An article by: Pedro Scuro

As President Lula recently admitted, the best thing for Brazil is to play its cards as a member of BRICS (first of the countries by alphabetical order, but also by political decision) and compete not only economically, but also by developing an innovative social policy.

BRICS: an alliance that more than twenty countries now want to be part of

We grow up hearing that in a different way from people, countries have no mutual affections, only interests. It’s maybe not the case of BRICS nations, among whom, as in great love affairs, things got serious on a beautiful summer day in Yekaterinburg thanks to their shared characteristics. So serious that from timid handshakes in the beginning at each subsequent meeting partners exchanged “engagement rings,” so from brief encounters emerged an “alliance” of which at present more than twenty other countries want to be part.

Far from a fleeting matter it became apparent that BRICS is written in the stars – like in Rihanna’s song: “From the moment of our inception/ we were destined to be together/ on a mission to last forever”. A tune not sung in the global South as much as in powerhouses of Western academia, where the disintegration of world financial markets and their weak recovery is associated with the demise of Bretton Woods institutions created after World War II to put subaltern economies on the halter.

Those straps have done terrible damage, nearly destroying entire societies, including what was left of former Soviet Union. Corsets relying on school-boy convictions on the merits of market-led strategies that, by favoring people at the top in developing countries they eventually pass on to the lower strata. Wonders such as when the rich receive tax cuts these somehow pass down creating jobs for the hoi polloi.

To wangle what typically turns out a mess – and to bestow afterlife to IMF and World Bank – the elite lot of Western democracies carved out G-7, dreamt as the world’s informal steering committee, mission soon reassigned to G-20 expressly to persuade Brazil, China, and India that at last they were recognized as ‘coordinators’ of new clusters of global players. It worked in the beginning. In 2009 Brazil and China were given the dubious privilege to contribute to ensure IMF and World Bank “as much as $1 trillion in additional resources” to support Greece, Hungary, Iceland, Ireland, Latvia, Pakistan, and Ukraine through their financing shortfalls.

By the same token, too eager to play a serious role Brazil became the largest troop contributor – and the only sponsor, according to Lula – to the disastrous “United Nations Stabilization Mission” in Haiti. The aftereffect of a coup d’état orchestrated by France and United States to topple a lawful president advocate of liberation theology, and to dissuade him from returning. Ironically, as foreign screwups became unbearable, it was not U.S. and French flags but that of Brazil which the populace burned in the streets of Port-au-Prince, chanting “Down with the occupation!

Haiti has shown China and Brazil the futility of learning from imperialism of power whose last offspring is the Jewish settler state, endowed with autonomy and countless resources to carry out fiendish lessons learned from its paragons. As Lula recently admitted, the best for Brazil, and possibly for China, is to play cards as members of BRICS and compete not only in economic and political casinos but in terms of innovative social policy. For that matter, poorly conceived U.S.-inspired schemes such as “race quotas” were supplanted by cash transfer programs and preventing vulnerable youth from falling prey to organized crime and/or to murderous police squads, yet another imperialist residue.

Financial services, hand-in-hand with fiscal irresponsibility, radical Christianity, and refusal to address the oil crisis lead Brazil to the “point of Armageddon”

As regards industrial policy also very little is to be expected from the advanced West, unless contrariwise. As the president of the Brazilian development bank, Aloisio Mercadante, points out, the country industrialized late, under the pressure of 1929 commodity crisis. The precise moment when real difference was made by – what Zygmunt Bauman called – “active utopias” (“makeable society,” social justice, socialism) uphold by founding members of the International Labor Organization (1919) and used as catalysts to balance idealism and pragmatism and put social reforms into practice through “international labor regimes.”

Bearing those utopias in mind reforms were set going in the 1940s and shaped a state-controlled social order consistent with the interests of large groups. They served as beacons for private competition but also met the basic agenda of labor movement. Identities of business and trades were redefined, citizenship stratified by splitting occupations into professional categories, giving rise to a highly vigorous, plural and primordially urban society in a capitalist, “artifacted” context resulting from technology, organization, and total (economic, symbolic, political) confrontation.

Subsequently, the state and productive basis put together in the forties and fifties, entered a period of accelerated growth and fashioned one of the world’s most modern urban societies, in which industry accounted for more than 30% of GDP, higher that China and Korea in 1980’s. All at the expense of public debt. Brazilian financial intermediary system services basically a mercantile economy, and since the public sector lacks effective fundraising instruments, imbalances already present in the economy invariably increase. Quite the opposite in China and Korea, Professor Mercadante remarks.

China and Korea make the most of “a creative relation between state and market, development-inducing state sectors, and strategic public companies in key sectors”, allowing both countries “to formulate new financing mechanisms not subordinated to the logic of financialization” – whereby financial services, broadly construed – hand in glove with fiscal irresponsibility, radical Christianity and refusal to deal with the oil crisis – take over an overriding economic, cultural, and political role, accruing no real benefit to society, in point of fact edging it to a “point of Armageddon.”

Lula can build a stronger, fairer, and more generous country, ready to become a “window of historic opportunity”

For that matter, rather than spooky “Armageddon” better to acknowledge the true nature of things in a changing world and refer – as Antonioni in “Zabriskie point” – to “the void” of the ruling elites’ culture that over and over and in ever more ferocious ways commands the collapse of everyone and everything. A crippling “void” in point is Brazil’s tax system, seen by media and academia as “a madhouse” set to preserve privileges.

In December, to a standing ovation in Congress Lula announced the most telling overhaul that, after more than 30 years in the making, will simplify such a perverse mechanism. Still, asked The Economist, can he “withstand the pressure from special-interest groups in order to implement it fully?” Some say no, since in January Lula announced a new industrial policy involving hundreds of billions in grants, subsidized loans and import-tax exemptions for inputs to national companies between now and 2026. Moves that certainly “undermine the idea of a simplified tax system”, the journal concludes naively.

Indeed, more than “keeping fiscal accounts in order,” the idea is to reverse a long-lasting process of deindustrialization, this time avoiding delusional fantasies of wealth, power, or omnipotence, such as when the country uncunningly went by G-20 rules or when it expected to deliver something good relying on undependable partners such as EU, US, Brazilian generals.

Then again, as in the old Jimmy James’s song, “now is the time to set things right” and punctuate that as part of BRICS Brazil may – provide no obsession with grandiose actions is involved – be about to initiate an effort no one better than Lula represents for. It means increasing mass consumption, credit and investment, primacy for innovation-minded companies, and a country more vigorous, just and generous, ready to become a “window of historical opportunities” in a world beleaguered by pain, war, crisis, risk, strain, and despair.


Pedro Scuro