The Free-Market Fundamentalism of Argentina’s Javier Milei

On Monday, as political analysts (and many Argentines) anxiously sought to digest the election of the far-right firebrand Javier Milei as the next President of South America’s second-largest economy, investors cheered. In New York, prices of Argentinean stocks and bonds rose sharply, with the value of Y.P.F., an oil and gas company that is majority-owned by the state, closing up forty per cent. “This is the opportunity for a new beginning,” Jorge Piedrahita, the founder of Gear Capital Management, told Bloomberg.

Argentina could certainly do with a fresh economic start. A century ago, after the development of steamships first enabled the export of beef and other perishable products to Europe and North America, its G.D.P. per capita was comparable to those of many Western European countries. Today, it lags far behind them. Since 2000, it has defaulted on its sovereign debt on three occasions. During the past couple of years, a lengthy drought has devastated the country’s agricultural sector. The economy has fallen into a recession, and the inflation rate has reached 142.7 per cent. Four out of ten Argentines are living in poverty, and, in the past four years, the value of the Argentine peso has fallen by more than ninety per cent against the U.S. dollar.

Milei, a fifty-three-year-old economist, initially attracted attention by appearing on a late-night television show. He blamed Argentina’s political class for the country’s economic woes and promised to blow things up. Although he directed much of his fire at the center-left Peronist parties that have been in power for much of the past twenty years, he also criticized the center-right government of Mauricio Macri, which was in office from 2015 to 2019, for not being conservative enough. If he was elected, he told voters, he would slash government spending, cut taxes, make a bonfire of government regulations, replace the Argentine peso with the U.S. dollar, and abolish most government agencies, including the Central Bank. “Today marks the end of decadence in Argentina,” he declared at his victory party.

Some accounts have compared Milei to Donald Trump as a right-wing populist with authoritarian sympathies. (He has downplayed the crimes of the military dictatorship that murdered thousands of Argentines between 1976 and 1983.) When it comes to economics, however, the comparison falls short. Although Milei and Trump are both self-styled economic nationalists, the Argentinean has no time for the protectionism that Trump espouses, or for telling manufacturers where to situate their plants. The intellectual inspirations for Milei’s hard-line economic libertarianism include Milton Friedman and Robert Lucas, two illustrious University of Chicago economists, and Murray Rothbard, a less famous New Yorker who helped to introduce the Austrian school of free-market economics to the United States. (Milei owns five English mastiffs, four of which are named Milton, Robert, Lucas, and Murray; the fifth is called Conan, after the Barbarian.)

Milei grew up in Buenos Aires. After a short spell as a goalie for the professional soccer team Chacarita Juniors, he shifted to economics, obtaining two master’s degrees and working for several financial companies, including HSBC, the international bank. In a revealing interview with The Economist in September, Milei recalled how it was reading an article by Rothbard, who died in 1995, that turned him into an “anarcho-capitalist”—someone who believes that the economy should be organized purely based on private contracts, and that the welfare state is “the enemy.” Milei said that he was still an anarcho-capitalist, intellectually speaking, but that he also recognized some of the difficulties associated with putting this philosophy into action. So, in practical terms, he was a “minarchist”—a believer in making the state as small as possible by confining its functions to defense and law enforcement.

Milei’s free-market fundamentalism places him more in the ultra-Reaganite camp than in MAGA nation. In the Latin American context, he is the heir to General Pinochet’s Chicago Boys, who liberalized the Chilean economy during the nineteen-seventies and eighties at the point of a gun, and to Domingo Cavallo, the neoliberal Argentinean minister of the economy who pegged the peso to the dollar in the nineties. However, it is one thing to espouse radical ideas as an economic commentator or a protest candidate. Putting them into effect is another, especially in a country as divided as Argentina.

The hurdles that Milei faces are formidable. Having ruled out implementing his policies by Presidential decree, he will have to get them through the bicameral legislature, which is dominated by the parties of the center-right and center-left. Even if Macri’s party, Together for Change, were to support Milei’s proposals in the lower house, he would still need to win over some of the Peronists in the Senate. That seems unlikely.