Estrategia Internacional N° 14
Noviembre/Diciembre - 1999

Social and economic transformations in Argentina in the 1990s

by Eduardo Molina

A New "Ignominious Decade"

In this issue we present two articles based on the document "Programmatic Fundaments and Program of the PTS" drafted by the national leadership of the PTS Argentina, to be submitted to the next Congress of our party coming up in December. This first article is an analysis about the changing relationships of the country with imperialism and the changes in the economy, and the reshaping of the class structure during this renewed "ignominious decade". Next comes the article called "The regime of the democratic counterrevolution", an appraisal of the bourgeois regime, one that has been imposed after the demise of the dictatorship in 1983.

We cannot understand all the great changes in our country during the 90s, and the perspectives and challenges ahead for the workers, unless we approach them from an international point of view. As Trotsky pointed out, we need: "to take both the conditions and the tendencies of the economy and the political situation in the world as a starting point, as a whole, with its relations and contradictions, that is, the mutual dependency that opposes its components against each other... This is the main difference separating, right from the start, communist internationalism from the various strands of nationalist socialism."

Thus, we should place Argentina within the worldwide crisis of capitalist accumulation that opened up 25 years ago; and the combination of different developments in the sphere of the world economy, politics and of the international class struggle: the defeat of the great upsurge in the 70s in the "southern cone" and Europe, the imperialist offensive in the 80s, the contradictory outcome of the 1989 revolutions in the East, the relative political and economical strengthening of the US in the early 90s (that allowed them to subordinate their bourgeois and bureaucratic agents), the existence of a great mass of finance capital willing to invest in the region, the ebbing of the class struggle both in the country and in Latin America, etc.

Early in the decade, we had seen the attempt by US –and to a lesser extent European- imperialism to resort to the exploitation of the "emerging economies", mainly in Asia, and secondarily in their own "back yard", Latin America to cushion their crisis.

The point of view of Trotskyism has nothing to do with abstract internationalism. As Trotsky wrote: "In politics, the most important, and the most difficult thing, is to establish, on one hand, the general laws determining the life and the struggle of all the countries in the world today; and on the other, to work out the particular combination of these laws in each given country." We will strive to follow this method to study the combination of local and international political conditions under which Argentina received a massive inflow of foreign capitals, thus becoming the seventh recipient country in the semi-colonial world. This has led towards new crises since the massive changes brought about by this new "ignominious decade" (just like in the 30s when Argentina became a virtual colony of the British empire) rested upon unstable basis. Such instability has been provoked by imperialism itself, in its attempt to put an end to the current world crisis, the failure of which we are witnessing. From the year 1997, this process has led to new disasters, such as the Asian slump, the Russian default and the new recession in Latin America, of which Argentina is a sharp expression.

1. Imperialist capital, the national bourgeoisie and the Argentine proletariat.

The attempt to understand how the mutual relationships between imperialism, the national bourgeoisie and the proletariat in the country have expressed historically, and also in the 1990s, is essential if we are to set out the strategy of the internationalist revolutionary Marxists for the nation, and to raise a program for proletarian revolution in Argentina.

The native bourgeoisie arrived to the historical scene belatedly, when the level reached by the world economy ruled by imperialism left no room for the independent development of a national capitalism. Just like in every industrially backward country, it was foreign capital that played a decisive role. In close dependence on it, and tightly related to the old landowning oligarchy, the Argentine bourgeoisie proved once and again incapable of taking the historical tasks corresponding to her class in its hands. Meantime, the relative weakness of the national bourgeoisie increased throughout the century, both in relation to the proletariat at home and to imperialism. Because of this, the Argentine bourgeoisie –an exploitative class, and also semi-oppressed by imperialism- even though it to maneuvered with the different metropolis to defend and improve its position in the exploitation of the country, it never led and never will lead any serious fight against imperialist rule, and for a genuine national emancipation. She is just too afraid of unleashing a mass movement of the workers, who would threaten its very social existence.

The1976 military coup represented a quantum leap in this historical development. The alliance of the national big bourgeoisie, the old oligarchy and imperialism imposed a severe counterrevolutionary defeat to the masses, crushing the mass upsurge in the 70s, thus ushering in the dismantling of the old structure of the country -in which the positions conquered by the proletariat had become a threat for its rule-, and opening the doors to an increased semi-colonization.

This is proved by the whole record of the national bourgeoisie in the 20th century, that under the direct rule of either the landowning oligarchy, bourgeois nationalism, "development"-oriented governments, the military dictatorships, or else under the disguise of bourgeois democracy, has not only proved helpless and reluctant to accomplish the tasks of national emancipation once and again, but also it has revealed itself as an openly anti-national, anti-working class and anti-peoples’ class, becoming more and more the agent of foreign capital.

This does not write off the possibility of clashes with imperialism, -even the upper layers of the landowning oligarchy comes into contradiction with the metropolis-. But it shows that the working class is the only "truly national" class, because by freeing itself it can, at the same time, release the rest of the exploited classes in the nation from imperialist oppression, giving the lie to all the bogus ideologies of the left nationalists, the populists, the guerilla supporters, the Stalinists and Maoists alike, who even today preach the conciliation of the working class with the native bourgeoisie to achieve "national liberation". At the end of the century, we the supporters of the Fourth International in Argentina reaffirm that : "Not a single one of the tasks of the bourgeois revolution shall be carried out in those backward countries under the leadership of the national bourgeoisie, since the latter has sprung to life through foreign support right from the start, as a class that is alien and hostile to the people. Each stage of this development bounds her more tightly to foreign finance capital, of which is essentially the agent ... The leadership is, by the nature of things, in the hands of the proletariat, who, right from the start, is set against not only the foreign bourgeoisie but also to its own national bourgeoisie. Only this class that has nothing to lose but its chains is capable of leading the struggle against imperialism for national emancipation to the very end."

