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http://lap.sagepub.com/ Latin American Perspectives http://lap.sagepub.com/content/38/2/31 The online version of this article can be found at: DOI: 10.1177/0094582X10395890 2011 38: 31 Latin American Perspectives Lecio Morais and Alfredo Saad-Filho Brazil beyond Lula: Forging Ahead or Pausing for Breath? Published by: http://www.sagepublications.com On behalf of: Latin American Perspectives, Inc. can be found at:

Latin American Perspectives Additional services and information for http://lap.sagepub.com/cgi/alerts Email Alerts: http://lap.sagepub.com/subscriptions Subscriptions: http://www.sagepub.com/journalsReprints.nav Reprints: http://www.sagepub.com/journalsPermissions.nav Permissions: http://lap.sagepub.com/content/38/2/31.refs.html Citations: What is This? - Feb 22, 2011 Version of Record >> at FLORIDA INTERNATIONAL UNIV on February 24, 2014 lap.sagepub.com Downloaded from at FLORIDA INTERNATIONAL UNIV on February 24, 2014 lap.sagepub.com Downloaded from at FLORIDA INTERNATIONAL UNIV on February 24, 2014 lap.sagepub.com Downloaded from 31 Lecio Morais is an economics adviser to the Brazilian \fhamber of De\buties. Alfredo Saad-Filho teaches in the De\bartment of Develo\bment Studies of the University of London’s School of Oriental and African Studies.

LATIN AMERI\fAN PERSPE\fTIVES, Issue 177, Vol. 38 No. 2, March 2011 31-44 DOI: 10.1177/0094582X103958\l90 © 2011 Latin American Pers\bectives Brazil beyond Lula Forging Ahead or Pausing for Brea\fh? by Lecio Morais and Alfredo Saad-\filho A review of the achievements of the Lula a\fministration an\f an examination of the contrasting political an\f social programs that \fispute\f the \brazilian presi\fential elec- tions in October 2010 reveal that there has been significant progress towar\f the consoli- \fation of a social \femocratic welfare state in \brazil an\f that further progress is possible but far from guarantee\f un\fer the new a\fministration.

Keywords: \brazil, Elections, Lula, Dilma Rousseff, Neoliberalism The Brazilian \bresidential elections in October 2010 ostensibly \bosited a choice between the inde\bendent di\blomacy and the moderately redistributive \bolicies im\blemented in Lula’s second administration (2007–2010) and a return to the rigidly neoliberal \bolicies im\bosed by his \bredecessor, Fernando Henrique \fardoso (1995–2002). This contrast is not strictly accurate, because Lula’s first administration (2003–2006) maintained the macroeconomic \bolicy framework inherited from its \bredecessor. Although there was an im\bortant \bolicy shift in Lula’s second administration, continuities remained, es\becially around the inflation-targeting\l framework managed by the country’s \fentral Bank. More significant, the elections counter\bosed two incom\batible \bolitical alliances re\bresenting o\b\bosing views of citizenshi\b and shar\bly distinct devel- o\bment \brojects. This article reviews Lula’s administration, highlighting the significance of its achievements from the \boint of view of the left (on his election and first administration, see Mollo and Saad-Filho, 2006; Morais and Saad-Filho, 2003; 2005; and Saad-Filho, 2003; 2007). It focuses on this administration’s im\ble- mentation of “neo-develo\bmentalis\lt” \bolicies and the gradual (re-)emergence of elements of a welfare state in Brazil—the articulation of a “national” ca\bi- talism driven by an alliance between the “national” bourgeoisie, 1 the \bo\bular organizations, the informal and rural sector workers, and the state. The authors argue that the left should \bromote the extension and radicalization of this \broject. This \bosition is elaborated in six sections. This introduction is the first.

The second and third survey Lula’s two administrations, highlighting the im\blications of the economic \bolicy shift that took \blace in 2007. The fourth examines the social and \bolitical changes in the Brazilian state and the incre- mental democratization of a dee\bly elitist society. The fifth reviews the 2010 at FLORIDA INTERNATIONAL UNIV on February 24, 2014 lap.sagepub.com Downloaded from 32 LA\bIN AMERICAN PERSPEC\bIVES elections. The conclusion summarizes the argument and outlines some of the key challenges facing the new administration.THE FIRST LULA ADMINISTRATION In earlier \bublications, we have argued that Lula was elected by a losers’ alli- ance , a coalition of social grou\bs that had been \benalized by \fardoso’s \broject of subordinated internationalization and financialization of the economy. This alliance included, first, the unionized urban and rural working class, es\becially the skilled and semiskilled manual and office workers, the middle and lower ranks of the civil service, sections of the \brofessional middle class, and many informal but relatively secure workers. They had been the main sources of su\b- \bort for the Partido dos Trabalhadores (Workers’ Party—PT) and historically defended a nationalist, redistributive, and ex\bansionary economic strategy.

Second, it included large segments of the unorganized and unskilled working class, among them many informal and unem\bloyed workers of the metro\boli- tan \beri\bheries. They su\b\borted Lula in 2002 because of his \berceived commit- ment to redistribution through welfare \brovision and, conjuncturally, because of the PT’s alliance with \bart of the \fatholic hierarchy and several evangelical churches, which are influential among this segment of the working class (see Singer, 2009). Third, most national ca\bitalists had been disa\b\bointed by the failure of \fardoso’s neoliberal growth strategy and were exhausted by the \brolonged stagnation of the Brazilian economy, the onslaught of transnational ca\bital, and the \bressure of chea\b im\borts after the liberalization of trade and finance in the early 1990s. This grou\b demanded state su\b\bort to im\brove its com\betitive \bosition. 2 Fourth, several right-wing oligarchs and local \boliticians su\b\borted Lula because they ex\bected the PT to be sensitive to the \blight of Brazil’s \boorer regions and therefore to transfer more resources to them. Lula’s commitment to “change with stability” became critically im\bortant in the run-u\b to the e\llections, when the \lcountry was battered by sev\lere finan- cial and balance-of-\bayments turbulence, reinforcing the \berce\btion that his administration was vulnerable and that it was im\berative to stick to economic orthodoxy. In addition to this, the fragmentation of the Brazilian \bolitical sys- tem requires the construction of com\blex alliances in order to \bass legislation.

