By CLAUDIO KATZ*
Milei applies the neoliberal doctrine of shock with a virulence never seen before
In the first weeks of government, Javier Milei demonstrated the extraordinary chaos he intends to establish. No denomination exaggerates this offensive. It is a “war plan against the working class”, a “chainsaw against the dispossessed” and an “integral counter-reformation of Argentine society”. It applies the neoliberal shock doctrine with an unprecedented virulence. Martinez de Hoz, Rodrigazo, Menem or Macri are timid antecedents of the ongoing brutality.
Javier Milei hopes to complete within a year the public expenditure surgery that the IMF proposed to carry out over five years. He proclaims the desirability of suffering and predicts an even greater collapse in popular income before achieving the promised economic recovery. He omits that these sufferings will not extend to the handful of powerful people that his administration enriches. It also hides the unnecessary and premeditated nature of the damage it is causing to the entire population.
The libertarian presents his sledgehammer as the only possible solution to contain an imminent economic catastrophe. But he substantiates this diagnosis with absurd numbers. He invents hyperinflation of 15.000%, twin deficits of 17% of GDP and warns of an increase in the price of a liter of milk from 400 to 60 thousand pesos. He insanely exaggerates the imbalances of the inheritance received to disguise the atrocity of his measures.
"Javier Milei's priority is to make work precarious, taking advantage of the demolition of labor costs imposed by inflation
In a few days, he denied all the election campaign messages. His decrees penalize the bulk of the population and not a handful of politicians. He has already replaced mentions of “caste” throughout the State as the recipient of cuts. Now, he confesses that his scissors will extend to the private sector, but omits that large capitalist groups are exempt from this adjustment.
General impoverishment
With a history of avoiding future hyperinflation, Javier Milei generates immediate superinflation. It started with a 100% mega devaluation that increased the cost of living to 25-30% per month. Remedying the danger of this scourge with more inflation is the first absurdity of his program.
Food prices rose again above average, threatening the survival of the poorest sectors. Javier Milei intensifies this degradation, annulling all legal obstacles to the savagery of the market (supply and shelf laws). He eliminated restrictions on meat exports in order to fix the price of this food in his priceless international quota.
A dramatic jump in poverty is already predicted, which, in the first quarter of 2024, would affect 55-60% of the population. Irrelevant compensation for cuts in social plans will result in malnutrition.
Retirees are, once again, the most affected segment. Javier Milei avoided granting bonuses, which periodically provide relief to those who receive the minimum wage. Furthermore, he is preparing another change to the mobility formula to punish the most vulnerable sector of society. The objective of this cruelty is to recreate the bankrupt AFJP (private retirement) regime, alleging insufficient funds in Social Security. He omits that it would be enough to replace employer contributions (eliminated by menemism and not replaced by his successors) to balance this system.
Javier Milei's priority is to make work precarious, taking advantage of the demolition of labor costs imposed by inflation. With this objective, he promotes a labor reform that disperses compensation, eliminates ultra-activity from agreements and extends evaluation periods.
The middle class will be hit with fare increases that will double the price of transport in AMBA [Buenos Aires Metropolitan Area]. Without departing from the principle of leveling down, Javier Milei argues that, in the rest of the country, these expenses are higher. It also reinforces the campaign by prepaid medicine companies to capture the cream of the market. His decree will allow them to capture members of social works with higher incomes, to expel the poorest to hell from public hospitals without resources. These companies prepare their new business with tariff increases of 40 or 50%.
“Banks celebrate the deregulation of credit cards and the elimination of the maximum limit on late payment interest paid by their customers.
The scythe for public servants is to freeze salaries in the midst of an inflationary flood. The dismissal of contract workers and the subsequent purge of numerous organizations is underway. The destruction of the scientific structure is also advancing, leading CONICET to survive with six months of budget.
The libertarian promotes this bloodletting by tarnishing state work and encouraging confrontation with employees in the formal private sector. With this objective, he will authorize, for this segment, the validity of short-term parity negotiations with trigger clauses, which he prohibits in the public sector.
