The issue of development – ​​Brazilian compass

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By JOSÉ LUÍS FIORI & WILLIAM NOZAKI*

Brazil is currently under the simultaneous pressure of both the old and the new order under construction.

“The Latin American “developmentalist debate” would have no specificity if it had been reduced to a macroeconomic discussion between neoclassical or liberal “orthodox” and Keynesian or structuralist “heterodox”. In fact, it would not have existed if it weren't for the State and the discussion about the effectiveness or not of State intervention to accelerate economic growth, above the “laws of the market” (José Luís Fiori. “States and Development: notes for a new research program”, Project, study and research documents, ECLAC Office, 2013).

The crisis and the abandonment of “developmentalism”

The history of the 1970th century Latin American debate on the “development issue” is well known, as well as the history of the rise and decline of developmentalist policies practiced in the period between the Second World War and the “American economic crisis”, which marks the end of the Bretton Woods system in the early XNUMXs.

During this period, the hegemony of theses and “developmentalist policies” was sustained by the United States and supported by European countries, as a response to the socialist economic theses that exerted great theoretical and political influence throughout the world throughout the Cold War period. But during the 1970s, the end of the Bretton Woods system and the American military defeat in Vietnam, added to the rise in oil prices and interest rates, together provoked the first major crisis and recession of the post-war world economy. Second war.

Some even spoke of a “terminal crisis of American hegemony”, but it was exactly this crisis that opened the doors to a drastic change in foreign policy, and, above all, in economic policy in the United States. It was in the 1970s that the United States left behind its post-war developmental project, and began to defend its new neoliberal strategy of deregulation and opening of national markets, privatization of companies worldwide (except in the United States). state, dismantling social welfare policies, and globalization of the great productive chains and financial markets.

These liberal reforms should be accompanied by the adoption of the same orthodox macroeconomic policy in all capitalist countries protected by the interest rate policy of the American Central Bank and the European banking and financial system (“free markets and sound money").

The complete abandonment of the “developmental state” project gave rise to an exclusive bet on the driving force of “globalized markets”. This same strategy was adopted by almost all the capitalist countries of the “Western world”, and had a profound impact on Latin American countries, with the reduction to a minimum of public investment subjected to fiscal austerity and the instantaneous sanction of coordinated private and public agents. by the “independent central banks” of each particular country.

Back to the “development issue” on the global stage

However, in this third decade of the XNUMXst century, the United States and its European satellites, once again, are leaving behind this global economic strategy, constrained by their own failures, expressed in the asymmetry of development, in the hyperconcentration of income and wealth, in the explosion of poverty and unemployment, instabilities and financial crises, in climatic and environmental emergencies, in the weakening of democracies and in the advance of the extreme right.

Added to all these problems are the “deglobalizing” effects of the COVID-19 pandemic and its disruptive impact on international production and distribution chains, for example, of pharmaceuticals, fertilizers and food. Furthermore, the war between Russia and Ukraine has left deleterious economic impacts on the international energy market and on inflation rates in the Euro-American bloc of countries.

The crisis that is in full swing does not have any immediate perspective of solution or change of course, on the contrary, everything indicates that it will drag on for a long period, perhaps throughout the 2020s, with economic and financial consequences that should change the geoeconomic design of the world projected over the entire first half of the XNUMXst century.

This time, therefore, the change in the international economic policy of the United States and the other G7 countries and their satellites, and also of Russia and other national economies of the world system, is taking place under pressure from the facts and without any kind of ideological defense. or economic theorizing. In all cases, the governments of these countries returned to give economic primacy to the principle of their security and national defense, leaving aside their old beliefs in the autonomous virtues of markets.

In the case of the United States, Europe, Russia and China, and several other countries involved in the ongoing geopolitical and military confrontation, their new economic policies are increasingly subject to the strategic designs of their governments. Without submitting to or taking into account the opinion of the liberal press and the traditional criticisms of orthodox economists to “mercantilist”, “nationalist” or “protectionist” economic policies.

Nobody within these governments is concerned at this moment with the fact that their economic policy is more or less orthodox or heterodox, and everyone is adhering to the new policies through emergency decisions that are being taken every day, as a response to the immediate military challenge, and to the economic and social crisis that is building up within the main countries involved in the Ukrainian War.

These same countries have been making decisions and implementing policies that are increasingly focused on possible future wars that are threatening their country. In fact, more and more, war is becoming the common compass that has been guiding the main public and private investments of these great powers. But even in the case of countries far from the war, what they all have in common right now is a growing concern with the problem of their security, be it industrial, technological, food, energy or health.

