Lula’s Brazil

By Perry Anderson:

“Material betterment is not social empowerment”


From the start, Lula had been committed to helping the poor. Accommodation of the rich and powerful would be necessary, but misery had to be tackled more seriously than in the past. His first attempt, a Zero Hunger scheme to assure minimum sustenance to every Brazilian, was a mismanaged fiasco. In his second year, however, consolidating various pre-existent partial schemes and expanding their coverage, he launched the programme that is now indelibly associated with him, the Bolsa Família, a monthly cash transfer to mothers in the lowest income strata, against proof that they are sending their children to school and getting their health checked. The payments are very small – currently $12 per child, or an average $35 a month. But they are made directly by the federal government, cutting out local malversation, and now reach more than 12 million households, a quarter of the population. The effective cost of the programme is a trifle. But its political impact has been huge. This is not only because it has helped, however modestly, to reduce poverty and stimulate demand in the worst afflicted regions of the country. No less important has been the symbolic message it delivers: that the state cares for the lot of every Brazilian, no matter how wretched or downtrodden, as citizens with social rights in their country. Popular identification of Lula with this change became his most unshakeable political asset.

Materially, a succession of substantial increases in the minimum wage was to be of much greater significance. These began just as the corruption scandals were breaking. In 2005, the rise was double that of the previous year in real terms. In the election year of 2006, the rise was still greater. By 2010, the cumulative increase in the rate was 50 per cent. At about $300 a month, it remains well below the earnings of virtually any worker in formal employment. But since pensions are indexed to the minimum wage, its steady increase has directly benefited at least 18 million people – the Statute of the Elderly, passed under Lula, consolidating their gains. Indirectly, too, it has encouraged workers in the informal sector not covered by the official rate, who make up the majority of the Brazilian workforce, to use the minimum as a benchmark to improve what they can get from their employers. Reinforcing these effects was the introduction early on of crédito consignado: bank loans for household purchases to those who had never before had bank accounts, with repayment automatically deducted from monthly wages or pensions. Together, conditional cash transfers, higher minimum wages and novel access to credit set off a sustained rise in popular consumption, and an expansion of the domestic market that finally, after a long drought, created more jobs.

In combination, faster economic growth and broader social transfers have achieved the greatest reduction in poverty in Brazilian history. By some estimates, the number of the poor dropped from around 50 to 30 million in the space of six years, and the number of the destitute by 50 per cent. Half of this dramatic transformation can be attributed to growth, half to social programmes – financed by higher revenues accruing from growth. Nor have such programmes been confined to income support. Since 2005, government spending on education has trebled and the number of university students doubled. During the 1990s, higher education in Brazil largely ceased to be a public function, with three-quarters of all students going to private universities that enjoyed tax exemption. Astutely, these have been obliged, in exchange for their exemption, to offer scholarship places to students from poor or non-white families who would otherwise never have a chance of getting beyond middle school. However poor the quality of instruction – it is often terrible – the hope of betterment has made the programme, enrolling some 700,000 students to date, a great popular success, sometimes compared for democratising effect to the GI Bill of Rights in postwar America.

In 2006, not all of this had yet been achieved. But more than enough had been done to shield Lula from the battering of his adversaries. Popular opinion was not entirely indifferent to corruption – at the height of the mensalão, his ratings had dropped quite sharply. But measured against such appreciable improvements in people’s lives, backhanders did not count. By the spring, the political tables had been turned so completely that Serra, looking at the opinion polls, decided he had no chance against Lula, leaving a hapless rival in his party to be thrashed in the presidential election that autumn, when Lula walked away with the same majority as he won four years before, 61 per cent in the second round. This time, however, its social composition differed. Alienated by the mensalão, much of the middle-class electorate that had rallied to Lula in 2002 deserted him, while the poor and the elderly voted for him in greater numbers than ever before. His campaign, too, struck a different note. Four years earlier, when its aim had been to reassure doubtful voters, his managers had marketed him as the bearer of ‘peace and love’ to the country. In 2006 the tone was less saccharine. Brushing aside lapses in the PT of which he had, of course, been unaware, the president launched an aggressive counter-attack on the privatisations of the previous regime, which had enriched a few at the expense of the nation and could be expected to resume if his opponent were elected. There was a gulf between his government and Cardoso’s: not a single enterprise had been privatised under Lula. The disposal of public assets, often on the murkiest terms, had never been popular in Brazil. The message struck home.

