Abstract
From the point of view of their capitalist development pattern, the governments of Fernando Collor de Mello, Fernando Henrique Cardoso, and Michel Temer, on the one hand, and Lula da Silva and Dilma Rousseff, on the other, were similar: the former were actively promoting that pattern and the latter accepting it as irreversible, the limit of the possible, and adapting to it. They differed, however, in the macroeconomic policy regimes they adopted. The development pattern of the Workers’ Party governments may be described as the peripheral-liberal pattern, the form assumed by neoliberalism in Brazil.
Do ponto de vista de seu padrão de desenvolvimento capitalista, os governos de Fernando Collor de Mello, Fernando Henrique Cardoso e Michel Temer, por um lado, e Lula da Silva e Dilma Rousseff, por outro, se assemelhavam em. Os primeiros promovendo-o ativamente e os segundos aceitando esse padrão como irreversível. Eles diferiram, no entanto, nos regimes de política macroeconômica que adotaram. O padrão de desenvolvimento dos governos do Partido dos Trabalhadores é aqui descrito como o padrão liberal periférico, a forma assumida pelo neoliberalismo no Brasil.
Keywords
The debate about the nature of the governments of the Partido dos Trabalhadores (Workers’ Party—PT) tends to contrast two diametrically opposite views: that they constituted a total rupture with the neoliberalism of the previous period (the governments of Fernando Collor de Mello/Itamar Franco and Fernando Henrique Cardoso) and that they simply continued the political-economic model of the past, creating, at best, a sort of social liberalism. These different views are accompanied by positions that emphasize the ambiguous or hybrid nature of the PT governments and therefore are situated between the two poles. With the unfolding of the debate, the various responses have been reduced to the opposition between neoliberalism and developmentalism (the latter with nuances). Normally, the arguments presented to defend the different points of view compare the performance (macroeconomic and social) of the Brazilian economy during the PT governments vis-à-vis the previous governments (Collor de Mello/Itamar Franco and Fernando Henrique Cardoso), and identify a set of economic and social reforms and policies whose content, together with a greater or lesser economic activism of the state, would characterize a government as neoliberal or developmentalist (neo-, new, or social).
The problem is that, despite the importance of the aspects considered, this approach does not unequivocally distinguish the structural dimension, which determines the deeper characteristics of the Brazilian capitalist development pattern established at the beginning of the 1990s, from the macroeconomic policy regimes that have conditioned and limited the actions of Brazil’s governments for the past three decades. In addition, the opposing views (neoliberal and developmentalist) are generally either fundamentally economic or essentially political in character, and even when advocates consider both of these dimensions of the Brazilian capitalist development pattern they cannot adequately articulate them. By fragmenting these dimensions or weakly articulating them they lose sight of the whole and make it difficult to understand how the material, social, and political interests of classes and class fractions intersect and determine each other, producing a long-term trend around which fluctuations and inflections (economic and political) occur, or how that pattern might be altered.
Employing the (transdisciplinary) concept of the capitalist development pattern (Filgueiras, 2013) and identifying the particular form it has assumed in Brazil since the 1990s, this article seeks to overcome the lack of hierarchization between structure and context and the separation (or weak articulation) between economics and politics. The proposal defended here is that, from the point of view of the capitalist development pattern, the governments of Collor de Mello, Cardoso, and Temer, on the one hand, and Lula da Silva and Dilma Rousseff, on the other, were similar: the former were actively promoting that pattern and the latter accepting it as irreversible, the limit of the possible, and adapting to it. They differed, however, in the macroeconomic policy regimes they adopted.
The understanding of neoliberalism adopted here is as a political-ideological doctrine systematized shortly after World War II by Hayek and Friedman, among others, out of a critique of the welfare state and socialism—a regressive update of liberalism (Anderson, 1995). In addition, accepting the conception of Dardot and Laval (2016), neoliberalism, rather than an ideology, is a global political rationale drawn from commercial competition whose logic tends to spread to all social spheres and all political subjects. Its political-practical marriage with big financial capital after the crisis of capitalism in the 1970s was expressed in a general political-economic program that can be summarized as privatization, deregulation, and liberalization. However, this program and its policies were implemented according to the specificities of the various socioeconomic formations—distinguished, above all, by their condition of center or periphery but not only by this, because neither the center nor the periphery is homogeneous. Therefore, there is more than one capitalist development pattern associated with neoliberalism. What is referred to here as the peripheral-liberal pattern is the form assumed by neoliberalism in Brazil, shaped by the country’s previous economic and social structure and the disputes between different fractions of its bourgeoisie and between these and the working classes. In short, neoliberalism is a doctrine and a general political-economic program, but the capitalist development patterns associated with it are more or less differentiated from one country to another according to their economic and social formations.
