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International Socialism, Summer 2016

Eduardo Albuquerque

Analysis

A historic turning point in Brazil

From International Socialism 2 : 151, Summer 2016.
Copyright © International Socialism.
Copiedwith thanks from the International Socialism Website.
Marked up by Einde O’Callaghan for ETOL.

Dilma Rousseff’s suspension is a historic turning point in Brazil – the end of an era of Workers’ Party (PT) national governments that began in 2002 with the election of Lula. [1] The PT won four presidential elections, two with Lula (2002 and 2006) and two with Dilma (2010 and 2014). This political crisis and historic turning point is intertwined with an equally deep economic crisis – in 2015 GDP shrank by 3.8 percent in Brazil and, taking into account IMF projections for 2016, GDP might shrink by a further 3.5 percent. These data suggest that now there is an economic crisis similar to the crisis of 1929–31, when Brazilian GDP shrank by 8.1 percent. [2]

The economic crisis in Brazil is an expression of a new stage of the global crisis that began in 2007–8. The epicentre of this crisis has moved from the United States to Europe and now reached the periphery of capitalism with the slowdown in China. This has grave consequences for those countries with huge exports of commodities whose demand is defined by China such as Russia, South Africa, Nigeria and Brazil. [3]

A revitalised political right, with an extreme right growing within the impeachment movement, highlights new problems for a young and incomplete democracy. The impeachment process is fed by a virtual monopoly of the means of (dis)information, by strange and opaque relations between an active and partisan judiciary and a monopolistic traditional press. [4] This impeachment does not have a judicial basis and has been denounced by the PT government and popular movements as a “coup” – a “parliamentary coup”. [5]

The government that succeeds Dilma, in principle expected to last until the 2018 elections, is led by Michael Temer, her vice-president, allied to the PT and elected on the same ticket both in 2010 and 2014. Temer – who has actively and successfully conspired to win votes for impeachment – is from the PMDB, currently the largest party in the Brazilian Congress, a party on the centre-right of the political spectrum. His government, born out of negotiations for pro-impeachment votes, is a coalition with old allies from Lula’s and Dilma’s governments (PMDB, PP, PRB, PR, PTB), with participants from PSBD and DEM – whose presidential coalition lost the last four elections (from 2002 to 2014) – and other parties from the right. [6]

Temer’s government is unelected, with no programmatic commitment to the voters, but which indicates that it will carry out the traditional policies of austerity, privatisations and restrictions on workers’ rights and popular movements. Privatisation, pension reforms, austerity policies to solve the fiscal crisis and a re-evaluation of existing social policies are all mentioned cryptically in documents released by PMDB, such as “Uma ponte para o futuro” and “A travessia social”. [7] However, these documents were forgotten in Temer’s first speech as interim president, when he mentioned his intention to preserve social programmes, but to increase their efficiency. Temer’s government might be just another phase of the present crisis.

Political parties in Brazil with elected members of congress

The economic crisis and the political crisis are only the tip of the iceberg – a bigger, multidimensional crisis is now taking place in Brazil. Four dimensions shape this crisis. First, the economic dimension – a deep crisis, related to the lack of structural reforms that would allow the country to follow a path towards development. Second, the exhaustion of the governmental policies of the PT (in its 2002 incarnation) – both economically, since the party’s accommodation to the existing elites has blocked any relevant developmental policy, and politically, since the coalitions with conservative parties in the Congress to keep the government became unsustainable as the recession went on. Third, the social dimension – improvements in social conditions after the end of the military dictatorship and the constrained advances after 2003 changed the country, introducing new actors and new demands, changes not adequately processed by the PT governments. Fourth, the political dimension – the limits of the transition “from above” from the military dictatorship (which came to power in 1964 and ruled until 1985) and the resulting constitution of 1988 resurfaced during this crisis, with risks of regression in the democratic institutions.

Those four interrelated dimensions shape the present crisis and its dynamics. The crisis presents challenges for the left, demanding a broad process of recomposition of social and popular movements with political parties, as well as collective and democratic efforts to prepare a new programme for this new phase.
 

First dimension: a deep economic crisis

Figure 1, following the movements of the two largest economies (the United States and China), demonstrates the specificity of the Brazilian economic crisis. Both countries are important destinations of Brazilian exports: the US was the main destination until 2008 and China took over in 2009.

Figure 1: Exports of goods and services per capita 1980–2014
(in constant 2005 US dollars)
Source: World Bank, World Development Indicators

But it is possible to discern a disconnection between the ups and downs of Brazilian GDP and that of the US and China. The synchronisation of the movements in Brazil with those two leading economies is clear in 2007 and 2011. Between 2005 and 2011 Brazilian GDP growth rates were higher than those of the US but lower than in China. After 2011 it becomes clear that the continuity and intensity of the fall in Brazilian growth rates were very specific. A careful conjecture may be suggested here: if there is, in global capitalism, an important economic and geopolitical shift towards emerging Asia, with China at the centre of those structural changes, might those changes be related to the crisis in Brazil – a country stuck (paralysed) between two competing poles?

