As of the submission of this article the economic, social, and political situation in Argentina remains explosive and dynamic. It contains the ingredients of a pre-revolutionary situation, but what is crucially lacking is a united, mass labor party and a revolutionary leadership capable of leading millions of the oppressed and exploited to political power and social predominance. This decisive leadership vacuum means, for now, that the way out of the deepening crisis of Argentine society, in the interests of the overwhelming majority, remains unclarified.

The article below begins --and I began writing it-- with the people’s rebellion of December 19-20, 2001, the subsequent collapse of the de la Rua-Cavallo regime, and the assumption of power by the Peronist Party (Justicialists). The crisis of leadership in the working class is registered in the fact that the new pro-austerity, pro-imperialist Peronist regime of Eduardo Duhalde has gained the crucial backing of the leaderships of the main national trade-union federations. The trade unions had led the fight against the de la Rua-Cavallo austerity assaults.

Out of the post-December 20 political instability, the Argentine ruling class, through its parliamentary representatives, finally installed–after a few false starts–then-Senator Duhalde as President. Duhalde’s central team includes two other top Peronists, Jorge Remes Lenicov as Economy Minister and Carlos Ruckauf–a notoriously corrupt and repressive Peronist governor of Buenos Aires Province–as Foreign Minister. This Peronist team has the unenviable job of "negotiating," that is, posturing and begging, with Washington for more loans and debt in return for more austerity and pain for the Argentine masses, while it struggles to demobilize and contain those masses who are demanding relief, jobs, justice, and development.

Not two months after the rebellion that put them in the Casa Rosada [presidential headquarters], and after an initial burst of populist rhetoric, nationalist demagogy, and anti-neoliberal hot air, the Duhalde team has gotten down to the business of prostrating themselves before Washington and the International Monetary Fund (IMF), which is determined to inflict as much pain -- which they call "sustainable reform"-- as necessary to restore debt payments and the extraction of wealth, value, and profit from Argentine labor to imperialist finance and industrial capital.

The apparent intractability of the Washington-led pressure on the Duhalde administration was underlined February 9 when finance ministers from the "Group of 7" (U.S., UK, Japan, Germany, France, Italy, and Canada) powers met in Ottawa, Canada. The esteemed gathering of state money overlords rejected Duhalde’s plea for as much as $20 billion in a new loan transfusion from the IMF. Not so soon, we need to see more pain, then we’ll consider it, was the unanimous answer from the imperialist sadists.

Unable and unwilling to stand up and defend the Argentine nation, the Duhalde Administration is busy lowering mass expectations, fashioning new austerity assaults on the working class and the middle class, begging for more loans from imperialist governments and institutions, and attacking revolutionary Cuba.

At this point, Duhalde and Peronism are unable to repress or decisively contain the surging and furious masses. Begging for another Washington/IMF bailout seems to be their only immediate perspective. The Peronist regime appears reduced to just watching the devaluation deepen the crisis, with the hope that division, exhaustion, demoralization, and demobilization will set in. But what if it doesn’t?

The article below focuses on the class dynamics in Argentina today and the potential and prospects for truly revolutionary change in the interests of the vast majority of the Argentine people. This boils down to closing the gap between the fighting capacity and militancy of the working people, on the one hand, and the absence of political clarity, popular unity and revolutionary leadership on the other.

Class dynamics encompass the leadership, perspectives, and prospects among and between all social classes in Argentina. These internal dynamics unfold in the decisive framework of the "master-slave" relationship between the semi- colonial Argentine nation and the most advanced capitalist states, led by Washington, that comprise contemporary world imperialism, which is looting and pillorying Argentina and the entire Third World. As the article shows, the Argentine rulers have their own leadership crisis, but it is the crisis of leadership in the working class that will be decisive in the pre-revolutionary situation that is at hand.

Today, all of Latin America is focused on Argentina. Washington and Wall Street are doubly fixated. Argentina–which now represents the largest default on sovereign debt in recorded world history–is a permanent, mounting headache for U.S. imperialism. For the bankers, bondholders, moguls, politicians, press lords, and "analysts," Argentina is the flashpoint in an increasingly unstable Latin America that is resisting fiercely the neoliberal "Washington Consensus."

Argentina is a particularly intense expression of what is actually the norm in Latin American and world politics today: the gap between the growing resistance among working people to the deepening capitalist economic and social crisis and the development and growth of revolutionary socialist leadership.

Argentina symbolizes the actuality of a crisis-ridden capitalist world order where a handful of rich nation-states --headed and led by Washington-- pillage and loot the overwhelming majority of humanity, the semi-colonial countries of Africa, Latin America, the Middle East, South and Central Asia that comprise the so-called Third World. The crumbs off the table from that loot is used to pacify and bribe the labor officialdom at home and buy class peace. This is the face of contemporary imperialism. Its mechanisms have changed since the end of the 19^th Century when the system of capitalist imperialism, which divided and redivided the world between various colonial empires, burst onto the globe. That birth set in motion a process which culminated in the first imperialist world war from 1914-18.

With few exceptions, today there are no more formal colonies. Institutions like the IMF, World Bank, World Trade Organization, and the less obvious linchpin, the United Nations, enforce the contemporary imperialist system of wealth and value extraction. Nevertheless, the system is fundamentally the same as described classically by Russian revolutionary Marxist V.I. Lenin in his small book Imperialism: the Highest Stage of Capitalism in 1916. The less than one hundred pages of that eighty-six year old book is an essential starting point to truly grasp what is happening in Argentina and the rest of today’s world, and should top the reading list of any young person grappling with what is misleadingly called "globalization" today.

The battles in the streets of Argentina are the real face of the fight against "neoliberal globalization" --that is, world imperialism. It registers the shift from what was represented by the idealistic youth of the First World at Seattle, Prague, Washington, D.C., Quebec City, and Genoa (and disoriented by liberals and protectionists) to the proletarian masses of the Third World as the driving force.

History has accelerated in Argentina (decades are happening in days and weeks as Lenin once said) but the absence of a united, disciplined and mass- based, working-class vanguard party --which is on the agenda and can only be forged in struggle-- means that a series of stages must be passed through where bourgeois rule carries on in an increasingly weakened state.

New York City

On December 19^th and 20^th of 2001, Argentina’s deep capitalist economic and political crisis boiled over in a mass social explosion, which, in effect, overturned the hated regime of President Fernando de la Rua and Economy Minister Domingo Cavallo. "¡Que se Vayan!" --Out With Them!-- was the central demand of the multitudes in the streets ... and out they went.

Working people, employed and jobless, together with radicalized youth and wide sections of the pauperized middle class, launched demonstrations, highway blockades, and seizures of food stocks ("looting of supermarkets" in the vernacular of the big-business press) in all of the country’s major cities and industrial centers. The most massive eruptions took place in the industrial center of Cordoba, second biggest city in the country, and the capital of Buenos Aires. But the rebellion was nationwide. Tens of thousands engaged in days of running battles with police in at least twenty cities. Some thirty were gunned down or beaten dead by cops and, in a few cases, merchants.

The actions, stunning in their breadth and fury, followed a massive December 13 general strike called together by Argentina’s three national trade-union federations, the two wings of the General Confederation of Labor (CGT) and the Argentine Workers Federation (CTA). [The general strike was the eighth in two years against the IMF-dictated austerity "programs" of the government of Fernando de la Rua since it was elected two years ago and began deepening the policies begun under the neoliberal Peronist administration of Carlos Menem. At the same time, the leaderships of the unions remain tied to Peronist party which was formally in opposition to de la Rua. They did not participate in the December 19-20 rebellion. They have not mobilized the unions against the continued austerity measures of the new Peronist Duhalde administration, which the union bureaucracy supports.–Ike Nahem]

The masses erupted against the de la Rua Administration which for two years had loyally implemented the policies demanded by Washington and European capitalist powers, under the cover of IMF. The unremitting destruction of jobs, wages, and social spending had to be permanent if the perpetual and unending flow of interest payments on Argentina’s $150 billion foreign debt to imperialist creditors was to be maintained. Now, the debt is in default and capitalist finance, production, and distribution has collapsed. [Of course, the capitalist system and its social relations remain, and is the only existing basis for the shoots of economic activity that go on and reproduce. What collapses is not dead and economic systems and their social relations never simply collapse out of existence. They can, however, be overthrown and replaced by new social relations established in social revolution. --I.N.]