Adventures and appropriations
Javier Milei intends to consolidate the demolition of the popular standard of living, with a recession that generates high unemployment rates. He hopes to dissuade social resistance with this mass of unemployed people. Menem used this recipe and his emulator recreated it, paralyzing public works and reducing transfers to the provinces. This storm would also cause the massive collapse of small companies in favor of concentrated national groups, which the libertarian favors by annulling the gondola law. Foreign companies are rewarded with the elimination of Argentinian Buy Ley.
The occupant of the Casa Rosada assumes that, with this bulldozer, the economy will reach an inflection point when the depression pulverizes domestic consumption. He predicts that, at this point, monetary stability will induce a cycle of reactivation, managed by the powerful who survive the collapse of the rest. But he does not consider the possibility of lasting stagflation due to the imbalances introduced by his adjustment.
If, for example, revenue decreases along with the decline in the level of activity more than the cuts in public spending, the economy will be trapped in a vicious circle of successive regressions. Inflation can also erode devaluation and force another exchange rate adjustment in a short time, with a consequent new increase in prices.
These eventualities are known, but omitted by the majority of the ruling classes. All fractions of him support the new president's fierce onslaught. They celebrate the phenomenal regressive income transfer imposed by the price markdown.
Javier Milei does not hide his appeal to reinforce the economic primacy of a group of companies. The axis of his mega decree are the changes to the Civil and Commercial Code, which give these companies the last word in any legal controversy. To stabilize a neoliberal model similar to the one that prevails in Chile, Colombia or Peru, it favors the overwhelming predominance of big capital.
The libertarian has already pre-established the winners of his match. He designs privatizations tailored to these companies, converting public companies into public limited companies. Each chapter of his mega decree favors a pre-determined group.
The annulment of the law on shelves is for Coto Supermarkets, the changes in football clubs are for Mauricio Macri, the remodeling of sugar for Blaquier, financial deregulation for Galperín, the break-up of YPF for Rocca and the decontrol of food for Arcor, Danone and Molinos.
It also puts an end to the rules on rentals, at the request of the Real Estate Chamber, Airbnb and Booking, and moves forward with the demolition of social works in favor of Osde, Swiss Medical, Galeno and Omint. The repeal of the Land Law is a gift to Joe Lewis and Luciano Benetton, and the modifications to the pharmaceutical regime conform to Farmacity. Satellite deregulation was explicitly tailor-made for Starlink.
In the great unresolved business of mining extractivism, the libertarian will lobby for his candidates by withdrawing funding from the provinces. There is also a long list of companies without buyers that will be broken up or closed (railroads, Aerolíneas, YCF, public media). Conflicts between the appropriators of the most coveted companies (vulture funds versus Techint by YPF).
The primacy of financiers
Financial capital has total pre-eminence in a cabinet blessed by the IMF. Banks celebrate the deregulation of credit cards and the elimination of the maximum limit on late payment interest paid by their customers.
This financial role was made clear by the issuance of a new bond to pay the State's debt to importers. This title (Bopreal) intends to reimburse companies that acquired goods abroad, without counting the currency that Massa refused to hand over to them due to the forced absence of reserves. To remedy this non-payment, the champions of fiscal austerity re-indebted the State with a 30 billion dollar bond, negotiated in foreign currency and with a high yield.
But the liabilities alleged to justify this new public debt are not documented and their size is an enigma. Importers proclaim different sums to compensate for very dubious transactions. It is clear that the amount is inflated and includes all types of fraud (self-loans from parent companies, overbilling of transfer prices). At the simple request of the capitalists, the State once again assumes a commitment that will be paid by the entire population. Although the nationalization of these private debts is not yet explicit, the conditions for this transfer are being created.
Caputo isn't just looking to help his friends. He is also trying to begin the gradual replacement of public debt denominated in pesos with one denominated in dollars. A large part of the liabilities claimed by importers are recycled in the banking system and are linked to the mountain of public bonds accumulated by entities (Leliqs). The minister intends to reconvert these papers into dollar bonds to give priority to transactions in foreign currency. He would replace the fresh dollars he couldn't get abroad with government bonds denominated in that currency.
So far, the bonus issued to importers has no significant guarantees and cannot be subject to litigation in international courts. Its issuance is yet another adventure of the trickster who sank the country during the administration of Mauricio Macri.
