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LATIN AMERICAN PERSPECTIVES, Issue XXX, Vol. XX No. XXX, Month 201X, 1–17
DOI: 10.1177/0094582X15616120
© 2016 Latin American Perspectives
1
State, State Institutions, and Political Power in Brazil
by
Armando Boito and Alfredo Saad-Filho
The political conflicts during the Workers’ Party administrations led by Luís Inácio
Lula da Silva and Dilma Rousseff have been driven by disputes between two fractions of
the country’s bourgeoisie: the internal and the internationalized bourgeoisie. Their ideolo-
gies, policies, institutions, and forms of political representation have determined govern-
ment policies and outcomes. These processes have unfolded within an authoritarian
democracy whose structures have not been challenged by the party. The party’s limited
power and continuing timidity have produced an aggressive reaction by the international-
ized bourgeoisie and the upper middle class, leading to a severe crisis in the administration
of President Dilma Rousseff.
Durante os dois governos do Partido dos Trabalhadores (PT), chefiados por Luís Inácio
Lula da Silva e por Dilma Rousseff, os conflitos políticos têm sido conflagrados por dispu-
tas entre duas facções burguesas do país: a burguesia interna e a burguesia internaciona-
lizada. Suas respectivas formas de representações políticas, ideologias, programas, bem
como instituições têm determinado políticas governamentais e seus resultados. Esses pro-
cessos evoluíram em uma democracia autoritária, cujas estruturas não foram contestadas
pelo PT. A timidez contínua e o poder limitado do partido têm produzido uma reação
agressiva por parte da burguesia internacionalizada e da classe média alta, levando a uma
crise severa na administração da Presidente Dilma Rousseff.
Keywords: Brazil, Internal bourgeoisie, Internationalized bourgeoisie, Workers’ Party,
Petrobras
This article examines the tensions, contradictions, and conflicts in the ide-
ologies and in the institutions of the Brazilian state during the Partido dos
Trabalhadores (Workers’ Party—PT) administrations led by Presidents Luís
Inácio Lula da Silva (2003–2006, 2007–2010) and Dilma Rousseff (2011–2014,
2015–present). Those ideologies and institutions are studied as fields of engage-
ment as well as tools of struggle in the conflicts between rival classes and class
fractions in the dominant power bloc. They serve as platforms—both material
and ideational—supporting specific state policies and centers of resistance to
policies favored by rival interests within the power bloc and to nonhegemonic
forces outside it.
This does not mean that the Brazilian state is “fragmented,” as if its institutions
could be (more or less randomly) captured by squabbling classes, fractions, and
Armando Boito is a professor of political science at the State University of Campinas, editor of the
journal Critica Marxista. Alfredo Saad-Filho is a professor of political economy at SOAS, University
of London. Both are participating editors of Latin American Perspectives.
616120LAPXXX10.1177/0094582X15616120Latin American PerspectivesState and Political Power in Brazil
research-article2016
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2 LATIN AMERICAN PERSPECTIVES
interest groups competing on a (more or less) level playing field. For example,
the working class, the union and peasant movements, and the radical socialist
parties, however defined, do not control any relevant institution of the state.
Instead, the institutional, ideological, social, and political conflicts in the country
have been driven by disputes within the dominant power bloc, specifically,
between two fractions of the bourgeoisie and their allies in the upper middle
class. Other social groups have played a secondary role in these conflicts.
Furthermore, state policies are not determined by the simple aggregation of self-
ish interests and the accommodation of contradictory short-term demands,
which would bring continuous institutional instability and a zigzagging pattern
of policy implementation. The outcome of the disputes between the two key frac-
tions of the Brazilian bourgeoisie and the multiplicity of institutions under their
control is largely determined by the interventions of the dominant institutions of
the state. These institutions include the Federal Executive and, at a further
remove, Congress and the judicial system. They both drive and respond to
demands from ministries, agencies, state-owned enterprises, banks, the media,
universities, nongovernmental organizations (NGOs), unions, political parties,
and so on, all of which can advocate for and against specific policies, intervene in
policy implementation, and contribute to broader struggles against rival interests.
In other words, while it is certainly true that the Brazilian state organizes the
rule of the capitalist class,1 it does so through complex processes including ten-
sions and displacements between rival social groups, whose interests are
expressed in and through disputes within state institutions and between them
and nonstate institutions. This analytically rich approach can support a com-
plex and contextual examination of the rule of capital in Brazil and the class
nature of the state and its principal institutions, and it can contribute to an
assessment of the strategies of the Brazilian left informed by Marxist political
economy. The following section outlines the dominant power bloc in Brazil and
describes the main fractions of the bourgeoisie and their allies. The third focuses
on the key political forces and the fourth on the political regime, the composi-
tion of the key institutions of the state and the conflicts between them, and
shows how and why social conflicts can appear through disputes between
institutions. The fifth reviews the role of the lower-level state institutions and
how they are used to advance or to block specific programs and class platforms.
The sixth section draws the relevant conclusions.
The Power Bloc
The dominant power bloc in Brazil is polarized by complex relationships of
cooperation and conflict both within and between two fractions of the large
bourgeoisie. These fractions can be distinguished by their relationship with the
process of accumulation in general and, specifically, with neoliberalism, inter-
national integration, and financialization (Boito, 2012; Filgueiras and Oliveira,
2013; Saad-Filho, 2014; Saad-Filho and Boito, 2016).
