Persistent inequality: why Kirchnerism lost in Argentina

Why did Macri win the elections? Because of the falling price of commodities? The power of the media? A change in the mood of the population?. Español

Alejandro Grimson
10 April 2018

A man with crutches during a protest against the pension system reform, on December 18, 2017 in Buenos Aires, Argentina. (Photo by Gabriel Sotelo/NurPhoto/Sipa USA). AP Images. All rights reserved

This article is part of the series "Persistent inequality: disputing the legacy of the pink tide in Latin America" produced in alliance with the Institute of Latin American Studies and at the Instituite of Sociology of the Freie Universität Berlin.

On December 10, 2015, Mauricio Macri took office as president of Argentina. He had won 51% of the votes in the second run of the elections against the pro-government candidate Daniel Scioli. In the first two years of his mandate, he has taken a number of measures which steer the country in a neoliberal direction, changing the course taken by Néstor Kirchner’s and Cristina Fernández de Kirchner’s administrations in the previous twelve years.

What were the reasons for Macri's victory? The most widely shared explanations for this political change in Argentina mention, in the first place, changes in the economic landscape due to the fall in commodity prices.

What were the reasons for Macri's victory? The most widely shared explanations for this political change in Argentina – like similar ones in several other Latin American countries - mention, in the first place, changes in the economic landscape due to the fall in commodity prices. After the "tailwind" of soybean prices stopped, Argentina faced "external constraints" – basically, a lack of foreign currency - and thus came the end of the "populist" experiments and the "redistribution" processes.

A second explanation refers to the outstanding power of the media and the concentrated economic groups. A third explanation points out the change in the mood of the population, although for competing reasons. While critical analysts of Kirchnerism make reference to corruption, inflation and authoritarian traits, those closest to the former government suggest another thesis – namely, that the processes of social inclusion and upward social mobility alter the demands of the population and promote in some way a "turn to the Right".

Given that the difference between the two candidates was less than 3%, the causes are obviously complex. Let us focus here on specifically political reasons - among them, the particular way in which Kirchnerism interpreted and reacted to the fall in the price of commodities, to corporate power and to social changes.

Four years before Macri’s inauguration, Kirchnerism seemed an unbeatable political force. Cristina Kirchner had won 54% of the votes at the 2011 presidential elections, while her closest opponent got 17%. Kirchnerism, however, had always had to make arrangements to bring together heterogeneous sectors for its electoral successes. In 2003, Néstor Kirchner won only 22% of the votes; in 2007, Cristina Kirchner reached 45%. In none of these elections the votes they won could be considered wholly "Kirchnerist". But after its overwhelming triumph in 2011, Kirchnerism lost sight of this.

Let us briefly note two major previous conflicts. In 2008, agricultural producers staged large protests to oppose an increase in export taxes. This confrontation ended in a defeat for the government which, combined with the economic crisis, translated into a setback at the 2009 general elections.

The following years were the government’s most innovative period, as it shifted its policies to the Left on several fronts. First, it gave a strong boost to social policies: the right of all the unemployed with children to a salary (on condition that the children attended school and be vaccinated); the nationalization and expansion of retirement funds; the tying of wage increases to inflation (including the wages of domestic employees). It also expanded civil rights, such as equal marriage. In a similar vein, a new audiovisual communication services law was passed, aiming at democratizing the media, which was viewed as a declaration of war by the corporate groups.

At the start of Cristina Kirchner’s second term in 2011, both "the countryside" and the media monopolies were actively in the opposition, as did several small but powerful sectors of the traditional Right, and in a very different economic context from that of the years of economic growth (2003-2007 and 2010-2011). The so-called “external constraint” – that is, the lack of foreign currency (dollars) - was getting worse.

The toll in foreign currency terms of the growing energy imports was substantial. The decision to re-nationalize 51% of Yacimientos Petrolíferos Fiscales (YPF), the country's main oil company which had been privatized during the neoliberal boom of the 1990s, entailed a high level of tension with Spain, but received widespread domestic support. On the other hand, higher limits on the purchase of dollars, which were raised in 2012, increased discontent among the urban middle classes.

Argentines distrust national banks and tend to place these dollars in safe-deposit boxes or transfer them out of the country. This entails a constant flight of capital from the Argentine financial system

It should be borne in mind that the dollar works in Argentina quite differently than in other societies. Due to the country’s recurrent crises and devaluations of the national currency – which peaked in 1975, 1982, 1989 and 2002 -, the Argentine middle and upper classes choose to have their savings in dollars. This means that there is a constant private demand for dollars, especially when the dollar is comparatively cheap. Argentines, in addition, distrust national banks and tend to place these dollars in safe-deposit boxes or transfer them out of the country. This entails, of course, a constant flight of capital from the Argentine financial system.