With this allocation, he intends to initiate a general launch of foreign currency bonds in order to contract the total mass of pesos in circulation and leave open a course of eventual dollarization. This result is conceived as the crowning achievement of the neoliberal project or as an emergency measure in the event of currency runs or bank collapses. Signs of this intention of dollarization can also be seen in the discouragement of deposits in pesos (decreasing interest rates) and in the new rules for contracts in dollars (rentals) or their virtual equivalents (bitcoins).
But Caputo is playing with fire by flirting with unsupported dollarization. So far, he has been unable to obtain external help from investment funds or the IMF to mitigate the 10 billion hole in reserves. He just hopes to inflate a bubble with his accomplices in City, until the harvest cash comes in in April.
The most unusual thing is the basis of his move to clean up public finances. A government that destroys the economy in the name of reducing the fiscal deficit is creating a gigantic hole in the public treasury. Their spokesmen omit that half of the 5,5 points of GDP they intend to cut corresponds to interest on the debt. This liability will increase uncontrollably again with the new adventures of a serial debtor, who promises to take care of public expenses while wasting the money of all Argentines.
Nods from agribusiness and industry
Javier Milei inaugurated his term with the mega devaluation demanded by agricultural exporters. They already had the soy dollar that Sergio Massa gave them and now they have obtained the price they want for their sales. This benefit is paid for with the impoverishment of the population, which suffered the immediate transfer to domestic prices of the doubling of the dollar exchange rate. Never has the country endured such an uncontrolled increase in food prices to fatten landowners, contractors and grain traders.
The strategic alignment of domestic food and fuel prices with international averages began with this coup. A territory immensely rich in nutrients and energy will be inhabited by malnourished people who cannot cool or heat their homes.
What is most shocking about this adjustment is its implementation in a record harvest year, with an unprecedented energy surplus. These profits will be pocketed by the privileged few, which Javier Milei defends with praise for the oligarchy that exterminated the native peoples. From this devastation, large estates were born that prevented the development of Argentina.
Javier Milei supports agribusiness by repealing the fire law that limits extractivism. As he does not believe in climate change, he encourages the expansion of the soybean frontier to the detriment of forests. He sponsors this primarization, also promoting Mercosur's pernicious free trade agreement with the European Union.
This favoritism in relation to agriculture is not without conflict, as Javier Milei is a servant of financial capital. That's why he suggested an increase in withholding taxes, which agro-exports avoided with evasion maneuvers (they recorded sales before the new taxes were sanctioned). Paradoxically, agrarian enthusiasts of other people's adjustment are uncomfortable with the cut in public works that support their businesses.
Javier Milei faces greater tensions with the industrial sector. Its mega devaluation made imports of inputs more expensive, without favoring manufacturing exports. Furthermore, he introduced a staggering increase in taxes on these sales.
Most of the regulations annulled with the mega presidential decree affect the provinces' industrial promotion regimes. The announced increase in energy prices will erode the profitability of factories and the abrupt opening of trade could lead to an invasion of cheap products. Javier Milei creates the conditions for this deadly influx of Asian imports, while rising up against China.
But the heads of the Industrial Chambers openly or silently support the government for its promotion of labor reform against workers and for its support for price adjustments. Like other fractions of the capitalist class, industrialists favor the abuse of wage earners over the very conduct of their business.
Three fragile pillars
Javier Milei tries to reconfigure Argentina by decree. Without explaining the need and urgency to modify 300 laws, he announced a package that usurps the powers of Congress, subjugates the division of powers and concentrates the sum of public power. It was the first attempt at authoritarian presidentialism that the libertarian advanced, assuming the presidency behind Parliament's back. This symbolic contempt of the legislators anticipated the express use of the presidential pen.
In its debut, it mixes laws with decrees as if they were equivalent norms. He bets on the docility of justice, the confusion of the opposition and the support of the governors, which facilitated his capture from the Senate committees. He hopes to reach an agreement with the Peronist right to create a second menemato.
Javier Milei uses all the tricks of the political caste to delay the processing of his mega decree. That is why he manipulates the sending of this project to Parliament and undermines the formation of the bicameral commission that will deal with the matter. He seeks to stall the issue until March to enforce the decree, remembering that Congress has never rejected a relevant DNU [Decree of Necessity and Urgency]. If this maneuver fails, he has already announced that he will up the ante, calling for a plebiscite.
