Sovereignty and Capitalist Accumulation in Brazil’s Primary Sector

Abstract

Sovereignty conditions all aspects of the extractive process. That it underpins the dynamics of capitalist accumulation is apparent in the power that governments have to classify space, alienate certain areas for investment, and charge rents. A review of the large-scale land acquisitions and changes in the mining and oil and gas industries in Brazil from 2002 to 2016 shows that initiatives intended to curtail foreign investment actually stimulate foreign enterprises to engage in novel forms of capitalist accumulation.

A soberania condiciona todos os aspectos do processo extrativo. Que ela sustenta as dinâmicas da acumulação capitalista é aparente no poder que os governos têm de classificar o espaço, abrir certas áreas de investimento, e cobrar aluguéis. Uma análise das aquisições de terras em larga escala e das mudanças nos setores de mineração, petróleo e gás no Brasil de 2002 a 2016 mostra que as iniciativas destinadas a restringir o investimento estrangeiro acabaram estimulando as empresas estrangeiras a se engajarem em novas formas de acumulação capitalista.

Keywords

Brazil Sovereignty Capitalist accumulation Rent Neoextractivism

No sooner had scholars documented the sudden increase of large-scale land acquisition at the end of the 2000s than they began to analyze the phenomenon. Some focused on how land deals dispossessed historically marginalized populations (Andreasson, 2006; Li, 2011), others on how they appropriated minerals and conservation sites (Fairhead, Leach, and Scoones, 2012; Mehta, Veldwisch, and Franco, 2012), and still others on the continuities with nineteenth- and twentieth-century colonialism (Wily, 2012). Whereas more critical studies called this acquisition “land grabbing,” others considered it an investment that potentially benefited all actors involved (Deininger and Byerlee, 2011). Another body of scholarship drawing upon Eduardo Gudynas’s (2009) work on neoextractivism drew attention to the resurgence of primary-sector export economies throughout Latin America. This literature, charting the increase of mineral, grain, or oil and natural gas exports, recognized a renewed role of the state. Burchardt and Dietz (2014) have documented the way self-identified progressive leftist governments have increased the state’s role in the primary sector by strengthening public enterprises, revising contracts with foreign firms to increase rents, and redistributing revenue for social programs to reduce poverty. Veltmeyer (2013: 72) claims that such practices “boil down to nothing more than the state striking a better deal with global capital regarding its share of the plundered resources.”

In this article, I argue that any analysis of recent developments in the primary sector requires an in-depth discussion of the role of sovereignty in capitalist accumulation. Studies of land-grabbing draw our attention to territorial acquisition but not to the way the state impedes or assists this accumulation strategy. Those who focus on the centrality of primary-sector exports acknowledge a renewed presence of the state but overlook the fact that control over territory is central to state power and the distribution of access to raw materials. This article provides a more nuanced analysis of the state’s role in capitalist accumulation, highlighting the centrality of sovereignty and territory.

In my argument, I combine Karl Marx’s understanding of ground rent and primitive accumulation with Giorgio Agamben’s work on sovereignty to develop a theory of sovereignty as a necessary condition for capitalist accumulation. Sovereignty provides governments the power to remove people from territory and assign space to different uses. Any area can be removed (becoming what Agamben calls an “exception”) from prior economic, political, and/or cultural relations and then reclassified and redistributed. Marx’s concept of ground rent explains how particular sites are attributed value: a place acquires value not through its possession of some essential quality but through its potential or actual role in commodity circuits to which property holders, public or private, charge for access. I illustrate this argument with cases of land and raw-material acquisition in Brazil from 2002 to 2016 that have appeared in government reports, newspapers, corporate press releases, and the Landmatrix.org database.¹ While I argue that capitalist accumulation cannot be separated from questions pertaining to territory that lie at the core of sovereignty, I conclude that, in contrast, the state can exist apart from capitalist accumulation.

