Re: (OPE-L) Alberto Bonnet on the Command of Money-Capital and the Latin American Crises (Part 1)

From: John Holloway (johnholloway@PRODIGY.NET.MX)
Date: Fri May 02 2003 - 23:02:25 EDT


    thank you for putting up the article by Alberto Bonnet (who is in the
same group of left economists as Claudio Katz and Guillermo Gigliani). I'm
not going to comment on it, as I'm too close to it, but I would certainly be
interested in seeing comments by others (and in passing them on to Alberto,
of course).

>From: gerald_a_levy <gerald_a_levy@MSN.COM>
>Subject: (OPE-L) Alberto Bonnet on the Command of Money-Capital and the
Latin American Crises (Part 1)
>Date: Thu, May 1, 2003, 7:14 AM

>The following is a chapter by Alberto Bonnet from Werner Bonefeld
>and Sergio Tischler ed. _What Is To Be Done?_ (London, Ashgate)
>reported on by  John H in [8169].  The editors, in Ch. 1, wrote that
>"offers a critique of the Leninist theory of imperialism against the
>background of globalization and shows, with reference to Latin-
>America, that it is the insubordination of labour that is the key for
>the understanding of the fragility of global capital."
>This article was previously posted on another list.
>Any comments?
>In solidarity,  Jerry
>Chapter 6
>The Command of Money-Capital and the Latin American Crises
>Alberto R. Bonnet
>At the current time, more than three decades since the eruption of
>crisis put an end to the post-war capitalist order, the start-point
>anti-capitalist critique is that we live (or, more to the point,
>survive) in a new and distinct period of capitalist development.1
>Lenin was certainly one of the first theorists who dared to argue that
>capitalism went through distinct periods in its development (cf.
>McDonough, 1995; 1998). In effect, the phases that Marx had identified
>in Capital (manufacturing, large-scale industry) can, as such, be
>understood as formative moments of original European capitalism rather
>than periods of global capitalist development. Lenin‚?Ts idea that,
>towards the end of the nineteenth century or the beginning of the
>twentieth century, capitalism had entered into an ‚?~imperialist‚?T
>(Lenin, 1977) inaugurated a long tradition of attempts to periodize
>capitalist development. Great crises and wars, profound changes in the
>correlation of social forces between classes, moments of accelerated
>technological innovation or radical restructuring of the world market,
>would from then on be associated with the emergence of a new period of
>capitalist development.
>Numerous Marxists in this way identified a new period of capitalism in
>the period following the Second World War. From Mandel‚?Ts ‚?~late
>capitalism‚?T, through Boccar√°‚?Ts ‚?~state monopoly capitalism‚?T
>Aglietta‚?Ts notion of ‚?~Fordism‚?T, to Sweezy‚?Ts renovated
>capitalism‚?T; all the above highlight in their own way the
>of post-war capitalism.  However, whilst in some cases (re-vindicating
>their ‚?~Leninist orthodoxies‚?T) they emphasised continuities with
>to the ‚?~imperialist‚?T capitalism studied by Lenin, these post-war
>Marxists nonetheless dared to argue that the novelties of post-war
>capitalism were of at least a similar magnitude to the continuities,
>thereby worthy of sustained critical analysis.
>Naturally, this does not imply that contemporary analysts should be
>content with one of these aforementioned interpretations of post-war
>capitalism or with the Leninist interpretation of ‚?~imperialist‚?T
>capitalism. This contribution does not intend to review any of these
>interpretations. But, to take an example, Lenin‚?Ts theory of
>is profoundly questionable with respect to two of its fundamental
>pillars: first, his conception of monopoly (which supposes the
>of the law of value on a world market scale) and, second, his
>of the imperialist state (which presupposes an instrumentalist vision
>the state). It is necessary for us, then, to develop a critical
>of contemporary capitalism.
