Central Bank Autonomy – the new prison

Image: Zachary DeBottis


Crucial decisions concerning macroeconomics run outside the institutions of popular representation, even at its highest level, which is the executive branch.

The concentrationist and centralizing tendencies of contemporary capitalism go against democracy and the republic, mainly as normativity. Institutions are assured of regular functioning and their praise is even exaggerated, as if they were not historic constructions. Politics is largely oligarchized by parties and governments become more and more intransparent; more often than not, institutionality becomes a barrier to popular participation.

Crucial decisions that concern the macroeconomy and, although they may not seem so, the daily lives of citizens and voters, run outside the institutions of popular representation, even at its highest level, which is the executive branch. Such tendencies are saying, in the manner of George Soros, that the popular vote is superfluous, economically irrelevant and even a hindrance, that democratic and republican institutions are bread – scarce – for the circus – ample – to keep citizen energies entertained while economic groups decide what is relevant.

Democracy and republic are the luxury that capital has to grant to the masses, giving them the illusion that they control vital processes, while real issues are decided in restricted, inaccessible instances, and free from any control.

A society of control is in the making, which escapes the simple labels of neoliberalism and even the most radical and opposite of authoritarianism. It does not seem authoritarian, as choices through elections are offered periodically, although the voter's instinct is suspicious of the irrelevance of his vote, having seen the clamorous abstinence that marks the North American elections[I] and more recently the case of France, where the Socialist Party was excluded from the final round of the 2002 presidential elections due to the simple indifference of its traditional electorate.

Public opinion is openly expressed, newspapers support or criticize, criticism is allowed, but everything remains the same. It is not neoliberalism because rarely have we seen state controls so severe, and “interventions” so heavy: right now the ultraconservative George W. Bush is announcing a clearly Keynesian program to boost the US economy; Mrs. Thatcher carried out the heaviest action by the English State to promote …privatization. The same happened to a lesser extent in France.

Argentina and Brazil followed the English recipe, privatizing on a similar scale and evading ownership and ownership of mega-companies that had the ability to guide their own private investment and the economy. But the privatizations were carried out with public funds, and the BNDES was transformed, paradoxically for those who believe in the free market, into the most powerful state coercion to transfer to the private sector what could, by the same means, have remained state property, and thus achieving an increase in real investment.

Social science, classic and modern, had already warned of the new Leviathan, which is not the State, but a control à la Orwell and Huxley, an absent presence or an invisible structure, a Big Brother that panoptically watches and watches everything. Michel Foucault was perhaps the one who most incisively recovered the subtle character of the new Leviathan, those micropowers, devices, disciplines and knowledge, whose algebraic sum transforms them into a macropower that no one can avoid, including the most powerful governments.[ii].

A policy without politics. Max Weber had already warned of the “iron cage” in which democracy finds itself enclosed by bureaucracy, which is, contradictorily, the impersonal way of processing conflicts that is at the root of modernity. The Frankfurtians, inspired by Schopenhauer and Nietzsche, anchoring simultaneously in Max Weber and Karl Marx's criticism, pointed out the coercive power of the new Leviathan, by characterizing Nazi-fascism not as a deviation from modernity, but its tragic and unappealable unfolding .[iii].

It is not even necessary to insist on the position of Karl Marx: the almost irrevocably determining character of capitalist forms always seemed to him superior to the will of individuals, shaping institutions, the critique of the alienating character of capital.

The IMF is Foucauldian knowledge: it fits national governments, recommending surpluses and other measures, which are dictates; your missions are the prison guard who repeatedly checks in on the prisoner; the latter keeps his accounts ready to show the gendarme that he is back, but this return is even unnecessary, as the prisoner does his homework like an automaton. Governments adopt provisions such as the Fiscal Responsibility Law in Brazil: if state and municipal governments do not reach the percentages of spending on revenues established by the Law, transfers from the Central Government will be automatically cut. It's a guillotine.

