The auspices of the Washington Consensus

Image: Kendall Hoopes


The asymmetric dispute between different conceptions about the fiscal problem

Lula is not a fool: he is well aware of the effects that his statements against the spending ceiling can cause. They are not random speeches, naive about their developments. At this point in history, not even the president-elect's fiercest opponents would sincerely deny his unique political intelligence. But, if the effects of these speeches are known and if they mean to make this transition period even more tense, why insist almost daily on criticism and irony against the financial market?

First of all, it is necessary to emphasize: constitutional amendment 95, a direct result of the 2016 coup and responsible for establishing the spending ceiling, is unconstitutional, and should be declared as such by the judiciary, more specifically by the Federal Supreme Court (STF). Two arguments, more than others, are usually used to prove this unconstitutionality: the offense to the separation of powers and the opposition between the spending ceiling and the social protection model enshrined in the 1988 Constitution as a whole.

As for the first, what is said is that the legislative power, by approving this amendment, would have exceeded its limits and interfered unduly in the sphere of decisions of the executive branch – fundamentally responsible for the execution of public expenditures –, of the judiciary and even of the ministry. public – hampered in their budgetary autonomy. As for the second, what is said is that the prioritization of fiscal adjustment and payment to public debt creditors, in the strict terms of amendment 95, mortally wounds the 1988 constitutional project, by radically disfavoring, for example, education expenses and or healthy.

Both arguments are fragile. Regarding the separation of powers, the legislative power, at the time it prepares and approves a constitutional amendment, does not act as a constituted power alongside the others, but as a derived constituent power. Therefore, it is not the imposition of a constituted power – the legislature – over others – the executive or the judiciary –, but the exercise, by the legislative power, of the function of constituent power attributed to it by the Constitution itself. This exercise of derived constituent power has its peculiarities: it is not a power without limits, it needs to be exercised within the limits authorized by the Constitution. Precisely for this reason, its mistakes and excesses can be controlled by the STF. But that does not make it equal to exercising the typical function of the legislature as it functions regularly as a constituted power.

Regarding the second argument, the point is: there is no lack of people trying to show that the fiscal adjustment established by the 95th constitutional amendment is a precondition precisely for the implementation of the social protection outlined in the 1988 Constitution. in the mainstream media, repeated to exhaustion by orthodox economists and by the large team of journalists engaged in echoing them. This is by no means the only possible position in this debate. Brilliant economists, in Brazil and around the world, disagree with her, with robust data and convincing reasoning – although they do not appear, of course, in the Globe News ou na Folha de São Paulo.

But the point is that there is a well-founded divergence within the very scope of the economic sciences, with serious people – it must be recognized – expressing the many possible points of view in this fierce dispute. Therefore, we cannot say that this amendment opposes the social protection paradigm of the 1988 Constitution with the same degree of certainty that we had when saying that refusing vaccines and inducing the population not to use masks would kill millions due to COVID-19.

On the other hand, it is precisely here that the unconstitutionality of Amendment 95 is revealed, at the exact point where it slides into one of the most complex issues of our time: the relationship between science and democracy. The well-founded divergence within the very field of economic sciences means that the dispute between different conceptions about the fiscal problem needs to be left to flow freely in the political-democratic arena, without a limitation that, embodied in a constitutional amendment, imposes externally on this free democratic dispute a given result – namely, the supposedly essential nature of the fiscal adjustment model corresponding to the expenditure ceiling.

Thus, by not allowing such free political dispute, what Amendment 95 does is, fundamentally, oppose the principle of democracy, guaranteed by Articles 1 and 14 of the 1988 Constitution. In technically stricter terms, this general offense to the principle of democracy can be specified as an offense to the fair value of political freedoms, set by the same article 14, caput, and, in an even more restricted and direct way, as a violation of the right to direct, secret, universal and periodic suffrage, an ironclad clause enshrined in article 60, paragraph 4, item II, of the same Constitution of the Republic.

Let me explain: according to the logic of an indirect, representative and majority democracy, with the formal presumptions that accompany it, the votes that elected Lula chose, among other things, his political-economic proposal, which includes a certain fiscal concept. Upon being elected, however, Lula finds himself constrained to adapt to a fiscal concept that is different from the one chosen with him at the polls and much closer to the fiscal concept that was part of the defeated candidate's economic policy proposal. Therefore, on the one hand, it is as if the votes that elected Lula were practically worth less than the votes that were destined for the defeated candidate, because, although Lula's votes chose the president, they could not choose with him his economic policy proposal. , while the votes of the defeated candidate, despite not having chosen the president, were still able to preserve intact the fiscal conception that integrated the political project as a whole that he lost at the polls.

On the other hand, this concrete inequality in the weight of votes implies a clear limitation on the full exercise of the right to vote: being able to choose a President of the Republic, provided that this choice excludes one of the most important elements of modern democracies, which is politics. economic and fiscal concept that accompanies it, is no longer to exercise the right to a free vote, nor periodic - since the 95th amendment provides for this type of limitation for a period of 20 years -, not even completely secret - because, in the end After all, normatively imposed as the only possible alternative, the fiscal model chosen is already clearly known in advance.

There is no other possible conclusion: amendment 95 violates article 60, paragraph IV, item II, of the Constitution of the Federative Republic of Brazil – that is, it violates the right to vote, when properly understood in all its substantive content and not reduced to a mere formal declaration in favor of one candidate over another. Therefore, it should be declared unconstitutional by the STF. But let's not deceive ourselves: this is unlikely to happen, as evidenced by the decision of Minister Luís Roberto Barroso in a request for a precautionary measure in writ of mandamus 34.448/DF.