Various Latin American states—for instance, left-wing governments in Bolivia, Brazil, and Argentina—have attempted to limit the acquisition of land and resources by foreigners. At the same time, these same administrations have increased the power of public enterprises in the primary sector. Attempts to limit foreign acquisitions have not had their intended result. Domestic and foreign interests continue to accumulate capital by finding legal exemptions, manipulating environmental laws and standards, engaging in joint ventures, and financing public enterprises. The state’s raw material, territory, is its exclusive, sovereign terrain; governmental actors have the power to classify, divide, and redistribute space in the process of capitalist accumulation. The acquisition of territory is the first step in the development and subsequent export of commodities in the mining, lumber, and/or agricultural sectors.

The State, Sovereignty, and Capitalist Accumulation

Capital, as David Harvey (1982: 210) notes, is a series of relationships in perpetual motion with the objective of accumulating money. Capitalist accumulation is therefore not only the amassing of objects or assets but the constant attempt to reproduce relations of production and property ownership to generate profit. Twentieth-century Marxist scholars theorized the relationship between this concept and state power. For example, Miliband (1969) argued that the state was an arena permeated and manipulated by corporations for their own objectives. In this instrumentalist view, the state, including laws and institutions, was an object used to promote the interests of class actors. Poulantzas (2000 [1980]: 18–19) took the Marxist approach to the state in a more structuralist direction, viewing the ability to differentiate state power from economic activity as “a peculiar feature of capitalism” and “the capitalist form of the political in the constitution and reproduction in the relations of production.” The focus was not on the use of political office to forward an economic agenda but on the promotion by public policies and institutions of individuality and private property, the means to ensure a mobile workforce, and the suppression of class struggle via repression and ideology (37–39). Evans (1979: 44–45) connected these approaches in recognizing that the state was relatively autonomous from economic actors. In his classic work on Brazilian industrialization, he suggested that state autonomy allowed elites to mediate between the demands of local and foreign capital, with governments using incentives and repression to create a safe, stable space for accumulation.

Subsequent scholarship has played down the connection between the state and capitalist accumulation. Skocpol (1985) acknowledged the importance of ideas such as nationalism in addition to material qualities in the capacity of states to identify and pursue their objectives. Others pointed to the interconnection of beliefs, values, institutions, finance, and mobilization that makes it impossible to distinguish sharply between state and economy (Evans, 1995; Migdal, 2001). Drawing on Foucault, Mitchell (2006) considered the state a particular European way of partitioning spatial and social relations. For him, the state was not a singular thing but a body of techniques, among them registering property claims and providing social security numbers, which produced subjects that might or might not have an interest in capitalist accumulation. James Scott (1998) likened the state to a set of grids that rendered populations legible for governmental intervention.

Agamben (1998: 18), building on Carl Schmitt’s work (1985 [1922]), explained that in modern legal systems sovereignty is rooted in the declaration of an exception, an “inclusive exclusion” that is “taken outside” but “not simply excluded.” Declaring an exception involves treating someone or something as not being of a particular legal order. It contrasts with the “simple exclusion’ by the Greek city-state of the people who lived outside its walls, over whom it sought no authority. The modern state claims authority over all people and places within a particular area, and declaring who and/or what pertains to a certain territory always entails classification, incorporation, and the potential to exclude.

Reading Marx’s understanding of primitive accumulation and ground rent in light of Agamben’s work on sovereignty clarifies the relationship between capitalist accumulation and territory. The seventeenth- and eighteenth-century enclosures in Britain, when land that had been held and administered in common was made subject to individual ownership and prior inhabitants were driven into cities, illustrates how private property is created by combining state authority, laws, and force (Marx, 1992 [1867]). De Angelis (2004) points out that private property remains individualized and an instrument of production through the modern state’s policing of the separation of owners from nonowners. Privatization includes while it excludes, making an exception of de jure nonowners when new owners place deeds on their acquisitions. Neoliberal efforts to privatize social services and public goods such as water or sanitation systems are instances of enclosure that are part of accumulation strategies (Akram-Lodhi, 2007).