This analysis of the material interests of broad social groups is not meant to
map fixed class positions onto individual proclivities or to suggest that social
classes or strata ought to be either self-conscious or politically united. Instead,
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it seeks to illustrate how conflicting economic interests and social relations can
support rival political platforms and economic policy programs that, in turn,
tend to be expressed through alternative political parties, organizations, and
movements. Following Nicos Poulantzas (1974; 1975), the first fraction may be
called the large internal bourgeoisie. It includes the owners of large firms across
manufacturing, construction, agribusiness, food processing, shipbuilding,
banking, and other sectors. The main goal of this fraction is to shore up its own
economic and political position within Brazilian dependent capitalism, which
implies a relationship of cooperation as well as conflict with international cap-
ital and the internationalized fraction of the bourgeoisie.
Although segments of the internal bourgeoisie may be more or less closely
related to international capital (e.g., finance is especially close, while construc-
tion is more autonomous), the internal bourgeoisie as a whole demands (differ-
ent forms of) state protection to shore up its command of domestic markets and
support its expansion abroad, especially in the Global South, and more advan-
tageous deals with international capital. This fraction has, then, a contradictory
relationship with state policy under neoliberalism. While it tends to support
neoliberal labor-market and social policies for ideological reasons, it also rec-
ognizes that government intervention, basic social protections, and rising min-
imum wages increase social cohesion and political stability, boost the domestic
market, and provide a protective umbrella against imperialist pressures.
Consequently, while the internal bourgeoisie usually demands “fiscal recti-
tude” and a large role for the private sector, it also expects lower real interest
rates, state investment in infrastructure and in research and development, dip-
lomatic assistance, subsidized loans from the Brazilian Development Bank,
preferential rules for state procurement, and restrictions against foreign capital.
This fraction also rejects the wholesale liberalization of trade and capital flows
because these policies threaten its own competitive position.
The internationalized bourgeoisie includes the representatives of economic
groups owned by foreign capital and the domestic firms directly dependent
upon them. It consists of international banks, insurance companies, large con-
sultancy and accountancy firms, transnational and internationally integrated
manufacturing capital, and—very important—the mainstream media.
Although the media are almost entirely owned by domestic capital, they are
committed ideologically to neoliberal financialization and the transnational
integration of the Brazilian economy and reject the notion of a “national” devel-
opment strategy. The internationalized bourgeoisie was politically dominant
during the administrations led by Fernando Collor (1990–1992) and Fernando
Henrique Cardoso (1994–1998, 1999–2002). Their political project is anchored
institutionally by policies of inflation targeting, central bank independence, the
liberalization of international capital flows, privatizations and market “deregu-
lation,” the dismantling of state capacity to allocate resources and steer devel-
opment, and the rejection of state-led (re)distribution. This group is represented
politically by the (misnamed) Partido da Social Democracia Brasileira (Brazilian
Social Democratic Party— PSDB) and its allies.
In addition to this primary division at the top, the Brazilian bourgeoisie also
includes a large number of small and medium-sized capitals lacking economic
power, independent organization, and autonomous influence.
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4 LATIN AMERICAN PERSPECTIVES
The divisions within the bourgeoisie are complex, and there is no neat sepa-
ration between the two main fractions and between them and the small and
medium-sized capitalists, who may belong to production chains dominated by
the internal or the internationalized bourgeoisie or be associated with both in
distinct ways. For example, the automobile dealerships are dominated by
medium-sized domestic capital that is obviously dependent on the transna-
tional automakers; however, the latter have significant autonomy vis-à-vis
their overseas head offices, while the dealers are also closely connected to parts
manufacturers, banks, and insurance companies dominated by Brazilian capi-
tal. Similarly, the domestic banks generally agree with their foreign counter-
parts on the supposed primacy of inflation targeting and central bank
independence over neodevelopmentalist policies supporting higher levels of
investment and consumption. The transnational manufacturers dominating
the consumer durables sector are also politically close to the domestic produc-
ers of capital goods, despite tensions concerning the role of the domestic mar-
ket, fiscal, monetary exchange rate policy, capital controls, and so on.
There are also contradictions within each fraction, for example, disputes
within the internal bourgeoisie between manufacturing and banks concerning
the level of interest rates. Although these are normally secondary to the contra-
dictions between the two main bourgeois fractions, they can affect the political
intervention of specific sectors. This is precisely what happened to the sugar-
cane-ethanol chain. Ethanol has been used extensively to fuel Brazilian auto-
mobiles for more than three decades, and it drives a vast sugarcane industry
that also supplies the domestic and external markets with sugar and provides
inputs to the food, beverage, and other industries. Having supported the two
Lula administrations, the sugarcane-ethanol chain moved into opposition to
Dilma Rousseff because her policies supported the rival oil chain built around
(state-owned) Petrobras, Latin America’s largest oil company.
In general, then, the structural separations between the internal and the
internationalized fractions of the bourgeoisie are tempered and strained by the
overlapping cleavages between industrial and banking capital, domestic and
foreign capital, and large and medium-sized capital, as well as national,
regional, sectoral, political, and other imperatives that can generate variegated
outcomes in practice. These often surface as political tensions (Farias, 2009).
PoliTical Forces
The orthodox neoliberal macroeconomic strategy implemented by Collor
and Cardoso in the 1990s and the hybrid neoliberal-neodevelopmentalist strat-
egy of the PT administrations have had a variegated impact upon the class
fractions just described, the bourgeois periphery, and other social groups.2
These uneven outcomes and the political twists and turns during the consolida-
tion of neoliberalism and democracy in Brazil since the late 1980s eventually
led to the emergence of stable forms of expression of the interests of the two
main fractions of the bourgeoisie. Brazilian political life has become polarized
accordingly. On the one hand, the internationalized bourgeoisie and interna-
tional capital are associated with the orthodox neoliberalism expressed by the
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PSDB and the mainstream media. The PSDB introduced and managed ortho-
dox neoliberal policies in Brazil, which, as elsewhere, curtailed social and labor
rights, privatized and denationalized state-owned enterprises, and deregu-
lated both finance and external trade.3 In contrast, the internal bourgeoisie has
become identified with the hybrid policies of the PT.