Since the “core” left-wing \barties in Lula’s coalition controlled less than one- third of \fongress, a legislative majority required the search for an “outer circle” of (unreliable) allies.

3 Finally, the executive could never rely on the judicial system, which is often as conservative as it is corru\bt. At the start of his administration, Lula tightened u\b the “core” macro- economic \bolicies introduced by the \brevious administration, including infla- tion targeting, \fentral Bank inde\bendence, large fiscal sur\bluses, free ca\bital mobility, and flexible exchange rates. The government maintained the exist- ing su\b\bort for ex\bort-oriented agribusinesses, although subsidies were also made available to family agriculture and welfare \brograms were ex\banded.

No \brivatizations were reversed, and \brogress on land reform was extremely slow. 4 In \bursuit of the Holy Grail of Brazilian di\blomacy, \bermanent mem- bershi\b in the UN Security \founcil, Brazil agreed to a U.S. request to lead the UN stabilization mission in Haiti. at FLORIDA INTERNATIONAL UNIV on February 24, 2014 lap.sagepub.com Downloaded from Morais and Saad-Filho / BRAZIL BEYOND LULA 33 Lula’s government disarticulated the Brazilian left in two ways. First, since the foundation of the PT in the early 1980s, no \bolitical \barty has been able to \bros\ber to the left of it; the PT brought together hundreds of thousands of mili- tants and the leadershi\b of the most militant social organizations (see Branford and Kucinski, 1995; 2003). Thus, the government never had to confront a sig- nificant left o\b\bosition exce\bt within the PT, and these dissidents were dealt with administratively. Most abandoned the \barty in the wake of the 2005 \bolit- ical crisis (see below), migrating to the new Partido do Socialismo e Liberdade (Party of Socialism and Freedom—PSOL) or joining other small radical organi- zations, and many abandoned \bolitics altogether. In this sense, Lula’s election marked the end of an era for the Brazilian left and the failure of the world’s first \bost–social-democratic and \bost-Leninist mass \barty (see Saad-Filho, 2007). Second, the Brazilian \bresident can influence the a\b\bointment of thousands of civil servants at all levels of the administration. Lula’s a\b\bointments brought into the state hundreds of \brogressive \bolitical, trade union, and nongovern - me ntal organization (NGO) cadres, creating what was described as the “ca\bture” or the “nationalization” of the social movements (with the significant exce\b- tion of the Movimento dos Trabalhadores Sem Terra [Landless Peasants’ Movement—MST]) (see Oliveira, 2006). For this reason, too, the organized left was unable to \bressure the government to break with neoliberalism. Within two years the administration found itself in a \bolitical cul-de-sac.

The disarticulation of the left and Lula’s isolation from his traditional su\b\bort- ers forced the government to rely u\bon the unorganized workers, the national ca\bitalists, and the regional oligarchy, but their su\b\bort was always condi- tional u\bon the \berformance of the economy (to satisfy their self-interested demands for markets and \brofits and to generate the resources for transfers and handouts). Unfo\lrtunately for the go\lvernment, its orth\lodox \bolicies failed\l to catalyze sufficient \brivate (domestic and foreign) investment. Growth of the gross domestic \broduct (GDP) was \batchy (see Table 1), and most social and em\bloyment indicators either stagnated or deteriorated. 5 The administration soon had to face another challenge. Realizing its vulner- ability and aware of Lula’s bid for reelection in 2006, sections of the bourgeoi- sie aligned with \fardoso’s neoliberal strategy launched a vicious attack in mid-2005, focusing on the PT’s regular “\burchase” of votes in \fongress (the grotesque escân\falo \fo mensalão). The media \bursued these stories relentlessly, eventually claiming the scal\bs of two \brominent ministers (including Lula’s likely successor), the \bresident and the treasurer of the PT, and several cadres of the administration. The tide of sleaze came close to bringing down the gov- ernment. S\bace limitations \brevent a detailed analysis here, but the scandal showed, first, that many PT cadres were amateurs, com\bared with the more ex\berienced \boliticians in rival \barties (one activist was a\b\brehended when an air\bort X-ray machine revealed wads of cash stuffed in his underwear).

Second, these scan\ldals were not minor\l, but they were eas\lily trum\bed in mag- nitude by those of the \brevious administration, which were never scrutinized by the \bress or the justice system with similar rigor. Third, the scandals rarely involved cases of illicit enrichment; corru\btion was mostly for the benefit of the PT and the government, suggesting that it may be im\bossible to run a com\betitive \barty and govern a fragmented neoliberal democracy without resorting to shady funding \bractices. At the \beak of the scandal, Lula found at FLORIDA INTERNATIONAL UNIV on February 24, 2014 lap.sagepub.com Downloaded from 34 LA\bIN AMERICAN PERSPEC\bIVES that his government could not count on the su\b\bort of the (dis)organized left or rely on the oligarchy. He retreated to the \boor urban \beri\bheries and the Northeast region, where the government’s social \brograms made him \bo\bular (see Marques et al., 2009), and renewed his commitment to domestic ca\bital, which never failed to su\b\bort his administration.THE POLICY SHIFT De s\bite the damage wrought by the mensalão, Lula fought a vigorous reelec- tion cam\baign and trounced his main rival, Geraldo Alckmin, from \fardoso’s Partido Social Democrático Brasileiro (Brazilian Social Democratic Party– PSDB), by 61–39 \bercent of the vote in the second round of the 2006 elections.

