Policy Research in Macroeconomics

From Chile in 1973 to Argentina and Türkiye in 2023: Economic Genocide Continues

President Erdogan, Macri, 2018 Image By Casa Rosada (Argentina Presidency of the Nation), https://commons.wikimedia.org/w/index.php?curid=74813664

In Memory of Andre Gunder Frank

A slightly edited version of this article first appeared in the Economic & Political Weekly on 11 May 2024.

Economic Genocide

The concept of economic genocide originated in an article published in 1976 in this journal [Economic & Political Weekly]. In his open letter titled “Economic Genocide in Chile: Open Letter to Milton Friedman and Arnold Harberger,” Andre Gunder Frank (1976) gave a brief summary of the Chicago-style economic policy the military dictatorship started to implement after the 11 September 1973 coup d’état, which ended as:

— and restructure production and then redirect investment to permit the still greater promotion of “non-traditional” exports of food, raw materials and manufactures at the expense of the Chilean consumers, whose most essential needs are sacrificed more and more, by an intentional, calculated and forcibly imposed Chicago/Junta policy of economic genocide.

What Frank termed the policy of economic genocide later came to be known as the neoliberal economic programme, a free-market principles-based economic programme first experimented in Chile and then started to spread around the globe after the Deng-Volcker-Thatcher-Reagan Revolution of 1978–80 (Harvey, 2005). The Bretton Woods twins, the International Monetary Fund (IMF) and the World Bank have been the key actors in promoting and enforcing the neoliberal policies.

Argentina and Türkiye were among the early adopters of the programme, much like Chile. Argentina embraced it after the coup d’état of 24 March 1976, while Türkiye did so following the coup d’état of 12 September 1980. Accompanying these coups d’état were stand-by agreements with the IMF, lending agreements that require the borrowing country to observe IMF-imposed conditions and are subject to periodic reviews in order to continue to draw upon it. In Argentina, the agreement was shortly after the coup d’état (Nelson, 2017), while in Türkiye, it was shortly before (Cömert and Öncü, 2023a).

Neoliberal Trajectories: Argentina versus Türkiye

In Cömert and Öncü (2023a, 2023b), we offered a comprehensive analysis of the neoliberal programme’s trajectory in Türkiye, spanning from the 12 September 1980 coup d’état to the presidential election of 28 May 2023. I note only that despite several severe crises, Türkiye’s adherence to the programme has remained relatively steadfast, with only minor deviations.

In contrast, the implementation of neoliberal policies in Argentina has been marked by more turbulence. The country experienced three distinct high-intensity neoliberal periods from the 24 March 1976 coup d’état to the presidential election of 19 November 2023: firstly, from 1976 to 1981 during the Junta period; secondly, from 1989 to 2001, encompassing the presidencies of Menem for the first decade and de la Rúa afterwards, and finally, from 2015 to 2019 under the presidency of Macri.

In Öncü (2014), mainly focusing on the debt accumulation that led to the historic Argentine default of 2001, I provided a historical account of the period from the 24 March 1976 coup d’état to the end of the second and longest high-intensity neoliberal period, which concluded with the collapse of the de la Rúa government on 20 December 2001. Four days later, on 24 December 2001, the second day of the presidency of Adolfo Rodríguez Saá, the caretaker president the Congress elected for three months to call for elections, Argentina halted payments on the $132 billion debt it owed.

From Neoliberalism to Neodevelopmentalism: Argentina

Six days later, Saá resigned, after which the Congress elected Eduardo Duhalde as the caretaker president to complete de la Rúa’s term. However, rather than serving the full term, Duhalde called for early elections, which were scheduled for 27 April 2003. With this election, Argentina shifted away from neoliberalism towards what Marini (1978) termed neodevelopmentalism, a reformist path the transitional government of Duhalde opened.

Implemented during the governments of Néstor Kirchner (2003–2007) and Cristina Fernández de Kirchner (2007–2011, 2011–2015), this neodevelopmentalist program reaffirmed the notion of state intervention as a means to foster economic growth and social inclusion, achieved through enhanced wages and social policies (Féliz, 2019). Moreover, the orthodox faith in unrestrained capital flows and free trade was replaced with acceptance of capital controls, conservative foreign indebtedness, and domestic funding for investments.

