By JOSÉ RAIMUNDO TRINDADE*
Imperialism and state-owned enterprises in Brazilian dependent capitalism
The debate on imperialism and dependency has become less present in Brazilian reality in recent decades, even in academic circles, partly due to a certain amount of euphoria that took hold of the Brazilian left in the early years of the century. As we fell into the critical reality of the second decade of this century of uncertainty and, especially, after the coup d'état of 2016, “endogenism”[I] It gradually faded away, and the debate about the peripheral nature of the Brazilian economy and the restricted sovereignty that characterizes the State and the underdevelopment of our society gradually returned, albeit weakly, to the center of national discussions.
This article aims to expose some elements discussed in the work Imperialism and state-owned enterprises in Brazilian dependent capitalism (1956-1998) (Alameda), a book by Carlos Rodrigues, a professor at UFVJM. This work is part of this renewed understanding of Brazilian reality, based on contributions from authors who are key to thinking about the future or some way out of the “Gordian knot” that consumes us, especially Florestan Fernandes, Caio Prado Júnior and Celso Furtado, true compasses so well used and organized by the author reviewed here.
The text presented here aims to discuss the current Brazilian and international situation, including establishing critical points regarding the current Lula government's ties and its difficulties. First, in the first and second sections, we will present the book and in the final section, we will develop its interaction with the current situation.
Imperialism and productive internationalization
The work resulted from the author's doctoral thesis and is structured in three fundamental chapters that analyze different periods of Brazilian dependent economic development: the period 1956-1973; 1974-1985 and 1986-1998. The key category that gives unity to work is “total imperialism”, a category initially established by Florestan Fernandes and developed by the author. As the author also points out in the introduction, the author aims to “analyze how the pressures of imperialism promoted changes in Brazilian economic policy between the governments of Juscelino Kubitschek (JK) and Fernando Henrique Cardoso (FHC) (…) [emphasizing] the country's external dependence”.
The hypothesis raised constitutes a relevant point of the work: that the long Brazilian neoliberal trajectory began well before the governments of Fernando Collor and Itamar Franco, referring to “the framework that state-owned companies suffered” via impositions of the former Secretariat for Control over State-Owned Companies (SESTE) at the end of the civil-military dictatorship (1979 to 1985).
This hypothesis, even though the author does not relate it, had also been considered by Octávio Ianni in his texts analyzing agriculture in the Amazon and, mainly, The Dictatorship of Big Capital, where that author observes “that the state apparatus began to function mainly as an apparatus of capital” and that the conservative modernization imposed by the dictatorship was progressing, as reinforced by the work of Carlos Rodrigues in strengthening the great financial and monopolistic bourgeoisie, the nucleus of American “total imperialism”.
“Total imperialism consists in the fact that it organizes external domination from within and at all levels of the social order”, whose formulation by Florestan Fernandes is complemented by Carlos Rodrigues when he observes that “in the 20th century [and we would add the 21st], the possibilities of achieving a capitalism of relative autonomy became increasingly distant”.
Five elements would be characteristic of “total imperialism” and its imposing logic on the Latin American periphery:
(i) investments by “multinational companies could not run any risk of being restricted”. Two important observations: capitalism expanded in the second half of the 20th century with broad US hegemony and whose central form of wealth appropriation on a global scale occurred through FDI (Foreign Direct Investment).
(ii) Peripheral capitalist expansion requires strategic intervention by the State, both by conditioning the accumulation sectors, through the favoring of subsidies and the organization of the necessary infrastructure, as well as by guaranteeing “political stability” through social control. Thus, the “State becomes an instrument of defense and unconditional support of private initiative (…) [enabling] the coexistence between the 'modern and the 'backward'”, in the terms used in the book.
(iii) The sociological restriction of “total imperialism” places the “Brazilian bourgeoisies”, as Florestan Fernandes states, in a perspective of social formations subordinate to and complementary to the US bourgeoisie. In general, the perspective of sub-regional bourgeois classes appears as “impotent” forms that are incapable of establishing minimally sovereign national projects.
(iv) the peripheral economic pattern requires a structurally heterogeneous model. The conditions of interaction between “modern” and “archaic” are based not only on the permanence of forms of exploitation that predate wage-earning, such as non-wage-earning, even slave-based, as well as the absence of greater completeness between productive departments. “Total imperialism” seems to require the maintenance of heterogeneous forms, both to guarantee the super-exploitation of the labor force and to condition the transfer of value from the periphery to the capitalist center.
(v) Finally, as the author highlights, in the era of “total imperialism” there is an “intensification of the flow of economic surplus”, with a growing transfer of values to central economies: “through remittances of profits, dividends, royalties (…) and remittances of interest, as well as through the payment of external debt charges”.
