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Mike Gonzalez

Brazil in the eye of the storm

(Spring 2003)

From International Socialism 2:98, Spring 2003.
Copyright © International Socialism.
Copied with thanks from the International Socialism Archive.
Marked up by Einde O’Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

‘As the century begins we are faced with two alternatives: Porto Alegre or Davos.’ That was the view of Olivier Besancenot, presidential candidate of the French Ligue Communiste Révolutionnaire in 2002, published in their newspaper Rouge in January.

On the one hand, the World Social Forum in Brazil gathered activists from across the political spectrum around the slogan ‘A better world is possible’. On the other, the World Economic Forum at Davos in Switzerland was far more exclusive – it drew together the most powerful financiers and economic decision makers in the global capitalist system to determine how best that system might serve their narrow interests.

In 2003, however, there was an unexpected connection between the two. Lula (Luis Inacio da Silva, to use his full name for the first and last time), who had recently won the Brazilian presidency by an overwhelming majority on behalf of the Workers Party (PT), put in an appearance at both conferences, despite the fact that a large group of his own parliamentary colleagues, and many branches of his party, had appealed to him not to go to Davos. Yet Lula addressed an admiring crowd at Porto Alegre’s Por do Sol stadium and then flew to Switzerland, where he was photographed shaking hands with Bill Clinton, the head of the World Bank and George Soros, among others.

Emir Sader was only one of those who had urged him not to go:

Lula should not attend this banquet of all those responsible for the world’s misery...the handful of bankers who created the policies that have produced hunger in Africa, Asia and Latin America and in Brazil itself. Lula should not cross to the other side of the barricade when those of us fighting because ‘a better world is possible’ are marching in protest at the policies of the IMF, the World Bank and the WTO. [1]

Lula’s decision was confusing, and it was revealing. And it forced many of his most fervent supporters to acknowledge some of the deeper contradictions in the strategic vision of the Lula government that were emerging even in the first weeks of the new administration.

As Rouge put it:

It is a government at a crossroads. It will manage the affairs of the dominant classes, but in a context marked by the strong presence of the mass movement, and particularly the unions and the landless. [2]

This way of characterising Lula’s government begs more questions than it answers – a ‘presence’, after all, need not be an actor. Yet if, as the same newspaper asserts, ‘Brazil is the political laboratory for the future’, the experiment deserves our detailed and careful analysis, because there is no doubt that claims and counterclaims about the success or failure of the Lula project will influence and to some extent shape the international political debate in the months to come.

The missing flags

Let me begin with a personal impression of an important difference between the Porto Alegre Forums of 2002 and 2003. In 2002 the Workers Party (PT) dominated the event. Its flags were everywhere, its stickers attached to every surface, its logo behind every speaker and visible at every press conference. It was impossible to avoid the impression that PT was the party of the social movements that had come together in Porto Alegre. It was true, of course, that Porto Alegre had a particular significance in the mythology of the PT. The city (and the state whose capital it is – Rio Grande do Sul) was under PT control and had initiated the system of ‘participatory budgeting’ which attracted much attention across the world. Meetings of state workers and community organisations, among others, were given the opportunity to advise on the distribution of the resources allocated to the city by the federal government in Brasilia. The experience was offered as a radical new form of popular participation, a sharing of responsibility among all sections of the community – and it was an example of advanced democracy which certainly had very few precedents in the bourgeois democracies of the rest of the world. On the other hand, it would be quite wrong to see it as a redistributive measure – after all, it was an experiment conducted in the wider framework of a country and a time in which the gap between rich and poor was growing at a startling rate. And the global budget was predetermined by central government. But I will return to the issue below.

The important point is the clear and ubiquitous identification between the PT and the resistance to neo-liberalism, many of whose most combative fronts were represented at the forum. That identification was noticeably absent in 2003. It is not that PT had disappeared – but it no longer presented itself as a voice of the movement. It was certainly in evidence, but only in the form of Lula. The implication was very clear and reinforced the sense I had of what had occurred in the intervening year. While Lula’s reputation and history were a powerful representation of an undifferentiated ‘people’, Lula was now a president and the head of a government in which the PT was a partner with several other parties whose past and present policies gave them no credentials to claim such representation. It seemed to me that Lula and the PT were placing themselves above class in a neutral state pursuing balance and an equality of representation between the classes.

And that is borne out and confirmed by the recent history of both the PT and Lula himself, and by the decisions already taken by the new government barely a month into its first administration.

The long march into the state

In last October’s elections Lula received 68 percent of the popular vote in the second round. That represents some 68 million people. This is an important indication in itself of the level and range of popular support that Lula has.

In this (Lula’s third) presidential election his spin doctors and advisers were at tremendous pains to project Lula as an outstanding individual. Electoral propaganda made enormous play of his personal history, a journey from poverty to the presidency. His open shirt was exchanged for an Armani suit. It may seem to an outside observer that this is no more than the usual image-making that is increasingly common in elections of this magnitude. But in Lula’s case the significance was deeper. For in his previous candidacies and throughout his previous political career Lula stood as a representative figure who stood for high office in the name of the working class movement with which he had been closely identified throughout the previous 20 years. The manufacture of the individual candidate for the campaign of 2002 was, at least implicitly, a considered attempt to disengage Lula from his own history in the movement. And yet – and this is another of the contradictions that will certainly blossom in very short order – his solid working class support came to him because he was widely seen as a man of and for the workers’ movement.

