an endless litany

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By JOSÉ LUÍS FIORI*

It is as if there were two parallel and absolutely incommunicable universes in Brazil.

“Economic agents have expressed concern about the risk of a wave of unbridled spending in the new administration – which could undermine the country's fiscal indicators and increase the perception of risk, large exchange rate depreciation and greater inflationary pressure. With an independent Central Bank, this could translate into high interest rates for longer and more difficulties to grow” (Mortari, M. “A. Fraga, E. Bacha and P. Malan send letter to Lula and warn of fiscal risk”. InfoMoney, November 17, 2022).

The economic debate on the issue of “fiscal balance” is so old and so repetitive that it sometimes resembles a medieval polyphony, in which voices alternate repeating the same phrases and the same chords endlessly, as if it were a mantra, or a song. “endless litany”. The phrasing may change over time, but the essence of the arguments is always the same, over 200 years ago. Whether on the side of liberals or monetarists, who defend the absolute imperative of “fiscal balance”, or on the side of developmentalists or Keynesians, who consider that economic growth requires less rigid and more expansionist fiscal policies.

Despite being long-standing, this debate never had and will never have a clear and definitive conclusion, simply because it is not an academic or purely scientific divergence, and always involves the interests of “economic agents” and social classes that are often antagonistic and exclusive. . In addition, to further confuse the discussion, it is verified throughout history that, in different circumstances, the same economic policies can have completely different results, depending on the power and degree of sovereignty of each government.

Few economists manage to recognize and accept that this was never a theoretical debate, and that in the field of economic policy there are no absolute truths. On the contrary, any decision that is taken will always involve political arbitration, which should be made according to the strategic objectives and particular interests that each government proposes to defend or prioritize. Just look at the case of the current Brazilian government, paramilitary and ultraliberal, which was unconditionally supported by the financial market and by its “orthodox” economists who never got alarmed or protested when the government exceeded its own “fiscal ceiling” by more than 700 billion real. Quite different from the alarmist behavior they recently adopted in the face of the first social measures announced by the progressive government that was just elected, and whose cost does not reach the foot of the “electoral spending” supported by the military, its economists and the entire financial market.

In Brazil, this “unfinished polyphony” began in the second half of the XNUMXth century, with the opposition between “metalistas” and “papelistas”, and their different views regarding public spending and “currency neutrality”. A divergence that lasted throughout the XNUMXth century, putting monetarists, orthodox, or liberals, such as Eugenio Gudin, Roberto Campos and their disciples on one side; and on the other, the structuralists, Keynesians, or developmentalists, such as Roberto Simonsen, Celso Furtado and all their disciples, up to our days. It was in a vain attempt to incorporate and reconcile the two sides that Getúlio Vargas inaugurated a practical solution that later became almost a rule of “developmentalist governments”, even conservative ones, placing a “monetarist” or “orthodox fiscalist” in the Ministry of Finance, and a “developmentalist” or “spender”, in the presidency of BB, and after its creation, in the Ministry of Planning.

This dispute, however, began long before the Brazilian hardships. Not by chance, the foundational work of political economy published by William Petty was called Treaty on taxes and contributions, and was published in 1662 to account for the imbalances between the “revenues” and the “fiscal responsibilities” of the English Crown, involved at that time in several successive wars with Holland, and soon after, in a prolonged military dispute with France. And the same can be said of Adam Smith's most famous work, The wealth of nations, published in 1776, at the very moment when Great Britain was facing the problem of the great “fiscal loss” of its main North American colony.

If we go back even further in time, we find that this same question or disjuncture was posed for all the great empires or territorial powers that proposed to increase their production of economic surplus in order to expand their territories. Otherwise, let's see, rereading very quickly an episode of Chinese history, paradigmatic and exemplary, which can help us to clarify our central argument about this old polemic that returns to haunt the Brazilian political scenario.