>In effect, we live in a period of capitalist development distinct from
>that associated with the transition between the nineteenth and
>centuries and that of the second half of the twentieth century. Its
>origin is to be found precisely in the crisis that brought post-war
>capitalism to an end, that is to say, in the rainbow of social
>that emerged in the late 1960s and early 1970s that included the
>rejection of work in the large automated factories of advanced
>capitalism, the rebellions against the Stalinist bureaucracies of
>Eastern Europe, and the national liberation struggles of the colonial
>South: struggles that were expressed in the form of a crisis that
>negated any possibility of a return to the capitalism of the post-war
>period. Thirty years later, however, this contemporaneous capitalism
>which we survive is already as old as the ‚?~thirty glorious years‚?T
>post-war capitalism, which, to tell the truth, were neither
>Various economic phenomena can be invoked to support the distinction
>between the capitalism of our days and post-war capitalism. A slowdown
>in the average growth rates of production, investment, employment,
>productivity and wages, for example, which contrasts notably with the
>accelerated expansion of trade and capital flows on a global level.
>Moreover, there has been a greater extension and integration of the
>world market, facilitated by the collapse of the bureaucratic regimes
>the East, alongside a persistent polarization of this world market
>centred on the regions associated with the United States, Europe and
>Japan. Indeed, contemporary capitalism is characterised by marked
>differentiation between the long-term economic performances of these
>poles and, concurrently, periodic episodes of deep recession with a
>or less generalized scope.
>However, the phenomenon that is most significant for making the
>distinction between contemporary capitalism and post-war capitalism is
>the expansion and socialization of debt. There can be little doubt
>the extreme importance of this factor. To appreciate this point it is
>enough to cast a glance at the sheer magnitude of the sums involved,
>the nature of financial instruments, at the behaviour of the actors
>involved, and at the functioning of the respective markets.
>Nevertheless, interpreting this phenomenon and understanding the role
>that it plays within contemporary capitalism is a source of much
>disagreement. These problems are the theme of this article.
>To explore the nature and role played by this expansion and
>socialization of debt means to explore the specific manner in which
>class struggle is developing today. In effect, it is necessary to
>dialectically interpret the process of debt expansion and
>as an expression of the antagonism between capital and labour. In
>words, it must be seen as a result of the wave of class struggle that
>led to the crisis of post-war capitalism and, at the same time, as a
>capitalist response to that wave.  As a capitalist response, this
>process instigated a new mode of the command of money-capital over
>capitalist accumulation. As a result of class struggle ‚?" and a class
>struggle that always returns to express itself as crisis ‚?" this
>is necessarily a command-in-crisis. In this sense the article stresses
>the command-in-crisis of money capital, and shall concentrate
>particularly on the manner in which the latter operates in the Latin
>Contemporary capitalism ‚?" a new period of capitalist development
>‚?" is
>associated in this manner with a new mode of command-in-crisis.2
>However, it is possible to go further and that is, to associate the
>capitalism of the imperialist period analysed by Lenin as a determined
>mode of command ‚?" the command that Lenin linked to the large
>companies and the integration between the imperialist state and
>financial capital ‚?" just as it is possible to associate a new mode
>command ‚?" the command-in-crisis of money-capital ‚?" to today‚?Ts
>capitalism. However, in Lenin‚?Ts work there existed a close relation
>between this mode of command and the composition, modes of
>and action, and programme of the working class. This bond is implicit
>each one of the pages of What is to be Done?3 Cearly there also
>exists a
>relation between the current command-in-crisis of money-capital and
>new global movements of anti-capitalist resistance, as shall be
>developed in the conclusion.
>In the Beginning was the Cisis
>In the beginning was the crisis: that is, the insubordination of
>that signified the disintegration of post-war capitalism.  A falling
>rate of profit began to undermine the conditions for accumulation in
>advanced Keynesian economies and these began ‚?" one after the other
>starting with the US ‚?" to plunge into stagflation. The central
>states that had played a key role in creating the conditions for
>expanded accumulation during the post-war period in turn entered into
>profound fiscal and political crisis.  The existing structure of the
>world market, in particular the monetary and financial order created
>Bretton Woods, disintegrated under the strains of international
>disequilibria that had no precedent. The configuration of the
>international state system that emerged during the Second World War
>was consolidated during the Cold War, predicated as it was on a
>reactionary ordering of inter-state relations around the Soviet and
>North American blocks, was similarly challenged through class
>The immediate reaction of capital before the unprecedented magnitude
>the crisis unleashed through the wave of class struggle was, like in
>other revolutionary conjunctures, a flight from the deteriorating
>conditions of accumulation.  In fact, it was a double flight.
