Four
The Normalization Program of 1967–1969

1. Successes

In contrast to the normalization policies of other BAs, the program launched in Argentina in March 1967 rapidly achieved success, at least from the perspective of its executors and supporters. As we shall see, this result was due principally to the relative mildness of the crisis that preceded the 1966 coup and to certain characteristics of the Argentine economy and society. Let us begin our examination of this program by reviewing its most successful aspects. We shall turn subsequently to other data that show the overall balance of this program to have been substantially more complex.

In 1967 Krieger Vasena's economic program generated modest per capita economic growth. Accelerated growth followed in 1968, and by 1969 the economy was growing at a rate substantially above its mean for previous decades (see Table 4).^[*]

This growth contrasts with the acute and prolonged recessions in Brazil (1964–67), Chile (1973–79), and Argentina (1976–82). Nonetheless, some branches of the Argentine economy fared better than others during Krieger Vasena's term. Table 5 shows that the construction

[*] In May 1969, after urban riots that had major repercussions for the country's economic situation, Krieger Vasena and his team were obliged to abandon the Economy Ministry. The year 1969 therefore cannot be considered entirely representative of the normalization program on which this chapter focuses. The timing of the Krieger Vasena team's departure should be borne in mind when examining the annual data presented in this table and in subsequent ones. I shall make the appropriate modifications to annual figures wherever monthly or quarterly data are available.

and mining sectors experienced pronounced growth while the agriculture and livestock sector stagnated. Industry grew little in 1967 but expanded strongly in 1968 and 1969.

Not all industrial subsectors fared equally well when the sector as a whole expanded. Table 6 shows that between 1966 and 1969 the mean overall growth in the industrial subsectors usually considered dynamic was 27.1 percent, while the corresponding mean for the traditional ones was 8.1 percent.

High rates of investment (particularly after 1967) propelled this uneven economic growth. Table 7 illustrates the evolution of investment in various economic sectors and highlights a theme to which we shall return: the extraordinary growth of public investment in construction.

Putting aside for the moment the figures for economic growth, let us examine the performance of the normalization program in meeting two of its major goals: control of inflation and improvement of the balance of payments. The data in Table 8 give eloquent testimony to the program's success in the former endeavor: in early 1968, barely a year after the program was launched, inflation was already on the downswing; by the second half of 1968 and the first half of 1969 it had dropped well below Argentina's historical mean.

The improvement in the balance of payments was no less spectacular.

The foreign exchange reserves of the Central Bank were low at the time of the coup and declined still further under Salimei's ministry. But in April 1967 these holdings began a period of rapid growth that peaked in April 1969, the last complete month in office for Krieger Vasena's economic team. The figures are given in Table 9.

This increase in foreign exchange holdings was due in part to an IMF standby loan and to other loans from nonprivate international sources, as well as the positive trade balances of 1967 and 1968 (see Table 10).

An influx of foreign loans from private sources made the largest contribution to improving the foreign exchange situation. Nothing better indicates the confidence of transnational capital than these inflows. Yet nothing better indicates the limits of this confidence: an overwhelming proportion of this capital, as Table 11 shows, came in the form of short-term loans. By comparison, new direct investment and private long-term loans were very scarce. Owing to the large differential between local and international interest rates and to the government's commitment to maintaining a stable peso-dollar exchange rate, Argentina had become an attractive market for financial capital. However, the insignificant balance of long-term capital shows that transnational capital was not yet willing to bet on the long-term prospects of the Argentine economy.

All of these indicators reflect a significant departure from the instability

and the negative trends that prevailed before March 1967. Reduced inflation and new expectations of short-term economic stability were accompanied by similar signals in other financial indicators. Table 12 shows that quotations for the U.S. dollar on the futures market (which, as we saw in chapter 2, had proved remarkably sensitive to the final crisis of the Radical government) plummeted as soon as the March 1967 program was launched.^[*]

[*] Tables in chapter 9 complete through 1972 the monthly series for these quotations and for other monthly data presented in this section.

We turn now to the fiscal situation. Table 13 shows that the effort to streamline public finances achieved no less remarkable successes. The central government's revenues expanded rapidly in real terms while its expenditures increased very little. By reducing its current expenditures (largely through the layoffs and salary reductions affecting public employees) the government reduced the fiscal deficit even as it increased its capital outlays considerably.

This symphony of successes was unblemished by the sour note that has accompanied the normalization programs of other BAs: a severe drop in wages. Although each indicator in Table 14 has reliability problems, their homogeneous variation over time suffices to show that the industrial working class suffered only a slight wage decline.^[*]

The data covering nonindustrial fractions of the working class (Table 15) show a pattern similar to the one just observed, although wages declined somewhat more for these workers than for their counterparts in the industrial sector.

[*] It should be noted that the recovery in wages shown in the 1969 data was due entirely to wage hikes granted in the second half of that year, after Krieger Vasena and his team had left office.

To summarize: under the normalization program launched in March 1967 the economy returned rapidly to a fairly high rate of growth; inflation was reduced considerably; the foreign exchange situation took a favorable turn; transnational capital signaled its approval but refrained

from long-term commitments; the fiscal situation of the state improved markedly; and the relatively small decline in wages maintained a level of general consumption that lagged behind economic growth but, in comparison with other normalization programs, cannot be considered unsatisfactory. From these points of view the success of the program was as rapid as it was remarkable.^[*] A somewhat different story is told by the data presented in the third section of this chapter, which show that the successes summarized here were by no means achieved without costs and tensions. However, the characteristics and impacts of this program cannot be adequately understood without first examining the ways in which it deviated from a strictly orthodox path.

2. Heterodoxies

As noted in the preceding chapter, a major innovation of Krieger Vasena's program was that it identified factor costs and the expectations of economic actors as the main causes of inflation. This diagnosis was accepted by the IMF and formed the basis for policies designed to freeze certain crucial prices over the short and medium terms. Among these policies were the wage and salary freeze imposed until the end of 1968, the voluntary price agreement between the government and the largest industrial firms, a pledge to maintain indefinitely the value of the peso against the U.S. dollar, and a commitment not to raise the prices of public services again after increasing them at the start of the programs.^[†] Given these price freezes and (equally important) plausible indications that most of them would be maintained for the foreseeable future, the principal economic actors might reasonably be expected to adjust their behavior to a forecast of lowered inflation.

Attributing inflation to costs and expectations rather than to excess demand enabled the economic team to avoid the recessionary policies associated with the latter diagnosis. Accordingly, the agreement with the IMF lacked its usual components of reducing bank credit and the money supply. As is evident from Table 16, both grew significantly during Krieger Vasena's term in office.

