Two years of mismanagement – ​​From the chicken to the turkey



Capitalism's lack of dynamism is what explains the coup fury that spread across the country

One cannot speak of the economic performance of the Messiah's government without recalling what happened in recent decades. It is necessary to see that the dominant classes and the political forces that represent them, already in 1990, abandoned any development project. They completely abdicated from pursuing a self-determined and self-sustaining path of economic expansion.

In the period of associated developmentalism, in which the economy was opened to foreign capital (1956-1980), the Brazilian bourgeoisie had already lost command and control of the accumulation process. It now lacks mastery of most large companies, technological processes and even financial processes. It had no choice but to accept a mediocre trajectory of economic expansion, according to a pattern of development that was classified as “peripheral liberal”. Many capitalist entrepreneurs sold their plants to foreign companies and began to rely more and more on the financial market and on neoliberalism.

Nothing summarizes the development of capitalism in Brazil better than the historical evolution of the average rate of profit observed there from the post-war period until almost the present. It shows why this economy has been almost stagnant since the 1980s, with little hope of a prolonged and robust recovery. It should be noted, in particular, that the slight recovery that took place between 2002 and 2010 (Lula government) was followed by a return to the downward trajectory that had manifested itself in the previous period (FHC government).

As a result, some economists began to use the term “chicken flight” to refer to the growth pattern of the capitalist economy in Brazil from the 1990s onwards. However, between 2002 and 2010 it seemed that this pattern had changed as it was possible to take cycle of expansion of world trade, in particular, of growth in demand for primary products. In fact, the previous growth pattern had only temporarily changed. Growth rates went up because the hen was able to climb onto the perch and from there was able to fly a little farther and higher. When the cycle ended, the domestic fowl returned to normal in its economic yard, which it had never really left.

The picture that was already observed in the last decade of the last century has continued to worsen in the present century. Behold, the most sophisticated productive sectors were dominated by multinational companies; industrial matrix linkages have progressively weakened due to deindustrialization; the export agenda underwent a process of reprimarization; the financial sector became increasingly oligopolistic as it became increasingly dependent on interest paid by the state.

If the growth rate increased mainly between 2004 and 2010, it is because the capital accumulation rate started to grow from 2002 onwards, as a result of the increase in the profit rate; the latter increases from 2002 onwards, reaching its peak in 2007, then falling thereafter. The accumulation rate starts to increase in 2003, reaches a maximum in 2011, to fall sharply in the following years, accompanying the fall in the rate of profit with a certain lag.

It should be noted that the accumulation rate did not fall from 2008 onwards because effective demand was sustained by an economic policy that was unsustainable in the medium term. That is why the boost to growth through a policy of subsidies and stimuli for the private sector in a period of falling profit rates could not work. The rate of profit, as is known or should be known, is the main spur of capitalist investment. It should also be noted that the recession already announced in 2011 was transformed into a depression from 2015 onwards due to the austerity policy, the political crisis linked to the impeachment of the president elected in 2014, as well as due to the economic impact of the Lava Jato lawsuit. Jet.

The result of this historical process is reflected in the per capita domestic product growth graph. This grows at a rate of 4,5% per year in the period when associated developmentalism prevails, reduces to a rate of 1,1% per year in the period when the neoliberal-peripheral pattern dominates, and then becomes negative from 2014. This last period is dominated by two GDP regressions, the 2015-16 crisis produced by austerity and the 2020 crisis produced by the new coronavirus pandemic; in the years when there was some recovery (2017-2019), growth was timid and precarious, so that there is no reason to assume that this pattern will change in the following decade.

Not even, therefore, a new flight of chickens can be expected for the next few years, including those two that are missing for the conclusion of the Messiah's government. What will probably be observed is a turkey flight, that is, a flight frustrated from the beginning, which will not be able to raise the per capita domestic product to the levels previously observed. Why?

The future is not given in advance, it is posited by structures preserved from the past and by actions undertaken in the present that modify them little by little or revolutionize them, for worse or for better. Perhaps it is thought that the future of Brazil in the near future is being strongly compromised by the deleterious administration of the current government in the economic, institutional and geopolitical planes. However, the opposite is even more true. It is the situation of the capitalist economy in Brazil, stalled from 2010 onwards, sinking from 2015 onwards, with an unpromising future, that created the conditions for the rise of a ruler who figures as a redeeming myth – something purely imaginary and, therefore, , false.

Capitalism's lack of dynamism is what explains the coup fury that spread across the country to destroy a center-left government that never threatened the system and was content only with trying to produce a better distribution of income. Temer was sworn in and Messiah was elected to deepen neoliberal reforms and to dismantle the obstacles to capital accumulation set up in recent decades by the ecological, social, human rights, etc. struggle. He's doing it. However, as has become increasingly clear, his government, even making the working classes more precarious, will not be able to reverse the lag of the capitalist economy in Brazil vis-à-vis that of the rest of the world; on the contrary, it should increase.

