The first cycle of PT-II

Image: João Nitsche


Balance of the financialization process during the governments of Luiz Inácio Lula da Silva

In this second article about the Lula governments, I will deal with some contradictions that permeated them, mainly in relation to financialization. Therefore, the same caveat placed in the previous article published on the site is valid here. the earth is round []: part of the criticism must be relativized and contextualized after the 2016 coup, and, above all, its unfolding from 2019. The return of a neoliberal coalition to the center of the State, as it happened, makes the pressures suffered clear by the Workers' Party governments and, therefore, the limits of its action towards a more popular program. Likewise, the hypothesis is not discarded that, if there had been a firmer confrontation of financial interests by the government when it was at its height, perhaps the directions of Brazilian politics would have been different.

“Lula Governments”

First of all, it is necessary to clarify some important points. First, not all of the financialization developments from 2003 to 2010 can be attributed to the actions of the governments of the period. That's why I chose the expression "years Lula” in the title of my thesis and doctorate on financialization in Brazil[I], for example, although one of its main objectives was evidently to understand the Lula administrations. Although the State is a fundamental agent, it is not omnipotent, as there are numerous economic, political and institutional constraints operating; and political agents are not omniscient either: the “tree” (2006-2010), by concealing some of the effects of financialization, may have given the PT the impression that it would be possible to implement a more left-wing program without having to face finances directly, for example. In addition, there are structural aspects, which take many years to be changed – far surpassing the intervention capacity of two presidential terms.

Secondly, it is necessary to be careful with the term “Lula governments”, insofar as these were much more than the expression of the will of Luiz Inácio Lula da Silva, the occupant of his highest post. Nor was it about the pure and simple implementation of the PT's political project for Brazil – which is evident, given the need for coalitions and alliances imposed by our political system. Beyond that, however, each government is necessarily the synthesis of multiple determinations and, above all, of the correlation of social, political and economic forces of the classes and fractions of classes that make up society. Since Brazilian society is capitalist, so is the State, which means that it, ultimately, will always have the objective of ensuring the general conditions for the reproduction of capital in the country and will have the capitalist class and its fractions as determinants in its performance.

That said, it is worth recognizing that the Lula governments allowed the insertion of some workers' interests in the State, but it was fundamentally based on the political alliance with a certain fraction of the Brazilian capitalist class. Armando Boito Jr.[ii] he called the broader political composition then formed the “neodevelopmentalist” front, as opposed to the “neoliberal” (orthodox) front that dominated in the immediately previous period. Bearing in mind, however, the author's own caveat: that “neo-developmentalism” means the developmentalism possible within a neoliberal model (implemented here in the 1990s and in tune with the world context), therefore much more limited than classic developmentalism. In my view, the hegemony of the banking-financial fraction did not show signs of having been broken in the Lula governments, but it seems necessary to recognize that the “internal bourgeoisie” (Boito Jr.'s term, from Poulantzas) significantly improved its relative position and the working class had some important demands met.

This picture reveals that, in many aspects, the Lula government's decisions, like those of governments in general, were under strong conditions and were not the translation of the immediate preferences of the president or the PT. In legislative and regulatory terms, for example, the fundamental framework for the installation and development of financialization was consolidated before Lula's arrival in power, during the governments of Fernando Henrique Cardoso. Thus, the government he took over in 2003 dealt, for example, with a country already financially liberalized; with a reformed private sector pension scheme and a regulated supplementary pension; and with the legacy of an orthodox neoliberal economic policy. Thus, a reversal of this situation, if it had been attempted (which it was not), would have been very difficult and would have required a lot of popular pressure. And, given that in some areas the government really opposed neoliberalism (to which financialization is closely linked), it is sometimes difficult to discern which decisions were taken due to the pressures suffered or by previous conditions and which reflected the political program really desired.

Lula governments and financialization

In any case, in addition to more obvious aspects, such as the maintenance of the orthodox economic policy of the Fernando Henrique Cardoso period, there are three areas in which government interventions clearly intensified financialization, moving against a leftist political project.