This article, in addition to this introduction and the conclusion, has four sections. In the first, based on the literature, I summarize the debate about the nature of the PT governments that has intensified since the end of the first Lula da Silva government with the flexibilization of the macroeconomic tripod inherited from the second Cardoso government. In this sequence, the dependent character of Brazilian capitalism stands out, along with the unavoidable historical-structural conditioning that accompanies all the development patterns through which the country has passed since its political independence. Subsequently I consider the origin, nature, characteristics, and inflections of the current peripheral-liberal capitalist development pattern established in Brazil since the 1990s. Finally I review the different macroeconomic policy regimes that the country has experienced within this pattern of development and associate them with the inflections that occurred in the power bloc.
Interpretations of the PT Governments
The following list of some of the main interpretations of the PT governments is intended simply to locate the main aspects of the problem in the interest of a better understanding of the alternative interpretation defended here—which, although different, uses countless contributions present in this debate.
The Developmental Rupture (or Inflection) of the Lula Da Silva Government
From the perspective of those who participated in the governments of Lula da Silva, Barbosa and Souza (2010) argue that around 2006–2007 there was the transition from a neoliberal economic model to a new developmentalist model in which economic growth driven by the domestic market leads to the distribution of income. Despite having benefited from a very favorable international economic environment, this transition was mainly the result of a choice by the government. From a macroeconomic point of view, it required the flexibility of the tripod inherited from the second Cardoso government. Reducing the primary fiscal surplus, maintaining the inflation target of 4.5 percent, and managing the exchange rate, along with the expansion and diversification of Brazilian exports (destination and nature of products), allowed the accumulation of international reserves and the reduction of the country’s vulnerability. According to Barbosa and Souza, this change of course relied above all on the return of the state to guidance and planning of the development process with the resumption of public investment (the Growth Acceleration Program) and fiscal incentives and credit for private investment (financing, through the Brazilian Development Bank, of large national groups to allow them to expand and internationalize their activities) and for consumption (consigned credit). In addition, two other policies were decisive because they were at the center of the “new model”: social policy (especially the Bolsa Família program, which significantly reduced absolute poverty) and the policy of real wage growth, which, in addition to reducing poverty and inequality, boosted economic growth.
From the same perspective but political, Singer (2012) identifies the emergence of a new phenomenon called “Lulism” that resulted partly from the socioeconomic transformations pointed to by Barbosa and Souza. Lulism expressed a long-term political tendency toward the replacement of the traditional confrontation between capital and labor with the opposition between rich and poor. This change was a consequence, on the one hand, of the removal of the middle class from the Lula da Silva government because of the so-called mensalão (purchase of senators) and, on the other hand, the support for the government of the subproletariat (the poor) because of economic and social policies that led to the expansion of the labor market, with growth in formal employment and higher wages— the reduction of absolute poverty, access to durable consumer goods, and improvement in the income distribution.
The favorable international environment (the commodities boom) helped to create Lulism, but the decisive factor may have been the government decisions that led to the reduction of poverty. In Singer’s view, Lula’s government was guided by a “weak reformism” that was sufficient to discourage conflict but focused on the poorest without confronting the rest. For this reason, the subproletariat, which was politically and morally conservative, identified with Lula and his policies, and this helped him to improve their lives. Moreover, and more important, because it was a fragmented and disorganized social segment and was unable to express itself independently in the political arena, the subproletariat identified Lula as its representative.
The Lulist project, according to Singer, divided society into a productivist coalition (factory owners and workers) and a rentier coalition (national and international financial capital and perhaps agribusiness and the traditional middle class, which supported it massively). Lulism (a kind of “Bonapartism”) balanced these interests with the support of the subproletariat, aiming to meet its aspirations and reduce absolute poverty. While the productivist coalition program sought to control the flow of foreign capital, reduce interest rates, manage exchange rates with devaluation of the real, make public investments in infrastructure, reduce inequality, and protect the industry against the “Dutch disease,” the rentier coalition advocated high interest rates, the free flow of foreign capital, the maintenance of the appreciated real, and the reduction of the tax burden. Although Singer does not believe, as do the previous writers, that there has been a break with neoliberalism, he seems to point more to an ill-defined hybrid situation characterized by neoliberal elements and other components opposed to neoliberalism.