Buoyed by socio-economic success, and a more hard-hitting political victory, Lula’s second mandate was a much more confident affair. He was now not only the undisputed master of popular affection, as the first president to bring a modest well being to so many of his people, but also in complete control of his own administration. His two leading ministers were gone. Palocci – to Lula ‘more than a brother’ – he might regret personally, but he was no longer required to calm the nerves of overseas investors. Dirceu, a virtuoso of cold political calculation and intrigue, he had never liked and somewhat feared. Their joint elimination freed him for sole command in Brasilia. When, midway through his second term its test came, he handled it with aplomb. The crash of Wall Street in 2008 might be a tsunami in the US, he declared, but in Brazil it would be no more than a ‘ripple’ – uma marolinha. The phrase was seized on by the press as proof of reckless economic ignorance and irresponsibility.

But he was as good as his word. Counter-cyclical action was prompt and effective. Despite falling tax revenues, social transfers were increased, reserve requirements were reduced, public investment went up and private consumption was supported. In overcoming the crisis, local banking practices helped. Tight controls, holding multipliers of the monetary base well below US levels, and greater transparency had left Brazilian banks in much better shape than those in the US, protecting the country from the worst of the financial fall-out. But it was concerted, vigorous state policy that pulled the economy round. Lula’s optimism was functional: told not to be afraid, Brazilians went out and consumed, and demand held up. By the second quarter of 2009, foreign capital was flowing back into the country, and by the end of the year the crisis was over. As Lula’s second mandate came to an end, the economy was posting more than 7 per cent growth, and nature itself was smiling on his rule, with the discovery of huge deposits of offshore oil.


Viewed historically, however, comparisons with Vargas, let alone Perón, miss the mark. The differences between their forms of rule and Lula’s are fundamental. Not that the great practitioners of populism in Brazil and Argentina were all that alike themselves. Vargas’s rhetoric was paternalist and sentimental, Perón’s rousing and aggressive, and their relationship to the masses was quite distinct. Vargas built his power on an incorporation of newly urbanised workers into the political system, as passive beneficiaries of his care, with a protective labour law and a gelded unionisation from above. Perón galvanised them as active combatants against oligarchic power, with a mobilisation of proletarian energies in a trade-union militancy that outlived him. The one appealed to lachrymose images of ‘the people’, while the other called up the anger of los descamisados – the local sansculottes, but without shirts rather than breeches.

Lula’s exercise of power has involved none of all this. His rise was based on a trade-union movement and political party far more modern and democratic than anything Vargas or Perón ever envisaged. But by the time he won the presidency at his fourth attempt, the PT had been largely reduced to an electoral machine. In power, Lula neither mobilised nor even incorporated the electorate that acclaimed him. No new structural forms gave shape to popular life. The signature of his rule was, if anything, demobilisation. The trade unions organised more than 30 per cent of the formal labour force in the 1980s, when he made his name as their most gifted leader. Today, the figure is 17 per cent. The decline preceded his period in office, but was not altered by it. Even the imposto sindical dating back to the Fascist-inspired legislation of the most repressive period of Vargas’s rule (the Estado Novo), whose deduction and distribution of dues by the state was long and rightly viewed by the PT as a mechanism for sapping union activism, and whose abolition was a key demand of the early 1980s, has been left untouched. Nor, on the other side of the ledger, have the forms of clientelism characteristic of classic populism been reproduced. The Bolsa Família is administered impersonally, clear of capillary systems of patronage. The pattern of rule is quite distinct.


