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

From: gerald_a_levy (gerald_a_levy@MSN.COM)
Date: Thu May 01 2003 - 09:14:05 EDT


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
Bonnet:

"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




Introduction

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
for
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
better
understood as formative moments of original European capitalism rather
than periods of global capitalist development. Leninâ?Ts idea that,
towards the end of the nineteenth century or the beginning of the
twentieth century, capitalism had entered into an â?~imperialistâ?T
period
(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 Mandelâ?Ts â?~late
capitalismâ?T, through Boccaráâ?Ts â?~state monopoly capitalismâ?T
and
Agliettaâ?Ts notion of â?~Fordismâ?T, to Sweezyâ?Ts renovated
â?~monopoly
capitalismâ?T; all the above highlight in their own way the
specificities
of post-war capitalism.  However, whilst in some cases (re-vindicating
their â?~Leninist orthodoxiesâ?T) they emphasised continuities with
respect
to the â?~imperialistâ?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,
and
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 â?~imperialistâ?T
capitalism. This contribution does not intend to review any of these
interpretations. But, to take an example, Leninâ?Ts theory of
imperialism
is profoundly questionable with respect to two of its fundamental
pillars: first, his conception of monopoly (which supposes the
abolition
of the law of value on a world market scale) and, second, his
conception
of the imperialist state (which presupposes an instrumentalist vision
of
the state). It is necessary for us, then, to develop a critical
analysis
of contemporary capitalism.
In effect, we live in a period of capitalist development distinct from
that associated with the transition between the nineteenth and
twentieth
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
struggles
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
in
which we survive is already as old as the â?~thirty glorious yearsâ?T
of
post-war capitalism, which, to tell the truth, were neither
â?~thirtyâ?Tnor
â?~gloriousâ?T.
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
of
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
more
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
about
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,
at
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
socialization
as an expression of the antagonism between capital and labour. In
other
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 â?" and a class
struggle that always returns to express itself as crisis â?" this
command
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
America.
Contemporary capitalism â?" a new period of capitalist development
â?" 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 â?" the command that Lenin linked to the large
monopoly
companies and the integration between the imperialist state and
financial capital â?" just as it is possible to associate a new mode
of
command â?" the command-in-crisis of money-capital â?" to todayâ?Ts
capitalism. However, in Leninâ?Ts work there existed a close relation
between this mode of command and the composition, modes of
organization
and action, and programme of the working class. This bond is implicit
in
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
the
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
labour
that signified the disintegration of post-war capitalism.  A falling
rate of profit began to undermine the conditions for accumulation in
the
advanced Keynesian economies and these began â?" one after the other
starting with the US â?" to plunge into stagflation. The central
reformist
states that had played a key role in creating the conditions for
expanded accumulation during the post-war period in turn entered into
a
profound fiscal and political crisis.  The existing structure of the
world market, in particular the monetary and financial order created
at
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
and
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
struggle.
The immediate reaction of capital before the unprecedented magnitude
of
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
of
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
of
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
dictatorships.
A brief illustration helps make the point. The wave of workers
struggles
in northern Italy that extended between the â?~hot autumnâ?T of 1969
until
the â?~spring rebellionâ?T of 1977 had its epicentre in the strikes,
occupations, confrontations and sabotage at the Fiat plant of Turin.
The
Fiat management reacted, not just by replacing living labour with dead
labour through the forced automation of the production process â?" an
action which leads to a rise in the organic composition of capital
and,
ultimately, a fall in the rate of profit â?" but also by to relocating
productive processes to the periphery.  In the words of one of their
workers: â?~they have not used these profits in terms of investment in
Italy â?" no, they have carried their cash abroad, and have set up
factories in other countries. In Brazil, for example, or
Argentinaâ?¦in
all those countries with regimes that are fascistâ?T (CSE/Red Notes,
1979,
p.195).
In effect, the workersâ?T struggles forced Fiat to relocate a portion
of
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
military
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
its
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
relocation
process.  Fiat had already established itself in Argentina during the
1950s and since the 1960s was producing cars for the local market. The
â?~hot autumnâ?T in Italy had been preceded by the Argentinean
cordobazo
with its own strikes, occupations, confrontations and sabotage, and
the
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 â?" by means of the persecution and assassination of union
leaders, the prohibition of unions and strikes and other repressive
measures taken by the state â?" and this enabled Fiat to carry out its
restructuring plans â?" massive sackings and wage cuts â?" and
provided the
basis for its subsequent expansion.
Hence, it is important to keep in mind that this same flight of
capital
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
flight
of capital from the insubordination of labour in the capitalist
centres
meets up with the insubordination of labour in the periphery. The
recent
Korean auto-workers strikes are illustrative of this point: the
relocation of productive processes to the relatively backward
countries
of Southeast Asia ruled by anti-communist dictatorships, and with
South
Korea at the forefront, ongoing since the 1970s, found itself
confronted
by massive social struggles and crisis during the 1990s.4
In the second place, the reaction of capital consisted in a flight in
time â?" 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
â?~French Mayâ?T movement and the Grenelle accords in May and June of
1968,
capital reacted by an inflationary expansion of credit that
definitively
put an end to one of the key pieces of the post-war Gaullist political
programme â?" the metal fetish of the Finance Minister, Rueff. Note
the
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?
In
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,
that
has no nationality, that is considered in every place and in every
time
