Social Classes and Capital Accumulation in Recent Argentina: The 2008 Agrarian Conflict

Methodology and Sources

This analysis rests on three main types of sources. In the first place, I reconstruct some of the most relevant aspects of the conflict by making use of documents and communiqués issued by the agrarian associations and reproduced by various media, as well as articles published in national newspapers. In particular, Clarín and La Nación regularly deal with topics related to agrarian production (even dedicating specific sections to this); to a lesser extent, other national newspapers are also referred to here.

A third type of source are the economic calculations regarding the magnitude and distribution of ground rent in Argentina. In particular, I employ data published by Iñigo Carrera (2007b), who has developed a method for estimating the amount and appropriators of agrarian rent flowing into the Argentine economy by using information collected from different sources. This calculation estimates the profit rate of capitals in the industrial sector, and, by using it as a reference for agrarian capitals, the magnitude of the extraordinary profits in the agrarian sector that take the form of ground rent can also be estimated.

Capital as an Immediate Concrete Subject for the Reproduction of Social Life

As Marx (1992) [1867] states in Capital, the capitalist organization of social production and consumption does not take the form of direct relationships between people; on the contrary, they participate in this process as free individuals. Their social relationship lies instead in the products of social labor as the capacity of these products to relate directly to each other in the process of exchange, therefore putting their owners into an indirect relation. In other words, social labor privately undertaken is represented as value—the commodities’ attribute of exchangeability. Individuals’ free consciousness and will is thus subject to a historically specific determination: serving as a personification of their commodity. From the viewpoint of their participation in social labor, therefore, the consciousness and will of individuals count only to the extent that they personify the powers of their commodities. And such power presents itself to them as alien precisely because it is incarnated in the commodities. Thus, as Iñigo Carrera (2006; 2007a) states, the free consciousness and will of commodity producers is the concrete form in which their alienated consciousness and will exist.

Because social labor is privately carried out, the unity of the organization of the production process and social consumption is automatically established as an attribute not of people but of social labor itself. This attribute confronts its producers as a power they cannot control and consists of the objectified capacity to set social labor in motion for the sole immediate purpose of expanding this very capacity. In other words, it confronts them as capital, which becomes the subject of its own movement and is therefore determined as the immediate concrete subject of social production and consumption (Iñigo Carrera, 2013 [2003]: 12–27). This means that commodities are actually the product of labor alienated in capital, carried out by doubly free wage laborers, and, therefore, that individuals’ free consciousness and will are alienated not simply in commodities but in capital. Capitalists and workers are forced to put their consciousness and will at the service of the objectified social relationships they personify: capital and labor power (Iñigo Carrera, 2013 [2003]).

In agrarian production there is also a third social subject, whose existence is determined by a means of production that capital cannot reproduce at will: land. Landlords, individuals who hold titles to land portions that present differential conditions for the production of commodities such as agrarian products, minerals, and energy, can claim a portion of the social product, namely, ground rent, in exchange for the mere temporary transfer of their property’s use. Thus, landownership is the social relation that this class personifies (Marx, 1993 [1894]).

As Marx points out, there are different types of ground rent. ¹ The differential ground rent of agrarian land is the prevailing one in Argentina (Iñigo Carrera, 2007b). It is based on a monopoly of the differential natural conditions: as the social need for agrarian commodities expands, it becomes necessary to invest capital in lands that were, until then, not used for production because of the presence of less favorable natural conditions. This results in a decrease in agrarian labor productivity and a rise in the individual price of production, which becomes the new commercial price. As a consequence, capitals invested in the better lands obtain extraordinary profits. (The same mechanism operates when labor productivity declines as a result of the investment of more capital in lands already in production.) Competition for the appropriation of this profit, however, causes it to pass into the hands of the landowner class.

