By JOÃO QUARTIM DE MORAES
The reactionary utopia of the minimal state has returned to the center of the political scene in the Southern Cone with the rise of the ultraliberal Javier Milei to the presidency of Argentina
1.
The bourgeoisie is spontaneously privatizing: its class position is determined by the private ownership of the means of production, large, medium and small. The State is public. Like the Republic. The most petty and philistine forms of the bourgeois mentality advocate reducing the role of the State to the maintenance of public order, which they identify with the defense of property. The political weight of this reactionary mentality tends to grow with the advances of the right, although not all of the right is “anarcho-capitalist.”
The reactionary utopia of the minimal state returned to the center of the political scene in the Southern Cone with the rise of the ultraliberal Javier Milei to the presidency of Argentina. An aggressive demagogue, unafraid to proclaim musty clichés, he set out to dismantle everything in the public sphere that exceeded the repressive functions of the state machine, showing what the “anti-authoritarian” and anti-state rhetoric of the bourgeois ideological vulgate is for.
Clearly, his anti-statism does not go so far as to dispense with the police and riot police to break up protests. He has declared his intention to dollarize Argentina, as his predecessor Carlos Menem, of ill-fated memory, had already attempted. He managed to reduce inflation from 211,4% in 2023 to 111,87% in 2024, but at a very high economic and social cost. More than half of the Argentine population lives below the poverty line; 18% are reduced to extreme poverty. Once again, it is confirmed: minimal state = maximum poverty.
2.
As we noted in the previous article in this series “The dictatorship and capitalist nationalization” the expectation that the military dictatorship would trigger a large-scale privatization of state-owned companies did not materialize. On the contrary. In the annual supplement entitled “Who’s Who” (in the Brazilian economy), relating to 1975, the economic magazine Vision presented a classification of the 100 largest companies in Brazil during the period 1968-1974, according to capital ownership.
During this period, foreign companies fell from 37 to 27; national companies remained between 26 and 28 and state-owned companies increased from 37 to 45. It was not to the detriment of national companies, but of foreign ones, that state capitalism advanced. Nevertheless, as we also mentioned in “The dictatorship and the capitalist statization”, the ultra-liberal ideologue Eugenio Gudin launched, at the end of 1974, a campaign against the statization of the economy that had strong support from the upper bourgeoisie of São Paulo.
Four years before Eugenio Gudin, bankers had already launched protests against the advance of the “nationalization” of credit. Otávio Gouvea de Bulhões, another reactionary liberal, who had been Finance Minister under the dictator Castelo Branco, told the magazine Vision of June 6, 1970, that private banks could no longer count on term deposits “because of the interference of state banks”.
Hence the multiplication of private agencies to collect deposits from small savers. The number of these agencies increased from 2.411 in 1950 to 5.820 in 1969. This would explain, according to Bulhões, the increase in the cost of banking services. Soon after, Economic World (July-August 1970) published a major study on “the advance of nationalization”, analyzing this “disturbing fact” from multiple aspects, particularly regarding the “nationalization of credit”. Indeed, nothing is more disturbing for bankers and their agents than losing the profits from financing economic activity.
The industrialists did not support the bankers' protest for a very simple reason. The National Bank for Economic and Social Development (BNDES), founded on June 20, 1952, when Getúlio Vargas was president, financed national companies with interest rates well below those of the capital market. In 1962, the BNDES financed around 2,2% of gross fixed capital formation in Brazil. At the end of 1974, when the privatization campaign began, the BNDES' share in fixed capital financing had risen to 8%.
Only an accurate study of the financing of industry at the time when Eugenio Gudin launched his war cry against nationalization can show whether or not the major industrialists had economic reasons to join the movement. It seems to us that it was above all the difficulties in the trade balance and foreign debt (a legacy of Delfim Neto, it is worth emphasizing), as well as the decline in the economic growth rate, that brought the most influential sectors of the bourgeoisie together in the privatization campaign.
Reinforcing the liberal campaign, the newspaper The state of Sao Paulo launched a series of eleven major articles on the “paths to nationalization”, published from February 16 to March 2, 1975. The articles examine the presence of the State in different sectors of the economy: banking system, communications, transportation, mining, steel industry, etc. In a very well-orchestrated campaign, the newspaper multiplied the reports, interviews, investigations, in-depth articles, editorials, documents and positions taken by the government and employers.
The leading circles of large industry joined the campaign: FIESP issued a statement, on the 7th of September 1975, lamenting that the State was intervening “in sectors traditionally left to private initiative”. The state of Sao Paulo, with his reactionary tenacity, resumed the campaign by publishing another series of articles from March 4 to 7, 1976.
The headlines speak for themselves: “Only Brazil is bigger than Petrobras” (5/3); “Technocrats in power” (7/3). Besides Geisel, the main “technocrat in power” was the Minister of Planning, Reis Veloso. He responded to the criticism by noting that state-owned companies, although they held 49,5% of the assets in a sample of 1.000 large and medium-sized companies, had a turnover of only 23% of the total, because they operated in sectors that required heavy fixed investments with slow maturation of the invested capital.
The importance, yesterday and today, of the debate on nationalization in capitalism seems sufficiently evident to us to dispense with supporting arguments. Even so, it is interesting to note that Werner Baer, one of the most prestigious American “Brazilianists”, consultant to the Ford Foundation and therefore unsuspected of any sympathy for statism, published in Vision (42),4, February 26, 1973, the article “An outside view: how and why the economic boom of 1968 occurred”.
There he categorically states that state sector investments in electricity, steel, petrochemicals, highways and construction “constituted the main factors of the economic boom (from 1968-1972)”, adding that “the effective and aggressive behavior of government companies […] constitutes the key to the boom”.
*João Quartim de Moraes is a retired full professor of the Department of Philosophy at Unicamp. Author of, among other books, Lenin: an introduction (Boitempo). [https://amzn.to/4fErZPX]
To read the first article in this series, click here
To read the second article in this series, click here
To read the third article in this series, click here
To read the fourth article in this series, click here.
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