The first was in legislative and regulatory terms. Although, as mentioned, the conditions for financialization in this regard were already prepared in the 1990s, other steps were taken in the same direction. In my doctoral thesis, there is a chapter dedicated to the subject, which, despite not being exhaustive, clearly shows the profusion of laws and regulations related to financialization. A well-known example is the pension reform itself, whose benefit limitation encourages the adoption of complementary private pension plans (based on the financial valuation of the accumulated amount). There are also issues related to the exchange rate, the stock market and investment funds, pension funds, banking insertion, among others.

The second was the wide banking insertion of the low-income population, combined with the expansion of mechanisms for offering personal credit. In 2010, 87% of the adult population had an active relationship with financial institutions and even Bolsa Família had a program that facilitated access to credit cards and overdrafts, for example. Despite the access to consumer goods (sometimes essential) that these policies provided, they also included a large contingent of people in financial circuits, increasing their financial expropriation. Not to mention programs such as FIES and Minha Casa Minha Vida, which promote the financialization of access to education and housing, respectively.

Another scope of “left-wing financialization” (to borrow an ironic term from sociologist Roberto Grün[iii]) was the incentive for pension funds, including the distribution of booklets on the subject and partnerships with unions to encourage them. Although the effectiveness in increasing the number of pension funds has been limited, in fact these institutions have significantly expanded the resources under their administration – which, of course, will circulate in the financial markets. The importance of such resources led PT governments to try to closely influence the main pension funds of national state-owned companies, appointing leaders mainly from trade union backgrounds – something critically observed by Francisco de Oliveira[iv]at the beginning of Lula's first term. A consequence of this process, perhaps not foreseen by the government, was that the incentive for supplementary retirement via pension funds also strongly boosted open pension funds (which in practice are investment funds, guarded by banks and financial institutions).

Alternatives to this path existed, of course. However, assuming there was a will to carry them out, it is a political question whether they could have been implemented. As it turned out, contradictions abounded.

As for economic policy, many analysts consider the first Lula government to be more conservative precisely because it had to face the turbulence created by his victory in the elections and face pressure from capital (national and international, mainly financial investment), without much room for maneuver. . On the other hand, Leda Paulani[v] he denounced in the heat of the moment the “state of economic emergency” to which the government was hostage and to which it had surrendered (including the ideological conversion of some members of the government).

Regarding the “structural reforms”, some of which certain PT supporters later regretted not having implemented or tried to implement, the social forces against them were, and still are, enormous. So much so that governments even further to the right have also failed to implement them. However, perhaps it was a historical and political task of the PT to at least have presented them to society and Congress, which was not done. Although a tax “revolution” is necessary in Brazil – which has a highly regressive tax system, penalizing the poorest –, a minimally “leftist” reform would have been fundamental. “From the left”, because there are different “reforms”: currently – as a rule –, what is being discussed is a tax simplification directed at companies, which may even be an important issue, but does not directly attack the urgent problem of our poor income distribution. Evidently, financialization, by favoring financial and rentier interests, reinforces the opposition to measures that could increase the taxation of this type of income or withdraw resources from the payment of the public debt.

Some contradictions, however, are more directly associated with the “financialization of the left”. First, by promoting the banking insertion of the poorest and granting them credit, the Lula governments provided a large portion of the population with greater access to consumer goods, but, with that, subjected them to processes of financial expropriation (through interest fees and fees paid), all the more perverse in that most people were not prepared to deal with these devices (the lack of financial education in Brazil is notorious). In some cases, the “snake's egg” was laid, because, by allowing a certain “entrepreneurship” (to use the fashionable neoliberal term, which hides more than it reveals), these measures led to a political-ideological knot: some analysts claim that some of the people who achieved some economic ascension during lulism distanced themselves electorally from the PT by associating it with a “poor” party (no longer identifying themselves as such, and not recognizing the contribution of the implemented policies to that ascent). .

As for encouraging pension funds and, by extension, other forms of supplementary social security, on the one hand this provides a supplementary future income to workers (with higher income, by the way) and puts it in the hands of unions (because they have participation in the management of pension funds) certain power to make investments and, therefore, direct this accumulated savings of workers. On the other hand, these investments must fundamentally comply with financial logic, as they will have to earn sufficient income for future payments to shareholders. Moreover, workers (and mainly fund managers) are subjected to a contradiction within their social and political identity: to the extent that they also become small “monetary capitalists”, they begin to have a direct interest in the good profitability of their savings. – which is often in contradiction with the improvement of working conditions. Not to mention the political effect of strengthening the discourse against public pensions and the privatizing bias that this has.

