The Crisis Behind

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Martin Thomas surveys the history of Argentina - and the crisis behind the junta's invasion of the

Peron dominated Argentine politics for 30 years SBU. denDe non ,Ilstten iosbisut l aine Simar: ARGENTINA, like Britain though at a different level, is a capitalist economy in decay. The economic crisis facing the Galtieri regime is the culmination of 50 years of relative decline.

The Spanish Empire which dominated Latin America from the 16th century was centred in Mexico and Peru/Bolivia -where relatively dense, highly developed native (Indian) populations were conquered and used as forced labour to produce silver and gold. Buenos Aires was peripheral.

At the time of Latin America's struggle for independence (starting in 1809) it had only begun to develop as merchant , city. The wild hinterland was for the most part sparsely peopled by nomadic Indians, though cattle-raising had started.

Some of the leaders of the independence struggle had dreamed of uniting the continent. But the old empire broke up into many separate states.

Boom 1870-1930.

In Argentina, after many civil wars and feuds, a stable state structure was consolidated by the 1860s Capitalism established itself in the countryside. In the 1870s the remaining Indian population of the hinterland was driven out, and vast new areas of fertile land were seized.

British merchants had already established themselves in Buenos Aires anon after indenenrence in wash tha 1810.

Ruled by the big ranchers, and basing itself on free trade, Argentina boomed. It became a massively prosperous supplier of wheat and beef, mainly to the British market. Immigrants poured in from Europe - mainly from Italy and Spain. The population increased from 1,150,000 In 180y to 1000 11,600,000 in 1929. (Today it is about 27 million).

Foreign capital also rushed in. Between 1870 and 1910 27,000 miles of railways were built. British capital dominated. In 1909 41% of the fixed capital in Argentina was foreign-owned, and two-thirds of that 41% was British.

In the early years of this century Argentina looked very different from the other countries of Latin America. Alone with Uruguay it was (and is) almost entirely a white-settler state.

It had no impoverished peasantry living in semi-feudal conditions. Wages were high - higher than in Western Europe - to attract the • immigrant labour. It had the infrastructure and living standards of an advanced capitalist state. The ranchers made huge profits.

But the prosperity was narrowly based. In a world economy dominated by the big imperialist powers of Western Europe and the US, the countries of Latin America had been integrated as provinces, relying on one or two major exports, linked more closely to countries like Britain than to each other. (Even in 11% of Latin America's trade was within the region).

Argentina was one of those provinces, even if a rich one. When the world trade patterns under which it had flourished collapsed, after the 1929 crash, it plunged into economic and political crisis.

1930: Free trade prosperity collapses, and the army steps in The dominant political force in Argentina up to A working class with a long tra tracked by nationalism World War 1 was the oligarchy of big capitalist landowners. Opposition developed from the 1890s.

The Socialist Party, founded in 1894, was based almost exclusively on immigrant workers in the cities. Trade unions - often very militant were built among craft workers, in textiles, and on the railways.

But many workers were drawn in behind middle-class politics. The middle class of professionals, small businessmen, and officials was (and still is) large in Argentina. it was this class — or more especially the Argentine-born section of this class - that was represented by the Radical Party.

The Radicals' main platform was electoral reform. Having eventually gained this they won the presidency in 1916 and governed until 1930.

They continued the free trade policy favoured by the ranchers and British capital. But they also used the armed forces to bolster themselves against athe conservatives. In 1922 army generals were put in charge of the nationalised oil firm.

And it was the army that stepped in when, in 1929-33 the money value of world exports fell, 50% and the export of capital from the advanced countries dried up. As Argentina fell into financial crisis, the military seized power in December 1930.

The new regime was no more able to resolve the crisis than the Radicals. In June 1943 it was overthrown by a group of junior officers.

Dominance

The manifesto of this group called for an 'inflexible dictatorship" so that Argentina could gain the same dominance in South America as Germany in Europe. "Only in this way will we be able to carry out the armament programme that is indispensable to MUCH. adition of struggle - but șideour conquest of the continent'.

In September 1945 Colonel Juan Domingo Peron seized the leadership of the new regime, to become the major figure of Argentine polities for the next 30 years.

Peron's regime 194355: a corporatist class alliance Despite many parallels, Peron' s regime was not fascist. Instead of directly smashing down the trade unions (though he broke many strikes and jailed many trade unionists), Peron built up a corporatist alliance of workers and industrialists.