After China became the main destination for Brazilian exports, the price per tonne of iron ore reached a peak in December 2010 – US$187.18 – and then began to fall, reaching US$38.8 in December 2015. The price of other commodities important among Brazilian exports also fell, impacting the whole economy. The results of those changes – new destination and new composition of exports with domestic effects – can be seen in figure 2. In 2009 the share of natural resources in Brazilian exports reached more than 30 percent of the total, with later peaks in 2011 and 2014. So there is a structural change in the composition of Brazilian exports. Probably, here lies the problem.

Figure 2: Brazilian exports according to industrial sector, 1997–March 2016
(sectoral share as percentage of total).
Source: MDIC, 2016.

Given changes in the global scenario, Brazil moved towards an export composition dominated by natural resources and low-tech industrial sectors. This is a backward step: while the US and China are increasing their high-tech industries, with the US heading towards a new phase in the information and technology revolution, the Brazilian economy moves towards natural resources. This movement affects the domestic economy. The net revenue from extractive industries was 2.1 percent of all industry (extractive and manufacturing) in 1996 and increased to 6.0 percent in 2013. This correlates with a relative shrinking of manufacturing industries. [8] This movement, towards a less sophisticated position in the international division of labour, means greater vulnerability in the international scenario – an important component of the Brazilian economic crisis.

The general problem here is the incapacity of the Brazilian economy to evolve from a passive insertion in the global economy towards an active insertion in the international division of labour – which is expected from any progressive government. Failure here comes at a high cost: exposure to the ups and downs in the prices of commodities; vulnerability in increasingly volatile international markets; shrinking GDP and recession, with the negative impacts on employment, social conditions and support for the public sector.

Thus, the question is: why have four consecutive PT governments been unable to begin at least a movement in the direction of a more active insertion in the international division of labour?
 

Second dimension: the exhaustion of PT version 2002

An active insertion in the international division of labour is a key step in the direction of development. Development implies structural changes, in the Brazilian case, a combination between policies for more scientific and technological capabilities and social policies to overcome poverty and radically to reduce inequality. Structural change depends on policies that break with long-term regressive institutions and traditional practices, including political practices. Development needs a rupture with the status quo: the reason is very simple: why should leading economic groups welcome new actors in economic and social life? It is in their interests to preserve existing structures and industries. That is why social and technological backwardness go hand in hand in Brazil.

The problem with the PT version 2002 – a party preparing to win a presidential election – is that it was no longer keen to confront the status quo of Brazilian economics and politics. The PT transformed their previous commitments to structural reforms required for development, a political position that shaped post-2002 policies. This meant that they accommodated to the status quo, a rightward political movement towards the centre of the political spectrum. [9] The PT began a process of transforming itself into a party very similar to the average in the Brazilian political landscape, which meant both changes in its political and economic platform and adaptation to the traditional ways of doing politics in Brazil – such as the offering of ministerial positions in exchange for political support in Congress, and to the prevailing ways of electoral financing, including the growing involvement of large firms and their aims. [10]

This way of doing politics in Brazil, what political scientists call “coalition presidentialism”, must be understood in the broader context of the specificities of the Brazilian transition from military dictatorship in 1985–8. In the case of PT governments, in 2003 Lula had to govern under the surveillance of a Congress with 513 members of parliament while the PT had only 91 MPs. Conservative and right wing parties held the majority. In 2014 the situation for Dilma was even worse – 70 MPs in a Congress of 513. This structural composition of the Brazilian Congress helps to explain the successive adaptations of the PT to the status quo and constitutes a real blocking factor for broader progressive politics. The PT took strategic decisions in the late 1990s and early 2000s in the naive belief that this could be managed and a shortcut towards the presidency could be taken, by forming a formal alliance with conservative parties. Now it is high time to return to these strategic discussions with all the empirical evidence of their tragic outcomes.

This process of sequential taming of the original PT had other consequences: the PT’s political creativity was blocked. From 1985 to 2002 governments at municipal and state level took important original initiatives such as “participatory budgets” – which successfully broadened the participation of popular movements in local government decisions. The 2002 strategic option was reflected in the style of government – no new ideas and no new institutional innovations in the federal government.

