The Limits of Pragmatism: The Rise and Fall of the Brazilian Workers’ Party (2002–2016)

• DOI: 10.1177/0094582X18805093
• Date: 01 January 2019
• Published date: 01 January 2019
• Author: Pedro Mendes Loureiro,Alfredo Saad-Filho
• Subject Matter: Articles

LATIN AMERICAN PERSPECTIVES, Issue 224, Vol. 46 No. 1, January 2019, 66–84

DOI: 10.1177/0094582X18805093

© 2018 Latin American Perspectives

66

The Limits of Pragmatism

The Rise and Fall of the Brazilian Workers’ Party

(2002–2016)

by

Pedro Mendes Loureiro and Alfredo Saad-Filho

Under favorable external circumstances, the pragmatic political and economic strategy

of Brazil’s Partido dos Trabalhadores (Workers’ Party—PT) helped to secure short-term

political stability, boosted growth, and supported an unprecedented distribution of income.

However, it also meant that the PT had to accommodate to rather than transform the

constraints on growth in Brazil and that stability would involve unwieldy political alli-

ances preventing deeper reforms. When it was confronted with deteriorating global eco-

nomic conditions and increasingly ineffectual economic policies, the PT’s strategy

immobilized the party, facilitated the dissolution of its base of support, and expedited its

ouster from power. The Brazilian experience suggests that political pragmatism can,

within limits, support progressive economic change but that the outcomes depend heavily

on external circumstances and the stability of the political coalitions supporting the

administration.

Em circunstâncias externas favoráveis, a pragmática estratégia política e econômica do

Partido dos Trabalhadores (PT) ajudou a assegurar a estabilidade política no curto prazo,

impulsionou o crescimento e apoiou uma distribuição de renda sem precedentes. No

entanto, isso também significou que o PT teve que se acomodar a, em vez de transformar,

as restrições ao crescimento no Brasil, e que a estabilidade envolveria alianças políticas

comprometedoras, impedindo reformas mais profundas. Quando foi confrontada com a

deterioração das condições econômicas globais e apresentando políticas econômicas cada

vez mais ineficazes, a estratégia do PT imobilizou o partido, facilitou a dissolução de sua

base de apoio e acelerou sua saída do poder. A experiência brasileira sugere que o pragma-

tismo político pode, dentro de certos limites, apoiar a mudança econômica progressista,

mas que os resultados dependem muito das circunstâncias externas e da estabilidade das

coalizões políticas que apóiam a administração.

Keywords: Brazil, Pragmatism, Workers’ Party, Drivers of growth, Neoliberalism

Global conditions were exceptionally supportive of economic development

in the early 2000s because of the combined effects of the “Great Moderation” in

Pedro Mendes Loureiro is a lecturer in Latin American studies at the University of Cambridge,

researching shifts in class inequality and capital accumulation in Latin America. Alfredo Saad-

Filho is a professor of political economy at SOAS, University of London and was a senior eco-

nomic affairs officer at the United Nations Conference on Trade and Development. Loureiro

thanks the Coordenação de Aperfeiçoamento de Pessoal de Nível Superior for the grant (BEX

0840/14-9) that made this research possible.

805093LAPXXX10.1177/0094582X18805093Latin American PerspectivesLoureiro and Saad-Filho / Rise And Fall Of The Workers’ Party

research-article2018

Loureiro and Saad-Filho / RISE AND FALL OF THE WORKERS’ PARTY 67

the United States, relative prosperity in the EU, and rapid growth in China. Most

low- and middle-income economies benefited from the high export prices asso-

ciated with the so-called commodity supercycle and from abundant inflows of

capital (Saad-Filho, 2013). These conditions facilitated the implementation of

pragmatic and nonconfrontational reformist policies in the administrations led

by the Partido dos Trabalhadores (Brazilian Workers’ Party—PT)—the pursuit

of progressive outcomes through a “path of least resistance.” This strategy

included the commitment to the “rules of the game,” preserving the constitu-

tion, and redistributing income flows at the margin through transfer programs

and improvements in the labor markets while leaving unchallenged the (highly

unequal) distribution of assets and avoiding extrainstitutional mobilization,

ideological confrontation, or appeals to class-based politics.

Under favorable external circumstances, the PT’s path of least resistance

supported an unprecedented virtuous cycle including growth, distribution,

and domestic political stability. However, this strategy purposefully bypassed

the party’s historical ambition to transform the system of accumulation and the

long-term constraints on growth in Brazil; in the medium term, the strategy’s

viability depended on conditions that were either ignored or taken for granted.

Their eventual disappearance dissolved the party’s base of support, disabled

the party at a crucial historical juncture, and facilitated the overthrow of

President Dilma Rousseff in 2016.

This argument is developed in five sections. Following this introduction, the

next section summarizes the “success story” of the 2000s through an examina-

tion of the political and economic dynamics in Brazil and the drivers of growth

and distribution during that period. It focuses on the minimum-wage and fed-

eral income transfer programs (especially the conditional cash transfers and the

expansion of public pensions and other benefits) and the relaxation of the bal-

ance-of-payments constraint on growth because of high commodity prices and

abundant international liquidity. The third examines the macroeconomic limi-

tations to the PT’s strategy, focusing on the inadequacies of the Brazilian indus-

trial structure, the deterioration of the country’s relationship with the global

economy, rising current-account deficits and inflation, and the diminishing

scope for distribution. These problems suggest that pragmatic economic strate-

gies are intrinsically limited and that their exhaustion was likely to undermine

the PT’s sources of political support. The fourth explains the PT’s continuing

attachment to its pragmatic strategy even as the political and economic crises

in Brazil spiraled out of control. This is illustrated through four moments: the

failure of the “new economic matrix” in 2011–2013, the government’s disregard

for the mass protests of June 2013, the economic policy turnaround after the

2014 elections, and the PT’s decision to follow a nonconfrontational strategy

even as Rousseff was being impeached. The fifth section offers conclusions.

THE ECONOMIC UPSWING

Between 1988 and 1994, the dominant system of accumulation and the main

strategy of development in Brazil shifted from import-substitution industrializa-

tion to neoliberalism. This systemic change was achieved through institutional