The libertarian intends to repeat the path that Boris Yeltsin followed to destroy the Soviet Union. He intends to impose a total remodeling of society, taking advantage of the stupor, passivity and repudiation of the political system.
But in his first weeks in office he faces multiple adversities. Opposition blocs are debating strategies to reject a decree that, according to the first polls, is widely contested by the population.
Javier Milei hopes to counter this hostility with repressive intimidation. This is the second pillar of your offensive. He launched a major threat operation to dissuade opposition marches, with an anti-picketing protocol aimed at banning protests in violation of all constitutional rights. This criminalization campaign included millionaire fines for the organizers of the mobilizations (and for other groups that did not even participate in these acts).
The new president also used a pathetic military disguise to announce in Bahía Blanca that the State cannot help the victims of the storm. He forgot about these limitations when he decided to offer Ukraine two helicopters that are used for weather emergencies.
The foul-mouthed president does not hide his repressive priority. His decree includes severe restrictions on the right to strike in many activities. He hopes to count on media coverage and justice support for this aggression. As a complementary option, imagine the repetition of the Fujimorist model of presidential authoritarianism, with the presence of gendarmes in the streets. But the first attempts at this provocation failed. Anti-picketing protocol was in fact overturned, in protests that ignored Patricia Bullrich's directives.
As street dominance will define who wins the match, Javier Milei builds his third pillar in this last field. Unlike his peers from other latitudes, he does not have a right-wing force of his own to confront the unions, social movements, Kirchnerism and the left. Therefore, he tries to build these legions with public resources at the helm of the State.
His first rehearsal was the inauguration ceremony. The small crowd chanted in favor of the police officer, with little enthusiasm for the adjustment. Libertarian voters still imagine that the sacrifice will be paid by someone else. Another attempt to create an officialist march, in response to the start of the protests, was directly neutralized, given signs of apathy. Very few people want, for now, to applaud a demolisher of living standards.
Javier Milei is also unable to make alliances. Their partners on the right are waiting for results before committing. The libertarian formed a government with unpresentable characters, who are unaware of how the State works and improvise directives from unusual bodies, such as the new Ministry of Human Capital. The president accompanies this shambles with mystical declarations and esoteric messages of conversion to medieval Judaism.
The risky outside bet
Javier Milei imagines a reissue of the “carnal relations” that Carlos Menem maintained with the United States. It assumes that if the country joins the OECD (fulfilling the neoliberal requirements of this admission) and ratifies its exclusion from the BRICS, it will obtain sustained support from Washington.
This expectation of retribution is the invariable illusion of right-wing rulers. Everyone forgets that the first power grants or refuses aid depending on major international circumstances. The State Department always requires results prior to any support for a vassal.
This imperial conduct was corroborated by the failed loans that Caputo exploited in New York. After consulting Washington, the financiers first demanded that the viability of the adjustment against the people be verified. At the moment, they are closely following the results of the decree, without contributing a single dollar. The Federal Reserve is satisfied, but is limited to observing what happens.
To gain American favor, Javier Milei exaggerates his submission, showing a fanaticism for Israel that surpasses that of the Zionists themselves. He has already changed Argentina's vote at the UN to validate the Gaza massacre and participates in Jewish festivities to get closer to the DAIA [Delegation of Argentine Israeli Associations].
But his affinity with Benjamin Netanyahu is not circumstantial. It is part of an international shift on the far right, which has gone from speech to action. The year 2023 completes this change. Reactionary leaders do not simply harass the helpless with verbal threats. They began to turn their regressive statements into atrocious practices.
What happened in Gaza reflects this change. Zionism is carrying out genocide to defeat the Palestinians and force a new Nakba. This massacre convulses the Middle East and is intended to support the United States' counteroffensive against China. Washington seeks to dissuade Saudi Arabia from its embryonic participation in the Silk Road and presses against the monarchy's flirtation with the de-dollarization of international transactions.
Javier Milei brings a Latin American base to the new direction of the extreme right. He seeks to impose a radical change in the relations of power in the country that is home to the main labor, democratic and social movement in the region. He also seeks to push China out of the region to restore the United States' declining primacy.
Netanyahu's fascist massacre and Milei's anarcho-capitalist onslaught differ from the conventional management that has so far characterized far-right leaders. Bolsonaro, Trump, Meloni and Orban led presidencies similar to traditional conservatism. These administrations preserved current parameters.