The December 19-20 popular rebellion culminated a week of mounting, deepening mass action. On December 12, a series of mobilizations broke out, including marches and highway blockades leading into Buenos Aires and other cities. One large union-led demonstration demanded unemployment benefits, which are largely nonexistent in Argentina. Official–and undercounted–figures for unemployment are 20%, which does not figure in the underemployed who work as called by some boss, for a few hours a week. Another big rally was organized by retired workers, protesting de la Rua and Cavallo’s threat to delay the already pathetically low pension payments of $150 a month. [It is often said in the U.S. big-business media that the roots of Argentina’s economic disaster lies in, as a Newsweek columnist put it, "a welfare state that is among the most generous in the world.’’ No unemployment compensation and starvation pensions are presumably two examples of such generosity.–I.N.]

The weekend of December 12-13 saw "groups of unemployed workers [demanding] food from supermarkets" according to the December 19 Financial Times. Workers massed around supermarkets in the industrial cities of Rosario, Concordia, and Mendoza demanding food. On December 14 the de la Rua-Cavallo regime paid $900 million in interest payments on the foreign debt largely by confiscating money from the pension funds of workers in private industry, provoking angry protests. The same day rail workers and teachers mobilized to demand the delivery of withheld wages. As many as one-third of employed workers in Argentina have not received their wages in months! Significantly, workers were joined in these actions by small shopkeepers who organized "blackouts," shutting down storefronts. All were supported in working-class and middle-class neighborhoods in Buenos Aires by noisy cacerolazos where pots and pans were banged from doors, windows, and balconies.

This first wave of militant protest was met by police repression. Tear gas and rubber bullets were used against peaceful protesters. But in a sign of growing determination and combativity among working people, especially the working-class youth in the forefront, repression did not cow and intimidate, but had the opposite effect. This would be registered full-blown on December 19-20.

The explosive chain of events culminating in the December 19-20 rebellion can be traced to a long-debated decision by the IMF --which means a decision in the highest bodies of the U.S. government-- to dramatically escalate the pressure on the Argentine state for still more austerity by withholding further funds. On December 5, the IMF suspended delivery on a $1.3 billion tranche of a previously agreed new loan --to, of course, pay interest on old loans-- that was "approved" in August 2001 in reward for the 13% wage and pension cuts implemented by the de la Rua-Cavallo regime. [This IMF slap in their lackey Cavallo’s face for all intents and purposes put Argentina in de facto default. $121 million in interest payments to bondholders due on December 14 were not paid. On January 3, Argentina went into formal default when an interest payment on a $28 million Italian lira bond was missed. --I.N.]

Cavallo took off to Washington and New York hat in hand, and was told to come up with more cuts, more austerity. He duly came forward on December 17, unveiling his "plan" for the 2002 national budget.

Cavallo projected $10 billion in new, ruthless austerity cuts in social spending. He floated additional slashes in wages and pensions for public workers on top of the 13% cuts implemented the previous August. That seems to have been the final straw; the genie of mass rebellion was unleashed by a supreme Harvard-trained technocrat and numbers cruncher incapable of "factoring in" the dignity of actual human beings and their capacity to resist.

After the fact, no one claimed–or could claim–to have been surprised by the massive upsurge. Still, Argentina’s capitalist rulers, their despised politicians, and their props and sustainers in Washington and other imperialist centers were shocked and shaken. In the final analysis, bourgeois politicians and economists always plod along empirically. Their arrogant contempt for the fighting capacities of working people always catches them unawares.

On December 19, de la Rua declared an impotent State of Siege, suspending constitutional and labor rights. He went on television to deliver a pre-recorded four-minute speech which reeked of his trademark banality and political irrelevance. Immediately following the speech tens of thousands gathered in the Playa de Mayo in Buenos Aires and elsewhere, storming the layers of barricades surrounding the Presidential Palace demanding de La Rua’s resignation. The numbers grew to hundreds of thousands. Within hours he was gone, having resigned and evacuating the palace by military helicopter.

The State of Siege was the supreme insult to the people. The collective response was registered by an unemployed Buenos Aires worker quoted in the December 24, 2001 New York Times, "There are millions like me who have come from the interior and end up eating from garbage cans because there is no work. The government created this situation, not the ordinary people, but the people are suffering, and all the government can think to do is declare a state of siege."

In the midst of the December 19-20 explosion, the chief enforcer of imperialism’s incessant demands for more and still more austerity and assaults on the living standards and social rights of the working class, the hated finance minister Domingo Cavallo resigned. His resignation had been preceded a few days earlier by his chief deputy Daniel Marx who jumped ship. Both Cavallo and Marx were darlings of the IMF, the imperialist agency assigned to oversee the social and economic devastation and political subordination of the Argentine nation. [Under the supervision of Cavallo and Marx in 2001, $12 billion in interest was paid to foreign creditors, even as the biggest capitalist families spirited their funds out of the country. The outrage within the ranks of middle-class savers who are totally aware of this, is palpable. They, of course, are unable to get their now devalued money --backed by nothing-- which was, in effect transferred to foreign banks, bondholders, and the IMF. --I.N.]

Among the hundreds of thousands that poured into the Plaza de Mayo in Buenos Aires were obviously large numbers of unionized workers. But, the three trade-union federation’s leaderships did not mobilize their members and abstained from the semi-spontaneous combustion. It was militant, unorganized working-class youth who were in the forefront of what became combat with the police. From 9:00 am until midnight the cops, using tear gas, horses, truncheons, rubber bullets, and live rounds tried to clear the square. The youth fought with stones and bottles. They hurled metal barricades at the murderous cops.

But despite wave upon wave of cop assaults, the youth continually regrouped and counterassaulted. They kept coming, shocking the cops and the government. In the end, Cavallo and de la Rua were gone and the youth were not defeated.

The long-simmering crisis in Argentina has now broken the mould. Argentina has become a touchstone of the Latin American class struggle. While the Argentine working class is clearly at center stage in unfolding politics, the bourgeoisie --via the Peronist party and remaining working-class illusions in Peronism-- and imperialism still hold the initiative. This is the objective reality. Events will turn on the subjective factor of leadership. How the proletarian fighting vanguard acts and reacts to events, whether it can forge a united, revolutionary leadership capable of leading millions to power in time, will be the lever in the coming period of permanent instability and growing class polarization.

Peronism remains the primary political and ideological obstacle facing the Argentine working class movement as it fights for its self-defense and for the national liberation of Argentina from imperialist exploitation. Juan Domingo Peron was elected President of Argentina in 1946, and remained in power until he was overthrown in a pro-Washington military coup in 1955. After short stops in Paraguay, Venezuela, and the Dominican Republic, Peron settled in exile in Franco’s Spain until a mass insurrectionary upsurge of the working class in the late 1960s and early 1970s led to a crisis of revolving military regimes, a pre- revolutionary situation, and an offer by top generals for Peron to return and run in a presidential election. Generals who Peron in power had jailed and who themselves had overthrown and exiled him now pleaded for his return in the realization that only he could demobilize the masses, end the pre-revolutionary situation, and thus restore the conditions for the tightfisted rule of capital. Peron returned and was elected again in 1973, but died a year later. He was succeeded by his wife Isabel, who ruled ineffectively until she was overthrown in another military coup in 1976. For the next seven years, the most vicious military regime in Argentina’s history–and among the worst ever in Latin America–ruled by terror, backed by Washington.

Peron represented an Argentine form of Third World bourgeois nationalism, in a certain conflict with imperialism, which was a broader tendency in the post-World War II period of colonial upsurge and decolonization, incorporating figures like Gamal Abdel Nasser in Egypt, Jawaharlal Nehru in India, and Julius Nyerere inTanzania. This tendency promoted the development of an indigenous industrial bourgeoisie and capital accumulation through state intervention, state enterprises, and various degrees of protection against imperialist economic domination. In Argentina, as elsewhere in this period, under the pressure of mass anti-imperialist consciousness and movements, these governments carried out large-scale nationalizations of industries and varying degrees of concessions to workers and peasants. Peron’s initial period in power, from 1946-55, until he was overthrown in a military coup, was marked by the most far-reaching concessions to working people, of any regime of this general type. As a result the Argentine working class retained, in their large majority, a striking adherence to Peron personally and the Peronist movement.This has considerably frayed, but is still not broken, today. The Peronist movement, before and after his death, has always been highly factionalized and ideologically diffuse, and was consciously designed as such by Peron.