While I refrain from analysing neodevelopmentalism and its implementation in Argentina, I acknowledge Marini’s (1981) argument that such reformist programmes inevitably fail to initiate new development paths. Instead, they lead to social crises, forcing a choice not between reform and revolution but between revolution and counterrevolution. In Argentina, the counterrevolution took the form of Mauricio Macri’s victory in the second round of the 2015 presidential elections on 22 November 2015, marking a return to neoliberalism.

Back to Neoliberalism: Argentina

Within a week of taking office on 10 December 2015, Macri lifted the capital controls imposed by Argentine authorities during the second term of Cristina Fernández de Kirchner as his first move. It is worth mentioning that not the neodevelopmental Fernández de Kirchner but the neoliberal de la Rúa had to impose the first 21st century Argentine capital control, restricting indiviuals’ foreign exchange purchases to $1000 on 30 November 2001, 20 days before his government collapsed. Macri then started a massive transformation of the economy from neodevelopmentalism back to neoliberalism. His moves included allowing the level of the currency to be determined by market forces, putting in place an inflation targeting framework for monetary policy, eliminating subsidies and export taxes, cutting government spending, and other neoliberal paraphernalia—all of which were supported by the IMF.

It took two and a half years for these policies to produce the expected results. The central government’s budget deficit and gross financing needs experienced a significant rise, contributing to the escalation of central government debt from $241 billion to $321 billion within its initial two years, with 70% of this debt denominated in US dollars or other foreign currencies. Furthermore, with the release of capital controls and the reversal of import compression, the current account deficit as a percentage of Gross Domestic Product (GDP) tripled between 2014 and 2017. This, combined with debt amortisation, led to a dramatic increase in gross external financing needs (IMF, 2018).

Substantial capital inflows, primarily directed towards financing the increase in central government debt, resulted in a considerable appreciation of the peso, although economic growth remained sluggish (Ocampo, 2020). Subsequently, Argentina experienced a recession marked by high inflation and, in April 2018, after a steady depreciation of the peso versus the US dollar in the first quarter of the year, a capital exodus from the country ensued, exacerbating balance of payments pressures that forced the Macri government to sit at the table with the IMF once again to sign yet another stand-by agreement on 7 June 2018 (IMF, 2018).

On 20 June 2018, the IMF approved a three-year stand-by arrangement for Argentina totaling $50 billion, which was subsequently increased to $57 billion in September of the same year. In exchange, Macri committed to implementing stricter fiscal and monetary policies and ensuring central bank independence, which led to further deterioration of the economy. At the close of Macri’s presidency, GDP had contracted by 3.4%, inflation had soared to 240%, and poverty rates had surged. Furthermore, despite the IMF loan, the loss of confidence among residents and nonresident creditors worsened, resulting in a sudden stop in external financing. Nearly $50 billion left the country by the end of 2019, transitioning the currency crisis into a debt crisis as Argentina’s central government debt to GDP ratio climbed to approximately 90% in 2019. Indeed, on 19 February 2020, the IMF staff classified Argentina’s $323 billion sovereign debt, about $52 billion of which was due in 2020 and about $37 billion was due in 2021, as unsustainable. Let me mention also that on 2 September 2019, about three months before the end of his term, Macri reimposed capital controls aimed at containing the country’s escalating financial crisis.

Back to Neodevelopmentalism: Argentina

With the presidential election on 27 October 2019, Argentina saw the defeat of Macri and the neoliberal agenda, signaling a return to neodevelopmentalism under a three-faction coalition within the divided Peronist Party. Alberto Fernández, who leads one of these factions, was elected president.

After the new administration took office, it adopted a protectionist productive policy, channelling resources to support the industrial sector. However, the onset of the COVID-19 pandemic necessitated a shift in focus towards preserving the existing productive capacity rather than expanding it. The government implemented various measures to support businesses and individuals to ensure the resilience of production capabilities and household incomes. Despite the economic recovery in 2021, internal divisions within the government escalated following the ruling party’s loss in the legislative elections, leading to a political crisis marked by tensions between key figures (Schteingart, 2024).

