Power Bloc Legitimation Strategies in a Dependent Society: The Case of Argentina (2001–2019)

Argentina from the Perspective of the Marxist Theory of Dependency

After the political independence of the colonies, the imposition of the metropolis was no longer explicit, thus modifying Latin American and Caribbean relations with the rest of the world. This gave rise to a debate on dependency that dates back, at least, to the centennial of the Latin American independence struggles (Beigel, 2006). In the case of Argentina, the debate over the prospects of autonomous development increased during the period of import-substitution industrialization (Peralta Ramos, 2007).

Emerging from this political and intellectual concern, Latin American structuralism explained the existence of dynamic centers of accumulation specialized in the manufacture of industrial goods and an extensive periphery engaged in the production of wage assets and raw materials. This specialization implied a deterioration of the terms of trade because of the technological and institutional dynamism of the core countries. For this school of thought, the way out of this situation was industrialization, as promoted by the developmentalist program.

Marxist dependency theory criticized this approach, disputing the idea that all societies had to go through the same process as European ones. ¹ The ahistorical claim that some countries would escape the overall logic of capitalism, suggesting the possibility of harmonious progress free of class struggle, was rejected (Bambirra, 1978). Dos Santos (1970) pointed out that (a) underdevelopment is closely connected to the expansion of industrialized countries; (b) development and underdevelopment are different dimensions of the same universal process; (c) underdevelopment cannot be regarded as the prerequisite for an evolutionary process; and (d) dependency is not an external event but instead is evidenced through various internal structures (economic, social, ideological, and political).

In fact, the local social classes associated with the bourgeoisies of the core countries make imperialism an internal social relation (Marini, 1978). Created from the external specialization of a country, the capital that operates locally must compensate, in some way, for the continual export of surpluses. To do so, according to Marini (1973), the superexploitation of the workforce (the payment of the workforce below its social reproduction value) is used. This entails a qualitatively different form of extraction of surplus value from that which functions as a rule in the core countries (cf. Katz, 2018; Osorio, 2018). In turn, this compensation mechanism restricts the opportunities for dependent countries, such as Argentina, to develop vigorous domestic markets, whose demand allows completing the circulation of capital within the national economy. This narrowing of the markets blocks the path proposed by developmentalism (Marini, 1994). The cycle of reproduction of capital is then structurally limited from being completed on a national level, enabling some form of autonomous development; it is subject to the needs of the core countries.

A worldwide reorganization of accumulation began in the 1970s through the establishment of global value chains, affecting the form of dependency (Treacy, 2016). In the Argentine case, the adaptation to these changes occurred during the so-called National Reorganization Process, corresponding to the last Argentine dictatorship (1976–1983). Since then, the country has systematically remitted value flows to the core economies in the form of payments for services controlled by the latter: logistics, communications, design, marketing, insurance, and intellectual property rights.

The deepening of the foreign control of Argentina’s productive structure heightened outflows through the remittance of profits. Moreover, it consolidated a corporate elite that concentrated a large part of production, exports, and access to international credit (Azpiazu, Schorr, and Manzanelli, 2012). As the local bourgeoisie internationalized, it carried out similar procedures. Through intracompany operations and the increasing financialization of their profits, these big capital firms accounted for a significant proportion of the capital flight in the form of foreign currency hoarding (Rúa and Zeolla, 2018). The tendency to withdraw resources from the cycle of capital reproduction caused a systemic loss of value for the national economy.

Lastly, access to credit became increasingly important. In particular, foreign credit allowed the state to delay the eruption of periods of crisis at the cost of becoming a systematic burden on the economy. Interest payments and debt capital maturities turned into the trigger of new crises associated with problematic renegotiations with creditors. In addition, public debt has increased by 30 times since the last dictatorship.

The growing weight of these various value outflow channels provoked repeated crises. Capital was challenged to compensate for this persistent outflow, and it did so through two mechanisms: superexploitation of the workforce and extraction of common resources (Féliz, 2018; López and Barrera, 2018). These two mechanisms firmly established the concrete shape of production and valorization of capital within the Argentine social formation; thus, it is more than merely a problem of circulation of surplus value.

Extractivism is related to the great pressure to obtain surpluses in trading primary goods. Extractivist production exploits natural resources and common goods to export products with low levels of processing, relatively low-intensity use of the workforce, and a strong presence of transnational capital (Gudynas, 2013). It seeks to maximize the capture of absolute and differential rent. It is worth noting that not only the capital that exploits goods but also the states —through taxes and royalties— participate in this capture (Acosta, 2016). Naturally, the socio-environmental costs of this production are socialized, making it increasingly difficult for communities to reproduce their lives (Svampa and Viale, 2014).

