Economy and politics in Brazil

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By ALEXANDRE DE FREITAS BARBOSA*

An inventory of hypotheses for contemporary Brazil

The interaction between the economic and political dimensions is one of the most complex topics in the social sciences. The common thread of Albert Hirschman's reflections revolves around this problematic relationship. The political scientist-economist – of German origin, naturalized American – followed in his work the successive “couplings” and “disengagements” between these dimensions through the “alternations between autonomy and interdependence” [1].

Instead of a direct and functional relationship between economics and politics – which would lead to the formalization of rigid theoretical models with reduced analytical potential –, Hirschman recommends investigating this intricate and unpredictable connection based on concrete historical experiences. This is what can be seen from his accurate and subtle analyzes of Latin America, developed countries and Eastern Europe.

This article proposes to weave an inventory of hypotheses for contemporary Brazil, through a long-term approach, with the objective of understanding the “tricks of history” and how the potentially contradictory interaction between economy and politics appears under different perspectives. settings.

In the period between 1945-1964, the country experienced a period of democratic stability with major economic and social transformations in the midst of the industrialization process. Democracy had some cracks: the illiterate did not vote, the PCB was outlawed and the military was frequently summoned to “preserve” the current institutional framework. The development project wielded by the nationalist sectors required the execution of basic reforms – including within the state apparatus – to promote development with social inclusion. This project was finally defeated by the capital's modernizing elites, who embraced the 1964 coup as a way to achieve “political stability” for the expanded reproduction of the productive forces of capitalism in the national territory.

The military regime created the conditions for the subordination of the political dimension to the designs of capital accumulation. The “class of others” – composed of those who live off work and counter-hegemonic intellectuals – was purged from power. The technocrat became the mainstay of the regime, providing the “optimal” means in terms of economic policy. Under the “bourgeois autocracy”, capital did not participate in the regime as a ruling class, but as a ruling class. Abundant credit, tax exemptions, compressed wages, in addition to gags to the press, took care to ensure by force the “hegemony” of the privileged class, boosted by economic dynamism.

Even before the foreign debt crisis of the 1980s, several businessmen jumped ship. The political elites themselves invented new acronyms to ensure the persistence of the past over the present. Instead of transition, we had accommodation. On the other hand, grassroots movements, led by the PT, emerged like a torrent in the hope of breaking the dams of authoritarianism. The result of this short circuit between society and politics was the 1988 Constitution, which, although Greeks and Trojans disliked it, became the space around which conflicts would take place in subsequent decades.

During the 1990s, neoliberal economists created the narrative that the Constitution was an impediment to stabilizing inflation, economic growth and increasing productivity. Constitutional amendments were approved to facilitate the entry of foreign capital and privatize sectors hitherto considered strategic. An offensive was set up to “bury” the Vargas Era. In terms of social policies, a gradual implementation of the Constitution – SUS, financing of education with resources destined to the various entities of the federation and non-contributory social security benefits prevailed. In terms of labor legislation, the “market” tried to promote reform through precariousness.

Therefore, the logic prevailed that the new political and legal institutionality should be changed, applied gradually or even circumvented by the market according to the class interests that supported the FHC government. Despite the social conflicts, politics adapted to the economy, which proved to be incapable of delivering what was promised by the neoliberals.

From the PT governments, it was assumed that economic growth and the emergence of a new development model could and should benefit from the existing institutional framework. There was an expansion of the social policies provided for in the Constitution, to which were added the policy of raising the minimum wage, Bolsa Família and the recovery of State power, especially through state banks. Important actions were also instituted to reduce inequalities in access to higher education.

However, this new political agenda was constrained by the so-called tripod of economic policy. The generation of primary surpluses – practiced throughout the Lula government and the first Dilma government – ​​should contribute to paying off the public debt interest bill. Exchange appreciation allowed interest rates to fall, despite remaining high in real terms. During this period, the internal market expanded, as well as exports (not only commodities), and foreign investment of all kinds flowed into the country. But the policies of greater densification of the productive chains – including in the most technology-intensive sectors – and of change in the pattern of external insertion, as well as an effective state planning, did not advance in a robust way.