[*] A survey conducted in 1967–68 by John Freels, Jr. shows that the upper bourgeoisie (as represented by leaders of UIA) shared this view of the normalization program. John Freels, Jr., "Industrialists and Politics in Argentina."

[†] Reflecting these initial increases, the index for the mean real prices charged by state enterprises rose from 100.0 in 1966 to 116.6 in 1967. It subsequently fell to 114.1 in 1968 and 108.1 in 1969. Cf. Horacio Nuñez Miñana and Horacio Porto, "Análisis de la evolución de precios de empresas públicas en la Argentina. Respuesta," Desarrollo Económico, no. 66 (July–September 1967): 348.

While the expansion of the money supply and the loosening of credit^[*] were important in reactivating the economy, other significant impulses came from the opening of new credit lines for housing purchases and personal consumption. Of course the benefits of these new lines of credit went almost exclusively to members of the upper and upper-middle income sectors, since others had little chance of meeting the solvency requirements imposed by the banks. The great increase in private investment in construction (Table 7) was due largely to the increased incomes of these sectors and to their easier access to credit.

Orthodoxy, however, continued to show itself in certain aspects of the economic program and in the IMF agreement even though, as Juan de Pablo has pointed out,^[1] the orthodox policies that were implemented were clearly inconsistent with a diagnosis that targeted costs and expectations as the main causes of inflation. Most notably, economic policy adhered to orthodoxy's cherished precept of reducing the fiscal deficit. To achieve this goal, Krieger Vasena and his team came up with the (economically) simple solution referred to earlier: a withholding tax on agricultural and livestock exports, which primarily affected Pampean production. This tax was an expedient mechanism by which to capture part of the differential rent accruing to the Pampean bourgeoisie. As

[*] The increase in bank credit was supplemented by the growth of financial societies (credit corporations prohibited from operating checking accounts), nearly all of which were linked to banks and/or large economic groups. The participation of these societies in the total flows of the financial system grew from 7.5 percent in 1967 to 11.6 percent in 1969. Data from Agapito Villavicencia, "Flujo global de fondos del sistema financiero institucionalizado argentino. Período 1967–1971," Simposio Latinoamericano para el Desarrollo de Mercados de Capital, Buenos Aires, March 1972.

Table 17 shows, the income it generated more than compensated for the decrease in revenues from import duties—which, in another signal of orthodoxy, were lowered.

Several other factors helped reduce the fiscal deficit: a drop in current expenditures (see Table 13), improvements in the efficiency of tax collection, and a rise in indirect taxes that outweighed the 1968–69 decrease in revenue from direct taxes (see Table 18), probably with regressive effects on income distribution.

The data in tables 17 and 18 show that of all sources of state revenue, income derived from the withholding tax on Pampean exports registered by far the largest increase in relation to the years prior to Krieger Vasena's economic program.^[*] The beneficiary of these new funds was the state's central administration. Table 19 shows that the share of total public investment emanating from the central administration increased significantly between 1966 and 1969, while the shares of provincial and local governments and of public enterprises declined. The relatively

[*] The significance of the funds derived from this withholding tax is evident not only from their sevenfold increase between 1966 and 1967, but also from the fact that these revenues represented about 50 percent of the national government's savings in the year of the launching of the normalization program (1967), and approximately 35 percent in 1968.

passive role of public enterprises in Argentina during this period sets this BA apart from others, especially that of Brazil.

Let us examine how these funds were used. Columns 1 through 4 of Table 20 show that between 1966 and 1969 the national government's capital outlays rose considerably, that outlays destined for investments grew even more, and that investments channeled into public works (primarily roads and communications) increased most of all. Columns 5 and 6 of this table show that, in contrast to previous years, much of this investment was financed with genuine resources from the public treasury. Columns 6 and 7, reflecting these changes, indicate a sharp rise in public investment as a share of both total domestic investment and gross domestic product.

The statements issued by the Economy Ministry during 1967 and 1968 trumpeted the achievements of the economic program and insistently urged foreign and domestic capital to take advantage of the newly achieved order and economic stability by substantially increasing their investments. Krieger Vasena and his team expected that their program would bring a rapid and substantial influx of domestic investment, long-term loans, and direct foreign investment, making foreign capital and the

more concentrated segments of the domestic private sector the driving forces in the economy.^[*] As we have seen, however, long-term foreign capital inflows were practically nil in 1967 and 1968. Moreover, domestic and foreign private investment was discouraged by the significant underutilization of installed productive capacity at the time the program was launched. The growth of (mostly private) investment in machinery and transport equipment (Table 7) was much lower than that of public investment (Table 20), and the growth of private consumption (Table 4) was even less impressive, despite the increased demand in the upper-income sectors. Public investment, especially in physical infrastructure, was therefore a critical—but not too orthodox—factor in sustaining the level of economic activity through 1967 and in stimulating economic growth in 1968 and 1969.^[†] Given the importance to public revenue of the withholding tax on Pampean exports, it is no exaggeration to conclude

[*] This expectation is explicit in speeches by members of the economic team. See, for example, Krieger Vasena in Política económica, vols. 1 and 2. See also de Pablo, Política antiinflacionaria en la Argentina, 118.

[†] The data in table 7 show that the increase in public construction was heavily responsible for the substantial growth in the construction sector as a whole. It is interesting to note that the growth of public investment did not imply an invasion by the state of directly productive areas, and therefore presented no obstacle (or what might have been perceived as an obstacle) to private capital accumulation. The impression that public and private investment were intended to be "noncompetitive" in this sense is further supported by data showing that public investment in industrial projects declined as a share of total public investment from 11.1 percent for the 1960–66 period to 10.0 percent in 1967, 4.8 percent in 1968, and 2.5 percent in 1969. Figures from Presidencia de la Nación, Plan trienal para la reconstrucción nacional, Buenos Aires, 1974.

that the dynamic economic role that the state apparatus played during this period was largely financed by the Pampean bourgeoisie. But we shall see in the next section that this class was not alone in bearing the costs of the normalization program.

3. Costs and Tensions

The organizations of the Pampean bourgeoisie received with mixed feelings the initial components of Krieger Vasena's economic program. They counted on the positive side a generous scheme of tax reductions on agrarian investments and, above all, the satisfaction of their long-standing claim against the laws freezing the price of rural rents and providing for the automatic extension of tenancy contracts. On the negative side was the withholding tax on exports. This tax, together with low (by then) international prices, worked against the increase in the domestic price of exportable goods—especially beef—that would otherwise have accompanied the March 1967 devaluation. Lower prices for beef, in turn, meant lower prices for its potential substitutes.^[2] By thus maintaining relatively low prices for many of the foods important in popular consumption, the withholding tax on Pampean exports helped to moderate the impact of the wage and salary freeze.