2. The 1990s: four aspects of the increased semi-colonial character of Argentina.

The implementation of imperialist plans in Argentina was legally codified in the Acts of Convertibility and State Reform supported by all bourgeois factions and parties. These were pushed through in the conditions brought in by the ebbing of the working class movement after the economic terror of the hyper-inflation in 1989, and by a number of defeats to major resistance strikes and fights waged by workers against privatization schemes in 1990-91 that were openly betrayed by the official leaderships of the working class. The whole of these elements, along with a wide reactionary class alliance, based on the middle classes, and in sectors of the working class and the pauperized masses, gave Peronism in power the force to push ahead with the imperialist bourgeois plan that provoked a profound transformation of the old country.

Following the method of the Marxist historian Milciades Peña, we claim that there are four key guidelines today, that help us understand this increased semi-colonization, namely: a) The productivity of human labor or, what is the same, the intensity of capital, in all the levels of production is still low with regard to the advanced countries, although in the past years it has incremented in some branches; b) the role of Argentina in the international division of labor is limited to providing food, raw materials and some commodities; c) the country has become more and more indebted and it is more dependant on both the credits and capital flows coming from the major imperialist countries; d) finally, essential resources of the country are being given away to imperialism.

a) Enclaves of advanced technology in some branches stand side by side with the low productivity of labor and increased technological dependency.

One of the keys to understand the semi-colonial backwardness is to measure up the productivity of labor in relation to that of the imperialist metropolises. The growth of output per worker in industry is brought about by two means: the assimilation of more advanced technologies and the better use of labor.

In the past decade we have seen, along an unprecedented waste of human energy provoked by the highest unemployment ever, and the brutal unprecedented speed-ups, the partial assimilation of state-of-the-art capitalist technologies in some branches. However, this does not make up for the increasing widening of the technology gap between our country and its dominant power, US imperialism.

The crisis of capitalist accumulation initiated in 1974, drove the main countries, particularly the US, to develop technological innovations (information technology, computer chips, biotechnology) which have widened the technological gap between the dominant imperialist metropolises and semi-colonial Argentina, as well as the whole Latin America. Taking the continent as a whole, labor productivity in manufacturing industry in the 1970s represented just 26.5% of that in the USA. Argentina along with the main countries in the region, finally accomplished some of this advances twenty years later, after a long retreat, following a typical semi-colonial pattern.

In a zero to a hundred scale of technological development, Argentine industry stood at 30 early in the decade, and now stands at 50. But this rise starts from a very low level, since in 1991 the age of fixed capital (machinery and equipment) already averaged twelve and a half years. And this is due mainly to the short term effect brought about by the arrival of transnational companies.

Except some branches of agro-industry, specifically in the production of soy oil, that reached levels of competitiveness comparable to those of the US, and the investment in telephones and telecommunications, the intensity of capital, i.e. the productivity of labor measured in terms of investment, still remains far behind that of imperialist countries.

This way, of the 22.5 billion of direct foreign investment, some 60% went to privatization schemes and banks, and only 10% of it was invested in new plants. Out of the total investment (both national as well as foreign) in the period 91-96, only 14% went to the opening of new plants. It is not surprising that the gross investment in 1996, was only 18.1% of the GNP, 6.2% below than that of the year 1974(9). This means the investment in the 90s did not even reach the levels registered in the mid 1970s, at the beginning of the world crisis.

The use of human labor shows the same tendency. From 1974 until the early 1990s, the total number of employed workers increased by 30%, although the added value of the economy remained constant. Between 1990 and 1995, the total amount of workers decreased, but the product increased 30%. This means: the productivity fell from the 1980s until the beginning of the 1990s, and from then on, up to 1995, an important recovery ensued. In spite of it, the productivity -excluding agriculture and mining - remains in fact slightly below that of 1974 (10).

In industry, the essential increase of labor productivity, of an accumulative annual 8% between 1991 and 1998, is due to the super-exploitation of the working class, based on the sackings of workers and a brutal speed-up. This is almost an absolute factor in the case of construction, where the increase of productivity was a byproduct of increased working hours. The retail trade was also affected when the big supermarkets muscled in.

The opening of the economy lowered the cost of imported capital goods, replacing both local equipment and labor. This is so, mainly, in sectors bound to privatization or the processing of raw materials. In the branch of telecommunications, this is manifested in the strong increment in the installation of phone lines (that went from 12 to 24 lines every one hundred people in the past decade), as well as the increase in the lines per employee in the companies, that jumped from 47 in 1985, to 311 per employee in 1997, although this has also to do with mass layoffs.

The cooking oil branch, in 1973-74, with 67 plants and 6.895 workers, produced 252 tons per worker on the average. In the years 93-94, a smaller amount of plants and workers (59 and 4.934, respectively) produced an average 2.472 tons per worker (11).