In recent decades, Argentina enhanced its specialization as a supplier of goods associated with agricultural production, including those with some type of minimal processing (Féliz, 2018). Exports of oilseed, cereals, and processed foods are the principal providers of trade surpluses. Furthermore, over the past two decades, the mining sector (metallic and nonmetallic minerals), with very low degrees of processing, joined this list.

In addition, the mechanism of superexploitation of the workforce was strengthened (Cazón et al., 2017) not only through the decline in average wages and the loss of participation in the national income but also by means of the increase in unemployment and informal employment, which favored the precarization of hiring practices. The flexibilization approved through several laws acted in a similar fashion, especially during the 1990s (Felder and Patroni, 2018). With regard to this mechanism, at least two structural biases exist, based on hierarchical social relations that combine with class domination: gender and race or ethnic relations (Falquet, 2017). Accordingly, poverty in the popular classes displays asymmetries that weigh more heavily on women, sexually diverse individuals, indigenous people, and non-Caucasian populations.

In this sense, the identification of the working class as an industrial proletariat is not appropriate. The various determinations of domination and exploitation in social relations create a heterogeneous social group with one feature in common: their need to enhance their ability to work in order to reproduce their lives (Vilas, 1995). This is what Antunes (2000) called the “class-that-lives-from-labor.” At the opposite extreme, there are the classes that take advantage of their property to obtain incomes, here referred to as the “power bloc” (Poulantzas, 1980). Considering an idea from Gramsci (1975), it is possible to understand the social bloc of oppressed people as a mixed and syncretic group, unified by its subordination in the relations of dominance and exploitation—which is why it is appropriate to speak of class—in opposition to another group, equally mixed, the power bloc (Dussel, 2001; Mazzeo, 2011; Vilas, 1995). Both blocs are amalgams of classes, fractions of classes, and multiple organizations.

The proposal to distinguish between the popular classes and the power bloc allows reconciling this diversity with the elements of inner unity while also upholding the opposition between the two blocs as a social contradiction in the logic of capital. The following section analyzes the relevance of conflicts and their relation to the mentioned compensatory mechanisms.

State, Social Classes, and Class Fractions

The debate over the space for political action in dependent societies was originally portrayed as an exogenous versus an endogenous bias. If dependent relations were external—an exogenous imposition on the dependent society—there would be no room for politics, and, therefore, this notion would be deemed an economistic interpretation (Muñoz, 1978). If the dependent relation was internal, how was it articulated within the society? If it was a political contingency, why would dependency continue to exist (Weffort, 1995)? According to Solís González (2016), this is a result of the lack of a theory of the state that considers the region’s specificities. Most of the classic works of this school of thought fail to include a systematic treatment of the problem. There is usually a theoretical and methodological leap that omits the particularly political nature of legitimacy building, presuming that the dominant position in the economic structure is equivalent to political leadership and, therefore, that the state acts in accordance with those interests and needs. This reveals a structuralist and economistic distortion in the understanding of the state that can be found even in recent contributions (Osorio, 2004; Ovalle and Crossa Niell, 2017). The proposal of this article is to address this problem through a concrete historical approach to political conflicts that does not overlook the structural features of dependency.

The state actively intervenes in the formation of the pattern of economic reproduction through, among other things, public policies and regulations that promote certain activities and discourage others (Cantamutto and Costantino, 2019). Although it responds to demands arising from political conflict, it is predisposed—as a legacy of historical structures—to defend what already exists, to meet certain demands (of capital) more quickly than others. This is not a mechanical determination but rather a predisposition, a strategic selectivity that does not guarantee that the results match the demands (Jessop, 2008).

Dependency structures contribute to the emergence of social agents who interpret and change those inclinations. The presence of foreign capital in the control of key linkages of the productive structure and, in relation to this, the local capitalists and political elite determine the structural tendencies of the state regarding social classes and their demands. ² This is the basis for Marxist dependency theory’s critique of the developmentalist proposal: that the autonomous development of dependent countries is impossible under capitalism (Marini, 1978). Its historical-structural principle is the subordination of local dominant classes to exogenous projects, which limits their ability to use consensus strategies to legitimate themselves and encourages them to rely on the coercive power of the state (Ovalle and Crossa Niell, 2017).

