Brazil Brazil Neoliberalism Versus Democracy Alfredo Saad-Filho and Lecio Morais First published 2018 by Pluto Press 345 Archway Road, London N6 5AA www.plutobooks.com Copyright © Alfredo Saad-Filho and Lecio Morais 2018 The right of Alfredo Saad-Filho and Lecio Morais to be identified as the authors of this work has been asserted by them in accordance with the Copyright, Designs and Patents Act 1988. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library ISBN 978 0 7453 3675 6 Hardback ISBN 978 0 7453 3670 1 Paperback ISBN 978 1 7837 1785 9 PDF eBook ISBN 978 1 7837 1787 3 Kindle eBook ISBN 978 1 7837 1786 6 EPUB eBook This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. Logging, pulping and manufacturing processes are expected to conform to the environmental standards of the country of origin. Typeset by Stanford DTP Services, Northampton, England Simultaneously printed in the United Kingdom and United States of America Contents Tables and Figures viii Acknowledgements ix Acronyms x Presidents of Brazil, 1930–2017 xiii Preface xiv Introduction 1 Overview 1 Method and Analytical Framework 4 Systems of Accumulation in Brazil 6 Structure of the Book 8 1 A Troubled Path to Development 14 Overview 14 ISI in Brazil 16 Political Structures of ISI 18 A Developmental Dictatorship 21 Creeping Hyperinflation 28 Distribution and Stabilisation 33 Summary and Conclusion 36 2 Building a Fragile Democracy 38 Overview 38 The Transition to Democracy 39 Late Social Democracy, Late Welfare State 44 PT Rising 47 The Workers’ Party Grows – and Changes 49 Summary and Conclusion 53 3. Inflation Stabilisation and the Transition to Neoliberalism 55 Overview 55 Neoliberalism in Brazil 56 The Real Plan 60 vi . brazil The Real Plan Unravels 65 Mature Neoliberalism 67 Summary and Conclusion 68 4. Impacts of Neoliberalism 70 Overview 70 The New Industrial Structure 71 A New Pattern of Employment 75 Limitations of Neoliberalism 77 Summary and Conclusion 78 5. Neoliberalism under the Workers’ Party 80 Overview 80 Running to Win: The Alliance of Losers 81 Embracing Neoliberalism 83 Enforcing Neoliberalism 85 Lula Hits the Buffers 89 Summary and Conclusion 91 6. Developmental Neoliberalism and the PT 92 Overview 92 The Hour of Neodevelopmentalism 92 The Alliance of Winners 94 Developmental Neoliberalism in Practice 96 Distributional Gains 99 The Bolsa Família Programme 103 Summary and Conclusion 105 7. From Glory to Disaster 106 Overview 106 Developmental Neoliberalism under Dilma Rousseff 106 Monetary Policy 108 Transport, Energy, Tax 111 The External Sector 114 The Wheels Fall Off 115 Developmental Neoliberalism: A Reckoning 120 Summary and Conclusion 124 contents . vii 8. Class and Class Politics in Brazilian Neoliberalism 126 Overview 126 The Bourgeoisie 127 The Formal Working Class 128 The Informal Working Class 131 The Middle Class 133 Breakdown 136 The Lumpenisation of Politics 139 Summary and Conclusion 143 9. From the Confluence of Dissatisfactions to the Restoration of Neoliberalism 144 Overview 144 The Workers’ Party Courts Political Corruption 145 Corruption and the Middle Class 147 The Alliance of Privilege 149 The Lava Jato Operation 151 Dénouement: Impeachment and the Debacle of the PT 155 Summary and Conclusion 160 Conclusion: Crisis of Neoliberalism, Crisis of Democracy 162 Limitations of Neoliberalism, Limitations of Democracy 162 Contradictions of the Workers’ Party 164 The Journey Thus Far 169 Notes 173 References 200 Index 231 Tables and Figures Tables 1.1 Growth rates of production and exports, 1964–74 24 1.2 Share of labour income in national income 34 4.1 Share of imports in manufacturing value added, 1993 and 1996 73 6.1 Distribution of the workforce, 1940, 1980 and 2000 100 6.2 Net new employment creation 100 6.3 Distribution of wages 100 7.1 Balance of payments, 1999–2016 116 Figures 1.1 Inflation, annualised monthly rate, 1973–2016 29 1.2 Inflation, annual rate and trend, January 1973 – March 1986 29 1.3 Gini coefficient of concentration of income, 1976–2014 34 3.1 Nominal exchange rate R$/US$ and real effective exchange rate 62 5.1 Terms of trade, 1967–2016 (annual average) 88 7.1 Real GDP growth rate, 1962–2015 (per cent per annum) 118 Acknowledgements We are grateful to many friends, colleagues and students who have generously contributed to our understanding of Brazil. Special thanks are due to Alice Kinghorn-Gray, Armando Boito, Ben Fine, Bruno Höfig, Charlotte Hübner, Juan Grigera, Leda Paulani, Lucas Bertholdi-Saad, Maria de Lourdes Rollemberg Mollo, Neil Coleman, Pedro Loureiro, Sam Gindin and Sila Demirors for their helpful comments and suggestions. Lena Lavinas read the entire manuscript and offered detailed comments, for which we are immensely grateful. We are indebted to Anne Beech for her continuing support for the publication of this book.