A Hybrid Economic Policy
Starting from a broader concept of economic policy that incorporates policies other than the macroeconomic, Morais and Saad-Filho (2011) also point to the improved performance of the Brazilian economy from 2006–2007 on and the aforementioned changes, especially the partial adoption of economic policies defended by the so-called new developmentalism. However, since these were accompanied by neoliberal macroeconomic policies (inflation targets, primary fiscal surpluses, and floating exchange rates), they constituted not a fully coherent new development policy but a hybrid one that was both neoliberal and developmentalist. Thus, while they agree that, as of 2006, the economic policy of Lula’s government underwent an inflection with the flexibilization of the macroeconomic tripod and the introduction of other economic policies, they do not consider the new situation a replacement of previous policies. Although they call the new policies “developmentalist,” they emphasize their similarities to new-developmentalist ones.
Also identifying the Lula da Silva governments as hybrid and indefinite, Fonseca, Cunha, and Bichara (2013), analyzing the performance and recent policies of the Brazilian economy and comparing them with those of the “era of developmentalism” (1930–1980), conclude that, despite the resumption of growth, “good macroeconomic fundamentals,” and increased consumption by the poorest, it was not unequivocally a matter of the resumption of development as the guiding ideology of a new phase of the Brazilian economy and society. Adopting the same perspective as Morais and Saad-Filho, they defend the coexistence of rupture and continuity with the previous neoliberal period. Accordingly, they argue, no clear project or classes and social segments to support it can be identified. Finally, they say that Lula da Silva’s government was close to the classic Keynesian-inspired post–World War II European social-democratic standard, with the adoption of policies to stimulate demand, public investment, and social protection.
Social Developmentalism
In defense of the governments of Lula da Silva and Dilma Rousseff and identifying with both is the formulation called “social developmentalist” or “left developmentalist” associated with the second generation of the Campinas school (Costa, 2012). This current of thought coincides with Morais and Saad-Filho’s (2011), although the date of the transition (second half of 2004) to a new pattern of growth is different. According to this idea, investment began to increase above the gross domestic product (GDP), indicating that the new growth cycle would have greater depth than the previous ones (Carneiro, 2011; Carneiro et al., 2012).
In the beginning (in 2003) this cycle was “pulled” by external demand associated with the international commodities price cycle and the new role played by China, but in the following two years exports lost importance compared with the domestic market. As of 2008, the external sector became a factor in the reduction of aggregate demand due to the negative current-account balance. The significant change in the Brazilian export agenda, coupled with the growth of industrial or agricultural commodities (18 of the 20 main export products), brought about few changes in the industrial structure of the economy with regard to its technological intensity. Thus, although it evidences a process of “regressive specialization” in the profile of Brazilian exports, deindustrialization and exchange-rate policy do not seem to be the main concern of this view. In this it differs from new-developmentalist thinking, which emphasizes exchange-rate overvaluation as a fundamental determinant of deindustrialization and, consequently, of low economic growth. In this new pattern of growth, investment was initially induced by exports (mining, steel, pulp and paper, oil and gas) and then by consumption, failing to move on to a pattern driven by autonomous investment. The increase in consumption was through credit and improved income distribution—the latter stemming from the increase in formal employment, minimum-wage adjustments, and government transfers (an increase in the social security benefit and the Bolsa Família program). Economic growth and low inflation recovered the economy’s average real wage after mid-2004.
Despite the positive evaluation of this new pattern expansion, which allowed the return of growth accompanied by a better income distribution, the social-developmentalist current acknowledged that it could not continue indefinitely (Carneiro et al., 2012). Thus, dynamically, this pattern would give way to a new one in which growth would be controlled by autonomous investment and not by exports, as proposed by the new developmentalism. Net exports cannot constitute “a relevant and permanent source of growth increase in Brazil” (Carneiro, 2011: 16) for two reasons. First, the high income elasticity of imports due to the regressive specialization that occurred in the 1990s increased the significance of imports in meeting domestic demand. Second, the exchange rate and the difference between domestic and external growth rates combined would increase the current-account deficit.
The New Developmentalism
In contrast to the “old” developmentalism, the new developmentalism, adopting a post-Keynesian and neostructuralist (ECLAC, 1998) approach, holds that exports “pull” development, the state ceases to invest and returns to promoting private investment, industrial policy becomes less important, public finances must be balanced or generate a surplus, and monetary stability must be constantly pursued (Bresser-Pereira and Gala, 2010). As did the old structuralist theory, it conceives (structural) underdevelopment as a counterpart of development, admits the existence of a tendency of the terms of trade to deteriorate, identifies a tendency of wages to increase less than productivity (because of the unlimited supply of labor), and considers promotion by the state strategic for development.
