World Economy

Brazil Crisis a Blessing, a Curse

Brazil Crisis a Blessing, a CurseBrazil Crisis a Blessing, a Curse

The Lula development model that lifted 35 million people out of poverty and raised living standards for another 20 million people during the governments of President Luiz Inacio Lula da Silva (2003-2011) has run its course.

This has come at a time when the global financial system is in crisis and is seeking economic recovery and profits by manipulating the interest rates paid by indebted countries, leaving their governments without much leeway to find alternative ways of meeting their commitments, Tarso Genro, former Brazilian minister of justice and education wrote for IPS.

The current fiscal crisis in Brazil has emerged from these two historical situations.

Lula’s model, underpinned by high commodity prices, drove social inclusion and increased the purchasing power of wage earners. It also promoted enormous investment in social housing and public education, embarked on a policy of diversified international relations, and made large investments in infrastructure.

It was a period of intense social dialogue among a wide spectrum of participants that went from bankers to landless peasants.

The model became exhausted, not because it failed, but because in fulfilling its goals it created new social demands.

The Lula governments reformed the class structure in Brazil, and now a large proportion of the population aspires to continue its upward mobility and improvement in their quality of life. This will be possible only through a further reduction of the country’s tremendous social inequalities, because the only way to grow the economy without increasing debt is to expand demand in the great mass domestic market in this country of 204 million people, a large proportion of whom are under-consuming according to the standards of advanced capitalism.

Brazil also possesses unexplored sources of wealth, the most obvious of which is its huge offshore oil reserves.

  Corrupt Systems

Some have blamed the present political crisis on corruption. Actually, it would be true to say that the crisis has been aggravated as a result of corruption cases initiated in the state apparatus decades ago. These were never before investigated effectively and independently, and they finally came to light during the governments of Lula and President Dilma Rousseff. Corruption emerged from criminal power systems embedded in the state during governments prior to those of the Workers’ Party (PT – Partido dos Trabalhadores). These were used by part of the PT for its own benefit and to maintain its power.

But it is important to remember that the discovery of these corrupt systems was possible because of the strengthening of organs for control and investigation, which occurred primarily under the Lula governments. Although the PT shared, along with all the other parties, in the corruption of the state and the political system, it is also true that corruption was never fought as hard as it was during the PT governments.

The crisis may therefore be seen as “blessed” because, after Brazil recovers from it, there will be a new anti-corruption consciousness in the country among political and business elites. Ultimately, if the PT wishes to survive as the proponent of a democratic and egalitarian utopia, it will have to undertake a profound organizational, programmatic, ethical and political reform.

  Struggle for Power

The political crisis in Brazil cannot be fully understood without taking into account two vital factors in our history.

First, the period since the 1988 constitution is the longest democratic era in the country’s history. Although it arose from a pact with the military regime, it set the country on a course toward social democracy, which at the time was in reverse internationally because of pressure from neoliberal reforms.

Second, Brazilian society continues to have yawning social and economic inequalities, the consequences of the policies of an elite characterized by a colonial and slave-owning culture and opposed to any type of income redistribution through the state, which it views as an interloper trying to appropriate its private wealth.

These two factors gave rise to the current crisis as factions have struggled for power and to define the development model and reform of the political system that will take shape in the next government period.

  Hatred Unleashed

But the crisis is “cursed” on two accounts. On the one hand, never has so much hatred been unleashed against the segment of society represented by the PT and other left wing parties, opening wounds that will be difficult to heal.

On the other hand, the ferocious campaign against the PT governments has itself created economic instability that has benefited the rent-extracting sector, increased the wealth of the rich and impoverished the rest of society. According to reliable sources, “large fortunes have grown again in the first half of 2015”, implying that the social deficit has increased as state functions have been reduced.