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Brazil: The Partido dos Trabalhadores in government
It has now been a year since Lula was elected president of Brazil and the Partido dos Trabalhadores (PT- the Workers’ Party) became the biggest party in the lower house (câmara dos deputados). The government set up and sworn into office in January 2003 must have been one of the most closely monitored and scrutinized in Brazilian history. The ‘right’ watched it closely for the steps they feared or claimed it would take; the‘left’ – including the party’s own left wing– the workers, the middle class and the few Brazilian-born capitalists (owners ofa small portion of home-based manufacturing) held their breath watching for the point when electoral promises would materialise as a development programme. At the moment, beneath a torrent of noisy and largely irrelevant criticism and complaint, neither side can be sure yet whether what they feared, or expected, according to the case, is really going to happen, or even whether the government is, or at least would like to be, going in that direction.
Under these conditions,it is virtually impossible to ‘assess’ this first year of Lula government, and what I do below is rather merely to sum up some of the main features of the current state of affairs and the main questions opened thereby. These could be seen as ‘criteria’ for an assessment of the government at a later point, or better yet, for continued monitoring of the workings of this, or for that matter any, government…
The political spectrum
A good part of the uncertainties regarding the nature of the Government stems from the widespread interpretation of there being a president who belongs to the Partido dos Trabalhadores
distinction is crucial. The PT may hold a number of key positions in
Making the situation more confused is the fact that the only really systematic opposition to Lula’s government comes from the self-professed left-wing PSDB (partly because of its electoral ambitions) and the most clearly right-wing party, the PFL (linked mainly to banking and finance). Thus both within the ‘allied base’ and in opposition there areleft-wing and right-wing parties. Which is a good indication of the above-mentioned reservations to which the left-right classification is subject.
The difficulty in sorting out the opposing forces and finding a critical stance from which to view the politics of Brazil is vividly reminded by the warning of an old-time politician: ‘Do not forget: that talking badly of the elite and of [social] inequalities became a method of the elite…’ (Evaristo de Morais Filho, Interview to Elio Gáspari, FSP, 3.11.02)
The complexity of the social/economic picture produced a number of most peculiar positions even from the best informed and highly qualified quarters. Chico de Oliveira, one of the most respected social scientists of the land – who has just left the Partido dos Trabalhadores in protest against the ‘neoliberalism’ of the government’s stance–
‘The Lula government – whatever the configuration it may finally assume– is inserted in a process of class struggle to decide who will pay the price, and in what measure, of the speculative folly of the 1990s.
‘A continuity (and deepening) of the economic policy of the FHC [Cardoso] government, confirms the highly advantageous position of finance capital in its speculative version/ modality, …while it also goes on with the disqualification of the State as a representative of common interest.
‘In spite of the impression it wants to convey, the Lula government is not immune to the polarization of the great classes. On the one side are those who struggle for a generalization of social benefits and a switch of the emphasis on ‘sound’ fiscal policy to the universal social and economic rights of the people. At the antipode are those in favour of fiscal adjustment, assuming the maintenance of the neoliberal economic model and of the hegemony of speculative capital.
‘In the same way, giving priority to Mercosul or Nafta means deciding between a sovereign or subservient foreign policy…
At all events, there can be no doubt but that history, in its ever?changing forms, is now and always the history of class struggle. Parties, governments and social and cultural forces change, but are bound to their position with respect to the overarching interests of capital or labour.
Here again, it is anything but clear on what basis a Brazilian government (present, past or future) could be criticized for not making a revolution (a clear stance for the workers) in the political framework of a bourgeois democracy.
On the other hand, an old?time economist Delfin Netto (see below), who would be seen by ten people out of ten as right?wing is more supportive of government policies than many of its ministers…
In an able summing up of the picture, a former economics minister commented that:
‘The opposition attacks the government and supports the economic policy. The parties of the situation (‘allied basis’) attack the economic policy and support the government (João Sayad, FSpaulo, 29.3.04 )
No wonder indeed if to many the situation of the country seems of ‘bewildering complexity’, to borrow an expression from the British historian G.M.Trevelyan referring to another epoch and quoted further below.
The status quo and social transformation
In this way it is probably better, rather than attempting a frontal attack on the ‘complexity’ of the positions held and rhetoric used, to sort out the constellation of forces – and their political concretization in parties – according to their position with respect to the maintenance of the status quo (hindered accumulation) and its opposite, an elimination of the hindrances to effective development of production and society.
