Systems of Banking and Production in Argentina
Víctor Fernández, Carolina Lauxmann and Julio Tealdo

A Social System of Production (ssp) is nothing more than a particular social configuration that the various existing institutions in a country assume. Among these institutions, we find: the system of industrial relations, the system of workforce training; the internal structure of corporate firms; relationships between various companies within the same or different industrial branches; financial markets; State structure and its policies; the customs, norms, moral principles and rules that guide social action (Hollingsworth, 1998; Hollingsworth and Boyer, 1997).

This particular social configuration tends to vary in the sense that the way these institutions are defined can change, giving rise to different ssp models, and different accumulation methods and ways to distribute surplus in society. But these archetypes are not infinite. They are limited by the existence of a necessary level of complementarity among the different organizational structures that make up the ssp institutions, seeking to achieve a stable social configuration — although not permanent or efficient in terms of economic performance (Amable, 2000; Soskice, 1999). Thus, for example, a centralized financial system, based on banks, will tend to favor industrial products with obtainable long-term profitability, which requires specialized labor. By contrast, a decentralized financial system, with stock market predominance, will favor an industrial sector based on projects with fast returns on investments, complemented by institutions that encourage generic abilities among the labor force (Amable, 2000).

Beyond the complementarity among the different components of ssp, there is a certain hierarchy as well, which is why one or some institutions can achieve special influence in determining morphology and performance (Amable, 2000).

A variety of theoretical developments have underlined the importance of the financial system in the make-up of institutional adjustments and growth trajectories (Zysman, 1983). But the relevance of this system in establishing the complementarities between institutions that characterize the East Asian ssp, and its contribution to break with the core-periphery logic on which the global economic system is based, have made it a strategic element to analyze developmental trajectories.

The financial system, and particularly the banking system, has been definitive in the configuration of successful Asian ssps (Johnson, 1987; Woo-Cummings, 1999; Zysman, 1983). By safeguarding national characteristics, the State has gained a central role in all of these experiences and has exercised strong control over the financial system in a political industrial framework oriented to stimulate development. This has allowed the state to direct credit, either through private banking, public banking, or even in some cases, through a development bank towards productive investment in certain strategic areas (Armsden and Euh, 1993; Epstein and Grabel, 2007). This method, in combination with the implementation of a system to monitor compliance with performance requirements stipulated as a loan condition, has allowed these countries to develop an endogenous and dynamic accumulation pattern, with varied levels of concentration (Fernández, 2010). This has further enabled them to access higher-yielding channels of the global production chain (Arceo, 2005).

For the Latin American periphery, the possibility of achieving these results thus implies the need to form an ssp with an endogenous, decentralized2 and dynamic accumulation pattern, capable of undoing the combined regimes of trans-nationalization, concentration and a propensity towards generating profits far removed from learning and innovation, all of which have dominated the Argentinean scene in particular (Nochteff, 1996) and the Latin American one in general (Cimoli et al., 2005). But also, and more fundamentally, there is a need to end auto-valuation practices for financial capital and link their reproduction to the financing of productive investment that would allow for the said accumulation pattern. To do so, and in the hopes of achieving certain institutional cohesion to make the ssp sustainable, it is necessary that the financial system’s structural properties are compatible with characteristics demanded by the production system.

Now, the observation of these factors, which combine endogeneity, dynamism and decentralization, implies that peripheral countries must transcend the way in which the ssp was originally conceived in core economies. In those scenarios, the ssp approach has focused primarily on studying the system of intra- and inter-business relationships and different cooperation mechanisms among them,3 setting aside questions related to the capital structure of the firms, market composition, quanti/qualitative relationships among financial bodies and capital producers, as well as the way and extent to which the State intervenes, which is extremely important for the accumulation pattern and its properties.

Seeking to establish an analytical framework appropriate for peripheral countries, and recognizing the centrality of the financial banking system in the make-up of ssps that have managed to achieve upward mobility within a hierarchical global system, as well as the predominance of banking institutions over stock methods in Latin American peripheral countries (Tilteman, 2003), we will focus our attention on studying the financial banking system and its links to the production system. The aspects to consider in our analysis, noting the necessary complementarity between the financial banking system and the production system, and taking into account characteristics required to alter subordinate participation in the world economy, are as follows: (a) the level of endogeneity or foreignization of capital ownership in the financial banking system, (b) level of concentration or decentralization and (c) reproduction dynamics, paying special attention to the existence or lack of a link with the production system.

Keeping in mind these variables, we will first introduce a brief description of the current context of Argentinean transition, and then analyze the financial banking system and its changes in terms of structure and dynamics in the time period from 1990-2010, making special note of ruptures and continuities that occurred in this same era as a result of the 2001 crisis. We will evaluate how these variables affect links with the production system with the goal of revealing the existence, or lack thereof, of a qualitative change in the Argentinean ssp, based on an endogenous, dynamic and decentralized accumulation pattern, that would allow the country a more competitive position in the highest value segments of the gvc.

2 Decentralization in capital ownership becomes a desirable characteristic for the formation of ssp, insofar as the tendency towards capital concentration in Argentina and a large part of Latin America has been favorable towards allowing profitable practices (Nochtoff, 2002; Fajnzylber, 1992; Sábato, 1998).

3 For a detailed analysis of these mechanisms, see Hall and Soskice (2001); Amable (2000); Hollingsworth and Boyer (1997).