Though Brazil’s new centrist president,
Fernando Henrique Cardoso, achieved early
prominence as a Marxist sociologist, there have
been no major breaks in his
intellectual career. He has simply embraced the
position of his former object of study,
the Brazilian business class.
In January, 1993, almost two years before Mexico’s
economic drift became every financial risk ana-
lyst’s worst nightmare, Washington’s prestigious
Institute for International Economics (IIE) brought
together more than 100 specialists from the United
States and a number of Asian, African and Latin
American countries to discuss a document by one of
the Institute’s senior fellows, John Williamson, “In
Search of a Manual for Technopols.” The discussion
took place in the context of an international seminar
on “The Political Economy of Policy Reform.”
The two-day gathering brought together executives
from governments, the multilateral banks, and private
businesses as well as a select handful of academics.
Discussions of economic stabilization and reform pro-
grams turned on the need for “the most favorable con-
ditions and action-guidelines enabling ‘technopols’ to
garner the political support needed to make such pro-
grams work,” the delicate terms implicit in what
Williamson years ago termed the “Washington Con-
sensus.”
This illustrative figure of speech, today in common
use internationally, refers to a single adjustment plan
for the world’s peripheral economies, formulated by
International Monetary Fund (IMF) and World Bank
strategists. So far, the plan has been implemented in
60-plus nations. The plan seeks to attain uniformity in
national economic policies, sometimes by placing
those policies under the direct management of IMF
VOL XXVIII, No 6 MAY/JUNE 1995
and World Bank technical staff. This has happened in
many African nations, beginning with Somalia in the
early 1980s. Elsewhere, in countries like Bolivia, Poland and even Russia, the strategy has been broad-
ened to include participation by leading economists,
mostly from U.S. universities.
A third option applies to nations with more fully
developed bureaucratic structures. These countries
employ politically astute, native-born economists, Williamson’s “technopols,” who are not only capable
of ensuring proper administration of their free-market
policies, but also able to garner popular support for
the same consensus agenda. These have included
Mexico’s Pedro Aspe, Carlos Salinas and Ernesto
Zedillo; Argentina’s Domingo Cavallo; Russia’s
Yegor Gaidar; Taiwan’s Lee Teng-hui; India’s Man-
mohan Singh; and even Turkey’s Turgut Ozal. There
has also been a long line of Brazilian technopols, beginning with Zl61ia Cardoso and Ant6nio Kandir,
followed by Pedro Malan, Persio Arida, Edmar Bacha, and Gustavo Franco.
The foundation of this “New Colonialism,” as
Newsweek termed it in its August 1, 1994 issue, is a
three-step strategic plan. First, national macroeco-
nomic stabilization must be assured, with absolute
priority given to producing a fiscal surplus. Invari-
ably, this implies reorganizing inter-governmental fis-
cal relationships, and restructuring government
social-welfare mechanisms. The plan’s second phase
stresses what in World Bank parlance are termed “structural reforms,” encompassing financial and
commercial reforms, deregulation of markets, and the
privatization of state-run enterprises. The third stage
17
Jose Luiz Fiori is a professor of political science at the University of the State of Sa5 Paulo and the Federal University of Rio de Janeiro. He thanks journalist Luiz Cesar Faro for his collabora- tion. Translated from the Portuguese by Charles H. Roberts.REPORT ON BRAZIL
is supposed to bring renewed investment and eco-
nomic growth.
By the early 1990s, a host of pessimistic policy
evaluations by both the IMF and the World Bank sin-
gled out the crucial importance of the “political fac-
tor” in the success or failure of programs. This new
concern on the part of intellectuals and managers of
the Washington Con-
sensus explains not
only the timeliness of
the Williamson semi-
nar, hailed as a bench-
mark in the treatment
of the issue, but also
the participation of two
prominent U.S. politi-
cal scientists, Joan
Nelson and Stephan
Haggard, the authors
of the most complete
comparative studies in
the United States on
the implementation of
such adjustment pro-
grams.
In his introductory
document, Williamson
clearly acknowledges
the perverse economic A family of and social conse-
quences of austerity and liberalization policies on tar-
get nations’ economies and populations, as well as the
logic that makes it difficult to elect a minimally stable
government. Working from these premises,
Williamson suggests several political tactics and arti-
fices capable of making the electorate accept the social
devastation invariably wrought by the neoliberal pro-
gram as both temporarily necessary, and undertaken
for the greater long-term good. The programs are
deemed more likely to succeed when their implemen-
tation follows some catastrophe-such as war or
hyperinflation–of a magnitude capable of undermin-
ing any and all resistance; when technopols are pitted
against a discredited or disorganized opposition; and
where, in addition, strong leaders can “insulate” the
programs from social issues.
