Image - Lula may give social democracy a workers’ face, but nothing can erase its bourgeois content

Papers over the cracks in capitalism

Introduction

Latin America has been teetering on the brink of total barbarism for so long that any new commentary seems unnecessary but in the last few years the world economic crisis and the neo­liberal policies that have been adopted to deal with it have plunged millions into the most desperate poverty. This has had several effects. In some places like Colombia, the state has all but collapsed (or divided). In Haiti, probably the poorest place on earth despite being a natural paradise, the state has collapsed into gang warfare. In Argentina, the mass revolt of 2001 which led to the $95bn default (the largest in history) and five Presidents in twelve days has, for the time being lapsed into uneasy calm as new elections are planned for April. Elsewhere, there has been the advent of a new social democracy in Chile, Ecuador, in Bolivia and, to a certain degree, in the populist figure of Chavez, who has just survived a two month long attempt by the US to bring him down, via a strike of the business sector backed by some unions. The latest, and perhaps most significant social democratic victory took place last October in Brazil.

Lula’s victory

At the fourth attempt, Luis Inacio Lula da Silva, otherwise known as “Lula”, ex-shoeshine boy, metalworker, ex-trades union leader and candidate of the Workers Party (PT) has become President of Brazil. And in style. The 60% plus of the votes he received in the October 2002 election was a record for Brazil. Historically, it is the first time any candidate supposedly representing the working class has achieved anything like this success. As usual, social democrats everywhere have enthusiastically turned to him as the great hope of the left.

Ironically on the very day that Lula was elected, his party lost control of the southern state of Rio Grande do Sul which they have held for the last eight years. This has not dampened the ardour of the new reformists who have invested so much in Lula’s limited vision of reform.

Porto Alegre

Take for example the editor of Le Monde Diplomatique which sponsors ATTAC, the think tank of the anti-capitalist movement. Writing in January 2001, his enthusiasm for the running of the city of Porto Alegre by Lula’s party bordered on the delirious. Justifying the decision to hold the World Social Forum in Porto Alegre he asked:

Why Porto Alegre? Because in recent years the city has become something of a symbol. The capital of the Brazil’s southernmost state, Rio Grande do Sul, on the border with Argentina and Uruguay, Porto Alegre is a kind of social laboratory, and as such is being closely watched by international experts in urban planning.
For twelve years now, it has been governed in new and original ways by a leftwing coalition led by the Brazilian Workers’ Party (PT). In a whole range of sectors (housing, public transport, highways, rubbish collection, clinics, hospitals, sewerage, environment, social housing, literacy, schooling, culture, law and order, etc.), the city has made spectacular progress. The key to this success has been its “participatory budget” (orçamento participativo), which makes it genuinely possible for the inhabitants of any given neighbourhood to define concretely and democratically where municipal funds are to be allocated. In other words, the people of the city decide what kind of infrastructures they want to create or improve, and the system enables them to follow in detail how work is progressing and how the money is being spent. This leaves less room for corruption and the siphoning of public funds, and urban investment is more likely to match the majority desires of the city’s population.
We might add that this political experiment is taking place in an atmosphere of total democratic freedom, in confrontation with a very vocal rightwing opposition. The PT does not control local newspapers or radio stations, let alone the TV channels, which are in the hands of big media companies allied to the local employers and therefore hostile to the PT. In addition, the party has been careful to respect the Brazilian federal constitution, which means that it has very limited political margins of manoeuvre. Particularly in fiscal matters, where it has not been able to legislate as it would have wished. However, citizen satisfaction has been such that in the mayoral elections of last October [2000 - CWO] the PT candidate received more than 63% of the vote.

Ramonet goes on to tell us that Porto Alegre is a place for “dreamers” who want

...an alternative model of globalisation - one that is not built on principles of exclusion...

which makes him sound just what he is: a complete social democratic reformist. There is nothing in his vision about ending all the real causes of the misery which still hangs over the landless in the countryside of the North East, in the shanty towns (favelas) or in other working class districts where unemployment is rising. At one time, social democracy actually stood for some attempt at using the state to mitigate the worst excesses of the capitalist market (naturally, in order to save capitalism), but not today. Now their only selling point is the self-management of poverty. This has nothing to do with ending capitalism.