Data showing the evolution of beef prices, which suggest reasons for the complaints of the Pampean bourgeoisie, are presented in Table 21. Observe, moreover, that the year chosen as the base for these data (1966) already registers a marked decline from the preceding years.

Although prices for other Pampean products such as cereals and vegetable oils evolved more favorably, the Pampean bourgeoisie had another cause for complaint: evidence that the liberals in charge of economic policy were preparing to enact a tax on potential land rent.^[*] This tax, aimed at forcing the agrarian bourgeoisie to make new capital investments and technological improvements, was seen by the Krieger Vasena team as a way to increase exports and thus lift the ceiling imposed on economic growth by the balance of payments. The prospect of a "confiscatory" and "collectivizing" tax intensified the protests of

[*] This tax would have penalized landholdings with yields below the mean for the ecological area on the basis of which the potential rent was estimated. For an analysis of this project and its implications, see Guillermo Flichman, La renta del suelo y el desarrollo agrario argentino (Mexico City: Siglo XXI, 1977); and Nidia Margenat, "Las organizaciones corporativas del sector agrario," Consejo Federal de Inversiones, Buenos Aires (n.d.).

the organizations of the Pampean bourgeoisie, already upset over the discouraging prices they were receiving.^[*]

Underlying the policies of the Krieger Vasena team was nothing less than an attempt by the upper bourgeoisie to subordinate to its own patterns of accumulation not just the popular sector but also an agrarian bourgeoisie endowed with enormous economic centrality and with political and ideological power resources which, if less formidable than in the past, still had to be reckoned with. On the other hand, by helping to maintain relatively low prices for food and other wage goods, the withholding tax encouraged governmental hopes that the workers, whose incomes had fallen relatively little, could be appeased or co-opted.

But if Krieger Vasena's program of 1967–69 differed from the normalization policies of other BAs in producing only a mild decline in workers' wages, it was typical in its impact on other social sectors. Table 22 shows that various categories of employees (which together comprised a large proportion of the middle sectors and approximately 40 percent of the economically active population)^[†] registered income losses more severe than those of the workers.

[*] Exacerbating the problems of the Pampean bourgeoisie was the unfavorable international economic conjuncture for Pampean exports, due in large measure to a ban imposed by the European Economic Community on meat imports from Argentina.

[†] State employees alone accounted for 30 percent of Argentina's economically active population. See José Calvar et al., "Resultados preliminares de una investigación del sector público argentine," BCRA, Buenos Aires, 1976, mimeo.

The data in Table 22 correspond to employees in the lower categories. Although direct information on the upper middle sectors is difficult to obtain, the figures in Table 23 suggest that persons in these categories, unlike the great majority of employees, increased their incomes considerably. It was thus as much through their increased salaries as through their easier access to credit that the upper strata of the middle sectors benefited from the economic program.

The traditional petty bourgeoisie, especially small merchants, must also be counted among those penalized by the policies of the 1967–69 period. Owing partly to the sudden "liberation" of urban commercial rents, partly to advances in mass marketing systems, and partly to the persecution of the credit cooperatives (to which I shall return shortly), more than a few segments of the petty bourgeoisie suffered serious income losses and were confronted with evidence that the coup they had initially applauded had produced a government that showed little concern for their interests.

It is harder to generalize about the situation of the local bourgeoisie engaged in medium- and large-scale activities. On the one hand, Table 24 shows that both the financial and the construction sectors showed extraordinary rises in their gross profit rates during 1968 and 1969.^[*]

[*] The gross profit rate for each sector was calculated by subtracting from the total value of its production outlays for inputs, indirect taxes, and wages and salaries. The gross profit rate is not usually a reliable indicator of effectively realized profits. Nonetheless it is safe to assume that for the years studied here the change in the gross profit rate for a given sector is an adequate approximation of the change in the effective rate of profit in that sector.

The upsurge in the construction sector was due to the flood of state investment into public works projects and to increased private construction. The rise in the gross profit rates enjoyed by financial capital had much to do with the substantial expansion of bank credit and with the increase in real interest rates brought on by the decline of inflation.^[3] On the other hand, we see that conditions in the agricultural and livestock sector were far from satisfactory, and that the mean gross profit rate in industry as a whole was lower during the 1967–69 period than it had been in 1966, in spite of a strong recovery in 1969.

Since these figures are highly aggregated, they are incapable of indicating whether, within a given sector, some types of firms improved their profit rates while others did not. Table 25 gives some evidence that such variation occurred: the cheapest credits, and those with the longest repayment periods, were extended much more readily to large firms than to small and medium-sized ones.

The fate of credit cooperatives also suggests a deterioration in the economic conditions of the smaller local firms during the 1966–69 period. Prior to 1966 credit cooperatives had been the major source of financing for small and medium-sized commercial and industrial enterprises. Partly because of allegations that these cooperatives were controlled by communists, but much more because they had become stiff competition for the banks and financial corporations, they were subjected after the 1966 coup to various forms of governmental control and harassment. The result of this persecution was that their numbers dropped from 1016 in 1966 to approximately 350 in mid-1969.^[*] The CGE, which had close ties to these organizations, repeatedly protested this blow to the weakest segments of the local bourgeoisie.

Why did the CGE come to the defense of these segments of the local bourgeoisie? After all, the credit problems plaguing the smaller local firms did not affect the firms from which most of the CGE directorate came, which were typically located in the dynamic sectors of the economy. The leaders of the CGE did not begin to voice their opposition to Krieger Vasena and his policies because their immediate economic interests had been damaged. It was rather that the CGE could maintain itself as an important political actor only insofar as its claim to represent the small and medium entrepreneurs remained believable to those entrepreneurs,

[*] The credit cooperatives' participation in the overall flow of financial resources decreased even more than their numbers. See Economic Survey, no. 1560 (February 3, 1977):1–3. Prior to the government campaign against them, the credit cooperatives had accounted for nearly 50 percent of the total of loans made by commercial banks. See Mallon and Sourrouille, Economic Policy-Making, 128.

as well as to government personnel, other fractions of the bourgeoisie, and the unions. The need to defend the credibility of their claim to represent the weaker fractions of the bourgeoisie gave the CGE directorate a powerful motive to voice the demands and grievances of those fractions.^[*]

A second reason for the CGE's opposition to the government's economic policy was that the new economic team had not seen fit to appoint to the positions that most directly concerned the local bourgeoisie persons receptive to arguments favoring state tutelage of local capital in the face of foreign competition. To the contrary, Krieger Vasena et al. adhered to another orthodox precept: the elimination of "discrimination" against transnational capital. For the sake of efficiency, each economic interest was to be treated "on an equal footing," regardless of the origins of its capital.^[†] The CGE and the unions responded to this position

[*] The issues raised here are rooted in the complex theme of representation. (I referred to some aspects of this theme in the last section of chapter 1.) The social origins and immediate economic interests of the leaders of a given institution constitute only one, and not the most important, of the aspects necessary to understand the issue of representation. More important is the question of the social bases that the leadership purports to represent, and the dialectic established between the way those social bases perceive their own interests and the way their leadership expresses them.

