Talking about the New Industry Brazil

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By RENATO DAGNINO*

It is not possible to remain silent in the face of what appears to be an inadequate direction for the reindustrialization effort that the country requires

A colleague involved with the formulation of the New Industry Brazil (NIB) made two justified criticisms of my article. The first, which I do not address here, was that I was more interested in defending Solidarity Reindustrialization, which I have shown to be both essential and complementary to Corporate Reindustrialization, than in analyzing the NIB.

The second, to which I now refer, is that I failed to recognize that the proposal, as it is based on what he considers to be the best that exists in the world today in terms of industrial policy, is the best we can do.

The fact that a article by Mariana Mazzucato, one of the greatest authorities interested in reforming capitalism through industrial policy measures, having been published welcoming the proposal on the same day it was announced, was taken as evidence of what the colleague advocates.

Privilege, therefore, as an argumentative thread for this text, to the detriment of other manifestations that appeared before and after, this enlightening article. It revisits and didactically intertwines several of the arguments she has developed in recent years. And, more than synthesizing the rationality (and highlighting the supposed causal relationships) on which the NIB is based and which has been alluded to by those responsible for its formulation, it resembles a “roadmap” that can serve for this purpose.

The NIB boundary conditions

In what follows, I telegraphically mention generic boundary conditions that appear explicitly in the “script” and, implicitly, to what she points elsewhere. And also, in a repeated and systematic way, by the current that for more than three decades dystopianly proposes to emulate in Latin America experiences of catch up Europeans. And, particularly, that of South Korean capitalism manufactured to serve as a showcase against our then anti-imperialist struggle for socialism.

This current, which has become a kind of prescription mainstream for countries considered emerging, it led to the coexistence among us, from the beginning of the 1990s, on the linear-offerist orientation of S&T development of the Bush Report with the innovationist one, derived from the neo-Schumpeterian narrative emanating from the propagation of neoliberal ideas.

A careful look reveals that, despite the differences that NIB presents in relation to the past, this coexistence can be clearly perceived. He also explains why, in the current situation of lowering left-wing policy agendas, this current has been endorsed by it with a view to expanding its governability. 

A central point of the analysis I have carried out and which I summarize in this text is that the prevalence of the boundary conditions (or contextual preconditions) of those experiences has not been adequately verified in our context, by those who intend to emulate them. Both internal and external policy propositions related to production and consumption, which include industrial and agricultural policies, as well as cognitive policy – ​​Education and STI –, which are the analytical focus of this text, have not been preceded by satisfactory diagnoses

In order to achieve my objective of making our reindustrialization successful, I outline these boundary conditions. They refer to (1) the existence of predictable capabilities or behaviors of the actors involved in these policies (companies and their decision-makers belonging to the ownership class, the State and its technocracies, and teaching and research institutions and their scientific elite); (2) stylized facts or trends that can be deduced from the evolution of the Brazilian productive, economic, social and political context, identifying their adherence to those observed in the experiences that NIB intends to emulate.

They can be very succinctly stated:

  1. Capacity to induce public investment in increasing private productive investment (which, judging by the global evidence on the share of public investment in the total, has shown itself to be, in addition to being very small, decreasing);
  2. Positive quantitative impact on employment generated by the company (which here is 37 of the 175 million people of working age, the majority in conditions of scarce “employability” and who have never had or will have a formal contract) of the increase in its expenditure for production of goods and services;
  3. Positive qualitative impact, on employment, of business spending in highly technologically intensive sectors (contrary to what is intended to be emulated, when employment in intensive segments with digitalization increased here, it implied, in more than 90%, salaries of up to two minimum );
  4. Positive intersectoral, systemic and compensated impact, as occurs in the experiences we want to emulate, of emerging technologies (those relating, for example, to the “electric car”, do not “dialogue” and will tend to disarticulate important segments already affected by deindustrialization);
  5. Existence of two actors within the owning class differentiated in relation to productive and financial options (or prone to dual or, at least, diachronic behavior);
  6. Significant R&D capacity in local companies and willingness to R&D in emerging technologies;
  7. High capacity of local techno-scientific potential to meet the company's interests;
  8. Existence of companies with national capital located in sectors of high technological intensity (industrialization, unlike what happens in those experiences, and with numerous exceptions that confirm the rule, “reserves” them to multinationals);
  9. Existence of multinational companies responsive to state authority (NIB, unlike what happens in those experiences and judging by what it proposes, will tend to maintain disproportionate privileges for multinationals);
  10. Existence of state-owned companies with R&D capacity or located in sectors of high technological intensity (successive waves of privatization have weakened this boundary condition);

Although I consider that none of these ten boundary conditions required for the successful implementation of those experiences are present in the Brazilian context, numbers 5, 6 and 7 deserve to be analyzed in some detail to assess the NIB's chance of success. I will proceed by making references to passages from the cited article that I, at my discretion, consider relevant to question its validity.