The prediction that there will be a complete stagnation of the capitalist economy in Brazil is consistent with the thesis that the austerity policy will probably be maintained in the future. To understand it, it is necessary to indicate that the bourgeois conscience reflected in current economic theory is based on a myth, that of the economy as a homeostatic, self-regulated system, which produces prosperity as long as it is not obstructed by the explicit or tacit enemies of the market.

From this perspective, austerity is seen as a policy that privatizes, cuts expenses, reduces budgets and cuts wages to re-establish spontaneous order, the competitiveness of the economic system and, thus, its supposed virtuosity. Now, this myth has already taken shape in the argument of the invisible hand found in The wealth of nations by Adam Smith (published in 1776) and which, since then, has become the basis of almost all subsequent economic theory. He is a founder of economic liberalism and neoliberalism. Perhaps only Keynes's theory, faced with the depression of the 1930s, deviated from this pattern.

However, even if this criticism is correct, it is necessary to see that this policy has a functionality since it seeks to transform the real economy in the mirror of the idealized economy, through reforms that are never enough. Therefore, one should not draw the conclusion that austerity is a dangerous idea because it is not capable of raising economic growth and, worse, it only transfers income from the poor to the rich, from workers to capitalists. Well, it remains despite its apparent nonsense precisely because of its role in the distribution of income and wealth among social classes, especially in the current stage of development of capitalism.

For, as has been known since Marx, meeting human and social needs was never the main objective of capitalism; not even economic growth – even though it necessarily stems from the accumulation of industrial capital. Its logic is that of the myth of Sisyphus, that is, to get something more out of continuous repetition, to seek to satisfy an insatiable enjoyment, to make an amount of money generate more money. In this allegory – it is evident – ​​Sisyphus only represents the worker who produces surplus value and who rests only to get tired again. To objective and social surplus value corresponds, on the other hand, a subjective and personal surplus enjoyment of the capitalist.

It is certainly possible to think of economic policies that boost the accumulation of industrial capital, generate employment, raise labor productivity and even positively impact wages and the wage bill. Although they may be less perverse, the difficult thing will be to implement them in the context of structural stagnation in which the capitalist economy in Brazil finds itself. The latter no longer has, objectively and subjectively, autonomy in relation to the world capitalist economy to formulate its own development project. It has become an appendix of a process of globalization still centered on a group of countries (so-called developed) that are currently in a state of prolonged depression (or of secular stagnation according to the economists of the system itself).

But that is not all. The capitalist economy in Brazil, as in much of the rest of the world, is a financialized economy. And this should not be understood as an anomaly that came about through a “coup” by the “rentiers”, a distortion of good capitalism. Financialization was born in the 1980s of the last century due to the existence of overaccumulation of capital in central countries, which had been manifesting itself as a drop in profitability, stagflation, monetary disturbances, abrupt fluctuations in oil prices, etc. Faced with this situation, the social-democratic and Keynesian commitment had to be broken; the strength of the unions had to be destroyed. It was necessary to give strength to financial capital through liberalization so that it could constrain industrial capital – and workers – to adapt to the reforms that came to be called neoliberal.

Neoliberalism was successful in the core countries for about a decade and a half (roughly between 1982 and 1997). In Brazil, on the contrary, stagnation began in the early 1980s with the outbreak of the inflationary crisis that lasted more than a decade and the beginning of a process of deindustrialization that has persisted for forty years. In 1997, the average profit rate fell again in the central economies and they then also entered a depression process from which they have not emerged since. In this context, everything happens as if Brazil were trapped in the circle of fire of neoliberalism and financialization.

After 1997, the financialization process continued, no longer as a result of an effort to overcome a barrier produced by the accumulation of industrial capital itself (from 1945 to 1980), but due to the persistence and worsening of overaccumulation itself; the latter intensified in the scope of industrial capital and began to manifest itself increasingly in the sphere of financial capital itself. If in the previous period, financialization had unleashed the drop in the rate of profit within the scope of industrial capital, now it started to destroy its own development possibilities.

The survival of the enormous accumulated financial wealth requires a constant drain on the income generated within the scope of industrial capital. And it is welcomed there because there are no great opportunities for profitable investment in that area due to the depression of profit rates. As a result, economic growth itself entered into contradiction with the evolution of support and accumulation of financial capital. Thus, austerity, which undoubtedly kills economic growth, has become an imperative in financialized capitalism. The worst mistake now is to maintain the illusion that one is only at the gates of hell and not quite inside it; that it is enough to remove the devil for the fire of disgrace to be extinguished.

* Eleutério FS Prado is a full and senior professor at the Department of Economics at USP. Author, among other books, of Complexity and praxis (Pleiade).


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