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04.12.23
Brazil: The Partido dos Trabalhadores in government Csaba Deák
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… 1 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
The
distinction is crucial. The PT may hold a number of key positions in
the
government, but
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[1] means deciding between a sovereign or subservient foreign policy… To conclude: 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.
Folha 4.2.3:A3
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.
2 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. The
basis of Brazilian elite society is the reproduction of a peculiar
modality
of accumulation, or development, originating in its colonial status
until This
peculiar form of economy – and the equally peculiar elite
society
it sustains– was able to reproduce itself for a century and a half,
while
(in the 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. The
net result of this period may be illustrated in a few facts and
figures.
Under the cover of runaway neo-liberalism,
Figure 2 Because
home production will soon have to be expanded (as always, in the face
of
the balance of payments constraint), entreguismo –the handing
out
of control over key branches to foreign control, whereby no internal
forces
demanding unhindered development will be borne– was duly intensified.
As
usual, Department I (means of production) was the first to go.
This
is illustrated in Figure 1:
the share of foreign capital in Brazilian industry increased overall
(left),
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. There
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. A
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
embryonic formation
of the G3,
comprising 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… Oddly
enough, it is in the field of ‘social justice’ that some of the worst
doubts
regarding the direction of government policy arise. Wages kept on
falling
further after all the years of downward movement and the minimum wage,
which was a shameful US$
70 a
month,
remained
stagnant
(to
be exact, it was increased by 1.2%).
There are strange, as yet not final, moves in social security –
including
cutbacks on (civil servants’ and waged workers’) retirement benefits as
well as in the health service. People are thus forced towards private
funds,
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
‘unsustainable’,
when in fact the funds accumulated in the last thirty years have been
stolen
by successive governments which took money from the pension fund (Fundo
the
Garantia
por
Tempo de Serviço) and spent it.Both
excuses
are
hollow, but the effect on social benefits to those with
least
provision are likely (there is no final design yet) to be crippling,
not
to say disastrous. Additionally, as regards public administration, such
measures are bound to further weaken an already precarious state
apparatus.
This is run by poorly paid civil servants who had at least the
advantages
of tenure and full pension on retirement. The overall project for the
pension
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[$85bn
) the ratio of the debt service to exports would fall from the current
60% to about 40% – not be the best of the possible worlds, but
considerably
better than the current situation (Delfim Netto, Gazeta Mercantil
04.2.4) Whatever
the merits of the various individual measures discussed so far, the
most
important question is whether, taken together, they are moving the
Brazilian
economy and society towards a process of unhindered or full
development
of its productive forces – with all the social transformations this
entails.
And there has recent been an explicit statement of intention to move in
this direction, in the government’s Development plan (a sort of
White Paper). The
Development Plan accords priority to four sectors: Semiconductors. The
plan recalls the very reasonable position of the country in this field
the early eighties, subsequently deliberately abandoned. Rec
Software. It argues that the potential of skilled low?wage cadres shou Pharmaceuticals. Here it is almost a
start almost from scratch, notwithstanding
some valuable moves during the previous government about the
introduction
of ‘generic’ medicines. Currently, there is a huge trade deficit in
this
sector (imports up from US$ 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 The
strengthening of foreign exchange reserves –which is certainly a
condition
for loosening the cha 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
Also,
there are a few voices stressing the importance of autochthonous, or
indigenous, 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
Before
concluding these remarks on economic policy, it is worth remembering
that
only
one part of the new developments is a result of Brazilian
economic
policy, others being a result of the contemporary tendencies of world
capitalism.
A case in point
There
is no telling what might be the immediate or long term results of the
tendencies
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.
But,
after the two lost decades the new impetus brought about by Lula’s
election
may peter out if there are no signs soon of economic recovery and
higher
living standards for large segments of the population. Already, after
one
year of expectations and little fulfilment, there are signs in this
direction,
as when a prestigious newspaper economic commentator, Paulo Nogueira
Batista
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.
Expectations
of change, and the speed of change, generated by the election must
certainly
be lowered, but the responsibility therefore can not be laid at the
door
of any single individual or political party – that is up to Brazilian
society
as a whole. For one thing, if there is no noticeable progress in the
second
year of government, the question mark in ‘Broken soul?’ above may
disappear,
to be replaced by a full stop. Even then, however, the antagonisms
wrought
in Brazilian society will not stop doing their silent work.
*** References Deák,
Csaba (1988) “The crisis of hindered
accumulation in Morton,
A L (1938) A
people’s history of [1] Mercosul:
a Common Market including
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