Thus, despite the significant improvement in social indicators, the conditions for raising productivity and consistently reducing inequalities in the long term were not achieved. Maintaining the tripod of economic policy blocked the conformation of a national development project.

Any change in the economic plan required a rearrangement of the political and social forces that supported the government which, in 2010, reached 80% of popular approval. In summary, the economy did not appear as an obstacle, as it generated political dividends in the short term. On the other hand, a new political and social coalition was the condition for overcoming the economic dilemmas. The option was not to change the team that was winning.

When an attempt was made to change the economic policy in 2012, it was done in a hasty way, without the seam of consensus, and in a context of slowdown. Yesterday's political dividends evaporated and the Dilma government suddenly became responsible for all the country's ills.

The 2014 electoral victory created the conditions for the rise of a staunch opposition, which transcended the scope of the parties, received broad support from the mainstream press, high finance and segments of the Judiciary and the Public Ministry under the banner of Lava Jato. This was the password for the rout of all fractions of the bourgeois class previously nested in the bosom of power.

According to the new hegemonic discourse, the “populist” social advances of the 2000s and “systemic corruption” were at the root of the “fiscal crisis”, paving the way for the 2016 coup. public debt/GDP resulted from the downturn of the economy between 2015 and 2016, in a context of rising interest rates and strong political instability generated by the opposition eager to take power “with everything and everyone”.

Now, the discourse that guided the 2016 coup reversed the causal relationship. As the “economic crisis” generated political instability, the withdrawal of the elected president, by assuring the return of the failed reforms of the 1990s, was the condition for the resumption of growth. By “reforms”, it is understood the annihilation of the constitutional charter in all its strategic points. As the icing on the cake came the spending ceiling law, which compromised the functioning of public administration and stifled the role of the State as an investment inducer. The meager growth between 2017 and 2019, in a context of still high interest rates, brought the permanent fiscal crisis.

With the arrival of the captain to power, the agenda of the destruction of the State and rights unified the various class fractions of the bourgeoisie. Neoliberals gave way to “market militiamen”, to use the image of one of the government's support bases. The erosion of state-driven economic solidarity links throughout history has weakened the intersectoral and interregional relationships that had built a complex economic and social structure.

The national territory was torn apart, literally becoming scorched earth for foreign conquest.

In this context, it is no longer possible to engage in a new process of lasting capital accumulation. The generalized primitive accumulation of capital is the death of capitalism as a dynamic and contradictory process, as it requires the demolition of the regulating State and wage labor with rights.

The politics of demolition – there is no “fascism”, nor “populism”, much less “developmentalism” capable of fitting into this new formula – prevents any perspective of economic development. The class hatred of the middle social strata – individualistic, authoritarian and anti-state – buried the bourgeois democracy dreamed of by the worker president, where all classes would have their divine share.

The problem goes back to being essentially political before being economic, not least because there is and will not be a way out for capitalism in Brazil as long as the “market militiamen” are in charge. Nor is that enough. If they are defenestrated, the “Centrão” will assume the protagonism, using chunks of the State to distribute benefits to the underlings. The fiscal crisis will last, without development, throwing the neoliberal discourse, at least in terms of economic policy, into the dustbin of history.

Time for the bourgeoisie to wake up and understand that its submission to opportunism through “assault engineering” does not ensure political stability and, at the limit, turns against its interests in the long term, as summarized by Wanderley Guilherme dos Santos in his last work [2].

Like it or not, this convincing task falls to the left. It is about re-establishing bridges between the various social and political forces. To start rebuilding what's left of this devastated land, where one day it was imagined that economic development could bear fruit with democracy and the reduction of inequalities. It's too early to throw in the towel. History does not seem to offer us any alternative.

*Alexandre de Freitas Barbosa Professor of Economic History and Brazilian Economy at the Institute of Brazilian Studies at the University of São Paulo (IEB/USP).

 

Notes


[1] HIRSCHMAN, Albert. Self-subversion: consecrated theories in check. São Paulo, Companhia das Letras, 2016, p. 250, 253-257.

[2] SANTOS, Wanderley Guilherme. Impeded democracy: Brazil in the XNUMXst century. Rio de Janeiro: FGV Editora, 2017, p, 7-8, 16-17.

 

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