The Argentine Crisis: Economy, Society and Ethics in Times of Globalization

Where We Are
[1] The full dimension of the economy in today’s world signifies a concentration of power and influence that penetrates economic, political, social and cultural life. As a result, the character of contemporary capitalist society is experimenting fundamental transformations that have significant repercussions on the populations of developed and developing countries. One cannot understand the socio-economic dimensions of the emergence of the strong capitalist offensive of recent decades without referring to the transformations that this process is generating in the global capitalist system itself, within which Latin America obviously is found.

[2] The whole world moves to the rhythm of a new capitalist phase called globalization. We are in the presence of a profound turning point in the power relations between markets and states. This change once again places on the table the discussion regarding the source and operation of economic authority and its consequences for all of society, and in particular for those sectors of the population that are most vulnerable.

[3] In Latin America but also in other regions of the globe, the reforms adopted from 1980 on were meant to overcome the permanent crisis of external debt and to make growth possible. These reforms had a twofold, simultaneous strategy: improve the market by freeing it more and more, and improve the state by minimizing it to the maximum. Privatization, deregulation, and the liberalization of trade and finances – key themes of the Washington consensus – were thus applied for the most part in Latin America.

[4] Placed in this perspective, the phenomenon of globalization uncovers the strategy of giving priority to the economic sphere over the social and political spheres. From this angle, one can understand the retreat from the social commitments elaborated and put in practice by the “providential” Keynesian state. Thus, the economic authority of the states has been permanently weakened. The enormous wave of deregulations and financial capital with which they had to compete has condemned the states, almost inexorably, to the loss of adequate instruments to mediate between the strong pressures of capital and the interests of the social body. One does not have to be very perceptive to realize that the tendency of the globalization process is to submit progressively and without limits all physical and social space to the laws of capital and the market.

[5] As I will show later, contrary to the argument of the defenders of this economic model, its progressive and systematic application has, among other consequences, marginalized the labor market of large sectors of the population that formerly participated in the national economy. The shrinking of the public sector, together with layoffs by privatized companies driven by competition, dramatically increased the unemployment rate. In Latin America at least, this system did not propel itself economically; due to the great influence of structural problems, it neither grew nor mobilized the development of productive forces in an equitable and homogeneous manner. The programs of stabilization and permanent structural adjustment, applied to the economies of the region under the strong pressure of the international system, are so severe that they do not contribute to generating resources for development. Rather, they are applied with the purpose of meeting the commitments required by the external creditors. The coincidence of these variables eloquently demonstrates that the reforms realized by the countries of the region, directed toward the unyielding liberalization of the market, have accentuated the economic insecurity generated earlier by the debt crisis. The phenomenon that we are analyzing is inherent to the existence of a backward and highly dehumanized capitalism, which increases poverty. According to data from CEPAL (Comisión Económica para América Latina), in 1990 more than 46% of the population – almost 160 million people – were living in poverty. That is, there were 83 million more in poverty than in 1970 and 50 million more than in 1980, the year in which they begin to apply the different variations of this model in the region. Today we know that more than two-thirds of the continent’s population live below the poverty line, and of that, more than one-tenth live in abject poverty.

Argentina: Exception or Symptom?
[6] Argentina represents a good example of what I have just indicated. Along with the changes brought about in democracy, Argentina was until recently one of the best followers of the neo-liberal globalization model and one of the most recognized disciples of the International Monetary Fund (IMF). In 1991 convertibility – dollarization of a lesser grade – ended hyperinflation of more than 4,900%. Between 1991 and 1994 its economy grew at an annual rate of 6.5%. Argentina renegotiated its debt, reopening the door to international banking. It privatized almost all that could be privatized for an amount close to 35 billion dollars. It opened its markets and deregulated its finances. It adjusted and readjusted all that was possible. The Argentine methodology was used as a model to be followed by other countries. In this manner, the effects of the rigid currency exchange system and IMF prescriptions created a strong ferment in Argentina. External clashes acted as catalysts for a chain reaction that exploded into a commercial deficit that since 1992 has become chronic. The overvalued type of exchange encouraged imports. De-industrialization was a constant. Exports were reduced to primary products. Privatization increased the cost of basic services, and the transfer of money for utilities strangled external payments. Without income from privatization, the economy lost its momentum; the Gross National Product grew 3,6% between 1995 and 1997, and then from 1998 on entered into recession. Unemployment has been in the double digits since 1993, and was at 18% at the end of 2000. In order to finance the foreign deficit and dispose of reserves destined to back up the monetary base, external indebtedness was accelerated: The debt jumped from $59 billion in 1991 to $132 billion in 2001. Towards the end of convertibility, the rigidity of the exchange rate was complemented with major fiscal rigidity: At the peak of arrogance, bank deposits were frozen in order to reach a zero deficit.

