IMAGINE DURING THE CUP*
AN ADDRESS TO THE PUBLIC ON THE BRAZILIAN REVOLT
*“Imagina na copa”, advertising slogan for a brand of beer.
Positivist consciousness – this form of consciousness immanent to capitalism and which considers the existing society as the most successful and therefore as unsurpassable – likes to reassure itself on the state of the world, especially when everything is going really wrong. It is thus that after the crisis of 2007-2008 which seemed to engulf the entire worldwide economy, it turned its attention towards the “emerging countries” which are supposed to take over from the old developed countries and bring back growth everywhere. As for the critical positivist consciousness, it certainly sees grave faults in the existing social organization but thinks that one can suppress them by using the appropriate means, starting with the setting up of a social State and a voluntarist policy (somewhere in between Lenin and De Gaulle). All its social knowledge comes down to two words: regulation and redistribution.
In this respect, Brazil plays a central role, even more revealing than India or pseudo-communist China, because it is at the same time an emerging country and a State with, at its head, a left-wing democratic government. Two reasons why the present revolt is important and merits that some light be shed on its real causes. Even if this revolt ran out of steam, it is already a victory because it smashes false hopes. Brazil, indeed, disappoints. It disappoints the economic positivism by showing the failure of the emerging countries, and it disappoints the worldwide pseudo-left by revealing its critical nothingness, its impotence when it is in power. It disappoints even ultra-leftism by refusing to bend to its codes of violent revolt.
What the Brazilians in revolt reveal is not only that the local political system is not democratic enough or that more money is needed so that everyone can consume more. No, what their action reveals, subjectively, is the absolute dissatisfaction produced by the wealth of this world (in this sense, there is a true return of May 1968); and, objectively, that the production of this wealth – in fact, capital and its self-movement – is not controllable by the State but is subject to the upheavals of an economic logic which has reached its historical limits, including in the “emerging” countries.
The newspapers have repeated it often enough: in June 2013, all it took was an increase of twenty cents of a real (around 7 cents of an Euro) in the price of a bus ticket in São Paulo to inflame the entire country. That which, in China, remains limited to one town or one region has mobilized almost all the big and medium cities of Brazil, where thousands of people, mostly young, gathered for several weeks, occupying public buildings, sometimes confronting the police, and above all demonstrating night and day their refusal and their anger: against the increase in the bus ticket, the absence of quality public schools1 and of quality public hospitals, or the waste involved in the World Cup of 2014 and the Olympic Games of 2016. The country had not known such a protest movement since the end of the dictatorship in 1985 and the marches against corruption of the previous President Fernando Collor de Mello in 1992. At the height of the protest, 75% of Brazilians were in favour of the protest.
The president of the International Federation of football, Joseph [Sepp] Blatter, can always assert that football is stronger than protest and the Brazilian president Dilma Roussef can try to play the appeasement card after sending in the police, but the fact that in the country where football is king a massive revolt began because of the costs linked to the organization of the 2014 World Cup (the bus ticket increase was helping to finance the infrastructures of this pseudo-party) ought to worry on a long-term basis any leader of the sporting or political spectacle. What was blown to pieces in June 2013, is the gilded image of the conquering economy of Brazil and with it the belief of a programmed emergence of the countries of the South.
And yet, the advertising for the emergence was so beautiful... While for decades, Brazil had been known primarily for its crowded favelas where masses of poor people were kept under control by heavily armed gangsters and for its hyper-rich minority protected by the death squads and the heavily armed private militias in an atmosphere of generalised corruption, now the fashion was for speaking about the economic miracle, growth, the middle-class. But neither the favelas, the gangs, nor corruption have disappeared. What has appeared is a middle-class which consumes on credit, an improvement in the social indicators through public debt and an economy benefiting from the new global distribution of growth but subject to the vagaries of a global crisis that is getting worse.
Moreover, this middle class that appeared during the Lula presidency (2003-2010) remains too small compared to the “needs” of the country, that is to say, it does not represent a large enough number of consumers to support the domestic growth.The author of City of God, Paulo Lins, asked the question bluntly: “Is it a middle-class which benefits from a good system of health? A good school system? Or is it a middle-class who has bought its car on credit, repayable in 32,000 monthly payments, and buys the advertised products?”
