Connections Between Thorstein Veblen’s Institutionalism and Celso Furtado’s Mature Writings

Abstract

This study associates Original Institutional Economics and four books by Celso Furtado from the 1990s and early 2000s, as he discusses the cultural dimensions of underdevelopment in those writings. We rely on the association of issues from Thorstein Veblen’s institutionalism with the cultural aspects of Furtado’s investigation. The Veblenian concepts of pecuniary emulation and conspicuous consumption support the understanding of the habits of the Brazilian elite as addressed by Furtado. Hence, this study examines an unexplored connection between institutionalism and structuralism as such associations usually rely on the ceremonial-instrumental dichotomy. We introduce a reading of the current Brazilian society to illustrate our argument. Such reading relies on changes promoted in higher education and the lower classes’ purchasing power.

Keywords:

• Celso Furtado
• structuralism
• institutions
• Brazil
• leisure class
• elite

JEL Classification Codes:

• B52

Disclosure Statement

No potential conflict of interest were reported by the authors.

Notes

1 To systemize structuralism, Ricardo Bielschowsky (2004) enumerated its five basic features, whose ideas were widely used by most theorists. They are the characterizations of underdevelopment: (1) a periphery’s condition, the “center–periphery” relationship, is of utmost importance in the structuralist analysis. Its foundation lies in the fact that the technical progress developed unequally among countries, creating differences in their productivity and creating a well-developed center and an underdeveloped periphery; (2) the identification of a spontaneous process of industrialization and its historical significance after World War I, a change of direction in the global economy, transformed the world economy when the flow of exports to the underdeveloped countries was reduced drastically. This allowed these countries to produce internally to supply their repressed demand; (3) the industrialization of the periphery is seen as an unparalleled and problematic development model. There are four problematic tendencies that accompany the process of industrialization in the underdeveloped world: unemployment, the deterioration of the terms of trade, the external imbalance, and inflation; (4) the structuralist thesis concerning inflation; and (5) the thesis of import substitution.

2 The United Nations Economic Commission for Latin America and the Caribbean (ECLAC) is a regional commission to encourage economic cooperation among the countries of the region. Established in 1948, it was aimed at solving problems related to the underdevelopment of Latin American countries. Its name was changed in 1984 to accommodate the Caribbean. It is headquartered in Santiago, Chile (ECLAC 2021).

3 The structuralism of ECLAC intends to identify non-economic parameters in macroeconomic models – here identified as historical and institutional factors which contribute to the economic development (Aguilar and Silva 2010), or which structures contribute more adequately to economic development, such as the ones that thwart it (Love 2005). We affirm that Furtado joined the ECLA, in 1949, instead of ECLAC by the reasons introduced above, in footnote 2.

4 From 1954 to 1955, Furtado was the head of the “Grupo Misto Cepal-BNDE” (Mixed Group ECLA-BNDE); between 1959 and 1962, he was the head of Sudene (Superintendence for the Development of Northeast); from 1962 to 1964, and he was the Minister of Planning, who dealt with the economic issues of the Brazilian federal government (Bielschowski 2004).

5 Furtado was a professor at Université Paris-Sorbonne (France), University of Cambridge (UK), Yale University (USA), American University (USA), and Columbia University (USA) (Furtado 1991).

6 It is a translation of Formação Econômica do Brasil. Since its first edition, the book sold more than 350,000 copies in Brazil, and it was translated into nine languages (D’Aguiar Furtado 2009).

7 In the EGB, Furtado emphasizes some of the basic elements of ECLAC theory, such as peripheral underdevelopment as a historical process, which demands economic planning, and the meaning and dynamics of the spontaneous industrialization (Bielschowsky 1989). The historical approach of ECLAC issues was responsible for EGB’s status as a classic (Silva 2011) and was considered a bastion of structuralism, or even its masterpiece (Bielschowsky 1989).

8 Although the cultural element was present in Furtado’s analysis since The Myth of Economic Development (O Mito do Desenvolvimento Econômico), published in 1974, it wasn’t until the 1990s that this aspect became preponderant in his books. Specifically, the cultural element was highlighted twice since 1974 until the 1990s, in Creativity and Dependency in the Industrial Civilization (1978) and in Culture and Development in an Age of Crisis (1984). His other books emphasized Brazil’s economic situation in the beginning of the 1980s, such as Brazil post-’Miracle’ (1981), The New Dependency, Foreign Debt and Monetarism (1982), No to Recession and Unemployment (1983), and in ABC of Foreign Debt (1989a). Between 1974 and 1991, Furtado also published three autobiographical books, wherein he only uses his theory as a background to his experiences: The Organized Fantasy, (1985), The Undone Fantasy (1989b), and The Air of the World (1991).

9 Since 1974, Furtado only cited Veblen once, in The Organized Fantasy (1985), referring to the fact that the investment rate is influenced by institutional factors, and that this discussion stems from the works of Veblen and Max Weber.

