'No' to Predatory Capitalism

Vijay Prasad

Elections and protests rattle the South American continent. The protest by Chilean students against metro fees has now become a general protest against the government. In Colombia, the right wing suffered significant defeats in the local elections.

In Argentina, the electorate tossed out the government of Mauricio Macri, who had taken his country to the International Monetary Fund (IMF], produced a harsh austerity budget, and then disregarded the pain felt by his compatriots. If Haiti and Ecuador simmer with "IMF Riots", Argentina had an "IMF Election". The incoming government of Alberto Ferrnandez and Cristina Fernandez de Kirchner promises an exit from neoliberalism. Argentina's external debt is at about $285 billion, just under $ 6,500 per person. This foreign debt is almost 75 percent higher than when Macri took office in 2015.

Forty years ago, the propertied classes revolted against any social democratic arrangement in their countries. As a result of fears over capitalist turbulence, Keynesians argued that the state must intervene to smooth over the instability of the business cycle. Pressure from the workers' movements and the Left forced governments to finance social security, education, health care, and elder care. Funds for state intervention and for social spending came—largely—from progressive taxation.

The rich no longer wanted to make these payments. One of the earliest countries to undergo a liberal transformation was Chile.

As the rich withdrew from taxation, governments—of a variety of political persuasions—struggled to fund their own borrowing and the social spending won by the workers.

Multilateral organisations—such as the IMF—and ratings agencies punished countries that had high deficits; this is why many countries passed balanced budget amendments that prevented borrowing to pay for social spending. A combination of the tax strike by the rich and the balanced budget amendment squeezed government spending.

To raise funds, governments did at least five things:
1.   Privatised public assets—such as public banks, public utilities, and public lands.
2.   Commodified areas of social life—Governments allowed private firms to charge money for the delivery of goods that had previously been seen as social and whose delivery was not for a fee—such as water and electricity.
3.   Deregulated business enterprises—Governments eliminated regulations that protected the public from the excesses of profit-making-such as environmental pollution.
4.   Gave subsidies to big corporations—To attract big corporations to their jurisdictions, governments began to provide massive subsidies to them-subsidies that were often larger than the funds laid out toward social services.
5.   Cut social spending—Austerity budgets became the norm, with States cutting social security, education, health care, and elder care.

This remains the core of neoliberalism. It has wrecked the world. It is why they are saying "never again" to neoliberalism in the ballot box and on the streets of South America.

The new Argentina has pledged to abandon the road of austerity, to robustly fund the social commitments of the government, and to adopt a national development strategy. How it will do so with the massive debt overhang and the expected pressure from the creditors and the multilateral organisations is to be seen.

In Argentina, debates around the exit from neoliberalism have been ongoing. Among steps that the new government can take include suspending all subsidies to corporations, ordering an audit of each of these subsidies, and taking steps to seize money held by Argentinians in tax havens abroad. If subsidies to corporations are suspended and if taxes are collected, there should be enough money to finance not only food sovereignty schemes that tackle endemic hunger, but also cooperative production for food and goods.

It's a period of transition. There is no doubt that the ruling classes have no idea how to solve the problems posed by capitalism—massive wealth, massive inequality, climate catastrophe, and war. Neoliberalism, their policy framework of the past 40 years, is now in serious crisis. No full alternative is available. Argentina's government will be under pressure to test an exit to neoliberalism. There will be excluded workers and feminists in the streets making sure that it does not betray their hopes.

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Frontier
Vol. 52, No. 28, Jan 12 - 18, 2020