The complete economic and social crisis and the seven deadly sins of the Brazilian elite

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The Brazilian bourgeoisie dependent on international interests pushed Brazil towards the biggest crisis in its history, and there is no denying its capital sins

By José Raimundo Trindade*

The conjuncture at the beginning of 2020 presents a complex set of factors, whose interaction deepens the limits of the fragile Brazilian economy and lead us, perhaps, to the deepest economic, social and humanitarian crisis in the history of the Republic. A society that seems shaken from the bottom of its entrails and that is scattered in seven profound contradictions that, like the seven deadly sins, consumes its soul and seems to be heading towards a growing and dark cliff.

These seven critical vectors of the Brazilian economy and society that we will analyze are related in the text to the seven deadly sins, a negative essence present in humanity and that has hit Brazilian society so formidably in these last four years: gluttony, which is related to selfishness and greed; the avarice that is related to excessive attachment to material goods and money; the lust that is the uncontrolled dominion of the passions; the anger that is the strong desire to harm another; the envy that is the exaggerated desire for possessions, status and everything that someone else has; the laziness that is negligence and carelessness in the attitude of doing and acting and; finally, the superb expression of arrogance and vanity (encurtador.com.br/hmnoU).

At the end of 2019, a recessive and low-growth warning picture was already showing, which materialized in the small GDP of 1,1% revealed by IBGE figures, a lower percentage even than in 2018, which was on the order of 1,3. XNUMX% (encurtador.com.br/noBDX). In this analysis, we focus on seven factors that are integrated as vectors of the scenario of this acute crisis that we are debating.

The first critical factor refers to governmental instability, a mixture of gluttony, avarice and anger. It is worth considering three elements that define this first condition as the most central of this perfect crisis: first, the government's inability to manage politically, where the center of government has as its "last motive" the constitution of an authoritarian and bonapartist power (an attempt to a Bonapartist government, curtador.com.br/tBQZ9); second, the fiscalist neoliberal logic, supported by a rigid and unintelligent condition of fiscal policy or non-intervention by the State in the form of EC 95/16, favoring only the financial component linked to interest and amortization of the public debt.

The logic of freezing the primary budget, that is, spending on education, health, public policies in general, and even investments, for twenty years, until 2036, dismantles the power of state intervention and weakens any possible way out of this iron circle; finally, due to the neoliberal logic itself, there are no government policies that stabilize the system, and any planning scenario that would make it possible to break the recessive cycle is absent, with only fallacy, empty speech and the permanent litany that with each new reform (Labour, Pension, Administrative and so on) you would have the almost divine expansion of the economy and growing and magical GDP rates. (see shortening.com.br/vRU35 and shortening.com.br/hsyLM).

The second factor refers to the growing competitive dispute between US and Chinese capitals around two very strong elements: i) the technological dispute, materialized in the competition around 5G, which affects both the consumer and planning sectors and capital programming (portion of infrastructure and means of production); ii) the dispute for the international supply network of raw materials and control of the supply belt of strategic resources, which imposes a long cycle of instability in the commodity markets, a very important link in the Brazilian economy.

It should be noted that this dispute between the US and China is a long-term one, and will not be resolved in the medium term, either by US financial and military power or by the huge geopolitical network armed throughout the post-war years. On the other hand, China still does not present the elements of economic and geopolitical coordination that would allow the transition from a global hegemonic power of the USA to the Celestial Empire (see: curtador.com.br/jqBFW). Since this process is long, we will have moments of crisis driven by this dispute, as evidenced in this first experiment of geopolitical dispute, for a good approximation of this debate, see Giovanni Arrighi (encurtador.com.br/ckzI3).

The third factor refers to the continued transition of the prevailing economic pattern in the country and the weakening of the economy's industrial links, establishing an economic pattern centered on agribusiness and export mining. Thus, the conditions of deindustrialization that led to a decreasing share of the manufacturing industry in the Brazilian GDP, now amounting to something that is 1/3 of what it was three decades ago (something around 10% of GDP, check: shortener. com.br/bfJSV and curtador.com.br/guzBT), is related, on the other hand, to the establishment of a reproductive pattern of Brazilian peripheral capitalism very similar to that before the 30s, sustained by agribusiness and mineral extraction , both linked to the world market. It is clear that such a model, as classically shown by authors such as Celso Furtado (encurtador.com.br/cDN05), is extremely susceptible to imbalances in the international economy, leading the system to the possibility of profound crises based on the logic of external vulnerability.

It is also worth paying attention to two structural aspects of the fragility of this model: i) it has an extremely small base for generating jobs, in addition to presenting a dynamic of more precarious jobs than the previous model based on the manufacturing industry; ii) it is based on an import base of technologies and machinery, making the national productive system as a whole even more dependent on the international machinery production circuit. This condition of intensified dependency puts Brazil back in the international division of labor, establishing a relationship of subordinated power to the US empire in a higher degree of vassalage.

The fourth critical factor relates to the deepening international crisis of capitalism. Since the 2008 crisis, capitalism has been going through a seesaw of growth and recession in several countries, in addition to the acceleration of public debts (encurtador.com.br/ouyzNver and curtador.com.br/hvJXZ), but without a definitive solution to the center of the manifest crisis process.

