Source: James Petras’ Website
Brazil has witnessed one of the world’s most striking socio-economic reversals in modern history: from a dynamic nationalist industrializing to a primary export economy. Between the mid 1930’s to the mid 1980’s, Brazil averaged nearly 10% growth in its manufacturing sector largely based on state interventionist policies, subsidizing, protecting and regulating the growth of national public and private enterprises.
Changes in the ‘balance’ between national and foreign (imperial) capital began to take place following the military coup of 1964 and accelerated after the return of electoral politics in the mid-1980’s. The election of neo-liberal politicians, especially with the election of the Cardoso regime in the mid-1990’s, had a devastating impact on the strategic sectors of the national economy: wholesale privatization was accompanied by the denationalization of the commanding heights of the economy and the deregulation of capital markets. Cardoso’s regime set the stage for the massive flow of foreign capital into the agro-mineral,the finance, insurance and real estate sectors. The rise in interest rates as demanded by the IMF and World Bank and the speculative market in real estate raised the costs of industrial production. Cardoso’s lowered tariffs ended industrial subsidies and opened the door to industrial imports. These neo-liberal policies led to the relative and absolute decline of industrial production.
The Presidential victory of the self-styled “Workers Party” in 2002 deepened and expanded the ‘great reversal’ promoted by its neo-liberal predecessors. Brazil reverted to becoming a primary commodity exporter, as soya, cattle, iron and metals exports multiplied and textile, transport and manufacturing exports declined. Brazil became one of the leading extractive commodity exporters in the world. Brazil’s dependence on commodity exports was aided and abated by the massive entry and penetration of imperial multi-national corporations and financial flows by overseas banks. Overseas markets and foreign banks became the driving force of extractive growth and industrial demise.
To gain a better understanding of Brazil’s ‘great reversion’ from a dynamic nationalist-industrializing to a vulnerable imperial driven agro-mineral extractive dependency, we need to briefly review the political-economy of Brazil over the past fifty years to identify the decisive ‘turning points’ and the centrality of political and class struggle.