The economy in Lula's third term

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By BRUNO MACHADO*

What is lacking for a Brazilian new developmentalism is objective and material conditions for its practical implementation

Much is discussed about what Lula's third term in the field of economics will be like. Some expect a Lula 3 similar to Lula 1, quite conservative. Others see Haddad's nomination for Fazenda as a sign that the PT intends to put into practice its original proposals for the Brazilian economy. However, there is also the possibility that Lula will have four years of economic liberalism to elect a successor with a counter-hegemonic proposal for the Brazilian economy.

The challenge of Lula's third term in terms of the economy may prove to be less difficult than expected. After the coup against Dilma Rousseff, the Brazilian per capita GDP had been growing by an average of 1% per year, suffering a large drop in the pandemic. From the blow to the pandemic, the Brazilian GDP per capita did not even recover from the 2015 crisis. The average expected growth of the Brazilian economy is 2% per year, in terms of GDP per capita. A government with a rational economic policy, not based on market fundamentalism, achieves this growth without major structural changes.

With a possible new fiscal anchor, which takes into account the public debt in the medium and long term, and which makes it possible to adjust the public accounts both by cutting expenditures and increasing revenues, a good part of the path towards average growth of 2% per year will already be outlined. As a resumption of public investment and a rational international policy are also expected, one can be certain of optimism regarding Brazilian economic growth over the next four years.

The Lula 3 government should come to reorganize the Brazilian State following democratic, republican and scientific dictates and, at the same time, recover a level of GDP per capita equivalent, in purchasing power parity, with the pre-crisis numbers of 2015. With a slow, gradual and secure economic growth, within a PT government, Brazil may resume normality as a peripheral country in global capitalism, but it will not overcome its difficulties in producing and distributing wealth, much less will it be able to offer its people good conditions of employment, housing, security, health, education, culture and leisure.

A real transformation in the material life of the average Brazilian depends on the resumption of the rapid economic growth that Brazil experienced from the Vargas period until the 1964 coup. through industrial policies, Brazil could squander economic development with GDP growth of around 6% per year, which would make us equal to Italy in three or four decades, in terms of GDP per capita and if Italy maintained its current average growth during that period.

That such developmental thinking is present in the PT is no secret to anyone. What is lacking for a Brazilian new developmentalism is objective and material conditions for its practical implementation. And the impediments to these conditions proved to be political, not economic. With luck, Lula is preparing a moderate first term to gain market confidence and elect a developmentalist successor who will not suffer market boycotts as severe as those suffered by Lula in 2003, even though such attacks are inevitable against any deviation from neoliberalism.

Contrary to what Ciro Gomes repeated, the biggest obstacle to Brazilian economic development is not the lack of ideas or projects, but the near impossibility of implementing an economic policy that is pro-economic development without suffering from the speculative terrorism of the financial market, which controls so much the media and Congress. Lula, like Dilma Rousseff, learned in practice how strong this market is in Brazil, and demonstrates great caution in disclosing each new economic proposal.

The greatest contribution to building an economically developed Brazil that Lula can make is to use his position as leader of the masses to raise the politicization and class consciousness of Brazilian workers. Because, only with the active action of the working class, any leftist ruler will have power to carry out structural transformations in Brazil.

*Bruno Machado is an engineer.

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