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31
Lecio Morais is an economics adviser to the Brazilian Chamber of Deputies. Alfredo Saad-Filho
teaches in the Department of Development Studies of the University of London’s School of
Oriental and African Studies.
LATIN AMERICAN PERSPECTIVES, Issue 177, Vol. 38 No. 2, March 2011 31-44
DOI: 10.1177/0094582X10395890
© 2011 Latin American Perspectives
Brazil beyond Lula
Forging Ahead or Pausing for Breath?
by
Lecio Morais and Alfredo Saad-Filho
A review of the achievements of the Lula administration and an examination of the
contrasting political and social programs that disputed the Brazilian presidential elec-
tions in October 2010 reveal that there has been significant progress toward the consoli-
dation of a social democratic welfare state in Brazil and that further progress is possible
but far from guaranteed under the new administration.
Keywords: Brazil, Elections, Lula, Dilma Rousseff, Neoliberalism
The Brazilian presidential elections in October 2010 ostensibly posited a
choice between the independent diplomacy and the moderately redistributive
policies implemented in Lula’s second administration (2007–2010) and a return
to the rigidly neoliberal policies imposed by his predecessor, Fernando
Henrique Cardoso (1995–2002). This contrast is not strictly accurate, because
Lula’s first administration (2003–2006) maintained the macroeconomic policy
framework inherited from its predecessor. Although there was an important
policy shift in Lula’s second administration, continuities remained, especially
around the inflation-targeting framework managed by the country’s Central
Bank. More significant, the elections counterposed two incompatible political
alliances representing opposing views of citizenship and sharply distinct devel-
opment projects.
This article reviews Lula’s administration, highlighting the significance of
its achievements from the point of view of the left (on his election and first
administration, see Mollo and Saad-Filho, 2006; Morais and Saad-Filho, 2003;
2005; and Saad-Filho, 2003; 2007). It focuses on this administration’s imple-
mentation of “neo-developmentalist” policies and the gradual (re-)emergence
of elements of a welfare state in Brazil—the articulation of a “national” capi-
talism driven by an alliance between the “national” bourgeoisie,1 the popular
organizations, the informal and rural sector workers, and the state. The
authors argue that the left should promote the extension and radicalization of this
project. This position is elaborated in six sections. This introduction is the first.
The second and third survey Lula’s two administrations, highlighting the
implications of the economic policy shift that took place in 2007. The fourth
examines the social and political changes in the Brazilian state and the incre-
mental democratization of a deeply elitist society. The fifth reviews the 2010
32 LATIN AMERICAN PERSPECTIVES
elections. The conclusion summarizes the argument and outlines some of the
key challenges facing the new administration.
THE FIRST LULA ADMINISTRATION
In earlier publications, we have argued that Lula was elected by a losers’ alli-
ance, a coalition of social groups that had been penalized by Cardoso’s project
of subordinated internationalization and financialization of the economy. This
alliance included, first, the unionized urban and rural working class, especially
the skilled and semiskilled manual and office workers, the middle and lower
ranks of the civil service, sections of the professional middle class, and many
informal but relatively secure workers. They had been the main sources of sup-
port for the Partido dos Trabalhadores (Workers’ Party—PT) and historically
defended a nationalist, redistributive, and expansionary economic strategy.
Second, it included large segments of the unorganized and unskilled working
class, among them many informal and unemployed workers of the metropoli-
tan peripheries. They supported Lula in 2002 because of his perceived commit-
ment to redistribution through welfare provision and, conjuncturally, because
of the PT’s alliance with part of the Catholic hierarchy and several evangelical
churches, which are influential among this segment of the working class (see
Singer, 2009). Third, most national capitalists had been disappointed by
the failure of Cardoso’s neoliberal growth strategy and were exhausted by the
prolonged stagnation of the Brazilian economy, the onslaught of transnational
capital, and the pressure of cheap imports after the liberalization of trade and
finance in the early 1990s. This group demanded state support to improve its
competitive position.2 Fourth, several right-wing oligarchs and local politicians
supported Lula because they expected the PT to be sensitive to the plight of
Brazil’s poorer regions and therefore to transfer more resources to them.
Lula’s commitment to “change with stability” became critically important
in the run-up to the elections, when the country was battered by severe finan-
cial and balance-of-payments turbulence, reinforcing the perception that his
administration was vulnerable and that it was imperative to stick to economic
orthodoxy. In addition to this, the fragmentation of the Brazilian political sys-
tem requires the construction of complex alliances in order to pass legislation.
Since the “core” left-wing parties in Lula’s coalition controlled less than one-
third of Congress, a legislative majority required the search for an “outer circle”
of (unreliable) allies.3 Finally, the executive could never rely on the judicial
system, which is often as conservative as it is corrupt.
