The Golden Bull and the Economy of the Ox



The history of capitalism shows that a strong national currency is a result of a strong domestic economy, not the other way around.

In the early 1990s, with neoliberal winds blowing strongly around here and high Brazilian inflation almost turning into hyperinflation, the Fernando Collor/Itamar Franco government, under the economic command of Fernando Henrique Cardoso (FHC), decided that, along with the transformation of the State in Judas to be beaten not only on Hallelujah Saturday, it would be good to take a ride on the monetary stabilization that the Real Plan promised and transform Brazil into an “emerging financial power”. FHC, who became president, was the patron saint of the proposal.

Three decades later, the polystyrene bull (bad aesthetic taste aside) posted in front of the B3, in the desolate center of São Paulo, in the midst of a catatonic economy, the uncontrolled devaluation of the national currency, the resurgence of the inflationary ghost and more than 100 million Brazilians in a situation of food insecurity, stands as the irreproachable symbol of the failure of that project. The artist who signs the work shot what he saw and hit what he didn't see.

They are layers of contradictions that are based on the animal's body, which sought to reproduce the icon planted in Wall Street, the Mecca of finance capital. The gold that makes it shine, glowing with power and vigor, is just the veil that hides the fragile Styrofoam interior. The billions traded day by day in the exchanges of the old building on Rua 15 de Novembro contrast with the degraded urban setting and with the interventions that quickly appeared, stamping on the object: “Hunger”, “tax the rich”… and they should not stop there .

The history of capitalist development shows that a strong national currency is the necessary offshoot of a strong domestic economy. In the XNUMXth century, England imposed the pound (and the gold standard) on the entire capitalist world due to the strength and technological dynamism of its economy. At the end of World War II, at the conference of Bretton Woods, the United States imposed the dollar as the international monetary standard thanks to the strength of its gigantic economy, benefited by the war itself.

Brazilian planners in the 1990s decided to invert the equation and give birth to a strong economy from a “strong” currency. To the delight of its sponsors, the Real was born worth more than the dollar, more precisely US$ 1,149. Today it is worth US$ 0,178 and the strong economy remains in promise. The “emerging financial power” and the protagonism of financial capital produced a strong currency, which ruined the Brazilian economy and placed the country in the worst positions in the international division of labor.

Today we pay all kinds of income and produce goods from the extractive industry, which detonate our natural wealth, and agribusiness goods, with low added value and high environmental destruction value. The ox is one of the protagonists of this decadence without apogee and can be associated with hard currency as a symbol of what we have become. Almost a century later, we are back to the completely subaltern pre-1930 situation, and this in the midst of the unstoppable evolution of Industry 4.0, which is developing at a dizzying speed.

The democratic and popular governments that have passed through here in the meantime have not been determined enough to break the absolutely vicious circle of foreign savings into which the hard currency economy has thrust us. They tried and succeeded, with surprising speed, in improving income distribution. They did not change, however, the deeper mechanisms that reproduce an even more unequal distribution of wealth and continued to socially develop the country under the same institutional frameworks of power, benefit and the protagonism of financial capital.

In the first years of the 2010s, despite the initial relative success in facing the international financial crisis of 2008, its consequences began to undermine the social achievements obtained. In the midst of the rise of the extreme right in the world, the economic turmoil was followed by political unrest and ended in the 2016 coup, in an even more poisonous dose of strong currency and cattle politics and, finally, in the Bolsonarism that plagues us.

For reasons that are still somewhat obscure, but which fortunes in tax havens may help explain, the Central Bank, in a spectacular turnaround, carried out, as of May 2020, a maneuver that was strange to the playbook that until then guided the conduct of monetary policy and dropped interest rates to levels incompatible with expected inflation and country risk. More than that, it maintained this posture, even with the rises in food, energy and fuel prices, which were becoming increasingly evident. The superlative devaluation of the exchange rate was the inexorable result. The prolonged hiccup ended in May of this year and monetary policy is rapidly returning to its usual course.

In the current context, with the economy prostrate by the crisis – which has now lasted seven years –, aggravated by the pandemic, the possible benefits of this unusual “correction” in the exchange rate were completely outweighed by its consequences in terms of inflation, which is higher, remember, in the food group, reaching with full force the families that spend most of their meager income there. The situation has been generating misery and despair in a country with more than 30 million unemployed people (unemployed, discouraged and underutilized, in an economically active population of around 100 million).

The poorest families (sustained in 2020 by emergency aid) are losing the minimum living conditions, no longer having a roof over their heads, as they are no longer able to pay the rent and start populating the big Brazilian cities with their tents, converting many of the public roads into spaces that are in no way inferior to refugee camps… refugees from the war that the theocratic state, run by market fundamentalists, moves them.

