fast-paced and tumultuous

Image: Francesco Ungaro


An interpretation of the situation of September 2021 in light of the structural economic crisis in the country

First of all, it is necessary to recognize the fundamental thing: the conjuncture is accelerated and tumultuous. This means saying that it is necessary to give up the pretension of “certainty and meridian clarity”. More than ever, the principle of “clear and distinct” ideas must be set aside. This is not about embracing any “anti-Cartesian” principle. It is merely about adapting to the object: to the current reality. It is not clear, it is in turbulence, in an accelerated movement that generates a lot of “dust and fog”, making it impossible to clearly perceive the actors and actions. If the ideas are very clear, it can only be because they are based on a simplified and simplifying analysis

However, recognizing the complexity of the moment we live in cannot prevent us from taking consolidated theoretical references to guide our analysis. Much rather the opposite. We can only bring some clarity to the current confusing and complex picture if we look at it using the proper glasses, microscopes and telescopes that theory offers. In this sense, Trotsky's epigraph that opens Valério Arcary's article “O scream da Paulista”, published on September 10 in “A Terra é Redonda”, is very illuminating:

The declining bourgeoisie is incapable of maintaining itself in power with the methods and means of its own creation – the parliamentary state. But the established bourgeoisie does not like the fascist means of solving its problems, for shocks and disturbances, although they are in the interests of bourgeois society, involve dangers for it as well. This is the source of the antagonism between fascism and the traditional parties of the bourgeoisie” (Leon Trotsky, The Struggle Against Fascism in Germany)

From my point of view, what we have witnessed recently – from the screams on Avenida Paulista on September 7th to the Temer-Bolsonaro Letter two days later – was nothing more than the full demonstration of how dysfunctional it would be (and is) for the national bourgeoisie and other dominant strata the implantation of a genuinely fascist regime in Brazil today. The reasons for this resistance are numerous. But it's easier to understand resistance when we understand the opposite: when it's functional and necessary.

Fascism is only functional when: (1) a real challenge to the bourgeois order emerges or, at least, a profound and current risk of breaking with the structure of property and consolidated social stratification; (2) the fascist order guarantees management autonomy to a government capable of facing economic-structural bottlenecks and leveraging/accelerating, simultaneously, the accumulation of capital and employment, and by extension, simultaneously making the masses of profit grow and salary.

This was the typical picture in Germany in 1933. Hitler took what was left of power from the Social Democrats and stifled the rise of the Communists. It also broke with the last traces of the asphyxiating Treaty of Versailles and imposed a pattern of administration and economic intervention in which the State began to direct and drive the economy, increasing military spending and gross fixed capital formation, with repercussions on demand. aggregate income and employment, within a strategy in which there was no room for price explosions and speculation in foreign currencies.

None of this is present in contemporary Brazil. There is no risk of the emergence of a socialist order. There is not even a risk of a radical discontinuity of the bourgeois ordering and social stratification pattern. The main – and, in a sense, the most “radical” – opposition party of the current government is the PT. It is a reformist party, which has already demonstrated its capacity for administration, negotiation with Congress and respect for the Constitution and the “unwritten norms” for the functioning of the strange and exclusive “Brazilian democracy”. Simultaneously, Bolsonaro's economic management has been faltering, erratic and totally incapable of pulling the country out of the crisis. A crisis in which the country finds itself today and towards which it has been heading and rowing slowly since 1994. In fact, the commitment of the national elite with the neoliberal and privatizing program that galvanizes the thinking of 11 out of 10 conservatives in contemporary Brazil is dehydrating the State and preventing it from assuming the role that it should have in facing and overcoming the structural economic crisis in which Brazil has become entangled.