Peronism displaced the discredited and Stalinized Argentine Communist Party as the major political force in the working-class movement during and after World War II. Peron was an army colonel and Minister of Labor under a military government that took power in a coup against an unpopular Conservative government in 1943. That government, dominated by the landowning oligarchy, had itself been installed by a military coup in 1930. By 1943, workers in industry surpassed in numbers those employed in cattle-raising and agriculture, and had a continuity of militant struggle, under socialist and communist leadership, throughout the 1930s depression. In the Labor Ministry post, Peron cultivated ties with the trade unions and implemented, over employer objections, reforms that removed obstacles to trade-union organization in meat-packing plants and other industries. Collective bargaining rights and procedures were institutionalized under the control of his Ministry. In fact, no agreement could be recognized without the approval of Peron’s Ministry. Peron’s Ministry appropriated large sums for the construction of apartment housing for workers. Compulsory holidays and vacations with pay were decreed for all wage workers. Under Peron’s watchful eye and indulgence, the General Confederation of Labor (CGT) healed a split and grew by nearly two million members in two years. From that time until today, the CGT --which is again split into two wings-- remains tied, albeit now more loosely and contentiously, to the Peronist party

In his post, Peron became very prominent, and his publicity machine promoted him as the "champion of the working man." As workers won considerable wage and benefits gains, they became grist for the Peronist propaganda mill. In this period Peron became associated with Eva Duarte, a popular and glamorous radio actress. They were a mainstay on the Argentine celebrity circuit, dispensing gifts and patronage and basking in the acclaim of star athletes and top entertainers.

In 1945 a clique of military officers, upset with Peron’s growing popularity and concessions to workers, had him arrested on trumped-up charges. The trade-union officialdom, with Eva Duarte in the forefront, immediately organized mass demonstrations demanding Peron’s freedom. The working-class suburbs surrounding Buenos Aires, emptied into the capital city. What became known as los descamisados --workers in shirt-sleeves-- virtually took control of the capital on October 17, 1945. Peron was quickly released and he and "Evita" were married a few days later.

The victorious Peron put his allies in key government positions, but stayed out of formal office to prepare for elections in February 1946. He formed the Partido Laborista and ran on a program of nationalization of the railroads and other public services, building of hospitals and homes for workers, the sick, and the elderly, and defense of his reforms as Minister of Labor. He was strongly opposed by Washington, ostensibly because of his opposition to Argentina’s entry into World War II. The elections were seen as the cleanest bourgeois election in Argentine history and Peron and his party won the presidency, two- thirds of the lower and all but two seats of the upper house of the Argentine Congress.

Peron’s initial post-war government was able to sustain a relative, conjunctural prosperity through its successful marketing of Argentine beef in war-disrupted and devastated European and world markets. Wartime beef sales gave the Argentine state nearly $2 billion (a huge amount in 1946) in reserves which Peron used to make concessions to the working people and bribe the union officialdom. Peron was a semi-Bonapartist political figure who built a popular base among working people in his initial term by sanctioning --under strict control-- trade-union organization and significant material concessions to workers. [Bonapartism --referring to mid-19^th French dictator Louis Bonaparte-- is a category coined by Karl Marx which describes a political tendency which concentrates executive power in a strong personality who appears to transcend the struggle between social classes and takes a populist pose, often antagonizing the ruling classes, as a way to preserve essential capitalist state power and property relations. Bonapartist regimes differ from rightist military or fascist dictatorships which rule strictly through force and repression of popular demands. A Bonapartist-type regime may retain certain parliamentary or democratic forms, even as it arbitrates between different interests, all the while holding ultimate decision-making power. The "leader" in a Bonapartist-type regime plays the role of supreme arbiter between contenting social classes and arises in a framework of intensifying and destabilizing, class struggle. Bonapartism is often a prelude to fascism or right-wing military dictatorship.. --I.N.]

Peron sought to promote Argentine capital --which was built up through policies promoting a degree of state industry, state intervention, and state protection-- and maneuver in world and especially regional markets for a better position for Argentine capital against the main imperialist forces operating in the region, which were Britain and the United States.

Peron was able to continue a policy of concessions to workers under tight control, as long as the favorable world market conditions for Argentine exports --mainly beefs and grains-- and the foreign exchange they brought in, continued. By the early 1950s, world market conditions had changed and Peron’s aura and ability to maneuver above and around the class struggle at home and the imperialist powers abroad began to slip.

Peron broke the political monopoly of the landowning oligarchy, but never nationalized their estates or implemented radical land reform. As state revenues declined and the patronage pie shrank, factional fighting between competing fiefdoms increased, and corruption scandals became more visible and publicized. Inflation also intensified, rousing the upper and middle classes.

Eva Peron was central to the appeal of the Peronist government and the Peronist mythology. A cult of personality was promoted which demagogically identified her with impoverished Argentines, especially through highly publicized charity campaigns, organized through the Eva Peron Foundation. Her death from cancer in her early 30s in 1952 deepened the "Evita" cult, but also hastened the disintegration of the regime.

Of all the Bonapartist-type regimes that have come and gone since the mid-19^th Century, Peron’s had certain distinct features, which explain its remarkable longevity as a political tendency and the illusions it has fostered among many militant, socialist-minded Argentine workers.

Ideologically, Peronism was a consciously contradictory, eclectic amalgam. It’s ranks included fascist sympathizers and petty-bourgeois leftists, right-wing and left-wing intellectuals, reactionary and progressive elements in the Catholic Church, and radical nationalists. But its main base was in the urban industrial working class and among farm workers in Argentina’s huge meat and grain producing and exporting agricultural industry. Peronism emerged and was nourished by the intense and rooted social antagonisms of Argentina, posing as above them all, the better to unite the entire "Argentine nation," employers and workers, rich and poor, against "foreign domination." At various times, Peron called his movement Christian, anti-Communist, and anti-capitalist. In his words, it was "a Third Position which is on the center, on the right, or the left according to specific circumstances." Among the slogans Peron popularized were "Labor’s Bill of Rights," "Economic Independence," "Social Justice," and "The Syndicalist State."

Many shallow and ignorant "analysts" in the big-business press, forced to delve into history by the urgency of the current events in Argentina, have labeled Peron a "fascist." They cite his supposed admiration for Mussolini, his 17-year exile in fascist Franco’s Spain, and even his connivance in the transfer of a number of Nazi officials to Argentina after World War II. [That connivance is true enough, but, of course, far more Nazis ended up in the U.S., France, and other "allied" countries–through the clandestine efforts of the CIA and the Catholic Church hierarchy. Franco, of course, was a U.S. ally after the war. -- I.N.] This is nonsense and stems from U.S. propaganda against Peron because of his conflicts with Washington. Peron did serve as a military attaché in Mussolini’s Italy and did urge Argentine neutrality in World War II. The latter position was an important factor in dislodging the Argentine CP from its dominant position in the labor movement which occurred in that period. The Argentine Stalinists–after the Soviet Union was invaded by Hitler–reversed their "anti-war" position and agitated furiously for Argentina’s entry into the war on the side of the "allies." This was not a popular position in the Argentine working class, insofar as it meant subordination to British and U.S. policies, the two imperialist powers that dominated Argentina.

Nevertheless, despite his strong-arm tactics and authoritarian persona and methods, Peron was by no means a fascist. Above all else, fascism is the untrammeled rule of capital. It seizes power with the backing of the summits of finance and industrial capital. Its intent is to pulverize all forms of working- class self-organization, first and foremost the trade unions, which are the elementary mass organizations of workers self-defense. Despite the craven willingness of trade-union bureaucrats in Italy and Germany to collaborate with the victorious fascist regimes of Mussolini and Hitler, both Il Duce and Der Fuehrer carried out the total dissolution and obliteration of trade union organization, down to the last penny of their bank accounts and the last light-switch in their offices.

Peron, on the other hand, leaned on the labor movement for support, competed with Stalinists, social —democrats, anarchists, and Trotskyists for position, and, in power, actually sanctioned and facilitated an astonishing expansion of trade-union organization to some 90% of wage workers, a figure unsurpassed in the capitalist world. [Today, years of neoliberal assaults from the Peronist Menem regime to the Radical "Alliance" of de la Rua have reduced union membership to 20% of the workforce. --I.N.]

