|Argentina's Economic Crisis: Capitalism Falters
in the Southern Cone (Debate Position A)
Debate Position A (Argentina's economic crisis
represents the failure of capitalism) vs Position B (Argentina did not
The following points may be of use to debaters on both sides.
Position A takes the position that Argentina is a model of capitalist reform
and its failure represents a serious challenge to the orthodox position
capitalism is the best of all possible worlds. Position B must
counter this with an argument that Argentina is sui generis or, at least,
not representative of capitalism. Position A may benefit by replicating
the arguments made against
socialism (in countries such as Cuba, China,
Hungary, etc.) that have attempted to use specific cases as models for
the global failure of an economic system. In this case, position
A can argue that the same logic should be applied to capitalist failures.
What are the roots of Argentina's economic crisis? Does it represent
the problems with unbridled capitalism? Is it a new poster nation
for why the world needs an economic alternative to capitalism? What does
this crisis in the real economy say about the crisis in orthodox economic
theory (the neoclassical paradigm that continues to be taught as science
in intro and intermediate-level courses)?
Argentina's capitalist economy was liberalized during the 1990s, along
lines drawn by the IMF and applauded by the pro-capitalist (Hoover Institute/Chicago
School) theorists. These theorists and policy wonks are neoclassical
theory fundamentalists, arguing for absolute faith in the ability of
unbridled markets to solve all problems (in the long run?). In other
words, Argentina's leadership did just
about everything the pro-capitalist theorists said they should do to be
prosperous and were rewarded with 40 billion US dollars in support.
But what was the result? Argentina is three years into a deep recession,
now has almost 20% unemployment, homelessness has doubled in the last four
and more than 50% of the population is now below
the poverty line. And this in a country that was once one of the
richest in the Western Hemisphere and that is still one of the richest
countries in natural resources on the planet. Why did capitalism
fail in Argentina?
Argentina's currency board was linked to developing the free market.
The currency board represents an excellent example of pro-capitalist theory.
As Milton Friedman has argued in the past, the best approach to macroeconomic
management is to take it out of the hands of bureaucrats. The currency
board did this. The Chicago boys loved Argentina's currency board,
until it failed. Now they want to see the Argentine economy simply
abandon the domestic currency (the peso) altogether and become victims
of US neocolonialism by making the dollar the official currency.