At the start of his administration, Lula tightened up the “core” macro-
economic policies introduced by the previous administration, including infla-
tion targeting, Central Bank independence, large fiscal surpluses, free capital
mobility, and flexible exchange rates. The government maintained the exist-
ing support for export-oriented agribusinesses, although subsidies were also
made available to family agriculture and welfare programs were expanded.
No privatizations were reversed, and progress on land reform was extremely
slow.4 In pursuit of the Holy Grail of Brazilian diplomacy, permanent mem-
bership in the UN Security Council, Brazil agreed to a U.S. request to lead the
UN stabilization mission in Haiti.
Morais and Saad-Filho / BRAZIL BEYOND LULA 33
Lula’s government disarticulated the Brazilian left in two ways. First, since
the foundation of the PT in the early 1980s, no political party has been able to
prosper to the left of it; the PT brought together hundreds of thousands of mili-
tants and the leadership of the most militant social organizations (see Branford
and Kucinski, 1995; 2003). Thus, the government never had to confront a sig-
nificant left opposition except within the PT, and these dissidents were dealt
with administratively. Most abandoned the party in the wake of the 2005 polit-
ical crisis (see below), migrating to the new Partido do Socialismo e Liberdade
(Party of Socialism and Freedom—PSOL) or joining other small radical organi-
zations, and many abandoned politics altogether. In this sense, Lula’s election
marked the end of an era for the Brazilian left and the failure of the world’s first
post–social-democratic and post-Leninist mass party (see Saad-Filho, 2007).
Second, the Brazilian president can influence the appointment of thousands
of civil servants at all levels of the administration. Lula’s appointments brought
into the state hundreds of progressive political, trade union, and nongovern-
mental organization (NGO) cadres, creating what was described as the “capture”
or the “nationalization” of the social movements (with the significant excep-
tion of the Movimento dos Trabalhadores Sem Terra [Landless Peasants’
Movement—MST]) (see Oliveira, 2006). For this reason, too, the organized left
was unable to pressure the government to break with neoliberalism.
Within two years the administration found itself in a political cul-de-sac.
The disarticulation of the left and Lula’s isolation from his traditional support-
ers forced the government to rely upon the unorganized workers, the national
capitalists, and the regional oligarchy, but their support was always condi-
tional upon the performance of the economy (to satisfy their self-interested
demands for markets and profits and to generate the resources for transfers
and handouts). Unfortunately for the government, its orthodox policies failed
to catalyze sufficient private (domestic and foreign) investment. Growth of
the gross domestic product (GDP) was patchy (see Table 1), and most social
and employment indicators either stagnated or deteriorated.5
The administration soon had to face another challenge. Realizing its vulner-
ability and aware of Lula’s bid for reelection in 2006, sections of the bourgeoi-
sie aligned with Cardoso’s neoliberal strategy launched a vicious attack in
mid-2005, focusing on the PT’s regular “purchase” of votes in Congress (the
grotesque escândalo do mensalão). The media pursued these stories relentlessly,
eventually claiming the scalps of two prominent ministers (including Lula’s
likely successor), the president and the treasurer of the PT, and several cadres
of the administration. The tide of sleaze came close to bringing down the gov-
ernment. Space limitations prevent a detailed analysis here, but the scandal
showed, first, that many PT cadres were amateurs, compared with the more
experienced politicians in rival parties (one activist was apprehended when
an airport X-ray machine revealed wads of cash stuffed in his underwear).
Second, these scandals were not minor, but they were easily trumped in mag-
nitude by those of the previous administration, which were never scrutinized
by the press or the justice system with similar rigor. Third, the scandals rarely
involved cases of illicit enrichment; corruption was mostly for the benefit of
the PT and the government, suggesting that it may be impossible to run a
competitive party and govern a fragmented neoliberal democracy without
resorting to shady funding practices. At the peak of the scandal, Lula found
34 LATIN AMERICAN PERSPECTIVES
that his government could not count on the support of the (dis)organized left
or rely on the oligarchy. He retreated to the poor urban peripheries and the
Northeast region, where the government’s social programs made him popular
(see Marques et al., 2009), and renewed his commitment to domestic capital,
which never failed to support his administration.
THE POLICY SHIFT
Despite the damage wrought by the mensalão, Lula fought a vigorous reelec-
tion campaign and trounced his main rival, Geraldo Alckmin, from Cardoso’s
Partido Social Democrático Brasileiro (Brazilian Social Democratic Party–
PSDB), by 61–39 percent of the vote in the second round of the 2006 elections.
