The Political Economy Of Argentina

Power And Class Since 1930

Monica Peralta-ramos

• Publisher: Routledge
• Year: 2019
• ISBN:
  9781000304435
• Edition: 1
• Topic: Politique et relations internationales
• Subtopic: Politique

Economic developments in Argentina over the last half-century present a puzzle to observers: Before World War II, the nation's per capita income and standard of living were comparable to those in countries like Canada and Australia; today, Argentina is submerged in deep economic, social, and political crises. In analyzing the events that led to this reversal, the author enhances our understanding of the phenomenon of arrested economic development in Argentina and similar developing countries. Dr. Peralta-Ramos approaches the problem with a dialectical interpretation of contemporary Argentinian history, examining crucial economic and political developments since 1930 from the standpoint of class interests in conflict. She discusses early government strategies for industrialization and their consequences for economic growth and institutional stability, maintaining that state policies generated a struggle for the appropriation of income and, ultimately, for control of the state, not only between the middle classes and the urban working class but also between the agrarian and industrial sectors of the bourgeoisie. The ensuing political instability led to further fluctuations in economic policy, to an erosion of institutional legitimacy, and, eventually, to state terrorism. Ongoing political crisis, war, and military rule, as well as soaring speculation and dwindling capital, hastened the downward spiral of the Argentinian economy. Dr. Peralta-Ramos offers in this book an innovative theoretical approach for examining how power relations can inhibit economic development and produce a fragile institutional system that threatens democracy.

1
Origins of Argentinian Industrial Development

Stages of Industrial Development

Until 1930, the development of Argentinian industry went hand in hand with the general expansion of the economy, and even supported it, but never governed it. That is, industry never performed a dynamic role. Argentinian industrial growth was based on the development of farm exports (crops and livestock products) and on the expansion of a domestic trade that relied on the use of imported capital and labor.

The predominance of the food, clothing, lumber, and tanning branches in the total value accumulated by industry over the course of the first three decades of this century is clear indication of the simple structure of the manufacturing sector in those decades. Until the 1930s, the output of nondurable consumer goods constituted more than half of industrial production. Furthermore, the import of consumer goods represented 13 percent of total consumption, and the import of machinery and equipment came to 35 percent of the total investment under this heading. Finally, the import of nondurable consumer goods made up the bulk of the total imports of the country during this period.

The international crisis of 1930 marked the beginning of a new period in Argentinian economic development, a period characterized by the dynamic role of industry. A sudden drop in farm prices, the result of a deterioration in the terms of exchange, had an adverse effect on agricultural farming. In addition, the implementation of exchange controls and a depreciation of currency protected domestic industry, occasioning a transfer of income from the agricultural to the industrial sector. These phenomena, accompanied as they were by a series of political occurrences (to be examined later), led to a new attitude on the part of the governing elite concerning the process of industrialization.

Evolution of Capital Accumulation

One of the distinctive characteristics of industrialization in Argentina was import substitution. It has been estimated that 90 percent of the growth in manufacturing from the early 1930s to the early 1960s can be explained by the reduction of the import coefficient in the total supply of manufactured products. During the years 1925-1929, merchandise imports represented some 25 percent of the gross national product (GNP); by 1957-1961 this proportion had decreased to 8 percent.¹

Two clearly differentiated stages distinguished this industrialization. An analysis of the evolution of the manufacturing structure from 1930 to 1960 reveals that between 1925-1929 and 1948-1950, textiles, food, and beverages represented 45 percent of the net industrial output, with metallurgy accounting for 22 percent of the expansion. In the subsequent period, this proportion was reversed. Between 1948-1950 and 1959-1961, the expansion of the metallurgical sector represented 57 percent of total industrial growth, textiles and foodstuffs only 9 percent. Consistent with this differential development, textiles and foodstuffs exerted the greatest substitutive pressure in the area of imports until the early 1950s; since then, the greatest pressure has been wielded by the metallurgical sector.²

From the perspective of the accumulation of capital, if one takes growth in capital stock as an indicator of the increase in constant capital—a partial indicator, because it regards only fixed capital—and if one takes the increase in the rate of industrial employment as an indicator of the growth of variable capital, it can be observed that between 1935 and 1945, and again between 1946 and 1955, the organic composition of capital (the composition of capital in a society) was characterized by a relative stability (see Table 1.1). In these periods, then, industrialization was based on the increasing incorporation of labor into the productive process, and globally, the extraction of absolute surplus value was the predominant form of exploitation of labor by capital. In the period 1956-1961, on the other hand, precisely the opposite occurred: Industrialization was based on a considerable increase in the organic composition of capital. The growth of constant capital exceeded that of variable capital, and the increase in labor productivity constituted the principal explanatory factor in the forward movement of industrialization. This change suggests that, at the global level, the extraction of relative rather than absolute surplus value was the principal form of exploitation of labor by capital during these years.