From this perspective, Oreiro (2011) identifies three macroeconomic policy regimes since the implementation of the Real Plan in 1994: (1) the anchored exchange rate (1995–1998), (2) the macroeconomic tripod (inflation targets, primary fiscal surpluses, and a floating exchange rate) (1999–2005), and (3) inconsistent development originating in the flexibilization of the tripod that began in 2006–2007 (2008–2014). According to Oreiro, the inconsistency of the last regime derives from the impossibility of simultaneously achieving its various objectives: stabilizing the real exchange rate, increasing the proportion of wages in the national income, controlling the rate of inflation in the long term, promoting a significant increase in actual output, and enabling a strong increase in domestic aggregate demand through an accelerated increase of primary government spending. As a consequence of the abandonment of one of its objectives, the stabilization of the real exchange rate, there was a tendency toward deterioration of the current-account balance of payments and the deepening of deindustrialization. In short, the inconsistent development regime typical of the governments of Lula da Silva and Dilma Rousseff was unsustainable in that it tended to revive the vulnerability of the Brazilian economy.
Thus the growth of the Brazilian economy in the period analyzed was wage-led. In other words, economic growth was “pulled” by the growth of wages faster than the increase in labor productivity. As a consequence, the proportion of wages in the national income and the proportion of consumption in the GDP tended to increase over time, leading to a loss of export competitiveness and then to balance-of-payments problems and eventually an exchange-rate crisis. Under this regime, the tendency was toward reduction of the rate of economic growth in the medium and long term and the return of the economy to the primary-export condition.
Neoliberal Neodevelopmentalism
Finally, in an interpretation, like Singer’s, verging on political science, Boito Jr. (2012) argues that the PT’s “model of development,” although it had undergone reform, remained neoliberal in nature—identifying, as an expression of this reform in the 2000s, the adoption of a neodevelopmentalist economic policy and social policies that moderated the negative effects of the model. According to Boito Jr., neodevelopmentalism “is the development policy possible within the limits of the neoliberal capitalist model” (6). From the political point of view, neodevelopmentalism rested on a political front of very heterogeneous classes and class fractions that strengthened the “Brazilian internal grande bourgeoisie” and secondarily addressed some of the interests of the popular classes. Economic growth and some income distribution converged to unite this front. This developmentalist front had the participation of the internal grande bourgeoisie: mining, heavy construction, the top of agribusiness, the manufacturing industry, and to some extent the large state-owned and privately owned banks. Unified by the favor and protection of the state through trade surplus policies, financing from the Banco Nacional de Desenvolvimento Econômico et Social (National Bank for Economic and Social Development—BNDES), state purchases and large state-owned enterprises, and a foreign policy that ruled out the Free Trade Area of the Americas and prioritized Mercosur.
In the area of the dominated classes, the front had the (organized) participation of the urban working class and the lower middle class (recovery of employment, the policy of minimum-wage adjustment, and union organization and struggle). The peasantry also participated in the front in an organized way, benefiting from the financing of family agriculture and government purchase of its products. The poor peasantry of the Landless Workers’ Movement was the most fragile segment of the front and received no tangible benefit. The front also included unemployed and underemployed workers, organized in part by popular protest movements (who benefited from the housing program called My House, My Life). Its socially marginalized segment, a politically disorganized and passive electoral social base, was the beneficiary of the social assistance policy. Among the programs were the Bolsa Família (a kind of minimum-income policy aimed at families with incomes below the poverty line) and the Continuous Benefit program (the payment of a monthly minimum wage for people with disabilities and/or over 65 whose family has per capita income less than a quarter of the minimum wage).
Dependency and the Capitalist Development Pattern
The International Division of Labor and Dependency
The fundamental characteristic of the economies of the underdeveloped or developing countries is dependency. These are capitalist economies whose dynamics and trajectories are heavily conditioned and constrained by capital accumulation on the world stage, which imposes on them the need to adapt their productive structures to the demands of the dominant countries. They are, therefore, subordinate economies with very little autonomy that transfer income and wealth to the central countries of the world capitalist system. They are the national economies of countries that, since their emergence in the mid-nineteenth century, have occupied a subordinate position in the international division of labor established under British hegemony and reconfigured several times by capitalism as it developed. The forms of this dependency, always involving the transfer of income and wealth (surplus) to the central countries, have changed throughout history, reflecting the modifications that have occurred in the international division of labor. From the 1970s on, with the distinct but articulated world processes of productive restructuring, globalization of capital, and financialization under neoliberal ideology and policies, a new form of dependency emerged and became consolidated in the 1990s.
This new technological and financial dependency redefined the incorporation of the peripheral countries into the international division of labor, deepening and radicalizing their dependency. It transformed them into a platform for the accumulation of international financial capital through the securitization and financing of public debt and the payment of rents derived from the monopoly of knowledge and information. For those that, like Brazil, had industrialized in the previous period, it brought back the condition of exporters of agricultural commodities (soy and meat), minerals (iron), and manufactured goods of low added value and low technological intensity and made them consumers but not producers of the typical products of the third and fourth technological revolutions. The major consequences of this new dependency were the almost complete loss of autonomy with regard to the development of socioeconomic policy and a long and painful process of deindustrialization—a decline in the proportion of industry, particularly manufacturing, in the GDP and employment with the country’s growing distance from the frontier of technological innovation.