Lula entered the engineering industry of São Bernardo in 1966. Unlike the traditional engineering workshops of São Paulo, the factories of São Bernardo were giant modern car and bus plants. The older industries had been the site of bitter political struggles in the earlier part of the decade which had ended in defeat for the rank and file militants and the emergence of a powerful trade union bureaucracy embedded in the metal workers’ union. Yet that militant tradition persisted in what was called the Metalworkers Opposition (MO). In São Bernardo, by contrast, that tradition did not exist, and the union bureaucracy was able to control its membership and absorb the best young workers. One of these was Lula, who became a low level official after only three years on the shop floor. [3] In 1976, however, as the ‘economic miracle’ began to falter [4], the São Bernardo unions began to adopt a more aggressive stance over wages. Lula emerged as a leader of this more militant wing and two years later, early in 1978, he was elected in his own right (and without the patronage of the old bureaucracy) to the leadership of the union. His acceptance speech included a promise to ‘fight even if it costs us the sacrifice of our lives to improve the conditions of life the engineering workers’. [5]

Three months later strikes began to paralyse the huge car plants in the industrial belt around São Paulo known as the ABC, which included São Bernardo:

At 7 o’clock in the morning of Friday 12 May the 2,500 workers on the day shift at Saab-Scania in São Bernardo clocked in as usual, went to their positions, but refused to switch on the machines ... It was a new kind of strike, without prominent leaders, without pickets, and without scabs. On the following Monday they were joined by 9,500 metal workers at Ford. Within ten days, similar strikes had reached 90 engineering firms ... Within two months, half a million workers at some 400 factories in 18 towns in São Paulo tested their strength in strike action ... [6]

In November, however, an end of year pay claim still carried behind it some of the militancy and confidence – the factory committees had, after all, been recognised by both trade unions and employers in the wake of the earlier actions. This time, however, the bureaucracy seized control of the movement and reached an agreement that provided a large (58 percent) wage increase, but only in exchange for the consolidation of earlier increases, a one-year no-strike clause, and a series of limitations on the factory committees. A rigged vote ensured that the agreement was accepted. The result was widespread demoralisation in São Paulo.

São Bernardo, however, had learned different lessons from its experience, and organised co-ordinated pickets and shop floor committees for its anticipated strike in April 1979. The core of that organisation, however, was the union, not the politics of shop floor organisation, expressed in the São Paulo factory committees. According to Beecham and Eidenham, the difference was much more than a matter of emphasis or the accidents of local organisation:

The real reason for the resistance to independent factory organisation is the separation of politics from economics which is characteristic of social democratic ideas. The São Bernardo leaders founded the Workers Party (PT) precisely because they saw politics as an activity distinct from workers’ struggles. [7]

Events in São Bernardo moved quickly, following to a degree the pattern of the São Paulo strikes of the previous years. Mass meetings of workers signalled a high level of militancy. The government responded with repression and arrested Lula. The employers offered a deal which included a 63 percent wage rise hedged about with a series of penalty clauses and limitations on union activity. Lula reappeared at a mass rally and argued for acceptance. When the workers returned there was a systematic campaign of victimisation, but a high level of rank and file factory organisation sustained a largely successful resistance to management’s campaign of revenge. It could not be counted a victory, however, despite the general improvement in wages. Yet elsewhere in Brazil the news of the ABC movement spread and inspired many other groups of workers – transport workers in Rio, building workers in Belo Horizonte, public sector workers in São Paulo – to organise stoppages.

The following year ABC assembled for another massive strike over wages, union representation and compensation for inflation. It was to begin in April 1980, following the collapse of wage negotiations during the previous month. This time the state and the army moved in quickly. A number of local trade union leaders were arrested, including Lula, who was later accused of murder. [8] Supporters of the strike were picked up or harassed, and crowds of workers were immediately dispersed by armed units. The harsh response of the state had a great deal to do with a changing economic situation – the so called ‘miracle’ of debt-led expansion (to which I will return) had reached a point of crisis, in part due to the rise in the world price of oil. Faced with the rising cost of debt-servicing, the regime had clearly decided that the risk of a confident and well organised rank and file response was the most pressing potential risk.

The strike continued for six weeks, before it was finally overwhelmed – ‘effectively the workers were starved back’. [9] Yet the immediate impact of the strike-one of the longest in Brazil’s history at six weeks, was double-edged. While many of those involved were understandably demoralised, other engineering plants seemed to gain inspiration from the struggle itself, and several strikes erupted in the following weeks. In reality, however, the strike wave centred on São Bernardo and the metal workers’ union ebbed after 1980, partly as a result of the defeat of that year and partly because the economic crisis then began in earnest, with a rising foreign debt, accelerating inflation and rising unemployment.

Yet during those six weeks the strikes had mobilised support and solidarity far beyond the ABC region. As well as other trade unionists, the radical Christian Base Communities had been at the heart of the organisation of that support. That explains in part why the São Bernardo actions achieved a national projection, and came to represent, countrywide, the possibility of resistance to the military regime. For a new generation, the strikes came to represent the return of the organised working class onto the historical stage. It was that experience that Lula came to symbolise and articulate, and his iconic status always refers back to that high point of class struggle and resistance.