During the PT federal administrations since 2003, Brazil’s development
strategy has shifted to include the hybrid combination of elements of neoliber-
alism and Latin American neodevelopmentalism. At a fundamental level there
is policy continuity, since the PT maintained the macroeconomic “policy tri-
pod” introduced by Cardoso in 1999, including inflation targeting and central
bank independence, floating exchange rates and liberalized capital movements,
and contractionary fiscal and monetary policies. These policies have had a con-
sistently adverse impact on the internal bourgeoisie; for example, high interest
rates and demand contraction have fueled the overvaluation of the currency
(the real) and led to deindustrialization and the loss of export competitiveness
especially in manufacturing. They have also created a declining trend in invest-
ment and rates of growth of the gross domestic product (GDP).
These macroeconomic policies were not abandoned by the PT administra-
tions, but they were toned down and, in the second Lula administration,
“hybridized” through the introduction of elements of neodevelopmentalism
(Saad-Filho and Morais, 2014). The hybrid policies included, first, the closer
alignment of (neoliberal) monetary and exchange rate policy with the govern-
ment’s (neodevelopmentalist) industrial policy in order to limit the current
account deficit and support the internalization of important production chains.
Second, real interest rates fell to their lowest levels in 20 years (from an average
of 22 percent in Cardoso’s first administration to less than 3 percent under
Dilma), and the Central Bank extended significantly the maturity and lowered
the costs of the domestic public debt. Third, the contractionary impact of high
interest rates was further neutralized by the capitalization of the Brazilian
Development Bank, which offered subsidized loans to a rapidly expanding set
of enterprises. Fourth, the earlier liberalization of imports was tempered by a
“local content” policy favoring domestic producers in government and state-
owned-enterprise procurement. Fifth, the state-owned enterprises that sur-
vived the neoliberal “cull” in the 1990s were strengthened, especially Petrobras.
Sixth, there were successive rounds of tax rebates to stimulate production and
control inflation, in a significant departure from the single-minded focus on the
manipulation of interest rates under neoliberalism; the Rousseff government
also strong-armed the private operators into reducing the price of electricity.
Finally, in order to commit the internal bourgeoisie to higher levels of invest-
ment in transport and infrastructure and to bypass budgetary constraints and
legal limitations to state funding, the government offered regulatory changes
and concessions and supported many public-private partnerships. These poli-
cies unquestionably reinforced the position of the internal bourgeoisie in the
power bloc; conversely, this fraction became Lula’s strongest source of support
as he confronted the growing hostility of international capital.
Despite the apparently wide scope of these policy changes, the internal bour-
geoisie never aimed for more than the moderation of the harshest features of
neoliberalism. It does not have an independent accumulation strategy, and it
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6 LATIN AMERICAN PERSPECTIVES
does not seek to impose a narrow hegemony marginalizing the international-
ized bourgeoisie. It remains heavily dependent on imperialism at the levels of
ideology, culture, technology, finance, and politics, and it does not aim to break
away from it; it only wants a more comfortable position within global imperial-
ism and in the Brazilian power bloc. In contrast, the internationalized bourgeoi-
sie does have an expansive strategy aiming at the complete subsumption of the
internal bourgeoisie through the ruthless implementation of neoliberal macro-
economic policies. It follows that the conflict between the two main fractions of
the bourgeoisie is deeply asymmetrical.
Both fractions of the bourgeoisie have established important alliances out-
side the power bloc. As we have seen, the internal bourgeoisie leads the politi-
cal front supporting the PT administrations. This alliance includes the lower
middle class, the unionized workers, most organized peasants, and the major-
ity of the informal and marginalized workers (Saad-Filho and Boito, 2016).
While they have consistently privileged the interests of the internal bourgeoi-
sie, the PT governments have also brought significant gains to those social
groups, leading to a significant improvement in their living and working con-
ditions. These gains include rising minimum wages, the expansion of welfare
transfers and benefit payments, protection of family agriculture, the expansion
of universities and professional schools, the introduction of racial and social
quotas for access to universities and the civil service, public housing programs,
lower tariffs and expanded access to the electricity grid, and so on. Those poli-
cies and programs have benefited especially the informal sector workers, who,
in turn, have been the most reliable base of support for PT presidential candi-
dates (Singer, 2012). For example, in the 2014 presidential elections Dilma
Rousseff won because of the support of the informal workers despite the falter-
ing support or even withdrawal of other groups from the neodevelopmentalist
front.
In turn, the internationalized bourgeoisie has established a robust alliance
with the urban upper middle class. This social group includes the managers of
most large and medium-sized private firms, the high cadres of the state bureau-
cracy (judges, prosecutors, senior administrators, high-ranking military and
police officers), skilled professionals offering nonreproducible services (law-
yers, doctors, dentists, engineers, academics, architects, artists), independent
merchants, small-scale rentiers and commercial landowners, and entrepre-
neurs hiring a small number of workers, often family members. The upper
middle class is, then, a heterogeneous group connected indirectly to the
dynamic core of capitalism; it does not have the economic power of the bour-
geoisie or the political power of the organized workers. However, it has the
economic and cultural wherewithal to articulate its demands through the polit-
ical system, the media, some unions, NGOs, lobbies, and the justice system.
