Javier Milei addresses a rally organised by the far right Vox party in Spain, November 2022. Source: Wikimedia Commons.

Into the abyss: On the Argentinian elections.

As Argentina lurches to the right, Adam Fabry, Lecturer in International Political Economy at the National University of Chilecito, Argentina, analyses the rise of Javier Milei, the crisis of Peronism and the prospects for Argentina’s future.

On 22 October, voters in Argentina went to the polls to elect their new president. The far-right libertarian economist Javier Milei, who run a campaign promising, amongst other things, that he would blow up the central bank, dollarise the economy, and wield a chainsaw to cut public spending, won a sweeping victory, obtaining 55.69 percent of the votes (14 million votes). His rival, Sergio Massa, the economy minister of the current Peronist government, won 44.3 percent of the vote (11 million votes).

Elections against the backdrop of a deepening economic and political crisis

Argentina’s sharp swing to the right comes amid a deepening economic and political crisis. Inflation has increased by more than 100 percent under four years of Peronist rule. It currently stands at more than 140 percent and shows no signs of decreasing in the near future. The ratio of public debt to GDP is above 85 percent, and the central bank has no liquid reserves (public debt exploded under Mauricio Macri’s conservative government and has remained more or less stable under the Peronist government). According to the latest forecasts, the economy will shrink by 2.5 percent in 2023, and future growth prospects will be severely limited by austerity measures imposed by the IMF.

The post-pandemic labour market is characterised by precarity and increasing flexibility. Although unemployment only stands at 6.4 percent, nearly 50 percent of Argentine workers work in the growing informal sector, which is characterised by precarious working conditions and high rates of overemployment. Many workers are forced to work long overtime hours or work multiple jobs in the growing ‘platform economy’ to survive. With the economic crisis deepening, poverty rates have been rising dramatically: the National Statistics and Census Institute (INDEC) reported that 40.1 percent of the population – 11.8 million people – lived below the national poverty line in the first half of this year (a nearly 5 percent increase compared to the post-pandemic). What’s even sadder is that 56.2 percent of children under 14 currently live below the poverty line.

Faced with a bleak economic situation and almost daily corruption scandals, it is perhaps not surprising that Argentine voters are increasingly angry and dissatisfied with the current political elite. Since the 2001 crisis, when Argentina’s financial system collapsed in a matter of weeks, and the country was forced to declare bankruptcy, a two-party system has been consolidated in Argentina, dominated by the centre-left Peronists and a coalition of centre-right parties. And perhaps is not surprising, that a ‘populist’ candidate won the elections in a country where populism has been a defining part of politics for eighty years.

In Argentina, ‘populism’ is equated with the name of General Juan Domingo Perón, who ruled the country from 1946 to 1955, when he was removed from power in a military coup. According to its supporters, Peronism is a progressive ideology that represents the interests of the working class and supports the active economic role of the state. Critics, however, associate Peronism with a Latin American version of ‘national populism’ or, even worse, ‘fascism’. Although it is undoubtedly a complex political movement, Peronist ideas have been popular with the electorate: since 1946, Peronists have won 10 out of 14 elections.

But all this does not explain why Milei’s radical ideas became so popular among voters.

Anger, liberty, and free markets: Javier Milei and the ascendancy of the Argentinian far-right