[†] It is interesting that even the UIA protested what its leaders viewed as excessively orthodox aspects of the Krieger Vasena program, particularly the lowering of import duties and the failure of officials in the Economy Ministry to consult with the UIA when promoting or approving new foreign investments. In addition to the oligopolized fractions of local capital, the branches of transnational capital already embedded in the local market were very influential within the UIA. Each of these fractions was prepared to sacrifice its orthodox canons (as it had done with the government's freezing of wages and salaries) when it came to protecting its foothold in the domestic market against new intrusions of transnational capital. See UIA, Memoria y balance anual, 1967–68 and 1968–69.

by accusing the economic team of willfully auctioning off the national productive structure to transnational capital.^[*] From the CGE's perspective, the immediate costs imposed by the normalization program were bad enough, but the crucial issue was whether the government would continue its anxious pursuit of transnational capital. Fearing the complete disappearance of state tutelage—which indeed would also have harmed the larger and more dynamic enterprises controlled by the CGE's top leadership—the fractions of the local bourgeoisie represented by the CGE made "denationalization of the economy" and "suffocation of the small and medium entrepreneur" the principal themes of their opposition to the normalization program.

To summarize, the data examined in this section show that the Pampean bourgeoisie, various middle sectors, and a substantial proportion of the lower and middle (and most definitively national) segments of the urban bourgeoisie had few reasons to share the government's enthusiasm over the normalization program.

4. Profits, Accumulation, and Exploitation

Implicit in the data thus far examined are complex issues involving the economic surplus appropriated by various fractions of the bourgeoisie. Official statistics are not designed to capture such phenomena, and the scarce data available at the sectoral and firm levels are of doubtful reliability. But since such issues are crucial to understanding the interplay between politics and economics, a series of approximations will be made, using available indicators, to the patterns of profits that took place during the normalization program of 1967–69.

Since these indicators are indirect and based on methodologies too heterogeneous to allow for strict comparisons, they should be interpreted with caution. Only when the changes such indicators record are of considerable magnitude, and when other indicators of the same phenomena move in the same direction to a similar degree, can we feel reasonably confident that they are valid approximations to actual processes.

The national accounts data on gross profit rates in the major sectors of the Argentine economy (Table 24) showed that industry as a whole was not among the net winners of the period. But as suggested earlier, it

[*] The CGE also complained about the "lack of recognition" it was accorded by the economic team. See its Memoria anual for 1967–69 and Jorge Niosi, Los empresarios y el estado argentino .

is likely that some firms did much better than these figures suggest, while others did much worse. This guess is supported by comparing trends in the gross profits of industrial subsidiaries of U.S.-based TNCs (Table 26) with trends in profit rates for industry as a whole (recall Table 24). Although these figures are not strictly comparable, they suggest that between 1966 and 1969 the performance of the TNC industrial subsidiaries was much better than that of industry in general.

Despite problems of data comparability and reliability, it is difficult to doubt that at least some segments of the upper industrial bourgeoisie made high profits during Krieger Vasena's term in office, even if they did not achieve the extraordinary ones realized by financial and construction firms. Conversely, if we take into account that industrial subsidiaries of transnational corporations generated approximately 50 percent of industrial value added,^[4] and assuming the profits of European and Japanese TNC subsidiaries were not significantly different from those of United States subsidiaries, then the data in Table 24 (showing low profit rates for industry as a whole) imply a significant drop in profitability for smaller, weaker enterprises. This inference suggests that the CGE did not exaggerate when complaining that the normalization program was detrimental to the national entrepreneurs.

Unpublished BCRA data allow us to estimate productivity and exploitation rates for various sectors of the Argentine economy. Productivity for each sector in a given year was calculated by dividing the value added in that sector in that year by the number of persons that sector employed. The rate of labor exploitation in each sector for a given year was calculated by dividing value added by the total amount

paid out in the form of wages and salaries to workers or employees in that sector.^[*] Productivity and exploitation data for four major sectors of the Argentine economy are presented in Table 27.

Table 27 shows that between 1966 and 1969 there occurred in all major sectors of the economy (except in the labor-intensive construction sector) a significant rise in productivity. But a still greater rise in the rate of exploitation took place, reflecting the joint effect of the increase in value added and the general though uneven fall in wages and salaries. It is significant in this respect that 1968 (the first complete year of the normalization program) was the year of the sharpest rise in productivity

[*] The data on which these calculations are based (BCRA, unpublished worksheets) distinguish between wages and salaries only for industry (where the figures for wages have been used), not for the other major economic sectors. It is safe to assume that wage remuneration predominates in construction, while salaries are the predominant form of payment in the financial and commercial sectors.

for the industrial and financial sectors; it was also, in every sector, the year of the greatest increase in the exploitation rate. After the resignation of Krieger Vasena and his team in mid-1969, the government raised salaries and wages as part of a strategy of "social pacification" that we shall study in subsequent chapters. It is reasonable to suppose that had this policy reversal not occurred, the 1969 increase in the rate of exploitation would have been even higher than it actually was, especially in view of the strong gains in productivity and value added registered in 1969 by nearly all sectors of the economy. It was not without reason, then, that the organizations of the upper bourgeoisie fought relentlessly for the preservation of the program launched in 1967.

Value added, employment, and wage data from unpublished BCRA documents permit a more precise evaluation of the situation in the industrial sector. These data have been disaggregated into the following industrial subsectors: (1) nondurable consumer goods (primarily for mass consumption), (2) consumer durables, (3) intermediate goods, and (4) capital goods. The consumer nondurables subsector tends to be highly competitive and is composed of many labor-intensive, domestically owned, and small and medium-sized firms. By contrast, the remaining subsectors (referred to jointly as the dynamic ones) tend to be highly oligopolized and are composed of many capital-intensive firms.^[5] Productivity and exploitation rates for each of these subsectors and for industrial subsidiaries of U.S.-based TNCs^[*] were calculated in the manner explained above. The results are given in Table 28.

