In 2019, I spent three months in Buenos Aires conducting f ieldwork for my PhD, much of this time based at the Universidad Torcuato di Tella as a Visiting Researcher. Whilst there, aside from my own research agenda, there were also ongoing discussions with colleagues about one of the university’s former master’s students: Javier Milei.
Whilst advocating for a fringe doctrine, right-libertarian economics, Milei was becoming an ever more prominent television personality, very frequently appearing across Argentine TV and generating significant debate.
This was an election year, won by the Peronist Alberto Fernández. But even though Milei did not put himself and his economic doctrine to the vote at that time, his views were already presented in a combative manner—as a radical alternative to the state-led redistributive policies that had been a hallmark of left-leaning Peronist governments in Argentina since the 1940s.
THE DOGMA OF MINIMAL STATE
Also known as anarcho-capitalism, right-libertarianism is both a political philosophy and economic theory. It is grounded in the concept of a minimal state that does not intervene into free market processes and acts a subsidiary to the private sector even in ownership of land, natural resources and infrastructure.
Advocates of the doctrine argue that, should a society have liberty and autonomy from a centralised state, it would organise itself through integration into the free market, while private agencies would assume the role of the state apparatus in areas of security.
Even though Milei had cultivated these views for decades, they gained traction in Argentinian politics only by the time he was first elected to Congress in 2021.
Milei’s anti-establishment and anti-statism rhetoric—he argued that a programme of deep austerity was the only way to fix the economic crisis, as illustrated by his frequent appearances with a chainsaw to decimate the state— was embraced by an electorate weary of the political status quo. Driven by a strong desire for change, Argentinians overwhelmingly elected him as President in November 2023.
At the time of Milei’s election, poverty levels had reached 40% and the Central Bank had no currency reserves to pay a $913 million repayment as part of an $44 billion IMF loan agreement.
Moreover, the Fernández administration’s policy of money printing to support welfare subsidies had led the annual inflation rate to hit 210% with December 2023’s monthly figures alone showing increases of 25.5%.
The country’s economic woes were aggravated by a three-year drought with a negative impact on Argentina’s major agricultural exports, a significant source of revenue.
SHOCK THERAPY
Part of Milei’s shock therapy to address the crisis has been to devalue the peso from nearly 400 to 800 pesos to one US dollar to try and close the gap between the official and black-market exchange rates in Argentina—the ‘Dollar Blue.’
Milei’s broad attack on state expenditure essentially means raising spending by less than inflation and thus delivering real terms cuts. This approach has been most damaging in pensions which dropped by 40% in real terms year-onyear. Wages also suffered real-term cuts, losing 21.3% in the public sector while minimum wages depreciated by 28.8% between November 2023 and May 2024.
While pushing Argentina into a deep recession, these austerity measures have cooled the level of inflation, which fell to 4.6% in June 2024. They have also allowed the government to post fiscal surpluses, with more tax receipts than money spent since April 2024. All of this has been much vaunted by financial markets and the IMF.
The eyes of the libertarian world are looking towards Argentina in what has been termed a ‘Libertarian Laboratory
Such policies, meanwhile, have brought significant hardship to the lives of Argentines. The devaluation of the peso and the removal of energy and transport subsidies have all contributed to an 80% rise in the cost of living. According to the Universidad Católica de Argentina, poverty in the country reached 57% by February, while homelessness in Buenos Aires alone was up 14% in May year-on-year.
Even the consumption of Argentina’s world-famous beef is beyond the reach of many citizens. Recent reports predict that the beef consumption in 2024 will be the lowest since records began in 1914 with consumption in the f irst quarter down 18.5% on the same period in 2023. Thus, whilst tourists and wealthier Argentines might feel little concerned by the crisis, it is the growing length of queues outside the 38,000 Argentine soup kitchens that may come to define Milei’s legacy.
REALITY CRASH-TEST
The eyes of the libertarian world are looking towards Argentina in what has been termed a ‘Libertarian Laboratory.’ And whilst it is too early to say whether the medium- and longer-term economic impacts will be any vindication of the doctrine, what has already become clear is that the most radical policies sought by Milei have faltered when they have intersected with political realities.
Milei submitted a major package of reform bills aimed at eviscerating the state whilst bestowing upon himself emergency powers to enact major f iscal adjustment policies. The Ley de Bases contained over 600 articles when first submitted to the Chamber of Deputies but was withdrawn by the government in February 2024 when members of Congress lower house heavily amended it.
A much-reduced package of 238 articles aimed at deregulation and liberalisation of the economy passed in June 2024—with votes lent from a centre-right coalition—but without the privatisation of major state owned entities earlier earmarked by Milei: Radio y Televisión Argentina (RTA), Aerolíneas Argentinas and the Argentine post off ice. Also removed was a major pension reform that would have jettisoned some state liabilities for pension provision to millions of informal sector workers.
The package that ultimately passed was watered-down significantly and did not include the more radical policies with the level of fiscal adjustment advocated by the anarcho-capitalist during the election campaign, showing an early failure in Milei’s strategy.
Moreover, a growing conflict over one policy—the removal of bus subsidies in Buenos Aires—is pitting Milei against some of the very same centre-right politicians who lent their vote to pass his legislation, fuelling political opposition that could threaten his ability to pass legislation and to govern.
Social resistance could also prove to be a problem. Unsurprisingly, the programme of austerity has led to mass mobilisations and general strikes in protest at the brutal austerity cuts. And whilst Argentina is no stranger to mass mobilisations, they are unprecedented insofar as they are occurring so early in a presidential term.
As Milei has remained inflexible, there are early signs that what he is cutting—especially free public higher education—will undermine the sustainability of his libertarian programme as a part of his own voters have already joined the protest movement.
Congressional intervention has so far led to a libertarianism reality-check. T he policies passed by Congress are less radically right-libertarian and more closely aligned with the laissez-faire neoliberal policies of deregulation, privatisation and market-led policies, last seen in Argentina on this level under Carlos Menem in the 1990s.
However, that neoliberal experiment pushed Argentina to the brink by 2001, and again a little over two decades later. Argentines have not forgotten the f inancial crisis and social unrest; neither should Milei.
By Matt Barlow
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