Of course, as Barker (2013) points out, the analysis of the social classes undertaken by Marx in Capital implies a high level of abstraction, since classes cannot act as individual entities. In fact, their members are divided by particular interests and tend to act in a fragmented way when facing the need to carry out a concrete political action. In this regard, Barker states, “‘class issues,’ meaning problems arising from capitalism’s underlying character, do, certainly, confront political actors, but how these actors respond is ‘mediated’ by a host of concrete particulars” (47).

In the case at hand, the Pampean fraction of the Argentine landlord class is represented by organizations that are not usually able to coordinate joint actions. Hence, the question of what made it possible for them to act collectively in the 2008 conflict arises. However, their action went beyond coordinating a political action: they not only acted together but also had enough power to block a law that was of crucial importance to the government. A second question, therefore, is how were they able to do that.

The Social Subjects of the Confrontation

Let us now move to the social subjects at stake in the conflict. As Sartelli (2008) points out, the two blocs were made up of multiple actors. While the “rural” side, led by the four national agrarian associations, included sectors of the church and opposition parties as well as small fractions of the working class alongside small capitalists, a much more significant portion of the working class (represented not only by the newly elected government voters but also by the most important unions) and industrial capital, such as the Unión Industrial Argentina (Argentine Industrial Union) and the Asociación de Bancos Privados de Capital Argentino (Association of Private Banks of Argentine Capital), among others, were on the government’s side. Some governors and mayors also took the side of the Kirchnerist government, as did some Peronist parties and organizations. The leaders of each bloc, however, were two specific social subjects: on the one side, the national state, namely, the general representative of the unit of the national capital accumulation process, which was commanded by the Kirchnerist government, and, on the other side, the agrarian associations that led the rural bloc.

The Political Action of the National Government

Let us now address the action carried out by the Kirchnerist administration, which led to the 2008 conflict. By 2003, the national capital accumulation process reentered one of its cyclical expansion phases, initially sustained by the wage contraction that followed the currency devaluation. This precarious foundation was almost immediately paired with the ground rent flow entering the national economy, largely as a result of the recovery of agricultural prices (particularly for soybeans), which had begun to fall in the mid-1990s. ⁴ With an undervalued currency, however, the channeling of ground rent toward industrial capitals could only take place via economic policies in which state intervention becomes immediately visible. Thus, along with the reinstatement of export taxes, policies such as maximum prices for agrarian commodities, subsidized prices on public services, loans at negative real interest rates, and the expansion of public spending also reappeared. And these, in turn, became the foundations for the consolidation of the political form under which expansive phases take place: a progressive government (Caligaris, 2016; Grinberg and Starosta, 2014; Iñigo Carrera, 2005; Kornblihtt, Seiffer, and Mussi 2016).

As the scale of capital accumulation grows, however, the mass of ground rent required by industrial capitals to sustain their valorization also increases. And at some point, faced with a relatively stagnant mass of ground rent, the national capital accumulation process eventually ends up crashing into its very limit, entering a phase of contraction or stagnation.

But this took a long time to happen in the expansive phase opened in the 2000s. After matching the peaks attained during the previous decade, grain prices continued increasing rapidly, thus expanding the flow of ground rent into the economy. And acting as the general political representative of the unity of the Argentine process of capital accumulation, the national state attempted to channel the greatest possible amount of this flow to the industrial capitals.

The Néstor Kirchner administration increased export taxes twice in 2007, but the magnitude of ground rent flowing toward the national economy kept rising. Resolution 125, enacted only four months after Cristina Fernández became president, was destined to become the definitive mechanism of ground rent via taxation: it established a system in which tax rates would vary with prices. However, the political action taken by the rural bloc summoned enough power to prevent it.

The Political Action of the Agrarian Associations

Let us now address the export taxes, which triggered the conflict. This tax can normally be sustained only if it falls on a fraction of ground rent. Therefore, it affects landlords (Iñigo Carrera, 2007b). ⁵ This means that the political action of the agrarian organizations was carried out mainly in defense of the members of this class. In other words, and as mentioned earlier, by acting in this way landlords were merely personifying land property. In doing so, they had to confront the national state, which acts on behalf of the total social capital operating in Argentine territory.