Here again is evidence of the heterogeneity of the processes we seek to uncover. In the nondurable consumer goods subsector, value added rose faster than productivity and exploitation. Productivity and exploitation seem to have risen quite slowly not only because of the labor-intensive character of the consumer nondurables industries but also because of the mildness of the wage losses suffered by the worst-paid workers (employed mainly in this sector) in comparison to their better-paid counterparts. Value added, productivity, and exploitation rates varied similarly in each of the three dynamic subsectors. These variations

[*] The data for the four industrial subsectors are based on value added, while those for the TNC subsidiaries are based on the total value of production, measured by sales receipts. Since there are indications that in the Argentine economy the ratio of value added to total value of production increased during the 1966–69 period, it is likely that the indexed productivity and exploitation figures for the TNC subsidiaries are below what they would have been had they been based on value added. However, the patterns of change in the data for the TNC subsidiaries are remarkably similar to those for the industrial subsectors in which these subsidiaries (together with TNC subsidiaries of non-U.S. origins and the main locally controlled oligopolistic firms) tend to operate.

were very similar to those of the U.S.-based TNC subsidiaries but differed markedly from those of the nondurable consumer goods industries. Between 1966 and 1969 productivity and exploitation rates rose respectively three and six times as much in the dynamic subsectors as in the consumer nondurables subsector. Moreover, the 1969 downturn in

the rate of exploitation in the nondurables subsector contrasts with the continued (though attenuated) rise in the exploitation rate in the three dynamic subsectors. This divergence surely reflects that the wage increases granted in the second half of 1969 had a greater impact on the consumer nondurables subsector than on the dynamic subsectors.^[*]

For a more complete picture of the patterns of capital accumulation during the normalization program we should recall that the state apparatus increased its revenues substantially while all wages, some salaries, and many Pampean prices fell. The increase in state revenue led to a strong expansion of public investment that went mainly to projects for improving the physical infrastructure. These projects, in addition to not competing with the activities of the bourgeoisie, furnished forward and backward linkages that further allowed the upper fractions of this class to emerge as the prime beneficiary of the normalization program. We have also seen that the spectacular growth of financial capital and private construction contrasted with the depression of the agricultural and livestock sector and with the moderate growth of industry as a whole. However, the data suggest that while most of the industrial bourgeoisie must have fared rather poorly, the dynamic industrial subsectors performed impressively well.

Data such as those used in this disaggregation of the industrial sector are not available for commerce. But considering that a large proportion of the small commercial firms were hurt by the persecution of the credit cooperatives and by the "liberation" of urban rents, it seems reasonable to assume that the mediocre performance of the commercial sector as a whole was, as in industry, the product of two opposing movements whereby the larger firms fared well while others did poorly.

Thus on one plane the distribution of the period's benefits pitted the urban against the Pampean bourgeoisie. But on a second plane—within the urban bourgeoisie—the financial and construction sectors, the upper

[*] Nondurable consumer goods enterprises and, in general, firms in the less dynamic and more labor-intensive industries are entangled in a dilemma to which we shall return. On the one hand, the relatively low productivity and higher wage and salary costs in such industries mean that their constituent firms must bear higher costs when wage and salary increases are granted. On the other hand, these firms are mostly oriented toward domestic mass consumption and therefore have a strong interest in an expanding domestic market, which tends to occur with wage and salary increases. This orientation toward mass consumption causes such firms special hardships in recessive situations. Although political conjunctures determine expansion or recession, these fractions of industry have frequently allied themselves with the unions (an alliance mediated above all through the CGE) in pursuit of policies, including wage and salary increases, likely to expand the domestic market. For a more detailed discussion of these themes, see O'Donnell, "State and Alliances" and "Notas para el estudio."

industrial bourgeoisie, and (presumably) the upper segments of commercial capital fared very well indeed. The economically less powerful fractions of the bourgeoisie, which were numerically the most important and far from inert politically, were not as fortunate. The mild income losses of wage earners, and the heavier losses of various categories of salary recipients, further contributed to what appeared increasingly as the solitary feast of the upper bourgeoisie.

5. Significance of the Normalization Program of 1967–69

The data we have examined leave little room for doubt that Krieger Vasena's economic program, beyond its seemingly neutral goals of controlling inflation, improving the balance of payments, and restoring a respectable rate of economic growth, embodied a major offensive by the upper bourgeoisie. The basis for this assertion is not merely that most members of this team came from, and would later return to, transnational financial organizations, or to the largest and transnationalized corporations operating in Argentina—although this is not a trivial consideration. It is also that the policies of the 1967–69 period received the explicit and sustained support of the organizations of the upper bourgeoisie.^[*] Even more important is that the content of the normalization program, and the type of economic growth it generated, consistently reinforced the economic dominance of the upper bourgeoisie.

It is not surprising that a BA's economic normalization program generates losses for the lower middle sectors and the weakest fractions of the bourgeoisie, nor that it severely harms regions outside the main circuits of capital accumulation. Such consequences are implicit in the peculiar normality that these programs seek to impose. The specificity of the 1967–69 program in Argentina consisted in the attempt by the Krieger Vasena team, with the explicit support of the upper bourgeoisie, to subordinate to the patterns of capital accumulation of the largest and most dynamic fractions of urban capital those of an agrarian class as

[*] Among these organizations was the Consejo Empresario Argentino, a group consisting of thirty leaders of the major local and transnational firms. The Consejo was created in 1967 with the help of Krieger Vasena and counted as one of its first presidents José A. Martínez de Hoz, Economy Minister during the second Argentine BA (1976–81). This council acted as a transmission belt between the Economy Ministry and the powerful interests these enterprises embodied. For a discussion of these and related themes, see Jorge Schvarzer, "Estrategia industrial y grandes empresas. El caso argentino" (Desarrollo Económico , no. 40, 1978).

powerful and economically central as the Pampean bourgeoisie. The displacement of dominant agrarian classes, or the subordination of their circuits of accumulation to those of an upper bourgeoisie intimately linked to transnational capital and the state apparatus, is no rarity in Latin America; it has occurred under various political forms and in the context of diverse efforts at capitalistic modernization. But in no other Latin American country, except Uruguay, has a dominant agrarian class been endowed with as much homogeneity, economic centrality, and political and ideological weight as the Pampean bourgeoisie.