Consequently, it can express its economic interests and ideological prejudices
powerfully, however diverse, reactionary, internally inconsistent, or strategi-
cally untenable they may be (Chaui, 2013; Pomar, 2013: 43–44).
Since the start of the neoliberal transition, in the late 1980s, the Brazilian
upper middle class has gradually assimilated a capitalist ethics of competitive-
ness, accumulation, and exclusion that eventually turned them into the main
mass base of support of the PSDB. This social group sees in the social policies
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of the PT governments a direct threat to its economic position and social stand-
ing. This is understandable. The upper middle class has been badly squeezed
by the exhaustion of import-substitution industrialization in the early 1980s,
the subsequent slowdown of economic growth, the retreat of secure and well-
paid occupations since the neoliberal transition, and the low-wage intensity of
the country’s economic recovery since the mid-2000s. At the same time, the
upper middle class has become enthralled by the notions of cultural and eco-
nomic “globalization” peddled by the media and superficially experienced in
its (historically recent) forays abroad.
The distributional policies implemented by the PT have nearly doubled the
minimum wage (which is a cost for the upper middle class as a net buyer of
low-end personal services), introduced means-tested transfer programs funded
by general taxation (which the upper middle class helps to fund but cannot
claim), incorporated millions of workers into formal labor markets (raising
both costs and demand, especially in the services sector), diluted the near-
monopoly of higher education and “good jobs” of the upper middle class
through the explosive growth of the universities and the quotas for blacks and
students from state schools,4 and introduced recruitment quotas in the civil
service. More recently, the Rousseff administration extended employment
rights to domestic workers, including the house cleaners, nannies, cooks, driv-
ers, gardeners, and personal security guards that are widely employed in
upper-middle-class households. This policy has raised costs to their employers
and, potentially more significant, threatened the authoritarian and paternalis-
tic relationships in their households. The Rousseff administration also created,
in 2013, a health program bringing thousands of foreign (mainly Cuban) doc-
tors to Brazilian municipalities without any health facilities. Despite the heav-
ily circumscribed conditions in which these doctors were hired, the program
was opposed by all medical associations in the country, drawing upon a gro-
tesque racist and anticommunist discourse. Finally, in addition to these tar-
geted programs the PT governments have also accommodated an emerging
cycle of industrial action since the mid-2000s that has greatly improved the
earnings of millions of skilled workers (Boito and Marcelino, 2011). Gains
favoring the poor have transformed the country’s pattern of demand and, cor-
respondingly, a whole host of institutions that used to be monopolized by the
(white) upper middle class. Airports, medical facilities, shopping malls, bars,
and restaurants have been “overrun” by low-income workers and relatively
poor black people who previously simply had no access to them.
The encroachment of the workers and the poor upon the economic, social,
and geographical privileges of the upper middle class has generated intense
anxiety and fierce opposition. For example, the social media have been bub-
bling for years with expressions of discomfort over this unwanted social and
racial mix. In essence, the upper middle class seems to consider that its privi-
leges are due to hard work and personal merit; conversely, in its view low-
income workers are lazy and their work is less meritorious. Their abject living
conditions are simply the inevitable—and fully deserved—outcome of their
preference for leisure and choice of low-skilled manual labor. It follows that the
poor are generally considered undeserving of taxpayer-funded support and
that cash transfers and other welfare programs are doubly wrong—rewarding
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8 LATIN AMERICAN PERSPECTIVES
laziness and perpetrating injustice against meritorious wealth-creators. In
response to the economic and social advance of the poor, the upper middle
class has gravitated increasingly toward the political right. This shift is highly
significant, since the upper middle class plays an important role in securing the
ideological hegemony of the bourgeoisie through schools, universities,
churches, and the media, which are normally managed by these professionals.
The PoliTical regime
The power bloc in Brazil, dominated by two (conflicting) fractions of the large
bourgeoisie, corresponds to a relatively closed political system that concentrates
decisions in the Federal Executive, headed by the president. The president’s
central position inevitably personalizes the country’s political life. In Brazilian
democracy, decision making is irreducibly authoritarian. This paradox has been
called “hyperpresidentialism” or “civilian authoritarianism” (Saes, 2001; Torre,
1996). Congress, consisting of a Chamber of Deputies and a Senate, occupies a
subordinate position in the formulation and implementation of public policy.
Despite its formal importance, its influence remains limited because the presi-
dency has appropriated most legislative functions through the “provisional
measures.” These are effectively presidential decrees awaiting ratification by
Congress, and they have been used extensively since the 1988 constitution. In
addition to the provisional measures, the Executive generally controls the con-
gressional agenda through the concentration of power in the speakers of the
Chamber and the Senate, who are elected by their peers but, effectively,
appointed by the president (as long as he or she can command, badger, or bar-
gain for the support of most deputies and senators). Legislative power is con-
centrated at a further level because the speakers and party leaders control the
voting process through their right to bestow “urgency” upon bills they wish to
bring to a vote; in turn, the leaders often vote on behalf of their parties while the
Executive bargains directly with them, offering favors in exchange for block
votes. One of the symptoms of the crisis of the Rousseff administration, in 2015,
is the unusual autonomy of the speakers of the Chamber and the Senate and
their aggressive use of constitutional prerogatives against the Executive. This is
certainly not the way the legislative process is meant to work.
Most political parties exist only as more or less coherent block votes in
Congress; otherwise, they are largely marginalized from all levels of the state.
