By JOSÉ LUIS FIORI*
A long-term historical interpretation of the state's role in the Brazilian crisis
Introduction
A decade of living with economic uncertainty and political instability has transformed the idea that the Brazilian crisis has a nature that transcends conjunctural fluctuations into a consensus. At that time, the conviction that the epicenter of this crisis is in the State also became widespread.
The political debate about the State's responsibility in the origin and overcoming of the problems generated by the crisis appears, however, wrapped in a profoundly ideological mantle. The anti-statism of our liberal businessmen cannot hide their prolonged clientelistic dependence on the State itself. But the statism of our developmentalists – conservatives more than progressives – is also unable to justify the alliances that have historically committed the State to corporate and cartorial paraphernalia and to authoritarianism, and the reformism of our social democrats has never been able to clarify how the state reform omelette is made without breaking the eggs that fed the various and heterogeneous segments agreed on the social basis of support for the strategy that modernized our society without expanding social and political citizenship.
At this time, there is a need to review some aspects of the debate on the true nature and importance of the State in the theoretical characterization and historical implementation of Brazilian industrialization. This article disagrees with some views traditionally associated with Marxist or structuralist positions and tries to locate in some privileged moments of Brazilian political-economic history the true specificity of its trajectory towards industrial modernity.
Specificity condensed in the schizophrenia of an economic policy that fully portrays the pacts and commitments that lined up the perverse relationship that unites, since the 1930s, the State with the Brazilian bourgeoisie. Commitments that distance Brazil from the Prussian model of industrialization and inscribe it in a “developmental path” leveraged by a State that never managed to go beyond the limits imposed on it by a business community that, contradictorily, managed to be profoundly anti-State, despite its long history of Schumpeterian anemia and dependence on the State itself.
The problem of the specificity of Brazilian industrialization
The provision of slave and immigrant labor inaugurated, as is known, the economic presence of the Brazilian State, which expanded continuously from the beginning of the XNUMXth century.
This presence changes in quality, however, with the federal policy of coffee valorization, institutionalized after the 1st World War, but, above all, with the institutional revolution that occurred with the Estado Novo. The numbers, even when restricted to the productive sector, are significant. Until the 30s, Brazil had only 14 state-owned companies. Between 1930 and 1954, in the Vargas Era, the State generated 15 new companies; in the five years of the Kubitschek Government, 23; with Goulart, 33 were created; and during the 20 years of military rule, 302, according to data collected by former Minister Hélio Beltrão (JB, 28.05.88). The numbers would be equally expressive if we quantified the proliferation of other bodies, especially after 1937, linked to regulation, control, financing, provision of services, etc.
Based on these data, many have defined the specificity of Brazilian capitalism according to the crucial importance of the state productive sector and the extent of state control over the accumulation process, with some claiming that “(...) the state is the one that appears as a substitute for the 'private growth machine', as it increasingly operates in the heavy sectors of the production goods industry and in the internal and external financing operations of the industry” (Tavares, 1985, p. 116).
This despite the fact that, since Gershenkron (1952) at least, this active and expansive presence of the State has been considered a common characteristic of all capitalist countries with national states and late economic developments. In fact, after the German experience, there are no known cases of accelerated industrialization that occurred outside the state aegis, although they differ in terms of the importance of foreign capital and the monopolizing impetus of national capital. In all of them, as in Brazil, in addition to its classic functions, the State played the role of infrastructure builder, producer of raw materials and basic inputs, coordinator of large investment blocks and an important instrument of financial centralization.
On the other hand, even in countries of original industrialization, the functions of the State were completely redefined after the 1st World War. From then on, and particularly after 1929, moved by the needs of the crisis or corporate pressures, supported by Keynesian arguments and sustained by social democracies, the State redefined its functions and institutionally reorganized itself. It became increasingly involved in maintaining investment levels compatible with the employment and consumption demands of the population, sustaining stable expectations, negotiating profit margins, leveraging technological frontiers and, above all after 1945, massively promoting welfare policies and social promotion.
Therefore, we believe, like Carlos Lessa and Sulamis Dain, that “(…) a superficial observation would show that the responses of the States of Europe and Latin America were consubstantiated in similar manifestations: expansion of the State's participation in the flows of product, income and spent; presence of the State in directly productive activities and expansion of its role in the financial monetary system”.
And with them we would conclude that “(…) apparently, attempts to describe the 'public sector' fail to capture any specificity in Latin America” (Lessa & Dain, 1982, p. 217). It seems to us that, neither in Latin America, nor in Brazil in particular, the specificity of the constitution of its industrial capitalism is found only in the active state presence, however extensive it may have been from the point of view of its functions, dimensions and areas of activity. productive intervention.
The limits of the Prussian hypothesis
If underlining the importance of the role of the State is insufficient to characterize the specificity of our industrialization, talking about the Prussian model of conservative modernization is too vague or abstract to capture the particularity of our developmentalist modernity.
For Lenin, the “Prussian way” was identified only as a way of converting the feudal countryside to bourgeois development. Its essential trait was that the “(…) feudal exploitation of the latifundia was slowly transformed into a bourgeois-based exploitation.junker (…)” (Lenin, 1980, p. 30); a transition from feudalism to capitalist exploitation of the land without division of the latifundia. Engels (1951), much earlier, in his works on the Revolution and Counter-Revolution in Germany, went much further by defining the fundamental traits of Prussian specificity, underlining the political conditions of German backwardness in the face of English economic development and French social development. .