The withholding tax on Pampean exports was crucial in generating the rapid and substantial increase in state revenues that allowed this normalization program to evade many of the enigmas that other such programs must face.^[*] Moreover, by contributing to the maintenance of low domestic prices for wage goods, the withholding tax helped reduce inflation and cushion the drop in salaries and wages. By 1968, as the liberals (and the paternalists, who congratulated themselves on selecting ténicos capable of executing the tasks of the "first phase of the Argentine Revolution") repeated time and again, Krieger Vasena's program could present a panoply of successes without having demanded too many sacrifices of the population at large. On the other hand, some crucial goals had yet to be achieved. It still remained to raise the levels of private domestic investment,^[†] to create a capital market, and to increase the flexibility of the interindustrial price structure (which would imply discontinuing the price agreements and thus bestowing even greater rewards on efficient producers).^[‡] Wage and salary increases could also be considered, but

[*] By contrast, a withholding tax on exports with crucial influence on public finances was not a workable option for other BAs. In Chile, low international prices for the main export, copper, ruled out this possibility. In Brazil, such appropriations were not feasible because the Brazilian agrarian export products that enjoy stronger comparative advantages in international trade are less important in terms of both total exports and total state finances than Argentina's Pampean exports. The case of Uruguay, on the other hand, shows that the relationships asserted here must not be understood mechanistically. Uruguay's agrarian bourgeoisie is even weightier in relation to other classes than is Argentina's. It was precisely this factor that made Krieger Vasena's solution for Argentina impossible for Uruguay: the urban bourgeoisie in Uruguay is neither politically nor economically strong enough to try to divert to itself a significant part of the differential rent enjoyed by the country's agrarian bourgeoisie.

[†] Domestic private investment, after remaining at low levels during 1967 and 1968, showed a strong resurgence in 1969 but plummeted in the wake of the urban riots of May of that year. See, in addition to the data presented earlier, de Pablo, Política anti-inflacionaria en la Argentina .

[‡] Just before his resignation as Economy Minister, Krieger Vasena proposed dismantling the "price accords" (Krieger Vasena, Política económica, vol. 2). Significantly, the successes achieved by the normalization program led in 1969 to attempts to step up, not diminish, orthodoxy. Economic policy for 1969 envisioned not only an end to the freezing

silence was maintained as to whether they would be pegged to improvements in productivity. The economic team and the organizations of the upper bourgeoisie, aware that such goals (which together constituted what I shall call its maximum program) could not be realized overnight, warned repeatedly that grave consequences would arise from any attempt to depart from the course begun in March 1967.

But from the perspective of many other actors, the normalization program had gone too far in channeling the economic surplus toward the upper bourgeoisie, the state apparatus, and the upper strata of the middle sectors. The reasons for the grievances of the lower middle sectors and the traditional petty bourgeoisie should be clear from the data already examined. The picture is more varied and complex for the local bourgeoisie, but it seems clear that domestic capital had few reasons to support many aspects of economic policy and fewer still to evaluate sympathetically the program's promise of a future increasingly open to transnational capital and oriented by the criteria of efficiency defined by the Krieger Vasena team.

The working class suffered only a slight income loss, even though the rate of exploitation increased considerably. However, it was as clear from the paternalists' corporatist designs as from the liberals' goal of atomizing the popular sector that a major decline in the political and economic weight of the unions was in the making. The working class as a whole, as well as the numerous unionized lower middle sectors (predominantly state employees) thus found themselves in danger of losing a resource they had learned to value highly: the capacity for pressure and negotiation provided by powerful unions. Moreover, wage data do not reflect other changes with a negative impact on the popular sector as a whole: the right to strike was effectively revoked, labor authorities made no move to halt arbitrary dismissals and other sanctions against workers, and, most important of all, strict discipline was restored to the workplace, backed by a state apparatus no longer reluctant to employ coercion. Thus, although influential government officials^[*] and some

[*] of industrial relative prices but also a greatly reduced role for public investment. It was expected that private investment would rise sharply (as it actually did in the first half of 1969) above the levels of the previous years, thus making (unorthodox) public investment unnecessary. Moreover, it was foreseen that the effective protection of industry against imports would continue to be lowered.

[*] Commenting on the riots of May 1969, Krieger Vasena expressed his surprise at the participation of workers who were among the most highly paid in the country (cited in Francisco Delich, Crisis y protesta social, 2d ed. [Buenos Aires: El Cid Editores, 1976], 236). Equally revealing is that many of the paternalists I interviewed stressed that their

union leaders thought otherwise, the relatively slight decline in wages (and the sharper decline in many salaries) had little chance of pacifying the popular sector or of co-opting the unions—much less of allying the popular sector with the upper bourgeoisie.

A survey taken in mid-1968 provides evidence that the biases of the economic program against the popular sector did not pass unnoticed.^[*] Table 29 underscores the wide disparities in the ways in which various layers of Argentine society perceived economic policy and the BA itself. While the data suggest that in June 1968 the middle sectors (although far from wholly satisfied) had barely begun to mobilize themselves against the BA, they indicate how overwhelmingly the popular sector opposed the existing state of affairs.^[†]

To summarize: the outstanding feature of the 1967–69 period was the attempt by the liberal técnicos and the upper bourgeoisie to subordinate not only the popular sector and the weakest fractions of the urban bourgeoisie but also an agrarian class endowed with formidable political and economic centrality. By attempting to recast the apex of the dominant classes at the same time that it endeavored to reinforce its domination over the usual victims of the BAs, the upper bourgeoisie antagonized virtually all other sectors of society.

That the upper bourgeoisie bit off more than it could chew in launching

[*] policies had not been hostile to the popular sector, a claim they based on the assertion that real wages had not declined during their tenure in office. This crude economism remains a curious (though typical) aspect of the perceptions of actors who espoused such a "spiritualist" conception of development.

[*] Since the source does not explain the methodology used in this survey, these data must be viewed with caution. But even granting an ample margin of error, the differences among the various categories of respondents in the survey are striking enough.