However, the contemporary state is a structure of political dominance that seeks to guarantee the reproduction of capitalist social relations. To accomplish this task, in addition to coercion, it resorts to negative consensus mechanisms such as fear, resignation, and apathy (Piva, 2007; Rey, 1994) as well as positive ones. In this last case, hegemony can be built with some approval from the popular classes (Gramsci, 1975).

In building this legitimacy, the state can refer to a certain political community that unites what appears to be scattered: the nation (Lechner, 1985). This illusory social unity is a historical result of class struggle, in which interpretations about what symbols, values, and ideas constitute “the national essence” are contested (Mazzeo, 2011). Classic developmentalism presented the industrial fractions of the power bloc as interpreters of the national nature of Argentine capitalism, something that was not a given but depended on political conflict. The prospects of a national program’s being embodied by this or any other fraction of the power bloc were severely eroded by the internationalization mentioned above. ³

Indeed, this fact highlights the existence of fractions within the power bloc identified by sectoral specializations that frame their structural bias (job creation ability, exports, investment, etc.). While they are united in opposition to the popular classes, they have differences among themselves that can cause political conflicts depending on the historical moment. In the analysis that follows, some of these fractions are identified through their representative organizations. It is possible to use their public statements and actions to reconstruct their demands and interpretations (Cantamutto and López, 2019).

Therefore, the state must act in a contradictory way; as a collective capitalist, it must mitigate the differences among fractions of the power bloc, while prioritizing some of them to regulate accumulation. The distinction of country origin of these fractions affects their capacity to legitimate this choice as well as their ability to link their interests to those of other social classes and fractions of the power bloc.

On the one hand, the state apparatus is conditioned by direct personal ties with the various fractions (Miliband, 1970). It is possible to trace this explicit relation in some cases, particularly in the national government (executive power). Nevertheless, today’s capitalist state rarely displays itself as explicitly “belonging to” the dominant class. As Poulantzas (1980) pointed out, its structures are such that no class can obtain control of its apparatuses and institutions without some universalization of its demands.

On the other hand, the state may have its own interests, based on building legitimacy for political dominance, in which the boost for accumulation and job creation can be contributing factors (Jessop, 2008). In Argentina, there is a central dichotomy on this point, inherited from the industrialization phase, in the fact that the agricultural fractions (and, more recently, those linked to mining) are able to supply the country with foreign currency through exports but create relatively little employment. In contrast, the industrial fractions create jobs but, having a high propensity for importing, demand foreign currency. Thus, although both benefit from the superexploitation of the workforce, the latter face a problem in the realization of those profits because of the narrowness of the domestic market. Moreover, the use of land rent as a mechanism to compensate or limit superexploitation presumes tension with the agricultural fractions. Depending on the circumstances, conflicts may arise between the fractions, giving prominence to the mediating role of the state.

In fact, this was a critical political problem for the developmentalist economic approach. First, the increasing organization of the popular classes limited the opportunities to adjust the process to the needs of the industrial fraction of the power bloc. Second, the latter came into conflict with the agricultural fraction’s interests. This situation led to a type of “hegemonic tie” (Portantiero, 1977) in which no social class or fraction was capable of presenting its interests as national, provoking political instability.

O’Donnell (1982) demonstrated that the fractions of the power bloc resolved their internal frictions in order to construct a more exclusionary pattern of dominance, which he called the “bureaucratic-authoritarian state.” Marini (1980) theorized the same change as a “counterinsurgency state.” The reconfiguration of society presumed a confluence of the fractions of the power bloc, causing a vertical split with regard to the popular classes. This process was completed in 1989, with Carlos Menem’s presidency (1989–1999). A decade of zero economic growth, marked by the foreign debt crisis, and a series of bouts of hyperinflation enabled the power bloc to align itself with Menem in launching a program of social adjustment and structural reform. The Convertibility plan (1991–2001) determined the shape of neoliberalism in Argentina.

Under the leadership of the financial fractions—whose main organization was the Asociación de Bancos de Argentina (Argentine Banking Association—ABA)—and the transnational capital that profited from the privatizations, structural reforms of liberalization, deregulation, and reshaping of the state were introduced, causing a severe deterioration of the living conditions of the popular classes (Cantamutto and Wainer, 2013). The government argued that this was the “lesser evil,” instead of reliving the previous crisis. The fear of both hyperinflation and rising unemployment operated as a negative consensus source, a kind of resigned acceptance of the economic pattern of reproduction (Rey, 1994). There was no real belief in the political order among the popular classes but rather an inability to confront it with their own proposals (Balsa, 2010; Basualdo, 2011).