In these branches, the increase of productivity, we insist, is bound to the installation of new machinery and equipment from abroad, in detriment of home-made equipment, what led to abandon the modest efforts of previous decades in the field of scientific and technological development. An "uneven and combined" development has thus settled in, with a few branches working at the most complex technological levels, nearing the most advanced ones worldwide, and the destruction of the bases of local know-how and technology for the whole industry at the same time. Because of this, even the quantitative and marginal productivity break-throughs based on investment, just reinforced and worsened the semi-colonial bounds tying down the Argentine industrial base, thus making the country more dependent on foreign technology and imperialist capital inflows alike.

b) Argentina lags behind in its industrialization level, establishing itself as an exporter of commodities and semi-manufactured products.

Argentina´s increasingly subordinated role in the international division of labor dominated by imperialism, and the increased investment of foreign capital, have even reversed the pseudo-industrialization underpinned by a tariff-protected domestic market, the base for the "import-substitution pattern". In the last 25 years, the share of industrial goods in the GNP in 1974 amounted to 28.3% (with a million and a half workers), whereas in 1990 went down to 21% (with a million two hundred thousand workers), reaching an all-time low 18% in 1998 (with a million industrial workers).

The restructuring of Argentine industry meant a concentration in some high profitability branches, oriented to exports towards certain niches of the regional market, namely, the Mercosur, and to the domestic market as well. Industry is more and more geared to the production of commodities, this means that it revolves around raw materials processing plants and the manufacturing of low added value goods. In the second place, it is less sophisticated: it has given up the production of machine tools, capital goods or high technology products; and in thirdly, it is less integrated: the different branches of the productive infrastructure are more and more geared to foreign industry, and they correspond less to the needs of the domestic market.

The so-called "modernization" concentrated in some decisive branches that had lagged behind in the previous stage, and that became highly profitable for its new owners under the new circumstances, as it clearly happened with the telecommunications.

The increased influence of foreign multinational into the economy took place by means of: 1º) the privatization of the state-owned companies, i.e., petroleum, gas, power supply, water, telephones, railroads, airlines; 2º) major purchases of old industrial plants mainly by food-processing transnational companies like Nabisco, Danone or Parmalat; 3º) a steady increase of investment in the car industry, particularly by Fiat, the comeback of General Motors to the country, and the entrance of Toyota, under a special régime of tax breaks and state protection; 4º) The arrival of big supermarket chains to the country.

This unequal development reached its highest peak in the countryside. While regional economies or small plots, either decayed or stagnated, with the resources in the hands of big landowners, who took advantage of the high international prices of the 1990s, underpinned a significant agricultural recovery. The production of grains and cotton grew from 27.4 million tons in 1988-89, to 57.4 million tons at present time, peaking in 1996-97: over 65 million tons, in what some have pompously branded the "second revolution in the pampas". This was based both on a 20% growth of the cultivated surface and increased yields reaped through new technological investment (a more extensive use of fertilizers and agrochemical, new seeds and production systems). Thus, the export of grains, oils and foods remains the fundamental component of the Argentine external trade. The countryside still accounts for 60% of the total exports of the country.

To sum up, a few branches concentrated almost all of the investment and expansion, while the industry oriented to the domestic market started to collapse, causing a twofold process of relative de-industrialization on one hand, and productive specialization concentrated in some highly profitable branches producing commodities on the other. This drive to the production of commodities is far from being balanced by the industrial exports to Brazil and the Mercosur, and it reveals the reversal in the country’s industrial capacity. Argentina is thus increasingly establishing itself as a semi-colonial supplier of raw materials and semi-manufactured products.

c) The submission of the country was worsened by means of the foreign debt, the privatization of public companies and the opening of the economy.

Argentina received part of the capital outflows towards the "emerging markets" in the 1990s, in exchange for the submission to the conditions of the Brady Plans, going for the renegotiation and the capitalization of the foreign debt. This gave place to a renewed cycle of borrowing, boosted by the MNCs –multinational corporations- and the economic trusts that had benefited before with the nationalization of the debt some years ago. The law of convertibility was brought in, with the overvaluation of the peso, with the aim of attracting foreign capital, guaranteeing the stability of the currency (12).

Hence, the imperialist plundering has brought about a wholesale indebtedness of the country, one that continues to grow apace. From 1991, Argentina paid the IMF some 59.7 billion dollars worth of interests and payments alike, and it borrowed new loans worth 63.5 billions. Although the net financial transfer was, in the period 1991-97, favorable to Argentina in 4 billion dollars, the total foreign debt rose, in 1997, to 124.3 billion dollars, more than twice as much as in 1991. The annual interests went from 2.9 billion dollars in 1993, to 8.2 billions in 1999, i.e, they increased more than 180%.

By means of privatization schemes, the Argentine state has got rid of a major network of utilities, of transport companies, and industrial plants that had all played a decisive role in the national economy for decades: YPF, Somisa, Argentinean Railroads, Segba, Entel, Airlines. Far from introducing "deregulation", the state adjudicated in favor of big capital, guaranteeing the monopoly of the services at high prices. It is evident that the privatization of these companies was a decisive step in the reshaping of the Argentine economy, since the state handed over the decisive levers of the economy to the hands of a handful of national and, fundamentally imperialist bosses, closely associated with each other. In 1998, almost half of the top 50 companies with highest returns were privatized companies, and the remittance of returns by the multinationals to their headquarters abroad was worth 3 billion dollars per year, an outflow that added up to the exacting burden of the foreign debt.

