Growth, Distribution, and Crisis: The Workers’ Party Administrations

• Author: Glaison Augusto Guerrero,Pedro Cezar Dutra Fonseca,Marcelo Arend
• Date: 01 January 2020
• Published date: 01 January 2020
• DOI: 10.1177/0094582X19886821
• Subject Matter: Articles

https://doi.org/10.1177/0094582X19886821

LATIN AMERICAN PERSPECTIVES, Issue 230, Vol. 47 No. 1, January 2020, 65–82

DOI: 10.1177/0094582X19886821

© 2019 Latin American Perspectives

65

Growth, Distribution, and Crisis

The Workers’ Party Administrations

by

Pedro Cezar Dutra Fonseca, Marcelo Arend, and Glaison Augusto Guerrero

Translated by

Patricia Fierro

The economic policies of the governments of Lula da Silva (2003–2010) and Dilma

Rousseff (2011–2016) combined orthodox measures with distinctive pro-growth measures

that, although they deviated from neoliberalism, cannot be called “developmentalist” either.

They lacked a long-term strategy for reversing the deindustrialization of the country or

advancing to a new technological paradigm. They did, however, have a historical commitment

to income redistribution that was largely implemented. The broad social pact proposed by Lula

acknowledged the hegemony of financial capital, and its contradiction was that it protected

the hegemonic group by means of monetary and fiscal policies that required growth in the

gross domestic product, a favorable balance of payments, and a gap between wages and pro-

ductivity. When these conditions no longer held, Rousseff responded to the crisis with a “new

macroeconomic matrix” that amounted to the abandonment of Lula’s class-coalition pact.

As políticas econômicas dos governos de Lula da Silva (2003–2010) e Dilma Rousseff

(2011–2016) combinaram medidas ortodoxas com distintas medidas pró-crescimento que,

embora se desviassem do neoliberalismo, também não podem ser chamadas de “desenvolvi-

mentalista.” Eles careceram de uma estratégia de longo prazo para reverter a desindustri-

alização do país e avançar para um novo paradigma tecnológico. Eles tinham, no entanto,

um compromisso histórico com a redistribuição de renda que foi implementada em grande

parte. O amplo pacto social proposto por Lula reconheceu a hegemonia do capital finan-

ceiro, e sua contradição foi que protegia o grupo hegemônico por meio de políticas mone-

tárias e fiscais que exigiam crescimento do produto interno bruto, uma balança de

pagamentos favorável e uma lacuna entre salários e produtividade. Quando essas condições

não mais se mantiveram, Rousseff respondeu à crise com uma “nova matriz macro-

econômica” que resultou no abandono do pacto de coalizão de classes de Lula.

Keywords: Lula administration, Rousseff administration, Developmentalism,

Neoliberalism, Brazilian economy

Pedro Cezar Dutra Fonseca is a full professor of economics and international relations at the

Federal University of Rio Grande do Sul, coordinator of the Brazilian Economic Development

Teaching Network, and a member of the Economics Committee of the National Council for

Scientific and Technological Development and of the board of directors of the Celso Furtado

International Center. Marcelo Arend is an adjunct professor of economics and international rela-

tions at the Federal University of Santa Catarina and holds a postdoctoral fellowship from the

Autonomous University of Madrid. Glaison Augusto Guerrero is an adjunct professor of econom-

ics and international relations at the Federal University of Rio Grande do Sul. Patrícia Fierro is an

American Translators Association–certified translator living in Quito, Ecuador. The authors thank

Leda Paulani for her suggestions and PIBIC/UFRGS/CNPq fellow César Prazeres Fraga Pereira

for his collaboration.

886821LAPXXX10.1177/0094582X19886821Latin American PerspectivesFonseca, Arend, and Guerrero / The Workers’ Party Administrations

research-article2019

66 LATIN AMERICAN PERSPECTIVES

The governments of Lula da Silva (2003–2010) and Dilma Rousseff (2011–

2016), from their inception, generated controversy with regard to the focus of

their economic policies. Lula’s 2002 “Letter to the Brazilian People,” launched

during the presidential campaign in June 2002, was understood as a way of

“calming the markets,” but at the same time its ideas drew away from the

historical principles of the Partido dos Trabalhadores (Workers’ Party—PT).

The economic policy of Antônio Palocci of the Ministry of Finance and

Henrique Meirelles of the Central Bank confirmed the promises of the letter.

The orthodox economic policy of the government of Fernando Henrique

Cardoso, based on inflation targeting and characterized by high real interest

rates, a positive primary result in public accounts, and an appreciated

exchange rate, was maintained as a basic guideline for macroeconomic policy.

This allowed several observers to stress the continuity of economic policy

with a strong neoliberal focus between the two governments (Assis, 2005;

Carvalho, 2007; Paula, 2005; Paulani, 2003; 2005; 2007). Others, pointing to the

high growth rates of the Lula period and the decline of the Gini index, began

to interpret the period, especially its second term, as a resumption of devel-

opmentalism (for example, Anderson, 2011; Bastos, 2012; Belluzzo, 2009;

Cardoso Jr., 2011; Cervo, 2009; Costa, 2015; Herrlein, 2011; Nakano, 2010;

Novy, 2009a; 2009b). Later works sought to overcome the polarization of

orthodoxy and developmentalism. Erber (2011) pointed out that in Lula’s

government there were two “pacts” or worldviews, a more orthodox “strict

institutionalist” view and one called “neodevelopmentalism,” both with

“distinct analytical hard cores . . . [and] therefore ontologically conflicting.”

Morais and Saad-Filho (2011) similarly argued that Lula’s policy was “hybrid”

and even included policies that were close to the “new developmentalism”

formulated by Bresser-Pereira (2011). Fonseca, Cunha, and Bichara (2013)

argued that, although there were aspects of both rupture and continuity with

Cardoso’s policy, there was insufficient reason to interpret this as a return to

developmentalism.

Regarding Dilma Rousseff’s government, the controversy was no less

intense. In August 2011 it abandoned policies that had been in place since the

Cardoso administration, forcing the Central Bank to lower the interest rate and

devalue the exchange rate. Our hypothesis is that this reorientation represented

more than a mere change in economic policy. It was a point of inflection of these

governments, since it meant the abandonment of the class-coalition pact signed

by Lula with segments of the business elite. At the start of her second term,

Rousseff sought to rebuild alliances established by Lula in 2002, but the condi-

tions for doing so no longer existed. Regardless of economic policy choices, the

lack of material, economic, and political foundations made the continuity of the

alliance infeasible. The economic and political scenario from 2015 on made it

impossible to reconcile orthodox economic policies with state redistributive

interventionism.

The following questions arise: Can Rousseff’s reorientation of economic

policy, sometimes called the “new macroeconomic matrix,” be considered the

abandonment of orthodoxy in favor of a developmentalist option? What were

the reasons for it? Which bourgeois sectors supported the PT governments, and

why did they move away?