In short, Brazil is a technologically and financially dependent country. On the one hand, with rare exceptions it does not endogenously generate its own technology and is increasingly moving away from the forefront of knowledge. Additionally, along with all other peripheral countries it has no internationally convertible currency, which means that its international role is conditional upon access to the currencies of the central countries (the dollar and the euro).
The Capitalist Development Pattern
A capitalist development pattern is defined by a set of attributes—economic-social and political—that structures, organizes, and delimits the dynamics of capital accumulation and the socioeconomic relations that exist in a given national state (space) during a certain historical period (Filgueiras, 2013). The attribute that both expresses and delimits all the others is the configuration of the bloc in power (Poulantzas, 1974; 1977). It is composed in each case of distinct classes or class fractions one of which assumes the position of leadership and hegemony. This hegemony (Gramsci, 2002; Liguori and Pasquale, 2017) expresses the dominance and leadership of a certain fraction of capital in the accumulation in progress, and it is characterized by its capacity to unify and direct, politically and ideologically, the other fractions of capital in terms of its own interests and theirs. When this hegemony incorporates, to a greater or lesser degree, the interests of the subordinate classes or some of its fractions, it extends beyond the bloc in power to encompass the whole of society. The identification of the different fractions of the bourgeoisie and of capital and of the fraction that assumes the leadership of the process of accumulation and hegemony within the bloc in power is fundamental for characterizing this bloc and describing the dominant dynamics and interests of the capitalist development pattern in force. These interests are expressed, above all, in the economic and political performance of the state and in macroeconomic, social, and other policies.
The other main defining attributes of a development pattern, which are closely associated with the bloc in power, are the nature and type of regulation of the capital-labor relationship, the nature of intercapitalist relations, the state’s relationship to the process of accumulation, the process of incorporation of technical progress (the endogenous capacity to generate innovations and whether there is an industrial and technological policy), the method of financing accumulation (public or private and/or external), the structure of ownership and distribution of income and wealth and the content of social policies, the country’s international role, and the types of organization and political representation of the distinct classes and class fractions.
In Brazil, dependency has been associated throughout its history with three distinct patterns of capitalist development that have tracked the reconfigurations of the international division of labor: the capitalist-exporter, the import-substitution, and the peripheral-liberal.
In capitalist-exporter development (1850–1930), the hegemonic fraction of the bourgeoisie in the bloc in power was big coffee capital, combining the functions of producer, trader, financier, and exporter. In the interior, regional oligarchies made up of big landowners were established. Strictly speaking, from the point of view of the capital-labor relationship, two distinct moments can be identified during the period of predominance of this pattern, one based on slave labor and one on free wage labor. This change in the labor relationship had an important impact on the development of the productive forces and the expansion of capital accumulation, but it did not change the commercial-financial nature of the dependency characteristic of the period or modify the reflexive dynamics of the economy. It was basically driven by the world market because of the decisive importance of its exports of coffee to the economy as a whole.
In the pattern of import-substitution development (1930–1990), the bloc in power was constituted until the mid-1950s by big industrial capital (national and state) and agrarian oligarchies under the hegemony of the industrial bourgeoisie. From then on, with foreign direct investment and therefore the internalization of its interests, multinational industrial capital was incorporated into the bloc in power, occupying a hegemonic position along with the portion of the big national capital associated with it and state capital. Thus, the national-developmentalism of the early stages of industrialization became associated-dependent developmentalism, with the central economic decisions being externalized, and a cosmopolitan bourgeois fraction and an upper middle class identified with it emerged. In this pattern, with the implementation of the durable consumer goods and capital goods segments, industrialization began and the cycle of capital and accumulation was largely internalized, with the resulting expansion of the internal market. This market became more important than the external market for the country’s production. The interests of the cosmopolitan bourgeoisie and its mode of reproduction as a social class have long been strongly associated and interwoven with foreign capital, financial capital, and imperialism, and its political-ideological hegemony has been expressed unequivocally in the Congress, the judicial branch, and the mass media. 1
Finally, the current pattern of capitalist development in Brazil (1990–2019), here called the peripheral-liberal, established in the 1990s under the Collor de Mello government, configured what was already a reality at the global level, a new hegemony. This one was led by financial capital, which subordinated productive logic to its own volatile and short-term logic. This pattern deepened during the governments of Cardoso and was consolidated during the governments of Lula da Silva and Dilma Rousseff.