This is the criterion against which the actions of the government and the positions taken by different political, economic and ‘civic’ associations can be assessed, along with their potential for a progressive transformation of (elite) society. This is what we try to do below. We must start by putting the present situation of the country into historical perspective.
basis of Brazilian elite society is the reproduction of a peculiar
of accumulation, or development, originating in its colonial status
peculiar form of economy – and the equally peculiar elite
it sustains– was able to reproduce itself for a century and a half,
This is the underlying cause of the stalemate Brazilian society finds itself in and which it failed to find a way out from or even to face openly. A country of 180 million people, 80% of which live in urban agglomerations, one of the worst income distributions in the world (the top 10% gets 45% of the national income, the top 1%, over 13%) and archaic institutions finds itself at a crossroads. Refusal to take either road materialized first in one ‘lost decade’ (as the eighties were dubbed), to be followed by a second and now by a third decade, of economic stagnation and social disarray.
The situation may therefore be summed up thus: after an all-time ‘traditional’ stop?go policy, Brazilian society ran into a dead end and faces the choice – which so far it has refused to take– of walking into its grave or jumpinginto the cold and troubled waters of a major social transformation.
net result of this period may be illustrated in a few facts and
Under the cover of runaway neo-liberalism,
home production will soon have to be expanded (as always, in the face
the balance of payments constraint), entreguismo –the handing
of control over key branches to foreign control, whereby no internal
demanding unhindered development will be borne– was duly intensified.
usual, Department I (means of production) was the first to go.
is illustrated in Figure 1:
the share of foreign capital in Brazilian industry increased overall
but it increased even more (and from an already higher platform) in the
machinery and high-tech industries (right) – to 87%.
As a suitable complement, investment in R&D is a mere 0.9% of GNP (of which 2/3 is government, 1/3 private).
The Brazilian tax system is 'iniquitous, irrational, regressive, expensive, bureaucratic,pachydermic' in the words of the referee of the reform bill in discussion at the Congress, Virgílio Guimararães; but on this score little can be expected for its reform would have to pass through Congress which is not inclined to allow it even to be submitted to a vote. Better news came regarding credit for production: BNDES, the National Development Bank, was in 2003 allowed to double its assets to increase financing capacity. Right in the first semester of 2003, it also reduced lending to foreign firms by half and increased lending to small and medium entreprises by 37 per cent.
was some fall in the interest rate (Libor), but it is still the world’s
highest at 9.95% (second is
On the other hand the government announced a doubling of funds for research and development from the current 0.6% to 1.2% of GDP through the next three years. It also quietly poured cold water on previous plans to privatise public universities –and announced a 100% increase in funds to provide for them.
As yet, there are no signs of a wholesale reversal of recent disastrous privatisations of infrastructure and public services, but at least a recovery of government control (through a majority on the regulating boards) of the regulation agencies has been the order of the day, notably in the crucial transport and telecommunication sectors as well as in the oil industry, with a government say in investment, performance targets and pricing policies.
The government also quietly abolished a tax exemption on imported goods which had given them an unfair advantage over home products,a form of reverse protectionism. (Under pressure from powerful lobbies, it re-established the exemption later in some branches in which foreign capital is predominant.)In the same vein, the government has made explicit statements (inappropriate anywhere else) that preserving the ‘national interest’ and incorporating high-end technology would be relevant criteria for the selection of bidders for an important Air Force tender for a state-of-the-art fighter fleet.
number of new directions emerged in foreign policy, the main thrust of
which has beena diversification of international
relations and a move away from US preponderance, partly
towards the EU and, better yet, towards not?OECD countries. There was the
of the G3,
On the other hand, less encouraging news came from a number of important quarters. The busy activities preparing the regulation of Public Private Partnerships – a neoliberal must – is a case in point. Apart from its extremely regressive nature –essentially, it providesmore finance to those who already have more– it is also a complement to the general disqualification of the State as the representative of collective interest, through the legitimation of non?public associations and pressure groups as representatives of ‘civil society’. At the operative level, the project attracted criticisms for its serious loopholes regarding public scrutiny and transparency and for its ruinous effect on the efficiency of public administration. Furthermore it includes overly favourable clauses towards private capital, both home-born and foreign, such as guarantees of a minimum return on investment, reminiscent of the ninetenth century, as when British-owned São Paulo Railway enjoyed precisely that guarantee (incidentally, when the rail became obsolete with the coming of the ‘motor age’, São Paulo Railway was ‘nationalized’– bought by the Brazilian government, in 1945– to the immense rejoicing of its shareholders in the City which hit the front page of the Financial Times for weeks). The regulation is however still in the making, so that a full assessment of it must be postponed for the time being.
