In the 2006 presidential election campaign in Brazil, President Luiz Inácio Lula da Silva (known as Lula), leader of the Partido dos Trabalhadores (PT or Workers’ Party), was interviewed at length on July 11, 2006, by the Financial Times (which also interviewed Lula’s main rightist challenger Geraldo Alckmin). The interview touched on many topics but mainly concentrated on Lula’s adherence in his first term of office to the global neoliberal policies of monopoly-finance capital, particularly repayment of debt and fiscal responsibility. At two points in the interview the Financial Times bluntly asked whether Lula was looking toward a radical change in the model, i.e., whether he and his Workers’ Party intended to break with financial capital and neoliberalism in his second term of office. Lula gave them the answer they wanted: There is no radical change in the model….What we need now, in economics and in politics, is to strengthen Brazil’s internal and external security.
Lula’s attempt here to reassure the financial community marks the dramatic shift that the Workers’ Party of Brazil has undergone over the years, and especially since winning the presidency in 2002. Although Lula was reelected in October 2006 with 60 percent of the vote, it was not simply as a candidate with a populist base, but one who was also broadly acceptable to global financial capital.
The PT arose in 1979 in the wake of a massive labor revolt by millions of industrial workers in the years 1978 and 1979. It was during this period of labor unrest that Lula—then president of the Metalworkers’ Union of São Bernardo do Campo and Diadema on the outskirts of São Paulo, Brazil’s most industrialized city—emerged as the new movement’s most charismatic leader, openly defying the military government. By 1989, when Brazil held its first free, democratic, presidential elections since 1960, the Workers’ Party had become such a mass, popular force that Lula came close to winning the presidency, losing in the end to his conservative opponent, Fernando Collor de Mello.
At the time of that defeat MR editors Harry Magdoff and Paul Sweezy (Notes from the Editors, February 1990) observed that Lula’s and the PT’s strengths lay in stressing the need for land reform, suspension of payment on Brazil’s enormous foreign debt, and above all redistribution of income and wealth.
Lula ran subsequently as the PT candidate in the 1994 and 1998 elections but was defeated both times by Fernando Henrique Cardoso, who as a former Brazilian finance minister and then as president played a leading role in the introduction of a monetary stabilization plan for the Brazilian currency (the real) in line with IMF requirements, marking the triumph of neoliberal policy in Brazil.
In 2002 Lula ran again. But this time the PT under his leadership indicated a greater willingness to accept the conditions imposed by neoliberalism, including full repayment of Brazil’s debt. Taking care of economic fundamentals was to be prioritized even at the expense of the PT’s broader social program. On that occasion his election campaign was successful. Lula’s first term consequently was characterized by its adherence to the main neoliberal agenda, including very stringent economic programs aimed at debt repayment and fiscal responsibility. This was coupled with a much less ambitious program than originally conceived on behalf of the poor. While passing out some benefits to its constituents the PT has also promoted neoliberal structural reforms that directly undermine the overall position of workers. This has then constituted a kind of Latin American social-democratic third way strategy in which neoliberal ends are hegemonic.
Realizing the importance and complexity of the Brazilian political economy, its centrality to struggles throughout Latin America, and the general lack of an in-depth understanding of its key features outside of Latin America itself, MR last year solicited a group of articles by authors associated with the radical economic association, Sociedade Brasileira de Economia Política (SEP). The SEP publishes its own quarterly journal Revista, and we were able to obtain the help of members of the editorial board of that journal—principally the assistance of Rosa Maria Marques and Paulo Nakatani, who brought the various pieces together—but also the support of Leda Maria Paulani. The following special MR survey, consisting of four articles written last spring together with a more recent introduction commenting on the October 2006 presidential election, is the result.