>In the first place, there occurred a spatial flight through a process
>relocation of production to territories where the conditions for
>accumulation were more favourable (see Harvey, 1990; 1992). Certain
>countries that were economically more backward and subject to
>dictatorial political regimes were prime candidates for the reception
>uprooted productive processes. These specifically included the
>anti-communist bulwarks in East and Southeast Asia installed by the US
>in the Cold War and, to a lesser degree, particular Latin American
>A brief illustration helps make the point. The wave of workers
>in northern Italy that extended between the ‚?~hot autumn‚?T of 1969
>the ‚?~spring rebellion‚?T of 1977 had its epicentre in the strikes,
>occupations, confrontations and sabotage at the Fiat plant of Turin.
>Fiat management reacted, not just by replacing living labour with dead
>labour through the forced automation of the production process ‚?" an
>action which leads to a rise in the organic composition of capital
>ultimately, a fall in the rate of profit ‚?" but also by to relocating
>productive processes to the periphery.  In the words of one of their
>workers: ‚?~they have not used these profits in terms of investment in
>Italy ‚?" no, they have carried their cash abroad, and have set up
>factories in other countries. In Brazil, for example, or
>all those countries with regimes that are fascist‚?T (CSE/Red Notes,
>In effect, the workers‚?T struggles forced Fiat to relocate a portion
>its productive activities, including the production of complete models
>as well as specific auto parts, to plants in Latin American countries
>whose working class was then subject to the open repression of
>dictatorships. The corporation developed an investment plan and a
>process of vertical and horizontal integration in Argentina (Córdoba)
>between 1977 and 1982, finally selling its assets and concentrating
>regional activities in Brazil (Belo Horizonte, Río de Janeiro).
>Nonetheless, this relocation of production to territories where the
>conditions for accumulation appear more favourable has strict limits,
>which are far more complex than a simple cost-analysis of the
>process.  Fiat had already established itself in Argentina during the
>1950s and since the 1960s was producing cars for the local market. The
>‚?~hot autumn‚?T in Italy had been preceded by the Argentinean
>with its own strikes, occupations, confrontations and sabotage, and
>Fiat plant in Cordoba had been one of the epicentres (Brennan, 1996,
>James, 1990). It was only with the fierce military dictatorship that
>took power in 1976 that relations of force favourable to capital were
>established ‚?" by means of the persecution and assassination of union
>leaders, the prohibition of unions and strikes and other repressive
>measures taken by the state ‚?" and this enabled Fiat to carry out its
>restructuring plans ‚?" massive sackings and wage cuts ‚?" and
>provided the
>basis for its subsequent expansion.
>Hence, it is important to keep in mind that this same flight of
>from the insubordination of labour through relocation reproduces this
>same insubordination of labour in the periphery. As such, the
>insubordination of labour trails capital like its own shadow. The
>of capital from the insubordination of labour in the capitalist
>meets up with the insubordination of labour in the periphery. The
>Korean auto-workers strikes are illustrative of this point: the
>relocation of productive processes to the relatively backward
>of Southeast Asia ruled by anti-communist dictatorships, and with
>Korea at the forefront, ongoing since the 1970s, found itself
>by massive social struggles and crisis during the 1990s.4
>In the second place, the reaction of capital consisted in a flight in
>time ‚?" that is a massive process of the expansion of credit that
>postponed the unleashing of the crisis (see Holloway, 1994). The
>inflationary expansion of credit, still accompanied at this point by
>Keynesian economic policies, was the immediate reaction of capital to
>the crisis for much of the 1970s.