It is hardly an overstatement to say that Javier Milei’s rise to the presidency has been somewhat unusual. In his CV we find, for example, that we he was a semi-professional footballer (until the age of 19), he also tried his fortune as a rock musician and tantric sex guru (with little success), before working as an economics professor and financial consultant for large multinational companies. such as Corporación América or HSBC. From the mid-2010s onwards Milei started to gain considerable fame in Argentina thanks to his role as an ‘expert’ on right-wing radio and television shows. While this enabled Milei to promote his radical economic ideas (his favourite economists include Ludwig von Mises, one of the leading representatives of the ‘Austrian school’ and a fierce critic of socialism, and Milton Friedman, the founder of the ‘monetarist school’, whose ideas also had a profound influence on evolution of neoliberalism) to a large audience, he also gained a reputation for the foul language and aggressive rhetoric with which he dismissed his critics. In November 2017, for example, he declared that the country’s most famous economics department (at the University of Buenos Aires, UBA) was ‘a Marxist indoctrination center from which Keynesian beasts spread.’ A year later, he celebrated his birthday by smashing a piñata of the central bank on live television. While most pundits dismissed Milei as a more eccentric version of Donald Trump (he is nicknamed ‘The Wig’ or ‘The Madman’), by 2019 the news magazine Noticias named him as one of the most influential persons in Argentina. Not long after, Milei burst into the Argentinian political scene.

In July 2021 Milei formally established the La Libertad Avanza (Freedom Advances) party, a coalition of conservative forces (although it was later revealed that the party also enabled neo-Nazis and apologists of the last military dictatorship to join its ranks). The party promoted a combination of neoliberal economic policies and conservative social values, in order to ‘once again make Argentina a prosperous country, like it was in the early 1900s.’ Although the party lacked significant finances, it won 13.82 percent of the vote (238,797 votes) in the 2021 legislative elections in Buenos Aires, placing it third behind the right-wing Juntos por el Cambio (Together for Change) and the Peronist Frente de Todos (Everyone’s Front). As a result, Milei was able to enter the Argentine House of Representatives.

At his electoral rallies, which mimicked rock concerts, Milei frequently combined hyper-individualist ideals – endlessly repeating his support for the triple shibboleth of ‘life, liberty, and private property’ – with ‘populist’ outbursts against the country’s parasitic ‘political caste’, who he blames for the country’s century-long economic decline. However, Milei and his supporters conveniently failed to mention the fact that his party has been financed by one of the richest Argentinians, the airport- and media magnate Eduardo Eurnekian. He often ended his campaign speeches with the catchphrase: “long live freedom, goddammit.” His simple and uncompromising rhetoric is particularly popular among young, disillusioned men, who spend a lot of time on social media and many of whom were first-time voters. To them, Milei offered a radical libertarian economic policy programme: he promised to blow up the central bank and dollarise the economy, privatise most state-owned companies, drastically cut public spending, and abolish the public health- and education systems (it should come as no surprise that the future president’s political role model is Margaret Thatcher). Although many of Milei’s economic proposals were based on outright lies – such as the misconception that ‘the “freest” countries in the world have the highest economic growth and that this is due to minimal state intervention’ – this apparently did not bother Milei or his supporters.

Milei combines his radical economic programme with authoritarian ideas and proposals. Similar to Trump and Bolsonaro, he describes anthropogenic climate change as a ‘socialist lie’, and he has openly denied that the last military dictatorship (1976-83) committed crimes against humanity and stated that he would pardon military officials imprisoned for such crimes. At the same time, he promises to legalise firearms, based on the lie that ‘the crime rate is much lower in countries where firearms are legalised.’ Like his far-right bedfellows mentioned above, Milei has also declared a war against the country’s powerful feminist movement, which contributed to the legalisation of abortion in 2020 following years of massive street protests, and promised to abolish ‘compulsory sex education’ (Educación Sexual Integral, ESI), in public schools, on the grounds that it is part of a ‘post-Marxist conspiracy’ that ‘seeks to destroy the family.’

The crisis of Peronism

Although the difficult economic situation, the growing disenchantment with the political establishment, and the mainstream media favourable treatment of Milei all played an important role in his rise, his sweeping victory would not have been possible without the crisis of Peronism (and the trade unions, which have historically been closely linked to it, both ideologically and economically). After winning the 2019 elections, the Peronist government led by Alberto Fernández promised to implement economic measures to improve social welfare. However, when the government accepted to repay the debt accumulated by the previous conservative government, led by Mauricio Macri, to the IMF, this idea quickly turned into an illusion. Later, the IMF itself admitted that the bailout package offered to the Macri government ‘did not achieve its objectives’ and that it ‘contributed to the outflow of capital, which put significant pressure on the exchange rate.’