Marx’s concept of ground rent—divided into monopoly and differential rent—clarified how economic motives condition the alienation of certain areas and their reallocation to commodity chains. He argued that “monopoly to a piece of earth enables the so-called landowner to exact a tribute, to put a price on it” (1993 [1894]: 762). As Harvey (1982: 334) explained, land is “monopolizable and alienable, it can be rented or sold as a commodity. . . . Land itself is also a non-reproducible asset. By contrast, some of the use-values embodied in it are not only reproducible, but created through commodity production.” Tractors, corn, a house, etc., are reproducible, but parcels of land are not. Harvey specified that this was not a quality of land per se but of land title (367). Legal documents grant an owner monopoly rights to alienate space and charge others for access to it. Differential rent presupposes monopoly rent and the capacity of an area to generate surplus revenue for an owner because it has or lacks certain qualities (Marx, 1993 [1894]: 788). It becomes apparent when spaces are compared to determine which is better for a certain investment. For instance, a space may offer easy access to water, special minerals, or technological developments made by a previous owner. The qualities of distinct areas in relation to one another may result in an owner’s charging different amounts of rent for it.

In the application of Marx’s concept of ground rent to the state, the actor that is analogous to the “owner” is the government. All governments have sovereign power, a simplifying and homogenizing claim to a certain territory and particular people, and they use it to create and police private property in order to promote circuits of capitalist accumulation. The property holder is guaranteed financial gain, while differential and monopoly rent determine its amount. Whether a particular parcel has value depends on whether an investor is willing to acquire it and a government grants access to it. Whereas others have conceptualized rent-seeking as occurring when, through connections to elites or public policy, actors use government to gain access to resources (Bates, 1981; Krueger, 1974). I argue that the state cannot exist apart from rent.

Miliband and Poulantzas forged a Marxist theory of the state without conceiving of sovereignty. Connecting their work to Marx’s concepts of monopoly and differential rent and to Agamben’s work on sovereignty makes it clear that space acquires value through its position in commodity circuits. The state becomes a raw material and an input because sovereignty homogenizes territory in terms of simple modes of classification. Thus, governments have the potential to offer access to and alienate the territory that is necessary to extraction.

Territory, Legislation, and the Conditions for Acquisitions in Brazil’s Primary Sector

Many who research large-scale land deals and the reliance of many Latin American economies on raw-material exports have given insufficient attention to territorial classification and alienation. In passing, Wolford, Borras, and Scoones (2013) mention that the study of land and resource acquisitions should understand sovereignty not as a “static object” but as a “process.” G. Oliveira’s (2013) work details how territorial acquisitions activate “state-making practices” that privatize and regularize space. He connects state making to property but does not examine the way sovereignty and capitalist accumulation are intertwined. Scholars who highlight the neoextractivist dimensions of the Brazilian economy, especially the growth of grain and mineral exports, recognize that the government deploys nationalist rhetoric to forestall potential popular backlash (López and Vértiz, 2015; Svampa, 2015) and redistributes rents to displaced people (Baletti, 2014). Neither the 2010 legislative efforts to impede the transfer of land to foreign entities nor the 2010 and 2012 laws targeting the oil and natural gas industries have been assessed in terms of how sovereignty, acquisition of territory, and capitalist accumulation are connected.

The potential for acquisition of territory and resources is identified in legislation. The principal Brazilian law on state power and territory, Law 5709/1971, was issued by the military government of 1964–1985. Previously foreign acquisition of land by rent or purchase had been prohibited, except when it was justified by its importance to national development. The 1971 legislation resulted from a 1968 corruption investigation that documented various illegal land deals involving government officials and large property owners (Vegro, Rocha, and Silva, 2012). Central among its provisions were the restriction of the ability of non-Brazilians to purchase land and the legalization of land they had already acquired (A. U. Oliveira, 2010). It established mechanisms for controlling and overseeing investment in land by Brazilians and non-Brazilians alike. The legislation was integral to the military government’s economic plans, which embraced foreign direct investment, especially in the Amazon (F. Oliveira, 1994). Under the slogan “Integrar para não entregar” (Integrate so as not to hand over), the law provided a scheme for classifying and organizing space and transferring it to Brazilian and non-Brazilian firms. Acquisitions by foreigners were limited to 50 modulos fiscais (fiscal modules), a unit of 5–100 hectares (the size depending on the region’s economic activity). An investor was also limited to owning no more than 25 percent of any municipality, with a 10 percent limit for multiple foreign investors of the same nationality. The law created a unit called the módulo de exploração indefinida (undefined exploitation module—MEI) that, with the approval of the investor’s project by decree, could exceed the 50-module limit. An official opinion issued in 1988 declared that recognized domestic legal entities with foreign capital holdings and/or investments could acquire property without restriction.