Apparently, the world system hegemonized by the Euro-American bloc has already fragmented and there is no prospect at this moment that the new “multipolar order” will be consecrated by some great diplomatic agreement, or by some great Peace Treaty. In the same way, the hegemony of the dollar within the Eurasian economic system declines by leaps and bounds, opening doors to the progressive birth of a new multi-monetary world economic system.

Back to the “development issue” in the Brazilian scenario

Located in the south of the American continent, Brazil has also been facing the challenge of redefining its international insertion in the midst of this typhoon that is shaking the geopolitical and economic foundations of the international system built after the Second World War, and, in particular, after the end of the World War Cold.

Brazil is currently under the simultaneous pressure of both the old and the new order under construction. In other words, it finds itself with one geographic and military foot in the western hemisphere, and the other economic and financial foot increasingly involved with China and the BRICS group, suffering simultaneous pressure, geopolitical and financial, from both sides of this transforming world. Pressured, Brazil has no way of undoing, nor does it have to give up at this moment, its various connections and global articulations.

But, at the same time, the country cannot move forward amidst this fog if it is not capable of building, on its own account, the compass that should guide its public investments and its economic and technological agreements with large private, national capital. and international institutions that intend to invest in the Brazilian economy.

Brazil's strategic compass is not war, nor should it be participation in future wars by third countries, and this is why the hierarchy of its major national objectives and its major investment axes ends up being more complex than in the case of the countries that are involved with the war.

This discussion may take time to mature, but it needs to be started immediately. And it is with this objective that we gather and put on the table some ideas and proposals that are not new, but that may have been forgotten or obscured by the ultraliberal fanaticism that has taken over the debate on economic policy.

It never hurts to remember that we are a country with a continental territory, a populous demography, a diverse culture and, therefore, with a vocation to develop geographically in multiple dimensions. Overcoming poverty and building the nation's wealth depend on building our own compass.

The fiscal and monetary frameworks are mere instruments to enable us to reach where we want to go, they are means and not ends in themselves. Knowing the place we intend to reach – especially in the current international context of reactivating the role of the State, investment and security – requires us to know which regions, sectors and projects we should invest in, starting with a simultaneous mapping of the areas, challenges and opportunities in that our comparative and competitive advantages can be at the service of reindustrialization. To the North we have the Amazon Forest, an area with potential for developing a bioeconomy based on natural resources, biodiversity and forests, with an intensive model in ST&I and mobilizing productive knowledge networks, capable of taking advantage of the comparative advantages of the Amazon biome and capable of becoming articulate with the SUS provision system through biopharmaceuticals and biochemicals, items in which our import coefficient is very high.

To the south, we have a historically strategic region, the Plata Basin, an area conducive to building an infrastructure capable of making the country turn its eyes to South America and the Pacific, in a model that encourages South American integration. and that facilitates the connection with the main commercial partners of the region in Asia, a project, in turn, that can be materialized in the construction of bioceanic infrastructure that links the Atlantic to the Pacific.

To the East, we have our eyes turned to the Atlantic and black Africa, with the potential for the advancement of an offshore industry capable of mobilizing strategic natural energy and mineral resources, guided by the vertical integration of production chains that allow us to achieve self-sufficiency in refining, gas and fertilizers , the main items of our import list.

To the West, we have the strategic heart focused on national integration, which, in order to be consolidated, must contain the predatory and illegal expansion of the agricultural frontier in favor of stimulating new, more innovative agro-food systems with socio-environmental commitments.

The country has the potential to break new ground associated with strategic natural resources, such as lithium and new energy minerals, and industrial and technological resources, such as the production of semiconductors and integrated circuits, fundamental for all segments linked to the so-called Fourth Revolution Industrial.

Hierarchizing objectives and projects within these large areas is a political task that will take time, because it is not a purely technical problem, or even an economic one, and will involve permanent negotiation between interest groups that are extremely heterogeneous and have extremely unequal power. .

But even so, the definition of these objectives and the construction of this “compass” is an urgent and unavoidable task. Without it, the country can reach full “fiscal balance” and become a stranded boat waiting for markets and private investments, when in the rest of the world the states are already acting aggressively, aware that capitalism does not operate. – especially in times of crisis – as a mere market economy, but it does function, as the French historian Fernand Braudel said, as a true “anti-market”.

* Jose Luis Fiori Professor Emeritus at UFRJ. Author, among other books, of Global power and the new geopolitics of nations (boitempo).

*William Nozaki is a special advisor to the presidency of BNDES.


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