There is No Alternative: Reaction Paper to 'The Take'

Recently I had to write another reaction paper to the film 'The Take', a documentary written by Naomi Klein about "cooperatives" in Argentina during that country's economic crisis in the first few years of this decade. During that time, some workers took over abandoned factories and tried to run them on their own, oftentimes successfully. Here is the link to the documentary's website.

This is my reaction paper:

The movie The Take is exactly what can be expected from a film written by Naomi Klein. A fighter for all things anti-capitalist, Ms. Klein is a loud critic of economic freedom, trade, business-friendly policies, the IMF, and pretty much everything else that has to do with globalization. In her film she takes the particularly bad case of Argentina as proof that capitalism does not work for the poor, and that a viable alternative model is that of worker-led cooperatives as the ones shown in the movie.

Of course, Ms. Klein’s film is wrong. The Take is full of half-truths, biased preconceptions, misinformation and a good deal of emotional manipulation designed to misguide the viewer. Let us start with the man that the movie portrays as the personification of evil: Carlos Menem. Ms. Klein’s film alleges that Mr. Menem followed “el modelo” (the capitalist model) to the letter, bringing Argentina to the brink of economic collapse. Indeed, Argentina went from prosperity to chaos in just a few years. According to the Economist Intelligence Unit, GDP per head (at PPP) went from USD 9,455 in 1998 to USD 8,003 in 2002 –in other words, in four years, the average Argentinean lost 15.3% of its income.That is a real economic tragedy.

But that tragedy occurred precisely because Mr. Menem did not follow the capitalist model to the letter. A series of economic mistakes, all of which violated capitalist orthodoxy, were what led the country to such a disastrous outcome. First, let us talk about pegging the Argentinean Peso to the US dollar, an irresponsible policy which made it impossible for the Argentines to adjust its balance of trade, leaving exporters vulnerable to rises in the US dollar and the subsequent loss in competitiveness for Argentine products abroad. But that was not Mr. Menem’s worst anti-capitalist mistake. The real problem was the huge budget deficit and the associated high levels of foreign debt that Argentina ran under Mr. Menem’s tenure. His government did not have any discipline regarding fiscal policy and continued handing out subsidies (as shown in the movie), contrary to the main tenets of the Washington Consensus. If Mr. Menem had not pegged his currency to the dollar, if he had cut spending to repay debt and not the other way around, if he had stopped giving subsidies to businesses (all of which are so-called neoliberal policies), Argentina would have certainly not fallen into the economic depths it saw between 1999 and 2002.

Yet, Ms. Klein does not tell you this. She preaches that it was capitalism what doomed the country to failure, keeping for herself the complex details that put her version in trouble. Instead, she chooses to take the example of the workers in the cooperatives as an anti-capitalist, anti-profit alternative to neoliberalism. Undeniably, it is really difficult not to agree with the plight of the workers. They are good, hardworking people who are simply trying to make a living by helping each other and making their factories spring back to life. They are the people who were affected by Menem’s recklessness and ill-advised economic policies. Now they simply want their jobs back.

Nonetheless, even if Ms. Klein and the workers themselves would like to pretend otherwise, the Argentine economy cannot survive on what is produced by the cooperatives. Their alternative is doomed to remain precisely that –an alternative to mainstream modes of production in which an investor is needed in order to set up a factory. Think about it: the workers were only able to take over the factory because it was there in the first place. The old capitalist interviewed in the film had put 90 million dollars of his money (probably with a few million courtesy of Mr. Menem) in that factory. Not in a hundred years would the workers on their own have been able to come up with such a large sum of money in order to set up their own cooperative. The cooperatives only work if there is something else for them to take, and to that extent they are really incapable of becoming a viable alternative for economic growth in Argentina or anywhere else. Of course, I am glad that the workers got what they demanded, but nobody should pretend that this is a real substitute for globalization. To be sure, as Margaret Thatcher liked to point out, there is no alternative.