as immutable value and fiduciary par excellenceâ?¦With no room for
doubt,
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
of
the French balance of payments â?" a product of the concessions won
by the
unions during the 1968 movement â?" 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 â?" that of finding
improved
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
which
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 capitalâ?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
capital.
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
of
ever-greater masses of productive capital into money-capital, because
we
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
the
dominant one in the development of the crisis of post-war capitalism
during much of the 1970s, while the second is the decisive moment
during
the second half of the 1980s and 1990s. It could be said too that the
capitalist offensive associated with the neo-conservatism arising in
the
later 1970s and extending during the first half of the 1980s operated
as
a sort of hinge between the two periods. However, as we shall see,
this
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
in
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
expressed
primarily through the credit expansion of international commercial
banks
and only secondarily through the international emission of bonds,
developed at a rate of some USD 50,000 million annually between 1973
and
1975, some USD 100,000 million annually between 1976 and 1978, and
more
than USD 150,000 Million annually between 1979 and 1981, before
slowing
abruptly because of the rise in interest rates.6 This expansion of
international money-capital flows was not a response, therefore, to
the
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
mired
deep in crisis.
The counterpoint to this expansion of international flows of
money-capital was, quite naturally, the process of external
indebtedness
of the peripheral capitalist countries and, in particular, those of
Latin America. The annual net capital flows to Latin American
countries
climbed gradually at an average rate of USD 814 million between 1950
and
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
Latin
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
was
the postponement during the 1970s of the regional unleashing of the
global crisis of post-war development (Ominami, 1987). The expansion
of
credit operated once more as a â?~flight forwardâ?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
and
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-
capital.
The deflationary policies of disciplining labour â?" 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) â?" operated as a hinge between one period and the next. In
effect, the monetarist turn that Volcker â?" then a functionary of the
Carter administration â?" 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
was
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
production,
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
was
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
Bundesbank
(see Kirshner, 1998).9 The monetarist restriction of credit returned
in
boomerang fashion against capital itself.  Nonetheless, in the more
political sense of an attempt at â?~monetary imposition of class
relations
through the subordination of the working class to the abstract
equality
of moneyâ?T (Bonefeld, 1995b, p.81), this monetarist policy of
disciplining labour attained certain important successes in the
advanced
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
periods.
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
interest
rates prompted by monetarist policies also signified a key turning
point
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
of
1982 whilst annual dollar inflation fell from 12 to 2.5 percent.
Capital
flows towards Latin American countries, which had reached a peak of
USD
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 â?" which up
to
this point had been postponed â?" unleashed itself upon the region,
and
with an unprecedented depth: between 1970 and 1980 the GDP of the
region
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
of
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
Latin
American foreign debt had risen to USD 476,739 million: of this a
larger
part than in 1980 was long-term public debt (USD 355,893 million
against
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
state
assumption of private debt, and a significant part (USD 18,298
million)
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 â?" notwithstanding some severe
fluctuations â?" tended to decrease until they reached a band between
7
and 9 percent, while dollar inflation slowly recovered, reaching a
peak
of 6 percent at the end of the 1980s.  However, during the entire
decade
the advanced capitalist centres â?" and particularly the US â?"
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
million
in 1980 to USD 4,144 thousand million in 1990.13  The expansion of
debt,
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
1990
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
American
interest rates during the 1990-91 recession â?" holding to about 6 or
7
percent during the first half of the decade â?" 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,
Indonesia,
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
Thirdly,
it is, however, important to note that this cycle would be
characterised
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,
secondarily,
from portfolio capital investment.
This disintermediation and conversion of debt into titles, which had
already started in the 1980s, was consolidated in the 1990s
particularly
through the mediation of the Brady Plan to restructure private debt.
The
process was a reaction by the large international banks to the
cessation
of payments and the danger of chain bankruptcies that characterized
the
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
in
a perverse manner, of course: on the one hand, as the loss of a whole
lifeâ?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,
that
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
the
following section.
The Argentinean case serves to clearly highlight all of the new
features
of this present cycle of Latin American foreign indebtedness. The
total
Argentinean external debt grew from USD 61,300 million in 1991, after
it
overcame the moratorium incurred between 1988 and 1990, to USD 124,300
millions in 1997, just before contagion from the Southeast Asian
crisis
rocked the region. Private debt operated as the motor of this
expansion,
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
time
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
disintermediated
and converted into property titles during these years as the
converging
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
in
international markets. These bonds, which represented scarcely 10.3
percent of total debt in 1991, grew to 54.1 percent in 1997.
Meanwhile,
debt owed to commercial banks fell from 53.9 percent to 16.3
percent.16
It is unnecessary to dwell upon the pressure exercised upon the
direction of internal policies by such debt evaluations, carried out
on
behalf of investors represented by international financial
organisations
and risk-analysis agencies. It suffices to note that in applying
policies of â?~debt capitalizationâ?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
of
public companies in exchange for debt titles.


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