Legislative changes in 2010 ostensibly placed new restrictions on land acquisitions by foreign interests. The Office of the Solicitor General issued an opinion challenging the meaning of “legal entity” in the above-mentioned 1998 opinion and reinforced Law 5709/1971’s 50-module limit for foreign actors. In 2012 the Instituto Nacional de Colonização e Reforma Agrária (National Institute for Colonization and Agrarian Reform—INCRA) refined the regulations for classification as an MEI, requiring that foreign entities justify the value of their projects to the Ministry of Agrarian Development, the Ministry of Agriculture, Livestock, and Supply, or the INCRA. The MEI was what Agamben called an “inclusive exclusion.” The exclusion of certain spaces from legislative restrictions was possible by first representing all Brazilian territory as included in the fiscal module classification system. The INCRA’s revision in 2012 did not remove the MEI from the law but instead added other governmental institutions to the process whereby foreign entities could achieve this legal exemption for their investment projects. The military government’s imperative “Integrar para não entregar” survives in these contemporary attempts to classify space.

Legislation in the mining, oil, and natural gas industries similarly reveals the role of sovereignty in facilitating capitalist accumulation. The potential for territorial acquisitions in these industries appears in establishing the distinction between surface and subsoil rights. According to Brazilian law, businesses—private or public—can receive concessions for the latter but not the former. In mining, the surface/subsoil distinction first appears in the military government’s 1967 Constitution and is detailed in Decree-Law 227/1967, which gives the government, through the Mining and Energy Ministry, the right to administer, process, and commercialize minerals and grant concessions to foreign or domestic actors after approving the investigation of a particular site. The law built upon Decree 4.352/1942, which created a state-owned enterprise, the Doce River Valley Company, and guaranteed it exclusive access to mining in Brazil. In contrast to the legislation on land acquisition, this decree placed no restrictions either on foreign concessions or on foreign ownership of stock in domestic mining firms. Oil and natural gas extraction developed according to similar legislative guidelines. Law 2004/1953 established the government’s monopoly over refining, investigation, and transportation rights through the creation of another state-owned enterprise, Petrobras. This legislation was part of a national developmental strategy, the result of the campaign known as “The Oil Is Ours” from Getúlio Vargas’s second term (1951–1954) (Soares and Grande, 2013).

National controls over the oil and gas industries expanded under President Lula in 2010 and 2012, following the discovery in 2007 of the extensive offshore gas and oil reserves known as the Pre-Salt (in reference to their geological location). In general, this body of legislation strengthened Petrobras and centralized the flow of rents. Law 12.276 allowed the federal government to increase its controlling share in Petrobras while granting the state-run company guaranteed production of up to 5 million barrels of oil. Law 12.304 created another state-owned enterprise, the Empresa Brasileira de Administração de Petróleo e Gás Natural S.A.–Pré-Sal Petróleo S.A. (the Brazilian Oil and Natural Gas Management Company—PPSA), to oversee potential private company investment and production. The PPSA does not engage in production and investment but monitors private actors and assists in commercialization. In contrast, legislation oriented around the mining industry has remained essentially unchanged since the military era despite current debates on raising the rates charged to firms.

Another law concerning territory and sovereignty is the revised Forestry Code, Law 12651/2012. The Forestry Code passed in 1965 institutionalized the military regime’s nationalist development project by providing a more systematic way of settling, developing, and classifying Brazilian territory (Brown and Koeppe, 2013). It established a unit known as the área de preservação permanente (area for permanent preservation—APP), which identified for conservation areas adjacent to water sources and susceptible to erosion such as hilltops over 1,800 meters. Passed in 2012, the revised Forestry Code retained the APP but reduced the designated acreage on private property and weakened the sanctions associated with violations. The reduction in acreage, according to one study (Soares-Filho, 2013), meant a 58 percent reduction in the acreage of land protected. Individuals or firms that had violated the 1965 Code before 2008 were forgiven, effectively legalizing prior appropriations (Tambosi et al., 2015). Similar to the undefined exploitation module designation, the APP category simultaneously excludes and includes. Sovereignty grants the government the power to classify Brazilian territory as part of the establishment of a uniform environmental policy, and the APP category classified territory according to criteria for environmental conservation. The Brazilian Congress’s liberalization of the 1965 Forestry Code in 2012 allowed private actors to exploit additional space.