In a polemic around the question of guerrilla warfare in Latin America in the 1970s, U.S. Marxist leader Joseph Hansen analyzed the "The Problem of Peronism" as follows, "The consolidation of industrial unionism in Argentina during the [first] Peron regime…made an indelible impression on the masses. Peron came to power after a period of relative prosperity arising from Argentina’s remoteness from the scenes of battle in World War II and its ability to take advantage of a profitable market. Peron had the wherewithal to grant considerable concessions to the masses. Among the consequences were the fastening of a powerful bureaucracy on the labor movement and the instilling of deep illusions among the masses with regard to the capacity of a bourgeois nationalist regime to meet their most pressing needs.

"In the interests of Argentine capitalism, Peron sought to maneuver among the imperialist powers. To accomplish this he encouraged the partial mobilization of the masses, but under the strict control of a government-dominated bureaucracy and with a readiness to resort to repressive measures should this be required.

"Peron’s policy of standing up to imperialism while supporting and strengthening Argentine capitalism ended in a blind alley, as was inevitable. Peron opposed independent mobilization and arming of the working class, the only class willing and able to confront imperialism in a showdown. He maintained and built up an officer caste loyal to the national bourgeoisie, which in turn is tied to imperialism through the world market. Thus Peron prepared the way for the economic penetration of American capital [Towards the end of his regime Peron shocked many by granting concessions in Patagonian oilfields to a U.S. company.–I.N.] both economically and politically in Argentina. Similarly he prepared the way for his own downfall at the hands of his subordinates in the army.

"Because the coup d’etat of 1955 was proimperialist, the masses were deprived of the opportunity of seeing Peron’s own relationship to imperialism become exposed. Their faith in him remained unaltered throughout the seventeen years of his exile….

"Peronism is the expression of a deep contradiction in Argentine politics. It is based on the existence of a very powerful labor movement that has never been defeated so far as the existence of its mass organizations and its high level of combativity is concerned. At the same time, Peronism ties the working class politically to capitalism through a bourgeois party." [Joseph Hansen, The Leninist Strategy of Party Building, Pathfinder Press, NY, 1979]

De la Rua’s humiliating departure set the stage for the Peronist Party to take over the top job. The disarray and splits between and within the capitalist political establishment was perhaps the decisive factor in allowing a relatively spontaneous and unorganized mass explosion to depose a "constitutional" government.

Voting in Argentina is compulsory by law. Nevertheless, in the October 2001 elections for Congress, as many as 40% of the voters cast blank votes for none of the bourgeois parties or abstained. The Peronists gained control over both houses of the Argentine Congress from the discredited and hapless Radical-led "Alliance." Behind closed doors, the Peronist heavyweights chose Adolfo Rodriguez Saa, a small-state governor previously know mainly for a sex scandal, to rule as president until new elections --with undemocratic rules that aimed to marginalize independent challenges to the two main bourgeois electoral formations-- were to be held in March. Rodriguez Saa took the reigns with great fanfare, genuflected before the "revolutionary spirit" of Eva Peron and announced that Argentina would stop payments on the principal and interest on its $150 billion dollar debt to imperialist banks and institutions. This was very popular, insofar as it has been a central demand of millions for years, but Rodriguez Saa got no "momentum" from it.

He further announced that a million jobs would be created and that past slashes in wages and benefits for public workers were rescinded. To address the question of devaluation and ending the currency board which artificially equates pesos and dollars in value and thereby prices Argenine exports out of world markets, Rodriguez Saa floated the idea of establishing a third currency, the argentino, essentially worthless scrip-like bonds, to oversee a slow devaluation, "pay" public workers, and finance his stated social and jobs programs. This was widely seen as a ridiculous fantasy putting off an inevitable devaluation and collapse of the Argentine peso. Rodriguez Saa also extended the limits on bank withdrawals which infuriated those in the middle class that still actually had cash --or numbers on paper, anyway-- in the banks.

Rodriguez Saa made a point of speaking before trade-union assemblies and meeting with the victims of military and police repression. But within a week his rule had collapsed as a new wave of mass protests and power jockeying within the Peronist organization left him unable to function. Rodriguez Saa’s cabinet choices included several notoriously corrupt figures. These included as his chief advisor a former mayor of Buenos Aires who had been indicted thirty-eight times for corruption! Photographs of him embracing and laughing it up with hated former president Carlos Menem, the architect of the neoliberal disaster and hero of Washington and Wall Street, who is popularly viewed as overseeing the looting of the nation while personally enriching himself, added to the isolation of Rodriguez Saa.

Behind the scenes, Argentina’s ruling class and Washington disdained Rodriguez Saa’s populist demagogy, the potential for rising expectations, and his currency hocus-pocus. They had no confidence in his ability to contain the mounting social explosion or even buy precious time. The renewed mass actions took place in middle-class neighborhoods and spread. Attacked by cops, the protests again became more combatitive. They were a sign that band-aid–mostly verbal–concessions would not work.

After a few days of Rodriguez Saa, there was a new wave of angry cacerolazos and he was soon gone on December 30.

Rodriguez Saa was also the sacrificial lamb when the Argentine rulers rethought the legislation which placed him in temporary power while mandating that new elections be held for the presidency in March.

Parliamentary elections under capitalism are normally and usually a stabilizing, atomizing, and conservatizing force with their inherent financial manipulation and wheeler-dealer corruption. They tend to obscure the underlying class conflicts in bourgeois society even as they appear to register the "equality" of "one person, one vote." However, under conditions of capitalist collapse and crisis and rising working-class and mass mobilizations, bourgeois parliamentary elections can be transformed into something quite the opposite from their normal utility for the ruling class. This is especially the case for semi-colonial countries.

The Argentine rulers quickly came to the conclusion that an election --even one which they tried to rig through various restrictive rules-- would be a further destabilizing factor, a forum for programs and forces they did not wish to elevate and which would likely produce a formal humiliation for the established bourgeois parties. In the October elections, in addition to the 40% who refused to vote or cast spoiled ballots, independent left-wing and revolutionary socialist parties got some 1.3 million votes, dividing 12% of the votes cast, and electing five members of Congress in Buenos Aires.

Bourgeois politics in Argentina are increasingly chaotic. As the December 22 Financial Times lamented, "The depth of the social crisis has shifted the political consensus to the left." This has meant the collapse of opposition to debt default. Lip-service is now widely given to state regulation, capital controls, price controls, state-established unemployment compensation, food and poverty relief, and other social spending. Any bourgeois party or figure who did not adapt to this would face political oblivion. But even the most timid actual "populist" steps would come up against a furious barrage of opposition from Washington and Europe, which demands more privatization, more budget cuts, less capital controls, less regulation, and "debt restructuring," that is, resumption of interest payments on the foreign debt.

This points to the dilemma facing the imperialist parasites. The crisis in Argentina is threatening the entire neoliberal "Washington consensus" for Latin America that took off after the collapse and defeat of the Nicaraguan Revolution and the stabilization of the imperialist order in Central America at the end of the 1980s. That period which lasted over a decade has now run its course. Argentina --the poster boy for the neoliberal Yankee model-- is in open revolt. The rest of the continent is so many shoes waiting to drop. Washington’s highly-touted Free Trade Area of the Americas (FTAA) pact, which is supposed to be realized by 2005, has taken a blow. As a Washington Post article put it, "The specter of Washington turning its back on [Argentina] could inflame anti-American sentiment throughout the region and give a boost to forces hostile to U.S. interests in other nations, notably Brazil --a potentially disastrous blow to the Bush administration’s hopes of forging close ties in the hemisphere."

On January 1, Duhalde replaced Rodriguez Saa in an overwhelming Congress vote, including those of de la Rua’s Radicals. In an emotional speech heavy with populist and nationalist appeals, Duhalde thundered his "commitment…to finish with an economic model that has brought desperation to the vast majority of our people." He bellowed, "The very essense of this perverse model ended convertibility, threw two million of our countrymen into poverty, destroyed the Argentine middle class, bankrupted our industries, and pulverized the jobs of Argentines."

Duhalde reaffirmed the default on foreign debt and scrapped the currency board and argentino charade. The devaluation decree by Duhalde was accompanied by the usual Peronist populist bombast against foreign banks and multinational corporations. Within days he announced a labyrinth new currency devaluation scheme which set a fixed rate of 1.40 pesos to the dollar for imports and other specified transactions and left the peso to float "freely" for all other transactions. On February 11, this was dropped under IMF pressure in favor of a total peso float. Following the devaluation, the peso plunged and has since oscillated around 2 pesos to a dollar.