Also,investment in infrastructure is still frozen – the State is bound by an agreement with the IMF signed back in 1992 according to which investment in infrastructure is by definition deficit spending (it yields no return), which would be just a nonsense if there were not a further clause limiting the deficit. The two clauses together amount however to tying the hands of the State and preventing the provision of support for the structure of production;everything from power generation to transport facilities and communication systems and water management were paralysed. The topic became a matter for discussion after the election but the discussion had died out inconclusively by the end of the year and paralysis continued, deepening the stagnation of production, while public debt, in the name of reducing which ‘fiscal austerity’ was being justified, went up from 55% to 57% of GNP. Incidentally, ‘incapacity’ of the State to invest is one of the main arguments invoked by the advocates of the PPP scheme mentioned above…
enough, it is in the field of ‘social justice’ that some of the worst
regarding the direction of government policy arise. Wages kept on
further after all the years of downward movement and the minimum wage,
which was a shameful US$
be exact, it was increased by 1.2%).
There are strange, as yet not final, moves in social security –
cutbacks on (civil servants’ and waged workers’) retirement benefits as
well as in the health service. People are thus forced towards private
with the excuse that these will be used to set up an investment fund to
provide credit for production – and that is the better excuse.The
worst is to say that the existing system is ‘bankrupt’ and
when in fact the funds accumulated in the last thirty years have been
by successive governments which took money from the pension fund (Fundo
Tempo de Serviço) and spent it.Both
hollow, but the effect on social benefits to those with
provision are likely (there is no final design yet) to be crippling,
to say disastrous. Additionally, as regards public administration, such
measures are bound to further weaken an already precarious state
This is run by poorly paid civil servants who had at least the
of tenure and full pension on retirement. The overall project for the
funds itself, which has been under discussio
Even with the best of intentions and the greatest of efforts, the reversal of historic self-destructive policies of the Brazilian society is a Sisyphean task. As Delfin Netto, a leading economist and ex-minister of finance noted: ‘there was no real adjustment yet, because of a policy of passivity for the last ten years. In the first four years of the Fernando Henrique Cardoso administration there was a constant budget deficit, while the government sold out the bulk of national assets and accumulated a current account deficit of US$ 180 billion [about 30% of GDP].’ In Netto’s view, monetary controls and a tight budget constitute a self?defeating policy in the long run and in no way substitute for a growth policy; the important short term issue being the freeing of the country from the ‘external dependence’ which ensues from very low foreign exchange reserves and a trade surplus which is too low to service the foreign debt.As he argues, with an increase of exports (a reasonable goal would be around US[$85bn ) the ratio of the debt service to exports would fall from the current 60% to about 40% – not be the best of the possible worlds, but considerably better than the current situation (Delfim Netto, Gazeta Mercantil 04.2.4)
the merits of the various individual measures discussed so far, the
important question is whether, taken together, they are moving the
economy and society towards a process of unhindered or full
of its productive forces – with all the social transformations this
And there has recent been an explicit statement of intention to move in
this direction, in the government’s Development plan (a sort of
The Development Plan accords priority to four sectors:
Semiconductors. The plan recalls the very reasonable position of the country in this field the early eighties, subsequently deliberately abandoned. Rec
Software. It argues that the potential of skilled low?wage cadres shou
Pharmaceuticals. Here it is almost a start almost from scratch, notwithstanding some valuable moves during the previous government about the introduction of ‘generic’ medicines. Currently, there is a huge trade deficit in this sector (imports up from US$ 212 mn to US$ 1,28 bn between 1990 and 2000).
Capital goods. This most important item is also the least clearly defined (partly because it depends on a well co-ordinated overall development policy rather than specific guidelines). However,the mere fact of explicit reference to it can probably be seen as a good sign. It does make reference to historic problems and the need to change policy direction, but there is a very suspect mention of assisting the introduction of new techniques through lower import taxes on machinery (!). Since in the same breath the Plan also mentions the need to stimulate the development of home-grown technology, one is left wondering about their awareness of the contradictory nature of these two measures.
