The issue of deindustrialization

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By JOSÉ RAIMUNDO TRINDADE*

The undoing of Brazilian industry: a return to the debate Roberto Simonsen – Eugênio Gudin

The closure of Ford in Brazil, as well as other recent episodes, constitutes the umpteenth act of a historical plot whose gradation expands over the last thirty years, reaching greater or lesser intensity depending on the degree of economic liberalization of the government in question, however, the dismantling of national industry and the reprimarization of the economy were maintained and deepened. The continuity of this debate and the mandatory understanding of its economic and political significance is of the utmost importance in thinking about a national agenda. The text that follows deals with this process in the light of a classic debate in Brazilian economic history: the Simonsen/Gudin polemic[I].

What justifies treating this process and its current consequences in the light of a debate that is practically unknown today, refers to two fundamental points: i) what are the limits and difficulties of peripheral industrialization and; ii) what lessons can still be learned from history to think about the present and future conditions of the Brazilian economy and society. The text is divided into three parts, initially we make a brief foray into the problem of deindustrialization and reprimarization of the Brazilian economy in recent decades. In a second, we visit the classic debate that is at the origin of Brazilian development proposals in the mid-1940s. Finally, we make the interaction between the two exposed points, seeking to build some propositions about the future.

The global economic reforms of the 1990s, 2000s and 2010s were based on a sharp business rationalization that accompanied the macroeconomic reordering of the so-called neoliberal prescriptions, a set of propositions referring to economic reorganization that deepened the degree of dependence of Latin American economies. The pillars of the “neoliberal model” are, in summary: i) trade liberalization; ii) financial deregulation; iii) privatization of public companies; and iv) deregulation, flexibilization of labor relations and deepening of the overexploitation of the workforce; v) dismantle of social policies. It was in this context that an agenda was imposed, especially on the most industrialized countries in the region (Brazil, Mexico and Argentina), which established a trajectory of lower technological content and reprimarization, first of its export bases, and then of its entire economic base. . These components of deregulation and economic disruption have been reinforced in the agenda of the government and the Brazilian bourgeoisie since the 2016 coup.

Specifically, the evolution conditions of the Brazilian export basket in recent years raised the question of the problem of the development of an “export pattern of productive specialization”, whether due to the export base of low technological intensity, or due to the strong dependence on the cycle of appreciation of the international demand for basic or primary goods.

It is located in the 1990s, and more specifically the FHC government and the first neoliberal wave, as a period of significant increase in Brazil's external vulnerability, and the high vulnerability of the balance of payments would be strongly conditioned to the greater presence of international capital in the country. its economic matrix, this because the control over the dynamics of accumulation has become increasingly internationalized, as highlighted by prof. Reinaldo Gonçalves (1999) “there was an 80% increase in the degree of denationalization of the Brazilian economy in the period 1995-1998”[ii].

Since then, the tendency has been for a decrease in the industrial share in the Brazilian GDP, reaching 20% ​​in 1998 and only partially recovering in the years 2003/2010, however with lower indicators in the period 1970-1980, for example, it reached 23% in 2005, but remained well below previous decades and the problem with this trend is that it is based on the evolution of added value[iii]). According to a study by IEDI (Institute of Studies for Industrial Development)[iv]: between “1980 and 2017, the real growth of manufacturing value added (VAM) in Brazil was only +24%, while in the world the increase reached +204% or +135%, if China is excluded. We were in last place among the 30 countries analyzed.”

The structural profile of the Brazilian economy, now centered on agribusiness and on the export of raw materials with low added value, seems to redefine the historical conditions of the debate held between 1944 and 1945 between two notable defenders of the virtues of capitalism, however with very divergent opinions regarding the role development policies, state intervention and Brazilian industrialization itself.

Roberto Simonsen presents in August 1944, still under the hot breath of the Second World War, a document entitled “The planning of the Brazilian economy”. The author was not at all sympathetic to any socialist leftist idea. The author was a wealthy businessman, but relevant to the world and a scholar of Brazilian economic history.[v]. Simonsen anticipates part of the perceptions that would be developed within the scope of the Economic Commission for Latin America (ECLAC) regarding the role that industrialization would play for the development of Latin American countries. However, this modern Brazilian “Mauá” also advocated that the “planning of national economic strengthening should cover (...) the treatment of industrial, agricultural and commercial problems, as well as social and economic ones in general”.