Lula recomposed his top team and announced, at his second inauguration, the
realignment of his administration (see Boito, 2010). This policy shift expressed,
in part, Lula’s frustration with the inability of orthodox policies to deliver
growth; most recently, the Central Bank had raised interest rates in response
to the threat of inflation in 2004, and this had sharply reduced GDP growth in
the following year. Sluggish economic performance was incompatible with
the political stabilization of Lula’s government. The policy shift also responded
to the imperative to reconstitute the administration’s base of political support,
given its isolation from the organized left, most of the political elite, the more
internationalized fractions of capital, and the middle classes.6 The government
introduced a strategy of “national economic development” and appointed
heterodox economists and nationalist diplomats to the Ministry of Finance,
the Secretariat of Strategic Affairs, the Institute of Applied Economic Research,
and the National Bank for Economic and Social Development (Banco Nacional
de Desenvolvimento Econômico e Social—BNDES), which has become the
largest development bank in the world.7 The Central Bank remained untouched
TABLE 1
Basic Macroeconomic Variables
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010*
GDP (US$bn) 6,918 6,907 6,991 6,974 7,276 7,413 7,616 7,990 8,313 8,217 8,671
GDP per capita
(2009 US$) 6,900 6,910 6,990 6,970 7,280 7,410 7,620 7,990 8,310 8,220 8,670
GDP growth
(real per
capita, %) 2.8 -0.2 1.2 -0.2 4.3 1.9 2.7 4.9 4.0 –1.2 5.5
Inflation rate
(CPI, %) 6.0 7.7 12.5 9.3 7.6 5.7 3.1 4.5 5.9 4.3 5.3
Domestic
public debt
(% GDP) 45.5 48.4 50.5 52.4 47.0 46.5 44.0 41.0 38.4 42.8 41.4
Real interest
rate (annual
average) 10.1 8.4 3.8 15.8 8.8 14.3 11.1 5.9 7.2 4.8 4.9
*estimate.
Sources: Monthly bulletins and Press Notes of the Central Bank of Brazil (http:// www.bcb.gov.br) and
Ipeadata (http://www.ipeadata.gov.br).
Morais and Saad-Filho / BRAZIL BEYOND LULA 35
because it was politically impossible to restrict its independence or change the
inflation-targeting regime. Despite their inability to control monetary or exchange
rate policy, the neo-developmentalists were successful in implementing activ-
ist and redistributive fiscal and financial policies, aiming to maintain high
international reserves, raise aggregate demand, redistribute income, expand
consumer credit for the poor, and provide subsidized credit for productive
investment in Brazil as well as in new ventures abroad. These policies have
been able to temper the Central Bank’s orthodoxy.
At the end of 2005, Brazil repaid ahead of time the US$23.3 billion Cardoso-
era International Monetary Fund loan that had helped it to weather the 2002
balance-of-payments crisis and that signaled Lula’s continuing commitment
to neoliberal policies.8 Early in 2007, the government introduced a “growth
acceleration program” focusing on infrastructure, transport, and energy that
expanded public investment from 0.4 to 0.7 percent of GDP within a year
(Barbosa and Souza, 2010: 15). These initiatives were supported by expanded
investment by the state-owned enterprises, especially Petrobras, the oil conglom-
erate. The state-owned banks (BNDES, Banco do Brasil, and Caixa Economica
Federal) vigorously expanded their credit lines for investment, house con-
struction, and consumption, while private “national champions” were sup-
ported by the federal government with subsidized credit, preferential contracts,
and share purchases by the state-owned banks and pension funds, and their
expansion abroad was actively promoted by the state. These policies were
opposed by the PSDB, but they helped to raise the country’s investment rate
from 15.9 percent of GDP in 2005 to 19.0 percent in 2008. The growth of global
liquidity and demand during that period supported the expansion of Brazil’s
foreign trade and contributed to the increase of inward as well as outward
investment flows. The latter, in turn, led to the rapid transnationalization
of Brazilian capital, which was actively supported by the country’s new
diplomacy. The international reserves grew rapidly, helping to stabilize
the exchange rate and dislocate the threat of balance-of-payment crises (see
Table 2). Since this policy shift, the Brazilian economy has been growing
strongly (despite a “dip” after the global crisis), breaking with the pattern of
low growth since 1981.
Having secured the alliance with “domestic” capital and renewed its com-
mitment to the organized workers and civil servants (the latter through higher
wages and the targeted expansion of the bureaucracy), the administration
extended social provision in three ways: first, through the growth of its social
programs, especially Bolsa Família, which currently reaches 11.4 million house-
holds; second, through the expansion of social security coverage, which rose
from 45 percent of the workforce in 2002 to 51 percent in 2010;9 and third,
through a rapid (real) increase of the minimum wage by 67 percent between
2003 and 2010 (real GDP rose by 37 percent in this period). The higher mini-
mum wage raised the floor of the labor market and triggered a simultaneous
increase of federal transfers to pensioners, the unemployed, and the disabled.