Needless to say, this was not the first time agrarian organizations confronted the state with regard to ground rent appropriation. And, indeed, because of the specificity of capital accumulation in Argentina, constant confrontation is to be expected. However, the degree of confrontation varies substantially depending on the economic policies under which ground rent appropriation is carried out. Two recent periods can be contrasted in this regard: on the one hand, the 1991–2001 decade, when the Convertibility Act set an exchange rate involving an overvaluation of the Argentine peso close to 100 percent; on the other hand, the 2002–2008 period, in which the currency rose from an undervaluation of about 30 percent to near parity by 2006, after which it continued to rise relatively slowly until 2008.

Let us now take a look at the evolution of ground rent flowing into the national sphere, which is shown in Figure 1. During the Convertibility period, there was a relative stability in the amount of ground rent flowing to the Argentine economy. After the 2002 devaluation, when this amount contracted to less than half, a quick recovery begun, which by 2007 reached the largest amount of ground rent in history.

OPEN IN VIEWER

Figure 1.

Ground rent (millions of pesos) for agrarian land in 2004 purchasing power (data from Iñigo Carrera, 2008).

Let us now look at the appropriators of this mass of social wealth. Figure 2 shows the fraction of ground rent kept by the landlord class. The proportion of ground rent appropriated by landlords during the Convertibility period averaged 20 percent. This low rate was sharply reversed after the 2002 devaluation, when landlords managed to appropriate not only all of the ground rent but also an extra mass of social wealth (represented in the graph by an appropriation rate exceeding 100 percent), the origin of which we will explore later. From this year on, and with ground rent increasing, its appropriation by landlords sharply exceeded the rate of the previous period even though it declined somewhat: between 2003 and 2006 it averaged 75 percent, more than triple the average of the previous decade, while by 2007 it had decreased to 56 percent, still more than double than the previous average.

OPEN IN VIEWER

Figure 2.

Percentage of ground rent appropriated by landlords, 1991–2007 (data from Iñigo Carrera, 2008).

It was in this context that, on March 11, 2008, the government announced the implementation of Resolution 125, triggering the conflict. One may wonder why similar clashes did not take place during the Convertibility period, when the ratio of ground rent kept by landlords was significantly lower. It so happens that, when the appropriation of ground rent takes place via currency overvaluation and therefore does not pass through the state hands, ⁶ landlords encounter difficulties in confronting it: instead of a tax that specifically affects agrarian production, appropriation takes place through a variable that affects all economic actors; moreover, currency overvaluation is not always self-evident, and its measurement can always be subject to debate. The situation was even trickier in the 1990s, because overvaluation was sustained by the Convertibility Act, a key issue in the program of neoliberal economic reforms implemented by the government. This program was supported supported by the SRA, which believed it was going to unleash the potential of the Argentine economy. Thus, in contrast to the situation in other historical periods (such as the one following the 2002 devaluation), the dispute over ground rent appropriation failed to function as a unifying element for joint action. While during the 1990s some agrarian organizations confronted the government with particular vigor, was not subject to discussion until the crisis begun to take place. Although the FAA, which spearheaded protests during that time, did not seek to terminate Convertibility until the end of the decade, the SRA strongly supported it, stating that it had not only stabilized the economy but also prevented the national administrations from issuing currency. Thus, the dispute over the appropriation of ground rent was virtually absent as an issue in the agrarian conflicts during these years (Pérez Trento, 2015; 2017).

This scenario began to reverse in the post-Convertibility period. Despite the fact that Eduardo Duhalde’s government reinstated export taxes in 2002, the proportion of ground rent kept by landlords increased significantly in the 2002–2007 period. The devaluation that took place in that year resulted in a significant undervaluation of the currency, which meant that landlords were to appropriate not only the totality of ground rent but also an extra mass of social wealth that escaped the already half-empty pockets of the working class through the increase in the cost of the basic food basket. Therefore, even after the reappearance of export taxes, not only did the mass of surplus value kept by landowners increase from an average of 20 percent of ground rent to 100 percent but an extra portion of social wealth, a fraction of wages, was also appropriated by them in 2002 (Iñigo Carrera, 2005). Despite this, the agrarian organizations, including the SRA, immediately protested against the export taxes, although failing to form a strong coalition as they would in 2008.