In all of the cases it has been necessary to form a
political coalition strong enough to take power at the
most favorable moment, and to wield it over long peri-
ods at the head of governments with solid parliamen-
tary majorities. Indeed, such legislative majorities are
now considered essential to the “credibility” required
by the risk analysts at the handful of giant financial
consulting firms which in effect control global move-
ments of capital.
ernando Henrique Cardoso, Brazil’s recently elected president, came to power with the back-
ing of a neoliberal elite determined to enforce
precisely this hegemonic stabilization program. Mid-
way through his campaign for the presidency, Car-
doso, then finance minister, launched a tight-money
anti-inflation program called the Real Plan, named
rural workers in the northern state of Para.
after the new currency. The Plan brought inflation
under control for the first time in years, and gave Car-
doso the momentum he needed to capture the presi-
dency. Considering the umbilical linkage between the
Real Plan’s stated long-term strategic objectives-
obligatory reforms to a gamut of fiscal and monetary
policies, liberalized commercial and financial regula-
tions, privatization of state-run concerns, and renewed
economic growth-and the implied corollary require-
ment of long-term political stability, the Plan appears
to most observers to be simply another offspring of
the larger family of stabilization packages discussed at
IIE’s Washington seminar.
Though Cardoso achieved prominence as a Marxist
sociologist in the 1960s and 1970s, it can be argued-
even though his early works contain a vehement, well-
reasoned indictment of the course he has come to take
as president-that the trajectory of his intellectual
career contains no major breaks. His early scholarship
includes some of the seminal work on dependency
theory, written from the mid-1960s to the early 1970s,
when he was exiled in Chile, and associated with the
UN’s Economic Commission on Latin America
(ECLA). One can trace the logical path that led him
from his theoretical contributions on the nature of
18NACIA REPORT ON THE AMERICAS NACIA REPORT ON THE AMERICAS 18REPORT ON BRAZIL
Globalization is the result of political decisions made,
in an increasingly focused manner, by a small number of transnational
companies and banks and a few national governments.
Brazilian industrialists, and the fundamentally depen-
dent nature of Brazilian capitalism, to his current posi-
tion in political and ideological struggle.
Cardoso’s academic work can be summarized as a
tireless search for the connections between the inter-
ests and objectives which exist under given “historico-
structural” situations, and the political strategies that
are constructed by social groups and their political
coalitions. With this aim, Cardoso was one of the first
to examine and conclude forcefully, as early as 1963, that Brazil’s national industrial bourgeoisie could not
play the role that the country’s nationalist-populist
ideology called upon it to play. He argued that the
industrial bourgeoisie had abdicated any pretensions
to exercising full hegemony over society, accepting its
role as junior partner to Western capitalism. This find-
ing enabled Cardoso to discover very early on that
while the Brazilian bourgeoisie may be associated, depending on the circumstances, with a broad range of
ideological positions, in the end it always supported
enhanced capital mobility, and the geopolitical and
economic developments which led to the increasing
internationalization of capital.
This discovery was directly responsible for Car-
doso’s next and most original step. For Cardoso, peripheral capitalism was defined by the lack of con-
vertible currencies and the lack of endogenous capa-
bility for technological innovation. “Dependent sta-
tus,” on the other hand, was defined by the specific
way in which national entrepreneurs were associated
with international capital and with the state. This
three-way relationship among national and interna-
tional capital and the state cushioned the “internation-
alization of the domestic market.” By the 1970s, multinational corporations had taken the lead in
almost all sectors featuring state-of-the-art technolo-
gies, coming to account for approximately 40% of
Brazil’s industrial output.
It would hardly be a stretch to extend and properly
update Cardoso’s analysis to fit the current “structural
situation,” defined by a more advanced international-
ization of capitalism, associated with an increase in
Brazil’s internal “sensitivity” to changes in the world
economy. Indeed, the new economic conjuncture goes
beyond-though does not invalidate-the essence of
Cardoso’s writings of the 1960s and 1970s. In a recent
article called “Reform and Imagination” which
VOL XXVIII, NO 6 MAY/JUNE 1995
appeared in the daily Folha de Sdo Paulo on July 10,
1994, Cardoso exuberantly displays his historical-
materialist sensibilities when he states that he contin-
ues “to believe that globalization of the economy is a
direct consequence of a new mode-flowing from a
new technology–of production.” His concrete grasp
of the facts, however, surprisingly ignores any politi-
cal and power dimension in the globalization process.