On January 20 Duhalde reversed an initial promise that account holders with dollar-denominated deposits --some $47 billion-- would "eventually" be paid in dollars. Now they will be paid, if at all, in the collapsed peso.

The promise had raised the ire of the foreign banks. The British bank HSBC, which stood to lose $2 billion, said through its Argentine subsidiary’s chief executive, "These kinds of economic measures are just not acceptable. I don’t see why the shareholders of foreign banks should be held accountable for the government’s mismanagement." Duhalde was quickly at pains to emphasize his "pragmatic" side to the imperialists. Duhalde’s acquiescence to the bankers will save them some $16 billion according to Moody’s Investors Service. Duhalde’s initial policy rhetoric would have, if implemented, been a hit to foreign-owned banks which would have been obliged to shell out dollars to depositers. In fact, there are investigations into some of these banks organizing convoys of armored vehicles to sneak dollars out of the country.

Nevertheless, a number of top imperialist banks and firms face significant losses in Argentina. Over $89 billion in imperialist capital poured into Argentina from 1994-2000, of which 30% was Spanish and 30% US. Spanish banks and firms which took over Argentine banks and privatized utilities, reaping huge short-term profits, are now vulnerable to body blows. Washington, the Spanish government, and the European Union are all intensely pressuring the Duhalde regime to minimize the losses of their biggest capitalists and to make workers and the middle class bear the "pain." In early January the French government sent a letter through "diplomatic channels" --which was then leaked-- demanding that the Argentine foreign minister "do everything in your power to look after our companies, who have invested much in Argentina." On January 22 came a public statement by all fifteen finance ministers of the European Union demanding that the Duhalde administration "adhere to the principles of a market-based economy and avoid discriminating against foreign direct investors and creditors." Such pressure quickly led Duhalde and the Argentine Congress to eliminate aspects of a pending bill on Argentine bankruptcy law that would have limited dollar transfers to foreign companies to pay debt. This followed Duhalde’s craven retreat under imperialist pressure from his "promise" to redeem dollar deposits in dollars.

Duhalde says, "We don’t have a lot of time. We are working against the clock. But the bomb is like you see in the pictures. It is ticking, tick, tock, tick, tock." With such statements Duhalde is begging the imperialists for some crumbs and some indulgence. They are not likely to be impressed. His job is to give, theirs is to receive.

The devaluation is accelerating the social catastrophe. Medicines for cancer, AIDS, heart, and diabetes drugs are disappearing from shelves as wholesalers withhold imported stocks so as to raise prices. Inuslin has vanished which will bring death. The Washington Post reported that diabetics hit the streets in mass protests at pharmacies. Brazil started sending emergency dosages.

Duhalde, no less than de la Rua, is under tremendous and conflicting pressures between the demands of imperialism for austerity and the demands of the Argentine masses for relief, jobs, and development.

In the immediate period Duhalde can only hope to buy time by attempting to appease the masses. How many deeds will back up his "populist" words will determine how long he is able to hold on to his post. But his ability to "buy off" and postpone new, more politically focused, and more consciously revolutionary mass upsurges that could become insurrectionary depends on how Washington "handles" the Peronist regime.

Neither Duhalde nor the imperialists are in control of the situation. Both must react to events. And the main "event" is the intervention of the Argentine masses, which has become an independent factor. Control can only come when the genie of the mass movement, the mass mobilizations, and the proletarian and middle- class radicalization that fuels it is somehow shoved back in the lamp. Without political stability, that is, the demobilization of the masses, there can be no orderly resumption of the imperialist looting of the Argentine nation.

Nonetheless, Washington is stepping up pressure on the Duhalde government and cannot do otherwise. The desire for social and political stability in Argentina is in irreconciliable conflict with the imperative to perpetuate the economic, financial, political, and strategic domination of Washington.

Washington needs an Argentine state power that adapts to its pressure, not the pressure of the vast majority of Argentines, including the pressures and needs of important layers of the Argentine capitalist class.

In this regard, Washington is hostile to any attempts by bourgeois Latin American governments to join forces to protect their independent economic interests through trading blocs such as the Mercosur arrangement between Brazil, Argentina, Uruguay, and Paraguay, and associate members including Chile. Washington does not like one bit the Duhalde regime’s overtures to Brazil aimed at re-cementing the two countries bilateral economic and political ties and strengthen the Mercosur trade bloc.

Under Menem, Argentina’s foreign policy and diplomacy became more openly servile to Washington. Foreign policy is always an extension of domestic policy. Argentina attained the dubious status of "non-NATO ally" of Washington. Argentine troops pulled up the rear of several U.S./UN "peacekeeping" missions around the globe, and were even, under de la Rua pining for "service" in Afghanistan, offering 600 troops and a field hospital. Revolutionary Cuba was gratuitously and with stunning hypocrisy attacked over "human rights" in UN forums to please Uncle Sam. Menem’s foreign minister famously described U.S.-Argentine diplomatic relations as "carnal."

The new Peronist foreign minister, Carlos Ruckauf, recalling the "carnal" quip pointedly said, "Regarding negotiations with Europe and the FTAA, I don’t see why we can’t be polygamous, at least, in foreign and economic policy."

In initial statements bound to displease Washington, Ruckhauf moved to mend economic tensions with Brazil and and affirmed an orientation to strengthening Mercosur [formative South American common market]. Cavallo had previously antagonized Brazil by denigrating Mercosur in favor of servile orientation to Washington and FTAA.

But the pathetic and transparent maneuverings of the new Peronist administration represents no break in the continuity of servility to Washington. This was underscored by Foreign Minister Carlos Ruckauf’s short trip to Washington, primarily a mission to beg for more IMF funds. While there, Washington made sure to extract from him public attacks on Cuba.

Throughout the 20^th Century, Washington has not hesitated to subvert and engineer the overthrow of vulnerable, reformist, "populist," and bourgeois nationalist regimes that attempted to implement independent, progressive policies in opposition to Washington. The list of examples is virtually endless; among the most egregious cases are Guatemala in 1954, the Dominican Republic in 1965 (which took finally an invasion of U.S. armed forces), and Chile in 1973. We can be sure the CIA agents ensconced in the U.S. embassy in Buenos Aires are working overtime cultivating and orienting agents in the military and Argentine intelligence, making contacts, disbursing cash to recruits, and drawing up contingencies for covert and overt action for "future contingencies" in Argentina.

Paul Krugman is a Harvard professor and bourgeois economist who is also a columnist for the New York Times. He writes in a flippant, know- it-all tone that aims to be comprehensive and popular for his affluent audience. He is liberal in the sense that he hates what capitalism does, but he loves capitalism itself. He opposes capitalist "excesses" and the more libertarian bourgeois economists whose remedies and policies he fears will jeopardize his beloved free-market system. Krugman favors state regulation of markets and minimum welfare and other social wage protections for workers, and opposes privatization of Social Security. Krugman is cynical enough to reveal certain facts and truths that contradict official bourgeois propaganda, if only to loyally forewarn the powers-that-be of potential Achille’s heels that can threaten the system as a whole.

In a New Years Day column called "Crying With Argentina", Krugman -- in his own smarmy, condescending, style-- gets to the heart of the problem that the events in Argentina represent for U.S. and world capitalism. He writes, "Most people here may think that [Argentina] is just another run-of-the-mill Latin American crisis --hey, those people have them all the time, don’t they?-- but in the eyes of much of the world, Argentina’s economic policies had ‘made in America’ stamped all over them. The catastrophic failure of those policies…is also a disaster for U.S. foreign policy.

""Here’s how the story looks to Latin America: Argentina, more than any other developing country, bought into the promises of U.S.-promoted ‘neoliberalism’ (that liberal as in free markets…). Tariffs were slashed, state enterprises were privatized, multinational corporations were welcomed, and the peso was pegged to the dollar. Wall Street cheered, and money poured in; for a while, free-market economics seemed vindicated, and its advocates weren’t shy about claiming credit."

Krugman leaves out the tripling of unemployment to 15% and the looting of the national patrimony in this period of "vindicated" neoliberalism, but he goes on to say, "Then things began to fall apart."

What Krugman is telling his ruling-class and affluent constituency is that the capitalist crisis in Argentina --and the unstated working-class resistance-- will not be contained there. Rather, it is bound to unleash a dynamic throughout Latin America that will challenge and unravel U.S. domination from Mexico to the southern tip of Chile. A new period has opened up.