In sum, when ground rent appropriation by industrial capitals takes place mainly through overvaluation, as was the case during the 1990s, the landlord class hardly confronts that economic policy, and the opposite occurs when appropriation is carried out via economic policies specifically directed toward agrarian commodities. As we shall see, the agrarian associations that acted in representation of landlords repeatedly faced export taxes (among other policies) in the 2002–2007 period, even when they were keeping a larger portion of ground rent in relation to the previous years. And not only that: they were strong enough to force the government to revoke Resolution 125 and, later, to prevent the passage of the bill in Congress. Let us now see why.

“Confiscation” and Freedom: The Limits on the Appropriation of Ground Rent Through Export Taxes

The agrarian lockout (which was actually an interruption of the domestic circulation of certain commodities) was the climactic action undertaken by the rural organizations against the interventionist aspects of the Kirchnerist agrarian policy. Government intervention in the meat and grain markets (which included both price fixing and a temporary ban on exports, among other measures equally repudiated by agrarian associations) from 2005 was met with two strikes in 2006, the first faced by Kirchnerism. While the first one was carried out exclusively by the CRA, the second one was joined not only by the SRA but also by the FAA, which had been close to the government until that point. Although these actions did not have the impact or the power of the 2008 strike, they can be seen as a first step toward the agrarian coalition.

Meanwhile, the price of grains had entered a prolonged rising phase, and the government had increased taxes twice in 2007. The agrarian organizations repudiated these increases, albeit without engaging yet in active protests. The confrontation was triggered only in the following year, with the failed enactment of Resolution 125. Less than 24 hours after the official announcement, the agrarian associations called for a commercial strike that would initially last for two days and was organized under the so-called Comisión de Enlace (Linking Commission—CE; see Sanz Cerbino, 2014). Despite the fact that no one could have anticipated it, a 129-day commercial strike that made history had just begun.

What explains the power of this action, which was the Kirchnerist government’s first significant political defeat and, moreover, managed to link “the countryside” with a small fraction of the urban working class? The answer lies, once again, in the form assumed by the ground rent appropriation mechanism, export taxes. As we have seen, Resolution 125 was a fluctuating tax scheme imposed on agricultural commodities. In March prices, the taxes on soybeans and sunflower seeds would have increased to 44.1 percent and 39.1 percent respectively; in addition, the fluctuating nature of the system could have increased them even more, to as much as 50 percent.

Such numbers allowed landlords to present their case in a simple way: the tax was unacceptable both because of its magnitude and because it affected a particular branch of production. The classic argument of “discrimination against the countryside,” usually raised against export taxes, was then bound to another commonplace that was first put forward by the president of one of the CRA federations the day after the announcement of the passage of the resolution: the idea that the tax was actually a “confiscation” (Clarín, 2008a). The legal basis for this argument was a ruling by the Supreme Court that established that any tax above 33 percent was confiscatory and therefore unconstitutional (see, for example, the constitutionalist lawyer Daniel Sabsay’s assertions in Clarín, 2008b).

Thus, the idea that “the countryside” (or, in any case, the no less abstract “producers”) was being harmed by the insatiable voracity of a government seeking to expand its tax collection capacity even via confiscatory means quickly gained in popularity. Similar statements were made by the presidents of the agrarian associations (Página/12, 2008c, 2009), as well as issued in the CE communiqués (Comisión de Enlace, 2008a, 2008b). Various opposition political parties also repeated this argument (El Santafesino, 2008; Infobae, 2008; Página/12, 2008b), as did some of the media (see, for example, La Nación, 2008a, 2008b). Moreover, precisely because of this alleged confiscatory nature, a small group of capitalists appealed the law, although this request was denied (Página/12, 2008a).