In the fourteenth century, after a long period of territorial fragmentation and internecine wars, China experienced a great process of centralization of power, under the Ming Dynasty (1368-1644), which was responsible for the reorganization of the Chinese State and for a true renaissance. of its ancient culture and civilization. He was also responsible for initiating an expansive move by China in various directions, in and out of its immediate geopolitical space, especially during the reign of Emperor Yung-Lo. All this until the emperor's death in 1424, when China suspended its maritime expeditions and all its wars of continental conquest. A change of course that remains to this day as one of the great unknowns of universal history. It's hard to believe, but this truly historic change of course was associated, in one way or another, with a “fiscal dispute” similar to those that still reproduce in our economic environment.

To understand what we are saying, let's go back to the reign of Yung-lo (1360-1423), who was one of the Chinese emperors with the greatest strategic and expansionist vision of China. It was he who concluded the work on the Grand Canal, connecting the China Sea and the ancient capital, Nanjing, with the poorest region in the north of the empire, and decided to build a new capital, which became Beijing. A gigantic “developmental project” that mobilized and employed, for many years, thousands of Chinese workers, artisans, soldiers and architects.

In addition, Yung-Lo extended Chinese hegemony – political, economic and cultural – in all directions, across China's territorial borders, and even towards the South Seas, the Indian Ocean, the Persian Gulf and the African Coast. It was during his reign that Admiral Cheng Ho led six large naval expeditions that reached the coast of Africa, when the Portuguese were just arriving in Ceuta. But throughout his reign, Emperor Yung-Lo's “developmentalist” policies faced fierce opposition from the Chinese economic elite led by his own finance minister, Hsia Yüan-Chi, a relentless advocate of “fiscal balance”. Unable to reach a conciliation, Emperor Yung-Lo had the minister arrested in 1421. But soon after the emperor died in battle, and his successor, Emperor Chu Kao-Chih, removed the old minister from jail and replaced him in the Ministry of Finance. , with full power to suspend all of Yung-Lo's works and expeditions, all in the name of the need to cut spending to contain inflation and maintain the empire's credibility. And that's how the Ming Empire lost its expansive breath and closed in on itself, falling into almost total isolation for nearly four centuries.

It is not possible to state that the victory of the “fiscalist” position of Minister Hsia Yüan-Chi against the “expansionist” position of Emperor Yung-Lo delayed the global expansion of the Chinese economy and civilization by 600 years. But it can be said with certainty that the political victory and imposition of “contentionist” ideas by China's finance minister during the reign of Emperor Chu Kao-Chin radically changed the course of Chinese history after 1424. as one English historian has put it, "to carry forward Yung-Lo's 'developmentalist' strategy would have required a succession of leaders with his same vigorous and strategic vision, the vision of an empire builder who had no followers."

There are at least two main lessons that can be drawn from this true “Chinese fable”: the first is that any and all short-term “contentionist choices” involve more dramatic options with long-term consequences that can affect future paths of development. a people and even a civilization, as in the Chinese case; and the second is that the success of an “expansionist choice” depends almost entirely on the existence of a government and a power bloc capable of sustaining this option for a prolonged period of time, always guided by a “vigorous and strategic vision”, as the English historian says.

To advance in a more expansionist direction, Brazil needs a government with the willingness and power to convey to society and its “economic agents” its definitive and unavoidable option for the conquest of a more just and egalitarian society, even facing resistance from the “market operators” (which, taken together, make up no more than 1% of the Brazilian population, even including the coffee shop and office cleaning staff).

Once and for all, it must be understood that this small, fortunate minority of the population does not feel any kind of material or moral responsibility for the “quality of life” of the 30 to 40% of Brazilians who go hungry and live in misery or in the most complete state of poverty. indigence. In fact, most of the Brazilian business bourgeoisie does not need and has never needed to ally themselves with their own people to succeed in their businesses and increase their private profits, which grow geometrically even in periods of low growth of the national GDP.

It is as if there were two parallel and absolutely incommunicable universes in Brazil: in one, live the poor, the unemployed, the destitute and the “wretched of the earth” in general; and in the other, lives a very satisfied bourgeoisie, sertaneja or cosmopolitan, but both equally turned their backs on their own people.

* Jose Luis Fiori Professor Emeritus at UFRJ. Author, among other books, of Global power and the new geopolitics of nations (Boitempo).

 

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