through taxes.
However, another important part did not have a real grounding. The pesos to buy
dollars, the credits via bond emissions and the subsidies were made, largely,
with monetary emission without backing, which accelerated inflation. Therefore,
the protectionist effect of the 3 to 1 exchange rate lost its potency. Adding
to this, the government’s fiscal problems were brought to the surface,
particularly those of the provinces, although also, and in a more and more
pressing manner, those of the national state. The looked-for solutions always
went in the same direction: to get fresh funds to keep transferring them to the
local and foreign bourgeoisie through exchange protection and subsidies. First
increasing the retentions, and then nationalizing the AFJP. But the plan which
was always behind this whole pursuit was becoming indebted again.
In fact, Cristina Kirchner’s presidential campaign was pulled through
coquetting abroad with future lenders and promising “juridical safety” and
exchange and tariffs adjustments as offerings to get fresh money. Cristina’s
plan to go back to the 90’s is implicit in her electoral platform, beyond the
rhetoric of her speeches. That is why the cover of the number 39 of the paper
El Aromo, of November 2007, under the title “Results and Prospects”, showed
Cristina face to face with Menem. In spite of the polemics which this
generated, the comparison was and is pertinent. Nonetheless, that plan could
not be implemented exactly as Cristina wanted. Even though she replaced any
vestiges of Keynesianism and put some of the most rancid orthodox neoliberals
as functionaries in the ministry of economy, this symbolic gesture was not
enough for the international banks to lend the money. The main problem in spite
of all these gestures is that Cristina’s plan to be Menem ran into the
financial fall down and the scarcity of credit. This explains why the payment
to the Paris Club could never concretize itself even with all the repeated
negotiations, nor was the situation with the bonds which had defaulted fixed,
the government’s will notwithstanding. The key to the problem is not in the
lack of will or a firm government position in the negotiations, but in the lack
of credit.
The conditions of the Kirchnerist menemization
The objective of paying the debt is to borrow again and cover up the increasing
accumulation problems. To do this, the government needs two things. The first
and fundamental one is financial availability on an international level. The
second one is solvency, even if only superficially. This is why the government
cannot use its own funds, given that, beyond the manipulations of the INDEC
(the national institute of statistics and census, which releases economic
indicators), it is evident that tax revenues could not serve as guarantor
before any kind of lender. Hence the key place of the utilization of reserves
in this scheme.
In the context of the last two years, beginning with the mortgage crisis in the
US, international financial availability has been almost completely cut off.
This is the reason Cristina’s plan had to be postponed and the bulk of the debt
did not come from European or North-American banks, but from Venezuela. Thus,
Cristina coquetted with supposed positions of Latin American unity, in spite of
her pro-US and pro-European profile in the build-up to her election campaign.
However, the global crisis, far from being resolved, is now in a brief impasse
due to a new expansive phase of fictitious capital. This time sustained by an
increasing state deficit. This new bubble has allowed for availability of
international credit to a certain degree. Confronted with this reality,
Cristina goes back to principles and hastens the agreement with the Paris Club,
and, in particular, with the rebel bond-traders who did not accept the partial
payment of their bonds in previous exchanges.
These bond-traders are the biggest headache for the government and deserve a
freestanding paragraph. While there are no problems with the World Bank and the
IMF because the whole debt has been settled and everything is almost ready with
the Paris Club, the situation is much more complicated with the thousands of
smaller bond-traders. Since they have less to win if Argentina were to become
indebted again and they are more were worried for their individual finances,
this sector has pleaded before justice to impound the country’s funds. The US
judicial authority has in fact favored them in various partial instances, which
is one of the arguments of Martín Redrado (the president of the Central Bank)
to not use the reserves. As the majority of these are outside the country, they
could indeed be withheld. Nonetheless, this threat is not so urgent because the
main interests which push for the re-indebtedness of Argentina are the
countries where these bond-traders reside. In fact, a large part of the rulings
in favor of the embargos were later appealed and put still.
But the fundamental problem is: where is the money to back up a new
indebtedness going to come from? (this is what is hidden behind the euphemism
of “paying” the debt and the dispute over whether the reserves should be used
or not). The employment of 6.5 billion dollars from the reserves as a pledge
through the emission of new bonds is explicitly presented by the government as
a way to get credit at lower interest rates. As we will see next, nobody lends
without asking for something in exchange, least of all the economic powers.
The opposition wants to use its parliamentary veto power to argue for the
autonomy of the Central Bank of the Argentine Republic (BCRA), so that the
warranty for the new loans will come from the fiscal funds of the government.
To do this, as some of the opposition’s economists propose, subsidies should be
limited and state expenditures reduced. To compensate these measures they
propose in turn to liberate the tariffs of public services and raise the value
of (local) money even more, so that the profits of capitalists will not be
affected. Of course, they say nothing about what will happen with spending in
social services and employment. Although it is clear that it will not be
anything good.
The consequences of a new cycle of indebtedness
In terms of the opposition’s proposal of using state resources instead of the
reserves, the government’s position presents the appearance of being the more
progressive one. Instead of reducing fiscal deficits to use these funds as
warranty for the new indebtedness, state spending is maintained and resources
which are not currently being taken advantage of will be used. This is the way
in which a dichotomy between the neoliberal adjustment of the opposition and
the Keynesian expansion in spending of the government presents itself. But
these are false alternatives. We repeat: both want to become indebted. If the
government gets its way and pledges the reserves as warranty, the result will
be a massive entry of dollars. As a consequence there will be a new
overvaluation of (local) money, reaching for the 1 to 1 rate of the 90’s, as
occurs today with the majority of countries in Latin America which have
privileged indebtedness as a road to growth. Brasil, Colombia, Chile, Uruguay
and Perú have at this moment a much more valued currency than Argentina and,
except for Brasil, a clear importing behavior reminiscent of the “deme dos”
(“give me two”) style of Martínez de Hoz and Menem in Argentina.