The heart of the crisis in the Brazilian economy is its prolonged process of deindustrialization. From the workers' perspective, the two main expressions of this crisis are the high unemployment rates (which fundamentally affect the former “elite” of this social stratum: the industrial working class) and the fall in average wages, associated with the gradual depression in the number of workers. better paid workers. From the point of view of the business community, this crisis appears as meager growth in virtually all sectors (except agribusiness). What this means? That some sectors lose revenue and profit with each passing year. Others are stagnant. And others grow very little. And this is much more problematic than it might seem to a non-entrepreneur (and non-economist). As the late Carlos Lessa used to say: “the capitalist economy is like an airplane. It only stays stable in accelerated movement. If it stops or slows down, it falls and shatters.” We are slowly almost stopping. In these circumstances, the weight of fixed costs rises and the net rate of return (excluding financial gains, only productive gains and/or gains from the main activity) falls faster than revenues. In Portuguese (and not in “economês”): even companies with slightly increasing revenues will show stable profits and companies with decreasing revenues will show an even greater decrease in profits than those with stable revenues. What's the problem? Simple: the bourgeois economic order is a radical Darwinian system that promotes the systematic decrease in the number of survivors within the environment. Those who don't eat are eaten; who does not grow, dies.

Now, the structural problems of the Brazilian economy come from the installation of the Real Plan. At first, it was the industry that lost via competitive exposure associated with the use of “Siamese anchors” – monetary (interest) and exchange rate (appreciation of the real) – in controlling inflation. This loss imposed on industry by FHC's Real Plan deepened during the PT years. Why? Because, in these years, the Central Bank maintained its autonomy and its inflation control policy. In fact, Bacen's autonomy was deepened in the PT years, through negotiations involving the Executive, the Senate (which approves - or vetoes! - the nominee by the President of the Republic for the position of President of the Central Bank) and the powerful Febraban. The result was the maintenance of an inflationary control policy centered on the relative depression of the prices of the sectors tradables (importable and exportable). Agribusiness and the mining industry circumvented the perverse effects of these policies on their profitability through the accelerated growth of the international price of commodities, driven by China's growth. Industry paid the price, under increasing competitive pressure for trends exporter of the world's new economic engine: China itself. Simultaneously, the wage, union and labor relations policies of the PT governments increased the bargaining power of the working class and, with it, nominal and real wage rates. The industry saw its productive profitability clamped down like a pair of tweezers: wages on one side and interest/exchange rates on the other, with no possibility of passing on rising costs to prices, due to external competition. In this context, the import of industrial goods increased and the internal and external market for national production dwindled. The reaction of the industrial business community manifested itself in the rupture of FIESP with the Dilma Government. Many have not (still) understood this rupture and classify it as a “betrayal” and even a “lack of horizon” by the bourgeoisie. Those who classify the movement in this way rely too much on the effectiveness of compensatory policies (fiscal subsidies, above all) and on policies to support innovation (in which the PT governments were prodigal and efficient) to face structural market problems. These policies are – and have turned out to be! – clearly insufficient.

However, the economy is a system of communicating vessels. And the industry's crisis spills over into the other productive segments. Unemployment – ​​for example – in the footwear industry in Rio Grande do Sul could not fail to spill over into (demand and growth) trade and services throughout the territory occupied by the great cluster of footwear in the Metropolitan Region of Porto Alegre. And what is true for this territory-industry is true for the whole country, which gradually began to show decreasing GDP growth rates throughout the 2014s. The crisis – already evident in 0,5, when the country's GDP grew by 2015% per year, despite all efforts to mobilize and spend the public sector – will deepen in XNUMX (with the radical, mistaken and unsuccessful change of economic policy in Dilma's second term) and in subsequent years, during the Temer and Bolsonaro administrations.

What is preventing the country from facing its structural bottlenecks? Very simple: the bourgeois project in progress since 1989 is the project of dewatering and downsizing the public machine. It is not the 1964 project, which used the strength and capacity of financial, fiscal and productive mobilization of the State to leverage and strengthen the competitiveness of the set of national productive sectors (with emphasis on the industrial and financial bourgeoisie) and, by extension, strengthen the autonomy and political and economic expression of the country in the world. What is the reason for this change of perspective and strategy?

Contrary to what many people think, this is not about “ideological blindness” and “irrelevant and ignorant commitment” to a neo-liberal program, which has already proved to be inconsistent in central countries. If one wants to understand the rationale of this “pseudo-blindness”, it is necessary to understand that, since the first presidential elections after the dictatorship crisis, the second round has been disputed between “the candidate of Globo-e-da-Ordem-e-Progresso ” and a candidate from the “Partido dos Trabalhadores”. The surprise represented by Lula's presence in the 1989 second round fueled a new consensus and a reaction. The new consensus was that the PT, sooner or later, would come to power. The reaction was: it is necessary to dehydrate the Brazilian State (huge, tentacular, powerful, with an enormous capacity to interfere in the economic order and social stratification) before the emergence of the “dangerous and announced” PT victory.