This new political strategy led to a sequence of governments that included the representatives of conservative political forces in key positions. For instance, the president of the Central Bank (appointed by Lula in 2003 and 2010), Henrique Meirelles, was a former president of the Bank of Boston, and is now the minister of finance in Temer’s government. These political arrangements – the PT’s strategic choice – resulted in a government that, on the one hand, put forward social projects such as Bolsa Família [11] but, on the other hand, left untouched the structure of the financial system and the high interest rate system of financing the public debt. This resulted in the preservation of the financial sector’s huge gains in Brazil. This very singular political arrangement has been analysed critically by Francisco de Oliveira. [12]

Now, it is possible to begin an overall assessment of this phase of Brazilian economic and political history. A preliminary question may be put forward: what were the main initiatives taken between Lula’s first government in 2003 and Dilma’s suspension in May 2016? In a first evaluation, only four political initiatives may be mentioned. Three of these initiatives: Bolsa Família, an increase in the minimum wage and the expansion of higher education, are positive. But this is not many positive initiatives for four different governments in 13 years, and is not enough to put a country like Brazil on a development path. [13] The fourth initiative, World Cup 2014, is more questionable. With its investments, public works with public money, authoritarian dislocations and changes in metropolitan regions it was a wrong decision for a country that needs investment in public health and education.

Given Brazil’s high levels of inequality, small and limited social initiatives have a broad impact. The Bolsa Família social programme received support and global applause – deservingly so. It did contribute to reducing extreme poverty, and to helping improve the economic conditions of the worst off regions in Brazil, specially the North East region. A relatively cheap social programme (costing $8.97 billion in 2015, 0.5 percent of Brazilian GDP), it brought electoral strength to the PT, and strong support from the less well-off in Brazil. This is a novelty since between 1980 and 2002 the electoral basis of PT was the organised social movements in urban and rural regions.

But the resources allocated to the Bolsa Família should be compared to the public expenditure to pay interest on the public debt: 5 percent of Brazilian GDP in 2014, 8.5 percent in 2015. As Perry Anderson puts it, there is also a Bolsa Empresário – public money to support firms and entrepreneurs. [14] According to the newspaper Estado de São Paulo, the total resources involved amount to ten times those devoted to Bolsa Família. [15]

And the Bolsa Família programme, implemented during Lula’s first term (2003–6), was not succeeded by a next step, the formation of a more complete welfare system. This sort of political inertia prevailed in the next three governments. A comparison can be made here with a successful social democratic party: the Swedish Social Democratic Party won elections in 1932 and basically introduced a new step forward in the formation of their welfare state during each successive term, with electoral success until 1982. [16]

Why was the PT unable to preserve the initiative and to introduce new reforms after a successful conclusion of one social project? The limiting factor was the political compromises adopted as a result of the strategy to win the 2002 elections, which became the strategy to preserve the PT’s electoral position. For instance, the parties in the alliance that supported Dilma in the 2014 election included the PP (former PDS, former ARENA, the party of the dictatorship) and PSD (a spin-off party from DEM, former PFL, a spin-off from ARENA), among other conservative parties.

This political entanglement generated an inability to introduce the structural reforms necessary for development. The persistence of an industrial structure basically inherited from previous governments is not accidental. Both Lula and Dilma introduced industrial policies, with lots of good intentions to push Brazilian catch up. [17] Those policies, however, could not escape the curse of their capture by existing firms from existing sectors, and were not able to push the Brazilian economy towards new sectors (either through creating new firms or moving incumbent firms towards new sectors), at least following movements in the global scenario. [18] One example of this capture is the resources given to the auto industry, basically a sector populated by transnational corporations, as an attempt to push for a bigger involvement in research and development. These policies deserve careful academic investigation, but the existing evidence shows resources basically going to existing firms and not pushing new sectors. Such policies do not promote an active insertion into the international division of labour. This explains the economic outcomes that form the first dimension of the crisis.
 

Third dimension: constrained social advances in a persistently unequal country

Brazil is a very unequal country – inequality is an important factor that blocks development. Figure 3 shows that in 1990, just after the end of the transition from the military regime, the Gini index measuring inequality for Brazil was 60.5 – as high as that of apartheid South Africa (59.3 in 1993). The level of income concentration is very high in Brazil, as shown by a comparison with Mexico, a country at a similar level of development (Gini = 48.1 in 2012). It is significantly higher than that of developed countries: the US with 41.1 in 2013, the UK with 32.6 in 2012 and Sweden with 27.3 in 2013. In China economic growth is related to increasing income concentration (32.4 in 1990 and 42.1 in 2010), but it is still lower than the Brazilian level.

Between 1990 and 2002 Brazil’s income concentration felt slightly to 58.6. As figure 3 shows, there was a further improvement after the PT came to office: between 2002 and 2013 the Gini coefficient felt to 52.9. This change was an important source of the PT’s electoral strength.

Figure 3: Income concentration (Gini Index),
selected countries (1990–2013).
Source: World Bank, 2016 (Indicators).