[7] The consequences of this entire neo-liberal globalization package are evident. Argentina synthesizes the word “crisis.” It completes its fourth year in recession. Unemployment borders on 20%. The investment risk index for the country grew from 300 basic points to 4000. Under-employment reaches 40%. The active interest rate surpasses the passive rate four times over. Its bonds are quoted at below 40%. Pension funds were forcibly transformed into treasury notes. Poverty affects 14 million people, almost 39% of the population. 60,000 small and medium companies have disappeared, and a large part of the remaining ones are totally or partially paralyzed. There is not even the most minimal safety net for the unemployed, and external commercial credit has been cut.

[8] A painful, morally intolerable consequence of this model of a market economy without controls and without local regulation mechanisms is that the number of people who lack employment and a safety net grows at a dizzying speed; levels of inequality that were previously unacceptable are now being accepted. In the discussion on this matter in recent decades, it was thought that the social consequences of the application of the model would only affect a small group of people, and therefore could be downplayed as a problem. Now it has been revealed as a very serious danger. The regimen of Suharto in Indonesia, for example, fell because there was no way of rescuing the majority of people once work ran out. As one can appreciate, Argentina is no exception.

Exclusion and Society
[9] In the midst of this panorama, like a growing signal of alarm, one social and cultural phenomenon advances in gigantic steps in Latin America and in the world. I refer to exclusion. For some time now it has been pointed out that, instead of the classic situation of the unemployed being the reserve armies of capitalism, there emerges at present a new group of marginal people no longer needed by the system, producing a social fracture with different characteristics than the classic diagram of exploitation and domination. This does not mean that exploitation has ended, but that it has acquired a different form. There do not appear to exist the known mechanisms of equilibrium of the law of supply and demand, governed by the implicit logic of the relation of forces between those who have to supply work and those who have to demand work. The exclusion operates in such a way that the included end up not requesting anything from the excluded, and the latter begin to feel that they have nothing to offer. In this way, the curve of demand of the included and the curve of offer from the excluded appear not to meet. This phenomenon is what the French thinker Pierre Rosanvallon has called the “massive movement of social secession” and what Michael Walzer has denominated the “society of alienation.” From this perspective, exclusion is, more than a state or a situation, a process of multiple dimensions that not only embraces the difficult problem of unemployment but also is identified as a phenomenon of distance, of the disaffiliation of the life of the citizen, of the loss of agency, and of participation in social exchange and the construction of society.

The Crisis of Social Space
[10] This present day phenomenon of exclusion has at the same time produced a crisis of social space. Proof of this is the existence in almost all societies of closed communities and privileged neighborhoods of people who do not want to live close to others. In reality, the concept of nation based upon the lone fact of citizens living in the same soil, yet separated into watertight compartments, separated by economic, cultural, racial, religious, and linguistic barriers, is an abstract concept. In the history of the nineteenth century up until 1960, the costs of heterogeneity in terms of redistribution of wealth – since a benefactor state is more expensive the more heterogeneous its population is – were compensated by the economic benefits of operating on a grand scale. This is no longer true because of the way the market organizes its production and consumption to obtain greater profits, converting these differences into inequalities and exclusion.1 These inequalities are reproduced in almost the entire world, and there are growing and precise symptoms of the existence of groups constantly more numerous that do not find themselves within the social space. Maintaining the cost-benefit equation appears to encourage middle- and upper-class people to live in closed cities and people in poverty to live in ghettos. The result is a sort of generalized apartheid. In this aspect let me point out that political citizenship, that is citizenship in its most narrow meaning, is probably exercised by all citizens. But the right to vote does not solve all the problems, and besides, it is sporadically exercised. The notion of citizenship understood in a broad sense is a notion richer and more comprehensive that goes beyond suffrage and that should be interpreted as global citizenship. That is to say, it is a right to participate in the construction of the city and in the management of one’s everyday dwelling place. Thanks to economic citizenship one participates freely in the exchange of goods. Social and cultural citizenship consists of maintaining bonds of relationships as well as in creating and enjoying cultural goods. It is also the right of not being rejected, discriminated against, and excluded by others and of having access to a common symbolic inheritance.