>Another case in point helps illustrate the issue. In response to the
>‚?~French May‚?T movement and the Grenelle accords in May and June of
>capital reacted by an inflationary expansion of credit that
>put an end to one of the key pieces of the post-war Gaullist political
>programme ‚?" the metal fetish of the Finance Minister, Rueff. Note
>exultant declarations of De Gaulle in the middle of the 1960s:
>We consider that international exchanges must be founded, as occurred
>before the great world disasters, in an unquestionable monetary base
>that does not bear the stamp of any particular country. On what base?
>reality, it is difficult to conceive in this respect of any other
>criteria, any other standard, other than gold. Yes, gold, whose nature
>does not change, that can be converted into bars, ingots or coins,
>has no nationality, that is considered in every place and in every
>as immutable value and fiduciary par excellence‚?¶With no room for
>no-one would think of imposing on a country the form of administering
>its internal affairs.  Nonetheless, the rule of gold (and certainly it
>is pertinent to say so) must be applied and followed anew in
>international economic relations. The supreme law is the need to
>balance, through the income and expenditure of gold, the balance of
>payments that result from exchanges between two monetary areas.5
>This reactionary dream of returning to the imposition of the
>deflationary discipline of gold on the working class succumbed a few
>years later to the Parisian barricades. In effect, the deterioration
>the French balance of payments ‚?" a product of the concessions won
>by the
>unions during the 1968 movement ‚?" prompted an anticipatory flight of
>capital that decimated the reserves and unleashed a devaluation of the
>franc (Mandel, 1976). Capital found itself forced to renounce the
>discipline of gold. Pompidou undertook a devaluation of 12.5 percent
>towards the middle of 1969 and, towards the end of the year at the
>meeting of the European Economic Community in The Hague, he agreed to
>the incorporation of the franc into the European monetary snake,
>implemented in April 1972. The new strategy, which succumbed in turn a
>couple of years later in the midst of new devaluations of the pound,
>lira, and the franc itself, would no longer hang its hopes on the old
>metallic fetish but would attempt to pin them squarely on the
>disciplinary capacity of the Bundesbank.
>Now let us look at this double flight of capital analytically. It is
>clear that both reactions, both modes of capital flight, suppose the
>metamorphosis of productive capital immobilised in production into
>mobile money-capital form. And, at the same time, both modes of flight
>imply an always uncertain gamble for capital ‚?" that of finding
>conditions for accumulation in new locations or at a future moment: a
>gamble which presupposes a future inversion of the metamorphosis, a
>return from the money-capital form to the productive-capital form
>alone is capable of exploiting living labour. However, whilst in the
>first case the two metamorphoses occur in a short time frame, in the
>second case they can remain separated on a more long-term basis. The
>insubordination of labour, for its part, can always refute capital‚?Ts
>gamble. But this refutation expresses itself in a different manner in
>both cases: in the first instance it is expressed as a crisis of
>profitability of relocated productive capital; in the second as the
>long-term impossibility of re-converting money-capital into productive
>Both modes of capital flight are related to each other, and both are
>characteristics of contemporary capitalism, as displayed by the
>expansion of foreign direct investment, of intra-firm trade, and of
>international financial flows. Nevertheless, we shall concentrate here
>on the second mode of capital flight, that is to say, the conversion
>ever-greater masses of productive capital into money-capital, because
>consider this process of expansion and socialization of debt (which we
>call the command-in-crisis of money capital) to be the mode par
>excellence in which the antagonism between capital and labour is
>manifested in contemporary capitalism. This means understanding this
>process as a result of the struggle of the working class and, in turn,
>as a capitalist response to the same.
>The Expansion and Socialization of Debt
>It could be said that the first of the two aforementioned moments is
>dominant one in the development of the crisis of post-war capitalism
>during much of the 1970s, while the second is the decisive moment
>the second half of the 1980s and 1990s. It could be said too that the
>capitalist offensive associated with the neo-conservatism arising in
>later 1970s and extending during the first half of the 1980s operated
>a sort of hinge between the two periods. However, as we shall see,
>process of expansion and socialization of debt is always both a result
>of and a response to class struggle, it is permanently both capitalist
>command and crisis.
