I visited Buenos Aires and other Argentine cities from May 21 to June 1 this year, talking to economists, politicians, representatives of think tanks, journalists, and young people. The situation in Argentina is nothing short of dramatic. No other country in the world has suffered such a steep decline over the last 100 years. At the beginning of the twentieth century, Argentina’s GDP per capita was among the highest in the world, and the expression “riche comme un argentin”—rich as an Argentinian—was a commonly heard expression.

A comparison of economic data from 2018 and 1913 shows that the country’s real GDP per capita has hardly increased. In fact, Argentina has the worst figures of all countries for which data are available for both years. Inflation is particularly alarming.

Inflation and the “Blue Dollar”

I realize what inflation actually means when I pay my hotel bill. I don’t want to pay with my Visa card because your credit card payment is based on the official exchange rate from the peso to the dollar or euro. You get twice as many pesos for a dollar on the free market, which is illegal but tolerated by the authorities. This unofficial rate is known as the “blue dollar,” the parallel exchange rate of the U.S. dollar in Argentina, which represents the cost of buying and selling a physical dollar bill on the black (or “blue”) market. In reality, my hosts explain, it is much more complicated than that because there are at least four different dollar variants.

The authorities tolerate the existence of so-called cuevos (literally, “caves”), where you can go to exchange dollars or euros into local currency. On the street, you are frequently approached by people known as arbolitos (Spanish for “little trees”), who show you the way to one of the many cuevos. Officially, these are pawn shops or places where you can buy and sell jewelry or gold, but in fact, they are clandestine Blue Dollar trading houses.

Argentinians use these cuevos to exchange pesos in the hope of getting even more pesos for their dollars a few weeks or months later. In a country with such rampant inflation, money has lost its function as a store of value and only serves as a means of payment. However, this is not always easy. You can’t always get large denomination bills in the cuevos. Only about a fifth of the 250,000 pesos that my interpreter and I have to pay for four days at the Sheraton in Buenos Aires are in thousands—the rest comes in small banknotes. At the hotel, it takes more than two hours to pay. After I ask why they don’t use their bill counting machine, I realize it’s because they first have to check the authenticity of every single banknote with a pen and count the money by hand. Once they are finished with the lengthy process of counting the bills by hand, they eventually run the money through the bill counter.

For Argentinians, inflation is nothing unusual. I meet Fausto Spotorno, chief economist of the Centro de Estudios Económicos of the consultancy OJF. He presents impressive statistics confirming that since 1945, Argentina has almost always had at least double-digit inflation—with the exception of the 1990s, when President Carlos Menem pegged the currency to the U.S. dollar, which eliminated inflation for a decade but had a negative impact on exports by making Argentinian goods no longer competitive.

Inflation also happens to be the main theme of the libertarian movement around Javier Milei. The fifty-one-year-old self-described “anarcho-capitalist” used to be the goalkeeper for the Chacarita Juniors soccer club, went on to study economics, and then became a chief economist at private financial consulting firms and a government advisor.

In 2021, Milei was elected to represent the city of Buenos Aires in the Cámara de Diputados, the lower house of Argentina’s Congress, after gaining 17 percent of the vote for the La Libertad Avanza party. Now, everyone expects him to be a candidate in the 2023 presidential election.

I talked to the libertarian activist and vice-president of Milei’s party, Lilia Lemoine, a forty-one-year-old cosplayer, model, actress, and major social media figure with hundreds of thousands of followers. Her website features a photo of her wearing a top emblazoned with a fist and the words Libre Mercado, or “free market economy.”

Lemoine is full of enthusiasm for Milei, who is formally the party’s honorary chairman. She is famous all over Argentina, and when we go to eat, the waiter immediately asks if he can take a selfie with her. Milei’s supporters are mostly young, poor, and male, she says. She explains that the belief that poor people don’t want to work and have become accustomed to state benefits, which we often hear here, is a lie: “That is only true for very few. Most of them would very much like to work, but the state, by imposing such high taxes and regulations, does not give them a real chance. These poor people are desperate, especially because of inflation. They have pinned their hopes on our libertarian movement.”

That is what is special about Argentina. Desperate poor people in other countries are often more in favor of socialism and bigger government—or else right-wing extremists. There are not many other countries where you will find poor people who want more capitalism.