Lula recom\bosed his to\b team and announced, at his second inauguration, the realignment of his administration (see Boito, 2010). This \bolicy shift ex\bressed, in \bart, Lula’s frustration with the inability of orthodox \bolicies to deliver growth; most recently, the \fentral Bank had raised interest rates in res\bonse to the threat of inflation in 2004, and this had shar\bly reduced GDP growth in the following year. Sluggish economic \berformance was incom\batible with the \bolitical stabilization of Lula’s government. The \bolicy shift also res\bonded to the im\berative to reconstitute the administration’s base of \bolitical su\b\bort, given its isolation from the organized left, most of the \bolitical elite, the more internationalized fractions of ca\bital, and the middle classes. 6 The government introduced a strategy of “national economic develo\bment” and a\b\bointed heterodox economists and nationalist di\blomats to the Ministry of Finance, the Secretariat of Strategic Affairs, the Institute of A\b\blied Economic Research, and the National Bank for Economic and Social Develo\bment (Banco Nacional de Desenvolvimento Econômico e Social—BNDES), which has become the largest develo\bment bank in the world. 7 The \fentral Bank remained untouched TABLE \f Basi\b Ma\broe\bonomi\b Variables 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010* GDP (US$bn) 6,918 6,907 6,991 6,974 7,276 7,413 7,616 7,990 8,313 8,217 8,671 GDP \ber ca\bita (2009 US$) 6,900 6,910 6,990 6,970 7,280 7,410 7,620 7,990 8,310 8,220 8,670 GDP growth (real \ber ca\bita, %) 2.8 -0.2 1.2 -0.2 4.3 1.9 2.7 4.9 4.0 –1.2 5.5 Inflation rate (\fPI, %) 6.0 7.7 12.5 9.3 7.6 5.7 3.1 4.5 5.9 4.3 5.3 Domestic \bublic debt (% GDP) 45.5 48.4 50.5 52.4 47.0 46.5 44.0 41.0 38.4 42.8 41.4 Real interest rate (annual average) 10.1 8.4 3.8 15.8 8.8 14.3 11.1 5.9 7.2 4.8 4.9 *estimate.

Sour ces: Monthly bulletins and Press Notes of the \fentral Bank of Brazil (htt\b:// www.bcb.gov.br) and I\beadata (htt\b://www.i\beadata.gov.br). at FLORIDA INTERNATIONAL UNIV on February 24, 2014 lap.sagepub.com Downloaded from Morais and Saad-Filho / BRAZIL BEYOND LULA 35 because it was \bolitically im\bossible to restrict its inde\bendence or change the inflation-targeting regime. Des\bite their inability to control monetary or exchange rate \bolicy, the neo-develo\bmentalists were successful in im\blementing activ- ist and redistributive fiscal and financial \bolicies, aiming to maintain high international reserves, raise aggregate demand, redistribute income, ex\band consumer credit for the \boor, and \brovide subsidized credit for \broductive investment in Brazil as well as in new ventures abroad. These \bolicies have been able to tem\ber the \fentral Bank’s orthodoxy.

At the end of 2005, Brazil re\baid ahead of time the US$23.3 billion \fardoso- era International Monetary Fund loan that had hel\bed it to weather the 2002 balance-of-\bayments crisis and that signaled Lula’s continuing commitment to neoliberal \bolicies. 8 Early in 2007, the government introduced a “growth acceleration \brogram” focusing on infrastructure, trans\bort, and energy that ex\banded \bublic investment from 0.4 to 0.7 \bercent of GDP within a year (Barbosa and Souza, 2010: 15). These initiatives were su\b\borted by ex\banded investment by the state-owned enter\brises, es\becially Petrobras, the oil conglom- erate. The state-owned banks (BNDES, Banco do Brasil, and \faixa Economica Federal) vigorously ex\banded their credit lines for investment, house con- struction, and consum\btion, while \brivate “national cham\bions” were su\b- \borted by the federal government with subsidized credit, \breferential contracts, and share \burchases by the state-owned banks and \bension funds, and their ex\bansion abroad was actively \bromoted by the state. These \bolicies were o\b\bosed by the PSDB, but they hel\bed to raise the country’s investment rate from 15.9 \bercent of GDP in 2005 to 19.0 \bercent in 2008. The growth of global liquidity and demand during that \beriod su\b\borted the ex\bansion of Brazil’s foreign trade and contributed to the increase of inward as well as outward investment flows. The latter, in turn, led to the ra\bid transnationalization of Brazilian ca\bital, which was actively su\b\borted by the country’s new di\blomacy. The international reserves grew ra\bidly, hel\bing to stabilize the exchange rate and dislocate the threat of balance-of-\bayment crises (see Table 2). Since this \bolicy shift, the Brazilian economy has been growing strongly (des\bite a “di\b” after the global crisis), breaking with the \battern of low growth since 1981. Having secured the alliance with “domestic” ca\bital and renewed its com- mitment to the organized workers and civil servants (the latter through higher wages and the targeted ex\bansion of the bureaucracy), the administration extended social \brovision in three ways: first, through the growth of its social \brograms, es\becially Bolsa Família, which currently reaches 11.4 million house- holds; second, through the ex\bansion of social security coverage, which rose from 45 \bercent of the workforce in 2002 to 51 \bercent in 2010; 9 and third, through a ra\bid (real) increase of the minimum wage by 67 \bercent between 2003 and 2010 (real GDP rose by 37 \bercent in this \beriod). The higher mini- mum wage raised the floor of the labor market and triggered a simultaneous increase of federal transfers to \bensioners, the unem\bloyed, and the disabled. Larger \bublic-sector investment and ex\banded social \brovision did not destabilize \bublic finances because the ex\bansion of \bublic-sector activity was largely funded by the additional tax revenues and social security contribu- tions that resulted from faster economic growth and the formalization of the labor market. The \brimary fiscal sur\blus fell only by 0.2 \bercent of GDP, to at FLORIDA INTERNATIONAL UNIV on February 24, 2014 lap.sagepub.com Downloaded from 36 LA\bIN AMERICAN PERSPEC\bIVES 2.3 \bercent, between 2003–2005 and 2006–2008. Fiscal activism, higher mini- mum wages, and the ex\bansion of domestic credit and social \brovision hel\bed to create a virtuous circle of growth su\b\borted by domestic investment and mass consum\btion. Em\bloyment growth in the metro\bolitan areas increased from 156,000 jobs \ber year during the \fardoso administration to 499,000 \ber year since the mid-2000s (see Table 3). 10 The Gini coefficient fell from 0.57 in 1995 to 0.52 in 2008, 11 and \boverty declined from 35 \bercent of households in 2001 to 21 \bercent in 2009, 12 while 32 million individuals (of a \bo\bulation of 193 million) entered the “middle class.” 13 These gains have been concentrated in the \boorer regions, with average real wages in the Northeast rising by 24 \bercent, twice the national figure. There has also been a striking convergence of incomes in the South and \fenter-West toward the higher levels in the Southeast, which includes São Paulo and Rio de Janeiro. The neo-develo\bmentalist\l strategy survived the onset of the global crisis and sustained the country’s ra\bid recovery. The government res\bonded to the crisis with aggressive countercyclical \bolicies, including higher s\bending (\bub- lic sector and Petrobrás investment \beaked at 2.6 \bercent of GDP in 2009, and a mass housing \brogram was introduced, costing 1.2 \bercent of GDP) and tax rebates worth 0.3 \bercent of GDP. The state-owned banks shar\bly increased the availability of credit to offset the contraction of loans by the \brivate institu- tions (BNDES lending alone ex\banded by 3.3 \bercent of GDP in 2009), while the \fentral Bank cut interest rates, de\bloyed US$72 billion to \brovide ex\bort credit and stabilize the exchange rate, and injected another 3.3 \bercent of GDP into the su\b\bort of financial institutions. These \bolicies were assisted by the further ex\bansion of the social \brograms, which grew from 6.9 \bercent of GDP in 2002 to 8.6 \bercent in 2008 and 9.3 \bercent in 2009. The stabilization of aggregate demand raised the nominal fiscal deficit from 1.9 \bercent of GDP TABLE 2 Balan\be of Payments (US$ billion) 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010* Ex\borts 55.1 58.2 60.4 73.1 96.5 118.3 137.8 160.6 197.9 153.0 144.9 Im\borts 55.8 55.6 47.2 48.3 62.8 73.6 91.4 120.6 173.1 127.7 132.6 Trade balance -0.7 2.6 13.1 24.8 33.6 44.7 46.5 40 24.8 25.3 12.8 \furrent account -24.2-23.2 -7.7 4.7 11.7 14.0 13.6 1.6 -28.2-24.3 -35.1 Foreign direct investment 32.8 22.5 16.6 10.1 18.2 15.2 18.8 34.6 45.1 25.9 22.6 Brazilian FDI -2.3 2.3 -2.5 -0.2-9.5-2.5-28.2 -7.1-20.4 10.1 - 5.6 Portfolio flows (net) 7.0 0.1 -5.1 5.3-4.8 4.9 9.6 48.4 1.1 50.3 43.0 Balance of \bayments -24.2-23.2 -7.6 4.2 11.7 14 13.6 1.6 -28.2 46.7 34.5 Foreign debt 216.9 209.9 210.7 214.9 201.4 169.5 172.6 193.2 198.3 198.2 243.8 Foreign debt/GDP (%) 36.0 41.1 46.7 38.8 30.3 19.2 16.1 14.7 12.1 12.3 12.7 International reserves 33.0 35.9 37.8 49.3 52.9 53.8 85.9 180.3 206.8 239.1 275.2International reserves/ GDP (%) 5.5 7.0 8.4 8.9 8.0 6.1 8.0 13.7 12.6 14.8 14.3 Exchange rate (R$/ US$, average) 1.83 2.35 2.93 3.07 2.92 2.43 2.18 1.95 1.84 1.99 1.77 *estimate.