State control of trade, initiated since 1930, was increased. The state took a big chunk of export revenue. The British owned railways, the US-owned telephones, and other sectors were nationalised (with generous compensation).

By 1955 only 5% of Argentina's fixed capital was foreign-owned, as against 20% in 1940 and 48% in: 1913. Ever since then the national state has dominated: Argentine' • nanOtrITIAn

Falklands.

capitalism.

Welfare • spending was increased. Trade unionism was spread (but under state control), and the share of wages in national income pushed up from 29% in 1946 to 46% in 1950.

On the basis of Argentina's big internal market and substantial infrastructure, industry had begun te develop even before World War 1 - accounting for some 18% of output in 1900-5.

Industry

It became more important after 1930, especially during World War 2 when imports were scarce. By 1937 industry was 26% of output, by 1947, 31% The failure of nationalism - and of working class opposition Peron loudly proclaimed himself a nationalist and "anti-imperialist" But national industrial development under his regime was thin. After a spurt based on "import substitution" in 1945-8, it stagnated.

Before he was overturned by a military coup in 1955, Peron had turned back to foreign capital, in an effort to boost industry.

In 1934 Leon Trotsky had proposed the slogan of the 'Soviet United States of South and Central America' as the only road to a socialist. reconstruction of the continent' s lopsided economies.

Peron's economic nationalism was the diametric opposite, an attempt to restore Argentina to its former prosperity by turning in on itself. It produced a chronic fiscal crisis of the state, which has dominated subsequent development.

The Socialist Party and the Communist, Party opposed Peron. But, they offered no socialist alternative =. instaad. sioining? with the Radicals and the conservatives in a 'Democratic Union'. They were marginalised, and to this ism and 'business unionism' Between 1955 and 1966 factions of the Radical Party ruled. A coup in 1966 brought to power a military regime determined to break the power of the unions and encourage foreign investment. But it was beaten back by tremendous workers' struggles in 1969 — almost an Argentine parallel t france's May 1968 In 1973 the army conceded elections. A Peronist candidate, standing on the basis of a 'social pact' signed by the unions and employers won the presidency - and then handed over to Peron himself, who at the age of 78 had returned from his exile in Madrid.

Peron died in July 1974 and his widow Isabel took over as President. There was no repetition even of the shallow boom of 194549. Real wages slumped, inflation rose to 500%, and fascist gangs sponsored by become a bigger proportion of the totai, enabling Argentina by 1963-4 to produce 63% of its new industrial equipment and machinery.

The US has been the dominant foreign investor, accounting for 58% of foreign capital in Argentina in 1975. Substantial US capital did enter in the 1960s - 64% of it (by 1968) was in manufacturing. In 1969, it was estimated, foreign capital (about half of it US) owned 60% of the 150 biggest industrial companies, which controlled 32% of industrial production.

But in 1968-75 the growth of US/West European capital in Argentina was very slow - only 1.2% per year, as against 12% in Brazil for example. By 1976 foreign investment had practically dried up.

Investment by Argentine capitalists has also been slow, with a lot of their money going abroad.

The relative decline of Argentina can be gauged by comparison with Australia. In the early years of this century, the two countries were on a level. In 1928-9 Argentina's output per head was about 70% of Australia's. In 1959-60 it was about half. Organiser FLND By the late '70s it was about 25 or 30%.

Argentina is now on a level with countries like Portugal, Greece or Turkey - and not very far ahead of Brazil or Mexico, though it suffers less than those countries from uneven development between booming cities and backward hinterland.

The decline has lurched into disaster with the economic policies of the military regime since 1976. Designed to dismantle statist, protectionist policies and encourage foreign investment, they have led only to. an industrial slump and an enormous foreign debt (worse than Poland's). The army-controlled state sector has actually increased, swallowing up bankrupt firms.

Against this background, the invasion of the Falklands was a desperate gambit by the military, to play the nationalist card. Behind them stand the Peronists, newly revived from their disarray in 1976, and vowing vengeance on Galtieri if he fails to fight to the last drop of blood for the islands.

Will the nationalist blind alley cripple the Argentine working class again?

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COR SI: AGK JUUNT APUBIEI

day the unions are domin- ated by Peronist national-