A political problem was added to these growing economic difficulties: the death of Néstor Kirchner in October 2010 and the constitutional provision barring Cristina Kirchner’s re-election meant that the Front for Victory lacked a suitable candidate for the succession, capable of bringing together Kirchnerism as a whole. Some sectors interpreted the results in 2011 as an opportunity to push for constitutional reform so as to allow Cristina Kirchner to run again. But in order to do this, they needed to equal or improve on their past performance at the 2013 general elections.

Although the reelection project was never publicly stated, some significant Peronist leaders actively opposed it. The strong alliance between the government and trade unionism began to crumble in 2012 with the departure of the General Confederation of Labor’s leader, Hugo Moyano. Other important leaders, such as the governor of Cordoba, José Manuel De la Sota, and the former governor of the province of Buenos Aires, Felipe Solá, distanced themselves from the government.

But the main and most hurtful split was the one led by Sergio Massa, former Chief of Staff of Cristina Kirchner and mayor of the prosperous municipality of Tigre, who assembled an electoral front for the 2013 general elections which included radical and trade union sectors and received the support of Mauricio Macri. Massa defeated the Front for Victory in the Province of Buenos Aires and buried re-election hopes.

The distribution of political forces was, however, fragmentary and the government continued feeling strong before a divided opposition. But as the economic problems, the lack of dollars, the impossibility of carrying through new redistribution processes - which had, until then, reduced unemployment, poverty, unregistered work and inequality - combined into a grim reality, the president’s discourse focused on what she called the "won decade" – won, that is, in terms of economic growth and social inclusion.

However, beyond the debate on the achievements and shortcomings of these years, the problem for the government was actually another one: by focusing on "defending what had been achieved", it failed to come up with a new agenda for change and it did not build on any presidential candidate who could compete with Daniel Scioli – whom it refused to accept as a suitable continuer for its political project.

One of the most significant achievements of the Kirchner governments had been the successful restructuring of Argentina's external debt. 

Some serious external problems were added to these difficulties. One of the most significant achievements of the Kirchner governments had been the successful restructuring of Argentina's external debt. More than 92% of the creditors had accepted the government offers in 2005 and 2010 and an impossible-to-pay debt turned into a manageable budget chapter. The relation between debt and GDP and the debt in foreign currency were reduced. But now, faced with a new lack of foreign exchange, the government sought to return to the international credit markets.

With this aim in mind, it reached an agreement for debt settlement with the International Centre for Settlement of Investment Disputes (ICSID), with the Paris Club and with Repsol (for the expropriation of YPF). Following this, Judge Thomas Griessa issued a famous ruling in favor of the holdouts, or "vulture funds", which actually blocked payments from Argentina even to the 92% of the restructured bondholders. Even though the latter had accepted a huge depreciation on the nominal value of their assets, US justice asserted, after an appeal was made, the litigants’ right to the nominal value of their assets, plus interest.

Mauricio Macri, who was then Mayor of the City of Buenos Aires, declared that the court ruling should be complied with and payments be made immediately. Cristina Kirchner’s government could not settle the issue and was thus unable to access the credit markets. This seriously limited its room for manoeuvre. It devalued the currency in 2014 and had to put up with inflation.

All of this, however, does not explain the political errors which were made. Some powerful sectors had been opposing the government for several years, but they did not succeed in defeating Kirchnerism until 2015. This was due less to the former’s merits than to the fact that the latter did not generate a leader to take on the succession.

As Álvaro García Linera points out in the case of Bolivia, in Argentina Kirchnerism confused two different things: the building of political hegemony and the continuity of leadership. Establishing shared values, a certain world vision and a common direction is a challenge that has little or nothing to do with constantly seeking reelection.

The other significant problem Kirchnerism encountered is the fact that public policies produce social changes - but it went on as if those changes had not happened. Economic growth and labor and social policies increased social inclusion and the purchasing power of important sectors of the population.

The apparent middle-class paradox: the fatalistic thesis according to which any improvement in the purchasing power of the population implies that it will eventually lean to the Right.

This not only had an effect on their income, but also on their class self-perception. And here we meet the apparent middle-class paradox: the fatalistic thesis according to which any improvement in the purchasing power of the population implies that it will eventually lean to the Right - so that every process of redistribution is doomed to inflict its own political defeat.

The issue of the "emerging middle classes" condenses a series of political problems. We must differentiate between, on the one hand, objective sociological concepts of the middle classes by type of employment, educational level or income levels, and on the other hand, class self-perceptions. The latter refer to the subjective perceptions that individuals or groups have regarding their own position in society.

There are two crucial differences between objectivist sociological analyzes, where each person or family is part of a class or stratum, and subjective perceptions. First, people use different elements to consider themselves as belonging to a given class: whether or not they are employed, changes in the quality of their jobs, in the quality of their home, whether they own it or not, the college education for their siblings, the possibility of going on vacation. Second, while objectivism considers that each person belongs to one class only, people tend to think that they can belong to two or more classes at the same time.