Engels already perceives in his work, in the middle of the last century, the importance of the feudal nobility in the constitution of the bourgeoisie and the other component classes of German society, concluding that “(...) the composition of the different classes of the people that form the base of all the political organism is more complicated in Germany than in any other country” (Engels, 1951, p. 205). The backwardness, the resistant feudal nobility, the unfavorable geographical situation and the continued wars were, according to him, at the root of why “(…) political liberalism, the regime of the bourgeoisie, whether in the form of monarchical or republican government, was impossible in Germany” (Engels, 1951, p. 300). For these reasons, the German bourgeoisie did not achieve the same political supremacy achieved in England and France, being forced into an alliance with the agrarian nobility, which resulted in a “progressive” evolution of production relations, an evolution “from above” or “by the top” as they later called it.
Much later, Gershenkron reworked the hypothesis of German backwardness and saw the “substitutive” role played by banks, the State and ideologies as the basic components of a new, now more institutional, “Prussian way” of industrialization. Barrington Moore (1973) went further and worked on some historical and sociological determinations responsible for what he called the “conservative modernization” of Germany. Its specificity lay in the strength of the countryside, as in Lenin, and in the fragility of the village, as in Engels. Their alliance, however, resulted not only in the authoritarian strengthening of a modernizing State, but also in its succession by a weak democratic regime and, soon after, by fascism.
Discounting some similarities with the Brazilian case, especially with regard to the agrarian question, all attempts to incorporate Brazilian development into the Prussian model detract from some economic particularities of German industrialization in the second half of the last century. As well as: the fact that the center of economic gravity was, from the beginning, in heavy industry and not in consumer goods; the fact that this industry was born monopolistic, national and at the new technological tip – electricity, steel, etc.; the fact that this industry was integrated, horizontally and vertically, by the financial articulation of the banks; the fact, finally, that this industrialization took place in a context of intense inter-imperialist competition and was directly articulated with the State via the production of war material, with a view to an imperial project and a predictable confrontation with the English hegemony.
These were the decisive factors that explain the vigor of the German economy in the second half of the last century, leveraged by industry and moved by a nationalist ideology, which rationalized an authentic imperial project. Something similar to what would happen in Japan during the Meiji Revolution. In both cases, industrialization took off through heavy industry, supported by the State and secured by a clear project of Nation-power.
Our reading of the Brazilian industrialization policy identifies two moments in which our elites were close, but ended up rejecting an authentically Prussian alternative; in the Vargas Era, especially in the 1930s, and in the Geisel Government.
Ten days before the 1937 coup d'état, Vargas suppressed the foreign exchange confiscation, winning the sympathy of our coffee growers, so that, shortly after the coup d'état, he declared a moratorium, adopting an explicit policy of stimulating the industry, with the creation of the Carteira of Agricultural and Industrial Credit of Banco do Brasil. In April 1938, Vargas stated that “(…) the great task of the moment is to mobilize national capital so that they take on a dynamic character in the conquest of backward regions (…). Brazil's imperialism would consist of expanding these economic frontiers and integrating a coherent system in which wealth circulates freely and quickly, based on efficient means of transport that will annihilate the disintegrating forces of nationality” (Brandi, 1983, p. 135) .
In that same year, Vargas stated that “(…) the Estado Novo does not recognize the rights of individuals against the collectivity. Individuals do not have rights, they have duties! Rights belong to the community” (Brandi, 1983, p. 142).
From the point of view of his economic project, Vargas defined the construction of the steel industry as the cornerstone, “a capital problem of our economic expansion”. And, signing a large contract with the German company Krupp, he thought of linking his industrializing project to the rearmament of the Army. But his national project foundered just ahead, when, on March 9, 1939, Oswaldo Aranha signed the Washington agreements, which released Eximbank credits to cover commercial arrears, but committed us to opening the economy to US capital. , with the suspension of the moratorium and with the resumption of payment of the service of our external debt.
Soon after, the exchange of military missions interrupted the German approach to Vargas. Based on these decisions, the direction of the Varguista national project was redefined, moving away from the Prussian path at the exact moment when he opted, in the face of political resistance from the business community and the scarcity of fiscal resources, for international financing of the Volta Redonda steelworks. , starting point of our heavy industry.
Many decades later, in 1974, General Geisel, upon receiving the presidential sash, announced that “(...) the Nation has gained unshakable confidence in itself, advancing with great strides towards its great destiny, which nothing will stop”.
With the II National Development Plan (PND), Geisel responded to the crisis of the first half of the 70s, proposing a “Nation-Power” strategy that had the State as its main architect. He defended the completion of the import substitution process, but maintained the international private financial system as its main guarantor. In parallel and in a movement similar to that of Vargas, Geisel broke the military agreement with the United States and signed the atomic agreement with Germany. This resumption of a national project, however, faced the most complete lack of popular support and growing opposition from the business class, the vast majority of which were against the implicit process of nationalization.
In 1938, Vargas thought about financing heavy industrialization with national resources, but he was short of breath. In 1950, he failed once more when he sought financial support from international public banks without finding the expected receptivity. In the 70s, Geisel finally completed heavy industry with the resources of international private banks, for which the country pays a known price today.
