Transnational discourse coalitions and monetary policy: Argentina and the limited powers of the ‘Washington Consensus’

Abstract

Why, in the era of neoliberalism, Argentinean monetary policymakers rejected the kind of flexible monetary exchange rates recommended by the ‘Washington Consensus’ remains a puzzle. The literature has mainly contrasted external and internal factors of influence and constraints to explain the country's peculiar road to neoliberalism. In this paper, discourse coalition theory is developed further to more fully capture the transnational configuration of the transnational discourse coalition behind the policy mix chosen under President Menem. In the course of deconstructing the Washington Consensus alliance and reconstructing the particular agents and agencies behind the currency board, apparently contradictory positions turn out to constitute a specific combination of neoliberal agents and agencies that are firmly embedded in the larger universe of the hegemonic discourse coalition of the Washington Consensus era, which has to be considered more heterogeneous than has been recognized by most observers.

Keywords:

• neoliberalism
• discourse coalition
• currency board
• Washington Consensus
• think tank
• expert network

Acknowledgements

I would like to thank two reviewers and Teresa Lynch for many valuable questions, comments and general advice. I am also grateful to Steve Hanke and Alan Meltzer who liberally shared information. Remaining errors of course are my own.

Notes

1. Simmons et al. (2008, pp. 10–17) discuss coercion as key mechanisms in diffusion processes.

2. Beltrán (2006, p. 11, FN 25) speaks of FIEL and CEMA in addition to Fundación Mediterránea, which harbors IEERAL, compare section 3section 3.

3. It appears to be a misunderstanding of structural dimensions of power if a fourth ‘postmodern’ dimension is separated by Hardy and Leiba-O'Sullivan (1998) to address discourse in particular since structure cannot be equated to ‘material’ (Plehwe et al. 2006, p. 23, FN 5).

4. Grove City College in Pennsylvania provides for a good example of the odd combination of Christian right wing and libertarian values (see http://www.gcc.edu/Faith_and_Freedom.php).

5. Benegas Lynch was sponsored by a right wing Spanish film maker and businessman, Joaquin Reig. Ayau (the first Latin American MPS president) and Reig belong to the core group of ‘frequent fliers’ to MPS conferences (Plehwe and Walther 2008).

6. N'Haux (1993, pp. 119f.) discusses the economic ideas of the founding father, industrialist and federalist Pedro Astori at length.

7. Economics Minister Rapanelli apparently refused to succumb to external pressures to prioritize international debt servicing at the expense of domestic needs whereas Alsogaray wanted to immediately resume international debt service in order to build trust with international finance (Birle 1995, p. 301). Rapanelli's successor Gonzalez attempted to consolidate the country with a policy mix of increasing revenue and severe austerity measures (in line with WC prescriptions).

8. Kellermann (2006) distinguishes laisser fairers, the international financial community, institutionalists, financial market stabilizers and globalization critics. Each group pursues different reform goals and has different instruments and mechanism of discourse power at its disposal. Kellermann's effort needs to be further refined in order to present a sufficiently differentiated picture of the interaction between different social forces. His US-centered perspective on the laisser fairers is too limited to capture the transnational neoliberal discourse coalition behind the currency board, for example. An organization centered analysis of discourse coalitions sheds additional light on neoliberal groups, which operate under the radar of expert observers (see Bair 2009).

9. Meltzer was a key person of the Kellermann's laisser fairer group of the WC era. The Mont Pèlerin Society's global reach and capacity of discourse generation and dissemination goes way beyond discourse power resulting from two level games and US veto power as described by Kellermann (2006, pp. 126f.).

10. Testimony before the Subcommittee on International Monetary Policy and Trade Committee on Financial Services United States House of Representatives, 5 March 2002. Available from: http://www.cato.org/testimony/ct-hanke030502.html [Accessed 27 April 2011].

11. If Cavallo was a latecomer to the specific institution of a currency board, the background framework of thinking in which the solution fit was laid long before Schuler's contributions. Cavallo completes the documentation of not just Argentine origins of his own orientation by way of specifying the influence of Hayek on his ideas about monetary systems (cited in Roig 2007, p. 13).

12. Steve Hanke has alerted me in a private communication to President Menem's personal encouragement in 1989 for writing the original study (Hanke/Schuler 1991), and to Alsogaray's particular weight in convincing the president with regard to the currency board. In addition to the writing of the authors who belong to the MPS circles mentioned so far (see Walters 1987 and Schuler's homepage), Anna Schwartz's work is important (Schwartz 1992, 1993).

13. Among the almost 300 ‘Cavallo boys’ hired (Dominguez 1997, p. 65) was Joaquin Alberto Cottani, for example, who obtained a Yale PhD in 1981. He joined Cavallo in 1991 as subsecretary for economic planning (Ramirez 2000, p. 173).

14. Hanke became an official advisor to Cavallo in 1995, which was the time of the Tequila crisis sending shock waves from Mexico to Argentina. His position ended with Cavallo's resignation in 1996.