Larger public-sector investment and expanded social provision did not
destabilize public finances because the expansion of public-sector activity was
largely funded by the additional tax revenues and social security contribu-
tions that resulted from faster economic growth and the formalization of the
labor market. The primary fiscal surplus fell only by 0.2 percent of GDP, to
36 LATIN AMERICAN PERSPECTIVES
2.3 percent, between 2003–2005 and 2006–2008. Fiscal activism, higher mini-
mum wages, and the expansion of domestic credit and social provision helped
to create a virtuous circle of growth supported by domestic investment and mass
consumption. Employment growth in the metropolitan areas increased from
156,000 jobs per year during the Cardoso administration to 499,000 per year
since the mid-2000s (see Table 3).10 The Gini coefficient fell from 0.57 in 1995 to
0.52 in 2008,11 and poverty declined from 35 percent of households in 2001 to 21
percent in 2009,12 while 32 million individuals (of a population of 193 million)
entered the “middle class.”13 These gains have been concentrated in the poorer
regions, with average real wages in the Northeast rising by 24 percent, twice
the national figure. There has also been a striking convergence of incomes in
the South and Center-West toward the higher levels in the Southeast, which
includes São Paulo and Rio de Janeiro.
The neo-developmentalist strategy survived the onset of the global crisis
and sustained the country’s rapid recovery. The government responded to the
crisis with aggressive countercyclical policies, including higher spending (pub-
lic sector and Petrobrás investment peaked at 2.6 percent of GDP in 2009, and
a mass housing program was introduced, costing 1.2 percent of GDP) and tax
rebates worth 0.3 percent of GDP. The state-owned banks sharply increased
the availability of credit to offset the contraction of loans by the private institu-
tions (BNDES lending alone expanded by 3.3 percent of GDP in 2009), while the
Central Bank cut interest rates, deployed US$72 billion to provide export
credit and stabilize the exchange rate, and injected another 3.3 percent of GDP
into the support of financial institutions. These policies were assisted by the
further expansion of the social programs, which grew from 6.9 percent of GDP
in 2002 to 8.6 percent in 2008 and 9.3 percent in 2009. The stabilization of
aggregate demand raised the nominal fiscal deficit from 1.9 percent of GDP
TABLE 2
Balance of Payments (US$ billion)
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010*
Exports 55.1 58.2 60.4 73.1 96.5 118.3 137.8 160.6 197.9 153.0 144.9
Imports 55.8 55.6 47.2 48.3 62.8 73.6 91.4 120.6 173.1 127.7 132.6
Trade balance -0.7 2.6 13.1 24.8 33.6 44.7 46.5 40 24.8 25.3 12.8
Current account -24.2 -23.2 -7.7 4.7 11.7 14.0 13.6 1.6 -28.2 -24.3 -35.1
Foreign direct
investment 32.8 22.5 16.6 10.1 18.2 15.2 18.8 34.6 45.1 25.9 22.6
Brazilian FDI -2.3 2.3 -2.5 -0.2 -9.5 -2.5 -28.2 -7.1 -20.4 10.1 - 5.6
Portfolio flows (net) 7.0 0.1 -5.1 5.3 -4.8 4.9 9.6 48.4 1.1 50.3 43.0
Balance of payments -24.2 -23.2 -7.6 4.2 11.7 14 13.6 1.6 -28.2 46.7 34.5
Foreign debt 216.9 209.9 210.7 214.9 201.4 169.5 172.6 193.2 198.3 198.2 243.8
Foreign debt/GDP (%) 36.0 41.1 46.7 38.8 30.3 19.2 16.1 14.7 12.1 12.3 12.7
International reserves 33.0 35.9 37.8 49.3 52.9 53.8 85.9 180.3 206.8 239.1 275.2
International reserves/
GDP (%) 5.5 7.0 8.4 8.9 8.0 6.1 8.0 13.7 12.6 14.8 14.3
Exchange rate (R$/
US$, average) 1.83 2.35 2.93 3.07 2.92 2.43 2.18 1.95 1.84 1.99 1.77
*estimate.
Sources: Monthly bulletins and Press Notes of the Central Bank of Brazil (http://www.bcb.gov.br) and
Ipeadata (http://www.ipeadata.gov.br).
Morais and Saad-Filho / BRAZIL BEYOND LULA 37
at the end of 2008 to 4.1 percent in 2009, while the domestic public debt rose
from 40.5 percent of GDP to 43.0 percent (Barbosa and Souza, 2010: 22–23).
However, after an initial slowdown, the economy rebounded, and GDP is
expected to grow by 7.5 percent in 2010—faster than at any time since the
mid-1980s.
Lula’s second administration also pursued an aggressive foreign policy.
Brazilian diplomats have sought to counterbalance U.S. influence in South
America and support the global expansion of Brazilian capital.14 They led the
effort to sink the U.S.-sponsored Free Trade Area of the Americas, which was
supported by the neoliberal fraction of the bourgeoisie (and the PSDB), and
Brazil has shored up the so-called pink-wave administrations in Argentina,
Bolivia, Ecuador, Paraguay, and Venezuela (see Lievesley and Ludlam, 2009).
