Porto Alegre, Brazil ? Held up for years as a shining example of free-market reforms, Argentina’s economic meltdown is being paraded at this year’s Social Forum as sad proof of the evils of unbridled global capitalism.

The collapse of South America’s No. 2 economy could further shake Latin Americans’ faith in democracy and open markets that the United States says will bring prosperity to the hemisphere, activists at the forum said.

Noam Chomsky, the U.S. linguistics scholar and a vigorous critic of U.S. foreign policy, signs autographs for participants at the Social Forum in Porto Alegre, Brazil. The five-day Social Forum is a shadow event to the World Economic Forum, which is taking place in New York City.

Thousands of political, environmental and social activists have flocked to the southern Brazilian city of Porto Alegre for the five-day Social Forum a counter summit to the splashy hobnobbing of the wealthy and powerful at the World Economic Forum on Manhattan’s Park Avenue this weekend.

On Friday, discussion here was dominated by criticism of plans for a new round of world trade talks and a U.S.-proposed common market stretching from Alaska to Argentina. By the afternoon, many were railing against the free-market reforms they blame for the financial failings that threw Argentine President Fernando de la Rua out of power in December as the country sunk amid crushing debt.

With four Latin American countries Bolivia, Brazil, Colombia and Ecuador going to the polls this year, candidates who spurn the kind of economic reforms that de la Rua followed and that the United States pushed could get a boost.

“In the 1990s we were held up as an example to follow,” said Emilio Taddei, an Argentine with the Latin American Council of Social Sciences. “Now the results can be seen: The country is broke and the population is suffering unprecedented levels of hardship.”

The deep concern echoed in New York, where Brazilian Foreign Minister Celso Lafer warned Secretary of State Colin Powell that Argentina’s crisis might cause turmoil across the continent unless the United States agrees to give Argentina financial help, the business daily Valor Economico reported.

The same message was hammered home at the Social Forum, where activists launched broadsides against capitalism and the power of multinational corporations.

“We cannot ask our Argentine brothers to stay calm, not to show their discontent when this free trade model has led to social disaster in Argentina,” Hector de la Cueva, a speaker from Mexico’s Continental Social Alliance said, drawing wild applause from a packed auditorium.

Finding itself unable to pay a $141 billion debt, Argentina defaulted last month. But only after four years of recession had ravaged the economy, sent the jobless rate soaring and eventually, brought thousands of enraged Argentines into the streets to protest what many saw as a merciless austerity program prescribed by the International Monetary Fund.