In this long journey, which can be seen as a transition from a capitalist agro-export economy to an industrial economy, our coffee growers were never junkers feudals did not even have a military vocation; our men of war were not nobles nor did they have an imperial breath; our industrial bourgeoisie was predominantly immigrant and suffered from Schumpeterian anemia; our banks have always preferred commercial intermediation and speculation; our nationalist faith was mainly the work of a technocratic and military elite that, in the absence of war, generated a bastard child, the idea of national security, a substitute ideology that was restricted to the barracks.
In summary, the role of the State was central in our industrialization, but its modernizing action was always limited by a conservative commitment different from that which sustained Prussian industrialization. This is what we will try to show in the more detailed discussion of how the Prussian dreams of Vargas and Geisel were frustrated.
Vargas: Prussianism Disfigured
Vargas' national project, despite its various moments and inflections, has a very clear central line. There is no place here for a complete reconstruction of its history or its main institutional consequences. This work has already been done and supports us in this reflection (Draibe, 1980). We just want to draw attention to some of its characteristics and contradictions that ended up accompanying and specifying our industrialization.
In fact, if Vargas's Prussian dream was short and unsuccessful, the story of his industrializing project was much longer and more successful. The Aranha Mission and external funding from Volta Redonda buried the former. The construction of an institutional apparatus “(…) whose form increasingly incorporates regulatory apparatuses and interventionist peculiarities that establish active support for the advancement of industrial accumulation” (Draibe, 1980, p. 83) paved the way for the second.
The list of institutions created with the aim of centralizing the command of economic administration is endless and has remained permanently in our history, extending to the spheres of administrative and budgetary organization; the regulation and control of exchange, foreign trade, currency, credit and insurance; the promotion of certain branches of production and commercialization; the normalization of large areas of economic activity; the attempt to jointly coordinate economic activities; drafting codes and regulations for public utility services; statistical information; regulation of prices, wages and interest, etc. A complete institutional framework that, even when it got old, would be the matrix that would make our industrial modernization viable, from the state point of view.
His plans for heavy industrialization are also well known, which permanently collided with political opposition to nationalization and the lack of financing “effort”, which was reduced to complicated exchange transfers. For this reason, if this enormous institutional modernization effort “(...) opened space for the industrializing action of the State, it also contained very strong elements of resistance to industrialization, the nationalization of policies, intervention and planning” (Draibe, 1980 , p. 116). This is because, as S. Draibe (1980, p. 118) says, “(...) the political nucleus of the State, although authoritarian and having autonomy for the elaboration and exercise of its direction, intermittently comes up against the insurmountable limits established by the balance instability of its sustaining forces.
Visible limits on objection to control and plan, but much more important and permanent on financial constraints. In this terrain and still dreaming of an endogenous financing pattern, the Estado Novo changed the fiscal rules and expanded the tax base, making income, consumption and stamp taxes the fundamental sources of the Union's resources. But these changes were insufficient even to account for the State's current expenditures, not to mention its industrializing pretensions.
And this despite the new reforms involving the Income Tax and the creation of the Tax on Extraordinary Profits, the insufficiency of which finally forced the creation of earmarked funds, initially intended for the re-equipment of transport routes and oil research. With that same objective, the creation of an investment bank was considered, which would only appear later, and the Cooke Mission idealized, for the first time, an active and efficient capital market from a productive point of view. Finally, in some cases, public companies were chosen, such as Companhia Siderúrgica Nacional, which, however, was made possible through external financing.
Today, looking retrospectively, it is clear that, in the Estado Novo, “(...) new, effectively, were the bodies created, unprecedented were the institutional instruments that centralized power now had at its disposal, innovative were the forms and types of regulation and control that would now characterize state economic action” (Draibe, 1980, p. l29). But “(…) the absence of adequate funding agencies, on the one hand, and of a Central Bank, on the other, made control not only partial, but effectively compromised the possibility of establishing a national currency and credit policy (emphasis added). ours)” (Draibe, 1980, p. 132).
The success of the Prussian strategy would imply, at that moment, from an economic point of view, an enormous global and integrated effort of public and private investments aiming at a heavy industrialization that did not occur. And it did not happen because this economic effort presupposes an iron link between the State and the business community, which was politically vetoed by the Brazilian dominant classes, predominantly agrarian and in favor of an anti-state and internationalizing economic liberalism. Thanks to this veto, at the beginning of the 50s, our technical industrial productive base remained critically dependent on intermediary imports and capital goods, so that, despite the previous limited industrial dynamism, insufficiencies of the transport infrastructural base had already become explicit. and energy that threatened to curb the expansion of the Brazilian economy. So, overcoming these “bottlenecks” was added to the unresolved issue of heavy industry as a central concern of the second Vargas administration.
Even though there is no formal and systematic plan that unequivocally unveils the economic and social development strategy pursued in the first half of the 50s, reading the presidential messages and expositions of reasons that accompany the succession of programs, projects and instrumental and operative aspects of the state apparatus allows, however, at least two interpretations. On the one hand, some saw at that stage the explanation of a capitalist development project where, under the rule of the State, the hegemony of national private capital would be founded, whose blockade would have led to the death of its main inspirer.
Others, with greater prudence, saw in that set a preview, extremely modern for the time, of a heavy industrialization, conducted from the conscious interpenetration of the State with national private capital and international public financing. In this direction, it was up to Vargas to set up his programmatic and institutional equation, even though its financing only became viable in the Kubitschek Administration, when the idea of public financing was replaced, in practice, by foreign private investment, and heavy industrialization, by an industry of consumer goods strongly internationalized.