In line with this strategy of global projection and support for domestic capital,
Brazil opened 40 new embassies and deftly explored the U.S. difficulty in
maintaining its global hegemony in the wake of the invasion of Iraq and the
ongoing global crisis. This strategy has been supported by Brazil’s economic
power and its peaceful image: the country has a large and diversified econ-
omy, but its armed forces are weak; it has no military tensions with its neigh-
bors and is constitutionally prohibited from building or storing nuclear
weapons. Since 2008, when the G-7 was compelled to seek G-20 support to
manage the global crisis, Brazilian diplomacy has positioned itself strategi-
cally to represent other developing countries. This has spilled over into the
international climate-change negotiations, and Brazil even attempted, together
with Turkey, to broker a deal to resolve the dispute over Iran’s nuclear policy.
Although some of these initiatives failed, they have signaled Brazil’s emer-
gence as a diplomatic power.
CHANGES IN THE STATE
This policy mix was very popular in the country, and it largely restored
Lula’s base of support among the organized and unorganized workers, national
capitalism, and some sectors of the oligarchy. After eight years in govern-
ment, national opinion polls showed that more than 80 percent of the voters
considered Lula’s government “excellent” or “good” while only 4 percent
TABLE 3
Sectoral Distribution of Employment
Workers Employed
(million, end of year)
Employment Growth During Each
Administration
Sector 1994 2002 2010 FHC % Lula %
Manufacturing 5.5 5.5 8.2 0.0 0.9 2.6 47.8
Construction 1.1 1.1 2.4 0.0 0.1 1.3 116.2
Services 9.7 14.0 21.0 4.4 45.1 7.8 55.7
Public administration 5.1 6.8 8.3 1.7 33.1 1.5 22.8
Other 2.3 1.3 1.6 –1.1 –46.0 0.4 30.4
Total 23.7 28.7 42.3 5.0 21.2 13.7 47.6
Sources: Ministry of Labor and http://www.caged.gov.br.
38 LATIN AMERICAN PERSPECTIVES
considered it “bad” or “very bad.” In the poorer regions, the positive
responses exceeded 90 percent. Despite these strengths, Lula’s popularity was
heavily skewed, and his government remained isolated from large swathes of
the middle classes and from the associated and dependent fraction of capital.
Throughout his career and especially since 2005, Lula was vilified by the
right-wing media15 and by the traditional (upper-) middle classes, who dis-
paraged his “populist” and trade union roots and lack of formal education.
They ridiculed his missing finger, lost in a work accident, and laughed at his
ungrammatical Portuguese. The media measured Lula’s government against
very different standards from those applied to its bourgeois predecessors.
This hatred was not because of narrow economic concerns: Lula insisted,
probably rightly, that the elite had never made as much money as they did
during his government. These fractions of the elite had two irresolvable objec-
tions to his administration.
First, they resented the loss of privileges associated with the expansion of
citizenship. Redistribution of income, however marginal, lifted millions from
absolute poverty and into the “middle class.” Consumer credit helped many
poor Brazilians to visit shopping centers, travel by air, frequent supermarkets,
and buy automobiles. Brazilian roads and airports are clogged, and their pre-
vious users complain bitterly about the lack of space to accommodate every-
one. These groups are equally dissatisfied with their loss of political prominence
and the realization that they have become unable to drive Brazilian politics
(see Singer, 2009).
Second, the nationalization of the social movements changed the Brazilian
state. For the first time, poor citizens could recognize themselves in the bureau-
cracy and relate to friends and comrades who had become “important” in
Brasília. These personnel changes, backed up by the policy shifts since 2007,
increased the legitimacy of the state and supported the claim of the poor to a
larger share of the products of their labor. These changes are evident on the
ground. This does not necessarily amount to collective action, and in some cases
it is inimical to it, but the affirmation of citizenship is centrally important for a
democracy. These changes have been called a “democratic revolution” by some
left-wing analysts (see, e.g., Wu, 2010). This is an exaggeration, but it illustrates
the significance of the new relationship between citizens and the state.
The achievements of Lula’s administration are in no way revolutionary, but
they are real enough. Some of them remain limited or are deeply problematic
for the left. For example, the liberalization of trade and capital flows and the
neoliberal economic policies transformed the country’s economic base in the
1990s. Domestic capital became much more closely integrated with foreign
capital; thousands of companies closed down because of foreign competition,
were purchased by foreign firms, or became assembly platforms processing
imported inputs for sale in global markets. Other firms upgraded technologi-
cally and survived, but only at the expense of tens of thousands of skilled jobs
(see OIT, 1999). The bourgeoisie remains deeply divided about these pro-
cesses, but most capitalists have adjusted to these new modalities of global
integration, and a large number of firms (including Odebrecht [construction],
Ambev [beverages], Gerdau [steel], and Friboi [processed foods]) are now
expanding abroad. However, the (re)integration of Brazil’s economic base and
the internalization of additional links of strategic value chains would require
Morais and Saad-Filho / BRAZIL BEYOND LULA 39
more aggressive industrial policies than those which the administration has
been either able or willing to consider. Problems of a different order are asso-
ciated with the government’s social programs, which have improved the
distribution of income despite the government’s failure to redistribute pro-
ductive assets. Subsidies to private universities have expanded the opportuni-
ties available to poor students, but they have been contested by many left-wing
academics and students. Finally, government policies on environmental pro-
tection and support for indigenous communities have achieved positive
results, but they have been challenged by several NGOs as either token or
counterproductive.
