Two Transitions in Brazil: Dilemmas of a Neoliberal Democracy

Published on The Bullet, Socialist Project’s E-Bulletin No. 927, by Alfredo Saad Filho, January 13, 2014.

This article reviews the background and the implications of two transitions in Brazil: the political transition from a military regime (1964-85) to democracy (1985-present), and the economic transition from import-substituting industrialization (ISI, 1930-80) to neoliberalism (1990-present). It subsequently examines how neoliberal economic policies were implemented in a democracy, under the centre-right administrations led by Fernando Henrique Cardoso (1995-98, 1998-2002), and the centre-left administrations led by Luís Inácio Lula da Silva (Lula, 2003-06, 2007-10) and Dilma Rousseff (2011-present).

The article concludes with a reflection about the limitations of these policies, and of neoliberal democracy more generally.

National Developmentalism and its Disintegration: … //

… The Political and Economic Transitions: … //

… The Workers’ Party Administrations: … //

… Conclusion:

This article has reviewed the economic and political transitions in Brazil, and traced their macroeconomic implications in the ‘age of neoliberalism.’ The two transitions have largely dismantled the production systems established during ISI and the corresponding social structures and patterns of employment. The Brazilian economy has become structurally more dependent on foreign trade, investment and technology, and the country’s productive base has shifted away from the long-term requirements of national accumulation, and toward the short-term imperatives of global accumulation. These outcomes were tempered but not fully reversed by the federal administrations led by the Workers’ Party.

At the political level, democracy has become established as the political form of neoliberalism in Brazil. The symbiosis between neoliberalism and political democracy operates at three levels. First, the economic transition to neoliberalism was achieved through, and validated by, democratic means. Second, neoliberal policies have supported the democratic regime because they fragment the working-class through higher unemployment, faster labour turnover, the repression of trade union activity by economic (rather than crudely political) means, and the rise of economic insecurity. Third, democracy is the best political regime for neoliberalism because it guarantees the stability and predictability of the ‘rules of the game,’ making it more easily managed by the dominant (moneyed) elite.

Despite these structural limitations, the Lula and Dilma administrations have achieved significant gains for the workers and the poor. Such progress has been important, but it remains insufficient to satisfy the distributive and democratic aims of the Brazilian workers and the left. Brazil remains one of the most unequal countries in the world and, clearly, more could have been achieved since 2003. However, the severe obstacles faced by Lula’s and Dilma’s administrations suggest that a more ambitious agenda would have been feasible only through the mobilization of the working-class to confront the traditional elites and the aggressive deployment of public resources to fund faster welfare gains and deliver strategic investments. These destabilizing options were never considered by these administrations, which have chosen, instead, a gradualist strategy supported by minimal legislative and regulatory changes.

(full long text and links for further reading).

(Alfredo Saad Filho teaches at the Department of Development Studies, SOAS, University of London).


Videos: Pension Funds, Unions, and Working Class Strategies, session 5: What role for unions and pension funds? on Socialist, Dec 6, 2013: The Rise of Finance, (1/4), 26.58 min;
also on YouTube, uploaded by LeftStreamed: (1/4), 26.58 min; (2/4), 15.59 min; (3/4), 33.37 min; (4/4), 28.08 min, Discussion with all the participants.

The rise of Islamic finance: Knowledge Works, 40.23 min, uploaded by UniSouthAustralia, March 17, 2013: Since its formation in the mid-1970s Islamic finance has grown rapidly, and appears to have come of age since the global financial crisis by nearly doubling in size from just over US $600 billion in 2007 to approximately $1.2 trillion in 2010 …;

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