Before that, however, and even with Vargas, there was the conviction of the public bureaucracy that, if the smallness and insufficiency of the infrastructure system made it difficult to continue industrial expansion, the lack of interest and inability of the private sector to take on the equating of these issues , evidenced by two decades of omission, forced the State to take on a leading role in these domains, as was inevitable in the cases of the National Electrification Plan and the creation of PETROBRÁS.
But these programs once again faced funding difficulties. Lafer's Five-Year Plan, which provided for investments in infrastructure of around US$ 1 billion, unfolded with the constitution, in November 1951, of the Economic Reapparation Fund (FRE), with the National Bank for Economic Development (BNDE) and your managing agent. The funds came from surcharges applied to Income Tax and from the transfer of part of the technical reserves of the insurance and capitalization companies. This internal scheme was thought of as the counterpart of the long-awaited American official cooperation for Brazilian development. If we add to the FRE some other funds fed with tax obligations, we witness the setting up of a subsystem of public financing of a fiscal nature which, by expanding and directing the tax burden towards infrastructural applications, allowed the achievement of some of the programmed multiannual objectives.
Thus, even the funding scheme presented in the Lafer Plan had American support as its main and critical component. In the work of the Joint Brazil-United States Commission, it was detailed, considered essential, in the order of US$ 300 million to US$ 500 million. It was as an anticipation and preparatory counterpart that the BNDE/FRE scheme emerged. The search for this financial support reaffirmed, in the first half of the 50s, the strategy that had emerged victorious from the internal and external political conflicts of the Estado Novo.
A disfigured Prussianism, an “associated” national project, even if based on the articulation between a public company, a private national company and foreign “aid” of a governmental nature. There were, in the Vargas program, two fundamental certainties: foreign capital would not carry out infrastructure tasks, nor would foreign companies come in new waves to Brazil until the bases for industrial expansion were created. And these should be financed by combining an internal effort with some variant of the Marshall Plan.
Once again, however, Vargas was defeated in the financing problem, to the extent that his industrialization project, now dissociated from any Nation-power project, did not count on the support of the internal economic elites or on external financial aid.
This same limitation reappears from another angle, in the evolution of the Vargas government's monetary and credit policy, which had a markedly orthodox or conservative approach. Its first movement (1951/52) was presided over by the Lafer Plan, a program to be implemented in line with a stabilization scheme that provided for fiscal balance and cost containment. Lafer achieved fiscal balance in federal accounts, although in those years the public sector “deficit” remained due to state administrations.
The Lafer scheme failed, however, to impose a contractionary credit policy. At this point, he faced up to Banco do Brasil under the presidency of Jaffet, which, enjoying peculiar autonomy and reinforced with resources from the sale of excess licenses, vigorously expanded credit. Even so, in the first two years of government, an orthodox economic policy was maintained, despite the “infractions” of “good doctrine”, which at each moment reset the financing impasse in the form of conflict, usual in developmentalist economic policy, between currency and credit, stability and growth.
At the beginning of 1953, the political-economic scenario presented an accumulation of well-known problems. To recapitulate: the liberalization of imports led to a drop in reserves and the accumulation of commercial arrears that already exceeded US$ 500 million. In February 1953, the Eximbank granted a line of US$300 million, under particularly strict conditions and aimed at offsetting American commercial arrears. In this context, Law No. 1.807 is enacted, which would establish the free exchange market for venture capital operations, and the President of Banco do Brasil is replaced, signaling the intention to modify the credit policy. In contemporary eyes, the stabilization program had failed, as inflation held steady at its new 15% level.
In the trade union area, mobilization against Vargas' economic policy grew, culminating in the 300.000 strike in March and April of that year. The dissolution of the mirage of loans for infrastructure projects would combine with the persistent trend towards a strong imbalance in Brazilian trade accounts. In the months of June and July, in the ministerial recomposition, Lafer would fall, assuming Oswaldo Aranha, who would reiterate the stabilizing priority with the announcement of tax cuts, credit restraint and strict selective import controls.
Panoramicly observed, the economic policy of 1953 is not different from that carried out in the previous biennium. The “Spider scheme” also proposed fiscal and credit restraint – although Banco do Brasil continued to expand that year – and the profound exchange rate changes did not distance the economic policy from the IMF recommendations. On the contrary, the relative exchange rate liberalization, even with a system of multiple rates, would be presented to that agency as a transitory solution to approach the system of full exchange rate freedom.
At a time when the contradictions between the already disfigured Prussianism of Vargas and those who vetoed him in handling an orthodox and “contentionist” economic policy were intensifying, Vargas witnessed the dissolution of his last hopes regarding American support. The Brazil-United States Joint Commission ended its work in June 1953, with negotiations with the Eximbank on hold. In May of the following year, a 100% increase in the minimum wage was decreed, raising the urban wage floor to a level never surpassed. Shortly afterwards, in the midst of the political-institutional crisis, Vargas would commit suicide, and Oswaldo Aranha would be replaced by his collaborator in the exchange rate reform, Eugênio Gudin.
The fundamental thing, for our purposes, is that the second Vargas Administration marked an awareness and a strategic inflection. The awareness that the national company was falling short of the needs imposed by the industrialization leap and that the private banking system was incapable of overcoming the narrow limits of commercial credit, which forced the State to assume a financial function. It was clear, moreover, that the strong arm of national capital was not in industrial capital and that the alliance of agrarian-mercantile and banking capital did not see in the State the condotiere of a project of economic or military affirmation.