The fifth boundary condition

To illustrate the “Existence of two actors within the owning class differentiated in relation to productive and financial options (or, at least, of dual or diachronic behavior)”, I selected the following passage:

“A mission-driven approach… is underpinned by an understanding of the role of the state in shaping an economy that, ex-ante, is sustainable and pre-distributive. This contrasts with the more traditional idea, which relegates the role of the State to correcting market failures… [… it must have…] … the potential to transform challenges… into business opportunities [… for companies…] and into investment channels .”

To comment on it, I need to summarize here the panorama that I have drawn about these two actors – company and State – within the scope of the process that I analyze here.

Our trajectory of peripheral capitalist development is marked by a high propensity to extract absolute surplus value and not relative surplus value. That which, with the consolidation of the capitalist mode of production, due to the organization of the labor movement, forces the entrepreneur to introduce innovations with a view to taking advantage of the prerogative that “his” State gives him to appropriate the consequent increase in productivity of the work.

We are a society whose origins are the conquest of the space where we live through the appropriation of indigenous land. For the genocide of, it is estimated, eight million indigenous people who, at the end of the 19th century, were reduced to less than 500 thousand. The conquerors who came here produced goods at a very low cost (given that the workforce was slaves and the land cost nothing) which they sold at international prices to their relatives who had remained in Europe.

This propensity to enjoy enormous rates of profit continues to this day. Enslaved people brought from Africa, hungry European immigrants who were expelled by the first industrial revolution and northeasterners expropriated from their lands were those who made the industrialization process possible, which contextualizes what is analyzed here.

This extremely high rate of profit that explains our enormous inequality is a structural characteristic of our economic-social formation that conditions the relationship we have with science, technology, research, and innovation. This high propensity to extract absolute surplus value and not relative surplus value means that our businessman does not need to innovate; he makes money by exploiting “his” working class in another way.

Because we have a property class accustomed to a high rate of profit, we have a high interest rate here. If it is the largest in the world and there is no one producing even a pin, it is because our profit rate must be the highest in the world. And this is the causal relationship, from profit to interest, and not vice versa, which allows us to consider it a mistake to think about the existence of that dual or diachronic behavior that the boundary condition and the quote I chose suppose.

Another point to highlight is the cognitive demand conditioned by our imitative peripheral market. It demands goods and services already produced and, therefore, already engineered in the North. As those of us in the field know, “those who like to do research are researchers; A businessman likes (and has to) make money.” And to make money he tends to import knowledge, he tends to import technology because this is twice the most economically rational behavior. This cognitive demand of the imitative market exacerbates, aggravates, that scarce propensity to extract relative surplus value from our business community.

It is also worth remembering that our industrialization, even before it was via import substitution, was heavily supported by foreign capital. The fact that our market has been reserved for it is a third important element that leads to uninnovative behavior and, above all, averse to R&D in our business environment. It is interesting to note that a multinational company, which in its country of origin is innovative, does research, etc., when it sets up in Brazil it even forgets that it ever did this…

I conclude the consideration of this condition, which deals with the expected behavior of the company actor, whose importance is fundamental to the success of the NIB, referring to a more comprehensive issue; to something that I consider a fundamental defect in the process that gave rise to it.

It did not begin with a moment of reflection within the democratic, formative and participatory bodies available to the majority party on the left, which must precede, to guarantee its success, the moments of policy formulation, negotiation and implementation.

The criticism I make regarding the non-observance of this path, which is ultimately what animates this text, does not underestimate the situation in which the fascist ultra-right attacks us day in and day out on the coup plot and the right is shaping an anti-republican content and form through spurious parliamentary means. to carry out the elaboration of public policy. On the contrary, my criticism – fraternal and constructive – seeks, through the reflection it proposes, to avoid the downgrading, in advance, by limiting the discussion, of the programmatic agenda that we defend.

I believe that the risk I run, that this text will be assimilated to an immobilist, retrogressive and reactionary position, is smaller than that of remaining silent in the face of what seems to me to be an inadequate direction for the reindustrialization effort that the country requires. Especially considering that non-exclusive alternatives to the NIB, such as Solidarity Reindustrialization, have been formulated in those instances.

In short, and to make the point I am raising even clearer, I ask: Is it legitimate to conceive that it is through a reduction in the interest rate that it will be possible to encourage the property class and its companies to allocate resources to production and not to speculation?