It follows that what Brazil has is not government by parties but parties of gov-
ernment. For example, during the Cardoso administrations the main task of the
PSDB was to secure congressional approval for government decisions whose
content the party often ignored entirely. This is substantively identical to what
happened to the PT during the Lula and Rousseff administrations. This was
unexpected, since the PT emerged in 1980 as an independent mass party of the
left; it was closely linked to the unions and to a new generation of mass move-
ments. Its utter subordination to federal administrations nominally elected by
the party itself illustrates the strength of civilian authoritarianism in Brazil:
there is no question that the upper layers of the state bureaucracy have more
power than the 32 political parties and their elected representatives. Indeed,
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only about half a dozen parties have a semblance of political life; the others are
either trading entrepôts for congressional votes or vehicles for supporting nar-
row (often personal) agendas.
Apart from voting in Congress, the political parties are relevant only in the
run-up to the elections. This does not mean that most candidates are controlled
by “their” parties. For example, Article 147 of the statutes of the PT states that if
there are competing pre-candidates for president, governor, senator, or mayor,
the party’s candidate will be selected through an internal ballot. In reality, how-
ever, a committee chaired by Lula has handpicked key PT candidates since the
1990s. Lula personally chose Dilma Rousseff as his successor in 2010, and he
decided that the party would support her reelection in 2014. He also regularly
chooses the PT candidates for mayor of São Paulo city and governor of São Paulo
state, the country’s wealthiest and most populous administrative units. The situ-
ation is the same with the PSDB, where a small number of leaders monopolizes
decisions. Internal debate is the exception in both parties, and it rarely touches
on anything that matters. The PT and the PSDB have polarized Brazilian presi-
dential elections since the early 1990s. Their rivalry is a reflex of the conflict
between the two bourgeois fractions examined above. Correspondingly, these
parties recruit members in distinct social sectors (Rodrigues, 2009), and their vot-
ers have distinct socioeconomic profiles (Singer, 2012). The PSDB won the presi-
dential elections in 1994 and 1998, while the PT won in 2002, 2006, 2010, and 2014.
No other party even reached the second round in these six elections (in 1989 the
PT narrowly lost the second round of the first presidential election after the dic-
tatorship to Fernando Collor, who had virtually no organized support).
The fragmentation of Brazil’s political party system is fostered by the coex-
istence of elections in two rounds for executive positions, in parallel with pro-
portional representation for the legislature (Duverger, 1967). In turn, the
polarization between the PT and the PSDB expresses the consolidation of a
multiparty system dominated by these two large parties. Each of them has a set
of preferential alliances with “satellite” parties, and, as long as political life
remains stable, most of these minor parties exist only to provide advantages,
jobs, and financial gain to their leaders. Following Max Weber (1946), they are
“patronage parties,” although they are not entirely devoid of ideology. They
are nevertheless essential, as neither the PT nor the PSDB is ever likely to
achieve a majority in Congress: up to two dozen patronage parties regularly
control at least 200 seats out of 513 in the Chamber of Deputies and 81 in the
Senate. They are essential for governability, but their mode of existence fosters
the political evacuation of Congress and its subservience to the Executive. The
limitations of Congress and the political parties, described above, make the
legislative too heterogeneous and unreliable to organize the political hegemony
of the bourgeoisie and completely unable to address efficiently the conflicts
within the power bloc.
conTradicTions in The sTaTe Bureaucracy
The concentration of decision making in the Executive makes a small num-
ber of federal institutions centrally important instruments of political struggle.
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10 LATIN AMERICAN PERSPECTIVES
The rival fractions of the bourgeoisie constantly seek to capture these institu-
tions in order to create, entrench, and project their own power, promote specific
policies and priorities, and disarticulate policies promoted by their rivals. The
significance of each institution for this conflict depends on several factors, espe-
cially its relationship with the presidency, its size, relevance, and economic and
political functions, the social composition of its staff, the correlation of political
forces, and the political conjuncture.
The core of the Federal Executive consists of the presidency and key eco-
nomic and political ministries, which conceive, implement, and monitor the
country’s development strategy. In turn, several subordinate institutions can
play a significant role in implementing or resisting that strategy. A brief exam-
ination of some of these institutions may illustrate their significance. The inter-
nal bourgeoisie has a strong power center in the large state-owned enterprises,
especially the Brazilian Development Bank and Petrobras and, at a further
remove, two state-owned commercial banks, the Banco do Brasil and the Caixa
Econômica Federal. In contrast, the internationalized bourgeoisie and the
upper middle class dominate the judiciary, the Attorney General’s Office, and
the Federal Police, which have become centers of resistance against the PT. Just
like the dispute between the PT and the PSDB, the conflict between these insti-
tutions expresses the rivalry between bourgeois fractions and their allies at the
heart of the state.
The Brazilian develoPmenT Bank, PeTroBras, and The inTernal
Bougeoisie
The Brazilian Development Bank and Petrobras are highly significant for the
internal bourgeoisie, as they have been centrally important in the implementa-
tion of the neodevelopmentalist policies that neutralized, in part, the neoliber-
alism imposed by the internationalized bourgeoisie. Lula appointed the noted
heterodox development economist Luciano Coutinho president of the bank in
2007. Coutinho has recently become the longest-serving president of the insti-
tution since its foundation in the 1950s. Under his chairmanship the bank’s loan
portfolio has expanded tenfold, and it has become the largest development
bank in the world, comfortably surpassing the World Bank. Its expansion
allowed the Lula and Dilma administrations to offer subsidized loans to
selected firms, especially those targeted to become “national champions”—
nurtured to take up leading global positions (Bugiato, 2014). For example, the
bank’s loans have transformed JBS-Friboi into the world’s largest company in
the processed meats sector. The firm has purchased processing plants on four
continents, and its rapid expansion provides the best example of the success of
the PT’s neodevelopmentalist industrial policy. In addition to subsidized loans,
the bank has supported investment by large domestic firms through its sub-
sidiary, BNDES-Par, which invests directly in selected firms. The bank’s loans
and BNDES-Par’s share purchases were funded through transfers from the
National Treasury. However, by convention these transfers count as public sec-
tor spending rather than investment; the ensuing reduction of the primary fis-
cal surplus (required to service the domestic public debt) was bitterly criticized
by international finance and the PSDB, regardless (and perhaps because) of the
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Boito and Saad-Filho / STATE AND POLITICAL POWER IN BRAZIL 11
developmental, income, employment, and export outcome of these loans and
investments.