And one might think that the “Brazilian way” will also circumvent this device, in the best cordial tradition: the numerous conflicts that marked the relations of the Itamar Franco government in Minas Gerais with the federal government under Fernando Henrique Cardoso, with the suspension of transfers due to Minas for not having honored the payment of its debt to the Union in due time, they say that the Foucauldian device is for real. In fact, the federal government responds to federal entities, the same treatment it receives from the International Monetary Fund. Some praise this automaticity as an advance in impersonality in dealing with public affairs, an improvement in the transparency of the Brazilian State, or for those who think in English, a real progress in the accountability.

The risk agencies, which measure the differences between the interest rates of each country and the US interest rate, are Foucauldian devices, which by simply moving them upwards or downwards, affect the currency and public debt of national states. : who endowed them with this power? Nobody, because they are private organizations. But their assessments can have devastating effects on the economy of the country they deem high risk. His directions are followed blindly and caninely.

Presided over by Big Brother, the US government, which oversees and orchestrates everything, institutions, knowledge, devices and disciplines make up a “black hole” architecture, from which no society, no government, no economy escapes. The capitalist periphery was recently endowed with democratic institutions, at the turn of decades of dictatorships and authoritarianism whose functional role was to accelerate the conditions for the internationalization of economies, a movement already inserted in the new dynamics, just outlined, of globalization.

Through their external debts, the national economies of Latin America, and to a lesser extent of Africa – in the latter, with the tragic consequences of the misery that consumes the mainland continent of the human species – were financialized, and every effort achieved by an industrialization to forced marches were annulled in the XNUMXs and XNUMXs by heavy debt service. Democracy was transferred to the mortgage of dictatorial regimes, under the harsh imposition of reversing the loss of national autonomy, growing financial dependence and impoverishment of populations.

It is within this framework that they struggle, constrained by the Foucauldian architecture of the society of control. In the return – or in some cases in the only original implantation – of democracy, new leaders found themselves trapped in the grips of this inflexible architecture and all the efforts of modernization and insertion in the new global wave resulted in resounding failures. Even granting them the benefit of the doubt, so as not to assume their intentions to cede sovereignty from the outset, the greater the effort to enter the First World paradise, the worse the failure. Argentina is already the classic case. But Brazil is not far behind; its process of national anomie advanced enormously during the Fernando Henrique Cardoso government.

Monetary stability, achieved thanks to the abdication of the national currency, in Argentina has already blown up: the southern country closed 2002 with an annual inflation of around 40%, contrasting with the “success” of Swiss inflation in Menem. Brazilian inflation has already reached 26% per year, measured by the IGP-DI, again in contrast to the deflation of the initial days of the success of the Real Plan. The privatization that sought a lean State, resulted in the loss of national control over powerful productive units, and the entrepreneurialization of the State, theorized among us by Bresser-Pereira,[iv] ended in the inability to minimally supervise social conflicts, which become privatized to the same extent that the legal monopoly on violence is contested by gangs, armed groups and oligopolistic companies.[v] Colombia, Argentina, Brazil, “names so old / that time without remorse dissolved”.[vi]

But it's still little. To complete Foucault's architecture, it is recommended to move towards the annulment of politics; more automaticity in the processes is recommended, more devices, more subjection of the body (of the nation), more that “the detainees find themselves trapped in a situation of power that they themselves are bearers” (Foucault, op.cit.). In Brazil, now, this new prison is called “autonomia do Banco Central”. Sung in prose and verse by all the writers of this science, of this knowledge that is actually a device of power. Demanded as a condition of modernity, of completeness.

If it were allowed to reduce the State to the lowest common denominator – which is done just to show the exemplarity of the question – one could say that the modern State in advanced capitalism is the currency. What, in Marx and Keynes, is endogenous, that is, it derives and processes social relations between private agents, in the past it was privately issued: advanced capitalism overrode this anachronism, precisely because it understood that it is the legal monopoly of violence in pure state, and therefore cannot be handled by any private agent.

