In mid-April, and midst a growing economic crisis, Argentine President Mauricio Macri announced a series of economic measures to stem rising inflation, including price controls and a Commercial Loyalty Law fining firms for disloyal competition. Few things are further from neoliberal orthodoxy than price controls or penalizing firms, but the label has been amply used to describe Macri’s administration. The promise to “defeat neoliberalism in 2019” is the opposition’s battle cry as the general elections approach.

I argue neoliberalism has become a shorthand whose usage does more harm than good. There are three (non-exhaustive) reasons why it is a problematic frame to understand Argentina’s predicament.

First, neoliberalism is a concept that over-simplifies multi-causal processes into a narrative frame presented as a coherent whole. It creates an “us versus them” dynamic crucial to identity formation, but if taken seriously, it has negative policy implications.

Policy-wise, if austerity policies are redefined as neoliberal, an anti-neoliberal party robs itself of basic tools to address a fiscal and monetary crisis. This opens the door for unorthodox and risky policies with unknown outcomes, or using tried and failed solutions from the past — as a key economic advisor to the opposition puts it: “a problemas viejos, soluciones viejas.

The third reason is political: to equate structural reforms with neoliberalism traps political discussions into a static frame that denies the country the ability to adapt to the important structural changes in the economy. In other words, this concept hinders a robust conversation about the causes of and solutions to Argentina’s long-run structural economic and social crisis.

Argentina’s troubled experience with neoliberalism

The term neoliberalism has had a powerful impact on how scholars, politicians and activists understand the complex process of globalization that occurred in Latin America after the 1980s. The region was home to some of the most transformational market reforms outside of the former Soviet Union, with Argentina a paradigmatic case.

President Carlos Menem (1989-1999) took credit for defeating hyperinflation by pegging the local currency to the U.S. dollar (a measure known as convertibility). He also passed a number of neoliberal reforms that were initially popular and included privatizations, trade liberalization, fiscal decentralization and labor reform.

However, the benefits of the reforms did not trickle down, as unemployment, labor informality, inequality and poverty increased.

By December 2001, a confluence of forces both endogenous (a weak government, severe austerity and an overvalued exchange rate) and exogenous (9/11, low commodity prices, dot-com bubble) left the country facing bankruptcy. The death knell for neoliberalism in Argentina was the International Monetary Fund’s (IMF) refusal to extend part of the country’s loan package. Immediately after, the country saw mass protests and looting, leaving 38 dead. President De la Rua resigned in disgrace and the country entered into a political crisis without precedent.

By January 2002, Argentina defaulted (the largest sovereign default in history) and devalued its currency by 300 percent. Poverty shot up to over 50 percent and inequality reached historic highs. The streets were taken over by the chant “¡Que se vayan todos!” (kick them all out), as public trust in the political system reached dangerously low levels.

Interim President Eduardo Duhalde (2002-2003) and his successor, Nestor Kirchner (2003-2007) were tasked with repairing the damage. Mirroring public sentiment, they attributed the crisis to neoliberalism and favored a greater role for the state in the economy. Although the crisis was partially a consequence of hasty market reforms that did not pay sufficient attention to its social costs, blaming neoliberalism was an oversimplification.

Accusing neoliberal reform and its largely foreign supporters (e.g., the IMF) for causing the crisis established a durable demarcation line in Argentine politics: states versus markets; national versus foreign. This framing let those who participated or supported Menem’s reforms like Néstor and Cristina Fernández de Kirchner absolve themselves of their role in the process by demonizing neoliberalism, which they did throughout the twelve years of their statist administrations (2003-2015).

Former President Cristina Fernández de Kirchner defines neoliberalism in her recent autobiographical book Sinceramente as “las políticas de saqueo,” or “looting policies.” She describes it as a doctrine that proposed that “everything public was horrible and the State is good for nothing” (todo lo público era horrible y que el Estado no sirve para nada; p. 180). This sentiment is echoed by many to point fingers at the current administration. Union leaders define Macri as a “neoliberal” and his government as “the worst for workers.” A domestic worker argues Macri’s “neoliberal” government “does not favor the people.”

Neoliberalism is an empty signifier for a multiplicity of meanings that, as political scientist Ernesto Laclau argued, function to bond disparate groups into a unified bloc against another bloc. It works most effectively when it is embodied, and Macri is the current embodiment.

Macri is no neoliberal

To be sure, the current government is much more pro-market than its predecessors — but that does not mean it is neoliberal.

After almost a full term, the evidence shows Macri does not believe that the state “no sirve para nada.” He has not privatized assets nationalized under the previous government (Aerolíneas Argentinas, YPF). He has maintained sector-level collective bargaining, restarted under Nestor Kirchner. He has increased access to social programs like the conditional cash transfer program, Asignación Universal por Hijo and subsidized utility and transportation rates (tarifa social) for the poorest. He also retained Kirchner-era non-contributory pensions.

