The political economy of neoliberalism in Brazil: towards a Polanyian approach

Abstract

This article relies on a Polanyian-inspired theoretical framework to compare political economy strategies adopted by Brazilian governments after democratisation. Responding to competing interests from the financial sector, the manufacturing industry, and the working class, these governments have chosen between disembedded neoliberal, embedded neoliberal and neocorporatist strategies, facing different challenges and crises. After the short-lived adoption of disembedded neoliberalism in the early 1990s, embedded neoliberal governments were able to conciliate economic liberalisation and orthodox macroeconomic policies with political stability and social cohesion, while compensating the manufacturing industry and the working class for some of their losses. In the late 2000s, however, discontentment within these social groups with regard to insufficient economic growth opened the way for the emergence of neocorporatism, which eased the commitment to liberalisation and macroeconomic orthodoxy in order to expand industrial policies, social protection and labour market regulation. The crisis of neocorporatism, which culminated in the 2016 impeachment, provided a new opportunity for disembedded neoliberalism, putting the interests of the financial sector at the centre of policy formulation.

Keywords:

• Brazil
• neoliberalism
• neocorporatism
• political economy
• Karl Polanyi

Acknowledgements

The authors are grateful for the helpful comments provided by the anonymous referees, Lígia Mori Madeira, Lucas de Oliveira Paes, Luciana Pazini Papi, Marina Zucker Marques, Ruth Candlish, and Saskia Ruth-Lovell on earlier drafts of this article.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 The classification of Singer’s (2012, 2017 2020) contributions is disputable. On one hand, Singer (2017) discusses the first term of Rousseff in relation to the adoption of several developmentalist policies, which sought to accelerate the pace of social inclusion. On the other hand, Singer (2012, 2020) is clear about the maintenance of neoliberal policy foundations during Lula presidencies, as well as the short-lived nature of the developmentalist turn during the first term of Rousseff.

2 Like any variety of developmentalism, neo-developmentalism aims to promote manufacturing industry and achieve technological catch-up (Johnson 1999; Caldentey 2008); however, it adapts the classical developmental agenda to the context of middle-income countries that have passed the infant industry stage (Bresser-Pereira 2009). Specifically, the main neo-developmentalist goal is to increase the external competitiveness of manufacturing industries through a combination of stable and competitive exchange rates, low interest rates and selective industrial policies (Gezmis 2018). Regarding neoliberalism, neo-developmentalism also embraces fiscal balance, inflation control and trade openness, but rejects macroeconomic orthodoxy and financial liberalisation, cornerstones of the neoliberal agenda (Ban 2013).

3 In addition to these domestic societal groups, we also assume that foreign investors are fully committed to economic liberalisation and macroeconomic orthodoxy.

4 The concern over the internationalisation of Brazilian companies motivated further engagement in export promotion, funding for acquiring assets abroad and credit for importers of Brazilian goods and services (Leopoldi 2016).

5 During the Cardoso governments, for example, subsidized lending by the national development bank almost quintupled (Etchemendy 2011).

6 Concerning thematic policies and conditional cash transfers, the government created initiatives like the Family Health Program, Family Farming Support Program, Higher Education Student Fund, National Worker Training Plan, Young Agent Program, Qualification Grant, School Grant, Gas Subsidy and Alimentation Grant. Despite the lack of harmonisation among these policies, social policies under the Cardoso presidency increased the coverage and redistributive impact of public services (Draibe 2003).

7 In countries like Argentina and Mexico, neoliberal administrations did not provide support to domestic banks, opening the way for the preponderance of foreign banks (Etchemendy and Puente 2017).

8 The convergence between domestic business groups and labour unions reached its peak in the 2011 joint document signed by Unified Workers’ Central, Union Force and Federation of Industries of São Paulo, which proposed changes to industrial and macroeconomic policies (Unified Workers’ Central, Union Force and Federation of Industries of São Paulo 2011). Labour unions’ concerns with challenges in the industrial sector can be observed in several labour union publications during the late 2000s (Galvão 2014).

9 In 2006, for instance, Guido Mantega, an economist with a developmentalist background, replaced Antonio Palocci, a supporter of mainstream economic policies, as the Brazilian Minister of Finance. Similarly, in 2011, Alexandre Tombini, more inclined to a dovish approach, replaced Henrique Meirelles, who had implemented a hawkish monetary policy as the President of the Central Bank of Brazil.

10 Even though it was created under embedded neoliberalism in 2003, the Council for Economic and Social Development reflects the preferences of the Workers’ Party towards institutionalised bargains between business associations and labour unions (Doctor 2007; Wylde 2012). This preference also led to the creation of the Labor Relations Council in 2010 (Ladosky and Rodrigues 2018).

Additional information

Notes on contributors

Pedro Perfeito da Silva

Pedro Perfeito da Silva is a PhD candidate in political science at the Central European University (CEU). He is also a junior visiting fellow at the Institute for Human Sciences (IWM). His research interest mainly lies in international political economy, specifically in the politics of capital controls in emerging and developing countries after the dismantlement of the Bretton Woods order. He has published studies related to the Global Financial Crisis, creative industries, regional development and the Brazilian financial system.

Julia Veiga Vieira Mancio Bandeira

Julia Bandeira is a PhD candidate in political science at the Federal University of Rio Grande do Sul. She has published studies on politicisation of the judiciary in Latin America. Her doctoral research focuses on the political economy of development in Latin America.