All this imposed a strategic inflection with the option for development associated with international capital, the only way to finance a late and peripheral industrialization that never became a truly national project, Prussian style. An industrialization that, on the contrary, was driven by the sector of durable consumer goods, with a high degree of productive internationalization and technological dependence and with a low degree of financial articulation and monopolization. An industrialization that, finally, was never guided by external ambitions or clear internal hegemonies.
Finally, with JK, the definitive option was made for a financing pattern heavily dependent on foreign capital and on the use by the State of internal and external debt, or even inflation, as a way of “supporting” an extremely conservative, protectionist business bourgeoisie and unpopular. Since, from then on, the State was also vetoed any movement of monopolization (which was not sectorial) or financial centralization, even when it was held responsible, simultaneously, for the stability of a currency unlinked to any international standard, for the extension of credits and subsidies and basic investments responsible for leveraging industrialization and sustaining the profit margins of heavily protected economic sectors.
Geisel: Prussianism rejected
The contradictions of the role reserved for the State are exponent in the Geisel period, when the current crisis, the deepest and most definitive of this pattern of industrialization, is set up, chronologically, politically and economically.
As is known, Geisel's national project responded to a slowdown in the internal industrial cycle and to an external shock, proposing "(...) to carry forward development in the midst of the crisis and external strangulation, through the restructuring of the productive apparatus" (Castro , 1985, p. 42), in a strategy integrated by two mutually articulated directives. The first proposed a new pattern of industrialization, whose dynamic leadership would be in heavy industry. As AB Castro well saw, “(...) the national industrialization project, which had as its first major milestone the battle for modern steelmaking (...)” (Castro, 1985, p. 54), and defined it. if the public company as its central agent. And the second projected a strengthening of national private capital, to be coordinated and financed by the BNDE.
The difficulties have already been duly mapped and analyzed elsewhere. For our purpose, we subscribe to the final balance, made by Barros de Castro, of the restructuring of the productive base, when he says that “(...) the rapid, horizontal and technologically passive growth of the years 1968/73 came to an abrupt end in 1974. From then on , in forced march, the economy would go up the ramp of capital-intensive and technology-intensive industries (...). As a result of the set of programs included in option 74, the capacity to produce oil and electricity, basic inputs and capital goods was drastically increased”.
Since “(...) the evolution registered in the last decade tended to decondition the dynamism of the economy from the profile of the internal demand (...) and, after the costly march started in 1974, the country had a new base and a wide field of possibilities (...) which no longer fits – even as a limiting case – within the perimeter of underdevelopment” (Castro, 1985 , p. 76, 79 and 82).
In the paths of this forced march, however, not everything went as planned, and the way in which it happened had decisive consequences in the future. As Carlos Lessa says, “(…) the II PND assumed the state-owned company as the leading agent for changing the pattern of industrialization (…) towards a new central pact: state-owned company/large national industry, notably capital goods” (Lessa, 1978, p. l47), not taking due account “(…) that the state-owned company is one of the instruments of sovereign pacts and that the State is an instrument of the larger movement of the economy and that, therefore, neither the State nor did state-owned companies have the autonomy envisaged by the II PND” (Lessa, 1978, p. l48).
This assumption would be valid in a “Prussian project”, but, imposed on a different reality, it faced unforeseen difficulties, the consequences of which were fatal. In this sense, and in the first place, it faced low corporate solidarity, transformed, from 1976 onwards, into a true rebellion against nationalization. This behavior, however, as we are trying to demonstrate, was not new and resulted from political choices that, since the 30s, generated a highly symbiotic relationship, however “mercantile” and lacking in solidarity, between the business community and the State. A relationship that was reinstated as conflict and opposition at all times when the State proposed to command the pace of heavy industrialization, which was Geisel's proposal, which, for this very reason, faced difficulty in financing expansion through companies state.
Conditioned by business claims and resistance, the Government limited, through a decision by the Economic Development Council on January 15, 1975, the maximum readjustment of its tariffs to 20%, making it difficult for companies to self-finance. In the same direction, when the private sector vetoed the carrying out of horizontal and vertical integrations, the large state-owned company was prevented from increasing the mass of its profits. Faced with such constraints, to which was added the limited access to the Treasury and the official financial system (aimed primarily at the private sector), public companies had to resort to external indebtedness, with all the known consequences. A problem that added to the tactical difficulties posed by short-term macroeconomic imbalances, concentrated in inflation and the balance of payments, and it was in this space and in the name of containing inflation that the direct and permanent confrontation of the developmental core of the strategy with the command of macroeconomic policy.
This confrontation was resolved, in part, with the increase in interest rates, associated with the increasingly intense entry of foreign loans, which widened the financial gap in the public debt operation used to finance the conversion of the net balance of incoming resources. As a consequence, and to face the private pressures resulting from the rise in interest rates, the Government was forced to open a growing range of subsidized credit lines. From then on, “(…) the almost obsessive insistence on slowing down aggregate demand through the policy of high interest rates and the attempt to tighten credit accumulated, on an increasingly unmanageable scale, the great problem of the Treasury's financial imbalance. The dizzying speed of the turnover of the public debt, the uncontrollable opening of the financial deficit, the flood of foreign loans created self-destructive pressures of the original goal of credit containment (...)” (Belluzzo&Coutinho, 1982, p. l65), leaving the exchange rate prisoner of the external financing policy and the growing weight of the debt service flow. With that the seeds of future financial enachment were planted.