FHC did what he could. Its victory was conquered with the Plano Real: there, the rings of inflationary profits were handed over, in exchange for the leviathanical fingers of the State. FHC presided over the private party, in which the dehydration of the State was associated with the re-accommodation of the relative spaces of the national and international bourgeoisie: niches hitherto closed were opened up for the latter, such as the financial system, while promoting the emergence of a new segment of the “national bourgeoisie” in the sectors of mining (Vale), Steel (CSN) and public utility services (electric concessions, Oi, etc.), which – it was hoped – would be chronically anti-PT.

But the strategy was insufficient. Even with a dehydrated State and with a new bourgeois composition arising from a privatization policy based on “organized auctions”, the PT not only managed to govern but also won 4 consecutive re-elections. The “problem” of the PT governments was not their inefficiency, inefficiency and ineffectiveness. Much less corruption. It doesn't matter what Globo and its analysts intend and/or want to convince the population. The “problem” was just the opposite.

However, PT governments were unable to untie the “blind knot” of the Brazilian economy: the monetary-exchange rate policy of controlling inflation, which has been leading to gradual deindustrialization and loss of economic dynamism, compromising national autonomy and sovereignty. When the crisis emerged in 2014 and was taken to an extreme in 2015, the possibility of a conservative reaction emerged. That manifested itself in the 2016 coup, in Lula’s arrest and in the 2018 elections, which were monitored by the Army (Villas-Boas), shackled by a STF committed to the coup (and chaired by the puppet Dias Toffoli) and galvanized by the great staging of fake-ada never investigated in depth by the cunning and conservative national media.

The 2016-18 period was the period of the “dreams” of the hegemonic political project of the “conservative classes” in the country. Not only the appearance was maintained, but the validity of a formally democratic political-institutional order was maintained, but it was fully protected by a highly politicized and highly politicized Justice system (Judiciary and MPF) and committed to sustaining the exclusionary Brazilian social and economic structure. Given the deterioration in the respectability and political-social appeal of the conservative parties, which were involved in the 2016 coup and which were deeply tainted and stained with the criminalization/judicialization of politics in this car wash period, the only alternative left was the “new- self-intentioned” outsider as a candidate with enough mass appeal to defeat the biggest enemy – the PT – in the 2018 presidential elections: Captain Bolsonaro. He was never the preferred candidate of the coup arrangement. But he was the possible candidate to maintain the pantomime of civic-political-institutional pseudo-normality. What was expected of him is that he “knows his place” and dances to the music with respect to the established hierarchy. But that's not exactly what happened. The “captain” decided to rule.

Bolsonaro did not “invade all the beaches”. On the economic front, he kept his commitments. He put Paulo Guedes in charge of continuing the reforms and dehydration of the State that form the axis of the hegemonic conservative project. He placed Tarcísio Gomes de Freitas (the competent former Director General of DNIT in the Dilma Government) in the Ministry of Infrastructure, with the task of meeting the demands of “combating logistical costs” that spur the profitability of exporting agribusiness. He put Tereza Cristina Dias in charge of Agriculture. And Ricardo Salles to let the herd pass in the Environment.

The problem is that the conservative “economic project” in Brazil today is marked by profound contradictions. The state's dehydration and respect (or, at least, attempt to respect) the ceiling rule make the state less effective in promoting investment, resuming growth and meeting business demands for infrastructure renewal and depression of the Brazil cost. So that, even with the continuity of the liberalizing reforms, their effectiveness was negligible.

There are two interpretations that economists give to the “effectiveness of liberalizing reforms”: 1) the reforms change the structure of the economy, but the readaptation period is long and painful; therefore, its “positive effects” are only noticed in the long term; 2) the reforms depress the purchasing power of the working class and state intervention, deepening the chronic problems of effective demand of the capitalist order, so that they are not effective, neither in the short, nor in the medium, nor in the long term. Liberals hold the first point of view; Keynesians and – as a general rule – heterodox advocate the second[I]. My perspective is heterodox. But this point – here – is minor. What is important to understand is that, even within the liberal logic, structural reforms would not be effective for the recovery of the economy in the short term. And the problems already start there: the deadline that the bourgeoisie in general – and the industrialist one in particular – was willing to give was very short. In fact, the Brazilian bourgeoisie is used to demanding everything “for yesterday”.

