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
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
The second pillar of the populist compromise was support for new industrial growth and manufacturing magnates. The Peronist administration used several devices to accelerate import-substitution industrialization (isi): foreign-exchange controls, heavy public-sector borrowing to finance procurement, high levels of protection for the manufacturing sector, and greatly expanded supply of credit. Accordingly, a new industrial elite emerged under the umbrella of state subsidies and protection. Many of these firms established links to the state under the Confederación Económica Argentina (cea), renamed Confederación General Económica (cge) in 1952. The more traditional manufacturers in the Unión Industrial Argentina (uia) splintered and were absorbed by the government. Some of the industrial giants made their fortunes off highly protected domestic private markets primed by forced transfers of wealth from the traditional agro-export sector and public-sector credits. Another group slowly emerged, especially in construction and public works, such as Pérez Companc, Techint, Soldati, and relied explicitly on public-sector contracts. This latter sector proved more adaptable to future shifts in state policy—especially with the subsequent squeeze on the private domestic market.
The heyday of this alliance of industrial elites with trade unions to refashion the Argentine political economy lasted only a few years. Padded by support from some ideological nacionalistas and some members of the clerical establishment, Perón appeared to have galvanized a powerful, indeed invincible bloc. But by 1949, the government was forced to curb its spending and profligate credit. By the 1950s, the economy was in full crisis. The weaknesses were both internal and external. Externally, isi never addressed the underlying dependent nature of the economy: rapid industrialization required massive imports of raw industrial materials and capital goods, but required export revenues from traditional staples. By 1952, due in part to anti-export policies and domestic consumption of staples, traditional agro-exports plummeted. The yawning balance-of-payments crisis symbolized one aspect of the limited nature of populist structural reforms.