The logic of financial valorization of capital and social impoverishment was incompatible with a strategy of building consensus among the popular classes. In fact, the entire decade was characterized by an increasing popular organization, with new forms of protest and new social actors, among them the piquetero (picketer) movement (Giarraca, 2001). Although the severe reforms promoting extractivist valorization were approved, ⁴ international prices were low, blocking the redistribution of rent as a means of moderating poverty. Because of both the economic liberalization and the deregulation of labor (Felder and Patroni, 2018), the precarization of work was consolidated, with an increasing lack of formal registration of jobs, growing unemployment, and stagnation of real wages.

Taking on foreign debt delayed the explosion of the crisis for a time. In fact, this was the main source of external resources during the administration of Fernando de la Rúa (1999–2001), who had to manage the demands of foreign creditors for greater adjustments along with growing social protests (Piva, 2007). The reversal of the international credit cycle following the crisis in the periphery, the withdrawal of support by the International Monetary Fund (IMF), and the social mobilization led to the end of the Convertibility plan. Even at the time of the president’s resignation, the ABA, the Cámara Argentina del Comercio (Argentine Chamber of Commerce), and the Sociedad Rural Argentina (Argentine Rural Society—SRA) were in favor of the continuation of this plan. However, this was not supported by other fractions of the power bloc.

The next sections analyze the legitimacy building of the fractions of the power bloc linked to the compensatory mechanisms of dependency.

The Neodevelopmentalist Experience

The Convertibility crisis produced an internal division in the power bloc. On the one hand, the fractions related to agriculture, public services, and finance continued to defend the economic program. These sectors achieved very high profit rates due to the capture of land rent because of their monopoly status and the increasing burden of debt. On the other hand, the Unión Industrial Argentina (Argentine Industrial Union—UIA) led the breakdown of the power bloc, encouraging the termination of the Convertibility plan in favor of “production and jobs.” ⁵ In addition, the Cámara de la Construcción (Chamber of Construction) and another organization in the agro-export fraction of the power bloc, the Confederaciones Rurales Argentinas (Argentine Rural Confederations), aligned themselves with the UIA, giving rise to the formation of the Grupo Productivo (Productive Group) (Cantamutto and Wainer, 2013)

Although the original proposal of the Grupo Productivo focused on the devaluation of the exchange rate, it later added the need to suspend debt payments and shift to using the national currency (the peso) to pay the debt and public service fees. This group argued that, with this set of measures, local production could be promoted, generating sources of employment. This would be the way to alleviate the social situation, which would also require implementing massive social policies. Through this discourse, fractions of the power bloc and part of the union movement, in particular the Confederación General del Trabajo (General Labor Confederation—CGT), were able to endorse the proposal of the Grupo Productivo. At the core of this demand was the fact that the Argentine industry had a greater capacity to create jobs than the fractions that supported the continuation of the neoliberal program.

The inability to advance the austerity program was determined by popular mobilization, which sharpened the differences within the power bloc. When the crisis erupted in December 2001, this tension was resolved in favor of the Grupo Productivo, modifying the macroeconomic policies according to its proposals. This new program can be identified as neodevelopmentalist (Costantino and Cantamutto, 2017; Féliz, 2018). It involved a change in the public discourse based on the idea of inclusion through reactivation of the economy and job creation, hand in hand with industrial production (Féliz et al., 2012). The implementation of these policies was carried out by the interim presidents Adolfo Rodríguez Saá (December 2001) and Eduardo Duhalde (2002–2003). Ignacio de Mendiguren, then president of the UIA, even became minister of production, while the Ministry of Economy also remained in the hands of the UIA’s advisers. The fact is that the industrial fraction of the power bloc—represented by the UIA—became the political leader of this period because of its position in the national cabinet, the macroeconomic policies implemented, and the discourse that interpreted them.

After a sudden depreciation of the workforce through devaluation, the Grupo Productivo program allowed the revival of economic activity until 2007, with special emphasis on industrial activity. During this period, the only initiatives that received the support of the entire power bloc were the 2005 debt restructuring and the payment to the IMF in 2006.