For, far from doing any harm to the propertied (or credentialed), this was a government that greatly benefited them. Never has capital so prospered as under Lula. It is enough to point to the stock market. Between 2002 and 2010, Bovespa outperformed every other bourse in the world, rocketing by 523 per cent; it now represents the third largest securities-futures-commodities complex on earth. Huge speculative gains accrued to a modern bourgeoisie accustomed to gambling on share prices. For more numerous and risk-averse sectors of the middle class, sky-high interest rates yielded more than satisfactory returns on simple bank deposits. Social transfers have doubled since the 1980s, but payments on the public debt trebled. Outlays on the Bolsa Família totalled a mere 0.5 per cent of GDP. Rentier incomes from the public debt took a massive 6-7 per cent. Fiscal receipts in Brazil are higher than in most other developing countries, at 34 per cent of GDP, largely because of social commitments inscribed in the constitution of 1988 at the high point of the country’s democratisation, when the PT was still a rising radical force. But taxes have remained staggeringly regressive. Those living on less than twice the minimum wage lose half their income to the Treasury, those on 30 times the minimum wage a quarter of theirs. In the countryside, the clearing of vast interior areas of scrub for modern agribusiness, proceeding apace under Lula, has left landownership more concentrated today than it was half a century ago. Urban real estate has moved in the same direction.


Thus instead of further industrial advance, the consequence for Brazil of the latest wave of technological revolution has been to shift accumulation away from manufacturing to financial transactions and natural-resource extraction, with a very rapid growth in the banking sector, where profits are highest, and in mining and agribusiness for export. The former is an involution, diverting investment from production; the latter a regression, taking Brazil back to earlier cycles of reliance on primary commodities for growth. It was to the dynamic of these sectors that Lulismo had to adjust in coming to terms with capital. Here lay the second parameter. For the result was to transform the structures out of which it had emerged – the party and the trade unions which, after 2002, became the apparatus of power on which it rested. The leadership of the CUT, the principal confederation of labour, was put in charge of the country’s largest pension fund. The cadres of the PT colonised the federal administration, where a Brazilian president has the right of nomination to over 20,000 well-paid jobs, far more than the spoils system has ever allowed the executive in America. Now all but completely detached from the working class, this stratum was inexorably sucked into the vortex of financialisation engulfing markets and bureaucracies alike. Trade unionists became managers of some of the biggest concentrations of capital in the country, the scene of ferocious struggles for control or expansion between competing predators. Militants became functionaries enjoying, or abusing, every perquisite of office.

As a new logic of accumulation interlocked with a new incrustation of power, a hybrid social layer was formed – de Oliveira would compare it to the duck-billed platypus, as a sport of the animal kingdom – whose natural habitat was corruption. The unorganised poor of the informal economy had now become Lula’s electoral base, and he could not be reproached for that, or for the neo-populism of his relationship to them, unavoidable for Chávez or Kirchner too. But between the leader and the masses lay an apparatus that had become deformed. Missing in Singer’s account was a sense of this dark side of Lulismo. What it had achieved was a kind of inverted hegemony. Where, for Gramsci, hegemony in a capitalist social order had been the moral ascendancy of the possessing over the labouring classes, securing the consent of the dominated to their own domination, in Lulismo it was as if the dominated had reversed the formula, achieving the consent of the dominant to their leadership of society, only to ratify the structures of their own exploitation. A more appropriate analogy was not the United States of the New Deal, but the South Africa of Mandela and Mbeki, where the iniquities of apartheid had been overthrown and the masters of society were black, but the rule of capital and its miseries was as implacable as ever. The fate of the poor in Brazil had been a kind of apartheid, and Lula had ended that. But equitable or inclusive progress remained out of reach.


Read full article at LRB – London Review of Books


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