Monopoly Rent, Royalties, and the Persistence of State-Owned Enterprises

Tracing the trajectory of state-owned enterprises during and after Brazil’s era of neoliberal reforms shows how capitalist accumulation is woven into sovereignty. Neoliberal restructuring during the 1990s, most notably through privatization of firms, did not result in foreign acquisition. The sale of the Doce River Valley Company (since 2007 known as Vale S.A.) during the Fernando Henrique Cardoso administration in the 1990s did not entail complete privatization; two state-owned banks—the National Development Bank and the Brazilian Workers’ Retirement Bank—together control nearly three-quarters of the enterprise’s shares (Singh and Massi, 2016). During its partial privatization, the company remained integrated and even expanded its investments rather than dividing into autonomous enterprises under the control of different owners. Petrobras never underwent privatization, even though the Cardoso government opened oil and natural gas exploration for private investment and exploration in 1997. The threat of competition from foreign firms actually led to increased economic growth and power for Petrobras (Bridgman, Gomes, and Teixeira, 2011).

Sovereignty provides governments with the power to classify territory and cede it to public or private firms and then to charge for access to it. Under the law, royalties include a monthly tax of 3 percent of mineral sales and 5–10 percent of oil and natural gas exports.² Mining rents rose from over R323 (~ US$98) million in 2004 to R1.5 billion (~US$430 million) in 2015, down from the high of R2.3 billion (~ US$76 million) in 2013 (DNPM, 2016). Oil royalties display an analogous trajectory, totaling in 2004 more than R5 billion (~ US$1.7 billion), peaking at R18.5 billion (~US$6 billion) in 2015, and then falling to R13 billion (~US$4 billion) in 2014 (ANP, 2016). The capacity to charge and collect royalties shows that the Brazilian government is the “owner” that monopolizes territorial access.

The Lula-era laws ensured that the government would have greater access to oil and gas rents. Law 12.351 established the Social Fund, which directs 15 percent of the royalties from oil and natural gas export from the Pre-Salt to national, state, and municipal governments for public policies oriented toward education, sports, culture, science, or the environment. Rents collected from oil and natural gas exports for the Social Fund constitute only about 1 percent of Brazil’s annual budget, but many municipal and state budgets rely heavily (from 20 to 60 percent) on mineral and oil rents. In 2015, the municipalities of Macaé, Cabo Frio, and Rio das Ostras in the state of Rio de Janeiro saw their revenues fall 30–40 percent with the decline in resource rents as commodity prices fell because of the contraction of the Chinese economy, the expansion of U.S. shale oil production, and OPEC’s decision in 2014 not to cut oil exports (Ordoñez and Bruno, 2016; Pahnke, 2018). Similarly, in the state of Pará, the municipality of Canaã’s budget fell by 30 percent (Santos, 2014). The state of Rio Grande do Sul, through federal redistribution of royalties, lost over R800 million (US$212 million) in 2016 (Correio do Povo, December 14, 2014). Such unexpected revenue reductions led to funding shortages for building schools, hiring doctors, and paying public servants. The volatility of the subnational rent regime indicates how sovereignty and resource rents from the primary sector condition the dynamics of governing at different levels of the Brazilian state.

The privatizations of Brazil’s 1990’s neoliberal restructuring did not impact the government’s ability to acquire revenue, since the Cardoso administration did not amend prior legislation on mining or oil rents. In contrast, the laws passed under Lula increased the amount of natural resource rents. The budget shortfalls experienced in 2014 were independent of the privatizations, reflecting a decline in raw-material rents at the time.