This private debt is itself backed by public debt. Lulism, like Chavism or the diverse forms of the Welfare State maintained in Western Europe, made the State the engine of social mobility through the consolidation of social protection systems, increases to the minimum wage and incentives for consumption, that is to say the right of credit for the poor a little less poor than the others. However, Brazil, despite its new middle-class, remains a highly unequal country where growth simply means new problems. No tax reform has come to correct this extremely polarised situation, where the super-rich exert upward pressure on the cost of living and salaries are low: the majority of the jobs created in recent years are remunerated at the maximum level of a SMIC2 and a half (about 390 Euros) and are intended to remain so. As there is no decent system of public health, nor a good public school system, this new middle-class devotes half of its income to pay for private education and health, and gets into debt to pay for everything else. Moreover, when Brazilians try to struggle against this situation, the left-wing government tells them to get lost. Thus the strike of public sector teachers, in 2012, lasted several months without any demands being met.
The Lula government then the Dilma government have helped companies access the worldwide economy via the National Bank for Economic and Social Development (BNDES), but the public financing of national capital has mainly reinforced the monopolistic character of the Brazilian economy by accelerating the process of concentration of large local companies. Consequently: the essential sectors of the economy (from aeronautics to telecommunications, as well as oilfields, mining or energy firms) are controlled by cartels which are themselves uncontrollable, which results in exorbitant prices for a mediocre service. Another structural defect of the Brazilian model is that it is dependent on exports: the exchange of Brazilian raw materials for Chinese manufactured products, which undermines local industry. Looking back, it is the 2000-2010 decade which appears exceptional and not the current slowing-down phase that the emergent economies are going through. Firstly, this decade witnessed China’s own performance (10% growth per year). The continuous increase of the price of raw materials, mainly due to Chinese demand and past underinvestment in the emerging countries, favoured net exporting regions of raw materials like Brazil. Next, the financial conditions improved considerably between 2002 and 2008 (the fall of real rates, reduction of sovereign spreads, Stock Exchange rises, the considerable influx of external capital).
But today the Brazilian economy has a hangover, “like an Ash Wednesday after the euphoria of the Carnival”, according to a consultant working in the City of São Paulo. Since 2012, the “economic experts” have worried that the Brazilian economy has broken down. After the “miracle” which allowed Brazil to establish itself as a new worldwide power, the growth rate collapsed to 0.9% in 2012. Many indicators show signs of panic: the industrial sector is in continuous decline, importing services are hypertrophied, investment is insufficient (18% of the national GDP compared to 49% in China), and increased State expenditure beyond that of even households. The competitiveness of Brazil is decreasing in relation to Asia and the fall in the real (down 50% in 2006-2010) does not compensate for anything. This collapse is translated into an inflation rate of 6.5% per year, 13% for basic foodstuffs. In this context, one can understand that the increase in public fares in order to finance the infrastructures designed for the World Cup and Olympic Games has created a fertile ground for revolt.
At present, it is the threat of the Fed (the American Federal Reserve) to slow down its production of liquidities which increases economic stagnation by pushing out investors, who have been withdrawing their funds from May 2013 onwards. However, the problem does not depend solely on cash injections from the Fed, but also on the difference between the growth of prices and the real growth born from the inflows of capital and of the upward pressure that this capital exerts on the actual exchange rate. Foreign investors put their money in a country because they hope to take out even more in the future. As soon as the situation threatens to be reversed they withdraw it. “The growth of the nominal GDP is attributable to a large extent to real growth; in most emerging countries, it was caused by improved terms of trade, inflows of capital, and a real appreciation of the exchange rate. These processes are being overturned, this implies that it is very unlikely that the sustained performance of recent years will comeback anytime soon. In most of these countries, the value of GDP growth expressed in American dollars largely exceeded real growth. The same dynamics that have inflated the dollar value of GDP growth in good years will now operate in the opposite direction: export prices, stable or falling, will reduce real growth and put an end to the currency appreciation, or even cause a weakening in real terms. No doubt, the party is over”, warned Ricardo Hausmann, former Minister of Planning of Venezuela and former chief economist of the Inter-American Development Bank, in Le Monde, 6th September 2013. One can thus expect that the disaffection with the emerging countries will accelerate in 2014, which will make the impotence of the Brazilian government worse and exacerbate dissatisfaction and revolt.
