Argentina is again in the grips of an economic crisis – with debt and default with the International Monetary Fund looming over the country. It all seems a familiar tale, but there is a less well known story about Argentina from the famous crisis of 2001/02 – which shows how quickly at the local level an economy can reinvent itself and communities can come up with ways of supporting themselves. It was driven by necessity, but when conventional economics failed, it showed how there can be benefits to throwing out the rule book and rapidly doing things differently.
In 2001, under extreme economic duress, Argentina turned its back on international financial orthodoxy by defaulting on its $95 billion debt, which formed part of its long-term strategy to recover following the country’s banking collapse in 1998. In the years after the default, unemployment reached all-time highs and protests and social upheaval rocked the country. However, the national,economic collapse also revealed some cause for hope: a great capacity for rapid, autonomous adaptation at the local level.
In the Boca district of Buenos Aires, as in many parts of the country, Huertas comunitarias, or community gardens sprang up, along with accompanying community kitchens in many places. As whole arms of the national government ceased to function properly, local communities self-organised to fill the gaps. El Movimiento de Trabajadores Desocupados, the Movement of Unemployed Workers, brought assembled groups together to do everything from making food, to building shelters, creating markets for people to sell their products, providing schooling and demonstrating. They created, in effect, a parallel economy. Panaderia, bloquera and ropero – bakeries, block making, and clothes making and selling – were a particular focus, the very basics of a livelihood: food, shelter and clothing. One such group, CTDAV, had 15,000 members and paid out 9,000 unemployment benefits per month in 2002.
Today the situation seems bleak again for Argentina. Perhaps to compensate for slower-than-expected improvements in domestic capacity, the government permitted excessive foreign-currency debt, which was underwritten not just by experienced emerging-market investors, but also by “tourist investors” seeking returns above what was available in their home markets. When domestic-policy slippages made investors nervous back in 2018, the IMF readily stepped in once again. So far, Argentina has received $44bn under the IMF’s largest-ever funding arrangement. Will the workers and small businesses of Argentina once again have to come to the rescue?
Governments will agree to almost anything to avoid the kind of economic collapse that Argentina faced after it defaulted on its international debt in 2000. They are right to be afraid of the consequences, which can lead to mass impoverishment and serious political upheaval, from which it can take years to return to any kind of prosperity. But Argentina was also a case study in what civil society institutions – new and old – can achieve if their backs are up against the wall. That does not imply that any nation should copy Argentina, or that the Argentinian people did not suffer through the economic collapse – of course they did. However, the activation of workers and civil society actors to innovate, collaborate and ease the pain of the Argentinian crisis provides important lessons for crises in other contexts.
It is important to note that today, despite huge loans and the might of the IMF and global investors, although poverty levels in this nation of 44 million people have fallen since the crisis in 2001, they are still around 40 percent – and in a country that was among the world’s wealthiest in the early 20th century. In December 2019, the centre-left government of Fernandez agreed a new last-minute plan of measures to avoid collapse, involving tax hikes on foreign currency purchases, agricultural exports and car sales.The government says the tax rises will only affect the upper and middle classes. They intend not to take nothing more from the IMF; Argentina currently owes $335 billion, which is just over 90 percent of its gross domestic product. It remains to be seen whether this government can bring confidence back to its people, who still tend to prefer dollars to pesos. If there was greater appreciation of what people and communities were capable of when empowered or compelled to provide mutual aid, perhaps it isn’t too far fetched to suggest that the government should be looking to its people for inspiration rather than the other way around?
The collapse of the Argentinian economy came after a decade of neo-liberal policy changes throughout the 1990s, in which the Argentinian government diligently followed the IMF’s formula for structural adjustment – through privatisation of public assets and parity between the peso and US dollar. These policies which were intended to bolster Argentina’s economy actually had the opposite effect – increasing the international debt, poverty rates and unemployment across the country, and ultimately resulting in the collapse of the economy in 1998. The Argentine Great Depression lasted until 2002. The peso lost two thirds of its value, tens of thousands of businesses closed and unemployment soared to over 20%. By May 2002, over half the population had fallen below the poverty line. The economic crisis led to massive political upheaval – with five presidents taking office and being forced out in just two weeks.
In the absence of a functioning government, ordinary Argentinians who had lost their jobs and savings came together on the streets to organize. General assemblies were held in street corners and public spaces, where people would discuss how to help each other in the face of eviction or organise health care, collective food buying, or food distribution programmes. The assemblies began in the capital but soon spread to other cities around the country. In Buenos Aires, one local newspaper estimated that a third of the population of the capital had attended a general assembly or another activity organized by them.
Another grassroots innovation that sprang up to help people cope were the Redes de Trueque – or barter networks. In an interview with the BBC, Marcela Ricca, a resident of a town outside Buenos Aires, noted how these networks helped people survive – “You’d offer whatever you had…You might repair a washing machine and get six eggs for it. Or do somebody’s accounts and they’d fix your car.” These barter networks spread throughout the Greater Buenos Aires region and neighbouring provinces, and also began to issue their own currencies. By early 2001, there were several dozen Trueque currencies in circulation.
Also significant was the extraordinary solidarity and self-organisation of those workers who were forced into unemployment. During the economic collapse, many business owners and foreign investors sent their money abroad, which starved many small businesses of capital. In response to the closure of so many factories and massive job losses, workers banded together, broke into and occupied their former workplaces, and got back to work. They restarted the silent and rusting machines and successfully reorganised the factories as cooperatives. In 2002-3, there were 200 occupied factories being run by workers in Argentina. Among the new co-operatives was a 4-star Hotel, printing factories, garment factories, health clinics and the largest tile factory in Latin America.