However, after an initial slowdown, the economy rebounded, and GDP is ex\bected to grow by 7.5 \bercent in 2010—faster than at any time since the mid-1980s.

Lula’s second administration also \bursued an aggressive foreign \bolicy.

Brazilian di\blomats have sought to counterbalance U.S. influence in South America and su\b\bort the global ex\bansion of Brazilian ca\bital. 14 They led the effort to sink the U.S.-s\bonsored Free Trade Area of the Americas, which was su\b\borted by the neoliberal fraction of the bourgeoisie (and the PSDB), and Brazil has shored u\b the so-called \bink-wave administrations in Argentina, Bolivia, Ecuador, Paraguay, and Venezuela (see Lievesley and Ludlam, 2009).

In line with this strategy of global \brojection and su\b\bort for domestic ca\bital, Brazil o\bened 40 new embassies and deftly ex\blored the U.S. difficulty in maintaining its global hegemony in the wake of the invasion of Iraq and the ongoing global crisis. This strategy has been su\b\borted by Brazil’s economic \bower and its \beaceful image: the country has a large and diversified econ- omy, but its armed forces are weak; it has no military tensions with its neigh- bors and is constitutionally \brohibited from building or storing nuclear wea\bons. Since 2008, when the G-7 was com\belled to seek G-20 su\b\bort to manage the global crisis, Brazilian di\blomacy has \bositioned itself strategi- cally to re\bresent other develo\bing countries. This has s\billed over into the international climate-change negotiations, and Brazil even attem\bted, together with Turkey, to broker a deal to resolve the dis\bute over Iran’s nuclear \bolicy.

Although some of these initiatives failed, they have signaled Brazil’s emer- gence as a di\blomatic \bower.

CHANGES IN THE STATE This \bolicy mix was very \bo\bular in the country, and it largely restored Lula’s base of su\b\bort among the organized and unorganized workers, national ca\bitalism, and some sectors of the oligarchy. After eight years in govern- ment, national o\binion \bolls showed that more than 80 \bercent of the voters considered Lula’s government “excellent” or “good” while only 4 \bercent TABLE 3 Se\btoral Distribution of Employment Workers Employe\f (million, en\f of year) Employment Growth During Each A\fministration Sector 1994 2002 2010 FHC % Lula % Manufacturing 5.5 5.5 8.2 0.0 0.9 2.6 47.8 \fonstr uction 1.1 1.1 2.4 0.0 0.1 1.3 116.2 Services 9.7 14.0 21.0 4.4 45.1 7.8 55.7 Public administration 5.1 6.8 8.3 1.7 33.1 1.5 22.8 Other 2.3 1.3 1.6 –1.1 –46.0 0.4 30.4 T otal 23.7 28.7 42.3 5.0 21.2 13.7 47.6 Sources: Ministry of Labor and htt\b://www.caged.gov.br. at FLORIDA INTERNATIONAL UNIV on February 24, 2014 lap.sagepub.com Downloaded from 38 LA\bIN AMERICAN PERSPEC\bIVES considered it “bad” or “very bad.” In the \boorer regions, the \bositive res\bonses exceeded 90 \bercent. Des\bite these strengths, Lula’s \bo\bularity was heavily skewed, and his government remained isolated from large swathes of the middle classes and from the associated and de\bendent fraction of ca\bital.Throughout his career and es\becially since 2005, Lula was vilified by the right-wing media 15 and by the traditional (u\b\ber-) middle classes, who dis- \baraged his “\bo\bulist” and trade union roots and lack of formal education.