If one compares the productive process of the textile or food industry with that of the metallurgical, one can observe that, in general terms, the latter is more capital intensive than the former. It is not surprising, therefore, that the metallurgical sector played the more dynamic role in the second

TABLE 1.1. Rates of Cumulative Annual Increase of Capital Stock and of Labor Employed in Industry, 1935-1961 (in percent)

	1935-1945	1946-1955	1956-1961
Capital stock	3.7	1.8	9.8
Employed labor	3.4	2.9	0.4

Sources: Capital stock based on the capital stock indices (base: 1960 = 100) presented in Victor Elias, "Estimates of Value Added, Capital and Labor in Argentine Manufacture, 1935-1963," (Ph.d. dissertation, University of Chicago, 1969). Employed labor (1) for 1935-1945, based on the indices (base: 1929 = 100) of industrial employment in Miguel Murmis and Juan Carlos Portantiero, "El movimiento obrero en los origenes del peronismo." in Estudios sobre los origenes del peronismo (Buenos Aires: Siglo XXI, 1972); (2) for 1946-1961, calculated on the basis of employment estimates in industry made by the Consejo Nacional de Desarrollo Economico (CONADE) (unpublished and kindly provided by that institution).

stage of industrialization. Furthermore, if one compares the evolution of the growth of capital stock among the various industrial branches, one can observe that although the textile and food sectors led industrial development, and were the areas of greater concentration of the effort to substitute for imports, they registered a drop in the rate of growth of capital stock (see Table 1.2). One may conclude, then, that the development of these sectors during the first stage of industrialization was based on an extensive use of labor.

Beginning in the mid-1950s, all industrial branches registered considerable growth in capital stock. This fact, coupled with the drastic drop in labor employment registered during the same period, indicates the important growth of organic composition in all industrial branches. This phenomenon was particularly strong in the sectors that produced durable consumer goods, intermediate goods, and capital goods. Along with the growth in the organic composition of capital, the capacity of industry to absorb labor became more limited. Although this trait was common to all the industrial branches, it was particularly devastating in the textile and food branches, where a considerable number of employees were laid off (see Table 1.3).

TABLE 1.2. Rates of Cumulative Annual Growth of Capital Stock by Type of Industry, 1935-1961

	1935-1945	1946-1955	1956-1961
Foodstuffs and Beverages	2.1	-1.2	9.1
Tobacco	2.8	1.1	4.3
Textiles	12.0	1.8	6.9
Timber	6.2	-6.1	5.7
Paper	5.0	6.1	11.7
Printing and Publication	-1.6	-1.2	7.9
Chemical Products	9.0	5.2	7.1
Petroleum and Derivatives	-3.9	4.7	17.3
Rubber	9.9	8.8	10.3
Leather	4.5	-1.8	7.1
Glass, Cement, Marble, and Granite	6.5	-1.2	3.1
Metals	7.0	9.0	10.9
Vehicles and Machinery	-0.3	2.3	12.5
Electrical Machinery and Appliances	12.8	8.5	16.0
Other	1.5	-4.1	4.8
Total for Manufacturing Industries	3.7	1.8	9.8

Source: Victor Elias, "Estimates of Value Added, Capital and Labor in Argentine Manufacture, 1935-1963" (Ph.d. dissertation, University of Chicago, 1969).

TABLE 1.3...

Table of contents

• Cover
• Half Title
• Title
• Copyright
• Contents
• List of Tables
• Introduction
• 1 Origins of Argentinian Industrial Development
• 2 Paradoxes of Argentinian Industrial Development
• 3 Explosion of the Legitimacy Crisis
• 4 Legacy of the Process
• 5 Political Challenges to the Radical Government
• 6 Democracy on the Brink of the Abyss
• Notes
• About the Book and Author
• Index