Contrary to this, Benjamin Netanyahu and Javier Milei inaugurate another model of effective reactionary action. This change is very significant at a time when the possibility of electoral successes for the extreme right in France and the United States are on the horizon. The current change is in line with bolder imperial counteroffensive strategies against China, in the heat of Washington's defeat in Ukraine.
Javier Milei displays great enthusiasm for his role as a mere pawn of the empire. But, until now, the master views him with distrust and contempt. Joe Biden is irritated by his ties to rival Donald Trump and sent a fifth-rate representative to his inauguration. This ceremony was pathetic due to the total absence of delegations with any diplomatic weight. Volodymyr Zelensky's leading role confirmed this orphanhood, because the Ukrainian presented himself as a great figure, when he was rejected by his Western sponsors in a scenario of military defeat.
Casa Rosada is trying to hide these adversities with messages of restoration of the Menemista idyll with the United States. But they omit the drastic change in the global context. Martín Menem and Rodolfo Barra intend to recreate a climate of fascination with the West, ignoring that the United States is no longer the winner of the Cold War, but a power affected by the rise of China.
Javier Milei acts as an ill-timed neoliberal, who is unaware of how distant the atmosphere of the 1990s has become. The euphoria with free market globalism has been replaced by regulatory interventionism in the main economies of the West. The libertarian's messages are out of adjustment to this scenario.
This distraction is already causing serious consequences in the relationship with China. The libertarian's provocative words led Beijing to freeze the swap of yuan, which feeds the Central Bank's effective reserves. This is a very serious warning. If Milei backtracks on the agreements already signed (dams, nuclear energy, Silk Road), the main customer of Argentine exports could drastically reduce its purchases, creating serious tension between the libertarian and agribusiness.
Javier Milei did not invent gunpowder and it is known that his policy of submission to the United States worsens underdevelopment and dependence. As in the case of the Roca-Runciman Pact, Argentina is once again tying its destiny to a declining power and the consequences of this course would be dramatic for the country.
Resistance tips the scales
The main obstacle facing Javier Milei's aggression is its potential popular rejection. If this opposition becomes widespread in the streets, the libertarian's adjustment will be neutralized and will be remembered as yet another failed attempt to subjugate the Argentine people. This possibility torments the ruling classes.
The struggle began with the important demonstration organized by several groups of left-wing picketers. This act was a political success. It managed to counter the official campaign of intimidation, gathered a respectable turnout and attracted a significant number of activists. It also aroused media interest and frustrated the application of Patricia Bullrich's protocol.
The provocative plan set up by the minister was dismantled by the determination of the protesters and a crisis between the federal repressive command and its counterparts in the city of Buenos Aires. The government of the city of Buenos Aires, in the hands of Macrismo, refused to bear the costs of the attacks carried out by Javier Milei. This divergence between the gendarmerie and the local police illustrated the erosion caused by the struggle of those below. It was a first portrait of the dynamics that could undermine the plans of the extreme right.
The second sign of resistance was the spontaneous protests in the neighborhoods. The Cteases were heard in many cities and their transformation into street protests reinforced the lack of knowledge of anti-picketing protocol.
The debut of these rejections, on the emblematic night of December 20th, raised analogies with what happened in 2001, when the pickets converged with the casseroles in the fight against the same characters that reappear in the current government (Bullrich, Sturzenegger). The expropriation of savings – then suffered by the middle class – has now turned into a confiscation of income.
In this climate, the CGT [General Confederation of Labor] called for a mobilization, encouraged by the marches of unions in Rosario, Banco Nación employees, railway workers and public servants in the city of Buenos Aires. This third milestone in the nascent struggle brought together a large crowd, linking all social movements and numerous union delegations. This confluence was uncommon and introduces encouraging information. The traditional hostility of the union hierarchy towards other popular sectors and its allergy to the left is losing its centrality, facilitating a decisive convergence to defeat the adjustment.
The “fat guys” of the CGT deactivated a more far-reaching concentration, as they negotiate corporately with the government the most repulsive contours of the labor reform, together with their continued control of social works. Therefore, they limited themselves to contesting the articles of the decree that concern them, with a limited act in front of the Courts. They also postponed the definition of a fight plan and avoided calling a national strike.
