Brazil against the grain of history



Considerations on the economic consequences of the war in Ukraine

The war in Ukraine buries any illusions that, with the coronavirus fatality rate decreasing, the world economy can resume a relatively stable and predictable trajectory. Beyond its immediate negative effects on growth and inflation, the economic consequences of war definitively erode the pillars of the neoliberal global order.

The open confrontation between the two largest nuclear powers on the planet, which underlies the background of the Ukrainian tragedy, makes explicit the growing rivalries provoked by the irreducible contradiction between the global character of the productive forces, the global horizon of capital accumulation and the national bases of reproduction of the capital-labor relationship. Unable to counteract the downward trend in the rate of profit due to the destruction of large masses of anachronistic capital and the opening of new fronts for expanding the world market, intercapitalist competition takes the form of a total economic war.

The draconian economic sanctions against Russia cannot be dissociated from the immediate interests of the American and European military-industrial, energy and financial complex in the business of war, nor from the irreducible opposition of the United States to the formation of a Eurasian Bloc, led by by China and supported by Russian military might. Impelled by the relentless imperatives of the logic of conquest, the great economic and financial conglomerates mobilize their imperial states to make an unbridled race for control of markets, sources of raw materials and national economic spaces.

Due to its audacity and wide scope, the trade blockade, the ban on participation in the international financial system and the freezing of foreign exchange reserves imposed by the United States on Russia represent a qualitative leap in the neo-mercantilist policy inaugurated by Donald Trump. Anything goes undermines the foundations of the international economic order erected under the auspices of Pax americana, after the crisis of the Bretton Woods in the early 1970's.

The weakening of the dollar as an international currency, the rise of protectionism, the uncertainties that put value chains at risk and the accelerated erosion of the international economic order are unmistakable symptoms that the liberal integration of commercial, productive and financial circuits has reached its limit. A process of deglobalization is established.

The Brazilian economy is particularly vulnerable to the challenges of the new times. After three decades of regressive specialization in the international division of labor, national economic life was completely at the mercy of the vicissitudes of the international economy. The explosion in the prices of petroleum derivatives – a particularly strategic reference in a country of continental magnitude, whose transport is basically done by road – is a clear example of the absolute lack of autonomy of Brazilian economic policy.

Even with an abundant oil reserve underground and a public oil company with a large production and refining capacity – one of the largest in the world –, the Brazilian State cannot prevent its company’s fuel prices from being set from spurious interests. The partial privatization of Petrobras' shareholding control during the Fernando Henrique Cardoso government, the company's listing on the New York Stock Exchange during the Lula government and the absurd adoption of the PPI system - Parity and Import Price - during the Temer government, which prices at foreign prices, left the Brazilian population hostage to a handful of billionaire speculators (mostly foreigners).

A similar situation occurs with the interest rate. Even having one of the largest exchange reserves in the world (US$ 358 billion), having a balanced balance of payments, a particularly privileged relationship with the North American Central Bank (with unlimited access to credit in times of capital flight), a moderate net public debt/GDP ratio (57% of GDP) and a fiscal regime rigidly framed in the canons of orthodoxy, the Brazilian economy has the second highest real interest rate in the world, second only to Russia.

The full freedom of capital movement instituted by the Real Plan, the meteoric rise of external financial liabilities during the neo-developmentalist boom of the PT governments and the absolute control of the Central Bank by financial capital leave the monetary authorities with no ray of freedom to manipulate the national currency according to the strategic interests of the popular economy. Under these circumstances, interest and exchange rates – two fundamental parameters of the economy – are subject to the speculative movements of large international and national capital.

At a time when the global order is becoming more fragmented, going against the grain of history, the Brazilian bourgeoisie doubles down on liberal globalization. The world economic crisis that has dragged on for more than a decade, the coronavirus pandemic that has paralyzed the world economy for two years and the war in Ukraine, which dismantles the international economic order, have not been enough catastrophes to convince the Brazilian bourgeoisie of the importance strategy of food, health and industrial self-determination.

Completely unprepared to face a particularly adverse historical situation, without the most basic monetary and fiscal instruments to intervene in the economy and totally insensitive to the needs of the population, it admits no criticism of the neoliberal economic agenda. Without overcoming the mental armor that circumscribes the national economic debate to the way of administering the neoliberal adjustment, it is impossible to envisage qualitative changes in workers' living conditions.

The 2022 elections are marked. Whoever is elected, there will be no substantial change in the economy. The deafening silence of the political leaders of the left of order about the Brazilian economic model speaks for itself. Only a popular uprising, which calls into question the urgency of a definitive break with the liberal-peripheral pattern of accumulation, would be able to open new horizons for Brazilian society.

* Plinio de Arruda Sampaio Jr. He is a retired professor at Unicamp's Institute of Economics and editor of the website Contrapoder. Author, among other books, of Between nation and barbarism – dilemmas of dependent capitalism (Vozes).


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