Such progress is clearly insufficient to satisfy the distributive and demo-
cratic aims of the left. Brazil remains one of the most unequal countries in the
world, and more could have been achieved in eight years. However, the
obstacles faced by Lula’s government 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 the Lula administration, which
chose a gradualist strategy backed up by minimal legislative and regulatory
changes. Despite his reluctance to break with neoliberalism, Lula pursued a
neo-developmentalist program bringing together the organized workers and
a sizable fraction of domestic capital, and his administration enjoyed the sup-
port of the vast majority of the poor.
In this light, the 2010 elections imposed a choice between two political, economic,
and social projects and two visions of the Brazilian state. Neither was revolutionary,
anticapitalist, or even unambiguously anti-neoliberal, but they were supported
by strikingly different social alliances. One was about broader-based economic
growth, the expansion of citizenship, continuing (if intrinsically limited) redis-
tributional gains, and the incremental democratization of the state, while the
other was about the renewal of elite control of the state, economy, and society
and the promotion of neoliberal dependent development.
THE ELECTIONS
The first phase of the presidential campaign, between July and September
2010, focused primarily on welfare and national development policies. The
main opposition candidate, São Paulo governor José Serra (PSDB), attempted
to balance the conflicting imperatives of recognizing Lula’s overwhelming
popularity, reflecting Serra’s political profile, and holding together a right-
wing coalition of internationalized capital, right-wing oligarchs, the tradi-
tional elite, and the upper middle classes.16 Serra is a development economist
turned center-right politician who was exiled during Brazil’s military dictator-
ship. Regardless of the protests of his coalition, Serra’s campaign supported
activist industrial policies and even same-sex marriage, but this strategy
failed. Faced with two candidates overtly supporting the government, the
poorer voters flocked to Lula’s candidate, Dilma Rousseff, and her 10-party
center-left coalition. Support for Serra in the opinion polls tumbled, and
Dilma was poised to win a decisive victory in the first round.17
40 LATIN AMERICAN PERSPECTIVES
Dilma Rousseff rose through the ranks of the state administration in Rio
Grande do Sul, initially in the Partido Democrático Trabalhista (Democratic
Labor Party—PDT) and later in the PT. She was appointed minister of energy
in 2002. Her ministry introduced the “Light for All” program of mass electrifi-
cation and developed a new regulatory regime for the sector after the combination
of privatizations with underinvestment under Cardoso forced the government
to ration electricity in 2001. When Lula’s government was decapitated by the
corruption scandals in 2005, Dilma was promoted to chief of staff. She had a
leading role in articulating the government’s industrial policy and designing
the exploration contracts for the new “pre-salt” oil reserves, which may turn
Brazil into a major exporter of refined petroleum products. These contracts
were heavily criticized by the press and the political right for being costly,
“unduly” restricting the operations of the oil majors, barring the export of crude
oil, “arbitrarily” vesting ownership of the reserves in the state, and “needlessly”
imposing a leading role for Petrobras in all prospecting areas.
Facing a humiliating defeat, Serra switched tactics. His campaign, which
was openly supported by the media, adopted a stridently right-wing rhetoric
focusing on three issues. First, it accused Lula of promoting the “Venezuelization
of Brazil” through his personal domination of the state, attempting to impose
his own successor, and wishing to abolish press freedom.18 Second, the gov-
ernment was, again, accused of corruption, leading to the dismissal of one
minister. Third, Dilma Rousseff was subjected to fearsome personal attacks in
the media, in religious services, and through anonymous pamphlets and bill-
boards. She was accused of involvement in corruption and of being against
religion, for abortion, a homosexual, and a terrorist.19 Scabrous rumors sug-
gested that she had stated that “not even Jesus could make her lose” (a calcu-
lated affront to Christian voters), and her “former lover” was “suddenly”
discovered and paraded around, loudly demanding an allowance “like any
other abandoned woman.”20
Donations poured into Serra’s coffers, while the press slyly promoted a
“third force” to “further the debate in the second round”: in the last weeks
before the election, they anointed the former environment minister, Marina
Silva—a candidate everyone knew could not win but who could pull unde-
cided voters away from Dilma. Dilma’s support in the opinion polls fell mar-
ginally, while Serra’s stagnated and Marina’s climbed rapidly. Dilma finished
the first round, on October 3, with 47 percent of the votes, against Serra’s
33 percent and Marina’s 19 percent. Four candidates to the left of the PT coali-
tion together polled 0.9 percent (radical left candidates had scored 9.5 percent
of the vote in 2006). The voting pattern was clear: Dilma won in the poorer
states of the North and Northeast and in most of the Southeast (except São
Paulo state) and lost in the richer Southern states. Within each state, her vote
was heavily concentrated in the poorer neighborhoods and among the least-
educated voters (see, e.g., Folha de S. Paulo, October 22, 2010). Serra won in São
Paulo and in the richer states in the “arch of agribusiness” across the Center-
West and among the wealthier and better-educated voters.