Agribusiness and the Evolution of Capitalist Accumulation Strategies

Connecting Marx’s concept of monopoly rent with sovereignty also clarifies the role of agribusiness development within the Brazilian economy. Large landowners have historically successfully evaded the Brazilian state’s rural land tax (Sauer and Leite, 2012). The export tax is of negligible financial importance, regularly amounting to less than 1 percent of yearly revenue (Ministério da Fazenda, 2015).³ While neither the land nor the export tax generates sufficient revenue for social programs, trade surpluses have resulted from agribusiness exports. Such surpluses have steadily increased in the 2000s (Figure 1). That agribusiness exports far outpace input imports results in a constant flow of foreign currency to the government and the private sector. The Brazilian government periodically uses these reserves to stabilize the value of the real, with one of the most recent instances involving loans in dollars to Brazilian firms that were negatively affected by the 2008–2009 financial crisis (Oganes, 2012). After 2013, the Brazilian Central Bank regularly began issuing loans in dollars for this purpose (Chamon, García, and Souza, 2017). Capitalist accumulation benefits from stabilization of the value of the real.

Figure 1.

Agribusiness imports and exports, 2001–2015 (US$ billions) (MAPA, 2018).

Acknowledging the privileged role of agribusiness in the Brazilian economy explains why, despite the apparent attempt to curtail foreign acquisition of land, ownership patterns have shown few changes. According to the Landmatrix database,⁴ 82 large-scale land acquisitions took place in Brazil from 2002 to 2015 (Figure 2). During this time, Brazilian entities acting alone were responsible for 25 acquisitions, foreign firms purchased or leased 30 properties, and in joint ventures involving foreign and Brazilian businesses 26 parcels changed hands. Foreign firms acquired territory at more or less the same rate before and after 2010 (18 acquisitions from 2002 to 2010, 12 from 2011 to 2015).

Figure 2.

Number of large-scale land acquisitions, 2002–2015 (Landmatrix.org, 2018).

Analysis of various large-scale post-2010 investments reveals the way investors manipulated the regulations to accumulate capital. The New Zealand–based Fonterra and Fazenda MIH Ltda. (99 percent Dutch-owned) legally purchased 854,000 hectares in Goias, 2,500 hectares in Mato Grosso, and 112,000 hectares in Minas Gerais, far more than the amount allowed such joint ventures by the 1971 law and the 2010 opinion (MDA, 2014). This is where sovereignty impacts the fiscal module system—private entities may ask for and receive special treatment. G. Oliveira (2013) applies Scott’s understanding of the state to document how regularizing property claims enables redistribution, dispossession, and sale. While fiscal modules classify every inch of Brazilian territory, the MEI makes immense spaces potentially alienable and subject to commercial investment. The MEI designation, therefore, contains the potential for the sovereign exception. Such an exception is not outside of the dynamics of capitalist accumulation but a condition for a particular area’s incorporation into commodity circuits.

Another strategy used to alienate territory and then incorporate it into commodity circuits is contract farming. This allows for the indirect appropriation of land through the establishment of contracts with small farmers who remain the principal owners. The U.S.-based firm Archer Daniels Midland (ADM) initiated such a venture in 2011 in the Amazonian state of Pará, acquiring more than 12,000 hectares by contracting with some 600 families for palm production for biodiesel (ADM, 2016). Under the contract, the farmers receive technical training and seedlings from a special team of ADM technicians (Franco, 2012). Nearly identical arrangements have been made in sugarcane production in São Paulo state (Fernandes, Welch, and Gonçalves, 2010). Contract farming on this scale, especially since 2010, provides corporations the ability to control territory—deploying their own technicians and promoting certain seed— without acquiring title to the land. Similar to the use of the MEI exemption, contract farming is a technique that allows foreign investors to bypass legal restrictions and access space to control commodity chains for capital accumulation.

Comparison of pre- and post-2010 trends in the acquisition of land shows the constant involvement of Brazilian firms acting alone. Domestic land deals have kept pace with foreign transactions, with 15 occurring before 2011 and 12 after. One corporation, SLC Agricola, has been part of 9 of the 25 large acquisitions by Brazilian firms since 2002 (5 of which have taken place in 2011 or after). As of 2016, its latest purchase was of over 13,000 hectares in Mato Grosso (Petroli, 2015). While the purpose of the acquisition was not made public, the corporation’s past involvement in soy, cotton, and corn suggests that grain exports will be its focus.