Unlike Simonsen, Professor Eugênio Gudin, a Brazilian neoliberal archetype, an admirer of Hayek and to a large extent a guide to Brazilian conservative monetarist thinking, advocated a version of the so-called Ricardian “theory of comparative advantages”.[vi]. Ricardian theory considered the benefits to a nation of having a relative advantage in production in international trade. This mutual relative advantage made it possible, according to this logic, for international trade to distribute benefits among nations, in such a way that even with specialization between agricultural and industrial countries, there would be no losses to countries that dedicated themselves to activities less intensive in technical progress. As a result of this vision, combined with a perspective that limited Brazilian insertion in the world, Gudin advocated a condition of “agrarian development” and economic coordination totally surrendered to the logic of the market, with minimal state intervention and free of any restrictions on foreign capital.

The famous debate established a first “tour de force” between the so-called developmentalist and neoliberal proposals. Over the past seventy years, there has been a permanent tug of war between an agrarian Brazil and another that, with great difficulty, sought to establish the minimum of industrial organization. It is worth noting that, following Celso Furtado's perspective, industry is not a panacea capable of solving the problems of inequality and poverty of the Brazilian population, just as this author already observed in a 1975 text that the industrial model of Brazilian development was moving towards a structural impasse, both linked to low industrial organization and interaction between productive sectors, or due to structural reforms not carried out: agrarian, urban, social and political[vii]. However, the accelerated dismantling of Brazilian industry will exact a high social price.

The current neoliberal cycle (2016 / ?) establishes a fierce destructive logic of the national industrial production system, combining a more regressive model of the economy and deepening the primary export base, in such a way that today all the main products exported by the country are basic products such as iron ore, oils and soy products. In the same way, the reproductive base of capital is destroyed with more complex technological levels, as was done with the dismantling of the aeronautical industry (Embraer) and, even more forcefully, the privatization of the national energy system, both in the process of destruction of Petrobras and denationalization Pre-salt, as well as around the possible privatization of Eletrobrás.

At this moment in the conjuncture, from the medium and long term economic point of view, Brazil is facing a critical crossroads, the deepening of a merely agrarian-export model is contradictory with the social complexity of contemporary Brazil, a society largely urban and densely populated. We consider that the conditions for Brazilian economic development require the establishment of a new and astute industrial policy and, mainly, economic policies aimed at building a future trajectory that breaks with the decline curve of the national industry, establishes technological goals and uses the advantages of the broad national market for the development of a less socially and regionally unequal society, for this again planning policies and an intervening and distributive State of social wealth will be required, if this is possible it constitutes the fundamental unknown for the coming years.

*Jose Raimundo Trinidad He is a professor at the Graduate Program in Economics at UFPA. Author, among other books, of Criticism of the Political Economy of the Public Debt and the Capitalist Credit System: a Marxist approach (CRV).

Notes


[I] Check: Ipea. Development and the pioneering debate of 1944-1945. Brasília: Ipea, 2010.

[ii] GONÇALVES, Reinaldo. Globalization and denationalization. São Paulo: Paz e Terra, 1999.

[iii] TRINDADE, JR, COONEY, P.; OLIVEIRA, WP de. Industrial trajectory and economic development: dilemma of the re-primarization of the Brazilian economy. Review of Radical Political Economics, vol. 48, no. 2, 2016. p. 269-286.

[iv] Letter IEDI, n. 940. A Point Outside the Curve, access at: https://iedi.org.br/cartas/carta_iedi_n_940.html.

[v] Roberto C. Simonsen. Economic History of Brazil (1500-1820). Brasília: Federal Senate, 2005.

[vi] Eugênio Gudin was the author of the important work Principles of Monetary Economy. Rio de Janeiro: Editora Agir, 1965.

[vii] Celso Furtado. development economics (Course given at PUC-SP in 1975). Rio de Janeiro: Counterpoint, 2008.

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