A cornered capital

5 December, 2020 · News> South America and the Caribbean> Argentina

President Alberto Fernández visits a Volkwagen factory.

Today in Argentina there are 149 deaths and 7.629 new cases of Covid in the past 24 hours. Just one more day in a long series. The massacre is being perpetrated on the working class and by now the government has even renounced the theatrics of the unity and the solemn press conferences with the province and city of Buenos Aires. Any hope that the state will take any of the ways to stop the pandemic is long gone. With production plummeting 6.9 percent in September, down 12 percent annually, all hope is placed on the vaccination campaign. But by the time the military returns to the barracks after the campaign, the bankruptcy of Argentine capital -earlier than or independently of the pandemic- will still be there, and so will its consequences. According to the data published yesterday, 44% of the population and 4/6 of minors already live in poverty. Public aid keeps 30% of the population on the border of destitution and under the threat of starvation.

And yet the main measure the government plans for 2021 will be… a new tarifazo, a general increase in the prices of basic consumption of energy, water, etc. One cannot help but wonder why they are planning to destroy the little market remaining to the national bourgeoisie when the president said yesterday that the way to create jobs is not public aid, but rather businessmen investing and providing jobs.

1 The truth is that, as in all semicolonial countries, the crucial market for the capital invested in Argentina is not the domestic one but the foreign ones. With very low production costs and a gigantic international demand, the primary export sector (mines, agriculture, livestock, hydrocarbons) is the only one capable of being capitalized in a sufficient scale. But it has a ceiling. It has been a long time since it last could capitalize itself profitably, nor can it sell much more than it already does. So the accumulated capital in each cycle tends to seek foreign destinations, flees without having developed a domestic industry, which tends to devalue the national currency -carrying capital outside means selling local currency to buy dollars- and produces in passing a hole in the public accounts whose debt is paid in international currency.

The state will try over and over again to take advantage of the temporary good times of international markets and prices of raw materials in order to rebuild, through a massive redistribution of income, an industry oriented to the domestic market and regional exports. But the latter is ultimately dependent on the performance of the export sector and every threat of global crisis or market closure ruins it. Hence the infernal cycle of crisis and developmentalism, of adjustment plans and industrial plans that has characterized Argentina and so many other countries.

From the 90’s until the arrival of Kirchnerism, national capital will try to take advantage of dismantling of tariffs and opening of international markets to move from the model of an industry oriented to the domestic market to an export industry. But lacking previous massive domestic markets -unlike China- and far from Asian logistic chains, the result will be equally disastrous. The limits of the model were subsequently retained and are visible still today in the special zone of Tierra del Fuego: the industry that was intended to be oriented to the global market ends up depending on tax subsidies and reduced to an assembly plant for the domestic market.

That is why now the recovery has collapsed with the fall in exports. The hopes of capital and the Argentinean government are placed on receiving a little more demand from the recovery of Brazil, China and the EU. With the fall of international prices of crude oil, Argentina has not even been able to put in motion the starting point of its eternal tale of counting the chickens before they hatch: the Vaca Muerta field. Simply, at current prices and demand expectations, it has not attracted enough foreign capital. The only great success that Fernández can show in front of the investors is an assembly plant of Renault pickups and an additional Ford one. It goes without saying that a good part of the parts and sales expected by the multinational will be in Brazil.

2 The government knows that, in the absence of a mass of foreign investors in order to restart accumulation and attract foreign capital in significant volumes, it will need loans. But it will not be that simple. It reached an agreement with the private bondholders in August, but until it closes negotiations with the IMF, it is very difficult for the loan tap not to be almost completely turned off. And to get an agreement with the IMF, what he needs is a payment plan to ensure that he is going to spend less and pay more.

Spending less means: a new tarifazo, letting inflation wipe out what is left of the social security system and dismantling social plans, first of all those implemented during the pandemic. The fact that the state is making more money is not a joy for the workers either, in the medium term it means improving the profitability of capital and winning new markets, which in the short term means lowering real wages.