The "disruption of foreign trade" has been the other side of the coin in this growing submission to imperialist capital The opening of the economy to the imports and the lowering of customs tariffs, has resulted in an increased entry of foreign products into the domestic market, particularly those coming from the United States. This facilitated the strategy of the MNCs aimed at the import of inputs or equipment, and the take over of a profitable market for the products manufactured by their headquarters at home, via "inter-companies" imports.

Renault is on top of the ranking of the top 1000 companies that imported the most in 1998, bringing in from France autoparts worth 319 million dollars. Volkswagen follows with autoparts worth 207.9 millions from Germany, and then comes Ford with 155.4 millions worth in motors from the USA.

Among the first top 45 importers in Argentina, 35 are imperialist companies that imported from their headquarters abroad their own products worth 2.94 billion dollars in 1998(13).

Against the claims made by the UIA (the Argentine bosses federation) about the imports coming from Brazil, we see that just 7 of the 45 top importers bring their products manufactured in their plants abroad. But out of seven companies, 6 of them - General Motor, Fiat, Scania, Gillette, Movistar and Unilever -, are also imperialist companies. Siderar, of the group Techint with branches across the region, imports itself iron planks from their plant located on the other side of the frontier, being the only national group of the Mercosur among them.

The whole MNCs, whereas they account for just 38% of the exports, they also account for a massive 60% of the total exports of the country. This means a chronic trade deficit that has to be financed with a growing borrowing, increasing the external indebtedness. The fact that industry should depend for its operation on this mechanism, far more than the already dependent "import substitution model", increases the vulnerability of the Argentine economy.

d) The era of the "carnal relationships".

The hacks of the establishment went even further this time than their predecessors who, in 1933 signed the Roca-Runciman Pact declaring Argentina was the "most valuable jewel of the British crown". This went hand in hand with a reinforced submission to imperialism, which has been brilliantly defined by the foreign minister, Mr. Di Tella, like "carnal relationships with the USA".

The direct interference of the US ambassadors, the signature by Argentina of the Treaty of Nuclear Non-Proliferation and the scrapping of the "Condor" missile project; the participation in the UN Peace Missions in several countries; the status of extra-NATO ally of the United States; the recent agreement on Malvinas which favors Britain; the recurrent monitoring missions of the IMF that dictate policy-making, which later are made into laws, as the recent Act of Fiscal Convertibility pushed through the Congress; or the candidates to Menem´s succession paying obedience to Wall Street: all these facts prove that the ruling class – the pro-government version as much as the "opposition"-, have given up on the essential attributes of the political sovereignty of the country.

In conclusion, taking these four elements as a whole, and from a historical point of view, we can see that the political and economical semi-colonial character of Argentine capitalism has been deepened, in a new spiral of uneven and combined development. This combined development is also reflected in the class structure. The old proletariat has disappeared, and a new one has come to life in other branches and big companies, therefore laying the basis for setting out the driving forces of proletarian revolution in Argentina.

3. The new class structure of the country.

a) The new establishment

A new establishment has come to life, basing itself on the association between creditor banks, multinational companies and big bosses at home who made a big business out of privatization mainly, but also with the purchase of old national private companies, and by means of the take over by imperialist companies and banks alike. Such was a process of concentration and centralization of capital that drove to a tight intertwining of both local and foreign capital, to unprecedented new heights in the history of the country.

In the last ten years the operations of the imperialist companies in Argentina have massively increased: Ford, Fiat, Renault, Volkswagen, CEI-Citicorp Holding, Soros (companies IRSA and Cresud), Exxel Group (that controls 14 companies), Repsol, Shell, Amoco, Telefónica, Telecom, HSBC, Cargill, Dreyfus, Unilever, are some of the foreign groups that lead all the sectors of production.

In the year 1998 alone, about 77 companies worth above 10 billion dollars passed on to foreign hands. By then, they accounted for 53.2% of the total sales of the top one thousand companies of the country. 6 times more than in 1990! They account for more than 30% of the GNP. Out of the top selling 500 industrial companies, the imperialist ones went from a 36% share of the GNP in 1990, up to 51% of it in 1995.

Foreign capital reigns supreme in the financial and banking systems alike. Above 40% of the deposits of the whole banking system is in the hands of foreign bankers. This take over by foreign capital in banking made a quantum leap in the wake of the "tequila" financial crisis, and has just gained momentum ever since: out of the 10 top banks in the country, 7 are foreign-owned: Banco Río (owned by the Bank of Santander), Banco Francés (owned by the Bilbao Vizcaya Bank), the City Bank, the Boston Bank, the Banco Hipotecario Nacional (National Mortgage Bank owned by Soros), the Bansud (Banamex), and the Banca Nazionale del Lavoro. Only the Bank of Galicia, owned by the Escasany family, is in the hands of national private capital; the two remaining big banks are state-owned: the Banco Nación and the Banco de la Provincia de Buenos Aires.