Which will be offering the property class the 1% of GDP per year promised by the NIB – 300 billion in three years –, meager compared to the 6% of public debt, the 10% of tax evasion, the 3% of corruption, the 5% of tax waiver and exemptions on profits, dividends, exports, property, and more than 15% of public purchases – that it will engage in a process of reindustrialization?

That it, which shifted its income and wealth from industry to the more profitable reprimarization of agribusiness and mining, to real estate and financial speculation inside and outside the country, causing the deindustrialization that benefited it, will add up to an “…industrial strategy mission-driven [… that] aims to align social, environmental and economic objectives [… and harness] the potential to transform challenges… into business opportunities and investment channels”?

Returning to the past on a reflective level, I ask, what is the point of trying to reify the actor that the Latin American communist parties of the 1960s believed capable of, removing ourselves from feudalism, leading the anti-imperialist democratic-bourgeois revolution; an actor that we have long known does not satisfy the conceptual criteria of bourgeoisie or nationality?

Or, within the scope of an extremely unfair, environmentally threatened and increasingly globalized economy, resurrect a hypothetical productive and non-financialized national entrepreneur to, by lowering our status as a nation and taking advantage of our human potential, fit him into historically and politically decontextualized narratives that can worsen these conditions?

Does it make sense to remain entangled in the ineffective but persistent social democratic trap of trying to make the capitalist economy and state more efficient in order to finance socializing policies? And at the same time, continuing to waste the potential of those who demand a fairer and more sustainable style of development and who seem to be, now, in the short term, the only actors capable of guaranteeing the governability that the current government needs?

The sixth boundary condition

Adopting the same procedure, but from here on in a much more summarized way, I make reference to the “Significant R&D capacity in local companies and willingness to R&D in emerging technologies”, and select the following passage from Mazzucato’s article:

“Such an approach [… by missions] has the potential to generate a multiplier effect, with each real invested by the government bringing an amplified impact on GDP. The Apollo mission... generated, for every dollar invested, a return of US$5 to US$7 in economic impacts... Brazil's mission-driven strategy could help stimulate corporate investment in innovation, which in Brazil is historically low, to address structural problems.”

One of the recurring theoretical inspirations of the current that proposes the NIB is based on the Kondratieff-Schumpeter Cycles. They propose the existence of a causal relationship considered deterministic, and questioned for decades by the field of Science, Technology and Society Studies, between the introduction of radical innovations and the rate of economic growth. They even seek to prescribe, as those who formulate the NIB want, ways of organizing our peripheral capitalism.

According to them, today we would be witnessing the Fourth Industrial Revolution or Industry 4.0 in the world. Or, according to another interpretation, which mentions the existence of five previous waves, we would be entering a sixth, of Sustainability, or of ESG (Environmental, Social and Governance), which suggests to everyone a promising future. As is evident from reading the NIB, one of the central elements that would allow countries to “surf” this sixth wave is their ability to generate the knowledge that this demands.

The statement contained in the article that “[…] company investment in innovation, which in Brazil is historically low” has a somewhat outdated. Even before there was empirical evidence about this, the analyzes of Latin American researchers in Science, Technology and Society Studies regarding the local company's low propensity for R&D were never challenged.

As I consider it harmless to repeat the results of these analyzes that those decision-makers have not taken into account, I highlight just three pieces of evidence. The first is contrary to the expectation of positive economic impact implicit in my quote from the article. According to PINTEC, the response of innovative companies to the allocation of public resources to business R&D has not just been wasted. It has led to a relative decrease in its own expenditure, reproducing the phenomenon of crowding out that occurs in other areas of public policy that involve business.

The second, coming from the same source, indicates that among the five innovative activities listed by the Oslo Manual, which obviously include internal R&D, 80% of those companies declare to systematically opt for the acquisition of machinery and equipment.

The third is even more overwhelming. Between 2006 and 2008, when the economy was “booming” and businesspeople were making a lot of money, the innovationist trend expected them to hire the masters and doctors that we had diligently dedicated ourselves to training in hard science for more than five decades. We graduated, then, following the canons of universities in central countries, thirty thousand per year: ninety thousand in three years. If they were in the US, around sixty thousand would have been hired to do R&D in companies; After all, that's what they're trained for all over the world.

The fact that, according to PINTEC, only sixty-eight were hired to carry out R&D in our innovative companies, and that they prefer to innovate by acquiring existing knowledge, should create a profound existential crisis among cognitive policy makers. Instead of training researchers, they should take a thorny and painful shortcut: training good buyers of knowledge.

Even before proceeding, it is worth noting that a policy that aims to renew the industrial park through the incorporation of new technologies that lead to a virtuous cycle of economic growth should imply a considerable change in cognitive policy.

