The position towards cross-border financial flows was a good example of the hybridity underlying the Latin American post-neoliberal left. On one hand, administrations led by post-neoliberal parties increased the level of capital controls even before the 2007 Global Financial Crisis; on the other hand, the deployment of further restrictions did not mean the repoliticization of capital flows management and its implications for macroeconomic policymaking. One exception to this strategy was the case of Argentina under Front for Victory (2003-2015), which was able to repoliticize capital flows management at both stages of the global financial cycle. Specifically, before the 2007 crisis, the government deployed pervasive restrictions against capital inflows alongside a discourse centered on the need for a stable and competitive currency, the risks of speculative investments, and the commitment with reindustrialization. After the crisis, Front for Victory went even further by imposing many outflow controls, which were justified around the defense of monetary sovereignty, the democratic control over macroeconomic policymaking, and the political arbitration of the distributive conflict. It is possible to shed light on the specificities of the case of Argentina by comparing its trajectory with Brazil under Workers’ Party (2003-2016), a country with similar economic structure and political institutions that was also harmed by a late 1990s currency crisis, which paved the way for the electoral triumph of a post-neoliberal party. In spite of these similarities, Brazil kept a depoliticized capital flows management throughout both stages of the global financial cycle. In this sense, before 2007 the crisis, despite the harmful consequences for manufacturing industries, there were no attempts to curb the growing capital inflows, which were used to accumulate official reserves, ease the debt constraint, and tame inflationary pressures. After the crisis, even though the government deployed inflows controls and denounced the so-called currency war at international forums, there was no repoliticization of the capital flows management, which relied on temporary market-friendly regulations to safeguard financial stability, while refrained from further restrictions in face of the outflows surge that followed the Federal Reserve tapering in 2013. Against this background, this article aims to discuss what factors favor the politicization of capital flows management by post-neoliberal parties once in power. Specifically, I contend that the post-neoliberal parties’ decision of repoliticizing capital flows management stems from two complementary channels. First, the autonomy and the strength of labor unions and community-based social movements favor repoliticization by increasing the government’s need for macroeconomic policy autonomy. Moreover, the existence of strategic allies among economic elites – like manufacturing producers – facilitates repoliticization by compensating credibility losses that such strategy could cause. Methodologically, I build comparative case-study centered on the aforementioned experiences of Argentina and Brazil. In terms of supportive evidence, I rely on IMF publications and financial openness indexes to assess the governmental politicization of capital flows management. With respect to discursive politicization, I analyze party manifestos, policymakers’ articles, and countries’ official responses to IMF staff. Finally, regarding the explanatory variables, I build upon related academic literature and interest groups’ publications.