These obstacles and conflicts explain why the completion of the import substitution process had such catastrophic consequences. This enormous effort, made by a State without corporate solidarity and with foreign debt, seems to have led us to a deeper crisis than the ones that followed previous attempts to install heavy industry in Brazil.
Its agonizing course after 1979 is well known. But it was from 1982, with the exhaustion of external financing, that the central knot of the crisis became exponential and definitively explicit: the general financial strain that destroyed any possibility of continued relaunch of the economy and imploded the developmental State at a time when it was facing the challenge of a democratic transition.
This crisis developed in the 80s, but originated in the strategic ambiguity of the II PND, divided between its developmental option and its stabilizing management; between its Nation-power project and its external funding; between its statist vocation and its submission to notarial, corporate and regional pacts and commitments that privatized and limited the State's very possibility of modernization and effectiveness. An extremely visible ambiguity in the way in which the indebtedness of the state-owned companies was arranged, obeying, at one moment, the financing strategy of the developmental “forced march” and, soon after, the stabilization policy, when they operated as borrowers of foreign currency with a view to close the balance of payments.
An equally explicit ambiguity in the management of the internal public debt capacity, which ceased to fulfill its fiscal function of raising funds and started to be used as a short-term monetary policy instrument, with the dual function of adjusting the balance of payments and combating the inflation. A strategy that led to the strangulation of the 80s, when the monetary authorities lost their ability to carry out active monetary policy. A visible ambiguity, finally, in the way in which the costs of the crisis were distributed among the three pillars of our developmentalism in the 80s:
“Through currency devaluations, increases in domestic interest rates and wage and tariff squeezes, a strong redistribution of income was allowed in favor of the private business sector, accentuating their profits as rentiers. But not only this was done, there was also a real change in the equity of assets and liabilities between the public and private sectors. The public sector increased its stock of debt (external and internal), while private business groups, boasting of their efficiency, reduced their indebtedness, settled their external and internal debt, made financial investments and increased their profit margins. not operational. As a result, from the beginning of the 1985s onwards, the private sector changed from a net debtor to a net creditor of the Central Bank and, through this, it also became an indirect creditor of the public sector, since the banking system works based on of the eighties as a net supplier of credit to all orbits of the federal and state public sector” (Tavares, 95, p. XNUMX).
The monetary-financial roots of the Brazilian crisis
If the investment effort to sustain the Geiselian strategy multiplied and exacerbated the economy's financial difficulties, it was ultimately constrained by the parameters defined in the institutional reforms that guided, from the 60s onwards, the monetary-financial policy of the military regime .
At that moment, a cyclical reversal, accompanied by inflationary acceleration, gave way to a classic “stabilization crisis”, which began in 1963 and deepened with the orthodox therapy applied by the Military Government installed in 1964: cuts in public spending, increased taxes, credit retrenchment and wage squeeze. Its results are well known: deepening of the recession, liquidation of small and medium-sized companies, expansion of idle margins of large companies, burning of surplus capital, decline in the investment rate of public companies with penalization of the production goods industry, unemployment and accelerated loss of basic wages.
But the reversal of the years 1961-67 contained another critical dimension: the crisis of the financing pattern, responsible for the profound banking, financial and tax reforms promoted by the regime. “Faced with the acceleration of inflation, the existing financing mechanisms lost their functionality, making it increasingly difficult to maintain public spending levels without a tax reform”. On the other hand, “(...) the development of the capital goods and durable consumer goods industry necessarily imposed the creation of new liquidity and financing creation schemes, which also required profound reforms in the financial system at the time” (Serra, 1982, p. 32).
A crucial question was then raised. As in other moments of our economic history, the alteration of norms and institutions linked to money, credit and financing appeared associated with a deep crisis of the political regime, which led to the important transformation of the State. This happened in the 60s, when the rules for credit and financial intermediation were redefined. In 1964, there was a general reform of the monetary-credit system and, in 1965, of the financial system. Separate functions were created or redefined for finance companies, commercial banks, investment banks, the capital market animated by investment funds and BNH. Once again, an attempt was made to encourage the creation of a national private financial system that would play an active role in financing development.
The results are known. The private system expanded enormously in successfully fulfilling the functions of creating extended credit for families in their debit/credit relationship with companies and financial intermediation, but it completely failed in fulfilling the active function of conducting the process of monopolization of the capital, articulating mergers of groups and capitalist blocs. This last and decisive function, necessary for the expansive resumption of the cycle and the redefinition of public/private relations in Brazilian industrial accumulation, “(...) was not effectively developed by the financial system, but was referred to the sphere of the State, where it was processed in a specific and incomplete” (Tavares, 1978, p. 141).
In late capitalism, “(...) the opening of new frontiers always involved the mediation of the State and the expansion of the affiliated subsystem (of foreign companies), which imposed an unstable and limited nature on the process of monopolization of national private capital” (Coutinho & Belluzzo, 1982, p.58).