The first period analyzed in the book covers the JK period and the first dictatorial governments. It is worth noting that the format in which “total imperialism” is coupled with the interests of the “Brazilian bourgeoisie” in the JK period establishes a different dynamic from that of the Vargas period, deepening, through the penetration of multinationals in the automobile sector, the loss of sovereign capacity and intensifying external dependence and unequal development.
However, according to the author, the “counterrevolution” of 1964 occurred for four reasons: (a) the intensification of internal antagonisms, both urban and rural; (b) reorganization of the system of social and economic control; (c) adaptation of economic relations to guarantee the maximum transfer of values; (d) readjustment of the State and loss of national sovereignty.
The 1964 dictatorship established a format of greater subordination of Brazilian capitalism to financial and transnational capitalism, losing sovereign capacity in various fields: economic, technological and military. As Florestan Fernandes pointed out, imperialism made its periphery “hostages to the objectives of international capital” deconstructing any possibility of “autonomous capitalist development in these regions and the construction of a nation”.
During the first phase of the dictatorship, what was observed was the increasing remittance of income abroad, especially to the USA. Thus, between 1963 and 1967, the remittance of income during the period was 1,21 billion dollars and the inflows (investments) in the form of FDI were 419 million dollars, a balance of 793 million dollars. As Carlos Rodrigues explains, these “data contradict the claim that the inflows of multinational companies and international capital into Brazil acted to alleviate the imbalances in the country's external accounts”, something that was consolidated in the form of the imbalances and deepened the financial instability and denationalization of the Brazilian economy.
It is worth noting that even during the first period, “the complete takeover of the Brazilian State (…) and its direction to meet the demands of multinational companies” was observed, with a series of measures such as the increase in foreign debt, the modifications of Law 4.131 (Profit Remittance Law) and the pattern of use of state-owned companies that served both “for the strategic production of raw materials, as well as for the supply of goods and services at subsidized prices, that is, passing on part of the state's profitability to foreign subsidiaries”, constituting part of the logic of early neoliberalism established in Brazil.
Imperialism and financialization
The second part of Carlos Rodrigues' book explores a key period in Brazil's recent economic history. We could even say with some degree of certainty that today's Brazil is largely the result of the economic and social format that was imposed during that period. It is the second phase of the civil-military dictatorship, a period of reorganization of world capitalism and the definitive decline of any project of autonomous Brazilian capitalism. The years 1974-1985, which the author calls with some accuracy the "state adjustment to financialization."
From the end of the 1960s onwards, US “total imperialism” entered its first and severe moment of crisis. The end of the “Golden Age” was marked by stagflation, the end of the “Bretton Woods"[ii] and defeat in the Vietnam War. The collapse, at least initially, of the American way of life was not easily digested by the American bourgeoisie, and the measures to be taken established the logic of the neoliberal and rentier economic pattern that would be imposed globally at the end of the 1970s, as Carlos Rodrigues correctly points out: “the structural crisis of capital at the turn of the 1960s to the 1970s resulted in financial internationalization and neoliberalism”.
The crisis of the early 1970s had several elements that would be significant for the later development of central capitalism, four important ones being worth noting: (a) the breaking of the so-called “dollar-gold standard” established in Bretton Woods. This standard established the possibility of converting the dollar into gold, making the maintenance of financial stability conditional on gold backing. With the end of this standard, a pure dollar standard was established, constituting an enormous capacity for “segniory” to the US Treasury.
(b) The establishment of a floating interest rate and, later, in the late 1970s, a shock of rising international interest rates (Volker Shock), redirecting capital flows to the USA and disrupting peripheral economies with the explosion of external public debt in peripheral economies, including Brazil.
(c) Economic policy now based on fiscal austerity and the emptying of the public budget allocated to public policies; (d) extensive process of privatization of public companies. Thus, this process leads to increasing financial internationalization and the increase in the power of US imperialism.
Brazilian capitalism will adapt in a completely passive manner to this imperialist configuration. The author will make extensive use of Celso Furtado to show the “unfeasibility of any national project”. The author observes that both Celso Furtado, Florestan Fernandes and Caio Prado Júnior understood that “there was no creation of an undetermined industrialization”. Furtado establishes this phase of Brazilian capitalism as a “new dependency”, with three key developments: (i) the foreign debt crisis; (ii) the reproduction of a cultural pattern that “mimics” the American and European ruling and middle classes; (iii) neoliberalism and fiscal austerity as imposing economic standards.
The text systematizes the set of policies established by the last dictatorial government that fit the Brazilian economy into this new neoliberal phase of capitalism, with three processes being very relevant and needing to be addressed due to their lasting repercussions: (a) public debt and its expansive logic; (b) the privatization of public companies; and (c) fiscal austerity based on cuts in primary spending.
The expansion of public debt occurred through two important mechanisms: Law 4.131 and Resolution 63. In both cases, as the author shows, this enabled both an increase in external debt and an increase in internal public debt and the nationalization of the debt, leading state-owned companies to resort to loans and strengthening the process of nationalization of Brazil's external debt. During this period, there was already an increase in transfers and charges on external liabilities, reaching US$ 1982 billion in 18,3, and in 1985, the expenditure on interest to pay creditors of the external debt was 130% higher than the interest paid in 1979.