According to the UN Development Programe, the level of human development in Brazil increased from 0.608 in 1990, to 0.683 in 2000, 0.737 in 2010 and 0.755 in 2014. On the one hand, this indicates progress in relation to education, health and income – components of this index. On the other hand, occupying the 75th position in the global human development ranking shows the problems persisting in Brazil. Those problems become more evident when inequality is taken into account: Brazil loses 26.3 percent in its human development ranking, falling to 95th place. [19]

These data summarise a complex social framework since the end of the dictatorship. On the one hand, progress – social indicators improve – on the other hand, inertia – inequality is still a scandal. The progress in social indicators as evidenced by the improving human development index may reflect changes brought by important social advances derived from social and popular movements, some included in the constitution of 1988. Three are very important: first, the consolidation of a public health system – SUS, inspired by the British NHS; second, formal commitment to education goals; third, the consolidation of a public pension system that included poor people from rural regions.

Another change that had a limited impact on those indicators is the end of the high-inflation era, with then finance minister Fernando Henrique Cardoso’s 1994 Plano Real. High inflation contributes to income concentration, as the rich have far more resources to preserve the value of their money than poor people.

Finally, the social policies of the PT governments: Bolsa Família and the policies regarding minimum wage certainly contributed to reductions in extreme poverty and improvements in income distribution captured by the Gini index. Bolsa Família seems to be a major factor in the mitigation of extreme poverty, which was reduced by 63 percent between 2004 and 2014. [20] The minimum wage policy is more relevant to the reduction in inequality.

There is a huge debate in academic circles about the real meaning of these data. Since this Gini index is calculated using information regarding mainly wages, it does not correctly capture income derived from capital – profits, rents, dividends, etc. Recent research using data from Brazilian income tax returns – the same method used by Thomas Piketty in Capital in the Twenty-First Century – shows a picture that is more unequal: the Gini index would be around 70, and the income from the top 5 percent appears more stable than suggested by other sources. [21]

The third social policy implemented by PT governments – the extension of higher education – increased the number of students from 3.04 million students in 2001 to 7.83 million in 2014. [22]

The economic growth between 2003 and 2013 and those combined processes determined changes in the social environment in Brazil – new actors with new demands. Governmental sources claim that between 2003 and 2013 44.7 million Brazilians were included in a so-called “new middle class” and 12.5 million included in the “traditional middle class”. [23] Although questionable, these data may be used to identify an important change: instead of a “middle class”, the data refer to people working mainly in services, sometimes in precarious conditions. These new workers, however, have not been integrated into existing trade unions because a labour movement that was dynamic and lively before Lula’s first government became tamed and less active as PT rule continued. Working class organisation has not advanced during the last 14 years. Many trade union leaders were integrated into different levels of the federal government. Without formal political organisation, new actors emerged into the Brazilian political arena.

This is evidenced by the huge mobilisations of June 2013 – national demonstrations, triggered in São Paulo by protests against a rise in the price of public transport. The demonstrations, with mixed demands such as better public transport, public education and public health services, also demanded political reform and an end to corruption. They developed from problems derived from public works for the World Cup 2014 – that fourth initiative from the PT government. So wrong priorities for public resources led new actors to the streets. [24] Were the demonstrations initial signs of the exhaustion of the policy choices of PT version 2002? Certainly they indicated that these new actors were demanding a change in the agenda of structural reforms – a warning to the PT government to break from its political inertia. However, the PT was unable to give a reasonable answer to these new demands. The final outcome: a political crisis in gestation.
 

Fourth dimension: a political crisis that shows the impasse
of the transition from military dictatorship

The wave of protests of June 2013 could be interpreted as a movement that, in a confused, dispersed and fragmented way, had a platform involving demands such as better public services, better use of public resources, and political reforms that included changes in the rules of electoral financing, more civil rights and greater transparency in public contracts and public-private relationships – in sum, more democracy.

These protests and demands offered the PT government an opportunity to renew its agenda, recompose its social and political basis and break the political inertia with a more assertive and left leaning set of policies – indeed, a second opportunity. The PT lost that opportunity after a clumsy suggestion for a platform of political reforms which was withdrawn after the initial reactions from conservative lawmakers – even those that were part of PT’s coalition.

That was an opportunity to complete the democratic transition, to broaden democratic rights and to overcome the conservative limits imposed in the transition. As Anderson explains:

When Brazil emerged from two decades of military dictatorship in the mid-1980s, this system was designed by a political class shaped under it. Objectively, its function was and is to neutralise the possibility that democracy might lead to the formation of any popular will that could threaten the enormities of Brazilian inequality, by chloroforming voter preferences in a miasma of sub-political contests for venal advantage. [25]

This political structure was deeply related to the preservation of a myriad of left-overs from the military regime, such as the structure of the repressive apparatus – military policies untouched, violent methods of policing with common and widespread use of torture and a judicial system and overcrowded prisons that incarcerate mainly poor people. This political structure went hand in hand with the denial of agrarian and urban reforms. The rebellion of June 2013 was a big opportunity, lost by the PT given its involvement with this political order.