The big national trusts belong to a more select elite within the establishment itself: Techint of the Rocca family, Pérez Companc, Arcor group of the Pagani family, the group Clarín, Macri´s Socma, Escasany, Fortabat, the Urquía Group, Zorroaquín, Roggio, Soldati, Pescarmona and some other names make a short list of 30 groups that own 75 companies among the 1000 top selling ones. These account for 22.3% of the total sales, 9% of the Argentine GNP and they hire 129.353 workers (14). Some of them have extended their operations abroad, spreading to the region, like Techint, Pérez Companc and Bunge and Born, who have more positions in Brazil than at home. Thus, they have accumulated assets abroad worth 8.6 billion dollars, for the year 1997.

However, the big "national bourgeoisie" did not fade away, but rather it concentrated and got even richer, as smaller partners of the MNCs, mainly bound to privatization schemes. These very national groups stashed 57 billion dollars away into foreign banks between 1991 and 1997, more than they did during the military dictatorship (15).

Those that benefited the most were the joint ventures that muscled in privatization schemes. Out of the top 200, one-third joined in privatization, and they account for two-thirds of the rise in the profits of the whole sector. Almost all privatized companies are now in the hands of joint ventures made up of major local groups and foreign companies, and they also are among top-earning corporations. 35 of the 50 more profitable companies of the country are linked to privatizations (16).

Foreign capital has also muscled in landed property, Soros and Benetton having become the biggest landowners in the country. But this came along a process of concentration of the land that was already on the run by the end of last decade: in the province of Buenos Aires there are 1.294 proprietors with a total surface of 8.776.071 of hectares. The top layer of this landowning bourgeoisie, is made up of 53 proprietors who own 44.000 hectares average each one, in the richest agricultural area in the country and one of the richest in the world!

The oligarchy of the concentrated agrarian capital is made up of only 536 landowners that concentrate 5.2 million hectares in their hands. That top landowning bourgeoisie owns land in several regions, allowing them to go for a potentially wider productive diversification. This, along a highly efficient capitalist exploitation of the soil, enables them to face the ups and downs of the market both at home and abroad, and to sustain their rent accordingly. The Rural Society of Argentina represents this high oligarchy, whereas the Agrarian Federation rallies the small and medium farmers, and the Coninagro or the CRA both represent other high layers of the agricultural bourgeoisie.

b) The other sectors of the national bourgeoisie

This process of massive centralization and concentration of capital meant that thousands of companies were driven against the wall, even during the boom, and it also widened the gap between the top layers of the establishment and whole swathes of local entrepreneurs that lagged behind. These, the so-called "independent national companies" (or "independent from the trusts", like Trotsky said), are a sector of the bourgeoisie that is not part of the 30 top local groups. If we take the top 1000, there are 583 companies which account for almost one-fourth of the total sales of the whole thousand, one-third of jobs and 16.4% of total assets (17).

Between 1984 and 1994, the so-called "PyMES" (small and medium-sized companies, a category including well off layers of the petty-bourgeoisie with some employees) in the manufacturing industry, saw a 11% drop in the number of plants. The most affected were those hiring between 6 and 10 workers (-26,4%), and those hiring above 50 people (-25,6%) (18). The UIA has been acting as a spokesperson of these bourgeois sectors, for example footwear, textile, auto parts makers, who want to bring in higher tariffs for the imports.

The so-called "independent national companies" in the industrial sector, the bourgeoisie of the "PyMES", the regional bourgeoisie, the medium-sized farmers, are all economically, financially, technically, culturally and politically dependent on the establishment. In spite of their subordinate role, in an economy increasingly dominated by the MNCs and the big bosses, they retain a strong social weight given their number, the fact that they have many employees and their widespread connections with the middle classes. That is why they are a mainstay for the dominance of big capital as "second and third line" exploiters. Even if sometimes the pressure of big capital drives them to openly clash for some concrete and partial aspects with the former, they bow down to the elite, full of admiration and respect (they dream about being part of it some day), and they burn with hate and fear of the workers and the poor alike. To put up with the pressure of the MNCs and the big corporations, they appeal to the worst super-exploitation of the working class. Little wonder then that they have been the main beneficiary of the wholesome introduction of non-unionized jobs and casualised labor.

Against the beautifying of the Pymes carried out by the reformists, populists and the union bureaucracy all alike, to justify the class collaboration with these "national" entrepreneurs, the fact remains that, due to their class interests and their fear of the masses, these layers cannot be won over for waging a progressive national fight, let alone one aimed against private property altogether.

c) The petty bourgeoisie and the modern middle classes

The reshaping of the country by big capital brought about a sharp polarization of the urban and rural middle classes, throwing whole swathes of these into poverty, and turning others into proletarians. On the other hand, it favored a minority of the top middle classes who saw their revenues increase significantly. The official indexes tell us that the richest 20% of the population has seen a 26% rise in their revenues in 1996 with regard to the year 1975. Meanwhile, 40% of the poorest layers have seen a 30% drop in their revenues, whereas the remaining 40% between them experienced a 12.6% loss in the same period. However, we do not get the whole picture of the earnings according to the class structure by looking at those figures, since the big bourgeoisie that gets the lion's share constitutes just 0,5% of the economically active population: 65.888 individuals only. These data point to a regressive and polarized distribution of the national rent.

This polarization divides even more the heterogeneous conglomerate of layers and social sectors that are the middle classes (small farmers and small milk producers or sugar producers; the traditional urban petty bourgeoisie made of merchants and workshops with less than 10 workers; a "modern middle class" of professionals and wage earning technicians).

