Volume 43, Number 171,
October-December 2012
The Third Peronist Government’s Economic Plan.
Gelbard’s Term (1973-1974)
Cecilia Vitto

Many of the laws put forth during this initial period had the fundamental goal of promoting growth of national industry and stimulating the use of local technology (National Executive Power, 1973: 31), especially seeking to favor the national bourgeoisie.5 Four laws that sought these same objectives essentially stand out. They tried to regulate the inflow of foreign capital (Law Nº 20.557), sme functioning (Law Nº 20.568), national work and production (Law Nº 20.545) and promote industry (Law Nº 20.560).

They sought to only allow foreign capital as long as it did not limit the country’s decision-making capacity, and did not imply a serious amount of future payments, and had demonstrably positive effects on national development. In keeping with these principles, Law Nº 20.557 established that foreign investors could never receive more favorable treatment than national investors under any circumstances, and that foreign investors who wanted to push capital into the country had to have prior authorization, and certain investments destined towards some activities would not be allowed, such as those related to defense and national security.

This severe treatment of foreign capital was complemented by stimulating national capital businesses. One of the instruments used to do so was the Corporation to Develop Small and Medium-Sized Enterprises. This corporation, created in Law Nº 20.568, sought to foster the expansion of smes, especially within the country, and generate growing participation of smes in the domestic market by driving greater efficiency and productivity, promoting access to credit and helping place their products in the international market.

Likewise, Law Nº 20.560 for Industrial Promotion sought to grant state support to productive entities that were determined as priorities based on the countries needs, using selective and pre-set criteria. Only national capital companies were eligible for this support.

Finally, Law Nº 20.545 for the Defense of National Production and Labor, passed at the end of 1973, sought to favor development of national capital companies. It supported self-supplying for sectors or branches considered as key for accelerating regional integration, contributing to the development of local technology able to break the ties of dependence on industrial centers. It also sought to foster the attainment of foreign capital by exporting manufactured products. One of the main instruments was to set import and export rights in such a way that protected national production, as well as the establishment of quantitative and qualitative restrictions on imports and exports.

Another fundamental tool that this law provided was to establish reimbursements and refunds for exports, with the goal of compensating for imbalances in the economic structure and equalizing Argentinean prices of industrial production with those of the international market. Setting these figures would take into consideration the net currency income that these exports would produce, especially seeking to promote exports of products manufactured by national capital companies with local technology. As such, these elements responded to the fundamental pillars of the economic program (in particular, to stimulating national capital companies and making industrial exports more dynamic). This last factor would allow Argentina to definitively overcome foreign strangulation and would make industrialization more sustainable.

This measure to foster exports was complemented by measures that sought to promote and expand exports and diversify the markets using bilateral agreements, especially with Latin American countries and other countries of the Socialist block.

On the other hand, laws such as Nº 20.535 and 20.573, passed in September 1973, established new powers for the National Meat and Grain Committees (León and Rossi, 2003). Through these powers the State sought to control foreign trade of these products to ensure proper placement of exportable balances and guarantee producer prices. This was about the State’s right to buy and sell all agricultural exports. In other words, it was a partial nationalization of foreign trade.

Another substantial question that the government sought to address was land use and ownership. Two laws deserve special attention: the tax on normal potential income of land and the Agrarian Law bill. Law Nº 20.538, passed in September 1973, established a tax on the normal potential income of agricultural production that was to begin in January 1975. Instead of making this a tax on production (as it had been previously), which discouraged expansion of activities, the tax would be established based on the land’s “normal” and “potential” productivity for each economic unit of production, taking into account the means of production as well as the ecological-economic characteristics of the zones of agrarian land in the country6 for the calculation. The Agrarian Law bill, proposed but never approved by Congress, allowed for expropriation of non-productive lands, and proposed that they be exploited under a regime of state or cooperative property (Rougier and Fiszbein, 2006: 185).

Another of the central points of the program involved reforming the financial system, which tended to reinforce the regulatory capacity of the State. The nationalization of deposits, which began with Law Nº 20.520, established that all entities in the sector had to transfer their deposits to the Central Bank of the Republic of Argentina (bcra, in Spanish), making it impossible to withdraw or use funds without authorization. Likewise, the bcra had the ability to determine the maximum portfolio of loans for each bank, and was able to favor some to the detriment of others, as well as to set commissions for deposits and the re-discount rate for loans.

5 This fraction of capital was linked to supplying the internal market based on producing popular consumer goods, and was driven by large oligopolistic industrial firms with the ability to establish agreements with salaried sectors.

6 In this way, establishing a tax sought to reward the most efficient producers. Because it was a fixed tax, it would punish those who produce less.

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