Although the elite onslaught prevented Dilma’s victory in the first round,
the government coalition did well in the elections. It won 17 out of 27 state
governments, 74 percent of the Senate, and 68 percent of the Chamber of
Deputies. However, these numbers are largely notional, because only one-third
Morais and Saad-Filho / BRAZIL BEYOND LULA 41
of seats is held by the left parties in the coalition (the PT, the Partido Comunista
do Brazil, the PDT, and the Partido Socialista Brasileiro).21 With 22 ill-
tempered and poorly disciplined parties in Congress, painstaking negotia-
tions will become inevitable whenever there is a difficult vote. In the second
round, on October 31, the government alliance, supported by the vast majority
of the social movements, the organized left, the unorganized workers, and a
large section of national capital, won another 5 state governments, and Dilma
reached 56 percent of the vote against Serra’s 44 percent.
CONCLUSION
Dilma Rousseff will face three difficult tasks in government. First, she
needs to keep her coalition together while building upon the developmental
and redistributive policies she has inherited in order to sustain her base of
support. This is a difficult challenge, since the global economic environment
is likely to remain unfavorable. Second, she must protect herself from attacks
by the elite; however, she lacks Lula’s charisma, track record, and popular
roots, and she has the additional vulnerability, in the political context of con-
temporary Brazil, of being a woman. Third, Lula never attempted to disman-
tle the right-wing media oligopoly, because this was bound to generate severe
political instability. Nevertheless, this nettle must be grasped in order to
expand the government’s policy space and allow democracy to flourish. Two
secondary challenges are bringing together a strong and cohesive team that
can represent both the coalition supporting her government and Lula’s politi-
cal role. Lula is likely to withdraw from domestic politics at least temporarily
(postponing as long as possible the decision whether to run for the presidency
in 2014); in the meantime, he could devote his energies to “global” initiatives,
for example, around South-South cooperation.
Dilma’s victory does not signal the start of a socialist transformation in Brazil.
Her government is not even committed to dismantling neoliberalism and build-
ing a democratic system of accumulation; it is also supported by an unwieldy
coalition. Nevertheless, it is enormously important for the left to support her
administration. Despite the ongoing neoliberal offensive in several countries,
Brazil demonstrates the viability of alternative policies, and it supports and
offers a demonstration effect for more ambitious experiments elsewhere in
Latin America. Further advances are possible, but they depend on the ability
of the mass organizations and the popular movement to articulate a plausible
alternative to neoliberalism and to push the government to deploy its legiti-
macy and resources in support of this project. These pressures must emerge from
below. The Brazilian state lacks the instruments and political will to go far
beyond what it has already achieved: the alternative to mass mobilization is
the consolidation of a national capitalist alternative including a bland social
democratic consensus offering diminishing returns for the majority.
One of the drivers of the cooperation between the government and the social
movements around a progressive program might be the tension between the
mildly nationalist and distributive policies that the government is likely to
choose and the demands of the constellation of forces from which it must seek
continuing support. Currently, these are heavily determined by economic and
42 LATIN AMERICAN PERSPECTIVES
social status: bluntly speaking, the “traditional” rich stand to one side and the
poor to the other, and the national bourgeoisie depends on the support of the
working class to control the country’s foreign and economic policies. This
cleavage poses clear dangers to Brazil’s political stability, but it also harbors
the greatest potential for the advancement of a left program since the demo-
cratic transition in the mid-1980s.
NOTES
1. The concepts of “national” (internal) bourgeoisie and “comprador” (neoliberal) bour-
geoisie are developed by Boito (2010). This distinction draws upon the relationship between
these fractions of capital and global capital(ism): the former seeks independent opportunities for
accumulation in Brazil and abroad on its own terms and with state support (e.g., trade and finan-
cial restrictions and preferential financial arrangements). It does not advocate autarchy or even
an import-substitution strategy, and it is not narrowly “nationalistic.” In contrast, the latter is
materially and ideologically committed to a strategy of associated and dependent accumulation
predicated upon (neo)liberal policies, especially free trade and financial flows under a U.S.-led
institutional umbrella. There is no necessary relationship between these fractions of capital and
their sectoral investments (manufacturing, construction, banking, insurance, agribusiness, and so
on) or their political profiles (neither of them is necessarily more “progressive”). Historically,
both fractions have been heavily represented in government, but the neoliberal bourgeoisie was
politically dominant during the Collor (1990–1992) administration while the national bour-
geoisie was relatively more influential under Lula, especially after 2006.
