Argentina: The Post-Money Economy

  • Share
  • Read Later

A man exchanges clothes for a week's worth of food in Buenos Aires, Argentina

Buenos Aires, the "Paris of Latin America," these days looks decidedly Third World. Of course the broad boulevards, late 19th-century buildings and teeming cafes downtown may suggest European gentility. But ten miles away, in the working-class suburb of Quilmes, merchants are hawking everything from homemade turnovers to new and used clothes, custom carpentry, haircuts and fresh produce. The shell of the old Bernalesa metal works has been turned into a massive market, whose four-foot aisles are so jammed that thousands of men, women and children can barely make their way over the dirt floor, past rickety stands of unpainted, unfinished wood — this in a country where shopping used to mean going to the supermarket, or the mall.

Argentina's old economy may be on the verge of collapse, but this market represents a burgeoning new economy. Alberto Martinez, 50, is about to sell a pair of earrings at his costume-jewelry stand. First, though, he runs a pager-sized black-light reader over the currency tendered by the customer, to check for the watermark that guarantees authenticity. The white bill is no Argentine peso; it's something called a 'credito.' "This," he says, holding up the scrip, "is what's keeping us going."

Creditos are not money, but they have purchasing power. And in a country running out of real cash, the credito may be a currency whose time has come. In the conventional economy, a government decree allows depositors only to withdraw their salaries or pensions from banks. Their savings remain untouchable for now, and if they were in dollars, have been converted to pesos. Public employees are being paid partly or fully in unbacked bonds; and unemployment is near 20 percent. Street protests have toppled four presidents in two weeks, but Argentina's 21st-century Great Depression is deepening. And it's driving tens of thousands of people to the "National Barter Network," centered at Bernalesa. Last month alone, the network expanded from a half-million to 640,000 families. Here, and at 600 other markets, they're trading goods and services for creditos, which can then be used to purchase other goods and services. "If you don't have any money, this is the only way to survive," says Irma Gonzalez, 46, a who lost her legal secretary job three months ago and is planning a barter-market clothing business.

Nobody's going to get rich at Bernalesa, but that's not the idea. "At least I can make enough for our food," says Hugo Correnti, 41, a mechanic at an electrical motor manufacturer before he took up his new part-time career as a baker six months ago. He makes 100 creditos a month from his breads, mini-pizzas and pastries, relying on odd jobs to pay his electricity bill and other cash expenses. Carpenter Antonio Galarza, 39, jobless for two months, makes wooden boxes and medicine cabinets to supplement the $88-a-month unemployment pay he collects from his construction workers union.

Trinkets and home-bootlegged videos pull in browsers at Bernalesa, but most of the demand is for basics. Ernesto Demeter, 51, has all but abandoned his line of antiques. "I traded three chandeliers for 80 pairs of socks and 40 T-shirts, and they're moving well," he says.

Not everyone can use creditos to restock. Bakers and cabinet-makers among others, need pesos for their raw materials. But as the money economy shrinks, barter is starting to leak into the cash universe. Casilda Teran Villaroel, 22, uses creditos at the wholesale produce market where she buys the lettuce, tomatoes and garlic for her market stand. In Quilmes, the "Caruso Seguros" firm is accepting creditos for auto insurance policies. Otherwise, says manager Horacio Iraola, "we wouldn't have any business at all."

No one dreamed that Argentina would come to this. Only seven years ago, the only cloud on the horizon was creeping unemployment. Back then, the three professionals who launched the credito market were merely trying to devise a productive outlet for their jobless friends. One peso was still worth $1, and foreign firms had poured millions into the phone and water systems, betting that Argentina would reclaim its historic place as a world-class industrial and agricultural powerhouse. Now, you need 1.7 pesos to buy a dollar, and some municipal governments, including the town of Gonzales Chaves in Buenos Aires province, are accepting eggs and chickens as tax payments, using them to feed poor families. The future? "Argentina can become one big barter club," says chemist Horacio Covas, a barter network co-founder. Indeed, the only economy that's growing in Argentina right now is the prehistoric one.

—with reporting by Elizabeth Love/Quilmes