This turmoil resulted in multiple changes in the cabinet, including significant appointments in key ministries such as Productive Development and Economy, which saw two replacements each in 2022. The government’s internal dynamics stabilised when Sergio Massa, a key governing coalition member, assumed control of the Ministry of Economy, consolidating power. However, the new administration struggled to address mounting macroeconomic challenges worsened by one of the worst droughts in Argentine history in 2023. Persistent economic stagnation and soaring inflation contributed to the defeat in the presidential election on 19 November 2023, resulting in the election of a libertarian far-right “outsider” economist, Javier Milei, as president (Schteingart, 2024), proving Marini right again: reformist programmes inevitably fail, leading to a choice not between reform and revolution but between revolution and counterrevolution.

Prelude to AKP Rule: Türkiye

As mentioned earlier, Türkiye’s commitment to the neoliberal programme has remained relatively steadfast but this does not mean that there were no bumps along the way. While Türkiye has not undergone the alternating cycles of neoliberalism and neodevelopmentalism seen in Argentina, akin to the low-intensity (1981-1985) and medium to low-intensity (1985-1989) neoliberal phases (Nelson, 2017), it did experience a hiatus in neoliberal reforms between 1990 and 2001 (Akçay, 2024).

As Akçay points out, the labour movement resurged in 1989, buoyed by orchestrated actions by trade unions known as the Spring Movement, in response to a decrease of approximately 20% in real wages between 1980 and 1989. This resurgence underscored the challenges faced by conventional stabilisation strategies, which relied on price competitiveness and surplus extraction through wage suppression. Throughout the 1990s, social movements, including the labour movement, actively opposed the authoritarian neoliberal state and thwarted extensive privatisation efforts.

Despite economic challenges and political instability, the labour movement played a crucial role in shaping opposition discourse and delaying the comprehensive implementation of neoliberal reforms. Notably, the decade witnessed the formation of 11 different governments, reflecting a robust labour movement presence and recurring economic crises. This combination of factors ultimately led to the complete breakdown of Türkiye’s mainstream political establishment. Consequently, the Justice and Development Party (AKP) assumed power as an Islamist “outsider” after the November 2002 elections (Akçay, 2024).

From Orthodoxy to Unorthodoxy: Türkiye

In Cömert and Öncü (2023a, 2023b), we discussed the political economy of the now 22-year-long AKP rule in Türkiye in detail. While in Cömert and Öncü (2023a), we provided a historical account of the evolution of the AKP-led strictly orthodox neoliberal policies until the crisis of 2018, in Cömert and Öncü (2023b), we examined how the Central Bank of the Republic of Türkiye (CBRT) transitioned from orthodoxy to unorthodoxy in its implementation of monetary policy after the 2018 crisis.

To recap briefly, the transition from orthodoxy to unorthodoxy in monetary policy began after Recep Tayyip Erdoğan, the leader of the AKP, granted himself the legal authority to appoint and dismiss a long list of high-ranking civil servants, including top officials of the CBRT, through a decree following his second presidency win in the presidential and general elections on 25 June 2018. Since the early days of the AKP rule, Erdoğan has advocated for interest rate reduction. Consequently, debates over the independence of the CBRT, a hallmark of orthodoxy, have persisted. This move further intensified these debates.

Indeed, after granting himself the authority to appoint and dismiss the CBRT governors, none of them, except the current one, served their full five-year terms. Erdoğan removed each of them from their posts through decrees. Only time will tell whether the current CBRT governor will meet a similar fate.

The unorthodox policy tools the CBRT employed in the period that started after the August 2018 currency shock included imposing implicit but strict capital controls disguised as macroprudential measures, lowering the policy rate in an inflationary environment in conjunction with currency depreciation, claiming free-float while a crawling-peg is self-evident, and running a currency swap-based short currency position to the tune of $60 billion, to name a few. Additionally, the foreign exchange-protected deposit accounts introduced after the December 2021 currency shock, which led to a loss of about 880 billion Turkish Liras for the CBRT in 2023, are worth mentioning also.