However, not only was one fraction able to establish its leadership within the power bloc but also, through the action of the state, it managed to include sectors of the popular classes in its program during Néstor Kirchner’s presidency (2003–2007). At the union level, this occurred through the drive to create employment. Social organizations started supporting this fraction by virtue of the adoption of social policies and the opening of institutional channels of dialogue. The Grupo Productivo had already begun communicating with a segment of the unions, but Kirchnerism went farther by incorporating part of the piquetero movement and human rights organizations. Concrete concessions, both symbolic and material, ⁶ prompted favorable interpretations among some of the popular organizations, which declared their support for the government (Retamozo, Schuttenberg, and Viguera, 2013). As a result, the industrial fraction of the power bloc was able to expand its own program, incorporating, in a secondary place, the demands of the popular classes (primarily jobs and wages) without relinquishing what it considered its fundamental stances (Cantamutto, 2017).

For some of Kirchernism’s officials, this program offered the possibility of restoring the classic developmentalist policies associated with a period of greater well-being. They identified with these ideas, based on the promotion of the national industry (Féliz, 2018). Apart from this, to the extent that these policies fueled high rates of economic growth and created employment, this program gained its own legitimacy, enabling, for example, the government to win elections. This allowed the direct representatives of the leading fraction to leave the state apparatus.

The distribution of the structural power among fractions of the power bloc was thereby altered: from the predominant place of foreign capital located in services (in particular, financial) during Convertibility, the new phase established the productive exporters as winners (Wainer, 2013). This is evident both in their role as suppliers of foreign currency and in the public policies designed to increase their profitability (Féliz, 2018). However, this distribution of benefits was not exactly in line with their political positions.

The fractions that were displaced received substantial compensation from the state. Both the financial and the (privatized) public service providers saw their prices lag compared with those of others, but this was offset by state subsidies; in other words, the cost of this displacement was socialized (Féliz et al., 2012). The big agrarian bourgeoisie, as part of the exporting fractions, increased its profits but was forced to “pay a fee” with the rent appropriated through export rights, an obligation that clashed with its demands. Because of this, the agricultural fraction became a separate entity from the power bloc: an economic winner but politically displaced (Cantamutto, 2017). The industrial fraction, in contrast, not only benefited from the policies but also had a privileged place in the dialogue with the government to the point that its leaders and advisers were appointed as government cabinet officials. ⁷

Nevertheless, this power bloc fraction was not in a position to alter the country’s role in the global market. Because of the productivity gap with more developed economies, its competitiveness depended on the superexploitation of the workforce (Cazón et al., 2017). Although the labor market demonstrated an undisputed improvement with respect to the 2002 crisis, it exhibited many more limitations after 2007 (Felder and Patroni, 2018; Pérez and Barrera, 2018). Unemployment decreased, after having reached almost a quarter of the economically active population, and remained stable at 6–8 percent between 2008 and 2015. Along the same lines, there were changes in real wages, which showed an overall increase until 2008. After that, great differences were found among productive sectors depending on the sectorial productivity and the ability of the respective unions to apply pressure on behalf of their workers (Barrera and López, 2019). Similar behavior was seen in informal labor, which stabilized at around a third of the employed workforce. Overall, income distribution displayed an improvement during this period, although the deep downturn produced since the last dictatorship had hardly been reversed (Kennedy, Pacífico, and Sánchez, 2018).

Social reproduction based on the industrial fraction’s program led to two major frictions: (a) difficulties in resolving the supply of foreign currency, which was necessary to compensate the foreign trade deficit of the industry and energy sectors, as well as the outflows for other items in the balance of payments; and (b) social tension, since complying with the concessions to the popular classes blocked sources of value appropriation. As we have seen, improvements in the labor market have been minimal since 2007.

Escalating extractivism bias as a compensatory mechanism eased both tensions: it supplied foreign currency through exports, and the capture of part of the land rent through taxes (export rights) allowed the state to sustain social policies. The use of land for the production of soy for export was rapidly expanded, as was large-scale metal mining, among other manifestations of this extractivist trend (Svampa and Viale, 2014). Nevertheless, tensions persisted as political problems (a) with fractions of the power bloc that were rent owners (mainly, with the agrarian organizations), who faced pressure over retaining the greater portion of rent, and (b) with the popular classes, for whom better living standards were being relegated.