PT: The Workers Party

The PT, the Brazilian Workers Party, has its origins in the same historical experience. It was born directly out of the experience of workers’ struggles in the São Paulo and São Bernardo regions, and founded in 1979, when the legislation against the forming of new parties was rescinded. Lula was among its founders.

The PT included a variety of currents – its founding documents laid great emphasis on openness and pluralism. And while the party acknowledged its roots in the workers’ movement, it took considerable care not to define its political perspectives too precisely. Despite the presence within the PT of a number of Trotskyist and syndicalist currents, it is true to say that radical Christianity – the theology of liberation – was the major ideological current among its ranks. Lula himself was closely associated with the Christian Base Communities, as were many of the PT’s leading figures. And in its early years it caused great excitement internationally in that it represented a radical party ‘of a new type’. It was open and democratic, and its lack of definition at that formative stage could be and was presented as a positive virtue. Most importantly, perhaps, it was a party with a mass working class base of support. It rejected Stalinism (which explains the ferocious and sustained hostility of the Brazilian Communist Party, PCB, towards it) and the cross-class populism so dominant in Brazilian politics. On the other hand, its founding manifesto made no mention of socialism, but restricted its specific demands to questions of labour legislation and parliamentary representation.

The foundation of the Brazilian Trade Union Federation, the CUT, was also a direct result of PT agitation and organising. Formed in 1983, it drew much of its support from the rank and file militants who had played such a key role in the strike wave of 1976-1980. Yet from the very moment of its founding it was clear that there was a contradiction at the heart of the CUT which reflected in its turn the unresolved political direction of the PT. Many of the leaders of both the CUT and the PT – most notably Lula himself – had emerged from a new union bureaucracy born out of those same struggles. Here too the link between the formation of the CUT and agitation for new labour legislation was too close to ignore. Just as the PT was moving towards an increasing emphasis on electoralism by the mid-1980s, so the CUT too saw the election of left officials as a primary task. The consequent neglect of rank and file organisation produced an increasingly angry confrontation within both organisations between the CUT Pela Base (Rank and File CUT) and the official leadership at the 1986 CUT Congress. The tensions were already obvious in 1983, when a new strike wave in São Bernardo was resolved after the formation of a common front between the old union bureaucracy and the leadership of the PT (including Lula), despite the bitter criticism of many rank and file groupings. By the time those political differences came to a head two years later, however, the elections of 1985 had produced a 10 percent national vote for PT. The military government had instituted indirect presidential elections in 1983 (through an electoral college) which the PT boycotted, winning it considerable support.

Direct elections presented the PT with the opportunity to pursue electoral success. The advocates of the pursuit of power through parliament were bolstered by the election results, and it was their political positions which retained the majority within both the PT and the CUT. The debate in the same year about the continuing existence of internal factions within the PT was a sign of the same rightward drift. And although the CUT had no formal connection with the PT, it was no secret that its leadership were overwhelmingly members of the PT and thus influenced by the same political pressures and arguments. If the PT leadership now saw before it a serious prospect of entering government at state and national level, the same was true for the leadership of the CUT, for whom the prospect of replacing the old populist leadership beckoned. As Beecham and Eidenham noted in 1987:

Not suprisingly, as the PT’s circumstances have changed, so have its language and practice, especially in relation to the centrality of the working class and to internal democracy ... Lula talks of the PT having achieved ‘maturity’ – i.e. it no longer restricts its base to the working class. It is consciously trying to appeal to the middle classes. [10]

It could not, however, break so easily with its solid working class base, or distance itself from a radical past which, for all its studied programmatic vagueness, still rested on a popular memory of struggle and resistance and the tradition it had generated. And the active cadre of the PT then (as now) still identified with that tradition.

In the 1988 municipal elections the PT won 36 mayoral contests, most prominently in São Paulo where Luiza Erundina, a working class woman in the best PT tradition, became the regent of Brazil’s largest city. Yet it was relatively soon after her election that she found herself fighting the CUT and the PT itself when they jointly led a series of strikes among city employees. A year later, in the 1989 presidential elections, Lula won 47 percent of the national vote – which is to say that 31 million Brazilians supported him.

There were many straws in the wind. In 1987 Lula had given a speech at the Escola Superior de Guerra, the crucible where the 1964 military coup was forged and where the systematic repression of the Brazilian workers had been planned and directed. He was, we are told, ‘received with great cordiality’.

The May 1990 Congress of the PT produced a key document called O socialismo petista (Our Socialism). [11] While Michel Lowy characterises it as ‘one of the most significant and rich documents of the “new thinking” developing in the Latin American left at the end of the 20th century’ [12], it is a document that is studied in its ambivalence. The document represents in some senses an ideological compromise which can only be achieved at the level of rhetoric, for the political practice of the PT was moving in a very different direction:

To the extent that the PT galvanises growing sectors of Brazilian society and is given credence as a political alternative for the country, our historic alternative must be more explicit. Many apparently conjunctural challenges – reform of the state, for example, or the struggle for the democratisation of landed property – can only in fact be met and overcome in the light of better strategic definitions. [13]

To this reader, at least, this paragraph reads as a studied evasion rather than as a model of theoretical clarity. And we know that at the same congress a resolution calling for a ‘return to the streets’ was followed by another that rejected a proposal that the PT should campaign for the removal of President Collor, on the grounds that he should be allowed to ride out his constitutional term – this despite his obvious corruption and his vigorous implementation of fierce neo-liberal policies! Clearly, that decision was made with an eye to the constitutional arrangements that the PT hoped to exploit itself at the next presidential elections. And while the document was forceful and explicit in its rejection of the Stalinist models of ‘actually existing socialism’, the conference adopted a commitment to pluralist market socialism – which was presumably the ‘strategic definition’ to which Our Socialism referred?!

