The “Social Pact” as Anti-Inflationary Policy: The Argentine Experience Since 1973

Abstract

Inflation has long been a fact of economic and political life in Argentina. The Peronist government which assumed office in mid-1973 attempted to control inflation through the so-called Social Pact, a wage-price agreement of two years’ duration involving the leading labor union organization, a leading businessmen's organization, and the Argentine state. An awareness of the principal issues of the economic situation is essential to an understanding of the crisis of contemporary Argentina, and a description of the evolution of the Social Pact reveals some of the essential contours of the economic debate. But the importance of the Social Pact extends beyond mere economic considerations. The study of the latest Argentine experience with anti-inflationary policy suggests some generalizations about the nature of populist political movements, the symbolic functions of economic policy initiatives, and the functions of such policies in co-opting private economic actors and legitimating governmental interference with free market forces. It also reveals some important characteristics of Argentine politics, especially concerning relations between the state and private economic groups. With economic and political implications of comparative significance, the Argentine Social Pact is an important case study in political economy.