Whereas people consider that "upper class" and "lower class" are always mutually exclusive, "working class" and "middle class" are not – at least, not always. In colloquial language, the term "middle class" in Argentina (and other countries) is used in a very different way than in the objectivist view. A significant part of the unionized workers consider themselves at the same time "working people" and part of the "middle class". Making the difference between objective classification and self-definition is a prime conceptual and political necessity.

The growth of employment and income improvement change the self-perceptions of broad sectors of the population. This what the "emerging middle classes" is about. For the traditional view, this generates a fatal paradox: the more the middle classes grow, the less people vote for the governments that generate them.

But this is a defensive reasoning which fails to analyze the political limitations of these governments. It is an indisputable fact that these governments partly solved serious problems of hunger and poverty, and that the middle classes grew in these years in the region. However, once the situation of these social sectors changed, people no longer demanded what had already been solved but raised new concerns and demands – new demands related to public services such as transport, security, education and desired levels of consumption.

The thesis according to which the beneficiaries of the redistributive reforms lean to the Right raises some serious conceptual problems.

The thesis according to which the beneficiaries of the redistributive reforms lean to the Right raises some serious conceptual problems. The post-neoliberal governments generated "middle classes" but failed to understand them. Today, a political project which does not include demands for services and transparency and which fails to deliver on some given levels of consumption cannot aspire to win over a majority of the voters in Argentina.

It could do so, in fact, after new consequences of neoliberal policies are felt again, but only while the damage is being repaired. If any political project wants to go beyond this, it needs to understand the perceptions, sensitivities and demands of a society with more middle-class sectors and less exclusion.

Aspirational dynamics produce not only new demands, but the identification of less privileged socioeconomic levels with more privileged ones. This is a very real problem which cannot be solved by rejecting and confronting the "aristocracy of labor" or the "middle classes". It should be addressed by analyzing the multiple causes of discomfort (which may include corruption, stubbornness, verticality, authoritarian attitudes, and inefficiency).

That is, the challenge here is to face the hard work of dismantling oppositional equivalences, instead of encouraging them through binary thinking, which undermines the capacity for hegemony. Political forces that think of themselves as representing "large majorities" need sensitivity – the ability to understand the feelings and class self-perceptions of the population they intend to represent and be helpful.

In 2012, when street protests against the government began on issues ranging from the availability of dollars to insecurity and corruption, several officials lambasted the "middle class". About the same time, a survey conducted in the Buenos Aires metropolitan area (13 million people) indicated that 78% of the inhabitants considered themselves to be middle, lower-middle and upper-middle class. In other words, a large part of Argentines were considering themselves again to be middle class.

But this was not a reason for spending the rest of their lives thanking the government leaders for it, as these sometimes seemed to expect. Argentines were instead beginning to have new demands and new hopes.

Possibly some of these demands could not be met by the government, but in any case the government could have led the building of a new agenda for the next stage. This did not happen: the government focused on "defending what had been achieved" and left the agenda for change in the hands of its still fragmented opponents.

Argentine society was divided into three sectors: about a third firmly pro-government, another third opposed to it, and another third with no fixed preference - the undecided -, who kept on changing their minds. Many of them had voted for Cristina Kirchner in 2011 and voted for Mauricio Macri in 2015.

In its last few years, Cristina Kirchner’s government addressed itself progressively less to that third of the population and increasingly radicalized its friend/enemy discourse, reinforcing the conviction of those already "convinced". Cristina Kirchner's speeches on national television, official television programs, government advertising and other symbols shaped what the opposition contemptuously called the "Kirchner narrative" – a narrative emphasizing the catastrophic situation of Argentina in 2002 and 2003, and the economic growth with social inclusion of the following decade.

From the point of view of Kirchnerism, this narrative was aimed at conferring an epic character to government policies and to forging a following of intensely convinced voters. However, towards the middle of Cristina Kirchner’s second term, as the economic problems grew, the epic was exacerbated and this had the effect of widening the gap between reality and social perceptions. The result was that the government distanced itself from the large and heterogeneous middle classes.

Scioli lost the elections by less than 3% of the vote. To say that Mauricio Macri won because of the low price of commodities is a gross simplification. 

An additional problem was that, since 2007, the government had destroyed part of the official statistics as a result of its manipulation of the inflation index. The official index was a misrepresentation, assumed by everybody, stating that inflation was less than half of what it actually was. So, having institutionalized a lie, its truths were severely weakened. All of this drained the Front for Victory’s political capital.

In the end, Scioli lost the elections by less than 3% of the vote. To say that Mauricio Macri won because of the low price of commodities is a gross simplification. For more than a decade, with some better and some worse moments, Kirchnerism had managed to bring together heterogeneous sectors. This is why it had become hegemonic. After 2011, the more homogenous it became, the less support it managed to arouse.

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