Alfredo Saad Filho — Two Transitions in Brazil: Dilemmas of a Neoliberal Democracy

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.

The B u l l e t
Two Transitions in Brazil: Dilemmas of a Neoliberal Democracy
Alfredo Saad Filho
(h/t Matias Vernengo at Naked Keynesianism)

Brazil is a big deal globally because 1) it is one of the BRICs (Brazil, Russia, India, and China), which are the leading emerging nations destined to influence the global economy owing to their size and resources, and 2) Brazil is in the sphere of influence of the United States, which therefore has a stake in what happens there. The article is short and only touches on the high points. Quick read.

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.