He calls any conceptual resistance to the dominant
model “devoid of any practical application.” He
decries charges that he has a political connection with
the so-called “new colonialism” as “conspiratorial
stereotypes.” He recognizes that he places conditions
on his ability to govern by adopting a policy of uni-
form stabilization, reforming the state, and attempting
to attain a “social democracy capable of reducing the
inequalities of a mass society.” Finally, he refuses to
admit his obvious swing to the right, seeking to
explain away, in particular, the most hardcore mem-
bers of his coalition, the Liberal Front Party (PFL),
principal heir to the spoils of the successive military
governments. In his view, the PFL has freed itself
from its past, and no longer represents traditional
clientelism.
The key issue is that, contrary to what Cardoso
thinks, globalization of the economy is not just a con-
sequence of technological development or the competi-
tive evolution of markets. Globalization is increasingly
proving to be a political, cultural and economic reality
whose origins and consequences are more complex
because of its many non-economic dimensions. While
globalization emerged behind the backs of many pro-
ducers and governments, it is also the result of political
and economic decisions made, in an increasingly
focused manner, by a relatively small number of global
oligopolies and banks and a few national governments.
It appears, however, that neoliberals, for obvious rea-
sons, as well as some of the old structuralists and trau-
matized leftists, have tremendous difficulty assimilat-
ing the importance of the political factor in the origin
and unfinished history of this process of change that
capitalism is undergoing.
In many ways, therefore, Cardoso is right when he
says that at no point has he renounced or cast aside his
sociological analysis. What he has done is perhaps
more profound. He has chosen a new ethical and polit-
ical option by abandoning his reformist idealism to
19REPORT ON BRAZIL
From the standpoint of his personal political strategy,
Cardoso has proven to be an applied and rigorous disciple of
the Spanish social democrat, Felipe Gonzalez.
embrace the position of his former object of study, the
Brazilian business class. Simultaneously, he assumes
as an unquestionable fact the current international
relations of power and dependency. After two decades
of critical political life, Cardoso is offering himself as
the “condottiere of the industrial bourgeoisie,” capa-
ble of redirecting it to its manifest destiny as the less-
er, dependent partner of Western capitalism, with new
life breathed into it by the third technological revolu-
tion and by financial globalization.
His painful letting go of his old idealist and
reformist positions, expressed in his frequent discom-
fort with the foibles of neoliberalism and his irritation
whenever the issue is raised, may be less a move to
the right than a hitherto unimaginable naivete. This
naivete, in turn, is the result of an even more unimag-
inable mistaken assessment of the process and pro-
grammatic content of the Spanish social democracy of
Felipe Gonzalez, which was always the great model
that has guided Cardoso’s political history. Cardoso
may believe that the “infallible combination” of his
capacity for political wizardry and the materialist
forces of historical inevitability make it possible to
avoid having to first reach par with Mexico or
Argentina before attaining the level of Spain. To ana-
lyze Cardoso’s future, it is therefore important to be
familiar with the history of Spain’s “real social
democracy.” A close look at that history indicates that
Cardoso is mistaken in his idealized vision of what
Spain was and still is.
quences, the “real social-liberalism” achieved
by Spain’s “socialist” government after 12
years of pactacidn social is indistinguishable from
the neoliberalism of Great Britain under Margaret
Thatcher. The Spanish “economic miracle” is summa-
rized, in chronological terms, in eight years of reces-
sion (1977-85) and four years of growth (1986-1990)
with a common objective: reducing inflation and pro-
moting economic growth. The issue of renewed
growth, however, was left almost entirely to the
vagaries of the marketplace. From 1982 to 1986, the
dominant orthodoxy suggested devaluation of the
exchange rate, high interest rates, clamps on wages,
and fiscal and monetary austerity. These policies were
implemented so rigorously that the recession dragged
on until 1985, when inflation slowly receded into the
single digits.