Additionally, examination of the continuity of large-scale acquisitions before and after 2010 highlights the strategic role of joint ventures. The 2010 opinion, while encouraging certain firms to rely on the special MEI classification, implicitly encouraged joint investments between foreign and domestic businesses. A joint venture of BrasilAgro and the Argentine enterprise Cresud involved the acquisition of over 7,000 hectares in Piauí (BrasilAgro, 2014). Cresud holds a plurality (~38 percent) of the shares, while BrasilAgro, with Tarpon Investments, controls a majority. Through this joint venture, foreign capital extracts resources and exports commodities through its partnership with a domestic firm. Another corporation—Agrifirma Ltda.—is headquartered in Brazil but the UK-based company Genagro owns 49.5 percent of its stock. Agrifirma engaged in four acquisitions between 2002 and 2010. Of the 26 joint-venture land deals, only 6 have taken place since 2010.

Differential Rent and Capitalist Accumulation Strategies

Multiple characteristics of Brazil—technical, natural, and political—reveal the utility of the concept of differential rent when detailing capitalist accumulation strategies. Data from the World Bank (Deininger and Byerlee, 2011: 11) highlight that between 1990 and 2007 crop yields in Latin America outpaced those in every other region in the world. Even though 70 percent of land deals take place in sub-Saharan Africa, higher agricultural productivity rates are found in Latin America. Brazil has the third-lowest rural population density on the continent (2.25 hectares per person, compared with 8.82 in Argentina, 7.91 in Uruguay, 0.35 in El Salvador, and 0.2 in Haiti), and this makes dispossession potentially less costly there than elsewhere, both politically and economically. Additionally, it is estimated that agribusiness in Brazil operates at 40 percent of its productive potential and utilizes only 60 percent of the country’s arable land (Deininger and Byerlee, 2011: xxxix). In oil, natural gas, and minerals, the country has similar advantages for capitalist accumulation. Brazil is the largest exporter of niobium and thorium and third-largest of iron ore, graphite, and bauxite (IBRAM, 2016). According to the president of the PPSA, Oswaldo Pedrosa, the Pre-Salt has the potential to yield 28–35 billion barrels of oil (Polito, 2014).

Despite the potential for increased extractivism, foreign investment in certain areas is negligible, especially in the oil and natural gas industry, where foreign investment has been minimal despite the legislative changes of 2010 and 2012. From 2005 to 2014, 18 companies, 13 of them foreign, invested in oil and natural gas (ANP, 2015), but 95 percent of investment remains with Petrobras. Comparable trends appear in the mining industry. As of 2013, over 400 foreign enterprises had invested in mining firms (Soto-Viruet, 2016), but the Brazilian mineral industry remains dominated by Vale S.A., which controls over 80 percent of the iron ore trade, 60 percent of the copper, and sizable percentages of the nickel, bauxite, and other minerals (IBRAM, 2016). Entrenched public enterprises that developed over decades have blocked foreign firms’ ability to take advantage of Brazil’s capacity to generate differential rents.

With respect to land acquisitions, the story is different. Here, some foreign firms are using Brazil’s environmental legislation to attribute value and thus acquire rent. The liberalized Forestry Code is explicitly referenced by the U.S.-based retirement provider Teachers’ Insurance and Annuity Association–College Retirement Equities Fund (TIAA-CREF) in its joint venture with the Brazilian firm Radar Propriedades (TIAA-CREF, 2015). In another joint venture involving the Brazilian sugar firm COSAN, areas were found to have been acquired illegally (Farthing, 2017; GRAIN, 2016). This latter deal has been criticized not only by GRAIN but also by the U.S.-based National Family Farm Coalition.⁵ TIAA-CREF was able to increase its presence in Brazil partly because the amended Forestry Code cut conservation requirements.