While there is no consensus on whether the December 2021 currency shock was an intentional devaluation or an accident, the statement made by Nureddin Nebati, the Treasury and Finance Minister at the time, on 6 June 2022, reveals that this unorthodox departure from orthodox neoliberalism was hardly neodevelopmental:

We preferred to grow with inflation. Otherwise, we could have taken very harsh measures to reduce inflation. With this system, except for low-income earners, manufacturing firms, and exporters are making profits. The wheels are turning.

When viewed as a whole, it is clear from Nebati’s statement that this policy framework aimed at increasing capital profitability through a wholesale attack on labour. The result was a severe distribution shock, unprecedented in Türkiye’s history. Even though GDP growth has continued, income and wealth inequalities have deepened, real wages have declined, and the share of labour in the national income has sharply decreased, while the share of capital has risen (Orhangazi, 2024). However, with this unorthodox monetary policy, foreign creditors, most of whom left the country after the 2018 currency shock, further lost confidence, exacerbating the depletion of external financing options for the structurally hard currency-dependent Türkiye. Hence, the unorthodox monetary policy experiment was not sustainable and had to be abondened.

In the face of a deepening cost of living crisis due to worsening inflation, and despite it, the AKP coalition secured a majority in the Parliamentary General Election on 14 May 2023. Following this, on 28 May 2023, Erdoğan emerged victorious in the second round of the Presidential Election, marking his third term as President of Türkiye. As Erdoğan promised before the election, he made a U-turn, replacing his old economic team with orthodox neoliberals led my Mehmet Şimşek, one of his former economy czars whose views hardly fall short of Milei’s, as his Treasury and Finance Minister.

Şimşek in Türkiye, Milei in Argentina: Economic Genocide Continues

Şimşek took the helm of the Turkish economy six months before Milei took office in Argentina. Erdoğan appointed Şimşek as the Treasury and Finance Minester on 4 June 2023, while the inauguration of Javier Milei as president of Argentina took place on 10 December 2023. Erdoğan also sacked the governor and all of the deputy governors of the CBRT, replacing them with strictly orthodox neoliberal economists, although the governor was actually an industrial engineer. The governor could last only eight months, after which one of the deputy governors, Fatih Karahan, replaced her.

Almost everyone now recognises that rapidly removing the implicit but strict capital controls, disguised as macroprudential measures, imposed during the unorthodox monetary policy period would amount to collective suicide in an emerging economy like Türkiye under existing conditions. Consequently, most of these capital controls remain intact, although some have been gradually relaxed. However, from 4 June 2023 (the day Şimşek assumed his post) to 19 July 2023 (the Friday after the second monetary policy meeting of the CBRT), the Turkish Lira depreciated against the US dollar by about 23% in three jumps, despite all of the capital controls imposed before the Şimşek team took the helm remaining intact.

While the claim that this was an intentional devaluation cannot be verified, the likelihood of it being accidental is close to zero. Furthermore, although the Şimşek team has denied the existence of a crawling peg of the Turkish Lira to the US dollar, the presence of a crawling peg from 28 August 2023 to 31 March 2024 (the day of the local elections) is evident from the statistical properties of the exchange rate as a stochastic process. Therefore, it cannot be asserted that the Şimşek team has fully returned to strictly orthodox monetary policy implementation because of the evident the lack of transparency.

On the monetary tightening and austerity fronts, however, despite the ballooning budget deficit because of the increase in interest payments (from June 2023 to March 2024, the CBRT raised the policy rate from 8.5% to 50% in nine steps) and decline in import tax revenues, there is no doubt that the Şimşek team is strictly orthodox. This is evident from the increasing wealth and income inequality, falling real wages and pension benefits, rising unemployment and worsening cost of living crisis as “official” inflation is now around 70% as opposed to around 38% when the Şimşek team took the helm of the economy. In spite of the AKP’s recent stunning electoral defeat in the local elections, its most significant in 22 years, attributed mainly to the worsening cost of living crisis, under President Erdoğan’s unwavering support, the Şimşek team continues to implement draconian neoliberal policies, described by Andre Gunder Frank as economic genocide.