The line of march

The case of the Landless Workers Movement (MST) illustrates, albeit indirectly, some of the tensions. One effect of the policies of rapid state-led economic expansion adopted by the Brazilian military regimes after 1964 was to accelerate the transformation and modernisation of agriculture. But it would do so in the interests of a powerful agribusiness sector. The agrarian reform process which had promised some degree of agrarian reform and land redistribution under the previous president, Goulart, was arrested by the coup. The military plan was designed to deliver land to large landowners and companies and to deal with the deepening problem of landlessness by ‘encouraging’ the landless to settle in the Amazon basin – in many cases occupying lands belonging to indigenous peoples. In any event, the ‘settlers’ discovered very quickly that the Amazon landowners had no compunction about using violence and murder to keep them out – though they were happy enough to have a cheap labour force at their disposal for mining and logging.

The landless people in the south of Brazil resisted the enforced migrations and instead began to occupy unused lands. As the pressure mounted in the latter half of the 1970s, the tactic of land occupation became the key method of resistance. [14] The struggles were long and bitter, confrontations between the most deprived sections of Brazilian society and some of the most powerful and ruthless members of the capitalist class. There can be very few examples of such uneven battles won by the weaker side simply because of their determination, their organisation and their courage. The experience of the movement was shared with landless groups from all over the country at a first Congress in 1984, out of which the MST was born.

There was intense debate within the MST (and it continued thereafter) concerning the relationship it should have with the PT and the trade unions. This was a movement of the rural poor, involving men, women and children in a continuous struggle for recognition of their rights to land. The conception of the community as the unit of struggle owed much to liberation theology – so too did the emphasis on internal democracy and the development of consciousness (called, with obvious religious overtones, la mística). [15] While they often supported the PT, and saw it as an ally, the movement’s leader, Joao Pedro Stédile, laid considerable emphasis on the independence of the MST from the broader political aims of the PT, and from a trade union movement which could not embrace the unemployed, the landless or their families. More significantly, perhaps, there was a very clear sense that the agrarian reform which was the central demand of the MST could not be carried through without radical redistributive policies – without, in other words, a transformation of society.

Since its formation the MST has grown to include over a million people. The basic strategy of land occupation, even in the face of unimaginable brutality from the landowners and the repressive forces, has continued to be the heart of the movement. Yet despite the conquest of several million acres of land for settlement, and despite the remarkable achievements the MST have made in terms of education and the incorporation of the landless into the struggle to transform their own lives, a long term perspective must look to the transformation of society as a whole. It is common to shorten the movement’s name to the sem terra, the landless, but the movement’s complete name is the Movement of Landless Workers. There was intense debate at the early congress where the name was adopted – and the decision to include ‘Workers’ was significant. Yet the MST has maintained a distance from the PT – very largely out of a profound mistrust of what it sees as the increasingly electoral orientation of the PT’s work and activity. On the other hand, that poses a problem for any general strategy for the socialist transformation of society – for this most combative and independent section of society, no land reform that is not part of a deeper and more complete redistribution of wealth and power can address the issues of land hunger that have made them such an extraordinary example of the courage to resist.

As the PT entered the 1990s, it was becoming clear that its origins were increasingly becoming political myth. Its practice, on the other hand, was focused on gaining power in the institutions of Brazilian society. In 1994 Lula came face to face with Cardoso in the presidential elections. It was a curious encounter, since Cardoso had once been seen as a theorist of the left, the advocate of radical emancipatory solutions. He and Lula were friends, or at least they had known each other for a long time.

The election took place against a background of rising debt, increasing unemployment and a plummeting standard of living. Ten years after the end of the military dictatorship Brazil was more unequal, more indebted and more crisis ridden than ever. The Sarney government had offered a weak and ultimately immobilised gradual reform, and then Collor’s government provided the first steps towards neo-liberalism. Cardoso came to power with a radical promise of economic transformation under a neo-liberal umbrella. Despite the radical rhetoric of PT documents at the beginning of the decade, Lula was now offering a programme of economic development firmly located within the existing capitalist framework, nationally and internationally. The PT was now a governing party in a number of cities and states; its programme for agrarian reform, for example, was far less radical than the MST might have wished. CUT, for its part, was now transformed into a national trade union apparatus long since distanced from the rank and file who had created the organisation in the first place:

The new trade unionism has thus come face to face with a basic paradox: at the very peak of its influence in the broader political process, it may be losing its effective workplace presence... The only way to strengthen the union movement is to maintain an organised broad base of support in workplaces. This requires a certain degree of militance [sic]. Despite the CUT’s militance at various points in its history, the dominant forces within the organisation today are increasingly seeking compromise and negotiation. [16]

The PT had found itself facing the same dilemma – and had made its choice. A radical rhetoric of participation and support for social movements belied the pursuit of what Lula called ‘governability’ – a project for broad cross-class electoral support for a PT government. As James Petras had noted:

In Brazil, the Workers Party is experiencing tensions between an increasingly social democratic leadership willing to sacrifice commitments to structural change in order to preserve electoral opportunities and militant rank and file trade unionists being increasingly pressured by Collor’s neo-liberal economic strategy toward more and more direct action initiatives. [17]

The pressures were to grow dramatically during the eight-year presidency of Fernando Henrique Cardoso. But in fact, Lula and the PT had already taken the decision as to the direction the PT would take and the strategy it would adopt.