Macri refused to impose shock therapy (associated with neoliberalism) in favor of gradualism, or a patient decline in the budget deficit. He wanted to avoid a social and political crisis that could have threatened governability — no non-Peronist government has finished its term since 1928.

To do this, Macri tapped international credit markets (the previous government was locked out of markets and used inflationary money printing to cover the fiscal deficit) to finance Argentina’s fiscal gap he inherited. Macri’s cosmopolitan and pro-market discourse turned him into an emerging market darling. In his first two years in office, Argentina borrowed $85 billion and sold an unprecedented 100-year bond.

Under Macri, the role and size of the state remained basically unchanged from the Kirchner era. What changed was Macri’s unwillingness to continue subsidizing loss-making state-owned firms. He arrested the unsustainable increase in public employment and ended expensive and regressive energy and transportation subsidies whose benefits disproportionately went to middle and upper classes in Greater Buenos Aires.

Initially, as inflation declined and growth accelerated, the country’s social indicators improved. Poverty fell from 32 percent in mid-2016 to 26 percent in late 2017 — a decline of 1.7 million people. Inequality, measured by the GINI index, remained stable and low by regional standards.

But the bonanza was not to last. In mid-2018 jitters about Argentina’s capacity to repay increased after the U.S. Federal Reserved increased interest rates and the country suffered the worst drought in decades. Markets were also unsettled by what was seen as political interference in monetary policy, which put the Central Bank’s autonomy in question. In a matter of weeks, Argentina was in dire straits requesting, and receiving, an IMF loan of over $57 billion — the Fund’s largest ever.

The veto of international markets and Macri’s underestimation of the depth of Argentina’s crisis forced him to impose strict austerity measures and forgo gradualism. The consequences were so severe that poverty returned to its 2016 levels and may surpass those levels by the end of 2019.

To soften the blow of austerity ahead of the October elections, Macri imposed policies reminiscent of his predecessor: price controls on basic goods, laws regulating competition, freezing utility prices and export taxes. Those demanding strict neoliberal reform accuse Macri of imposing “kirchnerismo de buenos modales.” To characterize Macri’s administration as neoliberal, or to caricature him as a “extreme rightwinger,” as former Greek Finance Minister Yanis Varoufakis did, unduly simplifies the complex interaction between historical, institutional and economic variables that explain the current conjuncture.

Demonizing neoliberalism hurts policy

And yet the notion of neoliberalism is not productive for Macri’s opposition, either. If self-identified anti-neoliberal forces like the Alberto Fernández-Cristina Fernández de Kirchner ticket win the October election, they face an uphill battle to resolve Argentina’s deep structural issues.

Like Macri, they will be heirs to decades-long issues of high inflation and poverty coupled with high debt from the Macri years. Reconciling this complex set of demands in a period of scarcity will not be easy. The reluctance by kirchnerismo to use orthodox (“neoliberal”) fiscal and monetary tools such as high interest rates or restricting public employment growth, denies them the resources most countries in the region use to successfully control inflation and rein in the deficit.

Framing policies as neoliberal (thus bad) creates spaces for heterodox and often risky alternatives that usually fail. At her informal campaign launch event, vice-presidential candidate and former president Cristina Fernández alluded to reviving the social pact of Juan Perón’s last presidency that imposed strict price and wage controls. That attempt ended in failure as the budget deficit ballooned leading to the Rodrigazo (the first shock therapy in Argentina) in 1975. The chances of a success for a social pact with a much weaker mandate than Perón’s and in a globalized economy are even lower.

At the same event, she also reaffirmed her protectionist policies appealing to President Donald Trump to defend her stance. She said, “Look what is happening in the United States. … Some realized that they had to return to generate industrial employment inside the country to generate wealth again.” But most economists agree protectionist policies hurt the economy through higher prices, increasing rent seeking and reducing competitiveness.

This policy uncertainty is a reason for Argentina’s elevated country risk (second highest in the world before Venezuela). The concerns of international markets were articulated by the Managing Director of the IMF, Christine Lagarde when she warned, “it would be foolish on the part of any candidate to turn their back to the work that is underway.”

But there is another serious consequence of these retrograde policies: they leave Argentina unprepared for a future defined by automation and artificial intelligence. A World Bank report shows Argentine workers are among the most exposed to automation, with 60 percent of occupations susceptible to it. Many of Argentina’s labor policies, trade policies and regulations are decades old, lagging behind the rest of the world and threatening its economic viability.

Argentina needs to put its politics on a new, productive axis that goes beyond the frames of the past to confront the potential benefits and costs of a 5G powered AI-based economy. Abandoning the polarizing and misleading framework of neoliberalism is a key step in doing so.

Nicolás Saldías (@NicSaldias) is a researcher at the Wilson Center’s Argentina Project and a PhD Candidate in Political Science at the University of Toronto. The views expressed in this article are his own.