The Lula government also supported Brazilian “national champions”
through diplomatic agreements with other countries in the Global South, espe-
cially in South America and Sub-Saharan Africa. Several countries have
obtained Brazilian Development Bank loans for infrastructure, especially roads,
dams, and railways, on the condition that those projects be led by Brazilian
companies. In doing this, the PT administrations have established a close rela-
tionship between Brazilian foreign policy and the internal bourgeoisie (Boito
and Berringer, 2014; Fontes and Garcia, 2014). A successful example is the Port
of Mariel, in Cuba, which elicited loud criticism from the PSDB. This port was
built by a consortium of 300 firms led by Odebrecht Engineering, one of the
largest Brazilian construction companies. The celebration of the completion of
Phase 1 of the work, in January 2014, was attended by most left-wing heads of
state in Latin America, including Bolivia’s Evo Morales and Venezuela’s Nicolás
Maduro.
Petrobras was the other key lever of the PT’s neodevelopmentalist economic
policies. While the Brazilian Development Bank attempted to bypass the financ-
ing bottleneck confronting Brazilian capital because of high interest rates and
the reluctance of banks to finance investment, Petrobras introduced a new pro-
curement policy to counteract the impact of import liberalization on domestic
production and support import substitution in the oil and gas chains. Lula
announced this policy change in his 2002 presidential campaign; it committed
his government to the internalization of the manufacture of oil tankers, drill
rigs, deep-water platforms, and other equipment for Petrobras. This policy was
spectacularly successful. The Cardoso administration had drastically reduced
the funding available to the oil industry in the 1990s and compelled Petrobras
to import most of its equipment and services. By 2003, the Brazilian shipbuild-
ing industry employed only 4,000 workers. The policy reversal under Lula
drove a strong recovery of the shipyards, which reached 100,000 workers in
2014; mothballed shipyards in Rio de Janeiro were reopened, and new ones
started operations in the Northeast and the South (Gomes, 2015).
This recovery strategy was implemented by Sergio Gabrielli, a neodevelop-
mentalist engineer appointed president of Petrobras in 2005 (he stayed in office
until 2012). In addition to the new procurement policy, Gabrielli ramped up the
company’s investment in research and development, oil exploration, and refin-
ing, in contrast with the firm’s focus on financing the oil sector during the
Cardoso administration. A transformative outcome of this policy was the dis-
covery of deep-sea “pre-Salt” oilfields in the South Atlantic holding estimated
reserves of 28–35 billion barrels.5 Lula and (then) Energy Minister Dilma
Rousseff imposed a new oil extraction policy in the late 2000s that required
Petrobras to participate in all new oilfields. This policy replaced the conces-
sions to the large oil transnationals introduced under Cardoso. The new policy
was heavily criticized by foreign capital and the PSDB, but it led to the rapid
expansion of Petrobras operations (“pre-Salt” oilfields are currently produc-
ing 800,000 barrels per day) and an increase in oil rents appropriated by the
state. These are being paid into a sovereign fund that will support health and
education spending.
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12 LATIN AMERICAN PERSPECTIVES
In turn, the shipbuilding chain is both large and highly diversified. It includes
not only the shipyards but also mechanical and electrical engineering, heavy
construction, and a host of other sectors (Sabença, 2014). The expansion of this
chain is one of the most significant achievements of the industrial policy of the
PT administrations: it has brought together the interests of hundreds of domes-
tic firms in multiple sectors and assisted the development of domestic science
and technology, and it has been supported by large unions because of its
employment impact. The expansion of the Brazilian shipbuilding chain pro-
vides a textbook example of successful neodevelopmentalist policies supported
by a multiclass political front. However, similar outcomes could not be achieved
in other sectors. For example, in traditional manufacturing sectors, especially
textiles, footwear, and apparel, local production has suffered badly because of
Asian imports since the early 1990s and the industry has failed to recover. In
sectors with a higher technological content, especially automobiles, computers,
household appliances, and electronic goods, foreign capital has traditionally
been dominant, and domestic firms operating along the intermediate links of
the chain have lost market share because of technological change and the trans-
nationalization of production since the transition to neoliberalism.
The Judiciary, The inTernaTionalized Bourgeoisie, and
The uPPer middle class
The PSDB leadership has consistently criticized government policies with
regard to the Brazilian Development Bank and Petrobras and, inevitably,
these institutions themselves. Fernando Henrique Cardoso, José Serra, and
other party leaders have complained repeatedly against these power centers
of the internal bourgeoisie (Cardoso, 2015; Serra, 2013). They claim that their
expansion compromises the government’s fiscal targets, fuels inflation, and
is nontransparent (i.e., corrupt) and undemocratic; they suggest that the
bank has granted loans on the basis of political rather than technical criteria,
that Petrobras investment plans are overambitious, and that the requirement
that Petrobras operate in every oilfield reduces foreign investment in Brazil
and “pre-Salt” oil production. Finally, they say that the policy requiring
Petrobras to purchase 65 percent of its inputs from Brazilian firms is anach-
ronistic and inefficient, increases costs, and will hamper the firm’s techno-
logical development.