The superior strata, well off, that represent 15% of the economically active population's (about 2 millions), are consolidated as high middle class increasing their earnings (19) and benefiting with the crumbs of the imperialistic penetration.

The bad off layers of it, the poor petty bourgeoisie that represents 22% of the economically active population (about three millions), share the same life conditions as the workers.

The take-over of retail trade by the big supermarket chains, alongside the widespread concentration of property, both in industry and the countryside alike, and of the nation’s wealth in the hands of the big capital –with regressive taxation on top of that-, have all led the inferior strata of the middle classes to destitution and ruin. Some of them have even fallen below the living standards of average workers (e.g., many small farmers), or else have been turned into proletarians, becoming wage earner or unemployed altogether. Meanwhile, the low and poorest sector of the middle classes have swollen with sacked industrial workers, or else those formerly employed in privatized utilities, now working as taxi drivers, small shopkeepers and all kinds of self-employed. This sector coming from the proletariat is just the legitimate son of a decomposing capitalism.

The small poor farms that are usually run with a permanent family labor, without exploiting waged labor, only encompass 163.246 families in the whole country. These poor small farmers that have lost weight in the class composition of the countryside, are swindled by the wholesale traders, the big mills, and the banks alike, being periodically ruined en masse, as shown by the growing emigration to the cities, and the participation of this sector in the road blockades of the recent round of rural protests.

Also, a very low stratum of rural middle class has come to life, the socalled "medieros", for example, Bolivian immigrants that move around with their family groups. They are super-exploited, dwelling in country houses in the "green belt" around Buenos Aires, and they represents 28% of the labor force in the rural area of the city of La Plata, in contrast with a 1.4% of permanent agricultural wage earners (20). Although sometimes they are hired as journeymen, they constitute a kind of land-less peasantry.

This tearing apart of the middle classes is a source of social instability, and also has the potential for provoking abrupt turns in the political arena. This has also nurtured the emergence of a progressive development, such as the new university student movement that, back in May, fought back the educational budget cuts. The student movement, although is not a specific sector of the middle classes, but just a heterogeneous social layer made up of different strata -high, middle and low- of the petty bourgeoisie (with a small proportion of workers in it), has just burst onto the scene, reflecting the widespread discontent of sectors of the oppressed and the exploited classes with the regime.

d) The new working class

As Marx and Engels stated in the Communist Manifesto, "we regard the modern wage earning working class as proletarians, who having being deprived of their own means of production, are forced to sell their labor force in order to earn a living". If we make a definition along these lines, the Argentinean working class constitutes 61% of the economically active population, that means a total of 7.989.378 workers (21). It is the overwhelming majority of society.

Against those claiming the working class is no longer the subject of revolutionary changes, let us point out that when the Marxist theory was first put into practice in the victorious proletarian 1917 revolution in Russia, the working class back then was a tiny minority in that country, surrounded by a sea of peasants. The urban working class is the majority today, both in the developed countries and in most semi-colonies, Argentina among them. The mainstream bourgeois newspaper "La Nacion", at odds with their own ideology, says that: "the theories pointing out to a ‘decline of the wage earning society’ in the last few years would therefore not apply, at least to Argentina". But the revolutionary nature of the proletariat does not flow from its number alone, but from the fact that is a surplus value-producing class par excellence, which due to its role in the production and distribution process is able to grind the whole economy and capitalist society to a halt. She eventually should be able to put them to work under her control and government in a superior regime. The transformations of the 1990s, have not diminished this role in the least. The concentration of capital mentioned above, has nurtured big workers contingents in new branches, although in different and relatively smaller production and distribution units, and in diverse plants under the control of the same capitalist.

A handful of holdings concentrates most of the workers in industry and services. We will only show data provided by the bosses themselves, which obviously don't include casualised and "outsourced" workers, both of which have grown significantly along the decade.

The top 1.000 companies alone -that churn out 167,157 billion pesos, almost half of the GNP-, employ a total 654.461 workers. The top 500 corporations have 591.332 workers (91% of the labor force in this sector). The top 100 have 421.515 employees (65%). Almost half of the workers in the top 1000 companies are concentrated in the top 50 companies: 317.208 workers (22).

Techint corporation has 27.500 employees. The Exxel Group, 35.552. Macri´s SOCMA group: 20.000 employees. The Coca Cola system, 18.000; the Arcor trust, 13.000. Telecom 12.630 and Telefónica 11.107 workers. Roggio employs 11.000 workers, the Pérez Companc corporation 6.800, and the media giant Clarín employs 11.400 workers.

Disco Supermarkets have in turn 17.000 workers, Coto 10.300 and Carrefour 8.500. The privatized YPF in hands of Repsol, in spite of the mass sackings still has 10.000 workers.

Another source, the Ministry of Labor, says that there are a total of 867 companies paying a risk-at-work insurance that have above 500 employees, employing 1.764.793 people. The top 47 have above 5.000 workers each, totaling 802.529 workers in all (23).

These new labor concentrations shaped by the new establishment show the decisive strength of workers in all the vital centers of the economy of our country, located around a handful of big cities and urban districts. Thus, their potential for paralyzing production and disrupting distribution remains intact. In turn, this heralds the perspective of putting them to work under a superior social and political régime.

