Inflation in Argentina during the Second Peronist Period (1973–76): A Post-Keynesian Interpretation

Abstract

This paper uses the Post-Keynesian approach to examine the surge of inflation in Argentina between 1973 and 1976. The pattern of inflation is compared with the changing course of the distributional conflict that characterised the episode. A description of the prevailing political and social context provides insight into Argentina's macroeconomic evolution. Two sub-periods are identified: one from June 1973 to October 1974 characterised mainly by a slowdown in inflation and an upturn in economic growth; a second, ending in the first quarter of 1976, during which the distributional conflict flared up again partly because of the rise in import prices and partly because the firms and workers involved enjoyed substantial market power and bargaining power. This led to an escalation of inflation and great variability in macroeconomic circumstances.

Notes

¹Heymann & Navajas (1989) also put the distributional conflict at the heart of their analysis of the Argentine economy for the period 1970–89. But not only does the period examined here receive little coverage (their paper concentrates mostly on the period from the late 1970s to 1987) but they attribute the conflict to the budget deficit and not to inflation. Richards (1997) investigates to what extent the distributional conflict in Argentina accounts for inflation, but for the period 1984–90.

²All quotes from sources not originally written in English are translated by the author of this article.

³This appointment, imposed by Perón, was a political choice to seek consensus. While Cámpora was identified as coming from the Justicialist party's left wing, Gelbard hailed from the sector of influence of Argentine private capitalism, representing domestically-owned small and medium-sized firms.

⁴The elements on which the Post-Keynesian theory is built are very similar to those postulated by Latin American structuralists from the mid-1950s onwards. Indeed, the model proposed by Taylor (1991) is close to the one developed here, and we may note that Taylor defines himself in this book as a structuralist, not as a Post-Keynesian economist. There was undoubtedly a cross-fertilization phenomenon between Post-Keynesian economists and structuralists at the time.

⁵Each figure in the paper shows the change in the distributional conflict compared with the position shown in the preceding figure: Figure 2 compared with Figure 1, and so on.

⁶The agreement granted a 13% pay rise across the board up to a 240 peso ceiling, a marked increase in social minima, a 4% cut in interest rates, and allowed many firms to adjust their prices.

⁷This solution was difficult to implement a fortiori in Argentina where the export sector was influential. A revaluation of the national currency relative to foreign currencies leads to a fall in exporters' real income (the value of exports in national currency falls).