By FERNANDO NOGUEIRA DA COSTA*
To understand the survival strategy of the majority of the population, we have to research and study urban dynamics more.
The tradition of national developmentalism was to defend industrialization in Brazil to overcome its historical backwardness. In the 1950s, a section of the left, which defended “socialism in one country,” that is, in the USSR, ardently defended the alliance of the working class with the national bourgeoisie for this purpose, even being willing to accept low real wages without compensation!
Another group, in the 1970s, founded the Campinas School, the precursor of social developmentalism (“social democracy in the tropics”), focused on the problem of the specificity of peripheral capitalism, highlighting the peculiarities of industrialization here. Our economic history should be reinterpreted as that of “late capitalism.”
Industrialization, in this late stage, was contemporary with monopoly capitalism in the most advanced countries. Its different characteristics were due to the productive forces of each phase of capitalism being distinct.
There were then different technical bases from which the industrialization of each country should start. The historicity of the capitalist productive forces led to the need for the country to adopt strategic planning aimed at the heavy industrialization stage to make a technological leap.
It involved a problem of scale, related to the still small size of the domestic market, given the concentration of income. It required mobilization and concentration of sufficient capital for investment in infrastructure and heavy industry, but the accumulation of financial wealth was not yet available in the Brazilian commercial banking system. It only granted loans for working capital.
In her fourth essay on the Brazilian economy, in the 1972 book, Maria da Conceição Tavares showed the structure of financial assets between 1964 and 1970. In the year of the banking reform, after the military coup, monetary assets represented 88,4% of them, and in the year of the praised “economic miracle” they fell to 61,1%. Paper money went from 18,8% to 10,9%, demand deposits from 69,6% to 50,2%.
Non-monetary assets increased from 11,6% to 38,9% in these six years, with the emergence of foreign exchange acceptances (13,6%), ORTN (10,9%), term deposits (7,3%) and savings deposits (3,2%). Monetary correction allowed the financial system to maintain the real value of its assets and customers in periods of high inflation.
Bank investments, such as savings accounts and government bonds, began to be indexed to inflation, ensuring that deposits and investments maintained their purchasing power. This attracted more savings to the banking system and helped to avoid bank disintermediation, i.e., the flight of resources to non-financial assets (such as real estate or dollars), typical of inflationary environments. This “definancialization” continues to this day in neighboring Argentina.
By guaranteeing positive real returns, in a period of high inflation, monetarily corrected financial investments encouraged the formation of funding (source of financing) internal. People and companies began to keep their resources within the urban banking network, contributing to the accumulation of capital and the growth of national financial reserves.
It is time for the left to review its concepts – the right has never been one to study – regarding national particularity. Was industry the “flagship” of the Brazilian economy or, in fact, was development more urban rather than industrial? Weren’t urban services – and not the few jobs in regionally centralized industry – the factor that attracted rural-urban emigration, in addition to the great repulsion factor due to the poor rural social conditions?
José Eustáquio Diniz Alves has digitally published the unmissable book Demographics and economy, in commemoration of the 200th anniversary of Brazil's Independence. It provides data and facts necessary for this historical review. I use them below.
In the 10th century, the Brazilian population grew almost tenfold (from 17 million in 1900 to almost 170 million in 2000), representing an average geometric growth rate of 2,3% per year. It multiplied 46 times in the 200 years since Independence. The highest rates of demographic growth in Brazil occurred in the 1950s and 1960s, when the contraceptive pill was still not available.
The determinants of the decline in mortality were the enrichment of nutritional standards, improvements in hygiene and basic sanitation conditions, especially treated water, and advances in medicine and access to the health system. The determinants of the decline in birth rates were increased income, higher educational levels, access to wage labor, mainly due to urbanization instead of industrialization, the entry of women into the labor market, greater female autonomy and the reduction of gender inequalities, the increase and diversification of consumption patterns, the expansion of the social security system, universal access to contraceptive methods, and the achievement of sexual and reproductive rights. These were all urban phenomena!
For most of Brazilian history, birth rates were high to offset high mortality rates and because families wanted many children to expand the workforce in the fields. However, with the “reversal of the intergenerational flow of wealth,” the costs of having children rose and the benefits decreased. Children ceased to be an “insurance” for parents, and now they can count on the public social protection and pension system, not to mention the financial products created, including in the private sector, as safety reserves.
Brazil was one of the countries in the world with the highest population and economic growth in the 1950th century. This growth, for the most part, occurred in urban areas, given the creation of transport infrastructure. The best decades were the 1970s and XNUMXs, a time when the population was still growing rapidly and the age structure was young.
The worst economic performance occurred in the 1980s, with the end of the developmental state and the advent of neoliberalism, and in the 2010s. The first decade of the XNUMXst century marked the best economic performance after democratization. But the second decade of the century was also the second lost decade with the bursting of the commodities, in September 2011, followed by droughts and food inflation, between 2013 and 2016, and the technical error of the Central Bank in raising the interest rate against the drop in supply, causing the financial deleveraging of non-financial companies, indebted due to the Growth Acceleration Plan.
The interest rate shock was added to the shock of the unit labor cost, exchange rate and tariff shock in 2015, and a semi-parliamentary coup in 2016. It caused capital flight or repatriation of foreign capital invested in Brazilian shares.
In the face of all this, the Brazilian population survives mainly due to urban services. Agro-exports, as well as minerals and oil, provide a trade surplus for the import of industrial goods needed to assemble durable consumer goods sold on the domestic market.
It is not enough to cover the deficit in the current account balance with profit remittances, interest payments and patents. Direct Investment in the country by foreign shareholders covers it – and further denationalizes the economy.
To understand the survival strategy of the majority of the population, we need to research and study urban dynamics further. In terms of large urban conglomerates, the three largest Brazilian metropolitan regions, according to the IBGE population estimates for 2021, are São Paulo, with around 22 million inhabitants, Rio de Janeiro with around 13 million and Belo Horizonte with around 6 million inhabitants.
In 2021, Brazil registered 17 municipalities with more than 1 million inhabitants, with a population of 46,7 million inhabitants, representing 21,9% of the national population of 213,3 million inhabitants, according to IBGE estimates. There were 326 municipalities with more than 100 thousand inhabitants, grouping 123 million inhabitants, representing 57,7% of the country's total population.
The Brazilian population was 51,9 million inhabitants in 1950, of which 18,8 million (36,2%) lived in urban areas and 33,2 million (63,8%) lived in rural areas. The rural population continued to grow in absolute terms until 1970, when it reached 41 million inhabitants, but in percentage terms it fell to 44,1% of the total population. From 1970 onwards, the rural population began a trajectory of absolute and relative decline, falling to 29,9 million people or 15,7% of the total population.
The urban population grew continuously throughout the period and reached 160,9 million inhabitants, according to the 2010 Demographic Census, representing 84,3% of the total population. Therefore, concludes José Eustáquio Diniz Alves in his informative book, which I recommend to anyone willing to review the traditional historical narrative, “Brazil is a predominantly urban country with a huge weight of large cities and metropolitan regions”.
Mainly through urban services, Brazil's GDP grew 704 times between 1822 and 2022, while the population grew 46,3 times in the same period. As a result, per capita income grew 15,2 times in the period. An average Brazilian currently receives, in one month, an income equivalent to that received by an average individual in 1822 with about 1 year and 3 months of work. It has improved, right? No wonder, it was a slave-owning and rural country...
*Fernando Nogueira da Costa He is a full professor at the Institute of Economics at Unicamp. Author, among other books, of Brazil of banks (EDUSP). [https://amzn.to/4dvKtBb].
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