Re-entering the international financial circuit has the drawback of favoring
the lending capitalists. Once more: nobody lends without asking for something
in exchange. The first thing which creditors will request will be a stronger
peso to increase the country’s importing capacity, so that foreign firms
settled in Argentina will remit more profits in dollars. The result will be a
contraction in economic activity, a smaller tax collection and more
unemployment. This is the same thing that Carrió, Duhalde, Cobos, De Narváez
and Macri (in the opposition), among others, are calling for.
The way from an undervalued economy to an overvalued one has always been
mediated by an adjustment. From Cámpora to Videla there was the Rodrigazo, from
Alfonsín to Menem there was hyperinflation. It’s not a question of political
incompetence but of the conditions of the cycles of accumulation (in
Argentina). The idea that the Kirchner couple will be able to do it differently
presents lots of doubts. The opposition therefore does not oppose the
underlying question at stake but is aiming for the government to assume the
responsibility for the crisis. This is why it seeks to speed up the adjustment
by way of avoiding the utilization of the reserves. In other words, they want
Cristina to be their Alfonsín or their Rodrigo.
The government does not want to play that role, and presents itself as the
guarantor of the national and popular interests. Nevertheless, even they are
successful in this fight, the adjustment will be made come what may, only a
little later, since the government will have to keep pleasing the creditors to
get more money. No speech can hide that the Kirchner myth is over. Even for the
most nac&pop (national and popular) it will be difficult to justify the “new”
policy and its script of quibbles with the IMF and the World Bank.
The problem is not the debt
Now that the content of the brawl is established, it is clear that neither of
the two sides in dispute expresses any solution in favor of the interests of
workers, not even partially. There is no lesser evil in any of these factions
because they are both after the same prize. But there is another important
conclusion. Indebtedness is a permanent policy of the argentine bourgeoisie, no
matter which fraction of it. It is the form in which fictitious capital, when
rent is not sufficient, comes to temporarily compensate the systematic
backwardness in productivity of local labor. When the situation is
unsustainable, default comes to the rescue to regenerate the conditions of
operation of the local economy: through devaluation the process of
de-valorization of labor-power, the promotion of exports and the possibility of
entrance of dividends is started again. Once the economy recuperates itself on
these precarious foundations, the advantages gained are liquefied and the
revaluation of the peso must be compensated with a new cycle of indebtedness.
The debt, then, is not the central problem of the Argentine economy, but the
form in which its general lack of competitiveness manifest itself. As we have
already witnessed, to stop paying is the waiting room to start paying again,
which is the previous step to going back to “good conduct”. For the same
reason, if by magic it could be paid in its entirety, it would reappear in a
brief time period. Debt is not the cause but consequence of the historical and
structural burdens which correspond to the capitalist nature of the country and
the place into which it fitted (and fits) in the global accumulation process
and which has no solution under this social form.
This is the reason why the banner of “no to debt payment” is esentially correct
but incomplete. It is correct, but not because the debt was engendered in a
fraudulent manner: the whole debt, including that which might be reputed as
“legitimate” according to bourgeois standards, is nothing more than the mass of
surplus value which results from capitalist exploitation. The refusal to
payment must be justified as a stoppage to exploitation and not as
“indignation” against the robbery of “the nation”. We do not want to pay the
debt because we do not want to keep producing surplus value. Failing to uphold
this banner on this basis sets the stage for pernicious conciliations with
petty-bourgeois fractions which build illusions around the “good national
productive capital”, in the manner of Pino Solanas or the same kirchnerism.
When this banner, properly justified, is added to the demand of the working
class for the wealth produced by the working class itself (that is what the
reserves are), the perspective points in the right direction. It is necessary,
however, to deepen this initiative. It is not the debt what is at stake, but
the reserves. The left must not get carried away by the petty-bourgeois
nationalism of solanism. What is more, it must make a step forward in denying
the right of the two political fractions of the bourgeoisie to decide over the
fate of this mass of social wealth. For this, the banner must be completed with
organizational measures going in this direction: a call of all political and
socially popular organizations to a national assembly that demands the right of
the proletariat to participate in the discussion over the fate of the social
wealth.
The accumulation of capital in Argentina is in crisis. The firms which reside
in the country are incapable of surviving by themselves without help from the
state or increasing the rate of exploitation to levels never seen to date.
Unemployment and poverty, far from being eradicated, are latent and in
crescendo. What this crisis puts on the table is that none of the bourgeois
alternatives (either the parliamentary or presidential ones) have a solution
which does not imply unlimited sufferings for the masses. Therefore, it is time
to go forward on the way to the control of the wealth in the hands of those who
produce it. Against the claim for the autonomy of the BCRA (central bank) by
the right, there must be a demand for its democratization and popular control.
Against the government’s desire to use the reserves as warranty to become
indebted, there must be a demand for availability of social plans, public
works, and general committees for wage increases. In short, there must be an
advance onto the true causes of misery and unemployment, that is, capitalism,
preparing the worker’s control over the national wealth.
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