And anyone who thinks the problem is in Guedes' management is wrong. I confess – against my will – that his administration surprised me positively, due to his perception of the whole and his attempt to manage the economy consistently. Paulo Guedes lowered the basic interest rate and devalued the real. As interest rates dropped, asset prices rose. The Stock Exchange in Brazil reached levels that “never before, in the history of this country, had reached”, fueling the emergence of new Brazilian billionaires over the past two years. Simultaneously, he deepened the liberal reforms inaugurated by Temer, leading to a depression in real wages. With a higher dollar and lower wages, some industrial sectors were able to rebuild part of their prices and profit margins. Some – few – were even able to recover market shares that had been lost to imports. In addition, Guedes was “pragmatic” in the interpretation and treatment of the PEC do Teto and, with the help and support of the “opposition”, generalized the Emergency Aid in 2020, which was responsible for: (1) the relative support (when compared to other countries of the world) of the internal economic dynamics in 2020; and (2) for the conservative victory in the municipal elections of the same year.

But none of these actions were able to face our structural problems. The problems had been accumulating and were fully manifested at the beginning of 2021. Inflation took off, forcing Bacen to go back on its tactics and raise interest rates. As a result, speculative stock market gains suffered a depression, the dollar became cheaper again (despite strong speculation, driven by growing political instability) and the meager industry gains were lost. Labor and social security reforms were somewhat effective in curbing wage growth. But the flip side of this purchasing power depression is the domestic market depression. Which is deepened by inflation and the abrupt drop in the value and coverage of Emergency Aid. The slack in the “Ceiling” associated with pandemic spending was partially offset by the depression in investment spending. And Infrastructure has not kept its promises. Frightened, the industry began to criticize Eletrobrás' privatization project. Especially since the water crisis: if, with monitored prices, Brazil already has one of the most expensive energies in the world, what would be “post-privatization”?

To make matters worse, Bolsonaro’s management in the social and political areas was even more inefficient. The Captain divided up the ministries of Health, Education, Human Rights, Justice, Chief of Staff, General Secretariat of Government, Social Development among ultra-right military personnel and leaders of social and political segments (such as the Evangelical Churches and Centrão) committed to their “(anti)theoretical and (anti)ethical beliefs”. Figures such as Ricardo Vélez Rodrigues, Abraham Weintraub, Milton Ribeiro, Eduardo Pazuello, Marcelo Queiroga, Damares Alves, Walter Braga Netto, Augusto Heleno, Osmar Terra, Onyx Lorezoni and Ernesto Araújo came to dominate the top echelon. Now, even if these ministries are considered “minor” by the financial market and agribusiness crowd, their budgets and social capillarity are far from being small. And the gestures of Bolsonaro's ministers were not just ideological. They were – and continue to be – absolutely exemplary inefficiency. Ernesto Araújo and Abraham Weintraub, more than once, compromised Brazil's relations with China, the country responsible for 70% of our trade balance, for the profitability of agribusiness and for stability and "speculative calculation" (so important for the market finance) of domestic macroeconomic policy. Health management was even worse, leading to an absurd morbidity during the pandemic, due to the President's orders, excesses and outbursts and prevarication and negotiations with the acquisition of vaccines (which the CPI of Covid-19 is revealing every passing day). The management of Education and Research is not hilarious only because it is tragic, compromising the continuity and quality of the national innovative system and professional training. And what is even worse for the consolidation of Bolsonaro's reactionary electoral base: the attacks on public education were not compensated by any "nice" to private education: the cut in funding for scholarships, research and investments in Private Universities were even worse. greater than the cuts perpetrated on Public Universities. And this “policy” was carried out precisely in the year of Covid-19, when private enrollments fell by up to 50% in several institutions, which are still at risk of bankruptcy.