The growth of domestic debt securities was exponential, and accompanied the explosive growth of interest rates charged by the monetary authority, for example, financing rates for overnight in real terms, they reached a rate of 1985% in 150,3. The expansive growth of public debt already shows itself in this period as a centrifugal force on the public budget, to the extent that its growth occurs as an automatism that is independent of the effective use of the resources raised, thus we observe a debt that grows only to pay increasing interest, whether external or internal.
The privatization of state-owned companies inaugurates, in the author's perception, the center of Brazilian neoliberalism, and for this purpose the Secretariat for the Control of State-Owned Companies (SEST) was created, which according to the author “has a direct relationship with the crisis of the capitalist mode of production and the growing financialization of multinational companies”.
SEST anticipates, even in its organizational format, the major lines of transfer of state capital to private funds, and the discourse has been established since that period (1979) based on the alleged ideology of private efficiency and the containment of public spending. An aspect reported by the author refers to how SEST reports already present the “sale of a state-owned company (…) [as] a trump card for fiscal balance”. It is important to point out that the logic of the Public Sector Financing Need (PSFN) was introduced in this period due to initial pressure from the International Monetary Fund (IMF) and cements fiscal austerity as an organizational principle of the public budget, favoring financial spending over primary spending.[iii]. Finally, it is observed that the strategy established at the end of the military dictatorship was the scrapping and indebtedness of state-owned companies, a process that anticipates the wave of privatization that will characterize FHC's neoliberal wave.
Neoliberalism and restricted sovereignty
We are currently in the crisis phase of “total imperialism”. Although Carlos Rodrigues’ work places us in the period from the beginning of the New Republic (1986) to the end of the first FHC government (1998), a considerable part of the logic established by the so-called Washington Consensus has remained to this day, through the three PT governments. As the author points out, “US imperialism was accentuated by financial internationalization” and moved towards the establishment of a regime of intensified financial speculation “with the objective of increasing the value of its capital in the shortest possible time”.
This logic can only be established in the face of the growing transfer of values from the capitalist periphery to the center, with the dictates of the Washington Consensus becoming key to commercial, productive and financial openness, alongside a state logic based on a fiscal regime that has become increasingly austere over the course of two decades, devolving from liability laws (LRF) to standards of constitutionalization of rules for non-primary spending (Fiscal Framework).
The privatization of almost all state-owned companies was the main hallmark of the FHC government, but without any return in terms of revenue to the Treasury coffers, thus “the annual average of his first term was a collection of 0,93% of GDP from sales of state-owned companies”, with the sole or greatest consequence being the almost complete denationalization of the Brazilian economy and the establishment of a national State with restricted sovereignty and a dependent capitalism marked by the overexploitation of its people and the continuous transfer of wealth to central capitalism.
Finally, it is worth drawing attention to the wealth of data and analysis that the work presented here makes possible, calling us to the necessary “reexamination of Brazilian economic history” and the return to the critical and constructive arguments of thinkers such as Florestan Fernandes, Caio Prado Júnior and Celso Furtado.
*Jose Raimundo Trinidad He is a professor at the Institute of Applied Social Sciences at UFPA. Author, among other books, of Agenda of debates and theoretical challenges: the trajectory of dependency and the limits of Brazilian peripheral capitalism and its regional constraints (Paka-Tatu).
Reference
Carlos Henrique Lopes Rodrigues. Imperialism and state-owned enterprises in Brazilian dependent capitalism (1956-1998). New York: New York University Press, 2023, 364 pages.https://amzn.to/40FfAqI]
REFERENCES
TRINDADE, José Raimundo Barreto. The dispute of ideas in the current situation: neoliberalism, resistance and social networks. Belém: ICSA Publisher, 2022.
MOFFITT, M. The World's Money: From Bretton Woods to the Brink of Insolvency. Rio de Janeiro: Peace and Land, 1984.
Notes
[I] In the article about Samir Amin's work “Only the people make their history” that I published here on this website (https://dpp.cce.myftpupload.com/somente-os-povos-fazem-sua-historia/) I clarify that endogenism refers to the notion that “capitalisms would all be local and there would be no central external influences, beyond the already typified commercial relations”.
[ii] The agreement signed in the US city of Bretton Woods before the end of World War II established a considerable part of the institutionality of the capitalist world for the last eighty years, such as the World Bank and the International Monetary Fund, in addition to the aforementioned “dollar-gold standard”, all of which are now in crisis or on the verge of death. For an interesting discussion of the end of the “Bretton Woods” agreement, see Moffitt (1984).
[iii] Check out the article published on this website: “State Spending” (https://dpp.cce.myftpupload.com/gastos-estatais/) and Trinity (2022).
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