Neoliberal radicalism: coups, authoritarianism and destruction of national sovereignty

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By José Raimundo Trindade*

“I rent myself out to dream” (Gabriel Garcia Máquez)
“Is the past silent? Or are we still deaf?” (Eduardo Galeano)

We live in a fearful and risky moment in Latin America, but our peoples have always lived with their “veins open”. Brazil is a necessary condition in the life and reality of the continent, the extent to which it will walk towards the historic cliff of social destruction, as other peoples have already done before, will demarcate the destiny of the fantastic continent of Garcia Márquez and Eduardo Galeano. This text returns to analyze the background factors that imply the current authoritarian transition and the imposition of a neoliberal model of radical social exclusion, authoritarianism and loss of national sovereignty.

In general, six characteristic points of neoliberalism as “the ideology of the crisis of the world system”, are fundamental macrostructural points and which, since the second half of the 1990s, have accompanied us cyclically and seduced the native Brazilian bourgeoisie and which, in the current context, are covered with greater radicalism and authoritarianism:

A) Greater financial intervention by the State, with increased fiscal effort to deal with the permanent increase in the public debt, within a logic of producing and expanding the public debt to transfer national income to the capitalist center. The subservient Brazilian bourgeoisie imposed Constitutional Amendment 95/16, establishing the strictest fiscal control rule in the history of capitalism as part of the rentier system that directs the flow of wealth produced in colonial societies to the imperial center. This rule has a central geopolitical function: the destruction of the conditions for maintaining any minimally sovereign system and imposing on Brazilian society its complete subordination to the power of the US empire. Any condition of national resistance involves the immediate revocation of this spurious neocolonial condition.

In the case of Brazil and other countries (peripheral and semi-peripheral) the public debt is linked to its own refinancing mechanism, which is called fictitious capital recycling. As historically, we can see that the policy established during the dictatorial period of 1964 was based on the placement of government bonds with a posteriori monetary correction (ORTNs and LTNs).

It is worth noting that the bond “repurchase” system was established in the 1970s, forming part of the Brazilian model that practically eliminated risk from the financial system. This model has been projected permanently since then, with notable consequences: i) the growth of gross debt even in a non-deficit environment; ii) it made the debt a liquidity condition of the financial system, both canceling out any system risk and transferring the net value of the national economy to financial sector patrons, mainly external, the main form of subordination of the Brazilian economy to the capitalist center.

Thus, over the last few years, we have had two apparently contradictory phenomena: A) A brutal reduction in the State's primary (social) expenditures is imposed - what is called the Minimum State is basically the Minimum Social State -, imposed as a fiscal rule through the infamous EC 95/16; ii) neoliberalism conditioned the public debt only to its rentier components, that is, the debt finances new bonds that transfer wealth (in the form of interest and part of the fiscal budget) to the debt controllers, not being destined to the debt to the foundation tax on financing investments or spending on social infrastructure.

Thus, a rollover mechanism was structurally established through a repurchase letter and the so-called automatic zeroing of any possible loss by public debt controllers (dilers), establishing a system of state debt that, on the one hand, permanently puts pressure on the fiscal capacity of the State and, on the other hand, guarantees risk-free profitability for financial institutions. As the data from the National Treasury Secretariat informs us between 1997 and 2018, the equivalent of R$ 5,1 trillion of the 22 Annual Budgets of the Union for the period were transferred to the financial system (see https://www.cartamaior.com.br/?/Editoria/Economia-Politica/Ainda-o-superavit-primario/7/43255). Likewise, the financial expenses of the Brazilian State account for the largest share of the Union's budget (in 2018 40,66% or R$ 1,065 trillion) (see https://auditoriacidada.org.br/wp-content/uploads/2019/02/grafico-2018.pdf).

The apparent contradiction here is that the deficit logic of the State, which, according to the dominant discourse, is related to the size of public expenditures, however the reality is that the budgetary portion allocated to primary (social) expenditures is increasingly diminished and the portion of expenditures destined to to financial expenses remains increasing. It is only apparently contradictory because the gradual reduction of social policies within the fiscal budget is a condition for a growing mass of amounts transferred from the fiscal budget to financial expenditures (public debt).

B) The second element of neoliberalism's strong idea is the discourse of “territorialism” and the notion that development policies should only be punctual and local, as a denial of national policies and the affirmation of sovereign development capacities. An aspect that reinforces the internal dispute of each nation for the flow of investment, often undermining the local fiscal capacity in favor of business capital and disorganizing federative relations. In the current neoliberal cycle of authoritarian conditions, there is a loss of geopolitical sovereignty itself, established with the concession of part of the national territory to external economic agents and other States, as in the case of the transfer of the Alcântara Base to the US empire.

C) Imposition by the WTO (World Trade Organization) of tariff and para-tariff rules that support the unequal and strongly asymmetric "principles of competition, trade openness and exchange rate flexibility", reducing the negotiation capacity of peripheral countries and strengthening trade circuits north-north. The reduction of tariff barriers associated with multilateral agreements carried out within the scope of the WTO and the proliferation of regional agreements favored the globalization of productive processes, reinforcing forms of subcontracting and the growing outsourcing of production in several sectors.

D) Increase in financial and trade imbalances. Financialization takes place both by reinforcing the rentier character of the economic structure, including the expansion of the mass of fictitious capital in the credit system, and by exchange rate flexibility and liberalization of the capital account with the consequent instability of current transactions and the balance of payments of peripheral economies. and, in recent years, from the central economies themselves.

E) Dismantling social policies, making labor markets more flexible and destroying social security, necessary components for the unbridled expansion of the Industrial Reserve Army and the establishment of the liberal-conservative ideology (“each one for himself, God for all”). In Brazil we already have 41 million people who are unemployed and underemployed, constituting part of this huge mass of people who are not servile to capitalism.

F) In the new neoliberal cycle (2016 / ?) the destructive logic of the national industrial production system intensifies, combining a more regressive model of the economy and deepening the primary export base, in such a way that today all the main products exported by the country are basic products such as iron ore, oils and soy products. In the same way, the reproductive base of capital is destroyed with more complex technological levels, as they did with the sale and dismantling of the aeronautical industry (Embraer) and, even more forcefully, the privatization of the national energy system, both in the process of destruction of Petrobrás and denationalization of Pre-salt, as well as the privatization of Eletrobrás.

The coups d'état that took place not only in Brazil, but throughout Latin America are based on the loss of multiple sovereignties: technological sovereignty, financial sovereignty, geopolitical sovereignty, sovereignty through citizenship. Will it be the loss of national sovereignty, as a condition for the ability to exercise autonomous national power, which involves those four types of sovereignty, which is at stake in the current dispute between Brazilian society, which must organize itself around a project of nation, and the conservative and fascist forces that are organized around a project of Brazilian neocolonization and complete subordination to the interests of the US empire power. 

The next step is our reaction and the construction of a nation project!

*Jose Raimundo Trinidad is a professor at the Federal University of Pará and at the Graduate Program in Economics

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