There are also specific complementary policies for
Technical development, research and development –there are plans to raise allowances for R&D from the current 0.6% to 1.2% of GNP
strengthening of foreign exchange reserves –which is certainly a
for loosening the ca
All in all, the propositions of the Plan are a relief especially when compared with the usual tired repetition of old slogans about the ‘agricultural vocation’ of
there are a few voices stressing the importance of autochthonous, or
Last but not least, there have been moves towards the cleaning up of an exceedingly cumbersome justice system which leaves tens of millions of cases entangled in tens of thousands of laws, with many taking ten years or longer to be resolved, or ending up classed as unsolved. This leaves most crimes unpunished, whether common or ‘white collar’ – especially the bigger ones. Thus the prisons are filled
concluding these remarks on economic policy, it is worth remembering
one part of the new developments is a result of Brazilian
policy, others being a result of the contemporary tendencies of world
A case in point
is no telling what might be the immediate or long term results of the
outlined here. But there is a feeling
In judging the events and series of events of day-to-day history, it will never be possible for anyone to go right back to the final economic causes. Changes … generally operate a long time in secret before they suddenly make themselves violently felt on the surface. A clear survey of the economic history of a given period can never be obtained contemporaneously, but only subsequently…
On the other hand, it is no good folding one’s hands in one’s lap and waiting for potential changes to work out before taking a stance or beginning to act. As another old revolutionary, Lenin stated: the true politician hears even the grass growing. That’s what we are trying to do here.
On one of the crucial periods of English history, in the aftermath of the Napoleonic Wars, amid the political struggles of the Chartist movement and the run-up to the Reform Bill and later to the Free Trade legislation, G.M. Trevelyan wrote:
The political history of the period is bewildering to the student, and rich in paradoxical happenings, because, while the old parties were breaking up, ‘the spirit of the age’ and the constant pressure of the unenfranchised from without overwhelm from day to day the policies of the nominal holders of power. The scene has all the confused inconsequence of a great military retreat, when no one knows what anyone else is doing, and positions are taken up only to be abandoned.
Another historian A.L. Morton makes a more penetrating interpretation of the same period of the same epoch when he quotes the passage above, then adds the comment of his own:
The point was precisely that behind the personal squabbles and the ‘confused inconsequence’ of the politicians, and working through them, were vast new class combinations, that the Industrial Revolution had reached the point at which the class it had engendered was becoming strong enough to dictate a new policy even before it had acquired direct political power. (A people’s history of England, p.331)
Maybe the current period of Brazilian history will turn out to have been as crucial as this in economic and social transformations. That is something to be reckoned in the future.
after the two lost decades the new impetus brought about by Lula’s
may peter out if there are no signs soon of economic recovery and
living standards for large segments of the population. Already, after
year of expectations and little fulfilment, there are signs in this
as when a prestigious newspaper economic commentator, Paulo Nogueira
Jr, headed his column
Until the early 80-s of the 20th century, the Brazilian economy was one of the most dynamic, possibly the most dynamic, economy of the planet. True, this rapid growth coexisted with grave distortions and acute problems (…) But the country grew incessantly, invested and created jobs and opportunities. Between the Second World War and 1980, the National Product grew at an average 7% annual rate. …Brazilians were irreverent, undisciplined and débauchés (at the 1982 World Cup supporters opened a banner: ‘Even our inflation is 100%!’). ..
In 20 or 20-odd years, everything changed. Inflationary crises, financial humiliations and the prolonged stagnation of the 80s and the 90s undermined the self-confidence of the country. We became traumatized, inhibited, cowered…. A book-keeping mentality became predominant and the respect of foreign norms. Everything became subordinated to the control of inflation, the ‘adjustment’ of the budget and financial stability.
In the opinion of this writer the real question lies far deeper than the question of this or that particular economic policy and relates to a transformation of society as a whole, from subservient to sovereign, from elite to bourgeois, from hindered accumulation to unfettered development. There is no doubt however that deeper and longer term tendencies must perforce materialize in day-to-day policy in the present.
of change, and the speed of change, generated by the election must
be lowered, but the responsibility therefore can not be laid at the
of any single individual or political party – that is up to Brazilian
as a whole. For one thing, if there is no noticeable progress in the
year of government, the question mark in ‘Broken soul?’ above may
to be replaced by a full stop. Even then, however, the antagonisms
in Brazilian society will not stop doing their silent work.
Csaba (1988) “The crisis of hindered
A L (1938) A
people’s history of
 Mercosul: a Common Market including