>The previous periodization can be clearly illustrated through the
>perspective of Latin America and its foreign debt. The crisis of
>profitability that, since the end of the 1960s, undermined the
>conditions for accumulation in the stagflation-stricken advanced
>Keynesian capitalisms, gave dynamism in the 1970s to a sustained
>increase in international liquidity, that is to a sustained increase
>the offer of money-capital on international financial markets. In this
>sense, the financial recycling of the petrodollars accumulated by the
>OPEC countries as a result of the oil price hikes in 1974-75 and again
>in 1979-80, must be understood as a chapter in this wider process. The
>expansion of international credit, which during the 1970s was
>primarily through the credit expansion of international commercial
>and only secondarily through the international emission of bonds,
>developed at a rate of some USD 50,000 million annually between 1973
>1975, some USD 100,000 million annually between 1976 and 1978, and
>than USD 150,000 Million annually between 1979 and 1981, before
>abruptly because of the rise in interest rates.6 This expansion of
>international money-capital flows was not a response, therefore, to
>conjunctural effects of the rise in oil prices driven by the OPEC
>countries but, more profoundly, it was a response to the deteriorating
>conditions of profitability of the advanced capitalisms that were
>deep in crisis.
>The counterpoint to this expansion of international flows of
>money-capital was, quite naturally, the process of external
>of the peripheral capitalist countries and, in particular, those of
>Latin America. The annual net capital flows to Latin American
>climbed gradually at an average rate of USD 814 million between 1950
>1965 (equivalent to 1.2 percent of regional GDP) to some USD 4,042
>million between 1966 and 1973 (2.8 percent of GDP). From then, the
>increase accelerated, reaching averages of USD 14,956 million between
>1974 and 1976 (4.2 percent of GDP) and USD 28,861 million between 1977
>and 1981 (4.5 percent of GDP).7 In consequence, the total stock of
>American external debt had already ascended to USD 258,665 million in
>1980, a sum of which the major part was long-term public debt (USD
>146,198 million) and an important portion was short-term (USD 68,597
>million, against USD 42,458 million of long-term private debt and USD
>1,413 million owed to the IMF).8
>The immediate result of this process of Latin American indebtedness
>the postponement during the 1970s of the regional unleashing of the
>global crisis of post-war development (Ominami, 1987). The expansion
>credit operated once more as a ‚?~flight forward‚?T. However,
>starting from
>the debt crisis, which reached its apex with the cessation of payments
>by Mexico in 1982, this same foreign indebtedness turned out in the
>medium term to be the primary mode of expression of this very crisis
>a crucial instrument for the restructuring processes that constituted
>the response of capital. In other words, this foreign debt became the
>foremost regional expression of the command-in-crisis of money-
>The deflationary policies of disciplining labour ‚?" imposed by the
>neo-conservative offensive in the advanced capitalisms from the end of
>the 1970s (see Bonefeld, 1995a; Clarke, 1988; Marazzi, 1995, amongst
>others) ‚?" operated as a hinge between one period and the next. In
>effect, the monetarist turn that Volcker ‚?" then a functionary of the
>Carter administration ‚?" imposed on the Federal Reserve from October
>1979, replace the policy of interest rate control with a policy that
>tried to control the monetary base itself as the lynchpin of the
>deflationary strategy. In a technical sense, this policy of control
>already doomed to failure given that inflation originates in the
>internal contradictions of capitalist accumulation and cannot be fully
>manipulated in an exogenous manner by state monetary policy. It merely
>induced the deflation that propelled the North American economy to its
>most severe recession in the post-war period (North American
>like its British counterpart, fell in 1980-2). Monetary emission
>accelerated once again towards the middle of 1981 and the original
>monetarist policy, facing the threat of a generalised bankruptcy of
>major banks, was definitively abandoned. This threat originated in the
>bankruptcy of over-indebted North American companies and the cessation
>of payments by foreign debtors that, started by Mexico, threatened to
>extend themselves on a regional scale. Thus, the initial monetarism
>replaced gradually by a policy centred on the independence of the
>central banks: a policy less mechanical in its quantitative objectives
>and more orientated towards the discretional management of interest
>rates. It was modelled on the European monetary policy of the
>(see Kirshner, 1998).9 The monetarist restriction of credit returned
>boomerang fashion against capital itself.  Nonetheless, in the more
>political sense of an attempt at ‚?~monetary imposition of class
>through the subordination of the working class to the abstract
>of money‚?T (Bonefeld, 1995b, p.81), this monetarist policy of
>disciplining labour attained certain important successes in the
>capitalist centres. The upward movement of the average rate of profit
>during the 1980s is the most succinct indicator of this success.10
>Moreover, it is in this sense that the capitalist offensive associated
>with neo-conservatism operated as a sort of hinge between the two
>A more detailed analysis of this process is beyond the scope of this
>paper. It is important, however, to note that the rise in real
>rates prompted by monetarist policies also signified a key turning
>in the aforementioned process of Latin American external indebtedness.