On January 15 a new wave of militant protests broke out, directed now at the Duhalde Administration. According to the Washington Post, "In mounting frustration, thousands of protesters rioted in three provinces today, throwing eggs and smashing windows of foreign-owned banks.

"In the northern province of Jujuy, demonstrators broke windows and destroyed computers and ATMs and BankBoston and Citibank. In Buenos Aires, thousands marched on the presidential palace demanding food, jobs, and an end to the banking freeze."

Increasingly beleagured, Duhalde stepped up his nationalist rhetoric, even as he defended the freeze on individual bank accounts and huddled with his aides to unveil a new austerity budget that will be a bargaining chip in negotiations with the IMF.

In a January 15 speech which irritiated U.S. officials and led to hyped-up attacks in top big-business papers in the U.S., Duhalde appealed to Latin American unity against foreign "domination," directly criticized U.S. trade barriers to Latin American commodities, and timidly criticized the IMF. He called for a common currency with Brazil and --in an appeal to Washington for indulgence and help-- said Argentina was "one step away from anarchy."

Washington’s response was swift and unyielding. On January 16, Bush delivered a major speech at the Washington headquarters of the Organization of American States (OAS). The clear backdrop was the gathering momentum of the Argentine crisis and the looming debacle of the neoliberal "Washington consensus." In a pointed address, Bush laid out the Yankee line and, in essence, read the riot act to the semi-colonial hemispheric governments that make up the OAS. To the oppressed and exploited peoples of Latin America, the speech will bring to mind the fable, "The Emperor Has No Clothes."

As the January 17 Financial Times put it, "The remarks by Mr. Bush were the sharpest sign yet of the growing concern in the administration that the economic crisis in Argentina could produce a wider regional backlash against globalization and derail US hopes to negotiate a Free Trade Area of the Americas by 2005."

In a thinly veiled attack on Duhalde’s rhetoric and feints at an independent policy, Bush gave no quarter. "Argentina --and nationals throughout our hemisphere-- need to strengthen our commitment to market-based reform not weaken it. Shortcuts to reform only lead to more trouble. Half-measures will not halve the pain, only prolong it."

"Some," he patronizingly intoned, "are questioning the path to prosperity. Some wonder whether free-market reforms are too painful to continue. Some question the fairness of free and open trade, holding out the false comfort of protectionism…Those who promise painless protectionism or security through statism assure a bleak and stagnant future."

Bush said Argentina must deliver a "sound and sustainable economic plan," i.e. more cuts, more austerity, more pain and misery before the IMF will deliver more loans and more debt. He pointed to Chile and Mexico as how countries that "stay on the hard road of reform are rewarded." This will incite bitter laughter among the workers and farmers of Chile and Mexico.

None of this will go down well in Latin America. The arrogance is too jarring. The hypocrisy too blatant. Latin American manufacturers face U.S. tariff walls which contribute to driving them against the wall.

In the Latin America where neoliberal "reform" has intensified social inequality and the debt slavery that guarantees its perpetual reproduction, Bush’s platitudes will have the opposite impact which his advisors and speechwriters hope and expect.

Today’s Latin America has 225 million impoverished people, 90 million of whom are utterly destitute. There are 114 million children living in poverty, 60% of all children. Fifty million Latin American children are living on the streets, homeless. Over 500,000 Latin American children die every year from preventable diseases. According to the International Labor Organization, 10 million of the Latin American children who are driven out of school by the imperative of working, end up in the prostitution and pornography rackets of the so- called sex industry.Such are the fruits of capitalism and imperialist exploitation that Bush wants to multiply with more neoliberal austerity.

The only country in Latin America and the Caribbean where these evils do not exist is Cuba, which through a socialist revolution ended the domination of Washington and the dictates of world capital.

In the inner sanctums of Washington policymakers and New York financial houses, the first thoughts are always their profits and their control. So, through the point man of Treasury Secretary Paul O’Neill, the Bush Administration, within days of Duhalde’s assumption of office and initial announced measures, began an incremental campaign of pressure on his government to not stray off the imperialist plantation. The pressure is framed in terms of conditions for future IMF "loans" to "rescue" the collapsing banking system.

An especially revealing article in the Washington Post of 10 January sharply posed the conflict over Buenos Aires’s needs and Washington’s requirements. "The hard-line stance staked out by the IMF and Treasury Secretary Paul H. O’Neill underscores their concern that the government of Eduardo Duhalde may not be willing to take the steps necessary to put the Argentine economy back on a sound long-term footing," says the Post. (Translation: "sound long-term footing" = more austerity, more pain, more unemployment, more homelessness, less medical care, less education in order to revive debt payments and capitalist profits.) The article goes on to quote a Argentine government spokesperson, "There should be an understanding of what the situation is like here. There are some decisions which could be socially intolerable."

Stripping away all the mystifying bourgeois economic jargon, what O’Neill and the IMF tops are calling for is for more, and still more, austerity. In fact, that is all they have to offer the vast majority of the Argentine people, regardless of the warning sirens sounded by their own people.

So Duhalde is moving towards a deal with the IMF for a new transfusion of loans. The head of Argentina’s central bank, a de la Rua appointee, was forced out and replaced by a former IMF official. "Basically, the government is doing whatever it can at the moment to get back around the table with the IMF," one economist at a major London firm told the Financial Times. Duhalde’s new economy minister Jorge Remes Lenicov’s job is to prepare a new austerity budget in return for new IMF loans.

While the ruins of dependent capitalism in Argentina smolder, the post-mortems from bourgeois economists, editorial pages, and pundit columnists are starting to fly. The dominant theme is that Argentina’s current crisis, while a "tragedy" for the Argentine people, is of course not a failure of the "free market" policies --privatization, "investment," austerity, "fiscal discipline", and orderly payments of debts-- of the "Washington Consensus." It's that these policies did not go far enough!

"They stopped reforming. They left the job half done," said Alberto Bernal of top firm IDEAglobal.com. "Argentina’s tragic crack-up occurred not because pro-market reforms went too far, but because they did not go nearly far enough," explained Brink Lindsay of the "libertarian" CATO Institute in a January 9 op-ed in the Wall Street Journal. A Washington Post editorial notched up the still-inadequate performance of the not-servile enough Argentine rulers, "Politicians who embark on reform often are tempted to feel that accomplishing three-quarters of their objectives is good enough. But failure to do the last quarter can sink the whole project."!!

The right-wing columnist Georgie Ann Geyer in a 9 January Washington Times piece wrote, "the self-indulgent argument on the streets…is that the country went too far toward opening up the markets and privatizing in the 1990s." But, she arrogantly lectures, these were not accompanied by "transformation [in] education, work habits, and mindset."

Bourgeois propaganda often accuses Marxists and socialists of being social engineers who reduce human beings to laboratory rats. This caricature of socialism is, however, literally true, in regard to how the working people as individuals and as a social class made up of thinking, breathing, changing human beings are viewed by the economists, bureaucrats, and policymakers of the imperialist world.

Argentina represents a classic illustration of the bourgeois arrogance which tries to present "economic policy" as a laboratory devoid of actual human beings and actual social relations. That is why the capitalist rulers will always be caught unawares when their subjects revolt and assert their humanity, their dignity, and their worth, not as objects for some ruthless IMF model, but as subjects of their own destiny.

If the IMF and its Argentine lackeys were unable to go even further than it did in its neoliberal assault, this was due to the permanent and mounting resistance of the working class.

In the short run, political space in Argentina will widen not narrow. The Peronist regime will have to attempt to draw into its formal personnel --and into direct responsibility for new rounds of austerity-- leaders of the trade unions and more radical social formations and organizations, in the hope of demobilizing the enraged proletarian and middle-class masses in order to prevent their independent alliance under the leadership of the working class.

The installation of Duhalde has not stopped or reversed the mass protests. His public spokesman has begun to make ominous threats to attempt mass repression, saying street protests have reached "the limit of the tolerable."

Washington is, of course, aware of Duhalde’s dicey political situation and of the disaster that a premature military attempt to seize power would bring. On 16 January the IMF extended for one year $993 million of interest due on past loans --what the IMF obfuscators call a "supplemental reserve facility credit." There was, in any case, no chance of payment.

But there are limits as to how accommodating Washington can be to even the immediate maneuvering of the increasingly desperate and buffeted politicians in Buenos Aires. In coming weeks, the IMF will have to decide how much new austerity is minimally acceptable to release new funds to prevent a collapse of the (now largely foreign-owned) banking system.