These numbers gives us a rough view of the weight and concentration of the different sectors (since they do not take casualized and outsourced workers into account, nor those working in sweatshops).

In line with the developments in the whole international working class movement, the weight of workers in the services and trade has increased altogether compared to the industrial proletariat. Likewise, they have been concentrated in large utilities and retail chains.

Of the total 848.984 retail trade workers in all the country, 200.000 are concentrated in large supermarkets. The top 7 supermarket chains -Disco, Coto, Norte, Carrefour, Tia, Wal-Mart and Jumbo -, employ in turn 60.265 workers.

In turn, there are 501.929 workers in the branches of transport and communications. Dozens of companies in these sectors have more than a thousand workers. The two main mail companies have 22.342 workers in their staff - 15.568 in Correo Argentino of the group Macri and 6.774 in the Exxel Group-owned Oca. Bank employees and the clerks working at other financial houses amount to 526.155 (24), with the former increasingly concentrated in a handful of big banks.

Industrial workers still have a decisive weight: there are 60.000 workers in the car industry. There are 20.700 auto workers the 9 terminals owned by the MNCs, who could grind production to a halt in the entire branch. Ford has 4.700; Volkswagen, 3.701; Renault, 3.588; Fiat, 2.869; General Motor, 2.000; Mercedes Benz, 1.687; Scania, 1.001; Toyota, 850. Auto-parts makers like Dana Argentina have 2.750 workers, and Lucas Indiel 715. The tire companies, in turn, like Fate have a 1.500-strong staff, Firestone 1.088 and Pirelli 598.

There are more than 15.000 steel workers in a few plants: Siderar has 5.974 workers. Acindar 4.061; Siderca 3.916; Aluar 1.889; Aceros Zapla 1.206 and Decker 600.

The top 10 food companies have 40.640 workers in all, distributed as follows: Arcor 13.000 workers, Ledesma 4.300; Molinos 4.275; Canale 4.000; Danone 3.840; Bagley 2.680; Nestlé 2.600; Azucarera Concepción: 1.898 and San Sebastián 1.838 workers. Others like Ingenio Tabacal have 1.200 and Refinerías de Maíz 1.198.

12.496 workers are employed in the top 5 dairy products companies: Sancor has 5.283 workers; Mastellone 4.500; Milkaut 1.280; Williner 942 and Molfino 491. In mills and oil-making companies, Cargill has 2.230, Nidera 1.039, La Plata Cereal 582 and Aceitera Gral. Deheza 350.

In the meat packing industry, workers are distributed as follows: Cepa 1.416, Quickfood 1.096, Rafaela Foods 960 and Frigorífico San Carlos 520 workers.

In the beverage industry there are more than 25.000 workers in the main companies. The Coca Cola corporation alone has 18.000 workers, the Cervecería (beer) Quilmes 2.413, Peñaflor 1.600 and Resero 1.000. The two main tobacco companies are Nobleza Picardo, with 2.000 workers and Massalin Particulares with 1.740.

In glass production and construction materials, Loma Negra has 3.013 workers, Corcemar of the group Minetti 1.500, Ferrum 1.200.

In the textile branch, Alpargatas has 6.500 employees, Gatic 4.900, Grafa 1.060.

In the pharmaceutical, chemical and petrochemical branches we find the following companies: Bayer with a 1.467-strong staff, Dupont 850, Atanor 811, Basf Argentina, 807. In the medicine-making sector Bagó has the lead, with 964 workers, and Grupo Sidus 889. In cleaning products and cosmetics, we find Unilever with 3.342 workers and Cosmetics Avon with a 1.400-strong staff.

All in all, the industrial proletariat, in spite of being well below its peak -1.525.257 workers back in 1974-, stood at 1.007.909 workers back in 1994. It still accounts for the relatively high percentage of 12.6% of the total 8 million wage earners. The number of companies that have between 500 and 1.000 workers shows that the industrial working class remains the most concentrated social layer, in spite of the relative increased weight gained by the services and retail trade alike.

To this we should add up (because the statistics do not consider them a part of the industrial proletariat), around 345.000 construction workers, according to the figures furnished by the UOCRA –construction workers union- and the Builders Federation.

Within the urban working class we should include 530.009 teachers in the whole coutry. Social services and health sector workers stand at 397. 865.

To them we should add the hundreds of thousands of workers in the provincial public administration, which remains the biggest employer in the interior of the country.

On the other hand, both the enormous concentration of the land in the last two decades and the changes in the forms of production in the countryside, have brought about an increased capitalization and, an ensuing proletarianisation of the social relationships there: there are 344.172 agricultural workers, almost half of them in the Pampas 25.

Far from what many pundits (and also the CTA –the "alternative" union federation- in its meetings) claim, it is not true that the proletariat has melted away into the exploited in general, or else that "production units have no longer a major role". On the contrary, wage earners are not only the most massive social class, but also hold the levers in key areas of the economy in the urban centers.

Having said this, the fact remains that the concentration and centralization of capital that has reshaped the proletariat, has meant at the same time the violent expropriation of all type of conquests this had achieved in the past with its struggle, causing an enormous deterioration of both working conditions and living standards, and also a quantum leap in unemployment and precarious labor. Overall, the 1990s meant a quantum leap in the surplus value from the working class movement, both directly or indirectly.