[†] Other survey data from this period, congruent with the ones presented above, may be found in Tilman Evers, Militarregierung in Argentinien . Das politische System der "Argentinischen Revolution" (Hamburg: Institut für Iberoamerika-Kunde, 1973), 146 passim, and in Frederick Turner, "The Study of Argentine Politics through Survey Research," Latin American Research Review 10, no. 2 (1975): 73–94. Turner presents data from a survey taken in Buenos Aires in February 1968 (n = 250 men) which show that (at least at that time) opinions about other political issues also were strongly influenced by social position. Regrouping the data presented in Turner's article on attitudes toward U.S. intervention in Viet Nam, we obtain results congruent with and as spectacular as those obtained in response to questions about national affairs (see Table 29).

its offensive on all fronts at once is all the more evident considering that the liberals were far from controlling all the top posts in the state apparatus. The problem was not simply that Onganía and his current cherished medium-term hopes that differed in important ways from those of the liberals and the upper bourgeoisie, though this divergence was an obstacle to the achievement of the long-term confidence necessary to build on existing successes. More important, the paternalists' presence in the state apparatus (along with the still-embryonic influence of the nationalists) signified the distribution of influence within the armed forces, the main coercive guarantee of the newly established order: although the liberals controlled many of the top military posts, the paternalists and nationalists retained enough weight within the armed forces to make them a crucial chamber of resonance for the protests of the middle sectors, the local bourgeoisie, and the Pampean bourgeoisie.

The social and economic conditions were therefore ripening for the fusion of a strong oppositional alliance and, within the state apparatus, for the breakdown of the precarious cohesion among the liberals, paternalists, and nationalists. Yet political struggles, both within and outside of the state apparatus, would determine whether this possibility would be realized. But let us defer the examination of such conflicts to chapter 5.

6. Crisis, Threat, and Economic "Successes"

While the relative mildness of the crisis in Argentina of 1966 was crucial to the rapid success of this BA in restoring order and achieving many of its economic goals, it was equally important in contributing to the articulation of forces that precipitated its no less rapid collapse. Let us examine the reasons that underlie this apparent paradox.

The 1966 Argentine BA emerged in the context of an accumulation crisis which, unlike those preceding the BAs of the 1970s, involved neither dramatic dislocations in the productive structure nor the redirection of a considerable proportion of commercial and industrial capital toward speculative financial ventures (although, as we saw in chapter 2, there were eloquent indications that confidence was evaporating and that a plunder economy was underway). This accumulation crisis unfolded without a concomitant crisis of social domination and was attended by a relatively low level of threat, which partly accounts, as we

shall see, for the armed forces' reluctance to apply the high degree of coercion that the upper bourgeoisie demanded when the continuity of the normalization program was seriously challenged.

The absence of a serious threat to capitalism and its associated patterns of social domination was crucial in creating political and ideological space for an alternative to the normalization program: what many envisioned as a socially just, nationalist, and balanced version of capitalism in which everyone would have a place in the sun—even transnational capital, although its expansion would be closely controlled by the government. Belief in the feasibility of this alternative was to form the ideological cement for a broad-based oppositional alliance whose common denominator was a critique of the "efficientist and transnationalizing" orientations of Krieger Vasena's policies. Likely to participate in such an alliance, in addition to the popular sector, were numerous middle sectors, the members of the local bourgeoisie that voiced their grievances through the CGE, various currents in the armed forces, most union leaders, and the political parties, including Radicals and Peronists.^[*] Ironically, a similar vision was shared by more than a few of the major actors at the apex of the state apparatus, including Onganía and the paternalists. They, however, were prepared to pursue this other form of development only later on, when the economic phase of the Argentine Revolution had come to fruition.

Two major consequences stemmed from the conflict between paternalists and liberals over which style of capitalist development was appropriate for Argentina. First, despite the initial successes of the normalization program, there could be no long-term political guarantee of the future continuity of existing economic policies until a solution was found to the problem of power at the apex of the state apparatus. The uncertainty that the struggle between paternalists and liberals generated among the major domestic and transnational economic actors is suggested by the dearth of direct foreign investment and long-term loans to Argentina between 1967 and 1969. Argentina's failure to attract foreign capital during this period is all the more noteworthy since the 1967–69 years were precisely those in which the Brazilian BA, which had received better marks on the test of its long-term political reliability, began to receive a massive influx

[*] Greatly facilitating the emergence of redistributive goals among certain segments of the bourgeoisie and of the armed forces, and thus promoting the formation of this broad oppositional alliance, was the perception that the crisis of accumulation had been resolved and that no crisis of social domination would erupt in the foreseeable future.

of such resources. The second consequence involved a paradox. So long as the paternalists (and nationalists, although they as yet did not seem too dangerous) remained entrenched in the armed forces and in the highest reaches of the state's civil apparatus, the continuation of the normalization program could be jeopardized by its very achievements. If, as the paternalists and liberals could agree, the program had realized such rapid and important successes—if monetary and exchange rate stability seemed assured, and if economic growth had spurted to impressive levels—then, the paternalists asked, why not begin a period of greater "social sensitivity"? In the first stage of normalization, certain sacrifices had been necessary; these had been exacted efficiently by the liberal técnicos . But now that these sacrifices had served their purpose, why not grant significant wage and salary increases and renew efforts to strengthen national enterprises? For the paternalists, a shift toward policies more favorable to the popular sector and the local bourgeoisie would be not only an act of justice desirable per se, it would also further their goal of co-opting the unions and most of the organizations of the bourgeoisie. The paternalists hoped that success in these endeavors would provide them with bases of support they could use to counterbalance what they saw as the excessive weight of the big corporations, not only in society but in the heart of their own government.^[6] To achieve this goal the paternalists would have to replace Krieger Vasena et al. in the not too distant future with an economic team whose orientations were closer to theirs.^[*]

The many similarities between the case we are examining and the other BAs must not be allowed to obscure differences that are basic to understanding the dynamics of each one. The method used in this book is to sketch, at a rather high level of abstraction, what all the BAs have in common, as a first step toward discovering, and emphasizing, what is distinctive about each one. To understand the specificity of the case on which this book focuses, it is necessary to take into account some specific features of the general context in which the normalization program of 1967–69 was launched. One such feature was the popular sector's relatively high degree of autonomy with respect to both the state apparatus and the dominant classes. This autonomy derived from a high level of political activation and organizational capacity. But it was also linked to ideological orientations that, as expressed through the unions

[*] Those whom I interviewed both at the time and later explicitly confirmed that the paternalists contemplated replacing Krieger Vasena and his team as soon as the economic phase was over. Further confirmation may be found in Roth, Los años de Onganía .

and Peronism, posed no fundamental challenge to social domination and capitalism. These orientations had important consequences both before and after the implantation of the BA. Prior to the 1966 coup, they kept the threat level relatively low. After the coup, once the impacts of the normalization program had created the conditions for a broad-based opposition, these relatively moderate orientations raised the possibility of an alliance between the popular sector, the local bourgeoisie, and various middle sectors. By contrast, the more radical, anticapitalist goals expressed by the popular sectors and their representatives prior to the implantation of other BAs have prevented, or greatly delayed, the formation of a multiclass oppositional alliance capable of posing an effective challenge to the BA. Radicalized popular sector ideologies work against such an alliance because the local bourgeoisie and the numerous middle sectors who might otherwise adhere to it (especially since the normalization programs initiated when the BA is implanted under high-threat conditions tend to have especially harsh consequences for these segments of society) feel that enduring these consequences is a lesser evil than allying themselves with a popular sector that has recently raised, and may raise again, the specter of "communism."