3 And thus, the imperialism, the struggle for markets and capital destinations, becomes again the center of all Argentine politics. Imperialism of national capital, which needs to expand foreign markets in order to regain profitability. Chinese, European, American, British imperialism… which put conditions to ensure the profitability of their own investments before doing so or partially opening their own markets.

The Economist urges Alberto Fernández by calling him president without a plan. Merkel insinuates that the Mercosur-EU treaty will go ahead even without Brazil if Fernández’s payment plan proves to be credible. The IMF is in no hurry and plays a game of holding the ball. Argentina owes the IMF $44 billion and has no reserves to pay it, but the first major payment committed to the fund is due in August. It has time and the Argentine government has little leverage. A default with the IMF would mean the end of the little external financing that remains, both with the Interamerican Development Bank and the World Bank, as well as with the Andean Development Corporation and many others:

The country desperately needs to show a plan to normalize the economy, especially to lower the exchange rate gap as a necessary condition to be able to increase the stock of reserves, to lower the country risk so that financing at least for the private sector can return and to define a fiscal deficit that can be financed without leading to a monetary emission which increases inflation. Without a plan there will be no investment or growth.

4 But the US and the Europeans are not the only imperialisms Argentine capital has to deal with. Brazil casts a tremendous shadow. The Argentine automobile industry does not cease to be dependent on the Brazilian one even in its military and arms dimension. In order to achieve investments in one of its few profitable industrial sectors, Fernández needs to secure Brazilian imports. Not only does he sell to Brazil, but he also depends on his neighbor for many basic industrial supplies, some medicines and even to create banknotes. Brazil is requiring Fernández to free up the entry of its exports in order to start talking and wants to increase quotas. But it also offers to multiply by five its demand for natural gas by building a gas pipeline to Vaca Muerta. Argentina is trying to contain a bilateral negotiation in which it is the weakest party and is playing at extending Mercosur by incorporating Bolivia; Brazil is demanding a reform to reduce bureaucracy in the process – that is, so that Argentina cannot freeze imports at customs during certain periods – and to allow its members more trade autonomy.

Fernández is cautious. He knows that the relationship with Brazil is also being played with China and the USA. And Brazil is having an increasingly difficult time with China if it follows the guidelines of the United States. Bolsonaro wants to lock the door on Huawei in 5G… but that would lead to retaliation from Beijing. So the landowners and the Brazilian agribusiness, the main support of bolsonarism in its beginnings, put pressure on the president. Argentina could be the great beneficiary of a Chinese-Brazilian estrangement.

However, China is not a saving wildcard for Argentine capital either. Its plans are textbook imperialism: it offers billions of dollars in investments to build highways exclusively for exports, and it does not hesitate to acknowledge that these new infrastructures, tailored to its needs, are of great importance for the People’s Republic of China. And even if the business may interest Argentine capital, it also forces it to swallow a toad. For instance: the Chinese deep-sea fleet, against which Europeans are stirring the international press and against whom even the military are asking for means to contain.

Being a man historically linked to the interests of U.S. capital in Argentina, Fernández thinks he has options with Biden to counterbalance the Chinese demands … and at the same time benefit from the fracture between China and Brazil.

This is the real imperialist game. Imperialism is not about territorial expansion, but about markets. It only becomes territorial under certain conditions. Tanks and planes only emerge in the end, when contradictions have become unbearable and only when the local bourgeoisie believes it can wage a war short enough not to provoke a workers’ uprising. Most imperialist competition and pressure goes into negotiations, bargaining, strategic moves and fights over the rules of negotiation in multilateral spaces. And, in spite of everything, the spectre of war is present at all times.

Conclusions

Argentine capital is in an impossible trap: its imperialist game depends on three-way carom with major powers; its capacity to recover profitability depends on a plan that Fernández has not dared to define yet and that can only aggravate what he already has set in motion: drastically worsening the general conditions of exploitation and pensions; and increasing profitability by lowering further the real wages. The real decision-maker of the future is therefore the working class. If it is sacrificed now by national capital, the working class cannot expect anything but new sacrifices in the future. It needs to free itself from the suffocating weight of nationalism in order to be able to claim and impose the satisfaction of its own needs, which are universal.

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