>The reference interest rate for the region (i.e. the yield from US
>ten-year benchmark bonds) passed 15 percent during 1981 and the start
>1982 whilst annual dollar inflation fell from 12 to 2.5 percent.
>flows towards Latin American countries, which had reached a peak of
>39,804 million in 1981 (4.6 percent of regional GDP) consequently
>contracted to 20,133 million by 1982 and to an average of only 8,154
>million annually between 1983 and 1989 (1.2 percent of a severely
>diminished regional GDP).11
>In this manner the global crisis of post-war capitalism ‚?" which up
>this point had been postponed ‚?" unleashed itself upon the region,
>with an unprecedented depth: between 1970 and 1980 the GDP of the
>expanded by almost a factor of four (396 percent) whereas between 1980
>and 1990 it scarcely increased by one fourth (27 percent). In a number
>of years there was actually an absolute fall in production. The stock
>foreign debt and its impact, despite the massive outflow of
>money-capital during the decade, could not but increase in the wake of
>this poor performance. By the end of the 1980s, the total stock of
>American foreign debt had risen to USD 476,739 million: of this a
>part than in 1980 was long-term public debt (USD 355,893 million
>USD 77,487 million short-term) and a much smaller part (USD 25,061
>million) was long-term private debt, owing to various policies of
>assumption of private debt, and a significant part (USD 18,298
>was owed to the IMF for restructuring programmes. All the debt
>indicators had worsened:  the stock of debt represented 33 percent of
>the annual product of the region compared to 26.5 percent in 1980, and
>162 percent of exports in 1990 as against 88 percent in 1980.12
>After the abandonment of monetarist policies, North American interest
>rates in the second half of the 1980s ‚?" notwithstanding some severe
>fluctuations ‚?" tended to decrease until they reached a band between
>and 9 percent, while dollar inflation slowly recovered, reaching a
>of 6 percent at the end of the 1980s.  However, during the entire
>the advanced capitalist centres ‚?" and particularly the US ‚?"
>operated as
>a giant suction pump for international money-capital flows. The
>extraordinary expansion registered by the market for titles in North
>American public debt gives a clear indication of this trend. Their
>volume registered a more than four-fold increase during the 1980s,
>whilst their nominal underlying value rose from USD 973 thousand
>in 1980 to USD 4,144 thousand million in 1990.13  The expansion of
>now as public debt emitted in order to finance fiscal deficits derived
>from the military-Keynesianism of Reaganomics, once again constituted
>the clearest expression of the crisis.