An important feature of the present conjuncture in Argentina is the radicalization and shift to the left by the country’s relatively large --and increasingly pauperized-- middle class.

The degree of collapse in capitalist production and sales of commodities is registered in the estimated 2,000 people who daily slip below the official poverty standard. [Poverty is defined as living on less than four dollars a day. Most consumer prices in Argentina, thanks to the dollar-peso currency board, are equivilant to those in New York City.–I.N.] Wiped-out small business owners and unemployed professionals make up a large percentage of these newly impoverished. Significant layers of Argentina’s petty bourgeoisie have seen their incomes devastated and their living standards fall below those of still- employed industrial and other workers. As Argentine journalist Noga Tarnopolsky wrote in a recent Washington Post op-ed piece, "There are people in Buenos Aires these days living in large, airy apartments with private parking places below who cannot afford to buy food."

In the social explosion of December 19-20 and since, these middle- class layers --with large contingents of housewives in the forefront-- have joined and initiated militant protests with trade unionists, unemployed workers, students, and youth.

While workers, employed and unemployed, and farmers have long lost - -if they ever had-- any savings on deposit, the middle classes still on their feet face the harrowing prospect of their remaining savings being wiped out as the banking system collapses. Government decrees have limited bank withdrawals to avoid a run on the banks. It has been revealed to one and all that personal savings on deposit exist only on paper. The open knowledge that the richest capitalist families and individuals have long since placed their funds out of the country–to the tune of more than $100 billion, according to the Economist magazine– has intensified the fury of the trapped middle class. An estimated $20 billion has left the country to foreign banks in the past year alone.

In addition, the massive withdrawal of liquid cash from public circulation has devastated the functioning of the cash dependent so-called "informal economy" of impoverished vendors, taxi drivers, as well as the black marketers, organized crime, and lumpenproletariat that could become shock troops for fascist formations.

In effect, the leftward lurch of the middle class is giving the labor movement a potentially decisive ally in the fight to establish a truly popular government in the interests of the vast majority, including broad layers of the petty bourgeoisie who are squeezed by big capital. This raises the possibilities and the stakes considerably for the working-class movement.

Petty-bourgeois public opinion in times of deep social crisis is a highly volatile, impressionable, and unstable thing, subject to sharp swings and shifts, left and right. The pauperized and radicalized middle-class masses become unhinged as their previously staid, provincial, and relatively comfortable place in society unravels and their relatively secure social position and status evaporates.

In such periods of capitalist collapse --the classic example is the last years of the German Weimar Republic leading to the assumption of power by Adolph Hitler’s National Socialist (Nazi) organization-- the increasingly frenzied middle classes, bitter and resentful towards the bourgeois class (to which they psychologically aspire) above them and the working class below them (at least in previous social status and position), are vulnerable to ultrarightist scapegoating appeals of racism, law and order, and Jew-hatred, along with inward- turning mysticism, sensationalist scandal mongering, sexual repression, and "populist" anti-capitalist demagogy. Fascism uses anti-capitalist rhetoric in defense of capitalism.

A collapse in capitalist production and distribution throws the middle classes–who fill in the cracks and crevices between capital and labor–into chaos, but they are unable to resolve the crisis. They lack the cohesion and social weight, insofar as they are outside the centers of production, the industrial and financial pillars of capitalist society.

On the other hand, the working class, particularly the industrial proletariat, has the cohesion and the social weight. If the capitalist crisis is not accompanied by a class-conscious workers movement with a nose for political power to resolve the crisis in the interests of the vast majority, then decisive layers of the middle classes become the historic shock troops of capitalist reaction and fascism.

If the workers movement is itself blunted by "populist", bourgeois nationalist, social-democratic, or Stalinist misleadership --looking to a "progressive" wing of the ruling class to subordinate to-- and thereby unable to lead the way out of the social and economic abyss, it will lose the sympathy and support of the middle classes, who can shift as sharply to the right and they did to the left. Contrariwise, a working class on the move, that knows what it wants, and intelligently fights for its program with honest, tested, plainspeaking, clearheaded, and inspiring mass popular leaders, is a hugely attractive force that draws around it, and behind it social and political leadership, the best elements of all social classes, progressive tendencies, and individuals, whatever their class origin or position.

In Argentina today, the base of ultrarightism is small and isolated. It festers and germinates in the military officer caste, the police forces, and sections of finance capital --all of whom have congenital connections with agencies of the U.S. government. These forces are presently discredited, demoralized, leaderless, and hated. The reality in Argentina is that reactionary forces are presently as isolated, impotent, and demoralized as they will likely ever be. But that can change. [Small numbers of Argentine fascists have appeared at various demonstrations and were visible in the December 19-20 rebellion. They are supporters of Mohamed Ali Seineldin, an ultrarightist former military officer currently in prison for leading a routed 1990 military revolt. Seineldin’s supporters appeal to radicalicalizing Argentines with nationalist rhetoric and attacks on the debt and the IMF. Seineldin has recently begun a campaign for the Argentine Presidency in elections that are scheduled for September 2003.–I.N.]

We can say that at this conjuncture, the class relationship of forces has shifted in favor of the working class. The bourgeoisie and its political parties and institutions are demoralized and discredited as the agents of foreign imperialist policies that have decimated the nation. [An expression of this is important divisions in the Argentine bourgeoisie between financial sectors and owners of privatized companies both in a more comprador relationship with Washington and other imperialist interests, and national manufacturers remaining, particularly in light-industry consumer goods sectors. These divisions are particularly highlighted over currency and devaluation schemes.–I.N.] The petty bourgeoisie has lost faith in and does not look to the bourgeoisie, and has shifted to the left, fighting with the workers to get rid of Cavallo and de la Rua. And the working class remains socially and politically at center stage, physically undefeated, continuing to mobilize and defend its political space, as it struggles to find a political way forward. The December 19-20 rebellion and events since have registered all these tendencies which have been developing for some time over the two years of the de la Rua administration.

However, it also registers what is lacking and decisive: revolutionary-minded leadership. Whether that develops in the coming period will determine if Argentina moves from rebellion to revolution. By default, for now, the bourgeoisie retains the political initiative.

If Washington and its Argentine surrogates prove able to implement a "Pinochet solution" and drown in blood growing resistance to neoliberal austerity and looting in Latin America, then finances, profits, currencies, and stock prices would all be "stabilized" for a long period on the bones of a defeated, starving, and --most importantly-- pliant working class.

But the dilemma for the Argentine and Latin American bourgeoisie and Wall Street is that they are presently unable to impose a military dictatorship to ravage the working class and the shrinking middle classes, slash the value of labor power, and --a la the Pinochet/Kissinger Chilean model-- lay the basis for renewed profits, capital accumulation, and re-establishing stable mechanisms for the extraction of labor-created values of wealth to foreign banks and bondholders through debt-slavery. The obstacle to this capitalist utopia is the freshness of the bitter memory of the 1976-83 military regime. Therefore the workers movement has a little time to break away and chart an anti-capitalist course during the period of intense political maneuvering will set in for an undeterminate period as the contending class political forces gather for combat.

In Argentina the military took power in 1976 to wipe out an urban guerrilla insurgency and to repress the working-class movement which pressed forward its progressive agenda. Thirty thousand people were killed in the death- squad terror government that followed, backed by Washington. As a result the military is thoroughly hated, politically sidelined, and unable or unwilling to presently intervene in the situation.

There have been a series of pompous editorials in liberal imperialist mouthpieces like the New York Times and Washington Post sanctimoniously lecturing Argentines to avoid the installation of military rule and pointing to the country’s history of military dictatorship. Such big-business press posturing as a "friend" of "democracy" is as revolting as it is hypocritical.

The fact is that military rule is not on the agenda, although this has nothing to do with "democratic" pleas from Washington. The military is thoroughly hated by the masses of working people and youth that have taken to the streets to defend their living standards, wages, social gains, and the national patrimony. The most prestigious organization in the country is the Mothers and Grandmothers of the Playa de Mayo, parents who children and grandchildren were "disappeared" and murdered by the death squads of the last military dictatorship.

If the actual possibility of military rule were posed, the editors of the Times and Post would be more, shall we say, understanding of the option, as a "bitter" even "tragic" pill to avoid "social breakdown," "mob rule," "anarchy," "totalitarian revolution," and other threats to the rule of capital.

But there is no possibility of military rule, in the short run. Any premature attempted coup would backfire, weakening and even disintegrating the army, setting millions into the streets, as the Yankee editorialists are fully aware.