The clearest manifestation of the depression of business support for Bolsonaro was given by the growing attacks by the Judiciary on his actions, through inquiries into the fake-news, the investigation into the “cracks” and the illicit enrichment of their children and for the authorization of the implementation of the Covid-19 CPI. Those who think that the Brazilian Judiciary in general (and the STF in particular) operate according to exclusively (or even primarily) legal principles are mistaken. The installation – or not – of inquiries and judgments such as those of Mensalão, Lava-Jato and the fake-news are defined exclusively at the political level. What “is not interesting to analyze and judge”, suffers from “lapse of time”; as, on one occasion, the jurist Carmen Lúcia recalled. The Judiciary's actions on Bolsonaro were a warning: Less! Hold on!

Bolsonaro decided to pay to see. After all, he had uncovered the Brazilian pressure cooker and revealed the existence of a fascist, ignorant and angry mass that “never before in the history of our country” had dared to scream so loudly. The acts on the 7th and 8th of September were organized by Bolsonaro and his troupe months in advance and with all the support and resources they managed to galvanize. It was an arm wrestling match. Bolsonaro wanted to show his “true size”. And he showed. He is much smaller than he even thought.

It is not just a matter of the fact that the demonstrations in Brasília and São Paulo were smaller than the expectations of the Bolsonarists. It is also about the difficulty in holding expressive demonstrations in other capitals. There was a lack of money and expressive support/funding for these events, which were – and were seen by all, correctly – as an attempt/preparation of a coup. Supporting this attempt would involve supporting the empowerment of an incompetent President, who surrounds himself with corrupt and ignorant people and who is incapable of even signaling a consistent and effective economic policy, capable of contemplating a significant portion of the national bourgeoisie.

The responses from the STF, Congress, the leaders of the traditional political parties and the country's business leaders (through the critical letter to the government that circulated before the events of the 7th and 8th) were much more forceful than so many left-wing analysts were able to to see. Bolsonaro's retreat on the 9th was not due to the lack of support among his radical bases. The strike/lock-out of truck drivers on the 8th could, indeed, lead to a paralysis of the country. Bolsonaro’s retreat – which was already manifested on the 8th, through requests for the closure of the movement of truck drivers and leaders of agribusiness and logistical enterprises – was already the unfolding of a refusal: the refusal of the political, economic and financial elite of the country in supporting his attempted coup and/or empowerment. The answer was a resounding and resounding NO! So loud even he could hear it.

Is Bolsonaro dead? Of course. But he emerges extraordinarily shaken from this process. He loses confidence and the ability to re-mobilize his most radical base. He loses electoral muscle. His daydreams of extreme power made it clear to all defenders of “Order and Progress” that he would never accept the role of puppet and pawnbroker. His incompetence as a manager and his ability to surround himself with the most mediocre cadres of the lower political and intellectual clergy had already made it clear that granting him exceptional powers was unfeasible. In short: he stopped being a minimally reliable and viable candidate to contest the next elections with “public enemy number 1” of all conservative hosts: lulo-petismo.

Evidently, the conservative forces will not stop working to articulate a political-electoral alternative capable of defeating Lula in 2022. And this challenge is getting bigger. For a simple reason: since 1989, all elected presidents in the country have had to convincingly present themselves as popular and anti-establishment candidates. Collor was the hunter of Maharajas. FHC was the father of Real, who ended the corruption of hyperinflation. Lula is …. Squid. Dilma was Lula's candidate. Bolsonaro was the guy who was going to end traditional politics and corruption in the country. The right has learned that not even with the support of Globo and the “Mensalões e Lavas-Jatos” is it capable of placing candidacies like Alckmin, Serra, Aécio, Dória, etc. Who appears, today, as a popular anti-Lula alternative? Ciro Gomes. He created for himself the image of a radical, untimely, competent, serious and incorruptible male. But his past and structural ties speak much more than this: former Arena, former PSDB, former Minister of several and diversified governments, son of a traditional family and with great and strong commitments and ties with the country's elite. The MBL already understood this. Soon others will understand. And we will see his consecration as an anti-Lula candidate. The first with real chances of scoring. Because it appears so well to be what it is not that it convinces even a portion of the national intellectualized left. Brazil is definitely not for beginners.

*Carlos Águedo Paiva he holds a doctorate in economics from Unicamp.


[I] I say “in general” because there are Ricardian-inflected heterodoxes that operate within the logic of Say's Law. The foundation of this logic is the assumption that a fall in wages leads to an increase in profits and, therefore, would always be beneficial to capitalists.

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