The conflict quickly intensified, especially after the strengthening of the agrarian bloc. Certainly, the creation of such an alliance was partly due to political opportunities. It happens that, until the conflict was unleashed, the Kirchnerist government had managed not only to close the political legitimacy crisis that followed the economic collapse of year 2001 but also to rule fairly unobstructed and consolidate its political hegemony: in 2007, Cristina Fernández was elected with 45 percent of the vote and more than 22 points ahead of her closest rival. In this scenario, the agrarian organizations were able to overcome the quarrels of opposition parties, which were acting separately, and form a coalition with the most important ones. Indeed, one of the most notable political consequences of the conflict was the strengthening of the opposition, which achieved significant victories in the 2009 legislative elections (Castro García, Cornelli, and Palmisano, 2011; Varesi, 2016).

However, the failure of the government to enact Resolution 125 and then to pass the bill in Congress cannot be explained just by the forming of this coalition. On the contrary, the question about the source of its power to prevent the passage of the bill still remains. In this regard, the idea that the taxes were beyond tolerable and an act of “confiscation” played a key role.

The appropriation of ground rent by industrial capitals does not in itself affect the reproduction of agrarian capital; in fact, ground rent could be entirely taken from landlords, affecting only the existence of that social class. However, the abolition of the landlord class would need to go further to include the abolition of the capitalist class, because it would entail the liquidation of private property. Of course, the Kirchnerist government was not to perform such a task; its role was merely to represent a phase of rapid economic expansion sustained by the diversion of an increasing flow of ground rent toward industrial capitals. Therefore, by attempting to increase ground rent appropriation via a traditional mechanism for funneling funds toward other sectors, the national government was doing nothing more than reproducing the specificity of capital accumulation in Argentina. However, the tax scheme appeared to go beyond that.

As long as the taxes remained within the limits considered legitimate, landlords reiterated their usual complaints, but they did not have the strength to prevent the appropriation. By exceeding these limits, the taxes appeared to clash with the legal system, in particular affecting the principle of fiscal equity and the ban on confiscation. Therefore, the very foundations of capitalism seemed to be at stake in the 2008 conflict: a tax close to 50 percent could only be seen as a breach of private property and freedom of trade. As a consequence, the failed tax scheme allowed for a generic protest of “discrimination against the countryside” to turn into what seemed to be a fight over something much more alarming: an illegitimate confiscation and, therefore, a violation of individual freedoms and private property—an argument that garnered considerable support.

Effects of the Expansion of Ground Rent Appropriated by Landlords

The impossibility of exceeding a certain limit on the appropriation of ground rent via taxation largely explains the outcome of the conflict. However, there are some other aspects to consider in order to explain why the agrarian associations held enough strength to prevent the passage of the bill.

First, a series of good harvests at rising prices tends to strengthen the landlord class by allowing it to accumulate enough social wealth to halt commodities trade for a relatively long period. This was not always enough. By the mid-1940s, another period when the amount of ground rent sharply expanded, the freezing of leases and the suspension of evictions in an inflationary economy left the landlords with no chance to raise lease rates or sell their lands, facing the only alternative of lending ground rent as loan capital. However, because of the negative real interest rate, a fraction of that mass of social wealth flowed toward the main loan borrowers, industrial capitalists (Iñigo Carrera, 2007b). Today, in contrast, landlords can prevent that from happening in two ways, both of which took place: on the one hand, by investing ground rent as real estate capital (therefore turning into urban landlords as well) and, on the other, by employing a new storage technology known as silobolsa, which enables them to store grains at low cost and for a relatively long period of time without their suffering a deterioration of their use value. Thus, after garnering enough support, agrarian landlords were literally able to sit on their small mounds of wealth and wait for the resolution of the conflict.

The transformation of the leasing system had the same effect. While the old one forced landlords to lease their lands for long periods of time, it is now usual to lease lands for a one-year period. Therefore, nothing prevents landlords from adjusting lease rates in accordance with movements in grain prices. And this is what, in fact, they have done in recent years (Bisang, 2007).