In 2014, instead of a movement towards the left, the PT moved to a more conservative political alliance – with right wing parties such as the PP and PSD and without PSB (the Brazilian Socialist Party) or the new movement REDE, a political organisation created by Marina Silva, a former minister of Lula’s government and important activist for environmental causes. During the 2014 electoral campaign, answering to a more assertive electoral campaign from the right, Dilma embraced a more left biased political marketing to regain support from historic supporters of the PT. [26] However, immediately after her victory in November 2014, all promises were forgotten and a pro-austerity agenda was introduced in order to calm the so-called markets.

This was a double mistake: first, economically, these austerity measures may have deepened the recession; second, politically, they alienated Dilma from the social movements. The intensification of the crisis, which was making itself felt through growing unemployment, and this programmatic U-turn vis-à-vis the PT’s electoral propaganda fed increasing disenchantment with Dilma, with a plunge in her support, as measured by opinion polls.

The explosive combination of negative news also fed the appetite of the right wing parties, energised by the headlines in the monopolist conservative press (newspapers and TV) about corruption schemes involving electoral financing and bribes from firms with contracts with Petrobrás. According to the prosecutors of Operação Lava-Jato, the corruption schemes involve the PT, and the PP and PMDB – parties in the coalition that supported Dilma. The impeachment became a demand and the impeachment process was triggered. This process, characterised by social and electoral resentment, political frustration and problems derived from unemployment, everything mixed in a cauldron, has, as a side effect, the alarming resurfacing of the far-right in Brazilian politics.

During the PT era the conservative media, given the weakness of the right opposition and the control of government by a party they distrusted, became very aggressive and acted as a sort of organiser for the ruling classes. Imagine a country with only newspapers like the London Times and TV networks like Fox News – that is the Brazilian media. Glenn Greenwald describes their role in whipping up support for Dilma’s impeachment:

It’s been astonishing – and unnerving – to watch it all unfold, particularly given how the country’s dominant media, owned by a tiny handful of rich families, allows almost no plurality of opinion. Instead, as Reporters Without Borders put it earlier this month: “In a barely veiled manner, the leading national media have urged the public to help bring down President Dilma Rousseff. The journalists working for these media groups are clearly subject to the influence of private and partisan interests, and these permanent conflicts of interests are clearly very detrimental to the quality of their reporting”. [27]

In a Congress where the PT had only 70 out of 513 MPs, during a conjuncture of popular disenchantment with Dilma, this extremely conservative political majority felt free to vote for her impeachment. This process culminated in the vote in the lower house (the Câmara Federal) with more than two thirds of the MPs voting to start the impeachment process on 17 April 2016.

The quality of the Brazilian Congress is an important part of the problem. An article in The New York Times stressed that “More than half of the members of congress face legal challenges, from cases in auditing court involving public contracts to serious counts like kidnapping or murder, according to Transparency Brazil, a corruption monitoring group”. [28] After the impeachment vote its orchestrator, Eduardo Cunha, president of the Chamber, was told to step down by the Supreme Court because he is facing a corruption trial. [29]

On 11 May 2016 the Senate voted on the impeachment process: a yes vote for the commencement of the formal trial, which can last for 180 days, and, consequently, the removal of Dilma from the presidency during this period. Michel Temer then officially became president during this process. If the Senate confirms the impeachment by another vote requiring a two thirds majority, Temer will become president, in principle until the elections of October 2018.

The new government was not elected directly by the Brazilian citizens and does not have a formal commitment to any programme. Is this a free hand to implement austerity measures that would not be feasible for elected governments? The composition of Temer’s government hints at this line of action – an expression of the conservative framework inherited from the transition to democracy, which returns with a vengeance. The new government represents a right wing turn, a composition of government built upon quid pro quo agreements between votes for impeachment and ministries and a general motivation towards conservative policies, politically, economically and in relation to civil rights in general. [30] As a display of how corrupt practices impregnate policies, nine out of 23 ministers are involved in problems uncovered by Lava-Jato. [31] The right wing media has a very clear programme for this new government: deep austerity measures, privatisation as broad as possible, reform of the pension system and flexibilisation of labour markets without any guarantee for workers’ rights.
 

A historic turning point with an open-ended scenario

This post-impeachment new government will not mean the end of the current crisis in Brazil. The interactions among the four dimensions analysed above continue to shape the current Brazilian crisis.

The PT’s exhaustion and the impending new government’s economic measures may provide an environment for a deepening of the economic crisis. The post-impeachment government starts out with a lack of legitimacy – a non-elected president, with a low approval rating in the opinion polls: Temer would win only 2 percent of the vote for president, according to Datafolha (9 May 2016). One of the mantras from the movement for impeachment was that the cause of the crisis was Dilma (sometimes only Dilma, sometimes mainly Dilma, always stressing only domestic factors, more specifically, the fiscal factor). Therefore, we were told that after the impeachment growth would be resumed – a clear illusion. Economists related to the new government – and the media linked to the monopolies that control (dis)information in Brazil – have been selling the idea that austerity measures, fiscal adjustment and the new government would be enough to restore growth.