In the interpretation of Aglietta and Orléans, money is the vector of private violence, and its metamorphosis into state currency and modernly into Central Bank money is the most powerful universalizer of class violence.[vii] Karl Polanyi warned precisely that currency is not a commodity and that society had created the means to protect itself from its possible commodification to avoid the devastating effects of this deformation. The Central Bank is part of this capital civilizing program, but its autonomy or independence goes in the opposite direction to the “great transformation” highlighted by Polanyi.[viii]

Guardian of the greatest sign of society's class division and its reproduction, the Central Bank is, in all capitalist societies, the most closed institution, most averse to publicity. In a word, the most anti-republican and most anti-democratic institution. No institution makes such a mockery of democracy and the Republic as the Central Bank.

No institution proclaims all the time that voting is superfluous, that the citizen is a useless abstraction, so effectively. No institution is more destructive of the popular will. To grant autonomy to the Central Bank is to lose the long civilizational accumulation even under capitalism.

What we need in a political reform is to vigorously introduce forms of democratization and republicanization of the State, due to the strong and irreplaceable role it plays in advanced capitalism. One of the places that is in need of new democratic and republican forms is precisely the Central Bank. Finding ways and means of establishing the role of citizens in controlling the Central Bank is one of the urgencies of democratization. It's not a simple task. The Central Bank, dealing with currency, which moves today with the speed of electronic signals between the various financial and capital markets on the planet, has as an eternal alibi the promptness of decisions, with which it is alleged that its administration does not sympathize with democratic controls, whose speed is different, not due to atavism, but to allow citizen intervention…

It is precisely here that one of the quid pro quos most denounces the ideology of capital, introduced into the Central Bank. In the Central Bank model subordinated to the Ministry of Finance, which is ours, Central Bank administrators and their employees are servants of the Brazilian State, and can be held accountable in all instances, starting with the administrative instance. In the model of an independent Central Bank, which is the North American model, Central Bank employees are not public servants.

Even North American liberalism took care to diversify, creating regional central banks, so that the federative interest could weigh centralizing decisions, guaranteeing, through this oblique mechanism, that citizens were represented.[ix] Somehow, from a liberal point of view, in democratic states with the rule of law, the citizen is also represented in the civil servant. Even so, it is evident that this representation is anachronistic.

However, a step forward towards the autonomy and independence of the Central Bank is to break even with this weak link that links the Bank's employee to the citizenry. In the independence model, the Central Bank employee does not have to report to anyone, except to the one who has him under contract for currency management. This immediately removes citizens from exercising their rights over the management of the Central Bank. There remains only the criminal instance to punish corruption or misuse of public funds managed by the Central Bank.

This was evident in the issue of the Central Bank's loan to FonteCidade and Markan banks, when the real devalued. Any citizen could have made accountability actions against the Bank's employees involved in the operation, as the Public Prosecutor's Office is doing, although the actions have had no effect so far. In the North American case, however, there is a culture of maintaining competition, inscribed in sociability, which sustains the institutions for the defense of competition and it is always through this bias that the Supreme Court deals with cases of abuse of economic power, including those of reckless management of the FED. In other cases, such as ours, the failure of CADE and the ineffectiveness of the CVM attest well that patrimonialism is inscribed with iron and fire even in the institutions created to annul it.[X]

Here lies an important question. It is not a question of denouncing democracy as slow, imperfect, subject to corruption, incapable of correcting social inequalities, along the lines of criticism from the right, à la Burke, Tocqueville – with its very aristocratic fear of democratic massification – or more modernly Carl Schmitt. It is also a question of democratizing the State, and republicanizing it. Doing so by creating institutions that are within the reach of citizens, bringing them to levels where popular action can effectively intervene. The formulas for that have to be invented, because democratization has not advanced much in the creation of new instances of power, with, on the contrary, a sacralization of the most ancestral institutions, as if they had been born from the depths of time, removing their living history of their constitutions and national formations.