By July 2022 the pressure on the Argentine peso became increasingly unsustainable, prompting infighting within the government between the supporters of vice-president Christina Fernández de Kirchner, who urged for a leftist-turn in economic policies, and the more centrist Alberto Fernández. As a result, the country changed economy ministers twice in little more than a month, before Fernández appointed Sergio Massa as the new ‘super minister’ (he took over three previously independent ministries: economy, production development and agriculture). The decision surprised many since Massa had no economic experience), although he was considered a ‘pragmatic, old fox’ within the Peronist party, who had supported all the ideological turns of the party, from the neoliberal politics promoted by president Carlos Ménem in the 1990s to the national-populist turn under president Nestor Kirchner (2003-7), during his political career.

Massa inherited a difficult economic situation with economic growth coming to a halt, inflation climbing towards 100 percent, and mounting income inequalities. According to one report, during the four years of Macri’s government and the first two years of Fernández’s government, the working class transferred 70 billion US dollars to the sectors of capital, with most of this occurring under Fernández’s rule. In other words, workers were becoming poorer and the rich were becoming richer under the Peronist government. However, although most Argentinians were already under severe economic strain, Massa opted to introduce austerity measures in an attempt to restore ‘fiscal order’ and ‘restore the confidence of the markets’. Moreover, he offered tax breaks and state subsidies to large domestic and international companies (mainly in the agricultural, mining, and energy sectors), hoping that these measures would contribute to the rise of the economy. When his measures backfired, Massa blamed Argentina’s deepening economic and social crisis on everything from the pandemic, through the war between Russia and Ukraine, to the historic drought that severely limited agricultural output. Meanwhile, the Peronist trade unions watched on at the unfolding tragedy with raised hands. The end result was, perhaps usurpingly, that large sections of the working- and popular classes abandoned the Peronists in the recent presidential elections.

What next for Argentina?

According to William Callison, Milei’s outlook represents ‘a reactionary mutation of neoliberalism in response to crisis conditions.’ In this regard, Milei is the latest embodiment of the long-standing tradition of ‘neoliberal authoritarianism’ in Latin America (amongst his predecessors we find such dark figures, as Augosto Pinochet, Jorge Videla, Alberto Fujimori, and Jair Bolsonaro). While Milei was swept to victory on popular backlash against Argentina’s economic and political crisis, Callison notes that his dogmatic ideas are unsettling international financial markets. In the immediate aftermath of his victory in August primary elections, the value of peso and dollar bonds collapsed, recalling the reaction of financial markets to former British Prime Minister Liz Truss’ radical neoliberal reforms in 2022. The Financial Times recently quoted an adviser from a London-based investment firm, who questioned whether Milei will be able to implement his economic policy ideas and that: ‘There’s concern about … governability – to what extent he will be able to control protests if he were able to implement his radical measures.’ Meanwhile, the Wall Street Journal has questioned Milei’s flagship policy of dollarising the economy, arguing that it ‘may work better on YouTube than in reality.’

Financial markets and foreign investors seem to be hoping that ex-president Macri, who backed Milei in the second round of the presidential elections, will be able to keep Milei in check (although there is little indication that he will be successful in his quest). However, for now, Milei is pushing full steam ahead. In his victory speech, he assuredly announced a new era of ‘shock therapy’ in Argentina, arguing that these measures are necessary to ‘put an end to inflation, unemployment and poverty.’ History tells us that Milei’s shock therapy will only deepen poverty and inequality in Argentina. The question is, what will the newly elected president do if he faces serious social opposition to his economic policies? Will he try to crush any opposition by force, as the military dictatorship successfully did from 1976 to 1983, or will he bow to popular pressure and change direction?