El valle de las hamacas, winner of the Certamen Cultural Centroamericano in 1968, reflects the political and social experience of the author, especially in the years 1959–60. Argueta depicts the all too familiar conflicts in his country and the inevitable identification of idealistic Salvadorean youth with problems in neighboring Honduras and Nicaragua. In his social fiction Argueta avoids direct ideological manifestoes and romantic symbolism without diminishing his concern or conviction. Using chains of associations, interior monologue, and a kind of mythological fusion of past and present history, he lightly touches on the theme of alienation which besets us all. Avoiding punctuation, Argueta uses various forms of address, especially the second person, in his recall and reverie, sometimes indicating them by italics. Done as a series of superimposed layers with flashbacks and interior temporal jumps, many of the events become fully evident only toward the end of the novel.

Essentially the story concerns a group of university students at San Salvador between the ages of eighteen and twenty-five who enjoy drinking, sex, music, and strong language, which the author transcribes in perhaps overabundant detail. Among these students are Raúl Morales, in love with Rosaura; Mauricio Robles, known as el Chatío, her brother; and Jorge. Imbued with a dislike of tyranny, they slip into Nicaragua to take part in guerrilla activities. Mauricio and many of the group are killed and Raúl is captured and mistreated to try to force him to reveal his companion's whereabouts. He is finally released but on his return to San Salvador cannot tell Rosaura about her brother.

At various moments in the story (with a group of revolutionaries or in the jail) Raúl slips in and out of different states of recall, remembering part of his childhood, his friendships, and university days. At times he seems to reexperience, at others to recall and resynthesize remote half-conscious associations as he switches in time and space.

Argueta mercilessly exposes the pretentious political hacks who preach phony law and order and the incredible police brutality against dissenting university students. In his hypocritical and corrupt country, where only the poor pay taxes, there are "clubes para ricos y excusados para pobres." Although Central America is a land of eternal contradiction filled with beautiful geography and invisible men, Raúl and others manage to maintain some of their convictions.