The entry of Spain into the European Economic
Community (EEC) in 1986 reoriented Gonzalez’ polit-
ical-economic strategy towards the new global ortho-
doxy: economic liberalization and deregulation, which
provoked an overvaluation of the exchange rate. This
was responsible for Spain’s mounting trade deficit,
financed by the import of short- and long-term capital,
which was attracted by extremely high interest rates in
relation to the average in the EEC. This situation of
external disequilibrium was fur-
ther aggravated with the entry
of Spain into the European
Monetary System (EMS) in
1989, which was the Spanish
equivalent of adopting dollar-
ization in Brazil. In addition to
working towards the goal of
stanching inflation, the govern-
ment under Gonzilez embraced
new orthodox policies: structur-
al reforms of the labor market
and social security, together
with deregulation, liberaliza-
tion, and reduction in the size of the public sector.
What were the lessons of the rapid economic
growth Spain experienced from 1986 to 1990? First,
this growth was above all an effect of entering the
EEC and the consequent explosion in external-
mostly speculative-investment. From 1986 to 1990,
10 billion pesetas flowed into Spain, ten times more
than in the previous five-year period. Of this sum,
30% was used to buy local firms; 58% for invest-
ments in portfolios of stocks, bonds, and public debt
on the securities markets; and the rest was earmarked
mainly for the purchase of real estate. This process
brought about an appreciation of real and financial
assets, increased the personal wealth of their owners,
and multiplied urban housing costs, but did little in
the way of contributing to activities capable of gener-
ating lasting and stable economic progress. In that
period, Spain spent less on human resources-about
0.08% of GDP-than any other country of Europe,
except Luxembourg; and its investment in research
and development was no more than 0.68% of GDP,
superior only to Portugal.
20
NACIA REPORT ON THE AMERICAS
NACLA REPORT ON THE AMERICAS
20REPORT ON BRAZIL
The figures show that Spain ceased being an indus- valued currency, was unable
trial economy. During this period, and increasingly in ness.
the 1980s and 1990s, industry’s share of GDP in Now if that was the econo
Spain fell from 32.9% to 24.2%, employing just 27% liberalism,” what can be sai
of the labor force, while the participation of services Here too the facts are eloque
increased from 47% to 63% of GDP, today employ- Felipe GonzAlez, social sp
ing about 60% of the population. What industry 19.42% to 21.37% of GDP, remains is divided between small and medium enter- keeps Spain among the lox
Left: The bookjacket of Cardoso’s seminal contribution to Latin American dependency theory. Above: Cardoso speaks to journalists in September, 1985, during his campaign for mayor of Sio Paulo.
prises, which account for about 90% of industrial out-
put, and a dynamic core of multinationals, which
accounts for the lion’s share of exports. According to
data published by The Economist in October, 1994, Spain, of all the countries belonging to the Organiza-
tion of Economic Cooperation and Development
(OECD), sold the largest number of firms to foreign-
ers between 1989 and 1993, because as the economy
opened up, Spanish capital migrated to the service
sector. According to the World Economic Forum, Spain is now among the least competitive nations of
the OECD.
This scheme that has provoked the deindustrializa-
tion of Spain, without attaining greater competitive-
ness, is an essential part of the strategy adopted by
the GonzAlez government. It is also automatically
accepted as part of the logic of Cardoso’s plan. Spain
has been a pioneer for more than a decade, of this “orthodox swindle.” The tucanos brasileiros-Brazil-
ian social democrats-should learn from the experi-
ence of Spanish social-liberalism that inflation never
decreases to levels capable of halting deindustrializa-
tion and denationalization. The Spanish economy, hindered as it was by high interest rates and an over-
to achieve competitive-
mic result of “real social
d about its social facet?
nt. In 12 years of rule by
ending increased from
a minimal increase that
lest ranks of the OECD
countries. As for
income distribution, the
poorest 10% of all fam-
ilies increased their
share from 2.41% in
1980 to 2.85% in 1992,
and the highest 10% of
all incomes saw their
share decline in the
same period from
29.23% to 28.01%.
Nevertheless, the wage
share of GDP fell from
51.2% in 1980 to
46.1% in 1991, while
unemployment, about
6% at the outset of the
GonzAlez Administra-
tion, has skyrocketed to
24% of the adult labor
force today, reaching
the imponderable level of 37 9% among peo-
ple under 25 years of age. Of the population between
the ages of 30 and 55, 800,000 of the 3.4 million
unemployed are illiterate or have little if any training, which makes it very difficult for them to hold jobs
offered in the “restructured” sector of the economy.