The view from the presidential palace

The military regime which took power in 1964 set in motion a programme of rapid expansion organised from the state and financed by massive private loans. This so called ‘Brazilian miracle’ came to a crashing halt at the start of the 1980s, and as it slowed in the period after 1978, it encountered large-scale resistance from the very bodies of workers that the ‘miracle’ had concentrated in the new engineering plants in the ABC area. At the same time, the growth of the MST expressed the resistance of rural workers and their families to the attempt to reorganise agriculture in favour of agribusiness.

When the military regime yielded power, it attempted to control the transition through indirect presidential elections. Its failure to control the process as it might have wished produced a weak civilian administration under Tancredo Neves, but Neves’s death on the eve of his inauguration passed the presidency to José Sarney. Sarney was himself a landowner who was a close ally of the military in his home state of Maranhão. Nevertheless, he switched allegiances – at least on the surface – and became an advocate of agrarian reform. But the extreme scepticism of the leaders of the MST proved justified – Sarney’s agrarian reform was a shadow of the reform he had promised, and even that fell apart in the face of landowner resistance. The MST, for its part, intensified its rate of land occupation. [18] And the level of working class activity began to rise in the mid-1980s as well. Yet by the end of the decade, as the 1990 presidential elections approached, ‘Brazil witnessed a steadily increasing concentration of wealth and income in the hands of the top 5 percent; the purchasing power of the 50 percent of the population receiving the minimum wage is currently (1991) at a historic low.’ [19]

Fernando Collor, a media executive and a well known media personality, won the presidency by a narrow margin in 1990 – beating Lula:

In March 1990 ... Collor announced an IMF-type anti-infaction (stabilisation programme) which included an end to price controls, the elimination of producer subsidies, and a major reduction in the size of the public sector. [20]

But in this Collor was simply imposing with more brutality the measures already pursued by Sarney and his predecessor government. Its purpose was to squeeze living standards and public spending in order to repay the mushrooming service on public debt. Once in power Collor obeyed the dictates of his masters and set out to impose the punitive regime that the IMF and others were demanding in exchange for a rescheduling of the debt. The complete failure of the plan simply produced a second version, Plan Collor II, which accelerated the previous measures, expanded the range of privatisation and imposed new austerity measures. Brazil, in other words, was experiencing its first brutal form of ‘structural adjustment’. [21] The consequence was accelerating inflation and a consequential catastrophic collapse in living standards. Millions fell below the line of absolute poverty. By 1994 the inflation figure had reached 2,000 percent. But Collor was no longer there to supervise it – he was impeached in 1993 for multiple corruption. His successor, Itamar Franco, appointed a new finance minister, a man who was known in the 1970s as a leading Marxist theorist, Fernando Henrique Cardoso.

A year later Cardoso became president and launched his own solution. It was neo-liberalism at its most extreme, intensifying privatisation, liberalising imports and throwing the doors open to foreign capital. But it was not only an encouragement to foreign capital to invest in industry – this was an invitation to speculators too, with high interest rates and special conditions to allow foreign speculators to move in and out of the economy at a moment’s notice. Between 1995 and 1999 foreign investment went from representing 6 percent of GDP ($42.5 billion) to 21.6 percent ($197.7 billion). Inflation plummeted (to 1.7 percent in 1998), imports fell in price and the value of wages rose. Some 9 million people escaped absolute poverty (leaving 33.9 percent of the population-some 50 million people – still surviving in misery). [22]

But this whole short-term resurgence was based on massive borrowing. Cardoso, the theorist of dependency and development, was elaborating a plan (the Plan Real) which envisaged the fastest possible integration of the Brazilian economy into the global capitalist system. By late 1995 interest rates were at 64.8 percent and privatisation was accelerating. If there were short term gains in growth in the job market, and control of inflation, it was Cardoso’s own predictions (in the 1970s) on the consequences of dependency that would now be confirmed as his presidency evolved:

Brazil’s access to overseas funding ultimately depended on the demand and supply of capital in the North and, in particular, on the cost of borrowing they set ... In practice this meant that the Brazilian economy was at the mercy of international developments triggered by the opportunities or dangers facing core [i.e. foreign] investors. [23]

By late 1997 one of those developments, the South Asian crisis, revealed how exposed the Brazilian economy was to the shock waves moving through the world system. Foreign investors fled Brazil, and the government borrowed high risk private capital to fill the gaps and service the burgeoning debt. Wages were frozen – unemployment rose dramatically. The collapse of the Russian economy a year later drove the point home again. Cardoso turned to the IMF for a $1.5 billion loan:

As Joseph Stiglitz recently reminded us, when the IMF comes in to bail out a Third World economy, it virtually always calls for austerity to force a deflation that will enable the country to earn foreign exchange and run a government surplus in order to pay back its debts. It does everything possible to prevent a reflation of demand to raise employment and alleviate popular suffering, since this would tend to make for bigger government and public sector deficits. [24]

The pattern was faithfully reproduced in Brazil from 1998 until the end of Cardoso’s second presidential term in 2002. The net result of his ambitious and high-sounding ‘Third Way’ [25] was an average rise in per capita income of just 1 percent across those eight years, a doubling of urban unemployment between 1995 and 2000, and a fall in the value of real wages of over 10 percent by 2001. Most scandalous of all was the picture of income distribution in the new Brazil. In 1999, 10 percent of the population owned 47.4 percent of the national income, while the bottom 10 percent shared between them only 8.1 percent of the total.