[11] As the global market economy has been extended and consolidated in the social web on a worldwide scale, it has influenced the social web in such a way that social relations have become more selective, competitive and fragmented. Captivated by the logic of the market, social space has become freer, but less consistent, sensitive and in solidarity with those who are left out from the benefits of the system. It is for these reasons that we see in many nations – as is the case in Argentina – the collapse of the social state, and it is also for these reasons that we are present in a severe crisis of social space.

Who is the Other?
[12] It is my understanding that the crisis of social space is in turn associated with the crisis concerning the interpretation and recognition of the “other.” The present process of globalization does not mean that we are all available for others, that we all can enter in all places, and that we all can consume what we need. Therefore this process is not understood without the dramas of exclusion, the cruel aggressions of racism, the public and private attitudes of discrimination, and the magnified disputes on a worldwide scale for differentiating the others that we can choose from those with whom we are forced to live. Here is the human cost of globalization that operates to the rhythm of a reconfiguration of identities: Instead of listening to others as they speak, one assimilates them to a supposed global culture that eliminates stigmas and obstacles for capital but that sharpens the breach between the social actors. The topic of equity and social exclusion is not only serious but is highly complex since, besides the usual poor, we now have the “new poor.” It seems we are marching toward the shaping of a social structure in which many could be definitely excluded. More than 120 million Latin Americans – a great part of whom are women and children – live today in abject poverty, and the projections of generating productive work for all – or even for the majority – even in the most optimistic hypothesis, does not permit having much hope. Without success at this level it is difficult to name and recognize the “other,” the multiple “others” that although they are different ought to be truly recognized and accepted in their difference through their equitable and democratic inclusion in our common social space.

The “Other” from the Christian Ethic
[13] Now, should or should not Christians seriously ask the following: When God in Jesus Christ assumed reality by becoming human, does this not mean that Jesus Christ is human for all humans? Is Jesus Christ not the person completely committed to the other, whom he transforms into his neighbor? Is not this action from God in Jesus Christ simultaneously the act and symbol of the word of promise of hope, of reconciliation, and of the transformation of life and its conditions? Thinking about this question, the theologian Jurgen Moltmann reflects in the following manner: “The singularity of the Christian possibility of hope resides in what is born from the memory of the resurrection of the crucified Son of Man. That the future of the human being has already begun with this discarded and expelled Son of Man can certainly be classified as the impossible possibility of hope in this world. To live in hope means to be able to love life discarded, unloved, and excluded. Christian hope to the extent that it is Christian is hope for the future of the dispossessed.”2 But in this sense what else does love mean, asks Moltmann, if not to count on the possibilities evoked from the other, including here the possibilities of God in him or her? It is true that we cannot say a-priori to what extent a strategy of humanization of culture and of a globalized market economy could make this fact intelligible. But this does not justify that we become accustomed to the ethical and spiritual emptiness of the absence of this hope in our social and natural space. If we were to do so, we would be legitimatising the suffering and the harshness of dehumanized policies, especially for the most vulnerable sectors of society. On the contrary, by the merit and grace of the incarnation of God in Jesus Christ, by His Cross and resurrection, God is shown to be “that other par excellence,” who gives his life for others and who directs himself critically against those powers that struggle today for world sovereignty and oppress the humanity of human beings. Today this means having a conscience and acting in accord with it to create an authentic world society that is not based on the planetary triumph of any hegemonic empire, of any single concept, and even less, of a globalization that transforms the world into merchandise. I consider that this rallying cry is contextually valid and profoundly compatible with a Christian ethic that, based in the Word of grace and in justification, should seek justice and equity in an unredeemed world.

End Notes

1 Canclini, N., “La Globalización imaginada.” Buenos Aires, 1999.

2 Moltmann, J., “El hombre.” Salamanca, 1980.