Structuralist and systemic-financial approach

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By FERNANDO NOGUEIRA DA COSTA*

The Yuppie generation adopted neoliberalism and preached the abandonment of public policy formulation in search of social equity but praised meritocracy to justify itself.

The Brazilian Association of Economists for Democracy (ABED) organized the collection of essays, Carlos Lessa, the Past and Future of Brazil (ABED \ Perseu Abramo Foundation) – download here [ABDE – Carlos Lessa The Past and Future of Brazil – FPA 2023] -, in his honor. It allows different readings of his vast thematic work.

I will try to distinguish the subtle theoretical-methodological differences between the generation of the dear professor's structuralist approach and mine and that of some practitioners of a systemic-financial approach. Many colleagues choose to “denounce capitalism”, criticizing its “financialization” as reversible, that is, they react against the advancement of history and, instead of being revolutionaries, they position themselves as reactionaries…

Structure is the way something is constructed or arranged. It deals with the organization, arrangement and order of the essential elements, components of a concrete or abstract body, in this case, of an Economic Science (Economics with a capital letter) – and not economics as an activity. It considers, in relative terms (%), all the components necessary to support it, as science requires the measurement of concepts.

The structuralist approach focuses on the economic, social and political structures capable of shaping the economic development of a country or region. It analyzes how the characteristics and relationships between different sectors of economic activities, as well as government institutions and policies, play a fundamental role in determining economic growth and income distribution.

Among others, there are some key principles of the structuralist approach, such as the emphasis on the composition of the productive sector, the distribution of resources and the organization of productive factors. Structuralist economists recognize that economic development is not uniform everywhere, that is, different sectors and regions of a country or a continent can develop in an uneven and combined way.

The structuralist approach considers international trade and the issue of economic dependence of underdeveloped countries in relation to developed industrialized countries. It states that the type of insertion of a country in the global economy affects its ability to develop independently, although without full autonomy.

The structure of government institutions and policies is seen as critical to economic development. Structuralist economists analyze how public policies, such as regulations, subsidies and investments in infrastructure, shape the economy to “jump stages” in the development process.

Equity in income distribution is an important concern for the structuralist approach not only from the point of view of social justice but also from the dimension of the internal market. It assesses how economic and political structures affect income distribution and the well-being of the population.

Industrialization and productive diversification of the economy are means of promoting economic development. Structuralists criticize excessive dependence on primary sectors, such as agriculture or mining, for limiting sustainable growth.

The structuralist approach highlights the historical context and specificities of each country or region. It recognizes that there is no one-size-fits-all approach to economic development. Policies and strategies must be adapted to local circumstances.

It was very influential in developing economies in Latin America, especially in Brazil, in the nascent industry phase (1951-1980), when a developmental state with a national project was in force. However, the Economy in defense of the “free market” as a value above development, competed ideologically with this national-developmental approach.

The generation yuppie (Abbreviation of Young Urban Professional), an Anglophone term coined in the early 1980s, typified a young, upwardly mobile urban professional. These young, professionally well-paid executives spent their income on luxury items and leisure activities and aimed to distance themselves from the social concerns of previous generations. They appreciated the Era of Ronald Reagan and Margaret Thatcher.

This generation adopted neoliberalism, to understand economic processes in a market economy, and preached the abandonment of public policy formulation in search of social equity. On the contrary, he praised meritocracy to justify himself.

Os yuppies They became known for their so-called “rentier capitalism”. It would have resulted from the belief in economic practices of controlling access to any type of property (motor, real estate, financial, intellectual, etc.) and obtaining significant profits without contributing to society. Materialism does not believe in this demiurge idealism.

Critics of generalized rentierism think they are acting in defense of generating income through the production of useful things for society. For example, Luiz Carlos Bresser-Pereira, a notable and admirable new developmentalist, denounces: “from the 1980s onwards, rentier capitalists, many of them heirs, replaced businessmen in the ownership of these companies. To manage their wealth, a special class of professionals emerged, financiers, brilliant young people trained in the best universities. They also assumed the role of ideologists or organic intellectuals of the rentiers and adopted neoliberalism as an ideology and neoclassical economic theory, or the Austrian School, as a supposedly scientific justification”.

Financialization describes the systemic process by which exchanges are progressively intermediated by financial instruments. In a market economy, with division of labor, they enable goods, services and risks to be exchanged for currency and facilitate the transformation of income flows into stocks of wealth-maintaining assets.

This term is used to describe the irreversible development of financial capitalism. The big mistake of its critics is “throwing out the baby with the bathwater”, that is, not understanding the key role of financial leverage in expanding economies of scale, productivity, operational profit and consequent employment and income of employees. workers.

Carlos Lessa's structuralist approach evolved into the contemporary systemic-financial approach. His didacticism allows us to understand the bases of this.

Professor Carlos Lessa, in a famous lecture to students in the 1970s, used as an example, to illustrate an analytical operation, the dismemberment of… a cow! From this metaphor he deduced that all economic analysis was an operation of partitioning ideas. The collection of parts obtained by the analyst is made up of concepts. But the idealized object, placed under analysis, admits, in the same way as the cow Magdalene, countless ways of partition.

Behind each set of economic concepts, there are implicit or explicit criteria. Depending on the highlighted concepts, keeping the partition criterion hidden, anything can be demonstrated. However, the Magdalene is not resurrected, that is, the whole that has been dismantled, whether by a butcher or a veterinarian.

In the analysis of contemporary real capitalism, it is not possible to distinguish between “real sector” and “financial sector”. Production and financial activities are integrated and/or interconnected as subsystems that make up a single economic-financial system.

This should be taught to all economics learners. There is no autonomous “banking sector”, just as there is no “productive sector” independent of monetary-financial circulation. Banks and so-called non-financial companies are components of the same financial capitalist system by definition.

In Economics, the concept of structure can be understood as “the characteristic proportions and relationships of an economic set located in time and space”. Distinguishes the order and integration of the parts of a unified body or system.

Given the heterogeneity of the units that form the set, the idea of ​​interactive interdependence of the component elements is presented. Just as economic and extra-economic factors are part of the analysis of any socioeconomic system, economic and financial factors are part of the analysis of the economic-financial system.

In 1967, the manual known as “Castro-e-Lessa” already treated the stagnant behaviors of economic agents as a reminiscence to be overcome. He knew there was another cycle to close: from extreme specialization to the mandatory return to the interrelations between all social disciplines – and all Sciences – with the overcoming of the division of labor over sections of a single, absolutely indivisible reality.

From this holistic vision, the differences and particularities of the economic problem mattered precisely, considered in each specific case. In the most general framework, economic and financial factors were placed in relation to the problems and circumstances of underdeveloped countries, especially those in Latin America.

*Fernando Nogueira da Costa He is a full professor at the Institute of Economics at Unicamp. Author, among other books, of Brazil of banks (EDUSP). [https://amzn.to/3r9xVNh]


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