Neoliberalism, Democracy, and Development Policy in Brazil

Article excerpt

This paper offers a political economy analysis of the two systems of accumulation in the postwar Brazilian economy: import-substituting industrialisation (ISI) and new liberalism, and the industrial policies associated with them. The transition between these two systems of accumulation from the early 1980s to the mid-1990s is reviewed in the light of the country's key macroeconomic indicators and the political developments which have determined the choice and implementation of economic policy in each period. It is argued that, despite their significant achievements, both ISI and new liberalism were implemented unevenly and inconsistently, and that their shortcomings can be analysed at two levels: internal micro- and macro-economic limitations preventing these development strategies from achieving their stated aims, and external limitations imposed by social conflicts during each period of time. The paper concludes, first, that industrial policies are closely associated with specific state structures, economic constraints, and political configurations which can be analysed only concretely (there can be no general theory of industrial policy, and there is no 'optimum path' of accumulation under late development). Second, each system of accumulation is limited by a distinctive set of historically specific economic and political constraints, which set limits to its potential development. Third, and precisely for these reasons, industrial policy is irreducibly political and context-specific.

Keywords: Brazil, Import Substitution, Inflation, Neoliberalism, Democracy

Introduction

This paper offers a political economy analysis of the two systems of accumulation in the postwar Brazilian economy: import-substituting industrialisation (ISI) and new liberalism, and the industrial policies associated with them.1 The shift across systems of accumulation has been associated with significant changes in the role, structure, and economic policies of the Brazilian state. The first section examines the case of ISI, departing from a review of conventional assessments of this system of accumulation and, subsequently, offering an alternative interpretation of the economic and political structures underpinning this development strategy. This section also considers the limitations of ISI and the reasons for its terminal crisis in the eighties.

The second section focuses on the political transition to new liberalism, that is, the shift from military rule to democracy. It is argued that this political transition was functionally articulated with the economic transition to neoliberal policies as examined in the third section. This section departs from a conceptual review of neoliberal economic policies and reviews their implementation in Brazil since the nineties, highlighting the significance of the real stabilisation plan. Studied in detail are the shortcomings and limitations of new liberalism, a system of accumulation defined through four main features: neoliberal economic policies, microeconomic integration of domestic capital into transnational circuits, a decisive role for finance in economic policy-making, and political democracy. This paper concludes that both ISI and new liberalism achieved significant successes in terms of economic development. However, both strategies were implemented unevenly and somewhat inconsistently. These shortcomings can be analysed at two levels: internal micro- and macro-economic limitations preventing these development strategies from achieving their stated aims, and the external limitations imposed by social conflicts during each period of time.

More generally, the paper argues that industrial policies are closely associated with specific state structures, economic constraints, and political configurations which can be analysed only concretely. Consequently, there can be no general theory of industrial policy, and there is no 'optimum path' of accumulation under late development. …