Falling dictatorships and troubled transitions to democracy in Latin America have dominated the agenda of social scientists of the region. These regime changes have largely been appraised within conjunctures of suddenly shifting political balances and economic crises. Such an approach seems all the more valid in light of the contemporaneous appearance of events: the swing to elected governments gathered speed in the early 1980s just as the international debt crisis hit Latin America with full force. In Argentina, the crisis culminated in 1982 with the Malvinas/Falklands War, the fall of the military, debouching into the triumph of Raúl Alfonsín in October 1983, and more recently with the victory of the Peronist Carlos Menem in 1989.

Seen from this perspective, however, the terms under which Argentina’s democracy is being forged are not easily understood. As much as the immediate conjunctural crisis of the debt and military failure in reshaping Argentina’s political economy are longer-term, deeper resolutions to the fallout of populism. From a broader standpoint, it is clear that what is now occurring is the definitive dismantling of a system created in the 1940s. Free-market liberalization, privatization, restoration of emphasis on exports, curbing trade-union power, and limits on political participation and expression of popular grievance are not just momentary responses to internal and international pressures, but the crest of a historic struggle to shatter populist alliances and their economic programmes. In varying degrees and permutations, Latin Americans are witnessing the reconstitution of historic blocs represented by new economic forces under new, and limited terms of political aperture. In Argentina the process of eviscerating populism has been both unsurpassed and shockingly successful for propertied interests. This article sets President Carlos Menem’s démarche into the context of a half-century conflict over the shape of the republic’s political economy.

The Second World War and its aftermath ushered in a wave of populist victories across Latin America, bringing new social alliances to power. Prior to the 1943 coup d’état which brought Perón to the labour secretariat and later to the vicepresidency, the Argentine political economy wallowed within an old agro-export system and traditional elite rule based on electoral fraud and corruption. The Second World War, urbanization and swelling ranks of industrial workers threw into crisis the old nostrums of export-oriented growth, close ties with Britain, conservative election rigging and the exclusion of labour. By the early 1940s, a new order was emerging: industrialization based on production for the internal market, and clamour among middle and working classes for representation within the state.

One pillar of the Peronist alliance was labour incorporation. Hitherto, unions lacked juridical bases for collective representation and bargaining, or political participation. As Perón sought allies to buttress a wobbly military government, trade unionists offered support in return for strategic concessions. By October 1945, Perón established pension schemes, housing programmes, and most importantly, an obligatory system of collective bargaining and full trade-union rights. This last concession led the military junta to gaol its vicepresident, an act which provoked massive labour demonstrations, culminating in the take-over of Buenos Aires and other cities by workers on 17 October 1945. Fearing social revolution, the military released Perón, and promised elections in early 1946. Unionists, having flexed their muscles, created their own Labour Party in late October, which served as the fulcrum of a coalition which narrowly won at the polls in February 1946. To preserve labour loyalty, Perón offered massive welfare schemes and bargaining rights. Trade-union membership soared from 520,000 to 2.3 million between 1946 and 1951.footnote1

In due course, Perón used the mechanisms of industrial relations provided under the October 1945 decree which had led to his arrest, to tighten slowly his grip over the unions.footnote2