Conclusions

Let us now go over some of the conclusions. The 2008 conflict was characterized here as a new episode in the long series of clashes between landlords and the national state over the appropriation of ground rent. As noted above, these social subjects respectively personify landownership and the unity of the Argentine process of capital accumulation. And while the channeling of portions of ground rent to the most concentrated capitals of the industrial sector is characteristic of this process, the concrete policies under which this happens do not always allow landlords to face (or even to acknowledge) them. With an undervalued currency, export taxes became the most powerful mechanism of ground rent appropriation, alongside various forms of agrarian market intervention, especially price controls and a ban on exports. Such mechanisms, however, are perceived by landlords as “discriminatory” policies, and after a certain point export taxes appear “confiscatory.” This was the source of the landlords’ power to prevent the passage of the bill: as I have said, the magnitude of the tax clashed with the very foundations of capitalist production, laying bare the limits of the appropriation of ground rent via this mechanism. Besides, landlords engaged in the conflict after years of keeping much of the ground rent for themselves. Therefore, they garnered enough strength to defeat the national state, at least in that battle. Moreover, they managed to gain allies among a small fraction of the working class that, horrified by this “plundering” of private property, joined their cause.

This dynamic partly explains why such clashes took place under the Kirchnerist administration. As noted, the abrupt expansion of the amount of ground rent that flowed toward the Argentine economy led not only to the reinstatement of a series of appropriation mechanisms but also to an attempt to increase export taxes alongside the growth of ground rent. At the same time, this appropriation had its counterpart in the reappearance of policies such as the expansion of public spending, social assistance, and public service subsidies, thus strengthening the government’s progressive character. The immediate visibility of these economic processes allowed the agrarian associations to coordinate political action in defense of the landlords, as opposed to what happened under the neoliberal governments of the previous decade, when ground rent appropriation took place mainly through currency overvaluation. Thus, although they were only able to keep a significantly lower proportion of ground rent, the dispute over its appropriation was not a key issue in agrarian conflicts, and the associations failed to coordinate a strong collective action. ⁷ When ground rent appropriation is mediated by more visible mechanisms, landlords immediately reject them and may attempt to terminate them, and occasionally their reaction is powerful enough to prevent an increase of the magnitude of the appropriation, as was the case in 2008.

However, their victory was a Pyrrhic one. By that year, the national currency had already reached parity with the U.S. dollar and was slowly beginning to overvaluate. But after the failure to pass Bill 125, this process accelerated exponentially via a sustained issuance of currency in excess of circulation needs. Just five years later, overvaluation was already around 70 percent (Grinberg and Starosta, 2014), not far from the rate reached during the Convertibility period. This, in addition to export taxes that remained at around 35 percent, resulted in an increase in the appropriation of ground rent. With the advent of a new neoliberal government in December 2015, ground rent appropriation declined only slightly, since taxes on grains were eliminated (except for soybeans, which accounted for the highest export value), although this only lasted a brief period. ⁸

As a final remark, it must be stated that these historically present forms of ground rent appropriation have a specific effect on the Argentine process of capital accumulation. They limit the intensive and extensive investment of agrarian capital by excluding those capitals that are not capable of yielding enough ground rent so that the appropriation mechanisms do not affect their normal profit rate. This prevents the development of the productive forces of social labor applied to agrarian production by excluding capitals that could implement a lower labor productivity but still achieve an individual price of production lower than the commercial price. And these capitals are, precisely, the ones that are compelled to keep developing the productive forces because they are located at the technological frontier (Iñigo Carrera, 2007b). Thus, even being a national space of capital accumulation where the only normal-sized capitals (those concentrated enough to reach the productivity of labor that determines the value of commodities) are those applied to the production of agrarian commodities, ⁹ Argentina cannot participate in the development of productive forces in this branch. This only emphasizes the issue of overcoming the specificity of this national process of capital accumulation.