10 Street’s approach to Sunkel was supported by Edythe Miller, AFEE’s president of that time, and Dilmus James, who was another institutionalist interested in structuralism (Sunkel 1989a).

11 It should be noted that despite Sunkel giving importance to Structuralism, he did not speak for all structuralists. For instance, Furtado did give technological change an important analytical role, as previously addressed.

12 With the exception of O Capitalismo Global, which was translated to English and published as Global Capitalism, the remaining books do not have an English title. Therefore, the translations of the other book titles have been done by us.

13 Brazil, Interrupted Construction is a free translation of Brasil, a Construção Interrompida.

14 The Long Dawn is a free translation of O Longo Amanhecer.

15 The Search for a New Model is a free translation of Em Busca de um Novo Modelo.

16 Marcelo Arend (2008) proposes an identification between Furtado’s elite and Raymundo Faoro’s bureaucratic “statement” (free translation to “estamento”), which is a group inside the State that takes its possession and uses it to command and conduct the State’s businesses (Faoro 2001). It is a domination based on public- made into private-patrimony, characterizing its mingling and social inequality.

17 Furtado (2008) links the external acculturation process by tracing its origins: “[t]he income increases originated by the expansion of international trade in the nineteenth century, propelled the diffusion of new consumption standards created by the Industrial Revolution. As a consequence, the industrial technology was not universalized, but the new consumption standards originating in the industrialized countries were. The diffusion of directly productive activities was slow, originating qualitative discrepancies in the social and economic structures between the countries in which the production techniques were advancing and those in which these advances privileged unproductive investments and consumption of durable goods, usually imported” (Furtado 1998, 59). Therefore, the external acculturation process drives the elites into wasting the country’s resources on unproductive goods, which reinforces the high concentration of income and the social heterogeneity among different social classes, at the same time, the persistence of international trade focuses on extracting resources from underdeveloped countries and exporting industrialized goods reinforces the tendency to maintain the vicious cycle of underdevelopment.

18 Furtado mentioned overconsumption when referring to the groups who consume conspicuously. To him, without a project grounded in reality, the rehearsals of the structural transformations required by society will hardly achieve the necessary efficacy. Without the consensus of the conspicuous segments of society, a well-elaborated project would not be feasible (Furtado 1992, 57).

19 The tendency towards this cultural imitation stems from the flow of innovations in developed countries (Furtado 1998, 60), always pushing the consumption standards towards new products, based on projected images of success.

20 Veblen affirmed that the conspicuous leisure “connotes non-productive consumption of time. Time is consumed non-productively (1) from a sense of the unworthiness of productive work and (2) as an evidence or pecuniary ability to afford a life of idleness” (Veblen 1899, 33).

21 Specifically, the United States influenced projects a mass culture endowed with extraordinary means of diffusion, and acts as a destabilization factor in the cultural frame founded on the elite-masses dichotomy (Furtado 1999, 65).

22 Furtado (1999) affirms that while popular culture takes the risk of mischaracterization, the transnational industry lends itself to the role of the vector of modernization progression. The brake to this process is inevitably an aspect of the creation of a critical conscience by the country’s elite to avoid cultural disintegration through imitating the less-favored classes.

23 The scholarships were not about fees. Brazilian federal universities function without fee structures. The scholarships offered a financial assistance to provide housing and food to students during their university education.

24 In the original version, the comments were: (1) “O glamour foi para o espaço” and (2) “E sabe o que é pior? Quando esse tipo de passageiro senta exatamente a seu lado e fica roçando o braço peludo no seu, porque – claro – não respeita (ou não cabe) nos limites do seu assento” (Pragmatismo Político 2014).

25 Real is the Brazilian currency.

26 In the original: “[t]odo mundo indo para a Disneylândia, empregada doméstica indo para a Disneylândia, uma festa danada” (Folha De S. Paulo 2020). Someone may find curious the fact that Guedes associated Real’s valuation with exchange rate incentives to Brazilians travel to the United States. Actually, we introduce the notion of Real’s valuation as it is discussed in Brazil and, consequently, as Guedes put it. In Brazil, a Real’s valuation means that Real became a strong currency with respect to the U.S. dollar. We know that, in Brazil, the debate about exchange rate takes a path that is different than usual, however for Guedes’ perspective on Real’s valuation makes sense so we have to take the Brazilian perspective into consideration.

Additional information

Notes on contributors

José Maltaca

José Maltaca and Felipe Almeida are, respectively, statistician and professor of economics both at the Federal University of Paraná. The authors want to thank Bill Waller and two anonymous referees for comments and suggestions. This research has been supported by the National Council for Scientific and Technological Development (CNPq) in Brazil.

Felipe Almeida

José Maltaca and Felipe Almeida are, respectively, statistician and professor of economics both at the Federal University of Paraná. The authors want to thank Bill Waller and two anonymous referees for comments and suggestions. This research has been supported by the National Council for Scientific and Technological Development (CNPq) in Brazil.