The second distinctive feature of the 1967–69 Argentine normalization program was the use it made of the enormous importance of Pampean production to Argentine exports (and to the whole economy). This importance provided the opportunity to impose the withholding tax that facilitated the quick successes of the program but at the same time gave the Pampean bourgeoisie a strong motive to oppose the BA. Other BAs, by contrast, have faced a complex map of several agrarian bourgeoisies and oligarchies with a broad and often conflicting array of interests. In countries like Brazil and Chile, where the dominant agrarian classes are much more fragmented than in Argentina, the production of each fraction is much less important to exports and to the economy as a whole than is that of Argentina's Pampean bourgeoisie. Accordingly, attempts by such fractions to resist policies aimed at modernizing their land tenure patterns and production techniques have tended to be politically isolated and incapable of generating extremely serious problems for the national economy. Argentina, by contrast, ecologically blessed with the fertility of the Pampean region, has been historically cursed by the capacity of those who have appropriated it to resist such attempts at modernization.

The characteristics of Argentina's class structure thus facilitated the opening of two fronts of resistance, which tended to converge, against

the offensive launched by the upper bourgeoisie: one that consisted of the popular sector allied to the local urban bourgeoisie, and another that comprised a powerful and homogeneous agrarian bourgeoisie. But it is important to note that the specificities of a class structure operate through political, ideological and economic struggles that are not determined unequivocally by that structure, and in which the history of prior struggles plays an important part. Argentina provides a case in point. The crisis that preceded the June 1966 coup was much less severe than the one that preceded the coup of March 1976. The latter was preceded by a crisis of social domination and by serious challenges to the coercive supremacy of the state apparatus. These challenges, for reasons discussed in chapter 1, also brought with them an economic crisis far more profound than the one that accompanied the implantation of the 1966 Argentine BA. Since the axis of the crisis that preceded the 1976 coup passed through the very heart of social domination and generated very high levels of threat, and since the popular sector was among the perceived agents of this crisis, it took more time, and a humiliating military defeat, before a multiclass political alliance (such as the one that began to take shape in 1968) emerged, in spite of the fact that the normalization program launched in 1976 had far harsher consequences for the popular sector, most middle sectors and the local bourgeoisie than did the program we have studied in this chapter. No less important in explaining why an oppositional alliance took so long to form after 1976 is a second difference, closely related to the one just examined, between the two Argentine BAs: in post-1976 Argentina the upper bourgeoisie did not overextend itself attempting to subordinate the Pampean bourgeoisie. On the contrary, both participated in a tacit alliance under more equal conditions than those the upper bourgeoisie sought to impose during the 1967—69 period. Financial capital moreover played a much more central role after 1976, as might have been expected in view of the higher level of previous threat and, consequently, the more extended economy of plunder that emerged both before and after the implantation of this BA. But the price for eliminating the antagonism between the upper and Pampean bourgeoisies that had plagued the previous Argentine BA was that a tax on Pampean exports could not be used to reduce the fiscal deficit. The failure to reduce the deficit reinforced other repercussions of the more acute previous crisis and helped situate the post-1976 Argentine BA among the cases in which economic policy could not produce successes even faintly resembling those of the 1967—69 period.

The Argentine experience of 1967—69 suggests that the lower the previous threat and crisis the greater, faster, and more conspicuous will be the success of the normalization program. But the very success of this program makes it more likely that forces will emerge capable of pressing for social and economic policies that tend to undermine its continuity. On the other hand, the deeper the previous crisis, the less likely it is (or the longer it takes) for the normalization program to succeed, even in terms of its own premises and stated goals. A deeper previous crisis, by generating greater difficulties for the subsequent normalization program, pushes economic policy toward still greater orthodoxy and increases the likelihood that such orthodoxy will persist over a sustained period of time. In such cases, the permanence in office of the técnicos who implement these orthodox policies is assured much more by their failures than by their successes.

Why? First, because in a situation of recession, speculation, high inflation, and hypertrophy of financial capital—all of which are more severe the deeper the previous crisis—redistributive proposals, such as those inspired by the success of Krieger Vasena's program, do not present themselves as viable alternatives. Second, because the continued reverberations of the profound crisis preceding the BA, in addition to discouraging direct private investment from domestic and transnational sources, make it very difficult, if not impossible, for the state apparatus to gather sufficient resources to substitute for those that private investors are not providing. The BA under these circumstances is rendered more dependent on domestic and (especially) transnational financial capital as virtually the only remaining potential supplier of the resources needed to reactivate the economy. As long as the balance of payments seems sufficient to guarantee loan repayments, and insofar as the existence of large differentials between domestic and international interest rates creates the expectation that high profits will be made on those loans, financial capital is largely uninterested in the misfortunes of the domestic economy (and, for that matter, in the domestic success of normalization). Given this lack of interest, it is not surprising that the only concrete achievement observable under BAs that have been forced to fall back on financial capital is an improvement in the balance of payments—often generated by the drop in demand for imports resulting from a domestic recession produced, in turn, by the orthodox economic policies upon which financial capital insists.

Let us recapitulate. The deeper the preceding crisis, the longer and the more tightly financial capital is able to hold the BA (and the country)

in its grasp. Under these circumstances, any deviation from what financial capital considers "rational"-i.e. strict application of the canon of orthodoxy—may provoke a particularly severe crash. In such a situation the BA's economic team is left with little choice but to keep applying orthodox policies, hoping that "efficiency" and "productivity" will somehow appear on the horizon. Meanwhile, and largely because of this dearth of options, nothing is done about the huge social and economic costs that such super-orthodox policies generate, even if these costs are regrettable from the point of view of many of the BA's principal actors and supporters. Thus the economy of plunder continues, but, in contrast to the period preceding the BA, few can participate in it while many must bear its costs. By contrast, BAs inaugurated under less extreme circumstances (Argentina in 1966 and Brazil in 1964) have better chances of achieving some significant successes. But under certain circumstances (which we have examined for the Argentine case and will later on contrast with the Brazilian BA), those very successes tend to generate expectations and political alliances that undermine the continuity of the normalization program. In spite of its impressive façade of power, the BA, in both its successful and its unsuccessful variants, offers no easy road—not even to the winners.