But in the Brazilian case, the limited and unstable nature of monopolization resulted largely from political constraints. This is because, if the private sector assigned the function of financial centralization to the State – an inevitable condition of any heavy industrialization –, it prevented it from being fully realized, in the name of its anti-statism. This resulted in a contradictory and impotent dynamic, as Maria da Conceição Tavares (1978, p. l42) well understood, when characterizing the financial function of the State in the Brazilian economy: “There is no doubt that the function of agglutination and management of large masses of financial resources was developed by the State through its Funds, Programs, Financial Agencies. However, public financial institutions fulfilled only the passive side of the financial function, that is, that of contributing masses of capital, in different forms, including subsidized credit. That is, the public financial system did not participate as a subject in the process of monopolization of capital, which was external to it (...). This aspect is entirely distinct and specific and should not be confused with the fact that some state productive companies, structured in the form of autonomous capitalist organizations, have been agents of monopolization” (sectoral, we would add).
In this sense, “the State only 'fulfilled the role' of financial capital, but did not carry out, in this act, the effective constitution of financial capital as an active agent of the capital centralization process” (Tavares, 1978, p. l42).
Without a true revolution in the conservative pact occurring in the 1960s, the new financial system created with the Campos and Bulhões reforms developed and diversified, but ended up not fulfilling the function of attracting investments within medium terms. or long, while the State, in the fulfillment of its “passive” financial function, sought to safeguard its room for maneuver, immediately recomposing tariffs, promoting a profound tax reform in 1967/68, creating several compulsory savings funds and making use of growing domestic indebtedness through its newly created financial assets (ORTN and LTN), which immediately became the basic instrument of financial circulation in the open market for securities, the open-market, guaranteed as financial mobilization instruments through monetary correction.
Created to protect the value of securities from inflationary effects, ensuring positive interest rates, monetary correction generated a “doubleness of money”, monetary and financial, “(…) reflecting the separation of the functions of money as a means of payment, general instrument of credit and instrument of reserve and financial valuation of capital” (Tavares, 1978, p. 146). “Thus, two measurement systems were created for money: an elastic one that allowed its progressive devaluation through the movement of prices, and another rigid, 'arbitrary', subject to monetary correction that determines its legal value” (Tavares & Belluzzo, 1982, p. 134).
As a result, when trying to finance itself further along the paths created by the 1969 reforms, the State ended up rewarding speculation with its own bonds and further distancing the private financial system from productive investments. Losing, moreover, one of its main instruments of arbitration and self-financing: inflation, or active and discriminated devaluation of money. This phenomenon increases from 1974 with the II PND, but, above all, from 1979, when the internal indebtedness is perversely associated with the external indebtedness and expands, aiming now only to redeem the primary debt already issued and to account for of Treasury imbalances produced by the progressive nationalization of external liabilities, a combination responsible for triggering a self-sustaining process of speculation and inflationary acceleration.
With the updating of money, it was intended “(…) by controlling the 'bad' currency to prevent the 'good' currency from becoming perverted, without suspecting that both are indissolubly married, since the business of money is one, and It's the business of banks. This way, everyone ended up becoming a courtier of 'financial money', fleeing 'bad money' as if from embers, only to find themselves again in the boiling cauldron of speculation and the devaluation of all money. As a result, there was no monetary or financial liquidity” (Tavares & Belluzzo, 1982, p. 138).
This perverse effect was exacerbated, however, by another financing mechanism generated by the reforms of the 60s, which became the indisputable hallmark of the new growth spurt that began in 1968: external indebtedness, which was favored by Law No. 4.131, which allowed direct access to foreign bank credit for foreign companies operating in Brazil, and with Resolution No. 1964, of 63, of the National Monetary Council, which made the national banking system the intermediary between credit in currency abroad and domestic takers.
Taking advantage of the new international monetary order generated by the transnationalization of private banks, which took place from the second half of the 60s onwards, the State authorized, through that legislation, “(...) a shift towards opening up to the outside world, creating the conditions for a effective articulation between national and international banks, also sharing with the latter the privilege of generating money and credit internally” (Assis, 1988, p. 28).
It was through this door, opened in 1964, that the indebtedness of the 70s was expanded, made at floating interest rates, as a way of financing the II PND. Debts that could be nationalized after Resolution 432 of 1977 ended up undermining the financial heart of the developmentalist State, as a result of the interest rate shock that occurred in 1979.
By sharing with the international financial system the privilege of generating currency and credit internally and stimulating the taking of foreign credits, first by the private sector and then by the public sector, economic policy made the State vulnerable in the face of oil and interest rate shocks. international. And, by implementing a policy of "adjustment" of the balance of payments through the nationalization of most of the external debt, it began a process of financial backlog that is today largely responsible for the exponential multiplication of the external debt and the public deficit, for the progressive degradation of economic infrastructure and public services and the most complete paralysis of economic policy.
very brief conclusions
The central theses of this article is that the decisive importance of the State is not enough to specify our industrialization and that our industrialization does not fit in what became known as the Prussian model of conservative modernization. In this direction, Vargas' frustrations and the hecatomb generated by the success of Geisel's II PND served us as privileged conjunctures to lay bare commitments and institutions that individualize our development through an internationalized financing pattern and a schizophrenic economic policy permanently divided between a regulation orthodox monetary policy and a developmental credit policy.
The weight of anti-statism embedded in the conservative pact and its liberal and at the same time developmentalist economic strategy, in force since the 1930s and restored in the 1960s, affected all state action, affecting its own institutionality, particularly when it came to the administration of the currency and credit or financing in general. It does not seem accidental, in this sense, the permanent conflict that, throughout our history, has opposed the two segments of the public administration responsible for those functions; nor that currency control was always claimed and handed over to “orthodox liberals” linked, in general, to the financial sector and committed to restricting the degree of political-state arbitration over the value of fiat currency, while investment policy remained in the hands of of the “developmentalists”, civil or military, and the exercise of the financial part, handed over to the State even when managed by the “developmentalists”, was permanently limited and coerced to “outsourcing”, as a way, among other things, of not overloading profitability internal.