The Peripheral-Liberal Pattern of Capitalist Development
The fundamental structural characteristics of the peripheral-liberal pattern of capitalist development can be summarized as follows (Filgueiras, 2013):
Capital/labor asymmetry favored the former because of the restructuring of production and trade liberalization, which led to an increase in structural unemployment, informal work, outsourcing, and lack of job security. As a result, the capacity for union organizing, mobilization, and negotiation was reduced (although it has recovered since the end of the first Lula government, when the economy resumed growth and formal employment increased).
As a result of the commercial-financial opening and privatizations, intercapital relations were redefined, changing the positions and the relative importance of the various fractions of capital in the process of accumulation and macroeconomic dynamics. Financial capital (national and international) came to occupy a dominant position, displacing industrial capital, state capital lost relevance in favor of foreign capital, and large national economic groups producing/exporting commodities (Brasil Foods, JBS, Gerdau, Votorantim) and agribusiness were strengthened.
The country’s position in the new international division of labor changed for the worse, increasing its structural vulnerability. On the one hand, the export agenda of the country once again included primary products (products with low added value and limited technological intensity, whose surplus trade balance compensated for the deficits observed in the medium-high- and high-technology segments) and deepened the deindustrialization begun in the 1980s. On the other hand, its financial dependency dramatically increased, weakening the state and greatly reducing its ability to develop macroeconomic policy. All this was due to the commercial-financial opening that also fueled deindustrialization and an increase in public debt (currently R$5.4 trillion, almost 80 percent of the GDP and, as in other peripheral countries, an accumulation platform for international financial capital).
The role of the state in accumulation and macroeconomic dynamics changed with privatization and financial opening. Despite its momentous rescue by the governments of Lula da Silva and Dilma Rousseff, the state became financially fragile and lost its ability to regulate the economy and operationalize macroeconomic and production support policies.
Finally, because of all these changes and at the same time reinforcing them, a new power bloc was established under the hegemony, at first, of financial capital (national and foreign) and the cosmopolitan bourgeoisie associated directly or indirectly with foreign capital, which imposed fundamental state monetary, fiscal, exchange-rate, industrial, and foreign trade policies. Subsequently, as a condition of the survival of peripheral-liberal development itself, the importance of agribusiness and commodity-producing industry grew, along with the role of the internal bourgeoisie.
In sum, the pattern was liberal because it was based on the commercial and financial opening, privatization, and deregulation of the economy under the clear hegemony of financial capital, and it was peripheral because neoliberalism assumed specific characteristics in dependent capitalist countries, becoming even more regressive than it was in the central ones.
From the point of view of macroeconomic dynamics, the fundamental characteristic of this capitalist development pattern, which structurally deepened the country’s technological and financial dependency, was expressed in its extreme instability and great structural vulnerability, closely following the cyclical changes in the international economy (the increase in liquidity since the early 1990s, China’s entry into the World Trade Organization at the beginning of the following decade, the global crisis of capitalism that occurred in 2007–2008, and the slowdown in postcrisis global growth). This pattern of development has characterized all Brazilian governments since 1990.
In its constitution and development the peripheral-liberal pattern has gone through five phases since the beginning of the 1990s:
A rather turbulent rupture with the import-substitution pattern and the implementation of the first concrete actions of a neoliberal nature (commercial opening and privatization). In this phase there was resistance from many industrial sectors (capital goods and nondurable consumer goods) and trade liberalization.
Expansion and consolidation of the new socioeconomic order with the implementation of the Real Plan and deepening of neoliberal reforms (commercial and financial opening, privatizations, and a first reform of social security) in which the hegemony of the interests of financial capital was expanded and consolidated within the bloc in power (the first Cardoso government) with the occupation of the ministries related to the economy (Finance, Planning) and the Central Bank.
The end of the exchange-rate anchor and the adoption of the macroeconomic tripod (in January 1999), in which commodity-producing capital (especially agribusiness) was strengthened, expanding in importance in the power bloc (Ministries of Agriculture, Industry, and Foreign Trade) because it was vital for reducing the instability of the model (the second Cardoso government and the first government of Lula da Silva).
Increased presence of the internal grande bourgeoisie 2 within the bloc in power in articulation with the state. The latter started to play an active and more direct role in the economic process, especially in the structuring of the oil production chain, the internationalization of large national economic groups, the financing of the country’s infrastructure through increased public investment, and the arbitration of the interests of the various fractions of capital (the second government of Lula da Silva and the government of Dilma Rousseff).