De la Rua’s State of Siege turned out to be a paper tiger and sealed his fate. The fact is that full-fledged repression is not viable at this point. The politicians lack the will, the police lack the muscle, and the army lacks the morale. All lack a bass base of support in the middle classes, which is where a base for repression would have to come. Any premature attempt by some military, police, and/or fascist faction to take power would be a serious blow to the bourgeoisie’s ability to buy time and would radicalize the process even more, perhaps pushing the blunt instruments of the labor movement, the trade unions, to assume governmental power.

Argentine politics will become more polarized and fascist forces -- with bases of support in the military and police and the U.S. embassy-- will step up probes and intervention in the protest movements and attacks on labor and socialist organizations. But they are far from prepared for a bid for power. Various stages have to be gone through before that is posed. Fascist forces, slowly at first and tied to the coming instability and deepening of the economic and social crisis, however, will be steadily unleashed to test the waters. They can grow only in proportion to the degree the labor movement falters and defaults. In the concrete Argentine context, this means the degree to which it is unable to liberate itself from its historic subordination and capitulation to Peronism.

At the same time, bourgeois-democratic institutions, bourgeois parties, and individual bourgeois figures are all viewed with contempt and bitter hatred by masses of Argentines. Since the resignation of de la Rua and the collapse of Rodriguez Saa, the politicians in the Argentine Congress have been scurrying like rats in a spotlight. A number of articles in the big-business press have highlighted the verbal and physical harassment of prominent argentine politicians in shopping malls, restaurants, and even aboard airplanes.

There is a left-wing tendency in Argentina today to make a virtue out of what could be a deadly weakness, that is, the absence of a revolutionary leadership. The contempt which masses of people hold for corrupt capitalist politicians can easily lead to a cynicism of "politics" in general, and an idealization of anti-political "spontaneity." This tendency is aided by the real history of sectarianism and factionalism among organizations calling themselves revolutionary socialist and Trotskyist in Argentina. [In a future article I plan on looking in more detail at the various tendencies in the workers movement in Argentina. There are several organizations calling themselves Trotskyist, which are relatively sizeable and growing. These include the Socialist Workers Movement (Movimiento Socialista de los Trabajadores) which is in an electoral bloc --United Left-- with the Communist Party of Argentina, the Workers Party (Partido Obrero), and the Workers Party for Socialism (Partido de Trabajadores por el Socialismo). All these groups have web pages, including English pages, which can be accessed for more information.–I.N.]

While this "anti-politics" sentiment registers the depth of anger and radicalization among the working class and petty bourgeoisie in Argentina, it also contains the seeds of potential demoralization and deep negativity. After all, being against something is never enough and will always be end up co- opted and incorporated into the bourgeois order. Instead positive demands must become generalized while organizations emerge out of the struggles of the oppressed and exploited, becoming a program and a vision of what you are for.

This process is still embryonic, at best, in Argentina today, despite the extraordinary level of mass radicalization and mass struggle. In the absence of revolutionary leadership with the discipline and capacity to lead millions in struggle for power, what is constantly elevated as the lowest common denominator of consciousness is the question of corruption.

Argentina is no more or no less corrupt than any other semi-colonial capitalist state which is dependent on the profoundly corruption-based major imperialist powers, the source of the massive venality inherent in any "master- slave" relationship. In other words, Argentina is very corrupt. The poster boy of Latin American neoliberalism --which measures its progress on how successful it is in enriching a small minority while impoverishing the majority-- Argentina could be nothing other than a land where corruption reeks from every pore and institution of society. That corruption was highlighted --and became the object of mass revulsion-- in the high-flying days of Carlos Menem’s presidency.

The dozens of billions in "loose" money, the large-scale cannibalization of industry, jobs, and communities by foreign capital in cahoots with self-serving and self-enriching local bureaucrats, bankers, compradors, and get-rich- quick artists is nothing but a culture of venality, looting, and thievery. This ruinous casino culture --glorified by its apologists as the "triumph of democracy, freedom, and free markets"-- becomes increasingly shameless.

But as an axis for organization and struggle, "the fight against corruption" is worse than politically useless. "Exposing" corruption in Argentina or any other nation exploited and looted by world imperialism is an endless maze and no-exit labyrinth. If every corrupt politician in Argentina were thrown in the slammer while the system both within Argentina and between Argentina and world imperialism remained intact, in no time at all a new layer of corrupted officials - -no doubt the very ones that led "the fight against corruption"-- would be in place, their snouts in the trough.

The popular sentiment, "they’re all crooks" and the popular slogan "throw them all out," while seemingly very radical, is in fact a political dead-end. These are slogans without serious political content, easily manipulated by demagogues. The "fight against corruption" and the highlighting of scandal quickly loses its punch and becomes a diversion and a freak show, even a form of tabloid entertainment for the demoralized masses. It becomes divorced from the decisive need to struggle against the system with concrete demands that raise political class consciousness and aim toward the struggle for political power, a workers and farmers government, and new social relations which will wipe out, as in Cuba, the material basis for capitalist venality and corruption.

Furthermore, the diversionary nature and dynamic of scandal mongering involves not only financial but sex scandals as the two often and usually go hand in hand. This makes scandal mongering the stock and trade of rightist tabloids - -'scandal sheets'-- and budding fascist movements.

When thousands of Argentine’s chant "They’re All Crooks," "Throw them All Out," and so on, the "all" actually focuses on individuals, not on the class in power or the system that sustains them.

The initial response by bourgeois economists and pundits to the heaving of the de la Rua-Cavallo regime, the default, devaluation, and overall financial and industrial collapse was to rally around a common line downplaying and denying its dynamic, particularly in Latin America. So-called "economic contagion" would be contained since the Argentine collapse had been long "anticipated" and thereby discounted. Investors, governments, and international institutions had long ago take measures to cover themselves, the line goes. Argentina was thus a unique basket case irrelevant to Brazil, Mexico, Chile, and other debt-strangled Latin America 'emerging markets"' with neoliberal governments.

This pipedream will be demolished by unfolding reality in the coming weeks and months.

If the bourgeois pundits and economic wizards can for a while delude themselves regarding "economic contagion" there is no holding back their anxiety over an ideological and political epidemic. [Of course economic and political dynamics can't be so mechanically separated. Politics, as the revolutionary Marxist leader Leon Trotsky put it, is "concentrated economics." What is true is that political developments and economic fallout will drive each other. And the class struggle will drive both.–I.N.]

And so the Wall Street Journal quotes an economist from a Peru-based consulting firm as saying, "The greatest danger for the region is not financial contagion, but ideological contagion, a move to change the economic model."

And the New York Times quotes an Argentine 'political consultant' along the same lines. "The idea that the neoliberal model of the Washington consensus is dead is something heard not just in Argentina, but is being repeated throughout Latin America. There are a lot of people out there right now who are looking for an alternative."

The course of events inside Argentina is part of the growing turmoil and instability throughout Latin America which, in recent days include the relaunching of full-scale war in Colombia with increasing U.S. intervention and a stepped-up reactionary campaign to topple the reformist Chavez regime in Venezuela.

Duhalde, the weak figurehead of a divided and demoralized bourgeoisie is incapable of anything but tinkering with the edges of the crisis. The Peronist apparatus will never mobilize the nation around a minimum and obvious relief program of canceling the foreign debt; nationalizing the foreign- (and few remaining domestic-) owned banks; renationalizing the foreign-bought energy and telecommunications utilities and other privatizes industries such as rail; confiscating for social-relief measures the properties of those big capitalists who expatriated their money and capital; seizing the supermarket chains and distributing food, etc.

Only a workers and farmers government can do that.

All of these factors --the profound shakeup inside and between the three social classes-- point to an approaching pre-revolutionary situation where the question of a new class power in the state is objectively posed, not in theory but in practice, not in the abstract but concretely, not on paper but in life.

However, a pre-revolutionary situation does not become a revolutionary situation until the subjective factor, that is, conscious leadership by the working-class political vanguard --a mass revolutionary organization like Lenin’s Bolsheviks in Russia or the July 26^th Movement led by Fidel Castro-- that can assume governmental power in the interests of the workers and farmers, rising to the challenge of what is objectively necessary and possible.

There is a definite gap between the objective and subjective in Argentina today which is the chief obstacle to the development of a revolutionary situation.

Duhalde and imperialism will have time–but so will the proletarian vanguard and the revolutionary minded youth.

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