>International flows of money-capital to Latin American countries,
>nonetheless, recovered in the 1990s. In effect, these flows had by
>already equalled the amounts reached prior to the debt crisis (USD
>37,211 million as compared to 39,804 million in 1981).  Moreover, they
>would amply surpass them during the following years (USD 61,682 and
>65,088 in 1992 and 1993; representing 5.2 percent of regional GDP as
>compared to the peak of 4.6 percent in 1981). The fall in North
>interest rates during the 1990-91 recession ‚?" holding to about 6 or
>percent during the first half of the decade ‚?" alongside stabilised
>dollar inflation of 2 to 3 percent annually prompted a new cycle of
>Latin American indebtedness.  However, this new cycle adopted various
>distinctive features as compared to its predecessor. Firstly, it was
>much more selective in its chosen debtors.  A small group of Latin
>American countries (Brazil, Mexico and Argentina in that order) along
>with another small group of Asian countries (China, Thailand,
>Korea and Malaysia) absorbed 70 percent of all lent money-capital.14
>Secondly, it is enough merely to invoke the names of these particular
>countries to draw attention to the fact that this new cycle of lending
>would turn to massive capital outflows and consequent financial crises
>that have characterised the 1990s (discussed further below).15
>it is, however, important to note that this cycle would be
>by the process of disintermediation of the banks and the conversion of
>debt into property titles.  These latter two factors created a process
>of indebtedness through investment in bonds and titles and,
>from portfolio capital investment.
>This disintermediation and conversion of debt into titles, which had
>already started in the 1980s, was consolidated in the 1990s
>through the mediation of the Brady Plan to restructure private debt.
>process was a reaction by the large international banks to the
>of payments and the danger of chain bankruptcies that characterized
>1980s. This is a significant point because it implies, alongside a new
>step in the process of debt expansion, a great advance towards the
>socialization of debt. Gradually, the large international commercial
>banks stopped being creditors, and were replaced by institutional
>investors such as pension funds, mutual funds and, to the degree that
>the quality of debtors decreases, speculative hedge funds. Debt was
>socialized through this displacement of creditors. It was socialized
>a perverse manner, of course: on the one hand, as the loss of a whole
>life‚?Ts savings by retired workers whose pension funds included
>titles in
>their portfolios; and on the other, through the bountiful short-term
>gains of speculators in hedge funds registered in exotic fiscal
>paradises yet, often enough, controlled by members of the very same
>Latin American bourgeoisie.
>This disintermediation and underwriting of debt implied, moreover,
>the debt came to be evaluated on a daily basis by international
>financial markets.  The spreads that resulted from this process of
>continuous market evaluation, accompanied by the country-risk
>evaluations released by credit-rating agencies, are prima facie
>instruments of the command of money-capital, as discussed further in
>following section.
>The Argentinean case serves to clearly highlight all of the new
>of this present cycle of Latin American foreign indebtedness. The
>Argentinean external debt grew from USD 61,300 million in 1991, after
>overcame the moratorium incurred between 1988 and 1990, to USD 124,300
>millions in 1997, just before contagion from the Southeast Asian
>rocked the region. Private debt operated as the motor of this
>as occurred in the rest of the region and, to a much greater extent,
>amongst the Asian debtors. As such, between 1991 and 1997 private debt
>moved from 14 percent of total debt to 39.8 percent and at the same
>it is estimated that local capital flows to the exterior, and invested
>in part in titles in this same foreign debt, grew from USD 60,400
>million to 96,400 million. This debt was progressively
>and converted into property titles during these years as the
>result of the restructuring of public debt foreseen in the Brady Plan,
>the emission of new public debt and the tendency of the local big
>bourgeoisie to directly finance itself through the emission of titles
>international markets. These bonds, which represented scarcely 10.3
>percent of total debt in 1991, grew to 54.1 percent in 1997.
>debt owed to commercial banks fell from 53.9 percent to 16.3
>It is unnecessary to dwell upon the pressure exercised upon the
>direction of internal policies by such debt evaluations, carried out
>behalf of investors represented by international financial
>and risk-analysis agencies. It suffices to note that in applying
>policies of ‚?~debt capitalization‚?T lauded by the IMF in its annual
>meeting in Seoul, 1985, Argentina is the country in Latin America that
>has gone furthest with debt-for-equity swaps, i.e. the privatization
>public companies in exchange for debt titles.

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