Reestablishment of the hegemony of financial capital and the cosmopolitan bourgeoisie (Ministries of Finance, Industry, and Mines and Energy, Central Bank) with a new wave of neoliberal reforms (privatizations, disruption of the oil-production chain, change in the Pre-Salt exploitation regime, unrestricted outsourcing, and labor and pension reforms) and the return of the macroeconomic tripod in its rigid version (the governments of Michel Temer and Jair Bolsonaro),
In the course of these five phases, the pattern underwent three inflections that, in addition to partially reconfiguring the bloc in power, led to changes in its dynamics through the adoption of different macroeconomic policy regimes that were directly related to changes in the international economic environment.
The Peripheral-Liberal Pattern and its Macroeconomic Policy Regimes
The policy regimes in question, whose terms depended decisively on the international situation and that reflected different priorities and advantages with regard to the different fractions of capital, always imply some accommodation by the bloc in power. Therefore, they differentiate the governments of Cardoso and Temer, on the one hand, from those of Lula da Silva and Dilma Rousseff, on the other. Thus the hegemony of financial capital in Brazil was undeniable until the beginning of the second Cardoso government (in 1999), when the Real Plan economic policy centered on the so-called exchange-rate anchor and, combined with passive monetary and fiscal policies, produced the overvaluation of the real and a devastating currency crisis that forced a change in macroeconomic policy. The power bloc undertook an adaptation of the correlation of internal forces with the strengthening of its export capital fractions (mineral extractive industry and agribusiness), a crucial condition for reducing the country’s external conjunctural vulnerability. Alongside the devaluation of the exchange rate, monetary (inflation targeting) and fiscal (obtaining primary fiscal surpluses) policies established the so-called macroeconomic tripod.
Later, during the transition from the first to the second Lula da Silva government, the bloc in power accomplished a second accommodation. Capital fractions such as large contractors and large retail chains increased in importance in the wake of the resumption of state investment, with the BNDES playing a fundamental role in the centralization and internationalization of large national economic groups. In addition, a monetary policy was adopted to stimulate consumption. There were reductions of interest rates and credit expansions, along with a new wave of exchange-rate appreciation and real increases in the minimum wage. From a fiscal point of view, primary fiscal surpluses were reduced and, after the 2008 crisis, a policy of tax relief was implemented, with problematic consequences for public accounts that were made explicit in the second Dilma government. Her response, early on, was to adopt a “fiscal adjustment” policy that pushed the economy into a brutal recession.
Finally, starting with the Temer government, financial capital and the cosmopolitan bourgeoisie recovered their hegemony within the bloc in power (Filgueiras, 2017). The interest rate continued to rise rapidly and the BNDES withdrew its support for the large national economic groups and the development of the oil production chain. In addition, the failure of the “fiscal adjustment” (with cuts in primary public spending) further deepened the recession, and there was a new devaluation of the exchange rate.
Throughout this period, the hegemony of financial capital was never questioned (despite its being forced to share power with other fractions of capital), and this was expressed during the second Lula da Silva government in the relaxation of the macroeconomic policy tripod. This flexibilization produced a reduction of the interest rate and the primary fiscal surplus and interventions in the foreign exchange-rate market for the accumulation of reserves. The international economic boom of the 2000s, interrupted only by the global crisis that began in 2008, allowed the flexibility of the macroeconomic tripod to be reduced because of the reduction of the country’s economic vulnerability. Along with other policies adopted since the end of the first Lula government—the Bolsa Família, the real increase of the minimum wage, and a popular housing program—this led to an increase of the country’s growth rates, the reduction of unemployment rates, the reduction of absolute poverty, and a small decrease in the concentration of income.
The improvement of these and other indicators was accompanied by an inflection of the bloc in power in which financial capital underwent a shift in its hegemony with the increasing influence in state management of other fractions of capital: agribusiness, commodity-producing and -exporting capital, large contractors, and large groups in retail trade. In short, the so-called internal bourgeoisie became a priority target of state policies, especially through the BNDES, the Banco do Brasil, the Caixa Econômica Federal, and Petrobras.
This particular moment of the peripheral-liberal pattern, brought about by a favorable international conjuncture and characterized by a macroeconomic policy regime that flexibilized the tripod and rearranged the different fractions of capital within the bloc in power, allowing them to analyze certain popular demands. This circumstance, which brought to the forefront the establishment of an informal alliance between the internal bourgeoisie and segments of the working class that propitiated the passive incorporation of the latter via the market, was interpreted, in the heat of the political struggle, as a new development pattern called new developmentalism (development with income distribution and social inclusion). It was believed that this had at least partially superseded the peripheral-liberal pattern characteristic of the governments of Collor de Mello and Cardoso. However, the global crisis of capitalism that began in 2008 and the impeachment of Dilma Rousseff and the resumption of neoliberal counterreforms categorically belied this illusion. The crisis initially hindered and ultimately made it impossible to continue the flexibilization of the macroeconomic tripod and reconcile the divergent interests of different fractions of capital and diverse sectors of the population.