This clearly underestimates the nature, size and complexity of the current crisis. Of course, this crisis has a political component, as discussed in previous sections, but a rightward movement may deepen the crisis. Even worse, given these illusions and the high expectations created during the impeachment process, the persistence of the crisis until 2017 would cause frustration and distress which could be translated into a new wave of demonstrations. It is clearly very difficult to foresee how Temer’s government will behave and what support it might have – and even to predict whether this new government will survive until the next election.

However, something is crystal clear in the present political and economic conjuncture in Brazil: the end of a phase in Brazilian history.

At this point there is a basic final question that would help to evaluate the nature of current right wing change in Brazil. The question is: have those four PT governments changed Brazilian capitalism so much that a new regime has been created? Something like the changes introduced by Franklin Roosevelt’s four terms (from 1933 to 1945) that created a New Deal? The answer is no, as the evaluation presented in the previous sections suggest. It is reasonable to refer to a sequence of governments with more social sensibility, but there was not a regime change in Brazil, or even a change in the nature of capitalism.

Therefore, in principle, the change in Brazil now is not of regime, but of government. Regarding privatisations, for instance, the PT government imposed a different, less aggressive agenda, with rules for privatised concessions – but there was no reversal of previous privatisations or any other structural change related to this topic. The parliamentary coup gave rise to a more right wing government, which begins its rule with a collection of neoliberal initiatives to be implemented, a return to a more aggressive rhythm of privatisation, connected to real threats to democracy. In 1964 there was a coup d’etat, a regime change that marked the end of an era of populist governments from 1946 onwards – with a military and civil dictatorship, political prisons, torture, no democratic freedom and no respect for basic human rights. So far, in 2016 there is a parliamentary coup, but no similar restriction of basic democratic rights.

However, the nature of this government, especially how far to the right its policies will go and how regressive in relation to democratic rights it will be, depends on the interplay between its initiatives and the resistance and initiatives of social movements. It is an open-ended scenario.

On the one hand, weakened social movements, a disoriented left, a fragmented resistance might feed the formation of a very singular political regime: an authoritarian regime based on the control of a very conservative parliament, with a selective anti-popular judiciary connected with a very partial and biased monopolist media – a political regime able to introduce anti-social measures keeping elections controlled and debates restricted. There is a risk of McCarthyism without the New Deal.

On the other hand, revitalised social movements, with a left able to learn from the tragic mistakes of the last two decades, and able to reconnect with the people and energies of the protests of June 2013 – those movements may overturn the rightward push of the 2016 parliamentary coup and resume constructing a truly democratic environment, with more social rights, overcoming the limits of the transition from the dictatorship.
 

New threats to democracy and new challenges for the left

Therefore, it is necessary to understand that this open-ended new phase opens with new threats and new challenges for social movements and for the socialist left.

First, a major threat – democratic regression, with the ruling classes resuming direct control of the government without due respect for democratic and constitutional rules. This major threat demands a strong presence of social and popular movements – people’s and workers’ rights are in danger. The weakening of labour organisation during the last 13 years may offer opportunities for aggressive actions from the ruling classes to impose austerity measures and regressive changes (attacks on pensions and workers’ rights, criminalisation of social and popular movements). Resistance is a key word now.

Second, new challenges for the left. This resistance must be combined with a struggle for democratic freedom, confronting leftovers from the transition and the limits imposed on social and popular movements. This is part of a broad effort to reorganise and recompose the political organisations of the workers’ and people’s movements. One important lesson from the PT government is the strength of the conservative resistance seeking to maintain the status quo, the systematic opposition to any change in the social and technological backwardness that characterises Brazilian society and economy. Even very moderate changes faced broad and hysterical resistance.

Third, hand in hand with those movements, one important task here is the elaboration of a programme to update the fight for democratic socialism in this new conjuncture in Brazil and current phase of global capitalism. This should be a platform that combines democracy – a political agenda of more participation and power for social movements at all levels – with initiatives to break the social obstacle represented by the high income concentration in Brazil: steps forward in a social welfare system; an agenda for development and structural change to overcome the technological backwardness and passive insertion in the international division of labour. In sum, structural reforms would enable Brazil to join international efforts to overcome capitalism.