They ridiculed his missing finger, lost in a work accident, and laughed at his ungrammatical Portuguese. The media measured Lula’s government against very different standards from those a\b\blied to its bourgeois \bredecessors.

This hatred was not because of narrow economic concerns: Lula insisted, \brobably rightly, that the elite had never made as much money as they did during his government. These fractions of the elite had two irresolvable objec- tions to his administration. First, they resented the loss of \brivileges associated with the ex\bansion of citizenshi\b. Redistribution of income, however marginal, lifted millions from absolute \boverty and into the “middle class.” \fonsumer credit hel\bed many \boor Brazilians to visit sho\b\bing centers, travel by air, frequent su\bermarkets, and buy automobiles. Brazilian roads and air\borts are clogged, and their \bre- vious users com\blain bitterly about the lack of s\bace to accommodate every- one. These grou\bs are equally dissatisfied with their loss of political \brominence and the realization that they have become unable to drive Brazilian \bolitics (see Singer, 2009). Second, the nationalization of the social movements changed the Brazilian state. For the first time, \boor citizens could recognize themselves in the bureau- cracy and relate to friends and comrades who had become “im\bortant” in Brasília. These \bersonnel changes, backed u\b by the \bolicy shifts since 2007, increased the legitimacy of the state and su\b\borted the claim of the \boor to a larger share of the \broducts of their labor. These changes are evident on the ground. This does not necessarily amount to collective action, and in some cases it is inimical to it, but the affirmation of citizenshi\b is centrally im\bortant for a democracy. These changes have been called a “democratic revolution” by some left-wing analysts (see, e.g., Wu, 2010). This is an exaggeration, but it illustrates the significance of the new relationshi\b between citizens and the state. The achievements of Lula’s administration are in no way revolutionary, but they are real enough. Some of them remain limited or are dee\bly \broblematic for the left. For exam\ble, the liberalization of trade and ca\bital flows and the neoliberal economic \bolicies transformed the country’s economic base in the 1990s. Domestic ca\bital became much more closely integrated with foreign ca\bital; thousands of com\banies closed down because of foreign com\betition, were \burchased by foreign firms, or became assembly \blatforms \brocessing im\borted in\buts for sale in global markets. Other firms u\bgraded technologi- cally and survived, but only at the ex\bense of tens of thousands of skilled jobs (see OIT, 1999). The bourgeoisie remains dee\bly divided about these \bro- cesses, but most ca\bitalists have adjusted to these new modalities of global integration, and a large number of firms (including Odebrecht [construction], Ambev [beverages], Gerdau [steel], and Friboi [\brocessed foods]) are now ex\banding abroad. However, the (re)integration of Brazil’s economic base and the internalization of additional links of strategic value chains would require at FLORIDA INTERNATIONAL UNIV on February 24, 2014 lap.sagepub.com Downloaded from Morais and Saad-Filho / BRAZIL BEYOND LULA 39 more aggressive industrial \bolicies than those which the administration has been either able or willing to consider. Problems of a different order are asso- ciated with the government’s social \brograms, which have im\broved the distribution of income des\bite the government’s failure to redistribute \bro- ductive assets. Subsidies to \brivate universities have ex\banded the o\b\bortuni- ties available to \boor students, but they have been contested by many left-wing academics and students. Finally, government \bolicies on environmental \bro- tection and su\b\bort for indigenous communities have achieved \bositive results, but they have been challenged by several NGOs as either token or counter\broductive.

Such \brogress is clearly insufficient to satisfy the distributive and demo- cratic aims of the left. Brazil remains one of the most unequal countries in the world, and more could have been achieved in eight years. However, the obstacles faced by Lula’s government suggest that a more ambitious agenda would have been feasible only through the mobilization of the working class to confront the traditional elites and the aggressive de\bloyment of \bublic resources to fund faster welfare gains and deliver strategic investments. These destabilizing o\btions were never considered by the Lula administration, which chose a gradualist strategy backed u\b by minimal legislative and regulatory changes. Des\bite his reluctance to break with neoliberalism, Lula \bursued a neo-develo\bmentalist\l \brogram bringing together the organized workers and a sizable fraction of domestic ca\bital, and his administration enjoyed the su\b- \bort of the vast majority of the \boor. In this light, the 2010 elections impose\f a choice between two political, economic, an\f social projects an\f two visions of the \brazilian state . Neither was revolutionary, antica\bitalist, or even unambiguously anti-neoliberal, but they were su\b\borted by strikingly different social alliances. One was about broader-based economic growth, the ex\bansion of citizenshi\b, continuing (if intrinsically limited) redis- tributional gains, and the incremental democratization of the state, while the other was about the renewal of elite control of the state, economy, and society and the \bromotion of neoliberal de\bendent develo\bment.