If in the past the left was notable for an instrumentalist conception of democracy, in the present the opposite is true: the concrete conditions for the formation of democracy are abstracted, which has prevented advances in its conception and practice. The case of participatory budget appears as on Generis precisely because of its innovation, in a field where sameness has been the rule.

How to democratize and republicanize the Central Bank? First, by not granting it autonomy or independence. Secondly, within the statute it has today, subordinated to the Ministry of Finance, improving Parliament's control instruments, going beyond the mere hearing that the Senate does when nominating the president and directors. Better organizing the Sabbath itself, as the one that is held even loses to the Show do Milhão contest. And one wonders: why the Senate, if it is citizenship that is affected above all by the daily activities of the Central Bank? Why not involve the Chamber of Deputies in control as well? The Federal Court of Accounts, which is a control body, must be perfected, instead of extinguished, as is the claim of the great press.

It is useless as it is, but its improvement would be a way of reinforcing democratic controls over public spending, in which losses are inscribed. Thirdly, by creating a chamber of citizens in charge of issuing opinions on the performance of the Central Bank. A periodically renewable commission, made up not of experts, but of ordinary citizens, for whom there must be an advisory, which works permanently anticipating, instead of simply verifying afterwards what has been done. Obviously, Fernandinho Beira-Mar and … bankers should be excluded from such a commission. I don't know a formula for this, but democracy itself is an invention.

This is the quest for the lost consensus: the consensus that we are a nation and not an agglomeration of consumers. The university has an important role to play in this fight. The classics of social sciences in Brazil made a very important contribution to “discovering” Brazil and “inventing” a nation. The neoliberal squandering of the last decade, in the globalist world tidal wave, has dangerously disrupted the State and can take the nation by storm. The University is the place where dissent is produced, in the first place; dissent from the “single thought” discourse. An irreplaceable step towards the production of a new consensus on the Nation, which is the work of citizenship, but which asks and requires the university to decipher the enigmas of the modern world. We are not asking for partisanship from the university: it is quite the opposite.

What is asked, rather, is to refuse simplifications, opportunistic consensuses, easy balance, to give way to reflection on the complexity of a Nation of unequals trying to find a place for its citizens in the mare unknown. Can we do it, alone, in the world? There is a world crisis and this urgently summons the university to help with its decoding. In what fold of time were the promises of modernity hidden? Was it at Auschwitz, temporarily, or did they evaporate irretrievably? Is the announced war against Iraq the continuation of Auschwitz, and is Bush's fundamentalism the impossibility of any questioning of contemporary society, the uselessness of the human sciences?

Was there, latent, as the authors of Critical Theory thought, an “authoritarian personality” in the most advanced capitalist society, easily slipping into totalitarianism? Can one still say “advanced capitalist society”? Is there still room for politics, or has the immense device of capital already eliminated the subject so radically that it has made the prisoner vigilant in his own prison?

These are the questions posed by the best theoretical tradition. It is beyond my capacity to make the slightest pretense of answering them, or even of adding drama to them. What search for consensus, then, is it? Based on the consensus that it is possible, necessary and urgent to formulate responses, aware of the dialectical warning that, at the very moment we do so, they are already on their way to expiry. The University continues to be the privileged place for producing or trying answers. It cannot abandon itself to genetic-biological and molecular-digital determinisms, as that would mean renouncing the human, which is the constant invention of the contingent and the provisional.

The dispute for the meanings of society is again at a boiling point. Brazil is a remote place of this dispute, and those who think that our specificity protects us from the global crisis, that there is a “Brazilian way” to the crisis, would be seriously mistaken. It is up to us to face this challenge, because nobody will do it in our place.

* Francisco de Oliveira (1933-2019) was a professor at the Department of Sociology at USP. Author, among other books, of Criticism of dualist reason (boitempo).