These frictions erupted along with the global crisis in 2008, when the displaced fractions from the power bloc spearheaded a fierce confrontation with the government. There was convergence of various business organizations linked to agribusiness, which created a new organization that represented them, the Mesa de Enlace (Liaison Committee). While their demand was centered on their refusal to pay higher taxes on exports, it enabled the confluence of other actors and demonstrated the possibility of building a political opposition to the government. This committee criticized the alleged “excessive” intervention by the state (alluding to the capture of land rent through taxes), an argument clearly rooted in the neoliberal discourse. In addition, there was criticism of the lack of respect for the separation of powers. This concealed a rejection of the government’s bias in favor of industry, attempting to promote conciliation among the different fractions of the power bloc through the opposition in Congress.

During this conflict, the leading fraction abstained from expressing its stance in order to avoid a direct confrontation with other fractions of the power bloc. Although there was tension associated with the land rent appropriation, these fractions had common views on other points, such as the need to pay the workforce less than it was worth. The leading fraction’s ambivalences increased in subsequent years, pursuing a path of emphasizing what it had in common with the rest of the power bloc (López and Cantamutto, 2017). At the same time, these doubts favored a less vigorous growth in accumulation, contributing to the scenario of recession, low job creation, and balance-of-payments problems (Kennedy, Pacífico, and Sánchez, 2018). After 2011, international prices of commodities exported by Argentina declined, reducing the available rent.

The burden of the confrontation fell squarely on the government, which took advantage of the situation to strengthen its image as a national-popular political force and reinforce the interpretation of the state as autonomous. In fact, it received strong support from popular class organizations, solidifying their political identification with the government. In the instrumentalist approach, this government prominence in the conflict with the Mesa de Enlace (and the lack of clear positions from the UIA) supported the assumption that the state was a machine practically controlled by the popular classes (Basualdo, 2011). The absence of direct representatives of industry fostered this interpretation. Nonetheless, the government remained focused on the contradictory industrial program, which implied greater interventions concerning the above-mentioned frictions. In this way, elements of a progressive agenda—such as exchange-rate controls, the regulation of foreign trade, and a new widespread increase in social policy—were combined with the intent to standardize Argentine peripheral capitalism, mainly regarding the relationship with foreign markets (Varesi, 2013).

Because of its own dependent condition, the industrial fraction was not able to sustain the valorization process without the aid of compensatory mechanisms, which halted possible further improvements in living standards for the popular classes. While no material setbacks occurred, the popular social bloc ceased to make gains that would encourage its approval of the government. Naturally, popular sympathy or its absence with Kirchnerism went beyond this economic process, which merely provided a setting in which the displaced fractions from the power bloc patiently reformulated their proposals.

The year 2008 was a turning point, as it allowed for the emergence of a political pole in opposition to the government due to the convergence of the other fractions of the power bloc, which would later be politically represented by the Cambiemos alliance. Since 2011, the organizations that brought together the entire power bloc, regardless of specialization, were revalued. This is the case with the Asociación de Empresas Argentinas (Business Association of Argentina—AEA) and the colloquium of the Instituto para el Desarrollo Empresarial de la Argentina (Argentine Business Development Institute—IDEA) and even a newly created Foro de Convergencia Empresarial (Business Convergence Forum). Those were the arenas in which the power bloc shaped their principal shared demands: liberalization and deregulation of the economy, creation of investment opportunities (especially those tied to the energy and infrastructure sectors), predictability in the business environment, and reductions in fiscal and labor costs (Cantamutto and López, 2019). This was the program that Cambiemos showed when it took office in 2015, despite having carried out a campaign based on dodging its concrete proposals. The industrial fraction aligned itself with this program, considering as priorities the elements of common ground with the rest of the power bloc—those that promoted the superexploitation of the workforce. The possibility of increasing the capture of land rent presumed a confrontation with the separated fractions that went beyond its material and ideological interests.

Late-Stage Neoliberalism

The Cambiemos alliance won the elections focusing its proposal on the opposition to Kirchnerist policies. Even so, its program was clear, representing the common demands of the power bloc expressed in the plans formulated by the associations of the most highly concentrated sectors of the business class. Thus, the industrial fraction lost its leadership ability, and the financial fraction gained ground.

The administration of Cambiemos (2015–2019) had a strong presence of business elite representatives in its national cabinet (Canelo and Castellani, 2016). This led to the government’s being referred to as a “CEO-cracy.” Moreover, this encouraged the most instrumental interpretations of the state as the presence of members of the power bloc in the government became evident, ⁸ in contrast to the previous phase, in which the political staff was not so clearly affiliated with the business world. Indeed, the government represented a convergence of fractions of the power bloc in which the industry remained sidelined. This explicit presence sought to guarantee the demand for predictability and an environment favorable to business.