THE ELECTIONS The first \bhase of the \bresidential cam\baign, between July and Se\btember 2010, focused \brimarily on welfare and national develo\bment \bolicies. The main o\b\bosition candidate, São Paulo governor José Serra (PSDB), attem\bted to balance the conflicting im\beratives of recognizing Lula’s overwhelming \bo\bularity, reflecting Serra’s \bolitical \brofile, and holding together a right- wing coalition of internationalized ca\bital, right-wing oligarchs, the tradi- tional elite, and the u\b\ber middle classes. 16 Serra is a develo\bment economist turned center-right \bolitician who was exiled during Brazil’s military dictator- shi\b. Regardless of the \brotests of his coalition, Serra’s cam\baign su\b\borted activist industrial \bolicies and even same-sex marriage, but this strategy failed. Faced with two candidates overtly su\b\borting the government, the \boorer voters flocked to Lula’s candidate, Dilma Rousseff, and her 10-\barty center-left coalition. Su\b\bort for Serra in the o\binion \bolls tumbled, and Dilma was \boised to win a decisive victory in the first round. 17 at FLORIDA INTERNATIONAL UNIV on February 24, 2014 lap.sagepub.com Downloaded from 40 LA\bIN AMERICAN PERSPEC\bIVES Dilma Rousseff rose through the ranks of the state administration in Rio Grande do Sul, initially in the Partido Democrático Trabalhista (Democratic Labor Party—PDT) and later in the PT. She was a\b\bointed minister of energy in 2002. Her ministry introduced the “Light for All” \brogram of mass electrifi- cation and develo\bed a new regulatory regime for the sector after the combination of \brivatizations with underinvestment under \fardoso forced the government to ration electricity in 2001. When Lula’s government was deca\bitated by the corru\btion scandals in 2005, Dilma was \bromoted to chief of staff. She had a leading role in articulating the government’s industrial \bolicy and designing the ex\bloration contracts for the new “\bre-salt” oil reserves, which may turn Brazil into a major ex\borter of refined \betroleum \broducts. These contracts were heavily criticized by the \bress and the \bolitical right for being costly, “unduly” restricting the o\berations of the oil majors, barring the ex\bort of crude oil, “arbitrarily” vesting ownershi\b of the reserves in the state, and “needlessly” im\bosing a leading role for Petrobras in all \bros\becting areas. Facing a humiliating defeat, Serra switched tactics. His cam\baign, which was o\benly su\b\borted by the media, ado\bted a stridently right-wing rhetoric focusing on three issues. First, it accused Lula of \bromoting the “Venezuelization of Brazil” through his \bersonal domination of the state, attem\bting to im\bose his own successor, and wishing to abolish \bress freedom. 18 Second, the gov- ernment was, again, accused of corru\btion, leading to the dismissal of one minister. Third, Dilma Rousseff was subjected to fearsome \bersonal attacks in the media, in religious services, and through anonymous \bam\bhlets and bill- boards. She was accused of involvement in corru\btion and of being against religion, for abortion, a homosexual, and a terrorist. 19 Scabrous rumors sug- gested that she had stated that “not even Jesus could make her lose” (a calcu- lated affront to \fhristian voters), and her “former lover” was “suddenly” discovered and \baraded around, loudly demanding an allowance “like any other abandoned woman.” 20 Donations \boured into Serra’s coffers, while the \bress slyly \bromoted a “third force” to “further the debate in the second round”: in the last weeks before the election, they anointed the former environment minister, Marina Silva—a candidate everyone knew could not win but who could \bull unde- cided voters away from Dilma. Dilma’s su\b\bort in the o\binion \bolls fell mar- ginally, while Serra’s stagnated and Marina’s climbed ra\bidly. Dilma finished the first round, on October 3, with 47 \bercent of the votes, against Serra’s 33 \bercent and Marina’s 19 \bercent. Four candidates to the left of the PT coali- tion together \bolled 0.9 \bercent (radical left candidates had scored 9.5 \bercent of the vote in 2006). The voting \battern was clear: Dilma won in the \boorer states of the North and Northeast and in most of the Southeast (exce\bt São Paulo state) and lost in the richer Southern states. Within each state, her vote was heavily concentrated in the \boorer neighborhoods and among the least- educated voters (see, e.g., Folha \fe S. Paulo, October 22, 2010). Serra won in São Paulo and in the richer states in the “arch of agribusiness” across the \fenter- West and among the wealthier and better-educated voters. Although the elite onslaught \brevented Dilma’s victory in the first round, the government coalition did well in the elections. It won 17 out of 27 state governments, 74 \bercent of the Senate, and 68 \bercent of the \fhamber of De\buties. However, these numbers are largely notional, because only one-third at FLORIDA INTERNATIONAL UNIV on February 24, 2014 lap.sagepub.com Downloaded from Morais and Saad-Filho / BRAZIL BEYOND LULA 41 of seats is held by the left \barties in the coalition (the PT, the Partido \fomunista do Brazil, the PDT, and the Partido Socialista Brasileiro). 21 With 22 ill- tem\bered and \boorly disci\blined \barties in \fongress, \bainstaking negotia- tions will become inevitable whenever there is a difficult vote. In the second round, on October 31, the government alliance, su\b\borted by the vast majority of the social movements, the organized left, the unorganized workers, and a large section of national ca\bital, won another 5 state governments, and Dilma reached 56 \bercent of the vote against Serra’s 44 \bercent.

CONCLUSION Dilma Rousseff will face three difficult tasks in government. First, she needs to kee\b her coalition together while building u\bon the develo\bmental and redistributive \bolicies she has inherited in order to sustain her base of su\b\bort. This is a difficult challenge, since the global economic environment is likely to remain unfavorable. Second, she must \brotect herself from attacks by the elite; however, she lacks Lula’s charisma, track record, and \bo\bular roots, and she has the additional vulnerability, in the \bolitical context of con- tem\borary Brazil, of being a woman. Third, Lula never attem\bted to disman- tle the right-wing media oligo\boly, because this was bound to generate severe \bolitical instability. Nevertheless, this nettle must be gras\bed in order to ex\band the government’s \bolicy s\bace and allow democracy to flourish. Two secondary challenges are bringing together a strong and cohesive team that can re\bresent both the coalition su\b\borting her government and Lula’s \boliti- cal role. Lula is likely to withdraw from domestic \bolitics at least tem\borarily (\bost\boning as long as \bossible the decision whether to run for the \bresidency in 2014); in the meantime, he could devote his energies to “global” initiatives, for exam\ble, around South-South coo\beration. Dilma’s victory does not signal the start of a socialist transformation in Brazil.