The seventh boundary condition

Considering the “High capacity of local techno-scientific potential to meet the company's interest” existing in the experiences that NIB intends to emulate would lead me once again to summarize a panoramic retrospective. The impossibility of doing so here forces me to point out some of his conclusions.

I begin by referring to the hegemonic actor of our cognitive politics. The elite of the scientific community, cultivated in the enclave that has always been our university, radiates its mistaken model of cognitive politics within the scope of a technocracy that is increasingly influential in the elaboration of left-wing public policies.

Contributing to co-opting other actors, legitimizing this hegemony and this model in society, this technocracy reinforces the maintenance of public teaching, research and extension agendas consistent with the values ​​and interests of the scientific elite. Despite being increasingly recognized as mimetic, outdated, and unfavorable for the construction of a scenario of justice and environmental responsibility, their coherence with the trans-ideological dogma of the neutrality of capitalist technoscience means that this model is maintained generationally. Innovationist regulations are thus reproduced and the lowering of left-wing policy agendas becomes natural.

The influence of this policy coalition in formulating the of NIB is evident. Its ability to co-opt, through the arena of politics built with the revitalization of the Industrial Development Council, opportunistic actors, such as those who are demonstrating in the business environment, and those within the research community and “their” technocracy, propose symbolic policies aimed at obtaining intangible benefits.

All this does not invalidate the fact that activity derived from the teaching, research and extension agenda defined by the scientific elite has resulted in the training of people who could, in a different scenario from the one that NIB intends to build, soften the structural conditions imposed by the our development style.

However, aware of this reality, and citing an alleged backwardness of the local business community and the scarcity of policies capable of generating an “environment conducive to innovation”, the scientific elite has made two fundamental mistakes.

The first is due to how its cognitive policy model “understands” the university-business relationship in the central countries whose virtuosity it wishes to emulate. His perception is that our company's low propensity for R&D is due to a cognitive deficit and not to a structural condition of our development style. Consequently, this relationship is modeled as if the determinant of the innovative behavior and competitiveness of companies in central countries were due to the transfer of disembodied knowledge produced by university research to the company.

This modeling prevents the understanding that the company hires university-trained researchers, who bring with them knowledge about how to carry out research – which, as we know, does not occur here –, which explains the behavior they want to emulate. As occurs in other situations in which idealization about reality obscures uncomfortable aspects of this same reality, there remains a bizarre lack of knowledge of analyzes and empirical evidence about how – there and here – the university-company relationship occurs.

The fact that only 1% of the resources invested by the North American company in research are contracted with universities and research institutes should be enough for the scientific elite to change their policy. In particular, it should review its action in relation to NITs, business incubators, patent offices and other institutional arrangements of a clearly corporate nature and poorly adherent to the mission of teaching and research institutions. And, also, considering that the resources coming from research contracts with the company are coincidentally also just 1% of the cost of the North American university, we would not continue repeating the fallacy that our public university could end up financing itself from significantly through the sale of services to the company.

The second mistake, associated with the previous one, refers to the Latin American ability to identify before la lettre, on the periphery, facets of capitalism that are only later revealed by researchers from the center. These are exceptions to the rule of underutilization of local techno-scientific potential.

When we had the coffee plague here in Campinas, at the end of the 19th century, who knew about this? Nobody. So, we created the Agronomic Institute. And what about yellow fever? We created what is today Fiocruz. When did the military come back from World War II wanting a plane when we weren't even making cars? We created CTA, ITA and Embraer. When agribusiness wanted to plant soybeans in the cerrado, who knew about this? We created Embrapa. When Brazilian oil appeared in deep water, we became world leaders. All over the world, and also in Latin America or Brazil, when an actor with important economic or political power has a political project that is intensive in new or unobtainable knowledge, he or she can, through the State, satisfy this cognitive demand, this techno-scientific demand.

Conclusion

Now, to finish, I quote Mariana Mazzucato once again:

“[…] Brazil may be on the path to demonstrating to the world what is needed to bring sustainability and inclusion to the heart of industrial strategy. To do this, however, it will have to avoid the temptation to temper the transformational capacity of the state… ensuring… that the voices of those previously left behind are at the table to help define a radical new direction for economic growth.”

Hoping to have managed to codify these voices in a language that can be understood by those who are deciding on our reindustrialization and hoping to contribute to what I have elsewhere called the transition from the Inherited State to the Necessary State, I say goodbye to my leftist colleague to whom I dedicated this text.

* Renato Dagnino He is a professor at the Department of Scientific and Technological Policy at Unicamp. Author, among other books, of Solidarity Technoscience, a strategic manual (anti-capital fights).


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