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The “Social Pact” as Anti-Inflationary Policy: The Argentine Experience Since 1973

Published online by Cambridge University Press:  18 July 2011

Robert L. Ayres
Robert L. Ayres
Affiliation:
University of California, Berkeley
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Extract

Inflation has long been a fact of economic and political life in Argentina. The Peronist government which assumed office in mid-1973 attempted to control inflation through the so-called Social Pact, a wage-price agreement of two years’ duration involving the leading labor union organization, a leading businessmen's organization, and the Argentine state. An awareness of the principal issues of the economic situation is essential to an understanding of the crisis of contemporary Argentina, and a description of the evolution of the Social Pact reveals some of the essential contours of the economic debate. But the importance of the Social Pact extends beyond mere economic considerations. The study of the latest Argentine experience with anti-inflationary policy suggests some generalizations about the nature of populist political movements, the symbolic functions of economic policy initiatives, and the functions of such policies in co-opting private economic actors and legitimating governmental interference with free market forces. It also reveals some important characteristics of Argentine politics, especially concerning relations between the state and private economic groups. With economic and political implications of comparative significance, the Argentine Social Pact is an important case study in political economy.

Type
Research Article
Information
World Politics , Volume 28 , Issue 4 , July 1976 , pp. 473 - 501
Copyright
Copyright © Trustees of Princeton University 1976

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References

1 Guillermo A, O'Donnell, Modernization and Bureaucratic-Authoritarianism: Studies in South American Politics (Berkeley: Institute of International Studies 1973), chap. III. This view, however, has been disputed by Mario S. Brodersohn in a recent review of O'Donnell's book.Google ScholarSee Brodersohn, , “Sobre ‘‘Modernizatión y Autoritarismo’ y el Estancamiento Inflacionario Argentino,” Desarrollo Economico, XIII (10-12 1973). 591–605CrossRefGoogle Scholar.

2 Foundation of Latin American Economic Research (FIEL), Indicadores de Coyuntura (Buenos Aires: FIEL 1973), 15Google Scholar.

3 The three-year plan announced in December 1973 made this goal more explicit. Specifically, wage- and salary-earners were to see their percentage participation in national income rise from 42·5% in 1973 to 47·7% in 1977. The latter figure had been their share in 1955, the year of Peron's overthrow. The goal for the longer range was to increase their participation to 52% by 1980. See República Argentina, Poder Ejecutivo Nacional, Plan Trienal para la Reconstruction y la Liberatión National, 1974-1977 [hereafter cited as Plan Trienal] (Buenos Aires 1973), 21, 48Google Scholar.

4 This description of some of the essential points in the Act of National Commitment is based upon the original text of the document as published in República Argentina, Presidencia de la Natión, Secretaria de Prensa y Difusión, Politica Económica y Social: Ruptura de la Dependentia (Buenos Aires 1973). The quotation is found on pp. 54-55. The translation, as well as all subsequent translations from Spanish sources, is the author'sGoogle Scholar.

5 La Nación (international edition), 02 24, 1975, p. 6Google Scholar.

6 A CGT official, quoted in La Nación (international edition), 04 21, 1975, p. 2Google Scholar.

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8 Plan, Trienal (fn. 3), 53Google Scholar.

9 The estimate is contained in Bureau of Labor Statistics, Labor Law and Practice in Argentina (Washington, D.C.: U.S. Department of Labor 1969), 24Google Scholar.

10 Torre (fn. 7), 15; Bureau of Labor Statistics (fn. 9), 32. This statement refers to periods of “normal” collective bargaining under the terms of Law 14.250 (1953). At various times, government enactments have in effect suspended such bargaining. This was the case during most of the administration of Juan Carlos Ongania (1966-1970), when compulsory arbitration and governmental imposition of wage ceilings were common. It was also the case, though for quite different motivations and reasons, in the period under consideration here—when the Social Pact suspended the wage-determination functions of the “collective work conventions” for a two-year period.

11 The internal politics of the CGT have not been systematically studied from the perspectives of sociology or political science. For a chronology of some of the divisions referred to here, see González, Santiago Senén, Breve Historia del Sindicalismo Argentino (Buenos Aires: Alzamor Editores 1974)Google Scholar.

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13 Unión Industrial Argentina, Memoria y Balance 1973-1974 (Buenos Aires: UIA 1974); list of affiliates on pp. 63–77Google Scholar.

14 Wynia, Gary W., “Economic Policy-Making Under Stress: Conflict and Exchange in Argentina,” Latin American Development Administration Committee (LADAC) Occasional Papers, Series 2, No. 11 (Austin, Texas: Institute of Latin American Studies 1974). 23Google Scholar.