The labor class has bore the brunt of the regressive distribution of incomes. Resorting to mass unemployment as a lever against the labor movement, the bourgeoisie has achieved an important reduction of the wages, forcing workers to put up with the lowest wages ever since the 1940s, around half of the average wage back in 1974: the same level as under Videla`s dictatorship!

Half of the workers in the country earn a maximum wage of $550 monthly, i.e., less than half of the cost of the shopping basket. Sweatshop workers get a pay between 30 and 45% below this. The industrial wages went down 9% during the convertibility. As a result of this, whereas before the 1976 coup wage earners got 48% of the total national income, back in 1998 their share fell to less than 20% of it.

Unemployment has been a key weapon in the hands of the big bosses, standing around 18% in 1995, and going up again to 15% in 1999, one of the highest in Latin America and four times above the historical levels. There are around 2 million unemployed, to which we should add 2 million underemployed, and around 4 million sweatshop-style workers. The rate of precarious labor stands at 50.7% in the City of Buenos Aires and its suburbs, the Greater Buenos Aires (26). In Argentina as a whole, two out of three workers don't have a full-time job.

Alongside a swollen the industrial reserve army and structural unemployment, there is drive to replace adult workers for young ones and women alike in all the companies. At the same time, these two sectors are the most affected by unemployment. Underemployment among the youths stands at 55.3%. Along with the unemployment of the working youth, this shows that capitalism can only incorporate smaller portions each time of the new generations of workers to the labor market.

In conclusion, while capital has concentrated a powerful working class in big companies and holdings, it has also wiped out major conquests, "outsourcing" a growing percentage of the proletariat, and even throwing millions out of production and into structural unemployment. The 2.123.170 unemployed workers looking for a job -the only ones incorporated into statistical data as economically active population - and the 5.866.208 wage earners, more than one-third of them working in precarious jobs, all highlight the sea change in the internal composition of the working class and the classes structure of the country altogether (27). In the short term, this –along the nefarious action of the bureaucratic leaderships that joined in the bourgeois offensive, dividing rank and file workers-, has prevented the new working class movement from going over to the offensive, also holding back the fighting disposition of the most concentrated working class sectors.


1. León Trotsky, Stalin, "The great organizer of defeats", Yunque Editorial, Bs. As. 1974.

2. León Trotsky, "Imperialism and national revolution", published in the newspaper Crítica of Buenos Aires, 24/02/1940.

3. León Trotsky dwells on this concept in several articles published in "Latin American Writings", CEIP León Trotsky, Bs. As. 1.999, p. 304.

4. "The Chinese Revolution", text of Trotsky that appeared in 1945, in the Fourth International magazine.

5. See his work "Industry, Industrial Bourgeoisie and National Liberation"

6. See "The betrayed revolution", León Trotsky.

7. Giovanni Stumpo et al. Transnational companies, industrial restructuring and economic policy in Latin America, CEPAL, 1998.

8. Data from the Center of Studies for Production, of the Secretary of Industry, Trade and Mining.

9. Hugo Nochteff, The Argentinean economy towards the end of the century: present fragmentation and absent development, (1998).

10. Alfredo Iñiguez. "Dimensions of the employment in the Argentina", in Employment and Globalization. National University of Quilmes. 1997.

11. Jorge Katz, "Structural reform and technological behavior…", February of 1.999.

12. The overvaluated peso that held down the exports and favored the imports, has affected the industrial sectors of the bourgeoisie, favoring the commercial bourgeoisie and of the services, including the owners of the privatized companies. On the other hand, the monetary stabilization, when impeding the transfer of cost to rise the sale price, like it was traditional in Argentina, at the time that determined the crash of the obsolete or less profitable companies, it forced the industrial bourgeoisie to look for an outcome lowering the labor costs based on the expulsion of workers and on an unprecedented increase of the work rhythms. In the 1980s the devaluation of the Peso, with its inflationary consequences, and in the 1990s the monetary stability, have demonstrated to be, as it is pointed out in the Transitional Program of IV International, two ends of the same rope with which bourgeoisie chokes the proletariat.

13. Data of magazine Market, 'Ranking of companies 1998', June of 1999

14. "The Latin American Multinationals". 1.999.

15. E. Basualdo, Página 12, August 1999.

16. Daniel Azpiazu, Privatization and regulation in the Argentine Economy. FLACSO. April of 1999.

17. Data of ' The Latin-American multinationals'. 1999.

18. Martha Manseo, "The new bloc of power and the new dominance model (1976-1996)", in The Argentinean Economy at the end of century (several authors), Buenos Aires, 1998.

19. National Census of 1991.

20. Roberto Benencia, 'Labor Transformations in the Argentine farmland', in Employment and Globalization, 1997.

21. Population Census of 1991.

22. Data of Revista Mercado, July of 1999.

23. MTSS, Report of Joint, December of 1998.

24. Data of the Economic National Census of the INDEC 1994.

25. This means a growth of 22% among the years 1969 and 1988, according to the data of the National Census of 1988.

26. The rate of labor precariousness indicates the relationship between the sum of the unemployed workers and the ones in part-time employment, and the total EconomicallyActive Population.

27. These global data belong to the last Census of the INDEC of May 1998. These have probably changed as a result of the recession of the last fifteen months in the country, but they illustrate the ratio of employed workers as to the unemployed.