While the auction of publicly owned utilities had earned $90 billion, none of that was reinvested in Brazil – rather the general picture was one of mergers, acquisitions and collapse of small and medium enterprises. Their production was then replaced by imported goods – telephones are one among many examples. All of this was then covered by emergency IMF loans – of $15 billion three yeas ago, and last year (2002) a further loan of $30 billion. The usual conditions applied!

This then was the situation of economic and social crisis in which Lula presented his candidacy for the presidency of Brazil.

Olé olé olé olé – Lula Lula!

In the weeks before and after Lula’s assumption of power the atmosphere was festive. Finally, after so many near misses, the Workers Party candidate had been elected. The level of expectation among ordinary Brazilians was extraordinary. Brazil, after all, was experiencing hunger. The level of unemployment had risen to close to 10 percent of the population. The official minimum wage of 211 reales at the end of 2002 was roughly equivalent to $60 per month. The number of people without homes, or living in fragile and temporary accommodation, was one more result of the deepening crisis in the Brazilian economy. The portrayal of life in the city slums – the favelas – in films like City of God may have distorted the proportion of people involved in drug trading and associated crime – and ignored the number of people who did find work of some kind or who simply struggled to make ends meet. But the truth was that Brazil’s huge and spreading cities were experiencing a growing level of social violence – an obvious and self destructive consequence of the absence of horizons for half the population at least. Add to that the small business sector that had experienced catastrophic collapse in the mounting crisis after 1996 – where perhaps much of that violence was concentrated. [26]

Throughout that period employed workers had been confronted with wage freezes, a steep decline in the purchasing power of what they did earn – a minimum wage, for example, which had not changed for several years and which was completely inadequate. Privatisation’s effects were much the same as those experienced everywhere else in Latin America – a steep decline in the quality of public services. And where there was resistance, the response was stubborn and unyielding and the consequences were often severe. The bus drivers of São Paulo, who had struck for improved wages, were fined after the strike ended and had prison sentences hanging over them for non-payment of fines. The oil workers in the state-owned enterprise Petrobras had met repeated repression when they flexed their muscles over the falling value of their wages.

The Landless Workers Movement (MST) had given its support to the PT, but insisted on its autonomy from it. And while Cardoso boasted that some 90 million hectares of land had been appropriated for redistribution among the landless, the real picture was very different. The majority of that land was in the Amazon basin, and was effectively impossible to cultivate, or as often as not it was controlled by local landowners and their armed thugs who had no intention of yielding the land to settlement (an entirely familiar experience over 20 years of land occupation under MST leadership). [27] And at the same time, some 60 million hectares of serviceable and fertile land had been absorbed into large-scale agriculture as a result of mergers and takeovers.

Some within the PT, even in recent weeks, have called for a complete break between the PT and the MST, others for a judicious distance to be established. But most leading PT members regard the MST with suspicion as ‘ideological purists’ – though this may have something to do with the MST’s absolute prohibition on any member accepting a government post at any level.

For all these sectors, the election of Lula was the fulfilment of a long held hope, a yearning for a just redistribution of wealth, for an end to hunger, for the exercise of control over the unrestrained activities of the transnational capitalist interests that Cardoso had invited to take control of key areas of the Brazilian economy. Above all, the financial agencies – the IMF and the World Bank – would now be subject to a government that would recognise the injustice of a debt incurred largely to service previous debts and to create favourable conditions for external investors at the expense of Brazil’s population.

And if such extraordinarily high expectations were invested in a government led by Lula, it was because he and his party had somehow come to symbolise the sustained resistance of the working classes over 20 years. In other words, the name Lula and the logo ‘PT’ had gathered around them an enormous symbolic capital. And within the PT itself there were still many sections and factions of the revolutionary left who fostered and reinforced the notion that the PT did carry within it the legacy of workers’ struggle.

I have tried to show, in the earlier part of this exploration of the Brazilian experience, that the myth of the PT did not necessarily correspond to its practice – especially as it came increasingly close to positions of power and control at city and state levels. The internal contradiction within PT, to which many commentators have referred, was not a tactical difference, but a strategic division. Yet, as the 2003 election results have shown, the hopes and aspirations have been invested in Lula and his party despite the deep ambiguities of their trajectory over recent years.

If those different hopes were set against what we already know about Lula’s presidency, so recently begun, would they be justified in their expectations?

The view from above

Before assuming the presidency Lula announced his principal cabinet nominations. In every area concerned with the economy, his nominees were people of the right committed to neo-liberal strategies. Most emblematic was his proposed director of the Central Bank – Henrique Meirelles, ex-president of the World Bank, a millionaire businessman and a member of the PMDB. More importantly, Meirelles was a key figure in the Cardoso regime and as he himself proudly announced, he represents ‘continuity’! As the gilt on the gingerbread, Lula simultaneously announced the independence of the bank. Similar nominations of wealthy businessmen committed to the global capitalist project were announced for the economics ministry (Palloci) and the ministry of development (Furlan). At the ministry of agriculture the new incumbent was a representative of some of the most powerful agribusiness interests in the country.