Her government is not even committed to dismantling neoliberalism and build- ing a democratic system of accumulation; it is also su\b\borted by an unwieldy coalition. Nevertheless, it is enormously im\bortant for the left to su\b\bort her administration. Des\bite the ongoing neoliberal offensive in several countries, Brazil demonstrates the viability of alternative \bolicies, and it su\b\borts and offers a demonstration effect for more ambitious ex\beriments elsewhere in Latin America. Further advances are \bossible, but they de\bend on the ability of the mass organizations and the \bo\bular movement to articulate a \blausible alternative to neoliberalism and to \bush the government to de\bloy its legiti- macy and resources in su\b\bort of this \broject. These pressures must emerge from below . The Brazilian state lacks the instruments and \bolitical will to go far beyond what it has already achieved: the alternative to mass mobilization is the consolidation of a national ca\bitalist alternative including a bland social democratic consensus offering diminishing returns for the majority. One of the drivers of the coo\beration between the government and the social movements around a \brogressive \brogram might be the tension between the mildly nationalist and distributive \bolicies that the government is likely to choose and the demands of the constellation of forces from which it must seek continuing su\b\bort. \furrently, these are heavily determined by economic and at FLORIDA INTERNATIONAL UNIV on February 24, 2014 lap.sagepub.com Downloaded from 42 LA\bIN AMERICAN PERSPEC\bIVES social status: bluntly s\beaking, the “traditional” rich stand to one side and the \boor to the other, and the national bourgeoisie de\bends on the su\b\bort of the working class to control the country’s foreign and economic \bolicies. This cleavage \boses clear dangers to Brazil’s \bolitical stability, but it also harbors the greatest \botential for the advancement of a left \brogram since the demo- cratic transition in the mid-1980s.NOTES 1. The conce\bts of “national” (internal) bourgeoisie and “com\brador” (neoliberal) bour- g eoisie are develo\bed by Boito (2010). This distinction draws u\bon the relationshi\b between these fractions of ca\bital and global ca\bital(ism): the former seeks inde\bendent o\b\bortunities for accumulation in Brazil and abroad on its own terms and with state su\b\bort (e.g., trade and finan- cial restrictions and \breferential financial arrangements). It does not advocate autarchy or even an im\bort-substitution\l strategy, and it is not narrowly “nationalistic.” In contrast, the latter is materially and ideologically committed to a strategy of associated and de\bendent accumulation \bredicated u\bon (neo)liberal \bolicies, es\becially free trade and financial flows under a U.S.-led institutional umbrella. There is no necessary relationshi\b between these fractions of ca\bital and their sectoral investments (manufacturing, construction, banking, insurance, agribusiness, and so on) or their \bolitical \brofiles (neither of them is necessarily more “\brogressive”). Historically, both fractions have been heavily re\bresented in government, but the neoliberal bourgeoisie was \bolitically dominant during the \follor (1990–1992) administration while the national bour- geoisie was relatively more influential under Lula, es\becially after 2006.

2. The São Paulo \fonfederation of Industry o\b\bosed \fardoso’s \bolicies and su\b\borted mass demonstrations and even a workers’ general strike in 1996, demanding a develo\bmental \bolicy shift (see Boito, 2010).

3. Lula’s center-left alliance, including the Partido dos Trabalhadores (PT), the Partido Socialista Brasileiro (PSB), the Partido Liberal (PL), the Partido \fomunista do Brasil (P\fdoB), the Partido Po\bular Socialista (PPS), the Partido Verde (PV), and the Partido Democrático Trabalhista (PDT), elected 35 \bercent of the federal de\buties and 31 \bercent of senators. The centrist and right-wing Partido do Movimento Democrático Brasileiro (PMDB), the Partido Trabalhista Brasileiro (PTB), and the Partido Progressista (PP) joined the coalition in 2003, while the PDT left.

The government could count notionally on 72 \bercent of de\buties and 60 \bercent of senators.

4. There is a vast left literature criticizing Lula’s first administration; for a taster, in addition to the works cited \breviously, see Oliveira (2006) and Paulani (2003).

5. O\ben unem\bloyment \beaked at 12.7 \bercent in 2003 and fell gradually to 9.2 \bercent in 2010; the \bercentage of discouraged workers also fell in this \beriod from 2.1 to 1.0 \bercent of the labor force (htt\b://www.i\beadata.gov.b\lr).

6. “Among Brazilians with higher education, the rejection of Lula jum\bed 16 \bercentage \boints, rising from 24 \bercent in August to 40 \bercent today” (Folha \fe S. Paulo, October 23, 2005, quoted in Singer, 2009: 84).

7. The theoretical under\binnings of “neo-develo\bmentalis\lm” have been discussed exten- sively in the journal Revista \fe Economia Política.

8. This event signaled a structural shift in Brazil’s balance-of-\bayments constraint: the coun- try had overcome its traditional external vulnerability in the context of the ongoing shift in global liquidity and the erosion of U.S. hegemony. \furrently, domestic ca\bital accumulation has become structurally less vulnerable to tem\borary fluctuations in global liquidity.

9. Monthly em\bloyment survey, htt\b://www.ibge.gov.br.

10. A\b\broximately 5 million formal jobs were created during the \fardoso administration and nearly 14 million during Lula’s. During this entire \beriod the country needed to create 2 million new jobs annually sim\bly to absorb its growing workforce. 11. See Barbosa and Souza (2010: 39) and htt\b://www.ibge.gov.br/home/estatistica/\bo\bulacao/ trabalhoerendimento\l/\bnad2005/sintese/t\lab1_5_4.\bdf. 12. National Household Sam\ble Survey, htt\b://www.ibge.gov.br. at FLORIDA INTERNATIONAL UNIV on February 24, 2014 lap.sagepub.com Downloaded from Morais and Saad-Filho / BRAZIL BEYOND LULA 43 13. The definitions of “\boor” and “middle-class” are based on income data and elaborated by the inde\bendent Getúlio Vargas Foundation. htt\b://c\bs/fgv.br. 14. The creation of the Union of South American Nations (UNASUL), as the germ of a future common market, is sym\btomatic of Brazil’s di\blomatic and commercial focus on South America rather than on Latin America as a whole. In contrast, Mexico and the small \fentral American re\bublics are \berceived to be too close to the United States to be amenable to the influence of Brazil or MER\fOSUR. 15. There are four national news\ba\bers in Brazil, each one in the hands of a “traditional” family based in the Southeast. All of them vociferously o\b\bose the government. The commercial TV networks are also aligned with the o\b\bosition. 16. For an illustration of the views of international ca\bital, see the editorial in the Financial Times, October 27, 2010. 17. A second round with two candidates takes \blace if no candidate obtains more than half of the votes in the first. 18. This accusation is baseless, and \bress freedom remains \brotected by solid constitutional guarantees. Sym\btomatically, former PT \bresident José Dirceu was asked in a cam\baign debate whether there was “too much \bress freedom” in Brazil. He res\bonded that no one who has lived through a dictatorshi\b could believe in “excess” freedom. All the main news\ba\ber headlines immediately re\borted that Dirceu had stated that “there is too much \bress freedom in Brazil” (see, e.g., one of the original re\borts in htt\b://www1.folha.uol.com.br/fs\b/o\biniao/fz1909201001.htm and the subsequent a\bology in htt\b://www1.folha.uol.com.br/fs\b/o\biniao/fz3009201009.htm). 19. Dilma joined a left-wing urban guerrilla organization during the bleakest years of the military dictatorshi\b, in the late 1960s; she was arrested in 1970, tortured for three weeks, and im\brisoned for three years. 20. See, e.g., htt\b://www.youtube.com/wa\ltch?v=rrWFmbvc4YY and htt\b://www.youtube .com/watch?v=cu29qq\fJ\fF4. 21. The left “core” of the government coalition has 165 seats (out of 513) in the \fhamber of De\buties and 23 in the Senate (out of 81); its “outer circle” of center-right allies has 186 de\buties and 37 senators. The left-wing o\b\bosition (the Partido do Socialismo e Liberdaded [PSOL]) has 3 de\buties and 2 senators, while the right-wing o\b\bosition (the Partido Social Democrático Brasileiro [PSDB] and the so-called Democrats) has 108 de\buties and 19 senators. The remaining 51 seats in the \fhamber of De\buties are held by “undecided” or wavering \barties. REFERENCES Barbosa, N. and J. A. P. Souza 2010 “A inflexão do governo Lula: \bolítica econômica, crescimento e distribuição de renda,” in E. Sader and M. A. Garcia (eds.), \brasil entre o passa\fo e o futuro. São Paulo:

Boitem\bo.

Boito Júnior., A. 2010 “A nova burguesia nacional no \boder.” MS.

Branford, S. and B. Kucinski 1995 \brazil, Carnival of the Oppresse\f: Lula an\f the \brazilian Workers’ Party. London: Latin American Bureau.

2003 Politics Transforme\f: Lula an\f the Workers’ Party in \brazil . London: Latin American Bureau.

Lievesley, G. and S. Ludlam (eds.) 2009 Reclaiming Latin America: Experiments in Ra\fical Social Democracy. London: Zed Books.

Marques, R. M., M. G. Leite, A. Mendes, and M. R. J. Ferreira 2009 “Discutindo o \ba\bel do \brograma Bolsa Família na decisão das eleições \bresidenciais brasileiras de 2006.” Revista \fe Economia Política 29 (1): 114–132.

Mollo, M. L. R. and A. Saad-Filho 2006 “Neoliberal economic \bolicies in Brazil (1994–2005): \fardoso, Lula, and the need for a democratic alternative.” New Political Economy 11 (1): 99–123.

Morais, L. and A. Saad-Filho 2003 “Snatching defeat from the jaws of victory? Lula, the Workers’ Party, and the \bros\bects for change in Brazil.” Capital & Class 81: 17–23. at FLORIDA INTERNATIONAL UNIV on February 24, 2014 lap.sagepub.com Downloaded from 44 LA\bIN AMERICAN PERSPEC\bIVES 2005 “Lula and the continuity of neoliberalism in Brazil: strategic choice, economic im\bera- tive, or \bolitical schizo\bhrenia?” Historical Materialism 13 (1): 3–32.

OIT (Organização Internacional do Trabalho) (ed.) 1999 Abertura e ajuste \fo merca\fo \fe trabalho no \brasil. São Paulo: Editora 34.

Oliveira, F. 2006 “Lula in the labyrinth.” New Left Review 42: 5–22.

Paulani, L. 2003 “ \brasil \felivery : a \bolítica econômica do governo Lula.” Revista \fe Economia Política 23 (4):

58–73.

Saad-Filho, A. 2003 “New dawn or false start in Brazil? The \bolitical economy of Lula’s election.” Historical Materialism 11 (1): 3–21.

2007 “Neoliberalism, democracy, and economic \bolicy in Brazil,” in P. Arestis and A. Saad-Filho (eds.), Political Economy of \brazil: Recent Economic Performance. London: Palgrave.

Singer, A. 2009 “Raízes sociais e ideológicas do Lulismo.” Novos Estu\fos 85: 83–102.

Wu, V. 2010 “Por que a grande mídia e a o\bosição resolveram jogar sujo.” Carta Maior, Se\btember 21.

htt\b://www.cartamaior.com.br/tem\blates/materiaMostrar.cfm?materia_id =16980&boletim _id=764&com\bonente_id=12686. at FLORIDA INTERNATIONAL UNIV on February 24, 2014 lap.sagepub.com Downloaded from 137 LATIN AMERICAN PERSPECTIVES, Issue 178, Vol. 38 No. 4, July 2011 137 DOI: 10.1177/0094582X11408786 © 2011 Latin American Perspectives Erratum Morais, Lecio and Alfredo Saad-Filho 2011 “Brazil beyond Lula: Forging ahead or pausing for breath?” Latin American Perspectives 38(2):31–44.

In Table 1 (p. 34) the figures for the first two lines, GDP (US$bn) and GDP per capita (2009 US$), were incorrect. The table with correct figures is given below. TABLE 1 Basic Macroeconomic Variables 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010* GDP (US$bn) 602.2 510.4 451.0 553.6 663.8 882.4 1,072.0 1,313.9 1,637.5 1,614.1 1 ,921.3 GDP per capita 6,918 6,907 6,991 6,974 7,276 7,413 7,616 7,990 8,313 8,217 8,671 (2009 US$) GDP growth 2.8 - 0.2 1.2 -0.2 4.3 1.9 2.7 4.9 4.0 - 1.2 5.5 (r eal per capita, %) Inflation rate 6.0 7.7 12.5 9.3 7.6 5.7 3.1 4.5 5.9 4.3 5.3 (CPI, %) Domestic 45.5 48.4 50.5 52.4 47.0 46.5 44.0 41.0 38.4 42.8 41.4 public debt (% GDP) Real interest 10.1 8.4 3.8 15.8 8.8 14.3 1 1.1 5.9 7.2 4.8 4.9 rate (annual average) *estimate.

Sour ces: Monthly bulletins and Press Notes of the Central Bank of Brazil (http://www.bcb.gov.br) and Ipeadata (http://www.ipeadata.gov.br).