2. The São Paulo Confederation of Industry opposed Cardoso’s policies and supported mass
demonstrations and even a workers’ general strike in 1996, demanding a developmental policy
shift (see Boito, 2010).
3. Lula’s center-left alliance, including the Partido dos Trabalhadores (PT), the Partido
Socialista Brasileiro (PSB), the Partido Liberal (PL), the Partido Comunista do Brasil (PCdoB), the
Partido Popular Socialista (PPS), the Partido Verde (PV), and the Partido Democrático Trabalhista
(PDT), elected 35 percent of the federal deputies and 31 percent of senators. The centrist and
right-wing Partido do Movimento Democrático Brasileiro (PMDB), the Partido Trabalhista
Brasileiro (PTB), and the Partido Progressista (PP) joined the coalition in 2003, while the PDT left.
The government could count notionally on 72 percent of deputies and 60 percent of senators.
4. There is a vast left literature criticizing Lula’s first administration; for a taster, in addition
to the works cited previously, see Oliveira (2006) and Paulani (2003).
5. Open unemployment peaked at 12.7 percent in 2003 and fell gradually to 9.2 percent in
2010; the percentage of discouraged workers also fell in this period from 2.1 to 1.0 percent of the
labor force (http://www.ipeadata.gov.br).
6. “Among Brazilians with higher education, the rejection of Lula jumped 16 percentage
points, rising from 24 percent in August to 40 percent today” (Folha de S. Paulo, October 23, 2005,
quoted in Singer, 2009: 84).
7. The theoretical underpinnings of “neo-developmentalism” have been discussed exten-
sively in the journal Revista de Economia Política.
8. This event signaled a structural shift in Brazil’s balance-of-payments constraint: the coun-
try had overcome its traditional external vulnerability in the context of the ongoing shift in
global liquidity and the erosion of U.S. hegemony. Currently, domestic capital accumulation has
become structurally less vulnerable to temporary fluctuations in global liquidity.
9. Monthly employment survey, http://www.ibge.gov.br.
10. Approximately 5 million formal jobs were created during the Cardoso administration and
nearly 14 million during Lula’s. During this entire period the country needed to create 2 million
new jobs annually simply to absorb its growing workforce.
11. See Barbosa and Souza (2010: 39) and http://www.ibge.gov.br/home/estatistica/populacao/
trabalhoerendimento/pnad2005/sintese/tab1_5_4.pdf.
12. National Household Sample Survey, http://www.ibge.gov.br.
Morais and Saad-Filho / BRAZIL BEYOND LULA 43
13. The definitions of “poor” and “middle-class” are based on income data and elaborated by
the independent Getúlio Vargas Foundation. http://cps/fgv.br.
14. The creation of the Union of South American Nations (UNASUL), as the germ of a future
common market, is symptomatic of Brazil’s diplomatic and commercial focus on South America
rather than on Latin America as a whole. In contrast, Mexico and the small Central American
republics are perceived to be too close to the United States to be amenable to the influence of
Brazil or MERCOSUR.
15. There are four national newspapers in Brazil, each one in the hands of a “traditional”
family based in the Southeast. All of them vociferously oppose the government. The commercial
TV networks are also aligned with the opposition.
16. For an illustration of the views of international capital, see the editorial in the Financial
Times, October 27, 2010.
17. A second round with two candidates takes place if no candidate obtains more than half
of the votes in the first.
18. This accusation is baseless, and press freedom remains protected by solid constitutional
guarantees. Symptomatically, former PT president José Dirceu was asked in a campaign debate
whether there was “too much press freedom” in Brazil. He responded that no one who has lived
through a dictatorship could believe in “excess” freedom. All the main newspaper headlines
immediately reported that Dirceu had stated that “there is too much press freedom in Brazil” (see,
e.g., one of the original reports in http://www1.folha.uol.com.br/fsp/opiniao/fz1909201001.htm
and the subsequent apology in http://www1.folha.uol.com.br/fsp/opiniao/fz3009201009.htm).
19. Dilma joined a left-wing urban guerrilla organization during the bleakest years of the
military dictatorship, in the late 1960s; she was arrested in 1970, tortured for three weeks, and
imprisoned for three years.
20. See, e.g., http://www.youtube.com/watch?v=rrWFmbvc4YY and http://www.youtube
.com/watch?v=cu29qqCJCF4.
21. The left “core” of the government coalition has 165 seats (out of 513) in the Chamber of
Deputies and 23 in the Senate (out of 81); its “outer circle” of center-right allies has 186 deputies
and 37 senators. The left-wing opposition (the Partido do Socialismo e Liberdaded [PSOL]) has
3 deputies and 2 senators, while the right-wing opposition (the Partido Social Democrático
Brasileiro [PSDB] and the so-called Democrats) has 108 deputies and 19 senators. The remaining
51 seats in the Chamber of Deputies are held by “undecided” or wavering parties.
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