The debt is not the problem

By Juan Kornblihtt – (Translated by Leonardo Kosloff)

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 is trying to avoid ending up as Raúl Alfonsín o Celestino Rodrigo. On the other hand, the opposition indeed 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 a 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 (of profit).

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 tariff 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, (the minister Boudou comes from the CEMA, while the discredited Martín Redrado -the president of the Central Bank-, and his eventual substitute Mario Blejer, have an even worse ancestry) 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 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 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 if 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 the debt could be paid in its entirety, it would reappear in a brief period of time. Debt is not the cause but the 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 essentially 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 (the central bank of Argentina) 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.

Los comentarios están cerrados