As a consequence of this, the State, by replacing the private financial sector, keeping itself within the limits imposed by the reforms of the 1960s, ended up feeding, in the 1980s, through its indebtedness, a strong unproductive speculation and a financial mess that completely disorganized the “developmental path” of industrialization. On the other hand, submitted to the pressure of the various and heterogeneous sectors of the conservative pact, the State “privatized” itself by dividing up its institutional apparatuses among the various dominant sectors and by sustaining uncompetitive segments of the private sector.
At the end of a long trajectory, it became more explicit what it always was, in a single time: the strength and fragility of the Brazilian developmental State when compared to the Prussian State. It was strong as long as it arbitrated with a certain autonomy the internal value of money and credits. But it was weak every time it wanted to go beyond the limits established by its constitutive commitments. Always moving along the razor's edge of a conservative alliance and a “liberal-developmentalist” economic strategy, it ended up succumbing to the contradictions that constantly moved and destabilized it.
Caught between the need to command the “escape forward” necessary to weld an extremely heterogeneous set of interests and the need to submit to the veto that these same interests made to “nationalization”, it provided, on the one hand, order, the subsidies, inputs and infrastructure, being prevented, on the other hand, from carrying out monopolization and financial centralization. It was the maintenance of the rules of this pact that, according to our point of view, forced the indebtedness responsible for the financial form of the crisis experienced in the 1980s by the developmental State.
Vargas and Geisel, in this sense, confirm John Zysman's hypothesis (1983, p. l6) that “(…) an examination of national financial structures can shed light on the strategies and political conflicts that accompany industrial adjustment”'. With Vargas, the choice was made that Geisel took to its ultimate consequences: heavy industrialization carried out with the decisive contribution of international capital. In the period between one government and another, the productive forces matured, and capitalist relations became generalized. The material foundations of the industry were finally established, but its institutional and financial support made this a highly discontinuous process and highly sensitive to cyclical reversals and international financial trepidations.
The lack of a true and solidary association between business and the State and the predominantly predatory posture of the former in relation to the latter prevented centralization and accelerated the segmentation of resources and state power, making the Brazilian State “(.,.) appear much more like a caricature of Schumpeter's creative destruction than with his admirable growth machine” (Tavares, 1985, p. 116).
Vargas foundered because he lacked “Prussian” internal support in 1939. And he failed because he did not obtain “associated” external support in 1953. He then turned to the people and attacked “foreign” interests. He left in place an institutional machine and a package of extremely useful projects for later industrialization. But, despite everything, he could not escape a conservative and contractionary macroeconomic policy.
Geisel was enormously successful in obtaining external private financing and left an extraordinary state productive machine in place, as well as the dream of a nation-power. But, even so, it had to submit to a rigorous, albeit oscillating, monetarist macroeconomic policy, which, instigated by inflation and the imbalance in the balance of payments, stimulated, to the limit, external indebtedness in which all, united, they sank further ahead. As a legacy of his success, he left the strong suspicion that this State was not set up with a view to heavy industrialization, but as an object of generalized cyclical enjoyment. Enjoy predation when things go well and socialize losses when things go wrong.
In summary, Vargas and Geisel confront us with a State that could not function as a unifier of the process of monopolization and centralization of capital necessary for a heavy and self-sustaining industrialization. But they also put us face to face with the paradox that private monopolization and centralization did not occur in a continuous and homogeneous way either, due to the dependence of businessmen on the same State that they crippled.
It is against this backdrop that the “paroxysmal” nature of the ideological debates that accompanied the trajectory of the developmental State and intensified in each of its crises is highlighted. Nationalism versus cosmopolitanism, statism versus liberalism and “contractionism” versus developmentalism are, and always have been, tactical cleavages, only acquiring ideological and strategic dimensions in the minds of militant intellectuals, some military personnel and very few businessmen. In times of expansion and “flight forward”, with stable inflation, balanced public spending and growth, everyone was together, and the debate cooled down. But the consensus always and regularly broke down in all cyclical reversals, accompanied by acceleration of inflation and an increase in the public deficit. In the first moments, the developmentalist face loomed large, even though it was linked to a notary's paraphernalia.
In others, the anti-State anger and the strength of the “liberals” were periodically rekindled, even though the State continued to be held accountable for its “obligation” to “socialize” the losses typical of the crisis. Whereas, if during the expansion wages dispersed, during the crisis, as part of the stabilization policies, they irremediably paid the price of the “tightening” and the inevitable increases in the tax burden, destined to sustain current spending and finance the socialization of losses. . However, in the crisis of the 80s, the State went bankrupt.
In this game, excluding some Prussian dreamers, ideas were permanently at the service of tactics more than strategies, of “liquidity” more than production, that is, perfectly in their place: that of the Brazilian crises.
* Jose Luis Fiori is a professor at the graduate program in international political economy at UFRJ. Author, among other books, of Brazil in space (Voices).
Originally published in the magazine FEE tests – Economics and Statistics Foundation, Rio Grande do Sul, Porto Alegre, 11, (1):41-61, 1990.
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