But the mobilization broadened the scope of the fight against the decree and once again neutralized the government's repressive intentions. Patricia Bullrich had to once again tolerate ignorance of her protocol.
Resistance to the adjustment has begun and the battle with Javier Milei requires the reinforcement of mobilization, with new calls for picketers, feminists and neighbors to occupy the streets. These calls counter the prevailing hesitations in Peronism and the center-left. The caution of both sectors is justified with arguments that highlight the inconvenience of confronting a newcomer to the Casa Rosada.
But this prudence clashes with the accelerated chainsaw that the new president has activated. Javier Milei leads the adjustment at breakneck speed to dismantle the opposition. If they let him act, he will reinforce this trend in the future. If, on the contrary, you are slowed down at the exit, your initiatives will lose cohesion.
The success of this battle also lies in forging a broad space of forces, which displays power on the streets and attracts voters disillusioned with the libertarian. It is essential to leave self-proclamation and disputes over protagonism behind, to reinforce unity and repeat the massive action that undermined Mauricio Macri in December 2017.
Open results
The defeat of the adjustment depends, first of all, on the social struggle and, secondly, on the contradictions that the officialist plan generates in the dominant classes. Without massive resistance, these tensions will be limited, because the powerful share the objective of demolishing unions, cooperatives and democratic networks.
There is the possibility of a popular victory, faced with a president willing to consolidate a monumental overthrow. Javier Milei intends to carry out his aggression, without the necessary support for this escalation. He commands an improvised office to implement a very ambitious project. He does not have the governors, deputies and mayors necessary to implement a plan that irritates the bulk of the population.
Javier Milei did not define how to implement the package, which faces the threat of a parliamentary veto. If such rejection is carried out, the 300 laws proposed by the libertarian will enter the refrigerator of justice, affecting the impatience of capitalists. The eventual deactivation of the employer abuse depends on a sustained protest in the streets.
The comparison with Jair Bolsonaro is enlightening and goes beyond the nonsense shared by both characters. Like his Argentine counterpart, the former captain unexpectedly became president, replacing the preferred candidate of the dominant groups. Jair Bolsonaro replaced Alckmin in the same sequence in which Javier Milei took the place of Rodríguez Larreta or Patricia Bullrich. In the first case, the uncontrollable development of the coup against Dilma Rousseff was decisive, and, in the second, the crisis of the conventional right.
But Jair Bolsonaro took office in a stabilized right-wing scenario, with the bulk of the adjustment completed by his predecessor Michel Temer (labor reform, freezing of social spending for 20 years, regression in education, ongoing privatizations). He just added changes to social security to this package. On the other hand, Milei has to deal with a huge economic crisis by resuming the discontinued neoliberal prescription.
Jair Bolsonaro took advantage of the climate of mobilization on the right, which expected revenge against the PT and the rejection of corruption (Lava Jato). Javier Milei does not have this support and Mauricio Macri's report exhausts the episodes of bribery of public officials. The libertarian also does not count on the powerful network of evangelicals, military and agrocapitalists who supported the former captain. Instead of profiting from the reflux of the union movement – which happened in Brazil after the 2018 strike –, it must face a union structure that preserves great firepower.
It remains to be seen whether Javier Milei will have the plasticity of his Rio idol to adapt his government to adversity. For now, he is limited to upping the ante with bolder measures in order to create a cohesive leadership for the ruling classes. The outcome of your adventure depends on popular resistance.
This outcome is open, because Javier Milei does not express the stabilized right-wing inflection that some analysts diagnose. He achieved electoral success without a corresponding social correlation. Due to this unresolved nature of his government, assessments that identify it with the convertibility established by Carlos Menem are premature. He also does not yet display the power of a “recharged Macrism”, capable of implementing the failed 2015-2019 program. These dangers loom, along with the opposite possibility of embodying a short-lived nightmare of the Argentine future. A few weeks before his inauguration, the only certainty is the centrality of the popular struggle to defeat him.
*Claudio Katz is professor of economics at Universidad Buenos Aires. Author, among other books, of Neoliberalism, neodevelopmentalism, socialism (popular expression) [https://amzn.to/3E1QoOD].
Translation: Fernando Lima das Neves.
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