The 2008 crisis was established in the financial market, with two partial solutions: the enormous monetary intervention of the main national States, especially the USA and Europe (Germany and France) in the adoption of the so-called monetary easing policy (encurtador.com.br/zCG35 ) with the expansion of the public debt in the main economies (encurtador.com.br/hvJXZ) and; the Chinese economic expansion that enabled a rapid recovery of the economic capacity of the USA, Europe and Brazil, insofar as their high rates of growth made possible, on the one hand, the solution of North American credit expansion, insofar as the Chinese are the main largest buyers of US public debt securities and; in the case of strategic commodities (minerals and cereals) the support of their international prices and even their expansion. These two solutions can hardly be repeated in a new scenario of global financial crisis, either due to the exhaustion of the Chinese economy itself, or due to the inflationary effects that will be produced in a new policy of monetary easing (check: curtador.com.br/sFSUX).

The crisis that now arises is deeper than that of 2008. The new financial crisis consolidates with the growing process of formation of new "bubbles" also located in the US (within segments such as education and again in real estate, for example, see curtador.com.br/ivxAZ). The growth of stock exchanges in several countries takes place within a classical speculative logic with the leverage of sectors that will soon fail.

The fifth critical factor refers to the disruption of Brazilian oil production chains. Petrobras has a structural significance in the Brazilian economy, everyone remembers the famous phrase by Conceição Tavares that “Petrobrás would be a friendly nation” (encurtador.com.br/djoQ1), to which the old master referred to the size and its importance, considering that the oil production chain, whether in the "backward effects" referring to the production of platforms and activation of the steel industry, or in the "forward effects" referring to petrochemical production (the closure of the fertilizer factory in Paraná is a good example) constitute key elements of the national economic dynamics.

Another important component is that the destruction of Petrobras also implies the loss of regulation of the economy in a key aspect which is the energy factor, whether in price control and stability, or in the ability to safely supply oil to the economy as a whole. The destruction of Petrobras as a strategic decision involves a far-reaching geopolitical decision, undoing an important part of the national State and removing the ability to make sovereign internal decisions, strongly weakening the sense of nation.

The sixth factor refers to the dismantling of the condition of national sovereignty, with the deepening of dependence and Brazilian neocolonization, determining the intensification of the overexploitation of workers, the marginalization of the technological frontier and the complete spoliation of national natural resources. This process takes place through two critical actions:

  1. With the destruction of the institutional base established throughout the period following the 1988 Federal Constitution, imposing a break with the bourgeois-democratic pattern and an agenda of radical geopolitical subordination to the US, including the military;
  2. With the complete dismantling of social policies, the flexibilization of labor markets and the destruction of social security, necessary components for the unbridled expansion of the Industrial Reserve Army and the establishment of the liberal-authoritarian-conservative ideology (“each one for himself, God for all ”). In Brazil we already have 41 million people who are unemployed and underemployed, constituting part of this huge mass of people who are not servile to capitalism (encurtador.com.br/mGX15).

The seventh factor refers to the Corona virus pandemic, something totally unpredictable and which adds another factor that is difficult to solve in an already very inconvenient scenario. The degree of spread of the pandemic and its economic consequences are severe, leading, according to the OECD prognosis (encurtador.com.br/htuy7) to a decline of more than 3% of the global economy, and even thriving economies such as China will for the first time in three decades it will show lower GDP growth rates (encurtador.com.br/mnEKW).

This opens up serious consequences for the Brazilian economy and society:

  1. The decline in demand for agricultural and mineral commodities, impacting both the agri-food industry, as for the mineral extractive industry, reaching the heart of the reproduction pattern of primary export specialization.
  2. The almost inevitable paralysis of segments of the productive and service sectors will significantly aggravate unemployment and the worsening of macroeconomic indicators, and the presence of a fiscal tourniquet of the EC 95/16 type makes State actions extremely fragile. It is worth noting that conventional packages such as the use of the FGTS or the advance of the 13th payment have little impact, either because of the population's level of indebtedness (encurtador.com.br/vwyM4) or because of the number of workers affected by these policies due to the destruction of the formal labor market resulting from LC 13.467/17.
  3. To the extent that a considerable portion of the small and medium-sized businesses that are the major employers in Brazil do not have credit conditions or the ability to survive in a demand crisis of the type that is approaching (measures of “social isolation” necessary to prevent the projection of contagion ), an acute scenario of social penalization must be foreseen. Still in this regard, it should be noted that informality (encurtador.com.br/kIKY6) is home to the vast majority of Brazilian workers, the impossibility of exercising these informal activities will constitute the most serious social crisis we have ever experienced.

The Brazilian bourgeoisie dependent on international interests pushed Brazil towards the biggest crisis in its history, and there is no way to deny its capital sins: the owners of the media for their arrogance and gluttony; the bankers for their avarice and lust; the military Generals for their anger and laziness, who imposed the complete subservience of the nation to the pettiest interests; the middle class out of envy and also out of incomprehensible anger at the little more justice and access of the poorest people to the minimum quality of life of the previous period. Behold, when this serious crisis passes, those people from above will have to face a radical reckoning with the people from below.

*Jose Raimundo Trinidad  is a professor at UFPA

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