CMPC Riograndense also draws on the discourses of sustainability and responsible business to promote sales and investment. On its website under the heading “Did You Know?” it tells consumers that “all the forests maintained by Celulose Riograndense respect [the Forestry Code] and, in some cases, maintain more preserved areas than foreseen in the legislation” (CMPC Riograndense, 2011). To “preserve more than foreseen” was easier after the 2012 changes to the code. CMPC is a member of the business association Brazilian Tree Industry, which advertises that its members are “working hard to accelerate the implementation of the new Brazilian Forest Code” (IBÁ, 2015). When not referencing the weakened piece of environmental legislation, CMPC advertises itself as a supporter of sustainable development by posting links to notarized statements about projects that have been approved by Bureau Veritas, a French-based certification corporation.⁶

The CMPC and TIAA-CREF acquisitions draw on the liberalized and weakened Forestry Code, and their use of it shows the relevance of differential rent. The revised code makes it easier for extractive firms to represent their actions as sustainable. Attention to such dynamics in land acquisition reveals capital’s ability to manipulate regulations to acquire more value in investment opportunities.

The relative absence of Chinese investment in Brazil further clarifies the way the concept of differential rent helps explain developments in the Brazilian primary sector. Rather than purchasing or leasing land, the Chinese Cereals, Oils, and Foodstuffs Corporation purchased a controlling stake in the Brazilian agribusiness firm the Noble Group, which specializes in grain (Thukral and Flaherty, 2014). One of the three areas acquired by Chinese investors has remained idle for years because of bureaucratic wrangling (Stauffer, 2014). The majority of Chinese direct investment in Brazil is in the automotive industry (22 percent), with the agricultural sector (land and commodities included) constituting only 3 percent (China-Brazil Business Council, 2013). Because of the cost of dealing with the Brazilian bureaucracy, Africa, not Brazil, is the focus of China’s agricultural plans with respect to purchasing territory (Winter and Stauffer, 2013). Of the 18 firms that have directly invested in the Brazilian oil and natural gas industry, only one is Chinese (Sinochem), and it has spent a negligible US$50 million (ANP, 2016).

This does not mean that Chinese involvement is negligible in mining and oil commodity circuits. China became the largest recipient of Brazil oil exports, 35 percent, after concluding an extension of credit from the China Development Bank to Petrobras in 2015 (Boadle and Orlofsky, 2017). Instead of directly purchasing a controlling number of shares in Vale S.A., the Bank of China and the Chinese Export/Import Bank have extended loans to it for shipbuilding and exploration (Saunders, 2015). Chinese investment is crucial in Brazil’s primary sector, but the Chinese have shown little interest in establishing direct ownership. In mining and oil, Chinese interests gain more value from providing loans and buying commodities than from owning assets. The same is true with respect to purchasing land in Brazil, where legal hurdles and political instability make landownership less profitable for Chinese capital than it is in Africa (Gillespie, 2016).⁷ Working with the concept of differential rent shows that understanding investment decisions requires considering the initial conditions of host and investor.

Capital and the State

The transformations of Brazil’s primary sector show that the nationalization efforts of leftist governments have had a negligible impact on acquisitions made by both national and foreign actors. Capital interacts with sovereignty to promote laws that will add value, partners with local firms, finds legal loopholes, or pursues more profitable spaces elsewhere.

The state classifies territory within a country in a universal, homogeneous way that can facilitate alienation of land, minerals, water access, etc., and their incorporation into many different extractive processes. Sovereignty allows governments to disconnect people from space and create classifications through which they reallocate resources and land. The abstract concept of territoriality found in sovereignty is a necessary condition for capital circuits to develop and persist. At the same time, sovereignty is not exhausted by the dynamics of capitalist accumulation. The same power that divides people from territory can also unify them. The agrarian reform projects of socialist and nonsocialist governments throughout the twentieth century show that sovereign power can unify dispossessed people with land through acts of redistribution. If land is redistributed to collectives of previously employed wage laborers, then sovereign power is utilized in an anticapitalist project. Cooperatives can be policed and protected from privatization by the same force that serves capitalist accumulation. Thus, while capitalism requires sovereignty, sovereignty does not necessarily need capital. An anticapitalist political project may employ sovereignty in mobilizing and benefiting the majority.

Footnotes

Notes

Anthony Pahnke is an assistant professor of international relations at San Francisco State University and the author of Brazil’s Long Revolution: Radical Achievements of the Landless Workers Movement (2018).

References

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