These appointments need to be seen against the background of Lula’s general policy regarding debt – currently at $400 billion and rising. The PT government has committed itself to honouring the foreign debt incurred by the Cardoso government on behalf of a shrinking number of powerful private economic interests. Presumably, if the debt obligation is accepted without renegotiation, so too are the conditions appended to it – the freeze on public spending, the increase in the domestic capital surplus [28], the maintenance of a low wage bill, etc. Thus the first, best hope of this most central of strategic decisions – a refusal to countenance the repayment of the foreign debt – has already been frustrated.

On the other hand, Lula has insisted that he is also simultaneously pursuing a policy of development. He would have to be very deaf indeed not to hear the clamour from the vast majority of Brazilians for a redistribution of wealth. That, of course, would embrace the land redistribution and agrarian reform for which the MST has fought since its foundation. And at the ministry of agrarian reform the new incumbent, Roseto, would seem to have appropriate credentials. He is a member of Democracia Socialista, a Trotskyist organisation within the PT allied to the USFI, the Fourth International. Yet when the economic development and agriculture ministries are firmly in the hands of the right, the ministry seems like a poisoned chalice.

More broadly, it is hard to imagine any meaningful policy of development that does not involve the growth of the domestic market and a high degree of state control and direction of the economy. Yet it is quite clear that, as far as control over economic strategy is concerned, the ball has already been passed back to the global system. While it is true that Brazil occupies something like eleventh place in the list of industrialised nations, the structure and ownership of that industry, in the wake of its transformations under Cardoso, tie it to the movements of global capital. By the same token, the growth of the internal market requires radical policies of redistribution of income. While it is easy to make sonorous promises, the clear signs after a few weeks of a Lula presidency are that this is wholly incompatible with those other neo-liberal strategic interests to whom, it seems, Lula is already hostage. The minimum wage, for example, will rise from 211 to 240 reales per month. Independent calculations suggest that for an average family of four to maintain an acceptable standard of living would require 1,500 reales at 2002 prices!

When civil servants who have been denied any wage increases for eight years called for an emergency 25 percent cost of living increase from the PT national and state administrations, the new government refused point blank to consider it. And yet – in a decision that will certainly come back to haunt them – MPs in the national parliament, where the PT have a majority, did immediately vote themselves a 30 percent increase in pay, from 6,000 to 8,000 reales, plus a virtual doubling of their expenses. When this cascades down through the various levels of the state apparatus, this will represent a considerable commitment – at the expense of those earning less than the minimum wage. ‘So to speak of a developmentalist policy in the era of capitalist globalisation is problematic in itself; but to think of implementing it side by side with neo-liberal policies is at the very least a contradiction in terms.’ [29]

In 2002 a proposed plebiscite to demonstrate the popular rejection of the Free Trade Area of the Americas (FTAA) was held, but the PT withdrew its support for the plebiscite and abstained from the campaign. While it expresses its rejection of the FTAA today, it is not in the terms of the mass campaign of last year – a rejection of the FTAA is a rejection of the policies of global capital and its neo-liberal strategists. Instead Lula and the PT have spoken of an alternative market, Mercosur. Given Brazil’s tiny share of world trade (around 1 percent) and its export dependence on the US (around 23 percent of total exports), this proposed alliance of national capitals is a phantasm in an age of aggressive global expansion. In any event, it is to Brazil’s internal market that any progressive government should be looking. However, to repeat the point, there can be no internal market unless there is a commitment to a radical redistribution of wealth. But there is no such policy!

The question of hunger, however, has been central to Lula’s early governmental decisions. One of the two new institutions created by the new government is the ‘Fome Zero’ (Zero Hunger) campaign around Lula’s promise to ensure that ‘every Brazilian will eat three proper meals a day’. For the 53 million or so who have no such possibility at the moment, this is a promise full of meaning.

Yet what is the reality of the proposed campaign? Essentially it is a food welfare programme, to be paid for either by tokens or by a sort of credit card which may be exchanged for food. We know in Britain how socially disabling food tokens are. They identify and further marginalise the poor. More importantly, these policies are not only paternalistic but they are not redistributive; they do not alter the share of national income that goes to the poor. This kind of ‘social inclusion’ programme – for that is what it is – creates a dependency on the state and in the real world of a political life controlled and dominated by the PT and its allies, a relationship of clientilism.

But there is a yet more sinister element. The second institution created in the early days of the Lula government is the CDES, the Commission for Social and Economic Development on which most trade unions and social movements are represented. Britain has its own experience of such National Economic Development Councils. But the frame for the commission’s work was set out by Lula in a pre-inauguration meeting with trade unionists in which he called on employed workers to ‘recognise their social responsibility towards the poor’. ‘Helping them is much more revolutionary than demanding a 5 percent wage rise,’ he said.

The irresistible conclusion is that there will be redistribution, but only from the relatively poor to the very poor – while the beneficiaries of the years of neo-liberal economic transformation will enjoy the protection of a workers’ government.

Lula from below

Seen from below, and from the perspective of all those who have invested such hope and expectation in Lula, the new regime may provide an opportunity, a real opening. It is not a matter at this early stage of attacking a government which is viewed with such optimism by the mass of working people. Instead the task is to build a movement ready to support whatever initiatives may come from that government – but able to act independently of its institutional arrangements to enact the changes for which so many have waited for so long.