15 It is difficult to identify “small-and medium-scale industry” precisely. The principal publication of the recently created Corporation for the Development of Small-and Medium-Scale Business eschews a quantitative definition of “small” or “medium” but estimates that there are 1·3 million Argentine firms deserving such a classification. These represent 90% of the total number of firms in the country. See Corporación para el Desarrollo de la Pequena y Mediana Empresa (COPYME), Informe Sobre la Labor Cumplida por COPYME, 1973-1974 (Buenos Aires: COPYME, n.d.)Google Scholar.

18 Wynia (fn. 14), 23, cites the 58% figure, although it appears that the percentage should refer to businessmen's associations (entidades de primer grado) and not to individual firms. The other estimates are from an address by José Ber Gelbard and cited in Niosi (fn. 12), 170.

17 See Cuneo, Dardo, Comportamiento y Crisis de la Clase Empresaria (Buenos Aires: Editorial Pleamar 1967), 174 ffGoogle Scholar.

18 Bureau of Labor Statistics (fn. 9), 27.

19 Plan Trienal (fn. 3), 66. This figure represents the total of all employees of the national, provincial, and municipal governments, as well as employees of all state enterprises.

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21 “El único pais sin inflatión?” Mercado, 11 1, 1973, p. 13Google Scholar.

22 Ibid., 18

23 Various sources have been used in the compilation of cost-of-living data, including the relatively recent Carta Politico; Indicadores de Coyuntura, the monthly publication of economic data from FIEL; the weekly economic summary in La Nación (“Al margen de la semana”); and the business publication Mercado.

24 According to Marcelo Diamand, “national populism” (i.e., Peronism) is characterized by “the conviction … that an increase in popular well-being is incompatible with an increase of advantages for capital.” Diamand, , Doctrinas Economicas, Desa-rrollo e Independencia (Buenos Aires: Editorial Paidos 1973), 428Google Scholar.

25 Mercado, 11 7, 1974, p. 16Google Scholar.

26 Diamand has pointed out that “national populism has traditionally identified an increase in exports as antipopular since it appeared to be an alternative to domestic consumption.” Diamand (fn. 24), 426.

27 Interview with Juan Carlos de Pablo of FIEL, November 12, 1974.

28 On this problem, see Mercado, September 19, 1974, p. 13.

29 Carta Politica, No. 20 (04 1975), 36Google Scholar.

30 Carta Politica, No. 21 (04 1975), 43Google Scholar.

31 This refers to “the average of the single wage earner and the married wage earner with a typical family.” It is based on data of FIEL and cited in Mercado, June 20, 1974, p. 14.

32 Data from April 1974 to August 1974 are from Mercado (various issues), and refer to “the average of the single wage earner and the married wage earner with a typical family.” Subsequent data are from Carta Politica (various issues), and refer to the single common laborer (peón).

33 La Natión (international edition), 06 16, 1975, p. 6Google Scholar.

34 All data in this paragraph are from Mercado, January 3, 1974, p. 33.

35 Mercado, 08 15, 1974, pp. 25, 26Google Scholar.

36 On these recent developments, see La Nación (international edition), 03 10, 1975. P. 5Google Scholar.

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38 The survey was conducted by FIEL; the results were reported in La Nación (international edition), May 26, 1975, p. 6.

39 Ibid.

40 In real terms, of course, this signified a sharp decline in capital outlays.

41 Data on the 1974 deficit are from Carta Politica, No. 16 (02 1975), 31. Data on the proportion of the gross domestic product represented by the deficit are fromGoogle ScholarCarta Politica, No. 12 (12 1974), 45Google Scholar.

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43 See the reports in La Nación (international edition), 05 26, 1975, p. 1, and June 2, 1975, pp. 1 and 5Google Scholar.

44 Wynia (fn. 14), 63.

45 Alejandro, Carlos F. Diaz, Essays on the Economic History of the Argentine Republic (New Haven: Yale University Press 1970), 206Google Scholar.

46 See the interview with Horacio Giberti, Minister of Agriculture, in La Opinión, 08 10, 1974, pp. 12–13Google Scholar.

47 Carta Politica, No. 13 (12 1974), 39, 45Google Scholar.

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49 Carta Politica, No. 19 (03 1975), 43. This indicates the validity of Diaz Alejandro's observation: “the correlation between aggregate rural output and the overall rural terms of trade is not a close one, and the apparent price elasticities that emerge are generally low and/or statistically insignificant. Although prices no doubt influenced producers by affecting their expectations about future rates of return in farming, they cannot provide the whole answer to the question of rural stagnation.”Google ScholarAlejandro, Diaz (fn. 45), 169, 171Google Scholar.