Despite Milei being six months behind Şimşek, his performance in Argentina is no worse, if not better, than that of Şimşek in Türkiye, notwithstanding his backing off from his election promises of “burning down” the Central Bank of the Argentine Republic and dollarising the country three days after his inauguration. However, he remained committed to tackling the country’s fiscal deficit, reinforcing “chainsaw” spending cuts and “blender” austerity measures aimed at curbing rampant inflation while squeezing purchasing power, as reported by Reuters on 24 April 2024.

Shortly after taking office, Milei devalued the Argentine peso by over 50%, exacerbating the already soaring inflation rates. By the two-month milestone of Milei’s presidency, in February, Argentina’s annual inflation rate surpassed 250%, eclipsing even Venezuela’s, claiming the title of the highest in Latin America. According to Statista, a respected global data and business intelligence platform based in Germany, his approval rating plummeted below 45% as early as February, amid growing hunger exacerbated by Milei’s austerity measures. The discontent among Argentines has spilled onto the streets, with protesters banging pots and pans, and almost every other week a new labour union has called for strikes since Milei’s inauguration.

Last Words

Despite the high praises coming from the IMF for both, commentators have been debating how long Milei can last for quite some time now, although they have not yet started debating how long Şimşek can last, since Şimşek still has the backing of Erdoğan, the strongman of Türkiye. No matter what, however, neither Milei nor Şimşek can last long, as the discontent of their respective populations will continue to grow. The expiration date of the intentional, calculated and forcibly imposed policies of economic genocide has already passed.


Akçay, Ümit (2024): “Revisiting the Rise and Decline of Authoritarian Neoliberalism: A Political Economy Analysis of AKP’s Initial Decade,” Journal of Balkan and Near Eastern Studies.

Cömert, Hasan and T. Sabri Öncü (2023a): “Monetary Policy Debates in the Age of Deglobalisation: The Turkish Experiment—II,” Economic & Political Weekly, Vol 58, No 11.

Cömert, Hasan and T. Sabri Öncü (2023b): “Monetary Policy Debates in the Age of Deglobalisation: The Turkish Experiment—III,” Economic & Political Weekly, Vol 58, No 29.

Frank, Andre Gunder (1976): “Economic Genocide in Chile: Open Letter to Milton Friedman and Arnold Harberger,” Economic & Political Weekly, Vol 11, No 24.

Féliz, Mariano (2019): “Neodevelopmentalism and Dependency in Twenty-first-Century Argentina,” Latin American Perspectives, Issue 224, Vol 46, No 1,

Harvey, David (2005): A Brief History of Neoliberalism, Oxford: Oxford University Press.

IMF (2018): Argentina, IMF Country Report No. 18/219

Marini, Ruy Mauro (1978) “Las razones del neodesarrollismo,” Archivo de Ruy Mauro Marini. Publicado en Revista Mexicana de Sociología, número especial, Facultad de Ciencias Políticas y Sociales, UNAM, México.

— (1981): “La acumulació capitalista dependiente y la superexplotación del trabajo,” Accessed at: https://marini-escritos.unam.mx/wp-content/uploads/1972/09/21-La-acumulación-capitalista-dependiente.pdf

Nelson, Stephen C. (2017): The Currency Of Confidence: How Economic Beliefs Shape the IMF’s Relationship with Its Borrowers, Ithaca and London: Cornell University Press.

Ocampo, José Antonio (2020): “Argentina’s Debt Renegotiation,” Project Syndicate, Accessed at: https://www.project-syndicate.org/commentary/argentina-fernandez-guzman-imf-program-by-jose-antonio-ocampo-2020-02

Orhangazi, Özgür (2024), “Sermayenin İki Programı,” Accessed at: https://ozgurorhangazi.com/2024/03/12/sermayenin-iki-programi/

Öncü, T. Sabri (2014): “A Sovereign Debt Story: Republic of Argentina vs NML Capital,” Economic & Political Weekly, Vol 49, No 20.

Schteingart, Daniel (2024): “Productive planning in an unstable country: The case of Argentina (2019–2023),” Economic Sociology,  Vol 25, No 2.

Related Content

Leave a Reply

Your email address will not be published. Required fields are marked *

This website collects cookies and analytic data. To use our website you must consent.
For more information read our Privacy Policy.