Fourth, this elaboration of a new programme must deal with an honest and a careful assessment of the PT’s experience. The reader of this journal may search the archive and find articles that show how high hopes were during the 1980s and early 1990s with the potential contribution of the PT to the advance of democracy and socialism, as an alternative to the failures of social democracy and to the tragedy of Stalinism. [32] The PT was an experiment, a potential strategic new alternative, with impacts on the global socialist and democratic movements – recall initiatives such as the World Social Forum. This assessment means a return to discussions of strategy – in the sense of Daniel Bensaïd’s elaboration. [33] Brazil has now made a huge contribution to the elaboration of a strategy – unfortunately, with a new lesson in failure for the international movement. But learning from this failure is to prepare for the struggles ahead – and to contribute to the elaboration of a programme of an alternative to global capitalism, a search that unites us all.

Eduardo Albuquerque is professor at the Department of Economics and Cedeplar, Universidade Federal de Minas Gerais, Brazil, and author of the book Agenda Rosdolsky (2012, Editora UFMG).

* * *

Notes

1. At the time of writing (13 May), a second phase of the impeachment process has been concluded in the Senate. After a vote in Congress on 17 April the Senate on 12 May voted (by 55 to 22) to start Dilma’s trial. This decision means that Dilma is temporarily suspended from the presidency – and the vice-president Michel Temer has assumed the presidency. In 180 days the Senate must judge the process and decide whether or not to impeach Dilma. If the Senate decides for impeachment, Dilma will be definitively withdrawn from the presidency. Temer would then become president.

I would like to thank Claudia Feres Faria, José Afonso Assis Cabral, Gilberto Libânio, Marco Flávio Resende, Leonardo Gomes de Deus and Alex Callinicos for their comments, suggestions and help during the preparation of this article. The mistakes are my responsibility.

2. Maddison, 2003; See also the IMF World Economic Outlook 2016.

3. Albuquerque and Callinicos, 2016. Of course, domestic factors are important. Among them, Dilma’s first response to the signs of this crisis was to implement austerity measures through the new finance minister of her second term, Joaquim Levy.

4. Conti, 2016.

5. PSOL, the left opposition to the PT, voted against the impeachment and denounced the parliamentary coup.

6. For a general description of Brazilian political parties, see At a glance: Brazilian Political parties, European Parliament (June 2015).

7. PMDB, 2015 and 2016.

8. IBGE, 1996, p58 and IBGE, 2013, table 2.2. This shift towards natural resources has two problems: 1) its impact on the whole economy is very limited (see Souza, 2015, p13); 2) the ecological impact is huge, with high human costs, as shown by the tragedy caused by a mining company – Samarco – in Mariana on 5 November 2015.

9. See Paula, 2003, especially the chapter by João Borges Neto.

10. This involvement led to corrupt practices – in general in place before 2002 – such as the Mensalão scandal (see Oliveira, 2006) and the corruption uncovered by the Lava Jato investigation (see Anderson, 2016). The origins of these schemes before 2002 may be identified from information gathered by Lava Jato (see Os rastros tucanos na Lava Jato, El País [12 January 2016]). The importance of these practices must not be underestimated: one of the largest construction firms in Brazil recently agreed to return R$ 1 billion (£196 million) to public coffers (see Andrade Gutierrez fecha acordo de leniência e se compromete a pagar indenização de R$ 1 bi, Estadão [8 May 2016]).

11. Bolsa Família is a social welfare programme that in 2016 involved 13 million families or 50 million people in Brazil. Families with a monthly per capita income less than R$ 77.00 (£17.17) are entitled to receive a monthly stipend of R$ 70.00 (£13.79).

12. Oliveira, 2006.

13. Paula, 2005.

14. Anderson, 2016. See also Indicadores econômicos consolidados, Banco Central do Brasil (30 March 2016).

15. Go to ‘Bolsa empresário’ chega a R$ 270 bilhões neste ano e pode ser revista por Temer, Estadão. (behind a paywall) (

16. Esping-Andersen, 1985.

17. The PITCE and PDP policies – both under Lula – and Programa Brasil Maior – under Dilma.

18. Suzigan, 2016, discusses how existing firms and industries can capture industrial policies.

19. UNDP, 2015, pp208 and 217.

20. Zaia, 2015.

21. Medeiros, Souza and Castro, 2015: “The article concludes that income data reveals concentration at the top that is substantially greater than other sources and, in general terms, remained stable in the period analysed.”

22. INEP, 2012 and 2015.

23. Neri, 2014. The definition of “classes” in this report is based on household income: the “new middle class” or “class” C are those with monthly incomes between R$ 2,005 and R$ 8,640 (£522.69 and £2,254.23) based on prices in January 2014 adjusted for the local cost of living. The “traditional middle class”, “classes” A and B, have household monthly incomes greater than R$ 8,640.00.