Milei has attracted a lot of attention by launching a “lottery.” Anyone who signs up on social media is entered into a lottery to win Milei’s monthly salary as a deputy of the Cámara de Diputados. In May 2022, that was 350,000 pesos, or about $1,800. Considering that the income of an average Argentinian is roughly 60,000 pesos, this is an attractive sum. In the first three months alone, Lemoine says, two million Argentinians have taken part in the lottery, with which Milei wants to show that he “didn't get into politics for the money.” Each participant has to provide an email address and phone number, and at first, I think this is a very cheap way to get people’s contact details for campaign advertising. Lemoine, meanwhile, assures me that the data will only be used for the lottery. Either way, it is a very effective marketing method.

I meet Ricardo López Murphy, a congressman who also hopes for a free-market turnaround but is not as radical as Milei, who wants to abolish the central bank, for example. López Murphy, who cooperates also with the German Naumann Foundation, is an economist and served as minister of defense and economics during Fernando de la Rúa’s presidency. Since 2021, he has been the leader of the Republicanos Unidos party, which he founded in 2020 and is part of the JTC Juntos por el Cambio (Cambiemos) alliance. He is also regarded as a potential presidential candidate. What would he do if he were in charge in Argentina? Above all, he would fight protectionism, cut red tape and regulations, and radically reduce taxes. Currently, companies with at least 200 employees are forced to sell a certain percentage of their products at prices set by the state. Argentina’s high taxes are a major problem he and others are addressing. Because of the high tax burden, the informal economy is extremely important, he explains. It is estimated that more people are working illegally today than are in official employment, says López Murphy.

A Capitalist Revolution?

López Murphy is one of the figureheads of Argentina’s free market movement. Another is José Luis Espert. Like Milei and López Murphy, Espert is also an economist and is convinced that more capitalism is the solution for Argentina. He has been a deputy in Buenos Aires province for the Avanza Libertad coalition since 2021. “We need a capitalist revolution,” he tells me. And he is optimistic: “Libertarian ideas are really taking off in Argentina,” says Espert. Milei, incidentally, used to be a member of Espert’s party before he founded his own. What would Espert change in Argentina if he could? First of all, he mentions the issue of “trade freedom”—the fight against protectionism and excessive taxation and for more deregulation. He also thinks that several corrupt trade union leaders should be put in jail to deter others.

I was surprised when I meet three young women in Buenos Aires. They belong to LOLA, or Ladies for Libertad. Valentina is twenty-one years old, speaks fluent English, and seems very self-confident. She comes from the city of Mendoza, started her own recycling business at the age of thirteen, and made it official at eighteen. But the first few years were very challenging: “Every day, robbers came to my company to steal from me. I called the police, who even put the thieves in jail once, but only for a few hours before releasing them again. The police do not protect me. And the state takes almost everything I earn with its extreme taxation.” And she doesn’t like the mentality of many compatriots who prefer to live off the state rather than work themselves: “It’s so hard to find employees,” she complains.

That’s why she became a libertarian. At seventeen, she joined the Students for Liberty. At nineteen, she founded her own libertarian group. The group grew quickly, attracting many members who opposed the government’s COVID-19 measures: “We had a seven-month curfew, you were only allowed out of the house for three hours on certain days to go shopping.” These measures led more and more members to their group.

They meet in apartments and restaurants and compare, for example, Marx’s Communist Manifesto with Hayek’s Road to Serfdom. It is a group for women who describe themselves as “liberal feminists,” in distinction to traditional feminists, who—according to Valentina—are mostly Marxists. Their hero is Javier Milei.

Adrina is twenty-seven years old. She fled Venezuela because she was sentenced to prison after joining the protests against the socialist regime. She studied law in Venezuela, he works as an IT programmer in Buenos Aires. She got involved in politics when her sister and brother-in-law were sent to prison after protesting against the socialist dictatorship. Her parents fled to Peru to escape the economic catastrophe. Adrina now lives in Buenos Aires and is involved with LOLA. I realize that just as it is considered cool for many young people in Western countries to be left-wing, it is cool here to be libertarian. Even in Tucumán, a provincial town in the north where there is little to see apart from crumbling houses and poverty, I give a lecture to seventy young people who attend courses at a libertarian think tank. They are against the establishment, against the over-reaching state, and live firmly in the hope that more capitalism will solve their problems.

Rainer Zitelmann is the author of the book The Power of Capitalism.

Image: Reuters.