These disputes around the bank and Petrobras illustrate the argument made
above that the Brazilian political process pivots around the conflict between
the two fractions of the bourgeoisie and that this conflict drives the ideology
and discourse of the main political parties. In other words, neoliberalism and
neodevelopmentalism express, at the level of ideas, the interests of rival bour-
geois fractions. Although it may seem odd that the PSDB, a thoroughly bour-
geois party, opposes policies supporting large firms in the shipbuilding,
construction, engineering, food, steel, and other sectors, the party’s principal
commitment is not to domestic capital but specifically to international capital
and finance and the local capitals closely associated with them. Conversely,
the PT, ostensibly a party of the working class, has become the main political
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vehicle of large domestic capital and the driving force of a developmentalist
alliance that is similar, both in aims and composition, to the “national fronts”
advocated by communist parties in Brazil and elsewhere in the 1950s and
1960s (see Boito, 2013).
These political conflicts have evolved recently. While the economy was
growing and the PT administrations enjoyed strong political support, in the
mid- and late 2000s, the PSDB leadership found itself isolated; its orthodox
neoliberal discourse had little traction. However, since 2011, the Brazilian econ-
omy has slowed down, new social and political conflicts have emerged, and old
ones have returned with a vengeance (Saad-Filho and Boito, 2016). In this con-
text, the PSDB and the mainstream media have not only stepped up their
attacks on the PT but also mobilized the judicial system in support of their
strategy of aggression. Three features of the judiciary, the Federal Police, and
the Attorney General’s Office incline them to support the internationalized
bourgeoisie and the upper middle class against the internal bourgeoisie, the PT,
and their allies.
First, these institutions employ the most privileged civil servants in Brazil;
their 40,000 judges, prosecutors, attorneys, and top bureaucrats are comfort-
ably stationed at the top of the upper middle class. The starting salary of a
public prosecutor ranges between 29 and 38 times the monthly minimum wage
for a working week of 25 hours, with additional work counting as overtime.6
Similarly, judges, who earn around 40 times the minimum wage, also receive
generous food allowances and housing support, even when they are home-
owners.7 Although the high-level employees of the Brazilian Development
Bank and Petrobras are also well paid, their salaries are far lower than those in
the judiciary. Second, the judiciary and the Attorney General’s office enjoy full
administrative and financial autonomy: they are funded by general taxation
but are accountable only to themselves. Judges and prosecutors can even set
their own salaries. Third, the function of these institutions in the capitalist state
is keeping public order. They are what Pierre Bourdieu (1998) called “the right
hand of the state.” This function tends to position their staff in opposition to
governments that facilitate popular organization and accommodate move-
ments deploying “illegal” forms of struggle, for example, occupations of arable
land and urban spaces, roadblocks, and so on.
The mainstream media, judges, prosecutors, attorneys, and the top levels of
the Federal Police have joined the PSDB leadership in two systemic attacks
against the PT administrations. In 2005 and again in 2015, operations by the
Federal Police, the Attorney General’s Office, and the judiciary against corrup-
tion, spurred by the media and the PSDB, have triggered political crises threat-
ening the destruction of the PT. Their operations have targeted key institutions
of neodevelopmentalism, especially the Brazilian Development Bank and
Petrobras. Those vicious attacks were facilitated by the inexplicable deference
of the PT toward the media and the judiciary: the PT has always refused to
mobilize its social base to counter the biased and illegal treatment inflicted
upon the party and its members in positions of government, as was recently
illustrated by the Petrobras scandal. In 2014 it emerged that a cartel of construc-
tion companies had bribed a small number of politically appointed directors of
Petrobras in order to secure a virtual monopoly of oil-related contracts. The
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14 LATIN AMERICAN PERSPECTIVES
Brazilian construction sector is heavily concentrated around 15 large (mostly
family-owned) firms that emerged in the late 1950s during the construction of
the new capital, Brasília. Those firms expanded rapidly during the military
dictatorship (1964–1985), and they currently dominate the market for public
works (Sabença, 2014). Bribes allegedly allowed those companies to capture
and allocate hundreds of contracts to cartel members; in turn, the corrupt direc-
tors of Petrobras channeled part of those funds to the political parties support-
ing their appointment. High-ranking Federal Police and public prosecutors
made clear political use of this investigation. They ignored clues suggesting the
involvement of the PSDB in similar cases, selectively leaked classified or mis-
leading information to competing media organizations, and consistently
sought to compromise the PT, especially in the run-up to the 2014 presidential
elections. They also illegally arrested company executives in order to compel
them to enter plea bargains; those refusing the offer to cooperate with the inves-
tigation were kept in prison indefinitely. In doing this, the Federal Police and
the Attorney General’s Office ensured that the investigation would always be
in the headlines, and eventually it became a telenovela—another farcical soap
opera dominating Brazilian evening television. At the same time, the PSDB cre-
ated a congressional committee to investigate corruption at Petrobras, further
escalating the confrontation. The mainstream media started speculating about
the impeachment of Dilma Rousseff while at the same time claiming that the
only way to end corruption at Petrobras was to eliminate the domestic procure-
ment policy and remove the rule that the company participate in all oilfields.
The PSDB immediately introduced bills in Congress to impose those policy
changes, which must have pleased the large oil transnationals and the large
shipyards and oil and gas contractors in the United States, Asia, and the
European Union.