With the persistence of the international crisis, the countercyclical policy adopted by Lula’s second government lost its effectiveness during the Dilma Rousseff government. In particular, the policy of tax exemptions failed to induce private investment and, what is worse, disrupted public finances. With this, financial capital once again had a more active role and demanded a return to the strict application of the macroeconomic tripod as a permanent state economic policy. The ensuing dispute between the cosmopolitan bourgeoisie and the internal grande bourgeoisie for the leadership of the state ended in the defeat of the latter impelled by the impeachment of the president and the return, already in the Temer government, of the neoliberal agenda in its most radical form.
Final Considerations
The fundamental argument presented here has been that, despite the differences between the macroeconomic policy regimes adopted since the beginning of the 1990s and some inflections in the ruling bloc, the essential characteristics of the Brazilian capitalist development pattern (the peripheral-liberal) did not change. This pattern is a concrete form of expression of the neoliberal doctrine and program in Brazil, and therefore it is a particular historical variety of neoliberalism just as neoliberalism is a product of the economic-social formation that incorporates it.
From the structural point of view, the peripheral-liberal pattern has updated some of the fundamental characteristics of the Brazilian socioeconomic formation: technological and financial dependency, with significant income transfer abroad; passive and subaltern participation in the international division of labor with enormous concentration of income; downgrading of the status of worker; promiscuity and illegal favoritism in public-private relations; and, as a product of the loss of hegemony of the bourgeoisie, centralization and displacement of real political power from formal political institutions and, more recently, the “judicialization” of politics, deterioration of formal democracy, and the gradual construction of a state of exception.
Throughout the trajectory of the peripheral-liberal pattern, there has been consensus among the various fractions of big capital, unified by financial logic despite the different positions they occupied in the process of capitalist accumulation, on the following points:
The commercial and financial opening of the economy and its consequent internationalization (implemented starting with the Collor government and initially contested by industrial capital) is a prerequisite for the country’s participation in the new order dominated by financial capital (although there are still different views as to the pace and intensity at which this should occur).
The dominance of financial capital and the financialization of the economy is essentially unquestionable—hence the limitation that it imposes on the development and implementation of macroeconomic policy. The decline in interest rates, for example, during the first Dilma government was strongly opposed by financial capital and was quickly reversed even before the start of the second government. Another example is the repeated attempts at pension reform, the latest version of which (that of the Bolsonaro government) has as its fundamental axis the creation of a system of capitalization, the usual aspiration of financial capital. Therefore, adaptation to the new capitalist order under the hegemony of financial accumulation is considered the only approach for individual capitals.
Privatization, with the consequent reduction of the state in the productive sphere, must continue both through the privatization of new investments in the country’s infrastructure area (public-private partnerships) and through the sale of the remaining public enterprises. This is a long-standing consensus, actually forged under the Sarney government even before the neoliberal wave of the 1990s. Although varying in form, pace, scope, and sectors affected, there was no interruption of it in the PT governments, although the process was accelerated in the Temer government and, more recently, the Bolsonaro (with Petrobras, the Pre-Salt project, and Eletrobras).
The deregulation of the labor market and the flexibilization of labor law must be deepened in line with the “primacy of the negotiated over the legislated”—hence the unrestricted support expressed by all fractions of capital and their associations for the labor reform passed by the Temer government as an essential condition for leveraging the competitiveness of the Brazilian economy.
The neoliberal reforms once again on the agenda and the reduction of social policy to a minimum are defended as preconditions for the reduction of the “Brazil cost” and the development of Brazilian capitalism. The dismantling of these policies and the radicality of the pension reform proposed by the Temer and Bolsonaro governments are not criticized or resisted by any fraction of big capital. Thus, given the absolute inability of the Brazilian bourgeoisie to express and incorporate, economically and politically, the differentiated interests of the whole of Brazilian society, especially of the working classes, there is no possibility of a capitalist national project to be directed by any fraction of it. In particular, its dominant fraction, the dependent cosmopolitan bourgeoisie, cannot achieve and cannot cope with a better distribution of income. The need for the overexploitation of labor is historically entrenched as part of its character and of the subjectivity of its members (Souza, 2017; 2015).
Footnotes
Notes
Luiz Filgueiras is a full professor of economics at the Federal University of Bahia and the author of História do Plano Real (2000) and, with Reinaldo Gonçalves, A economia política do Governo Lula (2007). Patrícia Fierro is an American Translators Association–certified translator living in Quito, Ecuador.