However, this power bloc unity was also clear in policies that produced a significant transfer of income to the detriment of the popular classes and small- and medium-sized businesses (Barrera et al., 2017). Through inflation, which reached almost 300 percent in four years, an average decline in real wages of 20 percent occurred. At the same time, unemployment rose from 7.6 percent in 2015 to 8.9 percent in 2019, and employment registered in the private sector was replaced by freelance work with less access to social security. The government adjusted several social expenditures. This set of measures implied an increase in superexploitation as a compensatory mechanism. Among the policies that led to this situation were the rapid liberalization of the capital account, payments to foreign creditors, ⁹ trade openness, tariff increases, standardization of the exchange rate and devaluation, and an increment in interest rates. In this way, the relative prices mainly benefited the financial fractions, those associated with primary production (agriculture and energy), and those that provided public services (Arelovich et al., 2017; CIFRA-FLACSO, 2016).

As a result of social resistance, the government was forced to slow down its pursuit of adjustment and structural reform, in what became known as “gradualism,” taking the same path at a slower pace. Even so, it managed to achieve concrete reforms such as the payment to contentious creditors known as “vulture funds” (Law 27.249), the legalization of capital that had previously avoided taxation (Law 27.260), a restructuring of public investment in favor of public-private associations (Law 27.328), pension (Law 27.426) and tax (Law 27.430) reforms, two bilateral investment treaties (with Qatar and Japan), and a free-trade agreement (with Chile). Social pressure prevented the introduction of a labor reform, but its contents were incorporated into many collective bargaining agreements. The government used the slogan “Get Back into the World” to name its willingness to be subordinated to Argentina’s dependent place in the global market. In this regard, it believed that liberalization and openness would promote primary exports as well as investment. Because international prices did not favor commodities, these policies were not sufficient to compensate for other exit routes for surpluses. In trade matters, the improvement came from a decrease in imports basically due to recession: the GDP declined slightly more than 3 percent during the administration of Cambiemos.

The principal source both of foreign currency and tax revenues was indebtedness. Public debt increased by almost US$104 billion, directed largely to financing capital outflows. The economic program favored carry trade (entry and exit of capital to take short-term advantage of higher local interest rates) as its main objective, which led the Argentine economy into a crisis in 2018. In the midst of a series of currency runs, the government resorted to the IMF for a stand-by loan of US$57 billion. The agreement promoted a reduction of the fiscal deficit, although it was rather lax in other aspects of economic policy. This was directly connected not only to the geopolitical role of the loan (the U.S. interest in sustaining an allied government) but also to the local social situation.

On this point, regarding the second element of friction of neodevelopmentalism in building legitimacy, Cambiemos had considerable limitations in making concessions to the popular classes, since its program was committed to greater social impoverishment in order to raise profits for the power bloc as a whole. To do so, it employed other strategies to attempt to validate its plan, such as more frequent use of repression, rhetoric based on hostility toward the previous government (called the “heavy legacy”), and economic policies aimed at the consumption expectations of the middle- and upper-middle strata (openness and liberalization, along with a appreciated exchange rate during 2016–2017, encouragement of hoarding, the import of consumer goods, and overseas tourism).

The above frames the hypothesis of this article: Cambiemos was unable to build hegemony because of its social composition and its economic program, focused on the common needs of the power bloc led by the financial fractions. This did not prevent it from becoming the first political minority with governing capacity (based on the disorganization of its political competitors), but it did constitute a social limitation for the economic program. The policies of liberalization, deregulation, and increase in interest rates and fuels and public service charges drove the financial valorization of capital and a few other enterprises (such as energy and public services) but was not sufficient for the entire power bloc. Quite the opposite; it ended up undermining the power bloc’s unity. It exposed the industrial and construction fractions and small- and medium-sized businesses to increased costs (financial and energy) and greater foreign competition (openness) in a context of reduced demand, thus eroding their profits. This contributed to damaging the unity of the power bloc that had paved the way for the program of Cambiemos.

