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.