24. For an interpretation of those protests, see Singer, 2014.

25. Anderson, 2016.

26. In an interview on 10 April 2016 Frei Betto, a supporter of liberation theology and a member of Lula’s first government, said that during its 13 years of government the PT only called upon social movements to act as firefighters in its crises – See http://tinyurl.com/hnrld2m

27. Greenwald, 2016.

28. Jacobs, 2016.

29. Romero, 2016a

30. Watts, 2016; Romero, 2016b.

31. For more on the nine new ministers involved see Entre ministros nomeados por Temer, nove envolvidos na Lava-Jato, Oglobo, (13 May 2016). (behind a paywall)

32. For references to the PT see Socialist Review, November 1982, pp. 14–15: an interview with Lula, that states the socialist perspective of PT, Socialist Worker Review, April 1987, pp. 9–12: an interview with Nigel Harris, very hopeful about the conditions of workers’ movements in Brazil and at least with the left in the PT (Harris, 1987) and Barreiros, 1994, My Single Hope.

33. Bensaïd, 2007.

* * *

References

Albuquerque, Eduardo, and Alex Callinicos, 2016, Introduction: Special Issue Crises and Transformation of Capitalism: Marx’s Investigations and Contemporary Analysis, Science and Society, volume 80, number 4 (forthcoming).

Anderson, Perry, 2016, Crisis in Brazil, London Review of Books, volume 38, number 8 (April).

Barreiros, Jaide, 1994, My Single Hope, Socialist Review (March).

Bensaïd, Daniel, 2007, The Return of Strategy, International Socialism 113 (winter),.

Conti, Mário, 2016, Acusados, Dilma e Collor diferem em valores, fonte e apuração da corrupção, Folha de São Paulo (18 April).

Esping-Andersen, Gøsta, 1985, Politics Against Markets: The Social Democratic Road to Power (Cambridge University Press).

Greenwald, Glenn, 2016, Brazil’s Democracy to Suffer Grievous Blow as unelectable, Corrupt Neoliberal is Installed, The Intercept (11 May.

Harris, Nigel, 1987, Debt as a Threat, Socialist Worker Review (April).

IBGE, 1996, Pesquisa Industrial 1996, Empresa, Rio de Janeiro.

IBGE, 2013, Pesquisa Industrial 2013, Empresa, Rio de Janeiro.

INEP, 2012, Resumo técnico – Censo Educação Superior de 2010.

INEP, 2015, Censo da Educação Superior 2014 – Notas Estatísticas.

Jacobs, Andrew, 2016, Brazil’s Graft-Prone Congress: A Circus That Even Has a Clown, New York Times (14 May). /behind a paywall)

Maddison, Angus, 2003, Historical Statistics for the World Economy: 1–2003 AD, (can be downloaded here as an Excel file).

MDIC, 2016, Séries Históricas – Intensidade Tecnológica.

Medeiros, Marcelo, Pedro Souza and Fábio Castro, 2015, O Topo da Distribuição de Renda no Brasil: rimeiras Estimativas com Dados Tributários e Comparação com Pesquisas Domiciliares (2006 –2012), Dados – Revista de Ciências Sociais, volume 58, number 1.

Neri, Marcelo, 2014, A classe média brasileira (SAE).

Oliveira, Francisco, 2006, Lula in the Labyrinth, New Left Review, II/42 (November–December).

Paula, João Antônio de (ed.), 2003, Economia Política da Mudança: os desafios e equívocos do início do governo Lula (Editora Autêntica).

Paula, João Antônio de (ed.), 2005, Adeus ao desenvolvimento: a opção do governo Lula (Editora Autêntica).

PMDB, 2015, Uma ponte para o futuro (Fundação Ulysses Guimarães).

PMDB, 2016, A travessia social (Fundação Ulysses Guimarães).

Romero, Simon, 2016a, Brazilian Lawmaker Behind Rousseff Impeachment is Told to Step Down, New York Times (5 May). (behind a pay wall)

Romero, Simon, 2016b, New President of Brazil, Michel Temer, Signals More Conservative Shift, New York Times (12 May). /behind a paywall)

Singer, André, 2014, Rebellion in Brazil, New Left Review, II/85 (January–February).

Socialist Review, 1982, Lula for Governor (November).

Suzigan, Wilson, 2016, Elementos Essenciais da Política Industrial, in Eduardo Albuquerque, Metamorfoses do capitalismo e processos de catch up (Editora da UFMG) (forthcoming).

Souza, Francisco Eduardo Pires, 2015, Por que a indústria parou? in Barbosa, Nelson, Nelson Marconi, Maurício Canêdo Pinheiro and Laura Carvalho (eds.), Indústria e desenvolvimento produtivo no Brasil (Elsevier/FGV).

UNDP, 2015, Human Development Report 2015 – Work for Human Development:

Watts, Jonathan, 2016, ‘Trust me’: Michel Temer Takes Over as Interim Brazil President, Guardian (13 May).

Zaia, Cristiano, 2015, Extrema pobreza caiu 63% no Brasil desde 2004, segundo Ipea, Valor Econômico (30 December). (behind a paywall)

 
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