Meanwhile, the cattle economy is now benefiting not only from the world high prices of commodities, but also the inflated price of real hard currency, and without paying a penny more tax for it. The ox economy feeds a significant part of the world while internally producing hopelessness, shortages and hunger.

Will the simple return of monetary policy to its usual course undo the misdeeds? Hard to say yes. Combined with the maintenance of the spending ceiling, the abrupt increase in the interest rate (everything indicates that it will increase a lot of speed until next year's fears) will further discourage private investment and, with public investments unfeasible, will sink the economy once and for all in his lethargic state and along with it the number of jobs.

At the same time, the maintenance of the political instability recurrently produced by the government itself, especially in an election year, will make the gains in terms of reducing the exchange rate and, therefore, the behavior of inflation – which is evidently not demand inflation, but inflation derived from price shocks, with emphasis on the price of the currency, resulting from the genocidal economic policy of Guedes-Bolsonaro.

All this indicates that the strong currency policy, which resulted in the ox policy, erected the golden bull of Rua 15 de Novembro: shining on the outside and hollow on the inside. Gleaming because the gold of the billions traded daily on the financial market continues to call the shots and produce rentier billionaires (see the brazen conversations between our monetary authorities, in times of the “independent” BC, with bankers and other macabre characters from the financial world).

Hollow inside, because, thanks to the “strong” currency, which remained unduly appreciated for very long periods, this policy acted like a plague that devastated the country's productive fabric. Now, which doesn't even shine in appearance anymore, we are really left with the cattle economy, and even then, until the Chinese and Europeans lose patience with the environmental ruin it causes.

Who pays the price of the continuous national mistake – price, let's say, increasingly high – is the Brazilian people… but who cares? Consisting mostly of poor and black people, it has always been seen as a disposable production factor, whose reproduction the representatives of power and capitalist accumulation never had to worry about. Without praising that barbaric ritual here, it is a kind of reverse bull spree, in which the population is persecuted and slaughtered by the consequences of a policy that, intending to produce a strong economy through strong currency, actually produced an ox increasingly fierce.

*Leda Maria Paulani is a senior professor at FEA-USP. Author, among other books, of Modernity and economic discourse (Boitempo). []

See this link for all articles


  • About artificial ignoranceEugenio Bucci 15/06/2024 By EUGÊNIO BUCCI: Today, ignorance is not an uninhabited house, devoid of ideas, but a building full of disjointed nonsense, a goo of heavy density that occupies every space
  • The society of dead historyclassroom similar to the one in usp history 16/06/2024 By ANTONIO SIMPLICIO DE ALMEIDA NETO: The subject of history was inserted into a generic area called Applied Human and Social Sciences and, finally, disappeared into the curricular drain
  • Franz Kafka, libertarian spiritFranz Kafka, libertarian spirit 13/06/2024 By MICHAEL LÖWY: Notes on the occasion of the centenary of the death of the Czech writer
  • A look at the 2024 federal strikelula haddad 20/06/2024 By IAEL DE SOUZA: A few months into government, Lula's electoral fraud was proven, accompanied by his “faithful henchman”, the Minister of Finance, Fernando Haddad
  • Letter to the presidentSquid 59mk,g 18/06/2024 By FRANCISCO ALVES, JOÃO DOS REIS SILVA JÚNIOR & VALDEMAR SGUISSARDI: “We completely agree with Your Excellency. when he states and reaffirms that 'Education is an investment, not an expense'”
  • PEC-65: independence or patrimonialism in the Central Bank?Campos Neto Trojan Horse 17/06/2024 By PEDRO PAULO ZAHLUTH BASTOS: What Roberto Campos Neto proposes is the constitutional amendment of free lunch for the future elite of the Central Bank
  • Chico Buarque, 80 years oldchico 19/06/2024 By ROGÉRIO RUFINO DE OLIVEIRA: The class struggle, universal, is particularized in the refinement of constructive intention, in the tone of proletarian proparoxytones
  • Return to the path of hopelate afternoon 21/06/2024 By JUAREZ GUIMARÃES & MARILANE TEIXEIRA: Five initiatives that can allow the Brazilian left and center-left to resume dialogue with the majority hope of Brazilians
  • Why are we on strike?statue 50g 20/06/2024 By SERGIO STOCO: We have reached a situation of shortage of federal educational institutions
  • The melancholic end of Estadãoabandoned cars 17/06/2024 By JULIAN RODRIGUES: Bad news: the almost sesquicentennial daily newspaper in São Paulo (and the best Brazilian newspaper) is rapidly declining