Even the agrarian-exporting fraction that had initiated the power bloc convergence in 2008 was affected by these policies. With less land rent to capture, intensifying the adjustment was the only path left. In other words, given that extractivism showed problems in moving forward, increasing superexploitation was the only option. The impossibility of building legitimacy with this program was seen in the loss of Cambiemos in the 2019 presidential elections. Following its defeat, the government itself was forced to retract part of the liberalization it had begun in 2015. Once again, the constraints on the economic program originated in social resistance, which prevented an even greater adjustment.

Although it is too early to draw conclusions regarding Alberto Fernández’s presidency (2019–2023), especially considering the COVID-19 pandemic, his proposal is similar to that of neodevelopmentalism in terms of invoking the production values linked to industry. In this sense, it would help to keep limits on the mechanism of superexploitation of the workforce in favor of extractivism (apparent in the significance assigned to exportable agricultural production and to lithium and hydrocarbons in unconventional deposits). It was the only current form of brokering concessions to the power bloc as a whole without greater social adjustment. For the moment, any purported success or failure in this strategy would be mere speculation.

Conclusions

This article is a contribution to the discussion on the political dimension of the analysis of dependent societies. It has linked Marxist dependency theory’s explanation of the historical socioeconomic structures of Latin American societies to a view of their political conflicts. Specifically, it has studied legitimacy building in the development process, taking into account the changes in the leading fractions within the power bloc associated with the primacy of superexploitation and extractivism. Because of its attention to the conflictive existence of social classes, Marxist dependency theory has a different perspective on the structural processes from other dependency theories.

In this connection, this article has presented a summary of recent Argentine economic and political dynamics. Convertibility—the epitome of neoliberal structural reform—involved a negative consensus based on fear and the difficulty of finding alternatives. The increasing impoverishment of the popular classes, which organized to demonstrate their rejection, ended up eroding this form of legitimacy building. The neodevelopmentalist political order arose from the Convertibility crisis, based on the program of the industrial fraction of the power bloc. By articulating public policies and a discourse that incorporated the demands of other classes without altering its own foundations, it was able to structure a distinctive hegemony that mobilized the express approval by the popular classes. The prospect of redistributing land rent by escalating extractivism enabled this political construct. In other words, the chances for material inclusion of the popular classes in the economic program of the industrial fraction of the power bloc were limited by the possibility of appropriating land rent for themselves and, thus, avoiding the expansion of (but not reversing) the superexploitation of the workforce. The problem was that sustaining this logic incited confrontations with the owners of those rents within the fractions of the power bloc.

The industrial leading fraction found itself in a dilemma. The bounds of this construct caused tension with its own social subject (i.e., itself) because maintaining the consensual bias (making concessions to the popular classes) meant challenging its own establishment (as part of the power bloc). Therefore, in order to avoid worsening the living standards of the popular classes, it was necessary to sever ties with other fractions of the power bloc to advance in the control of land rent. In other words, the way to sustain the process was to radicalize it, an endeavor that this fraction of the power bloc had no interest in undertaking. The alternative was to coalesce with the rest of the power bloc and lose support among the popular classes.

And, indeed, that is what occurred through a phase of attrition that ended with the replacement of the governing political power structured around the fractions previously displaced from the power bloc. The administration of Cambiemos, expanding the country’s incorporation into global markets, reinforced the social structures of dependency, escalating both extractivism and superexploitation. This shift in public policies and rhetoric shows that extractivism (or its expansion) is not sufficient in and of itself to define the type of public order to be built: the availability of land rent allows certain strategies but does not make them automatic. The exclusionary tendency of the economic reproduction pattern is a structural conditioning factor for the construction of hegemony in reducing the ability to grant material and symbolic concessions. This dependency relationship is not present in core-country societies, and this provides a greater margin—at least theoretically—for hegemonic constructs.

The question arises here about the possibility of strengthening the process linked to neodevelopmentalism. This involved resolving a difficult contradiction: in order to sustain the strategy of legitimacy through consensus, the structural roots of Argentine dependency had to be modified, implying displacement of fractions of the power bloc associated with it. However, given the intertwined nature of the power bloc, this entailed a change in the social subject leading the process. This tension was clearly expressed as of 2008 and was reduced by the industrial fraction’s relinquishment of hegemony in exchange for a more explicitly exclusionary political order. To put it another way, it dismissed the legitimacy problem in order to raise its profit rate, easing its tensions with the rest of capital and leaving to the new government the task of representing the power bloc as a whole. Of course, this proved to be limited in scope whenever the popular classes questioned a program that offered them nothing but greater poverty.