But the reality, I suspect, is that those institutional arrangements will represent an obstacle to the fulfilment of those aspirations from a very early stage. What kind of government is it? The answer lies in the term that Lula – or rather the besuited, elegant and professionally advised Luis Inacio da Silva-increasingly employs to describe the framing political concept of his presidency – ‘governability’. In practice the term means an agreement with conservatives and capitalists to maintain social and economic stability. Thus the ‘equilibrium’ in the cabinet is the first manifestation of ‘governability’; the second is the sharing of parliamentary posts with the right – thus Jose Sarney, the ex-president, is the PT’s candidate to lead the Senate in exchange for his party’s support for the PT candidate for president of Congress.

How will Lula react to the new wave of occupations planned by the MST in March? How will it respond to a national strike of oil workers, which seems likely to occur? How will it deal with a national strike of the white collar workers to whom it has denied a long overdue wage increase? What will ‘governability’ mean in those circumstances? In the end the maintenance of a political coalition forged with a large section of the bourgeoisie in exchange for ‘stability’ will be determinant, especially when the instruments of economic power have already been delivered into their hands.

A more likely scenario is that the trade union leadership will be called upon to maintain what is already being called a ‘truce’ (presumably an agreed pause in the class struggle?). After all, a glance back at the PT’s real history over the last decade and a half shows us not a party engaged in building the capacity of the mass movements, the social organisations and the trade unions to develop their capacity to struggle, but rather a growing insistence that they cede that impulse to struggle to those who will govern in their name.

They may for a brief period govern in their name – but ‘governability’ will ensure that they cannot govern in their interests, not when they are in a strategic alliance with their class enemies. This is not a time to denounce Lula – but it is a time to demand that he acts on behalf of those who put him where he is. That can only be done from below, from the mass movement; the challenge cannot be mounted from secret seminars in the presidential suites of Brasilia, and the subtleties of political debate will pale into insignificance in the face of the pressures of capital. For revolutionaries, the task – as always – is to build on our victories and prepare for the struggles to come; the socialist future will emerge from the experience of struggle from below, and the definitive transfer of power and control to those who for so long have produced the extraordinary and highly concentrated wealth of this huge but still deeply divided country.


1. E. Sadir, Correo de Prensa de la IV internacional, in Boletín Electrónico, no. 530, 9 January 2003.

2. Rouge, 20 January 2003.

3. Much of the information on this early history is taken from D. Beecham and A. Eidenham, Beyond the Mass Strike: Class, Party and Trade Union Struggle in Brazil, in International Socialism 36 (Autumn 1987), pp. 18–19.

4. See the discussion of the economy below.

5. D. Beecham and A. Eidenham, op. cit., p. 19.

6. Brazil State and Struggle (Latin America Bureau 1982), p. 67.

7. D. Beecham and A. Eidenham, op. cit., p. 24.

8. He was finally acquitted of the charge in 1984.

9. D. Beecham and A. Eidenham, op. cit., p. 29.

10. Ibid., p. 32.

11. Reproduced in M. Lowy (ed.), Marxism in Latin America from 1909 to the Present (Humanities Press 1992), pp. 264–271.

12. Ibid., p. 264.

13. Ibid., p. 269.

14. The story of the MST is movingly told and with a wealth of detail in S. Branford and J. Rocha, in Cutting the Wire (Latin America Bureau 2002).

15. For more on this see L. Kane, Popular Education and Social Change in Latin America (Latin America Bureau 2001), particularly ch. 4.

16. I.J. Rodrigues, The CUT: New Unionism at a Crossroads, in NACLA Report on the Americas: Report on Brazil, vol. XXVII/6 (May/June 19950), p. 36.

17. J. Petras and M. Morley, Latin America in the Time of Cholera (Routledge 1992), p. 20.

18. See S. Branford and J. Rocha, op. cit., pp. 31–32.

19. J. Petras and M. Morley, op. cit., p. 13.

20. Ibid., p. 52.

21. For the best analysis of the experience of neo-liberal economic measures through the 1990s in Latin America, see D. Green, The Silent Revolution: the Rise of Market Economics in Latin America (Latin America Bureau 1995).

22. This section owes much to Geisa Maria Rocha’s careful consideration of the Brazilian economy under Cardoso in Neo-dependency in Brazil, in New Left Review (July/August 2002), pp. 5–34.

23. Ibid., p. 13.

24. Ibid., p. 15.

25. Cardoso appears to have seen no contradiction between his early Marxism and his current enthusiastic advocacy of neo-liberalism. The ‘Third Way’ he espoused may have been closer to the route taken by Felipe Gonzalez in Spain, but he obviously saw himself in the same group as Blair. And in their shared enthusiasm for the benefits of globalisation, for privatisation and for the extension of the market to every sphere of human activity, they clearly are compatible bedfellows.

26. Apart from films like City of God, the novels of Patricia Melo – Killer or Inferno – give a flavour of favela life, as does the proliferating prison rap music that has so defined the last few years in Brazilian culture.

27. See S. Branford and J. Rocha, op. cit.

28. In neighbouring Argentina that same phrase has been used to explain the combination of cutbacks in all areas of public spending, plus a rise averaging 10 percent in the price of all public utilities – gas, water, electricity, transport.

29. R. Polly, Governo Lula: uma Analise, in Socialismo Internacional, no. 1 (São Paulo, January 2003), p. 9.

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