European capital has rushed to lay claim to the construction sector. In an
article in the newspaper O Estado de S. Paulo, EU Trade Commissioner Cecilia
Malmström made brief remarks about the spread of corruption in Brazilian
public works in order to conclude that the EU would sign a trade deal with
Mercosur only if its own firms had greater access to this (presumably tainted)
market. Sadly, the commissioner failed to mention the cases of Siemens and
Alstom, which had admitted making large payments to PSDB politicians in
order to win contracts for the São Paulo rail and metro systems. Interestingly,
this scandal never raised judicial or police eyebrows in Brazil. In turn, the EU
commissioner will certainly be pleased with the “independence” of the
Brazilian judiciary if, because of the Petrobras scandal, the largest domestic
construction companies are rendered ineligible for public contracts.
The goals of international capital and the associated fraction of the Brazilian
bourgeoisie harm not only the internal bourgeoisie but also the workers
employed in construction and in the oil and gas chains, which depend heavily
on public investment in general and on Petrobras specifically. The orthodox
neoliberal agitation over corruption is, then, both partial and misleading. Its
main goal is not political and administrative probity but disguising the ambi-
tions of the internationalized bourgeoisie and the upper middle class. Their
discourse and the judicial investigations are both selective: they target only the
institutions and parties aligned with neodevelopmentalism, showing that their
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Boito and Saad-Filho / STATE AND POLITICAL POWER IN BRAZIL 15
aim is government policy rather than corruption. This cover-up is necessary
because, in a democracy, minority interests can prevail only if they command
mass support. If the neoliberal campaign were to admit that its goals are to
weaken Petrobras and eliminate the local-content policy, it would fail com-
pletely. In contrast, agitation against corruption allows the internationalized
bourgeoisie and the upper middle class to hijack popular revulsion against
white-collar crime in order to smuggle in policy changes against the interests
of the vast majority and to shift the relation of forces within the power bloc to
their own advantage.
conclusion
The bourgeoisie is not a homogeneous class, and the state is not a passive
instrument in the hands of any government, class, or fraction. The implications
of this claim have been examined here through the conflict between the inter-
nationalized bourgeoisie and the internal bourgeoisie that has dominated polit-
ical life in Brazil during the PT administrations. Along with the upper middle
class, the broad (formal and informal) working class cannot ignore this conflict.
The neodevelopmentalist policies of the internal bourgeoisie support limited
income and employment gains for the majority and help to improve the condi-
tions for further struggle; in contrast, the neoliberal policies of the internation-
alized bourgeoisie would intensify the concentration of income and the social,
economic, and political disintegration of the working class.
The limited and asymmetric conflict between the two fractions of the bour-
geoisie has evolved within an authoritarian bourgeois democracy. Instead of
deepening, expanding, and radicalizing democracy in order to reinforce their
claim to power, the PT administrations have become increasingly entangled
with, and within, the institutions of the state and ever more distant from the
traditional social base of the party in the working class and the radicalized
urban middle class. This has been a result of the mistaken belief that the PT
could govern peacefully and implement a potentially open-ended program of
social-democratic reforms if it only occupied the top layer of a limited number
of state bureaucracies and managed to avoid paralyzing institutional conflicts
with the ruling class. This was always highly unlikely, and it did not come to
pass. The internationalized bourgeoisie and the upper middle class, whose
interests control the media and the judiciary (the latter being the penultimate
line of defense of the established order, the last being the armed forces), have
turned against the PT’s mild reformism and paralyzed the administration of
Dilma Rousseff.
The question that cannot be answered at this stage is whether the PT could
have deployed the tools of executive power, in conjunction with a mass social
movement, to turn established privileges into social rights and leverage the
democratization of the Brazilian state. This would have taken the Brazilian
experience closer to those unfolding in Bolivia and Venezuela, although, obvi-
ously, under very different circumstances and with unpredictable results. It is
now much too late to do that and still too soon to consider what might have
been.
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16 LATIN AMERICAN PERSPECTIVES
noTes
1. For an overview of Marxist theories of the state, see Clarke (1991). The well-known
Poulantzas-Miliband debate is reviewed by Barrow (2002).
2. These development strategies and their social implications are surveyed by Morais and
Saad-Filho (2011; 2012) and Saad-Filho and Mollo (2006).
3. For an overview of neoliberal policies and their implications, see Saad-Filho and Johnston
(2005) and Saad-Filho and Yalman (2009).
4. The university admissions quotas have generated not only diffuse opposition but organized
resistance. For example, a campaign led by students and academics at the University of Brasilia
culminated in a highly publicized case taken to the Supreme Court, which found the quotas con-
stitutional.
5. Reaching these oilfields under approximately five miles of water, rock, and salt (the latter
probably left after the evaporation of an earlier ocean) presents considerable technological chal-
lenges, making the extraction of the oil relatively expensive.
6. See Judiciário Brasileiro em Perspectiva–Associação dos Magistrados Brasileiros. https://
www.amb.com.br/portal/docs/pesquisa/Judiciario_brasileiro_em_perspectiva.pdf, and Portal
Consultor Jurídico, http://www.conjur.com.br/2013-mai-09/agenda-concursos-74-vagas-pro-
motor-justica-estados (accessed September 3, 2015).
7. Conselho de Justiça Federal–Secretaria de Recursos Humanos. http://www.cjf.jus.br/cjf/
cjf/administracao-de-rh/tabelas-de-remuneracao/magistrados/Tabela%20de%20
Remuneracao%202014%20magistrado.pdf/view (accessed September 3, 2015).
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