Brazil: Neoliberalism versus Democracy
Alfredo Saad Filho & Lecio Morais; 2018 by Pluto Press
Neoliberalism in Brazil
Neoliberalism is more than an ideology or a clearly defined set of policies, for example, privatisation, the liberalisation of trade and finance, or curbs to the welfare state. In what follows, neoliberalism is conceptualised as the dominant system of accumulation [SoA] today […]. This SoA has four distinguishing features: the financialisation of production, ideology and the state; the international integration of production (‘globalisation’); a prominent role for foreign capital for globally integrated production and the stabilisation of the balance of payments, and a macroeconomic policy mix based on contractionary fiscal and monetary policies and inflation targeting, with the manipulation of interest rates becoming the main policy tool. This combination of features has raised the rate of exploitation above that achieved under the previous SoAs, for example, Keynesianism in the advanced Western economies, different forms of developmentalism in the Global South, or Soviet-style socialism in Eastern Europe.
In most countries, the first (transition or shock) phase of neoliberalism normally forefronts the narrow interests of transnationalised private capital and, especially, finance, without regard to the consequences. This phase involves forceful state intervention to impose the new institutional framework and an accumulation strategy promoting the transnational integration of domestic capital at the microeconomic (firm) level, containing labour and disorganising the left. This is normally followed by a second (mature) phase, which aims to consolidate the expanded role of finance in economic and social reproduction, manage the new mode of international integration, stabilise the social relations imposed in the previous phase, nurture a neoliberal subjectivity, and introduce neoliberal social policies to manage mass economic deprivation.
These phases and the ensuing accumulation strategies are, inevitably, framed more logically than chronologically. They can be sequenced, delayed, accelerated, or even overlain in specific ways depending on country, region and economic and political circumstances. However, both phases require extensive (re-)regulation of economic and social reproduction, with political implications, despite the rhetorical insistence of all manner of neoliberals on the need to ‘roll back’ the state, interpreted, in the first phase of neoliberalism, as ‘hollowing out’, followed by the ‘rolling out’ of new forms of intervention, typically in the second phase.
Across its phases, the neoliberal reforms transform the material foundations of the economy, society and social reproduction, with implications for class relations and the distributional balance between them. This includes policies to dismantle the previous SoA (which is invariably defined as being ‘inefficient’), the reduction of the scope for state-led coordination of economic activity, the limitation of collective bargaining and wage growth, and the creation of undesirable patterns of employment […]. These changes feed the concentration of income and wealth, preclude the use of industrial policy tools to achieve socially determined priorities, and make the balance of payments structurally dependent on international flows of capital. Neoliberalism also influences social relations through the financialisation of social reproduction and the privatisation of the commons, that is, areas where property rights were either absent or vested upon the state.
In Brazil, the political transition to democracy was followed by the economic transition from an increasingly dysfunctional ISI [Import Substitution Industrialization] into a globalised and financialised neoliberalism. The Brazilian economic transition came relatively late and advanced slowly when compared with other countries in Latin America, Africa and Eastern Europe. This was due, in part, to the strong political left that emerged during the democratic transition, which drastically limited the scope for the neoliberal reforms. Brazil’s unique path to neoliberalism was also shaped by the imperative of inflation stabilisation.
During the 1980s, most analysts came to accept that ISI faced four insuperable challenges that, presumably, explained Brazil’s disappointing economic performance, inflation and external vulnerability. First, the inefficiency of the financial sector, that was unwilling or unable to channel savings to long-term investment projects. Second, insufficient access to foreign savings, investment, technology and markets. Third, continuing industrial backwardness, because of the weakness of the national system of innovation, excessive diversification, lack of scale in manufacturing production, and lack of foreign competition due to protectionism. Fourth, the fiscal crisis and the tendency towards hyperinflation, that were caused by ‘economic populism’, distributive conflicts and widespread indexation of wages and prices.
Supposedly, these obstacles could be overcome only by an accumulation strategy restoring rapid capital accumulation and ‘modernising’ the economy and society. This would require ‘rolling back’ the state through expenditure cuts, extensive privatisations, liberalisation of trade, finance and capital flows, and reforms of the fiscal, tax and social security systems. The fiscal reforms should reduce inflation; financial liberalisation would increase domestic savings and investment, and import liberalisation would cheapen inputs, increase the availability of quality consumer goods and reduce the monopoly power of inefficient producers and greedy trade unions. Finally, the liberalisation of capital movements would attract direct and portfolio inflows to fund economic restructuring. These policy reforms would raise productivity and improve the balance of payments. Economic liberalisation and the integration of Brazilian capital into transnational conglomerates would drive a virtuous circle of growth turning Brazil into a developed economy. This strategic shift was supported by strong pressures from the US government, the international financial institutions, the media and foreign and Brazilian capital, and validated by claims of success of comparable countries, especially Argentina, Mexico and South Korea.
According to the text, the reforms would supposedly:
Item 1 - Increase domestic savings;