If Brazil is behind when it comes to economic policy (notorious underinvestment), it is in advance when it comes to social crisis. Indeed, whilst the revolts of the “Arab Spring” or those in China, which are easily smothered, are limited in that they simply demand modernisation, in the banal sense of more democracy, the Brazilian revolt is already beyond this stage. It calls into question the economy itself, over which the existing democracy has no hold, and serves to reveal the totality of the world. Admittedly Brazil’s economic situation has specific features, but this crisis itself is not specific: on the contrary it inscribes itself on the worldwide crisis, of the present stage of capitalism. In the end, it is not a problem of Brazilian economic policy. The actual breakdown is no more the doing of the government of Dilma Roussef than the French economic stagnation in France is François Hollande's. To say this does not mean that one absolves leaders; on the contrary it is an acknowledgement of the impotence of politics and its solutions (a return to the interventionist State, a more equitable redistribution of social wealth) and to refuse them. The Brazilian experience shows clearly: the only thing the State can do, is to go into debt to launch a pseudo-growth, then implement, more or less brutally, crisis management when the pseudo-growth collapses. Of course in such cases this crisis management is accompanied by the customary political demagogy. Thus Dilma Roussef announced that “it is the nature of youth to protest”, after her own Minister of Sports, Aldo Rebelo, had warned that he will not “permit protests that would disturb the events that we have been staging”.
The problem in Brazil, as elsewhere, is not the management of the economy, it is the economy itself. It is not a question of a model that could be replaced by another built on the same basis. It is a question of capitalist logic itself, regardless of the economic policy: the substance of value is constituted by the expenditure of abstract human energy, but the more the productive force generated by scientification3 increases, the less each particular commodity contains value-substance, and the more the initial costs of production are high. Since the middle of the 1970’s capital invested in production (the “real” economy) no longer produces enough surplus-value. Thus it turned to financial markets, which has allowed a phase of “growth” on credit, in anticipation of the creation of surplus-value which was never realised. Nevertheless, the positivist vision, which refuses to accept the idea of a structural crisis of capitalism, has wanted to see in this “growth” a new model of accumulation. It considers that the industrial production of surplus-value has simply been displaced to the periphery, to the “emerging countries”, when the point of departure and the driving force for this displacement did not lie in the monetary revenues derived from the creation of real value, but in the fictitious capital of financial bubbles without substance. This global situation of deficit is today on the brink of the abyss, as much in the old “developed” countries as in the new “emergent” countries. Brazil did not avoid this contradiction.
Yet, already, other fronts are opening up in this country. The government which had to face the urban revolts is now confronted by the demands of the Indians whose rights to dispose of their lands (recognized by the Constitution of 1988) are under severe threat by the developmentalist left – Christian left included. The project of growth at any cost joins with the industrialists and big landowners hostile to the demarcation of indigenous lands and the closing of a part of Amazonia. For their part, the leaders of the indigenous movements have warned that, if their struggle was to fail, there would be repercussions from the 2014 World Cup, even before the October presidential elections. The misadventures of the crisis administrators have only started.
One thing is certain: with or without a victory in the World Cup, in Brazil or elsewhere, there is little chance that capitalism and its destructive self-movement end up as a telenovela4. The only victory worth saluting will be the one of men and women against capital.
Paris, September 2013.
For a Counter-Realist International.
(Translated from the French on the 10th of May 2015, by Michel Prigent.)
1. Here, it does not mean the British public schools, but schools in general, schools where the expenses are paid by the State, not by families. T.N.
2. SMIC for Salaire Minimum Interprofessionnel de Croissance, index-linked minimum statutory wage.
3. Expression used, among others, by Robert Kurz to analyze the rationalization of labor in capitalism. For instance, in The Crisis of Exchange Value: Science as Productive Force; Productive Labor; and Capitalist Reproduction (1986, translated and published in English by the review Mediations, Volume 27, Fall 2013-Spring 2014). T.N.
4. Very popular TV-drama in Brazil T.N.