Originally published in the magazine Theory and debate, v. 16, in June 2003


[I] The North American case is inscribed in a double contradiction: in part, a narrow conception of the State is part of the formation of the American nation, also due to the fact that the USA was formed with the persecuted of all stripes, which created a suspicion anti-state, anti totalizing institutions. On the other hand, the American tradition is also that the government is the citizens. Perhaps this, in the conditions of contemporary capitalism, is accentuating the anti-state side of the American liberal tradition. For Paulo Arantes, there is also a federalist counterrevolution in the construction of US imperial presidentialism, aborting the radicalism of the War of Independence, in the first “permanent exception” of modern history. See Paulo Eduardo Arantes, “Estado de Sítio”, in Isabel Loureiro, José Corrêa Leite and Maria Elisa Cevasco (orgs) The Spirit of Porto Alegre. São Paulo, Peace and Land, 2002.

[ii] “Hence the most important effect of the Panopticon: to induce in the detainee a conscious and permanent state of visibility that ensures the automatic functioning of power. Make surveillance permanent in its effects, even if it is discontinuous in its action; that the perfection of power tends to render the actuality of its exercise useless; that this architectural apparatus is a machine for creating and sustaining a power relationship independent of the one who exercises it; finally, that the detainees find themselves trapped in a situation of power of which they themselves are the bearers”. Michel Foucault, Watch and Punish. History of Violence in Prisons. Petropolis, Voices, 1977.

[iii] Theodor Adorno, Post-Auschwitz Education, in Gabriel Cohn (ed.) Theodor W. Adorno. Great Social Scientists Collection, São Paulo, Edt. Attica, 1994, whose theoretical bases can be found in Theodor Adorno and Max Horkheimer, Dialectics of Enlightenment. Philosophical Fragments. Rio de Janeiro, Jorge Zahar Editor, 1991.

[iv] Luiz Carlos Bresser Pereira, and Nuria Cunill Grau (eds.) The Non-State Public in State Reform. Rio de Janeiro, Editora Fundação Getúlio Vargas, 1999 and Luiz Carlos Bresser Pereira and Peter Spink (ogs.) State Reform and Managerial Public Administration. 2ªed. Rio de Janeiro, Editora Fundação Getúlio Vargas, 1998.

[v] This is the case, now, of AES, Eletropaulo's controller, which remitted profits to its North American headquarters, while recording losses in its balance sheet and, for this reason, it claimed, did not pay the BNDES. This financed the purchase of the state-owned São Paulo company by AES. ANEEL, the supervisory agency created by FHC to streamline the State, has done nothing and it is likely that the BNDES will clean up the company again and then privatize it again. See how the Foucauldian device operates: obviously, Eletropaulo cannot be allowed to fail, as it supplies around 50% of São Paulo's electricity demand. So, the State is obliged to renationalize it. Better than that, Foucault would not have thought of it as an example of the annulment of the subject.

[vi] Carlos Pena Filho, General Book. Rio de Janeiro, Livraria São José, 1959. Just for its musicality, I used the verses of the sonnet “Mistérios do Tempo no Campo”, p. 81:”A summer dress that was lost / the smile, in December, in the mirrors / Diogo, Duarte, Diniz, names so old / that time without remorse dissolved”. But my poet, who died so early, has nothing to do with the subject of this essay.

[vii] Michel Aglietta and André Orléans, La violence de la monnaie, Paris, PUF, 1981.

[viii] By the way The Great Transformation is precisely the title of the magnificent book by Karl Polanyi, for whom the institutions of the Welfare State were the means found by society to also remove work from the realm of merchandise.

[ix] Fernando Limongi, “Os Federalistas”, in Francisco C. Weffort (ed.) The Classics of Politics, vol.1, São Paulo, Editora Ática, 1989.

[X] See Carlos Alberto Bello e Silva, Cade's Illegitimate Conversion to Liberalism. Government and Entrepreneurship Triumph in the Face of Civil Society's Disinterest. Doctoral thesis. Department of Sociology. São Paulo, FFLCH-USP. 1999.

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