Three situations, therefore, seem to have occurred: some measures were maintained or adopted by political calculation, that is, according to the assessment that proceeding otherwise, the pressure would be too strong for the government to withstand (eg some (not) reforms and the initial orthodoxy of economic policy); others, on the contrary, were driven by the conviction of some members of the executive (eg maintenance of orthodox economic policy and pension reform); finally, as in the case of “left financialization”, it was about the “price to be paid” (perhaps not always consciously) for the implementation of certain government policies in favor of workers.

social programs

Social programs are always mentioned to support the popular character of PT governments and, in fact, they stood out for their progress in this area, which is of paramount importance. However, there are contradictions there as well, and the debate continues on which programs to adopt, how to carry them out and, above all, with what measures to complement them. Bolsa Família, for example, provided an essential income to families in a materially critical situation and made a crucial difference in their lives, although critics from the left have pointed out the low value of the benefit and its “management of misery” character – due to its alignment with the neoliberal policies advocated by international organizations such as the World Bank. Indeed, despite its importance, Bolsa Família does not change the mechanisms of production of social inequality, and the real increase in the minimum wage had more impact on its reduction than the first. A tax “revolution” (or even reform), as mentioned, would also have an incomparably more significant impact. Given this characteristic of Bolsa Família and that its cost is relatively low, while payment of interest on the public debt remains assured despite being high, it is a type of program that finds relatively less resistance on the part of finance, as it contributes to appease social tensions without clashing so directly with their interests.

In the area of ​​education, the expansion of universities and federal institutes and programs to finance basic education were undoubtedly very relevant and should leave a lasting impact, if the current government's grotesque attack on education (among other areas) is not stronger. . Prouni and Fies are more controversial, given that one promotes tax relief to private entities and the other indebted students (even at low interest rates, leading to the problem of financial expropriation already discussed). Minha Casa Minha Vida, in some of its tracks, has the same question. Not to mention the more or less indirect stimulus to the privatization of these services that these programs represent[vi].

As highlighted, the foundation of the contradictions of the PT governments is the fact that this party has a popular base and has to house some of its interests within a State. capitalist, in addition to having come to power through an alliance with part of the capitalist class, the “internal bourgeoisie”. This political “trap” engendered many contradictions, such as the implementation of broad social programs and real increases in the minimum wage, concomitantly with an orthodox economic policy that kept a State hostage to public debt and without adequate instruments to reverse deindustrialization and promote economic growth. robust and long-term economic. More than that, financialization itself was reinforced by more or less conscious decisions on the part of political leaders. This was perhaps one of the most important mistakes made by a government that enjoyed significant popular support, the negative consequences of which only became apparent later, when the tree economic time has run out and new mistakes have been made. If, evidently, the current political and social calamity cannot be entirely attributed to this, at least the reflection on its weight and how to proceed in the future remains.

*Ilan Lapyda he holds a PhD in sociology from USP.



[I]    LAPYDA, Ilan, Financialization in Brazil in the Lula years (2003-2010), Doctoral Thesis, University of São Paulo, São Paulo, 2019.

[ii]   BOITO JR., Armando, Reform and political crisis in Brazil, Edition: 1a. Campinas: Unicamp, 2018.

[iii]  GRÜN, Roberto, Financialization of the left? Unexpected fruits in 21st century Brazil, Tempo Social, v. 2, no. 153, p. 184–2009, XNUMX.

[iv]  OLIVEIRA, Francisco de, Criticism of dualistic reason/The platypus, São Paulo: Boitempo Editorial, 2003.

[v]    PAULANI, Leda, Brasil delivery: financial servitude and state of economic emergency, 1st. ed. São Paulo: Boitempo Editorial, 2008.

[vi]  On the relationship between financialization and (the decrease in) provision of goods and social services by the State, I recommend the works of Lena Lavinas (Ex. LAVINAS, Lena; GENTIL, Denise, Brazil in the 2000s: social policy under financialization, New Studies – CEBRAP, v. 37, n. 1, p. 191–211, 2018.)


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