To round out the social picture of the “Spanish mira-
cle,” one should recall that beginning in 1992, the
Economic Plan for Convergence, which was designed
to complement the Maastrich agreements, brought to
the forefront of Spanish political debate the “de-uni-
versalization” of social security. This new situation
led a high-ranking member of GonzAlez’ party to note
recently that “Spain has begun to turn back without
ever having gone forward.”
his journey through the history of “real social
liberalism” in Spain demonstrates that the cur-
rent hegemonic model has a long history and has
been clothed in a variety of garbs. It also suggests that from the standpoint of his personal political strategy,
Cardoso has proven to be an applied and rigorous dis-
ciple of Gonzilez. He got ahead of himself on just one
point: from the outset, notwithstanding his sleight of
hand, he has been allied with the right. This alliance
21
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x
21 VOL XXVIII, NO 6 MAY/JUNE 1995REPORT ON BRAZIL
led Ant6nio Carlos Magalhies-the conservative PFL
leader who is one of the pillars of Cardoso’s coali-
tion-to remark with sarcastic pleasure to the presi-
dent’s chorus of Penelopes, that they are weeping over
someone who never existed. “Behind the brilliant
Marxist sociologist,” suggests Magalhaes, “was always
an elitist and a man of the right.”
Cardoso at a campaign stop during his run for president
Cardoso wanted to leap straight to the stage of the
idealized and seductive elite of socialist technopols
commanded by Gonzilez without going through the
Mexican experience, disregarding the fact that except
for the pomp, the formula was essentially the same.
But the irresistible emanations from Washington and
the need to win international trust required that he
sing praises to the glory of Carlos Salinas de Gortari.
In the key statements of his political history, for
example his farewell speech as he left the Senate in
1994, Cardoso elevated Mexico and to a lesser extent
Argentina to the status of models pointing the way to
possible success. Mexico was brought in as a partner
to the North American bloc, and had a single-party
government for more than 60 years, making it the
darling for risk analysts specializing in the “emerg-
ing” countries. In the end, of course, the country led
the “credibility” formulation into a paroxysm.
The darling of the technopol community turned out
to be a house of cards built on a seismic foundation.
The Mexican collapse has been a sort of chronicle of a
death foretold, in which the same variables touted as
indicating the success of the stabilization program–
total financial deregulation, controlled overvaluation of
the currency (the narrow-band floating regime),
absolute trade opening, and a deficit in the external
current accounts (8.5% of GDP) increased according to
the formulaic recommendations of the new globalizing
order-are now crucified as the cause of death. Actual-
ly, Mexico was already agonizing socially and politi-
cally-Chiapas did not come out of thin air-when the
bubble of prosperity ephemerally provided by the dom-
inant model of stabilization burst. Statistics and reality
were back-to-back; the debacle was only a question of
time. But neither the intellectuals of the Washington
Consensus nor the pragmatic social
liberals were capable of recognizing
it in time.
Now there is no turning back. The
end of the Mexican dream will
inevitably condition the path taken
not only in the short run, but also in
the medium and long term in all the
adjustment programs, including
Brazil’s. This will occur despite the
understandable effort of opinion
makers to try to convince the risk
analysts that even though their stabi-
lization programs are strikingly sim-
ilar, their countries are different:
Mexico is not Brazil; Brazil is not
Spain; Spain is not Mexico, etc. At
the nerve center of the consensus,
the tendency is to forge full speed
last year ahead with the adjustments. Rolling
back now would be the real disaster. In this regard,
IMF Director Michel Camdessus affirmed that the
choice is between “advancing or advancing.” In
Brazil, Cardoso and his technopols indicate that they
understand Camdessus’ message and will follow the
herd towards shortening the time period for undertak-
ing the “structural reforms.” What took over 12 years
in Mexico must be done in two years in Brazil in the
name of “credibility.”
As of this writing, however, a very discreet note can
be heard that is out of tune with the resounding neolib-
eral symphony, bringing some encouragement to those
who believe that history is far from reaching its end.
At ECLA, where Cardoso wrote-with Enzo Falet-
to-the classic Dependency and Development in Latin
America in 1971 during his Chilean exile, he recog-
nized, in a speech this past February, “the arrogance,
lack of sensitivity, political dimension, and lack of
understanding on the part of the IMF for the democra-
cies, values and beliefs of our society.” Perhaps it was
just the Chilean air, or perhaps even a spectacular arti-
fice of illusion, but I prefer to think that under the
emotional outpourings of his reencounter with the
land where he made his most important theoretical
contributions, Cardoso rediscovered some unfeigned
part of his idealism and reconsidered the possibility of
dancing a last tango of rejection of the neoliberal
onslaught.
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