50 Wynia (fn. 14), 63.

51 La Nación, 09 7, 1974, p. 1Google Scholar.

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53 For a lengthy discussion of this question with reference to Argentina, see O'Donnell (fn. 1).

54 Gino Germani, the noted Argentine sociologist, explains: “If I have called Peron-ism a populist movement (a national popular movement, to be more precise), this is because it was made possible and acquired its peculiar form through an implicit ‘class alliance’ between workers and the new industrialists, with the participation of a political leadership of distinct origins—including many fascists—which locates Peronism in a category eminently different from that of parties of the ‘working class’ as these are commonly conceived.” Germani, , “El Surgimiento del Peronismo: el Rol de los Obreros y de los Migrantes Internos,” Desarrollo Economico, XIII (09-12 1973), 446; italics in originalGoogle Scholar.

55 Diamand (fn. 24), 16.

56 Stewart, Angus, “The Social Roots,” in Ionescu, Ghita and Gellner, Ernest, eds., Populism (New York: Macmillan 1969), 192Google Scholar.

57 P. J. D. Wiles, “A Syndrome, No t a Doctrine: Some Elementary Theses on Populism,” ibid., 167.

58 Stewart, ibid., 181.

59 Mercado, 06 20, 1974, pp. 48–49Google Scholar.

60 “Declaración del Equipo Economico,” ibid., 52.

61 Braun, Oscar, El Plan Económico del GoMerno Popular (Buenos Aires: Editorial El Coloquio 1974), 39, 36. Braun is referring to the post-Ongania experience, and particularly to the government of General Alejandro Lanusse, but his subsequent analysis of contradictions in the Peronist movement makes it apparent that his observations apply to Peronist economic policy as wellGoogle Scholar.

62 Ibid., 43-49.

63 Philippe C. Schmitter, “Notes Toward a Political Economic Conceptualization of Policy-Making in Latin America,” paper delivered at the Conference on Public Policy and Its Impact in Latin America, Aires, Buenos, 08 12–17, 1974 P. 57. The conference was sponsored by the Social Science Research Council and the Center for Research in Public Administration (CIAP)Google Scholar.

64 For a general discussion of several previous stabilization schemes, see Wynia (fn. 14). Also see Ferrer, Aldo and others, Los Planes de Estabiligacion en la Argentina (Buenos Aires: Editorial Paidos 1974)Google Scholar.

65 For an example of such arguments, see Wildavsky, Aaron, “If Planning is Everything, Maybe it's Nothing,” Policy Sciences, IV (06 1973), 127–53CrossRefGoogle Scholar.

66 By a “non-state-centric” system, I mean one in which “civil society”—private actors, intermediary interest associations, and so forth—is dominant, such that the primary role of the state is to react and respond to the demands and supports emanating from the civil sphere. A “state-centric” system is one in which the state retains the primary policy initiative. For a lengthier and provocative discussion of these matters, see Schmitter (fn. 63), 40 ff.

67 Portantiero, Juan Carlos, “Clases Dominantes y Crisis Politica en la Argentina Actual,” in Braun, Oscar, ed., El Capitalismo Argentino en Crisis (Buenos Aires: Siglo Veintiuno 1973), 106Google Scholar.

68 That has certainly been the standard leftist critique of the Social Pact. Curiously enough, it could just as easily be a rightist critique addressed to the failure to control labor's demands.

69 Edelman, Murray, Politics as Symbolic Action (Chicago: Markham 1971), 142, 176, 177. 23Google Scholar.

70 Interview with a president of one of the principal chambers of the UIA, October 16, 1974.

71 El Mercurio (international edition), 02 1-7, 1971, p. 1Google Scholar.

72 Mercado, 06 20, 1974, p. 48Google Scholar.

73 Edelman, Murray, The Symbolic Uses of Politics (Urbana: University of Illinois Press 1964), 81Google Scholar.

74 Ibid., 60.

75 Interview, September 30, 1974, with Roberto Martinez Nogueyra, staff member of the recently created National Institute of Public Administration (INAP) and former subsecretary (1970-1971) of CONADE, the Argentine national planning office.

76 La Opinión, 08 3, 1974, p. 20Google Scholar.

77 Interview, September 20, 1974, with Javier Villanueva, staff member of the Centro de Investigaciones Economicas of the Instituto Torcuato di Telia, and a former secretary (1971) of CONADE.

78 It should be noted, however, that Peron's death intervened before the merger.

79 Interview with Villanueva (fn. 77).

80 Interview, October 4, 1974, with Marcelo Diamand, President of the Chamber of Producers of Household Goods, an affiliate of the CGE.

81 For a highly useful discussion of the economic ideology of “liberal orthodoxy,” see Diamand (fn. 24), chap. 1. Also see O'Donnell (fn. 1), chap. III.