What option opens up, then, for Lula to be able to carry out the political program – therefore, also the economic policy and the corresponding fiscal policy – ​​with which he was democratically elected? How to get rid of the iron cage represented by the spending ceiling, while remaining within the horizon of fiscal responsibility as you did in your two previous terms? The only alternative is the path of political convincing, the difficult path of convincing a broad parliamentary majority as to the inadequacy of the fiscal model imposed by the 95th amendment or, at least, as to the way in which it was undemocratically imposed.

Given the difficulty of this task, given the size of the challenge, the more the discussion is wide open, the more political facts are generated, fostering debate and inviting reflection, the better: even if these political facts – Lula’s speeches against the ceiling and his ironies against the financial market – cause an uproar, increase the tension of the moment and strengthen, even before taking office, the opposition, they take us out of the doldrums of an economic policy model taken as unique and shoved down the throat of Brazilian society in recent years. They call us to the discussion, induce us to position ourselves, demand that we understand what is at stake behind the technical discussion on debt, deficit, expenses, interest rates – and what is at stake is none other than the meaning of democracy and what direction we democratically want to give to what, as a society, we produce economically.

But the challenge is perhaps too great for pressure from a local, national public sphere to overcome. Lula seems to know this. At least this is one of the possible interpretations of the fact that he frequently made reference to the external scenario and that he repeated the tone of his speeches about the spending ceiling on spaces and interventions outside Brazil: in the context of a highly interconnected economy globally, if this debate can also be held at the international level, the chances increase that its pressure effects will have a practical reach nationally.

Here, an asset may lie in the hands of the future president. The stagnation that surrounds the hegemonic political-economic and fiscal discourse has not only affected Brazil: it is a reality expanded around the world, with its deleterious effects suffered and denounced in different countries. When each of them tries to rise up against the unilaterality of this restrictive fiscal hegemony, the reaction of the markets is immediate and merciless. At the same time, however, there is a lack of international political leadership to pull a more articulated movement, supranational or at least multinational, to embody a new discourse and a set of new practices that, without giving up fiscal responsibility, face the consensus immobilized and impoverishing economic-fiscal policy that emerged from the 1970s onwards to become, today, almost unquestioned.

Almost. These restrictive fiscal recommendations are one of the cornerstones of that more general economic outlook that is often identified under the rubric of the Washington Consensus. In his face, there was never a lack of disagreements, silenced by himself. However, in more recent years, even before the pandemic, voices less likely to be silenced began to be raised, even among economists with an orthodox background, against the unsustainability of global capitalism based on the neoliberal foundations established by such Consensus, with its predatory tendencies and unequal – the success of a book like Capital in the XNUMXst Century, by Thomas Piketty, is at least partially due to this phenomenon. Post-pandemic, the need to seek a path outside the auspices of the Washington Consensus has been accentuated, as well as becoming even more urgent. But someone with the political strength is missing to break the shell, to allow the new one that has been gestating to finally be born.

Lula has everything to be that someone. The staggering strength of its international prestige became clear immediately after the final election results. Her protagonism was almost spontaneous, instantaneous and naturally announced by different global political characters in two fundamental fields: environmental protection and the fight against inequality and hunger. Would it be possible to protect the environment, face climate change, as well as strive against inequality and hunger, without destabilizing and ultimately overcoming the current ultra-restrictive neoliberal economic-fiscal consensus? The answer is simple: no.

In front of him, Lula has the image of a devastated land: misery, hunger, environmental degradation and destruction of the state apparatus that, in Brazil, dealt with these problems in recent decades. This framework, however, can also be his “fortune”, in Machiavelli’s sense: because he has the chance, inside and outside national borders, to integrate the fight against climate change, the fight against inequality and hunger and the defense of a realignment of the global economy in a single discourse and in a single practice.

will also have the virtù to do it? Only time will let us know. What is clear to me is: if you cannot align these themes internationally, it will be difficult to do so domestically. In other words, we are faced here again with the theme of democracy – more specifically, with the theme of its future, taking into account the tension between it and the imperatives of the capitalist economy – but now at a level that goes beyond the limits of the nation-state. To the extent that capitalism has reached the degree of global interconnection that characterizes it today, this seems to be the fundamental level at which this issue must be faced.

This does not mean, in any way, to reduce the importance of national States, the decisions that correspond to them and the standards of political legitimacy that continue to be marked by their borders: it is a matter of recognizing that the very defense of national democratic decisions in a global economy stultified by its own interests, it can no longer – if it ever could – dispense with an articulation that goes beyond the scope of nation-states.

The future of Brazil is also the future of Latin America; more than that, it is the future of the global periphery. And, for that very reason, it concerns the future of the world as a whole. Could such a transformation, with such an impact, have a country from the Global South as its protagonist? Could this universalism, which is designed in this way because it is projected as an unpostponable alternative for the whole world, be a universalism from the South? Also in this regard, only time will be able to provide answers. But that seems to me to be the only theoretical and practical bet left to us – us, all of humanity.[I]

*David FL Gomes Professor at the Faculty of Law at UFMG.


[I] I would like to thank Almir Megali Neto, Henrique Pereira de Queiroz, Pedro Pelliciari and Tales Resende de Assis for their careful reading of the manuscript and for their valuable correction suggestions.

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