Lula has been elected by a broad range of interests which encapsulate the Catholic Church, the trades unions, the homeless, the landless, the unemployed, the petty bourgeoisie who are scared at the rise in taxes and crime, and even Brazilian business. Lula’s Vice-president is a businessman from the Liberal Party. The President of the Brazilian equivalent of the CBI immediately after the election welcomed the result stating that

It represents the proof of the maturity which Brazilian society has reached and an important point in the consolidation of democracy. ⁽¹⁾

Lula himself has abandoned his jeans and tee shirt to don the grey suit of corporate global capitalism. In January, he went to the World Social Forum to justify his attendance in the den of global capital at the World Economic Forum in Davos during the same week. In fact, Lula had already made it clear that he would respect all the plans made by the outgoing Cardoso regime with the IMF to further cut state spending and increase taxes. Avoiding inflation was the declared policy of the PT long before the election and he has further announced that the central bank will have greater independence from government. The international financiers were also convinced that he was not going to do an Argentina by defaulting on his loans (although in Brazil’s case most of its debt is in any case with its own financial oligarchy). This is bad news for the poor and possibly explains why Lula as President is so welcome to the capitalists. Who better to manage the inevitable social crisis?

But the situation is deteriorating. Over the last decade the Brazilian government has had the benefit of $ 103 billion revenue from the privatisation of what was once an enormous state sector. This has been used up in trying to reduce state indebtedness (so that borrowing can be reduced and money does not have to be printed to fuel inflation). Despite this, government debt has risen from 40% of GDP to 55% of GDP today. This is partly because the value of the Real has declined against the dollar which has produced a fall in GDP in dollar terms. The previous rise of the dollar though is, as we have stated elsewhere a function of US policy in the face of the global capitalist crisis. All this is despite an extraordinary increase in productivity (i.e. exploitation) of the Brazilian working class, in both the factories and the fields. As the Financial Times put it in July 2002

...Brazil’s steel companies are among the lowest cost producers in the world and productivity has increased in motor manufacturing, textiles and shoes. Production costs of soy-beans, cotton, and sugar are between 20 and 50 per cent lower than the US. It costs Brazilian farmers 20% less than their European competitors to produce beef and poultry.

However, now the arguments of the “fair trade” lobby enter the story. The great thing about advocating free trade around the world if you are already an industrialised powerful state is that you don’t actually have to practice it yourself. Now state capitalist measures take the form of selective subsidies to protect local economies. In the US the top 15 export products of Brazil face an average tariff of 30% but the top 15 US imports into Brazil only face tariffs of 14%. Brazilian sugar is taxed at 118% when it enters Japan. Recent US protectionist measures (e.g. on steel) have made any talk of trade reform utopian. With the fall of world commodity prices (due to a shrinking market as the crisis hits the industrialised countries) it is clear that Brazil’s current trade deficit can only grow. The solution is neither fair trade nor free trade but the end of the commodity economy, so that all places freely distribute those products which they produce most efficiently. This, of course, is real anti-capitalism, and is not on the agenda either in Porto Alegre or Brasilia.

New government, same society

Brasil is the tenth largest economy in the world. It has 170 million people. If there was one state which should break into the magic circle of the advanced capitalist countries it should be Brazil. But it has not and will not, given the state of imperialist relations we have outlined. Today, the disparities of wealth within Brazil are a microcosm of the world situation. Officially unemployment is only 6.2%, but that hides the real state of the poor. Something like 35 million of the population experience levels of poverty equalled only in the most desperate parts of Africa whilst the rich have a lifestyle like that in Europe or the US. Whilst the latter get inside their increasingly gated “communities”, the “criminals of want” are on the increase too. It will take more than local people arguing how they spend a reduced budget or visits of tearful cabinet ministers in suits to favelas to mend this hole in the social fabric. This is why Lula and his party are going around saying that nothing will be done in a hurry and that little will change. The leader of the PT Jose Dirceu has already announced that

We expect 2003 to be a year of crisis. Society is aware that the margin for manoeuvre is small. ⁽²⁾

But selling illusions and administering palliatives is what the new government has been created for. And the “anti-capitalists” who currently look to Porto Alegre will be bitterly disappointed even in their own limited agendas. Even more disappointed will be the millions of Brazilians who will remain on the margins of existence. Only the toal overthrow of global capitalist relations can begin to create the conditions for them to have a decent life.

(1) From Rainews24 (Italy), translated from Brasil: Lula’s Victory is not the Proletariat’s Victory in Battaglia Comunista 11 (November 2002).

(2) Quoted in The Financial Times Oct 28th 2002 p8.